<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended June 27, 1998
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from to
Commission file number 01-13409
MIDAS, INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<CAPTION>
DELAWARE 38-4180556
<S> <C>
(State or Other Jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or Organization)
225 North Michigan Avenue Chicago, Illinois 60601
(Address of principal executive offices) (Zip Code)
</TABLE>
(312) 565-7500
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days. Yes X No
The registrant had 16,896,109 shares of common stock outstanding as of June 27,
1998.
<PAGE>
MIDAS, INC.
CONTENTS
PART I. FINANCIAL INFORMATION
Item 1: Financial Statements
Condensed Consolidated Statements Of Operations
Condensed Consolidated Balance Sheets
Condensed Consolidated Statements Of Cash Flows
Notes to Condensed Financial Statements
Item 2: Management's Discussion and Analysis of
Financial Condition and Results of Operations
PART II. OTHER INFORMATION
Exhibit 4.1 $200,000,000 Credit Agreement
Among
Midas, Inc. and Midas International Corporation,
as Borrowers,
The Lenders Named Herein,
The First National Bank of Chicago,
as Administrative Agent,
and Credit Suisse First Boston, as Co-Agent
Exhibit 4.2 Amendment No.1 To Credit Agreement
Exhibit 4.3 Midas International Corporation
$75,000,000
6.89% Guaranteed Senior Notes Due 2005
Fully and Unconditionally Guaranteed by Midas, Inc.
Exhibit 27 Financial Data Schedule
SIGNATURE
<PAGE>
PART 1. FINANCIAL INFORMATION
Item 1: Financial Statements
MIDAS, INC.
CONDENSED STATEMENTS OF OPERATIONS (Unaudited)
(In millions, except for earnings per share)
<TABLE>
<CAPTION>
For the Quarter For the Six Months
Ended June Ended June
------------------ --------------------
1998 1997 1998 1997
-------- -------- --------- ---------
<S> <C> <C> <C> <C>
Sales and revenues.................................................... $141.8 $160.3 $273.0 $302.3
Cost of goods sold.................................................... 67.9 74.0 130.1 140.6
Selling, general, and administrative expenses......................... 52.2 64.3 109.5 127.7
------ ------ ------ ------
Operating income.................................................... 21.7 22.0 33.4 34.0
------ ------ ------ ------
Whitman charges....................................................... - (4.5) (1.1) (9.0)
------ ------ ------ ------
Interest expense:
Whitman............................................................. - (1.8) (0.5) (3.9)
Other............................................................... (3.4) (0.6) (6.7) (1.1)
Total interest expense.............................................. (3.4) (2.4) (7.2) (5.0)
------ ------ ------ ------
Other income (expense), net........................................... 0.4 0.2 0.8 0.5
------ ------ ------ ------
Income before taxes................................................. 18.7 15.3 25.9 20.5
Income tax provisions................................................. 7.5 6.7 10.5 8.8
------ ------ ------ ------
Net income.......................................................... $ 11.2 $ 8.6 $ 15.4 $ 11.7
====== ====== ====== ======
EARNINGS PER SHARE:
Basic................................................................ $ .66 $ .91
====== ======
Diluted.............................................................. $ .65 $ .89
====== ======
Pro forma basic and diluted.......................................... $ .55 $ .78
====== ======
DIVIDENDS PER COMMON SHARE............................................ $ .02 $ .02
====== ======
AVERAGE NUMBER OF SHARES:
Common shares outstanding............................................ 16.9 16.9
Equivalent shares on outstanding stock options....................... .3 .3
Shares applicable to diluted earnings................................ 17.2 17.2
Pro forma common shares outstanding.................................. 17.0 17.0
</TABLE>
See notes to condensed financial statements.
1
<PAGE>
MIDAS, INC.
CONDENSED BALANCE SHEETS
(In millions)
<TABLE>
<CAPTION>
June December
1998 1997
----------- --------
ASSETS: (Unaudited)
<S> <C> <C>
Current assets:
Cash and cash equivalents......................................... $ 10.8 $ 12.5
Receivables, net.................................................. 73.2 65.7
Inventories....................................................... 73.8 79.8
Other current assets.............................................. 21.2 30.8
------- ------
Total current assets............................................ 179.0 188.8
Property and equipment, net......................................... 186.8 198.2
Intangible assets, net.............................................. 23.2 29.3
Other assets........................................................ 21.1 26.8
------- ------
Total assets.................................................... $ 410.1 $443.1
======= ======
LIABILITIES AND EQUITY:
Current liabilities:
Short-term debt................................................... $ 10.0 $ 1.0
Short-term obligations under capital leases....................... 0.7 0.8
Accounts and dividends payable.................................... 53.7 40.3
Other current liabilities......................................... 52.9 64.9
------- ------
Total current liabilities....................................... 117.3 107.0
Loans and advances from Whitman..................................... - 55.5
Long-term debt...................................................... 148.5 3.5
Obligations under capital leases.................................... 13.0 14.6
Deferred income taxes and other liabilities......................... 22.6 28.4
------- ------
Total liabilities............................................... 301.4 209.0
------- ------
Shareholder equity:
Common stock and capital in excess of par value
($.001 par value, 100 million shares authorized,
16.9 million shares outstanding June 1998)....................... 27.5 -
Treasury stock, at cost, .1 million shares........................ (1.6) -
Combined capital accounts......................................... - 26.6
Retained income................................................... 94.8 217.3
Accumulated other comprehensive income (loss)..................... (12.0) (9.8)
------- ------
108.7 234.1
------- ------
Total liabilities and equity.................................... $ 410.1 $443.1
======= ======
</TABLE>
See notes to condensed financial statements.
2
<PAGE>
MIDAS, INC.
CONDENSED STATEMENTS OF CASH FLOWS (Unaudited)
(In millions)
<TABLE>
<CAPTION>
For the Six
Months
Ended June
----------
1998 1997
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net income...................................................................... $ 15.4 $ 11.7
Adjustments reconciling net income to
net cash provided by operating activities:
Depreciation and amortization................................................... 8.6 11.3
Cash expenditures for non-recurring charges..................................... (12.6) -
Changes in assets and liabilities............................................... 19.6 (21.2)
-------- -------
Net cash provided by (used in) operating activities............................... 31.0 1.8
-------- -------
Cash flows from investing activities:
Capital investments............................................................. (9.5) (14.5)
Receipts associated with disposition of former
U.S. Company-operated stores.................................................. 15.7 -
Proceeds from sales of property and equipment................................... 2.7 2.2
-------- -------
Net cash provided by (used in) investing activities............................... 8.9 (12.3)
-------- -------
Cash flows from financing activities:
Long-term debt incurred......................................................... 291.4 -
Short-term borrowings (repayments).............................................. 5.0 (1.8)
Long-term debt repayments....................................................... (142.8) -
Payment of obligations under capital leases..................................... (0.4) (0.6)
Purchase of Treasury Stock...................................................... (2.6) -
Stock issued under stock option plans........................................... 1.0 -
Net increase (decrease) in loans and advances from Whitman...................... (55.5) 8.2
Dividends to Whitman............................................................ (137.6) (2.4)
-------- -------
Net cash provided by (used in) financing activities............................... (41.5) 3.4
-------- -------
Effect of exchange rate changes on cash and cash equivalents...................... (0.1) (0.6)
-------- -------
Net change in cash and cash equivalents........................................... (1.7) (7.7)
-------- -------
Cash and cash equivalents at beginning of period.................................. 12.5 18.2
-------- -------
Cash and cash equivalents at end of period........................................ $ 10.8 $ 10.5
======== =======
</TABLE>
See notes to condensed financial statements.
3
<PAGE>
MIDAS, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
NOTE 1. Financial Statement Presentation
The condensed interim period financial statements presented herein do not
include all of the information and disclosures customarily provided in annual
financial statements and they have not been audited, as permitted by the rules
and regulations of the Securities and Exchange Commission. The condensed
interim period financial statements should be read in conjunction with the
annual financial statements included in the annual report on Form 10-K. The
results of operations for interim periods are not necessarily indicative of the
results that may be achieved on an annual basis.
The unaudited condensed financial statements for the six months ended June 27,
1998 cover a 27-week period, while the statements for the quarter cover a 13-
week period and present the consolidated financial statements of Midas and its
wholly-owned consolidated subsidiaries.
The six months and quarter ended June 21, 1997 were also 27-week and 13-week
periods, respectively. The statement of operations and cash flow statement for
this period and the balance sheet as of December 20, 1997 present combined
financial information for Midas, which was then comprised of wholly-owned
subsidiaries of Whitman Corporation ("Whitman"), including Midas International
Corporation ("Midas International") and its wholly-owned subsidiaries and other
Midas companies owned by Whitman but directly managed by Midas International.
In January 1998, these companies became wholly-owned subsidiaries of Midas. (As
required by the context, the terms "Midas" or the "Company" refers to Midas,
Inc. or to the group of companies that became wholly-owned subsidiaries of
Midas, Inc. in January 1998.) On January 30, 1998, as a result of the spin-off
by Whitman, Midas became an independent, publicly held company.
Certain amounts for 1997 have been reclassified to conform with current period
classifications.
NOTE 2. Pro Forma Information
Pro forma basic and diluted earnings (loss) per share for the six months and
quarter ended June 21, 1997 have been calculated on the assumption that the 17.0
million shares of common stock that were distributed on January 30, 1998 had
been outstanding since the beginning of 1997. Pro forma adjustments have been
made to give effect to increases or decreases in costs that would have been
incurred by Midas as an independent, publicly held company, rather than a
subsidiary of Whitman. The pro forma adjustments for the second quarter and for
the six months of fiscal 1997 are summarized as follows (in millions):
<TABLE>
<CAPTION>
For the For the
Quarter Six Months
Ended Ended
June June
-------------- --------------
<S> <C> <C>
Incremental administrative expenses
of an independent, publicly held company.................................... $ (0.7) $ (1.4)
Elimination of Whitman charges................................................. 4.5 9.0
Elimination of interest paid to Whitman........................................ 1.8 3.9
Incremental interest expense of an independently-capitalized
Company..................................................................... ( 4.4) ( 9.1)
Incremental income tax provision............................................... ( 0.4) ( 0.9)
------ ------
Increase in pro forma net income............................................... $ 0.8 $ 1.5
====== ======
</TABLE>
4
<PAGE>
MIDAS, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS - CONTINUED
NOTE 3. Supplemental Cash Flow Activity
Net cash provided by operating activities reflect cash payments and receipts for
interest and taxes as follows (in millions):
<TABLE>
<CAPTION>
For the Six Months Ended
June
1998 1997
------------- ------------
<S> <C> <C>
Interest paid - Whitman............................................ $ 1.0 $ 3.9
Interest paid - other............................................... 4.4 1.2
Income tax (refunds)................................................ (3.7) -
Income taxes paid................................................... 4.6 11.7
</TABLE>
NOTE 4. Comprehensive Income
In January 1998, Midas adopted Statement of Financial Accounting Standard No.
130, "Reporting Comprehensive Income." Midas comprehensive income consists of
(a) net income as reported in the statement of operations and (b) other
comprehensive income (loss), which is comprised solely of foreign currency
translation adjustments. Midas has not recorded income tax benefits on its
foreign currency translation adjustments. For the first six months of 1998,
comprehensive loss was $2.2 million, as compared to a comprehensive loss of
$5.5 million in the first six months of 1997. The accumulated amount of other
comprehensive income (loss) through the date of each balance sheet is presented
as a component of shareholder equity. Comprehensive income will be reported in
a separate financial statement in each of the Company's future annual reports.
NOTE 5. Inventories
Inventories, summarized by major classification, were as follows (in millions):
<TABLE>
<CAPTION>
June December
1998 1997
-------------- -------------
(Unaudited)
<S> <C> <C>
Raw materials $ 3.6 $ 2.7
Work in process 1.1 1.1
Finished goods 69.1 76.0
----- -----
$73.8 $79.8
===== =====
</TABLE>
5
<PAGE>
Item 2. Management's Discussions and Analysis of Financial Condition and
Results of Operations.
LIQUIDITY AND CAPITAL RESOURCES
In anticipation of the January 30, 1998 spin-off from Whitman, Midas
entities entered into three new debt agreements in January 1998. Midas and its
wholly-owned subsidiary, Midas International, entered into a five year,
unsecured revolving credit facility with a syndicate of commercial banks and
financial institutions that enables Midas and Midas International to borrow
funds at variable interest rates up to an aggregate principal amount of $200
million. Midas International also entered into a seven-year $50 million
unsecured term loan arrangement with an institutional investor. Midas France
S.A. entered into a loan agreement with a syndicate of financial institutions
providing for a 100 million French franc, five-year amortizing term loan.
In January 1998, in order to settle its Whitman obligations of $210 million
($137.6 million dividend and $72.4 million of intercompany loans and advances),
and to provide for working capital on and after the spin-off, Midas
International borrowed $150 million under the revolving credit facility and $50
million under the term loan, while Midas France S.A. borrowed 100 million French
francs ($16.4 million) under the French term loan.
On April 15, 1998, Midas arranged a private placement of $75 million in
unsecured debt at a fixed rate of 6.89% with an investment grade (BBB) rating
from Duff & Phelps Credit Co. The maturity date of the debt is April 15, 2005.
The proceeds were used to retire the $50 million term loan and $25 million in
bank debt.
As the result of favorable operating and investing activities, which are
discussed in the following paragraphs, Midas reduced its debt obligations by
$45.3 million during the second quarter.
At June 1998, Midas had cash and cash equivalents of $10.8 million,
compared to $12.5 million at December 1997. Cash inflow from operating
activities amounted to $31.0 million in the first six months of 1998, compared
to cash inflow of $1.8 million in the first six months of 1997. The year-to-year
change principally resulted from a decrease in working capital in the first six
months of 1998 compared to a working capital increase in the same period in
1997.
Cash inflow from investing activities during the first six months of 1998
amounted to $8.9 million compared to cash outflow of $12.3 million during the
first six months of 1997. The variance between the six month periods was
principally due to proceeds from asset sales associated with the franchising of
67 former U.S. Company-operated stores in connection with the plan for disposal
adopted by Midas in the third quarter of 1997.
6
<PAGE>
RESULTS OF OPERATIONS
1998 Second Quarter Compared with 1997 Second Quarter.
At the end of the second quarter of 1998, there were 2,717 Midas stores in
operation system-wide versus 2,705 one year ago. Stores in operation by
business segment were as follows:
System-wide Stores in Operation
<TABLE>
<CAPTION>
June 1998 June 1997 Change
--------- --------- ------
<S> <C> <C> <C>
U.S. Operations:
Franchise activities.................................... 1,808 1,750 3 %
Company-operated stores................................. 69 148 (53)
----- -----
Total U.S............................................ 1,877 1,898 ( 1)
----- -----
Non-U.S. Operations
Europe.................................................. 424 396 7
Canada.................................................. 248 247 -
Other................................................... 168 164 2
----- -----
Total Non-U.S........................................ 840 807 4
----- -----
Total................................................ 2,717 2,705 - %
===== =====
</TABLE>
The increase over the past year in the number of U.S. franchised stores in
operation, and the corresponding decrease in the number of U.S. Company-operated
stores was principally due to the franchising of Company-operated stores. This
is the result of a Company program adopted in the third quarter of 1997 to
franchise virtually all of its U.S. Company-operated stores in order to more
clearly focus on growing the franchised stores portion of the U.S. business.
The net decrease of 21 stores in operation at the end of the quarter was due to
the closing of stores deemed to have low retail sales potential.
The year-over-year growth in non-U.S. stores in operation was due to store
growth in Europe, or more specifically, store additions in France and Spain.
7
<PAGE>
Midas System-wide Retail Sales. Midas system-wide retail sales in the
second quarter (including both franchised and Company-operated stores) decreased
$11.5 million, or 3% to $401.4 million. Retail sales as measured in U.S. dollars
would have been approximately $6.6 million higher if currency exchange rates had
remained the same in 1998 as in 1997. Following is a summary of Midas system-
wide retail sales for the quarters ended June 1998 and 1997, by business segment
(in millions):
System-Wide Retail Sales
<TABLE>
<CAPTION>
For the Quarter
Ended June
----------
1998 1997 Change
---- ---- ------
<S> <C> <C> <C>
U.S. Operations:
Franchise activities.............................. $285.7 $282.2 1 %
Company-operated stores........................... 12.3 24.2 (49)
------ ------
Total U.S..................................... 298.0 306.4 ( 3)
------ ------
Non-U.S. Operations
Europe............................................ 57.6 57.6 -
Canada............................................ 33.5 35.8 ( 6)
Other............................................. 12.3 13.1 ( 6)
------ ------
Total Non-U.S................................. 103.4 106.5 ( 3)
------ ------
Total......................................... $401.4 $412.9 ( 3) %
====== ======
</TABLE>
Midas system-wide retail sales in the U.S. declined 3% in the second
quarter or $8.4 million to a total of $298.0 million. The decrease was the
result of lower retail customer traffic due in part to the closing of (net) 21
low retail potential stores in the first half of 1998, and lower customer
traffic at the remaining Company-operated stores. The decrease in retail sales
from Company-operated stores in the quarter was due to a net decrease of 79
stores in operation versus a year ago. Of the decrease of 79 stores, 12 stores
were closed and 67 were franchised under a divestiture program adopted in the
third quarter of 1997. The number of Company-operated stores in the U.S. is
expected to decline further in the second half of 1998 as additional stores are
franchised.
Midas system-wide retail sales in Europe were even with the year ago
quarter as reported in U.S. dollars. Had currency exchange rates remained the
same in 1998 as in 1997, retail sales in Europe would have been approximately
$60.7 million or 5% above last year's second quarter, primarily due to an
increase in the number of stores in operation. Midas system-wide retail sales in
Canada were $33.5 million for the quarter, which was down $2.3 million or 6%
below the 1997 second quarter. Approximately 60% of the decrease was the result
of fluctuations in currency exchange rates, with the balance due to lower retail
customer traffic.
Retail sales from other non-U.S. operations were down 6% or $0.8 million to
$12.3 million for the quarter. Had currency exchange rates remained at 1997
levels, retail sales from these operations would have been up $1.3 million over
the year ago quarter.
8
<PAGE>
Midas Sales and Revenues. Sales and revenues decreased by $18.5 million or
12% to a total of $141.8 million. Sales and revenues as measured in U.S. dollars
would have been approximately $2.5 million higher if currency exchange rates had
remained the same in 1998 as in 1997. Following is a summary of sales and
revenues for the quarters ended June 1998 and 1997, by business segment (in
millions):
Sales and Revenues
<TABLE>
<CAPTION>
For the Quarter
Ended June
----------
1998 1997 Change
---- ---- ------
<S> <C> <C> <C>
U.S. Operations:
Franchise activities.............................. $ 85.7 $ 88.3 ( 3) %
Company-operated stores........................... 12.3 24.2 (49)
------ ------
Total U.S..................................... 98.0 112.5 (13)
------ ------
Non-U.S. Operations
Europe............................................ 27.7 29.0 ( 5)
Canada............................................ 14.3 16.3 (12)
Other............................................. 1.8 2.5 (28)
------ ------
Total Non-U.S................................. 43.8 47.8 ( 8)
------ ------
Total......................................... $141.8 $160.3 (12) %
====== ======
</TABLE>
Sales and revenues from U.S. Operations decreased by $14.5 million or 13%
in the second quarter to a total of $98.0 million. Sales and revenues from U.S.
franchise activities declined $2.6 million or 3% to a total of $85.7 million.
This decline was due primarily to lower wholesale replacement part selling
prices to franchisees reflecting a pass through of cost reductions received by
the Company from outside vendors. There were 79 fewer Company-operated stores in
operation at the end of June versus one year ago, which was the primary factor
in lower second quarter sales and revenues at U.S. Company-operated stores.
European sales and revenues decreased $1.3 million or 5% to a total of
$27.7 million for the quarter. Had currency exchange rates remained at 1997
levels, sales and revenues from European operations would have been $29.2
million or approximately even with a year ago.
Canadian sales and revenues decreased $2.0 million or 12% to a total of
$14.3 million for the quarter. Had currency exchange rates remained at 1997
levels, second quarter sales and revenues from Canadian operations would have
been $14.9 million, or a decrease of $1.4 million, principally because of the
franchising of former Company-operated stores.
Sales and revenues from other non-U.S. Operations declined due to a
combination of currency exchange rate fluctuations and the franchising of former
Company-operated stores in Australia.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses decreased $12.1 million or 19% to a total of $52.2
million for the quarter. Approximately two-thirds of the decrease in operating
expenses was due to the decline in the number of U.S. Company-operated stores.
The remainder of the decrease was spread across all of the Company's business
segments. Operating expenses in relation to sales and revenues decreased 3
percentage points to 37%.
9
<PAGE>
Operating Income. Operating income in the quarter decreased $0.3 million to a
total of $21.7 million. The following is a summary of operating income for the
quarters ended June 1998 and 1997, by business segment (in millions):
Operating Income
<TABLE>
<CAPTION>
For the Quarter
Ended June
---------------
1998 1997 Change
---- ---- ------
<S> <C> <C> <C>
U.S. Operations:
Franchise activities................................. $21.6 $19.9 9 %
Company-operated stores.............................. - 0.2 *
----- -----
Total U.S........................................ 21.6 20.1 8
----- -----
Non-U.S. Operations
Europe............................................... 0.8 1.9 *
Canada............................................... 1.1 1.5 *
Other................................................ (0.1) (0.1) -
----- -----
Total Non-U.S.................................... 1.8 3.3 *
----- -----
Total segment operating income................... 23.4 23.4 -
Corporate administrative expenses...................... (1.7) (1.4) (21)
----- -----
Total............................................ $21.7 $22.0 ( 1)%
===== =====
</TABLE>
*Not meaningful.
Operating income from U.S. operations in the second quarter increased 8% to a
total of $21.6 million. This improvement was due to lower operating expenses.
Operating income from non-U.S. operations in the second quarter decreased $1.5
million to $1.8 million. This decrease was principally due to relatively weak
retail markets in both France and Canada.
Whitman Charges. There were no Whitman charges in the second quarter of 1998,
since the spin-off occurred in the first quarter on January 30, 1998, as
compared to $4.5 million of Whitman charges in the second quarter of 1997.
Interest Expense. Interest expense for the second quarter increased $1.0
million, or 41% to a total of $3.4 million. The increase in interest expense
was due to a substantial increase in the Company's long-term debt to enable the
Company to repay $72.4 million of loans and advances from Whitman Corporation
and a special dividend to Whitman of $137.6 million in connection with the spin-
off. Partially offsetting the effect of higher debt levels were lower interest
rates on the new debt.
10
<PAGE>
First Six Months of 1998 Compared with the First Six Months of 1997
Midas System-wide Retail Sales. Midas system-wide retail sales for the first
six months of 1998 (including both franchised and Company-operated stores)
decreased $33.3 million, or 4% to $751.6 million. Retail sales as measured in
U.S. dollars would have been approximately $15.8 million higher if currency
exchange rates had remained the same in 1998 as in 1997. Following is a summary
of Midas system-wide retail sales for the six months ended June 1998 and 1997,
by business segment (in millions):
System-Wide Retail Sales
<TABLE>
<CAPTION>
For the Six Months
Ended June
------------------
1998 1997 Change
---- ---- ------
<S> <C> <C> <C>
U.S. Operations:
Franchise activities.............................. $527.6 $538.7 ( 2)%
Company-operated stores........................... 30.0 45.0 (33)
------ ------
Total U.S..................................... 557.6 583.7 ( 4)
------ ------
Non-U.S. Operations
Europe............................................ 109.7 109.6 -
Canada............................................ 59.3 64.1 ( 7)
Other............................................. 25.0 27.5 ( 9)
------ ------
Total Non-U.S................................. 194.0 201.2 ( 4)
------ ------
Total......................................... $751.6 $784.9 ( 4)%
====== ======
</TABLE>
Midas system-wide retail sales in the U.S. declined 4% or $26.1 million in the
first half of the year to a total of $557.6 million. The decrease was the
result of lower retail customer traffic primarily due to: a major national
retail promotion during the first quarter of 1997 and the absence of a similar
promotion in 1998, the closing of (net) 21 stores deemed to have limited retail
sales potential and lower retail sales at remaining Company-operated stores.
The decrease in retail sales from Company-operated stores was also due to a
decrease of 79 stores in operation versus one year ago. Of the decrease of 79
stores, 12 stores were closed and 67 stores franchised in 1998 under a
divestiture program adopted in the third quarter of 1997. The number of
Company-operated stores in the U.S. is expected to decline further in the second
half of 1998 as additional stores are franchised.
Midas system-wide retail sales in Europe of $109.7 million were slightly above
the prior year as reported in U.S. dollars. Had currency exchange rates
remained the same in 1998 as in 1997, first half retail sales in Europe would
have been approximately $118.6 million or 8% above the prior year, primarily due
to an increase in the number of stores in operation.
Midas system-wide retail sales in Canada were $59.3 million for the six months
ended June 1998, which was down $4.8 million or 7% below 1997. Sixty percent of
the decrease was the result of fluctuations in currency exchange rates, with the
balance due to lower retail customer traffic.
Retail sales from other non-U.S. operations were down 9% or $2.5 million to
$25.0 million for the six months ended June 1998. Had currency exchange rates
remained at 1997 levels, retail sales from these operations would have been up
$1.5 million over one year ago.
11
<PAGE>
Midas Sales and Revenues. Sales and revenues decreased by $29.3 million or
10% to a total of $273.0 million. Sales and revenues as measured in U.S.
dollars would have been approximately $6.2 million higher if currency exchange
rates had remained the same in 1998 as in 1997. Following is a summary of sales
and revenues for the six months ended June 1998 and 1997, by business segment
(in millions):
Sales and Revenues
<TABLE>
<CAPTION>
For the Six Months
Ended June
----------
1998 1997 Change
----- ---- ------
<S> <C> <C> <C>
U.S. Operations:
Franchise activities................................................ $160.3 $168.4 (5)%
Company-operated stores............................................. 30.0 45.0 (33)
------ ------
Total U.S........................................................ 190.3 213.4 (11)
------ ------
Non-U.S. Operations
Europe.............................................................. 52.9 54.8 (4)
Canada.............................................................. 26.1 28.8 (9)
Other............................................................... 3.7 5.3 (30)
------ ------
Total Non-U.S................................................... 82.7 88.9 (7)
------ ------
Total........................................................... $273.0 $302.3 (10)%
====== ======
</TABLE>
Sales and revenues from U.S. Operations decreased $23.1 million in the
first half versus a year ago, or 11% to a total of $190.3 million. Approximately
65% of the decline was due to Company-operated stores and the closing or
franchising of a substantial number of these stores as noted in the management
discussion of retail sales trends. The balance of the decrease was due to a
combination of: lower shipments of wholesale replacement parts due in part to
the elimination of several inefficient distribution points and programs, lower
wholesale replacement selling prices and closed stores.
European sales and revenues decreased $1.9 million or 4% to a total of
$52.9 million for the six months ended June 1998. Had currency exchange rates
remained at 1997 levels, sales and revenues from European operations would have
been up approximately $2.4 million or 4% primarily due to an increase in the
number of stores in operation.
Canadian sales and revenues decreased $2.7 million or 9% to a total of
$26.1 million for the six months ended June 1998. Nearly one-half of the
decrease was the result of fluctuations in currency exchange rates, with the
balance due to lower retail customer traffic.
Sales and revenues from other non-U.S. Operations declined due to a
combination of currency exchange rate fluctuations and the franchising of former
Company-operated stores in Australia.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses decreased $18.2 million or 14% to a total of $109.5
million for the six months ended June 1998. Approximately 60% of the decrease
in operating expenses resulted from the decline in the number of U.S. Company-
operated stores. The remainder of the decrease was spread across all of the
Company's business segments. Operating expenses in relation to sales and
revenues decreased 2 percentage points to 40%.
12
<PAGE>
Operating Income. Operating income for the six months ended June 1998
decreased $0.6 million or 2% to a total of $33.4 million. The following is a
summary of operating income for the six months ended June 1998 and 1997, by
business segment (in millions):
Operating Income
<TABLE>
<CAPTION>
For the Six Months
Ended June
------------------
1998 1997 Change
---- ---- ------
<S> <C> <C> <C>
U.S. Operations:
Franchise activities.............................. $36.7 $36.1 2 %
Company-operated stores........................... (0.9) (1.1) (18)
----- -----
Total U.S...................................... 35.8 35.0 2
----- -----
Non-U.S. Operations
Europe............................................ 0.2 1.0 *
Canada............................................ 1.0 1.2 *
Other............................................. (0.1) (0.4) *
----- -----
Total Non-U.S.................................. 1.1 1.8 *
----- -----
Total segment operating income................. 36.9 36.8 *
Corporate administrative expenses................... (3.5) (2.8) (25)
----- -----
Total......................................... $33.4 $34.0 ( 2)%
===== =====
</TABLE>
*Not meaningful.
Operating income from U.S. operations increased 2% in the first half of the
year to $35.8 million. The improvement was due to lower operating expenses.
Operating income from non-U.S. operations for the six months ended June,
decreased $0.7 million to $1.1 million due to weak retail markets in France and
Canada which lowered results in the two operations.
Whitman Charges. Whitman charges for the six months were $1.1 million versus
$9.0 million one year ago or a decrease of $7.9 million. The reduction in
charges in the current year reflects one month of charges in 1998 (due to the
January 30, 1998 spin-off) compared to six months of charges in the first
quarter of 1997.
Interest Expense. Interest expense for the six months increased $2.2 million,
or 44% to a total of $7.2 million. The increase in interest expense was due to
a substantial increase in the Company's long-term debt to enable the Company to
repay $72.4 million of loans and advances from Whitman Corporation and a special
dividend to Whitman of $137.6 million in connection with the spin-off.
Partially offsetting the effect of higher debt levels were lower interest rates
on the new debt.
13
<PAGE>
MIDAS, INC.
PART 2. OTHER INFORMATION
Exhibit 4.1 $200,000,000 Credit Agreement
Among
Midas, Inc. and Midas International Corporation,
as Borrowers,
The Lenders Named Herein,
The First National Bank of Chicago,
as Administrative Agent,
and Credit Suisse First Boston, as Co-Agent
Exhibit 4.2 Amendment No.1 To Credit Agreement
Exhibit 4.3 Midas International Corporation
$75,000,000
6.89 % Guaranteed Senior Notes Due 2005
Fully and Unconditionally Guaranteed by Midas, Inc.
Exhibit 27 Financial Data Schedule
Exhibit 27, Financial Data Schedule, was filed only electronically with the
Securities and Exchange Commission.
14
<PAGE>
MIDAS, INC.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
MIDAS, INC.
Date: August 10, 1998 By: /s/EDWIN A. GRELL
-------------------------------------
Edwin A. Grell
Vice President and Controller
(As Chief Accounting Officer and Duly
Authorized Officer of Midas, Inc.)
15
<PAGE>
Exhibit 4.1
EXECUTION COPY
--------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
$200,000,000
CREDIT AGREEMENT
AMONG
MIDAS, INC.
and
MIDAS INTERNATIONAL CORPORATION,
as Borrowers,
THE LENDERS NAMED HEREIN,
THE FIRST NATIONAL BANK OF CHICAGO,
as Administrative Agent,
and
CREDIT SUISSE FIRST BOSTON,
as Co-Agent
DATED AS OF
January 22, 1998
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Arranged By
FIRST CHICAGO CAPITAL MARKETS, INC.
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<S> <C>
ARTICLE I DEFINITIONS........................................................... 1
ARTICLE II THE FACILITY......................................................... 17
2.1. The Facility......................................................... 17
2.1.1. Description of Facility...................................... 17
2.1.2. Facility Amount.............................................. 18
2.1.3. Availability of Facility..................................... 18
2.1.4. Advances to Midas............................................ 18
2.2. Ratable Advances..................................................... 18
2.2.1. Ratable Advances............................................. 18
2.2.2 Ratable Advance Rate Options................................. 18
2.2.3. Method of Selecting Types and Interest Periods for
Ratable Advances............................................. 18
2.2.4. Conversion and Continuation of Outstanding Ratable Advances.. 19
2.3. Competitive Bid Advances............................................. 20
2.3.1. Competitive Bid Option....................................... 20
2.3.2. Competitive Bid Quote Request................................ 20
2.3.3. Invitation for Competitive Bid Quotes........................ 21
2.3.4. Submission and Contents of Competitive Bid Quotes............ 21
2.3.5. Notice to Applicable Borrower................................ 22
2.3.6. Acceptance and Notice by Applicable Borrower................. 22
2.3.7. Allocation by Administrative Agent........................... 23
2.4. Availability of Funds................................................ 23
2.5. Facility Fee; Reductions in Aggregate Commitment..................... 23
2.6. Minimum Amount of Each Advance....................................... 24
2.7. Optional Principal Payments.......................................... 24
2.8. Mandatory Prepayments................................................ 24
2.9. Changes in Interest Rate, etc........................................ 24
2.10. Rates Applicable After Default....................................... 25
2.11. Method of Payment.................................................... 25
2.12. Telephonic Notices................................................... 25
2.13. Noteless Agreement; Evidence of Indebtedness......................... 25
2.14. Interest Payment Dates; Interest and Fee Basis....................... 26
2.15. Notification of Advances, Interest Rates, Prepayments,
Commitment Reductions and Issuance Requests.......................... 26
2.16. Lending Installations................................................ 27
2.17. Non-Receipt of Funds by the Administrative Agent..................... 27
2.18. Facility Letters of Credit........................................... 27
2.18.1. Issuance of Facility Letters of Credit....................... 27
2.18.2 Participating Interests...................................... 28
2.18.3 Facility Letter of Credit Reimbursement Obligations.......... 28
</TABLE>
<PAGE>
<TABLE>
<S> <C>
2.18.4 Procedure for Issuance....................................... 30
2.18.5 Nature of the Lenders' Obligations........................... 30
2.18.6 Facility Letter of Credit Fees............................... 31
ARTICLE III CHANGE IN CIRCUMSTANCES.............................................. 31
3.1. Yield Protection..................................................... 31
3.2. Changes in Capital Adequacy Regulations.............................. 32
3.3. Availability of Types of Advances.................................... 33
3.4. Funding Indemnification.............................................. 33
3.5. Taxes................................................................ 33
3.6. Lender Statements; Survival of Indemnity............................. 35
3.7. Mitigation of Additional Costs or Adverse Circumstances.............. 35
ARTICLE IV CONDITIONS PRECEDENT................................................. 36
4.1. Initial Loans and Facility Letters of Credit......................... 36
4.2. Each Future Advance and Facility Letter of Credit.................... 38
ARTICLE V REPRESENTATIONS AND WARRANTIES........................................ 38
5.1. Corporate Existence and Standing..................................... 38
5.2. Authorization and Validity........................................... 39
5.3. No Conflict; Government Consent...................................... 39
5.4. Financial Statements................................................. 39
5.5. Material Adverse Change.............................................. 40
5.6. Taxes................................................................ 40
5.7. Litigation and Contingent Obligations................................ 40
5.8. Subsidiaries......................................................... 40
5.9. ERISA................................................................ 40
5.10. Accuracy of Information.............................................. 41
5.11. Compliance With Laws; Material Agreements............................ 41
5.12. Federal Reserve Regulations.......................................... 41
5.13. Investment Company Act............................................... 41
5.14. Public Utility Holding Company Act................................... 41
5.15. Plan Assets; Prohibited Transactions................................. 41
ARTICLE VI COVENANTS............................................................. 42
6.1. Financial Reporting.................................................. 42
6.2. Use of Proceeds...................................................... 43
6.3. Notice of Default.................................................... 43
6.4. Conduct of Business.................................................. 43
6.5. Taxes................................................................ 43
6.6. Insurance............................................................ 44
6.7. Compliance with Laws................................................. 44
6.8. Maintenance of Properties............................................ 44
6.9. Inspection........................................................... 44
6.10. Indebtedness......................................................... 44
</TABLE>
<PAGE>
<TABLE>
<S> <C>
6.11. Merger............................................................... 45
6.12. Sale of Assets....................................................... 45
6.13. Investments and Purchases............................................ 45
6.14. Liens................................................................ 46
6.15. Affiliates........................................................... 48
6.16. Environmental Matters................................................ 48
6.17. Inconsistent Agreements.............................................. 48
6.18. Financial Covenants.................................................. 48
6.18.1. Minimum Net Worth........................................... 48
6.18.2. Debt to EBITDA Ratio........................................ 49
6.18.3. Fixed Charges Coverage Ratio................................ 49
6.19. ERISA................................................................ 49
6.20. Senior Notes......................................................... 49
ARTICLE VII DEFAULTS............................................................. 50
ARTICLE VIII ACCELERATION, WAIVERS, AMENDMENTS AND REMEDIES...................... 52
8.1. Acceleration......................................................... 52
8.2. Amendments........................................................... 52
8.3. Preservation of Rights............................................... 53
ARTICLE IX GENERAL PROVISIONS.................................................... 53
9.1. Survival of Representations.......................................... 53
9.2. Governmental Regulation.............................................. 53
9.3. Headings............................................................. 53
9.4. Entire Agreement..................................................... 54
9.5. Several Obligations; Benefits of this Agreement...................... 54
9.6. Expenses; Indemnification............................................ 54
9.7. Numbers of Documents................................................. 55
9.8. Accounting........................................................... 55
9.9. Severability of Provisions........................................... 55
9.10. Nonliability of Lenders.............................................. 55
9.11. Choice of Law........................................................ 55
9.12. Consent to Jurisdiction.............................................. 55
9.13. Waiver of Jury Trial................................................. 56
9.14. Confidentiality...................................................... 56
9.15. Nonreliance.......................................................... 56
9.16. Disclosure........................................................... 56
9.17. Counterparts......................................................... 56
ARTICLE X THE AGENT.............................................................. 56
10.1. Appointment; Nature of Relationship.................................. 56
10.2. Powers............................................................... 57
10.3. General Immunity..................................................... 57
10.4. No Responsibility for Loans, Recitals, etc........................... 57
</TABLE>
<PAGE>
<TABLE>
<S> <C>
10.5. Action on Instructions of Lenders.................................... 58
10.6. Employment of Agents and Counsel..................................... 58
10.7. Reliance on Documents; Counsel....................................... 58
10.8. Administrative Agent's Reimbursement and Indemnification............. 58
10.9. Notice of Default.................................................... 59
10.10. Rights as a Lender................................................... 59
10.11. Lender Credit Decision............................................... 59
10.12. Successor Administrative Agent....................................... 59
10.13. Administrative Agent's Fee........................................... 60
10.14. Delegation to Affiliates............................................. 60
10.15. Co-Agent............................................................. 60
ARTICLE XI RATABLE PAYMENTS...................................................... 61
11.1. Ratable Payments..................................................... 61
ARTICLE XII BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS.................... 61
12.1. Successors and Assigns............................................... 61
12.2. Participations....................................................... 62
12.2.1. Permitted Participants; Effect.............................. 62
12.2.2. Voting Rights............................................... 62
12.3. Assignments.......................................................... 62
12.3.1. Permitted Assignments....................................... 62
12.3.2. Effect; Effective Date...................................... 62
12.4. Dissemination of Information......................................... 63
12.5. Tax Treatment........................................................ 63
ARTICLE XIII GUARANTY OF MIDAS................................................... 63
ARTICLE XIV GUARANTY OF INTERNATIONAL............................................ 67
ARTICLE XV NOTICES............................................................... 71
15.1. Notices.............................................................. 71
15.2. Change of Address.................................................... 71
</TABLE>
<PAGE>
EXHIBITS
--------
Exhibit A - Note (Ratable Loan)
Exhibit B - Note (Competitive Bid Loan)
Exhibit C - Competitive Bid Quote Request
Exhibit D - Invitation for Competitive Bid Quotes
Exhibit E - Competitive Bid Quote
Exhibit F - Compliance Certificate
Exhibit G - Assignment Agreement
Exhibit H - Transfer Instructions
SCHEDULES
---------
Schedule 4.1 - Senior Notes
Schedule 5.8 - Subsidiaries
Schedule 6.10 - Indebtedness
Schedule 6.13 - Investments
Schedule 6.14 - Liens
<PAGE>
CREDIT AGREEMENT
This Credit Agreement, dated as of January 22, 1998, is among MIDAS, INC.,
a Delaware corporation, MIDAS INTERNATIONAL CORPORATION, a Delaware corporation,
the Lenders, THE FIRST NATIONAL BANK OF CHICAGO, individually and as
Administrative Agent, and CREDIT SUISSE FIRST BOSTON, individually and as Co-
Agent.
R E C I T A L S:
- - - - - - - -
A. The Borrowers expect that (a) on January 29, 1998, (i) International
will repay approximately $60,000,000 of outstanding indebtedness to Whitman and
pay a cash dividend to Whitman of approximately $150,000,000 and (ii) Whitman
will contribute all of the issued and outstanding capital stock of International
and Midas B.V. to Midas, and (b) on January 30, 1998, (i) all of the issued and
outstanding capital stock of Midas will be distributed to Whitman's shareholders
and (ii) the other transactions described in the section of the Information
Statement entitled "The Distribution" will occur.
B. The Borrowers have requested the Lenders to make financial
accommodations to it in the aggregate principal amount of $200,000,000, the
proceeds of which will be used by (a) International to finance in part the
payments to be made in connection with the Distribution and (b) the Borrowers
(i) for the working capital and general corporate needs of Midas and its
Subsidiaries, (ii) for the issuance of Letters of Credit and (iii) to finance
acquisitions, subject to the terms of this Agreement.
C. The Lenders are willing to extend such financial accommodations on the
terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants and undertakings
herein contained, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Borrowers, the Lenders, the
Administrative Agent and the Co-Agent hereby agree as follows:
ARTICLE I
DEFINITIONS
-----------
As used in this Agreement:
"Absolute Rate" means, with respect to an Absolute Rate Loan made by a
given Lender for the relevant Absolute Rate Interest Period, the rate of
interest per annum (rounded to the nearest 1/100 of 1%) offered by such Lender
and accepted by the applicable Borrower pursuant to Section 2.3.
<PAGE>
"Absolute Rate Advance" means a borrowing hereunder consisting of the
aggregate amount of the several Absolute Rate Loans made by some or all of the
Lenders to the applicable Borrower at the same time and for the same Interest
Period.
"Absolute Rate Auction" means a solicitation of Competitive Bid Quotes
setting forth Absolute Rates pursuant to Section 2.3.
"Absolute Rate Interest Period" means, with respect to an Absolute Rate
Advance, a period of not less than seven and not more than 180 days commencing
on a Business Day selected by the applicable Borrower pursuant to this
Agreement. If such Absolute Rate Interest Period would end on a day which is not
a Business Day, such Absolute Rate Interest Period shall end on the next
succeeding Business Day.
"Absolute Rate Loan" means a Loan which bears interest at the Absolute
Rate.
"Administrative Agent" means The First National Bank of Chicago in its
capacity as contractual representative of the Lenders pursuant to Article X, and
not in its individual capacity as a Lender, and any successor Administrative
Agent appointed pursuant to Article X.
"Advance" means a borrowing hereunder consisting of the aggregate amount of
the several Loans made by some or all of the Lenders to either Borrower on the
same Borrowing Date, of the same Type (or on the same interest basis in the case
of Competitive Bid Advances) and, when applicable, for the same Interest Period
and includes a Competitive Bid Advance.
"Affiliate" of any Person means any other Person directly or indirectly
controlling, controlled by or under common control with such Person. A Person
shall be deemed to control another Person if the controlling Person owns 10% or
more of any class of voting securities (or other ownership interests) of the
controlled Person or possesses, directly or indirectly, the power to direct or
cause the direction of the management or policies of the controlled Person,
whether through ownership of stock, by contract or otherwise.
"Aggregate Commitment" means the aggregate of the Commitments of all the
Lenders hereunder, as reduced from time to time pursuant to the terms hereto.
The initial Aggregate Commitment is $200,000,000 and shall be reduced as
provided in Section 2.5(b).
"Agreement" means this credit agreement, as it may be amended, modified or
restated and in effect from time to time.
"Agreement Accounting Principles" means generally accepted accounting
principles as in effect from time to time, applied in a manner consistent with
those used in preparing the Financial Statements.
"Alternate Base Rate" means, for any day, a rate of interest per annum
equal to the higher of (a) the Corporate Base Rate for such day, and (b) the sum
of the Federal Funds Effective Rate for such day plus 1/2% per annum.
-2-
<PAGE>
"Alternate Base Rate Advance" means an Advance which bears interest at the
Alternate Base Rate.
"Applicable Eurodollar Margin" means, subject to the penultimate sentence
of this definition, for any period, the applicable of the following percentages
set forth below in effect with respect to such period as the Debt to EBITDA
Ratio of Midas shall fall within the indicated ranges:
<TABLE>
<CAPTION>
Debt to EBITDA Ratio Applicable Eurodollar Margin
-------------------- ----------------------------
<S> <C>
Greater than 3.25:1.0 .70%
Less than or equal to 3.25:1.0, but greater than or .625%
equal to 3.0:1.0
Less than 3.0:1.0, but greater than or equal to 2.5:1.0 .550%
Less than 2.5:1.0, but greater than or equal to 2.0:1.0 .475%
Less than 2.0:1.0, but greater than or equal to 1.5:1.0 .40%
Less than 1.5:1.0 .350%
</TABLE>
The Debt to EBITDA Ratio shall be calculated by Midas as of the end of each
Fiscal Quarter commencing (for the purposes of determining the Applicable
Eurodollar Margin) as of the end of the third Fiscal Quarter in 1998 and shall
be reported to the Administrative Agent pursuant to a certificate executed by
the chief financial officer of Midas and delivered in accordance with Section
6.1(c) hereof. The Applicable Eurodollar Margin shall be adjusted, if necessary,
as of the tenth day after the actual delivery date for the certificate
referenced above; provided, that if such certificate, together with the
financial statements to which such certificate relates, are not delivered within
15 days after the date required for delivery of such certificate, then the
Applicable Eurodollar Margin shall be equal to 0.70% for the relevant quarter.
Until adjusted as described above after the end of the third Fiscal Quarter in
1998, the Applicable Eurodollar Margin shall be equal to 0.625%. The Applicable
Eurodollar Margin for any Eurodollar Interest Period shall be that in effect on
the first day of such Eurodollar Interest Period and shall not change during
such Eurodollar Interest Period.
"Arranger" means First Chicago Capital Markets, Inc., a Delaware
corporation, and its successors.
"Article" means an article of this Agreement unless another document is
specifically referenced.
"Authorized Officer" means any of the Executive Vice President, any
financial Vice President or the Treasurer of the applicable Borrower, acting
singly.
-3-
<PAGE>
"Bankruptcy Code" means Title 11, United States Code, sections 1 et seq.,
as the same may be amended from time to time, and any successor thereto or
replacement therefor which may be hereafter enacted.
"Borrower" means, subject to Section 2.1.4, Midas or International, as
applicable, and their respective successors and assigns.
"Borrowing Date" means a date on which an Advance is made or a Facility
Letter of Credit is issued hereunder.
"Business Day" means (a) with respect to any borrowing, payment or rate
selection of Eurodollar Advances, a day (other than a Saturday or Sunday) on
which banks generally are open in Chicago and New York for the conduct of
substantially all of their commercial lending activities and on which dealings
in United States dollars are carried on in the London interbank market, and (b)
for all other purposes, a day (other than a Saturday or Sunday) on which banks
generally are open in Chicago and New York for the conduct of substantially all
of their commercial lending activities.
"Capitalized Lease" of a Person means any lease of Property by such Person
as lessee which would be capitalized on a balance sheet of such Person prepared
in accordance with Agreement Accounting Principles.
"Capitalized Lease Obligations" of a Person means the amount of the
obligations of such Person under Capitalized Leases which would be shown as a
liability on a balance sheet of such Person prepared in accordance with
Agreement Accounting Principles.
"Change" is defined in Section 3.2.
"Change in Control" means (a) the acquisition by any Person, or two or more
Persons acting in concert, including without limitation any acquisition effected
by means of any transaction contemplated by Section 6.11, of beneficial
ownership (within the meaning of Rule 13d-3 of the Securities and Exchange
Commission under the Securities Exchange Act of 1934) of 30% or more of the
outstanding shares of voting stock of Midas, (b) unless International has been
merged with and into Midas, Midas shall cease to own all of the issued and
outstanding capital stock of International or any shares of capital stock of
International shall be subject to any Lien, other encumbrances or voting
agreements, restrictions or trusts of any kind or (c) during any period of 25
consecutive calendar months, commencing on the date of this Agreement, the
ceasing of those individuals (the "Continuing Directors") who (i) were directors
of Midas on the first day of each such period or (ii) subsequently became
directors of Midas and whose initial election or initial nomination for election
subsequent to that date was approved by a majority of the Continuing Directors
then on the board of directors of Midas, to constitute a majority of the board
of directors of Midas.
"Closing Date" means the date on which the conditions precedent set forth
in Section 4.1 are satisfied or waived and the initial Advance is made
hereunder.
"Closing Transactions" is defined in Section 4.1(d).
-4-
<PAGE>
"Co-Agent" means Credit Suisse First Boston, in its capacity as co-agent
hereunder.
"Code" means the Internal Revenue Code of 1986, as amended, reformed or
otherwise modified from time to time.
"Commercial Letter of Credit" means a trade or commercial Facility Letter
of Credit issued by an Issuer pursuant to Section 2.18 hereof.
"Commitment" means, for each Lender, the obligation of such Lender to make
Loans and participate in Facility Letters of Credit not exceeding the amount set
forth opposite its signature below and as set forth in any Notice of Assignment
relating to any assignment which has become effective pursuant to Section
12.3.2, as such amount may be modified from time to time pursuant to the terms
hereof.
"Competitive Bid Advance" means a borrowing hereunder consisting of the
aggregate amount of the several Competitive Bid Loans made by some or all of the
Lenders to the applicable Borrower at the same time and for the same Interest
Period.
"Competitive Bid Borrowing Notice" is defined in Section 2.3.6.
"Competitive Bid Loan" means a Eurodollar Bid Rate Loan or an Absolute Rate
Loan, or both, as the case may be.
"Competitive Bid Margin" means the margin above or below the applicable
Eurodollar Base Rate offered for a Eurodollar Bid Rate Loan, expressed as a
percentage (rounded to the nearest 1/100 of 1%) to be added or subtracted from
such Eurodollar Base Rate.
"Competitive Bid Note" means any promissory note issued at the request of a
Lender pursuant to Section 2.13 in substantially the form of Exhibit B hereto,
with appropriate insertions, duly executed and delivered to the Administrative
Agent by the applicable Borrower for the account of a Lender and payable to the
order of such Lender, including any amendment, modification, renewal or
replacement of such promissory note.
"Competitive Bid Quote" means a Competitive Bid Quote substantially in the
form of Exhibit E hereto completed and delivered by a Lender to the
Administrative Agent in accordance with Section 2.3.4.
"Competitive Bid Quote Request" means a Competitive Bid Quote Request
substantially in the form of Exhibit C hereto completed and delivered by the
applicable Borrower to the Administrative Agent in accordance with Section
2.3.2.
"Consolidated" or "consolidated", when used in connection with any
calculation, means a calculation to be determined on a consolidated basis for
Midas and its Subsidiaries in accordance with Agreement Accounting Principles.
-5-
<PAGE>
"Contingent Obligation" of a Person means any agreement, undertaking or
arrangement by which such Person assumes, guarantees, endorses, contingently
agrees to purchase or provide funds for the payment of, or otherwise becomes or
is contingently liable upon, the obligation or liability of any other Person, or
agrees to maintain the net worth or working capital or other financial condition
of any other Person, or otherwise assures any creditor of such other Person
against loss.
"Contingent Operating Lease" means any operating lease of an individual
store location under which Midas or any of its Subsidiaries may be required,
under certain limited conditions, to make rental payments.
"Controlled Group" means all members of a controlled group of corporations
and all trades or businesses (whether or not incorporated) under common control
which, together with Midas or any of its Subsidiaries, are treated as a single
employer under Section 414 (b), (c), (m) or (o) of the Code.
"Conversion/Continuation Notice" is defined in Section 2.2.4.
"Corporate Base Rate" means a rate per annum equal to the corporate base
rate of interest announced by First Chicago from time to time, changing when and
as said corporate base rate changes. The Corporate Base Rate is a reference rate
and does not necessarily represent the lowest or best rate of interest actually
charged to any customer. First Chicago may make commercial loans or other loans
at rates of interest at, above or below the Corporate Base Rate.
"Debt to EBITDA Ratio" means as of the last day of any Fiscal Quarter, the
ratio of (a) the total Indebtedness of Midas and its Subsidiaries on a
consolidated basis as of the date of determination to (b) the EBITDA of Midas
and its Subsidiaries for the period of four Fiscal Quarters ending on the date
of determination.
"Default" means an event described in Article VII.
"Distribution" means, collectively, the transactions described in clauses
(a) and (b) of the first recital in this Agreement.
"Distribution Documents" means the "Distribution and Indemnity Agreements",
as defined in the Information Statement, and the other documents, certificates
and agreements delivered in connection with the Distribution.
"EBITDA" means, for any applicable computation period, Midas's Net Income
on a consolidated basis from continuing operations, plus (a) income and
franchise taxes paid or accrued by Midas and its consolidated Subsidiaries
during such period, plus (b) interest expenses paid or accrued by Midas and its
consolidated Subsidiaries during such period, plus (c) amortization and
depreciation and other special items deducted in determining Net Income for such
period. For the purpose of determining EBITDA, Net Income shall be computed
without giving effect to (i) the pre-tax non-recurring charge of $32,100,000
taken by International and its international Affiliates in 1997, (ii) the pre-
tax expenses related to the disposition of Midas-operated stores in the United
States
-6-
<PAGE>
of $35,500,000 taken by International and its international Affiliates in 1997
and (iii) the expenses related to the Whitman charge of $18,000,000 in 1997.
"Environmental Laws" means any and all federal, state, local and foreign
statutes, laws, judicial decisions, regulations, ordinances, rules, judgments,
orders, decrees, plans, injunctions, permits, concessions, grants, franchises,
licenses, agreements and other governmental restrictions relating to (a) the
protection of the environment, (b) the effect of the environment on human
health, (c) emissions, discharges or releases of pollutants, contaminants,
hazardous substances or wastes into surface water, ground water or land, or (d)
the manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of pollutants, contaminants, hazardous substances or
wastes or the clean-up or other remediation thereof.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time.
"Eurodollar Advance" means a Eurodollar Bid Rate Advance or a Eurodollar
Ratable Advance, or both, as the case may be.
"Eurodollar Auction" means a solicitation of Competitive Bid Quotes setting
forth Eurodollar Bid Rates pursuant to Section 2.3.
"Eurodollar Base Rate" means, with respect to a Eurodollar Advance for the
relevant Interest Period, the applicable London interbank offered rate for
deposits in U.S. dollars appearing on Dow Jones Markets (Telerate) Page 3750 as
of 11:00 a.m. (London time) two Business Days prior to the first day of such
Interest Period, and having a maturity approximately equal to such Interest
Period. If no London interbank offered rate of such maturity then appears on Dow
Jones Markets (Telerate) Page 3750, then the Eurodollar Base Rate shall be equal
to the London interbank offered rate for deposits in U.S. dollars maturing
immediately before or immediately after such maturity, whichever is higher, as
determined by the Agent from Dow Jones Markets (Telerate) Page 3750. If Dow
Jones Markets (Telerate) Page 3750 is not available, the applicable Eurodollar
Base Rate for the relevant Interest Period shall be the rate determined by the
Agent to be the rate at which First Chicago offers to place deposits in U.S.
dollars with first-class banks in the London interbank market at approximately
11:00 a.m. (London time) two Business Days prior to the first day of such
Interest Period, in the approximate amount of First Chicago's relevant portion
of the Eurodollar Advance and having a maturity approximately equal to such
Interest Period.
"Eurodollar Bid Rate" means, with respect to a Eurodollar Bid Rate Loan
made by a given Lender for the relevant Eurodollar Interest Period, the sum of
(a) the Eurodollar Base Rate and (b) the Competitive Bid Margin offered by such
Lender and accepted by the applicable Borrower.
"Eurodollar Bid Rate Advance" means a Competitive Bid Advance which bears
interest at a Eurodollar Bid Rate.
"Eurodollar Bid Rate Loan" means a Loan which bears interest at the
Eurodollar Bid Rate.
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<PAGE>
"Eurodollar Interest Period" means, with respect to a Eurodollar Ratable
Advance or a Eurodollar Bid Rate Advance, a period of one, two, three or six
months commencing on a Business Day selected by the applicable Borrower pursuant
to this Agreement. Such Eurodollar Interest Period shall end on (but exclude)
the day which corresponds numerically to such date one, two, three or six months
thereafter; provided, however, that if there is no such numerically
corresponding day in such next, second, third or sixth succeeding month, such
Eurodollar Interest Period shall end on the last Business Day of such next,
second, third or sixth succeeding month. If a Eurodollar Interest Period would
otherwise end on a day which is not a Business Day, such Eurodollar Interest
Period shall end on the next succeeding Business Day; provided, however, that if
said next succeeding Business Day falls in a new month, such Eurodollar Interest
Period shall end on the immediately preceding Business Day.
"Eurodollar Loan" means a Eurodollar Ratable Loan or Eurodollar Bid Rate
Loan, or both, as the case may be.
"Eurodollar Ratable Advance" means an Advance which bears interest at a
Eurodollar Rate requested by either Borrower pursuant to Section 2.2.3.
"Eurodollar Ratable Loan" means a Loan requested by either Borrower
pursuant to Section 2.2.3 which bears interest at a Eurodollar Rate.
"Eurodollar Rate" means, with respect to a Eurodollar Ratable Advance for
the relevant Eurodollar Interest Period, the sum of (a) the quotient of (i) the
Eurodollar Base Rate applicable to such Eurodollar Interest Period, divided by
(ii) one minus the Reserve Requirement (expressed as a decimal) applicable to
such Eurodollar Interest Period, plus (b) the Applicable Eurodollar Margin. The
Eurodollar Rate shall be rounded to the next higher multiple of 1/16 of 1% if
the rate is not such a multiple.
"Excluded Taxes" means, in the case of each Lender or applicable Lending
Installation and the Administrative Agent, taxes imposed on its overall net
income, and franchise taxes imposed on it, by (a) the jurisdiction (or any
political subdivision thereof or any jurisdiction of which it is a political
subdivision) under the laws of which such Lender or the Administrative Agent is
incorporated or organized or (b) the jurisdiction in which the Administrative
Agent's or such Lender's principal executive office or such Lender's applicable
Lending Installation is located.
"Facility Fee" is defined in Section 2.5(a).
"Facility Fee Percentage" means, subject to the last sentence of this
definition, for any period, the applicable of the following percentages in
effect with respect to such period as the Debt to EBITDA Ratio of Midas shall
fall within the indicated ranges:
<TABLE>
<CAPTION>
Facility
Debt to EBITDA Ratio Fee Percentage
-------------------- --------------
<S> <C>
Greater than 3.25:1.0 .30%
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Less than or equal to 3.25:1.0, but greater than or
equal to 3.0:1.0 .25%
Less than 3.0:1.0, but greater than or equal to 2.5:1.0 .20%
Less than 2.5:1.0, but greater than or equal to 2.0:1.0 .15%
Less than 2.0:1.0, but greater than or equal to 1.5:1.0 .125%
Less than 1.5:1.0 .10%
</TABLE>
The Debt to EBITDA Ratio shall be calculated by Midas as of the end of each
Fiscal Quarter commencing (for the purposes of determining the Facility Fee
Percentage) as of the end of the third Fiscal Quarter in 1998 and shall be
reported to the Administrative Agent pursuant to a certificate executed by the
chief financial officer of Midas and delivered in accordance with Section 6.1(c)
hereof. The Facility Fee Percentage shall be adjusted, if necessary, as of the
tenth day after the actual delivery date for the certificate referenced above;
provided, that if such certificate, together with the financial statements to
which such certificate relates, are not delivered within 15 days after the date
required for delivery of such certificate, then the Facility Fee Percentage
shall be equal to .30% for the relevant quarter. Until adjusted as described
above after the end of the third Fiscal Quarter in 1998, the Facility Fee
Percentage shall be equal to 0.25%.
"Facility Letter of Credit" means a Letter of Credit issued pursuant to
Section 2.18.
"Facility Letter of Credit Obligations" means as at the time of
determination thereof, the sum of (a) the Reimbursement Obligations then
outstanding and (b) the aggregate then undrawn face amount of the then
outstanding Facility Letters of Credit.
"Facility Letter of Credit Sublimit" means an aggregate amount of
$10,000,000.
"Facility Termination Date" means January 29, 2003 or any earlier date on
which the Aggregate Commitment is reduced to zero or otherwise terminated
pursuant to the terms hereof.
"Federal Funds Effective Rate" means, for any day, an interest rate per
annum equal to the weighted average of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged by Federal
funds brokers on such day, as published for such day (or, if such day is not a
Business Day, for the immediately preceding Business Day) by the Federal Reserve
Bank of New York, or, if such rate is not so published for any day which is a
Business Day, the average of the quotations at approximately 10 a.m. (Chicago
time) on such day on such transactions received by the Administrative Agent from
three Federal funds brokers of recognized standing selected by the
Administrative Agent in its sole discretion.
"Financial Statements" is defined in Section 5.4.
"First Chicago" means The First National Bank of Chicago in its individual
capacity, and its successors.
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<PAGE>
"Fiscal Quarter" means one of the four accounting periods of 13 or 14 weeks
comprising a Fiscal Year.
"Fiscal Year" means (a) in respect of 1997, the accounting period of 53
weeks ending on December 20, 1997, and (b) thereafter, the accounting period of
52 or 53 weeks ending on the last Saturday of each calendar year.
"Fixed Charges Coverage Ratio" means, as of any date of determination, the
ratio of (a) (i) EBITDA for the period of four Fiscal Quarters ending on the
date of determination, plus (ii) Net Rent for Midas' previous Fiscal Year (or,
if the date of determination is the last day of Midas' Fiscal Year, for the
Fiscal Year ending on such date), to (b) Fixed Charges for the period of four
Fiscal Quarters ending on the date of determination.
"Fixed Charges" means, with respect to Midas and its Subsidiaries on a
consolidated basis, for any applicable computation period, the sum of (a)
interest expenses paid or accrued during such period, plus (b) Net Rent for
Midas' previous Fiscal Year (or, if the date of determination is the last day of
Midas' Fiscal Year, for the Fiscal Year ending on such date), provided, that for
any computation made with respect to Fiscal Year 1998, interest expenses shall
be determined by multiplying actual interest expenses for the period beginning
January 30, 1998 by a fraction, the numerator of which shall be 12 and the
denominator of which shall be the number of months in the period from January
30, 1998 through the date of determination.
"Governmental Authority" means any government (foreign or domestic) or any
state or other political subdivision thereof or any governmental body, agency,
authority, department or commission (including without limitation any taxing
authority or political subdivision) or any instrumentality or office thereof
(including without limitation any court or tribunal) exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government and any corporation, partnership or other entity directly or
indirectly owned or controlled by or subject to the control of any of the
foregoing.
"Guaranteed International Obligations" is defined in Section 13.1.
"Guaranteed Midas Obligations" is defined in Section 14.1.
"Hazardous Materials" means any toxic or hazardous waste, substance or
chemical or any pollutant, contaminant, chemical or other substance defined or
regulated pursuant to any Environmental Law, including, without limitation,
asbestos, petroleum, crude oil or any fraction thereof.
"Indebtedness" of a Person means (without duplication) such Person's (a)
obligations for borrowed money, (b) obligations representing the deferred
purchase price of Property (other than accounts payable arising in the ordinary
course of such Person's business payable on terms customary in the trade), (c)
obligations, whether or not assumed, secured by Liens or payable out of the
proceeds or production from Property now or hereafter owned or acquired by such
Person, (d) obligations which are evidenced by notes, acceptances, or similar
instruments, (e) Capitalized Lease
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<PAGE>
Obligations, (f) Contingent Obligations (excluding Contingent Operating Leases)
and (g) obligations for which such Person is obligated pursuant to or in respect
of a Facility Letter of Credit and the face amount of any other Letter of Credit
which is not a Commercial Letter of Credit.
"Information Statement" means that certain Information Statement dated
January 8, 1998 distributed to the shareholders of Whitman in connection with
the Distribution.
"Interest Period" means a Eurodollar Interest Period or an Absolute Rate
Interest Period.
"International" means Midas International Corporation, a Delaware
corporation.
"Investment" of a Person means any (a) loan, advance (other than
commission, travel and similar advances to officers and employees made in the
ordinary course of business), extension of credit (other than accounts
receivable arising in the ordinary course of business on terms customary in the
trade), or contribution of capital by such Person, (b) stocks, bonds, mutual
funds, partnership interests, notes, debentures or other securities owned by
such Person, (c) deposit accounts and certificates of deposit owned by such
Person and (d) structured notes, derivative financial instruments and other
similar instruments or contracts owned by such Person.
"Investment Grade Ratings" means a rating of at least BBB- (or its
equivalent) by S&P and a rating of at least Baa3 (or its equivalent) by Moody's.
"Invitation for Competitive Bid Quotes" means an Invitation for Competitive
Bid Quotes substantially in the form of Exhibit D hereto, completed and
delivered by the Administrative Agent to the Lenders in accordance with Section
2.3.3.
"Issuance Request" is defined in Section 2.18.4.
"Issuer" means with respect to any Facility Letter of Credit, (a) First
Chicago, if requested by the applicable Borrower to act as the issuer of such
Facility Letter of Credit, or (b) such other Lender which has been requested by
the applicable Borrower and has agreed to act as the issuer of such Facility
Letter of Credit.
"Lenders" means the lending institutions listed on the signature pages of
this Agreement and their respective successors and assigns.
"Lending Installation" means, with respect to a Lender or the
Administrative Agent, any office, branch, subsidiary or affiliate of such Lender
or the Administrative Agent listed on the signature pages hereof or otherwise
selected by such Lender or the Administrative Agent pursuant to Section 2.16.
"Letter of Credit" of a Person means a letter of credit or similar
instrument which is issued upon the application of such Person or upon which
such Person is an account party or for which such Person is in any way liable.
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<PAGE>
"Letter of Credit Cash Collateral Account" is defined in Section 8.1. Such
account and the related cash collateralization shall be subject to documentation
satisfactory to the Administrative Agent.
"Lien" means any lien (statutory or other), mortgage, pledge,
hypothecation, assignment, deposit arrangement, encumbrance or preference,
priority or other security agreement or preferential arrangement of any kind or
nature whatsoever (including, without limitation, the interest of a vendor or
lessor under any conditional sale, Capitalized Lease or other title retention
agreement).
"Loan" means, with respect to a Lender, such Lender's loan made pursuant to
Article II (or any conversion or continuation thereof).
"Loan Documents" means this Agreement, the Notes, if any, the Reimbursement
Agreements and the other documents and agreements contemplated hereby and
executed by the applicable Borrower in favor of the Administrative Agent or any
Lender.
"Margin Stock" has the meaning assigned to that term under Regulation U.
"Material Adverse Effect" means a material adverse effect on (a) the
business, condition (financial or otherwise), operations, Property or prospects
of Midas and its Subsidiaries taken as a whole or, from the date of this
Agreement through the consummation of the Distribution, International and its
Subsidiaries taken as a whole, (b) the ability of Midas or International to
perform its obligations under the Loan Documents, or (c) the validity or
enforceability of any of the Loan Documents or the rights or remedies of the
Administrative Agent or the Lenders thereunder.
"Material Indebtedness" is defined in Section 7.5.
"Midas" means Midas, Inc., a Delaware corporation.
"Moody's" means Moody's Investors Service, Inc., a Delaware corporation,
together with any Person succeeding thereto by merger, consolidation or
acquisition of all or substantially all of its assets, including substantially
all of its business of rating securities.
"Multiemployer Plan" means a Plan subject to Title IV of ERISA which is a
"multiemployer plan", as defined in Section 4001(a)(3) of ERISA.
"Net Available Proceeds" means cash or readily marketable cash equivalents
received from the sale or issuance of equity securities whether at the time of
such sale or issuance or subsequent thereto, net of all commissions, fees and
costs and expenses incurred in connection therewith.
"Net Income" means, for any computation period, with respect to Midas on a
consolidated basis with its Subsidiaries, cumulative net income earned during
such period as determined in accordance with Agreement Accounting Principles.
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<PAGE>
"Net Rent" means, for any computation period, with respect to Midas on a
consolidated basis with its Subsidiaries, (a) gross rent expense, less (b)
sublease rental income from franchisees that reduced gross rent expense, as
presented in the relevant footnotes to the most recent audited annual financial
statements required to be delivered to the Lenders pursuant to Section 6.1(a)
hereof.
"Net Worth" means at any date of determination the consolidated
shareholders' equity of Midas and its consolidated Subsidiaries, plus minority
interest, determined in accordance with Agreement Accounting Principles.
"Non-U.S. Lender" is defined in Section 3.5(d).
"Notes" means, collectively, any promissory notes issued at the request of
a Lender pursuant to Section 2.13 in the form of Exhibit A, if issued to
evidence a Ratable Loan, or in the form of Exhibit B, if issued to evidence a
Competitive Bid Loan, and "Note" means any one of the Notes.
"Notice of Assignment" is defined in Section 12.3.2.
"Obligations" means all unpaid principal of and accrued and unpaid interest
on the Loans, the Facility Letter of Credit Obligations and all other
liabilities (if any), whether actual or contingent, of the Borrowers with
respect to Facility Letters of Credit, all accrued and unpaid fees and all
expenses, reimbursements, indemnities and other obligations of the Borrowers to
the Lenders or to any Lender, the Administrative Agent or any indemnified party
hereunder arising under any of the Loan Documents.
"Other Taxes" is defined in Section 3.5(b).
"Participants" is defined in Section 12.2.1.
"Payment Date" means the last day of each March, June, September and
December.
"PBGC" means the Pension Benefit Guaranty Corporation or any successor
thereto.
"Person" means any natural person, corporation, firm, joint venture,
partnership, association, enterprise, limited liability company, trust or other
entity or organization, or any government or political subdivision or any
agency, department or instrumentality thereof.
"Plan" means an employee pension benefit plan which is covered by Title IV
of ERISA or subject to the minimum funding standards under Section 412 of the
Code as to which Midas or any member of the Controlled Group has any liability,
contingent or otherwise.
"Property" of a Person means any and all property, whether real, personal,
tangible, intangible, or mixed, of such Person, or other assets owned, leased or
operated by such Person.
"Pro Forma" is defined in Section 5.4.
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"pro-rata" means, when used with respect to a Lender, and any described
aggregate or total amount, an amount equal to such Lender's pro-rata share or
portion based on its percentage of the Aggregate Commitment or if the Aggregate
Commitment has been terminated, its percentage of the aggregate principal amount
of outstanding Advances and Facility Letter of Credit Obligations.
"Purchase" means any transaction, or any series of related transactions,
consummated on or after the date of this Agreement, by which Midas or any of its
Subsidiaries (a) acquires any going business or all or substantially all of the
assets of any firm, corporation or division or line of business thereof, whether
through purchase of assets, merger or otherwise, or (b) directly or indirectly
acquires (in one transaction or as the most recent transaction in a series of
transactions) at least a majority (in number of votes) of the securities of a
corporation which have ordinary voting power for the election of directors
(other than securities having such power only by reason of the happening of a
contingency) or a majority (by percentage or voting power) of the outstanding
partnership interests of a partnership.
"Purchasers" is defined in Section 12.3.1.
"Ratable Advance" means a borrowing hereunder consisting of the aggregate
amount of the several Ratable Loans made by the Lenders to either Borrower at
the same time, of the same Type and for the same Interest Period.
"Ratable Borrowing Notice" is defined in Section 2.2.3.
"Ratable Loan" means a Loan made by a Lender pursuant to Section 2.2
hereof.
"Ratable Note" means any promissory note issued at the request of a Lender
pursuant to Section 2.13 in substantially the form of Exhibit A hereto, duly
executed and delivered to the Administrative Agent by either Borrower for the
account of each Lender and payable to the order of a Lender in the amount of its
Commitment, including any amendment, modification, renewal or replacement of
such promissory note.
"Regulation D" means Regulation D of the Board of Governors of the Federal
Reserve System as from time to time in effect and any successor thereto or other
regulation or official interpretation of said Board of Governors relating to
reserve requirements applicable to member banks of the Federal Reserve System.
"Regulation G" means Regulation G of the Board of Governors of the Federal
Reserve System as from time to time in effect and shall include any successor or
other regulation or official interpretation of said Board of Governors relating
to the extension of credit by Persons other than banks, brokers and dealers for
the purpose of purchasing or carrying margin stocks applicable to member banks
of the Federal Reserve System.
"Regulation T" means Regulation T of the Board of Governors of the Federal
Reserve System as from time to time in effect and shall include any successor or
other regulation or official interpretation of such Board of Governors relating
to the extension of credit by securities brokers and
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<PAGE>
dealers for the purpose of purchasing or carrying margin stocks applicable to
member banks of the Federal Reserve System.
"Regulation U" means Regulation U of the Board of Governors of the Federal
Reserve System as from time to time in effect and any successor or other
regulation or official interpretation of said Board of Governors relating to the
extension of credit by banks for the purpose of purchasing or carrying margin
stocks applicable to member banks of the Federal Reserve System.
"Regulation X" means Regulation X of the Board of Governors of the Federal
Reserve System as from time to time in effect and shall include any successor or
other regulation or official interpretation of said Board of Governors relating
to the extension of credit by the specified lenders for the purpose of
purchasing or carrying margin stocks applicable to member banks of the Federal
Reserve System.
"Reimbursement Agreement" means a letter of credit application and
reimbursement agreement in such form as an Issuer may from time to time employ
in the ordinary course of business.
"Reimbursement Obligations" means, at any time, the aggregate (without
duplication) of the Obligations of the Borrowers to the Lenders, the Issuer
and/or the Administrative Agent in respect of all unreimbursed payments or
disbursements made by the Lenders, the Issuer and/or the Administrative Agent
under or in respect of draws made under the Facility Letters of Credit.
"Release" is defined in the Comprehensive Environmental Response,
Compensation and Liability Act, as amended, 42 U.S.C. 39601 et seq.
"Reportable Event" means a reportable event as defined in Section 4043 of
ERISA and the regulations issued under such section, with respect to a Plan,
excluding, however, such events as to which the PBGC has by regulation waived
the requirement of Section 4043(a) of ERISA that it be notified within 30 days
of the occurrence of such event; provided, however, that a failure to meet the
minimum funding standard of Section 412 of the Code and of Section 302 of ERISA
shall be a Reportable Event regardless of the issuance of any such waiver of the
notice requirement in accordance with either Section 4043(a) of ERISA or Section
412(d) of the Code.
"Reports" is defined in Section 9.6.
"Required Lenders" means Lenders in the aggregate having at least 51% of
the Aggregate Commitment or, if the Aggregate Commitment has been terminated,
51% of the sum of (a) the aggregate unpaid principal amount of the outstanding
Loans plus (b) the aggregate amount of the outstanding Facility Letter of Credit
Obligations.
"Reserve Requirement" means, with respect to an Interest Period, the
maximum aggregate reserve requirement (including all basic, supplemental,
marginal and other reserves) which is imposed under Regulation D on Eurocurrency
liabilities.
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<PAGE>
"Risk-Based Capital Guidelines" is defined in Section 3.2.
"S&P" means Standard & Poor's Ratings Group, a division of McGraw-Hill,
Inc., together with any Person succeeding thereto by merger, consolidation or
acquisition of all or substantially all of its assets, including substantially
all of its business of rating securities.
"Section" means a numbered section of this Agreement, unless another
document is specifically referenced.
"Senior Notes" means those certain Senior Notes Due January 29, 2005 of
International.
"Single Employer Plan" means a Plan subject to Title IV of ERISA, other
than a Multiemployer Plan.
"Standby Letter of Credit" means a Facility Letter of Credit which is not a
Commercial Letter of Credit.
"Subsidiary" of a Person means (a) any corporation more than 50% of the
outstanding securities having ordinary voting power of which shall at the time
be owned or controlled, directly or indirectly, by such Person or by one or more
of its Subsidiaries or by such Person and one or more of its Subsidiaries, or
(b) any partnership, association, joint venture, limited liability company or
similar business organization more than 50% of the ownership interests having
ordinary voting power of which shall at the time be so owned or controlled.
Unless otherwise expressly provided, all references herein to a "Subsidiary"
shall mean a Subsidiary of Midas.
"Substantial Portion" means, with respect to the Property of Midas and its
Subsidiaries, Property which (a) represents more than 10% of the consolidated
assets of Midas and its Subsidiaries, as would be shown in the consolidated
financial statements of Midas and its Subsidiaries as at the end of the Fiscal
Quarter next preceding the date on which such determination is made, or (b) is
responsible for more than 10% of the consolidated Net Income of Midas and its
Subsidiaries for the 12-month period ending as of the end of the Fiscal Quarter
next preceding the date of determination.
"Taxes" means any and all present or future taxes, duties, levies, imposts,
deductions, charges or withholdings, and any and all liabilities with respect to
the foregoing, but excluding Excluded Taxes.
"Total Assets" means all assets of Midas and its Subsidiaries, on a
consolidated basis, reflected on a balance sheet prepared in accordance with
Agreement Accounting Principles.
"Transaction Date" means, in respect of specified representations and
warranties set forth in Article V, the applicable of (a) the date of this
Agreement, (b) the Closing Date or (c) the date on which the remaining
transactions comprising the Distribution are consummated.
"Transaction Documents" means the Loan Documents and the Distribution
Documents.
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<PAGE>
"Transferee" is defined in Section 12.4.
"Type" means, with respect to any Advance, its nature as an Alternate Base
Rate Advance, a Eurodollar Advance or an Absolute Rate Advance.
"Unfunded Liabilities" means the amount (if any) by which the present value
of all vested and unvested accrued benefits under all Single Employer Plans
exceeds the fair market value of all such Plan assets allocable to such
benefits, all determined as of the then most recent valuation date for such
Plans using PBGC actuarial assumptions for single employer plan terminations.
"Unmatured Default" means an event which but for the lapse of time or the
giving of notice, or both, would constitute a Default.
"Whitman" means Whitman Corporation, a Delaware corporation.
"Wholly-Owned Subsidiary" of a Person means (a) any Subsidiary all of the
outstanding voting securities of which shall at the time be owned or controlled,
directly or indirectly, by such Person or one or more Wholly-Owned Subsidiaries
of such Person, or by such Person and one or more Wholly-Owned Subsidiaries of
such Person, or (b) any partnership, association, joint venture, limited
liability company or similar business organization 100% of the ownership
interests having ordinary voting power of which shall at the time be so owned or
controlled.
The foregoing definitions shall be equally applicable to both the singular
and plural forms of the defined terms.
ARTICLE II
THE FACILITY
2.1. The Facility.
2.1.1. Description of Facility. Subject to Section 2.1.4, the
Lenders hereby establish in favor of the Borrowers a revolving credit facility
pursuant to which, and upon the terms and subject to the conditions herein set
out:
(a) each Lender severally agrees to make Ratable Loans to
the Borrowers in accordance with Section 2.2 in amounts not to exceed in
the aggregate at any one time outstanding the amount of its Commitment less
the amount of such Lender's pro-rata share of the sum of (i) the
outstanding principal amount of all Competitive Bid Advances (regardless of
which Lender or Lenders made such Competitive Bid Advances) exclusive of
Competitive Bid Advances being repaid substantially contemporaneously with
the making of any such Ratable Loans plus (ii) the outstanding amount of
Facility Letter of Credit Obligations at such time; and
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<PAGE>
(b) each Lender may, in its sole discretion, make bids to make
Competitive Bid Loans to either Borrower, and make such Loans, in
accordance with Section 2.3.
2.1.2. Facility Amount. In no event may the sum of (a) the aggregate
principal amount of all outstanding Advances (including both the Ratable
Advances and the Competitive Bid Advances) plus (b) the outstanding amount of
Facility Letter of Credit Obligations at any time exceed the Aggregate
Commitment.
2.1.3. Availability of Facility. Subject to Section 2.1.4 and the
other terms of this Agreement, from and including the date hereof to, but not
including the Facility Termination Date, each Borrower may borrow, repay and
reborrow Advances hereunder. All outstanding Advances and all other unpaid
Obligations shall be due and payable in full by the applicable Borrower on the
Facility Termination Date.
2.1.4. Advances to Midas. Notwithstanding any other provision of this
Agreement to the contrary, Midas shall not request or receive any Advances
hereunder or request the issuance of any Facility Letter of Credit hereunder
until all of the transactions comprising the Distribution have been completed,
as evidenced by the delivery to the Lenders of the certificate described in
Section 7.11; provided, that Midas shall at all times constitute a Borrower for
all other purposes of this Agreement.
2.2. Ratable Advances.
2.2.1. Ratable Advances. Each Ratable Advance hereunder shall consist
of borrowings made from the several Lenders ratably in proportion to the ratio
that their respective Commitments bear to the Aggregate Commitment without
regard to the outstanding Competitive Bid Advances made by such Lenders.
2.2.2 Ratable Advance Rate Options. The Ratable Advances may be
Alternate Base Rate Advances or Eurodollar Ratable Advances, or a combination
thereof, selected by the applicable Borrower in accordance with Section 2.2.3 or
2.2.4. No Ratable Advance may mature after, or have an Interest Period which
extends beyond, the Facility Termination Date.
2.2.3. Method of Selecting Types and Interest Periods for Ratable
Advances . The applicable Borrower shall select the Type of each Ratable Advance
and, in the case of each Eurodollar Ratable Advance, the Eurodollar Interest
Period applicable to such Ratable Advance from time to time. Such Borrower shall
give the Administrative Agent irrevocable notice (a "Ratable Borrowing Notice")
not later than 10:00 a.m. (Chicago time) on the Borrowing Date of each Alternate
Base Rate Advance and three Business Days before the Borrowing Date for each
Eurodollar Ratable Advance. Notwithstanding the foregoing, a Ratable Borrowing
Notice for an Alternate Base Rate Advance may be given by the applicable
Borrower not later than 30 minutes after the time which the applicable Borrower
is required to reject one or more bids offered in connection with an Absolute
Rate Auction pursuant to Section 2.3.6 and a Ratable Borrowing Notice
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for a Eurodollar Ratable Advance may be given by the applicable Borrower not
later than 30 minutes after the time the applicable Borrower is required to
reject one or more bids offered in connection with a Eurodollar Auction pursuant
to Section 2.3.6. A Ratable Borrowing Notice shall specify:
(a) the Borrowing Date, which shall be a Business Day, of such
Ratable Advance and the Borrower of such Advance;
(b) the aggregate amount of such Ratable Advance, which, when
added to all outstanding Ratable Advances and Competitive Bid Advances and
after giving effect to the repayment of any such outstanding Advances out
of the proceeds of the requested Ratable Advance, shall not exceed the
Aggregate Commitment;
(c) the Type of Advance selected; and
(d) in the case of each Eurodollar Ratable Advance, the
Eurodollar Interest Period applicable thereto (which may not end after the
Facility Termination Date).
2.2.4. Conversion and Continuation of Outstanding Ratable Advances.
Alternate Base Rate Advances shall continue as Alternate Base Rate Advances
unless and until such Alternate Base Rate Advances are converted into Eurodollar
Ratable Advances. Each Eurodollar Ratable Advance shall continue as a Eurodollar
Ratable Advance until the end of the then applicable Eurodollar Interest Period
therefor, at which time such Eurodollar Ratable Advance shall be automatically
converted into an Alternate Base Rate Advance unless the applicable Borrower
shall have given the Administrative Agent a Conversion/Continuation Notice
requesting that, at the end of such Eurodollar Interest Period, such Eurodollar
Ratable Advance continue as a Eurodollar Ratable Advance for the same or another
Eurodollar Interest Period. Subject to the terms of Section 2.6, either Borrower
may elect from time to time to convert all or any part of a Ratable Advance of
any Type into any other Type or Types of Ratable Advances; provided, that any
conversion of any Eurodollar Ratable Advance shall be made on, and only on, the
last day of the Eurodollar Interest Period applicable thereto. The applicable
Borrower shall give the Administrative Agent irrevocable notice (a
"Conversion/Continuation Notice") of each conversion of a Ratable Advance or
continuation of a Eurodollar Ratable Advance not later than 10:00 a.m. (Chicago
time) at least three Business Days, in the case of a conversion into or
continuation of a Eurodollar Ratable Advance, prior to the date of the requested
conversion or continuation, specifying:
(a) the requested date, which shall be a Business Day, of such
conversion or continuation;
(b) the aggregate amount and Type of Ratable Advance which is to
be converted or continued; and
(c) the amount and Type(s) of Ratable Advance(s) into which such
Ratable Advance is to be converted or continued and, in the case of a
conversion into or continuation of an Eurodollar Ratable Advance, the
duration of the Eurodollar Interest Period applicable thereto.
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2.3. Competitive Bid Advances.
2.3.1. Competitive Bid Option. In addition to Ratable Advances
pursuant to Section 2.2, but subject to the terms and conditions of this
Agreement (including, without limitation, the limitation set forth in Section
2.1.2 as to the maximum aggregate principal amount of all outstanding Advances
and Facility Letter of Credit Obligations hereunder), prior to the Facility
Termination Date either Borrower may, as set forth in this Section 2.3, request
the Lenders to make offers to make Competitive Bid Advances to such Borrower.
Each Lender may, but shall have no obligation to, make such offers and the
applicable Borrower may, but shall have no obligation to, accept any such offers
in the manner set forth in this Section 2.3.
2.3.2. Competitive Bid Quote Request. When either Borrower wishes
to request offers to make Competitive Bid Loans under this Section 2.3, it shall
transmit to the Administrative Agent by telecopy a Competitive Bid Quote Request
substantially in the form of Exhibit C hereto so as to be received no later than
(a) 10:00 a.m. (Chicago time) at least four Business Days prior to the Borrowing
Date proposed therein, in the case of a Eurodollar Auction or (b) 9:00 a.m.
(Chicago time) at least one Business Day prior to the Borrowing Date proposed
therein, in the case of an Absolute Rate Auction specifying:
(a) the proposed Borrowing Date, which shall be a Business
Day, for the proposed Competitive Bid Advance;
(b) the aggregate principal amount of such Competitive Bid
Advance;
(c) whether the Competitive Bid Quotes requested are to set
forth a Eurodollar Bid Rate, an Absolute Rate, or both; and
(d) the Interest Period applicable thereto (which may not end
after the Facility Termination Date).
Either Borrower may request offers to make Competitive Bid Loans for more than
one Interest Period in a single Competitive Bid Quote Request. No Competitive
Bid Quote Request shall be given within 5 Business Days (or such other number of
days as the applicable Borrower and the Administrative Agent may agree) of any
other Competitive Bid Quote Request. A Competitive Bid Quote Request that does
not conform substantially to the format of Exhibit C hereto shall be rejected,
and the Administrative Agent shall promptly notify the applicable Borrower of
such rejection by telecopy.
2.3.3. Invitation for Competitive Bid Quotes. Promptly and in any
event before the close of business on the same Business Day of receipt of a
Competitive Bid Quote Request that is not rejected pursuant to Section 2.3.2,
the Administrative Agent shall send to each of the Lenders by
telecopy an Invitation for Competitive Bid Quotes substantially in the form of
Exhibit D hereto, which shall constitute an invitation by the applicable
Borrower to each Lender to submit Competitive Bid Quotes offering to make the
Competitive Bid Loans to which such Competitive Bid Quote Request relates in
accordance with this Section 2.3.
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2.3.4. Submission and Contents of Competitive Bid Quotes.
(a) Each Lender may, in its sole discretion, submit a
Competitive Bid Quote containing an offer or offers to make Competitive Bid
Loans in response to any Invitation for Competitive Bid Quotes. Each
Competitive Bid Quote must comply with the requirements of this Section
2.3.4 and must be submitted to the Administrative Agent by telecopy at its
offices specified in or pursuant to Article XV not later than (i) 9:00 a.m.
(Chicago time) at least three Business Days prior to the proposed Borrowing
Date, in the case of a Eurodollar Auction or (ii) 9:00 a.m. (Chicago time)
on the proposed Borrowing Date, in the case of an Absolute Rate Auction
(or, in either case upon reasonable prior notice to the Lenders, such other
time and date as the applicable Borrower and the Administrative Agent may
agree); provided, that Competitive Bid Quotes submitted by First Chicago
may only be submitted if the Administrative Agent or First Chicago notifies
the applicable Borrower of the terms of the offer or offers contained
therein not later than 15 minutes prior to the latest time at which the
relevant Competitive Bid Quotes must be submitted by the other Lenders.
Subject to Articles IV and VIII, any Competitive Bid Quote so made shall be
irrevocable except with the written consent of the Administrative Agent
given on the instructions of the applicable Borrower.
(b) Each Competitive Bid Quote shall be in substantially the
form of Exhibit E hereto and shall in any case specify:
(i) the proposed Borrowing Date, which shall be the
same as that set forth in the applicable Invitation for Competitive
Bid Quotes;
(ii) the principal amount of the Competitive Bid Loan
for which each such offer is being made, which principal amount a) may
be greater than, less than or equal to the Commitment of the quoting
Lender, b) must be at least $5,000,000 and an integral multiple of
$1,000,000, and c) may not exceed the principal amount of Competitive
Bid Loans for which offers were requested;
(iii) in the case of a Eurodollar Auction, the
Competitive Bid Margin offered for each such Competitive Bid Loan;
(iv) the minimum amount, if any, of the Competitive Bid
Loan which may be accepted by the applicable Borrower;
(v) in the case of an Absolute Rate Auction, the
Absolute Rate offered for each such Competitive Bid Loan; and
(vi) the identity of the quoting Lender.
(c) The Administrative Agent shall reject any Competitive Bid
Quote that:
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(i) is not substantially in the form of Exhibit E
hereto or does not specify all of the information required by Section
2.3.4(b);
(ii) contains qualifying, conditional or similar
language, other than any such language contained in Exhibit E hereto;
(iii) proposes terms other than or in addition to those
set forth in the applicable Invitation for Competitive Bid Quotes; or
(iv) arrives after the time set forth in Section
2.3.4(a).
If any Competitive Bid Quote shall be rejected pursuant to this Section
2.3.4(c), then the Administrative Agent shall promptly notify the relevant
Lender of such rejection.
2.3.5. Notice to Applicable Borrower. The Administrative Agent shall
promptly notify the applicable Borrower of the terms (a) of any Competitive Bid
Quote submitted by a Lender that is in accordance with Section 2.3.4 and (b) of
any Competitive Bid Quote that amends, modifies or is otherwise inconsistent
with a previous Competitive Bid Quote submitted by such Lender with respect to
the same Competitive Bid Quote Request. Any such subsequent Competitive Bid
Quote shall be disregarded by the Administrative Agent unless such subsequent
Competitive Bid Quote specifically states that it is submitted solely to correct
a manifest error in such former Competitive Bid Quote. The Administrative
Agent's notice to the applicable Borrower shall specify the aggregate principal
amount of Competitive Bid Loans for which offers have been received for each
Interest Period specified in the related Competitive Bid Quote Request and the
respective principal amounts and Eurodollar Bid Rates or Absolute Rates, as the
case may be, so offered.
2.3.6. Acceptance and Notice by Applicable Borrower. Not later
than (a) 10:00 a.m. (Chicago time) at least three Business Days prior to the
proposed Borrowing Date, in the case of a Eurodollar Auction or (b) 10:00 a.m.
(Chicago time) on the proposed Borrowing Date, in the case of an Absolute Rate
Auction (or, in either case upon reasonable prior notice to the Lenders, such
other time and date as the applicable Borrower and the Administrative Agent may
agree), the applicable Borrower shall notify the Administrative Agent of its
acceptance or rejection of the offers so notified to it pursuant to Section
2.3.5; provided, however, that the failure by the applicable Borrower to give
such notice to the Administrative Agent shall be deemed to be a rejection of all
such offers. In the case of acceptance, such notice (a "Competitive Bid
Borrowing Notice") shall specify the aggregate principal amount of
offers for each Interest Period that are accepted. The applicable Borrower may
accept any Competitive Bid Quote in whole or in part (subject to the terms of
Section 2.3.4(b)(iv)); provided, that:
(a) the aggregate principal amount of each Competitive Bid
Advance may not exceed the applicable amount set forth in the related
Competitive Bid Quote Request,
(b) acceptance of offers may only be made on the basis of
ascending Eurodollar Bid Rates or Absolute Rates, as the case may be, and
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(c) The applicable Borrower may not accept any offer that is
described in Section 2.3.4(c) or that otherwise fails to comply with the
requirements of this Agreement.
2.3.7. Allocation by Administrative Agent. If offers are made by two
or more Lenders with the same Eurodollar Bid Rates or Absolute Rates, as the
case may be, for a greater aggregate principal amount than the amount in respect
of which offers are accepted for the related Interest Period, the principal
amount of Competitive Bid Loans in respect of which such offers are accepted
shall be allocated by the Administrative Agent among such Lenders as nearly as
possible (in such multiples, not greater than $1,000,000, as the Administrative
Agent may deem appropriate) in proportion to the aggregate principal amount of
such offers; provided, however, that no Lender shall be allocated a portion of
any Competitive Bid Advance which is less than the minimum amount which such
Lender has indicated that it is willing to accept. Allocations by the
Administrative Agent of the amounts of Competitive Bid Loans shall be conclusive
in the absence of manifest error. The Administrative Agent shall promptly, but
in any event on the same Business Day, notify each Lender of its receipt of a
Competitive Bid Borrowing Notice and the aggregate principal amount of such
Competitive Bid Advance allocated to each participating Lender.
2.4. Availability of Funds. Not later than noon (Chicago time) on each
Borrowing Date, each Lender (or in the case of a Competitive Bid Advance, each
Lender making a portion of such Advance) shall make available its Loan or Loans,
in funds immediately available in Chicago to the Administrative Agent at its
address specified pursuant to Article XV. The Administrative Agent will make
the funds so received from the Lenders available to the applicable Borrower at
the Administrative Agent's aforesaid address promptly following its receipt of
all such funds.
2.5. Facility Fee; Reductions in Aggregate Commitment.
(a Each Borrower agrees, on a joint and several basis, to pay to
the Administrative Agent for the ratable account of each Lender a facility fee
(the "Facility Fee") in an amount equal to the Facility Fee Percentage times the
daily average Commitment of such Lender (regardless of usage) during the
relevant period from the Closing Date to but excluding the Facility Termination
Date, payable in arrears on each Payment Date hereafter and on the Facility
Termination Date. All accrued Facility Fees shall be payable on the effective
date of any termination of the obligations of the Lenders to make Loans
hereunder.
(b The Borrowers may permanently reduce the Aggregate Commitment
in whole, or in part ratably among the Lenders, in the minimum amount of
$5,000,000 (and in multiples of $1,000,000 if in excess thereof), upon at least
two Business Days' written notice to the Administrative Agent, which notice
shall specify the amount of any such reduction; provided, however, that the
amount of the Aggregate Commitment may not be reduced below the sum of (i) the
aggregate principal amount of the outstanding Advances, plus (ii) the aggregate
amount of the outstanding Facility Letter of Credit Obligations. Any such
reduction shall ratably reduce the Commitment of each Lender.
2.6. Minimum Amount of Each Advance. Each Eurodollar Advance shall be
in the minimum amount of $5,000,000 (and in multiples of $1,000,000 if in excess
thereof), and each
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Alternate Base Rate Advance shall be in the minimum amount of $5,000,000 (and in
multiples of $1,000,000 if in excess thereof); provided, however, that (a) any
Alternate Base Rate Advance may be in the amount of the unused Aggregate
Commitment and (b) in no event shall more than twelve (12) Eurodollar Advances
(or such greater number as shall be acceptable to the Administrative Agent) be
permitted to be outstanding at any time.
2.7. Optional Principal Payments. Either Borrower may from time to time
pay, without penalty or premium, all outstanding Advances (other than
Competitive Bid Advances, which may not be voluntarily prepaid absent the prior
consent of the applicable Lenders), or, in a minimum aggregate amount of
$5,000,000 or any integral multiple of $1,000,000 in excess thereof, any portion
of the outstanding Advances (other than Competitive Bid Advances) upon notice to
the Administrative Agent not later than 12:00 noon (Chicago time) on the date of
prepayment. Any prepayment of a Eurodollar Advance prior to the last day of the
applicable Eurodollar Interest Period shall be subject to the indemnity
provisions of Section 3.4.
2.8. Mandatory Prepayments. If at any time the aggregate amount of the
sum of the Loans and the Facility Letter of Credit Obligations exceeds the
Aggregate Commitment, the Borrowers shall repay immediately then outstanding
Loans in such amount as may be necessary to eliminate such excess; provided,
that if an excess remains after repayment of all outstanding Loans, then the
Borrowers shall cash collateralize the Facility Letter of Credit Obligations by
depositing into the Letter of Credit Cash Collateral Account such amount as may
be necessary to eliminate such excess.
2.9. Changes in Interest Rate, etc. Each Alternate Base Rate Advance
shall bear interest at the Alternate Base Rate from and including the date of
such Advance or the date on which such Advance was converted into an Alternate
Base Rate Advance to (but not including) the date on which such Alternate Base
Rate Advance is paid or converted to a Eurodollar Ratable Advance. Changes in
the rate of interest on that portion of any Advance maintained as an Alternate
Base Rate Advance will take effect simultaneously with each change in the
Alternate Base Rate. Each Eurodollar Ratable Advance and Absolute Rate Advance
shall bear interest from and including the first day of the Interest Period
applicable thereto to, but not including, the last day of such Interest Period
at the interest rate determined as applicable to such Eurodollar Ratable Advance
or Absolute Rate Advance. No Interest Period may end after the Facility
Termination Date.
2.10. Rates Applicable After Default. Notwithstanding anything to the
contrary contained in Section 2.2.3 and 2.2.4, no Advance may be made as,
converted into or continued as a Eurodollar Ratable Advance (except with the
consent of the Administrative Agent and the Required Lenders) when any Default
or Unmatured Default has occurred and is continuing. During the continuance of
a Default, the Required Lenders may, at their option, by notice to Midas (which
notice may be revoked at the option of the Required Lenders notwithstanding any
provision of Section 8.2 requiring unanimous consent of the Lenders to changes
in interest rates), declare that each Eurodollar Advance and Alternate Base Rate
Advance shall bear interest during the continuance of such Default (and, if
applicable, for the remainder of the applicable Interest Period in the case of
Eurodollar Advances and Absolute Rate Advances) at a rate per annum equal to the
rate otherwise applicable plus one percent (1%) per annum; provided, however,
that during the continuance of a Default under Section
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7.6 or 7.7, the interest rate set forth above shall be applicable to all
Advances without any election or action on the part of the Administrative Agent
or any Lender.
2.11. Method of Payment. All payments of the Obligations hereunder shall
be made, without setoff, deduction or counterclaim, in immediately available
funds to the Administrative Agent at the Administrative Agent's address
specified pursuant to Article XV, or at any other Lending Installation of the
Administrative Agent specified in writing by the Administrative Agent to Midas,
by noon (Chicago time) on the date when due (it being understood that the
Administrative Agent shall be deemed to have received a payment prior to noon if
the applicable Borrower has provided the Administrative Agent with a Fed
reference number confirming such payment prior to such time) and, except for
repayments of Competitive Bid Loans or as set forth in Section 2.18.3, shall be
applied ratably by the Administrative Agent among the Lenders. Each payment
delivered to the Administrative Agent for the account of any Lender shall be
delivered promptly by the Administrative Agent to such Lender in the same type
of funds that the Administrative Agent received at its address specified
pursuant to Article XV or at any Lending Installation specified in a notice
received by the Administrative Agent from such Lender.
2.12. Telephonic Notices. Each Borrower, to the extent applicable, hereby
authorizes the Lenders and the Administrative Agent to extend, convert or
continue Advances, effect selections of Types of Advances, submit Competitive
Bid Quotes and to transfer funds based on telephonic notices made by any person
or persons the Administrative Agent or any Lender in good faith believes to be
an Authorized Officer of such Borrower or an officer, employee or agent of such
Borrower designated by any such Authorized Officer. Each Borrower agrees to
deliver promptly to the Administrative Agent a written confirmation, if such
confirmation is requested by the Administrative Agent or any Lender, of each
telephonic notice signed by an Authorized Officer. If the written confirmation
differs in any material respect from the action taken by the Administrative
Agent and the Lenders, the records of the Administrative Agent and the Lenders
shall govern absent manifest error.
2.13. Noteless Agreement; Evidence of Indebtedness. (a) Each Lender shall
maintain in accordance with its usual practice an account or accounts evidencing
the indebtedness of each Borrower to such Lender resulting from each Loan made
by such Lender from time to time, including the amounts of principal and
interest payable and paid to such Lender from time to time hereunder.
(b) The Administrative Agent shall also maintain accounts in which it
will record (i) the amount of each Loan made hereunder, the Type thereof and the
Interest Period with respect thereto, (ii) the amount of any principal or
interest due and payable or to become due and payable from each Borrower to each
Lender hereunder and (iii) the amount of any sum received by the Administrative
Agent hereunder from each Borrower and each Lender's share thereof.
(c) The entries maintained in the accounts maintained pursuant to
paragraphs (a) and (b) above shall be prima facie evidence of the existence and
amounts of the Obligations therein recorded absent manifest error; provided,
however, that the failure of the Administrative Agent or any Lender
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to maintain such accounts or any error therein shall not in any manner affect
the obligation of either Borrower to repay the Obligations in accordance with
their terms.
(d) Any Lender may request that its Loans be evidenced by a Note. In such
event, the applicable Borrower shall prepare, execute and deliver to such Lender
a Note payable to the order of such Lender. Thereafter, the Loans evidenced by
such Note and interest thereon shall at all times (including after any
assignment pursuant to Section 12.3.1) be represented by one or more Notes
payable to the order of the payee named therein or any assignee pursuant to
Section 12.3.1, except to the extent that any such Lender or assignee
subsequently returns any such Note for cancellation and requests that such Loans
once again be evidenced as described in paragraphs (a) and (b) above.
2.14. Interest Payment Dates; Interest and Fee Basis. Interest accrued on
each Alternate Base Rate Advance shall be payable on each Payment Date,
commencing with the first such date to occur after the date hereof, on any date
on which an Alternate Base Rate Advance is prepaid, whether due to acceleration
or otherwise, and at maturity. Interest accrued on each Eurodollar Advance or
Absolute Rate Advance shall be payable on the last day of its applicable
Interest Period, on any date on which the Eurodollar Advance or Absolute Rate
Advance is prepaid, whether by acceleration or otherwise, and at maturity.
Interest accrued on each Eurodollar Advance or Absolute Rate Advance having an
Interest Period longer than three months shall also be payable on the last day
of each three-month interval during such Interest Period. Interest on each
Alternate Base Rate Advance shall be calculated for actual days elapsed on the
basis of a 365/366-day year. Interest on each other Type of Advance and Facility
Fees shall be calculated for actual days elapsed on the basis of a 360-day year.
Interest shall be payable for the day an Advance is made but not for the day of
any payment on the amount paid if payment is received prior to 1:00 p.m.
(Chicago time) at the place of payment. If any payment of principal of or
interest on an Advance or of any fee shall become due on a day which is not a
Business Day, such payment shall be made on the next succeeding Business Day
and, in the case of a principal payment, such extension of time shall be
included in computing interest in connection with such payment.
2.15. Notification of Advances, Interest Rates, Prepayments, Commitment
Reductions and Issuance Requests. Promptly after receipt thereof, the
Administrative Agent will notify each Lender of the contents of each Aggregate
Commitment reduction notice, Ratable Borrowing Notice, Conversion/Continuation
Notice, Invitation for Competitive Quotes, Issuance Request and repayment notice
received by it hereunder. The Administrative Agent will notify each Lender of
the interest rate applicable to each Eurodollar Advance promptly upon
determination of such interest rate and will give each Lender prompt notice of
each change in the Alternate Base Rate.
2.16. Lending Installations. Each Lender may book its Loans at any
Lending Installation selected by such Lender and may change its Lending
Installation from time to time. All terms of this Agreement shall apply to any
such Lending Installation and the Loans and any Notes shall be deemed held by
each Lender for the benefit of such Lending Installation. Each Lender may, by
written notice to the Administrative Agent and Midas, designate a Lending
Installation through which Loans will be made by it and for whose account Loan
payments are to be made.
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2.17. Non-Receipt of Funds by the Administrative Agent. Unless the
applicable Borrower or a Lender, as the case may be, notifies the Administrative
Agent prior to the date on which it is scheduled to make payment to the
Administrative Agent of (a) in the case of a Lender, the proceeds of a Loan, or
(b) in the case of either Borrower, a payment of principal, interest or fees to
the Administrative Agent for the account of the Lenders, that it does not intend
to make such payment, the Administrative Agent may assume that such payment has
been made. The Administrative Agent may, but shall not be obligated to, make
the amount of such payment available to the intended recipient in reliance upon
such assumption. If such Lender or Borrower, as the case may be, has not in
fact made such payment to the Administrative Agent, the recipient of such
payment shall, on demand by the Administrative Agent, repay to the
Administrative Agent the amount so made available together with interest thereon
in respect of each day during the period commencing on the date such amount was
so made available by the Administrative Agent until the date the Administrative
Agent recovers such amount at a rate per annum equal to (x) in the case of a
payment by a Lender, the Federal Funds Effective Rate for such day or (y) in
the case of a payment by either Borrower, the interest rate applicable to the
relevant Loan.
2.18. Facility Letters of Credit.
2.18.1. Issuance of Facility Letters of Credit. (a) From and
after the date hereof, subject to Section 2.1.4, the Issuer agrees, upon
the terms and conditions set forth in this Agreement, to issue at the
request of either Borrower, one or more Facility Letters of Credit;
provided, however, that the Issuer shall not be under any obligation to
issue, and shall not issue, any Facility Letter of Credit if (i) any order,
judgment or decree of any Governmental Authority or other regulatory body
with jurisdiction over the Issuer shall purport by its terms to enjoin or
restrain such Issuer from issuing such Facility Letter of Credit, or any
law or governmental rule, regulation, policy, guideline or directive
(whether or not having the force of law) from any Governmental Authority or
other regulatory body with jurisdiction over the Issuer shall prohibit,
or request that the Issuer refrain from, the issuance of Facility Letters
of Credit in particular or shall impose upon the Issuer with respect to any
Facility Letter of Credit any restriction or reserve or capital requirement
(for which the Issuer is not otherwise compensated) or any unreimbursed
loss, cost or expense which was not applicable, in effect and known to the
Issuer as of the date of this Agreement and which the Issuer in good faith
deems material to it; (ii) one or more of the conditions to such issuance
contained in Section 4.2 is not then satisfied; or (iii) after giving
effect to such issuance, the aggregate outstanding amount of the Facility
Letter of Credit Obligations would exceed the Facility Letter of Credit
Sublimit.
(b) In no event shall: (i) the aggregate amount of the Facility
Letter of Credit Obligations at any time exceed the Facility Letter of
Credit Sublimit; (ii) the sum at any time of (A) the aggregate amount of
Facility Letter of Credit Obligations and (B) the aggregate principal
balance of outstanding Advances exceed the amount of the Aggregate
Commitment; or (iii) the expiration date of any Facility Letter of Credit
(including, without limitation, Facility Letters of Credit issued with an
automatic "evergreen" provision providing for renewal absent advance notice
by the applicable Borrower or the Issuer), or the
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date for payment of any draft presented thereunder and accepted by the
Issuer, be later than January 15, 2003.
2.18.2 Participating Interests. Immediately upon the issuance by the
Issuer of a Facility Letter of Credit in accordance with Section 2.18.4,
each Lender shall be deemed to have irrevocably and unconditionally
purchased and received from the Issuer, without recourse, representation or
warranty, an undivided participation interest equal to its pro-rata share
of the Aggregate Commitment of the face amount of such Facility Letter of
Credit and each draw paid by the Issuer thereunder. Each Lender's
obligation to pay its proportionate share of all draws under the Facility
Letters of Credit, absent gross negligence or willful misconduct by the
Issuer in honoring any such draw, shall be absolute, unconditional and
irrevocable and in each case shall be made without counterclaim or set-off
by such Lender.
2.18.3 Facility Letter of Credit Reimbursement Obligations. (a)
Each Borrower agrees to pay to the Issuer of each Facility Letter of Credit
issued for its account (i) on each date that any amount is drawn under such
Facility Letter of Credit a sum (and interest on such sum as provided in
clause (ii) below) equal to the amount so drawn plus all other charges and
expenses with respect thereto specified in Section 2.18.6 or in the
applicable Reimbursement Agreement and (ii) interest on any and all amounts
remaining unpaid under this Section 2.18.3 until payment in full at the
Alternate Base Rate plus 1.0% per annum. Each Borrower agrees to pay to
the Issuer the amount of all Facility Letter of Credit Reimbursement
Obligations owing in respect of each Facility Letter of Credit issued for
its account immediately when due, under all circumstances, including,
without limitation, any of the following circumstances: (w) any lack of
validity or enforceability of this Agreement or any of the other Loan
Documents; (x) the existence of any claim, set-off, defense or other right
which either Borrower may have at any time against a beneficiary named in a
Facility Letter of Credit, any transferee of any Facility Letter of Credit
(or any Person for whom any such transferee may be acting), any Lender or
any other Person, whether in connection with this Agreement, any Facility
Letter of Credit, the transactions contemplated herein or any unrelated
transactions (including any underlying transaction between such Borrower
and the beneficiary named in any Facility Letter of Credit); (y) the
validity, sufficiency or genuineness of any document which the Issuer has
determined (absent its gross negligence or willful misconduct) complies on
its face with the terms of the applicable Facility Letter of Credit, even
if such document should later prove to have been forged, fraudulent,
invalid or insufficient in any respect or any statement therein shall have
been untrue or inaccurate in any respect; or (z) the surrender or
impairment of any security for the performance or observance of any of the
terms hereof.
(b) Notwithstanding any provisions to the contrary in any
Reimbursement Agreement, each Borrower agrees to reimburse the Issuer for
amounts which the Issuer pays under each Facility Letter of Credit issued
for its account no later than the time specified in this Agreement. If the
applicable Borrower does not pay any such Facility Letter of Credit
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Reimbursement Obligations when due, then such Borrower shall be deemed to
have immediately requested that the Lenders make an Alternate Base Rate
Advance under this Agreement in a principal amount equal to such
unreimbursed Facility Letter of Credit Reimbursement Obligations. The
Administrative Agent shall promptly notify the Lenders of such deemed
request and, without the necessity of compliance with the requirements of
Sections 2.6 and 4.2, each Lender shall make available to the
Administrative Agent its Loan in the manner prescribed for Alternate Base
Rate Advances. The proceeds of such Loans shall be paid over by the
Administrative Agent to the Issuer for the account of the applicable
Borrower in satisfaction of such unreimbursed Facility Letter of Credit
Reimbursement Obligations, which shall thereupon be deemed satisfied by the
proceeds of, and replaced by, such Alternate Base Rate Advance.
(c) If the Issuer makes a payment on account of any Facility Letter
of Credit and is not concurrently reimbursed therefor by the applicable
Borrower and if for any reason an Alternate Base Rate Advance may not be
made pursuant to paragraph (b) above, then as promptly as practical during
normal banking hours on the date of its receipt of such notice or, if not
practicable on such date, not later than noon (Chicago time) on the
Business Day immediately succeeding such date of notification, each Lender
shall deliver to the Administrative Agent for the account of the Issuer, in
immediately available funds, the purchase price for such Lender's interest
in such unreimbursed Facility Letter of Credit Obligations, which shall be
an amount equal to such Lender's pro-rata share of such payment. Each
Lender shall, upon demand by the Issuer, pay the Issuer interest on such
Lender's pro-rata share of such draw from the date of payment by the Issuer
on account of such Facility Letter of Credit until the date of delivery of
such funds to the Issuer by such Lender at a rate per annum, computed for
actual days elapsed based on a 360-day year, equal to the Federal Funds
Effective Rate for such period; provided, that such payments shall be made
by the Lenders only in the event and to the extent that the Issuer is not
reimbursed in full by the applicable Borrower for interest on the amount of
any draw on the Facility Letters of Credit.
(d) At any time after the Issuer has made a payment on account of any
Facility Letter of Credit and has received from any other Lender such
Lender's pro-rata share of such payment, such Issuer shall, forthwith upon
its receipt of any reimbursement (in whole or in part) by the applicable
Borrower for such payment, or of any other amount from the applicable
Borrower or any other Person in respect of such payment (including, without
limitation, any payment of interest or penalty fees and any payment under
any collateral account agreement of the applicable Borrower or any Loan
Document but excluding any transfer of funds from any other Lender pursuant
to Section 2.18.3(b)), transfer to such other Lender such other Lender's
ratable share of such reimbursement or other amount; provided, that
interest shall accrue for the benefit of such Lender from the time such
Issuer has made a payment on account of any Facility Letter of Credit;
provided, further, that in the event that the receipt by the Issuer of such
reimbursement or other amount is found to have been a transfer in fraud of
creditors or a preferential payment under the Bankruptcy Code or is
otherwise required to be returned, such Lender shall promptly return to the
Issuer any portion thereof previously transferred by the Issuer to such
Lender, but without interest to the extent that interest is not payable by
the Issuer in connection therewith.
2.18.4 Procedure for Issuance. Prior to the issuance of each
Facility Letter of Credit, and as a condition of such issuance, the
applicable Borrower shall deliver to the Issuer (with
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a copy to the Administrative Agent) a Reimbursement Agreement signed by
such Borrower, together with such other documents or items as may be
required pursuant to the terms thereof, and the proposed form and content
of such Facility Letter of Credit shall be reasonably satisfactory to the
Issuer. Each Facility Letter of Credit shall be issued no earlier than two
(2) Business Days (or on such other date as shall be agreed to by the
Issuer and the applicable Borrower) after delivery of the foregoing
documents, which delivery may be by the applicable Borrower to the Issuer
by telecopy or other electronic means followed by delivery of executed
originals within five (5) days thereafter. The documents so delivered shall
be in compliance with the requirements set forth in Section 2.18.1(b), and
shall specify therein (i) the stated amount of the Facility Letter of
Credit requested, (ii) the effective date of issuance of such requested
Facility Letter of Credit, which shall be a Business Day, (iii) the date on
which such requested Facility Letter of Credit is to expire, which shall be
a Business Day prior to January 15, 2003, (iv) the entity for whose benefit
the requested Facility Letter of Credit is to be issued, which shall be
International or, subject to Section 2.1.4, Midas, (v) whether the
requested Facility Letter of Credit is a Standby Letter of Credit or a
Commercial Letter of Credit and (vi) the aggregate amount of Facility
Letter of Credit Obligations which are outstanding and which will be
outstanding after giving effect to the requested Facility Letter of Credit
issuance. The delivery of the foregoing documents and information shall
constitute an "Issuance Request" for purposes of this Agreement. Subject to
the terms and conditions of Section 2.18.1 and provided that the applicable
conditions set forth in Section 4.2 hereof have been satisfied, the Issuer
shall, on the requested date, issue a Facility Letter of Credit on behalf
of the applicable Borrower in accordance with the Issuer's usual and
customary business practices. In addition, any amendment of an existing
Facility Letter of Credit shall be deemed to be an issuance of a new
Facility Letter of Credit and shall be subject to the requirements set
forth above (other than the execution and delivery of a Reimbursement
Agreement, if waived by the Issuer). The Issuer shall give the
Administrative Agent prompt written notice of the issuance of each Facility
Letter of Credit.
2.18.5 Nature of the Lenders' Obligations. (a) As between each
Borrower and the Lenders, such Borrower assumes all risks of the acts and
omissions of, or misuse of the Facility Letters of Credit by, the
respective beneficiaries of the Facility Letters of Credit. In furtherance
and not in limitation of the foregoing, no Lender shall be responsible
(absent its own gross negligence or willful misconduct in connection
therewith) for (i) the form, validity, sufficiency, accuracy, genuineness
or legal effect of any document submitted by any party in connection with
the application for an issuance of a Facility Letter of Credit, even if it
should in fact prove to be in any or all respects invalid, insufficient,
inaccurate, fraudulent or forged; (ii) the validity or sufficiency of any
instrument transferring or assigning or purporting to transfer or assign a
Facility Letter of Credit or the rights or benefits thereunder or proceeds
thereof, in whole or in part, which may prove to be invalid or ineffective
for any reason; (iii) the failure of the beneficiary of a Facility Letter
of Credit to comply fully with conditions required to be satisfied by any
Person other than the Issuer in order to draw upon such Facility Letter of
Credit; (iv) errors, omissions, interruptions or delays in transmission or
delivery of any messages, by mail, cable, telegraph, telex or otherwise;
(v) errors in the interpretation of technical terms; (vi) the
misapplication by the
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beneficiary of a Facility Letter of Credit of the proceeds of any drawing
under such Facility Letter of Credit; or (vii) any consequences arising
from causes beyond control of the Issuer.
(b) In furtherance and extension and not in limitation of the
specific provisions hereinabove set forth, any action taken or omitted by
the Issuer under or in connection with the Facility Letters of Credit or
any related certificates, if taken or omitted absent its gross negligence
or willful misconduct, shall not put the Administrative Agent or any Lender
under any resulting liability to either Borrower or relieve either Borrower
of any of its obligations hereunder to the Issuer or any such Person.
2.18.6 Facility Letter of Credit Fees. Each Borrower hereby agrees to
pay to the Administrative Agent for the account of the Issuer or the
Lenders, as applicable, letter of credit fees with respect to each Facility
Letter of Credit issued for its account from and including the date of
issuance thereof until the date such Facility Letter of Credit is fully
drawn, cancelled or expired, (a) for the account of the Issuer, 0.10% on
the aggregate initial face amount of such Facility Letter of Credit payable
on the date of issuance, and (b) for the ratable account of the Lenders,
equal to the Applicable Margin multiplied by the aggregate amount from time
to time available to be drawn on such Letter of Credit, calculated with
respect to actual days elapsed on the basis of a 360-day year and payable
quarterly in arrears on each Payment Date in each year and upon the
expiration, cancellation or utilization in full of such Facility Letter of
Credit with such fees increased, in the case of clause (b) above, by 1% per
annum while a Default has occurred and is continuing. In addition to the
foregoing, each Borrower agrees to pay the Issuer any other fees
customarily charged by it in respect of Letters of Credit issued by it.
ARTICLE III
CHANGE IN CIRCUMSTANCES
3.1. Yield Protection. If any law or any governmental or quasi-governmental
rule, regulation, policy, guideline or directive, or any interpretation or
implementation thereof, by any Governmental Authority charged with the
administration thereof (which, if not having the force of law, is observed by
the reasonable practice of commercial lenders in the country involved):
(i) subjects any Lender or any applicable Lending Installation to any tax,
duty, charge or withholding on or from payments due from either
Borrower (excluding federal taxation of the overall net income of any
Lender or applicable Lending Installation), or changes the basis of
taxation of payments to any Lender or Lending Installation in respect
of its Loans, its interest in the Facility Letters of Credit or other
amounts due it hereunder, or
(ii) imposes or increases or deems applicable any reserve, assessment,
insurance charge, special deposit or similar requirement against
assets of, deposits with or for the account of, or credit extended by,
any Lender or any applicable Lending Installation
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(other than reserves or assessments taken into account in
determining the interest rate applicable to Eurodollar Advances), or
(iii) imposes any other condition (other than increases in amounts of
capital required under Section 3.2) the result of which is to
increase the cost to any Lender or any applicable Lending
Installation of making, funding or maintaining Loans or issuing or
participating in Facility Letters of Credit or to reduce any amount
receivable by any Lender or any applicable Lending Installation in
connection with any Loans or Facility Letters of Credit, or to
require any Lender or any applicable Lending Installation to make
any payment calculated by reference to the amount of Loans held,
Facility Letters of Credit issued or participated in or interest
received by it, by an amount deemed material by such Lender,
then, within 15 days of demand by such Lender pursuant to Section 3.6 (which
demand shall be made not more than 60 days after such Lender becomes aware of
the event which triggers it), such Borrower shall pay such Lender that portion
of such increased expense incurred or reduction in an amount received which such
Lender determines is attributable to making, funding and maintaining its Loans,
its interest in the Facility Letters of Credit and its Commitment.
3.2. Changes in Capital Adequacy Regulations. If a Lender determines the
amount of capital required or expected to be maintained by such Lender, any
Lending Installation of such Lender or any corporation controlling such Lender
is increased as a result of a Change, then, within 15 days of demand by such
Lender pursuant to Section 3.6 (which demand shall be made not more than 60 days
after such Lender becomes aware of the event which triggers it), each Borrower
shall pay such Lender the amount necessary to compensate for any shortfall in
the rate of return on the portion of such increased capital which such Lender
determines is attributable to this Agreement, its Loans, its interest in
Facility Letters of Credit or its obligation to make Loans or issue or
participate in Facility Letters of Credit hereunder unless each Borrower elects
to terminate this Agreement pursuant to Section 2.5 within the 15 day period
after such Lender's payment demand, in which case no compensation under this
Section 3.2 shall be due and payable. "Change" means (a) any change after the
date of this Agreement in the Risk-Based Capital Guidelines or (b) any adoption
of or change in any other law, governmental or quasi-governmental rule,
regulation, policy, guideline or directive, or any interpretation or
implementation thereof, by any Governmental Authority charged with the
administration thereof (which, if not having the force of law, is observed by
the reasonable practice of commercial lenders in the country involved), after
the date of this Agreement which affects the amount of capital required or
expected to be maintained by any Lender or any Lending Installation or any
corporation controlling any Lender. "Risk-Based Capital Guidelines" means (a)
the risk-based capital guidelines in effect in the United States on the date of
this Agreement, including transition rules, and (b) the corresponding capital
regulations promulgated by regulatory authorities outside the United States
implementing the July 1988 report of the Basle Committee on Banking Regulation
and Supervisory Practices Entitled "International Convergence of Capital
Measurements and Capital Standards," including transition rules, and any
amendments to such regulations adopted prior to the date of this Agreement.
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3.3. Availability of Types of Advances. If any Lender reasonably
determines that maintenance of any of its Eurodollar Ratable Loans at a suitable
Lending Installation would violate any applicable law, rule, regulation or
directive, whether or not having the force of law, the Administrative Agent
shall suspend the availability of Eurodollar Ratable Advances and require any
Eurodollar Ratable Advances be repaid or be promptly converted to an Alternate
Base Rate Advance, subject to the payment of any funding indemnification amounts
pursuant to Section 3.4, but without either Borrower incurring additional cost
or penalty. If the Required Lenders determine that (a) deposits of a type or
maturity appropriate to match fund Eurodollar Ratable Advances are not
available, or (b) the interest rate applicable to a Eurodollar Ratable Advance
does not accurately reflect the cost of making a Eurodollar Ratable Advance,
then the Administrative Agent shall suspend the availability of the Eurodollar
Ratable Advance with respect to any Ratable Advances made after the date of any
such determination until such time that neither such condition remains
applicable. If any Lender determines that maintenance of any of its Eurodollar
Bid Rate Loans at a suitable Lending Installation would violate any applicable
law, rule, regulation or directive, whether or not having the force of law, such
Lender may suspend the availability of such Eurodollar Bid Rate Loan and require
such Eurodollar Bid Rate Loan to be repaid, subject to the payment of any
funding indemnification amounts pursuant to Section 3.4, but without the
applicable Borrower incurring additional cost or penalty, or make such other
arrangement as such Lender and the applicable Borrower may deem appropriate;
provided, however, that any such event shall not affect any other Lender's
outstanding Eurodollar Bid Rate Loans.
3.4. Funding Indemnification. If any payment of a Eurodollar Ratable
Advance occurs on a date which is not the last day of the applicable Eurodollar
Interest Period, whether because of acceleration, prepayment or otherwise, or a
Eurodollar Ratable Advance is not made on the date specified by the applicable
Borrower in the related Ratable Borrowing Notice or Conversion/Continuation
Notice for any reason other than default by the Lenders, the applicable Borrower
will indemnify each Lender for any loss or cost incurred by it resulting
therefrom, including, without limitation, any loss or cost in liquidating or
employing deposits acquired to fund or maintain such Eurodollar Ratable Advance.
If any payment of a Competitive Bid Loan occurs on a date which is not the last
day of the applicable Interest Period, whether because of acceleration,
prepayment or otherwise, or a Competitive Bid Loan is not made on the date
specified by the applicable Borrower for any reason other than default by the
applicable Lender, such Borrower shall indemnify such Lender for such loss or
cost, if any, as may be agreed upon by such Borrower and such Lender. Payment
due under the indemnification set forth in this Section 3.4 shall be made within
15 days of the date such Lender makes demand therefor pursuant to Section 3.6
(which demand shall be made not more than 90 days after the occurrence of the
event which triggers it).
3.5. Taxes. (a) All payments by each Borrower to or for the account of any
Lender or the Administrative Agent hereunder or under any Note shall be made
free and clear of and without deduction for any and all Taxes. If either
Borrower shall be required by law to deduct any Taxes from or in respect of any
sum payable hereunder to any Lender or the Administrative Agent, (i) the sum
payable shall be increased as necessary so that after making all required
deductions (including deductions applicable to additional sums payable under
this Section 3.5) such Lender or the Administrative Agent (as the case may be)
receives an amount equal to the sum it would have received had no such
deductions been made, (ii) such Borrower shall make such deductions, (iii)
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such Borrower shall pay the full amount deducted to the relevant authority in
accordance with applicable law and (iv) such Borrower shall furnish to the
Administrative Agent the original copy of a receipt evidencing payment thereof
within 30 days after such payment is made.
(b) In addition, each Borrower hereby agrees to pay any present or future
stamp or documentary taxes and any other excise or property taxes, charges or
similar levies which arise from any payment made hereunder or under any Note or
from the execution or delivery of, or otherwise with respect to, this Agreement
or any Note ("Other Taxes").
(c) Each Borrower hereby agrees to indemnify the Administrative Agent and
each Lender for the full amount of Taxes or Other Taxes (including, without
limitation, any Taxes or Other Taxes imposed on amounts payable under this
Section 3.5) paid by the Administrative Agent or such Lender and any liability
(including penalties, interest and expenses) arising therefrom or with respect
thereto. Payments due under this indemnification shall be made within 30 days of
the date the Administrative Agent or such Lender makes demand therefor pursuant
to Section 3.6 (which demand shall be made not more than 90 days after the
occurrence of the event which triggers it).
(d) Each Lender that is not incorporated under the laws of the United
States of America or a state thereof (each a "Non-U.S. Lender") agrees that it
will, not less than ten Business Days after the date of this Agreement, (i)
deliver to each of Midas and the Administrative Agent two duly completed copies
of United States Internal Revenue Service Form 1001 or 4224, certifying in
either case that such Lender is entitled to receive payments under this
Agreement without deduction or withholding of any United States federal income
taxes, and (ii) deliver to each of Midas and the Administrative Agent a United
States Internal Revenue Form W-8 or W-9, as the case may be, and certify that it
is entitled to an exemption from United States backup withholding tax. Each Non-
U.S. Lender further undertakes to deliver to each of Midas and the
Administrative Agent (x) renewals or additional copies of such form (or any
successor form) on or before the date that such form expires or becomes
obsolete, and (y) after the occurrence of any event requiring a change in the
most recent forms so delivered by it, such additional forms or amendments
thereto as may be reasonably requested by Midas or the Administrative Agent. All
forms or amendments described in the preceding sentence shall certify that such
Lender is entitled to receive payments under this Agreement without deduction or
withholding of any United States federal income taxes, unless an event
(including without limitation any change in treaty, law or regulation) has
occurred prior to the date on which any such delivery would otherwise be
required which renders all such forms inapplicable or which would prevent such
Lender from duly completing and delivering any such form or amendment with
respect to it and such Lender advises Midas and the Administrative Agent that it
is not capable of receiving payments without any deduction or withholding of
United States federal income tax.
(e) For any period during which a Non-U.S. Lender has failed to provide
Midas with an appropriate form pursuant to clause (d) above (unless such failure
is due to a change in treaty, law or regulation, or any change in the
interpretation or administration thereof by any governmental authority,
occurring subsequent to the date on which a form originally was required to be
provided), such Non-U.S. Lender shall not be entitled to indemnification under
this Section 3.5 with respect to Taxes imposed by the United States; provided
that, should a Non-U.S. Lender which is otherwise
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exempt from or subject to a reduced rate of withholding tax become subject to
Taxes because of its failure to deliver a form required under clause (d) above,
Midas shall take such steps as such Non-U.S. Lender shall reasonably request
(but without the incurrence of any expense by Midas) to assist such Non-U.S.
Lender to recover such Taxes.
(f) Any Lender that is entitled to an exemption from or reduction of
withholding tax with respect to payments under this Agreement or any Note
pursuant to the law of any relevant jurisdiction or any treaty shall deliver to
Midas (with a copy to the Administrative Agent), at the time or times prescribed
by applicable law, such properly completed and executed documentation prescribed
by applicable law as will permit such payments to be made without withholding or
at a reduced rate.
3.6. Lender Statements; Survival of Indemnity. The Administrative Agent or
the applicable Lender, as applicable, shall deliver a written statement of the
Administrative Agent or such Lender to the applicable Borrower as to the amount
due, if any, under Section 3.1, 3.2, 3.4 or 3.5. Such written statement shall
set forth in reasonable detail the calculations upon which such Lender
determined such amount and shall be prima facie evidence of the accuracy thereof
absent manifest error. Determination of amounts payable under such Sections in
connection with a Eurodollar Ratable Loan shall be calculated as though each
Lender funded its Eurodollar Ratable Loan through the purchase of a deposit of
the type and maturity corresponding to the deposit used as a reference in
determining the Eurodollar Rate applicable to such Eurodollar Ratable Loan,
whether in fact that is the case or not. The obligations of each Borrower under
Sections 3.1, 3.2, 3.4 and 3.5 shall survive the payment of the Obligations and
the termination of this Agreement.
3.7. Mitigation of Additional Costs or Adverse Circumstances. If, in
respect of any Lender, circumstances arise which would or would upon the giving
of notice result in (i) an increase in the liability of either Borrower to such
Lender under Section 3.1, 3.2, or 3.5, or (ii) the unavailability of Eurodollar
Ratable Advances under Section 3.3, then, without in any way limiting, reducing
or otherwise qualifying the applicable Borrower's obligations under any of the
Sections referred to above in this Section 3.7, such Lender shall promptly upon
becoming aware of the same notify the Administrative Agent thereof and shall, in
consultation with the Administrative Agent and the applicable Borrower and to
the extent that it can do so without disadvantaging itself, take such reasonable
steps as may be reasonably open to it to mitigate the effects of such
circumstances (including, without limitation, the designation of an alternate
Lending Installation or the transfer of its Loans to another Lending
Installation). If and so long as a Lender has been unable to take, or has not
taken, steps acceptable to the applicable Borrower to mitigate the effect of the
circumstances in question, such Lender shall be obliged, at the request of the
applicable Borrower, pursuant to an assignment agreement in the form of Exhibit
G hereto, to sell its Notes, if any, and assign all its rights and obligations
hereunder to another Person nominated by the applicable Borrower and willing to
purchase such Notes, if any, assume the Commitment of such Lender and
participate in the facility in place of such Lender; provided that such Person
satisfies all of the requirements of this Agreement, including, but not limited
to, providing the forms required by Section 3.5(d). Upon such purchase and
assumption by such substituted Person, (a) such Person shall for all purposes be
a Lender party to this Agreement and any other Loan Document executed by the
Lenders and shall have all the rights and obligations of a Lender under the Loan
Documents, to the same extent as if
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it were an original party hereto, and (b) the transferor Lender shall be
released with respect to the Loans and Commitment so assigned. Notwithstanding
any such assignment, unless otherwise agreed to by the transferor Lender, the
obligations of each Borrower under Sections 3.1, 3.2, 3.3 and 3.5 shall survive
any such assignment and be enforceable by such transferor Lender.
ARTICLE IV
CONDITIONS PRECEDENT
4.1. Initial Loans and Facility Letters of Credit. The Lenders shall not
be required to make the initial Advance hereunder and the Issuer shall not be
required to issue any Facility Letter of Credit hereunder unless the Borrowers
have furnished the following to the Administrative Agent with sufficient copies
for the Lenders and the other conditions set forth below have been satisfied, in
each case on a date on or before February 28, 1998:
(a Charter Documents; Good Standing Certificate. Copies of the
Certificate of Incorporation of each Borrower, together with all amendments
thereto, all certified by the appropriate governmental officer in its
jurisdiction of incorporation, together with a good standing certificate issued
as of a date not more than 10 days prior to the Closing Date by the Secretary of
State of the jurisdiction of its incorporation.
(b By-Laws and Resolutions. Copies, certified by the Secretary or
Assistant Secretary of each Borrower, of its By-laws and Board of Directors'
resolutions authorizing the execution, delivery and performance of the Loan
Documents to which such Borrower is a party.
(c Secretary's Certificate. An incumbency certificate, executed by
the Secretary or Assistant Secretary of each Borrower, which shall identify by
name and title and bear the signature of the officers of such Borrower
authorized to sign the Loan Documents and to make borrowings hereunder, upon
which certificate the Administrative Agent and the Lenders shall be entitled to
rely until informed of any change in writing by such Borrower.
(d Officers' Certificate. A certificate, dated the Closing Date,
signed by an Authorized Officer of each Borrower, in form and substance
satisfactory to the Administrative Agent, to the effect that: (i) on the Closing
Date (both before and after giving effect to the consummation of the
Distribution, the consummation of the other transactions contemplated hereby and
the making of the Loans hereunder (collectively, the "Closing Transactions")),
no Default or Unmatured Default has occurred and is continuing; (ii) no
injunction or temporary restraining order which would prohibit the making of the
Loans or the consummation of any of the Closing Transactions, or other
litigation which could reasonably be expected to have a Material Adverse Effect
is pending or, to the best of such Person's knowledge, threatened; (iii) all
orders, consents, approvals, licenses, authorizations, or validations of, or
filings, recordings or registrations with, or exemptions by, any governmental or
public body or authority, or any subdivision thereof, required to make or
consummate the Closing Transactions have been or, prior to the time required,
will have been, obtained, given, filed or taken and are or will be in full force
and effect (or the applicable
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Borrower has obtained effective judicial relief with respect to the application
thereof) and all applicable waiting periods have expired; (iv) the Transaction
Documents are in full force and effect and no term or condition thereof has been
amended, modified or waived after the execution thereof except with the written
consent of the Administrative Agent; (v) all of the transactions contemplated by
the Distribution Documents which are to occur on or prior to the Closing Date
have occurred or will occur contemporaneously with the initial Advance
substantially in the form and manner set forth in the Information Statement;
(vi) each of the representations and warranties set forth in Article V of this
Agreement is true and correct on and as of such date; and (vii) since December
31, 1996, no event or change has occurred in respect of Midas and its
Subsidiaries, International and its Subsidiaries or the former international
operations of Whitman which are part of the Midas business, either individually
or in the aggregate, that has caused or evidences a Material Adverse Effect,
other than (x) the pre-tax non-recurring charge of $32,100,000 taken by
International and its international Affiliates in 1997, (y) the pre-tax expenses
related to the disposition of Midas-operated stores in the United States of
$35,500,000 taken by International and its international Affiliates in 1997 and
(z) the expenses related to the Whitman charge of $18,000,000 in 1997.
(e Legal Opinions. A written opinion of (a) Messrs. Sidley & Austin,
counsel to the Borrowers, and (b) Mr. Robert H. Sorensen, Esq., General Counsel
to the Borrowers, in each case addressed to the Administrative Agent and the
Lenders and in form and substance acceptable to the Administrative Agent and its
counsel.
(f Loan Documents. Executed originals of this Agreement and each of
the Loan Documents, which shall be in full force and effect, together with all
schedules (as of the Closing Date), exhibits, certificates, instruments,
opinions, documents and financial statements required to be delivered pursuant
hereto and thereto.
(g Letters of Direction. Written money transfer instructions with
respect to the initial Advances and to future Advances substantially in the form
of Exhibit H hereto in form and substance acceptable to the Administrative Agent
and its counsel addressed to the Administrative Agent and signed by an
Authorized Officer, together with such other related money transfer
authorizations as the Administrative Agent may have reasonably requested.
(h Financial Statements. The Administrative Agent and the Lenders
shall have received (i) the Pro Forma, which must be satisfactory in form and
substance to the Administrative Agent and the Lenders and which must not be
materially less favorable, in the Administrative Agent's and the Lenders'
reasonable judgment, than the projections previously provided to them, and (ii)
a certificate of the chief financial officer of Midas accompanying such Pro
Forma showing that, as of the applicable Transaction Date Midas has a Debt to
EBITDA Ratio of less than 3.5 to 1.0 (excluding (x) the pre-tax non-recurring
charge of $32,100,000 taken by International and its international Affiliates in
1997, (y) the pre-tax expenses related to the disposition of Midas-operated
stores in the United States of $35,500,000 taken by International and its
international Affiliates in 1997 and (z) the expenses related to the Whitman
charge of $18,000,000 in 1997).
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(i) Private Placement. International shall have issued the Senior
Notes, yielding gross proceeds to International of at least $50,000,000,
substantially on the terms and conditions set forth on Schedule 4.1.
(j) Other. Such other documents as the Administrative Agent, any
Lender or their counsel may have reasonably requested.
4.2. Each Future Advance and Facility Letter of Credit. The Lenders shall
not be required to make any Advance and the Issuer shall not be obligated to
issue any Facility Letter of Credit unless on the applicable Borrowing Date:
(a) There exists no Default or Unmatured Default and none would
result from such Advance or issuance of such Facility Letter of Credit;
(b) The representations and warranties contained in Article V
(excluding (i) Section 5.5 and (ii) at any time at which Midas maintains
Investment Grade Ratings in respect of its long term unsecured debt, Section
5.7) are true and correct as of such Borrowing Date except to the extent any
such representation or warranty is stated to relate solely to an earlier date,
in which case such representation or warranty shall be true and correct as of
such earlier date;
(c) A Borrowing Notice or Issuance Request, as applicable, shall have
been properly submitted; and
(d) All legal matters incident to the making of such Advance or
issuance of such Facility Letter of Credit shall be satisfactory to the Lenders
and their counsel.
Each Ratable Borrowing Notice and Competitive Bid Quote Request with
respect to each such Advance and each Issuance Request with respect to each such
Facility Letter of Credit shall constitute a representation and warranty by the
applicable Borrower that the conditions contained in Sections 4.2(a) and (b)
have been satisfied.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
Each Borrower represents and warrants to the Lenders that:
5.1. Corporate Existence and Standing. Each of Midas and each Subsidiary
is a corporation duly incorporated, validly existing and in good standing under
the laws of its jurisdiction of incorporation and has all requisite authority to
conduct its business in each jurisdiction in which it conducts business that is
material to the business of Midas and its Subsidiaries taken as a whole.
5.2. Authorization and Validity. Each of Midas and its Subsidiaries has
the corporate power and authority and legal right to execute and deliver the
Loan Documents and the other
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Transaction Documents to which each is a party, to perform its obligations
thereunder and to consummate the transactions therein contemplated. The
execution and delivery by Midas and its Subsidiaries of the Loan Documents and
the other Transaction Documents to which it is a party, the performance of their
respective obligations thereunder and the consummation of the transactions
therein contemplated have been duly authorized by proper corporate proceedings,
and the Loan Documents and other Transaction Documents constitute legal, valid
and binding obligations of Midas or such Subsidiary, as applicable, enforceable
against Midas or such Subsidiary, as applicable, in accordance with their terms,
except as enforceability may be limited by bankruptcy, insolvency or similar
laws affecting the enforcement of creditors' rights generally.
5.3. No Conflict; Government Consent. Neither the execution and delivery
by Midas and its Subsidiaries of the Loan Documents and the other Transaction
Documents to which each is a party, nor the consummation of the transactions
therein contemplated, nor compliance with the provisions thereof will or, at the
relevant time, did (a) violate any law, rule, regulation, order, writ, judgment,
injunction, decree or award binding on Midas or such Subsidiary or Midas's or
such Subsidiary's Certificate of Incorporation or By-Laws or the provisions of
any indenture, instrument or agreement to which Midas or any of its Subsidiaries
is a party or is subject, or by which it, or its Property, is bound, (b)
conflict with or constitute a default thereunder, or result in the creation or
imposition of any Lien in, of or on the Property of Midas or a Subsidiary
pursuant to the terms of any such indenture, instrument or agreement or (c)
require any consent of the stockholders or any Person, except for approvals or
consents which have been obtained and remain in effect, except for any such
violation, conflict or default that could not reasonably be expected to have a
Material Adverse Effect. No order, consent, approval, authorization, or
validation of, or filing, recording or registration with, or exemption by, any
governmental or public body or authority, or any subdivision thereof, which has
not been obtained by Midas or any of its Subsidiaries, is required to be
obtained by Midas or any of its Subsidiaries in connection with (a) the
execution and delivery of the Loan Documents or the other Transaction Documents
to which it is a party, (b) the borrowings under this Agreement or (c) the
payment by the Borrowers of the Obligations.
5.4. Financial Statements. Midas has heretofore furnished to each of the
Lenders the Fiscal Year 1996 audited combined financial statements (the
"Financial Statements"), as set forth in Annex C to the Information Statement,
of "Midas" (as described in the footnotes to such Financial Statements). The
Financial Statements were prepared in accordance with generally accepted
accounting principles in effect on the date such statements were prepared and
fairly present the financial position of "Midas" at such date and the
consolidated results of their operations for the period then ended. The pro
forma combined financial statements (the "Pro Forma") of "Midas" for the nine
months ended September 1997 and for the year ended December 1996 are provided in
the Information Statement. As of each Transaction Date, the Pro Forma estimates
Midas's and the Subsidiaries' assets, liabilities, financial condition and
results of operations on a combined basis in accordance with generally accepted
accounting principles in effect on the date such financial statements were
prepared, consistently applied, taking into account the Closing Transactions and
the other transactions and actions contemplated by this Agreement, the Loan
Documents and the Transaction Documents, and based upon assumptions that Midas
believes are reasonable and appropriate.
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5.5. Material Adverse Change. As of each Transaction Date, since December
31, 1996, no event or change has occurred in the business, Property, condition
(financial or otherwise) or results of operations of Midas and its Subsidiaries,
International and its Subsidiaries or the former international operations of
Whitman which are part of the Midas business, either individually or in the
aggregate, that has caused or evidences a Material Adverse Effect, other than
(i) a pre-tax non-recurring charge of $32,100,000 taken by International and its
international Affiliates in 1997, (ii) the pre-tax expenses related to the
disposition of Midas-operated stores in the United States of $35,500,000 taken
by International and its international Affiliates in 1997 and (iii) the expenses
related to the Whitman charge of $18,000,000 taken in 1997.
5.6. Taxes. Midas and its Subsidiaries have filed all United States
federal tax returns and all other material tax returns which are required to be
filed and have paid all taxes due pursuant to said returns or pursuant to any
assessment received by Midas or any of its Subsidiaries, except such taxes, if
any, as are being contested in good faith by appropriate proceedings and as to
which adequate reserves have been provided, as appropriate. No claims are being
asserted with respect to any such taxes which could reasonably be expected to
have a Material Adverse Effect. In respect of tax years prior to the
Distribution, neither Midas nor any of its Subsidiaries has any liability for
any taxes except (i) as disclosed in the Financial Statements, (ii) to the
extent reimbursable by Whitman pursuant to that certain Tax Sharing Agreement
among Midas, International and Whitman entered into in connection with the
Distribution, and (iii) to the extent payable to Whitman in respect of the 1997
Fiscal Year and in an amount not to exceed $5,000,000.
5.7. Litigation and Contingent Obligations. There is no litigation,
arbitration, governmental investigation, proceeding or inquiry pending or, to
the knowledge of any of their officers, threatened against or affecting Midas or
any of its Subsidiaries which could reasonably be expected to have a Material
Adverse Effect or to prevent, enjoin or unduly delay the making of the Loans or
the issuance of Facility Letters of Credit or the consummation of any other
Closing Transaction. As of each Transaction Date, other than any liability
incident to such litigation, arbitration or proceedings, neither Midas nor any
of its Subsidiaries has any material contingent obligations not provided for or
disclosed in the Financial Statements.
5.8. Subsidiaries. Schedule 5.8 hereto contains an accurate list of all of
the Subsidiaries of Midas as of the Closing Date (but after giving effect to all
of the transactions comprising the Distribution), setting forth their respective
jurisdictions of incorporation and the percentage of their respective capital
stock owned by Midas or other Subsidiaries.
5.9. ERISA. Since the date of the Financial Statements, no Reportable
Event has occurred with respect to any Single Employer Plan, and each Single
Employer Plan complies with all applicable requirements of law and regulations,
except for any failure to comply which could not reasonably be expected to have
a Material Adverse Effect. The sum of (a) the Unfunded Liabilities of all Single
Employer Plans in the aggregate and (b) the aggregate withdrawal liability to
Multiemployer Plans which Midas or any other member of the Controlled Group has
incurred, or is reasonably expected to incur, is not in excess of $10,000,000.
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5.10. Accuracy of Information. To Midas's knowledge, no information,
exhibit or report furnished by Midas or any of its Subsidiaries to the
Administrative Agent or to any Lender in connection with the negotiation of, or
compliance with, the Loan Documents contained any misstatement of a material
fact or omitted to state a material fact necessary to make the statements
contained therein not misleading.
5.11. Compliance With Laws; Material Agreements. Midas and its
Subsidiaries have complied with all applicable statutes, rules, regulations,
orders and restrictions of any domestic or foreign government or any
instrumentality or agency thereof, having jurisdiction over the conduct of their
respective businesses or the ownership of their respective properties, the
failure to comply with which could reasonably be expected to have a Material
Adverse Effect. Neither Midas nor any Subsidiary has received any notice to the
effect that its operations are not in material compliance with any of the
requirements of applicable federal, state and local environmental, health and
safety statutes and regulations or the subject of any federal or state
investigation evaluating whether any remedial action is needed to respond to a
release of any toxic or hazardous waste or substance into the environment, which
non-compliance or remedial action could reasonably be expected to have a
Material Adverse Effect. Neither Midas nor any Subsidiary is in default in the
performance, observance or fulfillment of any of the obligations, covenants or
conditions contained in any agreement to which it is a party, which default
could reasonably be expected to have a Material Adverse Effect.
5.12. Federal Reserve Regulations. Margin Stock constitutes less than 25%
of those assets of Midas and its Subsidiaries which are subject to any
limitation on sale, pledge, or other restriction hereunder. No part of the
proceeds of any Loan will be used in a manner which would violate, or result in
a violation of, Regulation G, Regulation T, Regulation U or Regulation X.
Neither the making of any Advance or issuance of any Facility Letters of Credit
hereunder, the use of the proceeds thereof, nor any other aspect of the
financing of the Distribution, will violate or be inconsistent with the
provisions of Regulation G, Regulation T, Regulation U or Regulation X.
5.13. Investment Company Act. Neither Midas nor any Subsidiary thereof is
an "investment company" or a company "controlled" by an "investment company",
within the meaning of the Investment Company Act of 1940, as amended.
5.14. Public Utility Holding Company Act. Neither Midas nor any Subsidiary
thereof is a "holding company" or a "subsidiary company" of a "holding company",
or an "affiliate" of a "holding company" or of a "subsidiary company" of a
"holding company", within the meaning of the Public Utility Holding Company Act
of 1935, as amended.
5.15. Plan Assets; Prohibited Transactions. Neither Borrower is an entity
deemed to hold "plan assets" within the meaning of 29 C.F.R. (S) 2510.3-101 of
an employee benefit plan (as defined in Section 3(3) of ERISA) which is subject
to Title I of ERISA or any plan (within the meaning of Section 4975 of the
Code), and neither the execution of this Agreement nor the making of Loans
hereunder gives rise to a prohibited transaction within the meaning of Section
406 of ERISA or Section 4975 of the Code.
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ARTICLE VI
COVENANTS
During the term of this Agreement, unless the Required Lenders shall
otherwise consent in writing:
6.1. Financial Reporting. Midas will maintain, for itself and each
Subsidiary, a system of accounting established and administered in accordance
with generally accepted accounting principles, consistently applied, and will
furnish to the Lenders:
(a) As soon as practicable and in any event within 100 days after
the close of each of its Fiscal Years, an audit report certified by independent
certified public accountants, acceptable to the Lenders, prepared in accordance
with Agreement Accounting Principles on a consolidated basis for itself and its
Subsidiaries, including balance sheets as of the end of such period and related
statements of income, retained earnings and cash flows; provided, that for the
1997 Fiscal Year, such Audit Report shall be prepared on a combined basis for
"Midas" and substantially in the form of the Financial Statements. Such audit
report shall be free from exceptions, reservations or qualifications as a result
of which the auditor is unable to conclude that the financial statements fairly
present or adequately disclose the financial condition of Midas and its
Subsidiaries and shall not be limited because of restricted or limited access by
such accountant to any material portion of Midas's or any Subsidiary's records.
(b) As soon as practicable and in any event within 55 days after the
close of the first three Fiscal Quarters of each of its Fiscal Years unaudited
balance sheets on a consolidated basis for itself and its Subsidiaries as at the
close of each such period and consolidated statements of income, retained
earnings and cash flows on a consolidated basis for itself and its Subsidiaries
for the period from the beginning of such Fiscal Year to the end of such Fiscal
Quarter in the form required for quarterly reports under the Securities and
Exchange Commission and certified by an Authorized Officer of Midas, subject to
year-end audit adjustments.
(c) Together with the financial statements required by clauses (a)
and (b) above, a compliance certificate in substantially the form of Exhibit F
hereto signed by Midas's chief financial officer showing the calculations
necessary to determine compliance with this Agreement and stating that no
Default or Unmatured Default exists, or if any Default or Unmatured Default
exists, stating the nature and status thereof.
(d) Together with the financial statements required by clause (b)
above, a certificate signed by Midas's chief financial officer confirming that
Net Rent for the period of four Fiscal Quarters ending on the date of
determination was not materially greater than Net Rent for the prior Fiscal
Year.
(e) As soon as possible and in any event within 10 days after Midas
knows that any Reportable Event has occurred with respect to any Plan, a
statement, signed by the chief
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financial officer of Midas, describing said Reportable Event and the action
which Midas proposes to take with respect thereto.
(f) Promptly upon the furnishing thereof to the shareholders of Midas,
copies of all financial statements, reports and proxy statements so furnished.
(g) Promptly upon the filing thereof, copies of all registration
statements and annual, quarterly or other regular reports which Midas or any of
its Subsidiaries files with the Securities and Exchange Commission.
(h) Such other information as the Administrative Agent or any Lender
may from time to time reasonably request.
6.2. Use of Proceeds. Midas will, and will cause each Subsidiary to, use
the proceeds of the Advances to finance in part the payments to be made in
connection with the Distribution and the payment of related fees and expenses,
to finance Purchases (subject to the next sentence), to meet the working capital
and other general corporate needs of Midas and its Subsidiaries and to repay
outstanding Advances. Midas will not, nor will it permit any Subsidiary to, use
any of the proceeds of the Advances or any Facility Letter of Credit to purchase
or carry any Margin Stock in violation of Regulation U or to finance the
Purchase of any Person which has not been approved and recommended by the board
of directors (or functional equivalent thereof) of such Person.
6.3. Notice of Default. Each Borrower will give prompt notice in writing to
the Lenders of the occurrence of any Default or Unmatured Default specifying the
nature and extent thereof and the steps being taken by such Borrower with
respect thereto.
6.4. Conduct of Business. Midas will, and will cause each Subsidiary to, do
all things necessary to remain duly incorporated or organized, validly existing
and (to the extent such concept applies to such entity) in good standing as a
domestic corporation, partnership or limited liability company in its
jurisdiction of incorporation or organization, as the case may be, and maintain
all requisite authority to conduct its business in each jurisdiction in which
its business is conducted.
6.5. Taxes. Midas will, and will cause each Subsidiary to, timely file
complete and correct, in all material respects, United States federal and
applicable foreign, state and local tax returns required by law and pay when due
all taxes, assessments and governmental charges and levies upon it or its
income, profits or Property, except those which are being contested in good
faith by appropriate proceedings and with respect to which adequate reserves
have been set aside, if appropriate, in accordance with Agreement Accounting
Principles.
6.6. Insurance. Midas will, and will cause each Subsidiary to, maintain
with financially sound and reputable insurance companies adequate insurance
covering all such properties and risks as are customarily insured, and in such
amounts as are customarily carried by, firms engaged in similar businesses and
similarly situated.
6.7. Compliance with Laws. Midas will, and will cause each Subsidiary to,
comply with all laws, rules, regulations, orders, writs, judgments, injunctions,
decrees or awards to which it may
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be subject, including, without limitation, all Environmental Laws, the failure
to comply with which could reasonably be expected to have a Material Adverse
Effect.
6.8. Maintenance of Properties. Midas will, and will cause each
Subsidiary to, do all things necessary to maintain, preserve, protect and keep
its Property in good repair, working order and condition, and make all necessary
and proper repairs, renewals and replacements so that its business carried on in
connection therewith may be properly conducted at all times.
6.9. Inspection. Midas will, and will cause each Subsidiary to, permit
the Administrative Agent and the Lenders, by their respective representatives
and agents during normal business hours, to inspect any of the Property,
corporate books and financial records of Midas and each Subsidiary, and to
discuss the affairs, finances and accounts of Midas and each Subsidiary with,
and to be advised as to the same by, their respective officers at such
reasonable times and intervals as the Lenders may designate; provided, that so
long as no Default or Unmatured Default has occurred and is continuing, the
Administrative Agent and the Lenders shall not conduct more than two inspections
in any calendar year. Midas will keep or cause to be kept, and cause each
Subsidiary to keep or cause to be kept, appropriate records and books of account
in which complete entries are to be made reflecting its and their business and
financial transactions, such entries to be made in accordance with Agreement
Accounting Principles consistently applied.
6.10. Indebtedness. At any time at which Midas does not maintain
Investment Grade Ratings in respect of its long term unsecured debt, Midas will
not, nor will it permit any Subsidiary to, create, incur or suffer to exist any
Indebtedness, except:
(a) the Loans;
(b) (i) Indebtedness evidenced by the Senior Notes, (ii) any
Indebtedness incurred to refinance or repay the Senior Notes (or any replacement
thereof) with an aggregate principal amount not to exceed $75 million and (iii)
any guaranty by Midas of any Indebtedness described in clause (i) or (ii);
provided, that any Indebtedness incurred for the purpose of refinancing or
repaying the Senior Notes (or any replacement thereof) may only be incurred in
compliance with Section 6.20;
(c) Indebtedness existing on the date hereof and described in
Schedule 6.10 hereto; and
(d) other Indebtedness with an aggregate principal amount not in
excess of the greater of (i) $50,000,000 or (ii) 15% of Total Assets.
6.11. Merger. Midas will not, nor will it permit any Subsidiary to, merge
or consolidate with or into any other Person, except that (a) any Wholly-Owned
Subsidiary may merge with or into Midas or any Wholly-Owned Subsidiary, provided
that in any merger or consolidation involving International and another Wholly-
Owned Subsidiary, International shall be the surviving corporation, (b) Midas or
any Subsidiary may merge or consolidate with any other Person so long as (i) the
merger has been approved and recommended by the board of directors (or
functional equivalent thereof) of such other Person, (ii) Midas or such
Subsidiary is the continuing or surviving
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corporation and (iii) prior to and after giving effect to such merger or
consolidation, no Default or Unmatured Default shall exist (determined, with
respect to Section 6.18, on a pro forma basis, as of the end of the preceding
Fiscal Quarter, including with respect to EBITDA (for the preceding four Fiscal
Quarters), Fixed Charges, and Indebtedness), and (c) any Subsidiary (other than
International) may enter into a merger or consolidation as a means of effecting
a disposition permitted by Section 6.12.
6.12. Sale of Assets. Midas will not, nor will it permit any Subsidiary
to, lease, sell transfer or otherwise dispose of its Property to any other
Person, except for:
(a) sales of inventory in the ordinary course of business;
(b) leases, sales, transfers or other dispositions of its Property that,
together with all other Property of Midas and its Subsidiaries
previously leased, sold, transferred or disposed of as permitted by
this Section 6.12(b) during the twelve-month period ending with the
month in which any such lease, sale, transfer or other disposition
occurs, do not constitute a Substantial Portion of the Property of
Midas and its Subsidiaries; and
(c) sales made after the Closing Date of (i) Midas-operated stores in
the United States, (ii) the caliper rebuilding plant located in
Chicago, Illinois, (iii) the facility located in Scarborough,
Ontario and (iv) other assets of European operations, so long as all
such sales involve Property with an aggregate net book value not to
exceed $50,000,000.
6.13. Investments and Purchases. Midas will not, nor will it permit any
Subsidiary to, make or suffer to exist any Investments (including, without
limitation, loans and advances to, and other Investments in, Subsidiaries), or
commitments therefor, or to create any Subsidiary or to become or remain a
partner in any partnership or joint venture, or to make any Purchases, except:
(a) (i) Short-term obligations of, or fully guaranteed by, the United
States of America, (ii) obligations of, or fully guaranteed by, the
central government of Canada, France, Belgium, Spain, Austria, the
Netherlands, Italy, Australia or Switzerland, and (iii) funds which
invest solely in any obligations described in clauses (i) and (ii);
(b) Commercial paper rated A-l or better by S&P or P-l or better by
Moody's and funds which invest solely in such commercial paper;
(c) Demand deposit accounts maintained in the ordinary course of
business;
(d) Certificates of deposit and bankers' acceptances issued by and time
deposits with commercial banks (whether domestic or foreign) having
capital and surplus in excess of $100,000,000;
(e) Investments in existence on the Closing Date and described in
Schedule 6.13 hereto;
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(f) Investments in Subsidiaries;
(g) Purchases, so long as both before and after giving effect to such
Purchase, no Default or Unmatured Default shall exist (determined,
with respect to Section 6.18, on a pro forma basis, as of the end of
the preceding Fiscal Quarter, including with respect to EBITDA (for
the preceding four Fiscal Quarters), Fixed Charges, and
Indebtedness);
(h) Interest rate and currency hedge transactions entered into in the
ordinary course of business; and
(i) Other Investments made after the Closing Date for aggregate
consideration not to exceed the greater of (i) $29,000,000 or (ii)
10% of Net Worth (determined as of the last day of the Fiscal
Quarter immediately prior to the date of such Investment).
6.14. Liens. Midas will not, nor will it permit any Subsidiary to, create,
incur, or suffer to exist any Lien in, of or on the Property of Midas or any of
its Subsidiaries, except:
(a) Liens affecting Property of a corporation or other business entity
existing at the time it becomes a Subsidiary or at the time it is
merged into or consolidated with or purchased by Midas or a
Subsidiary;
(b) Liens existing at the time of acquisition of the Property affected
thereby or incurred to secure payment of all or part of the purchase
price of such Property or to secure Indebtedness incurred prior to,
at the time of or within 180 days after the acquisition of such
Property for the purpose of financing all or part of the purchase
price thereof (provided such Liens are limited to such Property and
improvements thereon);
(c) Liens placed within 180 days of completion of construction of new
plants or facilities to secure all or part of the cost of
construction of such plants or facilities, or to secure Indebtedness
incurred to provide funds for any such purpose;
(d) Liens which secure Indebtedness owing by a Subsidiary to Midas or
another Subsidiary;
(e) Liens existing on the date of this Agreement and described in
Schedule 6.14 hereto;
(f) Liens arising by reason of mortgages on Property owned or leased by
Midas or a Subsidiary in favor of the United States of America or
any State thereof, or any department, agency or instrumentality or
political subdivision of the United States of America or any State
thereof, or in favor of any other country or any political
subdivision thereof, or in favor of holders of securities issued by
any such entity, pursuant to any contract or statute (including,
without limitation, mortgages or liens to secure pollution control
or industrial revenue bonds or similar financings) or to secure any
Indebtedness incurred or guaranteed for the purpose of financing all
or any part of the purchase price or the cost of the Property
subject to such mortgages;
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(g) Mechanics', materialmen's, carriers', workmen's, vendors' or other
like Liens, arising in the ordinary course of business in respect of
obligations which are not past due or which are being contested in
good faith;
(h) Liens arising by reason of any deposit with, or the giving of any form
of security to (a) any surety company or clerk or any court, or in
escrow, as collateral in connection with, or in lieu of, any bond or
appeal from any judgment or decree against Midas or a Subsidiary, or
in connection with other proceedings or actions at law or in equity by
or against Midas or a Subsidiary, or (b) any government or
governmental department, agency or instrumentality, which deposit or
security is required or permitted to qualify Midas or a Subsidiary to
conduct business (or perform any contract with such entities), to
maintain self-insurance, or to obtain the benefit of, or comply with,
any law pertaining to workers' compensation, unemployment insurance,
old age pensions, social security, or similar matters;
(i) Liens existing on property acquired by Midas or a Subsidiary through
the exercise of rights arising out of defaults on receivables acquired
in the ordinary course of business;
(j) Liens for judgments or awards, so long as the finality of any such
judgment or award is being contested in good faith and execution
thereon is stayed and for which adequate reserves have been
established if appropriate;
(k) Liens for taxes or assessments or governmental charges or levies not
yet past due or delinquent or which can thereafter be paid without
penalty, or which are being contested in good faith by appropriate
proceedings and for which adequate reserves have been established, if
appropriate; and any other liens of a nature substantially similar to
those described in this clause (k) which do not materially impair the
use of such Property in the operation of the business of Midas and its
Subsidiaries taken as a whole or the value of such Property for the
purposes of such business;
(l) Liens on receivables and general intangibles relating to payment
rights in connection therewith securing (i) Indebtedness incurred by
Midas or any such Subsidiary, as applicable, with respect to the
securitization of franchisee loans and (ii) Capitalized Lease
Obligations incurred by Midas or any such Subsidiary, as applicable;
(m) Liens securing other Indebtedness with an aggregate principal amount
not to exceed at any time the greater of (i) $50,000,000 or (ii) 10%
of Net Worth; and
(n) Any extension, renewal or replacement (or successive extensions,
renewals or replacements), in whole or in part, of any Lien referred
to in the foregoing clauses (a) to (m) inclusive of any Indebtedness
secured thereby; provided, that the principal amount of Indebtedness
secured thereby shall not exceed the principal amount of Indebtedness
so secured at the time of such extension, renewal or replacement, and
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that such extended, renewed, or replacement Lien shall be limited to
all or part of the same Property which secured the lien extended,
renewed or replaced (plus improvements on such Property).
6.15. Affiliates. Midas will not, and will not permit any Subsidiary
to, enter into any transaction (including, without limitation, the purchase or
sale of any Property or service) with, or make any payment or transfer to, any
Affiliate except (a) in the ordinary course of business and pursuant to the
reasonable requirements of Midas's or such Subsidiary's business and upon fair
and reasonable terms no less favorable to Midas or such Subsidiary than Midas or
such Subsidiary would obtain in a comparable arms-length transaction and (b)
transactions in connection with the Distribution described in the Information
Statement.
6.16. Environmental Matters. Midas shall and shall cause each of its
Subsidiaries to (a) at all times comply in all material respects with all
applicable Environmental Laws and (b) promptly take any and all necessary
remedial actions required by Environmental Law in response to the presence,
storage, use, disposal, transportation or Release of any Hazardous Materials on,
under or about any real property owned, leased or operated by Midas or any of
its Subsidiaries.
6.17. Inconsistent Agreements. Midas shall not, nor shall it permit any
Subsidiary to, enter into any indenture, agreement, instrument or other
arrangement which directly or indirectly prohibits or restrains, or has the
effect of prohibiting or restraining, or imposes materially adverse conditions
upon, the incurrence of the Obligations, the amending of the Loan Documents or
the ability of any Subsidiary to pay dividends or make other distributions on
its capital stock.
6.18. Financial Covenants. Midas on a consolidated basis with its
Subsidiaries shall:
6.18.1. Minimum Net Worth. At all times after the date hereof,
maintain a minimum Net Worth at least equal to the sum of (a) 75% of Net Worth
as of the date on which substantially all of the transactions comprising the
Distribution have been consummated (after giving effect to the consummation of
the Closing Transactions and the Distribution) plus (b) 50% of positive Net
Income, if any, for each Fiscal Quarter ending after the Closing Date and on or
prior to the date of determination, plus (c) 100% of the amount of Net Available
Proceeds realized by Midas or any Subsidiary from the issuance of equity
securities after the Closing Date, less (d) any non-cash restructuring charges
taken by Midas in its 1998 Fiscal Year or 1999 Fiscal Year, determined on an
after-tax basis.
6.18.2. Debt to EBITDA Ratio. As of the end of each Fiscal Quarter,
maintain a Debt to EBITDA Ratio, of less than the ratio set forth below for the
corresponding Fiscal Year:
<TABLE>
<CAPTION>
Fiscal Year Ratio
----------- -----
<S> <C>
1998 3.5:1.0
1999 3.5:1.0
2000 3.25:1.0
2001 3.0:1.0
</TABLE>
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<TABLE>
<S> <C>
2002 2.75:1.0
</TABLE>
6.18.3. Fixed Charges Coverage Ratio. As of the end of each Fiscal
Quarter, maintain a Fixed Charges Coverage Ratio of at least the ratio set forth
below for the corresponding Fiscal Year:
<TABLE>
<CAPTION>
Fiscal Year Ratio
----------- -----
<S> <C>
1998 2.25:1.0
1999 2.25:1.0
2000 2.50:1.0
2001 2.75:1.0
2002 3.0:1.0
</TABLE>
6.19. ERISA. Midas will (a) fulfill, and cause each member of the
Controlled Group to fulfill, its obligations under the minimum funding standards
of ERISA and the Code with respect to each Single Employer Plan and fulfill its
obligations to make required contributions to each Multiemployer Plan, (b)
comply, and cause each member of the Controlled Group to comply, with all
applicable provisions of ERISA and the Code with respect to each Single Employer
Plan, except where such failure or noncompliance individually or in the
aggregate would not have a Material Adverse Effect, (c) not permit the sum of
(i) the aggregate Unfunded Liabilities of all Single Employer Plans in the
aggregate and (ii) the aggregate withdrawal liability to Multiemployer Plans
which Midas or any other member of the Controlled Group has incurred, or is
reasonably expected to incur, to exceed $10,000,000 in the aggregate or (d) not,
and not permit any member of the Controlled Group to, (i) seek a waiver of the
minimum funding standards under ERISA, (ii) terminate any Single Employer Plan
or withdraw from any Multiemployer Plan or permit any Reportable Event to occur
with respect to a Single Employer Plan or (iii) take any other action with
respect to any Plan which would reasonably be expected to entitle the PBGC to
terminate, impose liability in respect of, or cause a trustee to be appointed to
administer, any Plan, unless the actions or events described in the foregoing
clauses (i), (ii) or (iii) individually or in the aggregate could not reasonably
be expected to have a Material Adverse Effect.
6.20. Senior Notes. International will not amend, modify or waive any
indenture, note or other agreement evidencing or governing the Indebtedness
evidenced by the Senior Notes (or any replacement thereof) if the effect thereof
is to cause such Indebtedness (a) to have terms (other than pricing terms) more
favorable to the holders of such Senior Notes than the terms set forth in this
Agreement, (b) to be secured by any property of any Person or (c) to be
guaranteed (either directly or indirectly) by any Person other than Midas. In
addition, such Indebtedness shall not be an obligation of any Subsidiary of
Midas at any time at which such obligor is not a Borrower hereunder with
outstanding Obligations hereunder in an amount at least equal to the lesser of
(x) the Indebtedness evidenced by the Senior Notes and (y) the aggregate
Obligations of the Borrowers hereunder.
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ARTICLE VII
DEFAULTS
--------
The occurrence of any one or more of the following events shall constitute
a Default:
7.1. Any representation or warranty made or deemed made by or on behalf of
Midas or any of its Subsidiaries to the Lenders or the Administrative Agent
under or in connection with this Agreement, any other Loan Document, any Loan,
any Facility Letter of Credit or any certificate or information delivered in
connection with this Agreement or any other Loan Document shall be false in any
material respect on the date as of which made or deemed made.
7.2. Nonpayment of (a) any principal of any Loan or any Reimbursement
Obligation when due, or (b) any interest upon any Loan or any Facility Fee or
other fee or obligations under any of the Loan Documents within five days after
the same becomes due.
7.3. The breach by Midas of any of the terms or provisions of Section 6.2,
6.3, 6.10, 6.12, 6.18, 6.19 or 6.20.
7.4. The breach by either Borrower (other than a breach which constitutes
a Default under another Section of this Article VII) of any of the terms or
provisions of this Agreement which is not remedied within thirty (30) days after
written notice from the Administrative Agent or any Lender.
7.5. Failure of Midas or any of its Subsidiaries to pay when due any
Indebtedness aggregating in excess of $10,000,000 ("Material Indebtedness"); or
the default by Midas or any of its Subsidiaries in the performance (beyond the
applicable grace period with respect thereto, if any) of any term, provision or
condition contained in any agreement under which any such Material Indebtedness
was created or is governed, or any other event shall occur or condition exist,
the effect of which default or event is to cause, or, at any time at which Midas
does not maintain Investment Grade Ratings on its long term unsecured debt, to
permit the holder or holders of such Material Indebtedness to cause, such
Material Indebtedness to become due prior to its stated maturity; or any
Material Indebtedness of Midas or any of its Subsidiaries shall be declared to
be due and payable or required to be prepaid or repurchased (other than by a
regularly scheduled payment or prepayment) prior to the stated maturity thereof;
or Midas or any of its Subsidiaries shall not pay, or admit in writing its
inability to pay, its debts generally as they become due.
7.6. Midas or any of its Subsidiaries shall (a) have an order for relief
entered with respect to it under the Federal bankruptcy laws as now or hereafter
in effect, (b) make an assignment for the benefit of creditors, (c) apply for,
seek, consent to, or acquiesce in, the appointment of a receiver, custodian,
trustee, examiner, liquidator or similar official for it or any Substantial
Portion of its Property, (d) institute any proceeding seeking an order for
relief under the Federal bankruptcy laws as now or hereafter in effect or
seeking to adjudicate it a bankrupt or insolvent, or seeking dissolution,
winding up, liquidation, reorganization, arrangement, adjustment or composition
of it or its debts under any law relating to bankruptcy, insolvency or
reorganization or relief of debtors or fail to file an answer or other pleading
denying the material allegations of any such proceeding
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<PAGE>
filed against it, (e) take any corporate or partnership action to authorize or
effect any of the foregoing actions set forth in this Section 7.6 or (f) fail to
contest in good faith any appointment or proceeding described in Section 7.7.
7.7. Without the application, approval or consent of Midas or any of its
Subsidiaries a receiver, trustee, examiner, liquidator or similar official shall
be appointed for Midas or any of its Subsidiaries or any Substantial Portion of
its Property, or a proceeding described in Section 7.6(d) shall be instituted
against Midas or any of its Subsidiaries and such appointment continues
undischarged or such proceeding continues undismissed or unstayed for a period
of 30 consecutive days.
7.8. Any court, government or governmental agency shall condemn, seize or
otherwise appropriate, or take custody or control of, all or any portion of the
Property of Midas and its Subsidiaries which, when taken together with all other
Property of Midas and its Subsidiaries so condemned, seized, appropriated, or
taken custody or control of, during the twelve-month period ending with the
month in which any such action occurs, constitutes a Substantial Portion.
7.9. Midas or any of its Subsidiaries shall fail within 30 days to pay,
bond or otherwise discharge any judgment or order for the payment of money in
excess of $1,000,000, which is not stayed on appeal or otherwise being
appropriately contested in good faith.
7.10. Any Change in Control shall occur.
7.11. By the close of business on the second Business Day following the
Closing Date, (a) the remaining transactions comprising the Distribution shall
not have been consummated, as evidenced by the failure of the Borrowers to
deliver to the Administrative Agent by such time a certificate executed by an
Authorized Officer of each Borrower to the effect set forth in Section 4.1(d) as
of such date, except that clause (v) thereof shall be replaced with the
following: "the Distribution and all of the transactions contemplated by the
Distribution Documents have occurred substantially in the form and manner set
forth in the Information Statement", or (b) the chief financial officer of Midas
shall not have delivered a certificate to the Administrative Agent to the effect
set forth in clause (ii) of Section 4.1(h) as of such date.
ARTICLE VIII
ACCELERATION, WAIVERS, AMENDMENTS AND REMEDIES
----------------------------------------------
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8.1. Acceleration. If any Default described in Section 7.6, 7.7 or
7.11 occurs with respect to either Borrower, the obligations of the Lenders to
make Loans or issue Facility Letters of Credit hereunder shall automatically
terminate and the Obligations shall immediately become due and payable without
any election or action on the part of the Administrative Agent or any Lender.
If any other Default occurs, the Required Lenders (or the Administrative Agent
with the consent of the Required Lenders) may terminate or suspend the
obligations of the Lenders to make Loans or issue Facility Letters of Credit
hereunder, or declare the Obligations to be due and payable, or both, whereupon
the Obligations shall become immediately due and payable, without presentment,
demand, protest or notice of any kind, all of which each Borrower hereby
expressly waives. In addition to the foregoing, following the occurrence and
during the continuance of a Default, so long as any Facility Letter of Credit
has not been fully drawn and has not been cancelled or expired by its terms,
upon demand by the Administrative Agent, the Borrowers shall deposit in an
account (the "Letter of Credit Cash Collateral Account") maintained with First
Chicago in the name of the Administrative Agent, for the ratable benefit of the
Lenders and the Administrative Agent, cash in an amount equal to the aggregate
undrawn face amount of all outstanding Facility Letters of Credit and all fees
and other amounts due or which may become due with respect thereto. Neither
Borrower shall have any control over funds in the Letter of Credit Cash
Collateral Account which funds shall be invested by the Administrative Agent
from time to time. Such funds shall be promptly applied by the Administrative
Agent to reimburse the Issuer for drafts drawn from time to time under the
Facility Letters of Credit. Such funds, if any, remaining in the Letter of
Credit Cash Collateral Account following the payment of all Obligations in full
or the earlier termination of all Defaults shall, unless the Administrative
Agent is otherwise directed by a court of competent jurisdiction, be promptly
paid over to the Borrower.
If, within 30 days after acceleration of the maturity of the Obligations or
termination of the obligations of the Lenders to make Loans hereunder as a
result of any Default (other than any Default as described in Section 7.6, 7.7
or 7.11 with respect to either Borrower) and before any judgment or decree for
the payment of the Obligations due shall have been obtained or entered, the
Required Lenders (in their sole discretion) shall so direct, the Administrative
Agent shall, by notice to Midas, rescind and annul such acceleration and/or
termination.
8.2. Amendments. Subject to the provisions of this Article VIII, the
Required Lenders (or the Administrative Agent with the consent in writing of the
Required Lenders) and the Borrowers may enter into agreements supplemental
hereto for the purpose of adding or modifying any provisions to the Loan
Documents or changing in any manner the rights of the Lenders or the Borrowers
hereunder or waiving any Default hereunder; provided, however, that no such
supplemental agreement shall, without the consent of all of the Lenders:
(a) Extend the final maturity of any Loan or forgive all or any
portion of the principal amount thereof, or reduce the rate or extend the time
of payment of interest or fees thereon;
(b) Reduce the percentage specified in the definition of Required
Lenders;
(c) Reduce the amount of or extend the date for the mandatory payments
required under Section 2.8 or increase the amount of the Commitment of any
Lender hereunder;
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<PAGE>
(d) Extend the Facility Termination Date, or permit any Facility
Letter of Credit to have an expiry date beyond January 15, 2003;
(e) Amend Section 7.11 or this Section 8.2; or
(f) Permit any assignment by either Borrower of its Obligations or
its rights hereunder.
No amendment of any provision of this Agreement relating to the Administrative
Agent shall be effective without the written consent of the Administrative
Agent. The Administrative Agent may waive payment of the fee required under
Section 12.3.2 without obtaining the consent of any other party to this
Agreement.
8.3. Preservation of Rights. No delay or omission of the Lenders or the
Administrative Agent to exercise any right under the Loan Documents shall impair
such right or be construed to be a waiver of any Default or an acquiescence
therein, and the making of a Loan notwithstanding the existence of a Default or
the inability of either Borrower to satisfy the conditions precedent to such
Loan shall not constitute any waiver or acquiescence. Any single or partial
exercise of any such right shall not preclude other or further exercise thereof
or the exercise of any other right, and no waiver, amendment or other variation
of the terms, conditions or provisions of the Loan Documents whatsoever shall be
valid unless in writing signed by the Lenders required pursuant to Section 8.2,
and then only to the extent in such writing specifically set forth. All remedies
contained in the Loan Documents or by law afforded shall be cumulative and all
shall be available to the Administrative Agent and the Lenders until the
Obligations have been paid in full.
ARTICLE IX
GENERAL PROVISIONS
9.1. Survival of Representations. All representations and warranties of
the Borrowers contained in this Agreement shall survive the making of the Loans
herein contemplated.
9.2. Governmental Regulation. Anything contained in this Agreement to the
contrary notwithstanding, no Lender shall be obligated to extend credit to
either Borrower in violation of any limitation or prohibition provided by any
applicable statute or regulation.
9.3. Headings. Section headings in the Loan Documents are for convenience
of reference only, and shall not govern the interpretation of any of the
provisions of the Loan Documents.
9.4. Entire Agreement. The Loan Documents embody the entire agreement and
understanding among the Borrowers, the Administrative Agent and the Lenders and
supersede all prior agreements and understandings among the Borrowers, the
Administrative Agent and the
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<PAGE>
Lenders relating to the subject matter thereof other than the fee letter dated
November 10, 1997 in favor of First Chicago.
9.5. Several Obligations; Benefits of this Agreement. The respective
obligations of the Lenders hereunder are several and not joint and no Lender
shall be the partner or agent of any other (except to the extent to which the
Administrative Agent is authorized to act as such). The failure of any Lender to
perform any of its obligations hereunder shall not relieve any other Lender from
any of its obligations hereunder. This Agreement shall not be construed so as to
confer any right or benefit upon any Person other than the parties to this
Agreement and their respective successors and assigns; provided, that the
parties expressly agree that the Arranger shall enjoy the benefits of the
provisions of Section 9.6, 9.10 and 10.11 to the extent specifically set forth
therein and shall have the right to enforce such provisions on its own behalf
and in its own name to the same extent as if it were a party to the Agreement.
9.6. Expenses; Indemnification. Each Borrower, on a joint and several
basis, shall reimburse the Administrative Agent and the Arranger for any
reasonable costs, internal charges and out-of-pocket expenses (including
reasonable attorneys' fees and time charges of attorneys for the Administrative
Agent, which attorneys may be employees of the Administrative Agent) paid or
incurred by the Administrative Agent or the Arranger in connection with the
preparation, negotiation, execution, delivery, review, syndication, amendment,
modification, and administration of the Loan Documents. Each Borrower, on a
joint and several basis, also agrees to reimburse the Administrative Agent, the
Arranger and the Lenders for any reasonable costs, internal charges and out-of-
pocket expenses (including reasonable attorneys' fees and time charges of
attorneys for the Administrative Agent, the Arranger and the Lenders, which
attorneys may be employees of the Administrative Agent, the Arranger or the
Lenders) paid or incurred by the Administrative Agent, the Arranger or any
Lender in connection with the collection and enforcement of the Loan Documents.
Each Borrower acknowledges that from time to time First Chicago may prepare and
may distribute to the Lenders (but shall have no obligation or duty to prepare
or to distribute to the Lenders) audit reports (the "Reports") pertaining to
such Borrower's assets for internal use by First Chicago from information
forwarded to it by or on behalf of such Borrower (following the expiration of a
reasonable period of review for accuracy of such Reports by the Borrowers),
after First Chicago has exercised its rights of inspection pursuant to this
Agreement. Each Borrower, on a joint and several basis, further agrees to
indemnify the Administrative Agent, the Arranger and each Lender, its directors,
officers and employees against all losses, claims, damages, penalties,
judgments, liabilities and expenses (including, without limitation, all expenses
of litigation or preparation therefor whether or not the Administrative Agent,
the Arranger or any Lender is a party thereto) which any of them may pay or
incur arising out of or relating to this Agreement, the other Loan Documents or
the Transaction Documents, the transactions contemplated hereby or thereby or
the direct or indirect application or proposed application of the proceeds of
any Loan hereunder or the use or intended use of any Facility Letter of Credit,
except to the extent that they have resulted from the gross negligence or
willful misconduct of the party seeking indemnification. The obligations of each
Borrower under this Section 9.6 shall survive the termination of this Agreement.
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9.7. Numbers of Documents. All statements, notices, closing documents, and
requests hereunder shall be furnished to the Administrative Agent with
sufficient counterparts so that the Administrative Agent may furnish one to each
of the Lenders.
9.8. Accounting. Except as provided to the contrary herein, all accounting
terms used herein shall be interpreted and all accounting determinations
hereunder shall be made in accordance with Agreement Accounting Principles.
9.9. Severability of Provisions. Any provision in any Loan Document that
is held to be inoperative, unenforceable, or invalid in any jurisdiction shall,
as to that jurisdiction, be inoperative, unenforceable, or invalid without
affecting the remaining provisions in that jurisdiction or the operation,
enforceability, or validity of that provision in any other jurisdiction, and to
this end the provisions of all Loan Documents are declared to be severable.
9.10. Nonliability of Lenders. The relationship between the Borrowers on
the one hand and the Lenders and the Administrative Agent on the other hand
shall be solely that of borrower and lender. Neither the Administrative Agent,
the Arranger nor any Lender shall have any fiduciary responsibilities to either
Borrower. Neither the Administrative Agent, the Arranger nor any Lender
undertakes any responsibility to either Borrower to review or inform such
Borrower of any matter in connection with any phase of either Borrower's
business or operations. Each Borrower agrees that neither the Administrative
Agent, the Arranger nor any Lender shall have liability to such Borrower
(whether sounding in tort, contract or otherwise) for losses suffered by such
Borrower in connection with, arising out of, or in any way related to, the
transactions contemplated and the relationship established by the Loan
Documents, or any act, omission or event occurring in connection therewith,
unless such losses resulted from the gross negligence or willful misconduct of
the party from which recovery is sought. Neither the Administrative Agent, the
Arranger nor any Lender shall have any liability with respect to, and each
Borrower hereby waives, releases and agrees not to sue for, any punitive,
special, indirect or consequential damages suffered by such Borrower in
connection with, arising out of, or in any way related to the Loan Documents or
the transactions contemplated thereby.
9.11. CHOICE OF LAW. THE LOAN DOCUMENTS (OTHER THAN THOSE CONTAINING A
CONTRARY EXPRESS CHOICE OF LAW PROVISION) SHALL BE CONSTRUED IN ACCORDANCE WITH
THE INTERNAL LAWS (AND NOT THE LAW OF CONFLICTS) OF THE STATE OF ILLINOIS, BUT
GIVING EFFECT TO FEDERAL LAWS APPLICABLE TO NATIONAL BANKS.
9.12. CONSENT TO JURISDICTION. EACH BORROWER HEREBY IRREVOCABLY SUBMITS TO
THE JURISDICTION OF ANY UNITED STATES FEDERAL OR ILLINOIS STATE COURT SITTING IN
CHICAGO, ILLINOIS IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO ANY
LOAN DOCUMENTS AND EACH BORROWER HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN
RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN ANY SUCH
COURT AND IRREVOCABLY WAIVES ANY OBJECTION IT MAY NOW OR HEREAFTER HAVE AS TO
THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN SUCH A
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COURT OR THAT SUCH COURT IS AN INCONVENIENT FORUM. NOTHING HEREIN SHALL LIMIT
THE RIGHT OF THE AGENT OR ANY LENDER TO BRING PROCEEDINGS AGAINST EITHER
BORROWER IN THE COURTS OF ANY OTHER JURISDICTION. ANY JUDICIAL PROCEEDING BY
EITHER BORROWER AGAINST THE ADMINISTRATIVE AGENT OR ANY LENDER OR ANY AFFILIATE
OF THE ADMINISTRATIVE AGENT OR ANY LENDER INVOLVING, DIRECTLY OR INDIRECTLY, ANY
MATTER IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH ANY LOAN
DOCUMENT SHALL BE BROUGHT ONLY IN A COURT IN CHICAGO, ILLINOIS.
9.13. WAIVER OF JURY TRIAL. EACH BORROWER, THE ADMINISTRATIVE AGENT AND
EACH LENDER HEREBY WAIVE TRIAL BY JURY IN ANY JUDICIAL PROCEEDING INVOLVING,
DIRECTLY OR INDIRECTLY, ANY MATTER (WHETHER SOUNDING IN TORT, CONTRACT OR
OTHERWISE) IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH ANY LOAN
DOCUMENT OR THE RELATIONSHIP ESTABLISHED THEREUNDER.
9.14. Confidentiality. Each Lender agrees to hold any confidential
information which it may receive from either Borrower pursuant to this Agreement
in confidence, except for disclosure (a) to its Affiliates and to other Lenders
and their respective Affiliates, (b) to legal counsel, accountants, and other
professional advisors to that Lender, (c) to regulatory officials, (d) to any
Person as requested pursuant to or as required by law, regulation, or legal
process, (e) to any Person in connection with any legal proceeding to which that
Lender is a party, and (f) permitted by Section 12.4.
9.15. Nonreliance. Each Lender hereby represents that it is not relying on
or looking to any margin stock (as defined in Regulation U of the Board of
Governors of the Federal Reserve System) for the repayment of the Loans provided
for herein.
9.16. Disclosure. Each Borrower and each Lender hereby acknowledge and
agree that First Chicago and/or its Affiliates from time to time may hold other
investments in, make other loans to or have other relationships with the
Borrowers.
9.17. Counterparts. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one agreement, and
any of the parties hereto may execute this Agreement by signing any such
counterpart. This Agreement shall be effective when it has been executed by each
Borrower, the Administrative Agent and the Lenders and each party has notified
the Administrative Agent that it has taken such action.
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ARTICLE X
THE AGENT
---------
10.1. Appointment; Nature of Relationship. The First National Bank of
Chicago is hereby appointed by each of the Lenders as its contractual
representative (herein referred to as the "Administrative Agent") hereunder and
under each other Loan Document, and each of the Lenders irrevocably authorizes
the Administrative Agent to act as the contractual representative of such Lender
with the rights and duties expressly set forth herein and in the other Loan
Documents. The Administrative Agent agrees to act as such contractual
representative upon the express conditions contained in this Article X.
Notwithstanding the use of the defined term "Administrative Agent," it is
expressly understood and agreed that the Administrative Agent shall not have any
fiduciary responsibilities to any Lender by reason of this Agreement or any
other Loan Document and that the Administrative Agent is merely acting as the
contractual representative of the Lenders with only those duties as are
expressly set forth in this Agreement and the other Loan Documents. In its
capacity as the Lenders' contractual representative, the Administrative Agent
(i) does not hereby assume any fiduciary duties to any of the Lenders, (ii) is a
"representative" of the Lenders within the meaning of Section 9-105 of the
Uniform Commercial Code and (iii) is acting as an independent contractor, the
rights and duties of which are limited to those expressly set forth in this
Agreement and the other Loan Documents. Each of the Lenders hereby agrees to
assert no claim against the Administrative Agent on any agency theory or any
other theory of liability for breach of fiduciary duty, all of which claims each
Lender hereby waives.
10.2. Powers. The Administrative Agent shall have and may exercise such
powers under the Loan Documents as are specifically delegated to the
Administrative Agent by the terms of each thereof, together with such powers as
are reasonably incidental thereto. The Administrative Agent shall have no
implied duties to the Lenders, or any obligation to the Lenders to take any
action thereunder except any action specifically provided by the Loan Documents
to be taken by the Administrative Agent.
10.3. General Immunity. Neither the Administrative Agent (in its capacity
as such) nor any of its directors, officers, agents or employees shall be liable
to either Borrower, the Lenders or any Lender for any action taken or omitted to
be taken by it or them hereunder or under any other Loan Document or in
connection herewith or therewith except to the extent such action or inaction
has arisen from the gross negligence or willful misconduct of such Person.
10.4. No Responsibility for Loans, Recitals, etc. Neither the
Administrative Agent nor any of its directors, officers, agents or employees
shall be responsible for or have any duty to ascertain, inquire into, or verify
(a) any statement, warranty or representation made in connection with any Loan
Document or any borrowing hereunder; (b) the performance or observance of any of
the covenants or agreements of any obligor under any Loan Document, including,
without limitation, any agreement by an obligor to furnish information directly
to each Lender; (c) the satisfaction of any condition specified in Article IV,
except receipt of items required to be delivered solely to the Administrative
Agent; (d) the existence or possible existence of any Default or Unmatured
Default; (e) the validity, enforceability, effectiveness, sufficiency or
genuineness of any Loan Document or any other instrument or writing furnished in
connection therewith; (f) the value, sufficiency, creation,
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perfection or priority of any Lien in any collateral security; or (g) the
financial condition of either Borrower or any guarantor of any of the
Obligations or of any of such Borrower's or any such guarantor's respective
Subsidiaries. The Administrative Agent shall have no duty to disclose to the
Lenders information that is not required to be furnished by either Borrower to
the Administrative Agent at such time, but is voluntarily furnished by such
Borrower to the Administrative Agent (either in its capacity as Administrative
Agent or in its individual capacity).
10.5. Action on Instructions of Lenders. The Administrative Agent shall in
all cases be fully protected in acting, or in refraining from acting, hereunder
and under any other Loan Document in accordance with written instructions signed
by the Required Lenders, and such instructions and any action taken or failure
to act pursuant thereto shall be binding on all of the Lenders. The Lenders
hereby acknowledge that the Administrative Agent shall be under no duty to take
any discretionary action permitted to be taken by it pursuant to the provisions
of this Agreement or any other Loan Document unless it shall be requested in
writing to do so by the Required Lenders. The Administrative Agent shall be
fully justified in failing or refusing to take any action hereunder and under
any other Loan Document unless it shall first be indemnified to its satisfaction
by the Lenders pro rata against any and all liability, cost and expense that it
may incur by reason of taking or continuing to take any such action.
10.6. Employment of Agents and Counsel. The Administrative Agent may
execute any of its duties as Administrative Agent hereunder and under any other
Loan Document by or through employees, agents, and attorneys-in-fact and shall
not be answerable to the Lenders, except as to money or securities received by
it or its authorized agents, for the default or misconduct of any such agents or
attorneys-in-fact selected by it with reasonable care. The Administrative Agent
shall be entitled to advice of counsel concerning the contractual arrangement
between the Administrative Agent and the Lenders and all matters pertaining to
the Administrative Agent's duties hereunder and under any other Loan Document.
10.7. Reliance on Documents; Counsel. The Administrative Agent shall be
entitled to rely upon any Note, notice, consent, certificate, affidavit, letter,
telegram, statement, paper or document believed by it to be genuine and correct
and to have been signed or sent by the proper person or persons, and, in respect
to legal matters, upon the opinion of counsel selected by the Administrative
Agent, which counsel may be employees of the Administrative Agent.
10.8. Administrative Agent's Reimbursement and Indemnification. The
Lenders agree to reimburse and indemnify the Administrative Agent ratably in
proportion to their respective Commitments (or, if the Commitments have been
terminated, in proportion to their Commitments immediately prior to such
termination) (i) for any amounts not reimbursed by the Borrowers for which the
Administrative Agent is entitled to reimbursement by the Borrowers under the
Loan Documents, (ii) for any other expenses incurred by the Administrative Agent
on behalf of the Lenders, in connection with the preparation, execution,
delivery, administration and enforcement of the Loan Documents (including,
without limitation, for any expenses incurred by the Administrative Agent in
connection with any dispute between the Administrative Agent and any Lender or
between two or more of the Lenders) and (iii) for any liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind and nature whatsoever which
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may be imposed on, incurred by or asserted against the Administrative Agent in
any way relating to or arising out of the Loan Documents or any other document
delivered in connection therewith or the transactions contemplated thereby
(including, without limitation, for any such amounts incurred by or asserted
against the Administrative Agent in connection with any dispute between the
Administrative Agent and any Lender or between two or more of the Lenders), or
the enforcement of any of the terms of the Loan Documents or of any such other
documents, provided that no Lender shall be liable for any of the foregoing to
the extent any of the foregoing has resulted from the gross negligence or
willful misconduct of the Administrative Agent. The obligations of the Lenders
under this Section 10.8 shall survive payment of the Obligations and termination
of this Agreement.
10.9. Notice of Default. The Administrative Agent shall not be deemed to
have knowledge or notice of the occurrence of any Default or Unmatured Default
hereunder unless the Administrative Agent has received written notice from a
Lender or either Borrower referring to this Agreement describing such Default or
Unmatured Default and stating that such notice is a "notice of default". In the
event that the Administrative Agent receives such a notice, the Administrative
Agent shall give prompt notice thereof to the Lenders.
10.10. Rights as a Lender. In the event the Administrative Agent is a
Lender, the Administrative Agent shall have the same rights and powers hereunder
and under any other Loan Document with respect to its Commitment and its Loans
as any Lender and may exercise the same as though it were not the Administrative
Agent, and the term "Lender" or "Lenders" shall, at any time when the
Administrative Agent is a Lender, unless the context otherwise indicates,
include the Administrative Agent in its individual capacity. The Administrative
Agent and its Affiliates may accept deposits from, lend money to, and generally
engage in any kind of trust, debt, equity or other transaction, in addition to
those contemplated by this Agreement or any other Loan Document, with either
Borrower or any of its Subsidiaries in which either Borrower or such Subsidiary
is not restricted hereby from engaging with any other Person.
10.11. Lender Credit Decision. Each Lender acknowledges that it has,
independently and without reliance upon the Administrative Agent, the Arranger
or any other Lender and based on the financial statements prepared by the
Borrowers and such other documents and information as it has deemed appropriate,
made its own credit analysis and decision to enter into this Agreement and the
other Loan Documents. Each Lender also acknowledges that it will, independently
and without reliance upon the Administrative Agent, the Arranger or any other
Lender and based on such documents and information as it shall deem appropriate
at the time, continue to make its own credit decisions in taking or not taking
action under this Agreement and the other Loan Documents.
10.12. Successor Administrative Agent. The Administrative Agent may resign
at any time by giving written notice thereof to the Lenders and Midas, such
resignation to be effective upon the appointment of a successor Administrative
Agent or, if no successor Administrative Agent has been appointed, forty-five
days after the retiring Administrative Agent gives notice of its intention to
resign. The Administrative Agent may be removed at any time with or without
cause by written notice received by the Administrative Agent from the Required
Lenders, such removal to be effective on the date specified by the Required
Lenders. Upon any such resignation or removal, the Required Lenders shall have
the right to appoint, on behalf of the Borrowers and the Lenders, a successor
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Administrative Agent, which successor Administrative Agent shall, so long as no
Default has occurred and is continuing, be subject to the consent of Midas, such
consent not to be unreasonably withheld or delayed. If no successor
Administrative Agent shall have been so appointed by the Required Lenders within
thirty days after the resigning Administrative Agent's giving notice of its
intention to resign, then the resigning Administrative Agent may appoint, on
behalf of the Borrowers and the Lenders, a successor Administrative Agent.
Notwithstanding the previous sentence, the Administrative Agent may at any time
without the consent of either Borrower or any Lender, appoint any of its
Affiliates which is a commercial bank as a successor Administrative Agent
hereunder. If the Administrative Agent has resigned or been removed and no
successor Administrative Agent has been appointed, the Lenders may perform all
the duties of the Administrative Agent hereunder and each Borrower shall make
all payments in respect of the Obligations to the applicable Lender and for all
other purposes shall deal directly with the Lenders. No successor Administrative
Agent shall be deemed to be appointed hereunder until such successor
Administrative Agent has accepted the appointment. Any such successor
Administrative Agent shall be a commercial bank having capital and retained
earnings of at least $100,000,000. Upon the acceptance of any appointment as
Administrative Agent hereunder by a successor Administrative Agent, such
successor Administrative Agent shall thereupon succeed to and become vested with
all the rights, powers, privileges and duties of the resigning or removed
Administrative Agent. Upon the effectiveness of the resignation or removal of
the Administrative Agent, the resigning or removed Administrative Agent shall be
discharged from its duties and obligations hereunder and under the Loan
Documents. After the effectiveness of the resignation or removal of an
Administrative Agent, the provisions of this Article X shall continue in effect
for the benefit of such Administrative Agent in respect of any actions taken or
omitted to be taken by it while it was acting as the Administrative Agent
hereunder and under the other Loan Documents. In the event that there is a
successor to the Administrative Agent by merger, or the Administrative Agent
assigns its duties and obligations to an Affiliate pursuant to this Section
10.12, then the term "Corporate Base Rate" as used in this Agreement shall mean
the prime rate, base rate or other analogous rate of the new Administrative
Agent.
10.13. Administrative Agent's Fee. Each Borrower, on a joint and several
basis, agrees to pay to the Administrative Agent, for its own account, the fees
agreed to by Midas and the Administrative Agent pursuant to that certain letter
agreement dated November 10, 1997, or as otherwise agreed from time to time.
10.14. Delegation to Affiliates. Each Borrower and the Lenders agree that
the Administrative Agent may delegate any of its duties under this Agreement to
any of its Affiliates. Any such Affiliate (and such Affiliate's directors,
officers, agents and employees) which performs duties in connection with this
Agreement shall be entitled to the same benefits of the indemnification, waiver
and other protective provisions to which the Administrative Agent is entitled
under Articles IX and X.
10.15. Co-Agent. There shall be no right, obligation or liabilities
afforded to or imposed upon the Co-Agent by virtue of its status as such.
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ARTICLE XI
RATABLE PAYMENTS
----------------
11.1. Ratable Payments. If any Lender, whether by setoff or otherwise, has
payment made to it upon its Loans (other than payments received pursuant to
Section 3.1, 3.2, 3.4 or 3.5) in a greater proportion than its pro-rata share of
such Loans, such Lender agrees, promptly upon demand, to purchase a portion of
the Loans held by the other Lenders so that after such purchase each Lender will
hold its ratable proportion of Loans. If any Lender, whether in connection with
setoff or amounts which might be subject to setoff or otherwise, receives
collateral or other protection for its Obligations or such amounts which may be
subject to setoff, such Lender agrees, promptly upon demand, to take such action
necessary such that all Lenders share in the benefits of such collateral ratably
in proportion to their Loans. In case any such payment is disturbed by legal
process, or otherwise, appropriate further adjustments shall be made. If an
amount to be setoff is to be applied to Indebtedness of either Borrower to a
Lender, other than Indebtedness comprised of Loans made by such Lender, such
amount shall be applied ratably to such other Indebtedness and to the
Indebtedness comprised of such Loans. In addition, the Lenders agree to share
with each Participant, and each Participant agrees to share with each Lender,
any amount received pursuant to the exercise of its right of setoff, such
amounts to be shared in accordance herewith as if each Participant were a
Lender.
ARTICLE XII
BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS
-------------------------------------------------
12.1. Successors and Assigns. The terms and provisions of the Loan
Documents shall be binding upon and inure to the benefit of each Borrower and
the Lenders and their respective successors and assigns, except that (a) neither
Borrower shall have the right to assign its rights or obligations under the Loan
Documents, and (b) any assignment by any Lender must be made in compliance with
Section 12.3. Notwithstanding clause (b) of this Section, any Lender may at any
time, without the consent of either Borrower or the Administrative Agent, assign
all or any portion of its rights under this Agreement and any Note to a Federal
Reserve Bank; provided, however, that no such assignment to a Federal Reserve
Bank shall release the transferor Lender from its obligations hereunder. The
Administrative Agent may treat the Person which made any Loan or which holds any
Note as the owner thereof for all purposes hereof unless and until such Person
complies with Section 12.3 in the case of an assignment thereof or, in the case
of any other transfer, a written notice of the transfer is filed with the
Administrative Agent. Any assignee or transferee of the rights to any Loan or
any Note agrees by acceptance of such transfer or assignment to be bound by all
the terms and provisions of the Loan Documents. Any request, authority or
consent of any Person, who at the time of making such request or giving such
authority or consent is the owner of the rights to any Loan (whether or not a
Note has been issued in evidence thereof) shall be conclusive and binding on any
subsequent holder, transferee or assignee of the rights to such Loan.
12.2. Participations.
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12.2.1. Permitted Participants; Effect. Any Lender may, in the
ordinary course of its business and in accordance with applicable law and upon
prior notice to Midas, at any time sell to one or more banks or other entities
("Participants") participating interests in any Loan owing to such Lender, any
Note held by such Lender, any Lender's interest in any Facility Letter of Credit
Obligation, any Commitment of such Lender or any other interest of such Lender
under the Loan Documents. In the event of any such sale by a Lender of
participating interests to a Participant, such Lender's obligations under the
Loan Documents shall remain unchanged, such Lender shall remain solely
responsible to the other parties hereto for the performance of such obligations,
such Lender shall remain the owner of its Loans and the holder of any Note
issued to it in evidence thereof for all purposes under the Loan Documents, all
amounts payable by either Borrower under this Agreement shall be determined as
if such Lender had not sold such participating interests, and each Borrower and
the Administrative Agent shall continue to deal solely and directly with such
Lender in connection with such Lender's rights and obligations under the Loan
Documents.
12.2.2. Voting Rights. Each Lender shall retain the sole right to
approve, without the consent of any Participant, any amendment, modification or
waiver of any provision of the Loan Documents other than any amendment,
modification or waiver with respect to any Loan or Commitment on which such
Participant has an interest which forgives principal, interest or fees, reduces
the interest rate or fees payable with respect to any such Loan or Commitment,
extends the Facility Termination Date or postpones any date fixed for a
regularly-scheduled payment of principal of, or interest or fees on, any such
Loan or Commitment.
12.3. Assignments.
12.3.1. Permitted Assignments. Any Lender may, in the ordinary course
of its business and in accordance with applicable law, at any time assign to one
or more banks or other entities ("Purchasers") all or any part of its rights and
obligations under the Loan Documents. Such assignment shall be substantially in
the form of Exhibit G hereto or in such other form as may be agreed to by the
parties thereto. The consent of Midas and the Administrative Agent, which in
each case shall not unreasonably be withheld, shall be required prior to an
assignment becoming effective with respect to a Purchaser which is not a Lender
or an Affiliate thereof. Each such assignment shall (unless Midas and the
Administrative Agent otherwise consents) be in an amount not less than the
lesser of (a) $5,000,000 or (b) the remaining amount of the assigning Lender's
Commitment (calculated as of the date of such Assignment).
12.3.2. Effect; Effective Date. Upon (a) delivery to the
Administrative Agent of a notice of assignment, substantially in the form
attached as Exhibit I to Exhibit G hereto (a "Notice of Assignment"), together
with any consents required by Section 12.3.1, and (b) payment of a $3,000 fee to
the Administrative Agent for processing such assignment, such assignment shall
become effective on the effective date specified in such Notice of Assignment.
The Notice of Assignment shall contain a representation by the Purchaser to the
effect that none of the consideration used to make the purchase of the
Commitment and Loans under the applicable assignment agreement are "plan assets"
as defined under ERISA and that the rights and interests of the Purchaser in
accordance with the Loan Documents will not be "plan assets" under ERISA. On and
after the effective date of such assignment, (a) such Purchaser shall for all
purposes be a Lender party to this Agreement and
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any other Loan Document executed by or on behalf of the Lenders and shall have
all the rights and obligations of a Lender under the Loan Documents, to the same
extent as if it were an original party hereto, and (b) no further consent or
action by either Borrower, the Lenders or the Administrative Agent shall be
required to release the transferor Lender with respect to the percentage of the
Aggregate Commitment and Loans assigned to such Purchaser. Upon the consummation
of any assignment to a Purchaser pursuant to this Section 12.3.2, the transferor
Lender, the Administrative Agent and each Borrower shall, if the transferor
Lender or the Purchaser desires that its Loans be evidenced by Notes, make
appropriate arrangements so that new Notes or, as appropriate, replacement Notes
are issued to such transferor Lender and new Notes or, as appropriate,
replacement Notes, are issued to such Purchaser, in each case in principal
amounts reflecting their respective Commitments, as adjusted pursuant to such
assignment, with any Notes so replaced to be returned to the applicable Borrower
for cancellation.
12.4. Dissemination of Information. Each Borrower authorizes each Lender
to disclose to any Participant or Purchaser or any other Person acquiring an
interest in the Loan Documents by operation of law (each a "Transferee") and any
prospective Transferee any and all information in such Lender's possession
concerning the creditworthiness of Midas and its Subsidiaries, including without
limitation any information contained in any Reports, upon the execution by any
Transferee or prospective Transferee of a confidentiality agreement and the
delivery of such executed confidentiality agreement to Midas and the
Administrative Agent.
12.5. Tax Treatment. If any interest in any Loan Document is transferred
to any Transferee which is organized under the laws of any jurisdiction other
than the United States or any State thereof, the transferor Lender shall cause
such Transferee, concurrently with the effectiveness of such transfer, to comply
with the provisions of Section 3.5(d).
ARTICLE XIII
GUARANTY OF MIDAS
-----------------
13.1 For valuable consideration, the receipt of which is hereby
acknowledged, and to induce the Lenders to make advances to International as a
Borrower, Midas hereby absolutely, irrevocably and unconditionally guarantees
prompt, full and complete payment when due, whether at stated maturity, upon
acceleration or otherwise, and at all times thereafter, of any and all existing
and future obligations of International to the Administrative Agent, the Lenders
and any holder of a Note, an Advance, or any other Obligation under or with
respect to the Loan Documents, whether for principal, interest, fees, expenses
or otherwise (collectively, the "Guaranteed International Obligations").
13.2 Midas waives notice of the acceptance of this guaranty and of the
extension, incurrence or continuation of the Guaranteed International
Obligations or any part thereof. Midas further waives all setoffs and
counterclaims and presentment, protest, notice of notices delivered or demand
made on International (except for any notice of demand or acceleration under
Section 8.1), filing of claims with a court in the event of receivership,
bankruptcy or reorganization of
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International or action or delinquency in respect of the Guaranteed
International Obligations or any part thereof, including any right to require
the Administrative Agent and the Lenders to sue International, any other
guarantor or any other Person obligated with respect to the Guaranteed
International Obligations or any part thereof, or otherwise to enforce payment
thereof against any collateral securing the Guaranteed International Obligations
or any part thereof; provided, however that if at any time any payment of any
portion of the Guaranteed International Obligations is rescinded or must
otherwise be restored or returned upon the insolvency, bankruptcy or
reorganization of International or otherwise, Midas's obligations hereunder with
respect to such payment shall be reinstated at such time as though such payment
had not been made and whether or not the Administrative Agent or the Lenders are
in possession of this guaranty. Credit may be granted or continued to
International by the Lenders without notice to or authorization from Midas
regardless of International's financial or other condition at the time of such
grant or continuation. The Administrative Agent and the Lenders shall have no
obligation to disclose or discuss with Midas their assessments of the financial
condition of International.
13.3 Midas hereby agrees that, to the fullest extent permitted by law, its
obligations hereunder shall be continuing, absolute and unconditional under any
and all circumstances and not subject to any reduction, limitation, impairment,
termination, defense (other than indefeasible payment in full), setoff,
counterclaim or recoupment whatsoever (all of which are hereby expressly waived
by it to the fullest extent permitted by law), whether by reason of any claim of
any character whatsoever, including, without limitation, any claim of waiver,
release, surrender, alteration or compromise. This guaranty is a guaranty of
payment and not of collection, is a primary obligation of Midas and not one of
surety. The validity and enforceability of this guaranty shall not be impaired
or affected by any of the following: (a) any extension, modification or renewal
of, or indulgence with respect to, or substitutions for, the Guaranteed
International Obligations or any part thereof or any agreement relating thereto
at any time; (b) any failure or omission to enforce any right, power or remedy
with respect to the Guaranteed International Obligations or any part thereof or
any agreement relating thereto, or any collateral; (c) any waiver of any right,
power or remedy or of any default with respect to the Guaranteed International
Obligations or any part thereof or any agreement relating thereto or with
respect to any collateral; (d) any release, surrender, compromise, settlement,
waiver, subordination or modification, with or without consideration, of any
collateral, any other guaranties with respect to the Guaranteed International
Obligations or any part thereof, or any other obligation of any Person with
respect to the Guaranteed International Obligations or any part thereof; (e) the
enforceability or validity of the Guaranteed International Obligations or any
part thereof or the genuineness, enforceability or validity of any agreement
relating thereto or with respect to any collateral; (f) the application of
payments received from any source to the payment of obligations other than the
Guaranteed International Obligations, any part thereof or amounts which are not
covered by this guaranty even though the Administrative Agent and the Lenders
might lawfully have elected to apply such payments to any part or all of the
Guaranteed International Obligations or to amounts which are not covered by this
guaranty; (g) any change in the ownership of International or the insolvency,
bankruptcy or any other change in the legal status of International; (h) any
change in or the imposition of any law, decree, regulation or other governmental
act which does or might impair, delay or in any way affect the validity,
enforceability or the payment when due of the Guaranteed International
Obligations; (i) the failure of Midas or International to maintain in full
force, validity or effect or to obtain or renew when required all governmental
and other approvals,
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licenses or consents required in connection with the Guaranteed International
Obligations or this guaranty, or to take any other action required in connection
with the performance of all obligations pursuant to the Guaranteed International
Obligations or this guaranty; (j) the existence of any claim, setoff or other
rights which Midas may have at any time against International, or any other
Person in connection herewith or an unrelated transaction; (k) the Lenders'
election, in any case or proceeding instituted under chapter 11 of the United
States Bankruptcy Code, of the application of Section 1111(b)(2) of the United
States Bankruptcy Code; (l) any borrowing, use of cash collateral, or grant of a
security interest by International, as debtor in possession, under Section 363
or 364 of the United States Bankruptcy Code; (m) the disallowance of all or any
portion of any of the Lenders' claims for repayment of the Guaranteed
International Obligations under Section 502 or 506 of the United States
Bankruptcy Code; or (n) any other circumstances, whether or not similar to any
of the foregoing, which could constitute a defense to a guarantor; all whether
or not Midas shall have had notice or knowledge of any act or omission referred
to in the foregoing clauses (a) through (n) of this paragraph. It is agreed that
Midas's liability hereunder is several and independent of any other guaranties
or other obligations at any time in effect with respect to the Guaranteed
International Obligations or any part thereof and that Midas's liability
hereunder may be enforced regardless of the existence, validity, enforcement or
non-enforcement of any such other guaranties or other obligations or any
provision of any applicable law or regulation purporting to prohibit payment by
International of the Guaranteed International Obligations in the manner agreed
upon between International and the Administrative Agent and the Lenders.
13.4 Midas authorizes the Lenders to take any action or exercise any
remedy with respect to any collateral from time to time securing the Guaranteed
International Obligations, which the Lenders in their sole discretion shall
determine, without notice to Midas. Notwithstanding any reference herein to any
collateral securing any of the Guaranteed International Obligations, it is
acknowledged that, on the date hereof, neither Midas nor any of its Subsidiaries
has granted, or has any obligation to grant, any security interest in or other
lien on any of its property as security for the Guaranteed International
Obligations.
13.5 In the event the Lenders in their sole discretion elect to give
notice of any action with respect to any collateral securing the Guaranteed
International Obligations or any part thereof, ten (10) days' prior written
notice to Midas at the address as provided in Article XV shall be deemed
reasonable notice of any matters contained in such notice. Midas consents and
agrees that neither Administrative Agent nor the Lenders shall be under any
obligation to marshall any assets in favor of Midas or against or in payment of
any or all of the Guaranteed International Obligations.
13.6 In the event that acceleration of the time for payment of any of the
Guaranteed International Obligations is stayed upon the insolvency, bankruptcy
or reorganization of International, or otherwise, all such amounts shall
nonetheless be payable by Midas forthwith upon demand by the Administrative
Agent or the Lenders. Midas further agrees that, to the extent that
International makes a payment or payments to any of the Lenders on the
Guaranteed International Obligations, or the Administrative Agent or the Lenders
receive any proceeds of collateral securing the Guaranteed International
Obligations, which payment or receipt of proceeds or any part thereof is
subsequently invalidated, declared to be fraudulent or preferential, set aside
or required to be returned or repaid to International, its estate, trustee,
receiver, debtor in possession or any other party,
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including, without limitation, Midas, under any insolvency or bankruptcy law,
state or federal law, common law or equitable cause, then to the extent of such
payment, return or repayment, the obligation or part thereof which has been
paid, reduced or satisfied by such amount shall be reinstated and continued in
full force and effect as of the date when such initial payment, reduction or
satisfaction occurred.
13.7 Midas agrees that, as between Midas on the one hand, and the Lenders
and the Administrative Agent, on the other hand, the obligations of
International guaranteed under this Article XIII may be declared to be forthwith
due and payable, or may be deemed automatically to have been accelerated, as
provided in Section 8.1 hereof for purposes of this Article XIII,
notwithstanding any stay, injunction or other prohibition (whether in a
bankruptcy proceeding affecting International or otherwise) preventing such
declaration as against International and that, in the event of such declaration
or automatic acceleration, such obligations (whether or not due and payable by
International) shall forthwith become due and payable by Midas for purposes of
this Article XIII.
13.8 No delay on the part of the Administrative Agent or the Lenders in
the exercise of any right, power or remedy shall preclude any further exercise
thereof; nor shall any amendment, supplement, modification or waiver of any of
the terms or provisions of this Guaranty be binding upon the Administrative
Agent or the Lenders, except as expressly set forth in a writing duly signed and
delivered on the Lenders' behalf by the Administrative Agent. The failure by the
Administrative Agent or the Lenders at any time or times hereafter to require
strict provisions, warranties, terms and conditions contained in any promissory
note, security agreement, agreement, guaranty, instrument or document now or at
any time or times hereafter executed pursuant to the terms of, or in connection
herewith, by International or Midas and delivered to the Administrative Agent or
the Lenders shall not waive, affect or diminish any right of the Administrative
Agent or the Lenders at any time or times hereafter to demand strict performance
thereof, and such right shall not be deemed to have been waived by any act or
knowledge of the Administrative Agent or the Lenders, their Administrative
Agents, officers or employees, unless such waiver is contained in an instrument
in writing duly signed and delivered on the Lenders' behalf by the
Administrative Agent. No waiver by the Administrative Agent or the Lenders of
any default shall operate as a waiver of any other default or the same default
on a future occasion, and no action by the Administrative Agent or the Lenders
permitted hereunder shall in any way affect or impair the Administrative Agent's
or the Lenders' rights or powers, or the obligations of Midas under this
guaranty. Any determination by a court of competent jurisdiction of the amount
of any Guaranteed International Obligations owing by International to the
Lenders shall be conclusive and binding on Midas irrespective of whether Midas
was a party to the suit or action in which such determination was made.
13.9 In addition to and without limitation of any rights, powers or
remedies of the Administrative Agent or the Lenders under applicable law, any
time after maturity of the Guaranteed International Obligations, whether by
acceleration or otherwise, the Administrative Agent or the Lenders may, in their
sole discretion, with notice after the fact to Midas and regardless of the
acceptance of any security or collateral for the payment hereof, appropriate and
apply toward the payment of the Guaranteed International Obligations (a) any
indebtedness due or to become due from any of the Lenders to Midas, and (b) any
moneys, credits or other property belonging to Midas
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(including all account balances, whether provisional or final and whether or not
collected or available) at any time held by or coming into the possession of any
of the Administrative Agent or any Lender whether for deposit or otherwise.
13.10 This Guaranty shall bind Midas and its successors and assigns and
shall inure to the benefit of the Administrative Agent, the Lenders and their
successors and assigns. All references herein to International shall be deemed
to include its successors and assigns including, without limitation, a receiver,
trustee or debtor in possession of or for International.
13.11 It is understood that while the amount of the Guaranteed
International Obligations guaranteed hereby is not limited, if in any action or
proceeding involving any state, federal or foreign bankruptcy, insolvency or
other law affecting the rights or creditors generally, this guaranty would be
held or determined to be void, invalid or unenforceable on account of the amount
of the aggregate liability under this guaranty, then, notwithstanding any other
provision of this guaranty to the contrary, the aggregate amount of such
liability shall, without any further action of the Agent, the Lenders or any
other Person, be automatically limited and reduced to the highest amount which
is valid and enforceable as determined in such action or proceeding.
13.12 This guaranty shall continue in effect until the date on which all
of the Guaranteed International Obligations have been paid in full.
ARTICLE XIV
GUARANTY OF INTERNATIONAL
14.1 For valuable consideration, the receipt of which is hereby
acknowledged, and to induce the Lenders to make advances to Midas as a Borrower,
International hereby absolutely, irrevocably and unconditionally guarantees
prompt, full and complete payment when due, whether at stated maturity, upon
acceleration or otherwise, and at all times thereafter, of any and all existing
and future obligations of Midas to the Administrative Agent, the Lenders and any
holder of a Note, an Advance, or any other Obligation under or with respect to
the Loan Documents, whether for principal, interest, fees, expenses or otherwise
(collectively, the "Guaranteed Midas Obligations").
14.2 International waives notice of the acceptance of this guaranty and
of the extension, incurrence or continuation of the Guaranteed Midas Obligations
or any part thereof. International further waives all setoffs and counterclaims
and presentment, protest, notice of notices delivered or demand made on
International (except for any notice of demand or acceleration under Section
8.1), filing of claims with a court in the event of receivership, bankruptcy or
reorganization of Midas or action or delinquency in respect of the Guaranteed
Midas Obligations or any part thereof, including any right to require the
Administrative Agent and the Lenders to sue Midas, any other guarantor or any
other Person obligated with respect to the Guaranteed Midas Obligations or any
part thereof, or otherwise to enforce payment thereof against any collateral
securing the Guaranteed Midas Obligations or any part thereof; provided, however
that if at any time any payment of any portion of the Guaranteed Midas
Obligations is rescinded or must otherwise be restored or returned upon the
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<PAGE>
insolvency, bankruptcy or reorganization of Midas or otherwise, International's
obligations hereunder with respect to such payment shall be reinstated at such
time as though such payment had not been made and whether or not the
Administrative Agent or the Lenders are in possession of this guaranty. Credit
may be granted or continued to Midas by the Lenders without notice to or
authorization from International regardless of Midas's financial or other
condition at the time of such grant or continuation. The Administrative Agent
and the Lenders shall have no obligation to disclose or discuss with
International their assessments of the financial condition of Midas.
14.3 International hereby agrees that, to the fullest extent permitted by
law, its obligations hereunder shall be continuing, absolute and unconditional
under any and all circumstances and not subject to any reduction, limitation,
impairment, termination, defense (other than indefeasible payment in full),
setoff, counterclaim or recoupment whatsoever (all of which are hereby expressly
waived by it to the fullest extent permitted by law), whether by reason of any
claim of any character whatsoever, including, without limitation, any claim of
waiver, release, surrender, alteration or compromise. This guaranty is a
guaranty of payment and not of collection, is a primary obligation of
International and not one of surety, The validity and enforceability of this
guaranty shall not be impaired or affected by any of the following: (a) any
extension, modification or renewal of, or indulgence with respect to, or
substitutions for, the Guaranteed Midas Obligations or any part thereof or any
agreement relating thereto at any time; (b) any failure or omission to enforce
any right, power or remedy with respect to the Guaranteed Midas Obligations or
any part thereof or any agreement relating thereto, or any collateral; (c) any
waiver of any right, power or remedy or of any default with respect to the
Guaranteed Midas Obligations or any part thereof or any agreement relating
thereto or with respect to any collateral; (d) any release, surrender,
compromise, settlement, waiver, subordination or modification, with or without
consideration, of any collateral, any other guaranties with respect to the
Guaranteed Midas Obligations or any part thereof, or any other obligation of any
Person with respect to the Guaranteed Midas Obligations or any part thereof; (e)
the enforceability or validity of the Guaranteed Midas Obligations or any part
thereof or the genuineness, enforceability or validity of any agreement relating
thereto or with respect to any collateral; (f) the application of payments
received from any source to the payment of obligations other than the Guaranteed
Midas Obligations, any part thereof or amounts which are not covered by this
guaranty even though the Administrative Agent and the Lenders might lawfully
have elected to apply such payments to any part or all of the Guaranteed Midas
Obligations or to amounts which are not covered by this guaranty; (g) any change
in the ownership of Midas or the insolvency, bankruptcy or any other change in
the legal status of Midas; (h) any change in or the imposition of any law,
decree, regulation or other governmental act which does or might impair, delay
or in any way affect the validity, enforceability or the payment when due of the
Guaranteed Midas Obligations; (i) the failure of Midas or International to
maintain in full force, validity or effect or to obtain or renew when required
all governmental and other approvals, licenses or consents required in
connection with the Guaranteed Midas Obligations or this guaranty, or to take
any other action required in connection with the performance of all obligations
pursuant to the Guaranteed Midas Obligations or this guaranty; (j) the existence
of any claim, setoff or other rights which International may have at any time
against Midas, or any other Person in connection herewith or an unrelated
transaction; (k) the Lenders' election, in any case or proceeding instituted
under chapter 11 of the United States Bankruptcy Code, of the application of
Section 1111(b)(2) of the United States Bankruptcy Code; (l) any borrowing, use
of cash collateral, or grant of a security interest by Midas, as debtor in
possession, under Section 363
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<PAGE>
or 364 of the United States Bankruptcy Code; (m) the disallowance of all or any
portion of any of the Lenders' claims for repayment of the Guaranteed Midas
Obligations under Section 502 or 506 of the United States Bankruptcy Code; or
(n) any other circumstances, whether or not similar to any of the foregoing,
which could constitute a defense to a guarantor; all whether or not
International shall have had notice or knowledge of any act or omission referred
to in the foregoing clauses (a) through (n) of this paragraph. It is agreed that
International's liability hereunder is several and independent of any other
guaranties or other obligations at any time in effect with respect to the
Guaranteed Midas Obligations or any part thereof and that International's
liability hereunder may be enforced regardless of the existence, validity,
enforcement or non-enforcement of any such other guaranties or other obligations
or any provision of any applicable law or regulation purporting to prohibit
payment by Midas of the Guaranteed Midas Obligations in the manner agreed upon
between Midas and the Administrative Agent and the Lenders.
14.4 International authorizes the Lenders to take any action or exercise
any remedy with respect to any collateral from time to time securing the
Guaranteed Midas Obligations, which the Lenders in their sole discretion shall
determine, without notice to International. Notwithstanding any reference herein
to any collateral securing any of the Guaranteed Midas Obligations, it is
acknowledged that, on the date hereof, neither International nor any of its
Subsidiaries has granted, or has any obligation to grant, any security interest
in or other lien on any of its property as security for the Guaranteed Midas
Obligations.
14.5 In the event the Lenders in their sole discretion elect to give
notice of any action with respect to any collateral securing the Guaranteed
Midas Obligations or any part thereof, ten (10) days' prior written notice to
International at the address as provided in Article XV shall be deemed
reasonable notice of any matters contained in such notice. International
consents and agrees that neither Administrative Agent nor the Lenders shall be
under any obligation to marshall any assets in favor of International or against
or in payment of any or all of the Guaranteed Midas Obligations.
14.6 In the event that acceleration of the time for payment of any of the
Guaranteed Midas Obligations is stayed upon the insolvency, bankruptcy or
reorganization of Midas, or otherwise, all such amounts shall nonetheless be
payable by International forthwith upon demand by the Administrative Agent or
the Lenders. International further agrees that, to the extent that International
makes a payment or payments to any of the Lenders on the Guaranteed Midas
Obligations, or the Administrative Agent or the Lenders receive any proceeds of
collateral securing the Guaranteed Midas Obligations, which payment or receipt
of proceeds or any part thereof is subsequently invalidated, declared to be
fraudulent or preferential, set aside or required to be returned or repaid to
such International, its estate, trustee, receiver, debtor in possession or any
other party, including, without limitation, International, under any insolvency
or bankruptcy law, state or federal law, common law or equitable cause, then to
the extent of such payment, return or repayment, the obligation or part thereof
which has been paid, reduced or satisfied by such amount shall be reinstated and
continued in full force and effect as of the date when such initial payment,
reduction or satisfaction occurred.
14.7 International agrees that, as between International on the one hand,
and the Lenders and the Administrative Agent, on the other hand, the obligations
of International guaranteed under
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<PAGE>
this Article XIV may be declared to be forthwith due and payable, or may be
deemed automatically to have been accelerated, as provided in Section 8.1 hereof
for purposes of this Article XIV, notwithstanding any stay, injunction or other
prohibition (whether in a bankruptcy proceeding affecting Midas or otherwise)
preventing such declaration as against Midas and that, in the event of such
declaration or automatic acceleration, such obligations (whether or not due and
payable by International) shall forthwith become due and payable by
International for purposes of this Article XIV.
14.8 No delay on the part of the Administrative Agent or the Lenders in
the exercise of any right, power or remedy shall preclude any further exercise
thereof; nor shall any amendment, supplement, modification or waiver of any of
the terms or provisions of this Guaranty be binding upon the Administrative
Agent or the Lenders, except as expressly set forth in a writing duly signed and
delivered on the Lenders' behalf by the Administrative Agent. The failure by the
Administrative Agent or the Lenders at any time or times hereafter to require
strict provisions, warranties, terms and conditions contained in any promissory
note, security agreement, agreement, guaranty, instrument or document now or at
any time or times hereafter executed pursuant to the terms of, or in connection
herewith, by International or Midas and delivered to the Administrative Agent or
the Lenders shall not waive, affect or diminish any right of the Administrative
Agent or the Lenders at any time or times hereafter to demand strict performance
thereof, and such right shall not be deemed to have been waived by any act or
knowledge of the Administrative Agent or the Lenders, their Administrative
Agents, officers or employees, unless such waiver is contained in an instrument
in writing duly signed and delivered on the Lenders' behalf by the
Administrative Agent. No waiver by the Administrative Agent or the Lenders of
any default shall operate as a waiver of any other default or the same default
on a future occasion, and no action by the Administrative Agent or the Lenders
permitted hereunder shall in any way affect ir impair the Administrative Agent's
or the Lenders' rights or powers, or the obligations of International under this
guaranty. Any determination by a court of competent jurisdiction of the amount
of any Guaranteed Midas Obligations owing by Midas to the Lenders shall be
conclusive and binding on International irrespective of whether International
was a party to the suit or action in which such determination was made.
14.9 In addition to and without limitation of any rights, powers or
remedies of the Administrative Agent or the Lenders under applicable law, any
time after maturity of the Guaranteed Midas Obligations, whether by acceleration
or otherwise, the Administrative Agent or the Lenders may, in their sole
discretion, with notice after the fact to International and regardless of the
acceptance of any security or collateral for the payment hereof, appropriate and
apply toward the payment of the Guaranteed Midas Obligations (a) any
indebtedness due or to become due from any of the Lenders to International, and
(b) any moneys, credits or other property belonging to International (including
all account balances, whether provisional or final and whether or not collected
or available) at any time held by or coming into the possession of any of the
Administrative Agent or any Lender whether for deposit or otherwise.
14.10 This Guaranty shall bind International and its successors and assigns
and shall inure to the benefit of the Administrative Agent, the Lenders and
their successors and assigns. All references herein to Midas shall be deemed to
include its successors and assigns including, without limitation, a receiver,
trustee or debtor in possession of or for Midas.
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<PAGE>
14.11 It is understood that while the amount of the Guaranteed Midas
Obligations guaranteed hereby is not limited, if in any action or proceeding
involving any state, federal or foreign bankruptcy, insolvency or other law
affecting the rights or creditors generally, this guaranty would be held or
determined to be void, invalid or unenforceable on account of the amount of the
aggregate liability under this guaranty, then, notwithstanding any other
provision of this guaranty to the contrary, the aggregate amount of such
liability shall, without any further action of the Agent, the Lenders or any
other Person, be automatically limited and reduced to the highest amount which
is valid and enforceable as determined in such action or proceeding.
14.12 This Guaranty shall continue in effect until the date on which all
of the Guaranteed Midas Obligations have been paid in full.
ARTICLE XV
NOTICES
15.1. Notices. Except as otherwise permitted by Section 2.12 with respect
to borrowing notices, all notices, requests and other communications to any
party hereunder shall be in writing (including electronic transmission,
facsimile transmission or similar writing) and shall be given to such party: (x)
in the case of each Borrower or the Administrative Agent, at its address or
facsimile number set forth on the signature pages hereof, (y) in the case of any
Lender, at its address or facsimile number set forth below its signature hereto
or in its administrative questionnaire or (z) in the case of any party, at such
other address or facsimile number as such party may hereafter specify for the
purpose by notice to the Administrative Agent and Midas in accordance with the
provisions of this Section 15.1. Each such notice, request or other
communication shall be effective (i) if given by facsimile transmission, when
transmitted to the facsimile number specified in this Section and confirmation
of receipt is received, or (ii) if given by any other means, when delivered (or,
in the case of electronic transmission, received) at the address specified in
this Section.
15.2. Change of Address. Either Borrower, the Administrative Agent and any
Lender may each change the address for service of notice upon it by a notice in
writing to the other parties hereto.
[signature pages to follow]
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<PAGE>
IN WITNESS WHEREOF, the Borrowers, the Lenders and the Administrative Agent
have executed this Agreement as of the date first above written.
MIDAS, INC.
By:
-----------------------------------------
Print Name:
---------------------------------
Title:
--------------------------------------
Address: 225 North Michigan Avenue
Chicago, Illinois 60611
Attn: R. Lee Barclay
Telecopy: (312) 565-3994
Telephone: (312) 565-7810
MIDAS INTERNATIONAL CORPORATION
By:
-----------------------------------------
Print Name:
---------------------------------
Title:
--------------------------------------
Address: 225 North Michigan Avenue
Chicago, Illinois 60611
Attn: R. Lee Barclay
Telecopy: (312) 565-3994
Telephone: (312) 565-7810
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<PAGE>
Commitment: $50,000,000 THE FIRST NATIONAL BANK OF CHICAGO,
Individually and as Administrative Agent
By:
-----------------------------------------
Print Name:
---------------------------------
Title:
--------------------------------------
Address: One First National Plaza
Chicago, Illinois 60670
Attn: Deborah Stevens
Telecopy: (312) 732-1117
Telephone: (312) 732-2532
-73-
<PAGE>
Commitment: $35,000,000 CREDIT SUISSE FIRST BOSTON,
Individually and as Co-Agent
By:
-----------------------------------------
Print Name:
---------------------------------
Title:
--------------------------------------
By:
-----------------------------------------
Print Name:
---------------------------------
Title:
--------------------------------------
Address: 227 West Monroe, 40th Floor
Chicago, Illinois 60606
Attn: John S. Marlatt
Telecopy: (312) 630-0359
Telephone: (312) 630-0086
with a copy to:
Address: 11 Madison Avenue
New York, New York 10010
Attn: Chris Horgan
Telecopy: (212) 325-8309
Telephone: (212) 325-9157
-74-
<PAGE>
Commitment: $25,000,000 ABN AMRO BANK N.V.
By:
-----------------------------------------
Print Name:
---------------------------------
Title:
--------------------------------------
By:
-----------------------------------------
Print Name:
---------------------------------
Title:
--------------------------------------
Address: 135 South LaSalle Street
Chicago, Illinois 60603
Attn: David E. Collignon
Telecopy: (312) 606-8425
Telephone: (312) 904-6973
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<PAGE>
Commitment: $25,000,000 BANQUE NATIONALE DE PARIS - CHICAGO
By:
-----------------------------------------
Print Name:
---------------------------------
Title:
--------------------------------------
By:
-----------------------------------------
Print Name:
---------------------------------
Title:
--------------------------------------
Address: 209 South LaSalle Street
Suite 500
Chicago, Illinois 60604
Attn: Jo Ellen Bender
Telecopy: (312) 977-1380
Telephone: (312) 977-2225
-76-
<PAGE>
Commitment: $25,000,000 THE FUJI BANK, LIMITED
By:
-----------------------------------------
Print Name:
---------------------------------
Title:
--------------------------------------
Address: 225 West Wacker Drive
Suite 2000
Chicago, Illinois 60606
Attn: James S. Bell
Telecopy: (312) 621-0539
Telephone: (312) 621-0526
-77-
<PAGE>
Commitment: $25,000,000 THE NORTHERN TRUST COMPANY
By:
-----------------------------------------
Print Name:
---------------------------------
Title:
--------------------------------------
Address: 50 LaSalle Street
Chicago, Illinois 60675
Attn: James F.T. Monhart
Telecopy: (312) 444-5055
Telephone: (312) 444-5646
-78-
<PAGE>
Commitment: $15,000,000 MERCANTILE BANK NATIONAL ASSOCIATION
By:
-----------------------------------------
Print Name:
---------------------------------
Title:
--------------------------------------
Address: One Mercantile Center
Tram 12-3
St. Louis, MO 63101
Attn: David F. Higbee
Telecopy: (314) 425-2203
Telephone: (314) 425-1967
Initial Aggregate
Commitment $200,000,000
===========
-79-
<PAGE>
Document Number: MIDASCR.AGR
8-7-98/10:31AM
-80-
<PAGE>
Exhibit 4.2
AMENDMENT NO. 1 TO CREDIT AGREEMENT
This Amendment No. 1 to Credit Agreement (this "Amendment Agreement") is
entered into as of April 3, 1998 by and among Midas, Inc. and Midas
International Corporation (the "Borrowers"), the undersigned lenders (the
"Lenders"), The First National Bank of Chicago, as Administrative Agent (the
"Agent"), and Credit Suisse First Boston, as Co-Agent (the "Co-Agent").
W I T N E S S E T H :
WHEREAS, the Borrowers, the Lenders, the Agent and the Co-Agent entered
into that certain Credit Agreement dated as of January 22, 1998 (the "Credit
Agreement"); and
WHEREAS, the Borrowers, the Lenders, the Agent and the Co-Agent have agreed
to amend the Credit Agreement on the terms and conditions herein set forth.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree as
follows:
1. Defined Terms. Capitalized terms used herein and not otherwise defined
herein shall have the meanings attributed to such terms in the Credit Agreement,
as amended hereby.
2. Amendments to Credit Agreement.
2.1 Article VI of the Credit Agreement is hereby amended by (a) deleting
clause (a) of Section 6.20 in its entirety and replacing it with the following:
(a) Subject to the last sentence of this Section 6.20, to have terms (other
than pricing terms) which, taken as a whole, are more favorable to the
holders of such Senior Notes than the terms set forth in this Agreement
and (b) adding the following sentence to the end of Section 6.20:
The provisions of clause (a) of this Section 6.20 shall not apply to any
Indebtedness that is registered with the Securities and Exchange Commission
at any time at which Midas maintains Investment Grade Ratings on its long
term unsecured debt.
2.2 Article VII of the Credit Agreement is hereby amended by (a) deleting
Section 7.3 in its entirety and replacing it with the following:
<PAGE>
7.3 The breach of any of the terms or provisions of Section 6.2, 6.3,
6.10, 6.11, 6.12, 6.14, 6.18, 6.19 or 6.20.
and (b) deleting Section 7.5 in its entirety and replacing it with the
following:
7.5 Failure of Midas or any of its Subsidiaries to pay when due any
Indebtedness aggregating in excess of $10,000,000 ("Material
Indebtedness"); or the default by Midas or any of its Subsidiaries in the
performance (beyond the applicable grace period with respect thereto, if
any) of any term, provision or condition contained in any agreement under
which any such Material Indebtedness was created or is governed, or any
other event shall occur or condition exist, the effect of which default or
event is to cause, or to permit the holder or holders of such Material
Indebtedness to cause, such Material Indebtedness to become due prior to
its stated maturity; or any Material Indebtedness of Midas or any of its
Subsidiaries shall be declared to be due and payable or required to be
prepaid or repurchased (other than by a regularly scheduled payment or
prepayment) prior to the stated maturity thereof; or Midas or any of its
Subsidiaries shall not pay, or admit in writing its inability to pay, its
debts generally as they become due.
3. Conditions Precedent. This Amendment Agreement shall become effective as of
the date first above written; provided, that the Agent has received counterparts
of this Amendment Agreement duly executed by each Borrower and each Lender.
4. Representations and Warranties of the Borrowers.
4.1 Each Borrower represents and warrants that the execution, delivery and
performance by such Borrower of this Amendment Agreement have been duly
authorized by all necessary corporate action and that this Amendment Agreement
is a legal, valid and binding obligation of such Borrower, enforceable against
such Borrower in accordance with its terms, except as the enforcement thereof
may be subject to (a) the effect of any applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors' rights generally
and (b) general principles of equity (regardless of whether such enforcement is
sought in a proceeding in equity or at law).
4.2 Each Borrower hereby certifies that each of the representations and
warranties contained in the Credit Agreement is true and correct in all material
respects on and as of the date hereof as if made on the date hereof, except to
the extent that any such representation or warranty is stated to relate solely
to an earlier date, in which case such representation or warranty shall be true
and correct on and as of such earlier date.
5. Reference to and Effect on the Credit Agreement.
5.1 Upon the effectiveness of this Amendment Agreement, each reference in
the Credit Agreement to "this Agreement," "hereunder," "hereof," "herein" or
words of like import and each reference to the Credit Agreement in each Loan
Document shall mean and be a reference to the Credit Agreement as amended
hereby.
-2-
<PAGE>
5.2 Except as specifically amended above, all of the terms, conditions and
covenants of the Credit Agreement and the other Loan Documents shall remain
unaltered and in full force and effect and shall be binding upon each Borrower
in all respects and are hereby ratified and confirmed.
5.3 The execution, delivery and effectiveness of this Amendment Agreement
shall not operate as a waiver of (a) any right, power or remedy of any Lender or
the Agent under the Credit Agreement or any of the Loan Documents, or (b) any
Default or Unmatured Default under the Credit Agreement.
6. Costs and Expenses. Each Borrower agrees, jointly and severally, to pay on
demand all costs and expenses of the Agent in connection with the preparation,
execution and delivery of this Amendment Agreement, including the reasonable
fees and out-of-pocket expenses of counsel for the Agent with respect thereto.
7. CHOICE OF LAW. THIS AMENDMENT AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE
WITH THE INTERNAL LAWS (AND NOT THE LAW OF CONFLICTS) OF THE STATE OF ILLINOIS,
BUT GIVING EFFECT TO FEDERAL LAWS APPLICABLE TO NATIONAL BANKS.
8. Execution in Counterparts. This Amendment Agreement may be executed in any
number of counterparts and by different parties hereto in separate counterparts,
each of which when so executed shall be deemed to be an original and all of
which taken together shall constitute one and the same agreement.
9. Headings. Section headings in this Amendment Agreement are included herein
for convenience of reference only and shall not constitute a part of this
Amendment Agreement for any other purposes.
[signature page to follow]
-3-
<PAGE>
IN WITNESS WHEREOF, the Borrowers, the Agent, the Co-Agent and the Lenders
have executed this Amendment Agreement as of the date first above written.
MIDAS, INC.
By: /s/ Christian Pappas
-------------------------------------
Title: Vice President and Treasurer
----------------------------------
MIDAS INTERNATIONAL CORPORATION
By: /s/ Christian Pappas
-------------------------------------
Title: Vice President and Treasurer
----------------------------------
THE FIRST NATIONAL BANK OF CHICAGO,
Individually and as Agent
By: /s/ Deborah E. Stevens
-------------------------------------
Title: Authorized Agent
----------------------------------
CREDIT SUISSE FIRST BOSTON,
Individually and as Co-Agent
By: /s/ Chris T. Horgan
-------------------------------------
Title: Vice President
----------------------------------
By: /s/ Kristin Lepri
-------------------------------------
Title: Associate
----------------------------------
-4-
<PAGE>
ABN AMRO BANK N.A.
By: /s/ David E. Collignon
----------------------------------------------
Title: Vice President
-------------------------------------------
By: /s/ Joann L. Holman
----------------------------------------------
Title: Vice President
-------------------------------------------
BANQUE NATIONALE DE PARIS-CHICAGO
By: /s/ Arnaud Collin DuBocage
----------------------------------------------
Title:Executive Vice President and General Manager
--------------------------------------------
THE FUJI BANK, LIMITED
By: /s/ Peter L. Chinnici
----------------------------------------------
Title: Joint General Manager
-------------------------------------------
THE NORTHERN TRUST COMPANY
By: /s/ James F.T. Monhart
----------------------------------------------
Title: Vice President
-------------------------------------------
-5-
<PAGE>
MERCANTILE BANK NATIONAL ASSOCIATION
By: /s/ David Higbee
-----------------------------------
Title: Vice President
--------------------------------
-6-
<PAGE>
EXHIBIT 4.3
CONFORMED COPY
NY3:#7147740
================================================================================
MIDAS INTERNATIONAL CORPORATION
$75,000,000
6.89% Guaranteed Senior Notes Due 2005
Fully and Unconditionally Guaranteed by Midas, Inc.
--------------
NOTE AND GUARANTEE AGREEMENT
--------------
Dated as of April 15, 1998
================================================================================
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Section Page
- ------- ----
<C> <S> <C>
1. AUTHORIZATION OF NOTES...................................................... 1
2. SALE AND PURCHASE OF NOTES.................................................. 2
3. CLOSING..................................................................... 2
4. CONDITIONS TO CLOSING....................................................... 2
4.1 Representations and Warranties........................................ 2
4.2 Performance; No Default............................................... 2
4.3 Compliance Certificates............................................... 3
4.4 Opinions of Counsel................................................... 3
4.5 Purchase Permitted By Applicable Law, etc............................. 3
4.6 Sale of Other Notes................................................... 3
4.7 Payment of Special Counsel Fees....................................... 4
4.8 Private Placement Number.............................................. 4
4.9 Changes in Corporate Structure........................................ 4
4.10 Proceedings and Documents............................................. 4
5. REPRESENTATIONS AND WARRANTIES OF THE OBLIGORS.............................. 4
5.1 Organization; Power and Authority..................................... 4
5.2 Authorization, etc.................................................... 5
5.3 Disclosure............................................................ 5
5.4 Organization and Ownership of Shares of Subsidiaries; Affiliates...... 6
5.5 Financial Statements.................................................. 6
5.6 Compliance with Laws, Other Instruments, etc.......................... 6
5.7 Governmental Authorizations, etc...................................... 7
5.8 Litigation; Observance of Agreements, Statutes and Orders............. 7
5.9 Taxes................................................................. 7
5.10 Title to Property; Leases............................................. 8
5.11 Licenses, Permits, etc................................................ 8
5.12 Compliance with ERISA................................................. 8
5.13 Private Offering by the Obligors...................................... 9
5.14 Use of Proceeds; Margin Regulations................................... 9
5.15 Existing Indebtedness; Future Liens................................... 10
5.16 Foreign Assets Control Regulations, etc............................... 10
5.17 Status under Certain Statutes......................................... 10
5.18 Environmental Matters................................................. 10
6. REPRESENTATIONS OF THE PURCHASERS........................................... 11
6.1 Purchase for Investment............................................... 11
6.2 Source of Funds....................................................... 11
7. INFORMATION AS TO THE OBLIGORS.............................................. 12
</TABLE>
i
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
7.1 Financial and Business Information..................................... 12
7.2 Officer's Certificate.................................................. 15
7.3 Inspection............................................................. 15
8. PREPAYMENT OF THE NOTES..................................................... 16
8.1 Required Prepayments................................................... 16
8.2 Optional Prepayments with Make-Whole Amount............................ 16
8.3 Allocation of Partial Prepayments...................................... 17
8.4 Prepayments in Connection with a Change of Control..................... 17
8.5 Maturity; Surrender, etc............................................... 17
8.6 Purchase of Notes...................................................... 18
8.7 Make-Whole Amount...................................................... 18
9. AFFIRMATIVE COVENANTS....................................................... 19
9.1 Compliance with Law.................................................... 19
9.2 Insurance.............................................................. 20
9.3 Maintenance of Properties.............................................. 20
9.4 Payment of Taxes and Claims............................................ 20
9.5 Corporate Existence, etc............................................... 20
9.6 Ownership of the Company............................................... 21
10. NEGATIVE COVENANTS.......................................................... 21
10.1 Transactions with Affiliates.......................................... 21
10.2 Merger, Consolidation, etc............................................ 21
10.3 Liens................................................................. 22
10.4 Sale and Leaseback Transactions....................................... 24
10.5 Subsidiary Indebtedness............................................... 24
10.6 Consolidated Indebtedness Ratio....................................... 25
10.7 Consolidated Net Worth................................................ 25
10.8 Disposition of Assets................................................. 25
10.9 Line of Business...................................................... 26
11. EVENTS OF DEFAULT........................................................... 26
12. REMEDIES ON DEFAULT, ETC.................................................... 28
12.1 Acceleration.......................................................... 28
12.2 Other Remedies........................................................ 29
12.3 Rescission............................................................ 29
12.4 No Waivers or Election of Remedies, Expenses, etc..................... 29
13. GUARANTEE, ETC.............................................................. 30
13.1 Guarantee............................................................. 30
13.2 Obligations Unconditional............................................. 30
13.3 Guarantees Endorsed on the Notes...................................... 32
14. REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES............................... 32
14.1 Registration of Notes................................................. 32
14.2 Transfer and Exchange of Notes........................................ 32
</TABLE>
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<TABLE>
<CAPTION>
<S> <C>
14.3 Replacement of Notes...................................................33
15. PAYMENTS ON NOTES............................................................33
15.1 Place of Payment.......................................................33
15.2 Home Office Payment....................................................34
16. EXPENSES, ETC................................................................34
16.1 Transaction Expenses...................................................34
16.2 Survival...............................................................34
17. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT.................35
18. AMENDMENT AND WAIVER.........................................................35
18.1 Requirements...........................................................35
18.2 Solicitation of Holders of Notes.......................................35
18.3 Binding Effect, etc....................................................36
18.4 Notes held by Obligor, etc.............................................36
19. NOTICES......................................................................36
20. REPRODUCTION OF DOCUMENTS....................................................37
21. CONFIDENTIAL INFORMATION.....................................................37
22. SUBSTITUTION OF PURCHASER....................................................38
23. MISCELLANEOUS................................................................38
23.1 Successors and Assigns.................................................38
23.2 Payments Due on Non-Business Days......................................38
23.3 Severability...........................................................39
23.4 Construction...........................................................39
23.5 Counterparts...........................................................39
23.6 Governing Law..........................................................39
</TABLE>
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<TABLE>
<CAPTION>
<S> <C>
SCHEDULE A - INFORMATION RELATING TO PURCHASERS
SCHEDULE B - DEFINED TERMS
SCHEDULE 4.9 - Changes in Corporate Structure
SCHEDULE 5.3 - Disclosure Materials
SCHEDULE 5.4 - Subsidiaries and Ownership of Subsidiary Stock
SCHEDULE 5.5 - Financial Statements
SCHEDULE 5.8 - Certain Litigation
SCHEDULE 5.11 - Patents, etc.
SCHEDULE 5.14 - Use of Proceeds
SCHEDULE 5.15 - Existing Indebtedness/Liens
EXHIBIT 1 - Form of 6.89% Guaranteed Senior Note due 2005
EXHIBIT 1-A - Form of Guarantee
EXHIBIT 4.4(a) - Matters to be Covered in Opinions of Counsel for the
Obligors
EXHIBIT 4.4(b) - Form of Opinion of Special Counsel for the Purchasers
</TABLE>
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<PAGE>
MIDAS INTERNATIONAL CORPORATION
225 North Michigan Avenue
Chicago, Illinois 60601
6.89% Guaranteed Senior Notes due 2005
Fully and Unconditionally Guaranteed by Midas, Inc.
As of April 15, 1998
TO THE PURCHASERS WHOSE NAMES
APPEAR IN THE ACCEPTANCE
FORM AT THE END HEREOF:
Ladies and Gentlemen:
MIDAS INTERNATIONAL CORPORATION, a Delaware corporation (the
"COMPANY"), and MIDAS, INC., a Delaware corporation (the "GUARANTOR" and,
together with the Company, the "OBLIGORS"), agree with each of the purchasers
whose names appear in the acceptance form at the end hereof (each, a "PURCHASER"
and, collectively, the "PURCHASERS") as follows:
1. AUTHORIZATION OF NOTES.
The Company will authorize the issue and sale of $75,000,000 aggregate
principal amount of its 6.89% Guaranteed Senior Notes due 2005 (the "NOTES",
such term to include any such notes issued in substitution therefor pursuant to
Section 14 of this Agreement). The Notes shall be substantially in the form set
out in Exhibit 1, with such changes therefrom, if any, as may be approved by
each Purchaser and the Company. Certain capitalized terms used in this Agreement
are defined in Schedule B; references to a "Schedule" or an "Exhibit" are,
unless otherwise specified, to a Schedule or an Exhibit attached to this
Agreement.
Payment of the principal of, Make-Whole Amount (if any) and interest
on the Notes and other amounts owing hereunder shall be unconditionally
guaranteed by the Guarantor as provided in Section 13 (and each Note will have
the guarantee (the "GUARANTEE") of the Guarantor endorsed thereon in the form
set out in Exhibit 1-A).
<PAGE>
2. SALE AND PURCHASE OF NOTES.
Subject to the terms and conditions of this Agreement, the Company
will issue and sell to each Purchaser and each Purchaser will purchase from the
Company, at the Closing provided for in Section 3, Notes in the principal amount
specified opposite such Purchaser's name in Schedule A at the purchase price of
100% of the principal amount thereof. The Purchasers' obligations hereunder are
several and not joint obligations and no Purchaser shall have any liability to
any Person for the performance or non-performance of any obligation by any other
Purchaser hereunder.
3. CLOSING.
The sale and purchase of the Notes to be purchased by each Purchaser
shall occur at the offices of Milbank, Tweed, Hadley & McCloy, One Chase
Manhattan Plaza, New York, New York 10005, at 10:00 a.m., New York City time, at
a closing (the "CLOSING") on April 15, 1998 or on such other Business Day
thereafter as may be agreed upon by the Obligors and the Purchasers. At the
Closing the Company will deliver to each Purchaser the Notes to be purchased by
such Purchaser in the form of a single Note (or such greater number of Notes in
denominations of at least $500,000 as such Purchaser may request) dated the date
of the Closing and registered in such Purchaser's name (or in the name of such
Purchaser's nominee), with the Guarantee of the Guarantor endorsed thereon,
against delivery by such Purchaser to the Company or its order of immediately
available funds in the amount of the purchase price therefor by wire transfer of
immediately available funds for the account of the Company to account number 50-
83559 at The First National Bank of Chicago (ABA No. 071-000-013), One First
National Plaza, Chicago, Illinois 60670. If at the Closing the Company shall
fail to tender such Notes to any Purchaser as provided above in this Section 3,
or any of the conditions specified in Section 4 shall not have been fulfilled to
such Purchaser's satisfaction, such Purchaser shall, at such Purchaser's
election, be relieved of all further obligations under this Agreement, without
thereby waiving any rights such Purchaser may have by reason of such failure or
such nonfulfillment.
4. CONDITIONS TO CLOSING.
Each Purchaser's obligation to purchase and pay for the Notes to be
sold to such Purchaser at the Closing is subject to the fulfillment to such
Purchaser's satisfaction, prior to or at the Closing, of the following
conditions:
4.1 REPRESENTATIONS AND WARRANTIES.
The representations and warranties of the Obligors in this Agreement
shall be correct when made and at the time of the Closing.
4.2 PERFORMANCE; NO DEFAULT.
Each Obligor shall have performed and complied with all agreements and
conditions contained in this Agreement required to be performed or complied with
by it prior to or at the Closing and after giving effect to the issue and sale
of the Notes (and the application of the proceeds thereof as contemplated by
Schedule 5.14) no Default or Event of Default shall have occurred and be
continuing. Neither Obligor nor any Subsidiary shall have entered into any
transaction since the
2
<PAGE>
date of the Memorandum that would have been prohibited by Section 10.2 or 10.8
hereof had such Sections applied since such date.
4.3 COMPLIANCE CERTIFICATES.
(a) Officer's Certificate. Each Obligor shall have delivered to such
Purchaser an Officer's Certificate, dated the date of the Closing, certifying
that the conditions specified in Sections 4.1, 4.2 and 4.9 applicable to such
Obligor have been fulfilled.
(b) Secretary's Certificate. Each Obligor shall have delivered to
such Purchaser a certificate certifying as to the resolutions attached thereto
and other corporate proceedings relating to the authorization, execution and
delivery of this Agreement and the Notes (in the case of the Company) and of
this Agreement and the Guarantees (in the case of the Guarantor).
4.4 OPINIONS OF COUNSEL.
Such Purchaser shall have received opinions in form and substance
satisfactory to such Purchaser, dated the date of the Closing (a) from (i)
Sidley & Austin, special counsel for the Obligors and (ii) Robert H. Sorensen,
General Counsel of each Obligor, covering the matters set forth in Exhibit
4.4(a)(i) and 4.4(a)(ii), respectively, and covering such other matters incident
to the transactions contemplated hereby as such Purchaser or the Purchasers'
counsel may reasonably request (and the Company hereby instructs such counsel to
deliver such opinions to the Purchasers) and (b) from Milbank, Tweed, Hadley &
McCloy, the Purchasers' special New York counsel in connection with such
transactions, substantially in the form set forth in Exhibit 4.4(b) and covering
such other matters incident to such transactions as such Purchaser may
reasonably request.
4.5 PURCHASE PERMITTED BY APPLICABLE LAW, ETC.
On the date of the Closing such Purchaser's purchase of Notes shall
(i) be permitted by the laws and regulations of each jurisdiction to which such
Purchaser is subject, without recourse to provisions (such as Section 1405(a)(8)
of the New York Insurance Law) permitting limited investments by insurance
companies without restriction as to the character of the particular investment,
(ii) not violate any applicable law or regulation (including, without
limitation, Regulation U, T or X of the Board of Governors of the Federal
Reserve System) and (iii) not subject such Purchaser to any tax, penalty or
liability under or pursuant to any applicable law or regulation, which law or
regulation was not in effect on the date hereof. If requested by such Purchaser,
such Purchaser shall have received an Officer's Certificate from the Guarantor
certifying as to such matters of fact as such Purchaser may reasonably specify
to enable such Purchaser to determine whether such purchase is so permitted.
4.6 SALE OF OTHER NOTES.
Contemporaneously with the Closing the Company shall sell to each
other Purchaser and each other Purchaser shall purchase the Notes to be
purchased by it at the Closing as specified in Schedule A.
3
<PAGE>
4.7 PAYMENT OF SPECIAL COUNSEL FEES.
Without limiting the provisions of Section 16.1, the Obligors shall
have paid on or before the Closing the fees, charges and disbursements of the
Purchasers' special counsel referred to in Section 4.4 to the extent reflected
in a statement of such counsel rendered to the Obligors at least one Business
Day prior to the Closing.
4.8 PRIVATE PLACEMENT NUMBER.
A Private Placement number issued by Standard & Poor's CUSIP Service
Bureau (in cooperation with the Securities Valuation Office of the National
Association of Insurance Commissioners) shall have been obtained for the Notes .
4.9 CHANGES IN CORPORATE STRUCTURE.
Except as specified in Schedule 4.9, neither Obligor shall have
changed its jurisdiction of incorporation or been a party to any merger or
consolidation or shall have succeeded to all or any substantial part of the
liabilities of any other entity, at any time following the date of the most
recent financial statements referred to in Schedule 5.5.
4.10 PROCEEDINGS AND DOCUMENTS.
All corporate and other proceedings in connection with the
transactions contemplated by this Agreement and all documents and instruments
incident to such transactions shall be satisfactory to such Purchaser and the
Purchasers' special counsel, and such Purchaser and such special counsel shall
have received all such counterpart originals or certified or other copies of
such documents as such Purchaser or such special counsel may reasonably request.
5. REPRESENTATIONS AND WARRANTIES OF THE OBLIGORS.
The Company and the Guarantor jointly and severally represent and
warrant to each Purchaser that:
5.1 ORGANIZATION; POWER AND AUTHORITY.
Each Obligor is a corporation duly organized, validly existing and in
good standing under the laws of its jurisdiction of incorporation, and is duly
qualified as a foreign corporation and is in good standing in each jurisdiction
in which such qualification is required by law, other than those jurisdictions
as to which the failure to be so qualified or in good standing could not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect. Each Obligor has the corporate power and authority to own or
hold under lease the properties it purports to own or hold under lease, to
transact the business it transacts and proposes to transact, to execute and
deliver this Agreement and the Notes (in the case of the Company) or this
Agreement and the Guarantees (in the case of the Guarantor), and to perform the
provisions hereof and thereof.
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<PAGE>
5.2 AUTHORIZATION, ETC.
This Agreement and the Notes have been duly authorized by all
necessary corporate action on the part of the Company, and this Agreement
constitutes, and upon execution and delivery thereof each Note will constitute,
a legal, valid and binding obligation of the Company enforceable against the
Company in accordance with its terms, and this Agreement and the Guarantees have
been duly authorized by all necessary corporate action on the part of the
Guarantor, and this Agreement constitutes and, upon execution and delivery
thereof, each Guarantee will constitute, a legal, valid and binding obligation
of the Guarantor enforceable against the Guarantor in accordance with its terms,
except, in each case, as such enforceability may be limited by (i) applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting the enforcement of creditors' rights generally and (ii) general
principles of equity (regardless of whether such enforceability is considered in
a proceeding in equity or at law).
5.3 DISCLOSURE.
The Obligors, through their agents, Credit Suisse First Boston
Corporation and First Chicago Capital Markets, Inc., have delivered to each
Purchaser a copy of a Private Placement Memorandum, dated February, 1998 (the
"MEMORANDUM"), relating to the transactions contemplated hereby. The Memorandum
fairly describes, in all material respects, the general nature of the business
and principal properties of the Guarantor and its Subsidiaries. Except as
disclosed in Schedule 5.3, this Agreement, the Memorandum, the documents,
certificates or other writings delivered to the Purchasers by or on behalf of
the Obligors in connection with the transactions contemplated hereby and the
financial statements listed in Schedule 5.5, taken as a whole, do not contain
any untrue statement of a material fact or omit to state any material fact
necessary to make the statements therein not misleading in light of the
circumstances under which they were made. Except as disclosed in the Memorandum
or as expressly described in Schedule 5.3, or in one of the documents,
certificates or other writings identified therein, or in the financial
statements listed in Schedule 5.5, since December 20, 1997, there has been no
change in the financial condition, operations, business, properties or prospects
of either Obligor or any Subsidiary of either Obligor or any of the
international operations of Whitman that were transferred to either Obligor as
part of the Distribution except changes that individually or in the aggregate
could not reasonably be expected to have a Material Adverse Effect. There is no
fact known to either Obligor that could reasonably be expected to have a
Material Adverse Effect that has not been set forth herein or in the Memorandum
or in the other documents, certificates and other writings delivered to the
Purchasers by or on behalf of either Obligor specifically for use in connection
with the transactions contemplated hereby. The projections contained in the
Memorandum are based on good faith estimates of, and assumptions believed to be
reasonable by, the management of the Obligors as of the date of the Memorandum
and as of the date hereof, it being recognized, however, that projections as to
future events are not to be viewed as fact and that actual results during the
period or periods covered by any such projections may differ from the projected
results (it being understood that, except as set forth in this sentence, no
representation or warranty is being made with respect to such projections).
5
<PAGE>
5.4 ORGANIZATION AND OWNERSHIP OF SHARES OF SUBSIDIARIES; AFFILIATES.
(a) Schedule 5.4 contains (except as noted therein) complete and
correct lists (i) of the Guarantor's Subsidiaries, showing, as to each
Subsidiary, the correct name thereof, the jurisdiction of its organization, and
the percentage of shares of each class of its capital stock or similar equity
interests outstanding owned by the Guarantor and each other Subsidiary, (ii) of
the Guarantor's Affiliates, other than Subsidiaries, and (iii) of the
Guarantor's and the Company's directors and senior officers.
(b) All of the outstanding shares of capital stock or similar equity
interests of each Subsidiary shown in Schedule 5.4 as being owned by the
Guarantor and its Subsidiaries have been validly issued, are fully paid and
nonassessable and are owned by the Guarantor or another Subsidiary free and
clear of any Lien (except as otherwise disclosed in Schedule 5.4).
(c) Each Subsidiary identified in Schedule 5.4 is a corporation or
other legal entity duly organized, validly existing and in good standing under
the laws of its jurisdiction of organization, and is duly qualified as a foreign
corporation or other legal entity and is in good standing in each jurisdiction
in which such qualification is required by law, other than those jurisdictions
as to which the failure to be so qualified or in good standing could not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect. Each such Subsidiary has the corporate or other power and
authority to own or hold under lease the properties it purports to own or hold
under lease and to transact the business it transacts and proposes to transact.
(d) No Subsidiary is a party to, or otherwise subject to any legal
restriction or any agreement (other than this Agreement, the agreements listed
on Schedule 5.4 and customary limitations imposed by corporate law statutes)
restricting the ability of such Subsidiary to pay dividends out of profits or
make any other similar distributions of profits to the Guarantor or any of its
Subsidiaries that owns outstanding shares of capital stock or similar equity
interests of such Subsidiary.
5.5 FINANCIAL STATEMENTS.
The Obligors have delivered to each Purchaser copies of the financial
statements listed on Schedule 5.5. All of said financial statements (including
in each case the related schedules and notes) fairly present in all material
respects the consolidated or combined financial position of the Guarantor and
its Subsidiaries as of the respective dates specified in such Schedule and the
consolidated or combined results of their operations and cash flows for the
respective periods so specified and have been prepared in accordance with GAAP
consistently applied throughout the periods involved except as set forth in the
notes thereto (subject, in the case of any interim financial statements, to
normal year-end adjustments).
5.6 COMPLIANCE WITH LAWS, OTHER INSTRUMENTS, ETC.
The execution, delivery and performance by the Obligors of this
Agreement and the Notes (in the case of the Company) and the Guarantees (in the
case of the Guarantor) will not (i) contravene, result in any breach of, or
constitute a default under, or result in the creation of any Lien in respect of
any property of either Obligor or any Subsidiary under, any indenture, mortgage,
6
<PAGE>
deed of trust, loan, purchase or credit agreement, lease, corporate charter or
by-laws, or any other agreement or instrument to which either Obligor or any
Subsidiary is bound or by which either Obligor or any Subsidiary or any of their
respective properties may be bound or affected, (ii) conflict with or result in
a breach of any of the terms, conditions or provisions of any order, judgment,
decree, or ruling of any court, arbitrator or Governmental Authority applicable
to either Obligor or any Subsidiary or (iii) violate any provision of any
statute or other rule or regulation of any Governmental Authority applicable to
either Obligor or any Subsidiary.
5.7 GOVERNMENTAL AUTHORIZATIONS, ETC.
No consent, approval or authorization of, or registration, filing or
declaration with, any Governmental Authority is required in connection with the
execution, delivery or performance by either Obligor of this Agreement or the
Notes (in the case of the Company) or the Guarantees (in the case of the
Guarantor).
5.8 LITIGATION; OBSERVANCE OF AGREEMENTS, STATUTES AND ORDERS.
(a) Except as disclosed in Schedule 5.8, there are no actions, suits
or proceedings pending or, to the knowledge of either Obligor, threatened
against or affecting either Obligor or any Subsidiary or any property of either
Obligor or any Subsidiary in any court or before any arbitrator of any kind or
before or by any Governmental Authority that, individually or in the aggregate,
could reasonably be expected to have a Material Adverse Effect.
(b) Neither of the Obligors nor any Subsidiary is in default under
any term of any agreement or instrument to which it is a party or by which it is
bound, or any order, judgment, decree or ruling of any court, arbitrator or
Governmental Authority or is in violation of any applicable law, ordinance, rule
or regulation (including without limitation Environmental Laws) of any
Governmental Authority, which default or violation, individually or in the
aggregate, could reasonably be expected to have a Material Adverse Effect.
5.9 TAXES.
The Obligors and each Subsidiary have filed all tax returns that are
required to have been filed in any jurisdiction, and have paid all taxes shown
to be due and payable on such returns and all other taxes and assessments levied
upon them or their properties, assets, income or franchises, to the extent such
taxes and assessments have become due and payable and before they have become
delinquent, except for any taxes and assessments (i) the amount of which is not
individually or in the aggregate Material or (ii) the amount, applicability or
validity of which is currently being contested in good faith by appropriate
proceedings and with respect to which the Guarantor or a Subsidiary, as the case
may be, has established adequate reserves in accordance with GAAP. Neither
Obligor knows of any basis for any other tax or assessment that could reasonably
be expected to have a Material Adverse Effect. The charges, accruals and
reserves on the books of the Guarantor and its Subsidiaries in respect of taxes
for all fiscal periods are adequate. The Federal income tax liabilities of the
Obligors and each Subsidiary have been determined by the Internal Revenue
Service and paid for all fiscal years up to and including the fiscal year ended
1990.
7
<PAGE>
5.10 TITLE TO PROPERTY; LEASES.
The Obligors and each Subsidiary have good and sufficient title to
their respective properties that individually or in the aggregate are Material,
including all such properties reflected in the most recent audited balance sheet
referred to in Section 5.5 or purported to have been acquired by either Obligor
or any Subsidiary after said date (except as sold or otherwise disposed of in
the ordinary course of business), in each case free and clear of Liens
prohibited by this Agreement. All leases that either Obligor or any Subsidiary
is party to as lessee and that individually or in the aggregate are Material are
valid and subsisting and are in full force and effect in all material respects.
5.11 LICENSES, PERMITS, ETC.
Except as disclosed in Schedule 5.11,
(a) the Obligors and each Subsidiary own or possess all licenses,
permits, franchises, authorizations, patents, copyrights, service marks,
trademarks and trade names, or rights thereto, that individually or in the
aggregate are Material, without known conflict with the rights of others;
(b) to the best knowledge of the Obligors, no product of either
Obligor or any Subsidiary infringes in any material respect any license, permit,
franchise, authorization, patent, copyright, service mark, trademark, trade name
or other right owned by any other Person; and
(c) to the best knowledge of the Obligors, there is no Material
violation by any Person of any right of either Obligor or any Subsidiary with
respect to any patent, copyright, service mark, trademark, trade name or other
right owned or used by either Obligor or any Subsidiary.
5.12 COMPLIANCE WITH ERISA.
(a) The Obligors and each ERISA Affiliate have operated and
administered each Plan in compliance with all applicable laws except for such
instances of noncompliance as have not resulted in and could not reasonably be
expected to result in a Material Adverse Effect. Neither of the Obligors nor any
ERISA Affiliate has incurred any liability pursuant to Title I or IV of ERISA or
the penalty or excise tax provisions of the Code relating to employee benefit
plans (as defined in section 3 of ERISA), and no event, transaction or condition
has occurred or exists that could reasonably be expected to result in the
incurrence of any such liability by either Obligor or any ERISA Affiliate, or in
the imposition of any Lien on any of the rights, properties or assets of either
Obligor or any ERISA Affiliate, in either case pursuant to Title I or IV of
ERISA or to such penalty or excise tax provisions or to section 401(a)(29) or
412 of the Code, other than such liabilities or Liens as would not be
individually or in the aggregate Material.
(b) The present value of the aggregate benefit liabilities under each
of the Plans (other than Multiemployer Plans), determined as of the end of such
Plan's most recently ended plan year on the basis of the actuarial assumptions
specified for funding purposes in such Plan's most recent actuarial valuation
report, did not exceed the aggregate current value of the assets of such Plan
allocable to such benefit liabilities by more than $1,000,000 in the case of any
single
8
<PAGE>
Plan and by more than $1 in the aggregate for all Plans. The term "BENEFIT
LIABILITIES" has the meaning specified in section 4001 of ERISA and the terms
"CURRENT VALUE" and "PRESENT VALUE" have the meaning specified in section 3 of
ERISA.
(c) The Obligors and each ERISA Affiliate have not incurred
withdrawal liabilities (and are not subject to contingent withdrawal
liabilities) under section 4201 or 4204 of ERISA in respect of Multiemployer
Plans that individually or in the aggregate are Material.
(d) The expected post-retirement benefit obligation (determined as of
the last day of the Guarantor's most recently ended fiscal year in accordance
with Financial Accounting Standards Board Statement No. 106, without regard to
liabilities attributable to continuation coverage mandated by section 4980B of
the Code) of the Guarantor and its Subsidiaries is not Material.
(e) The execution and delivery of this Agreement and the issuance and
sale of the Notes and Guarantees hereunder will not involve any transaction that
is subject to the prohibitions of section 406(a) of ERISA or in connection with
which a tax could be imposed pursuant to section 4975(c)(1)(A)-(D) of the Code.
The representation by the Obligors in the first sentence of this Section 5.12(e)
is made in reliance upon and subject to the accuracy of the Purchasers'
representation in Section 6.2 as to the sources of the funds used to pay the
purchase price of the Notes to be purchased by the Purchasers.
5.13 PRIVATE OFFERING BY THE OBLIGORS.
Neither the Obligors nor anyone acting on their behalf has offered the
Notes or the Guarantees or any similar securities for sale to, or solicited any
offer to buy any of the same from, or otherwise approached or negotiated in
respect thereof with, any Person other than the Purchasers and not more than 15
other Institutional Investors, each of which has been offered the Notes at a
private sale for investment. Neither the Obligors nor anyone acting on their
behalf has taken, or will take, any action that would subject the issuance or
sale of the Notes or the Guarantees to the registration requirements of Section
5 of the Securities Act.
5.14 USE OF PROCEEDS; MARGIN REGULATIONS.
The Company will apply the proceeds of the sale of the Notes as set
forth in Schedule 5.14. No part of the proceeds from the sale of the Notes
hereunder will be used, directly or indirectly, for the purpose of buying or
carrying any margin stock within the meaning of Regulation U of the Board of
Governors of the Federal Reserve System (12 CFR 207), or for the purpose of
buying or carrying or trading in any securities under such circumstances as to
involve either Obligor in a violation of Regulation X of said Board (12 CFR 224)
or to involve any broker or dealer in a violation of Regulation T of said Board
(12 CFR 220). Margin stock does not constitute more than 5% of the value of the
consolidated assets of the Guarantor and its Subsidiaries and the Guarantor does
not have any present intention that margin stock will constitute more than 5% of
the value of such assets. As used in this Section, the terms "MARGIN STOCK" and
"PURPOSE OF BUYING OR CARRYING" shall have the meanings assigned to them in said
Regulation U.
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5.15 EXISTING INDEBTEDNESS; FUTURE LIENS.
(a) Except as described therein, Part A of Schedule 5.15 sets forth a
complete and correct list of all outstanding Indebtedness of the Guarantor and
its Subsidiaries as of January 30, 1998, since which date there has been no
Material change in the amounts, interest rates, sinking funds, installment
payments or maturities of the Indebtedness of the Guarantor or its Subsidiaries.
Neither of the Obligors nor any Subsidiary is in default and no waiver of
default is currently in effect, in the payment of any principal or interest on
any Indebtedness of either Obligor or such Subsidiary and no event or condition
exists with respect to any Indebtedness of either Obligor or any Subsidiary that
would permit (or that with notice or the lapse of time, or both, would permit)
one or more Persons to cause such Indebtedness to become due and payable before
its stated maturity or before its regularly scheduled dates of payment.
(b) Except as disclosed in Part B of Schedule 5.15, neither of the
Obligors nor any Subsidiary has agreed or consented to cause or permit in the
future (upon the happening of a contingency or otherwise) any of its property,
whether now owned or hereafter acquired, to be subject to a Lien not permitted
by Section 10.3.
5.16 FOREIGN ASSETS CONTROL REGULATIONS, ETC.
Neither the sale of the Notes by the Company hereunder with the
benefit of the Guarantees of the Guarantor nor the Company's use of the proceeds
thereof will violate the Trading with the Enemy Act, as amended, or any of the
foreign assets control regulations of the United States Treasury Department (31
CFR, Subtitle B, Chapter V, as amended) or any enabling legislation or executive
order relating thereto.
5.17 STATUS UNDER CERTAIN STATUTES.
Neither of the Obligors nor any Subsidiary is subject to regulation
under the Investment Company Act of 1940, as amended, the Public Utility Holding
Company Act of 1935, as amended, the Interstate Commerce Act, as amended, or the
Federal Power Act, as amended.
5.18 ENVIRONMENTAL MATTERS.
Neither of the Obligors nor any Subsidiary has knowledge of any claim
or has received any notice of any claim, and no proceeding has been instituted
raising any claim against either Obligor or any Subsidiary or any of their
respective real properties now or formerly owned, leased or operated by any of
them or other assets, alleging any damage to the environment or violation of any
Environmental Laws, except, in each case, such as could not reasonably be
expected to result in a Material Adverse Effect. Except as otherwise disclosed
to the Purchasers in writing,
(a) neither of the Obligors nor any Subsidiary has knowledge of any
facts which would give rise to any claim, public or private, of violation of
Environmental Laws or damage to the environment emanating from, occurring on or
in any way related to real properties now or formerly owned, leased or operated
by any of them or to other assets or their use, except, in each case, such as
could not reasonably be expected to result in a Material Adverse Effect;
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(b) neither of the Obligors nor any Subsidiary has stored any
Hazardous Materials on real properties now or formerly owned, leased or
operated by any of them and has not disposed of any Hazardous Materials in
a manner contrary to any Environmental Laws in each case in any manner that
could reasonably be expected to result in a Material Adverse Effect; and
(c) all buildings on all real properties now owned, leased or
operated by either Obligor or any Subsidiary are in compliance with
applicable Environmental Laws, except where failure to comply could not
reasonably be expected to result in a Material Adverse Effect.
6. REPRESENTATIONS OF THE PURCHASERS.
6.1 PURCHASE FOR INVESTMENT.
Each Purchaser represents that such Purchaser is purchasing the Notes
for its own account or for one or more separate accounts maintained by it or for
the account of one or more pension or trust funds and not with a view to the
distribution thereof, provided that the disposition of such Purchaser's or their
property shall at all times be within such Purchaser's or their control. Each
Purchaser understands that the Notes have not been registered under the
Securities Act and may be resold only if registered pursuant to the provisions
of the Securities Act or if an exemption from registration is available, except
under circumstances where neither such registration nor such an exemption is
required by law, and that neither Obligor is required to register the Notes.
6.2 SOURCE OF FUNDS.
Each Purchaser represents that at least one of the following
statements is an accurate representation as to each source of funds (a "Source")
to be used by such Purchaser to pay the purchase price of the Notes to be
purchased by such Purchaser hereunder:
(a) the Source is an "insurance company general account" (as the term
is defined in PTE 95-60 (issued July 12, 1995)) in respect of which the reserves
and liabilities (as defined by the annual statement for life insurance companies
approved by the National Association of Insurance Commissioners (the "NAIC
ANNUAL STATEMENT")) for the general account contract(s) held by or on behalf of
any employee benefit plan together with the amount of the reserves and
liabilities for the general account contract(s) held by or on behalf of any
other employee benefit plans maintained by the same employer (or affiliate
thereof as defined in PTE 95-60) or by the same employee organization in the
general account do not exceed 10% of the total reserves and liabilities of the
general account (exclusive of separate account liabilities) plus surplus as set
forth in the NAIC Annual Statement filed with such Purchaser's state of
domicile; or
(b) the Source is a separate account that is maintained solely in
connection with such Purchaser's fixed contractual obligations under which the
amounts payable, or credited, to any employee benefit plan (or its related
trust) that has any interest in such separate account (or to any participant or
beneficiary of such plan (including any annuitant)) are not affected in any
manner by the investment performance of the separate account; or
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(c) the Source is either (i) an insurance company pooled separate
account, within the meaning of PTE 90-1 (issued January 29, 1990), or (ii)
a bank collective investment fund, within the meaning of the PTE 91-38
(issued July 12, 1991) and, except as disclosed by such Purchaser to the
Company in writing pursuant to this paragraph (c) at least two Business
Days prior to the date of the Closing, no employee benefit plan or group of
plans maintained by the same employer or employee organization beneficially
owns more than 10% of all assets allocated to such pooled separate account
or collective investment fund; or
(d) the Source constitutes assets of an "investment fund" (within the
meaning of Part V of the QPAM Exemption) managed by a "qualified
professional asset manager" or "QPAM" (within the meaning of Part V of the
QPAM Exemption), no employee benefit plan's assets that are included in
such investment fund, when combined with the assets of all other employee
benefit plans established or maintained by the same employer or by an
affiliate (within the meaning of Section V(c)(1) of the QPAM Exemption) of
such employer or by the same employee organization and managed by such
QPAM, exceed 20% of the total client assets managed by such QPAM, the
conditions of Part I(c) and (g) of the QPAM Exemption are satisfied,
neither the QPAM nor a person controlling or controlled by the QPAM
(applying the definition of "control" in Section V(e) of the QPAM
Exemption) owns a 5% or more interest in the Company and (i) the identity
of such QPAM and (ii) the names of all employee benefit plans whose assets
are included in such investment fund have been disclosed to the Company in
writing pursuant to this paragraph (d); or
(e) the Source is a governmental plan; or
(f) the Source is one or more employee benefit plans, or a separate
account or trust fund comprised of one or more employee benefit plans, each of
which has been identified to the Company in writing pursuant to this paragraph
(f); or
(g) the Source does not include assets of any employee benefit plan,
other than a plan exempt from the coverage of ERISA.
As used in this Section 6.2, the terms "EMPLOYEE BENEFIT PLAN", "GOVERNMENTAL
PLAN" and "SEPARATE ACCOUNT" shall have the respective meanings assigned to such
terms in Section 3 of ERISA.
7. INFORMATION AS TO THE OBLIGORS.
7.1 FINANCIAL AND BUSINESS INFORMATION.
The Obligors shall deliver to each holder of Notes that is an
Institutional Investor:
(e) Quarterly Statements -- within 55 days after the end of each
quarterly fiscal period in each fiscal year of the Guarantor (other than the
last quarterly fiscal period of each such fiscal year), duplicate copies of,
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(i) a consolidated balance sheet of the Guarantor and its
Subsidiaries as at the end of such quarter, and
(ii) consolidated statements of operations and cash flows of the
Guarantor and its Subsidiaries, for such quarter and (in the case of
the second and third quarters) for the portion of the fiscal year
ending with such quarter,
setting forth in each case in comparative form the figures for the
corresponding periods in the previous fiscal year, all in reasonable
detail, prepared in accordance with GAAP applicable to quarterly financial
statements generally, and certified by a Senior Financial Officer of the
Guarantor as fairly presenting, in all material respects, the financial
position of the companies being reported on and their results of operations
and cash flows, subject to changes resulting from year-end adjustments,
provided that delivery within the time period specified above of copies of
the Guarantor's Quarterly Report on Form 10-Q prepared in compliance with
the requirements therefor and filed with the Securities and Exchange
Commission shall be deemed to satisfy the requirements of this Section
7.1(a);
(b) Annual Statements -- within 100 days after the end of each fiscal
year of the Guarantor, duplicate copies of,
(i) a consolidated balance sheet of the Guarantor and its
Subsidiaries, as at the end of such year, and
(ii) consolidated statements of operations and cash flows of the
Guarantor and its Subsidiaries, for such year,
setting forth in each case in comparative form the figures for the previous
fiscal year, all in reasonable detail, prepared in accordance with GAAP, and
accompanied by
(A) an opinion thereon of independent certified public
accountants of recognized national standing, which opinion shall state
that such financial statements present fairly, in all material
respects, the financial position of the companies being reported upon
and their results of operations and cash flows and have been prepared
in conformity with GAAP, and that the examination of such accountants
in connection with such financial statements has been made in
accordance with generally accepted auditing standards, and that such
audit provides a reasonable basis for such opinion in the
circumstances, and
(B) a certificate of such accountants stating that they have
reviewed this Agreement and stating further whether, in making their
audit, they have become aware of any condition or event under Section
10.3(m), 10.4(a), 10.5, 10.6, 10.7 or 10.8(ii) of this Agreement that
then constitutes a Default or an Event of Default, and, if they are
aware that any such condition or event then exists, specifying the
nature and period of the existence thereof (it being understood that
such accountants shall not be liable, directly or indirectly, for any
failure to obtain knowledge of any Default or Event of Default unless
such accountants should have obtained
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knowledge thereof in making an audit in accordance with generally
accepted auditing standards or did not make such an audit),
provided that the delivery within the time period specified above of the
Guarantor's Annual Report on Form 10-K for such fiscal year (together with
the Company's annual report to shareholders, if any, prepared pursuant to
Rule 14a-3 under the Exchange Act) prepared in accordance with the
requirements therefor and filed with the Securities and Exchange
Commission, together with the accountant's certificate described in clause
(B) above, shall be deemed to satisfy the requirements of this Section
7.1(b);
(c) SEC and Other Reports -- promptly upon their becoming available,
one copy of (i) each financial statement, report, notice or proxy statement sent
by either Obligor or any Subsidiary to public securities holders generally, and
(ii) each regular or periodic report, each registration statement (other than on
Form S-8 and without exhibits except as expressly requested by such holder), and
each prospectus and all amendments thereto filed by either Obligor or any
Subsidiary with the Securities and Exchange Commission and of all press releases
and other statements made available generally by either Obligor or any
Subsidiary to the public concerning developments that are Material;
(d) Notice of Default or Event of Default -- promptly, and in any
event within five days after a Responsible Officer becoming aware of the
existence of any Default or Event of Default or that any Person has given any
notice or taken any action with respect to a claimed default hereunder or that
any Person has given any notice or taken any action with respect to a claimed
default of the type referred to in Section 11(f), a written notice specifying
the nature and period of existence thereof and what action the Obligors are
taking or propose to take with respect thereto;
(e) ERISA Matters -- promptly, and in any event within five days
after a Responsible Officer becoming aware of any of the following, a written
notice setting forth the nature thereof and the action, if any, that the
Guarantor or the Company or an ERISA Affiliate proposes to take with respect
thereto:
(i) with respect to any Plan, any reportable event, as defined
in section 4043(b) of ERISA and the regulations thereunder, for which
notice thereof has not been waived pursuant to such regulations as in
effect on the date hereof; or
(ii) the taking by the PBGC of steps to institute, or the
threatening by the PBGC of the institution of, proceedings under
section 4042 of ERISA for the termination of, or the appointment of a
trustee to administer, any Plan, or the receipt by either Obligor or
any ERISA Affiliate of a notice from a Multiemployer Plan that such
action has been taken by the PBGC with respect to such Multiemployer
Plan; or
(iii) any event, transaction or condition that could result in
the incurrence of any liability by either Obligor or any ERISA
Affiliate pursuant to Title I or IV of ERISA or the penalty or excise
tax provisions of the Code relating to employee benefit plans, or in
the imposition of any Lien on any of the rights, properties or
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assets of either Obligor or any ERISA Affiliate pursuant to Title I or
IV of ERISA or such penalty or excise tax provisions, if such
liability or Lien, taken together with any other such liabilities or
Liens then existing, could reasonably be expected to have a Material
Adverse Effect;
(f) Notices from Governmental Authority -- promptly, and in any event
within 30 days of receipt thereof, copies of any notice to either Obligor or any
Subsidiary from any Federal or state Governmental Authority relating to any
order, ruling, statute or other law or regulation that could reasonably be
expected to have a Material Adverse Effect; and
(g) Requested Information -- with reasonable promptness, such other
data and information relating to the business, operations, affairs, financial
condition, assets or properties of either Obligor or any Subsidiary or relating
to the ability of the Obligors to perform their respective obligations hereunder
and under the Notes and the Guarantees as from time to time may be reasonably
requested by any such holder of Notes.
7.2 OFFICER'S CERTIFICATE.
Each set of financial statements delivered to a holder of Notes
pursuant to Section 7.1(a) or Section 7.1(b) hereof shall be accompanied by a
certificate of a Senior Financial Officer of the Guarantor setting forth:
(a) Covenant Compliance -- the information (including detailed
calculations) required in order to establish whether the Obligors were in
compliance with the requirements of Sections 10.3(m), 10.4, 10.5, 10.6 and
10.7, during the quarterly or annual period covered by the statements then
being furnished (including with respect to each such Section, where
applicable, the calculations of the maximum or minimum amount, ratio or
percentage, as the case may be, permissible under the terms of such
Sections, and the calculation of the amount, ratio or percentage then in
existence); and
(b) Event of Default -- a statement that such officer has reviewed
the relevant terms hereof and has made, or caused to be made, under his or
her supervision, a review of the transactions and conditions of the
Guarantor and its Subsidiaries from the beginning of the quarterly or
annual period covered by the statements then being furnished to the date of
the certificate and that such review shall not have disclosed the existence
during such period of any condition or event that constitutes a Default or
an Event of Default or, if any such condition or event existed or exists
(including, without limitation, any such event or condition resulting from
the failure of either Obligor or any Subsidiary to comply with any
Environmental Law), specifying the nature and period of existence thereof
and what action the Obligors shall have taken or propose to take with
respect thereto.
7.3 INSPECTION.
The Obligors shall permit the representatives of each holder of Notes
that is an Institutional Investor:
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(a) No Default -- if no Default or Event of Default then exists, at
the expense of such holder and upon reasonable prior notice to the
Obligors, to visit the principal executive office of the Guarantor or the
Company, to discuss the affairs, finances and accounts of the Guarantor and
the Company and their Subsidiaries with the Guarantor's or the Company's
officers, and (with the consent of the Guarantor or the Company, as the
case may be, which consent will not be unreasonably withheld) its
independent public accountants (so long as the Obligors have the
opportunity to be present at such discussions), and (with the consent of
the Guarantor or the Company, as the case may be, which consent will not be
unreasonably withheld) to visit the other offices and properties of the
Guarantor and the Company and each Subsidiary, all at such reasonable times
and as often as may be reasonably requested in writing (provided, that any
such holder shall not conduct more than two inspections pursuant to this
clause (a) in any calendar year); and
(b) Default -- if a Default or Event of Default then exists, at the
expense of the Obligors, to visit and inspect any of the offices or
properties of the Guarantor, the Company or any Subsidiary, to examine all
their respective books of account, records, reports and other papers, to
make copies and extracts therefrom, and to discuss their respective
affairs, finances and accounts with their respective officers and
independent public accountants (and by this provision the Obligors
authorize said accountants to discuss the affairs, finances and accounts of
the Obligors and their Subsidiaries), all at such times and as often as may
be requested.
8. PREPAYMENT OF THE NOTES.
8.1 REQUIRED PREPAYMENTS.
On April 15, 2001 and on each April 15 thereafter to and including
April 15, 2004 the Company will prepay $15,000,000 principal amount (or such
lesser principal amount as shall then be outstanding) of the Notes at par and
without payment of the Make-Whole Amount or any premium, provided that upon any
partial prepayment of the Notes pursuant to Section 8.2 or purchase of the Notes
permitted by Section 8.6 the principal amount of each required prepayment of the
Notes becoming due under this Section 8.1 on and after the date of such
prepayment or purchase shall be reduced in the same proportion as the aggregate
unpaid principal amount of the Notes is reduced as a result of such prepayment
or purchase.
8.2 OPTIONAL PREPAYMENTS WITH MAKE-WHOLE AMOUNT.
The Company may, at its option, upon notice as provided below, prepay
at any time all, or from time to time any part of, the Notes, in an amount not
less than 5% of the aggregate principal amount of the Notes then outstanding in
the case of a partial prepayment, at 100% of the principal amount so prepaid,
plus the Make-Whole Amount determined for the prepayment date with respect to
such principal amount. The Company will give each holder of Notes written notice
of each optional prepayment under this Section 8.2 not less than 30 days and not
more than 60 days prior to the date fixed for such prepayment. Each such notice
shall specify such date, the aggregate principal amount of the Notes to be
prepaid on such date, the principal amount of each Note held by such holder to
be prepaid (determined in accordance with Section 8.3), and the interest to be
paid on
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the prepayment date with respect to such principal amount being prepaid, and
shall be accompanied by a certificate of a Senior Financial Officer as to the
estimated Make-Whole Amount due in connection with such prepayment (calculated
as if the date of such notice were the date of the prepayment), setting forth
the details of such computation. Two Business Days prior to such prepayment, the
Company shall deliver to each holder of Notes a certificate of a Senior
Financial Officer specifying the calculation of such Make-Whole Amount as of the
specified prepayment date.
8.3 ALLOCATION OF PARTIAL PREPAYMENTS.
In the case of each partial prepayment of the Notes, the principal
amount of the Notes to be prepaid shall be allocated among all of the Notes at
the time outstanding in proportion, as nearly as practicable, to the respective
unpaid principal amounts thereof not theretofore called for prepayment.
8.4 PREPAYMENTS IN CONNECTION WITH A CHANGE OF CONTROL.
(a) Promptly and in any event within five Business Days after any
Responsible Officer has knowledge of the occurrence of a Change of Control (as
defined in Section 8.4(b)), the Company shall give written notice thereof to the
holders of all outstanding Notes, which notice shall (i) refer specifically to
this Section 8.4 and describe the Change of Control in reasonable detail
(including the Persons party thereto), (ii) specify a date not less than 30 days
and not more than 45 days after the date of such notice (the "CONTROL PREPAYMENT
DATE") and (iii) offer to prepay on the Control Prepayment Date all (but not
less than all) of the Notes, at 100% of the principal amount thereof, together
with interest accrued thereon to the Control Prepayment Date (but without any
Make-Whole Amount). If on or prior to the date 15 days after the date of such
notice (the "CONTROL RESPONSE DATE") the Required Holders notify the Company in
writing that they have accepted such offer, the Company shall promptly provide a
written notice to such effect to the holders of all outstanding Notes and shall
prepay on the Control Prepayment Date all of the outstanding Notes (whether or
not held by such Required Holders) at a price in respect of each Note equal to
100% of the principal amount thereof, together with interest accrued thereon to
the Control Prepayment Date (but without any Make-Whole Amount); provided,
however, that if the Required Holders do not notify the Company in writing that
they have accepted such offer on or prior to the Control Response Date the
Company shall not be required to prepay Notes pursuant to this Section 8.4.
(b) A "CHANGE OF CONTROL" will be deemed to have occurred for
purposes of Section 8.4(a) if any Person, or two or more Persons acting in
concert, acquires beneficial ownership (within the meaning of Rule 13d-3 under
the Securities Exchange Act of 1934, as amended) of more than 50% of the
Guarantor's Voting Stock).
8.5 MATURITY; SURRENDER, ETC.
In the case of each prepayment of Notes pursuant to this Section 8,
the principal amount of each Note to be prepaid shall mature and become due and
payable on the date fixed for such prepayment, together with interest on such
principal amount accrued to such date and the applicable Make-Whole Amount, if
any. From and after such date, unless the Company shall fail to pay such
principal amount when so due and payable, together with the interest and Make-
Whole
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Amount, if any, as aforesaid, interest on such principal amount shall cease to
accrue. Any Note paid or prepaid in full shall be surrendered to the Company and
canceled and shall not be reissued, and no Note shall be issued in lieu of any
prepaid principal amount of any Note.
8.6 PURCHASE OF NOTES.
Neither Obligor will nor will either Obligor permit any Affiliate to
purchase, redeem, prepay or otherwise acquire, directly or indirectly, any of
the outstanding Notes except (a) upon the payment or prepayment of the Notes in
accordance with the terms of this Agreement and the Notes or (b) pursuant to an
offer to purchase made by the Company or an Affiliate pro rata to the holders of
all Notes at the time outstanding upon the same terms and conditions. Any such
offer shall provide each holder with sufficient information to enable it to make
an informed decision with respect to such offer, and shall remain open for at
least 30 days. If the holders of more than 50% of the principal amount of the
Notes then outstanding accept such offer, the Company shall promptly notify the
remaining holders of such fact and the expiration date for the acceptance by
holders of Notes of such offer shall be extended by the number of days necessary
to give each such remaining holder at least 10 days from its receipt of such
notice to accept such offer. The Company will promptly cancel all Notes acquired
by either Obligor or any such Affiliate pursuant to any payment, prepayment or
purchase of Notes pursuant to any provision of this Agreement and no Notes may
be issued in substitution or exchange for any such Notes.
8.7 MAKE-WHOLE AMOUNT.
The term "MAKE-WHOLE AMOUNT" means, with respect to any Note, an
amount equal to the excess, if any, of the Discounted Value of the Remaining
Scheduled Payments with respect to the Called Principal of such Note over the
amount of such Called Principal, provided that the Make-Whole Amount may in no
event be less than zero. For the purposes of determining the Make-Whole Amount,
the following terms have the following meanings:
"CALLED PRINCIPAL" means, with respect to any Note, the principal of
such Note that is to be prepaid pursuant to Section 8.2 or has become or is
declared to be immediately due and payable pursuant to Section 12.1, as the
context requires.
"DISCOUNTED VALUE" means, with respect to the Called Principal of any
Note, the amount obtained by discounting all Remaining Scheduled Payments
with respect to such Called Principal from their respective scheduled due
dates to the Settlement Date with respect to such Called Principal, in
accordance with accepted financial practice and at a discount factor
(applied on the same periodic basis as that on which interest on the Notes
is payable) equal to the Reinvestment Yield with respect to such Called
Principal.
"REINVESTMENT YIELD" means, with respect to the Called Principal of
any Note, 0.50% over the yield to maturity implied by (i) the yields
reported, as of 10:00 A.M. (New York City time) on the second Business Day
preceding the Settlement Date with respect to such Called Principal, on the
display designated as "Page 678" on the Telerate Access Service (or such
other display as may replace Page 678 on Telerate Access Service) for
actively traded U.S. Treasury securities having a maturity equal to the
Remaining Average Life of such Called Principal as of such Settlement Date,
or (ii) if such yields are not
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reported as of such time or the yields reported as of such time are not
ascertainable, the Treasury Constant Maturity Series Yields reported, for
the latest day for which such yields have been so reported as of the second
Business Day preceding the Settlement Date with respect to such Called
Principal, in Federal Reserve Statistical Release H.15 (519) (or any
comparable successor publication) for actively traded U.S. Treasury
securities having a constant maturity equal to the Remaining Average Life
of such Called Principal as of such Settlement Date. Such implied yield
will be determined, if necessary, by (a) converting U.S. Treasury bill
quotations to bond-equivalent yields in accordance with accepted financial
practice and (b) interpolating linearly between (1) the actively traded
U.S. Treasury security with the duration closest to and greater than the
Remaining Average Life and (2) the actively traded U.S. Treasury security
with the duration closest to and less than the Remaining Average Life.
"REMAINING AVERAGE LIFE" means, with respect to any Called Principal,
the number of years (calculated to the nearest one-twelfth year) obtained
by dividing (i) such Called Principal into (ii) the sum of the products
obtained by multiplying (a) the principal component of each Remaining
Scheduled Payment with respect to such Called Principal by (b) the number
of years (calculated to the nearest one-twelfth year) that will elapse
between the Settlement Date with respect to such Called Principal and the
scheduled due date of such Remaining Scheduled Payment.
"REMAINING SCHEDULED PAYMENTS" means, with respect to the Called
Principal of any Note, all payments of such Called Principal and interest
thereon that would be due after the Settlement Date with respect to such
Called Principal if no payment of such Called Principal were made prior to
its scheduled due date, provided that if such Settlement Date is not a date
on which interest payments are due to be made under the terms of the Notes,
then the amount of the next succeeding scheduled interest payment will be
reduced by the amount of interest accrued to such Settlement Date and
required to be paid on such Settlement Date pursuant to Section 8.2 or
12.1.
"SETTLEMENT DATE" means, with respect to the Called Principal of any
Note, the date on which such Called Principal is to be prepaid pursuant to
Section 8.2 or has become or is declared to be immediately due and payable
pursuant to Section 12.1, as the context requires.
9. AFFIRMATIVE COVENANTS.
The Company and the Guarantor jointly and severally covenant that so
long as any of the Notes are outstanding:
9.1 COMPLIANCE WITH LAW.
The Obligors will and will cause each of their Subsidiaries to comply
with all laws, ordinances or governmental rules or regulations to which each of
them is subject, including, without limitation, Environmental Laws, and will
obtain and maintain in effect all licenses, certificates, permits, franchises
and other governmental authorizations necessary to the ownership of their
respective properties or to the conduct of their respective businesses, in each
case to the extent
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necessary to ensure that non-compliance with such laws, ordinances or
governmental rules or regulations or failures to obtain or maintain in effect
such licenses, certificates, permits, franchises and other governmental
authorizations could not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect.
9.2 INSURANCE.
The Obligors will and will cause each of their Subsidiaries to
maintain, with financially sound and reputable insurers, insurance with respect
to their respective properties and businesses against such casualties and
contingencies, of such types, on such terms and in such amounts (including
deductibles, co-insurance and self-insurance, if adequate reserves are
maintained with respect thereto) as is customary in the case of entities of
established reputations engaged in the same or a similar business and similarly
situated.
9.3 MAINTENANCE OF PROPERTIES.
The Obligors will and will cause each of their Subsidiaries to
maintain and keep, or cause to be maintained and kept, their respective
properties in good repair, working order and condition (other than ordinary wear
and tear), so that the business carried on in connection therewith may be
properly conducted at all times, provided that this Section shall not prevent
either Obligor or any Subsidiary from discontinuing the operation and the
maintenance of any of its properties if such discontinuance is desirable in the
conduct of its business and the Guarantor has concluded that such discontinuance
could not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect.
9.4 PAYMENT OF TAXES AND CLAIMS.
The Obligors will and will cause each of their Subsidiaries to file
all tax returns required to be filed in any jurisdiction and to pay and
discharge all taxes shown to be due and payable on such returns and all other
taxes, assessments, governmental charges, or levies imposed on them or any of
their properties, assets, income or franchises, to the extent such taxes and
assessments have become due and payable and before they have become delinquent,
and all claims for which sums have become due and payable that have or might
become a Lien on properties or assets of either Obligor or any Subsidiary,
provided that neither of the Obligors nor any Subsidiary need pay any such tax
or assessment or claims if (i) the amount, applicability or validity thereof is
contested by such Obligor or such Subsidiary on a timely basis in good faith and
in appropriate proceedings, and such Obligor or such Subsidiary has established
adequate reserves therefor in accordance with GAAP on the books of such Obligor
or such Subsidiary or (ii) the nonpayment of all such taxes, assessments and
claims in the aggregate could not reasonably be expected to have a Material
Adverse Effect.
9.5 CORPORATE EXISTENCE, ETC.
Subject to Sections 10.2 and 10.8, the Obligors will at all times
preserve and keep in full force and effect their respective corporate
existences, and the Obligors will at all times preserve and keep in full force
and effect the corporate existence of each of their Subsidiaries and all rights
and franchises of the Obligors and their Subsidiaries unless, in the good faith
judgment of the Guarantor, the termination of or failure to preserve and keep in
full force and effect the corporate
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existence of any Subsidiary (other than the Company), or any such right or
franchise could not, individually or in the aggregate, have a Material Adverse
Effect.
9.6 OWNERSHIP OF THE COMPANY.
Unless the Company shall have merged with or into the Guarantor, the
Guarantor shall at all times ensure that (a) the Company is a Wholly-Owned
Subsidiary and (b) the Guarantor owns (directly or indirectly) the capital stock
of the Company free and clear of any Lien.
10. NEGATIVE COVENANTS.
The Company and the Guarantor jointly and severally covenant that so
long as any of the Notes are outstanding:
10.1 TRANSACTIONS WITH AFFILIATES.
The Guarantor will not, and will not permit any Subsidiary to, enter
into directly or indirectly any Material transaction or Material group of
related transactions (including without limitation the purchase, lease, sale or
exchange of properties of any kind or the rendering of any service) with any
Affiliate (other than the Guarantor or another Subsidiary), except in the
ordinary course and pursuant to the reasonable requirements of the Guarantor's
or such Subsidiary's business and upon fair and reasonable terms no less
favorable to the Guarantor or such Subsidiary than the Guarantor or such
Subsidiary would obtain in a comparable arm's-length transaction with a Person
not an Affiliate.
10.2 MERGER, CONSOLIDATION, ETC.
The Guarantor will not, and will not permit any Subsidiary to,
consolidate with or merge with any other corporation or convey, transfer or
lease substantially all of its assets in a single transaction or series of
transactions to any Person unless:
(a) in the case of the Guarantor or the Company, the successor formed
by such consolidation or the survivor of such merger or the Person that
acquires by conveyance, transfer or lease substantially all of the assets
of the Guarantor or the Company as an entirety, as the case may be, shall
be a solvent corporation organized and existing under the laws of the
United States or any State thereof (including the District of Columbia),
and, if the Guarantor or the Company, as the case may be, is not such
corporation, (i) such corporation shall have executed and delivered to each
holder of any Notes its assumption of the due and punctual performance and
observance of each covenant and condition of (x) this Agreement and the
Notes, in the case of the Company and (y) this Agreement and the
Guarantees, in the case of the Guarantor and (ii) the Guarantor or the
Company, as the case may be, shall have caused to be delivered to each
holder of any Notes an opinion of nationally recognized independent
counsel, or other independent counsel reasonably satisfactory to the
Required Holders, to the effect that all agreements or instruments
effecting such assumption are enforceable in accordance with their terms
and comply with the terms hereof;
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(b) in the case of any Subsidiary (other than the Company), the
successor formed by such consolidation or the survivor of such merger or
the Person that acquires by conveyance, transfer or lease substantially all
of the assets of such Subsidiary as an entirety, as the case may be, shall
be (i) such Subsidiary, either Obligor or a Wholly-Owned Subsidiary or (ii)
any other Person so long as the Disposition of all of the assets of such
Subsidiary would have otherwise been permitted by Section 10.8 (and is
treated as a Disposition of the assets of such Subsidiary for all purposes
of Section 10.8); and
(c) in any case, immediately after giving effect to such transaction,
no Default or Event of Default shall have occurred and be continuing.
No such conveyance, transfer or lease of substantially all of the assets of the
Guarantor or the Company shall have the effect of releasing the Guarantor or the
Company, as the case may be, or any successor corporation that shall theretofore
have become such in the manner prescribed in this Section 10.2 from its
liability under (x) this Agreement or the Notes, in the case of the Company or
(y) this Agreement or the Guarantees, in the case of the Guarantor.
10.3 LIENS.
The Guarantor will not, and will not permit any Subsidiary to, create,
assume, incur or suffer to exist any Lien upon or with respect to any property
or assets, whether now owned or hereafter acquired, of the Guarantor or any such
Subsidiary, unless the Notes are secured equally and ratably with any and all
other obligations secured by such Lien pursuant to documentation in form and
substance reasonably satisfactory to the Required Holders, excluding from the
operation of this Section:
(a) Liens existing on the date hereof securing Indebtedness of the
Guarantor or any Subsidiary outstanding on the date hereof and specified in
Part B of Schedule 5.15;
(b) Liens to secure Indebtedness incurred in connection with the
financing of all or a part of the purchase price or cost of construction of
property acquired or constructed by the Guarantor or a Subsidiary after the
date of the Closing, provided that in each case (i) the aggregate principal
amount of Indebtedness secured by such Lien in respect of any such property
shall not exceed the cost of such property and any improvements then being
financed, (ii) no such Lien shall extend to or cover any other property of
the Guarantor or such Subsidiary and (iii) such Lien shall be created
contemporaneously with, or within 180 days after, the acquisition or
completion of construction of such property;
(c) Liens existing (i) on property at the time of the acquisition
thereof by the Guarantor or a Subsidiary or (ii) on property of a Person at
the time such Person merges into or consolidates with the Guarantor or any
Subsidiary, or such Person becomes a Subsidiary (and not incurred in
anticipation thereof), provided that no such Lien shall extend to or cover
any other property of the Guarantor or such Subsidiary, as the case may be;
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(d) Liens on property or assets of any Subsidiary securing
Indebtedness owing by such Subsidiary to the Guarantor or to any Wholly-
Owned Subsidiary;
(e) Liens arising by reason of mortgages on property owned or leased
by the Guarantor or any Subsidiary in favor of any Governmental Authority,
or in favor of holders of securities issued by any Governmental Authority,
pursuant to any contract or statute (including, without limitation, Liens
to secure pollution control or industrial revenue bonds or similar
financings);
(f) mechanics', materialmen's, carriers', workmen's, vendors' or other
like Liens, arising in the ordinary course of business in respect of
obligations that are not past due or that are being contested in good
faith;
(g) Liens arising by reason of any deposit with, or the giving of any
form of security to (i) any surety company or clerk or any court, or in
escrow, as collateral in connection with, or in lieu of, any bond or appeal
from any judgment or decree against the Guarantor or any Subsidiary, or in
connection with other proceedings or actions at law or in equity by or
against the Guarantor or any Subsidiary, or (ii) any Governmental
Authority, which deposit or security is required or permitted to qualify
the Guarantor or any Subsidiary to conduct business (or perform any
contract with such Governmental Authority), to maintain self-insurance, or
to obtain the benefit of, or comply with, any law pertaining to workers'
compensation, unemployment insurance, old age pensions, social security, or
similar matters;
(h) Liens existing on property acquired by the Guarantor or any
Subsidiary through the exercise of rights arising out of defaults on
receivables acquired in the ordinary course of business;
(i) Liens for judgments or awards, so long as the finality of any such
judgment or award is being contested in good faith and execution thereon is
stayed and for which adequate reserves have been established if
appropriate;
(j) Liens (i) for taxes or assessments or governmental charges or
levies not yet past due or delinquent or which can thereafter be paid
without penalty, or which are being contested in good faith by appropriate
proceedings and for which adequate reserves have been established, if
appropriate (and, in the case of nonpayment of such taxes, assessments,
charges and levies, to the extent nonpayment thereof is permitted by the
proviso to Section 9.4) and (ii) of a substantially similar nature that do
not materially impair the use of the related property in the operation of
the business of the Guarantor and its Subsidiaries taken as a whole or the
value of such property for the purposes of such business;
(k) Liens on receivables and general intangibles relating to payment
rights in connection therewith securing (i) Indebtedness incurred by the
Guarantor or any Subsidiary, as applicable, with respect to the
securitization of franchisee loans and (ii) Capitalized Lease Obligations
incurred by the Guarantor or any such Subsidiary, as applicable;
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(l) any extension, renewal or replacement (or successive extensions,
renewals or replacements) in whole or in part, of any Lien described in
Subsections (a) through (c) above of any Indebtedness secured thereby,
provided that the principal amount (or accredited value) of any
Indebtedness secured thereby immediately before giving effect to such
extension, renewal or replacement is not increased and such Lien is not
extended to any other property; and
(m) Liens incurred by the Guarantor or any Subsidiary in addition to
those described in Subsections (a) through (l) above, provided that, upon
the incurrence thereof and immediately after giving effect thereto,
Priority Debt shall not exceed (i) at any time on or prior to December 31,
1998, $50,000,000 and (ii) at any time after December 31, 1998, 15% of
Consolidated Capitalization.
For purposes of this Section 10.3, any Lien existing in respect of property at
the time such property is acquired by an Obligor or any Subsidiary, or in
respect of property of a Person at the time such Person is acquired,
consolidated or merged with or into an Obligor or any Subsidiary, shall be
deemed to have been created at the time of such acquisition, consolidation or
merger, as the case may be.
10.4 SALE AND LEASEBACK TRANSACTIONS.
The Guarantor will not, and will not permit any Subsidiary to, enter
into any Sale and Leaseback Transaction unless:
(a) at the time of entering into such Sale and Leaseback Transaction
and immediately after giving effect thereto, Priority Debt shall not exceed
(i) at any time on or prior to December 31, 1998, $50,000,000 and (ii) at
any time after December 31, 1998, 15% of Consolidated Capitalization; or
(b) the net proceeds received by the Guarantor or such Subsidiary from
such Sale and Leaseback Transaction are applied within 180 days of the
receipt thereof to (x) the acquisition of property or assets to be used in
the business of the Guarantor or any Subsidiary, or (y) the repayment of
Funded Indebtedness (and any associated premium) of the Guarantor or any
Subsidiary which by its terms is not subordinated in right of payment to
the Notes.
10.5 SUBSIDIARY INDEBTEDNESS.
The Guarantor will not permit any Subsidiary (other than the Company)
to create, assume, incur, guarantee or otherwise become liable in respect of any
Indebtedness, excluding from the operation of this Section:
(a) Indebtedness secured by any Lien permitted by Section 10.3(b) or
(c);
(b) Indebtedness owing to either Obligor or to any Wholly-Owned
Subsidiary;
(c) Indebtedness of a Person outstanding at the time such Person
becomes a Subsidiary (and not incurred in anticipation thereof); and
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(d) Indebtedness in addition to that described in Subsections (a)
through (c) above, provided that, upon the incurrence thereof and
immediately after giving effect thereto, Priority Debt shall not exceed (i)
at any time on or prior to December 31, 1998, $50,000,000 and (ii) at any
time after December 31, 1998, 15% of Consolidated Capitalization.
For purposes of Section 10.5(b), a Subsidiary shall be deemed to have incurred
Indebtedness in respect of any obligation previously owed to a Wholly-Owned
Subsidiary on the date that such Wholly-Owned Subsidiary ceases to be a Wholly-
Owned Subsidiary.
10.6 CONSOLIDATED INDEBTEDNESS RATIO.
The Guarantor will not permit the ratio of Consolidated Indebtedness
to EBITDA to exceed 3.5 to 1 as at the end of any fiscal quarter of the
Guarantor.
10.7 CONSOLIDATED NET WORTH.
The Guarantor will not at any time permit Consolidated Net Worth to be
less than the sum of (i) $71,700,000, plus (ii) an amount equal to 50% of
Consolidated Net Income for each completed fiscal quarter of the Guarantor
ending on or after March 28, 1998 (but only if Consolidated Net Income for such
fiscal quarter is a positive number and excluding any Consolidated Net Income to
the extent it is reflected in the determination of Consolidated Net Worth as of
the date of the Closing), minus (iii) the amount of any non-cash restructuring
charges taken by the Guarantor in its fiscal years ending in December, 1998 and
December, 1999, determined on an after-tax basis.
10.8 DISPOSITION OF ASSETS.
The Guarantor will not, and will not permit any Subsidiary to,
directly or indirectly, sell, lease, transfer or otherwise dispose of
(collectively a "DISPOSITION") any of its properties or assets unless (i)
immediately before and after giving effect to such Disposition, no Default or
Event of Default shall have occurred and be continuing and (ii) after giving
effect to such proposed Disposition, the aggregate net book value of all assets
that were the subject of a Disposition during the period of twelve calendar
months immediately preceding the date of such proposed Disposition does not
exceed 10% of Consolidated Total Assets as of the end of the quarterly fiscal
period of the Guarantor ended on or immediately prior to the last day of such
twelve-month period. Any Disposition of shares of stock of any Subsidiary
shall, for purposes of this Section, be considered a sale of assets and be
valued at an amount that bears the same proportion to the total assets of such
Subsidiary as the number of such shares bears to the total number of shares of
stock of such Subsidiary. Notwithstanding the foregoing, the following
Dispositions shall not be taken into account under this Section 10.8:
(a) any Disposition of inventory made in the ordinary course of
business at fair value;
(b) any Disposition by a Subsidiary (other than the Company) to an
Obligor or to a Wholly-Owned Subsidiary; and
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(c) any Disposition made for cash payable in full upon the completion
thereof, the net proceeds of which are applied within 180 days of such
completion date to (x) the acquisition of property or assets to be used in
the business of the Guarantor or any Subsidiary, or (y) the repayment of
Funded Indebtedness (and any associated premium) of the Guarantor or any
Subsidiary which by its terms is not subordinated in right of payment to
the Notes (provided in any case that, immediately before and after giving
effect to such Disposition, no Default or Event of Default shall have
occurred and be continuing).
10.9 LINE OF BUSINESS.
The Guarantor will not, and will not permit any Subsidiary to, engage
to any substantial extent in any business other than the businesses in which the
Guarantor and its Subsidiaries are engaged on the date of this Agreement as
described in the Memorandum and businesses reasonably related thereto or in
furtherance thereof.
11. EVENTS OF DEFAULT.
An "EVENT OF DEFAULT" shall exist if any of the following conditions
or events shall occur and be continuing:
(a) default shall be made in the payment of any principal or Make-
Whole Amount, if any, on any Note when the same becomes due and payable,
whether at maturity or at a date fixed for prepayment or by declaration or
otherwise; or
(b) default shall be made in the payment of any interest on any Note
for more than five Business Days after the same becomes due and payable; or
(c) default shall be made by either Obligor in the performance of or
compliance with any term contained in Section 7.1(d), Section 9.6, Sections
10.2 through 10.6, inclusive, or Section 10.8; or
(d) default shall be made by either Obligor in the performance of or
compliance with any term contained herein (other than those referred to in
paragraphs (a), (b) and (c) of this Section 11) and (in the case of any
default arising under Section 10.7, so long as the Obligors are proceeding
diligently and in good faith to remedy such default (by issuing equity
securities or otherwise) during such 30-day period) such default is not
remedied within 30 days after the earlier of (i) a Responsible Officer
obtaining actual knowledge of such default and (ii) an Obligor receiving
written notice of such default from any holder of a Note (any such written
notice to be identified as a "notice of default" and to refer specifically
to this paragraph (d) of Section 11); or
(e) any representation or warranty made in writing by or on behalf of
either Obligor or by any officer of either Obligor in this Agreement or in
any writing furnished in connection with the transactions contemplated
hereby proves to have been false or incorrect in any Material respect on
the date as of which made; or
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(f) (i) either Obligor or any Subsidiary is in default (as principal
or as guarantor or other surety) in the payment of any principal of or
premium or make-whole amount or interest on any Indebtedness that is
outstanding in an aggregate principal amount in excess of $10,000,000
beyond any period of grace provided with respect thereto, or (ii) either
Obligor or any Subsidiary is in default in the performance of or compliance
with any term of any evidence of any Indebtedness in an aggregate
outstanding principal amount in excess of $10,000,000 or of any mortgage,
indenture or other agreement relating thereto or any other condition
exists, and as a consequence of such default or condition such Indebtedness
has become, or has been declared (or one or more Persons are entitled to
declare such Indebtedness to be), due and payable before its stated
maturity or before its regularly scheduled dates of payment, or (iii) as a
consequence of the occurrence or continuation of any event or condition
(other than the passage of time or the right of the holder of Indebtedness
to convert such Indebtedness into equity interests), (x) either Obligor or
any Subsidiary has become obligated to purchase or repay Indebtedness
before its regular maturity or before its regularly scheduled dates of
payment in an aggregate outstanding principal amount of at least
$10,000,000, or (y) one or more Persons have the right to require either
Obligor or any Subsidiary so to purchase or repay such Indebtedness; or
(g) either Obligor or any Significant Subsidiary (i) is not paying, or
admits in writing its inability to pay, its debts generally as they become
due, (ii) files, or consents by answer or otherwise to the filing against
it of, a petition for relief or reorganization or arrangement or any other
petition in bankruptcy, for liquidation or to take advantage of any
bankruptcy, insolvency, reorganization, moratorium or other similar law of
any jurisdiction, (iii) makes an assignment for the benefit of its
creditors, (iv) consents to the appointment of a custodian, receiver,
trustee or other officer with similar powers with respect to it or with
respect to any substantial part of its property, (v) is adjudicated as
insolvent or to be liquidated, or (vi) takes corporate action for the
purpose of any of the foregoing; or
(h) a court or governmental authority of competent jurisdiction enters
an order appointing, without consent by either Obligor or any Significant
Subsidiary, a custodian, receiver, trustee or other officer with similar
powers with respect to it or with respect to any substantial part of its
property, or constituting an order for relief or approving a petition for
relief or reorganization or any other petition in bankruptcy or for
liquidation or to take advantage of any bankruptcy or insolvency law of any
jurisdiction, or ordering the dissolution, winding-up or liquidation of
either Obligor or any Significant Subsidiary, or any such petition shall be
filed against either Obligor or any Significant Subsidiary and such
petition shall not be dismissed within 60 days; or
(i) a final judgment or judgments for the payment of money aggregating
in excess of $5,000,000 are rendered against one or more of the Obligors
and their Subsidiaries and which judgments are not, within 90 days after
entry thereof, bonded, discharged or stayed pending appeal, or are not
discharged within 90 days after the expiration of such stay; or
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(j) if (i) any Plan shall fail to satisfy the minimum funding
standards of ERISA or the Code for any plan year or part thereof or a
waiver of such standards or extension of any amortization period is sought
or granted under section 412 of the Code, (ii) a notice of intent to
terminate any Plan shall have been or is reasonably expected to be filed
with the PBGC or the PBGC shall have instituted proceedings under ERISA
section 4042 to terminate or appoint a trustee to administer any Plan or
the PBGC shall have notified either Obligor or any ERISA Affiliate that a
Plan may become a subject of any such proceedings, (iii) the aggregate
"amount of unfunded benefit liabilities" (within the meaning of section
4001(a)(18) of ERISA) under all Plans, determined in accordance with Title
IV of ERISA, shall exceed $5,000,000, (iv) either Obligor or any ERISA
Affiliate shall have incurred or is reasonably expected to incur any
liability pursuant to Title I or IV of ERISA or the penalty or excise tax
provisions of the Code relating to employee benefit plans, (v) either
Obligor or any ERISA Affiliate withdraws from any Multiemployer Plan, or
(vi) either Obligor or any Subsidiary establishes or amends any employee
welfare benefit plan that provides post-employment welfare benefits in a
manner that would increase the liability of either Obligor or any
Subsidiary thereunder; and any such event or events described in clauses
(i) through (vi) above, either individually or together with any other such
event or events, could reasonably be expected to have a Material Adverse
Effect; or
(k) any Guarantee shall cease to be in full force and effect or the
Guarantor or any Person acting on behalf of the Guarantor shall contest in
any manner the validity, binding nature or enforceability of any Guarantee.
As used in Section 11(j), the terms "EMPLOYEE BENEFIT PLAN" and "EMPLOYEE
WELFARE BENEFIT PLAN" shall have the respective meanings assigned to such terms
in Section 3 of ERISA.
12. REMEDIES ON DEFAULT, ETC.
12.1 ACCELERATION.
(a) If an Event of Default with respect to an Obligor described in
paragraph (g) or (h) of Section 11 (other than an Event of Default described in
clause (i) of paragraph (g) or described in clause (vi) of paragraph (g) by
virtue of the fact that such clause encompasses clause (i) of paragraph (g)) has
occurred, all the Notes then outstanding shall automatically become immediately
due and payable.
(b) If any other Event of Default has occurred and is continuing, the
Required Holders may at any time at their option, by notice or notices to the
Company, declare all the Notes then outstanding to be immediately due and
payable.
(c) If any Event of Default described in paragraph (a) or (b) of
Section 11 has occurred and is continuing, any holder or holders of Notes at the
time outstanding affected by such Event of Default may at any time, at its or
their option, by notice or notices to the Company, declare all the Notes held by
it or them to be immediately due and payable.
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Upon any Notes becoming due and payable under this Section 12.1,
whether automatically or by declaration, such Notes will forthwith mature and
the entire unpaid principal amount of such Notes, plus (x) all accrued and
unpaid interest thereon and (y) the Make-Whole Amount determined in respect of
such principal amount (to the full extent permitted by applicable law), shall
all be immediately due and payable, in each and every case without presentment,
demand, protest or further notice, all of which are hereby waived. The Obligors
acknowledge, and the parties hereto agree, that each holder of a Note has the
right to maintain its investment in the Notes free from repayment by the
Obligors (except as herein specifically provided for) and that the provision for
payment of a Make-Whole Amount by the Company in the event that the Notes are
prepaid or are accelerated as a result of an Event of Default, is intended to
provide compensation for the deprivation of such right under such circumstances.
12.2 OTHER REMEDIES.
If any Default or Event of Default has occurred and is continuing, and
irrespective of whether any Notes have become or have been declared immediately
due and payable under Section 12.1, the holder of any Note at the time
outstanding may proceed to protect and enforce the rights of such holder by an
action at law, suit in equity or other appropriate proceeding, whether for the
specific performance of any agreement contained herein or in any Note, or for an
injunction against a violation of any of the terms hereof or thereof, or in aid
of the exercise of any power granted hereby or thereby or by law or otherwise.
12.3 RESCISSION.
At any time after any Notes have been declared due and payable
pursuant to paragraph (b) or (c) of Section 12.1, the Required Holders, by
written notice to the Company, may rescind and annul any such declaration and
its consequences if (a) the Obligors have paid all overdue interest on the
Notes, all principal of and Make-Whole Amount, if any, on any Notes that are due
and payable and are unpaid other than by reason of such declaration, and all
interest on such overdue principal and Make-Whole Amount, if any, and (to the
extent permitted by applicable law) any overdue interest in respect of the
Notes, at the Default Rate, (b) all Events of Default and Defaults, other than
non-payment of amounts that have become due solely by reason of such
declaration, have been cured or have been waived pursuant to Section 18, and (c)
no judgment or decree has been entered for the payment of any monies due
pursuant hereto or to the Notes. No rescission and annulment under this Section
12.3 will extend to or affect any subsequent Event of Default or Default or
impair any right consequent thereon.
12.4 NO WAIVERS OR ELECTION OF REMEDIES, EXPENSES, ETC.
No course of dealing and no delay on the part of any holder of any
Note in exercising any right, power or remedy shall operate as a waiver thereof
or otherwise prejudice such holder's rights, powers or remedies. No right,
power or remedy conferred by this Agreement or by any Note upon any holder
thereof shall be exclusive of any other right, power or remedy referred to
herein or therein or now or hereafter available at law, in equity, by statute or
otherwise. Without limiting the obligations of the Obligors under Section 16,
the Obligors will pay to the holder of each Note on demand such further amount
as shall be sufficient to cover all costs and expenses of such
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holder incurred in any enforcement or collection under this Section 12,
including, without limitation, reasonable attorneys' fees, expenses and
disbursements.
13. GUARANTEE, ETC.
13.1 GUARANTEE.
The Guarantor hereby guarantees to each holder of any Note or Notes at
any time outstanding (a) the prompt payment in full, in United States currency,
when due (whether at stated maturity, by acceleration, by mandatory or optional
prepayment or otherwise) of the principal of and Make-Whole Amount (if any) and
interest on the Notes (including, without limitation, interest on any overdue
principal, Make-Whole Amount and, to the extent permitted by applicable law, on
any overdue interest) and all other amounts from time to time owing by the
Company under this Agreement and under the Notes (including, without limitation,
costs, expenses and taxes), and (b) the prompt performance and observance by the
Company of all covenants, agreements and conditions on its part to be performed
and observed hereunder, in each case strictly in accordance with the terms
thereof (such payments and other obligations being herein collectively called
the "GUARANTEED OBLIGATIONS"). The Guarantor hereby further agrees that if the
Company shall default in the payment or performance of any of the Guaranteed
Obligations, the Guarantor will (x) promptly pay or perform the same, without
any demand or notice whatsoever, and that in the case of any extension of time
of payment or renewal of any of the Guaranteed Obligations, the same will be
promptly paid in full when due (whether at extended maturity, by acceleration,
by mandatory or optional prepayment or otherwise) in accordance with the terms
of such extension or renewal and (y) pay to the holder of any Note such amounts,
to the extent lawful, as shall be sufficient to pay the costs and expenses of
collection or of otherwise enforcing any of such holder's rights under this
Agreement, including, without limitation, reasonable counsel fees.
All obligations of the Guarantor under this Section 13 shall survive
the transfer of any Note, and any obligations of the Guarantor under this
Section 13 with respect to which the underlying obligation of the Company is
expressly stated to survive payment of any Note shall also survive payment of
such Note.
13.2 OBLIGATIONS UNCONDITIONAL.
(a) The obligations of the Guarantor under Section 13.1 constitute a
present and continuing guaranty of payment and not collectibility and are
absolute and unconditional, irrespective of the value, genuineness, validity,
regularity or enforceability of the obligations of the Company under this
Agreement, the Notes or any other agreement or instrument referred to herein or
therein, or any substitution, release or exchange of any other guarantee of or
security for any of the Guaranteed Obligations, and, to the fullest extent
permitted by applicable law, irrespective of any other circumstance whatsoever
which might otherwise constitute a legal or equitable discharge or defense of a
surety or guarantor, it being the intent of this Section 13.2 that the
obligations of the Guarantor hereunder shall be absolute and unconditional,
under any and all circumstances. Without limiting the generality of the
foregoing, it is agreed that the occurrence of any one or more of the following
shall not alter or impair the liability of the Guarantor hereunder which shall
remain absolute and unconditional as described above:
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(1) any amendment or modification of any provision of this Agreement
or any of the Notes or any assignment or transfer thereof, including
without limitation the renewal or extension of the time of payment of any
of the Notes or the granting of time in respect of such payment thereof, or
of any furnishing or acceptance of security or any additional guarantee or
any release of any security or guarantee so furnished or accepted for any
of the Notes;
(2) any waiver, consent, extension, granting of time, forbearance,
indulgence or other action or inaction under or in respect of this
Agreement or the Notes, or any exercise or non-exercise of any right,
remedy or power in respect hereof or thereof;
(3) any bankruptcy, receivership, insolvency, reorganization,
arrangement, readjustment, composition, liquidation or similar proceedings
with respect to the Company or any other Person or the properties or
creditors of any of them;
(4) the occurrence of any Default or Event of Default under, or any
invalidity or any unenforceability of, or any misrepresentation,
irregularity or other defect in, this Agreement, the Notes or any other
agreement;
(5) any transfer of any assets to or from the Company, including
without limitation any transfer or purported transfer to the Company from
any Person, any invalidity, illegality of, or inability to enforce, any
such transfer or purported transfer, any consolidation or merger of the
Company with or into any Person, any change in the ownership of any shares
of capital stock of the Company, or any change whatsoever in the objects,
capital structure, constitution or business of the Company;
(6) any default, failure or delay, willful or otherwise, on the part
of the Company or any other Person to perform or comply with, or the
impossibility or illegality of performance by the Company or any other
Person of, any term of this Agreement, the Notes or any other agreement;
(7) any suit or other action brought by, or any judgment in favor of,
any beneficiaries or creditors of, the Company or any other Person for any
reason whatsoever, including without limitation any suit or action in any
way attacking or involving any issue, matter or thing in respect of this
Agreement, the Notes or any other agreement;
(8) any lack or limitation of status or of power, incapacity or
disability of the Company or any trustee or agent thereof; or
(9) any other thing, event, happening, matter, circumstance or
condition whatsoever, not in any way limited to the foregoing.
(b) The Guarantor hereby unconditionally waives diligence,
presentment, demand of payment, protest and all notices whatsoever and any
requirement that any holder of a Note exhaust any right, power or remedy against
the Company under this Agreement or the Notes or any other agreement or
instrument referred to herein or therein, or against any other Person under any
other guarantee of, or security for, any of the Guaranteed Obligations.
31
<PAGE>
(c) In the event that the Guarantor shall at any time pay any amount
on account of the Guaranteed Obligations or take any other action in performance
of its obligations hereunder, the Guarantor shall not exercise any subrogation
or other rights hereunder or under the Notes and the Guarantor hereby waives all
rights it may have to exercise any such subrogation or other rights, and all
other remedies that it may have against the Company, in respect of any payment
made hereunder unless and until the Guaranteed Obligations shall have been
indefeasible paid in full. If any amount shall be paid to the Guarantor on
account of any such subrogation rights or other remedy, notwithstanding the
waiver thereof, such amount shall be received in trust for the benefit of the
holders of the Notes and shall forthwith be paid to such holders to be credited
and applied upon the Guaranteed Obligations, whether matured or unmatured, in
accordance with the terms hereof. The Guarantor agrees that its obligations
under this Section 13 shall be automatically reinstated if and to the extent
that for any reason any payment (including payment in full) by or on behalf of
the Company is rescinded or must be otherwise restored by any holder of a Note,
whether as a result of any proceedings in bankruptcy or reorganization or
otherwise, all as though such amount had not been paid.
The guarantee in this Section 13 is a continuing guarantee and shall
apply to the Guaranteed Obligations whenever arising. Each default in the
payment or performance of any of the Guaranteed Obligations shall give rise to a
separate claim and cause of action hereunder, and separate claims or suits may
be made and brought, as the case may be, hereunder as each such default occurs.
13.3 GUARANTEES ENDORSED ON THE NOTES.
Each Note shall have endorsed thereon a Guarantee of the Guarantor in
the form of Exhibit 1-A.
14. REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES.
14.1 REGISTRATION OF NOTES.
The Company shall keep at its principal executive office a register
for the registration and registration of transfers of Notes. The name and
address of each holder of one or more Notes, each transfer thereof and the name
and address of each transferee of one or more Notes shall be registered in such
register. Prior to due presentment for registration of transfer, the Person in
whose name any Note shall be registered shall be deemed and treated as the owner
and holder thereof for all purposes hereof, and neither Obligor shall be
affected by any notice or knowledge to the contrary. The Company shall give to
any holder of a Note that is an Institutional Investor promptly upon request
therefor, a complete and correct copy of the names and addresses of all
registered holders of Notes.
14.2 TRANSFER AND EXCHANGE OF NOTES.
Upon surrender of any Note at the principal executive office of the
Company for registration of transfer or exchange (and in the case of a surrender
for registration of transfer, duly endorsed or accompanied by a written
instrument of transfer duly executed by the registered holder of such Note or
his attorney duly authorized in writing and accompanied by the address for
notices of each transferee of such Note or part thereof), the Company shall
execute and deliver, at the
32
<PAGE>
Company's expense (except as provided below), one or more new Notes (as
requested by the holder thereof) in exchange therefor, in an aggregate principal
amount equal to the unpaid principal amount of the surrendered Note. Each such
new Note shall be payable to such Person as such holder may request and shall be
substantially in the form of Exhibit 1 and shall have the Guarantee of the
Guarantor endorsed thereon. Each such new Note shall be dated and bear interest
from the date to which interest shall have been paid on the surrendered Note or
dated the date of the surrendered Note if no interest shall have been paid
thereon. The Company may require payment of a sum sufficient to cover any stamp
tax or governmental charge imposed in respect of any such transfer of Notes.
Notes shall not be transferred in denominations of less than $500,000, provided
that if necessary to enable the registration of transfer by a holder of its
entire holding of Notes, one Note may be in a denomination of less than
$500,000. Any transferee, by its acceptance of a Note registered in its name (or
the name of its nominee), shall be deemed to have made the representation set
forth in Section 6.2.
14.3 REPLACEMENT OF NOTES.
Upon receipt by the Company of evidence reasonably satisfactory to it
of the ownership of and the loss, theft, destruction or mutilation of any Note
(which evidence shall be, in the case of an Institutional Investor, notice from
such Institutional Investor of such ownership and such loss, theft, destruction
or mutilation), and
(a) in the case of loss, theft or destruction, of indemnity
reasonably satisfactory to it (provided that if the holder of such Note
is, or is a nominee for, an original Purchaser or another holder of a Note
with a minimum net worth of at least $10,000,000, such Person's own
unsecured agreement of indemnity shall be deemed to be satisfactory), or
(b) in the case of mutilation, upon surrender and cancellation
thereof,
the Company at its own expense shall execute and deliver, in lieu thereof, a new
Note, dated and bearing interest from the date to which interest shall have been
paid on such lost, stolen, destroyed or mutilated Note or dated the date of such
lost, stolen, destroyed or mutilated Note if no interest shall have been paid
thereon, and having the Guarantee of the Guarantor endorsed thereon.
15. PAYMENTS ON NOTES.
15.1 PLACE OF PAYMENT.
Subject to Section 15.2, payments of principal, Make-Whole Amount, if
any, and interest becoming due and payable on the Notes shall be made in New
York, New York at the principal office of The First National Bank of Chicago in
such jurisdiction. The Company may at any time, by notice to each holder of a
Note, change the place of payment of the Notes so long as such place of payment
shall be either the principal office of the Company in such jurisdiction or the
principal office of a bank or trust company in such jurisdiction.
33
<PAGE>
15.2 HOME OFFICE PAYMENT.
So long as any Purchaser or any nominee of such Purchaser shall be the
holder of any Note, and notwithstanding anything contained in Section 15.1 or in
such Note to the contrary, the Company will pay all sums becoming due on such
Note for principal, Make-Whole Amount, if any, and interest by the method and at
the address specified for such purpose below such Purchaser's name in Schedule
A, or by such other method or at such other address as such Purchaser shall have
from time to time specified to the Company in writing for such purpose, without
the presentation or surrender of such Note or the making of any notation
thereon, except that upon written request of the Company made concurrently with
or reasonably promptly after payment or prepayment in full of any Note, such
Purchaser shall surrender such Note for cancellation, reasonably promptly after
any such request, to the Company at its principal executive office or at the
place of payment most recently designated by the Company pursuant to Section
15.1. Prior to any sale or other disposition of any Note held by any Purchaser
or any nominee of such Purchaser, such Purchaser will, at its election, either
endorse thereon the amount of principal paid thereon and the last date to which
interest has been paid thereon or surrender such Note to the Company in exchange
for a new Note or Notes pursuant to Section 14.2. The Company will afford the
benefits of this Section 15.2 to any Institutional Investor that is the direct
or indirect transferee of any Note purchased by any Purchaser under this
Agreement and that has made the same agreement relating to such Note as the
Purchasers have made in this Section 15.2.
16. EXPENSES, ETC.
16.1 TRANSACTION EXPENSES.
Whether or not the transactions contemplated hereby are consummated,
the Obligors will pay all costs and expenses (including reasonable attorneys'
fees of a single special counsel and, if reasonably required, local or other
counsel) incurred by the Purchasers and each other holder of a Note in
connection with such transactions and in connection with any amendments, waivers
or consents under or in respect of this Agreement or the Notes (whether or not
such amendment, waiver or consent becomes effective), including, without
limitation: (a) the costs and expenses incurred in enforcing or defending (or
determining whether or how to enforce or defend) any rights under this Agreement
or the Notes or in responding to any subpoena or other legal process or informal
investigative demand issued in connection with this Agreement or the Notes, or
by reason of being a holder of any Note, and (b) the costs and expenses,
including financial advisors' fees, incurred in connection with the insolvency
or bankruptcy of the Guarantor, the Company or any Subsidiary or in connection
with any work-out or restructuring of the transactions contemplated hereby and
by the Notes. The Obligors will pay, and will save each Purchaser and each other
holder of a Note harmless from, all claims in respect of any fees, costs or
expenses if any, of brokers and finders (other than those retained by such
Purchaser or other holder).
16.2 SURVIVAL.
The obligations of the Obligors under this Section 16 will survive the
payment or transfer of any Note, the enforcement, amendment or waiver of any
provision of this Agreement or the Notes, and the termination of this Agreement.
34
<PAGE>
17. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT.
All representations and warranties contained herein shall survive the
execution and delivery of this Agreement and the Notes, the purchase or transfer
by each Purchaser of any Note or portion thereof or interest therein and the
payment of any Note, and may be relied upon by any subsequent holder of a Note,
regardless of any investigation made at any time by or on behalf of any
Purchaser or any other holder of a Note. All statements contained in any
certificate or other instrument delivered by or on behalf of either Obligor
pursuant to this Agreement shall be deemed representations and warranties of
such Obligor under this Agreement. Subject to the preceding sentence, this
Agreement and the Notes embody the entire agreement and understanding between
the Purchasers and the Obligors and supersede all prior agreements and
understandings relating to the subject matter hereof.
18. AMENDMENT AND WAIVER.
18.1 REQUIREMENTS.
This Agreement and the Notes may be amended, and the observance of any
term hereof or of the Notes may be waived (either retroactively or
prospectively), with (and only with) the written consent of the Obligors and the
Required Holders, except that (a) no amendment or waiver of any of the
provisions of Section 1, 2, 3, 4, 5, 6 or 22 hereof, or any defined term (as it
is used therein), will be effective as to any Purchaser unless consented to by
such Purchaser in writing, and (b) no such amendment or waiver may, without the
written consent of the holder of each Note at the time outstanding affected
thereby, (i) subject to the provisions of Section 12 relating to acceleration or
rescission, change the amount or time of any prepayment or payment of principal
of, or reduce the rate or change the time of payment or method of computation of
interest or of the Make-Whole Amount on, the Notes, (ii) change the percentage
of the principal amount of the Notes the holders of which are required to
consent to any such amendment or waiver, or (iii) amend any of Sections 8,
11(a), 11(b), 12, 13, 18 or 21.
18.2 SOLICITATION OF HOLDERS OF NOTES.
(a) Solicitation. The Obligors will provide each holder of the Notes
(irrespective of the amount of Notes then owned by it) with sufficient
information, sufficiently far in advance of the date a decision is required, to
enable such holder to make an informed and considered decision with respect to
any proposed amendment, waiver or consent in respect of any of the provisions
hereof or of the Notes. The Obligors will deliver executed or true and correct
copies of each amendment, waiver or consent effected pursuant to the provisions
of this Section 18 to each holder of outstanding Notes promptly following the
date on which it is executed and delivered by, or receives the consent or
approval of, the requisite holders of Notes.
(b) Payment. Neither Obligor will directly or indirectly pay or cause
to be paid any remuneration, whether by way of supplemental or additional
interest, fee or otherwise, or grant any security, to any holder of Notes as
consideration for or as an inducement to the entering into by any holder of
Notes of any waiver or amendment of any of the terms and provisions hereof
unless such remuneration is concurrently paid, or security is concurrently
35
<PAGE>
granted, on the same terms, ratably to each holder of Notes then outstanding
even if such holder did not consent to such waiver or amendment.
18.3 BINDING EFFECT, ETC.
Any amendment or waiver consented to as provided in this Section 18
applies equally to all holders of Notes and is binding upon them and upon each
future holder of any Note and upon the Obligors without regard to whether such
Note has been marked to indicate such amendment or waiver. No such amendment or
waiver will extend to or affect any obligation, covenant, agreement, Default or
Event of Default not expressly amended or waived or impair any right consequent
thereon. No course of dealing between either Obligor and the holder of any Note
nor any delay in exercising any rights hereunder or under any Note shall operate
as a waiver of any rights of any holder of such Note. As used herein, the term
"THIS AGREEMENT" and references thereto shall mean this Agreement as it may from
time to time be amended or supplemented.
18.4 NOTES HELD BY OBLIGOR, ETC.
Solely for the purpose of determining whether the holders of the
requisite percentage of the aggregate principal amount of Notes then outstanding
approved or consented to any amendment, waiver or consent to be given under this
Agreement or the Notes, or have directed the taking of any action provided
herein or in the Notes to be taken upon the direction of the holders of a
specified percentage of the aggregate principal amount of Notes then
outstanding, Notes directly or indirectly owned by either Obligor or any
Affiliate of either Obligor shall be deemed not to be outstanding.
19. NOTICES.
All notices and communications provided for hereunder shall be in
writing and sent (a) by telecopy if the sender on the same day sends a
confirming copy of such notice by a recognized overnight delivery service
(charges prepaid), or (b) by a recognized overnight delivery service (with
charges prepaid). Any such notice must be sent:
(i) if to any Purchaser or its nominee, to such Purchaser or
nominee at the address specified for such communications in Schedule
A, or at such other address as such Purchaser or nominee shall have
specified to the Company in writing,
(ii) if to any other holder of any Note, to such holder at such
address as such other holder shall have specified to the Company in
writing,
(iii) if to the Company, to the Company at its address set forth
at the beginning hereof to the attention of the Treasurer, or at such
other address as the Company shall have specified to the holder of
each Note in writing, or
(iv) if to the Guarantor, to the Guarantor at the same address
as set forth at the beginning hereof as to the Company to the
attention of the Treasurer, or at such other address as the Guarantor
shall have specified to the holder of each Note in writing.
36
<PAGE>
Notices under this Section 19 will be deemed given only when actually received.
20. REPRODUCTION OF DOCUMENTS.
This Agreement and all documents relating thereto, including, without
limitation, (a) consents, waivers and modifications that may hereafter be
executed, (b) documents received by any Purchaser at the Closing (except the
Notes themselves), and (c) financial statements, certificates and other
information previously or hereafter furnished to any Purchaser, may be
reproduced by such Purchaser by any photographic, photostatic, microfilm,
microcard, miniature photographic or other similar process and such Purchaser
may destroy any original document so reproduced. The Obligors agree and
stipulate that, to the extent permitted by applicable law, any such reproduction
shall be admissible in evidence as the original itself in any judicial or
administrative proceeding (whether or not the original is in existence and
whether or not such reproduction was made by such Purchaser in the regular
course of business) and any enlargement, facsimile or further reproduction of
such reproduction shall likewise be admissible in evidence. This Section 20
shall not prohibit an Obligor or any other holder of Notes from contesting any
such reproduction to the same extent that it could contest the original, or from
introducing evidence to demonstrate the inaccuracy of any such reproduction.
21. CONFIDENTIAL INFORMATION.
For the purposes of this Section 21, "CONFIDENTIAL INFORMATION" means
information delivered to any Purchaser by or on behalf of either Obligor or any
Subsidiary in connection with the transactions contemplated by or otherwise
pursuant to this Agreement that is proprietary in nature and that was clearly
marked or labeled or otherwise adequately identified when received by such
Purchaser as being confidential information of such Obligor or such Subsidiary,
provided that such term does not include information that (a) was publicly known
or otherwise known to such Purchaser prior to the time of such disclosure, (b)
subsequently becomes publicly known through no act or omission by such Purchaser
or any person acting on such Purchaser's behalf, (c) otherwise becomes known to
such Purchaser other than through disclosure by an Obligor or any Subsidiary or
(d) constitutes financial statements delivered to such Purchaser under Section
7.1 that are otherwise publicly available. Each Purchaser will maintain the
confidentiality of such Confidential Information in accordance with procedures
adopted by such Purchaser in good faith to protect confidential information of
third parties delivered to such Purchaser, provided that such Purchaser may
deliver or disclose Confidential Information to (i) such Purchaser's directors,
officers, employees, agents, attorneys and affiliates (to the extent such
disclosure reasonably relates to the administration of the investment
represented by such Purchaser's Notes), (ii) such Purchaser's financial advisors
and other professional advisors who agree to hold confidential the Confidential
Information substantially in accordance with the terms of this Section 21, (iii)
any other holder of any Note, (iv) any Institutional Investor to which such
Purchaser sells or offers to sell such Note or any part thereof or any
participation therein (if such Person has agreed in writing prior to its receipt
of such Confidential Information to be bound by the provisions of this Section
21), (v) any Person from which such Purchaser offers to purchase any security of
an Obligor (if such Person has agreed in writing prior to its receipt of such
Confidential Information to be bound by the provisions of this Section 21), (vi)
any federal or state regulatory authority having jurisdiction over such
Purchaser, (vii) the National Association of Insurance Commissioners or any
similar organization, or any nationally recognized rating agency that requires
access to information about such Purchaser's
37
<PAGE>
investment portfolio or (viii) any other Person to which such delivery or
disclosure may be necessary or appropriate (w) to effect compliance with any
law, rule, regulation or order applicable to such Purchaser, (x) in response to
any subpoena or other legal process, (y) in connection with any litigation to
which such Purchaser is a party or (z) if an Event of Default has occurred and
is continuing, to the extent such Purchaser may reasonably determine such
delivery and disclosure to be necessary or appropriate in the enforcement or for
the protection of the rights and remedies under such Purchaser's Notes or this
Agreement (provided, that if any Purchaser is required to disclose any
Confidential Information as provided in clauses (w), (x) or (y) above, it is
agreed that, to the extent permitted by law, such Purchaser will use its best
efforts to provide the Obligors with prompt notice of such requirement so that
the Obligors may seek an appropriate protective order if they so desire). Each
holder of a Note, by its acceptance of a Note, will be deemed to have agreed to
be bound by and to be entitled to the benefits of this Section 21 as though it
were a party to this Agreement. On reasonable request by an Obligor in
connection with the delivery to any holder of a Note of information required to
be delivered to such holder under this Agreement or requested by such holder
(other than a holder that is a party to this Agreement or its nominee), such
holder will enter into an agreement with the Obligors embodying the provisions
of this Section 21.
22. SUBSTITUTION OF PURCHASER.
Each Purchaser shall have the right to substitute any one of such
Purchaser's Affiliates as the purchaser of the Notes that such Purchaser has
agreed to purchase hereunder, by written notice to the Company, which notice
shall be signed by both such Purchaser and such Affiliate, shall contain such
Affiliate's agreement to be bound by this Agreement and shall contain a
confirmation by such Affiliate of the accuracy with respect to it of the
representations set forth in Section 6. Upon receipt of such notice, any
reference to such Purchaser in this Agreement (other than in this Section 22)
shall be deemed to refer to such Affiliate in lieu of such original Purchaser.
In the event that such Affiliate is so substituted as a purchaser hereunder and
such Affiliate thereafter transfers to such original Purchaser all of the Notes
then held by such Affiliate, upon receipt by the Company of notice of such
transfer, any reference to such Affiliate as a "Purchaser" in this Agreement
(other than in this Section 22) shall no longer be deemed to refer to such
Affiliate, but shall refer to such original Purchaser, and such original
Purchaser shall again have all the rights of an original holder of the Notes
under this Agreement.
23. MISCELLANEOUS.
23.1 SUCCESSORS AND ASSIGNS.
All covenants and other agreements contained in this Agreement by or
on behalf of any of the parties hereto bind and inure to the benefit of their
respective successors and assigns (including, without limitation, any subsequent
holder of a Note) whether so expressed or not.
23.2 PAYMENTS DUE ON NON-BUSINESS DAYS.
Anything in this Agreement or the Notes to the contrary
notwithstanding, any payment of principal of or Make-Whole Amount or interest on
any Note that is due on a date other than a Business Day shall be made on the
next succeeding Business Day without including the
38
<PAGE>
additional days elapsed in the computation of the interest payable on such next
succeeding Business Day.
23.3 SEVERABILITY.
Any provision of this Agreement that is prohibited or unenforceable in
any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall (to the full extent permitted by law) not invalidate or
render unenforceable such provision in any other jurisdiction.
23.4 CONSTRUCTION.
Each covenant contained herein shall be construed (absent express
provision to the contrary) as being independent of each other covenant contained
herein, so that compliance with any one covenant shall not (absent such an
express contrary provision) be deemed to excuse compliance with any other
covenant. Where any provision herein refers to action to be taken by any Person,
or which such Person is prohibited from taking, such provision shall be
applicable whether such action is taken directly or indirectly by such Person.
23.5 COUNTERPARTS.
This Agreement may be executed in any number of counterparts, each of
which shall be an original but all of which together shall constitute one
instrument. Each counterpart may consist of a number of copies hereof, each
signed by less than all, but together signed by all, of the parties hereto.
23.6 GOVERNING LAW.
This Agreement shall be construed and enforced in accordance with, and
the rights of the parties shall be governed by, the law of the State of New York
excluding choice-of-law principles of the law of such State that would require
the application of the laws of a jurisdiction other than such State.
* * * * *
39
<PAGE>
If you are in agreement with the foregoing, please sign the form of
agreement on the accompanying counterpart of this Agreement and return it to the
Company, whereupon the foregoing shall become a binding agreement between you
and the Company and the Guarantor.
Very truly yours,
MIDAS INTERNATIONAL CORPORATION
By /s/ Christian C. Pappas
------------------------------
Name: Christian C. Pappas
Title: Vice President and Treasurer
MIDAS, INC.
By /s/ Christian C. Pappas
------------------------------
Name: Christian C. Pappas
Title: Vice President and Treasurer
40
<PAGE>
The foregoing is hereby
agreed to as of the
date thereof.
CONNECTICUT GENERAL LIFE INSURANCE
COMPANY
By CIGNA Investments, Inc.
By /s/ James G. Schelling
-------------------------
Name: James G. Schelling
Title: Managing Director
CONNECTICUT GENERAL LIFE INSURANCE
COMPANY ON BEHALF OF ONE OR MORE
SEPARATE ACCOUNTS
By CIGNA Investments, Inc.
By /s/ James G. Schelling
-------------------------
Name: James G. Schelling
Title: Managing Director
LIFE INSURANCE COMPANY OF AMERICA
By CIGNA Investments, Inc.
By /s/ James G. Schelling
-------------------------
Name: James G. Schelling
Title: Managing Director
THE CANADA LIFE INSURANCE
COMPANY OF AMERICA
By /s/ Brian J. Lynch
-------------------------
Name: Brian J. Lynch
Title: Assistant Treasurer
SOUTHERN FARM BUREAU LIFE
INSURANCE COMPANY
By /s/ Carol Robertson
--------------------------
Name: Carol Robertson, CFA
Title: Portfolio Manager, Fixed Income
41
<PAGE>
THE UNITED STATES LIFE
INSURANCE COMPANY IN THE
CITY OF NEW YORK
and
AMERICAN GENERAL LIFE
INSURANCE COMPANY
By /s/ Julia S. Tucker
--------------------------
Name: Julia S. Tucker
Title: Investment Officer
THE TRAVELERS INSURANCE
COMPANY
By /s/ John W. Petchler
--------------------------
Name: John W. Petchler
Title: Second Vice President
CANADA LIFE INSURANCE
COMPANY OF NEW YORK
By /s/ Brian J. Lynch
--------------------------
Name: Brian J. Lynch
Title: Assistant Treasurer
42
<PAGE>
SCHEDULE A
----------
INFORMATION RELATING TO PURCHASERS
<TABLE>
<S> Amount of Notes
Purchaser Name to be Purchased
- -------------- ---------------
<S> <C>
Connecticut General Life $11,100,000
Insurance Company $ 4,400,000
$ 3,000,000
Register Note in the name of "CIG & Co." (the nominee of Connecticut General Life
Insurance Company).
Payment on Account of
Instruments:
Method Federal Funds Wire Transfer
Account Information Chase NYC/CTR/
BNF=CIGNA Private
Placements/AC=9009001802
ABA# 021000021
Accompanying OBI=[name of company, description of security,
Information: interest rate, maturity date, PPN, due date and
application (as among principal, premium and
interests of the payment being made), contact
name and phone.]
Address for notices Related CIG & Co.
to Payments: c/o CIGNA Investments, Inc.
Attention: Securities Processing S-309
900 Cottage Grove Road
Hartford, CT 06152-2309
CIG & Co.
c/o CIGNA Investments, Inc.
Attention: Private Securities -- S307
Operations Group
900 Cottage Grove Road
Hartford CT 06152-2307
Fax: 860-726-7203
with a copy to: Chase Manhattan Bank, N.A.
Private Placement Servicing
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
P.O. Box 1508
Bowling Green Station
New York, New York 10081
Attention: CIGNA Private Placements
FAX: 212-552-3107/1005
Address for All Other
Notices: CIG & Co.
c/o CIGNA Investments, Inc.
Attn: Private Securities Div. -- S-307
900 Cottage Grove Road
Hartford, Connecticut 06152-2307
FAX: 860-726-7203
Tax Identification Number: 13-3574027
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
Amount of Notes
Purchaser Name to be Purchased
- -------------- ---------------
<S> <C>
Connecticut General Life Insurance
Company on behalf of One or More $5,000,000
Separate Accounts $3,000,000
</TABLE>
Register Note in the name of "CIG & Co." (the nominee of Connecticut General
Life Insurance Company on behalf of One or More Separate Accounts).
<TABLE>
<CAPTION>
<S> <C>
Payment on Account of Federal Funds Wire Transfer
Instruments: Chase NYC/CTR/
Method BNF=CIGNA Private Placements/AC=9009001802
Account Information ABA# 021000021
Accompanying OBI=[name of company, description of security,
Information: interest rate, maturity date, PPN, due date and
application (as among principal, premium and
interests of the payment being made), contact
name and phone.]
Address for notices Related CIG & Co.
to Payments: c/o CIGNA Investments, Inc.
Attention: Securities Processing S-309
900 Cottage Grove Road
Hartford, CT 06152-2309
CIG & Co.
c/o CIGNA Investments, Inc.
Attention: Private Securities -- S307
Operations Group
900 Cottage Grove Road
Hartford CT 06152-2307
Fax: 860-726-7203
with a copy to: Chase Manhattan Bank, N.A.
Private Placement Servicing
P.O. Box 1508
Bowling Green Station
New York, New York 10081
Attention: CIGNA Private Placements
FAX: 212-552-3107/1005
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Address for All Other CIG & Co.
Notices: c/o CIGNA Investments, Inc.
Attn: Private Securities Div. -- S-307
900 Cottage Grove Road
Hartford, Connecticut 06152-2307
FAX: 860-726-7203
Tax Identification Number: 13-3574027
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
Amount of Notes
Purchaser Name to be Purchased
- -------------- ---------------
<S> <C>
Life Insurance Company of
North America $3,500,000
Register Note in the name of "CIG & Co." (the nominee of Life Insurance Company
of North America).
Payment on Account of
Instruments:
Method Federal Funds Wire Transfer
Account Information Chase NYC/CTR/
BNF=CIGNA Private Placements/AC=9009001802
ABA# 021000021
Accompanying OBI=[name of company, description of
Information: security, interest rate, maturity date,
PPN, due date and application (as among
principal, premium and interests of the
payment being made), contact name and
phone.]
Address for notices Related CIG & Co.
to Payments: c/o CIGNA Investments, Inc.
Attention: Securities Processing S-309
900 Cottage Grove Road
Hartford, CT 06152-2309
CIG & Co.
c/o CIGNA Investments, Inc.
Attention: Private Securities -- S307
Operations Group
900 Cottage Grove Road
Hartford CT 06152-2307
Fax: 860-726-7203
with a copy to: Chase Manhattan Bank, N.A.
Private Placement Servicing
P.O. Box 1508
Bowling Green Station
New York, New York 10081
Attention: CIGNA Private Placements
FAX: 212-552-3107/1005
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Address for All Other CIG & Co.
Notices: c/o CIGNA Investments, Inc.
Attn: Private Securities Div. -- S-307
900 Cottage Grove Road
Hartford, Connecticut 06152-2307
FAX: 860-726-7203
Tax Identification Number: 13-3574027
</TABLE>
6
<PAGE>
<TABLE>
Amount of Notes
Purchaser Name to be Purchased
- -------------- ---------------
<S> <C>
Canada Life Insurance
Company of America $4,000,000
Register Note in the name of "J. Romeo & Co."
Payment on Account of
Instruments:
Method Federal Funds Wire Transfer
Account Information CHASE MANHATTAN BANK
ABA 021-000-021
A/C #900-9-000200
Trust Acct. No. G52709, Canada Life of America
Attn: Doll Balbadar
Accompanying Name of issuer, rate, maturity date,
Information: settlement date
Address for notices Related to CHASE MANHATTAN BANK
Payments: North America Insurance
3 Chase MetroTech Centre-6th Floor
Brooklyn, NY 11245
Attn: Doll Balbadar
with a copy to: The Canada Life Assurance Company
330 University Avenue, SP-12
Toronto, Ontario, Canada M5G 1R8
Attn: Supervisor, Securities Accounting
For Call or Maturity: CHASE MANHATTAN BANK
ABA 021-000-021
A/C #900-9-000192
Trust Acct. No. G52709, Canada Life of America
Attn: Doll Balbadar
Address for All Other Notices: The Canada Life Assurance Company
Corporate Treasury, SP-11
330 University Avenue
Toronto, Ontario, Canada M5G 1R8
Attn: Brian Lynch, Assoc. Treasurer,
US Private Placements
Tax Identification Number: 38-2816473
</TABLE>
7
<PAGE>
<TABLE>
Amount of Notes
Purchaser Name to be Purchased
- -------------- ---------------
<S> <C>
Canada Life Insurance
Company of New York $1,000,000
Register Note in the name of "J. Romeo & Co."
Payment on Account of
Instruments:
Method Federal Funds Wire Transfer
Account Information CHASE MANHATTAN BANK
ABA 021-000-021
A/C #544-755-102
For A/C #MR 76-37266, Canada Life of New York
Attn: Mr. Richard Boxer
Accompanying Name of issuer, rate, maturity date,
Information: settlement date
Address for notices Related to CHASE MANHATTAN BANK
Payments: North America Insurance
3 Chase MetroTech Centre-6th Floor
Brooklyn, NY 11245
Attn: Mr. Richard Boxer
with a copy to: The Canada Life Assurance Company
330 University Avenue, SP-12
Toronto, Ontario, Canada M5G 1R8
Attn: Supervisor, Securities Accounting
For Call or Maturity CHASE MANHATTAN BANK
ABA # 021-000-021
A/C #400-425-073
For A/C # MR 76-37266, Canada Life of NY
Attn: Mr. Richard Boxer
Address for All Other Notices: The Canada Life Assurance Company
Corporate Treasury, SP-11
330 University Avenue
Toronto, Ontario, Canada M5G 1R8
Attn: Brian Lynch, Assoc. Treasurer,
US Private Placements
Tax Identification Number: 13-2690792
</TABLE>
8
<PAGE>
<TABLE>
Amount of Notes
Purchaser Name to be Purchased
- -------------- ---------------
<S> <C>
Southern Farm Bureau
Life Insurance Company $5,000,000
Payment on Account of
Instruments:
Method Federal Funds Wire Transfer
Account Information Wachovia Bank of North Carolina
301 North Main Street
Winston-Salem, NC 27150-1013
AC=8730-007153
ABA #053100494
Southern Bureau Farm Life Insurance Company
Accompanying OBI=[name of company, description of security,
Information: interest rate, maturity date, PPN, due date and
application (as among principal, premium and
interests of the payment being made), contact
name and phone.]
Address for notices Related to Southern Farm Bureau Life Insurance Company
Payments: P.O. Box 78
Jackson, MS 39205
Attn: Investment Department
Address for All Other Notices: Southern Farm Bureau Life Insurance Company
P.O. Box 78
Jackson, MS 39205
Attn: Investment Department
Or by overnight delivery to: 1401 Livingston Lane
Jackson, MS 39213
Tax Identification Number: 64-0283583
</TABLE>
9
<PAGE>
<TABLE>
Amount of Notes
Purchaser Name to be Purchased
- -------------- ---------------
<S> <C>
The United States Life Insurance
Company in the City of New York $5,000,000
Payment on Account of
Instruments:
Method Federal Funds Wire Transfer
Account Information ABA#011000028
State Street Bank and Trust Company
Boston, MA 02101
Re: The United States Life Insurance
Company in the City of New York
AC-6956-534-9
Accompanying OBI=PPN # and description of payment
Information: Fund Number PA 77
Address for notices Related to The United States Life Insurance Company in the
Payments: City of New York and PA 77
c/o State Street Bank & Trust Company
Insurance Services WES2S
105 Rosemont Road
Westwood, MA 02090
fax (781) 302-8005
Address for All Other Notices: The United States Life Insurance Company
in the City of New York
c/o American General Corporation
Attn: Investment Research Dept. A37-01
PO Box 3247
Houston, TX 77253-3247
Or by overnight delivery to: 2929 Allen Parkway
Houston, TX 77019-2155
Tax Identification Number: 13-5459480
</TABLE>
10
<PAGE>
<TABLE>
Amount of Notes
Purchaser Name to be Purchased
- -------------- ---------------
<S> <C>
American General Life
Insurance Company $10,000,000
Payment on Account of
Instruments:
Method Federal Funds Wire Transfer
Account Information ABA# 011000028
State Street Bank and Trust Company
Boston, MA 02101
Re: American General Life Insurance Co.
AC-0125-880-5
Accompanying OBI=PPN# and description of payment
Information: Fund Number PA 40
Address for notices Related to American General Life Insurance Co.
Payments: c/o State Street Bank and Trust Co.
Insurance Services WES2S
105 Rosemont Road
Westwood, MA 02090
fax (781) 302-8005
Address for All Other Notices: American General Life Insurance Co.
c/o American General Corporation
Attn: Investment Research Dept.
A37-01
PO Box 3247
Houston, TX 77253-3247
Or by overnight delivery to: 2929 Allen Parkway, A37-01
Houston, TX 77019-2155
Tax Identification Number: 25-0598210
</TABLE>
11
<PAGE>
<TABLE>
Amount of Notes
Purchaser Name to be Purchased
- -------------- --------------
<S> <C>
The Travelers Insurance
Company $20,000,000
Register Note in the name of "TRAL & Co."
Payment on Account of
Instruments:
Method Federal Funds Wire Transfer
prior to 12:00 noon (NY time)
Account Information The Travelers Insurance Company
Consolidate Private Placement Acct No
910-2-587434
The Chase Manhattan Bank, N.A.,
One Chase Manhattan Plaza
New York, NY 10081
ABA# 021-000021
Accompanying OBI=[name of company, description of security,
Information: interest rate, maturity date, PPN, due date]
Address for notices Related to One Tower Square
Payments: Hartford, CT 06183-2030
Attn: Securities Department Cashier
Address for All Other Notices: One Tower Square
Hartford, CT 06183-2030
Attn: Securities Dept. Priv. Placements
Fax (203) 954-5243
Tax Identification Number: 06-0566090
</TABLE>
12
<PAGE>
SCHEDULE B
----------
DEFINED TERMS
-------------
As used herein, the following terms have the respective meanings set
forth below or set forth in the Section hereof following such term:
"AFFILIATE" means, at any time, and with respect to any Person, (a)
any other Person that at such time directly or indirectly through one or more
intermediaries Controls, or is Controlled by, or is under common Control with,
such first Person, and (b) any Person beneficially owning or holding, directly
or indirectly, 10% or more of any class of voting or equity interests of either
Obligor or any Subsidiary or any corporation of which the Guarantor and its
Subsidiaries beneficially own or hold, in the aggregate, directly or indirectly,
10% or more of any class of voting or equity interests. As used in this
definition, "CONTROL" means the possession, directly or indirectly, of the power
to direct or cause the direction of the management and policies of a Person,
whether through the ownership of voting securities, by contract or otherwise.
Unless the context otherwise clearly requires, any reference to an "Affiliate"
is a reference to an Affiliate of the Guarantor.
"ATTRIBUTABLE DEBT" means, as to any particular lease relating to a
Sale and Leaseback Transaction, the present value of all Lease Rentals required
to be paid by the Guarantor or any Subsidiary under such lease during the
remaining term thereof (determined in accordance with generally accepted
financial practice and discounted semi-annually using a discount factor equal to
the interest rate implicit in such lease).
"BUSINESS DAY" means (a) for the purposes of Section 8.7 only, any day
other than a Saturday, a Sunday or a day on which commercial banks in New York
City are required or authorized to be closed, and (b) for the purposes of any
other provision of this Agreement, any day other than a Saturday, a Sunday or a
day on which commercial banks in New York City or Chicago, Illinois are required
or authorized to be closed.
"CAPITAL LEASE" means, at any time, a lease with respect to which the
lessee is required concurrently to recognize the acquisition of an asset and the
incurrence of a liability in accordance with GAAP.
"CAPITALIZED LEASE OBLIGATIONS" means, with respect to any Person, all
outstanding obligations of such Person in respect of Capital Leases which would
be shown as liabilities on a balance sheet of such Person in accordance with
GAAP.
"CLOSING" is defined in Section 3.
"CODE" means the Internal Revenue Code of 1986, as amended from time
to time, and the rules and regulations promulgated thereunder from time to time.
<PAGE>
SCHEDULE B
----------
"COMPANY" means Midas International Corporation, a Delaware
corporation, or any successor thereto that shall have become such in the manner
prescribed in Section 10.2
"CONFIDENTIAL INFORMATION" is defined in Section 21.
"CONSOLIDATED CAPITALIZATION" means, as of any date of determination,
the sum of (i) Consolidated Indebtedness plus (ii) Consolidated Net Worth plus
(iii) deferred taxes, all as determined as of such date on a consolidated basis
for the Guarantor and its Subsidiaries in accordance with GAAP.
"CONSOLIDATED INDEBTEDNESS" means, as of any date of determination,
all Indebtedness of the Guarantor and its Subsidiaries outstanding on such date,
determined on a consolidated basis in accordance with GAAP.
"CONSOLIDATED INTEREST EXPENSE" means, for any period, the sum for the
Guarantor and its Subsidiaries of all amounts that would be deducted in
computing Consolidated Net Income on account of interest on Indebtedness for
such period (including imputed interest in respect of Capitalized Lease
Obligations and amortization of debt discount and expense), determined on a
consolidated basis in accordance with GAAP.
"CONSOLIDATED NET INCOME" means, for any period, the net income of the
Guarantor and its Subsidiaries for such period, determined on a consolidated
basis in accordance with GAAP, excluding:
(a) any net gain from the collection of the proceeds of any life
insurance policy;
(b) any aggregate net gain (but not any aggregate net loss) arising
from (i) the sale or other disposition of assets (other than current assets),
(ii) any write-up of assets or (iii) the acquisition of any outstanding
securities of the Guarantor or any Subsidiary;
(c) any amount representing any interest in the undistributed
earnings of any Person other than a Subsidiary;
(d) any earnings, prior to the date of acquisition, of any Person
acquired in any manner, and any earnings of any Subsidiary acquired prior to its
becoming a Subsidiary;
(e) in the case of a successor to the Guarantor or the Company by
consolidation or merger or as a transferee of its assets, any earnings of the
successor corporation prior to such consolidation, merger or transfer of assets;
(f) any deferred credit (or amortization of a deferred credit)
arising from the acquisition of any Person; and
(g) any extraordinary gains not covered by clause (b) above.
2
<PAGE>
SCHEDULE B
----------
"CONSOLIDATED NET WORTH" means, as of any date of determination, the
sum of (i) capital stock taken at par or stated value, plus (ii) capital in
excess of par or stated value relating to capital stock, plus (iii) retained
earnings (or minus any retained earnings deficit), plus (iv) minority interests,
minus (v) treasury stock, minus (vi) capital stock subscribed for and unissued,
minus (vii) any other contra-equity accounts, all as determined as of such date
on a consolidated basis for the Guarantor and its Subsidiaries in accordance
with GAAP.
"CONSOLIDATED TOTAL ASSETS" means, as of any date of determination,
the total assets of the Guarantor and its Subsidiaries as determined as of such
date on a consolidated basis for the Guarantor and its Subsidiaries in
accordance with GAAP.
"DEFAULT" means an event or condition the occurrence or existence of
which would, with the lapse of time or the giving of notice or both, become an
Event of Default.
"DEFAULT RATE" means that rate of interest that is the greater of (i)
2% per annum above the rate of interest stated in clause (a) of the first
paragraph of the Notes or (ii) 2% over the rate of interest publicly announced
by The First National Bank of Chicago as its "base" or "prime" rate.
"DISPOSITION" is defined in Section 10.8.
"DISTRIBUTION" means the distribution by Whitman on January 30, 1998
of all of the issued and outstanding shares of common stock of the Guarantor to
the shareholders of Whitman as of January 16, 1998, as more fully described in
the Memorandum.
"EBITDA" means, as of the last day of any fiscal quarter, Consolidated
Net Income (without giving effect to the Special Charges) for the four fiscal
quarters ending on such date, plus all amounts deducted in the computation of
such Consolidated Net Income on account of (i) Consolidated Interest Expense,
(ii) depreciation and amortization expenses and other non-cash charges and (iii)
income, profit and franchise taxes, all determined on a consolidated basis in
accordance with GAAP.
"ENVIRONMENTAL LAWS" means any and all Federal, state, local, and
foreign statutes, laws, regulations, ordinances, rules, judgments, orders,
decrees, permits, concessions, grants, franchises, licenses, agreements or
governmental restrictions relating to pollution and the protection of the
environment or the release of any materials into the environment, including but
not limited to those related to hazardous substances or wastes, air emissions
and discharges to waste or public systems.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and the rules and regulations promulgated thereunder
from time to time in effect.
"ERISA AFFILIATE" means any trade or business (whether or not
incorporated) that is treated as a single employer together with either Obligor
under section 414 of the Code.
3
<PAGE>
SCHEDULE B
----------
"EVENT OF DEFAULT" is defined in Section 11.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
"FUNDED INDEBTEDNESS" means, with respect to any Person, all
Indebtedness of such Person which by its terms or by the terms of any instrument
or agreement relating thereto matures, or which is otherwise payable or unpaid,
one year or more from, or is directly or indirectly renewable or extendible at
the option of the obligor in respect thereof to a date one year or more
(including, without limitation, under a revolving or similar agreement
obligating the lender or lenders to extend credit over a period of one year or
more) from, the date of creation thereof.
"GAAP" means generally accepted accounting principles as in effect
from time to time in the United States of America.
"GOVERNMENTAL AUTHORITY" means
(a) the government of
(i) the United States of America or any State or other political
subdivision thereof, or
(ii) any other jurisdiction in which either Obligor or any
Subsidiary conducts all or any part of its business, or which asserts
jurisdiction over any properties of either Obligor or any Subsidiary,
or
(b) any entity exercising executive, legislative, judicial,
regulatory or administrative functions of, or pertaining to, any such
government.
"GUARANTEE" is defined in Section 1.1.
"GUARANTEED OBLIGATIONS" is defined in Section 13.1.
"GUARANTOR" means Midas, Inc., a Delaware corporation, or any
successor thereto that shall have become such in the manner prescribed in
Section 10.2.
"GUARANTY" means, with respect to any Person, any obligation (except
the endorsement in the ordinary course of business of negotiable instruments for
deposit or collection) of such Person guaranteeing or in effect guaranteeing any
indebtedness, dividend or other obligation of any other Person in any manner,
whether directly or indirectly, including (without limitation) obligations
incurred through an agreement, contingent or otherwise, by such Person:
(a) to purchase such indebtedness or obligation or any property
constituting security therefor;
4
<PAGE>
SCHEDULE B
----------
(b) to advance or supply funds (i) for the purchase or payment of such
indebtedness or obligation, or (ii) to maintain any working capital or
other balance sheet condition or any income statement condition of any
other Person or otherwise to advance or make available funds for the
purchase or payment of such indebtedness or obligation;
(c) to lease properties or to purchase properties or services
primarily for the purpose of assuring the owner of such indebtedness or
obligation of the ability of any other Person to make payment of the
indebtedness or obligation; or
(d) otherwise to assure the owner of such indebtedness or obligation
against loss in respect thereof.
In any computation of the indebtedness or other liabilities of the obligor under
any Guaranty, the indebtedness or other obligations that are the subject of such
Guaranty shall be assumed to be direct obligations of such obligor.
"HAZARDOUS MATERIAL" means any and all pollutants, toxic or hazardous
wastes or any other substances that might pose a hazard to health or safety, the
removal of which may be required or the generation, manufacture, refining,
production, processing, treatment, storage, handling, transportation, transfer,
use, disposal, release, discharge, spillage, seepage, or filtration of which is
or shall be restricted, prohibited or penalized by any applicable law
(including, without limitation, asbestos, urea formaldehyde foam insulation and
polychlorinated biphenyls).
"HOLDER" means, with respect to any Note, the Person in whose name
such Note is registered in the register maintained by the Company pursuant to
Section 14.1.
"INDEBTEDNESS" with respect to any Person means, at any time, without
duplication,
(a) its liabilities for borrowed money;
(b) its liabilities for the deferred purchase price of property
acquired by such Person (excluding accounts payable arising in the ordinary
course of business but including all liabilities created or arising under
any conditional sale or other title retention agreement with respect to any
such property);
(c) its Capitalized Lease Obligations;
(d) all liabilities for borrowed money secured by any Lien with
respect to any property owned by such Person (whether or not it has assumed
or otherwise become liable for such liabilities);
(e) all its liabilities in respect of letters of credit or instruments
serving a similar function issued or accepted for its account by banks and
other financial institutions; and
5
<PAGE>
SCHEDULE B
----------
(f) any Guaranty of such Person with respect to liabilities of a type
described in any of clauses (a) through (e) hereof.
Indebtedness of any Person shall include all obligations of such Person of the
character described in clauses (a) through (f) to the extent such Person remains
legally liable in respect thereof notwithstanding that any such obligation is
deemed to be extinguished under GAAP.
"INSTITUTIONAL INVESTOR" means (a) any original purchaser of a Note,
(b) any holder of a Note holding more than 5% of the aggregate principal amount
of the Notes then outstanding, and (c) any bank, trust company, savings and loan
association or other financial institution, any pension plan, any investment
company, any insurance company, any broker or dealer, or any other similar
financial institution or entity, regardless of legal form.
"LEASE RENTALS" means, for any period, the sum of the rental and other
obligations required to be paid by the lessee under any lease, excluding any
amounts required to be paid by the lessee (whether or not designated as rental
or additional rental) on account of maintenance and repairs, insurance, taxes
and similar charges.
"LIEN" means, with respect to any Person, any mortgage, lien, pledge,
charge, security interest or other encumbrance, or any interest or title of any
vendor, lessor, lender or other secured party to or of such Person under any
conditional sale or other title retention agreement or Capital Lease, upon or
with respect to any property or asset of such Person (including in the case of
stock, stockholder agreements, voting trust agreements and all similar
arrangements).
"MAKE-WHOLE AMOUNT" is defined in Section 8.7.
"MATERIAL" means material in relation to the business, operations,
affairs, financial condition, assets, properties, or prospects of the Guarantor
and its Subsidiaries taken as a whole.
"MATERIAL ADVERSE EFFECT" means a material adverse effect on (a) the
business, operations, affairs, financial condition, assets or properties of the
Guarantor and its Subsidiaries taken as a whole, or (b) the ability of the
Company or the Guarantor to perform its obligations under this Agreement or the
Notes (in the case of the Company) or the Guarantees (in the case of the
Guarantor), or (c) the validity or enforceability of this Agreement, the Notes
or the Guarantees.
"MEMORANDUM" is defined in Section 5.3.
"MULTIEMPLOYER PLAN" means any Plan that is a "multiemployer plan" (as
such term is defined in section 4001(a)(3) of ERISA).
"NAIC ANNUAL STATEMENT" is defined in Section 6.2(a).
"NOTES" is defined in Section 1.
"OBLIGORS" is defined in the first paragraph of this Agreement.
6
<PAGE>
SCHEDULE B
----------
"OFFICER'S CERTIFICATE" means a certificate of a Senior Financial
Officer or of any other officer of the Company or the Guarantor, as applicable,
whose responsibilities extend to the subject matter of such certificate.
"PBGC" means the Pension Benefit Guaranty Corporation referred to and
defined in ERISA or any successor thereto.
"PERSON" means an individual, partnership, corporation, limited
liability company, association, trust, unincorporated organization, or a
government or agency or political subdivision thereof.
"PLAN" means an "employee benefit plan" (as defined in section 3(3) of
ERISA) that is or, within the preceding five years, has been established or
maintained, or to which contributions are or, within the preceding five years,
have been made or required to be made, by either Obligor or any ERISA Affiliate
or with respect to which either Obligor or any ERISA Affiliate may have any
liability.
"PREFERRED STOCK" means any class of capital stock of a corporation
that is preferred over any other class of capital stock of such corporation as
to the payment of dividends or the payment of any amount upon liquidation or
dissolution of such corporation.
"PRIORITY DEBT" means the sum (without duplication) of (i) the
aggregate unpaid principal amount of Indebtedness of the Guarantor and any
Subsidiary secured by Liens (other than Liens permitted by Section 10.3(a)
through (l)), plus (ii) all outstanding Attributable Debt of the Guarantor and
any Subsidiary (other than Attributable Debt with respect to any Sale and
Leaseback Transaction permitted by Section 10.4(b)), plus (iii) the aggregate
unpaid principal amount of all Indebtedness of all Subsidiaries (other than
Indebtedness of the Company or Indebtedness permitted by Section 10.5(a) through
(c)).
"PROPERTY" or "PROPERTIES" means, unless otherwise specifically
limited, real or personal property of any kind, tangible or intangible, choate
or inchoate.
"PTE" means a Prohibited Transaction Exemption issued by the
Department of Labor.
"PURCHASER" is defined in the first paragraph of this Agreement.
"QPAM EXEMPTION" means Prohibited Transaction Class Exemption 84-14
issued by the United States Department of Labor.
"REQUIRED HOLDERS" means, at any time, the holders of more than 50% in
principal amount of the Notes at the time outstanding (exclusive of Notes then
owned by either Obligor or any of their respective Affiliates).
7
<PAGE>
SCHEDULE B
----------
"RESPONSIBLE OFFICER" means any Senior Financial Officer and any other
officer of the Company or the Guarantor with responsibility for the
administration of the relevant portion of this agreement.
"SALE AND LEASEBACK TRANSACTION" means a transaction or series of
transactions pursuant to which the Guarantor or any Subsidiary shall sell or
transfer to any Person any property, whether now owned or hereafter acquired,
and, as part of the same transaction or series of transactions, the Guarantor or
any Subsidiary shall lease as lessee, or similarly acquire the right to
possession or use of, such property for a period in excess of three years.
"SECURITIES ACT" means the U.S. Securities Act of 1933, as amended
from time to time.
"SENIOR FINANCIAL OFFICER" means the chief financial officer, the
principal accounting officer, the treasurer or the controller of the Company or
the Guarantor, as applicable.
"SPECIAL CHARGES" means (i) the pre-tax non-recurring charge of
$32,100,000 taken by the Company and its international Affiliates in 1997, (ii)
the pre-tax expenses of $35,500,000, with respect to the disposition of stores
operated by the Guarantor or its Subsidiaries in the United States, taken by the
Company and its international Affiliates in 1997, and (iii) the expenses of
$18,000,000 with respect to the charge taken by Whitman in 1997.
"SIGNIFICANT SUBSIDIARY" means, as of any date of determination, the
Company and any other Subsidiary (i) that, together with its Subsidiaries,
produced more than 10% of Consolidated Net Income for the fiscal year then most
recently ended or (ii) the assets of which, together with the assets of its
Subsidiaries, exceeded 10% of Consolidated Total Assets as of the last day of
the fiscal year then most recently ended (in each case calculated on a pro forma
basis in the case of any Person that became a Subsidiary during or after the end
of such fiscal year).
"SOURCE" is defined in Section 6.2.
"SUBSIDIARY" means, as to any Person, any corporation, association or
other business entity in which such Person or one or more of its Subsidiaries or
such Person and one or more of its Subsidiaries owns sufficient equity or voting
interests to enable it or them (as a group) ordinarily, in the absence of
contingencies, to elect a majority of the directors (or Persons performing
similar functions) of such entity, and any partnership or joint venture if more
than a 50% interest in the profits or capital thereof is owned by such Person or
one or more of its Subsidiaries or such Person and one or more of its
Subsidiaries (unless such partnership or joint venture can and does ordinarily
take major business actions without the prior approval of such Person or one or
more of its Subsidiaries). Unless the context otherwise clearly requires, any
reference to a "Subsidiary" is a reference to a Subsidiary of the Guarantor.
"VOTING STOCK" means, with respect to any Person, any shares of stock
or other equity interests of any class or classes of such Person whose holders
are entitled under ordinary circumstances (irrespective of whether at the time
stock or other equity interests of any other class
8
<PAGE>
SCHEDULE B
----------
or classes shall have or might have voting power by the reason of the happening
of any contingency) to vote for the election of a majority of the directors,
managers, trustees or other governing body of such Person.
"WHITMAN" means Whitman Corporation, a Delaware corporation.
"WHOLLY-OWNED SUBSIDIARY" means, at any time, any Subsidiary all of
the equity interests (except directors' qualifying shares) and voting interests
of which are owned by any one or more of the Guarantor and the Guarantor's other
Wholly-Owned Subsidiaries.
9
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-26-1998
<PERIOD-END> JUN-27-1998
<CASH> 10,800
<SECURITIES> 0
<RECEIVABLES> 76,700
<ALLOWANCES> 3,500
<INVENTORY> 73,800
<CURRENT-ASSETS> 179,000
<PP&E> 320,600
<DEPRECIATION> 133,800
<TOTAL-ASSETS> 410,100
<CURRENT-LIABILITIES> 117,300
<BONDS> 161,500<F1>
0
0
<COMMON> 27,500
<OTHER-SE> 81,200
<TOTAL-LIABILITY-AND-EQUITY> 410,100
<SALES> 273,000
<TOTAL-REVENUES> 273,000
<CGS> 130,100
<TOTAL-COSTS> 239,600<F2>
<OTHER-EXPENSES> 300
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 7,200
<INCOME-PRETAX> 25,900
<INCOME-TAX> 10,500
<INCOME-CONTINUING> 15,400
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 15,400
<EPS-PRIMARY> 0.91
<EPS-DILUTED> 0.89
<FN>
<F1> INCLUDES: CAPITALIZED LEASE OBLIGATIONS AND LONG-TERM DEBT OF $13,000 AND
$148,500, RESPECTIVELY.
<F2> INCLUDES: COST OF GOODS SOLD AND S, G & A EXPENSES OF $130,100 AND
$109,500, RESPECTIVELY.
</FN>
</TABLE>
