RESTRICTED STOCK AWARD
AGREEMENT
THERMADYNE HOLDINGS CORPORATION
2004 STOCK INCENTIVE
PLAN
THIS RESTRICTED
STOCK AWARD AGREEMENT (this “Agreement”) dated
May 1, 2007, between Thermadyne Holdings Corporation (the
“Company”), a Delaware corporation, and
(the “Grantee”), an officer or key employee of the
Company or one of its subsidiary corporations (“Subsidiary
Corporation”) within the meaning of Section 424(f) of the
Code.
WHEREAS, the
Committee or the Board of Directors of the Company
(“Board”) acting as the Committee (in either case, the
“Committee”) has determined that the Grantee is one of
the key personnel (officer, director, or key employee) of the
Company or one of its Subsidiary Corporations, and
WHEREAS, the
Committee believes the goals and objectives of the Company’s
2004 Stock Incentive Plan (the “Plan”) will be
furthered by granting to the Grantee shares of Common Stock
(“Restricted Stock”) pursuant to the Plan.
NOW, THEREFORE, in
consideration of the foregoing and of the mutual undertakings set
forth in this Plan Agreement, the Company and the Grantee agree as
follows:
Section 1.
Terms of Plan to Control
This Agreement is
subject to all the terms and conditions of the Plan, a copy of
which is attached hereto as Exhibit A . Capitalized
terms used in this Agreement and not otherwise defined in the
Agreement are defined in the Plan. In the event of a conflict
between the Plan and this Agreement, the terms of the Plan shall
control.
Section 2.
Grant of Restricted Stock
2.1 The Company
hereby grants to the Grantee
shares of Restricted Stock.
2.2 Subject to the
provisions of this Agreement, the Company shall issue and register
on its books and records in the name of the Grantee a
certificate(s) in the amount of the shares of Restricted Stock
subject to this Agreement as set forth above. Each certificate
shall bear a legend, substantially in the following
form:
“The sale
or other transfer of the shares of stock represented by this
certificate, whether voluntary, involuntary or by operation of law,
is subject to certain restrictions on transfer as set forth in the
Thermadyne Holdings Corporation 2004 Stock Incentive Plan and in
the associated Agreement. A copy of this Plan and such Agreement
may be obtained from Thermadyne Holdings
Corporation.”
The
certificate(s) shall be retained by the Company (or its designee)
until the time that all restrictions or conditions applicable to
the shares of Restricted Stock have been satisfied or lapsed. The
Grantee agrees to (i) deliver to the Company, as a
precondition to the issuance of any certificate(s) with respect to
Unvested Shares, one or more stock powers, endorsed in blank, with
respect to such shares, (ii) sign such other powers, take such
other actions as the Company may reasonably request to accomplish
the transfer or forfeiture of any Unvested Shares that are
forfeited under this Agreement, and (ii) authorize the Company
to cause such Unvested Shares to be cancelled or transferred in the
event they are forfeited pursuant to this Agreement.
“Unvested Shares” means shares of Common Stock which
are subject to forfeiture under this Agreement. If Unvested Shares
are held in book entry form, certificate(s) shall not be issued
under this Section and the Grantee agrees that the Company may give
stop transfer instructions to the depository of such shares of
Restricted Stock to ensure compliance with the provisions of this
Agreement. The Grantee hereby (i) acknowledges that the
Unvested Shares may be held in book entry form on the books of the
Company’s depository (or another institution specified by the
Company), (ii) irrevocably authorizes the Company to take such
actions as may be necessary or appropriate to effect a transfer or
cancellation of the record ownership of such Unvested Shares that
are forfeited, (iii) agrees to sign such powers and take such
other actions as the Company may reasonably request to accomplish
the forfeiture of any Unvested Shares that are forfeited under this
Agreement, and (iv) authorizes the Company to cause such
shares of Common Stock to be cancelled or transferred in the event
they are forfeited pursuant to this Agreement.
3.1 In association
with the other terms this Agreement or contained in the Plan, the
shares of Restricted Stock shall be subject to the following
restrictions:
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a.
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Neither (i) the shares of
Restricted Stock or any interest in them, (ii) the right to
vote such shares, (iii) the right to receive dividends on such
shares, or (iv) any other rights under this Agreement may be
sold, transferred, donated, exchanged, pledged, hypothecated,
assigned or otherwise transferred, alienated or encumbered, by
operation of law or otherwise, until (and then only to the extent
of) such shares are delivered to the Grantee or, in the event of
Grantee’s death, the Grantee’s testamentary transferee
or transferees.
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b.
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The
Grantee shall have, with respect to the shares of Restricted Stock,
all of the rights of a holder of such shares, including the right
to vote such shares and to receive any cash dividends thereon.
Additional shares of Company common stock resulting from
adjustments under section 12 of the Plan with respect to shares of
Restricted Stock subject to this Agreement shall be treated as
additional shares of Restricted Stock subject to the same
restrictions and other terms of this Agreement and the Grantee or,
in the event of his or her death, his or her Designated Beneficiary
or Beneficiaries or testamentary transferees, shall comply with the
provisions of Sections 2.5 of this Agreement with respect to
such additional shares. Cash dividends paid on Unvested Shares are
taxable to the Grantee as compensation income, and not dividend
income, and are deductible by the
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Company or a Subsidiary Corporation
for income tax purposes as compensation income.
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c.
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During the Grantee’s lifetime,
shares of Restricted Stock shall only be delivered to him or her.
Any such shares transferred in accordance with this Agreement shall
continue to be subject to the terms and conditions of this
Agreement. Any transfer permitted under this Agreement shall be
promptly reported in writing to the Company’s
Secretary.
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3.2 The amount of
the shares of Restricted Stock that are delivered to Grantee will
be based on Average ROIOC (as herein defined) over a three year
period, beginning in January 2007 and ending in
December 2009 (the “Target Period”) as set forth
below. Subject to applicable securities laws and the terms of
Section 4, shares of Restricted Stock shall be delivered to
the Grantee, or in the event of the Grantee’s death, his or
her testamentary transferee, as follows:
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a.
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If
Average ROIOC for the Target Period is 35 percent or more,
100 percent of the shares of Restricted Stock shall be
delivered.
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b.
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If
Average ROIOC for the Target Period is 30 percent, 67 percent
of the shares of Restricted Stock shall be delivered.
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c.
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If
Average ROIOC for the Target Period is 25 percent, 33 percent
of the shares of Restricted Stock shall be delivered.
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d.
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If
Average ROIOC during the Target Period does not reach 25 percent,
none of the shares of Restricted Stock shall be delivered, and the
grant of such shares shall be forfeited and no longer
exercisable.
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The parties agree
and acknowledge that incremental amounts of the shares of
Restricted Stock will be delivered for Average ROIOC between
25 percent and 30 percent and between 30 percent and
35 percent. For example, if Average ROIOC is 28 percent, 53%
percent of the shares of Restricted Stock will be
delivered.
3.3 The following
terms shall have the following meaning when used herein:
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a.
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“Average ROIOC” means
the weighted average ROIOC for the three fiscal years of the
Company ending December 31, 2007, 2008 and 2009.
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b.
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“ROIOC” for a fiscal
year of the Company means Adjusted Operating EBITDA for such year
divided by Invested Operating Capital for such year.
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c.
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“Invested Operating
Capital” for a fiscal year of the Company is the sum of the
following items from the consolidated year end balance sheet as
shown on the Company’s audited financial statement for such
year:
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Accounts receivables, less
allowances for doubtful accounts
Inventories
Net property, plant and equipment
Patents and trademarks included in intangibles
Other assets
Long term receivables
Less accounts payable
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d.
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“Adjusted Operating
EBITDA” for a fiscal year of the Company is the sum of the
following items from the consolidated year end statements of
operations as shown on the Company’s audited financial
statement for such year:
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Net
income (loss) from continuing operations
Interest expense
Net periodic postretirement benefits in excess of cash payments
Restructuring costs
LIFO
Minority interest
Severance accrual
Stock compensation expense
Provision for income tax
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3.4 The award
percentages are based on projections for the Target Period which
were made by the Company and are set forth in the 2007 Business
Plan, a copy of which projections are attached hereto and
incorporated herein as Exhibit A . Said projections are
based on the continued operation of the Company and its Subsidiary
Corporations in their current ordinary course during the Target
Period. The parties agree and acknowledge that Invested Operating
Capital and Adjusted Operating EBITDA may be recast by the Company
to adjust for any unforeseen extraordinary circumstances that may
occur during the Target Period, including, but not limited to, a
change in accounting methods, the discontinued operations of a
Subsidiary Corporation or a division, or the sale or acquisition of
a business or brand.
3.5
Notwithstanding anything in this Agreement to the contrary, all
restrictions, except those under Section 5, on shares of
Restricted Stock granted under this Agreement shall lapse on a
change of control and certificate(s) or other evidence of ownership
of such shares shall be delivered to the Grantee or, in the event
of his or her death, to his or her Designated Beneficiary or
Beneficiaries or testamentary transferees. “Change in
control” means a change in the ownership or effective control
of the Company or a change in a substantial portion of the assets
of the Company within the meaning of Section 409A(2
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