EXHIBIT 10.2
ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT (this "AGREEMENT") is made and entered
into as of January 31, 2005 by and among INTEGRATED ELECTRICAL SERVICES, INC., a
Delaware corporation (the "PARENT"), DKD ELECTRIC CO., INC., a New Mexico
corporation (the "COMPANY"), DKD ELECTRIC LLC, a New Mexico limited liability
company (the "BUYER"), and J. XXX XXXXXX, XX., an individual and resident of the
State of New Mexico ("INDEMNITOR").
WITNESSETH:
WHEREAS, the Parent owns, either directly or indirectly, all of the
issued and outstanding capital stock of the Company, which is engaged in the
electrical construction and services business (the "BUSINESS");
WHEREAS, the Parent and the Company desire to sell to the Buyer
substantially all of the Company's assets, which are more fully described in
Section 1.1 hereof, and the Buyer desires to acquire such assets in
consideration of the payment by the Buyer of the purchase price and the
assumption by the Buyer of the liabilities provided for herein, all upon the
terms and subject to the conditions hereinafter set forth;
WHEREAS, Indemnitor is a Member of the Buyer and has agreed to
personally guarantee to the Parent and the Company the Buyer's performance of
all representations, warranties, covenants, agreements and conditions set forth
herein;
NOW, THEREFORE, for and in consideration of the premises and of the
respective representations, warranties, covenants, agreements and conditions of
the parties contained herein, it is hereby agreed as follows:
1. PURCHASE AND SALE OF ASSETS.
1.1 Transfer of Assets. On the terms and subject to the conditions set
forth in this Agreement, on the Closing Date (as defined in Section 2.1 hereof),
the Company shall sell, convey, assign, transfer and deliver to the Buyer, and
the Buyer shall purchase and acquire from the Company (except as provided in
Section 1.2 hereof) all of the assets, rights and properties of the Parent or
the Company set forth on Schedule 1.1. The assets described in this Section 1.1
as being sold, conveyed, assigned, transferred and delivered to the Buyer
hereunder are sometimes hereinafter referred to collectively as the "ASSETS".
1.2 Excluded Assets. It is expressly understood and agreed that the
Assets shall not include the following (such assets are hereinafter referred to
collectively as the "EXCLUDED ASSETS"):
(a) Cash and cash equivalents or similar type investments,
such as certificates of deposit, Treasury bills and other marketable
securities;
(b) Claims for refunds of taxes and other governmental charges
to the extent such refunds relate to periods ending on or prior to the
Closing Date;
(c) Any asset, tangible or intangible, which is not freely
transferable without the consent of a third party, upon the failure to
obtain such consent;
(d) The original corporate minute books, stock books,
financial records, tax returns, personnel and payroll records and
corporate policies and procedures manuals of the Company and other
records required by applicable laws to be retained;
(e) Any contract or agreement, whether written or oral,
between the Company and IES Contractors, Inc.; and
(f) Any asset not set forth on Schedule 1.1.
1.3 Instruments of Conveyance and Transfer.
(a) At the Closing, the Buyer, the Company and the Parent
shall enter into a Xxxx of Sale, Assignment and Assumption Agreement in
the form attached hereto as Exhibit A, transferring to the Buyer good
and indefeasible title to all of the tangible personal property
included in the Assets, subject only to Permitted Encumbrances.
(b) At the Closing, the Buyer and the Parent shall deliver
such other instruments of transfer and assignment in respect of the
Assets as the Buyer shall reasonably require and as shall be consistent
with the terms and provisions of this Agreement.
(c) At the Closing, the Buyer shall, and shall cause the
Transferred Employees (as hereinafter defined) to, resign as officers
and directors of the Company and any other affiliates of the Parent.
1.4 Further Assurances. From time to time after the Closing, the Parent
and the Company will execute and deliver, or cause to be executed and delivered,
without further consideration, such other instruments of conveyance, assignment,
transfer and delivery and will take such other actions as the Buyer may
reasonably request in order to more effectively transfer, convey, assign and
deliver to the Buyer, and to place the Buyer in possession and control of any of
the Assets or to enable the Buyer to exercise and enjoy all rights and benefits
of the Company with respect thereto.
1.5 Liabilities. On the Closing Date, the Buyer will assume and agree
to pay and discharge all liabilities of the Company, known or unknown, absolute
or contingent (the "ASSUMED LIABILITIES") other than the liabilities set forth
on Schedule 1.5 (the "RETAINED LIABILITIES"), which shall be retained by the
Parent or the Company, respectively.
1.6 Expenses: Consents and Taxes. The Buyer shall pay, or cause to be
paid (i) all costs and expenses of obtaining all consents of third parties for
the assignment of any of the Assets, and (ii) all transfer, stamp, sales, use or
other similar taxes or duties payable in connection with the sale and transfer
of the Assets to the Buyer.
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2. CLOSING; PURCHASE PRICE.
2.1 Closing Date. The consummation of the transactions contemplated in
this Agreement (the "CLOSING") shall take place at the offices of Gardere Xxxxx
Xxxxxx LLP, 0000 Xxxxxxxxx, Xxxxx 0000, Xxxxxxx, Xxxxx at 10:00 a.m., Central
time, January 31, 2005 (the "CLOSING DATE") contemporaneously with the execution
of this Agreement or at such other place and time as the parties hereto may
mutually agree.
2.2 Purchase Price. The aggregate purchase price for the Assets shall
be $3,000,000 (the "PURCHASE PRICE"), subject to adjustment pursuant to Section
2.3 below, plus the Buyer's assumption of the Assumed Liabilities pursuant to
Section 1.5 above. The Purchase Price shall be payable by the Buyer at the
Closing to the Company in immediately available funds by confirmed wire transfer
to a bank account to be designated by the Company.
2.3 Cash Reconciliation. (a) Within 90 days following the Closing Date,
the Company shall prepare and deliver to the Buyer a schedule setting forth, for
the period commencing on October 1, 2004, and ending as of the Closing, (a) the
cash disbursements funded by the Company, the Parent or any of their affiliates
for the benefit of the Company, to include those made in the ordinary course to
trade vendors and those made in the ordinary course for Company employee benefit
plans (the "DISBURSEMENTS"), and (b) the cash deposits made by the Company (the
"DEPOSITS"). Within three business days of the receipt of such schedule, (i) the
Buyer shall remit to the Company in immediately available funds, the amount by
which the Disbursements exceed the Deposits, if any; provided, however, that if
such amount exceeds $250,000, then $250,000 shall be due and payable on such
third business day and the amounts in excess of $250,000 shall be due and
payable on the 180th day following the Closing, or (ii) the Company 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 Company or the Parent on behalf
of the Company with respect to pre-Closing periods, including (i) amounts paid
after September 30, 2004 for checks issued by the Company or Parent on behalf of
the Company on or before September 30, 2004 that had not cleared the banks on
September 30, 2004, which amounts were reflected on the September 30, 2004
balance sheet as negative cash amounts, (ii) checks issued by the Company or
Parent on behalf of the Company subsequent to September 30, 2004, but before the
Closing that have not cleared the banks as of the Closing, (iii) workers
compensation, general liability, auto insurance, health and similar insurance
premiums paid by the Parent on behalf of the Company with respect to periods
prior to the Closing, whether accrued prior to or after the Closing, and (iv)
other amounts paid by the Company or by the Parent on behalf of the Company with
respect to periods prior to the Closing, but for which invoices are received or
accruals are made after the Closing Date. Deposits shall include, but not be
limited to, actual cash amounts received by the Company or the Parent on behalf
of the Company subsequent to September 30, 2004, but before the Closing that
have not been reflected in the Company's accounts as of the Closing. Except as
specifically set forth in paragraph 2.3(b) below, Disbursements and Deposits
will be accounted for in accordance with Parent's accounting practices
consistent with past periods.
(b) At the Closing, the Parent shall pay to the Buyer a total of
$118,000 on behalf of Pan American Electric Company, Inc. ("PAN AM"), through an
offset to the Purchase Price, on account of certain accounts receivable and work
in process owed to the Company by Pan Am for work done on the Holy Cross job,
which accounts receivable and work in process would otherwise be included
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among the Assets, in full and final satisfaction of all amounts owed to the
Company by the Parent, Pan Am, or any of their respective affiliates in
connection with the Holy Cross project. At the Closing, the Parent shall pay to
the Buyer a total of $51,643.10 on behalf of Federal Communications Group, Inc.
("FCG"), through an offset to the Purchase Price, on account of amounts owed by
FCG to the Company, which amounts would otherwise be an account receivable or
work in process included among the Assets, in full and final satisfaction of all
amounts owed by FCG to the Company. Amounts offset against the Purchase Price in
accordance with the above will not be treated as Disbursements. Further,
Disbursements shall not include (i) lease payments and associated costs paid by
the Company to FCG for the Xerox machine listed in Schedule 1.5, 7(b), or (ii)
fees in the amount of $5,700 paid to Xxxxxxx & Wakefield in connection with the
early termination of the Las Vegas, NV lease.
(c) The Buyer and Parent, on its own behalf and on behalf of FCG, agree
that $68,311.91 is owed by the Company to FCG at the Closing and shall not be
due and payable until 180 days following the Closing Date. All amounts owed by
the Company or the Buyer to FCG other than such $68,311.91 amount shall be paid
in full by Buyer to FCG when due.
2.4 Purchase Price Allocation. As soon as practicable after the Closing
Date, the Company and the Buyer shall jointly attempt to agree to and prepare
IRS Form 8594 to report the allocation of the Purchase Price among the Assets.
Each party hereto agrees not to assert, in connection with any tax return, tax
audit or similar proceeding, any allocation that differs from that set forth in
such Form 8594. If the Company and the Buyer cannot reach agreement as to the
allocation of the Purchase Price among the Assets, the parties agree to allocate
the Purchase Price among the Assets for all purposes (including financial
accounting and tax purposes) independently.
3. REPRESENTATIONS AND WARRANTIES.
3.1 Representations and Warranties of the Company and the Parent. The
Company and the Parent represent and warrant to the Buyer as follows:
(a) Organization, Authority and Qualification of the Company.
The Company is a corporation duly organized and validly existing under
the laws of the State of New Mexico and the Company has full corporate
power and authority to own or lease its properties and to carry on its
business in such state. The Company has the full corporate power and
authority to execute, deliver and perform this Agreement, and this
Agreement has been duly and validly executed and delivered by the
Company and constitutes the valid and legally binding obligation of the
Company, subject to general equity principles, enforceable in
accordance with its terms, except as the same may be limited by
bankruptcy, insolvency, reorganization or similar laws affecting the
rights of creditors generally.
(b) No Violation. The Company is not in default under or in
violation of its Articles of Incorporation or Bylaws.
(c) Title to Properties; Absence of Liens and Encumbrances.
The Company owns good and indefeasible title to the Assets, free and
clear of all claims, liens, security interests, charges, leases,
encumbrances, licenses or sublicenses and other restrictions of any
kind and nature, other than the claims, liens, security interests,
charges,
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leases, encumbrances, licenses or sublicenses either included among the
Assumed Liabilities or specifically set forth on Schedule 3.1(c) hereto
("PERMITTED ENCUMBRANCES").
3.2 Representations and Warranties of the Buyer. The Buyer and
Indemnitor, jointly and severally, represent and warrant to the Parent and the
Company as follows:
(a) Organization, Authority and Qualification of the Buyer.
The Buyer is a limited liability company duly organized and validly
existing under the laws of the State of New Mexico and the Buyer has
full corporate power and authority to own or lease its properties and
to carry on its business in such state. The Buyer has the full
corporate power and authority to execute, deliver and perform this
Agreement, and this Agreement has been duly and validly executed and
delivered by the Buyer and constitutes the valid and legally binding
obligation of the Buyer, subject to general equity principles,
enforceable in accordance with its terms, except as the same may be
limited by bankruptcy, insolvency, reorganization or similar laws
affecting the rights of creditors generally.
(b) No Violation. The Buyer is not in default under or in
violation of its Articles of Organization or Operating Agreement.
(c) Certain Fees. The Buyer has not employed any broker or
finder or incurred any other liability for any brokerage fees,
commissions or finders' fees in connection with the transactions
contemplated hereby.
(d) Financial Information. The financial and management
reports (including, without limitation, WIP schedules) heretofore
delivered or made by Indemnitor or the Company to the Parent are true
and correct in all material respects and do not omit to state any fact
necessary to make any of them, in light of the circumstances in which
made, not misleading. All executed change orders have been recorded,
all agreed change orders have been executed or are listed on Schedule
3.2(d), and all checks and cash received by the Company and its
affiliates have been deposited.
3.3 No Warranty. The Buyer and the Indemnitor acknowledge that the
Indemnitor, through previous ownership and/or management of the Company, is
familiar with the Assets and the operations of the Company, and has access to
any information pertaining thereto and has made such information available to
Buyer. Neither the Company nor the Parent, nor any of their respective
directors, officers, employees, 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 and the Indemnitor have not relied upon and will not rely
upon, any express or implied representations, warranties, guaranties, promises
or statements pertaining to the Business or Assets except as specifically
provided in this Agreement. The Buyer and the Indemnitor acknowledge that in
making the decision to enter into this Agreement and to consummate the
transactions contemplated hereby, they have relied solely on the basis of their
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 Company and the Parent in this Agreement and without
affecting or impairing their right to rely thereon, the Buyer and the Indemnitor
acknowledge that (a) they have not relied, in whole or in part, on any
information contained in documents, materials or other information provided to
them by, or
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on behalf of, Company or the Parent, and (b) neither Company nor the Parent 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. ACCORDINGLY, THE ASSETS ARE BEING TRANSFERRED "AS IS, WHERE IS." EXCEPT
FOR THE REPRESENTATIONS AND WARRANTIES SET FORTH IN SECTION 3.1 OF THIS
AGREEMENT, THE COMPANY AND PARENT MAKE ABSOLUTELY NO REPRESENTATIONS OR
WARRANTIES WHATSOEVER, EXPRESS OR IMPLIED, REGARDING THE ASSETS, INCLUDING
WITHOUT LIMITATION ANY IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS FOR A
PARTICULAR PURPOSE, OR THE ABILITY OF THE COMPANY TO ASSIGN THE ASSETS, OR
OBTAIN CONSENTS TO ANY ASSIGNMENT.
4. COVENANTS; ACTION SUBSEQUENT TO CLOSING.
4.1 Access to Books and Records. Until the third anniversary of the
Closing Date, the Parent and the Company shall afford, and will cause its
affiliates to afford, to the Buyer, its counsel, accountants and other
authorized representatives, during normal business hours, reasonable access to
the books, records and other data of the Company and the Business with respect
to periods ending on or prior to the Closing Date to the extent that such access
may be reasonably required by the Buyer to facilitate (i) the investigation,
litigation and final disposition of any claims which may have been or may be
made against the Buyer in connection with the Business or (ii) for any other
reasonable business purpose. Following the Closing, the Buyer shall prepare and
deliver to the Parent on or before February 12, 2005, on behalf of the Company,
all regularly prepared financial reports and statements for periods up to and
including the Closing Date, and shall cooperate with and provide assistance to
the Parent and the Company in their financial and tax reporting obligations for
the periods up to and including the Closing Date.
4.2 Mail. The Parent and the Company authorize and empower the Buyer on
and after the Closing Date to receive and open all mail received by the Buyer
relating to the Business or the Assets and to deal with the contents of such
communications in any proper manner. The Parent and the Company shall promptly
deliver to the Buyer any mail or other communication received by them after the
Closing Date pertaining to the Business or the Assets. The Buyer shall promptly
deliver to the Parent any mail or other communication received by it after the
Closing Date pertaining to the Excluded Assets or Retained Liabilities, and any
cash, checks or other instruments of payment in respect of the Excluded Assets.
As soon as is practicable after the Closing Date, and in no event more than ten
days thereafter, the Buyer shall mail to its customers and vendors a notice of
the sale in the form provided by the Parent, with such changes thereto as Buyer
and Parent shall agree.
4.3 No Consent Contracts. To the extent that any contract of the
Company included in the Assets may not be assigned without the consent of any
third party, and such consent is not obtained prior to Closing (such contracts
referred to as "NO CONSENT CONTRACTS"), this Agreement and any assignment
executed at Closing pursuant hereto shall not constitute an assignment thereof,
but to the extent permitted by law shall constitute an equitable assignment by
the Company and assumption by the Buyer of the Company's rights and obligations
under the applicable No Consent
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Contract, with the Company making available to the Buyer the benefits thereof
and the Buyer performing the obligations thereunder on the Company's behalf.
4.4 Preparation and Filing of Certain Tax Forms. The Buyer shall
prepare and submit to the Parent for signature and timely filing all Forms W-2,
940, 941 and 1099 with all appropriate Governmental Entities, including without
limitation any summary schedules and transmittal forms, as well as any similar
filings required by any state or local Governmental Entity, with respect to all
wages and other reportable payments for the calendar year 2004 and for the
partial year in 2005 ending on the Closing Date. As used herein, "GOVERNMENTAL
ENTITY" means any court or tribunal in any jurisdiction (domestic or foreign) or
any public, governmental or regulatory body, agency, department, commission,
board, bureau or other authority or instrumentality, domestic or foreign. 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 Company will pay, on or before
they become due, any employment taxes withheld by it which have not been
previously paid. The Buyer, Parent and the Company shall cooperate in making all
such filings and shall make available to the others such information as any of
them requires to assure such filings are made on a timely and accurate basis.
4.5 The Parent 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 the Parent and its affiliates' names and logos from all of the Assets.
Except as specifically provided in Section 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 Company, the Parent or their
respective affiliates which bears any reference to IES or any subsidiary of IES
other than the Company. The name "DKD" and "DKD Electric" shall become the
exclusive property of the Buyer following the Closing and shall not be used by
the Company, Parent or their respective affiliates; provided that Parent will be
given a reasonable period of time (not to exceed 90 days) to change the
Company's name after the Closing Date.
4.6 Leased Assets. At the Closing, the Buyer, at its expense, shall pay
off or refinance the leases on the vehicles listed on Schedule 4.6 attached
hereto, and in connection therewith shall obtain the release of Parent and the
Company for all liability under such vehicle leases. As soon as practicable (but
in any event within 90 days) after the Closing Date, the Buyer, at its expense,
shall pay off or refinance the leases on the other assets listed on Schedule 4.6
attached hereto, and in connection therewith shall obtain the release of Parent
and the Company for all liability under such leases.
4.7 Chubb Bonds. Buyer agrees that at the Closing it shall execute and
deliver to the Federal Insurance Company and its subsidiary or affiliated
insurers and any applicable co-sureties (collectively, "FEDERAL"), a General
Agreement of Indemnity in the form attached as Exhibit B, pursuant to which
Buyer and Indemnitor agree to (i) indemnify Federal with respect to the
performance and completion of the bonded obligations as set forth therein; and
(ii) replace within ninety (90) days the bonds identified as Cancelable Bonds
therein. Buyer further agrees to continue to provide to Federal monthly written
reports (with a copy to the Parent) as to the progress of the completion of the
bonded jobs. Buyer and Indemnitor further agree to provide, from time to time
and at the request of the Parent, a certificate or certificates certifying that
the Cancelable Bonds have
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been replaced, and as to such other matters concerning the performance by the
Buyer of its post-closing obligations under this Agreement as Parent shall
request.
4.8 Retained Claims. The Company shall retain liability for certain
insured claims as set forth in Schedule 1.5, paragraphs 5 and 9 (the "RETAINED
CLAIMS"). The Buyer and the Indemnitor agree to cooperate with the Company and
the Parent in the defense of the Retained Claims and to make available the
Buyer's personnel and facilities for that purpose. The Company shall retain as
Excluded Assets and not transfer to the Buyer all books and records associated
with the Retained Claims, as well as reserves established on the books of the
Company for the Retained Claims.
5. INDEMNIFICATION.
5.1 Survival. The representations and warranties of the Company, the
Parent, the Buyer and the Indemnitor contained in this Agreement, any schedules
delivered by or on behalf of the Company and the Buyer pursuant to this
Agreement, or in any certificate, instrument, agreement or other writing
delivered by or on behalf of the Company, the Parent, the Buyer or the
Indemnitor pursuant to this Agreement shall survive the consummation of the
transactions contemplated herein; provided that all such representations and
warranties of the Company and the Parent shall be of no further force and
effect, and no claim for indemnification by the Buyer pursuant to this Section 5
may be brought for any reason, after the expiration of twelve (12) months from
the Closing Date (the "SURVIVAL PERIOD"), except for the representations and
warranties contained in Section 3.1(c), which shall survive indefinitely.
Anything to the contrary notwithstanding, a claim for indemnification which is
made but not resolved prior to the expiration of the Survival Period may be
pursued and resolved after such expiration.
5.2 Indemnification by the Company.
(a) In accordance with and subject to the provisions of this
Section 5, the Company and the Parent shall indemnify and hold harmless
the Buyer from and against and in respect of any and all loss, damage,
diminution in value, liability, cost and expense, including reasonable
attorneys' fees and amounts paid in settlement (collectively, the
"BUYER INDEMNIFIED LOSSES"), suffered or incurred by the Buyer by
reason of, or arising out of (i) any misrepresentation or breach of
representation or warranty of the Company or the Parent contained in
this Agreement, or in any schedules delivered to the Buyer by or on
behalf of the Company or the Parent pursuant to this Agreement; (ii)
the breach of any covenant or agreement of the Company or the Parent
contained in this Agreement; or (iii) the Retained Liabilities.
(b) The Company and the Parent shall reimburse the Buyer on
demand for any Buyer Indemnified Losses suffered by the Buyer with
respect to matters other than claims, actions or demands brought, made
or instituted by a third party ("THIRD PARTY CLAIMS"). With respect to
Third Party Claims, the Company and the Parent shall reimburse the
Buyer on demand for any Buyer Indemnified Losses suffered by the Buyer,
based on the judgment of any court of competent jurisdiction or
pursuant to a bona fide compromise or settlement in respect of any
Buyer Indemnified Losses. The Company and the Parent shall have the
opportunity to defend at their expense any claim, action or demand for
which the Buyer claims indemnity against the Company or the Parent;
provided that: (i) the defense is
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conducted by reputable counsel; (ii) the defense is expressly assumed
in writing within twenty (20) days after written notice of the claim,
action or demand is delivered to the Company and the Parent; and (iii)
counsel for the Buyer may participate at all times and in all
proceedings (formal and informal) relating to the defense, compromise
and settlement of the claim, action or demand at the expense of the
Buyer.
5.3 Indemnification by the Buyer.
(a) In accordance with and subject to the provisions of this
Section 5, the Buyer and Indemnitor shall, jointly and severally,
indemnify and hold harmless the Company, the Parent and their
respective affiliates (for purposes of this Section 5, the "COMPANY
INDEMNITEES") from and against and in respect of any and all loss,
damage, diminution in value, liability, cost and expense, including
reasonable attorneys' fees and amounts paid in settlement
(collectively, the "COMPANY INDEMNIFIED LOSSES"), suffered or incurred
by the Company Indemnitees by reason of, or arising out of (i) any
misrepresentation or breach of representation or warranty of the Buyer
or Indemnitor contained in this Agreement, or in any schedules
delivered to the Company or the Parent by or on behalf of the Buyer or
Indemnitor pursuant to this Agreement; (ii) or the breach of any
covenant or agreement of the Buyer or Indemnitor contained in this
Agreement; (iii) the Assumed Liabilities, including, without
limitation, any liability to sureties with respect to bonded jobs; or
(iv) the operation of the Business following the Closing, including,
but not limited to, any claims made by Transferred Employees concerning
COBRA, the WARN Act, unemployment claim liability, or any similar
matters as a result of the termination by Buyer of the Transferred
Employees.
(b) The Buyer and the Indemnitor, jointly and severally (the
"BUYER INDEMNIFYING PARTIES"), shall reimburse the Company Indemnitees
on demand for any Company Indemnified Losses suffered by the Company
Indemnitees with respect to matters other than Third Party Claims. With
respect to Third Party Claims, the Buyer Indemnifying Parties shall
reimburse the Company Indemnitees on demand for any Company Indemnified
Losses suffered by the Company Indemnitees, based on the judgment of
any court of competent jurisdiction or pursuant to a bona fide
compromise or settlement in respect of any Company Indemnified Losses.
The Buyer Indemnifying Parties shall have the opportunity to defend at
their expense any claim, action or demand for which the Company
Indemnitees claim indemnity against the Buyer Indemnifying Parties;
provided that: (i) the defense is conducted by reputable counsel; (ii)
the defense is expressly assumed in writing within twenty (20) days
after written notice of the claim, action or demand is delivered to the
Buyer Indemnifying Parties; and (iii) counsel for the Company and the
Parent may participate at all times and in all proceedings (formal and
informal) relating to the defense, compromise and settlement of the
claim, action or demand at the expense of the Company and the Parent.
5.4 Limitation and Payment on Claims. No claim shall be brought under
this Section 5 for breach of any Representation or Warranty in Section 3.1, and
no party hereto shall be entitled to receive any payment with respect thereto,
until such time as, and only to the extent that, the aggregate amount of such
claim(s) that such party has equals or exceeds $100,000 (the "DEDUCTIBLE");
provided, however, that the Deductible shall not apply to any obligations under
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Section 2.3. Anything to the contrary notwithstanding, the Company and the
Parent shall not be liable under this Section 5 for Buyer Indemnified Losses in
excess of the Purchase Price.
5.5 Sole Remedy. The sole remedy of the Company, the Parent and the
Buyer Indemnifying Parties for breach of the representations and warranties set
forth in Section 3 shall be pursuant to this Section 5.
5.6 No Construction Contract. Parent, Company, Buyer and Guarantor each
agree that N.M.S.A. 1978 Section 56-7-1 is not applicable to this Agreement
because this Agreement is not a "construction contract" as defined by N.M.S.A.
1978 Section 56-7-1(D), and because the Parties have agreed that the internal
laws of the State of Texas will govern their relationship. Parent, Company and
Buyer each agree that this Agreement pertains solely to the purchase of assets
by Buyer from Parent and Company and not to an agreement relating to the
construction, alteration, repair or maintenance of any real property in New
Mexico.
6. DISPUTE RESOLUTION.
6.1 Arbitration.
(a) Any controversy, dispute or claim arising out of or
relating in any way to this Agreement or the other agreements
contemplated by this Agreement or the transactions arising hereunder
(including the validity, interpretation or applicability of this
Section 6.1) shall be settled exclusively by final and binding
arbitration in Houston, Texas. Such arbitration will apply the laws of
the State of Texas and the commercial arbitration rules of AAA to
resolve the dispute. To the extent possible, any arbitration will be
administered by the AAA solely with respect to the appointment of the
arbitrator, and in all other respects the arbitrator will be
administered by the appointed arbitrator.
(b) Written notice of arbitration must be given within one
year after the notifying party has actual knowledge of accrual of the
claim on which the notice is based. If the claiming party fails to give
notice of arbitration within that time, the claim shall be deemed to be
waived and shall be barred from either arbitration or litigation.
(c) Such arbitration shall be conducted by one independent and
impartial arbitrator to be selected by mutual agreement of the parties,
if possible. If the parties fail to reach agreement regarding
appointment of an arbitrator within thirty (30) days following receipt
by one party of the other party's notice of arbitration, the arbitrator
shall be selected from a list or lists of proposed arbitrators
submitted by AAA. Unless the parties agree otherwise, the arbitrator
shall be a licensed attorney with at least ten years of experience in
the practice of law. The selection process shall be that which is set
forth in the AAA commercial arbitration rules then prevailing, except
that (A) the number of preemptory strikes shall not be limited and (B),
if the parties fail to select an arbitrator from one or more lists, AAA
shall not initially have the power to make an appointment but shall
continue to submit additional lists until an arbitrator has been
selected, but if no such arbitrator is selected within one hundred
twenty (120) days after the receipt of the first notice of arbitration,
the AAA shall have the power to make an appointment and shall promptly
do so. Initially, however, promptly following its receipt of a request
to submit a list of proposed
10
arbitrators, AAA shall convene the parties in person or by telephone
and attempt to facilitate their selection of an arbitrator by
agreement. If the arbitrator should die, withdraw or otherwise become
incapable of serving, a replacement shall be selected and appointed in
a like manner.
(d) The arbitrator shall render an opinion setting forth
findings of fact and conclusions of law with the reasons therefor
stated. A transcript of the evidence adduced at the hearing shall be
made and shall, upon request, be made available to either party. The
fees and expenses of the arbitrator shall be shared equally by the
parties and advanced by them from time to time as required; provided
that at the conclusion of the arbitration, the arbitrator may award
costs and expenses (including the costs of the arbitration previously
advanced and the fees and expenses of attorneys, accountants and other
experts). No pre-arbitration discovery shall be permitted, except that
the arbitrator shall have the power in his or her sole discretion, on
application by either party, to order the production of documents in
accordance with the commercial arbitration rules, and to order
pre-arbitration examination of the witnesses and documents that the
other party intends to introduce in its case-in-chief at the
arbitration hearing. The arbitrator shall render his or her opinion
and/or award within ninety (90) days of the conclusion of the
arbitration hearing. The arbitrator shall not be empowered to award to
either party any punitive damages in connection with any dispute
between them arising out of or relating in any way to this Agreement or
the other agreements contemplated hereby or the transactions arising
hereunder or thereunder, and each party hereby irrevocably waives any
right to recover such damages. The arbitration hearings and award shall
be maintained in confidence.
Notwithstanding anything to the contrary provided in this Section 6.1 and
without prejudice to the above procedures, either party may apply to any court
of competent jurisdiction for temporary injunctive or other provisional judicial
relief if such action is necessary to avoid irreparable damage or to preserve
the status quo until such time as the arbitrator is selected and available to
hear such party's request for temporary relief. The award rendered by the
arbitrator shall be final and not subject to judicial review and judgment
thereon may be entered in any court of competent jurisdiction.
7. EMPLOYEE MATTERS.
7.1 Hiring.
(a) The Buyer shall hire (subject to each employee's
agreement), effective as of the Closing Date, all of the employees of
the Company on the day immediately prior to the Closing Date, active or
inactive (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 the Closing Date.
Upon request of the Buyer, the Company 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.
(b) The Buyer shall assume and be responsible for any
severance costs associated with the termination of the Transferred
Employees' employment with the
11
Company. 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,
policy, program or arrangement maintained at any time by the Buyer (a
"BUYER PLAN" or collectively, the "BUYER PLANS"), 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
(unless provided otherwise by law or pursuant to applicable
regulations) nor shall the Company or the Parent be liable under the
WARN Act, COBRA, or state unemployment claims law for any Transferred
Employee terminated by Buyer after the Closing.
(c) At Closing, the Buyer shall establish and make available a
group medical plan for the Transferred Employees and their dependents
that is substantially similar to the group medical plan available to
the Transferred Employees immediately prior to Closing. The Buyer shall
credit the Transferred Employees with all service of the Transferred
Employees recognized under the employee benefit plans, policies,
programs, or arrangements maintained by the Parent or the Company (the
"PARENT PLANS") as service with the Buyer for purposes of eligibility
to participate, vesting and levels of benefits available, under all
Buyer Plans. The Buyer shall waive any coverage waiting period,
pre-existing condition and actively-at-work requirements under the
Buyer Plans for the Transferred Employees 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. For the first year after the Closing Date, Buyer Plans
shall not require contributions by Transferred Employees at a rate that
exceeds the rate in effect for other similarly situated employees of
the Buyer. Any reports or other information provided to Buyer by the
Company or the Parent in connection with Buyer performing his
obligations under this Section 7.1(c) shall be at the sole expense of
the Buyer.
7.2 Benefits. Except as provided in Section 7.1(b), 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
Transferred Employees of the Company accrued with respect to periods on or prior
to the Closing (except for any employment taxes actually withheld by the
Company) together with 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 Entity or other person, to the extent
such pay has been accrued on the books of the Company at such close of
business, based upon the remuneration of such employees normally used
in computing such pay for other compensated absences; and
12
(b) amounts accrued under the Integrated Electrical Services,
Inc. 401(k) Retirement Savings Plan (the "PARENT 401(K) PLAN") for the
Transferred Employees as of the Closing Date but not yet transferred to
the trustee of the Parent 401(k) Plan, including without limitation,
the accrued match, accrued payroll deductions representing elective
deferrals, loan repayments and accrued profit sharing contribution, if
any.
7.3 Parent 401(k) Plan. The Company, the Parent and the Buyer agree
that, as soon as practicable after Closing, but in any event within 90 days of
the Closing Date, the account balances in the Parent 401(k) Plan of the
Transferred Employees shall be transferred to a qualified 401(k) retirement
savings plan established by the Buyer (the "BUYER'S 401(K) PLAN") in accordance
with Section 414(l) of the Internal Revenue Code of 1986, as amended (the
"CODE"), and the regulations promulgated thereunder. In connection with such
transfer, the following provisions shall apply:
(a) 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 Parent 401(k) Plan as required under Section
411(d)(6) of the Code; and
(b) The outstanding loan of any Transferred Employee shall not
be in default as a result of the Transferred Employee's termination of
employment with the Parent or the Company, but such loan shall be
transferred to the Buyer's 401(k) Plan in accordance with (a) above.
The Buyer shall provide acceptable evidence to the Parent 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, the Parent and the Company agree to take
whatever action, including but not limited to plan amendments and resolutions,
to effectuate the transfer of the Transferred Employee's account balances
according to this section from the Parent 401(k) Plan to the Buyer's 401(k)
Plan.
Notwithstanding the foregoing, nothing in this Section 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).
8. MISCELLANEOUS.
8.1 Notices. All notices and communications required or permitted
hereunder shall be in writing and may be given by (a) depositing the same in the
United States mail, addressed to the party to be notified, postage prepaid and
registered or certified with return receipt requested, (b) by delivering the
same in person to an officer or agent of such party, or (c) overnight delivery
service. Such notice shall be deemed received on the date (i) on which it is
actually received if sent by overnight delivery service or hand delivery, or
(ii) on the third business day following the date on which it is mailed. For
purposes of notice, the addresses of the parties hereto shall be:
13
If to the Parent or the Company:
Integrated Electrical Services, Inc.
0000 Xxxx Xxxx Xxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attention: Chief Financial Officer
With a copy to:
Integrated Electrical Services, Inc.
0000 Xxxx Xxxx Xxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attention: Chief Legal Officer
If to the Buyer or Indemnitor:
J. Xxx Xxxxxx, Xx.
0000 Xxxxx XX
Xxxxxxxxxxx, XX 00000
With a copy to:
Xxxxxxx Xxxxxxxx
Xxxxxxxx & Xxxxxxx LLC
P. O. Xxx 0000
Xxxxx Xx, XX 00000
or such other address as any party hereto shall specify pursuant to this Section
8.1 from time to time.
8.2 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, and all of which
together shall constitute one and the same instrument. At the Closing, any Party
may rely on the facsimile signature of any other Party.
8.3 Governing Law. The validity and effect of this Agreement shall be
governed by and construed and enforced in accordance with the laws of the State
of Texas, without regard to its conflicts of laws rules.
8.4 Successors and Assigns. This Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their respective permitted
heirs, successors and assigns. Neither the Company, the Parent nor the Buyer may
assign, delegate or otherwise transfer any of their rights or obligations under
this Agreement without the written consent by each other party hereto.
8.5 Partial Invalidity and Severability. All rights and restrictions
contained herein may be exercised and shall be applicable and binding only to
the extent that they do not violate any applicable laws and are intended to be
limited to the extent necessary to render this Agreement legal, valid and
enforceable. If any term of this Agreement, or part thereof, not essential to
the commercial purpose of this Agreement shall be held to be illegal, invalid or
unenforceable by a forum of competent jurisdiction, it is the intention of the
parties that the remaining terms hereof, or part thereof, shall constitute their
agreement with respect to the subject matter hereof, and all such remaining
terms, or parts thereof, shall remain in full force and effect. To the extent
legally
14
permissible, any illegal, invalid or unenforceable provision of this Agreement
shall be replaced by a valid provision which will implement the commercial
purpose of the illegal, invalid or unenforceable provision.
8.6 Waiver. Any term or condition of this Agreement may be waived at
any time by the party which is entitled to the benefit thereof, but only if such
waiver is evidenced by a writing signed by such party. No failure on the part of
any party hereto to exercise, and no delay in exercising, any right, power or
remedy created hereunder shall operate as a waiver thereof, nor shall any single
or partial exercise of any right, power or remedy by either party preclude any
other or further exercise thereof or the exercise of any other right, power or
remedy. No waiver by either party hereto of any breach of or default in any term
or condition of this Agreement shall constitute a waiver of or assent to any
succeeding breach of or default in the same or any other term or condition
hereof.
8.7 Headings. The headings of particular provisions of this Agreement
are inserted for convenience only and shall not be construed as a part of this
Agreement or serve as a limitation or expansion on the scope of any term or
provision of this Agreement.
8.8 Entire Agreement; Amendments. This Agreement supersedes all prior
discussions and agreements between the parties with respect to the subject
matter hereof (including without limitation any letters of intent executed by
the parties), and this Agreement contains the sole and entire agreement between
the parties with respect to the matters covered hereby. This Agreement shall not
be altered or amended except by an instrument in writing signed by or on behalf
of the party against whom enforcement is sought.
8.9 Disclosure of Agreement Terms. Neither Buyer nor the Indemnitor
shall disclose the terms and conditions of this Agreement to any person or
entity without the prior written consent of an executive officer of the Parent
or as required by applicable law or an order from a court or administrative body
of competent jurisdiction (but only to the extent so required and only after
giving reasonable prior notice to the Company and the Parent and cooperating
with the Company and the Parent in any efforts to legally oppose such
disclosure). The foregoing notwithstanding, the Buyer and the Indemnitor shall
be permitted to make such disclosures to their accountants, lawyers, financial
institutions, lending sources, senior employees and related parties as may be
appropriate, provided that such parties are bound by the foregoing nondisclosure
provisions.
8.10 Number and Gender. Where the context requires, the use of the
singular form herein shall include the plural, the use of the plural shall
include the singular, and the use of any gender shall include any and all
genders.
[Remainder of page intentionally left blank]
15
IN WITNESS WHEREOF, this Agreement has been executed effective as of
the date set forth above.
PARENT:
INTEGRATED ELECTRICAL SERVICES, INC.
By: /s/ Xxxxxxx X. Xxxxx
---------------------------------------
Xxxxxxx X. Xxxxx
Chief Executive Officer
COMPANY:
DKD ELECTRIC CO., INC.
By: /s/ Xxxx X. Xxxxxxx
---------------------------------------
Xxxx X. Xxxxxxx
Vice President
BUYER:
DKD ELECTRIC LLC
By: /s/ J. Xxx Xxxxxx, Xx.
---------------------------------------
J. Xxx Xxxxxx, Xx., Member
INDEMNITOR:
/s/ J. Xxx Xxxxxx, Xx.
---------------------------------------
J. XXX XXXXXX, XX.
16
EXHIBIT A
XXXX OF SALE, ASSIGNMENT AND ASSUMPTION AGREEMENT
This XXXX OF SALE, ASSIGNMENT AND ASSUMPTION AGREEMENT ("XXXX OF SALE")
is entered into as of the ___ day of ___________ 2005, by and among INTEGRATED
ELECTRICAL SERVICES, INC., a Delaware corporation (the "PARENT"), DKD ELECTRIC
CO., INC., a New Mexico corporation (the "COMPANY") and DKD ELECTRIC LLC, a New
Mexico limited liability company (the "BUYER").
RECITALS
WHEREAS, pursuant to the terms of that certain Asset Purchase Agreement
(the "PURCHASE AGREEMENT") dated as of even date herewith by and among the
Buyer, the Parent, the Company, and J. Xxx Xxxxxx, Xx., individual, the Company
and the Parent agreed to convey the Assets to the Buyer and the Buyer agreed to
assume the Assumed Liabilities. In order to evidence such conveyance and
assumption, the parties desire to enter into this Xxxx of Sale.
WHEREAS, all capitalized terms used herein but not defined herein shall
have the meanings ascribed to them in the Purchase Agreement.
ASSIGNMENT
NOW, THEREFORE, for and in consideration of the mutual covenants,
agreements, and benefits contained herein, the sum of TEN DOLLARS ($10.00) and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the Company and the Parent do hereby BARGAIN, GRANT, SELL,
CONVEY, TRANSFER, DELIVER and ASSIGN unto Buyer all the Assets.
The Assets are hereby conveyed free and clear of all encumbrances other
than the Permitted Encumbrances.
TO HAVE AND TO HOLD the Assets unto the Buyer and its successors and
assigns forever; and the Company and the Parent do hereby bind themselves and
their successors and assigns to WARRANT AND FOREVER DEFEND title to the Assets
in accordance with the terms and provisions of the Purchase Agreement.
The Buyer, upon execution below, accepts this Xxxx of Sale, and to the
extent provided for in the Purchase Agreement, hereby assumes the Assumed
Liabilities, but no others.
This assignment shall be binding upon and shall inure to the benefit of
the parties hereto and their respective permitted successors and assigns.
This Xxxx of Sale may be executed in any number of counterparts, and
each counterpart shall for all purposes be deemed to be an original.
This Xxxx of Sale is subject to all terms and conditions contained in
the Purchase Agreement and nothing herein shall be deemed to alter, amend, or
supersede the Purchase Agreement, the terms of which shall in all respects be
controlling.
[Remainder of page intentionally left blank]
IN WITNESS WHEREOF, the parties hereto have executed this Xxxx of Sale
effective as of the date set forth above.
PARENT:
INTEGRATED ELECTRICAL SERVICES, INC.
By:
------------------------------
Name:
------------------------------
Title:
------------------------------
COMPANY:
DKD ELECTRIC CO., INC.
By:
------------------------------
Name:
------------------------------
Title:
------------------------------
BUYER:
DKD ELECTRIC LLC
By:
------------------------------
Name:
------------------------------
Title:
------------------------------
EXHIBIT B
FORM OF GENERAL AGREEMENT OF INDEMNITY
CHUBB GROUP OF INSURANCE COMPANIES
(CHUBB LOGO) 00 Xxxxxxxx Xxxx Xxxx, X.X. Xxx 0000, Xxxxxx, Xxx Xxxxxx 00000-0000
--------------------------------------------------------------------------------
GENERAL AGREEMENT OF INDEMNITY
WHEREAS, the undersigned (hereinafter individually and collectively called
"Indemnitor") desires FEDERAL INSURANCE COMPANY or any of its subsidiary or
affiliated insurers (hereinafter called "Company") to execute bonds including
undertakings and other like obligations (hereinafter referred to as bond or
bonds) on its behalf and also desires the execution of bonds on behalf of
individuals, partnerships, corporations, limited liability companies or any
other similarly unincorporated associations of members (hereinafter called
"Affiliates").
WHEREAS, from time to time the Indemnitor may be a participant in joint
ventures with others, and bonds will be required on behalf of the Indemnitor
along with the other participants in such joint ventures.
WHEREAS, Indemnitor is the successor-in-interest to DKD ELECTRIC CO.,
INC., A NEW MEXICO CORPORATION (along with any other affiliate or related entity
whose assets have been or will be assigned to Indemnitor hereinafter
individually and collectively called "Seller") as the assignee of all bonded
contract obligations, which Indemnitor has expressly assumed without reservation
NOW, THEREFORE, in consideration of the Company executing said bond or
bonds, and the undersigned Indemnitor hereby requests the execution thereof, and
in consideration of the consent of Company to the assignment and assumption of
the bonded obligations formerly undertaken by the Seller, as well as the sum of
One Dollar paid to the Indemnitor by said Company, the receipt whereof is hereby
acknowledged, the Indemnitor, being benefited by the execution and delivery of
said bond or bonds, including, without limitation all Bonds previously issued
prior to the date of this Agreement for the Seller, the bonded obligations of
which have been expressly assumed without reservation by Indemnitor(s) and as to
which Indemnitor(s) have agreed, and do hereby agree, to assume full
responsibility for work in place as well as the prompt and proper performance
and completion of all such bonded obligations, including, without limitation
those bonded obligations listed on Exhibit A attached hereto, hereby agrees that
it will at all times jointly and severally indemnify and save harmless said
Company from and against any and all loss, cost, damage or expense, including
court costs and attorneys' fees, which it shall at any time incur by reason of
its execution and/or delivery of said bond or bonds or its payment
of any claim or liability thereunder and will place the said Company in funds to
meet all its liability under said bond or bonds promptly on request and before
it may be required to make any payment thereunder and that the voucher or other
evidence of payment by said Company of any such loss, cost, damage, expense,
claim, or liability shall be prima facie evidence of the fact and amount of the
Indemnitor's liability to said Company under this Agreement.
IT IS UNDERSTOOD AND AGREED that with respect to any bonds on behalf of
the Indemnitor participating in a joint venture that if specific application is
filed with the Company for such bonds the liability of the Indemnitor to the
Company with respect to such joint venture bonds shall be limited to the amount
expressly set forth in said application.
IT IS UNDERSTOOD AND AGREED that all of the terms, provisions, and
conditions of this Agreement shall be extended to and for the benefit not only
of the Company either as a direct writing company or as a co-surety or reinsurer
but also for the benefit of any surety or insurance company or companies with
which the Company may participate as a co-surety or reinsurer and also for the
benefit of any other company which may execute any bond or bonds at the request
of the Company on behalf of the Indemnitor.
IT IS UNDERSTOOD AND AGREED that this Agreement is in addition to all
other rights and agreements which Company may have or be a party to in
connection with Bonds previously issued for the benefit of Seller and that the
assumption of responsibility therefor by Indemnitors as herein provided shall
not constitute a waiver or release by Company of any rights Company may have to
seek and recover indemnity from third parties having liability in connection
with the issuance of such Bonds including, but not limited to, the obligations
and liabilities of Integrated Electrical Services, Inc., Delco Electric, Inc. or
their affiliates.
IT IS UNDERSTOOD AND AGREED that, notwithstanding anything herein to the
contrary, Indemnitor's agreements, covenants, and all obligations under this
General Agreement of Indemnity is limited to (1) the obligations assumed by
Indemnitor (the "Assumed Obligations") under the Asset Purchase Agreement (the
"APA") by and among Integrated Electrical Services, Inc. ("IES"), DKD Electric
Co., Inc., DKD Electric LLC and J. Xxx Xxxxxx, Xx. and (2) Company's obligations
under the bonds listed on Exhibit A attached hereto. Furthermore, Indemnitor has
acknowledged and agreed that Indemnitor's obligation to perform or otherwise
discharge the Assumed Obligations is secured by certain assets acquired by
Indemnitor under the APA (the "Collateral"), said Collateral acquired subject to
that certain Underwriting, Continuing Indemnity, and Security Agreement dated as
of January 14, 2005, executed by and among Company, IES, and certain IES
affiliates, including DKD Electric Co., Inc.
IT IS UNDERSTOOD AND AGREED that Indemnitor will replace Bond No.
81889153, Bond No. 81967757, Bond No. 81889053, Bond No. 81934447, Bond No.
81955945, and Bond No. 81876813 identified on Exhibit A (the "Cancelable Bonds")
no later than ninety (90) days from the execution of this Agreement, and hereby
acknowledges and consents that the Cancelable Bonds will be canceled upon the
earlier of (i) the date of issuance of replacement bonds or (ii) the date upon
which Federal issues notice of cancellation in compliance with the terms the
Cancelable Bond(s) to be cancelled thereby. Indemnitor's obligation under this
Agreement with respect to any bond or bonds canceled or replaced as contemplated
herein will remain with respect to such liability accruing under said bond or
bonds.
IT IS FURTHER UNDERSTOOD AND AGREED that the Indemnitor, its heirs,
successors and assigns are jointly and severally bound by the foregoing
conditions of this Agreement.
IN WITNESS WHEREOF the Indemnitor has signed this instrument this, the
_____________ day of _______________, 2005.
WITNESS: DKD ELECTRIC LLC,
a New Mexico limited liability company
_________________________________ By: ___________________________________
Its: __________________________________
WITNESS: J. XXX XXXXXX, XX.
_________________________________ _______________________________________
ACKNOWLEDGMENT OF LIMITED LIABILITY COMPANY
STATE OF _____________________
COUNTY OF ___________________
On this ________ day of ______________________, 2005, before me
personally came ________________________ to me known, who, being by me duly
sworn, did depose and say that he/she resides in the State of _______________;
and that he/she is the __________________ of DKD ELECTRIC LLC, the limited
liability company described in and which executed the foregoing instrument; that
he/she executed the foregoing instrument by order and authority of the partners
(limited and general) and/or members of said DKD ELECTRIC LLC; and that he/she
signed his/her name thereto by like order and authority.
(SEAL) _________________________
NOTARY PUBLIC
My commission expires:
_________________________________
INDIVIDUAL ACKNOWLEDGMENT
STATE OF _____________________
COUNTY OF ___________________
On this ________ day of ______________________, 2005, before me
personally came J. XXX XXXXXX, XX., to me known, who, being by me duly sworn,
did depose and say that he resides in the State of New Mexico; and that he
executed the foregoing instrument for the purposes therein contained.
(SEAL) _______________________
NOTARY PUBLIC
My commission expires:
_________________________________
CHUBB GROUP OF INSURANCE COMPANIES
(CHUBB LOGO) 00 Xxxxxxxx Xxxx Xxxx, X.X. Xxx 0000, Xxxxxx, Xxx Xxxxxx 00000-0000
--------------------------------------------------------------------------------
GENERAL AGREEMENT OF INDEMNITY
WHEREAS, the undersigned (hereinafter individually and collectively called
"Indemnitor") desires FEDERAL INSURANCE COMPANY or any of its subsidiary or
affiliated insurers (hereinafter called "Company") to execute bonds including
undertakings and other like obligations (hereinafter referred to as bond or
bonds) on its behalf and also desires the execution of bonds on behalf of
individuals, partnerships, corporations, limited liability companies or any
other similarly unincorporated associations of members (hereinafter called
"Affiliates").
WHEREAS, from time to time the Indemnitor may be a participant in joint
ventures with others, and bonds will be required on behalf of the Indemnitor
along with the other participants in such joint ventures.
WHEREAS, Indemnitor is the successor-in-interest to DKD ELECTRIC CO.,
INC., A NEW MEXICO CORPORATION (along with any other affiliate or related entity
whose assets have been or will be assigned to Indemnitor hereinafter
individually and collectively called "Seller") as the assignee of all bonded
contract obligations, which Indemnitor has expressly assumed without reservation
NOW, THEREFORE, in consideration of the Company executing said bond or
bonds, and the undersigned Indemnitor hereby requests the execution thereof, and
in consideration of the consent of Company to the assignment and assumption of
the bonded obligations formerly undertaken by the Seller, as well as the sum of
One Dollar paid to the Indemnitor by said Company, the receipt whereof is hereby
acknowledged, the Indemnitor, being benefited by the execution and delivery of
said bond or bonds, including, without limitation all Bonds previously issued
prior to the date of this Agreement for the Seller, the bonded obligations of
which have been expressly assumed without reservation by Indemnitor(s) and as to
which Indemnitor(s) have agreed, and do hereby agree, to assume full
responsibility for work in place as well as the prompt and proper performance
and completion of all such bonded obligations, including, without limitation
those bonded obligations listed on Exhibit A attached hereto, hereby agrees that
it will at all times jointly and severally indemnify and save harmless said
Company from and against any and all loss, cost, damage or expense, including
court costs and attorneys' fees, which it shall at any time incur by reason of
its execution and/or delivery of said bond or bonds or its payment of any claim
or liability thereunder and will place the said Company in funds to meet all its
liability under said bond or bonds promptly on request and before it may be
required to make any payment thereunder and that the voucher or other evidence
of payment by said Company of any such loss, cost, damage, expense, claim, or
liability shall be prima facie evidence of the fact and amount of the
Indemnitor's liability to said Company under this Agreement.
IT IS UNDERSTOOD AND AGREED that with respect to any bonds on behalf of
the Indemnitor participating in a joint venture that if specific application is
filed with the Company for such bonds the liability of the Indemnitor to the
Company with respect to such joint venture bonds shall be limited to the amount
expressly set forth in said application.
IT IS UNDERSTOOD AND AGREED that all of the terms, provisions, and
conditions of this Agreement shall be extended to and for the benefit not only
of the Company either as a direct writing company or as a co-surety or reinsurer
but also for the benefit of any surety or insurance company or companies with
which the Company may participate as a co-surety or reinsurer and also for the
benefit of any other company which may execute any bond or bonds at the request
of the Company on behalf of the Indemnitor.
IT IS UNDERSTOOD AND AGREED that this Agreement is in addition to all
other rights and agreements which Company may have or be a party to in
connection with Bonds previously issued for the benefit of Seller and that the
assumption of responsibility therefor by Indemnitors as herein provided shall
not constitute a waiver or release by Company of any rights Company may have to
seek and recover indemnity from third parties having liability in connection
with the issuance of such Bonds including, but not limited to, the obligations
and liabilities of Integrated Electrical Services, Inc., Delco Electric, Inc. or
their affiliates.
IT IS UNDERSTOOD AND AGREED that, notwithstanding anything herein to the
contrary, Indemnitor's agreements, covenants, and all obligations under this
General Agreement of Indemnity is limited to (1) the obligations assumed by
Indemnitor (the "Assumed Obligations") under the Asset Purchase Agreement (the
"APA") by and among Integrated Electrical Services, Inc. ("IES"), DKD Electric
Co., Inc., DKD Electric LLC and J. Xxx Xxxxxx, Xx. and (2) Company's obligations
under the bonds listed on Exhibit A attached hereto. Furthermore, Indemnitor has
acknowledged and agreed that Indemnitor's obligation to perform or otherwise
discharge the Assumed Obligations is secured by certain assets acquired by
Indemnitor under the APA (the "Collateral"), said Collateral acquired subject to
that certain Underwriting, Continuing Indemnity, and Security Agreement dated as
of January 14, 2005, executed by and among Company, IES, and certain IES
affiliates, including DKD Electric Co., Inc.
IT IS UNDERSTOOD AND AGREED that Indemnitor will replace Bond No.
81889153, Bond No. 81967757, Bond No. 81889053, Bond No. 81934447, Bond No.
81955945, and Bond No. 81876813 identified on Exhibit A (the "Cancelable Bonds")
no later than ninety (90) days from the execution of this Agreement, and hereby
acknowledges and consents that the Cancelable Bonds will be canceled upon the
earlier of (i) the date of issuance of replacement bonds or (ii) the date upon
which Federal issues notice of cancellation in compliance with the terms the
Cancelable Bond(s) to be cancelled thereby. Indemnitor's obligation under this
Agreement with respect to any bond or bonds canceled or replaced as contemplated
herein will remain with respect to such liability accruing under said bond or
bonds.
IT IS FURTHER UNDERSTOOD AND AGREED that the Indemnitor, its heirs,
successors and assigns are jointly and severally bound by the foregoing
conditions of this Agreement.
IN WITNESS WHEREOF the Indemnitor has signed this instrument this, the
_____________ day of _______________, 2005.
WITNESS: DKD ELECTRIC LLC,
a New Mexico limited liability company
_______________________________ By: ___________________________________
Its: __________________________________
WITNESS: J. XXX XXXXXX, XX.
_______________________________ _______________________________________
ACKNOWLEDGMENT OF LIMITED LIABILITY COMPANY
STATE OF _____________________
COUNTY OF ___________________
On this ________ day of ______________________, 2005, before me
personally came ________________________ to me known, who, being by me duly
sworn, did depose and say that he/she resides in the State of _______________;
and that he/she is the __________________ of DKD ELECTRIC LLC, the limited
liability company described in and which executed the foregoing instrument; that
he/she executed the foregoing instrument by order and authority of the partners
(limited and general) and/or members of said DKD ELECTRIC LLC; and that he/she
signed his/her name thereto by like order and authority.
(SEAL) ______________________
NOTARY PUBLIC
My commission expires:
_________________________________
INDIVIDUAL ACKNOWLEDGMENT
STATE OF _____________________
COUNTY OF ___________________
On this ________ day of ______________________, 2005, before me
personally came J. XXX XXXXXX, XX., to me known, who, being by me duly sworn,
did depose and say that he resides in the State of New Mexico; and that he
executed the foregoing instrument for the purposes therein contained.
(SEAL) ______________________
NOTARY PUBLIC
My commission expires:
_________________________________
