EXHIBIT 10(e)
CAPITAL CONTRIBUTION AGREEMENT
This Capital Contribution Agreement is entered into this 30th day of June,
1998, by and among IPC INDUSTRIES, INC., an Alabama corporation ("IPC") and
AMERICAN AERO CRANES, L.L.C., a Louisiana limited liability company ("AAC") and
AERO INTERNATIONAL, L.L.C., a Louisiana limited liability company ("Aero").
WHEREAS, IPC operates a business of a general machine shop and foundry,
referred to as the Mobile Pulley & Machine Works Division, and a corporate
division (collectively, the "Business"). IPC owns equipment, inventories,
contract rights, leasehold interests, and miscellaneous assets used in
connection with the operation of the Business; and
WHEREAS, IPC wishes to acquire a preferred membership interest in Aero; and
WHEREAS, the parties have agreed that if IPC will contribute the Business
to Aero as a capital contribution in Aero, then Aero will issue Class B
Preferred Membership Interest units to IPC and shall pay other valuable
consideration including cash and the assumption of liabilities; and
WHEREAS, Aero is the parent company of AAC, and Aero wishes for AAC to take
title to the assets contributed and to assume the aforementioned liabilities.
NOW THEREFORE, IT IS AGREED AS FOLLOWS:
SECTION 1. CAPITAL CONTRIBUTION.
1.1 Assets Transferred. IPC agrees to transfer to AAC, as a capital
contribution to Aero, and AAC agrees to acquire from IPC, on the terms and
conditions set forth in this Agreement, IPC's entire right, title and interest
in, to and under the Business, as a going concern, including all of the assets
owned or used by the IPC in connection with or arising out of the Business of
every type and description, tangible and intangible, wherever located and
whether or not reflected on the books and records of the IPC (all of the assets,
properties, rights and business being hereinafter sometimes collectively
referred to as the "Assets"), including, but not limited to,
(i) All equipment relating to the Business, including the equipment
set forth on Exhibit A;
(ii) All inventory relating to the Business, including the inventory
set forth on Exhibit A;
(iii) All accounts and notes receivable relating to the Business,
including the accounts receivable set forth on Exhibit A;
(iv) All real property of the Business;
(v) All leasehold interests on real or personal property;
(vi) All proprietary information of the Business;
(vii) The benefit of all contracts, unfulfilled or outstanding
purchase orders, sales contracts, labor and employee benefit
plans, agency agreements, pricing agreements, other commitments
and engagements to which the IPC is entitled on the Effective
Date (herein defined) and that relate to the Business;
(viii) All cash and cash equivalents of the Business; and
(ix) Any goodwill associated with the Business.
1.2 Liabilities Assumed. Except for the Excluded Liabilities pursuant to
Section 2 hereof, AAC shall accept the assignment and assume responsibilities of
the Business and all of its liabilities, debts and obligations, whether known or
unknown, now existing or hereafter arising, contingent or liquidated, including
without limitation, liabilities of IPC with respect to the Business and of the
Business for the periods prior to the Effective Date and the Closing Date. (the
"Assumed Liabilities").
SECTION 2. EXCLUDED ASSETS AND LIABILITIES. Excluded from this transfer
and the assignment and assumption by AAC are any assets and liabilities of IPC
as reflected on Exhibit B attached hereto ("Excluded Assets and Liabilities").
SECTION 3. CONSIDERATION FOR CAPITAL CONTRIBUTION. In exchange for the
capital contribution by IPC, Aero shall:
(i) issue to IPC 720,000 duly authorized and issued units of Class B
Preferred Membership Interest in Aero International, L.L.C. having an
aggregate face amount of Nine Hundred Thousand and No/100 ($9,000,000.00)
Dollars, described on Exhibit C attached hereto.
(ii) pay to IPC cash in the amount of Two Million and No/100
($2,000,000.00) Dollars.
(iii) assume the obligation of IPC to the National Bank of Canada in the
amount of Four Million Four Hundred Seventy-Nine Thousand Four Hundred
Seventy-Four and 23/100 ($4,479,474.23) Dollars as of May 31, 1998.
(iv) assume the obligation of IPC to ▇▇▇▇▇▇ & ▇▇▇▇▇▇ in the amount of One
Million Four Hundred Thousand and No/100 ($1,400,000.00) Dollars, which
obligation has been discounted by the obligee to One Million One Hundred
Ninety-Five Thousand and No/100 ($1,195,000.00) Dollars pursuant to a
letter from ▇▇▇▇▇▇ & ▇▇▇▇▇▇ dated May , 1998 as amended by a letter dated
June , 1998.
(v) assume all of the other Assumed Liabilities.
2
SECTION 4. ADJUSTMENTS. The operation of IPC's business and related
income and expenses up to the close of business on the Effective Date shall be
for the account of IPC and thereafter for the account of AAC. Expenses,
including but not limited to utilities, personal property taxes, rents, real
property taxes, wages, vacation pay, payroll taxes, and fringe benefits of
employees of IPC, shall be prorated between IPC and AAC as of the close of
business on the Effective Date, the proration to be made and paid, insofar as
reasonably possible, on the Closing Date, with settlement of any remaining items
to be made within ninety (90) days following the Closing Date.
SECTION 5. The parties to this Agreement shall agree on the allocation of
the Assets and the units to be transferred hereunder so that filings with the
Internal Revenue Service by or with respect to each party to this Agreement
shall be consistent with one another.
SECTION 6. IPC'S REPRESENTATIONS AND WARRANTIES. IPC represents and
warrants to AAC as follows:
6.1 Corporate Existence. IPC is now, and on the Effective Date was and on
the Closing Date will be a corporation duly organized and validly existing and
in good standing under the laws of the State of Alabama. IPC has all requisite
corporate power and authority to own, operate and/or lease the Assets, as the
case may be, and to carry on its business as now being conducted.
6.2 Authorization. The execution, delivery, and performance of this
Agreement have been duly authorized and approved by the board of directors and
shareholders of IPC, and this Agreement constitutes a valid and binding
Agreement of IPC in accordance with its terms.
6.3 Financial Statements. Attached hereto as Exhibit D are IPC's audited
financial statements for the years ended December 31, 1995, 1996 and 1997
(combined with Mobile Pulley Marine Services, Inc.), and unaudited proforma
financial statements for the five (5) month period ended May 31, 1998
("Financial Statements"). The Financial Statements are in accordance with the
books and records of IPC and are true, correct, and complete; fairly present
financial conditions of IPC at the dates of such Financial Statements and the
results of its operations for the periods then ended; and were prepared in
accordance with generally accepted accounting principles applied on a basis
consistent with prior accounting periods. Except as described in this Agreement,
since May 31, 1998 there has been no material adverse change in the financial
condition of IPC.
6.4 Title to Assets. IPC holds good and marketable title to the Assets,
free and clear of restrictions on or conditions to transfer or assignment, and
free and clear of liens, pledges, charges, or encumbrances.
6.5 Litigation. IPC has no knowledge of any claim, litigation,
proceeding, or investigation pending or threatened against IPC that might result
in any material adverse change in the Business or condition of Assets being
transferred under this Agreement.
3
6.6 Taxes. To the best of IPC's knowledge, all federal, state and local
tax returns of IPC required by applicable law to be filed have been duly filed,
and all federal, state, and local taxes, assessments and other governmental
charges or levies upon IPC or its income, property and assets, affecting or
relating to the Business or the Assets, which are due and payable have been paid
except any such nonpayment which is the subject of a bona fide dispute by
appropriate proceedings and for which adequate reserves have been established
and are reflected in the Financial Statements.
6.7 Material Adverse Change. To the best of IPC's knowledge, since the
date of the most recent Financial Statements furnished herewith (i) no change in
the Business, Assets, Liabilities, condition (financial or otherwise), results
of operations or business prospects of the Business has occurred that has had,
or may have, a materially adverse effect, and (ii) no event has occurred or
failed to occur which has had, or may have, a materially adverse effect.
6.8 ERISA. Each of the employee benefit plans maintained by IPC for
employees of the Business is in substantial compliance with ERISA, and IPC has
not received any notice asserting that any such benefit plan is not in
compliance with ERISA. No material liability to the Pension Benefit Guaranty
Corporation or to any multi-employer plan has been, or is expected by IPC to be,
incurred by IPC in connection with the Business.
6.9 Government Approvals; Compliance with Law. IPC (i) has all
governmental approvals required of it to carry on the Business, including
permits relating to federal, state and local environmental laws, ordinances and
regulations required by any applicable law for it to conduct the Business, each
of which is in full force and effect, is final and not subject to review on
appeal and is not the subject of any pending or, to the knowledge of IPC,
threatened proceeding, and (ii) is in compliance with all laws and governmental
requirements applicable to the Business, including but not limited to all
environmental laws and occupational health and safety laws appplicable to the
Business, except those which would not have a material adverse effect on the
Business or the Assets.
6.10 Receivables. All accounts receivable forming part of the Assets (i)
are owed to IPC and represent bona fide transactions arising out of the ordinary
course of business and not requiring any further action to make them due and
payable; (ii) are not unpaid more than 120 days after the date of the original
invoice unless set forth in writing by IPC to AAC; (iii) are valid, legally
enforceable obligations of the respective account debtors and not subject to any
present or contigent offset, deduction or counterclaim, dispute or other defense
on the part of such account debtor; and (iv) are not subject to any liens other
than the lien of National Canada Finance Corporation in connection with IPC's
revolving credit facility.
6.11 Plant and Equipment. The buildings, plants, structures and equipment
included in the Assets are structurally sound, are in good operating condition
and repair, and are adequate for the uses to which they are being put, and none
of such buildings, plants, structures or equipment is in need of maintenance or
repairs except for ordinary, routine maintenance and repairs that are not
material in nature or cost. The building, plants, structures and equipment
included in the Assets are sufficient for the continued conduct of the Business
after the Closing in substantially the same manner as conducted prior to the
Closing.
4
6.12 Insurance. All policies of insurance with respect to the Business or
the Assets are listed in Schedule 6.12 attached hereto and made a part hereof
and are in full force and effect and shall remain in full force and effect as of
the Closing. All such policies provide coverage on an "occurrence" basis rather
than on a "claims made" basis.
6.13 Employment Agreements. Except as to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ Box and
▇▇▇▇▇▇ ▇▇▇▇▇▇ III, no employment contract or material consulting agreement is
currently in effect with any employee of the Business that is not terminable at
will (other than agreements with the sole purpose of providing for the
confidentiality of proprietary information or assignment of inventions).
6.14 Labor Relations; Compliance. IPC is in compliance in all respects
with all laws relating to employment, wages hours, benefits, collective
bargaining, and plant closing with respect to the Business. IPC is not liable
for the payment of any compensation, damages, taxes, fines, penalties, or other
amounts for any failure to comply with any of the foregoing.
SECTION 7. REPRESENTATIONS OF AERO. Aero represents and warrants as
follows:
7.1 Corporate Existence. Aero is a limited liability company duly
organized, validly existing, and in good standing under the laws of the State of
Louisiana. Aero has all requisite limited liability company power and authority
to enter into this Agreement and perform its obligations hereunder.
7.2 Authorization. The execution, delivery, and performance of this
Agreement have been duly authorized and approved by the members of Aero, and
this Agreement constitutes a valid and binding agreement of Aero in accordance
with its terms.
7.3 Issuance of Preferred Interest. The units of Class B Preferred
Membership Interest to be issued in accordance with this Agreement shall, at the
time of the Closing, be duly authorized and validly issued by Aero.
SECTION 8. REPRESENTATIONS OF AAC. AAC represents and warrants as
follows:
8.1 Corporate Existence. AAC is a limited liability company duly
organized, validly existing, and in good standing under the laws of the State of
Louisiana. AAC has all requisite limited liability company power and authority
to enter into this Agreement and perform its obligations hereunder.
8.2 Authorization. The execution, delivery, and performance of this
Agreement have been duly authorized and approved by the members of AAC, and this
Agreement constitutes a valid and binding Agreement of AAC in accordance with
its terms.
5
SECTION 9. COVENANTS OF IPC.
9.1 Access to Premises and Information. At reasonable times prior to the
Effective Date and Closing Date, IPC will provide AAC and its representatives
with reasonable access during business hours to the assets, titles, contracts,
and records of IPC and furnish such additional information concerning IPC's
business as AAC from time to time may reasonably request.
9.2 Change of Name. IPC will take all action necessary or appropriate to
permit AAC to legally commence use of the trade name of "Mobile Pulley & Machine
Works" on the Effective Date and Closing Date.
9.3 Conditions and Best Efforts. IPC will use its best efforts to
effectuate the transactions contemplated by this Agreement and to fulfill all
the conditions of the obligations of IPC under this Agreement, and will do all
acts and things as may be required to carry out its obligations under this
Agreement and to consummate and complete this Agreement.
SECTION 10. COVENANTS OF AAC AND AERO.
10.1 Conditions and Best Efforts. AAC and Aero, respectively will each
use its best efforts to effectuate the transactions contemplated by this
Agreement and to fulfill all the conditions of AAC's obligations under this
Agreement, and shall do all acts and things as may be required to carry out
their respective obligations and to consummate this Agreement.
SECTION 11. CONDITIONS PRECEDENT TO AAC'S AND AERO'S OBLIGATIONS. The
obligation of AAC to acquire the Assets and assume the Assumed Liabilities and
of Aero to deliver a certificate of ownership of the Class B Preferred
Membership Interest described in Section 3 is subject to the fulfillment, prior
to or at the Closing Date, of each of the following conditions, any one or
portion of which may be waived in writing by AAC and Aero:
11.1 Representations, Warranties, and Covenants of IPC. All
representations and warranties made in this Agreement by IPC shall be true as of
the Effective Date and Closing Date as fully as though such representations and
warranties had been made on and as of the Effective Date and Closing Date, and,
as of the Effective Date and Closing Date, IPC shall not have violated or shall
not have failed to perform in accordance with any covenant contained in this
Agreement.
11.2 Conditions of the Business. There shall have been no material
adverse change in the manner of operation of IPC's business prior to the
Effective Date and Closing Date.
11.3 No Suits or Actions. At the Effective Date and Closing Date, no
suit, action, or other proceeding shall have been threatened or instituted to
restrain, enjoin, or otherwise prevent the consummation of this Agreement or the
contemplated transactions.
11.4 Delivery of Assets. The obligations of IPC described in Subsection
17.2 shall have been fulfilled.
6
SECTION 12. CONDITIONS PRECEDENT TO OBLIGATIONS OF IPC. The obligations of
IPC to consummate the transactions contemplated by this Agreement are subject
to the fulfillment, prior to or at the Effective Date and Closing Date, of each
of the following conditions, any one or a portion of which may be waived in
writing by IPC;
12.1 Representations, Warranties and Covenants of AAC. All
representations and warranties made in this Agreement by AAC and Aero shall be
true as of the Effective Date and Closing Date as fully as though such
representations and warranties had been made on and as of the Effective Date and
Closing Date, and neither AAC nor Aero shall have violated or shall not have
failed to perform in accordance with any covenant contained in this Agreement.
12.2 Delivery of Consideration. The obligations of AAC and Aero described
in Subsection 17.3 shall have been fulfilled.
SECTION 13. AAC'S AND AERO'S ACCEPTANCE. AAC and Aero represent and
acknowledge that they have entered into this Agreement on the basis of their own
examination, personal knowledge, and opinion of the value of the Business. AAC
and Aero have not relied on any representations made by IPC other than those
specified in this Agreement. AAC and Aero further acknowledge that IPC has not
made any agreement or promise to repair or improve any of the real property,
leasehold improvements, equipment, or other personal property being transferred
under this Agreement, and that AAC takes all such property in the condition
existing on the date of this Agreement, except as otherwise provided in this
Agreement.
SECTION 14. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All
representations and warranties made in this Agreement shall survive the Closing
of this Agreement.
SECTION 15. IPC'S INDEMNIFICATION. IPC acknowledges that all events with
respect to the Business from the close of business on, and after the Effective
Date are, have been, and shall be for the account of Aero and AAC. IPC hereby
agrees to indemnify and hold Aero and AAC, their successors, and assigns
harmless from and against any and all claims, liabilities, and obligations of
every kind and description, contingent or otherwise, arising out of or related
to the operation of the Business prior to the close of Business on the Effective
Date, except for claims, liabilities, and obligations of IPC expressly assumed
by Aero and AAC under this Agreement or paid by insurance maintained by IPC or
AAC.
SECTION 16. AERO'S AND AAC'S INDEMNIFICATION. Aero and AAC acknowledge
that all events with respect to the Business from the close of business on and
after the Effective Date are, have been, and shall be for the account of Aero
and AAC. Aero and AAC agree to defend, indemnify, and hold harmless IPC from
and against any and all claims, liabilities, and obligations of every kind and
description arising out of or related to the operation of the Business on and
following the Effective Date (except, as to events between the Effective Date
and the Closing, those arising out of the wanton or intentional act of IPC) or
arising out of AAC's or Aero's failure to perform obligations of IPC assigned to
and assumed by AAC or Aero pursuant to this Agreement.
7
SECTION 17. CLOSING.
17.1 Time and Place. This Agreement shall be closed at the offices of
▇▇▇▇▇ and ▇▇▇▇▇, L.L.P., ▇▇▇ ▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ at
8:30 a.m. on , 1998, or at such other time as the parties may agree in
writing. If Closing has not occurred on or prior to August 31, 1998, then any
party may elect to terminate this Agreement. If, however, the Closing has not
occurred because of a breach of contract by one or more parties, the breaching
party or parties shall remain liable for breach of contract.
17.2 Obligations of IPC at the Closing. At the Closing and
coincidentally with the performance by AAC and Aero of their obligations
described in Section 17.3, IPC shall deliver to AAC and Aero the following:
(a) Executed original counterpart of an Assignment and Assumption
Agreement conveying all IPC's right, title and interest to the Assets;
(b) Executed original Warranty Deed conveying all IPC's right, title
and interest to all real property of the Business; and
(c) Certified copy of resolution of IPC's Board of Directors
authorizing the transfer of the Assets and the consummation of the transaction
contemplated by this Agreement.
17.3 Obligations of AAC and Aero at the Closing. At the Closing and
coincidentally with the performance by IPC of its obligations described in
Section 17.2:
(a) Aero shall execute and deliver a certificate of ownership of
720,000 units of Class B Preferred Membership Interest in Aero described in
Section 3 (the "Preferred Membership Interest Certificate");
(b) Aero shall deliver to IPC the cash sum as set forth in Section 3;
(c) AAC shall execute and deliver an original counterpart of the
Assignment and Assumption Agreement; and
(d) AAC and Aero shall each deliver a certified copy of unanimous
consent of all its members authorizing the transfer of the Assets, the issuance
of the Preferred Membership Interest Certificate and the consummation of the
transactions contemplated by this Agreement.
SECTION 18. RIGHTS AND OBLIGATIONS SUBSEQUENT TO CLOSING.
18.1 Books and Records. This transfer includes the books of account and
records of IPC's business. However, IPC or its agents shall have access to such
books and records and may make copies thereof. AAC will exercise reasonable care
in the safekeeping of such records. IPC shall retain its general ledger but
shall make it available for inspection by AAC from time to time upon reasonable
request.
8
SECTION 19. MISCELLANEOUS PROVISIONS.
19.1 Effective Date. The Effective Date of this Agreement shall be May
31, 1998. All parties have agreed to this Effective Date, in part to avoid
post-closing adjustments necessary to accommodate the period after the effect of
the Financial Statements.
19.2 Amendment and Modification. Subject to applicable law, this
Agreement may be amended, modified, or supplemented only by a written agreement
signed by all of the parties hereto.
19.3 Law Governing. This Agreement shall be governed by and construed in
accordance with the laws of the State of Alabama.
19.4 Titles and Captions. All section titles or captions contained in
this Agreement are for convenience only and shall not be deemed part of the
context nor affect the interpretation of this Agreement.
19.5 Pronouns and Plurals. All pronouns and any variations thereof shall
be deemed to refer to the masculine, feminine, neuter, singular or plural as the
identity of the person or persons may require.
19.6 Entire Agreement. This Agreement contains the entire understanding
between and among the parties and supersedes any prior understandings and
agreements among them respecting the subject matter of this Agreement. Any
amendments to this Agreement must be in writing and signed by the party against
whom enforcement of that amendment is sought.
19.7 Agreement Binding. This Agreement shall be binding upon the heirs,
executors, administrators, successors and assigns of the parties hereto.
19.8 Further Action. The parties hereto shall execute and deliver all
documents, provide all information and take or forbear from all such action as
may be necessary or appropriate to achieve the purpose of the Agreement.
19.9 Counterparts. This Agreement may be executed in several counterparts
and all so executed shall constitute one Agreement, binding on all the parties
hereto even though all the parties are not signatories to the original or the
same counterpart.
19.10 Parties in Interest. Nothing herein shall be construed to be to the
benefit of any third party, nor is it intended that any provision shall be for
the benefit of any third party.
9
19.11 Savings Clause. If any provision of this Agreement, or the
application of such provision to any person or circumstance, shall be held
invalid, the remainder of this Agreement, or the application of such provision
to persons or circumstances other than those as to which it is held invalid,
shall not be affected thereby.
AMERICAN AERO CRANES, L.L.C. IPC INDUSTRIES, INC.
a Louisiana limited liability company an Alabama corporation
By: /s/ W. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇.
---------------------- ------------------------
W. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇.
President and CEO Chairman and CEO
AERO INTERNATIONAL, L.L.C.
a Louisiana limited liability company
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
-----------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
Executive Vice President
Attached Exhibits: A - Assets
B - Excluded Assets and Liabilities
C - Preferred Interest Designation
D - Financial Statements
Attached Schedules: 6.12 Insurance Certificates
Aero Roll-Up/IPC Sale Docs/Capital Cont Agree for IPC
10