EXHIBIT 10.40
NON-QUALIFIED STOCK OPTION AGREEMENT
THERMADYNE HOLDINGS CORPORATION
2004 STOCK INCENTIVE PLAN
     THIS NON-QUALIFIED STOCK OPTION PLAN AGREEMENT (this “Agreement”) dated
May 1, 2007, between Thermadyne Holdings Corporation (the “Company”), a Delaware
corporation, and                                          (the “Optionee”), 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.
     RECITALS
     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 Optionee 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
Optionee a right to purchase shares of Common Stock pursuant to the Plan (the
“Stock Option”).
     NOW, THEREFORE, in consideration of the foregoing and of the mutual
undertakings set forth in this Agreement, the Company and the Optionee 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 this Agreement are as 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 Option
     2.1 Subject to the terms and conditions set forth herein and in the plan,
the Company hereby grants to the Optionee a Stock Option to purchase
                     shares of Common Stock of the Company. The per share
exercise price will be the price at which a share of Company Stock closes on
May 1, 2007.
     2.2 The Stock Option granted hereby is intended to be a Nonqualified Stock
Option subject to the provisions of Section 83 of the Code.
Section 3. Exercisability
     3.1 The Stock Option will vest based on Average ROIOC (as herein defined)
over a three year period, beginning in January 2007 and ending in December 2009
(the “Target Period”)

 

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as set forth below. Subject to applicable securities laws, the Stock Option
granted pursuant to this Agreement shall vest and be exercisable as of May 1,
2010 as follows:

  a.   If Average ROIOC for the Target Period is 35 percent or more, 100 percent
of the Stock Option shall be vested and exercisable.     b.   If Average ROIOC
for the Target Period is 30 percent, 67 percent of the Stock Option shall be
vested and exercisable.     c.   If Average ROIOC for the Target Period is
25 percent, 33 percent of the Stock Option shall be vested and exercisable.    
d.   If Average ROIOC during the Target Period does not reach 25 percent, the
Stock Option is forfeited and no longer exercisable.

     The parties agree and acknowledge that incremental amounts of the Stock
Option will vest 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 Stock Option shall be vested and exercisable.
     3.2 The following terms shall have the following meaning when used herein:

  a.   “Average ROIOC” means the weighted average ROIOC for the three fiscal
years of the Company ending December 31, 2007, 2008 and 2009.     b.   “ROIOC”
for a fiscal year of the Company means Adjusted Operating EBITDA for such year
divided by Invested Operating Capital for such year.     c.   “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:         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     d.   “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:         Net income (loss) from continuing operations
Interest expense

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      Net periodic postretirement benefits in excess of cash payments
Restructuring costs
LIFO
Minority interest
Severance accrual
Stock compensation expense
Provision for income tax

     3.3 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 circumstance 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.
     3.4 Subject to Section 5, the Stock Option shall expire and cease to be
exercisable ten years after the date of this Agreement, or on such earlier date
as may be provided herein.
     3.5 The Stock Option may be partially exercised from time to time within
the limits on exercisability set forth in Section 3.1.
Section 4. Method of Exercise
     The Stock Option or any part thereof may be exercised only by the giving of
written notice to the Secretary of the Company, which notice shall state the
election to exercise the Stock Option and the number of whole shares of Common
Stock with respect to which the Stock Option is being exercised. Such notice
must be accompanied by payment of the full purchase price for the number of
shares of Common Stock purchased. Such payment shall be made: (a) in immediately
available funds (or the equivalent thereof acceptable to the Company) or (b) in
such other consideration as the Committee deems appropriate, including, but not
limited to, shares of Common Stock owned by the Optionee, or a combination of
cash and other consideration having a total Fair Market Value, as so determined,
equal to the full purchase price. Subject to Section 6 and as soon as
practicable after it receives payment of the purchase price, the Company shall
deliver to the Optionee a certificate or certificates for the shares of Common
Stock so purchased.
Section 5. Termination of Employment
     5.1 Except to the extent otherwise provided in Section 5.2 or 5.3, any
portion of the Stock Option that has not previously been exercised shall
terminate upon the Optionee’s termination of employment with the Company or a
Subsidiary corporation for any reason, including death, and shall not be
exercisable after such date.
     5.2 If the Optionee’s employment terminates with the Company or a
Subsidiary Corporation other than by reason of death, dismissal for cause (as
defined herein) or resignation

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from employment without the Company’s prior consent, the Optionee may thereafter
exercise the Stock Option granted hereby only on the following terms and
conditions: (a) such exercise may be made only to the extent the Optionee is
entitled to exercise such Stock Option on the date his or her employment
terminates; and (b) such exercise must be made by the earlier of the expiration
date of such Stock Option, determined pursuant to Section 3, or the ninetieth
day after his employment terminates; provided, that if the Optionee’s employment
terminates by reason of disability described in Section 22(e)(3) of the Code,
the foregoing ninety day period shall be increased to one year.
     5.3 If the Optionee dies while in the employ of the Company or a Subsidiary
Corporation, or dies after his or her employment terminates and during a period
in which the Stock Option is exercisable pursuant to Section 5.2, the Stock
Option granted hereby shall be exercisable by earlier of the expiration date of
such Stock Option or ninety days after the date of the Optionee’s death, to the
extent that the Optionee was entitled to exercise such Stock Option on the date
of death. The Optionee may designate a beneficiary or beneficiaries (“Designated
Beneficiary or Beneficiaries”) on the Designated Beneficiary form attached to
this Agreement to exercise the Option after the Optionee’s death and to receive
shares of Common Stock acquired pursuant to such exercise. If the Optionee does
not complete the Beneficiary Designation form or the Designated Beneficiary or
Beneficiaries has or have predeceased the Optionee or cannot be located, the
Option shall be transferred in accordance with the Optionee’s will or, if the
Optionee has no will, in accordance with the applicable state laws of descent
and distribution. In this case, the Option shall be exercisable by the
Optionee’s testamentary transferee or transferees after his or her death and
shares of Common Stock acquired in connection with the exercise of the Options
shall be transferred to such Transferee or Transferees. Any person or entity
acquiring stock pursuant to the exercise of the Option after the Optionee’s
death shall be bound by all the terms and conditions of the Plan and this
Agreement which would have applied to the Optionee’s exercise of the Stock
Option granted hereby (if he or she had lived) including, without limitation,
the provisions of Section 6 and Section 11.
     5.4 References herein to an individual’s employment shall include any and
all periods during which such individual is considered an employee of the
Company or a Subsidiary Corporation. The Optionee shall be deemed to have
terminated employment when the Optionee completely ceases to be employed (within
the meaning of the preceding sentence) by the Company and all of its Subsidiary
Corporations. The Committee may in its discretion determine (a) whether any
leave of absence constitutes a termination of employment within the meaning of
this Agreement, and (b) the impact, if any, of any such leave of absence on the
Stock Option granted under this Agreement.
     5.5 The term “dismissal for cause” as used herein shall mean:

  a.   an act or omission by the Optionee that causes material harm to the
Company or a Subsidiary Corporation of which the Optionee is notified in writing
by the Company and the Optionee has not corrected within ten (10) days of such
notification;

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  b.   any continued neglect of, or failure to perform, duties by the Optionee
of which the Optionee is notified in writing by the Company and the Optionee has
not corrected within ten (10) days of such notification;     c.   the Optionee’s
performing services for any other corporation or person which competes with the
Company or a Subsidiary Corporation while he or she is employed by the Company
or a Subsidiary Corporation and without the written approval of the chief
executive officer of the Company; or     d.   any conviction of the Optionee or
plea of guilty (or nolo contendere) by the Optionee to a felonious crime.

provided, however, that if, at the time in question the Optionee is a party to
an employment agreement with the Company or any of its Subsidiary Corporations
which contains a definition of “cause” which is inconsistent with the provisions
of this Section 5.5, the terms of such employment agreement shall define
“dismissal for cause” for the purposes of this Plan Agreement.

Section 6.   Securities Law Restrictions and Other Restrictions on Transfer of
Shares of Company Common Stock Purchased Pursuant to this Agreement

  a.   The Optionee represents that upon exercise of a Stock Option, shares of
Common Stock shall be purchased for the Optionee’s own account and not on behalf
of others. Federal and state securities laws govern and restrict the Optionee’s
right to offer, sell or otherwise dispose of any such shares unless the shares
are first registered under the Securities Act of 1933 (the “Securities Act”) and
state securities laws (which the Company is not required to do), or in the
opinion of the Company’s counsel, such offer, sale or other disposition is
exempt from registration or qualification thereunder. The Optionee shall not
offer, sell or otherwise dispose of any shares purchased pursuant to this
Agreement in any manner unless they are first registered under the Securities
Act and any applicable state securities laws except in a transaction which, in
the opinion of counsel to the Company, is exempt from the registration
requirements.     b.   Restrictive Legend. The certificates representing the
shares of Common Stock purchased pursuant to this Agreement shall bear the
following legend, plus other legends the Company deems necessary or desirable in
connection with securities laws or other rules, regulations or laws.         THE
SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 (THE “ACT”) AND ARE “RESTRICTED SECURITIES” AS DEFINED IN
RULE 144 PROMULGATED UNDER THE ACT. THE SECURITIES MAY NOT BE SOLD, OFFERED FOR
SALE OR OTHERWISE DISTRIBUTED EXCEPT (i) IN CONJUNCTION WITH

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      AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE ACT, OR
(ii) IN COMPLIANCE WITH RULE 144, OR (iii) PURSUANT TO AN OPINION OF COUNSEL TO
THE CORPORATION THAT SUCH REGISTRATION OR COMPLIANCE IS NOT REQUIRED AS TO SAID
SALE, OFFER OR DISTRIBUTION.

Section 7. Non-Assignability
     No right granted to the Optionee under the Plan or this Agreement, except
as otherwise provided in this Agreement, shall be assignable or transferable
(whether by operation of law or otherwise and whether voluntarily or
involuntarily), other than by will or by the laws of descent and distribution.
During the life of the Optionee, all rights granted to the Optionee under the
Plan or under this Agreement shall be exercisable only by the Optionee.
Section 8. Withholding Taxes
     Whenever under the Plan and this Agreement shares of Common Stock are to be
delivered upon exercise of a Stock Option, the Company shall be entitled to
require as a condition of delivery that the Optionee remit an amount sufficient
to satisfy all federal, state and other governmental withholding tax
requirements related thereto; provided, that in lieu of or in addition to the
foregoing, the Company shall have the right to withhold such sums from
compensation or other amounts otherwise due to the Optionee.
Section 9. Requirement of Notification on Section 83(b) Election
     If the Optionee shall, in connection with the exercise of a Stock Option,
make the election permitted under Section 83(b) of the Code (i.e., an election
to include in his or her gross income in the year of transfer the amounts
specified in section 83(b) of the Code), he or she shall notify the Company of
such election within ten days of filing notice of the election with the Internal
Revenue Service, in addition to any filing and notification required pursuant to
regulations issued under the authority of Section 83(b) of the Code.
Section 10. Adjustments Upon Changes in Capitalization
     In the event of any increase or decrease, after the date of this Agreement,
in the number of issued shares of Common Stock resulting from the subdivision or
combination of shares of Common Stock or other capital adjustments, or the
payment of a stock dividend, or other increase or decrease in such shares
effected without receipt of consideration by the Company, the Committee shall
proportionately adjust the number of shares subject to the Stock Option, the
purchase price set forth in Section 2.1, and any and all other matters deemed
appropriate by the Committee; provided, however, that any Stock Option to
purchase fractional shares resulting from any such adjustment shall be
eliminated. Adjustments under this Section shall be made by the Committee, whose
determination as to what adjustments shall be made, and the extent thereof,
shall be final, binding and conclusive.
Section 11. Reorganization

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     In the event of a change in the ownership or effective control of the
Company or a change in the ownership of a substantial portion of the assets of
the Company within the meaning of Section 409A(2)(A)(v) of the Code (each such
event being hereafter called a “reorganization event”), or in the event that the
Board shall propose that the Company enter into a reorganization event, then the
Stock Option shall vest and become exercisable in full, and thereafter, the
Committee may in its discretion (a) by written notice to the Optionee, provide
that the Stock Option will be terminated unless exercised within thirty days (or
such longer period as the Committee shall determine in its sole discretion)
after the date of such notice, and/or (b) provide that such holder shall
receive, with respect to each share of Common Stock subject to such Stock Option
an amount equal to the excess of the Fair Market Value of such shares of Common
Stock immediately prior to the occurrence of such reorganization event over the
exercise price per share underlying such Stock Option with such amount payable
in cash, in one or more kinds of property (including the property, if any,
payable in the transaction) or in a combination thereof. Wherever deemed
appropriate by the Committee, any such action may be made conditional upon the
consummation of the applicable reorganization event.
Section 12. Right of Discharge Reserved
     Nothing in the Plan or in this Agreement shall confer upon the Optionee the
right to continue in the employment, or service of the Company or any of its
Subsidiary Corporations, or affect any right which the Company or any of its
Subsidiary Corporations may have to terminate the employment or service of the
Optionee. The parties agree and acknowledge that the Optionee is an at-will
employee of the Company or a Subsidiary Corporation. The Optionee and the
Company each retain the right to terminate such employment relationship at any
time.
Section 13. No Rights as a Stockholder
     Neither the Optionee nor any person succeeding to the Optionee’s rights
hereunder shall have any rights as a stockholder with respect to any shares of
Common Stock subject to the Stock Option until the date of the issuance of a
stock certificate to him or her for such shares. Except for adjustments made
pursuant to Section 10, no adjustment shall be made for dividends, distributions
or other rights (whether ordinary or extraordinary, and whether in cash,
securities or other property) for which the record date is prior to the date
such stock certificate is issued.
Section 14. Nature of Payments
     14.1 Any and all grants of Stock Options and issuance of shares of Common
Stock hereunder shall be in consideration of services performed by the Optionee
for the Company or for its Subsidiary Corporations.
     14.2 Any and all issuances of shares of Common Stock hereunder shall
constitute a special incentive payment to the Optionee. Such issuances and/or
income realized upon exercise of a Stock Option shall not be taken into account
in computing the amount of salary or compensation of the Optionee for the
purposes of determining any pension, retirement, death or other benefits under
(a) any 401(k), pension, retirement, profit-sharing, bonus, life insurance,
disability or other benefit plan of the Company or any Subsidiary Corporation or
(b) any

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agreement between the Company or any Subsidiary Corporation, on the one hand,
and the Optionee, on the other hand, except as such plan or agreement shall
otherwise expressly provide.
Section 15. Committee Determinations
     The Committee’s determinations under the Plan and this Agreement need not
be uniform and may be made by it selectively among persons who receive, or are
eligible to receive, awards under the Plan (whether or not such persons are
similarly situated). All decisions, interpretations and determinations by the
Committee with regard to any question or matter arising hereunder or under the
Plan shall be conclusive and binding upon the Company and the Optionee.
Section 16. Section Headings
     The Section headings contained herein are for the purpose of convenience
only and are not intended to define or limit the contents of said sections.
Section 17. Notices
     Any notice to be given to the Company or the Committee hereunder shall be
in writing and shall be addressed to the Secretary of the Company at Thermadyne
Holdings Corporation, 16052 Swingley Ridge Court, Suite 300, Chesterfield, MO
63017, or at such other address as the Company may hereafter designate to the
Optionee by notice as provided herein. Any notice to be given to the Optionee
hereunder shall be addressed to the Optionee at the address set forth beneath
his or her signature hereto, or at such other address as the Optionee may
hereafter designate to the Company by notice as provided herein. Notices
hereunder shall be deemed to have been duly given when personally delivered or
mailed by registered or certified mail to the party entitled to receive the
same.
Section 18. Successors and Assigns
     This Agreement shall be binding upon and inure to the benefit of the
parties hereto and the successors and assigns of the Company and, to the extent
set forth in Section 5.3, the heirs and personal representatives of the
Optionee.
Section 19. Other Payments or Awards
     Nothing contained in this Agreement shall be deemed in any way to limit or
restrict the Company or any Subsidiary Corporations from making any award or
payment to the Optionee under any other plan, arrangement or understanding,
whether now existing or hereafter in effect.
Section 20. Governing Law and Venue
     This Agreement shall be governed by and construed in accordance with the
laws of the state of Missouri despite any laws of that state that would apply
the laws of a different state. In the event of litigation arising in connection
with this Agreement and/or the Plan, the parties hereto agree to submit to the
jurisdiction of state and Federal courts located in the state of Missouri.

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Section 21. Severability
     If any term or provision of this Agreement, or the application of this
Agreement to any person or circumstances, shall at any time or to any extent be
invalid, illegal or unenforceable in any respect as written, both parties intend
for any court construing this Agreement to modify or limit that provision so as
to render it valid and enforceable to the fullest extent allowed by law. Any
provision that is not susceptible of reformation shall be ignored so as to not
affect any other term or provision of this Agreement, and the remainder of this
Agreement, or the application of that term or provision to persons or
circumstances other than those as to which it is held invalid, illegal or
unenforceable, shall not be affected thereby and each term and provision of this
Agreement shall be valid and enforced to the fullest extent permitted by law.
Section 22. Entire Agreement Modification
     The Plan and this Agreement contain the entire agreement between the
parties with respect to the subject matter contained in this Agreement and may
not be modified, except as provided in the Plan, as it may be amended from time
to time in the manner provided in the Plan, or in this Agreement, as it may be
amended from time to time by a written document signed by each of the parties to
this Agreement. Any oral or written agreements, representations, warranties,
written inducements or other communications with respect to the subject matter
contained in this Agreement made before the signing of this Agreement shall be
void and ineffective for all purposes.
Section 23. Authority to Receive Payments
     Any amount payable to or for the benefit of a minor, an incompetent person
or other person incapable of receipting therefore shall be deemed paid when paid
to the conservator of such person’s estate or to the party providing or
reasonably appearing to provide for the care of such person, and such payment
shall fully discharge the Company, members of the Committee and the Board with
respect thereto.
Section 24. Counterparts
     This Agreement may be executed simultaneously in two or more counterparts,
each of which shall constitute an original, but all of which taken together
shall constitute one and the same Agreement.
     IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date and year first above written.

                      THERMADYNE HOLDINGS CORPORATION       OPTIONEE        
 
                   
By:
          Optionee Signature:        
 
 
 
Patricia S. Williams       Optionee Name:  
 
   
 
          Date of Signature:  
 
   
 
             
 
   

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                                  Optionee’s Home Address:    
 
                                     
 
                                     
 
                                     

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NON-QUALIFIED STOCK OPTION AGREEMENT
THERMADYNE HOLDINGS CORPORATION
2004 STOCK INCENTIVE PLAN
BENEFICIARY DESIGNATION
To the Secretary of Thermadyne Holdings Corporation (“Company”)
I hereby designate the following person, persons or entity as primary and
secondary Designated Beneficiaries of my rights that shall be transferred under
the Thermadyne Holdings Corporation 2004 Stock Incentive Plan (the “Plan”) and
the Thermadyne Holdings Corporation 2004 Stock Incentive Plan Non Qualified
Stock Option Agreement (“Agreement”) between the Company and me dated
                    , 20___ upon my death:
Primary Beneficiary [include address and relationship]:
Secondary Beneficiary [include address and relationship]:
I RESERVE THE RIGHT TO REVOKE OR CHANGE ANY BENEFICIARY DESIGNATION. I HEREBY
REVOKE ALL PRIOR DESIGNATIONS (IF ANY) OF BENEFICIARIES AND SECONDARY
BENEFICIARIES.
The Company shall cause all Options under the Agreement to be transferred by
reason of my death pursuant to the Agreement to the Primary Beneficiary, if he,
she or it survives me, and if no Primary Designated Beneficiary shall survive
me, then to my secondary Designated Beneficiary. If no named Designated
Beneficiary survives me, then all such Options shall be transferred in
accordance with the terms of the Agreement. The recipient of such Options under
the Agreement may exercise such Options to the extent provided in the Agreement
and receive the shares of Company Common Stock acquired in connection with such
exercise..

     
 
   
Date of this Designation
  Signature of Participant

NOTE: Unless provided otherwise in this Beneficiary Designation, the Company
shall transfer all options to be transferred to more than one Designated
Beneficiary equally to the living Designated Beneficiaries.

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