DISTRIBUTION AND INDEMNITY AGREEMENT
DATED AS OF DECEMBER 31, 1997
BY AND AMONG
▇▇▇▇▇▇▇ CORPORATION,
MIDAS, INC.
and
MIDAS INTERNATIONAL CORPORATION
DISTRIBUTION AND INDEMNITY AGREEMENT
TABLE OF CONTENTS
ARTICLE I. DEFINITIONS.................................................................... 1
Section 1.01 General........................................................................ 1
ARTICLE II. THE DISTRIBUTION............................................................... 7
Section 2.01 The Distribution............................................................... 7
Section 2.02 Cooperation Prior to the Distribution.......................................... 8
Section 2.03 Conditions to the Distribution................................................. 8
ARTICLE III. TRANSACTIONS RELATING TO THE DISTRIBUTION...................................... 9
Section 3.01 Intercorporate Reorganization.................................................. 9
Section 3.02 Repayment of Intercompany Indebtedness
and Cash Dividend....................................................... 10
Section 3.03 Satisfaction and Waiver of Any Claims......................................... 10
Section 3.04 Midas Tax Sharing Agreement................................................... 10
Section 3.05 Employee Benefit Plans and Other
Compensation Arrangements..................................................... 10
Section 3.06 Board of Directors and Resignations........................................... 20
Section 3.07 Midas Rights Agreement........................................................ 21
Section 3.08 Insurance..................................................................... 21
ARTICLE IV. INDEMNIFICATION............................................................... 22
Section 4.01 Indemnification by ▇▇▇▇▇▇▇.................................................... 22
Section 4.02 Indemnification by Midas and
Midas Operating Company....................................................... 22
Section 4.03 Limitations on Indemnification
Obligations................................................................... 22
Section 4.04 Procedures for Indemnification................................................ 24
Section 4.05 Remedies Cumulative........................................................... 27
Section 4.06 Survival of Indemnities....................................................... 27
ARTICLE V. ACCESS TO INFORMATION......................................................... 27
Section 5.01 Access to Information......................................................... 27
Section 5.02 Production of Witnesses....................................................... 27
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Section 5.03 Retention of Records.......................................................... 27
Section 5.04 Confidentiality............................................................... 28
ARTICLE VI. ADDITIONAL COVENANTS.................................................................. 28
Section 6.01 Corporate Names.................................................................. 28
Section 6.02 Privileged Matters............................................................... 29
Section 6.03 Limitation on Solicitation of Employees.......................................... 31
Section 6.04 Expenses......................................................................... 32
Section 6.05 Further Assurances............................................................... 32
Section 6.06 Qualification as Tax-Free Distribution........................................... 32
ARTICLE VII. MISCELLANEOUS........................................................................ 33
Section 7.01 Complete Agreement; Conflict with Midas
Tax Sharing Agreement........................................................ 33
Section 7.02 Survival of Agreements........................................................ 33
Section 7.03 Governing Law................................................................. 33
Section 7.04 Notices....................................................................... 33
Section 7.05 Amendments.................................................................... 34
Section 7.06 Successors and Assigns........................................................ 34
Section 7.07 Termination................................................................... 34
Section 7.08 No Third Party Beneficiaries.................................................. 34
Section 7.09 Titles and Headings........................................................... 34
Section 7.10 Severability.................................................................. 35
Section 7.11 Specific Performance.......................................................... 35
Section 7.12 Waivers....................................................................... 35
Section 7.13 Execution in Counterparts..................................................... 35
SCHEDULE A: Midas Limits of Liability............................................................ A-1
SCHEDULE B: ▇▇▇▇▇▇▇ Indemnification of Midas Indemnitees......................................... B-1
SCHEDULE C: Midas and Midas Operating Company
Indemnification of ▇▇▇▇▇▇▇ Indemnitees...................................................... C-1
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DISTRIBUTION AND INDEMNITY AGREEMENT
DISTRIBUTION AND INDEMNITY AGREEMENT (this "Agreement"), dated as of
December 31, 1997, by and among ▇▇▇▇▇▇▇ CORPORATION, a Delaware corporation
("▇▇▇▇▇▇▇"), Midas, Inc., a Delaware corporation and, as of the date hereof, a
wholly-owned subsidiary of ▇▇▇▇▇▇▇ ("Midas"), and MIDAS INTERNATIONAL
CORPORATION, a Delaware corporation and, as of the Distribution Date, a wholly-
owned subsidiary of Midas ("Midas Operating Company").
WHEREAS, the ▇▇▇▇▇▇▇ Board has determined that it is appropriate and
desirable to spin off Midas by distributing all of the shares of Midas Common
Stock owned by ▇▇▇▇▇▇▇ on the Distribution Date on a pro rata basis to the
holders of record of ▇▇▇▇▇▇▇ Common Stock as of the Record Date; and
WHEREAS, ▇▇▇▇▇▇▇, Midas and Midas Operating Company have determined
that it is appropriate and desirable to set forth the principal corporate
transactions required to effect such distribution and certain other agreements
that will govern certain matters relating to such distribution;
NOW, THEREFORE, in consideration of the mutual agreements, provisions
and covenants contained in this Agreement, the parties hereby agree as follows:
ARTICLE I
DEFINITIONS
-----------
Section 1.01 General. In this Agreement, the following terms have
the meanings specified or referred to in this Article I and shall be equally
applicable to both the singular and plural forms. Any agreement referred to
below shall mean such agreement as amended, supplemented and modified from time
to time to the extent permitted by the applicable provisions thereof and by this
Agreement. Unless the context clearly indicates otherwise, the word "including"
means "including but not limited to."
Action: any action, suit, arbitration, inquiry, proceeding or
investigation by or before any court, any governmental or other regulatory or
administrative agency or commission or any arbitration tribunal.
Affiliate: when used with respect to a specified Person, another
Person that controls, is controlled by, or is under common control with the
Person specified. As used in this Agreement, "control" means the possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of such Person,
whether through the ownership of voting securities or other interests, by
contract or otherwise.
Agent: First Chicago Trust Company of New York, as distribution
agent.
Available ▇▇▇▇▇▇▇ Reserves: has the meaning specified in Section
3.05(c)(3).
Code: the Internal Revenue Code of 1986, as amended, and the Treasury
regulations promulgated thereunder, including any successor legislation.
Commission: the Securities and Exchange Commission.
Conveyance and Assumption Instruments: collectively, the various
agreements, instruments and other documents to be entered into to effect the
transfer of assets and the assumption of Liabilities contemplated by this
Agreement.
Distribution: the distribution to holders of record of ▇▇▇▇▇▇▇ Common
Stock as of the Record Date of all of the shares of Midas Common Stock owned by
▇▇▇▇▇▇▇ on the Distribution Date.
Distribution Date: the date determined by the ▇▇▇▇▇▇▇ Board (or a
duly authorized committee thereof) on which the Distribution shall be effected.
Employee Benefit Plan: an employee welfare benefit plan or an
employee pension benefit plan as defined in Sections 3(1) and 3(2) of ERISA or a
plan which is both an employee welfare benefit plan and an employee pension
benefit plan.
ERISA: the Employee Retirement Income Security Act of 1974, as
amended, or any successor legislation.
Exchange Act: the Securities Exchange Act of 1934, as amended, and
the rules and regulations promulgated thereunder, including any successor
legislation.
Foreign Exchange Rate: with respect to any currency other than United
States dollars as of any date of determination, the average of the opening bid
and asked rates on such date at which such currency may be exchanged for United
States dollars as quoted by The First National Bank of Chicago or, if not quoted
by said Bank, by Citicorp, N.A.
Indemnifying Party: has the meaning specified in Section 4.03(a).
Indemnitee: has the meaning specified in Section 4.03(a)
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Information: has the meaning specified in Section 5.01.
Information Statement: the Information Statement sent to the holders
of ▇▇▇▇▇▇▇ Common Stock in connection with the Distribution.
Insurance Proceeds: those monies (i) received by an insured from an
insurance carrier or (ii) paid by an insurance carrier on behalf of an insured,
in either case net of any applicable premium adjustments (including reserves),
retrospectively rated premium adjustments, deductibles, retentions, costs paid
by such insured or repayments by such insured to such insurance carrier of any
monies previously received by such insured from such insurance carrier.
IRS: the Internal Revenue Service.
Liabilities: any and all debts, liabilities and obligations, absolute
or contingent, matured or unmatured, liquidated or unliquidated, accrued or
unaccrued, known or unknown, whenever arising (unless otherwise specified in
this Agreement), including all costs and expenses relating thereto, and
including, without limitation, those debts, liabilities and obligations arising
under any law, rule, regulation, Action, threatened Action, order or consent
decree of any governmental entity or any award of any arbitrator of any kind,
and those arising under any contract, commitment or undertaking.
Loss and Losses: have the meanings specified in Section 3.05(a)(1).
Management Committee: has the meaning specified in Section
3.05(e)(2).
Midas: Midas, Inc., a Delaware corporation and, as of the date
hereof, a wholly-owned subsidiary of ▇▇▇▇▇▇▇.
Midas Common Stock: the Common Stock, $.001 par value, of Midas.
Midas Debt Repayment: has the meaning specified in Section 3.02(a).
Midas ERP: has the meaning specified in Section 3.05(e)(1).
Midas Form 10: the registration statement on Form 10 filed by Midas
with the Commission to effect the registration of the Midas Common Stock
pursuant to the Exchange Act.
Midas Funded Welfare Plan: has the meaning specified in Section
3.05(c)(1).
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Midas Indemnitees: has the meaning specified in Section
3.05(a)(2)(ii).
Midas Management Incentive Compensation Plan: has the meaning
specified in Section 3.05(a)(1).
Midas Master Trust: has the meaning specified in Section 3.05(e)(2).
Midas Operating Company: Midas International Corporation, a Delaware
corporation and, as of the Distribution Date, a wholly-owned subsidiary of
Midas.
Midas Participants: has the meaning specified in Section
3.05(d)(1)(i).
Midas Pension Plan Beneficiaries: has the meaning specified in
Section 3.05(e)(1).
Midas Pension Plans: has the meaning specified in Section 3.05(e)(1).
Midas Rights: Preferred Stock Purchase Rights of Midas issued
pursuant to the Midas Rights Agreement.
Midas Rights Agreement: the Rights Agreement, to be entered into on
or prior to the Distribution Date, between Midas and First Chicago Trust Company
of New York.
Midas RSP Plans: has the meaning specified in Section 3.05(d)(1)(i).
Midas RSP Trust: has the meaning specified in Section 3.05(d)(1)(i).
Midas Separated Employee: any individual (i) who, on or prior to the
Distribution Date, was employed by ▇▇▇▇▇▇▇ or any of its subsidiaries (including
Midas or any subsidiary of Midas) and who, prior to the Distribution Date, was
last employed by Midas or any Midas Subsidiary or (ii) who, on or after the
Distribution Date or otherwise in connection with the Distribution, remains or
becomes employed by Midas or any Midas Subsidiary, including any beneficiary or
dependent of such individual, as applicable.
Midas Split Dollar Plan: has the meaning specified in Section
3.05(f)(1).
Midas Stock Incentive Plan: has the meaning specified in Section
3.05(b)(2).
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Midas Subsidiary: any subsidiary of Midas on the Distribution Date
that will remain a subsidiary of Midas immediately following the Distribution
Date, including Midas Operating Company, and any other subsidiary of Midas which
thereafter may be organized or acquired.
Midas Tax Sharing Agreement: the Tax Sharing Agreement, dated the
date hereof, between ▇▇▇▇▇▇▇, Midas and Midas Operating Company.
Midas Welfare Benefit Plans: has the meaning specified in Section
3.05(c)(1).
Midas Welfare Trust: has the meaning specified in Section 3.05(c)(1).
Option: any option granted under the ▇▇▇▇▇▇▇ Stock Incentive Plan.
Pension Effective Date: has the meaning specified in Section
3.05(e)(2).
Person: any natural person, corporation, business trust, joint
venture, limited liability company, association, company, partnership or
government, or any agency or political subdivision thereof.
Record Date: the close of business, New York time, on the date
determined by the ▇▇▇▇▇▇▇ Board (or a duly authorized committee thereof) as the
record date for the Distribution.
Representatives: has the meaning specified in Section 5.01.
Restricted Stock: any award of restricted shares of ▇▇▇▇▇▇▇ Common
Stock granted under the Restricted Stock Award provisions of the ▇▇▇▇▇▇▇ Stock
Incentive Plan.
RSP Committee: has the meaning specified in Section 3.05(d)(2).
RSP Effective Date: has the meaning specified in Section
3.05(d)(1)(i).
Split Dollar Effective Date: has the meaning specified in Section
3.05(f)(1).
Spread: has the meaning specified in Section 3.05(b)(1).
Subsidiaries: the term "subsidiaries" as used herein with respect to
any entity shall mean any corporation, partnership or other entity of which such
entity (i) owns, directly or indirectly, ownership interests sufficient to elect
a majority of the board
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of directors (or individuals performing similar functions) (irrespective of
whether at the time any other class or classes of ownership interests of such
corporation, partnership or other entity shall or might have such voting power
upon the occurrence of any contingency) or (ii) is a general partner or an
entity performing similar functions, and shall, unless otherwise indicated, be
deemed to refer to both direct and indirect subsidiaries of such entity.
taxing saving: has the meaning specified in Section 4.03(b).
Third Party Claim: has the meaning specified in Section 4.04(b)(1).
Welfare Committee: has the meaning specified in Section 3.05(c)(3).
Welfare Effective Date: has the meaning specified in Section
3.05(c)(1).
▇▇▇▇▇▇▇: ▇▇▇▇▇▇▇ Corporation, a Delaware corporation.
▇▇▇▇▇▇▇ Board: the Board of Directors of ▇▇▇▇▇▇▇.
▇▇▇▇▇▇▇ Common Stock: the Common Stock, without par value, of
▇▇▇▇▇▇▇.
▇▇▇▇▇▇▇ Funded Welfare Plan: has the meaning specified in Section
3.05(c)(1).
▇▇▇▇▇▇▇ Indemnitees: has the meaning specified in Section 3.05(a)(1).
▇▇▇▇▇▇▇ Master Trust: has the meaning specified in Section
3.05(e)(1).
▇▇▇▇▇▇▇ MIC Plan: has the meaning specified in Section 3.05(a)(2).
▇▇▇▇▇▇▇ RSP Plans: has the meaning specified in Section
3.05(d)(1)(i).
▇▇▇▇▇▇▇ RSP Trust: has the meaning specified in Section
3.05(d)(1)(i).
▇▇▇▇▇▇▇ Split Dollar Plan: has the meaning specified in Section
3.05(f)(1).
▇▇▇▇▇▇▇ Stock Incentive Plan: the ▇▇▇▇▇▇▇ Corporation Stock Incentive
Plan and the ▇▇▇▇▇▇▇ Corporation Revised Stock Incentive Plan.
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▇▇▇▇▇▇▇ Subsidiary: any subsidiary of ▇▇▇▇▇▇▇ other than Midas or any
Midas Subsidiary.
▇▇▇▇▇▇▇ Welfare Trust: has the meaning specified in Section
3.05(c)(1).
ARTICLE II
THE DISTRIBUTION
----------------
Section 2.01 The Distribution.
(a) Subject to Section 2.03 and Section 7.07 hereof, prior to the
Distribution Date, ▇▇▇▇▇▇▇ shall deliver to the Agent, for the benefit of the
holders of record of ▇▇▇▇▇▇▇ Common Stock on the Record Date, one or more stock
certificates, endorsed by ▇▇▇▇▇▇▇ in blank, representing all of the then
outstanding shares of Midas Common Stock owned by ▇▇▇▇▇▇▇, and shall instruct
the Agent on the Distribution Date either to distribute in certificated form, or
make book-entry credits for, the appropriate number of such shares of Midas
Common Stock to each such holder (and, if applicable, cash in lieu of any
fractional shares obtained in the manner provided in Section 2.01(c)). Each of
▇▇▇▇▇▇▇ and Midas shall provide to the Agent all share certificates and any
information required in order to complete the Distribution on the basis of one
share of Midas Common Stock for every six shares of ▇▇▇▇▇▇▇ Common Stock
outstanding on the Record Date.
(b) The Distribution shall be effective as of 12:01 a.m., New York
time, on the Distribution Date.
(c) No certificates representing fractional shares of Midas Common
Stock shall be distributed in the Distribution. Holders that request or receive
delivery of physical certificates representing Midas Common Stock in the
Distribution and holders that would receive less than one whole share of Midas
Common Stock in the Distribution will receive cash in lieu of any fractional
shares. ▇▇▇▇▇▇▇ shall instruct the Agent to determine the number of fractional
shares of Midas Common Stock allocable to each holder of record of ▇▇▇▇▇▇▇
Common Stock as of the Record Date who will receive cash in lieu of a fractional
share of Midas Common Stock, to aggregate all such fractional shares and sell
the whole shares obtained thereby on the New York Stock Exchange or otherwise,
in each case at then prevailing trading prices, and to cause to be distributed
to each such holder, in lieu of any fractional share, such holder's ratable
share of the proceeds of such sale, after deducting an amount equal to all
brokerage charges, commissions and transfer taxes attributed to such sale.
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Section 2.02 Cooperation Prior to the Distribution.
-------------------------------------
(a) ▇▇▇▇▇▇▇ and Midas have prepared, and ▇▇▇▇▇▇▇ shall mail, prior to
the Distribution Date, to the holders of ▇▇▇▇▇▇▇ Common Stock as of the Record
Date, the Information Statement, which shall set forth appropriate disclosure
concerning Midas, the Distribution and other matters. ▇▇▇▇▇▇▇ and Midas have
prepared, and Midas has filed with the Commission, the Midas Form 10, which
includes or incorporates by reference portions of the Information Statement. The
Midas Form 10 has become effective under the Exchange Act.
(b) ▇▇▇▇▇▇▇ and Midas shall cooperate in preparing, filing with the
Commission and causing to become effective any registration statements or
amendments thereof which are required to reflect the establishment of, or
amendments to, any employee benefit and other plans contemplated by the
Distribution and this Agreement.
(c) ▇▇▇▇▇▇▇ and Midas shall take all such action as may be necessary
or appropriate under the securities or blue sky laws of states or other
political subdivisions of the United States (and any comparable laws of any
foreign jurisdiction), in connection with the transactions contemplated by this
Agreement.
(d) ▇▇▇▇▇▇▇ and Midas have prepared, and Midas has filed in
preliminary form and shall seek to make effective, an application to permit
listing of the Midas Common Stock (as well as the associated Midas Rights) on
the New York Stock Exchange.
Section 2.03 Conditions to the Distribution. This Agreement and the
consummation of each of the transactions provided for herein shall be subject to
approval of the ▇▇▇▇▇▇▇ Board. The ▇▇▇▇▇▇▇ Board (or a duly authorized committee
thereof) shall in its discretion establish the Record Date and the Distribution
Date and all appropriate procedures in connection with the Distribution, but in
no event shall the Distribution Date occur prior to such time as each of the
following have occurred or have been waived by the ▇▇▇▇▇▇▇ Board in its sole
discretion: (1) the ▇▇▇▇▇▇▇ Board shall have formally approved the Distribution;
(2) the Midas Form 10 shall have been declared effective by the Commission; (3)
a ruling(s) from the IRS shall have been obtained, and continue in effect, that
in substance provides that the Distribution will qualify as a tax-free "spin-
off" under Section 355 of the Code, and such ruling(s) shall be in form and
substance satisfactory to ▇▇▇▇▇▇▇ in its sole discretion; (4) the Board of
Directors of Midas, comprised as contemplated by Section 3.06(a), shall have
been duly elected; (5) the Midas Common Stock shall have been accepted for
listing on the New York Stock Exchange or for quotation on The Nasdaq Stock
Market; (6) the transactions contemplated by Section 3.01 and Section 3.02 shall
have been consummated in all material respects; and (7) no order, injunction or
decree issued by
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any court or agency of competent jurisdiction or other legal restraint or
prohibition preventing the consummation of the Distribution shall be in effect
and no other event shall have occurred or failed to occur that prevents the
consummation of the Distribution; provided, however, that the satisfaction of
such conditions shall not create any obligation on the part of ▇▇▇▇▇▇▇ to effect
the Distribution or in any way limit ▇▇▇▇▇▇▇'▇ power of termination set forth in
Section 7.07 or alter the consequences of any such termination from those
specified in such Section.
ARTICLE III
TRANSACTIONS RELATING TO THE DISTRIBUTION
-----------------------------------------
Section 3.01 Intercorporate Reorganization.
-----------------------------
(a) At least one business day prior to the Distribution Date, a series
of steps shall be consummated for the purpose of separating from ▇▇▇▇▇▇▇ any
assets that are related to the business of Midas. The steps to be taken, the
specific form and sequence of which shall be in the sole discretion of the
management of ▇▇▇▇▇▇▇ shall, among other things, result in Midas directly owning
all of the outstanding capital stock of Midas Operating Company and directly or
indirectly owning all of the foreign Subsidiaries and Affiliates of ▇▇▇▇▇▇▇ that
are related to the business of Midas. The transfer of capital stock shall be
effected by means of delivery of one or more stock certificates duly endorsed or
accompanied by duly executed stock powers and notation on the stock records
books of the corporation or other legal entities involved and, to the extent
required by applicable law, by notation on appropriate registries.
(b) In connection with transfers of assets other than capital stock
and the assumptions of any Liabilities, ▇▇▇▇▇▇▇ and Midas shall execute or cause
to be executed by the appropriate entities the Conveyance and Assumption
Instruments in such forms as ▇▇▇▇▇▇▇ and Midas shall reasonably agree, including
the transfer of any real property by deed.
(c) Prior to the Distribution Date, ▇▇▇▇▇▇▇ and Midas shall take all
steps necessary to increase the outstanding shares of Midas Common Stock so that
immediately prior to the Distribution, ▇▇▇▇▇▇▇ shall own the number of shares of
Midas Common Stock necessary to effect the Distribution.
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Section 3.02 Repayment of Intercompany Indebtedness and Cash
Dividend.
(a) Prior to the Distribution, Midas shall repay to ▇▇▇▇▇▇▇ all
intercompany indebtedness owing by Midas and the Midas Subsidiaries to ▇▇▇▇▇▇▇
and the ▇▇▇▇▇▇▇ Subsidiaries at the time of such repayment (the "Midas Debt
Repayment").
(b) Prior to the Distribution, Midas shall pay a cash dividend to
▇▇▇▇▇▇▇ in an amount which, when added to the amount of the Midas Debt
Repayment, equals an aggregate of $225 million.
Section 3.03 Satisfaction and Waiver of Any Claims. Midas agrees, on
behalf of itself and each Midas Subsidiary, except as may otherwise be provided
in the Midas Tax Sharing Agreement, that Midas and each Midas Subsidiary hereby
waives any claim they might otherwise have against ▇▇▇▇▇▇▇ or any ▇▇▇▇▇▇▇
Subsidiary by reason of dividends or tax benefits paid or made available to
▇▇▇▇▇▇▇ or any ▇▇▇▇▇▇▇ Subsidiary, by Midas or any Midas Subsidiary at any time
prior to the Distribution.
Section 3.04 Midas Tax Sharing Agreement. On or prior to the date
hereof, ▇▇▇▇▇▇▇, Midas and Midas Operating Company will execute and deliver the
Midas Tax Sharing Agreement.
Section 3.05 Employee Benefit Plans and Other Compensation
Arrangements.
(a) Management Incentive Compensation Plan.
(1) Midas shall establish a Management Incentive Compensation Plan
(the "Midas Management Incentive Compensation Plan"). Midas and the Midas
Subsidiaries shall be solely liable and responsible for all Liabilities
whatsoever arising under the Midas Management Incentive Compensation Plan, and
neither ▇▇▇▇▇▇▇ nor any ▇▇▇▇▇▇▇ Subsidiary shall have any Liabilities in respect
thereof at any time. Midas and Midas Operating Company shall indemnify, defend
and hold harmless ▇▇▇▇▇▇▇, each Affiliate of ▇▇▇▇▇▇▇ and each of ▇▇▇▇▇▇▇'▇
directors, officers and employees and each of the heirs, executors, successors
and assigns of any of the foregoing (the "▇▇▇▇▇▇▇ Indemnitees") from and against
any and all losses, Liabilities, claims, damages, payments, absolute or
contingent, matured or unmatured, liquidated or unliquidated, accrued or
unaccrued, known or unknown (including, without limitation, the costs and
expenses of any and all Actions, threatened Actions, demands, assessments,
judgments, settlements and compromises relating thereto and attorneys' fees and
any and all expenses whatsoever reasonably incurred in investigating, preparing
or defending against any such Actions or threatened Actions (collectively,
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"Losses" and, individually, a "Loss")) of the ▇▇▇▇▇▇▇ Indemnitees arising out of
or due to the failure or alleged failure of Midas or any of its Affiliates to
pay, perform or otherwise discharge such Liabilities.
(2) With respect to the ▇▇▇▇▇▇▇ Corporation Management Incentive
Compensation Plan (the "▇▇▇▇▇▇▇ MIC Plan"):
(i) Midas and the Midas Subsidiaries shall be solely liable and
responsible for all Liabilities whatsoever arising under the ▇▇▇▇▇▇▇ MIC
Plan in connection with any claims made by or on behalf of any Midas
Separated Employee, and neither ▇▇▇▇▇▇▇ nor any ▇▇▇▇▇▇▇ Subsidiary shall
have any Liabilities in respect thereof at any time. Midas and Midas
Operating Company shall indemnify, defend and hold harmless the ▇▇▇▇▇▇▇
Indemnitees from and against any and all Losses of the ▇▇▇▇▇▇▇ Indemnitees
arising out of or due to the failure or alleged failure of Midas or any of
its Affiliates to pay, perform or otherwise discharge such Liabilities.
(ii) Except as set forth in Section 3.05(a)(2)(i), ▇▇▇▇▇▇▇ shall be
solely liable and responsible for all Liabilities whatsoever arising under
the ▇▇▇▇▇▇▇ MIC Plan in connection with any claims made by or on behalf of
any individual, and neither Midas nor any Midas Subsidiary shall have any
Liabilities in respect thereof at any time. ▇▇▇▇▇▇▇ shall indemnify, defend
and hold harmless Midas, each Affiliate of Midas and each of Midas' and
Midas Operating Company's directors, officers and employees and each of the
heirs, executors, successors and assigns of any of the foregoing (the
"Midas Indemnitees") from and against any and all Losses of the Midas
Indemnitees arising out of or due to the failure or alleged failure of
▇▇▇▇▇▇▇ or any of its Affiliates to pay, perform or otherwise discharge
such Liabilities.
(b) Stock Incentive Plan.
(1) With respect to any Options issued to Midas Separated Employees,
the Distribution constitutes a termination of employment from ▇▇▇▇▇▇▇ and its
subsidiaries under the terms of Section 7(E) of the ▇▇▇▇▇▇▇ Stock Incentive
Plan. Each Option held by a Midas Separated Employee which is exercisable on,
and not exercised on or prior to, the Distribution Date and with respect to
which the holder has elected prior to the Distribution Date not to surrender for
an option to purchase shares of Midas Common Stock shall be considered
outstanding and exercisable according to its terms and the terms of the ▇▇▇▇▇▇▇
Corporation Stock Incentive Plan. The number of shares of ▇▇▇▇▇▇▇ Common Stock
subject to and the exercise price of such Option shall be determined in
accordance with the requirements of Section 424 of the Code and the regulations
promulgated thereunder. The exercise price of any such Option
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shall be rounded to the nearest $.01; the number of shares subject to any such
Option shall be rounded down to the nearest whole share; the aggregate Spread of
such Option immediately after the Distribution Date shall be equal to the Spread
of such Option immediately before the Distribution Date. "Spread" means, as of
the same date, the excess of the fair market value of the shares subject to the
option over the aggregate option price.
(2) ▇▇▇▇▇▇▇ and Midas shall cooperate and take all action necessary so
that as of the Distribution Date, each Option held by a Midas Separated Employee
and which is either (i) exercisable on, and not exercised on or prior to, the
Distribution Date and with respect to which the holder has elected prior to the
Distribution Date to surrender in exchange for an option to purchase shares of
Midas Common Stock; or (ii) not exercisable on or prior to the Distribution
Date, shall both, without any action on the part of the holder thereof, be
considered to be surrendered to ▇▇▇▇▇▇▇ in exchange for an option to be issued
from the Stock Incentive Plan to be established by Midas (the "Midas Stock
Incentive Plan") to purchase shares of Midas Common Stock. The number of shares
of Midas Common Stock subject to and the exercise price of such option shall be
determined in accordance with the requirements of Section 424 of the Code and
the regulations promulgated thereunder. The exercise price of any such option
shall be rounded to the nearest $.01; the number of shares subject to any such
option shall be rounded down to the nearest whole share; the aggregate Spread of
such option immediately after the Distribution Date shall be equal to the Spread
of each Option surrendered for it immediately before the Distribution Date; and
such options shall be granted under the Midas Stock Incentive Plan with an
outstanding exercise period and vesting schedule which is the same as the
exercise period and vesting schedule of the Option surrendered for it.
(3) The parties agree that Midas Separated Employees holding shares of
Restricted Stock on the Record Date will receive shares of Midas Common Stock
(as well as shares of common stock of Hussmann International, Inc. being
distributed simultaneously therewith) as a dividend on the Distribution Date, in
common with all other shareholders of ▇▇▇▇▇▇▇, free of any restriction but
subject to applicable withholding taxes. ▇▇▇▇▇▇▇ and Midas will separately
arrange for the payment of such withholding taxes by the recipient. With respect
to any shares of Restricted Stock outstanding as of the Distribution Date that
are then held by a Midas Separated Employee, ▇▇▇▇▇▇▇ and Midas shall cooperate
and take all action necessary so that as of the Distribution Date such shares of
Restricted Stock and the underlying Restricted Stock Award Agreement will be
canceled and replaced with shares of restricted Midas Common Stock of equivalent
value and a Restricted Stock Award Agreement issued under the Midas Stock
Incentive Plan having the same vesting schedule as that contained in the
Agreement which it replaced.
-12-
(4) Midas and the Midas Subsidiaries shall be solely liable and
responsible for all Liabilities whatsoever arising under the ▇▇▇▇▇▇▇ Stock
Incentive Plan or Options or Restricted Stock issued thereunder in connection
with any claims made by or on behalf of any Midas Separated Employee, and
neither ▇▇▇▇▇▇▇ nor any ▇▇▇▇▇▇▇ Subsidiary shall have any Liabilities in respect
thereof at any time. Midas and Midas Operating Company shall indemnify, defend
and hold harmless the ▇▇▇▇▇▇▇ Indemnitees from and against any and all Losses of
the ▇▇▇▇▇▇▇ Indemnitees arising out of or due to the failure or alleged failure
of Midas or any of its Affiliates to pay, perform or otherwise discharge such
Liabilities or the failure by any Midas Separated Employee to pay the applicable
withholding taxes referred to in Section 3.05(b)(3).
(5) Except as set forth in Section 3.05(b)(4), ▇▇▇▇▇▇▇ shall be solely
liable and responsible for all Liabilities whatsoever arising under the ▇▇▇▇▇▇▇
Stock Incentive Plan in connection with any claims made by or on behalf of any
individual, and neither Midas nor any Midas Subsidiary shall have any
Liabilities in respect thereof at any time. ▇▇▇▇▇▇▇ shall indemnify, defend and
hold harmless the Midas Indemnitees from and against any and all Losses of the
Midas Indemnitees arising out of or due to the failure or alleged failure of
▇▇▇▇▇▇▇ or any of its Affiliates to pay, perform or otherwise discharge such
Liabilities.
(6) Midas shall establish the Midas Stock Incentive Plan substantially
in the form in which it has been filed as an Exhibit to the Midas Form 10. The
Midas Stock Incentive Plan shall become effective as of the Distribution Date
for Midas Separated Employees. ▇▇▇▇▇▇▇ shall approve the Midas Stock Incentive
Plan as the sole shareholder of Midas. Midas and the Midas Subsidiaries shall be
solely liable and responsible for all Liabilities whatsoever arising under the
Midas Stock Incentive Plan, and neither ▇▇▇▇▇▇▇ nor any ▇▇▇▇▇▇▇ Subsidiary shall
have any Liabilities in respect thereof at any time. Midas and Midas Operating
Company shall indemnify, defend and hold harmless the ▇▇▇▇▇▇▇ Indemnitees from
and against any and all Losses of the ▇▇▇▇▇▇▇ Indemnitees arising out of or due
to the failure or alleged failure of Midas or any of its Affiliates to pay,
perform or otherwise discharge such Liabilities.
(c) Welfare Benefits.
(1) Midas shall, effective on a date which is on or prior to the
Distribution Date ("Welfare Effective Date"), establish the Midas International
Corporation Group Benefits Plan ("Midas Funded Welfare Plan") and the Midas
International Corporation Welfare Benefit Trust ("Midas Welfare Trust"), each
substantially similar to the ▇▇▇▇▇▇▇ Corporation Group Benefits Plan ("▇▇▇▇▇▇▇
Funded Welfare Plan") and the ▇▇▇▇▇▇▇ Corporation Welfare Benefit Trust
("▇▇▇▇▇▇▇ Welfare Trust"), respectively. The Midas Funded Welfare Plan and the
Midas Welfare Trust shall, as of the Welfare Effective Date, assume all
Liabilities whatsoever arising (before, on or after the Welfare Effective Date)
under the ▇▇▇▇▇▇▇ Funded Welfare Plan or the ▇▇▇▇▇▇▇ Welfare
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Trust, respectively, at any time with respect to each and every Midas Separated
Employee. Midas shall continue to provide, effective on the Distribution Date,
welfare benefit plans (as described in ERISA Section 3(c)) it or any Midas
Subsidiary currently sponsors to each and every Midas Separated Employee
substantially similar to the welfare benefits provided to each and every Midas
Separated Employee on the date hereof (all such plans herein referred to as
"Midas Welfare Benefit Plans").
(2) Midas and the Midas Subsidiaries shall be solely liable and
responsible for all Liabilities whatsoever arising under all Midas Welfare
Benefit Plans or the Midas Welfare Trust, and neither ▇▇▇▇▇▇▇ nor any ▇▇▇▇▇▇▇
Subsidiary shall have any Liabilities in respect thereof at any time. Midas and
the Midas Subsidiaries shall be solely liable and responsible for all
Liabilities whatsoever to each and every Midas Separated Employee with respect
to the Midas Welfare Benefit Plans or the Midas Welfare Trust at any time. Midas
and Midas Operating Company shall indemnify, defend and hold harmless the
▇▇▇▇▇▇▇ Funded Welfare Plan, the ▇▇▇▇▇▇▇ Welfare Trust, and the ▇▇▇▇▇▇▇
Indemnitees from and against any and all Losses of the ▇▇▇▇▇▇▇ Funded Welfare
Plan, the ▇▇▇▇▇▇▇ Welfare Trust, and the ▇▇▇▇▇▇▇ Indemnitees arising out of or
due to the failure or alleged failure of the Midas Welfare Benefit Plans, the
Midas Welfare Trust, Midas or any of its Affiliates to pay, perform or otherwise
discharge such Liabilities.
(3) ▇▇▇▇▇▇▇ shall provide to Midas, as of the Welfare Effective Date,
a determination of the fair market value of the assets held by the ▇▇▇▇▇▇▇
Welfare Trust as of the Welfare Effective Date (but excluding the sum of
$6,000,000) ("Available ▇▇▇▇▇▇▇ Reserves"). The ▇▇▇▇▇▇▇ Welfare Trust shall
deliver to the Midas Welfare Trust an amount, as determined by the Welfare
Benefit Trust Committee for the ▇▇▇▇▇▇▇ Benefit Trust ("Welfare Committee"), of
the Available ▇▇▇▇▇▇▇ Reserves, equal to (1) minus (2) where (1) is an amount
determined by multiplying the Available ▇▇▇▇▇▇▇ Reserves times a fraction, the
numerator of which is ▇▇▇▇▇▇▇'▇ estimate of claim reserve for the fiscal year
ended December 31, 1997, based on historical and current transactions of the
▇▇▇▇▇▇▇ Welfare Trust attributable to each and every Midas Separated Employee,
and the denominator of which is the aggregate claim reserve for the fiscal year
ended December 31, 1997, based on historical and current transactions of the
▇▇▇▇▇▇▇ Welfare Trust attributable to all activity under the ▇▇▇▇▇▇▇ Funded
Welfare Plan; and (2) is an amount equal to expenses and contributions incurred
but not paid on and prior to the Welfare Effective Date attributable to each and
every Midas Separated Employee.
(4) As of the Welfare Effective Date, ▇▇▇▇▇▇▇, the Welfare Committee,
the ▇▇▇▇▇▇▇ Funded Welfare Plan, and the ▇▇▇▇▇▇▇ Welfare Trust, each to the
extent applicable, shall cause to be issued to Midas, the Midas Funded Welfare
Plan or the Midas Welfare Trust, respectively, for the benefit only of a Midas
Separated Employee, all insurance contracts (including health maintenance
organization contracts),
-14-
administration contracts, or other service contracts which are either
substantially similar to such contracts held by each or applicable only with
respect to a Midas Separated Employee. Each such contract shall include, if any,
reserves or retrospective refunds or premiums due based on the experience
realized thereunder with respect to each and every Midas Separated Employee.
(d) Retirement Savings Plans.
(1)(i) Midas shall, as of a date which is on or prior to the
Distribution Date ("RSP Effective Date"), establish two defined
contribution plans and related trust(s) with a trustee designated by Midas
(respectively referred to below as the "Midas RSP Plans" and "Midas RSP
Trust") substantially similar to the ▇▇▇▇▇▇▇ Corporation Retirement Savings
Plan and the ▇▇▇▇▇▇▇ Corporation Master Retirement Savings Plan (with the
exception that on and after the Distribution Date instead of a ▇▇▇▇▇▇▇
Common Stock fund in both there will be offered a Midas Common Stock fund)
and the ▇▇▇▇▇▇▇ Corporation Defined Contribution Master Trust (respectively
referred to below as the "▇▇▇▇▇▇▇ RSP Plans" and the "▇▇▇▇▇▇▇ RSP Trust")
covering, among others, each and every Midas Separated Employee or
beneficiary thereof who, on or prior to the RSP Effective Date, is either a
participant or a beneficiary, respectively, in either of the ▇▇▇▇▇▇▇ RSP
Plans who has or has accrued a right to an account balance in either of the
▇▇▇▇▇▇▇ RSP Plans (such persons are referred to as "Midas Participants").
Each of the Midas RSP Plans and the Midas RSP Trust shall, effective as of
the RSP Effective Date, assume all Liabilities whatsoever arising (before,
on or after the RSP Effective Date) under each of the respective ▇▇▇▇▇▇▇
RSP Plans and the respective portion of the ▇▇▇▇▇▇▇ RSP Trust with respect
to Midas Participants.
(ii) Midas and the Midas Subsidiaries shall be solely liable and
responsible for all Liabilities whatsoever arising under the Midas RSP
Plans and Midas RSP Trust, and neither ▇▇▇▇▇▇▇ nor any ▇▇▇▇▇▇▇ Subsidiary
shall have any Liabilities in respect thereof at any time. Midas and the
Midas Subsidiaries shall be solely liable and responsible for all
Liabilities whatsoever to Midas Participants with respect to the Midas RSP
Plans and Midas RSP Trust at any time. Midas and Midas Operating Company
shall indemnify, defend and hold harmless the ▇▇▇▇▇▇▇ RSP Plans, the
▇▇▇▇▇▇▇ RSP Trust and the ▇▇▇▇▇▇▇ Indemnitees from and against any and all
Losses of the ▇▇▇▇▇▇▇ RSP Plans, the ▇▇▇▇▇▇▇ RSP Trust and the ▇▇▇▇▇▇▇
Indemnitees arising out of or due to the failure or alleged failure of the
Midas RSP Plans, the Midas RSP Trust, Midas or any of its Affiliates to
pay, perform or otherwise discharge such Liabilities.
-15-
(2) As of a valuation date not later than 30 calendar days after the
RSP Effective Date, as provided in the ▇▇▇▇▇▇▇ RSP Trust, there shall be
transferred to the Midas RSP Trust assets the value of which as of such
valuation date is equal to, as determined by the Administrative Committee of the
▇▇▇▇▇▇▇ RSP Trust ("RSP Committee"), the value of the account balances of, and
liabilities with respect to, all Midas Participants, as of such valuation date
not otherwise distributed or to be distributed pursuant to the ▇▇▇▇▇▇▇ RSP
Plans, less expenses or contributions incurred or due but not paid as of such
date of transfer with respect to each and every Midas Separated Employee. Such
assets shall consist of cash, contract rights, beneficial interests in
collective funds, and shares of stock to the extent that the accounts of Midas
Participants under the ▇▇▇▇▇▇▇ RSP Plans were invested in such investment
alternatives. Midas shall cause all assets so transferred to the Midas RSP Trust
to be allocated among the Midas RSP Plans in a manner such that the value of the
assets of each of the Midas RSP Plans so allocated shall be equal to the value
of assets transferred from each of the respective ▇▇▇▇▇▇▇ RSP Plans.
(3) As of the RSP Effective Date, ▇▇▇▇▇▇▇, the RSP Committee, the
▇▇▇▇▇▇▇ RSP Plans, and the ▇▇▇▇▇▇▇ RSP Trust, each to the extent applicable,
shall cause to be issued to Midas, the Midas RSP Plans or the Midas RSP Trust,
respectively, for the benefit only of Midas Participants, all insurance
contracts, administration contracts, or other service contracts which are either
substantially similar to such contracts held by each or applicable only with
respect to Midas Participants.
(e) Defined Benefit Pension Plans.
(1) Midas shall continue, on and after the Distribution Date,
qualified defined benefit pension plans ("Midas Pension Plans"), which are
presently being funded by the ▇▇▇▇▇▇▇ Corporation Defined Benefit Master Trust
("▇▇▇▇▇▇▇ Master Trust"), and a nonqualified Midas International Corporation
Executive Retirement Plan ("Midas ERP"), all of which Midas or a Midas
Subsidiary currently sponsors for current and former employees and beneficiaries
of employees or former employees of Midas and Midas Subsidiaries (the "Midas
Pension Plan Beneficiaries"). Midas and the Midas Subsidiaries shall be solely
liable and responsible for all Liabilities whatsoever arising under the Midas
Pension Plans and Midas ERP, and neither ▇▇▇▇▇▇▇ nor any ▇▇▇▇▇▇▇ Subsidiary
shall have any Liabilities in respect thereof at any time, except to the extent
such Liabilities relate to a benefit accrued by the Midas Participant under a
qualified defined benefit pension plan maintained by ▇▇▇▇▇▇▇ or a ▇▇▇▇▇▇▇
Subsidiary which is offset by the Midas Pension Plans against any benefit
accrual under the Midas Pension Plans based on the same period of credited
service. Midas and the Midas Subsidiaries shall be solely liable and responsible
to all Midas Pension Plan Beneficiaries for all Liabilities whatsoever with
respect to the Midas Pension Plans and Midas ERP at any time. Midas and Midas
Operating Company shall indemnify, defend and hold harmless
-16-
the ▇▇▇▇▇▇▇ Master Trust and the ▇▇▇▇▇▇▇ Indemnitees from and against any and
all Losses of the ▇▇▇▇▇▇▇ Master Trust and the ▇▇▇▇▇▇▇ Indemnitees arising out
of or due to the failure or alleged failure of the Midas Pension Plans, Midas
Master Trust (defined below), Midas or any of its Affiliates to pay, perform or
otherwise discharge such Liabilities.
(2) Midas shall, as of a date on or prior to the Distribution Date
("Pension Effective Date"), adopt a Midas International Corporation Defined
Benefit Master Trust ("Midas Master Trust") substantially similar to the ▇▇▇▇▇▇▇
Master Trust and designate a trustee for the Midas Master Trust for each of the
Midas Pension Plans. As provided in the ▇▇▇▇▇▇▇ Master Trust, the Management
Committee of the ▇▇▇▇▇▇▇ Master Trust ("Management Committee") shall cause the
▇▇▇▇▇▇▇ Master Trust to transfer to the Midas Master Trust, a pro rata portion
(net of accrued expenses, contributions and benefits attributable to each and
every Midas Separated Employee) of the cash, securities and other assets in the
▇▇▇▇▇▇▇ Master Trust as determined solely by the Management Committee on or as
soon as practicable after the Pension Effective Date.
Midas shall cause all assets so transferred to the Midas Master Trust
to be allocated among the Midas Pension Plans in a manner such that the value of
the assets of each of the Midas Pension Plans (net of accrued expenses,
contributions, and benefits attributable to each such Midas Pension Plan) so
allocated shall be equal to the value of such assets immediately prior to the
transfer from the ▇▇▇▇▇▇▇ Master Trust.
(3) On or as soon as administratively possible after the Distribution
Date, ▇▇▇▇▇▇▇ shall terminate the Canadian Master Trust and the Management
Committee shall cause the Canadian Master Trust to transfer assets to trusts
participating in the Canadian Master Trust in accordance with the terms of the
Canadian Master Trust.
(f) Executive Split Dollar Life Insurance Plan
(1) Midas shall, effective on a date which is on or prior to the
Distribution Date ("Split Dollar Effective Date"), establish the Midas Executive
Split Dollar Life Insurance Plan ("Midas Split Dollar Plan") substantially
similar to the ▇▇▇▇▇▇▇ Corporation Executive Split Dollar Life Insurance Plan
("▇▇▇▇▇▇▇ Split Dollar Plan"). The Midas Split Dollar Plan shall, as of the
Split Dollar Effective Date, assume all Liabilities whatsoever arising (before,
on or after the Split Dollar Effective Date) under the ▇▇▇▇▇▇▇ Split Dollar Plan
at any time with respect to each and every Midas Separated Employee.
(2) ▇▇▇▇▇▇▇ shall provide to Midas on or before the Split Dollar
Effective Date a list of outstanding life insurance policies issued pursuant to
the ▇▇▇▇▇▇▇ Split Dollar Plan to Midas Separated Employees and premiums paid by
▇▇▇▇▇▇▇ for such
-17-
policies since the inception of the ▇▇▇▇▇▇▇ Split Dollar Plan. ▇▇▇▇▇▇▇ and Midas
shall cooperate in obtaining new Split Dollar Agreements and Collateral
Assignments by Midas Split Dollar Plan participants assigning to Midas the right
to ▇▇▇▇▇▇▇'▇ Corporate Capital Interest as provided in the ▇▇▇▇▇▇▇ Split Dollar
Plan with respect to past premium contributions made by ▇▇▇▇▇▇▇ in respect of
Midas Separated Employees. Subject to the execution of such Split Dollar
Agreements and Collateral Assignments by Midas Split Dollar Plan participants,
Midas shall reimburse ▇▇▇▇▇▇▇ for all premium contributions made by ▇▇▇▇▇▇▇ in
respect of Midas Separated Employees since the inception of the ▇▇▇▇▇▇▇ Split
Dollar Plan pursuant to Section 3.02(a).
(3) Midas and the Midas Subsidiaries shall be solely liable and
responsible for all Liabilities whatsoever arising under the Midas Split Dollar
Plan, and neither ▇▇▇▇▇▇▇ nor any ▇▇▇▇▇▇▇ Subsidiary shall have any Liabilities
in respect thereof at any time. Midas and the Midas Subsidiaries shall be solely
liable and responsible for all Liabilities whatsoever to each and every Midas
Separated Employee with respect to the Midas Split Dollar Plan at any time.
Midas and Midas Operating Company shall indemnify, defend and hold harmless the
▇▇▇▇▇▇▇ Split Dollar Plan and the ▇▇▇▇▇▇▇ Indemnitees from and against any and
all Losses of the ▇▇▇▇▇▇▇ Split Dollar Plan and the ▇▇▇▇▇▇▇ Indemnitees arising
out of or due to the failure or alleged failure of the Midas Split Dollar Plan,
Midas or any of its Affiliates to pay, perform or otherwise discharge such
Liabilities.
(g) Severance Pay.
(1) The parties agree that, with respect to any individual who, in
connection with the Distribution, ceases to be an employee of ▇▇▇▇▇▇▇ or a
▇▇▇▇▇▇▇ Subsidiary and becomes or continues to be a Midas Separated Employee,
such cessation shall not be deemed to be a severance or termination of
employment from ▇▇▇▇▇▇▇ or a ▇▇▇▇▇▇▇ Subsidiary for purposes of any policy,
plan, program or agreement of ▇▇▇▇▇▇▇ or a ▇▇▇▇▇▇▇ Subsidiary that provides for
the payment of severance or salary continuation benefits. The parties agree
that, as of the Distribution Date, all severance compensation agreements between
▇▇▇▇▇▇▇ or a ▇▇▇▇▇▇▇ Subsidiary and Midas Separated Employees shall be
terminated, and that Midas will adopt and approve agreements between Midas and
such Midas Separated Employees, in lieu of such terminated agreements, which
agreements shall be substantially in the form of the Change in Control Agreement
filed as an Exhibit to the Midas Form 10.
(2) Midas and the Midas Subsidiaries shall be solely liable and
responsible for all Liabilities whatsoever arising in connection with any claims
made by or on behalf of Midas Separated Employees in respect of severance pay or
salary continuation obligations relating to the termination or alleged
termination of any such individual's employment as of the Distribution Date or
in connection with the
-18-
Distribution, and neither ▇▇▇▇▇▇▇ nor any ▇▇▇▇▇▇▇ Subsidiary shall have any
Liabilities in respect thereof at any time. Midas and Midas Operating Company
shall indemnify, defend and hold harmless the ▇▇▇▇▇▇▇ Indemnitees from and
against any and all Losses of the ▇▇▇▇▇▇▇ Indemnitees arising out of or due to
the failure or alleged failure of Midas or any of its Affiliates to pay, perform
or otherwise discharge such Liabilities.
(3) Except as set forth in Section 3.05(g)(2), ▇▇▇▇▇▇▇ shall be
solely liable and responsible for all Liabilities whatsoever arising in
connection with any claims made by or on behalf of any individual in respect of
severance pay or salary continuation obligations relating to the termination or
alleged termination of employment of such individual, other than any claim
relating to the termination or alleged termination of employment of a Midas
Separated Employee as of the Distribution Date or in connection with the
Distribution, and neither Midas nor any Midas Subsidiary shall have any
Liabilities in respect thereof at any time. ▇▇▇▇▇▇▇ shall indemnify, defend and
hold harmless the Midas Indemnitees from and against any and all Losses of the
Midas Indemnitees arising out of or due to the failure or alleged failure of
▇▇▇▇▇▇▇ or any of its Affiliates to pay, perform or otherwise discharge such
Liabilities.
(h) Midas Liability to Midas Separated Employees. As of the
Distribution Date, Midas and the Midas Subsidiaries shall be solely liable and
responsible for all Liabilities whatsoever arising in connection with any claims
made by or on behalf of Midas Separated Employees in respect of any Employee
Benefit Plan or Liabilities not otherwise provided for in this Agreement, as
well as with respect to any employee benefit or payment to a Midas Separated
Employee not otherwise provided for in this Agreement, and neither ▇▇▇▇▇▇▇ nor
any ▇▇▇▇▇▇▇ Subsidiary shall have any Liabilities in respect thereof at any
time. Midas and Midas Operating Company shall indemnify, defend and hold
harmless the ▇▇▇▇▇▇▇ Indemnitees and any relevant Employee Benefit Plan of the
▇▇▇▇▇▇▇ Indemnitees from and against any and all Losses of the ▇▇▇▇▇▇▇
Indemnitees and any such Employee Benefit Plan arising out of or due to the
failure or alleged failure of Midas or any of its Affiliates to pay, perform or
otherwise discharge such Liabilities. To the extent not otherwise provided in
this Agreement, ▇▇▇▇▇▇▇ and Midas shall take such action as is necessary to
effect an adjustment to the books of ▇▇▇▇▇▇▇ and of Midas and of their
subsidiaries so that, as of the Distribution Date, the prepaid expense balances
and accrued employee Liabilities, if any, with respect to any employee
Liabilities assumed or retained as of the Distribution Date by ▇▇▇▇▇▇▇ and the
▇▇▇▇▇▇▇ Subsidiaries, on the one hand, and Midas and the Midas Subsidiaries, on
the other hand, are appropriately reflected on their respective balance sheets
as of the Distribution Date. To the extent that ▇▇▇▇▇▇▇ pays for any other
expenses or Liabilities in respect of a Midas Separated Employee not otherwise
provided for in this Agreement, Midas and the Midas Subsidiaries shall reimburse
▇▇▇▇▇▇▇ as of the Distribution Date, to the extent not previously reimbursed.
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(i) ▇▇▇▇▇▇▇ Liability to ▇▇▇▇▇▇▇ Employees. Except as otherwise
specifically provided in this Section 3.05, this Agreement shall not affect any
Employee Benefit Plan or other compensation arrangement of ▇▇▇▇▇▇▇ in respect of
any employees of ▇▇▇▇▇▇▇ or the ▇▇▇▇▇▇▇ Subsidiaries who are not Midas Separated
Employees. Except as otherwise specifically provided, (1) this Agreement shall
not affect any Midas or Midas Subsidiary Employee Benefit Plans or other
compensation arrangements which Midas or the Midas Subsidiaries have maintained
on or before the Distribution Date and (2) ▇▇▇▇▇▇▇ shall have no Liabilities
with respect to such Employee Benefit Plans or arrangements at any time.
(j) Cooperation. ▇▇▇▇▇▇▇ and Midas shall, in connection with the
transactions and transfers described in Section 3.05(d) and Section 3.05 (e),
cooperate in making any and all appropriate filings required under the Code or
ERISA and the regulations thereunder and any applicable securities laws and take
all such action as may be necessary to cause such transactions and transfers to
take place on or as soon as practicable after the Distribution Date.
(k) Miscellaneous. Nothing in this Agreement shall be interpreted as
requiring ▇▇▇▇▇▇▇ or Midas or any subsidiary of ▇▇▇▇▇▇▇ or Midas to maintain any
Employee Benefit Plan or other benefit plan for any period of time or shall
impair the right of any of the foregoing to amend or terminate any such Employee
Benefit Plan or other benefit plan in accordance with its terms or applicable
law. Nothing in this Agreement shall be construed to create a right in any
employee or dependent or beneficiary of any employee under an Employee Benefit
Plan or other benefit plan which such employee, dependent or beneficiary would
not otherwise have under the terms of such Employee Benefit Plan or other
benefit plan.
Section 3.06 Board of Directors and Resignations.
-----------------------------------
(a) Midas and ▇▇▇▇▇▇▇ shall take all actions which may be required to
elect as directors of Midas, on or prior to the Distribution Date, the persons
named in the Midas Form 10 to constitute the Board of Directors of Midas on the
Distribution Date.
(b) ▇▇▇▇▇▇▇ shall cause each of its employees to resign, effective
not later than the Distribution Date, from all positions as a director and/or
officer of Midas and any Midas Subsidiary; and Midas shall cause each of its
employees to resign, effective not later than the Distribution Date, from all
positions as a director and/or officer of ▇▇▇▇▇▇▇ or any ▇▇▇▇▇▇▇ Subsidiary;
provided, however, that no individual shall be required by any party hereto to
resign from any position or office with another party hereto (or a subsidiary of
such other party) if such individual is named or identified in the Information
Statement as the individual who is to hold such position or office after the
Distribution.
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Section 3.07 Midas Rights Agreement. Midas shall enter into the Midas
Rights Agreement substantially in the form attached as an Exhibit to the Midas
Form 10.
Section 3.08 Insurance.
(a) Since April 1, 1978, ▇▇▇▇▇▇▇ has provided insurance coverage to
Midas and the Midas Subsidiaries through ▇▇▇▇▇▇▇'▇ wholly-owned insurance
subsidiary, ▇▇▇▇▇▇▇ Insurance Co., Ltd., for workers' compensation, general
liability, automobile liability and products liability. Midas Operating Company
has paid premiums to ▇▇▇▇▇▇▇ Insurance Co., Ltd. to provide such insurance,
without deductibles, and for varying limits of liability, as detailed on
Schedule ▇. ▇▇▇▇▇▇▇ shall cause ▇▇▇▇▇▇▇ Insurance Co., Ltd. to provide coverage
to Midas and the Midas Subsidiaries for all those coverages named above, without
deductibles, and up to the limits shown on Schedule A, for all insured incidents
occurring from the date such coverage first commenced through and including the
Distribution Date. The provisions of insurance coverage applicable to the above
are stipulated in policies of insurance issued to ▇▇▇▇▇▇▇ by Northwestern
National Insurance Co., Continental Insurance Co., National Union Fire Insurance
Co. and Old Republic Insurance Co.
(b) Since April 1, 1994, ▇▇▇▇▇▇▇ has provided Employment Practices
Liability insurance coverage to Midas and the Midas Subsidiaries through ▇▇▇▇▇▇▇
Insurance Co., Ltd. for $900,000 per occurrence with an aggregate of $2,000,000
per policy period for ▇▇▇▇▇▇▇ and its Subsidiaries excess of the per occurrence
deductible of $100,000, as shown on Schedule A. The insurance applicable to this
coverage is stipulated in policies of insurance issued to ▇▇▇▇▇▇▇ by Lexington
Insurance Co. and ▇▇▇▇▇▇▇ Insurance Co., Ltd.
(c) Since April 1, 1996 ▇▇▇▇▇▇▇ has provided General Liability and
since July 1, 1996 ▇▇▇▇▇▇▇ has provided All Risk Property insurance coverage to
Midas and the Midas Subsidiaries located outside of the United States and Canada
through ▇▇▇▇▇▇▇ Insurance Co., Ltd. for varying limits excess of varying
deductibles, as shown on Schedule A. The insurance applicable to this coverage
is stipulated in policies of insurance issued to ▇▇▇▇▇▇▇ by Cigna Insurance
Company, CNA and Winterthur Insurance Company.
(d) The parties agree that Midas shall have the right to present
claims to ▇▇▇▇▇▇▇ or ▇▇▇▇▇▇▇'▇ insurers under all policies of insurance placed
by ▇▇▇▇▇▇▇ on behalf of Midas or any Midas Subsidiary or which include Midas or
any Midas Subsidiary within them, whether placed through ▇▇▇▇▇▇▇ Insurance Co.,
Ltd. or otherwise, for insured incidents occurring from the date said coverage
first commenced until the Distribution Date. The parties agree that any such
policies written on a "claims
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made" rather than "occurrence" basis may not provide coverage to Midas for
incidents occurring on or prior to the Distribution Date but which are first
reported after the Distribution Date.
ARTICLE IV
INDEMNIFICATION
---------------
Section 4.01 Indemnification by ▇▇▇▇▇▇▇. Except with respect to
employee benefits or other Liabilities to employees, which shall be governed by
Section 3.05 hereof, ▇▇▇▇▇▇▇ shall indemnify, defend and hold harmless the Midas
Indemnitees from and against any and all Losses of the Midas Indemnities arising
out of or due to the failure or alleged failure of ▇▇▇▇▇▇▇ or any of its
Affiliates to pay, perform or otherwise discharge in due course any item set
forth on Schedule B. Anything in this Section 4.01 to the contrary
notwithstanding, neither ▇▇▇▇▇▇▇ nor any ▇▇▇▇▇▇▇ Subsidiary shall have any
Liabilities whatsoever to Midas or any Midas Subsidiary in respect of any Tax
(as such term is defined in the Midas Tax Sharing Agreement), except as
otherwise provided on Schedule B hereto or in the Midas Tax Sharing Agreement.
Section 4.02 Indemnification by Midas and Midas Operating Company.
Except with respect to employee benefits or other Liabilities to employees,
which shall be governed by Section 3.05 hereof, Midas and Midas Operating
Company shall indemnify, defend and hold harmless the ▇▇▇▇▇▇▇ Indemnitees from
and against any and all Losses of the ▇▇▇▇▇▇▇ Indemnitees arising out of or due
to the failure or alleged failure of Midas or any of its Affiliates to pay,
perform or otherwise discharge in due course any item set forth on Schedule C.
Anything in this Section 4.02 to the contrary notwithstanding, neither Midas nor
any Midas Subsidiary shall have any Liabilities whatsoever to ▇▇▇▇▇▇▇ or any
▇▇▇▇▇▇▇ Subsidiary in respect of any Tax (as such term is defined in the Midas
Tax Sharing Agreement), except as otherwise provided on Schedule C hereto or in
the Midas Tax Sharing Agreement.
Section 4.03 Limitations on Indemnification Obligations.
------------------------------------------
(a) The amount which any party (an "Indemnifying Party") is or may be
required to pay to any other Person (an "Indemnitee") pursuant to the
indemnification provisions contained in Section 3.05, Section 4.01 or Section
4.02 shall be reduced (including, without limitation, retroactively) by any
Insurance Proceeds or other amounts actually recovered by or on behalf of such
Indemnitee, in reduction of the related Loss. If an Indemnitee shall have
received the payment required by Section 3.05, 4.01 or 4.02 of this Agreement
from an Indemnifying Party in respect of any Loss and shall subsequently
actually receive Insurance Proceeds or other amounts in
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respect of such Loss, then such Indemnitee shall pay to such Indemnifying Party
a sum equal to the amount of such Insurance Proceeds or other amounts actually
received (subject to the enforcement of the following sentence and up to but not
in excess of the amount of any indemnity payment made hereunder). An insurer who
would otherwise be obligated to pay any claim shall not be relieved of the
responsibility with respect thereto, or, solely by virtue of the indemnification
provisions hereof, have any subrogation rights with respect thereto, it being
expressly understood and agreed that no insurer or any other third party shall
be entitled to a "windfall" (i.e., a benefit they would not be entitled to
receive in the absence of the indemnification provisions) by virtue of the
indemnification provisions hereof.
(b) If an Indemnitee shall actually realize a tax saving by reason of
having incurred a Loss for which such Indemnitee shall have received a payment
from an Indemnifying Party, then such Indemnitee shall pay to such Indemnifying
Party an amount equal to such tax saving. Whenever there is a substantial
likelihood that an Indemnitee will receive a tax saving by reason of a Loss,
such Indemnitee shall file its tax returns in a manner designed to do so,
provided that such Indemnitee shall have the sole responsibility for the
preparation of its tax returns and reporting thereon such Loss and any payments
received from such Indemnifying Party. An Indemnitee shall be deemed actually to
have realized a tax saving with respect to a Loss if, and to the extent that,
for any taxable period, whether ending before, on or after the Distribution
Date, the aggregate federal, state, local and foreign tax liability actually
payable by such Indemnitee and any of its wholly-owned subsidiaries, computed by
taking into account any deductions, credits or other items attributable to a
Loss (including the receipt of an Indemnity Payment with respect thereto and the
payment of any amounts pursuant to this Section 4.03(b)), is less than such
aggregate tax liability, computed without regard to such deductions, credits or
other items attributable to a Loss (including the receipt of an indemnity
payment with respect thereto and the payment of any amounts pursuant to this
Section 4.03(b)). In the event that, following a payment by an Indemnitee
pursuant to this Section 4.03(b) in respect of a tax saving, there shall be an
adjustment to the amount of such tax saving as a result of an audit or other
proceeding in respect of such Indemnitee's tax returns, the parties shall take
appropriate actions to reflect such adjustment. The term "tax saving" shall also
be deemed to include any interest received from a governmental tax authority,
net of any federal, state, local or foreign taxes payable thereon.
(c) In the event that an indemnity payment shall be denominated in a
currency other than United States dollars, the amount of such payment shall be
translated into United States dollars using the Foreign Exchange Rate for such
currency determined in accordance with the following rules:
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(1) with respect to a Loss arising from payment by a financial
institution under a guarantee, comfort letter, letter of credit, foreign
exchange contract or similar instrument, the Foreign Exchange Rate for such
currency shall be determined as of the date on which such financial
institution shall have been reimbursed;
(2) with respect to a Loss covered by insurance, the Foreign Exchange
Rate for such currency shall be the Foreign Exchange Rate employed by the
insurance company providing such insurance in settling such Loss with the
Indemnifying Party; and
(3) with respect to a Loss not covered by clause (1) or (2) of this
Section 4.03(c), the Foreign Exchange Rate for such currency shall be
determined as of the date that notice of the claim with respect to such
Loss shall be given to the Indemnitee.
(d) If the amount of any Loss shall, at any time subsequent to the
payment required by this Agreement, be reduced by recovery, settlement or
otherwise, the amount of such reduction, less any expenses incurred in
connection therewith, shall promptly be repaid by the Indemnitee to the
Indemnifying Party.
Section 4.04 Procedures for Indemnification.
------------------------------
(a) Any claim under Section 3.05, Section 4.01 or Section 4.02 or any
other Section of this Agreement on account of a Loss which does not result from
a Third Party Claim shall be asserted by written notice given by or on behalf of
an Indemnitee to the relevant Indemnifying Party. Such Indemnifying Party shall
have a period of 30 calendar days after the receipt of such notice within which
to respond thereto. If any such claim is not paid in full by an Indemnifying
Party within 30 calendar days after written notice has been received by the
Indemnifying Party, such Indemnitee and Indemnifying Party shall negotiate in
good faith for a reasonable period of time to settle such amount claimed;
provided, however, that such reasonable period shall not, unless otherwise
agreed by such Indemnitee and Indemnifying Party in writing, exceed 45 calendar
days from the time they began such negotiations; provided, further, that if such
Indemnifying Party does not respond within such 30-day period or rejects such
claim in whole or in part, such Indemnifying Party shall be deemed to have
refused to accept responsibility to make payment. The Indemnitee may, but need
not, at any time thereafter bring an Action against the Indemnifying Party to
recover the unpaid amount of the claim and, if successful in whole or in part,
the Indemnitee also shall be entitled to be paid the expenses of prosecuting
such claim; provided, however, that in the event of any such Action, neither the
Indemnitee nor the Indemnifying Party shall assert the defenses of statute of
limitations and laches arising for the period beginning after the date they
began negotiations hereunder as provided in the preceding sentence.
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(b) Procedures for indemnification of Third Party Claims shall be as
follows:
(1) If an Indemnitee shall receive notice or otherwise learn of the
assertion by a Person (including, without limitation, any governmental entity)
who is not a party to this Agreement of any claim or of the commencement by any
such Person of any Action (a "Third Party Claim") with respect to which an
Indemnifying Party may be obligated to provide indemnification pursuant to
Section 3.05, Section 4.01 or Section 4.02 or any other Section of this
Agreement, such Indemnitee or other party shall give such Indemnifying Party
written notice thereof promptly (and in any event within 30 calendar days) after
becoming aware of such Third Party Claim; provided, however, that the failure of
any Indemnitee to give notice as provided in this Section 4.04(b)(1) shall not
relieve such Indemnifying Party of its obligations under this Article IV, except
and only to the extent that such Indemnifying Party is prejudiced by such
failure to give notice. Such notice shall describe the Third Party Claim in
reasonable detail and, if ascertainable, shall indicate the amount (estimated if
necessary) of the Loss that has been or may be sustained by such Indemnitee.
(2) An Indemnifying Party may elect to defend or to seek to settle or
compromise, at such Indemnifying Party's own expense and by such Indemnifying
Party's own counsel, any Third Party Claim. Within 30 calendar days of the
receipt of notice from an Indemnitee in accordance with Section 4.04(b)(1) (or
sooner, if the nature of such Third Party Claim so requires), the Indemnifying
Party shall notify the Indemnitee of its election whether the Indemnifying Party
will assume responsibility for defending such Third Party Claim, which election
shall specify any reservations or exceptions. After notice from an Indemnifying
Party to an Indemnitee of its election to assume the defense of a Third Party
Claim, such Indemnifying Party shall not be liable to such Indemnitee under this
Article IV for any legal or other expenses (except expenses approved in writing
in advance by the Indemnifying Party) subsequently incurred by such Indemnitee
in connection with the defense thereof; provided, however, that if the
defendants in any such Third Party Claim include both the Indemnifying Party and
one or more Indemnitees and in any Indemnitee's reasonable judgment a conflict
of interest between one or more of such Indemnitees and such Indemnifying Party
exists in respect of such Third Party Claim or if the Indemnifying Party shall
have assumed responsibility for such Third Party Claim with any reservations or
exceptions, such Indemnitees shall have the right to employ separate counsel to
represent such Indemnitees and in that event the reasonable fees and expenses of
such separate counsel (but not more than one separate counsel (other than local
counsel) reasonably satisfactory to the Indemnifying Party) shall be paid by
such Indemnifying Party. If an Indemnifying Party elects not to assume
responsibility for defending a Third Party Claim, or fails to notify an
Indemnitee of its election as provided in this Section 4.04(b)(2), such
Indemnitee may defend or (subject to the remainder of this Section 4.04(b)(2))
seek to compromise or settle such Third Party Claim. Notwithstanding the
-25-
foregoing, neither an Indemnifying Party nor an Indemnitee may settle or
compromise any Third Party Claim over the objection of the other; provided,
however, that consent to settlement or compromise shall not be unreasonably
withheld. Neither an Indemnifying Party nor an Indemnitee shall consent, without
the written approval of the Indemnitee or Indemnifying Party (as the case may
be) to entry of any judgment or enter into any settlement of any Third Party
Claim which does not include as an unconditional term thereof the giving by the
claimant or plaintiff to such Indemnitee, in the case of a consent or settlement
by an Indemnifying Party, or the Indemnifying Party, in the case of a consent or
settlement by the Indemnitee, of a written release from all Liabilities in
respect to such Third Party Claim.
(3) If an Indemnifying Party chooses to defend or to seek to
compromise or settle any Third Party Claim, the related Indemnitee shall make
available to such Indemnifying Party any personnel or any books, records or
other documents within its control or which it otherwise has the ability to make
available that are necessary or appropriate for such defense, settlement or
compromise, and shall otherwise cooperate in the defense, settlement or
compromise of such Third Party Claim.
(4) Notwithstanding anything else in this Section 4.04(b) to the
contrary, if an Indemnifying Party notifies the related Indemnitee in writing of
such Indemnifying Party's desire to settle or compromise a Third Party Claim on
the basis set forth in such notice (provided that such settlement or compromise
includes as an unconditional term thereof the giving by the claimant or
plaintiff of a written release of the Indemnitee from all Liabilities in respect
thereof) and the Indemnitee shall notify the Indemnifying Party in writing that
such Indemnitee declines to accept any such settlement or compromise, such
Indemnitee may continue to contest such Third Party Claim, free of any
participation by such Indemnifying Party, at such Indemnitee's sole expense. In
such event, the obligation of such Indemnifying Party to such Indemnitee with
respect to such Third Party Claim shall be equal to (i) the costs and expenses
of such Indemnitee prior to the date such Indemnifying Party notifies such
Indemnitee of the offer to settle or compromise (to the extent such costs and
expenses are otherwise indemnifiable hereunder) plus (ii) the lesser of (A) the
amount of any offer of settlement or compromise which such Indemnitee declined
to accept and (B) the actual out-of-pocket amount such Indemnitee is obligated
to pay subsequent to such date as a result of such Indemnitee's continuing to
pursue such Third Party Claim.
(5) In the event of payment by an Indemnifying Party to any
Indemnitee in connection with any Third Party Claim, such Indemnifying Party
shall be subrogated to and shall stand in the place of such Indemnitee as to any
events or circumstances in respect of which such Indemnitee may have any right
or claim relating to such Third Party Claim against any claimant or plaintiff
asserting such Third Party Claim or against any other person. Such Indemnitee
shall cooperate with such Indemnifying Party in a
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reasonable manner, and at the cost and expense of such Indemnifying Party, in
prosecuting any subrogated right or claim.
Section 4.05 Remedies Cumulative. The remedies provided in this
Article IV shall be cumulative and shall not preclude assertion by any
Indemnitee of any other rights or the seeking of any and all other remedies
against any Indemnifying Party.
Section 4.06 Survival of Indemnities. The obligations of each of
▇▇▇▇▇▇▇, Midas and Midas Operating Company under this Article IV shall survive
the sale or other transfer by it of any assets or businesses or the assignment
by it of any Liabilities, with respect to any Loss of the other parties related
to such assets, businesses or Liabilities.
ARTICLE V
ACCESS TO INFORMATION
---------------------
Section 5.01 Access to Information. Subject to Section 6.02, from and
after the Distribution Date, each party hereto shall afford to each other party
and its authorized accountants, counsel and other designated representatives
(collectively, "Representatives") reasonable access (including using reasonable
efforts to give access to Persons possessing information) and duplicating rights
during normal business hours to all business records, books, contracts,
instruments, computer data and other data and information (collectively,
"Information") within such party's possession relating to such other party or
any subsidiary of such other party, insofar as such access is reasonably
required by such other party. Information may be requested under this Article V
for, without limitation, audit, accounting, claims, litigation and tax purposes,
as well as for purposes of fulfilling disclosure and reporting obligations and
for performing this Agreement and the transactions contemplated hereby.
Section 5.02 Production of Witnesses. After the Distribution Date,
each of ▇▇▇▇▇▇▇ and Midas and their respective subsidiaries shall use reasonable
efforts to make available to the other parties and their subsidiaries, upon
written request, their present and former directors, officers, employees and
agents as witnesses to the extent that any such individual may reasonably be
required in connection with any legal, administrative or other proceedings in
which the requesting party may from time to time be involved.
Section 5.03 Retention of Records. Except as otherwise required by law
or agreed to in writing, each of ▇▇▇▇▇▇▇ and Midas shall retain, and shall cause
its subsidiaries to retain, for a period of at least seven years following the
Distribution
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Date, all significant Information relating to the business of the other parties
and the other parties' subsidiaries. In addition, after the expiration of such
seven-year period, such Information shall not be destroyed or otherwise disposed
of at any time, unless, prior to such destruction or disposal, (a) the party
proposing to destroy or otherwise dispose of such Information shall provide no
less than 30 calendar days' prior written notice to the party to which such
Information relates, specifying in reasonable detail the Information proposed to
be destroyed or disposed of and (b) if a recipient of such notice shall request
in writing prior to the scheduled date for such destruction or disposal that any
of the Information proposed to be destroyed or disposed of be delivered to such
requesting party, the party proposing the destruction or disposal shall promptly
arrange for the delivery of such of the Information as was requested at the
expense of the party requesting such Information.
Section 5.04 Confidentiality. Each party shall hold, and shall
cause its subsidiaries and Representatives to hold, in strict confidence, all
Information concerning the other parties in its possession or furnished by the
other parties or the other parties' Representatives pursuant to either this
Agreement or the Midas Tax Sharing Agreement (except to the extent that such
Information (a) is on the date hereof or hereafter becomes generally available
to the public other than as a result of a disclosure, directly or indirectly, by
such party or its Representatives or (b) was or becomes available to such party
on a nonconfidential basis prior to its disclosure to such party or its
Representatives, in each case from a source other than the party furnishing such
Information, which source was not itself bound by a confidentiality agreement
with the party furnishing such Information and had not received such
Information, directly or indirectly, from a Person so bound), and each party
shall not release or disclose such Information to any other Person, except its
auditors, attorneys, financial advisors, bankers and other consultants and
advisors, unless compelled to disclose by judicial or administrative process or,
as advised by its counsel, by other requirements of law.
ARTICLE VI
ADDITIONAL COVENANTS
--------------------
Section 6.01 Corporate Names.
(a) As soon as reasonably practicable after the Distribution Date but
in any event within six months thereafter, at Midas' expense, Midas shall, and
shall cause the Midas Subsidiaries to, remove (or, if necessary, on an interim
basis, cover up) any and all exterior signs and other identifiers located on any
of Midas' or any Midas Subsidiary's property or premises or on the property or
premises used by any of the
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foregoing which refer or pertain to ▇▇▇▇▇▇▇ or which include the ▇▇▇▇▇▇▇ name,
logo or other trademark or other ▇▇▇▇▇▇▇ intellectual property.
(b) As soon as is reasonably practicable after the Distribution Date
but in any event within 90 calendar days thereafter, at Midas' expense, Midas
shall, and shall cause the Midas Subsidiaries to, remove from all letterhead,
envelopes, business cards, invoices and other communications media of any kind,
all references to ▇▇▇▇▇▇▇, including the ▇▇▇▇▇▇▇ name, logo and any other
trademark or other ▇▇▇▇▇▇▇ intellectual property (except that Midas shall not be
required to take any such action with respect to materials in the possession of
franchisees or customers), and neither Midas nor any Midas Subsidiary shall use
or display the ▇▇▇▇▇▇▇ name, logo or other trademarks or ▇▇▇▇▇▇▇ intellectual
property without the prior written consent of ▇▇▇▇▇▇▇.
(c) ▇▇▇▇▇▇▇ acknowledges that it has no interest in nor any right to
use or display the Midas name or any Midas trademark or intellectual property in
any way, and shall cease any such use or display within 90 calendar days after
the Distribution Date.
Section 6.02 Privileged Matters. The parties hereto recognize that
legal and other professional services that have been and will be provided on and
prior to the Distribution Date have been and will be rendered for the benefit of
▇▇▇▇▇▇▇ and Midas and their subsidiaries, and that each of the foregoing should
be deemed to be the client for the purposes of asserting all privileges which
may be asserted under applicable law. To allocate the interests of each party in
the Information as to which any party or any its subsidiaries is entitled to
assert a privilege, the parties agree as follows:
(a) ▇▇▇▇▇▇▇ shall be entitled, in perpetuity, to control the
assertion or waiver of all privileges in connection with privileged Information
which relates solely to ▇▇▇▇▇▇▇ or any ▇▇▇▇▇▇▇ Subsidiary or the business of
▇▇▇▇▇▇▇ or any ▇▇▇▇▇▇▇ Subsidiary, whether or not the privileged Information is
in the possession of or under the control of ▇▇▇▇▇▇▇ or Midas or any of their
subsidiaries. ▇▇▇▇▇▇▇ shall also be entitled, in perpetuity, to control the
assertion or waiver of all privileges in connection with privileged Information
that relates solely to the subject matter of any claims arising out of any item
set forth on Schedule B or any claims which may be asserted in the future in any
lawsuits or other proceedings (not involving Midas or any Midas Subsidiary)
initiated against or by ▇▇▇▇▇▇▇ or any ▇▇▇▇▇▇▇ Subsidiary, whether or not the
privileged Information is in the possession of or under the control of ▇▇▇▇▇▇▇
or Midas or any of their subsidiaries.
(b) Midas shall be entitled, in perpetuity, to control the assertion
or waiver of all privileges in connection with privileged Information which
relates solely to Midas or any Midas Subsidiary or the business of Midas or any
Midas Subsidiary,
-29-
whether or not the privileged Information is in the possession of or under the
control of ▇▇▇▇▇▇▇ or Midas or any of their subsidiaries. Midas shall also be
entitled, in perpetuity, to control the assertion or waiver of all privileges in
connection with privileged Information which relates solely to the subject
matter of any claims arising out of any item set forth on Schedule C or any
claims which may be asserted in the future in any lawsuits or other proceedings
(not involving ▇▇▇▇▇▇▇ or any ▇▇▇▇▇▇▇ Subsidiary) initiated against or by Midas
or any Midas Subsidiary, whether or not the privileged Information is in the
possession of or under the control of ▇▇▇▇▇▇▇ or Midas or any of their
subsidiaries.
(c) The parties hereto agree that they shall have a shared privilege,
with equal right to assert or waive, subject to the restrictions in this Section
6.02, with respect to all privileges not allocated pursuant to the terms of
Sections 6.02(a) and (b); provided, however, that no party shall have a shared
privilege in connection with privileged Information that does not relate to such
party, any of its subsidiaries or their respective businesses. All privileges
relating to any claims, proceedings, litigation, disputes, or other matters
which involve ▇▇▇▇▇▇▇ or any ▇▇▇▇▇▇▇ Subsidiary and/or Midas or any Midas
Subsidiary in respect of which each party retains any responsibility or
liability under this Agreement, shall be subject to a shared privilege among
them.
(d) No party hereto may waive any privilege which could be asserted
under any applicable law, and in which any other party hereto has a shared
privilege, without the consent of the other party, except to the extent
reasonably required in connection with any litigation as provided in subsection
(e) below. Consent shall be in writing, or shall be deemed to be granted unless
written objection is made within 20 calendar days after written notice from the
party requesting such consent.
(e) In the event of any litigation or dispute between or among the
parties hereto, any party and a subsidiary of another party hereto, or a
subsidiary of one party hereto and a subsidiary of another party hereto, either
such party may waive a privilege in which the other party has a shared
privilege, without obtaining the consent of the other party; provided, however,
that such waiver of a shared privilege shall be effective only as to the use of
information with respect to the litigation or dispute between the relevant
parties and/or their subsidiaries, and shall not operate as a waiver of the
shared privilege with respect to third parties.
(f) If a dispute arises between or among the parties hereto or their
respective subsidiaries regarding whether a privilege should be waived to
protect or advance the interest of any party, each party agrees that it shall
negotiate in good faith, shall endeavor to minimize any prejudice to the rights
of the other parties, and shall not unreasonably withhold consent to any request
for waiver by another party. Each party hereto specifically agrees that it will
not withhold consent to waiver for any purpose except to protect its own
legitimate interests.
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(g) Upon receipt by any party hereto or by any subsidiary thereof of
any subpoena, discovery or other request which arguably calls for the production
or disclosure of Information subject to a shared privilege or as to which
another party has the sole right hereunder to assert a privilege, or if any
party obtains knowledge that any of its or any of its subsidiaries' current or
former directors, officers, agents or employees has received any subpoena,
discovery or other requests which arguably calls for the production or
disclosure of such privileged Information, such party shall promptly notify the
other party or parties of the existence of the request and shall provide the
other party or parties a reasonable opportunity to review the Information and to
assert any rights it or they may have under this Section 6.02 or otherwise to
prevent the production or disclosure of such privileged Information.
(h) The furnishing and delivery of Information pursuant to this
Agreement is made in reliance on the agreement of the parties, as set forth in
Section 5.04, to maintain the confidentiality of confidential or privileged
Information and to assert and maintain all applicable privileges. The access to
Information being granted pursuant to Section 5.01, the agreement to provide
witnesses pursuant to Section 5.02, and the furnishing of notices and documents
and other cooperative efforts contemplated by Article IV, shall not be deemed a
waiver of any privilege that has been or may be asserted under this Agreement or
otherwise.
Section 6.03 Limitation on Solicitation of Employees.
(a) ▇▇▇▇▇▇▇ agrees on behalf of itself, its subsidiaries and
Affiliates which it controls, without any separate bargained for consideration,
but rather as an integral part of the Distribution provided for in this
Agreement, that it shall not directly or indirectly, through a subsidiary or
otherwise, until one year after the Distribution Date, employ or attempt to
employ any Midas Separated Employee or induce or attempt to induce any Midas
Separated Employee to leave his or her employment.
(b) Midas agrees on behalf of itself, its subsidiaries and Affiliates
which it controls, without any separate bargained for consideration, but rather
as an integral part of the Distribution provided for in this Agreement, that it
shall not directly or indirectly, through a subsidiary or otherwise, until one
year after the Distribution Date, employ or attempt to employ any employee of
▇▇▇▇▇▇▇ or any ▇▇▇▇▇▇▇ Subsidiary or induce or attempt to induce any employee of
▇▇▇▇▇▇▇ or any ▇▇▇▇▇▇▇ Subsidiary to leave his or her employment.
(c) The parties agree and acknowledge that the restrictions contained
in this Section 6.03 are reasonable in scope and duration and are necessary to
protect the other party hereto.
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Section 6.04 Expenses. Except as otherwise set forth in this
Agreement, all costs and expenses arising on or prior to the Distribution Date
(whether or not then payable) in connection with the Distribution shall be paid
by ▇▇▇▇▇▇▇ to the extent that appropriate documentation concerning such costs
and expenses shall be provided to ▇▇▇▇▇▇▇, other than (1) costs incurred in
connection with any financing arrangements entered into by Midas or any of its
subsidiaries, (2) listing fees of any national securities exchange or fees of
the National Association of Securities Dealers, Inc. incurred with respect to
listing or quoting the Midas Common Stock, (3) fees charged by rating agencies
for rating Midas securities, (4) one-third of the legal fees and expenses of
Sidley & Austin and ▇▇▇▇▇▇▇▇▇, Will & ▇▇▇▇▇, (5) one-half of the fees and
expenses of KPMG Peat Marwick which directly relate to the Distribution, (6) the
fees and expenses of any outside consultant retained by Midas or Midas Operating
Company, (7) costs incurred in printing and engraving the stock certificates of
Midas, and (8) one-third of the cost of printing and distributing the Midas Form
10, the Information Statement and related documents, all of which shall be paid
by Midas and Midas Operating Company, whether invoiced by ▇▇▇▇▇▇▇ before or
after the Distribution Date.
Section 6.05 Further Assurances. From time to time after the
Distribution Date, each party shall do, execute and deliver, or cause to be
done, executed and delivered, to another party hereto, or its successors and
assigns, all such further acts, deeds, assignments, powers of attorney and other
instruments of conveyance and transfer as such party may reasonably request as
may be necessary to consummate the Distribution and the transactions
contemplated hereby, including filings with, and obtaining the approval of, any
governmental body.
Section 6.06 Qualification as Tax-Free Distribution.
--------------------------------------
(a) After the Distribution Date, neither ▇▇▇▇▇▇▇ nor Midas shall
take, or permit any of its subsidiaries to take, any action which could
reasonably be expected to prevent the Distribution from qualifying as a tax-free
distribution within the meaning of Section 355 of the Code or any other
transaction contemplated by this Agreement which is intended by the parties to
be tax-free from failing so to qualify.
(b) After the Distribution Date, ▇▇▇▇▇▇▇ shall not, nor cause or
permit, any ▇▇▇▇▇▇▇ Subsidiary to take any action or enter into any transaction
which could reasonably be expected to materially adversely impact the expected
tax consequences to Midas which are known to ▇▇▇▇▇▇▇ of any transaction
contemplated by this Agreement; provided, however, nothing in this Section
6.06(b) shall prohibit ▇▇▇▇▇▇▇ from taking any action, or entering into any
transaction (or permitting or causing any ▇▇▇▇▇▇▇ Subsidiary so to act or
enter), in the ordinary course of business or in connection with the settlement
of any audit issue or the filing of any tax return. After the Distribution Date,
Midas shall not, nor cause or permit, any Midas Subsidiary to
-32-
take any action or enter into any transaction which could reasonably be expected
to materially adversely impact the reasonably expected tax consequences to
▇▇▇▇▇▇▇ which are known to Midas of any transaction contemplated by this
Agreement; provided, however, nothing in this Section 6.06(b) shall prohibit
Midas from taking any action, or entering into any transaction (or permitting or
causing any Midas Subsidiary so to act or enter) in the ordinary course of
business or in connection with the settlement of any audit issue or the filing
of any tax return.
ARTICLE VII
MISCELLANEOUS
-------------
Section 7.01 Complete Agreement; Conflict with Midas Tax Sharing
Agreement. This Agreement and the Midas Tax Sharing Agreement, including any
schedules and exhibits hereto or thereto, and other agreements and documents
referred to herein, shall constitute the entire agreement between the parties
with respect to the subject matter hereof and shall supersede all previous
negotiations, commitments and writings with respect to such subject matter.
Notwithstanding any other provisions in this Agreement to the contrary, in the
event and to the extent that there shall be a conflict between the provisions of
this Agreement and the Midas Tax Sharing Agreement, the provisions of the Midas
Tax Sharing Agreement shall control.
Section 7.02 Survival of Agreements. Except as otherwise specifically
contemplated by this Agreement, all covenants and agreements of the parties
contained in this Agreement shall survive the Distribution Date.
Section 7.03 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware, without regard
to the principles of conflicts of laws thereof.
Section 7.04 Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be delivered by hand,
mailed by registered or certified mail (postage prepaid and return receipt
requested) or sent by telecopy (confirmed by regular, first-class mail, postage
prepaid) to the parties at the following addresses (or at such other addresses
for a party as shall be specified by like notice) and shall be deemed given on
the date on which such notice is received:
-33-
if to ▇▇▇▇▇▇▇:
▇▇▇▇▇▇▇ Corporation
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: General Counsel
if to Midas or Midas Operating Company:
Midas, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: General Counsel
Section 7.05 Amendments. This Agreement may not be modified or amended
except by an agreement in writing signed by each of the parties.
Section 7.06 Successors and Assigns. This Agreement and all of the
provisions hereof shall be binding upon and inure to the benefit of the parties
and their respective successors and permitted assigns. No party may assign its
respective rights or delegate its respective obligations under this Agreement
without the express prior written consent of the other parties hereto.
Section 7.07 Termination. This Agreement may be terminated and the
Distribution abandoned at any time prior to the Distribution Date by and in the
sole discretion of the ▇▇▇▇▇▇▇ Board without the approval of either Midas or of
▇▇▇▇▇▇▇'▇ shareholders. In the event of such termination, no party shall have
any Liabilities of any kind to any other party on account of such termination
except that expenses incurred in connection with the transactions contemplated
hereby shall be paid as provided in Section 6.04.
Section 7.08 No Third Party Beneficiaries. Except for the provisions
of Section 3.03, Section 3.05 and Article IV relating to Indemnitees, this
Agreement is solely for the benefit of the parties hereto and their respective
Affiliates and should not be deemed to confer upon third parties (including any
employee of ▇▇▇▇▇▇▇, any ▇▇▇▇▇▇▇ Subsidiary, Midas or any Midas Subsidiary) any
remedy, claim, reimbursement, claim of action or other right in excess of those
existing without reference to this Agreement.
Section 7.09 Titles and Headings. Titles and headings to sections
herein are inserted for the convenience of reference only and are not intended
to be part of or to affect the meaning or interpretation of this Agreement.
-34-
Section 7.10 Severability. If any provision of this Agreement or the
application thereof to any Person or circumstance is determined by a court of
competent jurisdiction to be invalid, void or unenforceable, the remaining
provisions hereof, or the application of such provision to Persons or
circumstances or in jurisdictions other than those as to which it has been held
invalid or unenforceable, shall remain in full force and effect and shall in no
way be affected, impaired or invalidated thereby, so long as the economic or
legal substance of the transactions contemplated hereby is not affected in any
manner adverse to any party. Upon such determination, the parties shall
negotiate in good faith in an effort to agree upon such a suitable and equitable
provision to effect the original intent of the parties.
Section 7.11 Specific Performance. In the event of any actual or
threatened default in, or breach of, any of the terms, conditions and provisions
of this Agreement, the party or parties who are or are to be thereby aggrieved
shall have the right to specific performance and injunctive or other equitable
relief of its rights under this Agreement, in addition to any and all other
rights and remedies at law or in equity, and all such rights and remedies shall
be cumulative. The parties agree that the remedies at law for any breach or
threatened breach, including monetary damages, are inadequate compensation for
any loss and that any defense in any action for specific performance that a
remedy at law would be adequate is waived. Any requirements for the securing or
posting of any bond with such remedy are waived.
Section 7.12 Waivers. Any term or provision of this Agreement may be
waived, or the time for its performance may be extended, by the party or parties
entitled to the benefit thereof. Any such waiver shall be validly and
sufficiently authorized for the purposes of this Agreement if, as to any party,
it is authorized in writing by an authorized representative of such party. The
failure of any party hereto to enforce at any time any provision of this
Agreement shall not be construed to be a waiver of such provision, nor in any
way to affect the validity of this Agreement or any part hereof or the right of
any party thereafter to enforce each and every such provision. No waiver of any
breach of this Agreement shall be held to constitute a waiver of any other or
subsequent breach.
Section 7.13 Execution in Counterparts. This Agreement may be executed
in counterparts, each of which shall be considered an original instrument, but
all of which shall be considered one and the same agreement, and shall become
binding when such counterparts have been signed by each of the parties hereto
and delivered to each of the other parties hereto.
-35-
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the day and year first above written.
▇▇▇▇▇▇▇ CORPORATION
By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President and Treasurer
MIDAS, INC.
By: /s/ R. ▇▇▇ ▇▇▇▇▇▇▇
----------------------------------
Name: R. ▇▇▇ ▇▇▇▇▇▇▇
Title: Executive Vice President and
Chief Financial Officer
MIDAS INTERNATIONAL CORPORATION
By: /s/ R. ▇▇▇ ▇▇▇▇▇▇▇
-----------------------------------
Name: R. ▇▇▇ ▇▇▇▇▇▇▇
Title: Executive Vice President and
Chief Financial Officer
-36-
SCHEDULE A
MIDAS LIMITS OF LIABILITY
POLICY PERIOD LIMITS OF LIABILITY
4/1/78 - 4/1/79 50% of the first $250,000 each and every
loss, all lines
4/1/79 - 4/1/80 50% of the first $250,000 each and every
loss, all lines
4/1/80 - 4/1/81 50% of the first $250,000 each and every
loss, all lines*
4/1/81 - 4/1/82 $250,000 each and every loss, all lines*
4/1/82 - 4/1/83 50% of the first $250,000 each and every
loss, all lines*
4/1/83 - 4/1/84 $250,000 each and every loss, all lines*
4/1/84 - 4/1/85 $250,000 each and every loss, all lines*
4/1/85 - 4/1/86 $500,000 each and every loss, General
Liability
$250,000 each and every loss, Workers'
Compensation and Automobile Liability
4/1/86 - 4/1/87 $2,000,000 each and every loss, General
Liability
$500,000 each and every loss, Automobile
Liability
$250,000 each and every loss, Workers'
Compensation
4/1/87 - 4/1/88 $2,000,000 each and every loss, General
Liability
$1,000,000 each and every loss, Workers'
Compensation and Automobile Liability
4/1/88 - 4/1/89 $2,000,000 each and every loss, General
Liability
$1,000,000 each and every loss, Workers'
Compensation and Automobile Liability
4/1/89 - 4/1/90 $2,000,000 each and every loss, General
Liability
$1,000,000 each and every loss, Workers'
Compensation and Automobile Liability
4/1/90 - 4/1/91 $2,000,000 each and every loss, General
Liability
$1,000,000 each and every loss, Workers'
Compensation and Automobile Liability
4/1/91 - 4/1/92 $2,000,000 each and every loss, General
Liability
$1,000,000 each and every loss, Workers'
Compensation and Automobile Liability
4/1/92 - 4/1/93 $2,000,000 each and every loss, General
Liability
$1,000,000 each and every loss, Workers'
Compensation and Automobile Liability
4/1/93 - 4/1/94 $2,000,000 each and every loss, General
Liability
$1,000,000 each and every loss, Workers'
Compensation and Automobile Liability
4/1/94 - 4/1/95 $2,000,000 each and every loss, General
Liability
$1,000,000 each and every loss, Workers'
Compensation and Automobile Liability
4/1/95 - 4/1/96 $2,000,000 each and every loss, General
Liability
$1,000,000 each and every loss, Workers'
Compensation and Automobile Liability
4/1/96 - 4/1/97 $2,000,000 each and every loss, General
Liability, Workers' Compensation and
Automobile Liability
A-2
4/1/97 - Distribution Date $2,000,000 each and every loss, General
Liability, Workers' Compensation and Automobile
Liability
4/1/94 - 4/1/95 $900,000 excess of a $100,000 deductible per
occurrence with an overall aggregate of
$2,000,000 on a Claims made basis, Employment
Practices Liability Coverage.
4/1/95 - 4/1/96 $900,000 excess of a $100,000 deductible per
occurrence with an overall aggregate of
$2,000,000 on a Claims made basis, Employment
Practices Liability Coverage.
4/1/96 - 4/1/97 $900,000 excess of a $100,000 deductible per
occurrence with an overall aggregate of
$2,000,000 on a Claims made basis, Employment
Practices Liability Coverage.
4/1/97 - Distribution Date $900,000 excess of a $100,000 deductible per
occurrence with an overall aggregate of
$2,000,000 on a Claims made basis, Employment
Practices Liability Coverage.
4/1/96 - 4/1/97 $25,000 per occurrence less underlying
deductible for non - U.S. and Canadian exposures
of General Liability. Underlying Deductibles:
U.K. $10,000
Mexico $10,000
Elsewhere $ 4,500
4/1/97 - Distribution Date $25,000 per occurrence less underlying deductible
for non - U.S. and Canadian exposures of General
Liability. Underlying Deductibles:
U.K. $10,000
Mexico $10,000
Elsewhere $ 4,500
7/1/96 - 7/1/97 $100,000 per occurrence less underlying
deductible for non - U.S. and Canadian
A-3
exposures of $25,000 for All Risk Property Insurance
*General Liability (including Products Liability), Automobile Liability and
Workers' Compensation.
A-4
SCHEDULE B
▇▇▇▇▇▇▇ INDEMNIFICATION OF MIDAS INDEMNITEES
Items with respect to which ▇▇▇▇▇▇▇ will indemnify the Midas
Indemnitees in accordance with Section 4.01 of this Agreement:
(1) All Losses arising out of the businesses conducted (formerly or
currently) or to be conducted by ▇▇▇▇▇▇▇ (whether directly or through a
subsidiary or Affiliate of ▇▇▇▇▇▇▇), the ▇▇▇▇▇▇▇ Subsidiaries, and any
previously-owned division, subsidiary or Affiliate of ▇▇▇▇▇▇▇, whether such
Losses relate to events occurring, or whether such Losses are asserted, before,
on or after the Distribution Date; provided, however, that ▇▇▇▇▇▇▇ shall not be
liable for Losses arising out of (i) the businesses conducted (formerly or
currently) or to be conducted by Midas or Midas Operating Company (whether
directly or through a subsidiary or Affiliate of Midas or Midas Operating
Company), the Midas Subsidiaries or any previously-owned division, subsidiary or
Affiliate of Midas or Midas Operating Company (including, without limitation,
the former Sea Nymph division); and provided, further, that, except as set forth
in subsection (3) below, ▇▇▇▇▇▇▇ shall be liable for Losses arising out of the
businesses of ▇▇▇▇▇▇▇ that are otherwise not related to the business of Midas.
(2) All Losses arising out of or based upon any untrue statement or
alleged untrue statement of a material fact or omission or alleged omission to
state a material fact necessary in order to make the statements made therein, in
the light of the circumstances under which they were made, not misleading, with
respect to all information set forth in the Information Statement or any
supplement thereto (i) on the cover page of the Information Statement and in the
body of the Information Statement under the headings (a) "Summary - The
Distribution," (b) "Summary - Hussmann," (c) "Introduction," (d) "The
Distribution" and (e) any information derived from such information and (ii) in
Annex A and Annex B of the Information Statement.
(3) All Losses arising out of any Action brought by shareholders of
▇▇▇▇▇▇▇ or Midas because the Distribution is or becomes taxable to such
shareholders for any reason other than as a result of the occurrence of a
transaction on or after the Distribution Date involving either the stock or
assets (or any combination thereof) of Midas or any Midas Subsidiary or a breach
by Midas or Midas Operating Company of the Midas Tax Sharing Agreement.
(4) All Losses arising out of any breach by ▇▇▇▇▇▇▇ or any ▇▇▇▇▇▇▇
Subsidiary of this Agreement or the Midas Tax Sharing Agreement.
B-1
SCHEDULE C
MIDAS AND MIDAS OPERATING COMPANY INDEMNIFICATION OF ▇▇▇▇▇▇▇ INDEMNITEES
Items with respect to which Midas and Midas Operating Company will
indemnify the ▇▇▇▇▇▇▇ Indemnitees in accordance with Section 4.02 of this
Agreement:
(1) All Losses arising out of the businesses conducted (formerly or
currently) or to be conducted by Midas or Midas Operating Company (whether
directly or through a subsidiary or Affiliate of Midas or Midas Operating
Company), the Midas Subsidiaries and any previously-owned division, subsidiary
or Affiliate of Midas or Midas Operating Company, whether such Losses relate to
events occurring, or whether such Losses are asserted, before, on or after the
Distribution Date.
(2) All Losses arising out of or based upon any untrue statement or
alleged untrue statement of a material fact or omission or alleged omission to
state a material fact necessary in order to make the statements made therein, in
the light of the circumstances under which they were made, not misleading, with
respect to all information set forth in the Information Statement or any
supplement thereto, except for information with respect to which ▇▇▇▇▇▇▇ will
indemnify the Midas Indemnitees as set forth in Paragraph (2) of Schedule B of
this Agreement.
(3) All Losses arising out of any Action brought by shareholders of
▇▇▇▇▇▇▇ or Midas because the Distribution is or becomes taxable to such
shareholders as a result of the occurrence of a transaction on or after the
Distribution Date involving either the stock or assets (or any combination
thereof) of Midas or any Midas Subsidiary or a breach by Midas or Midas
Operating Company of the Midas Tax Sharing Agreement.
(4) All Losses arising out of any breach by Midas or Midas Operating
Company of this Agreement or the Midas Tax Sharing Agreement.
C-1