TAX SHARING AGREEMENT
This Tax Sharing Agreement (the "Agreement") dated as of December 31, 1997,
by and among Whitman Corporation, a Delaware corporation ("Whitman"), Midas,
Inc., a Delaware corporation ("Midas") and Midas International Corporation, a
Delaware corporation ("International").
WHEREAS, the parties have entered into a Distribution and Indemnity
Agreement of even date herewith (the "Distribution Agreement");
WHEREAS, pursuant to the Distribution Agreement all of the issued and
outstanding common stock of Midas and of Hussmann International, Inc., a
Delaware corporation ("Hussmann"), will be distributed by Whitman (pro rata) to
the holders of its common stock (the "Distribution");
WHEREAS, Midas was incorporated on August 29, 1997, and, at the time of the
Distribution, Midas will own all of the issued and outstanding shares of common
stock of International;
WHEREAS, Whitman and International are parties to certain tax allocation
agreements (collectively referred to as the "Tax Allocation Agreements") which
deal with the payment of U.S. federal, state and foreign income taxes and other
taxes; and
WHEREAS, the Tax Allocation Agreements did not contemplate the
Distribution;
NOW, THEREFORE, Whitman, on behalf of itself and its former, present and
future direct or indirect subsidiaries, other than the members of the Midas
Group, as hereinafter defined (hereinafter referred to as the "Whitman Group"),
and Midas and International, on behalf of themselves and their former, present
and future direct or indirect subsidiaries, other than those subsidiaries which,
immediately after the Distribution, will be direct or indirect subsidiaries of
Whitman or Hussmann (hereinafter referred to as the "Midas Group"), enter into
this Agreement for the purposes of replacing and superseding the Tax Allocation
Agreements and to define the rights of the parties hereto with respect to
certain potential tax controversies, all as hereinafter provided.
ARTICLE I
DEFINITIONS
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As used in this Agreement, the following terms shall have the following
meanings (such meanings to be equally applicable to both the singular and the
plural forms of the terms defined):
"Code" means the U.S. Internal Revenue Code of 1986, as amended, or any
successor thereto.
"Distribution Date" means the date of the Distribution. For all purposes of
this Agreement, the Distribution shall be deemed effective as of the close of
business on the Distribution Date.
"Foreign" means outside the United States of America.
"Midas Businesses" means the former, present and future subsidiaries,
divisions and businesses of any member of the Midas Group.
"Regulations" means any U.S. Treasury regulations under the Code and any
other state, foreign, or local regulations with respect to taxes.
"Restructuring Taxes" means any Taxes, including, without limitation, any
Taxes imposed pursuant to or as a result of Code Section 311 (together with
related interest, penalties and additions to Tax), resulting from the transfer
or other disposition of stock, assets, or debt including the Distribution and
from those transactions undertaken to separate the Midas Businesses from the
Whitman Businesses as contemplated by the Distribution Agreement.
"Tax" or "Taxes" means all forms of taxation, whenever created or imposed,
and whether of the United States of America or otherwise, and whether imposed by
a local, municipal, governmental, state, federation or other body, and without
limiting the generality of the foregoing, shall include income, sales, use, ad
valorem, gross receipts, value added, franchise, transfer, recording,
withholding, payroll, employment, excise, occupation, premium or property taxes,
together with any related interest, penalties and additions to tax, or
additional amounts imposed by any taxing authority (domestic or foreign) upon
the Midas Group, the Whitman Group or any of their respective members or
divisions or branches.
"Tax Benefit" means the amount by which any item, including, but not
limited to, any item of income or deduction, gain or loss or tax credit,
decreases the liability for Taxes on or with respect to a Tax Return.
"Tax Detriment" means the amount by which any item, including, but not
limited to, any item of income or deduction, gain or loss, or tax credit,
increases the liability for Taxes an or with respect to a Tax Return.
"Tax Return" means any return, filing, questionnaire, or other document
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required to be filed, including amended returns that may be filed, for any
period with any taxing authority (whether U.S. domestic or foreign) in
connection with any Tax or Taxes (whether or not a payment is required to be
made with respect to such filing).
"Whitman Businesses" means the former, present and future subsidiaries,
divisions and businesses of any member of the Whitman Group which are not, or
are not contemplated by the Distribution Agreement to be, part of the Midas
Group immediately after the Distribution.
ARTICLE II
PREPARATION AND FILING OF TAX RETURNS
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Section 2.01. Manner of Preparation. All Tax Returns filed after the
Distribution Date shall be prepared on a basis which is consistent with the
income tax rulings obtained from the U.S. Internal Revenue Service ("IRS") or
any other governmental authority in connection with the restructuring of Whitman
contemplated by the Distribution Agreement (in the absence of a controlling
change in law or circumstances) and shall be filed on a timely basis by the
party responsible for such filing under this Agreement. To the extent that and
inconsistent position taken by one party hereto or a member of its group would
result in a Tax Detriment to the other party hereto or a member of its group,
and in the absence of a controlling change in law or circumstances, all Tax
Returns filed after the date of this Agreement shall be prepared on a basis
consistent with the elections, accounting methods, conventions, and principles
of taxation used for the most recent taxable periods for which Tax Returns
involving similar items have been filed. Subject to the provisions of this
Agreement, all decisions relating to the preparation and filing of Tax Returns
and any audit or other review of such Tax Returns shall be made in the sole
discretion of the party responsible under this Agreement for such filing.
Section 2.02. Preparation and Filing of and Elections with respect to Pre-
Distribution Tax Returns and Tax Returns for Periods through, to and including
the Distribution Date.
(a) Consolidated U.S. Federal Income and Other U.S. Federal Tax Returns.
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All consolidated U.S. federal income and other U.S. Federal (including
excise, withholding, fuel and payroll) Tax Returns which include a member of the
Whitman Group and the Midas Group that are required to be filed for periods
beginning on or before the Distribution Date shall be prepared and filed by
Whitman. Midas shall, for each of its taxable periods for which it and/or
International is included in the consolidated federal income tax return of the
Whitman Group, provide Whitman with (i) a true and correct consolidated federal
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income tax return for the Midas Group, (ii) separate federal income tax returns
for each member of the Midas Group and (iii) a reconciliation of book income to
federal taxable income for each member of the Midas Group. Midas hereby agrees
to and shall utilize the Fast-Tax system for U.S. federal income tax return
preparation in preparing the aforesaid returns and computations and shall use
its best efforts to provide Whitman with such returns and computations on or
before the first day of the sixth month following the end of the period to which
such returns and computations relate but in any event Midas shall provide such
returns and computations no later than the fifteenth day of the sixth month
following the end of the period to which such returns and computations relate.
Simultaneously with providing the aforesaid returns and computations, Midas
shall pay to Whitman the amount of total U.S. federal income tax liability shown
on the above referenced consolidated federal income tax return for the Midas
Group, reduced by all estimated payments theretofore made by Midas or
International to Whitman on account of such liability, or if such estimated
payments in the aggregate exceed the federal income tax liability of the Midas
Group, Whitman shall pay such excess to Midas within five (5) days of the filing
by Whitman of its consolidated federal income tax return. Anything herein to the
contrary notwithstanding, Midas for itself and the members of the Midas Group
shall calculate in accordance with past practice and shall remit to Whitman at
least five (5) days prior to the due date of each Whitman estimated quarterly
federal income tax payment the quarterly estimated federal income tax payment
that Whitman is required to remit on behalf of the Midas Group. In no event will
any member of the Midas Group receive any tax benefit for purposes of this
Section unless Whitman recognizes and obtains said benefit on its consolidated
federal income tax return.
(b) State of Illinois Corporate Income Tax Returns.
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All State of Illinois corporate income tax returns that may be or are
required to be filed by Whitman for periods beginning on or before the
Distribution Date shall be prepared and filed by Whitman on a unitary group
basis and shall include members of the Midas Group. To permit Whitman to prepare
and file such returns, Midas or International shall, for each taxable period for
which it is included in the Illinois state income tax return of Whitman's
unitary group, provide Whitman with (i) a computation of the Illinois corporate
income tax liability of each member of the Midas Group, prepared on both a
separate company basis as well as on a unitary basis which includes all members
of the Midas Group; (ii) a reconciliation of its separate company Illinois
corporate taxable income to its separate taxable income for U.S. federal income
tax purposes (as determined pursuant to Section 2.02(a) above); and (iii) the
apportionment factors prescribed by Illinois law and all other information
necessary or appropriate for the proper apportionment of the unitary group
income. Each member of the Midas Group shall use its best efforts to provide
Whitman with the above material on or before the first day of the sixth month
following the end of each such period, but in any event such material shall
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be provided no later than the fifteenth day of such sixth month. Simultaneously
with providing the aforesaid material, Midas shall pay to Whitman the lesser of
(x) the aggregate amount of the separate company Illinois tax liability of each
member of the Midas Group for each such period, or (y) the Illinois corporate
income tax liability as computed above for the Midas Group on a unitary basis,
in either case reduced by all estimated payments theretofore made to Whitman on
account of such liability, or if such estimated payments in the aggregate exceed
the aggregate Illinois tax liability for the Midas Group, Whitman shall pay such
excess to International within five (5) days of filing by Whitman of its
Illinois corporate income tax return for such period. Anything herein to the
contrary notwithstanding, Midas or International on behalf of all of the members
of the Midas Group shall make estimated Illinois corporate income tax payments
to Whitman at such time and in such amount as shall permit Whitman to remit the
same to the appropriate authority on a timely basis, but in any event each such
payment shall be made within five (5) days of Whitman's written demand for the
same.
(c) Netherlands Corporate Income Tax, Capital Duty Tax and Withholding Tax
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Returns.
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Any tax returns required to be filed that include Whitman Netherlands B.V.,
Finanza I B.V., Midas Automotive International B.V., any members of the Whitman
Group and any members of the Midas Group in the Netherlands for corporate income
tax, capital duty tax or withholding tax purposes for periods beginning on or
before the Distribution Date shall be prepared, reviewed and filed under the
direction of Whitman consistent with the positions taken by Whitman in any tax
rulings obtained from the U.S. Internal Revenue Service and the Netherlands
taxing authorities in a timely manner in accordance with the law of the
Netherlands. Midas or International shall, for each taxable period for which a
member of the Midas Group is included in the consolidated income tax return
(also referred to as a "fiscal unity" return in the Netherlands) with members of
the Whitman Group, provide Whitman with (i) a true and correct Netherlands
income tax return for such Midas Group members which are required to file in the
Netherlands, (ii) separate Netherlands income tax returns for such Midas Group
members and (iii) a reconciliation of book income to Netherlands taxable income
for such Midas Group members. Midas agrees to utilize Moret Ernst & Young to
prepare the income tax returns in the Netherlands for this purpose and shall use
its best efforts to provide Whitman with such returns and computations on or
before sixty (60) days before the tax returns must be filed (including
extensions to file granted by the Netherlands). Simultaneously with providing
the aforesaid returns and computations, Midas shall pay Whitman the amount of
total Netherlands income taxes (and any other applicable taxes) shown on the
above-referenced consolidated Netherlands income tax return due and payable
relating to the members of the Midas Group, reduced by all estimated tax
payments theretofore
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made by Midas Group members to Whitman on account of such Netherlands tax
liabilities. If such estimated payments in the aggregate exceed the Netherlands
tax liability of the Midas Group members, Whitman shall pay such excess to Midas
within ten (10) days of the filing by Whitman of the consolidated Netherlands
income tax return which included members of the Whitman Group. Anything herein
to the contrary notwithstanding, Midas for itself and for members of the Midas
Group shall remit to Whitman at least ten (10) days prior to the due date of
each Whitman estimated Netherlands income tax payment (also known as
"preliminary assessments" in the Netherlands) the estimated Netherlands tax
payment that Whitman (or a Whitman Group member) is required to remit on behalf
of Midas Group members. In no event will any member of the Midas Group receive
any tax benefit for purposes of this Section unless a member of the Whitman
Group recognizes and obtains said benefit on its consolidated Netherlands income
tax return.
(d) Certain Distributions.
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Notwithstanding any provision of this Agreement to the contrary,
International shall be responsible and pay for any tax liabilities imposed as a
result of any distributions of cash by Midas France S.A., Midas Canada, Inc.,
Midas Canada Holdings, Ltd., or Midas Automotive International B.V. in
anticipation of the Distribution, and Midas shall be entitled to any subsequent
refunds of any such taxes.
(e) Other Tax Returns.
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All Tax Returns of any member of the Whitman Group or the Midas Group,
other than (1) the consolidated U.S. federal income tax returns, (2) the State
of Illinois corporate income tax returns and (3) the corporate income tax, the
capital duty tax and the withholding tax returns filed in the Netherlands,
required to be filed for periods beginning on or before the Distribution Date
shall be filed by the member of the Whitman Group or the Midas Group, as the
case may be, which filed the corresponding Tax Return for the most recent period
for which such a Tax Return has been filed, or, if no such corresponding Tax
Return has been filed, by the appropriate member in accordance with local law or
custom.
Section 2.03. Filing of Post-Distribution Tax Returns. All Tax Returns for
periods beginning after the Distribution Date shall be the responsibility of the
Whitman Group if such Tax Returns relate to Whitman Businesses, and shall be the
responsibility of the Midas Group if such Tax Returns relate to Midas
Businesses.
Section 2.04. Certification. Each tax return and computation of tax
liability required to be provided to Whitman by any member of the Midas Group
pursuant to either Section 2.02(a), Section 2.02(b) or Section 2.02(c) hereof
shall be
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accompanied by a statement signed by the Chief Financial Officer of Midas to the
effect that such officer has reviewed for completeness and accuracy the tax
return and computation of the tax liability and the documentation in support
thereof and has determined that such return and computation properly reflect the
taxable income (or loss), tax liability and tax credits of the entity or
entities, as the case may be, to which such tax return and computation relate
for the period covered thereby.
ARTICLE III
DEFICIENCIES AND REFUNDS OF TAXES
---------------------------------
Section 3.01. Payment of Deficiencies by Midas Group Members.
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If any adjustments are made with respect to any Tax Returns of Whitman (or
any member of the Whitman Group) in which any member of the Midas Group is
included for taxable periods beginning on or before the Distribution Date, and
such adjustments are either consented to by Whitman or are upheld on
administrative appeal or litigation, to the extent that such adjustments
increase the tax liability with respect to any taxing jurisdiction or taxing
authority attributable to any member of the Midas Group, then each member of the
Midas Group shall be jointly and severally liable to Whitman for such increases,
including interest and penalties thereon. If any member of the Midas Group shall
have any liability as a result of this Section 3.01, the amount thereof shall be
paid by Midas to Whitman within ten (10) days of the receipt by Midas of written
notice of such liability, together with a computation of the amount due and
supporting documentation in such detail as Midas may reasonably request to
verify the computation of the amount due.
Section 3.02. Payment of Refunds to Midas Group Members.
If any adjustments are made with respect to any Tax Returns of Whitman (or
any member of the Whitman Group) in which any member of the Midas Group is
included for any taxable period beginning on or before the Distribution
Date, and such adjustments are either consented to by Whitman or are upheld
on administrative appeal or litigation, to the extent that such adjustments
decrease the tax liability attributable to any member of the Midas Group as
determined and calculated under this Agreement and result in a Tax Benefit
for Whitman or for other members of the Whitman Group, then Whitman shall
remit to Midas any refunds of Taxes, together with any interest thereon,
received by it as a result of the adjustments attributable to a member of
the Midas Group. Whitman shall pay any amounts due from it to Midas as a
result of this Section 3.02 within ten (10) days of receipt of the relevant
refund from the respective taxing authority. Such payments shall be
accompanied by a computation of the amount due and supporting documentation
in such detail as Midas may reasonably request to verify the computation of
the amount due.
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Section 3.03. Restructuring Taxes.
(a) With Respect to Transactions Occurring On or Before the Distribution Date.
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If as a result of any transaction occurring on or before the Distribution
Date and involving either the stock, assets or debt (or any combination thereof)
of any member of the Midas Group, any Restructuring Taxes are imposed upon any
member of the Midas Group, then Whitman shall pay and shall indemnify and hold
harmless Midas and each member of the Midas Group from and against all
Restructuring Taxes, including, without limitation, any Restructuring Taxes at
any time paid by Midas or any member of the Midas Group. Such payment and
indemnification shall be made by Whitman no later than fifteen (15) days after
the later to occur of: (a) written notice from Midas, which notice shall be
accompanied by a computation of the amounts due; or (b) a final determination of
said Restructuring Taxes is made after exhausting any informal, administrative,
arbitration or judicial remedies.
(b) Transactions Occurring After the Distribution Date.
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If as a result of any transaction occurring after the Distribution Date and
involving either the stock, assets or debt (or any combination thereof) of Midas
or of any member of the Midas Group (including any transactions of the type
described in Section 4.05 below), any Restructuring Taxes are imposed upon
Whitman or any other member of the Whitman Group, then Midas shall pay and shall
indemnify and hold harmless Whitman and each member of the Whitman Group from
and against all such Restructuring Taxes at any time paid by Whitman or any
member of the Whitman Group. Such payment and indemnification shall be made by
Midas no later than fifteen (15) days after the later to occur of: (a) written
notice from Whitman, which notice shall be accompanied by a computation of the
amounts due; or (b) a final determination of said Restructuring Taxes is made
after exhausting any informal, administrative, arbitration or judicial remedies.
(c) Tax Benefits Regarding Basis Determinations Relating to Restructuring
Taxes.
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To the extent that Whitman shall pay or indemnify Midas and/or any member
of the Midas Group with respect to Restructuring Taxes pursuant to Section
3.03(a) above, the basis of the stock, assets or debt which are the subject of
the Restructuring Taxes payable increases, and such stock, assets or debt are
transferred by Midas or any member of the Midas Group in a taxable transaction
to which the basis increase is reflected in the computation of the gain or loss
on such taxable transaction during any taxable year which includes the
Distribution Date and the five (5) taxable years immediately following the
taxable year in which the Distribution Date falls, then Midas shall promptly
notify Whitman in writing of such taxable transaction and of the amount of the
Tax Benefit resulting from such basis increase. Such notice shall include
supporting documentation in such detail as Whitman may need to verify the
computation of the amount. The amount of such Tax Benefit shall be payable by
Midas to Whitman within ten (10) days of sending
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to Whitman written notice of such amount due. In order to verify the amount of
such Tax Benefit, Whitman shall have access to inspect the Tax Returns for the
taxable years of Midas and any members of the Midas Group covered by this
section upon written request directed to the Chief Financial Officer of Midas.
Midas shall comply with such request to make a copy of the Tax Returns in
question available at a reasonable place during normal business hours within
thirty (30) days of receiving said request and Whitman may make copies of
portions of the Tax Returns which it deems relevant to this inquiry.
ARTICLE IV
TAX AUDITS, TRANSACTIONS AND OTHER MATTERS
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Section 4.01. Tax Audits and Controversies.
Except as otherwise provided in this Section 4.01, Whitman, at its own
expense, shall have the exclusive authority to represent each member of the
Midas Group before the IRS or any other governmental agency or authority or
before any court with respect to any matter affecting the U.S. federal income or
other U.S. federal tax liability or any other tax liability (whether state,
local or foreign) of any member of the Whitman Group or the Midas Group for any
tax period beginning on or before the Distribution Date. Such representation
shall include, but shall not be limited to exclusive control over (i) any
response to any examination by the IRS or any other taxing authorities of U.S.
federal income tax returns, other U.S. federal tax returns or the tax returns of
other taxing jurisdictions and (ii) any contest through a final determination of
any issue included in any Tax Return that includes a member of the Whitman
Group, including, but not limited to (A) whether and in what forum to conduct
such contest, and (B) whether and on what basis to settle such contest. Whitman
shall give timely notice to Midas of any inquiry, the assertion of any claim or
the commencement of any suit, action or proceeding in respect of which indemnity
for U.S. federal taxes or any other taxes may be sought under this Agreement
against Midas or any member of the Midas Group and will give Midas such
information with respect thereto as Midas may reasonably request. Upon notice to
Whitman, Midas may at its own expense participate in any such inquiry, audit or
other administrative proceeding and assume the defense or prosecution, as the
case may be, of any suit, action or proceeding; provided, that each Midas
representative is satisfactory to Whitman, and Midas shall thereafter consult
with Whitman upon Whitman's request for such consultation from time to time with
respect to such inquiry, suit, action or proceeding. Whitman is authorized and
empowered to settle any claim, suit, action or proceeding in respect of which
indemnity for U.S. federal taxes or any other taxes may be sought against Midas
or any member of the Midas Group. Anything in this Section 4.01 to the contrary
notwithstanding, if Whitman determines to terminate Midas' participation in any
such inquiry or in the defense
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of any such suit, action or proceeding, then upon receipt of notice from Whitman
to such effect, Midas shall have no further right to commence or continue such
discussions or submissions with respect to the matter, and Whitman shall have
the right to close and to cause Midas to close such audit or contest.
Anything in this Section 4.01 or elsewhere in this Agreement to the
contrary notwithstanding, if Whitman permits Midas to litigate any U.S. federal
tax issue or other tax issue in any forum, Midas shall pay and shall indemnify
and hold harmless each member of the Whitman Group from any and all costs,
expenses and/or liabilities of any type or nature, including, without
limitation, any tax liability (including interest and penalties thereon), that
are incurred by or imposed upon Whitman or any member of the Whitman Group which
Whitman or such Whitman Group member would not otherwise have incurred.
Section 4.02. Code Section 355 Distribution Related Professional and
Consulting Fees.
The Tax Benefits arising out of any professional fees or consulting fees in
connection with the Code section 355 Distribution of Midas or other members of
the Midas Group that are paid for by Whitman or by members of the Whitman Group
which are allowed as a deduction to Midas or to any other member of the Midas
Group, rather than as a deduction to Whitman or to a member of the Whitman Group
which paid for such professional or consulting fees in question, shall be
reimbursed to Whitman or to the member of the Whitman Group that actually made
the payment of such professional or consulting fees. The amount thereof shall be
payable by Midas to Whitman within ten (10) days of the receipt by Midas of
written notice of such item, together with a computation of the amount due and
supporting documentation in such detail as Midas may reasonably request to
verify the computation of the amount due;
Section 4.03. Retention of Books and Records.
Midas and Whitman each agrees that they will take provisions to insure that
both they and the members of the Midas group and the members of the Whitman
Group, respectively, will retain all Tax Returns, related schedules and
workpapers, and all material records and other documents relating thereto
existing on the date hereof or created through or with respect to taxable
periods beginning on or before the Distribution Date, until the later of (a) the
expiration of the statute of limitations (including extensions) of the taxable
years to which such Tax Returns and other documents relate, or (b) September 16,
2008.
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Section 4.04. Cooperation With Respect to Tax Return Filings, Examinations
and Tax Related Controversies.
(a) Midas' Obligations.
In addition to any obligations imposed pursuant to the Distribution
Agreement, Midas and each other member of the Midas Group shall fully cooperate
with Whitman and its representatives, in a prompt and timely manner, in
connection with (i) the preparation and filing of and (ii) any inquiry, audit,
examination, investigation, dispute, or litigation involving, any Tax Return
filed or required to be filed by or for any member of the Whitman Group for any
taxable period beginning on or before the Distribution Date. Such cooperation
shall include, but not be limited to, (x) the execution and delivery to Whitman
by the appropriate Midas Group member of any power of attorney required to allow
Whitman and its counsel to represent Midas or such other Midas Group member in
any controversy which Whitman shall have the right to control pursuant to the
terms of Section 4.01 of this Agreement, and (y) making available to Whitman,
during normal business hours, and within sixty (60) days of any request
therefor, all books, records and information, and the assistance of all officers
and employees, necessary or useful in connection with any tax inquiry, audit,
examination, investigation, dispute, litigation or any other matter.
(b) Whitman's Obligations.
Except as otherwise provided in this Article IV, Whitman shall fully
cooperate with Midas and its representatives, in a prompt and timely manner, in
connection with (i) the preparation and filing of and (ii) any inquiry, audit,
examination, investigation, dispute, or litigation involving, any Tax Return
filed or required to be filed by or for any member of the Midas Group which
includes Whitman or any other member of the Whitman Group. Such cooperation
shall include, but not be limited to, (x) the execution and delivery to Midas by
Whitman of any power of attorney required to allow Midas and its counsel to
participate on behalf of Midas or other Midas Group members in any inquiry,
audit or other administrative proceeding and to assume the defense or
prosecution, as the case may be, of any suit, action or proceeding pursuant to
the terms of and subject to the conditions set forth in Section 4.01 of this
Agreement, (y) making available to Midas, during normal business hours, and
within sixty (60) days of any request therefor, all books, records and
information, and the assistance of all officers and employees, necessary or
useful in connection with any tax inquiry, audit, examination, investigation,
dispute, litigation or any other matter.
(c) Remedy for Failure to Comply.
If Whitman reasonably determines that Midas is not for any reason
fulfilling its obligations under Section 4.04(a), or if Midas reasonably
determines that Whitman is not for any reason fulfilling its obligations under
Section 4.04(b), then Whitman or Midas, as the case may be, shall have the right
to appoint, at the
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expense of the other, an independent entity such as a nationally-recognized
public accounting firm to assist the other in meeting its obligations under this
Section 4.04. Such entity shall have complete access, during normal business
hours, to all books, records and information, and the complete cooperation of
all officers and employees, of Midas or Whitman, as the case may be. The remedy
provided in this Section 4.04(c) shall not be deemed exclusive.
Section 4.05. Certain Post-Distribution Date Transactions.
(a) With Respect to U.S. Federal Income Taxes.
Midas shall, and shall cause each Midas Group member to, comply with each
representation and statement made, or to be made, to the IRS or other
governmental authority in connection with any rulings obtained, or to be
obtained, by Whitman with respect to the Distribution, and any other transaction
contemplated by this Agreement. Midas further agrees that during the three-year
period following the Distribution Date, it (i) shall continue and shall cause
MDS Automotive Holdings B.V. to continue to be engaged in an active trade or
business within the meaning of Section 355(b)(2) of the Code, (ii) shall not
issue any shares of, or options with respect to, its stock, except that it may
issue shares of, or options with respect to, its stock if such issuances would
not exceed (when aggregated with prior issuances) twenty percent (20%) of the
issued and outstanding stock of Midas immediately following the Distribution,
(iii) shall not purchase any shares of its stock other than through stock
purchases permitted by the ruling issued to Whitman by the IRS regarding the
Distribution, (iv) shall not liquidate or merge with any other corporation or
transfer substantially all of its assets to any other corporation, and (v) shall
not recommend to its shareholders that they agree to an acquisition of their
stock in Midas by another entity. Anything in this Section 4.05 to the contrary
notwithstanding, an act or omission otherwise inconsistent with the
representations herein shall be permitted if, in the opinion of nationally
recognized counsel to Midas, which counsel shall be satisfactory to Whitman, or
pursuant to a supplemental ruling letter obtained from the IRS and satisfactory
to Whitman, such act or omission would not adversely affect the rulings issued
by the IRS or by any other governmental authority with respect to the
Distribution. Nothing in this Section 4.05 should be interpreted as altering the
obligations of Midas or of any other member of the Midas Group under Section
3.03(b) of this Agreement.
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ARTICLE V
TAX ALLOCATION AGREEMENTS TERMINATED
Section 5.01 Complete Agreement and Termination of Tax Allocation
Agreements.
This Agreement shall constitute the entire agreement between the parties
with respect to the subject matter hereof and shall supersede all previous
negotiations and commitments and the prior Tax Allocation Agreements, which
shall be replaced and superseded in their entirety by this Agreement and shall
be of no further force and effect.
ARTICLE VI
MISCELLANEOUS
Section 6.01. Severability. In case any one or more of the provisions
contained in this Agreement should be invalid, illegal or unenforceable, the
enforceability of the remaining provisions contained herein shall not in any way
be affected or impaired thereby.
Section 6.02. Modification of Agreement. No modification, amendment or
waiver of any provision of this Agreement shall be effective unless the same
shall be in writing and signed by each of the parties hereto and then such
modification, amendment or waiver shall be effective only in the specific
instance and for the purpose for which given.
Section 6.03. Conflict with the Distribution Agreement.
In the event and to the extent that there shall be a conflict between the
provisions of this Agreement and the Distribution Agreement, the provisions of
this Agreement shall control.
Section 6.04. Notices. All notices or other communications required or
permitted under this Agreement shall be delivered by hand, mailed by certified
or registered mail, postage prepaid with return receipt requested, or sent by
cable, telegram, telex or telecopy (confirmed by regular, first-class mail), to
the parties at the following addresses (or at such other address for a party as
shall be specified by like notice) and shall be deemed given on the date on
which such notice is received:
(a) In the case of Whitman, to
Whitman Corporation
3501 Algonquin Road
Rolling Meadows, Illinois 60008
Attention: Chief Financial Officer
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(b) In the case of Midas and International:
Midas Group, Inc.
225 N. Michigan Avenue
Chicago, Illinois 60601
Attention: Chief Financial Officer
Section 6.05. Application to Present and Future Subsidiaries. This
Agreement is being entered into by Whitman, Midas and International on behalf of
themselves and each member of the Whitman Group and the Midas Group,
respectively. This Agreement shall constitute a direct obligation of each such
member and shall be deemed to have been readopted and affirmed on behalf of any
corporation which becomes a member of the Whitman Group or of the Midas Group in
the future. Whitman, Midas and International hereby guarantee the performance of
all actions, agreements and obligations provided for under this Agreement of
each member of the Whitman Group and the Midas Group, respectively. Whitman,
Midas and International shall, upon the written request of the other, cause any
of their respective group members formally to execute this Agreement. This
Agreement shall be binding upon, and shall inure to the benefit of, the
successors, assigns and persons controlling any of the corporations bound
hereby.
Section 6.06. Term. This Agreement shall commence on the date of
execution indicated above and shall continue in effect until otherwise agreed to
in writing by the parties hereto, or their respective successors or assigns.
Section 6.07. Titles and Headings. Titles and headings to sections herein
are inserted for the convenience of reference only and are not intended to be a
part or to affect the meaning or interpretation of this Agreement.
Section 6.08. Singular and Plural. As used herein, the singular shall
include the plural and vice versa.
Section 6.09. Governing Law. This Agreement shall be governed by the laws
of the State of Delaware.
Section 6.10. Counterparts. This Agreement maybe executed in one or more
counterparts, all of which shall be considered one and the same agreement, and
shall become a binding agreement when one or more counterparts have been signed
by each party and delivered to the other parties.
Section 6.11. Form of Payments and Late Payments. Any payment owed by one
party to another under this Agreement shall be made in the currency in
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which the tax to which such payment relates, and shall be paid in immediately
available funds and in such other manner as the party to whom such payment is
owed may reasonably request. Any payments required by this Agreement that are
not made when due shall bear interest at the prime rate plus six percent (6%)
from the due date of the payment to the date paid.
Section 6.12. Treatment of Payment. The parties agree that, in the
absence of any change in law or fact, any indemnification payments made under
this Agreement shall be treated, for tax purposes, as occurring before the
Distribution Date.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their duly authorized officers, all on the day and year first
above written.
WHITMAN CORPORATION
By: /s/ Louis J. Corna
--------------------
Vice President-Taxes
MIDAS INC.
By: /s/ R. Lee Barclay
-----------------------
Chief Financial Officer
MIDAS INTERNATIONAL
CORPORATION
By: /s/ R. Lee Barclay
-----------------------
Chief Financial Officer
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