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SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
---------------
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): SEPTEMBER 30, 1997
THERMADYNE HOLDINGS CORPORATION
(Exact Name of Registrant as Specified in Charter)
DELAWARE 0-23378 74-2482571
(State or Other Jurisdiction (Commission File Number) (IRS Employer
of Incorporation) Identification No.)
101 SOUTH HANLEY ROAD 63105
ST. LOUIS, MISSOURI (Zip Code)
(Address of Principal Executive Offices)
Registrant's telephone number, including area code: (314) 721-5573
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Number of sequentially numbered pages 81
Exhibit index appears on page 5
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
The Company's press release dated October 1, 1997 and filed herewith
as Exhibit 99.1 is incorporated herein by this reference.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
Exhibits.
2.1 - Stock Purchase Agreement, dated July 11, 1997, by and among DS
Group Limited, Thermadyne Holdings Corporation and Deloro
Stellite Holdings Corporation.
2.2 - First Amendment to Stock Purchase Agreement, dated August 1,
1997, by and among DS Group Limited, Thermadyne Holdings
Corporation and Deloro Stellite Holdings Corporation.
2.3 - Second Amendment to Stock Purchase Agreement, dated August 15,
1997, by and among DS Group Limited, Thermadyne Holdings
Corporation and Deloro Stellite Holdings Corporation.
2.4 - Third Amendment to Stock Purchase Agreement, dated August 29,
1997, by and among DS Group Limited, Thermadyne Holdings
Corporation and Deloro Stellite Holdings Corporation.
99.1 - Press Release dated October 1, 1997.
2
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SIGNATURES
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 hereunto duly authorized.
THERMADYNE HOLDINGS CORPORATION
Date: October 8, 1997 By: /s/ JAMES H. TATE
-----------------------------------
James H. Tate
Senior Vice President and
Chief Financial Officer
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The registrant hereby agrees to supplementally furnish to the
Securities and Exchange Commission, upon request, copies of any omitted
schedule to the Stock Purchase Agreement, dated July 11, 1997, by and among DS
Group Limited, Thermadyne Holdings Corporation and Deloro Stellite Holdings
Corporation, as amended.
THERMADYNE HOLDINGS CORPORATION
Date: October 8, 1997 By: /s/ JAMES H. TATE
-----------------------------------
James H. Tate
Senior Vice President and
Chief Financial Officer
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EXHIBIT INDEX
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<CAPTION>
EXHIBIT
NUMBER DESCRIPTION PAGE
- ------- ----------- ----
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2.1 - Stock Purchase Agreement, dated July 11, 1997, by and among DS
Group Limited, Thermadyne Holdings Corporation and Deloro
Stellite Holdings Corporation.
2.2 - First Amendment to Stock Purchase Agreement, dated August 1,
1997, by and among DS Group Limited, Thermadyne Holdings
Corporation and Deloro Stellite Holdings Corporation.
2.3 - Second Amendment to Stock Purchase Agreement, dated August 15,
1997, by and among DS Group Limited, Thermadyne Holdings
Corporation and Deloro Stellite Holdings Corporation.
2.4 - Third Amendment to Stock Purchase Agreement, dated August 29,
1997, by and among DS Group Limited, Thermadyne Holdings
Corporation and Deloro Stellite Holdings Corporation.
99.1 - Press Release dated October 1, 1997.
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EXHIBIT 2.1
STOCK PURCHASE AGREEMENT
AMONG
DS GROUP LIMITED,
THERMADYNE HOLDINGS CORPORATION
AND
DELORO STELLITE HOLDINGS CORPORATION
WITH RESPECT TO THE SALE OF ALL OF THE OUTSTANDING
CAPITAL STOCK OF DELORO STELLITE HOLDINGS CORPORATION
DATED JULY 11, 1997
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TABLE OF CONTENTS
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ARTICLE I
DEFINITIONS
SECTION 1.1. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE II
THE ACQUISITION
SECTION 2.1. Purchase and Sale of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 2.2. Consideration for the Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 2.3. Purchase Price Adjustment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 2.4. Reduction in Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF HOLDINGS
SECTION 3.1. Organization and Qualification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 3.2. Authorization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 3.3. No Violation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 3.4. Capitalization of the Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 3.5. Subsidiaries and Equity Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 3.6. Consents and Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 3.7. Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 3.8. Absence of Undisclosed Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 3.9. Absence of Certain Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 3.10. Conduct of Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 3.11. Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 3.12. Real Property; Liens and Encumbrances . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 3.13. Certain Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 3.14. Permits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 3.15. Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
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SECTION 3.16. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 3.17. Compliance with Applicable Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 3.18. Affiliate Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 3.19. Brokers' Fees and Commissions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 3.20. Proprietary Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 3.21. Labor Relations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 3.22. Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 3.23. Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 3.24. Absence of Certain Business Practices . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
ARTICLE IV
REPRESENTATIONS AND
WARRANTIES OF BUYER
SECTION 4.1. Organization and Qualification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 4.2. Authorization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 4.3. No Violation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 4.4. Consents and Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 4.5. Brokers' Fees and Commissions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 4.6. Purchase for Investment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 4.7. Financing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
ARTICLE V
COVENANTS
SECTION 5.1. Conduct of Business of the Company Prior to the Closing . . . . . . . . . . . . . . . . . . . 22
SECTION 5.2. Access to Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 5.3. Affirmative Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 5.4. All Reasonable Efforts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 5.5. Consents and Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 5.6. No Solicitation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 5.7. Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 5.8. Public Announcements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 5.9. Disclosure Supplements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 5.10. No Implied Representations or Warranties; Due Diligence . . . . . . . . . . . . . . . . . . . 27
SECTION 5.11. No Solicitation of Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 5.12. Reorganization Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
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SECTION 5.13. Employee Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 5.14. Intercompany Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 5.15. Assignment of Lease . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 5.16. Solvency After the Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 5.17. Covenant Not to Compete . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
ARTICLE VI
CLOSING CONDITIONS
SECTION 6.1. Conditions to Each Party's Obligations under this Agreement . . . . . . . . . . . . . . . . . 32
SECTION 6.2. Conditions to the Obligations of Buyer under this Agreement . . . . . . . . . . . . . . . . . 33
SECTION 6.3. Conditions to the Obligations of Holdings under this Agreement . . . . . . . . . . . . . . . . 34
ARTICLE VII
CLOSING
SECTION 7.1. Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
ARTICLE VIII
SURVIVAL AND INDEMNIFICATION
SECTION 8.1. Survival of Representations, Warranties and Covenants . . . . . . . . . . . . . . . . . . . . 36
SECTION 8.2. Limitations on Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 8.3. Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 8.4. Defense of Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
SECTION 8.5. Adjustment to Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
SECTION 8.6. Exclusive Remedy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
SECTION 8.7. City of Industry Site . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
ARTICLE IX
TERMINATION AND ABANDONMENT
SECTION 9.1. Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
SECTION 9.2. Procedure and Effect of Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
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ARTICLE X
MISCELLANEOUS PROVISIONS
SECTION 10.1. Amendment and Modification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
SECTION 10.2. Waiver of Compliance; Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
SECTION 10.3. Validity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
SECTION 10.4. Expenses and Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
SECTION 10.5. Parties in Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
SECTION 10.6. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
SECTION 10.7. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
SECTION 10.8. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
SECTION 10.9. Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
SECTION 10.10. Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
SECTION 10.11. Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
SECTION 10.12. Jurisdiction and Venue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
SECTION 10.13. Tax Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
SECTION 10.14. Foreign Competition Filings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Annex A - Matters to be covered in opinion of Weil, Gotshal & Manges LLP
Annex B - Matters to be covered in opinion of Simpson Thacher & Bartlett
Annex C - Matters to be covered in opinion of Allen & Overy
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STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT (this "Agreement"), dated July 11, 1997, by
and among DS Group Limited, a corporation formed under the laws of England and
Wales ("Buyer"), Thermadyne Holdings Corporation, a Delaware corporation
("Holdings"), and Deloro Stellite Holdings Corporation, a Delaware corporation
formerly known as MAG Acquisition Corp. and Deloro Stellite Corporation (the
"Company").
RECITALS:
WHEREAS, Holdings is the record and beneficial owner of all of the
issued and outstanding shares of common stock, par value $0.01 per share, of
the Company (the "Common Stock");
WHEREAS, Holdings desires to sell to Buyer, and Buyer desires to
purchase from Holdings, all of the issued and outstanding shares of Common
Stock, all in accordance with the provisions of this Agreement;
WHEREAS, the Board of Directors of Holdings and the Board of Directors
of Buyer have approved the acquisition of the Company by Buyer pursuant to this
Agreement; and
WHEREAS, each of Buyer and Holdings desires to make certain
representations, warranties and agreements in connection with the sale and
acquisition of the Common Stock and also desires to set forth various
conditions precedent thereto.
NOW, THEREFORE, in consideration of the mutual covenants,
representations, warranties and agreements herein contained, the parties hereto
agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1. Definitions. For purposes of this Agreement, the term:
(a) "affiliate" means a person that directly or
indirectly, through one or more intermediaries, controls, is controlled by, or
is under common control with, another person.
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(b) "Canadian Bank Act" means Part XII of the Bank
Act (Canada).
(c) "Canadian Competition Act" means the Competition
Act (Canada).
(d) "City of Industry Site" means that facility and
real property located at 16425 Gale Street, City of Industry, California.
(e) "Closing" has the meaning set forth in Section
7.1.
(f) "Closing Date" has the meaning set forth in
Section 7.1.
(g) "Code" means the Internal Revenue Code of 1986,
as amended (including any successor code), and the rules and regulations
promulgated thereunder.
(h) "Consolidated Assets" means the consolidated
assets of the Company determined in accordance with generally accepted
accounting principles applied in a manner consistent with the manner
consolidated assets have been determined for purposes of the Interim Balance
Sheet.
(i) "Consolidated Liabilities" means the consolidated
liabilities of the Company determined in accordance with generally accepted
accounting principles applied in a manner consistent with the manner
consolidated liabilities have been determined for purposes of the Interim
Balance Sheet.
(j) "contract" means any contract, agreement,
indenture, note, bond, loan, instrument, lease, conditional sales contract,
mortgage, license, franchise, insurance policy, commitment or other arrangement
or agreement.
(k) "Debt Commitment" has the meaning set forth in
Section 4.7.
(l) "Employee Arrangements" has the meaning set forth
in Section 3.15(b).
(m) "Employee Benefit Plans" has the meaning set
forth in Section 3.15(a).
(n) "Environmental Laws" means all applicable
federal, state, local or foreign statutes, codes, rules, decrees, requirements
or regulations of any Governmental Authority relating to or imposing liability
or standards of conduct concerning the environment, natural resources,
pollution or contamination, or human health as affected by any of the
foregoing, to the extent in effect as of the Closing Date.
(o) "Environmental Report" has the meaning set forth
in 3.23(g).
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(p) "Equity Commitment" has the meaning set forth in
Section 4.7.
(q) "ERISA" means Employee Retirement Income Security
Act of 1974, as amended.
(r) "Exon-Florio Amendment" means section 721 of the
Defense Production Act of 1950, as amended.
(s) "Financial Statements" has the meaning set forth
in Section 3.7.
(t) "GAAP" has the meaning set forth in Section 3.7.
(u) "German Competition Act" means the German Act
Against Restraints of Competition, being Section 24 of the Gesetz gegen
Wettbewerbsbeschrankungen.
(v) "Governmental Authority" means any nation or
government, any state or other political subdivision thereof and any entity
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government.
(w) "Hazardous Material" means any substance,
material or waste which is regulated, defined or classified as such in or under
any Environmental Law or that could potentially result in liability under any
Environmental Law, including, without limitation, petroleum, petroleum products
(including crude oil and any fraction thereof), asbestos, asbestos-containing
materials, urea formaldehyde and polychlorinated biphenyls.
(x) "HSR Act" has the meaning set forth in Section
3.6.
(y) "Indemnifiable Losses" has the meaning set forth
in Section 8.2(a).
(z) "Indemnifying Party" has the meaning set forth in
Section 8.2(a).
(aa) "Intercompany Indebtedness" means all outstanding
intercompany obligations and accounts among Holdings and its Subsidiaries
(other than the Company and its Subsidiaries), on the one hand, and the Company
and its Subsidiaries, on the other hand.
(ab) "Interim Balance Sheet" has the meaning set forth
in Section 3.7.
(ac) "knowledge" of Holdings means the actual
knowledge, after due inquiry, of the individuals listed on Section 1.1(l) of
the Disclosure Schedule.
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(ad) "Liens" has the meaning set forth in Section
3.12(b).
(ae) "Material Adverse Effect" means a material
adverse effect on the business, operations, liabilities, properties, assets or
financial condition of, in the case of Holdings or the Company, the Company and
its Subsidiaries taken as a whole, and in the case of Buyer, Buyer and its
Subsidiaries taken as a whole.
(af) "Net Assets" means the difference between the
amount of Consolidated Assets and the amount of Consolidated Liabilities.
(ag) "person" means an individual, corporation,
limited liability company, partnership, joint venture, association, trust,
unincorporated organization or, as applicable, any other entity.
(ah) "Protected Business" has the meaning set forth in
Section 5.17(a).
(ai) "Purchase Price" has the meaning set forth in
Section 2.2.
(aj) "Reorganization Transactions" means (i) the
merger of Deloro Stellite Group, Inc., a Delaware corporation formerly known as
Materials Application Group, Inc. ("DSG"), with and into Deloro Stellite
Company, Inc., a Delaware corporation formerly known as Stoody Deloro Stellite,
Inc. ("DSC"), with DSC as the surviving corporation (the "DSC Merger"), (ii)
the acquisition by Holdings or its assignee of all shares of Arcair Stoody
Europe, S.A., a Belgian corporation and Arcair Stoody Stellite Pacific,
Limited, a Hong Kong corporation, and (iii) the transactions contemplated by
(A) the Acquisition Agreement, dated June 30, 1997, among DSC, Stoody Company,
a Delaware corporation ("Stoody"), and Holdings relating to the acquisition by
Stoody of the assets relating to the Stoody division of DSC and all of the
issued and outstanding capital stock of HMA, Inc., a Delaware corporation
("HMA"), (B) the Letter Agreement, dated June 30, 1997, between Thermadyne
International Corp., a Delaware corporation ("TIC"), and DSC relating to the
acquisition by TIC of the issued and outstanding quotas of Thermadyne do Brasil
LTDA owned by DSC, (C) the Letter Agreement, dated June 30, 1997, between Tweco
Products, Inc., a Delaware corporation ("TPI"), and DSC relating to the
acquisition of all of the issued and outstanding capital stock of Arcair
Company, a Delaware corporation ("Arcair"), and (D) the Letter Agreement dated
June 30, 1997, between TIC and DSC relating to the acquisition by TIC of the
issued and outstanding capital stock of Thermadyne de Mexico, S.A. de C.V.
owned by DSC and (iii) following the transactions set forth in (ii) above, (A)
the merger of Hard Metal Alloys, Inc., a Florida corporation, with and into its
sole stockholder, HMA, with HMA as the surviving corporation, (B) following the
merger described in the preceding clause (A), the merger of HMA with and into
its sole stockholder, Stoody, with Stoody as the surviving
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corporation, (C) the merger of Arcair with and into its sole stockholder, TPI,
with TPI as the surviving corporation, and (D) the dissolution of Stoody
International Company, a California corporation, in accordance with the
California General Corporation Act.
(ak) "Seller Consolidated Returns" shall mean all
consolidated, combined, affiliated or unitary Tax Returns which include the
taxable income or loss of any of the Company or its Subsidiaries and any of the
Holdings or its Subsidiaries (other than the Company or its Subsidiaries) for
taxable periods ending on or before the Closing Date.
(al) "Senior Debt" means all indebtedness of Holdings
and its Subsidiaries under that certain Amended and Restated Credit Agreement,
dated as of June 25, 1996, among Holdings, the financial institutions named
therein, and Bankers Trust Company, as Agent, as amended (the "Credit
Agreement").
(am) "Shares" means the 1,000 shares of Common Stock
being sold by Holdings to Buyer pursuant to this Agreement.
(an) "Subsidiary" means any person of which at least a
majority of the outstanding shares or other equity interests having ordinary
voting power for the election of directors or comparable managers of such
person is owned, directly or indirectly, by another person.
(ao) "Taxes" shall mean any and all taxes, charges,
fees, levies, duties, tariffs or other similar assessments or liabilities
imposed by the United States of America, or by any state, local, or foreign
government, or any subdivision, agency, or other similar person of the United
States or any such government, including without limitation (a) income, gross
receipts, excise, property, sales, use, transfer, withholding, payroll, and
franchise taxes; and (b) any interest, fines, penalties, or additions to taxes
resulting from, attributable to, or incurred in connection with any Taxes.
(ap) "Tax Returns" means any report, return or
statement or any amendment thereof required to be supplied to a taxing
authority in connection with Taxes.
(aq) "Transition Services Agreement" means an
agreement reasonably acceptable to Holdings and Buyer providing for reasonable
transition services relating to certain services currently shared between
Holdings and the Company and its Subsidiaries.
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ARTICLE II
THE ACQUISITION
SECTION 2.1. Purchase and Sale of Shares. On the terms and subject
to the conditions hereof, at the Closing, Holdings will sell, assign, transfer
and convey to Buyer, and Buyer will purchase and acquire from Holdings, all
right, title and interest of Holdings in and to the Shares, free and clear of
all Liens.
SECTION 2.2. Consideration for the Shares. The aggregate purchase
price payable by Buyer for the Shares shall be $95,043,000 in cash (the
"Purchase Price"). On the Closing Date, Buyer will pay the Purchase Price by
wire transfer of immediately available funds to the account of Holdings set
forth below:
<TABLE>
<S> <C>
Bank: Bankers Trust
ABA No.: 021001033
Account Name: Thermadyne Industries, Inc.
Account No.: 00-325-593
</TABLE>
SECTION 2.3. Purchase Price Adjustment. (a) As soon as practicable,
but in no event later than 60 days following the Closing Date, Holdings shall
prepare an unaudited consolidated balance sheet of the Company as of the
Closing Date (including the notes thereto, the "Closing Date Balance Sheet").
The Closing Date Balance Sheet shall fairly present the consolidated financial
position of the Company in accordance with GAAP applied on a consistent basis
in the same manner as the Interim Balance Sheet.
(b) During the preparation of the Closing Date
Balance Sheet and the period of any dispute within the contemplation of this
Section 2.3, Buyer shall cause the Company to (i) provide Holdings and
Holdings' authorized representatives with full access to the books, records,
facilities and employees of the Company, (ii) provide Holdings as promptly as
practicable after the Closing Date (but in no event later than 20 business days
after the Closing Date) with normal month-end closing financial information for
the period ending on the Closing Date, and (iii) cooperate fully with Holdings
and Holdings' authorized representatives, including the provision on a timely
basis of all information necessary or useful in preparing the Closing Date
Balance Sheet.
(c) Holdings shall deliver a copy of the Closing Date
Balance Sheet to Buyer promptly after it has been prepared. After receipt of
the Closing Date Balance Sheet, Buyer shall have 30 days to review the Closing
Date Balance Sheet, together with the workpapers used in the preparation
thereof. Buyer and its authorized representatives shall have full access
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to all relevant books and records and employees of Holdings to the extent
required to complete their review of the Closing Date Balance Sheet. Unless
Buyer delivers written notice to Holdings on or prior to the 30th day after
Buyer's receipt of the Closing Date Balance Sheet specifying in reasonable
detail all disputed items and the basis therefor, Buyer shall be deemed to have
accepted and agreed to the Closing Date Balance Sheet. If Buyer so notifies
Holdings of its objection to the Closing Date Balance Sheet, Buyer and Holdings
shall, within 30 days following such notice (the "Resolution Period"), attempt
to resolve their differences and any resolution by them as to any disputed
differences and any resolution by them as to any disputed amounts shall be
final, binding and conclusive.
(d) At the conclusion of the Resolution Period all
amounts remaining in dispute shall be submitted to a firm of nationally
recognized independent public accountants (the "Neutral Auditors") selected by
Holdings and Buyer within 10 days after the expiration of the Resolution
Period. If Holdings and Buyer are unable to agree on the Neutral Auditors,
then Buyer and Holdings shall each have the right to request the American
Arbitration Association to appoint the Neutral Auditors, who shall not have had
a material relationship with Holdings, Buyer or any of their respective
affiliates within the past two years. Each party agrees to execute, if
requested by the Neutral Auditors, a reasonable engagement letter. All fees
and expenses relating to the work, if any, to be performed by the Neutral
Auditors shall be borne equally by Holdings and Buyer. The Neutral Auditors
shall act as an arbitrator to determine, based solely on presentations by
Holdings and Buyer, and not by independent review, only those issues still in
dispute. The Neutral Auditors' determination shall be made within 30 days of
their selection, shall be set forth in a written statement delivered to
Holdings and Buyer and shall be final, binding and conclusive. The term
"Adjusted Closing Date Balance Sheet", as hereinafter used, shall mean the
definitive Closing Date Balance Sheet agreed to by Buyer and Holdings in
accordance with Section 2.3(c) or the definitive Closing Date Balance Sheet
resulting from the determinations made by the Neutral Auditors in accordance
with this Section 2.3(d) (in addition to those items theretofore agreed to by
Holdings and Buyer).
(e) If the amount of Net Assets calculated in
accordance with the Adjusted Closing Date Balance Sheet exceeds $24,108,000
(being the amount of Net Assets calculated in accordance with the Interim
Balance Sheet) (the "Purchase Price Deficiency"), the Buyer shall pay Holdings
the Purchase Price Deficiency. If the amount of Net Assets calculated in
accordance with the Interim Balance Sheet ($24,108,000) exceeds the amount of
Net Assets calculated in accordance with the Adjusted Closing Date Balance
Sheet (the "Purchase Price Surplus"), Holdings shall pay the Buyer the Purchase
Price Surplus. Any amounts required to be paid pursuant to this Section 2.3(e)
shall be paid by wire transfer in immediately available funds to the account
specified by the party to whom such payment is owed within five business
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<PAGE> 13
days after the Adjusted Closing Date Balance Sheet is agreed to by Buyer and
Holdings or any remaining disputed items are ultimately determined by the
Neutral Auditors.
SECTION 2.4. Reduction in Purchase Price. If any payment is made by
Holdings to Buyer under or in respect of any breach of this Agreement, the
payment shall so far as possible be treated as a reduction in the Purchase
Price.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF HOLDINGS
Holdings represents and warrants to Buyer as set forth below:
SECTION 3.1. Organization and Qualification. Except as set forth in
Section 3.1 of the Disclosure Schedule, each of Holdings and the Company and
its Subsidiaries is a corporation duly organized, validly existing and in good
standing under the laws of its jurisdiction of incorporation, with all
requisite corporate power and authority to own, operate and lease its
properties and to carry on its business as it is now being conducted. Each of
the Company and its Subsidiaries is qualified or licensed to do business and is
in good standing in every jurisdiction where the nature of the business
conducted by it or the properties owned or leased by it requires qualification,
except where the failure to be so qualified or licensed would not, in the
aggregate, have a Material Adverse Effect. Holdings has delivered or made
available to Buyer complete and correct copies of the Certificates or Articles
of Incorporation and Bylaws (or similar organizational documents) of the
Company and each of its Subsidiaries.
SECTION 3.2. Authorization. Each of Holdings and the Company has
full corporate power and authority to execute and deliver this Agreement and
any other agreement or document executed or to be executed by Holdings and/or
the Company in connection with the transactions contemplated hereby and to
consummate the transactions contemplated hereby and thereby. The execution and
delivery of this Agreement by Holdings and the Company, the performance by
Holdings and the Company of their respective obligations hereunder, and the
consummation by them of the transactions contemplated hereby, have been duly
authorized by their respective Boards of Directors. No other corporate or
stockholder action on the part of Holdings or the Company is necessary to
authorize the execution and delivery of this Agreement or the consummation of
the transactions contemplated hereby. This Agreement has been duly and validly
executed and delivered by each of Holdings and the Company. This Agreement
constitutes, and each other agreement or document to be executed by Holdings
and/or the Company in connection with the transactions contemplated hereby when
so executed and delivered will constitute, a valid and binding obligation of
Holdings and/or the Company,
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<PAGE> 14
as applicable, enforceable against such party in accordance with its respective
terms, except to the extent that such enforcement may be subject to applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws now or
hereafter in effect relating to creditors' rights generally, and by principles
of equity regarding the availability of remedies.
SECTION 3.3. No Violation. Except as set forth in Section 3.3 of the
Disclosure Schedule, neither the execution and delivery of this Agreement by
Holdings and the Company and the performance by Holdings and the Company of
their respective obligations hereunder nor the consummation by Holdings and the
Company of the transactions contemplated hereby will (a) violate, conflict with
or result in any breach of any provision of the Certificates of Incorporation
or Bylaws (or similar constitutive document) of Holdings, the Company or any of
its Subsidiaries, (b) violate, conflict with or result in a violation, breach,
acceleration or termination of, constitute a default (with or without due
notice or lapse of time or both) or require notice to or the consent of any
third party under, the terms, conditions or provisions of any note, bond,
mortgage, indenture or deed of trust, or any material license, lease or
agreement to which Holdings, the Company or any of its Subsidiaries is a party
or (c) assuming compliance with the HSR Act, the Exon-Florio Amendment, the
Canadian Bank Act, the Canadian Competition Act and the German Competition Act,
conflict with or violate any order, writ, judgment, injunction, decree, law,
statute, rule or regulation of any court or Governmental Authority applicable
to Holdings, the Company or any of its Subsidiaries.
SECTION 3.4. Capitalization of the Company. The authorized capital
stock of the Company consists of 1,000 shares, all of which are designated
Common Stock. The Shares constitute all of the issued and outstanding capital
stock of the Company and all of the Shares have been validly issued, are fully
paid and non-assessable and were not issued in violation of any preemptive
rights. There are (i) no options, warrants, calls, subscriptions, conversion
or other rights, agreements or commitments obligating the Company to issue any
additional shares of capital stock or any other securities convertible into,
exchangeable for or evidencing the right to subscribe for any shares of capital
stock of the Company, (ii) agreements or commitments obligating the Company to
repurchase, redeem or otherwise acquire or dispose of any shares of capital
stock of the Company (other than this Agreement), (iii) restrictions on the
transfer of any shares of capital stock of the Company (other than those
restrictions resulting from federal and state securities or "blue sky" laws) or
(iv) requirements of the Company or Holdings to vote any shares of capital
stock of the Company. The Shares are owned of record and beneficially by
Holdings free and clear of all Liens other than the pledge thereof to secure
the Senior Debt. Holdings will have at Closing good and marketable title to
the Shares and the absolute right to sell, assign and transfer the same to
Buyer free and clear of all Liens.
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<PAGE> 15
SECTION 3.5. Subsidiaries and Equity Investments.
(a) Section 3.5 of the Disclosure Schedule sets forth
the name, jurisdiction of incorporation, capitalization and percentage
ownership of each direct and indirect Subsidiary of the Company and all equity
investments of the Company and its Subsidiaries. Except as set forth on
Section 3.5 of the Disclosure Schedule, the Company owns no capital stock or
other equity interest in any person other than the Subsidiaries.
(b) All of the outstanding shares of capital stock of
each Subsidiary of the Company have been duly authorized and validly issued,
are fully paid and non-assessable, have not been issued in violation of any
preemptive rights, and, except as specified in Section 3.5 of the Disclosure
Schedule, are owned of record and beneficially, directly or indirectly, by the
Company, free and clear of any Liens.
(c) There are no (i) options, warrants, calls,
subscriptions, conversion or other rights, agreements or commitments obligating
any of the Company's Subsidiaries to issue any additional shares of capital
stock of such Subsidiary or any other securities convertible into, exchangeable
for or evidencing the right to subscribe for any shares of such capital stock,
(ii) agreements or commitments obligating any Subsidiary of the Company to
repurchase, redeem or otherwise acquire or dispose of any shares of capital
stock of such Subsidiary, (iii) restrictions on the transfer of any shares of
capital stock of any Subsidiary of the Company (other than those restrictions
resulting from federal and state securities or "blue sky" laws) or (iv)
requirements of the Company or Holdings to vote any shares of capital stock of
any Subsidiary of the Company.
SECTION 3.6. Consents and Approvals. Except as set forth in Section
3.6 of the Disclosure Schedule, no filing or registration with, no notice to
and no permit, authorization, consent or approval of any Governmental Authority
is necessary for the consummation by Holdings and the Company of the
transactions contemplated by this Agreement other than (a) consents and
approvals of or filings or registrations pursuant to the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended (the "HSR Act"), the Exon-Florio
Amendment, the German Competition Act, the Canadian Competition Act and the
Canadian Bank Act, (b) those already obtained, and (c) consents, registrations,
approvals, authorizations, permits, filings or notifications which the failure
to obtain, in the aggregate, would not have a Material Adverse Effect.
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<PAGE> 16
SECTION 3.7. Financial Statements. Holdings has delivered to Buyer
(a) copies of the unaudited consolidated balance sheets of the Company as of
December 31, 1995, and December 31, 1996, together with the related unaudited
consolidated statements of operations and cash flows for the years then ended,
(b) copies of the unaudited consolidated balance sheet of the Company as of
March 31, 1997, together with the related unaudited consolidated statements of
operations and cash flow for the three-month period ending on such date, (c)
copies of the audited consolidated balance sheet of the Company as of December
31, 1996, together with the related audited consolidated statements of income
and cash flows for the year then ended, and (d) copies of the audited
consolidated balance sheet of the Company as of March 31, 1997 (the "Interim
Balance Sheet"), together with the related audited consolidated statements of
income and cash flows for the three-month period ended on such date (such
financial statements being hereinafter referred to as the "Financial
Statements"). The Financial Statements (i) were prepared in accordance with
generally accepted accounting principles applied on a consistent basis ("GAAP")
throughout the periods covered thereby, except as otherwise noted thereon or
(in the case of unaudited Financial Statements) disclosed in Section 3.7 of the
Disclosure Schedule and except (in the case of unaudited Financial Statements)
for the absence of notes thereto, and (ii) present fairly in all material
respects the consolidated financial position, results of operations and cash
flows of the Company as of such dates and for the periods then ended (subject,
in the case of the unaudited Financial Statements, to normal year-end
adjustments). The books and records of and relating to the Company and each of
its Subsidiaries have been maintained in accordance with good business
practices on a consistent basis and accurately reflect and evidence the
transactions of the Company and each such Subsidiary in all material respects.
SECTION 3.8. Absence of Undisclosed Liabilities. There are no
liabilities or financial obligations of the Company or any of its Subsidiaries
that are required to be reflected on a balance sheet prepared in accordance
with GAAP, other than liabilities and obligations (a) provided for or reserved
against in the Financial Statements, (b) arising after March 31, 1997 in the
ordinary course of business, (c) which would not have a Material Adverse
Effect, or (d) disclosed in Section 3.8 of the Disclosure Schedule.
SECTION 3.9. Absence of Certain Changes. Except as disclosed in
Section 3.9 of the Disclosure Schedule, since March 31, 1997, neither the
Company nor any of its Subsidiaries has (a) suffered a Material Adverse Effect,
whether individually or in the aggregate, except to the extent the same results
from changes in the economy in general or normal price fluctuations related to
the wear resistance industry, (b) conducted its business in any material
respect not in the ordinary and usual course, (c) except in the ordinary course
of business, incurred any long-term indebtedness for borrowed money or issued
any debt securities or assumed, guaranteed or endorsed the obligations of any
other person except for obligations of
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its Subsidiaries, (d) sold, transferred or otherwise disposed of any of its
material property or assets, or (e) mortgaged or encumbered any of its material
property or assets.
SECTION 3.10. Conduct of Business. Except as set forth in the notes
to the Financial Statements or Section 3.10 of the Disclosure Schedule, no
event has occurred since March 31, 1997, which, had it occurred subsequent to
the date of this Agreement, would have required the consent or approval of
Buyer in writing pursuant to Section 5.1 hereof.
SECTION 3.11. Litigation. Except as set forth in Section 3.11 of the
Disclosure Schedule, there is (a) no action, suit or proceeding ("Litigation")
pending or, to the knowledge of Holdings, threatened against the Company or any
of its Subsidiaries before any court, arbitrator or administrative or
governmental body which, if determined adversely, would have a Material Adverse
Effect, and (b) no material Litigation pending or threatened by the Company or
any of its Subsidiaries against any third party before any court, arbitrator or
administrative or governmental body. Neither the Company nor any of its
Subsidiaries is in violation of or default under any judgment, decree,
injunction or order of any court, governmental department, commission, agency,
instrumentality or arbitrator outstanding against the Company or any of its
Subsidiaries which could reasonably be expected to have a Material Adverse
Effect.
SECTION 3.12. Real Property; Liens and Encumbrances.
(a) Section 3.12 of the Disclosure Schedule contains
a complete and accurate list and description of all real property owned or
leased by the Company or its Subsidiaries as of the date hereof.
(b) Except as set forth in Section 3.12 of the
Disclosure Schedule, all properties and assets owned by the Company and its
Subsidiaries are free and clear of all liens, encumbrances, pledges, claims,
security interests, mortgages, assessments, easements, rights of way,
covenants, restrictions, rights of first refusal, defects in title,
encroachments and other burdens (collectively, "Liens") except (i) Liens for
taxes and other statutory Liens not yet delinquent, (ii) purchase money or
vendor Liens not yet delinquent, (iii) Liens reflected in the Financial
Statements (which have not been discharged) and (iv) Liens which in the
aggregate do not materially detract from the value or, in the case of personal
property, materially impair the use by the Company or any of its Subsidiaries
of properties or assets subject thereto or, in the case of real property,
materially impair the present and continued use in the usual and normal conduct
of the business of the Company and its Subsidiaries.
(c) All improvements on the properties owned or
leased by the Company or any of its Subsidiaries are in compliance with
applicable laws, ordinances and regulations in all
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respects necessary to operate their respective businesses, except for any
instances of non-compliance which do not and will not in the aggregate have a
Material Adverse Effect.
(d) Each lease of any property is valid, binding and
enforceable in accordance with its terms (except that enforceability thereof
may be limited by bankruptcy, insolvency, reorganization or other similar laws
affecting creditors' rights generally and by principles of equity regarding the
availability of remedies) and is in full force and effect, and to the best of
Holdings' and the Company's knowledge, there are no offsets or defenses by
either landlord or tenant thereunder which could be expected to have a Material
Adverse Effect. Holdings and the Company knows of no existing defaults, and to
the best of Holding's and the Company's knowledge, no events or circumstances
have occurred which, with or without notice or lapse of time or both, would
constitute defaults, under any of the leases of such properties which could be
expected to have a Material Adverse Effect. Except as set forth in Section
3.13 of the Disclosure Statement, the sale of the Shares will not, with respect
to any such leases of such properties, (i) permit the landlord to accelerate
the rent or cause any material lease terms to be renegotiated, (ii) constitute
a material default thereunder, or (iii) require the consent of the landlord or
any third party.
SECTION 3.13. Certain Agreements. Except as described in Section 3.13
of the Disclosure Schedule, neither the Company nor any of its Subsidiaries is
a party to any written agreement with any officer, director or employee of the
Company or any of its Subsidiaries (a) the benefits of which are contingent, or
the terms of which are materially altered, upon the occurrence of a transaction
involving the Company of the nature of any of the transactions contemplated by
this Agreement, (b) providing severance benefits or other benefits after the
termination of employment regardless of the reason for such termination of
employment, or (c) any of the benefits of which will be increased, or the
vesting of benefits of which will be accelerated, by the occurrence of any of
the transactions contemplated by this Agreement or the value of any of the
benefits of which will be calculated on the basis of any of the transactions
contemplated by this Agreement. Except as disclosed in Section 3.13 of the
Disclosure Schedule, neither the Company nor any of its Subsidiaries is a party
to any (i) agreement, contract, indenture or other instrument relating to the
borrowing of money or the guarantee of any obligation for the borrowing of
money or (ii) other contract, agreement or commitment of the Company or any of
its Subsidiaries material to the business, operations or financial condition of
the Company or any of its Subsidiaries. Neither the Company nor any of its
Subsidiaries is in default under any of the agreements, contracts or
obligations described in Section 3.13 of the Disclosure Schedule, except such
defaults which, in the aggregate, would not have
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a Material Adverse Effect. Except as set forth in Section 3.13 of the
Disclosure Schedule, no consent is required under any contract or agreement
listed on Section 3.13 of the Disclosure Schedule in connection with the
consummation of the transactions contemplated by this Agreement except for
consents which the failure to obtain would not have a Material Adverse Effect.
Each of the contracts listed in Section 3.13 of the Disclosure Schedule is
valid, binding and enforceable in accordance with its terms (except that
enforceability thereof may be limited by bankruptcy, insolvency, reorganization
or other similar laws affecting creditors' rights generally and by principles
of equity regarding the availability of remedies) and is in full force and
effect.
SECTION 3.14. Permits. The Company and each of its Subsidiaries has
obtained all permits, authorizations, certificates, approvals, licenses,
exemptions and classifications of Governmental Authorities required for the
conduct of its business (except for those the absence or violation of which
does not and will not have a Material Adverse Effect), all of which are
described on Section 3.14 of the Disclosure Schedule.
SECTION 3.15. Employee Benefit Plans.
(a) Set forth in Section 3.15(a) of the Disclosure
Schedule is an accurate and complete list of each domestic and foreign employee
benefit plan, within the meaning of Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended, and the rules and regulations
thereunder ("ERISA"), including each scheme providing any "relevant benefit" as
defined in UK Legislation in Section 612 of the Income and Corporation Taxes
Act of 1988), and each stock option, stock appreciation right, restricted
stock, incentive, bonus, employment, severance or salary or benefits
continuation plan, program, arrangement or agreement maintained by the Company
or any of its Subsidiaries or to which the Company or any such Subsidiary
contributes (or has any obligation to contribute), has any liability (other
than joint and several liability pursuant to Section 414 of the Code or is a
party (collectively, the "Employee Benefit Plans").
(b) Except to the extent that a breach of any of the
following representations would not have a Material Adverse Effect, (i) each
Employee Benefit Plan is in substantial compliance with applicable law
(including, without limitation, ERISA and the Code and other applicable foreign
law) and has been administered and operated (including in relation to the
making of contributions or payment of premiums, as the case may be) in all
respects in accordance with its terms and no remedial contributions, taxes,
penalties or fees are currently owing thereunder; (ii) each Employee Benefit
Plan which is intended to be "qualified" within the meaning of Section 401(a)
of the Code as received a favorable determination letter from the Internal
Revenue Service, and each foreign Employee Benefit Plan which is intended to
have a similar status under applicable non-U.S. law has received a
determination of such status from the relevant governmental authority, and, to
the knowledge of the Company, no event has occurred and no condition exists
which could reasonably be expected to result in the revocation of any such
determination; (iii) no complete or partial termination of any plan covered by
Title IV of ERISA, or any other non-U.S. defined benefit plan, with respect to
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<PAGE> 20
which the Company or any Subsidiary could have liability has occurred and no
proceedings have been instituted to terminate or appoint a trustee to
administer any such plan; (iv) neither the Company nor any of its Subsidiaries
has incurred any unsatisfied liability to the Pension Benefit Guaranty
Corporation (the "PBGC") with respect to any "single- employer plan" (within
the meaning of Section 4001(a)(15) of ERISA), including, without limitation,
any liability under Section 4069 of ERISA or any penalty imposed under Section
4071 of ERISA, except for payments of premiums to the PBGC; (v) no Employee
Benefit Plan is subject to Title IV of ERISA and no Employee Benefit Plan is
subject to Section 412 or 418B of the Code or Section 302 of ERISA has incurred
any accumulated funding deficiency (whether or not waived) within the meaning
of such sections of the Code or ERISA; (vi) full payment has been timely made
of all amounts which the Company or any of its Subsidiaries is required under
applicable law or under any Employee Benefit Plan to have paid as of the last
day of the most recent fiscal year of such Employee Benefit Plan ended prior to
the date hereof, and the Company and its Subsidiaries have made adequate
provisions, to the extent required by GAAP, in their consolidated financial
statements for all obligations and liabilities under all Employee Benefit Plans
that have accrued but have not been paid because they are not yet due under the
terms of any such Employee Benefit Plan or applicable law; (vii) no Employee
Benefit Plan currently contributed to by the Company or any of its Subsidiaries
is a "multiemployer plan" as defined in Section 4001(a)(3) of ERISA, or a
"multi employer plan" within the meaning of the Code or ERISA and neither the
Company nor any of its Subsidiaries has incurred any unsatisfied withdrawal
liability under Title IV of ERISA with respect to any such plan; (viii) neither
the Company nor any of its Subsidiaries has incurred any material liability
(including, without limitation, additional contributions, fines, taxes,
penalties or loss of tax deduction) as a result of a failure to administer or
operate any Employee Benefit Plan that is a "group health plan" (as such term
is defined in Section 607(1) of ERISA or Section 5000(b)(1) of the Code) in
compliance with the applicable requirements of Part 6 of Subtitle B of Title I
of ERISA or Section 4980B of the Code; (ix) no liability, claim, action, audit,
examination or litigation has been made, commenced or, to the Company's
knowledge, threatened with respect to any Employee Benefit Plan (other than for
benefits payable in the ordinary course); (x) the Company and its Subsidiaries
have complied to the extent required by applicable law with all obligations
under the German Social Security Regulations as of the date of this Agreement;
and (xi) no "key managerial employee" of the Company or any of its Subsidiaries
has given, or has been given, notice of termination of his or her employment or
has indicated an intention to terminate his or her employment, or has received
an increase in compensation and benefits since December 31, 1996, except for
increases as a result of promotions or in the ordinary course in accordance
with past practice. "Key managerial employee" shall mean Dan Lorden, John
Pawlikowski, Jim Wu, Jim Fox, Joe Overton, Gunther Clos and Ken Pearce.
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(c) Except with respect to any multiemployer plan,
Holdings and the company have provided Buyer (i) current, accurate and complete
copies of all documents embodying each Employee Benefit Plan, and the trust or
funding agreements and summaries with respect thereto (ii) the most recent
actuarial valuation with respect to any Employee Benefit Plan, (iii) the most
recent annual report (Series 5500 and all schedules thereto or other comparable
foreign reports) required in connection with any Employee Benefit Plan and (iv)
the most recent IRS determination letter received in respect of an Employee
Benefit Plan that is intended to satisfy the requirements of Code Section
401(a), and all information provided by Holdings, the Company and its
Subsidiaries in connection with the preparation of the documents in (ii) and
(iii) was true and correct in all material respects when so provided.
SECTION 3.16. Taxes. Except as set forth in Section 3.16 of the
Disclosure Schedule:
(a) all material Tax Returns required to be filed by
the Company and each of its Subsidiaries have been filed (and all such Tax
Returns were correct and complete in all material respects); the Company and
each of its Subsidiaries has paid (or there has been paid on its behalf) all
material Taxes that are due with respect to it;
(b) there are no outstanding agreements extending the
statutory period of limitation applicable to any claim for, or the period for
the collection or assessment of, Taxes due from the Company or its Subsidiaries
for any taxable period;
(c) no audit or other proceeding by any court or
Governmental Authority is pending with respect to any material Taxes due from
the Company or any of its Subsidiaries, and no claim for or assessment of
material Taxes is proposed or, to the knowledge of Holdings is threatened
against the Company or any of its Subsidiaries.
(d) there are no liens for, or in respect of, Taxes
on any of the assets of the Company or its Subsidiaries, other than liens for
(i) Taxes which are not yet due and payable, or (ii) which are being contested
in good faith and for which adequate reserves have been established in the
books and records of the Company and its Subsidiaries.
(e) all material Taxes required to have been
withheld, collected or deposited by the Company or any of its Subsidiaries with
respect to any payments made by the Company or any of its Subsidiaries to any
employee or independent contractor have been timely withheld, collected or
deposited and, to the extent required under applicable law, have been paid to
the relevant governmental or taxing authorities;
(f) none of the Company or any of its Subsidiaries is
a party to or has any obligation under any Tax sharing, Tax allocation or other
similar contract or agreement.
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(g) no claim for, or assessment of, material Taxes
due from the Company or any of its Subsidiaries has been made or, to the
knowledge of Holdings, threatened by any Governmental Authority of a
jurisdiction in which the Company or any of the Subsidiaries does not currently
file Tax Returns based upon an assertion that the Company or such Subsidiary is
required to file Tax Returns with, or is otherwise subject to taxation by, such
jurisdiction;
(h) Holdings is not a "foreign person" within the
meaning of Section 1445(b)(2) of the Code; and
(i) There is no contract, agreement, plan or
arrangement to which the Company or any of its Subsidiaries is a party with
respect to any person that, individually or collectively, could give rise to
the payment in connection with the transactions contemplated by this Agreement
of any amount that would not be deductible by the Company or any of its
Subsidiaries by reason of the application of Section 280G of the Code.
SECTION 3.17. Compliance with Applicable Law. Except as set forth in
Section 3.17 of the Disclosure Schedule, the Company and its Subsidiaries are
not, and have not been during the preceding two years, in violation of any
provision of any Federal, state, local or foreign statute, law, ordinance,
rule, regulation, judgment, decree, order, concession, grant, franchise, permit
or license or other governmental authorization or approval applicable to the
business, properties or operations of the Company or any of its Subsidiaries,
except such violations which, in the aggregate, would not have a Material
Adverse Effect.
SECTION 3.18. Affiliate Transactions. Except as disclosed in Section
3.18 of the Disclosure Schedule, there are no existing agreements,
understandings or arrangements between the Company or any of its Subsidiaries,
on the one hand, and Holdings or any affiliate of Holdings, on the other hand,
relating to the properties, assets or the conduct of the business and
operations of the Company or any of its Subsidiaries.
SECTION 3.19. Brokers' Fees and Commissions. Except for Gleacher
NatWest Inc. (whose compensation is solely the responsibility of Holdings),
none of Holdings, the Company and their respective directors, officers,
employees or agents has employed any investment banker, broker or finder in
connection with the transactions contemplated hereby, and no party has made any
claim for any brokerage commission, finder's fee or similar payment due from
Holdings or the Company.
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SECTION 3.20. Proprietary Rights.
(a) Section 3.20 of the Disclosure Schedule contains
a complete and accurate list of (i) all registered patents, trademarks,
copyrights, service marks and tradenames of the Company and its Subsidiaries
and (ii) all patent, trademark and copyright applications of the Company or its
Subsidiaries which have been filed and are currently pending.
(b) Except as set forth in Section 3.20 of the
Disclosure Schedule, (i) the Company and its Subsidiaries own or possess
adequate licenses or other valid rights to use all United States and foreign
copyrights, patents, trademarks, trade names, service marks, copyrights and
applications therefor, and all trade secrets and proprietary technology and
information which are material to the conduct of the business of the Company
and its Subsidiaries (the "Intellectual Property Rights"), (ii) as of the date
of this Agreement, the validity of the Intellectual Property Rights and the
title thereto of the Company or any Subsidiary are not being questioned in any
litigation to which the Company or any Subsidiary is a party, nor to the
knowledge of Holdings, is any such litigation threatened nor has any such claim
been asserted, (iii) as of the date of this Agreement, to the knowledge of
Holdings, the conduct of the business of the Company and its Subsidiaries as
now conducted does not conflict with any valid patents, trademarks, trade name,
service marks, copyrights or other proprietary rights of others in any way
which would have a Material Adverse Effect, and no such claim has been asserted
against the Company or any Subsidiary nor has any such litigation been
threatened or commenced against the Company or any Subsidiary and (iv) to
Holdings' knowledge, no person is infringing upon the Intellectual Property
Rights of the Company or any of its Subsidiaries.
SECTION 3.21. Labor Relations. Except as listed or described in
Section 3.21 of the Disclosure Schedule, the Company and its Subsidiaries have
no unfair labor practice charges or complaints pending or, to the knowledge of
Holdings, threatened against any of them before the National Labor Relations
Board or any similar body. There is no labor strike, dispute, slowdown,
stoppage or similar labor difficulty pending or, to the knowledge of Holdings,
threatened against the Company or any of its Subsidiaries. Except as disclosed
in Section 3.21 of the Disclosure Schedule, no employees of the Company or any
of its Subsidiaries are currently represented by a union or other labor
organization or covered by any collective bargaining agreement, and to the
knowledge of Holdings, no union is attempting to organize any such employees.
SECTION 3.22. Insurance. All material insurance policies (the
"Insurance Policies") with respect to the property, assets, operations and
business of the Company and its Subsidiaries are listed in Section 3.22 of the
Disclosure Schedule and are in full force and effect. Except as set forth in
Section 3.22 of the Disclosure Schedule, as of the date of this
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Agreement, there are no pending material claims against the Insurance Policies
by the Company or any of its Subsidiaries as to which the insurers have denied
liability. Holdings makes no representation or warranty that such insurance
will be continued or is continuable after the Closing.
SECTION 3.23. Environmental Matters. Except as disclosed on Section
3.23 of the Disclosure Schedule or as specifically identified in the
Environmental Reports delivered to Buyer:
(a) the operations of the Company and its
Subsidiaries are, and within all applicable statutes of limitation periods have
been, in compliance with all applicable Environmental Laws, except for
non-compliance which, in the aggregate, would not have a Material Adverse
Effect;
(b) each of the Company and its Subsidiaries has
obtained all permits, licenses and other authorizations that are required under
applicable Environmental Laws ("Environmental Permits") to conduct their
businesses except where the failure to possess such Environmental Permits, in
the aggregate, would not have a Material Adverse Effect; and the Company
reasonably believes that such Environmental Permits, and any other
Environmental Permits as to which the Company believes there is a reasonable
possibility will be required of the Company or any of its Subsidiaries, will be
timely obtained in the ordinary course of business, other than exceptions to
any of the foregoing that, in the aggregate, would not have a Material Adverse
Effect;
(c) no judicial or administrative proceedings or
investigations are pending or, to the knowledge of Holdings, threatened against
the Company or its Subsidiaries and no written notice, citation, summons or
order has been delivered to the Company or its Subsidiaries by any Governmental
Authority pursuant to any applicable Environmental Laws (collectively,
"Environmental Claims"), except for such Environmental Claims which, in the
aggregate, would not have a Material Adverse Effect;
(d) all real property currently or, to the knowledge
of Holdings, formerly owned, operated or leased by the Company or its
Subsidiaries is free from contamination that would have a Material Adverse
Effect and, to the knowledge of Holdings, there are no other locations with
contamination from disposal, recycling, or otherwise that, in the aggregate
would have a Material Adverse Effect;
(e) no real property currently (or to the knowledge
of Holdings, formerly) owned, operated or leased by the Company or its
Subsidiaries is listed or has been formally
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proposed for listing on the National Priorities List, the Comprehensive
Environmental Response Compensation and Liability and Information System or any
analogous state lists;
(f) there are not now on, in or under any real
property currently or, to the knowledge of Holdings, formerly owned, leased or
operated by the Company or its Subsidiaries (i) any underground storage tanks
("USTs"), (ii) any asbestos-containing materials ("ACMs"), or (iii) any
polychlorinated biphenyls ("PCBs"), except for such USTs, ACMs or PCBs, the
presence of which, in the aggregate, would not have a Material Adverse Effect;
and
(g) there are no environmental investigations,
studies, audits, tests, reviews or other analyses (collectively, "Environmental
Reports") in the possession (or to the knowledge of Holdings, control) of
Holdings or the Company in relation to any real property currently or formerly
owned or leased by the Company or its Subsidiaries that have not been made
available to Buyer.
(h) none of the matters disclosed on Section 3.23 of
the Disclosure Schedule, in the Environmental Reports delivered to the Buyer,
or that are otherwise exceptions to any of the foregoing representations and
warranties in Section 3.23, individually or in the aggregate, are reasonably
expected to have a Material Adverse Effect.
SECTION 3.24. Absence of Certain Business Practices. Neither the
Company, its Subsidiaries nor any of their respective officers or, to the
knowledge of Holdings, their respective employees has, directly or indirectly,
within the past five years given or agreed to give any bribe or similar benefit
to any customer, supplier, governmental employee or other person who is or may
be in a position to help or hinder the Company or any of its Subsidiaries (or
assist the Company or any of its Subsidiaries in connection with any actual or
proposed transaction) in violation of any federal, state, local or foreign law
or regulation.
ARTICLE IV
REPRESENTATIONS AND
WARRANTIES OF BUYER
Buyer hereby represents and warrants to Holdings as set forth below:
SECTION 4.1. Organization and Qualification. Buyer is a corporation
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation, with all requisite corporate power and
authority to own, lease and operate its properties and to carry on its
businesses as now being conducted, except where the failure to
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be so organized, existing and in good standing or to have such power or
authority would not, in the aggregate, have a Material Adverse Effect.
SECTION 4.2. Authorization. Buyer has full corporate power and
authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. No other corporate proceeding on the part of
Buyer is necessary to authorize the execution and delivery of this Agreement or
to consummate the transactions contemplated hereby. This Agreement has been
duly and validly executed and delivered by Buyer and constitutes a valid and
binding obligation of Buyer, enforceable against it in accordance with its
terms, except to the extent that such enforcement may be subject to bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or hereafter
in effect relating to creditors' rights generally, and by principles of equity
regarding the availability of remedies.
SECTION 4.3. No Violation. Neither the execution and delivery of
this Agreement by Buyer and the performance by Buyer of its obligations
hereunder nor the consummation by Buyer of the transactions contemplated hereby
will (a) violate, conflict with or result in any breach of any provision of the
Certificate or Articles of Incorporation or Bylaws of Buyer, (b) violate,
conflict with or result in a violation or breach of, or constitute a default
(with or without due notice or lapse of time or both) under the terms,
conditions or provisions of any note, bond, mortgage, indenture or deed of
trust, or any material license, lease or agreement to which Buyer or any of
Buyer's Subsidiaries is a party or (c) assuming compliance with the HSR Act,
the Exon-Florio Amendment, the German Competition Act, the Canadian Competition
Act and the Canadian Bank Act, conflict with or violate any order, writ,
judgment, injunction, decree, statute, rule or regulation of any court or
domestic or foreign Governmental Authority applicable to Buyer or any of
Buyer's Subsidiaries, except such defaults and violations which, in the
aggregate, would not have a Material Adverse Effect.
SECTION 4.4. Consents and Approvals. No filing or registration with,
no notice to and no permit, authorization, consent or approval of any third
party or any Governmental Authority is necessary for the consummation by Buyer
of the transactions contemplated by this Agreement other than (a) consents and
approvals of or filings or registrations pursuant to the HSR Act, the
Exon-Florio Amendment, the German Competition Act, the Canadian Bank Act and
the Canadian Competition Act, (b) requirements of federal and state securities
laws and (c) consents, registrations, approvals, authorizations, permits,
filings or notifications which, in the aggregate, would not have a Material
Adverse Effect.
SECTION 4.5. Brokers' Fees and Commissions. Neither the Buyer nor
any of its directors, officers, employees or agents has employed any investment
banker, broker or finder in connection with the transactions contemplated
hereby.
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SECTION 4.6. Purchase for Investment. Buyer is acquiring the Shares
for its own account for investment purposes and not with a view to the
distribution of the Shares. Buyer has such knowledge and experience in
financial and business matters so as to be capable of evaluating the merits and
risks of its investment in the Shares. Buyer is an "accredited investor" as
defined in Rule 501 of the Securities Act of 1933, as amended. Buyer will not,
directly or indirectly, dispose of the Shares except in compliance with
applicable federal and state securities laws.
SECTION 4.7. Financing. Buyer has received (i) the unconditional
commitment, subject only to the satisfaction or waiver of the conditions set
forth in Sections 6.1 and 6.2, of Morgan Grenfell Development Capital Limited
to make an equity investment of $50 million in Buyer (the "Equity Commitment"),
and (ii) the unconditional commitment, subject only to the satisfaction or
waiver of the conditions set forth therein, issued by National Westminster
Bank, or another financial establishment reasonably acceptable to Buyer, to
provide debt financing which, together the Equity Commitment, will be
sufficient to consummate the transactions contemplated hereby (the "Debt
Commitment"). Buyer has delivered true and correct copies of the letters
evidencing the Equity Commitment and the Debt Commitment to Holdings, which
Holdings is relying upon in entering into this Agreement. Buyer agrees to use
its reasonable best efforts to cause the funding under the Equity Commitment
and the Debt Commitment in accordance with their terms and to obtain a
modification of the Debt Commitment or a new Debt Commitment that contains no
conditions other than the closing of this Agreement, apart from payment of the
Purchase Price, upon fulfillment of the conditions set forth in Section 6.1 and
Section 6.2(a), 6.2(b) and 6.2(c) on or before July 25, 1997.
ARTICLE V
COVENANTS
SECTION 5.1. Conduct of Business of the Company Prior to the Closing.
Except as contemplated by this Agreement, as set forth in Section 5.1 of the
Disclosure Schedule or with the prior written consent of Buyer, during the
period from the date of this Agreement to the Closing, the Company and each of
its Subsidiaries will conduct its business and operations according to the
Company's ordinary and usual course of business and will use all reasonable
efforts consistent therewith to preserve intact the Company's properties,
assets and business organizations, to keep available the services of the
Company's officers and employees and to maintain satisfactory relationships
with customers, suppliers, distributors and others having commercially
beneficial business relationships with the Company, in each case in the
ordinary course of business. Without limiting the generality of the foregoing,
and except as otherwise provided in this Agreement, neither the Company nor any
of its Subsidiaries will, prior to the
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Closing, without the prior written consent of Buyer (which consent shall not be
unreasonably withheld):
(a) issue, sell or pledge, or authorize or propose
the issuance, sale or pledge of additional shares of capital stock of any
class, or securities convertible into any such shares, or any rights, warrants
or options to acquire any such shares or other convertible securities;
(b) redeem, purchase or otherwise acquire any
outstanding shares of the capital stock of the Company or its Subsidiaries;
(c) will effect any recapitalization of capital
stock;
(d) propose or adopt any amendment to the Certificate
or Articles of Incorporation or Bylaws (or similar organizational documents) of
the Company or any of its Subsidiaries;
(e) except in the ordinary course of business (i)
incur any long-term indebtedness for borrowed money or issue any debt
securities, (ii) assume, guarantee or endorse the obligations of any other
person except for obligations of the Company's Subsidiaries, (iii) cancel or
compromise, except in the ordinary course of business consistent with past
practice, any debts owed to it, (iv) waive or release any rights of material
value, or (v) close any plants or any other material facilities;
(f) except in the ordinary course of business or as
required by law, contractual obligations or other understandings or
arrangements existing on the date hereof, (i) increase in any manner the rate
or terms of compensation of any of its directors, officers or other employees,
(ii) enter into any collective bargaining agreement, or (iii) commit itself to
any additional pension, profit-sharing, deferred compensation, group insurance,
severance pay, retirement or other employee benefit plan, fund or similar
arrangement or amend or commit itself to amend any of such plans, funds or
similar arrangements in existence on the date hereof;
(g) except in the ordinary course of business, (i)
sell, transfer or otherwise dispose of any of its property or assets, (ii)
mortgage or encumber any of its property or assets, (iii) merge or consolidate
with or into any other corporation or entity (other than the DSC Merger), (iv)
convey, sell, lease or otherwise dispose of in any transaction or related
series of transactions all or substantially all of the property, business or
assets of the Company or any of its Subsidiaries (including, without
limitation, the capital stock or assets of the Company or any of its
Subsidiaries), and (v) acquire by purchase the business, assets or securities
of any person;
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(h) enter into other material agreements, commitments
or contracts, except agreements, commitments or contracts made in the ordinary
course of business;
(i) declare, set aside or pay any dividend or other
distribution in respect of its capital stock, other than in cash in the
ordinary course of business in connection with Holdings and the Company's cash
management practices;
(j) except in the ordinary course of business or with
respect to capital projects approved prior to the date hereof, enter into any
agreement or commitment involving an aggregate capital expenditure or
commitment exceeding $100,000;
(k) except as may be required as a result of a change
in law or in GAAP, change any of the accounting methods, practices or
principles used by the Company or any of its Subsidiaries;
(l) make any material tax election or settle or
compromise any material federal, state, local or foreign tax liability;
(m) settle or otherwise compromise any material audit
issue or other material dispute with the Internal Revenue Service or other
state, local or foreign taxing authority;
(n) except for the tax allocation arrangement
described in Section 3.16 of the Disclosure Schedule, enter into any Tax
sharing agreement, Tax allocation agreement or similar contract after the date
hereof; or
(o) agree in writing or otherwise to take any of the
foregoing actions.
SECTION 5.2. Access to Information. Between the date of this
Agreement and the Closing Date, upon reasonable notice and at reasonable times
without significant disruption to the business of the Company, the Company will
give Buyer and its authorized representatives reasonable access to all offices
and other facilities, and to all books and records of the Company and will
permit Buyer to make and will fully cooperate with regard to such inspections
as it may reasonably require and will cause its officers to furnish Buyer such
financial and operating data and other information with respect to the business
and properties of the Company as Buyer may from time to time reasonably
request. If the acquisition contemplated herein is consummated, the Buyer
covenants and agrees that it shall preserve and keep the records of the Company
delivered to it hereunder for a period of four years from the Closing Date
(provided, however, that in the event that Buyer decides to destroy or discard
any such records relating to Taxes after such date, Buyer shall provide
Holdings with the opportunity to take possession of such Tax related records),
and shall make such records
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available to Holdings as reasonably required by Holdings in connection with any
legal proceedings by or against, or governmental investigations of, Holdings,
or in connection with any Tax examination of Holdings or any consolidated group
of which Holdings was a part or for any other proper business purpose of
Holdings.
SECTION 5.3. Affirmative Covenants. Each of the Company and its
Subsidiaries (and where specifically indicated, Holdings) will, prior to the
Closing:
(a) maintain property damage, liability, interruption
and other insurance with respect to its assets, properties and business at
levels of coverage reasonable and customary in the industries in which the
Company and the Subsidiaries of the Company operate shall be maintained;
(b) furnish to the Buyer and its representatives all
financial, operating and other information concerning its businesses, assets
and properties (including, without limitation, information relating to Tax
matters) as the Buyer may reasonably request; and
(c) cooperate with the Buyer and provide all such
assistance as may be reasonably requested in connection with the arrangement of
the financing required for the consummation of the transactions contemplated
hereby.
(d) use any casualty insurance or condemnation
proceeds received by the Company and its Subsidiaries to repair or replace
property or assets of the Company and its Subsidiaries or retain such proceeds
in the Company and not distribute same to Holdings, and Holdings agrees that to
the extent it receives casualty insurance or condemnation proceeds related to
assets or property of the Company and its Subsidiaries it will cause such
proceeds to be paid over to the Company or its Subsidiaries. Holdings further
agrees to assign to the Company and its Subsidiaries at the Closing, the rights
to any pending casualty insurance proceeds not theretofore paid relating to
assets or property of the Company or its Subsidiaries under any umbrella
policies held by Holdings.
SECTION 5.4. All Reasonable Efforts. Subject to the terms and
conditions herein provided, each of the parties hereto agrees to use all
reasonable efforts to take, or cause to be taken, all action, and to do, or
cause to be done as promptly as practicable, all things necessary, proper and
advisable under applicable laws and regulations to consummate and make
effective as promptly as practicable the transactions contemplated by this
Agreement. If at any time after the Closing any further action is necessary or
desirable to carry out the purposes of this Agreement, including, without
limitation, the execution of additional instruments, the proper officers and
directors of each party to this Agreement shall take all such necessary action
contemplated by this Agreement, including without limitation the
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enforcement of the transactions contemplated by the Equity Commitment and the
Debt Commitment in accordance with their terms.
SECTION 5.5. Consents and Approvals. The parties hereto each will
cooperate with one another and use all reasonable efforts to prepare all
necessary documentation (including, without limitation, furnishing all
information required under the HSR Act and the Exon-Florio Amendment), to
effect promptly all necessary filings and to obtain all necessary permits,
consents, approvals, orders and authorizations of, or any exemptions by, all
third parties and Governmental Authorities necessary to consummate the
transactions contemplated by this Agreement. Each party will keep the other
parties apprised of the status of any inquiries made of such party by any
Governmental Authority or members of their respective staffs with respect to
this Agreement or the transactions contemplated hereby. Buyer shall pay the
required filing fees under the HSR Act, the German Competition Act, the
Canadian Bank Act and the Canadian Competition Act.
SECTION 5.6. No Solicitation. None of Holdings, the Company or any
Subsidiary of the Company nor any representative of Holdings, the Company or
any Subsidiary of the Company will directly or indirectly, through any officer,
director, agent or otherwise (a) solicit, initiate or encourage the submission
of inquiries, proposals or offers from any person relating to any acquisition
or purchase of assets or capital stock of the Company or any of its
Subsidiaries or any other transaction that would result in the transfer of
control of the Company or any of its Subsidiaries or an investment by any
person in the Company or any Subsidiaries (each an "Acquisition Proposal"), or
(b) participate in any discussions or negotiations regarding an Acquisition
Proposal or any of the foregoing or furnish to any person any information
concerning the Company or any of its Subsidiaries or any of the foregoing,
except to the extent required by law, or (c) otherwise cooperate in any way
with, or assist or participate in, facilitate or encourage, any effort or
attempt by any other person to do or seek any of the foregoing. Holdings and
the Company procure that they and their respective representatives shall
immediately cease and cause to be terminated any existing activities,
discussions or negotiations with any parties conducted heretofore with respect
to any Acquisition Proposal.
SECTION 5.7. Confidentiality. (a) Following the Closing, Holdings
agrees to retain in confidence, and to require its affiliates, directors,
officers, employees, consultants, professional representatives and agents
(collectively, "Holdings Representatives") to retain in confidence all
information concerning the Company and its Subsidiaries and further agrees
that, following the Closing, it will not use for its own benefit and will not
use or disclose to any third party, or permit the use or disclosure to any
third party of, any such information, except that Holdings may disclose the
information to those of the Holdings Representatives who need the information
for the proper performance of their assigned duties with respect to
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the consummation of the transactions contemplated hereby, the preparation of
Tax Returns, and any audit, judicial, administrative or other proceeding with
respect to any Taxes. In making such information available to such Holdings
Representatives, Holdings shall take any and all precautions necessary to
ensure that the Holdings Representatives use the information only as permitted
hereby. Notwithstanding the foregoing, such information may be disclosed (i)
if it is required by court order or decree or applicable law or in connection
with the preparation of Tax Returns, or any audit, administrative, judicial or
other proceeding in respect of Taxes, (ii) if it is ascertainable or obtained
from public or published information, or (iii) if it is received from a third
party not known to the recipient to be under an obligation to keep such
information confidential. If Holdings shall be required to make disclosure of
any such information by operation of law (other than in connection with the
preparation of Tax Returns or any audit, administrative, judicial or other
proceeding in respect of Taxes), Holdings shall give Buyer prior notice of the
making of such disclosure and shall use all reasonable efforts to afford Buyer
an opportunity to contest the making of such disclosure.
(b) After Closing, Holdings shall (at Buyer's request
and expense) (i) subject to clause (iii) below, enforce all confidentiality
agreements signed with third persons in connection with the transactions
contemplated hereby, (ii) subject to clause (iii) below, request that all
confidential information supplied to such persons be returned to the Company,
and (iii) assign to Buyer, to the extent assignable, all of Holdings rights
under such confidentiality agreements to the extent related to the Company and
its Subsidiaries.
SECTION 5.8. Public Announcements. Buyer and Holdings will consult
with each other and will mutually agree (the agreement of each party not to be
unreasonably withheld) upon the content and timing of any press release or
other public statements with respect to the transactions contemplated by this
Agreement and shall not issue any such press release or make any such public
statement prior to such consultation and agreement, except as may be required
by applicable law or by obligations pursuant to any listing agreement with any
securities exchange or any stock exchange regulations; provided, however, that
Buyer and Holdings will give prior notice to the other party of the content and
timing of any such press release or other public statement required by
applicable law or by obligations pursuant to any listing agreement with any
securities exchange or any stock exchange regulations.
SECTION 5.9. Disclosure Supplements. From time to time prior to the
Closing, Holdings will supplement or amend the Disclosure Schedule delivered in
connection herewith with respect to any matter which, if existing or occurring
at or prior to the date of this Agreement, would have been required to be set
forth or described in such Disclosure Schedule or which is necessary to correct
any information in such Disclosure Schedule which has been rendered inaccurate
thereby; provided, however, that any such amendment or supplement of the
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Disclosure Schedules will not be deemed in any way to amend or supplement the
Disclosure Schedules in connection with the satisfaction of the conditions
contained in Section 6.2(a) hereof. If the Closing occurs, the Disclosure
Schedules shall be deemed to be so supplemented or amended for all purposes of
this Agreement, including, without limitation, Sections 8.3.
SECTION 5.10. No Implied Representations or Warranties; Due
Diligence.
(a) Buyer hereby acknowledges and agrees that neither
Holdings nor the Company is making any representation or warranty
whatsoever, express or implied, except those representations and
warranties of Holdings explicitly set forth in this Agreement or in
the Disclosure Schedule or in any certificate contemplated hereby and
delivered by Holdings in connection herewith.
Without limiting the generality of the foregoing, and notwithstanding
any otherwise express representations and warranties made by Holdings in
Article III hereof, Holdings makes no representation or warranty to Buyer with
respect to:
(i) any projections, estimates or
budgets heretofore delivered to or made available to Buyer of future
revenues, expenses or expenditures or future results of operations; or
(ii) except as expressly covered by a
representation or warranty contained in Article III hereof, any other
information or documents (financial or otherwise) made available to
Buyer or its counsel, accountants or advisers with respect to the
Company and its Subsidiaries.
(b) Buyer acknowledges that: (i) it has had the
opportunity to visit with Holdings and meet with its respective officers and
other representatives to discuss the business and the assets, liabilities,
financial condition, cash flow and operations of the Company and its
Subsidiaries; and (ii) all materials and information requested by Buyer to date
have been provided to Buyer's reasonable satisfaction.
SECTION 5.11. No Solicitation of Employees. Holdings shall not (and
shall procure that no Subsidiary of Holdings shall) within a period of three
years after the Closing Date, directly or indirectly, hire any person who is a
managerial employee of the Company or any of its Subsidiaries on the Closing
Date; provided, however, that nothing herein shall prohibit Holdings or any of
its Subsidiaries from hiring any person who was a managerial employee of the
Company or its Subsidiaries on the Closing Date but whose employment is
thereafter terminated by the Company.
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SECTION 5.12. Reorganization Transactions. Holdings agrees to
indemnify Buyer against all liabilities which may attach to the Company or any
of its Subsidiaries in connection with the Reorganization Transactions;
provided, however, that indemnification in respect of Taxes shall be governed
by Section 10.13 hereof.
SECTION 5.13. Employee Matters.
(a) Buyer Indemnification. Buyer agrees that on and
after the Closing Date it will cause each of the Company and its Subsidiaries
to honor, without offset, deduction, counterclaims, interruptions or deferment
(other than withholdings under applicable law), all Employee Benefit Plans and
Employee Arrangements (other than the Employee Benefit Plans and Employee
Arrangements maintained by Holdings and listed on Section 5.8(a) of the
Disclosure Schedule, which are hereinafter referred to as the "Holdings
Employee Plans and Arrangements"), as they may hereafter be modified with the
consent of the other party or as otherwise permitted by such Employee Benefit
Plans and Employee Arrangements as in effect on the date hereof. Buyer shall
indemnify, defend and hold harmless Holdings from and against any and all
claims under the Employee Benefit Plans and Employee Arrangements which are not
Holdings Employee Plans and Arrangements, and any and all claims relating to
the employment or termination of employment of any employee of the Company and
its Subsidiaries, and any related costs and liabilities, regardless of whether
such claims and related costs and liabilities were made or incurred before, on
or after the Closing Date.
(b) Holdings Indemnification. Holdings agrees that
on and after the Closing Date it will honor, without offset, deduction,
counterclaims, interruptions or deferment (other than withholdings under
applicable law), all Holdings Employee Plans and Arrangements. Holdings shall
indemnify, defend and hold harmless Buyer from and against any and all claims
under the Holdings Employee Plans and Arrangements, and any related costs and
liabilities, including any liabilities arising by reason of the Company's (or
any of its Subsidiary's) affiliation with any entity which is a member of its
Controlled Group (defined as any entity which is a member of a controlled group
of organizations within the meaning of Section 414(b), (c), (m) or (o) of the
Code) as of the date hereof, regardless of whether such claims and related
costs and liabilities were made before, on or after the Closing Date.
(c) Employee Benefit Plans. With respect to the
United States employees of the Company and its Subsidiaries (the "U.S.
Employees"):
(i) Effective as of the Closing Date,
Buyer shall have health insurance coverage in place for the benefit of
U.S. Employees with no pre-existing condition exclusions and shall
credit such employees with any co-payments and deductibles made in the
current plan year. In its discretion, Buyer shall also provide
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U.S. Employees with other employee benefits. Buyer shall be
responsible for complying with the group health plan continuation
coverage requirements of Part 6 of Title I of ERISA with respect to
any U.S. Employees (and their eligible dependents) who experience a
qualifying event on or after to the Closing Date.
(ii) Holdings shall be responsible for
complying with the group health plan continuation coverage
requirements of Part 6 of Title I of ERISA with respect to any U.S.
Employees (and their eligible dependents) who experience a qualifying
event prior to the Closing Date.
(iii) Holdings shall ensure that the U.S.
Employees who participate in the Holdings Cafeteria Plan as of the
Closing Date may continue to participate in such Plan by making
after-tax contributions, at least through December 31, 1997.
(iv) With respect to the incentive plans,
management bonus plan and health and welfare plans participated in by
U.S. Employees, Holdings shall ensure that the Company's books contain
a reserve for accrued but unpaid benefits under such plans as of the
Closing Date, in accordance with GAAP, or shall pay to the U.S.
Employees all amounts accrued under such plans as of the Closing Date.
(d) Indemnification and Insurance. Buyer agrees that
all rights to indemnification or exculpation now existing in favor of the
employees, agents, directors or officers of the Company and its Subsidiaries
(the "Company Indemnified Parties") as provided in their respective
Certificates or Articles of Incorporation or Bylaws (or other comparable
governing documents), as provided in an agreement between a Company Indemnified
Party and the Company or any of the Company's Subsidiaries (the
"Indemnification Agreements") or otherwise in effect on the date hereof shall
continue in full force and effect for a period of not less than six years from
the Closing Date; provided, however, that, in the event any claim or claims are
asserted or made within such six-year period, all rights to indemnification in
respect of any such claim or claims shall continue until disposition of any and
all such claims. Any determination required to be made with respect to whether
a Company Indemnified Party's conduct complies with the standards set forth in
the Certificate or Articles of Incorporation or Bylaws (or other comparable
governing documents) of the Company or any of the Company's Subsidiaries or
under the Indemnification Agreements or otherwise shall be made by independent
counsel selected by the Company Indemnified Party reasonably satisfactory to
Buyer (whose fees and expenses shall be paid by the Company).
Buyer shall cause to be maintained (including, without
limitation, through the payment of any premium for "tail" coverage) in effect
for not less than six years from the Closing Date the current policies of the
directors' and officers' liability insurance maintained
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by Holdings for the benefit of the Company Indemnified Parties; provided that
Buyer or the Company may substitute therefor policies of at least the same
coverage containing terms and conditions which are no less advantageous and
provided that such substitution shall not result in any gaps or lapse of
coverage with respect to matters occurring prior to the Closing Date to the
extent currently available.
After the Closing, Holdings shall have no further obligation
to maintain any of the insurance currently provided with respect to the Company
and its Subsidiaries.
(e) Binding on Successors. In the event the Company
or any of its successors or assigns (i) consolidates with or merges into any
other person and shall not be the continuing or surviving corporation or entity
of such consolidation or merger or (ii) transfers all or substantially all of
its properties, assets or stock to any person, then and in each such case,
proper provision shall be made so that the successors and assigns of the
Company (or their successors and assigns) shall assume the obligations set
forth in this Section 5.13.
SECTION 5.14. Intercompany Obligations. Effective immediately prior
to the Closing, all Intercompany Obligations owing to Holdings and its
Subsidiaries (other than the Company and its Subsidiaries), by the Company and
its Subsidiaries, will be contributed to the capital of the Company (after
offsetting any Intercompany Obligations owing to the Company and its
Subsidiaries by Holdings and its Subsidiaries (other than the Company and its
Subsidiaries) and such Intercompany Obligations shall be thereby terminated.
Similarly, any Intercompany Obligations owing to the Company and its
Subsidiaries by Holdings and its Subsidiaries (other than the Company and its
Subsidiaries) shall be distributed to Holdings by the Company and its
Subsidiaries after offsetting any Intercompany Indebtedness owing to Holdings
and its Subsidiaries (other than the Company and its Subsidiaries) by the
Company and its Subsidiaries, and such Intercompany Obligations shall be
thereby terminated. Any holder of a note or other evidence of indebtedness,
obligation or account, if any, that is thereby deemed terminated in accordance
with this Section 5.14 shall surrender such note or other evidence, if any, to
the obligor thereon.
SECTION 5.15. Assignment of Lease. On or prior to the Closing, DSC
will assign its rights under, and Thermadyne Industries, Inc. will assume all
of DSC's obligations under, that certain Lease Agreement dated February 15,
1985, by and between Corporate Property Associates 6 and DSC, as amended,
relating to the City of Industry Site and will use its reasonable efforts to
obtain the consent of the lessor to such assignment.
SECTION 5.16. Solvency After the Closing. After the Closing, Buyer
agrees that it shall not, and that it shall cause the Company and its
Subsidiaries not to, take or cause to be taken or omit to take any action which
could result in a determination pursuant to state or
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federal law that, after giving effect to the transactions contemplated hereby
(or after giving effect to such transactions and to such other subsequent
actions or omissions), the Company or any of its Subsidiaries (i) was insolvent
at the time of the Closing, (ii) became insolvent as a result of the
transactions contemplated hereby, (iii) was left with unreasonably small
capital with which to engage in its business or (iv) incurred debts beyond its
ability to pay such debts as they mature, such that the payment of the Purchase
Price may be deemed a "fraudulent conveyance" or impermissible dividend or
distribution under applicable law or otherwise subject to claims of certain
creditors of the Company or any of its Subsidiaries or its trustees in a
bankruptcy proceeding.
SECTION 5.17. Covenant Not to Compete.
(a) Neither Holdings nor any Subsidiary of Holdings
shall engage in the Protected Business for a period of five years after the
Closing Date; provided, however, that nothing herein shall preclude Holdings or
any Subsidiary of Holdings from acquiring, or acquiring an equity interest in,
any person (an "Acquired Person") which, together with its Subsidiaries,
derives 10% or less but not more than $15 million of its consolidated revenues
from the Protected Business and continuing the business operations of such
Acquired Person. Buyer and Holdings only intend to limit Holdings or its
Subsidiaries' current or future business activities, as expressly set forth in
this Section 5.17(a) but not otherwise. For purposes of this Section 5.17(a),
the term "Protected Business" means the business of designing, manufacturing
and marketing wear resistant components and Designated Consumables Business.
"Designated Consumables Business" means the business of designing,
manufacturing and marketing wear resistant and hardfacing consumables,
including powders, wires, electrodes and rods, except to the extent Stoody
Company, Comweld Pty. Ltd. or any other Subsidiary of Holdings is currently
engaged in such business; it being acknowledged, without limiting the foregoing
exception, that Holdings or its Subsidiaries currently resells powders and
designs, manufactures and markets rods, wires and electrodes.
(b) The parties agree that the terms of the covenant
contained in Section 5.17(a) are fair and reasonable in light of Buyer's plans
for the Protected Business and are necessary to accomplish the full transfer of
the goodwill and other intangible assets contemplated hereby. If, as a result
of a dispute between the parties as to this covenant, a court refuses to
enforce this covenant not to compete for any reason, the parties shall request
such court to reform this covenant (for purposes of application only in the
jurisdiction in which such dispute arises) to the extent necessary to permit
its enforcement.
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ARTICLE VI
CLOSING CONDITIONS
SECTION 6.1. Conditions to Each Party's Obligations under this
Agreement. The respective obligations of each party under this Agreement shall
be subject to the fulfillment at or prior to the Closing of the following
conditions:
(a) Any waiting period applicable to the consummation
of the transactions contemplated hereby under the HSR Act, the Exon-Florio
Amendment, the German Competition Act, the Canadian Bank Act and the Canadian
Competition Act shall have expired or been terminated;
(b) No injunction, restraining order or other ruling
or order issued by any court of competent jurisdiction or Governmental
Authority or other legal restraint, or prohibition preventing the consummation
of the transactions contemplated hereby shall be in effect and no statute,
rule, regulation or executive order shall have been promulgated or enacted by
any Governmental Authority and remain in effect that prevents the consummation
of the transactions contemplated hereby; and
(c) No action or proceeding shall be pending by or
before any court or other governmental body or agency seeking to restrain,
prohibit or invalidate the transactions contemplated by this Agreement.
SECTION 6.2. Conditions to the Obligations of Buyer under this
Agreement. The obligations of Buyer under this Agreement shall be further
subject to the satisfaction, at or prior to the Closing, of the following
conditions:
(a) Each of the covenants, agreements and obligations
of Holdings and the Company required to be performed by them at or prior to the
Closing pursuant to this Agreement shall have been duly performed and complied
with in all material respects, and the representations and warranties of
Holdings contained in this Agreement shall be true and correct in all material
respects as of the date of this Agreement and as of the Closing as though made
at and as of the Closing (except as to any representation or warranty which
specifically relates to an earlier date), and Buyer shall have received a
certificate certifying the satisfaction of the conditions in this Section
signed by an officer of Holdings and an officer of the Company;
(b) Any and all permits, consents, waivers,
clearances, approvals and authorizations of all third parties and Governmental
Authorities that are necessary or advisable in connection with the consummation
of the transactions contemplated hereby shall have been obtained, other than
items which, if not obtained, would not have a Material Adverse Effect;
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(c) No Material Adverse Effect, individually or in
the aggregate, shall have occurred with respect to the Company and its
Subsidiaries subsequent to the date of this Agreement, except to the extent the
same results from changes in the economy in general or normal price
fluctuations in the wear resistance industry; and
(d) Buyer shall have received the proceeds of the
debt financing set forth in the Debt Commitment; provided, however, that it
shall be a condition precedent to Buyer's reliance on this condition that
Holdings shall have received payment of the sum of $250,000 in cash in
accordance with the terms of that certain letter agreement of even date
herewith among Morgan Grenfell Development Capital Limited, Holdings and the
Company.
SECTION 6.3. Conditions to the Obligations of Holdings under this
Agreement. The obligations of Holdings under this Agreement shall be further
subject to the satisfaction, at or prior to the Closing, of the following
conditions:
(a) Each of the obligations of Buyer required to be
performed by it at or prior to the Closing pursuant to the terms of this
Agreement shall have been duly performed and complied with in all material
respects, and the representations and warranties of Buyer contained in this
Agreement shall be true and correct in all material respects as of the date of
this Agreement and as of the Closing Date as though made at and as of the
Closing Date (except as to any representation or warranty which specifically
relates to an earlier date), and Holdings shall have received a certificate to
that effect signed by an officer of Buyer; and
(b) Any and all permits, consents, waivers,
clearances, approvals and authorizations of all Governmental Authorities which
are necessary in connection with the consummation of the transactions
contemplated hereby shall have been obtained, other than items which, if not
obtained, would not have a Material Adverse Effect.
ARTICLE VII
CLOSING
SECTION 7.1. Closing. The closing of the transactions contemplated
by this Agreement (the "Closing") shall take place at the offices of Weil,
Gotshal & Manges LLP, 767 Fifth Avenue, New York, New York 10153, subject to
the satisfaction or waiver of the conditions set forth in Article VI, as soon
as practicable after the date hereof on the last business day of a month and in
any event not later than October 31, 1997, or at such other time and place and
on such other date as Buyer and Holdings shall agree (the "Closing Date"). At
the Closing:
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(a) Holdings shall deliver or cause to be delivered
to Buyer the following:
(i) the certificate described in Section
6.2(a);
(ii) a certificate or certificates
representing all of the Shares in appropriate form for transfer to
Buyer duly endorsed in blank or accompanied by stock powers duly
executed in blank;
(iii) a copy of all corporate resolutions
authorizing the execution, delivery and performance of this Agreement,
and the consummation of the transactions contemplated herein,
accompanied by the certification of the Secretaries of Holdings and
the Company to the effect that such resolutions are in full force and
effect and have not been amended, modified or rescinded;
(iv) the minute books, corporate seals
and stock transfer records of the Company and its Subsidiaries;
(v) the Transition Services Agreement,
executed by Holdings;
(vi) all documents, including without
limitation, executed UCC-3 termination statements, as are necessary to
release all liens on the Company's assets, the Shares and the capital
stock and assets of the Company's Subsidiaries which secure the Senior
Debt;
(vii) resignations of directors of the
Company and each Subsidiary listed in Section 7.1(a)(iv) of the
Disclosure Schedule;
(viii) an opinion, dated the Closing Date,
of Weil, Gotshal & Manges LLP, counsel to Holdings and the Company,
addressing the matters set forth in Annex A hereto and otherwise in
form and substance reasonably satisfactory to the Buyer; and
(ix) all other previously undelivered
documents required to be delivered by Holdings to Buyer at or prior to
the Closing pursuant to the terms of this Agreement and such other
documents, certificates and information as Buyer may reasonably
request.
(b) Buyer shall deliver or cause to be delivered to
Holdings the following:
(i) the certificate described in Section
6.3(a);
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(ii) all other previously undelivered
documents required to be delivered by Buyer to Holdings at or prior to
the Closing pursuant to the terms of this Agreement;
(iii) an opinion, dated the Closing Date,
from Simpson Thacher & Bartlett, special U.S. counsel to the Buyer,
addressing the matters set forth in Annex B hereto and otherwise in
form and substance reasonably satisfactory to Holdings;
(iv) an opinion, dated the Closing Date,
from Allen & Overy, special U.K. counsel to the Buyer, addressing the
matters set forth in Annex C hereto and otherwise in form and
substance reasonably satisfactory to Holdings; and
(v) the Transition Services Agreement
executed by Buyer.
(c) Buyer shall pay to Holdings, by wire transfer of
immediately available funds, the Purchase Price immediately following the
delivery of the Shares pursuant to Section 7.1(a)(ii).
ARTICLE VIII
SURVIVAL AND INDEMNIFICATION
SECTION 8.1. Survival of Representations, Warranties and Covenants.
(a) Except as to the representations and warranties contained in Section 3.23,
which shall survive the Closing until the expiration of four years from the
Closing Date, and the representations and warranties contained in Section 3.16,
which shall expire on the Closing Date, the representations and warranties of
Holdings contained in this Agreement shall survive the Closing until the
expiration of 20 months from the Closing Date. Any claim for indemnification
with respect to any of such matters shall be asserted by notice given as herein
provided relating thereto within such specified period of survival. Any claim
for Indemnifiable Losses asserted within such period of survival as herein
provided will be timely made for purposes hereof.
(b) Unless a specified period is set forth in this
Agreement (in which event such specified period will control), the covenants in
this Agreement will survive the Closing and remain in effect indefinitely.
SECTION 8.2. Limitations on Liability. (a) For purposes of this
Agreement, (i) "Indemnity Payment" means any amount of Indemnifiable Losses
required to be paid
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pursuant to this Agreement, (ii) "Indemnitee" means any person or entity
entitled to indemnification under this Agreement, (iii) "Indemnifying Party"
means any person or entity required to provide indemnification under this
Agreement, (iv) "Indemnifiable Losses" means any and all damages, losses,
liabilities, obligations, costs and expenses, and any and all claims, demands
or suits (by any person or entity, including without limitation any
Governmental Authority), including without limitation the costs and expenses of
investigating, preparing, defending against or prosecuting, any and all
actions, suits, proceedings, demands, assessments, judgments, settlements and
compromises relating thereto and including reasonable attorneys' fees and
expenses in connection therewith, and (v) "Third Party Claim" means any claim,
action or proceeding made or brought by any person or entity who or which is
not a party to this Agreement or an affiliate of a party to this Agreement.
(b) Notwithstanding any other provision hereof (other
than Sections 8.7 and 10.13) or of any applicable Law, (i) no Indemnitee will
be entitled to make a claim against an Indemnifying Party in respect of
Indemnifiable Losses under Sections 8.3(a)(i), 8.3(a)(iii) or 8.3(b)(i) unless
and until the aggregate amount of such Indemnifiable Losses incurred by the
Indemnitee in respect of any individual event or occurrence, or related series
of events or occurrences, giving rise to such Indemnifiable Losses exceeds
$10,000, in which event (subject to the following provisions), such Indemnitee
may assert its right to indemnification hereunder to the full extent of its
Indemnifiable Losses in respect thereof, (ii) no Indemnitee will be entitled to
make a claim against an Indemnifying Party under Sections 8.3(a)(i),
8.3(a)(iii) or 8.3(b)(i) unless and until the aggregate amount of claims
asserted for Indemnifiable Losses (which aggregate amount shall not include any
Indemnifiable Losses with respect to which an Indemnitee is not entitled to
make a claim against an Indemnifying Party as a result of the limitations of
the preceding clause (i)) (A) in the case of Sections 8.3(a)(i) or 8.3(b)(i),
as applicable, exceeds $1,000,000 or (B) in the case of Section 8.3(a)(iii),
exceeds $1,000,000 (the applicable of the foregoing being herein called the
"Deductible"), in which event the Indemnitee will be entitled to make a claim
against the Indemnifying Party only to the extent the amount of Indemnifiable
Losses exceeds such Deductible, (iii) indemnification for Indemnifiable Losses
under Section 8.3(a)(iv) shall in no event exceed the Purchase Price, (iv)
cumulative indemnification for Indemnifiable Losses under Sections 8.3(a)(i) or
8.3(b)(i), as applicable, shall in no event exceed $20,000,000, (v) cumulative
indemnification for Indemnifiable Losses under Section 8.3(a)(iii) shall in no
event exceed $10,000,000, (vi) without expanding the limitations otherwise
applicable in clauses (i), (ii), (iii), (iv) and (v) of this Section 8.2(b), in
no event shall cumulative indemnification for Indemnifiable Losses under all
clauses of Section 8.3(a) exceed the Purchase Price, and (vii) no claim for any
breach of any representation or warranty may be made by Buyer or Holdings
(whether in tort, contract or otherwise) except pursuant to Section 8.3.
Nothing herein contained shall be construed to limit the indemnification
provided by Holdings or Buyer under Sections 8.7 and 10.13.
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SECTION 8.3. Indemnification. (a) Subject to Sections 8.1, 8.2 and
8.4(g), Holdings agrees to indemnify, defend and hold harmless Buyer and its
affiliates and their respective directors, officers, partners, employees,
agents and representatives and each person who controls Buyer from and against:
(i) any and all Indemnifiable Losses to the extent
relating to, resulting from or arising out of any breach of
representation or warranty of Holdings or the Company under the terms
of this Agreement (other than the representations and warranties of
Holdings in Sections 3.4, 3.16 and 3.23 and any other representations
or warranties relating to Environmental Laws and Hazardous Materials);
(ii) any and all Indemnifiable Losses to the extent
relating to, resulting from or arising out of any breach or
nonfulfillment of any agreement, covenant or condition of Holdings or
the Company under the terms of this Agreement;
(iii) eighty-five percent (85%) of any and all
Indemnifiable Losses to the extent relating to, resulting from or
arising out of any breach of any representation or warranty of
Holdings or the Company under the terms of Section 3.23 and any other
representations and warranties relating to Environmental Laws and
Hazardous Materials; provided that: (i) whether such representation
or warranty has been breached for purposes of this clause (iii) of
Section 8.3(a) shall be determined without regard to any matters
disclosed in Section 3.23 of the Disclosure Schedule and any matters
identified in the Environmental Reports delivered to the Buyer, and
without regard to any qualification of such representation or warranty
by Material Adverse Effect, materiality, or the knowledge of Holdings;
provided, however, Holdings shall have no obligation hereunder for any
costs incurred by the Buyer, the Company or any Subsidiary that were
not reasonably cost-effective and reasonably necessary to satisfy or
settle, or reasonable and prudent to minimize, obligations under
Environmental Laws or to obtain regulatory approval thereunder; and
(iv) any and all Indemnifiable Losses to the extent
relating to, resulting from or arising out of any breach of
representations and warranties of Holdings or the Company under the
terms of Section 3.4.
(b) Buyer agrees to indemnify, defend and hold
harmless Holdings and its affiliates and their respective directors, officers,
partners, employees, agents or representatives from and against any and all
Indemnifiable Losses to the extent relating to, resulting from or arising out
of:
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(i) any breach of representation or warranty of Buyer
under the terms of this Agreement; and
(ii) any breach or nonfulfillment of any agreement or
covenant of Buyer under the terms of this Agreement.
SECTION 8.4. Defense of Claims. (a) If any Indemnitee receives
notice of assertion or commencement of any Third Party Claim against such
Indemnitee with respect to which an Indemnifying Party is obligated to provide
indemnification under this Agreement, the Indemnitee will give such
Indemnifying Party reasonably prompt written notice thereof, but in any event
not later than 30 calendar days after receipt of such notice of such Third
Party Claim. Such notice will describe the Third Party Claim in reasonable
detail, will include copies of all material written evidence thereof and will
indicate the estimated amount, if reasonably practicable, of the Indemnifiable
Loss that has been or may be sustained by the Indemnitee. The Indemnifying
Party will have the right to participate in, or, by giving written notice to
the Indemnitee, to assume, the defense of any Third Party Claim at such
Indemnifying Party's own expense and by such Indemnifying Party's own counsel
(such counsel to be reasonably satisfactory to the Indemnitee), and the
Indemnitee will cooperate in good faith in such defense.
(b) If, within thirty calendar days after giving
notice of a Third Party Claim to an Indemnifying Party pursuant to Section
8.4(a), an Indemnitee receives written notice from the Indemnifying Party that
the Indemnifying Party has elected to assume the defense of such Third Party
Claim as provided in the last sentence of Section 8.4(a), the Indemnifying
Party will not be liable for any legal expenses subsequently incurred by the
Indemnitee in connection with the defense thereof; provided, however, that if
the Indemnifying Party fails to take reasonable steps necessary to defend
diligently such Third Party Claim (including the retention of counsel
reasonably satisfactory to the Indemnitee) within thirty calendar days after
receiving written notice from the Indemnitee or if the Indemnifying Party has
not undertaken fully to indemnify the Indemnitee in respect of all
Indemnifiable Losses relating to the matter, the Indemnitee may assume its own
defense, and the Indemnifying Party will be liable for all reasonable costs or
expenses paid or incurred in connection therewith. Subject to Section 10.13(h)
hereof, the Indemnifying Party will not enter into any settlement of any Third
Party Claim without the prior written consent of the Indemnitee, which consent
shall not be unreasonably withheld. If a firm offer is made to settle a Third
Party Claim without leading to liability or the creation of a financial or
other obligation on the part of the Indemnitee for which the Indemnitee is not
entitled to indemnification hereunder or any other Material Adverse Effect on
the Company and the Indemnifying Party desires to accept and agree to such
offer, the Indemnifying Party will give written notice to the Indemnitee to
that effect. If the Indemnitee fails to consent to such firm offer within ten
calendar days after its receipt of
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such notice, the Indemnitee may continue to contest or defend such Third Party
Claim and, in such event, the maximum liability of the Indemnifying Party as to
such Third Party Claim will not exceed the amount of such settlement offer,
plus costs and expenses paid or incurred by the Indemnitee through the end of
such ten calendar day period.
(c) A failure to give timely notice or to include any
specified information in any notice as provided in Sections 8.4(a) or 8.4(b)
will not affect the rights or obligations of any party hereunder except and
only to the extent that, as a result of such failure, any party which was
entitled to receive such notice was deprived of its right to recover any
payment under its applicable insurance coverage or was otherwise damaged as a
result of such failure.
(d) The Indemnifying Party will have a period of 30
calendar days within which to respond in writing to any claim by an Indemnitee
on account of an Indemnifiable Loss which does not result from a Third Party
Claim. If the Indemnifying Party does not so respond within such 30 calendar
day period, the Indemnifying Party will be deemed to have rejected such claim,
in which event the Indemnitee will be free to pursue such remedies as may be
available to the Indemnitee on the terms and subject to the provisions of this
Article VIII.
(e) If the amount of any Indemnifiable Loss, at any
time subsequent to the making of an Indemnity Payment, is reduced by recovery,
settlement or otherwise under or pursuant to any insurance coverage, or
pursuant to any claim, recovery, settlement or payment by or against any other
entity, the amount of such reduction, less any costs, expenses, premiums or
taxes incurred in connection therewith will promptly be repaid by the
Indemnitee to the Indemnifying Party. Upon making any Indemnity Payment the
Indemnifying Party will, to the extent of such Indemnity Payment, be subrogated
to all rights of the Indemnitee against any third party that is not an
affiliate of the Indemnitee in respect of the Indemnifiable Loss to which the
Indemnity Payment related; provided, however, that (i) the Indemnifying Party
shall then be in compliance with its obligations under this Agreement in
respect of such Indemnifiable Loss and (ii) until the Indemnitee recovers fully
payment of its Indemnifiable Loss, any and all claims of the Indemnifying Party
against any such third party on account of said Indemnity Payment will be
subrogated and subordinated in right of payment to the Indemnitee's rights
against such third party. Without limiting the generality or effect of any
other provision hereof, each such Indemnitee and Indemnifying Party will duly
execute upon request all instruments reasonably necessary to evidence and
perfect the above-described subrogation and subordination rights.
(f) With respect to a Third Party Claim for which
Holdings is the Indemnifying Party, Buyer shall, and shall cause each
Indemnitee to, make available to Holdings and its representatives all books and
records of Buyer and the Indemnitees relating to such Third Party Claim and
shall render to Holdings such assistance and access to records and
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the representatives of Buyer and the Indemnitees as Holdings and its
representatives may reasonably request, except that Buyer shall not be required
to make available to Holdings and its representatives any books, records,
documents or other information that Buyer reasonably determines to be
confidential or subject to attorney-client privilege unless and until Holdings
shall have entered into such agreements as Buyer reasonably deem to be
necessary in light of all surrounding circumstances (including, without
limitation, Holdings' need for information in connection with the investigation
or defense of a Third Party Claim) to protect such confidentiality or
privilege.
(g) In calculating the amount of any claim for
indemnification pursuant to this Article VIII or pursuant to Section 10.13,
Indemnifiable Losses shall be reduced by any Tax Benefit actually realized by
the Indemnitee or any affiliate of the Indemnitee in connection with or
relating to such Indemnifiable Loss, or in the event that any Tax Benefit is
actually realized subsequent to the indemnification payment, the Indemnitee
shall pay to the Indemnifying Party such Tax Benefit at such time as such Tax
Benefit is actually realized. The term "Tax Benefit" means the amount by which
any Taxes of the Indemnitee or any affiliate thereof (the "Benefitted Party")
are reduced by any loss, deduction, refund, credit or other Tax benefit,
computed based upon a comparison of the Benefitted Party's liability for Taxes
with and without such loss, deduction, refund, credit or other Tax benefit and
includes, without limitation, an Offsetting Tax Benefit. The term "Offsetting
Tax Benefit" means the amount of any Tax Benefit realized by the Benefitted
Party in one or more subsequent taxable periods (including, without limitation,
a taxable period ending after the Closing Date) attributable to or relating to
an adjustment with respect to Taxes in a prior taxable period. In the event
that a final determination of an adjustment by a taxing authority results in a
disallowance of a deduction, loss, refund, credit or other Tax benefit with
respect to which a Tax Benefit or Offsetting Tax Benefit was previously paid or
taken into account, the Indemnifying Party shall refund to the Indemnitee any
resulting reduction in the Tax Benefit or Offsetting Tax Benefit.
(h) Nothing herein contained is intended to limit any
rights of the Company's Subsidiary, Deloro Stellite Company, Inc. ("Deloro
Stellite") to indemnification under and respecting the "Fume Litigation Claim"
pursuant to Article VI and Section 7.15 of that certain Acquisition Agreement,
dated as of June 30, 1997, between Deloro Stellite, Stoody Company and
Holdings.
SECTION 8.5. Adjustment to Purchase Price. Buyer and Holdings agree
that any Indemnity Payment hereunder shall be treated as an adjustment to the
Purchase Price.
SECTION 8.6. Exclusive Remedy. Buyer and Holdings agree that, to the
fullest extent permitted by law, the sole and exclusive remedy of Buyer and
Holdings after the
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Closing with respect to any claim or cause of action asserted by Buyer or
Holdings relating to or arising from breaches of the representations,
warranties or covenants of the other party contained in this Agreement or any
document, list, schedule, exhibit, certificate or other instrument furnished or
to be furnished by or on behalf of such other party or any of its
representatives in connection with the transactions contemplated by this
Agreement shall be limited to the rights of Buyer and Holdings under, and shall
be subject to the terms and conditions of, this Article VIII and Section 10.13.
SECTION 8.7. City of Industry Site. Notwithstanding anything to the
contrary in this Agreement, Holdings agrees to indemnify, defend and hold
harmless Buyer and its affiliates (including, without limitation, the Company)
and their respective directors, officers, partners, employees, agents and
representatives from and against any and all Indemnifiable Losses arising out
of or related to the presence of Hazardous Materials at, on or under the City
of Industry Site, including, but not limited to, any obligations under or as a
result of Environmental Laws to investigate or remediate soil and/or
groundwater contamination at the City of Industry Site or the San Gabriel
Valley Superfund Site. This obligation hereunder shall not be subject to any
of the limitations set forth in Sections 8.1, 8.2 or 8.3(a)(iii).
ARTICLE IX
TERMINATION AND ABANDONMENT
SECTION 9.1. Termination. This Agreement may be terminated and the
transactions contemplated hereby may be abandoned at any time prior to the
Closing:
(a) by mutual written consent of Holdings and Buyer;
or
(b) by either Holdings or Buyer:
(i) if a court of competent jurisdiction
or Governmental Authority shall have issued an order, decree or ruling
or taken any other action (which order, decree or ruling the parties
hereto shall use their best efforts to lift), in each case permanently
restraining, enjoining or otherwise prohibiting the transactions
contemplated by this Agreement, and such order, decree, ruling or
other action shall have become final and nonappealable; or
(ii) if the Closing shall not have
occurred on or before October 31, 1997; provided, however, that (A)
each of Holdings and Buyer shall have the right, in their sole
discretion, to extend the time period in this Section 9.1(b)(ii) an
additional
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thirty days in the aggregate and (B) the right to terminate this
Agreement shall not be available to any party whose breach or
non-performance of this Agreement has been the cause of, or resulted
in, the failure of the Closing to occur on or before such date.
(c) by Holdings (if Holdings is not then in breach of
any term of this Agreement), if the Buyer shall (i) fail to perform in any
material respect its agreements contained herein required to be performed on or
prior to the Closing, or (ii) materially breach any of its representations or
warranties contained herein, which failure or breach is not cured within ten
days after Holdings has notified the Buyer of its intent to terminate this
Agreement pursuant to this subparagraph, or (iii) fail, on or before July 25,
1997, to deliver to Holdings a new unconditional Debt Commitment or modify the
existing Debt Commitment so that there shall be no conditions to funding
thereunder other than the closing of this Agreement, apart from payment of the
Purchase Price, upon fulfillment of the conditions set forth in Section 6.1 and
Sections 6.2(a), 6.2(b) and 6.2(c), which failure is not cured on or before
August 1, 1997;
(d) by the Buyer (if the Buyer is not then in breach
of any term of this Agreement), if Holdings or the Company shall (i) fail to
perform in any material respect its respective agreements contained herein
required to be performed on or prior to the Closing, or (ii) materially breach
any or their respective representations or warranties contained herein, which
failure or breach is not cured within ten days after the Buyer has notified
Holdings of its intent to terminate this Agreement pursuant to this
subparagraph;
SECTION 9.2. Procedure and Effect of Termination. In the event of
termination and abandonment of the transactions contemplated hereby pursuant to
Section 9.1, written notice thereof shall forthwith be given to the other
parties to this Agreement and this Agreement shall terminate and the
transactions contemplated hereby shall be abandoned, without further action by
any of the parties hereto. If this Agreement is terminated as provided herein:
(a) upon request therefor, each party will redeliver
all documents, work papers and other material of any other party relating to
the transactions contemplated hereby, whether obtained before or after the
execution hereof, to the party furnishing the same; and
(b) no party hereto shall have any liability or
further obligation to any other party to this Agreement resulting from such
termination except (i) that the provisions of this Section 9.2 and the proviso
of Section 9.1(b)(ii) shall remain in full force and effect and (ii) no party
waives any claim or right against a breaching party to the extent that such
termination results from the breach by a party hereto of any of its
representations, warranties, covenants or agreements set forth in this
Agreement.
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ARTICLE X
MISCELLANEOUS PROVISIONS
SECTION 10.1. Amendment and Modification. This Agreement may be
amended, modified or supplemented by a written instrument signed by the parties
hereto.
SECTION 10.2. Waiver of Compliance; Consents. Any failure of Buyer,
on the one hand, or of Holdings or the Company, on the other hand, to comply
with any obligation, covenant, agreement or condition contained herein may be
waived in writing by Holdings or Buyer, respectively, but such waiver or
failure to insist upon strict compliance with such obligation, covenant,
agreement or condition shall not operate as a waiver of, or estoppel with
respect to, any other failure.
SECTION 10.3. Validity. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provisions of this Agreement, which shall remain in full force and
effect.
SECTION 10.4. Expenses and Obligations. All costs and expenses
incurred in connection with the consummation of the transactions contemplated
by this Agreement by Buyer shall be paid by Buyer, and all costs and expenses
incurred in connection with the consummation of the transactions contemplated
by this Agreement by Holdings or the Company shall be paid by Holdings.
SECTION 10.5. Parties in Interest. This Agreement shall be binding
upon and, except as provided below, inure solely to the benefit of each party
hereto, and nothing in this Agreement, except as set forth below, express or
implied, is intended to confer upon any other person any rights or remedies of
any nature whatsoever under or by reason of this Agreement.
SECTION 10.6. Notices. All notices and other communications
hereunder shall be in writing and shall be deemed given upon the earlier of
delivery thereof if by hand or upon receipt if sent by mail (registered or
certified, postage prepaid, return receipt requested) or on the second next
business day after deposit if sent by a recognized overnight delivery service
or upon transmission if sent by telecopy or facsimile transmission (with
request of assurance of receipt in a manner customary for communication of such
type) as follows:
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(a) If to Buyer, to:
Morgan Grenfell Development Capital Limited
23 Great Winchester Street
London EC2P 2AX
Attention: Jonathan Derry-Evans
Facsimile No.: 011-44-171-545-5282
with a copy to:
Allen & Overy
One New Change
Attention: Alan Paul
Facsimile No.: 011-44-171-330-9999
with a copy to:
Simpson Thacher & Bartlett
99 Bishopsgate
21st Floor
London EC2M 3YH
Attention: Alan Klein
Facsimile No.: 011-44-171-422-4022
(b) If to Holdings or the Company, to:
Thermadyne Holdings Corporation
101 South Hanley Road
St. Louis, Missouri 63105
Attention: James H. Tate
Stephanie N. Josephson
Facsimile No.: (314) 746-2374
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and
Weil, Gotshal & Manges LLP
100 Crescent Court, Suite 1300
Dallas, Texas 75201
Attention: R. Scott Cohen
Facsimile No.: (214) 746-7777
SECTION 10.7. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York without regard
to the conflicts-of-laws rules thereof.
SECTION 10.8. Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same agreement.
SECTION 10.9. Headings. The article and section headings contained
in this Agreement are solely for the purpose of reference, are not part of the
agreement of the parties and shall not affect in any way the meaning or
interpretation of this Agreement.
SECTION 10.10. Entire Agreement. This Agreement and the Disclosure
Schedule embody the entire agreement and understanding of the parties hereto in
respect of the subject matter contained herein or therein. There are no
agreements, representations, warranties or covenants other than those expressly
set forth herein or therein. This Agreement and the Disclosure Schedule
supersede all prior agreements and understandings between the parties with
respect to such subject matter.
SECTION 10.11. Assignment. This Agreement shall not be assigned by
operation of law or otherwise, provided that the Buyer may assign or transfer
(i) rights and obligations under this Agreement to one or more of the
affiliates of the Buyer and (ii) by way of security, its rights under this
Agreement to an agent or security trustee for the providers of debt financing
to Buyer in connection with the transactions contemplated hereby.
SECTION 10.12. Jurisdiction and Venue. The parties hereto agree that
any suit, action or proceeding arising out of or relating to this Agreement
shall be instituted only in the United States District Court for the Southern
District of New York, United States of America. Each party waives any
objection it may have now or hereafter to the laying of the venue of any such
suit, action or proceeding, and irrevocably submits to the jurisdiction of any
such court in any such suit, action or proceeding.
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SECTION 10.13. Tax Matters. (a) Subject to Section 8.4(g), Holdings
agrees to indemnify, defend and hold harmless Buyer and its affiliates and
their respective directors, officers, partners, employees, agents and
representatives from and against any and all Indemnifiable Losses to the extent
relating to, resulting from or arising out of:
(i) any Taxes with respect to any taxable period of
the Company or any of its Subsidiaries ending on or before the Closing Date
(including, without limitation, any Taxes attributable to the Reorganization
Transactions);
(ii) any Taxes with respect to any taxable period of
the Company or any of its Subsidiaries beginning before and ending after the
Closing Date (a "Straddle Period") that are allocable pursuant to Section
10.13(c) to the portion of such Straddle Period ending on the Closing Date
(including, without limitation, any Taxes attributable to the Reorganization
Transactions), but only to the extent that the amount of such allocable
Straddle Period Taxes exceeds amounts accrued as a liability in respect of such
Straddle Period Taxes in the books and records of the Company and its
Subsidiaries;
(iii) any Taxes that are imposed on, or assessed
against the Company or any of its Subsidiaries that are attributable to any
member of a consolidated, combined or unitary group (other than the Company or
any of its Subsidiaries) of which the Company or any of its Subsidiaries is or
was a member on or prior to the Closing Date and for which the Company or any
of its Subsidiaries are liable pursuant to Treasury Regulation Section
1.1502-6(a) or any analogous or similar state, local or foreign Law; and
(iv) any breach by Holdings of any of its covenants
set forth in this Section 10.13.
Notwithstanding the foregoing, Holdings shall have no
indemnification obligations hereunder in respect of any Taxes attributable to
any operations, actions or transactions of or with respect to the Company or
any of its Subsidiaries outside the ordinary course of business which are
caused by or at the direction of Buyer and which occur or are deemed to occur
on the Closing Date after the Closing;
(b) Subject to Section 8.4(g), Buyer agrees to indemnify, defend
and hold harmless Holdings and its affiliates and their respective directors,
officers, partners, employees, agents and representatives from and against any
and all Indemnifiable Losses to the extent relating to, resulting from or
arising out of:
(i) any Taxes with respect to Straddle Periods which
are allocable to Buyer hereunder; and
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(ii) any breach by Buyer of any of its covenants set
forth in this Section 10.13.
(c) With respect to any taxable period that would otherwise be a
Straddle Period, the parties hereto shall, to the extent permitted under
applicable law, elect with the relevant taxing authority to treat, for all
purposes, the Closing Date as the last day of the taxable period of the company
or any of its Subsidiaries, as the case may be, for purposes of this Section
10.13. In any case where applicable law does not permit the Company or any of
its Subsidiaries, as the case may be, to treat the Closing Date as the last day
of the taxable period of the Company or any of its Subsidiaries, the portion of
any such Taxes that is allocable to the portion of the Straddle Period ending
on the Closing Date shall be: (x) in the case of Taxes that are either (1)
based upon or related to income or receipts, or (2) imposed in connection with
any sale or other transfer or assignment of property (real or personal,
tangible or intangible) (other than conveyances pursuant to this Agreement,
which are covered under Section 10.13(k)), deemed to equal the amount which
would be payable if the taxable year or period ended on the Closing Date
(except that, solely for purposes of determining the marginal Tax rate
applicable to income or receipts during such period in a jurisdiction in which
such Tax rate depends on the amount of income or receipts, annualized income or
receipts may be taken into account, if appropriate, for an equitable sharing of
such Taxes); and (v) in the case of Taxes not described in subparagraph (x)
above that are imposed on a periodic basis and measured by the amount of any
item, deemed to be the amount of such Taxes for the entire period (or, in the
case of such Taxes determined on an arrears basis, the amount of such Taxes for
the immediately preceding period) multiplied by a fraction the numerator of
which is the number of calendar days in the Straddle Period ending on the
Closing Date and the denominator of which is the number of calendar days in the
entire relevant period.
(d) After the Closing Date, Buyer will promptly notify Holdings of
the commencement of any claim, audit, examination, or other proposed change or
adjustment by any taxing authority concerning any Taxes or other Indemnifiable
Losses covered by Section 10.13(a) ("Tax Claim"); provided that a failure to
timely give notice of a Tax Claim shall not affect the rights or obligations of
any party hereunder except and only to the extent that, as a result of such
failure, any party which was entitled to receive such notice was damaged.
Except as provided below, Holdings shall have the right to assume control of
the strategy, defense and settlement of any Tax audit or administrative or
court proceeding relating to Taxes, including but not limited to extension of
the applicable statute of limitations, of the Company or any of its
Subsidiaries subject to indemnification under Section 10.13(a); provided,
however, (i) that in the case of a Straddle Period, such control rights will be
exercised by the party which would be allocated the greater portion of Taxes
with respect to the Straddle Period under this Agreement; (ii) that the party
not exercising rights of control hereunder may participate in any such audit or
proceeding at its own expense, and (iii) no
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settlement shall be made by Holdings which may reasonably be expected to
materially increase the liability of the Company or any of its Subsidiaries in
a taxable period ending after the Closing Date without the consent of Buyer,
which consent will not be unreasonably withheld. Holdings shall promptly
notify Buyer if Holdings decides not to participate in the defense of any such
Tax audit or administrative or court proceeding and Buyer thereupon shall be
permitted to defend such Tax audit or proceeding, provided, however, that no
settlement shall be made by Buyer without the prior written consent of Holdings
(which consent shall not be unreasonably withheld) and Buyer shall keep
Holdings duly informed of the progress thereof. Holdings will promptly notify
Buyer of the commencement of any claim, audit, examination, or other proposed
change or adjustment by any taxing authority which may affect the liability of
the Company or any of its Subsidiaries for Taxes, and Holdings shall keep Buyer
duly informed of the progress thereof.
(e) Any claim for indemnification under Section 10.13(a) may be
made at any time prior to the expiration of the applicable Tax statute of
limitations with respect to the relevant taxable period (including all periods
of extension, whether automatic or permissive).
(f) After the Closing, none of the Company or its Subsidiaries
shall be a party to or have any further obligations or rights under any tax
sharing or tax allocation agreement or other similar contract, if any, with
Holdings and its Affiliates, which agreements shall be terminated as between
such parties on the Closing Date.
(g) Holdings shall prepare or cause to be prepared, all Tax
Returns of the Company and its Subsidiaries with respect to all taxable periods
ending on or before the Closing Date (the "Seller Returns"). Buyer shall be
responsible for causing the Company and its Subsidiaries to prepare and file
all Tax Returns required to be filed by any of the Company or its Subsidiaries
with respect to Straddle Periods ("Straddle Returns"). After the Closing,
Buyer shall cause the Company and its Subsidiaries to timely file any of the
Seller Returns which are not Seller Consolidated Returns. Buyer shall provide
Holdings with the opportunity to review and comment upon the Straddle Returns
at least ten business days prior to the filing thereof. "Seller Consolidated
Returns" shall mean all consolidated or combined Tax Returns that include the
taxable income or loss of any of the Company or its Subsidiaries and Holdings
(or any of its affiliates other than the Company and its Subsidiaries).
Holdings shall cause the payment of all Taxes with respect to Seller Returns
and Straddle Returns for which Holdings is responsible pursuant to Section
10.13(a) on or prior to the due date for filing such Seller Returns and
Straddle Returns, and Buyer shall cause the payment of all Taxes with respect
to Straddle Returns for which Buyer is responsible pursuant to Section 10.13(b)
on or prior to the due date for filing such Straddle Returns.
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(h) None of Buyer, the Company or its Subsidiaries shall file any
amended Tax Return which may give rise to a claim for indemnification hereunder
without the prior written consent of Holdings (which consent shall not be
unreasonably withheld). Holdings shall have exclusive authority to make all
decisions with respect to matters relating to any Seller Consolidated Return,
including, but not limited to, decisions to amend a Seller Consolidated Return
(provided, however, that Holdings shall not file an amended Seller Consolidated
Return which would materially increase the liability of the Company or any of
its Subsidiaries in taxable periods ending after the Closing Date without
obtaining the prior written consent of Buyer (which consent will not be
unreasonably withheld)), to extend the statutes of limitations with respect to
any periods covered by a Seller Consolidated Return, make any election with
respect to Seller Consolidated Returns and to concede, settle, compromise or
contest any adjustment asserting by a taxing authority with respect to a Seller
Consolidated Return (subject to Buyer's rights pursuant to Section 10.13(d)).
Buyer shall cooperate with Holdings in making an election under Treasury
Regulation section 1.1502-20(g) (if requested by Holdings) and shall cause the
Company and any applicable Subsidiary to execute such election, provided that
such election does not in the good faith opinion of Buyer adversely affect
Buyer, its affiliates, the Company or its Subsidiaries.
(i) Holding and Buyer will cooperate with one another in
connection with the preparation and filing of Seller Returns and Straddle
Returns and for the defense or settlement of any audit or administrative
proceeding relating to Taxes and will provide each other with access, at any
reasonable time and from time to time, at the business location at which the
books and records are maintained, after the Closing Date, to such Tax data
relating to the Company or its Subsidiaries as Holdings or Buyer, as the case
may be, may from time to time reasonably request (including the relevant
portions of Seller Consolidated Returns).
(j) (x) Except as provided in (y) below, Holdings shall
be entitled to receive and to retain any and all refunds of Taxes in respect of
taxable periods of the Company and its Subsidiaries ending on or before the
Closing Date (including any refunds of Taxes arising from a carryback of
losses, credits or other similar items by the Company or its Subsidiaries) or
in respect of Straddle Periods to the extent allocable pursuant to Section
10.13(b) to the portion of such period ending on the Closing Date. In the
event that Buyer receives any refund (whether through payment, credit or
reduction in Taxes) to which Holdings is entitled hereunder, Buyer shall
promptly pay, or cause the payment of, such refund of Taxes to Holdings.
(y) In the event of a refund of Taxes described in
(x) above which are attributable to the carryback of losses, credits or similar
items of the Company or any of its Subsidiaries from a taxable period that
begins after the Closing Date ("Post-Closing Carrybacks"), then Buyer shall be
entitled to retain any such refund of Taxes received by
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Buyer or shall be entitled to be paid by Holdings any such refund which is
actually received by, credited to, or reduces Taxes of Holdings or its
Subsidiaries; except that subparagraph (x) above shall apply in lieu of this
subparagraph (y) unless, in the case of any Seller Consolidated Return, Buyer
shall have obtained the prior written consent of Holdings to the carryback of
Post-Closing Carrybacks (which consent shall not be unreasonably withheld) and
may be conditioned on the provision of reasonable indemnification against the
risk of disallowance of the Post Closing Carrybacks.
(k) Holdings and Buyer shall each pay one-half of any applicable
sales, transfer, recording, deed, stamp and other similar Taxes resulting from
the consummation of the transactions contemplated by this Agreement ("Transfer
Taxes") (other than the Reorganization Transactions, as to which Holdings shall
be responsible for all of such Transfer Taxes).
(l) Holdings shall cause the payment of any Taxes subject to
indemnification under Section 10.13(a) (or Buyer shall cause the payment of any
Taxes subject to indemnification under Section 10.13(b)) which arise as a
consequence of an audit, administrative, judicial or other proceeding no later
than five business days following the later of a "determination" (as defined in
Section 1313(a) of the Code) with respect thereto or the preparation of a
definitive computation with respect thereto by the applicable taxing authority.
In the case of Indemnifiable Losses pursuant to Sections 10.13(a) or 10.13(b)
other than Taxes and Indemnifiable Losses pursuant to Sections 10.13(a)(iv) and
10.13(b)(ii), the Indemnifying Party shall pay such Indemnifiable Losses within
five business days of the provision of adequate substantiation of the amount of
such Indemnifiable Losses and of Holdings' or Buyer's liability therefor.
(m) No election shall be made under Section 338(g) or Section
338(h)(10) of the Code with respect to the purchase of the Shares of the
Company hereunder.
SECTION 10.14. Foreign Competition Filings. All references to the
Canadian Bank Act, the Canadian Competition Act and the German Competition Act
set forth herein shall be deemed included in this Agreement only to the extent
filing under such Acts are determined to be necessary by Buyer or Holdings.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be signed on its behalf by its duly authorized officers, all as of
the day and year first above written.
DS GROUP LIMITED
By:/s/ DAN W. LORDEN
Name: Dan W. Lorden
Title: Director
THERMADYNE HOLDINGS CORPORATION
By:/s/ JAMES H. TATE
Name: James H. Tate
Title: Senior Vice President and
Chief Financial Officer
DELORO STELLITE HOLDINGS CORPORATION
By:/s/ JAMES H. TATE
Name: James H. Tate
Title: Senior Vice President and
Chief Financial Officer
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ANNEX A
MATTERS TO BE COVERED IN OPINION
OF WEIL, GOTSHAL & MANGES LLP
1. Each of Holdings, the Company and the
Subsidiaries is a corporation duly organized, validly existing and in good
standing under the laws of its jurisdiction of incorporation and has all
requisite corporate power and authority to own, lease and operate its
properties and to carry on its business as now being conducted.
2. The authorized capital stock of the Company
consists of 1,000 shares of common stock, par value $.01 per share ("Common
Stock"). As of the Closing Date, there were 1,000 shares of Common Stock
issued and outstanding.
3. Holdings and the Company have all requisite
corporate power and authority to execute and deliver the Agreement and to
perform their respective obligations thereunder. The execution, delivery and
performance of the Agreement by Holdings and the Company and the consummation
by Holdings and the Company of the transactions contemplated thereby have been
duly authorized by all necessary corporate action on the part of Holdings and
the Company. The Agreement has been duly and validly executed and delivered by
Holdings and the Company and (assuming the due authorization, execution and
delivery thereof by Buyer) constitutes the legal, valid and binding obligation
of each of Holdings and the Company, enforceable against each of them in
accordance with its terms, subject to applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and similar laws affecting
creditors' rights and remedies generally, and subject, as to enforceability, to
general principles of equity, including principles of commercial
reasonableness, good faith and fair dealing (regardless of whether enforcement
is sought in a proceeding at law or in equity, and except that no opinion is
rendered with respect to Section 5.17 of the Agreement.
4. The execution and delivery of the Agreement, the
consummation of the transactions contemplated thereby and compliance by
Holdings and the Company with any of the provisions thereof will not conflict
with, constitute a default under or violate (i) any of the terms, conditions or
provisions of the certificate of incorporation or by-laws of Holdings, the
Company or any Subsidiary of the Company, or (ii) any New York, Delaware
corporate or federal law or regulation (other than federal and state securities
or blue sky laws, as to which we express no opinion).
<PAGE> 59
5. No consent, approval, waiver, license or
authorization or other action by or filing with any New York, Delaware
corporate or United States federal governmental authority is required in
connection with the execution and delivery by Holdings and the Company of the
Agreement or the consummation by Holdings and the Company of the transactions
contemplated thereby except for (i) the applicable requirements of the HSR Act
and the Exon-Florio Amendment, (ii) the applicable requirements of federal and
state securities or blue sky laws, as to which we express no opinion, and (iii)
those already obtained.
Weil, Gotshal & Manges LLP may rely on local counsel in
connection with any opinions relating to the non-U.S. Subsidiaries of the
Company or, alternatively, may arrange for local counsel to render such
opinions directly to the Buyer.
Annex A - Page 2
<PAGE> 60
ANNEX B
MATTERS TO BE COVERED IN OPINION OF
SIMPSON THACHER & BARTLETT
1. Assuming the due authorization, execution and
delivery of the Agreement by Buyer, Holdings and the Company, the Agreement
constitutes the legal, valid and binding obligation of Buyer enforceable
against it in accordance with its terms, subject to applicable bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and similar laws
affecting creditors' rights and remedies generally, and subject, as to
enforceability, to general principles of equity, including principles of
commercial reasonableness, good faith and fair dealing (regardless of whether
enforcement is sought in a proceeding at law or in equity).
2. The execution and delivery of the Agreement, the
consummation of the transactions contemplated thereby and compliance by Buyer
with any of the provisions thereof will not conflict with, constitute a default
under or violate any New York, Delaware corporate or federal laws or
regulations (other than federal and state securities or blue sky laws, as to
which we express no opinion).
3. No consent, approval, waiver, license or
authorization or other action by or filing with any New York, Delaware
corporate or United States federal governmental authority is required in
connection with the execution and delivery by Buyer of the Agreement or the
consummation by Buyer of the transactions contemplated thereby, except for (i)
the applicable requirements of the HSR Act ad the Exon-Florio Amendment and
(ii) the applicable requirements of federal and state securities or blue sky
laws, sa to which we express no opinion.
<PAGE> 61
ANNEX C
MATTERS TO BE COVERED IN OPINION OF
ALLEN & OVERY
1. Buyer is a corporation duly organized, validly
existing and in good standing under the laws of England and Wales and has all
requisite power and authority as a corporation to own, lease and operate its
properties and to carry on its business as now being conducted.
2. Buyer has all requisite corporate power and
authority to execute and deliver the Agreement and to perform its obligations
thereunder. The execution, delivery and performance of the Agreement by Buyer
and the consummation by Buyer of the transactions contemplated thereby have
been duly authorized by all necessary corporate action on the part of Buyer.
The Agreement has been duly and validly executed and delivered by Buyer.
3. The execution and delivery of the Agreement, the
consummation of the transactions contemplated thereby and compliance by Buyer
with any of the provisions thereof will not conflict with, constitute a default
under or violate (i) any of the terms, conditions or provisions of the charter
or by-laws of Buyer, or (ii) the laws of England and Wales applicable to
companies generally.
4. No consent, approval, waiver, license or
authorization or other action by or filing with any governmental authority in
England or Wales is required in connection with the execution and delivery by
Buyer of the Agreement or the consummation by Buyer of the transactions
contemplated thereby.
<PAGE> 1
EXHIBIT 2.2
FIRST AMENDMENT TO STOCK PURCHASE AGREEMENT
FIRST AMENDMENT TO STOCK PURCHASE AGREEMENT (this "Amendment"), dated
August 1, 1997, by and among DS Group Limited, a corporation formed under the
laws of England and Wales ("Buyer"), Thermadyne Holdings Corporation, a
Delaware corporation ("Holdings"), and Deloro Stellite Holdings Corporation, a
Delaware corporation formerly known as MAG Acquisition Corp. and Deloro
Stellite Corporation (the "Company").
RECITALS:
WHEREAS, Buyer, Holdings and the Company are parties to that certain
Stock Purchase Agreement dated July 11, 1997 (the "Stock Purchase Agreement")
pursuant to which Buyer will acquire all of the issued and outstanding capital
stock of the Company; and
WHEREAS, Buyer, Holdings and the Company desire to amend certain
provisions of the Stock Purchase Agreement.
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants herein contained, the parties hereto agree as follows:
ARTICLE I
AMENDMENT OF AGREEMENT
Section 1.1 Consideration for the Shares. The first sentence of
Section 2.2 of the Stock Purchase Agreement is hereby amended in its entirety
to read as follows: "The aggregate purchase price payable by Buyer for the
Shares shall be $88,543,000 in cash (the "Purchase Price")."
Section 1.2 Purchase Price Adjustment. Section 2.3(a) of the
Stock Purchase Agreement is hereby amended in its entirety to read as follows:
As soon as practicable, but in no event later than 60 days following
the Closing Date, Holdings shall prepare an unaudited consolidated
balance sheet of the Company as of the Closing Date (including the
notes thereto, the "Closing Date Balance Sheet"). The Closing Date
Balance Sheet shall be prepared in the following manner and contain
the following agreed adjustments and, except as so provided, shall
otherwise fairly present the consolidated financial position of the
Company in accordance with GAAP applied on a consistent basis in the
same manner as the Interim Balance Sheet: (i) the Closing Date Balance
Sheet shall reflect a provision for doubtful account in the amount of
$615,000 relating to the account
<PAGE> 2
receivable of CHPO Deloro; (ii) an additional tax accrual in the
amount of $225,000 shall be reflected on the Closing Date Balance
Sheet (unless paid before Closing) relating to the settlement of the
tax audit in Germany of Deloro Stellite GmbH for the years 1992 to
1995; (iii) the Closing Date Balance Sheet shall reflect an additional
accrual in the amount of $498,000 for U.K. pension fund liability;
(iv) the Closing Date Balance Sheet shall reflect an additional
accrual in the amount of $100,000 for warranty costs for equipment
repair and replacement associated with the alleged failure of power
sources supplied by Thermal Dynamics Corporation and included in
Starweld 9000 PTA machines sold by the Company to TRW prior to the
Closing Date; (v) inventories shall be confirmed pursuant to the
physical inventory referenced in the immediately following sentence
and shall be recorded on the Closing Date Balance Sheet in a manner
consistent with Holdings' historical valuation methods; and (vi)
except as referenced in the immediately preceding clauses (i) through
(iv) no adjustments shall be made to the Closing Date Balance Sheet to
address any other matter referenced in Appendix B of that certain
letter dated July 31, 1997 from Morgan Grenfell Development Capital
Limited to Holdings and Gleacher NatWest Inc. (the "MG Capital
Letter"). As of the Closing Date, Holdings and Buyer shall jointly
conduct a physical inventory of the raw materials, work-in-process and
finished goods inventories of the Company and its Subsidiaries,
provided that such physical inventory shall not include a review for
obsolescence.
Section 1.4 Covenants. Article V of the Stock Purchase Agreement
is hereby amended to add the following section as follows:
SECTION 5.18 Conduct of TRW Litigation. Holdings hereby
agrees that Holdings and its affiliates will take into account the
importance to the Company of maintaining its on-going
customer/business relationship with TRW when conducting all litigation
and settlement negotiations with TRW in connection with the alleged
failure of power sources supplied by Thermal Dynamics Corporation and
included in Starweld 9000 PTA machines sold by the Company prior to
the Closing Date.
Section 1.5 Indemnification. Section 8.3(a) of the Stock
Purchase Agreement is hereby amended to add the following clauses (v), (vi),
(vii) and (viii):
(v) all payments in excess of $200,000 for dilapidation costs
required to be paid pursuant to that certain Lease Agreement dated
June 24, 1987 between Europa Investments Limited and Deloro Stellite
Limited, as amended;
(vi) all pension payments hereafter made by the Company or its
Subsidiaries to Herr Rohrmann in excess of $422,000;
(vii) any and all Indemnifiable Losses (other than
Indemnifiable Losses for warranty costs for equipment repair and
replacement relating to, resulting from or arising out
2
<PAGE> 3
of the alleged failure of power sources supplied by Thermal Dynamics
Corporation) in excess of $200,000 relating to, resulting from or
arising out of the alleged failure of Starweld 9000 PTA machines sold
by the Company to TRW prior to the Closing Date; and
(viii) the first $100,000 of any and all Indemnifiable
Losses and fifty percent (50%) of any and all Indemnifiable Losses
thereafter to the extent relating to, resulting from or arising out of
the litigation referred to in Item 5 of Section 3.11 of the Disclosure
Schedule; provided, that Holdings' obligations under this clause
(viii) are subject to the condition that, after the Closing, the
Company agrees that it will not enter into a French joint venture or
set up a wholly-owned French subsidiary that competes with CHPO-Deloro
prior to the settlement or judicial resolution of the litigation
referred to in Item 5 of Section 3.11 of the Disclosure Schedule.
Section 1.6 Defense of Claims. Section 8.4(a) of the Stock
Purchase Agreement is amended to add the following clause at the end thereof:
"; provided, that Holdings will assume the defense of any claim or action to
the extent relating to, resulting from or arising out of the litigation
referred to in Item 5 of Section 3.11 of the Disclosure Schedule and Buyer
shall be responsible for fifty percent (50%) of the costs of such defense in
excess of $100,000."
Section 1.7 Termination. Section 9.1(c)(iii) of the Stock
Purchase Agreement is hereby amended to read in its entirety as follows:
"(iii) fail, prior to 9:00 a.m. (New York City time) on August 7, 1997, to
deliver to Holdings a new unconditional Debt Commitment or modify the existing
Debt Commitment so that there shall be no conditions to funding thereunder
other than the closing of this Agreement, apart from payment of the Purchase
Price, upon fulfillment of the conditions set forth in Section 6.1 and Sections
6.2(a), 6.2(b) and 6.2(c);"
ARTICLE II
MISCELLANEOUS
Section 2.1 Defined Terms. All capitalized terms used and not
defined herein shall have the meanings ascribed to such terms in the Stock
Purchase Agreement as hereby amended.
Section 2.2 Effect of Amendment. Except as specifically provided
herein, the Stock Purchase Agreement is in all respects ratified and confirmed.
All of the terms, conditions and provisions of the Stock Purchase Agreement as
hereby amended shall be and remain in full force and effect. Buyer hereby
confirms that it shall not hereafter assert that any matter referenced in the
MG Capital Letter constitutes a breach of the representations of Holdings
contained in the Stock Purchase Agreement, nor, except to the extent expressly
provided herein, shall Buyer assert any right to seek indemnification from
Holdings in respect of any such matter.
3
<PAGE> 4
Section 2.3 Entire Agreement. This Amendment, together with the
unaltered portions of the Stock Purchase Agreement, embodies the entire
agreement and understanding of the parties hereto and supersedes all prior
agreements and understandings relating to the subject matter hereof.
Section 2.4 Governing Law. This Amendment shall be governed by
and construed in accordance with the laws of the State of New York, without
regard to the conflicts of laws rules thereof.
Section 2.5 Duplicate Originals. This Amendment may be executed
in as many counterparts as may be necessary or convenient and each of which,
when so executed, shall be deemed to be an original, but all such counterparts
shall constitute but one and the same agreement.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
4
<PAGE> 5
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be duly executed as of the date first written above.
DS GROUP LIMITED
By: /s/ DAN W. LORDEN
Name: Dan W. Lorden
Title: Director
THERMADYNE HOLDINGS CORPORATION
By:/s/ JAMES H. TATE
Name: James H. Tate
Title: Senior Vice President &
Chief Financial Officer
DELORO STELLITE HOLDINGS CORPORATION
By:/s/ JAMES H. TATE
Name: James H. Tate
Title: Senior Vice President &
Chief Financial Officer
5
<PAGE> 1
EXHIBIT 2.3
SECOND AMENDMENT TO STOCK PURCHASE AGREEMENT
SECOND AMENDMENT TO STOCK PURCHASE AGREEMENT (this "Amendment"), dated
August 15, 1997, by and among DS Group Limited, a corporation formed under the
laws of England and Wales ("Buyer"), Thermadyne Holdings Corporation, a
Delaware corporation ("Holdings"), and Deloro Stellite Holdings Corporation, a
Delaware corporation formerly known as MAG Acquisition Corp. and Deloro
Stellite Corporation (the "Company").
RECITALS:
WHEREAS, Buyer, Holdings and the Company are parties to that certain
Stock Purchase Agreement dated July 11, 1997, as amended by that certain First
Amendment to Stock Purchase Agreement dated August 1, 1997 (as amended, the
"Stock Purchase Agreement") pursuant to which Buyer will acquire all of the
issued and outstanding capital stock of the Company; and
WHEREAS, Buyer, Holdings and the Company desire to amend certain
provisions of the Stock Purchase Agreement.
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants herein contained, the parties hereto agree as follows:
ARTICLE I
AMENDMENT OF AGREEMENT
Section 1.1 Financing. (a) Clause (i) of the first sentence of
Section 4.7 of the Stock Purchase Agreement is amended in its entirety to read
as follows:
(i) the unconditional commitment, subject only to the
satisfaction or waiver of the conditions set forth in Sections
6.1 and 6.2, of Morgan Grenfell Development Capital
Syndications Limited to make an equity investment of $50
million in Buyer (as set forth in the letter agreement, dated
August 15, 1997, between Buyer and Morgan Grenfell Development
Capital Syndications Limited, the "Equity Commitment"),
(b) The last sentence of Section 4.7 of the Stock
Purchase Agreement is deleted in its entirety and Section 4.7 is further
amended to add the following provisions in lieu thereof:
Buyer agrees to use its reasonable best efforts (i) to
determine a tax structure for the transactions contemplated by
this Agreement that is acceptable to Buyer and Morgan
<PAGE> 2
Grenfell Development Capital Limited and (ii) to secure the
services of an executive Chairman of Buyer to assist with the
management of the business and operations of the Company after
the closing of this Agreement. In the event Buyer succeeds in
fulfilling the undertakings set forth in clauses (i) and (ii)
above, Buyer agrees to use its reasonable best efforts to
cause the provider of the Debt Commitment to modify it so that
funding thereunder is subject to no conditions other than the
closing of this Agreement, apart from the payment of the
Purchase Price, upon fulfillment of the conditions set forth
in Section 6.1 and Sections 6.2(a), 6.2(b) and 6.2(c) no later
than 5:00 p.m. (New York City time) on August 29, 1997. Upon
the modification of the Debt Commitment contemplated by the
prior sentence, Buyer agrees to use its reasonable best
efforts to cause the funding under the Equity Commitment and
the Debt Commitment to occur in accordance with their terms.
Section 1.2 No Solicitation. Section 5.6 of the Stock Purchase
Agreement is hereby amended in its entirety to read as follows:
SECTION 5.6. No Solicitation. None of Holdings, the Company
or any Subsidiary of the Company nor any representative of Holdings,
the Company or any Subsidiary of the Company will directly or
indirectly, through any officer, director, agent or otherwise (a)
solicit, initiate or encourage the submission of inquiries, proposals
or offers from any person relating to any acquisition or purchase of
assets or capital stock of the Company or any of its Subsidiaries or
any other transaction that would result in the transfer of control of
the Company or any of its Subsidiaries or an investment by any person
in the Company or any Subsidiaries (each an "Acquisition Proposal"),
or (b) participate in any discussions or negotiations regarding an
Acquisition Proposal or any of the foregoing or furnish to any person
any information concerning the Company or any of its Subsidiaries or
any of the foregoing, except to the extent required by law, or (c)
otherwise cooperate in any way with, or assist or participate in,
facilitate or encourage, any effort or attempt by any other person to
do or seek any of the foregoing. Holdings and the Company procure
that they and their respective representatives shall immediately cease
and cause to be terminated any existing activities, discussions or
negotiations with any parties conducted heretofore with respect to any
Acquisition Proposal. The foregoing provisions of this Section 5.6
shall no longer be effective after 9:00 a.m. (New York City time) on
August 25, 1997 if Buyer shall not have delivered to Holdings a new
unconditional Debt Commitment or modified the existing Debt Commitment
in the manner contemplated by Section 9.1(c)(iii); provided, however,
that the provisions of this Section 5.6 shall be reinstated upon the
delivery to Holdings of such Debt Commitment.
Section 1.3 CHPO Deloro Receivable. Article V of the
Agreement is hereby amended to add the following Section 5.18:
SECTION 5.18 CHPO Deloro Receivable. In
connection with the adjustment to the Closing Date Balance Sheet to
reflect a provision for doubtful account in the
2
<PAGE> 3
amount of $615,000 relating to the account receivable of CHPO Deloro,
Buyer agrees to pay in cash to Holdings (provided that no amount
received by the Company or any of its Subsidiaries from CHPO Deloro
with respect to any items sold to CHPO Deloro after the date hereof
shall be deemed payable pursuant to this Section):
(i) the first $100,000 realized
(whether by payment, offset, forgiveness or
compromise) with respect to such account receivable;
and thereafter
(ii) fifty percent (50%) of any
amount so realized in excess of $100,000 until the
amount so realized and not paid to Holdings is equal
to the sum of (1) all costs required to be paid by
Buyer pursuant to the proviso to the last sentence of
Section 8.4(a) and (2) all Indemnifiable Losses to
the extent relating to, resulting from or arising out
of the litigation referred to in Item 5 of Section
3.11 of the Disclosure Schedule that are not subject
to indemnification from Holdings pursuant to clause
(viii) of Section 8.3(a); and thereafter
(iii) one hundred percent (100%) of
any amount realized (whether by payment, offset,
forgiveness or compromise) with respect to such
account receivable.
Any such payment shall be made by wire transfer of immediately
available funds to the account designated by Holdings pursuant to
Section 2.2 of the Agreement and shall be paid as promptly as possible
upon realization by Buyer.
Section 1.4 Indemnification. Clause (viii) of Section
8.3(a) of the Stock Purchase Agreement is hereby amended in its entirety to
read as follows:
(viii) the first $100,000 of any and all Indemnifiable
Losses and fifty percent (50%) of any and all Indemnifiable Losses
thereafter to the extent relating to, resulting from or arising out of
the litigation referred to in Item 5 of Section 3.11 of the Disclosure
Schedule; provided, that Holdings' obligations under this clause
(viii) are subject to the condition that, after the Closing, the
Company agrees that it will not enter into a French joint venture or
set up a wholly-owned French subsidiary that competes with CHPO Deloro
prior to the settlement or judicial resolution of the litigation
referred to in Item 5 of Section 3.11 of the Disclosure Schedule;
provided, further, that in calculating Indemnifiable Losses for
purposes of this clause (viii), the offset, forgiveness or compromise
of the account receivable of CHPO Deloro that is the subject of
Section 5.18 shall not be an Indemnifiable Loss.
Section 1.5 Termination. (a) Section 9.1(c)(iii) of the Stock
Purchase Agreement is hereby amended to read in its entirety as follows:
"(iii) fail, prior to 5:00 p.m. (New York City time) on August 29, 1997, to
deliver to Holdings a new unconditional Debt Commitment or modify
3
<PAGE> 4
the existing Debt Commitment so that there shall be no conditions to funding
thereunder other than the closing of this Agreement, apart from payment of the
Purchase Price, upon fulfillment of the conditions set forth in Section 6.1 and
Sections 6.2(a), 6.2(b) and 6.2(c);"
(b) Section 9.1 of the Stock Purchase Agreement is
amended to add the following subsection (e):
(e) by the Buyer, on or after September 5,
1997, if Buyer shall fail, prior to 5:00 p.m. (New York City
time) on August 29, 1997, to deliver to Holdings a new
unconditional Debt Commitment or modify the existing Debt
Commitment so that there shall be no conditions to funding
thereunder other than the closing of this Agreement, apart
from payment of the Purchase Price, upon fulfillment of the
conditions set forth in Section 6.1 and Sections 6.2(a),
6.2(b) and 6.2(c).
ARTICLE II
MISCELLANEOUS
Section 2.1 Defined Terms. All capitalized terms used and not
defined herein shall have the meanings ascribed to such terms in the Stock
Purchase Agreement as hereby amended.
Section 2.2 Effect of Amendment. Except as specifically provided
herein, the Stock Purchase Agreement is in all respects ratified and confirmed.
All of the terms, conditions and provisions of the Stock Purchase Agreement as
hereby amended shall be and remain in full force and effect.
Section 2.3 Entire Agreement. This Amendment, together with the
unaltered portions of the Stock Purchase Agreement, embodies the entire
agreement and understanding of the parties hereto and supersedes all prior
agreements and understandings relating to the subject matter hereof.
Section 2.4 Governing Law. This Amendment shall be governed by
and construed in accordance with the laws of the State of New York, without
regard to the conflicts of laws rules thereof.
Section 2.5 Duplicate Originals. This Amendment may be executed
in as many counterparts as may be necessary or convenient and each of which,
when so executed, shall be deemed to be an original, but all such counterparts
shall constitute but one and the same agreement.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
4
<PAGE> 5
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be duly executed as of the date first written above.
DS GROUP LIMITED
By: /s/ DAN W. LORDEN
Name: Dan W. Lorden
Title: Director
THERMADYNE HOLDINGS CORPORATION
By:/s/ JAMES H. TATE
Name: James H. Tate
Title: Senior Vice President and
Chief Financial Officer
DELORO STELLITE HOLDINGS CORPORATION
By:/s/ JAMES H. TATE
Name: James H. Tate
Title: Senior Vice President and
Chief Financial Officer
5
<PAGE> 1
EXHIBIT 2.4
THIRD AMENDMENT TO STOCK PURCHASE AGREEMENT
THIRD AMENDMENT TO STOCK PURCHASE AGREEMENT (this "Amendment"), dated
August 29, 1997, by and among DS Group Limited, a corporation formed under the
laws of England and Wales ("Buyer"), Thermadyne Holdings Corporation, a
Delaware corporation ("Holdings"), and Deloro Stellite Holdings Corporation, a
Delaware corporation formerly known as MAG Acquisition Corp. and Deloro
Stellite Corporation (the "Company").
RECITALS:
WHEREAS, Buyer, Holdings and the Company are parties to that certain
Stock Purchase Agreement dated July 11, 1997, as amended by that certain First
Amendment to Stock Purchase Agreement dated August 1, 1997 and that certain
Second Amendment to Stock Purchase Agreement dated August 15, 1997 (as amended,
the "Stock Purchase Agreement") pursuant to which Buyer will acquire all of the
issued and outstanding capital stock of the Company; and
WHEREAS, Buyer, Holdings and the Company desire to amend certain
provisions of the Stock Purchase Agreement.
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants herein contained, the parties hereto agree as follows:
ARTICLE I
AMENDMENT OF STOCK PURCHASE AGREEMENT
Section 1.1 OFL Account. Article III of the Stock Purchase
Agreement is amended by adding thereto the following Section 3.25:
SECTION 3.25 OFL Account. The aggregate amount of
the "overall foreign loss," as defined in Section 904(f)(2) of
the Code, which is allocable pursuant to Treasury Regulation
Section 1.1502-9 to the Company and its Subsidiaries as of the
close of the taxable period ending on the Closing Date shall
not be greater than $26,000,000.
Section 1.2 Survival of Representations, Warranties and
Covenants. Clause (a) of Section 8.1 of the Stock Purchase Agreement is hereby
amended it its entirety to read as follows:
(a) Except as to the representations and
warranties contained in Section 3.23, which shall survive the
Closing until the expiration of four years from the
<PAGE> 2
Closing Date, the representations and warranties contained in
Section 3.25, which shall survive the Closing until December
31, 2004, and the representations and warranties contained in
Section 3.16, which shall expire on the Closing Date, the
representations and warranties of Holdings contained in this
Agreement shall survive the Closing until the expiration of 20
months from the Closing Date. Any claim for indemnification
with respect to any of such matters shall be asserted by
notice given as herein provided relating thereto within such
specified period of survival. Any claim for Indemnifiable
Losses asserted within such period of survival as herein
provided will be timely made for purposes hereof.
Section 1.3 Indemnification. Clause (a)(i) of Section
8.3 of the Stock Purchase Agreement is hereby amended in its entirety to read
as follows:
(i) any and all Indemnifiable Losses to the
extent relating to, resulting from or arising out of any
breach of representation or warranty of Holdings or the
Company under the terms of this Agreement (other than the
representations and warranties of Holdings in Sections 3.4,
3.16 and 3.23 and any other representations or warranties
relating to Environmental Laws and Hazardous Materials);
provided that Indemnifiable Losses relating to, resulting from
or arising out of any breach of representation or warranty of
Holdings contained in Section 3.25 shall be limited to
additional Taxes owed by Buyer, the Company and its
Subsidiaries for taxable periods ended on or before December
31, 2004 that relate to, result from or arise out of such
breach;
ARTICLE II
MISCELLANEOUS
Section 2.1 Defined Terms. All capitalized terms used and not
defined herein shall have the meanings ascribed to such terms in the Stock
Purchase Agreement as hereby amended.
Section 2.2 Effect of Amendment. Except as specifically provided
herein, the Stock Purchase Agreement is in all respects ratified and confirmed.
All of the terms, conditions and provisions of the Stock Purchase Agreement as
hereby amended shall be and remain in full force and effect.
Section 2.3 Entire Agreement. This Amendment, together with the
unaltered portions of the Stock Purchase Agreement, embodies the entire
agreement and understanding of the parties hereto and supersedes all prior
agreements and understandings relating to the subject matter hereof.
Section 2.4 Governing Law. This Amendment shall be governed by
and construed in accordance with the laws of the State of New York, without
regard to the conflicts of laws rules thereof.
2
<PAGE> 3
Section 2.5 Duplicate Originals. This Amendment may be executed
in as many counterparts as may be necessary or convenient and each of which,
when so executed, shall be deemed to be an original, but all such counterparts
shall constitute but one and the same agreement.
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3
<PAGE> 4
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be duly executed as of the date first written above.
DS GROUP LIMITED
By:/s/ DAN W. LORDEN
Name: Dan W. Lorden
Title: Director
THERMADYNE HOLDINGS CORPORATION
By:/s/ STEPHANIE N. JOSEPHSON
Name: Stephanie N. Josephson
Title: Vice President & General Counsel
DELORO STELLITE HOLDINGS CORPORATION
By:/s/ STEPHANIE N. JOSEPHSON
Name: Stephanie N. Josephson
Title: Vice President & General Counsel
4
<PAGE> 1
EXHIBIT 99.1
THERMADYNE HOLDINGS CORPORATION
COMPLETES DIVESTITURE OF
WEAR RESISTANCE BUSINESS
St. Louis, Missouri, October 1, 1997 - Thermadyne Holdings Corporation
(NASDAQ: TDHC) announced it completed the sale of its Wear Resistance business
on September 30, 1997, for $96.0 million consisting of $88.5 million in cash
and $7.5 million in assumed long-term liabilities. The purchase price, which is
subject to certain post-closing adjustments, differs from the previously
announced amount due to certain agreements reached with the buyer between the
signing of the definitive agreement and closing.
Randall E. Curran, Chairman and CEO of Thermadyne, stated, "The
divestiture of the Wear Resistance business completes Thermadyne's strategic
refocusing around its core cutting and welding activities. With our purchase of
GenSet S.p.A. in January 1997, and the recently completed purchase of the
welding division of Prestolite Power Corporation, Thermadyne continues its
commitment to enhance its global market position as a leading manufacturer of
cutting and welding equipment."
Gleacher NatWest, Inc. acted as financial advisor to Thermadyne on the
Wear Resistance divesture.
Thermadyne, headquartered in St. Louis, is a multinational manufacturer
of cutting and welding products. Thermadyne had sales from continuing
operations of $439.7 million and $252.9 million for the year ended December 31,
1996 and the six months ended June 30, 1997, respectively.
# # #
For more information, contact James H. Tate, Senior Vice President and Chief
Financial Officer, Thermadyne Holdings Corporation, 314-746-2107.
