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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 23, 1998
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM S-1
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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THERMADYNE HOLDINGS CORPORATION
(Exact name of registrant as specified in its charter)
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<S> <C> <C>
DELAWARE 3548 74-2482571
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification No.)
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101 SOUTH HANLEY ROAD, SUITE 300
ST. LOUIS, MISSOURI 63105
(314) 721-5573
(Address, including zip code, and telephone number,
including area code of registrant's principal executive offices)
RANDALL E. CURRAN
CHAIRMAN, PRESIDENT AND CHIEF EXECUTIVE OFFICER
THERMADYNE HOLDINGS CORPORATION
101 SOUTH HANLEY ROAD, SUITE 300
ST. LOUIS, MISSOURI 63105
(314) 721-5573
(Name, address, including zip code, and telephone
number, including area code, of agent for service)
Copies to:
R. SCOTT COHEN
WEIL, GOTSHAL & MANGES LLP
100 CRESCENT COURT, SUITE 1300
DALLAS, TEXAS 75201
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this Registration Statement becomes effective.
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
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If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
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If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
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CALCULATION OF REGISTRATION FEE
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PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO BE AGGREGATE OFFERING AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED PRICE(A) REGISTRATION FEE
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12 1/2% Senior Discount
Debentures due 2008...... $174,000,000 $94,611,388 $27,910.36
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(a) Estimated solely for the purpose of calculating the registration fee in
accordance with Rule 457(f) under the Securities Act of 1933, as amended.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
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Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such State.
SUBJECT TO COMPLETION, DATED JUNE , 1998
PROSPECTUS
OFFER FOR ALL OUTSTANDING
12 1/2% SENIOR DISCOUNT DEBENTURES DUE 2008
IN EXCHANGE FOR
12 1/2% SENIOR DISCOUNT DEBENTURES DUE 2008
OF
THERMADYNE HOLDINGS CORPORATION
Thermadyne Holdings Corporation ("Holdings" or the "Company") hereby offers,
upon the terms and subject to the conditions set forth in this Prospectus and
the accompanying Letter of Transmittal (which together constitute the "Exchange
Offer"), to exchange $1,000 principal amount at maturity of registered 12 1/2%
Senior Discount Debentures due 2008 (the "New Debentures") issued by the Company
for each $1,000 principal amount at maturity of unregistered 12 1/2% Senior
Discount Debentures due 2008 (the "Old Debentures") issued by the Company, of
which an aggregate principal amount at maturity of $174,000,000 is outstanding.
The form and terms of the New Debentures are identical to the form and terms of
the Old Debentures except that the New Debentures have been registered under the
Securities Act of 1933, as amended (the "Securities Act"), and will not bear any
legends restricting their transfer. The New Debentures will evidence the same
debt as the Old Debentures and will be issued pursuant to, and entitled to the
benefits of, the Indenture (as defined) governing the Old Debentures. The
Exchange Offer is being made in order to satisfy certain contractual obligations
of the Company. See "The Exchange Offer" and "Description of New Debentures."
The New Debentures and the Old Debentures are sometimes collectively referred to
herein as the "Debentures."
The New Debentures will mature on June 1, 2008. The New Debentures will accrete
at a rate of 12 1/2%, compounded semiannually, to an aggregate principal amount
at maturity of $174 million on June 1, 2003. Cash interest will not accrue on
the New Debentures prior to June 1, 2003. Commencing on June 1, 2003, cash
interest on the New Debentures will be payable, at a rate of 12 1/2% per annum,
semi-annually in arrears on each June 1 and December 1, commencing December 1,
2003. See "Description of New Debentures."
The New Debentures will be subject to redemption at any time on or after June 1,
2003 at the option of the Company, in whole or in part, in cash at the
redemption prices set forth herein, plus accrued and unpaid interest and
Liquidated Damages (as defined herein), if any, thereon to the applicable
redemption date. Notwithstanding the foregoing, on or prior to June 1, 2001, the
Company may redeem up to 100% of the aggregate principal amount at maturity of
Debentures ever issued under the Indenture in cash at a redemption price of
112.50% of the Accreted Value (as defined herein) thereof, plus Liquidated
Damages, if any, thereon to the redemption date, with the net cash proceeds of
one or more Public Equity Offerings (as defined herein); provided that, in the
event that the Company redeems less than 100% of the then outstanding
Debentures, at least 60% of the aggregate principal amount at maturity of
Debentures ever issued under the Indenture remains outstanding immediately after
the occurrence of any such redemption. In addition, at any time prior to June 1,
2003, the Issuer may, at its option upon the occurrence of a Change of Control
(as defined herein), redeem the New Debentures, in whole but not in part, in
cash at a redemption price equal to (i) the present value of the sum of all the
remaining premium and principal payments that would become due on the New
Debentures as if the New Debentures were to remain outstanding and be redeemed
on June 1, 2003, computed using a discount rate equal to the Treasury Rate (as
defined herein) plus 50 basis points, plus (ii) Liquidated Damages, if any, to
the date of redemption. Upon the occurrence of a Change of Control, each Holder
of New Debentures will have the right to require the Company to repurchase all
or any part of such Holder's New Debentures at an offer price in cash equal to
101% of the Accreted Value thereof, plus accrued and unpaid interest and
Liquidated Damages, if any, thereon to the date of repurchase. See "Description
of New Debentures."
The New Debentures will be senior obligations of the Company. The New Debentures
will rank pari passu in right of payment with all future senior indebtedness of
the Company and will rank senior in right of payment to all future indebtedness
of the Company that is subordinated to the New Debentures. The New Debentures
will be effectively subordinated to all liabilities of the Company's
subsidiaries. On a pro forma basis after giving effect to the Merger (as defined
herein), including the Merger Financing (as defined herein) and the application
of the proceeds therefrom, as of March 31, 1998, the Company (as defined herein)
would have had outstanding approximately $682.0 million of Indebtedness (as
defined herein) and the Company's subsidiaries would have had approximately
$733.2 million of liabilities outstanding, including Indebtedness under the
Senior Subordinated Notes (as defined herein) and the New Credit Facility (as
defined herein) and including trade payables.
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SEE "RISK FACTORS" BEGINNING ON PAGE 15 FOR A DISCUSSION OF CERTAIN FACTORS THAT
SHOULD BE CONSIDERED IN CONNECTION WITH AN INVESTMENT IN THE NEW DEBENTURES.
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The Company will accept for exchange any and all Old Debentures validly tendered
and not withdrawn prior to 5:00 p.m., New York City time, on , 1998,
unless extended (as so extended, the "Expiration Date"). Tenders of Old
Debentures may be withdrawn at any time prior to the Expiration Date. The
Exchange Offer is subject to certain customary conditions. See "The Exchange
Offer."
Each broker-dealer that receives New Debentures for its own account pursuant to
the Exchange Offer must acknowledge that it will deliver a prospectus in
connection with any resale of such New Debentures. The letter of transmittal
accompanying this Prospectus (the "Letter of Transmittal") states that by so
acknowledging and by delivering a prospectus, a broker-dealer will not be deemed
to admit that it is an "underwriter" within the meaning of the Securities Act.
This Prospectus, as it may be amended or supplemented from time to time, may be
used by a broker-dealer in connection with resales of New Debentures received in
exchange for Old Debentures where such Old Debentures were acquired by such
broker-dealer as a result of market-making activities or other trading
activities. The Company has agreed, for a period of 90 days after the Expiration
Date, to make this Prospectus available to any broker-dealer for use in
connection with any such resale. See "Plan of Distribution."
No public market existed for the Old Debentures before the Exchange Offer. The
Company currently does not intend to list the New Debentures on any securities
exchange or to seek approval for quotation through any automated quotation
system, and no active public market for the New Debentures is currently
anticipated. The Company will pay all the expenses incident to the Exchange
Offer.
The Exchange Offer is not conditioned upon any minimum principal amount of Old
Debentures being tendered for exchange pursuant to the Exchange Offer.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
THE DATE OF THIS PROSPECTUS IS , 1998.
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AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith will file reports and other information with the Securities and
Exchange Commission (the "Commission"). Such reports and other information may
be inspected and copied at the public reference facilities of the Commission at
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, and at the
Commission's regional offices at 500 West Madison Street, Suite 1400, Chicago,
Illinois 60611, and 7 World Trade Center, 13th Floor, New York, New York 10048.
Copies of such material can also be obtained at prescribed rates by writing to
the Public Reference Section of the Commission at Judiciary Plaza, 450 Fifth
Street, N.W., Washington, D.C. 20549.
This Prospectus does not contain all the information set forth in the
Registration Statement and the exhibits and schedules thereto. Statements made
in this Prospectus as to the contents of any contract, agreement or other
document are not necessarily complete. With respect to each such contract,
agreement or other document filed as an exhibit to the Registration Statement,
reference is hereby made to such exhibit for a more complete description of the
matter involved, and each such statement shall be deemed qualified in its
entirety by such reference. Copies of the Registration Statement and the
exhibits thereto are on file with the Commission and may be examined without
charge at the public reference facilities of the Commission described above.
Copies of such materials can also be obtained at prescribed rates by writing to
the Public Reference Section of the Commission at Judiciary Plaza, 450 Fifth
Street, N.W., Washington, D.C. 20549. The reports, proxy statements and other
information filed by the Company with the Commission may also be obtained from
the web site that the Commission maintains at http://www.sec.gov.
The Company is required by the Indenture to furnish the holders of the New
Debentures with copies of the annual reports and of the information, documents
and other reports specified in Sections 13 and 15(d) of the Exchange Act, so
long as any New Debentures are outstanding.
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SUMMARY
The following summary is qualified in its entirety by the more detailed
information and financial statements, including the notes thereto, appearing
elsewhere in this Prospectus. Investors are urged to read this Prospectus in its
entirety. As used in this Prospectus, the term "Mercury" means Mercury
Acquisition Corporation, the term "Issuer" means Mercury before the Merger and
Thermadyne Holdings Corporation after the Merger, the term "Holdings" means
Thermadyne Holdings Corporation, the terms "Thermadyne" and the "Company" mean
Thermadyne Holdings Corporation, its predecessors and subsidiaries, the term
"Thermadyne LLC" means Thermadyne Mfg. LLC, a wholly owned and the principal
operating subsidiary of Thermadyne Holdings Corporation, and the term
"Thermadyne Capital" means Thermadyne Capital Corp., a wholly owned subsidiary
of Thermadyne LLC.
THE COMPANY
OVERVIEW
Thermadyne is a leading global manufacturer of cutting and welding products
and accessories. The Company manufactures a broad range of gas (oxy-fuel) and
electric arc cutting and welding products that are ultimately sold to end-user
customers principally engaged in the aerospace, automotive, construction, metal
fabrication, mining, mill and foundry, petroleum and shipbuilding industries.
Thermadyne sells its products through a long-established domestic network of
approximately 1,100 independent distributors who market Thermadyne products to
over 10,000 end-user customers. For the twelve months ended March 31, 1998, the
Company's net sales and Adjusted EBITDA (as defined herein), on a pro forma
basis, were $548.2 million and $115.5 million, respectively.
The Company's core products enjoy leading brand recognition, a reputation
for quality and strong market positions. In 1994, following the Company's
Restructuring (as defined herein), current management initiated a series of
transactions to focus the Company's business exclusively on the cutting and
welding industry. As part of this strategy, the Company divested three non-core
businesses and acquired six cutting and welding businesses, which collectively
generated approximately $169 million in annual revenues at the respective times
of acquisition. As a result of this repositioning strategy, along with ongoing
new product introductions, an extensive distribution network and market leading
brands, the Company has achieved a compound annual growth in net sales and
EBITDA of 20.3% and 12.5%, respectively, from 1993 to 1997.
According to the United States Department of Commerce, domestic welding
industry revenues totaled over $3.6 billion in 1997. The domestic industry has
grown at an annual rate of 5.9% since 1989 and is expected to grow 4.2% in 1998.
Global welding industry revenues are estimated to total over $10.0 billion, and
management believes that growth in the international market has been faster than
the domestic market, driven, in large part, by infrastructure spending in
developing markets. International markets, including Australia and Italy,
represented approximately 42% of the Company's net sales in 1997, up from
approximately 20% of net sales in 1994. Although the industry has begun to
experience global consolidation, it continues to be very fragmented.
COMPETITIVE STRENGTHS
Thermadyne possesses a number of competitive strengths that have allowed it
to develop and maintain a strong position within the cutting and welding
industry, including the following:
Market Leading Brands. Management believes that the strength and longevity
of the numerous Thermadyne brand names create a significant competitive
advantage and position Thermadyne as one of the leaders in the cutting and
welding industry. Each of the Company's major divisions maintains
industry-leading brand names with significant market shares. Management believes
that VICTOR(R), founded in 1913, is the leading brand name in domestic
gas-operated cutting and welding torches and equipment; TWECO(R), founded in
1936, is the leading domestic manufacturer of metal inert gas ("MIG") and manual
welding torches; ARCAIR(R) is the leading domestic brand name of tungsten inert
gas ("TIG") torch and accessory products; THERMAL
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DYNAMICS(R), founded in 1957, is a leading domestic manufacturer of manual
plasma cutting products; and CIGWELD(R), founded in 1922, is the leading brand
name in the Australia/New Zealand cutting and welding products market. Each of
the manufacturing operations associated with these brands is ISO-9000 series
certified.
Diverse and Stable Customer Base. The Company's customer base includes
cutting and welding product distributors as well as end-user customers
principally engaged in the aerospace, automotive, construction, metal
fabrication, mining, mill and foundry, petroleum and ship building industries.
No one customer accounted for more than 9% of the Company's 1997 net sales.
Further, the Company's top 20 customers have been associated with the Company
for an average of over 10 years.
Established, Effective Distribution Channels. The Company believes that its
strong, established and long-standing relationships with over 1,100 independent
cutting and welding products distributors in the United States provide a
significant competitive advantage and support the Company's strong market
position. Thermadyne's domestic distributor relationships are maintained by 11
area business managers who oversee the Company's relationships with large
distributors and by separate product-specific sales forces for each of
Thermadyne's business units. Management believes that this unique structure,
which combines relationship managers with technically trained product
specialists, will enable the Company to more effectively maintain and utilize
its distributor networks. Management also believes that this established
distribution network enables the Company to achieve market penetration when
introducing newly developed or acquired products.
Proven and Committed Senior Management Team. Thermadyne's management team
has strategically repositioned the Company over the past four years to focus
exclusively in its core cutting and welding markets. This repositioning was
accomplished through divestitures of three non-core assets and acquisitions of
six strategic businesses or product lines. In addition, management has initiated
the development and introduction of significant new products and product lines.
As a result of management's efforts, the Company achieved a 20.3% growth rate in
net sales from 1993 to 1997. In connection with the Merger each member of the
senior management team signed an employment contract with the Company.
Additionally, the Company adopted an incentive plan to tie each member of senior
management's compensation to the Company's financial performance. See "Executive
Compensation."
BUSINESS STRATEGY
Thermadyne has developed a business strategy designed to enhance its strong
market positions and continue to improve its growth and profitability. The
primary elements of the Company's business strategy are as follows:
Continue New Product Development and Enhancement. The foundation for
Thermadyne's strong market positions and leading brand names is the development
and introduction of new products and enhancements of existing products. The
Company believes it is at the forefront of cutting and welding technology with a
proven track-record of continual new product introductions and existing product
enhancements that have resulted in 262 issued or pending United States and
foreign patents. New products and product enhancements are designed to add value
for customers, including enhanced safety features, improved productivity and
ergonomics and an improved welding environment. Examples of recent new product
introductions include robotic welding systems and accessories, high-purity
instrumentation, automated plasma cutting and safety products as well as
underwater cutting electrodes. During 1997, the Company introduced over 135 new
products or product enhancements, and the Company expects to continue this
effort in the future.
Expand Strategic Acquisitions. The Company has completed six acquisitions
since 1994, which collectively generated approximately $169 million in annual
revenues at the respective times of acquisition, including over $135 million of
revenues in Australia and Italy. The Company believes that numerous acquisition
candidates exist globally, and the Company intends to continue to seek new
acquisition opportunities in its cutting and welding business. Thermadyne
intends to continue its focused acquisition strategy that includes the following
principal elements: (i) entering and expanding in geographic areas where the
Company does not currently have a significant presence through acquisitions of
local cutting and welding
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businesses and (ii) expanding in geographic areas where the Company currently
maintains a strong presence through the acquisition of complementary product
lines.
Leverage Existing Distribution Network. The Company intends to leverage its
existing distribution network through the acquisition or introduction of new
products and product enhancements. Management believes that when the Company
acquires a local presence in a new geographic area, it can utilize the acquired
distribution network to sell existing Thermadyne brands into that local market.
In addition, the Company believes that significant opportunities exist to
purchase complementary product lines and expand its business by selling the new
product lines through Thermadyne's extensive distribution network. For example,
through recent acquisitions the Company has expanded its offering of filler
metals, conventional arc welding power supplies, safety equipment and
engine-driven welding power sources and began marketing such products through
its established distribution network. The Company intends to continue this
strategy of penetrating new welding product markets by leveraging its extensive
distribution network in conjunction with its new product development and focused
acquisition strategies.
Broaden International Presence. Thermadyne has maintained an international
presence for over 30 years and continues to broaden its presence throughout the
world. International sales accounted for approximately 42% of net sales in 1997
as compared to approximately 20% in 1994. The Company has established a
dedicated international market presence and maintains the leading position in
Australia/New Zealand and significant and growing positions in Europe, Asia and
Latin America. Management intends to continue the expansion of its strong
domestic brand names into the international market and to continue to penetrate
the growing Asian and Latin American cutting and welding markets.
Continue Cost Reduction Efforts. Thermadyne strives to continually improve
manufacturing efficiencies and reduce unit costs. In December 1997, the Company
implemented a cost reduction program that includes the following principal
elements: (i) vendor rationalization and consolidation; (ii) manufacturing
process and product improvements and product design changes; (iii) personnel
rationalization and expense reductions; (iv) advertising and trade show expense
reductions; (v) aircraft, charter and other travel expense reductions; and (vi)
elimination of the annual sales meeting. These cost reduction initiatives are
expected to generate approximately $10 million in savings on an annualized
basis. In addition, the Company has initiated the implementation of a new global
information system that is designed to allow the Company to further integrate
administrative functions and improve information flow across business unit
lines.
Continue Dedicated Customer Service. The Company believes that effective
and proactive customer service has enabled the Company to build and maintain its
leading market positions and strong distributor relationships. Management plans
to continue this strategy of enhancing distributor and end-user relationships
through continuous customer service improvements. Each of Thermadyne's divisions
maintains a dedicated, well trained, technically oriented and product-specific
sales and customer service team. Management believes that the dedicated product
teams provide Thermadyne with a significant competitive advantage. In addition,
to further improve customer service, the Company has implemented a national
accounts team of 11 area business managers to support the dedicated product
sales and service teams and further support sales to the Company's key
distributors.
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THE MERGER AND MERGER FINANCING
On May 22, 1998, Holdings consummated the merger of Mercury Acquisition
Corporation ("Mercury"), a corporation organized by DLJ Merchant Banking
Partners II, L.P. ("DLJMB") and affiliated funds and entities (the "DLJMB
Funds"), with and into Holdings, with Holdings continuing as the surviving
corporation (the "Merger").
In order to fund the payment of the cash portion of the Merger
Consideration (as defined herein), the Option Cash Proceeds (as defined herein)
and the ESPP Cash Proceeds (as defined herein), to refinance and/or retire
outstanding indebtedness of the Company, and to pay expenses incurred in
connection with the Merger, Thermadyne LLC and Thermadyne Capital issued $207
million principal amount of 9 7/8 Senior Subordinated Notes due 2008 (the
"Senior Subordinated Notes") and Thermadyne LLC entered into a syndicated senior
secured loan facility providing for term loan borrowings in the aggregate
principal amount of approximately $330 million and revolving loan borrowings of
$100 million (the "New Credit Facility").In connection with the Merger,
Thermadyne LLC borrowed all term loans available under the New Credit Facility
plus approximately $25 million of revolving loans. The remaining revolving loans
will be available to fund the working capital requirements of Thermadyne LLC.
The proceeds of such financings were distributed to Holdings in the form of a
dividend. See "Description of New Credit Facility," "The Merger and Merger
Financing" and "Certain Relationships and Related Transactions."
Mercury issued approximately $94.6 million aggregate proceeds of the
Debentures. In connection with the Merger, Holdings succeeded to the obligations
of Mercury with respect to the Debentures. The DLJMB Funds also purchased
2,608,696 shares of common stock of Mercury ("Mercury Common Stock"), 2,000,000
shares of Mercury Preferred Stock ("Mercury Preferred Stock") and warrants to
purchase 353,428 shares of Mercury Common Stock at an exercise price of $0.01
per share (the "DLJMB Warrants") for approximately $140 million (the "DLJMB
Equity Investment"). As a result of the Merger, the proceeds of such purchases
became an asset of Holdings, each share of Mercury Common Stock became a share
of Holdings ("Holdings Common Stock"), each share of Mercury Preferred Stock
became a share of senior exchangeable preferred stock of Holdings ("Holdings
Preferred Stock") and each DLJMB Warrant to acquire Mercury Common Stock became
exercisable for an equal number of shares of Holdings Common Stock. In addition,
in connection with the Merger, certain members of senior management purchased
143,192 shares of Holdings Common Stock for approximately $4.9 million (the
"Management Share Purchase"), of which approximately $3.6 million was provided
through non-recourse loans from Holdings (the "Management Loans").
The equity and debt financings referred to above are collectively referred
to herein as the "Merger Financing."
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THE EXCHANGE OFFER
The Exchange Offer......... $1,000 principal amount at maturity of New
Debentures in exchange for each $1,000 principal
amount at maturity of Old Debentures. The Old
Debentures were sold on May 22, 1998 in a private
placement to Donaldson, Lufkin & Jenrette
Securities Corporation (the "Initial Purchaser"),
which immediately resold the Old Debentures
pursuant to Rule 144A promulgated under the
Securities Act (the "Offering"). As of the date
hereof, Old Debentures representing $174 million
aggregate principal amount at maturity are
outstanding. The terms of the New Debentures and
the Old Debentures are substantially identical in
all material respects, except that the New
Debentures will be freely transferable by the
holders thereof except as otherwise provided
herein. See "Description of New Debentures."
Based on an interpretation by the Commission's
staff set forth in no-action letters issued to
third parties unrelated to the Issuer, the Issuer
believes that New Debentures issued pursuant to the
Exchange Offer in exchange for Old Debentures may
be offered for resale, sold and otherwise
transferred by any person receiving the New
Debentures, whether or not that person is the
registered holder (other than any such holder or
such other person that is an "affiliate" of the
Issuer within the meaning of Rule 405 under the
Securities Act), without compliance with the
registration and prospectus delivery provisions of
the Securities Act, provided that (i) the New
Debentures are acquired in the ordinary course of
business of that holder or such other person, (ii)
neither the holder nor such other person is
engaging in or intends to engage in a distribution
of the New Debentures and (iii) neither the holder
nor such other person has an arrangement or
understanding with any person to participate in the
distribution of the New Debentures. See "The
Exchange Offer -- Purpose and Effect." Each
broker-dealer that receives New Debentures for its
own account in exchange for Old Debentures, where
those Old Debentures were acquired by the
broker-dealer as a result of its market-making
activities or other trading activities, must
acknowledge that it will deliver a prospectus in
connection with any resale of these New Debentures.
See "Plan of Distribution."
Registration Rights
Agreement................ In connection with the Offering, the Issuer entered
into a Registration Rights Agreement with the
Initial Purchaser (the "Registration Rights
Agreement") requiring the Issuer to make the
Exchange Offer. See "The Exchange Offer -- Purpose
and Effect."
Expiration Date............ The Exchange Offer will expire at 5:00 p.m., New
York City time, , 1998, or such later
date and time to which it is extended by the Issuer
(the "Expiration Date").
Withdrawal................. The tender of the Old Debentures pursuant to the
Exchange Offer may be withdrawn at any time prior
to 5:00 p.m., New York City time, on the Expiration
Date. Any Old Debentures not accepted for exchange
for any reason will be returned without expense to
the tendering holder thereof as promptly as
practicable after the expiration or termination of
the Exchange Offer.
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Interest on the New
Debentures and Old
Debentures............... Interest on each New Debenture will accrue from the
date of issuance of the Old Debenture for which the
New Debenture is exchanged or from the date of the
last periodic payment of interest on such Old
Debenture, whichever is later. No additional
interest will be paid on Old Debentures tendered
and accepted for exchange.
Conditions to the Exchange
Offer...................... The Exchange Offer is subject to certain customary
conditions, certain of which may be waived by the
Issuer. See "The Exchange Offer -- Conditions to
the Exchange Offer."
Procedures for Tendering
Old
Debentures............... Each holder of Old Debentures wishing to accept the
Exchange Offer must complete, sign and date the
Letter of Transmittal, or a copy thereof, in
accordance with the instructions contained herein
and therein, and mail or otherwise deliver the
Letter of Transmittal, or the copy, together with
the Old Debentures and any other required
documentation, to the Exchange Agent (as defined
herein) at the address set forth herein. Persons
holding the Old Debentures through the Depository
Trust Company ("DTC") and wishing to accept the
Exchange Offer must do so pursuant to the DTC's
Automated Tender Offer Program, by which each
tendering participant will agree to be bound by the
Letter of Transmittal. By executing or agreeing to
be bound by the Letter of Transmittal, each holder
will represent to the Issuer that, among other
things, (i) the New Debentures acquired pursuant to
the Exchange Offer are being obtained in the
ordinary course of business of the person receiving
such New Debentures, whether or not such person is
the registered holder of the Old Debentures, (ii)
neither the holder nor any such other person is
engaging in or intends to engage in a distribution
of such New Debentures, (iii) neither the holder
nor any such other person has an arrangement or
understanding with any person to participate in the
distribution of such New Debentures, and (iv)
neither the holder nor any such other person is an
"affiliate," as defined under Rule 405 promulgated
under the Securities Act, of the Issuer. Pursuant
to the Registration Rights Agreement, the Issuer is
required to file a "shelf" registration statement
for a continuous offering pursuant to Rule 415
under the Securities Act in respect of the Old
Debentures if (a) it is prohibited from
consummating the Exchange Offer because the
Exchange Offer is not permitted by applicable law
of Commission policy or (b) any holder of Transfer
Restricted Securities (as defined) notifies the
Issuer in writing prior to the 20th business day
following consummation of the Exchange Offer that
(i) based on an opinion of counsel, it is
prohibited by law or Commission policy from
participating in the Exchange Offer or (ii) it is a
broker-dealer and owns Debentures acquired directly
from the Issuer.
Acceptance of Old
Debentures and Delivery of
New Debentures........... The Issuer will accept for exchange any and all Old
Debentures which are properly tendered (and not
withdrawn) in the Exchange Offer prior to 5:00
p.m., New York City time, on the Expiration Date.
The New Debentures issued pursuant to the Exchange
Offer will be delivered
8
<PAGE> 10
promptly following the Expiration Date. See "The
Exchange Offer -- Terms of the Exchange Offer."
Exchange Agent............. IBJ Schroder bank & Trust Company, is serving as
Exchange Agent (the "Exchange Agent") in connection
with the Exchange Offer.
Federal Income Tax
Considerations........... The exchange pursuant to the Exchange Offer should
not be a taxable event for federal income tax
purposes. See "Certain United States Federal Income
Tax Considerations."
Effect of Not Tendering.... Old Debentures that are not tendered or that are
improperly tendered and not accepted will,
following the completion of the Exchange Offer,
continue to be subject to the existing restrictions
upon transfer thereof. The Issuer will have no
further obligation to provide for the registration
under the Securities Act of such Old Debentures.
9
<PAGE> 11
THE NEW DEBENTURES
Securities Offered......... $174 million aggregate principal amount at maturity
of 12 1/2% Senior Discount Debentures due 2008.
Maturity Date.............. June 1, 2008.
Yield and Interest......... 12 1/2% (computed on a semi-annual bond equivalent
basis) calculated from May 22, 1998. The New
Debentures will accrete at a rate of 12 1/2%,
compounded semi-annually, to an aggregate principal
amount at maturity of $174 million on June 1, 2003.
Cash interest will not accrue on the New Debentures
prior to June 1, 2003. Commencing on June 1, 2003,
cash interest on the New Debentures will accrue and
be payable, at a rate of 12 1/2% per annum,
semi-annually in arrears on each June 1 and
December 1, commencing December 1, 2003.
Optional Redemption........ The New Debentures will be subject to redemption at
any time on or after June 1, 2003 at the option of
the Issuer, in whole or in part, in cash at the
redemption prices set forth herein, plus accrued
and unpaid interest and Liquidated Damages, if any,
thereon to the applicable redemption date.
Notwithstanding the foregoing, on or prior to June
1, 2001, the Issuer may redeem up to 100% of the
aggregate principal amount at maturity of
Debentures ever issued under the Indenture in cash
at a redemption price of 112.50% of the Accreted
Value thereof, plus Liquidated Damages, if any,
thereon to the redemption date, with the net cash
proceeds of one or more Public Equity Offerings;
provided that, in the event that the Issuer redeems
less than 100% of the then outstanding Debentures,
at least 60% of the aggregate principal amount at
maturity of Debentures ever issued under the
Indenture remains outstanding immediately after the
occurrence of any such redemption. In addition, at
any time prior to June 1, 2003, the Issuer may, at
its option upon the occurrence of a Change of
Control, redeem the Debentures, in whole but not in
part, in cash at a redemption price equal to (i)
the present value of the sum of all the remaining
premium and principal payments that would become
due on the Debentures as if the Debentures were to
remain outstanding and be redeemed on June 1, 2003,
computed using a discount rate equal to the
Treasury Rate plus 50 basis points, plus (ii)
Liquidated Damages, if any, to the date of
redemption. See "Description of New
Debentures -- Optional Redemption."
Change of Control.......... Upon the occurrence of a Change of Control, each
Holder of the New Debentures will have the right to
require the Issuer to repurchase all or any part of
such Holder's New Debentures at an offer price in
cash equal to 101% of the Accreted Value thereof,
in the case of any such purchase prior to June 1,
2003, or 101% of the aggregate principal amount at
maturity thereof, in the case of any such purchase
on or after June 1, 2003, in each case, plus
accrued and unpaid interest and Liquidated Damages,
if any, thereon to the date of repurchase. No
assurance can be given that the Issuer will have
sufficient resources to satisfy its repurchase
obligations with respect to the New Debentures
following a Change of Control. See "Risk
Factors -- Possible Inability to Repurchase New
Debentures upon Change of Control" and "Description
of New Debentures -- Repurchase at the Option of
Holders -- Change of Control."
10
<PAGE> 12
Ranking.................... The New Debentures will be senior obligations of
the Issuer. The New Debentures will rank pari passu
in right of payment with all future senior
indebtedness of the Issuer and will rank senior in
right of payment to all future indebtedness of the
Issuer that is subordinated to the New Debentures.
The New Debentures will be effectively subordinated
to all liabilities of the Issuer's subsidiaries. On
a pro forma basis, after giving effect to the
Merger, including the Merger Financing and the
application of the proceeds therefrom, as of March
31, 1998, the Issuer would have had outstanding
approximately $682.0 million of Indebtedness and
the Issuer's subsidiaries would have had
approximately $733.2 million of liabilities
outstanding, including Indebtedness under the
Senior Subordinated Notes and the New Credit
Facility and including trade payables.
Original Issue Discount.... The Old Debentures were issued at an original issue
discount for United States federal income tax
purposes. Thus, although cash interest will not
accrue on the Debentures prior to June 1, 2003,
original issue discount (i.e., the difference
between the sum of all principal and interest
payable on the Debentures and the issue price of
the Debentures) will accrue from the issue date of
the Debentures and will be included as interest
income periodically (including for periods ending
prior to June 1, 2003) in a holder's gross income
for United States federal income tax purposes in
advance of receipt of the cash payments to which
the income is attributable. See "Certain United
States Federal Income Tax Considerations."
Certain Covenants.......... The indenture pursuant to which the New Debentures
will be issued (the "Indenture") contains certain
covenants that, among other things, limit the
ability of the Issuer and its Restricted
Subsidiaries to: incur indebtedness and issue
preferred stock, repurchase Capital Stock (as
defined herein) and certain Indebtedness, engage in
transactions with affiliates, engage in sale and
leaseback transactions, incur or suffer to exist
certain liens, pay dividends or other
distributions, make certain investments, sell
assets and engage in certain mergers and
consolidations.
Use of Proceeds............ There will be no cash proceeds to the Issuer from
the exchange pursuant to the Exchange Offer. The
net proceeds from the Offering, together with the
initial borrowings under the New Credit Facility,
the DLJMB Equity Investment and the issuance of the
Senior Subordinated Notes, were used to fund
payment of the cash portion of the Merger
Consideration, the Option Cash Proceeds and the
ESPP Cash Proceeds, to refinance outstanding
indebtedness of Thermadyne LLC and to pay the
expenses incurred in connection with the Merger.
See "Use of Proceeds."
RISK FACTORS
See "Risk Factors" for a discussion of certain factors that should be
considered in connection with an investment in the New Debentures.
11
<PAGE> 13
SUMMARY HISTORICAL AND UNAUDITED PRO FORMA CONDENSED
CONSOLIDATED FINANCIAL INFORMATION
The summary historical consolidated financial data for and as of the end of
each of the years in the five-year period ended December 31, 1997 set forth
below have been derived from the audited consolidated financial statements of
the Company's predecessor, Holdings. The pro forma financial data for the three-
month period ended March 31, 1998 and the historical financial data for the
three-month period ended March 31, 1997, respectively, are derived from
unaudited financial statements. The unaudited financial statements include all
adjustments, consisting only of normal recurring adjustments, which the Company
considers necessary for a fair presentation of the financial position and the
results of operations for these periods. Operating results for the pro forma
three-month period ended March 31, 1998 are not necessarily indicative of the
results that may be expected for the entire year ending December 31, 1998. The
data should be read in conjunction with the historical consolidated financial
statements of the Company and its predecessor, and the related notes thereto,
set forth elsewhere herein.
The unaudited summary consolidated pro forma financial data of the Company
set forth below are based on historical consolidated financial statements of
Holdings as adjusted to give effect to certain transactions described below and
the Merger, including the Merger Financing and the application of the proceeds
thereof. The pro forma balance sheet data give effect to the Merger, including
the Merger Financing and the application of the proceeds thereof, as if it had
occurred on March 31, 1998. The pro forma statement of operations data for the
three-month period ended March 31, 1998 gives effect to the Merger and the
Merger Financing and the application of the proceeds thereof as if it had
occurred at the beginning of such period. The pro forma statement of operations
data for the twelve months ended March 31, 1998 give effect to the acquisition
of the welding division of Prestolite Power Corporation ("Arcsys"), which
occurred on September 26, 1997 (the "Arcsys Acquisition"), the acquisition of
certain assets of Woodland Cryogenics, Inc. ("Woodland"), which occurred on
November 25, 1997 (the "Woodland Acquisition"), and the Merger, including the
Merger Financing and the application of the proceeds thereof, as if they all had
occurred on April 1, 1997. The pro forma statement of operations data for the
twelve months ended March 31, 1998 and the three-month period ended March 31,
1998 have been derived as if the balance sheet of the Company at the beginning
of such period was the pro forma balance sheet as of March 31, 1998. The pro
forma adjustments are based upon available information and upon certain
assumptions that management believes are reasonable under the circumstances. The
pro forma financial data do not purport to represent what the Company's actual
results of operations or actual financial position would have been if the Arcsys
Acquisition, the Woodland Acquisition and the Merger, including the Merger
Financing and the application of the proceeds thereof, had occurred on such
dates or to project the Company's results of operations or financial position
for any future period or date.
In 1996, Holdings announced plans to sell, and in 1997 consummated the sale
of, its wear resistance business; in late 1995, Holdings announced its plans to
sell, and in 1996 consummated the sale of, its gas containment and floor
maintenance businesses. These businesses are accounted for as discontinued
operations in Holdings' Consolidated Financial Statements. The following data
should be read in conjunction with "Unaudited Condensed Consolidated Pro Forma
Financial Data," "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and Holdings' Consolidated Financial Statements and
Notes thereto, in each case included elsewhere herein.
12
<PAGE> 14
<TABLE>
<CAPTION>
COMPANY PREDECESSOR
------------------------------------------------------------------------------- ------------
TWELVE MONTHS
ENDED THREE MONTHS ENDED FISCAL YEARS ENDED
MARCH 31, MARCH 31, DECEMBER 31, FISCAL YEAR
------------- ------------------------- ----------------------------------- ENDED
PRO FORMA PRO FORMA DECEMBER 31,
1998 1998 1997 1997 1996 1995 1994(1) 1993
------------- ----------- ----------- ------ ------ ------- ------- ------------
(UNAUDITED) (UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
OPERATING RESULTS DATA(2):
Net sales................... $ 548.2 $131.8 $ 117.8 $520.4 $439.7 $ 316.8 $258.1 $ 248.3
Cost of goods sold.......... 342.2 81.8 70.3 320.0 259.8 176.0 141.1 132.2
Selling, general and
administrative expenses... 114.1 27.1 26.3 110.7 95.9 74.7 60.0 57.8
Amortization of
goodwill(3)............... 1.6 0.4 0.4 1.6 83.0 92.9 83.9 4.5
Amortization of
intangibles(4)............ 5.8 0.5 1.7 6.8 12.4 48.4 10.7 8.7
Net periodic postretirement
benefits.................. 2.8 0.6 0.6 2.8 2.7 2.1 2.1 3.6
------- ------ ------- ------ ------ ------- ------ -------
Operating income (loss)..... 81.7 21.4 18.5 78.5 (14.1) (77.3) (39.7) 41.5
Interest expense............ 69.0 17.5 11.5 45.3 45.7 41.3 39.1 66.9
Other expense, net(5)....... 5.6 0.4 0.1 4.7 3.7 4.8 2.0 27.4
Income (loss) from
continuing operations
available to common....... (5.7) (0.3) 3.9 15.1 (62.9) (131.8) (85.1) (53.4)
CONSOLIDATED BALANCE SHEET
DATA (AT PERIOD END):
Cash and cash equivalents... $ 0.2 $ 0.2 $ 7.5 $ 1.5 $ 1.4 $ 1.8 $ 7.3 $ 15.0
Working capital(6).......... 123.6 123.6 121.4 88.5 67.6 52.3 81.5 65.8
Total assets......... 402.4 402.4 386.6 354.5 353.4 416.4 627.8 517.5
Total debt(7)........ 682.0 682.0 444.1 358.1 421.3 456.5 497.7 693.3
Redeemable PIK preferred
stock(8).................... 50.0 50.0 -- -- -- -- -- --
Total stockholders'
equity (deficit)... (475.4) (475.4) (184.5) (162.8) (185.3) (132.2) 20.6 (307.9)
OTHER DATA:
Adjusted EBITDA(9).......... $ 105.8 $ 26.5 $ 24.0 $102.1 $ 95.7 $ 74.6 $ 62.7 $ 63.8
Adjusted EBITDA with cost
savings(10)............... 115.5 -- -- -- -- -- -- --
Redeemable PIK preferred
stock dividends(8)........ 6.5 1.6 -- -- -- -- -- --
Depreciation................ 13.6 3.6 2.9 12.5 11.7 8.5 5.7 5.6
Capital expenditures........ 17.8 3.8 2.4 16.3 11.4 7.2 8.0 5.0
CREDIT RATIOS:
Adjusted EBITDA with cost
savings/cash interest
expense(11)............... 2.0x -- -- -- -- -- -- --
Total debt/Adjusted EBITDA
with cost savings(12)..... 5.9 -- -- -- -- -- -- --
</TABLE>
- ---------------
(1) Represents the eleven-month period from February 1, 1994, the effective
date of the Company's comprehensive financial restructuring under chapter
11 of the United States Bankruptcy Code (the "Restructuring"), through
December 31, 1994.
(2) See "Business -- Business Strategy" and the discussion under the caption
"Recent Events -- Acquisitions" in Note 2 to Holdings' Consolidated
Financial Statements for information concerning the Company's business
combinations occurring during the periods presented.
(3) In conjunction with the Restructuring, Holdings' assets and liabilities
were revalued at the effective date thereof. The assets and liabilities
were stated at their reorganization value. The portion of the
reorganization value not attributable to specific assets was amortized over
a three year period.
(4) Includes $33.0 million in 1995 related to the writedown of intangible
assets in accordance with Financial Accounting Standards Board Statement
No. 121.
13
<PAGE> 15
(5) During 1993, nonrecurring charges of $18.9 million were recorded resulting
from writing off unamortized debt discount and deferred financing costs and
other costs related to the Restructuring.
(6) Excludes net assets of discontinued operations for 1995 and 1996.
(7) For 1993, includes liabilities subject to compromise of $466.2 million.
(8) Holdings will issue two million shares of a new series of preferred stock
in exchange for an identical number of shares of preferred stock of Merger
Sub. This new preferred stock, referred to elsewhere herein as Mirror
Preferred Stock, will have a liquidation preference of $25 per share, or
$50 million in the aggregate, and a quarterly dividend, payable for the
first 5 years through increases in the liquidation preference of the Mirror
Preferred Stock, at an annual rate of approximately 13%, or $6.5 million in
the aggregate.
(9) "Adjusted EBITDA" is defined as operating income plus depreciation,
amortization of goodwill, amortization of intangibles and net periodic
postretirement benefits expense and is a key financial measure but should
not be construed as an alternative to operating income or cash flows from
operating activities (as determined in accordance with generally accepted
accounting principles). Adjusted EBITDA is also one of the financial
measures by which the Company's compliance with its covenants is calculated
under its debt agreements. The Company believes that Adjusted EBITDA is a
useful supplement to net income (loss) and other consolidated income
statement data in understanding cash flows generated from operations that
are available for taxes, debt service and capital expenditures. However,
the Company's method of computation may or may not be comparable to other
similarly titled measures of other companies. In addition, Adjusted EBITDA
is not necessarily indicative of amounts that may be available for
discretionary uses and does not reflect any legal or contractual
restrictions on the Company's use of funds.
(10) Adjusted EBITDA with cost savings represents the pro forma 1997 Adjusted
EBITDA plus $10.2 million of anticipated cost savings and operational
enhancements. The components of these cost savings and operational
enhancements are set forth below.
<TABLE>
<CAPTION>
COST SAVINGS CATEGORY (IN MILLIONS)
--------------------- -------------
<S> <C>
Vendor rationalization and consolidation.................... $ 3.0
Manufacturing process and productivity improvements and
product design changes.................................... 1.8
Personnel rationalization and expense reductions............ 1.6
Advertising and trade show expense reductions............... 0.5
Aircraft, charter and other travel expense reductions....... 2.0
Elimination of annual sales meeting......................... 1.3
-----
$10.2
=====
</TABLE>
(11) Excludes $11.9 million of deferred interest associated with the Debentures.
(12) Total debt equals total long-term debt, including current maturities.
14
<PAGE> 16
RISK FACTORS
In addition to the other information set forth herein, prospective
investors should carefully consider the following information in evaluating the
Company and its business before making an investment in the New Debentures.
CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS
The information herein contains forward-looking statements that involve a
number of risks and uncertainties. A number of factors could cause actual
results, performance, achievements of the Company, or industry results to be
materially different from any future results, performance or achievements
expressed or implied by such forward-looking statements. These factors include,
but are not limited to: the competitive environment in the cutting and welding
industry in general and in the Company's specific market areas; changes in
prevailing interest rates and the availability of and terms of financing to fund
the anticipated growth of the Company's business; inflation; changes in costs of
goods and services; economic conditions in general and in the Company's specific
market areas; changes in or failure to comply with federal, state and/or local
government regulations; liability and other claims asserted against the Company;
changes in operating strategy or development plans; the ability to attract and
retain qualified personnel; the significant indebtedness of the Company; labor
disturbances; changes in the Company's acquisition and capital expenditure
plans; and other factors referenced herein. In addition, such forward-looking
statements are necessarily dependent upon assumptions, estimates and dates that
may be incorrect or imprecise and involve known and unknown risks uncertainties
and other factors. Accordingly, any forward-looking statements included herein
do not purport to be predictions of future events or circumstances and may not
be realized. Forward-looking statements can be identified by, among other
things, the use of forward-looking terminology such as "believes," "expects,"
"may," "will," "should," "seeks," "pro forma" or "anticipates," "intends" or the
negative of any thereof, or other variations thereon or comparable terminology,
or by discussions of strategy or intentions. Given these uncertainties,
prospective investors are cautioned not to place undue reliance on such
forward-looking statements. The Company disclaims any obligations to update any
such factors or to publicly announce the results of any revisions to any of the
forward-looking statements contained herein to reflect future events or
developments.
SUBSTANTIAL LEVERAGE; LIQUIDITY; STOCKHOLDER'S DEFICIT
In connection with the Merger and the Merger Financing, including the
application of the proceeds therefrom, the Company incurred a significant amount
of indebtedness. As of March 31, 1998, after giving pro forma effect to the
Merger, including the Merger Financing and the application of the proceeds
thereof, the Company would have had (i) total consolidated indebtedness of
approximately $682.0 million, (ii) $66.8 million of additional borrowings
available under the New Credit Facility and (iii) a stockholder's deficit of
$475.4 million. In addition, subject to the restrictions in the Indenture, the
New Credit Facility and the Indenture pursuant to which the Senior Subordinated
Notes are being issued (the "Notes Indenture"), the Company may incur
significant additional indebtedness, which may be secured, from time to time.
The level of the Company's indebtedness could have important consequences
to the Company, including: (i) limiting cash flow available for general
corporate purposes, including acquisitions, because a substantial portion of the
Company's cash flow from operations must be dedicated to debt service; (ii)
limiting the Company's ability to obtain additional debt financing in the future
for working capital, capital expenditures or acquisitions; (iii) limiting the
Company's flexibility in reacting to competitive and other changes in the
industry and economic conditions generally; and (iv) exposing the Company to
risks inherent in interest rate fluctuations because certain of the Company's
borrowings may be at variable rates of interest, which could result in higher
interest expense in the event of increases in interest rates.
The Company's ability to make scheduled payments of principal of, to pay
interest on or to refinance its indebtedness and to satisfy its other debt
obligations will depend upon its future operating performance, which will be
affected by general economic, financial, competitive, legislative, regulatory,
business and other factors beyond its control. The Company anticipates that its
operating cash flow, together with borrowings under the
15
<PAGE> 17
New Credit Facility, will be sufficient to meet its anticipated future operating
expenses, capital expenditures and to service its debt requirements as they
become due. However, if the Company's future operating cash flows are less than
currently anticipated it may be forced, in order to meet its debt service
obligations, to reduce or delay acquisitions or capital expenditures, sell
assets or reduce operating expenses, including, but not limited to, investment
spending such as selling and marketing expenses, expenditures on management
information systems and expenditures on new products. If the Company were unable
to meet its debt service obligations, it could attempt to restructure or
refinance its indebtedness or to seek additional equity capital. There can be no
assurance that the Company will be able to effect any of the foregoing on
satisfactory terms, if at all. In addition, subject to the restrictions and
limitations contained in the agreements relating to the Merger Financing, the
Company may incur significant additional indebtedness to finance future
acquisitions, which could adversely affect the Company's operating cash flows
and its ability to service its indebtedness. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations -- Liquidity and
Capital Resources."
LIMITATIONS ON ACCESS TO CASH FLOW OF SUBSIDIARIES; HOLDING COMPANY STRUCTURE
The Issuer is a holding company, and its ability to pay interest on the New
Debentures is dependent upon the receipt of dividends from its direct and
indirect subsidiaries. The Issuer does not have, and may not in the future have,
any assets other than ownership interests in Thermadyne LLC. Thermadyne LLC and
its subsidiaries are parties to the New Credit Facility and the Notes Indenture,
each of which imposes substantial restrictions on Thermadyne LLC's ability to
pay dividends to the Issuer. Any payment of dividends will be subject to the
satisfaction of certain financial conditions set forth in the Notes Indenture
and the New Credit Facility. The ability of Thermadyne LLC and its subsidiaries
to comply with such conditions in the Notes Indenture may be affected by events
that are beyond the control of the Issuer. The breach of any such conditions
could result in a default under the Notes Indenture and/or the New Credit
Facility, and in the event of any such default, the holders of the Senior
Subordinated Notes or the lenders under the New Credit Facility could elect to
accelerate the maturity of all the Senior Subordinated Notes or the loans under
such facility. If the maturity of the Senior Subordinated Notes or the loans
under the New Credit Facility were to be accelerated, all such outstanding debt
would be required to be paid in full before Thermadyne LLC or its subsidiaries
would be permitted to distribute any assets or cash to the Issuer. There can be
no assurance that the assets of the Company would be sufficient to repay all of
such outstanding debt and to meet its obligations under the Indenture. Future
borrowings by Thermadyne LLC can be expected to contain restrictions or
prohibitions on the payment of dividends by such subsidiaries to the Issuer. In
addition, under Delaware law, a limited liability company may not make
distributions to its members if, after giving effect thereto, the liabilities of
the limited liability company would exceed the fair value of its assets. The
Issuer cannot predict what the value of its subsidiaries' assets or the amount
of their liabilities will be in the future and whether such values or amounts
will permit the payment of distributions to the Issuer. Accordingly, there can
be no assurance that the Issuer will be able to pay its debt service obligations
on the New Debentures. As a result of the holding company structure of the
Company, the Holders of the New Debentures are structurally junior to all
creditors of the Issuer's subsidiaries, except to the extent that the Issuer is
itself recognized as a creditor of any such subsidiary, in which case the claims
of the Issuer would still be subordinate to any security in the assets of such
subsidiary and any indebtedness of such subsidiary senior to that held by the
Issuer. In the event of insolvency, liquidation, reorganization, dissolution or
other winding-up of the Issuer's subsidiaries, the Issuer will not receive any
funds available to pay to creditors of the subsidiaries. As of March 31, 1998,
on a pro forma basis after giving effect to the Merger and Merger Financing,
including the application of net proceeds therefrom, the aggregate amount of
indebtedness and other obligations of the Issuer's subsidiaries (including trade
payables) would have been approximately $733.2 million.
POSSIBLE INABILITY TO REPURCHASE NEW DEBENTURES UPON CHANGE OF CONTROL
Upon the occurrence of a Change of Control, each Holder of New Debentures
will have the right to require the Issuer to repurchase all or any part of such
Holder's New Debentures at an offer price in cash equal to 101% of the aggregate
principal amount thereof, plus accrued and unpaid interest and Liquidated
Damages, if any, thereon to the date of repurchase. No assurance can be given
that the Issuer will have
16
<PAGE> 18
sufficient resources to satisfy its repurchase obligation with respect to the
New Debentures following a Change of Control. See "Description of New
Debentures -- Repurchase at the Option of Holders -- Change of Control."
The Issuer does not have, and may not in the future have, any assets other
than ownership interests in Thermadyne LLC. As a result, the Issuer's ability to
repurchase all or any part of the New Debentures upon the occurrence of a Change
of Control will be dependent upon the receipt of dividends or other
distributions from its direct and indirect subsidiaries. The New Credit Facility
and the Notes Indenture restrict Thermadyne LLC from paying dividends and making
any other distributions to the Issuer. If the Issuer does not obtain the consent
of the lenders under agreements governing outstanding Indebtedness of its
Subsidiaries, including under the New Credit Facility and the Notes Indenture,
to permit the repurchase of the New Debentures or does not refinance such
Indebtedness, the Issuer will likely not have the financial resources to
purchase New Debentures upon the occurrence of a Change of Control and the
Issuer's subsidiaries will be restricted by the terms of such Indebtedness from
paying dividends to the Issuer or otherwise lending or distributing funds to the
Issuer for the purpose of such purchase. In any event, there can be no assurance
that the Issuer's subsidiaries will have the resources available to pay such
dividend or make any such distribution. Furthermore, the New Credit Facility
provides that certain change of control events will constitute a default
thereunder and the Notes Indenture provides that, in the event of a Change of
Control, Thermadyne LLC and Thermadyne Capital will be required to offer to
repurchase the Senior Subordinated Notes at the price specified therefor. The
Issuer's failure to make a Change of Control offer when required or to purchase
tendered New Debentures when tendered would constitute an Event of Default under
the Indenture. See "Description of New Debentures."
ORIGINAL ISSUE DISCOUNT; LIMITATIONS ON HOLDERS' CLAIMS
The Debentures were issued at a substantial original issue discount from
their principal amount at maturity. Consequently, participants in the Exchange
Offer will be required to include amounts in gross income for federal income tax
purposes in advance of receipt of the cash payments to which the income is
attributable.
Under the Indenture, in the event of an acceleration of the maturity of the
New Debentures upon the occurrence of an Event of Default, the Holders of the
New Debentures may be entitled to recover only the amount which may be declared
due and payable pursuant to the Indenture, which will be less than the principal
amount at maturity of such New Debentures. See "Description of the New
Debentures -- Events of Default and Remedies."
If a bankruptcy case is commenced by or against the Issuer under the
Bankruptcy Code, the claim of a Holder of New Debentures with respect to the
principal amount thereof may be limited to an amount equal to the sum of (i) the
issue price of the New Debentures and (ii) that portion of the original issue
discount (as determined on the basis of such issue price) which is not deemed to
constitute "unmatured interest" for purposes of the Bankruptcy Code (as defined
herein). Accordingly, Holders of the New Debentures under such circumstances
may, even if sufficient funds are available, receive a lesser amount than they
would be entitled to under the express terms of the Indenture. In addition,
there can be no assurance that a bankruptcy court would compute the accrual of
interest under the same rules as those used for the calculation of original
issue discount under federal income tax law and, accordingly, a Holder might be
required to recognize gain or loss in the event of a distribution related to
such a bankruptcy case.
CONTROL BY THE DLJMB FUNDS
Approximately 80.6% of the outstanding shares of Holdings Common Stock is
held by the DLJMB Funds. As a result of their stock ownership, the DLJMB Funds
control Holdings and have the power to elect a majority of its directors,
appoint new management and approve any action requiring the approval of the
holders of Holdings Common Stock, including adopting certain amendments to
Holdings' certificate of incorporation and approving mergers or sales of all or
substantially all of Holdings' assets. The directors elected by the DLJMB Funds
will have the authority to effect decisions affecting the capital structure of
17
<PAGE> 19
Holdings, including the issuance of additional capital stock, the implementation
of stock repurchase programs and the declaration of dividends. The interests of
the DLJMB Funds may differ from the interests of other holders of Holdings
Common Stock.
The general partners of each of the DLJMB Funds are affiliates or employees
of Donaldson, Lufkin & Jenrette, Inc. ("DLJ, Inc."). DLJ Capital Funding, which
acted as syndication agent for the New Credit Facility in connection with the
Merger, is also an affiliate of DLJ, Inc. DLJSC, which placed the Senior
Subordinated Notes and the Debentures, is also an affiliate of DLJ, Inc.
The existence of a controlling stockholder of the Company is likely to have
the effect of making it more difficult for a third party to acquire, or of
discouraging a third party from seeking to acquire, a majority of the
outstanding Holdings Common Stock. A third party would be required to negotiate
any such transaction with the DLJMB Funds and the interests of the DLJMB Funds
may be different from the interests of other Company stockholders.
ACQUISITION GROWTH STRATEGY; MANAGEMENT AND FUNDING OF GROWTH
The Company has historically pursued an aggressive acquisition strategy,
completing six acquisitions from September 13, 1994 to December 31, 1997, and
expects to continue to pursue such a strategy to promote its growth. There are
various risks associated with pursuing a growth strategy of this nature. Any
future growth of the Company will require the Company to manage its expanding
domestic and international operations, integrate new businesses and adapt its
operational and financial systems to respond to changes in its business
environment, while maintaining a competitive cost structure. The acquisition
strategy of the Company will continue to place significant demands on the
Company and its management to improve the Company's operational, financial and
management information systems, to develop further the management skills of the
Company's managers and supervisors, and to continue to retain, train, motivate
and effectively manage the Company's employees. The failure of the Company to
manage its prior or any future growth effectively could have a material adverse
effect on the Company. There also can be no assurance that suitable acquisition
candidates will be available or that acquisitions can be completed on reasonable
terms.
Additionally, the Company's ability to maintain and increase its revenue
base and to respond to shifts in customer demand and changes in industry trends
will be partially dependent on its ability to generate sufficient cash flow or
obtain sufficient capital for the purpose of, among other things, financing
acquisitions, satisfying customer contractual requirements and financing
infrastructure growth. There can be no assurance that the Company will be able
to generate sufficient cash flow or that financing will be available on
acceptable terms (or permitted to be incurred under the terms of the Merger
Financing and any future indebtedness) to fund the Company's future growth.
CYCLICALITY AND MATURITY OF THE CUTTING AND WELDING INDUSTRY
The cutting and welding industry in the United States is a mature industry
that is cyclical in nature. The substitution of plastic, concrete and other
materials impacts the use of fabricated metal parts in many products and
structures. Increased offshore manufacturing by United States companies has
contributed to slow growth rates in the domestic manufacturing industry and in
turn has led to slower growth in the United States cutting and welding industry.
During periods of economic expansion the cutting and welding industry has grown
at double digit rates but has experienced contraction during periods of slowing
industrial activity. There can be no assurance that during future periods of
economic expansion the cutting and welding industry will experience the same
growth rates as it has in the past. Although the Company believes that its
exposure to cyclical downturns is moderated by its broad customer base and the
diversity of the industries it serves, cyclical downturns could have an adverse
effect on period-to-period results.
INTERNATIONAL MARKETS
The Company's growth strategy includes increasing the marketing of existing
products into Europe, Asia, Latin America and other developing economies.
However, there can be no assurance that the Company will be successful in its
expansion efforts.
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<PAGE> 20
Approximately 42% of the Company's net sales in 1997 (including its United
States third party export sales) were made to purchasers located in foreign
countries. Because of its foreign operations, the Company's business is subject
to the currency risks of doing business abroad, including exchange rate
fluctuations and limits on repatriation of funds.
Additionally, as a result of the current downturn in the Asian economy,
there may be a decrease in infrastructure development in the Asian region or an
overall worldwide contraction of industrial development. The impact of decreased
development could have a material adverse effect on the Company's business,
financial condition or results of operations.
Further, many developing economies have a significant degree of political
and economic uncertainty. Social unrest, the absence of trained labor pools and
the uncertainty of entering into joint ventures or other partnership
arrangements with local organizations have slowed business activities in some
large developing economies. The political and economic uncertainties present in
these promising growth markets may adversely impact the Company's ability to
implement and achieve its foreign growth objectives.
COMPETITION
The cutting and welding industry is highly competitive. While the Company
believes it is one of only a few worldwide broad line manufacturers of both
cutting and welding equipment and consumable products, the Company competes in
each of its businesses with other broad line manufacturers and numerous smaller
competitors specializing in particular products.
While the Company has historically experienced little direct foreign
competition in the United States market, fluctuations in the value of the United
States dollar against other currencies could make the United States market more
attractive to foreign exporters.
The Company currently experiences substantial competition in the foreign
markets in which it competes.
DEPENDENCE ON KEY PERSONNEL
The Company's continued success depends, to a large extent, upon the
efforts and abilities of key managerial employees, particularly Holdings'
executive officers. See "Management." Although Holdings has employment
agreements with all of its executive officers, there can be no assurance that
such persons will remain in the employ of the Company. Competition for qualified
management personnel in the industry is intense. The loss of the services of
certain of these key employees or the failure to retain qualified employees when
needed could have a material adverse effect on the Company's business, financial
condition or results of operations. See "Executive Compensation -- Employment
Contracts." The Company does not currently maintain key man life insurance.
ENVIRONMENTAL MATTERS
The Company's operations are subject to federal, state, local and foreign
laws and regulations relating to the storage, handling, generation, treatment,
emission, release, discharge and disposal of certain substances and wastes. As a
result, the Company is involved from time to time in administrative or legal
proceedings relating to environmental matters and has in the past and will
continue to incur capital costs and other expenditures relating to environmental
matters. Liability under environmental laws may be imposed on current and prior
owners and operators of property or businesses without regard to fault or to
knowledge about the condition or action causing the liability. The Company may
be required to incur costs relating to the remediation of properties, including
properties at which the Company disposes of waste, and environmental conditions
could lead to claims for personal injury, property damage or damages to natural
resources. The Company is aware of environmental conditions at certain
properties which it now or previously owned or leased which are undergoing
remediation and the Company has in the past and may in the future be named a
potentially responsible party ("PRP") at off-site disposal sites to which it has
sent waste.
The Company believes, based on current information, that any costs it may
incur relating to environmental matters will not have a material adverse effect
on its business, financial condition or its result of operations.
19
<PAGE> 21
There can be no assurance, however, that the Company will not incur significant
fines, penalties or other liabilities associated with noncompliance or clean-up
liabilities or that future events, such as changes in laws or the interpretation
thereof, the development of new facts or the failure of other PRPs to pay their
share will not cause the Company to incur additional costs that could have a
material adverse effect on its business, financial condition or results of
operations. See "Business -- Legal Proceedings and Environmental Matters."
ABSENCE OF PUBLIC MARKET
The Old Debentures were issued on May 22, 1998, and the Company is not
aware that any active trading market for the Old Debentures has developed. The
Company does not intend to apply for a listing of the New Debentures on a
securities exchange or on any automated dealer quotation system. If any of the
New Debentures are traded after their issuance, they may trade at a discount
from their initial offering price, depending upon prevailing interest rates, the
market for similar securities and other factors, including general economic
conditions and the financial condition, performance of, and prospects for, the
Company. There can be no assurance as to the development of any market or
liquidity of any market that may develop for the New Debentures. The liquidity
of, and trading markets for, the New Debentures may also be adversely affected
by declines in the market for high yield securities generally.
YEAR 2000
The year 2000 issue is the result of computer programs being written using
two digits rather than four to define the applicable year. Any of the Company's
computer programs that have time-sensitive software may recognize a date using
"00" as the year 1900 rather than the year 2000. This could result in a system
failure or miscalculations causing disruptions of operations, including, among
other things, a temporary inability to process transactions, send invoices, or
engage in similar normal business activities. The Company believes that its
internal systems are Year 2000 compliant or will be upgraded or replaced in
connection with previously planned changes to information systems prior to the
need to comply with Year 2000 requirements. However, the Company is uncertain as
to the extent its customers and vendors may be affected by Year 2000 issues that
require commitment of significant resources and may cause disruptions in the
customers' and vendors' businesses.
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<PAGE> 22
USE OF PROCEEDS
The Company will not receive any cash proceeds from the exchange pursuant
to the Exchange Offer.
The proceeds from the sale of the Old Debentures, after deducting expenses
of the Offering, including discounts to the Initial Purchaser, were
approximately $90.8 million. The proceeds from the Offering, together with the
borrowings under the New Credit Facility, the DLJMB Equity Investment, and the
issuance of the Senior Subordinated Notes were used to finance the conversion
into cash of approximately 95.7% of the shares of Holdings Common Stock, to
refinance the outstanding indebtedness of the Company, fund payments of the
Option Cash Proceeds and the ESPP Cash Proceeds, and finance the expenses and
fees incurred in connection with the Merger. See "The Merger and Merger
Financing." Approximately $547 million of the proceeds to Thermadyne LLC from
the initial borrowings under the New Credit Facility and the Senior Subordinated
Notes was dividended to Holdings to fund a portion of the Cash Merger
Consideration (as defined herein) and fees and expenses of Holdings in
connection therewith.
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<PAGE> 23
CAPITALIZATION
The following table sets forth the historical consolidated capitalization
of the Company as of March 31, 1998, and on a pro forma basis to give effect to
the Merger, including the Merger Financing and the application of the proceeds
thereof, as if they had occurred on March 31, 1998. See "Use of Proceeds." The
information set forth below should be read in conjunction with the Company's
Unaudited Condensed Consolidated Pro Forma Financial Data, the Company's
Consolidated Financial Statements and the related notes thereto and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" contained elsewhere in this Prospectus.
<TABLE>
<CAPTION>
AS OF MARCH 31, 1998
--------------------------
HISTORICAL PRO FORMA(1)
---------- ------------
(IN MILLIONS)
<S> <C> <C>
Cash and cash equivalents................................... $ 0.2 $ 0.2
======= =======
Total debt (including current portion):
New Credit Facility:
Revolving credit facility......................... -- $ 33.2
Term loan facility................................ -- 330.0
Capitalized lease obligations and other debt........... $ 18.8 18.8
Outstanding subordinated notes......................... 179.3 --
Outstanding senior notes............................... 99.3 --
Other existing debt.................................... 73.1 --
Senior Subordinated Notes.............................. -- 205.4
Debentures offered hereby.............................. -- 94.6
------- -------
Total debt........................................ 370.4 682.0
Redeemable PIK preferred stock.............................. -- 50.0
Shareholders' deficit....................................... (156.8) (475.4)
------- -------
Total capitalization........................................ $ 213.6 $ 256.6
======= =======
</TABLE>
- ---------------
(1) For a description of the pro forma adjustments, see the Notes to Unaudited
Condensed Consolidated Pro Forma Balance Sheet Data.
22
<PAGE> 24
SELECTED FINANCIAL DATA
The selected financial data for and as of each of the years in the
five-year period ended December 31, 1997 set forth below have been derived from
the audited Consolidated Financial Statements of the Company and its
predecessor. The historical financial data for the three-month periods ended
March 31, 1998 and 1997 are derived from unaudited financial statements. The
unaudited financial statements include all adjustments, consisting only of
normal recurring adjustments, which the Company considers necessary for a fair
presentation of the financial position and the results of operations for these
periods. Operating results for the three-month period ended March 31, 1998 are
not necessarily indicative of the results that may be expected for the entire
year ending December 31, 1998. The data should be read in conjunction with the
historical consolidated financial statements of the Company and its predecessor,
and the related notes thereafter, set forth elsewhere herein. In 1996, Holdings
announced plans to sell, and in 1997 consummated the sale of, its wear
resistance business; in late 1995, Holdings announced its plans to sell, and in
1996 consummated the sale of, its gas containment and floor maintenance
businesses. These businesses are accounted for as discontinued operations in
Holdings' Consolidated Financial Statements. The selected financial data should
be read in conjunction with "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and Holdings' Consolidated Financial
Statements and Notes thereto, in each case included elsewhere herein.
<TABLE>
<CAPTION>
COMPANY PREDECESSOR
----------------------------------------------------------------- ------------
THREE MONTHS ENDED FISCAL YEAR
MARCH 31, FISCAL YEARS ENDED DECEMBER 31, ENDED
------------------------- ------------------------------------- DECEMBER 31,
1998 1997 1997 1996 1995 1994(1) 1993
----------- ----------- ------- ------- ------- ------- ------------
(UNAUDITED) (UNAUDITED)
(IN MILLIONS, EXCEPT FOR RATIO DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
OPERATING RESULTS DATA(2):
Net sales...................... $131.8 $117.8 $ 520.4 $ 439.7 $ 316.8 $258.1 $248.3
Cost of goods sold............. 81.8 70.3 320.0 259.8 176.0 141.1 132.2
Selling, general and
administrative expenses...... 27.1 26.3 110.7 95.9 74.7 60.0 57.8
Amortization of goodwill(3).... 0.4 0.4 1.6 83.0 92.9 83.9 4.5
Amortization of
intangibles(4)............... 0.5 1.7 6.8 12.4 48.4 10.7 8.7
Net periodic postretirement
benefits..................... 0.6 0.6 2.8 2.7 2.1 2.1 3.6
------ ------ ------- ------- ------- ------ ------
Operating income (loss)........ 21.4 18.5 78.5 (14.1) (77.3) (39.7) 41.5
Interest expense............... 10.8 11.5 45.3 45.7 41.3 39.1 66.9
Other expense, net(5).......... 0.2 0.1 4.7 3.7 4.8 2.0 27.4
Income (loss) from continuing
operations available to
common....................... 5.8 3.9 15.1 (62.9) (131.8) (85.1) (53.4)
CONSOLIDATED BALANCE SHEET DATA
(AT PERIOD END):
Cash and cash equivalents...... $ 0.2 $ 7.5 $ 1.5 $ 1.4 $ 1.8 $ 7.3 $ 15.0
Working capital(6)............. 104.3 121.4 88.5 67.6 52.3 81.5 65.8
Total assets................... 372.5 386.6 354.5 353.4 416.4 627.8 517.5
Total debt(7).................. 370.4 444.1 358.1 421.3 456.5 497.7 693.3
Total stockholders' equity
(deficit).................... (156.8) (184.5) (162.8) (185.3) (132.2) 20.6 (307.9)
CONSOLIDATED CASH FLOW DATA:
Net cash provided by operating
activities................... $ (9.1) $ 2.9 $ 15.0 $ 21.5 $ 31.2 $ 5.4 $ 36.6
Net cash provided by (used in)
investing activities......... (4.7) (22.2) 36.8 18.7 (15.7) (1.0) (7.3)
Net cash (used in) financing
activities................... 12.6 25.4 (51.7) (40.6) (20.9) (5.8) (22.1)
OTHER DATA:
Adjusted EBITDA(8)............. $ 26.5 $ 24.0 $ 102.1 $ 95.7 $ 74.6 $ 62.7 $ 63.8
Depreciation................... 3.6 2.9 12.5 11.7 8.5 5.7 5.6
Capital expenditures........... 3.8 2.4 16.3 11.4 7.2 8.0 5.0
Ratio of earnings to fixed
charges(9)................... 1.9x 1.5x 1.6x -- -- -- --
</TABLE>
23
<PAGE> 25
- ---------------
(1) Represents the eleven-month period from February 1, 1994, the effective date
of the Restructuring, through December 31, 1994.
(2) See "Business -- Business Strategy" and the discussion under the caption
"Recent Events -- Acquisitions" in Note 2 to Holdings' Consolidated
Financial Statements for information concerning the Company's business
combinations occurring during the periods presented.
(3) In conjunction with the Restructuring, Holdings' assets and liabilities were
revalued at the effective date thereof. The assets and liabilities were
stated at their reorganization value. The portion of the reorganization
value not attributable to specific assets was amortized over a three year
period.
(4) Includes $33.0 million in 1995 related to the writedown of intangible assets
in accordance with Financial Accounting Standards Board Statement No. 121.
(5) During 1993, nonrecurring charges of $18.9 million were recorded resulting
from writing off unamortized debt discount and deferred financing costs and
other costs related to the Restructuring.
(6) Excludes net assets of discontinued operations for 1995 and 1996.
(7) For 1993, includes liabilities subject to compromise of $466.2 million.
(8) "Adjusted EBITDA" is defined as operating income plus depreciation,
amortization of goodwill, amortization of intangibles and net periodic
postretirement benefits expense and is a key financial measure but should
not be construed as an alternative to operating income or cash flows from
operating activities (as determined in accordance with generally accepted
accounting principles). Adjusted EBITDA is also one of the financial
measures by which the Company's compliance with its covenants is calculated
under its debt agreements. The Company believes that Adjusted EBITDA is a
useful supplement to net income (loss) and other consolidated income
statement data in understanding cash flows generated from operations that
are available for taxes, debt service and capital expenditures. However, the
Company's method of computation may or may not be comparable to other
similarly titled measures of other companies. In addition, Adjusted EBITDA
is not necessarily indicative of amounts that may be available for
discretionary uses and does not reflect any legal or contractual
restrictions on the Company's use of funds.
(9) For purposes of calculating the ratio of earnings to fixed charges, earnings
consist of income before income taxes plus fixed charges. Fixed charges
consist of interest expense, amortization of deferred financing costs and
one-third of the rent expense from operating leases, which management
believes is a reasonable approximation of the interest component of rent
expense. Earnings were not sufficient to cover fixed charges by $52.8
million, $80.8 million, $123.3 million and $63.5 million for the fiscal
years ended December 31, 1993, 1994, 1995 and 1996, respectively.
24
<PAGE> 26
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction with Holdings'
Consolidated Financial Statements including the notes thereto.
This discussion contains forward-looking statements within the meaning of
the Private Securities Litigation Reform Act of 1995 which involve risks and
uncertainties. The Company's actual results may differ significantly from the
results discussed in the forward-looking statements. Factors that might cause
such a difference include, but are not limited to, those discussed in "Risk
Factors."
OVERVIEW
Thermadyne, through its subsidiaries, is engaged in the design, manufacture
and distribution of cutting and welding products and accessories. Since 1993,
the Company has embarked on a strategy designed to focus its business
exclusively on the cutting and welding industry and enhance the Company's market
position within that industry.
The Company divested three non-core businesses: the Coyne Cylinder Company
(1996), the Clarke floor maintenance business (1996) and the Deloro Stellite
wear resistance business (1997). In addition, since 1993, the Company acquired
six cutting and welding businesses, which businesses collectively generated
approximately $169 million in annual revenue at the respective times of
acquisition, in order to broaden the Company's product offerings and expand the
Company's worldwide geographic coverage. The acquisitions of Modern Engineering
Company (1994), C&G Systems Inc. (1995), Arcsys (1997), and Woodland (1997) all
added additional or complementary product lines to the Company's product
offering. The acquisition of Cigweld (1996), an Australian based manufacturer of
welding products, provided the Company with new product offerings as well as a
significant market position in Australia and New Zealand and positioned the
Company to effectively compete in the growing Asian market. The acquisition of
GenSet (1997), an Italian manufacturer of engine-driven welders, extended the
Company's product line globally and increased the Company's European presence.
Thermadyne plans to continue its focused acquisition strategy to acquire
businesses that augment its product offering and/or geographic coverage.
The Company's revenue is now generated entirely by the sale of cutting and
welding equipment, accessories and consumables. Consumables include tips,
electrodes, parts and other products that are required to be periodically
replaced. Consumable sales accounted for over 40% of total revenue in 1997 and
are expected to continue generating a significant percentage of revenue in the
future.
As a result of the Merger, the Company incurred various costs in connection
with consummating the transaction. See Note 2 to the Unaudited Condensed
Consolidated Pro Forma Statement of Operations for a more detailed explanation
of these expenses. While the exact timing, nature and amount of these costs have
not yet been fully determined, the Company anticipates that a significant
one-time pretax charge will be recorded in its second fiscal quarter. As a
result of the foregoing, the Company expects to record a significant net loss in
its second fiscal quarter. Because this loss will result directly from the
one-time charge incurred in connection with the Merger, and this charge will be
funded entirely through the proceeds of the Merger Financing, the Company does
not expect this loss to materially impact its liquidity, ongoing operations or
market position.
COST REDUCTION INITIATIVES
Thermadyne strives to continually improve manufacturing efficiencies and
reduce unit costs. In December 1997, the Company implemented a cost reduction
program that includes the following principal elements: (i) vendor
rationalization and consolidation; (ii) manufacturing process and productivity
improvements and product design changes; (iii) personnel rationalization and
expense reductions; (iv) advertising and trade show expense reductions; (v)
aircraft, charter and other travel expense reductions; and (vi) elimination of
the annual sales meeting. These cost reduction initiatives are expected to
generate approximately $10 million in savings on an annualized basis. In
addition, the Company has initiated the implementation of a new global
25
<PAGE> 27
information system that is designed to allow the Company to further integrate
administrative functions and improve information flow across business unit
lines.
RESULTS OF OPERATIONS
The following discussion of results of operations is presented for the
fiscal years ended December 31, 1997, 1996 and 1995 and the three months ended
March 31, 1998 and 1997. The results of operations of the Company's predecessor,
Holdings, include the operations of C&G, Cigweld, GenSet, Arcsys and Woodland
from their respective dates of acquisition.
THREE MONTHS ENDED MARCH 31, 1998 COMPARED TO THREE MONTHS ENDED MARCH 31,
1997
Net Sales
Net sales were $131.8 million for the three months ended March 31, 1998
compared to $117.8 million for the three months ended March 31, 1997, an
increase of 12.0%. Domestic sales for the first three months of 1998 were up
20.3% (10.5% excluding acquisitions) over the first three months of 1997.
International sales increased approximately 1.0% overall despite the continuing
economic turmoil in Asia. Europe, Latin America and the Middle East regions all
recorded significant increases over the prior year.
Costs and Expenses
Cost of goods sold as a percentage of sales for the quarter ended March 31,
1998 was 62.0% compared to 59.7% for the quarter ended March 31, 1997. This
increase is the result of (i) recent acquisitions, which generally carry a
somewhat lower average gross margin than the Company's existing businesses, and
(ii) sales mix, as the Company expanded its product offering including items in
more price-competitive markets.
Selling, general and administrative expenses were $27.1 million for the
first three months of 1998, an increase of $0.8 million, or 3.0% over the first
three months of 1997. As a percentage of sales, selling, general and
administrative expenses were 20.5% for the three months ended March 31, 1998 and
22.3% for the three months ended March 31, 1997. This improvement is due in part
to the Company's growth in sales as a portion of its costs are fixed in nature,
as well as the realization of savings from a cost reduction program the Company
initiated in December 1997.
Interest expense decreased from $11.5 million in the first quarter of 1997
to $10.8 million in the first quarter of 1998, a decrease of $0.7 million or
6.1%. This decrease is largely the result of lower debt levels in 1998 compared
to 1997.
Income tax provision was $4.6 million on pre-tax income of $10.4 million
for the three months ended March 31, 1998, compared to an income tax provision
of $3.0 million on pre-tax income of $6.9 million for the three months ended
March 31, 1997.
Adjusted EBITDA
Adjusted EBITDA was $26.5 million for the quarter ended March 31, 1998,
compared to $24.0 million for the quarter ended March 31, 1997, an increase of
$2.5 million or 10.5%.
FISCAL 1997 COMPARED TO FISCAL 1996
Net Sales
Net sales from continuing operations for the year ended December 31, 1997
were $520.4 million, compared to net sales of $439.7 million for the year ended
December 31, 1996, an increase of $80.7 million, or 18.4%. Domestic and
international sales increased 12.0% and 28.3%, respectively in 1997. Included in
net sales for the year ended December 31, 1997 are sales of $32.9 million
related to GenSet, which was acquired effective February 1, 1997, $5.6 million
related to Arcsys, which was acquired on September 26, 1997 and $0.2 million
related to Woodland, which was acquired on November 25, 1997. Excluding sales
from these
26
<PAGE> 28
acquired companies, net sales from continuing operations increased $42.0
million, or 9.6%. New product introductions and the addition of products through
acquisition have been the most significant growth factors in domestic sales.
Success with new marketing programs and with sales through alternate channels
have also contributed to this increase. Sales in international markets have
increased as a result of strategic initiatives in Asia and Latin America, and
the addition of sales personnel.
Costs and Expenses
Cost of goods sold from continuing operations as a percentage of sales for
the year ended December 31, 1997 was 61.5% compared to 59.1% for the year ended
December 31, 1996. This change is largely due to the 1997 acquisitions as these
new product lines have lower average gross margins than the blended margin in
the Company's existing businesses. Excluding the effect of the 1997
acquisitions, cost of goods sold as a percentage of sales would have been 59.9%.
Selling, general and administrative expenses from continuing operations
increased 15.4% to $110.7 million for the year ended December 31, 1997 from
$95.9 million for the year ended December 31, 1996. The 1997 acquisitions added
$4.6 million of this $14.8 million increase. The remainder of this increase is
mostly the result of spending in Asia and Latin America related to internal
infrastructure and business development as the Company pursues increased market
share in these regions. As a percentage of sales, selling, general and
administrative expenses from continuing operations decreased to 21.3% for the
year ended December 31, 1997 from 21.8% for the year ended December 31, 1996.
Amortization of goodwill decreased $81.4 million to $1.6 million for the
year ended December 31, 1997 from $83.0 million for the year ended December 31,
1996. Goodwill amortization in 1997 relates to acquisitions since the Company's
1994 financial reorganization. In 1996, goodwill recorded in connection with the
reorganization was reduced, in part, by the initial recognition of certain
deferred tax assets existing on the effective date of the Company's
comprehensive financial restructuring and the remaining amount associated with
the reorganization became fully amortized. Amortization of other intangibles
decreased from $12.4 million to $6.8 million for the years ended December 31,
1996 and 1997, respectively. This $5.6 million, or 45.3%, decrease results from
the initial recognition of the net deferred tax asset as well as adjustments
during 1997 resulting from the recognition of net operating loss carryforward
benefits and the sale of the wear resistance business.
Interest expense was essentially the same for 1997 as in 1996, even though
the Company's overall debt level decreased $63.3 million over the course of the
year. This is due to the acquisition of GenSet in February 1997 which resulted
in a higher overall debt balance the first nine months of the year. Cash
proceeds from the sale of discontinued operations were used to reduce debt at
the end of the third quarter of 1997.
Income tax expense was $13.5 million for the year ended December 31, 1997
compared to an income tax benefit of $0.5 million for the year ended December
31, 1996. The income tax benefit recorded in the fourth quarter of 1996 includes
a $13.8 million income tax benefit resulting from the initial recognition of the
Company's net deferred tax asset. The Company's decision to record the net
deferred tax asset was based on an analysis of actual taxable income in the
available carryback period and taxable income expected to be generated in the
succeeding three years. Based on this analysis, the Company believes that it is
more likely than not that the recorded net deferred tax asset will be realized.
Adjusted EBITDA
Adjusted EBITDA from continuing operations was $102.1 million and $95.7
million for the years ended December 31, 1997 and 1996, respectively. As a
percentage of sales, Adjusted EBITDA was 19.6% for the year ended December 31,
1997 compared to 21.8% for the year ended December 31, 1996. For a description
of the term "Adjusted EBITDA", see Note 9 to "Summary -- Summary Historical and
Unaudited Pro Forma Condensed Consolidated Financial Information."
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Recent Accounting Pronouncements
As of January 1, 1998, the Company adopted FASB Statement 130, "Reporting
Comprehensive Income" ("Statement 130"). Statement 130 establishes new rules for
the reporting and display of comprehensive income and its components; however,
the adoption of this Statement had no impact on the Company's net income or
shareholders' equity. Statement 130 requires foreign currency translation
adjustments, which prior to adoption were reported separately in shareholders'
equity, to be included in other comprehensive income. Prior year financial
statements have been reclassified to conform to the requirements of Statement
130.
In June 1997, the FASB issued Statement No. 131, "Disclosures about
Segments of an Enterprise and Related Information" ("FASB 131"), which requires
publicly-held companies to report financial and descriptive information about
its operating segments in financial statements issued to shareholders for
interim and annual periods. The statement also requires additional disclosures
with respect to products and services, geographical areas of operations, and
major customers. FASB 131 is effective for fiscal years beginning after December
15, 1997 and requires restatement of earlier periods presented. The Company is
evaluating the impact of adopting this standard.
FISCAL 1996 COMPARED TO FISCAL 1995
Net Sales
Net sales from continuing operations were $439.7 million for the year ended
December 31, 1996, representing an increase of $123.0 million, or 38.8%, over
comparable net sales for the year ended December 31, 1995. This increase
includes $100.2 million related to Cigweld, which was acquired effective
February 1, 1996. Excluding the effects of Cigweld, net sales from continuing
operations increased $22.8 million, or 7.2%, over 1995. This growth was realized
over all of the Company's key product lines and was the result of emphasis on
new product development, sales force expansion and increasing the Company's
international presence. The Company's overall sales increase came from domestic
growth of 7.5% and an increase in international business of 154.4% including the
effects of Cigweld. Sales have increased in all the Company's major
international markets, particularly Asia and Latin America which are two of the
key geographic areas the Company has targeted for growth.
Costs and Expenses
Cost of goods sold from continuing operations for the year ended December
31, 1996 was 59.1% of sales, which compares to 55.5% of sales for the year ended
December 31, 1995. This increase in percent of sales was expected upon
completion of the acquisition of Cigweld as the average gross margin on Cigweld
products is lower than the Company's existing businesses' blended margin.
Excluding the effect of Cigweld, cost of goods sold would have been 54.6% of
sales with the improvement over 1995 due primarily to a more favorable sales
mix.
Selling, general and administrative expenses from continuing operations
increased $21.2 million, or 28.4%, to $95.9 million for the year ended December
31, 1996. The acquisition of Cigweld accounts for $17.2 million of this
increase. As a percentage of sales, selling, general and administrative expenses
were 21.8% for the 12 months ended December 31, 1996 compared to 23.6% for the
twelve months ended December 31, 1995.
Amortization of other intangibles has decreased from 1995 due to the early
adoption of Financial Accounting Standards Board Statement No. 121, "Accounting
for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed
Of," during the fourth quarter of 1995, which resulted in a writedown of those
assets of approximately $33.0 million.
Interest expense increased $4.4 million to $45.7 million for the year ended
December 31, 1996 from $41.3 million for the year ended December 31, 1995. This
increase results primarily from debt incurred in the acquisition of Cigweld.
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<PAGE> 30
A tax benefit of $0.5 million was reported for the year ended December 31,
1996 compared to tax expense of $8.5 million reported for the year ended
December 31, 1995. In the fourth quarter of 1996, the Company reevaluated the
realizability of its net deferred tax asset, and consequently, recorded a $13.8
million reduction in income tax expense. The Company's decision to record the
net deferred tax asset was based on an analysis of actual taxable income in the
available carryback period and taxable income expected to be generated in the
succeeding three years. Based on this analysis, the Company believes that it is
more likely than not that the recorded net deferred tax asset will be realized.
Adjusted EBITDA
Adjusted EBITDA from continuing operations was $95.7 million for the twelve
months ended December 31, 1996 compared to $74.6 million for the twelve months
ended December 31, 1995. As a percentage of sales, Adjusted EBITDA was 21.8% for
the year ended December 31, 1996, compared to 23.6% for 1995. Excluding Cigweld
the Adjusted EBITDA percentage for 1996 would have been 24.8%.
Discontinued Operations
Excluding the effects of accounting for the wear resistance business as
discontinued operations, net sales and Adjusted EBITDA for the twelve months
ended December 31, 1996, were $546.1 million and $110.5 million, respectively,
increases of 31.9% and 24.4%, respectively, over the twelve months ended
December 31, 1995.
LIQUIDITY AND CAPITAL RESOURCES
Working Capital and Cash Flows. Cash used in operating activities was $9.1
million for the first quarter of 1998, a decrease of $12.0 million from the
first quarter of 1997, in which cash flow from operations provided $2.9 million.
This use of cash by operating activities is the result of a net increase in
operating assets and liabilities of $12.9 million. Net cash used in investing
activities decreased from $22.2 million in the first quarter of 1997 to $4.7
million in the first quarter of 1998. Cash used for acquisitions decreased $27.1
million and was offset by an increase in capital expenditures of $1.4 million
and a decrease in cash provided by other assets of $8.9 million. Cash provided
by financing activities decreased $12.9 million to $12.6 million for the quarter
ended March 31, 1998 from $25.4 million for the quarter ended March 31, 1997.
Net borrowings of long-term debt decreased $12.0 million in a comparison of
these same periods. In addition, the accounts receivable securitization program
provided $4.3 million less in the first three months of 1998 compared to 1997,
while financing activities of discontinued operations and other financing
activities used $1.2 million and $2.0 million less in the first quarter of 1998,
respectively.
Cash provided by operating activities was $15.0 million for the year ended
December 31, 1997 compared to $21.5 million for the year ended December 31,
1996. This decrease in cash provided by operating activities is the result of a
net increase in operating assets and liabilities in 1997 compared to 1996 of
$7.3 million, partially offset by an increase in earnings (adjusted for noncash
expenses) of $0.8 million in 1997 over 1996. Net cash provided by investing
activities was $36.8 million in 1997 compared to $18.7 million in 1996. Cash
used for acquisitions decreased $36.1 million and cash proceeds from the sale of
discontinued operations decreased $23.8 million in 1997 compared to 1996. In
addition, cash used for capital expenditures increased $4.9 million and other
assets provided $8.6 million more in 1997. Net cash used in financing activities
was $51.7 million for the year ended December 31, 1997, an increase of $11.1
million over the use of $40.6 million for the year ended December 31, 1996. The
net repayment of long-term obligations was $28.1 million higher in 1997 than in
1996. This was partially offset by an increase in cash provided by the accounts
receivable securitization of $15.6 million and a decrease in cash used by
financing fees of $3.9 million in the year ended December 31, 1997 compared to
the same period of 1996.
Capital Expenditures. The Company had $16.3 million of capital expenditures
related to continuing operations in 1997. The Company's existing credit
agreement contains restrictions on the Company's ability to make capital
expenditures. Based on present estimates, management believes that the amount of
capital
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<PAGE> 31
expenditures permitted to be made under the existing credit agreement will be
adequate to maintain the properties and businesses of the Company's continuing
operations.
Liquidity. The Company's principal sources of liquidity are cash flow from
operations and borrowings under the New Credit Facility. The Company's principal
uses of cash will be debt service requirements, capital expenditures,
acquisitions and working capital. The Company expects that ongoing requirements
for debt service, capital expenditures and working capital will be funded from
operating cash flow and borrowings under the New Credit Facility. In connection
with future acquisitions, the Company may require additional funding which may
be provided in the form of additional debt, equity financing or a combination
thereof. There can be no assurance that any such additional financing will be
available to the Company on acceptable terms.
The Company incurred substantial indebtedness in connection with the Merger
and the Merger Financing. On a pro forma basis, after giving effect to the
Merger, the Merger Financing and the application of the proceeds thereof, the
Company would have had approximately $682.0 million of indebtedness outstanding
as of March 31, 1998 as compared to $370.4 million of indebtedness outstanding
as of March 31, 1998 on a historical basis. In addition, on the same pro forma
basis, the Company would have a stockholders' deficit of $475.4 million at March
31, 1998 as compared to a stockholders' deficit of $156.8 million as of March
31, 1998 on a historical basis. The Company's significant debt service
obligations following the Merger could, under certain circumstances, have
material consequences to security holders of the Company. See "Risk Factors."
In connection with the Merger, Mercury raised approximately $140 million
through the issuance of approximately 2,608,696 shares of its Common Stock,
2,000,000 shares of its Preferred Stock and warrants to purchase 353,428 shares
of its Common Stock at an exercise price of $0.01 per share, and approximately
$94.6 million aggregate gross proceeds of the Debentures. As a result of the
Merger, the proceeds from the sale of such securities became an asset of
Holdings, each share of Mercury Common Stock became a share of Holdings Common
Stock, each share of Mercury Preferred Stock became a share of Holdings
Preferred Stock, each DLJMB Warrant by its terms became exercisable for an equal
number of shares of Holdings Common Stock and Holdings succeeded to the
obligations of Mercury with respect to the Debentures. In addition, the Company
raised approximately $205.4 million through the issuance of the Senior
Subordinated Notes and $430 million through the New Credit Facility. In
addition, in connection with the Merger, certain members of senior management
purchased 143,192 shares of Holdings Common Stock for approximately $4.9 million
through the Management Share Purchase, of which approximately $3.6 million was
provided through the Management Loans.
The term loan facility under the New Credit Facility consists of (i) a $100
million Term A loan, (ii) a $115 million Term B loan and (iii) a $115 million
Term C loan. The Term A loan will mature six years after the closing date, the
Term B loan will mature seven years after the closing date and the Term C loan
will mature eight years after the closing date. The New Credit Facility also
includes a $100 million revolving credit facility, which is subject to increase
by up to $25 million upon request by Thermadyne LLC and that will terminate six
years after the closing date.
Borrowings under the New Credit Facility generally will bear interest based
on a margin over, at the Company's option, the base rate or LIBOR. The
applicable margin will vary based on the Thermadyne LLC's ratio of consolidated
indebtedness to adjusted EBITDA. Thermadyne LLC's obligations under the New
Credit Facility will be secured by substantially all of the assets of Thermadyne
LLC, including a pledge of the capital stock of all of its subsidiaries, subject
to certain limitations with respect to foreign subsidiaries. In addition,
Holdings has guaranteed the obligations of Thermadyne LLC under the New Credit
Facility. Such guarantee is only recourse to Holdings' pledge of all of the
outstanding capital stock of Thermadyne LLC to secure Thermadyne LLC's
obligations under the New Credit Facility. The New Credit Facility contains
customary covenants and events of default including substantial restrictions on
Thermadyne LLC's ability to make dividends or other distributions to Holdings.
The Old Debentures were issued by Mercury, became obligations of Holdings
following the Merger and are not guaranteed by Thermadyne LLC or any of its
consolidated subsidiaries. The Debentures will mature in
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<PAGE> 32
2008 and will not require cash interest payments until 2003. The Debentures
contain customary covenants and events of default, including covenants that
limit the ability of the Company and its subsidiaries to incur debt, pay
dividends and make certain investments.
The Senior Subordinated Notes were issued by Thermadyne LLC and Thermadyne
Capital and, were guaranteed by certain of the Company's domestic subsidiaries.
The Senior Subordinated Notes will mature in 2008. Interest on the Senior
Subordinated Notes will be payable semiannually in cash. The Senior Subordinated
Notes contain customary covenants and events of default, including covenants
that limit the ability of Thermadyne LLC and its subsidiaries to incur debt, pay
dividends and make certain investments.
The Preferred Stock issued in connection with the Merger has an initial
liquidation preference of $50 million and will accrue dividends at an annual
rate of approximately 13%. Prior to the fifth anniversary of the original date
of issuance, such dividends will be paid through increases in the liquidation
preference thereof or through the issuance of additional shares of Preferred
Stock. The Company is required to redeem the Preferred Stock on May 15, 2010 at
a redemption price equal to the liquidation preference per share, plus accrued
and unpaid dividends, if any, to the date of redemption. In addition, in the
event of a "change of control," as defined in the certificate of designation
related thereto, holders of Preferred Stock will have the right to require the
Company to repurchase its shares at a purchase price equal to 101% of the
liquidation preference thereof plus accrued and unpaid dividends, if any.
The Company anticipates that its operating cash flow, together with
borrowings under the New Credit Facility, will be sufficient to meet its
anticipated future operating expenses, capital expenditures and to service its
debt requirements as they become due. However, the Company's ability to make
scheduled payments of principal of, to pay interest on or to refinance its
indebtedness and to satisfy its other debt obligations will depend upon its
future operating performance, which will be affected by general economic,
financial, competitive, legislative, regulatory, business and other factors
beyond its control. See "Risk Factors."
EFFECT OF INFLATION; SEASONALITY
Inflation has not been a material factor affecting the Company's business.
In recent years, the cost of electronic components has remained relatively
stable due to competitive pressures within the industry, which has enabled the
Company to contain its service costs. The Company's general operating expenses,
such as salaries, employee benefits, and facilities costs, are subject to normal
inflationary pressures.
The operations of the Company are generally not subject to seasonal
fluctuations.
YEAR 2000 COMPLIANCE
The year 2000 issue is the result of computer programs being written using
two digits rather than four to define the applicable year. Any of the Company's
computer programs that have time-sensitive software may recognize a date using
"00" as the year 1900 rather than the year 2000. This could result in a system
failure or miscalculations causing disruptions of operations, including, among
other things, a temporary inability to process transactions, send invoices, or
engage in similar normal business activities. The Company believes that its
internal systems are Year 2000 compliant or will be upgraded or replaced in
connection with previously planned changes to information systems prior to the
need to comply with Year 2000 requirements. However, the Company is uncertain as
to the extent its customers and vendors may be affected by Year 2000 issues that
require commitment of significant resources and may cause disruptions in the
customers' and vendors' businesses.
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BUSINESS
OVERVIEW
Thermadyne is a leading global manufacturer of cutting and welding products
and accessories. The Company manufactures a broad range of gas (oxy-fuel) and
electric arc cutting and welding products that are ultimately sold to end-user
customers principally engaged in the aerospace, automotive, construction, metal
fabrication, mining, mill and foundry, petroleum and shipbuilding industries.
Thermadyne sells its products through a long-established domestic network of
approximately 1,100 independent distributors who market Thermadyne products to
over 10,000 end-user customers. For the twelve months ended March 31, 1998, the
Company's net sales and Adjusted EBITDA, on a pro forma basis, were $548.2
million and $115.5 million, respectively.
The Company's core products enjoy leading brand recognition, a reputation
for quality and strong market positions. In 1994, following the Company's
comprehensive financial restructuring under chapter 11 of the United States
Bankruptcy Code (the "Restructuring"), current management initiated a series of
transactions to focus the Company's business exclusively on the cutting and
welding industry. As part of this strategy, the Company divested three non-core
businesses: the Clarke floor maintenance business (1996); the Coyne Cylinder
Company (1996); and the Deloro Stellite wear resistance business (1997). In
addition, the Company initiated an acquisition strategy, purchasing six cutting
and welding products businesses since the Restructuring, which businesses
collectively generated approximately $169 million in annual revenues at the
respective times of acquisition. The acquisitions of cutting and welding
businesses provided, and will continue to provide, an opportunity for Thermadyne
to expand distribution of existing product lines into new geographic regions and
to sell acquired product lines through Thermadyne's existing distribution
network. As a result of this repositioning strategy, along with ongoing new
product introductions, an extensive distribution network and market leading
brands, the Company has achieved a compound annual growth in net sales and
Adjusted EBITDA of 20.3% and 12.5%, respectively, from 1993 to 1997.
According to the United States Department of Commerce, domestic welding
industry revenues totaled over $3.6 billion in 1997. The domestic industry has
grown at an annual rate of 5.9% since 1989 and is expected to grow 4.2% in 1998.
Global welding industry revenues are estimated to total over $10.0 billion and
management believes that growth in the international market has been faster than
the domestic market, driven, in large part, by infrastructure spending in
developing markets. International markets, including Australia and Italy,
represented approximately 42% of the Company's net sales in 1997, up from
approximately 20% of net sales in 1994. Although the industry has begun to
experience global consolidation, it continues to be very fragmented.
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RECENT ACQUISITIONS
The following table sets forth certain information with respect to the
Company's recent acquisitions:
<TABLE>
<CAPTION>
YEAR
TARGET ACQUIRED
------ -------------
<S> <C>
Modern Engineering Company,
Inc...................... 1994
C&G Systems, Inc........... 1995
Duxtech Pty. Limited
(Cigweld)................ 1996
GenSet S.p.A............... 1997
Prestolite Power
Corporation Welding
Division (Arcsys)........ 1997
Woodland Cryogenics,
Inc...................... 1997
</TABLE>
<TABLE>
<CAPTION>
ANNUAL
PRINCIPAL PRODUCTS REVENUE(1)
------------------ -------------
(IN MILLIONS)
<S> <C>
Oxy-fuel gas apparatus..... $3.0
Cutting tables............. 2.5
Electric arc products,
oxy-fuel products, filler
metals, gas control
products and safety
products................. 100.1
Engine-driven welders and
generators............... 38.1
Arc welders, plasma welders
and wire feeders......... 20.3
Cryogenic pumps, ambient
and electric vaporizers
and automatic cylinder
filling systems.......... 4.6
------
Total................. $168.6
======
</TABLE>
- ---------------
(1) Estimated annual revenue at the respective times of acquisition.
COMPETITIVE STRENGTHS
Thermadyne possesses a number of competitive strengths that have allowed it
to develop and maintain a strong position within the cutting and welding
industry, including the following:
Market Leading Brands. Management believes that the strength and longevity
of the numerous Thermadyne brand names create a significant competitive
advantage and position Thermadyne as one of the leaders in the cutting and
welding industry. Each of the Company's major divisions maintains
industry-leading brand names with significant market shares. Management believes
that VICTOR(R), founded in 1913, is the leading brand name in domestic
gas-operated cutting and welding torches and equipment; TWECO(R), founded in
1936, is the leading domestic manufacturer of MIG and manual welding torches;
ARCAIR(R) is the leading domestic brand name of TIG torch and accessory
products; THERMAL DYNAMICS(R), founded in 1957, is a leading domestic
manufacturer of manual plasma cutting products; and CIGWELD(R), founded in 1922,
is the leading brand name in the Australia/New Zealand cutting and welding
products market. Each of the manufacturing operations associated with these
brands is ISO-9000 series certified.
Diverse and Stable Customer Base. The Company's customer base includes
cutting and welding product distributors as well as end-user customers
principally engaged in the aerospace, automotive, construction, metal
fabrication, mining, mill and foundry, petroleum and ship building industries.
No one customer accounted for more than 9% of the Company's 1997 net sales.
Further, the Company's top 20 customers have been associated with the Company
for an average of over 10 years.
Established, Effective Distribution Channels. The Company believes that its
strong, established and long-standing relationships with over 1,100 independent
cutting and welding products distributors in the United States provide a
significant competitive advantage and support the Company's strong market
position. Thermadyne's domestic distributor relationships are maintained by 11
area business managers who oversee the Company's relationships with large
distributors and by separate product-specific sales forces for each of
Thermadyne's business units. Management believes that this unique structure,
which combines relationship managers with technically trained product
specialists, will enable the Company to more effectively maintain and utilize
its distributor networks. Management also believes that this established
distribution network enables the Company to achieve market penetration when
introducing newly developed or acquired products.
Proven and Committed Senior Management Team. Thermadyne's management team
has repositioned the Company over the past four years to focus exclusively in
its core cutting and welding markets. This
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repositioning was accomplished through divestitures of non-core assets and
acquisitions of strategic businesses or product lines. In addition, through
aggressive new product development and acquisition strategies, the management
team has positioned the Company to realize a 20.3% compound annual growth rate
in net sales from 1993 to 1997. In connection with the Merger each member of the
senior management team signed an employment contract with the Company.
Additionally, the Company adopted an incentive plan to tie each member of senior
management's compensation to the Company's financial performance. See "Executive
Compensation."
BUSINESS STRATEGY
Thermadyne has developed a business strategy designed to enhance its strong
market positions and continue to improve its growth and profitability. The
primary elements of the Company's business strategy are as follows:
Continue New Product Development and Enhancement. The foundation for
Thermadyne's strong market positions and leading brand names is the development
and introduction of new products and enhancements of existing products. The
Company believes it is at the forefront of cutting and welding technology with a
proven track-record of continual new product introductions and existing product
enhancements that have resulted in the issuance of more than 262 issued or
pending United States and foreign patents. New products and product enhancements
are designed to add value for customers, including enhanced safety features,
improved productivity and ergonomics and an improved welding environment.
Examples of recent new product introductions include robotic welding systems and
accessories, high-purity instrumentation, automated plasma cutting and safety
products as well as underwater cutting electrodes. During 1997, the Company
introduced over 135 new products or product enhancements, and the Company
expects to continue this effort in the future.
Expand Strategic Acquisitions. The Company has completed six acquisitions
since 1993, which collectively generated approximately $169 million in annual
revenues at the respective times of acquisition, including over $135 million of
revenues in Australia and Italy. The Company believes that numerous acquisition
candidates exist globally, and the Company intends to continue to seek new
acquisition opportunities in its cutting and welding business. Thermadyne
intends to continue its focused acquisition strategy that includes the following
principal elements: (i) entering and expanding in geographic areas where the
Company does not currently have a significant presence through acquisitions of
local cutting and welding businesses and (ii) expanding in geographic areas
where the Company currently maintains a strong presence through the acquisition
of complementary product lines.
Leverage Existing Distribution Network. The Company intends to leverage its
existing distribution network through the acquisition or introduction of new
products and product enhancements. Management believes that when the Company
acquires a local presence in a new geographic area, it can utilize the acquired
distribution network to sell existing Thermadyne brands into that local market.
In addition, the Company believes that significant opportunities exist to
purchase complementary product lines and expand its business by selling the new
product lines through Thermadyne's extensive distribution network. For example,
through recent acquisitions the Company has expanded its offering of filler
metals, conventional arc welding power supplies, safety equipment and
engine-driven welding power sources and began marketing such products through
its established distribution network. The Company intends to continue this
strategy of penetrating new welding product markets by leveraging its extensive
distribution network in conjunction with its new product development and focused
acquisition strategies.
Broaden International Presence. Thermadyne has maintained an international
presence for over 30 years and continues to broaden its presence throughout the
world. International sales accounted for approximately 42% of net sales in 1997
as compared to approximately 20% in 1994. The Company has established a
dedicated international market presence and maintains the leading position in
Australia/New Zealand and significant and growing positions in Europe, Asia and
Latin America. Management intends to continue the expansion of its strong
domestic brand names into the international market and to continue to penetrate
the growing Asian and Latin American cutting and welding markets.
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<PAGE> 36
Continue Cost Reduction Efforts. Thermadyne strives to continually improve
manufacturing efficiencies and reduce unit costs. In December 1997, the Company
implemented a cost reduction program that includes the following principal
elements: (i) vendor rationalization and consolidation; (ii) manufacturing
process and productivity improvements and product design changes; (iii)
personnel rationalization and expense reductions; (iv) advertising and trade
show expense reductions; (v) aircraft, charter and other travel expense
reductions; and (vi) elimination of annual sales meeting. In addition, the
Company has initiated the implementation of a new global information system that
is designed to allow the Company to further integrate administrative functions
and improve information flow across business unit lines.
Continue Dedicated Customer Service. The Company believes that effective
and proactive customer service has enabled the Company to build and maintain its
leading market positions and strong distributor relationships. Management plans
to continue this strategy of enhancing distributor and end-user relationships
through continuous customer service improvements. Each of Thermadyne's divisions
maintains a dedicated, well trained, technically oriented and product-specific
sales and customer service team. Management believes that the dedicated product
teams provide Thermadyne with a significant competitive advantage. In addition,
to further improve customer service, the Company has implemented a national
accounts team of 11 area business managers to support the dedicated product
sales and service teams and further support sales to the Company's key
distributors.
PRINCIPAL PRODUCTS
The Company manufactures a broad range of both gas (oxy-fuel) and arc
cutting and welding equipment (including a line of advanced plasma arc cutting
systems and oxy-fuel apparatus), accessories and consumables, including repair
parts. Over 40% of the Company's 1997 net sales were derived from the sale of
consumables and repair parts. Gas cutting and welding torches burn a mixture of
oxygen and fuel gas, typically acetylene. Arc cutting and welding systems are
powered by electricity. The major arc cutting and welding systems are plasma,
stick, MIG and TIG. Arc technology is more sophisticated than gas technology and
can be used on more types of metals. In addition, arc equipment produces less
distortion in the surrounding metal and it cuts and welds faster, reducing labor
costs. However, gas technology is more portable and generally less expensive
than arc technology and therefore remains important in many industries.
The Company conducts its operations through the following subsidiaries:
Thermal Dynamics -- Plasma Arc Cutting Products. Thermal Dynamics
Corporation ("Thermal Dynamics"), located in West Lebanon, New Hampshire and
founded in 1957, developed many of the early plasma cutting systems and
maintains its position as a leading manufacturer of plasma cutting systems and
replacement parts. Thermal Dynamics' product line ranges from a portable 20 amp
unit to large 1000 amp units. Thermal Dynamics' end-users are engaged primarily
in fabrication and repair of sheet metal and plate products found in fabricated
structural steel and non-ferrous metals, automotive products, appliances, sheet
metal, HVAC, general fabrication, shipbuilding and general maintenance.
Advantages of the plasma cutting process over other methods include faster
cutting speeds, the ability to cut ferrous and non-ferrous alloys and minimum
heat distortion on the material being cut. Plasma cutting also permits metal
cutting using only compressed air and electricity.
Tweco -- Electric Arc Products and Arc Gouging Systems. Tweco Products,
Inc. ("Tweco"), located in Wichita, Kansas and founded in 1936, manufactures a
line of arc welding replacement parts and accessories, including electrode
holders, ground clamps, cable connectors, terminal connectors and lugs and cable
splicers, and a variety of automatic and semi-automatic welding guns and cable
assemblies utilized in the arc welding process. Tweco also manufactures manual
stick electrode holders, ground clamps and accessories. Manual stick welding is
one of the oldest forms of welding and is used primarily by smaller welding
shops which perform general repair, maintenance and fabrication work. Tweco's
end-users are primarily engaged in the manufacture or repair and maintenance of
transportation equipment, including automobiles, trucks, aircraft, trains and
ships; the manufacture of a broad range of machinery; and the production of
fabricated metal products, including structural metal, hand tools and general
hardware.
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<PAGE> 37
Tweco is a leading domestic manufacturer of MIG welding guns. The MIG
process is an arc welding process utilized in the fabrication of steel,
aluminum, stainless steel and other metal products and structures. In the MIG
process, a small diameter consumable electrode wire is continuously fed into the
arc. The welding arc area is protected from the atmosphere by a "shielding" gas.
The welding guns and cable assemblies manufactured by Tweco carry the continuous
wire electrode, welding current and shielding gas to the welding arc. Tweco
manufactures a related line of robotic welding accessory products. This new
accessory line includes, but is not limited to, a robotic torch with patented
consumables, a robotic deflection mount, a robotic cleaning station, robotic
arms and an anti-splatter misting system.
Through its Arcair product line, Tweco manufactures equipment and related
consumable materials for "gouging," a technique that liquefies metal in a narrow
groove and then removes it using compressed air. Gouging products are often used
in joint preparation prior to a welding process. Numerous other applications
exist for these gouging systems, such as removal of defective welds, removal of
trim in foundries and repair of track, switches and freight cars in the railroad
industry. Arcair also manufactures a line of underwater welding and gouging
equipment.
In addition to gouging products, Arcair produces a patented exothermic
cutting system, SLICE(R). This system generates temperatures in excess of 70008F
and can quickly cut through steel, concrete and other materials. SLICE(R) has
many applications, including opening clogged steel furnaces and providing rapid
entry in fire and rescue operations. Arcair has developed an underwater version
of the SLICE(R)cutting system for use in the marine repair and salvage industry.
Arcair also manufactures TIG torches and accessories. The TIG process can
be used to fuse metals of almost all alloys and in thicknesses down to foil
size. TIG welding is used for pressure vessels, such as tanks, valves and pipes
and is relied on heavily in welding nuclear components. Fabrications involving
aluminum, magnesium and other specialty metals for use in aircraft, ships and
weapon systems also utilize the TIG process.
Arcair provides a complete line of chemicals used in the welding industry.
Chemicals are used for weld cleaning and as agents to reduce splatter adherence
on the metal being welded. Chemicals are also used to reduce splatter adherence
in welding nozzles in MIG applications.
Victor -- Oxy-Fuel Gas Products. Victor Equipment Company ("Victor") has
plants in Abilene and Denton, Texas and Gallman, Mississippi and was founded in
1913. Victor is a leading domestic manufacturer of gas operated cutting and
welding torches and gas and flow pressure regulation equipment. Victor's torches
are used to cut ferrous metals and to weld, heat, solder and braze a variety of
metals, and its regulation equipment is used to control pressure and flow of
most industrial and specialty gases. In addition, Victor manufactures a variety
of replacement parts, including welding nozzles and cutting tips of various
types and sizes and a line of specialty gas regulators purchased by end-users in
the process control, electronics and other industries. Victor also manufactures
a wide range of medical regulation equipment serving the oxygen therapy market,
including home health care and hospitals.
The torches produced by Victor are commonly referred to as oxy-fuel
torches. These torches combine a mixture of oxygen and a fuel gas, typically
acetylene, to produce a high temperature flame. These torches are designed for
maximum durability, repair ability and performance utilizing patented built-in
reverse flow check valves and flash arresters in several models. Victor also
manufactures lighter-duty hand-held heating, soldering and brazing torches.
Pressure regulators, which are basically diaphragm valves, serve a broad range
of industrial and specialty gas process control operations.
The principal uses of the Victor torch are cutting steel in metal
fabricating applications such as shipbuilding, construction of oil refineries,
power plants and manufacturing facilities, and welding, heating, brazing and
cutting in connection with maintenance of machinery, equipment and facilities.
Victor sells its lighter-duty products to end-user customers principally engaged
in the plumbing, refrigeration and heating, ventilation and air conditioning
industries. The relative low cost, mobility and ease of use of Victor torches
makes them suitable for a wide variety of uses.
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<PAGE> 38
Cigweld -- Electric Arc Products, Oxy-Fuel Products, Filler Metals, Gas
Control Products and Safety Products. The business now known as Cigweld, located
in Melbourne, Australia and founded in 1922, is the leading Australian
manufacturer of gas equipment and welding products.
Cigweld manufactures arc equipment welding products for both the automatic
arc and manual arc welding markets. The Cigweld range of automatic welding
equipment includes packages specifically designed for particular market
segments. End users of this product range include the rural market and the
vehicle repair, metal fabrication, ship building, general maintenance and heavy
industries. Manual arc equipment products range from small welders designed for
the home handyman to units designed for heavy industry.
Cigweld manufactures a range of consumable products (filler metals) for
manual and automatic arc and gas welding. The range of manual arc electrodes
includes over 50 individual electrodes for different applications. Cigweld
markets its manual arc electrodes under such brand names as Satincraft,
Weldcraft, Ferrocraft(R), Alloycraft(R), Satincrome, Cobalarc(R), Castcraft and
Weldall(R).
For automatic and semi-automatic welding applications, Cigweld manufactures
a significant range of solid and flux-cored wires, principally under the
Autocraft(R), Verti-Cor, Satin-Cor, Metal-Cor and Cobalarc(R) brand names. For
gas and TIG welding, Cigweld manufactures and supplies approximately 40
individual types of wires and solders for use in different applications.
Cigweld's filler metals are manufactured to standards appropriate for their
intended use, with the majority of products approved by agencies, such as
Lloyd's Register of Shipping, American Bureau of Shipping, De Norske Veritas and
U.S. Naval Ships.
Cigweld manufactures a comprehensive range of equipment for gas welding and
cutting and ancillary products such as gas manifolds, gas regulators and
flowmeters. Gas welding and cutting equipment is sold in kit form or as
individual products. Kits are manufactured for various customer groups and their
components include combinations of oxygen and acetylene regulators, blowpipes,
cutting attachments, mixers, welding and heating tips, cutting nozzles, roller
guides, twin welding hoses, goggles, flint lighters and tip cleaners,
combination spanners and cylinder keys. In addition to its kits, Cigweld
manufactures and/or distributes a complete range of gas equipment, including a
range of blowpipes and attachments, regulators (for oxygen, acetylene, argon and
carbon dioxide), flashback arrestors, cutting nozzles, welding and heating tips,
hoses and fittings, gas manifolds and accessories.
Cigweld also manufactures a range of gas control equipment including
specialty regulators (for use with different gases, including oxygen, acetylene,
liquified petroleum gas, argon, carbon dioxide, nitrogen, air, helium, hydrogen,
carbon monoxide, ethylene, ethane and nitrous oxide), manifold systems, cylinder
valves and spares and natural gas regulators. Cigweld's gas control items are
primarily sold to gas companies.
Cigweld manufactures and/or distributes a range of safety products for use
in welding and complementary industries. The product range includes welding
helmets and accessories, respirators and masks, breathing apparatus, earmuffs
and earplugs, safety spectacles, safety goggles and gas welding goggles, safety
helmets, faceshields, flashields (see-through welding curtains and screens) and
welding apparel.
Medical products are also manufactured by Cigweld in its manufacturing
plant in Melbourne, Australia. These products are distributed through a sole
distributor in the Australian market and exported through third party
distributors and related entities. The product range includes regulators,
flowmeters, suction units, oxygen therapy, resuscitation and outlet valves for
medical gas systems.
C&G Systems -- Cutting Tables. C&G Systems Inc. ("C&G"), located in Itasca,
Illinois and founded in 1968, manufactures a line of mechanized cutting tables
for fabricating sheet metal and metal plate. The machines utilize either
oxy-fuel or plasma cutting torches produced by other divisions of the Company.
C&G has a wide range of cutting tables from the relatively inexpensive
cantilever type used in general fabrication and job shops to the large precision
gantry type found in steel service centers and specialty cutting applications.
These metal cutting tables can be used in virtually any metal fabrication plant.
Stoody -- Hardfacing Products. Stoody Company ("Stoody"), located in
Bowling Green, Kentucky and with operations founded in 1921, is a recognized
world leader in the development and manufacture of hardfacing welding wires,
electrodes and rods. While Stoody's primary product line is iron-based welding
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<PAGE> 39
wires, Stoody also participates in the markets for cobalt-based and nickel-based
electrodes, rods and wires, which are essentially protective overlays, deposited
on softer base materials by various welding processes. This procedure, referred
to as "hardfacing" or "surface treatment," adds a more resistant surface,
thereby increasing the component's useful life. Lower initial costs, the ability
to treat large parts, and ease and speed of repairs in the field are some of the
advantages of hardfacing over solid wear resistant components. A variety of
products have been developed for hardfacing applications in industries utilizing
earth moving equipment, agricultural tools, crushing components, and steel mill
rolls, and in virtually all applications where metal is exposed to external wear
factors.
Thermal Arc -- Arc Welders, Plasma Welders and Wire Feeders. In 1997, the
inverter and plasma arc welder business of Thermal Dynamics and Arcsys were
combined to form Thermal Arc, Inc. ("Thermal Arc"). The combined operation is
located in Troy, Ohio and produces a full line of inverter and transformer-
based electric arc welders, plasma welders, engine driven welders and wire
feeders. Thermal Arc products compete in the marketplace for construction,
industrial and automated applications, and serve a large and diverse user base.
The inverter arc welding power machines use high frequency power
transistors to provide welding machines that are extremely portable and power
efficient when compared to conventional welding power sources. Plasma welding
dramatically improves productivity for the end-user. Additionally, conventional
transformer-based machines provide a cost-effective alternative for markets
where low cost and simplicity of maintenance are a high priority.
GenSet -- Engine-Driven Welders and Generators. GenSet, located in Pavia,
Italy, commenced operations in 1976 with the production of small generating
sets. In 1976, it developed its first engine-driven welder and, in 1977,
obtained its first patent for the synchronous alternator designed for welding
purposes. It now offers a full range of technologically advanced generators and
engine-driven welders that are sold throughout the world. These products are
used both where main power is not available and for stand-by power where
continuous power supply is a key requirement.
Woodland Cryogenics -- Cryogenic Pumps, Ambient and Electric Vaporizers and
Automatic Cylinder Filling Systems. Woodland, with manufacturing facilities in
Philadelphia, Pennsylvania and founded in 1986, is a leading manufacturer,
distributor and installer of cryogenic and high pressure gas fill plants,
vaporizers and pumps. Woodland's products are used to control, mix and package
both cryogenic and high pressure gases into containment vessels such as gas
cylinders.
The principal uses of Woodland products are for the filling of cryogenic
and high pressure gases for applications in industrial, medical and specialty
gas markets served by gas distributors and producers. Woodland has developed
computerized filling equipment to maximize productivity while also offering
conventional or manual filling equipment.
INTERNATIONAL BUSINESS
The Company had aggregate international sales from continuing operations of
approximately $220.2 million, $171.6 million and $67.5 million for the fiscal
years ended December 31, 1997, 1996 and 1995, respectively, or approximately
42%, 39% and 21%, respectively, of net sales in each such period. The Company's
international sales are influenced by fluctuations in exchange rates of foreign
currencies, foreign economic conditions and other risks associated with foreign
trade. The Company's international sales consist of: (a) export sales of
Thermadyne products manufactured at domestic manufacturing facilities and, to a
limited extent, products manufactured by third parties, sold through overseas
field representatives of Thermadyne International Corporation ("Thermadyne
International"), a subsidiary of Thermadyne; and (b) sales of Thermadyne
products manufactured at international manufacturing facilities, sold by
Thermadyne's foreign subsidiaries. For further information concerning the
international operations of the Company, see the notes to the Consolidated
Financial Statements of the Company included elsewhere herein.
Thermadyne International was formed in 1980 to coordinate Thermadyne's
efforts to increase international sales and sells cutting and welding products
through independent distributors in more than 80 countries.
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<PAGE> 40
In support of this effort, the Company operates distribution centers in Canada,
Australia, Italy, Mexico, Japan, Singapore, Brazil, the Philippines, Indonesia
and the United Kingdom and employs sales people located in 23 additional
countries.
DISTRIBUTION
The Company's cutting and welding products are distributed through a
domestic network of approximately 1,100 independent welding products
distributors with over 2,800 locations who carry one or more of its product
lines. Relationships with the distributors are maintained by a separate sales
force for each of the Company's principal product lines. In addition, a team of
11 area business managers exists to support the sale of all of the Company's
product lines to its key distributors. The Company's products are distributed
internationally through a direct sales force and independent distributors.
RESEARCH AND DEVELOPMENT
The Company has research and development groups for each of its product
lines that primarily conduct process and product development to meet market
needs. As of December 31, 1997, the Company employed approximately 125 persons
in its research and development groups, most of which are engineers.
PATENTS, LICENSES AND TRADEMARKS
The Company's products are sold under a variety of trademarks and trade
names. The Company owns trademark registrations or has filed trademark
applications for all trademarks and has registered all trade names that the
Company believes are material to the operation of its businesses. The Company
also owns various patents and from time to time acquires licenses from owners of
patents to apply such patents to its operations. As of December 31, 1997, the
Company had 740 registered and pending trademarks and 262 registered and pending
patents. The Company does not believe any single patent or license is material
to the operation of its businesses taken as a whole.
COMPETITION
The Company competes principally with a number of domestic manufacturers of
cutting and welding products, the majority of which compete only in limited
segments of the overall market. Management believes that competition is based
primarily on product quality, brand name, breadth and depth of product lines,
effectiveness of distribution channels, acumen of sales force, price and quality
of customer service. To date, the Company has experienced little direct foreign
competition in its U.S. markets due to the relatively limited size of such
markets, the inability of foreign manufacturers to establish effective
distribution channels and the relatively non-labor intensive nature of the
cutting and welding product manufacturing process. The Company also competes in
certain international markets in which it faces substantial competition from
foreign manufacturers of cutting and welding products.
RAW MATERIALS
The Company has not experienced any difficulties in obtaining raw materials
for its operations because its principal raw materials, copper, brass, steel and
plastic, are widely available and need not be specially manufactured for use by
the Company. Certain of the raw materials used in hardfacing products, such as
cobalt and chromium, are available primarily from sources outside the United
States, some of which are located in countries that may be subject to economic
and political conditions which could affect pricing and disrupt supply. Although
the Company has historically been able to obtain adequate supplies of these
materials at acceptable prices and has been able to recover the costs of any
increases in the price of raw materials in the form of higher unit sales prices,
restrictions in supply or significant fluctuations in the prices of cobalt,
chromium and other raw materials could adversely affect the Company's business.
The Company also purchases certain products which it either uses in its
manufacturing processes or resells. These products include, but are not limited
to, electronic components, circuit boards, semi-conductors,
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<PAGE> 41
motors, engines, pressure gauges, springs, switches, lenses and chemicals. The
Company believes its sources of such products are adequate to meet foreseeable
demand.
EMPLOYEES
As of December 31, 1997, the Company employed 3,563 people, of which
approximately 637 were engaged in sales and marketing activities, 225 were
engaged in administrative activities, 2,584 were engaged in manufacturing
activities and 117 were engaged in engineering activities. Labor unions
represent none of the Company's work force in the United States and virtually
all of the manufacturing employees in its foreign operations. The Company
believes that its employee relations are good. The Company has not experienced
any significant work stoppages.
FACILITIES
The Company operates 12 manufacturing facilities in the United States,
Italy, the Philippines and Australia. All domestic manufacturing facilities,
leases and leasehold interests are encumbered by liens securing the Company's
obligations under the New Credit Facility. The Company considers its plants and
equipment to be modern and well-maintained and believes its plants have
sufficient capacity to meet future anticipated expansion needs.
The Company leases and maintains a 43,600 square foot facility located in
St. Louis, Missouri, which houses the executive offices of the Company and its
operating subsidiaries, as well as all centralized services.
The following table describes the location and general character of the
Company's principal properties:
<TABLE>
<CAPTION>
SUBSIDIARY/ BUILDING SPACE/ PROPERTY
LOCATION OF FACILITY NUMBER OF BUILDINGS SIZE
-------------------- ------------------- ----------
<S> <C> <C>
Thermal Dynamics/West Lebanon, New Hampshire.. 187,000 sq. ft. 8.0 acres
5 buildings (office, manufacturing, sales
training, future expansion)
Tweco/Wichita, Kansas......................... 220,816 sq. ft. 21.7 acres
3 buildings (office, manufacturing,
storage space)
Victor/Denton, Texas.......................... 222,403 sq. ft. 30.0 acres
4 buildings (office, manufacturing,
storage, sales training center)
Victor/Abilene, Texas......................... 123,740 sq. ft. 32.0 acres
1 building (office and manufacturing)
Thermadyne Canada/Oakville, Ontario, Canada... 57,000 sq. ft. 8.3 acres
1 building (office and warehouse)
Modern Engineering Company/ Gallman,
Mississippi................................. 60,000 sq. ft. 60.0 acres
1 building (office and manufacturing)
Thermadyne Australia/Melbourne, Australia..... 588,000 sq. ft. 32.4 acres
8 buildings (office, manufacturing,
storage, research)
Thermadyne Australia/Cebu, Philippines........ 34,600 sq. ft. 1.2 acres
1 building (office and manufacturing)
C&G/Itasca, Illinois.......................... 38,000 sq. ft. 2.0 acres
1 building (office, manufacturing, future
expansion)
Stoody/Bowling Green, Kentucky................ 185,000 sq. ft. 37.0 acres
1 building (office and manufacturing)
</TABLE>
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<PAGE> 42
<TABLE>
<CAPTION>
SUBSIDIARY/ BUILDING SPACE/ PROPERTY
LOCATION OF FACILITY NUMBER OF BUILDINGS SIZE
-------------------- ------------------- ----------
<S> <C> <C>
GenSet/Pavia, Italy........................... 193,000 sq. ft. 7.9 acres
2 buildings (office, manufacturing,
warehouse)
Thermal Arc/Troy, Ohio........................ 120,000 sq. ft. 6.5 acres
1 building (office, manufacturing,
warehouse, sales training)
Woodland/Philadelphia, Pennsylvania........... 25,537 sq. ft. 3.4 acres
1 building (office and manufacturing)
</TABLE>
All of the above facilities are leased, except for the facilities located
in Melbourne, Cebu, Pavia and Gallman, which are owned. The Company also has
additional assembly and warehouse facilities in Canada, the United Kingdom,
Italy, Japan, Singapore, Mexico, the Philippines, Indonesia, Brazil and
Australia.
In addition, the Company has subleased 264,000 square feet of its 325,000
square foot facility in City of Industry, California, which formerly was the
manufacturing facility for certain products now manufactured at the Company's
Bowling Green, Kentucky facility.
The leases for the Company's leased and subleased properties will expire
from 1999 through 2010.
LEGAL PROCEEDINGS AND ENVIRONMENTAL MATTERS
The Company is a party to ordinary litigation incidental to its businesses,
including a number of product liability cases seeking substantial damages. The
Company maintains insurance against any product liability claims. Coverage for
most years has a $500,000 self insured retention with $500,000 of primary
insurance per claim. In addition, the Company maintains umbrella policies
providing an aggregate of $50,000,000 in coverage for product liability claims.
Although it is difficult to predict the outcome of litigation with any
certainty, the Company believes that the liabilities which might reasonably
result from such lawsuits, to the extent not covered by insurance, will not have
a material adverse effect on the Company's financial condition or results of
operations.
The Company's operations are subject to federal, state, local and foreign
laws and regulations relating to the storage, handling, generation, treatment,
emission, release, discharge and disposal of certain substances and wastes. The
Company is currently not aware of any citations or claims filed against it by
any local, state, federal and foreign governmental agencies which, if
successful, would have a material adverse effect on the Company's financial
condition or results of operations.
The Company may be required to incur costs relating to remediation of
properties, including properties at which the Company disposes of waste, and
environmental conditions could lead to claims for personal injury, property
damage or damages to natural resources. The Company is aware of environmental
conditions at certain properties which it now or previously owned or leased
which are undergoing remediation. The Company does not believe that the cost of
such remediation will have a material adverse effect on the Company's business,
financial condition or results of operations.
Certain environmental laws, including but not limited to, the Comprehensive
Environmental Response, Compensation and Liability Act ("CERCLA" or "Superfund")
and the equivalent state Superfund laws, provide for strict, joint and several
liability for investigation and remediation of spills or other releases of
hazardous substances. Such laws may apply to conditions at properties presently
or formerly owned or operated by the Company or by its predecessors or
previously owned business entities, as well as to conditions at properties at
which wastes or other contamination attributable to the Company or its
predecessors or previously owned business entities come to be located. The
Company has in the past and may in the future be named a PRP at off-site
disposal sites to which it has sent waste. The Company does not believe that the
ultimate cost relating to Superfund sites will have a material adverse effect on
the Company's financial condition or results of operations. See "Risk
Factors -- Environmental Matters."
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<PAGE> 43
THE MERGER AND MERGER FINANCING
THE MERGER FINANCING
The funding required to pay the cash portion of the Merger Consideration,
the Option Cash Proceeds and the ESPP Cash Proceeds, to refinance and/or retire
outstanding indebtedness of the Company, and to pay expenses incurred in
connection with the Merger was approximately $808 million. These cash
requirements were funded with the proceeds obtained from concurrent equity and
debt financings, Thermadyne LLC and Thermadyne Capital issued the Senior
Subordinated Notes and Thermadyne LLC entered into a syndicated senior secured
loan facility providing for term loan borrowings in the aggregate principal
amount of approximately $330 million and revolving loan borrowings of $100
million (subject to a potential, but uncommitted, increase of up to $25 million
upon the request of Thermadyne LLC). In connection with the Merger, Thermadyne
LLC borrowed all term loans available under the New Credit Facility plus
approximately $25 million of revolving loans. The remaining revolving loans will
be available to fund the working capital requirements of the Company. The
proceeds of such financings were distributed to Holdings in the form of a
dividend. See "Description of New Credit Facility" and "Certain Relationships
and Related Transactions."
Mercury issued approximately $94.6 million aggregate proceeds of the
Debentures. In connection with the Merger, Holdings succeeded to the obligations
of Mercury with respect to the Debentures. The DLJMB Funds also purchased
2,608,696 shares of Mercury Common Stock, 2,000,000 shares of Mercury Preferred
Stock and the DLJMB Warrants for approximately $140 million. As a result of the
Merger, the proceeds of such purchases became an asset of Holdings, each share
of Mercury Common Stock became a share of Holdings Common Stock, each share of
Mercury Preferred Stock became a share of Holdings Preferred Stock and each
DLJMB Warrant to acquire Mercury Common Stock became exercisable for an equal
number of shares of Holdings Common Stock. In addition, in connection with the
Merger, certain members of senior management purchased 143,192 shares of
Holdings Common Stock for approximately $4.9 million through the Management
Share Purchase, of which approximately $3.6 million was provided through the
Management Loans.
THE MERGER
As a result of the Merger, each share of Holdings Common Stock held by
Holdings as treasury stock or owned by Mercury immediately prior to the
effectiveness of the Merger was cancelled, and no payment was made with respect
thereto; each share of Mercury Common Stock outstanding immediately prior to the
effectiveness of the Merger was converted into and became one share of Holdings
Common Stock with the same rights, powers and privileges as the shares so
converted; each share of Mercury Preferred Stock, outstanding immediately prior
to the effectiveness of the Merger was converted into and became one share of
preferred stock of Holdings with the same rights, powers and privileges as the
shares of preferred stock so converted; each outstanding DLJMB Warrant to
purchase Mercury Common Stock became exercisable for an equal number of shares
of Holdings Common Stock on the same terms and conditions as the DLJMB Warrant;
and each share of Holdings Common Stock outstanding immediately prior to the
effectiveness of the Merger was converted into the following (the "Merger
Consideration"): for each such share with respect to which an election to retain
Holdings Common Stock was effectively made and not revoked ("Stock Electing
Shares"), the right to retain approximately one share of Holdings Common Stock,
and for each such share (other than Stock Electing Shares), the right to receive
in cash from Mercury an amount equal to $34.50 (the "Cash Merger
Consideration"). Because the Merger required approximately 4.3% (or 485,010) of
the outstanding shares of Holdings Common Stock prior to the Merger to be
retained by existing stockholders of Holdings, the right to receive the Merger
Consideration was subject to proration. As a result of proration, each Stock
Electing Share was converted into .076 of a share of Holdings Common Stock and
the right to receive $34.50 in cash in lieu of shares not converted into
Holdings Common Stock. As a result of the Merger 10,690,283 shares of Holdings
Common Stock (approximately 95.7% of the presently issued and outstanding
shares) were converted into cash, as described above, and approximately 4.3% (or
485,010) of such shares were retained by existing stockholders. As a result of
the Merger, the shares of Mercury Common Stock were
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<PAGE> 44
converted into Holdings Common Stock representing approximately 80.6% of
Holdings Common Stock (or 75.7% on a fully diluted basis) after the Merger.
As a result of the Merger, the DLJMB Warrants permit the holders thereof to
purchase an additional 353,428 shares of Holdings Common Stock.
As a result of the Merger, each outstanding option to acquire shares of
Holding Common Stock granted to employees and directors, (excluding shares
subject to purchase under the Holding's Employee Stock Purchase Plan (the
"ESPP")), whether vested or not (the "Options"), were canceled. In lieu thereof,
the holders of such Options received, with respect to each Option, a cash
payment in an amount equal to the product of (x) the excess, if any, of $34.50
over the exercise price of such Option and (y) the number of shares of Holding
Common Stock subject to such Option (the "Option Cash Proceeds").
In addition, upon effectiveness of the Merger, rights to purchase shares of
Holding Common Stock under the ESPP were canceled. In lieu thereof, participants
in the ESPP received a cash payment in the amount equal to the product of the
number of shares of Holding Common Stock subject to purchase by such
participants thereunder and $34.50 (the "ESPP Cash Proceeds").
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<PAGE> 45
MANAGEMENT
Board of Directors. The following table sets forth the name, age and
position with Holdings of each director of Holdings:
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
Randall E. Curran........................................ 43 Chairman of the Board
James H. Tate............................................ 50 Director
Peter T. Grauer.......................................... 52 Director
William F. Dawson, Jr. .................................. 33 Director
John F. Fort III......................................... 56 Director
Harold A. Poling......................................... 72 Director
Lawrence M.v.D. Schloss.................................. 43 Director
</TABLE>
Randall E. Curran has been a Director of the Company since February 1994
and was elected Chairman of the Board and Chief Executive Officer in February
1995, having previously served as President of the Company from August 1994 and
as Executive Vice President and Chief Operating Officer of the Company from
February 1994. He also serves as President of Thermadyne Industries, Inc., a
position he has held since 1992. From 1986 to 1992, Mr. Curran was Chief
Financial Officer of the Company and/or its predecessors. Prior to 1986, Mr.
Curran held various executive positions with Cooper Industries, Inc.
James H. Tate has been a Director of the Company since October 1995. He was
elected Senior Vice President and Chief Financial Officer in February 1995,
having previously served as Vice President of the Company and Vice President and
Chief Financial Officer of the Company's subsidiaries since April 1993. Prior to
joining the Company, Mr. Tate was employed by the accounting firm of Ernst &
Young LLP for eighteen years, the last six of which he was a partner.
Peter T. Grauer has been a Managing Director of DLJMB Inc. (and its
predecessor) since September 1992. Mr. Grauer is a director of Doane Products
Co., Total Renal Care Holdings, Inc., DecisionOne Holdings Corp., Nebco Evans
Holding Company, Ameriserve Food Distribution, Inc. and Bloomberg, Inc.
William F. Dawson, Jr. has been a Principal of DLJMB Inc. since August
1997. From December 1995 to August 1997, he was a Senior Vice President in
DLJSC's High Yield Capital Markets Group. Prior thereto, Mr. Dawson was a Vice
President in the Leveraged Finance Group within DLJSC's Investment Banking
Group. Mr. Dawson serves as a Director of Von Hoffmann Corporation.
John F. Fort III retired as Chairman of the Board of Tyco International LTD
in January of 1993. In 1964, after receiving degrees in Aeronautical Engineering
and Industrial Management from Princeton and MIT's Sloan School of Business
respectively, he joined the Simplex Wire & Cable Company (now a subsidiary of
Tyco). Mr. Fort held a broad range of positions throughout his thirty years at
Tyco. He currently holds directorships at Tyco International Ltd., Dover
Corporation, and Roper Industries. He is an active participant on advisory
boards at MIT, Princeton University, Full Circle Investments and the Appalachian
Mountain Club.
Harold A. Poling retired as Chairman of the Board and Chief Executive
Officer of Ford Motor Company on January 1, 1994, a position he held since 1990.
Mr. Poling is a director of Shell Oil Company, LTV Corporation, Flint Ink
Corporation and the Kellogg Company, and is a member of BHP International
Advisory Council, The VIAG International Board and the PGA Tour Policy Board. He
is a director of the Monmouth (Ill.) College Senate and Chairman of the Dean's
Advisory Council for the Indiana University School of Business. He was national
chairman of Indiana University's Annual Fund campaigns from 1986 to 1998.
Lawrence M.v.D. Schloss has been the Managing Partner of DLJ Merchant
Banking II, Inc. since November 1995. Prior to November 1995, he was the Chief
Operating Officer and a Managing Director of DLJ Merchant Banking, Inc. Mr.
Schloss currently serves as Chairman of the Board of McCulloch Corporation and
as a director of Wilson Greatbatch, Inc. and DecisionOne Holdings Corp. Mr.
Schloss has
44
<PAGE> 46
previously served as a director of GTECH Corporation (NYSE:GTK), Krueger
International, Inc., OSi Specialties, Inc. and MPB Corporation.
Executive Officers. The following table sets forth certain information
concerning the executive officers of the Company:
<TABLE>
<CAPTION>
NAME AGE POSITION(S)
---- --- -----------
<S> <C> <C>
Randall E. Curran........... 43 President and Chief Executive Officer
James H. Tate............... 50 Senior Vice President and Chief Financial Officer
Stephanie N. Josephson...... 44 Vice President, General Counsel and Corporate Secretary
Thomas C. Drury............. 41 Vice President, Human Resources
Robert D. Maddox............ 38 Vice President and Corporate Controller
</TABLE>
The following are brief biographies of each officer of the Company who is
not also a director.
Stephanie N. Josephson has been Vice President, General Counsel and
Corporate Secretary of the Company since 1995. Prior to joining Holdings, Ms.
Josephson was Corporate Counsel for Mills & Partners, Inc. from 1993 to 1995 and
an Adjunct Professor at St. Louis University School of Business in the MBA
program from 1991 to 1993. Prior thereto, Ms. Josephson was employed in Houston,
Texas as Counsel for Cooper Industries, Inc. and in private practice with the
law firms Andrews & Kurth and Weycer and Kaplan from 1979 to 1991.
Thomas C. Drury has been Vice President -- Human Resources of the Company
since March 1995. Prior to that time, Mr. Drury served as Director of Human
Resources for Holdings since November 1991. Prior to joining Holdings, Mr. Drury
was Manager -- Human Resources at McDonnell Douglas Systems Integration Company
from 1988 through 1991.
Robert D. Maddox has been Vice President and Corporate Controller of the
Company since April 1996. Prior to that time, Mr. Maddox served as Vice
President and Controller of Holdings' operating subsidiaries from April 1995 to
April 1996 and Controller from May 1992 to April 1995. Prior to joining
Holdings, Mr. Maddox was a senior audit manager with the accounting firm of
Ernst & Young LLP.
45
<PAGE> 47
EXECUTIVE COMPENSATION
The following table sets forth for the years ended December 31, 1997, 1996
and 1995 certain compensation paid by Holdings to its Chief Executive Officer
and the four other most highly paid executive officers of Holdings whose cash
compensation exceeded $100,000 for the year ended December 31, 1997.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
------------
AWARDS
------------
ANNUAL COMPENSATION SECURITIES
-------------------- UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) OPTIONS(#) COMPENSATION($)(1)
--------------------------- ---- --------- -------- ------------ ------------------
<S> <C> <C> <C> <C> <C>
Randall E. Curran................... 1997 517,847 538,400 30,600 33,807
Chairman of the Board, President
and 1996 498,921 385,050 91,000 8,008
Chief Executive Officer(2) 1995 482,919 409,116 65,000 7,728
James H. Tate....................... 1997 275,093 188,614 27,000 18,039
Director, Senior Vice President
and 1996 241,012 169,114 36,000 7,403
Chief Financial Officer(3) 1995 221,454 158,965 20,000 3,991
Stephanie N. Josephson.............. 1997 168,719 84,625 10,000 10,210
Vice President, General Counsel
and 1996 129,573 70,208 6,000 6,489
Corporate Secretary(4) 1995 100,127 44,760 25,000 3,024
Thomas C. Drury..................... 1997 132,206 66,479 10,000 7,444
Vice President -- Human 1996 107,115 53,708 6,000 5,982
Resources(5) 1995 92,557 32,669 25,000 4,160
Robert D. Maddox.................... 1997 134,254 67,417 5,000 7,749
Vice President and Controller(6) 1996 113,658 60,055 6,000 6,272
1995 98,039 36,556 10,000 4,378
</TABLE>
- ---------------
(1) All other compensation includes group life insurance premiums paid by
Holdings and contributions made on behalf of the named executive officers to
Holdings' 401(k) retirement and profit sharing plan. The amount of insurance
premiums paid and 401(k) contributions made on behalf of the named executive
officers for 1997 are as follows: Mr. Curran, $3,978 and $29,829,
respectively; Mr. Tate, $2,544 and $15,495, respectively; Ms. Josephson,
$1,138 and $9,072, respectively; Mr. Drury, $361 and $7,083, respectively;
and Mr. Maddox, $254 and $7,495, respectively.
(2) Mr. Curran was elected Chairman of the Board and Chief Executive Officer of
Holdings effective as of February 23, 1995, having previously served as
President of Holdings from August 1994 and as Executive Vice President and
Chief Operating Officer of Holdings from February 1994.
(3) Mr. Tate was elected Senior Vice President and Chief Financial Officer of
Holdings effective as of February 23, 1995, having previously served as Vice
President of Holdings and as Chief Financial Officer of Holdings'
subsidiaries. Mr. Tate was elected as a director of Holdings on October 26,
1995.
(4) Ms. Josephson was elected Corporate Counsel and Corporate Secretary of
Holdings on March 7, 1995, and was elected Vice President and General
Counsel of Holdings on April 26, 1995.
(5) Mr. Drury was elected Vice President -- Human Resources of Holdings on March
7, 1995.
(6) Mr. Maddox was elected Controller of Holdings on June 1, 1992, Vice
President and Controller of Thermadyne Industries, Inc. on April 1, 1995,
and Vice President of Holdings on April 18, 1996.
46
<PAGE> 48
The following table sets forth certain information related to stock options
granted to the named executive officers in 1997.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
NUMBER OF PERCENT OF
SECURITIES TOTAL OPTIONS
UNDERLYING GRANTED TO EXERCISE OR GRANT DATE
OPTIONS EMPLOYEES IN BASE PRICE EXPIRATION PRESENT VALUE
NAME GRANTED(#)(1) FISCAL YEAR(%) ($/SH) DATE ($)(2)
---- ------------- -------------- ----------- ---------- -------------
<S> <C> <C> <C> <C> <C>
Randall E. Curran.............. 30,600 14.1 26.875 02/05/07 491,742
James H. Tate.................. 27,000 12.4 26.875 02/05/07 433,890
Stephanie N. Josephson......... 10,000 4.6 26.875 02/05/07 160,700
Thomas C. Drury................ 10,000 4.6 26.875 02/05/07 160,700
Robert D. Maddox............... 5,000 2.3 26.875 02/05/07 80,350
</TABLE>
- ---------------
(1) The options to purchase Holdings Common Stock were granted under Holdings'
1993 Management Option Plan or the Holdings' 1996 Employee Stock Option Plan
and become exercisable in five equal annual installments commencing on the
first anniversary of the date of grant. All options become exercisable upon
a change of control (as defined). In addition, such options continue to vest
after any termination of employment for so long as the optionee is entitled
to receive severance benefits under any employment arrangement with
Holdings. Replacement options may be granted, in the Compensation
Committee's sole discretion, if a named executive officer exercises such
options using previously owned shares of Holdings Common Stock.
(2) The grant date present value of each option grant was determined using a
variation of the Black-Scholes option pricing model. The estimated values
presented are based on the following assumptions made as of the time of
grant: an expected dividend yield of 0%; an expected option term of 10
years; volatility of .339 (based on historical stock price observations just
prior to each grant); and a risk-free rate of 6.72%. The actual value, if
any, that an executive officer may realize from the exercise of the options
will be the excess of the fair market value of Holdings Common Stock on the
date of exercise over the exercise price. See "-- Fiscal Year-End Option
Values."
The following table provides information related to the number and value of
options held by the named executive officers at the end of 1997. On December 31,
1997, the closing sale price of Holdings Common Stock on NASDAQ was $29 1/2. No
named executive officer exercised any options during 1997.
FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS AT IN-THE-MONEY OPTIONS
FISCAL YEAR-END AT FISCAL YEAR-END
---------------------------------- ----------------------------------
NAME EXERCISABLE(#) UNEXERCISABLE(#) EXERCISABLE($) UNEXERCISABLE($)
---- -------------- ---------------- -------------- ----------------
<S> <C> <C> <C> <C>
Randall E. Curran............... 244,200 142,400 4,139,725 1,574,850
James H. Tate................... 53,700 67,800 893,975 624,275
Stephanie N. Josephson.......... 11,200 29,800 177,975 328,775
Thomas C. Drury................. 11,200 29,800 177,975 328,775
Robert D. Maddox................ 5,200 15,800 81,225 170,525
</TABLE>
As a result of the Merger, all outstanding Options, whether or not vested,
were canceled, and the holders of such Options received a cash payment in an
amount equal to the product of (x) the excess, if any, of $34.50 over the
exercise price of such Option multiplied by (y) the number of shares of Holdings
Common Stock subject to such Option.
47
<PAGE> 49
EMPLOYMENT ARRANGEMENTS
Employment Contracts. In connection with the Merger Holdings entered into
employment agreements with, among others, the following executive officers:
Randall E. Curran, James H. Tate, Stephanie N. Josephson, Robert D. Maddox and
Thomas C. Drury. The employment agreements terminate on May 22, 2001; however,
such agreements automatically renew on each May 22 for an additional period so
that a new three-year term begins upon each extension (unless the agreements are
earlier terminated as provided herein). Each such employee serves in their
current executive capacities with Holdings as a requirement of their respective
employment agreements.
Messrs. Curran, Tate, Maddox and Drury and Ms. Josephson are entitled to
base salaries (subject to increase at the Board of Directors' discretion) of
$538,400, $290,175, $145,000, $145,000 and $175,000, respectively. In addition,
each employee is entitled to participate in an annual bonus plan providing for
an annual bonus opportunity. Pursuant to such bonus plan, Mr. Curran is entitled
to an annual bonus opportunity of not less than 100% of his base salary, Mr.
Tate is entitled to an annual bonus opportunity of not less than 75% of his base
salary and Ms. Josephson and Messrs. Maddox and Drury are each entitled to an
annual bonus opportunity of not less than 55% of his or her base salary. Each
such executive also is entitled to such benefits as are customarily provided to
the executives of Holdings and its subsidiaries. Each such executive is required
to devote all of his or her business time and attention to the business Holdings
and its subsidiaries.
Each employment agreement provides that upon termination without cause or
constructive termination of such executive's employment (which includes, among
other things, reductions of compensation, title, position or duties), such
executive will be entitled to receive such executive's then current salary and
other benefits through the later to occur of the termination date of the
agreement or 18 months from the date of termination of such executive's
employment.
Management Plans.
Management Incentive Plan. In connection with the Merger, Holdings adopted
the Thermadyne Holdings Corporation Management Incentive Plan (the "Incentive
Plan"), which provides for the granting of up to 500,000 shares of Holdings
Common Stock to certain officers and employees of the Company. In connection
with the Merger options to purchase approximately 322,966 shares of Holdings
Common Stock were granted to certain officers and employees of the Company at an
exercise price of $34.50. Pursuant to the terms of the Incentive Plan, options
granted to certain members of senior management provide for both a "Time Vesting
Option" and a "Cliff Vesting Option." Under the Time Vesting Option, the option
vests and is exercisable with respect to twenty percent of the shares subject to
the Option on the day it was granted. Then, on each of the first five
anniversaries from that date the Option was granted, an additional sixteen
percent of the shares subject to the Option vests and becomes exercisable as
long as the Option recipient is still employed by Holdings or its subsidiary.
The Cliff Vesting Option becomes vested and exercisable with respect to twenty
percent of the shares on the thirteenth day after the availability of the
audited financial statements for each of the fiscal years ended December 31,
1998 through December 31, 2003, provided that the Option recipient is still
employed by Holdings or its subsidiary, and further provided, that the targeted
implied common equity value of Holdings was met for each such fiscal year. If
the targeted implied common equity value of Holdings is not attained for any of
the fiscal years ending on or before December 31, 2002, the Option will be
treated as vested and exercisable if the target is attained for the subsequent
year as long as the Option recipient is still employed by Holdings or its
subsidiary. If, after eight years from receipt of the Cliff Vesting Option, all
shares subject to such Option have not vested, such shares shall become fully
vested and exercisable, as long as, the Option is still employed by Holdings or
its Subsidiary.
Direct Investment Program. In connection with the Merger, Holdings adopted
the Thermadyne Holdings Corporation Direct Investment Program (the "Investment
Program"), which provides for the purchase by certain members of management of
143,192 shares of Holdings Common Stock, of which 71,596 shares have been
designated as "Reinvestment Shares" and 71,596 shares have been designated as
"Coinvestment Shares." In connection with the Merger, Holdings issued all shares
available for issuance under the Investment Program. Of the Coinvestment Shares,
20% vest on each of the first five anniversaries of
48
<PAGE> 50
the date of purchase, so long as the participant is employed by the Company as
of such anniversary. Additionally, upon the occurrence of a Change of Control
(as defined therein), all unvested Coinvestment Shares held by a participant
that is employed by the Company at such time shall vest. All Reinvestment Shares
became immediately vested at the time of purchase. A portion of the funds
required to purchase the shares under the Investment Program were provided
through the proceeds of loans made by the Company to participants in the
Investment Program. In the event of a participant's termination for Cause (as
defined therein), the Company has the right to purchase shares of such
participant purchased under the Investment Program at a price equal to (i) the
lesser of (A) $34.50 or (B) the fair market value of such shares on the date of
purchase by the Company, with respect to Coinvestment Shares (whether or not
vested), and (ii) the fair market value of such shares on the date of purchase
by the Company, with respect to Reinvestment Shares. In the event of a
participant's termination for other than Cause or the participant's death, the
Company has the right to purchase shares of such participant purchased under the
Investment Program at a price equal to (i) the lesser of (A) the sum of $34.50
and the Allocable Interest (as defined therein) or (B) the fair market value of
such shares on the date of purchase by the Company, with respect to unvested
Coinvestment Shares, and (ii) the fair market value of such shares on the date
of purchase by the Company, with respect to Reinvestment Shares.
COMPENSATION OF DIRECTORS
Other than Messrs. Curran and Tate, each director of Holdings receives a
$12,000 annual retainer plus a $1,000 fee for each regular meeting of the Board
of Directors attended and a $500 fee for each meeting of a board committee
attended (other than meetings of the Executive Committee, for which members of
the committee other than Charles F. Moran, will receive a fee of $750). In
addition to those fees, Mr. Moran, as the Chairman of the Executive Committee,
received aggregate compensation of $60,000 for services he provided during the
twelve-month period ending February 28, 1997. For the period ending February 28,
1998, Mr. Moran is expected to receive aggregate compensation of $60,000 for
services to be provided by him in his capacity as Chairman of the Executive
Committee during such period. Directors also are reimbursed for all reasonable
travel and other expenses of attending meetings of the Board of Directors or
committees of the Board of Directors.
On November 1, 1997, the Board of Directors granted options to purchase
1,000 shares of Holdings Common Stock to each of Messrs. Byrom, Druker, Berger
and Moran pursuant to Holdings' Non-Employee Directors Stock Option Plan.
49
<PAGE> 51
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT
The following table sets forth certain information with respect to the
beneficial ownership of the Holdings Common Stock as of May 31, 1998 by (i) any
person or group who beneficially owns more than five percent of Holdings Common
Stock, (ii) by each executive officer and director of Holdings and (iii) all
directors and executive officers of Holdings as a group.
<TABLE>
<CAPTION>
PERCENTAGE OF OUTSTANDING
NAME AND ADDRESS OF BENEFICIAL OWNER: SHARES BENEFICIALLY OWNED COMMON STOCK
------------------------------------- ------------------------- -------------------------
<S> <C> <C>
DLJ Merchant Banking Partners II, L.P. and
related investors(1)(2)........................ 2,962,124 82.5%
Lawrence M.v.D. Schloss(3)....................... -- --
DLJMB Inc.
277 Park Avenue
New York, NY 10172
Peter T. Grauer(3)............................... -- --
DLJMB Inc.
277 Park Avenue
New York, NY 10172
William F. Dawson, Jr.(3)........................ -- --
DLJMB Inc.
277 Park Avenue
New York, NY 10172
John F. Fort III................................. -- --
Harold A. Poling................................. -- --
Randall E. Curran(4)............................. 69,506 2.2
James H. Tate(5)................................. 19,660 *
Stephanie N. Josephson(6)........................ 12,434 *
Thomas C. Drury(6)............................... 9,860 *
Robert D. Maddox(6).............................. 10,428 *
All directors and officers as a group (10
persons)(3)(7)................................. 121,888 3.8
</TABLE>
- ---------------
* Represents less than 1 percent.
(1) Includes 353,428 shares of Holdings Common Stock issuable upon the exercise
of the DLJMB Warrants. See "The Merger and the Merger Financing."
(2) Consists of shares held directly by the following investors related to DLJ
Merchant Banking Partners II, L.P. ("DLJMB"): DLJ Offshore Partners II, C.V.
("Offshore"), a Netherlands Antilles limited partnership, DLJ Diversified
Partners, L.P. ("Diversified"), a Delaware limited partnership, DLJMB
Funding II, Inc. ("Funding"), a Delaware corporation, DLJ Merchant Banking
Partners II-A, L.P. ("DLJMBPIIA"), a Delaware limited partnership, DLJ
Diversified Partners-A L.P. ("Diversified A"), a Delaware limited
partnership, DLJ Millennium Partners, L.P. ("Millennium"), a Delaware
limited partnership, DLJ Millennium Partners-A, L.P. ("Millennium A"), a
Delaware limited partnership, DLJEAB Partners, L.P. ("EAB"), UK Investment
Plan 1997 Partners ("UK Partners"), a Delaware partnership, DLJ First ESC
L.P., a Delaware limited partnership ("DLJ First ESC"), and DLJ ESC II,
L.P., a Delaware limited partnership ("DLJ ESC II"). See "Certain
Relationships and Related Transactions" and "Plan of Distribution." The
address of each of DLJMB, Diversified, Funding, DLJMBPIIA, Diversified A,
Millennium, Millennium A, DLJ First ESC, DLJ ESC II and EAB is 277 Park
Avenue, New York, New York 10172. The address of Offshore is John B.
Gorsiraweg 14, Willemstad, Curacao, Netherlands Antilles. The address of UK
Partners is 2121 Avenue of the Stars, Fox Plaza, Suite 3000, Los Angeles,
California 90067.
50
<PAGE> 52
(3) Messrs. Schloss, Grauer and Dawson are officers of DLJMB Inc., an affiliate
of DLJMB and the Initial Purchaser. Share data shown for such individuals
excludes shares shown as held by the DLJMB Funds, as to which such
individuals disclaim beneficial ownership.
(4) Includes 9,939 shares of Holdings Common Stock issuable upon the exercise of
vested stock options.
(5) Includes 5,168 shares of Holdings Common Stock issuable upon the exercise of
vested stock options.
(6) Includes 1,060 shares of Holdings Common Stock issuable upon the exercise of
vested stock options.
(7) Includes 18,287 shares of Holdings Common Stock issuable upon the exercise
of vested stock options.
51
<PAGE> 53
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
DLJ Capital Funding received customary fees and reimbursement of expenses
in connection with the arrangement and syndication of the New Credit Facility
and as a lender thereunder. DLJSC also received customary fees in connection
with the distribution of the Senior Subordinated Notes and the Old Debentures,
and the offer to purchase and consent solicitation for the Company's outstanding
Senior Notes and Subordinated Notes. Additionally, DLJ Bridge Finance, Inc.
received customary fees in connection with its commitment to provide bridge
financing in the event that the issuance of the Senior Subordinated Notes and
the Old Debentures did not occur. The aggregate fees to be received by these DLJ
entities for these services were approximately $20 million.
Pursuant to a letter agreement dated January 16, 1998 (the "Engagement
Letter"), DLJMB engaged DLJSC to act as DLJMB's exclusive financial advisor with
respect to the Merger and, following the Merger, to act as the Company's
exclusive financial advisor for a period of five years (the "Engagement Period")
with respect to the review and analysis of financial and structural alternatives
available to the Company. Upon the consummation of the Merger, DLJMB's
obligations under the Engagement Letter were assumed by the Company.
As compensation for the services to be provided by DLJSC under the
Engagement Letter, DLJSC received a fee of $4,000,000 upon the consummation of
the Merger and will be entitled to receive an annual advisory fee of $300,000,
payable quarterly in equal installments of $75,000. DLJSC will also be entitled
to reimbursement for all of its out-of-pocket expenses incurred in connection
with its engagement.
During the Engagement Period, DLJSC is also entitled to act as the
Company's exclusive financial advisor, sole placement agent, sole initial
purchaser, sole managing underwriter or sole dealer-manager, as the case may be,
with respect to any Transaction (as hereinafter defined) the Company determines
to pursue. The term "Transaction" includes the following: (i) the sale, merger,
consolidation or any other business combination, in one or a series of
transactions, involving any portion of the business, securities or assets of the
Company; (ii) the acquisition (and any related matters such as financings,
divestitures, etc.) in one or a series of transactions, of all or a portion of
the business, securities or assets of another entity or person; (iii) any
recapitalization, refinancing, repurchase or restructuring of the Company's
equity or debt securities or indebtedness or any amendments or modifications to
the Company's debt securities or indentures whether or not in connection
therewith, involving, by or on behalf of the Company, an offer to purchase or
exchange for cash, property, securities, indebtedness or other consideration, or
a solicitation of consents, waivers of authorizations with respect thereto; (iv)
any spin-off, split-off or other extraordinary dividend of cash, securities or
other assets to stockholders of the Company; or (v) any sale of securities of
the Company effected pursuant to a private sale or an underwritten public
offering.
The Company has agreed to indemnify and hold harmless DLJSC and its
affiliates, and the respective directors, officers, agents and employees of
DLJSC and its affiliates (each, an "Indemnified Person") from and against any
losses, claims, damages, judgments, assessments, costs and other liabilities and
will reimburse such Indemnified Persons for all fees and expenses (including the
reasonable fees and expenses of counsel) as they are incurred in investigating,
preparing, pursuing or defending any claim, action, proceeding or investigation
arising out of or in connection with advice or services rendered or to be
rendered by an Indemnified person pursuant to the Engagement Letter, the
transactions contemplated by the Engagement Letter or any Indemnified Person's
action or inactions in connection with any such advice, services or
transactions, other than liabilities or expenses that are determined by a
judgment of a court of competent jurisdiction to have resulted solely from such
Indemnified Person's gross negligence or willful misconduct.
The Engagement Letter makes available the resources of DLJSC concerning a
variety of financial and operational matters. The services that have been and
will continue to be provided by DLJSC could not otherwise be obtained by the
Company without the addition of personnel or the engagement of outside
professional advisors. In the opinion of management, the fees provided for under
the Engagement Letter reasonably reflect the benefits received and to be
received by the Company.
52
<PAGE> 54
In connection with the Merger, a portion of the funds required to purchase
the shares under the Investment Program were provided through the proceeds of
loans made by the Company to participants in the Investment Program (the
"Management Loans"). Messrs. Curran, Tate, Maddox and Drury and Ms. Josephson
received secured, non-recourse loans from the Company in the amount of
$1,249,890, $367,606, $237,630, $223,222 and $288,413, respectively. The loans
bear interest at the rate of 5.69% per annum and are due in full on May 22,
2006. Upon the termination of a participant's termination of employment with the
Company other than the participant's death any outstanding loan will become due
and payable.
THE EXCHANGE OFFER
PURPOSE AND EFFECT
The Old Debentures were sold by the Issuer on May 22, 1998, in the
Offering. In connection with that placement, the Issuer entered into the
Registration Rights Agreement, which requires that the Company file the
Registration Statement under the Securities Act with respect to the New
Debentures and, upon the effectiveness of the Registration Statement, offer to
the holders of the Old Debentures the opportunity to exchange their Old
Debentures for a like principal amount of New Debentures, which will be issued
without a restrictive legend and which generally may be reoffered and resold by
the holder without registration under the Securities Act. The Registration
Rights Agreement further provides that the Company must use its best efforts to
(i) cause the Registration Statement with respect to the Exchange Offer to be
declared effective on or before November 30, 1998 and (ii) consummate the
Exchange Offer on or before December 30, 1998. Except as provided below, upon
the completion of the Exchange Offer, the Company's obligations with respect to
the registration of the Old Debentures and the New Debentures will terminate. A
copy of the Registration Rights Agreement has been filed as an exhibit to the
Registration Statement of which this Prospectus is a part and the summary herein
of certain provisions thereof does not purport to be complete and is qualified
in its entirety by reference thereto. As a result of the filing and the
effectiveness of the Registration Statement, certain liquidated damages provided
for in the Registration Rights Agreement will not become payable by the Company.
Following the completion of the Exchange Offer (except as set forth in the
paragraph immediately below), holders of Old Debentures not tendered will not
have any further registration rights and those Old Debentures will continue to
be subject to certain restrictions on transfer. Accordingly, the liquidity of
the market for the Old Debentures could be adversely affected upon completion of
the Exchange Offer.
In order to participate in the Exchange Offer, a holder must represent to
the Company, among other things, that (i) the New Debentures acquired pursuant
to the Exchange Offer are being obtained in the ordinary course of business of
the person receiving the New Debentures, (ii) neither the holder nor any such
other person is engaging in or intends to engage in a distribution of the New
Debentures, (iii) neither the holder nor any such other person has an
arrangement or understanding with any person to participate in the distribution
of the New Debentures and (iv) neither the holder nor any such other person is
an "affiliate," as defined under Rule 405 promulgated under the Securities Act,
of the Company. Pursuant to the Registration Rights Agreement, the Company is
required to file a "shelf" registration statement for a continuous offering
pursuant to Rule 415 under the Securities Act in respect of the Old Notes if (a)
it is prohibited from consummating the Exchange Offer because the Exchange Offer
is not permitted by applicable law or Commission policy or (b) any holder of
Transfer Restricted Securities (as defined) notifies the Company in writing
prior to the 20th business day following consummation of the Exchange Offer that
(i) based on an opinion of counsel, it is prohibited by law or Commission policy
from participating in the Exchange Offer or (ii) it is a broker-dealer and owns
Debentures acquired directly from the Issuer. In the event that the Company is
obligated to file a "shelf" registration statement, it will be required to keep
such "shelf" registration statement effective until the later of (a) the date on
which the Initial Purchaser is no longer deemed to be an Affiliate of the Issuer
and (b) the earlier of May 22, 2000 and such earlier date when no Transfer
Restricted Securities covered by such "shelf" registration statement remain
outstanding. Other than as set forth in this paragraph, no holder will have the
right to participate in the "shelf" registration statement
53
<PAGE> 55
nor otherwise to require that the Company register such holder's shares of Old
Notes under the Securities Act. See "-- Procedures for Tendering."
Based on an interpretation by the Commission's staff set forth in no-action
letters issued to third-parties unrelated to the Company, the Company believes
that, with the exceptions set forth below, New Debentures issued pursuant to the
Exchange Offer in exchange for Old Debentures may be offered for resale, resold
and otherwise transferred by any person receiving such New Debentures, whether
or not such person is the registered holder (other than any such holder or such
other person which is an "affiliate" of the Company within the meaning of Rule
405 under the Securities Act) without compliance with the registration and
prospectus delivery provisions of the Securities Act, provided that the New
Debentures are acquired in the ordinary course of business of the holder or such
other person and neither the holder nor such other person has an arrangement or
understanding with any person to participate in the distribution of such New
Debentures. Any holder who tenders in the Exchange Offer for the purpose of
participating in a distribution of the New Debentures cannot rely on this
interpretation by the Commission's staff and must comply with the registration
and prospectus delivery requirements of the Securities Act in connection with a
secondary resale transaction. Each broker-dealer that receives New Debentures
for its own account in exchange for Old Debentures, where the Old Debentures
were acquired by such broker-dealer as a result of market-making activities or
other trading activities, must acknowledge that it will deliver a prospectus in
connection with any resale of such New Debentures. See "Plan of Distribution."
CONSEQUENCES OF FAILURE TO EXCHANGE
Following the completion of the Exchange Offer (except as set forth in the
second paragraph under "-- Purpose and Effect" above), holders of Old Debentures
not tendered will not have any further registration rights and those Old
Debentures will continue to be subject to certain restrictions on transfer.
Accordingly, the liquidity of the market for a holder's Old Debentures could be
adversely affected upon completion of the Exchange Offer if the holder does not
participate in the Exchange Offer.
TERMS OF THE EXCHANGE OFFER
Upon the terms and subject to the conditions set forth in this Prospectus
and in the Letter of Transmittal, the Company will accept any and all Old
Debentures validly tendered and not withdrawn prior to 5:00 p.m., New York City
time, on the Expiration Date. The Company will issue $1,000 principal amount at
maturity of New Debentures in exchange for each $1,000 principal amount at
maturity of outstanding Old Debentures accepted in the Exchange Offer. Holders
may tender some or all of their Old Debentures pursuant to the Exchange Offer.
However, Old Debentures may be tendered only in integral multiples of $1,000 in
principal amount.
The form and terms of the New Debentures are substantially the same as the
form and terms of the Old Debentures except that the New Debentures have been
registered under the Securities Act and will not bear legends restricting their
transfer. The New Debentures will evidence the same debt as the Old Debentures
and will be issued pursuant to, and entitled to the benefits of, the Indenture
pursuant to which the Old Debentures were issued.
As of May 31, 1998, Old Notes representing $174,000,000 aggregate principal
amount at maturity were outstanding and there was one registered holder, a
nominee of DTC. This Prospectus, together with the Letter of Transmittal, is
being sent to such registered Holder and to others believed to have beneficial
interests in the Old Debentures. The Company intends to conduct the Exchange
Offer in accordance with the applicable requirements of the Exchange Act and the
rules and regulations of the Commission promulgated thereunder.
The Company shall be deemed to have accepted validly tendered Old
Debentures when, as, and if the Company has given oral or written notice thereof
to the Exchange Agent. The Exchange Agent will act as agent for the tendering
holders for the purpose of receiving the New Debentures from the Company. If any
tendered Old Debentures are not accepted for exchange because of an invalid
tender, the occurrence of certain other events set forth herein or otherwise,
certificates for any such unaccepted Old Debentures will be
54
<PAGE> 56
returned, without expense, to the tendering holder thereof as promptly as
practicable after the Expiration Date.
Holders who tender Old Debentures in the Exchange Offer will not be
required to pay brokerage commissions or fees or, subject to the instructions in
the Letter of Transmittal, transfer taxes with respect to the exchange of Old
Debentures pursuant to the Exchange Offer. The Company will pay all charges and
expenses, other than certain applicable taxes, in connection with the Exchange
Offer. See "The Exchange Offer -- Fees and Expenses."
EXPIRATION DATE; EXTENSIONS; AMENDMENTS
The term "Expiration Date" shall mean 5:00 p.m., New York City time, on
, 1998, unless the Company, in its sole discretion, extends the
Exchange Offer, in which case the term "Expiration Date" shall mean the latest
date and time to which the Exchange Offer is extended. In order to extend the
Exchange Offer, the Company will issue a notice of any extension by press
release or other public announcement prior to 9:00 a.m., New York City time, on
the next business day after the previously scheduled Expiration Date. The
Company reserves the right, in its sole discretion, (i) to delay accepting any
Old Debentures, to extend the Exchange Offer or, if any of the conditions set
forth under "The Exchange Offer -- Conditions to the Exchange Offer" shall not
have been satisfied, to terminate the Exchange Offer, by giving oral or written
notice of such delay, extension or termination to the Exchange Agent, or (ii) to
amend the terms of the Exchange Offer in any manner.
PROCEDURES FOR TENDERING
Only a holder of Old Debentures may tender the Old Notes in the Exchange
Offer. Except as set forth under "The Exchange Offer -- Book Entry Transfer," to
tender in the Exchange Offer a holder must complete, sign, and date the Letter
of Transmittal, or a copy thereof, have the signatures thereon guaranteed if
required by the Letter of Transmittal, and mail or otherwise deliver the Letter
of Transmittal or copy to the Exchange Agent prior to the Expiration Date. In
addition, either (i) certificates for such Old Debentures must be received by
the Exchange Agent along with the Letter of Transmittal, prior to the Expiration
Date or (ii) a timely confirmation of a book-entry transfer (a "Book-Entry
Confirmation") of such Old Debentures, if that procedure is available, into the
Exchange Agent's account at DTC (the "Book-Entry Transfer Facility") pursuant to
the procedure for book-entry transfer described below, must be received by the
Exchange Agent prior to the Expiration Date, or (iii) the holder must comply
with the guaranteed delivery procedures described below. To be tendered
effectively, the Letter of Transmittal and other required documents must be
received by the Exchange Agent at the address set forth under "The Exchange
Offer -- Exchange Agent" prior to the Expiration Date.
The tender by a holder that is not withdrawn before the Expiration Date
will constitute an agreement between that holder and the Company in accordance
with the terms and subject to the conditions set forth herein and in the Letter
of Transmittal.
THE METHOD OF DELIVERY OF OLD DEBENTURES AND THE LETTER OF TRANSMITTAL AND
ALL OTHER REQUIRED DOCUMENTS TO THE EXCHANGE AGENT IS AT THE ELECTION AND RISK
OF THE HOLDER. INSTEAD OF DELIVERY BY MAIL, IT IS RECOMMENDED THAT HOLDERS USE
AN OVERNIGHT OR HAND DELIVERY SERVICE. IN ALL CASES, SUFFICIENT TIME SHOULD BE
ALLOWED TO ASSURE DELIVERY TO THE EXCHANGE AGENT BEFORE THE EXPIRATION DATE. NO
LETTER OF TRANSMITTAL OR OLD DEBENTURES SHOULD BE SENT TO THE COMPANY. HOLDERS
MAY REQUEST THEIR RESPECTIVE BROKERS, DEALERS, COMMERCIAL BANKS, TRUST
COMPANIES, OR NOMINEES TO EFFECT THESE TRANSACTIONS FOR SUCH HOLDERS.
Any beneficial owner whose Old Debentures are registered in the name of a
broker, dealer, commercial bank, trust company, or other nominee and who wishes
to tender should contact the registered holder promptly and instruct the
registered holder to tender on the beneficial owner's behalf. If the beneficial
owner wishes to tender on the owner's own behalf, the owner must, prior to
completing and executing the Letter of
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<PAGE> 57
Transmittal and delivering the owner's Old Debentures, either make appropriate
arrangements to register ownership of the Old Debentures in the beneficial
owner's name or obtain a properly completed bond power from the registered
holder. The transfer of registered ownership may take considerable time.
Signatures on a Letter of Transmittal or a notice of withdrawal, as the
case may be, must be guaranteed by an Eligible Institution (as defined below)
unless Old Debentures tendered pursuant thereto are tendered (i) by a registered
holder who has not completed the box entitled "Special Registration Instruction"
or "Special Delivery Instructions" on the Letter of Transmittal or (ii) for the
account of an Eligible Institution. If signatures on a Letter of Transmittal or
a notice of withdrawal, as the case may be, are required to be guaranteed, the
guarantee must be by any eligible guarantor institution that is a member of or
participant in the Securities Transfer Agents Medallion Program, the New York
Stock Exchange Medallion Signature Program, the Stock Exchange Medallion
Program, or an "eligible guarantor institution" within the meaning of Rule
17Ad-15 under the Exchange Act (an "Eligible Institution").
If the Letter of Transmittal is signed by a person other than the
registered holder of any Old Debentures listed therein, the Old Debentures must
be endorsed or accompanied by a properly completed bond power, signed by the
registered holder as that registered holder's name appears on the Old
Debentures.
If the Letter of Transmittal or any Old Debentures or bond powers are
signed by trustees, executors, administrators, guardians, attorneys-in-fact,
officers of corporations, or others acting in a fiduciary or representative
capacity, such persons should so indicate when signing, and evidence
satisfactory to the Company of their authority to so act must be submitted with
the Letter of Transmittal unless waived by the Company.
All questions as to the validity, form, eligibility (including time of
receipt), acceptance, and withdrawal of tendered Old Debentures will be
determined by the Company in its sole discretion, which determination will be
final and binding. The Company reserves the absolute right to reject any and all
Old Debentures not properly tendered or any Old Debentures the Company's
acceptance of which would, in the opinion of counsel for the Company, be
unlawful. The Company also reserves the right to waive any defects,
irregularities, or conditions of tender as to particular Old Debentures. The
Company's interpretation of the terms and conditions of the Exchange Offer
(including the instructions in the Letter of Transmittal) will be final and
binding on all parties. Unless waived, any defects or irregularities in
connection with tenders of Old Debentures must be cured within such time as the
Company shall determine. Although the Company intends to notify holders of
defects or irregularities with respect to tenders of Old Debentures, neither the
Company, the Exchange Agent, nor any other person shall incur any liability for
failure to give such notification. Tenders of Old Debentures will not be deemed
to have been made until such defects or irregularities have been cured or
waived. Any Old Debentures received by the Exchange Agent that are not properly
tendered and as to which the defects or irregularities have not been cured or
waived will be returned by the Exchange Agent to the tendering holders, unless
otherwise provided in the Letter of Transmittal, as soon as practicable
following the Expiration Date.
In addition, the Company reserves the right in its sole discretion to
purchase or make offers for any Old Debentures that remain outstanding after the
Expiration Date or, as set forth under "The Exchange Offer -- Conditions to the
Exchange Offer," to terminate the Exchange Offer and, to the extent permitted by
applicable law, purchase Old Debentures in the open market, in privately
negotiated transactions, or otherwise. The terms of any such purchases or offers
could differ from the terms of the Exchange Offer.
By tendering, each holder will represent to the Company that, among other
things, (i) the New Debentures acquired pursuant to the Exchange Offer are being
obtained in the ordinary course of business of the person receiving such New
Debentures, whether or not such person is the registered holder, (ii) neither
the holder nor any such other person is engaging in or intends to engage in a
distribution of such New Debentures, (iii) neither the holder nor any such other
person has an arrangement or understanding with any person to participate in the
distribution of such New Debentures, and (iv) neither the holder nor any such
other person is an "affiliate," as defined under Rule 405 of the Securities Act,
of the Company.
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<PAGE> 58
In all cases, issuance of New Debentures for Old Debentures that are
accepted for exchange pursuant to the Exchange Offer will be made only after
timely receipt by the Exchange Agent of certificates for such Old Debentures or
a timely Book-Entry Confirmation of such Old Debentures into the Exchange
Agent's account at the Book-Entry Transfer Facility, a properly completed and
duly executed Letter of Transmittal (or, with respect to the DTC and its
participants, electronic instructions in which the tendering holder acknowledges
its receipt of and agreement to be bound by the Letter of Transmittal), and all
other required documents. If any tendered Old Debentures are not accepted for
any reason set forth in the terms and conditions of the Exchange Offer or if Old
Debentures are submitted for a greater principal amount than the holder desires
to exchange, such unaccepted or non-exchanged Old Debentures will be returned
without expense to the tendering Holder thereof (or, in the case of Old
Debentures tendered by book-entry transfer into the Exchange Agent's account at
the Book-Entry Transfer Facility pursuant to the book-entry transfer procedures
described below, such nonexchanged Old Debentures will be credited to an account
maintained with such Book-Entry Transfer Facility) as promptly as practicable
after the expiration or termination of the Exchange Offer.
Each broker-dealer that receives New Debentures for its own account in
exchange for Old Debentures, where the Old Debentures were acquired by such
broker-dealer as a result of market-making activities or other trading
activities, must acknowledge that it will deliver a prospectus in connection
with any resale of such New Debentures. See "Plan of Distribution."
BOOK-ENTRY TRANSFER
The Exchange Agent will make a request to establish an account with respect
to the Old Debentures at the Book-Entry Transfer Facility for purposes of the
Exchange Offer within two business days after the date of this Prospectus, and
any financial institution that is a participant in the Book-Entry Transfer
Facility's systems may make book-entry delivery of Old Debentures being tendered
by causing the Book-Entry Transfer Facility to transfer such Old Debentures into
the Exchange Agent's account at the Book-Entry Transfer Facility in accordance
with such Book-Entry Transfer Facility's procedures for transfer. However,
although delivery of Old Debentures may be effected through book-entry transfer
at the Book-Entry Transfer Facility, the Letter of Transmittal or copy thereof,
with any required signature guarantees and any other required documents, must,
in any case other than as set forth in the following paragraph, be transmitted
to and received by the Exchange Agent at the address set forth under "The
Exchange Offer -- Exchange Agent" on or prior to the Expiration Date or the
guaranteed delivery procedures described below must be complied with.
DTC's Automated Tender Offer Program ("ATOP") is the only method of
processing exchange offers through DTC. To accept the Exchange Offer through
ATOP, participants in DTC must send electronic instructions to DTC through DTC's
communication system in lieu of sending a signed, hard copy Letter of
Transmittal. DTC is obligated to communicate those electronic instructions to
the Exchange Agent. To tender Old Debentures through ATOP, the electronic
instructions sent to DTC and transmitted by DTC to the Exchange Agent must
contain the character by which the participant acknowledges its receipt of and
agrees to be bound by the Letter of Transmittal.
GUARANTEED DELIVERY PROCEDURES
If a registered holder of the Old Debentures desires to tender such Old
Debentures and the Old Debentures are not immediately available, or time will
not permit such holder's Old Debentures or other required documents to reach the
Exchange Agent before the Expiration Date, or the procedure for book-entry
transfer cannot be completed on a timely basis, a tender may be effected if (i)
the tender is made through an Eligible Institution, (ii) prior to the Expiration
Date, the Exchange Agent received from such Eligible Institution a properly
completed and duly executed Letter of Transmittal (or a facsimile thereof) and
Notice of Guaranteed Delivery, substantially in the form provided by the Issuer
(by telegram, telex, facsimile transmission, mail or hand delivery), setting
forth the name and address of the holder of Old Debentures and the amount of Old
Debentures tendered, stating that the tender is being made thereby and
guaranteeing that within three New York Stock Exchange ("NYSE") trading days
after the date of execution of the Notice of Guaranteed Delivery, the
certificates for all physically tendered Old Debentures, in proper form for
transfer, or a Book-Entry Confirmation, as the case may be, and any other
documents required by the Letter of
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<PAGE> 59
Transmittal will be deposited by the Eligible Institution with the Exchange
Agent, and (iii) the certificates for all physically tendered Old Debentures, in
proper form for transfer, or a Book-Entry Confirmation, as the case may be, and
all other documents required by the Letter of Transmittal, are received by the
Exchange Agent within three NYSE trading days after the date of execution of the
Notice of Guaranteed Delivery.
WITHDRAWAL RIGHTS
Tenders of Old Debentures may be withdrawn at any time prior to 5:00 pm.,
New York City time, on the Expiration Date.
For a withdrawal of a tender of Old Debentures to be effective, a written
or (for DTC participants) electronic ATOP transmission notice of withdrawal must
be received by the Exchange Agent at its address set forth on the back cover
page of this Prospectus prior to 5:00 pm., New York City time, on the Expiration
Date. Any such notice of withdrawal must (i) specify the name of the person
having deposited the Old Debentures to be withdrawn (the "Depositor"), (ii)
identify the Old Debentures to be withdrawn (including the certificate number or
numbers and principal amount of such Old Debentures), (iii) be signed by the
holder in the same manner as the original signature on the Letter of Transmittal
by which such Old Debentures were tendered (including any required signature
guarantees) or be accompanied by documents of transfer sufficient to have the
Trustee register the transfer of such Old Debentures into the name of the person
withdrawing the tender, and (iv) specify the name in which any such Old
Debentures are to be registered, if different from that of the Depositor. All
questions as to the validity, form, and eligibility (including time of receipt)
of such notices will be determined by the Issuer, whose determination shall be
final and binding on all parties. Any Old Debentures so withdrawn will be deemed
not to have been validly tendered for exchange for purposes of the Exchange
Offer. Any Old Debentures which have been tendered for exchange but which are
not exchanged for any reason will be returned to the holder thereof without cost
to such holder as soon as practicable after withdrawal, rejection of tender, or
termination of the Exchange Offer. Properly withdrawn Old Debentures may be
retendered by following one of the procedures under "The Exchange Offer --
Procedures for Tendering" at any time on or prior to the Expiration Date.
CONDITIONS TO THE EXCHANGE OFFER
Notwithstanding any other provision of the Exchange Offer, the Issuer shall
not be required to accept for exchange, or to issue New Debentures in exchange
for, any Old Debentures and may terminate or amend the Exchange Offer if at any
time before the acceptance of such Old Debentures for exchange or the exchange
of the New Debentures for such Old Debentures, the Issuer determines that the
Exchange Offer violates applicable law, any applicable interpretation of the
staff of the Commission or any order of any governmental agency or court of
competent jurisdiction.
The foregoing conditions are for the sole benefit of the Issuer and may be
asserted by the Issuer regardless of the circumstances giving rise to any such
condition or may be waived by the Issuer in whole or in part at any time and
from time to time in its sole discretion. The failure by the Issuer at any time
to exercise any of the foregoing rights shall not be deemed a waiver of any such
right and each such right shall be deemed an ongoing right which may be asserted
at any time and from time to time.
In addition, the Issuer will not accept for exchange any Old Debentures
tendered, and no New Debentures will be issued in exchange for any such Old
Debentures, if at such time any stop order shall be threatened or in effect with
respect to the Registration Statement of which this Prospectus constitutes a
part or the qualification of the Indenture under the Trust Indenture Act of
1939, as amended (the "TIA"). In any such event the Issuer is required to use
every reasonable effort to obtain the withdrawal of any stop order at the
earliest possible time.
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EXCHANGE AGENT
All executed Letters of Transmittal should be directed to the Exchange
Agent. IBJ Schroder Bank & Trust Company, has been appointed as Exchange Agent
for the Exchange Offer. Questions, requests for assistance and requests for
additional copies of this Prospectus or of the Letter of Transmittal should be
directed to the Exchange Agent addressed as follows:
Deliver to:
IBJ SCHRODER BANK & TRUST COMPANY, EXCHANGE AGENT
<TABLE>
<S> <C> <C>
By Registered or Certified By Hand or Overnight Delivery
Mail: Service:
IBJ Schroder Bank & Trust IBJ Schroder Bank & Trust
Company Company
P.O. Box 84 One State Street
Bowling Green Station New York, New York 10004
New York, New York 10274-0084 Attention: Securities
Attention: Reorganization Processing Window,
Operations Department Subcellar One (SC-1)
By Facsimile Transmission:
(212) 858-2611
(Facsimile Confirmation)
(212) 858-2103
</TABLE>
FEES AND EXPENSES
The Issuer will not make any payments to brokers, dealers, or others
soliciting acceptances of the Exchange Offer. The principal solicitation is
being made by mail; however, additional solicitations may be made in person or
by telephone by officers and employees of the Issuer.
The estimated cash expenses to be incurred in connection with the Exchange
Offer will be paid by the Issuer and are estimated in the aggregate to be
$ , which includes fees and expenses of the Exchange Agent, accounting,
legal, printing, and related fees and expenses.
TRANSFER TAXES
Holders who tender their Old Debentures for exchange will not be obligated
to pay any transfer taxes in connection therewith, except that holders who
instruct the Issuer to register New Debentures in the name of, or request that
Old Debentures not tendered or not accepted in the Exchange Offer be returned
to, a person other than the registered tendering holder will be responsible for
the payment of any applicable transfer tax thereon.
BOOK-ENTRY; DELIVERY AND FORM
Except as described in the next paragraph, the New Debentures initially
will be represented by one or more permanent global certificates in definitive,
duly registered form (the "Global Debentures"). The Global Debentures will be
deposited on the Issue Date with, or on behalf of, The Depository Trust Company,
New York, New York ("DTC") and registered in the name of a nominee of DTC.
The Global Debentures. The Issuer expects that pursuant to procedures
established by DTC (i) upon the issuance of the Global Debentures, DTC or its
custodian will credit, on its internal system, the principal amount of New
Debentures of the individual beneficial interests represented by such Global
Debentures to the respective accounts of persons who have accounts with such
depositary and (ii) ownership of beneficial interests in the Global Debentures
will be shown on, and the transfer of such ownership will be effected only
through, records maintained by DTC or its nominee (with respect to interests of
participants) and the records of participants (with respect to interests of
persons other than participants). Such accounts initially will be designated by
or on behalf of the Initial Purchaser and ownership of beneficial interests in
the Global Debentures will be limited to persons who have accounts with DTC
("participants") or persons who hold
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interests through participants. QIBs and institutional Accredited Investors who
are not QIB's may hold their interests in the Global Debentures directly through
DTC if they are participants in such system, or indirectly through organizations
which are participants in such system.
So long as DTC, or its nominee, is the registered owner or holder of the
New Debentures, DTC or such nominee, as the case may be, will be considered the
sole owner or holder of the New Debentures represented by such Global Debentures
for all purposes under the Indenture. No beneficial owner of an interest in the
Global Debentures will be able to transfer that interest except in accordance
with DTC's procedures.
Payments of the principal of, premium (if any) and interest on, the Global
Debentures will be made to DTC or its nominee, as the case may be, as the
registered owner thereof. None of the Issuer, the Trustee or any Paying Agent
will have any responsibility or liability for any aspect of the records relating
to or payments made on account of beneficial ownership interests in the Global
Debentures or for maintaining, supervising or reviewing any records relating to
such beneficial ownership interest.
The Issuer expects that DTC or its nominee, upon receipt of any payment of
principal, premium, if any and interest on the Global Debentures, will credit
participants' accounts with payments in amount proportionate to their respective
beneficial interests in the principal amount of the Global Debentures as shown
on the records of DTC or its nominee. The Issuer also expects that payments by
participants to owners of beneficial interests in the Global Debentures held
through such participants will be governed by standing instructions and
customary practice, as is now the case with securities held for the accounts of
customers registered in the names of nominees for such customers. Such payments
will be the responsibility of such participants.
Transfers between participants in DTC will be effected in the ordinary way
through DTC's same-day funds system in accordance with DTC rules and will be
settled in same day funds. If a holder requires physical delivery of a
Certificated Security for any reason, including to sell New Debentures to
persons in states which require physical delivery of the New Debentures, or to
pledge such securities, such holder must transfer its interest in a Global Note,
in accordance with the normal procedures of DTC.
DTC has advised the Issuer that it will take any action permitted to be
taken by a holder of New Debentures (including the presentation of New
Debentures for exchange as described below) only at the direction of one or more
participants to whose account the DTC interests in the Global Debentures are
credited and only in respect of such portion of the aggregate principal amount
of New Debentures as to which such participant or participants has or have given
such direction.
DTC has advised the Issuer as follows: DTC is a limited purpose trust
company organized under the laws of the State of New York, a member of the
Federal Reserve System, a "clearing corporation" within the meaning of the
Uniform Commercial Code and a "Clearing Agency" registered pursuant to the
provisions of Section 17A of the Securities Exchange Act of 1934, as amended.
DTC was created to hold securities for its participants and facilitate the
clearance and settlement of securities transactions between participants through
electronic book-entry changes in accounts of its participants, thereby
eliminating the need for physical movement of certificates. Participants include
securities brokers and dealers, banks, trust companies and clearing corporations
and certain other organizations. Indirect access to the DTC system is available
to others such as banks, brokers, dealers and trust companies that clear through
or maintain a custodial relationship with a participant, either directly or
indirectly ("indirect participants").
Although DTC has agreed to the foregoing procedures in order to facilitate
transfers of interests in the Global Debentures among participants of DTC, it is
under no obligation to perform such procedures, and such procedures may be
discontinued at any time. Neither the Issuer nor the Trustee will have any
responsibility for the performance by DTC or its participants or indirect
participants of their respective obligations under the rules and procedures
governing their operations.
Certificated Securities. If DTC is at any time unwilling or unable to
continue as a depositary for the Global Debentures and a successor depositary is
not appointed by the Issuer within 90 days, Certificated Securities will be
issued in exchange for the Global Debentures.
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DESCRIPTION OF NEW CREDIT FACILITY
The New Credit Facility has been provided by a syndicate of banks and other
financial institutions led by Donaldson, Lufkin & Jenrette Securities
Corporation, as arranger (the "Arranger"), DLJ Capital Funding, Inc., as
syndication agent (the "Syndication Agent"), ABN AMRO Bank N.V., Chicago Branch,
as administrative agent (the "Administrative Agent"), and Societe Generale, as
documentation agent. The New Credit Facility includes a $330 million term loan
facility (the "Term Loan Facility") and a $100 million revolving credit facility
(subject to adjustment as provided below), which provides for revolving loans
and up to $50 million of letters of credit (the "Revolving Credit Facility").
The Term Loan Facility is comprised of a term A facility of $100 million (the
"Term A Facility"), which has a maturity of six years, a term B facility of $115
million (the "Term B Facility"), which has a maturity of seven years, and a term
C facility of $115 million (the "Term C Facility"), which has a maturity of
eight years. The Revolving Credit Facility terminates six years after the date
of initial funding of the New Credit Facility and is subject to a potential, but
uncommitted, increase of up to $25 million at Thermadyne LLC's request at any
time prior to such sixth anniversary. Such increase is available only if one or
more financial institutions agrees, at the time of Thermadyne LLC's request, to
provide it.
The New Credit Facility generally bears interest, at Thermadyne LLC's
option, at the Administrative Agent's alternate base rate or at the
reserve-adjusted London Interbank Offered Rate ("LIBOR") plus, in each case,
applicable margins of (i) in the case of alternate base rate loans, (x) 1.00%
for revolving and Term A loans, (y) 1.25% for Term B loans and (z) 1.50% for
Term C loans and (ii) in the case of LIBOR loans, (x) 2.25% for revolving and
Term A loans, (y) 2.50% for Term B loans and (z) 2.75% for Term C loans.
Thermadyne LLC pays a commitment fee calculated at a rate of 0.50% per
annum on the daily average unused commitment under the Revolving Credit Facility
(whether or not then available). Such fee is payable quarterly in arrears and
upon termination of the Revolving Credit Facility (whether at stated maturity or
otherwise).
Beginning six months after the consummation of the Merger and the Merger
Financing, the applicable margins for the Term A Facility and the Revolving
Credit Facility, as well as the commitment fee and letter of credit fee, is
subject to possible reductions based on the ratio of consolidated Debt to EBITDA
(each as defined in the New Credit Facility).
Thermadyne LLC pays a letter of credit fee calculated (i) in the case of
standby letters of credit, at a rate per annum equal to the then applicable
margin for LIBOR loans under the Revolving Credit Facility minus 0.125% and (ii)
in the case of documentary letters of credit, at a rate per annum equal to 1.25%
plus, in each case, a fronting fee on the stated amount of each letter of
credit. Such fees are payable quarterly in arrears. In addition, Thermadyne LLC
pays customary transaction charges in connection with any letters of credit.
The Term Loan Facility is subject to the following amortization schedule:
<TABLE>
<CAPTION>
YEAR TERM LOAN A TERM LOAN B TERM LOAN C
---- ----------- ----------- -----------
<S> <C> <C> <C>
1............................... 0.0% 1.0% 1.0%
2............................... 5.0% 1.0% 1.0%
3............................... 10.0% 1.0% 1.0%
4............................... 20.0% 1.0% 1.0%
5............................... 25.0% 1.0% 1.0%
6............................... 40.0% 1.0% 1.0%
7............................... -- 94.0% 1.0%
8............................... -- -- 93.0%
----- ----- -----
100.0% 100.0% 100.0%
</TABLE>
The Term Loan Facility is subject to mandatory prepayment: (i) with 100% of
the net cash proceeds from the issuance of debt, subject to certain exceptions,
(ii) with 100% of the net cash proceeds of asset sales and casualty events,
subject to certain exceptions, (iii) with 50% of Thermadyne LLC's excess cash
flow
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(as defined in the New Credit Facility) to the extent that the Leverage Ratio
(as defined in the New Credit Facility) exceeds 3.5 to 1.0, and (iv) with 50% of
the net cash proceeds from the issuance of equity to the extent that the
Leverage Ratio exceeds 4.0 to 1.0. Thermadyne LLC's obligations under the New
Credit Facility are secured by a first-priority perfected lien on: (i)
substantially all domestic property and assets, tangible and intangible (other
than accounts receivable sold or to be sold into the accounts receivable program
and short term real estate leases), of Thermadyne LLC and its domestic
subsidiaries (other than the special purpose subsidiaries involved in the
accounts receivable program); (ii) the capital stock of (a) Thermadyne LLC held
by Holdings and (b) all subsidiaries of the Issuer (provided that no more than
65% of the equity interest in non-U.S. subsidiaries held by the Issuer and its
domestic subsidiaries and no equity interests in subsidiaries held by foreign
subsidiaries are required to be pledged as a security); and (iii) all
intercompany indebtedness. Holdings has guaranteed the obligations of Thermadyne
LLC under the New Credit Facility. In addition, obligations under the New Credit
Facility are guaranteed by all domestic subsidiaries.
The New Credit Facility contains customary covenants and restrictions on
Thermadyne LLC's ability to engage in certain activities, including, but not
limited to: (i) limitations on the incurrence of liens and indebtedness, (ii)
restrictions on sale lease-back transactions, consolidations, mergers, sale of
assets, capital expenditures, transactions with affiliates and investments, and
(iii) severe restrictions on dividends, and other similar distributions.
The New Credit Facility contains financial covenants requiring Thermadyne
LLC to maintain a minimum level of adjusted EBITDA (as defined in the New Credit
Facility); a minimum Interest Coverage Ratio (as defined in the New Credit
Facility); a minimum Fixed Charge Coverage Ratio (as defined in the New Credit
Facility); and a maximum Leverage Ratio (as defined in the New Credit Facility).
DESCRIPTION OF SENIOR SUBORDINATED NOTES
Thermadyne Mfg. LLC and Thermadyne Capital Corp. have outstanding $207
aggregate principal amount of the Senior Subordinated Notes. The Senior
Subordinated Notes were issued pursuant to the Notes Indenture among Thermadyne
Mfg., Thermadyne Capital and State Street Bank and Trust Company, as trustee. A
copy of the Notes Indenture has been filed as an exhibit to the Registration
Statement of which this Prospectus is a part and the summary herein of certain
provisions thereof does not purport to be complete and is qualified in its
entirety by reference thereto, including the definitions therein of certain
terms used below.
The Senior Subordinated Notes are general unsecured obligations of
Thermadyne Mfg. and Thermadyne Capital and will be subordinated in right of
payment to all existing and future Senior Indebtedness of Thermadyne Mfg. and
Thermadyne Capital (including borrowings under the New Credit Facility). The
Senior Subordinated Notes are unconditionally guaranteed on a senior
subordinated basis by certain of Thermadyne Mfg.'s existing domestic
subsidiaries. The Note Guarantees will be general unsecured obligations of the
Guarantors, will be subordinated in right of payment to all existing and future
Senior Indebtedness of the Guarantors, including indebtedness under the New
Credit Facility, and will rank senior in right of payment to any future
subordinated indebtedness of the Guarantors.
All of Thermadyne Mfg.'s Subsidiaries (other than Thermadyne Capital and
Thermadyne Receivables, Inc.) are Restricted Subsidiaries. However, under
certain circumstances, Thermadyne Mfg. will be permitted to designate current or
future Subsidiaries as Unrestricted Subsidiaries. Unrestricted Subsidiaries will
not be subject to the restrictive covenants set forth in the Notes Indenture.
The Senior Subordinated Notes mature on June 1, 2008. Interest on the
Senior Subordinated Notes will accrue at the rate of 9 7/8% per annum and will
be payable semi-annually in arrears on June 1 and December 1, commencing on
December 1, 1998, to Holders of record on the immediately preceding May 15 and
November 15.
The payment of Subordinated Note Obligations will be subordinated in right
of payment, as set forth in the Notes Indenture, to the prior payment in full in
cash or cash equivalents of all Senior Indebtedness, whether outstanding on the
date of the Notes Indenture or thereafter incurred.
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<PAGE> 64
Thermadyne Mfg.'s payment obligations under the Senior Subordinated Notes
are jointly and severally guaranteed (the "Note Guarantees") by the Guarantors.
The Note Guarantee of each Guarantor will be subordinated to the prior payment
in full in cash or cash equivalents of all Senior Indebtedness of such Guarantor
(including such Guarantor's guarantee of the New Credit Facility) to the same
extent that the Senior Subordinated Notes are subordinated to Senior
Indebtedness of the Company. The obligations of each Guarantor under its Note
Guarantee will be limited so as not to constitute a fraudulent conveyance under
applicable law.
Except as provided below, the Senior Subordinated Notes are not redeemable
at the option of Thermadyne Mfg. and Thermadyne Capital prior to June 1, 2003.
Thereafter, the Senior Subordinated Notes are subject to redemption at any time
at the option of Thermadyne Mfg. and Thermadyne Capital, in whole or in part, in
cash at a redemption price declining from 104.938% of the principal amount
thereof during the 12-month period beginning June 1, 2003 to 100% of the
principal amount thereof on or after June 1, 2006, plus accrued and unpaid
interest and Liquidated Damages, if any, thereon to the applicable redemption
date.
Notwithstanding the foregoing, on or prior to June 1, 2001, Thermadyne Mfg.
and Thermadyne Capital may redeem up to 35% of the aggregate principal amount of
Senior Subordinated Notes ever issued under the Notes Indenture in cash at a
redemption price of 109.875% of the principal amount thereof, plus accrued and
unpaid interest and Liquidated Damages, if any, thereon to the redemption date,
with the net cash proceeds of one or more Public Equity Offerings; provided that
at least 65% of the aggregate principal amount of Senior Subordinated Notes ever
issued under the Notes Indenture remains outstanding immediately after the
occurrence of any such redemption; and provided further that such redemption
shall occur within 90 days of the date of the closing of any such Public Equity
Offering.
In addition, at any time prior to June 1, 2003, Thermadyne Mfg. and
Thermadyne Capital may, at their option upon the occurrence of a Change of
Control, redeem the Senior Subordinated Notes, in whole but not in part, upon
not less than 30 nor more than 60 days' prior notice (but in no event may any
such redemption occur more than 60 days after the occurrence of such Change of
Control), in cash at a redemption price equal to (i) the present value of the
sum of all the remaining interest (excluding accrued and unpaid interest, if
any), premium and principal payments that would become due on the Senior
Subordinated Notes as if the Senior Subordinated Notes were to remain
outstanding and be redeemed on June 1, 2003, computed using a discount rate
equal to the Treasury Rate plus 50 basis points, plus (ii) accrued and unpaid
interest and Liquidated Damages, if any, to the date of redemption.
Upon the occurrence of a Change of Control, each Holder of Senior
Subordinated Notes will have the right to require Thermadyne Mfg. and Thermadyne
Capital to repurchase all or any part (equal to $1,000 or an integral multiple
thereof) of such Holder's Senior Subordinated Notes at an offer price in cash
equal to 101% of the aggregate principal amount thereof, plus accrued and unpaid
interest and Liquidated Damages, if any, thereon to the date of repurchase.
The Notes Indenture contains certain covenants that, among other things,
limit the ability of Thermadyne Mfg. and Thermadyne Capital and their Restricted
Subsidiaries to: incur indebtedness and issue preferred stock, repurchase
Capital Stock and Indebtedness subordinated to the Senior Subordinated Notes,
engage in transactions with affiliates, engage in sale and leaseback
transactions, incur or suffer to exist certain liens, pay dividends or other
distributions, make investments, sell assets and engage in certain mergers and
consolidations.
The Notes Indenture provides that each of the following constitutes an
Event of Default: (a) default for 30 days in the payment when due of interest
on, or Liquidated Damages with respect to, the Senior Subordinated Notes
(whether or not prohibited by the subordination provisions of the Indenture);
(b) default in payment when due of the principal of or premium, if any, on the
Senior Subordinated Notes (whether or not prohibited by the subordination
provisions of the Notes Indenture); (c) failure by Thermadyne Mfg. or any of its
Restricted Subsidiaries for 30 days after receipt of notice from the Trustee or
Holders of at least 25% in principal amount of the Senior Subordinated Notes
then outstanding to comply with certain covenants contained in the Notes
Indenture (d) failure by Thermadyne Mfg. for 60 days after notice from the
Trustee or the Holders of at least 25% in principal amount of the Senior
Subordinated Notes then outstanding to comply
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with any of its other agreements in the Notes Indenture or the Senior
Subordinated Notes; (e) default under any mortgage, indenture or instrument
under which there may be issued or by which there may be secured or evidenced
any Indebtedness for money borrowed by Thermadyne Mfg. or any of its Restricted
Subsidiaries (or the payment of which is guaranteed by Thermadyne Mfg. or any of
its Restricted Subsidiaries), whether such Indebtedness or guarantee now exists,
or is created after the date of the Notes Indenture, which default (i) is caused
by a failure to pay Indebtedness at its stated final maturity (after giving
effect to any applicable grace period provided in such Indebtedness) (a "Payment
Default") or (ii) results in the acceleration of such Indebtedness prior to its
stated final maturity and, in each case, the principal amount of any such
Indebtedness, together with the principal amount of any other such Indebtedness
under which there has been a Payment Default or the maturity of which has been
so accelerated, aggregates $10.0 million or more; (f) failure by Thermadyne Mfg.
or any of its Restricted Subsidiaries to pay final judgments aggregating in
excess of $10.0 million (net of any amounts with respect to which a reputable
and creditworthy insurance company has acknowledged liability in writing), which
judgments are not paid, discharged or stayed for a period of 60 days; (g) except
as permitted by the Notes Indenture, any Note Guarantee shall be held in any
judicial proceeding to be unenforceable or invalid or shall cease for any reason
to be in full force and effect or any Guarantor, or any Person acting of behalf
of any Guarantor, shall deny or disaffirm its obligations under its Note
Guarantee; and (h) certain events of bankruptcy or insolvency with respect to
Thermadyne Mfg. or any of its Restricted Subsidiaries that is a Significant
Subsidiary.
If any Event of Default occurs and is continuing, the Trustee or the
Holders of at least 25% in principal amount of the then outstanding Senior
Subordinated Notes may declare all the Senior Subordinated Notes to be due and
payable immediately; provided that, so long as any Indebtedness permitted to be
incurred pursuant to the New Credit Facility shall be outstanding, such
acceleration shall not be effective until the earlier of (a) an acceleration of
any such Indebtedness under the New Credit Facility or (b) five business days
after receipt by Thermadyne Mfg. and Thermadyne Capital and the administrative
agent under the New Credit Facility of written notice of such acceleration.
Notwithstanding the foregoing, in the case of an Event of Default arising from
certain events of bankruptcy or insolvency with respect to Thermadyne Mfg. or
any Significant Subsidiary, all outstanding Senior Subordinated Notes will
become due and payable without further action or notice. Holders of the Senior
Subordinated Notes may not enforce the Notes Indenture or the Senior
Subordinated Notes except as provided in the Notes Indenture. In the event of a
declaration of acceleration of the Senior Subordinated Notes because an Event of
Default has occurred and is continuing as a result of the acceleration of any
Indebtedness described in clause (e) of the preceding paragraph, the declaration
of acceleration of the Senior Subordinated Notes shall be automatically annulled
if the holders of any Indebtedness described in clause (e) have rescinded the
declaration of acceleration in respect of such Indebtedness within 30 days of
the date of such declaration and if (i) the annulment of the acceleration of the
Senior Subordinated Notes would not conflict with any judgment or decree of a
court of competent jurisdiction and (ii) all existing Events of Default, except
non-payment of principal or interest on the Senior Subordinated Notes that
became due solely because of the acceleration of the Senior Subordinated Notes,
have been cured or waived.
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<PAGE> 66
DESCRIPTION OF NEW DEBENTURES
GENERAL
The New Debentures will be issued pursuant to an Indenture (the
"Indenture") among the Issuer and IBJ Schroder Bank & Trust Company, as trustee
(the "Trustee"). The terms of the New Debentures include those stated in the
Indenture and those made part of the Indenture by reference to the Trust
Indenture Act of 1939, as amended (the "Trust Indenture Act"). The New
Debentures are subject to all such terms, and Holders of New Debentures are
referred to the Indenture and the Trust Indenture Act for a statement thereof. A
copy of the Indenture has been filed as an exhibit to the Registration Statement
of which this Prospectus is a part and the summary herein of certain provisions
thereof does not purport to be complete and is qualified in its entirety by
reference thereto. The definitions of certain terms used in the following
summary are set forth below under "-- Certain Definitions."
The New Debentures are general unsecured obligations of the Issuer and are
senior in right of payment to all future Indebtedness of the Issuer that is
subordinated to the New Debentures and pari passu in right of payment with all
future Indebtedness of the Issuer that is not subordinated to the New
Debentures. The Issuer is the sole obligor with respect to the Debentures;
moreover, the operations of the Issuer are conducted entirely through its
Subsidiaries and, therefore, the Issuer is completely dependent upon the
operations and cash flow of its Subsidiaries to meet its obligations, including
its obligations under the New Debentures. The New Credit Facility and the Senior
Subordinated Notes restrict Thermadyne LLC from paying any dividends or making
any other distributions to the Issuer. The ability of Thermadyne LLC to comply
with the conditions in the Senior Subordinated Notes may be affected by certain
events that are beyond the Issuer's control. The Debentures are effectively
subordinated to all Indebtedness and other liabilities (including, without
limitation, trade payables and lease obligations) of the Issuer's Subsidiaries,
including, without limitation, to Thermadyne LLC's obligations under the New
Credit Facility and the Senior Subordinated Notes. Any right of the Issuer to
receive assets of any of its Subsidiaries upon such Subsidiary's liquidation or
reorganization (and the consequent right of Holders of the Senior Subordinated
Notes to participate in those assets) is effectively subordinated to the claims
of that Subsidiary's creditors except to the extent that the Issuer itself is
recognized as a creditor of such Subsidiary, in which case the claims of the
Issuer would still be subordinate to the claims of such creditors who hold
security in the assets of such Subsidiary and to the claims of such creditors
who hold Indebtedness of such Subsidiary senior to that held by the Issuer. On a
pro forma basis giving effect to the Merger, including the Merger Financing and
the application of the proceeds therefrom, as of March 31, 1998, the Issuer
would have had outstanding approximately $682.0 million of Indebtedness and the
Issuer's Subsidiaries would have had approximately $733.2 million of liabilities
outstanding, including Indebtedness under the Senior Subordinated Notes and the
New Credit Facility and including trade payables. The Indenture permits the
incurrence of certain additional Indebtedness of the Issuer and the Issuer's
Subsidiaries in the future. See "-- Certain Covenants -- Incurrence of
Indebtedness and Issuance of Preferred Stock."
Substantially all of the Issuer's Subsidiaries (other than Thermadyne
Receivables, Inc.) are Restricted Subsidiaries. However, under certain
circumstances, the Issuer will be permitted to designate current or future
Subsidiaries as Unrestricted Subsidiaries. Unrestricted Subsidiaries will not be
subject to the restrictive covenants set forth in the Indenture.
PRINCIPAL, MATURITY AND INTEREST
The New Debentures initially will be limited in aggregate principal amount
at maturity to $174 million and will mature on June 1, 2008. The New Debentures
will be issued at a substantial discount from their principal amount at
maturity. Until June 1, 2003, no interest will accrue on the New Debentures, but
the Accreted Value will increase (representing amortization of original issue
discount) between the date of original issuance and June 1, 2003, on a
semi-annual bond equivalent basis using a 360-day year comprised of twelve
30-day months, such that the Accreted Value shall be equal to the full principal
amount at maturity of the New Debentures on June 1, 2003. Beginning on June 1,
2003, interest on the New Debentures will accrue at the rate of 12 1/2% per
annum and will be payable in cash semi-annually in arrears on June 1 and
December 1, commencing on December 1, 2003, to Holders of record on the
immediately preceding May 15
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and November 15. Interest on the New Debentures will accrue from the most recent
date to which interest has been paid or, if no interest has been paid, from June
1, 2003. Interest will be computed on the basis of a 360-day year comprised of
twelve 30-day months. Principal of, premium, if any, and interest and Liquidated
Damages, if any, on the New Debentures will be payable at the office or agency
of the Issuer maintained for such purpose within the City and State of New York
or, at the option of the Issuer, payment of interest and Liquidated Damages may
be made by check mailed to the Holders of the New Debentures at their respective
addresses set forth in the register of Holders of New Debentures; provided that
all payments of principal, premium, interest and Liquidated Damages with respect
to New Debentures represented by one or more permanent global New Debentures
will be paid by wire transfer of immediately available funds to the account of
The Depository Trust Company or any successor thereto. Until otherwise
designated by the Issuer, the Issuer's office or agency in New York will be the
office of the Trustee maintained for such purpose. The New Debentures will be
issued in denominations of $1,000 and integral multiples thereof.
Subject to the covenants described below, the Issuer may issue additional
notes under the Indenture having the same terms in all respects as the New
Debentures (or in all respects except for the payment of interest on the New
Debentures (i) scheduled and paid prior to the date of issuance of such notes or
(ii) payable on the first Interest Payment Date following such date of
issuance). The New Debentures and any such additional notes would be treated as
a single class for all purposes under the Indenture.
OPTIONAL REDEMPTION
Except as provided below, the New Debentures will not be redeemable at the
Issuer's option prior to June 1, 2003. Thereafter, the New Debentures will be
subject to redemption at any time at the option of the Issuer, in whole or in
part, upon not less than 30 nor more than 60 days' notice, in cash at the
redemption prices (expressed as percentages of principal amount at maturity) set
forth below, plus accrued and unpaid interest and Liquidated Damages, if any,
thereon to the applicable redemption date, if redeemed during the twelve-month
period beginning on June 1 of the years indicated below:
<TABLE>
<CAPTION>
YEAR PERCENTAGE
---- ----------
<S> <C>
2003...................................................... 106.250%
2004...................................................... 104.167%
2005...................................................... 102.083%
2006 and thereafter....................................... 100.000%
</TABLE>
Notwithstanding the foregoing, on or prior to June 1, 2001, the Issuer may
redeem up to 100% of the aggregate principal amount at maturity of Debentures
ever issued under the Indenture in cash at a redemption price of 112.50% of the
Accreted Value thereof, plus Liquidated Damages, if any, thereon to the
redemption date, with the net cash proceeds of one or more Public Equity
Offerings; provided that, in the event that the Issuer redeems less than 100% of
the then outstanding Debentures, at least 60% of the aggregate principal amount
at maturity of Debentures ever issued under the Indenture remains outstanding
immediately after the occurrence of any such redemption; and provided further
that such redemption shall occur within 90 days of the date of the closing of
any such Public Equity Offering.
In addition, at any time prior to June 1, 2003, the Issuer may, at its
option upon the occurrence of a Change of Control, redeem the New Debentures, in
whole but not in part, upon not less than 30 nor more than 60 days' prior notice
(but in no event may any such redemption occur more than 60 days after the
occurrence of such Change of Control), in cash at a redemption price equal to
(i) the present value of the sum of all the remaining premium and principal
payments that would become due on the New Debentures as if the New Debentures
were to remain outstanding and be redeemed on June 1, 2003, computed using a
discount rate equal to the Treasury Rate plus 50 basis points, plus (ii)
Liquidated Damages, if any, to the date of redemption.
"Treasury Rate" means, as of any redemption date, the yield to maturity as
of such redemption date of United States Treasury securities with a constant
maturity (as compiled and published in the most recent Federal Reserve
Statistical Release H.15 (519) that has become publicly available at least two
Business Days prior to the redemption date (or, if such Statistical Release is
no longer published, any publicly available
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source of similar market data)) most nearly equal to the period from the
redemption date to June 1, 2003; provided that if the period from the redemption
date to June 1, 2003 is less than one year, the weekly average yield on actually
traded United States Treasury securities adjusted to a constant maturity of one
year shall be used.
SELECTION AND NOTICE
If less than all of the Debentures are to be redeemed at any time,
selection of New Debentures for redemption will be made by the Trustee in
compliance with the requirements of the principal national securities exchange,
if any, on which the New Debentures are listed, or, if the New Debentures are
not so listed, on a pro rata basis, by lot or by such method as the Trustee
shall deem fair and appropriate; provided that no New Debentures having a
principal amount at maturity of $1,000 or less shall be redeemed in part.
Notices of redemption shall be mailed by first class mail at least 30 but not
more than 60 days before the redemption date to each Holder of New Debentures to
be redeemed at its registered address. Notices of redemption may not be
conditional. If any New Debenture is to be redeemed in part only, the notice of
redemption that relates to such New Debenture shall state the portion of the
principal amount at maturity thereof to be redeemed. A new New Debenture in
principal amount at maturity equal to the unredeemed portion thereof will be
issued in the name of the Holder thereof upon cancellation of the original New
Debenture. New Debentures called for redemption become due on the date fixed for
redemption. On and after the redemption date, interest ceases to accrue on New
Debentures or portions of them called for redemption.
MANDATORY REDEMPTION
The Issuer is not required to make mandatory redemption of, or sinking fund
payments with respect to, the New Debentures.
REPURCHASE AT THE OPTION OF HOLDERS
CHANGE OF CONTROL
Upon the occurrence of a Change of Control, each Holder of New Debentures
will have the right to require the Issuer to repurchase all or any part (equal
to $1,000 principal amount at maturity or an integral multiple thereof) of such
Holder's New Debentures pursuant to the offer described below (the "Change of
Control Offer") at an offer price in cash equal to 101% of the aggregate
principal amount at maturity thereof, plus accrued and unpaid interest and
Liquidated Damages, if any, thereon to the date of repurchase (or, in the case
of repurchases of New Debentures prior to June 1, 2003, at a purchase price
equal to 101% of the Accreted Value thereof, plus Liquidated Damages, if any,
thereon as of the date of redemption) (the "Change of Control Payment"). Within
65 days following any Change of Control, the Issuer will (or will cause the
Trustee to) mail a notice to each Holder describing the transaction or
transactions that constitute the Change of Control and offering to repurchase
New Debentures, pursuant to the procedures required by the Indenture and
described in such notice. The Issuer will comply with the requirements of Rule
14e-1 under the Exchange Act and any other securities laws and regulations
thereunder to the extent such laws and regulations are applicable in connection
with the repurchase of the New Debentures as a result of a Change of Control. To
the extent that the provisions of any securities laws or regulations conflict
with the provisions of the Indenture relating to such Change of Control Offer,
the Issuer will comply with the applicable securities laws and regulations and
shall not be deemed to have breached its obligations described in the Indenture
by virtue thereof.
On the Change of Control Payment Date, the Issuer will, to the extent
lawful, (a) accept for payment all New Debentures or portions thereof properly
tendered pursuant to the Change of Control Offer, (b) deposit with the Paying
Agent an amount equal to the Change of Control Payment in respect of all New
Debentures or portions thereof so tendered and (c) deliver or cause to be
delivered to the Trustee the New Debentures so accepted together with an
Officers' Certificate stating the aggregate principal amount at maturity of
Debentures or portions thereof being purchased by the Issuer. The Paying Agent
will promptly mail to each Holder of New Debentures so tendered the Change of
Control Payment for such New Debentures, and the
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Trustee will promptly authenticate and mail (or cause to be transferred by
book-entry) to each Holder a new New Debenture equal in principal amount at
maturity to any unpurchased portion of the New Debentures surrendered, if any;
provided that each such new New Debenture will be in a principal amount at
maturity of $1,000 or an integral multiple thereof. The Issuer will publicly
announce the results of the Change of Control Offer on or as soon as practicable
after the Change of Control Payment Date.
The Indenture provides that, the Issuer will fix the Change of Control
Payment Date no earlier than 30 but no more than 60 days after the Change of
Control Offer is mailed as set forth above. Prior to complying with the
provisions of the preceding sentence, but in any event within 60 days following
a Change of Control, the Issuer will either repay all outstanding Indebtedness
of its Subsidiaries or obtain the requisite consents, if any, under all
agreements governing all such outstanding Indebtedness of its Subsidiaries to
permit the repurchase of the Debentures required by this covenant. The New
Credit Facility and the Senior Subordinated Notes restrict Thermadyne LLC from
paying any dividends or making any other distributions to the Issuer. If the
Issuer does not obtain the consent of the lenders under agreements governing
outstanding Indebtedness of its Subsidiaries, including under the New Credit
Facility and the Senior Subordinated Notes, to permit the repurchase of the
Debentures or does not refinance such Indebtedness, the Issuer will likely not
have the financial resources to purchase Debentures and the Issuer's
Subsidiaries will be restricted by the terms of such Indebtedness from paying
dividends to the Issuer or otherwise lending or distributing funds to the Issuer
for the purpose of such purchase. In any event, there can be no assurance that
the Issuer's Subsidiaries will have the resources available to pay any such
dividend or make any such distribution. The Issuer's failure to make a Change of
Control Offer when required or to purchase tendered Debentures when tendered
would constitute an Event of Default under the Indenture. See "Risk Factors."
The Change of Control provisions described above will be applicable whether
or not any other provisions of the Indenture are applicable. Except as described
above with respect to a Change of Control, the Indenture does not contain
provisions that permit the Holders of the New Debentures to require that the
Issuer repurchase or redeem the New Debentures in the event of a takeover,
recapitalization or similar transaction.
The Issuer will not be required to make a Change of Control Offer upon a
Change of Control if a third party makes the Change of Control Offer in the
manner, at the times and otherwise in compliance with the requirements set forth
in the Indenture applicable to a Change of Control Offer made by the Issuer and
purchases all New Debentures validly tendered and not withdrawn under such
Change of Control Offer.
"Change of Control" means the occurrence of any of the following: (a) the
sale, lease, transfer, conveyance or other disposition (other than by way of
merger or consolidation), in one or a series of related transactions, of all or
substantially all of the assets of the Issuer and its Subsidiaries, taken as a
whole, to any "person" or "group" (as such terms are used in Section 13(d) of
the Exchange Act), other than the Principals and their Related Parties; (b) the
adoption of a plan for the liquidation or dissolution of the Issuer, (c) the
consummation of any transaction (including, without limitation, any merger or
consolidation) the result of which is that any "person" or "group" (as such
terms are used in Section 13(d) of the Exchange Act), other than the Principals
and their Related Parties, becomes the "beneficial owner" (as such term is
defined in Rule 13d-3 and Rule 13d-5 under the Exchange Act), directly or
indirectly through one or more intermediaries, of 50% or more of the voting
power of the outstanding voting stock of the Issuer; or (d) the first day on
which a majority of the members of the Board of Directors of the Issuer are not
Continuing Directors.
The definition of Change of Control includes a phrase relating to the sale,
lease, transfer, conveyance or other disposition of "all or substantially all"
of the assets of the Issuer and its Subsidiaries taken as a whole. Although
there is a developing body of case law interpreting the phrase "substantially
all," there is no precise established definition of the phrase under applicable
law. Accordingly, the ability of a Holder of New Debentures to require the
Issuer to repurchase such New Debentures as a result of a sale, lease, transfer,
conveyance or other disposition of less than all of the assets of the Issuer and
its Subsidiaries taken as a whole to another Person or group may be uncertain.
"Continuing Directors" means, as of any date of determination, any member
of the Board of Directors of the Issuer who (a) was a member of such Board of
Directors immediately after consummation of the Merger
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or (b) was nominated for election or elected to such Board of Directors with the
approval of, or whose election to the Board of Directors was ratified by, at
least a majority of the Continuing Directors who were members of such Board of
Directors at the time of such nomination or election.
ASSET SALES
The Indenture provides that the Issuer will not, and will not permit any of
its Restricted Subsidiaries to, consummate an Asset Sale unless (a) the Issuer
or such Restricted Subsidiary, as the case may be, receives consideration at the
time of such Asset Sale at least equal to the fair market value (evidenced by a
resolution of the Board of Directors set forth in an Officers' Certificate
delivered to the Trustee) of the assets or Equity Interests issued or sold or
otherwise disposed of and (b) at least 75% of the consideration therefor
received by the Issuer or such Restricted Subsidiary is in the form of (i) cash
or Cash Equivalents or (ii) property or assets that are used or useful in a
Permitted Business, or the Capital Stock of any Person engaged in a Permitted
Business if, as a result of the acquisition by the Issuer or any Restricted
Subsidiary thereof, such Person becomes a Restricted Subsidiary; provided that
the amount of (x) any liabilities (as shown on the Issuer's or such Restricted
Subsidiary's most recent balance sheet), of the Issuer or any Restricted
Subsidiary (other than contingent liabilities and liabilities that are by their
terms subordinated to the Debentures or any guarantee thereof) that are assumed
by the transferee of any such assets pursuant to a customary novation agreement
that releases the Issuer or such Restricted Subsidiary from further liability,
(y) any securities, notes or other obligations received by the Issuer or any
such Restricted Subsidiary from such transferee that are contemporaneously
(subject to ordinary settlement periods) converted by the Issuer or such
Restricted Subsidiary into cash or Cash Equivalents (to the extent of the cash
or Cash Equivalents received), and (z) any Designated Noncash Consideration
received by the Issuer or any of its Restricted Subsidiaries in such Asset Sale
having an aggregate fair market value, taken together with all other Designated
Noncash Consideration received pursuant to this clause (z) that is at that time
outstanding, not to exceed 15% of Total Assets at the time of the receipt of
such Designated Noncash Consideration (with the fair market value of each item
of Designated Noncash Consideration being measured at the time received and
without giving effect to subsequent changes in value), shall be deemed to be
cash for purposes of this provision; and provided further that the 75%
limitation referred to in clause (b) above will not apply to any Asset Sale in
which the cash or Cash Equivalents portion of the consideration received
therefrom, determined in accordance with the foregoing proviso, is equal to or
greater than what the after-tax proceeds would have been had such Asset Sale
complied with the aforementioned 75% limitation.
Within 365 days after the receipt of any Net Proceeds from an Asset Sale,
the Issuer or any such Restricted Subsidiary shall apply such Net Proceeds, at
its option, to (a) repay or purchase Pari Passu Indebtedness of the Issuer or
any Indebtedness of any Restricted Subsidiary, provided that, if the Issuer
shall so repay or purchase Pari Passu Indebtedness of the Issuer, it will
equally and ratably reduce Indebtedness under the Debentures if the Debentures
are then redeemable, or, if the Debentures may not then be redeemed, the Issuer
shall make an offer (in accordance with the procedures set forth below for an
Asset Sale Offer) to all Holders of Debentures to purchase at a purchase price
equal to 100% of the principal amount at maturity of the Debentures (or, in the
case of purchases of Debentures prior to June 1, 2003, at a purchase price equal
to 100% of the Accreted Value thereof), plus accrued and unpaid interest and
Liquidated Damages, if any, thereon to the date of purchase, the Debentures that
would otherwise be redeemed, or (b) an investment in property, the making of a
capital expenditure or the acquisition of assets that are used or useful in a
Permitted Business, or Capital Stock of any Person primarily engaged in a
Permitted Business if (i) as a result of the acquisition by the Issuer or any
Restricted Subsidiary thereof, such Person becomes a Restricted Subsidiary or
(ii) the Investment in such Capital Stock is permitted by clause (f) of the
definition of Permitted Investments. Pending the final application of any such
Net Proceeds, the Issuer may temporarily reduce Indebtedness or otherwise invest
such Net Proceeds in any manner that is not prohibited by the Indenture. Any Net
Proceeds from Asset Sales that are not applied or invested as provided in the
first sentence of this paragraph will be deemed to constitute "Excess Proceeds."
When the aggregate amount of Excess Proceeds exceeds $15.0 million, the Issuer
will be required to make an offer to all Holders of Debentures (an "Asset Sale
Offer") to purchase the maximum principal amount at maturity of Debentures that
may be purchased out of the Excess Proceeds, at an offer price in cash in an
amount equal to 100% of the principal amount at
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maturity thereof, plus accrued and unpaid interest and Liquidated Damages, if
any, thereon to the date of purchase (or, in the case of repurchases of
Debentures prior to June 1, 2003, at a purchase price equal to 100% of the
Accreted Value, plus Liquidated Damages, if any, thereon as of the date of
repurchase), in accordance with the procedures set forth in the Indenture. To
the extent that any Excess Proceeds remain after consummation of an Asset Sale
Offer, the Issuer may use such Excess Proceeds for any purpose not otherwise
prohibited by the Indenture. If the aggregate principal amount at maturity or
Accreted Value (as applicable) of Debentures surrendered by Holders thereof in
connection with an Asset Sale Offer exceeds the amount of Excess Proceeds, the
Trustee shall select the Debentures to be purchased as set forth under
"-- Selection and Notice." Upon completion of such offer to purchase, the amount
of Excess Proceeds shall be reset at zero.
The Issuer will comply with the requirements of Rule 14e-1 under the
Exchange Act and any other securities laws and regulations thereunder to the
extent such laws and regulations are applicable in connection with the
repurchase of the Debentures pursuant to an Asset Sale Offer. To the extent that
the provisions of any securities laws or regulations conflict with the
provisions of the Indenture relating to such Asset Sale Offer, the Issuer will
comply with the applicable securities laws and regulations and shall not be
deemed to have breached its obligations described in the Indenture by virtue
thereof.
The New Credit Facility and the Senior Subordinated Notes restrict
Thermadyne LLC from paying any dividends or making any other distributions to
the Issuer. If the Issuer does not obtain the consent of the lenders under
agreements governing outstanding Indebtedness of its Subsidiaries, including
under the New Credit Facility and the Senior Subordinated Notes, to permit the
repurchase of the New Debentures or does not refinance such Indebtedness, the
Issuer will likely not have the financial resources to purchase New Debentures
and the Issuer's Subsidiaries will be restricted by the terms of such
Indebtedness from paying dividends to the Issuer or otherwise lending or
distributing funds to the Issuer for the purpose of such purchase. In any event,
there can be no assurance that the Issuer's Subsidiaries will have the resources
available to pay any such dividend or make any such distribution. The Issuer's
failure to make an Asset Sale Offer when required or to purchase tendered New
Debentures when tendered would constitute an Event of Default under the
Indenture. See "Risk Factors."
CERTAIN COVENANTS
RESTRICTED PAYMENTS
The Indenture provides that the Issuer will not, and will not permit any of
its Restricted Subsidiaries to, directly or indirectly, (a) declare or pay any
dividend or make any other payment or distribution on account of the Issuer's or
any of its Restricted Subsidiaries' Equity Interests (other than dividends or
distributions payable in Equity Interests (other than Disqualified Stock) of the
Issuer or dividends or distributions payable to the Issuer or any Wholly Owned
Restricted Subsidiary of the Issuer); (b) purchase, redeem or otherwise acquire
or retire for value any Equity Interests of the Issuer, any of its Restricted
Subsidiaries or any other Affiliate of the Issuer (other than any such Equity
Interests owned by the Issuer or any Restricted Subsidiary of the Issuer); (c)
make any principal payment on or with respect to, or purchase, redeem, defease
or otherwise acquire or retire for value, any Indebtedness of the Issuer (other
than the Debentures) that is pari passu or subordinated in right of payment to
the Debentures, except in accordance with the mandatory redemption or repayment
provisions set forth in the original documentation governing such Indebtedness
or in accordance with the covenant described under the caption entitled
"-- Repurchase at the Option of Holders -- Asset Sales" (but not pursuant to any
mandatory offer to repurchase upon the occurrence of any event); or (d) make any
Restricted Investment (all such payments and other actions set forth in clauses
(a) through (d) above being collectively referred to as "Restricted Payments"),
unless, at the time of and after giving effect to such Restricted Payment:
(i) no Default or Event of Default shall have occurred and be
continuing or would occur as a consequence thereof; and
(ii) the Issuer would, immediately after giving pro forma effect
thereto as if such Restricted Payment had been made at the beginning of the
applicable four-quarter period, have been permitted to
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incur at least $1.00 of additional Indebtedness pursuant to the Fixed
Charge Coverage Ratio test set forth in the first paragraph of the covenant
described under caption "-- Incurrence of Indebtedness and Issuance of
Preferred Stock"; and
(iii) such Restricted Payment, together with the aggregate amount of
all other Restricted Payments made by the Issuer and its Restricted
Subsidiaries after the date of the Indenture (excluding Restricted Payments
permitted by clauses (a) (to the extent that the declaration of any
dividend referred to therein reduces amounts available for Restricted
Payments pursuant to this clause (iii)), (b), (c), (e) through (g), (j),
and (m) through (p) of the next succeeding paragraph), is less than the
sum, without duplication, of (A) 50% of the Consolidated Net Income of the
Issuer for the period (taken as one accounting period) commencing July 1,
1998 to the end of the Issuer's most recently ended fiscal quarter for
which internal financial statements are available at the time of such
Restricted Payment (or, if such Consolidated Net Income for such period is
a deficit, less 100% of such deficit), plus (B) 100% of the Qualified
Proceeds received by the Issuer on or after the date of the Indenture from
contributions to the Issuer's capital or from the issue or sale on or after
the date of the Indenture of Equity Interests of the Issuer or of
Disqualified Stock or convertible debt securities of the Issuer to the
extent that they have been converted into such Equity Interests (other than
Equity Interests, Disqualified Stock or convertible debt securities sold to
a Subsidiary of the Issuer and other than Disqualified Stock or convertible
debt securities that have been converted into Disqualified Stock), plus (C)
the amount equal to the net reduction in Investments in Persons after the
date of the Indenture who are not Restricted Subsidiaries (other than
Permitted Investments) resulting from (x) Qualified Proceeds received as a
dividend, repayment of a loan or advance or other transfer of assets
(valued at the fair market value thereof) to the Issuer or any Restricted
Subsidiary from such Persons, (y) Qualified Proceeds received upon the sale
or liquidation of such Investment and (z) the redesignation of Unrestricted
Subsidiaries (other than any Unrestricted Subsidiary designated as such
pursuant to clause (n) of the following paragraph) whose assets are used or
useful in, or which is engaged in, one or more Permitted Business as
Restricted Subsidiaries (valued (proportionate to the Issuer's equity
interest in such Subsidiary) at the fair market value of the net assets of
such Subsidiary at the time of such redesignation).
The foregoing provisions will not prohibit:
(a) the payment of any dividend within 60 days after the date of
declaration thereof, if at said date of declaration such payment would have
complied with the provisions of the Indenture;
(b)(i) the redemption, repurchase, retirement, defeasance or other
acquisition of any Pari Passu Indebtedness, Subordinated Indebtedness or Equity
Interests of the Issuer (the "Retired Capital Stock") in exchange for, or out of
the net cash proceeds of the substantially concurrent sale (other than to a
Subsidiary of the Issuer) of, other Equity Interests of the Issuer (other than
any Disqualified Stock) (the "Refunding Capital Stock"), provided that the
amount of any such net cash proceeds that are utilized for any such redemption,
repurchase, retirement, defeasance or other acquisition shall be excluded from
clause (iii)(B) of the preceding paragraph and (ii) if immediately prior to the
retirement of Retired Capital Stock, the declaration and payment of dividends
thereon was permitted under clause (f) of this paragraph, the declaration and
payment of dividends on the Refunding Capital Stock in an aggregate amount per
year no greater than the aggregate amount of dividends per annum that was
declarable and payable on such Retired Capital Stock immediately prior to such
retirement; provided that, at the time of the declaration of any such dividends,
no Default or Event of Default shall have occurred and be continuing or would
occur as a consequence thereof;
(c) the defeasance, redemption, repurchase, retirement or other acquisition
of Pari Passu Indebtedness or Subordinated Indebtedness with the net cash
proceeds from an incurrence of, or in exchange for, Permitted Refinancing
Indebtedness;
(d) the repurchase, redemption or other acquisition or retirement for value
of any Equity Interests of the Issuer or Thermadyne LLC held by any member of
Thermadyne LLC's or the Issuer's (or any of its Restricted Subsidiaries')
management pursuant to any management equity subscription agreement or stock
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option agreement, provided that the aggregate price paid for all such
repurchased, redeemed, acquired or retired Equity Interests shall not exceed (x)
$7.5 million in any calendar year (with unused amounts in any calendar year
being carried over to succeeding calendar years subject to a maximum (without
giving effect to the following clause (y)) of $15.0 million in any calendar
year), plus (y) the aggregate cash proceeds received by the Issuer during such
calendar year from any reissuance of Equity Interests by the Issuer or
Thermadyne LLC to members of management of the Issuer and its Restricted
Subsidiaries and (ii) no Default or Event of Default shall have occurred and be
continuing immediately after such transaction;
(e) payments and transactions in connection with the Recapitalization, the
New Credit Facility (including commitment, syndication and arrangement fees
payable thereunder) and the application of the proceeds thereof, and the payment
of fees and expenses with respect thereto;
(f) the declaration and payment of dividends to holders of any class or
series of preferred stock (other than Disqualified Stock), provided that, at the
time of such issuance, after giving effect to such issuance on a pro forma
basis, the Fixed Charge Coverage Ratio for the Issuer for the most recently
ended four full fiscal quarters for which internal financial statements are
available immediately preceding the date of such issuance would have been no
less than 1.5 to 1;
(g) the payment of dividends or distributions by a Restricted Subsidiary on
any class of common stock or membership interests of such Restricted Subsidiary
if (i) such dividend or distribution is paid pro rata to all holders of such
class of common stock or membership interests and (ii) at least 51% of such
class of common stock or membership interests is held by the Issuer or one or
more of its Restricted Subsidiaries;
(h) the repurchase of any class of common stock or membership interests of
a Restricted Subsidiary if (i) such repurchase is made pro rata with respect to
such class of common stock or membership interests and (ii) at least 51% of such
class of common stock or membership interests is held by the Issuer or one or
more of its Restricted Subsidiaries;
(i) any other Restricted Investment made in a Permitted Business which,
together with all other Restricted Investments made pursuant to this clause (i)
since the date of the Indenture, does not exceed $25.0 million (in each case,
after giving effect to all subsequent reductions in the amount of any Restricted
Investment made pursuant to this clause (i), either as a result of (A) the
repayment or disposition thereof for cash or (B) the redesignation of an
Unrestricted Subsidiary as a Restricted Subsidiary (valued proportionate to the
Issuer's equity interest in such Subsidiary at the time of such redesignation)
at the fair market value of the net assets of such Subsidiary at the time of
such redesignation), in the case of clause (A) and (B), not to exceed the amount
of such Restricted Investment previously made pursuant to this clause (i);
provided that no Default or Event of Default shall have occurred and be
continuing immediately after making such Restricted Investment;
(j) the declaration and payment of dividends to holders of any class or
series of Disqualified Stock of the Issuer or any Restricted Subsidiary issued
on or after the date of the Indenture in accordance with the covenant described
under the caption "-- Incurrence of Indebtedness and Issuance of Preferred
Stock"; provided that no Default or Event of Default shall have occurred and be
continuing immediately after making such Restricted Payment;
(k) repurchases of Equity Interests deemed to occur upon exercise of stock
options if such Equity Interests represent a portion of the exercise price of
such options;
(l) the payment of dividends or distributions on the Issuer's common stock
or Thermadyne LLC's membership interests, following the first public offering of
the Issuer's common stock or Thermadyne LLC's membership interests after the
date of the Indenture, of up to 6.0% per annum of the net proceeds received by
the Issuer or Thermadyne LLC from such public offering, other than, in each
case, with respect to public offerings with respect to the Issuer's common stock
or Thermadyne LLC's membership interests registered on Form S-8; provided that
no Default or Event of Default shall have occurred and be continuing immediately
after any such payment of dividends or distributions;
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(m) any other Restricted Payment which, together with all other Restricted
Payments made pursuant to this clause (m) since the date of the Indenture, does
not exceed $25.0 million (in each case, after giving effect to all subsequent
reductions in the amount of any Restricted Investment made pursuant to this
clause (m) either as a result of (i) the repayment or disposition thereof for
cash or (ii) the redesignation of an Unrestricted Subsidiary as a Restricted
Subsidiary (valued proportionate to the Issuer's equity interest in such
Subsidiary at the time of such redesignation) at the fair market value of the
net assets of such Subsidiary at the time of such redesignation), in the case of
clause (i) and (ii), not to exceed the amount of such Restricted Investment
previously made pursuant to this clause (m); provided that no Default or Event
of Default shall have occurred and be continuing immediately after making such
Restricted Payment;
(n) the pledge by the Issuer of the Capital Stock of an Unrestricted
Subsidiary of the Issuer to secure Non-Recourse Debt of such Unrestricted
Subsidiary;
(o) the purchase, redemption or other acquisition or retirement for value
of any Equity Interests of any Restricted Subsidiary issued after the date of
the Indenture, provided that the aggregate price paid for any such repurchased,
redeemed, acquired or retired Equity Interests shall not exceed the sum of (i)
the amount of cash and Cash Equivalents received by such Restricted Subsidiary
from the issue or sale thereof and (ii) any accrued dividends thereon the
payment of which would be permitted pursuant to clause (j) above;
(p) distributions or payments of Receivables Fees; and
(q) the purchase, redemption or other acquisition or retirement for value
of rights issued pursuant to the Issuer's Rights Plan as in effect on the date
of the Indenture.
The Board of Directors may designate any Restricted Subsidiary (other than
Thermadyne LLC and Thermadyne Capital) to be an Unrestricted Subsidiary if such
designation would not cause a Default. For purposes of making such designation,
all outstanding Investments by the Issuer and its Restricted Subsidiaries
(except to the extent repaid in cash) in the Subsidiary so designated will be
deemed to be Restricted Payments at the time of such designation and will reduce
the amount available for Restricted Payments under the first paragraph of this
covenant. All such outstanding Investments will be deemed to constitute
Restricted Investments in an amount equal to the greater of (i) the net book
value of such Investments at the time of such designation and (ii) the fair
market value of such Investments at the time of such designation. Such
designation will only be permitted if such Restricted Investment would be
permitted at such time and if such Restricted Subsidiary otherwise meets the
definition of an Unrestricted Subsidiary.
The amount of (i) all Restricted Payments (other than cash) shall be the
fair market value on the date of the Restricted Payment of the asset(s) or
securities proposed to be transferred or issued by the Issuer or such Restricted
Subsidiary, as the case may be, pursuant to the Restricted Payment and (ii)
Qualified Proceeds (other than cash) shall be the fair market value on the date
of receipt thereof by the Issuer of such Qualified Proceeds. The fair market
value of any non-cash Restricted Payment shall be determined by the Board of
Directors whose resolution with respect thereto shall be delivered to the
Trustee. Not later than the date of making any Restricted Payment, the Issuer
shall deliver to the Trustee an Officers' Certificate stating that such
Restricted Payment is permitted and setting forth the basis upon which the
calculations required by the covenant "Restricted Payments" were computed.
INCURRENCE OF INDEBTEDNESS AND ISSUANCE OF PREFERRED STOCK
The Indenture provides that (a) the Issuer will not, and will not permit
any of its Restricted Subsidiaries to, directly or indirectly, create, incur,
issue, assume, guarantee or otherwise become directly or indirectly liable,
contingently or otherwise, with respect to (collectively, "incur") any
Indebtedness (including Acquired Indebtedness), (b) the Issuer will not, and
will not permit any of its Restricted Subsidiaries to, issue any shares of
Disqualified Stock and (c) the Issuer will not permit any of its Restricted
Subsidiaries to issue any shares of preferred stock; provided that the Issuer or
any Restricted Subsidiary may incur Indebtedness (including Acquired
Indebtedness) or issue shares of Disqualified Stock if the Fixed Charge Coverage
Ratio for the Issuer's most recently ended four full fiscal quarters for which
internal financial statements are available immediately preceding the date on
which such additional Indebtedness is incurred or such
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Disqualified Stock is issued would have been at least 1.5 to 1, determined on a
consolidated pro forma basis (including a pro forma application of the net
proceeds therefrom), as if the additional Indebtedness had been incurred, or the
Disqualified Stock had been issued, as the case may be, at the beginning of such
four-quarter period.
The Indenture also provides that the Issuer will not incur any Indebtedness
that is contractually subordinated in right of payment to any other Indebtedness
of the Issuer unless such Indebtedness is also contractually subordinated in
right of payment to the Debentures on substantially identical terms; provided
that no Indebtedness of the Issuer shall be deemed to be contractually
subordinated in right of payment to any other Indebtedness of the Issuer solely
by virtue of being unsecured.
The provisions of the first paragraph of this covenant will not apply to
the incurrence of any of the following items of Indebtedness (collectively,
"Permitted Indebtedness"):
(i) the incurrence by the Issuer and its Restricted Subsidiaries of
Indebtedness under the New Credit Facility; provided that the aggregate
principal amount of all Indebtedness (with letters of credit being deemed
to have a principal amount equal to the maximum potential liability of the
Issuer and such Restricted Subsidiaries thereunder) then classified as
having been incurred in reliance upon this clause (i) that remains
outstanding under the New Credit Facility after giving effect to such
incurrence does not exceed an amount equal to $430.0 million;
(ii) the incurrence by the Issuer and its Restricted Subsidiaries of
Existing Indebtedness;
(iii) the incurrence by (A) the Issuer and the Issuer's Restricted
Subsidiaries of Indebtedness represented by the Debentures and the
Indenture and (B) Thermadyne LLC and Thermadyne Capital of Indebtedness
represented by the Senior Subordinated Notes and the Subordinated Note
Indenture;
(iv) the incurrence by the Issuer or any of its Restricted
Subsidiaries of Indebtedness represented by Capital Expenditure
Indebtedness, Capital Lease Obligations or purchase money obligations, in
each case, incurred for the purpose of financing all or any part of the
purchase price or cost of construction or improvement of property, plant or
equipment used in the business of the Issuer or such Restricted Subsidiary,
in an aggregate principal amount (or accreted value, as applicable) not to
exceed $40.0 million outstanding after giving effect to such incurrence;
(v) Indebtedness arising from agreements of the Issuer or any
Restricted Subsidiary providing for indemnification, adjustment of purchase
price or similar obligations, in each case, incurred or assumed in
connection with the disposition of any business, assets or a Subsidiary,
other than guarantees of Indebtedness incurred by any Person acquiring all
or any portion of such business, assets or Restricted Subsidiary for the
purpose of financing such acquisition; provided that (A) such Indebtedness
is not reflected on the balance sheet of the Issuer or any Restricted
Subsidiary (contingent obligations referred to in a footnote or footnotes
to financial statements and not otherwise reflected on the balance sheet
will not be deemed to be reflected on such balance sheet for purposes of
this clause (A)) and (B) the maximum assumable liability in respect of such
Indebtedness shall at no time exceed the gross proceeds including non-cash
proceeds (the fair market value of such non-cash proceeds being measured at
the time received and without giving effect to any subsequent changes in
value) actually received by the Issuer and/or such Restricted Subsidiary in
connection with such disposition;
(vi) the incurrence by the Issuer or any of its Restricted
Subsidiaries of Permitted Refinancing Indebtedness in exchange for, or the
net proceeds of which are used to refund, refinance or replace Indebtedness
(other than intercompany Indebtedness) that was permitted by the Indenture
to be incurred;
(vii) the incurrence by the Issuer or any of its Restricted
Subsidiaries of intercompany Indebtedness between or among the Issuer
and/or any of its Restricted Subsidiaries; provided that (i) if the Issuer
is the obligor on such Indebtedness, such Indebtedness is expressly
subordinated to the prior payment in full in cash of all Obligations with
respect to the Debentures and (ii)(A) any subsequent issuance or transfer
of Equity Interests that results in any such Indebtedness being held by a
Person other than the
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Issuer or a Restricted Subsidiary thereof and (B) any sale or other
transfer of any such Indebtedness to a Person that is not either the Issuer
or a Restricted Subsidiary thereof shall be deemed, in each case, to
constitute an incurrence of such Indebtedness by the Issuer or such
Restricted Subsidiary, as the case may be, that was not permitted by this
clause (vii);
(viii) the incurrence by the Issuer or any of its Restricted
Subsidiaries of Hedging Obligations that are incurred for the purpose of
fixing or hedging (A) interest rate risk with respect to any floating rate
Indebtedness that is permitted by the terms of this Indenture to be
outstanding and (B) exchange rate risk with respect to agreements or
Indebtedness of such Person payable denominated in a currency other than
U.S. dollars, provided that such agreements do not increase the
Indebtedness of the obligor outstanding at any time other than as a result
of fluctuations in foreign currency exchange rates or interest rates or by
reason of fees, indemnities and compensation payable thereunder;
(ix) the guarantee by the Issuer or any of its Restricted Subsidiaries
of Indebtedness of the Issuer or a Restricted Subsidiary of the Issuer that
was permitted to be incurred by another provision of this covenant;
(x) the incurrence by the Issuer or any of its Restricted Subsidiaries
of Acquired Indebtedness in an aggregate principal amount (or accreted
value, as applicable) not to exceed $25.0 million outstanding after giving
effect to such incurrence;
(xi) obligations in respect of performance and surety bonds and
completion guarantees provided by the Issuer or any Restricted Subsidiary
in the ordinary course of business; and
(xii) the incurrence by the Issuer or any of its Restricted
Subsidiaries of additional Indebtedness in an aggregate principal amount
(or accreted value, as applicable) outstanding after giving effect to such
incurrence, including all Permitted Refinancing Indebtedness incurred to
refund, refinance or replace any Indebtedness incurred pursuant to this
clause (xii), not to exceed $50.0 million.
For purposes of determining compliance with this covenant, in the event
that an item of Indebtedness meets the criteria of more than one of the
categories of Permitted Indebtedness described in clauses (i) through (xii)
above or is entitled to be incurred pursuant to the first paragraph of this
covenant, the Issuer shall, in its sole discretion, classify such item of
Indebtedness in any manner that complies with this covenant and such item of
Indebtedness will be treated as having been incurred pursuant to only one of
such clauses or pursuant to the first paragraph hereof. In addition, the Issuer
may, at any time, change the classification of an item of Indebtedness (or any
portion thereof) to any other clause or to the first paragraph hereof, provided
that the Issuer would be permitted to incur such item of Indebtedness (or such
portion thereof) pursuant to such other clause or the first paragraph hereof, as
the case may be, at such time of reclassification. Accrual of interest,
accretion or amortization of original issue discount will not be deemed to be an
incurrence of Indebtedness for purposes of this covenant.
All Indebtedness under the New Credit Facility outstanding on the date on
which Debentures are first issued and authenticated under the Indenture shall be
deemed to have been incurred on such date in reliance on the first paragraph of
the covenant described under the caption "-- Certain Covenants -- Incurrence of
Indebtedness and Issuance of Preferred Stock." As a result, the Issuer will be
permitted to incur significant additional secured indebtedness under clause (i)
of the definition of "Permitted Indebtedness." See "Risk Factors."
LIENS
The Indenture provides that the Issuer will not, and will not permit any of
its Restricted Subsidiaries to, directly or indirectly, create, incur, assume or
suffer to exist any Lien, other than a Permitted Lien, that secures obligations
under any Pari Passu Indebtedness or Subordinated Indebtedness of the Issuer on
any asset or property now owned or hereafter acquired by the Issuer or any of
its Restricted Subsidiaries, or any income or profits therefrom or assign or
convey any right to receive income therefrom, unless the Debentures
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are equally and ratably secured with the obligations so secured until such time
as such obligations are no longer secured by a Lien.
DIVIDEND AND OTHER PAYMENT RESTRICTIONS AFFECTING RESTRICTED SUBSIDIARIES
The Indenture provides that the Issuer will not, and will not permit any of
its Restricted Subsidiaries to, directly or indirectly, create or otherwise
cause or suffer to exist or become effective any encumbrance or restriction on
the ability of any Restricted Subsidiary to (a)(i) pay dividends or make any
other distributions to the Issuer or any of its Restricted Subsidiaries (A) on
its Capital Stock or (B) with respect to any other interest or participation in,
or measured by, its profits, or (ii) pay any Indebtedness owed to the Issuer or
any of its Restricted Subsidiaries, (b) make loans or advances to the Issuer or
any of its Restricted Subsidiaries or (c) transfer any of its properties or
assets to the Issuer or any of its Restricted Subsidiaries. However, the
foregoing restrictions will not apply to encumbrances or restrictions existing
under or by reason of (a) Existing Indebtedness as in effect on the date of the
Indenture, (b) the terms of any Indebtedness permitted by the Indenture to be
incurred by any Restricted Subsidiary of the Issuer, (c) the Indenture and the
Debentures, (d) applicable law and any applicable rule, regulation or order, (e)
any agreement or instrument of a Person acquired by the Issuer or any of its
Restricted Subsidiaries as in effect at the time of such acquisition (except to
the extent created in contemplation of such acquisition), which encumbrance or
restriction is not applicable to any Person, or the properties or assets of any
Person, other than the Person, or the property or assets of the Person, so
acquired, provided that, in the case of Indebtedness, such Indebtedness was
permitted by the terms of the Indenture to be incurred, (f) customary
non-assignment provisions in leases entered into in the ordinary course of
business and consistent with past practices, (g) purchase money obligations for
property acquired in the ordinary course of business that impose restrictions of
the nature described in clause (e) above on the property so acquired, (h)
contracts for the sale of assets, including, without limitation, customary
restrictions with respect to a Subsidiary pursuant to an agreement that has been
entered into for the sale or disposition of all or substantially all of the
Capital Stock or assets of such Subsidiary, (i) Permitted Refinancing
Indebtedness, provided that the restrictions contained in the agreements
governing such Permitted Refinancing Indebtedness are, in the good faith
judgment of the Issuer's Board of Directors, not materially less favorable,
taken as a whole, to the Holders of the Debentures than those contained in the
agreements governing the Indebtedness being refinanced, (j) secured Indebtedness
otherwise permitted to be incurred pursuant to the covenants described under
"--Incurrence of Indebtedness and Issuance of Preferred Stock" and "--Liens"
that limit the right of the debtor to dispose of the assets securing such
Indebtedness, (k) restrictions on cash or other deposits or net worth imposed by
customers under contracts entered into in the ordinary course of business, (l)
other Indebtedness or Disqualified Stock of Restricted Subsidiaries permitted to
be incurred subsequent to the Issuance Date pursuant to the provisions of the
covenant described under "--Incurrence of Indebtedness and Issuance of Preferred
Stock", (m) customary provisions in joint venture agreements and other similar
agreements entered into in the ordinary course of business, and (n) restrictions
created in connection with any Receivables Facility that, in the good faith
determination of the Board of Directors of the Issuer, are necessary or
advisable to effect such Receivables Facility.
The New Credit Facility and the Senior Subordinated Notes restrict
Thermadyne LLC from paying any dividends or making any other distributions to
the Issuer. The existence of such restrictions could have an adverse effect on
the Issuer's ability to pay interest and principal on the Debentures. See "Risk
Factors."
MERGER, CONSOLIDATION, OR SALE OF ASSETS
The Indenture provides that the Issuer may not consolidate or merge with or
into (whether or not the Issuer is the surviving corporation), or sell, assign,
transfer, convey or otherwise dispose of all or substantially all of its
properties or assets in one or more related transactions, to another Person
unless (a) the Issuer is the surviving corporation or the Person formed by or
surviving any such consolidation or merger (if other than the Issuer) or to
which such sale, assignment, transfer, conveyance or other disposition shall
have been made is a corporation organized or existing under the laws of the
United States, any state thereof or the District of Columbia, (b) the Person
formed by or surviving any such consolidation or merger (if other than the
Issuer) or the Person to which such sale, assignment, transfer, conveyance or
other disposition shall have been made
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assumes all the obligations of the Issuer under the Registration Rights
Agreement, the Debentures and the Indenture pursuant to a supplemental indenture
in a form reasonably satisfactory to the Trustee, (c) immediately after such
transaction no Default or Event of Default exists and (d) the Issuer or the
Person formed by or surviving any such consolidation or merger (if other than
the Issuer), or to which such sale, assignment, transfer, conveyance or other
disposition shall have been made (i) will, at the time of such transaction and
after giving pro forma effect thereto as if such transaction had occurred at the
beginning of the applicable four-quarter period, be permitted to incur at least
$1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio
test set forth in the first paragraph of the covenant described under the
caption "-- Incurrence of Indebtedness and Issuance of Preferred Stock" or (ii)
would (together with its Restricted Subsidiaries) have a higher Fixed Charge
Coverage Ratio immediately after such transaction (after giving pro forma effect
thereto as if such transaction had occurred at the beginning of the applicable
four-quarter period) than the Fixed Charge Coverage Ratio of the Issuer and its
Restricted Subsidiaries immediately prior to such transaction. The foregoing
clause (d) will not prohibit (a) a merger between the Issuer and an Affiliate of
the Issuer created for the purpose of holding the Capital Stock of the Issuer,
(b) a merger between the Issuer and a Wholly Owned Restricted Subsidiary or (c)
a merger between the Issuer and an Affiliate incorporated solely for the purpose
of reincorporating the Issuer in another State of the United States so long as,
in each case, the amount of Indebtedness of the Issuer and its Restricted
Subsidiaries is not increased thereby. The Indenture provides that the Issuer
shall not lease all or substantially all of its assets to any Person.
TRANSACTIONS WITH AFFILIATES
The Indenture provides that the Issuer will not, and will not permit any of
its Restricted Subsidiaries to, make any payment to, or sell, lease, transfer or
otherwise dispose of any of its properties or assets to, or purchase any
property or assets from, or enter into or make or amend any transaction,
contract, agreement, understanding, loan, advance or guarantee with, or for the
benefit of, any Affiliate of the Issuer (each of the foregoing, an "Affiliate
Transaction"), unless (a) such Affiliate Transaction is on terms that are no
less favorable to the Issuer or such Restricted Subsidiary than those that would
have been obtained in a comparable transaction by the Issuer or such Restricted
Subsidiary with an unrelated Person and (b) the Issuer delivers to the Trustee,
with respect to any Affiliate Transaction or series of related Affiliate
Transactions involving aggregate consideration in excess of $7.5 million, either
(i) a resolution of the Board of Directors set forth in an Officers' Certificate
certifying that such Affiliate Transaction complies with clause (a) above and
that such Affiliate Transaction has been approved by a majority of the
disinterested members of the Board of Directors or (ii) an opinion as to the
fairness to the Holders of such Affiliate Transaction from a financial point of
view issued by an accounting, appraisal or investment banking firm of national
standing.
Notwithstanding the foregoing, the following items shall not be deemed to
be Affiliate Transactions: (a) customary directors' fees, indemnification or
similar arrangements or any employment agreement or other compensation plan or
arrangement entered into by the Issuer or any of its Restricted Subsidiaries in
the ordinary course of business (including ordinary course loans to employees
not to exceed (i) $5.0 million outstanding in the aggregate at any time and (ii)
$2.0 million to any one employee) and consistent with the past practice of the
Issuer or such Restricted Subsidiary; (b) transactions between or among the
Issuer and/or its Restricted Subsidiaries; (c) payments of customary fees by the
Issuer or any of its Restricted Subsidiaries to DLJMB and its Affiliates made
for any financial advisory, financing, underwriting or placement services or in
respect of other investment banking activities, including, without limitation,
in connection with acquisitions or divestitures which are approved by a majority
of the Board of Directors in good faith; (d) any agreement as in effect on the
date of the Indenture or any amendment thereto (so long as such amendment is not
disadvantageous to the Holders of the Debentures in any material respect) or any
transaction contemplated thereby; (e) payments and transactions in connection
with the Merger, the New Credit Facility (including commitment, syndication and
arrangement fees payable thereunder) and the Offerings (including underwriting
discounts and commissions in connection therewith) and the application of the
proceeds thereof, and the payment of the fees and expenses with respect thereto;
(f) Restricted Payments that are permitted by the provisions of the Indenture
described under the caption "--Restricted Payments"; (g) sales of accounts
receivable, or participations therein, in connection with any Receivables
Facility; and (h) transactions pursuant to the Management Loans.
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SALE AND LEASEBACK TRANSACTIONS
The Indenture provides that the Issuer will not, and will not permit any of
its Restricted Subsidiaries to, enter into any sale and leaseback transaction;
provided that the Issuer or any Restricted Subsidiary may enter into a sale and
leaseback transaction if (a) the Issuer or such Restricted Subsidiary, as the
case may be, could have (i) incurred Indebtedness in an amount equal to the
Attributable Indebtedness relating to such sale and leaseback transaction
pursuant to the Fixed Charge Coverage Ratio test set forth in the first
paragraph of the covenant described under the caption "-- Incurrence of
Indebtedness and Issuance of Preferred Stock" and (ii) incurred a Lien to secure
such Indebtedness pursuant to the covenant described under the caption
"-- Liens," (b) the gross cash proceeds of such sale and leaseback transaction
are at least equal to the fair market value (as determined in good faith by the
Board of Directors and set forth in an Officers' Certificate delivered to the
Trustee) of the property that is the subject of such sale and leaseback
transaction and (c) the transfer of assets in such sale and leaseback
transaction is permitted by, and the Issuer applies the proceeds of such
transaction in compliance with, the covenant described under the caption
"Repurchase at the Option of Holders -- Asset Sales."
ACCOUNTS RECEIVABLE FACILITY
The Indenture provides that no Accounts Receivable Subsidiary will incur
any Indebtedness if immediately after giving effect to such incurrence the
aggregate outstanding Indebtedness of all Accounts Receivable Subsidiaries
(excluding any Indebtedness owed to the Issuer or any Restricted Subsidiary)
would exceed $60.0 million.
REPORTS
The Indenture provides that, whether or not required by the rules and
regulations of the Securities and Exchange Commission (the "Commission"), so
long as any Debentures are outstanding, the Issuer will furnish to the Holders
of Debentures (a) all quarterly and annual financial information that would be
required to be contained in a filing with the Commission on Forms 10-Q and 10-K
if the Issuer were required to file such Forms, including a "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and,
with respect to the annual information only, a report thereon by the Issuer's
certified independent accountants and (b) all current reports that would be
required to be filed with the Commission on Form 8-K if the Issuer were required
to file such reports, in each case, within the time periods specified in the
Commission's rules and regulations. In addition, following the consummation of
the Exchange Offer, whether or not required by the rules and regulations of the
Commission, the Issuer will file a copy of all such information and reports with
the Commission for public availability within the time periods specified in the
Commission's rules and regulations (unless the Commission will not accept such a
filing) and make such information available to securities analysts and
prospective investors upon request. In addition, the Issuer has agreed that, for
so long as any Debentures remain outstanding, it will furnish to the Holders and
to securities analysts and prospective investors, upon their request, the
information required to be delivered pursuant to Rule 144A(d)(4) under the
Securities Act.
EVENTS OF DEFAULT AND REMEDIES
The Indenture provides that each of the following constitutes an Event of
Default: (a) default for 30 days in the payment when due of interest on, or
Liquidated Damages with respect to, the Debentures; (b) default in payment when
due of the principal of or premium, if any, on the Debentures at maturity, upon
redemption or otherwise; (c) failure by the Issuer or any of its Restricted
Subsidiaries for 30 days after receipt of notice from the Trustee or Holders of
at least 25% in principal amount at maturity of the Debentures then outstanding
to comply with the provisions described under the captions "Repurchase at the
Option of Holders -- Change of Control," "-- Asset Sales," "Certain
Covenants -- Restricted Payments," "-- Incurrence of Indebtedness and Issuance
of Preferred Stock" or "Merger, Consolidation or Sale of Assets"; (d) failure by
the Issuer for 60 days after notice from the Trustee or the Holders of at least
25% in principal amount at maturity of the Debentures then outstanding to comply
with any of its other agreements in the Indenture or the Debentures; (e) default
under any mortgage, indenture or instrument under which there may
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be issued or by which there may be secured or evidenced any Indebtedness for
money borrowed by the Issuer or any of its Restricted Subsidiaries (or the
payment of which is guaranteed by the Issuer or any of its Restricted
Subsidiaries), whether such Indebtedness or guarantee now exists, or is created
after the date of the Indenture, which default (i) is caused by a failure to pay
Indebtedness at its stated final maturity (after giving effect to any applicable
grace period provided in such Indebtedness) (a "Payment Default") or (ii)
results in the acceleration of such Indebtedness prior to its stated final
maturity and, in each case, the principal amount of any such Indebtedness,
together with the principal amount of any other such Indebtedness under which
there has been a Payment Default or the maturity of which has been so
accelerated, aggregates $10.0 million or more; (f) failure by the Issuer or any
of its Restricted Subsidiaries to pay final judgments aggregating in excess of
$10.0 million (net of any amounts with respect to which a reputable and
creditworthy insurance Company has acknowledged liability in writing), which
judgments are not paid, discharged or stayed for a period of 60 days; and (g)
certain events of bankruptcy or insolvency with respect to the Issuer or any of
its Restricted Subsidiaries that is a Significant Subsidiary.
If any Event of Default occurs and is continuing, the Trustee or the
Holders of at least 25% in principal amount at maturity of the then outstanding
Debentures may declare all the Debentures to be due and payable immediately;
provided that, so long as any Indebtedness permitted to be incurred pursuant to
the New Credit Facility shall be outstanding, such acceleration shall not be
effective until the earlier of (a) an acceleration of any such Indebtedness
under the New Credit Facility or (b) five business days after receipt by the
Issuer and the administrative agent under the New Credit Facility of written
notice of such acceleration. Notwithstanding the foregoing, in the case of an
Event of Default arising from certain events of bankruptcy or insolvency with
respect to the Issuer or any Significant Subsidiary, all outstanding Debentures
will become due and payable without further action or notice. Upon any
acceleration of maturity of the Debentures, all principal of and accrued
interest on (if on or after June 1, 2003) or Accreted Value of (if prior to June
1, 2003) the Debentures shall be due and payable immediately. Holders of the
Debentures may not enforce the Indenture or the Debentures except as provided in
the Indenture. In the event of a declaration of acceleration of the Debentures
because an Event of Default has occurred and is continuing as a result of the
acceleration of any Indebtedness described in clause (e) of the preceding
paragraph, the declaration of acceleration of the Debentures shall be
automatically annulled if the holders of any Indebtedness described in clause
(e) have rescinded the declaration of acceleration in respect of such
Indebtedness within 30 days of the date of such declaration and if (i) the
annulment of the acceleration of the Debentures would not conflict with any
judgment or decree of a court of competent jurisdiction and (ii) all existing
Events of Default, except non-payment of principal or interest on the Debentures
that became due solely because of the acceleration of the Debentures, have been
cured or waived.
Subject to certain limitations, Holders of a majority in principal amount
at maturity of the then outstanding Debentures may direct the Trustee in its
exercise of any trust or power. The Trustee may withhold from Holders of the
Debentures notice of any continuing Default or Event of Default (except a
Default or Event of Default relating to the payment of principal or interest) if
it determines that withholding notice is in their interest.
The Holders of a majority in aggregate principal amount at maturity of the
Debentures then outstanding by notice to the Trustee may on behalf of the
Holders of all of the Debentures waive any existing Default or Event of Default
and its consequences under the Indenture except a continuing Default or Event of
Default in the payment of interest on, or the principal of, the Debentures.
The Issuer is required to deliver to the Trustee annually a statement
regarding compliance with the Indenture, and the Issuer is required upon
becoming aware of any Default or Event of Default to deliver to the Trustee a
statement specifying such Default or Event of Default.
NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES AND STOCKHOLDERS
No director, officer, employee, incorporator or stockholder of the Issuer,
as such, shall have any liability for any obligations of the Issuer under the
Debentures or the Indenture or for any claim based on, in respect of, or by
reason of, such obligations or their creation. Each Holder of Debentures by
accepting a Debenture
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waives and releases all such liability. The waiver and release are part of the
consideration for issuance of the Debentures. Such waiver may not be effective
to waive liabilities under the federal securities laws, and it is the view of
the Commission that such a waiver is against public policy.
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
The Issuer may, at its option and at any time, elect to have all of its
obligations discharged with respect to the outstanding Debentures ("Legal
Defeasance") except for (a) the rights of Holders of outstanding Debentures to
receive payments in respect of the principal of, premium, if any, and interest
and Liquidated Damages, if any, on such Debentures when such payments are due
from the trust referred to below, (b) the Issuer's obligations with respect to
the Debentures concerning issuing temporary Debentures, registration of
Debentures, mutilated, destroyed, lost or stolen Debentures and the maintenance
of an office or agency for payment and money for security payments held in
trust, (c) the rights, powers, trusts, duties and immunities of the Trustee, and
the Issuer's obligations in connection therewith and (d) the Legal Defeasance
provisions of the Indenture. In addition, the Issuer may, at its option and at
any time, elect to have the obligations of the Issuer released with respect to
certain covenants that are described in the Indenture ("Covenant Defeasance")
and thereafter any omission to comply with such obligations shall not constitute
a Default or Event of Default with respect to the Debentures. In the event
Covenant Defeasance occurs, certain events (not including non-payment,
bankruptcy, receivership, rehabilitation and insolvency events) described under
"Events of Default and Remedies" will no longer constitute an Event of Default
with respect to the Debentures.
In order to exercise either Legal Defeasance or Covenant Defeasance, (a)
the Issuer must irrevocably deposit with the Trustee, in trust, for the benefit
of the Holders of the Debentures, cash in U.S. dollars, non-callable Government
Securities, or a combination thereof, in such amounts as will be sufficient, in
the opinion of a nationally recognized firm of independent public accountants,
to pay the principal of, premium, if any, and interest and Liquidated Damages,
if any, on the outstanding Debentures on the stated maturity or on the
applicable redemption date, as the case may be, and the Issuer must specify
whether the Debentures are being defeased to maturity or to a particular
redemption date, (b) in the case of Legal Defeasance, the Issuer shall have
delivered to the Trustee an opinion of counsel in the United States reasonably
acceptable to the Trustee confirming that (i) the Issuer has received from, or
there has been published by, the Internal Revenue Service a ruling or (ii) since
the date of the Indenture, there has been a change in the applicable federal
income tax law, in either case to the effect that, and based thereon such
opinion of counsel shall confirm that, subject to customary assumptions and
exclusions, the Holders of the outstanding Debentures will not recognize income,
gain or loss for federal income tax purposes as a result of such Legal
Defeasance and will be subject to federal income tax on the same amounts, in the
same manner and at the same times as would have been the case if such Legal
Defeasance had not occurred, (c) in the case of Covenant Defeasance, the Issuer
shall have delivered to the Trustee an opinion of counsel in the United States
reasonably acceptable to the Trustee confirming that, subject to customary
assumptions and exclusions, the Holders of the outstanding Debentures will not
recognize income, gain or loss for federal income tax purposes as a result of
such Covenant Defeasance and will be subject to federal income tax on the same
amounts, in the same manner and at the same times as would have been the case if
such Covenant Defeasance had not occurred, (d) no Default or Event of Default
shall have occurred and be continuing on the date of such deposit (other than a
Default or Event of Default resulting from the borrowing of funds to be applied
to such deposit) or, insofar as Events of Default from bankruptcy or insolvency
events are concerned, at any time in the period ending on the 123rd day after
the date of deposit, (e) such Legal Defeasance or Covenant Defeasance will not
result in a breach or violation of, or constitute a default under, any material
agreement or instrument (other than the Indenture) to which the Issuer or any of
its Subsidiaries is a party or by which the Issuer or any of its Subsidiaries is
bound, (f) the Issuer must have delivered to the Trustee an opinion of counsel
to the effect that, subject to customary assumptions and exclusions, after the
123rd day following the deposit, the trust funds will not be subject to the
effect of Section 547 of the United States Bankruptcy Code or any analogous New
York State law provision or any other applicable federal or New York bankruptcy,
insolvency, reorganization or similar laws affecting creditors' rights
generally, (g) the Issuer must deliver to the Trustee an Officers' Certificate
stating that the deposit was not made by the Issuer with the intent of
preferring the Holders of Debentures over the other
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creditors of the Issuer with the intent of defeating, hindering, delaying or
defrauding creditors of the Issuer or others, and (h) the Issuer must deliver to
the Trustee an Officers' Certificate and an opinion of counsel (which opinion
may be subject to customary assumptions and exclusions), each stating that all
conditions precedent provided for relating to the Legal Defeasance or the
Covenant Defeasance have been complied with.
TRANSFER AND EXCHANGE
A Holder may transfer or exchange New Debentures in accordance with the
Indenture. The Registrar and the Trustee may require a Holder, among other
things, to furnish appropriate endorsements and transfer documents and the
Issuer may require a Holder to pay any taxes and fees required by law or
permitted by the Indenture. The Issuer is not required to transfer or exchange
any New Debenture selected for redemption. Also, the Issuer is not required to
transfer or exchange any New Debenture for a period of 15 days before a
selection of New Debentures to be redeemed. The registered Holder of a New
Debenture will be treated as the owner of it for all purposes.
AMENDMENT, SUPPLEMENT AND WAIVER
Except as provided in the next two succeeding paragraphs, the Indenture and
the Debentures may be amended or supplemented with the consent of the Holders of
at least a majority in principal amount at maturity of the Debentures then
outstanding (including, without limitation, consents obtained in connection with
a purchase of, or tender offer or exchange offer for, Debentures), and any
existing default or compliance with any provision of the Indenture or the
Debentures may be waived with the consent of the Holders of a majority in
principal amount at maturity of the then outstanding Debentures (including,
without limitation, consents obtained in connection with a purchase of, or
tender offer or exchange offer for, Debentures).
Without the consent of each Holder affected, an amendment or waiver may not
(with respect to any Debentures held by a non-consenting Holder) (a) reduce the
principal amount at maturity of Debentures whose Holders must consent to an
amendment, supplement or waiver, (b) reduce the principal of or change the fixed
maturity of any Debenture or alter the provisions with respect to the redemption
of the Debentures (other than the provisions described under the caption
"-- Repurchase at the Option of Holders") or amend or modify the calculation of
the Accreted Value so as to reduce the amount of the Accreted Value of the
Debentures, (c) reduce the rate of or change the time for payment of interest on
any Debenture, (d) waive a Default or Event of Default in the payment of
principal of or premium, if any, or interest or Liquidated Damages, if any, on
the Debentures (except a rescission of acceleration of the Debentures by the
Holders of at least a majority in aggregate principal amount at maturity of the
Debentures and a waiver of the payment default that resulted from such
acceleration), (e) make any Debenture payable in money other than that stated in
the Debentures, (f) make any change in the provisions of the Indenture relating
to waivers of past Defaults, (g) waive a redemption payment with respect to any
Debenture (other than the provisions described under the caption "-- Repurchase
at the Option of Holders"), (h) make any change in the foregoing amendment and
waiver provisions, (i) modify any provision of the Indenture with respect to the
priority of the Debentures in right of payment or (j) make any change to the
right of Holders to waive an existing Default or Event of Default or the right
of Holders to receive payments of principal, premium, if any, and interest and
Liquidated Damages, if any, on the Debentures.
Notwithstanding the foregoing, any amendment to or waiver of the covenant
described under the caption "-- Repurchase at the Option of Holders -- Change of
Control" will require the consent of the Holders of at least two-thirds in
aggregate principal amount at maturity of the Debentures then outstanding if
such amendment would materially adversely affect the rights of Holders of
Debentures. Notwithstanding the foregoing, without the consent of any Holder of
Debentures, the Issuer and the Trustee may amend or supplement the Indenture or
the Debentures to cure any ambiguity, defect or inconsistency, to provide for
uncertificated Debentures in addition to or in place of certificated Debentures,
to provide for the assumption of the Issuer's obligations to Holders of
Debentures in the case of a merger or consolidation or sale of all or
substantially all of the Issuer's assets, to make any change that would provide
any additional rights or benefits to the Holders of Debentures or that does not
materially adversely affect the legal rights under the Indenture
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of any such Holder, or to comply with requirements of the Commission in order to
effect or maintain the qualification of the Indenture under the Trust Indenture
Act or to provide for guarantees of the Debentures.
CONCERNING THE TRUSTEE
The Indenture contains certain limitations on the rights of the Trustee,
should it become a creditor of the Issuer, to obtain payment of claims in
certain cases, or to realize on certain property received in respect of any such
claim as security or otherwise. The Trustee will be permitted to engage in other
transactions; however, if it acquires any conflicting interest it must eliminate
such conflict within 90 days, apply to the Commission for permission to continue
or resign.
The Holders of a majority in principal amount at maturity of the then
outstanding Debentures will have the right to direct the time, method and place
of conducting any proceeding for exercising any remedy available to the Trustee,
subject to certain exceptions. The Indenture provides that in case an Event of
Default shall occur (which shall not be cured), the Trustee will be required, in
the exercise of its power, to use the degree of care of a prudent man in the
conduct of his own affairs. Subject to such provisions, the Trustee will be
under no obligation to exercise any of its rights or powers under the Indenture
at the request of any Holder of Debentures, unless such Holder shall have
offered to the Trustee security and indemnity satisfactory to it against any
loss, liability or expense.
CERTAIN DEFINITIONS
Set forth below are certain defined terms used in the Indenture. Reference
is made to the Indenture for a full disclosure of all such terms, as well as any
other capitalized terms used herein for which no definition is provided.
"Accounts Receivable Subsidiary" means an Unrestricted Subsidiary of the
Issuer or any of its Restricted Subsidiaries to which the Issuer or any of its
Restricted Subsidiaries sells any of its accounts receivable pursuant to a
Receivables Facility.
"Accreted Value" means, as of any date of determination prior to June 1,
2003, with respect to any Debenture, the sum of (a) the initial offering price
(which shall be calculated by discounting the aggregate principal amount at
maturity of such Debenture at a rate of 12 1/2% per annum, compounded
semi-annually on each June 1 and December 1 from June 1, 2003 to the date of
issuance) of such Debenture and (b) the portion of the excess of the principal
amount at maturity of such Debenture over such initial offering price which
shall have been accreted thereon through such date, such amount to be so
accreted on a daily basis at a rate of 12 1/2% per annum of the initial offering
price of such Debenture, compounded semi-annually on each December 1 and June 1
from the date of issuance of the Debentures through the date of determination,
computed on the basis of a 360-day year of twelve 30-day months.
"Acquired Indebtedness" means, with respect to any specified Person, (a)
Indebtedness of any other Person existing at the time such other Person is
merged with or into or became a Subsidiary of such specified Person, including,
without limitation, Indebtedness incurred in connection with, or in
contemplation of, such other Person merging with or into or becoming a
Subsidiary of such specified Person, and (b) Indebtedness secured by a Lien
encumbering an asset acquired by such specified Person at the time such asset is
acquired by such specified Person.
"Acquisition" means the acquisition of the Issuer by the Principals.
"Affiliate" of any specified Person means any other Person which, directly
or indirectly, controls, is controlled by or is under direct or indirect common
control with, such specified Person. For purposes of this definition, "control,"
when used with respect to any Person, means the power to direct the management
and policies of such Person, directly or indirectly, whether through the
ownership of voting securities, by contract or otherwise, and the terms
"controlling" and "controlled" have meanings correlative to the foregoing.
"Asset Sale" means (a) the sale, lease, conveyance, disposition or other
transfer (a "disposition") of any properties, assets or rights (including,
without limitation, by way of a sale and leaseback) (provided that the
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sale, lease, conveyance or other disposition of all or substantially all of the
assets of the Issuer and its Subsidiaries taken as a whole will be governed by
the provisions of the Indenture described under the caption "-- Change of
Control" and/or the provisions described under the caption "-- Merger,
Consolidation or Sale of Assets" and not by the provisions of the Asset Sale
covenant), and (b) the issuance, sale or transfer by the Issuer or any of its
Restricted Subsidiaries of Equity Interests of any of the Issuer's Restricted
Subsidiaries, in the case of either clause (a) or (b), whether in a single
transaction or a series of related transactions (i) that have a fair market
value in excess of $5.0 million or (ii) for net proceeds in excess of $5.0
million. Notwithstanding the foregoing, the following items shall not be deemed
to be Asset Sales: (a) dispositions in the ordinary course of business; (b) a
disposition of assets by the Issuer to a Restricted Subsidiary or by a
Restricted Subsidiary to the Issuer or to another Restricted Subsidiary; (c) a
disposition of Equity Interests by a Restricted Subsidiary to the Issuer or to
another Restricted Subsidiary; (d) the sale and leaseback of any assets within
90 days of the acquisition thereof; (e) foreclosures on assets; (f) any exchange
of like property pursuant to Section 1031 of the Internal Revenue Code of 1986,
as amended, for use in a Permitted Business; (g) any sale of Equity Interests
in, or Indebtedness or other securities of, an Unrestricted Subsidiary; (h) a
Permitted Investment or a Restricted Payment that is permitted by the covenant
described under the caption "-- Restricted Payments"; and (i) sales of accounts
receivable, or participations therein, in connection with any Receivables
Facility.
"Attributable Indebtedness" in respect of a sale and leaseback transaction
means, at the time of determination, the present value (discounted at the rate
of interest implicit in such transaction, determined in accordance with GAAP) of
the obligation of the lessee for net rental payments during the remaining term
of the lease included in such sale and leaseback transaction (including any
period for which such lease has been extended or may, at the option of the
lessor, be extended).
"Capital Expenditure Indebtedness" means Indebtedness incurred by any
Person to finance the purchase or construction or any property or assets
acquired or constructed by such Person which have a useful life or more than one
year so long as (a) the purchase or construction price for such property or
assets is included in "addition to property, plant or equipment" in accordance
with GAAP, (b) the acquisition or construction of such property or assets is not
part of any acquisition of a Person or line of business and (c) such
Indebtedness is incurred within 90 days of the acquisition or completion of
construction of such property or assets.
"Capital Lease Obligation" means, at the time any determination thereof is
to be made, the amount of the liability in respect of a capital lease that would
at such time be required to be capitalized on a balance sheet in accordance with
GAAP.
"Capital Stock" means (a) in the case of a corporation, corporate stock,
(b) in the case of an association or business entity, any and all shares,
interests, participations, rights or other equivalents (however designated) of
corporate stock, (c) in the case of a partnership or limited liability company,
partnership or membership interests (whether general or limited) and (d) any
other interest or participation that confers on a Person the right to receive a
share of the profits and losses of, or distributions of assets of, the issuing
Person.
"Cash Equivalents" means (i) Government Securities, (ii) any certificate of
deposit maturing not more than 365 days after the date of acquisition issued by,
or time deposit of, an Eligible Institution or any lender under the New Credit
Facility, (iii) commercial paper maturing not more than 365 days after the date
of acquisition of an issuer (other than an Affiliate of the Issuer) with a
rating, at the time as of which any investment therein is made, of "A-3" (or
higher) according to S&P or "P-2" (or higher) according to Moody's or carrying
an equivalent rating by a nationally recognized rating agency if both of the two
named rating agencies cease publishing ratings of investments, (iv) any bankers
acceptances of money market deposit accounts issued by an Eligible Institution
and (v) any fund investing exclusively in investments of the types described in
clauses (i) through (iv) above.
"Consolidated Cash Flow" means, with respect to any Person for any period,
the Consolidated Net Income of such Person and its Restricted Subsidiaries for
such period plus, to the extent deducted in computing Consolidated Net Income,
(a) an amount equal to any extraordinary or non-recurring loss plus any net loss
realized in connection with an Asset Sale, (b) provision for taxes based on
income or profits of such Person and its Restricted Subsidiaries for such
period, (c) Fixed Charges of such Person for such period,
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(d) depreciation, amortization (including amortization of goodwill and other
intangibles) and all other non-cash charges (excluding any such non-cash charge
to the extent that it represents an accrual of or reserve for cash expenses in
any future period or amortization of a prepaid cash expense that was paid in a
prior period) of such Person and its Restricted Subsidiaries for such period,
(e) net periodic post-retirement benefits, (f) other income or expense net as
set forth on the face of such Person's statement of operations, (g) expenses and
charges of the Issuer and Thermadyne LLC related to the Recapitalization, the
New Credit Facility and the application of the proceeds thereof which are paid,
taken or otherwise accounted for within 90 days of the consummation of the
Merger, and (h) any non-capitalized transaction costs incurred in connection
with actual or proposed financings, acquisition or divestitures (including, but
not limited to, financing and refinancing fees and costs incurred in connection
with the Recapitalization), in each case, on a consolidated basis and determined
in accordance with GAAP. Notwithstanding the foregoing, the provision for taxes
based on the income or profits of, the Fixed Charges of, and the depreciation
and amortization and other non-cash charges of, a Restricted Subsidiary of a
Person shall be added to Consolidated Net Income to compute Consolidated Cash
Flow only to the extent (and in the same proportion) that Net Income of such
Restricted Subsidiary was included in calculating the Consolidated Net Income of
such Person.
"Consolidated Interest Expense" means, with respect to any Person for any
period, the sum of, without duplication, (a) the interest expense of such Person
and its Restricted Subsidiaries for such period, on a consolidated basis,
determined in accordance with GAAP (including amortization of original issue
discount, non-cash interest payments, the interest component of all payments
associated with Capital Lease Obligations, imputed interest with respect to
Attributable Debt, commissions, discounts and other fees and charges incurred in
respect of letter of credit or bankers' acceptance financings, and net payments,
if any, pursuant to Hedging Obligations; provided that in no event shall any
amortization of deferred financing costs be included in Consolidated Interest
Expense); and (b) the consolidated capitalized interest of such Person and its
Restricted Subsidiaries for such period, whether paid or accrued; provided,
however, that Receivables Fees shall be deemed not to constitute Consolidated
Interest Expense. Notwithstanding the foregoing, the Consolidated Interest
Expense with respect to any Restricted Subsidiary that is not a Wholly Owned
Restricted Subsidiary shall be included only to the extent (and in the same
proportion) that the net income of such Restricted Subsidiary was included in
calculating Consolidated Net Income.
"Consolidated Net Income" means, with respect to any Person for any period,
the aggregate of the Net Income of such Person and its Restricted Subsidiaries
for such period, on a consolidated basis, determined in accordance with GAAP;
provided that (a) the Net Income (or loss) of any Person that is not a
Restricted Subsidiary or that is accounted for by the equity method of
accounting shall be included only to the extent of the amount of dividends or
distributions paid in cash to the referent Person or a Restricted Subsidiary
thereof, (b) the Net Income (or loss) of any Person acquired in a pooling of
interests transaction for any period prior to the date of such acquisition shall
be excluded and (c) the cumulative effect of a change in accounting principles
shall be excluded.
"Default" means any event that is or with the passage of time or the giving
of notice or both would be an Event of Default.
"Designated Noncash Consideration" means the fair market value of non-cash
consideration received by the Issuer or one of its Restricted Subsidiaries in
connection with an Asset Sale that is so designated as Designated Noncash
Consideration pursuant to an Officers' Certificate, setting forth the basis of
such valuation, executed by the principal executive officer and the principal
financial officer of the Issuer, less the amount of cash or Cash Equivalents
received in connection with a sale of such Designated Noncash Consideration.
"Disqualified Stock" means any Capital Stock that, by its terms (or by the
terms of any security into which it is convertible, or for which it is
exchangeable), or upon the happening of any event (other than any event solely
within the control of the issuer thereof), matures or is mandatorily redeemable,
pursuant to a sinking fund obligation or otherwise, is exchangeable for
Indebtedness (except to the extent exchangeable at the option of such Person
subject to the terms of any debt instrument to which such Person is a party) or
redeemable at the option of the Holder thereof, in whole or in part, on or prior
to the date on which the
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Debentures mature; provided that any Capital Stock that would constitute
Disqualified Stock solely because the holders thereof have the right to require
the Issuer to repurchase such Capital Stock upon the occurrence of a Change of
Control or an Asset Sale shall not constitute Disqualified Stock if the terms of
such Capital Stock provide that the Issuer may not repurchase or redeem any such
Capital Stock pursuant to such provisions unless such repurchase or redemption
complies with the covenant described under the caption "-- Certain
Covenants -- Restricted Payments," and provided further that, if such Capital
Stock is issued to any plan for the benefit of employees of the Issuer or its
Subsidiaries or by any such plan to such employees, such Capital Stock shall not
constitute Disqualified Stock solely because it may be required to be
repurchased by the Issuer in order to satisfy applicable statutory or regulatory
obligations.
"DLJMB" means DLJ Merchant Banking Partners II, L.P. and its Affiliates.
"Eligible Institution" means a commercial banking institution that has
combined capital and surplus not less than $100.0 million or its equivalent in
foreign currency, whose short-term debt is rated "A-3" or higher according to
Standard & Poor's Ratings Group ("S&P") or "P-2" or higher according to Moody's
Investor Services, Inc. ("Moody's") or carrying an equivalent rating by a
nationally recognized rating agency if both of the two named rating agencies
cease publishing ratings of investments.
"Equity Interests" means Capital Stock and all warrants, options or other
rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock).
"Existing Indebtedness" means Indebtedness of the Issuer and its Restricted
Subsidiaries (other than Indebtedness under the New Credit Facility or the
Senior Subordinated Notes) in existence on the date of the Indenture, until such
amounts are repaid.
"Fixed Charges" means, with respect to any Person for any period, the sum,
without duplication, of (a) the Consolidated Interest Expense of such Person for
such period and (b) all dividend payments on any series of preferred stock of
such Person (other than dividends payable solely in Equity Interests that are
not Disqualified Stock), in each case, on a consolidated basis and in accordance
with GAAP.
"Fixed Charge Coverage Ratio" means, with respect to any Person for any
period, the ratio of the Consolidated Cash Flow of such Person for such period
(exclusive of amounts attributable to discontinued operations, as determined in
accordance with GAAP, or operations and businesses disposed of prior to the
Calculation Date (as defined)) to the Fixed Charges of such Person for such
period (exclusive of amounts attributable to discontinued operations, as
determined in accordance with GAAP, or operations and businesses disposed of
prior to the Calculation Date). In the event that the referrent Person or any of
its Subsidiaries incurs, assumes, guarantees or redeems any Indebtedness (other
than revolving credit borrowings) or issues or redeems preferred stock
subsequent to the commencement of the period for which the Fixed Charge Coverage
Ratio is being calculated but prior to the date on which the event for which the
calculation of the Fixed Charge Coverage Ratio is made (the "Calculation Date"),
then the Fixed Charge Coverage Ratio shall be calculated giving pro forma effect
to such incurrence, assumption, guarantee or redemption of Indebtedness, or such
issuance or redemption of preferred stock, as if the same had occurred at the
beginning of the applicable four-quarter reference period. In addition, for
purposes of making the computation referred to above, acquisitions that have
been made by the Issuer or any of its Subsidiaries, including all mergers or
consolidations and any related financing transactions, during the four-quarter
reference period or subsequent to such reference period and on or prior to the
Calculation Date shall be calculated to include the Consolidated Cash Flow of
the acquired entities on a pro forma basis after giving effect to cost savings
resulting from employee terminations, facilities consolidations and closings,
standardization of employee benefits and compensation practices, consolidation
of property, casualty and other insurance coverage and policies, standardization
of sales and distribution methods, reductions in taxes other than income taxes
and other cost savings reasonably expected to be realized from such acquisition,
as determined in good faith by an officer of the Issuer (regardless of whether
such cost savings could then be reflected in pro forma financial statements
under GAAP, Regulation S-X promulgated by the Commission or any other regulation
or policy of the Commission) and without giving effect to clause (c) of the
proviso set forth in the definition of Consolidated Net Income, and shall be
deemed to have occurred on the first day of the four-quarter reference period
and Consolidated Cash Flow for such reference period shall be calculated.
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"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as have been approved by a significant segment of the accounting
profession, which are in effect on the date of the Indenture.
"guarantee" means a guarantee (other than by endorsement of negotiable
instruments for collection in the ordinary course of business), direct or
indirect, in any manner (including, without limitation, letters of credit or
reimbursement agreements in respect thereof), of all or any part of any
Indebtedness.
"Hedging Obligations" means, with respect to any Person, the obligations of
such Person under (a) interest rate swap agreements, interest rate cap
agreements and interest rate collar agreements and (b) other agreements or
arrangements designed to protect such Person against fluctuations in interest
rates or foreign exchange rates.
"Indebtedness" means, with respect to any Person, any indebtedness of such
Person in respect of borrowed money or evidenced by bonds, notes, debentures or
similar instruments or letters of credit (or reimbursement agreements in respect
thereof) or banker's acceptances or representing Capital Lease Obligations or
the balance deferred and unpaid of the purchase price of any property or
representing any Hedging Obligations, except any such balance that constitutes
an accrued expense or trade payable, if and to the extent any of the foregoing
Indebtedness (other than letters of credit and Hedging Obligations) would appear
as a liability upon a balance sheet of such Person prepared in accordance with
GAAP, as well as all Indebtedness of others secured by a Lien on any asset of
such Person (whether or not such Indebtedness is assumed by such Person) and, to
the extent not otherwise included, the guarantee by such Person of any
Indebtedness of any other Person, provided that Indebtedness shall not include
the pledge by the Issuer of the Capital Stock of an Unrestricted Subsidiary of
the Issuer to secure Non-Recourse Debt of such Unrestricted Subsidiary. The
amount of any Indebtedness outstanding as of any date shall be (a) the accreted
value thereof (together with any interest thereon that is more than 30 days past
due), in the case of any Indebtedness that does not require current payments of
interest, and (b) the principal amount thereof, in the case of any other
Indebtedness.
"Investments" means, with respect to any Person, all investments by such
Person in other Persons (including Affiliates) in the forms of direct or
indirect loans (including guarantees by the referent Person of, and Liens on any
assets of the referent Person securing, Indebtedness or other obligations of
other Persons), advances or capital contributions (excluding commission, travel
and similar advances to officers and employees made in the ordinary course of
business), purchases or other acquisitions for consideration of Indebtedness,
Equity Interests or other securities, together with all items that are or would
be classified as investments on a balance sheet prepared in accordance with
GAAP, provided that an investment by the Issuer for consideration consisting of
common equity securities of the Issuer shall not be deemed to be an Investment.
If the Issuer or any Restricted Subsidiary of the Issuer sells or otherwise
disposes of any Equity Interests of any direct or indirect Restricted Subsidiary
of the Issuer such that, after giving effect to any such sale or disposition,
such Person is no longer a Subsidiary of the Issuer, the Issuer shall be deemed
to have made an Investment on the date of any such sale or disposition equal to
the fair market value of the Equity Interests of such Restricted Subsidiary not
sold or disposed of in an amount determined as provided in the final paragraph
of the covenant described under the caption "-- Restricted Payments."
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset,
whether or not filed, recorded or otherwise perfected under applicable law
(including any conditional sale or other title retention agreement, any lease in
the nature thereof, any option or other agreement to sell or give a security
interest in and any filing of or agreement to give any financing statement under
the Uniform Commercial Code (or equivalent statutes) of any jurisdiction).
"Management Loans" means one or more loans by the Issuer or Thermadyne LLC
to officers and/or directors of the Issuer and any of its Restricted
Subsidiaries to finance the purchase by such officers and
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directors of common stock of the Issuer; provided, however, that the aggregate
principal amount of all such Management Loans outstanding at any time shall not
exceed $5.0 million.
"Merger" means the merger of the Issuer with and into Thermadyne Holdings
Corporation on or prior to the date of issuance of the Debentures.
"Net Income" means, with respect to any Person, the net income (loss) of
such Person, determined in accordance with GAAP and before any reduction in
respect of preferred stock dividends, excluding, however, (a) any gain (or
loss), together with any related provision for taxes on such gain (or loss),
realized in connection with (i) any Asset Sale (including, without limitation,
dispositions pursuant to sale and leaseback transactions) or (ii) the
extinguishment of any Indebtedness of such Person or any of its Restricted
Subsidiaries and (b) any extraordinary or nonrecurring gain (or loss), together
with any related provision for taxes on such extraordinary or nonrecurring gain
(or loss).
"Net Proceeds" means the aggregate cash proceeds received by the Issuer or
any of its Restricted Subsidiaries in respect of any Asset Sale (including,
without limitation, any cash received upon the sale or other disposition of any
non-cash consideration received in any Asset Sale), net of, without duplication,
(a) the direct costs relating to such Asset Sale (including, without limitation,
legal, accounting and investment banking fees, and sales commissions, recording
fees, title transfer fees and appraiser fees and cost of preparation of assets
for sale) and any relocation expenses incurred as a result thereof, (b) taxes
paid or payable as a result thereof (after taking into account any available tax
credits or deductions and any tax sharing arrangements), (c) amounts required to
be applied to the repayment of Indebtedness (other than as required by clause
(a) of the second paragraph of the covenant described above under the caption
"-- Repurchase at the Option of Holders -- Asset Sales") secured by a Lien on
the asset or assets that were the subject of such Asset Sale and (d) any reserve
established in accordance with GAAP or any amount placed in escrow, in either
case for adjustment in respect of the sale price of such asset or assets until
such time as such reserve is reversed or such escrow arrangement is terminated,
in which case Net Proceeds shall include only the amount of the reserve so
reversed or the amount returned to the Issuer or its Restricted Subsidiaries
from such escrow arrangement, as the case may be.
"New Credit Facility" means that certain Credit Agreement dated as of May
22, 1998, by and among Thermadyne Mfg. LLC and certain of its foreign
subsidiaries, Donaldson, Lufkin & Jenrette Securities Corporation, as arranger,
DLJ Capital Funding, Inc., as syndication agent, and ABN AMRO Bank N.V., Chicago
Branch, as administrative agent, including any related notes, guarantees,
collateral documents, instruments and agreements executed in connection
therewith, and, in each case, as amended, modified, renewed, refunded, replaced
or refinanced from time to time, including, without limitation, any agreement
(i) extending or shortening the maturity of any Indebtedness incurred thereunder
or contemplated thereby, (ii) adding or deleting borrowers or guarantors
thereunder, (iii) increasing the amount of Indebtedness incurred thereunder or
available to be borrowed thereunder, provided that on the date such Indebtedness
is incurred it would not be prohibited by clause (i) of Section 4.09 of the
Indenture or (iv) otherwise altering the terms and conditions thereof.
Indebtedness under the New Credit Facility outstanding on the date on which
Debentures are first issued and authenticated under the Indenture shall be
deemed to have been incurred on such date in reliance on the first paragraph of
Section 4.09.
"Non-Recourse Debt" means Indebtedness (i) no default with respect to,
which (including any rights that the holders thereof may have to take
enforcement action against an Unrestricted Subsidiary) would permit (upon
notice, lapse of time or both) any holder of any other Indebtedness of the
Issuer or any of its Restricted Subsidiaries to declare a default on such other
Indebtedness or cause the payment thereof to be accelerated or payable prior to
its stated maturity; and (ii) as to which the lenders have been notified in
writing that they will not have any recourse to the stock (other than the stock
of an Unrestricted Subsidiary pledged by the Issuer to secure debt of such
Unrestricted Subsidiary) or assets of the Issuer or any of its Restricted
Subsidiaries; provided that in no event shall Indebtedness of any Unrestricted
Subsidiary fail to be Non-Recourse Debt solely as a result of any default
provisions contained in a guarantee thereof by the Issuer or any of its
Restricted Subsidiaries if the Issuer or such Restricted Subsidiary was
otherwise permitted to incur such guarantee pursuant to the Indenture.
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"Obligations" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness.
"Offerings" means the offering of the Debentures by the Issuer and the
concurrent offering of the Senior Subordinated Notes by Thermadyne LLC and
Thermadyne Capital.
"Pari Passu Indebtedness" means Indebtedness of the Issuer that ranks pari
passu in right of payment to the Debentures.
"Permitted Business" means any business in which the Issuer and its
Restricted Subsidiaries are engaged on the date of the Indenture or any business
reasonably related, incidental or ancillary thereto.
"Permitted Investments" means (a) any Investment in the Issuer or in a
Restricted Subsidiary of the Issuer, (b) any Investment in cash or Cash
Equivalents, (c) any Investment by the Issuer or any Restricted Subsidiary of
the Issuer in a Person, if as a result of such Investment (i) such Person
becomes a Restricted Subsidiary of the Issuer or (ii) such Person is merged,
consolidated or amalgamated with or into, or transfers or conveys substantially
all of its assets to, or is liquidated into, the Issuer or a Wholly Owned
Restricted Subsidiary of the Issuer, (d) any Investment made as a result of the
receipt of non-cash consideration from an Asset Sale that was made pursuant to
and in compliance with the covenant described under the caption "-- Repurchase
at the Option of Holders -- Asset Sales," (e) any Investment acquired solely in
exchange for Equity Interests (other than Disqualified Stock) of the Issuer, (f)
any Investment in a Person engaged in a Permitted Business (other than an
Investment in an Unrestricted Subsidiary) having an aggregate fair market value,
taken together with all other Investments made pursuant to this clause (f) that
are at that time outstanding, not to exceed 15% of Total Assets at the time of
such Investment (with the fair market value of each Investment being measured at
the time made and without giving effect to subsequent changes in value), (g)
Investments relating to any special purpose Wholly Owned Subsidiary of the
Issuer organized in connection with a Receivables Facility that, in the good
faith determination of the Board of Directors of the Issuer, are necessary or
advisable to effect such Receivables Facility, and (h) the Management Loans.
"Permitted Liens" means: (i) Liens on property of a Person existing at the
time such Person is merged into or consolidated with the Issuer or any
Restricted Subsidiary, provided that such Liens were not incurred in
contemplation of such merger or consolidation and do not secure any property or
assets of the Issuer or any Restricted Subsidiary other than the property or
assets subject to the Liens prior to such merger or consolidation; (ii) Liens
existing on the date of the Indenture; (iii) Liens securing Indebtedness
consisting of Capitalized Lease Obligations, purchase money Indebtedness,
mortgage financings, industrial revenue bonds or other monetary obligations, in
each case incurred solely for the purpose of financing all or any part of the
purchase price or cost of construction or installation of assets used in the
business of the Issuer or its Restricted Subsidiaries, or repairs, additions or
improvements to such assets, provided that (A) such Liens secure Indebtedness in
an amount not in excess of the original purchase price or the original cost of
any such assets or repair, additional or improvement thereto (plus an amount
equal to the reasonable fees and expenses in connection with the incurrence of
such Indebtedness), (B) such Liens do not extend to any other assets of the
Issuer or its Restricted Subsidiaries (and, in the case of repair, addition or
improvements to any such assets, such Lien extends only to the assets (and
improvements thereto or thereon) repaired, added to or improved), (C) the
Incurrence of such Indebtedness is permitted by "-- Certain
Covenants -- Incurrence of Indebtedness and Issuance of Preferred Stock" and (D)
such Liens attach within 365 days of such purchase, construction, installation,
repair, addition or improvement; (iv) Liens to secure any refinancings,
renewals, extensions, modification or replacements (collectively, "refinancing")
(or successive refinancings), in whole or in part, of any Indebtedness secured
by Liens referred to in the clauses above so long as such Lien does not extend
to any other property (other than improvements thereto); (v) Liens securing
letters of credit entered into in the ordinary course of business and consistent
with past business practice; (vi) Liens on and pledges of the capital stock of
any Unrestricted Subsidiary securing Non-Recourse Debt of such Unrestricted
Subsidiary; (vii) Liens securing Indebtedness (including all Obligations) under
the New Credit Facility; and (viii) other Liens securing Indebtedness that is
permitted by the terms of the Indenture to be outstanding having an aggregate
principal amount at any one time outstanding not to exceed $50.0 million.
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"Permitted Refinancing Indebtedness" means any Indebtedness of the Issuer
or any of its Restricted Subsidiaries issued in exchange for, or the net
proceeds of which are used to extend, refinance, renew, replace, defease or
refund other Indebtedness of the Issuer or any of its Restricted Subsidiaries;
provided that (a) the principal amount (or accreted value, if applicable) of
such Permitted Refinancing Indebtedness does not exceed the principal amount of
(or accreted value, if applicable), plus premium, if any, and accrued interest
on the Indebtedness so extended, refinanced, renewed, replaced, defeased or
refunded (plus the amount of reasonable expenses incurred in connection
therewith), (b) such Permitted Refinancing Indebtedness has a final maturity
date no earlier than the final maturity date of, and has a Weighted Average Life
to Maturity equal to or greater than the Weighted Average Life to Maturity of,
the Indebtedness being extended, refinanced, renewed, replaced, defeased or
refunded, and (c) if the Indebtedness being extended, refinanced, renewed,
replaced, defeased or refunded is subordinated in right of payment to the
Debentures, such Permitted Refinancing Indebtedness is subordinated in right of
payment to, the Debentures on terms at least as favorable, taken as a whole, to
the Holders of Debentures as those contained in the documentation governing the
Indebtedness being extended, refinanced, renewed, replaced, defeased or
refunded.
"Principals" means DLJMB.
"Public Equity Offering" means any issuance of common stock or preferred
stock by the Issuer (other than Disqualified Stock) or membership interests by
Thermadyne LLC (other than to the Issuer and other than Disqualified Stock) that
is registered pursuant to the Securities Act, other than issuances registered on
Form S-8 and issuances registered on Form S-4, excluding issuances of common
stock or membership interests pursuant to employee benefit plans of the Issuer
or its Restricted Subsidiaries or otherwise as compensation to employees of the
Issuer or its Restricted Subsidiaries.
"Qualified Proceeds" means any of the following or any combination of the
following: (i) cash; (ii) Cash Equivalents; (iii) assets that are used or useful
in a Permitted Business; and (iv) the Capital Stock of any Person engaged in a
Permitted Business if, in connection with the receipt by the Issuer or any
Restricted Subsidiary of the Issuer of such Capital Stock, (A) such Person
becomes a Restricted Subsidiary of the Issuer or any Restricted Subsidiary of
the Issuer or (B) such Person is merged, consolidated or amalgamated with or
into, or transfers or conveys substantially all of its assets to, or is
liquidated into, the Issuer or any Restricted Subsidiary of the Issuer.
"Recapitalization" means the Acquisition, the Merger and the Offerings.
"Receivables Facility" means one or more receivables financing facilities,
as amended from time to time, pursuant to which the Issuer or any of its
Restricted Subsidiaries sells its accounts receivable to an Accounts Receivable
Subsidiary.
"Receivables Fees" means distributions or payments made directly or by
means of discounts with respect to any participation interests issued or sold in
connection with, and other fees paid to a Person that is not a Restricted
Subsidiary in connection with, any Receivables Facility.
"Related Party" means, with respect to any Principal, (i) any controlling
stockholder or partner of such Principal on the date of the Indenture, or (ii)
any trust, corporation, partnership or other entity, the beneficiaries,
stockholders, partners, owners or Persons beneficially holding (directly or
through one or more Subsidiaries) a 51% or more controlling interest of which
consist of the Principals and/or such other Persons referred to in the
immediately preceding clauses (i) or (ii).
"Restricted Investment" means an Investment other than a Permitted
Investment.
"Restricted Subsidiary" of a Person means any Subsidiary of the referent
Person that is not an Unrestricted Subsidiary.
"Senior Subordinated Notes" means the 9 7/8% Senior Subordinated Notes due
2008 of Thermadyne LLC and Thermadyne Capital, issued in connection with the
Refinancing.
89
<PAGE> 91
"Significant Subsidiary" means any Subsidiary that would be a "significant
subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X, promulgated
pursuant to the Securities Act, as such Regulation is in effect on the date
hereof.
"Specified Agreements" means the Investors' Agreement and the Tax Sharing
Agreement.
"Stated Maturity" means, with respect to any installment of interest or
principal on any series of Indebtedness, the date on which such payment of
interest or principal was scheduled to be paid in the original documentation
governing such Indebtedness, and shall not include any contingent obligations to
repay, redeem or repurchase any such interest or principal prior to the date
originally scheduled for the payment thereof.
"Subordinated Indebtedness" means all Obligations with respect to
Indebtedness of the Issuer if the instrument creating or evidencing the same, or
pursuant to which the same is outstanding, designates such Obligations as
subordinated or junior in right of payment to the Debentures.
"Subordinated Note Indenture" means the indenture relating to the Senior
Subordinated Notes.
"Subsidiary" means, with respect to any Person, (a) any corporation,
association or other business entity of which more than 50% of the total voting
power of shares of Capital Stock entitled (without regard to the occurrence of
any contingency) to vote in the election of directors, managers or trustees
thereof is at the time owned or controlled, directly or indirectly, by such
Person or one or more of the other Subsidiaries of that Person (or a combination
thereof) and (b) any partnership or limited liability company (i) the sole
general partner or the managing general partner or managing member of which is
such Person or a Subsidiary of such Person or (ii) the only general partners or
managing members of which are such Person or of one or more Subsidiaries of such
Person (or any combination thereof).
"Tax Sharing Agreement" means any tax sharing agreement or arrangement
between the Issuer and its Subsidiaries, as the same may be amended from time to
time; provided that in no event shall the amount permitted to be paid pursuant
to all such agreements and/or arrangements exceed the amount the Issuer would be
required to pay for income taxes were it to file a consolidated tax return for
itself and its consolidated Restricted Subsidiaries.
"Thermadyne LLC" means Thermadyne Mfg. LLC, a Delaware limited liability
company, the sole member of which is the Issuer.
"Thermadyne Capital" means Thermadyne Capital Corp., a Delaware corporation
wholly owned by Thermadyne LLC.
"Total Assets" means the total consolidated assets of the Issuer and its
Restricted Subsidiaries, as shown on the most recent balance sheet (excluding
the footnotes thereto) of the Issuer.
"Unrestricted Subsidiary" means any Subsidiary (other than Thermadyne LLC
and Thermadyne Capital) that is designated by the Board of Directors as an
Unrestricted Subsidiary pursuant to a board resolution, but only to the extent
that such Subsidiary: (a) has no Indebtedness other than Non-Recourse Debt; (b)
is not party to any agreement, contract, arrangement or understanding with the
Issuer or any Restricted Subsidiary of the Issuer unless the terms of any such
agreement, contract, arrangement or understanding are no less favorable to the
Issuer or such Restricted Subsidiary than those that might be obtained at the
time from Persons who are not Affiliates of the Issuer; (c) is a Person with
respect to which neither the Issuer nor any of its Restricted Subsidiaries has
any direct or indirect obligation (i) to subscribe for additional Equity
Interests (other than Investments described in clause (g) of the definition of
Permitted Investments) or (ii) to maintain or preserve such Person's financial
condition or to cause such Person to achieve any specified levels, of operating
results; and (d) has not guaranteed or otherwise directly or indirectly provided
credit support for any Indebtedness of the Issuer or any of its Restricted
Subsidiaries. Any such designation by the Board of Directors shall be evidenced
to the Trustee by filing with the Trustee a certified copy of the board
resolution giving effect to such designation and an Officers' Certificate
certifying that such designation complied with the foregoing conditions and was
permitted by the covenant described under the caption entitled "-- Certain
Covenants -- Restricted Payments." If, at any time, any Unrestricted Subsidiary
90
<PAGE> 92
would fail to meet the foregoing requirements as a Unrestricted Subsidiary, it
shall thereafter cease to be an Unrestricted Subsidiary for purposes of the
Indenture and any Indebtedness of such Subsidiary shall be deemed to be incurred
by a Restricted Subsidiary of the Issuer as of such date (and, if such
Indebtedness is not permitted to be incurred as of such date under the covenant
described under the caption entitled "-- Certain Covenants -- Incurrence of
Indebtedness and Issuance of Preferred Stock," the Issuer shall be in default of
such covenant). The Board of Directors of the Issuer may at any time designate
any Unrestricted Subsidiary to be a Restricted Subsidiary; provided that such
designation shall be deemed to be an incurrence of Indebtedness by a Restricted
Subsidiary of the Issuer of any outstanding Indebtedness of such Unrestricted
Subsidiary and such designation shall only be permitted if (i) such Indebtedness
is permitted under the covenant described under the caption entitled "-- Certain
Covenants -- Incurrence of Indebtedness and Issuance Preferred of Stock" and
(ii) no Default or Event of Default would be in existence following such
designation.
"Weighted Average Life to Maturity" means, when applied to any Indebtedness
at any date, the number of years obtained by dividing (a) the sum of the
products obtained by multiplying (i) the amount of each then remaining
installment, sinking fund, serial maturity or other required payments of
principal, including payment at final maturity, in respect thereof, by (ii) the
number of years (calculated to the nearest one-twelfth) that will elapse between
such date and the making of such payment, by (b) the then outstanding principal
amount of such Indebtedness.
"Wholly Owned Restricted Subsidiary" of any Person means a Restricted
Subsidiary of such Person all the outstanding Capital Stock or other ownership
interests of which (other than directors' qualifying shares) shall at the time
be owned by such Person or by one or more Wholly Owned Subsidiaries of such
Person.
91
<PAGE> 93
CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES
The following discussion is a summary of certain federal income tax
considerations relevant to the exchange of Old Debentures for New Debentures,
but does not purport to be a complete analysis of all potential tax effects. The
discussion is based upon the Internal Revenue Code of 1986, as amended, Treasury
regulations, Internal Revenue Service rulings and pronouncements, and judicial
decisions now in effect, all of which are subject to change at any time by
legislative, judicial or administrative action. Any such changes may be applied
retroactively in a manner that could adversely affect a holder of the New
Debentures. The description does not consider the effect of any applicable
foreign, state, local or other tax laws or estate or gift tax considerations.
EACH HOLDER SHOULD CONSULT HIS OWN TAX ADVISOR AS TO THE PARTICULAR TAX
CONSEQUENCES TO IT OF EXCHANGING OLD DEBENTURES FOR NEW DEBENTURES, INCLUDING
THE APPLICABILITY AND EFFECT OF ANY STATE, LOCAL OR FOREIGN TAX LAWS.
EXCHANGE OF OLD DEBENTURES FOR NEW DEBENTURES
The exchange of Old Debentures for New Debentures pursuant to the Exchange
Offer should not constitute a sale or exchange for federal income tax purposes.
Accordingly, such exchange should have no federal income tax consequences to
holders of Old Debentures.
92
<PAGE> 94
PLAN OF DISTRIBUTION
Each broker-dealer that receives New Debentures for its own account
pursuant to the Exchange Offer must acknowledge that it will deliver a
prospectus in connection with any resale of such New Debentures. This
Prospectus, as it may be amended or supplemented from time to time, may be used
by a broker-dealer in connection with resales of New Debentures received in
exchange for Old Debentures where such Old Debentures were acquired as a result
of market-making activities or other trading activities. The Company has agreed
that, for a period of 90 days after the Expiration Date, it will make this
Prospectus, as amended or supplemented, available to any broker-dealer for use
in connection with any such resale. In addition, until , 1998, all
dealers effecting transactions in the New Debentures may be required to deliver
a Prospectus.
The Company will not receive any proceeds from any sale of New Debentures
by broker-dealers. New Debentures received by broker-dealers for their own
account pursuant to the Exchange Offer may be sold from time to time in one or
more transactions in the over-the-counter market, in negotiated transactions,
through the writing of options on the New Debentures or a combination of such
methods of resale, at market prices prevailing at the time of resale, at prices
related to such prevailing market prices or negotiated prices. Any such resale
may be made directly to purchasers or to or through brokers or dealers who may
receive compensation in the form of commissions or concessions from any such
broker-dealer or the purchasers of any such New Debentures. Any broker-dealer
that resells New Debentures that were received by it for its own account
pursuant to the Exchange Offer and any broker or dealer that participates in a
distribution of such New Debentures may be deemed to be an "underwriter" within
the meaning of the Securities Act, and any profit on any such resale of New
Debentures and any commissions or concessions received by any such persons may
be deemed to be underwriting compensation under the Securities Act. The Letter
of Transmittal states that by acknowledging that it will deliver and by
delivering a prospectus, a broker-dealer will not be deemed to admit that it is
an "underwriter" within the meaning of the Securities Act.
For a period of 90 days after the Expiration Date, the Company will
promptly send additional copies of this Prospectus and any amendment or
supplement to this Prospectus to any broker-dealer that requests such documents
in the Letter of Transmittal. The Company has agreed to pay all expenses
incident to the Exchange Offer other than commissions or concessions of any
broker-dealers and will indemnify holders of the Old Debentures (including any
broker-dealers) against certain liabilities, including certain liabilities under
the Securities Act.
LEGAL MATTERS
The validity of the New Debentures offered hereby will be passed upon for
the Company by Weil, Gotshal & Manges LLP, Dallas, Texas and New York, New York.
EXPERTS
The Consolidated Financial Statements of Holdings at December 31, 1997 and
1996 and for each of the three years in the period ended December 31, 1997, and
the related financial statement schedule appearing in this Registration
Statement and related Prospectus have been audited by Ernst & Young LLP,
independent auditors, as set forth in their reports thereon appearing elsewhere
herein, and are included in reliance upon such reports of such firm given upon
their authority as experts in accounting and auditing.
93
<PAGE> 95
UNAUDITED CONDENSED CONSOLIDATED PRO FORMA FINANCIAL DATA
The following unaudited condensed consolidated pro forma financial data
(the "Pro Forma Financial Data") of the Company are based on historical
consolidated financial statements of the Company as adjusted to give effect to
certain transactions described below and to the Merger, including the Merger
Financing and the application of the proceeds thereof. For additional
information regarding the Merger, see "The Merger and the Merger Financing." The
unaudited condensed consolidated pro forma statement of operations for the
quarter ended March 31, 1998 gives effect to the Merger and the Merger Financing
and the application of the proceeds thereof as if it had occurred at the
beginning of such period. The unaudited condensed consolidated pro forma
statement of operations for the twelve months ended March 31, 1998 and the year
ended December 31, 1997 give effect to the Arcsys Acquisition and the Woodland
Acquisition and, in the case of the year ended December 31, 1997, the GenSet
Acquisition, and the Merger, including the Merger Financing and the application
of the proceeds thereof, as if they all had occurred at the beginning of the
respective period. The pro forma statement of operations data have been derived
as if the balance sheet of the Company at the beginning of the respective period
was the pro forma balance sheet as of March 31, 1998. For additional information
regarding the GenSet Acquisition, the Arcsys Acquisition and the Woodland
Acquisition, see the discussion under the caption "Recent
Events -- Acquisitions" in Note 2 to the Company's Consolidated Financial
Statements. The unaudited condensed consolidated pro forma balance sheet gives
effect to the Merger, including the Merger Financing and the application of the
proceeds thereof, as if it had occurred on March 31, 1998. The pro forma
adjustments are based upon available information and upon certain assumptions
that management believes are reasonable under the circumstances. The Pro Forma
Financial Data and accompanying notes should be read in conjunction with the
historical consolidated financial statements of the Company, including the notes
thereto, and other financial information pertaining to the Company. The Pro
Forma Financial Data do not purport to represent what the Company's actual
results of operations or actual financial position would have been if the
Merger, including the Merger Financing and the application of the proceeds
thereof, and the GenSet Acquisition, the Arcsys Acquisition and the Woodland
Acquisition in fact occurred on such dates or to project the Company's results
of operations or financial position for any future period or date. The Pro Forma
Financial Data do not give effect to any transactions other than the GenSet
Acquisition, the Arcsys Acquisition, the Woodland Acquisition and the Merger,
including the Merger Financing and the application of the proceeds thereof,
discussed in the notes to the Pro Forma Financial Data included elsewhere
herein.
As a result of the Merger, the Company incurred various expenses in
connection with consummating the transaction. See Note 2 to the Unaudited
Condensed Consolidated Pro Forma Statement of Operations for a more detailed
explanation of these expenses. While the exact timing, nature and amount of
these costs have not yet been fully determined, the Company anticipates that a
significant one-time pretax charge will be recorded in its second fiscal
quarter. As a result of the foregoing, the Company expects to record a
significant net loss in its second fiscal quarter. Because this loss will result
directly from the one-time charge incurred in connection with the Merger, and
this charge will be funded entirely through the proceeds of the Merger
Financing, the Company does not expect this loss to materially impact its
liquidity, ongoing operations or market position. For a discussion of the
consequences of the incurrence of indebtedness in connection with the Merger
Financing, see "Management's Discussion and Analysis of Financial Condition and
Results of Operations -- Liquidity and Capital Resources."
The pro forma adjustments were applied to the respective historical
consolidated financial statements of the Company to reflect and account for the
Merger as a recapitalization; accordingly, the historical basis of the Company's
assets and liabilities has not been impacted thereby.
P-1
<PAGE> 96
THERMADYNE HOLDINGS CORPORATION
UNAUDITED CONDENSED CONSOLIDATED PRO FORMA BALANCE SHEET
<TABLE>
<CAPTION>
MARCH 31, 1998
-----------------------------------------
MERGER
HISTORICAL ADJUSTMENTS(1) PRO FORMA
---------- -------------- ---------
(IN MILLIONS)
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents............................. $ 0.2 $ -- $ 0.2
Accounts receivable................................... 82.2 -- 82.2
Inventories........................................... 119.0 -- 119.0
Prepaid expenses and other............................ 8.3 -- 8.3
------- ------ -------
Total current assets.......................... 209.7 -- 209.7
Property, plant and equipment, net...................... 86.0 -- 86.0
Deferred financing costs................................ 5.6 18.7(2) 18.7
(5.6)(3)
Intangibles, net........................................ 33.8 -- 33.8
Deferred income taxes................................... 35.5 16.8(4) 52.3
Other assets............................................ 1.9 -- 1.9
------- ------ -------
Total assets.................................. $ 372.5 $ 29.9 $ 402.4
======= ====== =======
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Accounts payable...................................... $ 49.9 $ -- $ 49.9
Accrued and other liabilities......................... 26.5 -- 26.5
Accrued interest...................................... 13.0 (13.0)(1) --
Income taxes payable.................................. 9.7 -- 9.7
Current maturities of long-term obligations........... 6.3 (6.3)(1) --
------- ------ -------
Total current liabilities..................... 105.4 (19.3) 86.1
New Credit Facility:
Revolving credit facility............................. -- 33.2(1) 33.2
Term loans............................................ -- 330.0(1) 330.0
Senior Subordinated Notes............................... -- 205.4(1) 205.4
Debentures.............................................. -- 94.6(1) 94.6
Outstanding Senior Notes................................ 99.3 (99.3)(1) --
Outstanding Subordinated Notes.......................... 179.3 (179.3)(1) --
Other existing long-term debt, less current
maturities............................................ 85.6 (66.8)(1) 18.8
Other long-term liabilities........................... 59.7 -- 59.7
Redeemable PIK preferred stock.......................... -- 50.0(1) 50.0
Stockholders' deficit................................... (156.8) (318.6)(5) (475.4)
------- ------ -------
Total liabilities and stockholders' deficit... $ 372.5 $ 29.9 $ 402.4
======= ====== =======
</TABLE>
See accompanying notes to Unaudited Condensed Consolidated Pro Forma Balance
Sheet.
P-2
<PAGE> 97
THERMADYNE HOLDINGS CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED PRO FORMA BALANCE SHEET
(IN MILLIONS)
(1) Sources and uses of cash and cash equivalents in the Merger, including the
Merger Financing and the application of the proceeds thereof as of March 31,
1998, are as follows:
<TABLE>
<S> <C>
TOTAL USES:
Cash to purchase shares..................................... $368.8
Option cash proceeds........................................ 18.1
Management Loans............................................ 3.6
Repayment of Outstanding Subordinated Notes(a).............. 179.3
Repayment of Outstanding Senior Notes(a).................... 99.3
Repayment of outstanding U.S., Australian and Italian bank
facilities................................................ 73.1
Payment of accrued interest................................. 13.0
Estimated transaction fees and expenses..................... 52.9
------
Total cash uses................................... $808.1
======
TOTAL SOURCES:
New Credit Facility
Revolving credit facility(a).............................. $ 33.2
Term loans................................................ 330.0
Senior Subordinated Notes(b)................................ 205.4
Debentures.................................................. 94.6
Redeemable PIK preferred stock and warrants purchased by
DLJMB..................................................... 50.0
Management Share Purchase................................... 4.9
Common stock purchased by DLJMB............................. 90.0
------
Total cash sources................................ $808.1
======
</TABLE>
- ---------------
(a) Assumes that all of the Outstanding Subordinated Notes and Outstanding
Senior Notes are purchased by Holdings. The purchase by Holdings of
less than 100% of each of such notes would result in a reduction in the
amount of borrowings under the New Credit Facility; however, management
does not believe that such changes would have a material effect on the
information presented herein.
(b) Represents the issuance of $207 million aggregate principal amount of
Senior Subordinated Notes at a discount.
(2) Represents the portion of estimated transaction fees and expenses
attributable to the New Credit Facility, the Senior Subordinated Notes, the
Debentures and related interim financing commitments. See Note 6 to the
Company's Unaudited Condensed Consolidated Pro Forma Statement of
Operations.
(3) The adjustment reflects the $5.6 million write-off of deferred debt issuance
costs associated with retiring the existing indebtedness. See Notes 2 and 6
to the Company's Unaudited Condensed Consolidated Pro Forma Statement of
Operations for an explanation of the pro forma income statement impact.
P-3
<PAGE> 98
THERMADYNE HOLDINGS CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED PRO FORMA BALANCE SHEET -- (CONTINUED)
(4) Reflects tax benefit of expense adjustments at a 35.0% rate as shown below:
<TABLE>
<S> <C> <C>
Option cash proceeds........................................ $18.1
Non-capitalized transaction fees and expenses............. 34.2
Less: estimated non-deductible portion.................... (10.0)
-----
Deductible non-capitalized transaction fees and expenses.... 24.2
Write-off of deferred debt issuance costs................... 5.6
-----
Total deductible expenses................................... 47.9
-----
Tax rate.................................................... 35.0%
-----
Tax benefit................................................. $16.8
=====
</TABLE>
(5) Represents the change in the stockholders' deficit as a result of the
Merger, including the Merger Financing and the application of the proceeds
thereof:
<TABLE>
<S> <C>
Cash to purchase shares(a).................................. $(368.8)
Management Share Purchase(b)................................ 4.9
Receivable related to Management Loans(c)................... (3.6)
Common stock purchased by DLJMB............................. 90.0
Non-capitalized transaction fees and expenses(d)............ (34.2)
Write-off of deferred debt issuance costs................... (5.6)
Option cash proceeds(e)..................................... (18.1)
Tax benefit of expense adjustments.......................... 16.8
-------
Total change in stockholders' deficit............. $(318.6)
=======
</TABLE>
- ---------------
(a) Assumes 10,690,283 shares are purchased for $34.50 per share. See "The
Merger and Merger Financing."
(b) Represents the Management Share Purchase (certain members of senior
management's anticipated purchase of 141,002 shares of the common stock
of the surviving corporation or $34.50 per share). See "Executive
Compensation -- Employment Contracts -- Employment Arrangements
Following the Merger."
(c) Represents loans provided to certain members of senior management by
the Company to facilitate the Management Shares Purchase.
(d) Represents all non-capitalized transaction fees and expenses and
includes estimated legal, accounting, advisory and consulting fees of
$17.4 million and estimated debt prepayment fees of $16.8 million. The
tax benefit of these expenses is included separately in the table
above.
(e) Represents the purchase of 1,033,668 options at an average purchase
price of $17.47 (the difference between $34.50 and $17.03, the average
exercise price of the Options). See "The Merger and Merger Financing."
P-4
<PAGE> 99
THERMADYNE HOLDINGS CORPORATION
UNAUDITED CONDENSED CONSOLIDATED PRO FORMA STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
TWELVE MONTHS ENDED MARCH 31, 1998
-----------------------------------------------------------------------------
1997 ACQUISITIONS(1)
COMPANY ------------------------------- MERGER
HISTORICAL ARCSYS WOODLAND ADJUSTMENTS ADJUSTMENTS PRO FORMA(2)
---------- ------ -------- ----------- ----------- ------------
(IN MILLIONS, EXCEPT FOR RATIO DATA)
<S> <C> <C> <C> <C> <C> <C>
Net sales.......................... $534.5 $11.2 $ 2.5 -- -- $548.2
Operating expenses:
Cost of goods sold............... 331.6 9.0 1.6 -- -- 342.2
Selling, general and
administrative expenses....... 111.5 1.7 .9 -- -- 114.1
Amortization of goodwill......... 1.6 -- -- -- -- 1.6
Amortization of other
intangibles................... 5.6 0.2 -- -- -- 5.8
Net periodic postretirement
benefits...................... 2.8 -- -- -- -- 2.8
------ ----- ----- ----- ------ ------
Income from operations............. 81.4 0.3 -- -- -- 81.7
Other (income) expense:
Interest expense................. 44.6 -- 0.2 0.2(3) 61.9(4) 69.0
(37.9)(5)
Amortization of deferred
financing costs............... 1.5 -- -- -- 2.3(6) 2.3
(1.5)(6)
Other............................ 3.3 -- -- -- -- 3.3
------ ----- ----- ----- ------ ------
Income (loss) from continuing
operations before taxes.......... 32.0 0.3 (0.2) (0.2) (24.8) 7.1
Income tax provision (benefit)..... 15.1 -- -- (0.1)(3) (8.7)(7) 6.3
------ ----- ----- ----- ------ ------
Income (loss) from continuing
operations....................... 16.9 0.3 (0.2) (0.1) (16.1) 0.8
Redeemable preferred stock
dividends........................ -- -- -- -- 6.5(8) 6.5
------ ----- ----- ----- ------ ------
Income (loss) from continuing
operations available to common... $ 16.9 $ 0.3 $(0.2) $(0.1) $(22.6) $ (5.7)(9)
OTHER DATA:
Adjusted EBITDA(10)................ $104.6 $ 0.8 $ 0.4 $ -- $ -- $105.8
Depreciation....................... 13.1 0.3 0.2 -- -- 13.6
Capital expenditures............... 17.7 0.1 -- -- -- 17.8
Ratio of earnings to fixed
charges(11)...................... 1.6x -- -- -- -- 1.1x
</TABLE>
See accompanying notes to Unaudited Condensed Consolidated Pro Forma Statement
of Operations.
P-5
<PAGE> 100
THERMADYNE HOLDINGS CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED
PRO FORMA STATEMENT OF OPERATIONS
(IN MILLIONS)
(1) Represents the financial results for the companies acquired during 1997 for
the periods not included in the Company Historical column as follows:
Arcsys (4/1/97-9/25/97) and Woodland (4/1/97-11/24/97).
(2) The pro forma balance sheet reflects non-recurring charges aggregating
$58.1 million (comprised of $18.1 million related to employee stock options
and related plans; $17.4 million of non-capitalizable transaction fees;
$16.8 million of debt pre-payment penalties and the write-off of $5.6
million of related deferred issuance costs) and estimated tax benefits of
$16.8 million. The amounts related to debt prepayment penalties and debt
issuance costs will be reflected net of tax benefits as an extraordinary
item. These amounts have not been reflected in the unaudited pro forma
consolidated statements of operations.
(3) Reflects the additional interest expense and associated tax benefit
attributable to the acquisitions, all of which were financed with
borrowings under the Company's revolving credit facility.
<TABLE>
<CAPTION>
ARCSYS WOODLAND TOTAL
------ -------- -----
<S> <C> <C> <C>
Acquisition......................................... $ 7.5 $ 2.6 $10.1
Average interest rate............................... 7.80% 7.80%
Annual interest..................................... $ 0.6 $ 0.2 $ 0.8
Months to include in pro forma...................... 6 8
Incremental pro forma interest...................... $ 0.3 $ 0.1 $ 0.4
Less historical interest included in reported
results........................................... (0.2)
-----
Adjustment.......................................... $ 0.2
=====
TAXES:
Tax benefit on incremental interest at assumed rate
of 35.0%.......................................... $ 0.1
=====
</TABLE>
(4) Reflects the additional interest expense attributable to the Merger
Financing, as follows:
<TABLE>
<CAPTION>
RATE AMOUNT INTEREST
---------------- ------ --------
<S> <C> <C> <C>
New Credit Facility:(a)
Revolving Credit Facility............. LIBOR(b) +2.25% $ 33.2 $ 2.7
TERM LOANS:
Term A............................. LIBOR(b) +2.25% $100.0 7.9
Term B............................. LIBOR(b) +2.50% 115.0 9.3
Term C............................. LIBOR(b) +2.75% 115.0 9.6
------ -----
Total Term Loans................. 330.0 26.8
Senior Subordinated Notes.............. 9.88% 207.0 20.4
Debentures............................. 12.50% 94.6 11.9
-----
61.8
Amortization of Issuance Discount for
Senior Subordinated Notes............ 10 yrs 1.6 0.1
-----
$61.9
=====
</TABLE>
- ---------------
(a) A one-eighth of one percent change in interest rates would impact
interest expense for borrowings under the New Credit Facility, the
Senior Subordinated Notes and the Debentures, collectively, in the
amount of approximately $0.8 million.
P-6
<PAGE> 101
THERMADYNE HOLDINGS CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED
PRO FORMA STATEMENT OF OPERATIONS -- (CONTINUED)
(b) Calculations based on LIBOR at 5.63%.
The borrowings under the New Credit Facility assume that all of the
Outstanding Subordinated Notes and Outstanding Senior Notes are purchased
by Holdings. The purchase by Holdings of less than 100% of each of such
notes would result in a reduction in the amount of borrowings under the New
Credit Facility; however, management does not believe that such changes
would have a material effect on the information presented herein.
(5) Reflects the elimination of interest expense attributable to indebtedness
to be paid in connection with the Merger, as follows:
<TABLE>
<CAPTION>
TWELVE MONTHS
ENDED
MARCH 31, 1998
--------------
<S> <C>
Outstanding U.S., Australian and Italian bank facilities.... $ 8.4
Outstanding Senior Notes.................................... 10.2
Outstanding Subordinated Notes.............................. 19.3
-----
$37.9
=====
</TABLE>
See Note 8 to Holding's Consolidated Financial Statements for a description
of interest rates applicable to outstanding indebtedness.
(6) Reflects the net change in amortization of capitalized financing costs, as
follows:
<TABLE>
<CAPTION>
TWELVE MONTHS
ENDED
MARCH 31,
FEES YEARS 1998
----- ----- -------------
<S> <C> <C> <C>
Elimination of existing amortization of capitalized
financing costs...................................... $(1.5)
Amortization of capitalized financing costs for new
debt:
Revolving Credit Facility............................ $ 2.3 6 0.4
Term A............................................... 2.3 6 0.4
Term B............................................... 2.6 7 0.4
Term C............................................... 2.6 8 0.3
Senior Subordinated Notes............................ 5.7 10 0.5
Debentures........................................... 3.2 10 0.3
----- -----
Total new capitalized financing costs........ $18.7 2.3
===== -----
$ 0.8
=====
</TABLE>
Financing costs are amortized using the effective interest method.
(7) Adjustment reflects the income tax effect of all pro forma entries above at
a rate of 35.0%.
(8) Reflects dividends on preferred stock issued in the Merger ($50 million
liquidation preference multiplied by a 13% dividend rate).
(9) Assuming the warrants to purchase shares of common stock to be issued in
connection with the Merger Financing had been issued as of April 1, 1997
with an exercise price of $0.01 per share, the pro forma twelve months
ended March 31, 1998 income (loss) from continuing operations available to
common would have been $(17.9) million.
P-7
<PAGE> 102
THERMADYNE HOLDINGS CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED
PRO FORMA STATEMENT OF OPERATIONS -- (CONTINUED)
(10) "Adjusted EBITDA" is defined as operating income plus depreciation,
amortization of goodwill, amortization of intangibles and net periodic
postretirement benefits expense and is a key financial measure but should
not be construed as an alternative to operating income or cash flows from
operating activities (as determined in accordance with generally accepted
accounting principles). Adjusted EBITDA is also one of the financial
measures by which the Company's compliance with its covenants is calculated
under its debt agreements. The Company believes that Adjusted EBITDA is a
useful supplement to net income (loss) and other consolidated income
statement data in understanding cash flows generated from operations that
are available for taxes, debt service and capital expenditures. However,
the Company's method of computation may or may not be comparable to other
similarly titled measures of other companies. In addition, Adjusted EBITDA
is not necessarily indicative of amounts that may be available for
discretionary uses and does not reflect any legal or contractual
restrictions on the Company's use of funds.
(11) For purposes of calculating the ratio of earnings to fixed charges,
earnings consist of income before income taxes plus fixed charges. Fixed
charges consist of interest expense, amortization of deferred financing
costs and one-third of the rent expense from operating leases, which
management believes is a reasonable approximation of the interest component
of rent expense.
P-8
<PAGE> 103
THERMADYNE HOLDINGS CORPORATION
UNAUDITED CONDENSED CONSOLIDATED PRO FORMA STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31, 1998
-----------------------------------------
COMPANY MERGER
HISTORICAL ADJUSTMENTS PRO FORMA(2)
---------- ----------- ------------
(IN MILLIONS, EXCEPT FOR RATIO DATA)
<S> <C> <C> <C>
Net sales............................................ $131.8 $ -- $131.8
Operating expenses:
Cost of goods sold................................. 81.8 -- 81.8
Selling, general and administrative expenses....... 27.1 -- 27.1
Amortization of goodwill........................... 0.4 -- 0.4
Amortization of other intangibles.................. 0.5 -- 0.5
Net periodic postretirement benefits............... 0.6 -- 0.6
------ ----- ------
Income from operations............................... 21.4 -- 21.4
Other (income) expense:
Interest expense................................... 10.8 15.5(4) 17.5
(8.8)(5)
Amortization of deferred financing costs........... 0.4 0.6(6) 0.6
(0.4)(6)
Other.............................................. (0.2) -- (0.2)
------ ----- ------
Income (loss) from continuing operations before
taxes.............................................. 10.4 (6.9) 3.5
Income tax provision (benefit)....................... 4.6 (2.4)(7) 2.2
------ ----- ------
Income (loss) from continuing operations............. 5.8 (4.5) 1.3
Redeemable preferred stock dividends................. -- 1.6(8) 1.6
------ ----- ------
Income (loss) from continuing operations available to
common............................................. $ 5.8 $(6.1) $ (0.3)(9)
OTHER DATA:
Adjusted EBITDA(10).................................. $ 26.5 $ -- $ 26.5
Depreciation......................................... 3.6 -- 3.6
Capital expenditures................................. 3.8 -- 3.8
Ratio of earnings to fixed charges(11)............... 1.9x -- 1.2x
</TABLE>
See accompanying notes to Unaudited Condensed Consolidated Pro Forma Statement
of Operations.
P-9
<PAGE> 104
THERMADYNE HOLDINGS CORPORATION
UNAUDITED CONDENSED CONSOLIDATED PRO FORMA STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1997
----------------------------------------------------------------------------------------
1997 ACQUISITIONS(1)
COMPANY ---------------------------------------------- MERGER
HISTORICAL GENSET ARCSYS WOODLAND ADJUSTMENTS ADJUSTMENTS PRO FORMA(2)
---------- ------ -------- ---------- ------------- ----------- ------------
(IN MILLIONS, EXCEPT FOR RATIO DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
Net sales......................... $520.4 $ 2.4 $17.4 $ 4.0 -- -- $544.2
Operating expenses:
Cost of goods sold.............. 320.0 2.1 14.2 2.6 -- -- 338.9
Selling, general and
administrative expenses...... 110.7 0.4 2.7 1.2 -- -- 115.0
Amortization of goodwill.......... 1.6 0.1 -- -- -- -- 1.7
Amortization of other
intangibles.................. 6.8 -- 0.2 -- -- -- 7.0
Net periodic postretirement
benefits........................ 2.8 -- -- -- -- -- 2.8
------ ----- ----- ----- ----- ------ ------
Income from operations............ 78.5 (0.2) 0.3 0.2 -- -- 78.8
Other (income) expense:
Interest expense................ 45.3 0.2 -- 0.3 0.4(3) 61.9(4) 68.9
(39.2)(5)
Amortization of deferred
financing costs.............. 1.6 -- -- -- -- 2.3(6) 2.3
(1.6)(6)
Other........................... 3.1 (0.1) -- -- -- -- 3.0
------ ----- ----- ----- ----- ------ ------
Income (loss) from continuing
operations before taxes......... 28.5 (0.3) 0.3 (0.1) (0.4) (23.4) 4.6
Income tax provision (benefit).... 13.4 0.1 -- 0.1 (0.2)(3) (8.2)(7) 5.2
------ ----- ----- ----- ----- ------ ------
Income (loss) from continuing
operations...................... 15.1 (0.4) 0.3 (0.2) (0.2) (15.2) (0.6)
Redeemable preferred stock
dividends....................... -- -- -- -- -- 6.5(8) 6.5
------ ----- ----- ----- ----- ------ ------
Income (loss) from continuing
operations available to
common.......................... $ 15.1 $(0.4) $ 0.3 $(0.2) $(0.2) $(21.7) $ (7.1)(9)
OTHER DATA:
Adjusted EBITDA(10)............... $102.1 $ -- $ 0.9 $ 0.4 $ -- $ -- $103.4
Depreciation...................... 12.5 0.1 0.4 0.2 -- -- 13.2
Capital expenditures.............. 16.3 -- 0.2 -- -- -- 16.5
Ratio of earnings to fixed
charges(11)..................... 1.6x -- -- -- -- -- 1.1x
</TABLE>
See accompanying notes to Unaudited Condensed Consolidated Pro Forma Statement
of Operations.
P-10
<PAGE> 105
THERMADYNE HOLDINGS CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED
PRO FORMA STATEMENTS OF OPERATIONS
(IN MILLIONS)
(1) Represents the financial results for the companies acquired during 1997 for
the periods not included in the Company Historical column as follows:
GenSet (1/1/97-1/31/97), Arcsys (1/1/97-9/25/97) and Woodland
(1/1/97-11/24/97).
(2) The pro forma balance sheet reflects non-recurring charges aggregating
$58.1 million (comprised of $18.1 million related to employee stock options
and related plans; $17.4 million of non-capitalizable transaction fees;
$16.8 million of debt pre-payment penalties and the write-off of $5.6
million of related deferred issuance costs) and estimated tax benefits of
$16.8 million. The amounts related to debt prepayment penalties and debt
issuance costs will be reflected net of tax benefits as an extraordinary
item. These amounts have not been reflected in the unaudited pro forma
consolidated statements of operations.
(3) Reflects the additional interest expense and associated tax benefit
attributable to the acquisitions, all of which were financed with
borrowings under the Company's revolving credit facility.
<TABLE>
<CAPTION>
GENSET ARCSYS WOODLAND TOTAL
------ ------ -------- -----
<S> <C> <C> <C> <C>
Acquisition............................................ $27.8 $7.5 $2.6 $37.9
Average interest rate.................................. 8.04% 7.80% 7.80%
Annual interest........................................ $ 2.2 $0.6 $0.2 $ 3.0
Months to include in pro forma......................... 1 9 11
Incremental pro forma interest......................... $ 0.2 $0.4 $0.2 $ 0.8
Less historical interest included in reported
results.............................................. (0.4)
-----
Adjustment............................................. $ 0.4
=====
Taxes:
Tax benefit on incremental interest at assumed rate of
35.0%................................................ $ 0.2
=====
</TABLE>
P-11
<PAGE> 106
THERMADYNE HOLDINGS CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED
PRO FORMA STATEMENTS OF OPERATIONS -- (CONTINUED)
(4) Reflects the additional interest expense attributable to the Merger
Financing, as follows:
<TABLE>
<CAPTION>
THREE MONTHS
ENDED
MARCH 31, YEAR ENDED
1998 DECEMBER 31, 1997
------------ -----------------
RATE AMOUNT INTEREST INTEREST
--------------- ------ ------------ -----------------
<S> <C> <C> <C> <C>
New Credit Facility:(a)
Revolving Credit
Facility............... LIBOR(b)+2.25% $ 33.2 $ 0.7 $ 2.7
Term Loans:
Term A................. LIBOR(b) +2.25% 100.0 2.0 7.9
Term B................. LIBOR(b) +2.50% 115.0 2.3 9.3
Term C................. LIBOR(b) +2.75% 115.0 2.4 9.6
------ ----- -----
Total Term
Loans........... 330.0 6.7 26.8
Senior Subordinated Notes... 9.88% 207.0 5.1 20.4
Debentures.................. 12.50% 94.6 2.9 11.9
------ -----
15.4 61.8
Amortization of Issuance
Discount for Senior
Subordinated Notes........ 10 yrs. 1.6 0.1 0.1
------ -----
$15.5 $61.9
====== ===== =====
</TABLE>
--------------------
(a) A one-eighth of one percent change in interest rates would impact
interest expense for borrowings under the New Credit Facility, the
Senior Subordinated Notes and the Debentures, collectively, in the
amount of approximately $0.2 million and $0.8 million for the three
months ended March 31, 1998 and the year ended December 31, 1997,
respectively.
(b) Calculations based on LIBOR at 5.63%.
The borrowings under the New Credit Facility assume that all of the
Outstanding Subordinated Notes and Outstanding Senior Notes are purchased
by Holdings. The purchase by Holdings of less than 100% of each of such
notes would result in a reduction in the amount of borrowings under the New
Credit Facility; however, management does not believe that such changes
would have a material effect on the information presented herein.
(5) Reflects the elimination of interest expense attributable to indebtedness
to be paid in connection with the Merger, as follows:
<TABLE>
<CAPTION>
THREE MONTHS
ENDED YEAR ENDED
MARCH 31, 1998 DECEMBER 31, 1997
-------------- -----------------
<S> <C> <C>
Outstanding U.S., Australian and Italian bank
facilities.......................................... $1.5 $ 9.7
Outstanding Senior Notes.............................. 2.5 10.2
Outstanding Subordinated Notes........................ 4.8 19.3
---- -----
$8.8 $39.2
==== =====
</TABLE>
See Note 8 to Holding's Consolidated Financial Statements for a description
of interest rates applicable to outstanding indebtedness.
P-12
<PAGE> 107
THERMADYNE HOLDINGS CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED
PRO FORMA STATEMENTS OF OPERATIONS -- (CONTINUED)
(6) Reflects the net change in amortization of capitalized financing costs, as
follows:
<TABLE>
<CAPTION>
THREE MONTHS
ENDED YEAR ENDED
FEES YEARS MARCH 31, 1998 DECEMBER 31, 1997
----- ----- -------------- -----------------
<S> <C> <C> <C> <C>
Elimination of existing amortization of
capitalized financing costs............ $(0.4) $(1.6)
Amortization of capitalized financing
costs for new debt:
Revolving Credit Facility................ $ 2.3 6 0.1 0.4
Term A................................... 2.3 6 0.1 0.4
Term B................................... 2.6 7 0.1 0.4
Term C................................... 2.6 8 0.1 0.3
Senior Subordinated Notes................ 5.7 10 0.1 0.5
Debentures............................... 3.2 10 0.1 0.3
----- ----- -----
Total new capitalized financing costs.... $18.7 0.6 2.3
===== ----- -----
$ 0.2 $ 0.7
===== =====
</TABLE>
Financing costs are amortized using the effective interest method.
(7) Adjustment reflects the income tax effect of all pro forma entries above at
a rate of 35.0%.
(8) Reflects dividends on preferred stock issued in the Merger ($50 million
liquidation preference multiplied by a 13% dividend rate).
(9) Assuming the warrants to purchase shares of common stock to be issued in
connection with the Merger Financing had been issued as of January 1, 1997
and January 1, 1998 with an exercise price of $0.01 per share, the pro
forma 1997 income (loss) and pro forma first quarter 1998 income (loss)
from continuing operations available to common would have been ($19.3)
million and ($12.5) million, respectively.
(10) "EBITDA" is defined as operating income plus depreciation, amortization of
goodwill, amortization of intangibles and net periodic postretirement
benefits expenses and is a key financial measure but should not be
construed as an alternative to operating income or cash flows from
operating activities (as determined in accordance with generally accepted
accounting principles). EBITDA is also one of the financial measures by
which the Company's compliance with its covenants is calculated under its
debt agreements. The Company believes that EBITDA is a useful supplement to
net income (loss) and other consolidated income statement data in
understanding cash flows generated from operations that are available for
taxes, debt service and capital expenditures. However, the Company's method
of computation may or may not be comparable to other similarly titled
measures of other companies.
(11) For purposes of calculating the ratio of earnings to fixed charges,
earnings consist of income before income taxes plus fixed charges. Fixed
charges consist of interest expense, amortization of deferred financing
costs and one-third of the rent expense from operating leases, which
management believes is a reasonable approximation of the interest component
of rent expense.
P-13
<PAGE> 108
THERMADYNE HOLDINGS CORPORATION
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Report of Ernst & Young LLP, Independent Auditors........... F-2
Consolidated Balance Sheets at December 31, 1997 and 1996
(audited) and March 31, 1998 (unaudited).................. F-3
Consolidated Statements of Operations for the years ended
December 31, 1997, 1996, and 1995 (audited) and the three
months ended March 31, 1998 and 1997 (unaudited).......... F-4
Consolidated Statements of Shareholders' Equity (Deficit)
for the years ended December 31, 1997, 1996, and 1995
(audited) and the three months ended March 31, 1998
(unaudited)............................................... F-5
Consolidated Statements of Cash Flows for the years ended
December 31, 1997, 1996, and 1995 (audited) and the three
months ended March 31, 1998 and 1997 (unaudited).......... F-6
Notes to Consolidated Financial Statements.................. F-7
</TABLE>
F-1
<PAGE> 109
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
The Board of Directors
Thermadyne Holdings Corporation
We have audited the accompanying consolidated balance sheets of Thermadyne
Holdings Corporation and subsidiaries as of December 31, 1997 and 1996, and the
related consolidated statements of operations, stockholders' equity (deficit),
and cash flows for each of the three years in the period ended December 31,
1997. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the consolidated financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position of
Thermadyne Holdings Corporation and subsidiaries at December 31, 1997 and 1996,
and the consolidated results of its operations and cash flows for each of the
three years in the period ended December 31, 1997, in conformity with generally
accepted accounting principles.
/s/ ERNST & YOUNG LLP
Orange County, California
February 5, 1998
F-2
<PAGE> 110
THERMADYNE HOLDINGS CORPORATION
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31, DECEMBER 31,
1998 1997 1996
----------- ------------ ------------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents.............................. $ 173 $ 1,481 $ 1,420
Accounts receivable, less allowance for doubtful
accounts of $2,278, $2,217 and $1,649,
respectively........................................ 82,171 76,847 54,286
Inventories............................................ 118,966 105,135 79,542
Prepaid expenses and other............................. 8,316 8,534 9,763
Net assets of discontinued operations.................. -- -- 29,455
-------- -------- --------
Total current assets........................... 209,626 191,997 174,466
Property, plant and equipment, at cost, net.............. 86,025 85,257 75,624
Deferred financing costs, net............................ 5,550 5,754 7,508
Intangibles, at cost, net................................ 33,797 33,970 62,645
Deferred income taxes.................................... 35,551 35,552 23,206
Other assets............................................. 1,893 1,997 9,956
-------- -------- --------
Total assets................................... $372,442 $354,527 $353,405
======== ======== ========
LIABILITIES AND SHAREHOLDERS' DEFICIT
Current liabilities:
Accounts payable....................................... $ 49,906 $ 55,390 $ 28,266
Accrued and other liabilities.......................... 26,478 32,697 29,257
Accrued interest....................................... 12,976 5,680 6,461
Income taxes payable................................... 9,725 4,769 7,948
Deferred income taxes.................................. -- -- 1,324
Current maturities of long-term obligations............ 6,256 4,912 4,205
-------- -------- --------
Total current liabilities...................... 105,341 103,448 77,461
Long-term obligations, less current maturities........... 364,160 353,175 417,135
Other long-term liabilities.............................. 59,718 60,751 44,078
Shareholders' equity (deficit):
Common stock, $.01 par value, 25,000,000 shares
authorized, 11,217,233, 11,189,675 and 11,020,311
shares issued and outstanding, at March 31, 1998,
December 31, 1997 and 1996, respectively............ 112 112 110
Additional paid-in capital............................. 149,358 149,023 143,237
Accumulated deficit.................................... (293,399) (299,208) (333,465)
Accumulated other comprehensive income................. (12,848) (12,774) 4,849
-------- -------- --------
Total shareholders' deficit.................... (156,777) (162,847) (185,269)
-------- -------- --------
Total liabilities and shareholders' deficit............ $372,442 $354,527 $353,405
======== ======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
F-3
<PAGE> 111
THERMADYNE HOLDINGS CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
THREE MONTHS THREE MONTHS
ENDED ENDED YEAR ENDED YEAR ENDED YEAR ENDED
MARCH 31, MARCH 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1998 1997 1997 1996 1995
------------ ------------ ------------ ------------ ------------
(UNAUDITED) (UNAUDITED)
(IN THOUSANDS, EXCEPT SHARE DATA)
<S> <C> <C> <C> <C> <C>
Net sales......................... $131,829 $117,751 $520,440 $439,744 $ 316,778
Operating expenses:
Cost of goods sold.............. 81,784 70,342 320,120 259,835 175,945
Selling, general and
administrative expenses...... 27,064 26,270 110,696 95,907 74,681
Amortization of goodwill........ 382 357 1,591 83,033 92,931
Amortization of other
intangibles.................. 518 1,692 6,776 12,377 48,401
Net periodic postretirement
benefits..................... 650 585 2,750 2,731 2,124
-------- -------- -------- -------- ---------
Operating income (loss)........... 21,431 18,505 78,507 (14,139) (77,304)
Other income (expense):
Interest expense................ (10,834) (11,538) (45,325) (45,655) (41,269)
Amortization of deferred
financing costs.............. (370) (460) (1,587) (2,711) (4,860)
Other........................... 166 406 (3,051) (968) 103
-------- -------- -------- -------- ---------
Income (loss) from continuing
operations before income taxes
and extraordinary item.......... 10,393 6,913 28,544 (63,473) (123,330)
Income tax provision (benefit).... 4,584 2,981 13,475 (534) 8,518
-------- -------- -------- -------- ---------
Income (loss) from continuing
operations before extraordinary
item............................ 5,809 3,932 15,069 (62,939) (131,848)
Discontinued operations:
Gain on sale of discontinued
operations, net of income taxes
of $12,623 and $14,732,
respectively.................... -- -- 16,015 8,480 --
Income (loss) from discontinued
operations, net of income
taxes........................... -- 1,036 3,173 (5,463) (28,952)
-------- -------- -------- -------- ---------
Income (loss) before extraordinary
item............................ 5,809 4,968 34,257 (59,922) (160,800)
Extraordinary item -- loss on
early
extinguishment of long-term
debt,
net of income tax benefit
of $2,001....................... -- -- -- (3,715) --
-------- -------- -------- -------- ---------
Net income (loss)................. $ 5,809 $ 4,968 $ 34,257 $(63,637) $(160,800)
======== ======== ======== ======== =========
Basic earnings per share amounts:
Income (loss) from continuing
operations................... $ 0.52 $ 0.36 $ 1.36 $ (5.83) $ (12.97)
Net income (loss)............... $ 0.52 $ 0.45 $ 3.09 $ (5.89) $ (15.81)
Diluted earnings per share
amounts:
Income (loss) from continuing
operations................... $ 0.50 $ 0.35 $ 1.33 $ (5.83) $ (12.97)
Net income (loss)............... $ 0.50 $ 0.44 $ 3.01 $ (5.89) $ (15.81)
</TABLE>
See accompanying notes to consolidated financial statements.
F-4
<PAGE> 112
THERMADYNE HOLDINGS CORPORATION
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (DEFICIT)
FOR THE YEARS ENDED DECEMBER 31, 1995, 1996 AND 1997 AND THE THREE MONTHS ENDED
MARCH 31, 1998
<TABLE>
<CAPTION>
ACCUMULATED
ADDITIONAL OTHER
COMMON PAID-IN ACCUMULATED COMPREHENSIVE
STOCK CAPITAL DEFICIT INCOME TOTAL
------ ---------- ----------- ------------- ---------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
January 1, 1995................... $100 $129,900 $(109,028) $ (350) $ 20,622
Comprehensive income:
Net loss.......................... -- -- (160,800) -- (160,800)
Other comprehensive income--
Foreign currency translation... -- -- -- (758) (758)
---------
Comprehensive income................ (161,558)
---------
Exercise of stock options........... 5 6,261 -- -- 6,266
Stock issued under employee stock
purchase plan..................... 2 2,422 -- -- 2,424
---- -------- --------- -------- ---------
December 31, 1995................. 107 138,583 (269,828) (1,108) (132,246)
Comprehensive income:
Net loss.......................... -- -- (63,637) -- (63,637)
Other comprehensive income--
Foreign currency translation... -- -- -- 5,957 5,957
---------
Comprehensive income................ (57,680)
---------
Exercise of stock options........... 2 2,424 -- -- 2,426
Stock issued under employee stock
purchase plan..................... 1 2,230 -- -- 2,231
---- -------- --------- -------- ---------
December 31, 1996................. 110 143,237 (333,465) 4,849 (185,269)
Comprehensive income:
Net income........................ -- -- 34,257 -- 34,257
Other comprehensive income--
Foreign currency translation... -- -- -- (17,623) (17,623)
---------
Comprehensive income................ 16,634
---------
Exercise of stock options........... 1 1,498 -- -- 1,499
Stock issued under employee stock
purchase plan..................... 1 1,993 -- -- 1,994
Recognition of net operating loss
carryforwards..................... -- 2,295 -- -- 2,295
---- -------- --------- -------- ---------
December 31, 1997................. 112 149,023 (299,208) (12,774) (162,847)
Comprehensive income:
Net income........................ -- -- 5,809 -- 5,809
Other comprehensive income--
Foreign currency translation... -- -- -- (74) (74)
---------
Comprehensive income................ 5,735
---------
Exercise of stock options........... -- 335 -- -- 335
---- -------- --------- -------- ---------
March 31, 1998.................... $112 $149,358 $(293,399) $(12,848) $(156,777)
==== ======== ========= ======== =========
</TABLE>
See accompanying notes to consolidated financial statements.
F-5
<PAGE> 113
THERMADYNE HOLDINGS CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
THREE MONTHS THREE MONTHS
ENDED ENDED YEAR ENDED YEAR ENDED YEAR ENDED
MARCH 31, MARCH 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1998 1997 1997 1996 1995
------------ ------------ ------------ ------------ ------------
(UNAUDITED) (UNAUDITED)
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Cash flows provided by (used in) operating
activities:
Net income (loss)............................ $ 5,809 $ 4,968 $ 34,257 $(63,637) $(160,800)
Adjustments to reconcile net income (loss) to
net cash provided by operating activities:
Net periodic postretirement benefits....... 650 585 2,750 2,731 2,206
Depreciation............................... 3,556 2,876 12,448 11,651 10,689
Amortization of goodwill................... 382 357 1,591 83,033 102,985
Amortization of other intangibles.......... 518 1,692 6,776 12,377 48,517
Amortization of deferred financing costs... 370 460 1,587 2,711 4,860
Recognition of net operating loss
carryforwards............................ -- 586 2,343 8,534 4,491
Deferred income taxes...................... -- (586) (1,836) (21,882) --
Noncash charges for discontinued
operations............................... -- 565 1,621 13,949 30,328
Gain on sale of discontinued operations.... -- -- (16,015) (8,480) --
Extraordinary item......................... -- -- -- 3,715 --
Changes in operating assets and liabilities:
Accounts receivable........................ (6,179) (2,577) (19,905) (10,166) (5,942)
Inventories................................ (13,502) (4,625) (17,228) (10,107) (7,541)
Prepaid expenses and other................. (52) (334) (1,628) (1,957) (291)
Accounts payable........................... (5,347) 358 20,605 3,498 2,818
Accrued and other liabilities.............. (6,246) (7,762) (5,757) (4,510) 2,963
Accrued interest........................... 7,370 7,249 (258) 643 (658)
Income taxes payable....................... 5,098 (1,513) (3,498) 1,379 (2,363)
Other long-term liabilities................ (1,562) (321) (3,152) (2,124) (2,519)
Discontinued operations.................... -- 903 285 97 1,465
-------- -------- --------- -------- ---------
Total adjustments................... (14,944) (2,087) (19,271) 85,092 192,008
-------- -------- --------- -------- ---------
Net cash provided by operating
activities........................ (9,135) 2,881 14,986 21,455 31,208
-------- -------- --------- -------- ---------
Cash flows provided by (used in) investing
activities:
Capital expenditures, net.................. (3,756) (2,395) (16,339) (11,447) (7,154)
Change in other assets..................... (349) 8,512 4,162 (4,399) (64)
Acquisitions, net of cash.................. (640) (27,755) (37,895) (74,011) (3,370)
Investing activities of discontinued
operations............................... -- (570) (1,680) (3,766) (5,133)
Proceeds from sale of discontinued
operations............................... -- -- 88,543 112,359 --
-------- -------- --------- -------- ---------
Net cash provided by (used in) investing
activities............................... (4,745) (22,208) 36,791 18,736 (15,721)
-------- -------- --------- -------- ---------
Cash flows provided by (used in) financing
activities:
Change in long-term receivables............ 263 17 170 (283) 47
Repayment of long-term obligations......... (10,592) (9,928) (131,486) (150,384) (26,263)
Borrowing of long-term obligations......... 22,370 33,683 72,855 119,854 505
Issuance of common stock................... 335 436 3,069 4,146 7,761
Change in accounts receivable
securitization........................... 376 4,631 5,676 (9,994) 731
Financing fees............................. -- -- -- (3,855) (189)
Financing activities of discontinued
operations............................... -- (1,227) (2,808) (1,732) (11)
Other...................................... (180) (2,168) 808 1,639 (3,516)
-------- -------- --------- -------- ---------
Net cash used in financing activities...... 12,572 25,444 (51,716) (40,609) (20,935)
-------- -------- --------- -------- ---------
Net increase (decrease) in cash and cash
equivalents................................ (1,308) 6,117 61 (418) (5,448)
Cash and cash equivalents at beginning of
year....................................... 1,481 1,420 1,420 1,838 7,286
-------- -------- --------- -------- ---------
Cash and cash equivalents at end of year..... $ 173 $ 7,537 $ 1,481 $ 1,420 $ 1,838
======== ======== ========= ======== =========
</TABLE>
See accompanying notes to consolidated financial statements.
F-6
<PAGE> 114
THERMADYNE HOLDINGS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT SHARE DATA)
1. THE COMPANY
Thermadyne Holdings Corporation ("Thermadyne" or "the Company"), a Delaware
corporation, is a global manufacturer of cutting and welding products and
accessories. Thermadyne's year end is December 31.
2. RECENT EVENTS
MERGER WITH MERCURY ACQUISITION CORPORATION
On January 20, 1998, the Company and Mercury Acquisition Corporation
("Mercury"), an affiliate of DLJ Merchant Banking Partners II, L.P. ("DLJ"),
entered into a definitive merger agreement (the "Merger Agreement"). Under the
terms of the Merger Agreement, Mercury will merge with and into the Company,
and, subject to the following sentence, the holders of each share of the
Company's common stock can elect to receive $34.50 in cash for such share or to
retain such share in the merged Company. In any event, holders will be required
to retain 485,010 shares, or 4.3%, of the Company's common stock outstanding
immediately prior to the merger. In addition, DLJ has entered into voting
agreements with Magten Asset Management (on behalf of itself and certain of its
clients) and Fidelity Capital and Income Fund, pursuant to which these current
shareholders, subject to certain conditions, have agreed to vote in favor of the
merger 5,942,708 shares of the Company's common stock owned by them. These
shares represent approximately 53% of the Company's common stock outstanding on
December 31, 1997.
The proposed merger, which will be recorded as a recapitalization for
accounting purposes, is subject to a number of conditions, including regulatory
approvals and approval by Company stockholders. The transaction is estimated to
have an aggregate value of approximately $790 million, including refinancing of
the Company's existing revolving credit facility and senior and subordinated
notes. The Company expects the merger to close by June 30, 1998.
As a result of the proposed merger, the Company and Mercury will incur
various costs, currently estimated to range between $50 million and $60 million,
on a pretax basis, in connection with consummating the transaction. These costs
consist primarily of professional fees, registration costs, compensation costs
and other expenses. Although the exact timing, nature and amount of these merger
transaction costs are subject to change, the Company expects that a one-time
charge for these costs will be recorded in the quarter during which the merger
is consummated.
ACQUISITIONS
On November 25, 1997, the Company acquired substantially all of the assets
of Woodland Cryogenics, Incorporated, a manufacturer of cryogenic pumps, ambient
and electric vaporizers and automatic cylinder filling systems located in
Philadelphia, Pennsylvania. The aggregate consideration paid was approximately
$2,500 and was financed through bank facilities. The transaction was accounted
for as a purchase.
On September 26, 1997, the Company acquired substantially all of the assets
of the welding division of Prestolite Power Corporation, a manufacturer of arc
welders, plasma welders and wire feeders, located in Troy, Ohio. The aggregate
consideration paid was approximately $7,500 and was financed through bank
facilities. The transaction was accounted for as a purchase.
On January 31, 1997, the Company acquired all of the issued and outstanding
capital stock of GenSet S.p.A., a leading manufacturer of engine-driven welders
and generators in Italy. The aggregate consideration paid was approximately
$28,000 and was financed through bank facilities. The transaction was accounted
for as a purchase.
F-7
<PAGE> 115
THERMADYNE HOLDINGS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
On January 18, 1996, the Company acquired all of the issued and outstanding
capital stock of Duxtech Pty. Ltd., an Australian holding company that operates
Cigweld, the leading manufacturer of welding products in Australia and New
Zealand. The aggregate consideration paid was approximately $74,000 of which
approximately $21,500 was the assumption of existing debt. The remaining balance
was paid in cash which was financed through cash on hand and borrowing under the
Company's existing credit agreement. This transaction was accounted for as a
purchase.
<TABLE>
<S> <C>
Net working capital......................................... $21,220
Excess of cost over fair value of net assets acquired....... 31,002
Property, plant and equipment, at cost, net................. 29,083
Other long-term liabilities, net............................ (7,294)
-------
$74,011
=======
</TABLE>
The operating results of the acquired companies have been included in the
Consolidated Statements of Operations from their respective dates of
acquisition. The pro forma unaudited results of operations for the twelve months
ended December 31, 1997 and 1996, respectively, assuming consummation of the
purchases as of the beginning of each period, are as follows:
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
--------------------
1997 1996
-------- --------
<S> <C> <C>
Net sales................................................... $544,140 $484,005
Income (loss) from from continuing operations............... 14,569 (63,804)
Net income (loss)........................................... 33,857 (64,502)
Basic per share amounts:
Income (loss) from continuing operations.................. 1.32 (5.91)
Net income (loss)......................................... 3.06 (5.97)
Diluted per share amounts:
Income (loss) from continuing operations.................. 1.28 (5.91)
Net income (loss)......................................... 2.97 (5.97)
</TABLE>
Such pro forma amounts are not necessarily indicative of what the actual
consolidated results of operations might have been if the acquisitions had been
effective at the beginning of each period above.
SALE OF DISCONTINUED OPERATIONS
On September 30, 1997, the Company completed the sale of its Wear
Resistance business for $96,000 which consisted of $88,500 in cash and $7,500 in
the assumption of long-term liabilities. The net proceeds were used to reduce
debt. The net assets of the Wear Resistance operations were classified as a
current asset on the Consolidated Balance Sheets at December 31, 1996, and their
financial results were reported separately as discontinued operations in the
Consolidated Statements of Operations. The Company realized a net gain of
$16,015 on this transaction, net of income taxes of $12,623.
F-8
<PAGE> 116
THERMADYNE HOLDINGS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The components of net assets of discontinued operations included in the
Consolidated Balance Sheet at December 31, 1996 are as follows:
<TABLE>
<S> <C>
Accounts receivable, net.................................... $17,819
Inventories................................................. 16,660
Prepaid expenses and other.................................. 327
Property, plant and equipment, at cost, net................. 14,323
Other noncurrent assets..................................... 2,732
Accounts payable and accrued liabilities.................... (13,235)
Long-term obligations....................................... (8,518)
Other long-term liabilities................................. (653)
-------
$29,455
=======
</TABLE>
On April 26, 1996, the Company completed the sale of substantially all of
the assets of Coyne Cylinder Company ("Coyne"), and on June 27, 1996, the
Company completed the sale of its Floor Maintenance business. Consideration
received from these two transactions totaled $137,000 and consisted of $112,359
in cash and $24,641 in the assumption or elimination of certain liabilities. The
Company realized a net gain of $8,480 on these two transactions, net of income
taxes of $14,732. The net proceeds were used to reduce debt. The financial
results of the Coyne and Floor Maintenance operations were reported separately
as discontinued operations in the Consolidated Statements of Operations.
Sales from the discontinued businesses totaled $76,163, $183,440 and
$259,772 for the years ended December 31, 1997, 1996 and 1995, respectively.
Certain expenses have been allocated to discontinued operations including
interest expense, which was allocated on a ratio of earnings before interest,
taxes, depreciation and amortization for the years presented. Interest expense
allocated to discontinued operations was $2,048, $7,630 and $11,413 for the
years ended December 31, 1997, 1996 and 1995, respectively. Income (loss) from
discontinued operations included in the accompanying Consolidated Statements of
Operations include immaterial amounts of income taxes (see Note 11).
3. SIGNIFICANT ACCOUNTING POLICIES
The consolidated financial statements include the accounts of Thermadyne
and its wholly owned subsidiaries. All material intercompany balances and
transactions have been eliminated in consolidation. Certain amounts from prior
years have been reclassified to conform to current year presentation.
Preparation of financial statements in conformity with generally accepted
accounting principles requires certain estimates and assumptions be made that
affect the reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those estimates.
Inventories -- Inventories are valued at the lower of cost or market. Cost
is determined using the last-in, first-out ("LIFO") method for domestic
subsidiaries and the first-in, first-out ("FIFO") method for foreign
subsidiaries. Inventories at foreign subsidiaries amounted to approximately
$46,798 and $33,567 at December 31, 1997 and 1996, respectively.
Property, Plant and Equipment -- Property, plant and equipment is carried
at cost and is depreciated using the straight-line method. The average estimated
lives utilized in calculating depreciation are as follows: buildings - 25 years;
and machinery and equipment -two to ten years.
Deferred Financing Costs -- The Company capitalizes loan origination fees
and other costs incurred arranging long-term financing. These costs are
amortized over the respective lives of the obligations using the effective
interest method.
F-9
<PAGE> 117
THERMADYNE HOLDINGS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Intangibles -- The excess of costs over the net tangible assets of
businesses acquired consists of assembled work forces, customer and distributor
relationships, patented and unpatented technology, and goodwill. In conjunction
with the 1993 financial reorganization of the Company, assets and liabilities
were revalued as of February 1, 1994. The assets were stated at their
reorganization value which is defined as the fair value of the reorganized
company (see Note 7). The portion of the reorganization value not attributable
to specific assets was amortized over a three-year period. Identified intangible
assets are amortized on a straight-line basis over the various estimated useful
lives of such assets, which generally range from three to 25 years. Goodwill
related to acquisitions subsequent to the financial reorganization is amortized
over 40 years.
Income Taxes -- The Company accounts for income taxes using the liability
method required by Statement of Financial Accounting Standards No. 109,
"Accounting for Income Taxes." Under the liability method, deferred tax assets
and liabilities are recognized for the estimated future tax consequences
attributable to temporary differences between the carrying value of assets and
liabilities for financial reporting purposes and their tax bases and
carryforward items. The measurement of current and deferred tax assets and
liabilities is based on provisions of the enacted tax law; the effects of future
changes in tax laws or rates are not anticipated. The measurement of deferred
tax assets is reduced, if necessary, by the amount of any tax benefits that,
based on available evidence, are not expected to be realized.
Revenue Recognition -- Revenue from the sale of cutting and welding
products is recognized upon shipment to the customer. Costs and related expenses
to manufacture cutting and welding products are recorded as cost of sales when
the related revenue is recognized.
Earnings Per Share -- In 1997, the Financial Accounting Standards Board
issued Statement No. 128, "Earnings per Share" ("FASB 128"). FASB 128 replaced
the calculation of primary and fully diluted earnings per share with basic and
diluted earnings per share. Unlike primary earnings per share, basic earnings
per share excludes any dilutive effects of options, warrants and convertible
securities. Diluted earnings per share is very similar to the previously
reported fully diluted earnings per share. All earnings per share amounts for
all periods have been presented to conform to the Statement 128 requirements.
The effects of options, warrants and convertible securities have not been
considered for the years ended December 31, 1996 and 1995 because the result
would be antidilutive. All exchange arrangements contemplated by the Company's
1994 financial restructuring are assumed to have been completed.
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31, YEAR ENDED DECEMBER 31,
------------------------- ---------------------------------------
1998 1997 1997 1996 1995
----------- ----------- ----------- ----------- -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
Basic earnings per share
amounts:
Income (loss) from continuing
operations before
extraordinary item......... $ 0.52 $ 0.36 $ 1.36 $ (5.83) $ (12.97)
Discontinued operations....... -- 0.09 1.73 0.28 (2.84)
----------- ----------- ----------- ----------- -----------
Income (loss) before
extraordinary item......... 0.52 0.45 3.09 (5.55) (15.81)
Extraordinary item -- loss on
early extinguishment of
long-term debt............. -- -- -- (0.34) --
----------- ----------- ----------- ----------- -----------
Net income (loss)............. $ 0.52 $ 0.45 $ 3.09 $ (5.89) $ (15.81)
=========== =========== =========== =========== ===========
</TABLE>
F-10
<PAGE> 118
THERMADYNE HOLDINGS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31, YEAR ENDED DECEMBER 31,
------------------------- ---------------------------------------
1998 1997 1997 1996 1995
----------- ----------- ----------- ----------- -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
Diluted earnings per share
amounts:
Income (loss) from continuing
operations before
extraordinary item......... $ 0.50 $ 0.35 $ 1.33 $ (5.83) $ (12.97)
Discontinued operations....... -- 0.09 1.68 0.28 (2.84)
----------- ----------- ----------- ----------- -----------
Income (loss) before
extraordinary item......... 0.50 0.44 3.01 (5.55) (15.81)
Extraordinary item -- loss on
early extinguishment of
long-term debt............. -- -- -- (0.34) --
----------- ----------- ----------- ----------- -----------
Net income (loss)............. $ 0.50 $ 0.44 $ 3.01 $ (5.89) $ (15.81)
=========== =========== =========== =========== ===========
Weighted average shares -- basic
earnings per share............ 11,208,536 11,028,126 11,072,088 10,797,261 10,168,817
Effect of dilutive securities:
Employee stock options........ 328,064 287,571 296,109 -- --
----------- ----------- ----------- ----------- -----------
Weighted average
shares -- diluted earnings per
share......................... 11,536,600 11,315,697 11,368,197 10,797,261 10,168,817
=========== =========== =========== =========== ===========
</TABLE>
Stock Based Compensation -- The Company grants stock options for a fixed
number of shares to employees with an exercise price equal to the fair value of
the shares at the date of grant, and also through its Employee Stock Purchase
Plan enables substantially all employees to purchase shares of common stock at a
purchase price of 85% of the fair market value at specified dates. The Company
accounts for these stock option grants in accordance with Accounting Principles
Board Opinion No. 25 -- "Accounting for Stock Issued to Employees" ("APB 25"),
and, accordingly, recognizes no compensation expense for the stock option
grants.
Statement of Cash Flows -- For purposes of the statement of cash flows,
Thermadyne considers all highly liquid investments purchased with a maturity of
three months or less to be cash equivalents. The carrying value of cash and cash
equivalents approximates fair value because of the short maturity of these
investments.
The following table shows the interest and taxes paid during the periods
presented in the accompanying Consolidated Statements of Cash Flows:
<TABLE>
<CAPTION>
THREE MONTHS
ENDED
THREE MONTHS ENDED
ENDED MARCH 31, YEAR ENDED YEAR ENDED YEAR ENDED
MARCH 31, 1998 1997 DECEMBER 31, 1997 DECEMBER 31, 1996 DECEMBER 31, 1995
-------------- -------------- ----------------- ----------------- -----------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
Interest............. $3,538 $4,561 $48,683 $48,581 $46,148
Taxes................ (624) 3,801 12,276 11,409 8,527
</TABLE>
Foreign Currency Translation -- Local currencies have been designated as
the functional currencies for all subsidiaries. Accordingly, assets and
liabilities of foreign subsidiaries are translated at the rates of exchange at
the balance sheet date. Income and expense items of these subsidiaries are
translated at average monthly rates of exchange. The resultant translation gains
or losses are included in the component of shareholders' equity designated
"Foreign currency translation." The Company's foreign operations are discussed
in Note 13.
F-11
<PAGE> 119
THERMADYNE HOLDINGS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Recent Accounting Pronouncements -- As of January 1, 1998, the Company
adopted Statement 130, Reporting Comprehensive Income. Statement 130 establishes
new rules for the reporting and display of comprehensive income and its
components; however, the adoption of this Statement had no impact on the
Company's net income or shareholders' equity. Statement 130 requires foreign
currency translation adjustments, which prior to adoption were reported
separately in shareholders' equity, to be included in other comprehensive
income. Prior year financial statements have been reclassified to conform to the
requirements of Statement 130.
In June 1997, the FASB issued Statement No. 131, "Disclosures about
Segments of an Enterprise and Related Information" ("FASB 131"), which requires
publicly-held companies to report financial and descriptive information about
its operating segments in financial statements issued to shareholders for
interim and annual periods. The statement also requires additional disclosures
with respect to products and services, geographical areas of operations, and
major customers. FASB 131 is effective for fiscal years beginning after December
15, 1997 and requires restatement of earlier periods presented.
4. ACCOUNTS RECEIVABLE
The Company has entered into a trade accounts receivable securitization
agreement whereby it will sell on an ongoing basis, through December 28, 1999,
participation interests in up to $50,000 of designated accounts receivable. The
amount of participation interests sold under this financing arrangement is
subject to change based on the level of eligible receivables and restrictions on
concentrations of receivables, and was approximately $28,305 and $22,629 at
December 31, 1997 and 1996, respectively. The sold accounts receivable are
reflected as a reduction of accounts receivable on the Consolidated Balance
Sheets. Interest expense is incurred on participation interests at the rate of
one-month LIBOR plus 50 basis points, per annum (approximately 6.48% at December
31, 1997). The fair value of accounts receivable approximates the carrying
value.
During the year ended December 31, 1997, the Company adopted FASB Statement
No. 125, "Accounting for Transfers and Servicing of Financial Assets and
Extinguishments of Liabilities" ("FASB 125"). FASB 125 is required to be applied
to transfers of assets occurring after January 1, 1997. The effect of adopting
FASB 125 was immaterial.
5. INVENTORIES
The composition of inventories is as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
MARCH 31, ------------------
1998 1997 1996
----------- -------- -------
(UNAUDITED)
<S> <C> <C> <C>
Raw materials......................................... $ 20,612 $ 19,903 $14,128
Work-in-process....................................... 25,874 30,743 21,248
Finished goods........................................ 73,240 56,087 46,519
LIFO reserve.......................................... (760) (1,598) (2,353)
-------- -------- -------
$118,966 $105,135 $79,542
======== ======== =======
</TABLE>
F-12
<PAGE> 120
THERMADYNE HOLDINGS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
6. PROPERTY, PLANT AND EQUIPMENT
The composition of property, plant and equipment at December 31 is as
follows:
<TABLE>
<CAPTION>
1997 1996
-------- --------
<S> <C> <C>
Land........................................................ $ 14,071 $ 16,320
Building.................................................... 33,748 22,048
Machinery and equipment..................................... 68,008 59,749
Less: accumulated depreciation.............................. (30,570) (22,493)
-------- --------
$ 85,257 $ 75,624
======== ========
</TABLE>
Assets recorded under capitalized leases were $17,663 ($14,432 net of
accumulated depreciation) and $17,688 ($15,145 net of accumulated depreciation)
at December 31, 1997 and 1996, respectively.
7. INTANGIBLES
The composition of intangibles at December 31 is as follows:
<TABLE>
<CAPTION>
1997 1996
------- --------
<S> <C> <C>
Goodwill.................................................... $39,532 $ 36,322
Patented and unpatented technology.......................... 279 17,311
Customer and distributor relationships...................... -- 18,182
Other....................................................... 2,759 9,958
------- --------
42,570 81,773
Less: accumulated amortization.............................. (8,600) (19,128)
------- --------
$33,970 $ 62,645
======= ========
</TABLE>
Prior to 1995, the Company assessed the recoverability of its identifiable
intangible assets primarily based on its current and anticipated future
undiscounted cash flows, which included disbursements for interest expense. In
the fourth quarter of 1995, the Company early adopted Financial Accounting
Standards Board Statement No. 121, "Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to be Disposed Of," ("FASB 121") and
consequently revalued amounts capitalized for customer and distributor
relationships and for patented and unpatented technology given recent
fundamental changes in its core businesses. Based on this revaluation, the
Company determined that assets with a carrying amount of $67,923 were impaired
and wrote them down by $32,972 to their estimated fair value. Fair value was
based on the estimated future cash flows to be generated by these assets,
discounted at a market rate of interest. The writedown is included in the
amortization of other intangibles line item on the Consolidated Statements of
Operations. In the fourth quarter of 1996, the carrying value of intangible
assets recorded in connection with the Company's financial reorganization was
reduced by approximately $2,400 resulting from the initial recognition of the
Company's net deferred tax asset. The carrying value of these intangibles was
further reduced during 1997 by approximately $26,000 upon the recognition of net
operating loss carryforward benefits and the sale of the Wear Resistance
business.
F-13
<PAGE> 121
THERMADYNE HOLDINGS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
8. LONG-TERM OBLIGATIONS
The composition of long-term obligations at December 31 is as follows:
<TABLE>
<CAPTION>
1997 1996
-------- --------
<S> <C> <C>
Domestic credit agreement................................... $ 41,500 $101,000
Australian credit agreement................................. 18,057 22,666
Senior notes, due May 1, 2002, 10.25% interest payable
semiannually on May 1 and November 1...................... 99,288 99,288
Subordinated notes, due November 1, 2003, 10.75% interest
payable semiannually on May 1 and November 1.............. 179,321 179,321
Capital leases.............................................. 17,630 17,405
Other....................................................... 2,291 1,660
-------- --------
358,087 421,340
Less: Current maturities.................................... (4,912) (4,205)
-------- --------
$353,175 $417,135
======== ========
</TABLE>
At December 31, 1997, the schedule of principal payments on long-term debt,
excluding capital lease obligations, is as follows:
<TABLE>
<S> <C>
1998........................................................ $ 4,708
1999........................................................ 2,705
2000........................................................ 2,685
2001........................................................ 41,544
2002........................................................ 99,300
Thereafter.................................................. 189,515
</TABLE>
On June 25, 1996 the Company amended and restated its domestic credit
agreement (the "Domestic Facility") to a $250,000 revolving credit and letters
of credit facility with a consortium of 22 banks. The term is five years and the
banks' commitment reduces by $25,000 at the end of year three and by an
additional $75,000 at the end of year four. At the Company's option, interest
accrues at (i) the prime rate plus an applicable margin in the range of
0.5% -- 1.25% or, (ii) LIBOR plus an applicable margin in the range of
1.5% -- 2.25%. The applicable margin percentage is dependent upon the Company
meeting certain financial conditions. At December 31, 1997 the prime rate was
8.5%. The facility contains financial covenants which, among other things,
require the Company to maintain certain financial ratios and restrict the
Company's ability to incur indebtedness, make capital expenditures, and pay
dividends. The facility is secured by the capital stock, personal and real
property of the Company and a significant portion of its subsidiaries' capital
stock and personal and real property. At December 31, 1997 the Company had
$10,349 of standby letters of credit outstanding under its Domestic Facility.
Unused borrowing capacity under the Domestic Facility was $198,151.
The Australian credit agreement (the "Australian Facility") is denominated
in Australian dollars ("A$") and expires on December 31, 2000. The Australian
Facility consists of an A$15,000 term commitment and an A$22,000 revolving
credit commitment. The Australian Facility bears interest at the Bank Bill Rate
(as defined) plus a margin of 1.5% for the term commitment and 0.75% for the
revolving credit commitment. At December 31, 1997 the Company's average
applicable Bank Bill Rate (as defined) was 4.987%. Interest payment dates vary
depending on the funding period selected by the Company. Total mandatory
principal reductions under the term commitment for the remainder of its term are
as follows: 1998 -- A$3,000; 1999 -- A$4,000; and 2000 -- A$4,000. The facility
requires the Company's Australian subsidiary to comply with various financial
covenants. The facility is secured by personal and real property of
F-14
<PAGE> 122
THERMADYNE HOLDINGS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
the Company's Australian subsidiary. At December 31, 1997 the Company had A$383
of letters of credit outstanding under the Australian Facility. Unused borrowing
capacity under the Australian Facility was A$1,500.
The indentures governing the senior notes and the subordinated notes
restrict, subject to certain exceptions, the Company and its subsidiaries from
incurring additional debt, paying dividends or making other distributions on or
redeeming or repurchasing capital stock, making investments, loans or advances,
disposing of assets, creating liens on assets and engaging in transactions with
affiliates.
The estimated fair value amounts of the Company's long-term obligations
have been determined by the Company using available market information and
appropriate valuation methodologies. Considerable judgment is required to
develop the estimates of fair value; thus, the estimates provided herein are not
necessarily indicative of the amounts that could be realized in a current market
exchange. The use of different market assumptions or valuation methodologies may
have a material effect on the estimated fair value amounts. The fair value of
the senior notes and the subordinated notes was based on the most recent market
information available, and is estimated to be 104.25% and 107.0% of their
current carrying values at December 31, 1997, or $103,508 and $191,873,
respectively. The fair values of the credit agreement and the Company's other
long-term obligations are estimated at their current carrying values since these
obligations are fully secured and have varying interest charges based on current
market rates.
9. STOCK OPTIONS
The Company has elected to follow APB 25 and related Interpretations in
accounting for its employee stock options because, as discussed below, the
alternative fair value accounting provided for under Financial Accounting
Standards Board Statement No. 123, "Accounting for Stock-Based Compensation"
("FASB 123"), requires use of option valuation models that were not developed
for use in valuing employee stock options. Under APB 25, because the exercise
price of the Company's employee stock options equals the market price of the
underlying stock on the date of grant, no compensation expense is recognized.
Pro forma information regarding net income and earnings per share is
required by FASB 123, which also requires that the information be determined as
if the Company has accounted for its employee stock options granted subsequent
to December 31, 1994 under the fair value method of that statement. The fair
value for these options was estimated at the date of grant using a Black-Scholes
option pricing model with the following weighted-average assumptions for 1997,
1996 and 1995, respectively: risk-free interest rates of 6.1%, 5.5% and 6.4%; a
dividend yield of 0.0% for each year presented; volatility factors of the
expected market price of the Company's common stock of 0.38, 0.39 and 0.42; and
a weighted-average expected life of the options of six years for each year
presented.
The Black-Scholes option valuation model was developed for use in
estimating the fair value of traded options which have no vesting restrictions
and are fully transferable. In addition, option valuation models require the
input of highly subjective assumptions including the expected stock price
volatility. Because the Company's employee stock options have characteristics
significantly different from those of traded options, and because changes in the
subjective input assumptions can materially affect the fair value estimate, in
management's opinion, the existing models do not necessarily provide a reliable
single measure of the fair value of its employee stock options.
F-15
<PAGE> 123
THERMADYNE HOLDINGS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
For purposes of pro forma disclosures, the estimated fair value of the
options is amortized to expense over the options' vesting period. The Company's
pro forma information follows:
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31,
1997 1996 1995
------------ ------------ ------------
<S> <C> <C> <C>
Pro forma net income (loss).................. $32,239 $(64,574) $(161,588)
Pro forma net income (loss) per share:
Basic...................................... 2.91 (5.98) (15.89)
Diluted.................................... 2.84 (5.98) (15.89)
</TABLE>
Because FASB 123 is applicable only to options granted subsequent to
December 31, 1994, its pro forma effect will not be fully reflected until future
periods.
The Company has three option plans for the grant of options to its
employees and directors. The 1993 Management Option Plan (the "1993 Management
Plan") provides for the grant of options to acquire up to 1,428,570 shares of
common stock to key officers and employees of the Company or its affiliates.
Grants under the 1993 Management Plan are exercisable in installments ranging
from immediately on the date of grant to not later than five years from the date
of grant. The Non-Employee Directors Plan (the "1995 Directors Plan") provides
for the grant of options to acquire up to 50,000 shares of common stock to
non-employee directors of the Company. Grants under the 1995 Directors Plan vest
immediately on the date of grant. The 1996 Employee Stock Option Plan (the "1996
Employee Plan") initially provided for the grant of options to acquire up to
300,000 shares of common stock to employees of the Company. This plan was
amended in 1996 to provide for the grant of options to acquire up to an
additional 500,000 shares of common stock. Grants under the 1996 Employee Plan
vest ratably over five years. All options granted under the three plans
described above are non-qualified stock options granted at 100% of the fair
market value on the grant dates.
Information regarding stock options is summarized as follows:
<TABLE>
<CAPTION>
1997 1996 1995
--------------------- -------------------- ---------------------
WEIGHTED- WEIGHTED- WEIGHTED-
AVERAGE AVERAGE AVERAGE
EXERCISE EXERCISE EXERCISE
OPTIONS PRICE OPTIONS PRICE OPTIONS PRICE
--------- --------- -------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Outstanding -- beginning of
year............................ 963,055 $14.27 913,000 $12.30 1,275,142 $12.00
Granted........................... 217,200 27.00 340,000 17.85 203,000 13.39
Exercised......................... (87,255) 12.38 (169,054) 12.01 (452,840) 12.00
Forfeited......................... (31,783) 18.32 (120,891) 12.62 (112,302) 12.10
--------- -------- ---------
Outstanding -- end of year........ 1,061,217 16.91 963,055 14.27 913,000 12.30
========= ======== =========
Exercisable at end of year:
1993 Management Plan............ 430,399 359,329 262,666
1995 Directors Plan............. 23,000 24,000 --
1996 Employee Plan.............. 39,355 -- --
Reserved for future grants:
1993 Management Plan............ 15,704 70,621 82,730
1995 Directors Plan............. 22,000 26,000 30,000
1996 Employee Plan.............. 470,500 97,000 300,000
Weighted-average fair value of
options granted during.......... $ 13.14 $ 8.49 $ 6.88
</TABLE>
F-16
<PAGE> 124
THERMADYNE HOLDINGS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
10. LEASES
Future minimum lease payments related to continuing operations under leases
with initial or remaining noncancelable lease terms in excess of one year at
December 31, 1997 are as follows:
<TABLE>
<CAPTION>
CAPITAL OPERATING
LEASES LEASES
-------- ---------
<S> <C> <C>
1998........................................................ $ 3,470 $ 8,855
1999........................................................ 3,644 8,209
2000........................................................ 3,627 7,131
2001........................................................ 3,614 5,955
2002........................................................ 3,608 4,725
Thereafter.................................................. 49,735 31,111
--------
Total minimum lease payments................................ 67,698
Less: amount representing interest.......................... (50,068)
--------
Present value of net minimum lease payments, including
current obligations of $204............................... $ 17,630
========
</TABLE>
Rent expense under operating leases from continuing operations amounted to
$9,358, $7,562 and $6,559 for the years ended December 31, 1997, 1996 and 1995,
respectively.
11. INCOME TAXES
Pre-tax income (losses) from continuing operations were taxed under the
following jurisdictions:
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, 1997 DECEMBER 31, 1996 DECEMBER 31, 1995
----------------- ----------------- -----------------
<S> <C> <C> <C>
Domestic.............................. $31,104 $(69,694) $(123,954)
Foreign............................... (2,560) 6,221 624
------- -------- ---------
Income (loss) before income
taxes..................... $28,544 $(63,473) $(123,330)
======= ======== =========
</TABLE>
The provision (benefit) for income taxes charged to continuing operations
is as follows:
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, 1997 DECEMBER 31, 1996 DECEMBER 31, 1995
----------------- ----------------- -----------------
<S> <C> <C> <C>
Current:
Federal............................. $11,014 $ 8,091 $6,010
Foreign............................. 1,064 1,785 1,147
State and local..................... 927 1,050 1,361
------- -------- ------
Total current............... 13,005 10,926 8,518
------- -------- ------
Deferred.............................. 470 (11,460) --
------- -------- ------
$13,475 $ (534) $8,518
======= ======== ======
</TABLE>
F-17
<PAGE> 125
THERMADYNE HOLDINGS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The composition of deferred tax assets and liabilities attributable to
continuing operations at December 31 is as follows:
<TABLE>
<CAPTION>
1997 1996
------- -------
<S> <C> <C>
Deferred tax assets:
Post-employment benefits.................................. $ 9,214 $ 8,915
Accrued liabilities....................................... 3,316 5,054
Intangibles............................................... 14,408 6,025
Other..................................................... -- 476
Fixed assets.............................................. 6,992 --
Net operating loss carryforwards.......................... 29,761 31,504
------- -------
Total deferred tax assets......................... 63,691 51,974
Valuation allowance for deferred tax assets............... (22,731) (24,474)
------- -------
Net deferred tax assets........................... 40,960 27,500
------- -------
Deferred tax liabilities:
Inventories............................................... 4,562 4,923
Other..................................................... 846 --
Property, plant and equipment............................. -- 695
------- -------
Total deferred tax liabilities.................... 5,408 5,618
------- -------
Net deferred tax asset............................ $35,552 $21,882
======= =======
</TABLE>
The provision (benefit) for income taxes differs from the amount of income
tax determined by applying the applicable U.S. statutory federal income tax rate
to pretax income from continuing operations as a result of the following
differences:
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, 1997 DECEMBER 31, 1996 DECEMBER 31, 1995
----------------- ----------------- -----------------
<S> <C> <C> <C>
Tax at U.S. statutory rates....... $ 9,991 $(22,216) $(43,166)
Nondeductible goodwill
amortization and other
nondeductible expenses.......... 2,048 28,877 37,500
Change in valuation allowance,
recognition of net operating
loss carryforward benefits and
other........................... -- 6,318 12,370
Foreign tax rate differences and
recognition of foreign tax loss
benefits........................ 833 (393) 929
State income taxes, net of federal
tax benefit..................... 603 683 885
Initial recognition of net
deferred tax asset.............. -- (13,803) --
------- -------- --------
$13,475 $ (534) $ 8,518
======= ======== ========
</TABLE>
In the fourth quarter of 1996, the Company re-evaluated the realizability
of the net deferred tax asset. As a result, a net deferred tax asset of
approximately $22,000 was recorded on December 31, 1996. Of the total amount
recorded, approximately $8,000 was reported as an adjustment to the carrying
value of goodwill and other intangible assets. The balance was reported as a
reduction to income tax expense. A portion of the net adjustment for deferred
taxes has been allocated to discontinued operations. The valuation allowance
relates to
F-18
<PAGE> 126
THERMADYNE HOLDINGS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
net operating loss carryforwards existing on February 1, 1994, the effective
date of the Company's financial reorganization.
At December 31, 1997, the Company had net operating loss carryforwards of
approximately $85,000 for U.S. income tax purposes that begin to expire in the
year 2001. The consummation of the financial reorganization resulted in an
ownership change under Section 382 of the Internal Revenue Code. As a result,
the Company's utilization of these losses to offset future U.S. taxable income
is limited to approximately $7,000 per year. Pursuant to the requirements of the
American Institute of Certified Public Accountants Statement of Position No.
90-7, entitled "Financial Entities in Reorganization Under the Bankruptcy Code",
to the extent net operating losses that existed on the effective date of the
Company's financial reorganization are recognized, the resulting tax benefit
will be reported as a direct addition to paid-in capital.
The Company's foreign subsidiaries have undistributed earnings at December
31, 1997. Those earnings are considered to be indefinitely reinvested and,
accordingly, no provision for U.S. federal and state income taxes has been
provided thereon. Upon distribution of those earnings in the form of dividends
or otherwise, the Company would be subject to both U.S. income taxes (subject to
an adjustment for foreign tax credits) and withholding taxes payable to the
various foreign countries. Determination of the amount of unrecognized deferred
U.S. income tax liability is not practicable because of the complexities
associated with its hypothetical calculation.
12. EMPLOYEE BENEFIT PLANS
401(k) Retirement Plan -- The 401(k) Retirement Plan covers the majority of
the Company's domestic employees. The Company, at its discretion, can make a
base contribution of 1% of each employee's compensation and an additional
contribution equal to as much as 4% of the employee's compensation. At the
employee's discretion, an additional 1% to 15% voluntary employee contribution
can be made. The plan requires the Company to make a matching contribution of
50% of the first 6% of the voluntary employee contribution. Total expense for
this plan related to continuing operations was approximately $2,628, $2,585, and
$1,897 for the years ended December 31, 1997, 1996 and 1995, respectively.
Employee Stock Purchase Plan -- The Employee Stock Purchase Plan enables
substantially all employees of the Company to purchase shares of common stock at
a purchase price of 85% of the fair market value at specified dates. For plan
year 1997, the plan was amended to change the plan year to a calendar year
basis. For the plan year ended December 31, 1997, 1,098 employee participants
purchased 82,085 shares at an aggregate purchase price of $1,989. For the plan
year ended October 31, 1996, 1,090 employee participants purchased 145,584
shares at an aggregate purchase price of $2,119. In the initial plan year ended
October 31, 1995, 1,502 employee participants purchased 252,925 shares at an
aggregate purchase price of $2,327. A maximum of 1,000,000 shares is authorized
for purchase under the plan.
Other Postretirement Benefits -- The Company has several retirement plans
covering both salaried and nonsalaried retired employees, which provide
postretirement health care benefits (medical and dental) and life insurance
benefits. The postretirement health care plan is contributory, with retiree
contributions adjusted annually as determined by the Company based on claim
costs. The postretirement life insurance plan is noncontributory. The Company
recognizes the cost of postretirement benefits on the accrual basis as employees
render service to earn the benefit. The Company continues to fund the cost of
health care and life insurance benefits in the year incurred.
F-19
<PAGE> 127
THERMADYNE HOLDINGS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The postretirement benefit plans' combined benefit obligations related to
continuing operations at December 31 are as follows:
<TABLE>
<CAPTION>
1997 1996
------- -------
<S> <C> <C>
Accumulated postretirement benefit obligations:
Retirees and surviving beneficiaries...................... $ 3,838 $ 5,156
Active employees eligible to retire....................... 720 1,420
Active employees not yet eligible to retire............... 7,452 9,411
Unrecognized gain......................................... 9,428 6,237
Unrecognized prior service cost........................... 1,927 64
------- -------
Unfunded accumulated postretirement benefit obligation and
accrued postretirement benefit cost.................... $23,365 $22,288
======= =======
</TABLE>
Net periodic postretirement benefit cost from continuing operations
included the following components:
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31,
1997 1996 1995
------------ ------------ ------------
<S> <C> <C> <C>
Service cost-benefits attributed to service
during the period............................. $1,255 $1,365 $1,161
Interest cost on accumulated postretirement
benefit obligation............................ 1,496 1,564 1,094
Loss (gain) from past experience different from
that assumed and changes in assumptions....... (1) (198) (131)
------ ------ ------
Net periodic postretirement benefit cost........ $2,750 $2,731 $2,124
====== ====== ======
</TABLE>
In addition, for actuarial measurements purposes, the following assumptions
and methods were used: annual discount rate of 7% (7% at January 1, 1997),
medical claim cost trends with annual increases starting at 10.5% in 1996 and
decreasing incrementally to 6% in 2011 and thereafter. The medical cost trend
rate assumption has a significant effect on the amounts reported. To illustrate,
increasing the medical cost trend rate by 1% in each year would increase the
accumulated postretirement benefit obligation as of December 31, 1997 by
approximately $1,900 and the aggregate of the service and interest cost
components of net periodic postretirement benefit cost for the year ended
December 31, 1997, by approximately $307. The Company uses the amortization
method for recording gains or losses resulting from past experience different
from that assumed and changes in assumptions.
F-20
<PAGE> 128
THERMADYNE HOLDINGS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Pension Plans -- The Company's subsidiaries have had various
noncontributory defined benefit pension plans which covered substantially all
U.S. employees. The Company froze its three noncontributory defined benefit
pension plans through amendments to such plans effective December 31, 1989. All
former participants of these plans became eligible to participate in the 401(k)
Retirement Plan effective January 1, 1990. The following table sets forth the
funded status of the defined benefit plans and the amounts recognized in the
Company's consolidated financial statements:
Actuarial present value of benefit obligations at December 31:
<TABLE>
<CAPTION>
1997 1996
------- -------
<S> <C> <C>
Vested benefit obligation................................... $13,911 $13,476
Accumulated benefit obligation.............................. 14,356 13,975
Projected benefit obligation................................ 14,356 13,975
Plan assets at fair value................................... 12,126 11,667
------- -------
Projected benefit obligation in excess of plan
assets............................................... (2,230) (2,308)
Unrecognized net loss....................................... (54) 358
Unrecognized prior service cost............................. 122 145
Unrecognized net obligation at transition................... 2 5
Adjustment required to recognize minimum liability.......... -- (508)
------- -------
Accrued pension cost................................... $(2,160) $(2,308)
======= =======
</TABLE>
Pension cost related to the defined benefit plans included the following
components:
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, 1997 DECEMBER 31, 1996 DECEMBER 31, 1996
----------------- ----------------- -----------------
<S> <C> <C> <C>
Service cost-benefits earned during the
period............................... $ -- $ -- $ --
Interest cost on projected benefit
obligation........................... 954 930 930
Actual return on plan assets........... (977) (1,135) (1,025)
Net amortization and deferral.......... 93 369 313
----- ------- -------
Net pension expense.................... $ 70 $ 164 $ 218
===== ======= =======
</TABLE>
The weighted average discount rate used in determining the actuarial
present value of the projected benefit obligations ranged from 7% to 8%. The
assumed rate of increase in future compensation levels used in determining the
actuarial present value of the projected benefit obligations was 0%. The
expected long-term rate of return on assets ranged from 7% to 8%. Plan assets
consist principally of marketable equity securities and restricted and
unrestricted debt securities. The Company's funding policy is to contribute
annually an amount equal to meet the minimum funding standards of the Employee
Retirement Income Security Act of 1974 as determined by the plans' actuary.
F-21
<PAGE> 129
THERMADYNE HOLDINGS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
13. FOREIGN OPERATIONS
The Company's continuing operations are primarily in the United States,
Australia/Asia, Canada and Europe. Sales among geographic areas have been
eliminated in consolidation. Financial data by geographic area is as follows:
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31,
1997 1996 1995
------------ ------------ ------------
<S> <C> <C> <C>
Net sales:
United States............................... $333,871 $293,549 $273,106
Australia/Asia.............................. 109,984 105,337 4,989
Other foreign operations.................... 76,585 40,858 38,683
-------- -------- --------
$520,440 $439,744 $316,778
======== ======== ========
Sales from United States to foreign
operations.................................. $ 35,576 $ 30,932 $ 22,518
======== ======== ========
Export sales from United States............... $ 33,668 $ 25,402 $ 23,782
======== ======== ========
Operating income (loss):
United States............................... $ 71,639 $(22,899) $(80,103)
Australia/Asia.............................. 2,304 5,689 143
Other foreign operations.................... 4,564 3,071 2,656
$ 78,507 $(14,139) $(77,304)
======== ======== ========
Identifiable assets:
United States............................... $194,216 $189,153 $280,146
Australia/Asia.............................. 102,342 113,588 4,314
Other foreign operations.................... 57,969 21,209 59,077
Discontinued operations..................... -- 29,455 72,829
-------- -------- --------
$354,527 $353,405 $416,366
======== ======== ========
</TABLE>
14. CONTINGENCIES
Thermadyne and certain of its wholly owned subsidiaries are defendants in
various legal actions, primarily in the products liability area. While there is
uncertainty relating to any litigation, management is of the opinion that the
outcome of such litigation will not have a material adverse effect on the
Company's financial condition or results of operations.
The Company is party to an agreement with a financial institution to sell
at face value up to a total of $25,000 of its long-term receivables. The product
line that generated these long-term receivables has been divested, and
consequently, no further sales will occur. Under the terms of this agreement,
the Company is liable for a total of 20% of the aggregate receivables sold and
this liability approximates $4,000. The Company has further retained collection
and administrative responsibilities on behalf of the financial institution. The
Company has a secured interest in the inventory sold under these long-term
receivables which has been assigned to the financial institution. At December
31, 1997, approximately $3,666 in contracts subject to this agreement are
outstanding. Management believes the allowance for doubtful accounts at December
31, 1997 will be adequate for all uncollectible receivables.
F-22
<PAGE> 130
THERMADYNE HOLDINGS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
15. SUPPLEMENTARY UNAUDITED QUARTERLY DATA
<TABLE>
<CAPTION>
FIRST SECOND THIRD FOURTH
QUARTER QUARTER QUARTER QUARTER TOTAL
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Year ended December 31, 1997:
Net sales............................ $117,751 $135,175 $131,902 $135,612 $520,440
Gross profit......................... 47,409 52,630 51,007 49,274 200,320
Income from continuing operations.... 3,932 5,581 4,045 1,511 15,069
Net income (loss).................... 4,968 6,783 22,995 (489) 34,257
Basic per share amounts:
Income from continuing
operations...................... 0.36 0.50 0.36 0.14 1.36
Net income (loss)................. 0.45 0.61 2.07 (0.04) 3.09
Diluted per share amounts:
Income from continuing
operations...................... 0.35 0.49 0.35 0.13 1.33
Net income (loss)................. 0.44 0.60 2.02 (0.04) 3.01
Year ended December 31, 1996:
Net sales............................ $102,233 $116,120 $110,820 $110,571 $439,744
Gross profit......................... 42,604 47,236 45,478 44,591 179,909
Loss from continuing operations...... (20,667) (20,657) (17,152) (4,463) (62,939)
Net loss............................. (21,867) (16,386) (19,616) (5,768)(1) (63,637)
Basic per share amounts:
Loss from continuing operations... (1.93) (1.92) (1.59) (0.41) (5.83)
Net loss.......................... (2.04) (1.53) (1.82) (0.53) (5.89)
Diluted per share amounts:
Loss from continuing operations... (1.93) (1.92) (1.59) (0.41) (5.83)
Net loss.......................... (2.04) (1.53) (1.82) (0.53) (5.89)
</TABLE>
- ---------------
(1) Reflects recognition of net deferred tax assets (see Note 11).
F-23
<PAGE> 131
======================================================
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS, AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT
BE RELIED UPON AS HAVING BEEN AUTHORIZED. THIS PROSPECTUS DOES NOT CONSTITUTE AN
OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OTHER THAN
THE SECURITIES TO WHICH IT RELATES OR ANY OFFER TO SELL OR THE SOLICITATION OF
AN OFFER TO BUY SUCH SECURITIES IN ANY CIRCUMSTANCES IN WHICH SUCH OFFER OR
SOLICITATION IS UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY OFFER
OR SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE AN IMPLICATION
THAT THERE HAS BEEN NO CHANGE IN THE FACTS SET FORTH IN THIS PROSPECTUS OR IN
THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THAT THE INFORMATION
CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE.
------------------
TABLE OF CONTENTS
<TABLE>
<S> <C>
Available Information.................. 2
Summary................................ 3
Risk Factors........................... 15
Use of Proceeds........................ 21
Capitalization......................... 22
Selected Financial Data................ 23
Management's Discussion and Analysis of
Financial Condition and Results of
Operations........................... 25
Business............................... 32
The Merger and Merger Financing........ 42
Management............................. 44
Executive Compensation................. 46
Security Ownership of Certain
Beneficial Owners and Management..... 50
Certain Relationships and Related
Transactions......................... 52
The Exchange Offer..................... 53
Description of New Credit Facility..... 61
Description of Senior Subordinated
Notes................................ 62
Description of New Debentures.......... 65
Certain United States Federal Income
Tax Consequences..................... 92
Plan of Distribution................... 93
Legal Matters.......................... 93
Experts................................ 93
Unaudited Condensed Consolidated Pro
Forma Financial Data................. P-1
Index to Financial Statements.......... F-1
</TABLE>
======================================================
======================================================
OFFER TO EXCHANGE
ALL OUTSTANDING
12 1/2% SENIOR DISCOUNT DEBENTURES
DUE 2008 FOR
12 1/2% SENIOR DISCOUNT DEBENTURES
DUE 2008
THERMADYNE HOLDINGS CORPORATION
--------------------
PROSPECTUS
--------------------
JUNE , 1998
======================================================
<PAGE> 132
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
Expenses in connection with the issuance and distribution of the securities
being registered are estimated (other than with respect to the SEC registration
fee) to be as follows:
<TABLE>
<S> <C>
SEC Registration Fee........................................ $27,910.36
Printing and Engraving Expenses............................. *
Accounting Fees and Expenses................................ *
Legal Fees and Expenses..................................... *
Miscellaneous............................................... *
----------
Total............................................. $ *
==========
</TABLE>
- ---------------
* To be provided by amendment.
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the General Corporation Law of the State of Delaware (the
"DGCL") permits a corporation to indemnify any of its directors or officers who
was or is a party, or is threatened to be made a party to any third party
proceeding by reason of the fact that such person is or was a director or
officer of the corporation, against expenses (including attorney's fees),
judgments, fines and amounts paid in settlement actually and reasonably incurred
by such person in connection with such action, suit or proceeding, if such
person acted in good faith and in a manner such person reasonably believed to be
in or not opposed to the best interests of the corporation, and, with respect to
any criminal action or proceeding, had no reason to believe that such person's
conduct was unlawful. In a derivative action, i.e., one by or in the right of
the corporation, the corporation is permitted to indemnify directors and
officers against expenses (including attorneys' fees) actually and reasonably
incurred by them in connection with the defense or settlement of an action or
suit if they acted in good faith and in a manner that they reasonably believed
to be in or not opposed to the best interests of the corporation, except that no
indemnification shall be made if such person shall have been adjudged liable to
the corporation, unless and only to the extent that the court in which the
action or suit was brought shall determine upon application that the defendant
directors or officers are fairly and reasonably entitled to indemnity for such
expenses despite such adjudication of liability.
Article Eighth of the Company's Amended and Restated Certificate of
Incorporation makes mandatory indemnification expressly authorized under the
DGCL for directors of the Company. With respect to officers of the Company,
Article Eighth of the Company's Amended and Restated Certificate of
Incorporation provides indemnification to such extent and to such effect as the
Board of Directors shall determine to be appropriate and authorized by Delaware
law.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933, as amended (the "Securities Act"), may be permitted to directors,
officers and controlling persons of the Company pursuant to the foregoing
provisions, or otherwise, the Company has been advised that in the opinion of
the Securities and Exchange Commission, such indemnification is against public
policy as expressed in the Securities Act and is therefore unenforceable. In the
event that a claim for indemnification against such liabilities (other than the
payment by the Company of expenses incurred or paid by a director, officer or
controlling person thereof in the successful defense of any action, suit or
proceeding) is asserted by a director, officer or controlling person in
connection with the securities being registered, the Company will, unless in the
opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question of whether such
indemnification by it is against public policy as expressed in the Securities
Act and will be governed by the final adjudication of such issue.
II-1
<PAGE> 133
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.
In connection with the merger of Mercury Acquisition Corporation
("Mercury") with and into the Registrant, Mercury issued 2,608,696 shares of its
common stock, 2,000,000 shares of its preferred stock and warrants to purchase
353,428 shares of its common stock for approximately $140 million. As a result
of the merger, each share of common stock of Mercury became a share of common
stock of the Registrant, each share of preferred stock of Mercury became a share
of preferred stock of the Registrant and each warrant to purchase common stock
of Mercury became exercisable for an equal number of shares of common stock of
the Registrant.
On May 22, 1998, the Registrant sold $174,000,000 aggregate principal
amount at maturity of its 12 1/2% Senior Discount Debentures due 2008 (the "Old
Debentures") to Donaldson, Lufkin & Jenrette Securities Corporation (the
"Initial Purchaser") in a private placement in reliance on Section 4(2) under
the Securities Act, at a price equal to 54.374% of the stated principal amount
of such Old Debentures. The Old Debentures were immediately resold by the
Initial Purchasers in reliance on Rule 144A promulgated under the Securities
Act.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) Exhibits:
<TABLE>
<CAPTION>
EXHIBIT
NO. EXHIBIT
------- -------
<C> <S>
2.1 -- First Amended and Restated Plan of Reorganization of TDII
Company under Chapter 11 of the Bankruptcy Code,
confirmed by the United States Bankruptcy Court, District
of Delaware, on January 18, 1994.(1)
2.2 -- Agreement and Plan of Merger, dated as of January 20,
1998, between Thermadyne Holdings Corporation and Mercury
Acquisition Corporation.(2)
2.3 -- Amendment No. 1 to Agreement and Plan of Merger between
Thermadyne Holdings Corporation and Mercury Acquisition
Corporation.*
2.4 -- Certificate of Merger of Mercury Acquisition Corporation
with and into Thermadyne Holdings Corporation.*
3.1 -- Certificate of Incorporation of Thermadyne Holdings
Corporation(included in Exhibit 2.4).
3.2 -- Bylaws of Thermadyne Holdings Corporation.*
4.1 -- Indenture, dated as of May 22, 1998, between Mercury
Acquisition Corporation and IBJ Schroder Bank & Trust
Company, as Trustee.*
4.2 -- First Supplemental Indenture, dated as of May 22, 1998,
between Thermadyne Holdings Corporation and IBJ Schroder
Bank & Trust Company, as Trustee.*
4.3 -- Form of 12 1/2% Senior Discount Debenture.*
4.4 -- A/B Exchange Registration Rights Agreement dated as of
May 22, 1998, among Mercury Acquisition Corporation and
Donaldson, Lufkin & Jenrette Securities Corporation.*
4.5 -- Amendment to Registration Rights Agreement dated May 22,
1998, among Thermadyne Holdings Corporation and
Donaldson, Lufkin & Jenrette Securities Corporation.*
5.1 -- Opinion of Weil, Gotshal & Manges LLP.+
10.1 -- Omnibus Agreement, dated as of June 3, 1988, among Palco
Acquisition Company (now Thermadyne Holdings Corporation)
and its subsidiaries and National Warehouse Investment
Company.(4)
10.2 -- Escrow Agreement, dated as of August 11, 1988, among
National Warehouse Investment Company, Palco Acquisition
Company (now Thermadyne Holdings Corporation) and Title
Guaranty Escrow Services, Inc.(4)
</TABLE>
II-2
<PAGE> 134
<TABLE>
<CAPTION>
EXHIBIT
NO. EXHIBIT
------- -------
<C> <S>
10.3 -- Amended and Restated Industrial Real Property Lease dated
as of August 11, 1988, between National Warehouse
Investment Company and Tweco Products, Inc., as amended
by First Amendment to Amended and Restated Industrial
Real Property Lease dated as of January 20, 1989.(4)
10.4 -- Schedule of substantially identical lease agreements.(4)
10.5 -- Amended and Restated Continuing Lease Guaranty, made as
of August 11, 1988, by Palco Acquisition Company (now
Thermadyne Holdings Corporation) for the benefit of
National Warehouse Investment Company.(4)
10.6 -- Schedule of substantially identical lease guaranties.(4)
10.7 -- Lease Agreement, dated as of October 10, 1990, between
Stoody Deloro Stellite and Bowling Green-Warren County
Industrial Park Authority, Inc.(4)
10.8 -- Lease Agreement, dated as of February 15, 1985, as
amended, between Stoody Deloro Stellite, Inc. and
Corporate Property Associates 6.(4)
10.9 -- Receivables Purchase Agreement, dated as of December 28,
1994, among Thermadyne Receivables, Inc., as Transferor,
and NationsBank of Virginia, N.A., as Trustee.(5)
10.10 -- Purchase Agreement, dated as of August 2, 1994, between
Coyne Cylinder Company and BA Credit Corporation.(5)
10.11 -- Sublease Agreement, dated as of April 7, 1994, between
Stoody Deloro Stellite, Inc., and Swat, Inc.(5)
10.12 -- Share Sale Agreement dated as of November 18, 1995, among
certain scheduled persons and companies, Rosny Pty
Limited, Byron Holdings Limited, Thermadyne Holdings
Corporation, and Thermadyne Australia Pty Limited
relating to the sale of the Cigweld Business.(6)
10.13 -- Sublease Agreement, dated March 15, 1993, by and between
Stoody Deloro Stellite, Inc. and Lima Transportation.(7)
10.14 -- First Amendment to Standard Industrial Lease, dated June
27, 1995, by and between Stoody Deloro Stellite, Inc. and
Lima Transportation.(7)
10.15 -- Rights Agreement dated as of May 1, 1997, between
Thermadyne Holdings Corporation and BankBoston, N.A., as
Rights Agent.(8)
10.16 -- First Amendment to Rights Agreement, dated January 20,
1998, between Thermadyne Holdings Corporation and
BankBoston, N.A.(2)
10.17 -- Executive Employment Agreement dated May 22, 1998,
between Thermadyne Holdings Corporation and Randall E.
Curran.*
10.18 -- Executive Employment Agreement dated May 22, 1998,
between Thermadyne Holdings Corporation and James H.
Tate.*
10.19 -- Executive Employment Agreement dated May 22, 1998,
between Thermadyne Holdings Corporation and Stephanie N.
Josephson.*
10.20 -- Executive Employment Agreement dated May 22, 1998,
between Thermadyne Holdings Corporation and Thomas C.
Drury.*
10.21 -- Executive Employment Agreement dated May 22, 1998,
between Thermadyne Holdings Corporation and Robert D.
Maddox.*
10.22 -- Award Agreement dated May 22, 1998, between Thermadyne
Holdings Corporation and Randall E. Curran.*
10.23 -- Award Agreement dated May 22, 1998, between Thermadyne
Holdings Corporation and James H. Tate.*
10.24 -- Award Agreement dated May 22, 1998, between Thermadyne
Holdings Corporation and Stephanie N. Josephson.*
10.25 -- Award Agreement dated May 22, 1998, between Thermadyne
Holdings Corporation and Thomas C. Drury.*
</TABLE>
II-3
<PAGE> 135
<TABLE>
<CAPTION>
EXHIBIT
NO. EXHIBIT
------- -------
<C> <S>
10.26 -- Award Agreement dated May 22, 1998, between Thermadyne
Holdings Corporation and Robert D. Maddox.*
10.27 -- Thermadyne Holdings Corporation Management Incentive
Plan.*
10.28 -- Thermadyne Holdings Corporation Direct Investment Plan.*
10.29 -- Investors' Agreement dated as of May 22, 1998, between
Thermadyne Holdings Corporation, the DLJ Entities (as
defined therein) and the Management Stockholders (as
defined therein).*
10.30 -- Indenture, dated May 22, 1998, between Thermadyne Mfg.
LLC, Thermadyne Capital Corp., the guarantors named
therein and State Street Bank and Trust Company, as
Trustee.*
10.31 -- Form of 9 7/8% Senior Subordinated Note.*
10.32 -- A/B Exchange Registration Rights Agreement dated as of
May 22, 1998, between Thermadyne Mfg. LLC, Thermadyne
Capital Corp., the guarantors named therein, and
Donaldson, Lufkin & Jenrette Securities Corporation.*
10.33 -- Credit Agreement dated as of May 22, 1998, among
Thermadyne Mfg. LLC, Comweld Group Pty. Ltd., Genset
S.p.A. and Thermadyne Welding Products Canada Limited, as
Borrowers, Various Financial Institutions, as Lenders,
DLJ Capital Funding, Inc., as Syndication Agent, Societe
Generale, as Documentation Agent, and ABN Amro Bank N.V.,
as Administrative Agent.*
10.34 -- Letter Agreement dated as of January 16, 1998, between
Donaldson, Lufkin & Jenrette Securities Corporation and
DLJ Merchant Banking II, Inc.*
10.35 -- Assignment and Assumption Agreement dated as of May 22,
1998, between DLJ Merchant Banking II, Inc. and
Thermadyne Holdings Corporation.*
12.1 -- Computation of Ratio of Earnings to Fixed Charges.(9)
21.1 -- Subsidiaries of Thermadyne Holdings Corporation.*
23.1 -- Consent of Ernst & Young LLP, Independent Auditors.*
23.2 -- Consent of Weil, Gotshal & Manges LLP (included in the
opinion filed as Exhibit 5.1 to the Registration
Statement).
24.1 -- Powers of Attorney (included in the signature pages in
Part II of this Registration Statement).
99.2 -- Form of Letter of Transmittal.+
99.3 -- Form of Notice of Guaranteed Delivery.+
99.4 -- Form of Exchange Letter Agreement.+
</TABLE>
- ---------------
* Filed herewith.
+ To be filed by amendment.
(1) Incorporated by reference to the Company's Registration Statement on Form
10 (File No. 0-23378) filed under Section 12(g) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), on February 7, 1994.
(2) Incorporated by reference to the Company's Current Report on Form 8-K (File
No. 0-23378) filed under Section 12(g) of the Exchange Act on January 21,
1998.
(3) Incorporated by reference to the Company's Annual Report on Form 10-K for
the year ended December 31, 1997.
(4) Incorporated by reference to the Company's Registration Statement on Form
10/A, Amendment No. 2 (File No. 0-23378) filed under Section 12(g) of the
Exchange Act, on April 28, 1994.
(5) Incorporated by reference to the Company's Annual Report on Form 10-K for
the year ended December 31, 1994.
II-4
<PAGE> 136
(6) Incorporated by reference to the Company's Current Report on Form 8-K (File
No. 0-23378) filed under Section 12(g) of the Exchange Act on January 18,
1996.
(7) Incorporated by reference to the Company's Annual Report on Form 10-K for
the year ended December 31, 1995.
(8) Incorporated by reference to the Company's Current Report on Form 8-K (File
No. 0-23378) filed under Section 12(g) of the Exchange Act on May 12, 1997.
(9) Incorporated by reference to the Company's Registration Statement on Form
S-4 (File No. 333-46631).
(b) Financial Statement Schedules
Financial Statement Schedules of Thermadyne Holdings Corporation and
subsidiaries for the years ended December 31, 1995, 1996 and 1997:
Schedule II Valuation and Qualifying Accounts
ITEM 17. UNDERTAKINGS.
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than 20 percent change in
the maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement.
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the registration statement
or any material change to such information in the registration
statement;
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered therein, and
the offering of such securities at the time shall be deemed to be the
initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(b) See Item 14.
II-5
<PAGE> 137
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized on June 22, 1998.
THERMADYNE HOLDINGS CORPORATION
By: /s/ JAMES H. TATE
------------------------------------
James H. Tate
Senior Vice President and Chief
Financial Officer
Each person whose signature to this Registration Statement appears below
hereby appoints Randall E. Curran and James H. Tate, and each of them
individually, any one of whom may act without the joinder of the other, as his
agent and attorney-in-fact to sign on his behalf individually and in the
capacity stated below and to file all pre- and post-effective amendments to this
Registration Statement, which may make such changes and additions to this
Registration Statement as such agent and attorney-in-fact may deem necessary or
appropriate.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed below by the following persons on
behalf of the registrant and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
NAME TITLE DATE
---- ----- ----
<C> <S> <C>
/s/ RANDALL E. CURRAN Chairman of the Board, President June 22, 1998
- ----------------------------------------------------- and Chief Executive Officer
Randall E. Curran (principal executive officer)
/s/ JAMES H. TATE Director, Senior Vice President June 22, 1998
- ----------------------------------------------------- and Chief Financial Officer
James H. Tate (principal financial and
accounting officer)
/s/ PETER T. GRAUER Director June 22, 1998
- -----------------------------------------------------
Peter T. Grauer
/s/ WILLIAM F. DAWSON, JR. Director June 22, 1998
- -----------------------------------------------------
William F. Dawson, Jr.
/s/ JOHN F. FORT III Director June 22, 1998
- -----------------------------------------------------
John F. Fort III
/s/ HAROLD A. POLING Director June 22, 1998
- -----------------------------------------------------
Harold A. Poling
/s/ LAWRENCE M.V.D. SCHLOSS Director June 22, 1998
- -----------------------------------------------------
Lawrence M.v.D. Schloss
</TABLE>
II-6
<PAGE> 138
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
The Board of Directors
Thermadyne Holdings Corporation
We have audited the consolidated financial statements of Thermadyne
Holdings Corporation as of December 31, 1997 and 1996, and for each of the three
years in the period ended December 31, 1997 and have issued our report thereon
dated February 5, 1998. Our audits also included the accompanying financial
statement schedule. This schedule is the responsibility of the Company's
management. Our responsibility is to express an opinion based on our audits.
In our opinion, the financial statement schedule referred to above, when
considered in relation to the basic financial statements taken as a whole,
presents fairly in all material respects the information set forth therein.
/s/ ERNST & YOUNG LLP
Orange County, California
February 5, 1998
S-1
<PAGE> 139
SCHEDULE II
THERMADYNE HOLDINGS CORPORATION
VALUATION AND QUALIFYING ACCOUNTS
(IN THOUSANDS)
<TABLE>
<CAPTION>
COLLECTION
BALANCE AT OF PREVIOUSLY EFFECT OF BALANCE
BEGINNING WRITTEN OFF DISCONTINUED AT END
ALLOWANCE FOR DOUBTFUL ACCOUNTS OF PERIOD PROVISION WRITEOFFS ACCOUNTS OPERATIONS OF PERIOD
- ------------------------------- ---------- --------- --------- ------------- ------------ ---------
<S> <C> <C> <C> <C> <C> <C>
Year ended December 31, 1997... $1,649 $ 875 $315 $ 8 $ 0 $2,217
Year ended December 31, 1996... 1,888 975 785 57 486 1,649
Year ended December 31, 1995... 2,565 1,205 621 21 1,282 1,888
</TABLE>
S-2
<PAGE> 140
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
------- -----------
<C> <S>
2.1 -- First Amended and Restated Plan of Reorganization of TDII
Company under Chapter 11 of the Bankruptcy Code,
confirmed by the United States Bankruptcy Court, District
of Delaware, on January 18, 1994.(1)
2.2 -- Agreement and Plan of Merger, dated as of January 20,
1998, between Thermadyne Holdings Corporation and Mercury
Acquisition Corporation.(2)
2.3 -- Amendment No. 1 to Agreement and Plan of Merger between
Thermadyne Holdings Corporation and Mercury Acquisition
Corporation.*
2.4 -- Certificate of Merger of Mercury Acquisition Corporation
with and into Thermadyne Holdings Corporation.*
3.1 -- Certificate of Incorporation of Thermadyne Holdings
Corporation(included in Exhibit 2.4).
3.2 -- Bylaws of Thermadyne Holdings Corporation.*
4.1 -- Indenture, dated as of May 22, 1998, between Mercury
Acquisition Corporation and IBJ Schroder Bank & Trust
Company, as Trustee.*
4.2 -- First Supplemental Indenture, dated as of May 22, 1998,
between Thermadyne Holdings Corporation and IBJ Schroder
Bank & Trust Company, as Trustee.*
4.3 -- Form of 12 1/2% Senior Discount Debenture.*
4.4 -- A/B Exchange Registration Rights Agreement dated as of
May 22, 1998, among Mercury Acquisition Corporation and
Donaldson, Lufkin & Jenrette Securities Corporation.*
4.5 -- Amendment to Registration Rights Agreement dated May 22,
1998, among Thermadyne Holdings Corporation and
Donaldson, Lufkin & Jenrette Securities Corporation.*
5.1 -- Opinion of Weil, Gotshal & Manges LLP.+
10.1 -- Omnibus Agreement, dated as of June 3, 1988, among Palco
Acquisition Company (now Thermadyne Holdings Corporation)
and its subsidiaries and National Warehouse Investment
Company.(4)
10.2 -- Escrow Agreement, dated as of August 11, 1988, among
National Warehouse Investment Company, Palco Acquisition
Company (now Thermadyne Holdings Corporation) and Title
Guaranty Escrow Services, Inc.(4)
10.3 -- Amended and Restated Industrial Real Property Lease dated
as of August 11, 1988, between National Warehouse
Investment Company and Tweco Products, Inc., as amended
by First Amendment to Amended and Restated Industrial
Real Property Lease dated as of January 20, 1989.(4)
10.4 -- Schedule of substantially identical lease agreements.(4)
10.5 -- Amended and Restated Continuing Lease Guaranty, made as
of August 11, 1988, by Palco Acquisition Company (now
Thermadyne Holdings Corporation) for the benefit of
National Warehouse Investment Company.(4)
10.6 -- Schedule of substantially identical lease guaranties.(4)
10.7 -- Lease Agreement, dated as of October 10, 1990, between
Stoody Deloro Stellite and Bowling Green-Warren County
Industrial Park Authority, Inc.(4)
10.8 -- Lease Agreement, dated as of February 15, 1985, as
amended, between Stoody Deloro Stellite, Inc. and
Corporate Property Associates 6.(4)
10.9 -- Receivables Purchase Agreement, dated as of December 28,
1994, among Thermadyne Receivables, Inc., as Transferor,
and NationsBank of Virginia, N.A., as Trustee.(5)
</TABLE>
<PAGE> 141
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
------- -----------
<C> <S>
10.10 -- Purchase Agreement, dated as of August 2, 1994, between
Coyne Cylinder Company and BA Credit Corporation.(5)
10.11 -- Sublease Agreement, dated as of April 7, 1994, between
Stoody Deloro Stellite, Inc., and Swat, Inc.(5)
10.12 -- Share Sale Agreement dated as of November 18, 1995, among
certain scheduled persons and companies, Rosny Pty
Limited, Byron Holdings Limited, Thermadyne Holdings
Corporation, and Thermadyne Australia Pty Limited
relating to the sale of the Cigweld Business.(6)
10.13 -- Sublease Agreement, dated March 15, 1993, by and between
Stoody Deloro Stellite, Inc. and Lima Transportation.(7)
10.14 -- First Amendment to Standard Industrial Lease, dated June
27, 1995, by and between Stoody Deloro Stellite, Inc. and
Lima Transportation.(7)
10.15 -- Rights Agreement dated as of May 1, 1997, between
Thermadyne Holdings Corporation and BankBoston, N.A., as
Rights Agent.(8)
10.16 -- First Amendment to Rights Agreement, dated January 20,
1998, between Thermadyne Holdings Corporation and
BankBoston, N.A.(2)
10.17 -- Executive Employment Agreement dated May 22, 1998,
between Thermadyne Holdings Corporation and Randall E.
Curran.*
10.18 -- Executive Employment Agreement dated May 22, 1998,
between Thermadyne Holdings Corporation and James H.
Tate.*
10.19 -- Executive Employment Agreement dated May 22, 1998,
between Thermadyne Holdings Corporation and Stephanie N.
Josephson.*
10.20 -- Executive Employment Agreement dated May 22, 1998,
between Thermadyne Holdings Corporation and Thomas C.
Drury.*
10.21 -- Executive Employment Agreement dated May 22, 1998,
between Thermadyne Holdings Corporation and Robert D.
Maddox.*
10.22 -- Award Agreement dated May 22, 1998, between Thermadyne
Holdings Corporation and Randall E. Curran.*
10.23 -- Award Agreement dated May 22, 1998, between Thermadyne
Holdings Corporation and James H. Tate.*
10.24 -- Award Agreement dated May 22, 1998, between Thermadyne
Holdings Corporation and Stephanie N. Josephson.*
10.25 -- Award Agreement dated May 22, 1998, between Thermadyne
Holdings Corporation and Thomas C. Drury.*
10.26 -- Award Agreement dated May 22, 1998, between Thermadyne
Holdings Corporation and Robert D. Maddox.*
10.27 -- Thermadyne Holdings Corporation Management Incentive
Plan.*
10.28 -- Thermadyne Holdings Corporation Direct Investment Plan.*
10.29 -- Investors' Agreement dated as of May 22, 1998, between
Thermadyne Holdings Corporation, the DLJ Entities (as
defined therein) and the Management Stockholders (as
defined therein).*
10.30 -- Indenture, dated May 22, 1998, between Thermadyne Mfg.
LLC, Thermadyne Capital Corp., the guarantors named
therein and State Street Bank and Trust Company, as
Trustee.*
10.31 -- Form of 9 7/8% Senior Subordinated Note.*
</TABLE>
<PAGE> 142
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
------- -----------
<C> <S>
10.32 -- A/B Exchange Registration Rights Agreement dated as of
May 22, 1998, between Thermadyne Mfg. LLC, Thermadyne
Capital Corp., the guarantors named therein, and
Donaldson, Lufkin & Jenrette Securities Corporation.*
10.33 -- Credit Agreement dated as of May 22, 1998, among
Thermadyne Mfg. LLC, Comweld Group Pty. Ltd., Genset
S.p.A. and Thermadyne Welding Products Canada Limited, as
Borrowers, Various Financial Institutions, as Lenders,
DLJ Capital Funding, Inc., as Syndication Agent, Societe
Generale, as Documentation Agent, and ABN Amro Bank N.V.,
as Administrative Agent.*
10.34 -- Letter Agreement dated as of January 16, 1998, between
Donaldson, Lufkin & Jenrette Securities Corporation and
DLJ Merchant Banking II, Inc.*
10.35 -- Assignment and Assumption Agreement dated as of May 22,
1998, between DLJ Merchant Banking II, Inc. and
Thermadyne Holdings Corporation.*
12.1 -- Computation of Ratio of Earnings to Fixed Charges.(9)
21.1 -- Subsidiaries of Thermadyne Holdings Corporation.*
23.1 -- Consent of Ernst & Young LLP, Independent Auditors.*
23.2 -- Consent of Weil, Gotshal & Manges LLP (included in the
opinion filed as Exhibit 5.1 to the Registration
Statement).
24.1 -- Powers of Attorney (included in the signature pages in
Part II of this Registration Statement).
99.2 -- Form of Letter of Transmittal.+
99.3 -- Form of Notice of Guaranteed Delivery.+
99.4 -- Form of Exchange Letter Agreement.+
</TABLE>
- ---------------
* Filed herewith.
+ To be filed by amendment.
(1) Incorporated by reference to the Company's Registration Statement on Form
10 (File No. 0-23378) filed under Section 12(g) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), on February 7, 1994.
(2) Incorporated by reference to the Company's Current Report on Form 8-K (File
No. 0-23378) filed under Section 12(g) of the Exchange Act on January 21,
1998.
(3) Incorporated by reference to the Company's Annual Report on Form 10-K for
the year ended December 31, 1997.
(4) Incorporated by reference to the Company's Registration Statement on Form
10/A, Amendment No. 2 (File No. 0-23378) filed under Section 12(g) of the
Exchange Act, on April 28, 1994.
(5) Incorporated by reference to the Company's Annual Report on Form 10-K for
the year ended December 31, 1994.
(6) Incorporated by reference to the Company's Current Report on Form 8-K (File
No. 0-23378) filed under Section 12(g) of the Exchange Act on January 18,
1996.
(7) Incorporated by reference to the Company's Annual Report on Form 10-K for
the year ended December 31, 1995.
(8) Incorporated by reference to the Company's Current Report on Form 8-K (File
No. 0-23378) filed under Section 12(g) of the Exchange Act on May 12, 1997.
(9) Incorporated by reference to the Company's Registration Statement on Form
S-4 (File No. 333-46631).
<PAGE> 1
EXHIBIT 2.3
AMENDMENT NO. 1
to
AGREEMENT AND PLAN OF MERGER
between
THERMADYNE HOLDINGS CORPORATION
and
MERCURY ACQUISITION CORPORATION
AMENDMENT NO. 1 TO AGREEMENT AND PLAN OF MERGER (this "AMENDMENT"),
dated as of April 22, 1998, by and between Thermadyne Holdings Corporation, a
Delaware corporation (the "COMPANY"), and Mercury Acquisition Corporation, a
Delaware corporation ("MERGERSUB").
WITNESSETH:
WHEREAS, MergerSub and the Company are parties to an Agreement and Plan
of Merger dated as of January 20, 1998 (the "AGREEMENT"); and
WHEREAS, the parties desire to amend the Agreement in certain respects;
NOW, THEREFORE, in consideration of the premises and mutual agreements
set forth herein and in the Agreement, the parties hereto agree as follows:
1. Section 1.07(a) is hereby amended by deleting the opening clause
"Except as set forth on Schedule 1.07(a)," so that Section 1.07(a) now commences
with the word "Immediately."
2. Schedule 1.07(a) is hereby deleted in its entirety.
3. Section 1.07(b) is renumbered 1.07(c) and the reference therein to
Section 1.07(a) is hereby amended to refer to Sections 1.07(a) and 1.07(b), and
a new Section 1.07(b) is hereby inserted as follows:
(b) At the Effective Time, each outstanding right to purchase
Shares with previously held funds under the Employee Stock
Purchase Plan (the "ESPP") shall be canceled. In lieu thereof,
as soon as reasonably practicable as of or after the Effective
Time, the holders of such purchase rights shall receive a cash
payment from the Company equal to the product of (i) the total
number of Shares of Company Common Stock subject to such
purchase rights immediately prior to the Effective Time and
(ii) $34.50. All funds previously withheld under the ESPP will
become assets of the Company.
4. Section 5.08 is hereby amended to read as follows:
<PAGE> 2
Page 2
"[intentionally omitted]."
5. Section 8.02(f) of the Agreement is hereby deleted in its entirety,
and Section 8.02(g) is renumbered 8.02(f).
6. Exhibit A of the Agreement is hereby amended to read in its entirety
as follows:
"SECOND AMENDED AND RESTATED CERTIFICATE OF
INCORPORATION
OF THE
SURVIVING CORPORATION
*****
As of the Effective Time, the Certificate of Incorporation of the
Surviving Corporation, as amended and restated hereby, shall, upon its filing
with the Secretary of State of the State of Delaware, read in its entirety as
follows:
FIRST: The name of the Corporation is Thermadyne Holdings Corporation.
SECOND: The address of its registered office in the State of Delaware
is 1013 Centre Road, Wilmington, Delaware 19805. The name of its registered
agent at such address is Corporation Service Company.
THIRD: The purpose of the Corporation and the nature and objects of the
business to be transacted, promoted, and carried on are to engage in any lawful
act or activity for which corporations may be organized under the General
Corporation Law of the State of Delaware, as the same exists or may hereafter be
amended (the "Delaware Law").
<PAGE> 3
Page 3
FOURTH: The total number of shares of stock which the Corporation shall
have authority to issue is 45,000,000, consisting of 30,000,000 shares of Common
Stock, par value $0.01 per share (the "COMMON STOCK"), and 15,000,000 shares of
Preferred Stock, par value $0.01 per share (the "PREFERRED STOCK"), of which
2,000,000 shares have been designated 13% Senior Exchangeable Preferred Stock
(the "SENIOR PREFERRED STOCK").
The designations and the powers and preferences, rights,
qualifications, limitations and restrictions of the Common Stock and the
Preferred Stock are as follows:
A. Provisions Relating to the Common Stock
Except as otherwise required by law, each holder of Common Stock shall
be entitled to one vote for each share of common stock standing in such holder's
name on the records of the Corporation on each matter submitted to a vote of the
stockholders.
The holders of the Common Stock shall be entitled to receive when, as,
and if declared by the board of directors of the Corporation, out of funds
legally available therefor, dividends payable in cash, stock, or otherwise.
Upon any liquidation, dissolution, or winding up of the Corporation,
whether voluntary or involuntary, and after the holders of any bonds,
debentures, or other obligations of the Corporation shall have been paid in full
the amounts to which they shall be entitled (if any), or a sum sufficient for
such payment in full shall have been set aside, the remaining net assets of the
Corporation shall be distributed pro rata to the holders of the Common Stock in
accordance with their respective rights and interests, to the exclusion of the
holders of any bonds, debentures, or other obligations of the Corporation.
The Corporation may issue shares of its Common Stock from time to time
for such consideration (in any form, but not less in value than the par value
thereof) as may be fixed by the board of directors of the Corporation, which is
expressly authorized to fix the same in its absolute and uncontrolled discretion
subject to the foregoing conditions. Shares so issued for which the
consideration shall have been paid or delivered to the Corporation shall be
deemed fully paid stock and shall not be liable to any further call or
assessment thereon, and the holders of such shares shall not be liable for any
further payments in respect of such shares. The Corporation shall also have
authority to create and issue rights and options entitling their holders
to purchase or otherwise acquire shares of Common Stock and such rights and
options shall be evidenced by instrument(s) approved by the board of directors
of the Corporation. The board of directors of the Corporation shall be empowered
to set the exercise price, duration, times for exercise, and other terms of such
options or rights; provided, however, that the consideration to be received
(which may be in any form) for any shares of Common Stock subject thereto shall
have a value not less than the par value thereof.
<PAGE> 4
Page 4
B. Provisions Relating to the Preferred Stock
The Board of Directors is hereby empowered to authorize by resolution
or resolutions from time to time the issuance of one or more classes or series
of Preferred Stock and to fix the designations, powers, preferences and
relative, participating, optional or other rights, if any, and the
qualifications, limitations or restrictions thereof, if any, with respect to
each such class or series of Preferred Stock and the number of shares
constituting each such class or series, and to increase or decrease the number
of shares of any such class or series to the extent permitted by the Delaware
Law.
C. Provisions Relating to the Senior Preferred Stock
(1) NUMBER AND DESIGNATION. 2,000,000 shares of the Preferred Stock of
the Corporation shall be designated as 13% Senior Exchangeable Preferred Stock.
(2) RANK. The Senior Preferred Stock shall, with respect to dividend
rights and rights on liquidation, dissolution and winding up, rank prior to all
classes of or series of common stock of the Corporation, including the
Corporation's Common Stock, and each other class of capital stock of the
Corporation, the terms of which provide that such class shall rank junior to the
Senior Preferred Stock or the terms of which do not specify any rank relative to
the Senior Preferred Stock. All equity securities of the Corporation to which
the Senior Preferred Stock ranks prior (whether with respect to dividends or
upon liquidation, dissolution, winding up or otherwise), including the Common
Stock, are collectively referred to herein as the "JUNIOR SECURITIES." All
equity securities of the Corporation with which the Senior Preferred Stock ranks
on a parity (whether with respect to dividends or upon liquida tion, dissolution
or winding up) are collectively referred to herein as the "PARITY SECURITIES."
The respective definitions of Junior Securities and Parity Securities shall also
include any rights or options exercisable for or convertible into any of the
Junior Securities and Parity Securities, as the case may be. The Senior
Preferred Stock shall be subject to the creation of Junior Securities.
(3) DIVIDENDS. (a) (i) The holders of shares of Senior
Preferred Stock shall be entitled to receive, when, as and if declared by the
Board of Directors, out of funds legally available for the payment of dividends,
dividends (subject to Sections 3(a)(ii) and (iii) hereof) at a rate equal to
______ [the greater of (x) 13% per annum (computed on the basis of a 360 day
year) or (y) the stated rate of interest per annum payable on the Senior
Subordinated Notes due 2008 of Thermadyne Mfg. LLC plus 300 basis points] (the
"DIVIDEND RATE") on the Liquidation Value of each share of Senior Preferred
Stock on and as of the most recent Dividend Payment Date (as defined below). In
the event the Corporation is unable or shall fail to discharge its obligation to
redeem all
<PAGE> 5
Page 5
outstanding shares of Senior Preferred Stock pursuant to paragraph 5(c) or 5(d)
hereof, the Dividend Rate shall increase by .25 percent per quarter (each, a
"DEFAULT DIVIDEND") for each quarter or portion thereof following the date on
which such redemption was required to be made until cured, provided that the
aggregate increase shall not exceed 5%. Such dividends shall be payable in the
manner set forth below in Sections 3(a)(ii) and (iii) quarterly on March 31,
June 30, September 30, and December 31 of each year (unless such day is not a
business day, in which event on the next succeeding business day) (each of such
dates being a "DIVIDEND PAYMENT DATE" and each such quarterly period being a
"DIVIDEND PERIOD"). Such dividends shall be cumulative from the date of issue,
whether or not in any Dividend Period or Periods there shall be funds of the
Corporation legally available for the payment of such dividends.
(ii) Prior to the fifth anniversary of the issuance of the
Senior Preferred Stock (the "CASH PAY DATE"), dividends shall
not be payable in cash to holders of shares of Senior
Preferred Stock but shall, subject to Section 3(b) hereof,
accrete to the Liquidation Value in accordance with Section
4(a) hereof.
(iii) Following the Cash Pay Date, each such dividend shall
be payable in cash on the Liquidation Value per share of the
Senior Preferred Stock, in equal quarterly amounts (to which
the Default Dividend, if any, shall be added), to the holders
of record of shares of the Senior Preferred Stock, as they
appear on the stock records of the Corporation at the close of
business on such record dates, not more than 60 days or less
than 10 days preceding the payment dates thereof, as shall be
fixed by the Board of Directors. Accrued and unpaid dividends
for any past Dividend Periods may be declared and paid at any
time, without reference to any Dividend Payment Date, to
holders of record on such date, not more than 45 days
preceding the payment date thereof, as may be fixed by the
Board of Directors.
(b) At the written request of the holders of a majority of the shares
of Senior Preferred Stock, the Corporation shall, commencing on the first
Dividend Payment Date after such request and ending on the Cash Pay Date, be
required to pay all dividends on shares of Senior Preferred Stock by the
issuance of additional shares of Senior Preferred Stock ("ADDITIONAL SHARES").
The Additional Shares shall be identical to all other shares of Senior Preferred
Stock, except as set forth in Section 4. For the purposes of determining the
number of Additional Shares to be issued as dividends pursuant to this Paragraph
(b), such Additional Shares shall be valued at their Applicable Liquidation
Value as provided in Section 4(c).
(c) Holders of shares of Senior Preferred Stock shall not be entitled
to any dividends, whether payable in cash, property or stock, in excess of the
cumulative dividends, as herein provided, on the Senior Preferred Stock. Except
<PAGE> 6
Page 6
as provided in this Section 3, no interest, or sum of money in lieu of interest,
shall be payable in respect of any dividend payment or payments on the Senior
Preferred Stock that may be in arrears.
(d) So long as any shares of the Senior Preferred Stock are
outstanding, no dividends, except as described in the next succeeding sentence,
shall be declared or paid or set apart for payment on Parity Securities, for any
period unless (to the extent such dividends are payable in cash) full cumulative
dividends have been or contemporaneously are declared and paid or declared and a
sum sufficient for the payment thereof set apart for such payment on the Senior
Preferred Stock for all Dividend Periods terminating on or prior to the date of
payment of the dividend on such class or series of Parity Securities. When (to
the extent such dividends are payable in cash) dividends are not paid in full or
a sum sufficient for such payment is not set apart, as aforesaid, all dividends
declared upon shares of the Senior Preferred Stock and all dividends declared
upon any other class or series of Parity Securities shall (in each case, to the
extent payable in cash) be declared ratably in proportion to the respective
amounts of dividends accumulated and unpaid on the Senior Preferred Stock and
accumulated and unpaid on such Parity Securities.
(e) So long as any shares of the Senior Preferred Stock are
outstanding, no dividends (other than dividends or distributions paid in shares
of, or options, warrants or rights to subscribe for or purchase shares of,
Junior Securities) shall be declared or paid or set apart for payment or other
distribution declared or made upon Junior Securities, nor shall any Junior
Securities be redeemed, purchased or otherwise acquired (other than a
redemption, purchase or other acquisition of shares of Common Stock made for
purposes of an employee incentive or benefit plan of the Corporation or any
subsidiary) (all such dividends, distributions, redemptions or purchases being
hereinafter referred to as a "JUNIOR SECURITIES DISTRIBUTION") for any
consideration (or any moneys be paid to or made available for a sinking fund for
the redemption of any shares of any such stock) by the Corporation, directly or
indirectly (except by conversion into or exchange for Junior Securities), unless
in each case (i) the full cumulative dividends on all outstanding shares of the
Senior Preferred Stock and any other Parity Securities shall (to the extent
payable in cash) have been paid or set apart for payment for all past Dividend
Periods with respect to the Senior Preferred Stock and all past dividend periods
with respect to such Parity Securities and (ii) (to the extent payable in cash)
sufficient funds shall have been paid or set apart for the payment of the
dividend for the current Dividend Period with respect to the Senior Preferred
Stock and the current dividend period with respect to such Parity Securities.
(4) LIQUIDATION PREFERENCE. (a) In the event of any liquidation,
dissolution or winding up of the Corporation, whether voluntary or involuntary,
before any payment or distribution of the assets of the Corporation (whether
capital or surplus) shall be made to or set apart for the holders of Junior
Securities, the holders of the shares of Senior Preferred Stock shall be
entitled to
<PAGE> 7
Page 7
receive an amount equal to the Liquidation Value of such share plus
any accrued and unpaid cash dividends to the date of distribution. "LIQUIDATION
VALUE" on any date means, with respect to (x) any share of Senior Preferred
Stock other than any Additional Shares, the sum of (1) $25.00 per share and (2)
the aggregate of all dividends accreted on such share until the most recent
Dividend Payment Date upon which an accretion to Liquidation Value has occurred
(or if such date is a Dividend Payment Date upon which an accretion to
Liquidation Value has occurred, such date), provided that in the event of an
actual liquidation, dissolution or winding up of the Corporation or the
redemption of any shares of Senior Preferred Stock pursuant to Section 5
hereunder, the amount referred to in (2) shall be calculated by including
dividends accreting to the actual date of such liquidation, dissolution or
winding up or the redemption date, as the case may be, rather than the Dividend
Payment Date referred to above and provided further that in no event will
dividends accrete beyond the earlier of (i) the Cash Pay Date and (ii) the most
recent Dividend Payment Date prior to the Dividend Payment Date on which
dividends on the Senior Preferred Stock are payable in Additional Shares and (y)
any Additional Share, the Applicable Liquidation Value. All accretions to
Liquidation Value will be calculated using compounding on a quarterly basis.
Except as provided in the preceding sentences, holders of shares of Senior
Preferred Stock shall not be entitled to any distribution in the event of
liquidation, dissolution or winding up of the affairs of the Corporation. If,
upon any liquidation, dissolution or winding up of the Corporation, the assets
of the Corporation, or proceeds thereof, distributable among the holders of the
shares of Senior Preferred Stock shall be insufficient to pay in full the
preferential amount aforesaid and liquidating payments on any Parity Securities,
then such assets, or the proceeds thereof, shall be distributed among the
holders of shares of Senior Preferred Stock and any such other Parity Securities
ratably in accordance with the respective amounts that would be payable on such
shares of Senior Preferred Stock and any such other stock if all amounts payable
thereon were paid in full. For the purposes of this Section 4, (i) a
consolidation or merger of the Corporation with one or more corporations, or
(ii) a sale or transfer of all or substantially all of the Corporation's assets,
shall not be deemed to be a liquidation, dissolution or winding up, voluntary or
involuntary, of the Corporation.
(b) Subject to the rights of the holders of any Parity Securities,
after payment shall have been made in full to the holders of the Senior
Preferred Stock, as provided in this paragraph (4), any other series or class or
classes of Junior Securities shall, subject to the respective terms and
provisions (if any) applying thereto, be entitled to receive any and all assets
remaining to be paid or distributed, and the holders of the Senior Preferred
Stock shall not be entitled to share therein.
(c) The Applicable Liquidation Value of any Additional Shares shall be
the Liquidation Value of Senior Preferred Stock outstanding immediately prior to
the first Dividend Payment Date occurring after a request for payment in
Additional Shares has been made in accordance with Section 3(b).
<PAGE> 8
Page 8
(5) REDEMPTION. (a) Redemption Upon Consummation of Public Offering.
The Corporation may, at its option, to the extent it shall have funds legally
available for such payment, redeem, prior to May 15, 2001, in whole but not in
part, shares of Senior Preferred Stock, at a redemption price per share equal to
113% of the Liquidation Value, in cash, plus accrued and unpaid cash dividends
on such shares to the date fixed for redemption, without interest, provided that
the Corporation shall not redeem any shares of Senior Preferred Stock pursuant
to this Section 5(a) unless (i) prior to such redemption a Public Offering shall
have been consummated, and (ii) the aggregate redemption price of the shares of
Senior Preferred Stock redeemed pursuant to this Section 5(a) does not exceed
the net proceeds received by the Corporation in such Initial Public Offering.
"PUBLIC OFFERING" shall mean any underwritten public offering of Common
Stock pursuant to an effective registration statement under the Securities Act
of 1933, as amended, and shall, in addition, for the purposes of Section 5(a)
hereof, include any sale, pursuant to such an underwritten registered public
offering, following the Closing Date of any common stock by any affiliate of the
Corporation, the net proceeds of which are contributed or loaned to the
Corporation in such a manner that such proceeds may lawfully be used for the
redemption of the Senior Preferred Stock.
"CLOSING DATE" shall have the meaning ascribed to such term in the
Investors' Agreement.
"INVESTORS' AGREEMENT" means the Investors' Agreement dated May __,
1998, among Thermadyne Holdings Corporation, DLJ Merchant Banking Partners II,
L.P., DLJ Merchant Banking Partners II-A, L.P., DLJ Offshore Partners, C.V., DLJ
Merchant Banking Funding, Inc., DLJ Offshore Partners II, C.V., DLJ Diversified
Partners, L.P., DLJ Diversified Partners-A, L.P., DLJ Millennium Partners, L.P.,
DLJ Millennium-A, L.P., DLJMB Funding II, Inc., DLJ EAB Partners, L.P., DLJ
First ESC L.P., UK Investment Plan 1997 Partners, DLJ ESC II, L.P.
(collectively, the "DLJMB Funds"), and certain other stockholders listed on the
signature pages thereof.
(b) Redemption At the Option of the Corporation. On and after May 15,
2003, to the extent the Corporation shall have funds legally available for such
payment, the Corporation may, at its option, redeem shares of Senior Preferred
Stock, at any time in whole but not in part, at redemption prices per share in
cash set forth in the table below, together with accrued and unpaid cash
dividends thereon to the date fixed for redemption, without interest:
<PAGE> 9
Page 9
<TABLE>
<CAPTION>
Twelve Months Beginning
May 15, Percentage of Liquidation Value
------ -------------------------------
<S> <C>
2003 106.500%
2004 104.333
2005 102.167
2006 100.000
</TABLE>
(c) Redemption In the Event of a Change of Control. In the
event of a Change of Control, the Corporation shall, to the extent it shall have
funds legally available for such payment, offer to redeem all of the shares of
Senior Preferred Stock then outstanding, and shall redeem the shares of Senior
Preferred Stock of any holder of such shares that shall consent to such
redemption, upon a date no later than 30 days following the Change in Control,
at a redemption price per share equal to 101% of the Liquidation Value, in cash,
plus accrued and unpaid cash dividends thereon to the date fixed for redemption,
without interest.
"CHANGE OF CONTROL" means such time as: (a) a "person" or "group"
(within the meaning of Sections 13(d) and 14(d)(2) of the Securities Exchange
Act of 1934, as amended), other than any person or group comprised solely of the
Initial Investors, has become the beneficial owner, by way of merger,
consolidation or otherwise, of 30% or more of the voting power of all classes of
voting securities of the Corporation, and such person or group has become the
beneficial owner of a greater percentage of the voting power of all classes of
voting securities of the Corporation than that beneficially owned by the Initial
Investors; or (b) a sale or transfer of all or substantially all of the assets
of the Corporation to any person or group (other than any group consisting
solely of the Initial Investors or their affiliates) has been consummated; or
(c) during any period of two consecutive years, individuals who at the beginning
of such period constituted the Board of Directors of the Corporation (together
with any new directors whose election was approved by a vote of a majority of
the directors then still in office, who either were directors at the beginning
of such period or whose election or nomination for the election was previously
so approved) cease for any reason to constitute a majority of the directors of
the Corporation, then in office.
"INITIAL INVESTORS" means the Stockholders (determined as of the
issuance of the Preferred Stock) and their Permitted Transferees, each as
defined in the Investors' Agreement.
(d) Mandatory Redemption. To the extent the Corporation shall have
funds legally available for such payment, on May 15, 2010, if any shares of the
Senior Preferred Stock shall be outstanding, the Corporation shall redeem all
<PAGE> 10
Page 10
outstanding shares of the Senior Preferred Stock, at a redemption price equal to
the aggregate Liquidation Value, in cash, together with any accrued and unpaid
cash dividends thereon to the date fixed for redemption, without interest.
(e) Status of Redeemed Shares. Shares of Senior Preferred Stock which
have been issued and reacquired in any manner, including shares purchased or
redeemed, shall (upon compliance with any applicable provisions of the laws of
the State of Delaware) have the status of authorized and unissued shares of the
class of Preferred Stock undesignated as to series and may be redesignated and
reissued as part of any series of the Preferred Stock; provided that no such
issued and reacquired shares of Senior Preferred Stock shall be reissued or sold
as Senior Preferred Stock.
(f) Failure to Redeem. If the Corporation is unable or shall fail to
discharge its obligation to redeem all outstanding shares of Senior Preferred
Stock pursuant to paragraph (5)(c) or 5(d) (each, a "MANDATORY REDEMPTION
OBLIGATION"), such Mandatory Redemption Obligation shall be discharged as soon
as the Corporation is able to discharge such Mandatory Redemption Obligation. If
and so long as any Mandatory Redemption Obligation with respect to the Senior
Preferred Stock shall not be fully discharged, the Corporation shall not (i)
directly or indirectly, redeem, purchase, or otherwise acquire any Parity
Security or discharge any mandatory or optional redemption, sinking fund or
other similar obligation in respect of any Parity Securities (except in
connection with a redemption, sinking fund or other similar obligation to be
satisfied pro rata with the Senior Preferred Stock) or (ii) in accordance with
paragraph 3(e), declare or make any Junior Securities Distribution, or, directly
or indirectly, discharge any mandatory or optional redemption, sinking fund or
other similar obligation in respect of the Junior Securities.
(g) Failure to Pay Dividends. Notwithstanding the foregoing provisions
of this paragraph (5), unless full cumulative cash dividends (whether or not
declared) on all outstanding shares of Senior Preferred Stock shall have been
paid or contemporaneously are declared and paid or set apart for payment for all
dividend periods terminating on or prior to the applicable redemption date, none
of the shares of Senior Preferred Stock shall be redeemed, and no sum shall be
set aside for such redemption, unless shares of Senior Preferred Stock are
redeemed pro rata.
(6) PROCEDURE FOR REDEMPTION. (a) In the event the Corporation shall
redeem shares of Senior Preferred Stock pursuant to Sections 5(a), (b) or (d),
notice of such redemption shall be given by first class mail, postage prepaid,
mailed not less than 30 days nor more than 60 days prior to the redemption date,
to each holder of record of the shares to be redeemed at such holder's address
as the same appears on the stock register of the Corporation; provided that
neither the failure to give such notice nor any defect therein shall affect the
validity of the giving of notice for the redemption of any share of Senior
Preferred Stock to be redeemed except as to the holder to whom the Corporation
has
<PAGE> 11
Page 11
failed to give said notice or except as to the holder whose notice was
defective. Each such notice shall state: (i) the redemption date; (ii) the
number of shares of Senior Preferred Stock to be redeemed; (iii) the redemption
price; (iv) the place or places where certificates for such shares are to be
surrendered for payment of the redemption price; and (v) that dividends on the
shares to be redeemed will cease to accrue on such redemption date.
(b) In the case of any redemption pursuant to Sections 5(a), (b) or (d)
hereof, notice having been mailed as provided in Section 6(a) hereof, from and
after the redemption date (unless default shall be made by the Corporation in
providing money for the payment of the redemption price of the shares called for
redemption), dividends on the shares of Senior Preferred Stock so called for
redemption shall cease to accrue, and all rights of the holders thereof as
stockholders of the Corporation (except the right to receive from the
Corporation the redemption price) shall cease. Upon surrender in accordance with
said notice of the certificates for any shares so redeemed (properly endorsed or
assigned for transfer, if the Board of Directors of the Corporation shall so
require and the notice shall so state), such share shall be redeemed by the
Corporation at the redemption price aforesaid. In case fewer than all the shares
represented by any such certificate are redeemed, a new certificate shall be
issued representing the unredeemed shares without cost to the holder thereof.
(c) In the case of a redemption pursuant to Section 5(c) hereof, notice
of such redemption shall be given by first class mail, postage prepaid, mailed
not more than 10 days following the occurrence of the Change of Control and not
less than 20 days prior to the redemption date, to each holder of record of the
shares to be redeemed at such holder's address as the same appears on the stock
register of the Corporation; provided that neither the failure to give such
notice nor any defect therein shall affect the validity of the giving of notice
for the redemption of any share of Senior Preferred Stock to be redeemed except
as to the holder to whom the Corporation has failed to give said notice or
except as to the holder whose notice was defective. Each such notice shall
state: (i) that a Change of Control has occurred; (ii) the redemption date;
(iii) the redemption price; (iv) that such holder may elect to cause the
Corporation to redeem all or any of the shares of Senior Preferred Stock held by
such holder; (v) the place or places where certificates for such shares are to
be surrendered for payment of the redemption price; and (vi) that dividends on
the shares the holder elects to cause the Corporation to redeem will cease to
accrue on such redemption date.
Upon receipt of such notice, the holder shall, within 20 days of
receipt thereof, return such notice to the Corporation indicating the number of
shares of Senior Preferred Stock such holder shall elect to cause the
Corporation to redeem, if any.
(d) In the case of a redemption pursuant to Section 5(c) hereof, notice
having been mailed as provided in Section 6(c) hereof, from and after the
redemption date (unless default shall be made by the Corporation in providing
<PAGE> 12
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money for the payment of the redemption price of the shares called for
redemption), dividends on such shares of Senior Preferred Stock as the holder
elects to cause the Corporation to redeem shall cease to accrue, and all rights
of the holders thereof as stockholders of the Corporation (except the right to
receive from the Corporation the redemption price) shall cease. Upon surrender
in accordance with said notice of the certificates for any shares so redeemed
(properly endorsed or assigned for transfer, if the Board of Directors of the
Corporation shall so require and the notice shall so state), such share shall be
redeemed by the Corporation at the redemption price aforesaid. In case fewer
than all the shares represented by any such certificate are redeemed, a new
certificate shall be issued representing the unredeemed shares without cost to
the holder thereof.
(7) EXCHANGE. (a) Subject to the provisions of this paragraph (7) the
Corporation may, at its option, at any time and from time to time on any
Dividend Payment Date, exchange, to the extent it is legally permitted to do so,
all, but not less than all, outstanding shares (and fractional shares) of Senior
Preferred Stock, for Exchange Debentures, provided that (i) on or prior to the
date of exchange the Corporation shall have paid to or declared and set aside
for payment to the holders of outstanding shares of Senior Preferred Stock all
accrued and unpaid cash dividends on shares of Senior Preferred Stock through
the exchange date in accordance with the next succeeding paragraph; (ii) no
event of default under the indenture (as defined in such indenture) governing
the Exchange Debentures shall have occurred and be continuing; and (iii) no
shares of Senior Preferred Stock are held on such date by the DLJMB Funds or any
of their Affiliates, or any of their Permitted Transferees. The principal amount
of Exchange Debentures deliverable upon exchange of a share of Senior Preferred
Stock, adjusted as hereinafter provided, shall be determined in accordance with
the Exchange Ratio (as defined below).
Cash dividends on any shares of Senior Preferred Stock exchanged for
Exchange Debentures which have accrued but have not been paid as of the date of
exchange shall be paid in cash. In no event shall the Corporation issue Exchange
Debentures in denominations other than $1,000 or in an integral multiple
thereof. Cash will be paid in lieu of any such fraction of an Exchange Debenture
which would otherwise have been issued (which shall be determined with respect
to the aggregate principal amount of Exchange Debentures to be issued to a
holder upon any such exchange). Interest will accrue on the Exchange Debentures
from the date of exchange.
Prior to effecting any exchange hereunder, the Corporation shall
appoint a trustee to serve in the capacity contemplated by an indenture between
the Corporation and such trustee, containing customary terms and conditions.
The EXCHANGE RATIO shall be, as of any Dividend Payment Date, $1.00 (or
fraction thereof) of principal amount of Exchange Debenture for each $1.00 of
(i) Liquidation Value plus (ii) accrued and unpaid cash dividends, if any, per
<PAGE> 13
Page 13
share of Senior Preferred Stock held by a holder on the applicable exchange
date.
"AFFILIATES" shall have the meaning ascribed such term in the
Investors' Agreement.
"EXCHANGE DEBENTURES" means 13% Subordinated Exchange Debentures due
2010 of the Corporation, to be issued pursuant to an indenture between the
Corporation and a trustee, containing customary terms and conditions, in
accordance with the Term Sheet attached as Exhibit A hereto.
"PERMITTED TRANSFEREES" shall have the meaning ascribed to such term in
the Investors' Agreement.
(b) Procedure for Exchange. (i) In the event the Corporation
shall exchange shares of Senior Preferred Stock, notice of such exchange shall
be given by first class mail, postage prepaid, mailed not less than 30 days nor
more than 60 days prior to the exchange date, to each holder of record of the
shares to be exchanged at such holder's address as the same appears on the stock
register of the Corporation; provided that neither the failure to give such
notice nor any defect therein shall affect the validity of the giving of notice
for the exchange of any share of Senior Preferred Stock to be exchanged except
as to the holder to whom the Corporation has failed to give said notice or
except as to the holder whose notice was defective. Each such notice shall
state: (A) the exchange date; (B) the number of shares of Senior Preferred Stock
to be exchanged; (C) the Exchange Ratio; (D) the place or places where
certificates for such shares are to be exchanged for notes evidencing the
Exchange Debentures to be received by the exchanging holder; and (E) that
dividends on the shares to be exchanged will cease to accrue on such exchange
date.
(ii) Prior to giving notice of intention to exchange, the
Corporation shall execute and deliver with a bank or trust
company selected by the Corporation an indenture containing
customary terms and conditions. The Corporation will cause the
Exchange Debentures to be authenticated on the Dividend
Payment Date on which the exchange is effective, and will pay
interest on the Exchange Debentures at the rate and on the
dates specified in such indenture from the exchange date.
The Corporation will not give notice of its intention
to exchange under paragraph 6(b)(i) hereof unless it shall
file at the place or places (including a place in the Borough
of Manhattan, The City of New York) maintained for such
purpose an opinion of counsel (who may be an employee of the
Corporation) to the effect that (i) the indenture has been
duly authorized, executed and delivered by the Corporation,
has been duly qualified under the Trust Indenture Act of 1939
(or that such qualification is not
<PAGE> 14
Page 14
necessary) and constitutes a valid and binding instrument
enforceable against the Corporation in accordance with its
terms (subject, as to enforcement, to bankruptcy, insolvency,
reorganization and other laws of general applicability
relating to or affecting creditors' rights and to general
equity principles, and subject to such other qualifications as
are then customarily contained in opinions of counsel
experienced in such matters), (ii) the Exchange Debentures
have been duly authorized and, when executed and authenticated
in accordance with the provisions of the indenture and
delivered in exchange for the shares of Preferred Stock, will
constitute valid and binding obligations of the Corporation
entitled to the benefits of the indenture (subject as
aforesaid), (iii) neither the execution nor delivery of the
indenture or the Exchange Debentures nor compliance with the
terms, conditions or provisions of such instruments will
result in a breach or violation of any of the terms or
provisions of, or constitute a default under, any indenture,
mortgage, deed of trust or agreement or instrument, known to
such counsel, to which the Corporation or any of its
subsidiaries is a party or by which it or any of them is
bound, or any decree, judgment, order, rule or regulation,
known to such counsel, of any court or governmental agency or
body having jurisdiction over the Corporation and such
subsidiaries or any of their properties, (iv) the Exchange
Debentures have been duly registered for such exchange with
the Securities and Exchange Commission under a registration
statement that has become effective under the Securities Act
of 1933 (the "Act") or that the exchange of the Exchange
Debentures for the shares of Senior Preferred Stock is exempt
from registration under the Act, and (v) the Corporation has
sufficient legally available funds for such exchange such that
such exchange is permitted under applicable law.
(iii) Notice having been mailed as aforesaid, from and after
the exchange date (unless default shall be made by the
Corporation in issuing Exchange Debentures in exchange for the
shares called for exchange), dividends on the shares of Senior
Preferred Stock so called for exchange shall cease to accrue,
and all rights of the holders thereof as stockholders of the
Corporation (except the right to receive from the Corporation
the Exchange Debentures and any rights such holder, upon the
exchange, may have as a holder of the Exchange Debenture)
shall cease. Upon surrender in accordance with said notice of
the certificates for any shares so exchanged (properly
endorsed or assigned for transfer, if the Board of Directors
of the Corporation shall so require and the notice shall so
state), such share shall be exchanged by the Corporation for
the Exchange Debentures at the Exchange Ratio. In case fewer
than all the shares represented by any such certificate are
exchanged, a
<PAGE> 15
Page 15
new certificate shall be issued representing the unexchanged
shares without cost to the holder thereof.
(iv) Each exchange shall be deemed to have been effected
immediately after the close of business on the relevant
Dividend Payment Date, and the person in whose name or names
any Exchange Debentures shall be issuable upon such exchange
shall be deemed to have become the holder of record of the
Exchange Debentures represented thereby at such time on such
Dividend Payment Date.
(v) Prior to the delivery of any securities which the
Corporation shall be obligated to deliver upon exchange of the
Senior Preferred Stock, the Corporation shall comply with all
applicable federal and state laws and regulations which
require action to be taken by the Corporation.
(c) The Corporation will pay any and all documentary stamp or similar
issue or transfer taxes payable in respect of the issue or delivery of notes
evidencing Exchange Debentures on exchange of the Senior Preferred Stock
pursuant hereto; provided that the Corporation shall not be required to pay any
tax which may be payable in respect of any transfer involved in the issue or
delivery of Exchange Debentures in a name other than that of the holder of the
Senior Preferred Stock to be exchanged and no such issue or delivery shall be
made unless and until the person requesting such issue or delivery has paid to
the Corporation the amount of any such tax or has established, to the
satisfaction of the Corporation, that such tax has been paid.
(8) VOTING RIGHTS. (a) The holders of record of shares of
Senior Preferred Stock shall not be entitled to any voting rights except as
hereinafter provided in this paragraph (8), as otherwise provided by law or as
provided in the Investors' Agreement.
(b) If and whenever (i) four consecutive or six quarterly cash
dividends payable on the Senior Preferred Stock have not been paid in full, (ii)
for any reason (including the reason that funds are not legally available for a
redemption), the Corporation shall have failed to discharge any Mandatory
Redemption Obligation (including a redemption in the Event of a Change of
Control pursuant to Section 5(c) hereof), (iii) the Corporation shall have
failed to provide the notice required by Section 6(c) hereof within the time
period specified in such section or (iv) the Corporation shall have failed to
comply with Sections 3(d), 3(e) or 8(c) hereof, (1) the number of directors then
constituting the Board of Directors shall be increased by two and the holders of
a majority of the outstanding shares of Senior Preferred Stock, together with
the holders of shares of every other series of preferred stock upon which like
rights have been conferred and are exercisable (resulting from either the
failure to pay dividends or the failure to redeem) (any such series is referred
to as the "PREFERRED
<PAGE> 16
Page 16
SHARES"), voting as a single class regardless of series, shall be entitled to
elect the two additional directors to serve on the Board of Directors at any
annual meeting of stockholders or special meeting held in place thereof, or at a
special meeting of the holders of the Senior Preferred Stock and the Preferred
Shares called as hereinafter provided. Whenever (i) all arrears in cash
dividends on the Senior Preferred Stock and the Preferred Shares then
outstanding shall have been paid and cash dividends thereon for the current
quarterly dividend period shall have been paid or declared and set apart for
payment, (ii) the Corporation shall have fulfilled its Mandatory Redemption
Obligation, (iii) fulfilled its obligation to provide notice as specified in
subsection (b)(iii) hereof, or (iv) the Corporation shall have complied with
Sections 3(d), 3(e), or 8(c) hereof, as the case may be, then the right of the
holders of the Senior Preferred Stock to elect such additional two directors
shall cease (but subject always to the same provisions for the vesting of such
voting rights in the case of any similar future (i) arrearage in six consecutive
quarterly cash dividends, (ii) failure to fulfill any Mandatory Redemption
Obligation, (iii) failure to fulfill the obligation to provide the notice
required by Section 6(d) hereof within the time period specified in such section
or (iv) failure to comply with Sections 3(d), 3(e), or 8(c)) and the terms of
office of all persons elected as directors by the holders of the Senior
Preferred Stock shall forthwith terminate and the number of the Board of
Directors shall be reduced accordingly. At any time after such voting power
shall have been so vested in the holders of shares of Senior Preferred Stock and
the Preferred Shares, the secretary of the Corporation may, and upon the written
request of any holder of Senior Preferred Stock (addressed to the secretary at
the principal office of the Corporation) shall, call a special meeting of the
holders of the Senior Preferred Stock and of the Preferred Shares for the
election of the two directors to be elected by them as herein provided, such
call to be made by notice similar to that provided in the Bylaws of the
Corporation for a special meeting of the stockholders or as required by law. If
any such special meeting required to be called as above provided shall not be
called by the secretary within 20 days after receipt of any such request, then
any holder of shares of Senior Preferred Stock may call such meeting, upon the
notice above provided, and for that purpose shall have access to the stock books
of the Corporation. The directors elected at any such special meeting shall hold
office until the next annual meeting of the stockholders or special meeting held
in lieu thereof if such office shall not have previously terminated as above
provided. If any vacancy shall occur among the directors elected by the holders
of the Senior Preferred Stock and the Preferred Shares, a successor shall be
elected by the Board of Directors, upon the nomination of the then-remaining
director elected by the holders of the Senior Preferred Stock and the Preferred
Shares or the successor of such remaining director, to serve until the next
annual meeting of the stockholders or special meeting held in place thereof if
such office shall not have previously terminated as provided above.
(c) Without the written consent of a majority of the outstanding shares
of Senior Preferred Stock or the vote of holders of a majority of the
outstanding shares of Senior Preferred Stock at a meeting of the holders of
Senior Preferred Stock called for such purpose, the Corporation will not (i)
amend, alter or repeal any provision of the Certificate of Incorporation (by
merger or otherwise) so as to adversely affect the preferences, rights or powers
of the Senior Preferred Stock; provided that any such amendment that decreases
the dividend payable on or the Liquidation Value of the Senior Preferred Stock
shall require the affirmative vote of holders of each share of Senior Preferred
Stock at a meeting of holders of Senior Preferred Stock called for such purpose
or written consent of the holder of each share of Senior Preferred
<PAGE> 17
Page 17
Stock; or (ii) create, authorize or issue any class of stock ranking prior to,
or on a parity with, the Senior Preferred Stock with respect to dividends or
upon liquidation, dissolution, winding up or otherwise, or increase the
authorized number of shares of any such class or series, or reclassify any
authorized stock of the Corporation into any such prior or parity shares or
create, authorize or issue any obligation or security convertible into or
evidencing the right to purchase any such prior or parity shares, except that
the Corporation may, without such approval, create authorize and issue Parity
Securities for the purpose of utilizing the proceeds from the issuance of such
Parity Securities for the redemption or repurchase of all outstanding shares of
Senior Preferred Stock in accordance with the terms hereof or of the Investors'
Agreement.
(d) In exercising the voting rights set forth in this paragraph (8),
each share of Senior Preferred Stock shall have one vote per share, except that
when any other series of preferred stock shall have the right to vote with the
Senior Preferred Stock as a single class on any matter, then the Senior
Preferred Stock and such other series shall have with respect to such matters
one vote per $25 of Liquidation Value or other liquidation preference. Except as
otherwise required by applicable law or as set forth herein, the shares of
Senior Preferred Stock shall not have any relative, participating, optional or
other special voting rights and powers and the consent of the holders thereof
shall not be required for the taking of any corporate action.
(9) REPORTS. So long as any of the Senior Preferred Stock is
outstanding, the Corporation will furnish the holders thereof with the quarterly
and annual financial reports that the Corporation is required to file with the
Securities and Exchange Commission pursuant to Section 13 or Section 15(d) of
the Securities Exchange Act of 1934 or, in the event the Corporation is not
required to file such reports, reports containing the same information as would
be required in such reports.
(10) GENERAL PROVISIONS. (a) The term "PERSON" as used herein means any
corporation, limited liability company, partnership, trust, organization,
association, other entity or individual.
(b) The term "OUTSTANDING", when used with reference to shares of
stock, shall mean issued shares, excluding shares held by the
Corporation or a subsidiary.
(c) The headings of the paragraphs, subparagraphs, clauses and
subclauses used herein are for convenience of reference only and shall
not define, limit or affect any of the provisions hereof.
(d) Each holder of Senior Preferred Stock, by acceptance thereof,
acknowledges and agrees that payments of dividends, interest, premium
and principal on, and exchange, redemption and repurchase of, such
securities by the Corporation are subject to restrictions on the
Corporation contained in certain credit and financing agreements.
FIFTH: No contract or transaction between the Corporation and one
or more of its directors, officers, or stockholders or between the
Corporation and any person (as used herein "person" means any other
corporation, partnership, association, firm, trust, joint venture,
political subdivision, or instrumentality) or other organization in
which one or more of its directors, officers, or stockholders are
directors, officers or stockholders, or have a financial interest,
shall be void or voidable solely for this reason, or solely because the
director or officer is present at or participates in the meeting of the
board or committee which authorizes the contract or transaction, or
solely because his, her, or their votes are counted for such purpose,
if: (i) the material facts as to his or her relationship or interest
and as to the contract or transaction are disclosed or are known to the
board of directors or the committee, and the board of directors or
committee in good faith authorizes the contract or transaction by the
affirmative votes of a
<PAGE> 18
Page 18
majority of the disinterested directors, even though the disinterested
directors be less than a quorum; or (ii) the material facts as to his
or her relationship or interest and as to the contract or transaction
are disclosed or are known to the stockholders entitled to vote
thereon, and the contract or transaction is specifically approved in
good faith by vote of the stockholders; or (iii) the contract or
transaction is fair as to the Corporation as of the time it is
authorized, approved, or ratified by the board of directors, a
committee thereof (to the extent permitted by applicable law), or the
stockholders. Common or interested directors may be counted in
determining the presence of a quorum at a meeting of the board of
directors or of a committee which authorizes the contract or
transaction.
SIXTH: The Board of Directors shall have the power to adopt,
amend or repeal the bylaws of the Corporation.
SEVENTH: Election of directors need not be by written ballot
unless the bylaws of the Corporation so provide.
EIGHTH: A director of the Corporation shall not be personally
liable to the Corporation or its stockholders for monetary damages for
breach of fiduciary duty as a director, except for liability (i) for
any breach of the director's duty of loyalty to the Corporation or its
stockholders, (ii) for acts or omissions not in good faith or which
involve intentional misconduct or knowing violation of law, (iii) under
Section 174 of the Delaware Law, or (iv) for any transaction from which
the director derived an improper personal benefit. Any repeal or
amendment of this Article EIGHTH by the stockholders of the Corporation
shall be prospective only, and shall not adversely affect any
limitation on the personal liability of a director of the Corporation
arising from an act or omission occurring prior to the time of such
repeal or amendment. In addition to the circumstances in which a
director of the Corporation is not personally liable as set forth in
the foregoing provisions of this Article EIGHTH, a director shall not
be liable to the Corporation or its stockholders to such further extent
as permitted by any law hereafter enacted, including without limitation
any subsequent amendment to the Delaware Law.
NINTH: (1) A director of the Corporation shall not be liable to
the Corporation or its stockholders for monetary damages for breach of
fiduciary duty as a director to the fullest extent permitted by
Delaware Law.
(2)(a) Each person (and the heirs, executors or administrators of
such person) who was or is a party or is threatened to be made a party
to, or is involved in any threatened, pending or completed action, suit
or proceeding, whether civil, criminal, administrative or
investigative, by reason of the fact that such person is or was a
director or officer of the Corporation or is or was serving at the
request of the Corporation as a director or officer of another
corporation, partnership, joint venture, trust or other enterprise,
shall be indemnified and held harmless by the Corporation to the
fullest extent permitted by Delaware Law.
<PAGE> 19
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The right to indemnification conferred in this Article NINTH
shall also include the right to be paid by the Corporation the expenses
incurred in connection with any such proceeding in advance of its final
disposition to the fullest extent authorized by Delaware Law. The right
to indemnification conferred in this Article NINTH shall be a contract
right.
(b) The Corporation may, by action of its Board of Directors,
provide indemnification to such of the officers, employees and agents
of the Corporation to such extent and to such effect as the Board of
Directors shall determine to be appropriate and authorized by Delaware
Law.
(3) The Corporation shall have power to purchase and maintain
insurance on behalf of any person who is or was a director, officer,
employee or agent of the Corporation, or is or was serving at the
request of the Corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other
enterprise against any expense, liability or loss incurred by such
person in any such capacity or arising out of his status as such,
whether or not the Corporation would have the power to indemnify him
against such liability under Delaware Law.
(4) The rights and authority conferred in this Article NINTH
shall not be exclusive of any other right which any person may
otherwise have or hereafter acquire.
(5) Neither the amendment nor repeal of this Article NINTH, nor
the adoption of any provision of this Certificate of Incorporation or
the bylaws of the Corporation, nor, to the fullest extent permitted by
Delaware Law, any modification of law, shall eliminate or reduce the
effect of this Article NINTH in respect of any acts or omissions
occurring prior to such amendment, repeal, adoption or modification.
TENTH: The Corporation expressly elects not to be governed by
Section 203 of the Delaware Law.
ELEVENTH: The Corporation reserves the right to amend this
Certificate of Incorporation in any manner permitted by Delaware Law
and, with the sole exception of those rights and powers conferred under
the above Article NINTH, all rights and powers conferred herein on
stockholders, directors and officers, if any, are subject to this
reserved power.
<PAGE> 20
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EXHIBIT A
SUMMARY OF TERMS
OF INDENTURE FOR
13% SUBORDINATED EXCHANGE DEBENTURES
<TABLE>
<S> <C>
PARTIES: Thermadyne Holdings Corporation (the
"CORPORATION") and [ ], as trustee.
ISSUE: 13% Exchange Debentures (the "EXCHANGE
DEBENTURES") to be issued by the Corporation, at
its option, in exchange for any or all the
outstanding shares of 13% Senior Exchangeable
Preferred Stock due 2010 (the "SENIOR PREFERRED
STOCK") issued on or about May 15, 1998 to DLJ
Merchant Banking Partners II, L.P. and certain of
its affiliates (the "DLJ ENTITIES").
MATURITY: May 15, 2010.
INTEREST: 13% annual rate, payable semi-annually.
Through the semi-annual interest payment period
ending in May 2003, semi-annual interest will
accrete on a compound basis (i.e. non-cash pay)
and increase the face amount of the Exchange
Debentures, thereafter interest will be payable in
cash.
RANKING: The Exchange Debentures will rank senior to all
other subordinated debt, preferred stock and
common equity of the Corporation.
OPTIONAL REDEMPTION: The Exchange Debentures will be redeemable at
any time after May 15, 2003 at the option of the
Corporation, in whole or in part, at the same
redemption prices set forth in the desigination of
the Senior Preferred Stock set forth in Article
FOURTH, paragraph (c) of the Restated
Certificate of Incorporation of the Surviving
Corporation.
</TABLE>
<PAGE> 21
Page 21
<TABLE>
<S> <C>
CHANGE OF CONTROL In the event of a Change of Control of the
REPURCHASE RIGHT: Corporation each holder of the Exchange
Debentures will have the right to require
the Corporation to repurchase all or any
part of such holder's Exchange Debentures
at a purchase price of 101% of the sum of
the accreted value thereof plus accrued and
unpaid cash interest, if any, to the
repurchase date.
COVENANTS: The Debentures will contain covenants that are
substantially the same as the covenants contained
in the Indenture of the [ ____ Senior Discount
Debentures due 2008] of the Corporation and will
limit, among other things, the ability of the
Corporation and its subsidiaries (i) to incur
additional indebtedness, (ii) to pay dividends and
make other distributions on its capital stock, (iii)
to repurchase its capital stock or warrants,
options or other rights to acquire shares of its
capital stock or any indebtedness subordinated to
the Exchange Debentures, (iv) to make certain
other restricted payments, (v) to make certain
investments or asset sales, (vi) to engage in
transactions with affiliates, (vii) to create liens,
(viii) to permit "layering" of indebtedness and
(ix) to merge or consolidate or transfer all or
substantially all of its assets."
</TABLE>
<PAGE> 22
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7. Except as specifically amended by this Amendment, the Agreement
shall remain in full force and effect.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment to
the Agreement as of this 22nd day of April, 1998.
THERMADYNE HOLDINGS
CORPORATION
By: /s/ RANDALL E. CURRAN
-----------------------------
Name: Randall E. Curran
Title: President
MERCURY ACQUISITION
CORPORATION
By: /s/ WILLIAM F. DAWSON, JR.
-----------------------------
Name: William F. Dawson, Jr.
Title: Vice President
<PAGE> 1
EXHIBIT 2.4
CERTIFICATE OF MERGER
OF
MERCURY ACQUISITION CORPORATION
WITH AND INTO
THERMADYNE HOLDINGS CORPORATION
(Pursuant to Section 251 of
the General Corporation Law of the State of Delaware)
* * * * *
The undersigned does hereby certify that:
FIRST: The name and state of incorporation of each of the constituent
corporations is as follows:
NAME STATE OF INCORPORATION
Thermadyne Holdings Corporation Delaware
Mercury Acquisition Corporation Delaware
SECOND: An Agreement and Plan of Merger dated as of January 20, 1998,
and as amended on April 23, 1998, between Thermadyne Holdings Corporation and
Mercury Acquisition Corporation (the "AGREEMENT") has been approved, adopted,
certified, executed and acknowledged by each of the constituent corporations in
accordance with the requirements of Section 251(c) of the General Corporation
Law of the State of Delaware.
THIRD: The name of the surviving corporation is Thermadyne Holdings
Corporation.
<PAGE> 2
FOURTH: Upon the effectiveness of the merger, the Restated Certificate
of Incorporation of the Surviving Corporation shall read in its entirety as
follows:
FIRST: The name of the Corporation is Thermadyne Holdings
Corporation.
SECOND: The address of its registered office in the State of
Delaware is 1013 Centre Road, Wilmington, Delaware 19805. The name of
its registered agent at such address is Corporation Service Company.
THIRD: The purpose of the Corporation and the nature and
objects of the business to be transacted, promoted, and carried on are
to engage in any lawful act or activity for which corporations may be
organized under the General Corporation Law of the State of Delaware,
as the same exists or may hereafter be amended (the "Delaware Law").
FOURTH: The total number of shares of stock which the
Corporation shall have authority to issue is 45,000,000, consisting of
30,000,000 shares of Common Stock, par value $0.01 per share (the
"COMMON STOCK"), and 15,000,000 shares of Preferred Stock, par value
$0.01 per share (the "PREFERRED STOCK"), of which 2,000,000 shares
have been designated 13% Senior Exchangeable Preferred Stock (the
"SENIOR PREFERRED STOCK").
The designations and the powers and preferences, rights,
qualifications, limitations and restrictions of the Common Stock and
the Preferred Stock are as follows:
A. Provisions Relating to the Common Stock
Except as otherwise required by law, each holder of Common
Stock shall be entitled to one vote for each share of Common Stock
standing in such holder's name on the records of the Corporation on
each matter submitted to a vote of the stockholders.
The holders of the Common Stock shall be entitled to receive
when, as, and if declared by the board of directors of the
Corporation, out of funds legally available therefor, dividends
payable in cash, stock, or otherwise.
2
<PAGE> 3
Upon any liquidation, dissolution, or winding up of the
Corporation, whether voluntary or involuntary, and after the holders
of any bonds, debentures, or other obligations of the Corporation
shall have been paid in full the amounts to which they shall be
entitled (if any), or a sum sufficient for such payment in full shall
have been set aside, the remaining net assets of the Corporation shall
be distributed pro rata to the holders of the Common Stock in
accordance with their respective rights and interests, to the
exclusion of the holders of any bonds, debentures, or other
obligations of the Corporation.
The Corporation may issue shares of its Common Stock from time
to time for such consideration (in any form, but not less in value
than the par value thereof) as may be fixed by the board of directors
of the Corporation, which is expressly authorized to fix the same in
its absolute and uncontrolled discretion subject to the foregoing
conditions. Shares so issued for which the consideration shall have
been paid or delivered to the Corporation shall be deemed fully paid
stock and shall not be liable to any further call or assessment
thereon, and the holders of such shares shall not be liable for any
further payments in respect of such shares. The Corporation shall
also have authority to create and issue rights and options entitling
their holders to purchase or otherwise acquire shares of Common Stock
and such rights and options shall be evidenced by instrument(s)
approved by the board of directors of the Corporation. The board of
directors of the Corporation shall be empowered to set the exercise
price, duration, times for exercise, and other terms of such options
or rights; provided, however, that the consideration to be received
(which may be in any form) for any shares of Common Stock subject
thereto shall have a value not less than the par value thereof.
B. Provisions Relating to the Preferred Stock
The Board of Directors is hereby empowered to authorize by
resolution or resolutions from time to time the issuance of one or
more classes or series of Preferred Stock and to fix the designations,
powers, preferences and relative, participating, optional or other
rights, if any, and the qualifications, limitations or restrictions
thereof, if any, with respect to each such class or series of
Preferred Stock and the number of shares constituting each such class
or series, and to increase or decrease the number of shares of
3
<PAGE> 4
any such class or series to the extent permitted by the Delaware Law.
C. Provisions Relating to the Senior Preferred Stock
(1) NUMBER AND DESIGNATION. 2,000,000 shares of the Preferred
Stock of the Corporation shall be designated as 13% Senior
Exchangeable Preferred Stock.
(2) RANK. The Senior Preferred Stock shall, with respect to
dividend rights and rights on liquidation, dissolution and winding up,
rank prior to all classes of or series of common stock of the
Corporation, including the Common Stock, and each other class of
capital stock of the Corporation, the terms of which provide that such
class shall rank junior to the Senior Preferred Stock or the terms of
which do not specify any rank relative to the Senior Preferred Stock.
All equity securities of the Corporation to which the Senior Preferred
Stock ranks prior (whether with respect to dividends or upon
liquidation, dissolution, winding up or otherwise), including the
Common Stock, are collectively referred to herein as the "JUNIOR
SECURITIES." All equity securities of the Corporation with which the
Senior Preferred Stock ranks on a parity (whether with respect to
dividends or upon liquidation, dissolution or winding up) are
collectively referred to herein as the "PARITY SECURITIES." The
respective definitions of Junior Securities and Parity Securities
shall also include any rights or options exercisable for or
convertible into any of the Junior Securities and Parity Securities,
as the case may be. The Senior Preferred Stock shall be subject to the
creation of Junior Securities.
(3) DIVIDENDS. (a) (i) The holders of shares of Senior
Preferred Stock shall be entitled to receive, when, as and if declared
by the Board of Directors, out of funds legally available for the
payment of dividends, dividends (subject to Sections 3(a)(ii) and
(iii) hereof) at a rate equal to 13% per annum (computed on the basis
of a 360 day year) (the "DIVIDEND RATE") on the Liquidation Value of
each share of Senior Preferred Stock on and as of the most recent
Dividend Payment Date (as defined below). In the event the Corporation
is unable or shall fail to discharge its obligation to redeem all
outstanding shares of Senior Preferred Stock pursuant to paragraph
5(c) or 5(d) hereof, the Dividend Rate shall increase by .25 percent
per quarter (each, a "DEFAULT DIVIDEND") for each quarter or portion
thereof following the date
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<PAGE> 5
on which such redemption was required to be made until cured, provided
that the aggregate increase shall not exceed 5%. Such dividends shall
be payable in the manner set forth below in Sections 3(a)(ii) and
(iii) quarterly on March 31, June 30, September 30, and December 31 of
each year (unless such day is not a business day, in which event on
the next succeeding business day) (each of such dates being a
"DIVIDEND PAYMENT DATE" and each such quarterly period being a
"DIVIDEND PERIOD"). Such dividends shall be cumulative from the date
of issue, whether or not in any Dividend Period or Periods there shall
be funds of the Corporation legally available for the payment of such
dividends.
(ii) Prior to the fifth anniversary of the issuance of the
Senior Preferred Stock (the "CASH PAY DATE"), dividends shall
not be payable in cash to holders of shares of Senior
Preferred Stock but shall, subject to Section 3(b) hereof,
accrete to the Liquidation Value in accordance with Section
4(a) hereof.
(iii) Following the Cash Pay Date, each such dividend shall be
payable in cash on the Liquidation Value per share of the
Senior Preferred Stock, in equal quarterly amounts (to which
the Default Dividend, if any, shall be added), to the holders
of record of shares of the Senior Preferred Stock, as they
appear on the stock records of the Corporation at the close of
business on such record dates, not more than 60 days or less
than 10 days preceding the payment dates thereof, as shall be
fixed by the Board of Directors. Accrued and unpaid dividends
for any past Dividend Periods may be declared and paid at any
time, without reference to any Dividend Payment Date, to
holders of record on such date, not more than 45 days
preceding the payment date thereof, as may be fixed by the
Board of Directors.
(b) At the written request of the holders of a majority of the
shares of Senior Preferred Stock, the Corporation shall, commencing on
the first Dividend Payment Date after such request and ending on the
Cash Pay Date, be required to pay all dividends on shares of Senior
Preferred Stock by the issuance of additional shares of Senior
Preferred Stock ("ADDITIONAL SHARES"). The Additional Shares shall be
identical to all other shares of Senior
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<PAGE> 6
Preferred Stock, except as set forth in Section 4. For the purposes of
determining the number of Additional Shares to be issued as dividends
pursuant to this Paragraph (b), such Additional Shares shall be valued
at their Applicable Liquidation Value as provided in Section 4(c).
(c) Holders of shares of Senior Preferred Stock shall not be
entitled to any dividends, whether payable in cash, property or stock,
in excess of the cumulative dividends, as herein provided, on the
Senior Preferred Stock. Except as provided in this Section 3, no
interest, or sum of money in lieu of interest, shall be payable in
respect of any dividend payment or payments on the Senior Preferred
Stock that may be in arrears.
(d) So long as any shares of the Senior Preferred Stock are
outstanding, no dividends, except as described in the next succeeding
sentence, shall be declared or paid or set apart for payment on Parity
Securities, for any period unless (to the extent such dividends are
payable in cash) full cumulative dividends have been or
contemporaneously are declared and paid or declared and a sum
sufficient for the payment thereof set apart for such payment on the
Senior Preferred Stock for all Dividend Periods terminating on or
prior to the date of payment of the dividend on such class or series
of Parity Securities. When (to the extent such dividends are payable
in cash) dividends are not paid in full or a sum sufficient for such
payment is not set apart, as aforesaid, all dividends declared upon
shares of the Senior Preferred Stock and all dividends declared upon
any other class or series of Parity Securities shall (in each case, to
the extent payable in cash) be declared ratably in proportion to the
respective amounts of dividends accumulated and unpaid on the Senior
Preferred Stock and accumulated and unpaid on such Parity Securities.
(e) So long as any shares of the Senior Preferred Stock are
outstanding, no dividends (other than dividends or distributions paid
in shares of, or options, warrants or rights to subscribe for or
purchase shares of, Junior Securities) shall be declared or paid or
set apart for payment or other distribution declared or made upon
Junior Securities, nor shall any Junior Securities be redeemed,
purchased or otherwise acquired (other than a redemption, purchase or
other acquisition of shares of Common Stock made for purposes of an
employee incentive or benefit plan of the Corporation or any
subsidiary) (all such dividends, distributions,
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<PAGE> 7
redemptions or purchases being hereinafter referred to as a "JUNIOR
SECURITIES DISTRIBUTION") for any consideration (or any moneys be paid
to or made available for a sinking fund for the redemption of any
shares of any such stock) by the Corporation, directly or indirectly
(except by conversion into or exchange for Junior Securities), unless
in each case (i) the full cumulative dividends on all outstanding
shares of the Senior Preferred Stock and any other Parity Securities
shall (to the extent payable in cash) have been paid or set apart for
payment for all past Dividend Periods with respect to the Senior
Preferred Stock and all past dividend periods with respect to such
Parity Securities and (ii) (to the extent payable in cash) sufficient
funds shall have been paid or set apart for the payment of the
dividend for the current Dividend Period with respect to the Senior
Preferred Stock and the current dividend period with respect to such
Parity Securities.
(4) LIQUIDATION PREFERENCE. (a) In the event of any
liquidation, dissolution or winding up of the Corporation, whether
voluntary or involuntary, before any payment or distribution of the
assets of the Corporation (whether capital or surplus) shall be made
to or set apart for the holders of Junior Securities, the holders of
the shares of Senior Preferred Stock shall be entitled to receive an
amount equal to the Liquidation Value of such share plus any accrued
and unpaid cash dividends to the date of distribution. "LIQUIDATION
VALUE" on any date means, with respect to (x) any share of Senior
Preferred Stock other than any Additional Shares, the sum of (1)
$25.00 per share and (2) the aggregate of all dividends accreted on
such share until the most recent Dividend Payment Date upon which an
accretion to Liquidation Value has occurred (or if such date is a
Dividend Payment Date upon which an accretion to Liquidation Value has
occurred, such date), provided that in the event of an actual
liquidation, dissolution or winding up of the Corporation or the
redemption of any shares of Senior Preferred Stock pursuant to Section
5 hereunder, the amount referred to in (2) shall be calculated by
including dividends accreting to the actual date of such liquidation,
dissolution or winding up or the redemption date, as the case may be,
rather than the Dividend Payment Date referred to above and provided
further that in no event will dividends accrete beyond the earlier of
(i) the Cash Pay Date and (ii) the most recent Dividend Payment Date
prior to the Dividend Payment Date on which dividends on the Senior
Preferred Stock are payable in Additional Shares and (y) any
Additional Share, the Applicable Liquidation Value. All accretions
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<PAGE> 8
to Liquidation Value will be calculated using compounding on a
quarterly basis. Except as provided in the preceding sentences,
holders of shares of Senior Preferred Stock shall not be entitled to
any distribution in the event of liquidation, dissolution or winding
up of the affairs of the Corporation. If, upon any liquidation,
dissolution or winding up of the Corporation, the assets of the
Corporation, or proceeds thereof, distributable among the holders of
the shares of Senior Preferred Stock shall be insufficient to pay in
full the preferential amount aforesaid and liquidating payments on any
Parity Securities, then such assets, or the proceeds thereof, shall be
distributed among the holders of shares of Senior Preferred Stock and
any such other Parity Securities ratably in accordance with the
respective amounts that would be payable on such shares of Senior
Preferred Stock and any such other stock if all amounts payable
thereon were paid in full. For the purposes of this Section 4, (i) a
consolidation or merger of the Corporation with one or more
corporations, or (ii) a sale or transfer of all or substantially all
of the Corporation's assets, shall not be deemed to be a liquidation,
dissolution or winding up, voluntary or involuntary, of the
Corporation.
(b) Subject to the rights of the holders of any Parity
Securities, after payment shall have been made in full to the holders
of the Senior Preferred Stock, as provided in this paragraph (4), any
other series or class or classes of Junior Securities shall, subject
to the respective terms and provisions (if any) applying thereto, be
entitled to receive any and all assets remaining to be paid or
distributed, and the holders of the Senior Preferred Stock shall not
be entitled to share therein.
(c) The Applicable Liquidation Value of any Additional Shares
shall be the Liquidation Value of Senior Preferred Stock outstanding
immediately prior to the first Dividend Payment Date occurring after a
request for payment in Additional Shares has been made in accordance
with Section 3(b).
(5) REDEMPTION. (a) Redemption Upon Consummation of Public
Offering. The Corporation may, at its option, to the extent it shall
have funds legally available for such payment, redeem, prior to May
15, 2001, in whole but not in part, shares of Senior Preferred Stock,
at a redemption price per share equal to 113% of the Liquidation
Value, in cash, plus accrued and unpaid cash dividends on such shares
to the date fixed for redemption, without interest,
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<PAGE> 9
provided that the Corporation shall not redeem any shares of Senior
Preferred Stock pursuant to this Section 5(a) unless (i) prior to such
redemption a Public Offering shall have been consummated, and (ii) the
aggregate redemption price of the shares of Senior Preferred Stock
redeemed pursuant to this Section 5(a) does not exceed the net
proceeds received by the Corporation in such Initial Public Offering.
"PUBLIC OFFERING" shall mean any underwritten public offering
of Common Stock pursuant to an effective registration statement under
the Securities Act of 1933, as amended, and shall, in addition, for
the purposes of Section 5(a) hereof, include any sale, pursuant to
such an underwritten registered public offering, following the Closing
Date of any common stock by any affiliate of the Corporation, the net
proceeds of which are contributed or loaned to the Corporation in such
a manner that such proceeds may lawfully be used for the redemption of
the Senior Preferred Stock.
"CLOSING DATE" shall have the meaning ascribed to such term in
the Investors' Agreement.
"INVESTORS' AGREEMENT" means the Investors' Agreement dated
May 22, 1998, among Thermadyne Holdings Corporation, DLJ Merchant
Banking Partners II, L.P., DLJ Merchant Banking Partners II-A, L.P.,
DLJ Offshore Partners, C.V., DLJ Merchant Banking Funding, Inc., DLJ
Offshore Partners II, C.V., DLJ Diversified Partners, L.P., DLJ
Diversified Partners-A, L.P., DLJ Millennium Partners, L.P., DLJ
Millennium-A, L.P., DLJMB Funding II, Inc., DLJ EAB Partners, L.P.,
DLJ First ESC L.P., UK Investment Plan 1997 Partners, DLJ ESC II, L.P.
(collectively, the "DLJMB Funds"), and certain other stockholders
listed on the signature pages thereof.
(b) Redemption At the Option of the Corporation. On and after
May 15, 2003, to the extent the Corporation shall have funds legally
available for such payment, the Corporation may, at its option, redeem
shares of Senior Preferred Stock, at any time in whole but not in
part, at redemption prices per share in cash set forth in the table
below, together with accrued and unpaid cash dividends thereon to the
date fixed for redemption, without interest:
9
<PAGE> 10
<TABLE>
<CAPTION>
Twelve Months Beginning
May 15, Percentage of Liquidation Value
------- -------------------------------
<S> <C>
2003 106.500%
2004 104.333
2005 102.167
2006 100.000
</TABLE>
(c) Redemption In the Event of a Change of Control. In the
event of a Change of Control, the Corporation shall, to the extent it
shall have funds legally available for such payment, offer to redeem
all of the shares of Senior Preferred Stock then outstanding, and
shall redeem the shares of Senior Preferred Stock of any holder of
such shares that shall consent to such redemption, upon a date no
later than 30 days following the Change in Control, at a redemption
price per share equal to 101% of the Liquidation Value, in cash, plus
accrued and unpaid cash dividends thereon to the date fixed for
redemption, without interest.
"CHANGE OF CONTROL" means such time as: (a) a "person" or
"group" (within the meaning of Sections 13(d) and 14(d)(2) of the
Securities Exchange Act of 1934, as amended), other than any person or
group comprised solely of the Initial Investors, has become the
beneficial owner, by way of merger, consolidation or otherwise, of 30%
or more of the voting power of all classes of voting securities of the
Corporation, and such person or group has become the beneficial owner
of a greater percentage of the voting power of all classes of voting
securities of the Corporation than that beneficially owned by the
Initial Investors; or (b) a sale or transfer of all or substantially
all of the assets of the Corporation to any person or group (other
than any group consisting solely of the Initial Investors or their
affiliates) has been consummated; or (c) during any period of two
consecutive years, individuals who at the beginning of such period
constituted the Board of Directors of the Corporation (together with
any new directors whose election was approved by a vote of a majority
of the directors then still in office, who either were directors at
the beginning of such period or whose election or nomination for the
election was previously so approved) cease for any reason to
constitute a majority of the directors of the Corporation, then in
office.
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<PAGE> 11
"INITIAL INVESTORS" means the Stockholders (determined as of
the issuance of the Preferred Stock) and their Permitted Transferees,
each as defined in the Investors' Agreement.
(d) Mandatory Redemption. To the extent the Corporation shall
have funds legally available for such payment, on May 15, 2010, if any
shares of the Senior Preferred Stock shall be outstanding, the
Corporation shall redeem all outstanding shares of the Senior
Preferred Stock, at a redemption price equal to the aggregate
Liquidation Value, in cash, together with any accrued and unpaid cash
dividends thereon to the date fixed for redemption, without interest.
(e) Status of Redeemed Shares. Shares of Senior Preferred
Stock which have been issued and reacquired in any manner, including
shares purchased or redeemed, shall (upon compliance with any
applicable provisions of the laws of the State of Delaware) have the
status of authorized and unissued shares of the class of Preferred
Stock undesignated as to series and may be redesignated and reissued
as part of any series of the Preferred Stock; provided that no such
issued and reacquired shares of Senior Preferred Stock shall be
reissued or sold as Senior Preferred Stock.
(f) Failure to Redeem. If the Corporation is unable or shall
fail to discharge its obligation to redeem all outstanding shares of
Senior Preferred Stock pursuant to paragraph (5)(c) or 5(d) (each, a
"MANDATORY REDEMPTION OBLIGATION"), such Mandatory Redemption
Obligation shall be discharged as soon as the Corporation is able to
discharge such Mandatory Redemption Obligation. If and so long as any
Mandatory Redemption Obligation with respect to the Senior Preferred
Stock shall not be fully discharged, the Corporation shall not (i)
directly or indirectly, redeem, purchase, or otherwise acquire any
Parity Security or discharge any mandatory or optional redemption,
sinking fund or other similar obligation in respect of any Parity
Securities (except in connection with a redemption, sinking fund or
other similar obligation to be satisfied pro rata with the Senior
Preferred Stock) or (ii) in accordance with paragraph 3(e), declare or
make any Junior Securities Distribution, or, directly or indirectly,
discharge any mandatory or optional redemption, sinking fund or other
similar obligation in respect of the Junior Securities.
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<PAGE> 12
(g) Failure to Pay Dividends. Notwithstanding the foregoing
provisions of this paragraph (5), unless full cumulative cash
dividends (whether or not declared) on all outstanding shares of
Senior Preferred Stock shall have been paid or contemporaneously are
declared and paid or set apart for payment for all dividend periods
terminating on or prior to the applicable redemption date, none of the
shares of Senior Preferred Stock shall be redeemed, and no sum shall
be set aside for such redemption, unless shares of Senior Preferred
Stock are redeemed pro rata.
(6) PROCEDURE FOR REDEMPTION. (a) In the event the Corporation
shall redeem shares of Senior Preferred Stock pursuant to Sections
5(a), (b) or (d), notice of such redemption shall be given by first
class mail, postage prepaid, mailed not less than 30 days nor more
than 60 days prior to the redemption date, to each holder of record of
the shares to be redeemed at such holder's address as the same appears
on the stock register of the Corporation; provided that neither the
failure to give such notice nor any defect therein shall affect the
validity of the giving of notice for the redemption of any share of
Senior Preferred Stock to be redeemed except as to the holder to whom
the Corporation has failed to give said notice or except as to the
holder whose notice was defective. Each such notice shall state: (i)
the redemption date; (ii) the number of shares of Senior Preferred
Stock to be redeemed; (iii) the redemption price; (iv) the place or
places where certificates for such shares are to be surrendered for
payment of the redemption price; and (v) that dividends on the shares
to be redeemed will cease to accrue on such redemption date.
(b) In the case of any redemption pursuant to Sections 5(a),
(b) or (d) hereof, notice having been mailed as provided in Section
6(a) hereof, from and after the redemption date (unless default shall
be made by the Corporation in providing money for the payment of the
redemption price of the shares called for redemption), dividends on
the shares of Senior Preferred Stock so called for redemption shall
cease to accrue, and all rights of the holders thereof as stockholders
of the Corporation (except the right to receive from the Corporation
the redemption price) shall cease. Upon surrender in accordance with
said notice of the certificates for any shares so redeemed (properly
endorsed or assigned for transfer, if the Board of Directors of the
Corporation shall so require and the notice shall so state), such
share shall be redeemed by the Corporation at the redemption price
aforesaid. In case fewer than all the shares
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<PAGE> 13
represented by any such certificate are redeemed, a new certificate
shall be issued representing the unredeemed shares without cost to the
holder thereof.
(c) In the case of a redemption pursuant to Section 5(c)
hereof, notice of such redemption shall be given by first class mail,
postage prepaid, mailed not more than 10 days following the occurrence
of the Change of Control and not less than 20 days prior to the
redemption date, to each holder of record of the shares to be redeemed
at such holder's address as the same appears on the stock register of
the Corporation; provided that neither the failure to give such notice
nor any defect therein shall affect the validity of the giving of
notice for the redemption of any share of Senior Preferred Stock to be
redeemed except as to the holder to whom the Corporation has failed to
give said notice or except as to the holder whose notice was
defective. Each such notice shall state: (i) that a Change of Control
has occurred; (ii) the redemption date; (iii) the redemption price;
(iv) that such holder may elect to cause the Corporation to redeem all
or any of the shares of Senior Preferred Stock held by such holder;
(v) the place or places where certificates for such shares are to be
surrendered for payment of the redemption price; and (vi) that
dividends on the shares the holder elects to cause the Corporation to
redeem will cease to accrue on such redemption date.
Upon receipt of such notice, the holder shall, within 20 days
of receipt thereof, return such notice to the Corporation indicating
the number of shares of Senior Preferred Stock such holder shall elect
to cause the Corporation to redeem, if any.
(d) In the case of a redemption pursuant to Section 5(c)
hereof, notice having been mailed as provided in Section 6(c) hereof,
from and after the redemption date (unless default shall be made by
the Corporation in providing money for the payment of the redemption
price of the shares called for redemption), dividends on such shares
of Senior Preferred Stock as the holder elects to cause the
Corporation to redeem shall cease to accrue, and all rights of the
holders thereof as stockholders of the Corporation (except the right
to receive from the Corporation the redemption price) shall cease.
Upon surrender in accordance with said notice of the certificates for
any shares so redeemed (properly endorsed or assigned for transfer, if
the Board of Directors of the Corporation shall so require and the
notice shall so state), such share shall be
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<PAGE> 14
redeemed by the Corporation at the redemption price aforesaid. In case
fewer than all the shares represented by any such certificate are
redeemed, a new certificate shall be issued representing the
unredeemed shares without cost to the holder thereof.
(7) EXCHANGE. (a) Subject to the provisions of this paragraph
(7) the Corporation may, at its option, at any time and from time to
time on any Dividend Payment Date, exchange, to the extent it is
legally permitted to do so, all, but not less than all, outstanding
shares (and fractional shares) of Senior Preferred Stock, for Exchange
Debentures, provided that (i) on or prior to the date of exchange the
Corporation shall have paid to or declared and set aside for payment
to the holders of outstanding shares of Senior Preferred Stock all
accrued and unpaid cash dividends on shares of Senior Preferred Stock
through the exchange date in accordance with the next succeeding
paragraph; (ii) no event of default under the indenture (as defined in
such indenture) governing the Exchange Debentures shall have occurred
and be continuing; and (iii) no shares of Senior Preferred Stock are
held on such date by the DLJMB Funds or any of their Affiliates, or
any of their Permitted Transferees. The principal amount of Exchange
Debentures deliverable upon exchange of a share of Senior Preferred
Stock, adjusted as hereinafter provided, shall be determined in
accordance with the Exchange Ratio (as defined below).
Cash dividends on any shares of Senior Preferred Stock
exchanged for Exchange Debentures which have accrued but have not been
paid as of the date of exchange shall be paid in cash. In no event
shall the Corporation issue Exchange Debentures in denominations other
than $1,000 or in an integral multiple thereof. Cash will be paid in
lieu of any such fraction of an Exchange Debenture which would
otherwise have been issued (which shall be determined with respect to
the aggregate principal amount of Exchange Debentures to be issued to
a holder upon any such exchange). Interest will accrue on the Exchange
Debentures from the date of exchange.
Prior to effecting any exchange hereunder, the Corporation
shall appoint a trustee to serve in the capacity contemplated by an
indenture between the Corporation and such trustee, containing
customary terms and conditions.
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<PAGE> 15
The EXCHANGE RATIO shall be, as of any Dividend Payment Date,
$1.00 (or fraction thereof) of principal amount of Exchange Debenture
for each $1.00 of (i) Liquidation Value plus (ii) accrued and unpaid
cash dividends, if any, per share of Senior Preferred Stock held by a
holder on the applicable exchange date.
"AFFILIATES" shall have the meaning ascribed to such term in
the Investors' Agreement.
"EXCHANGE DEBENTURES" means 13% Subordinated Exchange
Debentures due 2010 of the Corporation, to be issued pursuant to an
indenture between the Corporation and a trustee, containing customary
terms and conditions, in accordance with the Term Sheet attached as
Exhibit A hereto.
"PERMITTED TRANSFEREES" shall have the meaning ascribed to
such term in the Investors' Agreement.
(b) Procedure for Exchange. (i) In the event the
Corporation shall exchange shares of Senior Preferred Stock, notice of
such exchange shall be given by first class mail, postage prepaid,
mailed not less than 30 days nor more than 60 days prior to the
exchange date, to each holder of record of the shares to be exchanged
at such holder's address as the same appears on the stock register of
the Corporation; provided that neither the failure to give such notice
nor any defect therein shall affect the validity of the giving of
notice for the exchange of any share of Senior Preferred Stock to be
exchanged except as to the holder to whom the Corporation has failed
to give said notice or except as to the holder whose notice was
defective. Each such notice shall state: (A) the exchange date; (B)
the number of shares of Senior Preferred Stock to be exchanged; (C)
the Exchange Ratio; (D) the place or places where certificates for
such shares are to be exchanged for notes evidencing the Exchange
Debentures to be received by the exchanging holder; and (E) that
dividends on the shares to be exchanged will cease to accrue on such
exchange date.
(ii) Prior to giving notice of intention to exchange,
the Corporation shall execute and deliver to a bank or
trust company selected by the Corporation an indenture
containing customary terms and conditions. The
Corporation will cause the Exchange Debentures to be
authenticated on the
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<PAGE> 16
Dividend Payment Date on which the exchange is effective, and
will pay interest on the Exchange Debentures at the rate and
on the dates specified in such indenture from the exchange
date.
The Corporation will not give notice of its intention
to exchange under paragraph 6(b)(i) hereof unless it shall
file at the place or places (including a place in the Borough
of Manhattan, The City of New York) maintained for such
purpose an opinion of counsel (who may be an employee of the
Corporation) to the effect that (i) the indenture has been
duly authorized, executed and delivered by the Corporation,
has been duly qualified under the Trust Indenture Act of 1939
(or that such qualification is not necessary) and constitutes
a valid and binding instrument enforceable against the
Corporation in accordance with its terms (subject, as to
enforcement, to bankruptcy, insolvency, reorganization and
other laws of general applicability relating to or affecting
creditors' rights and to general equity principles, and
subject to such other qualifications as are then customarily
contained in opinions of counsel experienced in such matters),
(ii) the Exchange Debentures have been duly authorized and,
when executed and authenticated in accordance with the
provisions of the indenture and delivered in exchange for the
shares of Preferred Stock, will constitute valid and binding
obligations of the Corporation entitled to the benefits of the
indenture (subject as aforesaid), (iii) neither the execution
nor delivery of the indenture or the Exchange Debentures nor
compliance with the terms, conditions or provisions of such
instruments will result in a breach or violation of any of the
terms or provisions of, or constitute a default under, any
indenture, mortgage, deed of trust or agreement or instrument,
known to such counsel, to which the Corporation or any of its
subsidiaries is a party or by which it or any of them is
bound, or any decree, judgment, order, rule or regulation,
known to such counsel, of any court or governmental agency or
body having jurisdiction over the Corporation and
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<PAGE> 17
such subsidiaries or any of their properties, (iv) the
Exchange Debentures have been duly registered for such
exchange with the Securities and Exchange Commission
under a registration statement that has become
effective under the Securities Act of 1933 (the "Act")
or that the exchange of the Exchange Debentures for
the shares of Senior Preferred Stock is exempt from
registration under the Act, and (v) the Corporation
has sufficient legally available funds for such
exchange such that such exchange is permitted under
applicable law.
(iii) Notice having been mailed as aforesaid, from
and after the exchange date (unless default shall be
made by the Corporation in issuing Exchange Debentures
in exchange for the shares called for exchange),
dividends on the shares of Senior Preferred Stock so
called for exchange shall cease to accrue, and all
rights of the holders thereof as stockholders of the
Corporation (except the right to receive from the
Corporation the Exchange Debentures and any rights
such holder, upon the exchange, may have as a holder
of the Exchange Debenture) shall cease. Upon surrender
in accordance with said notice of the certificates for
any shares so exchanged (properly endorsed or assigned
for transfer, if the Board of Directors of the
Corporation shall so require and the notice shall so
state), such share shall be exchanged by the
Corporation for the Exchange Debentures at the
Exchange Ratio. In case fewer than all the shares
represented by any such certificate are exchanged, a
new certificate shall be issued representing the
unexchanged shares without cost to the holder thereof.
(iv) Each exchange shall be deemed to have been
effected immediately after the close of business on
the relevant Dividend Payment Date, and the person in
whose name or names any Exchange Debentures shall be
issuable upon such exchange shall be deemed to have
become the holder of record of the
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<PAGE> 18
Exchange Debentures represented thereby at such time
on such Dividend Payment Date.
(v) Prior to the delivery of any securities which the
Corporation shall be obligated to deliver upon
exchange of the Senior Preferred Stock, the
Corporation shall comply with all applicable federal
and state laws and regulations which require action to
be taken by the Corporation.
(c) The Corporation will pay any and all documentary stamp or
similar issue or transfer taxes payable in respect of the issue or
delivery of notes evidencing Exchange Debentures on exchange of the
Senior Preferred Stock pursuant hereto; provided that the Corporation
shall not be required to pay any tax which may be payable in respect
of any transfer involved in the issue or delivery of Exchange
Debentures in a name other than that of the holder of the Senior
Preferred Stock to be exchanged and no such issue or delivery shall be
made unless and until the person requesting such issue or delivery has
paid to the Corporation the amount of any such tax or has established,
to the satisfaction of the Corporation, that such tax has been paid.
(8) VOTING RIGHTS. (a) The holders of record of
shares of Senior Preferred Stock shall not be entitled to any voting
rights except as hereinafter provided in this paragraph (8), as
otherwise provided by law or as provided in the Investors' Agreement.
(b) If and whenever (i) four consecutive or six
quarterly cash dividends payable on the Senior Preferred Stock have not
been paid in full, (ii) for any reason (including the reason that funds
are not legally available for a redemption), the Corporation shall have
failed to discharge any Mandatory Redemption Obligation (including a
redemption in the Event of a Change of Control pursuant to Section 5(c)
hereof), (iii) the Corporation shall have failed to provide the notice
required by Section 6(c) hereof within the time period specified in
such section or (iv) the Corporation shall have failed to comply with
Sections 3(d), 3(e) or 8(c) hereof, (1) the number of directors then
constituting the Board of Directors shall be increased by two and the
holders of a majority of the outstanding shares of Senior Preferred
Stock, together with the holders of shares of every other
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<PAGE> 19
series of preferred stock upon which like rights have been conferred
and are exercisable (resulting from either the failure to pay
dividends or the failure to redeem) (any such series is referred to as
the "PREFERRED SHARES"), voting as a single class regardless of
series, shall be entitled to elect the two additional directors to
serve on the Board of Directors at any annual meeting of stockholders
or special meeting held in place thereof, or at a special meeting of
the holders of the Senior Preferred Stock and the Preferred Shares
called as hereinafter provided. Whenever (i) all arrears in cash
dividends on the Senior Preferred Stock and the Preferred Shares then
outstanding shall have been paid and cash dividends thereon for the
current quarterly dividend period shall have been paid or declared and
set apart for payment, (ii) the Corporation shall have fulfilled its
Mandatory Redemption Obligation, (iii) fulfilled its obligation to
provide notice as specified in subsection (b)(iii) hereof, or (iv) the
Corporation shall have complied with Sections 3(d), 3(e), or 8(c)
hereof, as the case may be, then the right of the holders of the
Senior Preferred Stock to elect such additional two directors shall
cease (but subject always to the same provisions for the vesting of
such voting rights in the case of any similar future (i) arrearage in
six consecutive quarterly cash dividends, (ii) failure to fulfill any
Mandatory Redemption Obligation, (iii) failure to fulfill the
obligation to provide the notice required by Section 6(d) hereof
within the time period specified in such section or (iv) failure to
comply with Sections 3(d), 3(e), or 8(c)) and the terms of office of
all persons elected as directors by the holders of the Senior
Preferred Stock shall forthwith terminate and the number of the Board
of Directors shall be reduced accordingly. At any time after such
voting power shall have been so vested in the holders of shares of
Senior Preferred Stock and the Preferred Shares, the secretary of the
Corporation may, and upon the written request of any holder of Senior
Preferred Stock (addressed to the secretary at the principal office of
the Corporation) shall, call a special meeting of the holders of the
Senior Preferred Stock and of the Preferred Shares for the election of
the two directors to be elected by them as herein provided, such call
to be made by notice similar to that provided in the Bylaws of the
Corporation for a special meeting of the stockholders or as required
by law. If any such special meeting required to be called as above
provided shall not be called by the secretary within 20 days after
receipt of any such request, then any holder of shares of Senior
Preferred Stock may call such meeting, upon the notice above provided,
and for that purpose shall have access to the stock books of the
Corporation. The directors elected
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<PAGE> 20
at any such special meeting shall hold office until the next annual
meeting of the stockholders or special meeting held in lieu thereof if
such office shall not have previously terminated as above provided. If
any vacancy shall occur among the directors elected by the holders of
the Senior Preferred Stock and the Preferred Shares, a successor shall
be elected by the Board of Directors, upon the nomination of the
then-remaining director elected by the holders of the Senior Preferred
Stock and the Preferred Shares or the successor of such remaining
director, to serve until the next annual meeting of the stockholders
or special meeting held in place thereof if such office shall not have
previously terminated as provided above.
(c) Without the written consent of a majority of the
outstanding shares of Senior Preferred Stock or the vote of holders of
a majority of the outstanding shares of Senior Preferred Stock at a
meeting of the holders of Senior Preferred Stock called for such
purpose, the Corporation will not (i) amend, alter or repeal any
provision of the Certificate of Incorporation (by merger or otherwise)
so as to adversely affect the preferences, rights or powers of the
Senior Preferred Stock; provided that any such amendment that
decreases the dividend payable on or the Liquidation Value of the
Senior Preferred Stock shall require the affirmative vote of holders
of each share of Senior Preferred Stock at a meeting of holders of
Senior Preferred Stock called for such purpose or written consent of
the holder of each share of Senior Preferred Stock; or (ii) create,
authorize or issue any class of stock ranking prior to, or on a parity
with, the Senior Preferred Stock with respect to dividends or upon
liquidation, dissolution, winding up or otherwise, or increase the
authorized number of shares of any such class or series, or reclassify
any authorized stock of the Corporation into any such prior or parity
shares or create, authorize or issue any obligation or security
convertible into or evidencing the right to purchase any such prior or
parity shares, except that the Corporation may, without such approval,
create authorize and issue Parity Securities for the purpose of
utilizing the proceeds from the issuance of such Parity Securities for
the redemption or repurchase of all outstanding shares of Senior
Preferred Stock in accordance with the terms hereof or of the
Investors' Agreement.
(d) In exercising the voting rights set forth in this
paragraph (8), each share of Senior Preferred Stock shall have one
vote per share, except that when any other series of preferred stock
shall
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<PAGE> 21
have the right to vote with the Senior Preferred Stock as a single
class on any matter, then the Senior Preferred Stock and such other
series shall have with respect to such matters one vote per $25 of
Liquidation Value or other liquidation preference. Except as otherwise
required by applicable law or as set forth herein, the shares of
Senior Preferred Stock shall not have any relative, participating,
optional or other special voting rights and powers and the consent of
the holders thereof shall not be required for the taking of any
corporate action.
(9) REPORTS. So long as any of the Senior Preferred Stock is
outstanding, the Corporation will furnish the holders thereof with the
quarterly and annual financial reports that the Corporation is
required to file with the Securities and Exchange Commission pursuant
to Section 13 or Section 15(d) of the Securities Exchange Act of 1934
or, in the event the Corporation is not required to file such reports,
reports containing the same information as would be required in such
reports.
(10) GENERAL PROVISIONS. (a) The term "PERSON" as used herein
means any corporation, limited liability company, partnership, trust,
organization, association, other entity or individual.
(b) The term "OUTSTANDING," when used with reference to
shares of stock, shall mean issued shares, excluding shares held by
the Corporation or a subsidiary.
(c) The headings of the paragraphs, subparagraphs,
clauses and subclauses used herein are for convenience of reference
only and shall not define, limit or affect any of the provisions
hereof.
(d) Each holder of Senior Preferred Stock, by acceptance
thereof, acknowledges and agrees that payments of dividends, interest,
premium and principal on, and exchange, redemption and repurchase of,
such securities by the Corporation are subject to restrictions on the
Corporation contained in certain credit and financing agreements.
FIFTH: No contract or transaction between the Corporation and
one or more of its directors, officers, or stockholders or between the
Corporation and any person (as used
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<PAGE> 22
herein "person" means any other corporation, partnership, association,
firm, trust, joint venture, political subdivision, or instrumentality)
or other organization in which one or more of its directors, officers,
or stockholders are directors, officers or stockholders, or have a
financial interest, shall be void or voidable solely for this reason,
or solely because the director or officer is present at or
participates in the meeting of the board or committee which authorizes
the contract or transaction, or solely because his, her, or their
votes are counted for such purpose, if: (i) the material facts as to
his or her relationship or interest and as to the contract or
transaction are disclosed or are known to the board of directors or
the committee, and the board of directors or committee in good faith
authorizes the contract or transaction by the affirmative votes of a
majority of the disinterested directors, even though the disinterested
directors be less than a quorum; or (ii) the material facts as to his
or her relationship or interest and as to the contract or transaction
are disclosed or are known to the stockholders entitled to vote
thereon, and the contract or transaction is specifically approved in
good faith by vote of the stockholders; or (iii) the contract or
transaction is fair as to the Corporation as of the time it is
authorized, approved, or ratified by the board of directors, a
committee thereof (to the extent permitted by applicable law), or the
stockholders. Common or interested directors may be counted in
determining the presence of a quorum at a meeting of the board of
directors or of a committee which authorizes the contract or
transaction.
SIXTH: The Board of Directors shall have the power to adopt,
amend or repeal the bylaws of the Corporation.
SEVENTH: Election of directors need not be by written ballot
unless the bylaws of the Corporation so provide.
EIGHTH: A director of the Corporation shall not be personally
liable to the Corporation or its stockholders for monetary damages for
breach of fiduciary duty as a director, except for liability (i) for
any breach of the director's duty of loyalty to the Corporation or its
stockholders, (ii) for acts or omissions not in good faith or which
involve intentional misconduct or knowing violation of law, (iii)
under Section 174 of the Delaware Law, or (iv) for any transaction
from which the director derived an improper personal benefit. Any
repeal or amendment of this Article EIGHTH by the stockholders of the
Corporation shall be prospective only,
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<PAGE> 23
and shall not adversely affect any limitation on the personal
liability of a director of the Corporation arising from an act or
omission occurring prior to the time of such repeal or amendment. In
addition to the circumstances in which a director of the Corporation
is not personally liable as set forth in the foregoing provisions of
this Article EIGHTH, a director shall not be liable to the Corporation
or its stockholders to such further extent as permitted by any law
hereafter enacted, including without limitation any subsequent
amendment to the Delaware Law.
NINTH: (1) A director of the Corporation shall not be liable
to the Corporation or its stockholders for monetary damages for breach
of fiduciary duty as a director to the fullest extent permitted by
Delaware Law.
(2)(a) Each person (and the heirs, executors or administrators
of such person) who was or is a party or is threatened to be made a
party to, or is involved in any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative, by reason of the fact that such person is or was a
director or officer of the Corporation or is or was serving at the
request of the Corporation as a director or officer of another
corporation, partnership, joint venture, trust or other enterprise,
shall be indemnified and held harmless by the Corporation to the
fullest extent permitted by Delaware Law. The right to
indemnification conferred in this Article NINTH shall also include the
right to be paid by the Corporation the expenses incurred in
connection with any such proceeding in advance of its final
disposition to the fullest extent authorized by Delaware Law. The
right to indemnification conferred in this Article NINTH shall be a
contract right.
(b) The Corporation may, by action of its Board of Directors,
provide indemnification to such of the officers, employees and agents
of the Corporation to such extent and to such effect as the Board of
Directors shall determine to be appropriate and authorized by Delaware
Law.
(3) The Corporation shall have power to purchase and maintain
insurance on behalf of any person who is or was a director, officer,
employee or agent of the Corporation, or is or was serving at the
request of the Corporation as a director, officer, employee or agent
of another corporation, partnership, joint
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<PAGE> 24
venture, trust or other enterprise against any expense, liability or
loss incurred by such person in any such capacity or arising out of
his status as such, whether or not the Corporation would have the
power to indemnify him against such liability under Delaware Law.
(4) The rights and authority conferred in this Article NINTH
shall not be exclusive of any other right which any person may
otherwise have or hereafter acquire.
(5) Neither the amendment nor repeal of this Article NINTH,
nor the adoption of any provision of this Certificate of Incorporation
or the bylaws of the Corporation, nor, to the fullest extent permitted
by Delaware Law, any modification of law, shall eliminate or reduce
the effect of this Article NINTH in respect of any acts or omissions
occurring prior to such amendment, repeal, adoption or modification.
TENTH: The Corporation expressly elects not to be governed by
Section 203 of the Delaware Law.
ELEVENTH: The Corporation reserves the right to amend this
Certificate of Incorporation in any manner permitted by Delaware Law
and, with the sole exception of those rights and powers conferred
under the above Article NINTH, all rights and powers conferred herein
on stockholders, directors and officers, if any, are subject to this
reserved power.
24
<PAGE> 25
EXHIBIT A
SUMMARY OF TERMS
OF INDENTURE FOR
13% SUBORDINATED EXCHANGE DEBENTURES
<TABLE>
<S> <C>
PARTIES: Thermadyne Holdings Corporation (the "CORPORATION") and
[ ], as trustee.
ISSUE: 13% Exchange Debentures (the "EXCHANGE DEBENTURES") to
be issued by the Corporation, at its option, in exchange
for any or all the outstanding shares of 13% Senior
Exchangeable Preferred Stock due 2010 (the "SENIOR
PREFERRED STOCK") issued on or about May 15, 1998 to DLJ
Merchant Banking Partners II, L.P. and certain of its
affiliates (the "DLJ ENTITIES").
MATURITY: May 15, 2010.
INTEREST: 13% annual rate, payable semi-annually. Through the
semi-annual interest payment period ending in May 2003,
semi-annual interest will accrete on a compound basis
(i.e. non-cash pay) and increase the face amount of the
Exchange Debentures, thereafter interest will be payable
in cash.
RANKING: The Exchange Debentures will rank senior to all other
subordinated debt, preferred stock and common equity of
the Corporation.
OPTIONAL REDEMPTION: The Exchange Debentures will be redeemable at any time
after May 15, 2003 at the option of the Corporation, in
whole or in part, at the same redemption prices set
forth in the designation of the Senior Preferred Stock
set forth in Article FOURTH, paragraph (c) of the
Restated Certificate of Incorporation of the Surviving
Corporation.
</TABLE>
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<PAGE> 26
<TABLE>
<S> <C> <C>
CHANGE OF CONTROL REPURCHASE In the event of a Change of Control of the Corporation
RIGHT: each holder of the Exchange Debentures will have the
right to require the Corporation to repurchase all or
any part of such holder's Exchange Debentures at a
purchase price of 101% of the sum of the accreted value
thereof plus accrued and unpaid cash interest, if any,
to the repurchase date.
COVENANTS: The Debentures will contain covenants that are
substantially the same as the covenants contained in the
Indenture of the Senior Discount Debentures due 2008 of
the Corporation and will limit, among other things, the
ability of the Corporation and its subsidiaries (i) to
incur additional indebtedness, (ii) to pay dividends and
make other distributions on its capital stock, (iii) to
repurchase its capital stock or warrants, options or
other rights to acquire shares of its capital stock or
any indebtedness subordinated to the Exchange
Debentures, (iv) to make certain other restricted
payments, (v) to make certain investments or asset
sales, (vi) to engage in transactions with affiliates,
(vii) to create liens, (viii) to permit "layering" of
indebtedness and (ix) to merge or consolidate or
transfer all or substantially all of its assets."
</TABLE>
FIFTH: The executed Agreement is on file at the office of the
surviving corporation at 101 South Hanley Road, Suite 300, St. Louis, Missouri
63105.
SIXTH: A copy of the Agreement will be furnished by the surviving
corporation, on request and without cost, to any stockholder of any constituent
corporation.
SEVENTH: This Certificate of Merger shall become effective upon
filing.
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<PAGE> 27
IN WITNESS WHEREOF, the undersigned has caused this instrument to be duly
executed by its authorized officers.
Dated: May 22, 1998
THERMADYNE HOLDINGS CORPORATION
By: /s/ STEPHANIE N. JOSEPHSON
---------------------------------------
Stephanie N. Josephson
Vice President, Corporate Secretary
and General Counsel
27
<PAGE> 1
EXHIBIT 3.2
BYLAWS
OF
THERMADYNE HOLDINGS CORPORATION
* * * * *
ARTICLE 1
OFFICES
SECTION 1.01. Registered Office. The registered office shall be in the
City of Wilmington, County of New Castle, State of Delaware.
SECTION 1.02. Other Offices. The Corporation may also have offices at
such other places both within and without the State of Delaware as the Board of
Directors may from time to time determine or the business of the Corporation may
require.
SECTION 1.03. Books. The books of the Corporation may be kept within
or without of the State of Delaware as the Board of Directors may from time to
time determine or the business of the Corporation may require.
ARTICLE 2
MEETINGS OF STOCKHOLDERS
SECTION 2.01. Time and Place of Meetings. All meetings of stockholders
shall be held at such place, either within or without the State of Delaware, on
such date and at such time as may be determined from time to time by the Board
of Directors (or the Chairman in the absence of a designation by the Board of
Directors).
SECTION 2.02. Annual Meetings. Annual meetings of stockholders,
commencing with the year 1998, shall be held to elect the Board of Directors and
transact such other business as may properly be brought before the meeting.
<PAGE> 2
SECTION 2.03. Special Meetings. Special meetings of stockholders may
be called by the Board of Directors or the chairman of the Board and shall be
called by the Secretary at the request in writing of holders of record of a
majority of the outstanding capital stock of the Corporation entitled to vote.
Such request shall state the purpose or purposes of the proposed meeting.
SECTION 2.04. Notice of Meetings and Adjourned Meetings; Waivers of
Notice. (a) Whenever stockholders are required or permitted to take any action
at a meeting, a written notice of the meeting shall be given which shall state
the place, date and hour of the meeting, and, in the case of a special meeting,
the purpose or purposes for which the meeting is called. Unless otherwise
provided by the General Corporation Law of the State of Delaware as the same
exists or may hereafter be amended ("DELAWARE LAW"), such notice shall be given
not less than 10 nor more than 60 days before the date of the meeting to each
stockholder of record entitled to vote at such meeting. Unless these bylaws
otherwise require, when a meeting is adjourned to another time or place (whether
or not a quorum is present), notice need not be given of the adjourned meeting
if the time and place thereof are announced at the meeting at which the
adjournment is taken. At the adjourned meeting, the Corporation may transact any
business which might have been transacted at the original meeting. If the
adjournment is for more than 30 days, or after the adjournment a new record date
is fixed for the adjourned meeting, a notice of the adjourned meeting shall be
given to each stockholder of record entitled to vote at the meeting.
(b) A written waiver of any such notice signed by the person entitled
thereto, whether before or after the time stated therein, shall be deemed
equivalent to notice. Attendance of a person at a meeting shall constitute a
waiver of notice of such meeting, except when the person attends the meeting for
the express purpose of objecting, at the beginning of the meeting, to the
transaction of any business because the meeting is not lawfully called or
convened. Business transacted at any special meeting of stockholders shall be
limited to the purposes stated in the notice.
SECTION 2.05. Quorum. Unless otherwise provided under the certificate
of incorporation or these bylaws and subject to Delaware Law, the presence, in
person or by proxy, of the holders of a majority of the outstanding capital
stock of the Corporation entitled to vote at a meeting of stockholders shall
constitute a quorum for the transaction of business.
SECTION 2.06. Voting. (a) Unless otherwise provided in the certificate
of incorporation and subject to Delaware Law, each stockholder shall be entitled
to one vote for each outstanding share of capital stock of the Corporation held
by such stockholder. Unless otherwise provided in Delaware Law, the certificate
of incorporation or these bylaws, the affirmative vote of a majority of the
shares of
2
<PAGE> 3
capital stock of the Corporation present, in person or by proxy, at a meeting of
stockholders and entitled to vote on the subject matter shall be the act of the
stockholders.
(b) Each stockholder entitled to vote at a meeting of stockholders or
to express consent or dissent to a corporate action in writing without a meeting
may authorize another person or persons to act for him by proxy, but no such
proxy shall be voted or acted upon after three years from its date, unless the
proxy provides for a longer period.
SECTION 2.07. Action by Consent. (a) Unless otherwise provided in the
certificate of incorporation, any action required to be taken at any annual or
special meeting of stockholders, or any action which may be taken at any annual
or special meeting of stockholders, may be taken without a meeting, without
prior notice and without a vote, if a consent or consents in writing, setting
forth the action so taken, shall be signed by the holders of outstanding capital
stock having not less than the minimum number of votes that would be necessary
to authorize or take such action at a meeting at which all shares entitled to
vote thereon were present and voted and shall be delivered to the Corporation by
delivery to its registered office in Delaware, its principal place of business,
or an officer or agent of the Corporation having custody of the book in which
proceedings of meetings of stockholders are recorded. Delivery made to the
Corporation's registered office shall be by hand or by certified or registered
mail, return receipt requested. Prompt notice of the taking of the corporate
action without a meeting by less than unanimous written consent shall be given
to those stockholders who have not consented in writing.
(b) Every written consent shall bear the date of signature of each
stockholder who signs the consent, and no written consent shall be effective to
take the corporate action referred to therein unless, within 60 days of the
earliest dated consent delivered in the manner required by this Section and
Delaware Law to the Corporation, written consents signed by a sufficient number
of holders to take action are delivered to the Corporation by delivery to its
registered office in Delaware, its principal place of business, or an officer or
agent of the Corporation having custody of the book in which proceedings of
meetings of stockholders are recorded. Delivery made to the Corporation's
registered office shall be by hand or by certified or registered mail, return
receipt requested.
SECTION 2.08. Organization. At each meeting of stockholders, the
Chairman of the Board, if one shall have been elected, (or in his absence or if
one shall not have been elected, the President) shall act as chairman of the
meeting. The Secretary (or in his absence or inability to act, the person whom
the chairman of the meeting shall appoint secretary of the meeting) shall act as
secretary of the meeting and keep the minutes thereof.
3
<PAGE> 4
SECTION 2.09. Order of Business. The order of business at all meetings
of stockholders shall be as determined by the chairman of the meeting.
ARTICLE 3
DIRECTORS
SECTION 3.01. General Powers. Except as otherwise provided in Delaware
Law or the certificate of incorporation, the business and affairs of the
Corporation shall be managed by or under the direction of the Board of
Directors.
SECTION 3.02. Number, Election and Term of Office. The number of
directors which shall constitute the whole Board shall be fixed from time to
time by resolution of the Board of Directors but shall not be less than three
nor more than nine. The directors shall be elected at the annual meeting of the
stockholders, except as provided in Section 3.12 herein, and each director so
elected shall hold office until his successor is elected and qualified or until
his earlier death, resignation or removal. Directors need not be stockholders.
SECTION 3.03. Quorum and Manner of Acting. Unless the certificate of
incorporation or these bylaws require a greater number, a majority of the total
number of directors shall constitute a quorum for the transaction of business,
and the affirmative vote of a majority of the directors present at meeting at
which a quorum is present shall be the act of the Board of Directors. When a
meeting is adjourned to another time or place (whether or not a quorum is
present), notice need not be given of the adjourned meeting if the time and
place thereof are announced at the meeting at which the adjournment is taken. At
the adjourned meeting, the Board of Directors may transact any business which
might have been transacted at the original meeting. If a quorum shall not be
present at any meeting of the Board of directors the directors present thereat
may adjourn the meeting, from time to time, without notice other than
announcement at the meeting, until a quorum shall be present.
SECTION 3.04. Time and Place of Meetings. The Board of Directors shall
hold its meetings at such place, either within or without the State of Delaware,
and at such time as may be determined from time to time by the Board of
Directors (or the Chairman in the absence of a determination by the Board of
Directors).
SECTION 3.05. Annual Meeting. The Board of Directors shall meet for the
purpose of organization, the election of officers and the transaction of other
business, as soon as practicable after each annual meeting of stockholders, on
the same day and at the same place where such annual meeting shall be held.
Notice
4
<PAGE> 5
of such meeting need not be given. In the event such annual meeting is not so
held, the annual meeting of the Board of Directors may be held at such place
either within or without the State of Delaware, on such date and at such time as
shall be specified in a notice thereof given as hereinafter provided in Section
3.07 hereof or in a waiver of notice thereof signed by any director who chooses
to waive the requirement of notice.
SECTION 3.06. Regular Meetings. After the place and time of regular
meetings of the Board of Directors shall have been determined and notice thereof
shall have been once given to each member of the Board of Directors, regular
meetings may be held without further notice being given.
SECTION 3.07. Special Meetings. Special meetings of the Board of
Directors may be called by the Chairman of the Board or the President and shall
be called by the Chairman of the Board, President or Secretary on the written
request of three directors. Notice of special meetings of the Board of Directors
shall be given to each director at least three days before the date of the
meeting in such manner as is determined by the Board of Directors.
SECTION 3.08. Committees. The Board of Directors may, by resolution
passed by a majority of the whole Board, designate one or more committees, each
committee to consist of one or more of the directors of the Corporation. The
Board may designate one or more directors as alternate members of any committee,
who may replace any absent or disqualified member at any meeting of the
committee. Any such committee, to the extent provided in the resolution of the
Board of Directors, shall have and may exercise all the powers and authority of
the Board of Directors in the management of the business and affairs of the
Corporation, and may authorize the seal of the Corporation to be affixed to all
papers which may require it; but no such committee shall have the power or
authority in reference to amending the certificate of incorporation, adopting an
agreement of merger or consolidation, recommending to the stockholders the sale,
lease or exchange of all or substantially all of the Corporation's property and
assets, recommending to the stockholders a dissolution of the Corporation or a
revocation of a dissolution, or amending the bylaws of the Corporation; and
unless the resolution of the Board of Directors or the certificate of
incorporation expressly so provide, no such committee shall have the power or
authority to declare a dividend or to authorize the issuance of stock. Each
committee shall keep regular minutes of its meetings and report the same to the
Board of Directors when required.
SECTION 3.09. Action by Consent. Unless otherwise restricted by the
certificate of incorporation or these bylaws, any action required or permitted
to be taken at any meeting of the Board of Directors or of any committee thereof
may be taken without a meeting, if all members of the Board or committee, as the
case
5
<PAGE> 6
may be, consent thereto in writing, and the writing or writings are filed with
the minutes of proceedings of the Board or committee.
SECTION 3.10. Telephonic Meetings. Unless otherwise restricted by the
certificate of incorporation or these bylaws, members of the Board of Directors,
or any committee designated by the Board of Directors, may participate in a
meeting of the Board of Directors, or such committee, as the case may be, by
means of conference telephone or similar communications equipment by means of
which all persons participating in the meeting can hear each other, and such
participation in a meeting shall constitute presence in person at the meeting.
SECTION 3.11. Resignation. Any director may resign at any time by
giving written notice to the Board of Directors or to the Secretary of the
Corporation. The resignation of any director shall take effect upon receipt of
notice thereof or at such later time as shall be specified in such notice; and
unless otherwise specified therein, the acceptance of such resignation shall not
be necessary to make it effective.
SECTION 3.12. Vacancies. Unless otherwise provided in the certificate
of incorporation, vacancies and newly created directorships resulting from any
increase in the authorized number of directors elected by all the stockholders
having the right to vote as a single class may be filled by a majority of the
directors then in office, although less than a quorum, or by a sole remaining
director. Whenever the holders of any class or classes of stock or series
thereof are entitled to elect one or more directors by the certificate of
incorporation, vacancies and newly created directorships of such class or
classes or series may be filled by a majority of directors elected by such class
or classes or series thereof then in office, or by a sole remaining director so
elected. Each director so chosen shall hold office until his successor is
elected and qualified, or until his earlier death, resignation or removal. If
there are no directors in office, then an election of directors may be held in
accordance with Delaware Law. Unless otherwise provided in the certificate of
incorporation, when one or more directors shall resign from the Board, effective
at a future date, a majority of the directors then in office, including those
who have so resigned, shall have the power to fill such vacancy or vacancies,
the vote thereon to take effect when such resignation or resignations shall
become effective, and each director so chosen shall hold office as provided in
the filling of other vacancies.
SECTION 3.13. Removal. Any director or the entire Board of Directors
may be removed, with or without cause, at any time by the affirmative vote of
the holders of a majority of the outstanding capital stock of the Corporation
entitled to vote and the vacancies thus created may be filled in accordance with
Section 3.12 herein.
6
<PAGE> 7
SECTION 3.14. Compensation. Unless otherwise restricted by the
certificate of incorporation or these bylaws, the Board of Directors shall have
authority to fix the compensation of directors, including fees and reimbursement
of expenses.
ARTICLE 4
OFFICERS
SECTION 4.01. Principal Officers. The principal officers of the
Corporation shall be a President, one or more Vice Presidents, a Treasurer and a
Secretary who shall have the duty, among other things, to record the proceedings
of the meetings of stockholders and directors in a book kept for that purpose.
The Corporation may also have such other principal officers, including one or
more Controllers, as the Board may in its discretion appoint. One person may
hold the offices and perform the duties of any two or more of said offices,
except that no one person shall hold the offices and perform the duties of
President and Secretary.
SECTION 4.02. Election, Term of Office and Remuneration. The principal
officers of the Corporation shall be elected annually by the Board of Directors
at the annual meeting thereof. Each such officer shall hold office until his
successor is elected and qualified, or until his earlier death, resignation or
removal. The remuneration of all officers of the Corporation shall be fixed by
the Board of Directors. Any vacancy in any office shall be filled in such manner
as the Board of Directors shall determine.
SECTION 4.03. Subordinate Officers. In addition to the principal
officers enumerated in Section 4.01 hereof, the Corporation may have one or more
Assistant Treasurers, Assistant Secretaries and Assistant Controllers and such
other subordinate officers, agents and employees as the Board of Directors may
deem necessary, each of whom shall hold office for such period as the Board of
Directors may from time to time determine. The Board of Directors may delegate
to any principal officer the power to appoint and to remove any such subordinate
officers, agents or employees.
SECTION 4.04. Removal. Except as otherwise permitted with respect to
subordinate officers, any officer may be removed, with or without cause, at any
time, by resolution adopted by the Board of Directors.
SECTION 4.05. Resignations. Any officer may resign at any time by
giving written notice to the Board of Directors (or to a principal officer if
the Board of Directors has delegated to such principal officer the power to
appoint
7
<PAGE> 8
and to remove such officer). The resignation of any officer shall take effect
upon receipt of notice thereof or at such later time as shall be specified in
such notice; and unless otherwise specified therein, the acceptance of such
resignation shall not be necessary to make it effective.
SECTION 4.06. Powers and Duties. The officers of the Corporation shall
have such powers and perform such duties incident to each of their respective
offices and such other duties as may from time to time be conferred upon or
assigned to them by the Board of Directors.
ARTICLE 5
GENERAL PROVISIONS
SECTION 5.01. Fixing the Record Date. (a) In order that the Corporation
may determine the stockholders entitled to notice of or to vote at any meeting
of stockholders or any adjournment thereof, the Board of Directors may fix a
record date, which record date shall not precede the date upon which the
resolution fixing the record date is adopted by the Board of Directors, and
which record date shall not be more than 60 nor less than 10 days before the
date of such meeting. If no record date is fixed by the Board of Directors, the
record date for determining stockholders entitled to notice of or to vote at a
meeting of stockholders shall be at the close of business on the day next
preceding the day on which notice is given, or, if notice is waived, at the
close of business on the day next preceding the day on which the meeting is
held. A determination of stockholders of record entitled to notice of or to vote
at a meeting of stockholders shall apply to any adjournment of the meeting;
provided that the Board of Directors may fix a new record date for the adjourned
meeting.
(b) In order that the Corporation may determine the stockholders
entitled to consent to corporate action in writing without a meeting, the Board
of Directors may fix a record date, which record date shall not precede the date
upon which the resolution fixing the record date is adopted by the Board of
Directors, and which date shall not be more than 10 days after the date upon
which the resolution fixing the record date is adopted by the Board of
Directors. If no record date has been fixed by the Board of Directors, the
record date for determining stockholders entitled to consent to corporate action
in writing without a meeting, when no prior action by the Board of Directors is
required by Delaware Law, shall be the first date on which a signed written
consent setting forth the action taken or proposed to be taken is delivered to
the Corporation by delivery to its registered office in Delaware, its principal
place of business, or an officer or agent of the Corporation having custody of
the book in which proceedings of meetings of stockholders are recorded. Delivery
made to the Corporation's registered office shall be by hand
8
<PAGE> 9
or by certified or registered mail, return receipt requested. If no record date
has been fixed by the Board of Directors and prior action by the Board of
Directors is required by Delaware Law, the record date for determining
stockholders entitled to consent to corporate action in writing without a
meeting shall be at the close of business on the day on which the Board of
Directors adopts the resolution taking such prior action.
(c) In order that the Corporation may determine the stockholders
entitled to receive payment of any dividend or other distribution or allotment
of any rights or the stockholders entitled to exercise any rights in respect of
any change, conversion or exchange of stock, or for the purpose of any other
lawful action, the Board of Directors may fix a record date, which record date
shall not precede the date upon which the resolution fixing the record date is
adopted, and which record date shall be not more than 60 days prior to such
action. If no record date is fixed, the record date for determining stockholders
for any such purpose shall be at the close of business on the day on which the
Board of Directors adopts the resolution relating thereto.
SECTION 5.02. Dividends. Subject to limitations contained in Delaware
Law and the certificate of incorporation, the Board of Directors may declare and
pay dividends upon the shares of capital stock of the Corporation, which
dividends may be paid either in cash, in property or in shares of the capital
stock of the Corporation.
SECTION 5.03. Fiscal Year. The fiscal year of the Corporation shall
commence on January 1 and end on December 31 of each year.
SECTION 5.04. Corporate Seal. The corporate seal shall have inscribed
thereon the name of the Corporation, the year of its organization and the words
"Corporate Seal, Delaware". The seal may be used by causing it or a facsimile
thereof to be impressed, affixed or otherwise reproduced.
SECTION 5.05. Voting of Stock Owned by the Corporation. The Board of
Directors may authorize any person, on behalf of the Corporation, to attend,
vote at and grant proxies to be used at any meeting of stockholders of any
corporation (except this Corporation) in which the Corporation may hold stock.
SECTION 5.06. Amendments. These bylaws or any of them, may be altered,
amended or repealed, or new bylaws may be made, by the stockholders entitled to
vote thereon at any annual or special meeting thereof or by the Board of
Directors.
9
<PAGE> 1
EXHIBIT 4.1
================================================================================
MERCURY ACQUISITION CORPORATION
12 1/2% SENIOR DISCOUNT DEBENTURES DUE 2008
----------------------------
INDENTURE
Dated as of May 22, 1998
----------------------------
IBJ SCHRODER BANK & TRUST COMPANY
TRUSTEE
----------------------------
================================================================================
<PAGE> 2
CROSS-REFERENCE TABLE*
----------------------
<TABLE>
<CAPTION>
Trust Indenture Act Section Indenture Section
<S> <C>
310 (a)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.10
(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.10
(a)(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(a)(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(a)(5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.10
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.10
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
311(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.11
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.11
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
312 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.05
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.03
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.03
313(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.06
(b)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(b)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.06
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.06;
10.02
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.06
314(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.03;
10.02
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(c)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.04
(c)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.04
(c)(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.05
(f) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
315(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.01
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.05
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.01
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.01
(e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.11
316 (a)(last sentence) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.09
(a)(1)(A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.05
(a)(1)(B) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.04
(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.07
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.12
317 (a)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.08
(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.09
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.04
318 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.01
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.01
</TABLE>
N.A. means not applicable.
*This Cross-Reference Table is not part of the Indenture.
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ARTICLE 1. DEFINITIONS AND INCORPORATION BY REFERENCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1.01. DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1.02. OTHER DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 1.03. INCORPORATION OF TIA PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 1.04. RULES OF CONSTRUCTION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
ARTICLE 2. THE DEBENTURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 2.01.FORM AND DATING. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 2.02. EXECUTION AND AUTHENTICATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 2.03. REGISTRAR AND PAYING AGENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 2.04. PAYING AGENT TO HOLD MONEY IN TRUST. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 2.05. HOLDER LISTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 2.06. TRANSFER AND EXCHANGE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 2.07. REPLACEMENT DEBENTURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 2.08. OUTSTANDING DEBENTURES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 2.09. TREASURY DEBENTURES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 2.10. TEMPORARY DEBENTURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 2.11. CANCELLATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 2.12. DEFAULTED INTEREST. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
ARTICLE 3. REDEMPTION AND PREPAYMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 3.01. NOTICES TO TRUSTEE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 3.02. SELECTION OF DEBENTURES TO BE REDEEMED . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 3.03. NOTICE OF REDEMPTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
SECTION 3.04. EFFECT OF NOTICE OF REDEMPTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
</TABLE>
i
<PAGE> 4
<TABLE>
<S> <C>
SECTION 3.05. DEPOSIT OF REDEMPTION PRICE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 3.06. DEBENTURES REDEEMED IN PART. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 3.07. OPTIONAL REDEMPTION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 3.08. MANDATORY REDEMPTION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 3.09. OFFER TO PURCHASE BY APPLICATION OF EXCESS PROCEEDS. . . . . . . . . . . . . . . . . . . . . . . . . 32
ARTICLE 4. COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 4.01. PAYMENT OF DEBENTURES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 4.02. MAINTENANCE OF OFFICE OR AGENCY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 4.03. REPORTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 4.04. COMPLIANCE CERTIFICATE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 4.05. TAXES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 4.06. STAY, EXTENSION AND USURY LAWS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 4.07. RESTRICTED PAYMENTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 4.08. DIVIDEND AND OTHER PAYMENT RESTRICTIONS AFFECTING SUBSIDIARIES. . . . . . . . . . . . . . . . . . . 38
SECTION 4.09. INCURRENCE OF INDEBTEDNESS AND ISSUANCE OF PREFERRED STOCK. . . . . . . . . . . . . . . . . . . . . 39
SECTION 4.10. ASSET SALES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
SECTION 4.11. TRANSACTIONS WITH AFFILIATES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
SECTION 4.12. LIENS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
SECTION 4.13. CORPORATE EXISTENCE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
SECTION 4.14. OFFER TO REPURCHASE UPON CHANGE OF CONTROL. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
SECTION 4.15. ACCOUNTS RECEIVABLE FACILITY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
SECTION 4.16. LIMITATION ON SALE AND LEASEBACK TRANSACTIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
SECTION 4.17. PAYMENTS FOR CONSENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
ARTICLE 5. SUCCESSORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
SECTION 5.01. MERGER, CONSOLIDATION, OR SALE OF ASSETS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
SECTION 5.02. SUCCESSOR CORPORATION SUBSTITUTED. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
</TABLE>
ii
<PAGE> 5
<TABLE>
<S> <C>
ARTICLE 6. DEFAULTS AND REMEDIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
SECTION 6.01. EVENTS OF DEFAULT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
SECTION 6.02. ACCELERATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
SECTION 6.03. OTHER REMEDIES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
SECTION 6.04. WAIVER OF PAST DEFAULTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
SECTION 6.05. CONTROL BY MAJORITY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
SECTION 6.06. LIMITATION ON SUITS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
SECTION 6.07. RIGHTS OF HOLDERS OF DEBENTURES TO RECEIVE PAYMENT. . . . . . . . . . . . . . . . . . . . . . . . . 48
SECTION 6.08. COLLECTION SUIT BY TRUSTEE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
SECTION 6.09. TRUSTEE MAY FILE PROOFS OF CLAIM. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
SECTION 6.10. PRIORITIES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
SECTION 6.11. UNDERTAKING FOR COSTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
ARTICLE 7. TRUSTEE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
SECTION 7.01. DUTIES OF TRUSTEE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
SECTION 7.02. RIGHTS OF TRUSTEE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
SECTION 7.03. INDIVIDUAL RIGHTS OF TRUSTEE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
SECTION 7.04. TRUSTEE'S DISCLAIMER. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
SECTION 7.05. NOTICE OF DEFAULTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
SECTION 7.06. REPORTS BY TRUSTEE TO HOLDERS OF THE DEBENTURES. . . . . . . . . . . . . . . . . . . . . . . . . . . 51
SECTION 7.07. COMPENSATION AND INDEMNITY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
SECTION 7.08. REPLACEMENT OF TRUSTEE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
SECTION 7.09. SUCCESSOR TRUSTEE BY MERGER, ETC. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
SECTION 7.10. ELIGIBILITY; DISQUALIFICATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
SECTION 7.11. PREFERENTIAL COLLECTION OF CLAIMS AGAINST ISSUER. . . . . . . . . . . . . . . . . . . . . . . . . . 53
ARTICLE 8. .LEGAL DEFEASANCE AND COVENANT DEFEASANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
SECTION 8.01. OPTION TO EFFECT LEGAL DEFEASANCE OR COVENANT DEFEASANCE. . . . . . . . . . . . . . . . . . . . . . 53
</TABLE>
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<TABLE>
<S> <C>
SECTION 8.02. LEGAL DEFEASANCE AND DISCHARGE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
SECTION 8.03. COVENANT DEFEASANCE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
SECTION 8.04. CONDITIONS TO LEGAL OR COVENANT DEFEASANCE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
SECTION 8.05. DEPOSITED MONEY AND GOVERNMENT SECURITIES TO BE HELD IN TRUST; OTHER MISCELLANEOUS PROVISIONS. . . . 55
SECTION 8.06. REPAYMENT TO ISSUER. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
SECTION 8.07. REINSTATEMENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
ARTICLE 9. AMENDMENT, SUPPLEMENT AND WAIVER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
SECTION 9.01. WITHOUT CONSENT OF HOLDERS OF DEBENTURES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
SECTION 9.02. WITH CONSENT OF HOLDERS OF DEBENTURES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
SECTION 9.03. COMPLIANCE WITH TRUST INDENTURE ACT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
SECTION 9.04. REVOCATION AND EFFECT OF CONSENTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
SECTION 9.05. NOTATION ON OR EXCHANGE OF DEBENTURES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
SECTION 9.06. TRUSTEE TO SIGN AMENDMENTS, ETC. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
ARTICLE 10. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
SECTION 10.01. TRUST INDENTURE ACT CONTROLS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
SECTION 10.02. NOTICES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
SECTION 10.03. COMMUNICATION BY HOLDERS OF DEBENTURES WITH OTHER HOLDERS OF DEBENTURES. . . . . . . . . . . . . . 61
SECTION 10.04. CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT. . . . . . . . . . . . . . . . . . . . . . . . . 61
SECTION 10.05. STATEMENTS REQUIRED IN CERTIFICATE OR OPINION. . . . . . . . . . . . . . . . . . . . . . . . . . . 61
SECTION 10.06. RULES BY TRUSTEE AND AGENTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
SECTION 10.07. NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES AND STOCKHOLDERS. . . . . . . . . . . . . . 62
SECTION 10.08. GOVERNING LAW. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
SECTION 10.09. NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS. . . . . . . . . . . . . . . . . . . . . . . . . . . 62
SECTION 10.10. SUCCESSORS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
SECTION 10.11. SEVERABILITY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
SECTION 10.12. COUNTERPART ORIGINALS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
</TABLE>
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<TABLE>
<S> <C>
SECTION 10.13. TABLE OF CONTENTS, HEADINGS, ETC. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
</TABLE>
<TABLE>
<CAPTION>
EXHIBITS
<S> <C>
Exhibit A: FORM OF NOTE
Exhibit B: FORM OF CERTIFICATE OF TRANSFER
Exhibit C: FORM OF CERTIFICATE OF EXCHANGE
Exhibit D: FORM OF CERTIFICATE OF ACQUIRING INSTITUTIONAL ACCREDITED INVESTOR
Exhibit E: FORM OF SUPPLEMENTAL INDENTURE
</TABLE>
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<PAGE> 8
INDENTURE dated as of May 22, 1998, between Mercury Acquisition
Corporation, a Delaware corporation (the "Issuer"), and IBJ Schroder Bank &
Trust Company, a New York banking corporation, as trustee (the "Trustee").
The Issuer and the Trustee agree as follows for the benefit of each
other and for the equal and ratable benefit of the Holders of the 12 1/2%
Senior Discount Debentures due 2008 (the "Debentures").
ARTICLE 1.
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01. DEFINITIONS.
"144A Global Debenture" means the form of the Debentures initially
sold to QIBs.
"Accounts Receivable Subsidiary" means an Unrestricted Subsidiary of
the Company to which the Company or any of its Restricted Subsidiaries sells
any of its accounts receivable pursuant to a Receivables Facility.
"Accreted Value" means, as of any date of determination prior to June
1, 2003, with respect to any Debenture, the sum of (a) the initial offering
price (which shall be calculated by discounting the aggregate principal amount
at maturity of such Debenture at a rate of 12 1/2% per annum, compounded
semi-annually on each June 1 and December 1 from June 1, 2003 to the date of
issuance) of such Debenture and (b) the portion of the excess of the principal
amount at maturity of such Debenture over such initial offering price which
shall have been accreted thereon through such date, such amount to be so
accreted on a daily basis at a rate of 12 1/2% per annum of the initial
offering price of such Debenture, compounded semi-annually on each December 1
and June 1 from the date of issuance of the Debentures through the date of
determination, computed on the basis of a 360-day year of twelve 30-day months.
"Acquired Indebtedness" means, with respect to any specified Person,
(a) Indebtedness of any other Person existing at the time such other Person is
merged with or into or became a Subsidiary of such specified Person, including,
without limitation, Indebtedness incurred in connection with, or in
contemplation of, such other Person merging with or into or becoming a
Subsidiary of such specified Person, and (b) Indebtedness secured by a Lien
encumbering an asset acquired by such specified Person at the time such asset
is acquired by such specified Person.
"Acquisition" means the acquisition of Holdings by the Principals.
"Additional Debentures" means additional Debentures (other than the
Initial Debentures) issued under this Indenture in accordance with Sections
2.02 and 4.09 hereof.
"Affiliate" of any specified Person means any other Person which,
directly or indirectly, controls, is controlled by or is under direct or
indirect common control with, such specified Person. For purposes of this
definition, "control," when used with respect to any Person, means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise,
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Agent" means any Registrar, Paying Agent or co-registrar.
"Applicable Procedures" means, with respect to any transfer or
exchange of or for beneficial interests in any Global Debenture, the rules and
procedures of the Depositary, Euroclear and Cedel that apply to such transfer
or exchange.
"Asset Sale" means (a) the sale, lease, conveyance, disposition or
other transfer (a "disposition") of any properties, assets or rights
(including, without limitation, by way of a sale and leaseback) (provided that
the sale, lease, conveyance or other disposition of all or substantially all of
the assets of the Issuer and its Subsidiaries taken as a whole will be governed
by the Sections 4.14 and/or 5.01 and not by the provisions of Section 4.10),
and (b) the issuance, sale
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<PAGE> 9
or transfer by the Issuer or any of its Restricted Subsidiaries of Equity
Interests of any of the Issuer's Restricted Subsidiaries, in the case of either
clause (a) or (b), whether in a single transaction or a series of related
transactions (i) that have a fair market value in excess of $5.0 million or
(ii) for net proceeds in excess of $5.0 million. Notwithstanding the foregoing,
the following items shall not be deemed to be Asset Sales: (a) dispositions in
the ordinary course of business; (b) a disposition of assets by the Issuer to a
Restricted Subsidiary or by a Restricted Subsidiary to the Issuer or to another
Restricted Subsidiary; (c) a disposition of Equity Interests by a Restricted
Subsidiary to the Issuer or to another Restricted Subsidiary; (d) the sale and
leaseback of any assets within 90 days of the acquisition thereof; (e)
foreclosures on assets; (f) any exchange of like property pursuant to Section
1031 of the Internal Revenue Code of 1986, as amended, for use in a Permitted
Business; (g) any sale of Equity Interests in, or Indebtedness or other
securities of, an Unrestricted Subsidiary; (h) a Permitted Investment or a
Restricted Payment that is permitted by Section 4.07 hereof; and (i) sales of
accounts receivable, or participations therein, in connection with any
Receivables Facility
"Attributable Indebtedness" in respect of a sale and leaseback
transaction means, at the time of determination, the present value (discounted
at the rate of interest implicit in such transaction, determined in accordance
with GAAP) of the obligation of the lessee for net rental payments during the
remaining term of the lease included in such sale and leaseback transaction
(including any period for which such lease has been extended or may, at the
option of the lessor, be extended).
"Bankruptcy Law" means Title 11, U.S. Code or any similar federal or
state law for the relief of debtors.
"Board of Directors" means the Board of Directors of the Issuer, or
any authorized committee of the Board of Directors.
"Business Day" means any day other than a Legal Holiday.
"Capital Expenditure Indebtedness" means Indebtedness incurred by any
Person to finance the purchase or construction or any property or assets
acquired or constructed by such Person which have a useful life or more than
one year so long as (a) the purchase or construction price for such property or
assets is included in "addition to property, plant or equipment" in accordance
with GAAP, (b) the acquisition or construction of such property or assets is
not part of any acquisition of a Person or line of business and (c) such
Indebtedness is incurred within 90 days of the acquisition or completion of
construction of such property or assets.
"Capital Lease Obligation" means, at the time any determination
thereof is to be made, the amount of the liability in respect of a capital
lease that would at such time be required to be capitalized on a balance sheet
in accordance with GAAP.
"Capital Stock" means (a) in the case of a corporation, corporate
stock, (b) in the case of an association or business entity, any and all
shares, interests, participations, rights or other equivalents (however
designated) of corporate stock, (c) in the case of a partnership or limited
liability company, partnership or membership interests (whether general or
limited) and (d) any other interest or participation that confers on a Person
the right to receive a share of the profits and losses of, or distributions of
assets of, the issuing Person.
"Cash Equivalents" means (i) Government Securities, (ii) any
certificate of deposit maturing not more than 365 days after the date of
acquisition issued by, or time deposit of, an Eligible Institution or any
lender under the New Credit Facility, (iii) commercial paper maturing not more
than 365 days after the date of acquisition of an issuer (other than an
Affiliate of the Issuer) with a rating, at the time as of which any investment
therein is made, of "A-3" (or higher) according to S&P or "P-2" (or higher)
according to Moody's or carrying an equivalent rating by a nationally
recognized rating agency if both of the two named rating agencies cease
publishing ratings of investments, (iv) any bankers acceptances of money market
deposit accounts issued by an Eligible Institution and (v) any fund investing
exclusively in investments of the types described in clauses (i) through (iv)
above.
"Cedel" means Cedel Bank, societe anonyme.
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<PAGE> 10
"Change of Control" means the occurrence of any of the following: (a)
the sale, lease, transfer, conveyance or other disposition (other than by way
of merger or consolidation), in one or a series of related transactions, of all
or substantially all of the assets of the Issuer and its Subsidiaries, taken as
a whole, to any "person" or "group" (as such terms are used in Section 13(d) of
the Exchange Act), other than the Principals and their Related Parties; (b) the
adoption of a plan for the liquidation or dissolution of the Issuer; (c) the
consummation of any transaction (including, without limitation, any merger or
consolidation) the result of which is that any "person" or "group" (as such
terms are used in Section 13(d) of the Exchange Act), other than the Principals
and their Related Parties, becomes the "beneficial owner" (as such term is
defined in Rule 13d-3 and Rule 13d-5 under the Exchange Act), directly or
indirectly through one or more intermediaries, of 50% or more of the voting
power of the outstanding voting stock of the Issuer; or (d) the first day on
which a majority of the members of the Board of Directors of the Issuer are not
Continuing Directors.
"Commission" means the Securities and Exchange Commission.
"Consolidated Cash Flow" means, with respect to any Person for any
period, the Consolidated Net Income of such Person and its Restricted
Subsidiaries for such period plus, to the extent deducted in computing
Consolidated Net Income, (a) an amount equal to any extraordinary or
non-recurring loss plus any net loss realized in connection with an Asset Sale,
(b) provision for taxes based on income or profits of such Person and its
Restricted Subsidiaries for such period, (c) Fixed Charges of such Person for
such period, (d) depreciation, amortization (including amortization of goodwill
and other intangibles) and all other non-cash charges (excluding any such
non-cash charge to the extent that it represents an accrual of or reserve for
cash expenses in any future period or amortization of a prepaid cash expense
that was paid in a prior period) of such Person and its Restricted Subsidiaries
for such period, (e) net periodic post-retirement benefits, (f) other income or
expense net as set forth on the face of such Person's statement of operations,
(g) expenses and charges of the Issuer related to the Recapitalization, the New
Credit Facility and the application of the proceeds thereof which are paid,
taken or otherwise accounted for within 90 days of the consummation of the
Merger, and (h) any non-capitalized transaction costs incurred in connection
with actual or proposed financings, acquisition or divestitures (including, but
not limited to, financing and refinancing fees and costs incurred in connection
with the Recapitalization), in each case, on a consolidated basis and
determined in accordance with GAAP. Notwithstanding the foregoing, the
provision for taxes based on the income or profits of, the Fixed Charges of,
and the depreciation and amortization and other non-cash charges of, a
Restricted Subsidiary of a Person shall be added to Consolidated Net Income to
compute Consolidated Cash Flow only to the extent (and in the same proportion)
that Net Income of such Restricted Subsidiary was included in calculating the
Consolidated Net Income of such Person.
"Consolidated Interest Expense" means, with respect to any Person for
any period, the sum of, without duplication, (a) the interest expense of such
Person and its Restricted Subsidiaries for such period, on a consolidated
basis, determined in accordance with GAAP (including amortization of original
issue discount, non-cash interest payments, the interest component of all
payments associated with Capital Lease Obligations, imputed interest with
respect to Attributable Indebtedness, commissions, discounts and other fees and
charges incurred in respect of letter of credit or bankers' acceptance
financings, and net payments, if any, pursuant to Hedging Obligations; provided
that in no event shall any amortization of deferred financing costs be included
in Consolidated Interest Expense); and (b) the consolidated capitalized
interest of such Person and its Restricted Subsidiaries for such period,
whether paid or accrued; provided, however, that Receivables Fees shall be
deemed not to constitute Consolidated Interest Expense. Notwithstanding the
foregoing, the Consolidated Interest Expense with respect to any Restricted
Subsidiary that is not a Wholly Owned Restricted Subsidiary shall be included
only to the extent (and in the same proportion) that the net income of such
Restricted Subsidiary was included in calculating Consolidated Net Income.
"Consolidated Net Income" means, with respect to any Person for any
period, the aggregate of the Net Income of such Person and its Restricted
Subsidiaries for such period, on a consolidated basis, determined in accordance
with GAAP; provided that (a) the Net Income (or loss) of any Person that is not
a Restricted Subsidiary or that is accounted for by the equity method of
accounting shall be included only to the extent of the amount of dividends or
distributions paid in cash to the referent Person or a Restricted Subsidiary
thereof, (b) the Net Income (or loss) of any Person acquired in a pooling of
interests transaction for any period prior to the date of such acquisition
shall be excluded and (c) the cumulative effect of a change in accounting
principles shall be excluded.
3
<PAGE> 11
"Continuing Directors" means, as of any date of determination, any
member of the board of directors of the Issuer who (a) was a member of such
board of directors immediately after consummation of the Merger or (b) was
nominated for election or elected to such board of directors with the approval
of, or whose election to the board of directors was ratified by, at least a
majority of the Continuing Directors who were members of such board of
directors at the time of such nomination or election.
"Corporate Trust Office of the Trustee" shall be at the address of the
Trustee specified in Section 10.02 hereof or such other address as to which the
Trustee may give notice to the Issuer.
"Custodian" means any receiver, trustee, assignee, liquidator or
similar official under any Bankruptcy Law.
"Debenture Custodian" means the Trustee, as custodian with respect to
the Debentures in global form, or any successor entity thereto.
"Debentures" has the meaning assigned to it in the preamble to this
Indenture.
"Default" means any event that is or with the passage of time or the
giving of notice or both would be an Event of Default.
"Definitive Debenture" means a certificated Debenture registered in
the name of the Holder thereof and issued in accordance with Section 2.06
hereof, in the form of Exhibit A-1 hereto except that such Debenture shall not
bear the Global Debenture Legend and shall not have the "Schedule of Exchanges
of Interests in the Global Debenture" attached thereto.
"Depositary" means The Depository Trust Company.
"Designated Noncash Consideration" means the fair market value of
non-cash consideration received by the Issuer or one of its Restricted
Subsidiaries in connection with an Asset Sale that is so designated as
Designated Noncash Consideration pursuant to an Officers' Certificate, setting
forth the basis of such valuation, executed by the principal executive officer
and the principal financial officer of the Issuer, less the amount of cash or
Cash Equivalents received in connection with a sale of such Designated Noncash
Consideration.
"Disqualified Stock" means any Capital Stock that, by its terms (or by
the terms of any security into which it is convertible, or for which it is
exchangeable), or upon the happening of any event (other than any event solely
within the control of the issuer thereof), matures or is mandatorily
redeemable, pursuant to a sinking fund obligation or otherwise, is exchangeable
for Indebtedness (except to the extent exchangeable at the option of such
Person subject to the terms of any debt instrument to which such Person is a
party) or redeemable at the option of the Holder thereof, in whole or in part,
on or prior to the date on which the Debentures mature; provided that any
Capital Stock that would constitute Disqualified Stock solely because the
holders thereof have the right to require the Issuer to repurchase such Capital
Stock upon the occurrence of a Change of Control or an Asset Sale shall not
constitute Disqualified Stock if the terms of such Capital Stock provide that
the Issuer may not repurchase or redeem any such Capital Stock pursuant to such
provisions unless such repurchase or redemption complies with Section 4.07, and
provided further that, if such Capital Stock is issued to any plan for the
benefit of employees of the Issuer or its Subsidiaries or by any such plan to
such employees, such Capital Stock shall not constitute Disqualified Stock
solely because it may be required to be repurchased by the Issuer in order to
satisfy applicable statutory or regulatory obligations.
"DLJMB" means DLJ Merchant Banking Partners II, L.P. and its
Affiliates.
"Eligible Institution" means a commercial banking institution that has
combined capital and surplus not less than $100.0 million or its equivalent in
foreign currency, whose short-term debt is rated "A-3" or higher according to
Standard & Poor's Ratings Group ("S&P") or "P-2" or higher according to Moody's
Investor Services, Inc. ("Moody's") or carrying an equivalent rating by a
nationally recognized rating agency if both of the two named rating agencies
cease publishing ratings of investments.
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<PAGE> 12
"Equity Interests" means Capital Stock and all warrants, options or
other rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock).
"Euroclear" means Morgan Guaranty Trust Company of New York, Brussels
office, as operator of the Euroclear system.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Exchange Debentures" means the Debentures issued in the Exchange
Offer pursuant to Section 2.06(f) hereof.
"Exchange Offer" has the meaning set forth in the Registration Rights
Agreement.
"Exchange Offer Registration Statement" has the meaning set forth in
the Registration Rights Agreement.
"Existing Indebtedness" means Indebtedness of the Issuer and its
Restricted Subsidiaries (other than Indebtedness under the New Credit Facility
or the Senior Subordinated Notes) in existence on the date of this Indenture,
until such amounts are repaid.
"Fixed Charges" means, with respect to any Person for any period, the
sum, without duplication, of (a) the Consolidated Interest Expense of such
Person for such period and (b) all dividend payments on any series of preferred
stock of such Person (other than dividends payable solely in Equity Interests
that are not Disqualified Stock), in each case, on a consolidated basis and in
accordance with GAAP.
"Fixed Charge Coverage Ratio" means, with respect to any Person for
any period, the ratio of the Consolidated Cash Flow of such Person for such
period (exclusive of amounts attributable to discontinued operations, as
determined in accordance with GAAP, or operations and businesses disposed of
prior to the Calculation Date (as defined)) to the Fixed Charges of such Person
for such period (exclusive of amounts attributable to discontinued operations,
as determined in accordance with GAAP, or operations and businesses disposed of
prior to the Calculation Date). In the event that the referrent Person or any
of its Subsidiaries incurs, assumes, guarantees or redeems any Indebtedness
(other than revolving credit borrowings) or issues or redeems preferred stock
subsequent to the commencement of the period for which the Fixed Charge
Coverage Ratio is being calculated but prior to the date on which the event for
which the calculation of the Fixed Charge Coverage Ratio is made (the
"Calculation Date"), then the Fixed Charge Coverage Ratio shall be calculated
giving pro forma effect to such incurrence, assumption, guarantee or redemption
of Indebtedness, or such issuance or redemption of preferred stock, as if the
same had occurred at the beginning of the applicable four-quarter reference
period. In addition, for purposes of making the computation referred to above,
acquisitions that have been made by the Issuer or any of its Subsidiaries,
including all mergers or consolidations and any related financing transactions,
during the four-quarter reference period or subsequent to such reference period
and on or prior to the Calculation Date shall be calculated to include the
Consolidated Cash Flow of the acquired entities on a pro forma basis after
giving effect to cost savings resulting from employee terminations, facilities
consolidations and closings, standardization of employee benefits and
compensation practices, consolidation of property, casualty and other insurance
coverage and policies, standardization of sales and distribution methods,
reductions in taxes other than income taxes and other cost savings reasonably
expected to be realized from such acquisition, as determined in good faith by
an officer of the Issuer (regardless of whether such cost savings could then be
reflected in pro forma financial statements under GAAP, Regulation S-X
promulgated by the Commission or any other regulation or policy of the
Commission) and without giving effect to clause (c) of the proviso set forth in
the definition of Consolidated Net Income, and shall be deemed to have occurred
on the first day of the four-quarter reference period and Consolidated Cash
Flow for such reference period shall be calculated.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as have been approved by a significant segment of the accounting
profession, which are in effect on the date of this Indenture.
5
<PAGE> 13
"guarantee" means a guarantee (other than by endorsement of negotiable
instruments for collection in the ordinary course of business), direct or
indirect, in any manner (including, without limitation, letters of credit or
reimbursement agreements in respect thereof), of all or any part of any
Indebtedness.
"Global Debentures" means, individually and collectively, each of the
Restricted Global Debentures and the Unrestricted Global Debentures, in the
form of Exhibit A hereto issued in accordance with Section 2.01, 2.06(b)(iv),
2.06(d)(ii) or 2.06(f) hereof.
"Global Debenture Legend" means the legend set forth in Section
2.06(g)(ii), which is required to be placed on all Global Debentures issued
under this Indenture.
"Government Securities" means direct obligations of, or obligations
guaranteed by, the United States of America, and the payment for which the
United States pledges its full faith and credit.
"Hedging Obligations" means, with respect to any Person, the
obligations of such Person under (a) interest rate swap agreements, interest
rate cap agreements and interest rate collar agreements and (b) other
agreements or arrangements designed to protect such Person against fluctuations
in interest rates or foreign exchange rates.
"Holder" means a Person in whose name a Debenture is registered.
"Holdings" means Thermadyne Holdings Corporation, a Delaware
corporation, the corporate parent of the Issuer, or its successors.
"Indebtedness" means, with respect to any Person, any indebtedness of
such Person in respect of borrowed money or evidenced by bonds, notes,
debentures or similar instruments or letters of credit (or reimbursement
agreements in respect thereof) or banker's acceptances or representing Capital
Lease Obligations or the balance deferred and unpaid of the purchase price of
any property or representing any Hedging Obligations, except any such balance
that constitutes an accrued expense or trade payable, if and to the extent any
of the foregoing Indebtedness (other than letters of credit and Hedging
Obligations) would appear as a liability upon a balance sheet of such Person
prepared in accordance with GAAP, as well as all Indebtedness of others secured
by a Lien on any asset of such Person (whether or not such Indebtedness is
assumed by such Person) and, to the extent not otherwise included, the
guarantee by such Person of any Indebtedness of any other Person, provided that
Indebtedness shall not include the pledge by the Issuer of the Capital Stock of
an Unrestricted Subsidiary of the Issuer to secure Non-Recourse Debt of such
Unrestricted Subsidiary. The amount of any Indebtedness outstanding as of any
date shall be (a) the accreted value thereof (together with any interest
thereon that is more than 45 days past due), in the case of any Indebtedness
that does not require current payments of interest, and (b) the principal
amount thereof, in the case of any other Indebtedness.
"Indenture" means this Indenture, as amended or supplemented from time
to time.
"Indirect Participant" means a Person who holds a beneficial interest
in a Global Debenture through a Participant.
"Issuer" means Thermadyne.
"Institutional Accredited Investor" means an institution that is an
"accredited investor" as defined in Rule 501(a)(1), (2), (3) or (7) under the
Securities Act, who are not also QIBs.
"Investments" means, with respect to any Person, all investments by
such Person in other Persons (including Affiliates) in the forms of direct or
indirect loans (including guarantees by the referent Person of, and Liens on
any assets of the referent Person securing, Indebtedness or other obligations
of other Persons), advances or capital contributions (excluding commission,
travel and similar advances to officers and employees made in the ordinary
course of business), purchases or other acquisitions for consideration of
Indebtedness, Equity Interests or other securities, together with all items
that are or would be classified as investments on a balance sheet prepared in
accordance with GAAP, provided that an investment by the Issuer for
consideration consisting of common equity
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<PAGE> 14
securities of the Issuer shall not be deemed to be an Investment. If the Issuer
or any Restricted Subsidiary of the Issuer sells or otherwise disposes of any
Equity Interests of any direct or indirect Restricted Subsidiary of the Issuer
such that, after giving effect to any such sale or disposition, such Person is
no longer a Subsidiary of the Issuer, the Issuer shall be deemed to have made
an Investment on the date of any such sale or disposition equal to the fair
market value of the Equity Interests of such Restricted Subsidiary not sold or
disposed of in an amount determined as provided in the final paragraph of
Section 4.07 hereof.
"Legal Holiday" means a Saturday, a Sunday or a day on which banking
institutions in the City of New York or at a place of payment are authorized by
law, regulation or executive order to remain closed. If a payment date is a
Legal Holiday at a place of payment, payment may be made at that place on the
next succeeding day that is not a Legal Holiday, and no interest shall accrue
on such payment for the intervening period.
"Letter of Transmittal" means the letter of transmittal to be prepared
by the Issuer and sent to all Holders of the Debentures for use by such Holders
in connection with the Exchange Offer.
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset,
whether or not filed, recorded or otherwise perfected under applicable law
(including any conditional sale or other title retention agreement, any lease
in the nature thereof, any option or other agreement to sell or give a security
interest in and any filing of or agreement to give any financing statement
under the Uniform Commercial Code (or equivalent statutes) of any
jurisdiction).
"Liquidated Damages" means all liquidated damages then owing pursuant
to Section 5 of the Registration Rights Agreement.
"Management Loans" means one or more loans by the Issuer or Thermadyne
LLC to officers and/or directors of the Issuer and any of its Restricted
Subsidiaries to finance the purchase by such officers and directors of common
stock of the Issuer; provided, however, that the aggregate principal amount of
all such Management Loans outstanding at any time shall not exceed $5.0
million.
"Merger" means the merger of the Issuer with and into Holdings on or
prior to the date of issuance of the Debentures.
"Net Income" means, with respect to any Person, the net income (loss)
of such Person, determined in accordance with GAAP and before any reduction in
respect of preferred stock dividends, excluding, however, (a) any gain (or
loss), together with any related provision for taxes on such gain (or loss),
realized in connection with (i) any Asset Sale (including, without limitation,
dispositions pursuant to sale and leaseback transactions) or (ii) the
extinguishment of any Indebtedness of such Person or any of its Restricted
Subsidiaries and (b) any extraordinary or nonrecurring gain (or loss), together
with any related provision for taxes on such extraordinary or nonrecurring gain
(or loss).
"Net Proceeds" means the aggregate cash proceeds received by the
Issuer or any of its Restricted Subsidiaries in respect of any Asset Sale
(including, without limitation, any cash received upon the sale or other
disposition of any non-cash consideration received in any Asset Sale), net of,
without duplication, (a) the direct costs relating to such Asset Sale
(including, without limitation, legal, accounting and investment banking fees,
and sales commissions, recording fees, title transfer fees and appraiser fees
and cost of preparation of assets for sale) and any relocation expenses
incurred as a result thereof, (b) taxes paid or payable as a result thereof
(after taking into account any available tax credits or deductions and any tax
sharing arrangements), (c) amounts required to be applied to the repayment of
Indebtedness (other than as required by clause (a) of the second paragraph of
the Section 4.10 hereof) secured by a Lien on the asset or assets that were the
subject of such Asset Sale and (d) any reserve established in accordance with
GAAP or any amount placed in escrow, in either case for adjustment in respect
of the sale price of such asset or assets until such time as such reserve is
reversed or such escrow arrangement is terminated, in which case Net Proceeds
shall include only the amount of the reserve so reversed or the amount returned
to the Issuer or its Restricted Subsidiaries from such escrow arrangement, as
the case may be.
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<PAGE> 15
"New Credit Facility" means that certain Credit Agreement, dated as of
May 22, 1998, by and among the Thermadyne Mfg. LLC and certain of its foreign
subsidiaries, Donaldson, Lufkin & Jenrette Securities Corporation, as arranger,
DLJ Capital Funding, Inc., as syndication agent, and ABN AMRO Bank N.V.,
Chicago Branch, as administrative agent, including any related notes,
guarantees, collateral documents, instruments and agreements executed in
connection therewith, and, in each case, as amended, modified, renewed,
refunded, replaced or refinanced from time to time, including, without
limitation, any agreement (i) extending or shortening the maturity of any
Indebtedness incurred thereunder or contemplated thereby, (ii) adding or
deleting borrowers or guarantors thereunder, (iii) increasing the amount of
Indebtedness incurred thereunder or available to be borrowed thereunder,
provided that on the date such Indebtedness is incurred it would not be
prohibited by clause (i) of Section 4.09 hereof or (iv) otherwise altering the
terms and conditions thereof. Indebtedness under the New Credit Facility
outstanding on the date on which Debentures are first issued and authenticated
under this Indenture shall be deemed to have been incurred on such date in
reliance on the first paragraph of Section 4.09 hereof.
"Non-Recourse Debt" means Indebtedness (i) no default with respect to,
which (including any rights that the holders thereof may have to take
enforcement action against an Unrestricted Subsidiary) would permit (upon
notice, lapse of time or both) any holder of any other Indebtedness of the
Issuer or any of its Restricted Subsidiaries to declare a default on such other
Indebtedness or cause the payment thereof to be accelerated or payable prior to
its stated maturity; and (ii) as to which the lenders have been notified in
writing that they will not have any recourse to the stock (other than the stock
of an Unrestricted Subsidiary pledged by the Issuer to secure debt of such
Unrestricted Subsidiary) or assets of the Issuer or any of its Restricted
Subsidiaries; provided that in no event shall Indebtedness of any Unrestricted
Subsidiary fail to be Non-Recourse Debt solely as a result of any default
provisions contained in a guarantee thereof by the Issuer or any of its
Restricted Subsidiaries if the Issuer or such Restricted Subsidiary was
otherwise permitted to incur such guarantee pursuant to this Indenture.
"Non-U.S. Person" means a Person who is not a U.S. Person.
"Obligations" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness.
"Offerings" means the offering of the Debentures by the Issuer and the
concurrent offering of Senior Subordinated Notes by Thermadyne LLC and
Thermadyne Capital.
"Officer" means, with respect to any Person, the Chairman of the
Board, the Chief Executive Officer, the President, the Chief Operating Officer,
the Chief Financial Officer, the Treasurer, any Assistant Treasurer, the
Controller, the Secretary or any Vice-President of such Person.
"Officers' Certificate" means a certificate signed on behalf of the
Issuer by two Officers of the Issuer, one of whom must be the principal
executive officer, the principal financial officer, the treasurer or the
principal accounting officer of the Issuer, that meets the requirements of
Section 10.05 hereof.
"Opinion of Counsel" means an opinion from legal counsel who is
reasonably acceptable to the Trustee, that meets the requirements of Section
10.05 hereof. The counsel may be an employee of or counsel to the Issuer, any
Subsidiary of the Issuer or the Trustee.
"Pari Passu Indebtedness" means Indebtedness of the Issuer that ranks
pari passu in right of payment to the Debentures.
"Participant" means, with respect to the Depositary, Euroclear or
Cedel, a Person who has an account with the Depositary, Euroclear or Cedel,
respectively (and, with respect to The Depository Trust Issuer, shall include
Euroclear and Cedel).
"Participating Broker-Dealer" has the meaning set forth in the
Registration Rights Agreement.
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<PAGE> 16
"Permitted Business" means any business in which the Issuer and its
Restricted Subsidiaries are engaged on the date of this Indenture or any
business reasonably related, incidental or ancillary thereto.
"Permitted Investments" means (a) any Investment in the Issuer or in a
Restricted Subsidiary of the Issuer, (b) any Investment in cash or Cash
Equivalents, (c) any Investment by the Issuer or any Restricted Subsidiary of
the Issuer in a Person, if as a result of such Investment (i) such Person
becomes a Restricted Subsidiary of the Issuer or (ii) such Person is merged,
consolidated or amalgamated with or into, or transfers or conveys substantially
all of its assets to, or is liquidated into, the Issuer or a Wholly Owned
Restricted Subsidiary of the Issuer, (d) any Investment made as a result of the
receipt of non-cash consideration from an Asset Sale that was made pursuant to
and in compliance with Section 4.10 hereof, (e) any Investment acquired solely
in exchange for Equity Interests (other than Disqualified Stock) of the Issuer,
(f) any Investment in a Person engaged in a Permitted Business (other than an
Investment in an Unrestricted Subsidiary) having an aggregate fair market
value, taken together with all other Investments made pursuant to this clause
(f) that are at that time outstanding, not to exceed 15% of Total Assets at the
time of such Investment (with the fair market value of each Investment being
measured at the time made and without giving effect to subsequent changes in
value), (g) Investments relating to any special purpose Wholly Owned Subsidiary
of the Issuer organized in connection with a Receivables Facility that, in the
good faith determination of the board of directors of the Issuer, are necessary
or advisable to effect such Receivables Facility and (h) the Management Loans.
"Permitted Liens" means: (i) Liens on property of a Person existing at
the time such Person is merged into or consolidated with the Issuer or any
Restricted Subsidiary, provided that such Liens were not incurred in
contemplation of such merger or consolidation and do not secure any property or
assets of the Issuer or any Restricted Subsidiary other than the property or
assets subject to the Liens prior to such merger or consolidation; (ii) Liens
existing on the date of this Indenture; (iii) Liens securing Indebtedness
consisting of Capitalized Lease Obligations, purchase money Indebtedness,
mortgage financings, industrial revenue bonds or other monetary obligations, in
each case incurred solely for the purpose of financing all or any part of the
purchase price or cost of construction or installation of assets used in the
business of the Issuer or its Restricted Subsidiaries, or repairs, additions or
improvements to such assets, provided that (A) such Liens secure Indebtedness
in an amount not in excess of the original purchase price or the original cost
of any such assets or repair, additional or improvement thereto (plus an amount
equal to the reasonable fees and expenses in connection with the incurrence of
such Indebtedness), (B) such Liens do not extend to any other assets of the
Issuer or its Restricted Subsidiaries (and, in the case of repair, addition or
improvements to any such assets, such Lien extends only to the assets (and
improvements thereto or thereon) repaired, added to or improved), (C) the
Incurrence of such Indebtedness is permitted by Section 4.09 hereof and (D)
such Liens attach within 365 days of such purchase, construction, installation,
repair, addition or improvement; (iv) Liens to secure any refinancings,
renewals, extensions, modification or replacements (collectively,
"refinancing") (or successive refinancings), in whole or in part, of any
Indebtedness secured by Liens referred to in the clauses above so long as such
Lien does not extend to any other property (other than improvements thereto);
(v) Liens securing letters of credit entered into in the ordinary course of
business and consistent with past business practice; (vi) Liens on and pledges
of the capital stock of any Unrestricted Subsidiary securing Non-Recourse Debt
of such Unrestricted Subsidiary; (vii) Liens securing Indebtedness (including
all Obligations) under the New Credit Facility; and (viii) other Liens securing
Indebtedness that is permitted by the terms of this Indenture to be outstanding
having an aggregate principal amount at any one time outstanding not to exceed
$50.0 million.
"Permitted Refinancing Indebtedness" means any Indebtedness of the
Issuer or any of its Restricted Subsidiaries issued in exchange for, or the net
proceeds of which are used to extend, refinance, renew, replace, defease or
refund other Indebtedness of the Issuer or any of its Restricted Subsidiaries;
provided that (a) the principal amount (or accreted value, if applicable) of
such Permitted Refinancing Indebtedness does not exceed the principal amount of
(or accreted value, if applicable), plus premium, if any, and accrued interest
on the Indebtedness so extended, refinanced, renewed, replaced, defeased or
refunded (plus the amount of reasonable expenses incurred in connection
therewith), (b) such Permitted Refinancing Indebtedness has a final maturity
date no earlier than the final maturity date of, and has a Weighted Average
Life to Maturity equal to or greater than the Weighted Average Life to Maturity
of, the Indebtedness being extended, refinanced, renewed, replaced, defeased or
refunded, and (c) if the Indebtedness being extended, refinanced, renewed,
replaced, defeased or refunded is subordinated in right of payment to the
Debentures, such Permitted Refinancing Indebtedness is subordinated in right of
payment to, the Debentures on terms at least as
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<PAGE> 17
favorable, taken as a whole, to the Holders of Debentures as those contained in
the documentation governing the Indebtedness being extended, refinanced,
renewed, replaced, defeased or refunded.
"Person" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated organization
or government or agency or political subdivision thereof (including any
subdivision or ongoing business of any such entity or substantially all of the
assets of any such entity, subdivision or business).
"Principals" means DLJMB.
"Private Placement Legend" means the legend set forth in Section
2.06(g)(i) to be placed on all Debentures issued under this Indenture except
where otherwise permitted by the provisions of this Indenture.
"Public Equity Offering" means any issuance of common stock or
preferred stock by the Issuer (other than Disqualified Stock) or membership
interests by Thermadyne LLC (other than to the Issuer and other than
Disqualified Stock) that is registered pursuant to the Securities Act, other
than issuances registered on Form S-8 and issuances registered on Form S-4,
excluding issuances of common stock or membership interests pursuant to
employee benefit plans of the Issuer or its Restricted Subsidiaries or
otherwise as compensation to employees of the Issuer or its Restricted
Subsidiaries.
"Qualified Proceeds" means any of the following or any combination of
the following: (i) cash; (ii) Cash Equivalents; (iii) assets that are used or
useful in a Permitted Business; and (iv) the Capital Stock of any Person
engaged in a Permitted Business if, in connection with the receipt by the
Issuer or any Restricted Subsidiary of the Issuer of such Capital Stock, (A)
such Person becomes a Restricted Subsidiary of the Issuer or any Restricted
Subsidiary of the Issuer or (B) such Person is merged, consolidated or
amalgamated with or into, or transfers or conveys substantially all of its
assets to, or is liquidated into, the Issuer or any Restricted Subsidiary of
the Issuer.
"QIB" means a "qualified institutional buyer" as defined in Rule 144A.
"Recapitalization" means the Acquisition, the Merger and the
Offerings.
"Receivables Facility" means one or more receivables financing
facilities, as amended from time to time, pursuant to which the Issuer or any
of its Restricted Subsidiaries sells its accounts receivable to an Accounts
Receivable Subsidiary.
"Receivables Fees" means distributions or payments made directly or by
means of discounts with respect to any participation interests issued or sold
in connection with, and other fees paid to a Person that is not a Restricted
Subsidiary in connection with, any Receivables Facility.
"Registration Rights Agreement" means the Registration Rights
Agreement, dated as of May 22, 1998, by and among the Issuer and the other
parties named on the signature pages thereof, as such agreement may be amended,
modified or supplemented from time to time, and, with respect to any Additional
Debentures, one or more registration rights agreements between the Issuer and
the other parties thereto, as such agreement(s) may be amended, modified or
supplemented from time to time, relating to rights given by the Issuer to the
purchasers of Additional Debentures to register such Additional Debentures
under the Securities Act.
"Regulation S" means Regulation S promulgated under the Securities
Act.
"Regulation S Global Debenture" means a Regulation S Temporary Global
Debenture or Regulation S Permanent Global Debenture, as appropriate.
"Regulation S Permanent Global Debenture" means a permanent global
Debenture in the form of Exhibit A-1 hereto bearing the Global Debenture Legend
and the Private Placement Legend and deposited with or on behalf of and
registered in the name of the Depositary or its nominee, issued in a
denomination equal to the outstanding
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<PAGE> 18
principal amount at maturity of the Regulation S Temporary Global Debenture
upon expiration of the Restricted Period.
"Regulation S Temporary Global Debenture" means a temporary global
Debenture in the form of Exhibit A-2 hereto bearing the Private Placement
Legend and deposited with or on behalf of and registered in the name of the
Depositary or its nominee, issued in a denomination equal to the outstanding
principal amount at maturity of the Debentures initially sold in reliance on
Rule 903 of Regulation S.
"Related Party" means, with respect to any Principal, (i) any
controlling stockholder or partner of such Principal on the date of this
Indenture, or (ii) any trust, corporation, partnership or other entity, the
beneficiaries, stockholders, partners, owners or Persons beneficially holding
(directly or through one or more Subsidiaries) a 51% or more controlling
interest of which consist of the Principals and/or such other Persons referred
to in the immediately preceding clauses (i) or (ii).
"Responsible Officer," when used with respect to the Trustee, means
any officer within the Corporate Trust Administration of the Trustee (or any
successor group of the Trustee) or any other officer of the Trustee customarily
performing functions similar to those performed by any of the above designated
officers and also means, with respect to a particular corporate trust matter,
any other officer to whom such matter is referred because of his knowledge of
and familiarity with the particular subject.
"Restricted Definitive Debenture" means a Definitive Debenture bearing
the Private Placement Legend.
"Restricted Global Debenture" means a Global Debenture bearing the
Private Placement Legend.
"Restricted Investment" means an Investment other than a Permitted
Investment.
"Restricted Period" means the 40-day restricted period as defined in
Regulation S.
"Restricted Subsidiary" of a Person means any Subsidiary of the
referent Person that is not an Unrestricted Subsidiary.
"Rule 144" means Rule 144 promulgated under the Securities Act.
"Rule 144A" means Rule 144A promulgated under the Securities Act.
"Rule 903" means Rule 903 promulgated under the Securities Act.
"Rule 904" means Rule 904 promulgated the Securities Act.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Senior Subordinated Notes" means the 9-7/8% Senior Subordinated Notes
due 2008 of Thermadyne LLC and Thermadyne Capital, issued in connection the
Refinancing.
"Shelf Registration Statement" means the Shelf Registration Statement
as defined in the Registration Rights Agreement.
"Significant Subsidiary" means any Subsidiary that would be a
"significant subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X,
promulgated pursuant to the Securities Act, as such Regulation is in effect on
the date hereof.
"Specified Agreements" means the Investors' Agreement and the Tax
Sharing Agreement.
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"Stated Maturity" means, with respect to any installment of interest
or principal on any series of Indebtedness, the date on which such payment of
interest or principal was scheduled to be paid in the original documentation
governing such Indebtedness, and shall not include any contingent obligations
to repay, redeem or repurchase any such interest or principal prior to the date
originally scheduled for the payment thereof.
"Subordinated Indebtedness" means all Obligations with respect to
Indebtedness of the Issuer if the instrument creating or evidencing the same,
or pursuant to which the same is outstanding, designates such Obligations as
subordinated or junior in right of payment to the Debentures.
"Subordinated Note Indenture" means the indenture relating to the
Senior Subordinated Notes.
"Subsidiary" means, with respect to any Person, (a) any corporation,
association or other business entity of which more than 50% of the total voting
power of shares of Capital Stock entitled (without regard to the occurrence of
any contingency) to vote in the election of directors, managers or trustees
thereof is at the time owned or controlled, directly or indirectly, by such
Person or one or more of the other Subsidiaries of that Person (or a
combination thereof) and (b) any partnership or limited liability company (i)
the sole general partner or the managing general partner or managing member of
which is such Person or a Subsidiary of such Person or (ii) the only general
partners or managing members of which are such Person or of one or more
Subsidiaries of such Person (or any combination thereof).
"Tax Sharing Agreement" means any tax sharing agreement or arrangement
between the Issuer and its Subsidiaries, as the same may be amended from time
to time; provided that in no event shall the amount permitted to be paid
pursuant to all such agreements and/or arrangements exceed the amount the
Issuer would be required to pay for income taxes were it to file a consolidated
tax return for itself and its consolidated Restricted Subsidiaries as if it
were a corporation that was a parent of a consolidated group.
"Thermadyne LLC" means Thermadyne Mfg. LLC, a Delaware limited
liability company, the sole member of which is the Issuer.
"Thermadyne Capital" means Thermadyne Capital Corp., a Delaware
corporation wholly owned by Thermadyne LLC.
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C. Sections
77aaa-77bbbb) as in effect on the date on which this Indenture is qualified
under the TIA.
"Total Assets" means the total consolidated assets of the Issuer and
its Restricted Subsidiaries, as shown on the most recent balance sheet
(excluding the footnotes thereto) of the Issuer.
"Treasury Rate" means, as of any redemption date, the yield to
maturity as of such redemption date of United States Treasury securities with a
constant maturity (as compiled and published in the most recent Federal Reserve
Statistical Release H.15 (519) that has become publicly available at least two
Business Days prior to the redemption date (or, if such Statistical Release is
no longer published, any publicly available source of similar market data))
most nearly equal to the period from the redemption date to June 1, 2003;
provided that if the period from the redemption date to June 1, 2003 is less
than one year, the weekly average yield on actually traded United States
Treasury securities adjusted to a constant maturity of one year shall be used.
"Trustee" means the party named as such above until a successor
replaces it in accordance with the applicable provisions of this Indenture and
thereafter means the successor serving hereunder.
"Unrestricted Global Debenture" means a permanent global Debenture in
the form of Exhibit A-1 attached hereto that bears the Global Debenture Legend
and that has the "Schedule of Exchanges of Interests in the Global Debenture"
attached thereto, and that is deposited with or on behalf of and registered in
the name of the Depositary, representing a series of Debentures that do not
bear the Private Placement Legend.
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<PAGE> 20
"Unrestricted Definitive Debenture" means one or more Definitive
Debentures that do not bear and are not required to bear the Private Placement
Legend.
"Unrestricted Subsidiary" means any Subsidiary (other than Thermadyne
LLC and Thermadyne Capital) that is designated by the board of directors as an
Unrestricted Subsidiary pursuant to a board resolution, but only to the extent
that such Subsidiary: (a) has no Indebtedness other than Non-Recourse Debt; (b)
is not party to any agreement, contract, arrangement or understanding with the
Issuer or any Restricted Subsidiary of the Issuer unless the terms of any such
agreement, contract, arrangement or understanding are no less favorable to the
Issuer or such Restricted Subsidiary than those that might be obtained at the
time from Persons who are not Affiliates of the Issuer; (c) is a Person with
respect to which neither the Issuer nor any of its Restricted Subsidiaries has
any direct or indirect obligation (i) to subscribe for additional Equity
Interests (other than Investments described in clause (g) of the definition of
Permitted Investments) or (ii) to maintain or preserve such Person's financial
condition or to cause such Person to achieve any specified levels, of operating
results; and (d) has not guaranteed or otherwise directly or indirectly
provided credit support for any Indebtedness of the Issuer or any of its
Restricted Subsidiaries. Any such designation by the board of directors shall
be evidenced to the Trustee by filing with the Trustee a certified copy of the
board resolution giving effect to such designation and an Officers' Certificate
certifying that such designation complied with the foregoing conditions and was
permitted by Section 4.07 hereof. If, at any time, any Unrestricted Subsidiary
would fail to meet the foregoing requirements as a Unrestricted Subsidiary, it
shall thereafter cease to be an Unrestricted Subsidiary for purposes of this
Indenture and any Indebtedness of such Subsidiary shall be deemed to be
incurred by a Restricted Subsidiary of the Issuer as of such date (and, if such
Indebtedness is not permitted to be incurred as of such date under Section 4.09
hereof, the Issuer shall be in default of such covenant). The board of
directors of the Issuer may at any time designate any Unrestricted Subsidiary
to be a Restricted Subsidiary; provided that such designation shall be deemed
to be an incurrence of Indebtedness by a Restricted Subsidiary of the Issuer of
any outstanding Indebtedness of such Unrestricted Subsidiary and such
designation shall only be permitted if (i) such Indebtedness is permitted under
Section 4.07 hereof and (ii) no Default or Event of Default would be in
existence following such designation.
"U.S. Person" means a U.S. person as defined in Rule 902(o) under the
Securities Act.
"Weighted Average Life to Maturity" means , when applied to any
Indebtedness at any date, the number of years obtained by dividing (a) the sum
of the products obtained by multiplying (i) the amount of each then remaining
installment, sinking fund, serial maturity or other required payments of
principal, including payment at final maturity, in respect thereof, by (ii) the
number of years (calculated to the nearest one-twelfth) that will elapse
between such date and the making of such payment, by (b) the then outstanding
principal amount of such Indebtedness.
"Wholly Owned Restricted Subsidiary" of any Person means a Restricted
Subsidiary of such Person all the outstanding Capital Stock or other ownership
interests of which (other than directors' qualifying shares) shall at the time
be owned by such Person or by one or more Wholly Owned Restricted Subsidiaries
of such Person or by such Person and one or more Wholly Owned Restricted
Subsidiaries of such Person.
"Wholly Owned Subsidiary" of any Person means a Subsidiary of such
Person all of the outstanding Capital Stock or other ownership interests of
which (other than directors' qualifying shares) shall at the time be owned by
such Person or by one or more Wholly Owned Subsidiaries of such Person.
SECTION 1.02. OTHER DEFINITIONS.
<TABLE>
<CAPTION>
Defined in
Term Section
<S> <C>
"Affiliate Transaction" . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.11
"Asset Sale" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.10
"Asset Sale Offer" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.09
"Authentication Order" . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.02
"Bankruptcy Law" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.01
"Change of Control Offer" . . . . . . . . . . . . . . . . . . . . . . . . . . 4.15
</TABLE>
13
<PAGE> 21
<TABLE>
<S> <C>
"Change of Control Payment" . . . . . . . . . . . . . . . . . . . . . . . . . 4.15
"Change of Control Payment Date" . . . . . . . . . . . . . . . . . . . . . . 4.15
"Covenant Defeasance" . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.03
"Event of Default" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.01
"Excess Proceeds" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.10
"incur" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.09
"Legal Defeasance" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.02
"Offer Amount" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.09
"Offer Period" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.09
"Paying Agent" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.03
"Permitted Debt" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.09
"Purchase Date" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.09
"Registrar" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.03
"Restricted Payments" . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.07
</TABLE>
SECTION 1.03. INCORPORATION OF TIA PROVISIONS
Whenever this Indenture refers to a provision of the TIA, the
provision is incorporated by reference in and made a part of this Indenture.
The following TIA terms used in this Indenture have the following
meanings:
"indenture securities" means the Debentures;
"indenture security holder" means a Holder of a Debenture;
"indenture to be qualified" means this Indenture;
"indenture trustee" or "institutional trustee" means the Trustee; and
"obligor" on the Debentures means the Issuer and any successor obligor
upon the Debentures.
All other terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by Commission rule under
the TIA have the meanings so assigned to them.
SECTION 1.04. RULES OF CONSTRUCTION.
Unless the context otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has
the meaning assigned to it in accordance with GAAP;
(3) "or" is not exclusive;
(4) words in the singular include the plural, and
in the plural include the singular;
(5) provisions apply to successive events and
transactions; and
(6) references to sections of or rules under the
Securities Act shall be deemed to include substitute,
replacement of successor sections or rules adopted by the
Commission from time to time.
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<PAGE> 22
ARTICLE 2.
THE DEBENTURES
SECTION 2.01.FORM AND DATING.
(a) General. The Debentures and the Trustee's certificate of
authentication shall be substantially in the form of Exhibit A hereto. The
Debentures may have notations, legends or endorsements required by law, stock
exchange rule or usage. Each Debenture shall be dated the date of its
authentication. The Debentures shall be in denominations of $1,000 and
integral multiples thereof except that Debentures used to pay Liquidated
Damages may be in other denominations.
The terms and provisions contained in the Debentures shall constitute,
and are hereby expressly made, a part of this Indenture and the Issuer and the
Trustee, by their execution and delivery of this Indenture, expressly agree to
such terms and provisions and to be bound thereby. However, to the extent any
provision of any Debenture conflicts with the express provisions of this
Indenture, the provisions of this Indenture shall govern and be controlling.
(b) Global Debentures. Debentures issued in global form shall be
substantially in the form of Exhibit A-1 attached hereto (including the Global
Debenture Legend thereon and the "Schedule of Exchanges of Interests in the
Global Debenture" attached thereto). Debentures issued in definitive form
shall be substantially in the form of Exhibit A-1 attached hereto (but without
the Global Debenture Legend thereon and without the "Schedule of Exchanges of
Interests in the Global Debenture" attached thereto). Each Global Debenture
shall represent such of the outstanding Debentures as shall be specified
therein and each shall provide that it shall represent the aggregate principal
amount at maturity of outstanding Debentures from time to time endorsed thereon
and that the aggregate principal amount at maturity of outstanding Debentures
represented thereby may from time to time be reduced or increased, as
appropriate, to reflect exchanges and redemptions. Any endorsement of a Global
Debenture to reflect the amount of any increase or decrease in the aggregate
principal amount at maturity of outstanding Debentures represented thereby
shall be made by the Trustee or the Debenture Custodian, at the direction of
the Trustee, in accordance with instructions given by the Holder thereof as
required by Section 2.06 hereof.
(c) Temporary Global Debentures. Debentures offered and sold in
reliance on Regulation S shall be issued initially in the form of Exhibit A-2
attached hereto, which shall be deposited on behalf of the purchasers of the
Debentures represented thereby with the Trustee, at its New York office, as
custodian for the Depositary, and registered in the name of the Depositary or
the nominee of the Depositary for the accounts of designated agents holding on
behalf of Euroclear or Cedel Bank, duly executed by the Issuer and
authenticated by the Trustee as hereinafter provided. The Restricted Period
shall be terminated upon the receipt by the Trustee of (i) a written
certificate from the Depositary, together with copies of certificates from
Euroclear and Cedel Bank certifying that they have received certification of
non-United States beneficial ownership of 100% of the aggregate principal
amount at maturity of the Regulation S Temporary Global Debenture (except to
the extent of any beneficial owners thereof who acquired an interest therein
during the Restricted Period pursuant to another exemption from registration
under the Securities Act and who will take delivery of a beneficial ownership
interest in a 144A Global Debenture, all as contemplated by Section 2.06(a)(ii)
hereof), and (ii) an Officers' Certificate from the Issuer. Following the
termination of the Restricted Period, beneficial interests in the Regulation S
Temporary Global Debenture shall be exchanged for beneficial interests in
Regulation S Permanent Global Debentures pursuant to the Applicable Procedures.
Simultaneously with the authentication of Regulation S Permanent Global
Debentures, the Trustee shall cancel the Regulation S Temporary Global
Debenture. The aggregate principal amount at maturity of the Regulation S
Temporary Global Debenture and the Regulation S Permanent Global Debentures may
from time to time be increased or decreased by adjustments made on the records
of the Trustee and the Depositary or its nominee, as the case may be, in
connection with transfers of interest as hereinafter provided.
(d) Euroclear and Cedel Procedures Applicable. The provisions of
the "Operating Procedures of the Euroclear System" and "Terms and Conditions
Governing Use of Euroclear" and the "General Terms and Conditions of Cedel
Bank" and "Customer Handbook" of Cedel Bank shall be applicable to transfers of
beneficial
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<PAGE> 23
interests in the Regulation S Temporary Global Debenture and the Regulation S
Permanent Global Debentures that are held by Participants through Euroclear or
Cedel Bank.
SECTION 2.02. EXECUTION AND AUTHENTICATION.
One Officer shall sign the Debentures for the Issuer by manual or
facsimile signature. The Issuer's seal may be reproduced on the Debentures and
may be in facsimile form.
If an Officer whose signature is on a Debenture no longer holds that
office at the time a Debenture is authenticated, the Debenture shall
nevertheless be valid.
A Debenture shall not be valid until authenticated by the manual
signature of the Trustee. The signature shall be conclusive evidence that the
Debenture has been authenticated under this Indenture.
The Trustee shall, upon a written order of the Issuer signed by one
Officer (an "Authentication Order"), authenticate Debentures for original issue
up to the aggregate principal amount at maturity stated in paragraph 4 of the
Debentures plus Debentures issued to pay Liquidated Damages pursuant to
paragraph 2 of the Debentures. The aggregate principal amount at maturity of
Debentures outstanding at any time may not exceed such amount except as
provided in Section 2.07 hereof.
The Trustee may appoint an authenticating agent acceptable to the
Issuer to authenticate Debentures. An authenticating agent may authenticate
Debentures whenever the Trustee may do so. Each reference in this Indenture to
authentication by the Trustee includes authentication by such agent. An
authenticating agent has the same rights as an Agent to deal with Holders or an
Affiliate of the Issuer.
SECTION 2.03. REGISTRAR AND PAYING AGENT.
The Issuer shall maintain an office or agency where Debentures may be
presented for registration of transfer or for exchange ("Registrar") and an
office or agency where Debentures may be presented for payment ("Paying
Agent"). The Registrar shall keep a register of the Debentures and of their
transfer and exchange. The Issuer may appoint one or more co-registrars and
one or more additional paying agents. The term "Registrar" includes any
co-registrar and the term "Paying Agent" includes any additional paying agent.
The Issuer may change any Paying Agent or Registrar without notice to any
Holder. The Issuer shall notify the Trustee in writing of the name and address
of any Agent not a party to this Indenture. If the Issuer fails to appoint or
maintain another entity as Registrar or Paying Agent, the Trustee shall act as
such. The Issuer or any of its Subsidiaries may act as Paying Agent or
Registrar.
The Issuer initially appoints The Depository Trust Company ("DTC") to
act as Depositary with respect to the Global Debentures.
The Issuer initially appoints the Trustee to act as the Registrar and
Paying Agent and to act as Debenture Custodian with respect to the Global
Debentures.
SECTION 2.04. PAYING AGENT TO HOLD MONEY IN TRUST.
The Issuer shall require each Paying Agent other than the Trustee to
agree in writing that the Paying Agent will hold in trust for the benefit of
Holders or the Trustee all money held by the Paying Agent for the payment of
principal, premium or Liquidated Damages, if any, or interest on the
Debentures, and will notify the Trustee of any default by the Issuer in making
any such payment. While any such default continues, the Trustee may require a
Paying Agent to pay all money held by it to the Trustee. The Issuer at any
time may require a Paying Agent to pay all money held by it to the Trustee.
Upon payment over to the Trustee, the Paying Agent (if other than the Issuer or
a Subsidiary) shall have no further liability for the money. If the Issuer or
a Subsidiary acts as Paying Agent, it shall segregate and hold in a separate
trust fund for the benefit of the Holders all money held by it as Paying Agent.
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<PAGE> 24
Upon any bankruptcy or reorganization proceedings relating to the Issuer, the
Trustee shall serve as Paying Agent for the Debentures.
SECTION 2.05. HOLDER LISTS.
The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
all Holders and shall otherwise comply with TIA Section 312(a). If the Trustee
is not the Registrar, the Issuer shall furnish to the Trustee at least seven
Business Days before each interest payment date and at such other times as the
Trustee may request, a list in such form and as of such date as the Trustee may
reasonably require of the names and addresses of the Holders of Debentures and
the Issuer shall otherwise comply with TIA Section 312(a).
SECTION 2.06. TRANSFER AND EXCHANGE.
(a) Transfer and Exchange of Global Debentures. A Global
Debenture may not be transferred as a whole except by the Depositary to a
nominee of the Depositary, by a nominee of the Depositary to the Depositary or
to another nominee of the Depositary, the Depositary or any such nominee to a
successor Depositary or a nominee of such successor Depositary. All Global
Debentures will be exchanged by the Issuer for Definitive Debentures if (i) the
Issuer delivers to the Trustee notice from the Depositary that it is unwilling
or unable to continue to act as Depositary or that it is no longer a clearing
agency registered under the Exchange Act and, in either case, a successor
Depositary is not appointed by the Issuer within 120 days after the date of
such notice from the Depositary or (ii) the Issuer in its sole discretion
determines that the Global Debentures (in whole but not in part) should be
exchanged for Definitive Debentures and delivers a written notice to such
effect to the Trustee; provided that in no event shall the Regulation S
Temporary Global Debenture be exchanged by the Issuer for Definitive Debentures
prior to (x) the expiration of the Restricted Period and (y) the receipt by the
Registrar of any certificates required pursuant to Rule 903(c)(3)(ii)(B) under
the Securities Act. Upon the occurrence of either of the preceding events in
(i) or (ii) above, Definitive Debentures shall be issued in such names as the
Depositary shall instruct the Trustee. Global Debentures also may be exchanged
or replaced, in whole or in part, as provided in Sections 2.07 and 2.10 hereof.
Every Debenture authenticated and delivered in exchange for, or in lieu of, a
Global Debenture or any portion thereof, pursuant to this Section 2.06 or
Section 2.07 or 2.10 hereof, shall be authenticated and delivered in the form
of, and shall be, a Global Debenture. A Global Debenture may not be exchanged
for another Debenture other than as provided in this Section 2.06(a), however,
beneficial interests in a Global Debenture may be transferred and exchanged as
provided in Section 2.06(b),(c) or (f) hereof.
(b) Transfer and Exchange of Beneficial Interests in the Global
Debentures. The transfer and exchange of beneficial interests in the Global
Debentures shall be effected through the Depositary, in accordance with the
provisions of this Indenture and the Applicable Procedures. Beneficial
interests in the Restricted Global Debentures shall be subject to restrictions
on transfer comparable to those set forth herein to the extent required by the
Securities Act. Transfers of beneficial interests in the Global Debentures
also shall require compliance with either subparagraph (i) or (ii) below, as
applicable, as well as one or more of the other following subparagraphs, as
applicable:
(i) Transfer of Beneficial Interests in the Same Global
Debenture. Beneficial interests in any Restricted Global
Debenture may be transferred to Persons who take delivery thereof
in the form of a beneficial interest in the same Restricted Global
Debenture in accordance with the transfer restrictions set forth
in the Private Placement Legend; provided, however, that prior to
the expiration of the Restricted Period, transfers of beneficial
interests in the Temporary Regulation S Global Debenture may not
be made to a U.S. Person or for the account or benefit of a U.S.
Person (other than an Initial Purchaser). Beneficial interests in
any Unrestricted Global Debenture may be transferred to Persons
who take delivery thereof in the form of a beneficial interest in
an Unrestricted Global Debenture. No written orders or
instructions shall be required to be delivered to the Registrar to
effect the transfers described in this Section 2.06(b)(i).
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<PAGE> 25
(ii) All Other Transfers and Exchanges of Beneficial
Interests in Global Debentures. In connection with all transfers
and exchanges of beneficial interests that are not subject to
Section 2.06(b)(i) above, the transferor of such beneficial
interest must deliver to the Registrar either (A) (1) a written
order from a Participant or an Indirect Participant given to the
Depositary in accordance with the Applicable Procedures directing
the Depositary to credit or cause to be credited a beneficial
interest in another Global Debenture in an amount equal to the
beneficial interest to be transferred or exchanged and (2)
instructions given in accordance with the Applicable Procedures
containing information regarding the Participant account to be
credited with such increase or (B) (1) a written order from a
Participant or an Indirect Participant given to the Depositary in
accordance with the Applicable Procedures directing the Depositary
to cause to be issued a Definitive Debenture in an amount equal to
the beneficial interest to be transferred or exchanged and (2)
instructions given by the Depositary to the Registrar containing
information regarding the Person in whose name such Definitive
Debenture shall be registered to effect the transfer or exchange
referred to in (1) above; provided that in no event shall
Definitive Debentures be issued upon the transfer or exchange of
beneficial interests in the Regulation S Temporary Global
Debenture prior to (x) the expiration of the Restricted Period and
(y) the receipt by the Registrar of any certificates required
pursuant to Rule 903 under the Securities Act. Upon consummation
of an Exchange Offer by the Issuer in accordance with Section
2.06(f) hereof, the requirements of this Section 2.06(b)(ii) shall
be deemed to have been satisfied upon receipt by the Registrar of
the instructions contained in the Letter of Transmittal delivered
by the Holder of such beneficial interests in the Restricted
Global Debentures. Upon satisfaction of all of the requirements
for transfer or exchange of beneficial interests in Global
Debentures contained in this Indenture and the Debentures or
otherwise applicable under the Securities Act, the Trustee shall
adjust the principal amount at maturity of the relevant Global
Debenture(s) pursuant to Section 2.06(h) hereof.
(iii) Transfer of Beneficial Interests to Another
Restricted Global Debenture. A beneficial interest in any
Restricted Global Debenture may be transferred to a Person who
takes delivery thereof in the form of a beneficial interest in
another Restricted Global Debenture if the transfer complies with
the requirements of Section 2.06(b)(ii) above and the Registrar
receives the following:
(A) if the transferee will take delivery in the form of a
beneficial interest in the 144A Global Debenture, then the
transferor must deliver a certificate in the form of Exhibit B
hereto, including the certifications in item (1) thereof; and
(B) if the transferee will take delivery in the form of a
beneficial interest in the Regulation S Temporary Global
Debenture or the Regulation S Global Debenture, then the
transferor must deliver a certificate in the form of Exhibit B
hereto, including the certifications in item (2) thereof.
(iv) Transfer and Exchange of Beneficial Interests in a
Restricted Global Debenture for Beneficial Interests in the
Unrestricted Global Debenture. A beneficial interest in any
Restricted Global Debenture may be exchanged by any holder thereof
for a beneficial interest in an Unrestricted Global Debenture or
transferred to a Person who takes delivery thereof in the form of
a beneficial interest in an Unrestricted Global Debenture if the
exchange or transfer complies with the requirements of Section
2.06(b)(ii) above and:
(A) such exchange or transfer is effected pursuant to the
Exchange Offer in accordance with the Registration Rights
Agreement and the holder of the beneficial interest to be
transferred, in the case of an exchange, or the transferee, in
the case of a transfer, certifies in the applicable Letter of
Transmittal that it is not (1) a broker-dealer, (2) a Person
participating in the distribution of the Exchange Debentures
or (3) a Person who is an affiliate (as defined in Rule 144)
of the Issuer;
(B) such transfer is effected pursuant to the Shelf
Registration Statement in accordance with the Registration
Rights Agreement;
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<PAGE> 26
(C) such transfer is effected by a Participating
Broker-Dealer pursuant to the Exchange Offer Registration
Statement in accordance with the Registration Rights
Agreement; or
(D) the Registrar receives the following:
(1) if the holder of such beneficial interest in
a Restricted Global Debenture proposes to exchange such
beneficial interest for a beneficial interest in an
Unrestricted Global Debenture, a certificate from such
holder in the form of Exhibit C hereto, including the
certifications in item (1)(a) thereof; or
(2) if the holder of such beneficial interest in
a Restricted Global Debenture proposes to transfer such
beneficial interest to a Person who shall take delivery
thereof in the form of a beneficial interest in an
Unrestricted Global Debenture, a certificate from such
holder in the form of Exhibit B hereto, including the
certifications in item (4) thereof;
and, in each such case set forth in this subparagraph (D), if the
Registrar so requests or if the Applicable Procedures so require,
an Opinion of Counsel in form reasonably acceptable to the
Registrar to the effect that such exchange or transfer is in
compliance with the Securities Act and that the restrictions on
transfer contained herein and in the Private Placement Legend are
no longer required in order to maintain compliance with the
Securities Act.
If any such transfer is effected pursuant to subparagraph (B) or (D)
above at a time when an Unrestricted Global Debenture has not yet been issued,
the Issuer shall issue and, upon receipt of an Authentication Order in
accordance with Section 2.02 hereof, the Trustee shall authenticate one or more
Unrestricted Global Debentures in an aggregate principal amount at maturity
equal to the aggregate principal amount at maturity of beneficial interests
transferred pursuant to subparagraph (B) or (D) above.
Beneficial interests in an Unrestricted Global Debenture cannot be
exchanged for, or transferred to Persons who take delivery thereof in the form
of, a beneficial interest in a Restricted Global Debenture.
(c) Transfer or Exchange of Beneficial Interests for Definitive
Debentures.
(i) Beneficial Interests in Restricted Global Debentures
to Restricted Definitive Debentures. If any holder of a
beneficial interest in a Restricted Global Debenture proposes to
exchange such beneficial interest for a Restricted Definitive
Debenture or to transfer such beneficial interest to a Person who
takes delivery thereof in the form of a Restricted Definitive
Debenture, then, upon receipt by the Registrar of the following
documentation:
(A) if the holder of such beneficial interest in a
Restricted Global Debenture proposes to exchange such
beneficial interest for a Restricted Definitive Debenture, a
certificate from such holder in the form of Exhibit C hereto,
including the certifications in item (2)(a) thereof;
(B) if such beneficial interest is being transferred to a
QIB in accordance with Rule 144A under the Securities Act, a
certificate to the effect set forth in Exhibit B hereto,
including the certifications in item (1) thereof;
(C) if such beneficial interest is being transferred to a
Non-U.S. Person in an offshore transaction in accordance with
Rule 903 or Rule 904 under the Securities Act, a certificate
to the effect set forth in Exhibit B hereto, including the
certifications in item (2) thereof;
(D) if such beneficial interest is being transferred
pursuant to an exemption from the registration requirements of
the Securities Act in accordance with Rule 144 under the
Securities Act, a certificate to the effect set forth in
Exhibit B hereto, including the certifications in item (3)(a)
thereof;
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<PAGE> 27
(E) if such beneficial interest is being transferred to
an Institutional Accredited Investor in reliance on an
exemption from the registration requirements of the Securities
Act other than those listed in subparagraphs (B) through (D)
above, a certificate to the effect set forth in Exhibit B
hereto, including the certifications, certificates and Opinion
of Counsel required by item (3) thereof, if applicable;
(F) if such beneficial interest is being transferred to
the Issuer or any of its Subsidiaries, a certificate to the
effect set forth in Exhibit B hereto, including the
certifications in item (3)(b) thereof; or
(G) if such beneficial interest is being transferred
pursuant to an effective registration statement under the
Securities Act, a certificate to the effect set forth in
Exhibit B hereto, including the certifications in item (3)(c)
thereof,
the Trustee shall cause the aggregate principal amount at maturity of
the applicable Global Debenture to be reduced accordingly pursuant to
Section 2.06(h) hereof, and the Issuer shall execute and the Trustee
shall authenticate and deliver to the Person designated in the
instructions a Definitive Debenture in the appropriate principal
amount at maturity. Any Definitive Debenture issued in exchange for a
beneficial interest in a Restricted Global Debenture pursuant to this
Section 2.06(c) shall be registered in such name or names and in such
authorized denomination or denominations as the holder of such
beneficial interest shall instruct the Registrar through instructions
from the Depositary and the Participant or Indirect Participant. The
Trustee shall deliver such Definitive Debentures to the Persons in
whose names such Debentures are so registered. Any Definitive
Debenture issued in exchange for a beneficial interest in a Restricted
Global Debenture pursuant to this Section 2.06(c)(i) shall bear the
Private Placement Legend and shall be subject to all restrictions on
transfer contained therein.
(ii) Notwithstanding Sections 2.06(c)(i)(A) and (C)
hereof, a beneficial interest in the Regulation S Temporary Global
Debenture may not be exchanged for a Definitive Debenture or
transferred to a Person who takes delivery thereof in the form of
a Definitive Debenture prior to (x) the expiration of the
Restricted Period and (y) the receipt by the Registrar of any
certificates required pursuant to Rule 903(c)(3)(ii)(B) under the
Securities Act, except in the case of a transfer pursuant to an
exemption from the registration requirements of the Securities Act
other than Rule 903 or Rule 904.]
(iii) Beneficial Interests in Restricted Global Debentures
to Unrestricted Definitive Debentures. A holder of a beneficial
interest in a Restricted Global Debenture may exchange such
beneficial interest for an Unrestricted Definitive Debenture or
may transfer such beneficial interest to a Person who takes
delivery thereof in the form of an Unrestricted Definitive
Debenture only if:
(A) such exchange or transfer is effected pursuant to the
Exchange Offer in accordance with the Registration Rights
Agreement and the holder of such beneficial interest, in the
case of an exchange, or the transferee, in the case of a
transfer, certifies in the applicable Letter of Transmittal
that it is not (1) a broker-dealer, (2) a Person participating
in the distribution of the Exchange Debentures or (3) a Person
who is an affiliate (as defined in Rule 144) of the Issuer;
(B) such transfer is effected pursuant to the Shelf
Registration Statement in accordance with the Registration
Rights Agreement;
(C) such transfer is effected by a Participating
Broker-Dealer pursuant to the Exchange Offer Registration
Statement in accordance with the Registration Rights
Agreement; or
(D) the Registrar receives the following:
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<PAGE> 28
(1) if the holder of such beneficial interest in
a Restricted Global Debenture proposes to exchange such
beneficial interest for a Definitive Debenture that does
not bear the Private Placement Legend, a certificate from
such holder in the form of Exhibit C hereto, including
the certifications in item (1)(b) thereof; or
(2) if the holder of such beneficial interest in
a Restricted Global Debenture proposes to transfer such
beneficial interest to a Person who shall take delivery
thereof in the form of a Definitive Debenture that does
not bear the Private Placement Legend, a certificate from
such holder in the form of Exhibit B hereto, including
the certifications in item (4) thereof;
and, in each such case set forth in this subparagraph (D),
if the Registrar so requests or if the Applicable
Procedures so require, an Opinion of Counsel in form
reasonably acceptable to the Registrar to the effect that
such exchange or transfer is in compliance with the
Securities Act and that the restrictions on transfer
contained herein and in the Private Placement Legend are
no longer required in order to maintain compliance with
the Securities Act.
(iv) Beneficial Interests in Unrestricted Global
Debentures to Unrestricted Definitive Debentures. If any holder
of a beneficial interest in an Unrestricted Global Debenture
proposes to exchange such beneficial interest for a Definitive
Debenture or to transfer such beneficial interest to a Person who
takes delivery thereof in the form of a Definitive Debenture,
then, upon satisfaction of the conditions set forth in Section
2.06(b)(ii) hereof, the Trustee shall cause the aggregate
principal amount at maturity of the applicable Global Debenture to
be reduced accordingly pursuant to Section 2.06(h) hereof, and the
Issuer shall execute and the Trustee shall authenticate and
deliver to the Person designated in the instructions a Definitive
Debenture in the appropriate principal amount at maturity. Any
Definitive Debenture issued in exchange for a beneficial interest
pursuant to this Section 2.06(c)(iii) shall be registered in such
name or names and in such authorized denomination or denominations
as the holder of such beneficial interest shall instruct the
Registrar through instructions from the Depositary and the
Participant or Indirect Participant. The Trustee shall deliver
such Definitive Debentures to the Persons in whose names such
Debentures are so registered. Any Definitive Debenture issued in
exchange for a beneficial interest pursuant to this Section
2.06(c)(iii) shall not bear the Private Placement Legend.
(d) Transfer and Exchange of Definitive Debentures for Beneficial
Interests.
(i) Restricted Definitive Debentures to Beneficial
Interests in Restricted Global Debentures. If any Holder of a
Restricted Definitive Debenture proposes to exchange such
Debenture for a beneficial interest in a Restricted Global
Debenture or to transfer such Restricted Definitive Debentures to
a Person who takes delivery thereof in the form of a beneficial
interest in a Restricted Global Debenture, then, upon receipt by
the Registrar of the following documentation:
(A) if the Holder of such Restricted Definitive Debenture
proposes to exchange such Debenture for a beneficial interest
in a Restricted Global Debenture, a certificate from such
Holder in the form of Exhibit C hereto, including the
certifications in item (2)(b) thereof;
(B) if such Restricted Definitive Debenture is being
transferred to a QIB in accordance with Rule 144A under the
Securities Act, a certificate to the effect set forth in
Exhibit B hereto, including the certifications in item (1)
thereof;
(C) if such Restricted Definitive Debenture is being
transferred to a Non-U.S. Person in an offshore transaction in
accordance with Rule 903 or Rule 904 under the Securities Act,
a certificate to the effect set forth in Exhibit B hereto,
including the certifications in item (2) thereof;
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(D) if such Restricted Definitive Debenture is being
transferred pursuant to an exemption from the registration
requirements of the Securities Act in accordance with Rule 144
under the Securities Act, a certificate to the effect set
forth in Exhibit B hereto, including the certifications in
item (3)(a) thereof;
(E) if such Restricted Definitive Debenture is being
transferred to an Institutional Accredited Investor in
reliance on an exemption from the registration requirements of
the Securities Act other than those listed in subparagraphs
(B) through (D) above, a certificate to the effect set forth
in Exhibit B hereto, including the certifications,
certificates and Opinion of Counsel required by item (3)
thereof, if applicable;
(F) if such Restricted Definitive Debenture is being
transferred to the Issuer or any of its Subsidiaries, a
certificate to the effect set forth in Exhibit B hereto,
including the certifications in item (3)(b) thereof; or
(G) if such Restricted Definitive Debenture is being
transferred pursuant to an effective registration statement
under the Securities Act, a certificate to the effect set
forth in Exhibit B hereto, including the certifications in
item (3)(c) thereof,
the Trustee shall cancel the Restricted Definitive Debenture, increase
or cause to be increased the aggregate principal amount at maturity
of, in the case of clause (A) above, the appropriate Restricted Global
Debenture, in the case of clause (B) above, the 144A Global Debenture,
in the case of clause (c) above, and the Regulation S Global
Debenture.
(ii) Restricted Definitive Debentures to Beneficial
Interests in Unrestricted Global Debentures. A Holder of a
Restricted Definitive Debenture may exchange such Debenture for a
beneficial interest in an Unrestricted Global Debenture or
transfer such Restricted Definitive Debenture to a Person who
takes delivery thereof in the form of a beneficial interest in an
Unrestricted Global Debenture only if:
(A) such exchange or transfer is effected pursuant to the
Exchange Offer in accordance with the Registration Rights
Agreement and the Holder, in the case of an exchange, or the
transferee, in the case of a transfer, certifies in the
applicable Letter of Transmittal that it is not (1) a broker-
dealer, (2) a Person participating in the distribution of the
Exchange Debentures or (3) a Person who is an affiliate (as
defined in Rule 144) of the Issuer;
(B) such transfer is effected pursuant to the Shelf
Registration Statement in accordance with the Registration
Rights Agreement;
(C) such transfer is effected by a Participating
Broker-Dealer pursuant to the Exchange Offer Registration
Statement in accordance with the Registration Rights
Agreement; or
(D) the Registrar receives the following:
(1) if the Holder of such Definitive Debentures
proposes to exchange such Debentures for a beneficial
interest in the Unrestricted Global Debenture, a
certificate from such Holder in the form of Exhibit C
hereto, including the certifications in item (1)(c)
thereof; or
(2) if the Holder of such Definitive Debentures
proposes to transfer such Debentures to a Person who
shall take delivery thereof in the form of a beneficial
interest in the Unrestricted Global Debenture, a
certificate from such Holder in the form of Exhibit B
hereto, including the certifications in item (4) thereof;
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and, in each such case set forth in this subparagraph (D), if the
Registrar so requests or if the Applicable Procedures so require, an
Opinion of Counsel in form reasonably acceptable to the Registrar to
the effect that such exchange or transfer is in compliance with the
Securities Act and that the restrictions on transfer contained herein
and in the Private Placement Legend are no longer required in order to
maintain compliance with the Securities Act.
Upon satisfaction of the conditions of any of the subparagraphs in
this Section 2.06(d)(ii), the Trustee shall cancel the Definitive
Debentures and increase or cause to be increased the aggregate
principal amount at maturity of the Unrestricted Global Debenture.
(iii) Unrestricted Definitive Debentures to Beneficial
Interests in Unrestricted Global Debentures. A Holder of an
Unrestricted Definitive Debenture may exchange such Debenture for
a beneficial interest in an Unrestricted Global Debenture or
transfer such Definitive Debentures to a Person who takes delivery
thereof in the form of a beneficial interest in an Unrestricted
Global Debenture at any time. Upon receipt of a request for such
an exchange or transfer, the Trustee shall cancel the applicable
Unrestricted Definitive Debenture and increase or cause to be
increased the aggregate principal amount at maturity of one of the
Unrestricted Global Debentures.
If any such exchange or transfer from a Definitive Debenture to a
beneficial interest is effected pursuant to subparagraphs (ii)(B), (ii)(D) or
(iii) above at a time when an Unrestricted Global Debenture has not yet been
issued, the Issuer shall issue and, upon receipt of an Authentication Order in
accordance with Section 2.02 hereof, the Trustee shall authenticate one or more
Unrestricted Global Debentures in an aggregate principal amount at maturity
equal to the principal amount at maturity of Definitive Debentures so
transferred.
(e) Transfer and Exchange of Definitive Debentures for Definitive
Debentures. Upon request by a Holder of Definitive Debentures and such
Holder's compliance with the provisions of this Section 2.06(e), the Registrar
shall register the transfer or exchange of Definitive Debentures. Prior to
such registration of transfer or exchange, the requesting Holder shall present
or surrender to the Registrar the Definitive Debentures duly endorsed or
accompanied by a written instruction of transfer in form satisfactory to the
Registrar duly executed by such Holder or by his attorney, duly authorized in
writing. In addition, the requesting Holder shall provide any additional
certifications, documents and information, as applicable, required pursuant to
the following provisions of this Section 2.06(e).
(i) Restricted Definitive Debentures to Restricted
Definitive Debentures. Any Restricted Definitive Debenture may be
transferred to and registered in the name of Persons who take
delivery thereof in the form of a Restricted Definitive Debenture
if the Registrar receives the following:
(A) if the transfer will be made pursuant to Rule 144A
under the Securities Act, then the transferor must deliver a
certificate in the form of Exhibit B hereto, including the
certifications in item (1) thereof;
(B) if the transfer will be made pursuant to Rule 903 or
Rule 904, then the transferor must deliver a certificate in
the form of Exhibit B hereto, including the certifications in
item (2) thereof; and
(C) if the transfer will be made pursuant to any other
exemption from the registration requirements of the Securities
Act, then the transferor must deliver a certificate in the
form of Exhibit B hereto, including the certifications,
certificates and Opinion of Counsel required by item (3)
thereof, if applicable.
(ii) Restricted Definitive Debentures to Unrestricted
Definitive Debentures. Any Restricted Definitive
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Debenture may be exchanged by the Holder thereof for an
Unrestricted Definitive Debenture or transferred to a Person or
Persons who take delivery thereof in the form of an Unrestricted
Definitive Debenture if:
(A) such exchange or transfer is effected pursuant to the
Exchange Offer in accordance with the Registration Rights
Agreement and the Holder, in the case of an exchange, or the
transferee, in the case of a transfer, certifies in the
applicable Letter of Transmittal that it is not (1) a broker-
dealer, (2) a Person participating in the distribution of the
Exchange Debentures or (3) a Person who is an affiliate (as
defined in Rule 144) of the Issuer;
(B) any such transfer is effected pursuant to the Shelf
Registration Statement in accordance with the Registration
Rights Agreement;
(C) any such transfer is effected by a Participating
Broker-Dealer pursuant to the Exchange Offer Registration
Statement in accordance with the Registration Rights
Agreement; or
(D) the Registrar receives the following:
(1) if the Holder of such Restricted Definitive
Debentures proposes to exchange such Debentures for an
Unrestricted Definitive Debenture, a certificate from
such Holder in the form of Exhibit C hereto, including
the certifications in item (1)(d) thereof; or
(2) if the Holder of such Restricted Definitive
Debentures proposes to transfer such Debentures to a
Person who shall take delivery thereof in the form of an
Unrestricted Definitive Debenture, a certificate from
such Holder in the form of Exhibit B hereto, including
the certifications in item (4) thereof;
and, in each such case set forth in this subparagraph (D), if the
Registrar so requests, an Opinion of Counsel in form reasonably
acceptable to the Issuer to the effect that such exchange or transfer
is in compliance with the Securities Act and that the restrictions on
transfer contained herein and in the Private Placement Legend are no
longer required in order to maintain compliance with the Securities
Act.
(iii) Unrestricted Definitive Debentures to Unrestricted
Definitive Debentures. A Holder of Unrestricted Definitive
Debentures may transfer such Debentures to a Person who takes
delivery thereof in the form of an Unrestricted Definitive
Debenture. Upon receipt of a request to register such a transfer,
the Registrar shall register the Unrestricted Definitive
Debentures pursuant to the instructions from the Holder thereof.
(f) Exchange Offer. Upon the occurrence of the Exchange Offer in
accordance with the Registration Rights Agreement, the Issuer shall issue and,
upon receipt of an Authentication Order in accordance with Section 2.02, the
Trustee shall authenticate (i) one or more Unrestricted Global Debentures in an
aggregate principal amount at maturity equal to the principal amount at
maturity of the beneficial interests in the Restricted Global Debentures
tendered for acceptance by Persons that certify in the applicable Letters of
Transmittal that (x) they are not broker-dealers, (y) they are not
participating in a distribution of the Exchange Debentures and (z) they are not
affiliates (as defined in Rule 144) of the Issuer, and accepted for exchange in
the Exchange Offer and (ii) Definitive Debentures in an aggregate principal
amount at maturity equal to the principal amount at maturity of the Restricted
Definitive Debentures accepted for exchange in the Exchange Offer.
Concurrently with the issuance of such Debentures, the Trustee shall cause the
aggregate principal amount at maturity of the applicable Restricted Global
Debentures to be reduced accordingly, and the Issuer shall execute and the
Trustee shall authenticate and deliver to the Persons designated by the Holders
of Definitive Debentures so accepted Definitive Debentures in the appropriate
principal amount at maturity.
(g) Legends. The following legends shall appear on the face of
all Global Debentures and Definitive Debentures issued under this Indenture
unless specifically stated otherwise in the applicable provisions of this
Indenture.
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(i) Private Placement Legend.
(A) Except as permitted by subparagraph (B) below, each
Global Debenture and each Definitive Debenture (and all
Debentures issued in exchange therefor or substitution
thereof) shall bear the legend in substantially the following
form:
"THIS SECURITY (OR ITS PREDECESSOR) HAS NOT BEEN REGISTERED
UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED, SOLD, PLEDGED OR
OTHERWISE TRANSFERRED WITHIN THE UNITED STATES OR TO, OR FOR THE
ACCOUNT OR BENEFIT OF, U.S. PERSONS, EXCEPT AS SET FORTH IN THE NEXT
SENTENCE. BY ITS ACQUISITION HEREOF OR OF A BENEFICIAL INTEREST
HEREIN, THE HOLDER: (1) REPRESENTS THAT (A) IT IS A "QUALIFIED
INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES
ACT) (A "QIB"), (B) IT HAS ACQUIRED THIS SECURITY IN AN OFFSHORE
TRANSACTION IN COMPLIANCE WITH REGULATION S UNDER THE SECURITIES ACT
OR (C) IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN
RULE 501(A) (1), (2), (3) OR (7) OR REGULATION D UNDER THE SECURITIES
ACT (AN "IAI"), (2) AGREES THAT IT WILL NOT RESELL OR OTHERWISE
TRANSFER THIS SECURITY EXCEPT (A) TO THE ISSUER OR ANY OF ITS
SUBSIDIARIES, (B) TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A
QIB PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QIB IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (C) IN AN OFFSHORE
TRANSACTION MEETING THE REQUIREMENTS OF RULE 903 OR 904 OF THE
SECURITIES ACT, (D) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE
144 UNDER THE SECURITIES ACT, (E) TO AN IAI THAT, PRIOR TO SUCH
TRANSFER, FURNISHES THE TRUSTEE A SIGNED LETTER CONTAINING CERTAIN
REPRESENTATIONS AND AGREEMENTS RELATING TO THE TRANSFER OF THIS
SECURITY (THE FORM OF WHICH CAN BE OBTAINED FROM THE TRUSTEE) AND, IF
SUCH TRANSFER IS IN RESPECT OF AN AGGREGATE PRINCIPAL AMOUNT OF
DEBENTURES LESS THAN $250,000, AN OPINION OF COUNSEL ACCEPTABLE TO THE
ISSUER THAT SUCH TRANSFER IS IN COMPLIANCE WITH THE SECURITIES ACT,
(F) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT (AND BASED UPON AN OPINION OF
COUNSEL ACCEPTABLE TO THE COMPANY) OR (G) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT AND, IN EACH CASE, IN ACCORDANCE WITH THE
APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY
OTHER APPLICABLE JURISDICTION AND (3) AGREES THAT IT WILL DELIVER TO
EACH PERSON TO WHOM THIS SECURITY OR AN INTEREST HEREIN IS TRANSFERRED
A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. AS USED HEREIN,
THE TERMS "OFFSHORE TRANSACTION" AND "UNITED STATES" HAVE THE MEANINGS
GIVEN TO THEM BY RULE 902 OF REGULATION S UNDER THE SECURITIES ACT.
THE INDENTURE CONTAINS A PROVISION REQUIRING THE TRUSTEE TO REFUSE TO
REGISTER ANY TRANSFER OF THIS SECURITY IN VIOLATION OF THE FOREGOING."
(B) Notwithstanding the foregoing, any Global Debenture
or Definitive Debenture issued pursuant to subparagraphs
(b)(iv), (c)(ii), (c)(iii), (d)(ii), (d)(iii), (e)(ii),
(e)(iii) or (f) to this Section 2.06 (and all Debentures
issued in exchange therefor or substitution thereof) shall not
bear the Private Placement Legend.
(ii) Global Debenture Legend. Each Global Debenture shall
bear a legend in substantially the following form:
"THIS GLOBAL DEBENTURE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE
INDENTURE GOVERNING THIS DEBENTURE) OR ITS NOMINEE IN CUSTODY FOR THE
BENEFIT OF THE BENEFICIAL OWNERS HEREOF, AND IS NOT TRANSFERABLE TO
ANY PERSON UNDER ANY CIRCUMSTANCES EXCEPT THAT (I) THE TRUSTEE MAY
MAKE SUCH
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NOTATIONS HEREON AS MAY BE REQUIRED PURSUANT TO SECTION 2.07 OF THE
INDENTURE, (II) THIS GLOBAL DEBENTURE MAY BE EXCHANGED IN WHOLE BUT
NOT IN PART PURSUANT TO SECTION 2.06(a) OF THE INDENTURE, (III) THIS
GLOBAL DEBENTURE MAY BE DELIVERED TO THE TRUSTEE FOR CANCELLATION
PURSUANT TO SECTION 2.11 OF THE INDENTURE AND (IV) THIS GLOBAL
DEBENTURE MAY BE TRANSFERRED TO A SUCCESSOR DEPOSITARY WITH THE PRIOR
WRITTEN CONSENT OF THERMADYNE MFG. LLC AND THERMADYNE CAPITAL
CORPORATION."
(iii) Regulation S Temporary Global Debenture Legend. The
Regulation S Temporary Global Debenture shall bear a legend in
substantially the following form:
"THE RIGHTS ATTACHING TO THIS REGULATION S TEMPORARY GLOBAL DEBENTURE,
AND THE CONDITIONS AND PROCEDURES GOVERNING ITS EXCHANGE FOR
CERTIFICATED DEBENTURES, ARE AS SPECIFIED IN THE INDENTURE (AS DEFINED
HEREIN). NEITHER THE HOLDER NOR THE BENEFICIAL OWNERS OF THIS
REGULATION S TEMPORARY GLOBAL DEBENTURE SHALL BE ENTITLED TO RECEIVE
PAYMENT OF INTEREST HEREON."
(iv) Original Issue Discount Legend. Each Debenture shall
bear a legend in substantially the following form:
"FOR THE PURPOSES OF SECTIONS 1272, 1273 AND 1275 OF THE INTERNAL
REVENUE CODE OF 1986, AS AMENDED, THIS SECURITY IS BEING ISSUED WITH
ORIGINAL ISSUE DISCOUNT; FOR EACH $1,000 PRINCIPAL AMOUNT OF THIS
SECURITY, THE ISSUE PRICE IS $543.74, THE AMOUNT OF ORIGINAL ISSUE
DISCOUNT IS $456.26, THE ISSUE DATE IS MAY 22, 1998 AND THE YIELD TO
MATURITY IS 12 1/2% PER ANNUM."
(v) [Intentionally omitted]
(h) Cancellation and/or Adjustment of Global Debentures. At such
time as all beneficial interests in a particular Global Debenture have been
exchanged for Definitive Debentures or a particular Global Debenture has been
redeemed, repurchased or cancelled in whole and not in part, each such Global
Debenture shall be returned to or retained and cancelled by the Trustee in
accordance with Section 2.11 hereof. At any time prior to such cancellation,
if any beneficial interest in a Global Debenture is exchanged for or
transferred to a Person who will take delivery thereof in the form of a
beneficial interest in another Global Debenture or for Definitive Debentures,
the principal amount at maturity of Debentures represented by such Global
Debenture shall be reduced accordingly and an endorsement shall be made on such
Global Debenture by the Trustee or by the Depositary at the direction of the
Trustee to reflect such reduction; and if the beneficial interest is being
exchanged for or transferred to a Person who will take delivery thereof in the
form of a beneficial interest in another Global Debenture, such other Global
Debenture shall be increased accordingly and an endorsement shall be made on
such Global Debenture by the Trustee or by the Depositary at the direction of
the Trustee to reflect such increase.
(i) General Provisions Relating to Transfers and Exchanges.
(i) To permit registrations of transfers and exchanges,
the Issuer shall execute and the Trustee shall authenticate Global
Debentures and Definitive Debentures upon the Issuer's order or at
the Registrar's request.
(ii) No service charge shall be made to a holder of a
beneficial interest in a Global Debenture or to a Holder of a
Definitive Debenture for any registration of transfer or exchange,
but the Issuer may require payment of a sum sufficient to cover
any transfer tax or similar governmental charge payable in
connection therewith (other than any such transfer taxes or
similar governmental charge payable upon exchange or transfer
pursuant to Sections 2.10, 3.06, 3.09, 4.10, 4.15 and 9.05
hereof).
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(iii) The Registrar shall not be required to register the
transfer of or exchange any Debenture selected for redemption in
whole or in part, except the unredeemed portion of any Debenture
being redeemed in part.
(iv) All Global Debentures and Definitive Debentures
issued upon any registration of transfer or exchange of Global
Debentures or Definitive Debentures shall be the valid obligations
of the Issuer, evidencing the same debt, and entitled to the same
benefits under this Indenture, as the Global Debentures or
Definitive Debentures surrendered upon such registration of
transfer or exchange.
(v) The Issuer shall not be required (A) to issue, to
register the transfer of or to exchange any Debentures during a
period beginning at the opening of business 15 days before the day
of any selection of Debentures for redemption under Section 3.02
hereof and ending at the close of business on the day of
selection, (B) to register the transfer of or to exchange any
Debenture so selected for redemption in whole or in part, except
the unredeemed portion of any Debenture being redeemed in part or
(c) to register the transfer of or to exchange a Debenture between
a record date and the next succeeding Interest Payment Date.
(vi) Prior to due presentment for the registration of a
transfer of any Debenture, the Trustee, any Agent and the Issuer
may deem and treat the Person in whose name any Debenture is
registered as the absolute owner of such Debenture for the purpose
of receiving payment of principal of and interest on such
Debentures and for all other purposes, and none of the Trustee,
any Agent or the Issuer shall be affected by notice to the
contrary.
(vii) The Trustee shall authenticate Global Debentures and
Definitive Debentures in accordance with the provisions of Section
2.02 hereof.
(viii) All certifications, certificates and Opinions of
Counsel required to be submitted to the Registrar pursuant to this
Section 2.06 to effect a registration of transfer or exchange may
be submitted by facsimile.
SECTION 2.07. REPLACEMENT DEBENTURES
If any Debenture is surrendered to the Trustee or the Issuer and the
Trustee receives evidence to its satisfaction of the destruction, loss or theft
of any Debenture, the Issuer shall issue and the Trustee, upon receipt of an
Authentication Order, shall authenticate a replacement Debenture if the
Trustee's requirements are met. If required by the Trustee or the Issuer, an
indemnity bond must be supplied by the Holder that is sufficient in the
judgment of the Trustee and the Issuer to protect the Issuer, the Trustee, any
Agent and any authenticating agent from any loss that any of them may suffer if
a Debenture is replaced. The Issuer may charge for its expenses in replacing a
Debenture.
Every replacement Debenture is an additional obligation of the Issuer
and shall be entitled to all of the benefits of this Indenture equally and
proportionately with all other Debentures duly issued hereunder.
SECTION 2.08. OUTSTANDING DEBENTURES.
The Debentures outstanding at any time are all the Debentures
authenticated by the Trustee except for those cancelled by it, those delivered
to it for cancellation, those reductions in the interest in a Global Debenture
effected by the Trustee in accordance with the provisions hereof, and those
described in this Section as not outstanding. Except as set forth in Section
2.09 hereof, a Debenture does not cease to be outstanding because the Issuer or
an Affiliate of the Issuer holds the Debenture; however, Debentures held by the
Issuer or a Subsidiary of the Issuer shall not be deemed to be outstanding for
purposes of Section 3.07(b) hereof.
If a Debenture is replaced pursuant to Section 2.07 hereof, it ceases
to be outstanding unless the Issuer receives proof satisfactory to it that the
replaced Debenture is held by a bona fide purchaser.
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If the principal amount at maturity of any Debenture is considered
paid under Section 4.01 hereof, it ceases to be outstanding and interest on it
ceases to accrue.
If the Paying Agent (other than the Issuer, a Subsidiary or an
Affiliate of any thereof) holds, on a redemption date or maturity date, money
sufficient to pay Debentures payable on that date, then on and after that date
such Debentures shall be deemed to be no longer outstanding and shall cease to
accrue interest.
SECTION 2.09. TREASURY DEBENTURES.
In determining whether the Holders of the required principal amount at
maturity of Debentures have concurred in any direction, waiver or consent,
Debentures owned by the Issuer, or by any Person directly or indirectly
controlling or controlled by or under direct or indirect common control with
the Issuer, shall be considered as though not outstanding, except that for the
purposes of determining whether the Trustee shall be protected in relying on
any such direction, waiver or consent, only Debentures that the Trustee knows
are so owned shall be so disregarded.
SECTION 2.10. TEMPORARY DEBENTURES
Until certificates representing Debentures are ready for delivery, the
Issuer may prepare and the Trustee, upon receipt of an Authentication Order,
shall authenticate temporary Debentures. Temporary Debentures shall be
substantially in the form of certificated Debentures but may have variations
that the Issuer considers appropriate for temporary Debentures and as shall be
reasonably acceptable to the Trustee. Without unreasonable delay, the Issuer
shall prepare and the Trustee shall authenticate definitive Debentures in
exchange for temporary Debentures.
Holders of temporary Debentures shall be entitled to all of the
benefits of this Indenture.
SECTION 2.11. CANCELLATION.
The Issuer at any time may deliver Debentures to the Trustee for
cancellation. The Registrar and Paying Agent shall forward to the Trustee any
Debentures surrendered to them for registration of transfer, exchange or
payment. The Trustee and no one else shall cancel all Debentures surrendered
for registration of transfer, exchange, payment, replacement or cancellation
and shall destroy cancelled Debentures (subject to the record retention
requirement of the Exchange Act). Certification of the destruction of all
cancelled Debentures shall be delivered to the Issuer. The Issuer may not
issue new Debentures to replace Debentures that it has paid or that have been
delivered to the Trustee for cancellation.
SECTION 2.12. DEFAULTED INTEREST.
If the Issuer defaults in a payment of interest on the Debentures, it
shall pay the defaulted interest in any lawful manner plus, to the extent
lawful, interest payable on the defaulted interest, to the Persons who are
Holders on a subsequent special record date, in each case at the rate provided
in the Debentures and in Section 4.01 hereof. The Issuer shall notify the
Trustee in writing of the amount of defaulted interest proposed to be paid on
each Debenture and the date of the proposed payment. The Issuer shall fix or
cause to be fixed each such special record date and payment date, provided that
no such special record date shall be less than 10 days prior to the related
payment date for such defaulted interest. At least 15 days before the special
record date, the Issuer (or, upon the written request of the Issuer, the
Trustee in the name and at the expense of the Issuer) shall mail or cause to be
mailed to Holders a notice that states the special record date, the related
payment date and the amount of such interest to be paid.
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ARTICLE 3.
REDEMPTION AND PREPAYMENT
SECTION 3.01. NOTICES TO TRUSTEE.
If the Issuer elects to redeem Debentures pursuant to the optional
redemption provisions of Section 3.07 hereof, it shall furnish to the Trustee,
at least 45 days but not more than 60 days before a redemption date, an
Officers' Certificate setting forth (i) the clause of this Indenture pursuant
to which the redemption shall occur, (ii) the redemption date, (iii) the
principal amount at maturity of Debentures to be redeemed and (iv) the
redemption price.
SECTION 3.02. SELECTION OF DEBENTURES TO BE REDEEMED
If less than all of the Debentures are to be redeemed at any time,
selection of Debentures for redemption will be made by the Trustee in
compliance with the requirements of the principal national securities exchange,
if any, on which the Debentures are listed, or, if the Debentures are not so
listed, on a pro rata basis, by lot or by such method as the Trustee shall deem
fair and appropriate; provided that no Debentures having a principal amount at
maturity of $1,000 or less shall be redeemed in part.
The Trustee shall promptly notify the Issuer in writing of the
Debentures selected for redemption and, in the case of any Debenture selected
for partial redemption, the principal amount at maturity thereof to be
redeemed. Debentures and portions of Debentures selected shall be in amounts
of $1,000 or whole multiples of $1,000; except that if all of the Debentures of
a Holder are to be redeemed, the entire outstanding amount of Debentures held
by such Holder, even if not a multiple of $1,000, shall be redeemed. Except as
provided in the preceding sentence, provisions of this Indenture that apply to
Debentures called for redemption also apply to portions of Debentures called
for redemption.
SECTION 3.03. NOTICE OF REDEMPTION
Subject to the provisions of Section 3.09 hereof, notices of
redemption shall be mailed by first class mail at least 30 but not more than 60
days before the redemption date to each Holder of Debentures to be redeemed at
its registered address. If any Debentures is to be redeemed in part only, the
notice of redemption that relates to such Debentures shall state the portion of
the principal amount at maturity thereof to be redeemed. A new Debenture in
principal amount at maturity equal to the unredeemed portion thereof will be
issued in the name of the Holder thereof upon cancellation of the original
Debentures. Debentures called for redemption become due on the date fixed for
redemption. On and after the redemption date, interest ceases to accrue on
Debentures or portions of them called for redemption.
The notice shall identify the Debentures to be redeemed and shall
state:
(a) the redemption date;
(b) the redemption price;
(c) if any Debenture is being redeemed in part, the portion of the
principal amount at maturity of such Debenture to be redeemed and that, after
the redemption date upon surrender of such Debenture, a new Debenture or
Debentures in principal amount at maturity equal to the unredeemed portion
shall be issued upon cancellation of the original Debenture;
(d) the name and address of the Paying Agent;
(e) that Debentures called for redemption must be surrendered to
the Paying Agent to collect the redemption price;
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(f) that, unless the Issuer defaults in making such redemption
payment, interest on Debentures called for redemption ceases to accrue on and
after the redemption date;
(g) the paragraph of the Debentures and/or Section of this
Indenture pursuant to which the Debentures called for redemption are being
redeemed; and
(h) that no representation is made as to the correctness or
accuracy of the CUSIP number, if any, listed in such notice or printed on the
Debentures.
At the Issuer's request, the Trustee shall give the notice of
redemption in the Issuer's name and at its expense; provided, however, that the
Issuer shall have delivered to the Trustee, at least 45 days prior to the
redemption date, an Officers' Certificate requesting that the Trustee give such
notice and setting forth the information to be stated in such notice as
provided in the preceding paragraph.
SECTION 3.04. EFFECT OF NOTICE OF REDEMPTION
Once notice of redemption is mailed in accordance with Section 3.03
hereof, Debentures called for redemption become irrevocably due and payable on
the redemption date at the redemption price. A notice of redemption may not be
conditional.
SECTION 3.05. DEPOSIT OF REDEMPTION PRICE
One Business Day prior to the redemption date, the Issuer shall
deposit with the Trustee or with the Paying Agent money sufficient to pay the
redemption price of and accrued interest on all Debentures to be redeemed on
that date. The Trustee or the Paying Agent shall promptly return to the Issuer
any money deposited with the Trustee or the Paying Agent by the Issuer in
excess of the amounts necessary to pay the redemption price of, and accrued
interest on, all Debentures to be redeemed.
If the Issuer complies with the provisions of the preceding paragraph,
on and after the redemption date, interest shall cease to accrue on the
Debentures or the portions of Debentures called for redemption. If a Debenture
is redeemed on or after an interest record date but on or prior to the related
interest payment date, then any accrued and unpaid interest shall be paid to
the Person in whose name such Debenture was registered at the close of business
on such record date. If any Debenture called for redemption shall not be so
paid upon surrender for redemption because of the failure of the Issuer to
comply with the preceding paragraph, interest shall be paid on the unpaid
principal, from the redemption date until such principal is paid, and to the
extent lawful on any interest not paid on such unpaid principal, in each case
at the rate provided in the Debentures and in Section 4.01 hereof.
SECTION 3.06. DEBENTURES REDEEMED IN PART.
Upon surrender of a Debenture that is redeemed in part, the Issuer
shall issue and, upon the Issuer's written request, the Trustee shall
authenticate for the Holder at the expense of the Issuer a new Debenture equal
in principal amount at maturity to the unredeemed portion of the Debenture
surrendered.
SECTION 3.07. OPTIONAL REDEMPTION.
(a) Except as provided below, the Debentures will not be
redeemable at the Issuer's option prior to June 1, 2003. Thereafter, the
Debentures will be subject to redemption at any time at the option of the
Issuer, in whole or in part, upon not less than 30 nor more than 60 days'
notice, in cash at the redemption prices (expressed as percentages of principal
amount at maturity) set forth below, plus accrued and unpaid interest and
Liquidated Damages, if any, thereon to the applicable redemption date, if
redeemed during the twelve-month period beginning on June 1 of the years
indicated below:
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<TABLE>
<CAPTION>
YEAR PERCENTAGE
---- ----------
<S> <C>
2003. . . . . . . . . . . . . . . . . . . . . . 106.250%
2004. . . . . . . . . . . . . . . . . . . . . . 104.167%
2005. . . . . . . . . . . . . . . . . . . . . . 102.083%
2006 and thereafter . . . . . . . . . . . . . . 100.000%
</TABLE>
Notwithstanding the foregoing, on or prior to June 1, 2001, the Issuer
may redeem up to 40% of the aggregate principal amount at maturity of
Debentures ever issued under this Indenture in cash at a redemption price of
112.500% of the Accreted Value thereof, plus accrued and unpaid interest and
Liquidated Damages, if any, thereon to the redemption date, with the net cash
proceeds of one or more Public Equity Offerings; provided that, in the event
that the Issuer redeems less than 100% of the then outstanding Debentures, at
least 60% of the aggregate principal amount at maturity of the Debentures ever
issued under this Indenture remains outstanding immediately after the
occurrence of any such redemption; and provided further that such redemption
shall occur within 90 days of the date of the closing of any such Public Equity
Offering.
In addition, at any time prior to June 1, 2003, the Issuer may, at
its option upon the occurrence of a Change of Control, redeem the Debentures,
in whole but not in part, upon not less than 30 nor more than 60 days' prior
notice (but in no event may any such redemption occur more than 60 days after
the occurrence of such Change of Control), in cash at a redemption price equal
to (i) the present value of the sum of all the remaining premium and principal
payments that would become due on the Debentures as if the Debentures were to
remain outstanding and be redeemed on June 1, 2003, computed using a discount
rate equal to the Treasury Rate plus 50 basis points, plus (ii) Liquidated
Damages, if any, to the date of redemption.
(b) Any redemption pursuant to this Section 3.07 shall be made
pursuant to the provisions of Section 3.01 through 3.06 hereof.
SECTION 3.08. MANDATORY REDEMPTION.
The Issuer is not required to make mandatory redemption of, or sinking
fund payments with respect to, the Debentures.
SECTION 3.09. OFFER TO PURCHASE BY APPLICATION OF EXCESS PROCEEDS.
In the event that, pursuant to Section 4.10 hereof, the Issuer shall
be required to commence an offer to all Holders to purchase Debentures (an
"Asset Sale Offer"), it shall follow the procedures specified below.
The Asset Sale Offer shall remain open for a period of 20 Business
Days following its commencement and no longer, except to the extent that a
longer period is required by applicable law (the "Offer Period"). No later
than five Business Days after the termination of the Offer Period (the
"Purchase Date"), the Issuer shall purchase the principal amount at maturity of
Debentures required to be purchased pursuant to Section 4.10 hereof (the "Offer
Amount") or, if less than the Offer Amount has been tendered, all Debentures
tendered in response to the Asset Sale Offer. Payment for any Debentures so
purchased shall be made in the same manner as interest payments are made.
If the Purchase Date is on or after an interest record date and on or
before the related interest payment date, any accrued and unpaid interest shall
be paid to the Person in whose name a Debenture is registered at the close of
business on such record date, and no additional interest shall be payable to
Holders who tender Debentures pursuant to the Asset Sale Offer.
Upon the commencement of an Asset Sale Offer, the Issuer shall send,
by first class mail, a notice to each of the Holders, with a copy to the
Trustee. The notice shall contain all instructions and materials necessary to
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<PAGE> 39
enable such Holders to tender Debentures pursuant to the Asset Sale Offer. The
Asset Sale Offer shall be made to all Holders. The notice, which shall govern
the terms of the Asset Sale Offer, shall state:
(a) that the Asset Sale Offer is being made pursuant to this
Section 3.09 and Section 4.10 hereof and the length of time the Asset Sale
Offer shall remain open;
(b) the Offer Amount, the purchase price and the Purchase Date;
(c) that any Debenture not tendered or accepted for payment shall
continue to accrete or accrue interest;
(d) that, unless the Issuer defaults in making such payment, any
Debenture accepted for payment pursuant to the Asset Sale Offer shall cease to
accrete or accrue interest after the Purchase Date;
(e) that Holders electing to have a Debenture purchased pursuant
to an Asset Sale Offer may only elect to have all of such Debenture purchased
and may not elect to have only a portion of such Debenture purchased;
(f) that Holders electing to have a Debenture purchased pursuant
to any Asset Sale Offer shall be required to surrender the Debenture, with the
form entitled "Option of Holder to Elect Purchase" on the reverse of the
Debenture completed, or transfer by book-entry transfer, to the Issuer, a
depositary, if appointed by the Issuer, or a Paying Agent at the address
specified in the notice at least three days before the Purchase Date;
(g) that Holders shall be entitled to withdraw their election if
the Issuer, the depositary or the Paying Agent, as the case may be, receives,
not later than the expiration of the Offer Period, a telegram, telex, facsimile
transmission or letter setting forth the name of the Holder, the principal
amount at maturity of the Debenture the Holder delivered for purchase and a
statement that such Holder is withdrawing his election to have such Debenture
purchased;
(h) that, if the aggregate principal amount at maturity of
Debentures surrendered by Holders exceeds the Offer Amount, the Issuer shall
select the Debentures to be purchased on a pro rata basis (with such
adjustments as may be deemed appropriate by the Issuer so that only Debentures
in denominations of $1,000, or integral multiples thereof, shall be purchased);
and
(i) that Holders whose Debentures were purchased only in part
shall be issued new Debentures equal in principal amount at maturity to the
unpurchased portion of the Debentures surrendered (or transferred by book-entry
transfer).
On or before the Purchase Date, the Issuer shall, to the extent
lawful, accept for payment, on a pro rata basis to the extent necessary, the
Offer Amount of Debentures or portions thereof tendered pursuant to the Asset
Sale Offer, or if less than the Offer Amount has been tendered, all Debentures
tendered, and shall deliver to the Trustee an Officers' Certificate stating
that such Debentures or portions thereof were accepted for payment by the
Issuer in accordance with the terms of this Section 3.09. The Issuer, the
Depositary or the Paying Agent, as the case may be, shall promptly (but in any
case not later than five days after the Purchase Date) mail or deliver to each
tendering Holder an amount equal to the purchase price of the Debentures
tendered by such Holder and accepted by the Issuer for purchase, and the Issuer
shall promptly issue a new Debenture, and the Trustee, upon written request
from the Issuer shall authenticate and mail or deliver such new Debenture to
such Holder, in a principal amount at maturity equal to any unpurchased portion
of the Debenture surrendered. Any Debenture not so accepted shall be promptly
mailed or delivered by the Issuer to the Holder thereof. The Issuer shall
publicly announce the results of the Asset Sale Offer on the Purchase Date.
Other than as specifically provided in this Section 3.09, any purchase
pursuant to this Section 3.09 shall be made pursuant to the provisions of
Sections 3.01 through 3.06 hereof.
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ARTICLE 4.
COVENANTS
SECTION 4.01. PAYMENT OF DEBENTURES.
The Issuer shall pay or cause to be paid the principal of, premium, if
any, and interest on the Debentures on the dates and in the manner provided in
the Debentures. Principal, premium, if any, and interest shall be considered
paid on the date due if the Paying Agent, if other than the Issuer or a
Subsidiary thereof, holds as of 10:00 a.m. Eastern Time on the due date money
deposited by the Issuer in immediately available funds and designated for and
sufficient to pay all principal, premium, if any, and interest then due. The
Issuer shall pay all Liquidated Damages, if any, in the same manner on the
dates and in the amounts set forth in the Registration Rights Agreement.
The Issuer shall pay interest (including post-petition interest in any
proceeding under any Bankruptcy Law) on overdue principal at the rate equal to
1% per annum in excess of the then applicable interest rate on the Debentures
to the extent lawful; they shall pay interest (including post-petition interest
in any proceeding under any Bankruptcy Law) on overdue installments of interest
and Liquidated Damages (without regard to any applicable grace period) at the
same rate to the extent lawful.
SECTION 4.02. MAINTENANCE OF OFFICE OR AGENCY.
The Issuer shall maintain in the Borough of Manhattan, the City of New
York, an office or agency (which may be an office of the Trustee or an
affiliate of the Trustee, Registrar or co-registrar) where Debentures may be
surrendered for registration of transfer or for exchange and where notices and
demands to or upon the Issuer in respect of the Debentures and this Indenture
may be served. The Issuer shall give prompt written notice to the Trustee of
the location, and any change in the location, of such office or agency. If at
any time the Issuer shall fail to maintain any such required office or agency
or shall fail to furnish the Trustee with the address thereof, such
presentations, surrenders, notices and demands may be made or served at the
Corporate Trust Office of the Trustee.
The Issuer may also from time to time designate one or more other
offices or agencies where the Debentures may be presented or surrendered for
any or all such purposes and may from time to time rescind such designations;
provided, however, that no such designation or rescission shall in any manner
relieve the Issuer of its obligation to maintain an office or agency in the
Borough of Manhattan, the City of New York for such purposes. The Issuer shall
give prompt written notice to the Trustee of any such designation or rescission
and of any change in the location of any such other office or agency.
The Issuer hereby designates the Corporate Trust Office of the Trustee
as one such office or agency of the Issuer in accordance with Section 2.03.
SECTION 4.03. REPORTS.
Whether or not required by the rules and regulations of the
Commission, so long as any Debentures are outstanding, the Issuer will furnish
to the Trustee and Holders of Debentures (a) all quarterly and annual financial
information that would be required to be contained in a filing with the
Commission on Forms 10-Q and 10-K if the Issuer were required to file such
Forms, including a "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and, with respect to the annual information only, a
report thereon by the Issuer's certified independent accountants and (b) all
current reports that would be required to be filed with the Commission on Form
8-K if the Issuer were required to file such reports, in each case, within the
time periods specified in the Commission's rules and regulations. In addition,
following the consummation of the exchange offer contemplated by the
Registration Rights Agreement, whether or not required by the rules and
regulations of the Commission, the Issuer will file a copy of all such
information and reports with the Commission for public availability within the
time periods specified in the Commission's rules and regulations (unless the
Commission will not accept such a filing) and make such information available
to securities analysts and prospective investors upon request. In addition, the
Issuer has agreed that, for so long as any Debentures remain outstanding, it
will furnish to the Holders, the Trustee and to securities analysts and
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<PAGE> 41
prospective investors, upon their request, the information required to be
delivered pursuant to Rule 144A(d)(4) under the Securities Act. The Issuer
will in each case comply with TIA Section 314.
SECTION 4.04. COMPLIANCE CERTIFICATE.
(a) The Issuer shall deliver to the Trustee, within 90 days after
the end of each fiscal year, an Officers' Certificate stating that a review of
the activities of the Issuer and its Subsidiaries during the preceding fiscal
year have been made under the supervision of the signing Officers with a view
to determining whether the Issuer has kept, observed, performed and fulfilled
its obligations under this Indenture, and further stating, as to each such
Officer signing such certificate, that to the best of his or her knowledge the
Issuer has kept, observed, performed and fulfilled each and every covenant
contained in this Indenture and are not in default in the performance or
observance of any of the terms, provisions and conditions of this Indenture
(or, if a Default or Event of Default shall have occurred, describing all such
Defaults or Events of Default of which he or she may have knowledge and what
action the Issuer is taking or propose to take with respect thereto) and that
to the best of his or her knowledge no event has occurred and remains in
existence by reason of which payments on account of the principal of or
interest or Liquidated Damages, if any, on the Debentures are prohibited or if
such event has occurred, a description of the event and what action the Issuer
is taking or propose to take with respect thereto.
(b) So long as not contrary to the then current recommendations of
the American Institute of Certified Public Accountants, the year-end financial
statements delivered pursuant to Section 4.03(a) above shall be accompanied by
a written statement of the Issuer's independent public accountants (who shall
be a firm of established national reputation) that in making the examination
necessary for certification of such financial statements, nothing has come to
their attention that would lead them to believe that the Issuer has violated
any provisions of Article 4 or Article 5 hereof or, if any such violation has
occurred, specifying the nature and period of existence thereof, it being
understood that such accountants shall not be liable directly or indirectly to
any Person for any failure to obtain knowledge of any such violation.
(c) The Issuer shall, so long as any of the Debentures are
outstanding, deliver to the Trustee, forthwith upon any Officer becoming aware
of any Default or Event of Default, an Officers' Certificate specifying such
Default or Event of Default and what action the Issuer is taking or propose to
take with respect thereto.
SECTION 4.05. TAXES.
The Issuer shall pay, and shall cause each of its Subsidiaries to pay,
prior to delinquency, all material taxes, assessments, and governmental levies
except such as are contested in good faith and by appropriate proceedings or
where the failure to effect such payment is not adverse in any material respect
to the Holders of the Debentures.
SECTION 4.06. STAY, EXTENSION AND USURY LAWS.
The Issuer covenants (to the extent that they may lawfully do so) that
it shall not at any time insist upon, plead, or in any manner whatsoever claim
or take the benefit or advantage of, any stay, extension or usury law wherever
enacted, now or at any time hereafter in force, that may affect the covenants
or the performance of this Indenture; and the Issuer (to the extent that it may
lawfully do so) hereby expressly waives all benefit or advantage of any such
law, and covenants that it shall not, by resort to any such law, hinder, delay
or impede the execution of any power herein granted to the Trustee, but shall
suffer and permit the execution of every such power as though no such law has
been enacted.
SECTION 4.07. RESTRICTED PAYMENTS.
The Issuer will not, and will not permit any of its Restricted
Subsidiaries to, directly or indirectly, (a) declare or pay any dividend or
make any other payment or distribution on account of the Issuer's or any of its
Restricted Subsidiaries' Equity Interests (other than dividends or
distributions payable in Equity Interests (other than Disqualified Stock) of
the Issuer or dividends or distributions payable to the Issuer or any Wholly
Owned Restricted Subsidiary of the Issuer); (b) purchase, redeem or otherwise
acquire or retire for value any Equity
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Interests of the Issuer, any of its Restricted Subsidiaries or any other
Affiliate of the Issuer (other than any such Equity Interests owned by the
Issuer or any Restricted Subsidiary of the Issuer); (c) make any principal
payment on or with respect to, or purchase, redeem, defease or otherwise
acquire or retire for value, any Indebtedness of the Issuer (other than the
Debentures) that is pari passu or subordinated in right of payment to the
Debentures, except in accordance with the mandatory redemption or repayment
provisions set forth in the original documentation governing such Indebtedness
or in accordance with Section 4.10 hereof (but not pursuant to any mandatory
offer to repurchase upon the occurrence of any event); or (d) make any
Restricted Investment (all such payments and other actions set forth in clauses
(a) through (d) above being collectively referred to as "Restricted Payments"),
unless, at the time of and after giving effect to such Restricted Payment:
(i) no Default or Event of Default shall have occurred
and be continuing or would occur as a consequence thereof; and
(ii) the Issuer would, immediately after giving pro forma
effect thereto as if such Restricted Payment had been made at the
beginning of the applicable four-quarter period, have been
permitted to incur at least $1.00 of additional Indebtedness
pursuant to the Fixed Charge Coverage Ratio test set forth in the
first paragraph of Section 4.09 herein; and
(iii) such Restricted Payment, together with the aggregate
amount of all other Restricted Payments made by the Issuer and its
Restricted Subsidiaries after the date of this Indenture
(excluding Restricted Payments permitted by clauses (a) (to the
extent that the declaration of any dividend referred to therein
reduces amounts available for Restricted Payments pursuant to this
clause (iii)), (b), (c), (e) through (g), (j), and (p) of the next
succeeding paragraph), is less than the sum, without duplication,
of (A) 50% of the Consolidated Net Income of the Issuer for the
period (taken as one accounting period) commencing July 1, 1998 to
the end of the Issuer's most recently ended fiscal quarter for
which internal financial statements are available at the time of
such Restricted Payment (or, if such Consolidated Net Income for
such period is a deficit, less 100% of such deficit), plus (B)
100% of the Qualified Proceeds received by the Issuer on or after
the date of this Indenture from contributions to the Issuer's
capital or from the issue or sale on or after the date of this
Indenture of Equity Interests of the Issuer or of Disqualified
Stock or convertible debt securities of the Issuer to the extent
that they have been converted into such Equity Interests (other
than Equity Interests, Disqualified Stock or convertible debt
securities sold to a Subsidiary of the Issuer and other than
Disqualified Stock or convertible debt securities that have been
converted into Disqualified Stock), plus (C) the amount equal to
the net reduction in Investments in Persons after the date of this
Indenture who are not Restricted Subsidiaries (other than
Permitted Investments) resulting from (x) Qualified Proceeds
received as a dividend, repayment of a loan or advance or other
transfer of assets (valued at the fair market value thereof) to
the Issuer or any Restricted Subsidiary from such Persons, (y)
Qualified Proceeds received upon the sale or liquidation of such
Investment and (z) the redesignation of Unrestricted Subsidiaries
(other than any Unrestricted Subsidiary designated as such
pursuant to clause (k) or (o) of the following paragraph) whose
assets are used or useful in, or which is engaged in, one or more
Permitted Business as Restricted Subsidiaries (valued
(proportionate to the Issuer's equity interest in such Subsidiary)
at the fair market value of the net assets of such Subsidiary at
the time of such redesignation).
The foregoing provisions will not prohibit:
(a) the payment of any dividend within 60 days after the date of
declaration thereof, if at said date of declaration such payment would have
complied with the provisions of this Indenture;
(b) (i) the redemption, repurchase, retirement, defeasance or
other acquisition of any Pari Passu Indebtedness, Subordinated Indebtedness or
Equity Interests of the Issuer (the "Retired Capital Stock") in exchange for,
or out of the net cash proceeds of the substantially concurrent sale (other
than to a Subsidiary of the Issuer) of, other Equity Interests of the Issuer
(other than any Disqualified Stock) (the "Refunding Capital Stock"), provided
that the amount of any such net cash proceeds that are utilized for any such
redemption, repurchase, retirement, defeasance or
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other acquisition shall be excluded from clause (iii)(B) of the preceding
paragraph and (ii) if immediately prior to the retirement of Retired Capital
Stock, the declaration and payment of dividends thereon was permitted under
clause (f) of this paragraph, the declaration and payment of dividends on the
Refunding Capital Stock in an aggregate amount per year no greater than the
aggregate amount of dividends per annum that was declarable and payable on such
Retired Capital Stock immediately prior to such retirement; provided that, at
the time of the declaration of any such dividends, no Default or Event of
Default shall have occurred and be continuing or would occur as a consequence
thereof;
(c) the defeasance, redemption, repurchase, retirement or other
acquisition of Pari Passu Indebtedness or Subordinated Indebtedness with the
net cash proceeds from an incurrence of, or in exchange for, Permitted
Refinancing Indebtedness;
(d) the repurchase, redemption or other acquisition or retirement
for value of any Equity Interests of the Issuer or Thermadyne LLC held by any
member of Thermadyne LLC's or the Issuer's (or any of its Restricted
Subsidiaries') management pursuant to any management equity subscription
agreement or stock option agreement, provided that the aggregate price paid for
all such repurchased, redeemed, acquired or retired Equity Interests shall not
exceed (x) $7.5 million in any calendar year (with unused amounts in any
calendar year being carried over to succeeding calendar years subject to a
maximum (without giving effect to the following clause (y)) of $15.0 million in
any calendar year), plus (y) the aggregate cash proceeds received by the Issuer
during such calendar year from any reissuance of Equity Interests by the Issuer
or Thermadyne LLC to members of management of the Issuer and its Restricted
Subsidiaries and (ii) no Default or Event of Default shall have occurred and be
continuing immediately after such transaction;
(e) payments and transactions in connection with the
Recapitalization, the New Credit Facility (including commitment, syndication
and arrangement fees payable thereunder) and the application of the proceeds
thereof, and the payment of fees and expenses with respect thereto;
(f) the declaration and payment of dividends to holders of any
class or series of preferred stock (other than Disqualified Stock), provided
that, at the time of such issuance, after giving effect to such issuance on a
pro forma basis, the Fixed Charge Coverage Ratio for the Issuer for the most
recently ended four full fiscal quarters for which internal financial
statements are available immediately preceding the date of such issuance would
have been no less than 2.0 to 1;
(g) the payment of dividends or distributions by a Restricted
Subsidiary on any class of common stock or membership interests of such
Restricted Subsidiary if (i) such dividend or distribution is paid pro rata to
all holders of such class of common stock or membership interests and (ii) at
least 51% of such class of common stock or membership interests is held by the
Issuer or one or more of its Restricted Subsidiaries;
(h) the repurchase of any class of common stock or membership
interests of a Restricted Subsidiary if (i) such repurchase is made pro rata
with respect to such class of common stock or membership interests and (ii) at
least 51% of such class of common stock or membership interests is held by the
Issuer or one or more of its Restricted Subsidiaries;
(i) any other Restricted Investment made in a Permitted Business
which, together with all other Restricted Investments made pursuant to this
clause (i) since the date of this Indenture, does not exceed $25.0 million (in
each case, after giving effect to all subsequent reductions in the amount of
any Restricted Investment made pursuant to this clause (i), either as a result
of (A) the repayment or disposition thereof for cash or (B) the redesignation
of an Unrestricted Subsidiary as a Restricted Subsidiary (valued proportionate
to the Issuer's equity interest in such Subsidiary at the time of such
redesignation) at the fair market value of the net assets of such Subsidiary at
the time of such redesignation), in the case of clause (A) and (B), not to
exceed the amount of such Restricted Investment previously made pursuant to
this clause (k); provided that no Default or Event of Default shall have
occurred and be continuing immediately after making such Restricted Investment;
(j) the declaration and payment of dividends to holders of any
class or series of Disqualified Stock of the Issuer or any Restricted
Subsidiary issued on or after the date of this Indenture in accordance with
Section 4.09 herein;
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provided that no Default or Event of Default shall have occurred and be
continuing immediately after making such Restricted Payment;
(k) repurchases of Equity Interests deemed to occur upon exercise
of stock options if such Equity Interests represent a portion of the exercise
price of such options;
(l) the payment of dividends or distributions on the Issuer's
common stock or Thermadyne LLC's membership interests, following the first
public offering of the Issuer's common stock or Thermadyne LLC's membership
interests after the date of this Indenture, of up to 6.0% per annum of the net
proceeds received by the Issuer or Thermadyne LLC from such public offering,
other than, in each case, with respect to public offerings with respect to the
Issuer's common stock or Thermadyne LLC's membership interests or Holdings'
common stock registered on Form S-8; provided that no Default or Event of
Default shall have occurred and be continuing immediately after any such
payment of dividends or distributions;
(m) any other Restricted Payment which, together with all other
Restricted Payments made pursuant to this clause (m) since the date of this
Indenture, does not exceed $25.0 million (in each case, after giving effect to
all subsequent reductions in the amount of any Restricted Investment made
pursuant to this clause (m) either as a result of (i) the repayment or
disposition thereof for cash or (ii) the redesignation of an Unrestricted
Subsidiary as a Restricted Subsidiary (valued proportionate to the Issuer's
equity interest in such Subsidiary at the time of such redesignation) at the
fair market value of the net assets of such Subsidiary at the time of such
redesignation), in the case of clause (i) and (ii), not to exceed the amount of
such Restricted Investment previously made pursuant to this clause (m);
provided that no Default or Event of Default shall have occurred and be
continuing immediately after making such Restricted Payment;
(n) the pledge by the Issuer of the Capital Stock of an
Unrestricted Subsidiary of the Issuer to secure Non-Recourse Debt of such
Unrestricted Subsidiary;
(o) the purchase, redemption or other acquisition or retirement
for value of any Equity Interests of any Restricted Subsidiary issued after the
date of this Indenture, provided that the aggregate price paid for any such
repurchased, redeemed, acquired or retired Equity Interests shall not exceed
the sum of (i) the amount of cash and Cash Equivalents received by such
Restricted Subsidiary from the issue or sale thereof and (ii) any accrued
dividends thereon the payment of which would be permitted pursuant to clause
(l) above;
(p) distributions or payments of Receivables Fees; and
(q) the purchase, redemption or other acquisition or retirement
for value of rights issued pursuant to the Issuer's Rights Plan as in effect on
the date of the Indenture.
The Board of Directors of the Issuer may designate any Restricted
Subsidiary (other than Thermadyne LLC and Thermadyne Capital) to be an
Unrestricted Subsidiary if such designation would not cause a Default. For
purposes of making such designation, all outstanding Investments by the Issuer
and its Restricted Subsidiaries (except to the extent repaid in cash) in the
Subsidiary so designated will be deemed to be Restricted Payments at the time
of such designation and will reduce the amount available for Restricted
Payments under the first paragraph of this covenant. All such outstanding
Investments will be deemed to constitute Restricted Investments in an amount
equal to the greater of (i) the net book value of such Investments at the time
of such designation and (ii) the fair market value of such Investments at the
time of such designation. Such designation will only be permitted if such
Restricted Investment would be permitted at such time and if such Restricted
Subsidiary otherwise meets the definition of an Unrestricted Subsidiary.
The amount of (i) all Restricted Payments (other than cash) shall be
the fair market value on the date of the Restricted Payment of the asset(s) or
securities proposed to be transferred or issued by the Issuer or such
Restricted Subsidiary, as the case may be, pursuant to the Restricted Payment
and (ii) Qualified Proceeds (other than cash) shall be the fair market value on
the date of receipt thereof by the Issuer of such Qualified Proceeds. The fair
market value of any non-cash Restricted Payment shall be determined by the
Board of Directors whose resolution with respect thereto
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shall be delivered to the Trustee. Not later than the date of making any
Restricted Payment, the Issuer shall deliver to the Trustee an Officers'
Certificate stating that such Restricted Payment is permitted and setting forth
the basis upon which the calculations required by this Section 4.07 were
computed.
SECTION 4.08. DIVIDEND AND OTHER PAYMENT RESTRICTIONS AFFECTING
SUBSIDIARIES.
The Issuer will not, and will not permit any of its Restricted
Subsidiaries to, directly or indirectly, create or otherwise cause or suffer to
exist or become effective any encumbrance or restriction on the ability of any
Restricted Subsidiary to (a)(i) pay dividends or make any other distributions
to the Issuer or any of its Restricted Subsidiaries (A) on its Capital Stock or
(B) with respect to any other interest or participation in, or measured by, its
profits, or (ii) pay any Indebtedness owed to the Issuer or any of its
Restricted Subsidiaries, (b) make loans or advances to the Issuer or any of its
Restricted Subsidiaries or (c) transfer any of its properties or assets to the
Issuer or any of its Restricted Subsidiaries. However, the foregoing
restrictions will not apply to encumbrances or restrictions existing under or
by reason of (a) Existing Indebtedness as in effect on the date of this
Indenture, (b) the terms of any Indebtedness permitted by the Indenture to be
incurred by any Restricted Subsidiary of the Issuer, (c) this Indenture and the
Debentures, (d) applicable law and any applicable rule, regulation or order,
(e) any agreement or instrument of a Person acquired by the Issuer or any of
its Restricted Subsidiaries as in effect at the time of such acquisition
(except to the extent created in contemplation of such acquisition), which
encumbrance or restriction is not applicable to any Person, or the properties
or assets of any Person, other than the Person, or the property or assets of
the Person, so acquired, provided that, in the case of Indebtedness, such
Indebtedness was permitted by the terms of this Indenture to be incurred, (f)
customary non-assignment provisions in leases entered into in the ordinary
course of business and consistent with past practices, (g) purchase money
obligations for property acquired in the ordinary course of business that
impose restrictions of the nature described in clause (e) above on the property
so acquired, (h) contracts for the sale of assets, including, without
limitation, customary restrictions with respect to a Subsidiary pursuant to an
agreement that has been entered into for the sale or disposition of all or
substantially all of the Capital Stock or assets of such Subsidiary, (i)
Permitted Refinancing Indebtedness, provided that the restrictions contained in
the agreements governing such Permitted Refinancing Indebtedness are, in the
good faith judgment of the Issuer's Board of Directors, not materially less
favorable, taken as a whole, to the Holders of the Debentures than those
contained in the agreements governing the Indebtedness being refinanced, (j)
secured Indebtedness otherwise permitted to be incurred pursuant to Sections
4.09 and 4.12 hereof that limit the right of the debtor to dispose of the
assets securing such Indebtedness, (k) restrictions on cash or other deposits
or net worth imposed by customers under contracts entered into in the ordinary
course of business, (l) other Indebtedness or Disqualified Stock of Restricted
Subsidiaries permitted to be incurred subsequent to the Issuance Date pursuant
to the provisions of Section 4.09 hereof, (m) customary provisions in joint
venture agreements and other similar agreements entered into in the ordinary
course of business, and (n) restrictions created in connection with any
Receivables Facility that, in the good faith determination of the Board of
Directors of the Issuer, are necessary or advisable to effect such Receivables
Facility.
SECTION 4.09. INCURRENCE OF INDEBTEDNESS AND ISSUANCE OF PREFERRED STOCK.
(a) the Issuer will not, and will not permit any of its Restricted
Subsidiaries to, directly or indirectly, create, incur, issue, assume,
guarantee or otherwise become directly or indirectly liable, contingently or
otherwise, with respect to (collectively, "incur") any Indebtedness (including
Acquired Indebtedness), (b) the Issuer will not, and will not permit any of its
Restricted Subsidiaries to, issue any shares of Disqualified Stock and (c) the
Issuer will not permit any of its Restricted Subsidiaries to issue any shares
of preferred stock; provided that the Issuer or any Restricted Subsidiary may
incur Indebtedness (including Acquired Indebtedness) or issue shares of
Disqualified Stock if the Fixed Charge Coverage Ratio for the Issuer's most
recently ended four full fiscal quarters for which internal financial
statements are available immediately preceding the date on which such
additional Indebtedness is incurred or such Disqualified Stock is issued would
have been at least 2.0 to 1, determined on a consolidated pro forma basis
(including a pro forma application of the net proceeds therefrom), as if the
additional Indebtedness had been incurred, or the Disqualified Stock had been
issued, as the case may be, at the beginning of such four-quarter period.
The Issuer will not incur any Indebtedness that is contractually
subordinated in right of payment to any other Indebtedness of the Issuer unless
such Indebtedness is also contractually subordinated in right of payment to the
Debentures on substantially identical terms; provided that no Indebtedness of
the Issuer shall be deemed to be
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contractually subordinated in right of payment to any other Indebtedness of the
Issuer solely by virtue of being unsecured.
The provisions of the first paragraph of this covenant will not apply
to the incurrence of any of the following items of Indebtedness (collectively,
"Permitted Indebtedness"):
(i) the incurrence by the Issuer and its Restricted Subsidiaries
of Indebtedness under the New Credit Facility; provided that the aggregate
principal amount of all Indebtedness (with letters of credit being deemed to
have a principal amount equal to the maximum potential liability of the Issuer
and such Restricted Subsidiaries thereunder) then classified as having been
incurred in reliance upon this clause (i) that remains outstanding under the
New Credit Facility after giving effect to such incurrence does not exceed an
amount equal to $430.0 million;
(ii) the incurrence by the Issuer and its Restricted Subsidiaries
of Existing Indebtedness;
(iii) the incurrence by (A) the Issuer of Indebtedness represented
by the Debentures and this Indenture and (B) Thermadyne LLC and Thermadyne
Capital of Indebtedness represented by the Senior Subordinated Notes and the
Subordinated Note Indenture and Thermadyne LLC's Restricted Subsidiaries of
Indebtedness represented by the guarantees thereof;
(iv) the incurrence by the Issuer or any of its Restricted
Subsidiaries of Indebtedness represented by Capital Expenditure Indebtedness,
Capital Lease Obligations or purchase money obligations, in each case, incurred
for the purpose of financing all or any part of the purchase price or cost of
construction or improvement of property, plant or equipment used in the
business of the Issuer or such Restricted Subsidiary, in an aggregate principal
amount (or accreted value, as applicable) not to exceed $40.0 million
outstanding after giving effect to such incurrence;
(v) Indebtedness arising from agreements of the Issuer or any
Restricted Subsidiary providing for indemnification, adjustment of purchase
price or similar obligations, in each case, incurred or assumed in connection
with the disposition of any business, assets or a Subsidiary, other than
guarantees of Indebtedness incurred by any Person acquiring all or any portion
of such business, assets or Restricted Subsidiary for the purpose of financing
such acquisition; provided that (A) such Indebtedness is not reflected on the
balance sheet of the Issuer or any Restricted Subsidiary (contingent
obligations referred to in a footnote or footnotes to financial statements and
not otherwise reflected on the balance sheet will not be deemed to be reflected
on such balance sheet for purposes of this clause (A)) and (B) the maximum
assumable liability in respect of such Indebtedness shall at no time exceed the
gross proceeds including non-cash proceeds (the fair market value of such
non-cash proceeds being measured at the time received and without giving effect
to any subsequent changes in value) actually received by the Issuer and/or such
Restricted Subsidiary in connection with such disposition;
(vi) the incurrence by the Issuer or any of its Restricted
Subsidiaries of Permitted Refinancing Indebtedness in exchange for, or the net
proceeds of which are used to refund, refinance or replace Indebtedness (other
than intercompany Indebtedness) that was permitted by this Indenture to be
incurred;
(vii) the incurrence by the Issuer or any of its Restricted
Subsidiaries of intercompany Indebtedness between or among the Issuer and/or
any of its Restricted Subsidiaries; provided that (i) if the Issuer is the
obligor on such Indebtedness, such Indebtedness is expressly subordinated to
the prior payment in full in cash of all Obligations with respect to the
Debentures and (ii)(A) any subsequent issuance or transfer of Equity Interests
that results in any such Indebtedness being held by a Person other than the
Issuer or a Restricted Subsidiary thereof and (B) any sale or other transfer of
any such Indebtedness to a Person that is not either the Issuer or a Restricted
Subsidiary thereof shall be deemed, in each case, to constitute an incurrence
of such Indebtedness by the Issuer or such Restricted Subsidiary, as the case
may be, that was not permitted by this clause (vii);
(viii) the incurrence by the Issuer or any of its Restricted
Subsidiaries of Hedging Obligations that are incurred for the purpose of fixing
or hedging (A) interest rate risk with respect to any floating rate
Indebtedness that is permitted by the terms of this Indenture to be outstanding
and (B) exchange rate risk with respect to agreements or Indebtedness of such
Person payable denominated in a currency other than U.S. dollars, provided that
such agreements
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do not increase the Indebtedness of the obligor outstanding at any time other
than as a result of fluctuations in foreign currency exchange rates or interest
rates or by reason of fees, indemnities and compensation payable thereunder;
(ix) the guarantee by the Issuer or any of its Restricted
Subsidiaries of Indebtedness of the Issuer or a Restricted Subsidiary of the
Issuer that was permitted to be incurred by another provision of this covenant;
(x) the incurrence by the Issuer or any of its Restricted
Subsidiaries of Acquired Indebtedness in an aggregate principal amount (or
accreted value, as applicable) not to exceed $25.0 million outstanding after
giving effect to such incurrence;
(xi) obligations in respect of performance and surety bonds and
completion guarantees provided by the Issuer or any Restricted Subsidiary in
the ordinary course of business; and
(xii) the incurrence by the Issuer or any of its Restricted
Subsidiaries of additional Indebtedness in an aggregate principal amount (or
accreted value, as applicable) outstanding after giving effect to such
incurrence, including all Permitted Refinancing Indebtedness incurred to
refund, refinance or replace any Indebtedness incurred pursuant to this clause
(xii), not to exceed $50.0 million.
For purposes of determining compliance with this covenant, in the
event that an item of Indebtedness meets the criteria of more than one of the
categories of Permitted Indebtedness described in clauses (i) through (xii)
above or is entitled to be incurred pursuant to the first paragraph of this
covenant, the Issuer shall, in its sole discretion, classify such item of
Indebtedness in any manner that complies with this covenant and such item of
Indebtedness will be treated as having been incurred pursuant to only one of
such clauses or pursuant to the first paragraph hereof. In addition, the Issuer
may, at any time, change the classification of an item of Indebtedness (or any
portion thereof) to any other clause or to the first paragraph hereof provided
that the Issuer would be permitted to incur such item of Indebtedness (or such
portion thereof) pursuant to such other clause or the first paragraph hereof,
as the case may be, at such time of reclassification. Accrual of interest,
accretion or amortization of original issue discount will not be deemed to be
an incurrence of Indebtedness for purposes of this covenant.
All Indebtedness under the New Credit Facility outstanding on the date
on which Debentures are first issued and authenticated under this Indenture
shall be deemed to have been incurred on such date in reliance on the first
paragraph of Section 4.09 hereof.
SECTION 4.10. ASSET SALES
The Issuer shall not, and will not permit any of its Restricted
Subsidiaries to, consummate an Asset Sale unless (a) the Issuer or such
Restricted Subsidiary, as the case may be, receives consideration at the time
of such Asset Sale at least equal to the fair market value (evidenced by a
resolution of the board of directors set forth in an Officers' Certificate
delivered to the Trustee) of the assets or Equity Interests issued or sold or
otherwise disposed of and (b) at least 75% of the consideration therefor
received by the Issuer or such Restricted Subsidiary is in the form of (i) cash
or Cash Equivalents or (ii) property or assets that are used or useful in a
Permitted Business, or the Capital Stock of any Person engaged in a Permitted
Business if, as a result of the acquisition by the Issuer or any Restricted
Subsidiary thereof, such Person becomes a Restricted Subsidiary; provided that
the amount of (x) any liabilities (as shown on the Issuer's or such Restricted
Subsidiary's most recent balance sheet), of the Issuer or any Restricted
Subsidiary (other than contingent liabilities and liabilities that are by their
terms subordinated to the Debentures or any guarantee thereof) that are assumed
by the transferee of any such assets pursuant to a customary novation agreement
that releases the Issuer or such Restricted Subsidiary from further liability,
(y) any securities, notes or other obligations received by the Issuer or any
such Restricted Subsidiary from such transferee that are contemporaneously
(subject to ordinary settlement periods) converted by the Issuer or such
Restricted Subsidiary into cash or Cash Equivalents (to the extent of the cash
or Cash Equivalents received), and (z) any Designated Noncash Consideration
received by the Issuer or any of its Restricted Subsidiaries in such Asset Sale
having an aggregate fair market value, taken together with all other Designated
Noncash Consideration received pursuant to this clause (z) that is at that time
outstanding, not to exceed 15% of Total Assets at the time of the receipt of
such Designated Noncash Consideration (with the fair market value of each item
of Designated Noncash Consideration being measured at the time received and
without giving effect to
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subsequent changes in value), shall be deemed to be cash for purposes of this
provision; and provided further that the 75% limitation referred to in clause
(b) above will not apply to any Asset Sale in which the cash or Cash
Equivalents portion of the consideration received therefrom, determined in
accordance with the foregoing proviso, is equal to or greater than what the
after-tax proceeds would have been had such Asset Sale complied with the
aforementioned 75% limitation.
Within 365 days after the receipt of any Net Proceeds from an Asset
Sale, the Issuer or any such Restricted Subsidiary shall apply such Net
Proceeds, at its option, to (a) repay or purchase Pari Passu Indebtedness of
the Issuer or any Indebtedness of any Restricted Subsidiary, provided that, if
the Issuer shall so repay or purchase Pari Passu Indebtedness of the Issuer, it
will equally and ratably reduce Indebtedness under the Debentures if the
Debentures are then redeemable, or, if the Debentures may not then be redeemed,
the Issuer shall make an offer (in accordance with the procedures set forth
below for an Asset Sale Offer) to all Holders of Debentures to purchase at a
purchase price equal to 100% of the principal amount at maturity of the
Debentures (or, in the case of purchases of Debentures prior to June 1, 2003,
at a purchase price equal to 100% of the Accreted Value thereof), plus accrued
and unpaid interest and Liquidated Damages, if any, thereon to the date of
purchase, the Debentures that would otherwise be redeemed, or (b) an investment
in property, the making of a capital expenditure or the acquisition of assets
that are used or useful in a Permitted Business, or Capital Stock of any Person
primarily engaged in a Permitted Business if (i) as a result of the acquisition
by the Issuer or any Restricted Subsidiary thereof, such Person becomes a
Restricted Subsidiary or (ii) the Investment in such Capital Stock is permitted
by clause (f) of the definition of Permitted Investments. Pending the final
application of any such Net Proceeds, the Issuer may temporarily reduce
Indebtedness or otherwise invest such Net Proceeds in any manner that is not
prohibited by this Indenture. Any Net Proceeds from Asset Sales that are not
applied or invested as provided in the first sentence of this paragraph will be
deemed to constitute "Excess Proceeds." When the aggregate amount of Excess
Proceeds exceeds $15.0 million, the Issuer will be required to make an offer to
all Holders of Debentures (an "Asset Sale Offer") to purchase the maximum
principal amount at maturity of Debentures that may be purchased out of the
Excess Proceeds, at an offer price in cash in an amount equal to 100% of the
principal amount at maturity thereof, plus accrued and unpaid interest and
Liquidated Damages, if any, thereon to the date of purchase (or, in the case of
repurchases of Debentures prior to June 1, 2003, at a purchase price equal to
100% of the Accreted Value, plus Liquidated Damages, if any thereon as of the
date of repurchase), in accordance with the procedures set forth in this
Indenture. To the extent that any Excess Proceeds remain after consummation of
an Asset Sale Offer, the Issuer may use such Excess Proceeds for any purpose
not otherwise prohibited by this Indenture. If the aggregate principal amount
at maturity or Accreted Value (as applicable) of Debentures surrendered by
Holders thereof in connection with an Asset Sale Offer exceeds the amount of
Excess Proceeds, the Trustee shall select the Debentures to be purchased as set
forth in Section 3.02 hereof. Upon completion of such offer to purchase, the
amount of Excess Proceeds shall be reset at zero.
The Issuer will comply with the requirements of Rule 14e-1 under the
Exchange Act and any other securities laws and regulations thereunder to the
extent such laws and regulations are applicable in connection with the
repurchase of the Debentures pursuant to an Asset Sale Offer. To the extent
that the provisions of any securities laws or regulations conflict with the
provisions of this Indenture relating to such Asset Sale Offer, the Issuer will
comply with the applicable securities laws and regulations and shall not be
deemed to have breached its obligations described in this Indenture by virtue
thereof.
SECTION 4.11. TRANSACTIONS WITH AFFILIATES.
The Issuer shall not, and will not permit any of its Restricted
Subsidiaries to, make any payment to, or sell, lease, transfer or otherwise
dispose of any of its properties or assets to, or purchase any property or
assets from, or enter into or make or amend any transaction, contract,
agreement, understanding, loan, advance or guarantee with, or for the benefit
of, any Affiliate of the Issuer (each of the foregoing, an "Affiliate
Transaction"), unless (a) such Affiliate Transaction is on terms that are no
less favorable to the Issuer or such Restricted Subsidiary than those that
would have been obtained in a comparable transaction by the Issuer or such
Restricted Subsidiary with an unrelated Person and (b) the Issuer delivers to
the Trustee, with respect to any Affiliate Transaction or series of related
Affiliate Transactions involving aggregate consideration in excess of $7.5
million, either (i) a resolution of the board of directors set forth in an
Officers' Certificate certifying that such Affiliate Transaction complies with
clause (a) above and that such Affiliate Transaction has been approved by a
majority of the disinterested members of the board of directors or (ii) an
opinion as
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to the fairness to the Holders of such Affiliate Transaction from a financial
point of view issued by an accounting, appraisal or investment banking firm of
national standing.
Notwithstanding the foregoing, the following items shall not be deemed
to be Affiliate Transactions: (a) customary directors' fees, indemnification or
similar arrangements or any employment agreement or other compensation plan or
arrangement entered into by the Issuer or any of its Restricted Subsidiaries in
the ordinary course of business (including ordinary course loans to employees
not to exceed (i) $5.0 million outstanding in the aggregate at any time and
(ii) $2.0 million to any one employee) and consistent with the past practice of
the Issuer or such Restricted Subsidiary; (b) transactions between or among the
Issuer and/or its Restricted Subsidiaries; (c) payments of customary fees by
the Issuer or any of its Restricted Subsidiaries to DLJMB and its Affiliates
made for any financial advisory, financing, underwriting or placement services
or in respect of other investment banking activities, including, without
limitation, in connection with acquisitions or divestitures which are approved
by a majority of the board of directors in good faith; (d) any agreement as in
effect on the date of this Indenture or any amendment thereto (so long as such
amendment is not disadvantageous to the Holders of the Debentures in any
material respect) or any transaction contemplated thereby; (e) payments and
transactions in connection with the Merger, the New Credit Facility (including
commitment, syndication and arrangement fees payable thereunder) and the
Offerings (including underwriting discounts and commissions in connection
therewith) and the application of the proceeds thereof, and the payment of the
fees and expenses with respect thereto; (f) Restricted Payments that are
permitted by Section 4.07; (g) sales of accounts receivable, or participations
therein, in connection with any Receivables Facility; and (h) transactions
pursuant to the Management Loans.
SECTION 4.12. LIENS.
The Issuer shall not and will not, and will not permit any of its
Restricted Subsidiaries to, directly or indirectly, create, incur, assume or
suffer to exist any Lien, other than a Permitted Lien, that secures obligations
under any Pari Passu Indebtedness or Subordinated Indebtedness of the Issuer on
any asset or property now owned or hereafter acquired by the Issuer or any of
its Restricted Subsidiaries, or any income or profits therefrom or assign or
convey any right to receive income therefrom, unless the Debentures are equally
and ratably secured with the obligations so secured until such time as such
obligations are no longer secured by a Lien.
SECTION 4.13. CORPORATE EXISTENCE.
Subject to Article 5 hereof, the Issuer shall do or cause to be done
all things necessary to preserve and keep in full force and effect (i) the
corporate, partnership or other existence of itself and each of its
Subsidiaries, in accordance with the respective organizational documents (as
the same may be amended from time to time) of the Issuer or any such Subsidiary
and (ii) the rights (charter and statutory), licenses and franchises of the
Issuer and its Subsidiaries; provided, however, that the Issuer shall not be
required to preserve any such right, license or franchise, or the corporate,
partnership or other existence of itself and any of its Subsidiaries, if the
Board of Directors shall determine that the preservation thereof is no longer
desirable in the conduct of the business of the Issuer and its Subsidiaries,
taken as a whole, and that the loss thereof is not adverse in any material
respect to the Holders of the Debentures.
SECTION 4.14. OFFER TO REPURCHASE UPON CHANGE OF CONTROL.
(a) Upon the occurrence of a Change of Control, each Holder of
Debentures will have the right to require the Issuer to repurchase all or any
part (equal to $1,000 principal amount at maturity or an integral multiple
thereof) of such Holder's Debentures pursuant to the offer described below (the
"Change of Control Offer") at an offer price in cash equal to 101% of the
aggregate principal amount at maturity thereof, plus accrued and unpaid
interest and Liquidated Damages, if any, thereon to the date of repurchase (or,
in the case of repurchases of Debentures prior to June 1, 2003, at a purchase
price equal to 101% of the Accreted Value thereof, plus Liquidated Damages, if
any, thereon as of the date of redemption) (the "Change of Control Payment").
Within 65 days following any Change of Control, the Issuer will (or will cause
the Trustee to) mail a notice to each Holder describing the transaction or
transactions that constitute the Change of Control and offering to repurchase
Debentures, pursuant to the procedures required by this Indenture and described
in such notice. The Issuer will comply with the requirements of Rule 14e-1
under the
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Exchange Act and any other securities laws and regulations thereunder to the
extent such laws and regulations are applicable in connection with the
repurchase of the Debentures as a result of a Change of Control. To the extent
that the provisions of any securities laws or regulations conflict with the
provisions of this Indenture relating to such Change of Control Offer, the
Issuer will comply with the applicable securities laws and regulations and
shall not be deemed to have breached its obligations described in this
Indenture by virtue thereof.
On the Change of Control Payment Date, the Issuer will, to the extent
lawful, (a) accept for payment all Debentures or portions thereof properly
tendered pursuant to the Change of Control Offer, (b) deposit with the Paying
Agent an amount equal to the Change of Control Payment in respect of all
Debentures or portions thereof so tendered and (c) deliver or cause to be
delivered to the Trustee the Debentures so accepted together with an Officers'
Certificate stating the aggregate principal amount at maturity of Debentures or
portions thereof being purchased by the Issuer. The Paying Agent will promptly
mail to each Holder of Debentures so tendered the Change of Control Payment for
such Debentures, and the Trustee will promptly authenticate and mail (or cause
to be transferred by book-entry) to each Holder a new Debenture equal in
principal amount at maturity to any unpurchased portion of the Debentures
surrendered, if any; provided that each such new Debenture will be in a
principal amount at maturity of $1,000 or an integral multiple thereof. Prior
to complying with the provisions of this covenant, but in any event within 90
days following a Change of Control, the Issuer will either repay all
outstanding Indebtedness or obtain the requisite consents, if any, under all
agreements governing outstanding Indebtedness to permit the repurchase of
Debentures required by this covenant. The Issuer will publicly announce the
results of the Change of Control Offer on or as soon as practicable after the
Change of Control Payment Date.
(b) Notwithstanding anything to the contrary in this Section 4.15,
the Issuer will not be required to make a Change of Control Offer upon a Change
of Control if a third party makes the Change of Control Offer in the manner, at
the times and otherwise in compliance with the requirements set forth in this
Indenture applicable to a Change of Control Offer made by the Issuer and
purchases all Debentures validly tendered and not withdrawn under such Change
of Control Offer.
SECTION 4.15. ACCOUNTS RECEIVABLE FACILITY.
No Accounts Receivable Subsidiary will incur any Indebtedness if
immediately after giving effect to such incurrence the aggregate outstanding
Indebtedness of all Accounts Receivable Subsidiaries (excluding any
Indebtedness owed to the Issuer or any Restricted Subsidiary) would exceed
$60.0 million.
SECTION 4.16. LIMITATION ON SALE AND LEASEBACK TRANSACTIONS.
The Issuer will not, and will not permit any of its Restricted
Subsidiaries to, enter into any sale and leaseback transaction; provided that
the Issuer or any Restricted Subsidiary may enter into a sale and leaseback
transaction if (a) the Issuer or such Restricted Subsidiary, as the case may
be, could have (i) incurred Indebtedness in an amount equal to the Attributable
Indebtedness relating to such sale and leaseback transaction pursuant to the
Fixed Charge Coverage Ratio test set forth in the first paragraph of Section
4.09 hereof and (ii) incurred a Lien to secure such Indebtedness pursuant to
Section 4.12 herein, (b) the gross cash proceeds of such sale and leaseback
transaction are at least equal to the fair market value (as determined in good
faith by the board of directors and set forth in an Officers' Certificate
delivered to the Trustee) of the property that is the subject of such sale and
leaseback transaction and (c) the transfer of assets in such sale and leaseback
transaction is permitted by, and the Issuer applies the proceeds of such
transaction in compliance with, Section 4.10 hereof.
SECTION 4.17. PAYMENTS FOR CONSENT.
Neither the Issuer nor any of its Subsidiaries shall, directly or
indirectly, pay or cause to be paid any consideration, whether by way of
interest, fee or otherwise, to any Holder of any Debentures for or as an
inducement to any consent, waiver or amendment of any of the terms or
provisions of this Indenture or the Debentures unless such consideration is
offered to be paid or is paid to all Holders of the Debentures that consent,
waive or agree to amend in the time frame set forth in the solicitation
documents relating to such consent, waiver or agreement.
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ARTICLE 5.
SUCCESSORS
SECTION 5.01. MERGER, CONSOLIDATION, OR SALE OF ASSETS.
The Issuer may not consolidate or merge with or into (whether or not
the Issuer is the surviving corporation), or sell, assign, transfer, convey or
otherwise dispose of all or substantially all of its properties or assets in
one or more related transactions, to another Person unless (a) the Issuer is
the surviving corporation or the Person formed by or surviving any such
consolidation or merger (if other than the Issuer) or to which such sale,
assignment, transfer, conveyance or other disposition shall have been made is a
corporation organized or existing under the laws of the United States, any
state thereof or the District of Columbia, (b) the Person formed by or
surviving any such consolidation or merger (if other than the Issuer) or the
Person to which such sale, assignment, transfer, conveyance or other
disposition shall have been made assumes all the obligations of the Issuer
under the Registration Rights Agreement, the Debentures and this Indenture
pursuant to a supplemental indenture in a form reasonably satisfactory to the
Trustee, (c) immediately after such transaction no Default or Event of Default
exists and (d) the Issuer or the Person formed by or surviving any such
consolidation or merger (if other than the Issuer), or to which such sale,
assignment, transfer, conveyance or other disposition shall have been made (i)
will, at the time of such transaction and after giving pro forma effect thereto
as if such transaction had occurred at the beginning of the applicable
four-quarter period, be permitted to incur at least $1.00 of additional
Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in the
first paragraph of Section 4.09 hereof or (ii) would (together with its
Restricted Subsidiaries) have a higher Fixed Charge Coverage Ratio immediately
after such transaction (after giving pro forma effect thereto as if such
transaction had occurred at the beginning of the applicable four-quarter
period) than the Fixed Charge Coverage Ratio of the Issuer and its Restricted
Subsidiaries immediately prior to such transaction. The foregoing clause (d)
will not prohibit (a) a merger between the Issuer and an Affiliate of the
Issuer created for the purpose of holding the Capital Stock of the Issuer, (b)
a merger between the Issuer and a Wholly Owned Restricted Subsidiary or (c) a
merger between the Issuer and an Affiliate incorporated solely for the purpose
of reincorporating the Issuer in another State of the United States so long as,
in each case, the amount of Indebtedness of the Issuer and its Restricted
Subsidiaries is not increased thereby. The Issuer shall not lease all or
substantially all of its assets to any Person.
SECTION 5.02. SUCCESSOR CORPORATION SUBSTITUTED.
Upon any consolidation or merger, or any sale, assignment, transfer,
lease, conveyance or other disposition of all or substantially all of the
assets of the Issuer in accordance with Section 5.01 hereof, the successor
corporation formed by such consolidation or into or with which the Issuer is
merged or to which such sale, assignment, transfer, lease, conveyance or other
disposition is made shall succeed to, and be substituted for (so that from and
after the date of such consolidation, merger, sale, lease, conveyance or other
disposition, the provisions of this Indenture referring to the "Issuer" shall
refer instead to the successor corporation and not to the Issuer), and may
exercise every right and power of the Issuer under this Indenture with the same
effect as if such successor Person had been named as the Issuer herein;
provided, however, that the predecessor Issuer shall not be relieved from the
obligation to pay the principal of and interest and Liquidated Damages, if any,
on the Debentures except in the case of a sale of all of the Issuer's assets
that meets the requirements of Section 5.01 hereof.
ARTICLE 6.
DEFAULTS AND REMEDIES
SECTION 6.01. EVENTS OF DEFAULT.
Each of the following constitutes an Event of Default:
(a) default for 30 days in the payment when due of interest on, or
Liquidated Damages with respect to, the Debentures;
(b) default in payment when due of the principal of or premium, if
any, on the Debentures at maturity, upon redemption or otherwise;
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(c) failure by the Issuer or any of its Restricted Subsidiaries
for 30 days after receipt of notice from the Trustee or Holders of at least 25%
in principal amount at maturity of the Debentures then outstanding to comply
with Sections 4.07, 4.09, 4.10, 4.14 or Article 5 hereof;
(d) failure by the Issuer for 60 days after notice from the
Trustee or the Holders of at least 25% in principal amount at maturity of the
Debentures then outstanding to comply with any of its other agreements in this
Indenture or the Debentures;
(e) default under any mortgage, indenture or instrument under
which there may be issued or by which there may be secured or evidenced any
Indebtedness for money borrowed by the Issuer or any of its Restricted
Subsidiaries (or the payment of which is guaranteed by the Issuer or any of its
Restricted Subsidiaries), whether such Indebtedness or guarantee now exists, or
is created after the date of this Indenture, which default (i) is caused by a
failure to pay Indebtedness at its stated final maturity (after giving effect
to any applicable grace period provided in such Indebtedness) (a "Payment
Default") or (ii) results in the acceleration of such Indebtedness prior to its
stated final maturity and, in each case, the principal amount of any such
Indebtedness, together with the principal amount of any other such Indebtedness
under which there has been a Payment Default or the maturity of which has been
so accelerated, aggregates $10.0 million or more;
(f) failure by the Issuer or any of its Restricted Subsidiaries to
pay final judgments aggregating in excess of $10.0 million (net of any amounts
with respect to which a reputable and creditworthy insurance company has
acknowledged liability in writing), which judgments are not paid, discharged or
stayed for a period of 60 days; and
(g) the Issuer or any of its Restricted Subsidiaries that is a
Significant Subsidiary or any group of Restricted Subsidiaries that, taken as a
whole, would constitute a Significant Subsidiary pursuant to or within the
meaning of Bankruptcy Law:
(i) commences a voluntary case,
(ii) consents to the entry of an order for relief against
it in an involuntary case,
(iii) consents to the appointment of a Custodian of it or
for all or substantially all of its property,
(iv) makes a general assignment for the benefit of its
creditors, or
(v) generally is not paying its debts as they become due;
or
(h) a court of competent jurisdiction enters an order or decree
under any Bankruptcy Law that:
(vi) is for relief against the Issuer or any of its
Restricted Subsidiaries that is Significant Subsidiary or any
group of Restricted Subsidiaries that, taken as a whole, would
constitute a Significant Subsidiary in an involuntary case;
(vii) appoints a Custodian of the Issuer or any of its
Restricted Subsidiaries that is Significant Subsidiary or any
group of Restricted Subsidiaries that, taken as a whole, would
constitute a Significant Subsidiary or for all or substantially
all of the property of the Issuer or any of its Restricted
Subsidiaries that is a Significant Subsidiary or any group of
Subsidiaries that, taken as a whole, would constitute a
Significant Subsidiary; or
(viii) orders the liquidation of the Issuer or any of its
Restricted Subsidiaries that is a Significant Subsidiary or any
group of Restricted Subsidiaries that, taken as a whole, would
constitute a Significant Subsidiary;
and the order or decree remains unstayed and in effect for 60
consecutive days.
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SECTION 6.02. ACCELERATION.
If any Event of Default (other than an Event of Default specified in
clause (g) or (h) of Section 6.01 hereof with respect to the Issuer, any of its
Restricted Subsidiaries that is a Significant Subsidiary or any group of
Restricted Subsidiaries that, taken as a whole, would constitute a Significant
Subsidiary) occurs and is continuing, the Trustee or the Holders of at least
25% in principal amount at maturity of the then outstanding Debentures may
declare all the Debentures to be due and payable immediately; provided, that so
long as any Indebtedness permitted to be incurred pursuant to the New Credit
Facility shall be outstanding, such acceleration shall not be effective until
the earlier of (i) an acceleration under any such Indebtedness under the New
Credit Facility or (ii) five Business Days after receipt by the Issuer and the
administrative agent under the New Credit Facility of written notice of such
acceleration. Upon any such declaration, the Debentures shall become due and
payable immediately. Notwithstanding the foregoing, if an Event of Default
specified in clause (g) or (h) of Section 6.01 hereof occurs with respect to
the Issuer, any of its Restricted Subsidiaries that is a Significant Subsidiary
or any group of Restricted Subsidiaries that, taken as a whole, would
constitute a Significant Subsidiary, all outstanding Debentures shall be due
and payable immediately without further action or notice. The Holders of a
majority in aggregate principal amount at maturity of the then outstanding
Debentures by written notice to the Trustee may on behalf of all of the Holders
rescind an acceleration and its consequences if the rescission would not
conflict with any judgment or decree and if all existing Events of Default
(except nonpayment of principal, interest or premium that has become due solely
because of the acceleration) have been cured or waived, provided that in the
event of a declaration of acceleration of the Debentures because an Event of
Default has occurred and is continuing as a result of the acceleration of any
Indebtedness described in clause (e) of Section 6.01 hereof, the declaration of
acceleration of the Debentures shall be automatically annulled if the holders
of any Indebtedness described in clause (e) of Section 6.01 hereof have
rescinded the declaration of acceleration in respect of such Indebtedness
within 30 days of the date of such declaration and if (i) the annulment of the
acceleration of the Debentures would not conflict with any judgment or decree
of a court of competent jurisdiction and (ii) all existing Events of Default,
except non-payment of principal or interest on the Debentures that became due
solely because of the acceleration of the Debentures, have been cured or
waived.
SECTION 6.03. OTHER REMEDIES.
If an Event of Default occurs and is continuing, the Trustee may
pursue any available remedy to collect the payment of principal, premium, if
any, and interest and Liquidated Damages, if any, on the Debentures or to
enforce the performance of any provision of the Debentures or this Indenture.
The Trustee may maintain a proceeding even if it does not possess any
of the Debentures or does not produce any of them in the proceeding. A delay
or omission by the Trustee or any Holder of a Debenture in exercising any right
or remedy accruing upon an Event of Default shall not impair the right or
remedy or constitute a waiver of or acquiescence in the Event of Default. All
remedies are cumulative to the extent permitted by law.
SECTION 6.04. WAIVER OF PAST DEFAULTS.
Holders of not less than a majority in principal amount at maturity of
the then outstanding Debentures by notice to the Trustee may on behalf of the
Holders of all of the Debentures waive an existing Default or Event of Default
and its consequences hereunder, except a continuing Default or Event of Default
in the payment of the principal of, premium and Liquidated Damages, if any, or
interest on, the Debentures (including in connection with an offer to purchase)
(provided, however, that the Holders of a majority in aggregate principal
amount at maturity of the then outstanding Debentures may rescind an
acceleration and its consequences, including any related payment default that
resulted from such acceleration). Upon any such waiver, such Default shall
cease to exist, and any Event of Default arising therefrom shall be deemed to
have been cured for every purpose of this Indenture; but no such waiver shall
extend to any subsequent or other Default or impair any right consequent
thereon.
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SECTION 6.05. CONTROL BY MAJORITY.
Holders of not less than a majority in principal amount at maturity of
the then outstanding Debentures may direct the time, method and place of
conducting any proceeding for exercising any remedy available to the Trustee or
exercising any trust or power conferred on it. However, the Trustee may refuse
to follow any direction that conflicts with law or this Indenture that the
Trustee determines may be unduly prejudicial to the rights of other Holders of
Debentures or that may involve the Trustee in personal liability.
SECTION 6.06. LIMITATION ON SUITS.
A Holder of a Debenture may pursue a remedy with respect to this
Indenture or the Debentures only if:
(a) the Holder of a Debenture gives to the Trustee written notice
of a continuing Event of Default;
(b) the Holders of at least 25% in principal amount at maturity of
the then outstanding Debentures make a written request to the Trustee to pursue
the remedy;
(c) such Holder of a Debenture or Holders of Debentures offer and,
if requested, provide to the Trustee indemnity satisfactory to the Trustee
against any loss, liability or expense;
(d) the Trustee does not comply with the request within 60 days
after receipt of the request and the offer and, if requested, the provision of
indemnity; and
(e) during such 60-day period the Holders of a majority in
principal amount at maturity of the then outstanding Debentures do not give the
Trustee a direction inconsistent with the request.
A Holder of a Debenture may not use this Indenture to prejudice the
rights of another Holder of a Debenture or to obtain a preference or priority
over another Holder of a Debenture.
SECTION 6.07. RIGHTS OF HOLDERS OF DEBENTURES TO RECEIVE PAYMENT.
Notwithstanding any other provision of this Indenture, the right of
any Holder of a Debenture to receive payment of principal, premium and
Liquidated Damages, if any, and interest on the Debenture, on or after the
respective due dates expressed in the Debenture (including in connection with
an offer to purchase), or to bring suit for the enforcement of any such payment
on or after such respective dates, shall not be impaired or affected without
the consent of such Holder.
SECTION 6.08. COLLECTION SUIT BY TRUSTEE.
If an Event of Default specified in Section 6.01(a) or (b) occurs and
is continuing, the Trustee is authorized to recover judgment in its own name
and as trustee of an express trust against the Issuer for the whole amount of
principal of, premium and Liquidated Damages, if any, and interest remaining
unpaid on the Debentures and interest on overdue principal and, to the extent
lawful, interest and such further amount as shall be sufficient to cover the
costs and expenses of collection, including the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel.
SECTION 6.09. TRUSTEE MAY FILE PROOFS OF CLAIM.
The Trustee is authorized to file such proofs of claim and other
papers or documents as may be necessary or advisable in order to have the
claims of the Trustee (including any claim for the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel)
and the Holders of the Debentures allowed in any judicial proceedings relative
to the Issuer (or any other obligor upon the Debentures), its creditors or its
property and shall be entitled and empowered to collect, receive and distribute
any money or other property payable or deliverable on any such claims and any
custodian in any such judicial proceeding is hereby authorized by
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each Holder to make such payments to the Trustee, and in the event that the
Trustee shall consent to the making of such payments directly to the Holders,
to pay to the Trustee any amount due to it for the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel,
and any other amounts due the Trustee under Section 7.07 hereof. To the extent
that the payment of any such compensation, expenses, disbursements and advances
of the Trustee, its agents and counsel, and any other amounts due the Trustee
under Section 7.07 hereof out of the estate in any such proceeding, shall be
denied for any reason, payment of the same shall be secured by a Lien on, and
shall be paid out of, any and all distributions, dividends, money, securities
and other properties that the Holders may be entitled to receive in such
proceeding whether in liquidation or under any plan of reorganization or
arrangement or otherwise. Nothing herein contained shall be deemed to
authorize the Trustee to authorize or consent to or accept or adopt on behalf
of any Holder any plan of reorganization, arrangement, adjustment or
composition affecting the Debentures or the rights of any Holder, or to
authorize the Trustee to vote in respect of the claim of any Holder in any such
proceeding.
SECTION 6.10. PRIORITIES.
If the Trustee collects any money pursuant to this Article, it shall
pay out the money in the following order:
First: to the Trustee, its agents and attorneys for amounts due under
Section 7.07 hereof, including payment of all compensation, expenses and
liabilities incurred, and all advances made, by the Trustee and the costs and
expenses of collection;
Second: to Holders of Debentures for amounts due and unpaid on the
Debentures for principal, premium and Liquidated Damages, if any, and interest,
ratably, without preference or priority of any kind, according to the amounts
due and payable on the Debentures for principal, premium and Liquidated
Damages, if any and interest, respectively; and
Third: to the Issuer or to such party as a court of competent
jurisdiction shall direct.
The Trustee may fix a record date and payment date for any payment to
Holders of Debentures pursuant to this Section 6.10.
SECTION 6.11. UNDERTAKING FOR COSTS.
In any suit for the enforcement of any right or remedy under this
Indenture or in any suit against the Trustee for any action taken or omitted by
it as a Trustee, a court in its discretion may require the filing by any party
litigant in the suit of an undertaking to pay the costs of the suit, and the
court in its discretion may assess reasonable costs, including reasonable
attorneys' fees, against any party litigant in the suit, having due regard to
the merits and good faith of the claims or defenses made by the party litigant.
This Section does not apply to a suit by the Trustee, a suit by a Holder of a
Debenture pursuant to Section 6.07 hereof, or a suit by Holders of more than
10% in principal amount at maturity of the then outstanding Debentures.
ARTICLE 7.
TRUSTEE
SECTION 7.01. DUTIES OF TRUSTEE.
(a) If an Event of Default has occurred and is continuing, the
Trustee shall exercise such of the rights and powers vested in it by this
Indenture, and use the same degree of care and skill in its exercise, as a
prudent man would exercise or use under the circumstances in the conduct of his
own affairs.
(b) Except during the continuance of an Event of Default:
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(i) the duties and obligations of the Trustee shall be
determined solely by the express provisions of this Indenture and
the Trustee need perform only those duties and obligations that
are specifically set forth in this Indenture and no others, and no
implied covenants or obligations shall be read into this Indenture
against the Trustee; and
(ii) in the absence of bad faith on its part, the Trustee
may conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon any
statements, certificates or opinions furnished to the Trustee and
conforming to the requirements of this Indenture. However, the
Trustee shall examine the statements, certificates and opinions to
determine whether or not they conform to the requirements of this
Indenture.
(c) The Trustee may not be relieved from liabilities for its own
negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
(i) this paragraph does not limit the effect of paragraph
(b) of this Section;
(ii) the Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer or
Responsible Officers, unless it is proved that the Trustee was
negligent in ascertaining the pertinent facts; and
(iii) the Trustee shall not be liable with respect to any
action it takes or omits to take in good faith in accordance with
a direction received by it pursuant to Section 6.05 hereof.
(d) Whether or not therein expressly so provided, every provision
of this Indenture that in any way relates to the Trustee is subject to
paragraphs (a), (b), and (c) of this Section.
(e) No provision of this Indenture shall require the Trustee to
expend or risk its own funds or otherwise incur any liability. The Trustee
shall be under no obligation to exercise any of its rights and powers under
this Indenture at the request of any Holders, unless such Holder shall have
offered to the Trustee security and indemnity satisfactory to it against any
loss, liability or expense.
(f) The Trustee shall not be liable for interest on any money
received by it except as the Trustee may agree in writing with the Issuer.
Money held in trust by the Trustee need not be segregated from other funds
except to the extent required by law.
SECTION 7.02. RIGHTS OF TRUSTEE.
(a) The Trustee may conclusively rely upon and shall be protected
in acting or refraining from acting upon any document or statement believed by
it to be genuine and to have been signed or presented by the proper Person or
parties. The Trustee need not investigate any fact or matter stated in the
document or statement.
(b) Any request, direction, order or demand of the Issuer for the
Trustee to act or refrain from acting shall be sufficiently evidenced by an
Officers' Certificate (unless other evidence in respect thereof be herein
specifically prescribed) or an Opinion of Counsel or both. The Trustee shall
not be liable for any action it takes or omits to take in good faith in
reliance on such Officers' Certificate or Opinion of Counsel. Any resolution
of the Board of Directors shall be evidenced to the Trustee by a copy thereof,
which, if requested by the Trustee, shall be certified by the secretary or any
assistant secretary of the Issuer. The Trustee may consult with counsel and
the written advice of such counsel or any Opinion of Counsel shall be full and
complete authorization and protection from liability in respect of any action
taken, suffered or omitted by it hereunder in good faith and in reliance
thereon.
(c) The Trustee may act through its attorneys and agents
(including those not regularly in its employ) and shall not be responsible for
the misconduct or negligence of any agent appointed with due care.
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(d) The Trustee shall not be liable for any action it takes or
omits to take in good faith that it believes to be authorized or within the
rights or powers conferred upon it by this Indenture.
(e) The Trustee shall be under no obligation to exercise any of
the rights or powers vested in it by this Indenture at the request or direction
of any of the Holders unless such Holders shall have offered to the Trustee
reasonable security or indemnity against the costs, expenses and liabilities
that might be incurred by it in compliance with such request or direction.
SECTION 7.03. INDIVIDUAL RIGHTS OF TRUSTEE.
The Trustee in its individual or any other capacity may become the
owner or pledgee of Debentures and may otherwise deal with the Issuer or any
Affiliate of the Issuer with the same rights it would have if it were not
Trustee. However, in the event that the Trustee acquires any conflicting
interest it must eliminate such conflict within 90 days, apply to the
Commission for permission to continue as trustee or resign. Any Agent may do
the same with like rights and duties. The Trustee is also subject to Sections
7.10 and 7.11 hereof.
SECTION 7.04. TRUSTEE'S DISCLAIMER.
The Trustee assumes no responsibility for the correctness of, and
makes no representation as to the validity or adequacy of, this Indenture or
the Debentures, it shall not be accountable for the Issuer's use of the
proceeds from the Debentures or any money paid to the Issuer or upon the
Issuer's direction under any provision of this Indenture, it shall not be
responsible for the use or application of any money received by any Paying
Agent other than the Trustee, and it shall not be responsible for any statement
or recital herein or any statement in the Debentures or any other document in
connection with the sale of the Debentures or pursuant to this Indenture other
than its certificate of authentication. The Trustee shall not be accountable
for any calculations made in respect hereof.
SECTION 7.05. NOTICE OF DEFAULTS.
If a Default or Event of Default occurs and is continuing and if it is
known to the Trustee, the Trustee shall mail to Holders of Debentures a notice
of the Default or Event of Default within 90 days after it occurs. Except in
the case of a Default or Event of Default in payment of principal of, premium,
if any, or interest or Liquidated Damages, if any, on any Debenture, the
Trustee may withhold the notice if and so long as a committee of its board of
directors, executive committee or a trust committee of directors or Responsible
Officers in good faith determines that withholding the notice is in the
interests of the Holders of the Debentures.
SECTION 7.06. REPORTS BY TRUSTEE TO HOLDERS OF THE DEBENTURES.
Within 60 days after each May 15 beginning with the May 15 following
the date of this Indenture, and for so long as Debentures remain outstanding,
the Trustee shall mail to the Holders of the Debentures a brief report dated as
of such reporting date that complies with TIA Section 313(a) (but if no event
described in TIA Section 313(a) has occurred within the twelve months
preceding the reporting date, no report need be transmitted). The Trustee also
shall comply with TIA Section 313(b)(2). The Trustee shall also transmit by
mail all reports as required by TIA Section 313(c).
A copy of each report at the time of its mailing to the Holders of
Debentures shall be mailed to the Issuer and filed with the Commission and each
stock exchange on which the Debentures are listed in accordance with TIA
Section 313(d). The Issuer shall promptly notify the Trustee when the
Debentures are listed on any stock exchange.
SECTION 7.07. COMPENSATION AND INDEMNITY.
The Issuer shall pay to the Trustee from time to time reasonable
compensation for its acceptance of this Indenture and services hereunder. The
Trustee's compensation shall not be limited by any law on compensation of a
trustee of an express trust. The Issuer shall reimburse the Trustee promptly
upon request for all reasonable disbursements, advances and expenses incurred
or made by or on behalf of it in addition to the compensation for its
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services. Such expenses shall include, without limitation, the reasonable
compensation, disbursements and expenses of the Trustee's agents and counsel.
The Issuer shall indemnify and hold harmless the Trustee against any
and all losses, liabilities or expenses incurred by it arising out of or in
connection with the acceptance or administration of its duties under this
Indenture, including, without limitation, the costs and expenses of enforcing
this Indenture against the Issuer (including this Section 7.07) and defending
itself against any claim (whether asserted by the Issuer or any Holder or any
other person) or liability in connection with the exercise or performance of
any of its powers or duties hereunder, except to the extent any such loss,
liability or expense may be attributable to its negligence or bad faith. The
Trustee shall notify the Issuer promptly of any claim for which it may seek
indemnity. Failure by the Trustee to so notify the Issuer shall not relieve
the Issuer of its obligations hereunder. The Issuer shall defend the claim and
the Trustee shall cooperate in the defense. The Trustee may have separate
counsel and the Issuer shall pay the reasonable fees and expenses of such
counsel. The Issuer need not pay for any settlement made without its consent,
which consent shall not be unreasonably withheld.
The obligations of the Issuer under this Section 7.07 shall constitute
additional indebtedness hereunder and shall survive the satisfaction and
discharge of this Indenture.
To secure the Issuer's payment obligations in this Section, the
Trustee shall have a Lien prior to the Debentures on all money or property held
or collected by the Trustee, except for that money or property held in trust to
pay principal and interest and Liquidated Damages, if any, on particular
Debentures. Such Lien shall survive the satisfaction and discharge of this
Indenture.
When the Trustee incurs expenses or renders services after an Event of
Default specified in Section 6.01(g) or (h) hereof occurs, the expenses and the
compensation for the services (including the fees and expenses of its agents
and counsel) are intended to constitute expenses of administration under any
Bankruptcy Law.
The Trustee shall comply with the provisions of TIA Section 313(b)(2)
to the extent applicable.
SECTION 7.08. REPLACEMENT OF TRUSTEE.
A resignation or removal of the Trustee and appointment of a successor
Trustee shall become effective only upon the successor Trustee's acceptance of
appointment as provided in this Section.
The Trustee may resign in writing at any time and be discharged from
the trust hereby created by so notifying the Issuer. The Holders of Debentures
of a majority in principal amount at maturity of the then outstanding
Debentures may remove the Trustee by so notifying the Trustee and the Issuer in
writing. The Issuer may remove the Trustee if:
(a) the Trustee fails to comply with Section 7.10 hereof;
(b) the Trustee is adjudged a bankrupt or an insolvent or an order
for relief is entered with respect to the Trustee under any Bankruptcy Law;
(c) a Custodian or public officer takes charge of the Trustee or
its property; or
(d) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the
office of Trustee for any reason, the Issuer shall promptly appoint a successor
Trustee. Within one year after the successor Trustee takes office, the Holders
of a majority in principal amount at maturity of the then outstanding
Debentures may appoint a successor Trustee to replace the successor Trustee
appointed by the Issuer.
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If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Issuer, or
the Holders of Debentures of at least 10% in principal amount at maturity of
the then outstanding Debentures may petition any court of competent
jurisdiction for the appointment of a successor Trustee.
If the Trustee, after written request by any Holder of a Debenture who
has been a Holder of a Debenture for at least six months, fails to comply with
Section 7.10, such Holder of a Debenture may petition any court of competent
jurisdiction for the removal of the Trustee and the appointment of a successor
Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Issuer. Thereupon, the
resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee shall have all the rights, powers and duties of the Trustee
under this Indenture. The successor Trustee shall mail a notice of its
succession to Holders of the Debentures. The retiring Trustee shall promptly
transfer all property held by it as Trustee to the successor Trustee, provided
that all sums owing to the Trustee hereunder have been paid and subject to the
Lien provided for in Section 7.07 hereof. Notwithstanding replacement of the
Trustee pursuant to this Section 7.08, the Issuer's obligations under Section
7.07 hereof shall continue for the benefit of the retiring Trustee.
SECTION 7.09. SUCCESSOR TRUSTEE BY MERGER, ETC.
If the Trustee consolidates, merges or converts into, or transfers all
or substantially all of its corporate trust business to, another corporation,
the successor corporation without any further act shall be the successor
Trustee.
SECTION 7.10. ELIGIBILITY; DISQUALIFICATION.
There shall at all times be a Trustee hereunder that is a corporation
organized and doing business under the laws of the United States of America or
of any state thereof that is authorized under such laws to exercise corporate
trustee power, that is subject to supervision or examination by federal or
state authorities and that has a combined capital and surplus of at least $100
million as set forth in its most recent published annual report of condition.
This Indenture shall always have a Trustee who satisfies the
requirements of TIA Section 310(a)(1), (2) and (5). The Trustee is subject to
TIA Section 310(b).
SECTION 7.11. PREFERENTIAL COLLECTION OF CLAIMS AGAINST ISSUER.
The Trustee is subject to TIA Section 311(a), excluding any creditor
relationship listed in TIA Section 311(b). A Trustee who has resigned or been
removed shall be subject to TIA Section 311(a) to the extent indicated therein.
ARTICLE 8.
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
SECTION 8.01. OPTION TO EFFECT LEGAL DEFEASANCE OR COVENANT DEFEASANCE.
The Issuer may, at the option of its Board of Directors evidenced by a
resolution set forth in an Officers' Certificate, at any time, elect to have
either Section 8.02 or 8.03 hereof be applied to all outstanding Debentures
upon compliance with the conditions set forth below in this Article Eight.
SECTION 8.02. LEGAL DEFEASANCE AND DISCHARGE.
Upon the Issuer's exercise under Section 8.01 hereof of the option
applicable to this Section 8.02, the Issuer shall, subject to the satisfaction
of the conditions set forth in Section 8.04 hereof, be deemed to have been
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discharged from its obligations with respect to all outstanding Debentures on
the date the conditions set forth below are satisfied (hereinafter, "Legal
Defeasance"). For this purpose, Legal Defeasance means that the Issuer shall
be deemed to have paid and discharged the entire Indebtedness represented by
the outstanding Debentures, which shall thereafter be deemed to be
"outstanding" only for the purposes of Section 8.05 hereof and the other
Sections of this Indenture referred to in (a) and (b) below, and to have
satisfied all its other obligations under such Debentures and this Indenture
(and the Trustee, on demand of and at the expense of the Issuer, shall execute
proper instruments acknowledging the same), except for the following provisions
which shall survive until otherwise terminated or discharged hereunder:
(a) the rights of Holders of outstanding Debentures to receive
payments in respect of the principal of, premium, if any, and interest and
Liquidated Damages, if any, on such Debentures when such payments are due from
the trust referred to below,
(b) the Issuer's obligations with respect to the Debentures
concerning issuing temporary Debentures, registration of Debentures, mutilated,
destroyed, lost or stolen Debentures and the maintenance of an office or agency
for payment and money for security payments held in trust,
(c) the rights, powers, trusts, duties and immunities of the
Trustee, and the Issuer's obligations in connection therewith and
(d) the Legal Defeasance provisions of this Indenture.
SECTION 8.03. COVENANT DEFEASANCE.
Upon the Issuer's exercise under Section 8.01 hereof of the option
applicable to this Section 8.03, the Issuer shall, subject to the satisfaction
of the conditions set forth in Section 8.04 hereof, be released from its
obligations under the covenants contained in Sections 4.07, 4.08, 4.09, 4.10,
4.11, 4.12, 4.13, 4.14, 4.15, 4.16 and 4.17 hereof with respect to the
outstanding Debentures on and after the date the conditions set forth in
Section 8.04 are satisfied (hereinafter, "Covenant Defeasance"), and the
Debentures shall thereafter be deemed not "outstanding" for the purposes of any
direction, waiver, consent or declaration or act of Holders (and the
consequences of any thereof) in connection with such covenants, but shall
continue to be deemed "outstanding" for all other purposes hereunder (it being
understood that such Debentures shall not be deemed outstanding for accounting
purposes). For this purpose, Covenant Defeasance means that, with respect to
the outstanding Debentures, the Issuer may omit to comply with and shall have
no liability in respect of any term, condition or limitation set forth in any
such covenant, whether directly or indirectly, by reason of any reference
elsewhere herein to any such covenant or by reason of any reference in any such
covenant to any other provision herein or in any other document and such
omission to comply shall not constitute a Default or an Event of Default under
Section 6.01 hereof, but, except as specified above, the remainder of this
Indenture and such Debentures shall be unaffected thereby. In addition, upon
the Issuer's exercise under Section 8.01 hereof of the option applicable to
this Section 8.03 hereof, subject to the satisfaction of the conditions set
forth in Section 8.04 hereof, Sections 6.01(d) through 6.01(f) hereof shall not
constitute Events of Default.
SECTION 8.04. CONDITIONS TO LEGAL OR COVENANT DEFEASANCE.
The following shall be the conditions to the application of either
Section 8.02 or 8.03 hereof to the outstanding Debentures:
In order to exercise either Legal Defeasance or Covenant Defeasance,
(a) the Issuer must irrevocably deposit with the Trustee, in
trust, for the benefit of the Holders of the Debentures, cash in U.S. dollars,
non-callable Government Securities, or a combination thereof, in such amounts
as will be sufficient, in the opinion of a nationally recognized firm of
independent public accountants, to pay the principal of, premium, if any, and
interest and Liquidated Damages, if any, on the outstanding Debentures on the
stated maturity or
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on the applicable redemption date, as the case may be, and the Issuer must
specify whether the Debentures are being defeased to maturity or to a
particular redemption date,
(b) in the case of Legal Defeasance, the Issuer shall have
delivered to the Trustee an Opinion of Counsel in the United States reasonably
acceptable to the Trustee confirming that (i) the Issuer has received from, or
there has been published by, the Internal Revenue Service a ruling or (ii)
since the date of this Indenture, there has been a change in the applicable
federal income tax law, in either case to the effect that, and based thereon
such opinion of counsel shall confirm that, subject to customary assumptions
and exclusions, the Holders of the outstanding Debentures will not recognize
income, gain or loss for federal income tax purposes as a result of such Legal
Defeasance and will be subject to federal income tax on the same amounts, in
the same manner and at the same times as would have been the case if such Legal
Defeasance had not occurred,
(c) in the case of Covenant Defeasance, the Issuer shall have
delivered to the Trustee an Opinion of Counsel in the United States reasonably
acceptable to the Trustee confirming that, subject to customary assumptions and
exclusions, the Holders of the outstanding Debentures will not recognize
income, gain or loss for federal income tax purposes as a result of such
Covenant Defeasance and will be subject to federal income tax on the same
amounts, in the same manner and at the same times as would have been the case
if such Covenant Defeasance had not occurred,
(d) no Default or Event of Default shall have occurred and be
continuing on the date of such deposit (other than a Default or Event of
Default resulting from the borrowing of funds to be applied to such deposit)
or, insofar as Events of Default from bankruptcy or insolvency events are
concerned, at any time in the period ending on the 123rd day after the date of
deposit,
(e) such Legal Defeasance or Covenant Defeasance will not result
in a breach or violation of, or constitute a default under, any material
agreement or instrument (other than this Indenture) to which the Issuer or any
of its Subsidiaries is a party or by which the Issuer or any of its
Subsidiaries is bound,
(f) the Issuer must have delivered to the Trustee an Opinion of
Counsel reasonably acceptable to the Trustee confirming that, subject to
customary assumptions and exclusions, after the 123rd day following the
deposit, the trust funds will not be subject to the effect of Section 547 of
the United States Bankruptcy Code or any analogous New York State law provision
or any other applicable federal or New York bankruptcy, insolvency,
reorganization or similar laws affecting creditors' rights generally,
(g) the Issuer must deliver to the Trustee an Officers'
Certificate stating that the deposit was not made by the Issuer with the intent
of preferring the Holders of Debentures over the other creditors of the Issuer
with the intent of defeating, hindering, delaying or defrauding creditors of
the Issuer or others, and
(h) the Issuer must deliver to the Trustee an Officers'
Certificate and an Opinion of Counsel (which opinion may be subject to
customary assumptions and exclusions) reasonably acceptable to the Trustee
confirming that all conditions precedent provided for relating to the Legal
Defeasance or the Covenant Defeasance have been complied with.
SECTION 8.05. DEPOSITED MONEY AND GOVERNMENT SECURITIES TO BE HELD IN TRUST;
OTHER MISCELLANEOUS PROVISIONS.
Subject to Section 8.06 hereof, all money and non-callable Government
Securities (including the proceeds thereof) deposited with the Trustee (or
other qualifying trustee, collectively for purposes of this Section 8.05, the
"Trustee") pursuant to Section 8.04 hereof in respect of the outstanding
Debentures shall be held in trust and applied by the Trustee, in accordance
with the provisions of such Debentures and this Indenture, to the payment,
either directly or through any Paying Agent (including the Issuer acting as
Paying Agent) as the Trustee may determine, to the Holders of such Debentures
of all sums due and to become due thereon in respect of principal, premium, if
any, and interest and Liquidated Damages, if any, but such money need not be
segregated from other funds except to the extent required by law.
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The Issuer shall pay and indemnify the Trustee against any and all
taxes, fees or other charges imposed on or assessed against the cash or
non-callable Government Securities deposited pursuant to Section 8.04 hereof or
the principal and interest received in respect thereof other than any such
taxes, fees or other charges which by law are for the account of the Holders of
the outstanding Debentures.
Anything in this Article Eight to the contrary notwithstanding, the
Trustee shall deliver or pay to the Issuer from time to time upon the request
of the Issuer any money or non-callable Government Securities held by it as
provided in Section 8.04 hereof which, in the opinion of a nationally
recognized firm of independent public accountants expressed in a written
certification thereof delivered to the Trustee (which may be the opinion
delivered under Section 8.04(a) hereof), are in excess of the amount thereof
that would then be required to be deposited to effect an equivalent Legal
Defeasance or Covenant Defeasance.
SECTION 8.06. REPAYMENT TO ISSUER.
Any money deposited with the Trustee or any Paying Agent, or then held
by the Issuer, in trust for the payment of the principal of, premium, if any,
or interest or Liquidated Damages, if any, on any Debenture and remaining
unclaimed for two years after such principal, and premium, if any, or interest
or Liquidated Damages, if any, has become due and payable shall be paid to the
Issuer on its request or (if then held by the Issuer) shall be discharged from
such trust; and the Holder of such Debenture shall thereafter, as a secured
creditor, look only to the Issuer for payment thereof, and all liability of the
Trustee or such Paying Agent with respect to such trust money, and all
liability of the Issuer as trustee thereof, shall thereupon cease; provided,
however, that the Trustee or such Paying Agent, before being required to make
any such repayment, may at the expense of the Issuer cause to be published
once, in the New York Times and The Wall Street Journal (national edition),
notice that such money remains unclaimed and that, after a date specified
therein, which shall not be less than 30 days from the date of such
notification or publication, any unclaimed balance of such money then remaining
will be repaid to the Issuer.
SECTION 8.07. REINSTATEMENT.
If the Trustee or Paying Agent is unable to apply any United States
dollars or non-callable Government Securities in accordance with Section 8.02
or 8.03 hereof, as the case may be, by reason of any order or judgment of any
court or governmental authority enjoining, restraining or otherwise prohibiting
such application, then the Issuer's obligations under this Indenture and the
Debentures shall be revived and reinstated as though no deposit had occurred
pursuant to Section 8.02 or 8.03 hereof until such time as the Trustee or
Paying Agent is permitted to apply all such money in accordance with Section
8.02 or 8.03 hereof, as the case may be; provided, however, that, if the Issuer
makes any payment of principal of, premium, if any, or interest or Liquidated
Damages, if any, on any Debenture following the reinstatement of its
obligations, the Issuer shall be subrogated to the rights of the Holders of
such Debentures to receive such payment from the money held by the Trustee or
Paying Agent.
ARTICLE 9.
AMENDMENT, SUPPLEMENT AND WAIVER
SECTION 9.01. WITHOUT CONSENT OF HOLDERS OF DEBENTURES.
Notwithstanding Section 9.02 of this Indenture, the Issuer and the
Trustee may amend or supplement this Indenture or the Debentures without the
consent of any Holder of a Debenture:
(a) to cure any ambiguity, defect or inconsistency;
(b) to provide for uncertificated Debentures in addition to or in
place of certificated Debentures or to alter the provisions of Article 2 hereof
(including the related definitions) in a manner that does not materially
adversely affect any Holder;
(c) to provide for the assumption of the Issuer's obligations to
the Holders of the Debentures by a successor to the Issuer pursuant to Article
5 hereof;
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(d) to make any change that would provide any additional rights or
benefits to the Holders of the Debentures or that does not adversely affect the
legal rights hereunder of any Holder of the Debenture;
(e) to comply with requirements of the Commission in order to
effect or maintain the qualification of this Indenture under the TIA; or
(f) to provide for the issuance of Additional Debentures in
accordance with the limitations set forth in this Indenture as of the date
hereof.
Upon the request of the Issuer accompanied by a resolution of its
Board of Directors authorizing the execution of any such amended or
supplemental Indenture, and upon receipt by the Trustee an Officer's
Certificate and an Opinion of Counsel (both reasonably acceptable to the
Trustee) as conclusive evidence that any such supplemental indenture complies
with the applicable provisions of this Indenture, the Trustee shall join with
the Issuer in the execution of any amended or supplemental Indenture authorized
or permitted by the terms of this Indenture and make any further appropriate
agreements and stipulations that may be therein contained, but the Trustee
shall not be obligated to enter into such amended or supplemental Indenture
that affects its own rights, duties or immunities under this Indenture or
otherwise.
SECTION 9.02. WITH CONSENT OF HOLDERS OF DEBENTURES.
Except as provided below in this Section 9.02, the Issuer and the
Trustee may amend or supplement this Indenture (including Section 3.09, 4.10
and 4.15 hereof), the Debentures may be amended or supplemented with the
consent of the Holders of at least a majority in principal amount at maturity
of the Debentures (including Additional Debentures, if any) then outstanding
voting as a single class (including consents obtained in connection with a
tender offer or exchange offer for, or purchase of, the Debentures), and,
subject to Sections 6.04 and 6.07 hereof, any existing Default or Event of
Default (other than a Default or Event of Default in the payment of the
principal, premium, if any, or interest or Liquidated Damages, if any, on the
Debentures, except a payment default resulting from an acceleration that has
been rescinded) or compliance with any provision of this Indenture or the
Debentures may be waived with the consent of the Holders of a majority in
principal amount at maturity of the then outstanding Debentures (including
Additional Debentures, if any) voting as a single class (including consents
obtained in connection with a tender offer or exchange offer for, or purchase
of, the Debentures). Notwithstanding the foregoing, any amendment to or waiver
of Sections 4.10 and 4.14 hereof will require the consent of the Holders of at
least two-thirds in aggregate principal amount at maturity of the Debentures
then outstanding if such amendment would materially adversely affect the rights
of Holders of Debentures. Section 2.08 hereof shall determine which Debentures
are considered to be "outstanding" for purposes of this Section 9.02.
Upon the request of the Issuer accompanied by a resolution of its
Board of Directors authorizing the execution of any such amended or
supplemental Indenture, and upon the filing with the Trustee of evidence
satisfactory to the Trustee of the consent of the Holders of Debentures as
aforesaid, and upon receipt by the Trustee of an Officer's Certificate and an
Opinion of Counsel (both reasonably acceptable to the Trustee) as conclusive
evidence that any such supplemental Indenture complies with the applicable
provisions of this Indenture, the Trustee shall join with the Issuer in the
execution of such amended or supplemental Indenture unless such amended or
supplemental Indenture directly affects the Trustee's own rights, duties or
immunities under this Indenture or otherwise, in which case the Trustee may in
its discretion, but shall not be obligated to, enter into such amended or
supplemental Indenture.
It shall not be necessary for the consent of the Holders of Debentures
under this Section 9.02 to approve the particular form of any proposed
amendment or waiver, but it shall be sufficient if such consent approves the
substance thereof.
After an amendment, supplement or waiver under this Section becomes
effective, the Issuer shall mail to the Holders of Debentures affected thereby
a notice briefly describing the amendment, supplement or waiver. Any failure
of the Issuer to mail such notice, or any defect therein, shall not, however,
in any way impair or affect the validity of any such amended or supplemental
Indenture or waiver. Subject to Sections 6.04 and 6.07 hereof, the
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Holders of a majority in aggregate principal amount at maturity of the
Debentures (including Additional Debentures, if any) then outstanding voting as
a single class may waive compliance in a particular instance by the Issuer with
any provision of this Indenture or the Debentures. However, without the
consent of each Holder affected, an amendment or waiver under this Section 9.02
may not (with respect to any Debentures held by a non-consenting Holder):
(a) reduce the principal amount at maturity of Debentures whose
Holders must consent to an amendment, supplement or waiver,
(b) reduce the principal of or change the fixed maturity of any
Debenture or alter the provisions with respect to the redemption of the
Debentures (other than Sections 4.10 and 4.14 hereof) or amend or modify the
calculation of the Accreted Value so as to reduce the amount of the Accreted
Value of the Debentures,
(c) reduce the rate of or change the time for payment of interest
on any Debentures,
(d) waive a Default or Event of Default in the payment of
principal of or premium, if any, or interest or Liquidated Damages, if any, on
the Debentures (except a rescission of acceleration of the Debentures by the
Holders of at least a majority in aggregate principal amount at maturity of the
Debentures and a waiver of the payment default that resulted from such
acceleration),
(e) make any Debentures payable in money other than that stated in
the Debentures,
(f) make any change in the provisions of this Indenture relating
to waivers of past Defaults,
(g) waive a redemption payment with respect to any Debentures
(other than Sections 4.10 and 4.14 hereof),
(h) make any change in the foregoing amendment and waiver
provisions,
(i) modify any provision of this Indenture with respect to the
priority of the Debentures in right of payment, or
(j) make any change to the right of Holders to waive an existing
Default or Event of Default or the right of Holders to receive payments of
principal, premium, if any, and interest and Liquidated Damages, if any, on the
Debentures.
SECTION 9.03. COMPLIANCE WITH TRUST INDENTURE ACT.
Every amendment or supplement to this Indenture or the Debentures
shall be set forth in a amended or supplemental Indenture that complies with
the TIA as then in effect.
SECTION 9.04. REVOCATION AND EFFECT OF CONSENTS.
Until an amendment, supplement or waiver becomes effective, a consent
to it by a Holder of a Debenture is a continuing consent by the Holder of a
Debenture and every subsequent Holder of a Debenture or portion of a Debenture
that evidences the same debt as the consenting Holder's Debenture, even if
notation of the consent is not made on any Debenture. However, any such Holder
of a Debenture or subsequent Holder of a Debenture may revoke the consent as to
its Debenture if the Trustee receives written notice of revocation before the
date the waiver, supplement or amendment becomes effective. An amendment,
supplement or waiver becomes effective in accordance with its terms and
thereafter binds every Holder.
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SECTION 9.05. NOTATION ON OR EXCHANGE OF DEBENTURES.
The Trustee may place an appropriate notation about an amendment,
supplement or waiver on any Debenture thereafter authenticated. The Issuer in
exchange for all Debentures may issue and the Trustee shall, upon receipt of an
Authentication Order, authenticate new Debentures that reflect the amendment,
supplement or waiver.
Failure to make the appropriate notation or issue a new Debenture
shall not affect the validity and effect of such amendment, supplement or
waiver.
SECTION 9.06. TRUSTEE TO SIGN AMENDMENTS, ETC.
The Trustee shall sign any amended or supplemental Indenture
authorized pursuant to this Article Nine if the amendment or supplement does
not adversely affect the rights, duties, liabilities or immunities of the
Trustee. The Issuer may not sign an amendment or supplemental Indenture until
the Board of Directors approves it. In executing any amended or supplemental
indenture, the Trustee shall be entitled to receive and (subject to Section
7.01 hereof) shall be fully protected in relying upon, in addition to the
documents required by Section 10.04 hereof, an Officer's Certificate and an
Opinion of Counsel stating that the execution of such amended or supplemental
indenture is authorized or permitted by this Indenture.
ARTICLE 10.
MISCELLANEOUS
SECTION 10.01. TRUST INDENTURE ACT CONTROLS.
If any provision of this Indenture limits, qualifies or conflicts with
the duties imposed by TIA Section 318(c), the imposed duties shall control.
SECTION 10.02. NOTICES.
Any notice or communication by the Issuer or the Trustee to the others
is duly given if in writing and delivered in Person or mailed by first class
mail (registered or certified, return receipt requested), telex, telecopier or
overnight air courier guaranteeing next day delivery, to the others' address
If to the Issuer:
101 South Hanley Road
St. Louis, Missouri 63105
Telecopier No.: (314) 721-5573
Attention: Chief Financial Officer
With a copy to:
Davis Polk & Wardwell
450 Lexington Avenue
New York, New York 10017
Telecopier No.: (212) 450-4800
Attention: Richard Truesdale, Esq.
and
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Weil, Gotshal & Manges LLP
100 Crescent Court, Suite 1300
Dallas, Texas 75201
Telecopier No.: (214) 746-7777
Attention: R. Scott Cohen, Esq.
If to the Trustee:
IBJ Schroder Bank & Trust Company
One State Street
New York, NY 10004
Telecopier No.: (212) 858-2952
Attention: Corporate Finance Trust Services
With a copy to:
Rogers & Wells LLP
200 Park Avenue
New York, New York 10166
Telecopier No.: (212) 878-8375
Attention: David W. Bernstein, Esq.
(a) The Issuer or the Trustee, by notice to the others may
designate additional or different addresses for subsequent notices or
communications.
All notices and communications (other than those sent to Holders)
shall be deemed to have been duly given: at the time delivered by hand, if
personally delivered; five Business Days after being deposited in the mail,
postage prepaid, if mailed; when answered back, if telexed; when receipt
acknowledged, if telecopied; and the next Business Day after timely delivery to
the courier, if sent by overnight air courier guaranteeing next day delivery.
Any notice or communication to a Holder shall be mailed by first class
mail, certified or registered, return receipt requested, or by overnight air
courier guaranteeing next day delivery to its address shown on the register
kept by the Registrar. Any notice or communication shall also be so mailed to
any Person described in TIA Section 313(c), to the extent required by the TIA.
Failure to mail a notice or communication to a Holder or any defect in it shall
not affect its sufficiency with respect to other Holders.
If a notice or communication is mailed in the manner provided above
within the time prescribed, it is duly given, whether or not the addressee
receives it.
If the Issuer mails a notice or communication to Holders, it shall
mail a copy to the Trustee and each Agent at the same time.
SECTION 10.03. COMMUNICATION BY HOLDERS OF DEBENTURES WITH OTHER HOLDERS OF
DEBENTURES.
Holders may communicate pursuant to TIA Section 312(b) with other
Holders with respect to their rights under this Indenture or the Debentures.
The Issuer, the Trustee, the Registrar and anyone else shall have the
protection of TIA Section 312(c).
SECTION 10.04. CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT.
Upon any request or application by the Issuer to the Trustee to take
or refrain from taking any action under this Indenture, the Issuer shall
furnish to the Trustee:
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(a) an Officers' Certificate in form and substance reasonably
satisfactory to the Trustee (which shall include the statements set forth in
Section 10.05 hereof) stating that, in the opinion of the signers, all
conditions precedent and covenants, if any, provided for in this Indenture
relating to the proposed action have been satisfied; and
(b) an Opinion of Counsel in form and substance reasonably
satisfactory to the Trustee (which shall include the statements set forth in
Section 10.05 hereof) stating that, in the opinion of such counsel, all such
conditions precedent and covenants have been satisfied.
SECTION 10.05. STATEMENTS REQUIRED IN CERTIFICATE OR OPINION.
Each certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture (other than a certificate
provided pursuant to TIA Section 314(a)(4)) shall comply with the provisions
of TIA Section 314(e) and shall include:
(a) a statement that the Person making such certificate or opinion
has read such covenant or condition;
(b) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions contained in
such certificate or opinion are based;
(c) a statement that, in the opinion of such Person, he or she has
made such examination or investigation as is necessary to enable him to express
an informed opinion as to whether or not such covenant or condition has been
satisfied;
(d) a statement as to whether or not, in the opinion of such
Person, such condition or covenant has been satisfied; and
(e) such additional evidence of compliance with a condition or
covenant as the Trustee may reasonably request.
SECTION 10.06. RULES BY TRUSTEE AND AGENTS.
The Trustee may make reasonable rules for action by or at a meeting of
Holders. The Registrar or Paying Agent may make reasonable rules and set
reasonable requirements for its functions.
SECTION 10.07. NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES AND
STOCKHOLDERS.
No director, officer, employee, incorporator or stockholder of the
Issuer, as such, shall have any liability for any obligations of the Issuer
under the Debentures or this Indenture or for any claim based on, in respect
of, or by reason of, such obligations or their creation. Each Holder of
Debentures by accepting a Debenture waives and releases all such liability. The
waiver and release are part of the consideration for issuance of the
Debentures.
SECTION 10.08. GOVERNING LAW.
THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL GOVERN AND BE USED TO
CONSTRUE THIS INDENTURE, THE DEBENTURES WITHOUT GIVING EFFECT TO APPLICABLE
PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS
OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.
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SECTION 10.09. NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS.
This Indenture may not be used to interpret any other indenture, loan
or debt agreement of the Issuer or its Subsidiaries or of any other Person.
Any such indenture, loan or debt agreement may not be used to interpret this
Indenture.
SECTION 10.10. SUCCESSORS.
All agreements of the Issuer in this Indenture and the Debentures
shall bind their successors. All agreements of the Trustee in this Indenture
shall bind their successors.
SECTION 10.11. SEVERABILITY.
In case any provision in this Indenture or in the Debentures shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
SECTION 10.12. COUNTERPART ORIGINALS.
The parties may sign any number of copies of this Indenture. Each
signed copy shall be an original, but all of them together represent the same
agreement.
SECTION 10.13. TABLE OF CONTENTS, HEADINGS, ETC.
The Table of Contents, Cross-Reference Table and Headings of the
Articles and Sections of this Indenture have been inserted for convenience of
reference only, are not to be considered a part of this Indenture and shall in
no way modify or restrict any of the terms or provisions hereof.
[Signatures on following page]
61
<PAGE> 69
SIGNATURES
Dated as of May 22, 1998
MERCURY ACQUISITION CORPORATION
BY: /s/ WILLIAM F. DAWSON
---------------------------------
Name:
Title:
IBJ SCHRODER BANK & TRUST COMPANY
BY: /s/ STEPHEN J. GIURLANDO
---------------------------------
Name: Stephen J. Giurlando
Title: Assistant Vice President
62
<PAGE> 1
EXHIBIT 4.2
FIRST SUPPLEMENTAL INDENTURE
dated as of May 22, 1998
between
THERMADYNE HOLDINGS CORPORATION
and
IBJ SCHRODER BANK & TRUST COMPANY,
as Trustee
with respect to
Series A and Series B 12-1/2% Senior Discount Debentures due 2008
<PAGE> 2
THIS FIRST SUPPLEMENTAL INDENTURE (this "Supplemental Indenture"),
entered into as of May 22, 1998, between Thermadyne Holdings Corporation, a
Delaware corporation ("Holdings") and IBJ Schroder Bank & Trust Company, as
trustee (the "Trustee").
RECITALS
WHEREAS, Mercury Acquisition Corp., a Delaware corporation ("Mercury"),
and the Trustee entered into the Indenture, dated as of May 22, 1998 (as amended
from time to time, the "Indenture"), relating to Mercury's Series A and Series B
12-1/2% Senior Discount Debentures due 2008 (the "Debentures");
WHEREAS, Mercury has merged with and into Holdings as contemplated by
the Indenture (the "Merger").
AGREEMENT
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained and intending to be legally bound, the parties hereto hereby
agree as follows:
Section 1. Capitalized terms used herein and not otherwise defined
herein are used as defined in the Indenture.
Section 2. Holdings hereby acknowledges and agrees with the Trustee
that, by virtue of the Merger and by operation of law it has succeeded to, and
is substituted for (so that from and after the Merger, the provisions of the
Indenture referring to the "Issuer" shall refer to Holdings), and may exercise
each and every right and power of Mercury under the Indenture with the same
effect as if Holdings had been named as the Issuer in the Indenture and has
assumed all of the liabilities and obligations of Mercury under the Indenture
and the Debentures in accordance with Article 5 of the Indenture.
Section 3. Pursuant to Section 9.05 of the Indenture, Holdings shall
issue and the Trustee shall authenticate new Debentures that reflect this
Supplemental Indenture.
Section 4. This Supplemental Indenture shall be governed by and
construed in accordance with the internal laws of the State of New York.
Section 5. This Supplemental Indenture may be signed in various
counterparts which together shall constitute one and the same instrument.
Section 6. This Supplemental Indenture is an amendment supplemental to
the Indenture and said Indenture and this Supplemental Indenture shall
henceforth be read together.
2
<PAGE> 3
IN WITNESS WHEREOF, the parties have duly executed and delivered this
Supplemental Indenture or have caused this Supplemental Indenture to be duly
executed on their respective behalf by their respective officers thereunto duly
authorized, as of the day and year first above written.
MERCURY ACQUISITION CORPORATION
By: /s/ WILLIAM F. DAWSON, JR.
--------------------------------
Name:
Title:
THERMADYNE HOLDINGS CORPORATION
By: /s/ JAMES H. TATE
--------------------------------
Name:
Title:
IBJ SCHRODER BANK & TRUST COMPANY,
as Trustee
By: /s/ STEPHEN J. GIURLANDO
--------------------------------
Name: Stephen J. Giurlando
Title: Vice President
3
<PAGE> 1
EXHIBIT 4.__
EXHIBIT A-1
(Face of Note)
================================================================================
FOR THE PURPOSES OF SECTIONS 1272, 1273 AND 1275 OF THE INTERNAL REVENUE CODE OF
1986, AS AMENDED, THIS SECURITY IS BEING ISSUED WITH ORIGINAL ISSUE DISCOUNT;
FOR EACH $1,000 PRINCIPAL AMOUNT OF THIS SECURITY, THE ISSUE PRICE IS $543.74,
THE AMOUNT OF ORIGINAL ISSUE DISCOUNT IS $456.26, THE ISSUE DATE IS MAY 22, 1998
AND THE YIELD TO MATURITY IS 12 1/2% PER ANNUM.
CUSIP_________
12 1/2% Senior Discount Debentures due 2008
No. ____ $__________
MERCURY ACQUISITION CORPORATION
promises to pay to ___________ or registered assigns, the principal sum of
_____________ Dollars on June 1, 2008.
Interest Payment Dates: June 1 and December 1.
Record Dates: May 15 and November 15.
================================================================================
A-1-1
<PAGE> 2
Dated: May 22, 1998
MERCURY ACQUISITION CORPORATION
By:
------------------------------
Name:
Title:
This is one of the
Debentures referred to in the
within-mentioned Indenture:
IBJ SCHRODER BANK & TRUST COMPANY,
as Trustee
By:
--------------------------------
A-1-2
<PAGE> 3
(Back of Note)
12 1/2% Senior Discount Debentures due 2008
[THIS GLOBAL DEBENTURE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE INDENTURE
GOVERNING THIS DEBENTURE) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE
BENEFICIAL OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY
CIRCUMSTANCES EXCEPT THAT (I) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON AS MAY
BE REQUIRED PURSUANT TO SECTION 2.07 OF THE INDENTURE, (II) THIS GLOBAL
DEBENTURE MAY BE EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT TO SECTION 2.06(a)
OF THE INDENTURE, (III) THIS GLOBAL DEBENTURE MAY BE DELIVERED TO THE TRUSTEE
FOR CANCELLATION PURSUANT TO SECTION 2.11 OF THE INDENTURE AND (IV) THIS GLOBAL
DEBENTURE MAY BE TRANSFERRED TO A SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN
CONSENT OF THERMADYNE MFG. LLC AND THERMADYNE CAPITAL CORPORATION.]1
- -----------------------
1 This should be included only if the Note is being issued in global form.
A-1-3
<PAGE> 4
Capitalized terms used herein shall have the meanings assigned to them
in the Indenture referred to below unless otherwise indicated.
1. INTEREST. Mercury Acquisition Corporation, a Delaware
corporation (the "Issuer"), promises to pay interest on the principal amount at
maturity of this Debenture at 12 1/2% per annum from June 1, 2003 until maturity
and shall pay the Liquidated Damages payable pursuant to Section 5 of the
Registration Rights Agreement referred to below. The Issuer will pay interest
and Liquidated Damages semi-annually on June 1 and December 1 of each year, or
if any such day is not a Business Day, on the next succeeding Business Day
(each, an "Interest Payment Date"). Interest on the Debentures will accrue from
the most recent date to which interest has been paid or, if no interest has been
paid, from June 1, 2003; provided that if there is no existing Default in the
payment of interest, and if this Debenture is authenticated between a record
date referred to on the face hereof and the next succeeding Interest Payment
Date, interest shall accrue from such next succeeding Interest Payment Date; and
provided further that the first Interest Payment Date shall be December 1, 2003.
The Issuer shall pay interest (including post-petition interest in any
proceeding under any Bankruptcy Law) on overdue principal and premium, if any,
from time to time on demand at a rate that is 1% per annum in excess of the rate
then in effect; it shall pay interest (including post-petition interest in any
proceeding under any Bankruptcy Law) on overdue installments of interest and
Liquidated Damages (without regard to any applicable grace periods) from time to
time on demand at the same rate to the extent lawful. Interest will be computed
on the basis of a 360-day year of twelve 30-day months.
2. METHOD OF PAYMENT. The Issuer will pay interest on the
Debentures (except defaulted interest) and Liquidated Damages to the Persons who
are registered Holders of Debentures at the close of business on the May 15 or
November 15 next preceding the Interest Payment Date, even if such Debentures
are cancelled after such record date and on or before such Interest Payment
Date, except as provided in Section 2.12 of the Indenture with respect to
defaulted interest. The Debentures will be payable as to principal, premium and
Liquidated Damages, if any, and interest at the office of the Paying Agent and
Registrar. Holders of Debentures must surrender their Debentures to the Paying
Agent to collect principal payments, and the Issuer may pay principal and
interest and Liquidated Damages, if any, by check and may mail checks to a
Holder's registered address; provided that all payments with respect to Global
Debentures and Definitive Debentures, the Holders of which have given wire
transfer instructions to the Issuer, will be required to be made by wire
transfer of immediately available funds to the accounts specified by the Holders
thereof. Such payment shall be in such coin or currency of the United States of
America as at the time of payment is legal tender for payment of public and
private debts.
3. PAYING AGENT AND REGISTRAR. Initially, IBJ Schroder Bank &
Trust Company, the Trustee under the Indenture, will act as Paying Agent and
Registrar. The Issuer may change any Paying Agent or Registrar without notice to
any Holder. The Issuer or any of its Subsidiaries may act in any such capacity.
4. INDENTURE The Issuer issued the Debentures under an Indenture,
dated as of May 22, 1998 ("Indenture"), between the Issuer and the Trustee. The
terms of the Debentures include those
A-1-4
<PAGE> 5
stated in the Indenture and those made part of the Indenture by reference to the
Trust Indenture Act of 1939, as amended (15 U.S. Code Sections 77aaa-77bbbb).
The Debentures are subject to all such terms, and Holders are referred to the
Indenture and such Act for a statement of such terms. To the extent any
provision of this Debenture conflicts with the express provisions of the
Indenture, the provisions of the Indenture shall govern and be controlling. The
Debentures are obligations of the Issuer initially limited to $174 million in
aggregate principal amount at maturity.
5. OPTIONAL REDEMPTION.
(a) Except as set forth in subparagraph (b) of this Paragraph 5, the
Debentures will not be redeemable at the Issuer's option prior to June 1, 2003.
Thereafter, the Debentures will be subject to redemption at any time at the
option of the Issuer, in whole or in part, upon not less than 30 nor more than
60 days' notice, in cash at the redemption prices (expressed as percentages of
principal amount at maturity) set forth below, plus accrued and unpaid interest
and Liquidated Damages, if any, thereon to the applicable redemption date, if
redeemed during the twelve-month period beginning on June 1 of the years
indicated below:
<TABLE>
<CAPTION>
YEAR PERCENTAGE
---- ----------
<S> <C>
2003. . . . . . . . . . . . . . 106.250%
2004. . . . . . . . . . . . . . 104.167%
2005. . . . . . . . . . . . . . 102.083%
2006 and thereafter. . . . . . . 100.000%
</TABLE>
(b) Notwithstanding the provisions of subparagraph (a) of this
Paragraph 5, on or prior to June 1, 2001, the Issuer may redeem up to 100% of
the aggregate principal amount at maturity of Debentures ever issued under the
Indenture in cash at a redemption price of 112.50% of the Accreted Value
thereof, plus Liquidated Damages, if any, thereon to the redemption date, with
the net cash proceeds of one or more Public Equity Offerings; provided that, in
the event that the Issuer redeems less than 100% of the then outstanding
Debentures, at least 60% of the aggregate principal amount at maturity of the
Debentures ever issued under the Indenture remains outstanding immediately after
the occurrence of any such redemption; and provided further that such redemption
shall occur within 90 days of the date of the closing of any such Public Equity
Offering.
(c) In addition, at any time prior to June 1, 2003, the Issuer may, at
its option upon the occurrence of a Change of Control, redeem the Debentures, in
whole but not in part, upon not less than 30 nor more than 60 days' prior notice
(but in no event may any such redemption occur more than 60 days after the
occurrence of such Change of Control), in cash at a redemption price equal to
(i) the present value of the sum of all the remaining premium and principal
payments that would become due on the Debentures as if the Debentures were to
remain outstanding and be redeemed on June 1, 2003, computed using a discount
rate equal to the Treasury Rate plus 50 basis points, plus (ii) Liquidated
Damages, if any, to the date of redemption.
A-1-5
<PAGE> 6
6. MANDATORY REDEMPTION.
Except as set forth in paragraph 7 below, the Issuer is not required to
make mandatory redemption of, or sinking fund payments with respect to, the
Debentures.
7. REPURCHASE AT OPTION OF HOLDER.
(a) Upon the occurrence of a Change of Control, each Holder of
Debentures shall have the right to require the Issuer to purchase all or any
part (equal to $1,000 or an integral multiple thereof) of such Holder's
Debentures pursuant to an offer at an offer price in cash equal to 101% of the
aggregate principal amount at maturity thereof, plus any accrued and unpaid
interest and Liquidated Damages, if any, thereon to the date of repurchase (or,
in the case of repurchases of Debentures prior to June 1, 2003, at a purchase
price equal to 101% of the Accreted Value thereof plus Liquidated Damages, if
any, thereon as of the date of redemption). Within 65 days following any Change
of Control, subject to the provisions of the Indenture, the Issuer shall mail a
notice to each Holder of Debentures at such Holder's registered address setting
forth the procedures governing the offer as required by the Indenture.
(b) When the aggregate amount of Excess Proceeds exceeds $15.0 million,
the Issuer will be required to make and offer to all Holders of Debentures (an
"Asset Sale Offer") to purchase the maximum principal amount at maturity of
Debentures that may be purchased out of Excess Proceeds, at an offer price in
cash in an amount equal to 100% of the principal amount at maturity thereof,
plus accrued and unpaid interest and Liquidated Damages, if any, thereon to the
date of purchase (or, in the case of repurchases of Debentures prior to June 1,
2003, at a purchase price equal to 100% of the Accreted Value thereof, plus
Liquidated Damages, if any, thereon as of the date of repurchase), in accordance
with the procedures set forth in the Indenture. Holders of Debentures that are
subject to an offer to purchase will receive an Asset Sale Offer from the Issuer
prior to any related purchase date and may elect to have such Debentures
purchased by completing the form entitled "Option of Holder to Elect Purchase"
on the reverse side of this Debenture.
8. NOTICE OF REDEMPTION. Notice of any redemption or offer to
purchase will be mailed at least 30 days but not more than 60 days before the
redemption or purchase date to each Holder of Debentures to be redeemed or
purchased at such Holder's registered address. Debentures in denominations
larger than $1,000 may be redeemed in part but only in whole multiples of
$1,000, unless all of the Debentures held by a Holder are to be redeemed. On and
after the redemption date interest and Liquidated Damages, if any, will cease to
accrue on Debentures or portions thereof called for redemption.
9. DENOMINATIONS, TRANSFER, EXCHANGE. The Debentures are in
registered form without coupons in denominations of $1,000 and integral
multiples of $1,000. The transfer of Debentures may be registered and Debentures
may be exchanged as provided in the Indenture. The Registrar and the Trustee may
require a Holder, among other things, to furnish appropriate endorsements and
transfer documents and the Issuer may require a Holder to pay any taxes and fees
required by law or permitted by the Indenture. The Issuer need not exchange or
register the transfer of any Debenture or portion of a Debenture selected for
redemption, except for the unredeemed portion of any Debenture being redeemed in
part. Also, the Issuer need not exchange or register the transfer of any
Debentures for a period of 15 days before a selection of Debentures to be
redeemed or during the period between a record date and the corresponding
Interest Payment Date.
A-1-6
<PAGE> 7
10. PERSONS DEEMED OWNERS. The registered Holder of a Debenture
may be treated as its owner for all purposes.
11. AMENDMENT, SUPPLEMENT AND WAIVER. Subject to certain
exceptions set forth in the Indenture, the Indenture and the Debentures may be
amended or supplemented with the consent of the Holders of at least a majority
in principal amount at maturity of the Debentures then outstanding (including,
without limitation, consents obtained in connection with a purchase of, or
tender offer or exchange offer for, Debentures), and any existing default or
compliance with any provision of the Indenture or the Debentures may be waived
with the consent of the Holders of a majority in principal amount at maturity of
the then outstanding Debentures (including, without limitation, consents
obtained in connection with a purchase of, or tender offer or exchange offer
for, Debentures). Notwithstanding the foregoing, without the consent of any
Holder of Debentures, the Issuer and the Trustee may amend or supplement the
Indenture or the Debentures to cure any ambiguity, defect or inconsistency, to
provide for uncertificated Debentures in addition to or in place of certificated
Debentures, to provide for the assumption of the Issuer's obligations to Holders
of Debentures in the case of a merger or consolidation or sale of all or
substantially all of the Issuer's assets, to make any change that would provide
any additional rights or benefits to the Holders of Debentures or that does not
materially adversely affect the legal rights under the Indenture of any such
Holder, or to comply with requirements of the Commission in order to effect or
maintain the qualification of the Indenture under the Trust Indenture Act or to
provide for guarantees of the Debentures.
12. DEFAULTS AND REMEDIES.
(a) Events of Default include: (a) default for 30 days in the payment
when due of interest on, or Liquidated Damages with respect to, the Debentures;
(b) default in payment when due of the principal of or premium, if any, on the
Debentures at maturity, upon redemption or otherwise; (c) failure by the Issuer
or any of its Restricted Subsidiaries for 30 days after receipt of notice from
the Trustee or Holders of at least 25% in principal amount at maturity of the
Debentures then outstanding to comply with the provisions of Sections 4.07,
4.09, 4.10, 4.15 and 5.01 of the Indenture; (d) failure by the Issuer for 60
days after notice from the Trustee or the Holders of at least 25% in principal
amount at maturity of the Debentures then outstanding to comply with any of its
other agreements in the Indenture or the Debentures; (e) default under any
mortgage, indenture or instrument under which there may be issued or by which
there may be secured or evidenced any Indebtedness for money borrowed by the
Issuer or any of its Restricted Subsidiaries (or the payment of which is
guaranteed by the Issuer or any of its Restricted Subsidiaries), whether such
Indebtedness or guarantee now exists, or is created after the date of the
Indenture, which default (i) is caused by a failure to pay Indebtedness at its
stated final maturity (after giving effect to any applicable grace period
provided in such Indebtedness) (a "Payment Default") or (ii) results in the
acceleration of such Indebtedness prior to its stated final maturity and, in
each case, the principal amount of any such Indebtedness, together with the
principal amount of any other such Indebtedness under which there has been a
Payment Default or the maturity of which has been so accelerated, aggregates
$10.0 million or more; (f) failure by the Issuer or any of its Restricted
Subsidiaries to pay final judgments aggregating in excess of $10.0 million (net
of any amounts with respect to which a reputable and creditworthy insurance
company has acknowledged liability in writing), which judgments are not paid,
discharged or stayed for a period of 60 days; and (g) certain events of
bankruptcy or insolvency with respect to the Issuer or any of its Restricted
Subsidiaries that is a Significant Subsidiary. If any Event of Default occurs
and is continuing, the Trustee or the Holders of at least 25% in principal
amount at maturity of the then outstanding Debentures may declare all the
Debentures to be due and payable immediately; provided that, so long as any
Indebtedness permitted to be incurred pursuant to the New Credit Facility shall
be outstanding, such acceleration shall not be effective until the earlier of
(a) an acceleration of any such Indebtedness under the New Credit Facility or
(b) five business days after receipt by the Issuer and the administrative agent
under the New Credit Facility
A-1-7
<PAGE> 8
of written notice of such acceleration. Notwithstanding the foregoing, in the
case of an Event of Default arising from certain events of bankruptcy or
insolvency with respect to the Issuer or any of its Restricted Subsidiaries that
is a Significant Subsidiary, all outstanding Debentures will become due and
payable without further action or notice.
(b) In the event of a declaration of acceleration of the Debentures
because an Event of Default has occurred and is continuing as a result of the
acceleration of any Indebtedness described in clause (e) of the preceding
paragraph, the declaration of acceleration of the Debentures shall be
automatically annulled if the holders of any Indebtedness described in clause
(e) have rescinded the declaration of acceleration in respect of such
Indebtedness within 30 days of the date of such declaration and if (i) the
annulment of the acceleration of the Debentures would not conflict with any
judgment or decree of a court of competent jurisdiction and (ii) all existing
Events of Default, except non-payment of principal or interest on the Debentures
that became due solely because of the acceleration of the Debentures, have been
cured or waived.
15. ADDITIONAL RIGHTS OF HOLDERS OF RESTRICTED GLOBAL DEBENTURES.
In addition to the rights provided to Holders of Debentures under the Indenture,
Holders of Restricted Global Debentures shall have the rights set forth in the
Registration Rights Agreement, dated as of May 22, 1998, among the Issuer and
the parties named on the signature pages thereof (the "Registration Rights
Agreement").
16. TRUSTEE DEALINGS WITH ISSUER. The Trustee, in its individual
or any other capacity, may make loans to, accept deposits from, and perform
services for the Issuer or its Affiliates, and may otherwise deal with the
Issuer or its Affiliates, as if it were not the Trustee.
17. NO RECOURSE AGAINST OTHERS. A director, officer, employee,
incorporator or stockholder, of the Issuer, as such, shall not have any
liability for any obligations of the Issuer under the Debentures or the
Indenture or for any claim based on, in respect of, or by reason of, such
obligations or their creation. Each Holder by accepting a Debenture waives and
releases all such liability. The waiver and release are part of the
consideration for the issuance of the Debentures.
18. AUTHENTICATION. This Debenture shall not be valid until
authenticated by the manual signature of the Trustee or an authenticating agent.
19. ABBREVIATIONS. Customary abbreviations may be used in the name
of a Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (=
tenants by the entireties), JT TEN (= joint tenants with right of survivorship
and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts
to Minors Act).
20. CUSIP NUMBERS. Pursuant to a recommendation promulgated by the
Committee on Uniform Security Identification Procedures, the Issuer has caused
CUSIP numbers to be printed on the Debentures and the Trustee may use CUSIP
numbers in notices of redemption as a convenience to Holders. No representation
is made as to the accuracy of such numbers either as printed on the Debentures
or as contained in any notice of redemption and reliance may be placed only on
the other identification numbers placed thereon.
A-1-8
<PAGE> 9
The Issuer will furnish to any Holder upon written request and without
charge a copy of the Indenture and/or the Registration Rights Agreement.
Requests may be made to:
Mercury Acquisition Corporation
c/o DLJ Merchant Banking Partners
277 Park Avenue
New York, NY 10172
Attention: Chief Financial Officer
A-1-9
<PAGE> 10
ASSIGNMENT FORM
To assign this Debenture, fill in the form below: (I) or (we) assign and
transfer this Debenture to
- --------------------------------------------------------------------------------
(Insert assignee's soc. sec. or tax I.D. no.)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Print or type assignee's name, address and zip code)
and irrevocably appoint_________________________________________________________
to transfer this Debenture on the books of the Issuer. The agent may substitute
another to act for him.
- --------------------------------------------------------------------------------
Date:
-------------
Your Signature:
--------------------------------------
(Sign exactly as your name appears on the
face of this Debenture)
Signature Guarantee:
Signature must be guaranteed by a participant in a
recognized signature guaranty medallion program or
other signature guarantor acceptable to the Trustee.
A-1-10
<PAGE> 11
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Debenture purchased by the Issuer
pursuant to Section 4.10 or 4.15 of the Indenture, check the box below:
[ ] Section 4.10 [ ] Section 4.15
If you want to elect to have only part of the Debenture purchased by
the Issuer pursuant to Section 4.10 or Section 4.15 of the Indenture, state the
amount you elect to have purchased: $________
Date:
-------------
Your Signature:
--------------------------------------
(Sign exactly as your name appears on the
Debenture)
Tax Identification No:
-------------------------------
Signature Guarantee:
Signature must be guaranteed by a participant in a
recognized signature guaranty medallion program or
other signature guarantor acceptable to the Trustee.
A-1-11
<PAGE> 12
[SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL DEBENTURE]2
[The following exchanges of a part of this Global Debenture for an
interest in another Global Debenture or for a Definitive Debenture, or exchanges
of a part of another Global Debenture or Definitive Debenture for an interest in
this Global Debenture, have been made:
<TABLE>
<CAPTION>
Principal Amount of Signature of
Amount of decrease Amount of increase this Global authorized
in Principal Amount in Principal Amount Debenture following officer of Trustee
of this Global of this Global such decrease or Debenture
Date of Exchange Debenture Debenture (or increase) Custodian]
- ---------------- ------------------- ------------------- ------------------- ------------------
<S> <C> <C> <C> <C>
</TABLE>
- ------------------
2 This should be included only if the Note is being issued in global form.
A-1-12
<PAGE> 1
EXHIBIT 4.4
================================================================================
A/B EXCHANGE
REGISTRATION RIGHTS AGREEMENT
MERCURY ACQUISITION CORPORATION
----------------------------------------
$174,000,000 Aggregate Principal Amount at Maturity
12-1/2% SENIOR DISCOUNT DEBENTURES DUE 2008
----------------------------------------
Dated as of May 22, 1998
-------------------
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
================================================================================
<PAGE> 2
This Registration Rights Agreement (this "Agreement") is made and
entered into as of May 22, 1998, by and among Mercury Acquisition Corporation, a
Delaware corporation (the "Issuer"), and Donaldson, Lufkin & Jenrette Securities
Corporation (the "Initial Purchaser"), which has agreed to purchase the Issuer's
12-1/2% Senior Discount Debentures due 2008 (the "Series A Debentures") pursuant
to the Purchase Agreement (as defined).
The Series A Debentures are being issued and sold in connection with
the merger (the "Merger") of the Issuer with and into Thermadyne Holdings
Corporation, a Delaware corporation ("Thermadyne Holdings"), pursuant to an
Agreement and Plan of Merger (the "Merger Agreement"), dated as of January 20,
1998. Upon consummation of the Merger, Thermadyne Holdings will assume all
obligations and liabilities of the Issuer, including the obligations and
liabilities of the Issuer under this Agreement, the Indenture (as defined), the
Series A Debentures and the Purchase Agreement (as defined). All references to
the Issuer in this Agreement refer to the surviving entity in the Merger.
This Agreement is made pursuant to the Purchase Agreement, dated May
15, 1998 (the "Purchase Agreement"), by and between the Issuer and the Initial
Purchaser. In order to induce the Initial Purchaser to purchase the Series A
Debentures, the Issuer has agreed to provide the registration rights set forth
in this Agreement. The execution and delivery of this Agreement is a condition
to the obligations of the Initial Purchaser set forth in Section 9 of the
Purchase Agreement. Capitalized terms used herein and not otherwise defined
shall have the meaning assigned to them in the Indenture, dated May 22, 1998
(the "Indenture"), between the Issuer and IBJ Schroder Bank & Trust Company, as
Trustee, relating to the Series A Debentures and the Series B Debentures (as
defined).
The parties hereby agree as follows:
SECTION 1. DEFINITIONS
As used in this Agreement, the following capitalized terms shall have
the following meanings:
Act: The Securities Act of 1933, as amended.
Affiliate: As defined in Rule 144.
Broker-Dealer: Any broker or dealer registered under the Exchange Act.
Certificated Securities: Definitive Debentures, as defined in the
Indenture.
Closing Date: The date hereof.
Commission: The Securities and Exchange Commission.
Consummate: An Exchange Offer shall be deemed "Consummated" for
purposes of this Agreement upon the occurrence of (a) the filing and
effectiveness under the Act of the Exchange Offer Registration Statement
relating to the Series B Debentures to be issued in the Exchange Offer, (b) the
keeping of the Exchange Offer open for a period not less than the period
required pursuant to Section 3(b) hereof and (c) the delivery by the Issuer to
the Registrar under the Indenture of Series B Debentures in the same aggregate
principal amount as the aggregate principal amount of Series A Debentures
validly tendered and not withdrawn by Holders thereof pursuant to the Exchange
Offer.
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Consummation Date: The date on which the Exchange Offer is
consummated.
Consummation Deadline: As defined in Section 3(b) hereof.
Effectiveness Deadline: As defined in Sections 3(a) and 4(a) hereof.
Exchange Act: The Securities Exchange Act of 1934, as amended.
Exchange Offer: The exchange and issuance by the Issuer of a principal
amount of Series B Debentures (which shall be registered pursuant to the
Exchange Offer Registration Statement) equal to the outstanding principal amount
of Series A Debentures that are validly tendered and not withdrawn in connection
with such exchange and issuance.
Exchange Offer Registration Statement: The Registration Statement
relating to the Exchange Offer, including the related Prospectus.
Exempt Resales: The transactions in which the Initial Purchaser
proposes to sell the Series A Debentures to certain "qualified institutional
buyers," as such term is defined in Rule 144A under the Act, and pursuant to
Regulation S.
Filing Deadline: As defined in Sections 3(a) and 4(a) hereof.
Holders: As defined in Section 2 hereof.
Prospectus: The prospectus included in a Registration Statement at the
time such Registration Statement is declared effective, as amended or
supplemented by any prospectus supplement and by all other amendments thereto,
including post-effective amendments, and all material incorporated by reference
into such Prospectus.
Recommencement Date: As defined in Section 6(d) hereof.
Registration Default: As defined in Section 5 hereof.
Registration Statement: Any registration statement of the Issuer
relating to (a) an offering of Series B Debentures pursuant to an Exchange Offer
or (b) the registration for resale of Transfer Restricted Securities pursuant to
the Shelf Registration Statement, in each case, (i) that is filed pursuant to
the provisions of this Agreement and (ii) including the Prospectus included
therein, all amendments and supplements thereto (including post-effective
amendments) and all exhibits and material incorporated by reference therein.
Regulation S: Regulation S promulgated under the Act.
Rule 144: Rule 144 promulgated under the Act.
Series B Debentures: The Issuer's 12-1/2% Senior Discount Debentures
due 2008 to be issued pursuant to the Indenture (i) in the Exchange Offer or
(ii) as contemplated by Section 6(b) hereof.
Shelf Registration Statement: As defined in Section 4 hereof.
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Suspension Notice: As defined in Section 6(d) hereof.
TIA: The Trust Indenture Act of 1939 (15 U.S.C. Section 77aaa-77bbbb),
as in effect on the date of the Indenture.
Transfer Restricted Securities: Each (a) Series A Debenture, until the
earliest to occur of (i) the date on which such Series A Debenture is exchanged
in the Exchange Offer for a Series B Debenture, (ii) the date on which such
Series A Debenture has been disposed of in accordance with a Shelf Registration
Statement (and the purchasers thereof have been issued Series B Debentures), and
(iii) the date on which such Series A Debenture is distributed to the public
pursuant to Rule 144 under the Act and (b) each Series B Debenture issued to a
Broker-Dealer in the Exchange Offer until the date on which such Series B
Debenture is disposed of by such Broker-Dealer pursuant to the "Plan of
Distribution" contemplated by the Exchange Offer Registration Statement
(including the delivery of the Prospectus contained therein).
SECTION 2. HOLDERS
A Person is deemed to be a holder of Transfer Restricted Securities
(each, a "Holder") whenever such Person is the holder of record of Transfer
Restricted Securities.
SECTION 3. REGISTERED EXCHANGE OFFER
(a) Unless the Exchange Offer shall not be permitted by applicable
federal law (after the procedures set forth in Section 6(a)(i) hereof have been
complied with), the Issuer shall use its reasonable best efforts to (i) cause
the Exchange Offer Registration Statement to be filed with the Commission as
soon as practicable after the Closing Date, but in no event later than 90 days
after the Closing Date (such 90th day, the "Filing Deadline"), (ii) cause such
Exchange Offer Registration Statement to become effective at the earliest
possible time, but in no event later than 180 days after the Closing Date (such
180th day, the "Effectiveness Deadline"), (iii) in connection with the
foregoing, (A) file all pre-effective amendments to such Exchange Offer
Registration Statement as may be necessary in order to cause it to become
effective, and (B) subject to the proviso in Section 6(c)(xii) hereof, cause all
necessary filings, if any, in connection with the registration and qualification
of the Series B Debentures to be made under the Blue Sky laws of such
jurisdictions as are necessary to permit Consummation of the Exchange Offer, and
(iv) upon the effectiveness of such Exchange Offer Registration Statement,
commence and, within the time periods contemplated by Section 3(b) hereof,
Consummate the Exchange Offer. The Exchange Offer shall be on the appropriate
form permitting (i) registration of the Series B Debentures to be offered in
exchange for the Series A Debentures that are Transfer Restricted Securities and
(ii) resales of Series B Debentures by Broker-Dealers that tendered into the
Exchange Offer Series A Debentures that such Broker-Dealer acquired for its own
account as a result of market-making activities or other trading activities
(other than Series A Debentures acquired directly from the Issuer or any of its
Affiliates) as contemplated by Section 3(c) hereof.
(b) The Issuer shall use its reasonable best efforts to cause the
Exchange Offer Registration Statement to be effective continuously, and shall
keep the Exchange Offer open for a period of not less than the minimum period
required under applicable federal and state securities laws to Consummate the
Exchange Offer; provided that in no event shall such period be less than 20
Business Days. The Issuer shall cause the Exchange Offer to comply with all
applicable federal and state securities laws. No securities other than the
Series B Debentures shall be included in the Exchange Offer Registration
Statement. The
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Issuer shall use its reasonable best efforts to cause the Exchange Offer to be
Consummated on the earliest practicable date after the Exchange Offer
Registration Statement has become effective, but in no event later than 30
Business Days thereafter (such 30th day, the "Consummation Deadline").
(c) The Issuer shall include a "Plan of Distribution" section in
the Prospectus contained in the Exchange Offer Registration Statement and
indicate therein that any Broker-Dealer who holds Transfer Restricted Securities
that were acquired for the account of such Broker-Dealer as a result of
market-making activities or other trading activities (other than Series A
Debentures acquired directly from the Issuer or any Affiliate of the Issuer),
may exchange such Transfer Restricted Securities pursuant to the Exchange Offer.
Such "Plan of Distribution" section shall also contain all other information
with respect to such sales by such Broker-Dealers that the Commission may
require in order to permit such sales pursuant thereto, but such "Plan of
Distribution" shall not name any such Broker-Dealer or disclose the amount of
Transfer Restricted Securities held by any such Broker-Dealer, except to the
extent required by the Commission.
Because such Broker-Dealer may be deemed to be an "underwriter" within
the meaning of the Act and must, therefore, deliver a prospectus meeting the
requirements of the Act in connection with its initial sale of any Series B
Debentures received by such Broker-Dealer in the Exchange Offer, the Issuer
shall permit the use of the Prospectus contained in the Exchange Offer
Registration Statement by such Broker-Dealer to satisfy such prospectus delivery
requirement for a period of 90 days following the Consummation Date. To the
extent necessary to ensure that the prospectus contained in the Exchange Offer
Registration Statement is available for sales of Series B Debentures by
Broker-Dealers, the Issuer agrees to use its reasonable best efforts to keep the
Exchange Offer Registration Statement continuously effective, supplemented,
amended and current as required by and subject to the provisions of Sections
6(a) and (c) hereof and in conformity with the requirements of this Agreement,
the Act and the policies, rules and regulations of the Commission as announced
from time to time, for a period of 90 days from the Consummation Date or such
shorter period as will terminate when no Transfer Restricted Securities are
outstanding. The Issuer shall provide sufficient copies of the latest version of
such Prospectus to such Broker-Dealers, promptly upon request, at any time
during such period.
SECTION 4. SHELF REGISTRATION
(a) Shelf Registration. If (i) the Exchange Offer is not permitted
by applicable law (after the Issuer has complied with the procedures set forth
in Section 6(a)(i) hereof) or (ii) if any Holder of Transfer Restricted
Securities shall notify the Issuer in writing within 20 Business Days following
the Consummation Deadline that (A) based on an opinion of counsel, such Holder
was prohibited by law or Commission policy from participating in the Exchange
Offer or (B) such Holder is a Broker-Dealer and holds Series A Debentures
acquired directly from the Issuer, then the Issuer shall:
(x) cause to be filed, on or prior to 90 days after the
earlier of (i) the date on which the Issuer determines that the
Exchange Offer Registration Statement cannot be filed as a result of
Section 4(a)(i) hereof and (ii) the date on which the Issuer receives
the notice specified in Section 4(a)(ii) hereof (such earlier date, the
"Filing Deadline"), a shelf registration statement (the "Shelf
Registration Statement") pursuant to Rule 415 under the Act (which may
be an amendment to the Exchange Offer Registration Statement) relating
to (1) all Transfer Restricted Securities in the case of clause (a)(i)
above or (2) the Transfer Restricted Securities specified in any notice
in the case of clause (a)(ii) above; and
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(y) shall use its reasonable best efforts to cause such Shelf
Registration Statement to become effective on or prior to 180 days
after the Filing Deadline for the Shelf Registration Statement (such
180th day, the "Effectiveness Deadline").
If, after the Issuer has filed an Exchange Offer Registration Statement
that satisfies the requirements of Section 3(a) hereof, the Issuer is required
to file and make effective a Shelf Registration Statement solely because the
Exchange Offer is not permitted under applicable federal law (i.e., Section
4(a)(i) hereof), then the filing of the Exchange Offer Registration Statement
shall be deemed to satisfy the requirements of clause (x) above; provided that,
in such event, the Issuer shall remain obligated to meet the Effectiveness
Deadline set forth in clause (y).
To the extent necessary to ensure that the Shelf Registration Statement
is available for sales of Transfer Restricted Securities by the Holders thereof
entitled to the benefit of this Section 4(a) and the other securities required
to be registered therein pursuant to Section 6(b)(ii) hereof, the Issuer shall
use its reasonable best efforts to keep any Shelf Registration Statement
required by this Section 4(a) continuously effective, supplemented, amended and
current as required by and subject to the provisions of Sections 6(b) and (c)
hereof and in conformity with the requirements of this Agreement, the Act and
the policies, rules and regulations of the Commission as announced from time to
time, until the later of (a) the date on which the Initial Purchaser is no
longer deemed to be an Affiliate of the Issuer, and (b) the earlier of the
second anniversary of the Closing Date (as such date may be extended pursuant to
Section 6(d) hereof) and such earlier date when no Transfer Restricted
Securities covered by such Shelf Registration Statement remain outstanding.
(b) Provision by Holders of Certain Information in Connection with
the Shelf Registration Statement. No Holder of Transfer Restricted Securities
may include any of its Transfer Restricted Securities in any Shelf Registration
Statement pursuant to this Agreement unless and until such Holder furnishes to
the Issuer in writing, within 20 days after receipt of a request therefor, the
information specified in Item 507 or 508 of Regulation S-K, as applicable, of
the Act for use in connection with any Shelf Registration Statement or
Prospectus or preliminary Prospectus included therein. No Holder of Transfer
Restricted Securities shall be entitled to liquidated damages pursuant to
Section 5 hereof unless and until such Holder shall have provided all such
information. Each selling Holder agrees to promptly furnish additional
information required to be disclosed in order to make the information previously
furnished to the Issuer by such Holder not materially misleading.
(c) Holders of Transfer Restricted Securities that do not give the
written notice within the 20 Business Day period set forth in Section 4(a)
hereof, if required to be given, will no longer have any registration rights
pursuant to this Section 4 and will not be entitled to any Liquidated Damages
pursuant to Section 5 hereof in respect of the Issuer's obligations with respect
to the Shelf Registration Statement.
SECTION 5. LIQUIDATED DAMAGES
If (i) any Registration Statement required by this Agreement is not
filed with the Commission on or prior to the applicable Filing Deadline, (ii)
any such Registration Statement has not been declared effective by the
Commission on or prior to the applicable Effectiveness Deadline, (iii) the
Exchange Offer has not been Consummated on or prior to the Consummation Deadline
or (iv) any Registration Statement required by this Agreement is filed and
declared effective but shall thereafter cease to be effective or fail to be
usable for its intended purpose without being succeeded within ten Business Days
by a post-effective amendment to such Registration Statement that cures such
failure and that is itself declared effective ten Business Days
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<PAGE> 7
of filing such post-effective amendment to such Registration Statement (each
such event referred to in clauses (i) through (iv), a "Registration Default"),
then the Issuer hereby agrees to pay to each Holder of Transfer Restricted
Securities affected thereby liquidated damages in an amount equal to $.05 per
week per $1,000 in principal amount of Transfer Restricted Securities held by
such Holder for each week or portion thereof that the Registration Default
continues for the first 90-day period immediately following the occurrence of
such Registration Default. The amount of the liquidated damages shall increase
by an additional $.05 per week per $1,000 in principal amount of Transfer
Restricted Securities with respect to each subsequent 90-day period until all
Registration Defaults have been cured, up to a maximum amount of liquidated
damages of $.25 per week per $1,000 in principal amount of Transfer Restricted
Securities; provided that the Issuer shall in no event be required to pay
liquidated damages for more than one Registration Default at any given time.
Notwithstanding anything to the contrary set forth herein, (1) upon filing of
the Exchange Offer Registration Statement (and/or, if applicable, the Shelf
Registration Statement), in the case of (i) above, (2) upon the effectiveness of
the Exchange Offer Registration Statement (and/or, if applicable, the Shelf
Registration Statement), in the case of (ii) above, (3) upon Consummation of the
Exchange Offer, in the case of (iii) above, (4) upon the filing of a
post-effective amendment to the Registration Statement or an additional
Registration Statement that causes the Exchange Offer Registration Statement
(and/or, if applicable, the Shelf Registration Statement) to again be declared
effective or made usable in the case of (iv) above, or (5) if sooner, upon the
first date on which no Transfer Restricted Securities remain outstanding, in the
case of clauses (i) through (iv) above, the liquidated damages payable with
respect to the Transfer Restricted Securities as a result of such clause (i),
(ii), (iii) or (iv), as applicable, shall cease.
All accrued liquidated damages shall be paid to the Holders entitled
thereto, in the manner provided for the payment of interest in the Indenture, on
each Interest Payment Date, as more fully set forth in the Indenture and the
Debentures. Notwithstanding the fact that any securities for which liquidated
damages are due cease to be Transfer Restricted Securities, all obligations of
the Issuer to pay liquidated damages with respect to securities that accrued
prior to the time such securities ceased to be Transfer Restricted Securities
shall survive until such time as such obligations with respect to such
securities shall have been satisfied in full.
SECTION 6. REGISTRATION PROCEDURES
(a) Exchange Offer Registration Statement. In connection with the
Exchange Offer, the Issuer shall (x) comply with all applicable provisions of
Section 6(c) hereof, (y) use its reasonable best efforts to effect such exchange
and to permit the resale of Series B Debentures by Broker-Dealers that tendered
in the Exchange Offer Series A Debentures that such Broker-Dealer acquired for
its own account as a result of its market-making activities or other trading
activities (other than Series A Debentures acquired directly from the Issuer or
any of its Affiliates) being sold in accordance with the intended method or
methods of distribution thereof, and (z) comply with all of the following
provisions:
(i) If, following the date hereof there has been
announced a change in Commission policy with respect to exchange
offers, such as the Exchange Offer, that, in the opinion of counsel to
the Issuer, raises a substantial question as to whether the Exchange
Offer is permitted by applicable federal law, the Issuer hereby agrees
to seek a no-action letter or other favorable decision from the
Commission allowing the Issuer to Consummate an Exchange Offer for such
Transfer Restricted Securities. The Issuer hereby agrees to use its
reasonable best efforts in pursuing the issuance of such a decision to
the Commission staff level.
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(ii) As a condition to its participation in the Exchange
Offer, each Holder of Transfer Restricted Securities (including,
without limitation, any Holder who is a Broker-Dealer) shall furnish,
upon the request of the Issuer, prior to the Consummation of the
Exchange Offer, a written representation to the Issuer (which may be
contained in the letter of transmittal contemplated by the Exchange
Offer Registration Statement) to the effect that, at the time of
Consummation of the Exchange Offer, (A) any Series B Debentures
received by such Holder will be acquired in the ordinary course of its
business, (B) such Holder will have no arrangement or understanding
with any person to participate in the distribution of the Series A
Debentures or the Series B Debentures within the meaning of the Act,
(C) if the Holder is not a Broker-Dealer or is a Broker-Dealer but will
not receive Series B Debentures for its own account in exchange for
Series A Debentures, neither the Holder nor any such other Person is
engaged in or intends to participate in a distribution of the Series B
Debentures, and (D) that such Holder is not an Affiliate of the Issuer.
If the Holder is a Broker-Dealer that will receive Series B Debentures
for its own account in exchange for Series A Debentures, it will
represent that the Debentures to be exchanged for the Series B
Debentures were acquired by it as a result of market-making activities
or other trading activities, and will acknowledge that it will deliver
a prospectus meeting the requirements of the Act in connection with any
resale of such Series B Debentures. It is understood that, by
acknowledging that it will deliver, and by delivering, a prospectus
meeting the requirements of the Act in connection with any resale of
such Series B Debentures, the Holder is not admitting that it is an
"underwriter" within the meaning of the Act.
(iii) Prior to effectiveness of the Exchange Offer
Registration Statement, the Issuer shall provide a supplemental letter
to the Commission (A) stating that the Issuer is registering the
Exchange Offer in reliance on the position of the Commission enunciated
in Exxon Capital Holdings Corporation (available May 13, 1988) and
Morgan Stanley and Co., Inc. (available June 5, 1991), as interpreted
in the Commission's letter to Shearman & Sterling dated July 2, 1993,
and, if applicable, any no-action letter obtained pursuant to clause
(i) above, (B) including a representation that the Issuer has not
entered into any arrangement or understanding with any Person to
distribute the Series B Debentures to be received in the Exchange Offer
and that, to the best of the Issuer's information and belief, each
Holder participating in the Exchange Offer is acquiring the Series B
Debentures in its ordinary course of business and has no arrangement or
understanding with any Person to participate in the distribution of the
Series B Debentures received in the Exchange Offer and (C) any other
undertaking or representation required by the Commission as set forth
in any no-action letter obtained pursuant to clause (i) above, if
applicable.
(b) Shelf Registration Statement. In connection with the Shelf
Registration Statement, the Issuer shall:
(i) comply with all the provisions of Section 6(c) hereof
and use its reasonable best efforts to effect such registration to
permit the sale of the Transfer Restricted Securities being sold in
accordance with the intended method or methods of distribution thereof
(as indicated in the information furnished to the Issuer pursuant to
Section 4(b) hereof), and pursuant thereto the Issuer will prepare and
file with the Commission a Registration Statement relating to the
registration on any appropriate form under the Act, which form shall be
available for the sale of the Transfer Restricted Securities in
accordance with the intended method or methods of distribution thereof
within the time periods and otherwise in accordance with the provisions
hereof, and
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(ii) issue, upon the request of any Holder or purchaser of
Series A Debentures covered by any Shelf Registration Statement
contemplated by this Agreement, Series B Debentures having an aggregate
principal amount equal to the aggregate principal amount of Series A
Debentures sold pursuant to the Shelf Registration Statement and
surrendered to the Issuer for cancellation; the Issuer shall register
Series B Debentures on the Shelf Registration Statement for this
purpose and issue the Series B Debentures to the purchaser(s) of
securities subject to the Shelf Registration Statement in the names as
such purchaser(s) shall designate.
(c) General Provisions. In connection with any Registration
Statement and any related Prospectus required by this Agreement, the Issuer
shall, during the periods specified in Sections 3 and 4 hereof, as applicable:
(i) use its reasonable best efforts to keep such
Registration Statement continuously effective and provide all requisite
financial statements for the period specified in Section 3 or 4 of this
Agreement, as applicable. Upon the occurrence of any event that would
cause any such Registration Statement or the Prospectus contained
therein (A) to contain an untrue statement of material fact or omit to
state any material fact necessary to make the statements therein, in
the light of the circumstances under which they were made, not
misleading or (B) not to be effective and usable for resale of Transfer
Restricted Securities during the period required by this Agreement, the
Issuer shall file promptly an appropriate amendment to such
Registration Statement or a supplement to the Prospectus, as
applicable, curing such defect, and, in the case of an amendment, use
its reasonable best efforts to cause such amendment to be declared
effective as soon as practicable.
(ii) prepare and file with the Commission such amendments
and post-effective amendments to the applicable Registration Statement
as may be necessary to keep such Registration Statement effective for
the applicable period set forth in Section 3 or 4 hereof, as the case
may be; cause the Prospectus to be supplemented by any required
Prospectus supplement, and as so supplemented to be filed pursuant to
Rule 424 under the Act, and to comply fully with Rules 424, 430A and
462, as applicable, under the Act in a timely manner; and comply with
the provisions of the Act with respect to the disposition of all
securities covered by such Registration Statement during the applicable
period in accordance with the intended method or methods of
distribution by the sellers thereof set forth in such Registration
Statement or supplement to the Prospectus;
(iii) advise each Holder whose Transfer Restricted
Securities have been included in a Shelf Registration Statement (in the
case of the Shelf Registration Statement) and the Initial Purchaser
promptly and, if requested by such Person, confirm such advice in
writing, (A) when the Prospectus or any Prospectus supplement or
post-effective amendment has been filed, and, with respect to any
applicable Registration Statement or any post-effective amendment
thereto, when the same has become effective, (B) of any request by the
Commission for amendments to the Registration Statement or amendments
or supplements to the Prospectus or for additional information relating
thereto, (C) of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement under the
Act or of the suspension by any state securities commission of the
qualification of the Transfer Restricted Securities for offering or
sale in any jurisdiction, or the initiation of any proceeding for any
of the preceding purposes, and (D) of the existence of any fact or the
happening of any event that makes any statement of a material fact made
in the Registration Statement, the Prospectus, any amendment or
supplement thereto or any
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document incorporated by reference therein untrue, or that requires
the making of any additions to or changes in the Registration
Statement in order to make the statements therein not misleading, or
that requires the making of any additions to or changes in the
Prospectus in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading. If at
any time the Commission shall issue any stop order suspending the
effectiveness of the Registration Statement, or any state securities
commission or other regulatory authority shall issue an order
suspending the qualification or exemption from qualification of the
Transfer Restricted Securities under state securities or Blue Sky
laws, the Issuer shall use its reasonable best efforts to obtain the
withdrawal or lifting of such order at the earliest possible time;
(iv) subject to Section 6(c)(i), if any fact or event
contemplated by Section 6(c)(iii)(D) hereof shall exist or have
occurred, prepare a supplement or post-effective amendment to the
Registration Statement or related Prospectus or any document
incorporated therein by reference or file any other required document
so that, as thereafter delivered to the purchasers of Transfer
Restricted Securities, the Prospectus will not contain an untrue
statement of a material fact or omit to state any material fact
necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading;
(v) furnish to each Holder whose Transfer Restricted
Securities have been included in a Shelf Registration Statement (in the
case of the Shelf Registration Statement) and the Initial Purchaser,
before filing with the Commission, copies of any Registration Statement
or any Prospectus included therein or any amendments or supplements to
any such Registration Statement or Prospectus (including all documents
incorporated by reference after the initial filing of such Registration
Statement), which documents will be subject to the review and comment
of such Persons, if any, for a period of at least five Business Days,
and the Issuer will not file any such Registration Statement or
Prospectus or any amendment or supplement to any such Registration
Statement or Prospectus (including all such documents incorporated by
reference) to which such Persons shall reasonably object within five
Business Days after the receipt thereof. Such Persons shall be deemed
to have reasonably objected to such filing if such Registration
Statement, amendment, Prospectus or supplement, as applicable, as
proposed to be filed, contains an untrue statement of a material fact
or omit to state any material fact necessary to make the statements
therein, in the light of the circumstances under which they were made,
not misleading or fails to comply with the applicable requirements of
the Act;
(vi) promptly prior to the filing of any document that is
to be incorporated by reference into a Registration Statement or
Prospectus, provide copies of such document to each Holder whose
Transfer Restricted Securities have been included in a Shelf
Registration Statement (in the case of the Shelf Registration
Statement) and the Initial Purchaser, make the Issuer's representatives
available for discussion of such document and other customary due
diligence matters, and include such information in such document prior
to the filing thereof as such Persons may reasonably request;
(vii) make available, at reasonable times, for inspection
by each Holder whose Transfer Restricted Securities have been included
in a Shelf Registration Statement (in the case of the Shelf
Registration Statement) and the Initial Purchaser and any attorney or
accountant retained by such Persons, all financial and other records,
pertinent corporate documents of the Issuer and cause the Issuer's
officers, directors and employees to supply all information reasonably
requested by any
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such Persons, attorney or accountant in connection with such
Registration Statement or any post-effective amendment thereto
subsequent to the filing thereof and prior to its effectiveness;
(viii) if requested by any Holders whose Transfer Restricted
Securities have been included in a Shelf Registration Statement (in the
case of the Shelf Registration Statement) or the Initial Purchaser,
promptly include in any Registration Statement or Prospectus, pursuant
to a supplement or post-effective amendment if necessary, such
information as such Persons may reasonably request to have included
therein, including, without limitation, information relating to the
"Plan of Distribution" of the Transfer Restricted Securities and the
use of the Registration Statement or Prospectus for market-making
activities; and make all required filings of such Prospectus supplement
or post-effective amendment as soon as practicable after the Issuer is
notified of the matters to be included in such Prospectus supplement or
post-effective amendment;
(ix) furnish to each Holder whose Transfer Restricted
Securities have been included in a Shelf Registration Statement (in the
case of the Shelf Registration Statement) and the Initial Purchaser,
without charge, at least one copy of the Registration Statement, as
first filed with the Commission, and of each amendment thereto,
including all documents incorporated by reference therein and all
exhibits (including exhibits incorporated therein by reference);
(x) deliver to each Holder whose Transfer Restricted
Securities have been included in a Shelf Registration Statement and the
Initial Purchaser without charge, as many copies of the Prospectus
(including each preliminary prospectus) and any amendment or supplement
thereto as such Persons reasonably may request; the Issuer hereby
consents to the use (in accordance with law and subject to Section 6(d)
hereof) of the Prospectus and any amendment or supplement thereto by
each selling Person in connection with the offering and the sale of the
Transfer Restricted Securities covered by the Prospectus or any
amendment or supplement thereto and all market-making activities of the
Initial Purchaser, as the case may be;
(xi) upon the request of any Holder whose Transfer
Restricted Securities have been included in a Shelf Registration
Statement (in the case of the Shelf Registration Statement) or the
Initial Purchaser, enter into such agreements (including underwriting
agreements) and make such representations and warranties and take all
such other actions in connection therewith in order to expedite or
facilitate the disposition of the Transfer Restricted Securities
pursuant to any applicable Registration Statement contemplated by this
Agreement as may be reasonably requested by such Person in connection
with any sale or resale pursuant to any applicable Registration
Statement. In such connection, the Issuer shall:
(A) upon request of any such Person, furnish (or in the
case of paragraphs (2) and (3), use its reasonable best efforts to
cause to be furnished) to each Holder whose Transfer Restricted
Securities have been included in a Shelf Registration Statement (in the
case of the Shelf Registration Statement) and the Initial Purchaser,
upon Consummation of the Exchange Offer or upon the effectiveness of
the Shelf Registration Statement, as the case may be:
(1) a certificate, dated such date, signed on
behalf of the Issuer by (x) the President or any Vice
President and (y) a principal financial or accounting officer
of the Issuer, confirming, as of the date thereof, the matters
set forth in Sections 6(y), 9(a) and 9(b) of the Purchase
Agreement and such other similar matters as such Person may
reasonably request;
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<PAGE> 12
(2) an opinion, dated the date of Consummation
of the Exchange Offer or the date of effectiveness of the
Shelf Registration Statement, as the case may be, of counsel
for the Issuer covering matters similar to those set forth in
Sections 9(e) and (f) of the Purchase Agreement and such other
matters as such Person may reasonably request, and in any
event including a statement to the effect that such counsel
has participated in conferences with officers and other
representatives of the Issuer, representatives of the
independent public accountants for the Issuer and have
considered the matters required to be stated therein and the
statements contained therein, although such counsel has not
independently verified the accuracy, completeness or fairness
of such statements; and that such counsel advises that, on the
basis of the foregoing (relying as to materiality to the
extent such counsel deems appropriate upon the statements of
officers and other representatives of the Issuer) and without
independent check or verification), no facts came to such
counsel's attention that caused such counsel to believe that
the applicable Registration Statement, at the time such
Registration Statement or any post-effective amendment thereto
became effective and, in the case of the Exchange Offer
Registration Statement, as of the date of Consummation of the
Exchange Offer, contained an untrue statement of a material
fact or omitted to state a material fact required to be stated
therein or necessary to make the statements therein not
misleading, or that the Prospectus contained in such
Registration Statement as of its date and, in the case of the
opinion dated the date of Consummation of the Exchange Offer,
as of the date of Consummation, contained an untrue statement
of a material fact or omitted to state a material fact
necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not
misleading. Without limiting the foregoing, such counsel may
state further that such counsel assumes no responsibility for,
and has not independently verified, the accuracy, completeness
or fairness of the financial statements, Debentures and
schedules and other financial data included in any
Registration Statement contemplated by this Agreement or the
related Prospectus; and
(3) a customary comfort letter, dated the date
of Consummation of the Exchange Offer, or as of the date of
effectiveness of the Shelf Registration Statement, as the case
may be, from the Issuer's independent accountants, in the
customary form and covering matters of the type customarily
covered in comfort letters to underwriters in connection with
underwritten offerings, and affirming the matters set forth in
the comfort letters delivered pursuant to Section 9(h) of the
Purchase Agreement; and
(B) deliver such other documents and certificates as may
be reasonably requested by such Persons to evidence compliance with the
matters covered in clause (A) above and with any customary conditions
contained in any agreement entered into by the Issuer pursuant to this
clause (xi);
(xii) prior to any public offering of Transfer Restricted
Securities, cooperate with the selling Holders and their counsel in
connection with the registration and qualification of the Transfer
Restricted Securities under the securities or Blue Sky laws of such
jurisdictions as the selling Holders may request and do any and all
other acts or things necessary or advisable to enable
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<PAGE> 13
the disposition in such jurisdictions of the Transfer Restricted
Securities covered by the applicable Registration Statement; provided
that the Issuer shall not be required to register or qualify as a
foreign corporation where it is not now so qualified or to take any
action that would subject it to the service of process in suits or to
taxation, other than as to matters and transactions relating to the
Registration Statement, in any jurisdiction where it is not now so
subject;
(xiii) in connection with any sale of Transfer Restricted
Securities that will result in such securities no longer being Transfer
Restricted Securities, cooperate with the Holders to facilitate the
timely preparation and delivery of certificates representing Transfer
Restricted Securities to be sold and not bearing any restrictive
legends; and to register such Transfer Restricted Securities in such
denominations and such names as the selling Holders may request at
least two Business Days prior to such sale of Transfer Restricted
Securities;
(xiv) use its reasonable best efforts to cause the
disposition of the Transfer Restricted Securities covered by the
Registration Statement to be registered with or approved by such other
governmental agencies or authorities as may be necessary to enable the
seller or sellers thereof to consummate the disposition of such
Transfer Restricted Securities, subject to the proviso contained in
clause (xii) above;
(xv) provide a CUSIP number for all Transfer Restricted
Securities not later than the effective date of a Registration
Statement covering such Transfer Restricted Securities and provide the
Trustee under the Indenture with printed certificates for the Transfer
Restricted Securities which are in a form eligible for deposit with The
Depository Trust Company;
(xvi) otherwise use its reasonable best efforts to comply
with all applicable rules and regulations of the Commission, and make
generally available to its security holders with regard to any
applicable Registration Statement, as soon as practicable, a
consolidated earnings statement meeting the requirements of Rule 158
(which need not be audited) covering a twelve-month period beginning
after the effective date of the Registration Statement (as such term is
defined in Rule 158(c) under the Act);
(xvii) cause the Indenture to be qualified under the TIA not
later than the effective date of the first Registration Statement
required by this Agreement and, in connection therewith, cooperate with
the Trustee and the Holders to effect such changes to the Indenture as
may be required for such Indenture to be so qualified in accordance
with the terms of the TIA; and execute and use its reasonable best
efforts to cause the Trustee to execute, all documents that may be
required to effect such changes and all other forms and documents
required to be filed with the Commission to enable such Indenture to be
so qualified in a timely manner; and
(xviii) provide promptly to each Holder and the Initial
Purchaser, upon request, each document filed with the Commission
pursuant to the requirements of Section 13 or Section 15(d) of the
Exchange Act.
(d) Restrictions on Holders. Each Holder agrees by acquisition of a
Transfer Restricted Security and the Initial Purchaser agrees that, upon receipt
of the notice referred to in Section 6(c)(iii)(C) or any notice from the Issuer
of the existence of any fact of the kind described in Section 6(c)(iii)(D)
hereof (in each case, a "Suspension Notice"), such Person will forthwith
discontinue disposition of Transfer Restricted Securities pursuant to the
applicable Registration Statement until (i) such Person has received copies of
the
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<PAGE> 14
supplemented or amended Prospectus contemplated by Section 6(c)(iv) hereof,
or (ii) such Person is advised in writing by the Issuer that the use of the
Prospectus may be resumed, and has received copies of any additional or
supplemental filings that are incorporated by reference in the Prospectus (in
each case, the "Recommencement Date"). Each Person receiving a Suspension Notice
hereby agrees that it will either (i) destroy any Prospectuses, other than
permanent file copies, then in such Person's possession which have been replaced
by the Issuer with more recently dated Prospectuses or (ii) deliver to the
Issuer (at the Issuer's expense) all copies, other than permanent file copies,
then in such Person's possession of the Prospectus covering such Transfer
Restricted Securities that was current at the time of receipt of the Suspension
Notice. The time period regarding the effectiveness of such Registration
Statement set forth in Section 3 or 4 hereof, as applicable, shall be extended
by a number of days equal to the number of days in the period from and including
the date of delivery of the Suspension Notice to the date of delivery of the
Recommencement Date.
SECTION 7. REGISTRATION EXPENSES
(a) All expenses incident to the Issuer's performance of or
compliance with this Agreement will be borne by the Issuer, regardless of
whether a Registration Statement becomes effective, including, without
limitation: (i) all registration and filing fees and expenses; (ii) all fees and
expenses of compliance with federal securities and state Blue Sky or securities
laws; (iii) all expenses of printing (including printing certificates for the
Series B Debentures to be issued in the Exchange Offer and printing of
Prospectuses (whether for exchanges, sales, market-making or otherwise),
messenger and delivery services and telephone; (iv) all fees and disbursements
of counsel for the Issuer; (v) all application and filing fees in connection
with listing the Series B Debentures on a national securities exchange or
automated quotation system pursuant to the requirements hereof; and (vi) all
fees and disbursements of independent certified public accountants of the Issuer
(including the expenses of any special audit and comfort letters required by or
incident to such performance).
The Issuer will, in any event, bear its internal expenses (including,
without limitation, all salaries and expenses of its officers and employees
performing legal or accounting duties), the expenses of any annual audit and the
fees and expenses of any Person, including special experts, retained by the
Issuer.
(b) In connection with any Registration Statement required by this
Agreement (including, without limitation, the Exchange Offer Registration
Statement and the Shelf Registration Statement), the Issuer will reimburse the
Initial Purchaser and the Holders of Transfer Restricted Securities who are
tendering Series A Debentures in the Exchange Offer and/or selling or reselling
Series A Debentures or Series B Debentures pursuant to the "Plan of
Distribution" contained in the Exchange Offer Registration Statement or the
Shelf Registration Statement, as applicable, for the reasonable fees and
disbursements of not more than one counsel, who shall be chosen by the Holders
of a majority in principal amount of the Transfer Restricted Securities for
whose benefit such Registration Statement is being prepared.
SECTION 8. INDEMNIFICATION
(a) The Issuer agrees to indemnify and hold harmless each Holder,
its directors, officers and each Person, if any, who controls such Holder
(within the meaning of Section 15 of the Act or Section 20 of the Exchange Act),
from and against any and all losses, claims, damages, liabilities, judgments,
(including, without limitation, any legal or other expenses incurred in
connection with investigating or defending any matter, including any action that
could give rise to any such losses, claims, damages, liabilities or judgments)
caused by any untrue statement or alleged untrue statement of a material fact
contained in any
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<PAGE> 15
Registration Statement, preliminary prospectus or Prospectus (or any amendment
or supplement thereto) provided by the Issuer to any Holder or any prospective
purchaser of Series B Debentures or registered Series A Debentures, or caused by
any omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading,
except insofar as such losses, claims, damages, liabilities or judgments are
caused by an untrue statement or omission or alleged untrue statement or
omission that is based upon information relating to any of the Holders furnished
in writing to the Issuer by any of the Holders.
(b) Each Holder of Transfer Restricted Securities agrees,
severally and not jointly, to indemnify and hold harmless the Issuer, its
directors and officers, and each person, if any, who controls (within the
meaning of Section 15 of the Act or Section 20 of the Exchange Act) the Issuer,
to the same extent as the foregoing indemnity from the Issuer set forth in
Section 8(a) hereof, but only with reference to information relating to such
Holder furnished in writing to the Issuer by such Holder expressly for use in
any Registration Statement. In no event shall any Holder, its directors,
officers or any Person who controls such Holder be liable or responsible for any
amount in excess of the amount by which the total amount received by such Holder
with respect to its sale of Transfer Restricted Securities pursuant to a
Registration Statement exceeds (i) the amount paid by such Holder for such
Transfer Restricted Securities and (ii) the amount of any damages that such
Holder, its directors, officers or any Person who controls such Holder has
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission.
(c) In case any action shall be commenced involving any person in
respect of which indemnity may be sought pursuant to Section 8(a) or 8(b) (the
"indemnified party"), the indemnified party shall promptly notify the person
against whom such indemnity may be sought (the "indemnifying person") in
writing, and the indemnifying party shall assume the defense of such action,
including the employment of counsel reasonably satisfactory to the indemnified
party and the payment of all fees and expenses of such counsel, as incurred
(except that, in the case of any action in respect of which indemnity may be
sought pursuant to both Sections 8(a) and 8(b), a Holder shall not be required
to assume the defense of such action pursuant to this Section 8(c), but may
employ separate counsel and participate in the defense thereof, but the fees and
expenses of such counsel, except as provided below, shall be at the expense of
the Holder). Any indemnified party shall have the right to employ separate
counsel in any such action and participate in the defense thereof, but the fees
and expenses of such counsel shall be at the expense of the indemnified party,
unless (i) the employment of such counsel shall have been specifically
authorized in writing by the indemnifying party, (ii) the indemnifying party
shall have failed to assume the defense of such action or employ counsel
reasonably satisfactory to the indemnified party or (iii) the named parties to
any such action (including any impleaded parties) include both the indemnified
party and the indemnifying party, and the indemnified party shall have been
advised by such counsel that there may be one or more legal defenses available
to it which are different from or additional to those available to the
indemnifying party (in which case the indemnifying party shall not have the
right to assume the defense of such action on behalf of the indemnified party).
In any such case, the indemnifying party shall not, in connection with any one
action or separate but substantially similar or related actions in the same
jurisdiction arising out of the same general allegations or circumstances, be
liable for the fees and expenses of more than one separate firm of attorneys (in
addition to any local counsel) for all indemnified parties and all such fees and
expenses shall be reimbursed as they are incurred. Such firm shall be designated
in writing by a majority of the Holders, in the case of the parties indemnified
pursuant to Section 8(a), and by the Issuer, in the case of parties indemnified
pursuant to Section 8(b). The indemnifying party shall indemnify and hold
harmless the indemnified party from and against any and all losses, claims,
damages, liabilities and judgments by reason of any settlement of any action (i)
effected with its written consent or (ii) effected without its written consent
if the settlement is entered into more than twenty Business Days after the
indemnifying party shall
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<PAGE> 16
have received a request from the indemnified party for reimbursement for the
fees and expenses of counsel (in any case where such fees and expenses are at
the expense of the indemnifying party) and, prior to the date of such
settlement, the indemnifying party shall have failed to comply with such
reimbursement request. No indemnifying party shall, without the prior written
consent of the indemnified party, effect any settlement or compromise of, or
consent to the entry of judgment with respect to, any pending or threatened
action in respect of which the indemnified party is or could have been a party
and indemnity or contribution may be or could have been sought hereunder by the
indemnified party, unless such settlement, compromise or judgment (i) includes
an unconditional release of the indemnified party from all liability on claims
that are or could have been the subject matter of such action and (ii) does not
include a statement as to or an admission of fault, culpability or a failure to
act, by or on behalf of the indemnified party.
(d) To the extent that the indemnification provided for in this
Section 8 is unavailable to an indemnified party in respect of any losses,
claims, damages, liabilities or judgments referred to therein, then each
indemnifying party, in lieu of indemnifying such indemnified party, shall
contribute to the amount paid or payable by such indemnified party as a result
of such losses, claims, damages, liabilities or judgments (i) in such proportion
as is appropriate to reflect the relative benefits received by the Issuer, on
the one hand, and the Holders, on the other hand, from their sale of Transfer
Restricted Securities or (ii) if the allocation provided by clause 8(d)(i) is
not permitted by applicable law, in such proportion as is appropriate to reflect
not only the relative benefits referred to in clause 8(d)(i) hereof but also the
relative fault of the Issuer, on the one hand, and of the Holder, on the other
hand, in connection with the statements or omissions which resulted in such
losses, claims, damages, liabilities or judgments, as well as any other relevant
equitable considerations. The relative fault of the Issuer, on the one hand, and
of the Holder, on the other hand, shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or the omission or alleged omission to state a material fact relates to
information supplied by the Issuer, on the one hand, or by the Holder, on the
other hand, and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission. The amount
paid or payable by an indemnified party as a result of the losses, claims,
damages, liabilities or judgments referred to above shall be deemed to include,
subject to the limitations set forth in the second paragraph of Section 8(a),
any legal or other fees or expenses reasonably incurred by such indemnified
party in connection with investigating or defending any matter, including any
action that could have given rise to such losses, claims, damages, liabilities
or judgments.
The Issuer and each Holder agree that it would not be just and
equitable if contribution pursuant to this Section 8(d) were determined by pro
rata allocation (even if the Holders were treated as one entity for such
purpose) or by any other method of allocation which does not take account of the
equitable considerations referred to in the immediately preceding paragraph.
Notwithstanding the provisions of this Section 8, no Holder, its directors, its
officers or any Person, if any, who controls such Holder shall be required to
contribute, in the aggregate, any amount in excess of the amount by which the
total received by such Holder with respect to the sale of Transfer Restricted
Securities pursuant to a Registration Statement exceeds (i) the amount paid by
such Holder for such Transfer Restricted Securities and (ii) the amount of any
damages which such Holder has otherwise been required to pay by reason of such
untrue or alleged untrue statement or omission or alleged omission. No person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Act) shall be entitled to contribution from any person who was not guilty of
such fraudulent misrepresentation. The Holders' obligations to contribute
pursuant to this Section 8(d) are several in proportion to the respective
principal amount of Transfer Restricted Securities held by each Holder hereunder
and not joint.
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<PAGE> 17
(e) The Issuer agrees that the indemnity and contribution
provisions of this Section 8 shall apply to the Initial Purchaser to the same
extent, on the same conditions, as it applies to Holders.
SECTION 9. RULE 144A AND RULE 144
The Issuer agrees with each Holder, for so long as any Transfer
Restricted Securities remain outstanding and during any period in which the
Issuer (i) is not subject to Section 13 or 15(d) of the Exchange Act, to make
available, upon request of any Holder, to such Holder or beneficial owner of
Transfer Restricted Securities in connection with any sale thereof and any
prospective purchaser of such Transfer Restricted Securities designated by such
Holder or beneficial owner, the information required by Rule 144A(d)(4) under
the Act in order to permit resales of such Transfer Restricted Securities
pursuant to Rule 144A, and (ii) is subject to Section 13 or 15(d) of the
Exchange Act, to make all filings required thereby in a timely manner in order
to permit resales of such Transfer Restricted Securities pursuant to Rule 144.
SECTION 10. MISCELLANEOUS
(a) Remedies. The Issuer acknowledges and agrees that any failure
by the Issuer to comply with its obligations under Sections 3 and 4 hereof may
result in material irreparable injury to the Initial Purchaser or the Holders
for which there is no adequate remedy at law, that it will not be possible to
measure damages for such injuries precisely and that, in the event of any such
failure, the Initial Purchaser or any Holder may obtain such relief as may be
required to specifically enforce the Issuer's obligations under Sections 3 and 4
hereof. The Issuer further agrees to waive the defense in any action for
specific performance that a remedy at law would be adequate.
(b) No Inconsistent Agreements. The Issuer will not, on or after
the date of this Agreement, enter into any agreement with respect to its
securities that is inconsistent with the rights granted to the Holders in this
Agreement or otherwise conflicts with the provisions hereof. The Issuer has not
previously entered into any agreement granting any registration rights with
respect to its securities to any Person. The rights granted to the Holders
hereunder do not in any way conflict with and are not inconsistent with the
rights granted to the holders of the Issuer's securities under any agreement in
effect on the date hereof.
(c) Amendments and Waivers. The provisions of this Agreement may
not be amended, modified or supplemented, and waivers or consents to or
departures from the provisions hereof may not be given unless (i) in the case of
Section 5 hereof and this Section 10(c)(i), the Issuer has obtained the written
consent of Holders of all outstanding Transfer Restricted Securities, and (ii)
in the case of all other provisions hereof, the Issuer has obtained the written
consent of Holders of a majority of the outstanding principal amount of Transfer
Restricted Securities (excluding Transfer Restricted Securities held by the
Issuer or its Affiliates). Notwithstanding the foregoing, a waiver or consent to
departure from the provisions hereof that relates exclusively to the rights of
Holders whose Transfer Restricted Securities are being tendered pursuant to the
Exchange Offer, and that does not affect directly or indirectly the rights of
other Holders whose Transfer Restricted Securities are not being tendered
pursuant to such Exchange Offer, may be given by the Holders of a majority of
the outstanding principal amount of Transfer Restricted Securities subject to
such Exchange Offer.
(d) Third Party Beneficiary. The Holders shall be third party
beneficiaries to the agreements made hereunder between the Issuer, on the one
hand, and the Initial Purchaser, on the other hand, and shall
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<PAGE> 18
have the right to enforce such agreements directly to the extent they may deem
such enforcement necessary or advisable to protect its rights or the rights of
Holders hereunder.
(e) Notices. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand-delivery, first-class mail
(registered or certified, return receipt requested), telex, telecopier, or air
courier guaranteeing overnight delivery:
(i) if to a Holder, at the address set forth on the
records of the Registrar under the Indenture, with a copy to the
Registrar under the Indenture; and
(ii) if to the Issuer:
c/o Mercury Acquisition Corporation
DLJ Merchant Banking Partners
277 Park Avenue
New York, New York 10172
Telecopier No.: (212) 892-3000
Attention: Bill Dawson
With a copy to:
Davis Polk & Wardwell
450 Lexington Avenue
New York, New York 10017
Telecopier No.: (212) 450-4000
Attention: Richard D. Truesdell, Esq.
and
Weil, Gotshal & Manges LLP
100 Crescent Court, Suite 1300
Dallas, Texas 75201
Telecopier No.: (214) 746-7777
Attention: R. Scott Cohen, Esq.
All such notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered; five Business
Days after being deposited in the mail, postage prepaid, if mailed; when receipt
acknowledged, if telecopied; and on the next Business Day, if timely delivered
to an air courier guaranteeing overnight delivery.
Copies of all such notices, demands or other communications shall be
concurrently delivered by the Person giving the same to the Trustee at the
address specified in the Indenture.
Upon the date of filing of the Exchange Offer or a Shelf Registration
Statement, as the case may be, notice shall be delivered to Donaldson, Lufkin &
Jenrette Securities Corporation (in the form attached hereto as Exhibit A) and
shall be addressed to: Attention: Louise Guarneri (Compliance Department), 277
Park Avenue, New York, New York 10172.
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<PAGE> 19
(f) Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the successors and assigns of each of the
parties, including, without limitation, and without the need for an express
assignment, subsequent Holders; provided that nothing herein shall be deemed to
permit any assignment, transfer or other disposition of Transfer Restricted
Securities in violation of the terms hereof or of the Purchase Agreement or the
Indenture. If any transferee of any Holder shall acquire Transfer Restricted
Securities in any manner, whether by operation of law or otherwise, such
Transfer Restricted Securities shall be held subject to all of the terms of this
Agreement, and by taking and holding such Transfer Restricted Securities such
Person shall be conclusively deemed to have agreed to be bound by and to perform
all of the terms and provisions of this Agreement, including the restrictions on
resale set forth in this Agreement and, if applicable, the Purchase Agreement,
and such Person shall be entitled to receive the benefits hereof.
(g) Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(h) Headings. The headings in this Agreement are for convenience
of reference only and shall not limit or otherwise affect the meaning hereof.
(i) 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 CONFLICT OF LAW RULES THEREOF.
(j) Severability. In the event that any one or more of the
provisions contained herein, or the application thereof in any circumstance, is
held invalid, illegal or unenforceable, the validity, legality and
enforceability of any such provision in every other respect and of the remaining
provisions contained herein shall not be affected or impaired thereby.
(k) Entire Agreement. This Agreement is intended by the parties as
a final expression of their agreement and intended to be a complete and
exclusive statement of the agreement and understanding of the parties hereto in
respect of the subject matter contained herein. There are no restrictions,
promises, warranties or undertakings, other than those set forth or referred to
herein with respect to the registration rights granted with respect to the
Transfer Restricted Securities. This Agreement supersedes all prior agreements
and understandings between the parties with respect to such subject matter.
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<PAGE> 20
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
MERCURY ACQUISITION CORPORATION
By: /s/ WILLIAM F. DAWSON
-------------------------------
Name:
Title:
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
By: /s/ TIMOTHY WHITE
-------------------------------
Name: Timothy White
Title: Vice President
19
<PAGE> 21
EXHIBIT A
NOTICE OF FILING OF
A/B EXCHANGE OFFER REGISTRATION STATEMENT
To: Donaldson, Lufkin & Jenrette Securities Corporation
277 Park Avenue
New York, New York 10172
Attention: Louise Guarneri (Compliance Department)
Fax: (212) 892-7272
From: Mercury Acquisition Corporation
12-1/2% Senior Discount Debentures due 2008
Date: ___________, 1998
For your information only (NO ACTION REQUIRED):
Today, ___________, 1998, we filed [an A/B Exchange Registration
Statement/a Shelf Registration Statement] with the Securities and Exchange
Commission.
20
<PAGE> 1
EXHIBIT 4.5
THIS AMENDMENT, dated as of May 22, 1998, by and between Thermadyne
Holdings Corporation (the "Company") and Donaldson, Lufkin & Jenrette Securities
Corporation (the "Initial Purchaser"), amends the Registration Rights Agreement
(as defined).
RECITALS
1. Mercury Acquisition Corporation, a Delaware corporation (the
"Issuer") and the Initial Purchaser entered into the Registration Rights
Agreement, dated as of May 22, 1998 (the "Registration Rights Agreement"),
relating to registration rights with respect to $174,000,000 aggregate principal
amount at maturity of the Issuer's 12-1/2% Senior Discount Debentures due 2008.
2. The Issuer has merged with and into the Company (the "Merger").
AGREEMENT
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained and intending to be legally bound, the parties hereto agree as
follows:
1. Defined Terms. Capitalized terms used herein and not otherwise
defined are used as defined in the Registration Rights Agreement.
2. Amendment to Registration Rights Agreement. The Registration Rights
Agreement shall be amended to include the following: The Company hereby
acknowledges and agrees that, by virtue of the Merger and the operation of law,
it has become a party to the Registration Rights Agreement and has assumed all
of the liabilities and obligations of the Issuer under the Registration Rights
Agreement.
3. 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
conflict of law principles thereof.
4. Continuing Effect. This amendment does not cancel or extinguish any
rights or obligations of the parties to the Registration Rights Agreement. The
parties agree that the Registration Rights Agreement shall be amended only in
respect of the matters referred to herein, and the provisions of the
Registration Rights Agreement are otherwise in full force and effect.
5. Counterparts. This amendment may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original, and all of which when taken
together shall constitute one and the same instrument.
6. Headings. The headings of this amendment are provided for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.
<PAGE> 2
IN WITNESS WHEREOF, the parties hereto have duly executed and delivered
this Amendment or have caused this Amendment to be duly executed on their
respective behalf by their respective officers thereunto duly authorized, as of
the date first above written.
THERMADYNE HOLDINGS CORPORATION
By: /s/ STEPHANIE N. JOSEPHSON
--------------------------------
Name:
Title:
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
By: /s/ TIMOTHY WHITE
--------------------------------
Name: Timothy White
Title: Vice President
<PAGE> 1
EXHIBIT 10.17
EXECUTIVE EMPLOYMENT AGREEMENT
This Agreement is made and entered into as of May 22, 1998, (the
EFFECTIVE DATE") by and among Thermadyne Holdings Corporation, a Delaware
corporation ("HOLDINGS"), together with its subsidiaries as herein defined (all
called the "EMPLOYERS") and Randall E. Curran ("EMPLOYEE").
WITNESSETH:
WHEREAS, Employers desire to continue to employ Employee upon the
terms set forth herein;
WHEREAS, Employee desires to continue to be employed by Employers and
to appropriately memorialize the terms and conditions of such employment;
WHEREAS, Holdings is entering into this Agreement by and on behalf of
itself and each trade or business in which its ownership and the value or voting
power is at least 50% (the "SUBSIDIARIES");
NOW THEREFORE, Employee and Employers, in consideration of the
agreements, covenants and conditions herein, hereby agree as follows:
SECTION 1. Basic Employment Provisions.
(a) Employment and Term. Employers hereby employ Employee (hereinafter
referred to as the "EMPLOYMENT") as Chairman of the Board, President and Chief
Executive Officer of Holdings and Employee agrees to be employed by Employers in
such capacities, all on the terms and conditions set forth herein. The
Employment shall be for a period (the "EMPLOYMENT PERIOD") that will (i)
commence on the Effective Date and continue for at least three years thereafter
(unless earlier terminated as provided herein) and (ii) renew on each
anniversary of the Effective Date for a three-year period, on the same terms and
conditions contained herein (unless earlier terminated as provided herein or
Employee is timely provided a notice of nonrenewal as provided herein), such
that the Employment Period shall extend for a period of three years from the
date of each such extension. The Employers must provide Employee with written
notice not less than 60 days in advance of the applicable anniversary of the
Effective Date in order to avoid renewal of the Employment Period on such
anniversary as described above. Notice shall be deemed given on the date it is
received by the Employee.
(b) Duties. Employee shall be subject to the direction and supervision
of the Board of Directors of Holdings (the "BOARD") and, as the Chief Executive
<PAGE> 2
Officer, shall have those duties and responsibilities which are assigned to him
during the Employment Period by the Board consistent with his positions,
provided that the Board shall not assign any greater duties or responsibilities
to the Employee than are necessary to the Employee's faithful and adequate
supervision of the overall management and businesses of the Employers. The Board
shall not take any action which results in a diminution of Employee's position,
authority, duties or responsibilities as of the date hereof. The parties
expressly acknowledge that the Employee shall devote all of his business time
and attention to the transaction of the Employer's businesses as is reasonably
necessary to discharge his supervisory management responsibilities hereunder.
Employee agrees to perform faithfully the duties assigned to him to the best of
his ability.
SECTION 2. Compensation.
(a) Salary. Employers shall pay to Employee during the Employment
Period a salary as basic compensation for the services to be rendered by
Employee hereunder. The initial amount of such salary shall be $538,400 per
annum. Such salary shall be reviewed no less frequently than annually by the
Board and may be increased upon the approval of the Board in its sole
discretion. Such salary shall accrue and be payable in accordance with the
payroll practices of Employers' subsidiary or subsidiaries in effect from time
to time. All such payments shall be subject to deduction and withholding
authorized or required by applicable law.
(b) Bonus. During the Employment Period, Employee shall additionally
participate in an annual bonus plan providing for an annual bonus opportunity of
not less than 100% of Employee's annual salary.
(c) Benefits. During the Employment Period, Employee shall be entitled
to participate in such other employee benefit plans, programs and arrangements
as are customarily accorded the executives of Employers, including without
limitation, tax qualified profit sharing and retirement plans, group life,
hospitalization and other insurance and vacations (but excluding stock option
and other stock- or equity-based compensation plans), on a basis no less
favorable than as of the date of this Agreement. Without limiting the foregoing,
the employee benefit plans, programs and arrangements in which Employee shall be
entitled to participate during the Employment Period shall be no less generous,
in the aggregate, than those in which such Employee was entitled to participate
immediately prior to the consummation of the merger between Holdings and Mercury
Acquisition Corporation.
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<PAGE> 3
SECTION 3. Termination.
(a) Death or Disability. Employment of Employee under this Agreement
shall terminate automatically upon the death or total disability of Employee.
For the purpose of this Agreement, "TOTAL DISABILITY" shall be deemed to have
occurred if Employee shall have been unable to perform the duties of his
Employment due to mental or physical incapacity for a period of six (6)
consecutive months.
(b) Cause. The Board may terminate the Employment of Employee under
this Agreement for Cause. For the purposes of this Agreement, "CAUSE" shall be
deemed to be (i) dishonesty by Employee that results in substantial personal
enrichment at the expense of the Employers or (ii) demonstratively willful
repeated violations of Employee's obligations under this Agreement which are
intended to result in material injury to the Employers.
(c) Without Cause. Any of the Employers, acting alone, may terminate
the Employment of Employee under this Agreement without Cause.
(d) Constructive Termination. Employee may elect to terminate his
Employment under this Agreement upon a Constructive Termination Without Cause,
as defined below. For purposes of this Agreement, "CONSTRUCTIVE TERMINATION
WITHOUT CAUSE" shall mean a termination of the Employee's employment at his
initiative following the occurrence, without the Employee's prior written
consent, of one or more of the following events:
(i) receipt of notice from the Employers that the Employment
Period shall not be renewed as described in Section 1(a) above;
(ii) any failure by the Employers to comply with any of the
provisions of the Employment Agreement, other than an isolated,
insubstantial and inadvertent failure not occurring in bad faith and
which is remedied by the Employers promptly after receipt of notice
thereof given by the Employee;
(iii) any reduction in any form of compensation, fringe
benefit, deferred compensation plan or perquisite applicable to the
Employee immediately prior to the effective time of the Employment
Agreement, including any reduction in salary or any reduction in bonus
percentage to less than the average of such bonus percentage for the
two fiscal years immediately preceding the effective time of the
Employment Agreement;
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<PAGE> 4
(iv) the loss of any of the Employee's titles or positions in
effect at the effective time of the Employment Agreement;
(v) any change in the position to which the Employee reports
or the positions that report to the Employee at the effective time of
the Employment Agreement (reporting relationships);
(vi) the assignment to the Employee of any duties
inconsistent in any respect with the Employee's position (including
status, offices, titles and reporting relationships), authority,
duties or responsibilities as in effect at the effective time of the
Employment Agreement, or any other action by the Employers which
results in a diminution in such position, authority, duties or
responsibilities excluding an isolated, insubstantial and inadvertent
action not taken in bad faith and which is remedied by the Employers
promptly after receipt of notice thereof given by the Employee;
(vii) the relocation of the Employee's office location as
assigned to him by the Employers, to a location more than 25 miles
from his office location at the effective time of the Employment
Agreement;
(viii) any purported termination by the Employers of the
Employee's employment otherwise than as expressly permitted by Section
3(b) of this Agreement;
(ix) any failure by the Employers to comply with and satisfy
the provisions of Section 6 hereof, or failure by any successor
(whether direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business and/or assets
of the Employers to assume expressly and agree to perform the
Employment Agreement in the same manner and to the same extent the
Employers would be required to perform it if no such succession had
taken place, provided, in either case, that the successor contemplated
by Section 6 hereof has received, at least 10 days prior to the giving
of notice of constructive termination by the Employee, written notice
from the Employers or the Employee of the requirements of the
provisions of Section 6 or of such failure;
(x) the removal or election or employment of any officer or
employee of the Employers without Employee's concurrence; and
(xi) failure to reelect Employee as both a member of the
Board and the Chairman of the Board or the removal of Employee as a
member of the Board or as Chairman of the Board.
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<PAGE> 5
For purposes of this Agreement any good faith determination of "Constructive
Termination Without Cause" made by the Employee shall be conclusive.
SECTION 4. Compensation Following Termination.
(a) Death or Disability. If the Employment Period is terminated
pursuant to the provisions of Section 3(a) above, this Agreement shall
terminate, and no further compensation shall be payable to Employee except that
Employee or Employee's estate, heirs or beneficiaries, as applicable, shall be
entitled, in addition to any other benefits to which Employee is or may become
entitled under any benefit plan, to receive Employee's then current basic
compensation, plus an amount in lieu of bonus, which amount shall be determined
as the average bonus received by Employee for the appropriate period (prorated
for partial portions thereof) for the previous 24 months hereunder and all other
benefits to which Employee would otherwise be entitled hereunder during the
Employment Period for a period of 24 months from the date the Employment Period
terminates.
(b) Termination for Cause or Voluntary Termination. If the Employment
Period is terminated for Cause or voluntarily by the Employee for reasons other
than those described in Section 3(a) or 3(d) above, no further compensation or
benefits shall be paid to Employee after the date of termination, but Employee
shall be entitled to receive benefits to which he is or may become entitled
pursuant to any benefit plan.
(c) Termination Without Cause; Constructive Termination. If the
Employment Period is terminated pursuant to Section 3(c) or 3(d)above, Employee
shall be entitled to continue to receive from Employers his then current basic
compensation hereunder, plus an amount in lieu of bonus, which amount shall be
determined as the average bonus received by Employee for the appropriate period
(prorated for partial portions thereof) for the previous 24 months, such amount
to continue to be paid in accordance with the payroll practices of Employers for
a period equal to the period remaining in the Employment Period immediately
prior to such termination and Employee shall further be entitled during such
period both to continue to receive the benefits to which he would otherwise be
entitled during the Employment Period pursuant to Section above and to
reimbursement for expenses incurred by Employee to own and maintain an
automobile as contemplated by Section below. Such continuation of compensation,
benefits and automobile expenses shall continue for the period described above
notwithstanding any earlier death or reemployment of Employee.
SECTION 5. Expense Reimbursement. Upon the submission of properly
documented expense account reports, Employers shall reimburse Employee for all
reasonable business-related travel and entertainment expenses incurred by
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<PAGE> 6
Employee in the course of his Employment with Employers and for expenses
incurred by Employee to own and maintain an automobile.
SECTION 6. Assignability; Binding Nature. This Agreement shall be
binding and inure to the benefit of the parties, and their respective
successors, heirs (in the case of Employee) and assigns. No obligations of the
Employers under this Agreement may be assigned or transferred by the Employers
except that such obligations shall be assigned or transferred (as described
below) pursuant to a merger or consolidation of Holdings in which Holdings is
not the continuing entity, or the sale or liquidation of all or substantially
all of the assets of the Employers, provided that the assignee or transferee is
the surviving entity or successor to all or substantially all of the assets of
the Employers and such assignee or transferee assumes the liabilities,
obligations and duties of the Employers, as contained in this Agreement, either
contractually or as a matter of law. As used in this Agreement, the "Employers"
and "Holdings" shall mean the Employers and Holdings as hereinbefore defined,
respectively, and any successor to their business and/or assets as aforesaid
which assumes and agrees to perform this Agreement by operation of law, or
otherwise.
SECTION 7. Confidential Information.
(a) Non-Disclosure. During the Employment Period or at any time
thereafter, irrespective of the time, manner or cause of the termination of this
Agreement, Employee will not directly or indirectly reveal, divulge, disclose or
communicate to any person or entity, other than authorized officers, directors
and employees of the Employers, in any manner whatsoever, any Confidential
Information (as hereinafter defined) of Employers or any subsidiary of Employers
without the prior written consent of the Board.
(b) Definition. As used herein, "CONFIDENTIAL INFORMATION" means
information disclosed to or known by Employee as a direct or indirect
consequence of or through the Employment about Employers or any subsidiary of
Employers, or their respective businesses, products and practices which
information is not generally known in the business in which Employers or any
subsidiary of Employers is or may be engaged. However, Confidential Information
shall not include under any circumstances any information with respect to the
foregoing matters which is (i) available to the public from a source other than
Employee, (ii) released in writing by Employers to the public or to persons who
are not under a similar obligation of confidentiality to Employers and who are
not parties to this Agreement, (iii) obtained by Employee from a third party not
under a similar obligation of confidentiality to Employers, (iv) required to be
disclosed by any court process or any government or agency or department
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<PAGE> 7
of any government, or (v) the subject of a written waiver executed by either
Employers for the benefit of Employee.
(c) Return of Property. Upon termination of the Employment, Employee
will surrender to Employers all Confidential Information, including without
limitation, all lists, charts, schedules, reports, financial statements, books
and records of the Employers or any subsidiary of the Employers, and all copies
thereof, and all other property belonging to the Employers or any subsidiary of
the Employers, provided Employee shall be accorded reasonable access to such
Confidential Information subsequent to the Employment Period for any proper
purpose as determined in the reasonable judgment of any of the Employers.
SECTION 8. Agreement Not to Compete.
(a) Termination for Cause. In the event that the Employee is
terminated for Cause or voluntarily terminates his Employment with Employers
other than as a constructive termination, Employee hereby agrees that for a
period of one (1) year following such termination, he shall not, either in his
own behalf or as a partner, officer, director, employee, agent or shareholder
(other than as the holder of less than 5% of the outstanding capital stock of
any corporation with a class of equity security registered under Section 12(b)
or Section 12(g) of the Securities Exchange Act of 1934, as amended) engage in,
invest in or render services to any person or entity engaged in the businesses
in which Employers or any subsidiary of Employers are then engaged and situated
within any country. Nothing contained in this Section 8(a) shall be construed as
restricting the Employee's right to sell or otherwise dispose of any business or
investments owned or operated by Employee as of the date hereof.
(b) Termination Without Cause or for Disability; Constructive
Termination. In the event that the Employment of Employee is terminated by
Employers without Cause or as a result of the total disability of Employee or by
Employee as a constructive termination, Employee hereby agrees that during the
period that Employee accepts payments from the Employers pursuant to Section or
Section above, as applicable, neither he nor any affiliate shall, either in his
own behalf or as a partner, officer, director, employee, agent or shareholder
(other than as the holder of less than 5% of the outstanding capital stock of
any corporation with a class of equity security registered under Section 12(b)
or Section 12(g) of the Securities Exchange Act of 1934, as amended) engage in,
invest in or render services to any person or entity engaged in the businesses
in which Employers or any subsidiary of Employers is then engaged and situated
within any country. Nothing contained in this Section 8(b) shall be construed as
restricting the Employee's right to sell or otherwise dispose of any business or
investments owned or operated by Employee as of the date hereof. In the event of
7
<PAGE> 8
Employee's violation of the provisions of Section 8(b), the right of Employee to
receive any further payment pursuant to Section 4(a) or 4(c) above, as
applicable, shall immediately terminate and the Employers shall be entitled to
secure reimbursement from Employee for all payments made to Employee subsequent
to the date of any such violation. The parties hereto hereby acknowledge and
agree that the provisions of the immediately preceding sentence shall be the
sole and exclusive remedy of the Employers in respect of any violation of this
Section 8(b).
SECTION 9. Agreement Not to Solicit Employees. Employee agrees that,
for a period of three (3) years following the termination of the Employment
Period, other than by Employers without Cause or as a result of the total
disability of Employee or by Employee as a constructive termination, and only by
reason of voluntary termination or termination for Cause, neither he nor any
affiliate shall, on behalf of any business engaged in a business competitive
with Employers or any subsidiary of Employers, solicit or induce, or in any
manner attempt to solicit or induce, any person employed by, or any agent of,
either of Employers or any subsidiary of Employers to terminate his employment
or agency, as the case may be, with either of Employers or such subsidiary;
provided that such limitations shall not apply if the contact with the Employee
or consultant is initiated by a third party on a "blind basis" such as through a
head hunter.
SECTION 10. No Violation. Employee hereby represents and warrants to
Employers that the execution, delivery and performance of this Agreement by
Employee does not, with or without the giving of notice or the passage of time,
or both, conflict with, result in a default, right to accelerate or loss of
rights under any provision of any agreement or understanding to which the
Employee or, to the best knowledge of Employee, any of Employee's affiliates are
a party or by which Employee, or to the best knowledge of Employee, Employee's
affiliates may be bound or affected.
SECTION 11. Captions. The captions, headings and arrangements used in
this Agreement are for convenience only and do not in any way affect, limit or
amplify the provisions hereof.
SECTION 12. Notices. All notices required or permitted to be given
hereunder shall be in writing and shall be deemed delivered, whether or not
actually received, two days after deposited in the United States mail, postage
prepaid, registered or certified mail, return receipt requested, addressed to
the party to whom notice is being given at the specified address or at such
other address as such party may designate by notice:
9
<PAGE> 9
Employers: Thermadyne Holdings Corporation
c/o DLJ Merchant Banking Partners II, L.P.
277 Park Avenue
New York, New York 10172
Attention: Peter T. Grauer
Fax: (212) 892-7272
and
Thermadyne Holdings Corporation
101 South Hanley Road
St. Louis, Missouri 63105
Attention: James H. Tate and Stephanie N. Josephson
Fax: (314) 746-2374
with a copy to:
Davis Polk & Wardwell
450 Lexington Avenue
New York, New York 10017
Attention: George R. Bason, Jr.
Fax: (212) 450-4800
Employee: Randall E. Curran
c/o Thermadyne Holdings Corporation
101 South Hanley Road
St. Louis, Missouri 63105
SECTION 13. Invalid Provisions. If any provision of this Agreement is
held to be illegal, invalid or unenforceable under present or future laws, such
provisions shall be fully severable, and this Agreement shall be construed and
enforced as if such illegal, invalid or unenforceable provision had never
comprised a part of this Agreement; the remaining provisions of this Agreement
shall remain in full force and effect and shall not be affected by the illegal,
invalid or unenforceable provision or by its severance for this Agreement. In
lieu of each such illegal, invalid or unenforceable provision, there shall be
added automatically as part of this Agreement a provision as similar in terms to
such illegal, invalid or unenforceable provision as may be possible and be
legal, valid and enforceable.
SECTION 14. Amendments. This Agreement may be amended in whole or
in part only by an instrument in writing setting forth the particulars of such
amendment and duly executed by an officer of Employers and by Employee.
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<PAGE> 10
SECTION 15. Waiver. No delay or omission by any party hereto to
exercise any right or power hereunder shall impair such right or power to be
construed as a waiver thereof. A waiver by any of the parties hereto of any of
the covenants to be performed by any other party or any breach thereof shall not
be construed to be a waiver of any succeeding breach thereof or of any other
covenant herein contained. Except as otherwise expressly set forth herein, all
remedies provided for in this Agreement shall be cumulative and in addition to
and not in lieu of any other remedies available to any party at law, in equity
or otherwise.
SECTION 16. Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall constitute an original, and all of which
together shall constitute one and the same Agreement.
SECTION 17. Governing Law. This Agreement shall be construed and
enforced according to the laws of the State of Missouri.
SECTION 18. Payment Upon Death of Employee. In the event of the death
of Employee during the term hereof, any unpaid payments due either prior to
Employee's death or after Employee's death shall be payable as designated by
Employee in writing to Employers. In the event of the death of all such persons
so designated by Employee, either prior to the death of the Employee or during
any time when payments are due as provided herein, or in the event Employee
fails to so designate, or withdraws all such designations, said payments
thereafter shall be made to the Employee or to Employee's estate.
SECTION 19. Prior Employment Agreement. This Agreement supersedes
any and all other employment, change-in-control, severance or similar agreements
between Employee and Employers.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the date first above written.
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<PAGE> 11
EMPLOYERS:
THERMADYNE HOLDINGS CORPORATION
By /s/ STEPHANIE N. JOSEPHSON
----------------------------------
Title
-------------------------------
EMPLOYEE:
/s/ RANDALL E. CURRAN
------------------------------------
Randall E. Curran
11
<PAGE> 1
EXHIBIT 10.18
EXECUTIVE EMPLOYMENT AGREEMENT
This Agreement is made and entered into as of May 22, 1998 (the
EFFECTIVE DATE") by and among Thermadyne Holdings Corporation, a Delaware
corporation ("HOLDINGS"), together with its subsidiaries as herein defined (all
called the "EMPLOYERS") and James H. Tate ("EMPLOYEE").
WITNESSETH:
WHEREAS, Employers desire to continue to employ Employee upon the
terms set forth herein;
WHEREAS, Employee desires to continue to be employed by Employers and
to appropriately memorialize the terms and conditions of such employment;
WHEREAS, Holdings is entering into this Agreement by and on behalf of
itself and each trade or business in which its ownership and the value or
voting power is at least 50% (the "SUBSIDIARIES");
NOW THEREFORE, Employee and Employers, in consideration of the
agreements, covenants and conditions herein, hereby agree as follows:
SECTION 1. Basic Employment Provisions.
(a) Employment and Term. Employers hereby employ Employee
(hereinafter referred to as the "EMPLOYMENT") as Chief Financial Officer of
Holdings and Employee agrees to be employed by Employers in such capacity, all
on the terms and conditions set forth herein. The Employment shall be for a
period (the "EMPLOYMENT PERIOD") that will (i) commence on the Effective Date
and continue for at least three years thereafter (unless earlier terminated as
provided herein) and (ii) renew on each anniversary of the Effective Date for a
three-year period, on the same terms and conditions contained herein (unless
earlier terminated as provided herein or Employee is timely provided a notice
of nonrenewal as provided herein), such that the Employment Period shall extend
for a period of three years from the date of each such extension. The
Employers must provide Employee with written notice not less than 60 days in
advance of the applicable anniversary of the Effective Date in order to avoid
renewal of the Employment Period on such anniversary as described above. Notice
shall be deemed given on the date it is received by the Employee.
(b) Duties. Employee shall be subject to the direction and
supervision of the Board of Directors of Holdings (the "BOARD") and, as the
Chief Financial Officer of Holdings, shall have those duties and
responsibilities which are
<PAGE> 2
assigned to him during the Employment Period by the Board consistent with his
positions, provided that the Board shall not assign any greater duties or
responsibilities to the Employee than are necessary to the Employee's faithful
and adequate supervision of the overall management and businesses of the
Employers. The Board shall not take any action which results in a diminution
of Employee's position, authority, duties or responsibilities as of the date
hereof. The parties expressly acknowledge that the Employee shall devote all
of his business time and attention to the transaction of the Employer's
businesses as is reasonably necessary to discharge his supervisory management
responsibilities hereunder. Employee agrees to perform faithfully the duties
assigned to him to the best of his ability.
SECTION 2. Compensation.
(a) Salary. Employers shall pay to Employee during the Employment
Period a salary as basic compensation for the services to be rendered by
Employee hereunder. The initial amount of such salary shall be $290,175 per
annum. Such salary shall be reviewed no less frequently than annually by the
Board and may be increased upon the approval of the Board in its sole
discretion. Such salary shall accrue and be payable in accordance with the
payroll practices of Employers' subsidiary or subsidiaries in effect from time
to time. All such payments shall be subject to deduction and withholding
authorized or required by applicable law.
(b) Bonus. During the Employment Period, Employee shall
additionally participate in an annual bonus plan providing for an annual bonus
opportunity of not less than 75% of Employee's annual salary.
(c) Benefits. During the Employment Period, Employee shall be
entitled to participate in such other employee benefit plans, programs and
arrangements as are customarily accorded the executives of Employers, including
without limitation, tax qualified profit sharing and retirement plans, group
life, hospitalization and other insurance and vacations (but excluding stock
option and other stock- or equity-based compensation plans), on a basis no less
favorable than as of the date of this Agreement. Without limiting the
foregoing, the employee benefit plans, programs and arrangements in which
Employee shall be entitled to participate during the Employment Period shall be
no less generous, in the aggregate, than those in which such Employee was
entitled to participate immediately prior to the consummation of the merger
between Holdings and Mercury Acquisition Corporation.
<PAGE> 3
SECTION 3. Termination.
(a) Death or Disability. Employment of Employee under this
Agreement shall terminate automatically upon the death or total disability of
Employee. For the purpose of this Agreement, "TOTAL DISABILITY" shall be
deemed to have occurred if Employee shall have been unable to perform the
duties of his Employment due to mental or physical incapacity for a period of
six (6) consecutive months.
(b) Cause. The Board may terminate the Employment of Employee
under this Agreement for Cause. For the purposes of this Agreement, "CAUSE"
shall be deemed to be (i) dishonesty by Employee that results in substantial
personal enrichment at the expense of the Employers or (ii) demonstratively
willful repeated violations of Employee's obligations under this Agreement
which are intended to result in material injury to the Employers.
(c) Without Cause. Any of the Employers, acting alone, may
terminate the Employment of Employee under this Agreement without Cause.
(d) Constructive Termination. Employee may elect to terminate his
Employment under this Agreement upon a Constructive Termination Without Cause,
as defined below. For purposes of this Agreement, "CONSTRUCTIVE TERMINATION
WITHOUT CAUSE" shall mean a termination of the Employee's employment at his
initiative following the occurrence, without the Employee's prior written
consent, of one or more of the following events:
(i) receipt of notice from the Employers that the Employment
Period shall not be renewed as described in Section 1(a) above;
(ii) any failure by the Employers to comply with any of the
provisions of the Employment Agreement, other than an isolated,
insubstantial and inadvertent failure not occurring in bad faith and
which is remedied by the Employers promptly after receipt of notice
thereof given by the Employee;
(iii) any reduction in any form of compensation, fringe
benefit, deferred compensation plan or perquisite applicable to the
Employee immediately prior to the effective time of the Employment
Agreement, including any reduction in salary or any reduction in bonus
percentage to less than the average of such bonus percentage for the
two fiscal years immediately preceding the effective time of the
Employment Agreement;
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<PAGE> 4
(iv) the loss of any of the Employee's titles or positions in
effect at the effective time of the Employment Agreement;
(v) any change in the position to which the Employee reports
or the positions that report to the Employee at the effective time of
the Employment Agreement (reporting relationships);
(vi) the assignment to the Employee of any duties inconsistent
in any respect with the Employee's position (including status,
offices, titles and reporting relationships), authority, duties or
responsibilities as in effect at the effective time of the Employment
Agreement, or any other action by the Employers which results in a
diminution in such position, authority, duties or responsibilities
excluding an isolated, insubstantial and inadvertent action not taken
in bad faith and which is remedied by the Employers promptly after
receipt of notice thereof given by the Employee;
(vii) the relocation of the Employee's office location as
assigned to him by the Employers, to a location more than 25 miles
from his office location at the effective time of the Employment
Agreement;
(viii) any purported termination by the Employers of the
Employee's employment otherwise than as expressly permitted by Section
3(b) of this Agreement;
(ix) any failure by the Employers to comply with and satisfy
the provisions of Section 6 hereof, or failure by any successor
(whether direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business and/or assets
of the Employers to assume expressly and agree to perform the
Employment Agreement in the same manner and to the same extent the
Employers would be required to perform it if no such succession had
taken place, provided, in either case, that the successor contemplated
by Section 6 hereof has received, at least 10 days prior to the giving
of notice of constructive termination by the Employee, written notice
from the Employers or the Employee of the requirements of the
provisions of Section 6 or of such failure;
(x) failure to reelect Employee as a member of the Board of
Directors or the removal of Employee as a member of the Board; and
(xi) the removal or Constructive Termination without cause of
the person who serves as Chairman of the Board or the person who
serves as Chief Executive Officer of Holdings at the effective time of
the Employment Agreement from either such position.
4
<PAGE> 5
For purposes of this Agreement any good faith determination of "Constructive
Termination Without Cause" made by the Employee shall be conclusive.
SECTION 4. Compensation Following Termination.
(a) Death or Disability. If the Employment Period is terminated
pursuant to the provisions of Section 3(a) above, this Agreement shall
terminate, and no further compensation shall be payable to Employee except that
Employee or Employee's estate, heirs or beneficiaries, as applicable, shall be
entitled, in addition to any other benefits to which Employee is or may become
entitled under any benefit plan, to receive Employee's then current basic
compensation, plus an amount in lieu of bonus, which amount shall be determined
as the average bonus received by Employee for the appropriate period (prorated
for partial portions thereof) for the previous 24 months hereunder and all
other benefits to which Employee would otherwise be entitled hereunder during
the Employment Period for a period of 24 months from the date the Employment
Period terminates.
(b) Termination for Cause or Voluntary Termination. If the
Employment Period is terminated for Cause or voluntarily by the Employee for
reasons other than those described in Section 3(a) or 3(d) above, no further
compensation or benefits shall be paid to Employee after the date of
termination, but Employee shall be entitled to receive benefits to which he is
or may become entitled pursuant to any benefit plan.
(c) Termination Without Cause; Constructive Termination. If the
Employment Period is terminated pursuant to Section 3(c) or 3(d) above,
Employee shall be entitled to continue to receive from Employers his then
current basic compensation hereunder, plus an amount in lieu of bonus, which
amount shall be determined as the average bonus received by Employee for the
appropriate period (prorated for partial portions thereof) for the previous 24
months, such amount to continue to be paid in accordance with the payroll
practices of Employers for a period equal to the period remaining in the
Employment Period immediately prior to such termination and Employee shall
further be entitled during such period both to continue to receive the benefits
to which he would otherwise be entitled during the Employment Period pursuant
to Section 2(c) above and to reimbursement for expenses incurred by Employee to
own and maintain an automobile as contemplated by Section 5 below. Such
continuation of compensation, benefits and automobile expenses shall continue
for the period described above notwithstanding any earlier death or
reemployment of Employee.
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<PAGE> 6
SECTION 5. Expense Reimbursement. Upon the submission of properly
documented expense account reports, Employers shall reimburse Employee for all
reasonable business-related travel and entertainment expenses incurred by
Employee in the course of his Employment with Employers and for expenses
incurred by Employee to own and maintain an automobile.
SECTION 6. Assignability; Binding Nature. This Agreement shall be
binding and inure to the benefit of the parties, and their respective
successors, heirs (in the case of Employee) and assigns. No obligations of the
Employers under this Agreement may be assigned or transferred by the Employers
except that such obligations shall be assigned or transferred (as described
below) pursuant to a merger or consolidation of Holdings in which Holdings is
not the continuing entity, or the sale or liquidation of all or substantially
all of the assets of the Employers, provided that the assignee or transferee is
the surviving entity or successor to all or substantially all of the assets of
the Employers and such assignee or transferee assumes the liabilities,
obligations and duties of the Employers, as contained in this Agreement, either
contractually or as a matter of law. As used in this Agreement, the
"Employers" and "Holdings" shall mean the Employers and Holdings as
hereinbefore defined, respectively, and any successor to their business and/or
assets as aforesaid which assumes and agrees to perform this Agreement by
operation of law, or otherwise.
SECTION 7. Confidential Information.
(a) Non-Disclosure. During the Employment Period or at any time
thereafter, irrespective of the time, manner or cause of the termination of
this Agreement, Employee will not directly or indirectly reveal, divulge,
disclose or communicate to any person or entity, other than authorized
officers, directors and employees of the Employers, in any manner whatsoever,
any Confidential Information (as hereinafter defined) of Employers or any
subsidiary of Employers without the prior written consent of the Board.
(b) Definition. As used herein, "CONFIDENTIAL INFORMATION" means
information disclosed to or known by Employee as a direct or indirect
consequence of or through the Employment about Employers or any subsidiary of
Employers, or their respective businesses, products and practices which
information is not generally known in the business in which Employers or any
subsidiary of Employers is or may be engaged. However, Confidential
Information shall not include under any circumstances any information with
respect to the foregoing matters which is (i) available to the public from a
source other than Employee, (ii) released in writing by Employers to the public
or to persons who are not under a similar obligation of confidentiality to
Employers and who are not parties to this Agreement, (iii) obtained by Employee
from a third
6
<PAGE> 7
party not under a similar obligation of confidentiality to Employers, (iv)
required to be disclosed by any court process or any government or agency or
department of any government, or (v) the subject of a written waiver executed
by either Employers for the benefit of Employee.
(c) Return of Property. Upon termination of the Employment,
Employee will surrender to Employers all Confidential Information, including
without limitation, all lists, charts, schedules, reports, financial
statements, books and records of the Employers or any subsidiary of the
Employers, and all copies thereof, and all other property belonging to the
Employers or any subsidiary of the Employers, provided Employee shall be
accorded reasonable access to such Confidential Information subsequent to the
Employment Period for any proper purpose as determined in the reasonable
judgment of any of the Employers.
SECTION 8. Agreement Not to Compete.
(a) Termination for Cause. In the event that the Employee is
terminated for Cause or voluntarily terminates his Employment with Employers
other than as a constructive termination, Employee hereby agrees that for a
period of one (1) year following such termination, he shall not, either in his
own behalf or as a partner, officer, director, employee, agent or shareholder
(other than as the holder of less than 5% of the outstanding capital stock of
any corporation with a class of equity security registered under Section 12(b)
or Section 12(g) of the Securities Exchange Act of 1934, as amended) engage in,
invest in or render services to any person or entity engaged in the businesses
in which Employers or any subsidiary of Employers are then engaged and situated
within any country. Nothing contained in this Section 8(a) shall be construed
as restricting the Employee's right to sell or otherwise dispose of any
business or investments owned or operated by Employee as of the date hereof.
(b) Termination Without Cause or for Disability; Constructive
Termination. In the event that the Employment of Employee is terminated by
Employers without Cause or as a result of the total disability of Employee or
by Employee as a constructive termination, Employee hereby agrees that during
the period that Employee accepts payments from the Employers pursuant to
Section 4(a) or Section 4(c) above, as applicable, neither he nor any affiliate
shall, either in his own behalf or as a partner, officer, director, employee,
agent or shareholder (other than as the holder of less than 5% of the
outstanding capital stock of any corporation with a class of equity security
registered under Section 12(b) or Section 12(g) of the Securities Exchange Act
of 1934, as amended) engage in, invest in or render services to any person or
entity engaged in the businesses in which Employers or any subsidiary of
Employers is then engaged and situated within any country. Nothing contained in
this Section 8(b) shall be construed as
7
<PAGE> 8
restricting the Employee's right to sell or otherwise dispose of any business
or investments owned or operated by Employee as of the date hereof. In the
event of Employee's violation of the provisions of Section 8(b), the right of
Employee to receive any further payment pursuant to Section 4(a) or 4(c) above,
as applicable, shall immediately terminate and the Employers shall be entitled
to secure reimbursement from Employee for all payments made to Employee
subsequent to the date of any such violation. The parties hereto hereby
acknowledge and agree that the provisions of the immediately preceding sentence
shall be the sole and exclusive remedy of the Employers in respect of any
violation of this Section 8(b).
SECTION 9. Agreement Not to Solicit Employees. Employee agrees that,
for a period of three (3) years following the termination of the Employment
Period, other than by Employers without Cause or as a result of the total
disability of Employee or by Employee as a constructive termination, and only
by reason of voluntary termination or termination for Cause, neither he nor any
affiliate shall, on behalf of any business engaged in a business competitive
with Employers or any subsidiary of Employers, solicit or induce, or in any
manner attempt to solicit or induce, any person employed by, or any agent of,
either of Employers or any subsidiary of Employers to terminate his employment
or agency, as the case may be, with either of Employers or such subsidiary;
provided that such limitations shall not apply if the contact with the Employee
or consultant is initiated by a third party on a "blind basis" such as through
a head hunter.
SECTION 10. No Violation. Employee hereby represents and warrants to
Employers that the execution, delivery and performance of this Agreement by
Employee does not, with or without the giving of notice or the passage of time,
or both, conflict with, result in a default, right to accelerate or loss of
rights under any provision of any agreement or understanding to which the
Employee or, to the best knowledge of Employee, any of Employee's affiliates
are a party or by which Employee, or to the best knowledge of Employee,
Employee's affiliates may be bound or affected.
SECTION 11. Captions. The captions, headings and arrangements used in
this Agreement are for convenience only and do not in any way affect, limit or
amplify the provisions hereof.
SECTION 12. Notices. All notices required or permitted to be given
hereunder shall be in writing and shall be deemed delivered, whether or not
actually received, two days after deposited in the United States mail, postage
prepaid, registered or certified mail, return receipt requested, addressed to
the party to whom notice is being given at the specified address or at such
other address as such party may designate by notice:
8
<PAGE> 9
Employers: Thermadyne Holdings Corporation
c/o DLJ Merchant Banking Partners II, L.P.
277 Park Avenue
New York, New York 10172
Attention: Peter T. Grauer
Fax: (212) 892-7272
and
Thermadyne Holdings Corporation
101 South Hanley Road
St. Louis, Missouri 63105
Attention: James H. Tate and Stephanie N. Josephson
Fax: (314) 746-2374
with a copy to:
Davis Polk & Wardwell
450 Lexington Avenue
New York, New York 10017
Attention: George R. Bason, Jr.
Fax: (212) 450-4800
Employee: c/o Thermadyne Holdings Corporation
101 South Hanley Road
St. Louis, Missouri 63105
SECTION 13. Invalid Provisions. If any provision of this Agreement is
held to be illegal, invalid or unenforceable under present or future laws, such
provisions shall be fully severable, and this Agreement shall be construed and
enforced as if such illegal, invalid or unenforceable provision had never
comprised a part of this Agreement; the remaining provisions of this Agreement
shall remain in full force and effect and shall not be affected by the illegal,
invalid or unenforceable provision or by its severance for this Agreement. In
lieu of each such illegal, invalid or unenforceable provision, there shall be
added automatically as part of this Agreement a provision as similar in terms
to such illegal, invalid or unenforceable provision as may be possible and be
legal, valid and enforceable.
SECTION 14. Amendments. This Agreement may be amended in whole or
in part only by an instrument in writing setting forth the particulars of such
amendment and duly executed by an officer of Employers and by Employee.
9
<PAGE> 10
SECTION 15. Waiver. No delay or omission by any party hereto to
exercise any right or power hereunder shall impair such right or power to be
construed as a waiver thereof. A waiver by any of the parties hereto of any of
the covenants to be performed by any other party or any breach thereof shall
not be construed to be a waiver of any succeeding breach thereof or of any
other covenant herein contained. Except as otherwise expressly set forth
herein, all remedies provided for in this Agreement shall be cumulative and in
addition to and not in lieu of any other remedies available to any party at
law, in equity or otherwise.
SECTION 16. Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall constitute an original, and all of which
together shall constitute one and the same Agreement.
SECTION 17. Governing Law. This Agreement shall be construed and
enforced according to the laws of the State of Missouri.
SECTION 18. Payment Upon Death of Employee. In the event of the
death of Employee during the term hereof, any unpaid payments due either prior
to Employee's death or after Employee's death shall be payable as designated by
Employee in writing to Employers. In the event of the death of all such
persons so designated by Employee, either prior to the death of the Employee or
during any time when payments are due as provided herein, or in the event
Employee fails to so designate, or withdraws all such designations, said
payments thereafter shall be made to the Employee or to Employee's estate.
SECTION 19. Prior Employment Agreement. This Agreement supersedes
any and all other employment, change-in-control, severance or similar
agreements between Employee and Employers.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the date first above written.
EMPLOYERS:
THERMADYNE HOLDINGS CORPORATION
By /s/ JAMES H. TATE
-----------------------------
Title
-----------------------------
EMPLOYEE:
/s/ JAMES H. TATE
-------------------------------
James H. Tate
10
<PAGE> 1
EXHIBIT 10.19
EXECUTIVE EMPLOYMENT AGREEMENT
This Agreement is made and entered into as of May 22, 1998, (the
EFFECTIVE DATE") by and among Thermadyne Holdings Corporation, a Delaware
corporation ("HOLDINGS"), together with its subsidiaries as herein defined (all
called the "EMPLOYERS") and Stephanie N. Josephson ("EMPLOYEE").
WITNESSETH:
WHEREAS, Employers desire to continue to employ Employee upon the
terms set forth herein;
WHEREAS, Employee desires to continue to be employed by Employers and
to appropriately memorialize the terms and conditions of such employment;
WHEREAS, Holdings is entering into this Agreement by and on behalf of
itself and each trade or business in which its ownership and the value or voting
power is at least 50% (the "SUBSIDIARIES");
NOW THEREFORE, Employee and Employers, in consideration of the
agreements, covenants and conditions herein, hereby agree as follows:
SECTION 1. Basic Employment Provisions.
(a) Employment and Term. Employers hereby employ Employee (hereinafter
referred to as the "EMPLOYMENT") as Vice President and General Counsel of
Holdings and Employee agrees to be employed by Employers in such capacities, all
on the terms and conditions set forth herein. The Employment shall be for a
period (the "EMPLOYMENT PERIOD") that will (i) commence on the Effective Date
and continue for at least three years thereafter (unless earlier terminated as
provided herein) and (ii) renew on each anniversary of the Effective Date for a
three-year period, on the same terms and conditions contained herein (unless
earlier terminated as provided herein or Employee is timely provided a notice of
nonrenewal as provided herein), such that the Employment Period shall extend for
a period of three years from the date of each such extension. The Employers must
provide Employee with written notice not less than 60 days in advance of the
applicable anniversary of the Effective Date in order to avoid renewal of the
Employment Period on such anniversary as described above. Notice shall be deemed
given on the date it is received by the Employee.
(b) Duties. Employee shall be subject to the direction and supervision
of the Board of Directors of Holdings (the "BOARD") and, as the Vice President
and General Counsel of Holdings, shall have those duties and responsibilities
which
<PAGE> 2
are assigned to him during the Employment Period by the Board consistent with
his positions, provided that the Board shall not assign any greater duties or
responsibilities to the Employee than are necessary to the Employee's faithful
and adequate supervision of the overall management and businesses of the
Employers. The Board shall not take any action which results in a diminution of
Employee's position, authority, duties or responsibilities as of the date
hereof. The parties expressly acknowledge that the Employee shall devote all of
his business time and attention to the transaction of the Employer's businesses
as is reasonably necessary to discharge his supervisory management
responsibilities hereunder. Employee agrees to perform faithfully the duties
assigned to him to the best of his ability.
SECTION 2. Compensation.
(a) Salary. Employers shall pay to Employee during the Employment
Period a salary as basic compensation for the services to be rendered by
Employee hereunder. The initial amount of such salary shall be $175,000 per
annum. Such salary shall be reviewed no less frequently than annually by the
Board and may be increased upon the approval of the Board in its sole
discretion. Such salary shall accrue and be payable in accordance with the
payroll practices of Employers' subsidiary or subsidiaries in effect from time
to time. All such payments shall be subject to deduction and withholding
authorized or required by applicable law.
(b) Bonus. During the Employment Period, Employee shall additionally
participate in an annual bonus plan providing for an annual bonus opportunity of
not less than 55% of Employee's annual salary.
(c) Benefits. During the Employment Period, Employee shall be entitled
to participate in such other employee benefit plans, programs and arrangements
as are customarily accorded the executives of Employers, including without
limitation, tax qualified profit sharing and retirement plans, group life,
hospitalization and other insurance and vacations (but excluding stock option
and other stock- or equity-based compensation plans), on a basis no less
favorable than as of the date of this Agreement. Without limiting the foregoing,
the employee benefit plans, programs and arrangements in which Employee shall be
entitled to participate during the Employment Period shall be no less generous,
in the aggregate, than those in which such Employee was entitled to participate
immediately prior to the consummation of the merger between Holdings and Mercury
Acquisition Corporation.
2
<PAGE> 3
SECTION 3. Termination.
(a) Death or Disability. Employment of Employee under this Agreement
shall terminate automatically upon the death or total disability of Employee.
For the purpose of this Agreement, "TOTAL DISABILITY" shall be deemed to have
occurred if Employee shall have been unable to perform the duties of his
Employment due to mental or physical incapacity for a period of six (6)
consecutive months.
(b) Cause. The Board may terminate the Employment of Employee under
this Agreement for Cause. For the purposes of this Agreement, "CAUSE" shall be
deemed to be (i) dishonesty by Employee that results in substantial personal
enrichment at the expense of the Employers or (ii) demonstratively willful
repeated violations of Employee's obligations under this Agreement which are
intended to result in material injury to the Employers.
(c) Without Cause. Any of the Employers, acting alone, may terminate
the Employment of Employee under this Agreement without Cause.
(d) Constructive Termination. Employee may elect to terminate his
Employment under this Agreement upon a Constructive Termination Without Cause,
as defined below. For purposes of this Agreement, "CONSTRUCTIVE TERMINATION
WITHOUT CAUSE" shall mean a termination of the Employee's employment at his
initiative following the occurrence, without the Employee's prior written
consent, of one or more of the following events:
(i) receipt of notice from the Employers that the Employment
Period shall not be renewed as described in Section 1(a) above;
(ii) any failure by the Employers to comply with any of the
provisions of the Employment Agreement, other than an isolated,
insubstantial and inadvertent failure not occurring in bad faith and
which is remedied by the Employers promptly after receipt of notice
thereof given by the Employee;
(iii) any reduction in any form of compensation, fringe
benefit, deferred compensation plan or perquisite applicable to the
Employee immediately prior to the effective time of the Employment
Agreement, including any reduction in salary or any reduction in bonus
percentage to less than the average of such bonus percentage for the
two fiscal years immediately preceding the effective time of the
Employment Agreement;
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<PAGE> 4
(iv) the loss of any of the Employee's titles or positions in
effect at the effective time of the Employment Agreement;
(v) any change in the position to which the Employee reports
or the positions that report to the Employee at the effective time of
the Employment Agreement (reporting relationships);
(vi) the assignment to the Employee of any duties
inconsistent in any respect with the Employee's position (including
status, offices, titles and reporting relationships), authority, duties
or responsibilities as in effect at the effective time of the
Employment Agreement, or any other action by the Employers which
results in a diminution in such position, authority, duties or
responsibilities excluding an isolated, insubstantial and inadvertent
action not taken in bad faith and which is remedied by the Employers
promptly after receipt of notice thereof given by the Employee;
(vii) the relocation of the Employee's office location as
assigned to him by the Employers, to a location more than 25 miles from
his office location at the effective time of the Employment Agreement;
(viii) any purported termination by the Employers of the
Employee's employment otherwise than as expressly permitted by Section
3(b) of this Agreement; and
(ix) any failure by the Employers to comply with and satisfy
the provisions of Section 6 hereof, or failure by any successor
(whether direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business and/or assets of
the Employers to assume expressly and agree to perform the Employment
Agreement in the same manner and to the same extent the Employers would
be required to perform it if no such succession had taken place,
provided, in either case, that the successor contemplated by Section 6
hereof has received, at least 10 days prior to the giving of notice of
constructive termination by the Employee, written notice from the
Employers or the Employee of the requirements of the provisions of
Section 6 or of such failure.
For purposes of this Agreement any good faith determination of "Constructive
Termination Without Cause" made by the Employee shall be conclusive.
SECTION 4. Compensation Following Termination.
(a) Death or Disability. If the Employment Period is terminated
pursuant to the provisions of Section 3(a) above, this Agreement shall
terminate,
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<PAGE> 5
and no further compensation shall be payable to Employee except that Employee or
Employee's estate, heirs or beneficiaries, as applicable, shall be entitled, in
addition to any other benefits to which Employee is or may become entitled under
any benefit plan, to receive Employee's then current basic compensation, plus an
amount in lieu of bonus, which amount shall be determined as the average bonus
received by Employee for the appropriate period (prorated for partial portions
thereof) for the previous 24 months hereunder and all other benefits to which
Employee would otherwise be entitled hereunder during the Employment Period for
a period of 24 months from the date the Employment Period terminates.
(b) Termination for Cause or Voluntary Termination. If the Employment
Period is terminated for Cause or voluntarily by the Employee for reasons other
than those described in Section 3(a) or 3(d) above, no further compensation or
benefits shall be paid to Employee after the date of termination, but Employee
shall be entitled to receive benefits to which he is or may become entitled
pursuant to any benefit plan.
(c) Termination Without Cause; Constructive Termination. If the
Employment Period is terminated pursuant to Section 3(c) or 3(d) above, Employee
shall be entitled to continue to receive from Employers his then current basic
compensation hereunder, plus an amount in lieu of bonus, which amount shall be
determined as the average bonus received by Employee for the appropriate period
(prorated for partial portions thereof) for the previous 24 months, such amount
to continue to be paid in accordance with the payroll practices of Employers for
a period equal to the period remaining in the Employment Period immediately
prior to such termination and Employee shall further be entitled during such
period both to continue to receive the benefits to which he would otherwise be
entitled during the Employment Period pursuant to Section 2(c) above and to
reimbursement for expenses incurred by Employee to own and maintain an
automobile as contemplated by Section 5 below. Such continuation of
compensation, benefits and automobile expenses shall continue for the period
described above notwithstanding any earlier death or reemployment of Employee.
SECTION 5. Expense Reimbursement. Upon the submission of properly
documented expense account reports, Employers shall reimburse Employee for all
reasonable business-related travel and entertainment expenses incurred by
Employee in the course of his Employment with Employers and for expenses
incurred by Employee to own and maintain an automobile.
SECTION 6. Assignability; Binding Nature. This Agreement shall be
binding and inure to the benefit of the parties, and their respective
successors, heirs (in the case of Employee) and assigns. No obligations of the
Employers
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<PAGE> 6
under this Agreement may be assigned or transferred by the Employers except that
such obligations shall be assigned or transferred (as described below) pursuant
to a merger or consolidation of Holdings in which Holdings is not the continuing
entity, or the sale or liquidation of all or substantially all of the assets of
the Employers, provided that the assignee or transferee is the surviving entity
or successor to all or substantially all of the assets of the Employers and such
assignee or transferee assumes the liabilities, obligations and duties of the
Employers, as contained in this Agreement, either contractually or as a matter
of law. As used in this Agreement, the "Employers" and "Holdings" shall mean the
Employers and Holdings as hereinbefore defined, respectively, and any successor
to their business and/or assets as aforesaid which assumes and agrees to perform
this Agreement by operation of law, or otherwise.
SECTION 7. Confidential Information.
(a) Non-Disclosure. During the Employment Period or at any time
thereafter, irrespective of the time, manner or cause of the termination of this
Agreement, Employee will not directly or indirectly reveal, divulge, disclose or
communicate to any person or entity, other than authorized officers, directors
and employees of the Employers, in any manner whatsoever, any Confidential
Information (as hereinafter defined) of Employers or any subsidiary of Employers
without the prior written consent of the Board.
(b) Definition. As used herein, "CONFIDENTIAL INFORMATION" means
information disclosed to or known by Employee as a direct or indirect
consequence of or through the Employment about Employers or any subsidiary of
Employers, or their respective businesses, products and practices which
information is not generally known in the business in which Employers or any
subsidiary of Employers is or may be engaged. However, Confidential Information
shall not include under any circumstances any information with respect to the
foregoing matters which is (i) available to the public from a source other than
Employee, (ii) released in writing by Employers to the public or to persons who
are not under a similar obligation of confidentiality to Employers and who are
not parties to this Agreement, (iii) obtained by Employee from a third party not
under a similar obligation of confidentiality to Employers, (iv) required to be
disclosed by any court process or any government or agency or department of any
government, or (v) the subject of a written waiver executed by either Employers
for the benefit of Employee.
(c) Return of Property. Upon termination of the Employment, Employee
will surrender to Employers all Confidential Information, including without
limitation, all lists, charts, schedules, reports, financial statements, books
and records of the Employers or any subsidiary of the Employers, and all copies
6
<PAGE> 7
thereof, and all other property belonging to the Employers or any subsidiary of
the Employers, provided Employee shall be accorded reasonable access to such
Confidential Information subsequent to the Employment Period for any proper
purpose as determined in the reasonable judgment of any of the Employers.
SECTION 8. Agreement Not to Solicit Employees. Employee agrees that,
for a period of three (3) years following the termination of the Employment
Period, other than by Employers without Cause or as a result of the total
disability of Employee or by Employee as a constructive termination, and only by
reason of voluntary termination or termination for Cause, neither he nor any
affiliate shall, on behalf of any business engaged in a business competitive
with Employers or any subsidiary of Employers, solicit or induce, or in any
manner attempt to solicit or induce, any person employed by, or any agent of,
either of Employers or any subsidiary of Employers to terminate his employment
or agency, as the case may be, with either of Employers or such subsidiary;
provided that such limitations shall not apply if the contact with the Employee
or consultant is initiated by a third party on a "blind basis" such as through a
head hunter.
SECTION 9. No Violation. Employee hereby represents and warrants to
Employers that the execution, delivery and performance of this Agreement by
Employee does not, with or without the giving of notice or the passage of time,
or both, conflict with, result in a default, right to accelerate or loss of
rights under any provision of any agreement or understanding to which the
Employee or, to the best knowledge of Employee, any of Employee's affiliates are
a party or by which Employee, or to the best knowledge of Employee, Employee's
affiliates may be bound or affected.
SECTION 10. Captions. The captions, headings and arrangements used in
this Agreement are for convenience only and do not in any way affect, limit or
amplify the provisions hereof.
SECTION 11. Notices. All notices required or permitted to be given
hereunder shall be in writing and shall be deemed delivered, whether or not
actually received, two days after deposited in the United States mail, postage
prepaid, registered or certified mail, return receipt requested, addressed to
the party to whom notice is being given at the specified address or at such
other address as such party may designate by notice:
Employers: Thermadyne Holdings Corporation
c/o DLJ Merchant Banking Partners II, L.P.
277 Park Avenue
New York, New York 10172
Attention: Peter T. Grauer
7
<PAGE> 8
Fax: (212) 892-7272
and
Thermadyne Holdings Corporation
101 South Hanley Road
St. Louis, Missouri 63105
Attention: James H. Tate and Stephanie N. Josephson
Fax: (314) 746-2374
with a copy to:
Davis Polk & Wardwell
450 Lexington Avenue
New York, New York 10017
Attention: George R. Bason, Jr.
Fax: (212) 450-4800
Employee: c/o Thermadyne Holdings Corporation
101 South Hanley Road
St. Louis, Missouri 63105
SECTION 12. Invalid Provisions. If any provision of this Agreement is
held to be illegal, invalid or unenforceable under present or future laws, such
provisions shall be fully severable, and this Agreement shall be construed and
enforced as if such illegal, invalid or unenforceable provision had never
comprised a part of this Agreement; the remaining provisions of this Agreement
shall remain in full force and effect and shall not be affected by the illegal,
invalid or unenforceable provision or by its severance for this Agreement. In
lieu of each such illegal, invalid or unenforceable provision, there shall be
added automatically as part of this Agreement a provision as similar in terms to
such illegal, invalid or unenforceable provision as may be possible and be
legal, valid and enforceable.
SECTION 13. Amendments. This Agreement may be amended in whole or
in part only by an instrument in writing setting forth the particulars of such
amendment and duly executed by an officer of Employers and by Employee.
SECTION 14. Waiver. No delay or omission by any party hereto to
exercise any right or power hereunder shall impair such right or power to be
construed as a waiver thereof. A waiver by any of the parties hereto of any of
the covenants to be performed by any other party or any breach thereof shall not
be construed to be a waiver of any succeeding breach thereof or of any other
8
<PAGE> 9
covenant herein contained. Except as otherwise expressly set forth herein, all
remedies provided for in this Agreement shall be cumulative and in addition to
and not in lieu of any other remedies available to any party at law, in equity
or otherwise.
SECTION 15. Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall constitute an original, and all of which
together shall constitute one and the same Agreement.
SECTION 16. Governing Law. This Agreement shall be construed and
enforced according to the laws of the State of Missouri.
SECTION 17. Payment Upon Death of Employee. In the event of the death
of Employee during the term hereof, any unpaid payments due either prior to
Employee's death or after Employee's death shall be payable as designated by
Employee in writing to Employers. In the event of the death of all such persons
so designated by Employee, either prior to the death of the Employee or during
any time when payments are due as provided herein, or in the event Employee
fails to so designate, or withdraws all such designations, said payments
thereafter shall be made to the Employee or to Employee's estate.
SECTION 18. Prior Employment Agreement. This Agreement supersedes
any and all other employment, change-in-control, severance or similar agreements
between Employee and Employers.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the date first above written.
EMPLOYERS:
THERMADYNE HOLDINGS CORPORATION
By /s/ JAMES H. TATE
-------------------------------------------
Title
----------------------------------------
EMPLOYEE:
/s/ STEPHANIE N. JOSEPHSON
----------------------------------------------
Stephanie N. Josephson
9
<PAGE> 1
EXHIBIT 10.20
EXECUTIVE EMPLOYMENT AGREEMENT
This Agreement is made and entered into as of May 22, 1998 (the
EFFECTIVE DATE") by and among Thermadyne Holdings Corporation, a Delaware
corporation ("HOLDINGS"), together with its subsidiaries as herein defined (all
called the "EMPLOYERS") and Thomas C. Drury ("EMPLOYEE").
WITNESSETH:
WHEREAS, Employers desire to continue to employ Employee upon the
terms set forth herein;
WHEREAS, Employee desires to continue to be employed by Employers and
to appropriately memorialize the terms and conditions of such employment;
WHEREAS, Holdings is entering into this Agreement by and on behalf of
itself and each trade or business in which its ownership and the value or voting
power is at least 50% (the "SUBSIDIARIES");
NOW THEREFORE, Employee and Employers, in consideration of the
agreements, covenants and conditions herein, hereby agree as follows:
SECTION 1. Basic Employment Provisions.
(a) Employment and Term. Employers hereby employ Employee (hereinafter
referred to as the "EMPLOYMENT") as Vice President, Human Resources of Holdings
and Employee agrees to be employed by Employers in such capacity, all on the
terms and conditions set forth herein. The Employment shall be for a period (the
"EMPLOYMENT PERIOD") that will (i) commence on the Effective Date and continue
for at least three years thereafter (unless earlier terminated as provided
herein) and (ii) renew on each anniversary of the Effective Date for a
three-year period, on the same terms and conditions contained herein (unless
earlier terminated as provided herein or Employee is timely provided a notice of
nonrenewal as provided herein), such that the Employment Period shall extend for
a period of three years from the date of each such extension. The Employers must
provide Employee with written notice not less than 60 days in advance of the
applicable anniversary of the Effective Date in order to avoid renewal of the
Employment Period on such anniversary as described above. Notice shall be deemed
given on the date it is received by the Employee.
(b) Duties. Employee shall be subject to the direction and supervision
of the Board of Directors of Holdings (the "BOARD") and, as the Vice President,
Human Resources of Holdings, shall have those duties and responsibilities which
<PAGE> 2
are assigned to him during the Employment Period by the Board consistent with
his positions, provided that the Board shall not assign any greater duties or
responsibilities to the Employee than are necessary to the Employee's faithful
and adequate supervision of the overall management and businesses of the
Employers. The Board shall not take any action which results in a diminution of
Employee's position, authority, duties or responsibilities as of the date
hereof. The parties expressly acknowledge that the Employee shall devote all of
his business time and attention to the transaction of the Employer's businesses
as is reasonably necessary to discharge his supervisory management
responsibilities hereunder. Employee agrees to perform faithfully the duties
assigned to him to the best of his ability.
SECTION 2. Compensation.
(a) Salary. Employers shall pay to Employee during the Employment
Period a salary as basic compensation for the services to be rendered by
Employee hereunder. The initial amount of such salary shall be $145,000 per
annum. Such salary shall be reviewed no less frequently than annually by the
Board and may be increased upon the approval of the Board in its sole
discretion. Such salary shall accrue and be payable in accordance with the
payroll practices of Employers' subsidiary or subsidiaries in effect from time
to time. All such payments shall be subject to deduction and withholding
authorized or required by applicable law.
(b) Bonus. During the Employment Period, Employee shall additionally
participate in an annual bonus plan providing for an annual bonus opportunity of
not less than 55% of Employee's annual salary.
(c) Benefits. During the Employment Period, Employee shall be entitled
to participate in such other employee benefit plans, programs and arrangements
as are customarily accorded the executives of Employers, including without
limitation, tax qualified profit sharing and retirement plans, group life,
hospitalization and other insurance and vacations (but excluding stock option
and other stock- or equity-based compensation plans), on a basis no less
favorable than as of the date of this Agreement. Without limiting the foregoing,
the employee benefit plans, programs and arrangements in which Employee shall be
entitled to participate during the Employment Period shall be no less generous,
in the aggregate, than those in which such Employee was entitled to participate
immediately prior to the consummation of the merger between Holdings and Mercury
Acquisition Corporation.
2
<PAGE> 3
SECTION 3. Termination.
(a) Death or Disability. Employment of Employee under this Agreement
shall terminate automatically upon the death or total disability of Employee.
For the purpose of this Agreement, "TOTAL DISABILITY" shall be deemed to have
occurred if Employee shall have been unable to perform the duties of his
Employment due to mental or physical incapacity for a period of six (6)
consecutive months.
(b) Cause. The Board may terminate the Employment of Employee under
this Agreement for Cause. For the purposes of this Agreement, "CAUSE" shall be
deemed to be (i) dishonesty by Employee that results in substantial personal
enrichment at the expense of the Employers or (ii) demonstratively willful
repeated violations of Employee's obligations under this Agreement which are
intended to result in material injury to the Employers.
(c) Without Cause. Any of the Employers, acting alone, may terminate
the Employment of Employee under this Agreement without Cause.
(d) Constructive Termination. Employee may elect to terminate his
Employment under this Agreement upon a Constructive Termination Without Cause,
as defined below. For purposes of this Agreement, "CONSTRUCTIVE TERMINATION
WITHOUT CAUSE" shall mean a termination of the Employee's employment at his
initiative following the occurrence, without the Employee's prior written
consent, of one or more of the following events:
(i) receipt of notice from the Employers that the Employment
Period shall not be renewed as described in Section 1(a) above;
(ii) any failure by the Employers to comply with any of the
provisions of the Employment Agreement, other than an isolated,
insubstantial and inadvertent failure not occurring in bad faith and
which is remedied by the Employers promptly after receipt of notice
thereof given by the Employee;
(iii) any reduction in any form of compensation, fringe
benefit, deferred compensation plan or perquisite applicable to the
Employee immediately prior to the effective time of the Employment
Agreement, including any reduction in salary or any reduction in bonus
percentage to less than the average of such bonus percentage for the
two fiscal years immediately preceding the effective time of the
Employment Agreement;
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<PAGE> 4
(iv) the loss of any of the Employee's titles or positions in
effect at the effective time of the Employment Agreement;
(v) any change in the position to which the Employee reports
or the positions that report to the Employee at the effective time of
the Employment Agreement (reporting relationships);
(vi) the assignment to the Employee of any duties inconsistent
in any respect with the Employee's position (including status, offices,
titles and reporting relationships), authority, duties or
responsibilities as in effect at the effective time of the Employment
Agreement, or any other action by the Employers which results in a
diminution in such position, authority, duties or responsibilities
excluding an isolated, insubstantial and inadvertent action not taken
in bad faith and which is remedied by the Employers promptly after
receipt of notice thereof given by the Employee;
(vii) the relocation of the Employee's office location as
assigned to him by the Employers, to a location more than 25 miles from
his office location at the effective time of the Employment Agreement;
(viii) any purported termination by the Employers of the
Employee's employment otherwise than as expressly permitted by Section
3(b) of this Agreement; and
(ix) any failure by the Employers to comply with and satisfy
the provisions of Section 6 hereof, or failure by any successor
(whether direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business and/or assets of
the Employers to assume expressly and agree to perform the Employment
Agreement in the same manner and to the same extent the Employers would
be required to perform it if no such succession had taken place,
provided, in either case, that the successor contemplated by Section 6
hereof has received, at least 10 days prior to the giving of notice of
constructive termination by the Employee, written notice from the
Employers or the Employee of the requirements of the provisions of
Section 6 or of such failure.
For purposes of this Agreement any good faith determination of "Constructive
Termination Without Cause" made by the Employee shall be conclusive.
SECTION 4. Compensation Following Termination.
(a) Death or Disability. If the Employment Period is terminated
pursuant to the provisions of Section 3(a) above, this Agreement shall
terminate,
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<PAGE> 5
and no further compensation shall be payable to Employee except that Employee or
Employee's estate, heirs or beneficiaries, as applicable, shall be entitled, in
addition to any other benefits to which Employee is or may become entitled under
any benefit plan, to receive Employee's then current basic compensation, plus an
amount in lieu of bonus, which amount shall be determined as the average bonus
received by Employee for the appropriate period (prorated for partial portions
thereof) for the previous 24 months hereunder and all other benefits to which
Employee would otherwise be entitled hereunder during the Employment Period for
a period of 24 months from the date the Employment Period terminates.
(b) Termination for Cause or Voluntary Termination. If the Employment
Period is terminated for Cause or voluntarily by the Employee for reasons other
than those described in Section 3(a) or 3(d) above, no further compensation or
benefits shall be paid to Employee after the date of termination, but Employee
shall be entitled to receive benefits to which he is or may become entitled
pursuant to any benefit plan.
(c) Termination Without Cause; Constructive Termination. If the
Employment Period is terminated pursuant to Section 3(c) or 3(d) above, Employee
shall be entitled to continue to receive from Employers his then current basic
compensation hereunder, plus an amount in lieu of bonus, which amount shall be
determined as the average bonus received by Employee for the appropriate period
(prorated for partial portions thereof) for the previous 24 months, such amount
to continue to be paid in accordance with the payroll practices of Employers for
a period equal to the period remaining in the Employment Period immediately
prior to such termination and Employee shall further be entitled during such
period both to continue to receive the benefits to which he would otherwise be
entitled during the Employment Period pursuant to Section 2(c) above and to
reimbursement for expenses incurred by Employee to own and maintain an
automobile as contemplated by Section 5 below. Such continuation of
compensation, benefits and automobile expenses shall continue for the period
described above notwithstanding any earlier death or reemployment of Employee.
SECTION 5. Expense Reimbursement. Upon the submission of properly
documented expense account reports, Employers shall reimburse Employee for all
reasonable business-related travel and entertainment expenses incurred by
Employee in the course of his Employment with Employers and for expenses
incurred by Employee to own and maintain an automobile.
SECTION 6. Assignability; Binding Nature. This Agreement shall be
binding and inure to the benefit of the parties, and their respective
successors, heirs (in the case of Employee) and assigns. No obligations of the
Employers
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<PAGE> 6
under this Agreement may be assigned or transferred by the Employers except that
such obligations shall be assigned or transferred (as described below) pursuant
to a merger or consolidation of Holdings in which Holdings is not the continuing
entity, or the sale or liquidation of all or substantially all of the assets of
the Employers, provided that the assignee or transferee is the surviving entity
or successor to all or substantially all of the assets of the Employers and such
assignee or transferee assumes the liabilities, obligations and duties of the
Employers, as contained in this Agreement, either contractually or as a matter
of law. As used in this Agreement, the "Employers" and "Holdings" shall mean the
Employers and Holdings as hereinbefore defined, respectively, and any successor
to their business and/or assets as aforesaid which assumes and agrees to perform
this Agreement by operation of law, or otherwise.
SECTION 7. Confidential Information.
(a) Non-Disclosure. During the Employment Period or at any time
thereafter, irrespective of the time, manner or cause of the termination of this
Agreement, Employee will not directly or indirectly reveal, divulge, disclose or
communicate to any person or entity, other than authorized officers, directors
and employees of the Employers, in any manner whatsoever, any Confidential
Information (as hereinafter defined) of Employers or any subsidiary of Employers
without the prior written consent of the Board.
(b) Definition. As used herein, "CONFIDENTIAL INFORMATION" means
information disclosed to or known by Employee as a direct or indirect
consequence of or through the Employment about Employers or any subsidiary of
Employers, or their respective businesses, products and practices which
information is not generally known in the business in which Employers or any
subsidiary of Employers is or may be engaged. However, Confidential Information
shall not include under any circumstances any information with respect to the
foregoing matters which is (i) available to the public from a source other than
Employee, (ii) released in writing by Employers to the public or to persons who
are not under a similar obligation of confidentiality to Employers and who are
not parties to this Agreement, (iii) obtained by Employee from a third party not
under a similar obligation of confidentiality to Employers, (iv) required to be
disclosed by any court process or any government or agency or department of any
government, or (v) the subject of a written waiver executed by either Employers
for the benefit of Employee.
(c) Return of Property. Upon termination of the Employment, Employee
will surrender to Employers all Confidential Information, including without
limitation, all lists, charts, schedules, reports, financial statements, books
and records of the Employers or any subsidiary of the Employers, and all copies
6
<PAGE> 7
thereof, and all other property belonging to the Employers or any subsidiary of
the Employers, provided Employee shall be accorded reasonable access to such
Confidential Information subsequent to the Employment Period for any proper
purpose as determined in the reasonable judgment of any of the Employers.
SECTION 8. Agreement Not to Solicit Employees. Employee agrees that,
for a period of three (3) years following the termination of the Employment
Period, other than by Employers without Cause or as a result of the total
disability of Employee or by Employee as a constructive termination, and only by
reason of voluntary termination or termination for Cause, neither he nor any
affiliate shall, on behalf of any business engaged in a business competitive
with Employers or any subsidiary of Employers, solicit or induce, or in any
manner attempt to solicit or induce, any person employed by, or any agent of,
either of Employers or any subsidiary of Employers to terminate his employment
or agency, as the case may be, with either of Employers or such subsidiary;
provided that such limitations shall not apply if the contact with the Employee
or consultant is initiated by a third party on a "blind basis" such as through a
head hunter.
SECTION 9. No Violation. Employee hereby represents and warrants to
Employers that the execution, delivery and performance of this Agreement by
Employee does not, with or without the giving of notice or the passage of time,
or both, conflict with, result in a default, right to accelerate or loss of
rights under any provision of any agreement or understanding to which the
Employee or, to the best knowledge of Employee, any of Employee's affiliates are
a party or by which Employee, or to the best knowledge of Employee, Employee's
affiliates may be bound or affected.
SECTION 10. Captions. The captions, headings and arrangements used in
this Agreement are for convenience only and do not in any way affect, limit or
amplify the provisions hereof.
SECTION 11. Notices. All notices required or permitted to be given
hereunder shall be in writing and shall be deemed delivered, whether or not
actually received, two days after deposited in the United States mail, postage
prepaid, registered or certified mail, return receipt requested, addressed to
the party to whom notice is being given at the specified address or at such
other address as such party may designate by notice:
Employers: Thermadyne Holdings Corporation
c/o DLJ Merchant Banking Partners II, L.P.
277 Park Avenue
New York, New York 10172
Attention: Peter T. Grauer
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<PAGE> 8
Fax: (212) 892-7272
and
Thermadyne Holdings Corporation
101 South Hanley Road
St. Louis, Missouri 63105
Attention: James H. Tate and Stephanie N. Josephson
Fax: (314) 746-2374
with a copy to:
Davis Polk & Wardwell
450 Lexington Avenue
New York, New York 10017
Attention: George R. Bason, Jr.
Fax: (212) 450-4800
Employee: c/o Thermadyne Holdings Corporation
101 South Hanley Road
St. Louis, Missouri 63105
SECTION 12. Invalid Provisions. If any provision of this Agreement is
held to be illegal, invalid or unenforceable under present or future laws, such
provisions shall be fully severable, and this Agreement shall be construed and
enforced as if such illegal, invalid or unenforceable provision had never
comprised a part of this Agreement; the remaining provisions of this Agreement
shall remain in full force and effect and shall not be affected by the illegal,
invalid or unenforceable provision or by its severance for this Agreement. In
lieu of each such illegal, invalid or unenforceable provision, there shall be
added automatically as part of this Agreement a provision as similar in terms to
such illegal, invalid or unenforceable provision as may be possible and be
legal, valid and enforceable.
SECTION 13. Amendments. This Agreement may be amended in whole or
in part only by an instrument in writing setting forth the particulars of such
amendment and duly executed by an officer of Employers and by Employee.
SECTION 14. Waiver. No delay or omission by any party hereto to
exercise any right or power hereunder shall impair such right or power to be
construed as a waiver thereof. A waiver by any of the parties hereto of any of
the covenants to be performed by any other party or any breach thereof shall not
be construed to be a waiver of any succeeding breach thereof or of any other
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<PAGE> 9
covenant herein contained. Except as otherwise expressly set forth herein, all
remedies provided for in this Agreement shall be cumulative and in addition to
and not in lieu of any other remedies available to any party at law, in equity
or otherwise.
SECTION 15. Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall constitute an original, and all of which
together shall constitute one and the same Agreement.
SECTION 16. Governing Law. This Agreement shall be construed and
enforced according to the laws of the State of Missouri.
SECTION 17. Payment Upon Death of Employee. In the event of the death
of Employee during the term hereof, any unpaid payments due either prior to
Employee's death or after Employee's death shall be payable as designated by
Employee in writing to Employers. In the event of the death of all such persons
so designated by Employee, either prior to the death of the Employee or during
any time when payments are due as provided herein, or in the event Employee
fails to so designate, or withdraws all such designations, said payments
thereafter shall be made to the Employee or to Employee's estate.
SECTION 18. Prior Employment Agreement. This Agreement supersedes
any and all other employment, change-in-control, severance or similar agreements
between Employee and Employers.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the date first above written.
EMPLOYERS:
THERMADYNE HOLDINGS CORPORATION
By /s/ JAMES H. TATE
-------------------------------------
Title
----------------------------------
EMPLOYEE:
/s/ THOMAS C. DRURY
---------------------------------------
Thomas C. Drury
9
<PAGE> 1
EXHIBIT 10.21
EXECUTIVE EMPLOYMENT AGREEMENT
This Agreement is made and entered into as of May 22, 1998, (the
EFFECTIVE DATE") by and among Thermadyne Holdings Corporation, a Delaware
corporation ("HOLDINGS"), together with its subsidiaries as herein defined (all
called the "EMPLOYERS") and Robert D. Maddox ("EMPLOYEE").
WITNESSETH:
WHEREAS, Employers desire to continue to employ Employee upon the
terms set forth herein;
WHEREAS, Employee desires to continue to be employed by Employers and
to appropriately memorialize the terms and conditions of such employment;
WHEREAS, Holdings is entering into this Agreement by and on behalf of
itself and each trade or business in which its ownership and the value or voting
power is at least 50% (the "SUBSIDIARIES");
NOW THEREFORE, Employee and Employers, in consideration of the
agreements, covenants and conditions herein, hereby agree as follows:
SECTION 1. Basic Employment Provisions.
(a) Employment and Term. Employers hereby employ Employee (hereinafter
referred to as the "EMPLOYMENT") as Vice President and Controller of Holdings
and Employee agrees to be employed by Employers in such capacities, all on the
terms and conditions set forth herein. The Employment shall be for a period (the
"EMPLOYMENT PERIOD") that will (i) commence on the Effective Date and continue
for at least three years thereafter (unless earlier terminated as provided
herein) and (ii) renew on each anniversary of the Effective Date for a
three-year period, on the same terms and conditions contained herein (unless
earlier terminated as provided herein or Employee is timely provided a notice of
nonrenewal as provided herein), such that the Employment Period shall extend for
a period of three years from the date of each such extension. The Employers must
provide Employee with written notice not less than 60 days in advance of the
applicable anniversary of the Effective Date in order to avoid renewal of the
Employment Period on such anniversary as described above. Notice shall be deemed
given on the date it is received by the Employee.
(b) Duties. Employee shall be subject to the direction and supervision
of the Board of Directors of Holdings (the "BOARD") and, as the Vice President
and Controller of Holdings, shall have those duties and responsibilities which
are
<PAGE> 2
assigned to him during the Employment Period by the Board consistent with his
positions, provided that the Board shall not assign any greater duties or
responsibilities to the Employee than are necessary to the Employee's faithful
and adequate supervision of the overall management and businesses of the
Employers. The Board shall not take any action which results in a diminution of
Employee's position, authority, duties or responsibilities as of the date
hereof. The parties expressly acknowledge that the Employee shall devote all of
his business time and attention to the transaction of the Employer's businesses
as is reasonably necessary to discharge his supervisory management
responsibilities hereunder. Employee agrees to perform faithfully the duties
assigned to him to the best of his ability.
SECTION 2. Compensation.
(a) Salary. Employers shall pay to Employee during the Employment
Period a salary as basic compensation for the services to be rendered by
Employee hereunder. The initial amount of such salary shall be $145,000 per
annum. Such salary shall be reviewed no less frequently than annually by the
Board and may be increased upon the approval of the Board in its sole
discretion. Such salary shall accrue and be payable in accordance with the
payroll practices of Employers' subsidiary or subsidiaries in effect from time
to time. All such payments shall be subject to deduction and withholding
authorized or required by applicable law.
(b) Bonus. During the Employment Period, Employee shall additionally
participate in an annual bonus plan providing for an annual bonus opportunity of
not less than 55% of Employee's annual salary.
(c) Benefits. During the Employment Period, Employee shall be entitled
to participate in such other employee benefit plans, programs and arrangements
as are customarily accorded the executives of Employers, including without
limitation, tax qualified profit sharing and retirement plans, group life,
hospitalization and other insurance and vacations (but excluding stock option
and other stock- or equity-based compensation plans), on a basis no less
favorable than as of the date of this Agreement. Without limiting the foregoing,
the employee benefit plans, programs and arrangements in which Employee shall be
entitled to participate during the Employment Period shall be no less generous,
in the aggregate, than those in which such Employee was entitled to participate
immediately prior to the consummation of the merger between Holdings and Mercury
Acquisition Corporation.
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<PAGE> 3
SECTION 3. Termination.
(a) Death or Disability. Employment of Employee under this Agreement
shall terminate automatically upon the death or total disability of Employee.
For the purpose of this Agreement, "TOTAL DISABILITY" shall be deemed to have
occurred if Employee shall have been unable to perform the duties of his
Employment due to mental or physical incapacity for a period of six (6)
consecutive months.
(b) Cause. The Board may terminate the Employment of Employee under
this Agreement for Cause. For the purposes of this Agreement, "CAUSE" shall be
deemed to be (i) dishonesty by Employee that results in substantial personal
enrichment at the expense of the Employers or (ii) demonstratively willful
repeated violations of Employee's obligations under this Agreement which are
intended to result in material injury to the Employers.
(c) Without Cause. Any of the Employers, acting alone, may terminate
the Employment of Employee under this Agreement without Cause.
(d) Constructive Termination. Employee may elect to terminate his
Employment under this Agreement upon a Constructive Termination Without Cause,
as defined below. For purposes of this Agreement, "CONSTRUCTIVE TERMINATION
WITHOUT CAUSE" shall mean a termination of the Employee's employment at his
initiative following the occurrence, without the Employee's prior written
consent, of one or more of the following events:
(i) receipt of notice from the Employers that the Employment
Period shall not be renewed as described in Section 1(a) above;
(ii) any failure by the Employers to comply with any of the
provisions of the Employment Agreement, other than an isolated,
insubstantial and inadvertent failure not occurring in bad faith and
which is remedied by the Employers promptly after receipt of notice
thereof given by the Employee;
(iii) any reduction in any form of compensation, fringe
benefit, deferred compensation plan or perquisite applicable to the
Employee immediately prior to the effective time of the Employment
Agreement, including any reduction in salary or any reduction in bonus
percentage to less than the average of such bonus percentage for the
two fiscal years immediately preceding the effective time of the
Employment Agreement;
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<PAGE> 4
(iv) the loss of any of the Employee's titles or positions in
effect at the effective time of the Employment Agreement;
(v) any change in the position to which the Employee reports
or the positions that report to the Employee at the effective time of
the Employment Agreement (reporting relationships);
(vi) the assignment to the Employee of any duties inconsistent
in any respect with the Employee's position (including status, offices,
titles and reporting relationships), authority, duties or
responsibilities as in effect at the effective time of the Employment
Agreement, or any other action by the Employers which results in a
diminution in such position, authority, duties or responsibilities
excluding an isolated, insubstantial and inadvertent action not taken
in bad faith and which is remedied by the Employers promptly after
receipt of notice thereof given by the Employee;
(vii) the relocation of the Employee's office location as
assigned to him by the Employers, to a location more than 25 miles from
his office location at the effective time of the Employment Agreement;
(viii) any purported termination by the Employers of the
Employee's employment otherwise than as expressly permitted by Section
3(b) of this Agreement; and
(ix) any failure by the Employers to comply with and satisfy
the provisions of Section 6 hereof, or failure by any successor
(whether direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business and/or assets of
the Employers to assume expressly and agree to perform the Employment
Agreement in the same manner and to the same extent the Employers would
be required to perform it if no such succession had taken place,
provided, in either case, that the successor contemplated by Section 6
hereof has received, at least 10 days prior to the giving of notice of
constructive termination by the Employee, written notice from the
Employers or the Employee of the requirements of the provisions of
Section 6 or of such failure.
For purposes of this Agreement any good faith determination of "Constructive
Termination Without Cause" made by the Employee shall be conclusive.
SECTION 4. Compensation Following Termination.
(a) Death or Disability. If the Employment Period is terminated
pursuant to the provisions of Section 3(a) above, this Agreement shall
terminate,
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<PAGE> 5
and no further compensation shall be payable to Employee except that Employee or
Employee's estate, heirs or beneficiaries, as applicable, shall be entitled, in
addition to any other benefits to which Employee is or may become entitled under
any benefit plan, to receive Employee's then current basic compensation, plus an
amount in lieu of bonus, which amount shall be determined as the average bonus
received by Employee for the appropriate period (prorated for partial portions
thereof) for the previous 24 months hereunder and all other benefits to which
Employee would otherwise be entitled hereunder during the Employment Period for
a period of 24 months from the date the Employment Period terminates.
(b) Termination for Cause or Voluntary Termination. If the Employment
Period is terminated for Cause or voluntarily by the Employee for reasons other
than those described in Section 3(a) or 3(d) above, no further compensation or
benefits shall be paid to Employee after the date of termination, but Employee
shall be entitled to receive benefits to which he is or may become entitled
pursuant to any benefit plan.
(c) Termination Without Cause; Constructive Termination. If the
Employment Period is terminated pursuant to Section 3(c) or 3(d) above, Employee
shall be entitled to continue to receive from Employers his then current basic
compensation hereunder, plus an amount in lieu of bonus, which amount shall be
determined as the average bonus received by Employee for the appropriate period
(prorated for partial portions thereof) for the previous 24 months, such amount
to continue to be paid in accordance with the payroll practices of Employers for
a period equal to the period remaining in the Employment Period immediately
prior to such termination and Employee shall further be entitled during such
period both to continue to receive the benefits to which he would otherwise be
entitled during the Employment Period pursuant to Section 2(c) above and to
reimbursement for expenses incurred by Employee to own and maintain an
automobile as contemplated by Section 5 below. Such continuation of
compensation, benefits and automobile expenses shall continue for the period
described above notwithstanding any earlier death or reemployment of Employee.
SECTION 5. Expense Reimbursement. Upon the submission of properly
documented expense account reports, Employers shall reimburse Employee for all
reasonable business-related travel and entertainment expenses incurred by
Employee in the course of his Employment with Employers and for expenses
incurred by Employee to own and maintain an automobile.
SECTION 6. Assignability; Binding Nature. This Agreement shall be
binding and inure to the benefit of the parties, and their respective
successors, heirs (in the case of Employee) and assigns. No obligations of the
Employers
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<PAGE> 6
under this Agreement may be assigned or transferred by the Employers except that
such obligations shall be assigned or transferred (as described below) pursuant
to a merger or consolidation of Holdings in which Holdings is not the continuing
entity, or the sale or liquidation of all or substantially all of the assets of
the Employers, provided that the assignee or transferee is the surviving entity
or successor to all or substantially all of the assets of the Employers and such
assignee or transferee assumes the liabilities, obligations and duties of the
Employers, as contained in this Agreement, either contractually or as a matter
of law. As used in this Agreement, the "Employers" and "Holdings" shall mean the
Employers and Holdings as hereinbefore defined, respectively, and any successor
to their business and/or assets as aforesaid which assumes and agrees to perform
this Agreement by operation of law, or otherwise.
SECTION 7. Confidential Information.
(a) Non-Disclosure. During the Employment Period or at any time
thereafter, irrespective of the time, manner or cause of the termination of this
Agreement, Employee will not directly or indirectly reveal, divulge, disclose or
communicate to any person or entity, other than authorized officers, directors
and employees of the Employers, in any manner whatsoever, any Confidential
Information (as hereinafter defined) of Employers or any subsidiary of Employers
without the prior written consent of the Board.
(b) Definition. As used herein, "CONFIDENTIAL INFORMATION" means
information disclosed to or known by Employee as a direct or indirect
consequence of or through the Employment about Employers or any subsidiary of
Employers, or their respective businesses, products and practices which
information is not generally known in the business in which Employers or any
subsidiary of Employers is or may be engaged. However, Confidential Information
shall not include under any circumstances any information with respect to the
foregoing matters which is (i) available to the public from a source other than
Employee, (ii) released in writing by Employers to the public or to persons who
are not under a similar obligation of confidentiality to Employers and who are
not parties to this Agreement, (iii) obtained by Employee from a third party not
under a similar obligation of confidentiality to Employers, (iv) required to be
disclosed by any court process or any government or agency or department of any
government, or (v) the subject of a written waiver executed by either Employers
for the benefit of Employee.
(c) Return of Property. Upon termination of the Employment, Employee
will surrender to Employers all Confidential Information, including without
limitation, all lists, charts, schedules, reports, financial statements, books
and records of the Employers or any subsidiary of the Employers, and all copies
6
<PAGE> 7
thereof, and all other property belonging to the Employers or any subsidiary of
the Employers, provided Employee shall be accorded reasonable access to such
Confidential Information subsequent to the Employment Period for any proper
purpose as determined in the reasonable judgment of any of the Employers.
SECTION 8. Agreement Not to Solicit Employees. Employee agrees that,
for a period of three (3) years following the termination of the Employment
Period, other than by Employers without Cause or as a result of the total
disability of Employee or by Employee as a constructive termination, and only by
reason of voluntary termination or termination for Cause, neither he nor any
affiliate shall, on behalf of any business engaged in a business competitive
with Employers or any subsidiary of Employers, solicit or induce, or in any
manner attempt to solicit or induce, any person employed by, or any agent of,
either of Employers or any subsidiary of Employers to terminate his employment
or agency, as the case may be, with either of Employers or such subsidiary;
provided that such limitations shall not apply if the contact with the Employee
or consultant is initiated by a third party on a "blind basis" such as through a
head hunter.
SECTION 9. No Violation. Employee hereby represents and warrants to
Employers that the execution, delivery and performance of this Agreement by
Employee does not, with or without the giving of notice or the passage of time,
or both, conflict with, result in a default, right to accelerate or loss of
rights under any provision of any agreement or understanding to which the
Employee or, to the best knowledge of Employee, any of Employee's affiliates are
a party or by which Employee, or to the best knowledge of Employee, Employee's
affiliates may be bound or affected.
SECTION 10. Captions. The captions, headings and arrangements used in
this Agreement are for convenience only and do not in any way affect, limit or
amplify the provisions hereof.
SECTION 11. Notices. All notices required or permitted to be given
hereunder shall be in writing and shall be deemed delivered, whether or not
actually received, two days after deposited in the United States mail, postage
prepaid, registered or certified mail, return receipt requested, addressed to
the party to whom notice is being given at the specified address or at such
other address as such party may designate by notice:
Employers: Thermadyne Holdings Corporation
c/o DLJ Merchant Banking Partners II, L.P.
277 Park Avenue
New York, New York 10172
Attention: Peter T. Grauer
7
<PAGE> 8
Fax: (212) 892-7272
and
Thermadyne Holdings Corporation
101 South Hanley Road
St. Louis, Missouri 63105
Attention: James H. Tate and Stephanie N. Josephson
Fax: (314) 746-2374
with a copy to:
Davis Polk & Wardwell
450 Lexington Avenue
New York, New York 10017
Attention: George R. Bason, Jr.
Fax: (212) 450-4800
Employee: c/o Thermadyne Holdings Corporation
101 South Hanley Road
St. Louis, Missouri 63105
SECTION 12. Invalid Provisions. If any provision of this Agreement is
held to be illegal, invalid or unenforceable under present or future laws, such
provisions shall be fully severable, and this Agreement shall be construed and
enforced as if such illegal, invalid or unenforceable provision had never
comprised a part of this Agreement; the remaining provisions of this Agreement
shall remain in full force and effect and shall not be affected by the illegal,
invalid or unenforceable provision or by its severance for this Agreement. In
lieu of each such illegal, invalid or unenforceable provision, there shall be
added automatically as part of this Agreement a provision as similar in terms to
such illegal, invalid or unenforceable provision as may be possible and be
legal, valid and enforceable.
SECTION 13. Amendments. This Agreement may be amended in whole or
in part only by an instrument in writing setting forth the particulars of such
amendment and duly executed by an officer of Employers and by Employee.
SECTION 14. Waiver. No delay or omission by any party hereto to
exercise any right or power hereunder shall impair such right or power to be
construed as a waiver thereof. A waiver by any of the parties hereto of any of
the covenants to be performed by any other party or any breach thereof shall not
be construed to be a waiver of any succeeding breach thereof or of any other
8
<PAGE> 9
covenant herein contained. Except as otherwise expressly set forth herein, all
remedies provided for in this Agreement shall be cumulative and in addition to
and not in lieu of any other remedies available to any party at law, in equity
or otherwise.
SECTION 15. Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall constitute an original, and all of which
together shall constitute one and the same Agreement.
SECTION 16. Governing Law. This Agreement shall be construed and
enforced according to the laws of the State of Missouri.
SECTION 17. Payment Upon Death of Employee. In the event of the death
of Employee during the term hereof, any unpaid payments due either prior to
Employee's death or after Employee's death shall be payable as designated by
Employee in writing to Employers. In the event of the death of all such persons
so designated by Employee, either prior to the death of the Employee or during
any time when payments are due as provided herein, or in the event Employee
fails to so designate, or withdraws all such designations, said payments
thereafter shall be made to the Employee or to Employee's estate.
SECTION 18. Prior Employment Agreement. This Agreement supersedes
any and all other employment, change-in-control, severance or similar agreements
between Employee and Employers.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the date first above written.
EMPLOYERS:
THERMADYNE HOLDINGS CORPORATION
By /s/ JAMES H. TATE
-------------------------------------
Title
----------------------------------
EMPLOYEE:
/s/ ROBERT D. MADDOX
---------------------------------------
Robert D. Maddox
9
<PAGE> 1
EXHIBIT 10.22
Page 1
Award Agreement
under the
Thermadyne Holdings Corporation
Management Incentive Plan
Date of Grant: May 22, 1998
Name of Optionee: Randall E. Curran
Number of Shares
Time Vesting: 49,699
Cliff Vesting: 49,698
Exercise Price: $34.50/share
Expiration Date: May 22, 2008
Thermadyne Holdings Corporation, a Delaware corporation (the
"COMPANY"), hereby grants to the above-named optionee (the "OPTIONEE") a time
vesting option (the "TIME VESTING OPTION") and a cliff vesting option (the
"CLIFF VESTING OPTION" and, together with the Time Vesting Option, the
"OPTIONS") to purchase from the Company, for the price per share set forth
above, the number of shares of Common Stock, $0.01 par value (the "SHARES"), of
the Company set forth above pursuant to the Thermadyne Holdings Corporation
Management Incentive Plan (the "PLAN"). The Options are not intended to be
treated as incentive stock options under the Code.
Capitalized terms not otherwise defined herein shall have the same
meanings as in the Plan. The terms and conditions of the Option granted hereby,
to the extent not controlled by the terms and conditions contained in the Plan,
are as follows:
1. Exercise Price. The price at which each Share subject to
this Option may be purchased shall be the price set forth above.
2. Number of Shares; Exercise. The number of Shares for which
the Time Vesting Option and the Cliff Vesting Option may be exercised are set
forth above. To the extent this Option has become vested in accordance with
Sections 3 and 4 below, the Option may be exercised at any time until the
Expiration Date, subject to the terms of the Plan and of Section 8 below.
<PAGE> 2
Page 2
3. Vesting: Time Vesting Option. As of the Date of Grant, the
Time Vesting Option shall become vested and exercisable with respect to 20% of
the Shares subject thereto. On each of the first five anniversaries of the Date
of Grant, provided the Optionee is then in the employ of the Company or a
Subsidiary, the Time Vesting Option shall become vested and exercisable with
respect to an additional 16% of the Shares subject thereto.
4. Vesting: Cliff Vesting Option.
(a) To the extent not previously vested in accordance with
paragraph (b) or (c) below, the Cliff Vesting Option shall become fully vested
and exercisable on the eighth anniversary of the Date of Grant, provided the
Optionee is then in the employ of the Company or a Subsidiary.
(b) The Cliff Vesting Option shall become vested and exercisable
with respect to 20% of the Shares subject thereto on the thirtieth day following
the availability of audited financial statements for each of the five fiscal
years of the Company commencing with the fiscal year ending December 31, 1998
(each such day a "CLIFF VESTING DATE"), provided the implied common equity value
of the Company as of the end of such fiscal year, calculated in accordance with
Exhibit A hereto, is at least equal to the target value for such fiscal year set
forth in such Exhibit A, and provided further that the Optionee is in the employ
of the Company or a Subsidiary on such Cliff Vesting Date. If the target set
forth in Exhibit A for any of the first four fiscal years referred to above is
not attained, the portion of the Cliff Vesting Option that would otherwise have
vested for such fiscal year shall be treated as vested and exercisable as of the
Cliff Vesting Date for any subsequent fiscal year ending on or before December
31, 2002 for which the target for such subsequent year is attained, provided the
Optionee is in the employ of the Company or a Subsidiary on such Cliff Vesting
Date.
(c) Upon the occurrence of a Liquidation Event, provided the DLJ
Entities' realized annual investment rate of return as calculated in accordance
with Exhibit B ("DLJ IRR") is at least 20%, and provided the Optionee is in the
employ of the Company or a Subsidiary as of such Liquidation Event, the Cliff
Vesting Option shall become vested and exercisable with respect to a portion of
the Shares subject thereto as to which the Option has not yet vested in
accordance with paragraph (b) above ("UNVESTED CLIFF VESTING SHARES"). In such
case, the Cliff Vesting Option will become vested and exercisable with respect
to the applicable percentage of the Unvested Cliff Vesting Shares set forth in
Exhibit B hereto, based on the DLJ IRR.
5. Manner of Exercise. The Optionee (or his representative,
devisee or heir, as applicable) may exercise any portion of this Option which
has become exercisable in accordance with the terms hereof as to all or any of
the Shares then available for purchase by delivering to the Company written
notice specifying:
<PAGE> 3
Page 3
(i) the number of whole Shares to be purchased together
with payment in full of the aggregate Exercise Price of such shares;
(ii) the address to which dividends, notices, reports,
etc. are to be sent; and
(iii) the Optionee's social security number.
Payment shall be in cash, by certified or bank cashier's check payable to the
order of the Company, free from all collection charges, or in unencumbered
Shares (provided such shares shall have been held by the Optionee for at least
six months unless the Committee determines in its sole discretion that such
six-month holding period is not necessary to comply with any accounting, legal
or regulatory requirement) having a Fair Market Value equal to the full amount
of the Exercise Price therefor, or such other form as may be permitted by the
Committee. Only one stock certificate will be issued unless the Optionee
otherwise requests in writing. Shares purchased upon exercise of the Option will
be issued in the name of the Optionee or the Optionee's Permitted Transferee.
The Optionee shall not be entitled to any rights as a stockholder of the Company
in respect of any Shares covered by this Option until such Shares shall have
been paid for in full and issued to the Optionee.
6. Certificates. Certificates issued in respect of Shares
acquired upon exercise of the Option shall, unless the Committee otherwise
determines, be registered in the name of the Optionee or its Permitted
Transferee. When the Optionee ceases to be bound by the provisions of the
Investors' Agreement, the Company shall deliver such certificates to the
Optionee or its Permitted Transferee upon request. Such stock certificate shall
carry such appropriate legends, and such written instructions shall be given to
the Company's transfer agent, as may be deemed necessary or advisable by counsel
to the Company in order to comply with the requirements of the Securities Act of
1933, any state securities laws or any other applicable laws or the Investors'
Agreement.
7. Nontransferability. This Option is personal to the Optionee
and may be exercised only by the Optionee or his or her representative in the
event of the Optionee's Disability or death. This Option shall not be
transferable other than by will or the laws of descent and distribution.
Notwithstanding the foregoing, this Option may be transferred to a trust solely
for the benefit of the Optionee or the Optionee's immediate family (which shall
be deemed to include the Optionee's spouse, parents, siblings, children,
stepchildren and grandchildren).
<PAGE> 4
Page 4
8. Forfeiture of Option; Right of Repurchase.
(a) If the Optionee's employment with the Company and its
Subsidiaries shall terminate for any reason other than by the Company or its
Subsidiary for Cause, then (i) to the extent not yet vested as of the date of
termination of employment, the Option shall immediately be forfeited; and (ii)
to the extent vested as of the date of termination of employment, the Option may
be retained and exercised, in accordance with the terms of the Plan and this
Award Agreement, until the Expiration Date.
(b) If the Optionee's employment with the Company and its
Subsidiaries shall be terminated by the Company or its Subsidiary for Cause,
then the entire Option shall immediately be forfeited, and all Shares previously
acquired upon exercise of the Option shall be subject to a right of repurchase
by the Company from the Participant or his or her Permitted Transferee at a
price equal to the Exercise Price.
9. Change of Control. Upon a Change of Control, the Time Vesting
Option shall vest in its entirety and become immediately exercisable and, if the
Change of Control constitutes a Liquidation Event, the Cliff Vesting Option
shall vest in accordance with Section 4(c) hereof.
10. Sale of Underlying Shares. The Optionee's right to sell any
Shares acquired upon exercise of the Option (in the case of Optionees who are
party thereto) shall be subject to the terms of the Investors' Agreement.
11. Employment Rights. This Option does not confer on the Optionee
any right to continue in the employ of the Company or any Subsidiary or
interfere in any way with the right of the Company or any Subsidiary to
determine the terms of the Optionee's employment.
12. Terms of Plan; Interpretations. This Option and the terms and
conditions herein set forth are subject in all respects to the terms and
conditions of the Plan, which shall be controlling. All interpretations or
determinations of the Committee and/or the Board shall be binding and conclusive
upon the Optionee and his legal representatives on any question arising
hereunder. The Optionee acknowledges that he has received and reviewed a copy of
the Plan.
13. Delegation. Optionee acknowledges that any powers, rights or
responsibilities of the Board and/or the Committee set forth herein may be
delegated to and exercised by any subcommittee thereof as permitted under the
Plan.
14. Notices. All notices hereunder to the party shall be delivered
or mailed to the following addresses:
<PAGE> 5
Page 5
If to the Company:
Thermadyne Holdings Corporation
c/o DLJ Merchant Banking Partners II, L.P.
277 Park Avenue
New York, New York 10172
Attention: Peter T. Grauer
Fax: (212) 892-7272
and
Thermadyne Holdings Corporation
101 South Hanley Road
St. Louis, Missouri 63105
Attention: James H. Tate and Stephanie N. Josephson
Fax: (314) 746-2374
with a copy to:
Davis Polk & Wardwell
450 Lexington Avenue
New York, New York 10017
Attention: George R. Bason, Jr.
Fax: (212) 450-4800
If to the Optionee:
To the person and at the address specified on the signature
page.
Such addresses for the service of notices may be changed at any time provided
notice of such change is furnished in advance to the other party.
15. Entire Agreement. This Agreement, together with the Plan and
(in the case of Optionees who are party thereto) the Investors Agreement,
contains the entire understanding of the parties hereto in respect of the
subject matter contained herein. This Agreement, the Plan and (in the case of
Optionees who are party thereto) the Investors' Agreement supersede all prior
agreements and understandings between the parties hereto with respect to the
subject matter hereof.
16. Governing Law. This Award Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware, without
application of the conflict of laws principles thereof.
17. Counterparts. This Award Agreement may be signed in any number
of counterparts, each of which shall be an original, with the same effect as if
the signatures thereto and hereto were upon the same instrument.
<PAGE> 6
Page 6
IN WITNESS WHEREOF, the undersigned have caused this Award Agreement to
be duly executed as of the date first above written.
THERMADYNE HOLDINGS
CORPORATION
By: /s/ STEPHANIE N. JOSEPHSON
------------------------------------
Name:
Title:
OPTIONEE:
/s/ RANDALL E. CURRAN
---------------------------------------
Name: Randall E. Curran
Address: c/o Thermadyne Holdings Corp.
101 South Hanley Road
St. Louis, Missouri 63105
<PAGE> 1
EXHIBIT 10.23
Page 1
Award Agreement
under the
Thermadyne Holdings Corporation
Management Incentive Plan
Date of Grant: May 22, 1998
Name of Optionee: James H. Tate
Number of Shares
Time Vesting: 25,843
Cliff Vesting: 25,843
Exercise Price: $34.50/share
Expiration Date: May 22, 2008
Thermadyne Holdings Corporation, a Delaware corporation (the
"COMPANY"), hereby grants to the above-named optionee (the "OPTIONEE") a time
vesting option (the "TIME VESTING OPTION") and a cliff vesting option (the
"CLIFF VESTING OPTION" and, together with the Time Vesting Option, the
"OPTIONS") to purchase from the Company, for the price per share set forth
above, the number of shares of Common Stock, $0.01 par value (the "SHARES"), of
the Company set forth above pursuant to the Thermadyne Holdings Corporation
Management Incentive Plan (the "PLAN"). The Options are not intended to be
treated as incentive stock options under the Code.
Capitalized terms not otherwise defined herein shall have the same
meanings as in the Plan. The terms and conditions of the Option granted hereby,
to the extent not controlled by the terms and conditions contained in the Plan,
are as follows:
1. Exercise Price. The price at which each Share subject to this Option
may be purchased shall be the price set forth above.
2. Number of Shares; Exercise. The number of Shares for which the Time
Vesting Option and the Cliff Vesting Option may be exercised are set forth
above. To the extent this Option has become vested in accordance with Sections 3
and 4 below, the Option may be exercised at any time until the Expiration Date,
subject to the terms of the Plan and of Section 8 below.
<PAGE> 2
Page 2
3. Vesting: Time Vesting Option. As of the Date of Grant, the Time
Vesting Option shall become vested and exercisable with respect to 20% of the
Shares subject thereto. On each of the first five anniversaries of the Date of
Grant, provided the Optionee is then in the employ of the Company or a
Subsidiary, the Time Vesting Option shall become vested and exercisable with
respect to an additional 16% of the Shares subject thereto.
4. Vesting: Cliff Vesting Option.
(a) To the extent not previously vested in accordance with paragraph
(b) or (c) below, the Cliff Vesting Option shall become fully vested and
exercisable on the eighth anniversary of the Date of Grant, provided the
Optionee is then in the employ of the Company or a Subsidiary.
(b) The Cliff Vesting Option shall become vested and exercisable with
respect to 20% of the Shares subject thereto on the thirtieth day following the
availability of audited financial statements for each of the five fiscal years
of the Company commencing with the fiscal year ending December 31, 1998 (each
such day a "CLIFF VESTING DATE"), provided the implied common equity value of
the Company as of the end of such fiscal year, calculated in accordance with
Exhibit A hereto, is at least equal to the target value for such fiscal year set
forth in such Exhibit A, and provided further that the Optionee is in the employ
of the Company or a Subsidiary on such Cliff Vesting Date. If the target set
forth in Exhibit A for any of the first four fiscal years referred to above is
not attained, the portion of the Cliff Vesting Option that would otherwise have
vested for such fiscal year shall be treated as vested and exercisable as of the
Cliff Vesting Date for any subsequent fiscal year ending on or before December
31, 2002 for which the target for such subsequent year is attained, provided the
Optionee is in the employ of the Company or a Subsidiary on such Cliff Vesting
Date.
(c) Upon the occurrence of a Liquidation Event, provided the DLJ
Entities' realized annual investment rate of return as calculated in accordance
with Exhibit B ("DLJ IRR") is at least 20%, and provided the Optionee is in the
employ of the Company or a Subsidiary as of such Liquidation Event, the Cliff
Vesting Option shall become vested and exercisable with respect to a portion of
the Shares subject thereto as to which the Option has not yet vested in
accordance with paragraph (b) above ("UNVESTED CLIFF VESTING SHARES"). In such
case, the Cliff Vesting Option will become vested and exercisable with respect
to the applicable percentage of the Unvested Cliff Vesting Shares set forth in
Exhibit B hereto, based on the DLJ IRR.
5. Manner of Exercise. The Optionee (or his representative, devisee or
heir, as applicable) may exercise any portion of this Option which has become
exercisable in accordance with the terms hereof as to all or any of the Shares
then available for purchase by delivering to the Company written notice
specifying:
<PAGE> 3
Page 3
(i) the number of whole Shares to be purchased together with
payment in full of the aggregate Exercise Price of such shares;
(ii) the address to which dividends, notices, reports, etc.
are to be sent; and
(iii) the Optionee's social security number.
Payment shall be in cash, by certified or bank cashier's check payable to the
order of the Company, free from all collection charges, or in unencumbered
Shares (provided such shares shall have been held by the Optionee for at least
six months unless the Committee determines in its sole discretion that such
six-month holding period is not necessary to comply with any accounting, legal
or regulatory requirement) having a Fair Market Value equal to the full amount
of the Exercise Price therefor, or such other form as may be permitted by the
Committee. Only one stock certificate will be issued unless the Optionee
otherwise requests in writing. Shares purchased upon exercise of the Option will
be issued in the name of the Optionee or the Optionee's Permitted Transferee.
The Optionee shall not be entitled to any rights as a stockholder of the Company
in respect of any Shares covered by this Option until such Shares shall have
been paid for in full and issued to the Optionee.
6. Certificates. Certificates issued in respect of Shares acquired upon
exercise of the Option shall, unless the Committee otherwise determines, be
registered in the name of the Optionee or its Permitted Transferee. When the
Optionee ceases to be bound by the provisions of the Investors' Agreement, the
Company shall deliver such certificates to the Optionee or its Permitted
Transferee upon request. Such stock certificate shall carry such appropriate
legends, and such written instructions shall be given to the Company's transfer
agent, as may be deemed necessary or advisable by counsel to the Company in
order to comply with the requirements of the Securities Act of 1933, any state
securities laws or any other applicable laws or the Investors' Agreement.
7. Nontransferability. This Option is personal to the Optionee and may
be exercised only by the Optionee or his or her representative in the event of
the Optionee's Disability or death. This Option shall not be transferable other
than by will or the laws of descent and distribution. Notwithstanding the
foregoing, this Option may be transferred to a trust solely for the benefit of
the Optionee or the Optionee's immediate family (which shall be deemed to
include the Optionee's spouse, parents, siblings, children, stepchildren and
grandchildren).
8. Forfeiture of Option; Right of Repurchase.
<PAGE> 4
Page 4
(a) If the Optionee's employment with the Company and its Subsidiaries
shall terminate for any reason other than by the Company or its Subsidiary for
Cause, then (i) to the extent not yet vested as of the date of termination of
employment, the Option shall immediately be forfeited; and (ii) to the extent
vested as of the date of termination of employment, the Option may be retained
and exercised, in accordance with the terms of the Plan and this Award
Agreement, until the Expiration Date.
(b) If the Optionee's employment with the Company and its Subsidiaries
shall be terminated by the Company or its Subsidiary for Cause, then the entire
Option shall immediately be forfeited, and all Shares previously acquired upon
exercise of the Option shall be subject to a right of repurchase by the Company
from the Participant or his or her Permitted Transferee at a price equal to the
Exercise Price.
9. Change of Control. Upon a Change of Control, the Time Vesting Option
shall vest in its entirety and become immediately exercisable and, if the Change
of Control constitutes a Liquidation Event, the Cliff Vesting Option shall vest
in accordance with Section 4(c) hereof.
10. Sale of Underlying Shares. The Optionee's right to sell any Shares
acquired upon exercise of the Option (in the case of Optionees who are party
thereto) shall be subject to the terms of the Investors' Agreement.
11. Employment Rights. This Option does not confer on the Optionee any
right to continue in the employ of the Company or any Subsidiary or interfere in
any way with the right of the Company or any Subsidiary to determine the terms
of the Optionee's employment.
12. Terms of Plan; Interpretations. This Option and the terms and
conditions herein set forth are subject in all respects to the terms and
conditions of the Plan, which shall be controlling. All interpretations or
determinations of the Committee and/or the Board shall be binding and conclusive
upon the Optionee and his legal representatives on any question arising
hereunder. The Optionee acknowledges that he has received and reviewed a copy of
the Plan.
13. Delegation. Optionee acknowledges that any powers, rights or
responsibilities of the Board and/or the Committee set forth herein may be
delegated to and exercised by any subcommittee thereof as permitted under the
Plan.
<PAGE> 5
Page 5
14. Notices. All notices hereunder to the party shall be delivered or
mailed to the following addresses:
If to the Company:
Thermadyne Holdings Corporation
c/o DLJ Merchant Banking Partners II, L.P.
277 Park Avenue
New York, New York 10172
Attention: Peter T. Grauer
Fax: (212) 892-7272
and
Thermadyne Holdings Corporation
101 South Hanley Road
St. Louis, Missouri 63105
Attention: James H. Tate and Stephanie N. Josephson
Fax: (314) 746-2374
with a copy to:
Davis Polk & Wardwell
450 Lexington Avenue
New York, New York 10017
Attention: George R. Bason, Jr.
Fax: (212) 450-4800
If to the Optionee:
To the person and at the address specified on the signature
page.
Such addresses for the service of notices may be changed at any time provided
notice of such change is furnished in advance to the other party.
15. Entire Agreement. This Agreement, together with the Plan and (in
the case of Optionees who are party thereto) the Investors Agreement, contains
the entire understanding of the parties hereto in respect of the subject matter
contained herein. This Agreement, the Plan and (in the case of Optionees who are
party thereto) the Investors' Agreement supersede all prior agreements and
understandings between the parties hereto with respect to the subject matter
hereof.
16. Governing Law. This Award Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware, without
application of the conflict of laws principles thereof.
17. Counterparts. This Award Agreement may be signed in any number of
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
<PAGE> 6
Page 6
IN WITNESS WHEREOF, the undersigned have caused this Award Agreement to
be duly executed as of the date first above written.
THERMADYNE HOLDINGS
CORPORATION
By: /s/ STEPHANIE N. JOSEPHSON
-------------------------------------
Name:
Title:
OPTIONEE:
/s/ JAMES H. TATE
-----------------------------------------
Name: James H. Tate
Address: c/o Thermadyne Holdings Corp.
101 South Hanley Road
St. Louis, Missouri 63105
<PAGE> 1
EXHIBIT 10.24
Page 1
Award Agreement
under the
Thermadyne Holdings Corporation
Management Incentive Plan
Date of Grant: May 22, 1998
Name of Optionee: Stephanie N. Josephson
Number of Shares
Time Vesting: 5,302
Cliff Vesting: 5,301
Exercise Price: $34.50/share
Expiration Date: May 22, 2008
Thermadyne Holdings Corporation, a Delaware corporation (the
"COMPANY"), hereby grants to the above-named optionee (the "OPTIONEE") a time
vesting option (the "TIME VESTING OPTION") and a cliff vesting option (the
"CLIFF VESTING OPTION" and, together with the Time Vesting Option, the
"OPTIONS") to purchase from the Company, for the price per share set forth
above, the number of shares of Common Stock, $0.01 par value (the "SHARES"), of
the Company set forth above pursuant to the Thermadyne Holdings Corporation
Management Incentive Plan (the "PLAN"). The Options are not intended to be
treated as incentive stock options under the Code.
Capitalized terms not otherwise defined herein shall have the same
meanings as in the Plan. The terms and conditions of the Option granted hereby,
to the extent not controlled by the terms and conditions contained in the Plan,
are as follows:
1. Exercise Price. The price at which each Share subject to this Option
may be purchased shall be the price set forth above.
2. Number of Shares; Exercise. The number of Shares for which the Time
Vesting Option and the Cliff Vesting Option may be exercised are set forth
above. To the extent this Option has become vested in accordance with Sections 3
and 4 below, the Option may be exercised at any time until the Expiration Date,
subject to the terms of the Plan and of Section 8 below.
<PAGE> 2
Page 2
3. Vesting: Time Vesting Option. As of the Date of Grant, the Time
Vesting Option shall become vested and exercisable with respect to 20% of the
Shares subject thereto. On each of the first five anniversaries of the Date of
Grant, provided the Optionee is then in the employ of the Company or a
Subsidiary, the Time Vesting Option shall become vested and exercisable with
respect to an additional 16% of the Shares subject thereto.
4. Vesting: Cliff Vesting Option.
(a) To the extent not previously vested in accordance with paragraph
(b) or (c) below, the Cliff Vesting Option shall become fully vested and
exercisable on the eighth anniversary of the Date of Grant, provided the
Optionee is then in the employ of the Company or a Subsidiary.
(b) The Cliff Vesting Option shall become vested and exercisable with
respect to 20% of the Shares subject thereto on the thirtieth day following the
availability of audited financial statements for each of the five fiscal years
of the Company commencing with the fiscal year ending December 31, 1998 (each
such day a "CLIFF VESTING DATE"), provided the implied common equity value of
the Company as of the end of such fiscal year, calculated in accordance with
Exhibit A hereto, is at least equal to the target value for such fiscal year set
forth in such Exhibit A, and provided further that the Optionee is in the employ
of the Company or a Subsidiary on such Cliff Vesting Date. If the target set
forth in Exhibit A for any of the first four fiscal years referred to above is
not attained, the portion of the Cliff Vesting Option that would otherwise have
vested for such fiscal year shall be treated as vested and exercisable as of the
Cliff Vesting Date for any subsequent fiscal year ending on or before December
31, 2002 for which the target for such subsequent year is attained, provided the
Optionee is in the employ of the Company or a Subsidiary on such Cliff Vesting
Date.
(c) Upon the occurrence of a Liquidation Event, provided the DLJ
Entities' realized annual investment rate of return as calculated in accordance
with Exhibit B ("DLJ IRR") is at least 20%, and provided the Optionee is in the
employ of the Company or a Subsidiary as of such Liquidation Event, the Cliff
Vesting Option shall become vested and exercisable with respect to a portion of
the Shares subject thereto as to which the Option has not yet vested in
accordance with paragraph (b) above ("UNVESTED CLIFF VESTING SHARES"). In such
case, the Cliff Vesting Option will become vested and exercisable with respect
to the applicable percentage of the Unvested Cliff Vesting Shares set forth in
Exhibit B hereto, based on the DLJ IRR.
5. Manner of Exercise. The Optionee (or his representative, devisee or
heir, as applicable) may exercise any portion of this Option which has become
exercisable in accordance with the terms hereof as to all or any of the Shares
then available for purchase by delivering to the Company written notice
specifying:
<PAGE> 3
Page 3
(i) the number of whole Shares to be purchased together with
payment in full of the aggregate Exercise Price of such shares;
(ii) the address to which dividends, notices, reports, etc.
are to be sent; and
(iii) the Optionee's social security number.
Payment shall be in cash, by certified or bank cashier's check payable to the
order of the Company, free from all collection charges, or in unencumbered
Shares (provided such shares shall have been held by the Optionee for at least
six months unless the Committee determines in its sole discretion that such
six-month holding period is not necessary to comply with any accounting, legal
or regulatory requirement) having a Fair Market Value equal to the full amount
of the Exercise Price therefor, or such other form as may be permitted by the
Committee. Only one stock certificate will be issued unless the Optionee
otherwise requests in writing. Shares purchased upon exercise of the Option will
be issued in the name of the Optionee or the Optionee's Permitted Transferee.
The Optionee shall not be entitled to any rights as a stockholder of the Company
in respect of any Shares covered by this Option until such Shares shall have
been paid for in full and issued to the Optionee.
6. Certificates. Certificates issued in respect of Shares acquired upon
exercise of the Option shall, unless the Committee otherwise determines, be
registered in the name of the Optionee or its Permitted Transferee. When the
Optionee ceases to be bound by the provisions of the Investors' Agreement, the
Company shall deliver such certificates to the Optionee or its Permitted
Transferee upon request. Such stock certificate shall carry such appropriate
legends, and such written instructions shall be given to the Company's transfer
agent, as may be deemed necessary or advisable by counsel to the Company in
order to comply with the requirements of the Securities Act of 1933, any state
securities laws or any other applicable laws or the Investors' Agreement.
7. Nontransferability. This Option is personal to the Optionee and may
be exercised only by the Optionee or his or her representative in the event of
the Optionee's Disability or death. This Option shall not be transferable other
than by will or the laws of descent and distribution. Notwithstanding the
foregoing, this Option may be transferred to a trust solely for the benefit of
the Optionee or the Optionee's immediate family (which shall be deemed to
include the Optionee's spouse, parents, siblings, children, stepchildren and
grandchildren).
8. Forfeiture of Option; Right of Repurchase.
<PAGE> 4
Page 4
(a) If the Optionee's employment with the Company and its Subsidiaries
shall terminate for any reason other than by the Company or its Subsidiary for
Cause, then (i) to the extent not yet vested as of the date of termination of
employment, the Option shall immediately be forfeited; and (ii) to the extent
vested as of the date of termination of employment, the Option may be retained
and exercised, in accordance with the terms of the Plan and this Award
Agreement, until the Expiration Date.
(b) If the Optionee's employment with the Company and its Subsidiaries
shall be terminated by the Company or its Subsidiary for Cause, then the entire
Option shall immediately be forfeited, and all Shares previously acquired upon
exercise of the Option shall be subject to a right of repurchase by the Company
from the Participant or his or her Permitted Transferee at a price equal to the
Exercise Price.
9. Change of Control. Upon a Change of Control, the Time Vesting Option
shall vest in its entirety and become immediately exercisable and, if the Change
of Control constitutes a Liquidation Event, the Cliff Vesting Option shall vest
in accordance with Section 4(c) hereof.
10. Sale of Underlying Shares. The Optionee's right to sell any Shares
acquired upon exercise of the Option (in the case of Optionees who are party
thereto) shall be subject to the terms of the Investors' Agreement.
11. Employment Rights. This Option does not confer on the Optionee any
right to continue in the employ of the Company or any Subsidiary or interfere in
any way with the right of the Company or any Subsidiary to determine the terms
of the Optionee's employment.
12. Terms of Plan; Interpretations. This Option and the terms and
conditions herein set forth are subject in all respects to the terms and
conditions of the Plan, which shall be controlling. All interpretations or
determinations of the Committee and/or the Board shall be binding and conclusive
upon the Optionee and his legal representatives on any question arising
hereunder. The Optionee acknowledges that he has received and reviewed a copy of
the Plan.
13. Delegation. Optionee acknowledges that any powers, rights or
responsibilities of the Board and/or the Committee set forth herein may be
delegated to and exercised by any subcommittee thereof as permitted under the
Plan.
<PAGE> 5
Page 5
14. Notices. All notices hereunder to the party shall be delivered or
mailed to the following addresses:
If to the Company:
Thermadyne Holdings Corporation
c/o DLJ Merchant Banking Partners II, L.P.
277 Park Avenue
New York, New York 10172
Attention: Peter T. Grauer
Fax: (212) 892-7272
and
Thermadyne Holdings Corporation
101 South Hanley Road
St. Louis, Missouri 63105
Attention: James H. Tate and Stephanie N. Josephson
Fax: (314) 746-2374
with a copy to:
Davis Polk & Wardwell
450 Lexington Avenue
New York, New York 10017
Attention: George R. Bason, Jr.
Fax: (212) 450-4800
If to the Optionee:
To the person and at the address specified on the signature
page.
Such addresses for the service of notices may be changed at any time provided
notice of such change is furnished in advance to the other party.
15. Entire Agreement. This Agreement, together with the Plan and (in
the case of Optionees who are party thereto) the Investors Agreement, contains
the entire understanding of the parties hereto in respect of the subject matter
contained herein. This Agreement, the Plan and (in the case of Optionees who are
party thereto) the Investors' Agreement supersede all prior agreements and
understandings between the parties hereto with respect to the subject matter
hereof.
16. Governing Law. This Award Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware, without
application of the conflict of laws principles thereof.
17. Counterparts. This Award Agreement may be signed in any number of
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
<PAGE> 6
Page 6
IN WITNESS WHEREOF, the undersigned have caused this Award Agreement to
be duly executed as of the date first above written.
THERMADYNE HOLDINGS
CORPORATION
By: /s/ JAMES H. TATE
-------------------------------------
Name:
Title:
OPTIONEE:
/s/ STEPHANIE N. JOSEPHSON
-----------------------------------------
Name: Stephanie N. Josephson
Address: c/o Thermadyne Holdings Corp.
101 South Hanley Road
St. Louis, Missouri 63105
<PAGE> 1
EXHIBIT 10.25
Page 1
Award Agreement
under the
Thermadyne Holdings Corporation
Management Incentive Plan
Date of Grant: May 22, 1998
Name of Optionee: Thomas C. Drury
Number of Shares
Time Vesting: 5,302
Cliff Vesting: 5,301
Exercise Price: $34.50/share
Expiration Date: May 22, 2008
Thermadyne Holdings Corporation, a Delaware corporation (the
"COMPANY"), hereby grants to the above-named optionee (the "OPTIONEE") a time
vesting option (the "TIME VESTING OPTION") and a cliff vesting option (the
"CLIFF VESTING OPTION" and, together with the Time Vesting Option, the
"OPTIONS") to purchase from the Company, for the price per share set forth
above, the number of shares of Common Stock, $0.01 par value (the "SHARES"), of
the Company set forth above pursuant to the Thermadyne Holdings Corporation
Management Incentive Plan (the "PLAN"). The Options are not intended to be
treated as incentive stock options under the Code.
Capitalized terms not otherwise defined herein shall have the same
meanings as in the Plan. The terms and conditions of the Option granted
hereby, to the extent not controlled by the terms and conditions contained in
the Plan, are as follows:
1. Exercise Price. The price at which each Share subject to
this Option may be purchased shall be the price set forth above.
2. Number of Shares; Exercise. The number of Shares for which
the Time Vesting Option and the Cliff Vesting Option may be exercised are set
forth above. To the extent this Option has become vested in accordance with
Sections 3 and 4 below, the Option may be exercised at any time until the
Expiration Date, subject to the terms of the Plan and of Section 8 below.
<PAGE> 2
Page 2
3. Vesting: Time Vesting Option. As of the Date of Grant, the
Time Vesting Option shall become vested and exercisable with respect to 20% of
the Shares subject thereto. On each of the first five anniversaries of the
Date of Grant, provided the Optionee is then in the employ of the Company or a
Subsidiary, the Time Vesting Option shall become vested and exercisable with
respect to an additional 16% of the Shares subject thereto.
4. Vesting: Cliff Vesting Option.
(a) To the extent not previously vested in accordance with
paragraph (b) or (c) below, the Cliff Vesting Option shall become fully vested
and exercisable on the eighth anniversary of the Date of Grant, provided the
Optionee is then in the employ of the Company or a Subsidiary.
(b) The Cliff Vesting Option shall become vested and exercisable
with respect to 20% of the Shares subject thereto on the thirtieth day
following the availability of audited financial statements for each of the five
fiscal years of the Company commencing with the fiscal year ending December 31,
1998 (each such day a "CLIFF VESTING DATE"), provided the implied common equity
value of the Company as of the end of such fiscal year, calculated in
accordance with Exhibit A hereto, is at least equal to the target value for
such fiscal year set forth in such Exhibit A, and provided further that the
Optionee is in the employ of the Company or a Subsidiary on such Cliff Vesting
Date. If the target set forth in Exhibit A for any of the first four fiscal
years referred to above is not attained, the portion of the Cliff Vesting
Option that would otherwise have vested for such fiscal year shall be treated
as vested and exercisable as of the Cliff Vesting Date for any subsequent
fiscal year ending on or before December 31, 2002 for which the target for such
subsequent year is attained, provided the Optionee is in the employ of the
Company or a Subsidiary on such Cliff Vesting Date.
(c) Upon the occurrence of a Liquidation Event, provided the DLJ
Entities' realized annual investment rate of return as calculated in accordance
with Exhibit B ("DLJ IRR") is at least 20%, and provided the Optionee is in the
employ of the Company or a Subsidiary as of such Liquidation Event, the Cliff
Vesting Option shall become vested and exercisable with respect to a portion of
the Shares subject thereto as to which the Option has not yet vested in
accordance with paragraph (b) above ("UNVESTED CLIFF VESTING SHARES"). In such
case, the Cliff Vesting Option will become vested and exercisable with respect
to the applicable percentage of the Unvested Cliff Vesting Shares set forth in
Exhibit B hereto, based on the DLJ IRR.
5. Manner of Exercise. The Optionee (or his representative,
devisee or heir, as applicable) may exercise any portion of this Option which
has become exercisable in accordance with the terms hereof as to all or any of
the Shares then available for purchase by delivering to the Company written
notice specifying:
<PAGE> 3
Page 3
(i) the number of whole Shares to be purchased together
with payment in full of the aggregate Exercise Price of such shares;
(ii) the address to which dividends, notices, reports,
etc. are to be sent; and
(iii) the Optionee's social security number.
Payment shall be in cash, by certified or bank cashier's check payable to the
order of the Company, free from all collection charges, or in unencumbered
Shares (provided such shares shall have been held by the Optionee for at least
six months unless the Committee determines in its sole discretion that such
six-month holding period is not necessary to comply with any accounting, legal
or regulatory requirement) having a Fair Market Value equal to the full amount
of the Exercise Price therefor, or such other form as may be permitted by the
Committee. Only one stock certificate will be issued unless the Optionee
otherwise requests in writing. Shares purchased upon exercise of the Option
will be issued in the name of the Optionee or the Optionee's Permitted
Transferee. The Optionee shall not be entitled to any rights as a stockholder
of the Company in respect of any Shares covered by this Option until such
Shares shall have been paid for in full and issued to the Optionee.
6. Certificates. Certificates issued in respect of Shares
acquired upon exercise of the Option shall, unless the Committee otherwise
determines, be registered in the name of the Optionee or its Permitted
Transferee. When the Optionee ceases to be bound by the provisions of the
Investors' Agreement, the Company shall deliver such certificates to the
Optionee or its Permitted Transferee upon request. Such stock certificate
shall carry such appropriate legends, and such written instructions shall be
given to the Company's transfer agent, as may be deemed necessary or advisable
by counsel to the Company in order to comply with the requirements of the
Securities Act of 1933, any state securities laws or any other applicable laws
or the Investors' Agreement.
7. Nontransferability. This Option is personal to the Optionee
and may be exercised only by the Optionee or his or her representative in the
event of the Optionee's Disability or death. This Option shall not be
transferable other than by will or the laws of descent and distribution.
Notwithstanding the foregoing, this Option may be transferred to a trust solely
for the benefit of the Optionee or the Optionee's immediate family (which shall
be deemed to include the Optionee's spouse, parents, siblings, children,
stepchildren and grandchildren).
8. Forfeiture of Option; Right of Repurchase.
<PAGE> 4
Page 4
(a) If the Optionee's employment with the Company and its
Subsidiaries shall terminate for any reason other than by the Company or its
Subsidiary for Cause, then (i) to the extent not yet vested as of the date of
termination of employment, the Option shall immediately be forfeited; and (ii)
to the extent vested as of the date of termination of employment, the Option
may be retained and exercised, in accordance with the terms of the Plan and
this Award Agreement, until the Expiration Date.
(b) If the Optionee's employment with the Company and its
Subsidiaries shall be terminated by the Company or its Subsidiary for Cause,
then the entire Option shall immediately be forfeited, and all Shares
previously acquired upon exercise of the Option shall be subject to a right of
repurchase by the Company from the Participant or his or her Permitted
Transferee at a price equal to the Exercise Price.
9. Change of Control. Upon a Change of Control, the Time
Vesting Option shall vest in its entirety and become immediately exercisable
and, if the Change of Control constitutes a Liquidation Event, the Cliff
Vesting Option shall vest in accordance with Section 4(c) hereof.
10. Sale of Underlying Shares. The Optionee's right to sell any
Shares acquired upon exercise of the Option (in the case of Optionees who are
party thereto) shall be subject to the terms of the Investors' Agreement.
11. Employment Rights. This Option does not confer on the
Optionee any right to continue in the employ of the Company or any Subsidiary
or interfere in any way with the right of the Company or any Subsidiary to
determine the terms of the Optionee's employment.
12. Terms of Plan; Interpretations. This Option and the terms and
conditions herein set forth are subject in all respects to the terms and
conditions of the Plan, which shall be controlling. All interpretations or
determinations of the Committee and/or the Board shall be binding and
conclusive upon the Optionee and his legal representatives on any question
arising hereunder. The Optionee acknowledges that he has received and reviewed
a copy of the Plan.
13. Delegation. Optionee acknowledges that any powers, rights or
responsibilities of the Board and/or the Committee set forth herein may be
delegated to and exercised by any subcommittee thereof as permitted under the
Plan.
14. Notices. All notices hereunder to the party shall be
delivered or mailed to the following addresses:
If to the Company:
Thermadyne Holdings Corporation
<PAGE> 5
Page 5
c/o DLJ Merchant Banking Partners II, L.P.
277 Park Avenue
New York, New York 10172
Attention: Peter T. Grauer
Fax: (212) 892-7272
and
Thermadyne Holdings Corporation
101 South Hanley Road
St. Louis, Missouri 63105
Attention: James H. Tate and Stephanie N. Josephson
Fax: (314) 746-2374
with a copy to:
Davis Polk & Wardwell
450 Lexington Avenue
New York, New York 10017
Attention: George R. Bason, Jr.
Fax: (212) 450-4800
If to the Optionee:
To the person and at the address specified on the signature
page.
Such addresses for the service of notices may be changed at any time provided
notice of such change is furnished in advance to the other party.
15. Entire Agreement. This Agreement, together with the Plan and
(in the case of Optionees who are party thereto) the Investors Agreement,
contains the entire understanding of the parties hereto in respect of the
subject matter contained herein. This Agreement, the Plan and (in the case of
Optionees who are party thereto) the Investors' Agreement supersede all prior
agreements and understandings between the parties hereto with respect to the
subject matter hereof.
16. Governing Law. This Award Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware, without
application of the conflict of laws principles thereof.
17. Counterparts. This Award Agreement may be signed in any
number of counterparts, each of which shall be an original, with the same
effect as if the signatures thereto and hereto were upon the same instrument.
<PAGE> 6
Page 6
IN WITNESS WHEREOF, the undersigned have caused this Award Agreement
to be duly executed as of the date first above written.
THERMADYNE HOLDINGS CORPORATION
By: /s/ STEPHANIE N. JOSEPHSON
-----------------------------------
Name:
Title:
OPTIONEE:
/s/ THOMAS C. DRURY
--------------------------------------
Name: Thomas C. Drury
Address: c/o Thermadyne Holdings Corp.
101 South Hanley Road
St. Louis, Missouri 63105
<PAGE> 1
EXHIBIT 10.26
Award Agreement
under the
Thermadyne Holdings Corporation
Management Incentive Plan
<TABLE>
<S> <C>
Date of Grant: May 22, 1998
Name of Optionee: Robert D. Maddox
Number of Shares
Time Vesting: 5,302
Cliff Vesting: 5,301
Exercise Price: $34.50/share
Expiration Date: May 22, 2008
</TABLE>
Thermadyne Holdings Corporation, a Delaware corporation (the
"COMPANY"), hereby grants to the above-named optionee (the "OPTIONEE") a time
vesting option (the "TIME VESTING OPTION") and a cliff vesting option (the
"CLIFF VESTING OPTION" and, together with the Time Vesting Option, the
"OPTIONS") to purchase from the Company, for the price per share set forth
above, the number of shares of Common Stock, $0.01 par value (the "SHARES"), of
the Company set forth above pursuant to the Thermadyne Holdings Corporation
Management Incentive Plan (the "PLAN"). The Options are not intended to be
treated as incentive stock options under the Code.
Capitalized terms not otherwise defined herein shall have the same
meanings as in the Plan. The terms and conditions of the Option granted hereby,
to the extent not controlled by the terms and conditions contained in the Plan,
are as follows:
1. Exercise Price. The price at which each Share subject to this Option
may be purchased shall be the price set forth above.
2. Number of Shares; Exercise. The number of Shares for which the Time
Vesting Option and the Cliff Vesting Option may be exercised are set forth
above. To the extent this Option has become vested in accordance with Sections 3
<PAGE> 2
and 4 below, the Option may be exercised at any time until the Expiration Date,
subject to the terms of the Plan and of Section 8 below.
3. Vesting: Time Vesting Option. As of the Date of Grant, the Time
Vesting Option shall become vested and exercisable with respect to 20% of the
Shares subject thereto. On each of the first five anniversaries of the Date of
Grant, provided the Optionee is then in the employ of the Company or a
Subsidiary, the Time Vesting Option shall become vested and exercisable with
respect to an additional 16% of the Shares subject thereto.
4. Vesting: Cliff Vesting Option.
(a) To the extent not previously vested in accordance with paragraph
(b) or (c) below, the Cliff Vesting Option shall become fully vested and
exercisable on the eighth anniversary of the Date of Grant, provided the
Optionee is then in the employ of the Company or a Subsidiary.
(b) The Cliff Vesting Option shall become vested and exercisable with
respect to 20% of the Shares subject thereto on the thirtieth day following the
availability of audited financial statements for each of the five fiscal years
of the Company commencing with the fiscal year ending December 31, 1998 (each
such day a "CLIFF VESTING DATE"), provided the implied common equity value of
the Company as of the end of such fiscal year, calculated in accordance with
Exhibit A hereto, is at least equal to the target value for such fiscal year set
forth in such Exhibit A, and provided further that the Optionee is in the employ
of the Company or a Subsidiary on such Cliff Vesting Date. If the target set
forth in Exhibit A for any of the first four fiscal years referred to above is
not attained, the portion of the Cliff Vesting Option that would otherwise have
vested for such fiscal year shall be treated as vested and exercisable as of the
Cliff Vesting Date for any subsequent fiscal year ending on or before December
31, 2002 for which the target for such subsequent year is attained, provided the
Optionee is in the employ of the Company or a Subsidiary on such Cliff Vesting
Date.
(c) Upon the occurrence of a Liquidation Event, provided the DLJ
Entities' realized annual investment rate of return as calculated in accordance
with Exhibit B ("DLJ IRR") is at least 20%, and provided the Optionee is in the
employ of the Company or a Subsidiary as of such Liquidation Event, the Cliff
Vesting Option shall become vested and exercisable with respect to a portion of
the Shares subject thereto as to which the Option has not yet vested in
accordance with paragraph (b) above ("UNVESTED CLIFF VESTING SHARES"). In such
case, the Cliff Vesting Option will become vested and exercisable with respect
to the applicable percentage of the Unvested Cliff Vesting Shares set forth in
Exhibit B hereto, based on the DLJ IRR.
2
<PAGE> 3
5. Manner of Exercise. The Optionee (or his representative, devisee or
heir, as applicable) may exercise any portion of this Option which has become
exercisable in accordance with the terms hereof as to all or any of the Shares
then available for purchase by delivering to the Company written notice
specifying:
(i) the number of whole Shares to be purchased together with
payment in full of the aggregate Exercise Price of such shares;
(ii) the address to which dividends, notices, reports, etc.
are to be sent; and
(iii) the Optionee's social security number.
Payment shall be in cash, by certified or bank cashier's check payable to the
order of the Company, free from all collection charges, or in unencumbered
Shares (provided such shares shall have been held by the Optionee for at least
six months unless the Committee determines in its sole discretion that such
six-month holding period is not necessary to comply with any accounting, legal
or regulatory requirement) having a Fair Market Value equal to the full amount
of the Exercise Price therefor, or such other form as may be permitted by the
Committee. Only one stock certificate will be issued unless the Optionee
otherwise requests in writing. Shares purchased upon exercise of the Option will
be issued in the name of the Optionee or the Optionee's Permitted Transferee.
The Optionee shall not be entitled to any rights as a stockholder of the Company
in respect of any Shares covered by this Option until such Shares shall have
been paid for in full and issued to the Optionee.
6. Certificates. Certificates issued in respect of Shares acquired upon
exercise of the Option shall, unless the Committee otherwise determines, be
registered in the name of the Optionee or its Permitted Transferee. When the
Optionee ceases to be bound by the provisions of the Investors' Agreement, the
Company shall deliver such certificates to the Optionee or its Permitted
Transferee upon request. Such stock certificate shall carry such appropriate
legends, and such written instructions shall be given to the Company's transfer
agent, as may be deemed necessary or advisable by counsel to the Company in
order to comply with the requirements of the Securities Act of 1933, any state
securities laws or any other applicable laws or the Investors' Agreement.
7. Nontransferability. This Option is personal to the Optionee and may
be exercised only by the Optionee or his or her representative in the event of
the Optionee's Disability or death. This Option shall not be transferable other
than by will or the laws of descent and distribution. Notwithstanding the
foregoing,
3
<PAGE> 4
this Option may be transferred to a trust solely for the benefit of the Optionee
or the Optionee's immediate family (which shall be deemed to include the
Optionee's spouse, parents, siblings, children, stepchildren and grandchildren).
8. Forfeiture of Option; Right of Repurchase.
(a) If the Optionee's employment with the Company and its Subsidiaries
shall terminate for any reason other than by the Company or its Subsidiary for
Cause, then (i) to the extent not yet vested as of the date of termination of
employment, the Option shall immediately be forfeited; and (ii) to the extent
vested as of the date of termination of employment, the Option may be retained
and exercised, in accordance with the terms of the Plan and this Award
Agreement, until the Expiration Date.
(b) If the Optionee's employment with the Company and its Subsidiaries
shall be terminated by the Company or its Subsidiary for Cause, then the entire
Option shall immediately be forfeited, and all Shares previously acquired upon
exercise of the Option shall be subject to a right of repurchase by the Company
from the Participant or his or her Permitted Transferee at a price equal to the
Exercise Price.
9. Change of Control. Upon a Change of Control, the Time Vesting Option
shall vest in its entirety and become immediately exercisable and, if the Change
of Control constitutes a Liquidation Event, the Cliff Vesting Option shall vest
in accordance with Section 4(c) hereof.
10. Sale of Underlying Shares. The Optionee's right to sell any Shares
acquired upon exercise of the Option (in the case of Optionees who are party
thereto) shall be subject to the terms of the Investors' Agreement.
11. Employment Rights. This Option does not confer on the Optionee any
right to continue in the employ of the Company or any Subsidiary or interfere in
any way with the right of the Company or any Subsidiary to determine the terms
of the Optionee's employment.
12. Terms of Plan; Interpretations. This Option and the terms and
conditions herein set forth are subject in all respects to the terms and
conditions of the Plan, which shall be controlling. All interpretations or
determinations of the Committee and/or the Board shall be binding and conclusive
upon the Optionee and his legal representatives on any question arising
hereunder. The Optionee acknowledges that he has received and reviewed a copy of
the Plan.
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13. Delegation. Optionee acknowledges that any powers, rights or
responsibilities of the Board and/or the Committee set forth herein may be
delegated to and exercised by any subcommittee thereof as permitted under the
Plan.
14. Notices. All notices hereunder to the party shall be delivered or
mailed to the following addresses:
If to the Company:
Thermadyne Holdings Corporation
c/o DLJ Merchant Banking Partners II, L.P.
277 Park Avenue
New York, New York 10172
Attention: Peter T. Grauer
Fax: (212) 892-7272
and
Thermadyne Holdings Corporation
101 South Hanley Road
St. Louis, Missouri 63105
Attention: James H. Tate and Stephanie N. Josephson
Fax: (314) 746-2374
with a copy to:
Davis Polk & Wardwell
450 Lexington Avenue
New York, New York 10017
Attention: George R. Bason, Jr.
Fax: (212) 450-4800
If to the Optionee:
To the person and at the address specified on the signature
page.
Such addresses for the service of notices may be changed at any time provided
notice of such change is furnished in advance to the other party.
15. Entire Agreement. This Agreement, together with the Plan and (in
the case of Optionees who are party thereto) the Investors Agreement, contains
the entire understanding of the parties hereto in respect of the subject matter
contained
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herein. This Agreement, the Plan and (in the case of Optionees who are party
thereto) the Investors' Agreement supersede all prior agreements and
understandings between the parties hereto with respect to the subject matter
hereof.
16. Governing Law. This Award Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware, without
application of the conflict of laws principles thereof.
17. Counterparts. This Award Agreement may be signed in any number of
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
IN WITNESS WHEREOF, the undersigned have caused this Award Agreement to
be duly executed as of the date first above written.
THERMADYNE HOLDINGS
CORPORATION
By: /s/ STEPHANIE N. JOSEPHSON
---------------------------------
Name:
Title:
OPTIONEE:
/s/ ROBERT D. MADDOX
------------------------------------
Name: Robert D. Maddox
Address: c/o Thermadyne Holdings Corp.
101 South Hanley Road
St. Louis, Missouri 63105
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<PAGE> 1
EXHIBIT 10.27
THERMADYNE HOLDINGS CORPORATION
MANAGEMENT INCENTIVE PLAN
SECTION 1. Purpose. The purposes of the Thermadyne Holdings Corporation
Management Incentive Plan are to promote the interests of Thermadyne Holdings
Corporation (the "COMPANY") and its stockholders by (i) attracting and retaining
exceptional executive personnel and other key employees of the Company and its
Subsidiaries, as defined below; (ii) motivating such employees by means of
performance-related incentives to achieve longer-range performance goals; and
(iii) enabling such employees to participate in the long-term growth and
financial success of the Company.
SECTION 2. Definitions. As used in the Plan, the following terms shall
have the meanings set forth below:
"AFFILIATE" means, with respect to any Person, any other Person
directly or indirectly controlling, controlled by or under common control with
such Person. For purposes of this definition, the terms "control" (including
with correlative meanings, the terms "controlling", "controlled by" and "under
common control with"), when used with respect to any Person, means the
possession, directly or indirectly of the power to direct or cause the direction
of the management and policies of such Person, whether through the ownership of
voting securities, by contract or otherwise.
"AWARD" means any Option.
"AWARD AGREEMENT" means any written agreement, contract, or other
instrument or document evidencing any Award, which may, but need not, be
executed or acknowledged by a Participant.
"BOARD" means the Board of Directors of the Company.
"CAUSE" means (i) dishonesty by a Participant that results in
substantial personal enrichment at the expense of the Company or (ii)
demonstratively willful repeated violations of a Participant's obligations to
the Company (including under any employment agreement between the Participant
and the Company) which are intended to result in material injury to the Company.
"CHANGE OF CONTROL" means:
<PAGE> 2
(a) any "person" (as such term is used in Section 3(a)(9) and
13(d)(3) of the Exchange Act) other than (A) the DLJ Entities and/or
their respective Permitted Transferees (as defined in the Investors'
Agreement) or (B) any "group" (within the meaning of such Section
13(d)(3)) of which the DLJ Entities constitute a majority (on the basis
of ownership interest), acquires, directly or indirectly, by virtue of
the consummation of any purchase, merger or other combination,
securities of the Company representing more than 51% of the combined
voting power of the Company's then outstanding voting securities with
respect to matters submitted to a vote of the stockholders generally;
or
(b) a sale or transfer by the Company or any of its
Subsidiaries of substantially all of the consolidated assets of the
Company and its Subsidiaries to an entity which is not an Affiliate of
the Company prior to such sale or transfer.
"CODE" means the Internal Revenue Code of 1986, as amended from time to
time.
"COMMITTEE" means a committee of the Board designated by the Board to
administer the Plan and composed of not less than the minimum number of persons
from time to time required by Rule 16b-3 and Section 162(m) each of whom, to the
extent necessary to comply with Rule 16b-3 and Section 162(m) only, is a
"Non-Employee Director" and an "Outside Director" within the meaning of Rule
16b-3 and Section 162(m), respectively. Until otherwise determined by the Board,
the full Board shall be the Committee under the Plan.
"DISABILITY" shall mean a Participant's inability to perform the duties
of his or her employment due to mental or physical incapacity for a period of
six consecutive months.
"EMPLOYEE" means an employee of the Company or any Subsidiary.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
"FAIR MARKET VALUE" means with respect to the Shares, as of the
consummation of the merger of the Company and Mercury Acquisition Corporation,
$34.50 per share, and as of any other given date or dates, the average reported
closing price of a share of such class of common stock on such exchange or
market as is the principal trading market for such class of common stock for the
three trading days immediately preceding such date or dates. If such class of
common stock is not traded on an exchange or principal trading market on such
date, the fair market value of a Share shall be determined by the Committee in
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<PAGE> 3
good faith taking into account as appropriate recent sales of the Shares, recent
valuations of the Shares and such other factors as the Committee shall in its
discretion deem relevant or appropriate.
"INVESTORS' AGREEMENT" means the Investors' Agreement dated as of May
22, 1998 among (i) the Company, (ii) DLJ Merchant Banking Partners II, L.P., DLJ
Offshore Partners II, C.V., DLJ Merchant Banking Partners II-A, L.P., DLJ
Diversified Partners, L.P., DLJ Diversified Partners-A, L.P., DLJ Millennium
Partners, L.P., DLJ Millennium Partners-A, L.P., DLJMB Funding II, Inc., UK
Investment Plan 1997 Partners, DLJ EAB Partners, DLJ First ESC, L.P. and DLJ ESC
II, L.P. (collectively, the "DLJ ENTITIES") and (iii) certain other Persons
listed on the signature pages thereof.
"LIQUIDATION EVENT" means the sale by the DLJ Entities of 75% or more
of their investment in the Company or a sale of substantially all of the assets
of the Company.
"OPTION" means a right to purchase Shares from the Company granted
under Section 6 of the Plan.
"PARTICIPANT" means any Employee selected by the Committee to receive
an Award under the Plan (and to the extent applicable, any heirs or legal
representatives thereof).
"PERMITTED TRANSFEREE" shall have the meaning assigned to it in the
Investors' Agreement.
"PERSON" means any individual, corporation, limited liability company,
partnership, association, joint-stock company, trust, unincorporated
organization, government or political subdivision thereof or other entity.
"PLAN" means this Thermadyne Holdings Corporation Management
Incentive Plan.
"RULE 16b-3" means Rule 16b-3 as promulgated and interpreted by the SEC
under the Exchange Act, or any successor rule or regulation thereto as in effect
from time to time.
"SEC" means the Securities and Exchange Commission or any successor
thereto.
"SECTION 162(m)" means Section 162(m) of the Code, or any successor
section thereto as in effect from time to time.
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<PAGE> 4
"SHARES" means shares of common stock, $0.01 par value, of the Company
or such other securities as may be designated by the Committee from time to
time.
"SUBSIDIARY" shall mean, with respect to any Person, any corporation or
other entity of which securities or other ownership interests having ordinary
voting power to elect a majority of the board of directors or other persons
performing similar functions are at the time directly or indirectly owned by
such Person.
"SUBSTITUTE AWARDS" means Awards granted in assumption of, or in
substitution for, outstanding awards previously granted by a company acquired by
the Company or with which the Company combines.
SECTION 3. Administration.
(a) Authority of Committee. The Plan shall be administered by the
Committee. Subject to the terms of the Plan, applicable law and contractual
restrictions affecting the Company, and in addition to other express powers and
authorizations conferred on the Committee by the Plan, the Committee shall have
full power and authority to: (i) designate Participants; (ii) determine the type
or types of Awards to be granted to a Participant; (iii) determine the number of
Shares to be covered by, or with respect to which payments, rights, or other
matters are to be calculated in connection with, Awards; (iv) determine the
terms and conditions of any Award and Award Agreement; (v) determine whether, to
what extent, and under what circumstances Awards may be settled or exercised in
cash, Shares, other securities, other Awards or other property, or canceled,
forfeited, or suspended and the method or methods by which Awards may be
settled, exercised, canceled, forfeited, or suspended; (vi) determine whether,
to what extent, and under what circumstances cash, Shares, other securities,
other Awards, other property, and other amounts payable with respect to an Award
shall be deferred either automatically or at the election of the holder thereof
or of the Committee; (vii) interpret and administer the Plan and any instrument
or agreement relating to, or Award made under, the Plan; (viii) establish,
amend, suspend, or waive such rules and regulations and appoint such agents as
it shall deem appropriate for the proper administration of the Plan; and (ix)
make any other determination and take any other action that the Committee deems
necessary or desirable for the administration of the Plan.
(b) Committee Discretion Binding. Unless otherwise expressly provided
in the Plan, all designations, determinations, interpretations, and other
decisions under or with respect to the Plan or any Award shall be within the
sole discretion of the Committee, may be made at any time and shall be final,
conclusive and
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binding upon all Persons, including the Company, any Subsidiary, any
Participant, any holder or beneficiary of any Award, any shareholder and any
Employee.
SECTION 4. Shares Available for Awards.
(a) Shares Available. Subject to adjustment as provided in Section 4(b)
and 4(c), the number of Shares with respect to which Awards may be granted under
the Plan shall be 500,000. If, after the effective date of the Plan, any Shares
covered by an Award granted under the Plan or to which such an Award relates are
forfeited, or if such an Award is settled for cash or otherwise terminates or is
canceled without the delivery of Shares, then the Shares covered by such Award,
or to which such Award relates, or the number of Shares otherwise counted
against the aggregate number of Shares with respect to which Awards may be
granted, to the extent of any such settlement, forfeiture, termination or
cancellation, shall, in the calendar year in which such settlement, forfeiture,
termination or cancellation occurs, again become Shares with respect to which
Awards may be granted unless any dividends have been paid thereon prior to such
settlement, forfeiture, termination or cancellation. In addition, Shares
tendered in satisfaction or partial satisfaction of the exercise price of any
Award or any tax withholding obligations will again become Shares with respect
to which Awards may be granted. Notwithstanding the foregoing and subject to
adjustment as provided in Section 4(b), no Employee of the Company may receive
Options in any calendar year that relate to more than 250,000 Shares.
(b) Adjustments. In the event that the Committee determines that any
dividend or other distribution (whether in the form of cash, Shares, other
securities or other property), recapitalization, stock split, reverse stock
split, reorganization, reclassification, merger, consolidation, split-up,
spin-off, combination, repurchase, or exchange of Shares or other securities of
the Company, issuance of warrants or other rights to purchase Shares or other
securities of the Company, or other similar corporate transaction or event
affects the Shares such that an adjustment is determined by the Committee to be
appropriate in order to prevent dilution or enlargement of the benefits or
potential benefits intended to be made available under the Plan, then the
Committee shall, in such manner as it may deem equitable, adjust any or all of
(i) the number of Shares of the Company (or number and kind of other securities
or property) with respect to which Awards may thereafter be granted, (ii) the
number of Shares or other securities of the Company (or number and kind of other
securities or property) subject to outstanding Awards, and (iii) the grant or
exercise price with respect to any Award, or, if deemed appropriate, make
provision for a cash payment to the holder of an outstanding Award.
Notwithstanding the foregoing, the issuance of warrants by the Company in
connection with the merger of the
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<PAGE> 6
Company and Mercury Acquisition Corporation shall not give rise to any such
adjustment.
(c) Substitute Awards. Any Shares underlying Substitute Awards shall
not be counted against the Shares available for Awards under the Plan.
(d) Sources of Shares Deliverable Under Awards. Any Shares delivered
pursuant to an Award may consist, in whole or in part, of authorized and
unissued Shares or of treasury Shares.
SECTION 5. Eligibility. Any Employee, including any officer or
employee-director of the Company or any Subsidiary, shall be eligible to be
designated a Participant.
SECTION 6. Stock Options.
(a) Grant. Subject to the provisions of the Plan and contractual
restrictions affecting the Company, the Committee shall have sole and complete
authority to determine the Employees to whom Options shall be granted, the
number of Shares to be covered by each Option, the exercise price therefor and
the conditions and limitations applicable to the exercise of the Option.
(b) Exercise Price. The Committee in its sole discretion shall
establish the exercise price at the time each Option is granted; provided, that
in no event shall the exercise price per Share be less than the Fair Market
Value of a Share on the date of grant.
(c) Exercise. Each Option shall be exercisable at such times and
subject to such terms and conditions as the Committee may, in its sole
discretion, specify in the applicable Award Agreement or thereafter. The
Committee may impose such conditions with respect to the exercise of Options,
including without limitation, any relating to the application of Federal or
state securities laws, as it may deem necessary or advisable.
(d) Payment. No Shares shall be delivered pursuant to any exercise of
an Option until payment in full of the exercise price, or adequate provision
therefor, is received by the Company. Such payment may be made: (i) in cash;
(ii) in Shares owned by the Participant for at least six months (the value of
such Shares shall be their Fair Market Value on the date of exercise); (iii) by
a combination of cash and Shares; or (iv) in such other manner as permitted by
the Committee at the time of grant or thereafter.
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<PAGE> 7
SECTION 7. Vesting; Termination of Employment. Each Award Agreement
shall contain such terms as the Committee may in its sole discretion determine
concerning vesting, forfeiture, the Company's rights of repurchase of Shares
acquired upon exercise of an Option, and/or the effects of termination or
suspension of a Participant's employment upon the exercisability of any Option
granted thereunder.
SECTION 8. Change of Control. The Committee, in its sole discretion,
may provide in an Award Agreement for the accelerated vesting of an Award in the
event of a Change of Control.
SECTION 9. Amendment and Termination.
(a) Amendments to the Plan. The Board may amend, alter, suspend,
discontinue, or terminate the Plan or any portion thereof at any time; provided
that no such amendment, alteration, suspension, discontinuation or termination
shall be made without shareholder approval if such approval is necessary to
comply with any tax or regulatory requirement, including for these purposes any
approval requirement which is a prerequisite for exemptive relief from Section
16(b) of the Exchange Act, for which or with which the Board deems it necessary
or desirable to qualify or comply. Notwithstanding anything to the contrary
herein, the Committee may amend the Plan in such manner as may be necessary so
as to have the Plan conform with local rules and regulations in any jurisdiction
outside the United States.
(b) Amendments to Awards. Subject to the terms of the Plan and
applicable law, the Committee may waive any conditions or rights under, amend
any terms of, or alter, suspend, discontinue, cancel or terminate, any Award
theretofore granted, prospectively or retroactively; provided that any such
waiver, amendment, alteration, suspension, discontinuance, cancellation or
termination that would adversely affect the rights Participant or any holder or
beneficiary of any Award theretofore granted shall not to that extent be
effective without the consent of the affected Participant, holder or
beneficiary.
(c) Cancellation. Any provision of this Plan or any Award Agreement to
the contrary notwithstanding, in the event of a Change of Control or an offer to
Participants generally relating to the acquisition of Shares, including through
purchase, merger or otherwise, the Committee may cause any Award granted
hereunder to be canceled in consideration of a cash payment or alternative Award
made to the holder of such canceled Award equal in value to the Fair Market
Value of such canceled Award.
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<PAGE> 8
SECTION 10. General Provisions.
(a) Dividend Equivalents. In the sole and complete discretion of the
Committee, an Award may provide the Participant with dividends or dividend
equivalents, payable in cash, Shares, other securities or other property on a
current or deferred basis.
(b) Nontransferability. Except to the extent otherwise provided in an
Award Agreement, no Award shall be assigned, alienated, pledged, attached, sold
or otherwise transferred or encumbered by a Participant, except by will or the
laws of descent and distribution.
(c) No Rights to Awards. No Employee, Participant or other Person shall
have any claim to be granted any Award, and there is no obligation for
uniformity of treatment of Employees, Participants, or holders or beneficiaries
of Awards. The terms and conditions of Awards need not be the same with respect
to each recipient.
(d) Share Certificates. Certificates issued in respect of Shares shall,
unless the Committee otherwise determines, be registered in the name of the
Participant or its Permitted Transferees and shall be deposited by such
Participant or Permitted Transferee, together with a stock power endorsed in
blank, with the Company. When the Participant ceases to be bound by any transfer
restrictions set forth herein or in the Investors' Agreement, the Company shall
deliver such certificates to the Participant upon request. Such stock
certificate shall carry such appropriate legends, and such written instructions
shall be given to the Company's transfer agent, as may be deemed necessary or
advisable by counsel to the Company in order to comply with the requirements of
the Securities Act of 1933, any state securities laws or any other applicable
laws and the Investors' Agreement. Subject to the provisions of the Investors'
Agreement, all certificates for Shares or other securities of the Company or any
Subsidiary delivered under the Plan pursuant to any Award or the exercise
thereof shall be subject to such stop transfer orders and other restrictions as
the Committee may deem advisable under the Plan or the rules, regulations and
other requirements of the Securities and Exchange Commission or any stock
exchange upon which such Shares or other securities are then listed and any
applicable laws or rules or regulations, and the Committee may cause a legend or
legends to be put on any such certificates to make appropriate reference to such
restrictions.
(e) Withholding. A Participant may be required to pay to the Company or
any Subsidiary, and the Company or any Subsidiary shall have the right and is
hereby authorized to withhold from any Award, from any payment due or transfer
made under any Award or under the Plan or from any compensation or other amount
owing to a Participant the amount (in cash, Shares, other securities, other
Awards or other property) of any applicable withholding taxes in respect of an
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<PAGE> 9
Award, its exercise, or any payment or transfer under an Award or under the Plan
and to take such other action as may be necessary in the opinion of the Company
to satisfy all obligations for the payment of such taxes. The Committee may
provide for additional cash payments to holders of Awards to defray or offset
any tax arising from any such grant, lapse, vesting, or exercise of any Award.
(f) Award Agreements. Each Award hereunder shall be evidenced by an
Award Agreement which shall be delivered to the Participant and shall specify
the terms and conditions of the Award and any rules applicable thereto.
(g) No Limit on Other Compensation Arrangements. Nothing contained in
the Plan shall prevent the Company or any Subsidiary from adopting or continuing
in effect other compensation arrangements, which may, but need not, provide for
the grant of options, restricted stock, Shares and other types of Awards
provided for hereunder (subject to shareholder approval if such approval is
required), and such arrangements may be either generally applicable or
applicable only in specific cases.
(h) No Right to Employment. The grant of an Award shall not be
construed as giving a Participant the right to be retained in the employ or
service of the Company or any Subsidiary. Further, the Company or an Subsidiary
may at any time dismiss a Participant from employment or service, free from any
liability or any claim under the Plan, unless otherwise expressly provided in
the Plan or in any Award Agreement.
(i) Rights as a Stockholder. Subject to the provisions of the
applicable Award, no Participant or holder or beneficiary of any Award shall
have any rights as a stockholder with respect to any Shares to be issued under
the Plan until he or she has become the holder of such Shares.
(j) Governing Law. The validity, construction, and effect of the Plan
and any rules and regulations relating to the Plan and any Award Agreement shall
be determined in accordance with the laws of the State of Delaware.
(k) Severability. If any provision of the Plan or any Award is or
becomes or is deemed to be invalid, illegal, or unenforceable in any
jurisdiction or as to any Person or Award, or would disqualify the Plan or any
Award under any law deemed applicable by the Committee, such provision shall be
construed or deemed amended to conform to the applicable laws, or if it cannot
be construed or deemed amended without, in the determination of the Committee,
materially altering the intent of the Plan or the Award, such provision shall be
stricken as to such jurisdiction, Person or Award and the remainder of the Plan
and any such Award shall remain in full force and effect.
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<PAGE> 10
(l) Other Laws. The Committee may refuse to issue or transfer any
Shares or other consideration under an Award if, acting in its sole discretion,
it determines that the issuance or transfer of such Shares or such other
consideration might violate any applicable law or regulation or entitle the
Company to recover the same under Section 16(b) of the Exchange Act, and any
payment tendered to the Company by a Participant in connection therewith shall
be promptly refunded to the relevant Participant, holder or beneficiary. Without
limiting the generality of the foregoing, no Award granted hereunder shall be
construed as an offer to sell securities of the Company, and no such offer shall
be outstanding, unless and until the Committee in its sole discretion has
determined that any such offer, if made, would be in compliance with all
applicable requirements of the U.S. federal securities laws and any other laws
to which such offer, if made, would be subject.
(m) No Trust or Fund Created. Neither the Plan nor any Award shall
create or be construed to create a trust or separate fund of any kind or a
fiduciary relationship between the Company or any Subsidiary and a Participant
or any other Person. To the extent that any Person acquires a right to receive
payments from the Company or any Subsidiary pursuant to an Award, such right
shall be no greater than the right of any unsecured general creditor of the
Company or any Subsidiary.
(n) No Fractional Shares. No fractional Shares shall be issued or
delivered pursuant to the Plan or any Award, and the Committee shall determine
whether cash or other securities or other property shall be paid or transferred
in lieu of any fractional Shares or whether such fractional Shares or any rights
thereto shall be canceled, terminated, or otherwise eliminated.
(o) Transfer Restrictions. Shares acquired hereunder may not be sold,
assigned, transferred, pledged or otherwise disposed of, except as provided in
the Plan, the applicable Award Agreement and the Investors' Agreement.
(p) Headings. Headings are given to the Sections and subsections of the
Plan solely as a convenience to facilitate reference. Such headings shall not be
deemed in any way material or relevant to the construction or interpretation of
the Plan or any provision thereof.
SECTION 11. Term of the Plan.
(a) Effective Date. The Plan shall be effective as of May 22, 1998,
subject to approval by the shareholders of the Company. Awards may be granted
hereunder prior to such shareholder approval subject in all cases, however, to
such approval.
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(b) Expiration Date. The Board and the Committee's authority to grant
Awards under the Plan shall terminate on the tenth anniversary of the Plan's
effective date. Unless otherwise expressly provided in the Plan or in an
applicable Award Agreement, any Award granted hereunder may, and the authority
of the Board or the Committee to amend, alter, adjust, suspend, discontinue, or
terminate any such Award or to waive any conditions or rights under any such
Award shall, continue after the authority for grant of new Awards hereunder has
been exhausted.
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EXHIBIT 10.28
THERMADYNE HOLDINGS CORPORATION
DIRECT INVESTMENT PROGRAM
SECTION 1. Purpose. The purpose of the Thermadyne Holdings Corporation
Direct Investment Program is to promote the interests of Thermadyne Holdings
Corporation (the "COMPANY") and its stockholders by (i) attracting and retaining
exceptional executive personnel and other key officers and employees of the
Company and its Subsidiaries; (ii) motivating such individuals by means of an
equity-based incentive to achieve longer-range performance goals; and (iii)
enabling such individuals to participate in the long-term growth and financial
success of the Company.
SECTION 2. Definitions. As used in the Plan, the following terms shall
have the meanings set forth below:
"ALLOCABLE INTEREST" means, as of any date with respect to any unvested
Coinvestment Shares that have been pledged by a Participant as security for a
Loan, the following product:
0.68 x I x F,
where I is the total interest accrued through such date on all Loans for which
such unvested Coinvestment Shares are so pledged, and F is a fraction the
numerator of which is the number of such unvested Coinvestment Shares and the
denominator of which is the total number of Coinvestment Shares that have been
pledged by the Participant as security for such Loans.
"AFFILIATE" means (i) any entity that is, directly or indirectly,
controlled by the Company and (ii) any other entity in which the Company has a
significant equity interest or which has a significant equity interest in the
Company, in either case as determined by the Committee.
"BOARD" shall mean the Board of Directors of the Company.
"CAUSE" means (i) dishonesty by a Participant that results in
substantial personal enrichment at the expense of the Company or (ii)
demonstratively willful repeated violations of a Participant's obligations to
the Company (including under any employment agreement between the Participant
and the Company) which are intended to result in material injury to the Company.
<PAGE> 2
"CHANGE OF CONTROL" means:
(a) any "person" (as such term is used in Section 3(a)(9) and
13(d)(3) of the Exchange Act) other than (A) the DLJ Entities and/or
their respective Permitted Transferees (as defined in the Investors'
Agreement) or (B) any "group" (within the meaning of such Section
13(d)(3)) of which the DLJ Entities constitute a majority (on the basis
of ownership interest), acquires, directly or indirectly, by virtue of
the consummation of any purchase, merger or other combination,
securities of the Company representing more than 51% of the combined
voting power of the Company's then outstanding voting securities with
respect to matters submitted to a vote of the stockholders generally;
or
(b) a sale or transfer by the Company or any of its
Subsidiaries of substantially all of the consolidated assets of the
Company and its Subsidiaries to an entity which is not an Affiliate of
the Company prior to such sale or transfer.
"CODE" means the Internal Revenue Code of 1986, as amended from time to
time.
"COINVESTMENT SHARES" means Shares of the Company purchased under the
Plan and designated as Coinvestment Shares.
"COMMITTEE" means a committee of the Board designated by the Board to
administer the Plan and composed of not less than the minimum number of persons
from time to time required by Rule 16b-3, each of whom, to the extent necessary
to comply with Rule 16b-3 only, is a "Non-Employee Director" within the meaning
of Rule 16b-3. Until otherwise determined by the Board, the full Board shall be
the Committee under the Plan.
"EMPLOYEE" means an employee of the Company or any Subsidiary.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended.
"FAIR MARKET VALUE" means with respect to the Shares, as of the
consummation of the merger of the Company and Mercury Acquisition Corporation,
$34.50 per share, and as of any other given date or dates, the average reported
closing price of a share of such class of common stock on such exchange or
market as is the principal trading market for such class of common stock for the
three trading days immediately preceding such date or dates. If such class of
common stock is not traded on an exchange or principal trading market on such
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date, the Fair Market Value of a Share shall be determined by the Committee in
good faith taking into account as appropriate recent sales of the Shares, recent
valuations of the Shares and such other factors as the Committee shall in its
discretion deem relevant or appropriate; provided, that if Fair Market Value is
to be determined in connection with the exercise by the Company or a Participant
of a right under this Plan or a Purchase Agreement to purchase, or cause to be
purchased by the Company, 40,000 or more Shares, the Fair Market Value of a
Share shall be the value selected by an unaffiliated financial institution
designated by the Committee (subject to the reasonable approval of the
Participant) as most accurately reflecting the value of a Share, from among
sealed proposed valuations submitted to such institution by each of such
Participant and the Company.
"INVESTORS' AGREEMENT" means the Investors' Agreement dated as of May
22, 1998 among (i) the Company, (ii) DLJ Merchant Banking Partners II, L.P., DLJ
Offshore Partners II, C.V., DLJ Merchant Banking Partners II-A, L.P., DLJ
Diversified Partners, L.P., DLJ Diversified Partners-A, L.P., DLJ Millennium
Partners, L.P., DLJ Millennium Partners-A, L.P., DLJMB Funding II, Inc., UK
Investment Plan 1997 Partners, DLJ EAB Partners, L.P., DLJ First ESC, L.P. and
DLJ ESC II, L.P. (collectively, the "DLJ ENTITIES") and (iii) certain other
Persons listed on the signature pages thereof.
"LOAN" shall have the meaning set forth in Section 5(c).
"PARTICIPANT" means the individuals listed on Exhibit A hereto (and to
the extent applicable, any heirs, legatees or legal representatives thereof).
"PERMITTED TRANSFEREE" shall have the meaning assigned to such term in
the Investors' Agreement.
"PERSON" means any individual, corporation, limited liability company,
partnership, association, joint-stock company, trust, unincorporated
organization, government or political subdivision thereof or other entity.
"PLAN" means this Thermadyne Holdings Corporation Direct Investment
Program.
"PLAN SHARES" means any Coinvestment Shares or Reinvestment Shares
purchased by a Participant under this Plan.
"PURCHASE AGREEMENT" shall mean an agreement to be executed by the
Company and a Participant as a condition to the acquisition of Shares under the
Plan by such Participant.
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"PURCHASE PRICE" shall have the meaning set forth in Section 5(b).
"REINVESTMENT SHARES" means Shares of the Company purchased under the
Plan and designated as Reinvestment Shares.
"RULE 16b-3" shall mean Rule 16b-3 as promulgated and interpreted by
the SEC under the Exchange Act, or any successor rule or regulation thereunder
as in effect from time to time.
"SEC" shall mean the Securities and Exchange Commission or any
successor thereto.
"SHARES" means shares of common stock, $0.01 par value, of the Company
or such other securities as may be designated by the Committee from time to
time.
"SUBSIDIARY" shall mean, with respect to any Person, any corporation or
other entity of which securities or other ownership interests having ordinary
voting power to elect a majority of the board of directors or other persons
performing similar functions are at the time directly or indirectly owned by
such Person.
SECTION 3. Administration.
(a) Authority of Committee. The Plan shall be administered by the
Committee or by the Board as a whole, if no Committee has been constituted. All
references to the powers and responsibilities of the Committee set forth in this
Plan shall be deemed to be references to the Board if no Committee has been
constituted. Subject to the terms of the Plan, applicable law and contractual
restrictions affecting the Company, and in addition to other express powers and
authorizations conferred on the Committee by the Plan, the Committee shall have
full power and authority to: (i) determine whether, to what extent, and under
what circumstances Purchase Agreements may be amended or terminated and Shares
acquired thereunder may be reacquired or transferred; (ii) interpret and
administer the Plan and any Purchase Agreement or other instrument or agreement
relating to, or made under, the Plan; (iii) establish, amend, suspend, or waive
such rules and regulations and appoint such agents as it shall deem appropriate
for the proper administration of the Plan; and (iv) make any other determination
and take any other action that the Committee deems necessary or desirable for
the administration of the Plan.
(b) Committee Discretion Binding. Unless otherwise expressly provided
in the Plan, all designations, determinations, interpretations, and other
decisions
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<PAGE> 5
under or with respect to the Plan or any Purchase Agreement shall be within the
sole discretion of the Committee, may be made at any time and shall be final,
conclusive and binding upon all Persons, including the Company, any Subsidiary,
any Participant, any holder or beneficiary of any Purchase Agreement, any
shareholder and any Employee.
SECTION 4. Shares Available for Purchase under Plan.
(a) Number of Shares. Subject to adjustment as provided in Section
4(b), the number of Shares available for purchase under the Plan shall be
141,002, of which 70,501 Shares shall be designated as Reinvestment Shares and
70,501 Shares shall be designated as Coinvestment Shares.
(b) Adjustments. In the event that the Committee determines that any
dividend or other distribution (whether in the form of cash, Shares, other
securities or other property), recapitalization, stock split, reverse stock
split, reorganization, reclassification, merger, consolidation, split-up,
spin-off, combination, repurchase, or exchange of Shares or other securities of
the Company, issuance of warrants or other rights to purchase Shares or other
securities of the Company, or other similar corporate transaction or event
affects the Shares such that an adjustment is determined by the Committee to be
appropriate in order to prevent dilution or enlargement of the benefits or
potential benefits of a Participant's investment in Shares under the Plan, then
the Committee shall, in such manner as it deems equitable, make such
adjustments, if any, to the number and kind of Shares (or number and kind of
other securities or property) with respect to which Purchase Agreements have
been or may thereafter be entered into hereunder as it deems appropriate and
necessary. Notwithstanding the foregoing, the issuance of warrants by the
Company in connection with the merger of the Company and Mercury Acquisition
Corporation shall not give rise to any such adjustment.
(c) Sources of Shares. Any Shares delivered pursuant to a Purchase
Agreement may be either authorized and unissued shares, or previously issued
shares, held in the treasury of the Company.
SECTION 5. Share Purchases.
(a) Purchase. The number of Coinvestment and Reinvestment Shares set
forth opposite each Participant's name in Exhibit A hereto shall be made
available for purchase by such Participant, effective as of the consummation of
the merger of the Company and Mercury Acquisition Corporation.
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<PAGE> 6
(b) Purchase Price. The price at which each Share under the Plan may be
purchased by a Participant hereunder (the "PURCHASE PRICE") shall be the Fair
Market Value as of the date of purchase.
(c) Payment. No Shares shall be delivered hereunder until payment in
full of the Purchase Price therefor is received by the Company. Such payment may
be made in cash or its equivalent, pursuant to financing arrangements approved
by the Committee, including loans to Participants made by the Company in the
form of Exhibit B hereto (the "LOANS") of up to the amounts set forth opposite
such Participants' names in Exhibit A hereto, or a combination of the foregoing,
provided that the combined value of all cash, cash equivalents and such
financing arrangements is at least equal to such Purchase Price.
SECTION 6. Vesting.
(a) Of the Coinvestment Shares purchased by any Participant, 20% shall
vest on each of the first five anniversaries of the date of purchase, provided
such Participant is employed by the Company or its Subsidiary as of such
anniversary.
(b) Upon the occurrence of a Change of Control, all Coinvestment Shares
that have not yet vested and that are held by a Participant who is then in the
employ of the Company or its Subsidiary, or that are held by the Permitted
Transferee of such a Participant, shall immediately become vested in full.
(c) All Reinvestment Shares shall be fully vested as of the date of
purchase by the Participant hereunder.
SECTION 7. Termination of Employment; Repayment of Loan. Except as may
be set forth in any Purchase Agreement or as otherwise determined by the
Committee at any time, upon the termination of a Participant's employment with
the Company and its Subsidiaries:
(a) Any outstanding Loan shall become due in accordance with the terms
of such Loan.
(b) In the event of a Participant's termination of employment other
than by the Company or its Subsidiary for Cause and other than by reason of the
Participant's death, the Company or its designee shall have the right to
purchase all or a portion of the Plan Shares held by the Participant or his or
her Permitted Transferee, at a price per Share equal to:
(i) In the case of unvested Coinvestment Shares, the lesser of
(A) the sum of the Purchase Price and the Allocable Interest with
respect
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<PAGE> 7
to such unvested Coinvestment Shares and (B) the Fair Market Value of
such Shares on the date of purchase by the Company; and
(ii) In the case of all other Plan Shares, the Fair Market
Value of such Shares on the date of purchase by the Company.
(c) In the event of a Participant's termination of employment by reason
of the Participant's death:
(i) The Company or its designee shall have the right to
purchase all or a portion of the unvested Coinvestment Shares held by
the Participant or his or her Permitted Transferee, at a price per
Share equal to the lesser of (A) the sum of the Purchase Price and the
Allocable Interest with respect to such unvested Coinvestment Shares
and (B) the Fair Market Value of such unvested Coinvestment Shares on
the date of purchase by the Company;
(ii) The Participant's estate or Permitted Transferee shall
have the right to cause the Company to purchase all or a portion of the
Reinvestment Shares and vested Coinvestment Shares held by the
Participant or his or her Permitted Transferee, at a price per Share
equal to the Fair Market Value of such Shares on the date of purchase
by the Company; and
(iii) In the event, after the Participant's death, of maturity
of any Loan secured by the Reinvestment Shares and vested Coinvestment
Shares held by the Participant's estate or Permitted Transferee, the
Company or its designee shall have the right to purchase all or a
portion of such Shares, at a price per Share equal to the Fair Market
Value of such Shares on the date of purchase by the Company.
(d) In the event of a Participant's termination of employment by the
Company or its Subsidiary for Cause, the Company or its designee shall have the
right to purchase all or a portion of the Plan Shares held by the Participant or
his or her Permitted Transferee, at a price per Share equal to:
(i) In the case of Coinvestment Shares (whether or not
vested), the lesser of (A) the Purchase Price with respect to such
Shares and (B) the Fair Market Value of such Shares on the date of
purchase by the Company; and
(ii) In the case of Reinvestment Shares, the Fair Market Value
of such Shares on the date of purchase by the Company.
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<PAGE> 8
(e) If either the Company or, in the case of Section 7(c)(ii), a
Participant's estate or Permitted Transferee, elects to exercise their rights
under this Section 7, the Company or such estate or Permitted Transferee, as the
case may be, shall deliver written notice (a "PURCHASE NOTICE") to the other to
such effect:
(i) in the case of any purchase pursuant to Sections 7(c)(ii)
or 7(c)(iii), prior to the third business day before the maturity date
of any Loan secured by the Plan Shares to be so purchased; and
(ii) in the case of any other purchase under this Section 7,
at any time within the discretion of the Company.
For purposes of this Section 7, the "date of purchase" shall mean the third
business day following the receipt of a Purchase Notice by the other party. The
proceeds of any Shares purchased from a Participant (or his or her Permitted
Transferee) pursuant to this Section 7 shall be applied first to the amount of
any interest and principal outstanding under any Loans held by such Participant
and secured by such Shares, in accordance with the terms of such Loans. Any
excess proceeds remaining after repayment of all such interest and principal
shall be paid to such Participant or his or her Permitted Transferee in cash or
by certified check; provided that if the terms of any agreement to which the
Company is a party, or any of the indentures governing any debt securities
issued by the Company or any of its Subsidiaries would prohibit the Company from
effecting such payment, payment may be effected (to the extent permitted under
such agreement or indenture) through a promissory note having such commercially
reasonable terms and interest rate as may be determined by the Company in its
reasonable discretion; and provided further that in any event such note shall
become due at such time as the prohibitions described above shall lapse.
SECTION 8. Loan Maturity Prior to Termination of Employment.
(a) In the event an outstanding Loan becomes due prior to the
termination of the applicable Participant's employment, the Participant shall
have the right to cause the Company to purchase that portion of such
Participant's vested Plan Shares necessary to repay the principal amount of the
Loan and any interest thereon at a per share price equal to such Shares' Fair
Market Value on the date of purchase by the Company.
(b) If a Participant elects to exercise his or her rights under this
Section 8, the Participant shall deliver a Purchase Notice to the Company to
such effect prior to the third business day before the maturity date of the
applicable Loan.
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<PAGE> 9
The purchase price for such Shares shall be applied and paid in the manner set
forth in Section 7(e).
SECTION 9. Investors' Agreement. A Participant shall, as a condition
precedent to the purchase of Shares, execute an instrument agreeing to be bound
by the terms of the Investors' Agreement or, at the election of the Company, a
counterpart of the Investors' Agreement. In any event, any Shares shall be
subject to the provisions in the Investors' Agreement regarding restrictions on
transfer and the Company's rights to compel sales and repurchase Shares.
SECTION 10. Amendment and Termination.
(a) Amendments to and Termination of the Plan. Unless the Plan shall
theretofore have been terminated as hereinafter provided, the Plan shall
terminate on, and no Purchase Agreement shall be entered into thereunder after,
May 22, 2008. Subject to any contractual restrictions affecting the Company, the
Board may amend, alter, suspend, discontinue, or terminate the Plan or any
portion thereof at any time; provided that no such amendment, alteration,
suspension, discontinuation or termination shall be made without shareholder
approval if such approval is necessary to comply with any tax or regulatory
requirement for which or with which the Board deems it necessary or desirable to
qualify or comply.
(b) Amendments to Purchase Agreements. The Committee may waive any
conditions or rights under, amend any terms of, or alter, suspend, discontinue,
cancel or terminate, any Purchase Agreement, prospectively or retroactively;
provided that any such waiver, amendment, alteration, suspension,
discontinuance, cancellation or termination that would adversely affect the
rights of any Participant under any Purchase Agreement shall not to that extent
be effective without the consent of the affected Participant.
SECTION 11. General Provisions.
(a) No Rights to Participation. No Employee, Participant or other
Person shall have any claim to be granted the opportunity to purchase any Shares
hereunder, and there is no obligation for uniformity of treatment of Employees
or Participants. The terms and conditions of Purchase Agreements need not be the
same with respect to each recipient.
(b) Share Certificates. Certificates issued in respect of Shares shall,
unless the Committee otherwise determines, be registered in the name of the
Participant or its Permitted Transferees and, so long as a Participant continues
to be governed by the provisions of any Loan, shall be deposited by such
Participant or Permitted Transferee, together with a stock power endorsed in
blank, with the
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<PAGE> 10
Company. When the Participant ceases to be bound by the provisions of the
Investors' Agreement and any Loan, the Company shall deliver such certificates
to the Participant upon request. Such stock certificate shall carry such
appropriate legends, and such written instructions shall be given to the
Company's transfer agent, as may be deemed necessary or advisable by counsel to
the Company in order to comply with the requirements of (i) the Securities Act
of 1933, any state securities laws or any other applicable laws, (ii) the
Investors' Agreement and (iii) any Loan. Subject to the provisions of the
Investors' Agreement, all certificates for Shares or other securities of the
Company or any Affiliate delivered under the Plan pursuant to any Purchase
Agreement shall be subject to such stop transfer orders and other restrictions
as the Committee may deem advisable under the Plan, the applicable Purchase
Agreement or the rules, regulations and other requirements of the SEC or any
stock exchange upon which such Shares or other securities are then listed and
any applicable laws or rules or regulations.
(c) Execution of Purchase Agreement: Disposition of Shares. No Shares
shall be issued hereunder unless and until a Purchase Agreement shall be
executed by the Company and the Participant.
(d) No Limit on Compensation Arrangements. Nothing contained in the
Plan shall prevent the Company or any Subsidiary from adopting or continuing in
effect compensation arrangements, which may, but need not, provide for the grant
of options, restricted stock, Shares and other types of awards (subject to
shareholder approval if such approval is required), and such arrangements may be
either generally applicable or applicable only in specific cases.
(e) No Rights to Employment. Nothing in this Plan or in any Purchase
Agreement shall confer on any individual any right to continue in the employ of
the Company or any Subsidiary of the Company or interfere in any way with the
right of the Company or any Subsidiary of the Company to terminate his or her
employment at any time.
(f) Governing Law. The validity, construction, and effect of the Plan
and any rules and regulations relating to the Plan and any Purchase Agreement
shall be determined in accordance with the laws of the State of Delaware,
without application of the conflict of laws principles thereof.
(g) Severability. If any provision of the Plan or any Purchase
Agreement is or becomes or is deemed to be invalid, illegal, or unenforceable in
any jurisdiction or as to any Person or Purchase Agreement, or would disqualify
the Plan or any Purchase Agreement under any law deemed applicable by the
Committee, such provision shall be construed or deemed amended to conform to the
applicable laws, or if it cannot be construed or deemed amended without, in
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<PAGE> 11
the determination of the Committee, materially altering the intent of the Plan
or the Purchase Agreement, such provision shall be stricken as to such
jurisdiction, Person or Purchase Agreement and the remainder of the Plan and any
such Purchase Agreement shall remain in full force and effect.
(h) Other Laws. The Committee may refuse to issue or transfer any
Shares or other consideration under a Purchase Agreement if, acting in its sole
discretion, it determines that the issuance or transfer of such Shares or such
other consideration might violate any applicable law or regulation or entitle
the Company to recover the same under Section 16(b) of the Exchange Act, and any
payment tendered to the Company by a Participant in connection therewith shall
be promptly refunded to the relevant Participant. Without limiting the
generality of the foregoing, no Purchase Agreement shall be construed as an
offer to sell securities of the Company, and no such offer shall be outstanding,
unless and until the Committee in its sole discretion has determined that any
such offer, if made, would be in compliance with all applicable requirements of
the U.S. Federal securities laws and any other laws to which such offer, if
made, would be subject.
(i) No Trust or Fund Created. Neither the Plan nor any Purchase
Agreement shall create or be construed to create a trust or separate fund of any
kind or a fiduciary relationship between the Company or any Affiliate and a
Participant or any other Person. To the extent that any Person acquires a right
to receive payments from the Company or any Affiliate pursuant to a Purchase
Agreement, such right shall be no greater than the right of any unsecured
general creditor of the Company or any Affiliate.
(j) No Fractional Shares. No fractional Shares shall be issued or
delivered pursuant to the Plan or any Purchase Agreement, and the Committee
shall determine whether cash or other securities or other property shall be paid
or transferred in lieu of any fractional Shares or whether such fractional
Shares or any rights thereto shall be canceled, terminated, or otherwise
eliminated.
SECTION 12. Effective Date. The Plan shall be effective as of May 22,
1998.
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<PAGE> 1
EXHIBIT 10.29
INVESTORS' AGREEMENT
dated as of
May 22, 1998
by and among
THERMADYNE HOLDINGS CORPORATION
DLJ MERCHANT BANKING PARTNERS II, L.P.,
DLJ MERCHANT BANKING PARTNERS II-A, L.P.,
DLJ OFFSHORE PARTNERS II, C.V.,
DLJ DIVERSIFIED PARTNERS, L.P.
DLJ DIVERSIFIED PARTNERS-A, L.P.,
DLJ MILLENNIUM PARTNERS, L.P.
DLJ MILLENNIUM PARTNERS-A, L.P.
DLJMB FUNDING II, INC.,
UK INVESTMENT PLAN 1997 PARTNERS,
DLJ EAB PARTNERS, L.P.,
DLJ FIRST ESC, L.P.,
DLJ ESC II, L.P.
and certain other Stockholders named herein
<PAGE> 2
TABLE OF CONTENTS
----------------------
<TABLE>
<CAPTION>
PAGE
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<S> <C> <C>
ARTICLE 1
DEFINITIONS
SECTION 1.01. Definitions......................................................................2
ARTICLE 2
CORPORATE GOVERNANCE
SECTION 2.01. Composition of the Board........................................................10
SECTION 2.02. Removal.........................................................................10
SECTION 2.03. Vacancies.......................................................................11
SECTION 2.04. Meetings........................................................................11
SECTION 2.05. Action by the Board.............................................................11
SECTION 2.06. Conflicting Charter or Bylaw Provisions.........................................11
ARTICLE 3
RESTRICTIONS ON TRANSFER
SECTION 3.01. General.........................................................................12
SECTION 3.02. Legends.........................................................................12
SECTION 3.03. Permitted Transferees...........................................................13
SECTION 3.04. Restrictions on Transfers by Management Stockholders............................13
ARTICLE 4
TAG-ALONG RIGHTS; DRAG-ALONG RIGHTS
SECTION 4.01. Rights to Participate in Transfer...............................................15
SECTION 4.02. Right to Compel Participation in Certain Transfers..............................16
SECTION 4.03. Certain Rights..................................................................18
ARTICLE 5
REGISTRATION RIGHTS
SECTION 5.01. Demand Registration.............................................................18
SECTION 5.02. Incidental Registration.........................................................21
SECTION 5.03. Holdback Agreements.............................................................23
SECTION 5.04. Registration Procedures.........................................................23
SECTION 5.05. Indemnification by the Company..................................................26
SECTION 5.06. Indemnification by Participating Stockholders...................................27
</TABLE>
<PAGE> 3
<TABLE>
<CAPTION>
PAGE
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<S> <C> <C>
SECTION 5.07. Conduct of Indemnification Proceedings..........................................28
SECTION 5.08. Contribution....................................................................28
SECTION 5.09. Participation in Public Offering................................................30
SECTION 5.10. Other Indemnification...........................................................30
SECTION 5.11. Cooperation by the Company......................................................30
ARTICLE 6
MISCELLANEOUS
SECTION 6.01. Entire Agreement................................................................31
SECTION 6.02. Binding Effect; Benefit.........................................................31
SECTION 6.03. Exclusive Financial and Investment Banking Advisor..............................31
SECTION 6.04. Assignability...................................................................31
SECTION 6.05. Amendment; Waiver; Termination..................................................31
SECTION 6.06. Notices.........................................................................32
SECTION 6.07. Headings........................................................................33
SECTION 6.08. Counterparts....................................................................33
SECTION 6.09. Applicable Law..................................................................33
SECTION 6.10. Specific Enforcement............................................................33
SECTION 6.11. Consent to Jurisdiction.........................................................33
</TABLE>
ii
<PAGE> 4
INVESTORS' AGREEMENT
AGREEMENT dated as of May 22, 1998 among (i) Thermadyne Holdings
Corporation, a Delaware corporation (the "COMPANY"), (ii) DLJ Merchant Banking
Partners II, L.P., a Delaware limited partnership, DLJ Offshore Partners II,
C.V. a Netherlands Antilles limited partnership, DLJ Merchant Banking Partners
II-A, L.P., a Delaware limited partnership, DLJ Diversified Partners, L.P., a
Delaware limited partnership, DLJ Diversified Partners-A, L.P., a Delaware
limited partnership, DLJ EAB Partners, L.P., a Delaware limited partnership, DLJ
Millennium Partners, L.P., a Delaware limited partnership, DLJ Millennium
Partners-A, L.P., a Delaware limited partnership, DLJMB Funding II, Inc., a
Delaware corporation, UK Investment Plan 1997 Partners, a Delaware partnership,
DLJ First ESC, L.P., a Delaware limited partnership and DLJ ESC II, L.P., a
Delaware limited partnership, (each of the foregoing, a "DLJ ENTITY", and
collectively, the "DLJ ENTITIES") and (iii) certain other Persons listed on the
signature pages hereof (each a "STOCKHOLDER" and collectively, the "MANAGEMENT
STOCKHOLDERS").
W I T N E S S E T H:
WHEREAS, certain parties hereto have acquired or will be acquiring
securities of Mercury Acquisition Corporation, the predecessor by merger to the
Company, and/or the Company;
WHEREAS, pursuant to the terms of the Merger Agreement (as defined
below) Mercury Acquisition Corporation has been merged with and into the Company
with the Company as the surviving corporation;
WHEREAS, the parties hereto desire to enter into this Agreement to
govern certain of their rights, duties and obligations after consummation of the
transactions contemplated by the Merger Agreement;
NOW, THEREFORE, in consideration of the covenants and agreements
contained herein and in the Merger Agreement, the parties hereto agree as
follows:
<PAGE> 5
ARTICLE 1
DEFINITIONS
SECTION 1.01. Definitions. (a) The following terms, as used herein,
have the following meanings:
"ADVERSE PERSON" means any Person whom the Board of Directors of the
Company determines is a competitor or a potential competitor of the Company or
its subsidiaries.
"AFFILIATE" means, with respect to any Person, any other Person
directly or indirectly controlling, controlled by, or under common control with
such Person; provided that no stockholder of the Company shall be deemed an
Affiliate of any other stockholder of the Company solely by reason of any
investment in the Company. For the purpose of this definition, the term
"CONTROL" (including with correlative meanings, the terms "CONTROLLING",
"CONTROLLED BY" and "UNDER COMMON CONTROL WITH"), when used with respect to any
Person, means the possession, directly or indirectly, of the power to direct or
cause the direction of the management and policies of such Person, whether
through the ownership of voting securities, by contract or otherwise.
"AFFILIATED EMPLOYEE BENEFIT TRUST" means any trust that is a successor
to the assets held by a trust established under an employee benefit plan subject
to ERISA or any other trust established directly or indirectly under such plan
or any other such plan having the same sponsor.
"AGGREGATE OWNERSHIP" means, with respect to any Stockholder or group
of Stockholders, and with respect to any class of Company Securities, the total
amount of such securities "beneficially owned" (as such term is defined in Rule
13d-3 under the Exchange Act) (without duplication) by such Stockholder or group
of Stockholders as of the date of such calculation (but adjusted in accordance
with the proviso below), calculated on a Fully Diluted basis and taking into
account any stock dividend, stock split or reverse stock split; provided that
such amount of securities shall be increased (without duplication) with respect
to any Other Stockholder, by any stock appreciation rights, options, warrants
(including the Warrants) or other rights to purchase or subscribe for Company
Securities of such Other Stockholder as and when such stock appreciation rights,
options, warrants or other rights have vested.
"BENCHMARK SECURITIES" means the aggregate number of Common Shares,
Preferred Shares or Warrants sold or proposed to be sold by the DLJ Entities
(other than to their Permitted Transferees) subsequent to the date hereof
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<PAGE> 6
until the first to occur of (i) the aggregate number of Common Shares, Preferred
Shares or Warrants so sold or proposed to be sold by the DLJ Entities (other
than to their Permitted Transferees) equals 25% of the Initial Ownership of
Common Stock, Preferred Stock or Warrants of the DLJ Entities and (ii) the
aggregate amount in cash (net of any commissions, fees or expenses) collectively
received or to be received by the DLJ Entities, without duplication, as a result
of the sale subsequent to the date hereof or proposed sale of any such Common
Shares, Preferred Shares or Warrants (other than to their Permitted Transferees)
shall equal the aggregate amount invested by the DLJ Entities as of such date in
Common Shares, Preferred Shares or Warrants.
"BOARD" means the board of directors of the Company.
"BUSINESS DAY" means any day except a Saturday, Sunday or other day on
which commercial banks in New York City are authorized by law to close.
"BYLAWS" means the Amended and Restated Bylaws of the Company, as
amended from time to time.
"CHANGE OF CONTROL" means:
(a) any "person" (as such term is used in Section 3(a)(9) and
13(d)(3) of the Exchange Act) other than (A) the DLJ Entities and/or
their respective Permitted Transferees or (B) any "group" (within the
meaning of such Section 13(d)(3)) of which the DLJ Entities constitute
a majority (on the basis of ownership interest), acquires, directly or
indirectly, by virtue of the consummation of any purchase, merger or
other combination, securities of the Company representing more than 51%
of the combined voting power of the Company's then outstanding voting
securities with respect to matters submitted to a vote of the
stockholders generally; or
(b) a sale or transfer by the Company or any of its
Subsidiaries of substantially all of the consolidated assets of the
Company and its Subsidiaries to an entity which is not an Affiliate of
the Company prior to such sale or transfer.
"CODE" means the Internal Revenue Code of 1986, as amended from time to
time.
"COINVESTMENT SHARES" means Shares of the Company purchased under the
Thermadyne Investment Program and designated as Coinvestment Shares.
3
<PAGE> 7
"COMMITTEE" means a committee of the Board designated by the Board to
administer the Plan and composed of not less than the minimum number of persons
from time to time required by Rule 16b-3, each of whom, to the extent necessary
to comply with Rule 16b-3 only, is a "Non-Employee Director" within the meaning
of Rule 16b-3. Until otherwise determined by the Board, the full Board shall be
the Committee under the Plan.
"CHARTER" means the Amended and Restated Certificate of Incorporation
of the Company, as amended from time to time.
"CLOSING DATE" means May 22, 1998.
"CODE" means the Internal Revenue Code of 1986, as amended.
"COMMON STOCK" means the common stock, par value $0.01 per share, of
the Company and any stock into which such Common Stock may thereafter be
converted or changed, and "COMMON SHARES" means shares of Common Stock.
"COMPANY SECURITIES" means the Common Stock and securities convertible
into or exchangeable for Common Stock, Preferred Stock and options, warrants
(including the Warrants) or other rights to acquire Common Stock, Preferred
Stock or any other equity security issued by the Company.
"DRAG-ALONG PORTION" means, with respect to any Other Stockholder and
any class of Company Securities, the number of such class of Company Securities
beneficially owned by such Other Stockholder on a Fully Diluted basis (but
without duplication) multiplied by a fraction, the numerator of which is the
number of such class of Company Securities proposed to be sold by the DLJ
Entities on behalf of the DLJ Entities and the Other Stockholders and the
denominator of which is the total number of such class of Company Securities on
a Fully Diluted basis beneficially owned by the Stockholders.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
"FOUNDING STOCKHOLDER" means either of Randall E. Curran or James H.
Tate.
"FULLY DILUTED" means, with respect to Common Stock and without
duplication, all outstanding Shares and all Shares issuable in respect of
securities convertible into or exchangeable for Shares, stock appreciation
rights, options,
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<PAGE> 8
warrants (including the Warrants) and other rights to purchase or subscribe for
Shares or securities convertible into or exchangeable for Common Stock; provided
that, to the extent any of the foregoing stock appreciation rights, options,
warrants or other rights to purchase or subscribe for Shares are subject to
vesting, the Shares subject to vesting shall be included in the definition of
"FULLY DILUTED" only upon and to the extent of such vesting.
"FIRST PUBLIC OFFERING" means the first sale after the date hereof of
Common Stock pursuant to an effective registration statement under the
Securities Act (other than a registration statement on Form S-8 or any successor
form).
"INITIAL OWNERSHIP" means, with respect to any Stockholder and any
class of Company Securities, the number of shares of such class of Company
Securities beneficially owned (and (without duplication) which such Persons have
the right to acquire) as of the date hereof, or in the case of any Person that
shall become a party to this Agreement on a later date, as of such date, taking
into account any stock split, stock dividend, reverse stock split or similar
event.
"OTHER STOCKHOLDERS" means all Stockholders other than the DLJ
Entities, and their respective Permitted Transferees.
"PERMITTED TRANSFEREE" means:
(i) in the case of any DLJ Entity (A) any other DLJ
Entity, (B) any general or limited partner of any DLJ Entity
(a "DLJ PARTNER"), and any corporation, partnership,
Affiliated Employee Benefit Trust or other entity that is an
Affiliate of any DLJ Partner (collectively, the "DLJ
AFFILIATES"), (C) any managing director, general partner,
director, limited partner, officer or employee of any DLJ
Entity or of any DLJ Affiliate, or the heirs, executors,
administrators, testamentary trustees, legatees or
beneficiaries of any of the foregoing persons referred to in
this clause (C) (collectively, "DLJ ASSOCIATES"), (D) a trust,
the beneficiaries of which, or a corporation, limited
liability company or partnership, the stockholders, members or
general or limited partners of which, include only DLJ
Entities, DLJ Affiliates, DLJ Associates, their spouses or
their lineal descendants or (E) a voting trustee for one or
more DLJ Entities, DLJ Affiliates or DLJ Associates under the
terms of a voting trust designed to conform with the
requirements of the Insurance Law of the State of New York;
and
(ii) in the case of any Other Stockholder (A) any Other
Stockholder, (B) a Person to whom Shares are transferred from
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<PAGE> 9
such Other Stockholder (1) by will or the laws of descent and
distribution or (2) by gift without consideration of any kind;
provided that, in the case of clause (2), such transferee is
the issue or spouse of such Other Stockholder or (C) a trust
that is for the exclusive benefit of such Other Stockholder or
its Permitted Transferees under (B) above.
"PERSON" means an individual, corporation, partnership, association,
trust or other entity or organization, including a government or political
subdivision or an agency or instrumentality thereof.
"PREFERRED STOCK" means the 13% senior exchangeable preferred stock,
par value $0.01 per share and due 2010 of the Company, and "PREFERRED SHARES"
means shares of Preferred Stock.
"PRO RATA PORTION" means the number of Shares a Stockholder holds
(either Purchased Shares or non-Purchased Shares, as the case may be) multiplied
by a fraction, the numerator of which is the number of Shares to be sold by the
DLJ Entities and their Permitted Transferees in a Public Offering and the
denominator of which is the total number of Shares, on a Fully Diluted basis,
held in the aggregate by the DLJ Entities and their Permitted Transferees prior
to such Public Offering.
"PUBLIC OFFERING" means an underwritten public offering of Registrable
Securities of the Company pursuant to an effective registration statement under
the Securities Act.
"PURCHASED SHARES" means those shares of Common Stock purchased by a
Management Stockholder on the Closing Date for cash and/or a promissory note
contemplated in the Thermadyne Investment Program.
"REGISTRABLE SECURITIES" means any Shares or Warrants until (i) a
registration statement covering such Shares or Warrants has been declared
effective by the SEC and such shares have been disposed of pursuant to such
effective registration statement, (ii) such Shares or Warrants are sold under
circumstances in which all of the applicable conditions of Rule 144 are met or
under which they may be sold pursuant to Rule 144(k) or (iii) such Shares or
Warrants are otherwise transferred, the Company has delivered a new certificate
or other evidence of ownership for such Shares or Warrants not bearing the
legend required pursuant to this Agreement and such Shares or Warrants may be
resold without subsequent registration under the Securities Act.
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<PAGE> 10
"REGISTRATION EXPENSES" means (i) all registration and filing fees,
(ii) fees and expenses of compliance with securities or blue sky laws (including
reasonable fees and disbursements of counsel in connection with blue sky
qualifications of the Shares or Warrants), (iii) printing expenses, (iv)
internal expenses of the Company (including, without limitation, all salaries
and expenses of its officers and employees performing legal or accounting
duties), (v) reasonable fees and disbursements of counsel for the Company and
customary fees and expenses for independent certified public accountants
retained by the Company (including the expenses of any comfort letters or costs
associated with the delivery by independent certified public accountants of a
comfort letter or comfort letters requested pursuant to Section 5.04(h)), (vi)
the reasonable fees and expenses of any special experts retained by the Company
in connection with such registration, (vii) reasonable fees and expenses of one
counsel for the Stockholders participating in the offering selected (A) by the
DLJ Entities, in the case of any offering in which such entities participate, or
(B) in any other case, by the Other Stockholders holding the majority of Shares
or Warrants to be sold for the account of all Other Stockholders in the
offering, (viii) fees and expenses in connection with any review of underwriting
arrangements by the National Association of Securities Dealers, Inc. (the
"NASD") including fees and expenses of any "QUALIFIED INDEPENDENT UNDERWRITER"
and (ix) fees and disbursements of underwriters customarily paid by issuers or
sellers of securities; but shall not include any underwriting fees, discounts or
commissions attributable to the sale of Registrable Securities, or any
out-of-pocket expenses (except as set forth in clause (vii) above) of the
Stockholders (or the agents who manage their accounts) or any fees and expenses
of underwriter's counsel.
"RESTRICTION TERMINATION DATE" means the earlier to occur of (a) the
second anniversary of the First Public Offering and (b) the fifth anniversary of
the Closing Date.
"RULE 144" means Rule 144 and Rule 144A (or any successor provisions)
under the Securities Act.
"SEC" means the Securities and Exchange Commission.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SHARES" means shares of Common Stock and shares of Preferred Stock.
"STOCKHOLDER" means each Person (other than the Company) who shall be a
party to or bound by this Agreement, whether in connection with the execution
and delivery hereof as of the date hereof, pursuant to Section 6.04, or
otherwise, so long as such Person shall (i) beneficially own any Company
Securities, or (ii)
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<PAGE> 11
have any stock appreciation rights, options, warrants or other rights to
purchase or subscribe for Company Securities.
"SUBJECT SECURITIES" means any Company Securities beneficially owned
by the Management Stockholders.
"TAG-ALONG PORTION" means
(i) where the Selling Person is selling Preferred Stock, the number of
shares of Preferred Stock held by the Tagging Person or the Selling Person, as
the case may be, multiplied by a fraction, the numerator of which is the number
of shares of Preferred Stock proposed to be sold in the Tag-Along Sale pursuant
to Section 4.01, and the denominator of which is the aggregate number of shares
of Preferred Stock owned by all Stockholders;
(ii) where the Selling Person is selling Common Stock, the number of
shares of Common Stock held (or, without duplication, acquirable under the
Warrants) by the Tagging Person or the Selling Person, as the case may be,
multiplied by a fraction, the numerator of which is the number of shares of
Common Stock proposed to be sold in the Tag-Along Sale pursuant to Section 4.01,
and the denominator of which is the aggregate number of shares of Common Stock
on a Fully Diluted basis owned by all Stockholders, and
(iii) where the Selling Person is selling Warrants, the number of
shares of Common Stock held (or, without duplication, acquirable under the
Warrants) by the Tagging Person or the Selling Person, as the case may be,
multiplied by a fraction the numerator of which is the number of shares of
Common Stock for which the Warrants proposed to be sold in the Tag-Along Sale
pursuant to Section 4.01 are exercisable, and the denominator of which is the
aggregate number of shares of Common Stock on a Fully Diluted basis owned by all
Stockholders,
provided that where a Tag-Along Right includes the right to sell Common
Stock, any holder of Warrants may, in lieu of exercising Warrants, transfer
Warrants for some or all of that number of shares of Common Stock as would
otherwise have constituted its Tag-Along Portion, in which event the price to be
received with respect to each such Warrant shall be the price per share of
Common Stock applicable to the Tag-Along Offer, less the then applicable
exercise price of the Warrants owned by such holder.
"THERMADYNE INVESTMENT PROGRAM" means the Thermadyne Holdings
Corporation Direct Investment Program.
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<PAGE> 12
"THERMADYNE NEW OPTION PROGRAM" means the Thermadyne Holdings
Corporation Management Incentive Plan.
"THIRD PARTY" means a prospective purchaser of Shares in an
arm's-length transaction from a Stockholder where such purchaser is not a
Permitted Transferee of such Stockholder.
"WARRANTS" means the warrants issued by the Company to Stockholders for
the purchase of an aggregate of 353,428 shares of Common Stock (subject to
adjustment as provided for herein).
"WARRANT SHARES" means shares of Common Stock issuable by the Company
upon exercise of the Warrants.
(b) The term "DLJ ENTITIES", to the extent such entities shall have
transferred any of their Shares to "Permitted Transferees", shall mean the DLJ
Entities and the Permitted Transferees of the DLJ Entities, taken together, and
any right or action that may be taken at the election of the DLJ Entities may be
taken at the election of the DLJ Entities and such Permitted Transferees.
(c) The term "Other Stockholders", to the extent such stockholders
shall have transferred any of their Shares to "Permitted Transferees", shall
mean the Other Stockholders and the Permitted Transferees of the Other
Stockholders, taken together, and any right or action that may be taken at the
election of the Other Stockholders may be taken at the election of the Other
Stockholders and such Permitted Transferees.
(d) Each of the following terms is defined in the Section set forth
opposite such term:
<TABLE>
<CAPTION>
Term Section
---- -------
<S> <C>
Applicable Holdback Period 5.03
beneficially own 1.01(a)
Demand Registration 5.01(e)
DLJSC 6.03
Drag-Along Rights 4.02(a)
Holders 5.01(e)
Incidental Registration 5.01(e)
Indemnified Party 5.07
Indemnifying Party 5.07
</TABLE>
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<PAGE> 13
<TABLE>
<S> <C>
Independent Director 2.01(a)
Inspectors 5.04(g)
Maximum Offering Size 5.01(e)
Nominee 2.03(a)
Records 5.04(g)
Section 4.01 Response Notice 4.01(a)
Section 4.02 Notice 4.02(a)
Section 4.02 Notice Period 4.02(a)
Section 4.02 Sale 4.02(a)
Section 4.02 Sale Price 4.02(a)
Selling Person 4.01(a)
Selling Stockholder 5.01(e)
Tag-Along Notice 4.01(a)
Tag-Along Notice Period 4.01(a)
Tag-Along Offer 4.01(a)
Tag-Along Right 4.01(a)
Tag-Along Sale 4.01(a)
Tagging Person 4.01(a)
transfer 3.01(a)
</TABLE>
ARTICLE 2
CORPORATE GOVERNANCE
SECTION 2.01. Composition of the Board. (a) The Board shall consist
initially of seven directors, five of whom will be designated by DLJ Merchant
Banking Partners II, L.P., one of whom will be Randall E. Curran and one of whom
will be James H. Tate, in each case for so long as such person is employed by
the Company; provided that at least one of the directors designated by DLJ
Merchant Banking Partners II, L.P. shall not be either an "Affiliate" or an
"Associate" (as such terms are used within the meaning of Rule 12b-2 under the
Exchange Act) of the DLJ Entities or the Other Stockholders (the "INDEPENDENT
DIRECTOR") and such Independent Director shall be designated by DLJ Merchant
Banking Partners II, L.P. after consultation with the Other Stockholders. The
DLJ Entities shall be permitted at any time to increase the number of directors
from seven to eight and DLJ Merchant Banking Partners II, L.P. shall be
permitted to designate the eighth director.
(b) Each Stockholder entitled to vote for the election of directors to
the Board agrees that it will vote its Shares or execute written consents, as
the case may be, and take all other necessary action (including causing the
Company to call a special meeting of stockholders) in order to ensure that the
composition of
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<PAGE> 14
the Board is as set forth in this Section 2.01; provided that the Other
Stockholders shall not be required to vote for the board-designees of the DLJ
Entities if the aggregate number of Common Shares held by the DLJ Entities is
less than 10% of their Initial Ownership of Common Shares.
SECTION 2.02. Removal. Each Stockholder agrees that if, at any time, it
is then entitled to vote for the removal of directors of the Company, it will
not vote any of its Shares in favor of the removal of any director who shall
have been designated or nominated pursuant to Section 2.01 unless such removal
shall be for cause or the Persons entitled to designate or nominate such
director shall have consented to such removal in writing.
SECTION 2.03. Vacancies. If, as a result of death, disability,
retirement, resignation, removal (with or without cause) or otherwise, there
shall exist or occur any vacancy of the Board:
(a) the Person or Persons entitled under Section 2.01 to designate or
nominate such director whose death, disability, retirement, resignation or
removal resulted in such vacancy may designate another individual (the
"NOMINEE") to fill such capacity and serve as a director of the Company; and
(b) each Stockholder then entitled to vote for the election of the
Nominee as a director of the Company agrees that it will vote its Shares, or
execute a written consent, as the case may be, in order to ensure that the
Nominee is elected to the Board.
SECTION 2.04. Meetings. The Board shall hold a regularly scheduled
meeting at least once every calendar quarter.
SECTION 2.05. Action by the Board. (a) A quorum of the Board shall
consist of four directors, of whom at least three must be designees of DLJ
Merchant Banking Partners II, L.P.; provided that the DLJ Entities shall have
the right at any time to increase the number of directors necessary to
constitute a quorum of the Board. All actions of the Board shall require the
affirmative vote of at least a majority of the directors present at a duly
convened meeting of the Board at which a quorum is present or the unanimous
written consent of the Board; provided that, in the event there is a vacancy on
the Board and an individual has been nominated to fill such vacancy, the first
order of business shall be to fill such vacancy.
(b) The Board may create executive, compensation and audit committees,
as well as such other committees as it may determine. The DLJ Entities shall be
entitled to majority representation on any committee created by
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<PAGE> 15
the Board and, to the extent not prohibited by or inadvisable under applicable
law, the Other Stockholders shall be entitled to at least one representative on
any such committee.
SECTION 2.06. Conflicting Charter or Bylaw Provisions. Each Stockholder
shall vote its Shares or execute written consents, as the case may be, and take
all other actions necessary, to ensure that the Company's Charter and Bylaws
facilitate and do not at any time conflict with any provision of this Agreement.
ARTICLE 3
RESTRICTIONS ON TRANSFER
SECTION 3.01. General. (a) Each Stockholder understands and agrees that
the Company Securities purchased pursuant to the applicable subscription
agreement or the Thermadyne Investment Program and the Thermadyne New Option
Program have not been registered under the Securities Act and are restricted
securities. Each Stockholder agrees that it will not, directly or indirectly,
sell, assign, transfer, grant a participation in, pledge or otherwise dispose of
("TRANSFER") any Company Securities (or solicit any offers to buy or otherwise
acquire, or take a pledge of any Company Securities) except in compliance with
the Securities Act and the terms and conditions of this Agreement.
Any attempt to transfer any Company Securities not in compliance
with this Agreement shall be null and void and the Company shall not, and shall
cause any transfer agent not to, give any effect in the Company's stock records
to such attempted transfer.
SECTION 3.02. Legends. In addition to any other legend that may be
required, each certificate for shares of Common Stock or Preferred Stock and
each Warrant that is issued to any Stockholder shall bear a legend in
substantially the following form:
"THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR ANY STATE SECURITIES LAWS AND MAY NOT BE OFFERED OR SOLD
EXCEPT IN COMPLIANCE THEREWITH. THIS SECURITY IS ALSO SUBJECT TO ADDITIONAL
RESTRICTIONS ON TRANSFER AS SET FORTH IN THE INVESTORS' AGREEMENT DATED AS OF
MAY 22, 1998, COPIES OF WHICH MAY BE
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<PAGE> 16
OBTAINED UPON REQUEST FROM THERMADYNE HOLDINGS CORPORATION OR ANY SUCCESSOR
THERETO."
If any Company Securities shall cease to be Registrable
Securities under clause (i) or clause (ii) of the definition thereof, the
Company shall, upon the written request of the holder thereof, issue to such
holder a new certificate evidencing such securities without the first sentence
of the legend required by this Section endorsed thereon. If any Company
Securities cease to be subject to any and all restrictions on transfer set forth
in this Agreement, the Company shall, upon the written request of the holder
thereof, issue to such holder a new certificate evidencing such Company
Securities without the second sentence of the legend required by this Section
endorsed thereon.
SECTION 3.03. Permitted Transferees. Notwithstanding anything in this
Agreement to the contrary, any Stockholder may at any time transfer any or all
of its Company Securities to one or more of its Permitted Transferees without
the consent of the Board or any other Stockholder or group of Stockholders and
without compliance with Sections 3.04 and 4.01 so long as (a) such Permitted
Transferee shall have agreed in writing to be bound by the terms of this
Agreement and (b) the transfer to such Permitted Transferee is not in violation
of applicable federal or state securities laws.
SECTION 3.04. Restrictions on Transfers by Management Stockholders.
(a) Each Management Stockholder and each Permitted Transferee of such
Management Stockholder may transfer its Company Securities only as follows:
(i) in a transfer made in compliance with Section 4.01 or
4.02, 4.03 or as permitted or required by the Thermadyne Investment
Program, the Thermadyne New Option Program or any employment contract
between the Company or any Subsidiary and an employee;
(ii) subject to the Public Offering Limitations, in a Public
Offering in connection with the exercise of its rights under Article 5
hereof;
(iii) in a transfer made at the conclusion of the Applicable
Holdback Period (as defined in Section 5.03) following a Public
Offering, in compliance with Rule 144 promulgated under the Securities
Act; provided, however, that until the Restriction Termination Date,
the Aggregate Ownership of such Management Stockholder as a result of
such transfer shall be equal to or exceed the greater of (x) 50% of
such
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<PAGE> 17
Management Stockholder's Initial Ownership of Common Stock and (y) the
percentage of such Management Stockholder's Initial Ownership that is
equal to the Aggregate Ownership of the DLJ Entities as a percentage of
the DLJ Entities' Initial Ownership; or
(iv) following the Restriction Termination Date, to any Third
Party other than an Adverse Person for consideration consisting solely
of cash, provided, however, that the number of Shares transferred by
such Management Stockholder pursuant to this Section 3.04(a)(iv) in any
twelve-month period shall not exceed 20% of the greater of (x) such
Management Stockholder's Aggregate Ownership at the beginning of such
twelve month period and (y) such Management Stockholder's Aggregate
Ownership as of the date hereof.
For purposes of this Agreement, "PUBLIC OFFERING LIMITATIONS" means (A)
except as set forth in the proviso at the end of this paragraph, no Management
Stockholder shall be permitted to exercise its rights under Section 5.02 hereof
(x) with respect to the First Public Offering and (y) until such time as the
Aggregate Ownership of the DLJ Entities shall be less than 50% of their
aggregate Initial Ownership of Common Stock and (B) in each Public Offering
following the First Public Offering, such Management Stockholder shall be
entitled to transfer a number of Shares not exceeding such Management
Stockholder's Pro Rata Portion of non-Purchased Shares; provided, however, that
notwithstanding the restrictions set forth in clauses (A) and (B), each
Management Stockholder shall be permitted to exercise its rights pursuant to
Section 5.02 hereof in respect of such Management Stockholder's Pro Rata Portion
of its Purchased Shares in any Public Offering.
(b) The provisions of Section 3.04(a) shall terminate upon the earliest
to occur of (i) the fifth anniversary of the Closing Date and (ii) a Change of
Control. Notwithstanding the foregoing sentence, the provisions of Section
3.04(a) shall not terminate with respect to any Management Stockholder's Shares
which shall have been pledged to the Company as security in connection with any
indebtedness for borrowed money owed by such Management Stockholder to the
Company unless the proceeds from the sale of such Shares are applied to repay
such indebtedness in full.
(c) In addition to any other restriction contained in this Agreement
and notwithstanding any other provision of this Section 3.04, neither a
Management Stockholder nor any Permitted Transferee thereof may transfer
Coinvestment Shares (as defined in the Thermadyne Investment Program) prior to
the date such Shares have vested in accordance with the terms of the Thermadyne
Investment Program and the relevant purchase agreement thereunder.
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<PAGE> 18
ARTICLE 4
TAG-ALONG RIGHTS; DRAG-ALONG RIGHTS
SECTION 4.01. Rights to Participate in Transfer. (a) If DLJ Entities
(the "SELLING PERSON") propose to transfer (other than transfers of shares of
Company Securities (i) in a Public Offering, (ii) to any Permitted Transferee of
any of the DLJ Entities or (iii) any transfer of Preferred Stock or any transfer
of Warrants made in conjunction with such a transfer of Preferred Stock), in a
transaction otherwise permitted by Article 3 hereof, a number of Company
Securities of any class of securities of the Company equal to or exceeding 10%
of the Aggregate Ownership of the DLJ Entities of securities of such class in a
single transaction or in a series of related transactions on the date of the
proposed sale (a "TAG-ALONG SALE"), the Other Stockholders may, at their option,
elect to exercise their rights under this Section 4.01 (each such Stockholder, a
"TAGGING PERSON"). In the event of such a proposed transfer, the Selling Person
shall provide each Other Stockholder written notice of the terms and conditions
of such proposed transfer ("TAG-ALONG NOTICE") and offer each Tagging Person the
opportunity to participate in such sale. The Tag-Along Notice shall identify the
number and type of Company Securities subject to the offer ("TAG-ALONG OFFER"),
the cash price at which the transfer is proposed to be made, and all other
material terms and conditions of the Tag-Along Offer, including the form of the
proposed agreement, if any. From the date of the Tag-Along Notice, each Tagging
Person shall have the right (a "TAG-ALONG RIGHT"), exercisable by written notice
("SECTION 4.01 RESPONSE NOTICE") given to the Selling Person within 10 Business
Days (the "TAG-ALONG NOTICE PERIOD"), to request that the Selling Person include
in the proposed transfer the number of Company Securities held by such Tagging
Person as is specified in such notice; provided that if the aggregate number of
Company Securities proposed to be sold by the Selling Person and all Tagging
Persons in such transaction exceeds the number of Company Securities which can
be sold on the terms and conditions set forth in the Tag-Along Notice, then only
the Tag- Along Portion of Company Securities of each Tagging Person shall be
sold pursuant to the Tag-Along Offer and the Selling Person shall sell its
Tag-Along Portion of Company Securities and such additional Company Securities
as permitted by Section 4.01(d). If the Tagging Persons exercise their Tag-Along
Rights hereunder, each Tagging Person shall deliver, together with its Section
4.01 Response Notice, to the Selling Person the certificate or certificates
representing the Company Securities of such Tagging Person to be included in the
transfer, together with a limited power-of-attorney authorizing the Selling
Person to transfer such Securities on the terms set forth in the Tag-Along
Notice.
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<PAGE> 19
Delivery of such certificate or certificates representing the Company Securities
to be transferred and the limited power-of-attorney authorizing the Selling
Person to transfer such Company Securities shall constitute an irrevocable
acceptance of the Tag-Along Offer by such Tagging Persons. If, at the end of a
120 day period after such delivery, the Selling Person has not completed the
transfer of all such Company Securities on substantially the same terms and
conditions set forth in the Tag-Along Notice, the Selling Person shall return to
each Tagging Person the limited power-of-attorney (and all copies thereof)
together with all certificates representing the Company Securities which such
Tagging Person delivered for transfer pursuant to this Section 4.01.
(b) Concurrently with the consummation of the Tag-Along Sale, the
Selling Person shall notify the Tagging Persons thereof, shall remit to the
Tagging Persons the total consideration (by bank or certified check) for the
Company Securities of the Tagging Persons transferred pursuant thereto, and
shall, promptly after the consummation of such Tag-Along Sale, furnish such
other evidence of the completion and time of completion of such transfer and the
terms thereof as may be reasonably requested by the Tagging Persons.
(c) If at the termination of the Tag-Along Notice Period any Tagging
Person shall not have elected to participate in the Tag-Along Sale, such Tagging
Person will be deemed to have waived its rights under Section 4.01(a) with
respect to the transfer of its securities pursuant to such Tag-Along Sale.
(d) If any Tagging Person declines to exercise its Tag-Along Rights or
elects to exercise its Tag-Along Rights with respect to less than such Tagging
Person's Tag-Along Portion, the DLJ Entities shall be entitled to transfer,
pursuant to the Tag-Along Offer, a number of Company Securities held by the DLJ
Entities equal to the number of Company Securities constituting the portion of
such Tagging Person's Tag-Along Portion with respect to which Tag-Along Rights
were not exercised.
(e) The DLJ Entities and any Tagging Person who exercises the Tag-
Along Rights pursuant to this Section 4.01 may sell the Company Securities
subject to the Tag-Along Offer on the terms and conditions set forth in the Tag-
Along Notice (provided, however, that the cash price payable in any such sale
may exceed the cash price specified in the Tag-Along Notice by up to 10%) within
120 days of the date on which Tag-Along Rights shall have been waived, exercised
or expire.
SECTION 4.02. Right to Compel Participation in Certain Transfers. (a)
If (i) the DLJ Entities propose to transfer not less than 50% of their Initial
Ownership of Common Stock to a Third Party in a bona fide sale or (ii) the DLJ
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<PAGE> 20
Entities propose a transfer in which the shares of Common Stock to be
transferred by the DLJ Entities and their Permitted Transferees constitute more
than 50% of the outstanding shares of Common Stock (a "SECTION 4.02 SALE"), the
DLJ Entities may at their option require all Other Stockholders to sell the
Drag-Along Portion of the Subject Securities ("DRAG-ALONG RIGHTS") then held by
every Other Stockholder, and (subject to and at the closing of the Section 4.02
Sale) to exercise all, but not less than all, of the options or Warrants held by
every Other Stockholder and to sell all of the shares of Common Stock received
upon such exercise to such Third Party, for the same consideration per share of
Common Stock and otherwise on the same terms and conditions as the DLJ Entities;
provided that any Other Stockholder who holds options or Warrants the exercise
price per share of which is greater than the per share price at which the Shares
are to be sold to the Third Party may, if required by the DLJ Entities to
exercise such options, in place of such exercise, submit to irrevocable
cancellation thereof without any liability for payment of any exercise price
with respect thereto. In the event the Section 4.02 Sale is not consummated with
respect to any shares acquired upon exercise of such options or Warrants, or the
Section 4.02 Sale is not consummated, such options or Warrants shall be deemed
not to have been exercised or canceled, as applicable. DLJMB shall provide
written notice of such Section 4.02 Sale to the Other Stockholders (a "SECTION
4.02 NOTICE") not later than the 15th day prior to the proposed Section 4.02
Sale. The Section 4.02 Notice shall identify the transferee, the number of
Subject Securities, the consideration for which a transfer is proposed to be
made (the "SECTION 4.02 SALE PRICE") and all other material terms and conditions
of the Section 4.02 Sale. The number of shares of Common Stock, Preferred Stock,
and/or Warrants to be sold by each Other Stockholder will be the Drag-Along
Portion of the shares of Common Stock, Preferred Stock, and/or Warrants that
such Other Stockholder owns. Subject to Sections 4.02 and 4.03, each Other
Stockholder shall be required to participate in the Section 4.02 Sale on the
terms and conditions set forth in the Section 4.02 Notice and to tender all its
Subject Securities as set forth below. The price payable in such transfer shall
be the Section 4.02 Sale Price. Not later than the 10th day following the date
of the Section 4.02 Notice (the "SECTION 4.02 NOTICE PERIOD"), each of the Other
Stockholders shall deliver to a representative of DLJMB designated in the
Section 4.02 Notice certificates representing all Subject Securities
representing the Drag Along Portion held by such Other Stockholder, duly
endorsed, together with all other documents required to be executed in
connection with such Section 4.02 Sale. If an Other Stockholder should fail to
deliver such certificates to DLJMB, the Company shall cause the books and
records of the Company to show that such Subject Securities are bound by the
provisions of this Section 4.02 and Section 4.03 and that such Subject
Securities shall be transferred to the purchaser of the Subject Securities
immediately upon surrender for transfer by the holder thereof.
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(b) The DLJ Entities shall have a period of 90 days from the date of
receipt of the Section 4.02 Notice to consummate the Section 4.02 Sale on the
terms and conditions set forth in such Section 4.02 Sale Notice. If the Section
4.02 Sale shall not have been consummated during such period, DLJMB shall return
to each of the Other Stockholders all certificates representing Subject
Securities that such Other Stockholder delivered for transfer pursuant hereto,
together with any documents in the possession of DLJMB executed by the Other
Stockholder in connection with such proposed transfer, and all the restrictions
on transfer contained in this Agreement or otherwise applicable at such time
with respect to Common Stock owned by the Other Stockholders shall again be in
effect.
(c) Concurrently with the consummation of the transfer of Company
Securities pursuant to this Section 4.02 and Section 4.03, DLJMB shall give
notice thereof to all Stockholders, shall remit to each of the Stockholders who
have surrendered their certificates the total consideration (by bank or
certified check) for the Subject Securities transferred pursuant hereto and
shall furnish such other evidence of the completion and time of completion of
such transfer and the terms thereof as may be reasonably requested by such
Stockholders.
SECTION 4.03. Certain Rights. It is understood and agreed that the
employment agreements or associated restricted stock purchase agreements between
one or more Management Stockholders and the Company or any Subsidiary may
contain provisions permitting or requiring, under certain circumstances, such
Management Stockholders to sell to the Company or a Subsidiary, and permitting
or requiring, under certain circumstances, the Company or such Subsidiary to
purchase from such Management Stockholder, Company Securities. Such provisions
may, by the terms of such agreements, remain effective notwithstanding that the
employment relationship created by such employment agreements has been
terminated, in which event such provisions are deemed to be incorporated herein
and made a part hereof, to the extent appropriate.
ARTICLE 5
REGISTRATION RIGHTS
SECTION 5.01. Demand Registration. (a) If the Company shall receive a
written request by the DLJ Entities or their Permitted Transferees (any such
requesting Person, a "SELLING STOCKHOLDER") that the Company effect the
registration under the Securities Act of all or a portion of such Selling
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Stockholder's Registrable Securities, and specifying the intended method of
disposition thereof, then the Company shall promptly give written notice of such
requested registration (a "DEMAND REGISTRATION") at least 5 days prior to the
anticipated filing date of the registration statement relating to such Demand
Registration to the Other Stockholders and thereupon will use its best efforts
to effect, as expeditiously as possible, the registration under the Securities
Act of:
(i) the Registrable Securities which the Company has been so
requested to register by the Selling Stockholders, then held by the
Selling Stockholders; and
(ii) subject to the restrictions set forth in Section 3.04,
all other Registrable Securities of the same type as that to which the
request by the Selling Stockholders relates which any Other Stockholder
entitled to request the Company to effect an Incidental Registration
(as such term is defined in Section 5.02) pursuant to Section 5.02 (all
such Stockholders, together with the Selling Stockholders, the
"HOLDERS") has requested the Company to register by written request
received by the Company within 2 days after the receipt by such Holders
of such written notice given by the Company,
all to the extent necessary to permit the disposition (in accordance with the
intended methods thereof as aforesaid) of the Registrable Securities so to be
registered; provided that, subject to Section 5.01(d) hereof, the Company shall
not be obligated to effect more than six Demand Registrations for the DLJ
Entities; and provided further that the Company shall not be obligated to effect
a Demand Registration unless the aggregate proceeds expected to be received from
the sale of the Common Stock to be included in such Demand Registration, in the
reasonable opinion of DLJMB exercised in good faith, equals or exceeds (x)
$50,000,000 if such Demand Registration would constitute the First Public
Offering, or (y) $10,000,000 in all other cases. In no event will the Company be
required to effect more than one Demand Registration within any four-month
period.
(b) Promptly after the expiration of the 2-day period referred to in
Section 5.01(a)(ii) hereof, the Company will notify all the Holders to be
included in the Demand Registration of the other Holders and the number of
Registrable Securities requested to be included therein. The Selling
Stockholders requesting a registration under this Section may, at any time prior
to the effective date of the registration statement relating to such
registration, revoke such request, without liability to any of the other
Holders, by providing a written notice to the Company revoking such request, in
which case such request, so revoked, shall be considered a Demand Registration
unless the participating Stockholders reimburse the
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Company for all costs incurred by the Company in connection with such
registration, or unless such revocation arose out of the fault of the Company,
in which case such request shall not be considered a Demand Registration.
(c) The Company will pay all Registration Expenses in connection with
any Demand Registration.
(d) A registration requested pursuant to this Section shall not be
deemed to have been effected (i) unless the registration statement relating
thereto (A) has become effective under the Securities Act and (B) has remained
effective for a period of at least 180 days (or such shorter period in which all
Registrable Securities of the Holders included in such registration have
actually been sold thereunder); provided that if after any registration
statement requested pursuant to this Section becomes effective (x) such
registration statement is interfered with by any stop order, injunction or other
order or requirement of the SEC or other governmental agency or court and (y)
less than 75% of the Registrable Securities included in such registration
statement has been sold thereunder, such registration statement shall not be
considered a Demand Registration or (ii) if the Maximum Offering Size (as
defined below) is reduced in accordance with Section 5.01(e) such that less than
66 2/3% of the Registrable Securities of the Selling Stockholders sought to be
included in such registration are included.
(e) If a Demand Registration involves an Underwritten Public Offering
and the managing underwriter shall advise the Company and the Selling
Stockholders that, in its view, (i) the number of Registrable Securities
requested to be included in such registration (including any securities which
the Company proposes to be included which are not Registrable Securities) or
(ii) the inclusion of some or all of the Registrable Securities owned by the
Holders, in any such case, exceeds the largest number of securities which can be
sold without having an adverse effect on such offering, including the price at
which such securities can be sold (the "MAXIMUM OFFERING SIZE"), the Company
will include in such registration, in the priority listed below, up to the
Maximum Offering Size:
(A) first, all Benchmark Securities requested to be
registered by the Selling Stockholder and by all other DLJ
Entities and their Permitted Transferees (allocated, if
necessary for the offering not to exceed the Maximum Offering
Size, pro rata among such entities on the basis of the
relative number of shares of Registrable Securities requested
to be registered);
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(B) second, all Registrable Securities (other than
Benchmark Securities) requested to be included in such
registration by all DLJ Entities and their Permitted
Transferees and any other Holder (allocated, if necessary for
the offering not to exceed the Maximum Offering Size, pro rata
among such DLJ Entities and their Permitted Transferees and
such other Holders on the basis of the relative number of
shares of Registrable Securities (excluding any Benchmark
Securities) requested to be included in such registration);
and
(C) third, any securities proposed to be registered by
the Company.
(f) If, in connection with any Demand Registration pursuant to this
Section with respect to the Preferred Stock, any Selling Stockholder shall seek
to transfer any Warrants together with shares of Preferred Stock, the Company
shall at the request of any such Stockholder effect a registration of such
Warrants to which the provisions of this Article 5 shall apply mutatis mutandis
and a registration, pursuant to a shelf registration statement, so as to permit
the resale of the shares of Common Stock for which any Warrants so transferred
may be exercisable. The Company shall maintain the effectiveness of any such
shelf registration statement, and take all actions necessary to permit resale of
such Common Stock as may be required by applicable state securities laws.
SECTION 5.02. Incidental Registration. (a) If the Company proposes to
register any Company Securities under the Securities Act (other than a
registration (A) on Form S-8 or S-4 or any successor or similar forms, (B)
relating to Common Stock issuable upon exercise of employee stock options or in
connection with any employee benefit or similar plan of the Company or (C) in
connection with a direct or indirect acquisition by the Company of another
company), whether or not for sale for its own account, it will each such time,
subject to the provisions of Section 5.02(b), give prompt written notice at
least 30 days prior to the anticipated filing date of the registration statement
relating to such registration to each DLJ Entity and each Other Stockholder,
which notice shall set forth such Stockholder's rights under this Section 5.02
and shall offer such Stockholders the opportunity to include in such
registration statement such number of Registrable Securities of the same type as
are proposed to be registered as each such Stockholder may request (an
"INCIDENTAL REGISTRATION"). Upon the written request of any such Stockholder
made within 15 days after the receipt of notice from the Company (which request
shall specify the number of Registrable Securities intended to be disposed of by
such Stockholder), the Company will use its best efforts to effect the
registration under the Securities Act of all Registrable Securities which the
Company has been so requested to register by such
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Stockholders, to the extent requisite to permit the disposition of the
Registrable Securities so to be registered; provided that (I) if such
registration involves a Public Offering, all such Stockholders requesting to be
included in the Company's registration must sell their Registrable Securities to
the underwriters selected as provided in Section 5.04(f) on the same terms and
conditions as apply to the Company and (II) if, at any time after giving written
notice of its intention to register any stock pursuant to this Section 5.02(a)
and prior to the effective date of the registration statement filed in
connection with such registration, the Company shall determine for any reason
not to register such securities, the Company shall give written notice to all
such Stockholders and, thereupon, shall be relieved of its obligation to
register any Registrable Securities in connection with such registration
(without prejudice, however, to rights of any DLJ Entity under Section 5.01). No
registration effected under this Section 5.02 shall relieve the Company of its
obligations to effect a Demand Registration to the extent required by Section
5.01. The Company will pay all Registration Expenses in connection with each
registration of Registrable Securities requested pursuant to this Section 5.02.
(b) If a registration pursuant to this Section 5.02 involves a Public
Offering (other than in the case of a Public Offering requested by any DLJ
Entity or any of their Permitted Transferees or the Other Stockholders in a
Demand Registration, in which case the provisions with respect to priority of
inclusion in such offering set forth in Section 5.01(e) shall apply) and the
managing underwriter advises the Company that, in its view, the number of Shares
that the Company and such Stockholders intend to include in such registration
exceeds the Maximum Offering Size, the Company will include in such
registration, in the following priority, up to the Maximum Offering Size:
(i) first, so much of the securities proposed to be registered
by the Company as would not cause the offering to exceed the Maximum
Offering Size;
(ii) second, all Benchmark Securities requested to be included
in such registration statement by the DLJ Entities and their Permitted
Transferees (allocated, if necessary for the offering not to exceed the
Maximum Offering Size, pro rata among such entities on the basis of the
relative number of shares of Registrable Securities requested to be so
included); and
(iii) third, all Registrable Securities other than Benchmark
Securities requested to be included in such registration by any DLJ
Entity and its Permitted Transferees or any Other Stockholder pursuant
to this Section 5.02 (allocated, if necessary for the offering not to
exceed the
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Maximum Offering Size, pro rata among such Stockholders on the basis of
the relative number of shares of Registrable Securities (excluding any
Benchmark Securities) so requested to be included in such
registration).
SECTION 5.03. Holdback Agreements. If any registration of Registrable
Securities shall be in connection with a Public Offering, each DLJ Entity and
its Permitted Transferees and each Other Stockholder agrees not to effect any
public sale or distribution, including any sale pursuant to Rule 144, or any
successor provision, under the Securities Act, of any Registrable Securities,
and not to effect any such public sale or distribution of any other Common Stock
of the Company or of any stock convertible into or exchangeable or exercisable
for any Common Stock of the Company (in each case, other than as part of such
Public Offering) during the 14 days prior to the effective date of such
registration statement (except as part of such registration) or during the
period after such effective date equal to the lesser of (i) such period of time
as agreed between such managing underwriter and the Company and (ii) 180 days
(such lesser period, the "APPLICABLE HOLDBACK PERIOD").
SECTION 5.04. Registration Procedures. Whenever Stockholders request
that any Registrable Securities be registered pursuant to Section 5.01 or 5.02,
the Company will, subject to the provisions of such Sections, use its best
efforts to effect the registration and the sale of such Registrable Securities
in accordance with the intended method of disposition thereof as quickly as
practicable, and in connection with any such request:
(a) The Company will as expeditiously as possible prepare and file with
the SEC a registration statement on any form for which the Company then
qualifies or which counsel for the Company shall deem appropriate and which form
shall be available for the sale of the Registrable Securities to be registered
thereunder in accordance with the intended method of distribution thereof, and
use its best efforts to cause such filed registration statement to become and
remain effective for a period of not less than 180 days.
(b) The Company will, if requested, prior to filing a registration
statement or prospectus or any amendment or supplement thereto, furnish to
participating Stockholder and each underwriter, if any, of the Registrable
Securities covered by such registration statement copies of such registration
statement as proposed to be filed, and thereafter the Company will furnish to
such Stockholder and underwriter, if any, such number of copies of such
registration statement, each amendment and supplement thereto (in each case
including all exhibits thereto and documents incorporated by reference therein),
the prospectus included in such registration statement (including each
preliminary prospectus) and such other documents as such Stockholder or
underwriter may reasonably
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request in order to facilitate the disposition of the Registrable Securities
owned by such Stockholder.
(c) After the filing of the registration statement, the Company will
promptly notify each Stockholder holding Registrable Securities covered by such
registration statement of any stop order issued or threatened by the SEC and
take all reasonable actions required to prevent the entry of such stop order or
to remove it if entered.
(d) The Company will use its best efforts to (i) register or qualify
the Registrable Securities covered by such registration statement under such
other securities or blue sky laws of such jurisdictions in the United States as
any Stockholder holding such Registrable Securities reasonably (in light of such
Stockholder's intended plan of distribution) requests and (ii) cause such
Registrable Securities to be registered with or approved by such other
governmental agencies or authorities as may be necessary by virtue of the
business and operations of the Company and do any and all other acts and things
that may be reasonably necessary or advisable to enable such Stockholder to
consummate the disposition of the Registrable Securities owned by such
Stockholder; provided that the Company will not be required to (A) qualify
generally to do business in any jurisdiction where it would not otherwise be
required to qualify but for this paragraph (d), (B) subject itself to taxation
in any such jurisdiction or (C) consent to general service of process in any
such jurisdiction.
(e) The Company will immediately notify each Stockholder holding such
Registrable Securities, at any time when a prospectus relating thereto is
required to be delivered under the Securities Act, of the occurrence of an event
requiring the preparation of a supplement or amendment to such prospectus so
that, as thereafter delivered to the purchasers of such Registrable Securities,
such prospectus will not contain an untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary to make
the statements therein not misleading and promptly prepare and make available to
each such Stockholder any such supplement or amendment.
(f) (i) The DLJ Entities will have the right, in their sole discretion,
to select an underwriter or underwriters in connection with any Public Offering
resulting from the exercise by any such DLJ Entity or its Permitted Transferee
of a Demand Registration, which underwriter or underwriters may include any
Affiliate of any DLJ Entity and (ii) the Company will select an underwriter or
underwriters in connection with any other Public Offering. In connection with
any Public Offering, the Company will enter into customary agreements (including
an underwriting agreement in customary form) and take such other
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actions as are reasonably required in order to expedite or facilitate the
disposition of Registrable Securities in any such Public Offering, including the
engagement of a "qualified independent underwriter" in connection with the
qualification of the underwriting arrangements with the NASD.
(g) Upon the execution of confidentiality agreements in form and
substance satisfactory to the Company, the Company will make available for
inspection by any Stockholder and any underwriter participating in any
disposition pursuant to a registration statement being filed by the Company
pursuant to this Section 5.04 and any attorney, accountant or other professional
retained by any such Stockholder or underwriter (collectively, the
"INSPECTORS"), all financial and other records, pertinent corporate documents
and properties of the Company (collectively, the "RECORDS") as shall be
reasonably necessary to enable them to exercise their due diligence
responsibility, and cause the Company's officers, directors and employees to
supply all information reasonably requested by any Inspectors in connection with
such registration statement. Records that the Company determines, in good faith,
to be confidential and that it notifies the Inspectors are confidential shall
not be disclosed by the Inspectors unless (i) the disclosure of such Records is
necessary to avoid or correct a misstatement or omission in such registration
statement or (ii) the release of such Records is ordered pursuant to a subpoena
or other order from a court of competent jurisdiction. Each Stockholder agrees
that information obtained by it as a result of such inspections shall be deemed
confidential and shall not be used by it as the basis for any market
transactions in the Company Securities or its Affiliates unless and until such
is made generally available to the public. Each Stockholder further agrees that
it will, upon learning that disclosure of such Records is sought in a court of
competent jurisdiction, give notice to the Company and allow the Company, at its
expense, to undertake appropriate action to prevent disclosure of the Records
deemed confidential.
(h) The Company will furnish to each such Stockholder and to each such
underwriter, if any, a signed counterpart, addressed to such underwriter, of (i)
an opinion or opinions of counsel to the Company and (ii) a comfort letter or
comfort letters from the Company's independent public accountants, each in
customary form and covering such matters of the type customarily covered by
opinions or comfort letters, as the case may be, as a majority of such
Stockholders or the managing underwriter therefor reasonably requests.
(i) The Company will otherwise use its best efforts to comply with all
applicable rules and regulations of the SEC, and make available to its
stockholders, as soon as reasonably practicable, an earnings statement covering
a period of 12 months, beginning within three months after the effective date of
the
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registration statement, which earnings statement shall satisfy the provisions of
Section 11(a) of the Securities Act.
The Company may require each such Stockholder to promptly furnish in
writing to the Company such information regarding the distribution of the
Registrable Securities as the Company may from time to time reasonably request
and such other information as may be legally required in connection with such
registration.
Each such Stockholder agrees that, upon receipt of any notice from the
Company of the happening of any event of the kind described in Section 5.04(e),
such Stockholder will forthwith discontinue disposition of Registrable
Securities pursuant to the registration statement covering such Registrable
Securities until such Stockholder's receipt of the copies of the supplemented or
amended prospectus contemplated by Section 5.04(e), and, if so directed by the
Company, such Stockholder will deliver to the Company all copies, other than any
permanent file copies then in such Stockholder's possession, of the most recent
prospectus covering such Registrable Securities at the time of receipt of such
notice. In the event that the Company shall give such notice, the Company shall
extend the period during which such registration statement shall be maintained
effective (including the period referred to in Section 5.04(a)) by the number of
days during the period from and including the date of the giving of notice
pursuant to Section 5.04(e) to the date when the Company shall make available to
such Stockholder a prospectus supplemented or amended to conform with the
requirements of Section 5.04(e).
SECTION 5.05. Indemnification by the Company. The Company agrees to
indemnify and hold harmless each Stockholder holding Registrable Securities
covered by a registration statement, its officers, directors and agents, and
each person, if any, who controls such Stockholder within the meaning of Section
15 of the Securities Act or Section 20 of the Exchange Act from and against any
and all losses, claims, damages and liabilities caused by any untrue statement
or alleged untrue statement of a material fact contained in any registration
statement or prospectus relating to the Registrable Securities (as amended or
supplemented if the Company shall have furnished any amendments or supplements
thereto) or any preliminary prospectus, or caused by any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, except insofar as such
losses, claims, damages or liabilities are caused by any such untrue statement
or omission or alleged untrue statement or omission based upon information
furnished in writing to the Company by such Stockholder or on such Stockholder's
behalf expressly for use therein; provided that with respect to any untrue
statement or omission or alleged untrue statement or omission made in any
preliminary prospectus, or in any
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prospectus, as the case may be, the indemnity agreement contained in this
paragraph shall not apply to the extent that any such loss, claim, damage,
liability or expense results from the fact that a current copy of the prospectus
(or, in the case of a prospectus, the prospectus as amended or supplemented) was
not sent or given to the person asserting any such loss, claim, damage,
liability or expense at or prior to the written confirmation of the sale of the
Registrable Securities concerned to such person if it is determined that the
Company has provided such prospectus and it was the responsibility of such
Stockholder to provide such person with a current copy of the prospectus (or
such amended or supplemented prospectus, as the case may be) and such current
copy of the prospectus (or such amended or supplemented prospectus, as the case
may be) would have cured the defect giving rise to such loss, claim, damage,
liability or expense. The Company also agrees to indemnify any underwriters of
the Registrable Securities, their officers and directors and each person who
controls such underwriters on substantially the same basis as that of the
indemnification of the Stockholders provided in this Section 5.05.
SECTION 5.06. Indemnification by Participating Stockholders. Each
Stockholder holding Registrable Securities included in any registration
statement agrees, severally but not jointly, to indemnify and hold harmless the
Company, its officers, directors and agents and each person, if any, who
controls the Company within the meaning of either Section 15 of the Securities
Act or Section 20 of the Exchange Act to the same extent as the foregoing
indemnity from the Company to such Stockholder, but only (i) with respect to
information furnished in writing by such Stockholder or on such Stockholder's
behalf expressly for use in any registration statement or prospectus relating to
the Registrable Securities, or any amendment or supplement thereto, or any
preliminary prospectus or (ii) to the extent that any loss, claim, damage,
liability or expense described in Section 5.05 results from the fact that a
current copy of the prospectus (or, in the case of a prospectus, the prospectus
as amended or supplemented) was not sent or given to the person asserting any
such loss, claim, damage, liability or expense at or prior to the written
confirmation of the sale of the Registrable Securities concerned to such person
if it is determined that it was the responsibility of such Stockholder to
provide such person with a current copy of the prospectus (or such amended or
supplemented prospectus, as the case may be) and such current copy of the
prospectus (or such amended or supplemented prospectus, as the case may be)
would have cured the defect giving rise to such loss, claim, damage, liability
or expense. Each such Stockholder also agrees to indemnify and hold harmless
underwriters of the Registrable Securities, their officers and directors and
each person who controls such underwriters on substantially the same basis as
that of the indemnification of the Company provided in this Section 5.06. As a
condition to including Registrable Securities in any registration statement
filed in accordance with Article 5 hereof, the Company may require that it shall
have
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received an undertaking reasonably satisfactory to it from any underwriter to
indemnify and hold it harmless to the extent customarily provided by
underwriters with respect to similar securities.
SECTION 5.07. Conduct of Indemnification Proceedings. In case any
proceeding (including any governmental investigation) shall be instituted
involving any person in respect of which indemnity may be sought pursuant to
this Article 5, such person (an "INDEMNIFIED PARTY") shall promptly notify the
person against whom such indemnity may be sought (the "INDEMNIFYING PARTY") in
writing and the Indemnifying Party shall assume the defense thereof, including
the employment of counsel reasonably satisfactory to such Indemnified Party, and
shall assume the payment of all fees and expenses; provided that the failure of
any Indemnified Party so to notify the Indemnifying Party shall not relieve the
Indemnifying Party of its obligations hereunder except to the extent that the
Indemnifying Party is materially prejudiced by such failure to notify. In any
such proceeding, any Indemnified Party shall have the right to retain its own
counsel, but the fees and expenses of such counsel shall be at the expense of
such Indemnified Party unless (i) the Indemnifying Party and the Indemnified
Party shall have mutually agreed to the retention of such counsel or (ii) in the
reasonable judgment of such Indemnified Party representation of both parties by
the same counsel would be inappropriate due to actual or potential differing
interests between them. It is understood that the Indemnifying Party shall not,
in connection with any proceeding or related proceedings in the same
jurisdiction, be liable for the reasonable fees and expenses of more than one
separate firm of attorneys (in addition to any local counsel) at any time for
all such Indemnified Parties, and that all such fees and expenses shall be
reimbursed as they are incurred. In the case of any such separate firm for the
Indemnified Parties, such firm shall be designated in writing by the Indemnified
Parties. The Indemnifying Party shall not be liable for any settlement of any
proceeding effected without its written consent, but if settled with such
consent, or if there be a final judgment for the plaintiff, the Indemnifying
Party shall indemnify and hold harmless such Indemnified Parties from and
against any loss or liability (to the extent stated above) by reason of such
settlement or judgment. No Indemnifying Party shall, without the prior written
consent of the Indemnified Party, effect any settlement of any pending or
threatened proceeding in respect of which any Indemnified Party is or could have
been a party and indemnity could have been sought hereunder by such Indemnified
Party, unless such settlement includes an unconditional release of such
Indemnified Party from all liability arising out of such proceeding.
SECTION 5.08. Contribution. If the indemnification provided for in this
Article 5 is unavailable to the Indemnified Parties in respect of any losses,
claims, damages or liabilities referred to herein, then each such Indemnifying
Party, in
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<PAGE> 32
lieu of indemnifying such Indemnified Party, shall contribute to the amount paid
or payable by such Indemnified Party as a result of such losses, claims, damages
or liabilities (i) as between the Company and the Stockholders holding
Registrable Securities covered by a registration statement on the one hand and
the underwriters on the other, in such proportion as is appropriate to reflect
the relative benefits received by the Company and such Stockholders on the one
hand and the underwriters on the other, from the offering of the Registrable
Securities, or if such allocation is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits but also
the relative fault of the Company and such Stockholders on the one hand and of
such underwriters on the other in connection with the statements or omissions
which resulted in such losses, claims, damages or liabilities, as well as any
other relevant equitable considerations and (ii) as between the Company on the
one hand and each such Stockholder on the other, in such proportion as is
appropriate to reflect the relative fault of the Company and of each such
Stockholder in connection with such statements or omissions, as well as any
other relevant equitable considerations. The relative benefits received by the
Company and such Stockholders on the one hand and such underwriters on the other
shall be deemed to be in the same proportion as the total proceeds from the
offering (net of underwriting discounts and commissions but before deducting
expenses) received by the Company and such Stockholders bear to the total
underwriting discounts and commissions received by such underwriters, in each
case as set forth in the table on the cover page of the prospectus. The relative
fault of the Company and such Stockholders on the one hand and of such
underwriters on the other shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Company and such Stockholders or by such underwriters. The
relative fault of the Company on the one hand and of each such Stockholder on
the other shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by such party,
and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission.
The Company and the Stockholders agree that it would not be just and
equitable if contribution pursuant to this Section 5.08 were determined by pro
rata allocation (even if the underwriters were treated as one entity for such
purpose) or by any other method of allocation which does not take account of the
equitable considerations referred to in the immediately preceding paragraph. The
amount paid or payable by an Indemnified Party as a result of the losses,
claims, damages or liabilities referred to in the immediately preceding
paragraph shall be deemed to include, subject to the limitations set forth
above, any legal or other expenses reasonably incurred by such Indemnified Party
in connection with investigating or
29
<PAGE> 33
defending any such action or claim. Notwithstanding the provisions of this
Section 5.08, no underwriter shall be required to contribute any amount in
excess of the amount by which the total price at which the Registrable
Securities underwritten by it and distributed to the public were offered to the
public exceeds the amount of any damages which such underwriter has otherwise
been required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission, and no Stockholder shall be required to contribute
any amount in excess of the amount by which the total price at which the
Registrable Securities of such Stockholder were offered to the public exceeds
the amount of any damages which such Stockholder has otherwise been required to
pay by reason of such untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation. Each such
Stockholder's obligation to contribute pursuant to this Section 5.08 is several
in the proportion that the proceeds of the offering received by such Stockholder
bears to the total proceeds of the offering received by all such Stockholders
and not joint.
SECTION 5.09. Participation in Public Offering. No Person may
participate in any Public Offering hereunder unless such Person (a) agrees to
sell such Person's securities on the basis provided in any underwriting
arrangements approved by the Persons entitled hereunder to approve such
arrangements an (b) completes and executes all questionnaires, powers of
attorney, indemnities, underwriting agreements and other documents reasonably
required under the terms of such underwriting arrangements and the provisions of
this Agreement in respect of registration rights.
SECTION 5.10. Other Indemnification. Indemnification similar to that
specified herein (with appropriate modifications) shall be given by the Company
and each Stockholder participating therein with respect to any required
registration or other qualification of securities under any federal or state law
or regulation or governmental authority other than the Securities Act.
SECTION 5.11. Cooperation by the Company. In the event any Stockholder
shall transfer any Registrable Securities pursuant to Rule 144A under the
Securities Act, the Company shall cooperate with such Stockholder (which shall
include, without limitation, making registration rights with respect to the
Registrable Securities to be sold (or securities issuable or to be issued in
exchange therefor) available to the ultimate purchasers thereof) and shall
provide to such Stockholder such information as such Stockholder shall
reasonably request.
30
<PAGE> 34
ARTICLE 6
MISCELLANEOUS
SECTION 6.01. Entire Agreement. This Agreement and the Securities
Purchase Agreement constitute the entire agreement among the parties hereto and
supersede all prior agreements and understandings, oral and written, among the
parties hereto with respect to the subject matter hereof.
SECTION 6.02. Binding Effect; Benefit. This Agreement shall inure to
the benefit of and be binding upon the parties hereto and their respective
heirs, successors, legal representatives and permitted assigns. Nothing in this
Agreement, expressed or implied, shall confer on any Person other than the
parties hereto, and their respective heirs, successors, legal representatives
and permitted assigns, any rights, remedies, obligations or liabilities under or
by reason of this Agreement.
SECTION 6.03. Exclusive Financial and Investment Banking Advisor.
During the period from and including the date hereof through and including the
fifth anniversary of the date hereof, Donaldson, Lufkin & Jenrette Securities
Corporation ("DLJSC"), or any Affiliate of DLJSC that the DLJ Entities may
choose in their sole discretion, shall be engaged as the exclusive financial and
investment banking advisor of the Company. DLJSC or such Affiliate shall be
entitled to reimbursement from the Company for all expenses incurred by DLJSC or
such Affiliate (including, without limitation, fees and expenses of counsel) as
financial and investment banking advisor of the Company.
SECTION 6.04. Assignability. This Agreement shall not be assignable by
any party hereto, except that any Person acquiring Shares who is required by the
terms of this Agreement or any employment agreement or stock purchase, option,
stock option or other compensation plan of the Company or any Subsidiary to
become a party hereto shall (unless already bound hereby) execute and deliver to
the Company an agreement to be bound by this Agreement and shall thenceforth be
a "STOCKHOLDER". Any Stockholder who ceases to own beneficially any Shares shall
cease to be bound by the terms hereof (other than the provisions of Sections
5.05, 5.06, 5.07, 5.08, and 5.10 applicable to such Stockholder with respect to
any offering of Registrable Securities completed before the date such
Stockholder ceased to own any Shares).
SECTION 6.05. Amendment; Waiver; Termination. No provision of this
Agreement may be waived except by an instrument in writing executed by the party
against whom the waiver is to be effective. No provision of this Agreement may
be amended or otherwise modified except by an instrument in writing
31
<PAGE> 35
executed by the Company with the approval of the Board and Stockholders holding
at least 75% of the outstanding Shares; provided that any amendment or other
modification of this Agreement that would adversely affect any Founding
Stockholder may be effected only with the consent of such Stockholder.
SECTION 6.06. Notices. All notices, requests and other communications
to any party hereunder shall be in writing (including facsimile transmissions
and shall be given,
if to the Company or the Management Stockholders, to:
Thermadyne Holdings Corporation
101 South Hanley Road
St. Louis, Missouri 63105
(314) 721-5573
Attention: James H. Tate
Stephanie N. Josephson
Fax: (314) 746-2374
with a copy to:
Weil, Gotshal & Manges
100 Crescent Court, Suite 1300
Dallas, Texas 75201
Attention: R. Scott Cohen
Fax: (214) 746-7777
and a copy to the DLJ Entities at their addresses listed below.
if to the DLJ Entities, to:
DLJ Merchant Banking Partners II, L.P.
277 Park Avenue
New York, New York 10172
Attention: Peter T. Grauer
Fax: (212) 892-7552
with a copy to:
32
<PAGE> 36
Davis Polk & Wardwell
450 Lexington Avenue
New York, New York 10017
Attention: George R. Bason, Jr.
Fax: (212) 450-4800
All notices, requests and other communications shall be deemed received
on the date of receipt by the recipient thereof if received prior to 5 p.m. in
the place of receipt and such day is a business day in the place of receipt.
Otherwise, any such notice, request or communication shall be deemed not to have
been received until the next succeeding business day in the place of receipt.
Any notice, request or other written communication sent by facsimile
transmission shall be confirmed by certified mail, return receipt requested,
posted within one Business Day, or by personal delivery, whether courier or
otherwise, made within two Business Days after the date of such facsimile
transmission.
Any Person who becomes a Stockholder shall provide its address and fax
number to the Company, which shall promptly provide such information to each
other Stockholder.
SECTION 6.07. Headings. The headings contained in this Agreement are
for convenience only and shall not affect the meaning or interpretation of this
Agreement.
SECTION 6.08. Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be deemed to be an original and all
of which together shall be deemed to be one and the same instrument.
SECTION 6.09. Applicable Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF DELAWARE WITHOUT REGARD
TO THE CONFLICTS OF LAW RULES OF SUCH STATE.
SECTION 6.10. Specific Enforcement. Each party hereto acknowledges that
the remedies at law of the other parties for a breach or threatened breach of
this Agreement would be inadequate and, in recognition of this fact, any party
to this Agreement, without posting any bond, and in addition to all other
remedies which may be available, shall be entitled to obtain equitable relief in
the form of specific performance, a temporary restraining order, a temporary or
permanent injunction or any other equitable remedy which may then be available.
SECTION 6.11. Consent to Jurisdiction. Any suit, action or proceeding
seeking to enforce any provision of, or based on any matter arising out of or in
33
<PAGE> 37
connection with, this Agreement or the transactions contemplated hereby may be
brought in the United States District Court for the Southern District of New
York or any other New York State court sitting in New York City, and each of the
parties hereby consents to the non-exclusive jurisdiction of such courts (and of
the appropriate appellate courts therefrom) in any such suit, action or
proceeding and irrevocably waives, to the fullest extent permitted by law, any
objection which it may now or hereafter have to the laying of the venue of any
such suit, action or proceeding in any such court or that any such suit, action
or proceeding which is brought in any such court has been brought in an
inconvenient forum. Process in any such suit, action or proceeding may be served
on any party anywhere in the world, whether within or without the jurisdiction
of any such court. Without limiting the foregoing, each party agrees that
service of process on such party as provided in Section 6.06 shall be deemed
effective service of process on such party.
34
<PAGE> 38
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the day and year
first above written.
THERMADYNE HOLDINGS CORPORATION
By: /s/ JAMES H. TATE
----------------------------------
Name:
Title:
DLJ MERCHANT BANKING PARTNERS II, L.P.
BY DLJ MERCHANT BANKING II, INC.
Managing General Partner
By: /s/ IVY DODES
----------------------------------
Name: Ivy Dodes
Title: Vice President
DLJ MERCHANT BANKING
PARTNERS II-A, L.P.
BY DLJ MERCHANT BANKING II,
INC., Managing General Partner
By: /s/ IVY DODES
----------------------------------
Name: Ivy Dodes
Title: Vice President
35
<PAGE> 39
DLJ OFFSHORE PARTNERS II, C.V.
BY DLJ MERCHANT BANKING II,
INC., Advisory General Partner
By: /s/ IVY DODES
----------------------------------
Name: Ivy Dodes
Title: Vice President
DLJ DIVERSIFIED PARTNERS, L.P.
BY DLJ DIVERSIFIED PARTNERS,
INC., Managing General Partner
By: /s/ IVY DODES
----------------------------------
Name: Ivy Dodes
Title: Vice President
DLJ DIVERSIFIED PARTNERS-A, L.P.
BY DLJ DIVERSIFIED PARTNERS, INC.,
Managing General Partner
By: /s/ IVY DODES
----------------------------------
Name: Ivy Dodes
Title: Vice President
DLJMB FUNDING II, INC.
By: /s/ IVY DODES
----------------------------------
Name: Ivy Dodes
Title: Vice President
36
<PAGE> 40
DLJ EAB PARTNERS, L.P.
BY DLJ LBO PLANS MANAGEMENT
CORPORATION, General Partner
By: /s/ IVY DODES
----------------------------------
Name: Ivy Dodes
Title: Vice President
DLJ MILLENNIUM PARTNERS, L.P.
BY DLJ MERCHANT BANKING II,
INC., Managing General Partner
By: /s/ IVY DODES
----------------------------------
Name: Ivy Dodes
Title: Vice President
UK INVESTMENT PLAN 1997
PARTNERS
DONALDSON, LUFKIN & JENRETTE,
INC., General Partner
By: /s/ IVY DODES
----------------------------------
Name: Ivy Dodes
Title: Vice President
37
<PAGE> 41
DLJ FIRST ESC, L.P.
BY DLJ LBO PLANS MANAGEMENT
CORPORATION, as General Partner
By: /s/ IVY DODES
----------------------------------
Name: Ivy Dodes
Title: Vice President
DLJ ESC II, L.P.
BY DLJ LBO PLANS MANAGEMENT
CORPORATION, as General Partner
By: /s/ IVY DODES
----------------------------------
Name: Ivy Dodes
Title: Vice President
DLJ MILLENNIUM PARTNERS-A, L.P.
BY DLJ MERCHANT BANKING II, INC.,
Managing General Partner
By: /s/ IVY DODES
----------------------------------
Name: Ivy Dodes
Title: Vice President
/s/ RANDALL E. CURRAN
-------------------------------------
Randall E. Curran
/s/ JAMES H. TATE
-------------------------------------
James H. Tate
/s/ MICHAEL E. MAHONEY
-------------------------------------
Michael E. Mahoney
<PAGE> 42
/s/ JOHN D. MCCULLOCH
-------------------------------------
John D. McCulloch
/s/ MICHAEL C. O'CONNELL
-------------------------------------
Michael C. O'Connell
/s/ JAMES R. DELANY
-------------------------------------
James R. Delany
/s/ HOYT H. FITZSIMMONS, JR.
-------------------------------------
Hoyt H. Fitzsimmons, Jr.
/s/ DENNIS KLANJSCEK
-------------------------------------
Dennis Klanjscek
/s/ ROBERT D. MADDOX
-------------------------------------
Robert D. Maddox
/s/ THOMAS C. DRURY
-------------------------------------
Thomas C. Drury
/s/ STEPHANIE N. JOSEPHSON
-------------------------------------
Stephanie N. Josephson
<PAGE> 1
EXHIBIT 10.30
================================================================================
THERMADYNE MFG. LLC
THERMADYNE CAPITAL CORP.
9-7/8% SENIOR SUBORDINATED NOTES DUE 2008
Guaranteed to the extent set forth herein by
C&G SYSTEMS HOLDING, INC.
C&G SYSTEMS, INC.
COYNE NATURAL GAS SYSTEMS INC.
MARISON CYLINDER COMPANY
MECO HOLDING COMPANY
MODERN ENGINEERING COMPANY, INC.
STOODY COMPANY
TAG REALTY, INC.
THERMADYNE CYLINDER COMPANY
THERMADYNE INDUSTRIES, INC.
THERMADYNE INTERNATIONAL CORP.
THERMAL ARC, INC.
THERMAL DYNAMICS CORP.
TWECO PRODUCTS, INC.
VICTOR COYNE INTERNATIONAL, INC.
VICTOR EQUIPMENT COMPANY
WICHITA WAREHOUSE CORPORATION
WOODLAND CRYOGENICS COMPANY
---------------------------
INDENTURE
Dated as of May 22, 1998
---------------------------
STATE STREET BANK AND TRUST COMPANY
TRUSTEE
------------------------------------
================================================================================
<PAGE> 2
CROSS-REFERENCE TABLE*
<TABLE>
<CAPTION>
Trust Indenture Act Section Indenture Section
<S> <C>
310 (a)(1)................................................................................................7.10
(a)(2) ...................................................................................................7.10
(a)(3)....................................................................................................N.A.
(a)(4)....................................................................................................N.A.
(a)(5)....................................................................................................7.10
(b).......................................................................................................7.10
(c).......................................................................................................N.A.
311(a)....................................................................................................7.11
(b).......................................................................................................7.11
(c).......................................................................................................N.A.
312 (a)...................................................................................................2.05
(b).......................................................................................................12.03
(c).......................................................................................................11.03
313(a)....................................................................................................7.06
(b)(1)....................................................................................................N.A.
(b)(2)....................................................................................................7.06;
7.07
(c).......................................................................................................7.06;
12.02
(d).......................................................................................................7.06
314(a)....................................................................................................12.05
(b).......................................................................................................N.A.
(c)(1)....................................................................................................12.04
(c)(2)....................................................................................................12.04
(c)(3)....................................................................................................N.A.
(d).......................................................................................................N.A.
(e).......................................................................................................12.05
(f).......................................................................................................NA
315 (a)...................................................................................................7.01
(b).......................................................................................................7.05,
11.02
(c).......................................................................................................7.01
(d).......................................................................................................7.01
(e).......................................................................................................6.11
316 (a)(last sentence)....................................................................................2.09
(a)(1)(A).................................................................................................6.05
(a)(1)(B).................................................................................................6.04
(a)(2)....................................................................................................N.A.
(b).......................................................................................................6.07
(c).......................................................................................................2.12
317 (a)(1)................................................................................................6.08
(a)(2)....................................................................................................6.09
(b).......................................................................................................2.04
318 (a)...................................................................................................11.01
(b).......................................................................................................N.A.
(c).......................................................................................................11.01
</TABLE>
N.A. means not applicable.
*This Cross-Reference Table is not part of the Indenture.
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ARTICLE 1. DEFINITIONS AND INCORPORATION BY REFERENCE.............................................................1
SECTION 1.01. DEFINITIONS......................................................................................1
SECTION 1.02. OTHER DEFINITIONS...............................................................................16
SECTION 1.03. INCORPORATION OF TIA PROVISIONS.................................................................16
SECTION 1.04. RULES OF CONSTRUCTION...........................................................................17
ARTICLE 2. THE NOTES.............................................................................................17
SECTION 2.01. FORM AND DATING.................................................................................17
SECTION 2.02. EXECUTION AND AUTHENTICATION....................................................................18
SECTION 2.03. REGISTRAR AND PAYING AGENT......................................................................19
SECTION 2.04. PAYING AGENT TO HOLD MONEY IN TRUST.............................................................19
SECTION 2.05. HOLDER LISTS....................................................................................19
SECTION 2.06. TRANSFER AND EXCHANGE...........................................................................20
SECTION 2.07. REPLACEMENT NOTES...............................................................................32
SECTION 2.08. OUTSTANDING NOTES...............................................................................32
SECTION 2.09. TREASURY NOTES..................................................................................32
SECTION 2.10. TEMPORARY NOTES.................................................................................33
SECTION 2.11. CANCELLATION....................................................................................33
SECTION 2.12. DEFAULTED INTEREST..............................................................................33
ARTICLE 3. REDEMPTION AND PREPAYMENT.............................................................................33
SECTION 3.01. NOTICES TO TRUSTEE..............................................................................33
SECTION 3.02. SELECTION OF NOTES TO BE REDEEMED...............................................................34
SECTION 3.03. NOTICE OF REDEMPTION............................................................................34
</TABLE>
i
<PAGE> 4
<TABLE>
<S> <C> <C>
SECTION 3.04. EFFECT OF NOTICE OF REDEMPTION..................................................................35
SECTION 3.05. DEPOSIT OF REDEMPTION PRICE.....................................................................35
SECTION 3.06. NOTES REDEEMED IN PART..........................................................................35
SECTION 3.07. OPTIONAL REDEMPTION.............................................................................35
SECTION 3.08. MANDATORY REDEMPTION............................................................................36
SECTION 3.09. OFFER TO PURCHASE BY APPLICATION OF EXCESS PROCEEDS.............................................36
ARTICLE 4. COVENANTS.............................................................................................38
SECTION 4.01. PAYMENT OF NOTES................................................................................38
SECTION 4.02. MAINTENANCE OF OFFICE OR AGENCY.................................................................38
SECTION 4.03. REPORTS.........................................................................................39
SECTION 4.04. COMPLIANCE CERTIFICATE..........................................................................39
SECTION 4.05. TAXES...........................................................................................40
SECTION 4.06. STAY, EXTENSION AND USURY LAWS..................................................................40
SECTION 4.07. RESTRICTED PAYMENTS.............................................................................40
SECTION 4.08. DIVIDEND AND OTHER PAYMENT RESTRICTIONS AFFECTING SUBSIDIARIES..................................44
SECTION 4.09. INCURRENCE OF INDEBTEDNESS AND ISSUANCE OF PREFERRED STOCK......................................45
SECTION 4.10. ASSET SALES.....................................................................................47
SECTION 4.11. TRANSACTIONS WITH AFFILIATES....................................................................49
SECTION 4.12. LIENS...........................................................................................49
SECTION 4.13. CORPORATE EXISTENCE.............................................................................50
SECTION 4.14. OFFER TO REPURCHASE UPON CHANGE OF CONTROL......................................................50
SECTION 4.15. NO SENIOR SUBORDINATED INDEBTEDNESS.............................................................51
SECTION 4.16. ACCOUNTS RECEIVABLE FACILITY....................................................................51
SECTION 4.17. LIMITATION ON SALE AND LEASEBACK TRANSACTIONS...................................................51
SECTION 4.18. RESTRICTIONS ON ACTIVITIES OF THERMADYNE CAPITAL................................................51
</TABLE>
ii
<PAGE> 5
<TABLE>
<S> <C>
SECTION 4.19. PAYMENTS FOR CONSENT............................................................................52
SECTION 4.20. ADDITIONAL NOTE GUARANTEES......................................................................52
ARTICLE 5. SUCCESSORS............................................................................................52
SECTION 5.01. MERGER, CONSOLIDATION, OR SALE OF ASSETS........................................................52
SECTION 5.02. SUCCESSOR CORPORATION SUBSTITUTED...............................................................53
ARTICLE 6. DEFAULTS AND REMEDIES.................................................................................53
SECTION 6.01. EVENTS OF DEFAULT...............................................................................53
SECTION 6.02. ACCELERATION....................................................................................54
SECTION 6.03. OTHER REMEDIES..................................................................................55
SECTION 6.04. WAIVER OF PAST DEFAULTS.........................................................................55
SECTION 6.05. CONTROL BY MAJORITY.............................................................................56
SECTION 6.06. LIMITATION ON SUITS.............................................................................56
SECTION 6.07. RIGHTS OF HOLDERS OF NOTES TO RECEIVE PAYMENT...................................................56
SECTION 6.08. COLLECTION SUIT BY TRUSTEE......................................................................56
SECTION 6.09. TRUSTEE MAY FILE PROOFS OF CLAIM................................................................57
SECTION 6.10. PRIORITIES......................................................................................57
SECTION 6.11. UNDERTAKING FOR COSTS...........................................................................57
ARTICLE 7. TRUSTEE...............................................................................................58
SECTION 7.01. DUTIES OF TRUSTEE...............................................................................59
SECTION 7.02. RIGHTS OF TRUSTEE...............................................................................60
SECTION 7.03. INDIVIDUAL RIGHTS OF TRUSTEE....................................................................60
SECTION 7.04. TRUSTEE'S DISCLAIMER............................................................................61
SECTION 7.05. NOTICE OF DEFAULTS..............................................................................61
SECTION 7.06. REPORTS BY TRUSTEE TO HOLDERS OF THE NOTES......................................................61
SECTION 7.07. COMPENSATION AND INDEMNITY......................................................................61
</TABLE>
iii
<PAGE> 6
<TABLE>
<S> <C>
SECTION 7.08. REPLACEMENT OF TRUSTEE..........................................................................62
SECTION 7.09. SUCCESSOR TRUSTEE BY MERGER, ETC................................................................63
SECTION 7.10. ELIGIBILITY; DISQUALIFICATION...................................................................63
SECTION 7.11. PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY...............................................63
ARTICLE 8. .LEGAL DEFEASANCE AND COVENANT DEFEASANCE.............................................................63
SECTION 8.01. OPTION TO EFFECT LEGAL DEFEASANCE OR COVENANT DEFEASANCE........................................64
SECTION 8.02. LEGAL DEFEASANCE AND DISCHARGE..................................................................64
SECTION 8.03. COVENANT DEFEASANCE.............................................................................64
SECTION 8.04. CONDITIONS TO LEGAL OR COVENANT DEFEASANCE......................................................65
SECTION 8.05. DEPOSITED MONEY AND GOVERNMENT SECURITIES TO BE HELD IN TRUST; OTHER MISCELLANEOUS PROVISIONS...66
SECTION 8.06. REPAYMENT TO COMPANY............................................................................66
SECTION 8.07. REINSTATEMENT...................................................................................67
ARTICLE 9. AMENDMENT, SUPPLEMENT AND WAIVER......................................................................67
SECTION 9.01. WITHOUT CONSENT OF HOLDERS OF NOTES.............................................................67
SECTION 9.02. WITH CONSENT OF HOLDERS OF NOTES................................................................68
SECTION 9.03. COMPLIANCE WITH TRUST INDENTURE ACT.............................................................69
SECTION 9.04. REVOCATION AND EFFECT OF CONSENTS...............................................................70
SECTION 9.05. NOTATION ON OR EXCHANGE OF NOTES................................................................70
SECTION 9.06. TRUSTEE TO SIGN AMENDMENTS, ETC.................................................................70
ARTICLE 10. SUBORDINATION........................................................................................70
SECTION 10.01. AGREEMENT TO SUBORDINATE.......................................................................70
SECTION 10.02. CERTAIN DEFINITIONS............................................................................70
SECTION 10.03. LIQUIDATION; DISSOLUTION; BANKRUPTCY...........................................................71
SECTION 10.04. DEFAULT ON DESIGNATED SENIOR INDEBTEDNESS......................................................72
</TABLE>
iv
<PAGE> 7
<TABLE>
<S> <C>
SECTION 10.05. ACCELERATION OF SECURITIES.....................................................................72
SECTION 10.06. WHEN DISTRIBUTION MUST BE PAID OVER............................................................72
SECTION 10.07. NOTICE BY ISSUERS..............................................................................73
SECTION 10.08. SUBROGATION....................................................................................73
SECTION 10.09. RELATIVE RIGHTS................................................................................73
SECTION 10.10. SUBORDINATION MAY NOT BE IMPAIRED BY ISSUERS...................................................74
SECTION 10.11. DISTRIBUTION OR NOTICE TO REPRESENTATIVE.......................................................74
SECTION 10.12. RIGHTS OF TRUSTEE AND PAYING AGENT.............................................................74
SECTION 10.13. AUTHORIZATION TO EFFECT SUBORDINATION..........................................................74
SECTION 10.14. AMENDMENTS.....................................................................................75
ARTICLE 11. NOTE GUARANTEES......................................................................................75
SECTION 11.01. GUARANTEE......................................................................................75
SECTION 11.02. SUBORDINATION OF NOTE GUARANTEE................................................................76
SECTION 11.03. LIMITATION ON GUARANTOR LIABILITY..............................................................76
SECTION 11.04. EXECUTION AND DELIVERY OF NOTE GUARANTEE.......................................................77
SECTION 11.05. GUARANTORS MAY CONSOLIDATE, ETC., ON CERTAIN TERMS.............................................77
SECTION 11.06. RELEASES FOLLOWING SALE OF ASSETS..............................................................78
ARTICLE 12. MISCELLANEOUS........................................................................................78
SECTION 12.01. TRUST INDENTURE ACT CONTROLS...................................................................78
SECTION 12.02. NOTICES........................................................................................78
SECTION 12.03. COMMUNICATION BY HOLDERS OF NOTES WITH OTHER HOLDERS OF NOTES..................................80
SECTION 12.04. CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT.............................................80
SECTION 12.05 STATEMENTS REQUIRED IN CERTIFICATE OR OPINION...................................................80
SECTION 12.06. RULES BY TRUSTEE AND AGENTS....................................................................80
SECTION 12.07. NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES AND STOCKHOLDERS.......................81
</TABLE>
v
<PAGE> 8
<TABLE>
<S> <C>
SECTION 12.08. GOVERNING LAW..................................................................................81
SECTION 12.09. NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS..................................................81
SECTION 12.10.. SUCCESSORS....................................................................................81
SECTION 12.11.. SEVERABILITY..................................................................................81
SECTION 12.12. COUNTERPART ORIGINALS..........................................................................81
SECTION 12.13. TABLE OF CONTENTS, HEADINGS, ETC...............................................................81
</TABLE>
EXHIBITS
Exhibit A: FORM OF NOTE
Exhibit B: FORM OF CERTIFICATE OF TRANSFER
Exhibit C: FORM OF CERTIFICATE OF EXCHANGE
Exhibit D: FORM OF CERTIFICATE OF ACQUIRING INSTITUTIONAL
ACCREDITED INVESTOR
Exhibit E FORM OF SUPPLEMENTAL INDENTURE
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INDENTURE dated as of May 22, 1998, by and among Thermadyne Mfg. LLC, a
Delaware limited liability company ("Thermadyne"), Thermadyne Capital Corp., a
Delaware corporation ("Thermadyne Capital" and, together with Thermadyne, the
"Issuers"), C&G Systems Holding, Inc., a Delaware corporation, C&G Systems,
Inc., an Illinois corporation, Coyne Natural Gas Systems Inc., a Missouri
corporation, Marison Cylinder Company, a Delaware corporation, MECO Holding
Company, a Delaware corporation, Modern Engineering Company, Inc., a Missouri
corporation, Stoody Company, a Delaware corporation, Tag Realty, Inc., a Texas
corporation, Thermadyne Cylinder Company, a California corporation, Thermadyne
Industries, Inc., a Delaware corporation, Thermadyne International Corp., a
Delaware corporation, Thermal Arc, Inc., a Delaware corporation, Thermal
Dynamics Corp., a Delaware corporation, Tweco Products, Inc., a Delaware
corporation, Victor Coyne International, Inc., a Delaware corporation, Victor
Equipment Company, a Delaware corporation, Wichita Warehouse Corporation, a
Kansas corporation, Woodland Cryogenics Company, a Delaware corporation
(collectively, the "Guarantors") and State Street Bank and Trust Company, as
trustee (the "Trustee").
The Issuers and the Trustee agree as follows for the benefit of each
other and for the equal and ratable benefit of the Holders of the 9-7/8% Senior
Subordinated Notes due 2008 (the "Notes").
ARTICLE 1.
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01 DEFINITIONS.
"144A Global Note" means the form of the Notes initially sold to QIBs.
"Accounts Receivable Subsidiary" means an Unrestricted Subsidiary of
the Company to which the Company or any of its Restricted Subsidiaries sells any
of its accounts receivable pursuant to a Receivables Facility.
"Acquired Indebtedness" means, with respect to any specified Person,
(a) Indebtedness of any other Person existing at the time such other Person is
merged with or into or became a Subsidiary of such specified Person, including,
without limitation, Indebtedness incurred in connection with, or in
contemplation of, such other Person merging with or into or becoming a
Subsidiary of such specified Person, and (b) Indebtedness secured by a Lien
encumbering an asset acquired by such specified Person at the time such asset is
acquired by such specified Person.
"Acquisition" means the acquisition of Holdings by the Principals.
"Additional Notes" means additional Notes (other than the Initial
Notes) issued under this Indenture in accordance with Sections 2.02 and 4.09
hereof.
"Affiliate" of any specified Person means any other Person which,
directly or indirectly, controls, is controlled by or is under direct or
indirect common control with, such specified Person. For purposes of this
definition, "control," when used with respect to any Person, means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise,
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Agent" means any Registrar, Paying Agent or co-registrar.
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"Applicable Procedures" means, with respect to any transfer or exchange
of or for beneficial interests in any Global Note, the rules and procedures of
the Depositary, Euroclear and Cedel that apply to such transfer or exchange.
"Asset Sale" means (a) the sale, lease, conveyance, disposition or
other transfer (a "disposition") of any properties, assets or rights (including,
without limitation, by way of a sale and leaseback) (provided that the sale,
lease, conveyance or other disposition of all or substantially all of the assets
of the Company and its Subsidiaries taken as a whole will be governed by the
Sections 4.14 and/or 5.01 and not by the provisions of Section 4.10), and (b)
the issuance, sale or transfer by the Company or any of its Restricted
Subsidiaries of Equity Interests of any of the Company's Restricted
Subsidiaries, in the case of either clause (a) or (b), whether in a single
transaction or a series of related transactions (i) that have a fair market
value in excess of $5.0 million or (ii) for net proceeds in excess of $5.0
million. Notwithstanding the foregoing, the following items shall not be deemed
to be Asset Sales: (a) dispositions in the ordinary course of business; (b) a
disposition of assets by the Company to a Restricted Subsidiary or by a
Restricted Subsidiary to the Company or to another Restricted Subsidiary; (c) a
disposition of Equity Interests by a Restricted Subsidiary to the Company or to
another Restricted Subsidiary; (d) the sale and leaseback of any assets within
90 days of the acquisition thereof; (e) foreclosures on assets; (f) any exchange
of like property pursuant to Section 1031 of the Internal Revenue Code of 1986,
as amended, for use in a Permitted Business; (g) any sale of Equity Interests
in, or Indebtedness or other securities of, an Unrestricted Subsidiary; (h) a
Permitted Investment or a Restricted Payment that is permitted by Section 4.07
hereof; and (i) sales of accounts receivable, or participations therein, in
connection with any Receivables Facility.
"Attributable Indebtedness" in respect of a sale and leaseback
transaction means, at the time of determination, the present value (discounted
at the rate of interest implicit in such transaction, determined in accordance
with GAAP) of the obligation of the lessee for net rental payments during the
remaining term of the lease included in such sale and leaseback transaction
(including any period for which such lease has been extended or may, at the
option of the lessor, be extended).
"Bankruptcy Law" means Title 11, U.S. Code or any similar federal or
state law for the relief of debtors.
"Board of Directors" means the Board of Directors of the Company, or
any authorized committee of the Board of Directors.
"Business Day" means any day other than a Legal Holiday.
"Capital Expenditure Indebtedness" means Indebtedness incurred by any
Person to finance the purchase or construction or any property or assets
acquired or constructed by such Person which have a useful life or more than one
year so long as (a) the purchase or construction price for such property or
assets is included in "addition to property, plant or equipment" in accordance
with GAAP, (b) the acquisition or construction of such property or assets is not
part of any acquisition of a Person or line of business and (c) such
Indebtedness is incurred within 90 days of the acquisition or completion of
construction of such property or assets.
"Capital Lease Obligation" means, at the time any determination thereof
is to be made, the amount of the liability in respect of a capital lease that
would at such time be required to be capitalized on a balance sheet in
accordance with GAAP.
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"Capital Stock" means (a) in the case of a corporation, corporate
stock, (b) in the case of an association or business entity, any and all shares,
interests, participations, rights or other equivalents (however designated) of
corporate stock, (c) in the case of a partnership or limited liability company,
partnership or membership interests (whether general or limited) and (d) any
other interest or participation that confers on a Person the right to receive a
share of the profits and losses of, or distributions of assets of, the issuing
Person.
"Cash Equivalents" means (i) Government Securities, (ii) any
certificate of deposit maturing not more than 365 days after the date of
acquisition issued by, or time deposit of, an Eligible Institution or any lender
under the New Credit Facility, (iii) commercial paper maturing not more than 365
days after the date of acquisition of an issuer (other than an Affiliate of the
Company) with a rating, at the time as of which any investment therein is made,
of "A-3" (or higher) according to S&P or "P-2" (or higher) according to Moody's
or carrying an equivalent rating by a nationally recognized rating agency if
both of the two named rating agencies cease publishing ratings of investments,
(iv) any bankers acceptances of money market deposit accounts issued by an
Eligible Institution and (v) any fund investing exclusively in investments of
the types described in clauses (i) through (iv) above.
"Cedel" means Cedel Bank, societe anonyme.
"Change of Control" means the occurrence of any of the following: (a)
the sale, lease, transfer, conveyance or other disposition (other than by way of
merger or consolidation), in one or a series of related transactions, of all or
substantially all of the assets of the Company and its Subsidiaries, taken as a
whole, to any "person" or "group" (as such terms are used in Section 13(d) of
the Exchange Act), other than the Principals and their Related Parties; (b) the
adoption of a plan for the liquidation or dissolution of one or both of the
Issuers; (c) the consummation of any transaction (including, without limitation,
any merger or consolidation) the result of which is that any "person" or "group"
(as such terms are used in Section 13(d) of the Exchange Act), other than the
Principals and their Related Parties, becomes the "beneficial owner" (as such
term is defined in Rule 13d-3 and Rule 13d-5 under the Exchange Act), directly
or indirectly through one or more intermediaries, of 50% or more of the voting
power of the outstanding voting equity interests of the Company; (d) the first
day on which a majority of the members of the board of directors of the Company
are not Continuing Members or (e) the first day on which the Company fails to
own 100% of the issued and outstanding Equity Interests of Thermadyne Capital
(other than by reason of the merger of Thermadyne Capital with and into a
corporate successor to the Company).
"Commission" means the Securities and Exchange Commission.
"Company" means Thermadyne.
"Consolidated Cash Flow" means, with respect to any Person for any
period, the Consolidated Net Income of such Person and its Restricted
Subsidiaries for such period plus, to the extent deducted in computing
Consolidated Net Income, (a) an amount equal to any extraordinary or
non-recurring loss plus any net loss realized in connection with an Asset Sale,
(b) provision for taxes based on income or profits of such Person and its
Restricted Subsidiaries for such period, (c) Fixed Charges of such Person for
such period, (d) depreciation, amortization (including amortization of goodwill
and other intangibles) and all other non-cash charges (excluding any such
non-cash charge to the extent that it represents an accrual of or reserve for
cash expenses in any future period or amortization of a prepaid cash expense
that was paid in a prior period) of such Person and its Restricted Subsidiaries
for such period, (e) net periodic post-retirement benefits, (f) other income or
expense net as set forth on the face of such Person's statement of operations,
(g) expenses and charges of the Company related to the Recapitalization, the New
Credit Facility and the
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application of the proceeds thereof which are paid, taken or otherwise accounted
for within 90 days of the consummation of the Merger, and (h) any
non-capitalized transaction costs incurred in connection with actual or proposed
financings, acquisition or divestitures (including, but not limited to,
financing and refinancing fees and costs incurred in connection with the
Recapitalization), in each case, on a consolidated basis and determined in
accordance with GAAP. Notwithstanding the foregoing, the provision for taxes
based on the income or profits of, the Fixed Charges of, and the depreciation
and amortization and other non-cash charges of, a Restricted Subsidiary of a
Person shall be added to Consolidated Net Income to compute Consolidated Cash
Flow only to the extent (and in the same proportion) that Net Income of such
Restricted Subsidiary was included in calculating the Consolidated Net Income of
such Person.
"Consolidated Interest Expense" means, with respect to any Person for
any period, the sum of, without duplication, (a) the interest expense of such
Person and its Restricted Subsidiaries for such period, on a consolidated basis,
determined in accordance with GAAP (including amortization of original issue
discount, non-cash interest payments, the interest component of all payments
associated with Capital Lease Obligations, imputed interest with respect to
Attributable Indebtedness, commissions, discounts and other fees and charges
incurred in respect of letter of credit or bankers' acceptance financings, and
net payments, if any, pursuant to Hedging Obligations; provided that in no event
shall any amortization of deferred financing costs be included in Consolidated
Interest Expense); and (b) the consolidated capitalized interest of such Person
and its Restricted Subsidiaries for such period, whether paid or accrued;
provided, however, that Receivables Fees shall be deemed not to constitute
Consolidated Interest Expense. Notwithstanding the foregoing, the Consolidated
Interest Expense with respect to any Restricted Subsidiary that is not a Wholly
Owned Restricted Subsidiary shall be included only to the extent (and in the
same proportion) that the net income of such Restricted Subsidiary was included
in calculating Consolidated Net Income.
"Consolidated Net Income" means, with respect to any Person for any
period, the aggregate of the Net Income of such Person and its Restricted
Subsidiaries for such period, on a consolidated basis, determined in accordance
with GAAP; provided that (a) the Net Income (or loss) of any Person that is not
a Restricted Subsidiary or that is accounted for by the equity method of
accounting shall be included only to the extent of the amount of dividends or
distributions paid in cash to the referent Person or a Restricted Subsidiary
thereof, (b) the Net Income (or loss) of any Restricted Subsidiary shall be
excluded to the extent that the declaration or payment of dividends or similar
distributions by that Restricted Subsidiary of that Net Income (or loss) is not
at the date of determination permitted without any prior governmental approval
(that has not been obtained) or, directly or indirectly, by operation of the
terms of its charter or any agreement, instrument, judgment, decree, order,
statute, rule or governmental regulation applicable to that Restricted
Subsidiary, (c) the Net Income (or loss) of any Person acquired in a pooling of
interests transaction for any period prior to the date of such acquisition shall
be excluded and (d) the cumulative effect of a change in accounting principles
shall be excluded.
"Continuing Members" means, as of any date of determination, any member
of the board of directors of the Company who (a) was a member of such board of
directors immediately after consummation of the Merger or (b) was nominated for
election or elected to such board of directors with the approval of, or whose
election to the board of directors was ratified by, at least a majority of the
Continuing Members who were members of such board of directors at the time of
such nomination or election.
"Corporate Trust Office of the Trustee" shall be at the address of the
Trustee specified in Section 12.02 hereof or such other address as to which the
Trustee may give notice to the Company.
"Custodian" means any receiver, trustee, assignee, liquidator or
similar official under any Bankruptcy Law.
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"Default" means any event that is or with the passage of time or the
giving of notice or both would be an Event of Default.
"Definitive Note" means a certificated Note registered in the name of
the Holder thereof and issued in accordance with Section 2.06 hereof, in the
form of Exhibit A-1 hereto except that such Note shall not bear the Global Note
Legend and shall not have the "Schedule of Exchanges of Interests in the Global
Note" attached thereto.
"Depositary" means The Depository Trust Company.
"Designated Noncash Consideration" means the fair market value of
non-cash consideration received by the Company or one of its Restricted
Subsidiaries in connection with an Asset Sale that is so designated as
Designated Noncash Consideration pursuant to an Officers' Certificate, setting
forth the basis of such valuation, executed by the principal executive officer
and the principal financial officer of the Company, less the amount of cash or
Cash Equivalents received in connection with a sale of such Designated Noncash
Consideration.
"Disqualified Stock" means any Capital Stock that, by its terms (or by
the terms of any security into which it is convertible, or for which it is
exchangeable), or upon the happening of any event (other than any event solely
within the control of the issuer thereof), matures or is mandatorily redeemable,
pursuant to a sinking fund obligation or otherwise, is exchangeable for
Indebtedness (except to the extent exchangeable at the option of such Person
subject to the terms of any debt instrument to which such Person is a party) or
redeemable at the option of the Holder thereof, in whole or in part, on or prior
to the date on which the Notes mature; provided that any Capital Stock that
would constitute Disqualified Stock solely because the holders thereof have the
right to require the Company to repurchase such Capital Stock upon the
occurrence of a Change of Control or an Asset Sale shall not constitute
Disqualified Stock if the terms of such Capital Stock provide that the Company
may not repurchase or redeem any such Capital Stock pursuant to such provisions
unless such repurchase or redemption complies with Section 4.07, and provided
further that, if such Capital Stock is issued to any plan for the benefit of
employees of the Company or its Subsidiaries or by any such plan to such
employees, such Capital Stock shall not constitute Disqualified Stock solely
because it may be required to be repurchased by the Company in order to satisfy
applicable statutory or regulatory obligations.
"DLJMB" means DLJ Merchant Banking Partners II, L.P. and its
Affiliates.
"Domestic Subsidiary" means a Subsidiary that is organized under the
laws of the United States or any State, district or territory thereof.
"Eligible Institution" means a commercial banking institution that has
combined capital and surplus not less than $100.0 million or its equivalent in
foreign currency, whose short-term debt is rated "A-3" or higher according to
Standard & Poor's Ratings Group ("S&P") or "P-2" or higher according to Moody's
Investor Services, Inc. ("Moody's") or carrying an equivalent rating by a
nationally recognized rating agency if both of the two named rating agencies
cease publishing ratings of investments.
"Equity Interests" means Capital Stock and all warrants, options or
other rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock).
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"Euroclear" means Morgan Guaranty Trust Company of New York, Brussels
office, as operator of the Euroclear system.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Exchange Notes" means the Notes issued in the Exchange Offer pursuant
to Section 2.06(f) hereof.
"Exchange Offer" has the meaning set forth in the Registration Rights
Agreement.
"Exchange Offer Registration Statement" has the meaning set forth in
the Registration Rights Agreement.
"Existing Indebtedness" means Indebtedness of the Company and its
Restricted Subsidiaries (other than Indebtedness under the New Credit Facility)
in existence on the date of this Indenture, until such amounts are repaid.
"Fixed Charges" means, with respect to any Person for any period, the
sum, without duplication, of (a) the Consolidated Interest Expense of such
Person for such period and (b) all dividend payments on any series of preferred
stock of such Person (other than dividends payable solely in Equity Interests
that are not Disqualified Stock), in each case, on a consolidated basis and in
accordance with GAAP.
"Fixed Charge Coverage Ratio" means, with respect to any Person for any
period, the ratio of the Consolidated Cash Flow of such Person for such period
(exclusive of amounts attributable to discontinued operations, as determined in
accordance with GAAP, or operations and businesses disposed of prior to the
Calculation Date (as defined)) to the Fixed Charges of such Person for such
period (exclusive of amounts attributable to discontinued operations, as
determined in accordance with GAAP, or operations and businesses disposed of
prior to the Calculation Date). In the event that the referrent Person or any of
its Subsidiaries incurs, assumes, guarantees or redeems any Indebtedness (other
than revolving credit borrowings) or issues or redeems preferred stock
subsequent to the commencement of the period for which the Fixed Charge Coverage
Ratio is being calculated but prior to the date on which the event for which the
calculation of the Fixed Charge Coverage Ratio is made (the "Calculation Date"),
then the Fixed Charge Coverage Ratio shall be calculated giving pro forma effect
to such incurrence, assumption, guarantee or redemption of Indebtedness, or such
issuance or redemption of preferred stock, as if the same had occurred at the
beginning of the applicable four-quarter reference period. In addition, for
purposes of making the computation referred to above, acquisitions that have
been made by the Company or any of its Subsidiaries, including all mergers or
consolidations and any related financing transactions, during the four-quarter
reference period or subsequent to such reference period and on or prior to the
Calculation Date shall be calculated to include the Consolidated Cash Flow of
the acquired entities on a pro forma basis after giving effect to cost savings
resulting from employee terminations, facilities consolidations and closings,
standardization of employee benefits and compensation practices, consolidation
of property, casualty and other insurance coverage and policies, standardization
of sales and distribution methods, reductions in taxes other than income taxes
and other cost savings reasonably expected to be realized from such acquisition,
as determined in good faith by an officer of the Company (regardless of whether
such cost savings could then be reflected in pro forma financial statements
under GAAP, Regulation S-X promulgated by the Commission or any other regulation
or policy of the Commission) and without giving effect to clause (c) of the
proviso set forth in the definition of Consolidated Net Income, and shall be
deemed to have occurred on the first day of the four-quarter reference period
and Consolidated Cash Flow for such reference period shall be calculated.
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"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as have been approved by a significant segment of the accounting
profession, which are in effect on the date of this Indenture.
"guarantee" means a guarantee (other than by endorsement of negotiable
instruments for collection in the ordinary course of business), direct or
indirect, in any manner (including, without limitation, letters of credit or
reimbursement agreements in respect thereof), of all or any part of any
Indebtedness.
"Guarantors" means (i) each of the Domestic Subsidiaries of the Company
(other than Thermadyne Receivables, Inc.) that is a Restricted Subsidiary on the
date of the Indenture and (ii) any other Subsidiary that executes a Note
Guarantee in accordance with the provisions of the Indenture.
"Global Notes" means, individually and collectively, each of the
Restricted Global Notes and the Unrestricted Global Notes, in the form of
Exhibit A hereto issued in accordance with Section 2.01, 2.06(b)(iv),
2.06(d)(ii) or 2.06(f) hereof.
"Global Note Legend" means the legend set forth in Section 2.06(g)(ii),
which is required to be placed on all Global Notes issued under this Indenture.
"Government Securities" means direct obligations of, or obligations
guaranteed by, the United States of America, and the payment for which the
United States pledges its full faith and credit.
"Hedging Obligations" means, with respect to any Person, the
obligations of such Person under (a) interest rate swap agreements, interest
rate cap agreements and interest rate collar agreements and (b) other agreements
or arrangements designed to protect such Person against fluctuations in interest
rates.
"Holder" means a Person in whose name a Note is registered.
"Holdings" means Thermadyne Holdings Corporation, a Delaware
corporation, the corporate parent of the Company, or its successors.
"Indebtedness" means, with respect to any Person, any indebtedness of
such Person in respect of borrowed money or evidenced by bonds, notes,
debentures or similar instruments or letters of credit (or reimbursement
agreements in respect thereof) or banker's acceptances or representing Capital
Lease Obligations or the balance deferred and unpaid of the purchase price of
any property or representing any Hedging Obligations, except any such balance
that constitutes an accrued expense or trade payable, if and to the extent any
of the foregoing Indebtedness (other than letters of credit and Hedging
Obligations) would appear as a liability upon a balance sheet of such Person
prepared in accordance with GAAP, as well as all Indebtedness of others secured
by a Lien on any asset of such Person (whether or not such Indebtedness is
assumed by such Person) and, to the extent not otherwise included, the guarantee
by such Person of any Indebtedness of any other Person, provided that
Indebtedness shall not include the pledge by the Company of the Capital Stock of
an Unrestricted Subsidiary of the Company to secure Non-Recourse Debt of such
Unrestricted Subsidiary. The amount of any Indebtedness outstanding as of any
date shall be (a) the accreted value thereof (together with any interest thereon
that is more than 30 days past due), in the case of any Indebtedness that does
not require current payments of interest, and (b) the principal amount thereof,
in the case of any other Indebtedness.
"Indenture" means this Indenture, as amended or supplemented from time
to time.
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"Indirect Participant" means a Person who holds a beneficial interest
in a Global Note through a Participant.
"Issuers" means, collectively, the Company and Thermadyne Capital
Corp., a wholly owned subsidiary of the Company.
"Institutional Accredited Investor" means an institution that is an
"accredited investor" as defined in Rule 501(a)(1), (2), (3) or (7) under the
Securities Act, who are not also QIBs.
"Investments" means, with respect to any Person, all investments by
such Person in other Persons (including Affiliates) in the forms of direct or
indirect loans (including guarantees by the referent Person of, and Liens on any
assets of the referent Person securing, Indebtedness or other obligations of
other Persons), advances or capital contributions (excluding commission, travel
and similar advances to officers and employees made in the ordinary course of
business), purchases or other acquisitions for consideration of Indebtedness,
Equity Interests or other securities, together with all items that are or would
be classified as investments on a balance sheet prepared in accordance with
GAAP, provided that an investment by the Company for consideration consisting of
common equity securities of the Company shall not be deemed to be an Investment.
If the Company or any Restricted Subsidiary of the Company sells or otherwise
disposes of any Equity Interests of any direct or indirect Restricted Subsidiary
of the Company such that, after giving effect to any such sale or disposition,
such Person is no longer a Subsidiary of the Company, the Company shall be
deemed to have made an Investment on the date of any such sale or disposition
equal to the fair market value of the Equity Interests of such Restricted
Subsidiary not sold or disposed of in an amount determined as provided in the
final paragraph of Section 4.07 hereof.
"Legal Holiday" means a Saturday, a Sunday or a day on which banking
institutions in the City of New York or the city in which the principal
corporate trust office of the Trustee is located, or at a place of payment are
authorized by law, regulation or executive order to remain closed. If a payment
date is a Legal Holiday at a place of payment, payment may be made at that place
on the next succeeding day that is not a Legal Holiday, and no interest shall
accrue on such payment for the intervening period.
"Letter of Transmittal" means the letter of transmittal to be prepared
by the Company and sent to all Holders of the Notes for use by such Holders in
connection with the Exchange Offer.
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset,
whether or not filed, recorded or otherwise perfected under applicable law
(including any conditional sale or other title retention agreement, any lease in
the nature thereof, any option or other agreement to sell or give a security
interest in and any filing of or agreement to give any financing statement under
the Uniform Commercial Code (or equivalent statutes) of any jurisdiction).
"Liquidated Damages" means all liquidated damages then owing pursuant
to Section 5 of the Registration Rights Agreement.
"Management Loans" means one or more loans by the Company or Holdings
to officers and/or directors of the Company and any of its Restricted
Subsidiaries to finance the purchase by such officers and directors of common
stock of Holdings; provided, however, that the aggregate principal amount of all
such Management Loans outstanding at any time shall not exceed $5.0 million.
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"Merger" means the merger of Mercury Acquisition Corp., a Delaware
corporation, with and into Holdings on or prior to the date of issuance of the
Notes.
"Net Income" means, with respect to any Person, the net income (loss)
of such Person, determined in accordance with GAAP and before any reduction in
respect of preferred stock dividends, excluding, however, (a) any gain (or
loss), together with any related provision for taxes on such gain (or loss),
realized in connection with (i) any Asset Sale (including, without limitation,
dispositions pursuant to sale and leaseback transactions) or (ii) the
extinguishment of any Indebtedness of such Person or any of its Restricted
Subsidiaries and (b) any extraordinary or nonrecurring gain (or loss), together
with any related provision for taxes on such extraordinary or nonrecurring gain
(or loss).
"Net Proceeds" means the aggregate cash proceeds received by the
Company or any of its Restricted Subsidiaries in respect of any Asset Sale
(including, without limitation, any cash received upon the sale or other
disposition of any non-cash consideration received in any Asset Sale), net of,
without duplication, (a) the direct costs relating to such Asset Sale
(including, without limitation, legal, accounting and investment banking fees,
and sales commissions, recording fees, title transfer fees and appraiser fees
and cost of preparation of assets for sale) and any relocation expenses incurred
as a result thereof, (b) taxes paid or payable as a result thereof (after taking
into account any available tax credits or deductions and any tax sharing
arrangements), (c) amounts required to be applied to the repayment of
Indebtedness (other than revolving credit Indebtedness incurred pursuant to the
New Credit Facility) secured by a Lien on the asset or assets that were the
subject of such Asset Sale and (d) any reserve established in accordance with
GAAP or any amount placed in escrow, in either case for adjustment in respect of
the sale price of such asset or assets until such time as such reserve is
reversed or such escrow arrangement is terminated, in which case Net Proceeds
shall include only the amount of the reserve so reversed or the amount returned
to the Company or its Restricted Subsidiaries from such escrow arrangement, as
the case may be.
"New Credit Facility" means that certain Credit Agreement, dated as of
May 22, 1998, by and among the Company and certain of its foreign subsidiaries,
Donaldson, Lufkin & Jenrette Securities Corporation, as arranger, DLJ Capital
Funding, Inc., as syndication agent, and ABN AMRO Bank N.V., Chicago Branch, as
administrative agent, including any related notes, guarantees, collateral
documents, instruments and agreements executed in connection therewith, and, in
each case, as amended, modified, renewed, refunded, replaced or refinanced from
time to time, including, without limitation, any agreement (i) extending or
shortening the maturity of any Indebtedness incurred thereunder or contemplated
thereby, (ii) adding or deleting borrowers or guarantors thereunder, (iii)
increasing the amount of Indebtedness incurred thereunder or available to be
borrowed thereunder, provided that on the date such Indebtedness is incurred it
would not be prohibited by clause (i) of Section 4.09 hereof or (iv) otherwise
altering the terms and conditions thereof. Indebtedness under the New Credit
Facility outstanding on the date on which Notes are first issued and
authenticated under this Indenture shall be deemed to have been incurred on such
date in reliance on the first paragraph of Section 4.09 hereof.
"Non-Recourse Debt" means Indebtedness (i) no default with respect to,
which (including any rights that the holders thereof may have to take
enforcement action against an Unrestricted Subsidiary) would permit (upon
notice, lapse of time or both) any holder of any other Indebtedness of the
Company or any of its Restricted Subsidiaries to declare a default on such other
Indebtedness or cause the payment thereof to be accelerated or payable prior to
its stated maturity; and (ii) as to which the lenders have been notified in
writing that they will not have any recourse to the stock (other than the stock
of an Unrestricted Subsidiary pledged by the Company to secure debt of such
Unrestricted Subsidiary) or assets of the Company or any of its Restricted
Subsidiaries; provided that in no event shall Indebtedness of any Unrestricted
Subsidiary fail to be Non-Recourse Debt solely as a result of any default
provisions contained
9
<PAGE> 18
in a guarantee thereof by the Company or any of its Restricted Subsidiaries if
the Company or such Restricted Subsidiary was otherwise permitted to incur such
guarantee pursuant to this Indenture.
"Non-U.S. Person" means a Person who is not a U.S. Person.
"Note Custodian" means the Trustee, as custodian with respect to the
Notes in global form, or any successor entity thereto.
"Note Guarantee" means the Guarantee by each Guarantor of the Company's
payment obligations under this Indenture and the Notes, including any subsequent
Guarantees executed pursuant to the provisions of this Indenture.
"Notes" has the meaning assigned to it in the preamble to this
Indenture.
"Obligations" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness.
"Offerings" means the offering of the Notes by the Issuers and the
concurrent offering of senior discount debentures by Holdings.
"Officer" means, with respect to any Person, the Chairman of the Board,
the Chief Executive Officer, the President, the Chief Operating Officer, the
Chief Financial Officer, the Treasurer, any Assistant Treasurer, the Controller,
the Secretary or any Vice-President of such Person.
"Officers' Certificate" means a certificate signed on behalf of the
Company by two Officers of the Company, one of whom must be the principal
executive officer, the principal financial officer, the treasurer or the
principal accounting officer of the Company, that meets the requirements of
Sections 12.04 and 12.05 hereof.
"Opinion of Counsel" means an opinion from legal counsel who is
reasonably acceptable to the Trustee, that meets the requirements of Sections
12.04 and 12.05 hereof. The counsel may be an employee of or counsel to the
Company, any Subsidiary of the Company or the Trustee.
"Pari Passu Indebtedness" means Indebtedness of the Company that ranks
pari passu in right of payment to the Notes.
"Participant" means, with respect to the Depositary, Euroclear or
Cedel, a Person who has an account with the Depositary, Euroclear or Cedel,
respectively (and, with respect to The Depository Trust Company, shall include
Euroclear and Cedel).
"Participating Broker-Dealer" has the meaning set forth in the
Registration Rights Agreement.
"Permitted Business" means any business in which the Company and its
Restricted Subsidiaries are engaged on the date of this Indenture or any
business reasonably related, incidental or ancillary thereto.
"Permitted Investments" means (a) any Investment in the Company or in a
Restricted Subsidiary of the Company, (b) any Investment in cash or Cash
Equivalents, (c) any Investment by the Company or any Restricted Subsidiary of
the Company in a Person, if as a result of such Investment (i) such Person
becomes a Restricted Subsidiary of the Company or (ii) such Person is merged,
consolidated or amalgamated with or into, or transfers or conveys substantially
all of its assets to, or is liquidated into, the Company or a Wholly
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<PAGE> 19
Owned Restricted Subsidiary of the Company, (d) any Investment made as a result
of the receipt of non-cash consideration from an Asset Sale that was made
pursuant to and in compliance with Section 4.10 hereof, (e) any Investment
acquired solely in exchange for Equity Interests (other than Disqualified Stock)
of the Company, (f) any Investment in a Person engaged in a Permitted Business
(other than an Investment in an Unrestricted Subsidiary) having an aggregate
fair market value, taken together with all other Investments made pursuant to
this clause (f) that are at that time outstanding, not to exceed 15% of Total
Assets at the time of such Investment (with the fair market value of each
Investment being measured at the time made and without giving effect to
subsequent changes in value), (g) Investments relating to any special purpose
Wholly Owned Subsidiary of the Company organized in connection with a
Receivables Facility that, in the good faith determination of the board of
directors of the Company, are necessary or advisable to effect such Receivables
Facility and (h) the Management Loans.
"Permitted Liens" means: (i) Liens on property of a Person existing at
the time such Person is merged into or consolidated with the Company or any
Restricted Subsidiary, provided that such Liens were not incurred in
contemplation of such merger or consolidation and do not secure any property or
assets of the Company or any Restricted Subsidiary other than the property or
assets subject to the Liens prior to such merger or consolidation; (ii) Liens
existing on the date of this Indenture; (iii) Liens securing Indebtedness
consisting of Capitalized Lease Obligations, purchase money Indebtedness,
mortgage financings, industrial revenue bonds or other monetary obligations, in
each case incurred solely for the purpose of financing all or any part of the
purchase price or cost of construction or installation of assets used in the
business of the Company or its Restricted Subsidiaries, or repairs, additions or
improvements to such assets, provided that (A) such Liens secure Indebtedness in
an amount not in excess of the original purchase price or the original cost of
any such assets or repair, additional or improvement thereto (plus an amount
equal to the reasonable fees and expenses in connection with the incurrence of
such Indebtedness), (B) such Liens do not extend to any other assets of the
Company or its Restricted Subsidiaries (and, in the case of repair, addition or
improvements to any such assets, such Lien extends only to the assets (and
improvements thereto or thereon) repaired, added to or improved), (C) the
Incurrence of such Indebtedness is permitted by Section 4.09 hereof and (D) such
Liens attach within 365 days of such purchase, construction, installation,
repair, addition or improvement; (iv) Liens to secure any refinancings,
renewals, extensions, modification or replacements (collectively, "refinancing")
(or successive refinancings), in whole or in part, of any Indebtedness secured
by Liens referred to in the clauses above so long as such Lien does not extend
to any other property (other than improvements thereto); (v) Liens securing
letters of credit entered into in the ordinary course of business and consistent
with past business practice; (vi) Liens on and pledges of the capital stock of
any Unrestricted Subsidiary securing Non-Recourse Debt of such Unrestricted
Subsidiary; (vii) Liens securing Indebtedness (including all Obligations) under
the New Credit Facility; and (viii) other Liens securing Indebtedness that is
permitted by the terms of this Indenture to be outstanding having an aggregate
principal amount at any one time outstanding not to exceed $50.0 million.
"Permitted Refinancing Indebtedness" means any Indebtedness of the
Company or any of its Restricted Subsidiaries issued in exchange for, or the net
proceeds of which are used to extend, refinance, renew, replace, defease or
refund other Indebtedness of the Company or any of its Restricted Subsidiaries;
provided that (a) the principal amount (or accreted value, if applicable) of
such Permitted Refinancing Indebtedness does not exceed the principal amount of
(or accreted value, if applicable), plus premium, if any, and accrued interest
on the Indebtedness so extended, refinanced, renewed, replaced, defeased or
refunded (plus the amount of reasonable expenses incurred in connection
therewith), (b) such Permitted Refinancing Indebtedness has a final maturity
date no earlier than the final maturity date of, and has a Weighted Average Life
to Maturity equal to or greater than the Weighted Average Life to Maturity of,
the Indebtedness being extended, refinanced, renewed, replaced, defeased or
refunded, and (c) if the Indebtedness being extended, refinanced, renewed,
replaced, defeased or refunded is subordinated in right
11
<PAGE> 20
of payment to the Notes, such Permitted Refinancing Indebtedness is subordinated
in right of payment to, the Notes on terms at least as favorable, taken as a
whole, to the Holders of Notes as those contained in the documentation governing
the Indebtedness being extended, refinanced, renewed, replaced, defeased or
refunded.
"Person" means any individual, corporation, partnership, limited
liability company, joint venture, association, joint-stock company, trust,
unincorporated organization or government or agency or political subdivision
thereof (including any subdivision or ongoing business of any such entity or
substantially all of the assets of any such entity, subdivision or business).
"Principals" means DLJMB.
"Private Placement Legend" means the legend set forth in Section
2.06(g)(i) to be placed on all Notes issued under this Indenture except where
otherwise permitted by the provisions of this Indenture.
"Public Equity Offering" means any issuance of membership interests by
the Company (other than to Holdings and other than Disqualified Stock) or common
stock or preferred stock by Holdings (other than Disqualified Stock) that is
registered pursuant to the Securities Act, other than issuances registered on
Form S-8 and issuances registered on Form S-4, excluding issuances of membership
interests or common stock pursuant to employee benefit plans of Holdings or the
Company or otherwise as compensation to employees of the Company or Holdings.
"Qualified Proceeds" means any of the following or any combination of
the following: (i) cash; (ii) Cash Equivalents; (iii) assets that are used or
useful in a Permitted Business; and (iv) the Capital Stock of any Person engaged
in a Permitted Business if, in connection with the receipt by the Company or any
Restricted Subsidiary of the Company of such Capital Stock, (A) such Person
becomes a Restricted Subsidiary of the Company or any Restricted Subsidiary of
the Company or (B) such Person is merged, consolidated or amalgamated with or
into, or transfers or conveys substantially all of its assets to, or is
liquidated into, the Company or any Restricted Subsidiary of the Company.
"QIB" means a "qualified institutional buyer" as defined in Rule 144A.
"Recapitalization" means the Acquisition, the Merger and the Offerings.
"Receivables Facility" means one or more receivables financing
facilities, as amended from time to time, pursuant to which the Company or any
of its Restricted Subsidiaries sells its accounts receivable to an Accounts
Receivable Subsidiary.
"Receivables Fees" means distributions or payments made directly or by
means of discounts with respect to any participation interests issued or sold in
connection with, and other fees paid to a Person that is not a Restricted
Subsidiary in connection with, any Receivables Facility.
"Registration Rights Agreement" means the Registration Rights
Agreement, dated as of May 22, 1998, by and among the Company and the other
parties named on the signature pages thereof, as such agreement may be amended,
modified or supplemented from time to time, and, with respect to any Additional
Notes, one or more registration rights agreements between the Company and the
other parties thereto, as such agreement(s) may be amended, modified or
supplemented from time to time, relating to rights given by the Company to the
purchasers of Additional Notes to register such Additional Notes under the
Securities Act.
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<PAGE> 21
"Regulation S" means Regulation S promulgated under the Securities Act.
"Regulation S Global Note" means a Regulation S Temporary Global Note
or Regulation S Permanent Global Note, as appropriate.
"Regulation S Permanent Global Note" means a permanent global Note in
the form of Exhibit A-1 hereto bearing the Global Note Legend and the Private
Placement Legend, if applicable, and deposited with or on behalf of and
registered in the name of the Depositary or its nominee, issued in a
denomination equal to the outstanding principal amount of the Regulation S
Temporary Global Note upon expiration of the Restricted Period.
"Regulation S Temporary Global Note" means a temporary global Note in
the form of Exhibit A-2 hereto bearing the Global Note Legend and the Private
Placement Legend and deposited with or on behalf of and registered in the name
of the Depositary or its nominee, issued in a denomination equal to the
outstanding principal amount of the Notes initially sold in reliance on Rule 903
of Regulation S.
"Related Party" means, with respect to any Principal, (i) any
controlling stockholder or partner of such Principal on the date of this
Indenture, or (ii) any trust, corporation, partnership or other entity, the
beneficiaries, stockholders, partners, owners or Persons beneficially holding
(directly or through one or more Subsidiaries) a 51% or more controlling
interest of which consist of the Principals and/or such other Persons referred
to in the immediately preceding clauses (i) or (ii).
"Responsible Officer," when used with respect to the Trustee, means any
officer within the Corporate Trust Administration of the Trustee (or any
successor group of the Trustee) or any other officer of the Trustee customarily
performing functions similar to those performed by any of the above designated
officers and also means, with respect to a particular corporate trust matter,
any other officer to whom such matter is referred because of his knowledge of
and familiarity with the particular subject.
"Restricted Definitive Note" means a Definitive Note bearing the
Private Placement Legend.
"Restricted Global Note" means a Global Note bearing the Private
Placement Legend.
"Restricted Investment" means an Investment other than a Permitted
Investment.
"Restricted Period" means the 40-day restricted period as defined in
Regulation S.
"Restricted Subsidiary" of a Person means any Subsidiary of the
referent Person that is not an Unrestricted Subsidiary.
"Rule 144" means Rule 144 promulgated under the Securities Act.
"Rule 144A" means Rule 144A promulgated under the Securities Act.
"Rule 903" means Rule 903 promulgated under the Securities Act.
"Rule 904" means Rule 904 promulgated the Securities Act.
"Securities Act" means the Securities Act of 1933, as amended.
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<PAGE> 22
"Shelf Registration Statement" means the Shelf Registration Statement
as defined in the Registration Rights Agreement.
"Significant Subsidiary" means any Subsidiary that would be a
"significant subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X,
promulgated pursuant to the Securities Act, as such Regulation is in effect on
the date hereof.
"Stated Maturity" means, with respect to any installment of interest or
principal on any series of Indebtedness, the date on which such payment of
interest or principal was scheduled to be paid in the original documentation
governing such Indebtedness, and shall not include any contingent obligations to
repay, redeem or repurchase any such interest or principal prior to the date
originally scheduled for the payment thereof.
"Subsidiary" means, with respect to any Person, (a) any corporation,
association or other business entity of which more than 50% of the total voting
power of shares of Capital Stock entitled (without regard to the occurrence of
any contingency) to vote in the election of directors, managers or trustees
thereof is at the time owned or controlled, directly or indirectly, by such
Person or one or more of the other Subsidiaries of that Person (or a combination
thereof) and (b) any partnership or limited liability company (i) the sole
general partner or the managing general partner or managing member of which is
such Person or a Subsidiary of such Person or (ii) the only general partners or
managing members of which are such Person or of one or more Subsidiaries of such
Person (or any combination thereof).
"Tax Sharing Agreement" means any tax sharing agreement or arrangement
between the Company and Holdings, as the same may be amended from time to time;
provided that in no event shall the amount permitted to be paid pursuant to all
such agreements and/or arrangements exceed the amount the Company would be
required to pay for income taxes were it to file a consolidated tax return for
itself and its consolidated Restricted Subsidiaries as if it were a corporation
that was a parent of a consolidated group.
"Thermadyne" means the Company.
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C.ss.ss.
77aaa-77bbbb) as in effect on the date on which this Indenture is qualified
under the TIA.
"Total Assets" means the total consolidated assets of the Company and
its Restricted Subsidiaries, as shown on the most recent balance sheet
(excluding the footnotes thereto) of the Company.
"Treasury Rate" means, as of any redemption date, the yield to maturity
as of such redemption date of United States Treasury securities with a constant
maturity (as compiled and published in the most recent Federal Reserve
Statistical Release H.15 (519) that has become publicly available at least two
Business Days prior to the redemption date (or, if such Statistical Release is
no longer published, any publicly available source of similar market data)) most
nearly equal to the period from the redemption date to June 1, 2003; provided
that if the period from the redemption date to June 1, 2003 is less than one
year, the weekly average yield on actually traded United States Treasury
securities adjusted to a constant maturity of one year shall be used.
"Trustee" means the party named as such above until a successor
replaces it in accordance with the applicable provisions of this Indenture and
thereafter means the successor serving hereunder.
"Unrestricted Global Note" means a permanent global Note in the form of
Exhibit A-1 attached hereto that bears the Global Note Legend and that has the
"Schedule of Exchanges of Interests in the
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<PAGE> 23
Global Note" attached thereto, and that is deposited with or on behalf of and
registered in the name of the Depositary, representing a series of Notes that do
not bear the Private Placement Legend.
"Unrestricted Definitive Note" means one or more Definitive Notes that
do not bear and are not required to bear the Private Placement Legend.
"Unrestricted Subsidiary" means any Subsidiary (other than Thermadyne
Capital) that is designated by the board of directors as an Unrestricted
Subsidiary pursuant to a board resolution, but only to the extent that such
Subsidiary: (a) has no Indebtedness other than Non-Recourse Debt; (b) is not
party to any agreement, contract, arrangement or understanding with the Company
or any Restricted Subsidiary of the Company unless the terms of any such
agreement, contract, arrangement or understanding are no less favorable to the
Company or such Restricted Subsidiary than those that might be obtained at the
time from Persons who are not Affiliates of the Company; (c) is a Person with
respect to which neither the Company nor any of its Restricted Subsidiaries has
any direct or indirect obligation (i) to subscribe for additional Equity
Interests (other than Investments described in clause (g) of the definition of
Permitted Investments) or (ii) to maintain or preserve such Person's financial
condition or to cause such Person to achieve any specified levels, of operating
results; and (d) has not guaranteed or otherwise directly or indirectly provided
credit support for any Indebtedness of the Company or any of its Restricted
Subsidiaries. Any such designation by the board of directors shall be evidenced
to the Trustee by filing with the Trustee a certified copy of the board
resolution giving effect to such designation and an Officers' Certificate
certifying that such designation complied with the foregoing conditions and was
permitted by Section 4.07 hereof. If, at any time, any Unrestricted Subsidiary
would fail to meet the foregoing requirements as a Unrestricted Subsidiary, it
shall thereafter cease to be an Unrestricted Subsidiary for purposes of this
Indenture and any Indebtedness of such Subsidiary shall be deemed to be incurred
by a Restricted Subsidiary of the Company as of such date (and, if such
Indebtedness is not permitted to be incurred as of such date under Section 4.09
hereof, the Company shall be in default of such covenant). The board of
directors of the Company may at any time designate any Unrestricted Subsidiary
to be a Restricted Subsidiary; provided that such designation shall be deemed to
be an incurrence of Indebtedness by a Restricted Subsidiary of the Company of
any outstanding Indebtedness of such Unrestricted Subsidiary and such
designation shall only be permitted if (i) such Indebtedness is permitted under
Section 4.09 hereof and (ii) no Default or Event of Default would be in
existence following such designation.
"U.S. Person" means a U.S. person as defined in Rule 902(o) under the
Securities Act.
"Weighted Average Life to Maturity" means , when applied to any
Indebtedness at any date, the number of years obtained by dividing (a) the sum
of the products obtained by multiplying (i) the amount of each then remaining
installment, sinking fund, serial maturity or other required payments of
principal, including payment at final maturity, in respect thereof, by (ii) the
number of years (calculated to the nearest one-twelfth) that will elapse between
such date and the making of such payment, by (b) the then outstanding principal
amount of such Indebtedness.
"Wholly Owned Restricted Subsidiary" of any Person means a Restricted
Subsidiary of such Person all the outstanding Capital Stock or other ownership
interests of which (other than directors' qualifying shares) shall at the time
be owned by such Person or by one or more Wholly Owned Restricted Subsidiaries
of such Person or by such Person and one or more Wholly Owned Restricted
Subsidiaries of such Person.
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<PAGE> 24
"Wholly Owned Subsidiary" of any Person means a Subsidiary of such
Person all of the outstanding Capital Stock or other ownership interests of
which (other than directors' qualifying shares) shall at the time be owned by
such Person or by one or more Wholly Owned Subsidiaries of such Person.
SECTION 1.02 OTHER DEFINITIONS.
<TABLE>
<CAPTION>
Defined in
Term Section
<S> <C>
"Affiliate Transaction"......................................................4.11
"Asset Sale".................................................................4.10
"Asset Sale Offer"...........................................................3.09
"Authentication Order".......................................................2.02
"Bankruptcy Law".............................................................4.01
"Change of Control Offer"....................................................4.15
"Change of Control Payment"..................................................4.15
"Change of Control Payment Date" ............................................4.15
"Covenant Defeasance"........................................................8.03
"Designated Senior Indebtedness".............................................10.02
"Event of Default"...........................................................6.01
"Excess Proceeds"............................................................4.10
"incur"......................................................................4.09
"Legal Defeasance" ..........................................................8.02
"Offer Amount"...............................................................3.09
"Offer Period"...............................................................3.09
"Paying Agent"...............................................................2.03
"Permitted Junior Securities"................................................10.02
"Permitted Indebtedness".....................................................4.09
"Purchase Date"..............................................................3.09
"Registrar"..................................................................2.03
"Restricted Payments"........................................................4.07
"Representative".............................................................10.02
"Senior Indebtedness"........................................................10.02
</TABLE>
SECTION 1.03. INCORPORATION OF TIA PROVISIONS
Whenever this Indenture refers to a provision of the TIA, the provision
is incorporated by reference in and made a part of this Indenture.
The following TIA terms used in this Indenture have the following
meanings:
"indenture securities" means the Notes;
"indenture security Holder" means a Holder of a Note;
"indenture to be qualified" means this Indenture;
"indenture trustee" or "institutional trustee" means the Trustee; and
16
<PAGE> 25
"obligor" on the Notes and the Note Guarantees means the Issuers and
the Guarantors, respectively, and any successor obligor upon the Notes and the
Note Guarantees, respectively.
All other terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by Commission rule under
the TIA have the meanings so assigned to them.
SECTION 1.04. RULES OF CONSTRUCTION.
Unless the context otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has
the meaning assigned to it in accordance with GAAP;
(3) "or" is not exclusive;
(4) words in the singular include the plural, and
in the plural include the singular;
(5) provisions apply to successive events and
transactions; and
(6) references to sections of or rules under the
Securities Act shall be deemed to include substitute,
replacement of successor sections or rules adopted by
the Commission from time to time.
ARTICLE 2.
THE NOTES
SECTION 2.01. FORM AND DATING.
(a) General. The Notes and the Trustee's certificate of authentication
shall be substantially in the form of Exhibit A hereto. The Notes may have
notations, legends or endorsements required by law, stock exchange rule or
usage. Each Note shall be dated the date of its authentication. The Notes shall
be in denominations of $1,000 and integral multiples thereof, except that Notes
used to pay Liquidated Damages may be in other denominations.
The terms and provisions contained in the Notes shall constitute, and
are hereby expressly made, a part of this Indenture and the Issuers, the
Guarantors and the Trustee, by their execution and delivery of this Indenture,
expressly agree to such terms and provisions and to be bound thereby. However,
to the extent any provision of any Note conflicts with the express provisions of
this Indenture, the provisions of this Indenture shall govern and be
controlling.
(b) Global Notes.
Notes issued in global form shall be substantially in the form of
Exhibit A-1 attached hereto (including the Global Note Legend thereon and the
"Schedule of Exchanges of Interests in the Global Note" attached thereto). Notes
issued in definitive form shall be substantially in the form of Exhibit A-1
attached hereto (but without the Global Note Legend thereon and without the
"Schedule of Exchanges of Interests in the Global Note" attached thereto). Each
Global Note shall represent such of the outstanding Notes as shall be specified
therein and each shall provide that it shall represent the aggregate principal
amount of outstanding Notes from time to time endorsed thereon and
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<PAGE> 26
that the aggregate principal amount of outstanding Notes represented thereby may
from time to time be reduced or increased, as appropriate, to reflect exchanges
and redemptions. Any endorsement of a Global Note to reflect the amount of any
increase or decrease in the aggregate principal amount of outstanding Notes
represented thereby shall be made by the Trustee or the Note Custodian, at the
direction of the Trustee, in accordance with instructions given by the Holder
thereof as required by Section 2.06 hereof.
(c) Temporary Global Notes. Notes offered and sold in reliance on
Regulation S shall be issued initially in the form of Exhibit A-2 attached
hereto, which shall be deposited on behalf of the purchasers of the Notes
represented thereby with the Trustee, at its New York office, as custodian for
the Depositary, and registered in the name of the Depositary or the nominee of
the Depositary for the accounts of designated agents holding on behalf of
Euroclear or Cedel Bank, duly executed by the Issuers and authenticated by the
Trustee as hereinafter provided. The Restricted Period shall be terminated upon
the receipt by the Trustee of (i) a written certificate from the Depositary,
together with copies of certificates from Euroclear and Cedel Bank certifying
that they have received certification of non-United States beneficial ownership
of 100% of the aggregate principal amount of the Regulation S Temporary Global
Note (except to the extent of any beneficial owners thereof who acquired an
interest therein during the Restricted Period pursuant to another exemption from
registration under the Securities Act and who will take delivery of a beneficial
ownership interest in a 144A Global Note, all as contemplated by Section
2.06(a)(ii) hereof), and (ii) an Officers' Certificate from the Issuers.
Following the termination of the Restricted Period, beneficial interests in the
Regulation S Temporary Global Note shall be exchanged for beneficial interests
in Regulation S Permanent Global Notes pursuant to the Applicable Procedures.
Simultaneously with the authentication of Regulation S Permanent Global Notes,
the Trustee shall cancel the Regulation S Temporary Global Note. The aggregate
principal amount of the Regulation S Temporary Global Note and the Regulation S
Permanent Global Notes may from time to time be increased or decreased by
adjustments made on the records of the Trustee and the Depositary or its
nominee, as the case may be, in connection with transfers of interest as
hereinafter provided.
(d) Euroclear and Cedel Procedures Applicable. The provisions of the
"Operating Procedures of the Euroclear System" and "Terms and Conditions
Governing Use of Euroclear" and the "General Terms and Conditions of Cedel Bank"
and "Customer Handbook" of Cedel Bank shall be applicable to transfers of
beneficial interests in the Regulation S Temporary Global Note and the
Regulation S Permanent Global Notes that are held by Participants through
Euroclear or Cedel Bank.
SECTION 2.02. EXECUTION AND AUTHENTICATION.
One Officer shall sign the Notes for the Issuers by manual or facsimile
signature. The Issuers's seal may be reproduced on the Notes and may be in
facsimile form.
If an Officer whose signature is on a Note no longer holds that office
at the time a Note is authenticated, the Note shall nevertheless be valid.
A Note shall not be valid until authenticated by the manual signature
of the Trustee. The signature shall be conclusive evidence that the Note has
been authenticated under this Indenture.
The Trustee shall, upon a written order of the Issuers signed by one
Officer (an "Authentication Order"), authenticate Notes for original issue up to
the aggregate principal amount stated in paragraph 4 of the Notes plus Notes
issued to pay Liquidated Damages pursuant to paragraph 2 of the Notes. The
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<PAGE> 27
aggregate principal amount of Notes outstanding at any time may not exceed such
amount except as provided in Section 2.07 hereof.
The Trustee may appoint an authenticating agent acceptable to the
Issuers to authenticate Notes. An authenticating agent may authenticate Notes
whenever the Trustee may do so. Each reference in this Indenture to
authentication by the Trustee includes authentication by such agent. An
authenticating agent has the same rights as an Agent to deal with Holders or an
Affiliate of the Issuers.
SECTION 2.03. REGISTRAR AND PAYING AGENT.
The Issuers shall maintain an office or agency where Notes may be
presented for registration of transfer or for exchange ("Registrar") and an
office or agency where Notes may be presented for payment ("Paying Agent"). The
Registrar shall keep a register of the Notes and of their transfer and exchange.
The Issuers may appoint one or more co-registrars and one or more additional
paying agents. The term "Registrar" includes any co-registrar and the term
"Paying Agent" includes any additional paying agent. The Issuers may change any
Paying Agent or Registrar without notice to any Holder. The Issuers shall notify
the Trustee in writing of the name and address of any Agent not a party to this
Indenture. If the Issuers fail to appoint or maintain another entity as
Registrar or Paying Agent, the Trustee shall act as such. The Issuers or any of
their respective Subsidiaries may act as Paying Agent or Registrar.
The Issuers initially appoint The Depository Trust Issuers ("DTC") to
act as Depositary with respect to the Global Notes.
The Issuers initially appoint the Trustee to act as the Registrar and
Paying Agent and to act as Note Custodian with respect to the Global Notes.
SECTION 2.04. PAYING AGENT TO HOLD MONEY IN TRUST.
The Issuers shall require each Paying Agent other than the Trustee to
agree in writing that the Paying Agent will hold in trust for the benefit of
Holders or the Trustee all money held by the Paying Agent for the payment of
principal, premium or Liquidated Damages, if any, or interest on the Notes, and
will notify the Trustee of any default by the Issuers in making any such
payment. While any such default continues, the Trustee may require a Paying
Agent to pay all money held by it to the Trustee. The Issuers at any time may
require a Paying Agent to pay all money held by it to the Trustee. Upon payment
over to the Trustee, the Paying Agent (if other than the Issuers or a
Subsidiary) shall have no further liability for the money. If the Issuers or a
Subsidiary acts as Paying Agent, it shall segregate and hold in a separate trust
fund for the benefit of the Holders all money held by it as Paying Agent. Upon
any bankruptcy or reorganization proceedings relating to the Issuers, the
Trustee shall serve as Paying Agent for the Notes.
SECTION 2.05. HOLDER LISTS.
The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
all Holders and shall otherwise comply with TIA ss. 312(a). If the Trustee is
not the Registrar, the Issuers shall furnish to the Trustee at least seven
Business Days before each interest payment date and at such other times as the
Trustee may request in writing, a list in such form and as of such date as the
Trustee may reasonably require of the names and addresses of the Holders of
Notes and the Issuers shall otherwise comply with TIA ss. 312(a).
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SECTION 2.06. TRANSFER AND EXCHANGE.
(a) Transfer and Exchange of Global Notes. A Global Note may not be
transferred as a whole except by the Depositary to a nominee of the Depositary,
by a nominee of the Depositary to the Depositary or to another nominee of the
Depositary, the Depositary or any such nominee to a successor Depositary or a
nominee of such successor Depositary. All Global Notes will be exchanged by the
Issuers for Definitive Notes if (i) the Issuers deliver to the Trustee notice
from the Depositary that it is unwilling or unable to continue to act as
Depositary or that it is no longer a clearing agency registered under the
Exchange Act and, in either case, a successor Depositary is not appointed by the
Issuers within 120 days after the date of such notice from the Depositary or
(ii) the Issuers in their sole discretion determine that the Global Notes (in
whole but not in part) should be exchanged for Definitive Notes and delivers a
written notice to such effect to the Trustee; provided that in no event shall
the Regulation S Temporary Global Note be exchanged by the Issuers for
Definitive Notes prior to (x) the expiration of the Restricted Period and (y)
the receipt by the Registrar of any certificates required pursuant to Rule
903(c)(3)(ii)(B) under the Securities Act. Upon the occurrence of either of the
preceding events in (i) or (ii) above, Definitive Notes shall be issued in such
names as the Depositary shall instruct the Trustee. Global Notes also may be
exchanged or replaced, in whole or in part, as provided in Sections 2.07 and
2.10 hereof. Every Note authenticated and delivered in exchange for, or in lieu
of, a Global Note or any portion thereof, pursuant to this Section 2.06 or
Section 2.07 or 2.10 hereof, shall be authenticated and delivered in the form
of, and shall be, a Global Note. A Global Note may not be exchanged for another
Note other than as provided in this Section 2.06(a), however, beneficial
interests in a Global Note may be transferred and exchanged as provided in
Section 2.06(b), (c) or (f) hereof.
(b) Transfer and Exchange of Beneficial Interests in the Global Notes.
The transfer and exchange of beneficial interests in the Global Notes shall be
effected through the Depositary, in accordance with the provisions of this
Indenture and the Applicable Procedures. Beneficial interests in the Restricted
Global Notes shall be subject to restrictions on transfer comparable to those
set forth herein to the extent required by the Securities Act. Transfers of
beneficial interests in the Global Notes also shall require compliance with
either subparagraph (i) or (ii) below, as applicable, as well as one or more of
the other following subparagraphs, as applicable:
(i) Transfer of Beneficial Interests in the Same Global Note.
Beneficial interests in any Restricted Global Note may be
transferred to Persons who take delivery thereof in the form of a
beneficial interest in the same Restricted Global Note in
accordance with the transfer restrictions set forth in the Private
Placement Legend; provided, however, that prior to the expiration
of the Restricted Period, transfers of beneficial interests in the
Temporary Regulation S Global Note may not be made to a U.S.
Person or for the account or benefit of a U.S. Person (other than
an Initial Purchaser). Beneficial interests in any Unrestricted
Global Note may be transferred to Persons who take delivery
thereof in the form of a beneficial interest in an Unrestricted
Global Note. No written orders or instructions shall be required
to be delivered to the Registrar to effect the transfers described
in this Section 2.06(b)(i).
(ii) All Other Transfers and Exchanges of Beneficial Interests
in Global Notes. In connection with all transfers and exchanges of
beneficial interests that are not subject to Section 2.06(b)(i)
above, the transferor of such beneficial interest must deliver to
the Registrar either (A)(1) a written order from a Participant or
an Indirect Participant given to the Depositary in accordance with
the Applicable Procedures directing the Depositary to credit or
cause to be credited a beneficial interest in another Global Note
in an amount equal
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to the beneficial interest to be transferred or exchanged and (2)
instructions given in accordance with the Applicable Procedures
containing information regarding the Participant account to be
credited with such increase or (B) (1) a written order from a
Participant or an Indirect Participant given to the Depositary in
accordance with the Applicable Procedures directing the Depositary
to cause to be issued a Definitive Note in an amount equal to the
beneficial interest to be transferred or exchanged and (2)
instructions given by the Depositary to the Registrar containing
information regarding the Person in whose name such Definitive
Note shall be registered to effect the transfer or exchange
referred to in (1) above; provided that in no event shall
Definitive Notes be issued upon the transfer or exchange of
beneficial interests in the Regulation S Temporary Global Note
prior to (x) the expiration of the Restricted Period and (y) the
receipt by the Registrar of any certificates required pursuant to
Rule 903 under the Securities Act. Upon consummation of an
Exchange Offer by the Issuers in accordance with Section 2.06(f)
hereof, the requirements of this Section 2.06(b)(ii) shall be
deemed to have been satisfied upon receipt by the Registrar of the
instructions contained in the Letter of Transmittal delivered by
the Holder of such beneficial interests in the Restricted Global
Notes. Upon satisfaction of all of the requirements for transfer
or exchange of beneficial interests in Global Notes contained in
this Indenture and the Notes or otherwise applicable under the
Securities Act, the Trustee shall adjust the principal amount of
the relevant Global Note(s) pursuant to Section 2.06(h) hereof.
(iii) Transfer of Beneficial Interests to Another Restricted
Global Note. A beneficial interest in any Restricted Global Note
may be transferred to a Person who takes delivery thereof in the
form of a beneficial interest in another Restricted Global Note if
the transfer complies with the requirements of Section 2.06(b)(ii)
above and the Registrar receives the following:
(A) if the transferee will take delivery in the form of a
beneficial interest in the 144A Global Note, then the
transferor must deliver a certificate in the form of Exhibit B
hereto, including the certifications in item (1) thereof; and
(B) if the transferee will take delivery in the form of a
beneficial interest in the Regulation S Temporary Global Note
or the Regulation S Global Note, then the transferor must
deliver a certificate in the form of Exhibit B hereto,
including the certifications in item (2) thereof.
(iv) Transfer and Exchange of Beneficial Interests in a
Restricted Global Note for Beneficial Interests in the
Unrestricted Global Note. A beneficial interest in any Restricted
Global Note may be exchanged by any holder thereof for a
beneficial interest in an Unrestricted Global Note or transferred
to a Person who takes delivery thereof in the form of a beneficial
interest in an Unrestricted Global Note if the exchange or
transfer complies with the requirements of Section 2.06(b)(ii)
above and:
(A) such exchange or transfer is effected pursuant to the
Exchange Offer in accordance with the Registration Rights
Agreement and the holder of the beneficial interest to be
transferred, in the case of an exchange, or the transferee, in
the case of a transfer, certifies in the applicable Letter of
Transmittal that it is not (1) a broker-dealer, (2) a Person
participating in the distribution of the Exchange Notes or (3)
a Person who is an affiliate (as defined in Rule 144) of the
Issuers;
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(B) such transfer is effected pursuant to the Shelf
Registration Statement in accordance with the Registration
Rights Agreement;
(C) such transfer is effected by a Participating
Broker-Dealer pursuant to the Exchange Offer Registration
Statement in accordance with the Registration Rights
Agreement; or
(D) the Registrar receives the following:
(1) if the holder of such beneficial interest in a
Restricted Global Note proposes to exchange such
beneficial interest for a beneficial interest in an
Unrestricted Global Note, a certificate from such holder
in the form of Exhibit C hereto, including the
certifications in item (1)(a) thereof; or
(2) if the holder of such beneficial interest in a
Restricted Global Note proposes to transfer such
beneficial interest to a Person who shall take delivery
thereof in the form of a beneficial interest in an
Unrestricted Global Note, a certificate from such holder
in the form of Exhibit B hereto, including the
certifications in item (4) thereof;
and, in each such case set forth in this subparagraph (D), if the
Registrar so requests or if the Applicable Procedures so require,
an Opinion of Counsel in form reasonably acceptable to the
Registrar to the effect that such exchange or transfer is in
compliance with the Securities Act and that the restrictions on
transfer contained herein and in the Private Placement Legend are
no longer required in order to maintain compliance with the
Securities Act.
If any such transfer is effected pursuant to subparagraph (B) or (D)
above at a time when an Unrestricted Global Note has not yet been issued, the
Issuers shall issue and, upon receipt of an Authentication Order in accordance
with Section 2.02 hereof, the Trustee shall authenticate one or more
Unrestricted Global Notes in an aggregate principal amount equal to the
aggregate principal amount of beneficial interests transferred pursuant to
subparagraph (B) or (D) above.
Beneficial interests in an Unrestricted Global Note cannot be exchanged
for, or transferred to Persons who take delivery thereof in the form of, a
beneficial interest in a Restricted Global Note.
(c) Transfer or Exchange of Beneficial Interests for Definitive
Notes.
(i) Beneficial Interests in Restricted Global Notes to
Restricted Definitive Notes. If any holder of a beneficial
interest in a Restricted Global Note proposes to exchange such
beneficial interest for a Restricted Definitive Note or to
transfer such beneficial interest to a Person who takes delivery
thereof in the form of a Restricted Definitive Note, then, upon
receipt by the Registrar of the following documentation:
(A) if the holder of such beneficial interest in a
Restricted Global Note proposes to exchange such beneficial
interest for a Restricted Definitive Note, a certificate from
such holder in the form of Exhibit C hereto, including the
certifications in item (2)(a) thereof;
(B) if such beneficial interest is being transferred to a
QIB in accordance with Rule 144A under the Securities Act, a
certificate to the effect set forth in Exhibit B hereto,
including the certifications in item (1) thereof;
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(C) if such beneficial interest is being transferred to a
Non-U.S. Person in an offshore transaction in accordance with
Rule 903 or Rule 904 under the Securities Act, a certificate
to the effect set forth in Exhibit B hereto, including the
certifications in item (2) thereof;
(D) if such beneficial interest is being transferred
pursuant to an exemption from the registration requirements of
the Securities Act in accordance with Rule 144 under the
Securities Act, a certificate to the effect set forth in
Exhibit B hereto, including the certifications in item (3)(a)
thereof;
(E) if such beneficial interest is being transferred to an
Institutional Accredited Investor in reliance on an exemption
from the registration requirements of the Securities Act other
than those listed in subparagraphs (B) through (D) above, a
certificate to the effect set forth in Exhibit B hereto,
including the certifications, certificates and Opinion of
Counsel required by item (3) thereof, if applicable;
(F) if such beneficial interest is being transferred to
the Issuers or any of their Subsidiaries, a certificate to the
effect set forth in Exhibit B hereto, including the
certifications in item (3)(b) thereof; or
(G) if such beneficial interest is being transferred
pursuant to an effective registration statement under the
Securities Act, a certificate to the effect set forth in
Exhibit B hereto, including the certifications in item (3)(c)
thereof,
the Trustee shall cause the aggregate principal amount of the
applicable Global Note to be reduced accordingly pursuant to Section
2.06(h) hereof, and the Issuers shall execute and the Trustee shall
authenticate and deliver to the Person designated in the instructions a
Definitive Note in the appropriate principal amount. Any Definitive
Note issued in exchange for a beneficial interest in a Restricted
Global Note pursuant to this Section 2.06(c) shall be registered in
such name or names and in such authorized denomination or denominations
as the holder of such beneficial interest shall instruct the Registrar
through instructions from the Depositary and the Participant or
Indirect Participant. The Trustee shall deliver such Definitive Notes
to the Persons in whose names such Notes are so registered. Any
Definitive Note issued in exchange for a beneficial interest in a
Restricted Global Note pursuant to this Section 2.06(c)(i) shall bear
the Private Placement Legend and shall be subject to all restrictions
on transfer contained therein.
(ii) Notwithstanding Sections 2.06(c)(i)(A) and (C) hereof, a
beneficial interest in the Regulation S Temporary Global Note may
not be exchanged for a Definitive Note or transferred to a Person
who takes delivery thereof in the form of a Definitive Note prior
to (x) the expiration of the Restricted Period and (y) the receipt
by the Registrar of any certificates required pursuant to Rule
903(c)(3)(ii)(B) under the Securities Act, except in the case of a
transfer pursuant to an exemption from the registration
requirements of the Securities Act other than Rule 903 or Rule
904.
(iii) Beneficial Interests in Restricted Global Notes to
Unrestricted Definitive Notes. A holder of a beneficial interest
in a Restricted Global Note may exchange such beneficial interest
for an Unrestricted Definitive Note or may transfer such
beneficial interest to a Person who takes delivery thereof in the
form of an Unrestricted Definitive Note only if:
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(A) such exchange or transfer is effected pursuant to the
Exchange Offer in accordance with the Registration Rights
Agreement and the holder of such beneficial interest, in the
case of an exchange, or the transferee, in the case of a
transfer, certifies in the applicable Letter of Transmittal
that it is not (1) a broker-dealer, (2) a Person participating
in the distribution of the Exchange Notes or (3) a Person who
is an affiliate (as defined in Rule 144) of the Issuers;
(B) such transfer is effected pursuant to the Shelf
Registration Statement in accordance with the Registration
Rights Agreement;
(C) such transfer is effected by a Participating
Broker-Dealer pursuant to the Exchange Offer Registration
Statement in accordance with the Registration Rights
Agreement; or
(D) the Registrar receives the following:
(1) if the holder of such beneficial interest in a
Restricted Global Note proposes to exchange such
beneficial interest for a Definitive Note that does not
bear the Private Placement Legend, a certificate from
such holder in the form of Exhibit C hereto, including
the certifications in item (1)(b) thereof; or
(2) if the holder of such beneficial interest in a
Restricted Global Note proposes to transfer such
beneficial interest to a Person who shall take delivery
thereof in the form of a Definitive Note that does not
bear the Private Placement Legend, a certificate from
such holder in the form of Exhibit B hereto, including
the certifications in item (4) thereof;
and, in each such case set forth in this subparagraph (D),
if the Registrar so requests or if the Applicable
Procedures so require, an Opinion of Counsel in form
reasonably acceptable to the Registrar to the effect that
such exchange or transfer is in compliance with the
Securities Act and that the restrictions on transfer
contained herein and in the Private Placement Legend are
no longer required in order to maintain compliance with
the Securities Act.
(iv) Beneficial Interests in Unrestricted Global Notes to
Unrestricted Definitive Notes. If any holder of a beneficial
interest in an Unrestricted Global Note proposes to exchange such
beneficial interest for a Definitive Note or to transfer such
beneficial interest to a Person who takes delivery thereof in the
form of a Definitive Note, then, upon satisfaction of the
conditions set forth in Section 2.06(b)(ii) hereof, the Trustee
shall cause the aggregate principal amount of the applicable
Global Note to be reduced accordingly pursuant to Section 2.06(h)
hereof, and the Issuers shall execute and the Trustee shall
authenticate and deliver to the Person designated in the
instructions a Definitive Note in the appropriate principal
amount. Any Definitive Note issued in exchange for a beneficial
interest pursuant to this Section 2.06(c)(iii) shall be registered
in such name or names and in such authorized denomination or
denominations as the holder of such beneficial interest shall
instruct the Registrar through instructions from the Depositary
and the Participant or Indirect Participant. The Trustee shall
deliver such Definitive Notes to the Persons in whose names such
Notes are so registered. Any Definitive Note issued in exchange
for a beneficial interest pursuant to this Section 2.06(c)(iii)
shall not bear the Private Placement Legend.
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(d) Transfer and Exchange of Definitive Notes for Beneficial
Interests.
(i) Restricted Definitive Notes to Beneficial Interests in
Restricted Global Notes. If any Holder of a Restricted Definitive
Note proposes to exchange such Note for a beneficial interest in a
Restricted Global Note or to transfer such Restricted Definitive
Notes to a Person who takes delivery thereof in the form of a
beneficial interest in a Restricted Global Note, then, upon
receipt by the Registrar of the following documentation:
(A) if the Holder of such Restricted Definitive Note
proposes to exchange such Note for a beneficial interest in a
Restricted Global Note, a certificate from such Holder in the
form of Exhibit C hereto, including the certifications in item
(2)(b) thereof;
(B) if such Restricted Definitive Note is being
transferred to a QIB in accordance with Rule 144A under the
Securities Act, a certificate to the effect set forth in
Exhibit B hereto, including the certifications in item (1)
thereof;
(C) if such Restricted Definitive Note is being
transferred to a Non-U.S. Person in an offshore transaction in
accordance with Rule 903 or Rule 904 under the Securities Act,
a certificate to the effect set forth in Exhibit B hereto,
including the certifications in item (2) thereof;
(D) if such Restricted Definitive Note is being
transferred pursuant to an exemption from the registration
requirements of the Securities Act in accordance with Rule 144
under the Securities Act, a certificate to the effect set
forth in Exhibit B hereto, including the certifications in
item (3)(a) thereof;
(E) if such Restricted Definitive Note is being
transferred to an Institutional Accredited Investor in
reliance on an exemption from the registration requirements of
the Securities Act other than those listed in subparagraphs
(B) through (D) above, a certificate to the effect set forth
in Exhibit B hereto, including the certifications,
certificates and Opinion of Counsel required by item (3)
thereof, if applicable;
(F) if such Restricted Definitive Note is being
transferred to the Issuers or any of their Subsidiaries, a
certificate to the effect set forth in Exhibit B hereto,
including the certifications in item (3)(b) thereof; or
(G) if such Restricted Definitive Note is being
transferred pursuant to an effective registration statement
under the Securities Act, a certificate to the effect set
forth in Exhibit B hereto, including the certifications in
item (3)(c) thereof,
the Trustee shall cancel the Restricted Definitive Note, increase or
cause to be increased the aggregate principal amount of, in the case of
clause (A) above, the appropriate Restricted Global Note, in the case
of clause (B) above, the 144A Global Note, in the case of clause (c)
above, and the Regulation S Global Note.
(ii) Restricted Definitive Notes to Beneficial Interests in
Unrestricted Global Notes. A Holder of a Restricted Definitive
Note may exchange such Note for a beneficial interest in an
Unrestricted Global Note or transfer such Restricted Definitive
Note to a Person who takes delivery thereof in the form of a
beneficial interest in an Unrestricted Global Note only if:
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(A) such exchange or transfer is effected pursuant to the
Exchange Offer in accordance with the Registration Rights
Agreement and the Holder, in the case of an exchange, or the
transferee, in the case of a transfer, certifies in the
applicable Letter of Transmittal that it is not (1) a
broker-dealer, (2) a Person participating in the distribution
of the Exchange Notes or (3) a Person who is an affiliate (as
defined in Rule 144) of the Issuers;
(B) such transfer is effected pursuant to the Shelf
Registration Statement in accordance with the Registration
Rights Agreement;
(C) such transfer is effected by a Participating
Broker-Dealer pursuant to the Exchange Offer Registration
Statement in accordance with the Registration Rights
Agreement; or
(D) the Registrar receives the following:
(1) if the Holder of such Definitive Notes
proposes to exchange such Notes for a beneficial
interest in the Unrestricted Global Note, a certificate
from such Holder in the form of Exhibit C hereto,
including the certifications in item (1)(c) thereof; or
(2) if the Holder of such Definitive Notes
proposes to transfer such Notes to a Person who shall
take delivery thereof in the form of a beneficial
interest in the Unrestricted Global Note, a certificate
from such Holder in the form of Exhibit B hereto,
including the certifications in item (4) thereof;
and, in each such case set forth in this subparagraph (D), if the
Registrar so requests or if the Applicable Procedures so require, an
Opinion of Counsel in form reasonably acceptable to the Registrar to
the effect that such exchange or transfer is in compliance with the
Securities Act and that the restrictions on transfer contained herein
and in the Private Placement Legend are no longer required in order to
maintain compliance with the Securities Act.
Upon satisfaction of the conditions of any of the subparagraphs in this
Section 2.06(d)(ii), the Trustee shall cancel the Definitive Notes and
increase or cause to be increased the aggregate principal amount of the
Unrestricted Global Note.
(iii) Unrestricted Definitive Notes to Beneficial Interests in
Unrestricted Global Notes. A Holder of an Unrestricted Definitive
Note may exchange such Note for a beneficial interest in an
Unrestricted Global Note or transfer such Definitive Notes to a
Person who takes delivery thereof in the form of a beneficial
interest in an Unrestricted Global Note at any time. Upon receipt
of a request for such an exchange or transfer, the Trustee shall
cancel the applicable Unrestricted Definitive Note and increase or
cause to be increased the aggregate principal amount of one of the
Unrestricted Global Notes.
If any such exchange or transfer from a Definitive Note to a beneficial
interest is effected pursuant to subparagraphs (ii)(B), (ii)(D) or (iii) above
at a time when an Unrestricted Global Note has not yet been issued, the Issuers
shall issue and, upon receipt of an Authentication Order in accordance with
Section 2.02 hereof, the Trustee shall authenticate one or more Unrestricted
Global Notes in an aggregate principal amount equal to the principal amount of
Definitive Notes so transferred.
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(e) Transfer and Exchange of Definitive Notes for Definitive Notes.
Upon request by a Holder of Definitive Notes and such Holder's
compliance with the provisions of this Section 2.06(e), the Registrar shall
register the transfer or exchange of Definitive Notes. Prior to such
registration of transfer or exchange, the requesting Holder shall present or
surrender to the Registrar the Definitive Notes duly endorsed or accompanied by
a written instruction of transfer in form satisfactory to the Registrar duly
executed by such Holder or by his attorney, duly authorized in writing. In
addition, the requesting Holder shall provide any additional certifications,
documents and information, as applicable, required pursuant to the following
provisions of this Section 2.06(e).
(i) Restricted Definitive Notes to Restricted Definitive
Notes. Any Restricted Definitive Note may be transferred to and
registered in the name of Persons who take delivery thereof in the
form of a Restricted Definitive Note if the Registrar receives the
following:
(A) if the transfer will be made pursuant to Rule 144A
under the Securities Act, then the transferor must deliver a
certificate in the form of Exhibit B hereto, including the
certifications in item (1) thereof;
(B) if the transfer will be made pursuant to Rule 903 or
Rule 904, then the transferor must deliver a certificate in
the form of Exhibit B hereto, including the certifications in
item (2) thereof; and
(C) if the transfer will be made pursuant to any other
exemption from the registration requirements of the Securities
Act, then the transferor must deliver a certificate in the
form of Exhibit B hereto, including the certifications,
certificates and Opinion of Counsel required by item (3)
thereof, if applicable.
(ii) Restricted Definitive Notes to Unrestricted Definitive
Notes. Any Restricted Definitive Note may be exchanged by the
Holder thereof for an Unrestricted Definitive Note or transferred
to a Person or Persons who take delivery thereof in the form of an
Unrestricted Definitive Note if:
(A) such exchange or transfer is effected pursuant to the
Exchange Offer in accordance with the Registration Rights
Agreement and the Holder, in the case of an exchange, or the
transferee, in the case of a transfer, certifies in the
applicable Letter of Transmittal that it is not (1) a
broker-dealer, (2) a Person participating in the distribution
of the Exchange Notes or (3) a Person who is an affiliate (as
defined in Rule 144) of the Issuers;
(B) any such transfer is effected pursuant to the Shelf
Registration Statement in accordance with the Registration
Rights Agreement;
(C) any such transfer is effected by a Participating
Broker-Dealer pursuant to the Exchange Offer Registration
Statement in accordance with the Registration Rights
Agreement; or
(D) the Registrar receives the following:
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(1) if the Holder of such Restricted Definitive
Notes proposes to exchange such Notes for an
Unrestricted Definitive Note, a certificate from such
Holder in the form of Exhibit C hereto, including the
certifications in item (1)(d) thereof; or
(2) if the Holder of such Restricted Definitive
Notes proposes to transfer such Notes to a Person who
shall take delivery thereof in the form of an
Unrestricted Definitive Note, a certificate from such
Holder in the form of Exhibit B hereto, including the
certifications in item (4) thereof;
and, in each such case set forth in this subparagraph (D), if the
Registrar so requests, an Opinion of Counsel in form reasonably
acceptable to the Issuers to the effect that such exchange or transfer
is in compliance with the Securities Act and that the restrictions on
transfer contained herein and in the Private Placement Legend are no
longer required in order to maintain compliance with the Securities
Act.
(iii) Unrestricted Definitive Notes to Unrestricted Definitive
Notes. A Holder of Unrestricted Definitive Notes may transfer such
Notes to a Person who takes delivery thereof in the form of an
Unrestricted Definitive Note. Upon receipt of a request to
register such a transfer, the Registrar shall register the
Unrestricted Definitive Notes pursuant to the instructions from
the Holder thereof.
(f) Exchange Offer. Upon the occurrence of the Exchange Offer in
accordance with the Registration Rights Agreement, the Issuers shall issue and,
upon receipt of an Authentication Order in accordance with Section 2.02, the
Trustee shall authenticate (i) one or more Unrestricted Global Notes in an
aggregate principal amount equal to the principal amount of the beneficial
interests in the Restricted Global Notes tendered for acceptance by Persons that
certify in the applicable Letters of Transmittal that (x) they are not
broker-dealers, (y) they are not participating in a distribution of the Exchange
Notes and (z) they are not affiliates (as defined in Rule 144) of the Issuers,
and accepted for exchange in the Exchange Offer and (ii) Definitive Notes in an
aggregate principal amount equal to the principal amount of the Restricted
Definitive Notes accepted for exchange in the Exchange Offer. Concurrently with
the issuance of such Notes, the Trustee shall cause the aggregate principal
amount of the applicable Restricted Global Notes to be reduced accordingly, and
the Issuers shall execute and the Trustee shall authenticate and deliver to the
Persons designated by the Holders of Definitive Notes so accepted Definitive
Notes in the appropriate principal amount.
(g) Legends. The following legends shall appear on the face of all
Global Notes and Definitive Notes issued under this Indenture unless
specifically stated otherwise in the applicable provisions of this Indenture.
(i) Private Placement Legend.
(A) Except as permitted by subparagraph (B) below, each
Global Note and each Definitive Note (and all Notes issued in
exchange therefor or substitution thereof) shall bear the
legend in substantially the following form:
"THIS NOTE (OR ITS PREDECESSOR) HAS NOT BEEN REGISTERED UNDER THE
U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
AND, ACCORDINGLY, MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE
TRANSFERRED WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR
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BENEFIT OF, U.S. PERSONS, EXCEPT AS SET FORTH IN THE NEXT
SENTENCE. BY ITS ACQUISITION HEREOF OR OF A BENEFICIAL INTEREST
HEREIN, THE HOLDER: (1) REPRESENTS THAT (A) IT IS A "QUALIFIED
INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES
ACT) (A "QIB"), (B) IT HAS ACQUIRED THIS NOTE IN AN OFFSHORE
TRANSACTION IN COMPLIANCE WITH REGULATION S UNDER THE SECURITIES
ACT OR (C) IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS
DEFINED IN RULE 501(A) (1), (2), (3) OR (7) OR REGULATION D UNDER
THE SECURITIES ACT (AN "IAI")), (2) AGREES THAT IT WILL NOT RESELL
OR OTHERWISE TRANSFER THIS NOTE EXCEPT (A) TO THE ISSUERS OR ANY
OF ITS SUBSIDIARIES, (B) TO A PERSON WHOM THE SELLER REASONABLY
BELIEVES IS A QIB PURCHASING FOR ITS OWN ACCOUNT OR FOR THE
ACCOUNT OF A QIB IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE
144A, (C) IN AN OFFSHORE TRANSACTION MEETING THE REQUIREMENTS OF
RULE 903 OR 904 OF THE SECURITIES ACT, (D) IN A TRANSACTION
MEETING THE REQUIREMENTS OF RULE 144 UNDER THE SECURITIES ACT, (E)
TO AN IAI THAT, PRIOR TO SUCH TRANSFER, FURNISHES THE TRUSTEE A
SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS
RELATING TO THE TRANSFER OF THIS NOTE (THE FORM OF WHICH CAN BE
OBTAINED FROM THE TRUSTEE) AND, IF SUCH TRANSFER IS IN RESPECT OF
AN AGGREGATE PRINCIPAL AMOUNT OF NOTES LESS THAN $250,000, AN
OPINION OF COUNSEL ACCEPTABLE TO THE ISSUERS THAT SUCH TRANSFER IS
IN COMPLIANCE WITH THE SECURITIES ACT, (F) IN ACCORDANCE WITH
ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT (AND BASED UPON AN OPINION OF COUNSEL ACCEPTABLE TO
THE ISSUERS) OR (G) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT AND, IN EACH CASE, IN ACCORDANCE WITH THE APPLICABLE
SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER
APPLICABLE JURISDICTION AND (3) AGREES THAT IT WILL DELIVER TO
EACH PERSON TO WHOM THIS NOTE OR AN INTEREST HEREIN IS TRANSFERRED
A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. AS USED
HEREIN, THE TERMS "OFFSHORE TRANSACTION" AND "UNITED STATES" HAVE
THE MEANINGS GIVEN TO THEM BY RULE 902 OF REGULATION S UNDER THE
SECURITIES ACT. THE INDENTURE CONTAINS A PROVISION REQUIRING THE
TRUSTEE TO REFUSE TO REGISTER ANY TRANSFER OF THIS NOTE IN
VIOLATION OF THE FOREGOING."
(B) Notwithstanding the foregoing, any Global Note or
Definitive Note issued pursuant to subparagraphs (b)(iv),
(c)(ii), (c)(iii), (d)(ii), (d)(iii), (e)(ii), (e)(iii) or (f)
to this Section 2.06 (and all Notes issued in exchange
therefor or substitution thereof) shall not bear the Private
Placement Legend.
(ii) Global Note Legend. Each Global Note shall bear a legend
in substantially the following form:
"THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE
INDENTURE GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE
BENEFIT OF THE BENEFICIAL OWNERS HEREOF, AND IS NOT TRANSFERABLE
TO ANY PERSON UNDER ANY CIRCUMSTANCES EXCEPT THAT (I) THE TRUSTEE
MAY MAKE SUCH NOTATIONS HEREON AS MAY BE REQUIRED PURSUANT TO
SECTION 2.07 OF THE INDENTURE, (II) THIS GLOBAL NOTE MAY BE
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<PAGE> 38
EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT TO SECTION 2.06(a) OF
THE INDENTURE, (III) THIS GLOBAL NOTE MAY BE DELIVERED TO THE
TRUSTEE FOR CANCELLATION PURSUANT TO SECTION 2.11 OF THE INDENTURE
AND (IV) THIS GLOBAL NOTE MAY BE TRANSFERRED TO A SUCCESSOR
DEPOSITARY WITH THE PRIOR WRITTEN CONSENT OF THERMADYNE MFG. LLC
AND THERMADYNE CAPITAL CORPORATION."
(iii) Regulation S Temporary Global Note Legend. The
Regulation S Temporary Global Note shall bear a legend in
substantially the following form:
"THE RIGHTS ATTACHING TO THIS REGULATION S TEMPORARY GLOBAL NOTE,
AND THE CONDITIONS AND PROCEDURES GOVERNING ITS EXCHANGE FOR
CERTIFICATED NOTES, ARE AS SPECIFIED IN THE INDENTURE (AS DEFINED
HEREIN). NEITHER THE HOLDER NOR THE BENEFICIAL OWNERS OF THIS
REGULATION S TEMPORARY GLOBAL NOTE SHALL BE ENTITLED TO RECEIVE
PAYMENT OF INTEREST HEREON."
(iv) [Intentionally omitted]
(v) [Intentionally omitted]
(h) Cancellation and/or Adjustment of Global Notes. At such time as
all beneficial interests in a particular Global Note have been exchanged for
Definitive Notes or a particular Global Note has been redeemed, repurchased or
cancelled in whole and not in part, each such Global Note shall be returned to
or retained and cancelled by the Trustee in accordance with Section 2.11 hereof.
At any time prior to such cancellation, if any beneficial interest in a Global
Note is exchanged for or transferred to a Person who will take delivery thereof
in the form of a beneficial interest in another Global Note or for Definitive
Notes, the principal amount of Notes represented by such Global Note shall be
reduced accordingly and an endorsement shall be made on such Global Note by the
Trustee or by the Depositary at the direction of the Trustee to reflect such
reduction; and if the beneficial interest is being exchanged for or transferred
to a Person who will take delivery thereof in the form of a beneficial interest
in another Global Note, such other Global Note shall be increased accordingly
and an endorsement shall be made on such Global Note by the Trustee or by the
Depositary at the direction of the Trustee to reflect such increase.
(i) General Provisions Relating to Transfers and Exchanges.
(i) To permit registrations of transfers and exchanges, the
Issuers shall execute and the Trustee shall authenticate Global
Notes and Definitive Notes upon the Issuer's order or at the
Registrar's request.
(ii) No service charge shall be made to a holder of a
beneficial interest in a Global Note or to a Holder of a
Definitive Note for any registration of transfer or exchange, but
the Issuers may require payment of a sum sufficient to cover any
transfer tax or similar governmental charge payable in connection
therewith (other than any such transfer taxes or similar
governmental charge payable upon exchange or transfer pursuant to
Sections 3.06, 3.09, 4.10 and 4.14 hereof).
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(iii) The Registrar shall not be required to register the
transfer of or exchange any Note selected for redemption in whole
or in part, except the unredeemed portion of any Note being
redeemed in part.
(iv) All Global Notes and Definitive Notes issued upon any
registration of transfer or exchange of Global Notes or Definitive
Notes shall be the valid obligations of the Issuers, evidencing
the same debt, and entitled to the same benefits under this
Indenture, as the Global Notes or Definitive Notes surrendered
upon such registration of transfer or exchange.
(v) The Issuers shall not be required (A) to issue, to
register the transfer of or to exchange any Notes during a period
beginning at the opening of business 15 days before the day of any
selection of Notes for redemption under Section 3.02 hereof and
ending at the close of business on the day of selection, (B) to
register the transfer of or to exchange any Note so selected for
redemption in whole or in part, except the unredeemed portion of
any Note being redeemed in part or (c) to register the transfer of
or to exchange a Note between a record date and the next
succeeding Interest Payment Date.
(vi) Prior to due presentment for the registration of a
transfer of any Note, the Trustee, any Agent and the Issuers may
deem and treat the Person in whose name any Note is registered as
the absolute owner of such Note for the purpose of receiving
payment of principal of and interest and Liquidated Damages, if
any, on such Notes and for all other purposes, and none of the
Trustee, any Agent or the Issuers shall be affected by notice to
the contrary.
(vii) The Trustee shall authenticate Global Notes and
Definitive Notes in accordance with the provisions of Section 2.02
hereof.
(viii) All certifications, certificates and Opinions of
Counsel required to be submitted to the Registrar pursuant to this
Section 2.06 to effect a registration of transfer or exchange may
be submitted by facsimile.
SECTION 2.07. REPLACEMENT NOTES
If any mutilated Note is surrendered to the Trustee or the Issuers and
the Trustee receives evidence to its satisfaction of the destruction, loss or
theft of any Note, the Issuers shall issue and the Trustee, upon receipt of an
Authentication Order, shall authenticate a replacement Note if the Trustee's
requirements are met. If required by the Trustee or the Issuers, an indemnity
bond must be supplied by the Holder that is sufficient in the judgment of the
Trustee and the Issuers to protect the Issuers, the Trustee, any Agent and any
authenticating agent from any loss that any of them may suffer if a Note is
replaced. The Issuers may charge for their expenses in replacing a Note.
Every replacement Note is an additional obligation of the Issuers and
shall be entitled to all of the benefits of this Indenture equally and
proportionately with all other Notes duly issued hereunder.
SECTION 2.08. OUTSTANDING NOTES.
The Notes outstanding at any time are all the Notes authenticated by
the Trustee except for those cancelled by it, those delivered to it for
cancellation, those reductions in the interest in a Global Note effected by the
Trustee in accordance with the provisions hereof, and those described in this
Section as not outstanding. Except as set forth in Section 2.09 hereof, a Note
does not cease to be outstanding
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because the Issuers or an Affiliate of the Issuers holds the Note; however,
Notes held by the Issuers or a Subsidiary of the Issuers shall not be deemed to
be outstanding for purposes of Section 3.07 hereof.
If a Note is replaced pursuant to Section 2.07 hereof, it ceases to be
outstanding unless the Trustee receives proof satisfactory to it that the
replaced Note is held by a bona fide purchaser.
If the principal amount of any Note is considered paid under Section
4.01 hereof, it ceases to be outstanding and interest on it ceases to accrue.
If the Paying Agent (other than the Issuers, a Subsidiary or an
Affiliate of any thereof) holds, on a redemption date or maturity date, money
sufficient to pay Notes payable on that date, then on and after that date such
Notes shall be deemed to be no longer outstanding and shall cease to accrue
interest.
SECTION 2.09. TREASURY NOTES.
In determining whether the Holders of the required principal amount of
Notes have concurred in any direction, waiver or consent, Notes owned by the
Issuer, or by any Person directly or indirectly controlling or controlled by or
under direct or indirect common control with the Issuer, shall be considered as
though not outstanding, except that for the purposes of determining whether the
Trustee shall be protected in relying on any such direction, waiver or consent,
only Notes that the Trustee knows are so owned shall be so disregarded.
SECTION 2.10. TEMPORARY NOTES
Until certificates representing Notes are ready for delivery, the Issuers may
prepare and the Trustee, upon receipt of an Authentication Order, shall
authenticate temporary Notes. Temporary Notes shall be substantially in the form
of certificated Notes but may have variations that the Issuers consider
appropriate for temporary Notes and as shall be reasonably acceptable to the
Trustee. Without unreasonable delay, the Issuers shall prepare and the Trustee
shall authenticate definitive Notes in exchange for temporary Notes.
Holders of temporary Notes shall be entitled to all of the benefits of
this Indenture.
SECTION 2.11. CANCELLATION.
The Issuers at any time may deliver Notes to the Trustee for
cancellation. The Registrar and Paying Agent shall forward to the Trustee any
Notes surrendered to them for registration of transfer, exchange or payment. The
Trustee and no one else shall cancel all Notes surrendered for registration of
transfer, exchange, payment, replacement or cancellation and shall destroy
cancelled Notes (subject to the record retention requirement of the Exchange
Act). Certification of the destruction of all cancelled Notes shall be delivered
to the Issuers. The Issuers may not issue new Notes to replace Notes that it has
paid or that have been delivered to the Trustee for cancellation.
SECTION 2.12. DEFAULTED INTEREST.
If the Issuers default in a payment of interest on the Notes, it shall
pay the defaulted interest in any lawful manner plus, to the extent lawful,
interest payable on the defaulted interest, to the Persons who are Holders on a
subsequent special record date, in each case at the rate provided in the Notes
and in Section 4.01 hereof. The Issuers shall notify the Trustee in writing of
the amount of defaulted interest proposed to be paid on each Note and the date
of the proposed payment. The Issuers shall fix or cause to be fixed each such
special record date and payment date, provided that no such special record date
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<PAGE> 41
shall be less than 10 days prior to the related payment date for such defaulted
interest. At least 15 days before the special record date, the Issuers (or, upon
the written request of the Issuers, the Trustee in the name and at the expense
of the Issuers) shall mail or cause to be mailed to Holders a notice that states
the special record date, the related payment date and the amount of such
interest to be paid.
ARTICLE 3.
REDEMPTION AND PREPAYMENT
SECTION 3.01. NOTICES TO TRUSTEE.
If the Issuers elects to redeem Notes pursuant to the optional
redemption provisions of Section 3.07 hereof, it shall furnish to the Trustee,
at least 30 days but not more than 60 days before a redemption date, an
Officers' Certificate setting forth (i) the clause of this Indenture pursuant to
which the redemption shall occur, (ii) the redemption date, (iii) the principal
amount of Notes to be redeemed and (iv) the redemption price.
SECTION 3.02. SELECTION OF NOTES TO BE REDEEMED
If less than all of the Notes are to be redeemed at any time, selection
of Notes for redemption will be made by the Trustee in compliance with the
requirements of the principal national securities exchange, if any, on which the
Notes are listed, or, if the Notes are not so listed, on a pro rata basis, by
lot or by such method as the Trustee shall deem fair and appropriate; provided
that no Notes of $1,000 or less shall be redeemed in part.
The Trustee shall promptly notify the Issuers in writing of the Notes
selected for redemption and, in the case of any Note selected for partial
redemption, the principal amount thereof to be redeemed. Notes and portions of
Notes selected shall be in amounts of $1,000 or whole multiples of $1,000;
except that if all of the Notes of a Holder are to be redeemed, the entire
outstanding amount of Notes held by such Holder, even if not a multiple of
$1,000, shall be redeemed. Except as provided in the preceding sentence,
provisions of this Indenture that apply to Notes called for redemption also
apply to portions of Notes called for redemption.
SECTION 3.03. NOTICE OF REDEMPTION
Subject to the provisions of Section 3.09 hereof, notices of redemption
shall be mailed by first class mail at least 30 but not more than 60 days before
the redemption date to each Holder of Notes to be redeemed at its registered
address. If any Note is to be redeemed in part only, the notice of redemption
that relates to such Note shall state the portion of the principal amount
thereof to be redeemed. A new Note in principal amount equal to the unredeemed
portion thereof will be issued in the name of the Holder thereof upon
cancellation of the original Note. Notes called for redemption become due on the
date fixed for redemption. On and after the redemption date, interest ceases to
accrue on Notes or portions of them called for redemption.
The notice shall identify the Notes to be redeemed and shall state:
(a) the redemption date;
(b) the redemption price;
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<PAGE> 42
(c) if any Note is being redeemed in part, the portion of the
principal amount of such Note to be redeemed and that, after the redemption date
upon surrender of such Note, a new Note or Notes in principal amount equal to
the unredeemed portion shall be issued upon cancellation of the original Note;
(d) the name and address of the Paying Agent;
(e) that Notes called for redemption must be surrendered to the Paying
Agent to collect the redemption price;
(f) that, unless the Issuers defaults in making such redemption
payment, interest on Notes called for redemption ceases to accrue on and after
the redemption date;
(g) the paragraph of the Notes and/or Section of this Indenture
pursuant to which the Notes called for redemption are being redeemed; and
(h) that no representation is made as to the correctness or accuracy
of the CUSIP number, if any, listed in such notice or printed on the Notes.
At the Issuers' request, the Trustee shall give the notice of
redemption in the Issuers' name and at their expense; provided, however, that
the Issuers shall have delivered to the Trustee, at least 45 days prior to the
redemption date, an Officers' Certificate requesting that the Trustee give such
notice and setting forth the information to be stated in such notice as provided
in the preceding paragraph.
SECTION 3.04. EFFECT OF NOTICE OF REDEMPTION
Once notice of redemption is mailed in accordance with Section 3.03
hereof, Notes called for redemption become irrevocably due and payable on the
redemption date at the redemption price. A notice of redemption may not be
conditional.
SECTION 3.05. DEPOSIT OF REDEMPTION PRICE
One Business Day prior to the redemption date, the Issuers shall
deposit with the Trustee or with the Paying Agent money sufficient to pay the
redemption price of and accrued interest on all Notes to be redeemed on that
date. The Trustee or the Paying Agent shall promptly return to the Issuers any
money deposited with the Trustee or the Paying Agent by the Issuers in excess of
the amounts necessary to pay the redemption price of, and accrued interest on,
all Notes to be redeemed.
If the Issuers comply with the provisions of the preceding paragraph,
on and after the redemption date, interest shall cease to accrue on the Notes or
the portions of Notes called for redemption. If a Note is redeemed on or after
an interest record date but on or prior to the related interest payment date,
then any accrued and unpaid interest shall be paid to the Person in whose name
such Note was registered at the close of business on such record date. If any
Note called for redemption shall not be so paid upon surrender for redemption
because of the failure of the Issuers to comply with the preceding paragraph,
interest shall be paid on the unpaid principal, from the redemption date until
such principal is paid, and to the extent lawful on any interest and Liquidated
Damages, if any, not paid on such unpaid principal, in each case at the rate
provided in the Notes and in Section 4.01 hereof.
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SECTION 3.06. NOTES REDEEMED IN PART.
Upon surrender of a Note that is redeemed in part, the Issuers shall
issue and, upon the Issuers' written request, the Trustee shall authenticate for
the Holder at the expense of the Issuers a new Note equal in principal amount to
the unredeemed portion of the Note surrendered.
SECTION 3.07. OPTIONAL REDEMPTION.
(a) Except as provided below, the Notes will not be redeemable at the
Issuers' option prior to June 1, 2003. Thereafter, the Notes will be subject to
redemption at any time at the option of the Issuers, in whole or in part, upon
not less than 30 nor more than 60 days' notice, in cash at the redemption prices
(expressed as percentages of principal amount) set forth below, plus accrued and
unpaid interest and Liquidated Damages, if any, thereon to the applicable
redemption date, if redeemed during the twelve-month period beginning on June 1
of the years indicated below:
<TABLE>
<CAPTION>
YEAR PERCENTAGE
- ---- ----------
<S> <C>
2003......................................................104.938%
2004......................................................103.292%
2005......................................................101.646%
2006 and thereafter.......................................100.000%
</TABLE>
Notwithstanding the foregoing, on or prior to June 1, 2001, the Issuers
may redeem up to 35% of the aggregate principal amount of Notes ever issued
under this Indenture in cash at a redemption price of 109.875% of the principal
amount thereof, plus accrued and unpaid interest and Liquidated Damages, if any,
thereon to the redemption date, with the net cash proceeds of one or more Public
Equity Offerings; provided that at least 65% of the aggregate principal amount
of Notes ever issued under this Indenture remains outstanding immediately after
the occurrence of any such redemption; and provided further that such redemption
shall occur within 90 days of the date of the closing of any such Public Equity
Offering.
In addition, at any time prior to June 1, 2003, the Issuers may, at
their option upon the occurrence of a Change of Control, redeem the Notes, in
whole but not in part, upon not less than 30 nor more than 60 days' prior notice
(but in no event may any such redemption occur more than 60 days after the
occurrence of such Change of Control), in cash at a redemption price equal to
(i) the present value of the sum of all the remaining interest (excluding
accrued and unpaid interest, if any), premium and principal payments that would
become due on the Notes as if the Notes were to remain outstanding and be
redeemed on June 1, 2003, computed using a discount rate equal to the Treasury
Rate plus 50 basis points, plus (ii) accrued and unpaid interest and Liquidated
Damages, if any, to the date of redemption.
(b) Any redemption pursuant to this Section 3.07 shall be made
pursuant to the provisions of Section 3.01 through 3.06 hereof.
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SECTION 3.08. MANDATORY REDEMPTION.
The Issuers are not required to make mandatory redemption of, or
sinking fund payments with respect to, the Notes.
SECTION 3.09. OFFER TO PURCHASE BY APPLICATION OF EXCESS PROCEEDS.
In the event that, pursuant to Section 4.10 hereof, the Issuers shall
be required to commence an offer to all Holders to purchase Notes (an "Asset
Sale Offer"), it shall follow the procedures specified below.
The Asset Sale Offer shall remain open for a period of 20 Business Days
following its commencement and no longer, except to the extent that a longer
period is required by applicable law (the "Offer Period"). No later than five
Business Days after the termination of the Offer Period (the "Purchase Date"),
the Issuers shall purchase the principal amount of Notes required to be
purchased pursuant to Section 4.10 hereof (the "Offer Amount") or, if less than
the Offer Amount has been tendered, all Notes tendered in response to the Asset
Sale Offer. Payment for any Notes so purchased shall be made in the same manner
as interest payments are made.
If the Purchase Date is on or after an interest record date and on or
before the related interest payment date, any accrued and unpaid interest shall
be paid to the Person in whose name a Note is registered at the close of
business on such record date, and no additional interest shall be payable to
Holders who tender Notes pursuant to the Asset Sale Offer.
Upon the commencement of an Asset Sale Offer, the Issuers shall send,
by first class mail, a notice to the Trustee and each of the Holders, with a
copy to the Trustee. The notice shall contain all instructions and materials
necessary to enable such Holders to tender Notes pursuant to the Asset Sale
Offer. The Asset Sale Offer shall be made to all Holders. The notice, which
shall govern the terms of the Asset Sale Offer, shall state:
(a) that the Asset Sale Offer is being made pursuant to this Section
3.09 and Section 4.10 hereof and the length of time the Asset Sale Offer shall
remain open;
(b) the Offer Amount, the purchase price and the Purchase Date;
(c) that any Note not tendered or accepted for payment shall continue
to accrete or accrue interest;
(d) that, unless the Issuers default in making such payment, any Note
accepted for payment pursuant to the Asset Sale Offer shall cease to accrete or
accrue interest after the Purchase Date;
(e) that Holders electing to have a Note purchased pursuant to an
Asset Sale Offer may only elect to have all of such Note purchased and may not
elect to have only a portion of such Note purchased;
(f) that Holders electing to have a Note purchased pursuant to any
Asset Sale Offer shall be required to surrender the Note, with the form entitled
"Option of Holder to Elect Purchase" on the reverse of the Note completed, or
transfer by book-entry transfer, to the Issuers, a depositary, if appointed by
the Issuers, or a Paying Agent at the address specified in the notice at least
three days before the Purchase Date;
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<PAGE> 45
(g) that Holders shall be entitled to withdraw their election if the
Issuers, the depositary or the Paying Agent, as the case may be, receives, not
later than the expiration of the Offer Period, a telegram, telex, facsimile
transmission or letter setting forth the name of the Holder, the principal
amount of the Note the Holder delivered for purchase and a statement that such
Holder is withdrawing his election to have such Note purchased;
(h) that, if the aggregate principal amount of Notes surrendered by
Holders exceeds the Offer Amount, the Issuers shall select the Notes to be
purchased on a pro rata basis (with such adjustments as may be deemed
appropriate by the Issuers so that only Notes in denominations of $1,000, or
integral multiples thereof, shall be purchased); and
(i) that Holders whose Notes were purchased only in part shall be
issued new Notes equal in principal amount to the unpurchased portion of the
Notes surrendered (or transferred by book-entry transfer).
On or before the Purchase Date, the Issuers shall, to the extent
lawful, accept for payment, on a pro rata basis to the extent necessary, the
Offer Amount of Notes or portions thereof tendered pursuant to the Asset Sale
Offer, or if less than the Offer Amount has been tendered, all Notes tendered,
and shall deliver to the Trustee an Officers' Certificate stating that such
Notes or portions thereof were accepted for payment by the Issuers in accordance
with the terms of this Section 3.09. The Issuers, the Depositary or the Paying
Agent, as the case may be, shall promptly (but in any case not later than five
days after the Purchase Date) mail or deliver to each tendering Holder an amount
equal to the purchase price of the Notes tendered by such Holder and accepted by
the Issuers for purchase, and the Issuers shall promptly issue a new Note, and
the Trustee, upon written request from the Issuers shall authenticate and mail
or deliver such new Note to such Holder, in a principal amount equal to any
unpurchased portion of the Note surrendered. Any Note not so accepted shall be
promptly mailed or delivered by the Issuers to the Holder thereof. The Issuers
shall publicly announce the results of the Asset Sale Offer on the Purchase
Date.
Other than as specifically provided in this Section 3.09, any purchase
pursuant to this Section 3.09 shall be made pursuant to the provisions of
Sections 3.01 through 3.06 hereof.
ARTICLE 4.
COVENANTS
SECTION 4.01. PAYMENT OF NOTES.
The Issuers shall pay or cause to be paid the principal of, premium, if
any, and interest on the Notes on the dates and in the manner provided in the
Notes. Principal, premium, if any, and interest shall be considered paid on the
date due if the Paying Agent, if other than the Issuers or a Subsidiary thereof,
holds as of 10:00 a.m. Eastern Time on the due date money deposited by the
Issuers in immediately available funds and designated for and sufficient to pay
all principal, premium, if any, and interest then due. The Issuers shall pay all
Liquidated Damages, if any, in the same manner on the dates and in the amounts
set forth in the Registration Rights Agreement.
The Issuers shall pay interest (including post-petition interest in any
proceeding under any Bankruptcy Law) on overdue principal at the rate equal to
1% per annum in excess of the then applicable interest rate on the Notes to the
extent lawful; they shall pay interest (including post-petition interest in any
proceeding under any Bankruptcy Law) on overdue installments of interest and
Liquidated Damages (without regard to any applicable grace period) at the same
rate to the extent lawful.
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SECTION 4.02. MAINTENANCE OF OFFICE OR AGENCY.
The Issuers shall maintain in the Borough of Manhattan, the City of New
York, an office or agency (which may be an office of the Trustee or an affiliate
of the Trustee, Registrar or co-registrar) where Notes may be surrendered for
registration of transfer or for exchange and where notices and demands to or
upon the Issuers in respect of the Notes and this Indenture may be served. The
Issuers shall give prompt written notice to the Trustee of the location, and any
change in the location, of such office or agency. If at any time the Issuers
shall fail to maintain any such required office or agency or shall fail to
furnish the Trustee with the address thereof, such presentations, surrenders,
notices and demands may be made or served at the Corporate Trust Office of the
Trustee.
The Issuers may also from time to time designate one or more other
offices or agencies where the Notes may be presented or surrendered for any or
all such purposes and may from time to time rescind such designations; provided,
however, that no such designation or rescission shall in any manner relieve the
Issuers of their obligation to maintain an office or agency in the Borough of
Manhattan, the City of New York for such purposes. The Issuers shall give prompt
written notice to the Trustee of any such designation or rescission and of any
change in the location of any such other office or agency.
The Issuers hereby designate the Corporate Trust Office of the Trustee
as one such office or agency of the Issuers in accordance with Section 2.03.
SECTION 4.03. REPORTS.
Whether or not required by the rules and regulations of the
Commission, so long as any Notes are outstanding, the Company will furnish to
the Holders of Notes (a) all quarterly and annual financial information that
would be required to be contained in a filing with the Commission on Forms 10-Q
and 10-K if the Company were required to file such Forms, including a
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and, with respect to the annual information only, a report thereon
by the Company's certified independent accountants and (b) all current reports
that would be required to be filed with the Commission on Form 8-K if the
Company were required to file such reports, in each case, within the time
periods specified in the Commission's rules and regulations. In addition,
following the consummation of the exchange offer contemplated by the
Registration Rights Agreement, whether or not required by the rules and
regulations of the Commission, the Company will file a copy of all such
information and reports with the Commission for public availability within the
time periods specified in the Commission's rules and regulations (unless the
Commission will not accept such a filing) and make such information available to
securities analysts and prospective investors upon request. In addition, the
Issuers and the Guarantors have agreed that, for so long as any Notes remain
outstanding, it will furnish to the Holders and to securities analysts and
prospective investors, upon their request, the information required to be
delivered pursuant to Rule 144A(d)(4) under the Securities Act.
SECTION 4.04. COMPLIANCE CERTIFICATE.
(a) The Issuers and each Guarantor (to the extent that such Guarantor
is so required under the TIA) shall deliver to the Trustee, within 90 days after
the end of each fiscal year, an Officers' Certificate stating that a review of
the activities of the Company and its Subsidiaries during the preceding fiscal
year have been made under the supervision of the signing Officers with a view to
determining whether the Issuers have kept, observed, performed and fulfilled
their obligations under this Indenture, and further stating, as to each such
Officer signing such certificate, that to the best of his or her knowledge the
Issuers have kept, observed, performed and fulfilled each and every covenant
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contained in this Indenture and are not in default in the performance or
observance of any of the terms, provisions and conditions of this Indenture (or,
if a Default or Event of Default shall have occurred, describing all such
Defaults or Events of Default of which he or she may have knowledge and what
action the Issuers are taking or propose to take with respect thereto) and that
to the best of his or her knowledge no event has occurred and remains in
existence by reason of which payments on account of the principal of or interest
or Liquidated Damages, if any, on the Notes is prohibited or if such event has
occurred, a description of the event and what action the Issuers are taking or
propose to take with respect thereto.
(b) So long as not contrary to the then current recommendations of the
American Institute of Certified Public Accountants, the year-end financial
statements delivered pursuant to Section 4.03(a) above shall be accompanied by a
written statement of the Company's independent public accountants (who shall be
a firm of established national reputation) that in making the examination
necessary for certification of such financial statements, nothing has come to
their attention that would lead them to believe that the Issuers have violated
any provisions of Article 4 or Article 5 hereof or, if any such violation has
occurred, specifying the nature and period of existence thereof, it being
understood that such accountants shall not be liable directly or indirectly to
any Person for any failure to obtain knowledge of any such violation.
(c) The Issuers shall, so long as any of the Notes are outstanding,
deliver to the Trustee, forthwith upon any Officer becoming aware of any Default
or Event of Default, an Officers' Certificate specifying such Default or Event
of Default and what action the Issuers are taking or propose to take with
respect thereto.
SECTION 4.05. TAXES.
The Company shall pay, and shall cause each of its Subsidiaries to pay,
prior to delinquency, all material taxes, assessments, and governmental levies
except such as are contested in good faith and by appropriate proceedings or
where the failure to effect such payment is not adverse in any material respect
to the Holders of the Notes.
SECTION 4.06. STAY, EXTENSION AND USURY LAWS.
The Issuers and each of the Guarantors covenant (to the extent that
they may lawfully do so) that they shall not at any time insist upon, plead, or
in any manner whatsoever claim or take the benefit or advantage of, any stay,
extension or usury law wherever enacted, now or at any time hereafter in force,
that may affect the covenants or the performance of this Indenture; and the
Issuers and each of the Guarantors (to the extent that they may lawfully do so)
hereby expressly waive all benefit or advantage of any such law, and covenant
that they shall not, by resort to any such law, hinder, delay or impede the
execution of any power herein granted to the Trustee, but shall suffer and
permit the execution of every such power as though no such law has been enacted.
SECTION 4.07. RESTRICTED PAYMENTS.
The Company will not, and will not permit any of its Restricted
Subsidiaries to, directly or indirectly, (a) declare or pay any dividend or make
any other payment or distribution on account of the Company's or any of its
Restricted Subsidiaries' Equity Interests (other than dividends or distributions
payable in Equity Interests (other than Disqualified Stock) of the Company or
dividends or distributions payable to the Company or any Wholly Owned Restricted
Subsidiary of the Company); (b) purchase,
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redeem or otherwise acquire or retire for value any Equity Interests of the
Company, any of its Restricted Subsidiaries or any other Affiliate of the
Company (other than any such Equity Interests owned by the Company or any
Restricted Subsidiary of the Company); (c) make any principal payment on or with
respect to, or purchase, redeem, defease or otherwise acquire or retire for
value, any Indebtedness of the Company that is subordinated in right of payment
to the Notes, except in accordance with the mandatory redemption or repayment
provisions set forth in the original documentation governing such Indebtedness
(but not pursuant to any mandatory offer to repurchase upon the occurrence of
any event); or (d) make any Restricted Investment (all such payments and other
actions set forth in clauses (a) through (d) above being collectively referred
to as "Restricted Payments"), unless, at the time of and after giving effect to
such Restricted Payment:
(i) no Default or Event of Default shall have occurred and be
continuing or would occur as a consequence thereof; and
(ii) the Company would, immediately after giving pro forma
effect thereto as if such Restricted Payment had been made at the
beginning of the applicable four-quarter period, have been
permitted to incur at least $1.00 of additional Indebtedness
pursuant to the Fixed Charge Coverage Ratio test set forth in the
first paragraph of Section 4.09 herein; and
(iii) such Restricted Payment, together with the aggregate
amount of all other Restricted Payments made by the Company and
its Restricted Subsidiaries after the date of this Indenture
(excluding Restricted Payments permitted by clauses (a) (to the
extent that the declaration of any dividend referred to therein
reduces amounts available for Restricted Payments pursuant to this
clause (iii)), (b), (c), (e) through (j), (l), (m), (p), (q) and
(r) of the next succeeding paragraph), is less than the sum,
without duplication, of (A) 50% of the Consolidated Net Income of
the Company for the period (taken as one accounting period)
commencing July 1, 1998 to the end of the Company's most recently
ended fiscal quarter for which internal financial statements are
available at the time of such Restricted Payment (or, if such
Consolidated Net Income for such period is a deficit, less 100% of
such deficit), plus (B) 100% of the Qualified Proceeds received by
the Company on or after the date of this Indenture from
contributions to the Company's capital or from the issue or sale
on or after the date of this Indenture of Equity Interests of the
Company or of Disqualified Stock or convertible debt securities of
the Company to the extent that they have been converted into such
Equity Interests (other than Equity Interests, Disqualified Stock
or convertible debt securities sold to a Subsidiary of the Company
and other than Disqualified Stock or convertible debt securities
that have been converted into Disqualified Stock), plus (C) the
amount equal to the net reduction in Investments in Persons after
the date of this Indenture who are not Restricted Subsidiaries
(other than Permitted Investments) resulting from (x) Qualified
Proceeds received as a dividend, repayment of a loan or advance or
other transfer of assets (valued at the fair market value thereof)
to the Company or any Restricted Subsidiary from such Persons, (y)
Qualified Proceeds received upon the sale or liquidation of such
Investment and (z) the redesignation of Unrestricted Subsidiaries
(other than any Unrestricted Subsidiary designated as such
pursuant to clause (k) or (o) of the following paragraph) whose
assets are used or useful in, or which is engaged in, one or more
Permitted Business as Restricted Subsidiaries (valued
(proportionate to the Company's equity interest in such
Subsidiary) at the fair market value of the net assets of such
Subsidiary at the time of such redesignation).
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The foregoing provisions will not prohibit:
(a) the payment of any dividend within 60 days after the date of
declaration thereof, if at said date of declaration such payment would have
complied with the provisions of this Indenture;
(b) (i) the redemption, repurchase, retirement, defeasance or other
acquisition of any subordinated Indebtedness or Equity Interests of the Company
(the "Retired Capital Stock") in exchange for, or out of the net cash proceeds
of the substantially concurrent sale (other than to a Subsidiary of the Company)
of, other Equity Interests of the Company (other than any Disqualified Stock)
(the "Refunding Capital Stock"), provided that the amount of any such net cash
proceeds that are utilized for any such redemption, repurchase, retirement,
defeasance or other acquisition shall be excluded from clause (iii)(B) of the
preceding paragraph and (ii) if immediately prior to the retirement of Retired
Capital Stock, the declaration and payment of dividends thereon was permitted
under clause (f) of this paragraph, the declaration and payment of dividends on
the Refunding Capital Stock in an aggregate amount per year no greater than the
aggregate amount of dividends per annum that was declarable and payable on such
Retired Capital Stock immediately prior to such retirement; provided that, at
the time of the declaration of any such dividends, no Default or Event of
Default shall have occurred and be continuing or would occur as a consequence
thereof;
(c) the defeasance, redemption, repurchase, retirement or other
acquisition of subordinated Indebtedness of the Company with the net cash
proceeds from an incurrence of, or in exchange for, Permitted Refinancing
Indebtedness;
(d) the repurchase, redemption or other acquisition or retirement for
value of any Equity Interests of the Company or Holdings held by any member of
Holdings' or the Company's (or any of its Restricted Subsidiaries') management
pursuant to any management equity subscription agreement or stock option
agreement and any dividend to Holdings to fund any such repurchase, redemption,
acquisition or retirement, provided that the aggregate price paid for all such
repurchased, redeemed, acquired or retired Equity Interests shall not exceed (x)
$7.5 million in any calendar year (with unused amounts in any calendar year
being carried over to succeeding calendar years subject to a maximum (without
giving effect to the following clause (y)) of $15.0 million in any calendar
year), plus (y) the aggregate cash proceeds received by the Company during such
calendar year from any reissuance of Equity Interests by the Company or Holdings
to members of management of the Company and its Restricted Subsidiaries and (ii)
no Default or Event of Default shall have occurred and be continuing immediately
after such transaction;
(e) payments and transactions in connection with the Recapitalization,
the New Credit Facility (including commitment, syndication and arrangement fees
payable thereunder) and the application of the proceeds thereof, and the payment
of fees and expenses with respect thereto;
(f) the declaration and payment of dividends to holders of any class
or series of preferred stock (other than Disqualified Stock), provided that, at
the time of such issuance, after giving effect to such issuance on a pro forma
basis, the Fixed Charge Coverage Ratio for the Company for the most recently
ended four full fiscal quarters for which internal financial statements are
available immediately preceding the date of such issuance would have been no
less than 2.0 to 1;
(g) the payment of dividends or the making of loans or advances by the
Company to Holdings not to exceed $5.0 million in any fiscal year for costs and
expenses incurred by Holdings in its capacity as a holding company or for
services rendered by Holdings on behalf of the Company;
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(h) payments or distributions to Holdings pursuant to any Tax Sharing
Agreement;
(i) the payment of dividends by a Restricted Subsidiary on any class
of common stock of such Restricted Subsidiary if (i) such dividend is paid pro
rata to all holders of such class of common stock and (ii) at least 51% of such
class of common stock is held by the Company or one or more of its Restricted
Subsidiaries;
(j) the repurchase of any class of common stock of a Restricted
Subsidiary if (i) such repurchase is made pro rata with respect to such class of
common stock and (ii) at least 51% of such class of common stock is held by the
Company or one or more of its Restricted Subsidiaries;
(k) any other Restricted Investment made in a Permitted Business
which, together with all other Restricted Investments made pursuant to this
clause (k) since the date of this Indenture, does not exceed $25.0 million (in
each case, after giving effect to all subsequent reductions in the amount of any
Restricted Investment made pursuant to this clause (k), either as a result of
(i) the repayment or disposition thereof for cash or (ii) the redesignation of
an Unrestricted Subsidiary as a Restricted Subsidiary (valued proportionate to
the Company's equity interest in such Subsidiary at the time of such
redesignation) at the fair market value of the net assets of such Subsidiary at
the time of such redesignation), in the case of clause (i) and (ii), not to
exceed the amount of such Restricted Investment previously made pursuant to this
clause (k); provided that no Default or Event of Default shall have occurred and
be continuing immediately after making such Restricted Investment;
(l) the declaration and payment of dividends to holders of any class
or series of Disqualified Stock of the Company or any Restricted Subsidiary
issued on or after the date of this Indenture in accordance with Section 4.09
herein; provided that no Default or Event of Default shall have occurred and be
continuing immediately after making such Restricted Payment;
(m) repurchases of Equity Interests deemed to occur upon exercise of
stock options if such Equity Interests represent a portion of the exercise price
of such options;
(n) the payment of dividends or distributions on the Company's
membership interests, following the first public offering of the Company's
membership interests or Holdings' common stock after the date of this Indenture,
of up to 6.0% per annum of (i) the net proceeds received by the Company from
such public offering of its membership interests or (ii) the net proceeds
received by the Company from such public offering of Holdings' common stock as
common equity or preferred equity (other than Disqualified Stock), other than,
in each case, with respect to public offerings with respect to the Company's
membership interests or Holdings' common stock registered on Form S-8; provided
that no Default or Event of Default shall have occurred and be continuing
immediately after any such payment of dividends or distributions;
(o) any other Restricted Payment which, together with all other
Restricted Payments made pursuant to this clause (o) since the date of this
Indenture, does not exceed $25.0 million (in each case, after giving effect to
all subsequent reductions in the amount of any Restricted Investment made
pursuant to this clause (o) either as a result of (i) the repayment or
disposition thereof for cash or (ii) the redesignation of an Unrestricted
Subsidiary as a Restricted Subsidiary (valued proportionate to the Company's
equity interest in such Subsidiary at the time of such redesignation) at the
fair market value of the net assets of such Subsidiary at the time of such
redesignation), in the case of clause (i) and (ii), not to exceed the amount of
such Restricted Investment previously made pursuant to this clause (o); provided
that no Default or Event of Default shall have occurred and be continuing
immediately after making such Restricted Payment;
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(p) the pledge by the Company of the Capital Stock of an Unrestricted
Subsidiary of the Company to secure Non-Recourse Debt of such Unrestricted
Subsidiary;
(q) the purchase, redemption or other acquisition or retirement for
value of any Equity Interests of any Restricted Subsidiary issued after the date
of this Indenture, provided that the aggregate price paid for any such
repurchased, redeemed, acquired or retired Equity Interests shall not exceed the
sum of (i) the amount of cash and Cash Equivalents received by such Restricted
Subsidiary from the issue or sale thereof and (ii) any accrued dividends thereon
the payment of which would be permitted pursuant to clause (l) above;
(r) distributions or payments of Receivables Fees; and
(s) dividends or distributions to Holdings solely in connection with
the purchase, redemption or other acquisition or retirement for value of rights
issued pursuant to Holdings' Rights Plan as in effect on the date of this
Indenture.
The board of directors of the Company may designate any Restricted
Subsidiary to be an Unrestricted Subsidiary if such designation would not cause
a Default. For purposes of making such designation, all outstanding Investments
by the Company and its Restricted Subsidiaries (except to the extent repaid in
cash) in the Subsidiary so designated will be deemed to be Restricted Payments
at the time of such designation and will reduce the amount available for
Restricted Payments under the first paragraph of this covenant. All such
outstanding Investments will be deemed to constitute Restricted Investments in
an amount equal to the greater of (i) the net book value of such Investments at
the time of such designation and (ii) the fair market value of such Investments
at the time of such designation. Such designation will only be permitted if such
Restricted Investment would be permitted at such time and if such Restricted
Subsidiary otherwise meets the definition of an Unrestricted Subsidiary.
The amount of (i) all Restricted Payments (other than cash) shall be
the fair market value on the date of the Restricted Payment of the asset(s) or
securities proposed to be transferred or issued by the Company or such
Restricted Subsidiary, as the case may be, pursuant to the Restricted Payment
and (ii) Qualified Proceeds (other than cash) shall be the fair market value on
the date of receipt thereof by the Company of such Qualified Proceeds. The fair
market value of any non-cash Restricted Payment shall be determined by the board
of directors of the Company whose resolution with respect thereto shall be
delivered to the Trustee. Not later than the date of making any Restricted
Payment, the Company shall deliver to the Trustee an Officers' Certificate
stating that such Restricted Payment is permitted and setting forth the basis
upon which the calculations required by this Section 4.07 were computed.
SECTION 4.08. DIVIDEND AND OTHER PAYMENT RESTRICTIONS AFFECTING SUBSIDIARIES.
The Company will not, and will not permit any of its Restricted
Subsidiaries to, directly or indirectly, create or otherwise cause or suffer to
exist or become effective any encumbrance or restriction on the ability of any
Restricted Subsidiary to (a)(i) pay dividends or make any other distributions to
the Company or any of its Restricted Subsidiaries (A) on its Capital Stock or
(B) with respect to any other interest or participation in, or measured by, its
profits, or (ii) pay any Indebtedness owed to the Company or any of its
Restricted Subsidiaries, (b) make loans or advances to the Company or any of its
Restricted Subsidiaries or (c) transfer any of its properties or assets to the
Company or any of its Restricted Subsidiaries. However, the foregoing
restrictions will not apply to encumbrances or restrictions existing under or by
reason of (a) Existing Indebtedness as in effect on the date of this Indenture,
(b) the New Credit Facility as in effect as of the date of this Indenture, and
any amendments, modifications, restatements,
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renewals, increases, supplements, refundings, replacements or refinancings
thereof, (c) this Indenture and the Notes, (d) applicable law and any applicable
rule, regulation or order, (e) any agreement or instrument of a Person acquired
by the Company or any of its Restricted Subsidiaries as in effect at the time of
such acquisition (except to the extent created in contemplation of such
acquisition), which encumbrance or restriction is not applicable to any Person,
or the properties or assets of any Person, other than the Person, or the
property or assets of the Person, so acquired, provided that, in the case of
Indebtedness, such Indebtedness was permitted by the terms of this Indenture to
be incurred, (f) customary non-assignment provisions in leases entered into in
the ordinary course of business and consistent with past practices, (g) purchase
money obligations for property acquired in the ordinary course of business that
impose restrictions of the nature described in clause (e) above on the property
so acquired, (h) contracts for the sale of assets, including, without
limitation, customary restrictions with respect to a Subsidiary pursuant to an
agreement that has been entered into for the sale or disposition of all or
substantially all of the Capital Stock or assets of such Subsidiary, (i)
Permitted Refinancing Indebtedness, provided that the restrictions contained in
the agreements governing such Permitted Refinancing Indebtedness are, in the
good faith judgment of the Company's board of directors, not materially less
favorable, taken as a whole, to the Holders of the Notes than those contained in
the agreements governing the Indebtedness being refinanced, (j) secured
Indebtedness otherwise permitted to be incurred pursuant to Sections 4.09 and
4.12 hereof that limit the right of the debtor to dispose of the assets securing
such Indebtedness, (k) restrictions on cash or other deposits or net worth
imposed by customers under contracts entered into in the ordinary course of
business, (l) other Indebtedness or Disqualified Stock of Restricted
Subsidiaries permitted to be incurred subsequent to the Issuance Date pursuant
to the provisions of Section 4.09 hereof, (m) customary provisions in joint
venture agreements and other similar agreements entered into in the ordinary
course of business, and (n) restrictions created in connection with any
Receivables Facility that, in the good faith determination of the board of
directors of the Company, are necessary or advisable to effect such Receivables
Facility.
SECTION 4.09. INCURRENCE OF INDEBTEDNESS AND ISSUANCE OF PREFERRED STOCK.
(a) the Company will not, and will not permit any of its Restricted
Subsidiaries to, directly or indirectly, create, incur, issue, assume, guarantee
or otherwise become directly or indirectly liable, contingently or otherwise,
with respect to (collectively, "incur") any Indebtedness (including Acquired
Indebtedness), (b) the Company will not, and will not permit any of its
Restricted Subsidiaries to, issue any shares of Disqualified Stock and (c) the
Company will not permit any of its Restricted Subsidiaries to issue any shares
of preferred stock; provided that the Company or any Restricted Subsidiary may
incur Indebtedness (including Acquired Indebtedness) or issue shares of
Disqualified Stock if the Fixed Charge Coverage Ratio for the Company's most
recently ended four full fiscal quarters for which internal financial statements
are available immediately preceding the date on which such additional
Indebtedness is incurred or such Disqualified Stock is issued would have been at
least 2.0 to 1, determined on a consolidated pro forma basis (including a pro
forma application of the net proceeds therefrom), as if the additional
Indebtedness had been incurred, or the Disqualified Stock had been issued, as
the case may be, at the beginning of such four-quarter period.
The provisions of the first paragraph of this covenant will not apply
to the incurrence of any of the following items of Indebtedness (collectively,
"Permitted Indebtedness"):
(i) the incurrence by the Company and its Restricted Subsidiaries of
Indebtedness under the New Credit Facility; provided that the aggregate
principal amount of all Indebtedness (with letters of credit being deemed to
have a principal amount equal to the maximum potential liability of the Company
and such Restricted Subsidiaries thereunder) then classified as having been
incurred in reliance upon this clause (i)
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that remains outstanding under the New Credit Facility after giving effect to
such incurrence does not exceed an amount equal to $430.0 million;
(ii) the incurrence by the Company and its Restricted Subsidiaries of
Existing Indebtedness;
(iii) the incurrence by the Issuers of Indebtedness represented by the
Notes and this Indenture and by the Guarantors of Indebtedness represented by
the Note Guarantees;
(iv) the incurrence by the Company or any of its Restricted
Subsidiaries of Indebtedness represented by Capital Expenditure Indebtedness,
Capital Lease Obligations or purchase money obligations, in each case, incurred
for the purpose of financing all or any part of the purchase price or cost of
construction or improvement of property, plant or equipment used in the business
of the Company or such Restricted Subsidiary, in an aggregate principal amount
(or accreted value, as applicable) not to exceed $40.0 million outstanding after
giving effect to such incurrence;
(v) Indebtedness arising from agreements of the Company or any
Restricted Subsidiary providing for indemnification, adjustment of purchase
price or similar obligations, in each case, incurred or assumed in connection
with the disposition of any business, assets or a Subsidiary, other than
guarantees of Indebtedness incurred by any Person acquiring all or any portion
of such business, assets or Restricted Subsidiary for the purpose of financing
such acquisition; provided that (A) such Indebtedness is not reflected on the
balance sheet of the Company or any Restricted Subsidiary (contingent
obligations referred to in a footnote or footnotes to financial statements and
not otherwise reflected on the balance sheet will not be deemed to be reflected
on such balance sheet for purposes of this clause (A)) and (B) the maximum
assumable liability in respect of such Indebtedness shall at no time exceed the
gross proceeds including non-cash proceeds (the fair market value of such
non-cash proceeds being measured at the time received and without giving effect
to any subsequent changes in value) actually received by the Company and/or such
Restricted Subsidiary in connection with such disposition;
(vi) the incurrence by the Company or any of its Restricted
Subsidiaries of Permitted Refinancing Indebtedness in exchange for, or the net
proceeds of which are used to refund, refinance or replace Indebtedness (other
than intercompany Indebtedness) that was permitted by this Indenture to be
incurred;
(vii) the incurrence by the Company or any of its Restricted
Subsidiaries of intercompany Indebtedness between or among the Company and/or
any of its Restricted Subsidiaries; provided that (i) if the Company is the
obligor on such Indebtedness, such Indebtedness is expressly subordinated to the
prior payment in full in cash of all Obligations with respect to the Notes and
(ii)(A) any subsequent issuance or transfer of Equity Interests that results in
any such Indebtedness being held by a Person other than the Company or a
Restricted Subsidiary thereof and (B) any sale or other transfer of any such
Indebtedness to a Person that is not either the Company or a Restricted
Subsidiary thereof shall be deemed, in each case, to constitute an incurrence of
such Indebtedness by the Company or such Restricted Subsidiary, as the case may
be, that was not permitted by this clause (vii);
(viii) the incurrence by the Company or any of its Restricted
Subsidiaries of Hedging Obligations that are incurred for the purpose of fixing
or hedging (A) interest rate risk with respect to any floating rate Indebtedness
that is permitted by the terms of this Indenture to be outstanding and (B)
exchange rate risk with respect to agreements or Indebtedness of such Person
payable denominated in a currency other than U.S. dollars, provided that such
agreements do not increase the Indebtedness of the
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obligor outstanding at any time other than as a result of fluctuations in
foreign currency exchange rates or interest rates or by reason of fees,
indemnities and compensation payable thereunder;
(ix) the guarantee by the Company or any of its Restricted
Subsidiaries of Indebtedness of the Company or a Restricted Subsidiary of the
Company that was permitted to be incurred by another provision of this covenant;
(x) the incurrence by the Company or any of its Restricted
Subsidiaries of Acquired Indebtedness in an aggregate principal amount (or
accreted value, as applicable) not to exceed $25.0 million outstanding after
giving effect to such incurrence;
(xi) obligations in respect of performance and surety bonds and
completion guarantees provided by the Company or any Restricted Subsidiary in
the ordinary course of business; and
(xii) the incurrence by the Company or any of its Restricted
Subsidiaries of additional Indebtedness in an aggregate principal amount (or
accreted value, as applicable) outstanding after giving effect to such
incurrence, including all Permitted Refinancing Indebtedness incurred to refund,
refinance or replace any Indebtedness incurred pursuant to this clause (xii),
not to exceed $50.0 million.
For purposes of determining compliance with this covenant, in the event
that an item of Indebtedness meets the criteria of more than one of the
categories of Permitted Indebtedness described in clauses (i) through (xii)
above or is entitled to be incurred pursuant to the first paragraph of this
covenant, the Company shall, in its sole discretion, classify such item of
Indebtedness in any manner that complies with this covenant and such item of
Indebtedness will be treated as having been incurred pursuant to only one of
such clauses or pursuant to the first paragraph hereof. In addition, the Company
may, at any time, change the classification of an item of Indebtedness (or any
portion thereof) to any other clause or to the first paragraph hereof provided
that the Company would be permitted to incur such item of Indebtedness (or such
portion thereof) pursuant to such other clause or the first paragraph hereof, as
the case may be, at such time of reclassification. Accrual of interest,
accretion or amortization of original issue discount will not be deemed to be an
incurrence of Indebtedness for purposes of this covenant.
All Indebtedness under the New Credit Facility outstanding on the date
on which Notes are first issued and authenticated under this Indenture shall be
deemed to have been incurred on such date in reliance on the first paragraph of
Section 4.09 hereof.
SECTION 4.10. ASSET SALES
The Company shall not, and will not permit any of its Restricted
Subsidiaries to, consummate an Asset Sale unless (a) the Company or such
Restricted Subsidiary, as the case may be, receives consideration at the time of
such Asset Sale at least equal to the fair market value (evidenced by a
resolution of the board of directors set forth in an Officers' Certificate
delivered to the Trustee) of the assets or Equity Interests issued or sold or
otherwise disposed of and (b) at least 75% of the consideration therefor
received by the Company or such Restricted Subsidiary is in the form of (i) cash
or Cash Equivalents or (ii) property or assets that are used or useful in a
Permitted Business, or the Capital Stock of any Person engaged in a Permitted
Business if, as a result of the acquisition by the Company or any Restricted
Subsidiary thereof, such Person becomes a Restricted Subsidiary; provided that
the amount of (x) any liabilities (as shown on the Company's or such Restricted
Subsidiary's most recent balance sheet), of the Company or any Restricted
Subsidiary (other than contingent liabilities and liabilities that are by their
terms subordinated to the Notes or any guarantee thereof) that are assumed by
the transferee of any such assets pursuant to a
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customary novation agreement that releases the Company or such Restricted
Subsidiary from further liability, (y) any securities, notes or other
obligations received by the Company or any such Restricted Subsidiary from such
transferee that are contemporaneously (subject to ordinary settlement periods)
converted by the Company or such Restricted Subsidiary into cash or Cash
Equivalents (to the extent of the cash or Cash Equivalents received), and (z)
any Designated Noncash Consideration received by the Company or any of its
Restricted Subsidiaries in such Asset Sale having an aggregate fair market
value, taken together with all other Designated Noncash Consideration received
pursuant to this clause (z) that is at that time outstanding, not to exceed 15%
of Total Assets at the time of the receipt of such Designated Noncash
Consideration (with the fair market value of each item of Designated Noncash
Consideration being measured at the time received and without giving effect to
subsequent changes in value), shall be deemed to be cash for purposes of this
provision; and provided further that the 75% limitation referred to in clause
(b) above will not apply to any Asset Sale in which the cash or Cash Equivalents
portion of the consideration received therefrom, determined in accordance with
the foregoing proviso, is equal to or greater than what the after-tax proceeds
would have been had such Asset Sale complied with the aforementioned 75%
limitation.
Within 365 days after the receipt of any Net Proceeds from an Asset
Sale, the Company or any such Restricted Subsidiary shall apply such Net
Proceeds, at its option (or to the extent the Company is required to apply such
Net Proceeds pursuant to the terms of the New Credit Facility), to (a) repay or
purchase Senior Indebtedness or Pari Passu Indebtedness of the Company or any
Indebtedness of any Restricted Subsidiary, provided that, if the Company shall
so repay or purchase Pari Passu Indebtedness of the Company, it will equally and
ratably reduce Indebtedness under the Notes if the Notes are then redeemable,
or, if the Notes may not then be redeemed, the Company shall make an offer (in
accordance with the procedures set forth below for an Asset Sale Offer) to all
Holders of Notes to purchase at a purchase price equal to 100% of the principal
amount of the Notes, plus accrued and unpaid interest and Liquidated Damages, if
any, thereon to the date of purchase, the Notes that would otherwise be
redeemed, or (b) an investment in property, the making of a capital expenditure
or the acquisition of assets that are used or useful in a Permitted Business, or
Capital Stock of any Person primarily engaged in a Permitted Business if (i) as
a result of the acquisition by the Company or any Restricted Subsidiary thereof,
such Person becomes a Restricted Subsidiary or (ii) the Investment in such
Capital Stock is permitted by clause (f) of the definition of Permitted
Investments. Pending the final application of any such Net Proceeds, the Company
may temporarily reduce Indebtedness or otherwise invest such Net Proceeds in any
manner that is not prohibited by this Indenture. Any Net Proceeds from Asset
Sales that are not applied or invested as provided in the first sentence of this
paragraph will be deemed to constitute "Excess Proceeds." When the aggregate
amount of Excess Proceeds exceeds $15.0 million, the Company will be required to
make an offer to all Holders of Notes (an "Asset Sale Offer") to purchase the
maximum principal amount of Notes that may be purchased out of the Excess
Proceeds, at an offer price in cash in an amount equal to 100% of the principal
amount thereof, plus accrued and unpaid interest and Liquidated Damages, if any,
thereon to the date of purchase, in accordance with the procedures set forth in
this Indenture. To the extent that any Excess Proceeds remain after consummation
of an Asset Sale Offer, the Company may use such Excess Proceeds for any purpose
not otherwise prohibited by this Indenture. If the aggregate principal amount of
Notes surrendered by Holders thereof in connection with an Asset Sale Offer
exceeds the amount of Excess Proceeds, the Trustee shall select the Notes to be
purchased as set forth in Section 3.02 hereof. Upon completion of such offer to
purchase, the amount of Excess Proceeds shall be reset at zero.
The Company will comply with the requirements of Rule 14e-1 under the
Exchange Act and any other securities laws and regulations thereunder to the
extent such laws and regulations are applicable in connection with the
repurchase of the Notes pursuant to an Asset Sale Offer. To the extent that the
provisions of any securities laws or regulations conflict with the provisions of
this Indenture relating to such
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Asset Sale Offer, the Company will comply with the applicable securities laws
and regulations and shall not be deemed to have breached its obligations
described in this Indenture by virtue thereof.
SECTION 4.11. TRANSACTIONS WITH AFFILIATES.
The Company shall not, and will not permit any of its Restricted
Subsidiaries to, make any payment to, or sell, lease, transfer or otherwise
dispose of any of its properties or assets to, or purchase any property or
assets from, or enter into or make or amend any transaction, contract,
agreement, understanding, loan, advance or guarantee with, or for the benefit
of, any Affiliate of the Company (each of the foregoing, an "Affiliate
Transaction"), unless (a) such Affiliate Transaction is on terms that are no
less favorable to the Company or such Restricted Subsidiary than those that
would have been obtained in a comparable transaction by the Company or such
Restricted Subsidiary with an unrelated Person and (b) the Company delivers to
the Trustee, with respect to any Affiliate Transaction or series of related
Affiliate Transactions involving aggregate consideration in excess of $7.5
million, either (i) a resolution of the board of directors set forth in an
Officers' Certificate certifying that such Affiliate Transaction complies with
clause (a) above and that such Affiliate Transaction has been approved by a
majority of the disinterested members of the board of directors or (ii) an
opinion as to the fairness to the Holders of such Affiliate Transaction from a
financial point of view issued by an accounting, appraisal or investment banking
firm of national standing.
Notwithstanding the foregoing, the following items shall not be deemed
to be Affiliate Transactions: (a) customary directors' fees, indemnification or
similar arrangements or any employment agreement or other compensation plan or
arrangement entered into by the Company or any of its Restricted Subsidiaries in
the ordinary course of business (including ordinary course loans to employees
not to exceed (i) $5.0 million outstanding in the aggregate at any time and (ii)
$2.0 million to any one employee) and consistent with the past practice of the
Company or such Restricted Subsidiary; (b) transactions between or among the
Company and/or its Restricted Subsidiaries; (c) payments of customary fees by
the Company or any of its Restricted Subsidiaries to DLJMB and its Affiliates
made for any financial advisory, financing, underwriting or placement services
or in respect of other investment banking activities, including, without
limitation, in connection with acquisitions or divestitures which are approved
by a majority of the board of directors in good faith; (d) any agreement as in
effect on the date of this Indenture or any amendment thereto (so long as such
amendment is not disadvantageous to the Holders of the Notes in any material
respect) or any transaction contemplated thereby; (e) payments and transactions
in connection with the Merger, the New Credit Facility (including commitment,
syndication and arrangement fees payable thereunder) and the Offerings
(including underwriting discounts and commissions in connection therewith) and
the application of the proceeds thereof, and the payment of the fees and
expenses with respect thereto; (f) Restricted Payments that are permitted by
Section 4.07; (g) sales of accounts receivable, or participations therein, in
connection with any Receivables Facility; and (h) transactions pursuant to the
Management Loans.
SECTION 4.12. LIENS.
The Company shall not and will not, and will not permit any of its
Restricted Subsidiaries to, directly or indirectly, create, incur, assume or
suffer to exist any Lien, other than a Permitted Lien, that secures obligations
under any Pari Passu Indebtedness or subordinated Indebtedness of the Company on
any asset or property now owned or hereafter acquired by the Company or any of
its Restricted Subsidiaries, or any income or profits therefrom or assign or
convey any right to receive income therefrom, unless the Notes are equally and
ratably secured with the obligations so secured until such time as such
obligations are no longer secured by a Lien; provided that, in any case
involving a Lien securing subordinated Indebtedness of
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the Company, such Lien is subordinated to the Lien securing the Notes to the
same extent that such subordinated Indebtedness is subordinated to the Notes.
SECTION 4.13. CORPORATE EXISTENCE.
Subject to Article 5 hereof, the Company shall do or cause to be done
all things necessary to preserve and keep in full force and effect (i) the
corporate, partnership or other existence of itself and each of its
Subsidiaries, in accordance with the respective organizational documents (as the
same may be amended from time to time) of the Company or any such Subsidiary and
(ii) the rights (charter and statutory), licenses and franchises of the Company
and its Subsidiaries; provided, however, that the Company shall not be required
to preserve any such right, license or franchise, or the corporate, partnership
or other existence of itself and any of its Subsidiaries, if the Board of
Directors shall determine that the preservation thereof is no longer desirable
in the conduct of the business of the Company and its Subsidiaries, taken as a
whole, and that the loss thereof is not adverse in any material respect to the
Holders of the Notes.
SECTION 4.14. OFFER TO REPURCHASE UPON CHANGE OF CONTROL.
(a) Upon the occurrence of a Change of Control, each Holder of Notes
will have the right to require the Issuers to repurchase all or any part (equal
to $1,000 or an integral multiple thereof) of such Holder's Notes pursuant to
the offer described below (the "Change of Control Offer") at an offer price in
cash equal to 101% of the aggregate principal amount thereof, plus accrued and
unpaid interest and Liquidated Damages, if any, thereon to the date of
repurchase (the "Change of Control Payment"). Within 60 days following any
Change of Control, the Issuers will (or will cause the Trustee to) mail a notice
to each Holder describing the transaction or transactions that constitute the
Change of Control and offering to repurchase Notes on the date specified in such
notice, which date shall be no earlier than 30 days and no later than 60 days
from the date such notice is mailed (the "Change of Control Payment Date"),
pursuant to the procedures required by this Indenture and described in such
notice. The Issuers will comply with the requirements of Rule 14e-1 under the
Exchange Act and any other securities laws and regulations thereunder to the
extent such laws and regulations are applicable in connection with the
repurchase of the Notes as a result of a Change of Control. To the extent that
the provisions of any securities laws or regulations conflict with the
provisions of this Indenture relating to such Change of Control Offer, the
Issuers will comply with the applicable securities laws and regulations and
shall not be deemed to have breached their obligations described in this
Indenture by virtue thereof.
On the Change of Control Payment Date, the Issuers will, to the extent
lawful, (a) accept for payment all Notes or portions thereof properly tendered
pursuant to the Change of Control Offer, (b) deposit with the Paying Agent an
amount equal to the Change of Control Payment in respect of all Notes or
portions thereof so tendered and (c) deliver or cause to be delivered to the
Trustee the Notes so accepted together with an Officers' Certificate stating the
aggregate principal amount of Notes or portions thereof being purchased by the
Issuers. The Paying Agent will promptly mail to each Holder of Notes so tendered
the Change of Control Payment for such Notes, and the Trustee will promptly
authenticate and mail (or cause to be transferred by book-entry) to each Holder
a new Note equal in principal amount to any unpurchased portion of the Notes
surrendered, if any; provided that each such new Note will be in a principal
amount of $1,000 or an integral multiple thereof. Prior to complying with the
provisions of this covenant, but in any event within 90 days following a Change
of Control, the Issuers will either repay all outstanding Senior Indebtedness or
obtain the requisite consents, if any, under all agreements governing
outstanding Senior Indebtedness to permit the repurchase of Notes required by
this covenant. The Issuers
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will publicly announce the results of the Change of Control Offer on or as soon
as practicable after the Change of Control Payment Date.
(b) Notwithstanding anything to the contrary in this Section 4.14, the
Issuers will not be required to make a Change of Control Offer upon a Change of
Control if a third party makes the Change of Control Offer in the manner, at the
times and otherwise in compliance with the requirements set forth in this
Indenture applicable to a Change of Control Offer made by the Issuers and
purchases all Notes validly tendered and not withdrawn under such Change of
Control Offer.
SECTION 4.15. NO SENIOR SUBORDINATED INDEBTEDNESS.
(a) the Company will not Incur any Indebtedness that is subordinate or
junior in right of payment to any Senior Indebtedness and senior in right of
payment to the Notes, and (b) no Guarantor will Incur any Indebtedness that is
subordinate or junior in right of payment to any Senior Indebtedness and senior
in any respect in right of payment to the Note Guarantees.
SECTION 4.16. ACCOUNTS RECEIVABLE FACILITY.
No Accounts Receivable Subsidiary will incur any Indebtedness if
immediately after giving effect to such incurrence the aggregate outstanding
Indebtedness of all Accounts Receivable Subsidiaries (excluding any Indebtedness
owed to the Company or any Restricted Subsidiary) would exceed $60.0 million.
SECTION 4.17. LIMITATION ON SALE AND LEASEBACK TRANSACTIONS.
The Company will not, and will not permit any of its Restricted
Subsidiaries to, enter into any sale and leaseback transaction; provided that
the Company or any Restricted Subsidiary may enter into a sale and leaseback
transaction if (a) the Company or such Restricted Subsidiary, as the case may
be, could have (i) incurred Indebtedness in an amount equal to the Attributable
Indebtedness relating to such sale and leaseback transaction pursuant to the
Fixed Charge Coverage Ratio test set forth in the first paragraph of Section
4.09 hereof and (ii) incurred a Lien to secure such Indebtedness pursuant to
Section 4.12 herein, (b) the gross cash proceeds of such sale and leaseback
transaction are at least equal to the fair market value (as determined in good
faith by the board of directors and set forth in an Officers' Certificate
delivered to the Trustee) of the property that is the subject of such sale and
leaseback transaction and (c) the transfer of assets in such sale and leaseback
transaction is permitted by, and the Company applies the proceeds of such
transaction in compliance with, Section 4.10 hereof.
SECTION 4.18. RESTRICTIONS ON ACTIVITIES OF THERMADYNE CAPITAL
Thermadyne Capital may not hold any assets, become liable for any
obligations or engage in any business activities; provided that Thermadyne
Capital may be a co-obligor with respect to Notes issued pursuant to this
Indenture and the Senior Indebtedness and engage in any activities directly
related or necessary in connection therewith.
SECTION 4.19. PAYMENTS FOR CONSENT.
Neither the Company nor any of its Subsidiaries shall, directly or
indirectly, pay or cause to be paid any consideration, whether by way of
interest, fee or otherwise, to any Holder of any Notes for or as an inducement
to any consent, waiver or amendment of any of the terms or provisions of this
Indenture or the Notes unless such consideration is offered to be paid or is
paid to all Holders of the Notes that
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consent, waive or agree to amend in the time frame set forth in the solicitation
documents relating to such consent, waiver or agreement.
SECTION 4.20. ADDITIONAL NOTE GUARANTEES
If any Restricted Subsidiary of the Company that is a Domestic
Subsidiary guarantees any Indebtedness under the New Credit Facility after the
date of this Indenture, then such Restricted Subsidiary shall become a Guarantor
by executing a Supplemental Indenture in the form attached hereto as Exhibit E
and deliver an Opinion of Counsel to the Trustee to the effect that such
Supplemental Indenture has been duly authorized, executed and delivered by such
Subsidiary and constitutes a valid and binding obligation of such Subsidiary,
enforceable against such Subsidiary in accordance with its terms (subject to
customary exceptions).
ARTICLE 5.
SUCCESSORS
SECTION 5.01. MERGER, CONSOLIDATION, OR SALE OF ASSETS.
The Company may not consolidate or merge with or into (whether or not
the Company is the surviving corporation), or sell, assign, transfer, convey or
otherwise dispose of all or substantially all of its properties or assets in one
or more related transactions, to another Person unless (a) the Company is the
surviving corporation or the Person formed by or surviving any such
consolidation or merger (if other than the Company) or to which such sale,
assignment, transfer, conveyance or other disposition shall have been made is a
corporation organized or existing under the laws of the United States, any state
thereof or the District of Columbia, (b) the Person formed by or surviving any
such consolidation or merger (if other than the Company) or the Person to which
such sale, assignment, transfer, conveyance or other disposition shall have been
made assumes all the obligations of the Company under the Registration Rights
Agreement, the Notes and this Indenture pursuant to a supplemental indenture in
a form reasonably satisfactory to the Trustee, (c) immediately after such
transaction no Default or Event of Default exists and (d) the Company or the
Person formed by or surviving any such consolidation or merger (if other than
the Company), or to which such sale, assignment, transfer, conveyance or other
disposition shall have been made (i) will, at the time of such transaction and
after giving pro forma effect thereto as if such transaction had occurred at the
beginning of the applicable four-quarter period, be permitted to incur at least
$1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio
test set forth in the first paragraph of Section 4.09 hereof or (ii) would
(together with its Restricted Subsidiaries) have a higher Fixed Charge Coverage
Ratio immediately after such transaction (after giving pro forma effect thereto
as if such transaction had occurred at the beginning of the applicable
four-quarter period) than the Fixed Charge Coverage Ratio of the Company and its
Restricted Subsidiaries immediately prior to such transaction. The foregoing
clause (d) will not prohibit (a) a merger between the Company and a Wholly Owned
Subsidiary of Holdings created for the purpose of holding the Capital Stock of
the Company, (b) a merger between the Company and a Wholly Owned Restricted
Subsidiary or (c) a merger between the Company and an Affiliate incorporated
solely for the purpose of reincorporating the Company in another State of the
United States so long as, in each case, the amount of Indebtedness of the
Company and its Restricted Subsidiaries is not increased thereby. The Company
will not lease all or substantially all of its assets to any Person.
SECTION 5.02. SUCCESSOR CORPORATION SUBSTITUTED.
Upon any consolidation or merger, or any sale, assignment, transfer,
lease, conveyance or other disposition of all or substantially all of the assets
of the Company in accordance with Section 5.01 hereof, the successor corporation
formed by such consolidation or into or with which the Company is
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merged or to which such sale, assignment, transfer, lease, conveyance or other
disposition is made shall succeed to, and be substituted for (so that from and
after the date of such consolidation, merger, sale, lease, conveyance or other
disposition, the provisions of this Indenture referring to the "Company" shall
refer instead to the successor corporation and not to the Company), and may
exercise every right and power of the Company under this Indenture with the same
effect as if such successor Person had been named as the Company herein;
provided, however, that the predecessor Company shall not be relieved from the
obligation to pay the principal of and interest or Liquidated Damages, if any,
on the Notes except in the case of a sale of all of the Company's assets that
meets the requirements of Section 5.01 hereof.
ARTICLE 6.
DEFAULTS AND REMEDIES
SECTION 6.01. EVENTS OF DEFAULT.
Each of the following constitutes an Event of Default:
(a) default for 30 days in the payment when due of interest on, or
Liquidated Damages with respect to, the Notes (whether or not prohibited by
Article 10 hereof);
(b) default in payment when due of the principal of or premium, if
any, on the Notes (whether or not prohibited by Article 10 hereof);
(c) failure by the Company or any of its Restricted Subsidiaries for
30 days after receipt of notice from the Trustee or Holders of at least 25% in
principal amount of the Notes then outstanding to comply with Sections 4.07,
4.09, 4.10, 4.14 or Article 5 hereof;
(d) failure by the Company for 60 days after notice from the Trustee
or the Holders of at least 25% in principal amount of the Notes then outstanding
to comply with any of its other agreements in this Indenture or the Notes;
(e) default under any mortgage, indenture or instrument under which
there may be issued or by which there may be secured or evidenced any
Indebtedness for money borrowed by the Company or any of its Restricted
Subsidiaries (or the payment of which is guaranteed by the Company or any of its
Restricted Subsidiaries), whether such Indebtedness or guarantee now exists, or
is created after the date of this Indenture, which default (i) is caused by a
failure to pay Indebtedness at its stated final maturity (after giving effect to
any applicable grace period provided in such Indebtedness) (a "Payment Default")
or (ii) results in the acceleration of such Indebtedness prior to its stated
final maturity and, in each case, the principal amount of any such Indebtedness,
together with the principal amount of any other such Indebtedness under which
there has been a Payment Default or the maturity of which has been so
accelerated, aggregates $10.0 million or more;
(f) failure by the Company or any of its Restricted Subsidiaries to
pay final judgments aggregating in excess of $10.0 million (net of any amounts
with respect to which a reputable and creditworthy insurance company has
acknowledged liability in writing), which judgments are not paid, discharged or
stayed for a period of 60 days;
(g) except as permitted by this Indenture, any Note Guarantee shall be
held in any judicial proceeding to be unenforceable or invalid or shall cease
for any reason to be in full force and effect or any
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Guarantor, or any Person acting on behalf of any Guarantor, shall deny or
disaffirm its obligations under its Note Guarantee;
(h) the Company or any of its Restricted Subsidiaries that is a
Significant Subsidiary or any group of Restricted Subsidiaries that, taken as a
whole, would constitute a Significant Subsidiary pursuant to or within the
meaning of Bankruptcy Law:
(i) commences a voluntary case,
(ii) consents to the entry of an order for relief against it
in an involuntary case,
(iii) consents to the appointment of a Custodian of it or for
all or substantially all of its property,
(iv) makes a general assignment for the benefit of its
creditors, or
(v) generally is not paying its debts as they become due; or
(i) court of competent jurisdiction enters an order or decree
under any Bankruptcy Law that:
(i) is for relief against the Company or any of its Restricted
Subsidiaries that is a Significant Subsidiary or any group of
Restricted Subsidiaries that, taken as a whole, would constitute a
Significant Subsidiary in an involuntary case;
(ii) appoints a Custodian of the Company or any of its
Restricted Subsidiaries that is a Significant Subsidiary or any
group of Restricted Subsidiaries that, taken as a whole, would
constitute a Significant Subsidiary or for all or substantially
all of the property of the Company or any of its Restricted
Subsidiaries that is a Significant Subsidiary or any group of
Restricted Subsidiaries that, taken as a whole, would constitute a
Significant Subsidiary; or
(iii) orders the liquidation of the Company or any of its
Restricted Subsidiaries that is a Significant Subsidiary or any
group of Restricted Subsidiaries that, taken as a whole, would
constitute a Significant Subsidiary;
and the order or decree remains unstayed and in effect for 60 consecutive days.
SECTION 6.02. ACCELERATION.
If any Event of Default (other than an Event of Default specified in
clause (h) or (i) of Section 6.01 hereof with respect to the Company, any
Restricted Subsidiaries that is a Significant Subsidiary or any group of
Restricted Subsidiaries that, taken as a whole, would constitute a Significant
Subsidiary) occurs and is continuing, the Trustee or the Holders of at least 25%
in principal amount of the then outstanding Notes may declare all the Notes to
be due and payable immediately; provided, that so long as any Indebtedness
permitted to be incurred pursuant to the New Credit Facility shall be
outstanding, such acceleration shall not be effective until the earlier of (i)
an acceleration under any such Indebtedness under the New Credit Facility or
(ii) five Business Days after receipt by the Issuers and the administrative
agent under the New Credit Facility of written notice of such acceleration. Upon
any such declaration, the Notes shall become due and payable immediately.
Notwithstanding the foregoing, if an Event of Default specified in clause (h) or
(i) of Section 6.01 hereof occurs with respect to the Company, any of its
Restricted Subsidiaries that is a Significant Subsidiary or any group of
Restricted Subsidiaries
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that, taken as a whole, would constitute a Significant Subsidiary, all
outstanding Notes shall be due and payable immediately without further action or
notice. The Holders of a majority in aggregate principal amount of the then
outstanding Notes by written notice to the Trustee may on behalf of all of the
Holders rescind an acceleration and its consequences if the rescission would not
conflict with any judgment or decree and if all existing Events of Default
(except nonpayment of principal, interest or premium or Liquidated Damages, if
any, that has become due solely because of the acceleration) have been cured or
waived, provided that, in the event of a declaration of acceleration of the
Notes because an Event of Default has occurred and is continuing as a result of
the acceleration of any Indebtedness described in clause (e) of Section 6.01
hereof, the declaration of acceleration of the Notes shall be automatically
annulled if the holders of any Indebtedness described in clause (e) of Section
6.01 hereof have rescinded the declaration of acceleration in respect of such
Indebtedness within 30 days of the date of such declaration and if (i) the
annulment of the acceleration of the Notes would not conflict with any judgment
or decree of a court of competent jurisdiction and (ii) all existing Events of
Default, except non-payment of principal or interest on the Notes that became
due solely because of the acceleration of the Notes, have been cured or waived.
SECTION 6.03. OTHER REMEDIES.
If an Event of Default occurs and is continuing, the Trustee may pursue
any available remedy to collect the payment of principal, premium, if any, and
interest and Liquidated Damages, if any, on the Notes or to enforce the
performance of any provision of the Notes or this Indenture.
The Trustee may maintain a proceeding even if it does not possess any
of the Notes or does not produce any of them in the proceeding. A delay or
omission by the Trustee or any Holder of a Note in exercising any right or
remedy accruing upon an Event of Default shall not impair the right or remedy or
constitute a waiver of or acquiescence in the Event of Default. All remedies are
cumulative to the extent permitted by law.
SECTION 6.04. WAIVER OF PAST DEFAULTS.
Holders of not less than a majority in aggregate principal amount of
the then outstanding Notes by notice to the Trustee may on behalf of the Holders
of all of the Notes waive an existing Default or Event of Default and its
consequences hereunder, except a continuing Default or Event of Default in the
payment of the principal of, premium and Liquidated Damages, if any, or interest
on, the Notes (including in connection with an offer to purchase) (provided,
however, that the Holders of a majority in aggregate principal amount of the
then outstanding Notes may rescind an acceleration and its consequences,
including any related payment default that resulted from such acceleration).
Upon any such waiver, such Default shall cease to exist, and any Event of
Default arising therefrom shall be deemed to have been cured for every purpose
of this Indenture; but no such waiver shall extend to any subsequent or other
Default or impair any right consequent thereon.
SECTION 6.05. CONTROL BY MAJORITY.
Holders of a majority in principal amount of the then outstanding Notes
may direct the time, method and place of conducting any proceeding for
exercising any remedy available to the Trustee or exercising any trust or power
conferred on it. However, the Trustee may refuse to follow any direction that
conflicts with law or this Indenture that the Trustee determines may be unduly
prejudicial to the rights of other Holders of Notes or that may involve the
Trustee in personal liability.
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SECTION 6.06. LIMITATION ON SUITS.
A Holder of a Note may pursue a remedy with respect to this Indenture
or the Notes only if:
(a) the Holder of a Note gives to the Trustee written notice of a
continuing Event of Default;
(b) the Holders of at least 25% in principal amount of the then
outstanding Notes make a written request to the Trustee to pursue the remedy;
(c) such Holder of a Note or Holders of Notes offer and, if requested,
provide to the Trustee indemnity satisfactory to the Trustee against any loss,
liability or expense;
(d) the Trustee does not comply with the request within 60 days after
receipt of the request and the offer and, if requested, the provision of
indemnity; and
(e) during such 60-day period the Holders of a majority in principal
amount of the then outstanding Notes do not give the Trustee a direction
inconsistent with the request.
A Holder of a Note may not use this Indenture to prejudice the rights
of another Holder of a Note or to obtain a preference or priority over another
Holder of a Note.
SECTION 6.07. RIGHTS OF HOLDERS OF NOTES TO RECEIVE PAYMENT.
Notwithstanding any other provision of this Indenture, the right of any
Holder of a Note to receive payment of principal, premium and Liquidated
Damages, if any, and interest on the Note, on or after the respective due dates
expressed in the Note (including in connection with an offer to purchase), or to
bring suit for the enforcement of any such payment on or after such respective
dates, shall not be impaired or affected without the consent of such Holder.
SECTION 6.08. COLLECTION SUIT BY TRUSTEE.
If an Event of Default specified in Section 6.01(a) or (b) occurs and
is continuing, the Trustee is authorized to recover judgment in its own name and
as trustee of an express trust against the Issuers for the whole amount of
principal of, premium and Liquidated Damages, if any, and interest remaining
unpaid on the Notes and interest and Liquidated Damages, if any, on overdue
principal and, to the extent lawful, interest and such further amount as shall
be sufficient to cover the costs and expenses of collection, including the
reasonable compensation, expenses, disbursements and advances of the Trustee,
its agents and counsel.
SECTION 6.09. TRUSTEE MAY FILE PROOFS OF CLAIM.
The Trustee is authorized to file such proofs of claim and other papers
or documents as may be necessary or advisable in order to have the claims of the
Trustee (including any claim for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel) and the
Holders of the Notes allowed in any judicial proceedings relative to the Issuers
(or any other obligor upon the Notes), its creditors or its property and shall
be entitled and empowered to collect, receive and distribute any money or other
property payable or deliverable on any such claims and any custodian in any such
judicial proceeding is hereby authorized by each Holder to make such payments to
the Trustee, and in the event that the Trustee shall consent to the making of
such payments directly to the Holders, to pay to the Trustee any amount due to
it for the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel, and any other amounts due the Trustee under
Section 7.07 hereof. To the extent that the payment of any such compensation,
expenses, disbursements and
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advances of the Trustee, its agents and counsel, and any other amounts due the
Trustee under Section 7.07 hereof out of the estate in any such proceeding,
shall be denied for any reason, payment of the same shall be secured by a Lien
on, and shall be paid out of, any and all distributions, dividends, money,
securities and other properties that the Holders may be entitled to receive in
such proceeding whether in liquidation or under any plan of reorganization or
arrangement or otherwise. Nothing herein contained shall be deemed to authorize
the Trustee to authorize or consent to or accept or adopt on behalf of any
Holder any plan of reorganization, arrangement, adjustment or composition
affecting the Notes or the rights of any Holder, or to authorize the Trustee to
vote in respect of the claim of any Holder in any such proceeding.
SECTION 6.10. PRIORITIES.
If the Trustee collects any money pursuant to this Article, it shall
pay out the money in the following order:
First: to the Trustee, its agents and attorneys for amounts due under
Section 7.07 hereof, including payment of all compensation, expense and
liabilities incurred, and all advances made, by the Trustee and the costs and
expenses of collection;
Second: to holders of Senior Indebtedness to the extent required by
Article 10 or Section 11.02 hereof;
Third: to Holders of Notes for amounts due and unpaid on the Notes for
principal, premium and Liquidated Damages, if any, and interest, ratably,
without preference or priority of any kind, according to the amounts due and
payable on the Notes for principal, premium and Liquidated Damages, if any and
interest, respectively; and
Fourth: to the Issuers or to such party as a court of competent
jurisdiction shall direct.
The Trustee may fix a record date and payment date for any payment to
Holders of Notes pursuant to this Section 6.10.
SECTION 6.11. UNDERTAKING FOR COSTS.
In any suit for the enforcement of any right or remedy under this
Indenture or in any suit against the Trustee for any action taken or omitted by
it as a Trustee, a court in its discretion may require the filing by any party
litigant in the suit of an undertaking to pay the costs of the suit, and the
court in its discretion may assess reasonable costs, including reasonable
attorneys' fees, against any party litigant in the suit, having due regard to
the merits and good faith of the claims or defenses made by the party litigant.
This Section does not apply to a suit by the Trustee, a suit by a Holder of a
Note pursuant to Section 6.07 hereof, or a suit by Holders of more than 10% in
principal amount of the then outstanding Notes.
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ARTICLE 7.
TRUSTEE
SECTION 7.01. DUTIES OF TRUSTEE.
(a) If an Event of Default has occurred and is continuing, the Trustee
shall exercise such of the rights and powers vested in it by this Indenture, and
use the same degree of care and skill in its exercise, as a prudent man would
exercise or use under the circumstances in the conduct of his own affairs.
(b) Except during the continuance of an Event of Default:
(i) the duties of the Trustee shall be determined solely by
the express provisions of this Indenture and the Trustee need
perform only those duties that are specifically set forth in this
Indenture and no others, and no implied covenants or obligations
shall be read into this Indenture against the Trustee; and
(ii) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates
or opinions furnished to the Trustee and conforming to the
requirements of this Indenture. However, the Trustee shall examine
the certificates and opinions to determine whether or not they
conform to the requirements of this Indenture.
(c) The Trustee may not be relieved from liabilities for its own
negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
(i) this paragraph does not limit the effect of paragraph (b)
of this Section;
(ii) the Trustee shall not be liable for any error of judgment
made in good faith by a Responsible Officer, unless it is proved
that the Trustee was negligent in ascertaining the pertinent
facts; and
(iii) the Trustee shall not be liable with respect to any
action it takes or omits to take in good faith in accordance with
a direction received by it pursuant to Section 6.05 hereof.
(d) Whether or not therein expressly so provided, every provision
of this Indenture that in any way relates to the Trustee is subject to
paragraphs (a), (b), (c), (e) and (f) of this Section and Section 7.02.
(e) No provision of this Indenture shall require the Trustee to
expend or risk its own funds or incur any liability. The Trustee shall be under
no obligation to exercise any of its rights and powers under this Indenture at
the request of any Holders, unless such Holder shall have offered to the Trustee
security and indemnity satisfactory to it against any loss, liability or
expense.
(f) The Trustee shall not be liable for interest on any money
received by it except as the Trustee may agree in writing with the Issuers.
Money held in trust by the Trustee need not be segregated from other funds
except to the extent required by law.
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SECTION 7.02. RIGHTS OF TRUSTEE.
(a) The Trustee may conclusively rely upon any document believed by it
to be genuine and to have been signed or presented by the proper Person. The
Trustee need not investigate any fact or matter stated in the document.
(b) Before the Trustee acts or refrains from acting, it may require an
Officers' Certificate or an Opinion of Counsel or both. The Trustee shall not be
liable for any action it takes or omits to take in good faith in reliance on
such Officers' Certificate or Opinion of Counsel. The Trustee may consult with
counsel and the written advice of such counsel or any Opinion of Counsel shall
be full and complete authorization and protection from liability in respect of
any action taken, suffered or omitted by it hereunder in good faith and in
reliance thereon.
(c) The Trustee may act through its attorneys and agents and shall not
be responsible for the misconduct or negligence of any agent appointed with due
care.
(d) The Trustee shall not be liable for any action it takes or omits
to take in good faith that it believes to be authorized or within the rights or
powers conferred upon it by this Indenture.
(e) Unless otherwise specifically provided in this Indenture, any
demand, request, direction or notice from the Issuers shall be sufficient if
signed by an Officer of the Issuers.
(f) The Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request or direction of
any of the Holders unless such Holders shall have offered to the Trustee
reasonable security or indemnity against the costs, expenses and liabilities
that might be incurred by it in compliance with such request or direction.
(g) Except with respect to Section 4.01 hereof, the Trustee shall have
no duty to inquire as to the performance of the Issuers' covenants in Article 4
hereof. In addition, the Trustee shall not be deemed to have knowledge of any
Default or Event of Default except (i) any Event of Default occurring pursuant
to Sections 6.01(a), 6.01(b) and 4.01 or (ii) any Default or Event of Default of
which the Trustee shall have received written notification or obtained actual
knowledge.
(h) The Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent, order, bond, debenture,
note, other evidence of indebtedness or other paper or document, but the Trustee
may, in its discretion, make such further inquiry or investigation into such
facts or matters as it may see fit and if the Trustee shall determine to make
such further inquiry or investigation, it shall be entitled to examine the
books, records and premises of the Issuers personally or by agent or attorney.
SECTION 7.03. INDIVIDUAL RIGHTS OF TRUSTEE.
The Trustee in its individual or any other capacity may become the
owner or pledgee of Notes and may otherwise deal with the Issuers or any
Affiliate of the Issuers with the same rights it would have if it were not
Trustee. However, in the event that the Trustee acquires any conflicting
interest it must eliminate such conflict within 90 days, apply to the Commission
for permission to continue as trustee or resign. Any Agent may do the same with
like rights and duties. The Trustee is also subject to Sections 7.10 and 7.11
hereof.
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SECTION 7.04. TRUSTEE'S DISCLAIMER.
The Trustee shall not be responsible for and makes no representation as
to the validity or adequacy of this Indenture or the Notes, it shall not be
accountable for the Issuers' use of the proceeds from the Notes or any money
paid to the Issuers or upon the Issuers' direction under any provision of this
Indenture, it shall not be responsible for the use or application of any money
received by any Paying Agent other than the Trustee, and it shall not be
responsible for any statement or recital herein or any statement in the Notes or
any other document in connection with the sale of the Notes or pursuant to this
Indenture other than its certificate of authentication.
SECTION 7.05. NOTICE OF DEFAULTS.
If a Default or Event of Default occurs and is continuing and if it is
known to the Trustee, the Trustee shall mail to Holders of Notes a notice of the
Default or Event of Default within 90 days after it occurs. Except in the case
of a Default or Event of Default in payment of principal of, premium, if any, or
interest or Liquidated Damages, if any, on any Note, the Trustee may withhold
the notice if and so long as a committee of its Responsible Officers in good
faith determines that withholding the notice is in the interests of the Holders
of the Notes.
SECTION 7.06. REPORTS BY TRUSTEE TO HOLDERS OF THE NOTES.
Within 60 days after each May 15 beginning with the May 15 following
the date of this Indenture, and for so long as Notes remain outstanding, the
Trustee shall mail to the Holders of the Notes a brief report dated as of such
reporting date that complies with TIA ss. 313(a) (but if no event described in
TIA ss. 313(a) has occurred within the twelve months preceding the reporting
date, no report need be transmitted). The Trustee also shall comply with TIA ss.
(b)(2). The Trustee shall also transmit by mail all reports as required by TIA
ss. 313(c).
A copy of each report at the time of its mailing to the Holders of
Notes shall be mailed to the Issuers and filed with the Commission and each
stock exchange on which the Notes are listed in accordance with TIA ss. 313(d).
The Issuers shall promptly notify the Trustee when the Notes are listed on any
stock exchange.
SECTION 7.07. COMPENSATION AND INDEMNITY.
The Issuers shall pay to the Trustee from time to time reasonable
compensation for its acceptance of this Indenture and services hereunder. The
Trustee's compensation shall not be limited by any law on compensation of a
trustee of an express trust. The Issuers shall reimburse the Trustee promptly
upon request for all reasonable disbursements, advances and expenses incurred or
made by it in addition to the compensation for its services. Such expenses shall
include the reasonable compensation, disbursements and expenses of the Trustee's
agents and counsel.
The Issuers shall indemnify the Trustee against any and all losses,
liabilities or expenses incurred by it arising out of or in connection with the
acceptance or administration of its duties under this Indenture, including the
costs and expenses of enforcing this Indenture against the Issuers (including
this Section 7.07) and defending itself against any claim (whether asserted by
the Issuers or any Holder or any other person) or liability in connection with
the exercise or performance of any of its powers or duties hereunder, except to
the extent any such loss, liability or expense may be attributable to its
negligence or bad faith. The Trustee shall notify the Issuers promptly of any
claim for which it may seek
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indemnity. Failure by the Trustee to so notify the Issuers shall not relieve the
Issuers of its obligations hereunder. The Issuers shall defend the claim and the
Trustee shall cooperate in the defense. The Trustee may have separate counsel
and the Issuers shall pay the reasonable fees and expenses of such counsel. The
Issuers need not pay for any settlement made without its consent, which consent
shall not be unreasonably withheld.
The obligations of the Issuers under this Section 7.07 shall survive
the satisfaction and discharge of this Indenture.
To secure the Issuers's payment obligations in this Section, the
Trustee shall have a Lien prior to the Notes on all money or property held or
collected by the Trustee, except that held in trust to pay principal and
interest on particular Notes. Such Lien shall survive the satisfaction and
discharge of this Indenture.
When the Trustee incurs expenses or renders services after an Event of
Default specified in Section 6.01(h) or (i) hereof occurs, the expenses and the
compensation for the services (including the fees and expenses of its agents and
counsel) are intended to constitute expenses of administration under any
Bankruptcy Law.
The Trustee shall comply with the provisions of TIA ss. 313(b)(2) to
the extent applicable.
SECTION 7.08. REPLACEMENT OF TRUSTEE.
A resignation or removal of the Trustee and appointment of a successor
Trustee shall become effective only upon the successor Trustee's acceptance of
appointment as provided in this Section.
The Trustee may resign in writing at any time and be discharged from
the trust hereby created by so notifying the Issuers. The Holders of Notes of a
majority in principal amount of the then outstanding Notes may remove the
Trustee by so notifying the Trustee and the Issuers in writing. The Issuers may
remove the Trustee if:
(a) the Trustee fails to comply with Section 7.10 hereof;
(b) the Trustee is adjudged a bankrupt or an insolvent or an order for
relief is entered with respect to the Trustee under any Bankruptcy Law;
(c) a Custodian or public officer takes charge of the Trustee or its
property; or
(d) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the
office of Trustee for any reason, the Issuers shall promptly appoint a successor
Trustee. Within one year after the successor Trustee takes office, the Holders
of a majority in principal amount of the then outstanding Notes may appoint a
successor Trustee to replace the successor Trustee appointed by the Issuers.
If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Issuers, or
the Holders of Notes of at least 10% in principal amount of the then outstanding
Notes may petition any court of competent jurisdiction for the appointment of a
successor Trustee.
If the Trustee, after written request by any Holder of a Note who has
been a Holder of a Note for at least six months, fails to comply with Section
7.10, such Holder of a Note may petition any court of competent jurisdiction for
the removal of the Trustee and the appointment of a successor Trustee.
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A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Issuers. Thereupon, the
resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee shall have all the rights, powers and duties of the Trustee
under this Indenture. The successor Trustee shall mail a notice of its
succession to Holders of the Notes. The retiring Trustee shall promptly transfer
all property held by it as Trustee to the successor Trustee, provided all sums
owing to the Trustee hereunder have been paid and subject to the Lien provided
for in Section 7.07 hereof. Notwithstanding replacement of the Trustee pursuant
to this Section 7.08, the Issuers' obligations under Section 7.07 hereof shall
continue for the benefit of the retiring Trustee.
SECTION 7.09. SUCCESSOR TRUSTEE BY MERGER, ETC.
If the Trustee consolidates, merges or converts into, or transfers all
or substantially all of its corporate trust business to, another corporation,
the successor corporation without any further act shall be the successor
Trustee.
SECTION 7.10. ELIGIBILITY; DISQUALIFICATION.
There shall at all times be a Trustee hereunder that is a corporation
organized and doing business under the laws of the United States of America or
of any state thereof that is authorized under such laws to exercise corporate
trustee power, that is subject to supervision or examination by federal or state
authorities and that has a combined capital and surplus of at least $100 million
as set forth in its most recent published annual report of condition.
This Indenture shall always have a Trustee who satisfies the
requirements of TIA ss. 310(a)(1), (2) and (5). The Trustee is subject to TIA
ss. 310(b).
SECTION 7.11. PREFERENTIAL COLLECTION OF CLAIMS AGAINST ISSUERS.
The Trustee is subject to TIA ss. 311(a), excluding any creditor
relationship listed in TIA ss. 311(b). A Trustee who has resigned or been
removed shall be subject to TIA ss. 311(a) to the extent indicated therein.
ARTICLE 8.
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
SECTION 8.01. OPTION TO EFFECT LEGAL DEFEASANCE OR COVENANT DEFEASANCE.
The Issuers may, at the option of their respective Board of Directors
evidenced by a resolution set forth in an Officers' Certificate, at any time,
elect to have either Section 8.02 or 8.03 hereof be applied to all outstanding
Notes upon compliance with the conditions set forth below in this Article Eight.
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SECTION 8.02. LEGAL DEFEASANCE AND DISCHARGE.
Upon the Issuers' exercise under Section 8.01 hereof of the option
applicable to this Section 8.02, the Issuers shall, subject to the satisfaction
of the conditions set forth in Section 8.04 hereof, be deemed to have been
discharged from their obligations with respect to all outstanding Notes on the
date the conditions set forth below are satisfied (hereinafter, "Legal
Defeasance"). For this purpose, Legal Defeasance means that the Issuers shall be
deemed to have paid and discharged the entire Indebtedness represented by the
outstanding Notes, which shall thereafter be deemed to be "outstanding" only for
the purposes of Section 8.05 hereof and the other Sections of this Indenture
referred to in (a) and (b) below, and to have satisfied all its other
obligations under such Notes and this Indenture (and the Trustee, on demand of
and at the expense of the Issuers, shall execute proper instruments
acknowledging the same), except for the following provisions which shall survive
until otherwise terminated or discharged hereunder:
(a) the rights of Holders of outstanding Notes to receive payments in
respect of the principal of, premium, if any, and interest and Liquidated
Damages, if any, on such Notes when such payments are due from the trust
referred to below,
(b) the Issuers' obligations with respect to the Notes concerning
issuing temporary Notes, registration of Notes, mutilated, destroyed, lost or
stolen Notes and the maintenance of an office or agency for payment and money
for security payments held in trust,
(c) the rights, powers, trusts, duties and immunities of the Trustee,
and the Issuers' obligations in connection therewith and
(d) the Legal Defeasance provisions of this Indenture.
SECTION 8.03. COVENANT DEFEASANCE.
Upon the Issuers' exercise under Section 8.01 hereof of the option
applicable to this Section 8.03, the Issuers shall, subject to the satisfaction
of the conditions set forth in Section 8.04 hereof, be released from its
obligations under the covenants contained in Sections 4.07, 4.08, 4.09, 4.10,
4.11, 4.12, 4.14, 4.15, 4.16, 4.17, 4.19 and 4.20 hereof with respect to the
outstanding Notes on and after the date the conditions set forth in Section 8.04
are satisfied (hereinafter, "Covenant Defeasance"), and the Notes shall
thereafter be deemed not "outstanding" for the purposes of any direction,
waiver, consent or declaration or act of Holders (and the consequences of any
thereof) in connection with such covenants, but shall continue to be deemed
"outstanding" for all other purposes hereunder (it being understood that such
Notes shall not be deemed outstanding for accounting purposes). For this
purpose, Covenant Defeasance means that, with respect to the outstanding Notes,
the Issuers may omit to comply with and shall have no liability in respect of
any term, condition or limitation set forth in any such covenant, whether
directly or indirectly, by reason of any reference elsewhere herein to any such
covenant or by reason of any reference in any such covenant to any other
provision herein or in any other document and such omission to comply shall not
constitute a Default or an Event of Default under Section 6.01 hereof, but,
except as specified above, the remainder of this Indenture and such Notes shall
be unaffected thereby. In addition, upon the Issuers' exercise under Section
8.01 hereof of the option applicable to this Section 8.03 hereof, subject to the
satisfaction of the conditions set forth in Section 8.04 hereof, Sections
6.01(d) through 6.01(f) hereof shall not constitute Events of Default.
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SECTION 8.04. CONDITIONS TO LEGAL OR COVENANT DEFEASANCE.
The following shall be the conditions to the application of either
Section 8.02 or 8.03 hereof to the outstanding Notes:
In order to exercise either Legal Defeasance or Covenant Defeasance,
(a) the Issuers must irrevocably deposit with the Trustee, in trust,
for the benefit of the Holders of the Notes, cash in U.S. dollars, non-callable
Government Securities, or a combination thereof, in such amounts as will be
sufficient, in the opinion of a nationally recognized firm of independent public
accountants, to pay the principal of, premium, if any, and interest and
Liquidated Damages, if any, on the outstanding Notes on the stated maturity or
on the applicable redemption date, as the case may be, and the Issuers must
specify whether the Notes are being defeased to maturity or to a particular
redemption date,
(b) in the case of Legal Defeasance, the Issuers shall have delivered
to the Trustee an Opinion of Counsel in the United States reasonably acceptable
to the Trustee confirming that (i) the Issuers has received from, or there has
been published by, the Internal Revenue Service a ruling or (ii) since the date
of this Indenture, there has been a change in the applicable federal income tax
law, in either case to the effect that, and based thereon such Opinion of
Counsel shall confirm that, subject to customary assumptions and exclusions, the
Holders of the outstanding Notes will not recognize income, gain or loss for
federal income tax purposes as a result of such Legal Defeasance and will be
subject to federal income tax on the same amounts, in the same manner and at the
same times as would have been the case if such Legal Defeasance had not
occurred,
(c) in the case of Covenant Defeasance, the Issuers shall have
delivered to the Trustee an Opinion of Counsel in the United States reasonably
acceptable to the Trustee confirming that, subject to customary assumptions and
exclusions, the Holders of the outstanding Notes will not recognize income, gain
or loss for federal income tax purposes as a result of such Covenant Defeasance
and will be subject to federal income tax on the same amounts, in the same
manner and at the same times as would have been the case if such Covenant
Defeasance had not occurred,
(d) no Default or Event of Default shall have occurred and be
continuing on the date of such deposit (other than a Default or Event of Default
resulting from the borrowing of funds to be applied to such deposit) or, insofar
as Events of Default from bankruptcy or insolvency events are concerned, at any
time in the period ending on the 123rd day after the date of deposit,
(e) such Legal Defeasance or Covenant Defeasance will not result in a
breach or violation of, or constitute a default under, any material agreement or
instrument (other than this Indenture) to which the Company or any of its
Subsidiaries is a party or by which the Company or any of its Subsidiaries is
bound,
(f) the Issuers must have delivered to the Trustee an Opinion of
Counsel to the effect that, subject to customary assumptions and exclusions,
after the 123rd day following the deposit, the trust funds will not be subject
to the effect of Section 547 of the United States Bankruptcy Code or any
analogous New York State law provision or any other applicable federal or New
York bankruptcy, insolvency, reorganization or similar laws affecting creditors'
rights generally,
(g) the Issuers must deliver to the Trustee an Officers' Certificate
stating that the deposit was not made by the Issuers with the intent of
preferring the Holders of Notes over the other creditors of the Issuers with the
intent of defeating, hindering, delaying or defrauding creditors of the Issuers
or others, and
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(h) the Issuers must deliver to the Trustee an Officers' Certificate
and an Opinion of Counsel (which opinion may be subject to customary assumptions
and exclusions), each stating that all conditions precedent provided for
relating to the Legal Defeasance or the Covenant Defeasance have been complied
with.
SECTION 8.05. DEPOSITED MONEY AND GOVERNMENT SECURITIES TO BE HELD IN TRUST;
OTHER MISCELLANEOUS PROVISIONS.
Subject to Section 8.06 hereof, all money and non-callable Government
Securities (including the proceeds thereof) deposited with the Trustee (or other
qualifying trustee, collectively for purposes of this Section 8.05, the
"Trustee") pursuant to Section 8.04 hereof in respect of the outstanding Notes
shall be held in trust and applied by the Trustee, in accordance with the
provisions of such Notes and this Indenture, to the payment, either directly or
through any Paying Agent (including the Issuers acting as Paying Agent) as the
Trustee may determine, to the Holders of such Notes of all sums due and to
become due thereon in respect of principal, premium, if any, and interest and
Liquidated Damages, if any, but such money need not be segregated from other
funds except to the extent required by law.
The Issuers shall pay and indemnify the Trustee against any tax, fee or
other charge imposed on or assessed against the cash or non-callable Government
Securities deposited pursuant to Section 8.04 hereof or the principal and
interest received in respect thereof other than any such tax, fee or other
charge which by law is for the account of the Holders of the outstanding Notes.
Anything in this Article Eight to the contrary notwithstanding, the
Trustee shall deliver or pay to the Issuers from time to time upon the request
of the Issuers any money or non-callable Government Securities held by it as
provided in Section 8.04 hereof which, in the opinion of a nationally recognized
firm of independent public accountants expressed in a written certification
thereof delivered to the Trustee (which may be the opinion delivered under
Section 8.04(a) hereof), are in excess of the amount thereof that would then be
required to be deposited to effect an equivalent Legal Defeasance or Covenant
Defeasance.
SECTION 8.06. REPAYMENT TO ISSUERS.
Any money deposited with the Trustee or any Paying Agent, or then held
by the Issuers, in trust for the payment of the principal of, premium, if any,
or interest or Liquidated Damages, if any, on any Note and remaining unclaimed
for two years after such principal, and premium, if any, or interest or
Liquidated Damages, if any, has become due and payable shall be paid to the
Issuers on its request or (if then held by the Issuers) shall be discharged from
such trust; and the Holder of such Note shall thereafter, as a secured creditor,
look only to the Issuers for payment thereof, and all liability of the Trustee
or such Paying Agent with respect to such trust money, and all liability of the
Issuers as trustees thereof, shall thereupon cease; provided, however, that the
Trustee or such Paying Agent, before being required to make any such repayment,
may at the expense of the Issuers cause to be published once, in the New York
Times and The Wall Street Journal (national edition), notice that such money
remains unclaimed and that, after a date specified therein, which shall not be
less than 30 days from the date of such notification or publication, any
unclaimed balance of such money then remaining will be repaid to the Issuers.
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SECTION 8.07. REINSTATEMENT.
If the Trustee or Paying Agent is unable to apply any United States
dollars or non-callable Government Securities in accordance with Section 8.02 or
8.03 hereof, as the case may be, by reason of any order or judgment of any court
or governmental authority enjoining, restraining or otherwise prohibiting such
application, then the Issuers' obligations under this Indenture and the Notes
shall be revived and reinstated as though no deposit had occurred pursuant to
Section 8.02 or 8.03 hereof until such time as the Trustee or Paying Agent is
permitted to apply all such money in accordance with Section 8.02 or 8.03
hereof, as the case may be; provided, however, that, if the Issuers make any
payment of principal of, premium, if any, or interest or Liquidated Damages, if
any, on any Note following the reinstatement of their obligations, the Issuers
shall be subrogated to the rights of the Holders of such Notes to receive such
payment from the money held by the Trustee or Paying Agent.
ARTICLE 9.
AMENDMENT, SUPPLEMENT AND WAIVER
SECTION 9.01. WITHOUT CONSENT OF HOLDERS OF NOTES.
Notwithstanding Section 9.02 of this Indenture, the Issuers, the
Guarantors and the Trustee may amend or supplement this Indenture, the Note
Guarantees or the Notes without the consent of any Holder of a Note:
(a) to cure any ambiguity, defect or inconsistency;
(b) to provide for uncertificated Notes in addition to or in place of
certificated Notes or to alter the provisions of Article 2 hereof (including the
related definitions) in a manner that does not materially adversely affect any
Holder;
(c) to provide for the assumption of the Issuers' or Guarantor's
obligations to the Holders of the Notes by a successor to the Issuers or a
Guarantor pursuant to Article 5 or Article 11 hereof;
(d) to make any change that would provide any additional rights or
benefits to the Holders of the Notes or that does not adversely affect the legal
rights hereunder of any Holder of the Note;
(e) to comply with requirements of the Commission in order to effect
or maintain the qualification of this Indenture under the TIA;
(f) to provide for the issuance of Additional Notes in accordance with
the limitations set forth in this Indenture as of the date hereof; or
(g) to allow any Guarantor to execute a supplemental indenture and/or
a Note Guarantee with respect to the Notes.
Upon the request of the Issuers accompanied by a resolution of their
Board of Directors authorizing the execution of any such amended or supplemental
Indenture, and upon receipt by the Trustee of the documents described in Section
7.02 hereof, the Trustee shall join with the Issuers in the execution of any
amended or supplemental Indenture authorized or permitted by the terms of this
Indenture and to make any further appropriate agreements and stipulations that
may be therein contained, but the Trustee shall not be obligated to enter into
such amended or supplemental Indenture that affects its own rights, duties or
immunities under this Indenture or otherwise.
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SECTION 9.02. WITH CONSENT OF HOLDERS OF NOTES.
Except as provided below in this Section 9.02, the Issuers and the
Trustee may amend or supplement this Indenture (including Section 3.09, 4.10 and
4.15 hereof), the Note Guarantees and the Notes may be amended or supplemented
with the consent of the Holders of at least a majority in principal amount of
the Notes (including Additional Notes, if any) then outstanding voting as a
single class (including consents obtained in connection with a tender offer or
exchange offer for, or purchase of, the Notes), and, subject to Sections 6.04
and 6.07 hereof, any existing Default or Event of Default (other than a Default
or Event of Default in the payment of the principal of, premium, if any, or
interest or Liquidated Damages, if any, on the Notes, except a payment default
resulting from an acceleration that has been rescinded) or compliance with any
provision of this Indenture, the Note Guarantees or the Notes may be waived with
the consent of the Holders of a majority in principal amount of the then
outstanding Notes (including Additional Notes, if any) voting as a single class
(including consents obtained in connection with a tender offer or exchange offer
for, or purchase of, the Notes). Notwithstanding the foregoing, any (i)
amendment to or waiver of Sections 4.10 and 4.14 hereof, and (ii) amendment to
Article 10 herein will require the consent of the Holders of at least two-thirds
in aggregate principal amount of the Notes then outstanding if such amendment
would materially adversely affect the rights of Holders of Notes. Section 2.08
hereof shall determine which Notes are considered to be "outstanding" for
purposes of this Section 9.02.
Upon the request of the Issuers accompanied by a resolution of their
respective Board of Directors authorizing the execution of any such amended or
supplemental Indenture, and upon the filing with the Trustee of evidence
satisfactory to the Trustee of the consent of the Holders of Notes as aforesaid,
and upon receipt by the Trustee of the documents described in Section 7.02
hereof, the Trustee shall join with the Issuers in the execution of such amended
or supplemental Indenture unless such amended or supplemental Indenture directly
affects the Trustee's own rights, duties or immunities under this Indenture or
otherwise, in which case the Trustee may in its discretion, but shall not be
obligated to, enter into such amended or supplemental Indenture.
It shall not be necessary for the consent of the Holders of Notes under
this Section 9.02 to approve the particular form of any proposed amendment or
waiver, but it shall be sufficient if such consent approves the substance
thereof.
After an amendment, supplement or waiver under this Section becomes
effective, the Issuers shall mail to the Holders of Notes affected thereby a
notice briefly describing the amendment, supplement or waiver. Any failure of
the Issuers to mail such notice, or any defect therein, shall not, however, in
any way impair or affect the validity of any such amended or supplemental
Indenture or waiver. Subject to Sections 6.04 and 6.07 hereof, the Holders of a
majority in aggregate principal amount of the Notes (including Additional Notes,
if any) then outstanding voting as a single class may waive compliance in a
particular instance by the Issuers with any provision of this Indenture or the
Notes. However, without the consent of each Holder affected, an amendment or
waiver under this Section 9.02 may not (with respect to any Notes held by a
non-consenting Holder):
(a) reduce the principal amount of Notes whose Holders must consent to
an amendment, supplement or waiver,
(b) reduce the principal of or change the fixed maturity of any Note
or alter the provisions with respect to the redemption of the Notes (other than
Sections 4.10 and 4.14 hereof,
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(c) reduce the rate of or change the time for payment of interest on
any Note,
(d) waive a Default or Event of Default in the payment of principal of
or premium, if any, or interest or Liquidated Damages, if any, on the Notes
(except a rescission of acceleration of the Notes by the Holders of at least a
majority in aggregate principal amount of the Notes and a waiver of the payment
default that resulted from such acceleration),
(e) make any Note payable in money other than that stated in the
Notes,
(f) make any change in the provisions of this Indenture relating to
waivers of past Defaults,
(g) waive a redemption payment with respect to any Note (other than
Sections 4.10 and 4.14 hereof,
(h) release any Guarantor from its obligations under its Note
Guarantee or the Indenture, except in accordance with the terms of the
Indenture; or
(i) make any change in the foregoing amendment and waiver provisions.
SECTION 9.03. COMPLIANCE WITH TRUST INDENTURE ACT.
Every amendment or supplement to this Indenture or the Notes shall be
set forth in a amended or supplemental Indenture that complies with the TIA as
then in effect.
SECTION 9.04. REVOCATION AND EFFECT OF CONSENTS.
Until an amendment, supplement or waiver becomes effective, a consent
to it by a Holder of a Note is a continuing consent by the Holder of a Note and
every subsequent Holder of a Note or portion of a Note that evidences the same
debt as the consenting Holder's Note, even if notation of the consent is not
made on any Note. However, any such Holder of a Note or subsequent Holder of a
Note may revoke the consent as to its Note if the Trustee receives written
notice of revocation before the date the waiver, supplement or amendment becomes
effective. An amendment, supplement or waiver becomes effective in accordance
with its terms and thereafter binds every Holder.
SECTION 9.05. NOTATION ON OR EXCHANGE OF NOTES.
The Trustee may place an appropriate notation about an amendment,
supplement or waiver on any Note thereafter authenticated. The Issuers in
exchange for all Notes may issue and the Trustee shall, upon receipt of an
Authentication Order, authenticate new Notes that reflect the amendment,
supplement or waiver.
Failure to make the appropriate notation or issue a new Note shall not
affect the validity and effect of such amendment, supplement or waiver.
SECTION 9.06. TRUSTEE TO SIGN AMENDMENTS, ETC.
The Trustee shall sign any amended or supplemental Indenture authorized
pursuant to this Article Nine if the amendment or supplement does not adversely
affect the rights, duties, liabilities or immunities of the Trustee. The Issuers
may not sign an amendment or supplemental Indenture until their respective Board
of Directors approves it. In executing any amended or supplemental indenture,
the
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Trustee shall be entitled to receive and (subject to Section 7.01 hereof)
shall be fully protected in relying upon, in addition to the documents required
by Section 11.04 hereof, an Officer's Certificate and an Opinion of Counsel
stating that the execution of such amended or supplemental indenture is
authorized or permitted by this Indenture.
ARTICLE 10.
SUBORDINATION
SECTION 10.01. AGREEMENT TO SUBORDINATE.
The Issuers agree, and each Holder by accepting a Note agrees, that the
payment of Subordinated Note Obligations are subordinated in right of payment,
to the extent and in the manner set forth in this Article 10, to the prior
payment in full in cash or cash equivalents of all Senior Indebtedness, whether
outstanding on the date of this Indenture or thereafter incurred and that the
subordination is for the benefit of the holders of Senior Indebtedness. The
provisions of this Article 10 shall constitute a continuing offer to all Persons
that, in reliance upon such provisions, become holders of, or continue to hold
Senior Indebtedness, and they or each of them may enforce the rights of holders
of Senior Indebtedness hereunder, subject to the terms and provisions hereof.
SECTION 10.02. CERTAIN DEFINITIONS.
"cash equivalents" means Cash Equivalents of the type described in
clause (i) of the definition thereof maturing not more than 90 days after the
date of the acquisition thereof.
"Designated Senior Indebtedness" means (a) any Indebtedness outstanding
under the New Credit Facility and (b) any other Senior Indebtedness permitted
under this Indenture the principal amount of which is $25.0 million or more and
that has been designated by the Issuers as "Designated Senior Indebtedness."
"Permitted Junior Securities" means Equity Interests in the Issuers or
debt securities of the Issuers that are subordinated to all Senior Indebtedness
(and any debt securities issued in exchange for Senior Indebtedness) to
substantially the same extent as, or to a greater extent than, the Notes are
subordinated to Senior Indebtedness.
"Representative" means the indenture trustee or other trustee, agent or
representative for any Senior Indebtedness.
"Senior Indebtedness" means, with respect to any Person, (a) all
Obligations of such Person outstanding under the New Credit Facility and all
Hedging Obligations payable to a lender or an Affiliate thereof or to a Person
that was a lender or an Affiliate thereof at the time the contract was entered
into under the New Credit Facility or any of its Affiliates, including, without
limitation, interest accruing subsequent to the filing of, or which would have
accrued but for the filing of, a petition for bankruptcy, whether or not such
interest is an allowable claim in such bankruptcy proceeding, (b) any other
Indebtedness, unless the instrument under which such Indebtedness is incurred
expressly provides that it is subordinated in right of payment to any other
Senior Indebtedness of such Person and (c) all Obligations with respect to the
foregoing. Notwithstanding anything to the contrary in the foregoing, Senior
Indebtedness will not include (i) any liability for federal, state, local or
other taxes, (ii) any Indebtedness of such Person (other than pursuant to the
New Credit Facility) to any of its Subsidiaries or other Affiliates, (iii) any
trade payables or (iv) any Indebtedness that is incurred in violation of this
Indenture.
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"Subordinated Note Obligations" means all Obligations with respect to
the Notes, including, without limitation, principal, premium (if any), interest
and Liquidated Damages payable pursuant to the terms of the Notes (including
upon the acceleration or redemption thereof), together with and including any
amounts received or receivable upon the exercise of rights of rescission or
other rights of action (including claims for damages) or otherwise.
A "distribution" or "payment" may consist of a distribution, payment or
other transfer of assets by or on behalf of any Issuer (including, without
limitation, a redemption, repurchase or other acquisition of the Notes) from any
source, of any kind or character, whether in cash, securities or other property,
by set-off or otherwise.
SECTION 10.03. LIQUIDATION; DISSOLUTION; BANKRUPTCY.
Upon any distribution to creditors of the Issuers in a liquidation or
dissolution of the Issuers or in a bankruptcy, reorganization, insolvency,
receivership or similar proceeding relating to the Issuers or their property, an
assignment for the benefit of creditors or any marshalling of the Issuers'
assets and liabilities, (a) the holders of Senior Indebtedness will be entitled
to receive payment in full in cash or cash equivalents of all Obligations due in
respect of such Senior Indebtedness (including interest after the commencement
of any such proceeding at the rate specified in the applicable Senior
Indebtedness) before the Holders of Notes will be entitled to receive any
payment with respect to the Subordinated Note Obligations (except that Holders
of Notes may receive and retain Permitted Junior Securities and payments and
other distributions made from the trust described in Section 8.04 hereof), and
(b) until all Obligations with respect to Senior Indebtedness are paid in full
in cash or cash equivalents, any distribution to which the Holders of Notes
would be entitled but for this Article 10 shall be made to the holders of Senior
Indebtedness (except that Holders of Notes may receive and retain Permitted
Junior Securities and payments and other distributions made from the trust
described Section 8.04 hereof) as their interests appear.
SECTION 10.04. DEFAULT ON DESIGNATED SENIOR INDEBTEDNESS.
The Issuers may not make any payment or distribution to the Trustee or
any Holder upon or in respect of the Subordinated Note Obligations (except in
Permitted Junior Securities or from the trust described in Section 8.04 hereof)
until all principal and other obligations with respect to Senior Indebtedness
have been paid in full in cash or cash equivalents, if
(a) a default in the payment of the principal (including reimbursement
obligations in respect of letters of credit) of, premium, if any, or interest on
or commitment fees relating to, Designated Senior Indebtedness occurs and is
continuing beyond any applicable period of grace in the agreement, indenture or
other document governing such Designated Senior Indebtedness or
(b) any other default occurs and is continuing with respect to
Designated Senior Indebtedness that permits holders of the Designated Senior
Indebtedness as to which such default relates to accelerate its maturity and the
Trustee receives a notice of such default (a "Payment Blockage Notice") from the
Issuers or the holders of any Designated Senior Indebtedness (or their
Representative).
Payments on the Notes may and shall be resumed (a) in the case of a
payment default, upon the date on which such default is cured or waived and (b)
in case of a nonpayment default, the earlier of the date on which such
nonpayment default is cured or waived or 179 days after the date on which the
applicable Payment Blockage Notice is received, unless the maturity of any
Designated Senior
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Indebtedness has been accelerated. No new period of payment blockage may be
commenced unless and until 360 days have elapsed since the effectiveness of the
immediately prior Payment Blockage Notice. No nonpayment default that existed or
was continuing on the date of delivery of any Payment Blockage Notice to the
Trustee shall be, or be made, the basis for a subsequent Payment Blockage Notice
unless such default shall have been waived or cured for a period of not less
than 90 days.
SECTION 10.05. ACCELERATION OF SECURITIES.
If payment of the Notes is accelerated because of an Event of Default,
the Issuers shall promptly notify holders of Senior Indebtedness of the
acceleration.
SECTION 10.06. WHEN DISTRIBUTION MUST BE PAID OVER.
In the event that the Trustee or any Holder receives any payment of any
Subordinated Note Obligations at a time when the Trustee or such Holder, as
applicable, has actual knowledge that such payment is prohibited by Section
10.03 or 10.04 hereof, such payment shall be held by the Trustee or such Holder,
in trust for the benefit of, and shall be paid forthwith over and delivered,
upon written request, to, the holders of Senior Indebtedness as their interests
may appear or their Representative under the indenture or other agreement (if
any) pursuant to which Senior Indebtedness may have been issued, as their
respective interests may appear, for application to the payment of all
Obligations with respect to Senior Indebtedness remaining unpaid to the extent
necessary to pay such Obligations in full in accordance with their terms, after
giving effect to any concurrent payment or distribution to or for the holders of
Senior Indebtedness.
With respect to the holders of Senior Indebtedness, the Trustee
undertakes to perform only such obligations on the part of the Trustee as are
specifically set forth in this Article 10, and no implied covenants or
obligations with respect to the holders of Senior Indebtedness shall be read
into this Indenture against the Trustee. The Trustee shall not be deemed to owe
any fiduciary duty to the holders of Senior Indebtedness, and shall not be
liable to any such holders if the Trustee shall pay over or distribute to or on
behalf of Holders or the Issuers or any other Person money or assets to which
any holders of Senior Indebtedness shall be entitled by virtue of this Article
10, except if such payment is made as a result of the willful misconduct or
gross negligence of the Trustee.
SECTION 10.07. NOTICE BY ISSUERS.
The Issuers shall promptly notify the Trustee and the Paying Agent of
any facts known to the Issuers that would cause a payment of any Obligations
with respect to the Notes to violate this Article 10, but failure to give such
notice shall not affect the subordination of the Notes to the Senior
Indebtedness as provided in this Article 10.
SECTION 10.08. SUBROGATION.
After all Senior Indebtedness is paid in full in cash or cash
equivalents and until the Notes are paid in full, Holders of Notes shall be
subrogated (equally and ratably with all other Indebtedness pari passu with the
Notes) to the rights of holders of Senior Indebtedness to receive distributions
applicable to Senior Indebtedness to the extent that distributions otherwise
payable to the Holders of Notes have been applied to the payment of Senior
Indebtedness. A distribution made under this Article 10 to holders of Senior
Indebtedness that otherwise would have been made to Holders of Notes is not, as
between the Issuers and Holders, a payment by the Issuers on the Notes.
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SECTION 10.09. RELATIVE RIGHTS.
This Article 10 defines the relative rights of Holders of Notes and
holders of Senior Indebtedness. Nothing in this Indenture shall:
(1) impair, as between the Issuers and Holders of Notes, the obligation
of the Issuers, which is absolute and unconditional, to pay principal of and
interest and Liquidated Damages, if any, on the Notes in accordance with their
terms;
(2) affect the relative rights of Holders of Notes and creditors of the
Issuers other than their rights in relation to holders of Senior Indebtedness;
or
(3) prevent the Trustee or any Holder of Notes from exercising its
available remedies upon a Default or Event of Default, subject to the rights of
holders and owners of Senior Indebtedness to receive distributions and payments
otherwise payable to Holders of Notes.
If the Issuers fail because of this Article 10 to pay principal of or
interest or Liquidated Damages, if any, on a Note on the due date, the failure
is still a Default or Event of Default.
SECTION 10.10. SUBORDINATION MAY NOT BE IMPAIRED BY ISSUERS.
No right of any holder of Senior Indebtedness to enforce the
subordination of the Indebtedness evidenced by the Notes shall be impaired by
any act or failure to act by the Issuers or any Holder or by the failure of the
Issuers or any Holder to comply with this Indenture.
SECTION 10.11. DISTRIBUTION OR NOTICE TO REPRESENTATIVE.
Whenever a distribution is to be made or a notice given to holders of
Senior Indebtedness, the distribution may be made and the notice given to their
Representative.
Upon any payment or distribution of assets of the Issuers referred to
in this Article 10, the Trustee and the Holders of Notes shall be entitled to
rely upon any order or decree made by any court of competent jurisdiction or
upon any certificate of such Representative or of the liquidating trustee or
agent or other Person making any distribution to the Trustee or to the Holders
of Notes for the purpose of ascertaining the Persons entitled to participate in
such distribution, the holders of the Senior Indebtedness and other Indebtedness
of the Issuers, the amount thereof or payable thereon, the amount or amounts
paid or distributed thereon and all other facts pertinent thereto or to this
Article 10.
SECTION 10.12. RIGHTS OF TRUSTEE AND PAYING AGENT.
Notwithstanding the provisions of this Article 10 or any other
provision of this Indenture, the Trustee shall not be charged with knowledge of
the existence of any facts that would prohibit the making of any payment or
distribution by the Trustee, and the Trustee and the Paying Agent may continue
to make payments on the Notes, unless the Trustee shall have received at its
Corporate Trust Office at least five Business Days prior to the date of such
payment written notice of facts that would cause the payment of any Obligations
with respect to the Notes to violate this Article 10. Only the Issuers or a
Representative may give the notice. Nothing in this Article 10 shall impair the
claims of, or payments to, the Trustee under or pursuant to Section 7.07 hereof.
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The Trustee in its individual or any other capacity may hold Senior
Indebtedness with the same rights it would have if it were not Trustee. Any
Agent may do the same with like rights.
SECTION 10.13. AUTHORIZATION TO EFFECT SUBORDINATION.
Each Holder of Notes, by the Holder's acceptance thereof, authorizes
and directs the Trustee on such Holder's behalf to take such action as may be
necessary or appropriate to effectuate the subordination as provided in this
Article 10, and appoints the Trustee to act as such Holder's attorney-in-fact
for any and all such purposes. If the Trustee does not file a proper proof of
claim or proof of debt in the form required in any proceeding referred to in
Section 6.09 hereof at least 30 days before the expiration of the time to file
such claim, the Representative is hereby authorized to file an appropriate claim
for and on behalf of the Holders of the Notes.
SECTION 10.14. NO WAIVER OF SUBORDINATION PROVISIONS.
(a) No right of any present or future holder of any Senior
Indebtedness to enforce subordination as herein provided shall at any time in
any way be prejudiced or impaired by any act or failure to act by any such
holder.
(b) Without in any way limiting the generality of paragraph (a) of
this Section 10.14, the holders of Senior Indebtedness may, at any time and from
time to time, without the consent of or notice to the Trustee or any Holder,
without incurring responsibility to any Holder and without impairing or
releasing the subordination provided in this Article 10 or the obligations
hereunder of the Holders to the holders of Senior Indebtedness, do any one or
more of the following: (i) change the manner, place or terms of payment or
extend the time of payment of, or renew or alter, any Senior Indebtedness or any
instrument evidencing the same or any agreement under which Senior Indebtedness
is outstanding; (ii) sell, exchange, release or otherwise deal with any property
pledged, mortgaged or otherwise securing Senior Indebtedness; (iii) release any
Person liable in any manner for the collection of Senior Indebtedness; and (iv)
exercise or refrain from exercising any rights against either Issuer or any
other Person.
SECTION 10.15. AMENDMENTS.
The provisions of this Article 10 shall not be amended or modified
without the written consent of the holders of all Senior Indebtedness.
ARTICLE 11.
NOTE GUARANTEES
SECTION 11.01. GUARANTEE.
Subject to this Article 11, each of the Guarantors hereby, jointly and
severally, unconditionally guarantees to each Holder of a Note authenticated and
delivered by the Trustee and to the Trustee and its successors and assigns,
irrespective of the validity and enforceability of this Indenture, the Notes or
the obligations of the Issuers hereunder or thereunder, that: (a) the principal
of and interest and Liquidated Damages, if any, on the Notes will be promptly
paid in full when due, whether at maturity, by acceleration, redemption or
otherwise, and interest on the overdue principal of and interest and Liquidated
Damages, if any, on the Notes, if any, if lawful, and all other obligations of
the Issuers to the Holders or the Trustee hereunder or thereunder will be
promptly paid in full or performed, all in accordance with the terms hereof and
thereof; and (b) in case of any extension of time of payment or
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renewal of any Notes or any of such other obligations, that same will be
promptly paid in full when due or performed in accordance with the terms of the
extension or renewal, whether at stated maturity, by acceleration or otherwise.
Failing payment when due of any amount so guaranteed or any performance so
guaranteed for whatever reason, the Guarantors shall be jointly and severally
obligated to pay the same immediately. Each Guarantor agrees that this is a
guarantee of payment and not a guarantee of collection.
The Guarantors hereby agree that their obligations hereunder shall be
unconditional, irrespective of the validity, regularity or enforceability of the
Notes or this Indenture, the absence of any action to enforce the same, any
waiver or consent by any Holder of the Notes with respect to any provisions
hereof or thereof, the recovery of any judgment against the Issuers, any action
to enforce the same or any other circumstance which might otherwise constitute a
legal or equitable discharge or defense of a guarantor. Each Guarantor hereby
waives diligence, presentment, demand of payment, filing of claims with a court
in the event of insolvency or bankruptcy of the Issuers, any right to require a
proceeding first against the Issuers, protest, notice and all demands whatsoever
and covenant that this Note Guarantee shall not be discharged except by complete
performance of the obligations contained in the Notes and this Indenture.
If any Holder or the Trustee is required by any court or otherwise to
return to the Issuers, the Guarantors or any custodian, trustee, liquidator or
other similar official acting in relation to either the Issuers or the
Guarantors, any amount paid by either to the Trustee or such Holder, this Note
Guarantee, to the extent theretofore discharged, shall be reinstated in full
force and effect.
Each Guarantor agrees that it shall not be entitled to any right of
subrogation in relation to the Holders in respect of any obligations guaranteed
hereby until payment in full of all obligations guaranteed hereby. Each
Guarantor further agrees that, as between the Guarantors, on the one hand, and
the Holders and the Trustee, on the other hand, (x) the maturity of the
obligations guaranteed hereby may be accelerated as provided in Article 6 hereof
for the purposes of this Note Guarantee, notwithstanding any stay, injunction or
other prohibition preventing such acceleration in respect of the obligations
guaranteed hereby, and (y) in the event of any declaration of acceleration of
such obligations as provided in Article 6 hereof, such obligations (whether or
not due and payable) shall forthwith become due and payable by the Guarantors
for the purpose of this Note Guarantee. The Guarantors shall have the right to
seek contribution from any non-paying Guarantor so long as the exercise of such
right does not impair the rights of the Holders under the Guarantee.
SECTION 11.02. SUBORDINATION OF NOTE GUARANTEE.
The Guarantors agree, and each Holder by accepting a Note agrees, that
the Obligations of each Guarantor under its Note Guarantee pursuant to this
Article 11 shall be junior and subordinated to the Senior Indebtedness of such
Guarantor on the same basis as the Notes are junior and subordinated to Senior
Indebtedness of the Company as provided in Article 10 hereof. For the purposes
of the foregoing sentence, the Trustee and the Holders shall have the right to
receive and/or retain payments by any of the Guarantors only at such times as
they may receive and/or retain payments in respect of the Notes pursuant to this
Indenture, including Section 4.15 hereof.
SECTION 11.03. LIMITATION ON GUARANTOR LIABILITY.
Each Guarantor, and by its acceptance of Notes, each Holder, hereby
confirms that it is the intention of all such parties that the Note Guarantee of
such Guarantor not constitute a fraudulent transfer or conveyance for purposes
of Bankruptcy Law, the Uniform Fraudulent Conveyance Act, the Uniform
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Fraudulent Transfer Act or any similar federal or state law to the extent
applicable to any Note Guarantee. To effectuate the foregoing intention, the
Trustee, the Holders and the Guarantors hereby irrevocably agree that the
obligations of such Guarantor under its Note Guarantee and this Article 11 shall
be limited to the maximum amount as will, after giving effect to such maximum
amount and all other contingent and fixed liabilities of such Guarantor that are
relevant under such laws, and after giving effect to any collections from,
rights to receive contribution from or payments made by or on behalf of any
other Guarantor in respect of the obligations of such other Guarantor under this
Article 11, result in the obligations of such Guarantor under its Note Guarantee
not constituting a fraudulent transfer or conveyance.
SECTION 11.04. EXECUTION AND DELIVERY OF NOTE GUARANTEE.
To evidence its Note Guarantee set forth in Section 11.01, each
Guarantor hereby agrees that this Indenture shall be executed on behalf of such
Guarantor by its President or one of its Vice Presidents.
If an Officer whose signature is on this Indenture no longer holds that
office at the time the Trustee authenticates the Note, the Note Guarantee shall
be valid nevertheless.
The delivery of any Note by the Trustee, after the authentication
thereof hereunder, shall constitute due delivery of the Note Guarantee set forth
in this Indenture on behalf of the Guarantors.
In the event that the Company creates or acquires any new Subsidiaries
subsequent to the date of this Indenture, if required by Section 4.20 hereof,
the Company shall cause such Subsidiaries to execute supplemental indentures to
this Indenture in accordance with Section 4.20 hereof and this Article 11, to
the extent applicable.
SECTION 11.05. GUARANTORS MAY CONSOLIDATE, ETC., ON CERTAIN TERMS.
No Guarantor may consolidate with or merge with or into (whether or not
such Guarantor is the surviving Person) another Person whether or not affiliated
with such Guarantor unless:
(a) subject to Section 11.05 hereof, the Person formed by or surviving
any such consolidation or merger (if other than a Guarantor or the Company)
unconditionally assumes all the obligations of such Guarantor, pursuant to a
supplemental indenture in form and substance reasonably satisfactory to the
Trustee, under the Notes, the Indenture and the Note Guarantee on the terms set
forth herein or therein;
(b) immediately after giving effect to such transaction, no Default or
Event of Default exists; and
(c) the Company would be permitted, immediately after giving effect to
such transaction, to incur at least $1.00 of additional Indebtedness pursuant to
the Fixed Charge Coverage Ratio test set forth in the first paragraph of Section
4.09 hereof.
In case of any such consolidation, merger, sale or conveyance and upon
the assumption by the successor Person, by supplemental indenture, executed and
delivered to the Trustee and satisfactory in form to the Trustee, of the Note
Guarantee endorsed upon the Notes and the due and punctual performance of all of
the covenants and conditions of this Indenture to be performed by the Guarantor,
such successor Person shall succeed to and be substituted for the Guarantor with
the same effect as if it had been named herein as a Guarantor. All the Note
Guarantees so issued shall in all respects have the
74
<PAGE> 83
same legal rank and benefit under this Indenture as the Note Guarantees
theretofore and thereafter issued in accordance with the terms of this Indenture
as though all of such Note Guarantees had been issued at the date of the
execution hereof.
Except as set forth in Articles 4 and 5 hereof, and notwithstanding
clauses (a) and (b) above, nothing contained in this Indenture or in any of the
Notes shall prevent any consolidation or merger of a Guarantor with or into the
Company or another Guarantor, or shall prevent any sale or conveyance of the
property of a Guarantor as an entirety or substantially as an entirety to the
Company or another Guarantor.
SECTION 11.06. RELEASES FOLLOWING SALE OF ASSETS.
In the event of a sale or other disposition of all of the assets of any
Guarantor, by way of merger, consolidation or otherwise, or a sale or other
disposition of all of the capital stock of any Guarantor, then such Guarantor
(in the event of a sale or other disposition, by way of merger, consolidation or
otherwise, of all of the capital stock of such Guarantor) or the corporation
acquiring the property (in the event of a sale or other disposition of all or
substantially all of the assets of such Guarantor) will be released and relieved
of any obligations under its Note Guarantee; provided that the Net Proceeds of
such sale or other disposition are applied in accordance with the applicable
provisions of this Indenture, including without limitation Section 4.10 hereof.
Upon delivery by the Issuers to the Trustee of an Officers' Certificate and an
Opinion of Counsel to the effect that such sale or other disposition was made by
the Company in accordance with the applicable provisions of this Indenture,
including without limitation Section 4.10 hereof, the Trustee shall execute any
documents reasonably required in order to evidence the release of any Guarantor
from its obligations under its Note Guarantee.
Any Guarantor not released from its obligations under its Note
Guarantee shall remain liable for the full amount of principal of and interest
and Liquidated Damages, if any, on the Notes and for the other obligations of
any Guarantor under this Indenture as provided in this Article 11.
ARTICLE 12.
MISCELLANEOUS
SECTION 12.01. TRUST INDENTURE ACT CONTROLS.
If any provision of this Indenture limits, qualifies or conflicts with
the duties imposed by TIA ss. 318(c), the imposed duties shall control.
SECTION 12.02. NOTICES.
Any notice or communication by the Issuers, any Guarantor or the
Trustee to the others is duly given if in writing and delivered in Person or
mailed by first class mail (registered or certified, return receipt requested),
telex, telecopier or overnight air courier guaranteeing next day delivery, to
the others' address
75
<PAGE> 84
If to the Issuers and/or any Guarantor:
101 South Hanley Road
St. Louis, Missouri 63105
Telecopier No.: (314) 721-5573
Attention: Chief Financial Officer
With a copy to:
Davis Polk & Wardwell
450 Lexington Avenue
New York, New York 10017
Telecopier No.: (212) 450-4800
Attention: Richard Truesdell, Esq.
and
Weil, Gotshal & Manges LLP
100 Crescent Court, Suite 1300
Dallas, Texas 75201
Telecopier No.: (214) 746-7777
Attention: R. Scott Cohen, Esq.
If to the Trustee:
State Street Bank and Trust Company
225 Asylum Street, 23rd Floor
Hartford, Connecticut 06103
Telecopier No.: (860) 244-1889
Attention: Corporate Trust Administration
(a) The Issuers, any Guarantor or the Trustee, by notice to the
others may designate additional or different addresses for subsequent notices or
communications.
All notices and communications (other than those sent to Holders) shall
be deemed to have been duly given: at the time delivered by hand, if personally
delivered; five Business Days after being deposited in the mail, postage
prepaid, if mailed; when answered back, if telexed; when receipt acknowledged,
if telecopied; and the next Business Day after timely delivery to the courier,
if sent by overnight air courier guaranteeing next day delivery.
Any notice or communication to a Holder shall be mailed by first class
mail, certified or registered, return receipt requested, or by overnight air
courier guaranteeing next day delivery to its address shown on the register kept
by the Registrar. Any notice or communication shall also be so mailed to any
Person described in TIA ss. 313(c), to the extent required by the TIA. Failure
to mail a notice or communication to a Holder or any defect in it shall not
affect its sufficiency with respect to other Holders.
If a notice or communication is mailed in the manner provided above
within the time prescribed, it is duly given, whether or not the addressee
receives it.
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<PAGE> 85
If the Issuers mail a notice or communication to Holders, it shall mail
a copy to the Trustee and each Agent at the same time.
SECTION 12.03. COMMUNICATION BY HOLDERS OF NOTES WITH OTHER HOLDERS OF NOTES.
Holders may communicate pursuant to TIA ss. 312(b) with other Holders
with respect to their rights under this Indenture or the Notes. The Issuers, the
Trustee, the Registrar and anyone else shall have the protection of TIA ss.
312(c).
SECTION 12.04. CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT.
Upon any request or application by the Issuers to the Trustee to take
any action under this Indenture, the Issuers shall furnish to the Trustee:
(a) an Officers' Certificate in form and substance reasonably
satisfactory to the Trustee (which shall include the statements set forth in
Section 12.05 hereof) stating that, in the opinion of the signers, all
conditions precedent and covenants, if any, provided for in this Indenture
relating to the proposed action have been satisfied; and
(b) an Opinion of Counsel in form and substance reasonably
satisfactory to the Trustee (which shall include the statements set forth in
Section 12.05 hereof) stating that, in the opinion of such counsel, all such
conditions precedent and covenants have been satisfied.
SECTION 12.05 STATEMENTS REQUIRED IN CERTIFICATE OR OPINION.
Each certificate or opinion with respect to compliance with a condition
or covenant provided for in this Indenture (other than a certificate provided
pursuant to TIA ss. 314(a)(4)) shall comply with the provisions of TIA ss.
314(e) and shall include:
(a) a statement that the Person making such certificate or opinion has
read such covenant or condition;
(b) a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(c) a statement that, in the opinion of such Person, he or she has
made such examination or investigation as is necessary to enable him to express
an informed opinion as to whether or not such covenant or condition has been
satisfied; and
(d) a statement as to whether or not, in the opinion of such Person,
such condition or covenant has been satisfied.
SECTION 12.06. RULES BY TRUSTEE AND AGENTS.
The Trustee may make reasonable rules for action by or at a meeting of
Holders. The Registrar or Paying Agent may make reasonable rules and set
reasonable requirements for its functions.
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<PAGE> 86
SECTION 12.07. NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES AND
STOCKHOLDERS.
No member, director, officer, employee, incorporator or stockholder of
any Issuer or any Guarantor, as such, shall have any liability for any
obligations of any Issuer or such Guarantor under the Notes, the Note Guarantees
or this Indenture or for any claim based on, in respect of, or by reason of,
such obligations or their creation. Each Holder of Notes by accepting a Note
waives and releases all such liability. The waiver and release are part of the
consideration for issuance of the Notes.
SECTION 12.08. GOVERNING LAW.
THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL GOVERN AND BE USED TO
CONSTRUE THIS INDENTURE, THE NOTES AND THE NOTE GUARANTEES WITHOUT GIVING EFFECT
TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION
OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.
SECTION 12.09. NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS.
This Indenture may not be used to interpret any other indenture, loan
or debt agreement of the Company or its Subsidiaries or of any other Person. Any
such indenture, loan or debt agreement may not be used to interpret this
Indenture.
SECTION 12.10.. SUCCESSORS.
All agreements of the Issuers in this Indenture and the Notes shall
bind their successors. All agreements of the Trustee in this Indenture shall
bind their successors.
SECTION 12.11.. SEVERABILITY.
In case any provision in this Indenture or in the Notes shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
SECTION 12.12. COUNTERPART ORIGINALS.
The parties may sign any number of copies of this Indenture. Each
signed copy shall be an original, but all of them together represent the same
agreement.
SECTION 12.13. TABLE OF CONTENTS, HEADINGS, ETC.
The Table of Contents, Cross-Reference Table and Headings of the
Articles and Sections of this Indenture have been inserted for convenience of
reference only, are not to be considered a part of this Indenture and shall in
no way modify or restrict any of the terms or provisions hereof.
[Signatures on following page]
78
<PAGE> 87
SIGNATURES
Dated as of May 22, 1998
THERMADYNE MFG. LLC
BY: /s/ JAMES H. TATE
-----------------------------------
Name:
Title:
THERMADYNE CAPITAL CORP.
BY: /s/ JAMES H. TATE
-----------------------------------
Name:
Title:
C&G SYSTEMS HOLDING, INC.
BY: /s/ JAMES H. TATE
-----------------------------------
Name:
Title:
C&G SYSTEMS, INC.
BY: /s/ JAMES H. TATE
-----------------------------------
Name:
Title:
COYNE NATURAL GAS SYSTEMS INC.
BY: /s/ JAMES H. TATE
-----------------------------------
Name:
Title:
79
<PAGE> 88
MARISON CYLINDER COMPANY
BY: /s/ JAMES H. TATE
-----------------------------------
Name:
Title:
MECO HOLDING COMPANY
BY: /s/ JAMES H. TATE
-----------------------------------
Name:
Title:
MODERN ENGINEERING COMPANY, INC.
BY: /s/ JAMES H. TATE
-----------------------------------
Name:
Title:
STOODY COMPANY
BY: /s/ JAMES H. TATE
-----------------------------------
Name:
Title:
TAG REALTY, INC.
BY: /s/ JAMES H. TATE
-----------------------------------
Name:
Title:
80
<PAGE> 89
THERMADYNE CYLINDER COMPANY
BY: /s/ JAMES H. TATE
-----------------------------------
Name:
Title:
THERMADYNE INDUSTRIES, INC.
BY: /s/ JAMES H. TATE
-----------------------------------
Name:
Title:
THERMADYNE INTERNATIONAL CORP.
BY: /s/ JAMES H. TATE
-----------------------------------
Name:
Title:
THERMAL ARC, INC.
BY: /s/ JAMES H. TATE
-----------------------------------
Name:
Title:
THERMAL DYNAMICS CORP.
BY: /s/ JAMES H. TATE
-----------------------------------
Name:
Title:
81
<PAGE> 90
TWECO PRODUCTS, INC.
BY: /s/ JAMES H. TATE
-----------------------------------
Name:
Title:
VICTOR COYNE INTERNATIONAL, INC.
BY: /s/ JAMES H. TATE
-----------------------------------
Name:
Title:
VICTOR EQUIPMENT COMPANY,
BY: /s/ JAMES H. TATE
-----------------------------------
Name:
Title:
WICHITA WAREHOUSE CORPORATION
BY: /s/ JAMES H. TATE
-----------------------------------
Name:
Title:
WOODLAND CRYOGENICS COMPANY
BY: /s/ JAMES H. TATE
-----------------------------------
Name:
Title:
82
<PAGE> 91
STATE STREET BANK AND TRUST COMPANY,
as Trustee
BY: /s/ PHILIP G. KANE, JR.
-----------------------------------
Name: Philip G. Kane, Jr.
Title: Vice President
83
<PAGE> 1
EXHIBIT 10.31
EXHIBIT A-1
(Face of Note)
================================================================================
CUSIP 883439AA9
9-7/8% Senior Subordinated Notes due 2008
No. ____ $__________
THERMADYNE MFG. LLC
AND
THERMADYNE CAPITAL CORP.
jointly and severally, promise to pay to ___________ or registered assigns, the
principal sum of _____________ Dollars on June 1, 2008.
Interest Payment Dates: June 1 and December 1.
Record Dates: May 15 and November 15.
================================================================================
A-1-1
<PAGE> 2
Dated: May 22, 1998
THERMADYNE MFG. LLC
By:
----------------------------------
Name:
Title:
THERMADYNE CAPITAL CORP.
By:
----------------------------------
Name:
Title:
This is one of the
Notes referred to in the
within-mentioned Indenture:
STATE STREET BANK AND TRUST COMPANY,
as Trustee
By:
----------------------------------
A-1-2
<PAGE> 3
(Back of Note)
9-7/8% Senior Subordinated Notes due 2008
[THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE INDENTURE
GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE BENEFICIAL
OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY CIRCUMSTANCES
EXCEPT THAT (I) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON AS MAY BE REQUIRED
PURSUANT TO SECTION 2.07 OF THE INDENTURE, (II) THIS GLOBAL NOTE MAY BE
EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT TO SECTION 2.06(a) OF THE INDENTURE,
(III) THIS GLOBAL NOTE MAY BE DELIVERED TO THE TRUSTEE FOR CANCELLATION PURSUANT
TO SECTION 2.11 OF THE INDENTURE AND (IV) THIS GLOBAL NOTE MAY BE TRANSFERRED TO
A SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN CONSENT OF THERMADYNE MFG. LLC AND
THERMADYNE CAPITAL CORPORATION.]1
THIS NOTE (OR ITS PREDECESSOR) HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE
OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED WITHIN THE UNITED STATES OR TO,
OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS, EXCEPT AS SET FORTH IN THE NEXT
SENTENCE. BY ITS ACQUISITION HEREOF OR OF A BENEFICIAL INTEREST HEREIN, THE
HOLDER: (1) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS
DEFINED IN RULE 144A UNDER THE SECURITIES ACT) (A "QIB"), (B) IT HAS ACQUIRED
THIS NOTE IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH REGULATION S UNDER THE
SECURITIES ACT OR (C) IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED
IN RULE 501(A) (1), (2), (3) OR (7) OR REGULATION D UNDER THE SECURITIES ACT (AN
"IAI"), (2) AGREES THAT IT WILL NOT RESELL OR OTHERWISE TRANSFER THIS NOTE
EXCEPT (A) TO THE ISSUERS OR ANY OF ITS SUBSIDIARIES, (B) TO A PERSON WHOM THE
SELLER REASONABLY BELIEVES IS A QIB PURCHASING FOR ITS OWN ACCOUNT OR FOR THE
ACCOUNT OF A QIB IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (C) IN
AN OFFSHORE TRANSACTION MEETING THE REQUIREMENTS OF RULE 903 OR 904 OF THE
SECURITIES ACT, (D) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144 UNDER
THE SECURITIES ACT, (E) TO AN IAI THAT, PRIOR TO SUCH TRANSFER, FURNISHES THE
TRUSTEE A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS
RELATING TO THE TRANSFER OF THIS NOTE (THE FORM OF WHICH CAN BE OBTAINED FROM
THE TRUSTEE) AND, IF SUCH TRANSFER IS IN RESPECT OF AN AGGREGATE PRINCIPAL
AMOUNT OF NOTES LESS THAN $250,000, AN OPINION OF COUNSEL ACCEPTABLE TO THE
ISSUERS THAT SUCH TRANSFER IS IN COMPLIANCE WITH THE SECURITIES ACT, (F) IN
ACCORDANCE WITH ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT (AND BASED UPON AN OPINION OF COUNSEL ACCEPTABLE TO THE ISSUERS)
OR (G) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT AND, IN EACH CASE, IN
ACCORDANCE WITH THE APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES
OR ANY OTHER APPLICABLE JURISDICTION AND (3) AGREES THAT IT WILL DELIVER TO EACH
PERSON TO WHOM THIS NOTE OR AN INTEREST HEREIN IS
- -------------------
1 This should be included only if the Note is being issued in global form.
A-1-3
<PAGE> 4
TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. AS USED HEREIN,
THE TERMS "OFFSHORE TRANSACTION" AND "UNITED STATES" HAVE THE MEANINGS GIVEN TO
THEM BY RULE 902 OF REGULATION S UNDER THE SECURITIES ACT. THE INDENTURE
CONTAINS A PROVISION REQUIRING THE TRUSTEE TO REFUSE TO REGISTER ANY TRANSFER OF
THIS NOTE IN VIOLATION OF THE FOREGOING.
Capitalized terms used herein shall have the meanings assigned to them
in the Indenture referred to below unless otherwise indicated.
1. INTEREST. Thermadyne Mfg. LLC, a Delaware limited liability
company ("Thermadyne"), and Thermadyne Capital Corp., a Delaware corporation
("Thermadyne Capital", together with Thermadyne, the "Issuers"), jointly and
severally, promise to pay interest on the principal amount of this Note at
9-7/8% per annum from May 22, 1998 until maturity and shall pay the Liquidated
Damages payable pursuant to Section 5 of the Registration Rights Agreement
referred to below. The Issuers will pay interest and Liquidated Damages
semi-annually on June 1 and December 1 of each year, or if any such day is not a
Business Day, on the next succeeding Business Day (each, an "Interest Payment
Date"). Interest on the Notes will accrue from the most recent date to which
interest has been paid or, if no interest has been paid, from May 22, 1998;
provided that if there is no existing Default in the payment of interest, and if
this Note is authenticated between a record date referred to on the face hereof
and the next succeeding Interest Payment Date, interest shall accrue from such
next succeeding Interest Payment Date; and provided further that the first
Interest Payment Date shall be December 1, 1998. The Issuers shall pay interest
(including post-petition interest in any proceeding under any Bankruptcy Law) on
overdue principal and premium, if any, from time to time on demand at a rate
that is 1% per annum in excess of the rate then in effect; they shall pay
interest (including post-petition interest in any proceeding under any
Bankruptcy Law) on overdue installments of interest and Liquidated Damages
(without regard to any applicable grace periods) from time to time on demand at
the same rate to the extent lawful. Interest will be computed on the basis of a
360-day year of twelve 30-day months.
2. METHOD OF PAYMENT. The Issuers will pay interest on the Notes
(except defaulted interest) and Liquidated Damages to the Persons who are
registered Holders of Notes at the close of business on the May 15 or November
15 next preceding the Interest Payment Date, even if such Notes are cancelled
after such record date and on or before such Interest Payment Date, except as
provided in Section 2.12 of the Indenture with respect to defaulted interest.
The Notes will be payable as to principal, premium and Liquidated Damages, if
any, and interest at the office of the Paying Agent and Registrar. Holders of
Notes must surrender their Notes to the Paying Agent to collect principal
payments, and the Issuers may pay principal and interest and Liquidated Damages,
if any, by check and may mail checks to a Holder's registered address; provided
that all payments with respect to Global Notes and Definitive Notes, the Holders
of which have given wire transfer instructions to the Issuers, will be required
to be made by wire transfer of immediately available funds to the accounts
specified by the Holders thereof. Such payment shall be in such coin or currency
of the United States of America as at the time of payment is legal tender for
payment of public and private debts.
3. PAYING AGENT AND REGISTRAR. Initially, State Street Bank and
Trust Company, the Trustee under the Indenture, will act as Paying Agent and
Registrar. The Issuers may change any Paying Agent or Registrar without notice
to any Holder. The Issuers or any of their Subsidiaries may act in any such
capacity.
4. INDENTURE The Issuers issued the Notes under an Indenture
dated as of May 22, 1998 ("Indenture"), among the Issuers, the Guarantors and
the Trustee. The terms of the Notes include those
A-1-4
<PAGE> 5
stated in the Indenture and those made part of the Indenture by reference to the
Trust Indenture Act of 1939, as amended (15 U.S. Code ss.ss. 77aaa-77bbbb). The
Notes are subject to all such terms, and Holders are referred to the Indenture
and such Act for a statement of such terms. To the extent any provision of this
Note conflicts with the express provisions of the Indenture, the provisions of
the Indenture shall govern and be controlling. The Notes are obligations of the
Issuers initially limited to $207 million in aggregate principal amount.
5. OPTIONAL REDEMPTION.
(a) Except as provided in subparagraph (b) of this Paragraph 5,
the Notes will not be redeemable at the Issuers' option prior to June 1, 2003.
Thereafter, the Notes will be subject to redemption at any time at the option of
the Issuers, in whole or in part, upon not less than 30 nor more than 60 days'
notice, in cash at the redemption prices (expressed as percentages of principal
amount) set forth below, plus accrued and unpaid interest and Liquidated
Damages, if any, thereon to the applicable redemption date, if redeemed during
the twelve-month period beginning on June 1 of the years indicated below:
<TABLE>
<CAPTION>
Year Percentage
---- ----------
<S> <C>
2003......................................... 104.938%
2004......................................... 103.292%
2005......................................... 101.646%
2006 and thereafter.......................... 100.000%
</TABLE>
(b) Notwithstanding the provisions of subparagraph (a) of this
Paragraph 5, on or prior to June 1, 2001, the Issuers may redeem up to 35% of
the aggregate principal amount of Notes ever issued under the Indenture in cash
at a redemption price of 109.875% of the principal amount thereof, plus accrued
and unpaid interest and Liquidated Damages, if any, thereon to the redemption
date, with the net cash proceeds of one or more Public Equity Offerings;
provided that at least 65% of the aggregate principal amount of Notes ever
issued under the Indenture remains outstanding immediately after the occurrence
of any such redemption; and provided further that such redemption shall occur
within 90 days of the date of the closing of any such Public Equity Offering.
(c) In addition, at any time prior to June 1, 2003, the Issuers
may, at their option upon the occurrence of a Change of Control, redeem the
Notes, in whole but not in part, upon not less than 30 nor more than 60 days'
prior notice (but in no event may any such redemption occur more than 60 days
after the occurrence of such Change of Control), in cash at a redemption price
equal to (i) the present value of the sum of all the remaining interest
(excluding accrued and unpaid interest, if any), premium and principal payments
that would become due on the Notes as if the Notes were to remain outstanding
and be redeemed on June 1, 2003, computed using a discount rate equal to the
Treasury Rate plus 50 basis points, plus (ii) accrued and unpaid interest and
Liquidated Damages, if any, to the date of redemption.
6. MANDATORY REDEMPTION.
Except as set forth in paragraph 7 below, the Issuers are not required
to make mandatory redemption of, or sinking fund payments with respect to, the
Notes.
A-1-5
<PAGE> 6
7. REPURCHASE AT OPTION OF HOLDER.
(a) Upon the occurrence of a Change of Control (such date being
the "Change of Control Payment"), each Holder of Notes shall have the right to
require the Issuers to purchase all or any part (equal to $1,000 or an integral
multiple thereof) of such Holder's Notes pursuant to an offer at an offer price
in cash equal to 101% of the aggregate principal amount thereof, plus accrued
and unpaid interest and Liquidated Damages, if any, thereon to the date of
repurchase. Within 60 days following any Change of Control, subject to the
provisions of the Indenture, the Issuers shall mail a notice to each Holder of
Notes at such Holder's registered address setting forth the procedures governing
the offer as required by the Indenture.
(b) When the aggregate amount of Excess Proceeds exceeds $15.0
million, the Issuers will be required to make an offer to all Holders of Notes
to purchase the maximum principal amount of Notes that may be purchased out of
Excess Proceeds, at an offer price in cash in an amount equal to 100% of the
principal amount thereof, plus accrued and unpaid interest and Liquidated
Damages, if any, thereon to the date of purchase, in accordance with the
procedures set forth in the Indenture. Holders of Notes that are subject to an
offer to purchase will receive an Asset Sale Offer from the Issuers prior to any
related purchase date and may elect to have such Notes purchased by completing
the form entitled "Option of Holder to Elect Purchase" on the reverse side of
this Note.
8. NOTICE OF REDEMPTION. Notice of any redemption or offer to
purchase will be mailed at least 30 days but not more than 60 days before the
redemption or purchase date to each Holder of Notes to be redeemed or purchased
at such Holder's registered address. Notes in denominations larger than $1,000
may be redeemed in part but only in whole multiples of $1,000, unless all of the
Notes held by a Holder are to be redeemed. On and after the redemption date,
interest and Liquidated Damages, if any, will cease to accrue on Notes or
portions thereof called for redemption.
9. DENOMINATIONS, TRANSFER, EXCHANGE. The Notes are in registered
form without coupons in denominations of $1,000 and integral multiples of
$1,000. The transfer of Notes may be registered and Notes may be exchanged as
provided in the Indenture. The Registrar and the Trustee may require a Holder,
among other things, to furnish appropriate endorsements and transfer documents
and the Issuers may require a Holder to pay any taxes and fees required by law
or permitted by the Indenture. The Issuers need not exchange or register the
transfer of any Note or portion of a Note selected for redemption, except for
the unredeemed portion of any Note being redeemed in part. Also, the Issuers
need not exchange or register the transfer of any Notes for a period of 15 days
before a selection of Notes to be redeemed or during the period between a record
date and the corresponding Interest Payment Date.
10. PERSONS DEEMED OWNERS. The registered Holder of a Note may be
treated as its owner for all purposes.
11. AMENDMENT, SUPPLEMENT AND WAIVER. Subject to certain
exceptions set forth in the Indenture, the Indenture, the Note Guarantees or the
Notes may be amended or supplemented with the consent of the Holders of at least
a majority in principal amount of the Notes then outstanding (including, without
limitation, consents obtained in connection with a purchase of, or tender offer
or exchange offer for, Notes), and any existing default or compliance with any
provision of the Indenture or the Notes may be waived with the consent of the
Holders of a majority in principal amount of the then outstanding Notes
A-1-6
<PAGE> 7
(including, without limitation, consents obtained in connection with a purchase
of, or tender offer or exchange offer for, Notes). Notwithstanding the
foregoing, without the consent of any Holder of Notes, the Issuers, the
Guarantors and the Trustee may amend or supplement the Indenture, the Note
Guarantees or the Notes to cure any ambiguity, defect or inconsistency, to
provide for uncertificated Notes in addition to or in place of certificated
Notes, to provide for the assumption of the Issuers' obligations to Holders of
Notes in the case of a merger or consolidation or sale of all or substantially
all of the Issuers' assets, to make any change that would provide any additional
rights or benefits to the Holders of Notes or that does not materially adversely
affect the legal rights under the Indenture of any such Holder, or to comply
with requirements of the Commission in order to effect or maintain the
qualification of the Indenture under the Trust Indenture Act or to provide for
additional Note Guarantees of the Notes.
12. DEFAULTS AND REMEDIES.
(a) Events of Default include: (a) default for 30 days in the payment
when due of interest on, or Liquidated Damages with respect to, the Notes
(whether or not prohibited by the subordination provisions of the Indenture);
(b) default in payment when due of the principal of or premium, if any, on the
Notes (whether or not prohibited by the subordination provisions of the
Indenture); (c) failure by the Issuers or any of their Restricted Subsidiaries
for 30 days after receipt of notice from the Trustee or Holders of at least 25%
in principal amount of the Notes then outstanding to comply with the provisions
of Sections 4.07, 4.09, 4.10, 4.15 and 5.01 of the Indenture; (d) failure by the
Issuers for 60 days after notice from the Trustee or the Holders of at least 25%
in principal amount of the Notes then outstanding to comply with any of their
other agreements in the Indenture or the Notes; (e) default under any mortgage,
indenture or instrument under which there may be issued or by which there may be
secured or evidenced any Indebtedness for money borrowed by the Issuers or any
of their Restricted Subsidiaries (or the payment of which is guaranteed by the
Issuers or any of their Restricted Subsidiaries), whether such Indebtedness or
guarantee now exists, or is created after the date of the Indenture, which
default (i) is caused by a failure to pay Indebtedness at its stated final
maturity (after giving effect to any applicable grace period provided in such
Indebtedness) (a "Payment Default") or (ii) results in the acceleration of such
Indebtedness prior to its stated final maturity and, in each case, the principal
amount of any such Indebtedness, together with the principal amount of any other
such Indebtedness under which there has been a Payment Default or the maturity
of which has been so accelerated, aggregates $10.0 million or more; (f) failure
by the Issuers or any of their Restricted Subsidiaries to pay final judgments
aggregating in excess of $10.0 million (net of any amounts with respect to which
a reputable and creditworthy insurance company has acknowledged liability in
writing), which judgments are not paid, discharged or stayed for a period of 60
days; (g) except as permitted by the Indenture, any Note Guarantee shall be held
in any judicial proceeding to be unenforceable or invalid or shall cease for any
reason to be in full force and effect or any Guarantor, or any Person acting on
behalf of any Guarantor, shall deny or disaffirm its obligations under its Note
Guarantee; and (h) certain events of bankruptcy or insolvency with respect to
the Issuers or any of their Restricted Subsidiaries that is a Significant
Subsidiary. If any Event of Default occurs and is continuing, the Trustee or the
Holders of at least 25% in principal amount of the then outstanding Notes may
declare all the Notes to be due and payable immediately; provided that, so long
as any Indebtedness permitted to be incurred pursuant to the New Credit Facility
shall be outstanding, such acceleration shall not be effective until the earlier
of (a) an acceleration of any such Indebtedness under the New Credit Facility or
(b) five business days after receipt by the Issuers and the administrative agent
under the New Credit Facility of written notice of such acceleration.
Notwithstanding the foregoing, in the case of an Event of Default arising from
certain events of bankruptcy or insolvency with respect to the Issuers or any of
their Restricted Subsidiaries that is a Significant Subsidiary, all outstanding
Notes will become due and payable without further action or notice.
A-1-7
<PAGE> 8
(b) In the event of a declaration of acceleration of the Notes because
an Event of Default has occurred and is continuing as a result of the
acceleration of any Indebtedness described in clause (e) of the preceding
paragraph, the declaration of acceleration of the Notes shall be automatically
annulled if the holders of any Indebtedness described in clause (e) have
rescinded the declaration of acceleration in respect of such Indebtedness within
30 days of the date of such declaration and if (i) the annulment of the
acceleration of the Notes would not conflict with any judgment or decree of a
court of competent jurisdiction and (ii) all existing Events of Default, except
non-payment of principal or interest on the Notes that became due solely because
of the acceleration of the Notes, have been cured or waived.
13. SUBORDINATION. The payment of Subordinated Note Obligations
will be subordinated in right of payment, as set forth in the Indenture, to the
prior payment in full in cash or cash equivalents of all Senior Indebtedness,
whether outstanding on the date of the Indenture or thereafter incurred. The
Issuers agree, and each Holder by accepting a Note agrees, that the payment of
principal of, premium and interest and Liquidated Damages, if any, on the Notes
is subordinated in right of payment, to the extent and in the manner provided in
the Indenture, to the prior payment in full in cash or cash equivalents of all
Senior Indebtedness (whether outstanding on the date hereof or thereafter
created, incurred, assumed or guaranteed), and that the subordination is for the
benefit of the holders of Senior Indebtedness.
14. NOTE GUARANTEES. The payment of principal of, premium, and
interest and Liquidated Damages, if any, on the Notes are unconditionally
guaranteed, jointly and severally, on a senior subordinated basis by the
Guarantors.
15. ADDITIONAL RIGHTS OF HOLDERS OF RESTRICTED GLOBAL NOTES. In
addition to the rights provided to Holders of Notes under the Indenture, Holders
of Restricted Global Notes shall have the rights set forth in the Registration
Rights Agreement dated as of May 22, 1998, among the Issuers, the Guarantors and
the parties named on the signature pages thereof (the "Registration Rights
Agreement").
16. TRUSTEE DEALINGS WITH ISSUERS. The Trustee, in its individual
or any other capacity, may make loans to, accept deposits from, and perform
services for the Issuers or their Affiliates, and may otherwise deal with any
Issuer or its Affiliates, as if it were not the Trustee.
17. NO RECOURSE AGAINST OTHERS. A director, officer, employee,
incorporator or stockholder, of any Issuer, as such, shall not have any
liability for any obligations of the Issuers under the Notes or the Indenture or
for any claim based on, in respect of, or by reason of, such obligations or
their creation. Each Holder by accepting a Note waives and releases all such
liability. The waiver and release are part of the consideration for the issuance
of the Notes.
18. AUTHENTICATION. This Note shall not be valid until
authenticated by the manual signature of the Trustee or an authenticating agent.
19. ABBREVIATIONS. Customary abbreviations may be used in the name
of a Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (=
tenants by the entireties), JT TEN (= joint tenants with right of survivorship
and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts
to Minors Act).
20. CUSIP NUMBERS. Pursuant to a recommendation promulgated by the
Committee on Uniform Security Identification Procedures, the Issuers have caused
CUSIP numbers to be printed on the Notes and the Trustee may use CUSIP numbers
in notices of redemption as a convenience to Holders.
A-1-8
<PAGE> 9
No representation is made as to the accuracy of such numbers either as printed
on the Notes or as contained in any notice of redemption and reliance may be
placed only on the other identification numbers placed thereon.
The Issuers will furnish to any Holder upon written request and without
charge a copy of the Indenture and/or the Registration Rights Agreement.
Requests may be made to:
Thermadyne Mfg. LLC
Thermadyne Capital Corp.
101 S. Hanley Road
St. Louis, MO 63105
Attention: Chief Financial Officer
A-1-9
<PAGE> 10
ASSIGNMENT FORM
To assign this Note, fill in the form below: (I) or (we) assign and transfer
this Note to
- --------------------------------------------------------------------------------
(Insert assignee's soc. sec. or tax I.D. no.)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Print or type assignee's name, address and zip code)
and irrevocably appoint_________________________________________________________
to transfer this Note on the books of the Issuers. The agent may substitute
another to act for him.
- --------------------------------------------------------------------------------
Date:
--------------------
Your Signature:
----------------------------
(Sign exactly as your name appears on
the face of this Note)
Signature Guarantee:
A-1-10
<PAGE> 11
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Note purchased by the Issuers
pursuant to Section 4.10 or 4.15 of the Indenture, check the box below:
[ ]Section 4.10 [ ]Section 4.15
If you want to elect to have only part of the Note purchased by the
Issuers pursuant to Section 4.10 or Section 4.15 of the Indenture, state the
amount you elect to have purchased: $________
Date: Your Signature:
------------ ---------------------------
(Sign exactly as your name appears
on the Note)
Tax Identification No:
--------------------
Signature Guarantee:
A-1-11
<PAGE> 12
[SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL NOTE]2
[The following exchanges of a part of this Global Note for an interest
in another Global Note or for a Definitive Note, or exchanges of a part of
another Global Note or Definitive Note for an interest in this Global Note, have
been made:
<TABLE>
<CAPTION>
Amount of Amount of
decrease in increase in Principal Amount Signature of
Principal Amount Principal of this Global Note authorized officer
of this Amount of this following such of Trustee or
Date of Exchange Global Note Global Note decrease(or increase) Note Custodian]
- ---------------- ----------- ----------- --------------------- ---------------
<S> <C> <C> <C> <C>
</TABLE>
- ----------------
2 This should be included only if the Note is being issued in global form.
A-1-12
<PAGE> 13
EXHIBIT A-2
(Face of Regulation S Temporary Global Note)
================================================================================
CUSIP U88346AA6
9-7/8% Senior Subordinated Notes due 2008
No. ____ $__________
THERMADYNE MFG. LLC
AND
THERMADYNE CAPITAL CORP.
jointly and severally, promise to pay to ___________ or registered assigns, the
principal sum of _____________ Dollars on June 1, 2008.
Interest Payment Dates: June 1 and December 1.
Record Dates: May 15 and November 15.
================================================================================
A-2-1
<PAGE> 14
Dated: May 22, 1998
THERMADYNE MFG. LLC
By:
-------------------------------
Name:
Title:
THERMADYNE CAPITAL CORP.
By:
-------------------------------
Name:
Title:
This is one of the
Notes referred to in the
within-mentioned Indenture:
STATE STREET BANK AND TRUST COMPANY,
as Trustee
By:
--------------------------------
A-2-2
<PAGE> 15
(Back of Note)
9-7/8% Senior Subordinated Notes due 2008
THE RIGHTS ATTACHING TO THIS REGULATION S TEMPORARY GLOBAL NOTE, AND THE
CONDITIONS AND PROCEDURES GOVERNING ITS EXCHANGE FOR CERTIFICATED NOTES, ARE AS
SPECIFIED IN THE INDENTURE (AS DEFINED HEREIN). NEITHER THE HOLDER NOR THE
BENEFICIAL OWNERS OF THIS REGULATION S TEMPORARY GLOBAL NOTE SHALL BE ENTITLED
TO RECEIVE PAYMENT OF INTEREST HEREON.
THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE INDENTURE
GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE BENEFICIAL
OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY CIRCUMSTANCES
EXCEPT THAT (I) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON AS MAY BE REQUIRED
PURSUANT TO SECTION 2.07 OF THE INDENTURE, (II) THIS GLOBAL NOTE MAY BE
EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT TO SECTION 2.06(a) OF THE INDENTURE,
(III) THIS GLOBAL NOTE MAY BE DELIVERED TO THE TRUSTEE FOR CANCELLATION PURSUANT
TO SECTION 2.11 OF THE INDENTURE AND (IV) THIS GLOBAL NOTE MAY BE TRANSFERRED TO
A SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN CONSENT OF THERMADYNE MFG. LLC AND
THERMADYNE CAPITAL CORPORATION.
THIS NOTE (OR ITS PREDECESSOR) HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE
OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED WITHIN THE UNITED STATES OR TO,
OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS, EXCEPT AS SET FORTH IN THE NEXT
SENTENCE. BY ITS ACQUISITION HEREOF OR OF A BENEFICIAL INTEREST HEREIN, THE
HOLDER: (1) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS
DEFINED IN RULE 144A UNDER THE SECURITIES ACT) (A "QIB"), (B) IT HAS ACQUIRED
THIS NOTE IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH REGULATION S UNDER THE
SECURITIES ACT OR (C) IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED
IN RULE 501(A) (1), (2), (3) OR (7) OR REGULATION D UNDER THE SECURITIES ACT (AN
"IAI"), (2) AGREES THAT IT WILL NOT RESELL OR OTHERWISE TRANSFER THIS NOTE
EXCEPT (A) TO THE ISSUERS OR ANY OF ITS SUBSIDIARIES, (B) TO A PERSON WHOM THE
SELLER REASONABLY BELIEVES IS A QIB PURCHASING FOR ITS OWN ACCOUNT OR FOR THE
ACCOUNT OF A QIB IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (C) IN
AN OFFSHORE TRANSACTION MEETING THE REQUIREMENTS OF RULE 903 OR 904 OF THE
SECURITIES ACT, (D) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144 UNDER
THE SECURITIES ACT, (E) TO AN IAI THAT, PRIOR TO SUCH TRANSFER, FURNISHES THE
TRUSTEE A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS
RELATING TO THE TRANSFER OF THIS NOTE (THE FORM OF WHICH CAN BE OBTAINED FROM
THE TRUSTEE) AND, IF SUCH TRANSFER IS IN RESPECT OF AN AGGREGATE PRINCIPAL
AMOUNT OF NOTES LESS THAN $250,000, AN OPINION OF COUNSEL ACCEPTABLE TO THE
ISSUERS THAT SUCH TRANSFER IS IN COMPLIANCE WITH THE SECURITIES ACT, (F) IN
ACCORDANCE WITH ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT (AND BASED UPON AN OPINION OF COUNSEL ACCEPTABLE TO THE ISSUERS)
OR (G) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT AND, IN EACH
A-2-3
<PAGE> 16
CASE, IN ACCORDANCE WITH THE APPLICABLE SECURITIES LAWS OF ANY STATE OF THE
UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION AND (3) AGREES THAT IT WILL
DELIVER TO EACH PERSON TO WHOM THIS NOTE OR AN INTEREST HEREIN IS TRANSFERRED A
NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. AS USED HEREIN, THE TERMS
"OFFSHORE TRANSACTION" AND "UNITED STATES" HAVE THE MEANINGS GIVEN TO THEM BY
RULE 902 OF REGULATION S UNDER THE SECURITIES ACT. THE INDENTURE CONTAINS A
PROVISION REQUIRING THE TRUSTEE TO REFUSE TO REGISTER ANY TRANSFER OF THIS NOTE
IN VIOLATION OF THE FOREGOING.
Capitalized terms used herein shall have the meanings assigned to them
in the Indenture referred to below unless otherwise indicated.
1. INTEREST. Thermadyne Mfg. LLC, a Delaware limited liability
company ("Thermadyne"), and Thermadyne Capital Corp., a Delaware corporation
("Thermadyne Capital", together with Thermadyne, the "Issuers"), jointly and
severally, promise to pay interest on the principal amount of this Note at
9-7/8% per annum from May 22, 1998 until maturity and shall pay the Liquidated
Damages payable pursuant to Section 5 of the Registration Rights Agreement
referred to below. The Issuers will pay interest and Liquidated Damages
semi-annually on June 1 and December 1 of each year, or if any such day is not a
Business Day, on the next succeeding Business Day (each, an "Interest Payment
Date"). Interest on the Notes will accrue from the most recent date to which
interest has been paid or, if no interest has been paid, from May 22, 1998;
provided that if there is no existing Default in the payment of interest, and if
this Note is authenticated between a record date referred to on the face hereof
and the next succeeding Interest Payment Date, interest shall accrue from such
next succeeding Interest Payment Date; and provided further that the first
Interest Payment Date shall be December 1, 1998. The Issuers shall pay interest
(including post-petition interest in any proceeding under any Bankruptcy Law) on
overdue principal and premium, if any, from time to time on demand at a rate
that is 1% per annum in excess of the rate then in effect; they shall pay
interest (including post-petition interest in any proceeding under any
Bankruptcy Law) on overdue installments of interest and Liquidated Damages
(without regard to any applicable grace periods) from time to time on demand at
the same rate to the extent lawful. Interest will be computed on the basis of a
360-day year of twelve 30-day months.
2. METHOD OF PAYMENT. The Issuers will pay interest on the Notes
(except defaulted interest) and Liquidated Damages to the Persons who are
registered Holders of Notes at the close of business on the May 15 or November
15 next preceding the Interest Payment Date, even if such Notes are cancelled
after such record date and on or before such Interest Payment Date, except as
provided in Section 2.12 of the Indenture with respect to defaulted interest.
The Notes will be payable as to principal, premium and Liquidated Damages, if
any, and interest at the office of the Paying Agent and Registrar. Holders of
Notes must surrender their Notes to the Paying Agent to collect principal
payments, and the Issuers may pay principal and interest and Liquidated Damages,
if any, by check and may mail checks to a Holder's registered address; provided
that all payments with respect to Global Notes and Definitive Notes, the Holders
of which have given wire transfer instructions to the Issuers, will be required
to be made by wire transfer of immediately available funds to the accounts
specified by the Holders thereof. Such payment shall be in such coin or currency
of the United States of America as at the time of payment is legal tender for
payment of public and private debts.
3. PAYING AGENT AND REGISTRAR. Initially, State Street Bank and
Trust Company, the Trustee under the Indenture, will act as Paying Agent and
Registrar. The Issuers may change any Paying Agent or Registrar without notice
to any Holder. The Issuers or any of their Subsidiaries may act in any such
capacity.
A-2-4
<PAGE> 17
4. INDENTURE The Issuers issued the Notes under an Indenture
dated as of May 22, 1998 ("Indenture"), among the Issuers, the Guarantors and
the Trustee. The terms of the Notes include those stated in the Indenture and
those made part of the Indenture by reference to the Trust Indenture Act of
1939, as amended (15 U.S. Code ss.ss. 77aaa-77bbbb). The Notes are subject to
all such terms, and Holders are referred to the Indenture and such Act for a
statement of such terms. To the extent any provision of this Note conflicts with
the express provisions of the Indenture, the provisions of the Indenture shall
govern and be controlling. The Notes are obligations of the Issuers initially
limited to $207 million in aggregate principal amount.
5. OPTIONAL REDEMPTION.
(a) Except as provided in subparagraph (b) of this Paragraph 5,
the Notes will not be redeemable at the Issuers' option prior to June 1, 2003.
Thereafter, the Notes will be subject to redemption at any time at the option of
the Issuers, in whole or in part, upon not less than 30 nor more than 60 days'
notice, in cash at the redemption prices (expressed as percentages of principal
amount) set forth below, plus accrued and unpaid interest and Liquidated
Damages, if any, thereon to the applicable redemption date, if redeemed during
the twelve-month period beginning on June 1 of the years indicated below:
<TABLE>
<CAPTION>
Year Percentage
---- ----------
<S> <C>
2003.........................................104.938%
2004.........................................103.292%
2005.........................................101.646%
2006 and thereafter..........................100.000%
</TABLE>
(b) Notwithstanding the provisions of subparagraph (a) of this
Paragraph 5, on or prior to June 1, 2001, the Issuers may redeem up to 35% of
the aggregate principal amount of Notes ever issued under the Indenture in cash
at a redemption price of 109.875% of the principal amount thereof, plus accrued
and unpaid interest and Liquidated Damages, if any, thereon to the redemption
date, with the net cash proceeds of one or more Public Equity Offerings;
provided that at least 65% of the aggregate principal amount of Notes ever
issued under the Indenture remains outstanding immediately after the occurrence
of any such redemption; and provided further that such redemption shall occur
within 90 days of the date of the closing of any such Public Equity Offering.
(c) In addition, at any time prior to June 1, 2003, the Issuers
may, at their option upon the occurrence of a Change of Control, redeem the
Notes, in whole but not in part, upon not less than 30 nor more than 60 days'
prior notice (but in no event may any such redemption occur more than 60 days
after the occurrence of such Change of Control), in cash at a redemption price
equal to (i) the present value of the sum of all the remaining interest
(excluding accrued and unpaid interest, if any), premium and principal payments
that would become due on the Notes as if the Notes were to remain outstanding
and be redeemed on June 1, 2003, computed using a discount rate equal to the
Treasury Rate plus 50 basis points, plus (ii) accrued and unpaid interest and
Liquidated Damages, if any, to the date of redemption.
A-2-5
<PAGE> 18
6. MANDATORY REDEMPTION.
Except as set forth in paragraph 7 below, the Issuers are not required
to make mandatory redemption of, or sinking fund payments with respect to, the
Notes.
7. REPURCHASE AT OPTION OF HOLDER.
(a) Upon the occurrence of a Change of Control (such date being
the "Change of Control Payment"), each Holder of Notes shall have the right to
require the Issuers to purchase all or any part (equal to $1,000 or an integral
multiple thereof) of such Holder's Notes pursuant to an offer at an offer price
in cash equal to 101% of the aggregate principal amount thereof, plus accrued
and unpaid interest and Liquidated Damages, if any, thereon to the date of
repurchase. Within 60 days following any Change of Control, subject to the
provisions of the Indenture, the Issuers shall mail a notice to each Holder of
Notes at such Holder's registered address setting forth the procedures governing
the offer as required by the Indenture.
(b) When the aggregate amount of Excess Proceeds exceeds $15.0
million, the Issuers will be required to make an offer to all Holders of Notes
to purchase the maximum principal amount of Notes that may be purchased out of
Excess Proceeds, at an offer price in cash in an amount equal to 100% of the
principal amount thereof, plus accrued and unpaid interest and Liquidated
Damages, if any, thereon to the date of purchase, in accordance with the
procedures set forth in the Indenture. Holders of Notes that are subject to an
offer to purchase will receive an Asset Sale Offer from the Issuers prior to any
related purchase date and may elect to have such Notes purchased by completing
the form entitled "Option of Holder to Elect Purchase" on the reverse side of
this Note.
8. NOTICE OF REDEMPTION. Notice of any redemption or offer to
purchase will be mailed at least 30 days but not more than 60 days before the
redemption or purchase date to each Holder of Notes to be redeemed or purchased
at such Holder's registered address. Notes in denominations larger than $1,000
may be redeemed in part but only in whole multiples of $1,000, unless all of the
Notes held by a Holder are to be redeemed. On and after the redemption date,
interest and Liquidated Damages, if any, will cease to accrue on Notes or
portions thereof called for redemption.
9. DENOMINATIONS, TRANSFER, EXCHANGE. The Notes are in registered
form without coupons in denominations of $1,000 and integral multiples of
$1,000. The transfer of Notes may be registered and Notes may be exchanged as
provided in the Indenture. The Registrar and the Trustee may require a Holder,
among other things, to furnish appropriate endorsements and transfer documents
and the Issuers may require a Holder to pay any taxes and fees required by law
or permitted by the Indenture. The Issuers need not exchange or register the
transfer of any Note or portion of a Note selected for redemption, except for
the unredeemed portion of any Note being redeemed in part. Also, the Issuers
need not exchange or register the transfer of any Notes for a period of 15 days
before a selection of Notes to be redeemed or during the period between a record
date and the corresponding Interest Payment Date.
10. PERSONS DEEMED OWNERS. The registered Holder of a Note may be
treated as its owner for all purposes.
A-2-6
<PAGE> 19
11. AMENDMENT, SUPPLEMENT AND WAIVER. Subject to certain
exceptions set forth in the Indenture, the Indenture, the Note Guarantees or the
Notes may be amended or supplemented with the consent of the Holders of at least
a majority in principal amount of the Notes then outstanding (including, without
limitation, consents obtained in connection with a purchase of, or tender offer
or exchange offer for, Notes), and any existing default or compliance with any
provision of the Indenture or the Notes may be waived with the consent of the
Holders of a majority in principal amount of the then outstanding Notes
(including, without limitation, consents obtained in connection with a purchase
of, or tender offer or exchange offer for, Notes). Notwithstanding the
foregoing, without the consent of any Holder of Notes, the Issuers, the
Guarantors and the Trustee may amend or supplement the Indenture, the Note
Guarantees or the Notes to cure any ambiguity, defect or inconsistency, to
provide for uncertificated Notes in addition to or in place of certificated
Notes, to provide for the assumption of the Issuers' obligations to Holders of
Notes in the case of a merger or consolidation or sale of all or substantially
all of the Issuers' assets, to make any change that would provide any additional
rights or benefits to the Holders of Notes or that does not materially adversely
affect the legal rights under the Indenture of any such Holder, or to comply
with requirements of the Commission in order to effect or maintain the
qualification of the Indenture under the Trust Indenture Act or to provide for
additional Note Guarantees of the Notes.
12. DEFAULTS AND REMEDIES.
(a) Events of Default include: (a) default for 30 days in the payment
when due of interest on, or Liquidated Damages with respect to, the Notes
(whether or not prohibited by the subordination provisions of the Indenture);
(b) default in payment when due of the principal of or premium, if any, on the
Notes (whether or not prohibited by the subordination provisions of the
Indenture); (c) failure by the Issuers or any of their Restricted Subsidiaries
for 30 days after receipt of notice from the Trustee or Holders of at least 25%
in principal amount of the Notes then outstanding to comply with the provisions
of Sections 4.07, 4.09, 4.10, 4.15 and 5.01 of the Indenture; (d) failure by the
Issuers for 60 days after notice from the Trustee or the Holders of at least 25%
in principal amount of the Notes then outstanding to comply with any of their
other agreements in the Indenture or the Notes; (e) default under any mortgage,
indenture or instrument under which there may be issued or by which there may be
secured or evidenced any Indebtedness for money borrowed by the Issuers or any
of their Restricted Subsidiaries (or the payment of which is guaranteed by the
Issuers or any of their Restricted Subsidiaries), whether such Indebtedness or
guarantee now exists, or is created after the date of the Indenture, which
default (i) is caused by a failure to pay Indebtedness at its stated final
maturity (after giving effect to any applicable grace period provided in such
Indebtedness) (a "Payment Default") or (ii) results in the acceleration of such
Indebtedness prior to its stated final maturity and, in each case, the principal
amount of any such Indebtedness, together with the principal amount of any other
such Indebtedness under which there has been a Payment Default or the maturity
of which has been so accelerated, aggregates $10.0 million or more; (f) failure
by the Issuers or any of their Restricted Subsidiaries to pay final judgments
aggregating in excess of $10.0 million (net of any amounts with respect to which
a reputable and creditworthy insurance company has acknowledged liability in
writing), which judgments are not paid, discharged or stayed for a period of 60
days; (g) except as permitted by the Indenture, any Note Guarantee shall be held
in any judicial proceeding to be unenforceable or invalid or shall cease for any
reason to be in full force and effect or any Guarantor, or any Person acting on
behalf of any Guarantor, shall deny or disaffirm its obligations under its Note
Guarantee; and (h) certain events of bankruptcy or insolvency with respect to
the Issuers or any of their Restricted Subsidiaries that is a Significant
Subsidiary. If any Event of Default occurs and is continuing, the Trustee or the
Holders of at least 25% in principal amount of the then outstanding Notes may
declare all the Notes to be due and payable immediately; provided that, so long
as any Indebtedness permitted to be incurred pursuant to the New Credit Facility
shall be outstanding, such acceleration shall not be effective until the earlier
of (a) an acceleration of any such Indebtedness under the New Credit Facility or
(b) five business
A-2-7
<PAGE> 20
days after receipt by the Issuers and the administrative agent under the New
Credit Facility of written notice of such acceleration. Notwithstanding the
foregoing, in the case of an Event of Default arising from certain events of
bankruptcy or insolvency with respect to the Issuers or any of their Restricted
Subsidiaries that is a Significant Subsidiary, all outstanding Notes will become
due and payable without further action or notice.
(b) In the event of a declaration of acceleration of the Notes because
an Event of Default has occurred and is continuing as a result of the
acceleration of any Indebtedness described in clause (e) of the preceding
paragraph, the declaration of acceleration of the Notes shall be automatically
annulled if the holders of any Indebtedness described in clause (e) have
rescinded the declaration of acceleration in respect of such Indebtedness within
30 days of the date of such declaration and if (i) the annulment of the
acceleration of the Notes would not conflict with any judgment or decree of a
court of competent jurisdiction and (ii) all existing Events of Default, except
non-payment of principal or interest on the Notes that became due solely because
of the acceleration of the Notes, have been cured or waived.
13. SUBORDINATION. The payment of Subordinated Note Obligations
will be subordinated in right of payment, as set forth in the Indenture, to the
prior payment in full in cash or cash equivalents of all Senior Indebtedness,
whether outstanding on the date of the Indenture or thereafter incurred. The
Issuers agree, and each Holder by accepting a Note agrees, that the payment of
principal of, premium and interest and Liquidated Damages, if any, on the Notes
is subordinated in right of payment, to the extent and in the manner provided in
the Indenture, to the prior payment in full in cash or cash equivalents of all
Senior Indebtedness (whether outstanding on the date hereof or thereafter
created, incurred, assumed or guaranteed), and that the subordination is for the
benefit of the holders of Senior Indebtedness.
14. NOTE GUARANTEES. The payment of principal of, premium, and
interest and Liquidated Damages, if any, on the Notes are unconditionally
guaranteed, jointly and severally, on a senior subordinated basis by the
Guarantors.
15. ADDITIONAL RIGHTS OF HOLDERS OF RESTRICTED GLOBAL NOTES. In
addition to the rights provided to Holders of Notes under the Indenture, Holders
of Restricted Global Notes shall have the rights set forth in the Registration
Rights Agreement dated as of May 22, 1998, among the Issuers, the Guarantors and
the parties named on the signature pages thereof (the "Registration Rights
Agreement").
16. TRUSTEE DEALINGS WITH ISSUERS. The Trustee, in its individual
or any other capacity, may make loans to, accept deposits from, and perform
services for the Issuers or their Affiliates, and may otherwise deal with any
Issuer or its Affiliates, as if it were not the Trustee.
17. NO RECOURSE AGAINST OTHERS. A director, officer, employee,
incorporator or stockholder, of any Issuer, as such, shall not have any
liability for any obligations of the Issuers under the Notes or the Indenture or
for any claim based on, in respect of, or by reason of, such obligations or
their creation. Each Holder by accepting a Note waives and releases all such
liability. The waiver and release are part of the consideration for the issuance
of the Notes.
18. AUTHENTICATION. This Note shall not be valid until
authenticated by the manual signature of the Trustee or an authenticating agent.
19. ABBREVIATIONS. Customary abbreviations may be used in the name
of a Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (=
tenants by the entireties), JT TEN (=
A-2-8
<PAGE> 21
joint tenants with right of survivorship and not as tenants in common), CUST (=
Custodian), and U/G/M/A (= Uniform Gifts to Minors Act).
20. CUSIP NUMBERS. Pursuant to a recommendation promulgated by the
Committee on Uniform Security Identification Procedures, the Issuers have caused
CUSIP numbers to be printed on the Notes and the Trustee may use CUSIP numbers
in notices of redemption as a convenience to Holders. No representation is made
as to the accuracy of such numbers either as printed on the Notes or as
contained in any notice of redemption and reliance may be placed only on the
other identification numbers placed thereon.
The Issuers will furnish to any Holder upon written request and without
charge a copy of the Indenture and/or the Registration Rights Agreement.
Requests may be made to:
Thermadyne Mfg. LLC
Thermadyne Capital Corp.
101 S. Hanley Road
St. Louis, MO 63105
Attention: Chief Financial Officer
A-2-9
<PAGE> 22
ASSIGNMENT FORM
To assign this Note, fill in the form below: (I) or (we) assign and transfer
this Note to
- --------------------------------------------------------------------------------
(Insert assignee's soc. sec. or tax I.D. no.)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Print or type assignee's name, address and zip code)
and irrevocably appoint_________________________________________________________
to transfer this Note on the books of the Issuers. The agent may substitute
another to act for him.
- --------------------------------------------------------------------------------
Date:
----------------
Your Signature:
--------------------------
(Sign exactly as your name appears
on the face of this Note)
Signature Guarantee:
A-2-10
<PAGE> 23
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Note purchased by the Issuers
pursuant to Section 4.10 or 4.15 of the Indenture, check the box below:
[ ] Section 4.10 [ ] Section 4.15
If you want to elect to have only part of the Note purchased by the
Issuers pursuant to Section 4.10 or Section 4.15 of the Indenture, state the
amount you elect to have purchased: $________
Date: Your Signature:
----------- -------------------------------
(Sign exactly as your name appears on the
Note)
Tax Identification No:
------------------------
Signature Guarantee:
A-2-11
<PAGE> 24
SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL NOTE
The following exchanges of a part of this Global Note for an interest
in another Global Note or for a Definitive Note, or exchanges of a part of
another Global Note or Definitive Note for an interest in this Global Note, have
been made:
<TABLE>
<CAPTION>
Amount of Amount of
decrease in increase in Principal Amount Signature of
Principal Amount Principal of this Global Note authorized officer
of this Amount of this following such of Trustee or
Date of Exchange Global Note Global Note decrease (or increase) Note Custodian
- ---------------- ------------ ----------- ---------------------- --------------
<S> <C> <C> <C> <C>
</TABLE>
A-2-12
<PAGE> 1
EXHIBIT 10.32
================================================================================
A/B EXCHANGE
REGISTRATION RIGHTS AGREEMENT
THERMADYNE MFG. LLC
THERMADYNE CAPITAL CORP.
as Issuers
C&G SYSTEMS HOLDING, INC.
C&G SYSTEMS, INC.
COYNE NATURAL GAS SYSTEMS INC.
MARISON CYLINDER COMPANY
MECO HOLDING COMPANY
MODERN ENGINEERING COMPANY, INC.
STOODY COMPANY
TAG REALTY, INC.
THERMADYNE CYLINDER COMPANY
THERMADYNE INDUSTRIES, INC.
THERMADYNE INTERNATIONAL CORP.
THERMAL ARC, INC.
THERMAL DYNAMICS CORP.
TWECO PRODUCTS, INC.
VICTOR COYNE INTERNATIONAL, INC.
VICTOR EQUIPMENT COMPANY
WICHITA WAREHOUSE CORPORATION
WOODLAND CRYOGENICS COMPANY
as Guarantors
$207,000,000
9-7/8% SENIOR SUBORDINATED NOTES DUE 2008
Dated as of May 22, 1998
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
================================================================================
<PAGE> 2
This Registration Rights Agreement (this "Agreement") is made and
entered into as of May 22, 1998, by and among Thermadyne Mfg. LLC, a Delaware
limited liability company, and Thermadyne Capital Corp., a Delaware corporation
(together, the "Issuers"), each of the guarantors listed on Schedule A hereto,
as guarantors (collectively, the "Guarantors"), and Donaldson, Lufkin &
Jenrette Securities Corporation (the "Initial Purchaser"), which has agreed to
purchase the Issuers' 9-7/8% Senior Subordinated Notes due 2008 (the "Series A
Notes") pursuant to the Purchase Agreement (as defined).
This Agreement is made pursuant to the Purchase Agreement, dated May 15,
1998 (the "Purchase Agreement"), by and among the Issuers, the Guarantors and
the Initial Purchaser. In order to induce the Initial Purchaser to purchase
the Series A Notes, the Issuers and the Guarantors have agreed to provide the
registration rights set forth in this Agreement. The execution and delivery of
this Agreement is a condition to the obligations of the Initial Purchaser set
forth in Section 9 of the Purchase Agreement. Capitalized terms used herein
and not otherwise defined shall have the meaning assigned to them in the
Indenture, dated May 22, 1998 (the "Indenture"), among the Issuers, the
Guarantors and State Street Bank and Trust Company, as Trustee, relating to the
Series A Notes and the Series B Notes (as defined).
The parties hereby agree as follows:
SECTION 1. DEFINITIONS
As used in this Agreement, the following capitalized terms shall have
the following meanings:
Act: The Securities Act of 1933, as amended.
Affiliate: As defined in Rule 144.
Broker-Dealer: Any broker or dealer registered under the Exchange Act.
Certificated Securities: Definitive Notes, as defined in the Indenture.
Closing Date: The date hereof.
Commission: The Securities and Exchange Commission.
Consummate: An Exchange Offer shall be deemed "Consummated" for
purposes of this Agreement upon the occurrence of (a) the filing and
effectiveness under the Act of the Exchange Offer Registration Statement
relating to the Series B Notes to be issued in the Exchange Offer, (b) the
keeping of the Exchange Offer open for a period not less than the period
required pursuant to Section 3(b) hereof and (c) the delivery by the Issuers to
the Registrar under the Indenture of Series B Notes in the same aggregate
principal amount as the aggregate principal amount of Series A Notes validly
tendered and not withdrawn by Holders thereof pursuant to the Exchange Offer.
Consummation Date: The date on which the Exchange Offer is consummated.
Consummation Deadline: As defined in Section 3(b) hereof.
Effectiveness Deadline: As defined in Sections 3(a) and 4(a) hereof.
Exchange Act: The Securities Exchange Act of 1934, as amended.
<PAGE> 3
Exchange Offer: The exchange and issuance by the Issuers of a principal
amount of Series B Notes (which shall be registered pursuant to the Exchange
Offer Registration Statement) equal to the outstanding principal amount of
Series A Notes that are validly tendered and not withdrawn in connection with
such exchange and issuance.
Exchange Offer Registration Statement: The Registration Statement
relating to the Exchange Offer, including the related Prospectus.
Exempt Resales: The transactions in which the Initial Purchaser
proposes to sell the Series A Notes to certain "qualified institutional
buyers," as such term is defined in Rule 144A under the Act, and pursuant to
Regulation S.
Filing Deadline: As defined in Sections 3(a) and 4(a) hereof.
Guarantors: The Guarantors defined in the preamble hereto and any
Person who becomes a guarantor after the date hereof pursuant to the terms of
the Indenture.
Holders: As defined in Section 2 hereof.
Prospectus: The prospectus included in a Registration Statement at the
time such Registration Statement is declared effective, as amended or
supplemented by any prospectus supplement and by all other amendments thereto,
including post-effective amendments, and all material incorporated by reference
into such Prospectus.
Recommencement Date: As defined in Section 6(d) hereof.
Registration Default: As defined in Section 5 hereof.
Registration Statement: Any registration statement of the Issuers and
the Guarantors relating to (a) an offering of Series B Notes pursuant to an
Exchange Offer or (b) the registration for resale of Transfer Restricted
Securities pursuant to the Shelf Registration Statement, in each case, (i) that
is filed pursuant to the provisions of this Agreement and (ii) including the
Prospectus included therein, all amendments and supplements thereto (including
post- effective amendments) and all exhibits and material incorporated by
reference therein.
Regulation S: Regulation S promulgated under the Act.
Rule 144: Rule 144 promulgated under the Act.
Series B Notes: The Issuers' 9-7/8% Senior Subordinated Notes due 2008
to be issued pursuant to the Indenture (i) in the Exchange Offer or (ii) as
contemplated by Section 6(b) hereof.
Shelf Registration Statement: As defined in Section 4 hereof.
Suspension Notice: As defined in Section 6(d) hereof.
2
<PAGE> 4
TIA: The Trust Indenture Act of 1939 (15 U.S.C. Section 77aaa-77bbbb),
as in effect on the date of the Indenture.
Transfer Restricted Securities: Each (a) Series A Note, until the
earliest to occur of (i) the date on which such Series A Note is exchanged in
the Exchange Offer for a Series B Note, (ii) the date on which such Series A
Note has been disposed of in accordance with a Shelf Registration Statement
(and the purchasers thereof have been issued Series B Notes), and (iii) the
date on which such Series A Note is distributed to the public pursuant to Rule
144 under the Act and (b) each Series B Note issued to a Broker-Dealer in the
Exchange Offer until the date on which such Series B Note is disposed of by
such Broker-Dealer pursuant to the "Plan of Distribution" contemplated by the
Exchange Offer Registration Statement (including the delivery of the Prospectus
contained therein).
SECTION 2. HOLDERS
A Person is deemed to be a holder of Transfer Restricted Securities
(each, a "Holder") whenever such Person is the holder of record of Transfer
Restricted Securities.
SECTION 3. REGISTERED EXCHANGE OFFER
(a) Unless the Exchange Offer shall not be permitted by applicable
federal law (after the procedures set forth in Section 6(a)(i) hereof have been
complied with), the Issuers and the Guarantors shall use their reasonable best
efforts to (i) cause the Exchange Offer Registration Statement to be filed with
the Commission as soon as practicable after the Closing Date, but in no event
later than 90 days after the Closing Date (such 90th day, the "Filing
Deadline"), (ii) cause such Exchange Offer Registration Statement to become
effective at the earliest possible time, but in no event later than 180 days
after the Closing Date (such 180th day, the "Effectiveness Deadline"), (iii) in
connection with the foregoing, (A) file all pre-effective amendments to such
Exchange Offer Registration Statement as may be necessary in order to cause it
to become effective, and (B) subject to the proviso in Section 6(c)(xii)
hereof, cause all necessary filings, if any, in connection with the
registration and qualification of the Series B Notes to be made under the Blue
Sky laws of such jurisdictions as are necessary to permit Consummation of the
Exchange Offer, and (iv) upon the effectiveness of such Exchange Offer
Registration Statement, commence and, within the time periods contemplated by
Section 3(b) hereof, Consummate the Exchange Offer. The Exchange Offer shall
be on the appropriate form permitting (i) registration of the Series B Notes to
be offered in exchange for the Series A Notes that are Transfer Restricted
Securities and (ii) resales of Series B Notes by Broker-Dealers that tendered
into the Exchange Offer Series A Notes that such Broker-Dealer acquired for its
own account as a result of market-making activities or other trading activities
(other than Series A Notes acquired directly from the Issuers or any of their
Affiliates) as contemplated by Section 3(c) hereof.
(b) The Issuers and the Guarantors shall use their reasonable best
efforts to cause the Exchange Offer Registration Statement to be effective
continuously, and shall keep the Exchange Offer open for a period of not less
than the minimum period required under applicable federal and state securities
laws to Consummate the Exchange Offer; provided that in no event shall such
period be less than 20 Business Days. The Issuers shall cause the Exchange
Offer to comply with all applicable federal and state securities laws. No
securities other than the Series B Notes shall be included in the Exchange
Offer Registration Statement. The Issuers shall use their reasonable best
efforts to cause the Exchange Offer to be
3
<PAGE> 5
Consummated on the earliest practicable date after the Exchange Offer
Registration Statement has become effective, but in no event later than 30
Business Days thereafter (such 30th day, the "Consummation Deadline").
(c) The Issuers shall include a "Plan of Distribution" section in
the Prospectus contained in the Exchange Offer Registration Statement and
indicate therein that any Broker-Dealer who holds Transfer Restricted
Securities that were acquired for the account of such Broker-Dealer as a result
of market-making activities or other trading activities (other than Series A
Notes acquired directly from the Issuers or any Affiliate of the Issuers), may
exchange such Transfer Restricted Securities pursuant to the Exchange Offer.
Such "Plan of Distribution" section shall also contain all other information
with respect to such sales by such Broker-Dealers that the Commission may
require in order to permit such sales pursuant thereto, but such "Plan of
Distribution" shall not name any such Broker-Dealer or disclose the amount of
Transfer Restricted Securities held by any such Broker-Dealer, except to the
extent required by the Commission.
Because such Broker-Dealer may be deemed to be an "underwriter" within
the meaning of the Act and must, therefore, deliver a prospectus meeting the
requirements of the Act in connection with its initial sale of any Series B
Notes received by such Broker-Dealer in the Exchange Offer, the Issuers shall
permit the use of the Prospectus contained in the Exchange Offer Registration
Statement by such Broker-Dealer to satisfy such prospectus delivery requirement
for a period of 90 days following the Consummation Date. To the extent
necessary to ensure that the prospectus contained in the Exchange Offer
Registration Statement is available for sales of Series B Notes by
Broker-Dealers, the Issuers and the Guarantors agree to use their reasonable
best efforts to keep the Exchange Offer Registration Statement continuously
effective, supplemented, amended and current as required by and subject to the
provisions of Sections 6(a) and (c) hereof and in conformity with the
requirements of this Agreement, the Act and the policies, rules and regulations
of the Commission as announced from time to time, for a period of 90 days from
the Consummation Date or such shorter period as will terminate when no Transfer
Restricted Securities are outstanding. The Issuers shall provide sufficient
copies of the latest version of such Prospectus to such Broker-Dealers,
promptly upon request, at any time during such period.
SECTION 4. SHELF REGISTRATION
(a) Shelf Registration. If (i) the Exchange Offer is not permitted
by applicable law (after the Issuers and the Guarantors have complied with the
procedures set forth in Section 6(a)(i) hereof) or (ii) if any Holder of
Transfer Restricted Securities shall notify the Issuers in writing within 20
Business Days following the Consummation Deadline that (A) based on an opinion
of counsel, such Holder was prohibited by law or Commission policy from
participating in the Exchange Offer or (B) such Holder is a Broker-Dealer and
holds Series A Notes acquired directly from the Issuers, then the Issuers and
the Guarantors shall:
(x) cause to be filed, on or prior to 90 days after the earlier
of (i) the date on which the Issuers determine that the Exchange Offer
Registration Statement cannot be filed as a result of Section 4(a)(i)
hereof and (ii) the date on which the Issuers receive the notice
specified in Section 4(a)(ii) hereof (such earlier date, the "Filing
Deadline"), a shelf registration statement (the "Shelf Registration
Statement") pursuant to Rule 415 under the Act (which may be an
amendment to the Exchange Offer Registration Statement) relating to
(1) all Transfer Restricted Securities in the case
4
<PAGE> 6
of clause (a)(i) above or (2) the Transfer Restricted Securities
specified in any notice in the case of clause (a)(ii) above; and
(y) shall use their reasonable best efforts to cause such Shelf
Registration Statement to become effective on or prior to 180 days
after the Filing Deadline for the Shelf Registration Statement (such
180th day, the "Effectiveness Deadline").
If, after the Issuers and the Guarantors have filed an Exchange Offer
Registration Statement that satisfies the requirements of Section 3(a) hereof,
the Issuers are required to file and make effective a Shelf Registration
Statement solely because the Exchange Offer is not permitted under applicable
federal law (i.e., Section 4(a)(i) hereof), then the filing of the Exchange
Offer Registration Statement shall be deemed to satisfy the requirements of
clause (x) above; provided that, in such event, the Issuers and the Guarantors
shall remain obligated to meet the Effectiveness Deadline set forth in clause
(y).
To the extent necessary to ensure that the Shelf Registration Statement
is available for sales of Transfer Restricted Securities by the Holders thereof
entitled to the benefit of this Section 4(a) and the other securities required
to be registered therein pursuant to Section 6(b)(ii) hereof, the Issuers and
the Guarantors shall use their reasonable best efforts to keep any Shelf
Registration Statement required by this Section 4(a) continuously effective,
supplemented, amended and current as required by and subject to the provisions
of Sections 6(b) and (c) hereof and in conformity with the requirements of this
Agreement, the Act and the policies, rules and regulations of the Commission as
announced from time to time, until the later of (a) the date on which the
Initial Purchaser is no longer deemed to be an Affiliate of the Issuers, and
(b) the earlier of the second anniversary of the Closing Date (as such date may
be extended pursuant to Section 6(d) hereof) and such earlier date when no
Transfer Restricted Securities covered by such Shelf Registration Statement
remain outstanding.
(b) Provision by Holders of Certain Information in Connection with
the Shelf Registration Statement. No Holder of Transfer Restricted Securities
may include any of its Transfer Restricted Securities in any Shelf Registration
Statement pursuant to this Agreement unless and until such Holder furnishes to
the Issuers in writing, within 20 days after receipt of a request therefor, the
information specified in Item 507 or 508 of Regulation S-K, as applicable, of
the Act for use in connection with any Shelf Registration Statement or
Prospectus or preliminary Prospectus included therein. No Holder of Transfer
Restricted Securities shall be entitled to liquidated damages pursuant to
Section 5 hereof unless and until such Holder shall have provided all such
information. Each selling Holder agrees to promptly furnish additional
information required to be disclosed in order to make the information
previously furnished to the Issuers by such Holder not materially misleading.
(c) Holders of Transfer Restricted Securities that do not give the
written notice within the 20 Business Day period set forth in Section 4(a)
hereof, if required to be given, will no longer have any registration rights
pursuant to this Section 4 and will not be entitled to any Liquidated Damages
pursuant to Section 5 hereof in respect of the Issuers' and the Guarantors'
obligations with respect to the Shelf Registration Statement.
5
<PAGE> 7
SECTION 5. LIQUIDATED DAMAGES
If (i) any Registration Statement required by this Agreement is not
filed with the Commission on or prior to the applicable Filing Deadline, (ii)
any such Registration Statement has not been declared effective by the
Commission on or prior to the applicable Effectiveness Deadline, (iii) the
Exchange Offer has not been Consummated on or prior to the Consummation
Deadline or (iv) any Registration Statement required by this Agreement is filed
and declared effective but shall thereafter cease to be effective or fail to be
usable for its intended purpose without being succeeded within ten Business
Days by a post-effective amendment to such Registration Statement that cures
such failure and that is itself declared effective ten Business Days of filing
such post-effective amendment to such Registration Statement (each such event
referred to in clauses (i) through (iv), a "Registration Default"), then the
Issuers and the Guarantors hereby agree to pay to each Holder of Transfer
Restricted Securities affected thereby liquidated damages in an amount equal to
$.05 per week per $1,000 in principal amount of Transfer Restricted Securities
held by such Holder for each week or portion thereof that the Registration
Default continues for the first 90-day period immediately following the
occurrence of such Registration Default. The amount of the liquidated damages
shall increase by an additional $.05 per week per $1,000 in principal amount of
Transfer Restricted Securities with respect to each subsequent 90-day period
until all Registration Defaults have been cured, up to a maximum amount of
liquidated damages of $.25 per week per $1,000 in principal amount of Transfer
Restricted Securities; provided that the Issuers and the Guarantors shall in no
event be required to pay liquidated damages for more than one Registration
Default at any given time. Notwithstanding anything to the contrary set forth
herein, (1) upon filing of the Exchange Offer Registration Statement (and/or,
if applicable, the Shelf Registration Statement), in the case of (i) above, (2)
upon the effectiveness of the Exchange Offer Registration Statement (and/or, if
applicable, the Shelf Registration Statement), in the case of (ii) above, (3)
upon Consummation of the Exchange Offer, in the case of (iii) above, (4) upon
the filing of a post-effective amendment to the Registration Statement or an
additional Registration Statement that causes the Exchange Offer Registration
Statement (and/or, if applicable, the Shelf Registration Statement) to again be
declared effective or made usable in the case of (iv) above, or (5) if sooner,
upon the first date on which no Transfer Restricted Securities remain
outstanding, in the case of clauses (i) through (iv) above, the liquidated
damages payable with respect to the Transfer Restricted Securities as a result
of such clause (i), (ii), (iii) or (iv), as applicable, shall cease.
All accrued liquidated damages shall be paid to the Holders entitled
thereto, in the manner provided for the payment of interest in the Indenture,
on each Interest Payment Date, as more fully set forth in the Indenture and the
Notes. Notwithstanding the fact that any securities for which liquidated
damages are due cease to be Transfer Restricted Securities, all obligations of
the Issuers and the Guarantors to pay liquidated damages with respect to
securities that accrued prior to the time such securities ceased to be Transfer
Restricted Securities shall survive until such time as such obligations with
respect to such securities shall have been satisfied in full.
SECTION 6. REGISTRATION PROCEDURES
(a) Exchange Offer Registration Statement. In connection with the
Exchange Offer, the Issuers and the Guarantors shall (x) comply with all
applicable provisions of Section 6(c) hereof, (y) use their reasonable best
efforts to effect such exchange and to permit the resale of Series B Notes by
Broker-Dealers that tendered in the Exchange Offer Series A Notes that such
Broker-Dealer acquired for its own account as a result of its market-making
activities or other trading activities (other than Series A Notes acquired
6
<PAGE> 8
directly from the Issuers or any of their Affiliates) being sold in accordance
with the intended method or methods of distribution thereof, and (z) comply
with all of the following provisions:
(i) If, following the date hereof there has been
announced a change in Commission policy with respect to exchange
offers, such as the Exchange Offer, that, in the opinion of counsel to
the Issuers and the Guarantors, raises a substantial question as to
whether the Exchange Offer is permitted by applicable federal law, the
Issuers and the Guarantors hereby agree to seek a no-action letter or
other favorable decision from the Commission allowing the Issuers and
the Guarantors to Consummate an Exchange Offer for such Transfer
Restricted Securities. The Issuers and the Guarantors hereby agree to
use their reasonable best efforts in pursuing the issuance of such a
decision to the Commission staff level.
(ii) As a condition to its participation in the Exchange
Offer, each Holder of Transfer Restricted Securities (including,
without limitation, any Holder who is a Broker-Dealer) shall furnish,
upon the request of the Issuers, prior to the Consummation of the
Exchange Offer, a written representation to the Issuers (which may be
contained in the letter of transmittal contemplated by the Exchange
Offer Registration Statement) to the effect that, at the time of
Consummation of the Exchange Offer, (A) any Series B Notes received by
such Holder will be acquired in the ordinary course of its business,
(B) such Holder will have no arrangement or understanding with any
person to participate in the distribution of the Series A Notes or the
Series B Notes within the meaning of the Act, (C) if the Holder is not
a Broker-Dealer or is a Broker-Dealer but will not receive Series B
Notes for its own account in exchange for Series A Notes, neither the
Holder nor any such other Person is engaged in or intends to
participate in a distribution of the Series B Notes, and (D) that such
Holder is not an Affiliate of the Issuers. If the Holder is a
Broker-Dealer that will receive Series B Notes for its own account in
exchange for Series A Notes, it will represent that the Notes to be
exchanged for the Series B Notes were acquired by it as a result of
market-making activities or other trading activities, and will
acknowledge that it will deliver a prospectus meeting the requirements
of the Act in connection with any resale of such Series B Notes. It
is understood that, by acknowledging that it will deliver, and by
delivering, a prospectus meeting the requirements of the Act in
connection with any resale of such Series B Notes, the Holder is not
admitting that it is an "underwriter" within the meaning of the Act.
(iii) Prior to effectiveness of the Exchange Offer
Registration Statement, the Issuers and the Guarantors shall provide a
supplemental letter to the Commission (A) stating that the Issuers and
the Guarantors are registering the Exchange Offer in reliance on the
position of the Commission enunciated in Exxon Capital Holdings
Corporation(available May 13, 1988) and Morgan Stanley and Co., Inc.
(available June 5, 1991), as interpreted in the Commission's letter to
Shearman & Sterling dated July 2, 1993, and, if applicable, any
no-action letter obtained pursuant to clause (i) above, (B) including
a representation that neither the Issuers nor any Guarantor have
entered into any arrangement or understanding with any Person to
distribute the Series B Notes to be received in the Exchange Offer and
that, to the best of the Issuers' and the Guarantors' information and
belief, each Holder participating in the Exchange Offer is acquiring
the Series B Notes in its ordinary course of business and has no
arrangement or understanding with any Person to participate in the
distribution of the Series B Notes received in the Exchange Offer and
(C) any
7
<PAGE> 9
other undertaking or representation required by the Commission as set
forth in any no-action letter obtained pursuant to clause (i) above,
if applicable.
(b) Shelf Registration Statement. In connection with the Shelf
Registration Statement, the Issuers and the Guarantors shall:
(i) comply with all the provisions of Section 6(c) hereof and
use their reasonable best efforts to effect such registration to permit
the sale of the Transfer Restricted Securities being sold in accordance
with the intended method or methods of distribution thereof (as
indicated in the information furnished to the Issuers pursuant to
Section 4(b) hereof), and pursuant thereto the Issuers and the
Guarantors will prepare and file with the Commission a Registration
Statement relating to the registration on any appropriate form under
the Act, which form shall be available for the sale of the Transfer
Restricted Securities in accordance with the intended method or methods
of distribution thereof within the time periods and otherwise in
accordance with the provisions hereof, and
(ii) issue, upon the request of any Holder or purchaser of
Series A Notes covered by any Shelf Registration Statement
contemplated by this Agreement, Series B Notes having an aggregate
principal amount equal to the aggregate principal amount of Series A
Notes sold pursuant to the Shelf Registration Statement and
surrendered to the Issuers for cancellation; the Issuers and the
Guarantors shall register Series B Notes on the Shelf Registration
Statement for this purpose and issue the Series B Notes to the
purchaser(s) of securities subject to the Shelf Registration Statement
in the names as such purchaser(s) shall designate.
(c) General Provisions. In connection with any Registration
Statement and any related Prospectus required by this Agreement, the Issuers
and the Guarantors shall, during the periods specified in Sections 3 and 4
hereof, as applicable:
(i) use their reasonable best efforts to keep such
Registration Statement continuously effective and provide all
requisite financial statements for the period specified in Section 3
or 4 of this Agreement, as applicable. Upon the occurrence of any
event that would cause any such Registration Statement or the
Prospectus contained therein (A) to contain an untrue statement of
material fact or omit to state any material fact necessary to make the
statements therein, in the light of the circumstances under which they
were made, not misleading or (B) not to be effective and usable for
resale of Transfer Restricted Securities during the period required by
this Agreement, the Issuers and the Guarantors shall file promptly an
appropriate amendment to such Registration Statement or a supplement
to the Prospectus, as applicable, curing such defect, and, in the case
of an amendment, use their reasonable best efforts to cause such
amendment to be declared effective as soon as practicable.
(ii) prepare and file with the Commission such amendments
and post-effective amendments to the applicable Registration Statement
as may be necessary to keep such Registration Statement effective for
the applicable period set forth in Section 3 or 4 hereof, as the case
may be; cause the Prospectus to be supplemented by any required
Prospectus supplement, and as so supplemented to be filed pursuant to
Rule 424 under the Act, and to comply fully with Rules
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<PAGE> 10
424, 430A and 462, as applicable, under the Act in a timely manner; and
comply with the provisions of the Act with respect to the disposition
of all securities covered by such Registration Statement during the
applicable period in accordance with the intended method or methods of
distribution by the sellers thereof set forth in such Registration
Statement or supplement to the Prospectus;
(iii) advise each Holder whose Transfer Restricted
Securities have been included in a Shelf Registration Statement (in
the case of the Shelf Registration Statement) and the Initial
Purchaser promptly and, if requested by such Person, confirm such
advice in writing, (A) when the Prospectus or any Prospectus
supplement or post-effective amendment has been filed, and, with
respect to any applicable Registration Statement or any post-effective
amendment thereto, when the same has become effective, (B) of any
request by the Commission for amendments to the Registration Statement
or amendments or supplements to the Prospectus or for additional
information relating thereto, (C) of the issuance by the Commission of
any stop order suspending the effectiveness of the Registration
Statement under the Act or of the suspension by any state securities
commission of the qualification of the Transfer Restricted Securities
for offering or sale in any jurisdiction, or the initiation of any
proceeding for any of the preceding purposes, and (D) of the existence
of any fact or the happening of any event that makes any statement of
a material fact made in the Registration Statement, the Prospectus,
any amendment or supplement thereto or any document incorporated by
reference therein untrue, or that requires the making of any additions
to or changes in the Registration Statement in order to make the
statements therein not misleading, or that requires the making of any
additions to or changes in the Prospectus in order to make the
statements therein, in the light of the circumstances under which they
were made, not misleading. If at any time the Commission shall issue
any stop order suspending the effectiveness of the Registration
Statement, or any state securities commission or other regulatory
authority shall issue an order suspending the qualification or
exemption from qualification of the Transfer Restricted Securities
under state securities or Blue Sky laws, the Issuers and the
Guarantors shall use their reasonable best efforts to obtain the
withdrawal or lifting of such order at the earliest possible time;
(iv) subject to Section 6(c)(i), if any fact or event
contemplated by Section 6(c)(iii)(D) hereof shall exist or have
occurred, prepare a supplement or post-effective amendment to the
Registration Statement or related Prospectus or any document
incorporated therein by reference or file any other required document
so that, as thereafter delivered to the purchasers of Transfer
Restricted Securities, the Prospectus will not contain an untrue
statement of a material fact or omit to state any material fact
necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading;
(v) furnish to each Holder whose Transfer Restricted
Securities have been included in a Shelf Registration Statement (in
the case of the Shelf Registration Statement) and the Initial
Purchaser, before filing with the Commission, copies of any
Registration Statement or any Prospectus included therein or any
amendments or supplements to any such Registration Statement or
Prospectus (including all documents incorporated by reference after
the initial filing of such Registration Statement), which documents
will be subject to the review and comment of such Persons, if any, for
a period of at least five Business Days, and the Issuers will not file
any such Registration Statement or Prospectus or any amendment or
supplement to any such Registration
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<PAGE> 11
Statement or Prospectus (including all such documents incorporated by
reference) to which such Persons shall reasonably object within five
Business Days after the receipt thereof. Such Persons shall be deemed
to have reasonably objected to such filing if such Registration
Statement, amendment, Prospectus or supplement, as applicable, as
proposed to be filed, contains an untrue statement of a material fact
or omit to state any material fact necessary to make the statements
therein, in the light of the circumstances under which they were made,
not misleading or fails to comply with the applicable requirements of
the Act;
(vi) promptly prior to the filing of any document that is
to be incorporated by reference into a Registration Statement or
Prospectus, provide copies of such document to each Holder whose
Transfer Restricted Securities have been included in a Shelf
Registration Statement (in the case of the Shelf Registration
Statement) and the Initial Purchaser, make the Issuers' and the
Guarantors' representatives available for discussion of such document
and other customary due diligence matters, and include such information
in such document prior to the filing thereof as such Persons may
reasonably request;
(vii) make available, at reasonable times, for inspection
by each Holder whose Transfer Restricted Securities have been included
in a Shelf Registration Statement (in the case of the Shelf
Registration Statement) and the Initial Purchaser and any attorney or
accountant retained by such Persons, all financial and other records,
pertinent corporate documents of the Issuers and the Guarantors and
cause the Issuers' and the Guarantors' officers, directors and
employees to supply all information reasonably requested by any such
Persons, attorney or accountant in connection with such Registration
Statement or any post-effective amendment thereto subsequent to the
filing thereof and prior to its effectiveness;
(viii) if requested by any Holders whose Transfer Restricted
Securities have been included in a Shelf Registration Statement (in
the case of the Shelf Registration Statement) or the Initial
Purchaser, promptly include in any Registration Statement or
Prospectus, pursuant to a supplement or post-effective amendment if
necessary, such information as such Persons may reasonably request to
have included therein, including, without limitation, information
relating to the "Plan of Distribution" of the Transfer Restricted
Securities and the use of the Registration Statement or Prospectus for
market-making activities; and make all required filings of such
Prospectus supplement or post-effective amendment as soon as
practicable after the Issuers are notified of the matters to be
included in such Prospectus supplement or post-effective amendment;
(ix) furnish to each Holder whose Transfer Restricted
Securities have been included in a Shelf Registration Statement (in
the case of the Shelf Registration Statement) and the Initial
Purchaser, without charge, at least one copy of the Registration
Statement, as first filed with the Commission, and of each amendment
thereto, including all documents incorporated by reference therein and
all exhibits (including exhibits incorporated therein by reference);
(x) deliver to each Holder whose Transfer Restricted
Securities have been included in a Shelf Registration Statement and
the Initial Purchaser without charge, as many copies of the Prospectus
(including each preliminary prospectus) and any amendment or
supplement thereto as such Persons reasonably may request; the Issuers
and the Guarantors hereby consent to the use (in
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<PAGE> 12
accordance with law and subject to Section 6(d) hereof) of the
Prospectus and any amendment or supplement thereto by each selling
Person in connection with the offering and the sale of the Transfer
Restricted Securities covered by the Prospectus or any amendment or
supplement thereto and all market-making activities of the Initial
Purchaser, as the case may be;
(xi) upon the request of any Holder whose Transfer
Restricted Securities have been included in a Shelf Registration
Statement (in the case of the Shelf Registration Statement) or the
Initial Purchaser, enter into such agreements (including underwriting
agreements) and make such representations and warranties and take all
such other actions in connection therewith in order to expedite or
facilitate the disposition of the Transfer Restricted Securities
pursuant to any applicable Registration Statement contemplated by this
Agreement as may be reasonably requested by such Person in connection
with any sale or resale pursuant to any applicable Registration
Statement. In such connection, the Issuers and the Guarantors shall:
(A) upon request of any such Person, furnish (or in the case of
paragraphs (2) and (3), use their reasonable best efforts to cause to
be furnished) to each Holder (in the case of the Shelf Registration
Statement) and the Initial Purchaser, upon Consummation of the
Exchange Offer or upon the effectiveness of the Shelf Registration
Statement, as the case may be:
(1) a certificate, dated such date, signed on behalf
of the Issuers by (x) the President or any Vice President and
(y) a principal financial or accounting officer of each of the
Issuers and each of the Guarantors, confirming, as of the date
thereof, the matters set forth in Sections 6(y), 9(a) and 9(b)
of the Purchase Agreement and such other similar matters as
such Person may reasonably request;
(2) an opinion, dated the date of Consummation of
the Exchange Offer or the date of effectiveness of the Shelf
Registration Statement, as the case may be, of counsel for the
Issuers and the Guarantors covering matters similar to those
set forth in Sections 9(e) and (f) of the Purchase Agreement
and such other matters as such Person may reasonably request,
and in any event including a statement to the effect that such
counsel has participated in conferences with officers and
other representatives of the Issuers and the Guarantors,
representatives of the independent public accountants for the
Issuers and the Guarantors and have considered the matters
required to be stated therein and the statements contained
therein, although such counsel has not independently verified
the accuracy, completeness or fairness of such statements; and
that such counsel advises that, on the basis of the foregoing
(relying as to materiality to the extent such counsel deems
appropriate upon the statements of officers and other
representatives of the Issuers and the Guarantors) and without
independent check or verification), no facts came to such
counsel's attention that caused such counsel to believe that
the applicable Registration Statement, at the time such
Registration Statement or any post-effective amendment thereto
became effective and, in the case of the Exchange Offer
Registration Statement, as of the date of Consummation of the
Exchange Offer, contained an untrue statement of a material
fact or omitted to state a material fact required to be stated
therein or necessary to make the
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<PAGE> 13
statements therein not misleading, or that the Prospectus contained
in such Registration Statement as of its date and, in the case of
the opinion dated the date of Consummation of the Exchange Offer,
as of the date of Consummation, contained an untrue statement of a
material fact or omitted to state a material fact necessary in
order to make the statements therein, in the light of the
circumstances under which they were made, not misleading. Without
limiting the foregoing, such counsel may state further that such
counsel assumes no responsibility for, and has not independently
verified, the accuracy, completeness or fairness of the financial
statements, notes and schedules and other financial data included
in any Registration Statement contemplated by this Agreement or the
related Prospectus; and
(3) a customary comfort letter, dated the date of
Consummation of the Exchange Offer, or as of the date of
effectiveness of the Shelf Registration Statement, as the case may
be, from the Issuers' and the Guarantors' independent accountants,
in the customary form and covering matters of the type customarily
covered in comfort letters to underwriters in connection with
underwritten offerings, and affirming the matters set forth in the
comfort letters delivered pursuant to Section 9(h) of the Purchase
Agreement; and
(B) deliver such other documents and certificates as may be
reasonably requested by such Persons to evidence compliance with
the matters covered in clause (A) above and with any customary
conditions contained in any agreement entered into by the Issuers
and the Guarantors pursuant to this clause (xi);
(xii) prior to any public offering of Transfer Restricted
Securities, cooperate with the selling Holders and their counsel in
connection with the registration and qualification of the Transfer
Restricted Securities under the securities or Blue Sky laws of such
jurisdictions as the selling Holders may request and do any and all
other acts or things necessary or advisable to enable the disposition
in such jurisdictions of the Transfer Restricted Securities covered by
the applicable Registration Statement; provided that neither the
Issuers nor any Guarantor shall be required to register or qualify as
a foreign corporation where it is not now so qualified or to take any
action that would subject it to the service of process in suits or to
taxation, other than as to matters and transactions relating to the
Registration Statement, in any jurisdiction where it is not now so
subject;
(xiii) in connection with any sale of Transfer Restricted
Securities that will result in such securities no longer being
Transfer Restricted Securities, cooperate with the Holders to
facilitate the timely preparation and delivery of certificates
representing Transfer Restricted Securities to be sold and not bearing
any restrictive legends; and to register such Transfer Restricted
Securities in such denominations and such names as the selling Holders
may request at least two Business Days prior to such sale of Transfer
Restricted Securities;
(xiv) use their reasonable best efforts to cause the
disposition of the Transfer Restricted Securities covered by the
Registration Statement to be registered with or approved by such other
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<PAGE> 14
governmental agencies or authorities as may be necessary to enable the
seller or sellers thereof to consummate the disposition of such
Transfer Restricted Securities, subject to the proviso contained in
clause (xii) above;
(xv) provide a CUSIP number for all Transfer Restricted
Securities not later than the effective date of a Registration
Statement covering such Transfer Restricted Securities and provide the
Trustee under the Indenture with printed certificates for the Transfer
Restricted Securities which are in a form eligible for deposit with The
Depository Trust Company;
(xvi) otherwise use their reasonable best efforts to
comply with all applicable rules and regulations of the Commission, and
make generally available to their security holders with regard to any
applicable Registration Statement, as soon as practicable, a
consolidated earnings statement meeting the requirements of Rule 158
(which need not be audited) covering a twelve-month period beginning
after the effective date of the Registration Statement (as such term is
defined in Rule 158(c) under the Act);
(xvii) cause the Indenture to be qualified under the TIA
not later than the effective date of the first Registration Statement
required by this Agreement and, in connection therewith, cooperate with
the Trustee and the Holders to effect such changes to the Indenture as
may be required for such Indenture to be so qualified in accordance
with the terms of the TIA; and execute and use their reasonable best
efforts to cause the Trustee to execute, all documents that may be
required to effect such changes and all other forms and documents
required to be filed with the Commission to enable such Indenture to be
so qualified in a timely manner; and
(xviii) provide promptly to each Holder and the Initial
Purchaser, upon request, each document filed with the Commission
pursuant to the requirements of Section 13 or Section 15(d) of the
Exchange Act.
(d) Restrictions on Holders. Each Holder agrees by acquisition of
a Transfer Restricted Security and the Initial Purchaser agrees that, upon
receipt of the notice referred to in Section 6(c)(iii)(C) or any notice from
the Issuers of the existence of any fact of the kind described in Section
6(c)(iii)(D) hereof (in each case, a "Suspension Notice"), such Person will
forthwith discontinue disposition of Transfer Restricted Securities pursuant to
the applicable Registration Statement until (i) such Person has received copies
of the supplemented or amended Prospectus contemplated by Section 6(c)(iv)
hereof, or (ii) such Person is advised in writing by the Issuers that the use
of the Prospectus may be resumed, and has received copies of any additional or
supplemental filings that are incorporated by reference in the Prospectus (in
each case, the "Recommencement Date"). Each Person receiving a Suspension
Notice hereby agrees that it will either (i) destroy any Prospectuses, other
than permanent file copies, then in such Person's possession which have been
replaced by the Issuers with more recently dated Prospectuses or (ii) deliver
to the Issuers (at the Issuers' expense) all copies, other than permanent file
copies, then in such Person's possession of the Prospectus covering such
Transfer Restricted Securities that was current at the time of receipt of the
Suspension Notice. The time period regarding the effectiveness of such
Registration Statement set forth in Section 3 or 4 hereof, as applicable, shall
be extended by a number of days equal to the number of days in the period from
and including the date of delivery of the Suspension Notice to the date of
delivery of the Recommencement Date.
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SECTION 7. REGISTRATION EXPENSES
(a) All expenses incident to the Issuers' and the Guarantors'
performance of or compliance with this Agreement will be borne by the Issuers
and the Guarantors, regardless of whether a Registration Statement becomes
effective, including, without limitation: (i) all registration and filing fees
and expenses; (ii) all fees and expenses of compliance with federal securities
and state Blue Sky or securities laws; (iii) all expenses of printing
(including printing certificates for the Series B Notes to be issued in the
Exchange Offer and printing of Prospectuses (whether for exchanges, sales,
market-making or otherwise), messenger and delivery services and telephone;
(iv) all fees and disbursements of counsel for the Issuers and the Guarantors;
(v) all application and filing fees in connection with listing the Series B
Notes on a national securities exchange or automated quotation system pursuant
to the requirements hereof; and (vi) all fees and disbursements of independent
certified public accountants of the Issuers and the Guarantors (including the
expenses of any special audit and comfort letters required by or incident to
such performance).
The Issuers will, in any event, bear its and the Guarantors' internal
expenses (including, without limitation, all salaries and expenses of their
officers and employees performing legal or accounting duties), the expenses of
any annual audit and the fees and expenses of any Person, including special
experts, retained by the Issuers and the Guarantors.
(b) In connection with any Registration Statement required by this
Agreement (including, without limitation, the Exchange Offer Registration
Statement and the Shelf Registration Statement), the Issuers and the Guarantors
will reimburse the Initial Purchaser and the Holders of Transfer Restricted
Securities who are tendering Series A Notes in the Exchange Offer and/or
selling or reselling Series A Notes or Series B Notes pursuant to the "Plan of
Distribution" contained in the Exchange Offer Registration Statement or the
Shelf Registration Statement, as applicable, for the reasonable fees and
disbursements of not more than one counsel, who shall be chosen by the Holders
of a majority in principal amount of the Transfer Restricted Securities for
whose benefit such Registration Statement is being prepared.
SECTION 8. INDEMNIFICATION
(a) The Issuers and the Guarantors, jointly and severally, agree to
indemnify and hold harmless each Holder, its directors, officers and each
Person, if any, who controls such Holder (within the meaning of Section 15 of
the Act or Section 20 of the Exchange Act), from and against any and all
losses, claims, damages, liabilities, judgments, (including, without
limitation, any legal or other expenses incurred in connection with
investigating or defending any matter, including any action that could give
rise to any such losses, claims, damages, liabilities or judgments) caused by
any untrue statement or alleged untrue statement of a material fact contained
in any Registration Statement, preliminary prospectus or Prospectus (or any
amendment or supplement thereto) provided by the Issuers to any Holder or any
prospective purchaser of Series B Notes or registered Series A Notes, or caused
by any omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not
misleading, except insofar as such losses, claims, damages, liabilities or
judgments are caused by an untrue statement or omission or alleged untrue
statement or omission that is based upon information relating to any of the
Holders furnished in writing to the Issuers by any of the Holders.
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(b) Each Holder of Transfer Restricted Securities agrees, severally
and not jointly, to indemnify and hold harmless each of the Issuers and the
Guarantors, its directors and officers, and each person, if any, who controls
(within the meaning of Section 15 of the Act or Section 20 of the Exchange Act)
such Issuer or Guarantor, to the same extent as the foregoing indemnity from
the Issuers and the Guarantors set forth in Section 8(a) hereof, but only with
reference to information relating to such Holder furnished in writing to the
Issuers and the Guarantors by such Holder expressly for use in any Registration
Statement. In no event shall any Holder, its directors, officers or any Person
who controls such Holder be liable or responsible for any amount in excess of
the amount by which the total amount received by such Holder with respect to
its sale of Transfer Restricted Securities pursuant to a Registration Statement
exceeds (i) the amount paid by such Holder for such Transfer Restricted
Securities and (ii) the amount of any damages that such Holder, its directors,
officers or any Person who controls such Holder has otherwise been required to
pay by reason of such untrue or alleged untrue statement or omission or alleged
omission.
(c) In case any action shall be commenced involving any person in
respect of which indemnity may be sought pursuant to Section 8(a) or 8(b) (the
"indemnified party"), the indemnified party shall promptly notify the person
against whom such indemnity may be sought (the "indemnifying person") in
writing, and the indemnifying party shall assume the defense of such action,
including the employment of counsel reasonably satisfactory to the indemnified
party and the payment of all fees and expenses of such counsel, as incurred
(except that, in the case of any action in respect of which indemnity may be
sought pursuant to both Sections 8(a) and 8(b), a Holder shall not be required
to assume the defense of such action pursuant to this Section 8(c), but may
employ separate counsel and participate in the defense thereof, but the fees
and expenses of such counsel, except as provided below, shall be at the expense
of the Holder). Any indemnified party shall have the right to employ separate
counsel in any such action and participate in the defense thereof, but the fees
and expenses of such counsel shall be at the expense of the indemnified party,
unless (i) the employment of such counsel shall have been specifically
authorized in writing by the indemnifying party, (ii) the indemnifying party
shall have failed to assume the defense of such action or employ counsel
reasonably satisfactory to the indemnified party or (iii) the named parties to
any such action (including any impleaded parties) include both the indemnified
party and the indemnifying party, and the indemnified party shall have been
advised by such counsel that there may be one or more legal defenses available
to it which are different from or additional to those available to the
indemnifying party (in which case the indemnifying party shall not have the
right to assume the defense of such action on behalf of the indemnified party).
In any such case, the indemnifying party shall not, in connection with any one
action or separate but substantially similar or related actions in the same
jurisdiction arising out of the same general allegations or circumstances, be
liable for the fees and expenses of more than one separate firm of attorneys
(in addition to any local counsel) for all indemnified parties and all such
fees and expenses shall be reimbursed as they are incurred. Such firm shall be
designated in writing by a majority of the Holders, in the case of the parties
indemnified pursuant to Section 8(a), and by the Issuers and the Guarantors, in
the case of parties indemnified pursuant to Section 8(b). The indemnifying
party shall indemnify and hold harmless the indemnified party from and against
any and all losses, claims, damages, liabilities and judgments by reason of any
settlement of any action (i) effected with its written consent or (ii) effected
without its written consent if the settlement is entered into more than twenty
Business Days after the indemnifying party shall have received a request from
the indemnified party for reimbursement for the fees and expenses of counsel
(in any case where such fees and expenses are at the expense of the
indemnifying party) and, prior to the date of such settlement, the indemnifying
party shall have failed to comply with such reimbursement request. No
indemnifying party shall, without the prior written consent of the indemnified
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<PAGE> 17
party, effect any settlement or compromise of, or consent to the entry of
judgment with respect to, any pending or threatened action in respect of which
the indemnified party is or could have been a party and indemnity or
contribution may be or could have been sought hereunder by the indemnified
party, unless such settlement, compromise or judgment (i) includes an
unconditional release of the indemnified party from all liability on claims
that are or could have been the subject matter of such action and (ii) does not
include a statement as to or an admission of fault, culpability or a failure to
act, by or on behalf of the indemnified party.
(d) To the extent that the indemnification provided for in this
Section 8 is unavailable to an indemnified party in respect of any losses,
claims, damages, liabilities or judgments referred to therein, then each
indemnifying party, in lieu of indemnifying such indemnified party, shall
contribute to the amount paid or payable by such indemnified party as a result
of such losses, claims, damages, liabilities or judgments (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Issuers and the Guarantors, on the one hand, and the Holders, on the other
hand, from their sale of Transfer Restricted Securities or (ii) if the
allocation provided by clause 8(d)(i) is not permitted by applicable law, in
such proportion as is appropriate to reflect not only the relative benefits
referred to in clause 8(d)(i) hereof but also the relative fault of the Issuers
and the Guarantors, on the one hand, and of the Holder, on the other hand, in
connection with the statements or omissions which resulted in such losses,
claims, damages, liabilities or judgments, as well as any other relevant
equitable considerations. The relative fault of the Issuers and the
Guarantors, on the one hand, and of the Holder, on the other hand, shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to
state a material fact relates to information supplied by the Issuers and the
Guarantors, on the one hand, or by the Holder, on the other hand, and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission. The amount paid or payable by
an indemnified party as a result of the losses, claims, damages, liabilities or
judgments referred to above shall be deemed to include, subject to the
limitations set forth in the second paragraph of Section 8(a), any legal or
other fees or expenses reasonably incurred by such indemnified party in
connection with investigating or defending any matter, including any action
that could have given rise to such losses, claims, damages, liabilities or
judgments.
The Issuers, the Guarantors and each Holder agree that it would not be
just and equitable if contribution pursuant to this Section 8(d) were
determined by pro rata allocation (even if the Holders were treated as one
entity for such purpose) or by any other method of allocation which does not
take account of the equitable considerations referred to in the immediately
preceding paragraph. Notwithstanding the provisions of this Section 8, no
Holder, its directors, its officers or any Person, if any, who controls such
Holder shall be required to contribute, in the aggregate, any amount in excess
of the amount by which the total received by such Holder with respect to the
sale of Transfer Restricted Securities pursuant to a Registration Statement
exceeds (i) the amount paid by such Holder for such Transfer Restricted
Securities and (ii) the amount of any damages which such Holder has otherwise
been required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The Holders' obligations to contribute pursuant to this
Section 8(d) are several in proportion to the respective principal amount of
Transfer Restricted Securities held by each Holder hereunder and not joint.
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(e) The Issuers and the Guarantors agree that the indemnity and
contribution provisions of this Section 8 shall apply to the Initial Purchaser
to the same extent, on the same conditions, as it applies to Holders.
SECTION 9. RULE 144A AND RULE 144
The Issuers and the Guarantors agrees with each Holder, for so long as
any Transfer Restricted Securities remain outstanding and during any period in
which the Issuers (i) are not subject to Section 13 or 15(d) of the Exchange
Act, to make available, upon request of any Holder, to such Holder or
beneficial owner of Transfer Restricted Securities in connection with any sale
thereof and any prospective purchaser of such Transfer Restricted Securities
designated by such Holder or beneficial owner, the information required by Rule
144A(d)(4) under the Act in order to permit resales of such Transfer Restricted
Securities pursuant to Rule 144A, and (ii) are subject to Section 13 or 15(d)
of the Exchange Act, to make all filings required thereby in a timely manner in
order to permit resales of such Transfer Restricted Securities pursuant to Rule
144.
SECTION 10. MISCELLANEOUS
(a) Remedies. The Issuers and the Guarantors acknowledge and agree
that any failure by the Issuers and the Guarantors to comply with their
obligations under Sections 3 and 4 hereof may result in material irreparable
injury to the Initial Purchaser or the Holders for which there is no adequate
remedy at law, that it will not be possible to measure damages for such
injuries precisely and that, in the event of any such failure, the Initial
Purchaser or any Holder may obtain such relief as may be required to
specifically enforce the Issuers' and the Guarantors' obligations under
Sections 3 and 4 hereof. The Issuers and the Guarantors further agree to waive
the defense in any action for specific performance that a remedy at law would
be adequate.
(b) No Inconsistent Agreements. None of the Issuers or the
Guarantors will, on or after the date of this Agreement, enter into any
agreement with respect to its securities that is inconsistent with the rights
granted to the Holders in this Agreement or otherwise conflicts with the
provisions hereof. None of the Issuers or the Guarantors has previously entered
into any agreement granting any registration rights with respect to its
securities to any Person. The rights granted to the Holders hereunder do not
in any way conflict with and are not inconsistent with the rights granted to
the holders of the Issuers' or any Guarantor's securities under any agreement
in effect on the date hereof.
(c) Amendments and Waivers. The provisions of this Agreement may
not be amended, modified or supplemented, and waivers or consents to or
departures from the provisions hereof may not be given unless (i) in the case
of Section 5 hereof and this Section 10(c)(i), the Issuers have obtained the
written consent of Holders of all outstanding Transfer Restricted Securities,
and (ii) in the case of all other provisions hereof, the Issuers have obtained
the written consent of Holders of a majority of the outstanding principal
amount of Transfer Restricted Securities (excluding Transfer Restricted
Securities held by the Issuers or their Affiliates). Notwithstanding the
foregoing, a waiver or consent to departure from the provisions hereof that
relates exclusively to the rights of Holders whose Transfer Restricted
Securities are being tendered pursuant to the Exchange Offer, and that does not
affect directly or indirectly the rights of other Holders whose Transfer
Restricted Securities are not being tendered pursuant to such Exchange Offer,
17
<PAGE> 19
may be given by the Holders of a majority of the outstanding principal amount
of Transfer Restricted Securities subject to such Exchange Offer.
(d) Third Party Beneficiary. The Holders shall be third party
beneficiaries to the agreements made hereunder between the Issuers and the
Guarantors, on the one hand, and the Initial Purchaser, on the other hand, and
shall have the right to enforce such agreements directly to the extent they may
deem such enforcement necessary or advisable to protect its rights or the
rights of Holders hereunder.
(e) Notices. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand-delivery, first-class mail
(registered or certified, return receipt requested), telex, telecopier, or air
courier guaranteeing overnight delivery:
(i) if to a Holder, at the address set forth on the
records of the Registrar under the Indenture, with a copy to the
Registrar under the Indenture; and
(ii) if to the Issuers or the Guarantors:
c/o Thermadyne Mfg. LLC
101 South Hanley Road
St. Louis, Missouri 63105
Telecopier No.: (314) 746-2327
Attention: Stephanie N. Josephson, Esq.
With a copy to:
Davis Polk & Wardwell
450 Lexington Avenue
New York, New York 10017
Telecopier No.: (212) 450-4000
Attention: Richard D. Truesdell, Esq.
and
Weil, Gotshal & Manges LLP
100 Crescent Court, Suite 1300
Dallas, Texas 75201
Telecopier No.: (214) 746-7777
Attention: R. Scott Cohen, Esq.
All such notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered; five Business
Days after being deposited in the mail, postage prepaid, if mailed; when
receipt acknowledged, if telecopied; and on the next Business Day, if timely
delivered to an air courier guaranteeing overnight delivery.
18
<PAGE> 20
Copies of all such notices, demands or other communications shall be
concurrently delivered by the Person giving the same to the Trustee at the
address specified in the Indenture.
Upon the date of filing of the Exchange Offer or a Shelf Registration
Statement, as the case may be, notice shall be delivered to Donaldson, Lufkin &
Jenrette Securities Corporation (in the form attached hereto as Exhibit A) and
shall be addressed to: Attention: Louise Guarneri (Compliance Department), 277
Park Avenue, New York, New York 10172.
(f) Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the successors and assigns of each of the
parties, including, without limitation, and without the need for an express
assignment, subsequent Holders; provided that nothing herein shall be deemed to
permit any assignment, transfer or other disposition of Transfer Restricted
Securities in violation of the terms hereof or of the Purchase Agreement or the
Indenture. If any transferee of any Holder shall acquire Transfer Restricted
Securities in any manner, whether by operation of law or otherwise, such
Transfer Restricted Securities shall be held subject to all of the terms of
this Agreement, and by taking and holding such Transfer Restricted Securities
such Person shall be conclusively deemed to have agreed to be bound by and to
perform all of the terms and provisions of this Agreement, including the
restrictions on resale set forth in this Agreement and, if applicable, the
Purchase Agreement, and such Person shall be entitled to receive the benefits
hereof.
(g) Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(h) Headings. The headings in this Agreement are for convenience
of reference only and shall not limit or otherwise affect the meaning hereof.
(i) 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 CONFLICT OF LAW RULES THEREOF.
(j) Severability. In the event that any one or more of the
provisions contained herein, or the application thereof in any circumstance, is
held invalid, illegal or unenforceable, the validity, legality and
enforceability of any such provision in every other respect and of the
remaining provisions contained herein shall not be affected or impaired
thereby.
(k) Entire Agreement. This Agreement is intended by the parties as
a final expression of their agreement and intended to be a complete and
exclusive statement of the agreement and understanding of the parties hereto in
respect of the subject matter contained herein. There are no restrictions,
promises, warranties or undertakings, other than those set forth or referred to
herein with respect to the registration rights granted with respect to the
Transfer Restricted Securities. This Agreement supersedes all prior agreements
and understandings between the parties with respect to such subject matter.
19
<PAGE> 21
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
THERMADYNE MFG. LLC
By: /s/ STEPHANIE N. JOSEPHSON
-----------------------------
Name:
Title:
THERMADYNE CAPITAL CORP.
By: /s/ STEPHANIE N. JOSEPHSON
-----------------------------
Name:
Title:
C&G SYSTEMS HOLDING, INC.
By: /s/ STEPHANIE N. JOSEPHSON
-----------------------------
Name:
Title:
C&G SYSTEMS, INC.
By: /s/ STEPHANIE N. JOSEPHSON
-----------------------------
Name:
Title:
COYNE NATURAL GAS SYSTEMS INC.
By: /s/ STEPHANIE N. JOSEPHSON
-----------------------------
Name:
Title:
MARISON CYLINDER COMPANY
By: /s/ STEPHANIE N. JOSEPHSON
-----------------------------
Name:
Title:
20
<PAGE> 22
MECO HOLDING COMPANY
By: /s/ STEPHANIE N. JOSEPHSON
-----------------------------
Name:
Title:
MODERN ENGINEERING COMPANY, INC.
By: /s/ STEPHANIE N. JOSEPHSON
-----------------------------
Name:
Title:
STOODY COMPANY
By: /s/ STEPHANIE N. JOSEPHSON
-----------------------------
Name:
Title:
TAG REALTY, INC.
By: /s/ STEPHANIE N. JOSEPHSON
-----------------------------
Name:
Title:
THERMADYNE CYLINDER COMPANY
By: /s/ STEPHANIE N. JOSEPHSON
-----------------------------
Name:
Title:
THERMADYNE INDUSTRIES, INC.
By: /s/ STEPHANIE N. JOSEPHSON
-----------------------------
Name:
Title:
21
<PAGE> 23
THERMADYNE INTERNATIONAL CORP.
By: /s/ STEPHANIE N. JOSEPHSON
-----------------------------
Name:
Title:
THERMAL ARC, INC.
By: /s/ STEPHANIE N. JOSEPHSON
-----------------------------
Name:
Title:
THERMAL DYNAMICS CORP.,
By: /s/ STEPHANIE N. JOSEPHSON
-----------------------------
Name:
Title:
TWECO PRODUCTS, INC.
By: /s/ STEPHANIE N. JOSEPHSON
-----------------------------
Name:
Title:
VICTOR COYNE INTERNATIONAL, INC.
By: /s/ STEPHANIE N. JOSEPHSON
-----------------------------
Name:
Title:
VICTOR EQUIPMENT COMPANY,
By: /s/ STEPHANIE N. JOSEPHSON
-----------------------------
Name:
Title:
22
<PAGE> 24
WICHITA WAREHOUSE CORPORATION
By: /s/ STEPHANIE N. JOSEPHSON
-----------------------------
Name:
Title:
WOODLAND CRYOGENICS COMPANY
By: /s/ STEPHANIE N. JOSEPHSON
-----------------------------
Name:
Title:
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
By: /s/ TIMOTHY WHITE
-----------------------------
Name: Timothy White
Title: Vice President
23
<PAGE> 25
EXHIBIT A
NOTICE OF FILING OF
A/B EXCHANGE OFFER REGISTRATION STATEMENT
To: Donaldson, Lufkin & Jenrette Securities Corporation
277 Park Avenue
New York, New York 10172
Attention: Louise Guarneri (Compliance Department)
Fax: (212) 892-7272
From: Thermadyne Mfg. LLC and Thermadyne Capital Corp.
9-7/8% Senior Subordinated Notes due 2008
Date: ___________, 1998
For your information only (NO ACTION REQUIRED):
Today, ___________, 1998, we filed [an A/B Exchange Registration
Statement/a Shelf Registration Statement] with the Securities and Exchange
Commission.
24
<PAGE> 26
SCHEDULE A
Guarantors
C&G Systems Holding, Inc.
C&G Systems, Inc.
Coyne Natural Gas Systems Inc.
Marison Cylinder Company
MECO Holding Company
Modern Engineering Company, Inc.
Stoody Company
TAG Realty, Inc.
Thermadyne Cylinder Company
Thermadyne Industries, Inc.
Thermadyne International Corp.
Thermal Arc, Inc.
Thermal Dynamics Corp.,
Tweco Products, Inc.
Victor Coyne International, Inc.
Victor Equipment Company,
Wichita Warehouse Corporation
Woodland Cryogenics Company
25
<PAGE> 1
EXHIBIT 10.33
[EXECUTION COPY]
U.S. $430,000,000
CREDIT AGREEMENT,
dated as of May 22, 1998,
among
THERMADYNE MFG. LLC,
COMWELD GROUP PTY. LTD.,
GENSET S.P.A.
and
THERMADYNE WELDING PRODUCTS CANADA LIMITED,
as the Borrowers,
VARIOUS FINANCIAL INSTITUTIONS,
as the Lenders,
DLJ CAPITAL FUNDING, INC.,
as the Syndication Agent for the Lenders,
SOCIETE GENERALE,
as the Documentation Agent for the Lenders
and
ABN AMRO BANK N.V.,
as the Administrative Agent for the Lenders.
<PAGE> 2
ARRANGED BY
DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION
2
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
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ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
1.1. Defined Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.2. Use of Defined Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
1.3. Cross-References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
1.4. Accounting and Financial Determinations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
ARTICLE II
COMMITMENTS, BORROWING AND ISSUANCE PROCEDURES,NOTES AND LETTERS OF CREDIT
2.1. Commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
2.1.1. Term Loan Commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
2.1.2. Revolving Loan Commitments and Swing Line Loan Commitment . . . . . . . . . . . . . . . . . . . . . . . . 48
2.1.3. Letter of Credit Commitment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
2.1.4. Lenders Not Permitted or Required to Make the Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
2.1.5. Issuer Not Permitted or Required to Issue Letters of Credit . . . . . . . . . . . . . . . . . . . . . . . 52
2.2. Optional Reduction of the Revolving Loan Commitment Amount . . . . . . . . . . . . . . . . . . . . . . . . 52
2.3. Borrowing Procedures and Funding Maintenance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
2.3.1. Term Loans and Committed Revolving Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
2.3.2. Swing Line Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
2.4. Uncommitted Foreign Currency Revolving Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
2.4.1. Uncommitted Foreign Currency Revolving Loan Borrowing Request . . . . . . . . . . . . . . . . . . . . . . 55
2.4.2. Invitation for Uncommitted Foreign Currency Interest Quotes . . . . . . . . . . . . . . . . . . . . . . . 56
2.4.3. Submission and Contents of Uncommitted Foreign Currency Interest . . . . . . . . . . . . . . . . . . . . . 57
2.4.4. Uncommitted Foreign Currency Revolving Loan Acceptance . . . . . . . . . . . . . . . . . . . . . . . . . . 58
2.5. Committed Foreign Currency Revolving Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
2.6. Continuation and Conversion Elections . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
2.7. Funding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
2.8. Issuance Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
2.8.1. Other Lenders' Participation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
2.8.2. Disbursements; Conversion to Committed Revolving Loans . . . . . . . . . . . . . . . . . . . . . . . . . . 63
2.8.3. Reimbursement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
2.8.4. Deemed Disbursements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
2.8.5. Nature of Reimbursement Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
2.9. Register; Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
</TABLE>
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ARTICLE III
REPAYMENTS, PREPAYMENTS, INTEREST AND FEES
3.1. Repayments and Prepayments; Application . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
3.1.1. Repayments and Prepayments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
3.1.2. Application . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
3.2. Interest Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
3.2.1. Rates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
3.2.2. Post-Maturity Rates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
3.2.3. Payment Dates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
3.3. Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
3.3.1. Commitment Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
3.3.2. Administrative Agent Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
3.3.3. Letter of Credit Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
ARTICLE IV
CERTAIN LIBO RATE AND OTHER PROVISIONS
4.1. LIBO Rate Lending Unlawful . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
4.2. Deposits Unavailable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
4.3. Increased LIBO Rate Loan Costs, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
4.4. Funding Losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
4.5. Increased Capital Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
4.6. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
4.7. Payments, Computations, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
4.8. Sharing of Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
4.9. Setoff . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
4.10. Mitigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
4.11. Replacement of Lenders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
ARTICLE V
CONDITIONS TO CREDIT EXTENSIONS
5.1. Initial Credit Extension . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
5.1.1. Resolutions, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
5.1.2. Transaction Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
5.1.3. Consummation of Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
5.1.4. Closing Date Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
5.1.5. Delivery of Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
5.1.6. Subsidiary Co-Obligation Agreement and Guaranty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
5.1.7. Pledge Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
5.1.8. Security Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
5.1.9. Financial Information, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
5.1.10. Solvency, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
5.1.11. Holdco Equity Contribution, Asset Contribution, Discount Debentures
Issuance, Closing Date Dividend/Intercompany Loan and Subordinated
Debt Issuance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
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5.1.12. Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
5.1.13. Material Adverse Change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
5.1.14. Reliance Letters. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
5.1.15. Opinions of Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
5.1.16. Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
5.1.17. Perfection Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
5.1.18. Closing Fees, Expenses, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
5.1.19. Satisfactory Legal Form. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
5.2. All Credit Extensions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
5.2.1. Compliance with Warranties, No Default, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
5.2.2. Credit Extension Request. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90
5.3. First Borrowing by Each Foreign Subsidiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
6.1. Organization, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91
6.2. Due Authorization, Non-Contravention, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91
6.3. Government Approval, Regulation, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92
6.4. Validity, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92
6.5. Financial Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93
6.6. No Material Adverse Effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93
6.7. Litigation, Labor Controversies, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93
6.8. Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93
6.9. Ownership of Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93
6.10. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93
6.11. Pension and Welfare Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93
6.12. Environmental Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94
6.13. Regulations G, U and X . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95
6.14. Accuracy of Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95
6.15. Solvency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96
ARTICLE VII
COVENANTS
7.1. Affirmative Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96
7.1.1. Financial Information, Reports, Notices, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96
7.1.2. Compliance with Laws, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98
7.1.3. Maintenance of Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98
7.1.4. Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99
7.1.5. Books and Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99
7.1.6. Environmental Covenant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99
7.1.7. Future Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100
7.1.8. Future Leased Property and Future Acquisitions of Real Property; Future Acquisition of Other
Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101
7.1.9. Use of Proceeds, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101
</TABLE>
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7.1.10. Hedging Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102
7.1.11. Undertaking . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102
7.1.12. Mortgages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102
7.2. Negative Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103
7.2.1. Business Activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103
7.2.2. Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103
7.2.3. Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105
7.2.4. Financial Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107
7.2.5. Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 108
7.2.6. Restricted Payments, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111
7.2.7. Capital Expenditures, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 114
7.2.8. Consolidation, Merger, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 114
7.2.9. Asset Dispositions, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 115
7.2.10. Modification of Certain Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 116
7.2.11. Transactions with Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 117
7.2.12. Negative Pledges, Restrictive Agreements, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 117
7.2.13. Stock of Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 118
7.2.14. Sale and Leaseback . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 118
ARTICLE VIII
EVENTS OF DEFAULT
8.1. Listing of Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 118
8.1.1. Non-Payment of Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 118
8.1.2. Breach of Warranty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 118
8.1.3. Non-Performance of Certain Covenants and Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . 119
8.1.4. Non-Performance of Other Covenants and Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . 119
8.1.5. Default on Other Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 119
8.1.6. Judgments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 119
8.1.7. Pension Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 119
8.1.8. Change in Control . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 120
8.1.9. Bankruptcy, Insolvency, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 120
8.1.10. Impairment of Security, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 120
8.1.11. Subordinated Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 121
8.2. Action if Bankruptcy, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 121
8.3. Action if Other Event of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 121
ARTICLE IX
THE AGENTS
9.1. Actions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 122
9.2. Funding Reliance, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 122
9.3. Exculpation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 123
9.4. Successor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 123
9.5. Credit Extensions by Each Agent and Issuer. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 124
9.6. Credit Decisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 124
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9.7. Copies, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 124
9.8. The Syndication Agent, the Documentation Agent and the Administrative Agent . . . . . . . . . . . . . . . 124
ARTICLE X
COMPANY GUARANTY
10.1. Guaranty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 125
10.2. Acceleration of Obligations Hereunder . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 125
10.3. Obligations Hereunder Absolute, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 125
10.4. Reinstatement, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 127
10.5. Waiver, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 127
10.6. Postponement of Subrogation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 127
10.7. Successors, Transferees and Assigns; Transfers of Notes, etc. . . . . . . . . . . . . . . . . . . . . . . 127
ARTICLE XI
MISCELLANEOUS PROVISIONS
11.1. Waivers, Amendments, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 128
11.2. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 129
11.3. Payment of Costs and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 129
11.4. Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 130
11.5. Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 132
11.6. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 132
11.7. Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 132
11.8. Execution in Counterparts, Effectiveness, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 132
11.9. Governing Law; Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 132
11.10. Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 132
11.11. Sale and Transfer of Loans and Notes; Participations in Loans and Notes . . . . . . . . . . . . . . . . . 133
11.11.1. Assignments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 133
11.11.2. Participations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 135
11.12. Other Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 136
11.13. Forum Selection, Consent to Jurisdiction and Waiver of Immunities . . . . . . . . . . . . . . . . . . . . 136
11.14. Judgment Currency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 137
11.15. Waiver of Jury Trial . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 137
11.16. Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 138
||
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SCHEDULE I - Disclosure Schedule
SCHEDULE II - Percentages and Administrative Information
SCHEDULE III - Illustration Relating to Section 2.5(d)
EXHIBIT A-1 - Form of Revolving Note
EXHIBIT A-2 - Form of Term-A Note
EXHIBIT A-3 - Form of Term-B Note
EXHIBIT A-4 - Form of Term-C Note
EXHIBIT A-5 - Form of Swing Line Note
EXHIBIT B-1 - Form of Committed Loan Borrowing Request
EXHIBIT B-2 - Form of Issuance Request
EXHIBIT B-3 - Form of Uncommitted Foreign Currency Revolving Loan Borrowing Request
EXHIBIT B-4 - Form of Invitation for Uncommitted Foreign Currency Interest Quotes
EXHIBIT B-5 - Form of Uncommitted Foreign Currency Interest Quote
EXHIBIT B-6 - Form of Revolving Loan Foreign Currency Commitment Addendum
EXHIBIT B-7 - Form of Uncommitted Foreign Currency Revolving Borrowing Addendum
EXHIBIT C - Form of Continuation/Conversion Notice
EXHIBIT D - Form of Closing Date Certificate
EXHIBIT E-1 - Form of Compliance Certificate
EXHIBIT E-2 - Form of Restricted Payments Compliance Certificate
EXHIBIT E-3 - Form of U.S. Dollar Equivalent Certificate
EXHIBIT F-1 - Form of Company Security Agreement
EXHIBIT F-2 - Form of Subsidiary Security Agreement
EXHIBIT G-1 - Form of Holdco Guaranty and Pledge Agreement
EXHIBIT G-2 - Form of Company Pledge Agreement
EXHIBIT G-3 - Form of Subsidiary Pledge Agreement
EXHIBIT H - Form of Subsidiary Co-Obligation Agreement and Guaranty
EXHIBIT I - Form of Perfection Certificate
EXHIBIT J - Form of Lender Assignment Agreement
EXHIBIT K-1 - Form of New York Counsel Opinion
EXHIBIT K-2 - Form of Local Counsel Opinion
EXHIBIT K-3 - Form of Opinion of the General Counsel of the Company
EXHIBIT K-4 - Form of Opinion of Local Counsel to each Foreign Borrower
EXHIBIT L - Form of Intercreditor Agreement
</TABLE>
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<PAGE> 9
CREDIT AGREEMENT
THIS CREDIT AGREEMENT, dated as of May 22, 1998, is among
Thermadyne Mfg. LLC, a Delaware limited liability company (the "Company"),
Comweld Group Pty. Ltd. (the "Initial Australian Borrower"), GenSet S.p.A. (the
"Initial Italian Borrower"), Thermadyne Welding Products Canada Limited (the
"Initial Canadian Borrower"), the various financial institutions as are or may
become parties hereto (collectively, the "Lenders"), DLJ Capital Funding, Inc.
("DLJ"), as syndication agent for the Lenders (the "Syndication Agent"),
Societe Generale, as documentation agent for the Lenders (the "Documentation
Agent"), and ABN AMRO Bank N.V. ("ABN AMRO"), as administrative agent for the
Lenders (the "Administrative Agent"; the Syndication Agent and the
Administrative Agent are sometimes referred to herein as the "Agents" and each
as an "Agent").
W I T N E S S E T H:
WHEREAS, DLJ Merchant Banking Partners II, L.P., DLJ
Offshore Partners II, C.V., DLJ Diversified Partners, L.P., DLJMB Funding II,
Inc., DLJ EAB Partners, L.P., UK Investment Plan 1997 Partners, DLJ Diversified
Partners-A, L.P., DLJ ESC II, L.P., DLJ First ESC L.P., DLJ Millennium
Partners, L.P., DLJ Millennium Partners-A, L.P. and DLJ Merchant Banking
Partners II-A, L.P. (collectively the "DLJMB Entities") own all of the issued
and outstanding Capital Stock of Mercury Acquisition Corporation, a Delaware
corporation ("Mergerco");
WHEREAS, the DLJMB Entities and certain current equity
owners of Thermadyne Holdings Corporation, a Delaware corporation
("Thermadyne"), and employees of Thermadyne and its Subsidiaries (such owners,
employees and the DLJMB Entities being, collectively, the "Purchasers") intend
to consummate a leveraged recapitalization of Thermadyne, whereby, among other
things, (i) Thermadyne will contribute all of its assets to the Company (the
"Asset Contribution"), which is a wholly-owned Subsidiary of Thermadyne, and
(ii) thereafter, Mergerco will merge (the "Merger") with and into Thermadyne
(such leveraged recapitalization, Merger, Asset Contribution and all
transactions related thereto, including those described in the recitals hereto,
being herein collectively referred to as the "Transaction");
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<PAGE> 10
WHEREAS, Thermadyne will be the corporation surviving the
Merger (Mergerco, at all times prior to the consummation of the Merger, and
such surviving corporation, at all times after the consummation of the Merger,
being herein collectively referred to as "Holdco"), and, after giving effect to
the Merger, the Purchasers will be the holders of at least 80% of the issued
and outstanding Capital Stock of Holdco;
WHEREAS, in connection with the Transaction, and pursuant
to the Transaction Documents, the following capital-raising transactions will
be consummated prior to or contemporaneously with the consummation of the
Merger and the making of the initial Credit Extensions hereunder:
a. Mergerco shall receive a cash equity
contribution (the "Holdco Equity Contribution") of
approximately $140,000,000 from (i) the issuance of (x)
its common stock to certain of the Purchasers (the
"Common Stock", with the issuance thereof being herein
referred to as the "Common Stock Issuance") and (y)
warrants, if warrants are issued, to purchase up to
360,000 shares of Common Stock (the "Warrants", with the
issuance thereof being herein referred to as the "Warrant
Issuance") and (ii) the issuance of preferred stock to
certain of the Purchasers (the "Preferred Stock", with
the issuance thereof being herein referred to as the
"Preferred Stock Issuance"); and
b. Mergerco shall receive gross cash proceeds of
not less than $95,000,000 from the issuance of senior
discount debentures (the "Discount Debentures", with the
issuance thereof being herein referred to as the
"Discount Debentures Issuance");
WHEREAS, in connection with the Transaction and prior to
or contemporaneously with the consummation of the Merger and the making of the
initial Credit Extensions hereunder, the Company and Thermadyne Capital Corp.,
a Delaware corporation, will issue not more than $207,000,000 in aggregate
principal amount of their 9 7/8% senior subordinated notes due 2008 (the
"Subordinated Notes", with the issuance thereof being herein referred to as the
"Subordinated Debt Issuance");
WHEREAS, in connection with the Transaction and the
ongoing working capital and general corporate needs of the Company and its
Subsidiaries, the Company desires to obtain the following financing facilities
from the Lenders:
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<PAGE> 11
(a) a Term-A Loan Commitment pursuant to which
Borrowings of Term-A Loans will be made to the Company
and the Initial Foreign Borrowers (other than the Initial
Canadian Borrower) on the Closing Date, in an aggregate
maximum, original principal amount (calculated, in the
case of such Borrowings of Term-A Loans made by any
Initial Foreign Borrower, at the U.S. Dollar Equivalent
thereof on the Closing Date) not to exceed $100,000,000;
(b) a Term-B Loan Commitment and a Term-C Loan
Commitment pursuant to which Borrowings of Term Loans
will be made to the Company on the Closing Date in a
maximum, original principal amount of $115,000,000 (in
the case of Term-B Loans) and $115,000,000 (in the case
of Term-C Loans);
(c) a Revolving Loan Commitment (to include
availability for Committed Revolving Loans, Swing Line
Loans and Letters of Credit) pursuant to which (i)
Borrowings of U.S. Dollar Revolving Loans will be made
to the Company and (ii) Borrowings of Committed Foreign
Currency Revolving Loans will be made to the Foreign
Borrowers, in each case from time to time on and
subsequent to the Closing Date but prior to the Revolving
Loan Commitment Termination Date and in a maximum
aggregate principal amount (together with (x) the U.S.
Dollar Equivalent of the Foreign Currency Letter of
Credit Outstandings, (y) all Swing Line Loans and (z) the
U.S. Dollar Letter of Credit Outstandings) not to exceed,
subject to the terms and provisions hereof, the then
existing Total Revolving Loan Commitment Amount;
provided, however, that not more than $20,000,000 of the
proceeds from Revolving Loans may be used for purposes of
consummating the Transaction, including the payment of
related costs and expenses;
(d) a Letter of Credit Commitment pursuant to
which the Issuers will issue U.S. Dollar and Foreign
Currency Letters of Credit for the account of the Company
and its Subsidiaries from time to time on and subsequent
to the Closing Date but prior to the Revolving Loan
Commitment Termination Date in a maximum aggregate Stated
Amount at any one time outstanding (with Foreign Currency
Letter of Credit Outstandings calculated at the U.S.
Dollar Equivalent thereof) not to exceed $50,000,000;
(e) a Swing Line Loan Commitment pursuant to
which Borrowings of Swing Line Loans (which shall be
denominated solely in U.S. Dollars) in an aggregate
outstanding principal amount not to exceed $10,000,000
will be
3
<PAGE> 12
made to the Company on and subsequent to the Closing Date
but prior to the Revolving Loan Commitment Termination
Date; and
(f) on a committed or uncommitted basis (as
agreed upon pursuant hereto), one or more additional
facilities pursuant to which Borrowings of Foreign
Currency Revolving Loans may be made, on and subsequent
to the Closing Date but prior to the Revolving Loan
Commitment Termination Date, to Foreign Borrowers in an
aggregate outstanding principal amount the U.S. Dollar
Equivalent of which (together with (x) the U.S. Dollar
Equivalent of all Committed Foreign Currency Loans and
(y) the U.S. Dollar Equivalent of all Foreign Currency
Letter of Credit Outstandings), subject to the terms and
provisions hereof, shall not exceed the Revolving Loan
Foreign Currency Limit;
WHEREAS, on the Closing Date, contemporaneously with the
consummation of the Merger, the Asset Contribution, the Holdco Equity
Contribution, the Discount Debentures Issuance, the Subordinated Debt Issuance
and the initial Borrowing of Term Loans and Revolving Loans hereunder, the
Company shall distribute to Holdco as a dividend (the "Closing Date Dividend")
and/or make an intercompany loan (the "Intercompany Loan") in an amount equal
to all of the net proceeds of the Subordinated Debt Issuance and the initial
Borrowing of Term Loans and Revolving Loans (other than any such proceeds used
by the Company or any of its Subsidiaries to repay existing Indebtedness of the
Company and its Subsidiaries and to pay fees and expenses related to the
Transaction) for purposes of consummating the Merger, which Intercompany Loan,
if any, shall be evidenced by a promissory note issued by Holdco to the Company
(the "Intercompany Note");
WHEREAS, the Lenders are willing, on the terms and
subject to the conditions hereinafter set forth (including Article V), to
extend the Commitments and make the Loans described herein to the Borrowers and
issue (or participate in) Letters of Credit for the account of the Company and
its Subsidiaries;
NOW, THEREFORE, the parties hereto agree as follows:
4
<PAGE> 13
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
SECTION 1.1. Defined Terms. The following terms
(whether or not underscored) when used in this Agreement, including its
preamble and recitals, shall, except where the context otherwise requires, have
the following meanings (such meanings to be equally applicable to the singular
and plural forms thereof):
"ABN AMRO" is defined in the preamble.
"Absolute Rate Auction" means a solicitation of
Uncommitted Foreign Currency Interest Quotes setting forth Uncommitted Foreign
Currency Absolute Interest Rates pursuant to Section 2.4.
"Acquired Controlled Person" means any Person (i) in
which the Company or any of its Subsidiaries has made an Investment permitted
under subclause (y) of clause (m) of Section 7.2.5 and (ii) as to which the
Company or such Subsidiary exercises control. For purposes hereof, "control"
means the power to appoint a majority of the board of directors (or other
equivalent governing body) of such Person or to otherwise direct or cause the
direction of the management or policies of such Person, whether by contractual
arrangement or otherwise.
"Administrative Agent" is defined in the preamble and
includes each other Person as shall have subsequently been appointed as the
successor Administrative Agent pursuant to Section 9.4.
"Administrative Agent Fee Letter" means the confidential
fee letter, dated May 22, 1998, between the Company and the Administrative
Agent.
"Affiliate" of any Person means any other Person which,
directly or indirectly, controls, is controlled by or is under common control
with such Person (excluding any trustee under, or any committee with
responsibility for administering, any Plan). A Person shall be deemed to be
"controlled by" any other Person if such other Person possesses, directly or
indirectly, power (i) to vote 10% or more of the securities (on a fully diluted
basis) having ordinary voting power for the election of directors or managing
general partners, or (ii) to direct or cause the direction of the management
and policies of such Person whether by contract or otherwise.
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<PAGE> 14
"Agents" is defined in the preamble.
"Agreement" means, on any date, this Credit Agreement as
originally in effect on the Closing Date and as thereafter from time to time
amended, supplemented, amended and restated, or otherwise modified and in
effect on such date.
"Alternate Base Rate" means, for any day and with respect
to all Base Rate Loans, the higher of: (a) 0.50% per annum above the latest
Federal Funds Rate; and (b) the rate of interest in effect for such day as most
recently publicly announced or established by the Administrative Agent in
Chicago, Illinois as its "prime rate" for U.S. Dollar obligations (The "prime
rate" is a rate set by the Administrative Agent based upon various factors
including the Administrative Agent's costs and desired return, general economic
conditions and other factors, and is used as a reference point for pricing some
loans, which may be priced at, above or below such announced rate.) Any change
in the prime rate established or announced by the Administrative Agent shall
take effect at the opening of business on the day of such establishment or
announcement.
"Annualized" means (i) with respect to the end of the
first Fiscal Quarter of the Company ending after the Closing Date, the
applicable amount for such Fiscal Quarter multiplied by four, (ii) with respect
to the second Fiscal Quarter of the Company ending after the Closing Date, the
applicable amount for such Fiscal Quarter and the immediately preceding Fiscal
Quarter multiplied by two, and (iii) with respect to the third Fiscal Quarter
of the Company ending after the Closing Date, the applicable amount for such
Fiscal Quarter and the immediately preceding two Fiscal Quarters multiplied by
one and one-third.
"Applicable Commitment Fee" means, (i) for each day from
the Closing Date through (but excluding) the date upon which the Compliance
Certificate for the second full Fiscal Quarter ending after the Closing Date is
delivered or required to be delivered by the Company to the Administrative
Agent pursuant to clause (c) of Section 7.1.1, a fee which shall accrue at a
rate of 1/2 of 1% per annum, and (ii) for each day thereafter, a fee which
shall accrue at the applicable rate per annum set forth below under the column
entitled "Applicable Commitment Fee", determined by reference to the applicable
Leverage Ratio referred to below:
6
<PAGE> 15
<TABLE>
<CAPTION>
APPLICABLE
LEVERAGE RATIO COMMITMENT FEE
-------------- --------------
<S> <C>
GREATER THAN OR
EQUAL TO 5.0:1 0.50%
GREATER THAN OR
EQUAL TO 4.0:1 AND
LESS THAN 5.0:1 0.375%
GREATER THAN OR
EQUAL TO 3.0:1 AND
LESS THAN 4.0:1 0.30%
LESS THAN 3.0:1 0.25%
</TABLE>
The Leverage Ratio used to compute the Applicable Commitment Fee for any date
referred to in clause (ii) above shall be the Leverage Ratio set forth in the
Compliance Certificate most recently delivered by the Company to the
Administrative Agent on or prior to such day pursuant to clause (c) of Section
7.1.1. Changes in the Applicable Commitment Fee resulting from a change in the
Leverage Ratio shall become effective (as of the first day following the Fiscal
Quarter in respect of which such Compliance Certificate was required to be
delivered) upon delivery by the Company to the Administrative Agent of a new
Compliance Certificate pursuant to clause (c) of Section 7.1.1. In the event
such Compliance Certificate indicates a Leverage Ratio that would result in an
Applicable Commitment Fee which is greater or lesser than the Applicable
Commitment Fee theretofore in effect, then (A) such greater or lesser
Applicable Commitment Fee shall be deemed to have been in effect for all
purposes of this Agreement from the first day following the Fiscal Quarter in
respect of which such Compliance Certificate was required to be delivered by
the Company to the Administrative Agent pursuant to clause (c) of Section 7.1.1
and (B) if any Borrower shall have theretofore made any payment of commitment
fees in respect of the period from the first day following the Fiscal Quarter
in respect of which such Compliance Certificate was required to be delivered by
the Company to the Administrative Agent pursuant to clause (c) of Section
7.1.1, then, on the next Quarterly Payment Date, either (x) if the new
Applicable Commitment Fee is greater than the Applicable Commitment Fee
theretofore in effect, such Borrower shall pay, as a supplemental payment of
commitment fees, an amount which equals the difference between the amount of
commitment fees that would otherwise have been paid based on such new Leverage
Ratio and the amount of such commitment fees actually so paid, or (y) if the
new Applicable Commitment Fee is less than the Applicable Commitment Fee
7
<PAGE> 16
theretofore in effect, an amount shall be deducted from the interest on
Committed Revolving Loans and commitment fees and Letter of Credit fees under
the first sentence of Section 3.3.3 then otherwise payable in an amount which
equals the difference between the amount of commitment fees so paid and the
amount of commitment fees that would otherwise have been paid based on such new
Leverage Ratio (or, if no such payment is owed by such Borrower to the
Revolving Lenders on such next Quarterly Payment Date, or if such amount owed
by such Borrower is less than such difference, the Revolving Lenders shall pay
to such Borrower on such next Quarterly Payment Date the amount of such
difference less the amount, if any, owed by such Borrower to such Lenders on
such Quarterly Payment Date); provided that, if the Company shall fail to
deliver a Compliance Certificate within the number of days required pursuant to
clause (c) of Section 7.1.1 (without giving effect to any grace period), the
Applicable Commitment Fee from and including the first day after the date on
which such Compliance Certificate was required to be delivered to but not
including the date the Company delivers to the Administrative Agent an
appropriately completed Compliance Certificate shall conclusively equal the
highest Applicable Commitment Fee set forth above.
"Applicable Margin" means at all times during the
applicable periods set forth below,
(a) with respect to the unpaid principal amount
of each Term-B Loan maintained as a (i) Base Rate Loan,
1.25% per annum and (ii) LIBO Rate Loan, 2.50% per annum;
(b) with respect to the unpaid principal amount
of each Term-C Loan maintained as a (i) Base Rate Loan,
1.50% per annum, and (ii) LIBO Rate Loan, 2.75% per
annum;
(c) from the Closing Date through (but excluding)
the date upon which the Compliance Certificate for the
second full Fiscal Quarter ending after the Closing Date
is delivered by the Company to the Administrative Agent
pursuant to clause (c) of Section 7.1.1, with respect to
the unpaid principal amount of each (i) Swing Line Loan
(which shall be borrowed and maintained only as a U.S.
Dollar denominated Base Rate Loan) and each Committed
Revolving Loan and Term-A Loan maintained as a Base Rate
Loan, 1.00% per annum, and (ii) Committed Revolving Loan
and Term-A Loan maintained as a LIBO Rate Loan, 2.25% per
annum; and
8
<PAGE> 17
(d) at all times after the date of such delivery
of the Compliance Certificate described in clause (c)
above, with respect to the unpaid principal amount of
each Swing Line Loan (which shall be borrowed and
maintained only as a U.S. Dollar denominated Base Rate
Loan) and each Committed Revolving Loan and Term-A Loan,
by reference to the applicable Leverage Ratio and at the
applicable percentage per annum set forth below under the
column entitled "Applicable Margin for Base Rate Loans",
in the case of Base Rate Loans, or by reference to the
applicable Leverage Ratio and at the applicable
percentage per annum set forth below under the column
entitled "Applicable Margin for LIBO Rate Loans", in the
case of LIBO Rate Loans:
APPLICABLE MARGIN FOR COMMITTED REVOLVING LOANS,
SWING LINE LOANS AND TERM-A LOANS
<TABLE>
<CAPTION>
APPLICABLE APPLICABLE
MARGIN FOR BASE MARGIN FOR LIBO
LEVERAGE RATIO RATE LOANS RATE LOANS
-------------- ---------- ----------
<S> <C> <C>
GREATER THAN OR EQUAL TO 5.0:1 1.0% 2.25%
GREATER THAN OR EQUAL TO 4.0:1 AND LESS
THAN 5.0:1 0.75% 2.0%
GREATER THAN OR EQUAL TO 3.0:1 AND LESS
THAN 4.0:1 0.25% 1.5%
LESS THAN 3.0:1 0.0% 1.0%
</TABLE>
The Leverage Ratio used to compute the Applicable Margin for Swing Line Loans,
Committed Revolving Loans and Term-A Loans for any day referred to in clause
(d) above shall be the Leverage Ratio set forth in the Compliance Certificate
most recently delivered by the Company to the Administrative Agent on or prior
to such day pursuant to clause (c) of Section 7.1.1. Changes in the Applicable
Margin for Swing Line Loans, Committed Revolving Loans and Term-A Loans
resulting from a change in the Leverage Ratio shall become effective (as of the
first day following the Fiscal Quarter in respect of which such Compliance
Certificate was required to be delivered) upon delivery by the Company to the
Administrative Agent of a new Compliance Certificate pursuant to clause (c) of
Section 7.1.1. In the event such Compliance Certificate indicates a Leverage
Ratio that would result in an Applicable Margin which is greater or lesser than
the Applicable Margin theretofore in effect, then (A) such greater or lesser
Applicable Margin shall be deemed to be in effect for all purposes of this
Agreement from the first day following the Fiscal Quarter in
9
<PAGE> 18
respect of which such Compliance Certificate was required to be delivered by
the Company to the Administrative Agent pursuant to clause (c) of Section 7.1.1
and (B) if any Borrower shall have theretofore made any payment of interest in
respect of Swing Line Loans, Committed Revolving Loans or Term-A Loans, or of
Letter of Credit fees pursuant to the first sentence of Section 3.3.3, in any
such case in respect of the period from the first day following the Fiscal
Quarter in respect of which such Compliance Certificate was required to be
delivered to the actual date of delivery of such Compliance Certificate, then,
on the next Quarterly Payment Date, either (x) if the new Applicable Margin is
greater than the Applicable Margin theretofore in effect, such Borrower shall
pay as a supplemental payment of interest and/or Letter of Credit fees, an
amount which equals the difference between the amount of interest and Letter of
Credit fees that would otherwise have been paid based on such new Leverage
Ratio and the amount of such interest and Letter of Credit fees actually so
paid, or (y) if the new Applicable Margin is less than the Applicable Margin
theretofore in effect, an amount shall be deducted from the interest on
Committed Revolving Loans, commitment fees and Letter of Credit fees (in the
case of differences in respect of interest on Committed Revolving Loans and
Letter of Credit fees) or from the interest on Term-A Loans (in the case of
differences in respect of interest on Term-A Loans) thereafter payable by such
Borrower in an amount which equals the difference between the amount of
interest and Letter of Credit fees so paid and the amount of interest and
Letter of Credit fees that would otherwise have been paid based on such new
Leverage Ratio (or, if no payment by such Borrower to the Revolving Lenders or
Term-A Lenders, as the case may be, will thereafter accrue hereunder, or if the
amount that so accrues is less than such difference, the Revolving Lenders or
the Term-A Lenders, as the case may be, will promptly pay to such Borrower an
amount equal to such difference less the amount, if any, of such accrued and
unpaid payments); provided, that if the Company shall fail to deliver a
Compliance Certificate within the number of days required pursuant to clause
(c) of Section 7.1.1 (without giving effect to any grace period), the
Applicable Margin for all Committed Revolving Loans, Term-A Loans and Letters
of Credit from and including the first day after the date on which such
Compliance Certificate was required to be delivered to but not including the
date the Company delivers to the Administrative Agent a Compliance Certificate
shall conclusively equal the highest Applicable Margin for the relevant type of
Loan set forth in clause (d) above.
"Approved Fund" means, with respect to any Lender that is
a fund that invests in bank loans, any other fund that invests in bank loans
and is advised or managed by the same investment advisor as such Lender or by
an Affiliate of such investment advisor.
10
<PAGE> 19
"Arranger" means Donaldson, Lufkin & Jenrette Securities
Corporation, a Delaware corporation.
"Asset Contribution" is defined in the second recital.
"Assignee Lender" is defined in Section 11.11.1.
"Assignor Lender" is defined in Section 11.11.1.
"Assumed Indebtedness" means Indebtedness of a Person
which (i) is in existence at the time such Person becomes a Subsidiary of the
Company or (ii) is assumed in connection with an Investment in or acquisition
of such Person, and has not been incurred or created by such Person in
connection with, or in anticipation or contemplation of, such Person becoming a
Subsidiary of the Company.
"Australian Borrower" means the Initial Australian
Borrower and any other Non-U.S. Subsidiary that (i) has its principal business
operations located in Australia and (ii) has satisfied all of the conditions
set forth in Section 5.3.
"Australian Dollars" means the lawful currency of
Australia.
"Authorized Officer" means, relative to any Obligor,
those of its officers whose signatures and incumbency shall have been certified
to the Administrative Agent and the Lenders pursuant to Section 5.1.1 or clause
(c) of Section 5.3.
"Base Financial Statements" is defined in clause (a) of
Section 5.1.9.
"Base Rate Loan" means a Committed Loan bearing interest
at a fluctuating rate determined by reference to the Alternate Base Rate.
"Borrowers" means the Company and the Foreign Borrowers.
"Borrowing" means, as the context may require, Loans of
the same type, made to the same Borrower and in the same Currency (and, in the
case of LIBO Rate Loans, having the same Interest Period) made by the relevant
Lenders on the same Business Day and pursuant to the same Borrowing Request in
accordance with Section 2.1 (in the case of Committed Loans) or Section 2.4 (in
the case of Uncommitted Foreign Currency Revolving Loans).
11
<PAGE> 20
"Borrowing Request" means, (i) in the case of Committed
Loans, a Committed Loan Borrowing Request, and (ii) in the case of Uncommitted
Foreign Currency Revolving Loans, an Uncommitted Foreign Currency Revolving
Loan Borrowing Request.
"Business Day" means any day which is neither a Saturday
or Sunday nor a legal holiday on which banks are authorized or required to be
closed in New York City and, (i) with respect to Borrowings of, Interest
Periods with respect to, payments of principal and interest in respect of,
conversions of Base Rate Loans into, and LIBO Rate Auctions with respect to,
LIBO Rate Loans, on which dealings in the applicable Currency are carried on in
the London interbank market and (ii) with respect to Borrowings of, Interest
Periods with respect to, payments of principal and interest in respect of,
Foreign Currency Loans or Reimbursement Obligations in respect of Foreign
Currency Letters of Credit, on which banks are generally open for business in
the principal financial center of the jurisdiction of such Foreign Currency.
"Canadian Borrower" means the Initial Canadian Borrower
and any other Non-U.S. Subsidiary that (i) has its principal business
operations located in Canada and (ii) has satisfied all of the conditions set
forth in Section 5.3.
"Canadian Dollars" means the lawful currency of Canada.
"Capital Expenditures" means for any period, the sum,
without duplication, of (i) the aggregate amount of all expenditures of the
Company and its Subsidiaries for fixed or capital assets made during such
period which, in accordance with GAAP, would be classified as capital
expenditures, and (ii) to the extent not included in clause (i) above, the
aggregate amount of the principal component of all Capitalized Lease
Liabilities incurred during such period by the Company and its Subsidiaries;
provided that Capital Expenditures shall not include (i) any such expenditures
or any such principal component funded with (x) any Casualty Proceeds, as
permitted under clause (f) of Section 3.1.1, or (y) any Net Disposition
Proceeds of any asset sale permitted under clause (c) of Section 7.2.9 or any
asset sale of obsolete or worn out equipment permitted under subclause (a)(i)
of Section 7.2.9 or (ii) any Investment made under Section 7.2.5 (other than
pursuant to clause (d) thereof).
"Capital Stock" means, with respect to any Person, (i)
any and all shares, interests, participations, rights or other equivalents of
or interests in (however designated) corporate or capital stock, including,
without limitation, shares of preferred or preference stock of such Person,
(ii) all partnership interests (whether
12
<PAGE> 21
general or limited) in such Person, (iii) all membership interests or limited
liability company interests in such Person, and (iv) all other equity or
ownership interests in such Person of any other type.
"Capitalized Lease Liabilities" means, without
duplication, all monetary obligations of the Company or any of its Subsidiaries
under any leasing or similar arrangement which, in accordance with GAAP, would
be classified as capitalized leases, and, for purposes of this Agreement and
each other Loan Document, the amount of such obligations shall be the
capitalized amount thereof, determined in accordance with GAAP, and the stated
maturity thereof shall be the date of the last payment of rent or any other
amount due under such lease prior to the first date upon which such lease may
be terminated by the lessee without payment of a penalty.
"Cash Equivalent Investment" means, at any time:
(a) any evidence of Indebtedness, maturing not
more than one year after such time, issued directly by
the United States of America or any agency thereof or
guaranteed by the United States of America or any agency
thereof;
(b) commercial paper, maturing not more than nine
months from the date of issue, which is (i) rated at
least A-l by S&P or P-l by Moody's, or (ii) issued by any
Lender (or its holding company);
(c) any time deposit, certificate of deposit or
bankers acceptance, maturing not more than one year after
such time, maintained with or issued by either (i) a
commercial banking institution (including U.S. branches
of foreign banking institutions) that is a member of the
Federal Reserve System and has a combined capital and
surplus and undivided profits of not less than
$500,000,000, or (ii) any Lender;
(d) short-term tax-exempt securities rated not
lower than MIG-1/1+ by either Moody's or S&P with
provisions for liquidity or maturity accommodations of
183 days or less;
(e) repurchase agreements which (i) are entered
into with any entity referred to in clause (b) or (c)
above or any other financial institution whose unsecured
long-term debt (or the unsecured long-term debt of whose
holding company) is rated at least A- or better by S&P or
Baa1 or better by Moody's and maturing not more than one
year after such time and (ii) are secured by a
13
<PAGE> 22
fully perfected security interest in securities of the
type referred to in clause (a) above which have a market
value at the time such repurchase agreement is entered
into of not less than 100% of the repurchase obligation
of such counterparty entity with whom such repurchase
agreement has been entered into;
(f) any money market or similar fund not less
than 95% of the assets of which are comprised of any of
the items specified in clauses (a) through (e) above and
as to which withdrawals are permitted at least every 90
days; or
(g) in the case of any Subsidiary of the Company
organized or having its principal place of business
outside the United States, investments denominated in the
Currency of the jurisdiction in which such Subsidiary is
organized or has its principal place of business which
are similar to the items specified in clauses (a) through
(f) above.
"Casualty Event" means the damage, destruction or
condemnation, as the case may be, of property of the Company or any of its
Subsidiaries.
"Casualty Proceeds" means, with respect to any Casualty
Event, the amount of any insurance proceeds or condemnation awards received by
the Company or any of its Subsidiaries in connection therewith, but excluding
any proceeds or awards required to be paid to a creditor (other than the
Lenders) which holds a Lien on the property which is the subject of such
Casualty Event which Lien (x) is permitted by Section 7.2.3 and (y) has
priority over the Liens securing the Obligations.
"CERCLA" means the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended.
"CERCLIS" means the Comprehensive Environmental Response
Compensation and Liability Information System List.
"Certificate of Merger" means the Certificate of Merger
relating to the Merger of Thermadyne and Mergerco, as filed with the Secretary
of State of Delaware on May 22, 1998.
"Change in Control" means (i) the failure of Holdco at
any time to own, directly or indirectly, free and clear of all Liens and
encumbrances (other than Liens of the types permitted to exist under clauses
(b), (f) and (i) of Section 7.2.3), all
14
<PAGE> 23
right, title and interest in 100% of the Capital Stock of the Company; (ii) the
failure of the DLJMB Entities and their Affiliates to own at least 51% (on a
fully diluted basis) of the economic and voting interest in the Voting Stock of
Holdco; or (iii) the failure of the DLJMB Entities and their Affiliates at any
time to have the right to designate or nominate at least 51% of the Board of
Directors of Holdco.
"Closing Date" means the date of the initial Credit
Extension, not to be later than June 30, 1998.
"Closing Date Certificate" means a certificate of an
Authorized Officer of the Company substantially in the form of Exhibit D
hereto, delivered pursuant to Section 5.1.4.
"Closing Date Dividend" is defined in the seventh
recital.
"Code" means the Internal Revenue Code of 1986, as
amended.
"Commitment" means, as the context may require, a
Lender's Term-A Loan U.S. Dollar Commitment, Term-A Loan Australian Dollar
Commitment, Term-A Loan Lira Commitment, Term-B Loan Commitment, Term-C Loan
Commitment, Revolving Loan U.S. Dollar Commitment, Revolving Loan Australian
Dollar Commitment, Revolving Loan Canadian Dollar Commitment, Revolving Loan
Lira Commitment, other Revolving Loan Foreign Currency Commitment (if any),
Letter of Credit Commitment in respect of any Currency or the Swing Line
Lender's Swing Line Loan Commitment.
"Commitment Amount" means, as the context may require,
the Term-A Loan U.S. Dollar Commitment Amount, the Term-A Loan Australian
Dollar Commitment Amount, the Term-A Loan Lira Commitment Amount, the Term-B
Loan Commitment Amount, the Term-C Loan Commitment Amount, the Revolving Loan
U.S. Dollar Commitment Amount, the Revolving Loan Australian Dollar Commitment
Amount, the Revolving Loan Canadian Dollar Commitment Amount, the Revolving
Loan Lira Commitment Amount, any other Revolving Loan Foreign Currency
Commitment Amount (if any), the Letter of Credit Commitment Amount, the U.S.
Dollar Letter of Credit Commitment Amount, any Foreign Currency Letter of
Credit Commitment Amount (if any) or the Swing Line Loan Commitment Amount.
15
<PAGE> 24
"Commitment Letter" means the commitment letter, dated
January 20, 1998, among the DLJMB Entities, the Arranger and the Syndication
Agent including all annexes and exhibits thereto.
"Commitment Termination Date" means, as the context may
require, the Revolving Loan Commitment Termination Date or any Term Loan
Commitment Termination Date.
"Commitment Termination Event" means (i) the occurrence
of any Event of Default described in clauses (b) through (d) of Section 8.1.9
with respect to any Obligor (other than Immaterial Subsidiaries), or (ii) the
occurrence and continuance of any other Event of Default and either (x) the
declaration of the Loans or other Obligations to be due and payable pursuant to
Section 8.3, or (y) in the absence of such declaration, the giving of notice by
the Administrative Agent, acting at the direction of the Required Lenders, to
the Company that the Commitments have been terminated.
"Committed Australian Dollar Revolving Loan" is defined
in clause (b) of Section 2.1.2.
"Committed Borrowing" means a Borrowing of Committed
Loans.
"Committed Canadian Dollar Revolving Loan" is defined in
clause (c) of Section 2.1.2.
"Committed Foreign Currency Revolving Loan" means a
Committed Australian Dollar Revolving Loan, a Committed Canadian Dollar
Revolving Loan, a Committed Lira Revolving Loan or any other Loan made pursuant
to a Revolving Loan Foreign Currency Commitment.
"Committed Lira Revolving Loan" is defined in clause (d)
of Section 2.1.2.
"Committed Loan" means a Term Loan, a Swing Line Loan or
a Committed Revolving Loan.
"Committed Loan Borrowing Request" means a loan request
and certificate duly executed by an Authorized Officer of the applicable
Borrower, substantially in the form of Exhibit B-1 hereto.
16
<PAGE> 25
"Committed Revolving Loan" means a U.S. Dollar Revolving
Loan or a Committed Foreign Currency Revolving Loan.
"Common Stock" is defined in the fourth recital.
"Common Stock Issuance" is defined in the fourth recital.
"Company" is defined in the preamble.
"Company Pledge Agreement" means the Pledge Agreement
executed and delivered by an Authorized Officer of the Company pursuant to
clause (b) of Section 5.1.7, substantially in the form of Exhibit G-2 hereto,
as amended, supplemented, amended and restated or otherwise modified from time
to time.
"Company Security Agreement" means the Security Agreement
executed and delivered by an Authorized Officer of the Company pursuant to
Section 5.1.8, substantially in the form of Exhibit F-1 hereto, as amended,
supplemented, amended and restated or otherwise modified from time to time.
"Compliance Certificate" means a certificate duly
completed and executed by an Authorized Officer that is the president, chief
executive officer, treasurer, assistant treasurer, controller or chief
financial officer of the Company, substantially in the form of Exhibit E-1
hereto.
"Contingent Liability" means any agreement, undertaking
or arrangement by which any Person guarantees, endorses or otherwise becomes or
is contingently liable upon (by direct or indirect agreement, contingent or
otherwise, to provide funds for payment, to supply funds to, or otherwise to
invest in, a debtor, or otherwise to assure a creditor against loss) the
indebtedness, obligation or any other liability of any other Person (other than
by endorsements of instruments in the course of collection), or guarantees the
payment of dividends or other distributions upon the shares of any other
Person. The amount of any Person's obligation under any Contingent Liability
shall (subject to any limitation set forth therein) be deemed to be the
outstanding principal amount of the debt, obligation or other liability
guaranteed thereby.
"Continuation/Conversion Notice" means a notice of
continuation or conversion and certificate duly executed by an Authorized
Officer of the applicable Borrower, substantially in the form of Exhibit C
hereto.
17
<PAGE> 26
"Controlled Group" means all members of a controlled
group of corporations and all members of a controlled group of trades or
businesses (whether or not incorporated) under common control which, together
with the Company, are treated as a single employer under Section 414(b) or
414(c) of the Code or Section 4001 of ERISA, or for purposes of Section 412 of
the Code, Section 414(m) or Section 414(o) of the Code.
"Credit Extension" means, as the context may require, (i)
the making of a Loan (including without limitation the making of any Foreign
Currency Loan) by a Lender, or (ii) the issuance of any Letter of Credit
(including without limitation the issuance of any Foreign Currency Letter of
Credit), or the extension of any Stated Expiry Date of any previously issued
Letter of Credit (including without limitation the extension of any Stated
Expiry Date of any previously issued Foreign Currency Letter of Credit), by an
Issuer.
"Credit Extension Request" means, as the context may
require, any Borrowing Request or Issuance Request.
"Currency" means, as the context may require, U.S.
Dollars or any Foreign Currency.
"Current Assets" means, on any date, without duplication,
all assets which, in accordance with GAAP, would be included as current assets
on a consolidated balance sheet of the Company and its Subsidiaries at such
date as current assets (excluding, however, amounts due and to become due from
Affiliates of the Company which have arisen from transactions which are other
than arm's-length and in the ordinary course of its business).
"Current Liabilities" means, on any date, without
duplication, all amounts which, in accordance with GAAP, would be included as
current liabilities on a consolidated balance sheet of the Company and its
Subsidiaries at such date, excluding current maturities of Indebtedness.
"Debt" means, without duplication, the outstanding
principal amount of all Indebtedness of the Company and its Subsidiaries that
(i) is of the type referred to in clause (a), (b) (other than undrawn trade
letters of credit and undrawn letters of credit in respect of workers'
compensation, insurance, performance and surety bonds and similar obligations,
in each case incurred in the ordinary course of business) or (c) of
18
<PAGE> 27
the definition of "Indebtedness" and (ii) any Contingent Liability in respect
of any of the foregoing types of Indebtedness.
"Default" means any Event of Default or any condition,
occurrence or event which, after notice or lapse of time or both, would, unless
cured or waived, constitute an Event of Default.
"Disbursement" is defined in Section 2.8.2.
"Disbursement Date" is defined in Section 2.8.2.
"Disbursement Due Date" is defined in Section 2.8.2.
"Disclosure Schedule" means the Disclosure Schedule
attached hereto as Schedule I, as it may be amended, supplemented or otherwise
modified from time to time by the Company with the written consent of the
Required Lenders.
"Discount Debentures" is defined in the fourth recital.
"Discount Debentures Issuance" is defined in the fourth
recital.
"DLJ" is defined in the preamble.
"DLJMB Entities" is defined in the first recital.
"DLJMB Fee Letter" means the confidential fee letter,
dated as of January 20, 1998, among the DLJMB Entities, the Arranger and the
Syndication Agent.
"Documentation Agent" means Societe Generale, in its
capacity as documentation agent under this Agreement.
"EBITDA" means, for any applicable period, subject to
clause (b) of Section 1.4, the sum (without duplication) for the Company and
its Subsidiaries on a consolidated basis of
(a) Net Income,
plus
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(b) the amount deducted in determining Net Income
representing (i) net periodic post-retirement benefits
paid in cash and (ii) non-cash charges or expenses,
including depreciation and amortization,
plus
(c) the amount deducted in determining Net Income
representing income taxes (whether paid or deferred),
plus
(d) the amount deducted in determining Net Income
representing Interest Expense and fees, expenses and
management bonuses (to the extent, in the case of
management bonuses, paid at or prior to the Closing Date)
and financing costs incurred in connection with the
Transaction,
plus
(e) the amount deducted in determining Net Income
representing any net loss realized in connection with any
sale, lease, conveyance or other disposition of any asset
(other than in the ordinary course of business from the
Company or any of its Subsidiaries to the Company or any
of its Subsidiaries) or any extraordinary or
non-recurring loss,
minus
(f) Restricted Payments of the type referred to
in clause (c)(i) of Section 7.2.6 made during such
period,
minus
(g) the amount included in determining Net Income
representing any extraordinary gain.
"Environmental Laws" means all applicable federal, state
or local statutes, laws, ordinances, codes, rules and regulations (including
consent decrees and administrative orders) relating to the protection of the
environment or the effect of the environment on human health and safety.
20
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"ERISA" means the Employee Retirement Income Security Act
of 1974, as amended.
"Event of Default" is defined in Section 8.1.
"Excess Cash Flow" means, for any applicable period, the
excess (if any), of
(a) EBITDA for such applicable period;
over
(b) the sum, without duplication (for such
applicable period) of
(i) the cash portion of Interest Expense
(net of interest income) for such applicable
period;
plus
(ii) scheduled payments, to the extent
actually made, of the principal amount of the Term
Loans and scheduled payments and optional and
mandatory prepayments of the principal of any other
funded Debt (including Capitalized Lease
Liabilities) and mandatory prepayments of the
principal amount of Revolving Loans pursuant to
clause (g) of Section 3.1.1 in connection with a
reduction of any Revolving Loan Commitment Amount,
in each case to the extent actually made and for
such applicable period;
plus
(iii) all federal, state and foreign
income taxes actually paid or payable in cash by
the Company and its Subsidiaries in such applicable
period;
plus
(iv) Capital Expenditures actually made
during such applicable period pursuant to clause
(a) of Section 7.2.7 (excluding Capital
Expenditures constituting Capitalized Lease
Liabilities and by way of the incurrence of
Indebtedness permitted pursuant to clause (c) of
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<PAGE> 30
Section 7.2.2 to a vendor of any assets permitted
to be acquired pursuant to Section 7.2.7 to finance
the acquisition of such assets);
plus
(v) the amount of the net increase (if
any) of Current Assets, other than cash and Cash
Equivalent Investments, over Current Liabilities of
the Company and its Subsidiaries for such
applicable period;
plus
(vi) Investments permitted and actually
made pursuant to clauses (d), (m) and (o) of
Section 7.2.5 during such applicable period;
plus
(vii) gains on sales of assets (other than
sales permitted under clause (a) of Section 7.2.9);
plus
(viii) Restricted Payments of the types
described in clauses (c)(ii), (c)(iii), (c)(iv)
and (c)(v) of Section 7.2.6 made during such
period;
plus
(ix) amounts paid in cash in respect of
periodic post-retirement benefits (whether or not
previously accrued).
"Exchange Equivalent" means, on any date of
determination, (a) with respect to any Foreign Currency, the equivalent amount
in U.S. Dollars of such Foreign Currency, and (b) with respect to U.S. Dollars,
the equivalent amount in the applicable Foreign Currency of U.S. Dollars, in
each case as determined by reference to the New York foreign exchange selling
rates, as published in The Wall Street Journal on such date of determination
for the immediately preceding Business Day, or, if such rate is not available,
such equivalent amount shall be determined by the Administrative Agent (in
accordance with its standard practices) by using the quoted
22
<PAGE> 31
spot rate offered to the Administrative Agent in the New York foreign exchange
market for such Foreign Currency at approximately 11:00 a.m., New York time, on
such date of determination.
"Excluded Equity Proceeds" means any proceeds received by
Holdco or the Company from the sale or issuance by such Person of its Capital
Stock or any warrants or options in respect of any such Capital Stock or the
exercise of any such warrants or options, in each case pursuant to any such
sale, issuance or exercise constituting or resulting from (i) capital
contributions to, or Capital Stock issuances by, Holdco or the Company
(exclusive of any such contribution or issuance resulting from a Public
Offering or a widely distributed private offering exempted from the
registration requirements of Section 5 of the Securities Act of 1933, as
amended), (ii) any subscription agreement, incentive plan or similar
arrangement with any officer, employee or director of such Person or any of its
Subsidiaries, (iii) any loan made by Holdco, the Company or any of their
respective Subsidiaries pursuant to clause (g) of Section 7.2.5, (iv) the sale
of any Capital Stock of Holdco to any officer, director or employee described
in clause (ii) above; provided such proceeds do not exceed $15,000,000 in the
aggregate, (v) the Holdco Equity Contribution or (vi) the exercise of the
Warrants or any options or warrants issued to any officer, employee or director
described in clause (ii) above.
"Existing Letters of Credit" means those letters of
credit which (i) are outstanding on the Closing Date, (ii) have been disclosed
on Item 7.2.2(a) ("Ongoing Indebtedness") of the Disclosure Schedule and (iii)
have been issued by a Lender or one of its Affiliates.
"Federal Funds Rate" means, for any period, a fluctuating
interest rate per annum equal for each day during such period to
(a) the weighted average of the rates on
overnight federal funds transactions with members of the
Federal Reserve System arranged by federal funds brokers,
as published for such day (or, if such day is not a
Business Day, for the next preceding Business Day) by the
Federal Reserve Bank of New York; or
(b) if such rate is not so published for any day
which is a Business Day, the average of the quotations
for such day on such transactions received by the
Administrative Agent from three federal funds brokers of
recognized standing selected by it.
23
<PAGE> 32
"Fee Letter" means, as the context may require, the DLJMB
Fee Letter or the Administrative Agent Fee Letter.
"Fiscal Quarter" means any quarter of a Fiscal Year.
"Fiscal Year" means any twelve month period ending on
December 31 of any calendar year.
"Fixed Charge Coverage Ratio" means, at the end of any
Fiscal Quarter, subject to clause (b) of Section 1.4, the ratio computed for
the period consisting of such Fiscal Quarter and each of the three immediately
prior Fiscal Quarters of
(a) EBITDA for all such Fiscal Quarters
to
(b) the sum (without duplication) of
(i) Capital Expenditures actually made
during all such Fiscal Quarters pursuant to clause
(a) of Section 7.2.7 (excluding Capital
Expenditures constituting Capitalized Lease
Liabilities and by way of the incurrence of
Indebtedness permitted pursuant to Section 7.2.2(c)
to a vendor of any assets permitted to be acquired
pursuant to Section 7.2.7 to finance the
acquisition of such assets);
plus
(ii) the cash portion of Interest Expense
(net of interest income) for all such Fiscal
Quarters, provided that for the first three Fiscal
Quarters ending after the Closing Date, Interest
Expense shall be determined on an Annualized basis;
plus
(iii) all scheduled payments of principal
of the Term Loans and other funded Debt (including
the principal portion of any Capitalized Lease
Liabilities) during all such Fiscal Quarters,
provided that for the first three Fiscal Quarters
ending after the Closing Date, such payments shall
be determined on an Annualized basis;
24
<PAGE> 33
plus
(iv) cash taxes actually paid or payable
during all such Fiscal Quarters.
"Foreign Borrower" means, as the context may require, the
Initial Australian Borrower, the Initial Canadian Borrower, the Initial Italian
Borrower, or any other Non-U.S. Subsidiary of the Company that shall have
satisfied all of the conditions set forth in Section 5.3.
"Foreign Currency" means any currency other than U.S.
Dollars.
"Foreign Currency Equivalent" means the Exchange
Equivalent in the applicable Foreign Currency of any amount of U.S. Dollars.
"Foreign Currency Issuer" means any Lender as may be
designated by the Company (and consented to by the Agents and such Lender, such
consent by the Agents not to be unreasonably withheld) in its capacity as
issuer of Foreign Currency Letters of Credit.
"Foreign Currency Letter of Credit" means a Letter of
Credit denominated in a Foreign Currency.
"Foreign Currency Letter of Credit Commitment" means a
Letter of Credit Commitment in respect of Foreign Currency Letters of Credit.
"Foreign Currency Letter of Credit Commitment Amount"
means, at any time in respect of any Foreign Borrower, the aggregate amount at
such time of the Commitments of all applicable Issuers to issue Foreign
Currency Letters of Credit to such Foreign Borrower denominated in a Foreign
Currency; provided, that the Foreign Currency Letter of Credit Commitment
Amount in respect of any Foreign Borrower shall not exceed the then applicable
Revolving Loan Foreign Currency Commitment Amount for such Foreign Borrower, as
such amount may be reduced pursuant to Section 2.2 or increased pursuant to
Section 2.5.
"Foreign Currency Letter of Credit Outstandings" means,
on any date, an amount equal to the sum of
25
<PAGE> 34
(a) the then aggregate outstanding amount which
is undrawn and available under all issued and outstanding
Foreign Currency Letters of Credit,
plus
(b) the then aggregate amount of all unpaid and
outstanding Reimbursement Obligations in respect of such
Foreign Currency Letters of Credit.
"Foreign Currency Loan" means a Term-A Australian Dollar
Loan, a Term-A Lira Loan or a Foreign Currency Revolving Loan.
"Foreign Currency Revolving Loan" means an Uncommitted
Foreign Currency Revolving Loan or a Committed Foreign Currency Revolving Loan.
"F.R.S. Board" means the Board of Governors of the
Federal Reserve System or any successor thereto.
"GAAP" is defined in Section 1.4.
"Hazardous Material" means
(a) any "hazardous substance", as defined by
CERCLA;
(b) any "hazardous waste", as defined by the
Resource Conservation and Recovery Act, as amended;
(c) any petroleum product; or
(d) any pollutant or contaminant or hazardous,
dangerous or toxic chemical, material or substance within
the meaning of any other applicable federal, state or
local law, regulation, ordinance or requirement
(including consent decrees and administrative orders)
relating to or imposing liability or standards of conduct
concerning any hazardous, toxic or dangerous waste,
substance or material, all as amended or hereafter
amended.
"Hedging Obligations" means, with respect to any Person,
all liabilities of such Person under interest rate or currency swap agreements,
interest or exchange rate cap agreements and interest or exchange rate collar
agreements, and all other
26
<PAGE> 35
agreements or arrangements designed to protect such Person against fluctuations
in interest rates, currency exchange rates or commodity prices.
"herein", "hereof", "hereto", "hereunder" and similar
terms contained in this Agreement or any other Loan Document refer to this
Agreement or such other Loan Document, as the case may be, as a whole and not
to any particular Section, paragraph or provision of this Agreement or such
other Loan Document.
"Holdco" is defined in the third recital.
"Holdco Equity Contribution" is defined in the fourth
recital.
"Holdco Guaranty and Pledge Agreement" means the Guaranty
and Pledge Agreement executed and delivered by an Authorized Officer of Holdco
pursuant to clause (a) of Section 5.1.7, substantially in the form of Exhibit
G-1 hereto, as amended, supplemented, amended and restated or otherwise
modified from time to time.
"Immaterial Subsidiary" means each Subsidiary of the
Company that (a) accounted for no more than 3% of the consolidated gross
revenues of the Company and its Subsidiaries for the most recently completed
Fiscal Quarter with respect to which, pursuant to Section 7.1.1(a) or 7.1.1(b),
financial statements have been, or are required to have been, delivered by the
Company on or before the date as of which any such determination is made, as
reflected in such financial statements; and (b) has assets which represent no
more than 3% of the consolidated gross assets of the Company and its
Subsidiaries as of the last day of the most recently completed Fiscal Quarter
with respect to which, pursuant to Section 7.1.1(a) or 7.1.1(b), financial
statements have been, or are required to have been, delivered by the Company on
or before the date as of which any such determination is made, as reflected in
such financial statements.
"Impermissible Qualification" means, relative to the
opinion or certification of any independent public accountant as to any
financial statement of any Obligor, any qualification or exception to such
opinion or certification (i) which is of a "going concern" or similar nature,
(ii) which relates to the limited scope of examination of matters relevant to
such financial statement (except, in the case of matters relating to any
acquired business or assets, in respect of the period prior to the acquisition
by such Obligor of such business or assets), or (iii) which relates to the
treatment or classification of any item in such financial statement and which,
as a condition to its
27
<PAGE> 36
removal, would require an adjustment to such item the effect of which would be
to cause the Company to be in default of any of its obligations under Section
7.2.4.
"including" means including without limiting the
generality of any description preceding such term, and, for purposes of this
Agreement and each other Loan Document, the parties hereto agree that the rule
of ejusdem generis shall not be applicable to limit a general statement, which
is followed by or referable to an enumeration of specific matters, to matters
similar to the matters specifically mentioned.
"Indebtedness" of any Person means, without duplication:
(a) all obligations of such Person for borrowed
money or for the deferred purchase price of property or
services (exclusive of deferred purchase price
arrangements in the nature of open or other accounts
payable owed to suppliers on normal terms in connection
with the purchase of goods and services in the ordinary
course of business) and all obligations of such Person
evidenced by bonds, debentures, notes or other similar
instruments;
(b) all obligations, contingent or otherwise,
relative to the face amount of all letters of credit,
whether or not drawn, and banker's acceptances issued for
the account of such Person;
(c) all Capitalized Lease Liabilities;
(d) net liabilities of such Person under all
Hedging Obligations;
(e) whether or not so included as liabilities in
accordance with GAAP, all Indebtedness of the types
referred to in clauses (a) through (d) above (excluding
prepaid interest thereon) secured by a Lien on property
owned or being purchased by such Person (including
Indebtedness arising under conditional sales or other
title retention agreements), whether or not such
Indebtedness shall have been assumed by such Person or is
limited in recourse; provided, however, that, to the
extent such Indebtedness is limited in recourse to the
assets securing such Indebtedness, the amount of such
Indebtedness shall be limited to the fair market value of
such assets; and
(f) all Contingent Liabilities of such Person in
respect of any of the foregoing.
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<PAGE> 37
For all purposes of this Agreement, the Indebtedness of any Person shall
include the Indebtedness of any partnership or joint venture in which such
Person is a general partner or a joint venturer (to the extent such Person is
liable for such Indebtedness).
"Indemnified Liabilities" is defined in Section 11.4.
"Indemnified Parties" is defined in Section 11.4.
"Initial Australian Borrower" is defined in the preamble.
"Initial Canadian Borrower" is defined in the preamble.
"Initial Foreign Borrowers" means, collectively, the
Initial Australian Borrower, the Initial Canadian Borrower and the Initial
Italian Borrower.
"Initial Italian Borrower" is defined in the preamble.
"Intercompany Loan" is defined in the seventh recital.
"Intercompany Note" is defined in the seventh recital.
"Intercreditor Agreement" means the Amended and Restated
Intercreditor Agreement, dated as of May 22, 1998, between the Administrative
Agent and The Bank of New York, in substantially the form of Exhibit L hereto,
as amended, supplemented, amended and restated or otherwise modified from time
to time.
"Interest Coverage Ratio" means, at the end of any Fiscal
Quarter, subject to clause (b) of Section 1.4, the ratio computed for the
period consisting of such Fiscal Quarter and each of the three immediately
prior Fiscal Quarters of:
(a) EBITDA (for all such Fiscal Quarters)
to
(b) the cash portion of Interest Expense (net of
interest income) (for all such Fiscal Quarters; provided
that for the first three Fiscal Quarters ending after the
Closing Date, Interest Expense shall be determined on an
Annualized basis).
29
<PAGE> 38
"Interest Expense" means, for any period, the aggregate
consolidated interest expense of the Company and its Subsidiaries for such
period, as determined in accordance with GAAP, including (a) financing costs in
respect of any Receivables Transaction and (b) the portion of any payments made
in respect of Capitalized Lease Liabilities allocable to interest expense, but
excluding (to the extent included in interest expense) up-front fees and
expenses and the amortization of all deferred financing costs.
"Interest Period" means, (a) as to any LIBO Rate Loan
that is a Committed Loan, the period commencing on the Borrowing date of such
Loan or on the date on which the Loan is converted into or continued as a LIBO
Rate Loan, and ending on the date one, two, three, six or, if available in the
Administrative Agent's reasonable determination, nine or twelve months
thereafter as selected by the applicable Borrower in its Borrowing Request or
its Conversion/Continuation Notice; provided however that:
(i) if any Interest Period would otherwise end on
a day that is not a Business Day, that Interest Period
shall be extended to the following Business Day unless
the result of such extension would be to carry such
Interest Period into another calendar month, in which
event such Interest Period shall end on the preceding
Business Day;
(ii) any Interest Period that begins on the last
Business Day of a calendar month (or on a day for which
there is no numerically corresponding day in the calendar
month at the end of such Interest Period) shall end on
the last Business Day of the calendar month at the end of
such Interest Period;
(iii) no Interest Period for any Loan shall
extend beyond the Stated Maturity Date for such Loan;
(iv) no Interest Period applicable to a Term Loan
or portion thereof shall extend beyond any date upon
which is due any scheduled principal payment in respect
of the Term Loans unless the aggregate principal amount
of Term Loans represented by Base Rate Loans, or by LIBO
Rate Loans having Interest Periods that will expire on or
before such date, equals or exceeds the amount of such
principal payment; and
(v) there shall be no more than 20 Interest
Periods in respect of Committed Loans in effect at any
one time;
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<PAGE> 39
provided, that with respect to each Borrowing of Term Loans consisting of LIBO
Rate Loans made on the Closing Date, Interest Period means the period
commencing on (and including) the Business Day on which such Borrowing is made
and ending on (but excluding) the last Business Day of the calendar month
following the month in which such Borrowing was made; and
(b) as to any Uncommitted Foreign Currency LIBO
Revolving Loan, the period commencing on the Borrowing date of such Loan and
ending on the date such integral number of weeks or months thereafter as
selected by the applicable Foreign Borrower in its Uncommitted Foreign Currency
Revolving Loan Borrowing Request; provided, however, that:
(i) if any Interest Period would otherwise end on
a day that is not a Business Day, that Interest Period
shall be extended to the following Business Day unless,
in the case of an Interest Period of an integral number
of months, the result of such extension would be to carry
such Interest Period into another calendar month, in
which event such Interest Period shall end on the
preceding Business Day;
(ii) any Interest Period of an integral number of
months that begins on the last Business Day of a calendar
month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of
such Interest Period) shall end on the last Business Day
of the calendar month at the end of such Interest Period;
and
(iii) no Interest Period shall extend beyond the
Revolving Loan Commitment Termination Date.
"Investment" means, relative to any Person, (i) any loan
or advance made by such Person to any other Person (excluding commission,
travel, relocation and similar advances to officers, directors and employees
(or individuals acting in similar capacities) made in the ordinary course of
business), or (ii) any investment, contribution or similar transfer made by
such Person for purposes of acquiring or maintaining any ownership or similar
interest in another Person or a business of another Person (whether through the
ownership or acquisition of Capital Stock, revenues or profits or otherwise,
including by way of merger, consolidation or otherwise). The amount of any
Investment shall be the original principal or capital amount thereof less all
returns of principal or equity thereon (and without adjustment by reason of the
financial condition of such other Person) and shall, if made by the
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transfer or exchange of property other than cash, be deemed to have been made
in an original principal or capital amount equal to the fair market value of
such property at the time of such transfer or exchange.
"Investors' Agreement" means the Investors' Agreement,
dated as of the Closing Date, among Mergerco and the Purchasers.
"Invitation for Uncommitted Foreign Currency Interest
Quotes" means an invitation to Lenders having a Percentage of any Revolving
Loan Commitment of greater than zero, substantially in the form of Exhibit B-4
hereto, sent to such Lenders by the Administrative Agent on behalf of the
applicable Foreign Borrower pursuant to Section 2.4, inviting such Lenders to
submit Uncommitted Foreign Currency Interest Quotes in accordance with Section
2.4.3.
"Issuance Request" means a Letter of Credit request and
certificate duly executed by an Authorized Officer of the applicable Borrower,
substantially in the form of Exhibit B-2 hereto.
"Issuer" means a U.S. Dollar Issuer or a Foreign Currency
Issuer.
"Italian Borrower" means the Initial Italian Borrower and
any other Non-U.S. Subsidiary that (i) has its principal business operations
located in Italy and (ii) has satisfied all of the conditions set forth in
Section 5.3.
"Lender Assignment Agreement" means a Lender Assignment
Agreement substantially in the form of Exhibit J hereto.
"Lenders" is defined in the preamble.
"Letter of Credit" is defined in Section 2.1.3.
"Letter of Credit Commitment" means, with respect to any
Issuer in respect of any Currency, such Issuer's obligation to issue Letters of
Credit denominated in such Currency pursuant to Section 2.1.3 and, with respect
to each of the other Lenders that has a Revolving Loan Commitment in respect of
such Currency, the obligation of each such Lender to participate in such
Letters of Credit pursuant to Section 2.8.1.
"Letter of Credit Commitment Amount" means, on any date,
with respect to U.S. Dollar Letters of Credit and Foreign Currency Letters of
Credit, a maximum
32
<PAGE> 41
amount of $50,000,000, as such amount may be reduced from time to time pursuant
to Section 2.2 or increased pursuant to Section 2.5.
"Letter of Credit Outstandings" means, on any date, an
amount equal to the sum of
(a) the U.S. Dollar Letter of Credit Outstandings
on such date,
plus
(b) the U.S. Dollar Equivalent of the Foreign
Currency Letter of Credit Outstandings on such date.
"Letter of Credit Reimbursement Obligation Rate" means
(i) in the case of Foreign Currency Letters of Credit denominated in Australian
Dollars, Canadian Dollars or Lire, the LIBO Rate applicable to Foreign Currency
Revolving Loans made as LIBO Rate Loans in a principal amount approximately
equal to the stated amount of the Letter of Credit and having an Interest
Period of one month, and (ii) in the case of Foreign Currency Letters of Credit
denominated in any other Foreign Currency, the rate set forth in the applicable
Revolving Loan Foreign Currency Commitment Addendum.
"Leverage Ratio" means, at the end of any Fiscal Quarter,
subject to clause (b) of Section 1.4, the ratio of
(a) total Debt (less cash and Cash Equivalent
Investments) of the Company and its Subsidiaries on a
consolidated basis outstanding at such time;
to
(b) EBITDA for the period of four consecutive
Fiscal Quarters ended on such date.
"LIBO Rate" means, relative to any Interest Period for
LIBO Rate Loans in any Currency, the rate of interest per annum determined by
the Administrative Agent to be the arithmetic mean (rounded upward to the next
1/100th of 1%) of the rates of interest per annum at which deposits in such
Currency in the approximate amount of the Loan to be made or continued as, or
converted into, a LIBO Rate Loan by the Administrative Agent (or, in the case
of any LIBO Rate in respect of LIBO Rate
33
<PAGE> 42
Loans in which the Administrative Agent will not participate, $1,000,000 or the
Foreign Currency Equivalent thereof) and having a maturity comparable to such
Interest Period would be offered to the Administrative Agent in the London
interbank market at its request at approximately 11:00 a.m. (London time) two
Business Days prior to the commencement of such Interest Period; provided,
that, for purposes of LIBO Rate Loans denominated in Australian Dollars, "LIBO
Rate" shall mean the "bid rate" quoted on the page entitled "BBSY" of the
Reuters Monitor System at or about 10:00 a.m. (Melbourne, Australia time) on
the first day of the applicable Interest Period for bank accepted bills which
have a tenor comparable to such Interest Period.
"LIBO Rate Auction" means a solicitation of Uncommitted
Foreign Currency Interest Quotes setting forth Uncommitted Foreign Currency
Interest Margins based on the LIBO Rate pursuant to Section 2.4.
"LIBO Rate Loan" means a Loan in any Currency bearing
interest, at all times during an Interest Period applicable to such Loan, at a
fixed rate of interest determined by reference to the LIBO Rate for such
Currency.
"LIBO Rate (Reserve Adjusted)" means, relative to any
Loan denominated in U.S. Dollars to be made, continued or maintained as, or
converted into, a LIBO Rate Loan for any Interest Period, the rate of interest
per annum (rounded upwards to the next 1/100th of 1%) determined by the
Administrative Agent as follows:
LIBO Rate
LIBO Rate = -------------------------------
(Reserve Adjusted) 1.00 - LIBOR Reserve Percentage
The LIBO Rate (Reserve Adjusted) for any Interest Period
for LIBO Rate Loans will be adjusted automatically as to all LIBO Rate Loans
that are then outstanding as of the effective date of any change in the LIBOR
Reserve Percentage.
"LIBOR Office" means, relative to any Lender (i) in the
case of Committed Revolving Loans denominated in U.S. Dollars, Australian
Dollars, Canadian Dollars or Lire or Term Loans, the office of such Lender
designated as such on Schedule II hereto or designated in the Lender Assignment
Agreement pursuant to which such Lender became a Lender hereunder, (ii) in the
case of LIBO Rate Loans that are Committed Foreign Currency Revolving Loans
denominated in any other Foreign Currency, the office of such Lender designated
as such in the applicable Revolving Loan Foreign Currency Commitment Addendum
or (iii) in either case, such other
34
<PAGE> 43
office of a Lender as shall be so designated from time to time by notice from
such Lender to the Company and the Administrative Agent, which shall be making
or maintaining LIBO Rate Loans of such Lender in such Currency hereunder.
"LIBOR Reserve Percentage" means, relative to any
Interest Period for LIBO Rate Loans denominated in U.S. Dollars, the percentage
(expressed as a decimal, rounded upward to the next 1/100th of 1%) in effect on
such day (whether or not applicable to any Lender) under regulations issued
from time to time by the F.R.S. Board for determining the maximum reserve
requirement (including any emergency, supplemental or other marginal reserve
requirement) with respect to Eurocurrency funding (currently referred to as
"Eurocurrency Liabilities" in Regulation D of the F.R.S. Board).
"Lien" means any security interest, mortgage, pledge,
hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or
otherwise), charge against or interest in property, or any filing or recording
of any instrument or document in respect of the foregoing, to secure payment of
a debt or performance of an obligation or any other priority or preferential
treatment of any kind or nature whatsoever that has the practical effect of
creating a security interest in property.
"Lira" or "Lire" means the lawful currency of Italy.
"Loan" means, as the context may require, a Revolving
Loan, a Term-A Loan, a Term-B Loan, a Term-C Loan or a Swing Line Loan, in each
case, of any type and, in the case of Term-A Loans and Revolving Loans, in any
available Currency.
"Loan Document" means this Agreement, the Notes, the
Letters of Credit, each Revolving Loan Foreign Currency Commitment Addendum,
each Uncommitted Foreign Currency Revolving Borrowing Addendum, each Rate
Protection Agreement relating to Hedging Obligations of the Company or any of
its Subsidiaries (including without limitation a Foreign Borrower), each
Borrowing Request, each Issuance Request, each Fee Letter, each Pledge
Agreement, the Subsidiary Co-Obligation Agreement and Guaranty, each Mortgage
(upon execution and delivery thereof), each Security Agreement and each other
agreement, document or instrument delivered in connection with this Agreement
or any other Loan Document, whether or not specifically mentioned herein or
therein, and for purposes of Article X and Sections 11.3, 11.4 and 11.11, the
term "Loan Document" shall also include the Intercreditor Agreement.
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"Material Adverse Effect" means (a) a material adverse
effect on the condition (financial or otherwise), business, assets or results
of operations of the Company and its Subsidiaries, taken as a whole, but
excluding, for purposes of the initial Credit Extension only, (i) any change
resulting from general economic conditions and (ii) with respect to the
agreements set forth on Schedule 3.04(c) to the Merger Agreement, any changes
arising out of the Transaction and the public announcement thereof.
"Material Documents" means the Merger Agreement, the
Organic Documents of the Company and the Investors' Agreement, each as amended,
supplemented, amended and restated or otherwise modified from time to time as
permitted in accordance with the terms hereof or of any other Loan Document.
"Merger" is defined in the second recital.
"Merger Agreement" means the Agreement and Plan of
Merger, dated as of January 20, 1998, and amended on April 22, 1998 (as
amended, supplemented, amended and restated or otherwise modified from time to
time in accordance with Section 7.2.10) between Thermadyne and Mergerco.
"Mergerco" is defined in the first recital.
"Moody's" means Moody's Investors Service, Inc.
"Mortgage" means, collectively, each Mortgage or Deed of
Trust executed and delivered pursuant to the terms of this Agreement, including
clause (b) of Section 7.1.8 or 7.1.12, in form and substance reasonably
satisfactory to the Agents.
"Net Debt Proceeds" means, with respect to the
incurrence, sale or issuance by the Company or any of its Subsidiaries of any
Debt (other than Debt incurred as part of the Transaction and other Debt
permitted by Section 7.2.2 as in effect on the date hereof), the excess of:
(a) the gross cash proceeds received, directly or
indirectly, by the Company or any of its Subsidiaries
from such incurrence, sale or issuance,
over
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<PAGE> 45
(b) the sum (without duplication) of (i) all
reasonable and customary underwriting commissions and
legal, investment banking, brokerage and accounting and
other professional fees, sales commissions and
disbursements and all other reasonable fees, expenses and
charges, in each case actually incurred in connection
with such incurrence, sale or issuance and (ii) in the
case of any Debt incurred, sold or issued by any Non-U.S.
Subsidiary, any taxes or other costs or expenses
resulting from repatriating any such proceeds to the
United States.
"Net Disposition Proceeds" means, with respect to any
sale, transfer or other disposition of any assets of the Company or any of its
Subsidiaries (other than transfers made as part of the Transaction and other
sales permitted pursuant to clause (a), (b), (d) or (e) of Section 7.2.9, but
including any sale or issuance of Capital Stock of any such Subsidiary to any
Person other than the Company or any of its Subsidiaries), the excess of:
(a) the gross cash proceeds received, directly or
indirectly, by the Company or any of its Subsidiaries
from any such sale, transfer or other disposition and any
cash payments received in respect of promissory notes or
other non-cash consideration delivered to the Company or
such Subsidiary in respect thereof,
less
(b) the sum (without duplication) of (i) all
reasonable and customary fees and expenses with respect
to legal, investment banking, brokerage, accounting and
other professional fees, sales commissions and
disbursements and all other reasonable fees, expenses and
charges, in each case actually incurred in connection
with such sale, transfer or other disposition, (ii) all
taxes and other governmental costs and expenses actually
paid or estimated by the Company (in good faith) to be
payable in cash in connection with such sale, transfer or
other disposition (including, in the event of a transfer,
sale or other disposition of non-U.S. assets, any such
taxes or other costs or expenses resulting from
repatriating any such proceeds to the U.S.), (iii)
payments made by the Company or any of its Subsidiaries
to retire Indebtedness (other than the Loans) of the
Company or any of its Subsidiaries where payment of such
Indebtedness is required in connection with such sale,
transfer or other disposition and (iv) reserves for
purchase price adjustments reasonably expected to be
payable by the Company and its Subsidiaries in cash in
connection therewith;
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<PAGE> 46
provided, however, that if, after the payment of all taxes and purchase price
adjustments with respect to such sale, transfer or other disposition, the
amount of estimated taxes or purchase price adjustments, if any, pursuant to
clause (b)(ii) or (b)(iv) above exceeded the tax or purchase price adjustment
amount actually paid in cash in respect of such sale, transfer or other
disposition, the aggregate amount of such excess shall, at such time,
constitute Net Disposition Proceeds.
"Net Equity Proceeds" means with respect to any sale or
issuance by the Company or Holdco to any Person of any Capital Stock of the
Company or Holdco, as the case may be, or any warrants or options with respect
to any such Capital Stock or the exercise of any such warrants or options after
the Closing Date (exclusive of any such proceeds constituting Excluded Equity
Proceeds) the excess of:
(a) the gross cash proceeds received by Holdco,
the Company and the Company's Subsidiaries from such
sale, exercise or issuance,
over
(b) all reasonable and customary underwriting
commissions and legal, investment banking, brokerage,
accounting and other professional fees, sales commissions
and disbursements and all other reasonable fees, expenses
and charges, in each case actually incurred in connection
with such sale or issuance.
"Net Income" means, for any period, the net income of the
Company and its Subsidiaries for such period on a consolidated basis.
"Non-Consenting Lender" means any Lender that, in
response to any request by the Company or the Administrative Agent to a
departure from, waiver of or amendment to any provision of any Loan Document
that requires the agreement of all Lenders or all Lenders with respect to a
particular Tranche, which departure, waiver or amendment receives the consent
of the Required Lenders or the holders of a majority of the Commitments or (if
the applicable Commitments in respect of such Tranche shall have expired or
been terminated) outstanding Credit Extensions in respect of such Tranche, as
the case may be, shall not have given its consent to such departure, waiver or
amendment.
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<PAGE> 47
"Non-Funding Lender" means a Lender that shall have
failed to fund any Loan hereunder that it was required to have funded in
accordance with the terms hereof, which Loan was included in any Borrowing in
respect of which a majority of the aggregate principal amount of all Loans
included in such Borrowing were funded by the Lenders party thereto.
"Non-U.S. Lender" means any Lender (including each
Assignee Lender) that is not (i) a citizen or resident of the United States,
(ii) a corporation, partnership or other entity created or organized in or
under the laws of the United States or any state thereof, (iii) an estate that
is subject to U.S. federal income taxation regardless of the source of its
income or (iv) a trust, if and only if (A) a court within the United States is
able to exercise primary supervision over the administration of the trust and
(B) one or more U.S. persons has the authority to control all substantial
decisions of the trust.
"Non-U.S. Subsidiary" means a Subsidiary of the Company
that is not a U.S. Subsidiary, including without limitation any Foreign
Borrower.
"Note" means, as the context may require, a Revolving
Note, a Term-A Note, a Term-B Note, a Term-C Note or a Swing Line Note.
"Notice of Uncommitted Foreign Currency Revolving
Borrowing" is defined in clause (a) of Section 2.4.4.
"Obligations" means all obligations (monetary or
otherwise) of the Borrowers and the other Obligors arising under or in
connection with this Agreement, any Rate Protection Agreement, any Note, any
Letter of Credit and any other Loan Document.
"Obligor" means any Borrower or any other Person (other
than any Agent, the Arranger, any Issuer, the Swing Line Lender or any Lender)
obligated under any Loan Document.
"Organic Document" means, relative to any Obligor, its
certificate of incorporation and by-laws or other constituent documents and all
shareholder agreements, voting trusts and similar arrangements to which such
Obligor is a party applicable to any of its authorized shares of Capital Stock.
"Participant" is defined in Section 11.11.2.
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"PBGC" means the Pension Benefit Guaranty Corporation and
any successor entity.
"Pension Plan" means a "pension plan", as such term is
defined in section 3(2) of ERISA, which is subject to Title IV of ERISA (other
than a multiemployer plan as defined in section 4001(a)(3) of ERISA), and to
which the Company or any corporation, trade or business that is, along with the
Company, a member of a Controlled Group, has or within the prior six years has
had any liability, including any liability by reason of having been a
substantial employer within the meaning of section 4063 of ERISA at any time
during the preceding five years, or by reason of being deemed to be a
contributing sponsor under section 4069 of ERISA.
"Percentage" means, relative to any Lender, (i) the
applicable percentage relating to Term-A Australian Dollar Loans, Term-A Lira
Loans, Term-A U.S. Dollar Loans, Term-B Loans, Term-C Loans, Committed
Australian Dollar Revolving Loans, Committed Canadian Dollar Revolving Loans,
Committed Lira Revolving Loans or U.S. Dollar Revolving Loans, as the case may
be, as set forth opposite its name on Schedule II hereto under the applicable
column heading or set forth in Lender Assignment Agreement(s) under the
applicable column heading or (ii) the applicable percentage relating to
Committed Foreign Currency Revolving Loans in any other Foreign Currency as set
forth opposite its name in a Revolving Loan Foreign Currency Commitment
Addendum or a Lender Assignment Agreement(s), as applicable, under the
applicable column heading, in each case as such percentage may be adjusted from
time to time pursuant to Lender Assignment Agreement(s) executed by such Lender
and its Assignee Lender(s) and delivered pursuant to Section 11.11 or, in the
case of a Lender's Percentage relating to Committed Revolving Loans, pursuant
to clause (g) of Section 2.1.2 or clause (d) or (e) of Section 2.5. A Lender
shall not have any Commitment to make Committed Australian Dollar Revolving
Loans, Committed Canadian Dollar Revolving Loans, Committed Lira Revolving
Loans, U.S. Dollar Revolving Loans, Committed Foreign Currency Revolving Loans
in any other Foreign Currency, Term-A Australian Dollar Loans, Term-A Lira
Loans, Term-A U.S. Dollar Loans, Term-B Loans or Term-C Loans (as the case may
be) if its percentage under the applicable column heading or in the applicable
Revolving Loan Foreign Currency Commitment Addendum or Lender Assignment
Agreement is zero.
"Perfection Certificate" means the Perfection Certificate
executed and delivered by an Authorized Officer of the Company pursuant to
Section 5.1.17,
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<PAGE> 49
substantially in the form of Exhibit I hereto, as amended, supplemented,
amended and restated or otherwise modified from time to time.
"Person" means any natural person, corporation,
partnership, firm, association, trust, government, governmental agency, limited
liability company or any other entity, whether acting in an individual,
fiduciary or other capacity.
"Plan" means any Pension Plan or Welfare Plan.
"Pledge Agreement" means, as the context may require, the
Company Pledge Agreement, the Holdco Guaranty and Pledge Agreement or the
Subsidiary Pledge Agreement.
"Preferred Stock" means Holdco's Preferred Stock issued
pursuant to the Preferred Stock Issuance and, following consummation of the
Merger, the Preferred Stock of Holdco into which such Preferred Stock has been
converted.
"Preferred Stock Issuance" is defined in the fourth
recital.
"Pro Forma Balance Sheet" is defined in clause (b) of
Section 5.1.9.
"Proxy Statement" means Thermadyne's proxy
statement/prospectus dated April 23, 1998 relating to the Merger.
"Public Offering" means, for any Person, any sale after
the Closing Date of the Capital Stock of such Person to the public pursuant to
a primary offering registered under the Securities Act of 1933, as amended.
"Purchasers" is defined in the second recital.
"Quarterly Payment Date" means the last day of each of
March, June, September and December, or, if any such day is not a Business Day,
the next succeeding Business Day, commencing with June 30, 1998.
"Rate Protection Agreement" means any interest rate swap,
cap, collar or similar agreement entered into by the Company pursuant to the
terms of this Agreement under which the counterparty to such agreement is (or
at the time such Rate Protection Agreement was entered into, was) a Lender or
an Affiliate of a Lender.
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<PAGE> 50
"Receivables Subsidiary" means Thermadyne Receivables,
Inc. or any other Subsidiary of the Company established after the Closing Date
whose sole business consists of purchasing accounts receivable and related
assets, or interests therein, from the Company and its Subsidiaries, selling
and granting Liens on such accounts receivable and related assets, or interests
therein, obtaining credit on the basis of sales of or Liens on such accounts
receivable and related assets, or interests therein, and such other activities
as are incidental to the foregoing.
"Receivables Transaction" means one or more trade
receivables financing transactions pursuant to which the Company or any of its
Subsidiaries sells accounts receivable and assets related thereto that are
customarily transferred with such accounts receivable in receivables financing
transactions, or interests therein, directly or indirectly through another
Subsidiary of the Company, to a Receivables Subsidiary and such Receivables
Subsidiary sells such accounts receivable and related assets, or interests
therein, and/or grants Liens in such accounts receivable and related assets, or
interests therein, to buyers thereof or providers of financing based thereon,
so long as (i) the aggregate principal amount outstanding (without duplication)
at any time of all such financings (excluding the transactions referred to in
clause (B) below) does not exceed $50,000,000 and (ii) such financings are
subject to customary terms and conditions for trade receivables financing
transactions, including with respect to advance rates, indemnities and recourse
(it being understood that (A) the transactions contemplated in the Receivables
Participation Agreement (the "RPA") dated as of December 28, 1994 among
Thermadyne Receivables, Inc. and Nationsbank of Virginia, N.A. (as the same
has been or may be amended or modified from time to time, including by
substitution of assignees and successors to the parties thereto, in accordance
with the terms of the Loan Documents) and the First Tier RPSA and Second Tier
RPSA (each as defined in the RPA) constitute, subject to the aggregate
$50,000,000 limitation set forth above, Receivables Transactions, and (B) the
transactions contemplated in the Purchase Agreement (the "Purchase Agreement")
dated as of August 2, 1994 between BA Credit Corporation and Coyne Cylinder
Company (as the same has been amended or modified from time to time, including
by substitution of assignees and successors to the parties thereto, in
accordance with the terms of the Loan Documents), to the extent that any sales
of Contract Portfolio (as defined in the Purchase Agreement) and Contract
Records (as so defined) were consummated prior to the Closing Date, constitute
Receivables Transactions, so long as the aggregate principal amount of
financing thereunder does not, at any time after the Closing Date, exceed
$4,000,000).
"Refunded Swing Line Loans" is defined in clause (b) of
Section 2.3.2.
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"Register" is defined in clause (b) of Section 2.9.
"Reimbursement Obligation" is defined in Section 2.8.3.
"Reinstatement Date" is defined in Section 4.1.
"Release" means a "release", as such term is defined in
CERCLA.
"Replacement Lender" is defined in Section 4.11.
"Replacement Notice" is defined in Section 4.11.
"Required Lenders" means, at any time, (a) prior to the
date of the making of the initial Credit Extension hereunder, Lenders having at
least 51% of the sum of the Revolving Loan Commitments, Term-A Loan
Commitments, Term-B Loan Commitments and Term-C Loan Commitments, and (b) on
and after the date of the initial Credit Extension, Lenders holding at least
51% of the Total Exposure Amount.
"Resource Conservation and Recovery Act" means the
Resource Conservation and Recovery Act, 42 U.S.C. Section 6901, et seq., as in
effect from time to time.
"Restricted Payments" is defined in Section 7.2.6.
"Restricted Payments Compliance Certificate" means a
certificate duly completed and executed by an Authorized Officer that is the
president, chief executive officer, treasurer, assistant treasurer, controller
or chief financial officer of the Company, substantially in the form of Exhibit
E-2 hereto.
"Revolving Australian Dollar Note" means a promissory
note of an Australian Borrower payable to any Lender, substantially in the form
of Exhibit A-1 hereto (as such promissory note may be amended, endorsed or
otherwise modified from time to time), evidencing the aggregate Indebtedness of
such Australian Borrower to such Lender resulting from outstanding Committed
Australian Dollar Revolving Loans made to such Australian Borrower, and also
means all other promissory notes accepted from time to time in substitution
therefor or renewal thereof.
"Revolving Canadian Dollar Note" means a promissory note
of a Canadian Borrower payable to any Lender, substantially in the form of
Exhibit A-1 hereto (as such promissory note may be amended, endorsed or
otherwise modified from time to
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<PAGE> 52
time), evidencing Indebtedness of such Canadian Borrower to such Lender
resulting from outstanding Committed Canadian Dollar Revolving Loans made to
such Canadian Borrower, and also means all other promissory notes accepted from
time to time in substitution therefor or renewal thereof.
"Revolving Foreign Currency Note" means, in respect of
any Committed Foreign Currency Revolving Loan made by a Lender to a Foreign
Borrower pursuant to a Revolving Loan Foreign Currency Commitment under Section
2.5, a promissory note which (x) shall be in a form mutually agreed upon
pursuant to the Revolving Loan Foreign Currency Commitment Addendum relative to
such Commitment (as such promissory note may be amended, endorsed or otherwise
modified from time to time) and (y) shall evidence the Indebtedness of such
Foreign Borrower to such Lender resulting from such Loan, and, with respect to
any such promissory note, shall also mean any other promissory note accepted
from time to time in substitution therefor or renewal thereof.
"Revolving Lira Note" means a promissory note of an
Italian Borrower payable to any Lender, substantially in the form of Exhibit
A-1 hereto (as such promissory note may be amended, endorsed or otherwise
modified from time to time), evidencing Indebtedness of such Italian Borrower
to such Lender resulting from outstanding Committed Lira Revolving Loans made
to such Italian Borrower, and also means all other promissory notes accepted
from time to time in substitution therefor or renewal thereof.
"Revolving Loan" means a Committed Revolving Loan or an
Uncommitted Foreign Currency Revolving Loan and "Revolving Loans" means
Committed Revolving Loans or Uncommitted Foreign Currency Revolving Loans, or
any combination of the foregoing.
"Revolving Loan Australian Dollar Commitment" is defined
in clause (b) of Section 2.1.2.
"Revolving Loan Australian Dollar Commitment Amount"
means an amount (expressed in U.S. Dollars) which, as of the Closing Date,
shall equal $5,000,000, as such amount may be (i) reduced pursuant to Section
2.2 or (ii) increased pursuant to a Revolving Loan Foreign Currency Commitment
Addendum pursuant to Section 2.5 or pursuant to clause (g) of Section 2.1.2.
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<PAGE> 53
"Revolving Loan Canadian Dollar Commitment" is defined in
clause (c) of Section 2.1.2.
"Revolving Loan Canadian Dollar Commitment Amount" means
an amount (expressed in U.S. Dollars) which, as of the Closing Date, shall
equal $2,000,000, as such amount may be (i) reduced pursuant to Section 2.2 or
(ii) increased pursuant to a Revolving Loan Foreign Currency Commitment
Addendum pursuant to Section 2.5 or pursuant to clause (g) of Section 2.1.2.
"Revolving Loan Commitment" means a Revolving Loan U.S.
Dollar Commitment or a Revolving Loan Foreign Currency Commitment.
"Revolving Loan Commitment Amount" means, as the context
may require, (i) in the case of any Revolving Loan Foreign Currency Commitment,
the Revolving Loan Foreign Currency Commitment Amount relative to such
Commitment, (ii) in the case of the Revolving Loan U.S. Dollar Commitment, the
Revolving Loan U.S. Dollar Commitment Amount or (iii) in the case of all
Revolving Loan Foreign Currency Commitments and the Revolving Loan U.S. Dollar
Commitment, in the aggregate, the then existing Total Revolving Loan Commitment
Amount.
"Revolving Loan Commitment Termination Date" means the
earliest of (i) June 30, 1998 if the Term Loans have not been made on or prior
to such date, (ii) the sixth anniversary of the Closing Date, (iii) the date on
which the Total Revolving Loan Commitment Amount is terminated in full or
reduced to zero pursuant to Section 2.2, and (iv) the date on which any
Commitment Termination Event occurs.
"Revolving Loan Foreign Currency Commitment" means, as
the context may require, a Revolving Loan Australian Dollar Commitment, a
Revolving Loan Canadian Dollar Commitment, a Revolving Loan Lira Commitment or
any other commitment of one or more Lenders to make Committed Foreign Currency
Revolving Loans to a Foreign Borrower pursuant to Section 2.5 hereof.
"Revolving Loan Foreign Currency Commitment Addendum"
means an addendum to this Agreement among one or more Lenders, the Company and
a Foreign Borrower, substantially in the form of Exhibit B-6 hereto, setting
forth, among other things, the commitment of such Lender or Lenders to make,
and the obligation of such Foreign Borrower to repay, Committed Foreign
Currency Revolving Loans, and, in certain cases, issue and/or participate in
Foreign Currency Letters of Credit, in accordance with this Agreement.
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<PAGE> 54
"Revolving Loan Foreign Currency Commitment Amount"
means, as the context may require, the Revolving Loan Australian Dollar
Commitment Amount, the Revolving Loan Canadian Dollar Commitment Amount, the
Revolving Loan Lira Commitment Amount or, with respect to any other Revolving
Loan Foreign Currency Commitment, the amount (expressed in U.S. Dollars) set
forth as the committed amount for such Commitment in the Revolving Loan Foreign
Currency Commitment Addendum with respect to such Revolving Loan Foreign
Currency Commitment.
"Revolving Loan Foreign Currency Limit" means
$50,000,000.
"Revolving Loan Lira Commitment" is defined in clause (d)
of Section 2.1.2.
"Revolving Loan Lira Commitment Amount" means an amount
(expressed in U.S. Dollars) which, as of the Closing Date, shall equal
$3,000,000, as such amount may be (i) reduced pursuant to Section 2.2 or (ii)
increased pursuant to a Revolving Loan Foreign Currency Commitment Addendum
pursuant to Section 2.5 or pursuant to clause (g) of Section 2.1.2.
"Revolving Loan U.S. Dollar Commitment" is defined in
clause (a) of Section 2.1.2.
"Revolving Loan U.S. Dollar Commitment Amount" means, at
any time, the Total Revolving Loan Commitment Amount at such time less the
Total Revolving Loan Foreign Currency Commitment Amount at such time.
"Revolving Note" means a Revolving Australian Dollar
Note, a Revolving Canadian Dollar Note, a Revolving Lira Note, a Revolving U.S.
Dollar Note or any Revolving Foreign Currency Note.
"Revolving U.S. Dollar Note" means a promissory note of
the Company payable to any Lender, substantially in the form of Exhibit A-1
hereto (as such promissory note may be amended, endorsed or otherwise modified
from time to time), evidencing Indebtedness of the Company to such Lender
resulting from outstanding U.S. Dollar Revolving Loans, and also means all
other promissory notes accepted from time to time in substitution therefor or
renewal thereof.
"S&P" means Standard & Poor's Ratings Group, a division
of McGraw Hill, Inc.
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"Secured Parties" means, collectively, the Lenders, the
Issuers, the Agents and all Affiliates of the Lenders which may be party to any
Loan Document (including any Rate Protection Agreement).
"Security Agreement" means, as the context may require,
the Company Security Agreement or the Subsidiary Security Agreement.
"Solvent" means, with respect to any Person on a
particular date, that on such date (a) the fair value of the property of such
Person is greater than the total amount of liabilities, including contingent
liabilities, of such Person, (b) the present fair salable value of the assets
of such Person is not less than the amount that will be required to pay the
probable liability of such Person on its debts as they become absolute and
matured, (c) such Person does not intend to, and does not believe that it will,
incur debts or liabilities beyond such Person's ability to pay as such debts
and liabilities mature, and (d) such Person is not engaged in business or a
transaction, and such Person is not about to engage in business or a
transaction, for which such Person's property would constitute an unreasonably
small capital. The amount of contingent liabilities at any time shall be
computed as the amount that, in light of all the facts and circumstances
existing at such time, can reasonably be expected to become an actual or
matured liability.
"Stated Amount" of each Letter of Credit means the total
amount available to be drawn under such Letter of Credit upon the issuance
thereof.
"Stated Expiry Date" is defined in Section 2.8.
"Stated Maturity Date" means (i) in the case of any
Committed Revolving Loan, the sixth anniversary of the Closing Date, (ii) in
the case of any Term-A Loan, the sixth anniversary of the Closing Date, (iii)
in the case of any Term-B Loan, the seventh anniversary of the Closing Date,
(iv) in the case of any Term-C Loan, the eighth anniversary of the Closing Date
and (v) in the case of any Uncommitted Foreign Currency Revolving Loan, the
earlier of (x) the Stated Maturity Date for Committed Revolving Loans and (y)
the maturity date that shall have been agreed between the applicable Foreign
Borrower and the Lender or Lenders that shall have made, or offered or agreed
to make, such Uncommitted Foreign Currency Revolving Loan, or, in each case, if
such day is not a Business Day, the first Business Day following such day.
"Subject Lender" is defined in Section 4.11.
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"Subordinated Debt Issuance" is defined in the fifth
recital.
"Subordinated Note Indenture" is defined in Section
7.2.15.
"Subordinated Notes" is defined in the fifth recital.
"Subordination Provisions" is defined in Section 8.1.11.
"Subsidiary" means, with respect to any Person, any
corporation, partnership or other business entity of which more than 50% of the
outstanding Capital Stock (or other ownership interest) having ordinary voting
power to elect a majority of the board of directors, managers or other voting
members of the governing body of such entity (irrespective of whether at the
time Capital Stock (or other ownership interests) of any other class or classes
of such entity shall or might have voting power upon the occurrence of any
contingency) is at the time directly or indirectly owned by such Person, by
such Person and one or more other Subsidiaries of such Person, or by one or
more other Subsidiaries of such Person. For purposes of this Agreement and the
other Loan Documents, any Acquired Controlled Person shall be deemed to be a
"Subsidiary" of the Company for purposes of Sections 6.1, 6.7, 6.9, 6.10, 6.11,
6.12, 7.1.2, 7.1.3, 7.1.4, 7.1.5, 7.1.6, 7.1.7(b), 7.2.1, 7.2.2, 7.2.3, 7.2.5,
7.2.6, 7.2.9, 7.2.11, 7.2.12 and 7.2.14 and, to the extent (and only to the
extent) that it relates to any of the foregoing Sections, Article VIII.
"Subsidiary Co-Obligor" means, on the Closing Date, each
U.S. Subsidiary of the Company (other than Thermadyne Receivables, Inc.) and
thereafter, each U.S. Subsidiary of the Company that is required, pursuant to
clause (a) of Section 7.1.7, to execute and deliver a supplement to the
Subsidiary Co-Obligation Agreement and Guaranty.
"Subsidiary Co-Obligation Agreement and Guaranty" means
the Subsidiary Co-Obligation Agreement and Guaranty executed and delivered by
an Authorized Officer of each Subsidiary Co-Obligor pursuant to Section 5.1.6,
substantially in the form of Exhibit H hereto, as amended, supplemented,
amended and restated or otherwise modified from time to time.
"Subsidiary Pledge Agreement" means the Pledge Agreement
executed and delivered by an Authorized Officer of each Subsidiary of the
Company (other than Thermadyne Receivables, Inc.) pursuant to clause (c) of
Section 5.1.7, substantially in the form of Exhibit G-3 hereto, as amended,
supplemented, amended and restated or otherwise modified from time to time.
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"Subsidiary Security Agreement" means the Security
Agreement executed and delivered by an Authorized Officer of each U.S.
Subsidiary of the Company (other than the Receivables Subsidiaries) pursuant to
Section 5.1.8, substantially in the form of Exhibit F-2 hereto, as amended,
supplemented, amended and restated or otherwise modified from time to time.
"Swing Line Lender" means ABN AMRO, in its capacity as
Swing Line Lender hereunder.
"Swing Line Loan" is defined in clause (f) of Section
2.1.2.
"Swing Line Loan Commitment" is defined in clause (f) of
Section 2.1.2.
"Swing Line Loan Commitment Amount" means, on any date,
$10,000,000, as such amount may be reduced from time to time pursuant to
Section 2.2.
"Swing Line Note" means a promissory note of the Company
payable to the Swing Line Lender, in the form of Exhibit A-5 hereto (as such
promissory note may be amended, endorsed or otherwise modified from time to
time), evidencing the aggregate Indebtedness of the Company to the Swing Line
Lender resulting from outstanding Swing Line Loans, and also means all other
promissory notes accepted from time to time in substitution therefor or renewal
thereof.
"Syndication Agent" is defined in the preamble.
"Taxes" is defined in Section 4.6.
"Term-A Australian Dollar Loan" is defined in clause (b)
of Section 2.1.1.
"Term-A Australian Dollar Note" means a promissory note
of the Initial Australian Borrower payable to the order of any Lender, in the
form of Exhibit A-2 hereto (as such promissory note may be amended, endorsed or
otherwise modified from time to time), evidencing the aggregate Indebtedness of
the Initial Australian Borrower to such Lender resulting from outstanding
Term-A Australian Dollar Loans, and also means all other promissory notes
accepted from time to time in substitution therefor or renewal thereof.
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"Term-A Lira Loan" is defined in clause (c) of Section
2.1.1.
"Term-A Lira Note" means a promissory note of the Initial
Italian Borrower payable to the order of any Lender, in the form of Exhibit A-2
hereto (as such promissory note may be amended, endorsed or otherwise modified
from time to time), evidencing the aggregate Indebtedness of the Initial
Italian Borrower to such Lender resulting from outstanding Term-A Lira Loans,
and also means all other promissory notes accepted from time to time in
substitution or renewal thereof.
"Term-A Loan" means a Term-A U.S. Dollar Loan, a Term-A
Australian Dollar Loan or a Term-A Lira Loan.
"Term-A Loan Australian Dollar Commitment" is defined in
clause (b) of Section 2.1.1.
"Term-A Loan Australian Dollar Commitment Amount" means
an amount of Australian Dollars the U.S. Dollar Equivalent of which is equal
to, as of one Business Day immediately preceding the Closing Date, $20,000,000.
"Term-A Loan Commitment" means, as the context may
require, the Term-A Loan U.S. Dollar Commitment, the Term-A Loan Australian
Dollar Commitment or the Term-A Loan Lira Commitment.
"Term-A Loan Commitment Termination Date" means the
earliest of (i) June 30, 1998, if the Term-A Loans have not been made on or
prior to such date, (ii) the Closing Date (immediately after the making of the
Term-A Loans on such date), and (iii) the date on which any Commitment
Termination Event occurs.
"Term-A Loan Lira Commitment" is defined in clause (c) of
Section 2.1.1.
"Term-A Loan Lira Commitment Amount" means an amount of
Lire the U.S. Dollar Equivalent of which is equal to, as of one Business Day
immediately preceding the Closing Date, $10,000,000.
"Term-A Loan U.S. Dollar Commitment" is defined in clause
(a) of Section 2.1.1.
"Term-A Loan U.S. Dollar Commitment Amount" means
$70,000,000.
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"Term-A Note" means a Term-A Australian Dollar Note, a
Term-A Lira Note or a Term-A U.S. Dollar Note.
"Term-A U.S. Dollar Loan" is defined in clause (a) of
Section 2.1.1.
"Term-A U.S. Dollar Note" means a promissory note of the
Company payable to the order of any Lender, in the form of Exhibit A-2 hereto
(as such promissory note may be amended, endorsed or otherwise modified from
time to time), evidencing the aggregate Indebtedness of the Company to such
Lender resulting from outstanding Term-A U.S. Dollar Loans, and also means all
other promissory notes accepted from time to time in substitution therefor or
renewal thereof.
"Term-B Loan" is defined in clause (d) of Section 2.1.1.
"Term-B Loan Commitment" is defined in clause (d) of
Section 2.1.1.
"Term-B Loan Commitment Amount" means $115,000,000.
"Term-B Loan Commitment Termination Date" means the
earliest of (i) June 30, 1998, if the Term-B Loans have not been made on or
prior to such date, (ii) the Closing Date (immediately after the making of the
Term-B Loans on such date), and (iii) the date on which any Commitment
Termination Event occurs.
"Term-B Note" means a promissory note of the Company
payable to the order of any Lender, in the form of Exhibit A-3 hereto (as such
promissory note may be amended, endorsed or otherwise modified from time to
time), evidencing the aggregate Indebtedness of the Company to such Lender
resulting from outstanding Term-B Loans, and also means all other promissory
notes accepted from time to time in substitution therefor or renewal thereof.
"Term-C Loan" is defined in clause (e) of Section 2.1.1.
"Term-C Loan Commitment" is defined in clause (e) of
Section 2.1.1.
"Term-C Loan Commitment Amount" means $115,000,000.
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"Term-C Loan Commitment Termination Date" means the
earliest of (i) June 30, 1998, if the Term-C Loans have not been made on or
prior to such date, (ii) the Closing Date (immediately after the making of the
Term-C Loans on such date), and (iii) the date on which any Commitment
Termination Event occurs.
"Term-C Note" means a promissory note of the Company
payable to the order of any Lender, in the form of Exhibit A-4 hereto (as such
promissory note may be amended, endorsed or otherwise modified from time to
time), evidencing the aggregate Indebtedness of the Company to such Lender
resulting from outstanding Term-C Loans, and also means all other promissory
notes accepted from time to time in substitution therefor or renewal thereof.
"Term Loan Commitment Termination Date" means, as the
context may require, the Term-A Loan Commitment Termination Date, the Term-B
Loan Commitment Termination Date or the Term-C Loan Commitment Termination
Date.
"Term Loans" means, collectively, the Term-A Loans, the
Term-B Loans and the Term-C Loans.
"Thermadyne" is defined in the second recital.
"Thermadyne Business" is defined in Section 7.2.1.
"Total Exposure Amount" means, at any time,
(a) with respect to any provision of this
Agreement other than the declaration of the acceleration
of the maturity of all or any portion of the outstanding
principal amount of the Loans and other Obligations to be
due and payable pursuant to Section 8.3, the sum of (i)
the aggregate principal amount of all Term Loans
outstanding at such time (included, in the case of any
Term-A Loan denominated in a Foreign Currency, at the
U.S. Dollar Equivalent thereof) and (ii) (x) the Total
Revolving Loan Commitment Amount, if there are any
Revolving Loan Commitments then outstanding, or (y) if
all Revolving Loan Commitments shall have expired or been
terminated, the sum of (1) the aggregate principal amount
of all Revolving Loans and Swing Line Loans outstanding
at such time (included, in the case of any Foreign
Currency Revolving Loan, at the U.S. Dollar Equivalent
thereof) and (2) the Letter of Credit Outstandings at
such time; and
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(b) with respect to the declaration of the
acceleration of the maturity of all or any portion of the
outstanding principal amount of the Loans and other
Obligations to be due and payable pursuant to Section
8.3, the sum of (i) the aggregate principal amount of all
Loans outstanding at such time (included, in the case of
any Foreign Currency Loan, at the U.S. Dollar Equivalent
thereof) and (ii) the Letter of Credit Outstandings at
such time.
"Total Revolving Loan Commitment Amount" means, with
respect to all Revolving Loan Foreign Currency Commitments and the Revolving
Loan U.S. Dollar Commitment, on any date, an amount (expressed in U.S. Dollars)
equal to $100,000,000, as such amount may be increased from time to time
pursuant to clause (g) of Section 2.1.2 or reduced from time to time pursuant
to Section 2.2.
"Total Revolving Loan Foreign Currency Commitment Amount"
means, at any time, the aggregate of all Revolving Loan Foreign Currency
Commitment Amounts at such time.
"Tranche" means, as the context may require, the Loans
constituting Term-A Australian Dollar Loans, Term-A Lira Loans, Term-A U.S.
Dollar Loans, Term-B Loans, Term-C Loans, U.S. Dollar Revolving Loans,
Committed Australian Dollar Revolving Loans, Committed Canadian Dollar
Revolving Loans, Committed Lira Revolving Loans, other Committed Foreign
Currency Revolving Loans in a particular Currency, Uncommitted Foreign Currency
Revolving Loans of a particular Borrowing or Swing Line Loans.
"Transaction" is defined in the second recital.
"Transaction Documents" means each of the Material
Documents and all other agreements, documents, instruments, certificates,
filings, consents, approvals, board of directors resolutions and opinions
furnished pursuant to or in connection with the Merger, the Holdco Equity
Contribution, the Discount Debentures Issuance, the Asset Contribution, the
Subordinated Debt Issuance and the transactions contemplated hereby or thereby,
each as amended, supplemented, amended and restated or otherwise modified from
time to time as permitted in accordance with the terms hereof or of any other
Loan Document.
"type" means (i) relative to any Committed Loan, the
portion thereof, if any, being maintained as a Base Rate Loan or a LIBO Rate
Loan, and (ii) relative to any Uncommitted Foreign Currency Revolving Loan,
whether such Uncommitted Foreign
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Currency Revolving Loan is an Uncommitted Foreign Currency Absolute Rate
Revolving Loan or an Uncommitted Foreign Currency LIBO Revolving Loan.
"UCC" means the Uniform Commercial Code as in effect from
time to time in the State of New York.
"Uncommitted Foreign Currency Absolute Interest Rate" is
defined in clause (b)(v) of Section 2.4.3.
"Uncommitted Foreign Currency Absolute Rate Revolving
Loans" means a loan made or to be made by a Lender pursuant to an Absolute Rate
Auction.
"Uncommitted Foreign Currency Interest Margin" is defined
in clause (b)(iv) of Section 2.4.3.
"Uncommitted Foreign Currency Interest Quote" means an
offer by a Lender to make an Uncommitted Foreign Currency Revolving Loan in
accordance with Section 2.4.
"Uncommitted Foreign Currency Interest Rate" means, with
respect to any Uncommitted Foreign Currency Revolving Loan, the interest rate
per annum for such Uncommitted Foreign Currency Revolving Loan, as agreed to
and accepted by the applicable Foreign Borrower and the Lender that shall have
made or offered or agreed to make such Uncommitted Foreign Currency Revolving
Loan, pursuant to Section 2.4.
"Uncommitted Foreign Currency LIBO Revolving Loans" means
a loan made or to be made by a Lender pursuant to a LIBO Rate Auction.
"Uncommitted Foreign Currency Revolving Borrowing
Addendum" shall mean an addendum to this Agreement executed by the
Administrative Agent and a Non-U.S. Subsidiary, substantially in the form of
Exhibit B-7 hereto, delivered pursuant to clause (c) of Section 5.3.
"Uncommitted Foreign Currency Revolving Loan" means an
Uncommitted Foreign Currency Absolute Rate Revolving Loan or an Uncommitted
Foreign Currency LIBO Revolving Loan.
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"Uncommitted Foreign Currency Revolving Loan Borrowing"
shall mean a Borrowing of Uncommitted Foreign Currency Revolving Loans made by
each of the Lenders whose offer to make such Uncommitted Foreign Currency
Revolving Loans as part of such Borrowing has been accepted by the applicable
Foreign Borrower pursuant to Section 2.4.4.
"Uncommitted Foreign Currency Revolving Loan Borrowing
Request" shall mean a loan request and certificate requesting Uncommitted
Foreign Currency Revolving Loans, duly executed by an Authorized Officer of the
applicable Foreign Borrower, substantially in the form of Exhibit B-3 hereto,
delivered pursuant to Section 2.4.1.
"United States" or "U.S." means the United States of
America, its fifty states and the District of Columbia.
"U.S. Dollar" and "$" means the lawful currency of the
United States.
"U.S. Dollar Equivalent" means, with respect to any
Foreign Currency on any date of determination, the equivalent amount in U.S.
Dollars of such Foreign Currency, determined by reference to the New York
foreign exchange selling rates, as published in The Wall Street Journal on such
date of determination for the immediately preceding Business Day, or, if such
rate is not available, such equivalent amount shall be determined by the
Administrative Agent (in accordance with its standard practices) by using the
quoted spot rate offered to the Administrative Agent in the New York foreign
exchange market for such Foreign Currency at approximately 11:00 a.m. (New York
time) on such date of determination; provided that, solely for purposes of
determining (x) the equivalent amount in U.S. Dollars of Australian Dollars
that will be borrowed by the Initial Australian Borrower on the Closing Date as
Term-A Australian Dollar Loans, and (y) the equivalent amount in U.S. Dollars
of Lira that will be borrowed by the Initial Italian Borrower on the Closing
Date as Term-A Lira Loans, the "U.S. Dollar Equivalent" shall mean the
equivalent amount in U.S. Dollars of such Foreign Currencies determined by
reference to the foreign exchange selling rates agreed to by the Company and
the relevant Lenders.
"U.S. Dollar Issuer" means (i) ABN AMRO, in its capacity
as issuer of U.S. Dollar Letters of Credit, and (ii) any other Lender as may be
designated by the Company (and consented to by the Agents and such Lender, such
consent by the Agents not to be unreasonably withheld) in its capacity as
issuer of U.S. Dollar Letters of Credit.
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"U.S. Dollar Letter of Credit" means a Letter of Credit
denominated in U.S. Dollars.
"U.S. Dollar Letter of Credit Commitment" means a Letter
of Credit Commitment in respect of U.S. Dollar Letters of Credit.
"U.S. Dollar Letter of Credit Commitment Amount" means,
at any time, the Letter of Credit Commitment Amount at such time less the
aggregate Foreign Currency Letter of Credit Commitment Amounts in respect of
all Foreign Currency Letter of Credit Commitments outstanding at such time.
"U.S. Dollar Letter of Credit Outstandings" means, on any
date, an amount equal to the sum of:
(a) the then aggregate amount which is undrawn
and available under all issued and outstanding U.S.
Dollar Letters of Credit,
plus
(b) the then aggregate amount of all unpaid and
outstanding Reimbursement Obligations in respect of such
U.S. Dollar Letters of Credit.
"U.S. Dollar Revolving Loan" is defined in clause (a) of
Section 2.1.2.
"U.S. Subsidiary" means any Subsidiary of the Company
that is incorporated or organized in or under the laws of the United States or
any state thereof.
"Voting Stock" of any Person means Capital Stock of such
Person which ordinarily has voting power for the election of directors (or
Persons performing similar functions) of such Person, whether at all times or
only so long as no senior class of securities has such voting power by reason
of any contingency.
"Waiver" means an agreement in favor of the Agents for
the benefit of the Lenders in form and substance reasonably satisfactory to the
Agents.
"Warrant" is defined in the fourth recital.
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"Warrant Issuance" is defined in the fourth recital.
"Welfare Plan" means a "welfare plan", as such term is
defined in section 3(1) of ERISA, and to which the Company has any liability.
"wholly-owned Subsidiary" means, with respect to any
Person, any Subsidiary of such Person all of the Capital Stock (and all rights
and options to purchase such Capital Stock) of which, other than directors'
qualifying shares, are owned, beneficially and of record, by such Person and/or
one or more wholly-owned Subsidiaries of such Person.
SECTION 1.2. Use of Defined Terms. Unless otherwise
defined or the context otherwise requires, terms for which meanings are
provided in this Agreement shall have such meanings when used in the Disclosure
Schedule and in each other Loan Document, notice and other communication
delivered from time to time in connection with this Agreement or any other Loan
Document.
SECTION 1.3. Cross-References. Unless otherwise
specified, references in this Agreement and in each other Loan Document to any
Article or Section are references to such Article or Section of this Agreement
or such other Loan Document, as the case may be, and, unless otherwise
specified, references in any Article, Section or definition to any clause are
references to such clause of such Article, Section or definition.
SECTION 1.4. Accounting and Financial Determinations.
(a) Unless otherwise specified, all accounting terms used herein or in any
other Loan Document shall be interpreted, all accounting determinations and
computations hereunder or thereunder (including under Section 7.2.4) shall be
made, and all financial statements required to be delivered hereunder or
thereunder shall be prepared, in accordance with those generally accepted
accounting principles ("GAAP"), as in effect in the United States on December
31, 1997 and, unless otherwise expressly provided herein, shall be computed or
determined on a consolidated basis and without duplication.
(b) For purposes of computing the Fixed Charge Coverage
Ratio, Interest Coverage Ratio and Leverage Ratio (and any financial
calculations required to be made or included within such ratios) as of the end
of any Fiscal Quarter, all components of such ratios (other than Capital
Expenditures) for the period of four Fiscal Quarters ending at the end of such
Fiscal Quarter shall include, without duplication, such components of such
ratios attributable to any business or assets that
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have been acquired or disposed of by the Company or any of its Subsidiaries
(including through mergers or consolidations) after the first day of such
period of four Fiscal Quarters and prior to the end of such period, as
determined in good faith by the Company on a pro forma basis for such period of
four Fiscal Quarters as if such acquisition had occurred on such first day of
such period (including, whether or not such inclusion would be permitted under
GAAP or Regulation S-X of the Securities and Exchange Commission, cost savings
that would have been realized had such acquisition occurred on such day).
(c) Unless the context otherwise requires, for purposes
of determining the outstanding principal amount of Loans or Letter of Credit
Outstandings denominated in a Foreign Currency (including without limitation
pursuant to Section 3.1.2), the term "pro rata" as used in this Agreement shall
be based upon the U.S. Dollar Equivalent of the particular Foreign Currency at
the time of determination.
ARTICLE II
COMMITMENTS, BORROWING AND ISSUANCE PROCEDURES,
NOTES AND LETTERS OF CREDIT
SECTION 2.1. Commitments. On the terms and subject to
the conditions of this Agreement (including Sections 2.1.4, 2.1.5 and Article
V),
(a) each Lender severally agrees to make Loans
(other than Swing Line Loans) pursuant to each of its
Commitments, and the Swing Line Lender agrees to make
Swing Line Loans (to be denominated in U.S. Dollars only)
pursuant to the Swing Line Loan Commitment, in each case
as described in this Section 2.1; and
(b) each Issuer that has a Letter of Credit
Commitment in respect of any Currency severally agrees
that it will issue Letters of Credit denominated in such
Currency pursuant to Section 2.1.3, and each other Lender
that has a Revolving Loan Commitment in respect of such
Currency severally agrees that it will purchase
participation interests in such Letters of Credit
pursuant to Section 2.8.1.
Any term or provision of this Agreement or any other Loan Document (including
this Article II or Article III hereof) to the contrary notwithstanding, (i) all
Foreign Currency Loans shall be made in the applicable Foreign Currency and
shall be repaid
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or prepaid in the same Foreign Currency in which such Loans were made and (ii)
all Foreign Currency Letters of Credit shall be issued, and all Reimbursement
Obligations in respect of Foreign Currency Letters of Credit shall be paid, in
the applicable Foreign Currency.
SECTION 2.1.1. Term Loan Commitments. Subject to
compliance by the Company with the terms of Sections 2.1.4, 5.1 and 5.2.1, and
compliance by the applicable Borrower with the terms of Section 5.2.2, on (but
solely on) the Closing Date (which shall be a Business Day), each Lender that
has a Percentage in excess of zero of the Term-A Loan U.S. Dollar Commitment,
the Term-A Loan Australian Dollar Commitment, the Term-A Loan Lira Commitment,
the Term-B Loan Commitment or the Term-C Loan Commitment, as applicable, will
make Term Loans to the applicable Borrower as provided in this Section 2.1.1.
(a) Each Lender having a Percentage of the Term-A
Loan U.S. Dollar Commitment in excess of zero will make
loans denominated in U.S. Dollars (relative to such
Lender, its "Term-A U.S. Dollar Loans") to the Company
equal to such Lender's Percentage of the aggregate amount
of the Borrowing or Borrowings of Term-A U.S. Dollar
Loans requested by the Company to be made on the Closing
Date (with the commitment of each such Lender described
in this clause (a) herein referred to as its "Term-A Loan
U.S. Dollar Commitment").
(b) Each Lender having a Percentage of the Term-A
Loan Australian Dollar Commitment in excess of zero will
make loans denominated in Australian Dollars (relative to
such Lender, its "Term-A Australian Dollar Loans") to the
Initial Australian Borrower equal to such Lender's
Percentage of the aggregate amount of the Borrowing or
Borrowings of Term-A Australian Dollar Loans requested by
the Initial Australian Borrower to be made on the Closing
Date (with the commitment of each such Lender described
in this clause (b) herein referred to as its "Term-A Loan
Australian Dollar Commitment").
(c) Each Lender having a Percentage of the Term-A
Loan Lira Commitment in excess of zero will make loans
denominated in Lire (relative to such Lender, its "Term-A
Lira Loans") to the Initial Italian Borrower equal to
such Lender's Percentage of the aggregate amount of the
Borrowing or Borrowings of Term-A Lira Loans requested by
the Initial Italian Borrower to be made on the Closing
Date (with the commitment of each such Lender described
in this clause (c) herein referred to as its "Term-A Loan
Lira Commitment").
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(d) Each Lender having a Percentage of the Term-B
Loan Commitment in excess of zero will make loans
denominated in U.S. Dollars (relative to such Lender, its
"Term-B Loans") to the Company equal to such Lender's
Percentage of the aggregate amount of the Borrowing or
Borrowings of Term-B Loans requested by the Company to be
made on the Closing Date (with the commitment of each
such Lender described in this clause (d) herein referred
to as its "Term-B Loan Commitment").
(e) Each Lender having a Percentage of the Term-C
Loan Commitment in excess of zero will make loans
denominated in U.S. Dollars (relative to such Lender, its
"Term-C Loans") to the Company equal to such Lender's
Percentage of the aggregate amount of the Borrowing or
Borrowings of Term-C Loans requested by the Company to be
made on the Closing Date (with the commitment of each
such Lender described in this clause (e) herein referred
to as its "Term-C Loan Commitment").
No amounts paid or prepaid with respect to Term-A Loans, Term-B Loans or Term-C
Loans may be reborrowed.
SECTION 2.1.2. Revolving Loan Commitments and Swing Line
Loan Commitment. Subject to compliance by the Company with the terms of
Section 2.1.4, Section 5.1 and Section 5.2.1, and compliance by the applicable
Borrower with the terms of Section 5.2.2 (and, in the case of any Foreign
Borrower other than the Initial Foreign Borrowers, compliance by the applicable
Foreign Borrower with the terms of Section 5.3), from time to time on any
Business Day occurring concurrently with (or after) the making of the Term
Loans but prior to the Revolving Loan Commitment Termination Date, each Lender
that has a Percentage in excess of zero of the Revolving Loan U.S. Dollar
Commitment, the Revolving Loan Australian Dollar Commitment, the Revolving Loan
Canadian Dollar Commitment, the Revolving Loan Lira Commitment, any other
Revolving Loan Foreign Currency Commitment or the Swing Line Loan Commitment
will make Revolving Loans or Swing Line Loans, as applicable, to the applicable
Borrower as provided in this Section 2.1.2.
(a) Each Lender having a Percentage of the
Revolving Loan U.S. Dollar Commitment in excess of zero
will make loans denominated in U.S.
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Dollars (relative to such Lender, its "U.S. Dollar
Revolving Loans") to the Company equal to such Lender's
Percentage of the aggregate amount of the Borrowing or
Borrowings of U.S. Dollar Revolving Loans requested by
the Company to be made on such day. The Commitment of
each Lender described in this clause (a) is herein
referred to as its "Revolving Loan U.S. Dollar
Commitment." On the terms and subject to the conditions
hereof, the Company may from time to time borrow, prepay
and reborrow U.S. Dollar Revolving Loans.
(b) Each Lender having a Percentage of any
Revolving Loan Australian Dollar Commitment in excess of
zero will make loans denominated in Australian Dollars
(relative to such Lender, its "Committed Australian
Dollar Revolving Loans") to the applicable Australian
Borrower equal to such Lender's Percentage of the
aggregate amount of the Borrowing or Borrowings of
Committed Australian Dollar Revolving Loans requested by
such Australian Borrower to be made on such day. The
Commitment of each Lender described in this clause (b) is
herein referred to as its "Revolving Loan Australian
Dollar Commitment". On the terms and subject to the
conditions hereof, the applicable Australian Borrower may
from time to time borrow, prepay and reborrow Committed
Australian Dollar Revolving Loans.
(c) Each Lender having a Percentage of any
Revolving Loan Canadian Dollar Commitment in excess of
zero will make loans denominated in Canadian Dollars
(relative to such Lender, its "Committed Canadian Dollar
Revolving Loans") to the applicable Canadian Borrower
equal to such Lender's Percentage of the aggregate amount
of the Borrowing or Borrowings of Committed Canadian
Dollar Revolving Loans requested by such Canadian
Borrower to be made on such day. The Commitment of each
Lender described in this clause (c) is herein referred to
as its "Revolving Loan Canadian Dollar Commitment". On
the terms and subject to the conditions hereof, the
applicable Canadian Borrower may from time to time
borrow, prepay and reborrow Committed Canadian Dollar
Revolving Loans.
(d) Each Lender that has a Percentage of any
Revolving Loan Lira Commitment in excess of zero will
make loans denominated in Lira (relative to such Lender,
its "Committed Lira Revolving Loans") to the applicable
Italian Borrower equal to such Lender's Percentage of the
aggregate amount of the Borrowing or Borrowings of
Committed Lira Revolving Loans requested by such Italian
Borrower to be made on such day. The Commitment of each
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Lender described in this clause (d) is herein referred to
as its "Revolving Loan Lira Commitment". On the terms
and subject to the conditions hereof, the applicable
Italian Borrower may from time to time borrow, prepay and
reborrow Committed Lira Revolving Loans.
(e) In the event any other Revolving Loan Foreign
Currency Commitment is created pursuant to Section 2.5,
each Lender having a Percentage of such Revolving Loan
Foreign Currency Commitment in excess of zero will make
Committed Foreign Currency Revolving Loans denominated in
the applicable Foreign Currency to the applicable Foreign
Borrower equal to such Lender's Percentage of the
aggregate amount of the Borrowing or Borrowings of
Committed Foreign Currency Revolving Loans requested by
such Foreign Borrower under such Revolving Loan Foreign
Currency Commitment to be made on such day. On the terms
and subject to the conditions hereof and of the
applicable Revolving Loan Foreign Currency Commitment
Addendum, the applicable Foreign Borrower may from time
to time borrow, prepay and reborrow Committed Foreign
Currency Revolving Loans under such Revolving Loan
Foreign Currency Commitment.
(f) The Swing Line Lender will make a loan
denominated in U.S. Dollars (a "Swing Line Loan") to the
Company equal to the principal amount of the Swing Line
Loan requested by the Company to be made on such day.
The Commitment of the Swing Line Lender described in this
clause (f) is herein referred to as its "Swing Line Loan
Commitment." On the terms and subject to the conditions
hereof, the Company may from time to time borrow, prepay
and reborrow Swing Line Loans.
(g) At any time that no Default has occurred and
is continuing, the Company may, by notice to the Agents,
request that, on the terms and subject to the conditions
contained in this Agreement, the Lenders and/or other
financial institutions not then a party to this Agreement
that are satisfactory to the Administrative Agent and the
Issuers provide up to an aggregate amount of $25,000,000
in additional Revolving Loan Commitments to make
Committed Revolving Loans denominated in any Currency or
Currencies. Upon receipt of such notice, the Syndication
Agent shall use all commercially reasonable efforts to
arrange for the Lenders or other financial institutions
to provide such additional Revolving Loan Commitments;
provided that the Syndication Agent will first offer each
of the Lenders that then has a Percentage of any
Revolving Loan Commitments a pro rata portion (based upon
the Total Revolving Loan
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Commitment Amount at such time) of any such additional
Revolving Loan Commitment. Alternatively, any Lender may
commit to provide the full amount of the requested
additional Revolving Loan Commitment and then offer
portions of such additional Revolving Loan Commitment to
the other Lenders or other financial institutions,
subject to the proviso in the immediately preceding
sentence. Nothing contained in this clause (g) or
otherwise in this Agreement is intended to commit any
Lender or any Agent to provide any portion of any such
additional Revolving Loan Commitments. If and to the
extent that any Lenders and/or other financial
institutions agree, in their sole discretion, to provide
any such additional Revolving Loan Commitments, (i) the
Total Revolving Loan Commitment Amount and the Revolving
Loan U.S. Dollar Commitment Amount or the Revolving Loan
Foreign Currency Commitment Amount, as the case may be,
shall be increased by the amount of the additional
Revolving Loan U.S. Dollar Commitments or Revolving Loan
Foreign Currency Commitments, as the case may be, agreed
to be so provided, (ii) the Percentages of the respective
Lenders in respect of the Revolving Loan U.S. Dollar
Commitment and/or Revolving Loan Foreign Currency
Commitments, as the case may be, shall be proportionally
adjusted, as applicable, (iii) at such time and in such
manner as the Company and the Syndication Agent shall
agree (it being understood that the Company and the
Agents will use all commercially reasonable efforts to
avoid the prepayment or assignment of any LIBO Rate Loan
on a day other than the last day of the Interest Period
applicable thereto), the Lenders shall assign and assume
outstanding Committed Revolving Loans and participations
in outstanding Letters of Credit so as to cause the
amount of such Committed Revolving Loans and
participations in Letters of Credit held by each Lender
to conform to the respective percentages of the
applicable Revolving Loan Commitments of the Lenders and
(iv) the Company shall execute and deliver any additional
Notes or other amendments or modifications to this
Agreement or any other Loan Document as the Agents may
reasonably request.
SECTION 2.1.3. Letter of Credit Commitment. (a) Subject
to compliance by the Company with the terms of Sections 2.1.5, 5.1 and 5.2.1
and compliance by the applicable Borrower with Section 5.2.2 (and, in the case
of any Foreign Borrower other than the Initial Foreign Borrowers, compliance by
the applicable Foreign Borrower with the terms of Section 5.3), from time to
time on any Business Day occurring concurrently with (or after) the Closing
Date but prior to the Revolving Loan Commitment Termination Date, an Issuer in
respect of a Currency will (i) issue one or more standby or commercial letters
of credit denominated in the applicable
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Currency (each referred to as a "Letter of Credit") for the account of the
Company or any of its Subsidiaries in the Stated Amount requested by the
applicable Borrower on such day, or (ii) extend the Stated Expiry Date of an
existing standby or commercial Letter of Credit previously issued hereunder to
a date not later than the earlier of (x) the Business Day immediately preceding
the sixth anniversary of the Closing Date and (y) the first anniversary of the
date of such extension; provided that, notwithstanding the terms of this clause
(y), a Letter of Credit may, if required by the beneficiary thereof, contain
"evergreen" provisions pursuant to which the Stated Expiry Date shall be
automatically extended, unless notice to the contrary shall have been given to
the beneficiary by the applicable Issuer or the account party of such Letter of
Credit more than a specified period prior to the then existing Stated Expiry
Date.
(b) Each Existing Letter of Credit shall for purposes
of this Agreement be deemed to be a "Letter of Credit" issued hereunder on the
Closing Date.
SECTION 2.1.4. Lenders Not Permitted or Required to Make
the Loans. No Lender shall be permitted or required to make, and the
applicable Borrower shall not request any Lender to make, any of the following
Loans to the extent prohibited by this Section 2.1.4:
(a) No Term-A Australian Dollar Loan, Term-A Lira
Loan, Term-A U.S. Dollar Loan, Term-B Loan or Term-C Loan
(as the case may be) shall be made by any Lender, or
requested to be made by any applicable Borrower if,
after giving effect thereto, the aggregate original
principal amount (calculated at the U.S. Dollar
Equivalent thereof on the Closing Date in the case of any
Term-A Australian Dollar Loan or Term-A Lira Loan) of all
Term-A Australian Dollar Loans, Term-A Lira Loans, Term-A
U.S. Dollar Loans, Term-B Loans or Term-C Loans (as the
case may be) of such Lender would exceed such Lender's
Percentage of the Term-A Loan Australian Dollar
Commitment Amount (in the case of Term-A Australian
Dollar Loans), the Term-A Loan Lira Commitment Amount (in
the case of Term-A Lira Loans), the Term-A Loan U.S.
Dollar Commitment Amount (in the case of Term-A U.S.
Dollar Loans), the Term-B Loan Commitment Amount (in the
case of Term-B Loans) or the Term-C Loan Commitment
Amount (in the case of Term-C Loans).
(b) No U.S. Dollar Revolving Loan shall be made
by any Lender, or requested to be made by the Company if,
after giving effect thereto, the aggregate outstanding
principal amount of (i) all U.S. Dollar Revolving Loans
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of such Lender, plus (ii) such Lender's Percentage in
respect of the Revolving Loan U.S. Dollar Commitment of
the aggregate amount of all U.S. Dollar Letter of Credit
Outstandings plus (iii) such Lender's Percentage in
respect of the Revolving Loan U.S. Dollar Commitment of
the outstanding principal amount of all Swing Line Loans,
would exceed such Lender's Percentage of the Revolving
Loan U.S. Dollar Commitment Amount.
(c) No Committed Foreign Currency Revolving Loan
under any Revolving Loan Foreign Currency Commitment
shall be made by any Lender, or requested to be made by
any Foreign Borrower if, after giving effect thereto, the
U.S. Dollar Equivalent of the aggregate outstanding
principal amount of (i) all such Committed Foreign
Currency Revolving Loans of such Lender under such
Commitment plus (ii) such Lender's Percentage in respect
of such Revolving Loan Foreign Currency Commitment of the
aggregate amount of all Foreign Currency Letter of Credit
Outstandings in respect of the applicable Commitment,
would exceed such Lender's Percentage in respect of the
Revolving Loan Foreign Currency Commitment Amount
applicable to such Commitment.
(d) No Swing Line Loan shall be made by the Swing
Line Lender, or requested to be made by the Company if,
after giving effect thereto, the aggregate outstanding
principal amount of all Swing Line Loans would exceed the
lesser of (i) the then existing Swing Line Loan
Commitment Amount and (ii) an amount equal to the then
existing Revolving Loan U.S. Dollar Commitment Amount
less the sum of (x) the aggregate outstanding principal
amount of all U.S. Dollar Revolving Loans and (y) the
U.S. Dollar Letter of Credit Outstandings.
SECTION 2.1.5. Issuer Not Permitted or Required to Issue
Letters of Credit. No Issuer in respect of any Currency shall be permitted or
required to issue any Letter of Credit if, after giving effect thereto, (i) the
Letter of Credit Outstandings would exceed the then existing Letter of Credit
Commitment Amount or (ii) the Letter of Credit Outstandings in respect of the
applicable Tranche would exceed (x) the then existing Revolving Loan Commitment
Amount in respect of such Tranche less (y) the sum of (A) the aggregate amount
of all U.S. Dollar Revolving Loans or Committed Foreign Currency Revolving
Loans in the applicable Currency, as the case may be, and (B) in the case of
U.S. Dollar Letters of Credit only, the aggregate amount of all Swing Line
Loans.
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SECTION 2.2. Optional Reduction of the Revolving Loan
Commitment Amount. The Company may, from time to time on any Business Day
occurring after the Closing Date, voluntarily reduce any Revolving Loan
Commitment Amount; provided, however, that all such reductions shall require at
least three Business Days' prior notice to the Administrative Agent and any
partial reduction of any Revolving Loan Commitment Amount shall be in an
aggregate amount of $500,000 or any larger integral multiple of $100,000. Any
such reduction of any Revolving Loan Commitment Amount which reduces such
Revolving Loan Commitment Amount below the Letter of Credit Commitment Amount
with respect to the same Currency (or, in the case of the Revolving Loan U.S.
Dollar Commitment only, the Swing Line Loan Commitment Amount) shall result in
an automatic and corresponding reduction of such Letter of Credit Commitment
Amount (or the Swing Line Loan Commitment Amount, as the case may be) to an
aggregate amount not in excess of the applicable Revolving Loan Commitment
Amount, as so reduced, without any further action on the part of the applicable
Issuer (or the Swing Line Lender, if applicable); provided, that any such
reduction in any such Letter of Credit Commitment Amount or the Swing Line Loan
Commitment Amount shall be reinstated to the extent that, whether pursuant to
clause (g) of Section 2.1.2, Section 2.5 or otherwise, the corresponding
Revolving Loan Commitment Amount is thereafter increased.
SECTION 2.3. Borrowing Procedures and Funding
Maintenance. Committed Loans (other than Swing Line Loans) shall be made by
the Lenders in accordance with Section 2.3.1, and Swing Line Loans shall be
made by the Swing Line Lender in accordance with Section 2.3.2.
SECTION 2.3.1. Term Loans and Committed Revolving Loans.
By delivering the appropriate Committed Loan Borrowing Request to the
Administrative Agent on or before 12:00 noon, New York time, on a Business Day,
a Borrower may from time to time irrevocably request, on not less than one
Business Day's notice (in the case of Base Rate Loans) or three Business Days'
notice (in the case of LIBO Rate Loans) nor more than five Business Days'
notice (in the case of any Committed Loans), that a Committed Borrowing be made
in an aggregate amount of $1,000,000 (or, in the case of Committed Foreign
Currency Revolving Loans, the multiple of 100,000 units of the Currency of such
Loans the U.S. Dollar Equivalent of which is nearest to $1,000,000) or any
larger integral multiple of $500,000 (or, in the case of Committed Foreign
Currency Revolving Loans, the multiple of 50,000 units of the Currency of such
Loans the U.S. Dollar Equivalent of which is nearest to $500,000), or in the
unused amount of the applicable Commitment. No Committed Loan Borrowing
Request shall be required, and the minimum aggregate amounts specified
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under this Section 2.3.1 shall not apply, in the case of U.S. Dollar Revolving
Loans made under clause (b) of Section 2.3.2 to refund Refunded Swing Line
Loans or Committed Revolving Loans deemed made under Section 2.8.2 in respect
of unreimbursed Disbursements. On the terms and subject to the conditions of
this Agreement, each Committed Borrowing shall be comprised of the type of
Committed Loans, shall be made in the Currency, and shall be made on the
Business Day, specified in such Committed Loan Borrowing Request. As to U.S.
Dollar Loans, on or before 11:00 a.m., New York time, on such Business Day each
Lender shall deposit with the Administrative Agent same day funds in the
applicable Currency in an amount equal to such Lender's Percentage of the
requested Committed Borrowing. Such deposit will be made to an account which
the Administrative Agent shall specify from time to time by notice to the
Lenders. As to Committed Loans in any Foreign Currency, on or before 11:00
a.m. (local time in the country in which the applicable Foreign Borrower is
located), on the Business Day specified in such Committed Loan Borrowing
Request, each relevant Lender shall deposit same day funds in the applicable
Currency in an amount equal to such Lender's Percentage of the requested
Committed Borrowing at such account as shall be designated by the
Administrative Agent. To the extent funds are received from the Lenders, the
Administrative Agent shall make such funds available to the applicable Borrower
by wire transfer to the accounts such Borrower shall have specified in its
Committed Loan Borrowing Request. No Lender's obligation to make any Committed
Loan shall be affected by any other Lender's failure to make any Committed
Loan.
SECTION 2.3.2. Swing Line Loans. (a) By telephonic
notice, promptly followed (within one Business Day) by the delivery of a
confirming Committed Loan Borrowing Request, to the Swing Line Lender and the
Administrative Agent on or before 3:00 p.m., New York City time, on the
Business Day the proposed Swing Line Loan is to be made, the Company may from
time to time irrevocably request that a Swing Line Loan be made by the Swing
Line Lender in a minimum principal amount of $500,000 or any larger integral
multiple of $100,000. All Swing Line Loans shall be made in U.S. Dollars as
Base Rate Loans and shall not be entitled to be converted into LIBO Rate Loans.
Upon receipt of notice from the Administrative Agent confirming the amount of
the requested Borrowing, the proceeds of each Swing Line Loan shall be made
available by the Swing Line Lender, by 3:30 p.m., New York City time, on the
Business Day telephonic notice is received by it as provided in this clause
(a), to the Company by wire transfer to the account the Company shall have
specified in its notice therefor.
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(b) If any Default shall occur and be continuing, each
Lender with a Revolving Loan U.S. Dollar Commitment (other than the Swing Line
Lender) irrevocably agrees that it will, at the request of the Swing Line
Lender and upon notice from the Administrative Agent, unless such Swing Line
Loan shall have been earlier repaid in full, make a U.S. Dollar Revolving Loan
(which shall initially be funded as a Base Rate Loan) in an amount equal to
such Lender's Percentage in respect of the Revolving Loan U.S. Dollar
Commitments of the aggregate principal amount of all such Swing Line Loans then
outstanding (such outstanding Swing Line Loans hereinafter referred to as the
"Refunded Swing Line Loans"); provided, that the Swing Line Lender shall not
request, and no Lender with a Revolving Loan U.S. Dollar Commitment shall make,
any Refunded Swing Line Loan if, after giving effect to the making of such
Refunded Swing Line Loan, the sum of all Swing Line Loans and U.S. Dollar
Revolving Loans made by such Lender, plus such Lender's Percentage in respect
of the Revolving Loan U.S. Dollar Commitments of the aggregate amount of all
U.S. Dollar Letter of Credit Outstandings, would exceed such Lender's
Percentage of the then existing Revolving Loan U.S. Dollar Commitment Amount.
On or before 11:00 a.m. (New York City time) on the first Business Day
following receipt by each Lender of a request to make U.S. Dollar Revolving
Loans as provided in the preceding sentence, each such Lender with a Revolving
Loan U.S. Dollar Commitment shall deposit in an account specified by the Swing
Line Lender the amount so requested in same day funds and such funds shall be
applied by the Swing Line Lender to repay the Refunded Swing Line Loans. At
the time the aforementioned Lenders make the above referenced U.S. Dollar
Revolving Loans, the Swing Line Lender shall be deemed to have made, in
consideration of the making of the Refunded Swing Line Loans, a U.S. Dollar
Revolving Loan in an amount equal to the Swing Line Lender's Percentage in
respect of the Revolving Loan U.S. Dollar Commitment of the aggregate principal
amount of the Refunded Swing Line Loans. Upon the making (or deemed making, in
the case of the Swing Line Lender) of any U.S. Dollar Revolving Loans pursuant
to this clause (b), the amount so funded shall become outstanding as a U.S.
Dollar Revolving Loan of such Lender and shall no longer be a Swing Line Loan.
All interest payable with respect to any U.S. Dollar Revolving Loans made (or
deemed made, in the case of the Swing Line Lender) pursuant to this clause (b)
shall be appropriately adjusted to reflect the period of time during which the
Swing Line Lender had outstanding Swing Line Loans in respect of which such
U.S. Dollar Revolving Loans were made. Each Lender's obligation (in the case
of Lenders with a Revolving Loan U.S. Dollar Commitment) to make the U.S.
Dollar Revolving Loans referred to in this clause (b) shall be absolute and
unconditional and shall not be affected by any circumstance, including, without
limitation, (i) any set-off, counterclaim, recoupment, defense or other right
which
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such Lender may have against the Swing Line Lender, the Company or any other
Person for any reason whatsoever; (ii) the occurrence or continuance of any
Default; (iii) any adverse change in the condition (financial or otherwise) of
the Company or any other Obligor; (iv) the acceleration or maturity of any
Loans or the termination of any Commitment after the making of any Swing Line
Loan; (v) any breach of this Agreement or any other Loan Document by any
Borrower or any Lender; or (vi) any other circumstance, happening or event
whatsoever, whether or not similar to any of the foregoing.
SECTION 2.4. Uncommitted Foreign Currency Revolving
Loans. Subject to compliance by the Company with the terms of Section 2.1.4,
Section 5.1 and Section 5.2.1, and compliance by the applicable Foreign
Borrower with the terms of Section 5.2.2 (and, in the case of any Foreign
Borrower other than the Initial Foreign Borrowers, compliance by the applicable
Foreign Borrower with the terms of Section 5.3), each Lender severally agrees
that any Foreign Borrower may request that Uncommitted Foreign Currency
Revolving Loan Borrowings be made to it pursuant to this Section 2.4 from time
to time on any Business Day prior to the Revolving Loan Commitment Termination
Date. No Foreign Borrower may deliver to the Administrative Agent any
Uncommitted Foreign Currency Revolving Loan Borrowing Request in respect of
Uncommitted Foreign Currency Revolving Loans in any Foreign Currency if there
shall exist any unused Revolving Loan Foreign Currency Commitment in respect of
such Foreign Currency unless such Revolving Loan Foreign Currency Commitment is
fully utilized prior to or simultaneously with the Uncommitted Foreign Currency
Revolving Loan Borrowing contemplated by such Foreign Currency Revolving Loan
Borrowing Request.
SECTION 2.4.1. Uncommitted Foreign Currency Revolving
Loan Borrowing Request. (a) A Foreign Borrower may request that a Borrowing
of Uncommitted Foreign Currency Revolving Loans be made to it by delivering to
the Administrative Agent an Uncommitted Foreign Currency Revolving Loan
Borrowing Request , which shall be substantially in the form of Exhibit B-3
hereto, and specify:
(i) the Foreign Currency in which each such Loan
is requested to be made (provided, that a Canadian
Borrower may only request and receive Uncommitted Foreign
Currency Revolving Loans denominated in Canadian Dollars,
an Australian Borrower may only request and receive
Uncommitted Foreign Currency Revolving Loans denominated
in Australian Dollars, an Italian Borrower may only
request and receive Uncommitted Foreign Currency
Revolving Loans denominated in Lire and any other Foreign
Borrower may
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only request and receive Uncommitted Foreign Currency
Revolving Loans denominated in the Foreign Currency of
the country in which such Foreign Borrower's principal
business operations are located);
(ii) the principal amount of the Uncommitted
Foreign Currency Revolving Loan Borrowing requested to be
made to such Foreign Borrower (which shall be in an
aggregate principal amount the U.S. Dollar Equivalent of
which is not less than $500,000) and that, after giving
effect to such Uncommitted Foreign Currency Revolving
Loan Borrowing, the conditions set forth in Section 5.2.1
applicable thereto shall have been satisfied;
(iii) the proposed date of each such proposed
Uncommitted Foreign Currency Revolving Loan Borrowing,
which shall be a Business Day;
(iv) in the case of a proposed Borrowing of
Uncommitted Foreign Currency Revolving Loans that are to
be LIBO Rate Loans, the proposed Interest Period for each
such proposed Borrowing, subject to the provisions of the
definition of Interest Period;
(v) the proposed Stated Maturity Date for the
Uncommitted Foreign Currency Revolving Loans to be made
pursuant to each such Uncommitted Foreign Currency
Revolving Loan Borrowing; and
(vi) whether the Uncommitted Foreign Currency
Interest Quotes requested are to set forth an Uncommitted
Foreign Currency Interest Margin or an Uncommitted
Foreign Currency Absolute Interest Rate.
(b) Each Uncommitted Foreign Currency Revolving Loan
Borrowing Request shall be transmitted to the Administrative Agent by telex or
facsimile so as to be received by the Administrative Agent not later than 10:30
a.m. (New York City time) on the fifth Business Day before the date of the
Borrowing proposed therein, or such other time or date as the Company and the
Administrative Agent shall have mutually agreed and shall have notified the
Lenders having a Percentage of any Revolving Loan Commitment of greater than
zero not later than the date of the Uncommitted Foreign Currency Revolving Loan
Borrowing Request for the first LIBO Rate Auction or Absolute Rate Auction for
which such change is to be effective.
(c) No Foreign Borrower shall deliver to the
Administrative Agent any Uncommitted Foreign Currency Revolving Loan Borrowing
Request within five
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Business Days after the delivery by such Foreign Borrower of any other
Uncommitted Foreign Currency Revolving Loan Borrowing Request.
SECTION 2.4.2. Invitation for Uncommitted Foreign
Currency Interest Quotes. Promptly upon receipt of an Uncommitted Foreign
Currency Revolving Loan Borrowing Request delivered pursuant to Section 2.4.1,
but in no event later than the Business Day following such receipt, the
Administrative Agent shall send to each of the Lenders having a Percentage of
any Revolving Loan Commitment of greater than zero (by telecopy) an Invitation
for Uncommitted Foreign Currency Interest Quotes (which shall include a copy of
each Uncommitted Foreign Currency Revolving Loan Borrowing Request delivered
pursuant to Section 2.4.1), which shall constitute an invitation on behalf of
the relevant Foreign Borrower to each such Lender to submit Uncommitted Foreign
Currency Interest Quotes offering to make all or a portion of the Uncommitted
Foreign Currency Revolving Loan Borrowing requested by such Foreign Borrower
pursuant to Section 2.4.1. Such Lenders may, but shall have no obligation to,
make such offers and such Foreign Borrower may, but shall have no obligation
to, accept any such offers in the manner set forth herein.
SECTION 2.4.3. Submission and Contents of Uncommitted
Foreign Currency Interest Quotes. (a) Each Lender having a Percentage of any
Revolving Loan Commitment of greater than zero may submit an Uncommitted
Foreign Currency Interest Quote containing an offer or offers to make
Uncommitted Foreign Currency Revolving Loans in response to any Invitation for
Uncommitted Foreign Currency Interest Quotes. Each Uncommitted Foreign
Currency Interest Quote must comply with the requirements of this Section 2.4.3
and must be submitted to the Administrative Agent (by telecopy) not later than
2:00 p.m. (New York City time) on the fourth Business Day before the proposed
date of the Borrowing, or such other time or date as the Company and the
Administrative Agent shall have mutually agreed and shall have notified to the
Lenders having a Percentage of any Revolving Loan Commitment of greater than
zero not later than the date of the Uncommitted Foreign Currency Revolving Loan
Borrowing Request for the first LIBO Rate Auction or Absolute Rate Auction for
which such change is to be effective; provided, however, that Uncommitted
Foreign Currency Interest Quotes submitted by the Administrative Agent (or any
affiliate of the Administrative Agent) in the capacity of a Lender may be
submitted, and may only be submitted, if the Administrative Agent or such
affiliate notifies the relevant Foreign Borrower of the terms of the offer or
offers contained therein not later than (x) one hour before the deadline for
the other Lenders, in the case of a LIBO Rate Auction or (y) 15 minutes before
the deadline for the other Lenders, in the case of an Absolute Rate Auction.
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(b) Each Uncommitted Foreign Currency Interest Quote
shall be substantially in the form of Exhibit B-5 hereto, shall comply with
the provisions of this Section 2.4.3, and shall in any case specify the
following:
(i) the proposed date of Borrowing,
(ii) each Foreign Borrower to which the Lender
would be willing to make its Uncommitted Foreign Currency
Revolving Loans,
(iii) the principal amount (stated in the
applicable Foreign Currency) of the Uncommitted Foreign
Currency Revolving Loan for which each such offer is
being made, which principal amount (x) may be greater
than or less than the Revolving Loan Commitments of the
quoting Lender, (y) shall be in an amount the U.S. Dollar
Equivalent of which is at least $1,000,000 and (z) may
not exceed the principal amount of Uncommitted Foreign
Currency Revolving Loans for which offers were requested,
(iv) in the case of a LIBO Rate Auction, the
margin above the applicable LIBO Rate (the "Uncommitted
Foreign Currency Interest Margin") offered for each such
Uncommitted Foreign Currency Revolving Loan, expressed as
a percentage (specified to the nearest 1/10,000 of 1%)
to be added to or subtracted from such LIBO Rate,
(v) in the case of an Absolute Rate Auction, the
rate of interest per annum (specified to the nearest
1/10,000 of 1%) (the "Uncommitted Foreign Currency
Absolute Interest Rate") offered for each such
Uncommitted Foreign Currency Revolving Loan, and
(vi) the identity of the quoting Lender;
provided, however, that any Uncommitted Foreign Currency Interest Quote
submitted by a Lender pursuant to this Section 2.4.3 shall be irrevocable
(subject to Articles V and VIII hereof), unless otherwise consented to in
writing by the Administrative Agent acting upon the instructions of the
applicable Foreign Borrower.
(c) Any Uncommitted Foreign Currency Interest Quote
that: (i) is not substantially in the form of Exhibit B-5 hereto, as
determined by the Administrative Agent in its sole discretion, or does not
specify all of the information required in clause (b) above; (ii) contains
qualifying, conditional or similar language; or (iii)
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arrives after the time set forth in clause (a) above, may be disregarded by the
applicable Foreign Borrower and the Administrative Agent.
(d) The Administrative Agent (by telephone, promptly
confirmed in writing) shall promptly notify the relevant Foreign Borrower of
the terms of all Uncommitted Foreign Currency Interest Quotes submitted by the
Lenders in accordance with this Section 2.4.3, as well as the identity of any
such Lender.
SECTION 2.4.4. Uncommitted Foreign Currency Revolving
Loan Acceptance. (a) The relevant Foreign Borrower shall notify the
Administrative Agent of its acceptance or non-acceptance of the offers notified
to it pursuant to clause (d) of Section 2.4.3 not later than 4:00 p.m. (New
York City time) on the fourth Business Day before the proposed date of
Borrowing, or such other time or date as the relevant Foreign Borrower and the
Administrative Agent shall have mutually agreed and shall have given notice
thereof to each Lender having a Percentage of any Revolving Loan Commitment of
greater than zero not later than the date of the Uncommitted Foreign Currency
Revolving Loan Borrowing Request for the first LIBO Rate Auction or Absolute
Rate Auction for which such change is to be effective. In the case of
acceptance, such notice (a "Notice of Uncommitted Foreign Currency Revolving
Borrowing") shall specify the aggregate principal amount of offers for each
requested maturity date and, in the case of LIBO Rate Loans, Interest Period
that are accepted.
(b) The relevant Foreign Borrower may accept any
Uncommitted Foreign Currency Interest Quote in whole or in part; provided,
however, that:
(i) the aggregate principal amount of each
Uncommitted Foreign Currency Revolving Loan Borrowing may
not exceed the applicable amount set forth in the related
Uncommitted Foreign Currency Revolving Loan Borrowing
Request;
(ii) the aggregate principal amount (calculated
at the U.S. Dollar Equivalent thereof) of each
Uncommitted Foreign Currency Revolving Loan Borrowing
must not be less than $1,000,000;
(iii) acceptance of offers may only be made on
the basis of ascending Uncommitted Foreign Currency
Interest Margins or Uncommitted Foreign Currency Absolute
Interest Rates, as the case may be;
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(iv) the relevant Foreign Borrower may not accept
any offer that fails to comply with the requirements of
this Agreement; and
(v) the conditions set forth in Section 5.2.1
applicable to such Uncommitted Foreign Currency Revolving
Loan Borrowing shall have been satisfied.
(c) Not later than 12:00 noon (local time in the country
in which the applicable Foreign Borrower is located ) on the date specified for
each Uncommitted Foreign Currency Revolving Loan Borrowing hereunder, each
Lender participating therein shall, by wire transfer in same day funds, deposit
to an account of the applicable Foreign Borrower specified by such Foreign
Borrower the amount of the Uncommitted Foreign Currency Revolving Loans to be
made by it on such date in the applicable Foreign Currency.
(d) As soon as practicable after the Uncommitted Foreign
Currency Revolving Loan Borrowing is made, the Administrative Agent shall
notify each Lender having a Percentage of any Revolving Loan Commitment of
greater than zero of (i) the amount of the Uncommitted Foreign Currency
Revolving Loan Borrowing, (ii) the U.S. Dollar Equivalent of the outstanding
principal amount of all Foreign Currency Revolving Loans (in the aggregate and
for each Foreign Borrower) immediately after giving effect to such Borrowing
and (iii) the date on which such Uncommitted Foreign Currency Revolving Loan
Borrowing was made.
SECTION 2.5. Committed Foreign Currency Revolving Loans.
(a) At any time that no Event of Default has occurred and is continuing, one
or more Foreign Borrowers from time to time may enter into one or more
Revolving Loan Foreign Currency Commitment Addenda, each with one or more
Lenders that have, immediately prior to the effectiveness of such Revolving
Loan Foreign Currency Commitment Addenda, Percentages in respect of the
Revolving Loan U.S. Dollar Commitment of greater than zero, whereby such
Lenders commit to make, from time to time on and subsequent to the Closing Date
but prior to the Revolving Loan Commitment Termination Date, Committed Foreign
Currency Revolving Loans denominated in the Foreign Currency of the country in
which such Foreign Borrower's principal business operations are located,
provided, however, that, after giving effect to any Revolving Loan Foreign
Currency Commitment created pursuant to this Section 2.5, the Total Revolving
Loan Foreign Currency Commitment Amount shall not exceed the Revolving Loan
Foreign Currency Limit. Any Revolving Loan Foreign Currency Commitment
Addendum entered into pursuant to this Section 2.5
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shall become effective upon (and subject to) the Company's delivery of a duly
executed copy thereof to the Administrative Agent pursuant to Section 11.2
hereof.
(b) Any Revolving Loan Foreign Currency Commitment
Addendum entered into pursuant to this Section 2.5 may, but need not, include a
Foreign Currency Letter of Credit Commitment by an Issuer party thereto to
issue, and a commitment by the Lenders party thereto to participate in, from
time to time on and subsequent to the Closing Date but prior to the Revolving
Loan Commitment Termination Date, Foreign Currency Letters of Credit
denominated in the Foreign Currency of the country in which such Foreign
Borrower's principal business operations are located for the account of the
Foreign Borrower or Foreign Borrowers party thereto and their respective
Subsidiaries; provided, however, that in respect of any Foreign Currency Letter
of Credit Commitment so created under this Section 2.5, the Foreign Currency
Letter of Credit Commitment Amount shall not exceed the Revolving Loan Foreign
Currency Commitment Amount set forth in the applicable Revolving Loan Foreign
Currency Commitment Addendum;
(c) Each Revolving Loan Foreign Currency Commitment
Addendum shall set forth:
(i) the Foreign Borrowers eligible to make
Borrowings of Committed Foreign Currency Revolving Loans
(and, if Foreign Currency Letters of Credit are therein
contemplated, request the issuance of Foreign Currency
Letters of Credit) thereunder;
(ii) the Foreign Currency in which Committed
Foreign Currency Revolving Loans are to be made (and, if
applicable, Foreign Currency Letters of Credit are to be
issued) thereunder;
(iii) the Revolving Loan Foreign Currency
Commitment Amount under such Revolving Loan Foreign
Currency Commitment Addendum, which shall be stated in
U.S. Dollars;
(iv) the Percentage of each Lender party to such
Revolving Loan Foreign Currency Commitment Addendum in
respect of such Revolving Loan Foreign Currency
Commitment Amount; and
(v) if such Revolving Loan Foreign Currency
Commitment Addendum includes Foreign Currency Letter of
Credit Commitments,
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(A) the Issuer in respect of the Foreign Currency
Letters of Credit to be issued thereunder;
(B) the Foreign Currency Letter of Credit
Commitment Amount under such Revolving Loan
Foreign Currency Commitment Addendum, which shall
be stated in U.S. Dollars and shall not exceed the
Revolving Loan Foreign Currency Commitment Amount
set forth in such Revolving Loan Foreign Currency
Commitment Addendum; and
(C) the Letter of Credit Reimbursement Obligation
Rate in respect of Foreign Currency Letters of
Credit issued thereunder.
(d) Upon the effectiveness of any Revolving Loan Foreign
Currency Commitment Addendum pursuant to clause (a) of Section 2.5 or any
reduction in any Revolving Loan Foreign Currency Commitment pursuant to Section
2.2, the Percentages of each Lender with a Percentage in respect of the
applicable Revolving Loan Foreign Currency Commitments or the Revolving Loan
U.S. Dollar Commitments in excess of zero shall be automatically adjusted so
that, after giving effect to such adjustment, the aggregate amount of the
respective Percentages of each Lender in respect of Revolving Loan Commitments
multiplied by the respective Revolving Loan Commitment Amounts shall, before
and after giving effect to such Revolving Loan Foreign Currency Commitment
Addendum or reduction and such adjustment, be equal. Schedule III hereto sets
forth an illustration of the operation of this Section 2.5(d).
(e) If and when any adjustment is made to any Percentage
of any Lender pursuant to clause (d) at any time when any Committed Revolving
Loans or Letters of Credit are outstanding, at such time and in such manner as
the Company and the Syndication Agent shall agree (it being understood that the
Company and the Agents will use all commercially reasonable efforts to avoid
prepayment or assignment of any Committed Revolving Loan that is a LIBO Rate
Loan on a day other than the last day of the Interest Period applicable
thereto), the Lender shall assign and assume outstanding Committed Revolving
Loans and participations in outstanding Letters of Credit held by each Lender
to conform to the respective Percentages of the respective Revolving Loan
Commitments of the Lenders.
SECTION 2.6. Continuation and Conversion Elections. By
delivering a Continuation/Conversion Notice to the Administrative Agent on or
before 12:00 noon, New York City time, on a Business Day, a Borrower may from
time to time
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irrevocably elect, on not less than one Business Day's notice (in the case of a
conversion of LIBO Rate Loans to Base Rate Loans) or three Business Days'
notice (in the case of a continuation of LIBO Rate Loans or a conversion of
Base Rate Loans into LIBO Rate Loans) nor more than five Business Days' notice
(in the case of any Loans) that all, or any portion in a minimum amount of
$1,000,000 (or, in the case of Foreign Currency Loans, the multiple of 100,000
units of the Currency of such Loans the U.S. Dollar Equivalent of which is
nearest to $1,000,000) or any larger integral multiple of $500,000 (or, in the
case of Foreign Currency Loans, the multiple of 50,000 units of the Currency of
such Loans the U.S. Dollar Equivalent of which is nearest to $500,000) of any
Borrowing of Committed Loans be, in the case of Base Rate Loans, converted into
LIBO Rate Loans or, in the case of LIBO Rate Loans, continued as LIBO Rate
Loans or, in the case of U.S. Dollar Revolving Loans only, converted into Base
Rate Loans (in the absence of delivery of a Continuation/Conversion Notice with
respect to any Committed Loan that is a LIBO Rate Loan at least three Business
Days before the last day of the then current Interest Period with respect
thereto, such LIBO Rate Loan shall (A) in the case of a LIBO Rate Loan that is
a Foreign Currency Loan, automatically be continued as a LIBO Rate Loan with an
Interest Period of one month and (B) in the case of a LIBO Rate Loan that is a
U.S. Dollar Loan, automatically convert to a Base Rate Loan, in each case on
such last day); provided, however, that (x) each such conversion or
continuation shall be pro rated among the applicable outstanding Committed
Loans of the relevant Lenders, (y) no portion of the outstanding principal
amount of any Loans denominated in U.S. Dollars may be continued as, or be
converted into, LIBO Rate Loans when any Default has occurred and is continuing
and (z) Loans shall be continued as, or be converted into, Loans of the same
Currency.
SECTION 2.7. Funding. Each Lender may, if it so elects,
fulfill its obligation to make, continue or convert LIBO Rate Loans hereunder
by causing one of its foreign branches or Affiliates (or an international
banking facility created by such Lender) to make or maintain such LIBO Rate
Loan, so long as such action does not result in increased costs to the
applicable Borrower; provided, however, that such LIBO Rate Loan shall
nonetheless be deemed to have been made and to be held by such Lender, and the
obligation of the applicable Borrower to repay such LIBO Rate Loan shall
nevertheless be to such Lender for the account of such foreign branch,
Affiliate or international banking facility; and provided, further, however,
that, except for purposes of determining whether any such increased costs are
payable by the applicable Borrower, such Lender shall cause such foreign
branch, Affiliate or international banking facility to comply with the
applicable provisions of clause (b) of Section 4.6 with respect to such LIBO
Rate Loan. In addition, each Borrower hereby
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consents and agrees that, for purposes of any determination to be made for
purposes of Section 4.1, 4.2, 4.3 or 4.4, it shall be conclusively assumed that
each Lender elected to fund all LIBO Rate Loans by purchasing deposits in the
relevant Currency in its LIBOR Office's interbank Eurodollar market.
SECTION 2.8. Issuance Procedures. By delivering to the
applicable Issuer and the Administrative Agent an Issuance Request on or before
12:00 noon, New York time, on a Business Day, any Borrower as to which any
Issuer has a Letter of Credit Commitment may, from time to time irrevocably
request, on not less than three nor more than ten Business Days' notice (or
such shorter or longer notice as may be acceptable to the applicable Issuer),
in the case of an initial issuance of a Letter of Credit, and not less than
three nor more than ten Business Days' notice (unless a shorter or longer
notice period is acceptable to the applicable Issuer) prior to the then
existing Stated Expiry Date of a Letter of Credit, in the case of a request for
the extension of the Stated Expiry Date of a Letter of Credit, that such Issuer
issue, or extend the Stated Expiry Date of, as the case may be, an irrevocable
Letter of Credit on behalf of such Borrower denominated in the applicable
Currency (whether issued for the account of or on behalf of such Borrower or
any of its Subsidiaries) in such form as may be requested by such Borrower and
approved by such Issuer, for the purposes described in Section 7.1.9.
Notwithstanding anything to the contrary contained herein or in any separate
application for any Letter of Credit, each Borrower hereby acknowledges and
agrees that it shall be obligated to reimburse the applicable Issuer upon each
Disbursement paid under a Letter of Credit, and it shall be deemed to be the
obligor for purposes of each such Letter of Credit issued hereunder by such
Issuer at the request of such Borrower (whether the account party on such
Letter of Credit is such Borrower or a Subsidiary of such Borrower). Upon
receipt of an Issuance Request, the Administrative Agent shall promptly notify
the applicable Issuer and each Lender that has a Percentage of more than zero
in respect of the relevant Revolving Loan Commitments thereof. Each Letter of
Credit shall by its terms be stated to expire on a date (its "Stated Expiry
Date") no later than the earlier to occur of (i) the sixth anniversary of the
Closing Date or (ii) one year from the date of its issuance; provided, that,
notwithstanding the terms of clause (ii) above, a Letter of Credit may, if
required by the beneficiary thereof, contain "evergreen" provisions pursuant to
which the Stated Expiry Date shall be automatically extended, unless notice to
the contrary shall have been given to the beneficiary by the applicable Issuer
or the account party more than a specified period prior to the then existing
Stated Expiry Date. The applicable Issuer will make available to the
beneficiary thereof the original of each Letter of Credit which it issues
hereunder. In the event that the Issuer is other than the Administrative
Agent, such Issuer will send by
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facsimile transmission to the Administrative Agent, promptly on the first
Business Day of each week, its daily maximum amount available to be drawn under
the Letters of Credit issued by such Issuer for the previous week. The
Administrative Agent shall deliver to each Lender upon each calendar month end,
and upon each Letter of Credit fee payment, a report setting forth the daily
maximum amount available to be drawn for all Issuers during such period.
SECTION 2.8.1. Other Lenders' Participation. Upon the
issuance of each Letter of Credit issued by an Issuer pursuant hereto, and
without further action, each Lender (other than such Issuer) that has a
Percentage of more than zero in respect of the relevant Revolving Loan
Commitments shall be deemed to have irrevocably purchased from such Issuer, to
the extent of its Percentage in respect of the applicable Revolving Loan
Commitments and such Issuer shall be deemed to have irrevocably granted and
sold to such Lender a participation interest in such Letter of Credit
(including the Contingent Liability and any Reimbursement Obligation and all
rights with respect thereto), and such Lender shall, to the extent of its
Percentage in respect of the applicable Revolving Loan Commitments be
responsible for reimbursing promptly (and in any event within one Business Day)
the applicable Issuer for Reimbursement Obligations which have not been
reimbursed by the applicable Borrower in accordance with Section 2.8.3. In
addition, such Lender shall, to the extent of its Percentage in respect of the
applicable Revolving Loan Commitments, be entitled to receive from the
Administrative Agent a ratable portion of the Letter of Credit fees payable
pursuant to Section 3.3.3 with respect to each Letter of Credit and of interest
payable pursuant to Section 3.2 with respect to any Reimbursement Obligation.
To the extent that any Lender has reimbursed an Issuer for a Disbursement as
required by this Section, such Lender shall be entitled to receive from the
Administrative Agent its ratable portion of any amounts subsequently received
(from the applicable Borrower or otherwise) in respect of such Disbursement.
SECTION 2.8.2. Disbursements; Conversion to Committed
Revolving Loans. Each Issuer will notify the applicable Borrower and the
Administrative Agent promptly of the presentment for payment of any drawing
under any Letter of Credit issued by such Issuer, together with notice of the
date (the "Disbursement Date") such payment shall be made (each such payment, a
"Disbursement"). Subject to the terms and provisions of such Letter of Credit
and this Agreement, such Issuer shall make such payment to the beneficiary (or
its designee) of such Letter of Credit. Prior to 12:30 p.m., New York time, on
the first Business Day following the Disbursement Date (the "Disbursement Due
Date"), the applicable Borrower will reimburse the
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Administrative Agent, for the account of such Issuer, for all amounts which
such Issuer has disbursed under such Letter of Credit, together with interest
thereon at the rate per annum otherwise applicable to U.S. Dollar Revolving
Loans made as Base Rate Loans (in the case of U.S. Dollar Letters of Credit) or
at the Letter of Credit Reimbursement Obligation Rate in respect of such Letter
of Credit (in the case of any other Letter of Credit) from and including the
Disbursement Date to but excluding the Disbursement Due Date and, thereafter
(unless such Disbursement is converted into a Committed Revolving Loan on the
Disbursement Due Date), at a rate per annum equal to the rate per annum then in
effect with respect to overdue U.S. Dollar Revolving Loans made as Base Rate
Loans pursuant to Section 3.2.2 (in the case of U.S. Dollar Letters of Credit)
or at a rate per annum equal to the Letter of Credit Reimbursement Obligation
Rate in respect of such Letter of Credit plus 2% (in the case of any other
Letter of Credit) for the period from the Disbursement Due Date through the
date of such reimbursement; provided, however, that, if no Default shall have
then occurred and be continuing, unless the applicable Borrower has notified
the Administrative Agent no later than one Business Day prior to the
Disbursement Due Date that it will reimburse such Issuer for the applicable
Disbursement, then the amount of the Disbursement shall be deemed to be a
Borrowing of Committed Revolving Loans in the applicable Currency which, in the
case of U.S. Dollars, shall constitute Base Rate Loans and, in the case of any
Foreign Currency, shall bear interest at the Letter of Credit Reimbursement
Obligation Rate set forth in the applicable Revolving Loan Foreign Currency
Commitment Addendum, and following the giving of notice thereof by the
Administrative Agent to the applicable Lenders, each Lender with a Percentage
of greater than zero in respect of the applicable Revolving Loan Commitments
(other than such Issuer) will deliver to such Issuer on the Disbursement Due
Date immediately available funds in the applicable Currency in an amount equal
to such Lender's applicable Percentage of such Borrowing. Each conversion of
Disbursement amounts into Committed Revolving Loans shall constitute a
representation and warranty by the applicable Borrower that on the date of the
making of such Committed Revolving Loans all of the statements set forth in
Section 5.2.1 are true and correct.
SECTION 2.8.3. Reimbursement. The obligation (a
"Reimbursement Obligation") of a Borrower under Section 2.8.2 to reimburse an
Issuer with respect to each Disbursement (including interest thereon) not
converted into a Committed Revolving Loan pursuant to Section 2.8.2, and, upon
the failure of any Borrower to reimburse an Issuer and the giving of notice
thereof by the Administrative Agent to the applicable Lenders, each Lender's
(to the extent it has a Percentage of greater than zero in respect of the
applicable Revolving Loan Commitment Amount)
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obligation under Section 2.8.1 to reimburse such Issuer or fund its Percentage
of any Disbursement converted into a Committed Revolving Loan, shall be
absolute and unconditional under any and all circumstances and irrespective of
any setoff, counterclaim or defense to payment which such Borrower or such
Lender, as the case may be, may have or have had against such Issuer or any
such Lender, including any defense based upon the failure of any Disbursement
to conform to the terms of the applicable Letter of Credit (if, in the
applicable Issuer's good faith opinion, such Disbursement is determined to be
appropriate) or any non-application or misapplication by the beneficiary of the
proceeds of such Letter of Credit; provided, however, that after paying in full
its Reimbursement Obligation hereunder, nothing herein shall adversely affect
the right of such Borrower or such Lender, as the case may be, to commence any
proceeding against the applicable Issuer for any wrongful Disbursement made by
such Issuer under a Letter of Credit as a result of acts or omissions
constituting gross negligence or willful misconduct on the part of such Issuer.
SECTION 2.8.4. Deemed Disbursements. Upon the
occurrence and during the continuation of any Event of Default of the type
described in clauses (b) through (d) of Section 8.1.9 with respect to any
Obligor (other than Immaterial Subsidiaries) or, with notice from the
Administrative Agent acting at the direction of the Required Lenders, upon the
occurrence and during the continuation of any other Event of Default,
(a) an amount equal to that portion of all Letter
of Credit Outstandings attributable to the then aggregate
amount which is undrawn and available under all Letters
of Credit issued at the request of any Borrower and
outstanding shall, without demand upon or notice to such
Borrower or any other Person, be deemed to have been paid
or disbursed by the applicable Issuer under such Letters
of Credit (notwithstanding that such amount may not in
fact have been so paid or disbursed); and
(b) upon notification by the Administrative Agent
to the applicable Borrower of its obligations under this
Section, such Borrower shall be immediately obligated to
reimburse the applicable Issuer for the amount deemed to
have been so paid or disbursed by the applicable Issuer.
Any amounts so payable by any Borrower pursuant to this Section shall be
deposited in cash in the applicable Currency with the Administrative Agent and
held as collateral security for the Obligations in connection with the Letters
of Credit issued
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at the request of such Borrower by the applicable Issuer. At such time as the
Events of Default giving rise to the deemed disbursements hereunder shall have
been cured or waived, the Administrative Agent shall return to the applicable
Borrower all amounts then on deposit with the Administrative Agent pursuant to
this Section, together with accrued interest at the Federal Funds Rate, which
have not been applied to the satisfaction of such Obligations.
SECTION 2.8.5. Nature of Reimbursement Obligations.
Each Borrower and, to the extent set forth in Section 2.8.1, each Lender with
an applicable Revolving Loan Commitment, shall assume all risks of the acts,
omissions or misuse of any Letter of Credit by the beneficiary thereof. No
Issuer (except to the extent of its own gross negligence or willful misconduct)
shall be responsible for:
(a) the form, validity, sufficiency, accuracy,
genuineness or legal effect of any Letter of Credit or
any document submitted by any party in connection with
the application for and issuance of a Letter of Credit,
even if it should in fact prove to be in any or all
respects invalid, insufficient, inaccurate, fraudulent or
forged;
(b) the form, validity, sufficiency, accuracy,
genuineness or legal effect of any instrument
transferring or assigning or purporting to transfer or
assign a Letter of Credit or the rights or benefits
thereunder or the proceeds thereof in whole or in part,
which may prove to be invalid or ineffective for any
reason;
(c) failure of the beneficiary to comply fully
with conditions required in order to demand payment under
a Letter of Credit;
(d) errors, omissions, interruptions or delays in
transmission or delivery of any messages, by mail, cable,
telegraph, telex or otherwise; or
(e) any loss or delay in the transmission or
otherwise of any document or draft required in order to
make a Disbursement under a Letter of Credit.
None of the foregoing shall affect, impair or prevent the vesting of any of the
rights or powers granted to any Issuer or any Lender with an applicable
Revolving Loan Commitment hereunder. In furtherance and extension and not in
limitation or derogation of any of the foregoing, any action taken or omitted
to be taken by any Issuer in good faith (and not constituting gross negligence
or willful misconduct) shall
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be binding upon the applicable Borrower, each Obligor and each such Lender, and
shall not put such Issuer under any resulting liability to such Borrower, any
Obligor or any such Lender, as the case may be.
SECTION 2.9. Register; Notes. (a) Each Lender may
maintain in accordance with its usual practice an account or accounts
evidencing the Indebtedness of each Borrower to such Lender resulting from each
Loan made by such Lender to such Borrower, including the amounts of principal
and interest payable and paid to such Lender from time to time hereunder. In
the case of a Lender that does not request, pursuant to clause (b)(ii) below,
execution and delivery of a Note or Notes evidencing the Loans made by such
Lender to a Borrower, such account or accounts shall, to the extent not
inconsistent with the notations made by the Administrative Agent in the
Register, be conclusive and binding on such Borrower absent manifest error;
provided, however, that the failure of any Lender to maintain such account or
accounts shall not limit or otherwise affect any Obligations of any Borrower or
any other Obligor.
(b) (i) Each Borrower hereby designates the
Administrative Agent to serve as its agent, solely for
the purpose of this clause (b), to maintain a register
(the "Register") on which the Administrative Agent will
record each Lender's Commitments, the Loans made by each
Lender to each Borrower and each repayment in respect of
the principal amount of the Loans of each Lender to each
Borrower and annexed to which the Administrative Agent
shall retain a copy of each Revolving Loan Foreign
Currency Commitment Addendum delivered to the
Administrative Agent pursuant to Section 2.5 and each
Lender Assignment Agreement delivered to the
Administrative Agent pursuant to Section 11.11.1.
Failure to make any recordation, or any error in such
recordation, shall not affect the Borrowers' obligations
in respect of such Loans. The entries in the Register
shall be conclusive, in the absence of manifest error,
and the Borrowers, the Administrative Agent and the
Lenders shall treat each Person in whose name a Loan
(and, as provided in clause (ii), the Note evidencing
such Loan, if any) is registered as the owner thereof for
all purposes of this Agreement, notwithstanding notice or
any provision herein to the contrary. Any Commitment of
any Lender and the Loans made pursuant thereto may be
assigned or otherwise transferred in whole or in part
only by registration of such assignment or transfer in
the Register. Any assignment or transfer of any
Commitment of any Lender or the Loans made pursuant
thereto shall be registered in the Register only upon
delivery to the Administrative Agent of a Lender
Assignment Agreement duly executed by the
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assignor thereof. No assignment or transfer of any
Commitment of any Lender or the Loans made pursuant
thereto shall be effective unless such assignment or
transfer shall have been recorded in the Register by the
Administrative Agent as provided in this Section.
(ii) Each Borrower agrees that, upon the request
by any Lender to the Administrative Agent, such Borrower
will execute and deliver to such Lender, as applicable, a
Revolving U.S. Dollar Note, a Revolving Australian
Dollar Note, a Revolving Canadian Dollar Note, a
Revolving Lira Note, a Term-A U.S. Dollar Note, a Term-A
Australian Dollar Note, a Term-A Lira Note, a Term-B
Note, a Term-C Note, any other applicable Revolving
Foreign Currency Note and a Swing Line Note evidencing
the Loans made by such Lender to such Borrower. Each
Borrower hereby irrevocably authorizes each Lender to
make (or cause to be made) appropriate notations on the
grid attached to such Lender's Notes of such Borrower (or
on any continuation of such grid), which notations, if
made, shall evidence, inter alia, the date of, the
outstanding principal amount of, and the interest rate
and Interest Period applicable to the Loans evidenced
thereby. Such notations shall, to the extent not
inconsistent with the notations made by the
Administrative Agent in the Register, be conclusive and
binding on the Borrower that shall have issued such Note
absent manifest error; provided, however, that the
failure of any Lender to make any such notations or any
error in any such notations shall not limit or otherwise
affect any Obligations of the Borrowers or any other
Obligor. The Loans evidenced by any such Note and
interest thereon shall at all times (including after
assignment pursuant to Section 11.11.1) be represented by
one or more Notes payable to the order of the payee named
therein and its registered assigns. A Note and the
obligation evidenced thereby may be assigned or otherwise
transferred in whole or in part only by registration of
such assignment or transfer of such Note and the
obligation evidenced thereby in the Register (and each
Note shall expressly so provide). Any assignment or
transfer of all or part of an obligation evidenced by a
Note shall be registered in the Register only upon
surrender for registration of assignment or transfer of
the Note evidencing such obligation, accompanied by a
Lender Assignment Agreement duly executed by the assignor
thereof, and thereupon, if requested by the assignee, one
or more new Notes shall be issued by the applicable
Borrower to the designated assignee and the old Note
shall be returned by the Administrative Agent to the
applicable Borrower marked "exchanged". No assignment of
a Note and the obligation evidenced thereby
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shall be effective unless it shall have been recorded in
the Register by the Administrative Agent as provided in
this Section.
ARTICLE III
REPAYMENTS, PREPAYMENTS, INTEREST AND FEES
SECTION 3.1. Repayments and Prepayments; Application.
SECTION 3.1.1. Repayments and Prepayments. Each
Borrower shall repay in full the unpaid principal amount of each Loan made to
it upon the Stated Maturity Date therefor. Prior thereto, payments and
repayments of Loans shall or may be made as set forth below.
(a) From time to time on any Business Day, the
Company or a Foreign Borrower, as the case may be, may
make a voluntary prepayment, in whole or in part, of the
outstanding principal amount of any
(i) Loans (other than Swing Line Loans);
provided, however, that
(1) any such prepayment of the Loans of
any Tranche shall be made pro rata among
Loans of such Tranche of the same type and,
if applicable, having the same Interest
Period of all Lenders that have made such
Loans;
(2) each Borrower shall comply with
Section 4.4 in the event that any LIBO Rate
Loan is prepaid on any day other than the
last day of the Interest Period for such
Loan;
(3) all such voluntary prepayments
shall require at least one Business Day's
notice in the case of Base Rate Loans, three
Business Days' notice in the case of LIBO
Rate Loans, but no more than five Business
Days' notice in the case of any Loans, in
each case in writing to the Administrative
Agent; and
(4) all such voluntary partial
prepayments shall be in an aggregate amount
of $1,000,000 (or, in the case of Foreign
Currency Loans, the multiple of 100,000 units
of the Currency
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of such Loans the U.S. Dollar Equivalent of
which is nearest to $1,000,000) or any larger
integral multiple of $500,000 (or, in the
case of Foreign Currency Loans, the multiple
of 50,000 units of the Currency of such Loans
the U.S. Dollar Equivalent of which is
nearest to $500,000) or in the aggregate
principal amount of all Loans of the
applicable Tranche and type then outstanding;
or
(ii) Swing Line Loans, provided that
(1) all such voluntary prepayments
shall require prior telephonic notice to the
Swing Line Lender on or before 3:00 p.m., New
York City time, on the day of such prepayment
(such notice to be confirmed in writing by
the Company within 24 hours thereafter); and
(2) all such voluntary partial
prepayments shall be in an aggregate amount
of $500,000 or any larger integral multiple
of $100,000 or in the aggregate principal
amount of all Swing Line Loans then
outstanding.
(b) No later than the Business Day following the
date upon which the Company shall have delivered the
certificate required to be delivered pursuant to clause
(h) of Section 7.1.1, the Company or any applicable
Foreign Borrower, as the case may be, shall
(i) if the U.S. Dollar Equivalent of the
aggregate outstanding principal amount of all
Committed Foreign Currency Revolving Loans and the
Foreign Currency Letter of Credit Outstandings in
any Foreign Currency is equal to or greater than
105% of the applicable Revolving Loan Foreign
Currency Commitment Amount with respect to such
Foreign Currency, make a prepayment of its
Committed Foreign Currency Revolving Loans in such
Foreign Currency (and, if necessary, deposit with
the Administrative Agent cash collateral for the
Foreign Currency Letter of Credit Outstandings in
the applicable Foreign Currency) in an amount
equal to such excess over the applicable Revolving
Loan Foreign Currency Commitment Amount, and
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<PAGE> 95
(ii) if the U.S. Dollar Equivalent of the
sum of the aggregate outstanding principal amount
of all Foreign Currency Revolving Loans and all
Foreign Currency Letter of Credit Outstandings is
equal to or greater than 105% of the Revolving
Loan Foreign Currency Limit, make a prepayment of
its Foreign Currency Loans (and, if necessary,
deposit with the Administrative Agent cash
collateral for the Foreign Currency Letter of
Credit Outstandings in the applicable Foreign
Currency) in an amount equal to such excess over
the Revolving Loan Foreign Currency Limit.
(c) No later than five Business Days following the
delivery by the Company of its annual audited financial
reports required pursuant to clause (b) of Section 7.1.1
(beginning with the financial reports delivered in
respect of the 1999 Fiscal Year), the Company shall
deliver to the Administrative Agent a calculation of the
Excess Cash Flow for the Fiscal Year last ended and, no
later than five Business Days following the delivery of
such calculation, make or cause to be made a mandatory
prepayment of the Term Loans in an amount equal to (i)
50% of the Excess Cash Flow (if any) for such Fiscal Year
(or period) less (ii) the aggregate amount of all
voluntary prepayments of the principal of the Term Loans
actually made in such Fiscal Year pursuant to clause (a)
of Section 3.1.1, to be applied as set forth in Section
3.1.2; provided, however, that no such prepayment shall
be required to be made to the extent that the amount of
Debt as reduced by giving effect to such prepayment would
result (on a pro forma basis) in a Leverage Ratio of
3.50:1 or less as of the end of the immediately preceding
Fiscal Quarter.
(d) No later than one Business Day (in the case of
Net Debt Proceeds) or 30 calendar days (in the case of
Net Disposition Proceeds) following the receipt of any
Net Disposition Proceeds or Net Debt Proceeds by the
Company or any of its Subsidiaries, the Company shall
deliver to the Administrative Agent a calculation of the
amount of such Net Disposition Proceeds or Net Debt
Proceeds, as the case may be, and, to the extent the
amount of such Net Disposition Proceeds or Net Debt
Proceeds, as the case may be, with respect to any single
transaction or series of related transactions, exceeds
$5,000,000, make or cause to be made a mandatory
prepayment of the Term Loans in an amount equal to 100%
of such Net Disposition Proceeds or Net Debt Proceeds, as
the case may be, to be applied as set forth in Section
3.1.2; provided, that no mandatory prepayment on account
of such Net Disposition Proceeds shall be required under
this clause if the Company informs the
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<PAGE> 96
Agents no later than 30 days following the receipt of any
Net Disposition Proceeds of its or its Subsidiary's good
faith intention to apply such Net Disposition Proceeds to
the acquisition of other assets or property consistent
with the Thermadyne Business (including by way of merger
or investment) within 365 days following the receipt of
such Net Disposition Proceeds, with the amount of such
Net Disposition Proceeds unused after such 365 day period
being applied to the Loans as set forth in Section 3.1.2.
(e) Concurrently with the consummation of any
transaction giving rise to any Net Equity Proceeds, the
Company shall deliver to the Administrative Agent a
calculation of the amount of such Net Equity Proceeds,
and no later than five Business Days following the
delivery of such calculation, and, to the extent that the
amount of such Net Equity Proceeds with respect to any
single transaction or series of related transactions
exceeds $3,000,000, the Company shall make or cause to be
made a mandatory prepayment of the Term Loans in an
amount equal to 50% of such Net Equity Proceeds, to be
applied as set forth in Section 3.1.2; provided, however,
that no such prepayment shall be required to be made to
the extent that the amount of Debt as reduced by giving
effect to such prepayment would result (on a pro forma
basis) in a Leverage Ratio of less than 4.00:1 as of the
end of the immediately preceding Fiscal Quarter.
(f) Concurrently with the receipt by the Company
or any of its Subsidiaries of any Casualty Proceeds in
excess of $3,000,000 (individually or in the aggregate
over the course of a Fiscal Year), the Company shall make
or cause to be made a mandatory prepayment of the Term
Loans in an amount equal to 100% of such Casualty
Proceeds, to be applied as set forth in Section 3.1.2;
provided, that no mandatory prepayment on account of
Casualty Proceeds shall be required under this clause if
the Company informs the Agents no later than 60 days
following the occurrence of the Casualty Event resulting
in such Casualty Proceeds of its or its Subsidiary's good
faith intention to apply such Casualty Proceeds to the
rebuilding or replacement of the assets or property
subject to such Casualty Event or the acquisition of
other assets or property consistent with the Thermadyne
Business (including by way of merger or Investment) and
in fact uses such Casualty Proceeds to rebuild or replace
the assets or property subject to such Casualty Event or
to acquire such other property or assets within 365 days
following the receipt of such Casualty Proceeds, with the
amount of such Casualty Proceeds unused after such 365
day period being applied to the Loans pursuant to Section
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<PAGE> 97
3.1.2; provided, further, however, that at any time when
any Event of Default shall have occurred and be continuing
or Casualty Proceeds not applied as provided above shall
exceed $3,000,000, such Casualty Proceeds will be
deposited in an account maintained with the Administrative
Agent for disbursement at the request of the Company to
pay for such rebuilding, replacement or acquisition.
(g) On each date when any reduction in any
Revolving Loan Commitment Amount shall become effective
in respect of any Revolving Loan Commitment, including
pursuant to Section 2.2.2, the Company or any applicable
Foreign Borrower, as the case may be, shall make a
mandatory prepayment of Revolving Loans (in the relevant
Currency) and (if necessary) Swing Line Loans and (if
necessary) deposit with the Administrative Agent cash
collateral for Letter of Credit Outstandings (in the
relevant Currency) in an aggregate amount equal to the
excess, if any, of (A) the sum of the aggregate
outstanding principal amount of all Committed Revolving
Loans and Letter of Credit Outstandings (in the relevant
Currency) and (in the case of a reduction in the
Revolving Loan U.S. Dollar Commitment Amount) Swing Line
Loans outstanding under such Revolving Loan Commitment,
over (B) the applicable Revolving Loan Commitment Amount
in respect of such Revolving Loan Commitment, in each
case as so reduced.
(h) On each date when any reduction in the Total
Revolving Loan Commitment Amount shall become effective,
including pursuant to Section 2.2, the Company or any
applicable Foreign Borrower, as the case may be, shall
make a mandatory prepayment of Revolving Loans and (if
necessary) Swing Line Loans and (if necessary) deposit
with the Administrative Agent cash collateral for Letter
of Credit Outstandings in an aggregate amount equal to
the excess, if any, of the sum of (i) the aggregate
outstanding principal amount of all Revolving Loans
(included, in the case of Foreign Currency Revolving
Loans, at the U.S. Dollar Equivalent thereof) and Swing
Line Loans and (ii) the Letter of Credit Outstandings,
over the Total Revolving Loan Commitment Amount as so
reduced.
(i) On the Stated Maturity Date and on each
Quarterly Payment Date occurring during any period set
forth below, the Company or any applicable Foreign
Borrower, as the case may be, shall make a scheduled
repayment of the outstanding principal amount, if any, of
its Term-A Loans (such repayments to be applied as set
forth in Section 3.1.2), so that the aggregate
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<PAGE> 98
amount of such repayments shall equal the amount set
forth below opposite such Stated Maturity Date or period,
as applicable (as such amounts may have otherwise been
reduced pursuant to this Agreement); provided that, in
the case of any repayments of Foreign Currency Term Loans
made pursuant to this clause, such repayments shall be
made in the applicable Foreign Currency in an amount
equal to the Foreign Currency Equivalent thereof
determined by reference to the exchange rate applied in
respect of such Foreign Currency Term Loans on the date
such Loans were made:
<TABLE>
<CAPTION>
SCHEDULED
PRINCIPAL
PERIOD REPAYMENT
===================================================
<S> <C>
7/16/98 - 7/15/99 $ -0-
---------------------------------------------------
7/16/99 - 7/15/00 $ 1,250,000
---------------------------------------------------
7/16/00 - 7/15/01 $ 2,500,000
---------------------------------------------------
7/16/01 - 7/15/02 $ 5,000,000
---------------------------------------------------
7/16/02 - 7/15/03 $ 6,250,000
---------------------------------------------------
7/16/03 - Sixth
Anniversary of the Closing
Date $10,000,000
</TABLE>
(j) On the Stated Maturity Date and on each
Quarterly Payment Date occurring during any period set
forth below, the Company shall make a scheduled repayment
of the outstanding principal amount, if any, of Term-B
Loans in an aggregate amount equal to the amount set
forth below opposite such Stated Maturity Date or period,
as applicable (as such amounts may have otherwise been
reduced pursuant to this Agreement):
<TABLE>
<CAPTION>
==========================================================
SCHEDULED
PRINCIPAL
PERIOD REPAYMENT
==========================================================
<S> <C>
7/16/98 - 7/15/04 $ 287,500
----------------------------------------------------------
7/16/04 - Seventh Anniversary of
the Closing Date $27,025,000
</TABLE>
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<PAGE> 99
(k) On the Stated Maturity Date and on each
Quarterly Payment Date occurring during any period set
forth below, the Company shall make a scheduled repayment
of the outstanding principal amount, if any, of Term-C
Loans in an aggregate amount equal to the amount set
forth below opposite such Stated Maturity Date or period,
as applicable (as such amounts may have otherwise been
reduced pursuant to this Agreement):
<TABLE>
<CAPTION>
========================================================
SCHEDULED
PRINCIPAL
PERIOD REPAYMENT
========================================================
<S> <C>
7/1/98 - 7/15/05 $ 287,500
--------------------------------------------------------
7/16/05 - Eighth Anniversary of
the Closing Date $26,737,500
========================================================
</TABLE>
(l) Following the prepayment in full of the Term
Loans, on the date the Term Loans would otherwise have
been required to be prepaid on account of any Net
Disposition Proceeds, Net Debt Proceeds, Excess Cash
Flow, Net Equity Proceeds or Casualty Proceeds, the
Company or any applicable Foreign Borrower, as the case
may be, shall first, prepay such Tranche or Tranches of
Revolving Loans and Swing Line Loans, to the extent then
outstanding, as the Company shall elect, and, second,
deposit with the Administrative Agent cash collateral for
Letter of Credit Outstandings, in an aggregate amount
equal to the amount by which the Term Loans would
otherwise have been required to be prepaid if Term Loans
had been outstanding.
(m) Immediately upon any acceleration of the
Stated Maturity Date of any Loans or Obligations pursuant
to Section 8.2 or Section 8.3, the Company or any
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<PAGE> 100
applicable Foreign Borrower, as the case may be, shall
repay all outstanding Loans and other Obligations,
unless, pursuant to Section 8.3, only a portion of all
Loans and other Obligations are so accelerated (in which
case the portion so accelerated shall be so prepaid).
Each prepayment of any Loans made pursuant to this
Section shall be without premium or penalty, except as may be required by
Section 4.4. No prepayment of principal of any Revolving Loans or Swing Line
Loans pursuant to clause (a), (b) or (m) of this Section 3.1.1 shall cause a
reduction in any Revolving Loan Commitment Amount or the Swing Line Loan
Commitment Amount, as the case may be. Any Letter of Credit outstanding that
is cash collateralized pursuant to clause (b), (g), (h) or (l) of this Section
3.1.1 shall not thereafter, so long as, and to the extent that, such Letter of
Credit remains so cash collateralized, be considered to be outstanding for
purposes of (but only for purposes of) such clause (b), (g), (h) or (l) of
this Section 3.1.1.
SECTION 3.1.2. Application. (a) Subject to clause (b)
below, each prepayment or repayment of principal of the Loans of any Tranche
shall be applied, to the extent of such prepayment or repayment, first, to the
principal amount thereof being maintained as Base Rate Loans, and second, to
the principal amount thereof being maintained as LIBO Rate Loans; provided,
that prepayments or repayments of LIBO Rate Loans not made on the last day of
the Interest Period with respect thereto, shall be prepaid or repaid subject to
the provisions of Section 4.4 (together with a payment of all accrued
interest). Any mandatory prepayments of LIBO Rate Loans made pursuant to
clauses (d) and (e) of Section 3.1.1, if not made on the last day of the
Interest Period with respect thereto, shall, at the Borrower's option, so long
as no Default has occurred and is continuing, be prepaid subject to the
provisions of Section 4.4, or the amount required to be applied to the
prepayment of LIBO Rate Loans (after application to any Base Rate Loans) shall
be deposited with the Administrative Agent as cash collateral for such Loans on
terms reasonably satisfactory to the Administrative Agent and thereafter shall
be applied in the order of the Interest Periods next ending most closely to the
date of receipt of the proceeds in respect of which such prepayment is required
to be made and on the last day of each such Interest Period (together with a
payment of all interest that is due on the last day of each such Interest
Period pursuant to clause (d) of Section 3.2.3).
(b) Each prepayment of Term Loans made pursuant to
clauses (a), (c), (d), (e), (f), (i), (j) and (k) of Section 3.1.1 shall be
applied, (i) on a pro rata basis, to the outstanding principal amount of (A) in
the case of clauses (a), (c), (d), (e) and (f), all remaining Term-A Loans,
Term-B Loans and Term-C Loans and (B) in the case of clauses (i), (j) and (k),
all remaining Term-A Loans, Term-B Loans or Term-C Loans, as the case may be,
and (ii) in
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<PAGE> 101
respect of each Tranche of Term Loans, in direct order of maturity of the
remaining scheduled quarterly amortization payments in respect thereof, until
all such Term-A Loans, Term-B Loans and Term-C Loans have been paid in full;
provided that the Company may make, or cause other Borrowers to make, any such
prepayments to any Lender of Term Loans of such Tranches as the Company shall
elect so long as the aggregate amount of all such prepayments made to each
Lender is equal to its pro rata portion of the aggregate prepayments to all
applicable Lenders; and provided, further, that if the Company at any time
elects in writing, in its sole discretion, to permit any Lender that has Term-B
Loans or Term-C Loans to decline to have such Loans prepaid pursuant to clause
(a), (c), (d), (e) or (f) of Section 3.1.1, then any Lender having Term-B Loans
or Term-C Loans outstanding may, by delivering a notice to the Agents at least
one Business Day prior to the date that such prepayment is to be made, decline
to have such Loans prepaid with the amounts set forth above, in which case 50%
of the amounts that would have been applied to a prepayment of such Lender's
Term-B Loans or Term-C Loans, as the case may be, shall instead be applied to a
prepayment of the Term-A Loans (until paid in full), with the balance being
retained by the Company and its Subsidiaries.
SECTION 3.2. Interest Provisions. Interest on the
outstanding principal amount of the Loans shall accrue and be payable in
accordance with this Section 3.2.
SECTION 3.2.1. Rates. (a) Each Base Rate Loan shall
accrue interest on the unpaid principal amount thereof for each day from and
including the day upon which such Loan was made or converted to a Base Rate
Loan to but excluding the date such Loan is repaid or converted to a LIBO Rate
Loan at a rate per annum equal to the sum of the Alternate Base Rate for such
day plus the Applicable Margin for such Loan on such day.
(b) Each Committed LIBO Rate Loan in any Currency shall
accrue interest on the unpaid principal amount thereof for each day during each
Interest Period applicable thereto at a rate per annum equal to the sum of the
LIBO Rate (or, in the case of U.S. Dollar Loans, LIBO Rate (Reserve Adjusted))
for such Currency and Interest Period plus the Applicable Margin for such Loan
on such day.
(c) Each Uncommitted Foreign Currency Revolving Loan
shall accrue interest on the unpaid principal amount thereof for each day from
and including the day upon which such Loan was made to but excluding the date
such Loan is repaid at a rate per annum equal to the Uncommitted Foreign
Currency Interest Rate for such Loan.
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<PAGE> 102
All LIBO Rate Loans shall bear interest from and including the first day of the
applicable Interest Period to (but not including) the last day of such Interest
Period at the interest rate determined as applicable to such LIBO Rate Loan.
SECTION 3.2.2. Post-Maturity Rates. After the date any
principal amount of any Loan shall have become due and payable (whether on the
applicable Stated Maturity Date, upon acceleration or otherwise), or any other
monetary Obligation (other than overdue Reimbursement Obligations which shall
bear interest as provided in Section 2.8.2) of any Borrower shall have become
due and payable, such Borrower shall pay, but only to the extent permitted by
law, interest (after as well as before judgment) on such amounts at a rate per
annum equal to (i) in the case of any overdue principal of Loans, overdue
interest thereon, overdue commitment fees or other overdue amounts in respect
of Loans or other obligations (or the related Commitments) under a particular
Tranche, (x) in the case of Loans other than Foreign Currency Loans, the rate
that would otherwise be applicable to Base Rate Loans under such Tranche
pursuant to Section 3.2.1 plus 2%, (y) in the case of Committed Foreign
Currency Loans, the rate that would otherwise be applicable to such Loans under
clause (b) of Section 3.2.1 plus 2%, and (z) in the case of Uncommitted Foreign
Currency Revolving Loans, the rate that would otherwise be applicable to such
Loans pursuant to clause (c) of Section 3.2.1 plus 2%, and (ii) in the case of
other overdue monetary Obligations, the rate that would otherwise be applicable
to U.S. Dollar Revolving Loans that were Base Rate Loans plus 2%.
SECTION 3.2.3. Payment Dates. Interest accrued on each
Loan shall be payable, without duplication:
(a) on the Stated Maturity Date therefor;
(b) in the case of a LIBO Rate Loan or
Uncommitted Foreign Currency Absolute Rate Revolving
Loan, on the date of any payment or prepayment, in whole
or in part, of principal outstanding on such Loan, to the
extent of the unpaid interest accrued through such date
on the principal so paid or prepaid;
(c) with respect to Base Rate Loans, on each
Quarterly Payment Date occurring after the date of the
initial Credit Extension hereunder;
(d) with respect to LIBO Rate Loans, on the last
day of each applicable Interest Period (and, if such
Interest Period shall exceed three months, at intervals
of three months after the first day of such Interest
Period); and
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<PAGE> 103
(e) on that portion of any Loans the Stated
Maturity Date of which is accelerated pursuant to Section
8.2 or Section 8.3, immediately upon such acceleration.
Interest accrued on Loans, Reimbursement Obligations or other monetary
Obligations arising under this Agreement or any other Loan Document after the
date such amount is due and payable (whether on the Stated Maturity Date, upon
acceleration or otherwise) shall be payable upon demand.
SECTION 3.3. Fees. The Borrowers agree to pay the fees
set forth in this Section 3.3. All such fees shall be non-refundable.
SECTION 3.3.1. Commitment Fee. Each Borrower agrees to
pay to the Administrative Agent for the account of each Lender that has a
Revolving Loan Commitment to such Borrower for each day during the period
(including any portion thereof when any of the Lenders' applicable Revolving
Loan Commitments are suspended by reason of the Company's inability to satisfy
any condition of Article V) commencing on the Closing Date and continuing to
but excluding the Revolving Loan Commitment Termination Date, a commitment fee
on such Lender's Percentage of the unused portion, whether or not then
available to the applicable Borrower, of the Revolving Loan Commitment Amount
with respect to such Revolving Loan Commitment (net of Letter of Credit
Outstandings in respect of Letters of Credit outstanding under the related
Letter of Credit Commitment) for such day at a rate per annum equal to the
Applicable Commitment Fee for such day. Such commitment fees shall be payable
by the applicable Borrower in arrears on each Quarterly Payment Date,
commencing with the first such day following the Closing Date and on the
Revolving Loan Commitment Termination Date. The making of Swing Line Loans and
Uncommitted Foreign Currency Revolving Loans shall not constitute usage of the
applicable Revolving Loan Commitment with respect to the calculation of
commitment fees to be paid by the Borrowers to the applicable Lenders. Any
term or provision hereof to the contrary notwithstanding, commitment fees
payable for any period prior to the Closing Date shall be payable in accordance
with the Fee Letter. Payments by the Company to the Swing Line Lender in
respect of accrued interest on Swing Line Loans shall be net of the commitment
fee payable in respect of the Swing Line Lender's Revolving Loan Commitment.
SECTION 3.3.2. Administrative Agent Fee. The Company
agrees to pay an annual administration fee to the Administrative Agent, for its
own account, in the amount set forth in the Administrative Agent Fee Letter,
payable in advance on the Closing Date and annually thereafter.
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<PAGE> 104
SECTION 3.3.3. Letter of Credit Fee. Each Borrower
agrees to pay to the Administrative Agent, for the pro rata account of the
applicable Issuer and each other Lender that has a Percentage of greater than
zero in respect of the applicable Revolving Loan Commitment Amount, a Letter of
Credit fee for each day on which there shall be any Letters of Credit
outstanding under any Letter of Credit Commitment to such Borrower, at a rate
per annum equal to (i) with respect to each standby Letter of Credit, the then
Applicable Margin for Revolving Loans maintained as LIBO Rate Loans, minus 1/8
of 1% per annum, multiplied by the Stated Amount of each such Letter of Credit;
and (ii) with respect to each documentary Letter of Credit, 1.25% multiplied by
the Stated Amount of each such Letter of Credit, such fees being payable in the
Currency in which such Letter of Credit is denominated quarterly in arrears on
each Quarterly Payment Date. Each Borrower further agrees to pay to the
applicable Issuer quarterly in arrears on each Quarterly Payment Date, an
issuance fee equal to 1/8 of 1% per annum, multiplied by the Stated Amount of
the applicable Letter of Credit.
ARTICLE IV
CERTAIN LIBO RATE AND OTHER PROVISIONS
SECTION 4.1. LIBO Rate Lending Unlawful. If any Lender
shall determine (which determination shall, in the absence of manifest error,
upon notice thereof to the Company and the Lenders, be conclusive and binding
on the Borrowers) that the introduction of or any change in or in the
interpretation of any law, in each case after (i) in the case of any such
introduction or change with respect to Committed Loans, the date upon which
such Lender shall have become a Lender hereunder, and (ii) in the case of any
such introduction or change with respect to Uncommitted Foreign Currency
Revolving Loans, the date on which such Lender submitted an Uncommitted Foreign
Currency Interest Quote in respect of such Uncommitted Foreign Currency
Revolving Loan pursuant to Section 2.4 makes it unlawful, or any central bank
or other governmental authority asserts, after such date, that it is unlawful,
for such Lender to make, continue or maintain any Loan as, or to convert any
Loan into, a LIBO Rate Loan, the obligations of such Lender to make, continue,
maintain or convert any Loans as or to LIBO Rate Loans shall, upon such
determination, forthwith be suspended until such Lender shall notify the
Administrative Agent that the circumstances causing such suspension no longer
exist, which such Lender shall do promptly upon obtaining actual knowledge of
such change in circumstances (provided that the rights and benefits of such
Lender under this clause relating to any period prior to such failure to give
prompt notice shall not be limited or otherwise adversely affected as a result
of such failure) (with the date of such notice being the "Reinstatement
Date"), and (i) all LIBO Rate Loans
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<PAGE> 105
previously made by such Lender shall (A) in the case of U.S. Dollar Loans,
automatically convert into Base Rate Loans and (B) in the case of Foreign
Currency Loans, accrue interest at each applicable Lender's cost of funds, as
reasonably determined and as notified by such Lender to the Administrative
Agent and the Company, plus the Applicable Margin in respect of such Foreign
Currency Loans, in each case at the end of the then current Interest Periods
with respect thereto or sooner, if required by such law or assertion, and (ii)
all Loans thereafter to be made by such Lender and outstanding prior to the
Reinstatement Date shall (A) in the case of U.S. Dollar Loans, be made as Base
Rate Loans, with interest thereon being payable on the same date that interest
is payable with respect to the corresponding Borrowing of LIBO Rate Loans made
by Lenders not so affected, and (B) in the case of Foreign Currency Loans,
accrue interest at each applicable Lender's cost of funds, as reasonably
determined and as notified by such Lender to the Administrative Agent and the
Company, plus the Applicable Margin in respect of such Foreign Currency Loans.
SECTION 4.2. Deposits Unavailable. If the
Administrative Agent shall have determined that
(a) deposits in the relevant Currency and amount
and for the relevant Interest Period are not available to
the Administrative Agent in its relevant market; or
(b) by reason of circumstances affecting the
Administrative Agent's relevant market, adequate means do
not exist for ascertaining the interest rate applicable
hereunder to LIBO Rate Loans in a particular Currency,
then, upon notice from the Administrative Agent to the Company and the Lenders,
(i) the obligations of all Lenders under Section 2.3 and Section 2.4 to make or
continue any Loans as, or to convert any Loans into, LIBO Rate Loans shall
forthwith be suspended and (ii) in the case of Foreign Currency Loans, such
Loans shall accrue interest at each applicable Lender's cost of funds, as
reasonably determined and as notified by such Lender to the Administrative
Agent and the Company, plus the Applicable Margin in respect of such Loans, at
the end of the then current Interest Period applicable thereto, in each case
until the Administrative Agent shall notify the Company and the Lenders that
the circumstances causing such suspension no longer exist, which the
Administrative Agent shall do promptly upon obtaining actual knowledge of such
change in circumstances (provided that the rights and benefits of the
Administrative Agent under this clause relating to any period prior to such
failure to give prompt notice shall not be limited or otherwise adversely
affected as a result of such failure), and subsequent Foreign Currency Loans in
respect of such Currency shall be made at an interest rate equal to each
applicable Lender's cost of funds, as
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<PAGE> 106
reasonably determined and as notified by such Lender to the Administrative
Agent and the Company, plus the Applicable Margin in respect of such Loans.
SECTION 4.3. Increased LIBO Rate Loan Costs, etc. The
applicable Borrower agrees to reimburse each Lender for any increase in the
cost to such Lender of, or any reduction in the amount of any sum receivable by
such Lender in respect of, making, continuing or maintaining (or of its
obligation to make, continue or maintain) any Loans as, or of converting (or of
its obligation to convert) any Loans into, LIBO Rate Loans (excluding any
amounts, whether or not constituting Taxes, referred to in Section 4.6) arising
as a result of any change in, or the introduction, adoption, effectiveness,
interpretation, reinterpretation or phase-in of, any law or regulation,
directive, guideline, decision or request (whether or not having the force of
law) of any court, central bank, regulator or other governmental authority that
occurs after (i) in the case of any such increased costs or reduced return in
respect of Committed Loans, the date upon which such Lender became a Lender
hereunder, and (ii) in the case of any such increased costs or reduced return
in respect of Uncommitted Foreign Currency Revolving Loans, the date on which
such Lender submitted an Uncommitted Foreign Currency Interest Quote with
respect to such Uncommitted Foreign Currency Revolving Loans pursuant to
Section 2.4. Such Lender shall promptly notify the Administrative Agent and
the Company in writing of the occurrence of any such event, such notice to
state, in reasonable detail, the reasons therefor and the additional amount
required fully to compensate such Lender for such increased cost or reduced
amount. Such additional amounts shall be payable by the applicable Borrower
directly to such Lender within five days of its receipt of such notice, and
such notice shall, in the absence of manifest error, be conclusive and binding
on the Borrowers.
SECTION 4.4. Funding Losses. In the event any Lender
shall incur any loss or expense (including any loss or expense incurred by
reason of the liquidation or reemployment of deposits or other funds acquired
by such Lender to make, continue or maintain any portion of the principal
amount of any Loan as, or to convert any portion of the principal amount of any
Loan into, a LIBO Rate Loan, but excluding any loss of margin after the date of
any such conversion, repayment, prepayment or failure to borrow, continue or
convert) as a result of
(a) any conversion or repayment or prepayment of
the principal amount of any LIBO Rate Loans on a date
other than the scheduled last day of the Interest Period
applicable thereto, whether pursuant to Section 3.1 or
otherwise;
(b) any Loans not being borrowed as LIBO Rate
Loans in accordance with the Borrowing Request therefor;
or
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(c) any Loans not being continued as, or
converted into, LIBO Rate Loans in accordance with the
Continuation/Conversion Notice therefor,
then, upon the written notice of such Lender to the applicable Borrower (with a
copy to the Administrative Agent), such Borrower shall, within five days of its
receipt thereof, pay directly to such Lender such amount as will (in the
reasonable determination of such Lender) reimburse such Lender for such loss or
expense. Such written notice (which shall include calculations in reasonable
detail) shall, in the absence of manifest error, be conclusive and binding on
such Borrower.
SECTION 4.5. Increased Capital Costs. If any change in,
or the introduction, adoption, effectiveness, interpretation, reinterpretation
or phase-in of, any law or regulation, directive, guideline, decision or
request (whether or not having the force of law) of any court, central bank,
regulator or other governmental authority, in each case occurring after (i) in
the case of any such change, introduction, adoption, effectiveness,
interpretation, reinterpretation or phase-in in respect of Committed Loans, the
applicable Lender becomes a Lender hereunder, and (ii) in the case of any such
change, introduction, adoption, effectiveness, interpretation, reinterpretation
or phase-in in respect of Uncommitted Foreign Currency Revolving Loans, the
date on which such Lender submitted an Uncommitted Foreign Currency Interest
Quote in respect of such Uncommitted Foreign Currency Revolving Loan pursuant
to Section 2.4, affects or would affect the amount of capital required or
expected to be maintained by any Lender or any Person controlling such Lender,
and such Lender determines (in its sole and absolute discretion) that the rate
of return on its or such controlling Person's capital as a consequence of its
Commitments, participation in Letters of Credit or the Loans made by such
Lender is reduced to a level below that which such Lender or such controlling
Person could have achieved but for the occurrence of any such circumstance,
then, in any such case upon notice from time to time by such Lender to the
Company, which such Lender shall give promptly upon its obtaining actual
knowledge of such circumstance (provided that the rights and benefits of such
Lender under this clause relating to any period prior to such failure to give
prompt notice shall not be limited or otherwise adversely affected as a result
of such failure), the applicable Borrower shall immediately pay directly to
such Lender additional amounts sufficient to compensate such Lender or such
controlling Person for such reduction in rate of return. A statement of such
Lender as to any such additional amount or amounts (including calculations
thereof in reasonable detail) shall, in the absence of manifest error, be
conclusive and binding on the Borrowers. In determining such amount, such
Lender may use any method of averaging and attribution that it (in its sole and
absolute discretion) shall deem applicable; provided, that such Lender may not
impose materially greater costs on the Borrowers than on other similarly
situated borrowers by virtue of any such averaging or attribution method.
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SECTION 4.6. Taxes. (a) All payments by the Borrowers
of principal of, and interest on, the Loans and all other amounts payable
hereunder or under any other Loan Document (including Reimbursement
Obligations, fees and expenses) shall be made free and clear of and without
deduction for any present or future income, excise, stamp or franchise taxes
and other taxes, fees, duties, withholdings or other charges of any nature
whatsoever imposed by any taxing authority, from or through which payments
originate or are made or deemed made by or to the Borrowers, but excluding (i)
any income, excise, stamp or franchise taxes and other similar taxes, fees,
duties, withholdings or other charges imposed on either of the Agents as a
result of a present or former connection between the applicable lending office
(or office through which it performs any of its actions as Agent) of such
Agent, and any income, excise, stamp or franchise taxes and other similar
taxes, fees, duties, withholdings or other charges imposed on any Lender as a
result of a present or former connection between the applicable lending office
of such Lender, in each case and the jurisdiction of the governmental authority
imposing such tax or any political subdivision or taxing authority thereof or
therein (other than any such connection arising solely from such Agent or such
Lender having executed, delivered or performed its obligations or received a
payment under, or taken any action to enforce, this Agreement or any Note) or
(ii) any income, excise, stamp or franchise taxes and other similar taxes,
fees, duties, withholdings or other charges to the extent that they are in
effect and would apply (x) as of the date any Person becomes a Lender or
Assignee Lender to the extent such taxes, fees, duties, withholdings or charges
relate to payments other than payments in respect of Uncommitted Foreign
Currency Revolving Loans, (y) as of the date on which such Lender submitted an
Uncommitted Foreign Currency Interest Quote with respect to such Uncommitted
Foreign Currency Revolving Loans pursuant to Section 2.4, to the extent such
taxes, fees, duties, withholdings or other charges relate to payments in
respect of Uncommitted Foreign Currency Revolving Loans, or (z) in either case,
as of the date that any Lender changes its applicable lending office, to the
extent such taxes become applicable as a result of such change (other than a
change in an applicable lending office made pursuant to Section 4.10 below)
(such non-excluded items being called "Taxes"). In the event that any
withholding or deduction from any payment to be made by any Borrower hereunder
is required in respect of any Taxes pursuant to any applicable law, rule or
regulation, then such Borrower will (i) pay directly to the relevant taxing
authority the full amount required to be so withheld or deducted, (ii) promptly
forward to the Administrative Agent an official receipt or other documentation
available to such Borrower reasonably satisfactory to the Administrative Agent
evidencing such payment to such authority, and (iii) pay to the Administrative
Agent for the account of the applicable Lenders such additional amount or
amounts as is necessary to ensure that the net amount actually received by each
such Lender will equal the full amount such applicable Lender would have
received had no such withholding or deduction been required, provided, however,
that the Company shall not be required to pay any such
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additional amounts in respect of amounts payable to any Non-U.S. Lender or any
Agent that is not organized under the laws of the United States or a state
thereof to the extent that the related tax is imposed (or an exemption
therefrom is not available) as a result of such Lender or Agent failing to
comply with the requirements of clause (b) of Section 4.6.
Moreover, if any Taxes are directly asserted against
either of the Agents or any Lender with respect to any payment received by such
Agents or such Lender hereunder, such Agents or such Lender may pay such Taxes
and the applicable Borrower will promptly pay to such Person such additional
amount (including any penalties, interest or expenses) as is necessary in order
that the net amount received by such Person (including any Taxes on such
additional amount) shall equal the amount of such Taxes paid by such Person;
provided, however, that the applicable Borrower shall not be obligated to make
payment to the Lenders or the Agents (as the case may be) pursuant to this
sentence in respect of penalties or interest attributable to any Taxes, if
written demand therefor has not been made by such Lenders or the Agents within
60 days from the date on which such Lenders or the Agents knew of the
imposition of Taxes by the relevant taxing authority or for any additional
imposition which may arise from the failure of the Lenders or the Agents to
apply payments in accordance with the applicable tax law after any Borrower has
made the payments required hereunder; provided, further, however, that the
Borrowers shall not be required to pay any such additional amounts in respect
of any amounts payable to any Non-U.S. Lender or any Agent that is not
organized under the laws of the United States or a state thereof to the extent
the related Tax is imposed as a result of such Lender or Agent failing to
comply with the requirements of clause (b) of Section 4.6. After a Lender or
an Agent (as the case may be) learns of the imposition of Taxes, such Lender or
Agent will act in good faith to notify the Borrowers of their obligations
hereunder as soon as reasonably possible.
If any Borrower fails to pay any Taxes when due to the
appropriate taxing authority or fails to remit to the Administrative Agent, for
the account of the respective Lenders, the required receipts or other required
documentary evidence, such Borrower shall indemnify the Lenders for any
incremental Taxes, interest or penalties that may become payable by any Lender
as a result of any such failure.
(b) Each Non-U.S. Lender shall, (i) on or prior to the
date of the execution and delivery of this Agreement, in the case of each
Lender listed on the signature pages hereof, or, in the case of an Assignee
Lender, on or prior to the date it becomes a Lender, execute and deliver to the
Company and the Administrative Agent, two or more (as the Company or the Agents
may reasonably request) United States Internal Revenue Service Forms 4224 or
Forms 1001 (or successor forms) or, solely if such Lender is claiming exemption
from United States withholding tax under Section 871(h) or 881(c) of the Code
with respect to
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payments of "portfolio interest", United States Internal Revenue Service Forms
W-8 and a certificate signed by a duly authorized officer of such Lender
representing that such Lender is not a "bank" (within the meaning of Section
881(c)(3)(A) of the Code), is not a 10 percent shareholder (within the meaning
of Section 871(h)(3)(B) of the Code) with respect to the Company and is not a
controlled foreign corporation with respect to which the Company is a related
person (within the meaning of Section 864(d)(4) of the Code) or such other
forms or documents (or successor forms or documents), appropriately completed,
establishing that payments to such Lender are exempt from withholding or
deduction of Taxes imposed by the United States; and (ii) deliver to the
Company and the Administrative Agent two further copies of any such form or
documents on or before the date that any such form or document expires or
becomes obsolete and after the occurrence of any event requiring a change in
the most recent such form or document previously delivered by it to the
Company. Each Lender and each Agent agrees, to the extent reasonable and
without material cost to it, to provide to the applicable Borrower and the
Administrative Agent such other applicable forms or certificates that would
reduce or eliminate any Tax otherwise applicable.
(c) If the Company determines in good faith that a
reasonable basis exists for contesting the imposition of a Tax with respect to
a Lender or either of the Agents, the relevant Lender or Agent, as the case may
be, shall reasonably cooperate with the Borrowers in challenging such Tax at
the Borrowers' expense if requested by the Company; provided, however, that
nothing in this Section 4.6 shall require any Lender to submit to the Company
or any other Person any tax returns or any part thereof, or to prepare or file
any tax returns other than as such Lender in its sole discretion shall
determine.
(d) If a Lender or an Agent shall receive a refund
(including any offset or credits) from a taxing authority (as a result of any
error in the imposition of Taxes by such taxing authority) of any Taxes paid by
any Borrower pursuant to clause (a) above, such Lender or the Agent (as the
case may be) shall promptly pay such Borrower the amount so received, with
interest from the taxing authority with respect to such refund, net of any tax
liability incurred by such Lender or Agent that is attributable to the receipt
of such refund and such interest.
(e) Each Lender and each Agent agrees, to the extent
reasonable and without material cost to it, to cooperate with the Borrowers to
minimize any amounts payable by the Borrowers under this Section 4.6; provided,
however, that nothing in this Section 4.6 shall require any Lender to take any
action which, in the sole discretion of such Lender, is inconsistent with its
internal policy and legal and regulatory restrictions.
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SECTION 4.7. Payments, Computations, etc. Unless
otherwise expressly provided, all payments by or on behalf of the Borrowers
pursuant to this Agreement or any other Loan Document shall be made by the
Borrowers to the Administrative Agent for the pro rata account of the Lenders,
Agents or Arranger, as applicable, entitled to receive such payment. All such
payments required to be made to the Administrative Agent shall be made, without
setoff, deduction or counterclaim, not later than 1:00 p.m., New York time, on
the date due, in same day or immediately available funds, to such account as
the Administrative Agent shall specify from time to time by notice to the
Company and the applicable Borrower. Funds received after that time shall be
deemed to have been received by the Administrative Agent on the next succeeding
Business Day. The Administrative Agent shall promptly remit in same day funds
to each Lender, Agent or Arranger, as the case may be, its share, if any, of
such payments received by the Administrative Agent for the account of such
Lender, Agent or Arranger, as the case may be. All interest and fees shall be
computed on the basis of the actual number of days (including the first day but
excluding the last day) occurring during the period for which such interest or
fee is payable over a year comprised of 360 days (or, in the case of interest
on a Base Rate Loan, 365 days or, if appropriate, 366 days). Whenever any
payment to be made shall otherwise be due on a day which is not a Business Day,
such payment shall (except as otherwise required by clause (i) of the
definition of the term "Interest Period") be made on the next succeeding
Business Day and such extension of time shall be included in computing interest
and fees, if any, in connection with such payment.
SECTION 4.8. Sharing of Payments. If any Lender shall
obtain any payment or other recovery (whether voluntary, involuntary, by
application of setoff or otherwise) on account of any Loan or Reimbursement
Obligations (other than pursuant to the terms of Sections 4.3, 4.4 and 4.5) in
excess of its pro rata share of payments then or therewith obtained by all
Lenders entitled thereto, such Lender shall purchase from the other Lenders
such participation in the Credit Extensions made by them as shall be necessary
to cause such purchasing Lender to share the excess payment or other recovery
ratably with each of them; provided, however, that if all or any portion of the
excess payment or other recovery is thereafter recovered from such purchasing
Lender, the purchase shall be rescinded and each Lender which has sold a
participation to the purchasing Lender shall repay to the purchasing Lender the
purchase price to the ratable extent of such recovery together with an amount
equal to such selling Lender's ratable share (according to the proportion of
(i) the amount of such selling Lender's required repayment to the purchasing
Lender in respect of such recovery, to (ii) the total amount so recovered from
the purchasing Lender) of any interest or other amount paid or payable by the
purchasing Lender in respect of the total amount so recovered. The Borrowers
agree that any Lender so purchasing a participation from another Lender
pursuant to this Section may, to the fullest extent permitted by law, exercise
all its
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rights of payment (including pursuant to Section 4.9) with respect to such
participation as fully as if such Lender were the direct creditor of the
applicable Borrower in the amount of such participation. If under any
applicable bankruptcy, insolvency or other similar law, any Lender receives a
secured claim in lieu of a setoff to which this Section applies, such Lender
shall, to the extent practicable, exercise its rights in respect of such
secured claim in a manner consistent with the rights of the Lenders entitled
under this Section to share in the benefits of any recovery on such secured
claim.
SECTION 4.9. Setoff. Each Lender shall, upon the
occurrence of any Event of Default described in clauses (b) through (d) of
Section 8.1.9 with respect to any Obligor (other than Immaterial Subsidiaries)
or, with the consent of the Required Lenders, upon the occurrence of any other
Event of Default, to the fullest extent permitted by law, have the right to
appropriate and apply to the payment of the Obligations then due to it from
such Borrower, and (as security for such Obligations) each Borrower hereby
grants to each Lender a continuing security interest in, any and all balances,
credits, deposits, accounts or moneys of such Borrower (general or special,
matured or unmatured and in whatever currencies denominated) then or thereafter
maintained with or otherwise held by such Lender; provided, however, that any
such appropriation and application shall be subject to the provisions of
Section 4.8. Each Lender agrees promptly to notify the applicable Borrower,
the Company and the Administrative Agent after any such setoff and application
made by such Lender; provided, however, that the failure to give such notice
shall not affect the validity of such setoff and application. The rights of
each Lender under this Section are in addition to other rights and remedies
(including other rights of setoff under applicable law or otherwise) which such
Lender may have.
SECTION 4.10. Mitigation. Each Lender agrees that if it
makes any demand for payment under Sections 4.3, 4.4, 4.5 or 4.6, or if any
adoption or change of the type described in Section 4.1 shall occur with
respect to it, it will use reasonable efforts (consistent with its internal
policy and legal and regulatory restrictions and so long as such efforts would
not be disadvantageous to it, as determined in its sole discretion) to
designate a different lending office if the making of such a designation would
reduce or obviate the need for a Borrower to make payments under Section 4.3,
4.4, 4.5 or 4.6, or would eliminate or reduce the effect of any adoption or
change described in Section 4.1.
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SECTION 4.11. Replacement of Lenders. Each Lender
hereby severally agrees as set forth in this Section. If any Lender (a
"Subject Lender") (i) makes demand upon any Borrower for (or if any Borrower is
otherwise required to pay) amounts pursuant to Section 4.3, 4.5 or 4.6, (ii)
gives notice pursuant to Section 4.1 requiring a conversion of such Subject
Lender's LIBO Rate Loans to Base Rate Loans or any change in the basis upon
which interest is to accrue in respect of such Subject Lender's LIBO Rate Loans
or suspending such Lender's obligation to make Loans as, or to convert Loans
into, LIBO Rate Loans, (iii) becomes a Non-Consenting Lender or (vi) becomes a
Non-Funding Lender, the Company may, within 180 days of receipt by such
Borrower of such demand or notice (or the occurrence of such other event
causing any Borrower to be required to pay such compensation) or within 180
days of such Lender becoming a Non-Consenting Lender or a Non-Funding Lender,
as the case may be, give notice (a "Replacement Notice") in writing to the
Agents and such Subject Lender of its intention to replace such Subject Lender
with a financial institution (a "Replacement Lender") designated in such
Replacement Notice. If the Agents shall, in the exercise of their reasonable
discretion and within 30 days of their receipt of such Replacement Notice,
notify the Company and such Subject Lender in writing that the designated
financial institution is satisfactory to the Agents (such consent not being
required where the Replacement Lender is already a Lender), then such Subject
Lender shall, subject to the payment of any amounts due pursuant to Section
4.4, assign, in accordance with Section 11.11.1, all of its Commitments, Loans
and other rights and obligations under this Agreement and all other Loan
Documents (including, without limitation, Reimbursement Obligations) to such
designated financial institution; provided, however, that (i) such assignment
shall be without recourse, representation or warranty and shall be on terms and
conditions reasonably satisfactory to such Subject Lender and such designated
financial institution and (ii) the purchase price paid by such designated
financial institution shall be in the amount of such Subject Lender's Loans and
its Percentage in respect of any Revolving Loan Commitment under which there
are outstanding Reimbursement Obligations of such Reimbursement Obligation,
together with all accrued and unpaid interest and fees in respect thereof, plus
all other amounts (including the amounts demanded and unreimbursed under
Sections 4.3, 4.5 and 4.6), owing to such Subject Lender hereunder. Upon the
effective date of an assignment described above, the designated financial
institution or Replacement Lender shall become a "Lender" for all purposes
under this Agreement and the other Loan Documents.
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ARTICLE V
CONDITIONS TO CREDIT EXTENSIONS
SECTION 5.1. Initial Credit Extension. The obligations
of the Lenders and the Issuers to fund the initial Credit Extension shall be
subject to the prior or concurrent satisfaction of each of the conditions
precedent set forth in this Section 5.1.
SECTION 5.1.1. Resolutions, etc. The Agents shall have
received from each Obligor a certificate, dated the date of the initial Credit
Extension, of its Secretary or Assistant Secretary as to (i) resolutions of its
Board of Directors then in full force and effect authorizing the execution,
delivery and performance of each Loan Document to be executed by it, and (ii)
the incumbency and signatures of those of its officers authorized to act with
respect to each Loan Document executed by it, upon which certificate each Agent
and each Lender may conclusively rely until it shall have received a further
certificate of the Secretary or Assistant Secretary of such Obligor canceling
or amending such prior certificate.
SECTION 5.1.2. Transaction Documents. The Agents shall
have received (with copies for each Lender that shall have expressly requested
copies thereof) copies of fully executed versions of the Transaction Documents,
certified to be true and complete copies thereof by an Authorized Officer of
the Company. The Merger Agreement shall be in full force and effect and shall
not have been modified or waived in any material respect, nor shall there have
been any forbearance to exercise any material rights with respect to any of the
terms or provisions relating to the conditions to the consummation of the
Merger set forth in the Merger Agreement unless otherwise agreed to by the
Required Lenders.
SECTION 5.1.3. Consummation of Merger. The Agents shall
have received evidence satisfactory to each of them that all actions necessary
to consummate the Merger (including the filing of the Certificate of Merger
with the Secretary of State of the State of Delaware) shall have been taken in
accordance with Section 251 of the Delaware General Corporation Law.
SECTION 5.1.4. Closing Date Certificate. Each of the
Agents shall have received, with copies for each Lender, the Closing Date
Certificate, substantially in the form of Exhibit D hereto, dated the date of
the initial Credit Extension and duly executed and delivered by an Authorized
Officer that is the chief executive, financial or accounting (or equivalent)
officer of the Company, in which certificate the Company shall agree and
acknowledge that the statements made therein shall be deemed to be true and
correct
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representations and warranties of the Company made as of such date under this
Agreement, and, at the time such certificate is delivered, such statements
shall in fact be true and correct.
SECTION 5.1.5. Delivery of Notes. The Agents shall have
received, for the account of each Lender that shall have requested a Note not
less than two Business Days prior to the Closing Date, a Note of each
applicable Borrower in respect of each applicable Tranche duly executed and
delivered by such Borrower.
SECTION 5.1.6. Subsidiary Co-Obligation Agreement and
Guaranty. The Agents shall have received the Subsidiary Co-Obligation
Agreement and Guaranty, dated the date hereof, duly executed and delivered by
an Authorized Officer of each U.S. Subsidiary of the Company (other than
Thermadyne Receivables, Inc.) in existence on the date of the initial Credit
Extension (after giving effect to the Merger).
SECTION 5.1.7. Pledge Agreements. The Agents shall have
received executed counterparts of
(a) the Holdco Guaranty and Pledge Agreement,
dated as of the date hereof, duly executed by an
Authorized Officer of Holdco, together with the
certificates evidencing all of the issued and outstanding
shares of Capital Stock of the Company which shall be
pledged pursuant to the Holdco Guaranty and Pledge
Agreement, which certificates shall in each case be
accompanied by undated stock powers duly executed in
blank;
(b) the Company Pledge Agreement, dated as of the
date hereof, duly executed by the Company, together with
(i) the certificates evidencing all of the issued and
outstanding shares of Capital Stock of each Subsidiary of
the Company which shall be pledged pursuant to the
Company Pledge Agreement, which certificates shall in
each case be accompanied by undated stock powers duly
executed in blank and (ii) the Intercompany Note (if any)
duly indorsed to the order of the Administrative Agent;
and
(c) the Subsidiary Pledge Agreement, dated as of
the date hereof, duly executed by an Authorized Officer
of each Subsidiary of the Company (other than Thermadyne
Receivables, Inc.) (after giving effect to the
Transaction) which in turn has any Subsidiary or
Subsidiaries, together with the certificates evidencing
all of the issued and outstanding shares of Capital Stock
of each such indirect Subsidiary of the Company which
shall be pledged pursuant to such Subsidiary Pledge
Agreement,
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which certificates shall in each case be accompanied by
undated stock powers duly executed in blank;
provided, however, that neither the Company nor any of its Subsidiaries shall
be required to pledge in excess of 65% of the outstanding voting stock of any
Non-U.S. Subsidiary. If any securities pledged pursuant to a Pledge Agreement
are uncertificated securities or are held through a securities intermediary,
the Administrative Agent shall have received confirmation and evidence
satisfactory to it that appropriate book entries have been made in the relevant
books or records of a securities intermediary or the issuer of such securities,
as the case may be, or other appropriate steps have been (or will be, in
accordance with Section 7.1.13) taken under applicable law resulting in the
perfection of the security interest granted in favor of the Administrative
Agent in such securities pursuant to the terms of the applicable Pledge
Agreement.
SECTION 5.1.8. Security Agreement. The Agents shall
have received executed counterparts of the Company Security Agreement and the
Subsidiary Security Agreement, dated as of the date hereof, duly executed by
the Company and its U.S. Subsidiaries (other than the Receivables Subsidiary),
together with
(a) executed Uniform Commercial Code financing
statements (Form UCC-1) naming the Company or the
relevant U.S. Subsidiary as the debtor and the
Administrative Agent as the secured party, or other
similar instruments or documents, to be filed under the
Uniform Commercial Code of all jurisdictions as may be
necessary or, in the opinion of the Administrative Agent,
desirable to perfect the security interest of the
Administrative Agent pursuant to the Security Agreements
(provided that perfection of security interests in (i)
motor vehicles shall not be required and (ii) certain
intellectual property owned as of the Closing Date by the
Company or its U.S. Subsidiaries shall be completed in
accordance with Section 7.1.11); and
(b) certified copies of Uniform Commercial Code
Requests for Information or Copies (Form UCC-11), or a
similar search report certified by a party acceptable to
the Agents, dated a date reasonably near to the date of
the initial Credit Extension, listing all effective
financing statements which name the Company or the
relevant U.S. Subsidiary (under its present name and any
previous names) as the debtor and which are filed in the
jurisdictions in which filings are to be made pursuant to
clause (a) above, together with copies of such financing
statements.
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SECTION 5.1.9. Financial Information, etc. The Agents
shall have received, with counterparts for each Lender,
(a) the audited consolidated balance sheets of
Thermadyne and its Subsidiaries as at December 31, 1995,
December 31, 1996 and December 31, 1997 and the audited
consolidated statements of operations, cash flows and
shareholders' equity for the fiscal years ended December
31, 1995, December 31, 1996 and December 31, 1997 and an
unaudited consolidated balance sheet of Thermadyne and
its Subsidiaries as at March 31, 1998 and unaudited
consolidated statements of income, cash flows and
stockholders' equity for the three months then ended
(collectively, the "Base Financial Statements"); and
(b) a pro forma consolidated balance sheet of the
Company and its Subsidiaries, as of March 31, 1998 (the
"Pro Forma Balance Sheet"), certified by an Authorized
Officer that is the chief financial or accounting officer
of the Company, giving effect to the consummation of the
Transaction and reflecting the proposed legal and capital
structure of the Company, which legal and capital
structure shall be, in all material respects, as
described in the Proxy Statement or otherwise reasonably
satisfactory to the Syndication Agent.
SECTION 5.1.10. Solvency, etc. The Agents shall have
received an opinion letter from Valuation Research Corporation, addressed to
the Agents and each Lender and dated as of the date of the initial Credit
Extensions, as to the solvency of the Company and its Subsidiaries on a
consolidated basis immediately after giving effect to the Transaction and the
initial Credit Extensions, such opinion letter to be in form, substance and
scope satisfactory to the Agents.
SECTION 5.1.11. Holdco Equity Contribution, Asset
Contribution, Discount Debentures Issuance, Closing Date Dividend/Intercompany
Loan and Subordinated Debt Issuance. The Agents shall have received evidence
satisfactory to each of them that (i) Mergerco shall have received not less
than $140,000,000 from the Purchasers pursuant to the Holdco Equity
Contribution, and not less than $95,000,000 in gross cash proceeds from the
Discount Debentures Issuance, (ii) Thermadyne shall have made the Asset
Contribution to the Company, (iii) the Closing Date Dividend and/or
Intercompany Loan shall have been made and (iv) the Company shall have received
not less than $207,000,000 in gross cash proceeds from the Subordinated Debt
Issuance.
SECTION 5.1.12. Litigation. There shall exist no
pending or threatened material litigation, proceedings or investigations which
(x) could reasonably be expected to have a
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Material Adverse Effect or (y) could reasonably be expected to materially,
adversely affect the consummation of the Transaction.
SECTION 5.1.13. Material Adverse Change. Except as
disclosed in Schedule 3.10 to the Merger Agreement, no facts, events or
circumstances constituting or having a Material Adverse Effect shall have
occurred since December 31, 1997.
SECTION 5.1.14. Reliance Letters. The Agents shall,
unless otherwise agreed, have received reliance letters, dated the date of the
initial Credit Extension and addressed to each Lender and each Agent, in
respect of each of the legal opinions (other than "disclosure" and other
similar opinions) delivered in connection with the Transaction.
SECTION 5.1.15. Opinions of Counsel. The Agents shall
have received opinions, dated the date of the initial Credit Extension and
addressed to the Agents and all Lenders from
(a) Davis Polk & Wardwell, special New York
counsel to each of the Obligors, in substantially the
form of Exhibit K-1 hereto;
(b) Goodell, Stratton, Edmonds & Palmer L.L.P.,
Ogden, Newell & Welch, Winer and Bennett, Jones, Day,
Reavis & Pogue and Weil, Gotshal & Manges LLP, special
local counsel to the Company, in substantially the form
of Exhibit K-2 hereto;
(c) Stephanie N. Josephson, General Counsel of
the Company, in substantially the form of Exhibit K-3
hereto; and
(d) Deacon Graham & Jones, Osler, Hoskin &
Harcourt, Bonelli E Associati and Ward Hadaway, special
foreign counsel to the Company, in substantially the form
of Exhibit K-4 hereto.
SECTION 5.1.16. Insurance. The Agents shall have
received satisfactory evidence of the existence of insurance in compliance with
Section 7.1.4 (including all endorsements included therein), and the
Administrative Agent shall be named additional insured or loss payee, on behalf
of the Lenders, pursuant to documentation reasonably satisfactory to the Agents
and the Company.
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SECTION 5.1.17. Perfection Certificate. The
Administrative Agent shall have received the Perfection Certificate, dated as
of the date of the initial Credit Extension, duly executed and delivered by an
Authorized Officer of the Company.
SECTION 5.1.18. Closing Fees, Expenses, etc. The Agents
and the Arranger shall have received, each for its own respective account, or,
in the case of the Administrative Agent, for the account of each Lender, as the
case may be, all fees, costs and expenses due and payable pursuant to Sections
3.3 and 11.3, if then invoiced.
SECTION 5.1.19. Satisfactory Legal Form. All documents
executed or submitted pursuant hereto by or on behalf of the Company or any of
its Subsidiaries or any other Obligors shall be reasonably satisfactory in form
and substance to the Agents and their counsel; the Agents and their counsel
shall have received all information, approvals, opinions, documents or
instruments that the Agents or their counsel shall have reasonably requested.
SECTION 5.2. All Credit Extensions. The obligation of
each Lender and, if applicable, each Issuer, to make any Credit Extension
(including its initial Credit Extension) shall be subject to the satisfaction
of each of the conditions precedent set forth in this Section 5.2.
SECTION 5.2.1. Compliance with Warranties, No Default,
etc. Both before and after giving effect to any Credit Extension the following
statements shall be true and correct:
(a) the representations and warranties set forth
in Article VI and in each other Loan Document shall, in
each case, be true and correct in all material respects
with the same effect as if then made (unless stated to
relate solely to an earlier date, in which case such
representations and warranties shall be true and correct
in all material respects as of such earlier date);
(b) (i) in the case of U.S. Dollar Revolving
Loans, Swing Line Loans or U.S. Dollar Letters of Credit
(x) the sum of (A) the aggregate outstanding principal
amount of all U.S. Dollar Revolving Loans and Swing Line
Loans and (B) the U.S. Dollar Letter of Credit
Outstandings will not exceed the Revolving Loan U.S.
Dollar Commitment Amount less the excess, if any, of the
U.S. Dollar Equivalent of all Foreign Currency Loans
outstanding and the Foreign Currency Letter of Credit
Outstandings over the Total Revolving Loan Foreign
Currency Commitment Amount, (y) the aggregate outstanding
principal amount of all Swing Line Loans will not exceed
the Swing Line Loan Commitment Amount, and (z) the U.S.
Dollar Letter of
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Credit Outstandings will not exceed the U.S. Dollar Letter
of Credit Commitment Amount;
(ii) in the case of any Committed Foreign
Currency Revolving Loans made or Foreign Currency Letters
of Credit issued under any Revolving Loan Foreign
Currency Commitment, (x) the U.S. Dollar Equivalent of
the sum of (A) the aggregate outstanding principal amount
of all Committed Foreign Currency Revolving Loans made
under such Revolving Loan Foreign Currency Commitment and
(B) the Foreign Currency Letter of Credit Outstandings in
respect of such Commitment shall not exceed the Revolving
Loan Foreign Currency Commitment Amount in respect of
such Revolving Loan Foreign Currency Commitment, (y) the
U.S. Dollar Equivalent of the sum of (A) the aggregate
outstanding principal amount of all Foreign Currency
Revolving Loans and (B) the aggregate Foreign Currency
Letter of Credit Outstandings shall not exceed the
Revolving Loan Foreign Currency Limit and (z) the sum of
(A) the aggregate outstanding principal amount of all
Revolving Loans and Swing Line Loans and (B) the Letter
of Credit Outstandings (all Revolving Loans and Letter of
Credit Outstandings denominated in Foreign Currencies
included in such calculation at the U.S. Dollar
Equivalent thereof) shall not exceed the Total Revolving
Loan Commitment Amount;
(iii) in the case of Uncommitted Foreign Currency
Revolving Loans, (x) the U.S. Dollar Equivalent of the
sum of (A) the aggregate principal amount of all Foreign
Currency Revolving Loans and (B) the Foreign Currency
Letter of Credit Outstandings shall not exceed the
Revolving Loan Foreign Currency Limit and (y) the sum of
(A) the aggregate outstanding principal amount of all
Revolving Loans and Swing Line Loans and (B) the Letter
of Credit Outstandings (all Revolving Loans and Letter of
Credit Outstandings denominated in Foreign Currencies
included in such calculation at the U.S. Dollar
Equivalent thereof) shall not exceed the Total Revolving
Loan Commitment Amount; and
(c) no Default shall have then occurred and be
continuing.
SECTION 5.2.2. Credit Extension Request. Except with
respect to the deemed issuance of the Existing Letters of Credit on the Closing
Date, the Administrative Agent shall have received a Borrowing Request if Loans
are being requested, or an Issuance Request if a Letter of Credit is being
requested or extended. Each of the delivery of a Borrowing Request or Issuance
Request and the acceptance by any Borrower of the proceeds of any Credit
Extension shall constitute a representation and warranty by the Company that on
the date of such Credit Extension (both immediately before and after giving
effect thereto and the application of the proceeds thereof) the statements made
in Section 5.2.1 are true and correct.
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SECTION 5.3. First Borrowing by Each Foreign Subsidiary.
The obligation of any Lender to make a Loan on the occasion of the first
Borrowing by any Foreign Borrower (other than the Initial Foreign Borrowers) is
subject to the satisfaction of the following further conditions:
(a) receipt by the Administrative Agent for the
account of each Lender with an applicable Revolving Loan
Foreign Currency Commitment that shall have requested a
Note not less than two Business Days prior to the date of
such Borrowing of a duly executed Note of such Foreign
Borrower, dated on or before the date of such Borrowing,
complying with the provisions of Section 2.9;
(b) receipt by the Administrative Agent of an
opinion of counsel for such Foreign Borrower acceptable
to the Administrative Agent, substantially in the form of
Exhibit K-4 hereto and covering such additional matters
relating to the transactions contemplated hereby as the
Required Lenders may reasonably request; and
(c) receipt by the Administrative Agent of a duly
executed Revolving Loan Foreign Currency Commitment
Addendum or Uncommitted Foreign Currency Revolving
Borrowing Addendum, together with all documents which it
may reasonably request relating to the existence of such
Foreign Borrower, its corporate authority for and the
validity of its entry into this Agreement and the other
Loan Documents to which it is a party, and any other
matters relevant thereto, all in form and substance
satisfactory to the Administrative Agent.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
In order to induce the Lenders, the Issuers and the
Agents to enter into this Agreement and to make Credit Extensions hereunder,
the Company represents and warrants unto the Agents, each Issuer and each
Lender as set forth in this Article VI.
SECTION 6.1. Organization, etc. The Company and each of
its Subsidiaries (a) is validly organized and existing and in good standing to
the extent required under the laws of the jurisdiction of its incorporation,
except to the extent that the failure to be in good
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standing would not reasonably be expected to have a Material Adverse Effect,
(b) is duly qualified to do business and is in good standing to the extent
required under the laws of each jurisdiction where the nature of its business
requires such qualification, except to the extent that the failure to qualify
would not reasonably be expected to result in a Material Adverse Effect, and
(c) has full power and authority and holds all requisite governmental licenses,
permits and other approvals to (i) enter into and perform its obligations in
connection with the Transaction and its Obligations under this Agreement and
each other Loan Document to which it is a party and (ii) own and hold under
lease its property and to conduct its business substantially as currently
conducted by it except, in the case of this clause (b)(ii), where the failure
to do so could not reasonably be expected to result in a Material Adverse
Effect.
SECTION 6.2. Due Authorization, Non-Contravention, etc.
The execution, delivery and performance by the Company of this Agreement and
each other Loan Document executed or to be executed by it, and the execution,
delivery and performance by each other Obligor of each Loan Document executed
or to be executed by it and the Company's and, where applicable, each such
other Obligor's participation in the consummation of the Transaction, are
within the Company's and each such Obligor's powers, have been duly authorized
by all necessary action, and do not
(a) contravene the Company's or any such
Obligor's Organic Documents;
(b) contravene any contractual restriction (other
than any contractual restriction that shall have been
waived on or prior to the Closing Date), law or
governmental regulation or court decree or order binding
on or affecting the Company or any such Obligor, where
such contravention, individually or in the aggregate,
could reasonably be expected to have a Material Adverse
Effect; or
(c) result in, or require the creation or
imposition of, any Lien on any of the Company's or any
other Obligor's properties, except pursuant to the terms
of a Loan Document.
SECTION 6.3. Government Approval, Regulation, etc. No
authorization or approval or other action by, and no notice to or filing with,
any governmental authority or regulatory body or other Person, is required for
the due execution, delivery or performance by the Company or any other Obligor
of this Agreement or any other Loan Document to which it is a party, except as
have been duly obtained or made and are in full force and effect or those which
the failure to obtain or make could not reasonably be expected to have a
Material Adverse Effect. All authorizations, approvals and other actions by,
and all notices to and filings with, any governmental authority or regulatory
body that are required
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pursuant to the Merger Agreement in connection with the Transaction have been
duly obtained or made and are in full force and effect, except those which the
failure to obtain or make could not reasonably be expected to have a Material
Adverse Effect. Neither the Company nor any other Obligor nor any of the
Company's Subsidiaries, is an "investment company" within the meaning of the
Investment Company Act of 1940, as amended, or a "holding company", or a
"subsidiary company" of a "holding company", or an "affiliate" of a "holding
company" or of a "subsidiary company" of a "holding company", within the
meaning of the Public Utility Holding Company Act of 1935, as amended.
SECTION 6.4. Validity, etc. This Agreement constitutes,
and each other Loan Document executed by any Borrower will, on the due
execution and delivery thereof, constitute, the legal, valid and binding
obligations of each Borrower party thereto, enforceable in accordance with
their respective terms; and each Loan Document executed pursuant hereto by each
other Obligor will, on the due execution and delivery thereof by such Obligor,
be the legal, valid and binding obligation of such Obligor enforceable in
accordance with its terms, in each case with respect to this Section 6.4
subject to the effects of bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws relating to or affecting
creditors' rights generally, general equitable principles (whether considered
in a proceeding in equity or at law) and an implied covenant of good faith and
fair dealing.
SECTION 6.5. Financial Information. The Company has
delivered to the Agents and each Lender copies of (i) the Base Financial
Statements and (ii) the Pro Forma Balance Sheet. Each of the financial
statements described above has been prepared in accordance with GAAP
consistently applied (in the case of clause (i)) and, in the case of clause
(ii), on a basis substantially consistent with the basis used to prepare the
financial statements referred to in clause (i), and (in the case of clause (i))
present fairly the consolidated financial condition of the corporations covered
thereby as at the date thereof and the results of their operations for the
periods then ended and (in the case of clause (ii)) include appropriate pro
forma adjustments to give pro forma effect to the Transaction.
SECTION 6.6. No Material Adverse Effect. Since December
31, 1997, no facts, events or conditions have occurred which constitute a
Material Adverse Effect.
SECTION 6.7. Litigation, Labor Controversies, etc.
There is no pending or, to the knowledge of the Company, threatened litigation,
action, proceeding or governmental investigation affecting any Obligor, or any
of their respective properties, businesses, assets or revenues, which could
reasonably be expected to result in a Material Adverse Effect except as
disclosed in Item 6.7 ("Litigation") of the Disclosure Schedule. No
development
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has occurred in any litigation, action, labor controversy, arbitration or
governmental investigation or other proceeding disclosed in Item 6.7
("Litigation") of the Disclosure Schedule which could reasonably be expected to
have a Material Adverse Effect.
SECTION 6.8. Subsidiaries. The Company has only those
Subsidiaries (i) which are identified in Item 6.8 ("Existing Subsidiaries") of
the Disclosure Schedule, or (ii) which are permitted to have been acquired in
accordance with Section 7.2.5 or 7.2.8. Each Foreign Borrower is a
wholly-owned Subsidiary of the Company.
SECTION 6.9. Ownership of Properties. Except to the
extent that the failure to do so could not reasonably be expected to have a
Material Adverse Effect, the Company and each of its Subsidiaries owns good
title to, or leasehold interests in, all of its properties and assets (other
than insignificant properties and assets), real and personal, tangible and
intangible, of any nature whatsoever (including patents, trademarks, trade
names, service marks and copyrights), free and clear of all Liens or material
claims (including material infringement claims with respect to patents,
trademarks, copyrights and the like), except as permitted pursuant to Section
7.2.3.
SECTION 6.10. Taxes. Each of Holdco, the Company and
each of their respective Subsidiaries has filed all federal and other material
tax returns required by law to have been filed by it and has paid all material
taxes and governmental charges thereby shown to be owing, except any such taxes
or charges which are being contested in good faith by appropriate proceedings
and for which adequate reserves in accordance with GAAP shall have been set
aside on its books.
SECTION 6.11. Pension and Welfare Plans. During the
twelve-consecutive-month period prior to the date of the execution and delivery
of this Agreement, no steps have been taken to terminate any Pension Plan, and
no contribution failure has occurred with respect to any Pension Plan
sufficient to give rise to a Lien under section 302(f) of ERISA, which, in
either case, is reasonably expected to lead to a liability to such Pension Plan
in excess of $10,000,000. No condition exists or event or transaction has
occurred with respect to any Pension Plan which could reasonably be expected to
result in the incurrence by the Company or any member of the Controlled Group
of any material liability, fine or penalty other than such condition, event or
transaction which would not reasonably be expected to have a Material Adverse
Effect. Except as disclosed in Item 6.11 ("Employee Benefit Plans") of the
Disclosure Schedule or otherwise approved by the Agents (such approval not to
be unreasonably withheld or delayed), since the date of the last financial
statement the Company has not increased any contingent liability with respect
to any post-retirement benefit under a
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Welfare Plan, other than liability for continuation coverage described in Part
6 of Subtitle B of Title I of ERISA, except as would not have Material Adverse
Effect.
SECTION 6.12. Environmental Warranties. Except as set
forth in Item 6.12 ("Environmental Matters") of the Disclosure Schedule or as,
individually or in the aggregate, could not reasonably be expected to have a
Material Adverse Effect:
(a) all facilities and property owned or leased
by the Company or any of its Subsidiaries are in
compliance with all Environmental Laws;
(b) there are no pending or threatened
(i) written claims, complaints, notices or
requests for information received by the Company
or any of its Subsidiaries with respect to any
alleged violation of any Environmental Law, or
(ii) written complaints, notices or
inquiries to the Company or any of its
Subsidiaries regarding potential liability under
any Environmental Law;
(c) to the knowledge of the Company, there have
been no Releases of Hazardous Materials at, on or under
any property now or previously owned or leased by the
Company or any of its Subsidiaries;
(d) the Company and its Subsidiaries have been
issued and are in compliance with all permits,
certificates, approvals, licenses and other
authorizations relating to environmental matters and
necessary or desirable for their businesses;
(e) no property now or, to the best knowledge of
the Company, previously owned or leased by the Company or
any of its Subsidiaries is listed or, to the knowledge of
the Company or any of its Subsidiaries, proposed for
listing (with respect to owned property only) on the
National Priorities List pursuant to CERCLA, on the
CERCLIS or on any similar state list of sites requiring
investigation or clean-up;
(f) to the best knowledge of the Company, there
are no underground storage tanks, active or abandoned,
including petroleum storage tanks, on or under any
property now or previously owned or leased by the Company
or any of its Subsidiaries;
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(g) to the knowledge of the Company, the Company
and its Subsidiaries have not directly transported or
directly arranged for the transportation of any Hazardous
Material to any location (i) which is listed or to the
knowledge of the Company or any of its Subsidiaries,
proposed for listing on the National Priorities List
pursuant to CERCLA, on the CERCLIS or on any similar
state list, or (ii) which is the subject of federal,
state or local enforcement actions or other
investigations;
(h) to the knowledge of the Company, there are no
polychlorinated biphenyls or friable asbestos present in
a manner or condition requiring remedial action to comply
with any Environmental Law at any property now or
previously owned or leased by the Company or any
Subsidiary of the Company; and
(i) to the knowledge of the Company, no
conditions exist at, on or under any property now or
previously owned or leased by the Company or any of its
Subsidiaries which, with the passage of time, or the
giving of notice or both, would give rise to liability to
the Company or any of its Subsidiaries under any
Environmental Law.
SECTION 6.13. Regulations G, U and X. Neither the
Company nor Holdco is engaged in the business of extending credit for the
purpose of purchasing or carrying margin stock, and no proceeds of any Credit
Extension will be used in violation of F.R.S. Board Regulation G, U or X.
Terms for which meanings are provided in F.R.S. Board Regulation G, U or X or
any regulations substituted therefor, as from time to time in effect, are used
in this Section with such meanings.
SECTION 6.14. Accuracy of Information. All material
factual information concerning the financial condition, operations or prospects
of Holdco, the Company and their respective Subsidiaries heretofore or
contemporaneously furnished by or on behalf of the Company in writing to the
Agents, the Arranger, any Issuer or any Lender for purposes of or in connection
with this Agreement or any transaction contemplated hereby or with respect to
the Transaction is, and all other such factual information hereafter furnished
by or on behalf of the Company or any of its Subsidiaries to the Agents, the
Arranger, any Issuer or any Lender will be, taken as a whole, true and accurate
in every material respect on the date as of which such information is dated or
certified and such information is not, or shall not be, taken as a whole, as
the case may be, incomplete by omitting to state any fact necessary to make
such information not materially misleading.
Any term or provision of this Section to the contrary
notwithstanding, insofar as any of the factual information described above
includes assumptions, estimates, projections or
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opinions, no representation or warranty is made herein with respect thereto;
provided, however, that to the extent any such assumptions, estimates,
projections or opinions are based on factual matters, the Company has reviewed
such factual matters and nothing has come to its attention in the context of
such review which would lead it to believe that such factual matters were not
or are not true and correct in all material respects or that such factual
matters omit to state any material fact necessary to make such assumptions,
estimates, projections or opinions not misleading in any material respect.
SECTION 6.15. Solvency. The Transaction (including the
incurrence of the initial Credit Extensions hereunder, the incurrence by the
Borrowers of the Indebtedness represented by the Subordinated Notes, the
execution and delivery by the Subsidiary Co-Obligors of the Subsidiary
Co-Obligation Agreement and Guaranty and the application of the proceeds of the
Credit Extensions) will not involve or result in any fraudulent transfer or
fraudulent conveyance under the provisions of Section 548 of the Bankruptcy
Code (11 U.S.C. Section 101 et seq., as from time to time hereafter amended,
and any successor or similar statute) or any applicable state law respecting
fraudulent transfers or fraudulent conveyances. On the Closing Date, after
giving effect to the Transaction, the Company is Solvent.
ARTICLE VII
COVENANTS
SECTION 7.1. Affirmative Covenants. The Company agrees
with the Agents, each Issuer and each Lender that, until all Commitments have
terminated and all Obligations have been paid and performed in full, the
Company will perform the obligations set forth in this Section 7.1.
SECTION 7.1.1. Financial Information, Reports, Notices,
etc. The Company will furnish, or will cause to be furnished, to each Lender
and each Agent copies of the following financial statements, reports, notices
and information:
(a) as soon as available and in any event within
60 days after the end of each of the first three Fiscal
Quarters of each Fiscal Year of the Company (or, if the
Company is required to file such information on a Form
10-Q with the Securities and Exchange Commission,
promptly following such filing), a consolidated balance
sheet of the Company and its Subsidiaries as of the end
of such Fiscal Quarter, together with the related
consolidated statement of operations for such Fiscal
Quarter and for the period commencing at the end of the
previous Fiscal Year and ending with the end
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of such Fiscal Quarter and the related consolidated
statement of cash flows for the period commencing at the
end of the previous Fiscal Year and ending with the end
of such Fiscal Quarter (it being understood that the
foregoing requirement may be satisfied by delivery of the
Company's report to the Securities and Exchange
Commission on Form 10-Q, if any), certified by an
Authorized Officer that is the president, chief executive
officer, treasurer, assistant treasurer, controller or
chief financial officer of the Company;
(b) as soon as available and in any event within
105 days after the end of each Fiscal Year of the Company
(or, if the Company is required to file such information
on a Form 10-K with the Securities and Exchange
Commission, promptly following such filing), a copy of
the annual audit report for such Fiscal Year for the
Company and its Subsidiaries, including therein a
consolidated balance sheet for the Company and its
Subsidiaries as of the end of such Fiscal Year, together
with the related consolidated statements of operations
and cash flows for such Fiscal Year (it being understood
that the foregoing requirement may be satisfied by
delivery of the Company's report to the Securities and
Exchange Commission on Form 10-K, if any), in each case
certified (without any Impermissible Qualification) by a
"Big Six" firm of independent public accountants,
together with a certificate from such accountants as to
whether, in making the examination necessary for the
signing of such annual report by such accountants, they
have become aware of any Default in respect of any term,
covenant, condition or other provision of this Agreement
(including any Default in respect of the financial
covenants contained in Section 7.2.4) that relates to
accounting matters that has occurred and is continuing
or, if in the opinion of such accounting firm, any such
Default has occurred and is continuing, a statement as to
the nature thereof;
(c) together with the delivery of the financial
information required pursuant to clauses (a) and (b), a
Compliance Certificate, in substantially the form of
Exhibit E-1, executed by an Authorized Officer that is
the president, chief executive officer, assistant
treasurer, treasurer, controller or chief financial
officer of the Company, showing (in reasonable detail and
with appropriate calculations and computations in all
respects satisfactory to the Agents) compliance with the
financial covenants set forth in Section 7.2.4;
(d) promptly and in any event within seven
Business Days after obtaining knowledge of the occurrence
of any Default, if such Default is then continuing, a
statement of an Authorized Officer that is the president,
chief executive officer, treasurer, assistant treasurer,
controller or chief financial officer of the Company
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setting forth details of such Default and the action
which the Company has taken or proposes to take with
respect thereto;
(e) promptly and in any event within five Business
Days after (x) the occurrence of any development with
respect to any litigation, action or proceeding described
in Section 6.7 which could reasonably be expected to have
a Material Adverse Effect or (y) the commencement of any
litigation, action or proceeding of the type described in
Section 6.7, notice thereof and of the action which the
Company has taken or proposes to take with respect
thereto;
(f) promptly after the sending or filing thereof,
copies of all reports and registration statements (other
than exhibits thereto and any registration statement on
Form S-8 or its equivalent) which the Company or any of
its Subsidiaries files with the Securities and Exchange
Commission or any national securities exchange;
(g) as soon as practicable after the chief
financial officer or the chief executive officer of the
Company or a member of the Company's Controlled Group
becomes aware of (i) formal steps in writing to terminate
any Pension Plan or (ii) the occurrence of any event with
respect to a Pension Plan which, in the case of (i) or
(ii), could reasonably be expected to result in a
contribution to such Pension Plan by (or a liability to)
the Company or a member of the Company's Controlled Group
in excess of $10,000,000, (iii) the failure to make a
required contribution to any Pension Plan if such failure
is sufficient to give rise to a Lien under section 302(f)
of ERISA in an amount in excess of $10,000,000, (iv) the
taking of any action with respect to a Pension Plan which
could reasonably be expected to result in the requirement
that the Company furnish a bond to the PBGC or such
Pension Plan in an amount in excess of $10,000,000 or (v)
any material increase in the contingent liability of the
Company with respect to any post-retirement Welfare Plan
benefit as a result of a change in the level or scope of
benefits thereunder, notice thereof and copies of all
documentation relating thereto;
(h) within 20 days after the end of each calendar
month, a certificate, in substantially the form of
Exhibit E-3, executed by an Authorized Officer that is
the president, chief executive officer, treasurer,
assistant treasurer, controller or chief financial
officer of the Company showing the U.S. Dollar Equivalent
of the aggregate outstanding principal amount of all
Foreign Currency Revolving Loans, as of the end of such
month, for (i) all Foreign Borrowers, taken as a whole,
and (ii) each Foreign Borrower, individually;
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(i) promptly after the execution and delivery
thereof, copies of all material documents and instruments
relating to any Receivables Transactions (including
without limitation copies of any material amendments,
supplements or other modifications thereto); and
(j) such other information respecting the
condition or operations, financial or otherwise, of the
Company or any of its Subsidiaries as any Lender through
the Administrative Agent may from time to time reasonably
request.
SECTION 7.1.2. Compliance with Laws, etc. The Company
will, and will cause each of its Subsidiaries to, comply in all material
respects with all applicable laws, rules, regulations and orders, such
compliance to include (without limitation):
(a) except as permitted under Section 7.2.8, the
maintenance and preservation of its corporate existence
and qualification as a foreign corporation, except where
the failure to so qualify could not reasonably be
expected to have a Material Adverse Effect; and
(b) the payment, before the same become
delinquent, of all material taxes, assessments and
governmental charges imposed upon it or upon its
property, except to the extent being contested in good
faith by appropriate proceedings and for which adequate
reserves in accordance with GAAP shall have been set
aside on its books.
SECTION 7.1.3. Maintenance of Properties. Except to the
extent that the failure to do so could not reasonably be expected to have a
Material Adverse Effect, the Company will, and will cause each of its
Subsidiaries to, maintain, preserve, protect and keep its properties (other
than insignificant properties) in good repair, working order and condition
(ordinary wear and tear excepted), and make necessary and proper repairs,
renewals and replacements so that its business carried on in connection
therewith may be properly conducted at all times unless the Company determines
in good faith that the continued maintenance of any of its properties is no
longer economically desirable.
SECTION 7.1.4. Insurance. The Company will, and will
cause each of its Subsidiaries to, maintain or cause to be maintained with
responsible insurance companies insurance with respect to its properties and
business against such casualties and contingencies and of such types and in
such amounts as is customary in the case of similar businesses and with such
provisions and endorsements as the Agents may reasonably request and will, upon
request of the Agents, furnish to the Agents and each Lender a certificate of
an Authorized
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Officer of the Company setting forth the nature and extent of all insurance
maintained by the Company and its Subsidiaries in accordance with this Section.
SECTION 7.1.5. Books and Records. The Company will, and
will cause each of its Subsidiaries to, keep books and records which accurately
reflect in all material respects all of its business affairs and transactions
and permit the Agents, each Issuer and each Lender or any of their respective
representatives, at reasonable times and intervals, and upon reasonable notice,
but, unless an Event of Default shall have occurred and be continuing, not more
frequently than once in each Fiscal Year, to visit its offices, to discuss its
financial matters with its officers and, after notice to the Company and
provision of an opportunity for the Company to participate in such discussion,
its independent public accountant (and the Company hereby authorizes such
independent public accountant to discuss the Company's financial matters with
each Issuer and each Lender or its representatives whether or not any
representative of the Company is present, so long as the Company has been
afforded a reasonable opportunity to be present) and to examine, and photocopy
extracts from, any of its books or other corporate records. The cost and
expense of each such visit shall be borne by the applicable Agent or Lender.
SECTION 7.1.6. Environmental Covenant. The Company will
and will cause each of its Subsidiaries to,
(a) use and operate all of its facilities and
properties in compliance with all Environmental Laws,
keep all necessary permits, approvals, certificates,
licenses and other authorizations relating to
environmental matters in effect and remain in compliance
therewith, and handle all Hazardous Materials in
compliance with all applicable Environmental Laws, in
each case except where the failure to comply with the
terms of this clause would not reasonably be expected to
have a Material Adverse Effect;
(b) promptly notify the Agents and provide copies
of all written claims, complaints, notices or inquiries
relating to the condition of its facilities and
properties or compliance with Environmental Laws which
relate to environmental matters which would have, or
would reasonably be expected to have, a Material Adverse
Effect, and promptly cure and have dismissed with
prejudice any material actions and proceedings relating
to compliance with Environmental Laws, except to the
extent being diligently contested in good faith by
appropriate proceedings and for which adequate reserves
in accordance with GAAP have been set aside on its books;
and
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(c) provide such information and certifications
which the Agents may reasonably request from time to time
to evidence compliance with this Section 7.1.6.
SECTION 7.1.7. Future Subsidiaries. Upon any Person
(other than the Receivables Subsidiaries) becoming, after the Closing Date, a
Subsidiary of the Company, or (in the case of clause (b) below only) upon the
Company or any U.S. Subsidiary (other than the Receivables Subsidiaries)
acquiring additional Capital Stock of any existing Subsidiary, the Company
shall notify the Agents of such acquisition, and
(a) the Company shall promptly cause any such
Subsidiary that is a U.S. Subsidiary to execute and
deliver to the Administrative Agent, with counterparts
for each Lender, a supplement to the Subsidiary
Co-Obligation Agreement and Guaranty and a supplement to
the Subsidiary Security Agreement (and, if such
Subsidiary owns any real property, to the extent required
by clause (b) of Section 7.1.8, a Mortgage), together
with Uniform Commercial Code financing statements (Form
UCC-1) executed and delivered by such U.S. Subsidiary
naming such U.S. Subsidiary as the debtor and the
Administrative Agent as the secured party, or other
similar instruments or documents, in appropriate form for
filing under the Uniform Commercial Code and any other
applicable recording statutes, in the case of real
property, of all jurisdictions as may be necessary or, in
the reasonable opinion of the Administrative Agent,
desirable to perfect the security interest of the
Administrative Agent pursuant to the Subsidiary Security
Agreement or a Mortgage, as the case may be (other than
the perfection of security interests in motor vehicles);
and
(b) the Company shall promptly deliver, or cause
to be delivered, to the Administrative Agent under a
Pledge Agreement (or a supplement thereto) certificates
(if any) representing all of the issued and outstanding
shares of Capital Stock of such Subsidiary owned by the
Company or any U.S. Subsidiary of the Company, as the
case may be, along with undated stock powers for such
certificates, executed in blank, or, if any securities
subject thereto are uncertificated securities, the
Administrative Agent shall have obtained "control" (as
defined in the Uniform Commercial Code applicable to such
securities) over such securities, or other appropriate
steps shall have been taken under applicable law
resulting in the perfection of the security interest
granted in such securities in favor of the Administrative
Agent pursuant to the terms of such Pledge Agreement;
together, in each case, with such opinions, in form and substance and from
counsel satisfactory to the Agents, as the Agents may reasonably require;
provided, however, that notwithstanding the foregoing, no Non-U.S. Subsidiary
shall be required to execute and
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deliver a Mortgage, a supplement to the Subsidiary Co-Obligation Agreement and
Guaranty, a supplement to the Security Agreement or a supplement to a Pledge
Agreement, nor will the Company or any Subsidiary of the Company be required to
deliver in pledge pursuant to a Pledge Agreement in excess of 65% of the total
combined voting power of all classes of Capital Stock of a Non-U.S. Subsidiary
entitled to vote.
SECTION 7.1.8. Future Leased Property and Future
Acquisitions of Real Property; Future Acquisition of Other Property. (a)
Prior to entering into any new lease of real property or renewing any existing
lease of real property following the Closing Date, the Company shall, and shall
cause each of its U.S. Subsidiaries to, use its (and their) commercially
reasonable efforts (which shall not require the expenditure of cash or the
making of any material concessions under the relevant lease) to deliver to the
Administrative Agent a Waiver executed by the lessor of any real property that
is to be leased by the Company or such U.S. Subsidiary for a term in excess of
one year in any state which by statute grants such lessor a "landlord's" (or
similar) Lien which is superior to the Administrative Agent's, to the extent
the value of any personal property of the Company or its U.S. Subsidiaries to
be held at such leased property exceeds (or it is anticipated that the value of
such personal property will, at any point in time during the term of such
leasehold term, exceed) $6,000,000.
(b) In the event that the Company or any of its U.S.
Subsidiaries shall acquire any real property having a value as determined in
good faith by the Administrative Agent in excess of $3,000,000 in the
aggregate, the Company or the applicable U.S. Subsidiary shall, promptly after
such acquisition, execute a Mortgage and provide the Administrative Agent with
(i) evidence of the completion (or satisfactory arrangements for the
completion) of all recordings and filings of such Mortgage as may be necessary
or, in the reasonable opinion of the Administrative Agent, desirable
effectively to create a valid, perfected, first priority Lien, subject to the
Liens permitted by Section 7.2.3, against the properties purported to be
covered thereby, (ii) mortgagee's title insurance policies in favor of the
Agents and the Lenders in amounts and in form and substance and issued by
insurers, reasonably satisfactory to the Agents, with respect to the property
purported to be covered by such Mortgage, insuring that title to such property
is indefeasible and that the interests created by the Mortgage constitute valid
first Liens thereon free and clear of all defects and encumbrances other than
as permitted by Section 7.2.3 or as approved by the Agents, and such policies
shall also include, to the extent available, a revolving credit endorsement and
such other endorsements as the Agents shall reasonably request and shall be
accompanied by evidence of the payment in full of all premiums thereon, and
(iii) such other approvals, opinions, or documents as the Agents may reasonably
request.
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(c) In accordance with the terms and provisions of the
Loan Documents, the Company and each U.S. Subsidiary (other than the
Receivables Subsidiary) shall provide the Agents with evidence of all
recordings and filings as may be necessary or, in the reasonable opinion of the
Administrative Agent, desirable to create a valid, perfected, first priority
Lien, subject to the Liens permitted by Section 7.2.3, against all property
acquired after the Closing Date (excluding motor vehicles and (except to the
extent required under clause (b) of Section 7.1.8) leases of and fee interests
in real property) and not otherwise subject to Sections 7.1.11 and 7.1.12.
SECTION 7.1.9. Use of Proceeds, etc. The Borrowers
shall
(a) apply the proceeds of the Loans
(i) in the case of the Term Loans and the
Revolving Loans made on the Closing Date, to pay,
in part, through the Closing Date Dividend and/or
the Intercompany Loan to Holdco, the cash portion
of the obligations of Holdco in connection with
the Transaction, to refinance certain existing
Indebtedness of Holdco and its Subsidiaries and to
pay the transaction fees and expenses associated
with the Transaction; provided, that not more than
$20,000,000 of the proceeds from Revolving Loans
may be used to finance the consummation of the
Transaction (including reasonably related
transaction fees and expenses); and
(ii) in the case of any other Revolving
Loans and the Swing Line Loans, for working
capital and general corporate purposes of the
Company and its Subsidiaries; and
(b) use Letters of Credit only for purposes of
supporting working capital and general corporate purposes
of the Company and its Subsidiaries.
SECTION 7.1.10. Hedging Obligations. Within six months
following the Closing Date, the Administrative Agent shall have received
evidence satisfactory to it that the Company and its Subsidiaries have entered
into interest rate swap, cap, collar or similar arrangements (including without
limitation such Indebtedness accruing interest at a fixed rate by its terms)
designed to protect the Company and its Subsidiaries against fluctuations in
interest rates with respect to at least 50% of the aggregate principal amount
of the Term Loans and the Subordinated Notes for a period of at least three
years from the Closing Date with terms reasonably satisfactory to the Company
and the Agents.
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SECTION 7.1.11. Undertaking. The Company will deliver
to the Agents no later than 60 days after the Closing Date instruments or
documents, in appropriate form for filing with the United States Patent and
Trademark Office, sufficient to create and perfect a security interest in all
intellectual property owned as of the Closing Date by the Company and its U.S.
Subsidiaries as identified in Item 7.1.11 ("Intellectual Property") of the
Disclosure Schedule.
SECTION 7.1.12. Mortgages. Within 60 days after the
Closing Date, the Company shall deliver to the Agents counterparts of each
Mortgage relating to each property listed on Item 7.1.12 ("Mortgaged
Properties") of the Disclosure Schedule, each dated as of the date of such
delivery, duly executed by the Company or the applicable U.S. Subsidiary,
together with
(a) evidence of the completion (or satisfactory
arrangements for the completion) of all recordings and
filings of such Mortgage as may be necessary or, in the
reasonable opinion of the Administrative Agent, desirable
effectively to create a valid, perfected, first priority
Lien, subject to Liens permitted by Section 7.2.3,
against the properties purported to be covered thereby;
(b) mortgagee's title insurance policies in favor
of the Agents and the Lenders in amounts and in form and
substance and issued by insurers, reasonably satisfactory
to the Agents, with respect to the property purported to
be covered by such Mortgage, insuring that title to such
property is indefeasible and that the interests created
by the Mortgage constitute valid first Liens thereon free
and clear of all defects and encumbrances other than as
permitted by Section 7.2.3 or as approved by the Agents,
and such policies shall also include, to the extent
available, a revolving credit endorsement and such other
endorsements as the Administrative Agent shall reasonably
request and shall be accompanied by evidence of the
payment in full of all premiums thereon; and
(c) such other approvals, opinions or documents
as the Agents may reasonably request.
SECTION 7.1.13. Perfection of Certain Pledges. Within
15 days after the Closing Date, the Company shall deliver evidence satisfactory
to the Agents as to the perfection of the security interest granted in favor of
the Administrative Agent under the Subsidiary Pledge Agreement in
uncertificated securities of Thermadyne de Mexico S.A. de C.V. and Thermadyne
do Brasil S.C. LTDA.
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SECTION 7.2. Negative Covenants. The Company agrees
with the Agents, each Issuer and each Lender that, until all Commitments have
terminated, and all Obligations have been paid and performed in full, the
Company will perform the obligations set forth in this Section 7.2.
SECTION 7.2.1. Business Activities. The Company will
not, and will not permit any of its Subsidiaries to, engage in any business
activity, except business activities of the type in which the Company and its
Subsidiaries are engaged on the date hereof (after giving effect to the
Transaction) and any businesses reasonably related or incidental thereto (the
"Thermadyne Business").
SECTION 7.2.2. Indebtedness. The Company will not, and
will not permit any of its Subsidiaries to, create, incur, assume or suffer to
exist or otherwise become or be liable in respect of any Indebtedness, other
than, without duplication, the following:
(a) Indebtedness outstanding on the Closing Date
and identified in Item 7.2.2(a) ("Ongoing Indebtedness")
of the Disclosure Schedule, and refinancings and
replacements thereof in a principal amount not exceeding
the principal amount of the Indebtedness so refinanced or
replaced and with an average life to maturity of not less
than the then average life to maturity of the
Indebtedness so refinanced or replaced;
(b) Indebtedness in respect of the Credit
Extensions and other Obligations;
(c) to the extent (but only to the extent)
otherwise permitted by Section 7.2.7, Indebtedness
incurred by the Company or any of its Subsidiaries that
is represented by Capitalized Lease Liabilities, mortgage
financings or purchase money obligations; provided, that
the maximum aggregate amount of all Indebtedness
permitted under this clause (c) shall not at any time
exceed $25,000,000;
(d) Hedging Obligations of the Company or any of
its Subsidiaries in respect of the Credit Extensions or
otherwise entered into by the Company or any Subsidiary
to hedge against interest rate, currency exchange rate or
commodity price risk, in each case arising in the
ordinary course of business of the Company and its
Subsidiaries and not for speculative purposes;
(e) intercompany Indebtedness (i) (x) of any U.S.
Subsidiary of the Company owing to the Company or any
Subsidiary or (y) of the Company owing to any of its U.S.
Subsidiaries, and (ii) of any Non-U.S. Subsidiary of the
Company owing to the Company or any U.S. Subsidiary of
the Company; provided that in respect of (A) any
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such Indebtedness described in this clause (ii), the U.S.
Dollar Equivalent of such Indebtedness (other than any
such intercompany Indebtedness incurred to finance any
acquisition permitted hereunder) shall not exceed, when
taken together with the aggregate amount at such time of
all outstanding Investments made pursuant to clause (l)
of Section 7.2.5 (other than any such Investments made
as part of, or to finance, any acquisition permitted
hereunder), $20,000,000 at any time outstanding and (B)
any such Indebtedness described in this clause (e) which
is owing to the Company or any of its U.S. Subsidiaries,
(1) to the extent requested by the Administrative Agent,
such Indebtedness shall be evidenced by one or more
promissory notes in form and substance satisfactory to
the Agents which (except in the case of any such notes
held by a Receivables Subsidiary in connection with a
Receivables Transaction) shall be duly executed and
delivered to (and indorsed to the order of) the
Administrative Agent in pledge pursuant to a Pledge
Agreement and (2) in the case of any such Indebtedness
owed by a Person other than the Company or a Subsidiary
Co-Obligor, such Indebtedness shall not be forgiven or
otherwise discharged for any consideration other than
payment (Dollar for Dollar or, if denominated in a
Foreign Currency, the applicable Currency) in cash unless
the Agents otherwise consent;
(f) Indebtedness evidenced by the Subordinated
Notes and subordinated guarantees thereof in an aggregate
outstanding principal amount not to exceed $207,000,000
at any time outstanding;
(g) Indebtedness consisting of notes issued by
the Company or any U.S. Subsidiary and used for making
Investments permitted under clause (n) of Section 7.2.5;
(h) Assumed Indebtedness of the Company and its
Subsidiaries incurred in connection with an Investment
permitted under Section 7.2.5, in an aggregate principal
amount at any time outstanding not to exceed $20,000,000;
(i) Indebtedness of any Non-U.S. Subsidiary owing
to any other Non-U.S. Subsidiary;
(j) Indebtedness of Non-U.S. Subsidiaries in an
aggregate outstanding principal amount the U.S. Dollar
Equivalent of which does not exceed (except if such
excess is caused solely by changes in exchange rates and
is eliminated within five Business Days of its
occurrence) $20,000,000 at any time outstanding;
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(k) Indebtedness in respect of Receivables
Transactions; provided that, except in the case of any
Receivables Subsidiary, such Indebtedness consists solely
of Liens on accounts receivable and related assets
subject to such Receivables Transactions and similar
obligations in respect of such Receivables Transactions;
and
(l) other unsecured Indebtedness of the Company
and its U.S. Subsidiaries in an aggregate amount at any
time outstanding not to exceed $20,000,000 plus the
difference between the maximum amount of additional
Revolving Loan Commitments that have been or could be
provided under clause (g) of Section 2.1.2 and the then
outstanding amount of additional Revolving Loans made
pursuant to clause (g) of Section 2.1.2;
provided, however, that no Indebtedness otherwise permitted by clause (c), (e)
(as such clause (e) relates to loans made by the Company or any Subsidiary
Co-Obligor to Subsidiaries which are not party to the Subsidiary Co-Obligation
Agreement and Guaranty), (h), (i), (j) or (l) may be incurred if, immediately
before or after giving effect to the incurrence thereof, any Default shall have
occurred and be continuing, and provided, further, however, that all such
Indebtedness of the type described in clause (e)(i)(y) above that is owed to
Subsidiaries which are not party to the Subsidiary Co-Obligation Agreement and
Guaranty, shall be subordinated, in writing, to the Obligations upon terms
satisfactory to the Agents.
SECTION 7.2.3. Liens. The Company will not, and will
not permit any of its Subsidiaries to, create, incur, assume or suffer to exist
any Lien upon any of its property, revenues or assets, whether now owned or
hereafter acquired, except:
(a) Liens existing on the Closing Date identified
in Item 7.2.3(a) ("Ongoing Liens") of the Disclosure
Schedule, including Liens securing extensions or renewals
of the Indebtedness which such identified Liens secure;
provided that no such extension or renewal shall increase
the obligations secured by such Lien, extend such Lien to
additional assets (other than, in the case of existing
Liens securing Indebtedness of Non-U.S. Subsidiaries
secured by Receivables and related assets of such
Non-U.S. Subsidiaries, Liens on other Receivables and
related assets of such Non-U.S. Subsidiaries securing
refinancings and replacements of such Indebtedness) or
otherwise result in a Default hereunder;
(b) Liens securing payment of the Obligations or
any Hedging Obligations owed to any Person that, at the
time such Hedging Obligation was contracted for, was a
Lender or any Affiliate of any Lender, which Liens are
granted pursuant to any Loan Document;
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(c) Liens granted to secure payment of
Indebtedness of the type permitted and described in
clause (c) of Section 7.2.2; provided that such Lien is
limited in recourse solely to the asset being purchased
or leased through the incurrence of such Indebtedness;
(d) Liens on the assets of the Receivables
Subsidiary granted to secure obligations in respect of
Receivables Transactions;
(e) Liens on the assets of any Non-U.S.
Subsidiary granted to secure payment of Indebtedness of
such Non-U.S. Subsidiary permitted under clause (i) or
(j) of Section 7.2.2;
(f) Liens for taxes, assessments or other
governmental charges or levies, including Liens pursuant
to Section 107(l) of CERCLA or other similar law, not at
the time delinquent or thereafter payable without penalty
or being contested in good faith by appropriate
proceedings and for which adequate reserves in accordance
with GAAP shall have been set aside on its books;
(g) Liens of carriers, warehousemen, mechanics,
repairmen, materialmen, contractors, laborers and
landlords or other like Liens incurred in the ordinary
course of business for sums not overdue for a period of
more than 30 days or being diligently contested in good
faith by appropriate proceedings and for which adequate
reserves in accordance with GAAP shall have been set
aside on its books;
(h) Liens incurred in the ordinary course of
business in connection with workmen's compensation,
unemployment insurance or other forms of governmental
insurance or benefits, or to secure performance of
tenders, bids, statutory or regulatory obligations,
insurance obligations, leases and contracts (other than
for borrowed money) entered into in the ordinary course
of business or to secure obligations on surety or appeal
bonds;
(i) judgment Liens in existence less than 30 days
after the entry thereof or with respect to which
execution has been stayed or the payment of which is
covered in full by a bond or (subject to a customary
deductible) by insurance maintained with responsible
insurance companies;
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(j) Liens with respect to minor imperfections of
title and easements, rights-of-way, restrictions,
reservations, permits, servitudes and other similar
encumbrances on real property and fixtures which do not
materially detract from the value or materially impair
the use by the Company or any such Subsidiary in the
ordinary course of its business of the property subject
thereto;
(k) licenses, leases or subleases granted by the
Company or any of its Subsidiaries to any other Person in
the ordinary course of business;
(l) Liens in the nature of trustees' Liens
granted pursuant to any indenture governing any
Indebtedness permitted by Section 7.2.2, in each case in
favor of the trustee under such indenture and securing
only obligations to pay compensation to such trustee, to
reimburse its expenses and to indemnify it under the
terms thereof;
(m) Liens of sellers of goods to the Company and
any of its Subsidiaries arising under Article 2 of the
UCC or similar provisions of applicable law in the
ordinary course of business, covering only the goods sold
and securing only the unpaid purchase price for such
goods and related expenses;
(n) Liens securing Assumed Indebtedness of the
Company and its Subsidiaries permitted pursuant to clause
(h) of Section 7.2.2; provided, however, that (i) any
such Liens attach only to the property of the Subsidiary
acquired, or the property acquired, in connection with
such Assumed Indebtedness and shall not attach to any
assets of the Company or any of its Subsidiaries
theretofore existing or which arise after the date
thereof and (ii) the Assumed Indebtedness and other
secured Indebtedness of the Company and its Subsidiaries
secured by any such Lien shall not exceed 100% of the
fair market value of the assets being acquired in
connection with such Assumed Indebtedness;
(o) Liens on accounts receivable and related
assets granted pursuant to Receivables Transactions and
securing obligations arising under such Receivables
Transactions; and
(p) Liens not otherwise permitted hereunder which
secure obligations not exceeding $5,000,000 at any time
outstanding.
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SECTION 7.2.4. Financial Covenants.
(a) EBITDA. The Company will not permit EBITDA
for the period of four consecutive Fiscal Quarters ending
on the last day of any Fiscal Quarter occurring during
any period set forth below to be less than the amount set
forth opposite such period:
<TABLE>
<CAPTION>
Period EBITDA
------ ------
<S> <C>
Closing Date to 12/31/99 $ 90,000,000
1/1/00 to 12/31/00 $ 95,000,000
1/1/01 to 12/31/01 $100,000,000
1/1/02 to 12/31/02 $105,000,000
1/1/03 to 12/31/03 $110,000,000
1/1/04 to 12/31/04 $120,000,000
1/1/05 to 12/31/05 $125,000,000
1/1/06 to 12/31/06 $130,000,000
1/1/07 and thereafter $135,000,000
</TABLE>
provided, that, to the extent the amount of EBITDA for
the immediately preceding four consecutive Fiscal Quarter
period exceeds the amount of EBITDA required to be
maintained for such four consecutive Fiscal Quarter
period pursuant to this clause (a), an amount equal to
50% of such excess amount may be carried forward to (but
only to) the then current Fiscal Quarter (any such amount
to be certified to the Administrative Agent in the
Compliance Certificate delivered for the last Fiscal
Quarter of such four consecutive Fiscal Quarter period).
(b) Leverage Ratio. The Company will not permit
the Leverage Ratio as of the end of any Fiscal Quarter
ending after the Closing Date and occurring during any
period set forth below to be greater than the ratio set
forth opposite such period:
<TABLE>
<CAPTION>
Period Leverage Ratio
------ --------------
<S> <C>
Closing Date to 12/31/98 6.00:1.00
1/1/99 to 12/31/99 5.50:1.00
1/1/00 to 12/31/00 5.00:1.00
1/1/01 to 12/31/01 4.50:1.00
1/1/02 to 12/31/02 4.00:1.00
1/1/03 to 12/31/03 3.50:1.00
1/1/04 and thereafter 3.00:1.00
</TABLE>
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(c) Interest Coverage Ratio. The Company will
not permit the Interest Coverage Ratio as of the end of
any Fiscal Quarter ending after the Closing Date and
occurring during any period set forth below to be less
than the ratio set forth opposite such period:
<TABLE>
<CAPTION>
Interest Coverage
Period Ratio
------ ------------------
<S> <C>
Closing Date to 12/31/98 1.75:1.00
1/1/99 to 12/31/99 1.85:1.00
1/1/00 to 12/31/00 2.00:1.00
1/1/01 to 12/31/01 2.25:1.00
1/1/02 to 12/31/02 2.50:1.00
1/1/03 to 12/31/03 3.00:1.00
1/1/04 to 12/31/04 3.50:1.00
1/1/05 to 12/31/05 4.00:1.00
1/1/06 to 12/31/06 4.50:1.00
1/1/07 and thereafter 5.00:1.00
</TABLE>
(d) Fixed Charge Coverage Ratio. The Company
will not permit the Fixed Charge Coverage Ratio as of the
end of any Fiscal Quarter ending after the Closing Date
to be less than 1.10:1.00.
SECTION 7.2.5. Investments. The Company will not, and
will not permit any of its Subsidiaries to, make, incur, assume or suffer to
exist any Investment in any other Person, except:
(a) Investments existing on the Closing Date and
identified in Item 7.2.5(a) ("Ongoing Investments") of
the Disclosure Schedule and extensions or renewals
thereof, provided that no such extension or renewal shall
be permitted if it would (x) increase the amount of such
Investment at the time of such extension or renewal or
(y) result in a Default hereunder;
(b) Cash Equivalent Investments;
(c) without duplication, Investments permitted as
Indebtedness pursuant to Section 7.2.2;
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(d) without duplication, Investments permitted as
Capital Expenditures pursuant to Section 7.2.7 (including
any such Investments which would otherwise constitute
Capital Expenditures but for the operation of clause (i)
of the proviso to the definition of "Capital
Expenditures");
(e) Investments made by the Company or any of its
Subsidiaries from capital contributions by Holdco to the
Company, sales of Capital Stock by the Company to Holdco
or repayments of the Intercompany Loan by Holdco to the
Company, in each case only to the extent proceeds from
such capital contribution, sale or repayment (x) are not
required to be applied as Net Equity Proceeds pursuant to
clause (e) of Section 3.1.1, (y) arise from the issuance
by Holdco of its Capital Stock, and (z) are received
after the Closing Date for the purpose of making an
Investment identified in a notice delivered to the Agents
on or prior to the date such capital contribution, sale
or repayment is made, which Investments shall result in
the Company or such Subsidiary acquiring a majority
controlling interest in the Person in which such
Investment was made or increasing any such controlling
interest already maintained by it;
(f) Investments to the extent the consideration
received pursuant to clause (c)(i) of Section 7.2.9 is
not all cash;
(g) Investments in the form of loans to officers,
directors and employees of the Company and its
Subsidiaries for the sole purpose of purchasing Holdco
common stock (or purchases of such loans made by others)
in an aggregate amount at any time outstanding not to
exceed $7,500,000;
(h) the Intercompany Loan;
(i) Letters of Credit issued in support of, and
guarantees by the Company or any Subsidiary of,
Indebtedness permitted under clauses (b), (c), (d) and
(l) of Section 7.2.2;
(j) Investments made or held by any Non-U.S.
Subsidiary in any other Non-U.S. Subsidiary;
(k) Investments of the Company or any U.S.
Subsidiary in the Company or any U.S. Subsidiary;
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(l) equity Investments of the Company or any U.S.
Subsidiary in Non-U.S. Subsidiaries in an aggregate
amount at any time outstanding not to exceed (exclusive
of any such Investments made as part of, or to finance,
any acquisition permitted hereunder) $20,000,000 less the
aggregate principal amount outstanding at such time of
Indebtedness permitted under clause (e)(ii) of Section
7.2.2 (other than any such intercompany Indebtedness
incurred to finance any acquisition permitted hereunder);
(m) Investments made by the Company or any of its
Subsidiaries in an aggregate amount not to exceed
$40,000,000 in any single transaction (or a series of
related transactions) or $150,000,000 in the aggregate
over the term of this Agreement; provided that such
Investments (x) result in the Company or the relevant
Subsidiary acquiring (subject to Section 7.2.1) a
majority controlling interest in the Person (or its
assets and businesses) in which such Investment was made,
or increasing any such controlling interest maintained by
it in such Person or (y) result in the Person in which
such Investment was made becoming an Acquired Controlled
Person with respect to the Company and its Subsidiaries;
provided further, that, to the extent any Assumed
Indebtedness permitted pursuant to clause (h) of Section
7.2.2 would be incurred in connection with any such
Investment to be made pursuant to this clause (m), the
permitted amounts set forth in this clause shall be
reduced, Dollar for Dollar, by the outstanding principal
amount of any such Assumed Indebtedness to be assumed;
(n) Investments made by the Company or any of its
U.S. Subsidiaries in cash or by means of a note and
consisting of the capitalization of, or subscription for
units in, a wholly-owned Australian unit trust; provided
that the proceeds of such Investments are lent to a
Non-U.S. Subsidiary of the Company and used by such
Non-U.S. Subsidiary, directly or indirectly, to repay
outstanding Indebtedness or other obligations owed to the
Company or any of its U.S. Subsidiaries;
(o) Investments in Persons engaged in the
Thermadyne Business that are not permitted under clauses
(a) through (n) above in an aggregate principal amount at
any one time outstanding not to exceed $10,000,000;
(p) Investments arising in connection with
Receivables Transactions;
(q) extensions of trade credit in the ordinary
course of business;
(r) Investments in Hedging Obligations permitted
hereunder;
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(s) Investments (including debt obligations and
Capital Stock) received in connection with the bankruptcy
or reorganization of suppliers and customers and in
settlement of delinquent obligations of and other
disputes with customers and suppliers arising in the
ordinary course of business;
provided, however, that
(t) any Investment which when made complies with
the requirements of the definition of the term "Cash
Equivalent Investment" may continue to be held
notwithstanding that such Investment if made thereafter
would not comply with such requirements; and
(u) no Investment otherwise permitted by clause
(c) (except to the extent permitted under Section 7.2.2),
(e), (g), (i) (to the extent that the applicable Letter
of Credit relates to Indebtedness permitted under clause
(c) or (l) of Section 7.2.2), (l), (m), (n) or (o) shall
be permitted to be made if, immediately before or after
giving effect thereto, any Default shall have occurred
and be continuing.
SECTION 7.2.6. Restricted Payments, etc. On and at all
times after the date hereof:
(a) the Company will not, and will not permit any
of its Subsidiaries to, declare, pay or make any
dividend, distribution or exchange (in cash, property or
obligations) on or in respect of any shares of any class
of Capital Stock (now or hereafter outstanding) of the
Company or on any warrants, options or other rights with
respect to any shares of any class of Capital Stock (now
or hereafter outstanding) of the Company (other than (i)
dividends or distributions payable in its common stock or
warrants to purchase its common stock and (ii) splits or
reclassifications of its stock into additional or other
shares of its common stock) or apply, or permit any of
its Subsidiaries to apply, any of its funds, property or
assets to the purchase, redemption, exchange, sinking
fund or other retirement of, or agree or permit any of
its Subsidiaries to purchase, redeem or exchange, any
shares of any class of Capital Stock (now or hereafter
outstanding) of the Company or warrants, options or other
rights with respect to any shares of any class of Capital
Stock (now or hereafter outstanding) of the Company;
(b) the Company will not, and will not permit any
of its Subsidiaries to (i) directly or indirectly, make
any payment or prepayment of principal of, or make any
payment of interest on, any Subordinated Note, on any day
other than the stated, scheduled date for such payment or
prepayment set forth in the documents and
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instruments memorializing such Subordinated Note, or
which would violate the subordination provisions of such
Subordinated Note, or (ii) redeem, purchase or defease
any Subordinated Note or Discount Debenture (the
foregoing prohibited acts referred to in clauses (a) and
(b) above are herein collectively referred to as
"Restricted Payments");
provided, however, that
(c) notwithstanding the provisions of clause (a)
above, the Company shall be permitted to make Restricted
Payments to Holdco to the extent necessary to enable
Holdco to
(i) pay its overhead expenses (including
fees in respect of fees for advisory services) in
an amount not to exceed $3,000,000 (which amount
shall include not more than $500,000 in respect of
advisory services) in the aggregate in any Fiscal
Year,
(ii) make payments in respect of taxes,
(iii) so long as (A) no Default shall have
occurred and be continuing on the date such
Restricted Payment is declared or to be made, nor
would a Default (including in respect of the
financial covenants set forth in Section 7.2.4)
result from the making of such Restricted Payment,
(B) after giving effect to the making of such
Restricted Payment, the Company shall be in pro
forma compliance with the covenant set forth in
clause (b) of Section 7.2.4 for the most recent
full Fiscal Quarter immediately preceding the date
of the making of such Restricted Payment for which
the relevant financial information has been
delivered pursuant to clause (a) or clause (b) of
Section 7.1.1, and (C) an Authorized Officer of
the Company shall have delivered a certificate to
the Administrative Agent in form and substance
satisfactory to the Administrative Agent
(including a calculation of the Borrower's pro
forma compliance with the covenant set forth in
clause (b) of Section 7.2.4 in reasonable detail)
certifying as to the accuracy of clauses
(c)(iii)(A) and (c)(iii)(B) above,
(x) repurchase, redeem or otherwise
acquire or retire for value any Capital Stock
of Holdco (including Preferred Stock), or any
warrant, option or other right to acquire any
such Capital Stock of Holdco, held by any
member of management or an employee of the
Company or any of its Subsidiaries pursuant
to any employment
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agreement, management equity subscription
agreement, restricted stock plan, stock
option agreement or other similar arrangement
so long as the total amount of such
repurchases, redemptions, acquisitions,
retirements and payments shall not exceed (I)
$5,000,000 in any calendar year (with unused
amounts in any calendar year being carried
forward to succeeding calendar years subject
to a maximum (without giving effect to the
following clause (II)) of $10,000,000 in any
calendar year) plus (II) the aggregate cash
proceeds received by the Company during such
calendar year from any reissuance of Capital
Stock of Holdco, and warrants, options and
other rights to acquire Capital Stock of
Holdco, by Holdco or the Company to members
of management and employees of the Company
and its Subsidiaries (to the extent such
proceeds are not otherwise required to be
applied pursuant to clause (e) of Section
3.1.1); or
(y) pay for the repurchase, retirement
or other acquisition or retirement for value
of Capital Stock of Holdco or options,
warrants or other rights to acquire Capital
Stock of Holdco outstanding on the date of
this Agreement and which are not held by the
Purchasers or any member of management of
Holdco or any of its Subsidiaries (including
any Capital Stock, options, warrants or
rights issued in respect of such Capital
Stock, options, warrants or rights as a
result of a stock split, recapitalization,
merger, combination, consolidation or
otherwise, but excluding any Capital Stock,
options, warrants or rights issued pursuant
to any management equity plan or stock option
plan or similar agreement) in an aggregate
amount not to exceed (I) $10,000,000 and (II)
an incremental $20,000,000 so long as (A)
after giving effect to the making of such
Restricted Payment, the Leverage Ratio shall
be less than 4.0:1.0 on a pro forma basis for
the most recent full Fiscal Quarter
immediately preceding the date of the making
of such Restricted Payment for which the
relevant financial information has been
delivered pursuant to clause (a) or (b) of
Section 7.1.1, (B) an Authorized Officer of
the Company shall have delivered a Restricted
Payments Compliance Certificate to the
Administrative Agent (including a calculation
of the Leverage Ratio in reasonable detail)
certifying to the accuracy of clause (A)
above and certifying that no Default shall
have occurred and be continuing on the date
such Restricted Payment is made, nor would a
Default result from the making of such
Restricted Payment, and (C) the amount of
such
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Restricted Payment shall not exceed 25% of
the Excess Cash Flow for the period from June
30, 1998 through the most recently ended
Fiscal Quarter,
(iv) pay for the redemption of common stock
purchase rights (the "Rights") under the Rights
Agreement dated as of May 1, 1997 between Holdco
and BankBoston, N.A., as Rights Agent, at a
redemption price of $.01 per Right, and in an
aggregate amount not to exceed $120,000, and
(v) so long as no Default shall have occurred
and be continuing at the time thereof, pay
principal of, and interest on, or redeem or
repurchase, any of Holdco's 10 3/4% Senior
Subordinated Notes due November 2003 or 10 1/4%
Senior Notes due May 2002, and
(d) notwithstanding the provisions of clauses (a)
and (b) above, the Company and its Subsidiaries shall be
permitted to pay dividends to Holdco subsequent to the
fifth anniversary of the Closing Date to enable Holdco to
pay cash interest on the Discount Debentures in
accordance with the terms of such Indebtedness in an
aggregate amount not to exceed 25% of Excess Cash Flow
for the period from June 30, 1998 through the most
recently ended Fiscal Quarter (net of amounts in respect
of clause (c)(iii)(y)(II) above) so long as (A) after
giving effect to the making of such Restricted Payment,
(i) the Leverage Ratio shall be less than 4.0:1.0 on a
pro forma basis and (ii) the Company shall be in pro
forma compliance with the Fixed Charge Coverage Ratio
covenant set forth in clause (d) of Section 7.2.4, in
each case for the most recent full Fiscal Quarter
immediately preceding the date of the making of such
Restricted Payment for which the relevant financial
information has been delivered pursuant to clause (a) or
clause (b) of Section 7.1.1 and (B) an Authorized Officer
of the Company shall have delivered a certificate to the
Administrative Agent (including a calculation of the
Leverage Ratio and Fixed Charge Coverage Ratio in
reasonable detail) certifying to the accuracy of clause
(A) above and certifying that no Default shall have
occurred and be continuing on the date such Restricted
Payment is made, nor would a Default result from the
making of such Restricted Payment; and
(e) notwithstanding the provisions of clauses (a)
and (b) above, (i) the Company and its Subsidiaries shall
be permitted to make the Restricted Payments included in
the Transaction, (ii) the Company shall be permitted to
make payments in respect of statutory appraisal rights
(and any settlement thereof) exercised by holders of
outstanding Capital Stock of Thermadyne in connection
with the Merger, and
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(iii) the Company may pay a non-cash dividend to Holdco
consisting solely of a transfer of all or a portion of
the Intercompany Loan.
SECTION 7.2.7. Capital Expenditures, etc. With respect
to Capital Expenditures, the parties covenant and agree as follows:
(a) The Company will not, and will not permit any
of its Subsidiaries to, make or commit to make Capital
Expenditures in any Fiscal Year, except Capital
Expenditures (i) which do not aggregate in excess of
$25,000,000 in such Fiscal Year plus (ii) an additional
aggregate amount equal to $20,000,000 over the term of
this Agreement; provided, however, that to the extent the
amount of Capital Expenditures permitted to be made in
any Fiscal Year pursuant to this Section exceeds the
aggregate amount of Capital Expenditures actually made
during such Fiscal Year, such excess amount (up to an
aggregate of 50% of the amount of Capital Expenditures
permitted for such Fiscal Year, without giving effect to
this proviso) may be carried forward to (but only to) the
next succeeding Fiscal Year (any such amount to be
certified by the Company to the Agents in the Compliance
Certificate delivered for the last Fiscal Quarter of such
Fiscal Year, and any such amount carried forward to a
succeeding Fiscal Year shall be deemed to be used prior
to the Company and its Subsidiaries using the amount of
Capital Expenditures permitted by this Section in such
succeeding Fiscal Year, without giving effect to such
carry-forward).
(b) The parties acknowledge and agree that the
permitted Capital Expenditure level set forth in clause
(a) above shall be exclusive of the amount of Capital
Expenditures actually made with cash capital
contributions (including the proceeds of issuances of
equity securities) made, directly or indirectly, by any
Person other than the Company and its Subsidiaries, after
the Closing Date to the Company or any of its
Subsidiaries and specifically identified in a certificate
delivered by an Authorized Officer of the Company to the
Agents on or about the time such capital contribution is
made; provided, that, to the extent any such cash capital
contributions constitute Net Equity Proceeds arising from
the issuance by Holdco of its Capital Stock, only that
portion of such Net Equity Proceeds which are not
required to be applied as a prepayment pursuant to clause
(e) of Section 3.1.1 may be used for Capital Expenditures
pursuant to this clause (b).
SECTION 7.2.8. Consolidation, Merger, etc. The Company
will not, and will not permit any of its Subsidiaries to, liquidate or
dissolve, consolidate with, or merge into or with, any other corporation, or
purchase or otherwise acquire all or substantially all of the assets of any
Person (or of any division thereof) except
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(a) any such Subsidiary may liquidate or dissolve
voluntarily into, and may merge with and into, the
Company (so long as the Company is the surviving
corporation of such combination or merger) or any other
Subsidiary, and the assets or stock of any Subsidiary may
be purchased or otherwise acquired by the Company or any
other Subsidiary; provided, that notwithstanding the
above, a Subsidiary may only liquidate or dissolve into,
or merge with and into, another Subsidiary of the Company
if, after giving effect to such combination or merger,
the Company continues to own (directly or indirectly),
and the Administrative Agent continues to have pledged to
it pursuant to a Pledge Agreement, a percentage of the
issued and outstanding shares of Capital Stock (on a
fully diluted basis) of the Subsidiary surviving such
combination or merger that is equal to or in excess of
the percentage of the issued and outstanding shares of
Capital Stock (on a fully diluted basis) of the
Subsidiary that does not survive such combination or
merger that was (immediately prior to the combination or
merger) owned by the Company or pledged to the
Administrative Agent;
(b) so long as no Default has occurred and is
continuing or would occur after giving effect thereto,
the Company or any of its Subsidiaries (other than the
Receivables Subsidiaries) may purchase all or
substantially all of the assets of any Person (or any
division thereof) not then a Subsidiary, or acquire such
Person by merger, if permitted (without duplication)
pursuant to Section 7.2.7 or clause (e), (f), (m) or (r)
of Section 7.2.5;
(c) the Company and its Subsidiaries may
consummate the Transaction; and
(d) the Company may merge into a newly-formed
corporation incorporated under the laws of the United
States or any State for the purpose of reincorporating in
such State so long as (i) the shareholders of the
surviving corporation immediately after such merger are
the same as the shareholders of the Company immediately
prior to such merger, (ii) immediately before and after
such merger, no Default shall have occurred and be
continuing and (iii) the corporation surviving such
merger shall assume, pursuant to documentation reasonably
satisfactory to the Agents, all of the obligations of the
Company under the Loan Documents.
SECTION 7.2.9. Asset Dispositions, etc. The Company
will not, and will not permit any of its Subsidiaries to, sell, transfer,
license, lease, contribute or otherwise convey, or grant options, warrants or
other rights with respect to, all or any part of its assets, whether now owned
or hereafter acquired (including accounts receivable and Capital Stock of
Subsidiaries) to any Person, unless
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(a) such sale, transfer, license, lease,
contribution or conveyance of such assets is (i) in the
ordinary course of its business (and does not constitute
a sale, transfer, license, lease, contribution or other
conveyance of all or a substantial part of the Company's
and its Subsidiaries' assets, taken as a whole) or is of
obsolete or worn out property, (ii) permitted by Section
7.2.8, (iii) between the Company and one of its
wholly-owned Subsidiaries or between wholly-owned
Subsidiaries of the Company (but only to the extent such
sale, transfer, license, lease, contribution or
conveyance would be permitted by Section 7.2.11) or (iv)
a sale or transfer of accounts receivable and related
assets, or any interest therein, by the Company or any of
its Subsidiaries to a Receivables Subsidiary, or by a
Receivables Subsidiary to any other Person, in connection
with a Receivables Transaction;
(b) such sale, transfer, lease, contribution or
conveyance constitutes (i) an Investment permitted under
Section 7.2.5, (ii) a Lien permitted under Section 7.2.3
or (iii) a Restricted Payment permitted under Section
7.2.6;
(c) (i) such sale, transfer, lease, contribution
or conveyance of such assets is for fair market value and
the consideration consists of no less than 75% in cash,
(ii) the Net Disposition Proceeds received from such
assets, together with the Net Disposition Proceeds of all
other assets sold, transferred, leased, contributed or
conveyed pursuant to this clause (c) since the Closing
Date, does not exceed (individually or in the aggregate)
$20,000,000 in any Fiscal Year and (iii) an amount equal
to the Net Disposition Proceeds generated from such sale,
transfer, lease, contribution or conveyance is reinvested
in the business of the Company and its Subsidiaries, or,
to the extent required thereunder, is applied to prepay
the Loans pursuant to the terms of Section 3.1.1 and
Section 3.1.2;
(d) transfers resulting from any casualty or
condemnation of property or assets; or
(e) the sale or discount of overdue accounts
receivable in the ordinary course of business, but only
in connection with the compromise or collection thereof.
SECTION 7.2.10. Modification of Certain Agreements.
Without the prior written consent of the Required Lenders, the Company will
not, and will not permit any of its Subsidiaries to, consent to any amendment,
supplement, amendment and restatement, waiver or other modification of any of
the terms or provisions contained in, or applicable to, the Preferred Stock,
the Discount Debentures or the Subordinated Notes or any Material Document or
any schedules, exhibits or agreements related thereto (the "Restricted
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Agreements"), in each case which would materially adversely affect the rights
or remedies of the Lenders or the Company's or any other Obligor's ability to
perform hereunder or under any Loan Document, or materially increase the
obligations of the Company or any Subsidiary thereunder to the detriment of the
Lenders, or which would increase the cash consideration payable in respect of
the Merger or, in the case of the Merger Agreement, which would increase the
Company's or any of its Subsidiaries' obligations or liabilities, contingent or
otherwise (other than adjustments to the cash consideration payable in respect
of the Merger made pursuant to the terms of the Merger Agreement).
SECTION 7.2.11. Transactions with Affiliates. The
Company will not, and will not permit any of its Subsidiaries to, enter into,
or cause, suffer or permit to exist any arrangement or contract with any of its
other Affiliates (other than any Obligor or any other Subsidiary of the
Company) unless such arrangement or contract is fair and equitable to the
Company or such Subsidiary and is an arrangement or contract of the kind which
would be entered into by a prudent Person in the position of the Company or
such Subsidiary with a Person which is not one of its Affiliates; provided,
however that the Company and its Subsidiaries shall be permitted to (i) enter
into and perform their obligations, or take any other actions contemplated or
permitted under the Transaction Documents, (ii) make any Restricted Payment
permitted under Section 7.2.6 and (iii) enter into and perform their
obligations under arrangements with DLJ and its Affiliates for underwriting,
investment banking and advisory services (including payments of the fee in
respect of advisory services pursuant to clause (c)(i) of Section 7.2.6) on
usual and customary terms, (iv) make payment of reasonable and customary fees
and reimbursement of expenses payable to directors of Holdco, and (v) enter
into employment arrangements with respect to the procurement of services of
directors, officers and employees in the ordinary course of business and pay
reasonable fees in connection therewith.
SECTION 7.2.12. Negative Pledges, Restrictive
Agreements, etc. The Company will not, and will not permit any of its
Subsidiaries to, enter into any agreement (other than the Loan Documents)
prohibiting
(a) (i) the creation or assumption of any Lien
upon its properties, revenues or assets, whether now
owned or hereafter acquired (other than, (A) in the case
of any assets acquired with the proceeds of any
Indebtedness permitted under clause (c) of Section 7.2.2
or subject to Capitalized Lease Liabilities permitted
under such clause (c), customary limitations and
prohibitions contained in such Indebtedness), (B) in the
case of any Indebtedness permitted under clauses (g),
(h), (i), (j) and (l) of Section 7.2.2, customary
limitations in respect of the Subsidiary of the Company
that has incurred such Indebtedness and its assets;
provided, that such limitations shall be
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limited solely to such Subsidiary (and any of its
Subsidiaries) and its (and their) assets and (C) in the
case of any accounts receivable and related assets that
are the subject of a Receivables Transaction,
prohibitions on the creation of Liens on such accounts
receivable and related assets), or (ii) the ability of
the Company or any other Obligor to amend or otherwise
modify this Agreement or any other Loan Document; or
(b) any Subsidiary from making any payments,
directly or indirectly, to the Company by way of
dividends, advances, repayments of loans or advances,
reimbursements of management and other intercompany
charges, expenses and accruals or other returns on
investments, or any other agreement or arrangement which
restricts the ability of any such Subsidiary to make any
payment, directly or indirectly, to the Company (other
than (A) customary limitations and prohibitions in any
Indebtedness permitted under clauses (b), (g), (h), (i),
(j) and (l) of Section 7.2.2 that are applicable to the
Subsidiary of the Company that has incurred such
Indebtedness and its assets; provided, that such
limitations shall be limited solely to such Subsidiary
(and any of its Subsidiaries) and its (and their) assets
and (B) any such limitations and prohibitions applicable
to any Receivables Subsidiary arising in connection with
any Receivables Transaction).
SECTION 7.2.13. Stock of Subsidiaries. The Company will
not permit any Subsidiary to issue any Capital Stock (whether for value or
otherwise) to any Person other than the Company or another wholly-owned
Subsidiary of the Company.
SECTION 7.2.14. Sale and Leaseback. The Company will
not, and will not permit any of its Subsidiaries to, enter into any agreement
or arrangement with any other Person providing for the leasing by the Company
or any of its Subsidiaries of real or personal property which has been or is to
be sold or transferred by the Company or any of its Subsidiaries to such other
Person or to any other Person to whom funds have been or are to be advanced by
such Person on the security of such property or rental obligations of the
Company or any of its Subsidiaries.
SECTION 7.2.15. Designation of Senior Indebtedness. The
Company will not, and will not permit Thermadyne Capital Corp. to, designate
any Indebtedness as "Designated Senior Indebtedness" pursuant to clause (b) of
the definition of such term in the Indenture, dated as of May 22, 1998 (the
"Subordinated Note Indenture"), by and among the Company, Thermadyne Capital
Corp. and State Street Bank and Trust Company, with respect to the Subordinated
Notes, without the consent of the Required Lenders.
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ARTICLE VIII
EVENTS OF DEFAULT
SECTION 8.1. Listing of Events of Default. Each of the
following events or occurrences described in this Section 8.1 shall constitute
an "Event of Default".
SECTION 8.1.1. Non-Payment of Obligations. (a) Any
Borrower shall default in the payment or prepayment of any principal of any
Loan when due or any Reimbursement Obligations or any deposit of cash for
collateral purposes pursuant to Section 2.8.4, as the case may be, or (b) any
Obligor (including any Borrower) shall default (and such default shall continue
unremedied for a period of three Business Days) in the payment when due of any
interest or commitment fee with respect to the Loans or Commitments or of any
other monetary Obligation.
SECTION 8.1.2. Breach of Warranty. Any representation
or warranty of the Company or any other Obligor made or deemed to be made
hereunder or in any other Loan Document executed by it or any other writing or
certificate (including the Closing Date Certificate) furnished by or on behalf
of the Company or any other Obligor to the Agents, any Issuer, the Arranger or
any Lender for the purposes of or in connection with this Agreement or any such
other Loan Document (including any certificates delivered pursuant to Article
V) is or shall be incorrect when made in any material respect.
SECTION 8.1.3. Non-Performance of Certain Covenants and
Obligations. The Company shall default in the due performance and observance
of any of its obligations under Sections 7.1.9, 7.1.10, 7.1.11, 7.1.12, 7.1.13
or 7.2 (other than Section 7.2.1).
SECTION 8.1.4. Non-Performance of Other Covenants and
Obligations. Any Obligor shall default in the due performance and observance
of any other agreement contained herein or in any other Loan Document executed
by it, and such default shall continue unremedied for a period of 30 days after
notice thereof shall have been given to the Company by the Administrative Agent
at the direction of the Required Lenders.
SECTION 8.1.5. Default on Other Indebtedness. A default
shall occur (i) in the payment when due (subject to any applicable grace
period), whether by acceleration or otherwise, of any Indebtedness, other than
Indebtedness described in Section 8.1.1, of the Company or any of its
Subsidiaries or Holdco having a principal amount, individually or in the
aggregate, in excess of $10,000,000, or (ii) a default shall occur in the
performance or observance of any obligation or condition with respect to such
Indebtedness having a
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principal amount, individually or in the aggregate, in excess of $10,000,000 if
the effect of such default is to accelerate the maturity of any such
Indebtedness or such default shall continue unremedied for any applicable
period of time sufficient to permit the holder or holders of such Indebtedness,
or any trustee or agent for such holders, to cause such Indebtedness to become
due and payable prior to its expressed maturity.
SECTION 8.1.6. Judgments. Any judgment or order for the
payment of money in excess of $10,000,000 (not covered by insurance from a
responsible insurance company that is not denying its liability with respect
thereto) shall be rendered against the Company or any of its Subsidiaries or
Holdco and remain unvacated and unpaid and either
(a) enforcement proceedings shall have been
commenced by any creditor upon such judgment or order; or
(b) there shall be any period of 30 consecutive
days during which a stay of enforcement of such judgment
or order, by reason of a pending appeal or otherwise,
shall not be in effect.
SECTION 8.1.7. Pension Plans. Any of the following
events shall occur with respect to any Pension Plan
(a) the termination of any Pension Plan if, as a
result of such termination, the Company would be
required to make a contribution to such Pension Plan, or
would reasonably expect to incur a liability or
obligation to such Pension Plan, in excess of
$10,000,000; or
(b) a contribution failure occurs with respect to
any Pension Plan sufficient to give rise to a Lien under
section 302(f) of ERISA in an amount in excess of
$10,000,000.
SECTION 8.1.8. Change in Control. Any Change in Control
shall occur.
SECTION 8.1.9. Bankruptcy, Insolvency, etc. The
Company, any other Obligor or any other Subsidiaries of the Company (other than
Immaterial Subsidiaries) shall
(a) become insolvent or generally fail to pay, or
admit in writing its inability to pay its debts as they
become due;
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(b) apply for, consent to, or acquiesce in, the
appointment of a trustee, receiver, sequestrator or other
custodian for the Company or any of its Subsidiaries
(other than Immaterial Subsidiaries which are not
Obligors) or any other Obligor or any material property
of any thereof, or make a general assignment for the
benefit of creditors;
(c) in the absence of such application, consent,
acquiescence or assignment, permit or suffer to exist the
appointment of a trustee, receiver, sequestrator or other
custodian for the Company or any of its Subsidiaries
(other than Immaterial Subsidiaries which are not
Obligors) or any other Obligor or for a substantial part
of the property of any thereof, and such trustee,
receiver, sequestrator or other custodian shall not be
discharged within 60 days, provided that the Company,
each Subsidiary and each other Obligor hereby expressly
authorizes the Agents, each Issuer and each Lender to
appear in any court conducting any relevant proceeding
during such 60-day period to preserve, protect and defend
their rights under the Loan Documents;
(d) permit or suffer to exist the commencement of
any bankruptcy, reorganization, debt arrangement or other
case or proceeding under any bankruptcy or insolvency
law, or any dissolution, winding up or liquidation
proceeding, in respect of the Company or any of its
Subsidiaries (other than Immaterial Subsidiaries which
are not Obligors) or any other Obligor, and, if any such
case or proceeding is not commenced by the Company or
such Subsidiary or such other Obligor, such case or
proceeding shall be consented to or acquiesced in by the
Company or such Subsidiary or such other Obligor or shall
result in the entry of an order for relief or shall
remain for 60 days undismissed, provided that the
Company, each Subsidiary and each other Obligor hereby
expressly authorizes the Agents, each Issuer and each
Lender to appear in any court conducting any such case or
proceeding during such 60-day period to preserve, protect
and defend their rights under the Loan Documents; or
(e) take any action (corporate or otherwise)
authorizing, or in furtherance of, any of the foregoing.
SECTION 8.1.10. Impairment of Security, etc. Any Loan
Document, or any Lien granted thereunder, shall (except in accordance with its
terms or pursuant to an agreement of the parties thereto), in whole or in part,
terminate, cease to be in full force and effect or cease to be the legally
valid, binding and enforceable obligation of any Obligor party thereto; the
Company or any other Obligor shall, directly or indirectly, contest in any
manner the effectiveness, validity, binding nature or enforceability thereof;
or any Lien securing any Obligation shall, in whole or in part, cease to be a
perfected first priority Lien, subject only
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to those exceptions expressly permitted by the Loan Documents, except to the
extent any event referred to above (a) relates to assets of the Company or any
of its Immaterial Subsidiaries, (b) results from the failure of the
Administrative Agent to maintain possession of certificates representing
securities pledged under any Pledge Agreement or to file continuation
statements under the Uniform Commercial Code of any applicable jurisdiction or
(c) is covered by a lender's title insurance policy and the relevant insurer
promptly after the occurrence thereof shall have acknowledged in writing that
the same is covered by such title insurance policy.
SECTION 8.1.11. Subordinated Notes. The subordination
provisions relating to the Subordinated Notes (the "Subordination Provisions")
shall fail to be enforceable by the Lenders (which have not effectively waived
the benefits thereof) in accordance with the terms thereof, or the principal or
interest on any Loan, Reimbursement Obligation or other Obligations shall fail
to constitute "Senior Indebtedness" or "Designated Senior Indebtedness" (as
defined in the Subordinated Note Indenture); or the Company or any of its
Subsidiaries shall, directly or indirectly, disavow or contest in any manner
(i) the effectiveness, validity or enforceability of any of the Subordination
Provisions, or (ii) that any of such Subordination Provisions exist for the
benefit of the Agents and the Lenders.
SECTION 8.2. Action if Bankruptcy, etc. If any Event of
Default described in clauses (b), (c) and (d) of Section 8.1.9 shall occur with
respect to any Obligor (other than Immaterial Subsidiaries) the Commitments (if
not theretofore terminated) shall automatically terminate and the outstanding
principal amount of all outstanding Loans and all other Obligations (including
Reimbursement Obligations) shall automatically be and become immediately due
and payable, without notice or demand and the Company shall automatically and
immediately be obligated to deposit with the Administrative Agent cash
collateral in an amount equal to all Letter of Credit Outstandings.
SECTION 8.3. Action if Other Event of Default. If any
Event of Default (other than an Event of Default described in clauses (b), (c)
and (d) of Section 8.1.9) shall occur for any reason, whether voluntary or
involuntary, and be continuing, the Administrative Agent, upon the direction of
the Required Lenders, shall by notice to the Company declare all or any portion
of the outstanding principal amount of the Loans and other Obligations
(including Reimbursement Obligations) to be due and payable, require the
applicable Borrowers to provide cash collateral (in the relevant Currency) to
be deposited with the Administrative Agent in an amount equal to the undrawn
amount of all Letters of Credit outstanding and/or declare the Commitments (if
not theretofore terminated) to be terminated, whereupon the full unpaid amount
of such Loans and other Obligations which shall be so declared due and payable
shall be and become immediately due and payable, without further notice, demand
or
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presentment, and/or, as the case may be, the Commitments shall terminate and
applicable Borrowers shall deposit with the Administrative Agent cash
collateral (in the relevant Currency) in an amount equal to all Letters of
Credit Outstandings.
ARTICLE IX
THE AGENTS
SECTION 9.1. Actions. Each Lender hereby appoints DLJ
as its Syndication Agent and ABN AMRO as its Administrative Agent under and for
purposes of this Agreement and each other Loan Document. Each Lender
authorizes the Agents to act on behalf of such Lender under this Agreement and
each other Loan Document and, in the absence of other written instructions from
the Required Lenders received from time to time by the Agents (with respect to
which each of the Agents agrees that it will comply, except as otherwise
provided in this Section or as otherwise advised by counsel), to exercise such
powers hereunder and thereunder as are specifically delegated to or required of
the Agents by the terms hereof and thereof, together with such powers as may be
reasonably incidental thereto. Each Lender authorizes the Administrative Agent
to act on behalf of such Lender as "Administrative Agent" pursuant to the
Intercreditor Agreement. Each Lender hereby indemnifies (which indemnity
shall survive any termination of this Agreement) the Agents, ratably in
accordance with their respective Term Loans outstanding and Commitments (or, if
no Term Loans or Commitments are at the time outstanding and in effect, then
ratably in accordance with the principal amount of Term Loans held by such
Lender, and their respective Commitments as in effect in each case on the date
of the termination of this Agreement), from and against any and all
liabilities, obligations, losses, damages, claims, costs or expenses of any
kind or nature whatsoever which may at any time be imposed on, incurred by, or
asserted against, either of the Agents in any way relating to or arising out of
this Agreement and any other Loan Document, including reasonable attorneys'
fees, and as to which any Agent is not reimbursed by the Company or any other
Obligor (and without limiting the obligation of the Company or any other
Obligor to do so); provided, however, that no Lender shall be liable for the
payment of any portion of such liabilities, obligations, losses, damages,
claims, costs or expenses which are determined by a court of competent
jurisdiction in a final proceeding to have resulted solely from such Agent's
gross negligence or willful misconduct. The Agents shall not be required to
take any action hereunder or under any other Loan Document, or to prosecute or
defend any suit in respect of this Agreement or any other Loan Document, unless
it is indemnified hereunder to its satisfaction. If any indemnity in favor of
either of the Agents shall be or become, in such Agent's determination,
inadequate, the Agent may call for additional indemnification from the Lenders
and cease to do the acts indemnified against hereunder until such additional
indemnity is given.
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SECTION 9.2. Funding Reliance, etc. Unless the
Administrative Agent shall have been notified by telephone, confirmed in
writing, by any Lender by 5:00 p.m., New York time, on the day prior to a
Borrowing or Disbursement with respect to a Letter of Credit pursuant to
Section 2.8.2 that such Lender will not make available the amount which would
constitute its Percentage of such Borrowing on the date specified therefor, the
Administrative Agent may assume that such Lender has made such amount available
to the Administrative Agent and, in reliance upon such assumption, make
available to the applicable Borrower a corresponding amount. If and to the
extent that such Lender shall not have made such amount available to the
Administrative Agent, such Lender severally agrees and the applicable Borrower
agrees to repay the Administrative Agent forthwith on demand such corresponding
amount together with interest thereon, for each day from the date the
Administrative Agent made such amount available to such Borrower to the date
such amount is repaid to the Administrative Agent, at the interest rate
applicable at the time to Loans comprising such Borrowing.
SECTION 9.3. Exculpation. None of the Agents or the
Arranger nor any of their respective directors, officers, employees or agents
shall be liable to any Lender for any action taken or omitted to be taken by it
under this Agreement or any other Loan Document, or in connection herewith or
therewith, except for its own willful misconduct or gross negligence, nor
responsible for any recitals or warranties herein or therein, nor for the
effectiveness, enforceability, validity or due execution of this Agreement or
any other Loan Document, nor for the creation, perfection or priority of any
Liens purported to be created by any of the Loan Documents, or the validity,
genuineness, enforceability, existence, value or sufficiency of any collateral
security, nor to make any inquiry respecting the performance by any Borrower of
its obligations hereunder or under any other Loan Document. Any such inquiry
which may be made by any Agent or any Issuer shall not obligate it to make any
further inquiry or to take any action. The Agents and the Issuers shall be
entitled to rely upon advice of counsel concerning legal matters and upon any
notice, consent, certificate, statement or writing which the Agents or the
Issuers, as applicable, believe to be genuine and to have been presented by a
proper Person.
SECTION 9.4. Successor. The Syndication Agent may
resign as such upon one Business Day's notice to the Company and the
Administrative Agent. The Administrative Agent may resign as such at any time
upon at least 30 days' prior notice to the Company and all Lenders. If the
Administrative Agent at any time shall resign, the Required Lenders may, with
the prior consent of the Company (which consent shall not be unreasonably
withheld),
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appoint another Lender as a successor Administrative Agent which shall
thereupon become the Administrative Agent hereunder. If no successor
Administrative Agent shall have been so appointed by the Required Lenders, and
shall have accepted such appointment, within 30 days after the retiring
Administrative Agent's giving notice of resignation, then the retiring
Administrative Agent may, on behalf of the Lenders, appoint a successor
Administrative Agent, which shall be one of the Lenders or a commercial banking
institution organized under the laws of the United States or a United States
branch or agency of a commercial banking institution, and having a combined
capital and surplus of at least $500,000,000. Upon the acceptance of any
appointment as Administrative Agent hereunder by a successor Administrative
Agent, such successor Administrative Agent shall be entitled to receive from
the retiring Administrative Agent such documents of transfer and assignment as
such successor Administrative Agent may reasonably request, and shall thereupon
succeed to and become vested with all rights, powers, privileges and duties of
the retiring Administrative Agent, and the retiring Administrative Agent shall
be discharged from its duties and obligations under this Agreement. After any
retiring Administrative Agent's resignation hereunder as the Administrative
Agent, the provisions of
(a) this Article IX shall inure to its benefit as
to any actions taken or omitted to be taken by it while
it was the Administrative Agent under this Agreement; and
(b) Section 11.3 and Section 11.4 shall continue
to inure to its benefit.
SECTION 9.5. Credit Extensions by Each Agent and Issuer.
Each Agent and each Issuer shall have the same rights and powers with respect
to (i) in the case of the Agents, the Credit Extensions made by it or any of
its Affiliates and (ii) in the case of any Issuer, the Loans made by it or any
of its Affiliates as any other Lender and may exercise the same as if it were
not an Agent or an Issuer. Each Agent, each Issuer and each of their
respective Affiliates may accept deposits from, lend money to, and generally
engage in any kind of business with any Borrower or any Subsidiary or Affiliate
of any Borrower as if such Agent or Issuer were not an Agent or Issuer
hereunder.
SECTION 9.6. Credit Decisions. Each Lender acknowledges
that it has, independently of each Agent, the Arranger, each Issuer and each
other Lender, and based on such Lender's review of the financial information of
the Borrowers, this Agreement, the other Loan Documents (the terms and
provisions of which being satisfactory to such Lender) and such other
documents, information and investigations as such Lender has deemed
appropriate, made its own credit decision to extend its Commitments. Each
Lender also acknowledges that it will, independently of each Agent, the
Arranger, each Issuer and each other Lender, and based on such other documents,
information and investigations as it shall
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deem appropriate at any time, continue to make its own credit decisions as to
exercising or not exercising from time to time any rights and privileges
available to it under this Agreement or any other Loan Document.
SECTION 9.7. Copies, etc. The Administrative Agent
shall give prompt notice to each Lender of each notice or request required or
permitted to be given to the Administrative Agent by any Borrower pursuant to
the terms of this Agreement (unless concurrently delivered to the Lenders by
such Borrower). The Administrative Agent will distribute to each Lender each
document or instrument received for such Lender's account and copies of all
other communications received by the Administrative Agent from any Borrower for
distribution to the Lenders by the Administrative Agent in accordance with the
terms of this Agreement.
SECTION 9.8. The Syndication Agent, the Documentation
Agent and the Administrative Agent. Notwithstanding anything else to the
contrary contained in this Agreement or any other Loan Document, the
Syndication Agent, the Documentation Agent and the Administrative Agent, each
in such capacity, shall have no duties or responsibilities under this Agreement
or any other Loan Document nor any fiduciary relationship with any Lender, and
no implied covenants, functions, responsibilities, duties, obligations or
liabilities shall be read into this Agreement or otherwise exist against the
Syndication Agent, the Documentation Agent or the Administrative Agent, as
applicable, in such capacity except, in the case of the Agents, as are
explicitly set forth herein or in the other Loan Documents.
ARTICLE X
COMPANY GUARANTY
SECTION 10.1. Guaranty. The Company hereby absolutely,
unconditionally and irrevocably
(a) guarantees the full and punctual payment when
due, whether at stated maturity, by required prepayment,
declaration, acceleration, demand or otherwise, of all
Obligations of each Foreign Borrower and each other
Obligor now or hereafter existing under this Agreement
and each other Loan Document to which such Foreign
Borrower and each other Obligor is or may become a party,
whether for principal, interest, fees, expenses or
otherwise (including all such amounts which would become
due but for the operation of the automatic stay under
Section 362(a) of the United
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States Bankruptcy Code, 11 U.S.C. Section 362(a), and the
operation of Sections 502(b) and 506(b) of the United
States Bankruptcy Code, 11 U.S.C. Section 502(b) and
Section 506(b)), and
(b) indemnifies and holds harmless each Lender
for any and all costs and expenses (including reasonable
attorney's fees and expenses) incurred by such Lender or
such holder, as the case may be, in enforcing any rights
under this Article X;
This Article X constitutes a guaranty of payment when due and not of
collection, and the Company specifically agrees that it shall not be necessary
or required that any Lender exercise any right, assert any claim or demand or
enforce any remedy whatsoever against any Foreign Borrower or any other Obligor
(or any other Person) before or as a condition to the obligations of the
Company hereunder.
SECTION 10.2. Acceleration of Obligations Hereunder.
The Company agrees that, in the event of the dissolution or insolvency of any
Foreign Borrower or any other Obligor, or the inability or failure of any
Foreign Borrower or any other Obligor to pay its debts as they become due, or
an assignment by any Foreign Borrower or any other Obligor for the benefit of
creditors, or the commencement of any case or proceeding in respect of any
Foreign Borrower or any other Obligor under any bankruptcy, insolvency or
similar laws, and if such event shall occur at a time when any of the
Obligations of any Foreign Borrower or any other Obligor may not then be due
and payable, the Company agrees that it will pay to the Lenders forthwith the
full amount which would be payable hereunder by such Foreign Borrower if all
such Obligations were then due and payable. The foregoing provisions of this
Section 10.2 shall not be applicable if the dissolution, insolvency or other
events described above relate to an Immaterial Subsidiary.
SECTION 10.3. Obligations Hereunder Absolute, etc. The
obligations of the Company under this Article X shall in all respects be a
continuing, absolute, unconditional and irrevocable guaranty of payment, and
shall remain in full force and effect until all Obligations of all Foreign
Borrowers and each other Obligor have been paid in full and all Commitments
shall have terminated. The Company guarantees that the Obligations of the
Foreign Borrowers and each other Obligor will be paid strictly in accordance
with the terms of this Agreement and each other Loan Document under which they
arise, regardless of any law, regulation or order now or hereafter in effect in
any jurisdiction affecting any of such terms or the rights of any Lender or any
holder of any Note with respect thereto. The liability of the Company under
this Article X shall be absolute, unconditional and irrevocable irrespective
of:
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(a) any lack of validity, legality or
enforceability of other provisions of this Agreement or
any other Loan Document;
(b) the failure of any Lender
(i) to assert any claim or demand or to
enforce any right or remedy against any Foreign
Borrower, any other Obligor or any other Person
(including any other guarantor) under the
provisions of this Agreement, any other Loan
Document or otherwise, or
(ii) to exercise any right or remedy against
any other guarantor of, or collateral securing,
any Obligations of any Foreign Borrower or any
other Obligor;
(c) any change in the time, manner or place of
payment of, or in any other term of, all or any of the
Obligations of any Foreign Borrower or any other Obligor,
or any other extension, compromise or renewal of any
Obligation of any Foreign Borrower or any other Obligor;
(d) any reduction, limitation, impairment or
termination of any Obligation of any Foreign Borrower or
any other Obligor for any reason, including any claim of
waiver, release, surrender, alteration or compromise, and
shall not be subject to (and the Company hereby waives
any right to or claim of) any defense or setoff,
counterclaim, recoupment or termination whatsoever by
reason of the invalidity, illegality, nongenuineness,
irregularity, compromise, unenforceability of, or any
other event or occurrence affecting, any Obligation of
any Foreign Borrower, any other Obligor or otherwise;
(e) any amendment to, rescission, waiver, or
other modification of, or any consent to departure from,
any of the other terms of this Agreement or any other
Loan Document;
(f) any addition, exchange, release, surrender or
non-perfection of any collateral, or any amendment to or
waiver or release or addition of, or consent to departure
from, any other guaranty, held by any Lender securing any
of the Obligations of any Foreign Borrower or any other
Obligor; or
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(g) any other circumstance which might otherwise
constitute a defense available to, or a legal or
equitable discharge of, any Foreign Borrower, any other
Obligor, any surety or any guarantor.
SECTION 10.4. Reinstatement, etc. The Company agrees
that this Article X shall continue to be effective or be reinstated, as the
case may be, if at any time any payment (in whole or in part) of any of the
Obligations of any Foreign Borrower or any other Obligor is rescinded or must
otherwise be restored by any Lender upon the insolvency, bankruptcy or
reorganization of any Foreign Borrower or any other Obligor or otherwise, all
as though such payment had not been made.
SECTION 10.5. Waiver, etc. The Company hereby waives
promptness, diligence, notice of acceptance and any other notice with respect
to any of the Obligations of the Foreign Borrowers or any other Obligor and
this Article X and any requirement that the Administrative Agent and any other
Lender protect, secure or perfect or insure any security interest or Lien, or
any property subject thereto, or exhaust any right or take any action against
any Foreign Borrower, any other Obligor or any other Person (including any
other guarantor) or entity or any collateral securing the Obligations of the
Foreign Borrowers or any other Obligor, as the case may be.
SECTION 10.6. Postponement of Subrogation. The Company
agrees that it will not exercise any rights which it may acquire by way of
subrogation under this Article X, by any payment made hereunder or otherwise,
until the prior payment, in full and in cash, of all Obligations of the Foreign
Borrowers and each other Obligor. Any amount paid to the Company on account of
any such subrogation rights prior to the payment in full of all Obligations of
the Foreign Borrowers and each other Obligor shall be held in trust for the
benefit of the Lenders and shall immediately be paid to the Lenders and
credited and applied against the Obligations of the Foreign Borrowers and each
other Obligor whether matured or unmatured, in accordance with the terms of
this Agreement; provided, however, that if all Obligations of the Foreign
Borrowers and each other Obligor have been paid in full and all Commitments
have been permanently terminated, each Lender agrees that, at the Company's
request, the Lenders will execute and deliver to the Company appropriate
documents (without recourse and without representation or warranty) necessary
to evidence the transfer by subrogation to the Company of an interest in the
Obligations of the Foreign Borrowers and each other Obligor resulting from such
payment by the Company. In furtherance of the foregoing, for so long as any
Obligations of any Foreign Borrowers or any Commitments remain outstanding, the
Company shall refrain from taking any action or commencing any proceeding
against any Foreign Borrower or any other Obligor (or its successors or
assigns),
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whether in connection with a bankruptcy proceeding or otherwise to recover any
amounts in respect of payments made under this Article X to any Lender.
SECTION 10.7. Successors, Transferees and Assigns;
Transfers of Notes, etc. Without limiting the generality of Section 11.11, any
Lender may assign or otherwise transfer (in whole or in part) any Obligation of
any Foreign Borrower held by it to any other Person or entity, and such other
Person or entity shall thereupon become vested with all rights and benefits in
respect thereof granted to such Lender under any Loan Document (including this
Article X) or otherwise, subject, however, to any contrary provisions in such
assignment or transfer, and to the provisions of Section 11.11 and Article IX
of this Agreement.
ARTICLE XI
MISCELLANEOUS PROVISIONS
SECTION 11.1. Waivers, Amendments, etc. The provisions
of this Agreement and of each other Loan Document may from time to time be
amended, modified or waived, if such amendment, modification or waiver is in
writing and consented to by the Company and each Obligor party thereto and by
the Required Lenders; provided, however, that no such amendment, modification
or waiver which would:
(a) modify any requirement hereunder that any
particular action be taken by all the Lenders or by the
Required Lenders shall be effective unless consented to
by each Lender;
(b) modify this Section 11.1, or clause (a) of
Section 11.10, change the definitions of "Required
Lenders" or "Total Exposure Amount", increase any
Commitment Amount or the Percentage of any Lender (other
than pursuant to clause (g) of Section 2.1.2), reduce any
fees described in Section 3.3 (other than the
administration fee referred to in Section 3.3.2), release
any material Subsidiary Co-Obligor from its obligations
under the Subsidiary Co-Obligation Agreement and
Guaranty, Holdco from its obligations under the Holdco
Guaranty and Pledge Agreement, or the Company from its
obligations under Article X hereof, or all or
substantially all of the collateral security (except in
each case as otherwise specifically provided in this
Agreement, the Subsidiary Co-Obligation Agreement and
Guaranty, a Security Agreement or a Pledge Agreement) or
extend any Commitment Termination Date, shall be made
without the consent of each Lender adversely affected
thereby;
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(c) extend the due date for, or reduce the amount
of, any scheduled repayment of principal of or interest
on or fees payable in respect of any Loan or reduce the
principal amount of or rate of interest on or fees
payable in respect of any Loan or any Reimbursement
Obligations (which shall in each case include the
conversion of all or any part of the Obligations into
equity of any Obligor), shall be made without the consent
of the Lender which has made such Loan or, in the case of
a Reimbursement Obligation, the Issuer owed, and those
Lenders participating in, such Reimbursement Obligation;
(d) affect adversely the interests, rights or
obligations of any Agent, any Issuer or the Arranger (in
its capacity as Agent, Issuer or Arranger), unless
consented to by such Agent, Issuer or Arranger, as the
case may be;
(e) have the effect (either immediately or at
some later time) of enabling any Borrower to satisfy a
condition precedent to the making of a Revolving Loan or
the issuance of a Letter of Credit without the consent of
Lenders holding at least 51% of the Revolving Loan
Commitments; or
(f) amend, modify or waive the provisions of
clause (a)(i) of Section 3.1.1 or clause (b) of Section
3.1.2 or effect any amendment, modification or waiver
that by its terms adversely affects the rights of Lenders
participating in any Tranche differently from those of
Lenders participating in other Tranches, without the
consent of the holders of at least 51% of the aggregate
amount of Loans outstanding under the Tranche or Tranches
affected by such amendment, modification or waiver, or,
in the case of an amendment, modification or waiver
affecting any Tranche or Tranches of Revolving Loan
Commitments, the Lenders holding at least 51% of the
Revolving Loan Commitments in respect of such Tranche or
Tranches.
No failure or delay on the part of any Agent, any Issuer or any Lender in
exercising any power or right under this Agreement or any other Loan Document
shall operate as a waiver thereof, nor shall any single or partial exercise of
any such power or right preclude any other or further exercise thereof or the
exercise of any other power or right. No notice to or demand on any Borrower
in any case shall entitle it to any notice or demand in similar or other
circumstances. No waiver or approval by any Agent, any Issuer or any Lender
under this Agreement or any other Loan Document shall, except as may be
otherwise stated in such waiver or approval, be applicable to subsequent
transactions. No waiver or approval hereunder shall require any similar or
dissimilar waiver or approval thereafter to be granted hereunder.
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SECTION 11.2. Notices. All notices and other
communications provided to any party hereto under this Agreement or any other
Loan Document shall be in writing or by facsimile and addressed, delivered or
transmitted to such party at its address or facsimile number set forth on
Schedule II hereto or, in the case of a Lender that becomes a party hereto
after the date hereof, as set forth in the Lender Assignment Agreement pursuant
to which such Lender becomes a Lender hereunder or at such other address or
facsimile number as may be designated by such party in a notice to the other
parties. Any notice, if mailed and properly addressed with postage prepaid or
if properly addressed and sent by pre-paid courier service, shall be deemed
given when received; any notice, if transmitted by facsimile, shall be deemed
given when transmitted (and telephonic confirmation of receipt thereof has been
received).
SECTION 11.3. Payment of Costs and Expenses. The
Company agrees to pay on demand all reasonable expenses of each of the Agents
(including the reasonable fees and out-of-pocket expenses of a single counsel
to the Agents and of local or foreign counsel, if any, who may be retained by
counsel to the Agents) in connection with
(a) the syndication by the Syndication Agent and
the Arranger of the Loans, the negotiation, preparation,
execution and delivery of this Agreement and of each
other Loan Document, including schedules and exhibits,
and any amendments, waivers, consents, supplements or
other modifications to this Agreement or any other Loan
Document as may from time to time hereafter be required,
whether or not the transactions contemplated hereby are
consummated;
(b) the filing, recording, refiling or
rerecording of each Mortgage, each Pledge Agreement and
each Security Agreement and/or any Uniform Commercial
Code financing statements relating thereto and all
amendments, supplements and modifications to any thereof
and any and all other documents or instruments of further
assurance required to be filed or recorded or refiled or
rerecorded by the terms hereof or of such Mortgage,
Pledge Agreement or Security Agreement; and
(c) the preparation and review of the form of any
document or instrument relevant to this Agreement or any
other Loan Document.
The Company further agrees to pay, and to save the Agents, the Issuers and the
Lenders harmless from all liability for, any stamp or other similar taxes which
may be payable in connection with the execution or delivery of this Agreement,
the Credit Extensions made hereunder or the issuance of any Notes or Letters of
Credit or any other Loan Documents. The Company also agrees to reimburse each
Agent, each Issuer and each Lender upon
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demand for all reasonable out-of-pocket expenses (including reasonable
attorneys' fees and legal expenses) incurred by such Agent, such Issuer or such
Lender in connection with (x) the negotiation of any restructuring or
"work-out", whether or not consummated, of any Obligations and (y) the
enforcement of any Obligations.
SECTION 11.4. Indemnification. In consideration of the
execution and delivery of this Agreement by each Lender and the extension of
the Commitments, the Company hereby, to the fullest extent permitted under
applicable law, indemnifies, exonerates and holds each Agent, each Issuer, the
Arranger and each Lender and each of their respective Affiliates, and each of
their respective partners, officers, directors, employees and agents, and each
other Person controlling any of the foregoing within the meaning of either
Section 15 of the Securities Act of 1933, as amended, or Section 20 of the
Securities Exchange Act of 1934, as amended (collectively, the "Indemnified
Parties"), free and harmless from and against any and all actions, causes of
action, suits, losses, costs, liabilities and damages, and expenses actually
incurred in connection therewith (irrespective of whether any such Indemnified
Party is a party to the action for which indemnification hereunder is sought),
including reasonable attorneys' fees and disbursements (collectively, the
"Indemnified Liabilities"), incurred by the Indemnified Parties or any of them
as a result of, or arising out of, or relating to
(a) any transaction financed or to be financed in
whole or in part, directly or indirectly, with the
proceeds of any Credit Extension;
(b) the entering into and performance of this
Agreement and any other Loan Document by any of the
Indemnified Parties (excluding any successful action
brought by or on behalf of any Borrower as the result of
any failure by any Lender to make any Credit Extension
hereunder);
(c) any investigation, litigation or proceeding
related to any acquisition or proposed acquisition by the
Company or any of its Subsidiaries of all or any portion
of the stock or assets of any Person, whether or not such
Agent, such Issuer, such Arranger or such Lender is party
thereto;
(d) any alleged or actual litigation or
proceeding related to any environmental cleanup or
noncompliance with or liability under any Environmental
Law relating to the use, ownership or operation by the
Company or any of its Subsidiaries of any real property
or to the release, generation, transportation or
arrangement for transportation by the Company or any of
its Subsidiaries of any Hazardous Material; or
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(e) the presence on or under, or the escape,
seepage, leakage, spillage, discharge, emission or
release from, any real property owned or operated by the
Company or any Subsidiary thereof of any Hazardous
Material present on or under such property at or prior to
the time the Company or such Subsidiary owned or operated
such property which gives rise to liability under any
Environmental Law (including any losses, liabilities,
damages, injuries, costs, expenses or claims asserted or
arising under any Environmental Law), regardless of
whether caused by, or within the control of, the Company
or such Subsidiary,
except for any such Indemnified Liabilities arising for the account of a
particular Indemnified Party by reason of the relevant Indemnified Party's
gross negligence or willful misconduct or any Hazardous Materials that are
first manufactured, emitted, generated, treated, released, stored or disposed
of on any real property of the Company or any of its Subsidiaries or any
violation of Environmental Law that first occurs on or with respect to any real
property of the Company or any of its Subsidiaries after such real property is
transferred to any Indemnified Person or its successor by foreclosure sale,
deed in lieu of foreclosure, or similar transfer, except to the extent such
manufacture, emission, release, generation, treatment, storage or disposal or
violation is actually caused by Holdco, the Company or any of the Company's
Subsidiaries. The Company and its permitted successors and assigns hereby
waive, release and agree not to make any claim, or bring any cost recovery
action against, any Agent, any Issuer, the Documentation Agent, the Arranger or
any Lender under CERCLA or any state equivalent, or any similar law now
existing or hereafter enacted, except to the extent arising out of the gross
negligence or willful misconduct of any Indemnified Party. It is expressly
understood and agreed that to the extent that any Indemnified Party is strictly
liable under any Environmental Laws, the Company's obligation to such
Indemnified Party under this indemnity shall likewise be without regard to
fault on the part of the Company, to the extent permitted under applicable law,
with respect to the violation or condition which results in liability of such
Indemnified Party. Notwithstanding anything to the contrary herein, each
Agent, each Issuer, the Arranger and each Lender shall be responsible with
respect to any Hazardous Materials that are first manufactured, emitted,
generated, treated, released, stored or disposed of on any real property of the
Company or any of its Subsidiaries or any violation of Environmental Law that
first occurs on or with respect to any such real property after such real
property is transferred to any Agent, Issuer, Arranger or Lender to its
successor by foreclosure sale, deed in lieu of foreclosure, or similar
transfer, except to the extent such manufacture, emission, release, generation,
treatment, storage or disposal or violation is actually caused by Holdco, the
Company or any of the Company's Subsidiaries. If and to the extent that the
foregoing undertaking may be unenforceable for any reason, the Company hereby
agrees to make the maximum
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contribution to the payment and satisfaction of each of the Indemnified
Liabilities, which is permissible under applicable law.
SECTION 11.5. Survival. The obligations of the Company
under Sections 4.3, 4.4, 4.5, 4.6, 11.3 and 11.4, and the obligations of the
Lenders under Sections 4.8 and 9.1, shall in each case survive any termination
of this Agreement, the payment in full of all Obligations and the termination
of all Commitments. The representations and warranties made by the Company and
each other Obligor in this Agreement and in each other Loan Document shall
survive the execution and delivery of this Agreement and each such other Loan
Document.
SECTION 11.6. Severability. Any provision of this
Agreement or any other Loan Document which is prohibited or unenforceable in
any jurisdiction shall, as to such provision and such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions of this Agreement or such Loan Document
or affecting the validity or enforceability of such provision in any other
jurisdiction.
SECTION 11.7. Headings. The various headings of this
Agreement and of each other Loan Document are inserted for convenience only and
shall not affect the meaning or interpretation of this Agreement or such other
Loan Document or any provisions hereof or thereof.
SECTION 11.8. Execution in Counterparts, Effectiveness,
etc. This Agreement may be executed by the parties hereto in several
counterparts, each of which shall be deemed to be an original and all of which
shall constitute together but one and the same agreement.
SECTION 11.9. Governing Law; Entire Agreement. THIS
AGREEMENT AND, EXCEPT TO THE EXTENT OTHERWISE EXPRESSLY PROVIDED THEREIN, EACH
OTHER LOAN DOCUMENT SHALL EACH BE DEEMED TO BE A CONTRACT MADE UNDER AND
GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW YORK. This Agreement and the
other Loan Documents constitute the entire understanding among the parties
hereto with respect to the subject matter hereof and supersede any prior
agreements, written or oral, with respect thereto. Upon the execution and
delivery of this Agreement by the parties hereto, all obligations and
liabilities of the DLJMB Entities, under or relating or with respect to the
Commitment Letter shall be terminated and of no further force or effect.
SECTION 11.10. Successors and Assigns. This Agreement
shall be binding upon and shall inure to the benefit of the parties hereto and
their respective successors and assigns; provided, however, that:
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(a) no Borrower may assign or transfer its rights
or obligations hereunder without the prior written
consent of each of the Agents and all Lenders; and
(b) the rights of sale, assignment and transfer
of the Lenders are subject to Section 11.11.
SECTION 11.11. Sale and Transfer of Loans and Notes;
Participations in Loans and Notes. Each Lender may assign, or sell
participations in, its Loans and Commitments to one or more other Persons, on a
non pro rata basis (except as provided below), in accordance with this Section
11.11.
SECTION 11.11.1. Assignments. Any Lender (the "Assignor
Lender"),
(a) with the written consents of the Company, the
Agents and (in the case of any assignment of
participations in Letters of Credit or Revolving Loan
Commitments) the applicable Issuer (which consents (i)
shall not be unreasonably delayed or withheld and (ii) of
the Company shall not be required upon the occurrence and
during the continuance of any Event of Default), may at
any time assign and delegate to one or more commercial
banks, funds which are regularly engaged in making,
purchasing or investing in loans or securities or other
financial institutions, and
(b) with notice to the Company, the Agents, and
(in the case of any assignment of participations in
Letters of Credit or Revolving Loan Commitments) the
applicable Issuer, but without the consent of the
Company, the Agents or such Issuer, may assign and
delegate to any of its Affiliates or to any other Lender,
or to an Approved Fund of any Lender
(each Person described in either of the foregoing clauses as being the Person
to whom such assignment and delegation is to be made, being hereinafter
referred to as an "Assignee Lender"), all or any fraction of such Lender's Term
Loans of any Tranche, Uncommitted Foreign Currency Revolving Loans of any
Tranche or Committed Revolving Loans of such Tranche, participations in Letters
of Credit, Letter of Credit Outstandings with respect thereto and related
Commitments of any Tranche (which assignment and delegation shall be, as among
Revolving Loan Commitments of any Tranche, Committed Revolving Loans of such
Tranche and participations in Letters of Credit of such Tranche, of a constant,
and not a varying, percentage) in a minimum aggregate amount of (i) $5,000,000
(or, in the case of Foreign Currency Loans, the multiple of 100,000 units of
the Currency of such Loans the U.S. Dollar Equivalent of which is nearest to
$5,000,000), or such lesser amount as the
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Company and the Agents may consent to, or (ii) with respect to the Tranche as
to which such assignment is to occur, the then remaining amount of such
Lender's Term Loans, Uncommitted Foreign Currency Revolving Loans, or Revolving
Loan Commitment and related Committed Revolving Loans and participations in
Letters of Credit, as the case may be; provided, however, that any such
Assignee Lender will comply, if applicable, with the provisions contained in
Section 4.6 and the Borrowers, each other Obligor and the Agents shall be
entitled to continue to deal solely and directly with such Lender in connection
with the interests so assigned and delegated to an Assignee Lender until
(i) written notice of such assignment and
delegation, together with payment instructions, addresses
and related information with respect to such Assignee
Lender, shall have been given to the Company, the
applicable Borrower (if other than the Company) and the
Agents by such Lender and such Assignee Lender;
(ii) such Assignee Lender shall have executed and
delivered to the applicable Borrower and the Agents a
Lender Assignment Agreement, accepted by the Agents;
(iii) the processing fees described below shall
have been paid; and
(iv) the Administrative Agent shall have
registered such assignment and delegation in the Register
pursuant to clause (b) of Section 2.9.
From and after the date that the Agents accept such Lender Assignment Agreement
and such assignment and delegation is registered in the Register pursuant to
clause (b) of Section 2.9, (x) the Assignee Lender thereunder shall be deemed
automatically to have become a party hereto and to the extent that rights and
obligations hereunder have been assigned and delegated to such Assignee Lender
in connection with such Lender Assignment Agreement, shall have the rights and
obligations of a Lender hereunder and under the other Loan Documents, and (y)
the Assignor Lender, to the extent that rights and obligations hereunder have
been assigned and delegated by it in connection with such Lender Assignment
Agreement, shall be released from its obligations hereunder and under the other
Loan Documents. Any Assignor Lender that shall have previously requested and
received any Note or Notes in respect of any Tranche to which any such
assignment applies shall, upon the acceptance by the Administrative Agent of
the applicable Lender Assignment Agreement, mark such Note or Notes "exchanged"
and deliver them to the applicable Borrower (against, if the Assignor Lender
has retained Loans or Commitments with respect to the applicable Tranche and
has requested replacement Notes pursuant to clause (b)(ii) of Section 2.9, its
receipt from the applicable Borrower of replacement Notes in the principal
amount of the Loans and Commitments of the applicable Tranche retained by it).
Such Assignor Lender or
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such Assignee Lender must also pay a processing fee to the Administrative Agent
upon delivery of any Lender Assignment Agreement in the amount of $3,500,
unless such assignment and delegation is by a Lender to its Affiliate or
Approved Fund or if such assignment and delegation is by a Lender to a Federal
Reserve Bank, as provided below or is otherwise consented to by the
Administrative Agent. Any attempted assignment and delegation not made in
accordance with this Section 11.11.1 shall be null and void. Nothing contained
in this Section 11.11.1 shall prevent or prohibit any Lender from pledging its
rights (but not its obligations to make Loans or participate in Letters of
Credit or Letter of Credit Outstandings) under this Agreement and/or its Loans
hereunder to a Federal Reserve Bank in support of borrowings made by such
Lender from such Federal Reserve Bank, and any Lender that is a fund that
invests in bank loans may pledge all or any portion of its rights (but not its
obligations to make Loans or participate in Letters of Credit or Letter of
Credit Outstandings) hereunder to any trustee or any other representative of
holders of obligations owed or securities issued by such fund as security for
such obligations or securities. In the event that S&P, Moody's or Thompson's
BankWatch (or InsuranceWatch Ratings Service, in the case of Lenders that are
insurance companies (or Best's Insurance Reports, if such insurance company is
not rated by Insurance Watch Ratings Service)) shall, after the date that any
Lender with a Commitment to make Revolving Loans or participate in Letters of
Credit becomes a Lender, downgrade the long-term certificate of deposit rating
or long-term senior unsecured debt rating of such Lender, and the resulting
rating shall be below BBB-, Baa3 or C (or BB, in the case of Lender that is an
insurance company (or B, in the case of an insurance company not rated by
InsuranceWatch Ratings Service)), respectively, then the applicable Issuer or
the Company shall have the right, but not the obligation, upon notice to such
Lender and the Agents, to replace such Lender with an Assignee Lender in
accordance with and subject to the restrictions contained in this Section, and
such Lender hereby agrees to transfer and assign without recourse (in
accordance with and subject to the restrictions contained in this Section) all
its interests, rights and obligations in respect of its Revolving Loan
Commitment under this Agreement to such Assignee Lender; provided, however,
that (i) no such assignment shall conflict with any law, rule, regulation or
order of any governmental authority and (ii) such Assignee Lender shall pay to
such Lender in immediately available funds on the date of such assignment the
principal of and interest and fees (if any) accrued to the date of payment on
the Loans made, and Letters of Credit participated in, by such Lender hereunder
and all other amounts accrued for such Lender's account or owed to it
hereunder.
SECTION 11.11.2. Participations. Any Lender may at any
time sell to one or more commercial banks or other Persons (each such
commercial bank and other Person being herein called a "Participant")
participating interests in any of the Loans, Commitments,
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participations in Letters of Credit and Letter of Credit Outstandings or other
interests of such Lender hereunder; provided, however, that
(a) no participation contemplated in this Section
shall relieve such Lender from its Commitments or its
other obligations hereunder or under any other Loan
Document;
(b) such Lender shall remain solely responsible
for the performance of its Commitments and such other
obligations;
(c) each Borrower and each other Obligor and the
Agents shall continue to deal solely and directly with
such Lender in connection with such Lender's rights and
obligations under this Agreement and each of the other
Loan Documents;
(d) no Participant, unless such Participant is
itself a Lender, shall be entitled to require such Lender
to take or refrain from taking any action hereunder or
under any other Loan Document, except that such Lender
may agree with any Participant that such Lender will not,
without such Participant's consent, agree to (i) any
reduction in the interest rate or amount of fees that
such Participant is otherwise entitled to, (ii) a
decrease in the principal amount, or an extension of the
final Stated Maturity Date, of any Loan in which such
Participant has purchased a participating interest or
(iii) a release of all or substantially all of the
collateral security under the Loan Documents or any
material Subsidiary Co-Obligor under the Subsidiary
Co-Obligation Agreement and Guaranty, if any, in each
case except as otherwise specifically provided in a Loan
Document; and
(e) no Borrower shall be required to pay any
amount under Sections 4.3, 4.4, 4.5, 4.6, 11.3 and 11.4
that is greater than the amount which it would have been
required to pay had no participating interest been sold.
The Borrowers acknowledge and agree, subject to clause (e) above, that, to the
fullest extent permitted under applicable law, each Participant, for purposes
of Sections 4.3, 4.4, 4.5, 4.6, 4.8, 4.9, 11.3 and 11.4, shall be considered a
Lender.
SECTION 11.12. Other Transactions. Nothing contained
herein shall preclude any Agent or any other Lender from engaging in any
transaction, in addition to those contemplated by this Agreement or any other
Loan Document, with any Borrower or any of its Affiliates in which such
Borrower or such Affiliate is not restricted hereby from engaging with any
other Person.
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SECTION 11.13. Forum Selection, Consent to Jurisdiction
and Waiver of Immunities. (a) ANY LITIGATION BASED HEREON, OR ARISING OUT OF,
UNDER, OR IN CONNECTION WITH, THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR ANY
COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR
ACTIONS OF THE AGENTS, THE LENDERS, THE ISSUERS OR THE BORROWERS RELATING
THERETO SHALL BE BROUGHT AND MAINTAINED EXCLUSIVELY (TO THE EXTENT PERMITTED
UNDER APPLICABLE LAW) IN THE COURTS OF THE STATE OF NEW YORK, NEW YORK COUNTY,
OR IN THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK;
PROVIDED, HOWEVER, THAT ANY SUIT SEEKING ENFORCEMENT AGAINST ANY COLLATERAL OR
OTHER PROPERTY MAY BE BROUGHT, AT THE ADMINISTRATIVE AGENT'S OPTION, IN THE
COURTS OF ANY JURISDICTION WHERE SUCH COLLATERAL OR OTHER PROPERTY MAY BE
FOUND. THE BORROWERS HEREBY EXPRESSLY AND IRREVOCABLY SUBMIT TO THE
JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK, NEW YORK COUNTY, AND OF
THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK FOR THE
PURPOSE OF ANY SUCH LITIGATION AS SET FORTH ABOVE AND IRREVOCABLY AGREE TO BE
BOUND BY ANY JUDGMENT RENDERED THEREBY IN CONNECTION WITH SUCH LITIGATION. THE
BORROWERS IRREVOCABLY CONSENT TO THE SERVICE OF PROCESS BY REGISTERED MAIL,
POSTAGE PREPAID, OR BY PERSONAL SERVICE WITHIN OR WITHOUT THE STATE OF NEW
YORK. THE BORROWERS HEREBY EXPRESSLY AND IRREVOCABLY WAIVE, TO THE FULLEST
EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH THEY MAY HAVE OR HEREAFTER MAY
HAVE TO THE LAYING OF VENUE OF ANY SUCH LITIGATION BROUGHT IN ANY SUCH COURT
REFERRED TO ABOVE AND ANY CLAIM THAT ANY SUCH LITIGATION HAS BEEN BROUGHT IN AN
INCONVENIENT FORUM.
(b) NOTHING IN THIS SECTION SHALL AFFECT THE RIGHT OF
ANY AGENT, ANY LENDER OR ANY ISSUER TO SERVE LEGAL PROCESS IN ANY OTHER MANNER
PERMITTED BY LAW OR AFFECT THE RIGHT OF ANY SUCH PERSON TO BRING ANY ACTION OR
PROCEEDING AGAINST ANY BORROWER OR ITS PROPERTY IN THE COURTS OF ANY OTHER
JURISDICTIONS.
(c) TO THE EXTENT ANY BORROWER HAS OR HEREAFTER MAY
ACQUIRE ANY IMMUNITY FROM JURISDICTION OF ANY COURT OR FROM ANY LEGAL PROCESS
(WHETHER THROUGH SERVICE OR NOTICE,
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ATTACHMENT PRIOR TO JUDGMENT, ATTACHMENT IN AID OF EXECUTION, EXECUTION OR
OTHERWISE) WITH RESPECT TO ITSELF OR TO ITS PROPERTY, EACH BORROWER HEREBY
IRREVOCABLY WAIVES SUCH IMMUNITY IN RESPECT OF ITS OBLIGATIONS UNDER THIS
AGREEMENT AND EACH OTHER LOAN DOCUMENT EXECUTED OR TO BE EXECUTED BY IT.
SECTION 11.14. Judgment Currency. (a) If, for the
purpose of obtaining judgment in any court, it is necessary to convert a sum
due hereunder, under any Note or under any other Loan Document in another
currency into U.S. Dollars or into a Foreign Currency, as the case may be, the
parties hereto agree, to the fullest extent that they may effectively do so,
that the rate of exchange used shall be that at which, in accordance with
normal banking procedures, the applicable Secured Party could purchase such
other currency with U.S. Dollars or with such Foreign Currency, as the case may
be, in New York City, at the close of business on the Business Day immediately
preceding the day on which final judgment is given, together with any premiums
and costs of exchange payable in connection with such purchase.
(b) The obligation of each of the Borrowers in respect
of any sum due from it to any Agent, any Lender or any other Secured Party
hereunder, under any Note or under any other Loan Document shall,
notwithstanding any judgment in a currency other than U.S. Dollars or a Foreign
Currency, as the case may be, be discharged only to the extent that on the
Business Day next succeeding receipt by such Agent, such Lender or such other
Secured Party of any sum adjudged to be so due in such other currency, such
Agent, such Lender or such other Secured Party may, in accordance with normal
banking procedures, purchase U.S. Dollars or such Foreign Currency, as the case
may be, with such other currency. If the U.S. Dollars or such Foreign Currency
so purchased are less than the sum originally due to such Agent, such Lender or
such other Secured Party in U.S. Dollars or in such Foreign Currency, each of
the Borrowers agrees, as a separate obligation and notwithstanding any such
judgment, to indemnify such Agent, such Lender or such other Secured Party
against such loss.
SECTION 11.15. Waiver of Jury Trial. THE AGENTS, THE
ISSUERS, THE LENDERS AND THE BORROWERS HEREBY KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVE ANY RIGHTS THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF
ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER OR IN CONNECTION WITH,
THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR ANY COURSE OF CONDUCT, COURSE OF
DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN) OR ACTIONS OF THE AGENTS, THE
LENDERS OR ANY BORROWER RELATING THERETO. EACH
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BORROWER ACKNOWLEDGES AND AGREES THAT IT HAS RECEIVED FULL AND SUFFICIENT
CONSIDERATION FOR THIS PROVISION (AND EACH OTHER PROVISION OF EACH OTHER LOAN
DOCUMENT TO WHICH IT IS A PARTY) AND THAT THIS PROVISION IS A MATERIAL
INDUCEMENT FOR THE AGENTS AND THE LENDERS ENTERING INTO THIS AGREEMENT AND EACH
SUCH OTHER LOAN DOCUMENT.
SECTION 11.16. Confidentiality. The Agents, the
Issuers, the Arranger and the Lenders shall hold all non-public information
obtained pursuant to or in connection with this Agreement or obtained by them
based on a review of the books and records of the Company or any of its
Subsidiaries in accordance with their customary procedures for handling
confidential information of this nature, but may make disclosure to any of
their examiners, Affiliates, Approved Funds, outside auditors, counsel and
other professional advisors in connection with this Agreement or as reasonably
required by any potential bona fide transferee, participant or assignee, or to
any direct or indirect contractual counterparties in swap agreements or such
contractual counterparties' professional advisors, or in connection with the
exercise of remedies under a Loan Document, or as requested by any governmental
or regulatory agency, or the National Association of Insurance Commissioners,
or representative of any thereof or pursuant to legal process; provided,
however, that
(a) unless specifically prohibited by applicable
law or court order, each Agent, each Issuer, the Arranger
and each Lender shall promptly notify the Company of any
request by any governmental agency or representative
thereof (other than any such request in connection with
an examination of the financial condition of such Agent,
such Issuer, the Arranger and such Lender by such
governmental agency) for disclosure of any such
non-public information prior to disclosure of such
information;
(b) prior to any such disclosure pursuant to this
Section 11.16, each Agent, each Issuer, the Arranger and
each Lender shall require any such bona fide transferee,
participant and assignee receiving a disclosure of
non-public information to agree in writing
(i) to be bound by this Section 11.16; and
(ii) to require such Person to require any
other Person to whom such Person discloses such
non-public information to be similarly bound by
this Section 11.16; and
(c) except as may be required by an order of a
court of competent jurisdiction and to the extent set
forth therein, no Lender shall be obligated or required
to return any materials furnished by the Company or any
of its Subsidiaries.
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their respective officers thereunto duly authorized
as of the day and year first above written.
THERMADYNE MFG. LLC
By: /s/ JAMES H. TATE
-----------------------------------
Title: Senior Vice President and
Chief Financial Officer
COMWELD GROUP PTY. LTD.
By: /s/ JAMES H. TATE
-----------------------------------
Title: Director
GENSET S.P.A.
By: /s/ JAMES H. TATE
-----------------------------------
Title: Director
THERMADYNE WELDING PRODUCTS
CANADA LIMITED
By: /s/ JAMES H. TATE
-----------------------------------
Title: Senior Vice President and
Chief Financial Officer
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DLJ CAPITAL FUNDING, INC.,
as the Syndication Agent and as a Lender
By: /s/ HAROLD J. PHILLIPS
-----------------------------------
Title: Managing Director
ABN AMRO BANK N.V., as the
Administrative Agent and as a Lender
By: /s/ JUDY CHENEY
-----------------------------------
Title: Vice President
SOCIETE GENERALE,
as the Documentation Agent and as a
Lender
By: [ILLEGIBLE]
-----------------------------------
Title: Vice President
LENDERS
ABN AMRO BANK, N.V., MILAN
BRANCH
By:
-----------------------------------
Name:
Title:
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BANK OF NEW YORK
By: /s/ STEVEN WILSON
-----------------------------------
Name: Steven Wilson
Title: Assistant Vice President
THE BANK OF NOVA SCOTIA
By: /s/ F.C.H. ASHBY
-----------------------------------
Name: F.C.H. Ashby
Title: Senior Manager Loan Operations
BANK OF SCOTLAND
By: /s/ ANNIE CHIN TAT
-----------------------------------
Name: Annie Chin Tat
Title: Vice President
CITY NATIONAL BANK
By: /s/ GEORGE HAYRAPETIAN
-----------------------------------
Name: George Hayrapetian
Title: Vice President
THE FIRST NATIONAL BANK OF
CHICAGO
By: /s/ CATHERINE V. FRANK
-----------------------------------
Name: Catherine V. Frank
Title: Vice President
172
<PAGE> 181
THE FUJI BANK, LIMITED
By: /s/ PETER L. CHINNICI
-----------------------------------
Name: Peter L. Chinnici
Title: Joint General Manager
GENERAL ELECTRIC CAPITAL
CORPORATION
By: /s/ JANET K. WILLIAMS
-----------------------------------
Name: Janet K. Williams
Title: Duly Authorized Signatory
IMPERIAL BANK
By: /s/ RAY VADALMA
-----------------------------------
Name: Ray Vadalma
Title: Senior Vice President
NATIONAL CITY BANK
By: /s/ JOSEPH D. ROBISON
-----------------------------------
Name: Joseph D. Robison
Title: Vice President
THE INDUSTRIAL BANK OF JAPAN,
LIMITED
By: /s/ TAKUYA HONJO
-----------------------------------
Name: Takuya Honjo
Title: Senior Vice President
IBJ AUSTRALIA BANK LIMITED
By: /s/ TAKUYA HONJO
-----------------------------------
Name: Takuya Honjo
Title: Senior Vice President
173
<PAGE> 1
EXHIBIT 10.34
[DONALDSON, LUFKIN & JENRETTE LETTERHEAD]
January 16, 1998
PRIVATE AND CONFIDENTIAL
DLJ Merchant Banking II, Inc.
277 Park Avenue
New York, NY 10172
Attention: Mr. Peter T. Grauer
Managing Director
Ladies and Gentlemen:
This letter agreement (the "Agreement") confirms our understanding that
DLJ Merchant Banking II, Inc. (the "Company") has engaged Donaldson, Lufkin &
Jenrette Securities Corporation ("DLJ") to (i) act as its exclusive financial
advisor for a period of 12 months commencing upon your acceptance of this
Agreement, with respect to the possible acquisition (and any related matters
such as financings) of Thermadyne Holdings Corporation ("Target"), in one or a
series of transactions, by merger, consolidation or any other business
combination, by purchase involving all or a substantial amount of the business,
securities or assets of the Target, or otherwise (each a "Acquisition"), and
(ii) following the closing of the Acquisition, and continuing for a period of
five years thereafter (the "Engagement Period"), with respect to the review and
analysis of financial and structural alternatives available to the Company with
a view to meeting its long term strategic objectives. It is understood and
agreed that the obligations of the Company under this letter agreement
(including without limitation, the indemnification and other obligations of the
Company set forth in Schedule I hereto) shall terminate upon the assumption of
such obligations by the Target upon the consummation of the Acquisition.
Accordingly, following consummation of the Acquisition, all references to the
Company shall be deemed a reference to the Target.
As discussed, we propose to undertake certain services on your behalf, to
the extent requested by you, which shall consist of the following: (i)
assisting you in evaluating the Target, its operations, its historical
performance and its future prospects; (ii) advising on a proposed purchase
price and form of consideration; (iii) assisting you in structuring the
Acquisition; (iv) negotiating the financial aspects of any Acquisition under
your guidance and (v) assisting you, from time to time, in analyzing the
Company's operations, its historical performance and future prospects.
As compensation for the services to be provided by DLJ hereunder, the
Company agrees (i) to pay to DLJ (a) a fee of $4,000,000 upon consummation of an
Acquisition (the "Acquisition Fee") and (b) an annual advisory fee of $300,000,
payable quarterly in equal installments of $75,000 on the first business day of
each three month period commencing on the closing of the Acquisition, and (ii)
upon request by DLJ from time to time, to reimburse DLJ promptly for all
out-of-pocket expenses (including the reasonable fees and expenses of counsel)
incurred by DLJ in connection with its engagement hereunder, whether or not an
Acquisition or a Transaction (as defined below) is consummated. As DLJ will be
acting on your behalf, the Company agrees to the
<PAGE> 2
Mr. Peter T. Grauer
DLJ Merchant Banking II, Inc.
Page 2 January 16, 1998
indemnification and other obligations set forth in Schedule I attached hereto,
which Schedule is an integral part hereof.
The Acquisition Fee shall be in an amount equal to $4,000,000 and shall be
payable in cash promptly upon consummation of the Acquisition. For purposes
of this Agreement, an Acquisition shall be deemed to have been consummated
upon the earliest of any of the following events to occur: (a) the acquisition
by the Company or any of its affiliates of at least fifty one percent (51.0%)
of the outstanding equity securities of the Target, calculated on a
fully-diluted basis; (b) a merger or consolidation of the Target with the
Company or an affiliate of the Company; (c) the acquisition by the Company or
any of its affiliates of assets of the Target representing at least fifty one
percent (51.0%) of the Target's book value or (d) in the case of any other
Acquisition, the consummation thereof.
In the event an Acquisition is not consummated and the Company receives
cash or assets from the Target (such cash or assets hereinafter referred to as
the "Break-up Fee"), then the Company shall pay to DLJ in cash, promptly upon
the Company's receipt of such Break-up Fee, an amount equal to the lesser of
(x) $2,000,000 or (y) fifteen percent (15%) of such Break-up Fee received (the
"DLJ Participation").
In connection with any debt or equity financing (other than bank
financing) by the Company (i) the proceeds of which are used to finance all or
a portion of the Acquisition or (ii) which is effected at any time within 12
months following consummation of the Acquisition, DLJ shall have the right but
not the obligation to act as exclusive private placement agent, lead initial
purchaser or sole managing underwriter to the Company, provided that the fees
of DLJ for such services shall be competitive with those customarily charged by
DLJ and other investment banks in similar transactions. In connection with such
financings, the Company shall take such action as is necessary or desirable to
facilitate the public or private sale of such securities, including the
preparation of any documents required to be filed with the Securities and
Exchange Commission and shall enter into a private placement agreement,
purchase agreement or underwriting agreement with DLJ which shall contain
normal and customary provisions for such agreements in which DLJ acts as
placement agent, initial purchaser or managing underwriter, as the case may be.
As further compensation, the Company agrees that in the event the Company
determines to pursue any Transaction (as hereinafter defined) during the
Engagement Period, DLJ shall have the right to act as the Company's exclusive
financial advisor, sole placement agent, sole initial purchaser, sole managing
underwriter or sole dealer-manager, as the case may be, with respect to each
such Transaction.
For purposes of this letter, the term "Transaction" shall specifically
exclude the Acquisition and shall include each of the following: (i) the sale,
merger, consolidation or any other business combination, in one or a series of
transactions, involving any portion of the business, securities or assets of
the Company; (ii) the acquisition (and any related matters such as financings,
divestitures, etc.), in one or a series of transactions, of all or a portion of
the business, securities or assets of another entity or person; (iii) any
recapitalization, refinancing, repurchase or restructuring of the Company's
equity or debt securities or indebtedness or any amendments or modifications to
the Company's debt securities or indentures whether or not in connection
therewith, involving, by or on behalf of the Company, an offer to purchase or
exchange for cash, property, securities, indebtedness or other consideration,
or a solicitation of consents, waivers of authorizations with respect thereto;
(iv) any spin-off, split-off or other extraordinary dividend of cash,
securities or other assets to
<PAGE> 3
Mr. Peter T. Grauer
DLJ Merchant Banking II, Inc.
Page 3 January 16, 1998
stockholders of the Company: or (v) any sale of securities of the Company
effected pursuant to a private sale or an underwritten public offering.
If the Company determines to pursue any such Transaction, DLJ and the
Company will enter into an agreement appropriate to the circumstances,
containing provisions for, among other things, compensation, indemnification,
contribution and representations and warranties, which are usual and customary
for similar agreements entered into by DLJ or other investment bankers of
international standing acting in similar transactions. DLJ shall have no
obligation to act as placement agent, initial purchaser, underwriter or dealer
manager to the Company or to place or purchase any securities of the Company,
except to the extent that such obligations arise out of a placement agent
agreement, purchase agreement, underwriting agreement or dealer-manager
agreement, as the case may be, with respect to a particular Transaction executed
and delivered by both DLJ and the Company.
The Company shall make available to DLJ all financial and other information
concerning its business and operations that DLJ reasonably requests as well as
any other information relating to the Acquisition and any Transaction prepared
by the Company or any of its other advisors. In performing its services
hereunder, DLJ shall be entitled to rely without investigation upon all
information that is available from public sources as well as all other
information supplied to it by or on behalf of the Company or its advisors or the
Target or its advisors and shall not in any respect be responsible for the
accuracy or completeness of, or have any obligation to verify, the same or to
conduct any appraisal of any of the Company's or the Target's assets or
liabilities. To the extent consistent with legal requirements, all information
given to DLJ by the Company, unless publicly available or otherwise available to
DLJ without restriction or breach of any confidentiality agreement, will be held
by DLJ in confidence and will not be disclosed to anyone other than DLJ's agents
and advisors without the Company's prior approval or used for any purpose other
than those referred to in this Agreement.
Any advice, written or oral, provided by DLJ pursuant to this Agreement
will be treated by the Company as confidential, will be solely for the
information and assistance of the Company in connection with its consideration
of the Acquisition or a Transaction and will not be reproduced, summarized,
described or referred to, or furnished to any other party or used for any other
purpose, except in each case with our prior written consent.
The Company acknowledges and agrees that DLJ has been retained solely to
provide the advice or services set forth in this Agreement. DLJ shall act as an
independent contractor, and any duties of DLJ arising out of its engagement
hereunder shall be owed solely to the Company.
This Agreement may be terminated by DLJ at any time or by the Company upon
expiration of the Engagement Period upon receipt of written notice to that
effect by the other party. Upon any termination or expiration of this Agreement,
DLJ will be entitled to prompt payment of all fees accrued prior to such
termination or expiration and reimbursement of all out-of-pocket expenses as
described above. The indemnity and other provisions contained in Schedule I will
also remain operative and in full force and effect regardless of any termination
or expiration of this Agreement.
In addition, if at any time prior to 12 months after termination or
expiration of this Agreement an Acquisition is consummated or the Company is
entitled to receive a Break-up Fee, DLJ will be entitled to payment in full of
the Acquisition Fee or the DLJ Participation, as the case may be. Further, if at
any time prior to 12 months after the termination or expiration of this
<PAGE> 4
Mr. Peter T. Grauer
DLJ Merchant Banking II, Inc.
Page 4 January 16, 1998
Agreement, a Transaction is consummated with respect to which DLJ was not
invited by the Company to act as financial advisor, placement agent, initial
purchaser, underwriter or dealer-manager, as the case may be, the Company
shall, promptly upon consummation of each such Transaction pay DLJ a cash fee
in an amount equal to the usual and customary fees which would have been to DLJ
by the Company if DLJ had acted in such capacity, with regard to the
consummated Transaction(s).
It is understood that if the Company completes a transaction in lieu of
the Acquisition or any Transaction, either during the Engagement Period or at
any time prior to 12 months after termination by the Company or expiration of
this Agreement, for which DLJ is entitled to compensation pursuant to this
Agreement, DLJ and the Company will in good faith mutually agree upon
acceptable compensation for DLJ taking into account, among other things, the
results obtained and the custom and practice of investment bankers of
international standing acting in similar transactions.
The Company further agrees that it will not enter into any transaction
referred to in either of the two preceding paragraphs unless, prior to or
simultaneously with such transaction, adequate provision is made with respect
to the payment of compensation to DLJ as contemplated by such paragraphs.
This Agreement shall be binding upon and inure to the benefit of the
Company, DLJ, each Indemnified Person (as defined in Schedule I) and their
respective successors and assigns.
This Agreement shall be governed by, and construed and enforced in
accordance with, the laws of the State of New York.
The Company irrevocably and unconditionally submits to the exclusive
jurisdiction of any State or Federal court sitting in New York city over any
suit, action or proceeding arising out of or relating to this Agreement
(including Schedule I). The Company hereby agrees that service of any process,
summons, notice or document by U.S. registered mail addressed to the Company
shall be effective service of process for any action, suit or proceeding brought
in any such court. The Company irrevocably and unconditionally waives any
objection to the laying of venue of any such suit, action or proceeding
brought in any such court and any claim that any such suit, action or
proceeding brought in such a court has been brought in an inconvenient forum.
The Company agrees that a final judgment in any such suit, action or proceeding
brought in any such court shall be conclusive and binding upon the Company and
may be enforced in any other courts to whose jurisdiction the Company is or may
be subject, by suit upon such judgment.
<PAGE> 5
Mr. Peter T. Grauer
DLJ Merchant Banking II, Inc.
Page 5
January 16, 1998
If any term, provision, covenant or restriction contained in this
Agreement, including Schedule I, is held by a court of competent jurisdiction
or other authority to be invalid, void, unenforceable or against its regulatory
policy, the remainder of the terms, provisions, covenants and restrictions
contained in this Agreement shall remain in full force and effect and shall in
no way be affected, impaired or invalidated.
After reviewing this Agreement, please confirm that the foregoing is in
accordance with your understanding by signing and returning to me the duplicate
of this Agreement attached hereto, whereupon it shall be our binding Agreement.
Very truly yours,
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
By: /s/ JOSEPH H. MARREN
--------------------------------
Joseph H. Marren
Senior Vice President
Accepted and Agreed
this day of 1998
----- ----------
DLJ MERCHANT BANKING II, INC.
By: /s/ PETER T. GRAUER
-----------------------
Peter T. Grauer
Managing Director
<PAGE> 6
SCHEDULE I
This Schedule I is a part of and is incorporated into that certain letter
agreement (together, the "Agreement") dated January 16, 1998 by and between DLJ
Merchant Banking II, Inc. (the "Company") and Donaldson, Lufkin & Jenrette
Securities Corporation ("DLJ").
The Company will indemnify and hold harmless DLJ and its affiliates, and
the respective directors, officers, agents and employees of DLJ and its
affiliates (DLJ and each such entity or person, an "Indemnified Person") from
and against any losses, claims, damages, judgments, assessments, costs and
other liabilities (collectively "Liabilities"), and will reimburse each
Indemnified Person for all fees and expenses (including the reasonable fees and
expenses of counsel) (collectively "Expenses") as they are incurred in
investigating, preparing, pursuing, or defending any claim, action, proceeding
or investigation, whether or not in connection with pending or threatened
litigation or arbitration and whether or not any Indemnified Person is a party
(collectively, "Actions"), arising out of or in connection with advice or
services rendered or to be rendered by any Indemnified Person pursuant to this
Agreement, the transactions contemplated hereby or any Indemnified Person's
actions or inactions in connection with any such advice, services or
transactions; provided that the Company will not be responsible for any
Liabilities or Expenses of any Indemnified Person that are determined by a
judgment of a court of competent jurisdiction which is no longer subject to
appeal or further review to have resulted solely from such Indemnified Person's
gross negligence or willful misconduct in connection with any of the advice,
actions, inactions or services referred to above; it being understood and
agreed that for purposes of this Schedule I, the term "Indemnified Person"
shall specifically exclude the Company. The Company also agrees to reimburse
each Indemnified Person for all Expenses as they are incurred in connection
with enforcing such Indemnified Person's rights under this Agreement
(including, without limitation, its rights under this Schedule I).
Upon receipt by an Indemnified Person of actual notice of an Action
against such Indemnified Person with respect to which indemnity may be sought
under this Agreement, such Indemnified Person shall promptly notify the Company
in writing; provided that failure so to notify the Company shall not relieve
the Company from any liability which the Company may have on account of this
indemnity or otherwise, except to the extent the Company shall have been
materially prejudiced by such failure. The Company shall, if requested by DLJ,
assume the defense of any such Action including the employment of counsel
reasonably satisfactory to DLJ. Any Indemnified Person shall have the right to
employ separate counsel in any such action and participate in the defense
thereof but the fees and expenses of such counsel shall be at the expense of
such Indemnified Person, unless: (i) the Company has failed promptly to assume
the defense and employ counsel or (ii) the named parties to any such Action
(including any impleaded parties) include such Indemnified Person and the
Company, and such Indemnified Person shall have been advised by counsel that
there may be one or more legal defenses available to it which are different
from or in addition to those available to the Company; provided that the
Company shall not in such event be responsible hereunder for the fees and
expenses of more than one firm of separate counsel in connection with any
Action in the same jurisdiction, in addition to any local counsel. The Company
shall not be liable for any settlement of any Action effected without its
written consent. In addition, the Company will not, without prior written
consent of DLJ, settle, compromise or consent to the entry of any judgment in
or otherwise seek to terminate any pending or threatened Action in respect
<PAGE> 7
of which indemnification or contribution may be sought hereunder (whether or
not any Indemnified Person is a party thereto) unless such settlement,
compromise, consent or termination includes an unconditional release of each
Indemnified Person from all Liabilities arising out of such Action.
In the event the foregoing indemnity is unavailable to an Indemnified
Person other than in accordance with this Agreement, the Company shall
contribute to the Liabilities and Expenses paid or payable by such Indemnified
Person in such proportion as is appropriate to reflect (i) the relative
benefits to the Company and its shareholders, on the one hand, and to DLJ, on
the other hand, of the matters contemplated by this Agreement or (ii) if the
allocation provided by the immediately preceding clause is not permitted by the
applicable law, not only such relative benefits but also the relative fault of
the Company, on the one hand, and DLJ, on the other hand, in connection with
the matters as to which such Liabilities or Expenses relate, as well as any
other relevant equitable considerations; provided that in no event shall the
Company contribute less than the amount necessary to ensure that all
Indemnified Persons, in the aggregate, are not liable for any Liabilities and
Expenses in excess of the amount of fees actually received by DLJ pursuant to
this Agreement. For purposes of this paragraph, the relative benefits to the
Company and its shareholders, on the one hand, and to DLJ, on the other hand,
of the matters contemplated by this Agreement shall be deemed to be in the same
proportion as (a) the total value paid or contemplated to be paid or received
or contemplated to be received by the Company or the Company's shareholders, as
the case may be, in the transaction or transactions that are within the scope
of this Agreement, whether or not any such transaction is consummated, bears to
(b) the fees paid or to be paid to DLJ under this Agreement.
The Company also agrees that no Indemnified Person shall have any
liability (whether direct or indirect, in contract or tort or otherwise) to the
Company for or in connection with advice or services rendered or to be rendered
by any Indemnified Person pursuant to this Agreement, the transactions
contemplated hereby or any Indemnified Person's actions or inactions in
connection with any such advice, services or transactions except for Liabilities
(and related Expenses) of the Company that are determined by a judgment of a
court of competent jurisdiction which is no longer subject to appeal or further
review to have resulted solely from such Indemnified Person's gross negligence
or willful misconduct in connection with any such advice, actions, inactions or
services.
The reimbursement, indemnity and contribution obligations of the Company
set forth herein shall apply to any modification of this Agreement and shall
remain in full force and effect regardless of any termination of, or the
completion of any Indemnified Person's services under or in connection with,
this Agreement.
<PAGE> 1
EXHIBIT 10.35
ASSIGNMENT AND ASSUMPTION AGREEMENT
THIS ASSIGNMENT AND ASSUMPTION AGREEMENT (this "Agreement") is
made and entered into this 22nd day of May, 1998, by and between Thermadyne
Holdings Corporation, a Delaware corporation (the "Company"), and DLJ Merchant
Banking II, Inc., a Delaware corporation ("DLJMB").
RECITALS:
WHEREAS, the Company and Mercury Acquisition Corporation, a
Delaware corporation and affiliate of DLJMB ("MergerSub"), have executed and
delivered that certain Agreement and Plan of Merger dated as of January 20,
1998 (as amended, the "Merger Agreement");
WHEREAS, in connection with the consummation of the
transactions contemplated by the Merger Agreement, DLJMB entered into a letter
agreement (the "Engagement Letter") dated January 16, 1998, with Donaldson,
Lufkin & Jenrette Securities Corporation ("DLJSC") pursuant to which, among
other things, DLJSC agreed to provide certain financial advisory services to
the Company; and
WHEREAS, the transactions contemplated by the Merger Agreement
have been consummated; and
WHEREAS, in connection with the consummation of the
transactions contemplated by the Merger Agreement, DLJMB wishes to assign its
rights under the Engagement Letter to the Company and the Company wishes to
assume DLJMB's obligations under the Engagement Letter.
NOW, THEREFORE, for good and valuable consideration, the
receipt of which is hereby acknowledged, the Company and DLJMB hereby agree as
follows:
1. DLJMB hereby transfers and assigns unto the Company
all of the rights and incidents of interest of DLJMB in and under the
Engagement Letter.
2. The Company hereby agrees to assume and thereafter pay,
perform, or otherwise discharge, as and when the same shall become due and
payable all of DLJMB's obligations under the Engagement Letter.
<PAGE> 2
3. This Agreement may be executed in one or more
counterparts for the convenience of the parties hereto, all of which together
shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first above written.
THERMADYNE HOLDINGS CORPORATION
By: /s/ Stephanie N. Josephson
-----------------------------------
Stephanie N. Josephson
Vice President, General Counsel
and Corporate Secretary
DLJ MERCHANT BANKING II, INC.
By: /s/ William F. Dawson
-----------------------------------
William F. Dawson
Principal
<PAGE> 1
EXHIBIT 21.1
SUBSIDIARIES OF THERMADYNE HOLDINGS CORPORATION
<TABLE>
<CAPTION>
JURISDICTION
OF
NAME ORGANIZATION
- ---- ------------
<S> <C>
Arcair Stoody Europe S.A. ........................... Belgium
C&G Systems Holding, Inc. ........................... Delaware
C&G Systems, Inc. ................................... Illinois
Canadian Cylinder Company ........................... Canada
Comet Property Holdings, Inc. ....................... Philippines
Comweld Group Pty. Ltd. ............................. Australia
Comweld Philippines Inc. ............................ Philippines
Coyne Natural Gas Systems, Inc. ..................... Missouri
Duxtech Pty. Ltd. ................................... Australia
Genset SpA .......................................... Italy
Greymo S.A. ......................................... Spain
Marison Cylinder Company ............................ Delaware
MECO Holding Company ................................ Delaware
Modern Engineering Company, Inc. .................... Missouri
Philippine Welding Equipment Inc. ................... Philippines
PT Catu Tehnik Arya Unggul .......................... Indonesia
PT Comweld Indonesia ................................ Indonesia
Quetack Pty. Ltd. ................................... Australia
Quetala Pty. Ltd. ................................... Australia
Quetala Unit Trust .................................. Australia
Stoody Company ...................................... Delaware
TAG Realty, Inc. .................................... Texas
THC Italia Srl ...................................... Italy
Thermadyne Asia/Pacific Pty. Ltd. ................... Singapore
Thermadyne Asia SDN BHD ............................. Malaysia
Thermadyne Australia Pty. Ltd. ...................... Australia
Thermadyne Cylinder Company ......................... California
Thermadyne de Brasil LTDA ........................... Brazil
Thermadyne de Mexico S.A. de C.V. ................... Mexico
Thermadyne Foreign Sales Corporation ................ Barbados
Thermadyne Industries, Inc. ......................... Delaware
Thermadyne Industries Ltd. .......................... United Kingdom
Thermadyne International Corp. ...................... Delaware
Thermadyne Italia Srl ............................... Italy
Thermadyne Japan, K.K. .............................. Japan
Thermadyne Korea, Ltd. .............................. Korea
Thermadyne Receivables, Inc. ........................ Delaware
Thermadyne Welding Products Canada, Ltd. ............ Canada
Thermal Arc, Inc. ................................... Delaware
Thermadyne Mfg. LLC ................................. Delaware
Thermadyne Capital Corp. ............................ Delaware
Victor Equipment Company ............................ Delaware
Victor Coyne International, Inc. .................... Delaware
Woodland Cryogenics Company ......................... Delaware
Tweco Products, Inc. ................................ Delaware
Wichita Warehouse Corp. ............................. Kansas
Thermal Dynamics Corp. .............................. Delaware
Ocim Srl ............................................ Italy
Thermal Acc Philippines Inc. ........................ Philippines
Thermadyne Hong Kong Limited ........................ Hong Kong
</TABLE>
<PAGE> 1
EXHIBIT 23.1
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" and to
the use of our reports dated February 5, 1998, in the Form S-1 Registration
Statement and related Prospectus of Thermadyne Holdings Corporation, to be filed
with the Securities and Exchange Commission on or about June 22, 1998.
/s/ ERNST & YOUNG LLP
Orange County, California
June 22, 1998
