EXHIBIT 2.1
PURCHASE AND SALE AGREEMENT
This Agreement (this "Agreement") dated as of the 26th day of February,
2003 is by and among Encompass Electrical Technologies - Rocky Mountains, Inc.,
a Colorado corporation (the "Seller"), Encompass Services Corporation, a Texas
corporation, ("Encompass"), and IES ENC, Inc., a Delaware Corporation (the
"Buyer").
W I T N E S S E T H:
WHEREAS, the Seller is engaged in the electrical construction and
services business (the "Business"); and
WHEREAS, the Seller desires to sell all of the Seller's Assets (as
hereinafter defined), and the Buyer desires to purchase such Assets pursuant to
the terms and conditions of this Agreement and pursuant to an order of the
Bankruptcy Court (as hereinafter defined) approving such sale under Section 363
of Chapter 11, Title 11 of the United States Bankruptcy Code (the "Bankruptcy
Code"); et seq., (the "Sale Order"), such Sale Order to include the assumption
and assignment of certain executory contracts as provided herein pursuant to
Section 365 of the Bankruptcy Code;
NOW, THEREFORE, in consideration of the promises, covenants and other
consideration described herein, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows, intending to be
legally bound:
ARTICLE 1.
TRANSFER OF ASSETS AND PURCHASE PRICE
1.1 Assets. Pursuant to the Sale Order of the Bankruptcy Court approving
the same and subject to the terms and conditions of this Agreement, the
Seller agrees to sell, convey, transfer and deliver to the Buyer at the
Closing (as hereinafter defined) all right, title and interest of the
Seller in and to the following assets (collectively, the "Assets"),
free from all claims, defaults, liens, taxes, debts and encumbrances of
any kind, except the Assumed Liabilities (as hereinafter defined):
(a) The equipment listed on Schedule 1.1 (a) ("Equipment");
(b) All Assigned Contracts (as hereinafter defined);
(c) All accounts receivable owed to the Seller as of the Closing (the
"Accounts Receivable");
(d) The spare parts and any other inventory of the Business existing as
of the Closing and located in the State of Colorado (the
"Inventory");
(e) The intellectual property set forth in Schedule 1.1(e)(i), and the
following names, "Riviera Electric Construction Co.," "Riviera
Electric, Inc.," "Aspen Electric
Co.," and "Xxxxx, Inc. d/b/a Mountain View Electric," but Encompass
shall retain all rights to any intellectual property owned by or
licensed to Encompass or any of its affiliates other than the
Seller as provided in Sections 1.8 and 1.9 hereto (including any
rights to personal computer or mainframe software) (the
"Intellectual Property");
(f) All customer deposits, contract/lease deposits, and escrow accounts
associated with the Business reflected on the balance sheet of the
Seller as of the Closing;
(g) All prepaid items, expenses and accruals of the Business reflected
on the balance sheet of the Seller as of the Closing;
(h) All books, records, manuals and other materials of the Seller or
the Business, including, without limitation, all sales, customer
records, lists, personnel and payroll records, accounting records,
purchase records, price lists, correspondence, quality control
records and all research and development files, wherever located
other than the Seller's corporate minute book, stock ownership
records, bank account records, including all of the Seller's stock
of checks and checkbooks and tax returns) (the "Records");
(i) All licenses, permits, certificates, interim permits, permit
applications, franchises, rights, and other authorizations issued
to the Seller by any governmental authority and applicable to the
Business; and
(j) All goodwill and going concern value of the Business.
1.2 Consideration. The consideration to be paid by the Buyer to the Seller
for the Assets shall be:
(a) (i) THREE MILLION EIGHT-HUNDRED AND FIFTY THOUSAND DOLLARS
($3,850,000) (the "Cash Consideration"), plus (ii) any amount owed
by the Buyer to the Seller pursuant to Section 1.7 of this
Agreement, if any, minus (iii) any amount owed by the Seller to the
Buyer pursuant to Section 1.7 of this Agreement, if any, plus (iv)
the amount of necessary costs (the "Cure Costs") that Seller pays
to cure all defaults under the Assigned Contracts to compensate
non-debtor parties under Section 365 of the Bankruptcy Code in
connection with and prior to the assumption and assignment of the
Assigned Contracts under Section 365 of the Bankruptcy Code as
specifically set forth in the Sale Order; and
(b) the Buyer's assumption of the Assumed Liabilities pursuant to
Section 1.5 of this Agreement.
1.3 Delivery of Cash Consideration. The Cash Consideration shall be paid by
the Buyer to the Seller on the Closing Date in immediately available
funds by wire transfer or certified or cashier's check, as specified by
the Seller in written instructions delivered to the Buyer prior to the
Closing Date.
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1.4 Assignment of Contracts, Leases and Other Assets.
(a) Subject to the terms and conditions of this Agreement, as of the
Closing, the Seller shall assign and transfer to the Buyer all of
the Seller's right, title and interest in and to, and the Buyer
shall assume all the rights of the Seller, and, except as provided
hereunder, all of the obligations of the Seller for performance
from and after the Closing, under the following contracts (the
"Assigned Contracts"):
(i) Customer Contracts. All contracts for customers that remain
incomplete as of the Closing and all orders for customers not
begun as of the Closing, including, without limitation, those
contracts listed on Schedule 1.4(a)(i) ("Customer Contracts");
(ii) Real Property Leases. All leases of real property in
connection with the Seller Business;
(iii) Personal Property Leases. All leases of equipment, vehicles
and other personal property in connection with the Seller
Business, including, but not limited to those leases listed on
Schedule 1.4(a)(iii);
(iv) Purchase Orders. All purchase orders for Inventory and for
materials and all other contracts and agreements entered into
for the operation of the Business prior to or on the Closing,
including, without limitation, those Purchase Orders listed on
Schedule 1.4(a)(iv); and
(v) Other Contracts. All other agreements not otherwise described
in this section related to the operation of the Business to
which the Seller is a party.
(b) Notwithstanding the foregoing, the term "Assigned Contracts"
shall not include the following leases: a lease from CZK, LLC
for office space in Boulder, CO; a lease from Stadium
Management Co., LLC for a stadium suite at Invesco Field; a
lease from Inter-Tel for a phone system in Boulder, CO; a
lease from Steelcase Financial Services for furniture in
Boulder, CO; a lease from Inter-Tel for a phone system in
Steamboat, CO; and a uniform service lease in Boulder.
1.5 Assumption of Liabilities. As partial consideration for the Purchased
Assets, the Buyer shall assume, perform and discharge, by Bankruptcy
Court order, pursuant to Section 365 of the Bankruptcy Code, from and
after the Closing, the following obligations of the Seller (the
"Assumed Liabilities"):
(a) All liabilities of the Seller under the Assigned Contracts;
(b) All of Seller's obligations under any warranty work owed or pending
pursuant to any agreement to which Seller is a party;
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(c) All of Seller's liabilities for any sales or other commissions owed
by Seller to any third party, employee or other person (i) pursuant
to any Customer Contract to which Seller is a party, and (ii) which
accrue and are owing as a result of Buyer's performing under any
Assigned Contract commencing after the Closing;
(d) All accounts payable, accrued bonuses, accrued sales, use and
property taxes, and other accrued expenses of Seller existing on
the Closing Date arising from the Business;
(e) All of Sellers obligations pursuant to Article 7 hereunder; and
(f) Without limiting the generality of the foregoing, any liabilities
and obligations set forth in Schedule 1.5(f) hereto.
1.6 Liabilities other than the Assumed Liabilities. Except for the Assumed
Liabilities, the Buyer shall assume no other debts, liabilities, or
obligations of the Seller, Encompass, or any of their affiliates
whatsoever. Notwithstanding any other provisions of this Agreement,
Buyer will not assume and the defined term "Assumed Liabilities" will
not include any contingent liabilities (as defined by GAAP) of the
Seller, any liabilities rejected by Seller and/or Encompass in
bankruptcy, or any federal, state or local income tax liability of the
Seller.
1.7 Cash Reconciliation. Within 30 days following the Closing Date, the
Seller shall prepare and deliver to the Buyer a schedule setting forth,
for the period commencing on November 30, 2002, and ending as of the
Closing, the cash disbursements funded by the Seller, Encompass or any
of their affiliates for the benefit of the Seller, to include those
made in the ordinary course to trade vendors and those made in the
ordinary course for Seller employee benefit plans (the
"Disbursements"), and the cash deposits made by the Seller (the
"Deposits"). Within three business days following the Buyer's receipt
of such schedule, (i) the Buyer shall remit to the Seller in
immediately available funds, the amount by which the Disbursements
exceed the Deposits, if any; or (ii) the Seller shall remit to the
Buyer, in like manner and within such period, the amount by which
Deposits exceed the Disbursements, if any. Disbursements shall include,
but not be limited to, actual cash amounts paid by the Seller or
Encompass on behalf of the Buyer, including checks issued by the Buyer
subsequent to November 30, 2002, but before the Closing that have not
cleared the banks as of the Closing, and Deposits shall include, but
not be limited to, actual cash amounts received by the Seller or
Encompass on behalf of the Buyer subsequent to November 30, 2002, but
before the Closing that have not been reflected in the Seller's
accounts as of the Closing. In any case, the maximum amount that Buyer
shall be required to remit to Seller under this 1.7 is limited to
$2,000,000.
1.8 Excluded Assets. The Assets to be conveyed by the Seller to the Buyer
hereunder shall not include any asset, tangible or intangible, which is
not specifically set forth and described in Section 1.1, or any asset
which is not freely transferable without the consent of a third party,
upon the failure to obtain such consent. The Assets further do not
include any Intellectual Property owned by or licensed to Encompass, or
any of its
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affiliates. The Assets further do not include any retained Intellectual
Property, retained Intellectual Property includes but is not limited to
items listed in Schedule 1.1(e)(ii).
1.9 Grant of License. For good and valuable consideration, as provided for
in Section 1.2, the Buyer shall have a non-exclusive, worldwide,
perpetual, royalty-free, irrevocable license to make, have, copy, use,
modify, internally distribute, prepare derivative works, perform,
display, disclose the Intellectual Property listed on Schedule
1.1(e)(ii) for internal use only. Internal use includes use by the
Buyer and related entities only and is restricted to uses for which no
consideration is received. Buyer's limited license is non-transferable.
Buyer agrees to execute additional documents and take such acts as
necessary to confirm such license.
ARTICLE 2.
CLOSING
2.1 Closing. The transfers and deliveries referred to in Article 1 hereof
(the "Closing") shall take place at 10:00 a.m. at the offices of
Xxxxxxxxx & Xxxxxxxxx, L.L.P., on February 28, 2003. The Closing may
take place by such other means, including facsimile, and at such other
time and date as the Seller and the Buyer may in writing designate or
such exchange actually occurs (the "Closing Date"). Notwithstanding
anything in this Agreement to the contrary, if the Closing is
consummated, the effective time of the Closing shall be 12:01 a.m. on
the Closing Date.
2.2 Conditions to Closing. The obligations of the Buyer, the Seller and
Encompass under this Agreement are subject to the satisfaction or
waiver by the Buyer or the Seller, as applicable, of the following
conditions precedent on or before the Closing:
(a) The representations and warranties of the Seller contained herein
shall be true in all material respects on and as of the Closing;
(b) The Seller shall, in all material respects, have performed all of
its obligations and agreements and complied with all of its
covenants contained in this Agreement to be performed and complied
with by it on or prior to the Closing;
(c) The representations and warranties of the Buyer contained herein
shall be true in all material respects on and as of the Closing;
(d) The Buyer shall, in all material respects, have performed all of
its obligations and agreements and complied with all of its
covenants contained in this Agreement to be performed and complied
with by it on or prior to the Closing;
(e) The Seller shall have filed a motion or motions for approval (the
"Approval Motion") under Section 363 of the Bankruptcy Code of (i)
the sale of the Assets and assumption and assignment of the
Assigned Contracts and assumption of the Assumed Liabilities
pursuant to the terms of this Agreement and the transactions
hereunder (the "Transaction") and (ii) the form of this Agreement;
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(f) Approval and agreement of surety companies to continue all existing
bonds associated with assigned contracts
(g) The United States Bankruptcy Court having jurisdiction over the
Chapter 11 case of the Seller and Encompass filed on November 19,
2002 (the "Bankruptcy Court") shall have entered the Sale Order
approving the Approval Motion; and
(h) No court order by the Bankruptcy Court shall have been entered
in any action or proceeding instituted by any person that enjoins,
restrains, or prohibits the consummation of the transactions
contemplated hereby.
2.3 The Seller's Deliveries. At the Closing, the Seller shall deliver to
the Buyer the following:
(a) A Xxxx of Sale substantially in the form of attached Exhibit
2.3(a);
(b) A certificate from a duly elected officer of the Seller certifying
(i) the resolutions of the Board of Directors and Shareholders of
the Seller approving and authorizing the execution of this
Agreement and the transactions contemplated hereby and the taking
of any and all actions deemed necessary or advisable to consummate
the transactions contemplated herein; and (ii) compliance of the
Seller with Sections 2.2 (a) and 2.2 (b);
(c) A certificate from a duly elected officer of Encompass certifying
the resolutions of the Board of Directors of Encompass approving
and authorizing the execution of this Agreement and the
transactions contemplated hereby and the taking of any and all
actions deemed necessary or advisable to consummate the
transactions contemplated herein; and
(d) Other instruments of transfer reasonably required by the Buyer to
evidence the transfer of the Assets to the Buyer, including titles
to all titled vehicles, if any, and assignments with respect to any
Intellectual Property registered, recorded or filed with any
governmental authority, in form suitable for registration,
recordation or filing with such governmental authority, in each
case duly executed by the Seller.
2.4 The Buyer's Deliveries. At the Closing, the Buyer shall deliver to the
Seller the following:
(a) The Cash Consideration (as adjusted pursuant to Section 1.2);
(b) A certificate from a duly elected officer of the Buyer certifying
(i) the resolutions of the Board of Directors of the Buyer
approving and authorizing the execution of this Agreement and the
transactions contemplated hereby and the taking of any and all
actions deemed necessary or advisable to consummate the
transactions contemplated herein; and (ii) compliance of the Buyer
with Sections 2.2 (c) and 2.2 (d); and
(c) Certified copies of the formation documents of the Buyer; and
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(d) An agreement executed by the Buyer in the form of Exhibit 2.4(d)
attached hereto.
ARTICLE 3.
ENCOMPASS AND SELLER'S REPRESENTATIONS AND WARRANTIES
The Seller and Encompass represent and warrant to the Buyer as follows:
3.1 Existence and Qualification. The Seller is a corporation validly
existing and in good standing under the laws of the State of Colorado
with all the requisite power and authority to carry on its business as
now being conducted. Encompass is a corporation validly existing and in
good standing under the laws of the State of Texas with all the
requisite power and authority to carry on its business as now being
conducted.
3.2 Authority. The Seller and Encompass each has all requisite power and
authority to enter into this Agreement and to perform its respective
obligations hereunder. The execution, delivery and performance of this
Agreement has been duly and validly authorized by all necessary
corporate and other action on the part of the Seller and Encompass and
no other proceedings on the part of the Seller or Encompass are
necessary to authorize this Agreement and the transactions contemplated
hereby.
3.3 Validity. Assuming due authorization, execution and delivery of this
Agreement by the Buyer, and assuming Bankruptcy Court approval and
authorization, this Agreement constitutes a valid and binding
obligation of the Seller and Encompass, enforceable in accordance with
its terms.
3.4 Title. The Seller has good and marketable title to all of the Assets,
tangible and intangible, free and clear of all liabilities,
encumbrances, and security interests whatsoever except for those
arising from or related to the Assumed Liabilities.
3.5 Condition and Sufficiency of Assets. Neither Encompass not the Seller,
nor any of their respective directors, officers, employers, agents or
representatives has made, or shall be deemed to have made, and no such
person shall be liable for, or bound in any manner by, and Buyer has
not relied upon and will not rely upon, any express or implied
representations, warranties, guaranties, promises or statements
pertaining to the Business or the Assets, except as specifically set
forth in this Article 3. THE SELLER AND ENCOMPASS HEREBY EXPRESSLY
DISCLAIM AND NEGATE ANY OTHER REPRESENTATION OR WARRANTY, OF ANY KIND
OR NATURE, EXPRESS OR IMPLIED, AS TO THE CONDITION, VALUE OR QUALITY OF
THE ASSETS AND RELATING TO THE OPERATIONS OF THE SELLER, AND
SPECIFICALLY DISCLAIM ANY IMPLIED OR EXPRESS REPRESENTATION OR WARRANTY
OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE OR CONFORMITY TO
MODELS OR SAMPLES OR MATERIALS, OR THE ABILITY OF THE SELLER TO ASSIGN
THE ASSETS, OR OBTAIN CONSENTS TO ANY ASSIGNMENT. ALL OF THE ASSETS ARE
BEING SOLD "AS IS", "WHERE IS" AND "WITH ALL FAULTS."
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ARTICLE 4.
THE BUYER'S REPRESENTATIONS AND WARRANTIES
The Buyer represents and warrants to the Seller and Encompass as
follows:
4.1 Existence and Qualification. The Buyer is a corporation validly
existing and in good standing under the laws of the State of Colorado
with all the requisite power and authority to carry on its business as
now being conducted.
4.2 Authority. The Buyer has all requisite power and authority to enter
into this Agreement and to perform its respective obligations
hereunder. The execution, delivery and performance of this Agreement
has been duly and validly authorized by all necessary corporate and
other action on the part of the Buyer and no other proceedings on the
part of the Buyer are necessary to authorize this Agreement and the
transactions contemplated hereby.
4.3 Validity. Assuming due authorization, execution and delivery of this
Agreement by the Seller and Encompass, and assuming Bankruptcy Court
approval and authorization, this Agreement constitutes a valid and
binding obligation of the Buyer, enforceable in accordance with its
terms. Upon execution and delivery thereof by Buyer at Closing (and
assuming due authorization, execution and delivery thereof by Encompass
and Seller and Bankruptcy Court approval and authorization thereof),
this Agreement will be the valid and binding obligation of Buyer
enforceable against Buyer in accordance with its terms.
4.4 No Conflicts. Neither the execution, delivery and performance of this
Agreement, nor the consummation of the transactions provided for
herein, will conflict with or result in a breach of the organizational
documents of the Buyer or any of the terms, conditions or provisions of
any agreement or instrument to which the Buyer is a party or by which
it is bound or will result in a violation of any applicable law,
ordinance, regulation, permit, authorization or decree or order of any
court or other governmental agency applicable to the Buyer.
4.5 Disclaimer. The Buyer acknowledges that in making the decision to enter
into this Agreement and to consummate the transactions contemplated
hereby, the Buyer has relied solely on the basis of its own independent
investigation of the Business and the Assets and upon the express
written representations, warranties and covenants in this Agreement.
Without diminishing the scope of the express written representations,
warranties and covenants of the Seller in this Agreement and without
affecting or impairing its right to rely thereon, the Buyer
acknowledges that (a) it has not relied, in whole or in part, on any
information contained in documents, materials or other information
provided to it by, or on behalf of, Seller or Encompass, and (b)
neither Seller nor Encompass is making any representations or
warranties with respect to (i) any such documents, materials or other
information, other than, in each case, as set forth in this Agreement
or (ii) the value, condition, merchantability, marketability,
profitability, suitability or fitness for a particular use or purpose
of the Assets.
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4.6 Brokers. Neither the Seller nor any Affiliate of the Seller has or
shall have any liability or otherwise suffer or incur any Loss as a
result of or in connection with any brokerage or finder's fee or other
commission of any Person retained by the Buyer in connection with any
of the transactions contemplated by this Agreement.
4.7 Employees. Effective as of the Closing, the Buyer shall hire or offer
to hire for a period of not less than ninety-one (91) days thereafter
all of the Seller's personnel employed in connection with the Business
(the "Employees") who are employed by the Seller immediately prior to
the Closing at a job and rate of pay (including commission structure)
comparable to each such employee's job.
ARTICLE 5.
INDEMNIFICATION
5.1 Indemnity by the Seller. The Seller and Encompass, jointly and
severally, agree to indemnify and hold harmless the Buyer and its
officers, managers and employees, from and after the Closing, against
any and all losses damages, liabilities, claims, deficiencies, costs,
expenses, and expenditures, including, without limitation, reasonable
attorney's fees and court and investigation costs (collectively, the
"Indemnity Losses") arising with respect to the following events (the
"Seller Events"):
(a) the breach by the Seller or Encompass of any of their
representations and warranties under this Agreement; or
(b) the failure by the Seller or Encompass to perform any of their
covenants under this Agreement.
5.2 Indemnity by the Buyer. The Buyer agrees to indemnify and hold harmless
the Seller and Encompass, its affiliates, and each of their respective
officers, directors, and employees, from and after the Closing, against
any and all Indemnity Losses arising with respect to each of the
following events (the "Buyer Events" and together with the Seller
Events, the "Indemnity Events"):
(a) Any sales or use tax liability arising out the transfer of the
Assets to the Buyer;
(b) Any liability or obligation of the Seller expressly assumed by the
Buyer pursuant to this Agreement;
(c) Any breach by the Buyer of any of its representations and
warranties under this Agreement; or
(d) The failure by Buyer to perform any of the covenants to be
performed by the Buyer under this Agreement.
5.3 Limitations on Indemnities. The obligations of indemnity provided above
in Sections 5.1 and 5.2 are subject to the following terms, conditions
and limitations:
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(a) The aggregate obligation of indemnity of the Seller pursuant to
Section 5.1 shall not exceed the Closing Cash Consideration; and
(b) The obligations of indemnity described in Sections 5.1 and 5.2
shall survive the Closing Date for one year; provided, however,
that obligations for indemnity related to each party's respective
obligations for tax matters shall survive until the applicable
statute of limitations for such tax obligation expires.
5.4 Notice of Indemnity Claim. A party seeking indemnity hereunder (an
"Indemnified Party") shall promptly notify the other party (the
"Indemnifying Party") in accordance with the terms of Section 9.8
hereunder, of the Indemnity Event in question after the Indemnified
Party becomes aware of the existence of such Indemnity Event specifying
with reasonable particularity the basis for such Indemnity Event;
provided, that the failure so to timely notify shall relieve the
Indemnifying Party from the obligation to indemnify against the
liability respecting such Indemnity Event only to the extent the
Indemnifying Party establishes by competent evidence that it is
prejudiced thereby. In any case, if any such action giving rise to an
Indemnity Event shall be brought, and the Indemnified Party shall
promptly notify the Indemnifying Party of the commencement thereof,
such Indemnified Party shall be entitled to participate in the defense
thereof at its own expense. Whether or not the Indemnified Party
chooses to participate in the defense or prosecution of any claim,
action, suit or proceeding with respect to an Indemnity Event, all the
parties hereto shall cooperate in the defense or prosecution thereof.
5.5 Sole Remedy. Except for fraud, the sole remedy of the Seller and
the Buyer for breach of the representations and warranties set forth
in Articles 3 and 4 shall be pursuant to this Article 5.
ARTICLE 6.
TAX MATTERS
6.1 Certain Taxes Other Than Federal, State and Local Income Taxes. All
transfer, documentary, sales, use, stamp, registration and other such
taxes and fees (including penalties and interest), if any, after giving
effect to Section 1146(c) of the Bankruptcy Code, incurred in
connection with this Agreement shall be paid by the Buyer when due, and
the Buyer shall, at its own expense, file all necessary tax returns and
other documentation with respect to all such transfer, documentary,
sales, use, stamp, registration and other such taxes and fees, and, if
required by applicable law, the Seller shall join in the execution of
any such tax returns and other documentation. The parties shall
cooperate with one another in the preparation of all Tax returns,
questionnaires, applications or other documents regarding any Taxes or
transfer, recording, registration or other fees which become payable in
connection with the transactions that are required to be filed on or
before the Closing.
6.2 Preparation and Filing of Certain Tax Forms. The Buyer shall prepare
and timely file all Forms W-2, 940, 941 and 1099 with all appropriate
governmental authorities, including without limitation any summary
schedules and transmittal forms, as well as any similar filings
required by any state or local governmental authority, with respect to
all wages
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and other reportable payments for the calendar year 2003. The Buyer
shall pay all administrative amounts owed as a result of or otherwise
related to such filings, with the exception of any tax, interest, or
penalties associated with periods prior to the Closing. The Seller will
pay, on or before they become due, any employment taxes withheld by it
which have not been previously paid.
ARTICLE 7.
EMPLOYEE MATTERS
7.1 The Buyer shall hire, (subject to each employee's agreement), effective
as of the Closing Date, all of the employees of the Seller on the day
immediately prior to the Closing Date (such employees being hereafter
referred to as the "Transferred Employees") at a comparable job and at
a rate of pay not less than each such Transferred Employee's pay as of
December 31, 2002. Upon request of the Buyer, the Seller shall provide
the Buyer reasonable access to data (including computer data) regarding
the ages, dates of hire, compensation and job description of the
Transferred Employees.
The Buyer shall not assume and not be responsible for any severance
costs associated with the termination of the Transferred Employees'
employment with the Seller. Notwithstanding the foregoing, the Buyer
agrees to assume any accrued severance for any employees of the Seller
terminated prior to the Closing Date; such accrued severance assumed by
the Buyer shall not exceed $74,000. The Buyer shall discharge all
liabilities and claims based on occurrences or conditions first
occurring or commencing on or after the Closing Date with respect to
Transferred Employees arising out of their employment with the Buyer
after the Closing Date, including, but not limited to, any claims
arising out of any employee benefit plan maintained by the Buyer,
except Buyer shall not assume any liabilities with respect to the WARN
Act or COBRA benefits for any terminations occurring prior to the
Closing Date even if the medical plan in place by Seller ceases to
exist.
At Closing, the Buyer shall make available or establish a group major
medical plan for the Transferred Employees and their dependents. The
Buyer shall credit the Transferred Employees with all service
recognized by the Seller under the Plans as service with the Buyer for
purposes of eligibility to participate, vesting and levels of benefits
available, under all employee benefit plans, programs and policies of
the Buyer, whether now existing or hereafter adopted (the "Buyer
Plans"). The Buyer shall waive any coverage waiting period,
pre-existing condition and actively-at-work requirements under the
Buyer Plans and shall provide that any expenses incurred before the
Closing Date by a Transferred Employee (and his or her dependents)
during the calendar year of the Closing shall be taken into account for
purposes of satisfying the applicable deductible, coinsurance and
maximum out-of-pocket provisions, and applicable annual and/or lifetime
maximum benefit limitations of the Buyer Plans. The Buyer Plans shall
not require contributions by Transferred Employees at a rate that
exceeds the rate in effect for other individuals in like positions
employed by the Buyer.
7.2 The Buyer shall be responsible for the payment of all amounts of wages,
bonuses and other remuneration (including discretionary benefits and
bonuses) payable to the
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Transferred Employees of the Seller accrued with respect to periods on
or prior to the Closing, (except for any employment taxes actually
withheld by the Seller), together with any worker's compensation claims
or amounts payable to such employees in connection with events
occurring on or prior to the Closing. In addition, the Buyer shall be
responsible for:
(a) all vacation pay and pay for other compensated absences earned or
accrued by the Transferred Employees as of the close of business on
the Closing Date to the appropriate employee, including any related
payroll burden (FICA and other pension or other employee benefit
plan contributions and employment taxes) with respect thereto to
the appropriate Governmental Authority or other person, to the
extent such pay has been accrued on the books of The Seller at such
close of business, based upon the remuneration of such employees
normally used in computing such pay for other compensated absences;
and
(b) amounts accrued for the Transferred Employees as of the Closing
Date with respect to the Encompass 401(k) plan, including without
limitation the accrued match, accrued payroll deductions and 401(k)
loan repayments; and
(c) the amount of accrued profit sharing contribution, if any, owing to
the Transferred Employees pursuant to the Encompass 401(k) Plan.
7.3 The Seller, Encompass and the Buyer agree that, as soon as practicable
after Closing, the account balances in the Encompass 401(k) Plan of the
Transferred Employees shall be transferred to a profit sharing plan
established or maintained by the Buyer (the "Buyer's 401(k) Plan") in
accordance with Section 414(l) of the Code, as amended, and the
regulations promulgated thereunder. In connection with such transfer,
the following provisions shall apply:
(a) To the extent allowable under applicable law, the Transferred
Employees shall be fully vested in their account balances under the
Encompass 401(k) Plan, regardless of their years of vesting service
credit as of their termination of employment with all affiliated
employers under the Encompass 401(k) Plan.
(b) The account balances of the Transferred Employees transferred to
the Buyer's 401(k) Plan shall be subject to the provisions of the
Buyer's 401(k) Plan effective as of the date of transfer; provided,
however that the Buyer's 401(k) Plan shall continue any benefits
under the Encompass 401(k) Plan as required under Section 411(d)(6)
of the Code.
(c) The outstanding loan of any Transferred Participant shall not be in
default as a result of the Transferred Employee's termination of
employment with Encompass or the Seller, but such loan shall be
transferred to the Buyer's 401(k) Plan in accordance with (b)
above.
The Buyer shall provide acceptable evidence to Encompass that the
Buyer's 401(k) Plan meets the requirements of Section 401(a) of the
Code prior to the date of such transfer. The Buyer, Encompass and
the Seller agree to take whatever
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action, including but not limited to plan amendments and
resolutions, to effectuate the transfer of such participants'
account balances according to this section.
Notwithstanding the foregoing, nothing in this Article 7 shall be
deemed or construed to give rise to any rights, claims, benefits, or
causes of action to any Transferred Employee or third party whatsoever
(including any governmental entity).
ARTICLE 8.
TERMINATION
8.1 Termination. This Agreement may be terminated at any time prior to the
Closing Date:
(a) By mutual written consent of the Buyer and the Seller;
(b) By either the Buyer or the Seller:
(i) if the Bankruptcy Court denies the Approval Motion, materially
revises the terms of the proposed Sale Order, or orders the
sale of the Assets to a third party; or
(ii) if the Closing shall not have occurred on or before the date
provided for in Section 2.1 including any extensions under that
Section, by reason of the failure of any condition precedent,
or unless the failure to consummate the transactions is the
result of a material breach of this Agreement by the party
seeking to terminate this Agreement;
(c) by the Buyer if the Seller breaches any of its representations and
warranties in any material respect herein or fails to perform in
any material respect any of its covenants, agreements, or
obligations under this Agreement; or
(d) by the Seller if the Buyer breaches any of its representations or
warranties in any material respect herein or fails to perform in
any material respect any of its covenants, agreements, or
obligations under this Agreement.
8.2 Effect of Termination. In the event of termination of this Agreement by
either the Seller or the Buyer as provided in Section 8.1, this
Agreement shall forthwith become void and have no effect, without any
liability or obligation on the part of the Seller or the Buyer, except
(i) to the extent that such termination results from the breach by a
party of any of its representations, warranties, covenants or
agreements set forth in this Agreement as contemplated by Sections 8.1
(c) and 8.1 (d), or (ii) to the extent that such termination results
from Buyer's failure to close at the Closing, without breach of the
Seller, once the Bankruptcy Court has approved the Transaction and this
Agreement pursuant to the Sale Order.
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ARTICLE 9.
GENERAL
9.1 The Seller Name and Logos. As soon as practicable (but in any event
within 90 days) after the Closing Date, the Buyer, at its expense,
shall remove all Encompass names and logos from all of the Assets.
Except as set forth in Article 1, nothing in this Agreement shall
constitute a license or authorization for the Buyer to use in any
manner any name, logo or xxxx owned by or licensed to the Seller and
its affiliates.
9.2 Access to Records and Properties; Assistance.
(a) For a period of seven years following the Closing, the parties
hereto shall afford each other reasonable access to the Records of
the Seller and the Business as well as the properties related to
the Seller and the Business to (i) complete any financial
statements or audits thereof or tax returns, (ii) defend any tax
disputes or claims or respond to any requests in connection with
any tax audits, (iii) comply with any legal request or order, (iv)
defend any disputes, claims, prosecution or litigation including
any enforcement of rights against third parties in the Bankruptcy
Court, or (v) for any other reasonable purpose.
(b) Commencing the month of the Closing, and for as long as any work
for which Encompass has posted a bond remains to be completed under
the Assigned Contracts, Buyer shall provide Seller and Encompass a
monthly report in terms reasonably acceptable to Seller and
Encompass summarizing Buyer's current contract status and cost to
complete with respect to any such bonded work under an Assumed
Contract for which Encompass is an indemnitor.
9.3 Public Announcements. Neither Buyer, Seller nor Encompass will make any
public disclosure of this Agreement or the transactions contemplated
hereby without prior consultation with the other party hereto, except
for such disclosure as may be required by applicable laws (to be deemed
to include without limitation the Bankruptcy Code) or by obligations
pursuant to any listing agreement with any national securities exchange
to which either may be a party.
9.4 Assignment. This Agreement and the rights of the parties hereunder may
not be assigned (except by operation of law) and shall be binding upon
and shall inure to the benefit of the parties hereto and the successors
to the parties hereto, provided, however, that Encompass, Seller and
Buyer may assign their respective rights hereunder to any of their
respective direct or indirect wholly-owned subsidiary or subsidiaries.
Signatures on this Agreement delivered by fax or telecopier shall be
considered original signatures for purposes of effectiveness of this
Agreement
9.5 Counterparts. This Agreement may be executed simultaneously in two or
more counterparts, each of which shall be deemed an original and all of
which together shall constitute but one and the same instrument.
9.6 Fees and Expenses. Whether or not the transactions herein contemplated
shall be consummated, (i) the Seller and Encompass will pay the fees,
expenses and
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disbursements of the Seller, Encompass, and their agents,
representatives, accountants and counsel incurred in connection with
the subject matter of this Agreement and any amendments thereto, and
(ii) the Buyer will pay the fees, expenses and disbursements of the
Buyer and its agents, representatives, accountants and counsel incurred
in connection with the subject matter of this Agreement and any
amendments hereto.
9.7 Notices. Any notice or communication required or permitted hereunder
shall be sufficiently given if sent by first class mail, postage
prepaid:
(a) If to the Seller or Encompass, addressed to it at:
Encompass Services Corporation
0 Xxxxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx, XX 00000
Attention: Corporate Secretary
(b) With a copy to its counsel at:
Bracewell & Xxxxxxxxx, L.L.P.
000 Xxxxxxxxx Xx., Xxxxx 0000
Xxxxxxx, XX 00000
Attention: Xxxxxxxx X. Xxxx
(c) If to the Buyer, addressed to it at:
IES ENC, Inc.
0000 Xxxx Xxxx Xxxxx, Xxxxx 000
Xxxxxxx, XX 00000
Attention: Xxxx X. Xxxxxxx
(d) With a copy to its counsel at:
Xxxxxx & Xxxxxx, LLP
000 Xxxxxxxxx Xx., Xxxxx 0000
Xxxxxxx, XX 00000-0000
Attention: Xxxx Xxxxxxx
9.8 Opportunity to Investigate. All of the parties have had an opportunity
to investigate and evaluate the Assets being purchased, have relied on
independent professional advice and, therefore, agree that the price to
be paid by the Buyer for the Assets is reasonably equivalent value for
the Assets.
9.9 Governing Law and Jurisdiction. THIS AGREEMENT (AND ALL DOCUMENTS,
INSTRUMENTS, AND AGREEMENTS EXECUTED AND DELIVERED PURSUANT TO THE
TERMS AND PROVISIONS HEREOF (THE "ANCILLARY DOCUMENTS") SHALL BE
GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE
BANKRUPTCY CODE AND TO THE EXTENT NOT INCONSISTENT WITH THE BANKRUPTCY
CODE, THE INTERNAL LAWS OF
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THE STATE OF COLORADO WITHOUT GIVING EFFECT TO THE PRINCIPLES OF
CONFLICTS OF LAW THEREOF. THE BUYER AND THE SELLER FURTHER AGREE THAT
THE BANKRUPTCY COURT SHALL HAVE EXCLUSIVE JURISDICTION OVER ALL
DISPUTES AND OTHER MATTERS RELATING TO (A) THE INTERPRETATION AND
ENFORCEMENT OF THIS AGREEMENT OR ANY ANCILLARY DOCUMENT AND (B) THE
ACQUIRED ASSETS AND THE ASSUMED LIABILITIES. BUYER CONSENTS TO AND
EXPRESSLY CONSENTS TO AND AGREES NOT TO CONTEST SUCH EXCLUSIVE
JURISDICTION; PROVIDED, HOWEVER, THAT IF THE BANKRUPTCY COURT REFUSES
TO ACCEPT JURISDICTION OVER ANY SUCH DISPUTE, THEN ANY STATE OR FEDERAL
COURT LOCATED IN THE STATE OF COLORADO SHALL HAVE JURISDICTION OVER
SUCH DISPUTE AND BUYER AND THE SELLER HEREBY CONSENT TO THE
JURISDICTION OF SUCH COURT IN ANY SUCH CASE.
9.10 Conflicts. In case any provision in this Agreement shall conflict with
any part of the Sale Order, the terms of the Sale Order shall control
and shall be given precedence by the parties hereto over any such
conflicting term in this Agreement.
9.11 Captions. The captions in this Agreement are for convenience only and
shall not be considered a part hereof or affect the construction or
interpretation of any provisions of this Agreement.
9.12 Entire Agreement. This Agreement and the documents delivered pursuant
hereto constitute the entire agreement and understanding between the
Seller and the Buyer and supersede any prior agreement and
understanding relating to the subject matter of this Agreement. This
Agreement may be modified or amended only by a written instrument
executed by the Seller and the Buyer acting through their duly elected
officers.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
THE SELLER:
ENCOMPASS ELECTRICAL
TECHNOLOGIES - ROCKY
MOUNTAINS, INC.
-----------------------------------
Name:
Title:
ENCOMPASS:
ENCOMPASS SERVICES CORPORATION
-----------------------------------
Name:
Title:
THE BUYER:
IES ENC, INC.
-----------------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: Chief Financial Officer
