ACQUISITION AGREEMENT

 

TABLE OF CONTENTS

 

ARTICLE 1 - PRELIMINARY COVENANTS		2
1.1	RECITALS AND ANNEXES	2
1.2	DEFINED TERMS	2
1.3	ACCOUNTING PRINCIPLES	2
ARTICLE 2 - SALE AND PURCHASE OF THE SHARES		3
2.1	SALE AND PURCHASE	3
2.2	CLOSING	3
2.3	NATURE OF THE AGREEMENT	3
ARTICLE 3 - PRICE - PAYMENTS		3
3.1	PRICE OF THE SHARES	3
3.2	PAYMENTS	4
ARTICLE 4 - ACTIONS PRIOR TO OR AT THE CLOSING DATE		4
4.1	CORPORATE ACTIONS	4
4.2	PERFORMANCE OF CLOSING	5
4.3	SIMULTANEOUS TRANSACTIONS	5
ARTICLE 5 - SELLER’S REPRESENTATIONS AND WARRANTIES		5
5.1	SELLER’S REPRESENTATIONS AND WARRANTIES	5
5.1.1	Power and authority of Seller	6
5.1.2	Share Capital of the Company	6
5.1.3	Title to the Shares	7
S.1.4	Good Standing	7
5.1.5	By-laws and corporate records	7
5.1.6	Powers of attorney	7
5.1.7	No conflict	8
5.1.8	Financial statements and accounting books	8
5.1.9	Interests in other entities—Shareholders Agreements	8
5.1.10	Receivables	9
5.1.11	Inventory	9
5.1.12	Title to Assets	10
5.1.13	Real Property and Leases	10
5.1.14	Intellectual property rights	11
5.1.15	Bank Accounts and Loans	12
5.1.16	Guarantees given by the Company	12
5.1.17	Material Contracts	12
5.1.18	Insurance policies	12
5.1.19	Taxes	13
5.1.20	Employees	13
5.1.21	Litigation	14
5.1.22	Conduct of Business	15
5.1.23	Compliance with laws	15
5.2	NO DISCLAIMER; NO OTHER REPRESENTATIONS AND WARRANTIES	15
ARTICLE 6 - INDEMNIFICATION OBLIGATIONS		16
6.1	INDEMNIFICATION BY SELLER	16

 

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6.2	INDEMNIFICATION BY BUYER	17
6.3	LIMITATIONS ON SELLER’S INDEMNIFICATION	17
6.4	THRESHOLD	17
6.5	CAP	18
6.6	TIME LIMITS	18
6.7	CLAIMS	19
6.8	THIRD PARTY CLAIMS	19
6.9	PAYMENT OF THE AMOUNT OF INDEMNIFICATION	20
6.10	PROVISIONAL PAYMENTS	20
6.11	EXCLUSIVE REMEDY	21
ARTICLE 7 - BUYER’S REPRESENTATIONS AND WARRANTIES		21
ARTICLE 8 - FURTHER COVENANTS		22
8.1	GUARANTEE OF THERMADYNE HOLDINGS	22
8.2	GUARANTEE OF MASE	22
8.3	AGREEMENTS WITH AFFILIATES OF THE THERMADYNE GROUP	22
8.4	INTERIM MANAGEMENT	23
8.5	NON COMPETITION	23
8.6	CONFIDENTIALITY	24
8.7	PRESS RELEASES	24
8.8	COOPERATION	25
ARTICLE 9 - MISCELLANEA		25
9.1	COSTS	25
9.2	SEVERABILITY	25
9.3	WAIVER	26
9.4	ENTIRE AGREEMENT	26
9.5	AMENDMENTS	26
9.6	NOTICES	26
9.7	APPLICABLE LAW	27
9.8	ARBITRATION	28

 

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ACQUISITION AGREEMENT

 

By this agreement dated as of December 22, 2005 (the “ Agreement ”) by and between

 

THERMADYNE ITALIA S.R.L., with registered offices in Via Stazione 5, Villanova D’ Ardenghi, Pavia, Italy, share capital Euro 46,482, Tax code and Register of Enterprises of Milano no. 07978050156, represented by Mr Oreste Cazzaniga, duly empowered (the “ Thermadyne Italia ” or the “ Seller ”, depending on the context)

 

and

 

MASE GENERATORS S.P.A., with registered offices in Via Tortona, 345, Cesena (Forli-Cesena), Italy, share capital Euro 3,500,000, Tax code and Register of Enterprises of Forli-Cesena no. 00687150409, represented by Mr. Luigi Foresti, duly empowered (“ Mase ”),

 

WHEREAS

 

A.                                     Thermadyne Italia is an affiliate of the Thermadyne Group (the “ Thermadyne Group ”), whose parent company is Thermadyne Holdings Corporation, Suite 300, 16052 Swingley Ridge Road, St. Louis, Missouri (“ Thermadyne Holdings ”);

 

B.                                     Thermadyne Italia is the sole shareholder of GEN SET S.P.A., a company organized and existing under the laws of Italy, having its registered office at Via Stazione 5, Villa-nova D’Ardenghi, Pavia, Italy, and an issued and fully paid share capital of Euro 7,488,000.00, tax code and Register of Enterprises of Pavia no. 102111540157 (the “ Company ”), active in the field of manufacture of, inter alia , power generators and motor welding;

 

C.                                     Thermadyne Italia is interested in selling, and Mase is interested in purchasing, through GEN SET S.R.L., a newly established company controlled by Mase and designated by it (“ Newco ” or, together with Mase, the “ Buyer ”), the entire share capital of the Company upon the terms and conditions set forth herein; and

 

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D.                                     On November 8, 2005 Thermadyne Holdings and Mase entered into a letter of intent whereby the parties thereto agreed upon certain terms and conditions to be included in the Agreement (the “ Letter of Intent ”),

 

NOW THEREFORE IT IS AGREED AS FOLLOWS .

 

ARTICLE 1 - PRELIMINARY COVENANTS

 

1.1                                RECITALS AND ANNEXES

 

The recitals set out above, as well as the documents attached hereto as Annexes, form an integral and substantive part of the Agreement.

 

1.2                                DEFINED TERMS

 

Defined terms are used throughout the Agreement in the specific meaning respectively attributed to each of them herein. Terms defined in the plural include the singular and vice-versa.

 

Seller and Buyer are sometimes referred to collectively as the “Parties”.

 

1.3                                ACCOUNTING PRINCIPLES

 

For the purpose of the Agreement, reference is made to the rules of Italian law applicable to the drafting of financial statements, as integrated by, interpreted and applied in accordance with the accounting principles issued by the Commission of the “Consiglio Nazionale dei Dottori Commercialisti e dei Ragionieri” (the “Accounting Principles”).

 

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ARTICLE 2 - SALE AND PURCHASE OF THE SHARES

 

2.1                                SALE AND PURCHASE

 

Subject to the terms and conditions set forth in the Agreement, Seller hereby agrees to sell to Buyer, and Buyer agrees to purchase, all the no. 7,488,000 shares representing 100% of the share capital of the Company (the “ Shares ”), free from all liens and encumbrances of any kind (the “ Sale and Purchase ”).

 

All rights and interests relating to the Shares, including accrued and unpaid dividends (“godimento”) are hereby transferred with effective date as of the Closing Date (as hereinafter defined).

 

2.2                                CLOSING

 

The Sale and Purchase shall take place, as specified herein (the “ Closing ”) at the office of the Notary Roberto Scotto, in Cesena, Corte Piero della Francesca, 49, on December 29, 2005, or such other date (not later than December 31, 2005) and place as the Parties may mutually agree in writing (the “ Closing Date ”).

 

2.3                                NATURE OF THE AGREEMENT

 

Upon Closing, the Agreement will have the nature of and will be considered as a definitive sale and purchase agreement, and shall remain in full force and effect until consummation of all relations deriving therefrom, with no need of further confirmation or repetition of the provisions of the Agreement in other documents.

 

ARTICLE 3 - PRICE – PAYMENTS

 

3.1                                PRICE OF THE SHARES

 

The aggregate purchase price for the Shares has been agreed between the Parties in the fixed amount of Euro 7,596,865 (seven million five hundred and ninety-six

 

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thousand eight hundred and sixty-five), subject to no adjustment (the “ Price of the Shares ”).

 

3.2                                PAYMENTS

 

The Price of the Shares shall be paid at the Closing Date, simultaneously with the Closing, as follows:

 

(a)                                the amount of Euro 4,900,000 (four million nine hundred thousand) shall be paid by Buyer to Seller in immediately available funds by means of wire transfer, with value date as of the date of payment, on the bank account and at the bank previously notified in writing by Seller to Buyer or, alternatively, at Buyer’s choice, by means of certified checks (“ assegni circolari”) (the “ Payment in Cash ”); whilst

 

(b)                               the residual amount of Euro 2,696,865 (two million six hundred and ninety-six thousand eight hundred and sixty-five) shall be paid by Buyer to Seller according to separate agreements between the Parties, by offsetting respective credits vis-à-vis each other.

 

ARTICLE 4 - ACTIONS PRIOR TO OR AT THE CLOSING DATE

 

4.1                                CORPORATE ACTIONS

 

On the Closing Date, Seller shall cause that an ordinary shareholders’ meeting of the Company take place to resolve upon the following matters:

 

(a)                                resignation of all directors and statutory auditors of the Company;

 

(b)                               appointment of new directors and statutory auditors, as per the previous written instructions of Buyer; and

 

(c)                                formal waiver of any and all claims of the Company vis-à-vis each of the above resigning directors and statutory auditors, pursuant to Article 2393 of the Italian

 

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Civil Code, except in case of gross negligence and wilful misconduct ( ‘dolo o colpa grave’ ).

 

4.2                                PERFORMANCE OF CLOSING

 

At Closing each of the Parties shall take or cause to be taken the following actions:

 

(a)                                Seller shall deliver to Buyer all the share certificates representing the Shares, duly endorsed in favour of Buyer;

 

(b)                               Buyer shall pay to Seller the Payment in Cash;

 

(c)                                Seller and Buyer shall execute and deliver any other instrument or document in connection with the Sale and Purchase, including the required stamp duty form, as required for the completion of the Sale and Purchase; and

 

(d)                               the transfer of the Shares shall be recorded in the Company’s shareholders’ book.

 

4.3                                SIMULTANEOUS TRANSACTIONS

 

Any and all actions and transactions constituting the Closing, including without limitation all deeds, instruments and documents to be executed at Closing and deliveries to be made at Closing pursuant to the Agreement, shall be regarded for the purposes of the Closing as a single transaction so that such actions and transactions shall be deemed to occur simultaneously, and no such transaction shall be deemed to have been consummated until all such transactions have been consummated.

 

ARTICLE 5 - SELLER’S REPRESENTATIONS AND WARRANTIES

 

5.1                                SELLER’S REPRESENTATIONS AND WARRANTIES

 

Seller hereby gives Buyer the following representations and warranties (the “ Seller’s Representations and Warranties ”), as qualified by the specifications and/or

 

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additional information set out in the disclosure schedule attached hereto as Annex A (the “Disclosure Schedule”).

 

It is agreed that (i) the Disclosure Schedule is an integral part of the Seller’s Representations and Warranties, (ii) the Seller’s Representations and Warranties refer to the date hereof and to the Closing Date, unless otherwise specified therein; and (iii) said Seller’s Representations and Warranties will continue in full force and effect for the period, depending on the nature of each of them, specified in the Agreement.

 

5.1.1                      Power and authority of Seller

 

Seller has full power and authority to perform the Sale and Purchase, as well as the power to transfer the Shares to Buyer, as provided for in the Agreement.

 

Seller has taken all actions necessary to authorize execution, delivery and performance of the Agreement.

 

All consents, approvals, authorizations and other requirements provided for by any law which must be obtained or satisfied by Seller and which are necessary for the execution and delivery by Seller of the Agreement and the consummation of the transactions contemplated herein have been obtained and satisfied.

 

Seller has obtained all required or appropriate consent to the Sale and Purchase from its lenders.

 

5.1.2                      Share Capital of the Company

 

As of the Closing Date, the share capital of the Company is equal to Euro 7,488,000.00, and is represented solely by the Shares. The Shares are duly authorized, validly issued, outstanding and fully paid up.

 

There are no pending transactions on the capital of the Company, neither in form of payments attributable to future capital increases nor as financing by the shareholder, and no third party may claim any right in connection with the Shares or the issuance of new shares of the Company.

 

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Since December 23, 2004 until the Closing Date no dividends have been or shall be resolved nor distributed, in any form.

 

5.13                         Title to the Shares

 

Seller has full legal title to the Shares and full right, power and authority to the sale and transfer thereof.

 

The Shares represent 100% of the share capital of the Company.

 

At the Closing Date the Shares shall be free and clear of any pledges, liens, encumbrances, restrictions or commitments and of any rights of third parties.

 

The transfer of the Shares by Seller to Buyer provided for herein shall vest in Buyer legal and beneficial title to the Shares.

 

5.1.4                      Good Standing

 

The Company is duly organized, validly existing and in good standing under the Italian law, and has full right and authority to carry on its activity as now conducted and to own its properties.

 

5.1.5                      By-laws and corporate records

 

A complete copy of the up-dated by-laws of the Company has been delivered to Buyer prior to the date hereof.

 

The Company has duly kept all corporate books and records which are mandatory under Italian law.

 

5.1.6                      Powers of attorney

 

The Disclosure Schedule contains a list of all powers of attorney granted by the Company and currently in force.

 

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5.1.7                      No conflict

 

The execution and delivery of the Agreement by Seller and the fulfilment of the obligations provided for herein at the charge of Seller is neither in conflict with, nor shall result in a material violation or breach of any binding obligation of Seller, nor to the best of Seller’s knowledge of any laws, regulations or orders of the judicial authority or of any other competent authorities applicable to Seller nor shall cause the anticipated termination of any agreement or licence of which the Company is a party or howsoever applicable to any of its assets and properties.

 

5.1.8                      Financial statements and accounting books

 

The financial statements of the Company as of December 31, 2004, copy of which is attached hereto as Annex B/l (the “2004 Financial Statements”) have been prepared in accordance with the applicable law and by applying the Accounting Principles on a consistent basis and are true, real and correct and give a true and fair view of the Company’s financial position and the results of its operations and correctly reflect all assets and liabilities of the Company as at their reference date.

 

The pro-forma financial statements of the Company as at September 30, 2005, copy of which is attached hereto as Annex B/2 (the “Pro-Forma Financial Statements”) have been prepared broadly on the basis of the 2004 Financial Statements.

 

The 2004 Financial Statements and the Pro-Forma Financial Statements are herebelow sometimes collectively referred to as the “Financial Statements” .

 

The accounting books and records (“scritture contabili”) of the Company are complete and have been regularly kept in accordance with the applicable laws.

 

5.1.9                      Interests in other entities – Shareholders Agreements

 

Expect for the shareholding interest equal to 90% of the capital of OCIM Sri (“ Ocim ”), and except as otherwise specified in the Disclosure Schedule, the Company has no direct or indirect participations and/or interests of any kind in other entities.

 

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At the Closing Date the Company shall not be part of any put and call or other shareholders agreement concerning Ocim.

 

5.1.10               Receivables

 

It is acknowledged that point 5.1.10 of the Disclosure Schedule specifies certain intercompany accounts receivable, which (i) have been past due for more than 12 months and are expected not to be paid, and (ii) are excluded from the Seller’s Representations and Warranties (the “ Excluded Receivables ”).

 

It is further acknowledged that the receivable versus the Spanish distributor GREYMO S.A., equal to Euro 323,914, shall be included among the Excluded Receivables.

 

Such Excluded Receivables will be transferred to Seller, pro-soluto, for an aggregate amount of Euro 1,000 promptly after the Closing Date and effective as of January 2, 2006, by means of the exchange of letters according to the text attached hereto as Annex C , it being understood that until such transfer the Company shall not attempt to collect any of such Excluded Receivables.

 

Except for the Excluded Receivables, all accounts receivable, notes receivable and other credits of the Company as are reflected in the Financial Statements and, for the period from October 1, 2005 to the Closing Date, will be reflected in the Company’s accounting books, are and shall be valid and existing and, to the best of Seller’s knowledge, are collectable in the ordinary course of business consistent with past practice.

 

5.1.11               Inventory

 

(a)                                   Point 5.1.11 of the Disclosure Schedule identifies certain no moving and slow moving inventory items, respectively defined as products with no sales in the last 24 months and as products having a turnover not in line with the normal business standards, which are valued in the aggregate of Euro 1,200,820.69, and for which Buyer acknowledges that the expected recovery value is lower than the corresponding book value, net of the relevant provision reflected in the

 

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Company’s Financial Statements, and that the Buyer will not seek indemnification, pursuant to the Agreement or otherwise, for such difference (the “ Excluded Inventory ”).

 

(b)            Without prejudice for the above clause (a):

 

(i)             the quantities of inventory items reflected in the accounting books (including the Excluded Inventory) are effectively existing, it being understood that physical differences in inventory items having an aggregate book value up to a maximum amount of Euro 250,000 (two hundred and fifty thousand) will not be taken into account; and

 

(ii)            all inventory items (excluding the Excluded Inventory) are saleable and/or usable.

 

5.1.12               Title to Assets

 

The Company has full legal title to all plants, machinery, equipment, and other assets reflected in the Financial Statements and in general in the accounting books of the Company.

 

Except as otherwise specified in the Disclosure Schedule, all such assets owned by the Company are subject to no liens, pledges, mortgages, encumbrances, reservations of ownership or rights of any kind of any third parties.

 

All plants, machinery and equipment and the other assets used by the Company are in good operating conditions as to the use they are destined to, except for the ordinary wear and tear.

 

5.1.13               Real Property and Leases

 

The Disclosure Schedule contains a true and correct list of each parcel of real property owned (the “ Owned Real Property ”) and of each parcel of real property leased (the “Leased Real Property ”) by the Company (as lessor or lessee) and all liens relating to or affecting any parcel of real property referred to above; provided that Buyer hereby

 

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acknowledges that: (i) the Company has requested a cadastral search on its real estate; and (ii) such search shall replace item 5.1.13 of the Disclosure Schedule, should the results of such search be differen