[Execution Copy]
SEPARATION AGREEMENT
by and between
HARNISCHFEGER CORPORATION
and
MATERIAL HANDLING, LLC
October 26, 1997
TABLE OF CONTENTS
Page
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1. Definitions............................................................1
2. Exchange of Consideration..............................................6
2.1 Consideration by HarnCo..........................................6
2.2 Consideration by MHE LLC.........................................6
3. Transferred Assets, Leased Personal Property, Retained Assets and
Shared Facilities......................................................6
3.1 Transferred Assets...............................................6
3.2 Leased Personal Property.........................................8
3.3 Retained Assets..................................................8
3.4 Consents and Approvals...........................................9
3.5 Deferred Real Estate Conveyance.................................10
3.6 Shared Facilities...............................................10
4. Assumption of Liabilities.............................................10
4.1 Assumed Liabilities.............................................10
4.2 Absolute Assumption.............................................12
4.3 Retained Liabilities............................................12
4.4 Payments Due to Withheld Consents...............................12
5. No Representations and Warranties.....................................12
6. Authorizations........................................................13
7. Employees and Employment..............................................13
7.1 Employment......................................................13
7.2 Collective Bargaining Agreements and Employment Contracts.......13
8. Use of HarnCo's Trademarks............................................14
9. Other Effective Date and Post-Effective Date Covenants................14
9.1 Intercompany Cash Management....................................14
9.2 Letters of Credit...............................................14
10. Indemnification Matters...............................................14
10.1 Indemnification.................................................14
10.2 Notice of Circumstance..........................................16
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10.3 Scope of Indemnification........................................17
10.4 Indemnity for Certain Environmental Liabilities.................17
11. Limitation on Consequential Damages...................................17
12. Further Assurances....................................................17
13. Transfer Tax Matters..................................................17
13.1 Transaction Taxes...............................................17
13.2 Property Taxes..................................................17
13.3 Unemployment Tax Experience.....................................18
13.4 Preparation of W-2's, Etc.......................................18
14. Post-Effective Date Tax Matters.......................................18
14.1 Filing of Tax Returns...........................................18
14.2 Payment of Taxes................................................18
14.3 Cooperation and Records Retention...............................19
14.4 Liability for Assessments or Refunds............................19
15. Bulk Sales or Transfer Laws...........................................20
16. Miscellaneous.........................................................20
16.1 Entire Agreement................................................20
16.2 Waivers.........................................................20
16.3 Succession and Assignment.......................................20
16.4 Headings........................................................20
16.5 Notices. .......................................................20
16.6 Counterparts....................................................21
16.7 Expenses........................................................21
16.8 Severability....................................................21
16.9 Governing Law...................................................21
16.10 Submission to Jurisdiction......................................21
16.11 Construction....................................................22
16.12 Incorporation of Exhibits and Schedules.........................22
16.13 No Third Party Beneficiaries....................................22
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LIST OF SCHEDULES
AND EXHIBITS
Schedule 1.24 Leased Personal Property
Schedule 1.37 Other MHE Subsidiaries
Schedule 3.1.4 Excluded Tooling
Schedule 3.1.11.1 Owned Real Estate
Schedule 3.1.11.2 Leased Real Estate
Schedule 3.6 Shared Facilities
Schedule 4.1.6.2 Stock and Asset Purchase Agreements
Schedule 4.1.8 Assumed Litigation
EXHIBIT A MHE License Agreement
EXHIBIT B P&H License Agreement
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SEPARATION AGREEMENT
This SEPARATION AGREEMENT (the "Agreement"), dated as of October 26, 1997,
is between Harnischfeger Corporation, a Delaware corporation ("HarnCo"), and
Material Handling, LLC, a Delaware limited liability company ("MHE LLC").
RECITALS
WHEREAS, HarnCo desires to convey, assign and lease certain assets of the
MHE Division to MHE LLC in exchange for MHE LLC's assumption of the Assumed
Liabilities and MHE LLC's issuance to HarnCo of the MHE LLC Interests; and
WHEREAS, MHE LLC desires to accept the conveyance, assignment and lease
from HarnCo of such assets, to assume the Assumed Liabilities, and to issue the
MHE LLC Interests to HarnCo.
THEREFORE, the parties hereby agree as follows:
1. Definitions. The following terms shall, for the purposes of this Agreement,
have the following meanings:
1.1 "Active Employees" means all employees of the MHE Division who are
either actively employed or are on layoff, leave of absence or short-term
disability on the Effective Date.
1.2 "Agreement" has the meaning set forth in the preface above.
1.3 "Action" means any actual or threatened action, suit, arbitration,
inquiry, proceeding, or investigation by or before any court, agency, tribunal,
arbitrator, mediator, or Governmental Body.
1.4 "Affiliate" means, with respect to any Person, any other Person that,
directly or indirectly through one or more intermediaries, controls, is
controlled by, or is under common control with, the first mentioned Person.
1.5 "Assets" means the Transferred Assets and Leased Personal Property.
1.6 "Assumed Liabilities" shall have the meaning specified in Section 4.1.
1.7 "Business" means (i) the original equipment business for industrial
cranes, hoists, winches, and other related types of industrial "through-the-air"
material handling equipment, and (ii) aftermarket products and services for the
products described in clause (i), including inspection, repair, and maintenance,
in each case as performed immediately prior to the Effective Date by HarnCo and
the Other MHE Subsidiaries.
1.8 "Cash" means cash and cash equivalents (including marketable
securities and short term investments).
1.9 "Code" means the Internal Revenue Code of 1986, as amended.
1.10 "Contracts" means (i) contracts, agreements, undertakings,
commitments, licenses, permits, authorizations, instruments, representations and
warranties, certificates, instruments granting a Security Interest, guaranties,
arrangements, license and technology agreements (including software licenses),
asset and stock purchase and sale agreements, releases, settlements,
indemnities, leases and confidentiality or nondisclosure agreements, in each
case which were undertaken for or made on behalf of or for the MHE Division by
HarnCo; (ii) the right to receive payment for Products sold or services rendered
pursuant to, and to receive goods and services pursuant to, such contracts; and
(iii) the rights under any of the foregoing, including the right to assert
claims and take other rightful actions in respect of breaches, defaults and
other violations of such contracts.
1.11 "Effective Date" shall mean October 26, 1997.
1.12 "Effective Time" shall mean 12:01 a.m. on the Effective Date.
1.13 "Employee Benefit Plan" means the employee welfare benefit plans as
defined in Section 3(1) of ERISA, and the employee pension benefit plans as
defined in Section 3(2) of ERISA currently or previously maintained by any
HarnCo Company for the benefit of employees of the MHE Division.
1.14 "ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
1.15 "Environmental and Safety Requirements" means all federal, state,
local and foreign statutes, regulations, ordinances and similar provisions
having the force or effect of law, all judicial and administrative orders and
determinations, all contractual obligations and all common law concerning public
health and safety, worker health and safety, and pollution or protection of the
environment, including without limitation all those relating to the presence,
use, production, generation, handling, transportation, treatment, storage,
disposal, distribution, labeling, testing, processing, discharge, release,
threatened release, control, or cleanup of any hazardous materials, substances
or wastes, as such of the foregoing are enacted or in effect prior to, on, or
after the Effective Date.
1.16 "Environmental Liability" means any Liability or investigatory,
remedial or corrective obligation whatsoever arising under any Environmental and
Safety Requirements, including without limitation any liability pursuant to the
Comprehensive Environmental Response, Compensation and Liability Act of 1980
("CERCLA"), as amended, or otherwise relating to handling, treatment, storage,
onsite or offsite disposal, release or threatened release of hazardous
materials, substances or wastes, personal injury, property damage or natural
resources damage.
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1.17 "Governmental Body" means any country, any national body, any state,
province, municipality, subdivision of any of the foregoing, any agency,
governmental department, court, entity, commission, board, ministry, bureau,
locality or authority of any of the foregoing, or any quasi-governmental or
private body exercising any regulatory, taxing, importing, exporting, or other
governmental or quasi-governmental function.
1.18 "HarnCo" has the meaning set forth in the preface above.
1.19 "HarnCo Companies" means (i) HarnCo, (ii) HarnCo's Affiliates (but
excluding MHE LLC and the Other MHE Subsidiaries) and (iii) any direct or
indirect Predecessors of the Persons covered by clauses (i) and (ii).
1.20 "HarnCo Indemnified Parties" means the HarnCo Companies and their
respective officers, directors, employees, agents, representatives,
shareholders, successors and assigns.
1.21 "HCHC" means HCHC, Inc., a Delaware corporation and wholly-owned
subsidiary of HarnCo.
1.22 "Income Taxes" means all U.S. federal, state and local taxes on,
based on, measured by or with respect to income, net worth or capital (including
interest and penalties thereon).
1.23 "Intellectual Property" means all (i) patents and pending patent
applications; (ii) trademark, service mark and trade name registrations and
applications therefor; (iii) copyright registrations and applications therefor;
and (iv) licenses (other than licenses for the use of commercially available
computer software and related documentation) and similar agreements for the use
of any intellectual property (including patents, unpatented inventions and
technology, trademarks, service marks and trade names, copyrights and
copyrightable works, know-how and trade secrets).
1.24 "Leased Personal Property" means all leased machines, equipment,
software and other items of personal property, including those listed in
Schedule 1.24.
1.25 "Liability" means any commitment, contract, agreement, obligation,
liability, debt, Tax, payment, expense, cost, fee, loss, damage, demand, claim,
breach, default, Action, fine, penalty, judgment, settlement, release,
indemnity, warranty, representation or misrepresentation, certification, injury,
death, accident, tort, or product liability, whether resulting from, arising out
of or relating to facts, actions, events or conditions that occurred or existed
in whole or in part before, on or after the Effective Date, whether accrued or
unaccrued, whether absolute, contingent or otherwise, whether liquidated or
unliquidated, whether due, to become due, or otherwise, whether known or
unknown, whether written, oral or otherwise, whether direct, indirect, special,
incidental, consequential, punitive or otherwise, and whether asserted or
unasserted, including those arising under any law (including any statute, the
common law or any rule, order, instruction, directive, regulation, by-law,
ordinance, or requirement of any
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Governmental Body or imposed by any court or any arbitrator in a binding
arbitration), and without regard to (i) whether based on theories of negligence,
breach of warranty, strict liability, breach of contract, violation of any
consumer protection legislation passed by any Governmental Body, absolute
liability or arising as an obligation of contribution, or the violation of any
other applicable legal duty or standard, (ii) the cause thereof or the
negligence of any Person, whether such negligence be sole, joint or concurrent,
active or passive, or (iii) whether arising before, on or after the Effective
Date. Unless otherwise qualified, all references to Liabilities herein shall
include Environmental Liabilities.
1.26 "MHE Benefits" shall have the meaning set forth in Section 7.1.
1.27 "MHE Division" means the P&H Material Handling Division of HarnCo,
through which HarnCo (along with the Other MHE Subsidiaries) conducted the
Business prior to the Effective Date; provided, the MHE Division shall not be
construed to include any of the Other MHE Subsidiaries.
1.28 "MHE LLC" has the meaning set forth in the preface above.
1.29 "MHE License Agreement" means the Patent, Invention, Know-How and
Trademark License Agreement between MHE LLC and MHE Technologies, Inc., attached
hereto as Exhibit A.
1.30 "MHE LLC Interests" means the limited liability company membership
interests of MHE LLC.
1.31 "Mining Division" means the P&H Mining Division of HarnCo.
1.32 "National Avenue Facility" means the HarnCo facility located at 4400
W. National Avenue, Milwaukee, WI 53214-3684.
1.33 "Oak Creek Facility" means the HarnCo facility located at 315 W.
Forest Hill Avenue, Oak Creek, Wisconsin 53154-2199.
1.34 "Orchard Street Facility" means that HarnCo Facility located at 4107
W. Orchard Street, Milwaukee, WI 53215-1707.
1.35 "Ordinary Course of Business" means the ordinary course of business
consistent with past custom and practice.
1.36 "Other Agreements" means (i) the MHE License Agreement and (ii) the
P&H License Agreement.
1.37 "Other MHE Subsidiaries" means those Subsidiaries and Affiliates of
HarnCo which are listed on Schedule 1.37, each of which is principally engaged
in the Business.
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1.38 "P&H License Agreement" means the Corporate Name and Trademark
License Agreement between MHE LLC and Harnischfeger Technologies, Inc., attached
hereto as Exhibit B.
1.39 "Parties" means HarnCo and MHE LLC, each of which is individually
referred to as a "Party."
1.40 "Permit" means governmental licenses, permits, approvals,
authorizations, license applications, and license amendment applications and all
governmental or third party product registrations or approvals.
1.41 "Person" means an individual, a partnership, a limited liability
company, a corporation, a division of a corporation (if applicable), an
association, a joint stock company, a trust, a joint venture, an unincorporated
organization, or a governmental entity (or any department, agency, or political
subdivision thereof).
1.42 "Predecessor" means a Person who has previously held an interest in
another Person, including a Person who conveyed, transferred or assigned all or
substantially all of its assets to the succeeding Person or a Person who was
merged or amalgamated into or consolidated with the succeeding Person.
1.43 "Products" means those industrial "through-the-air" material handling
equipment products (i) researched, developed, engineered, manufactured,
distributed, sold or marketed, or (ii) serviced, inspected, maintained, or
repaired by the MHE Division or its Predecessors, in each case prior to the
Effective Date, including original equipment cranes, hoists, and winches, other
related types of industrial "through-the-air" material handling equipment, and
aftermarket products; provided, however, that Products shall not include any
mobile construction material handling equipment or related products of the type
produced by the former Construction Equipment Division of HarnCo.
1.44 "Retained Assets" shall have the meaning described in Section 3.3.
1.45 "Retained Liabilities" shall have the meaning described in Section
4.3.
1.46 "Retired and Inactive Employees" means all former employees of the
MHE Division who were not employed by the MHE Division or any HarnCo Company on
the Effective Date, or (to the extent applicable) beneficiaries of such former
employees.
1.47 "Return" means any return, declaration, report, claim for refund, or
information return or statement relating to Income Taxes, including any schedule
or attachment thereto.
1.48 "Security Interest" means any mortgage, pledge, lien, encumbrance,
charge, or other security interest, other than (a) mechanic's, materialmen's,
and similar liens, (b) liens for taxes not yet due and payable or for taxes that
the taxpayer is contesting in good faith through appropriate proceedings, (c)
purchase money liens and liens securing rental payments under
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capital lease arrangements, and (d) other liens arising in the Ordinary Course
of Business and not incurred in connection with the borrowing of money.
1.49 "Shared Facilities" has the meaning set forth in Section 3.6.
1.50 "Taxes" means all federal, state, provincial, local and foreign
income, profits, franchise, unincorporated business, withholding, capital,
general corporate, customs duties, environmental (including taxes under Code
Section 59A), disability, registration, alternative, add-on, minimum, estimated,
sales, goods and services, use, occupation, property, severance, production,
excise, recording, ad valorem, gains, transfer, value-added, unemployment
compensation, social security premium, privilege and any and all other taxes
(including interest, additions to tax and penalties thereon, and interest on
such additions to tax and penalties).
1.51 "Termination Date" means the close of business on the date that the
MHE LLC Interests are transferred to a Person that is not an Affiliate of
HarnCo.
1.52 "Transferred Assets" shall have the meaning described in Section 3.1.
1.53 "Warranty Obligations" shall mean any obligation to repair or replace
defective products for a period of time of one (1) year after the date of
delivery by HarnCo to an end user.
1.54 "Xtek Dispute" means the lawsuit entitled Harnischfeger Corporation
v. Xtek, currently pending in Cincinnati, Ohio.
2. Exchange of Consideration.
2.1 Consideration by HarnCo. On the terms and subject to the conditions
set forth in this Agreement, HarnCo hereby (i) conveys and assigns to MHE LLC
all of HarnCo's right, title and interest in and to the Transferred Assets, (ii)
subleases to MHE LLC all of HarnCo's rights and interests in the Leased Personal
Property and (iii) leases or subleases the specified areas of the Shared
Facilities to MHE LLC. Such conveyances, assignments, leases and sub-leases
shall occur and be effective as of the Effective Time. In addition, HarnCo has
caused MHE Technologies, Inc. to execute and deliver the MHE License Agreement
and Harnischfeger Technologies, Inc. to execute and deliver the P&H License
Agreement.
2.2 Consideration by MHE LLC. MHE LLC hereby assumes and agrees to pay,
honor, discharge and be fully liable for all of the Assumed Liabilities. Such
assumption shall occur and be effective as of the Effective Time. MHE LLC has
also executed and delivered both the MHE License Agreement and the P&H License
Agreement, and has issued to HarnCo the MHE LLC Interests.
3. Transferred Assets, Leased Personal Property, Retained Assets and Shared
Facilities.
3.1 Transferred Assets. The term "Transferred Assets" shall mean those
assets of the
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MHE Division specified in Sections 3.1.1 through 3.1.14 which, immediately prior
to the Effective Time, are held by HarnCo and used exclusively by the MHE
Division. The Transferred Assets shall not include any Retained Assets.
3.1.1 Receivables. Billed and unbilled accounts and notes receivable
(including intercompany and intracompany accounts and notes receivable held by
the MHE Division), net of reserves for bad debt.
3.1.2 Inventories. Inventories and related reserves of or with
respect to Products manufactured by the MHE Division, its subsidiaries or
Predecessors, including finished goods, finished components, consigned
inventory, work-in-process, raw materials, scrap, purchased parts, packaging and
supplies, and perishable tools.
3.1.3 Current Assets. Prepaid expenses and deposits.
3.1.4 Fixed Assets. Machinery, equipment, furniture, furnishings,
personal computers and servers (and related peripheral hardware), office
equipment, printing machines, reproduction equipment tools, jigs, dies, molds
and parts and similar property (including any of the foregoing purchased subject
to any conditional sales or title retention agreement in favor of any other
Person, but excluding any of the foregoing which is Leased Personal Property),
and all fixed assets of the foregoing nature located at the Oak Creek Facility
and all tooling set forth on Schedule 3.1.4.
3.1.5 Claims. Claims, deposits, prepayments, refunds, causes of
action, choses in action, rights of recovery, rights of set off, and rights of
recoupment (collectively a "claim" for the purposes of this Section 3.1.5). With
respect to the Xtek Dispute, such claim shall be for the full amount of the
final resolution of such claim (whether by adjudication or otherwise), despite
any shared nature or non-exclusive aspect of such claim.
3.1.6 Contracts. All Contracts.
3.1.7 Vehicles. Automobiles, trucks, and other vehicles listed on
Schedule 1.24.
3.1.8 Office Supplies. Subject to Article 8, office supplies,
stationery and forms.
3.1.9 Bonds and Letters of Credit. Bonds, letters of credit and
other evidences of indebtedness furnished by any other Person to the MHE
Division and the right to receive payments from any other Person under or in
respect of any such instrument.
3.1.10 Books and Records. Books, records, manuals and other
materials, including advertising matter, catalogs, price lists, credit
information, cost information, correspondence, mailing lists, lists of
customers, distribution lists, photographs, production data, sales and
promotional materials and records, purchasing materials and records, personnel
records,
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manufacturing and quality control records and procedures, blueprints, research
and development files, records, data and laboratory books, patent disclosures,
media materials and plates, accounting records and sales order files.
3.1.11 Real Estate.
3.1.11.1 The owned real estate listed in Schedule 3.1.11.1
(together with the buildings, improvements, and fixtures thereon) and easements,
rights-of-way, and other appurtenants thereto, which shall be conveyed by
quitclaim deed.
3.1.11.2 Subject to each applicable lease (whether oral or
written), the leasehold interest in the leased real estate listed in Schedule
3.1.11.2. Where such conveyance or assignment involves a sublease of such real
property between HarnCo and MHE LLC, HarnCo shall enjoy the rights (but not the
obligations) under the applicable terms and conditions as if HarnCo were the
primary lessor under such lease.
3.1.12 Permits. All Permits.
3.1.13 Data Assets. All electronic data residing in the various
shared or HarnCo managed systems that is related to the MHE Division, including
information for processes, products, bills of material, routings, customers,
employees, financial information, vendors, drawings, inventory, and storerooms,
and any data stored off-line necessary for conducting the MHE Division's
business activities.
3.1.14 Control Test Facility Equipment. The control test facility
equipment located at the Orchard Street Facility utilized solely for services to
the MHE Division.
3.2 Leased Personal Property. Subject to Section 3.4, the Leased Personal
Property shall be subleased to MHE LLC, with MHE LLC being bound by and subject
to all such terms and conditions and entitled to all rights as if it were the
lessee thereunder. As between HarnCo and MHE LLC, HarnCo shall enjoy the rights
(but not the obligations) under the applicable terms and conditions as if HarnCo
were the primary lessor under each such lease.
3.3 Retained Assets. Notwithstanding anything herein to the contrary,
HarnCo shall retain and not convey, assign or lease, and MHE LLC shall not
purchase, acquire or lease, the following assets (collectively, the "Retained
Assets"):
3.3.1 Any and all stock and other ownership interests in the Other
MHE Subsidiaries, as well as any ownership interests in and notes receivable
from Century II, Inc. (formerly known as the Construction Equipment Division of
HarnCo and now known as PPM Cranes, Inc.)
3.3.2 Any and all of the rights of HarnCo under this Agreement or
the Other Agreements.
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3.3.3 Any and all refunds that relate to Taxes paid by HarnCo prior
to the Effective Time.
3.3.4 Any and all Employee Benefit Plans, including the plan assets
of the Harnischfeger Industries Salaried Employee's Retirement Plan and the
Harnischfeger Industries Hourly Employee's Retirement Pension Plan.
3.3.5 All Intellectual Property, including jointly used or shared
Intellectual Property.
3.3.6 Any and all Cash; provided that MHE LLC shall be able to draw
Cash from HarnCo pursuant to Section 9.1.
3.3.7 Any real estate owned, operated, used or leased by HarnCo
other than that listed in Schedules 3.1.11.1 and 3.1.11.2.
3.3.8 Any and all assets which, immediately prior to the Effective
Time, are not used exclusively by the MHE Division in conducting the Business,
whether or not such assets are otherwise listed in this Section 3.3.
3.3.9 The Workers' Compensation reserve as set forth on the balance
sheet of the MHE Division as of the Effective Date.
3.3.10 Telecommunications equipment and computer equipment on which
the Data Assets are stored.
3.3.11 Any and all actions, claims, causes of action, rights of
recovery, choses in action and rights of set off of any kind arising before, on
or after the Effective Date relating to the Retained Assets set forth above.
3.4 Consents and Approvals. This Agreement and the Other Agreements shall
not constitute an assignment, transfer or lease of any interest in any Asset (or
in any Shared Facility) if an assignment, transfer, lease or an attempt to make
such an assignment, transfer or lease (a) without the consent of or notice to a
third party would constitute a breach or violation or affect adversely the
rights of MHE LLC, HarnCo or any Affiliate of HarnCo thereunder or (b) is
restricted or prohibited by law, including all Environmental and Safety
Requirements. Any transfer, assignment or lease to MHE LLC by HarnCo of any
interest in any Asset (or in any Shared Facility) that requires filing with,
notice to, or the consent of a third party shall be made subject to such filing,
notice being given, or consent or approval being obtained. In the event such
consent or approval is not obtained on or prior to the Effective Date, HarnCo
shall continue to use commercially reasonable efforts to obtain any such
approval or consent until the earliest of (i) 180 days after the Effective Date,
(ii) such time as such consent or approval has been obtained or (iii) the date
HarnCo determines that the third party will not provide its consent or approval.
In the event HarnCo determines that the third party will not provide its consent
or approval (which determination shall be deemed to have been made if such
consent or approval has not been
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obtained 180 days after the Effective Date), HarnCo will cooperate with MHE LLC
in any lawful and feasible arrangement to provide MHE LLC with the benefits of
any such Asset (or Shared Facility), including performance by HarnCo as agent,
if commercially feasible; provided, however, that MHE LLC shall undertake to pay
or satisfy the corresponding Liabilities for the enjoyment of such benefits to
the extent MHE LLC would have been responsible therefor if such consent or
approval had been obtained. Notwithstanding the foregoing, the HarnCo Companies
shall have the right to terminate or cancel any Permit or Contract that is not
assigned within 180 days of the Effective Date. MHE LLC shall pay and discharge
any and all Liabilities incurred by any HarnCo Company after the Effective Date
in seeking to obtain or obtaining any consent or approval. MHE LLC acknowledges
that the benefits under certain Contracts are available to MHE LLC only until
the Termination Date. MHE LLC shall be responsible for negotiating with other
Persons that are parties to such Contracts to obtain future commitments, if any,
for such products or services after the Termination Date.
3.5 Deferred Real Estate Conveyance. Subject to Section 3.4, any real
estate that HarnCo is unable to convey or lease as required hereunder as of the
Effective Date will be conveyed or leased as soon as reasonably practicable
thereafter.
3.6 Shared Facilities. From and after the Effective Date and until the
Termination Date, MHE LLC may continue to occupy the shared facilities which are
identified in Schedule 3.6 (collectively the "Shared Facilities") in the manner
and in the areas and otherwise to the extent such occupancy has been conducted
immediately prior to the Effective Date.
4. Assumption of Liabilities.
4.1 Assumed Liabilities. The term "Assumed Liabilities" shall mean any and
all Liabilities of any HarnCo Company that result from, arise out of or relate
to (i) the MHE Division, (ii) the Business, (iii) the Transferred Assets, or
(iv) real property formerly owned or leased by any HarnCo Company and
exclusively or primarily operated or used for purposes of the MHE Division or
the Business, including any and all Liabilities associated with or of the nature
of those listed in Sections 4.1.1 through 4.1.12. The Assumed Liabilities shall
not include any Retained Liabilities.
4.1.1 Any and all billed or unbilled accounts and notes payable and
accrued liabilities (including intercompany and intracompany accounts and notes
payable and accrued liabilities of the MHE Division).
4.1.2 Active Employees and Retired and Inactive Employees, including
(i) liability for any salaries, wages, bonuses, incentive compensation, profit
sharing, tax equalization payments, vacation pay, sick leave, personal leave,
severance pay, wrongful dismissal and discrimination claims; (ii) except as set
forth in Section 4.3, liability for or under MHE Benefits and (iii) liability
arising from claims or litigation and liability arising from any injury, death,
loss, disability, occupational disease or claims under any workers' compensation
laws.
4.1.3 Claims by any Active Employee or Retired and Inactive Employee
under
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any law in respect of termination of employment or dismissal.
4.1.4 The owned and leased real estate listed on Schedules 3.1.11.1
and 3.1.11.2, respectively, the areas of the Shared Facilities occupied by MHE
LLC pursuant to Section 3.6, or any current or previous facility or office space
used in whole or primarily by the MHE Division, the operations of any of the
foregoing, and any on-site or off-site Environmental Liabilities related to any
of the foregoing.
4.1.5 Real and personal property taxes arising out of or related to
the MHE Division, whether for taxable periods before, on or after the Effective
Date.
4.1.6 All Contracts, including:
4.1.6.1 Any consulting, severance or employment agreements or
indemnities to officers or employees of the MHE Division.
4.1.6.2 Any stock purchase or asset purchase agreement, other
transfer agreement or merger document or any other agreement concerning the
acquisition or divestiture of any assets of the MHE Division or of the Business,
or any other agreement in any way concerning the MHE Division, the Assets or the
Business, or any portion thereof, including those listed on Schedule 4.1.6.2.
4.1.6.3 All Liabilities arising from, relating to or
associated with any breach or failure to perform with respect to such Contracts,
including liabilities arising from termination of distributors of the MHE
Division, except for Warranty Obligations for components manufactured by the
Mining Division delivered to end users prior to the Effective Date.
4.1.7 All Environmental Liabilities.
4.1.8 All Actions pending or threatened against, or otherwise
affecting, the MHE Division or the Business, including those listed on Schedule
4.1.8.
4.1.9 Warranty claims and product liability claims, including claims
for personal injury and exposure to asbestos, with respect to Products and
Services manufactured, sold or provided by any HarnCo Company or the Other MHE
Subsidiaries on or prior to the Effective Date.
4.1.10 All Leased Personal Property.
4.1.11 All Liabilities for violations of law relating to or arising
out of operations of the MHE Division or the Business prior to and on the
Effective Date, including Liabilities for actions taken or omissions made by
directors, officers, employees, agents or other representatives of HarnCo or any
Affiliate of HarnCo which relate to the MHE Division or the Business (regardless
of whether or not such actions were taken or omissions were made in the Ordinary
Course of Business), including any legal or regulatory consequences of such
actions or omissions.
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4.1.12 Any other agreements, commitments or obligations in any way
relating to the MHE Division or the Business by any HarnCo Company or the Other
MHE Subsidiaries under which any HarnCo Company has or may have any liability or
obligation after the Effective Time (whether primary or contingent).
4.2 Absolute Assumption. It is the intent of the parties that MHE LLC's
assumption of the Assumed Liabilities (including Environmental Liabilities)
under Section 2.2 shall be absolute. Upon, from and after the Effective Date,
MHE LLC shall, without any further responsibility or liability of or recourse to
any of the HarnCo Companies, absolutely and irrevocably assume and be solely
liable and responsible for the Assumed Liabilities. Neither HarnCo nor any of
the HarnCo Companies shall be liable to MHE LLC (or any of its Affiliates,
officers, directors, employees, agents or assigns) for any reason whatsoever (i)
on account of the Assumed Liabilities or (ii) on account of any obligations,
liabilities or expenses arising out of or associated with (or any litigation and
claims alleged to arise out of or be associated with) (A) the assets, business
and operations of MHE LLC following the Effective Date, (B) this Agreement or
any of the other agreements or instruments executed pursuant hereto or (C) any
other activities of the MHE Division (whether or not in the Ordinary Course of
Business and whether occurring before, on or after the Effective Date). MHE LLC
hereby waives and releases for itself and on behalf of the Other MHE
Subsidiaries (and their Affiliates) any claims, defenses, or claims for
contribution that they may have against HarnCo or any other HarnCo Company with
respect to the Assumed Liabilities.
4.3 Retained Liabilities. The term "Retained Liabilities" shall mean (i)
any and all Liabilities of MHE LLC for transaction taxes that HarnCo has agreed
to pay pursuant to Section 13.1, (ii) subject to Article 14, any and all
liabilities of MHE LLC for Taxes accrued on or before the Effective Date not
described in Section 4.1.5, (iii) any deferred compensation liability previously
deducted for book purposes but not yet deducted for tax purposes, (iv) any and
all liabilities with respect to medical, pension and savings plans of Retired
and Inactive Employees, including all liabilities relating to the Harnischfeger
Industries Salaried Employee's Retirement Plan and the Harnischfeger Industries
Hourly Employee's Retirement Pension Plan, (v) any and all Environmental
Liabilities of the HarnCo Companies relating to the ownership, operation or use
of the Shared Facilities or the Orchard Street Facility, and (vi) any and all
non-trade intercompany accounts payable to HCHC.
4.4 Payments Due to Withheld Consents. In connection with MHE LLC's
assumption of the Assumed Liabilities, HarnCo shall use commercially reasonable
efforts to obtain any necessary consents; provided, however, that HarnCo shall
not be obligated to incur any Liability with respect to or remain liable for any
Assumed Liability. With respect to any Contracts for which all necessary
consents have not been obtained within 180 days following the Effective Date,
HarnCo may, in its sole discretion, (i) require MHE LLC to pay to the applicable
payee(s) the amount necessary to settle the entire outstanding obligations in
accordance with the applicable Contracts, or any payoff associated with
termination or cancellation of such Contracts (pursuant to Section 3.4), (ii)
require MHE LLC to make the payments to the applicable payee as they
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become due in accordance with the applicable Contracts, or (iii) pay to the
applicable payee(s) the amount necessary to settle the entire outstanding
obligation in accordance with the applicable Contracts on behalf of MHE LLC,
with such payments being subject to reimbursement pursuant to Article 10. MHE
LLC agrees to make any such payments in accordance with instructions provided by
HarnCo.
5. No Representations and Warranties. Notwithstanding any contrary provisions
herein or in the Other Agreements, it is the explicit understanding of MHE LLC,
and MHE LLC hereby agrees, that neither HarnCo nor any other HarnCo Company, nor
any officer, director, employee or agent of any of the foregoing, is making any
representation or warranty whatsoever, express or implied. HARNCO, FOR ITSELF
AND ON BEHALF OF SUCH PERSONS, EXPRESSLY DISCLAIMS AND NEGATES ANY EXPRESS OR
IMPLIED WARRANTIES, INCLUDING THE WARRANTY OF FITNESS FOR A PARTICULAR PURPOSE
OR OF MERCHANTABILITY, THE CONDITION OR VALUE OF THE ASSETS, THE COLLECTIBILITY
OF RECEIVABLES, OR VALIDITY OF LEASES. HarnCo does not warrant any forecast or
financial performance information relating to the MHE Division or the Business.
HarnCo does not warrant the valuation of inventory, assets or the adequacy of
reserves on the books of the MHE Division or the Business. MHE LLC accepts the
Assets in their "AS IS, WHERE IS" CONDITION, WITH ALL FAULTS. Without in any way
limiting the disclaimer above, HarnCo further disclaims any and all warranties
or representations, whether express or implied, with respect to environmental,
health or safety matters, including any matters arising under Environmental and
Safety Requirements. MHE LLC hereby acknowledges the foregoing disclaimer and
limitation of warranty.
6. Authorizations. Each of HarnCo and MHE LLC covenants to, as promptly as
practicable after the Effective Date, (a) make, or cause to be made, all such
filings and submissions under laws, rules and, regulations as may be required to
consummate (i) the transfer of the Transferred Assets, the lease of the Leased
Personal Property and the occupancy arrangements for the Shared Facilities, (ii)
the assumption of the Assumed Liabilities and (iii) the other transactions
contemplated hereby in accordance with the terms of this Agreement, and (b) use
commercially reasonable efforts to take, or cause to be taken, all other actions
necessary, proper or advisable in order to fulfill the obligations hereunder. In
furtherance thereof, HarnCo and MHE LLC each agree to coordinate and cooperate
with one another in exchanging such information and supplying such assistance as
may be reasonably required by each in connection with the foregoing.
7. Employees and Employment.
7.1 Employment. As of the Effective Date, MHE LLC shall offer to employ
all Active Employees. All Active Employees shall become employees of MHE LLC on
the Effective Date. MHE LLC shall promptly notify HarnCo of any Active Employee
that does not accept employment. MHE LLC shall, until the Termination Date and
at its own expense, provide all Active Employees with the same pension benefit
plans and welfare benefit plans that are provided under the Employee Benefit
Plans and other benefit programs, policies and arrangements (the "MHE Benefits")
for such Active Employees immediately prior to the Effective Date. In general,
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under such MHE Benefits adopted by MHE LLC, all periods of service with any
HarnCo Company shall be counted for all purposes.
7.2 Collective Bargaining Agreements and Employment Contracts. As soon as
practicable after the Effective Date, MHE LLC shall enter into a new collective
bargaining agreement with United Steelworkers of America, Local No. 1114
covering Active Employees and Retired and Inactive Employees. On the Effective
Date, MHE LLC shall assume all liability for all individual or group employment
contracts that are in effect between HarnCo and any Active Employee or Retired
and Inactive Employee or group of Active Employees or Retired and Inactive
Employees.
8. Use of HarnCo's Trademarks. Except with respect to Intellectual Property set
forth in the License Agreement and the P&H License Agreement (the use of which
shall be governed by each such agreement), MHE LLC shall be entitled on a
non-exclusive, non-transferable, royalty free basis to distribute their sales
aids, sales literature, advertising materials, catalogues, inventory and
packaging materials, invoicing or purchasing forms existing on the Effective
Date that bear any trademark, logo, or corporate name of Harnischfeger
Corporation, Harnischfeger Industries, Inc. or any other HarnCo Company
(collectively, the "Harnischfeger Marks"), but only until the existing inventory
is depleted or for a period of nine months after the Effective Date, whichever
first occurs. MHE LLC shall have no other rights to use the Harnischfeger Marks
as all or part of any trademark, logo, trade name or corporate name, except as
provided in the License Agreement. Within 30 days following the Termination
Date, MHE LLC agrees to mark all inventory, packaging materials, sales aids,
sales literature, advertising materials or catalogues that contain any of the
Harnischfeger Marks to indicate that MHE LLC is the seller of such Products.
9. Other Effective Date and Post-Effective Date Covenants.
9.1 Intercompany Cash Management. From the Effective Date until the end of
business on the day preceding the Termination Date, HarnCo shall provide Cash
to, and collect Cash from, MHE LLC in accordance with practices consistent with
the practices with respect to the MHE Division in effect as of the Effective
Date. Therefore, Cash equal to the excess of the aggregate daily deposits in MHE
LLC's collection accounts over the aggregate daily disbursement from MHE LLC's
disbursement accounts shall be provided by MHE LLC to HarnCo and, conversely,
Cash equal to the excess of the aggregate daily disbursement from MHE LLC's
disbursement accounts over the aggregate daily deposits in MHE LLC's collection
accounts shall be provided by HarnCo to MHE LLC.
9.2 Letters of Credit. From the Effective Date through the Termination
Date, HarnCo shall assist MHE LLC in and procuring letters of credit for the
benefit of MHE LLC which MHE LLC alone can not issue or procure. HarnCo shall
use reasonable efforts to assist MHE LLC in drawing under letters of credit
issued prior to the Effective Date in the name of any HarnCo Company for the
benefit of the MHE Division or MHE LLC.
10. Indemnification Matters.
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10.1 Indemnification. Subject to Sections 10.3 and 10.4, MHE LLC shall
indemnify, defend, save and hold harmless the HarnCo Indemnified Parties from
and against all claims, liabilities, obligations, losses, costs, costs of
defense (as and when incurred, and including all outside attorneys' and
consultants' fees) expenses, fines, taxes, levies, imposts, duties,
deficiencies, assessments, charges, penalties, allegations, demands, damages
(including but not limited to actual, punitive or consequential, foreseen or
unforeseen, known or unknown), settlements, awards, or judgments of any kind or
nature whatsoever, arising out of or associated with the Assumed Liabilities
(including the Environmental Liabilities) or that otherwise are or are alleged
to be related to, arising from, or associated with the ownership, use,
possession, operation or conduct of (i) the MHE Division, (ii) the Business, or
(iii) the Transferred Assets, in each case before, on or after the Effective
Date. The indemnities provided by MHE LLC hereunder shall extend to any and all
Assumed Liabilities with respect to environment, health, safety, personal
injury, property damage, employment, benefits, compensation, claims arising out
of contracts, product liability, warranty, merchantability or fitness for any
particular purpose of goods, conformity of goods to contractual requirements,
deceptive trade practice, misrepresentation, fraud or any other alleged or
actual breach or violation of any obligation or requirement arising out of, or
in connection with (i) the MHE Division, (ii) the Business, or (iii) the
Transferred Assets. MHE LLC's indemnification includes any Liability (including
reasonable fees and expenses of attorneys, accountants, consultants, and
experts) that the HarnCo Indemnified Parties incur, are subject to a claim for,
or are subject to, that are based upon, arising out of, relating to or otherwise
in respect of:
10.1.1 Any breach of any covenant or agreement of MHE LLC contained
in this Agreement or the Other Agreements.
10.1.2 The acts or omissions of any of the HarnCo Companies on
behalf of the MHE Division before or on the Effective Date and the acts or
omissions of MHE LLC after the Effective Date;
10.1.3 The conduct of the Business before, on or after the Effective
Date.
10.1.4 The conduct of the Business by any HarnCo Company or any of
the Other MHE Subsidiaries after the Effective Date;
10.1.5 The Assumed Liabilities (regardless of whether any such
Assumed Liability is assigned by any HarnCo Company or assumed by MHE LLC);
10.1.6 The Assets, regardless of MHE LLC's prior or continued use of
any such asset;
10.1.7 The conveyance, assignment, sale, lease or making available
of the Assets, or the license of the Intellectual Property pursuant to the
License Agreement;
10.1.8 Any and all amounts for which HarnCo may be liable on account
of any claims, administrative charges, self-insured retentions, deductibles,
retrospective premiums or
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fronting provisions in insurance policies, including as the result of any
uninsured period, insolvent insurance carriers or exhausted policies, arising
from or out of claims by or against MHE LLC, or the employees of any of the
foregoing, or claims by insurance carriers of any HarnCo Company for indemnity
arising from or out of claims by or against MHE LLC, acts or omissions of MHE
LLC, or related to the Business or any Product;
10.1.9 Any settlement or judgments in any litigation commenced by
one or more insurance carriers against any HarnCo Company on account of claims
by or against MHE LLC or the employees of the MHE Division or MHE LLC;
10.1.10 Any and all Liabilities incurred by any HarnCo Company
pursuant to its obligations hereunder or under any of the Other Agreements after
the Effective Date in seeking to obtain or obtaining any consent or approval to
assign, transfer or lease any interest in any asset or instrument, contract,
lease (whether oral or written), permit or benefit arising thereunder or
resulting therefrom;
10.1.11 Any Liability incurred by any HarnCo Company as a result of
the drawing against any letter of credit or performance bond issued by any
HarnCo Company on behalf of MHE LLC or the MHE Division;
10.1.12 Any Liability relating to the failure to comply with any
bulk sales or transfers laws in connection herewith or with any of the Other
Agreements; and
10.1.13 Any Liability relating to an Active Employee or Retired and
Inactive Employee (other than Retained Liabilities).
This indemnity obligation shall apply without regard to (i) whether the
Liability (including any Environmental Liability) is based on theories of
negligence, breach of warranty, strict liability, breach of contract, violation
of any consumer protection legislation passed by any Governmental Body, absolute
liability or arising as an obligation of contribution, or the violation of any
other applicable legal duty or standard, (ii) whether the Liability (including
any Environmental Liability) was caused by the negligence of any of the HarnCo
Indemnified Parties (whether such negligence be sole, joint or concurrent,
active or passive), or (iii) whether the Liability (including any Environmental
Liability) arose before, on or after the Effective Date.
10.2 Notice of Circumstance. After receipt by HarnCo of notice, or
HarnCo's actual discovery, of any action, proceeding, claim, demand, or
potential claims, which could give rise to a right of indemnification pursuant
to any provision of this Agreement (any of which is individually referred to as
a "Circumstance"), HarnCo shall give MHE LLC written notice describing the
Circumstance in reasonable detail; provided, however, that no delay by HarnCo in
notifying MHE LLC shall relieve MHE LLC from any Liability hereunder unless (and
then solely to the extent) MHE LLC's position is actually prejudiced by such
delay. In the event MHE LLC notifies HarnCo within 30 days after such notice
that MHE LLC is assuming the defense thereof, (i) MHE LLC will defend the HarnCo
Indemnified Parties against the Circumstance with counsel of its choice,
provided such counsel is reasonably satisfactory to HarnCo, (ii) the HarnCo
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Indemnified Parties may retain separate co-counsel at its or their sole cost and
expense (except that MHE LLC will be responsible for the fees and expenses for
the separate co-counsel to the extent HarnCo concludes reasonably that the
counsel selected by MHE LLC has a conflict of interest), (iii) the HarnCo
Indemnified Parties will not consent to the entry of any judgment or enter into
any settlement with respect to the Circumstance without the written consent of
MHE LLC and (iv) MHE LLC will not consent to the entry of any judgment with
respect to the Circumstance, or enter into any settlement which does not include
a provision whereby the plaintiff or claimant in the matter releases the HarnCo
Indemnified Parties from all Liability with respect thereto, without the written
consent of HarnCo. In the event MHE LLC does not notify HarnCo within 30 days
after HarnCo has given notice of the Circumstance that MHE LLC is assuming the
defense thereof, the HarnCo Indemnified Parties may defend against, or enter
into any settlement with respect to, the Circumstance in any manner the HarnCo
Indemnified Parties reasonably deem appropriate, at MHE LLC's cost.
10.3 Scope of Indemnification. Indemnification under this Article 10 shall
be in addition to any remedies the HarnCo Companies may have at law or equity.
There shall be no time limit as to MHE LLC's indemnification obligations
hereunder.
10.4 Indemnity for Certain Environmental Liabilities. MHE LLC understands
and agrees that its right to indemnification for matters described in Section
4.3(v) hereof shall constitute its sole recourse against the HarnCo Companies
with respect to environmental, health or safety matters and that it shall have
no other right of indemnification or any other right or remedy against the
HarnCo Companies with respect to any environmental, health or safety matters
(including without limitation all matters arising under CERCLA or any other
Environmental and Safety Requirements) arising from this Agreement or the
transactions contemplated thereby (collectively "Environmental, Health and
Safety Matters") and hereby waives, and releases the HarnCo Companies and their
respective officers, directors, employees and agents from, any and all claims,
demands, or causes of action with respect to Environmental, Health and Safety
Matters.
11. Limitation on Consequential Damages. NOTWITHSTANDING ANYTHING HEREIN TO THE
CONTRARY, NO HARNCO COMPANY SHALL BE LIABLE TO MHE LLC, ANY OTHER MHE SUBSIDIARY
OR ANY OF THEIR AFFILIATES FOR ANY SPECIAL, INDIRECT, INCIDENTAL, CONSEQUENTIAL
OR PUNITIVE DAMAGES, LOST PROFITS, LOSS OF SALE OR USE, OR OPPORTUNITY COSTS,
REGARDLESS OF THE FORM OF ACTION, WHETHER IN CONTRACT, TORT OR OTHERWISE.
12. Further Assurances. After the Effective Date and upon HarnCo's request, and
for no further consideration, MHE LLC shall use its best efforts to obtain full
releases of any and all HarnCo Companies' Liability with respect to the Assumed
Liabilities; provided, however, that until MHE LLC obtains such releases, MHE
LLC shall not take any action that has the effect of amending or otherwise
modifying any provisions of any of the Assumed Liabilities for which any HarnCo
Company may have continuing liability, either primary or contingent, except for
amendments or modifications which do not (i) increase in any respect any
Liability of any HarnCo Company thereunder, or (ii) extend the period of time
during which any HarnCo Company will be
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obligated or liable thereunder.
13. Transfer Tax Matters.
13.1 Transaction Taxes. HarnCo shall be liable for any and all sales, use,
transfer, stamp, stamp duty, stamp duty reserve tax, conveyance, documentary, or
similar taxes, duties, excises or governmental charges imposed by any taxing
jurisdiction, including recording fees, notarial fees and other similar costs
incurred in connection with the conveyance of the Assets to MHE LLC pursuant to
this Agreement. MHE LLC shall, on the Effective Date, execute and deliver to
HarnCo a sales tax resale exemption certificate for each state in which
inventory is transferred to MHE LLC pursuant to this Agreement.
13.2 Property Taxes. MHE LLC shall be liable for, shall pay and shall
indemnify and hold HarnCo harmless against any and all real and personal
property taxes and assessments relating to the Assets, regardless of the taxable
periods to which such taxes relate. If HarnCo is contesting any such taxes
before a taxing authority, administrative tribunal or in a judicial proceeding,
as of the Effective Date MHE LLC shall assume responsibility for and control any
such proceeding at its own expense and with its own counsel. HarnCo shall
execute all contracts, authorizations or other documents necessary to enable MHE
LLC to have proper standing to conduct any such proceedings.
13.3 Unemployment Tax Experience. The state unemployment tax experience
(the "Experience") of HarnCo may be transferred to MHE LLC for such states, if
any, as HarnCo may select in its sole discretion. The decision to transfer such
Experience may be made separately for each state in which the business of MHE
LLC is conducted. If HarnCo elects to transfer the Experience in a particular
state, MHE LLC shall timely execute any and all necessary governmental filings
to accomplish this transfer.
13.4 Preparation of W-2's, Etc. HarnCo and MHE LLC agree that MHE LLC has
received substantially all of the property used in a trade or business
previously operated by HarnCo, and in connection therewith MHE LLC shall employ
individuals who immediately before the Effective Date were employed in such
trade or business by HarnCo. Accordingly, if the Effective Date is such that the
alternative procedure set forth in Revenue Procedure 84-77, 1984-2 C.B. 753 for
reporting by predecessors-successors is applicable and provided that HarnCo
provides MHE LLC with all necessary (as determined in HarnCo's sole discretion)
payroll records for the calendar year which includes the Effective Date, then
MHE LLC shall furnish or cause to be furnished a Form W-2 to each employee
employed by MHE LLC who had been employed by HarnCo disclosing all wages and
other compensation paid for such calendar year, and taxes withheld therefrom,
and HarnCo shall be relieved of the responsibility to do so.
14. Post-Effective Date Tax Matters.
14.1 Filing of Tax Returns. HarnCo agrees to prepare and file or cause to
be prepared and filed on a timely basis all appropriate Returns in respect of
the MHE Division that (i) are required to be filed before the Effective Date; or
(ii) are required to be filed on or after the
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Effective Date that (a) are required to include, on a consolidated or combined
basis, the operations of the MHE Division for any tax period ending before the
Effective Date; or (b) are required to be filed by the MHE Division on a
separate return basis for any tax period ending before the Effective Date. To
the extent requested by HarnCo, MHE LLC shall participate in the filing of and
shall file any required Returns with respect to any period that ends before the
Effective Date. MHE LLC shall prepare the schedules in respect of MHE LLC and
the MHE Division containing the information necessary for HarnCo to prepare any
consolidated or combined returns. MHE LLC shall also prepare or cause to be
prepared and shall file or cause to be filed all other Returns required of MHE
LLC and the MHE Division, or in respect of its activities, for any taxable
period ending on or after the Effective Date that includes the operations of MHE
LLC or the MHE Division prior to the Effective Date.
14.2 Payment of Taxes.
14.2.1 HarnCo agrees to pay timely all Income Taxes in respect of
MHE LLC or the MHE Division that are (i) due with respect to Returns that HarnCo
is required to prepare and file pursuant to Section 14.1 hereof, or (ii) due
before the Effective Date for which no Return is required to be filed. In
addition, HarnCo agrees to pay all other Income Taxes that may be due after the
Effective Date that are attributable to the period prior to the Effective Date.
The parties hereto will, to the extent permitted by applicable law, elect with
the relevant Tax authority to treat for all purposes the day prior to the
Effective Date as the last day of a taxable period of the MHE Division, and such
period shall be treated as a "Short Period" for purposes of this Agreement.
14.2.2 In any case where applicable law does not permit MHE LLC to
treat the day prior to the Effective Date as the last day of a Short Period,
then for purposes of this Agreement the portion of such Income Taxes that is
attributable to the operations of the MHE Division for such Interim Period (as
defined below) shall be (i) in the case of Income Taxes that are not based in
whole or in part on income or gross receipts, the total amount of such Income
Taxes for the period in question multiplied by a fraction, the numerator of
which is the number of days in the Interim Period, and the denominator of which
is the total number of days in the entire period in question, and (ii) in the
case of Income Taxes that are based in whole or in part on income or gross
receipts, the Income Taxes that would be due with respect to the Interim Period,
if such Interim Period were a Short Period. "Interim Period" means with respect
to any Income Taxes imposed on MHE LLC on a periodic basis for which the day
prior to the Effective Date is not the last day of a Short Period, the period of
time beginning on the first day of the actual taxable period that includes (but
does not end on) the day prior to the Effective Date and ending on the day prior
to the Effective Date. Any franchise Tax shall be allocated to the taxable
period during which the right to do business obtained by the payment of such
franchise Tax relates, regardless of whether such franchise tax is measured by
income, operations, assets or capital relating to another taxable period.
14.3 Cooperation and Records Retention. HarnCo and MHE LLC shall (i) each
provide the other with such assistance as may reasonably be requested by either
of them in connection with the preparation of any Tax return, audit or other
examination by any taxing authority or judicial or administrative proceedings
relating to liability for Taxes, (ii) each retain
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and provide the other with any records or other information which may be
relevant to such Return, audit or examination or proceeding, and (iii) each
provide the other with any final determination of any such audit or examination
or proceeding that affects any amount required to be shown on any Tax return of
the other for any period. Without limiting the generality of the foregoing,
HarnCo and MHE LLC shall retain, until the applicable statutes of limitations
(including any extensions) have expired, copies of all Tax returns, supporting
work schedules and other records or information which are relevant to such
returns for all taxable periods or portions thereof ending before or including
the Effective Date and shall not thereafter destroy or otherwise dispose of any
such records without first providing the other party with a reasonable
opportunity to review and copy the same.
14.4 Liability for Assessments or Refunds. HarnCo shall pay any
assessments for additional Income Taxes and be entitled to receive all refunds
of Income Taxes (i) with respect to all periods ending prior to the Effective
Date; and (ii) with respect to any period beginning before the Effective Date
and ending after the Effective Date, but only with respect to the portion of
such period up to and including the day prior to the Effective Date allocated in
accordance with Section 14.2.2 above. HarnCo shall have sole and exclusive
discretion to contest or not to contest, negotiate and settle proposed
adjustments relating to the inclusion in any Return of the income, deductions,
credits, allowances or other tax items of MHE LLC for any period ending before
the Effective Date. Any proceeding with respect to Income Taxes for a period
which includes but does not end on the day prior to the Effective Date shall be
controlled jointly by HarnCo and MHE LLC.
15. Bulk Sales or Transfer Laws. MHE LLC acknowledges that HarnCo will not
comply with the provision of any bulk sales or transfer laws of any jurisdiction
in connection with the transaction contemplated by this Agreement. MHE LLC
hereby waives compliance by HarnCo with the provisions of the bulk sales or
transfer law of any jurisdiction.
16. Miscellaneous.
16.1 Entire Agreement. This Agreement and the Other Agreements constitute
the entire agreement of the parties with respect to the subject matter hereof
and thereof, supersede all prior agreements, understandings and representations
between them with respect to such subject matter, written or oral, and shall not
be modified, amended or terminated except by a written agreement specifically
referring to the applicable agreement signed by all of the parties thereto.
16.2 Waivers. No waiver by any Party of any breach or default hereunder
shall be considered valid unless in writing and signed by the party giving such
waiver, and no such waiver shall be deemed a waiver of any subsequent breach or
default of the same or similar nature.
16.3 Succession and Assignment. This Agreement shall inure to the benefit
of, and be binding upon, HarnCo and MHE LLC and their successors and permitted
assigns, and may be assigned in whole or in part by them to any of their
respective Affiliates (with the assignor remaining primarily liable thereon),
but otherwise this Agreement is not assignable by any party hereto, either in
whole or in part, without the prior written consent of the other party, and any
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such attempted assignment without such consent shall be null and void. In the
event that such an assignment is made to any such Affiliate such assignment
shall include an obligation on such Affiliate to transfer all rights and
interests assigned thereto back to such assigning party (or to some other
Affiliate thereof) promptly upon such assignee ceasing to be an Affiliate of the
assignor.
16.4 Headings. The paragraph headings contained herein or in the Other
Agreements are for the purposes of convenience only and are not intended to
define or limit the contents of such paragraphs and shall be given no effect in
the construction or interpretation of this Agreement or the Other Agreements.
16.5 Notices. All notices, requests, demands, claims, and other
communications hereunder will be in writing. Any notice, request, demand, claim,
or other communication hereunder shall be deemed duly given if (and then two
business days after) it is sent by registered or certified mail, return receipt
requested, postage prepaid, and addressed to the intended recipient as set forth
below:
If to HarnCo: Copy to:
Harnischfeger Corporation Kirkland & Ellis
3600 South Lake Drive 200 East Randolph Drive
St. Francis, WI 53235-3716 Chicago, IL 60601
Attn: James A. Chokey Attn: Keith S. Crow
If to MHE: Copy to:
Material Handling, LLC Material Handling, LLC
315 W. Forest Hill Avenue 315 W. Forest Hill Avenue
Oak Creek, WI 53154 Oak Creek, WI 53154
Attn: President Attn: General Counsel
Any Party may send any notice, request, demand, claim, or other communication
hereunder to the intended recipient at the address set forth above using any
other means (including personal delivery, expedited courier, messenger service,
telecopy, telex, ordinary mail, or electronic mail), but no such notice,
request, demand, claim, or other communication shall be deemed to have been duly
given unless and until it actually is received by the intended recipient. Any
Party may change the address to which notices, requests, demands, claims, and
other communications hereunder are to be delivered by giving the other Parties
notice in the manner herein set forth.
16.6 Counterparts. This Agreement may be executed in one or more
counterparts, all of which taken together shall be deemed one original.
16.7 Expenses. Except as otherwise provided in Articles 4 and 10 and
Section 3.4, MHE LLC shall bear the expenses, costs and fees (including those of
attorneys, accountants, consultants, or experts) incurred by MHE LLC and the MHE
Division, and HarnCo shall bear the
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expenses, costs and fees (including those of attorneys, accountants,
consultants, or experts) incurred by HarnCo, in connection with the transactions
contemplated hereby, including the preparation and execution of this Agreement
and the Other Agreements and compliance herewith and therewith.
16.8 Severability. Any provision of this Agreement or any of the Other
Agreements that is invalid or unenforceable in any jurisdiction shall not affect
the validity or enforceability of the remaining terms and provisions hereof or
the validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction.
16.9 Governing Law. This Agreement shall be governed by and construed in
accordance with the domestic laws of the State of New York without giving effect
to any choice or conflict of law provision or rule (whether of the State of New
York or any other jurisdiction) that would cause the application of the laws of
any jurisdiction other than the State of New York.
16.10 Submission to Jurisdiction. Each of the Parties consents to the
exclusive jurisdiction of the federal courts of the Eastern District of
Wisconsin for any legal action, suit, or proceeding arising out of or in
connection with this Agreement or the Other Agreements, and agree that any such
action, suit, or proceeding may be brought only in such courts. If such forum is
not available, each of the Parties consents to the exclusive jurisdiction of the
Milwaukee County Circuit Court for any such action, suit or proceeding. Each of
the Parties further waives any objection to the laying of venue for any such
suit, action, or proceeding in such courts. Each Party agrees to accept and
acknowledge service of any and all process that may be served in any suit,
action, or proceeding. Each Party agrees that any service of process upon it
mailed by registered or certified mail, return receipt requested to such Party
at the address provided in Section 16.5 above shall be deemed in every respect
effective service of process upon such Party in any such suit, action, or
proceeding. Each Party agrees to waive any right it might have to a trial by
jury in any such suit, action or proceeding.
16.11 Construction. Each of the Parties agree that (a) the rule of
construction to the effect that any ambiguities are to be resolved against the
drafting party shall not be employed in the interpretation or construction of
this Agreement or the Other Agreements and (b) except as specifically provided
in an agreement, no usage of trade, course of dealing, course of performance or
enforcement or surrounding circumstances shall be used in interpreting or
construing this Agreement or the Other Agreements. The terms "including" or
"include" shall mean "including, without limitation," and the subsequent listing
of any matter or matters shall in no event be construed to limit or narrow the
breadth of the preceding clause of matter.
16.12 Incorporation of Exhibits and Schedules. The schedules and exhibits
to this Agreement shall be construed with and as integral parts of this
Agreement to the same extent as if they were set forth verbatim herein;
provided, however, that in the event of any conflict between any such schedule
or exhibit (including the Other Agreements) and this Agreement, this Agreement
shall control.
16.13 No Third Party Beneficiaries. Nothing in this Agreement, whether
express or
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implied, is intended to confer any rights or remedies under or by reason of this
Agreement on any Persons other than the parties hereto and their Affiliates and
respective permitted successors and assigns.
******
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first above written.
HARNISCHFEGER CORPORATION
By: /s/ Kenneth J. Stark
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Its: Assistant Teasurer
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MATERIAL HANDLING, LLC
By: /s/ Eric Fonstad
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Its: Manager
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