<PAGE> 1
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
</TABLE>
Thermadyne Holdings Corporation
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
-----------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-----------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
-----------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-----------------------------------------------------------------------
(5) Total fee paid:
-----------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-----------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
-----------------------------------------------------------------------
(3) Filing Party:
-----------------------------------------------------------------------
(4) Date Filed:
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<PAGE> 2
THERMADYNE HOLDINGS CORPORATION
101 SOUTH HANLEY ROAD, SUITE 300
ST. LOUIS, MISSOURI 63105
---------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON APRIL 27, 1999
---------------------
Notice is hereby given that the Annual Meeting of Stockholders of
Thermadyne Holdings Corporation, a Delaware corporation (the "Company"), will be
held on Tuesday, April 27, 1999, at 10:00 a.m., local time, at the offices of
Tweco Products, Inc., 4200 West Harry, Wichita, Kansas 67209, for the following
purposes:
1. To elect seven directors; and
2. To transact such other business as may properly come before the
meeting or any adjournment thereof.
The Board of Directors has fixed the close of business on March 1, 1999, as
the record date for determining the stockholders entitled to notice of, and to
vote at, the meeting or any adjournment thereof. A list of such stockholders
will be maintained at the offices of Tweco Products, Inc., 4200 West Harry,
Wichita, Kansas 67209, during the ten-day period prior to the date of the
meeting and will be available for inspection by stockholders, for any purpose
germane to the meeting, during ordinary business hours.
We hope you will be represented at the meeting by signing, dating and
returning the enclosed proxy card in the accompanying envelope as promptly as
possible, whether or not you expect to be present in person. Your vote is
important and the Board of Directors appreciates the cooperation of stockholders
in directing proxies to vote at the meeting.
By Order of the Board of Directors,
STEPHANIE N. JOSEPHSON
Corporate Secretary
March 31, 1999
IT IS IMPORTANT THAT THE ENCLOSED PROXY CARD BE PROMPTLY SIGNED, DATED AND
RETURNED IN THE ENCLOSED ENVELOPE SO THAT YOUR SHARES WILL BE REPRESENTED
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING.
<PAGE> 3
THERMADYNE HOLDINGS CORPORATION
101 SOUTH HANLEY ROAD, SUITE 300
ST. LOUIS, MISSOURI 63105
(314) 721-5573
---------------------
PROXY STATEMENT
MARCH 31, 1999
---------------------
GENERAL INFORMATION
This Proxy Statement is being sent by the Board of Directors of Thermadyne
Holdings Corporation, a Delaware corporation (the "Company"), to the holders of
common stock, par value $.01 per share, of the Company (the "Common Stock"), in
connection with the solicitation of proxies for use at the Annual Meeting of
Stockholders (the "Annual Meeting") to be held at 10:00 a.m., local time, on
Tuesday, April 27, 1999, at the offices of Tweco Products, Inc., 4200 West
Harry, Wichita, Kansas 67209, and at any and all adjournments thereof.
A proxy delivered pursuant to this solicitation is revocable at the option
of the person giving the same at any time before it is exercised. A proxy may be
revoked, prior to its exercise, by executing and delivering a later dated proxy
card, by delivering written notice of the revocation of the proxy to the
Corporate Secretary of the Company prior to the Annual Meeting, or by attending
and voting at the Annual Meeting. Attendance at the Annual Meeting, in and of
itself, will not constitute a revocation of a proxy. Unless previously revoked,
the shares represented by the enclosed proxy will be voted in accordance with
the stockholder's directions if the proxy is duly executed by the stockholder
and received by the Company prior to the Annual Meeting. If no directions are
specified in any duly signed and dated proxy received by the Company, the shares
will be voted FOR the election of the seven director nominees recommended by the
Board of Directors and in accordance with the discretion of the named
attorneys-in-fact on other matters, if any, properly brought before the Annual
Meeting.
The expense of preparing, printing and mailing this Proxy Statement and of
soliciting the proxies sought hereby will be borne by the Company. In addition
to the use of the mails, proxies may be solicited in person, or by telephone,
facsimile transmission or otherwise by officers, directors and regular employees
of the Company and its subsidiaries, none of whom will receive additional
compensation for those services. The Company also will request brokerage firms,
banks, nominees, custodians and fiduciaries to forward proxy materials to the
beneficial owners of shares of Common Stock as of the record date and will
provide reimbursement for the cost of forwarding those materials in accordance
with customary practice. Your cooperation in promptly signing, dating and
returning the enclosed proxy card will help to avoid additional expense.
As of March 1, 1999, the Company had 3,590,326 shares of Common Stock
issued and outstanding. Each share of Common Stock entitles the holder to one
vote. Only stockholders of record at the close of business on March 1, 1999,
will be entitled to notice of, and to vote at, the Annual Meeting.
This Proxy Statement and the enclosed proxy card are first being mailed to
stockholders of the Company on or about March 31, 1999.
<PAGE> 4
OUTSTANDING VOTING SECURITIES OF THE COMPANY
AND PRINCIPAL HOLDERS THEREOF
The following table sets forth, as of March 1, 1999, certain information
regarding the ownership of Common Stock (i) by each person known by the Company
to be the beneficial owner of more than five percent of the outstanding Common
Stock, (ii) by each director or director nominee of the Company, (iii) by each
executive officer named in the Summary Compensation Table (see "Executive and
Director Compensation -- Summary Compensation Table") and (iv) by all current
directors and executive officers of the Company as a group. Other than as set
forth below, no director, director nominee or executive officer of the Company
is the beneficial owner of any shares of Common Stock. The Company believes
that, unless otherwise noted, each person shown in the following table has sole
voting and sole investment power with respect to the shares indicated.
<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP
OF COMMON STOCK
-----------------------
NUMBER OF PERCENT OF
NAME AND ADDRESS OF BENEFICIAL OWNER SHARES CLASS (1)
- ------------------------------------ --------- ----------
<S> <C> <C>
DLJ Merchant Banking Partners II, L.P. and related
investors(2).............................................. 2,962,124 82.5%
Magten Asset Management Corp.
35 East 21st Street
New York, NY 10010(3)..................................... 267,339 7.4%
Randall E. Curran(4)........................................ 67,165 1.9%
James H. Tate(5)............................................ 23,795 *
Peter T. Grauer(6).......................................... -- *
William F. Dawson, Jr.(6)................................... -- *
John F. Fort III(7)......................................... 3,000 *
Harold A. Poling(8)......................................... 3,000 *
Lawrence M.v.D Schloss(6)................................... -- *
Stephanie N. Josephson(9)................................... 13,278 *
Thomas C. Drury(10)......................................... 10,708 *
Robert D. Maddox(11)........................................ 11,276 *
All directors and executive officers as a group (10
persons)(6)(12)........................................... 132,222 3.7%
</TABLE>
- ---------------
* Represents less than 1 percent.
(1) Based on 3,590,326 shares of Common Stock outstanding and calculated in
accordance with Rule 13d-3 under the Securities Exchange Act of 1934, as
amended (the "Exchange Act").
(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, DLJ EAB Partners, L.P. ("EAB"), a Delaware
limited partnership, UK Investment Plan 1997 Partners ("UK Partners"), a
Delaware partnership, DLJ First ESC L.P. ("DLJ First ESC"), a Delaware
limited partnership, and DLJ ESC II, L.P. ("DLJ ESC II"), a Delaware limited
partnership. The address of each of DLJMB, Diversified, Funding, DLJMBPIIA,
Diversified A, Millennium, Millennium A, EAB, DLJ First ESC and DLJ ESC II
is 277 Park Avenue, New York, New York 10172. Includes 353,428 shares of
Common Stock acquired by the DLJMB Funds in January 1999 on exercise of
warrants purchased in connection with the Recapitalization. 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.
2
<PAGE> 5
(3) The following information is based on a Schedule 13D, dated July 25, 1996,
as amended on September 25, 1996, on February 12, 1998, on March 9, 1998,
and on June 10, 1998, filed with the Securities and Exchange Commission
(the "Commission") by Magten Asset Management Corp. ("Magten"), an
investment adviser registered under the Investment Advisers Act of 1940, as
amended (the "Investment Advisers Act"). Magten has (i) shared voting power
over 227,897 of the shares and no voting power over 39,442 of the shares
and (ii) shared investment power over all 267,339 shares.
(4) Includes 17,891 shares of Common Stock issuable to Mr. Curran upon the
exercise of vested stock options or stock options that will vest within 60
days.
(5) Includes 9,303 shares of Common Stock issuable to Mr. Tate upon the
exercise of vested stock options or stock options that will vest within 60
days.
(6) Messrs. Grauer, Dawson and Schloss are officers of DLJ Merchant Banking II,
Inc. ("DLJMB II Inc."), the general partner of DLJMB. Share data shown for
such individuals excludes shares shown as held by DLJMB and affiliated
funds and entities (the "DLJMB Funds"), as to which such individuals
disclaim beneficial ownership.
(7) Includes 3,000 shares of Common Stock issuable to Mr. Fort upon the
exercise of vested stock options or stock options that will vest within 60
days.
(8) Includes 3,000 shares of Common Stock issuable to Mr. Poling upon the
exercise of vested stock options or stock options that will vest within 60
days.
(9) Includes 1,908 shares of Common Stock issuable to Ms. Josephson upon the
exercise of vested stock options or stock options that will vest within 60
days.
(10) Includes 1,908 shares of Common Stock issuable to Mr. Drury upon the
exercise of vested stock options or stock options that will vest within 60
days.
(11) Includes 1,908 shares of Common Stock issuable to Mr. Maddox upon the
exercise of vested stock options or stock options that will vest within 60
days.
(12) Includes 38,918 shares of Common Stock issuable upon the exercise of vested
stock options or stock options that will vest within 60 days.
CHANGES IN CONTROL OF REGISTRANT
On May 22, 1998, the Company and DLJMB consummated (i) the merger (the
"Merger") of Mercury Acquisition Corporation, an affiliate of the DLJMB Funds,
with and into the Company and (ii) the associated recapitalization of the
Company (collectively, the "Recapitalization"). The DLJMB Funds acquired
approximately 80.6% of the outstanding Common Stock pursuant to such
transactions.
The transactions were financed by (i) approximately $355 million of
proceeds from a new senior secured loan facility (the "New Credit Facility")
entered into among Thermadyne Mfg. LLC, a subsidiary of the Company ("Thermadyne
LLC"), Donaldson, Lufkin & Jenrette Securities Corporation ("DLJSC"), as
arranger, DLJ Capital Funding, Inc., as syndication agent, ABN AMRO Bank N.V.,
Chicago Branch, as administrative agent, Societe Generale, as documentation
agent, and the other lenders party thereto, (ii) $94.6 million of proceeds from
the issuance by the Company of its 12 1/2% Senior Discount Debentures due 2008
(the "Debentures"), (iii) $205.4 million of proceeds from the issuance by
Thermadyne LLC and Thermadyne Capital Corporation, a subsidiary of Thermadyne
LLC, of 9 7/8% Senior Subordinated Notes due 2008 (the "Senior Subordinated
Notes") and (iv) approximately $140 million of proceeds from the issuance by the
Company of Common Stock, preferred stock and warrants to the DLJMB Funds.
PROPOSAL FOR THE ELECTION OF DIRECTORS
Action will be taken at the Annual Meeting for the election of seven
directors for terms expiring at the 2000 annual meeting of stockholders. The
persons named below, each of whom currently serves as a director of the Company,
have been nominated for election as directors. It is intended that the
attorneys-in-fact named in the proxy card will vote FOR the election of the
seven nominees listed below, unless instructions to the
3
<PAGE> 6
contrary are given therein. These nominees have indicated that they are able and
willing to serve as directors. However, if some unexpected occurrence should
require the substitution of some other person or persons for any or all of the
nominees, it is intended that the attorneys-in-fact will vote FOR such
substitute nominee(s) as the Board of Directors may designate. All directors
elected at the Annual Meeting will hold office until their respective successors
are elected and qualified.
DIRECTOR NOMINEES
Randall E. Curran, Age 44
Chairman of the Board, President
and Chief Executive Officer
Mr. Curran has been a Director of the Company since February 1994 and was
elected Chairman of the Board and Chief Executive Officer of the Company 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. From 1992 to 1994, Mr. Curran was President of the cutting
and welding division of the Company. 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. Mr. Curran
presently serves on the board of directors of Insilco Holding Co. and the
Whitfield School.
James H. Tate, Age 51
Director, Senior Vice President and Chief Financial Officer
Mr. Tate has been a Director of the Company since October 1995. He was
elected Senior Vice President and Chief Financial Officer of the Company 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. Mr. Tate currently serves on the board of directors of Rowe
International, Inc.
Peter T. Grauer, Age 53
Director
Mr. Grauer has been a Director of the Company since May 1998. Mr. Grauer
has been a Managing Director of DLJMB II Inc. (and its predecessor) since
September 1992. Mr. Grauer is a director of Doane Pet Care Enterprises, Inc.,
Total Renal Care Holdings, Inc., DecisionOne Holdings Corp., Nebco Evans Holding
Company, Ameriserve Food Distribution, Inc. and Bloomberg, Inc.
William F. Dawson, Jr., Age 34
Director
Mr. Dawson has been a Director of the Company since May 1998. Mr. Dawson
has been a Principal of DLJMB II 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 and Insilco Holding Co.
John F. Fort III, Age 57
Director
Mr. Fort has been a Director of the Company since May 1998. Mr. Fort
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 the MIT Sloan School, 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. and Roper Industries. He is
4
<PAGE> 7
an active participant on advisory boards at MIT, Princeton University, Full
Circle Investments and the Appalachian Mountain Club.
Harold A. Poling, Age 73
Director
Mr. Poling has been a Director of the Company since May 1998. Mr. 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, Flint Ink Corporation, the Kellogg Company,
Karrington Health, Inc. and Meritor Automotive, Inc. He is a member of the DLJ
Executive Advisory Board and a member of the VIAG International Board. Mr.
Poling is a director of the Monmouth (Ill.) College Senate and a member 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 1986-88.
Lawrence M.v.D. Schloss, Age 44
Director
Mr. Schloss has been a Director of the Company since May 1998. Mr. Schloss
has been the Managing Partner of DLJMB 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 previously served as a director of
GTECH Corporation, Krueger International, Inc., OSi Specialties, Inc. and MPB
Corporation.
ARRANGEMENTS RELATING TO THE ELECTION OF DIRECTORS
Pursuant to an Investors' Agreement (the "Investors' Agreement") dated May
22, 1998, entered into by and among the Company, the DLJMB Funds and the senior
executive officers of the Company (including Messrs. Curran and Tate), each
stockholder party thereto has agreed to vote shares of Common Stock owned by
such stockholder in order to ensure that the Board of Directors of the Company
will consist of Messrs. Curran and Tate, so long as they are employed by the
Company, and at least five directors designated by DLJMB.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF THE
INDIVIDUALS NOMINATED FOR ELECTION AS DIRECTORS
GENERAL INFORMATION CONCERNING THE BOARD OF DIRECTORS
AND ITS COMMITTEES
The Board of Directors of the Company met on twelve occasions during 1998.
The Delaware General Corporation Law provides that the Board of Directors, by
resolution adopted by a majority of the entire Board, may designate one or more
committees, each of which shall consist of one or more directors. The Board of
Directors has established an Audit Committee and a Compensation Committee. In
connection with the Recapitalization and the resulting change in majority
ownership of the Company, Messrs. Grauer, Dawson, Fort, Poling and Schloss were
elected to the Board of Directors, replacing the then current outside directors.
No incumbent director attended fewer than 75% of the meetings of the Board of
Directors held during the period for which he was a director during 1998 and the
meetings of the committee or committees on which he served during such period.
Audit Committee. The Audit Committee is responsible for providing general
oversight with respect to the accounting principles employed in the Company's
financial reporting. The Audit Committee meets periodically with the Company's
principal financial and accounting officers and independent public accountants
to review the scope of auditing procedures and the Company's policies relating
to internal auditing and accounting procedures and controls. The Audit Committee
met two times last year. The current members of the Audit Committee are Messrs.
Dawson, Poling and Schloss. Messrs. Curran and Tate are entitled to attend
meetings of the Audit Committee in an ex officio capacity.
5
<PAGE> 8
Compensation Committee. The Compensation Committee (i) determines the
annual salary and bonus and reviews the amount of remuneration in stock options
of the Company's senior executives, (ii) reviews the operation of the Company's
executive compensation programs, and (iii) establishes and periodically reviews
policies in the area of management benefits. None of the members of the
Compensation Committee may be officers or employees of the Company. The
Compensation Committee met two times last year. The current members of the
Compensation Committee are Messrs. Grauer, Fort and Dawson. Messrs. Curran and
Tate are entitled to attend meetings of the Compensation Committee in an ex
officio capacity.
EXECUTIVE AND DIRECTOR COMPENSATION
EXECUTIVE COMPENSATION
The following table sets forth information in respect of the compensation
of the Chief Executive Officer and each of the other four most highly
compensated executive officers of the Company (collectively, the "Named
Executive Officers") for services in all capacities to the Company and its
subsidiaries for the fiscal years ended December 31, 1998, 1997 and 1996. Each
of the Named Executive Officers entered into a new employment agreement with the
Company in connection with the Recapitalization. See "-- Post-Recapitalization
Employment Arrangements -- Employment Contracts."
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
AWARDS
------------
ANNUAL COMPENSATION SECURITIES
-------------------- UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION(S) YEAR SALARY($) BONUS($) OPTIONS(#) COMPENSATION($)(1)
------------------------------ ---- --------- -------- ------------ ------------------
<S> <C> <C> <C> <C> <C>
Randall E. Curran................... 1998 538,400 506,634 99,397 36,282
Chairman of the Board, President 1997 517,847 538,400 30,600 33,807
and Chief Executive Officer 1996 498,921 385,050 91,000 8,008
James H. Tate....................... 1998 294,741 219,488 51,686 19,230
Director, Senior Vice President 1997 275,093 188,614 27,000 18,039
and Chief Financial Officer 1996 241,012 169,114 36,000 7,403
Stephanie N. Josephson.............. 1998 181,577 94,935 10,603 10,248
Vice President, General Counsel 1997 168,719 84,625 10,000 10,210
and Corporate Secretary 1996 129,573 70,208 6,000 6,489
Thomas C. Drury..................... 1998 150,481 78,279 10,603 7,292
Vice President -- Human 1997 132,206 66,479 10,000 7,444
Resources 1996 107,115 53,708 6,000 5,982
Robert D. Maddox.................... 1998 150,481 78,279 10,603 6,854
Vice President -- Controller(2) 1997 134,254 67,417 5,000 7,749
1996 113,658 60,055 6,000 6,272
</TABLE>
- ---------------
(1) All other compensation includes group life insurance premiums paid by the
Company and contributions made on behalf of the Named Executive Officers to
the Company's 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 1998 are as follows: Mr. Curran, $3,978 and $32,304,
respectively; Mr. Tate, $4,729 and $14,501, respectively; Ms. Josephson,
$2,262 and $7,986, respectively; Mr. Drury, $785 and $6,507, respectively;
and Mr. Maddox, $317 and $6,537, respectively.
(2) Mr. Maddox was elected Controller of the Company on June 1, 1992, Vice
President -- Controller of Thermadyne Industries, Inc. on April 1, 1995, and
Vice President -- Controller of the Company on April 18, 1996.
6
<PAGE> 9
The following table sets forth certain information related to stock options
granted to the Named Executive Officers in 1998.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
--------------------------------------------
NUMBER OF PERCENT OF
SECURITIES TOTAL OPTIONS GRANT DATE
UNDERLYING GRANTED TO EXERCISE OR PRESENT
OPTIONS EMPLOYEES IN BASE PRICE EXPIRATION VALUE
NAME GRANTED(#)(1) FISCAL YEAR(%) ($/SH) DATE ($)(2)
- ---- ------------- -------------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Randall E. Curran................ 99,397 30.8 34.50 5/22/08 1,813,995
James H. Tate.................... 51,686 16.0 34.50 5/22/08 943,270
Stephanie N. Josephson........... 10,603 3.3 34.50 5/22/08 193,505
Thomas C. Drury.................. 10,603 3.3 34.50 5/22/08 193,505
Robert D. Maddox................. 10,603 3.3 34.50 5/22/08 193,505
</TABLE>
- ---------------
(1) The options to purchase Common Stock were granted under the Thermadyne
Holdings Corporation Management Incentive Plan (the "Management Incentive
Plan") and become exercisable as follows: (a) 10 % immediately on the date
of grant, (b) 40% ratably over five years and (c) 50% at the end of eight
years. For a more complete description of the Management Incentive Plan, see
"-- Post-Recapitalization Employment Arrangements -- Management Incentive
Plan." All options become exercisable upon a change of control.
(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 .278 (based on historical stock price observations just
prior to each grant); and a risk-free rate of 5.76%. The actual value, if
any, that the Named Executive Officers realized from the exercise of the
options was the excess of the fair market value of the 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 1998. On December 31,
1998, the closing sale price of Common Stock on NASDAQ was $20.00.
AGGREGATED OPTION EXERCISES IN 1998 AND YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
VALUE AT FISCAL YEAR-END AT FISCAL YEAR-END
SHARES ACQUIRED REALIZED --------------------------------- ---------------------------------
NAME ON EXERCISE(#)(1) ($)(1) EXERCISABLE(#) UNEXERCISABLE(#) EXERCISABLE($) UNEXERCISABLE($)
---- ----------------- --------- -------------- ---------------- -------------- ----------------
<S> <C> <C> <C> <C> <C> <C>
Randall E. Curran...... -- 7,647,575 9,939 89,458 -- --
James H. Tate.......... -- 2,125,750 5,168 46,518 -- --
Stephanie N.
Josephson............ -- 711,750 1,060 9,543 -- --
Thomas C. Drury........ -- 711,750 1,060 9,543 -- --
Robert D. Maddox....... -- 356,750 1,060 9,543 -- --
</TABLE>
- ---------------
(1) As of May 22, 1998, the effective time of the Merger, all outstanding
options to acquire shares of Common Stock granted to employees and directors
under the Management Option Plan and the Employee Stock Option Plan, whether
vested or not (the "Options"), were cancelled, 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 Common Stock subject to such Option.
All options currently outstanding were granted under the Management
Incentive Plan following the consummation of the Merger.
7
<PAGE> 10
POST-RECAPITALIZATION EMPLOYMENT ARRANGEMENTS
Employment Contracts. On May 22, 1998, in connection with the Merger,
Messrs. Curran, Tate, Drury and Maddox and Ms. Josephson entered into employment
agreements with the Company and its subsidiaries. All five employment agreements
terminate on May 22, 2001; however, such agreements automatically renew for an
additional year on each May 22 beginning in 1999 so that a new three-year term
begins upon each extension (unless the agreements are earlier terminated as
provided therein). Messrs. Curran, Tate, Drury and Maddox and Ms. Josephson
serve in their current executive capacities with the Company as a requirement of
their respective employment agreements.
Messrs. Curran, Tate, Drury and Maddox and Ms. Josephson are entitled to
annual base salaries (subject to increase at the Board of Directors' discretion)
of $538,400, $311,000, $170,000, $170,000 and $205,000, respectively. In
addition, Messrs. Curran, Tate, Drury and Maddox and Ms. Josephson are eligible
to participate in an annual bonus plan providing for an annual bonus opportunity
of not less than 100%, 75%, 55%, 55% and 55%, respectively, of such executive's
base salary. Each executive is also entitled to such benefits as are customarily
provided to the executives of the Company and its subsidiaries. All five
executives are required to devote all of their business time and attention to
the business of the Company and its subsidiaries.
Each employment agreement provides that if the executive's employment
ceases as a result of disability or death, the executive or the executive's
estate, heirs or beneficiaries, as the case may be, will continue to receive the
executive's then current salary for a period of 24 months from the date of his
or her disability or death. If the executive's employment is terminated by the
Company for Cause (as defined in each employment agreement) or voluntarily by
the executive for any reason other than death, disability or upon a constructive
termination (which includes, among other things, reduction of compensation,
title, position or duties) the executive will not be entitled to receive
compensation or unaccrued benefits after the date of termination. If the
executive's employment is terminated by the Company without Cause or is
terminated by the executive upon a constructive termination, the executive will
continue to receive his or her then current salary and other benefits provided
by the agreement during the unexpired term of the agreement.
Direct Investment Program. In May 1998, in connection with the Merger,
certain members of senior management were offered the opportunity to purchase
shares of Common Stock through the Thermadyne Holdings Corporation Direct
Investment Program (the "Investment Program"). The following table set forth the
number of shares of Common Stock purchased by each Named Executive Officer
participating in the Investment Program.
DIRECT INVESTMENT PROGRAM PURCHASES
<TABLE>
<CAPTION>
NAME NUMBER OF SHARES(1)
---- -------------------
<S> <C>
Randall E. Curran......................................... 49,274
James H. Tate............................................. 14,492
Stephanie N. Josephson.................................... 11,370
Thomas C. Drury........................................... 8,800
Robert D. Maddox.......................................... 9,368
</TABLE>
- ---------------
(1) All such shares were purchased at $34.50 per share.
In connection with the Merger, a portion of the funds required to purchase
the shares under the Investment Program were provided through loans made by the
Company. 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 the participant's employment with the Company, other than as a
result of the participant's death, any outstanding loan will become due and
payable.
8
<PAGE> 11
Management Incentive Plan. In May 1998, in connection with the Merger, the
Board of Directors adopted the Management Incentive Plan, which provides for the
granting of options to acquire up to 500,000 shares of Common Stock to certain
officers and employees of the Company. In connection with the Merger, options to
purchase approximately 322,966 shares of Common Stock were granted under the
Management Incentive Plan to certain officers and employees of the Company at an
exercise price of $34.50 per option share. Pursuant to the terms of the
Management 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 Time
Vesting 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 the Company or its subsidiaries. The Cliff Vesting Option
becomes vested and exercisable with respect to twenty percent of the shares on
the thirtieth day after the availability of the audited financial statements for
each of the fiscal years ended December 31, 1998 through December 31, 2002,
provided that the option recipient is still employed by the Company or its
subsidiaries on such date of determination, and further provided, that the
targeted implied common equity value of the Company was met for such fiscal
year. If the targeted implied common equity value of the Company is not attained
for any of the fiscal years ending on or before December 31, 2002, the Cliff
Vesting 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 the Company or its subsidiaries on such date of determination. 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 recipient is still employed by the Company or
its subsidiaries on such date.
The following table sets forth the number of shares of Common Stock
issuable upon the exercise of options granted to each Named Executive Officer
under the Management Incentive Plan.
MANAGEMENT INCENTIVE PLAN OPTION GRANTS
<TABLE>
<CAPTION>
TIME CLIFF
NAME VESTING SHARES VESTING SHARES
---- -------------- --------------
<S> <C> <C>
Randall E. Curran........................................... 49,699 49,698
James H. Tate............................................... 25,843 25,843
Stephanie N. Josephson...................................... 5,302 5,301
Thomas C. Drury............................................. 5,302 5,301
Robert D. Maddox............................................ 5,302 5,301
</TABLE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
No member of the Compensation Committee of the Board of Directors served as
an officer or employee of the Company or any of its subsidiaries during 1998.
COMPENSATION OF DIRECTORS
Post-Recapitalization Compensation Arrangements. Other than Messrs. Curran,
Tate, Dawson, Schloss and Grauer, for periods following the Merger, each
director of the Company is entitled to receive 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. Additionally, certain
non-employee directors (as described in the Thermadyne Holdings Corporation 1998
Non-Employee Directors Stock Option Plan (the "Directors Plan")) are eligible to
receive options under the Directors Plan. The Directors Plan, adopted by the
Board of Directors following the consummation of the Merger, provides that
certain non-employee directors shall receive options to purchase 3,000 shares of
Common Stock upon becoming a director and options to purchase 500 shares of
Common Stock each year thereafter. During 1998, the Board of Directors awarded
each of Messrs. Fort and Poling options to purchase 3,000 shares of Common Stock
pursuant to the Directors Plan. 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.
9
<PAGE> 12
Pre-Recapitalization Compensation Arrangements. Prior to the Merger, each
director of the Company, other than Messrs. Curran and Tate, received 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, a former director of the Company,
received 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, 1998.
Directors were also reimbursed for all reasonable travel and other expenses of
attending meetings of the Board of Directors or committees of the Board of
Directors. Certain non-employee directors (as described in the Thermadyne
Holdings Corporation Non-Employee Directors Stock Option Plan (the "Prior
Directors Plan") were eligible to receive options under the Prior Directors
Plan. The Prior Directors Plan provided that certain non-employee directors were
to receive options to purchase 5,000 shares of Common Stock upon becoming a
director and options to purchase 1,000 shares of Common Stock each November 1
thereafter. No options were granted under the Prior Directors Plan in 1998.
REPORT OF THE COMPENSATION COMMITTEE
ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors (the "Compensation
Committee") is responsible for reviewing the Company's compensation arrangements
with the Company's senior executive officers (including the Named Executive
Officers). The current members of the Compensation Committee are Messrs. Grauer,
Fort and Dawson. Messrs. Curran and Tate are entitled to attend meetings of the
Compensation Committee in an ex officio capacity. In addition, in connection
with the Merger, certain compensation and investment arrangements were
implemented based on negotiations with DLJMB. The principal elements of the
Company's 1998 executive compensation program consisted of base salaries, the
opportunity for annual cash bonuses based on the Company's financial
performance, equity-based compensation in the form of stock options and the
opportunity to participate in a stock purchase program and other customary
fringe benefits.
Philosophy
The Compensation Committee believes that all executive officers of the
Company, including the Chief Executive Officer, should be compensated on a
competitive basis with other manufacturing companies of comparable size in sales
and earnings. The Compensation Committee's primary objectives with respect to
executive compensation are to establish a total compensation program that
provides base salaries in a competitive range, bonus opportunities that reward
above-average performance with above-average pay, and equity-based incentives
designed to enhance the profitable growth of the Company and the value of its
Common Stock and align management and stockholder interests.
Base Salaries
For 1998, the Company's executive officers received base salaries in
accordance with recommendations of the Compensation Committee as constituted
prior to the Merger. In connection with the Merger, the Company entered into
Executive Employment Agreements with each of the Named Executive Officers. Mr.
Curran's Employment Agreement provides for an annual base salary of $538,400,
reviewable no less frequently than annually.
Bonus Plans
In 1998, prior to the Merger, the Company maintained the following
management bonus plans: the Executive Incentive Plan (the "Incentive Plan") and
the President's Award Plan (the "President's Award Plan"). In February 1998, the
President's Award Plan was terminated. No bonuses were paid for 1998 under the
President's Award Plan.
10
<PAGE> 13
The Incentive Plan, as amended on October 23, 1997, provided bonus
opportunities based on the Company's actual performance in consolidated EBITDA
(earnings before interest, taxes, depreciation and amortization) compared to
planned goals. Participants are eligible to receive a bonus, expressed as a
percentage of base salary, with the amount of the bonus opportunity varying with
the relative responsibilities of the participants and being dependant upon the
attainment of certain levels of the established profit plan. The annual bonus
opportunity for Named Executive Officers ranges from 55% to 100% of annual
salary, as set forth in their respective employment agreements. In 1998, the
Company attained 97.64% of its planned EBITDA goal. Based on that performance,
Mr. Curran recommended and the Board of Directors approved, the award to the
plan participants of a bonus of 94.1% of their bonus opportunity in accordance
with the terms of the Incentive Plan.
In October 1998, the Board of Directors adopted the Thermadyne Holdings
Corporation Bonus Plan (the "Bonus Plan"), which was approved by the
stockholders of the Company in November 1998. Beginning January 1, 1999, bonuses
will be determined under the Bonus Plan rather than the Incentive Plan. The
Bonus Plan provides bonus opportunities based on the Company's achievement of
certain profit goals. Participants are eligible to receive a bonus, expressed as
a percentage of base salary, with the amount of the bonus opportunity being
dependent upon the Company meeting certain performance-related goals. The
performance goals may be comprised of one or more measures, including, among
others, EBITDA, cash flow, net sales, division, group or corporate financial
goals and/or market share. A percentage of each participant's bonus opportunity
may be tied to one or more of the performance measures. Payment of the bonuses
is made in a lump sum payment as soon as administratively practicable after the
end of the Company's fiscal year (normally no later than March) or, if
applicable, another relevant performance period.
Stock Option and Stock Purchase Programs
Prior to the Merger, the Company provided long-term compensation to its
executive officers through the grant of stock options under the Company's 1993
Management Option Plan (the "Management Option Plan") and the Company's 1996
Employee Stock Option Plan (the "Employee Stock Option Plan"). During 1998, the
Compensation Committee awarded no options to senior executives (including the
Named Executive Officers) pursuant to the Management Option Plan and the
Employee Stock Option Plan.
The Company's Employee Stock Purchase Plan (the "Stock Purchase Plan"),
adopted in 1994, was intended to encourage the Company's executive officers and
all other employees to increase their personal investments in the Common Stock.
The Stock Purchase Plan entitled the Company's employees to purchase shares of
Common Stock at 85% of the price at which the Common Stock traded in the open
market during certain designated periods.
In connection with the Merger, the Management Option Plan, the Employee
Stock Option Plan and the Stock Purchase Plan were terminated. All outstanding
options to acquire shares of Common Stock granted under the Management Option
Plan and the Employee Stock Option Plan, whether vested or not, were cancelled,
and the holders thereof 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
cancelled option multiplied by (y) the number of shares of Common Stock subject
to such cancelled option. All rights to purchase shares of Common Stock with
previously withheld funds under the Stock Purchase Plan were terminated and
participants in the Stock Purchase Plan received a cash payment in the amount
equal to the product of the number of shares of Common Stock subject to purchase
by each participant thereunder and $34.50.
In connection with the Merger, the Board of Directors adopted the
Management Incentive Plan, which provides for the granting of options to
purchase up to 500,000 shares of Common Stock to certain officers and employees
of the Company. For 1998, the Compensation Committee awarded options to purchase
322,966 shares of Common Stock pursuant to the Management Incentive Plan. For a
more complete description of the Management Incentive Plan, see
"-- Post-Recapitalization Employment Arrangements -- Management Incentive Plan."
11
<PAGE> 14
CEO Compensation
Prior to the Merger, Mr. Curran's annual base salary was $538,400 pursuant
to an employment agreement which was terminated in connection with the Merger.
At the effective time of the Merger, the Company entered into a new Executive
Employment Agreement with Mr. Curran which was negotiated in connection with the
Merger and provides for an annual base salary of $538,400 and provides for his
participation in an annual bonus opportunity of not less than 100% of his base
salary. For 1998, Mr. Curran received a bonus of $506,634. In addition, Mr.
Curran was granted an option to purchase 99,397 shares of Common Stock pursuant
to the Management Incentive Plan.
Tax Considerations
In formulating its compensation policies, the Compensation Committee
considers the relevant provisions, including Section 162(m) of the Internal
Revenue Code of 1986, as amended (the "Code"), that limit the deductibility of
certain executive compensation and the consequences to the Company if the
compensation paid to the Company's executive officers is not deductible.
COMPENSATION COMMITTEE
PETER T. GRAUER
JOHN F. FORT III
WILLIAM F. DAWSON, JR.
12
<PAGE> 15
CORPORATE PERFORMANCE
The following graph shows a comparison of cumulative total returns for the
Company, the Nasdaq Stock Market Index and the Standard & Poor's Midcap 400
Manufacturing (Specialized Industries) Index (the "S&P Midcap 400 Mfg Index")
for the period from May 13, 1994 (the date of the Company's original listing
after its 1994 restructuring) to December 31, 1998. The comparison assumes $100
was invested on May 13, 1994 in each of the Common Stock, the Nasdaq Stock
Market Index, and the S&P Midcap 400 Mfg Index, and assumes compounded daily
returns with reinvestment of dividends.
COMPARISON OF TOTAL CUMULATIVE RETURN AMONG THERMADYNE
HOLDINGS CORPORATION, THE NASDAQ STOCK MARKET INDEX (U.S. COMPANIES),
AND THE S&P MIDCAP 400 MFG INDEX
MAY 13, 1994-DECEMBER 31, 1998 (ANNUAL BASIS)
<TABLE>
<CAPTION>
NASDAQ S&P MIDCAP THERMADYNE
MEASUREMENT PERIOD STOCK 400 MFG HOLDINGS
(FISCAL YEAR COVERED) MARKET INDEX INDEX CORPORATION
<S> <C> <C> <C>
5/13/94 100.00 100.00 100.00
12/30/94 105.77 111.24 91.67
12/29/95 149.60 135.05 142.16
12/31/96 183.97 171.01 223.53
12/31/97 225.70 190.48 231.37
12/31/98 317.27 166.06 172.55
</TABLE>
The stock price performance depicted in the above graph is not necessarily
indicative of future price performance of the Common Stock.
13
<PAGE> 16
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
DLJ Capital Funding, Inc. 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
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 Debentures did not occur. The aggregate fees received
by these DLJ entities for these services were approximately $20 million. In the
opinion of management, the fees and other compensation provided to DLJ Capital
Funding, Inc., DLJSC and DLJ Bridge Finance, Inc. reasonably reflect the
benefits received by the Company for such services.
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 is entitled to receive an annual advisory fee of $300,000,
payable quarterly in equal installments of $75,000. DLJSC is also 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.
14
<PAGE> 17
Messrs. Grauer, Dawson and Schloss, directors of the Company, are officers
of DLJMB II Inc., which is an affiliate of each of DLJMB, DLJSC, DLJ Capital
Funding, Inc. and DLJ Bridge Finance, Inc.
The Company has entered into the Investors' Agreement with the DLJMB Funds
and the senior executive officers of the Company. The Investors' Agreement,
among other things, contains provisions regarding the composition of the Board
of Directors of the Company, grants the parties thereto certain registration
rights and contains provisions requiring the senior executive officers parties
thereto to sell their shares of Common Stock in connection with certain sales of
Common Stock by the DLJMB Funds and granting the senior executive officers
parties thereto the right to include a portion of their shares of Common Stock
in certain sales of Common Stock by the DLJMB Funds.
In connection with the Merger, a portion of the funds required to purchase
the shares under the Investment Program were provided through loans made by the
Company. 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 employment with the Company, other than as a
result of the participant's death, any outstanding loan will become due and
payable.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's directors and
executive officers, and persons who own more than 10% of the Common Stock, to
file with the Commission initial reports of beneficial ownership and reports of
changes in beneficial ownership of Common Stock and other equity securities of
the Company. Officers, directors and greater than 10% beneficial owners are
required by the Commission to furnish the Company with copies of all Section
16(a) reports they file. To the Company's knowledge, based solely on a review of
the copies of such reports furnished to the Company, all Section 16(a) filing
requirements applicable to its officers and directors were complied with for the
year ended December 31, 1998, except the Forms 3 filed on behalf of Messrs.
Dawson, Fort, Grauer, Poling and Schloss in connection with the Merger were
late.
OTHER MATTERS
The Board of Directors knows of no other matters to be brought before the
Annual Meeting. However, if any other matters are properly brought before the
Annual Meeting, it is the intention of the attorneys-in-fact named in the
accompanying proxy to vote in accordance with their judgment on such matters.
VOTING REQUIREMENTS
With regard to the Proposal for the Election of Directors, votes may be
cast for or votes may be withheld from each nominee. Directors will be elected
by plurality vote. Therefore, votes that are withheld will be excluded entirely
from the vote and will have no effect. Abstentions may not be specified with
respect to the election of directors and, under Delaware law, broker non-votes
(as explained below) will have no effect on the outcome of the election of
directors. In general, a broker who holds securities in street name has limited
authority to vote on matters submitted at a stockholders meeting in the absence
of specific instructions from the beneficial owner. In the absence of
instructions from the beneficial owner or authorization from the National
Association of Securities Dealers, Inc. (the "NASD") to vote on specific matters
without the necessity of obtaining instructions from the beneficial owner, a
broker will specify a "non-vote" on particular matters. For purposes of Delaware
law, a broker non-vote is counted as present for quorum purposes, but is
generally excluded entirely from determining whether a particular matter has
been approved. Typically, however, brokers are permitted by the NASD to vote for
the election of directors without instructions from the beneficial owner.
15
<PAGE> 18
If no directions are specified in any duly signed and dated proxy card
received by the Company, the shares represented by that proxy card will be
counted as present for quorum purposes and will be voted by the
attorneys-in-fact named in the proxy FOR the election of the director nominees
recommended by the Board of Directors and in accordance with the discretion of
the named attorneys-in-fact on other matters, if any, properly brought before
the Annual Meeting.
INDEPENDENT AUDITORS
Ernst & Young LLP served as the Company's independent auditors for the
fiscal year ended December 31, 1998, and it is expected they will be reappointed
by the Board of Directors to serve in that capacity again for the fiscal year
ending December 31, 1999. No member of Ernst & Young LLP or any of its
associates has any financial interest in the Company or its affiliates. It is
anticipated that a representative of Ernst & Young LLP will be available at the
Annual Meeting to respond to appropriate questions and will be given an
opportunity to make a statement on behalf of Ernst & Young LLP, if desired.
STOCKHOLDER PROPOSALS
Stockholder proposals to be included in the Proxy Statement relating to the
2000 Annual Meeting of Stockholders of the Company must be received by no later
than December 31, 1999 at the Company's principal executive offices, 101 South
Hanley Road, Suite 300, St. Louis, Missouri 63105, Attention: Corporate
Secretary. Stockholders of the Company who intend to nominate candidates for
election as a director or to bring business before the meeting must also comply
with the applicable procedures set forth in the Company's Bylaws. The Company
will furnish copies of such Bylaw provisions upon written request to the
Corporate Secretary of the Company at the aforementioned address. In the case of
other stockholder proposals not included in the Company's proxy materials, the
Company may generally exercise discretionary voting authority, conferred by
proxies, at its 2000 Annual Meeting with respect to any such proposal that is
not timely submitted (i.e., of which the Company did not have notice by December
31, 1999).
ANNUAL REPORT ON FORM 10-K
A copy of the Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1998, which contains copies of the Company's audited
financial statements, is being sent to stockholders with this Proxy Statement.
The foregoing Notice and Proxy Statement are sent by order of the Board of
Directors.
STEPHANIE N. JOSEPHSON
Corporate Secretary
March 31, 1999
16
<PAGE> 19
DETACH HERE
- --------------------------------------------------------------------------------
PROXY
THERMADYNE HOLDINGS CORPORATION
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
THERMADYNE HOLDINGS CORPORATION
FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON APRIL 27, 1999
The undersigned, having received the notice and accompanying Proxy
Statement for said meeting, hereby appoints Randall E. Curran, James H. Tate or
Stephanie N. Josephson, and each of them, with full power of substitution, as
the undersigned's proxy and attorney-in-fact to vote at the Annual Meeting of
Stockholders of Thermadyne Holdings Corporation (the "Company") to be held on
April 27, 1999 (the "Annual Meeting"), or at any adjournment thereof, all
shares of voting stock of the Company which the undersigned may be entitled to
vote. The above proxies are hereby instructed to vote as shown on the reverse
of this card and in their discretion upon such other business as may properly
come before the Annual Meeting or at any adjournment thereof.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE DIRECTOR NOMINEES.
THIS PROXY WILL BE VOTED AS SPECIFIED. IF NO SPECIFIC DIRECTIONS ARE GIVEN, ALL
THE VOTES ATTRIBUTABLE TO YOUR VOTING SHARES WILL BE VOTED FOR THE DIRECTOR
NOMINEES.
<TABLE>
<S> <C> <C>
- ------------ -------------
SEE REVERSE SEE REVERSE
SIDE CONTINUED AND TO BE COMPLETED, SIGNED AND DATED ON THE REVERSE SIDE SIDE
- ------------ -------------
</TABLE>
<PAGE> 20
DETACH HERE
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C>
[X] Please mark
votes as in
this example.
1. ELECTION OF DIRECTORS 2. IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED
Nominees: Randall E. Curran, William F. Dawson, Jr., TO VOTE WITH RESPECT TO ANY OTHER BUSINESS
John F. Fort III, Peter T. Grauer, Harold A. Poling, WHICH MAY PROPERLY COME BEFORE THE ANNUAL MEETING
Lawrence M.v.D. Schlass, James H. Tate OR AT ANY ADJOURNMENT THEREOF.
FOR ALL [ ] [ ] WITHHOLD
NOMINEES AUTHORITY MARK HERE IF YOU PLAN TO ATTEND THE MEETING [ ]
(except as FOR ALL MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT [ ]
indicated in NOMINEES
space below)
PLEASE SIGN, DATE AND RETURN THIS PROXY PROMPTLY
USING THE ENCLOSED ENVELOPE EVEN IF YOU PLAN TO
ATTEND THE MEETING.
------------------------------------------ Please sign exactly as your name appears hereon.
(To withhold authority to vote for any Joint owners should each sign. When signing as attorney,
individual nominee, print the nominee's executor, administrator, trustee or guardian, please give
name above. full title as such.
Signature: Date: Signature: Date:
----------------------------------- -------------- --------------------------------- ----------------
</TABLE>
