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STOCK PURCHASE AGREEMENT
dated as of the 21st day of October, 1997
by and among
INTEGRATED ELECTRICAL SERVICES, INC.
BW CONSOLIDATED, INC.
all of the STOCKHOLDERS named herein
BEXAR ELECTRIC COMPANY, LTD.,
XXXXXXX ELECTRIC COMPANY, LTD.
and
the EMPLOYEE PARTNERS named herein
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TABLE OF CONTENTS
Page
RECITALS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1. SALE AND PURCHASE OF STOCK . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.1 Sale and Purchase. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.2 Purchase Price. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.3 Certain Information With Respect to the Capital Stock of
the Company and IES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2. BOARD OF DIRECTORS AND OFFICERS OF THE COMPANY . . . . . . . . . . . . . . . . . . . 6
2.1 Board of Directors. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.2 Officers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3. DELIVERY OF CONSIDERATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.1 Stockholders' Consideration. . . . . . . . . . . . . . . . . . . . . . . . . 6
3.2 Stockholders' Deliveries. . . . . . . . . . . . . . . . . . . . . . . . . . 6
4. CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND
THE STOCKHOLDERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
5.1 Due Organization. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
5.2 Authorization. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
5.3 Capital Stock of the Company. . . . . . . . . . . . . . . . . . . . . . . . 8
5.4 Transactions in Capital Stock; Organization Accounting. . . . . . . . . . . 8
5.5 No Bonus Shares. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
5.6 Subsidiaries; Ownership in Other Entities. . . . . . . . . . . . . . . . . . 8
5.7 Predecessor Status; etc. . . . . . . . . . . . . . . . . . . . . . . . . . . 9
5.8 Spin-off by the Company. . . . . . . . . . . . . . . . . . . . . . . . . . . 9
5.9 Financial Statements. . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
5.10 Liabilities and Obligations. . . . . . . . . . . . . . . . . . . . . . . . . 10
5.11 Accounts and Notes Receivable. . . . . . . . . . . . . . . . . . . . . . . . 10
5.12 Permits and Intangibles. . . . . . . . . . . . . . . . . . . . . . . . . . . 11
5.13 Environmental Matters. . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
5.14 Personal Property. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
5.15 Significant Customers; Material Contracts and Commitments . . . . . . . . . 13
5.16 Real Property. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
5.17 Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
5.18 Compensation; Employment Agreements; Labor Matters. . . . . . . . . . . . . 15
5.19 Employee Plans. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
5.20 Compliance with ERISA. . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
5.21 Conformity with Law; Litigation. . . . . . . . . . . . . . . . . . . . . . . 17
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5.22 Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
5.23 No Violations; No Consent Required, Etc. . . . . . . . . . . . . . . . . . . 18
5.24 Government Contracts. . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
5.25 Absence of Changes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
5.26 Deposit Accounts; Powers of Attorney. . . . . . . . . . . . . . . . . . . . 21
5.27 Validity of Obligations. . . . . . . . . . . . . . . . . . . . . . . . . . . 21
5.28 Relations with Governments. . . . . . . . . . . . . . . . . . . . . . . . . 21
5.29 Disclosure. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
5.30 Prohibited Activities. . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
5.31 No Warranties or Insurance. . . . . . . . . . . . . . . . . . . . . . . . . 22
5.32 Interest in Customers and Suppliers and Related Party Transactions. . . . . 22
5.33 Registration Statement. . . . . . . . . . . . . . . . . . . . . . . . . . . 22
5.34 Authority; Ownership. . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
5.35 Preemptive Rights. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
5.36 No Commitment to Dispose of IES Stock. . . . . . . . . . . . . . . . . . . . 23
6. REPRESENTATIONS OF IES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
6.1 Due Organization. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
6.2 Authorization. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
6.3 Capital Stock of IES. . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
6.4 Transactions in Capital Stock; Organization Accounting. . . . . . . . . . . 24
6.5 Subsidiaries. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
6.6 Financial Statements. . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
6.7 Liabilities and Obligations. . . . . . . . . . . . . . . . . . . . . . . . . 25
6.8 Conformity with Law; Litigation. . . . . . . . . . . . . . . . . . . . . . . 25
6.9 No Violations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
6.10 Validity of Obligations. . . . . . . . . . . . . . . . . . . . . . . . . . . 26
6.11 IES Stock. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
6.12 No Side Agreements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
6.13 Business; Real Property; Material Agreements. . . . . . . . . . . . . . . . 27
6.14 Relations with Governments. . . . . . . . . . . . . . . . . . . . . . . . . 27
6.15 Disclosure. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
6.16 Other Agreements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
6.17 Draft Registration Statement. . . . . . . . . . . . . . . . . . . . . . . . 27
7. COVENANTS PRIOR TO CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
7.1 Access and Cooperation; Due Diligence. . . . . . . . . . . . . . . . . . . . 28
7.2 Conduct of Business Pending Closing. . . . . . . . . . . . . . . . . . . . . 28
7.3 Prohibited Activities. . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
7.4 No Shop. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
7.5 Agreements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
7.6 Notification of Certain Matters. . . . . . . . . . . . . . . . . . . . . . . 31
7.7 Amendment of Schedules. . . . . . . . . . . . . . . . . . . . . . . . . . . 31
7.8 Cooperation in Preparation of Registration Statement. . . . . . . . . . . . 32
7.9 Final Financial Statements. . . . . . . . . . . . . . . . . . . . . . . . . 32
7.10 Further Assurances. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
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7.11 Authorized Capital. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
7.12 Compliance with the Xxxx-Xxxxx Act. . . . . . . . . . . . . . . . . . . . . 33
8. CONDITIONS PRECEDENT TO OBLIGATIONS OF STOCKHOLDERS
AND COMPANY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
8.1 Representations and Warranties; Performance of Obligations. . . . . . . . . 34
8.2 Satisfaction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
8.3 No Litigation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
8.4 Opinion of Counsel. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
8.5 Registration Statement. . . . . . . . . . . . . . . . . . . . . . . . . . . 34
8.6 Consents and Approvals. . . . . . . . . . . . . . . . . . . . . . . . . . . 35
8.7 Good Standing Certificates. . . . . . . . . . . . . . . . . . . . . . . . . 35
8.8 No Material Adverse Change. . . . . . . . . . . . . . . . . . . . . . . . . 35
8.9 Closing of IPO. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
8.10 Secretary's Certificate. . . . . . . . . . . . . . . . . . . . . . . . . . . 35
8.11 Employment Agreements. . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
8.12 Tax Matters. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
8.13 Other Founding Companies. . . . . . . . . . . . . . . . . . . . . . . . . . 35
9. CONDITIONS PRECEDENT TO OBLIGATIONS OF IES . . . . . . . . . . . . . . . . . . . . . 36
9.1 Representations and Warranties; Performance and Obligations. . . . . . . . . 36
9.2 No Litigation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
9.3 Secretary's Certificate. . . . . . . . . . . . . . . . . . . . . . . . . . . 36
9.4 No Material Adverse Effect. . . . . . . . . . . . . . . . . . . . . . . . . 36
9.5 Stockholders' Release. . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
9.6 Satisfaction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
9.7 Termination of Related Party Agreements. . . . . . . . . . . . . . . . . . . 37
9.8 Opinion of Counsel. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
9.9 Consents and Approvals. . . . . . . . . . . . . . . . . . . . . . . . . . . 37
9.10 Good Standing Certificates. . . . . . . . . . . . . . . . . . . . . . . . . 37
9.11 Registration Statement. . . . . . . . . . . . . . . . . . . . . . . . . . . 37
9.12 Employment Agreements. . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
9.13 Closing of IPO. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
9.14 FIRPTA Certificate. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
9.15 Resignations of Directors. . . . . . . . . . . . . . . . . . . . . . . . . . 38
10. COVENANTS OF IES AND THE STOCKHOLDERS AFTER CLOSING . . . . . . . . . . . . . . . . 38
10.1 Release From Guarantees; Repayment of Certain Obligations. . . . . . . . . . 38
10.2 Preservation of Tax and Accounting Treatment. . . . . . . . . . . . . . . . 38
10.3 Preparation and Filing of Tax Returns. . . . . . . . . . . . . . . . . . . . 38
10.4 Directors. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
11. INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
11.1 General Indemnification by the Stockholders. . . . . . . . . . . . . . . . . 39
11.2 Indemnification by IES. . . . . . . . . . . . . . . . . . . . . . . . . . . 40
11.3 Third Person Claims. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
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11.4 Exclusive Remedy. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
11.5 Limitations on Indemnification. . . . . . . . . . . . . . . . . . . . . . . 42
12. TERMINATION OF AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
12.1 Termination. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
12.2 Liabilities in Event of Termination. . . . . . . . . . . . . . . . . . . . . 43
13. NONCOMPETITION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
13.1 Prohibited Activities. . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
13.2 Damages. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
13.3 Reasonable Restraint. . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
13.4 Severability; Reformation. . . . . . . . . . . . . . . . . . . . . . . . . . 45
13.5 Independent Covenant. . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
13.6 Materiality. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
14. NONDISCLOSURE OF CONFIDENTIAL INFORMATION . . . . . . . . . . . . . . . . . . . . . 45
14.1 Stockholders. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
14.2 IES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
14.3 Damages. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
14.4 Survival. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
14.5 Return of Information. . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
15. TRANSFER RESTRICTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
15.1 Transfer Restrictions. . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
16. FEDERAL SECURITIES ACT REPRESENTATIONS . . . . . . . . . . . . . . . . . . . . . . . 47
16.1 Compliance with Law. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
16.2 Economic Risk; Sophistication. . . . . . . . . . . . . . . . . . . . . . . . 48
17. REGISTRATION RIGHTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
17.1 Piggyback Registration Rights. . . . . . . . . . . . . . . . . . . . . . . . 48
17.2 Registration Procedures. . . . . . . . . . . . . . . . . . . . . . . . . . . 49
17.3 Indemnification. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
17.4 Underwriting Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . 52
17.5 Transfer of Rights. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
17.6 Rule 144 Reporting. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
18. GENERAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
18.1 Cooperation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
18.2 Successors and Assigns. . . . . . . . . . . . . . . . . . . . . . . . . . . 53
18.3 Entire Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
18.4 Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
18.5 Brokers and Agents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
18.6 Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
18.7 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
18.8 Governing Law. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
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18.9 Survival of Representations and Warranties. . . . . . . . . . . . . . . . . 55
18.10 Exercise of Rights and Remedies. . . . . . . . . . . . . . . . . . . . . . . 56
18.11 Time. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
18.12 Reformation and Severability. . . . . . . . . . . . . . . . . . . . . . . . 56
18.13 Remedies Cumulative. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
18.14 Captions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
18.15 Amendments and Waivers. . . . . . . . . . . . . . . . . . . . . . . . . . . 56
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ANNEXES
Annex I - Consideration to Be Paid to Stockholders
Annex II - Amended and Restated Certificate of
Incorporation and By-Laws of IES;
Board Resolutions
Annex III - Form of Opinion of Counsel to IES
Annex IV - Form of Opinion of Counsel to Company and
Stockholders
Annex V - Form of Key Employee Employment Xxxxxxxxx
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XXXXXXXXX
2.1 Board of Directors
2.2 Officers
5.1 Due Organization
5.2 Authorization
5.3 Capital Stock of the Company
5.4 Transactions in Capital Stock; Organization Accounting
5.5 No Bonus Shares
5.6 Subsidiaries; Ownership in Other Entities
5.7 Predecessor Status; etc
5.8 Spin-off by the Company
5.9 Financial Statements
5.10 Liabilities and Obligations
5.11 Accounts and Notes Receivable
5.12 Permits and Intangibles
5.13 Environmental Matters
5.14 Personal Property
5.15 Significant Customers; Material Contracts and Commitments
5.16 Real Property
5.17 Insurance
5.18 Compensation; Employment Agreements; Labor Matters
5.19 Employee Plans
5.20 Compliance with ERISA
5.21 Conformity with Law; Litigation
5.22 Taxes
5.23 No Violations, No Consents Required, Etc.
5.24 Government Contracts
5.25 Absence of Changes
5.26 Deposit Accounts; Powers of Attorney
5.30 Prohibited Activities
5.31 No Warranties or Insurance
5.32 Interest in Customers and Suppliers and Related Party Transactions
7.2 Conduct of Business Pending Closing
7.3 Prohibited Activities
7.5 Agreements
9.7 Termination of Related Party Agreements
9.12 Employment Agreements
10.1 Release From Guarantees; Repayment of Certain Obligations
13.1 Stockholders with Non-Competes
16.2 Non-accredited Investors
18.5 Brokers and Agents
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STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (the "Agreement") is made as of the 21st
day of October, 1997, by and among INTEGRATED ELECTRICAL SERVICES, INC., a
Delaware corporation ("IES"), BW CONSOLIDATED, INC., a Nevada corporation (the
"Company" and where necessary or appropriate as the context requires, Company
shall refer to the Company and its Subsidiaries); Xxx Xxxx, The Xxxxxxxxx Xxx
Xxxxx Trust of 1996 and The Xxxx Xxxxx Xxxx Trust of 1996, which are all the
stockholders of the Company; Bexar Electric Company, Ltd., a Texas limited
partnership and Xxxxxxx Electric Company, Ltd., a Texas limited partnership
(collectively, the "Partnership"); and Xxxxx X. Xxxxxx, Xxxx Xxxxxxxx, Xxxxxxx
Xxxxx, Xxxxx Xxxxxx, Xxxxx Xxxxx, Xxxxx Xxxx, Xxxxxxx Xxxxx, Xxxxxx Xxxxx, Jr.,
Xxxxxx Xxxxxxxxx, Xxxxxx Xxxxxxx, Xxxx Xxxx, Xxxxxx Xxxxxxx, Xxxxxx Xxxxx,
Xxxxx Xxxxxx, Xxxxxxx Xxxxxxxx, Xxxxx Xxxx, Xxxxxx Xxxxxxx, and Xxxxxx
Xxxxxxxxxx (together with Xxx Xxxx, The Xxxxxxxxx Xxx Xxxxx Trust of 1996 and
The Xxxx Xxxxx Xxxx Trust of 1996, the "Stockholders").
RECITALS
WHEREAS, the Company is engaged in the electrical contracting
business;
WHEREAS, as of the date hereof, the Stockholders and the Employee
Partners own, and as of the Consummation Date the Stockholders and the Employee
Partners will own, all of the issued and outstanding capital stock of the
Company and all of the interests in BW/CEC, BW/BEC and the Partnership (the
"Company Stock");
WHEREAS, IES is entering into other separate agreements simultaneously
with this Agreement that are substantially the same as this Agreement (the
"Other Agreements"), each of which is entitled "Stock Purchase Agreement," with
each of the Other Founding Companies (as defined herein) and their respective
stockholders in order to acquire additional companies engaged in the electrical
services business;
WHEREAS, this Agreement and the Other Agreements constitute the "IES
Plan of Organization;"
WHEREAS, the Stockholders and the boards of directors and the
stockholders of IES, the Employee Partners, and each of the Other Founding
Companies that are parties to the Other Agreements, have approved and adopted
the IES Plan of Organization as an integrated plan pursuant to which the
Stockholders, the Employee Partners, and the stockholders of each of the other
Founding Companies will transfer their respective membership interests in
BW/BEC and BW/CEC, their partnership interests in the Partnership, or the
capital stock of each of the Founding Companies to IES and the Stockholders,
the Employee Partners, and the stockholders of each of the other Founding
Companies will acquire the stock of IES (but not cash or other property) as a
tax-free transfer of property under Section 351 of the Code;
10
WHEREAS, in consideration of the agreements of the Other Founding
Companies pursuant to the Other Agreements, the board of directors of the
Company has approved this Agreement as part of the IES Plan of Organization in
order to transfer the capital stock of the Company to IES; and
WHEREAS, unless the context otherwise requires, capitalized terms used
in this Agreement or in any schedule attached hereto and not otherwise defined
shall have the following meanings for all purposes of this Agreement:
"1933 Act" means the Securities Act of 1933, as amended.
"1934 Act" means the Securities Exchange Act of 1934, as amended.
"Acquired Party" means the Company, any subsidiary and any member of a
Relevant Group.
"Affiliates" means with respect to any person or entity, any other
person or entity that directly or indirectly, controls, is controlled by, or is
under common control with such person or entity.
"Balance Sheet Date" means June 30, 1997.
"Charter Documents" has the meaning set forth in Section 5.1.
"Closing" has the meaning set forth in Section 4.
"Closing Date" has the meaning set forth in Section 4.
"Code" means the Internal Revenue Code of 1986, as amended.
"Company" has the meaning set forth in the first paragraph of this
Agreement.
"Company Stock" has the meaning set forth in the recitals of this
Agreement.
"Consummation Date" has the meaning set forth in Section 4.
"Delaware GCL" means the General Corporation Law of the State of
Delaware.
"Draft Registration Statement" means the draft dated October 20, 1997
of the Registration Statement, and any corrections thereto and supplemental
information delivered by IES to the Company for delivery to the Stockholders
prior to the time this Agreement is delivered to IES.
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"Effective Time" means the effective time of the consummation of the
purchase and sale of the Company Stock, which shall occur on the Consummation
Date.
"Employee Partners" has the meaning set forth on the signature pages
hereto.
"Environmental Laws" has the meaning set forth in Section 5.13(b).
"Expiration Date" has the meaning set forth in Section 5(A).
"Founding Companies" means:
Ace Electric, Inc., a Georgia corporation;
Amber Electric, Inc., a Florida corporation;
BW Consolidated, Inc., a Nevada corporation (together with its
subsidiaries Bexar Electric Company, Ltd., a Texas limited
partnership, and Xxxxxxx Electric Company, Ltd., a Texas limited
partnership);
Xxxxxx Electrical Contractors, Inc., a Florida corporation, and Xxxxxx
Electrical of Treasure Coast, Inc., a Florida corporation;
Xxxxxxxx Electric, Inc., an Arizona corporation;
Xxxxxxxx Electric, Ltd., an Alabama limited partnership;
Xxxxxxx-Xxxxxxxx Electric, Inc., a Texas corporation;
Xxxxx Electrical Contractors, Inc., a Texas corporation;
Xxxx Electric, Inc., a South Dakota corporation;
Xxxxxxx Electric Inc., a Texas corporation;
Xxxxxx Xxxx & Company, an Ohio corporation;
Xxxxxxxx Electric Corp., an Arizona corporation;
Xxxxxxx Electric Company, Inc., a Washington corporation;
Xxxxx Investments, Inc., a Texas corporation;
Summit Electric of Texas, Incorporated, a Texas corporation; and
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Xxxxxxx & X'Xxxxxxx Corporation, a Kentucky corporation;
"GAAP" means generally accepted accounting principles as consistently
applied in the United States.
"Xxxx-Xxxxx Act" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements
Act of 1976.
"Hazardous Substance" has the meaning set forth in Section 5.13(c).
"IES" has the meaning set forth in the first paragraph of this
Agreement.
"IES Charter Documents" has the meaning set forth in Section 6.1.
"IES Plan of Organization" has the meaning set forth in the recitals of this
Agreement.
"IES Stock" means the common stock, par value $.01 per share, of IES.
"IPO" means the initial public offering of IES Stock pursuant to the
Registration Statement.
"known," "knowledge" or "best knowledge," when used in reference to a
statement regarding the existence or absence of facts in this Agreement, is
intended by the parties to mean that the only information to be attributed to
such person is information actually known to (a) the person in the case of an
individual or (b) in the case of a corporation or other entity, an officer or
director.
"Material Adverse Change" means a material adverse change in the
business, operations, properties, assets or condition (financial or otherwise),
of the subject entity and its subsidiaries taken as a whole.
"Material Adverse Effect" means a material adverse effect on the
business, operations, properties, assets or condition (financial or otherwise),
of the subject entity and its subsidiaries taken as a whole.
"Material Documents" has the meaning set forth in Section 5.23.
"Minimum Value" has the meaning set forth in Annex I.
"Other Founding Companies" means all of the Founding Companies other
than the Company.
"Plans" has the meaning set forth in Section 5.19.
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"Pricing" means the date of determination by IES and the Underwriters
of the public offering price of the shares of IES Stock in the IPO; the parties
hereto contemplate that the Pricing shall take place on the Closing Date.
"Qualified Plans" has the meaning set forth in Section 5.20.
"Registration Statement" means that certain registration statement on
Form S-1 to be filed with the SEC covering the shares of IES Stock to be issued
in the IPO, including the prospectus and all amendments and supplements
thereto.
"Relevant Group" means the Company and any affiliated, combined,
consolidated, unitary or similar group of which the Company is or was a member.
"Restricted Common Stock" has the meaning set forth in Section
1.3(ii).
"Returns" means any returns, reports or statements (including any
information returns) required to be filed for purposes of a particular Tax.
"Schedule" means each Schedule attached hereto, which shall reference
the relevant sections of this Agreement, on which parties hereto disclose
information as part of their respective representations, warranties and
covenants.
"SEC" means the United States Securities and Exchange Commission.
"State of Incorporation" means the State of Nevada.
"Stockholders" has the meaning set forth in the first paragraph of
this Agreement.
"Subsidiaries" means with respect to a person or entity, any
corporation or other entity in which such person or entity owns a 5% or greater
ownership interest.
"Tax" or "Taxes" means all federal, state, local or foreign net or
gross income, gross receipts, net proceeds, sales, use, ad valorem, value
added, franchise, withholding, employment, excise, property, deed, stamp,
alternative or add-on minimum, or other taxes, assessments, duties, fees,
levies or other governmental charges, whether disputed or not, together with
any interest, penalties, additions to tax or additional amounts with respect
thereto.
"Underwriters" means the prospective underwriters identified in the
Registration Statement.
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements, representations, warranties, provisions and covenants herein
contained, the parties hereto hereby agree as follows:
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1. SALE AND PURCHASE OF STOCK
1.1 SALE AND PURCHASE. Upon the terms and subject to the
conditions contained in this Agreement and in reliance upon the
representations, warranties, covenants and agreements contained in this
Agreement, on the Consummation Date, the Stockholders and the Employee Partners
shall sell to IES and IES shall purchase from the Stockholders and the Employee
Partners, all of the issued and outstanding shares of capital stock of the
Company and all of their respective interests in BW/CEC, BW/BEC and the
Partnership as set forth in Annex I hereto.
1.2 PURCHASE PRICE. The purchase price for the Company Stock
shall be as set forth on Annex I to this Agreement.
1.3 CERTAIN INFORMATION WITH RESPECT TO THE CAPITAL STOCK OF THE
COMPANY AND IES. The respective designations and numbers of outstanding shares
and voting rights of each class of outstanding capital stock of the Company and
IES as of the date of this Agreement are as follows:
(i) as of the date of this Agreement, the authorized and
outstanding capital stock of the Company is as set forth on Schedule
5.3 hereto; and
(ii) immediately prior to the Closing Date and the
Consummation Date, the authorized capital stock of IES will consist of
100,000,000 shares of IES Stock, of which the number of issued and
outstanding shares will be set forth in the Registration Statement,
and 10,000,000 shares of preferred stock, $.0l par value, of which no
shares will be issued and outstanding and 2,655,709 shares of
Restricted Voting Common Stock, $.01 per value (the "Restricted Common
Stock"), all of which will be issued and outstanding except as
otherwise set forth in the Registration Statement.
2. BOARD OF DIRECTORS AND OFFICERS OF THE COMPANY
2.1 BOARD OF DIRECTORS. As of the Consummation Date, the Board of
Directors of the Company shall consist of the persons identified on Schedule
2.1 hereto, each of such directors to hold office subject to the provisions of
the laws of the State of Incorporation and of the charter and bylaws of the
Company, until their respective successors are duly elected and qualified.
2.2 OFFICERS. As of the Consummation Date, the officers of the
Company shall consist of the persons identified on Schedule 2.2 hereto, each of
such officers to hold office, subject to the provisions of the laws of the
State of Incorporation and of the charter and bylaws of the Company, until
their respective successors are duly elected and qualified.
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3. DELIVERY OF CONSIDERATION
3.1 STOCKHOLDERS' CONSIDERATION. On the Consummation Date, the
Stockholders, who are now and on the Consummation Date will be, the holders of
all of the outstanding capital stock of the Company, shall, upon surrender of
certificates evidencing that capital stock, receive from IES the respective
number of shares of IES Stock and the amount of cash described on Annex I
hereto, which shall be payable by certified check or wire transfer.
3.2 STOCKHOLDERS' DELIVERIES. The Stockholders shall deliver at
the Closing the certificates representing Company Stock, duly endorsed in blank
by the Stockholders, or accompanied by blank stock powers, and with all
necessary transfer tax and other revenue stamps, acquired at the Stockholders'
expense, affixed and canceled. The Stockholders agree promptly to cure any
deficiencies with respect to the endorsement of the stock certificates or other
documents of conveyance with respect to such Company Stock or with respect to
the stock powers accompanying any Company Stock.
3.3 INTEREST TRANSFERS AND CONSENTS. At or prior to the Pricing,
each of the Employee Partners shall deliver executed transfer and assignments
("Transfers and Assignments"), attached hereto at Schedule 3.3 and pursuant to
which each such Employee Partner transfers all of its interest in Partnership
to IES effective as of the Consummation Date. At or prior to the Pricing, Xxx
Xxxx shall deliver executed transfers and assignments (also "Transfers and
Assignments"), attached hereto at Schedule 3.3 and pursuant to which Xxx Xxxx
transfers all of his interest in both BW/CEC and BW/BEC to IES on or effective
as of the Consummation Date. At or prior to the Pricing, each of the Employee
Partners shall deliver executed consents ("Consents"), attached hereto at
Schedule 3.3 and pursuant to which the necessary partners of Partnership
consent to the transfer of such Employee Partner's interest in the Partnership
to and substitution as a partner of IES, to IES on or effective as of the
Consummation Date. At or prior to the Pricing, Xxx Xxxx shall deliver executed
consents (also "Consents"), attached hereto at Schedule 3.3 and pursuant to
which the necessary members of each of BW/CEC and BW/BEC consent to the
transfer of Xxx Xxxx'x interests in BW/CEC and BW/BEC to and substitution as a
member of IES, to IES on or effective as of the Consummation Date.
3.4 DELIVERY OF CONSIDERATION. On the Consummation Date, each
Employee Partner and Xxx Xxxx shall, upon delivery of the Transfer and
Assignment, and Consent referred to in Section 3.3 hereof with respect to such
person's interest in the Partnership, BW/CEC or BW/CEC, as appropriate, receive
the respective number of shares of IES Stock
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and the amount of cash described in Annex I hereto, said cash to be payable by
certified check or wire transfer.
4. CLOSING
At or prior to the Pricing, the parties shall take all actions
necessary to effect the delivery of shares referred to in Section 3 hereof;
provided, that such actions shall not include the actual completion of the
purchase and sale of the Company Stock or the delivery of the IES Stock and
cash referred to in Section 3 hereof, each of which actions shall only be taken
upon the Consummation Date as herein provided. The delivery of the Company
Stock, which shall occur at or prior to the Pricing (the "Closing"), shall take
place on the closing date (the "Closing Date") at the offices of Xxxxxxx &
Xxxxx L.L.P, 4200 Texas Commerce Tower, 000 Xxxxxx, Xxxxxxx, Xxxxx 00000. All
Company Stock and the Transfers and Assignments and Consents shall be delivered
at the Closing to Xxxxxxx & Xxxxx L.L.P., to be held in trust until the
Consummation Date, and shall be returned immediately upon any termination of
this Agreement prior to the Consummation Date. On the Consummation Date (x)
all transactions contemplated by this Agreement, including the delivery of
shares and cash which the Stockholders shall be entitled to receive pursuant to
Annex I hereof, shall be completed, and (y) the closing with respect to the IPO
shall occur and be completed. The date on which the actions described in the
preceding clauses (x) and (y) occurs shall be referred to as the "Consummation
Date." During the period from the Closing Date to the Consummation Date, this
Agreement may only be terminated by the Company if the underwriting agreement
in respect of the IPO is terminated pursuant to the terms of such underwriting
agreement. This Agreement shall in any event terminate if the Consummation
Date does not occur within 30 days of the Pricing. Time is of the essence.
5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
AND THE STOCKHOLDERS
(A) Representations and Warranties of the Company and the
Stockholders.
Except as set forth in the disclosure schedules attached hereto and
except as otherwise qualified below, each of the Company and the Stockholders,
jointly and severally, represent and warrant that all of the following
representations and warranties in this Section 5(A) are true at the date of
this Agreement and, subject to Section 7.7 hereto, shall be true at the time of
Closing and the Consummation Date, and that such representations and warranties
shall survive the Consummation Date for a period of eighteen months (the last
day of such period being the "Expiration Date"), except that the warranties and
representations set forth in Sections 5.3 and 5.22 hereof shall survive until
such time as the applicable limitations period has run, which shall be deemed
to be the Expiration Date for Sections 5.3 and 5.22. For purposes of this
Section 5, the term "Company" shall mean and refer to the Company and all of
its Subsidiaries, if any.
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5.1 DUE ORGANIZATION. The Company is a corporation duly
incorporated and organized, validly existing and in good standing under the
laws of the State of Incorporation, and has the requisite power and authority
to carry on its business as it is now being conducted. The Company is duly
qualified or authorized to do business and is in good standing in each
jurisdiction in which the nature of its business or the ownership or leasing of
its properties makes such qualification or authorization necessary except where
the failure to be so qualified or authorized to do business would not have a
Material Adverse Effect on the Company. Schedule 5.1 sets forth a list of all
states in which the Company is authorized or qualified to do business. True,
complete and correct copies of (i) the Certificate of Incorporation and
By-laws, each as amended, of the Company (the "Charter Documents"), and (ii)
the stock records of the Company, are all attached to Schedule 5.1. The
Company has delivered to IES complete and correct copies of all minutes of
meetings, written consents and other evidence, if any, of deliberations of or
actions taken by the Company's Board of Directors, any committees of the Board
of Directors and stockholders during the last five years.
5.2 AUTHORIZATION. (i) The officers or other representatives of
the Company executing this Agreement have the authority to enter into and bind
the Company to the terms of this Agreement and (ii) the Company has the full
legal right, power and authority to enter into this Agreement and consummate
the transactions contemplated hereby. Copies of the most recent resolutions
adopted by the Board of Directors of the Company and the most recent
resolutions adopted by the Stockholders, which approve this Agreement and the
transactions contemplated hereby in all respects, certified by the Secretary or
an Assistant Secretary of the Company as being in full force and effect on the
date hereof, are attached hereto as Schedule 5.2.
5.3 CAPITAL STOCK OF THE COMPANY. The authorized capital stock of
the Company is as set forth on Schedule 5.3. All of the issued and outstanding
shares of the capital stock of the Company are owned by the Stockholders in the
amounts set forth in Schedule 5.3, other than any treasury shares listed on
Schedule 5.3. Each Stockholder, severally, represents and warrants that except
as set forth on Schedule 5.3, the shares of capital stock of the Company owned
by such Stockholder are owned free and clear of all liens, security interests,
pledges, charges, voting trusts, restrictions, encumbrances and claims of every
kind. All of the issued and outstanding shares of the capital stock of the
Company have been duly authorized and validly issued, are fully paid and
nonassessable, are owned of record and beneficially by the Stockholders and
further, such shares were offered, issued, sold and delivered by the Company in
compliance with all applicable state and Federal laws concerning the issuance
of securities. Further, none of such shares were issued in violation of any
preemptive rights of any past or present stockholder.
5.4 TRANSACTIONS IN CAPITAL STOCK; ORGANIZATION ACCOUNTING.
Except as set forth on Schedule 5.4, the Company has not acquired or redeemed
any Company Stock since January 1, 1995. Except as set forth on Schedule 5.4,
(i) no option, warrant, call, conversion right or commitment of any kind exists
which obligates the Company to issue any of its authorized but unissued capital
stock; (ii) the Company has no obligation (contingent or otherwise) to
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purchase, redeem or otherwise acquire any of its equity securities or any
interests therein or to pay any dividend or make any distribution in respect
thereof; and (iii) neither the voting stock structure of the Company nor the
relative ownership of shares among any of its respective Stockholders has been
altered or changed in contemplation of the IES Plan of Organization. There are
no voting trusts, proxies or other agreements or understandings to which the
Company or any of the Stockholders is a party or is bound with respect to the
voting of any shares of capital stock of the Company.
5.5 NO BONUS SHARES. Except as set forth on Schedule 5.5, none of
the shares of Company Stock was issued pursuant to awards, grants or bonuses in
contemplation of the IES Plan of Organization.
5.6 SUBSIDIARIES; OWNERSHIP IN OTHER ENTITIES. Except as set
forth on Schedule 5.6, the Company has no Subsidiaries. Except as set forth in
Schedule 5.6, the Company does not presently own, of record or beneficially, or
control, directly or indirectly, any capital stock, securities convertible into
capital stock or any other equity interest in any corporation, association or
business entity nor is the Company, directly or indirectly, a participant in
any joint venture, partnership or other non-corporate entity.
5.7 PREDECESSOR STATUS; ETC. Set forth on Schedule 5.7 is a
listing of all predecessor companies of the Company, including the names of any
entities acquired by the Company (by stock purchase, merger or otherwise) or
owned by the Company or from whom the Company previously acquired material
assets, in any case, from the earliest date upon which any Stockholder acquired
his or her stock in any Company. Except as disclosed on Schedule 5.7, the
Company has not been, within such period of time, a subsidiary or division of
another corporation or a part of an acquisition which was later rescinded.
5.8 SPIN-OFF BY THE COMPANY. Except as set forth on Schedule 5.8,
there has not been any sale, spin-off or split-up of material assets of either
the Company or any other person or entity that is an Affiliate of the Company
since January 1, 1995.
5.9 FINANCIAL STATEMENTS. Copies of the following financial
statements are attached hereto as Schedule 5.9:
(i) the balance sheets of the Company as of December 31,
1995 and 1996 and the related statements of operations, stockholder's
equity and cash flows for the two-year period ended December 31, 1996,
together with the related notes and schedules (such balance sheets,
the related statements of operations, stockholder's equity and cash
flows and the related notes and schedules are referred to herein as
the "Year-end Financial Statements"); and
(ii) the balance sheet of the Company as of June 30, 1996,
the balance sheet of the Company as of June 30, 1997 (the "Balance
Sheet Date") and the related statements of operations, stockholder's
equity and cash flows for the six-month periods
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ended June 30, 1996 and 1997, together with the related notes and
schedules (such balance sheets, the related statements of operations,
stockholder's equity and cash flows and the related notes and
schedules are referred to herein as the "Interim Financial
Statements"). The Year-end Financial Statements and the Interim
Financial Statements are collectively called the "Financial
Statements". The Financial Statements have been prepared in
accordance with generally accepted accounting principles applied on a
consistent basis and fairly present the financial position of the
Company as of the dates thereof and the results of its operations and
changes in financial position for the periods then ended, subject, in
the case of the Interim Financial Statements, to normal year-end and
audit adjustments and any other adjustments described therein.
5.10 LIABILITIES AND OBLIGATIONS. Schedule 5.10 sets forth an
accurate list as of the Balance Sheet Date of (i) all material liabilities of
the Company which are not reflected on the balance sheet of the Company at the
Balance Sheet Date or otherwise reflected in the Company Financial Statements
at the Balance Sheet Date which by their nature would be required in accordance
with GAAP to be reflected in the balance sheet, and (ii) all loan agreements,
indemnity or guaranty agreements, bonds, mortgages, pledges or other security
agreements to which the Company is a party or by which its properties may be
bound other than those made in the ordinary course of business and consistent
with past practice. Except as set forth on Schedule 5.10, since the Balance
Sheet Date, the Company has not incurred any material liabilities or
obligations of any kind, character or description, whether accrued, absolute,
secured or unsecured, contingent or otherwise, other than liabilities incurred
in the ordinary course of business and consistent with past practices. The
Company has also delivered to IES on Schedule 5.10, in the case of those
contingent liabilities related to pending litigation or litigation that has
been threatened in writing, or other material liabilities which are not fixed
or otherwise accrued or reserved, a good faith and reasonable estimate of the
maximum amount which the Company reasonably expects will be payable and the
amount, if any, accrued or reserved for each such potential liability on the
Company's Financial Statements. For each such contingent liability or
liability for which the amount is not fixed or is contested, the Company has
provided to IES the following information:
(i) a summary description of the liability together with
the following:
(a) copies of all relevant documentation in the
possession of the Company or its directors,
officers or stockholders relating thereto;
(b) amounts claimed and any other action or
relief sought; and
(c) name of claimant and all other parties to the
claim, suit or proceeding;
(ii) the name of each court or agency before which such
claim, suit or proceeding is pending;
(iii) the date such claim, suit or proceeding was
instituted; and
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(iv) a good faith estimate of the maximum amount, if any,
which the Company expects, based on information available, is likely
to become payable with respect to each such liability. If no estimate
is provided, the estimate shall for purposes of this Agreement be
deemed to be zero.
5.11 ACCOUNTS AND NOTES RECEIVABLE. Schedule 5.11 sets forth an
accurate list, in all material respects, of the accounts and notes receivable
of the Company, as of the Balance Sheet Date, including any such amounts which
are not reflected in the balance sheet as of the Balance Sheet Date, and
including all receivables from and advances to employees and the Stockholders,
which are identified as such. Schedule 5.11 also sets forth an accurate aging
of all accounts and notes receivable as of the Balance Sheet Date showing
amounts due in 30-day aging categories. Except to the extent reflected on
Schedule 5.11, such accounts, notes and other receivables are collectible in
the amounts shown on Schedule 5.11, net of reserves reflected in the balance
sheet as of the Balance Sheet Date.
5.12 PERMITS AND INTANGIBLES. The Company or its employees hold
all licenses, franchises, permits and other governmental authorizations
("Licenses") necessary to conduct the business of the Company, the absence of
which would cause a Material Adverse Effect on the Company, and the Company has
delivered to IES a list that is accurate, in all material respects, and summary
description (which is set forth on Schedule 5.12) of all such Licenses,
including any trademarks, trade names, patents, patent applications and
copyrights owned or held by the Company or any of its employees (including
interests in software or other technology systems, programs and intellectual
property). At or prior to the Closing, all such trademarks, trade names,
patents, patent applications, copyrights and other intellectual property will
be assigned or licensed to the Company for no additional consideration. The
Licenses and other rights listed on Schedule 5.12 are valid, and the Company
has not received any notice that any person intends to cancel, terminate or not
renew any such License or other right. The Company has conducted and is
conducting its business in compliance in all material respects with the
requirements, standards, criteria and conditions set forth in the Licenses and
other rights listed on Schedule 5.12 and is not in violation of any of the
foregoing in any material respect. Except as specifically provided in Schedule
5.12, the consummation by the Company of the transactions contemplated by this
Agreement will not result in a default under or a breach or violation of, or
adversely affect the rights and benefits afforded to the Company by, any such
Licenses or other rights.
5.13 ENVIRONMENTAL MATTERS. (a) Except as set forth in Schedule
5.13 attached hereto, (i) the Company has conducted its businesses in
compliance in all material respects with all applicable Environmental Laws,
including, without limitation, having all environmental permits, licenses and
other approvals and authorizations necessary for the operation of its business
as presently conducted, (ii) none of the properties owned by the Company
contain any Hazardous Substance as a result of any activity of the Company in
amounts exceeding the levels permitted by applicable Environmental Laws, (iii)
the Company has not received any notices, demand letters or requests for
information from any Federal, state, local or foreign governmental entity or
third party indicating that the Company may be in violation of, or
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liable under, any Environmental Law in connection with the ownership or
operation of its business, (iv) there are no civil, criminal or administrative
actions, suits, demands, claims, hearings, investigations or proceedings
pending or, to the knowledge of the Company or the Stockholders, threatened,
against the Company relating to any violation, or alleged violation, of any
Environmental Law, (v) no reports have been filed, or are required to be filed,
by the Company concerning the release of any Hazardous Substance or the
threatened or actual violation of any Environmental Law, (vi) no Hazardous
Substance has been disposed of, released or transported in violation of any
applicable Environmental Law from any properties owned by the Company as a
result of any activity of the Company during the time such properties were
owned, leased or operated by the Company, (vii) there have been no
environmental investigations, studies, audits, tests, reviews or other analysis
regarding compliance or non-compliance with any applicable Environmental Law
conducted by or which are in the possession of the Company relating to the
activities of the Company which are not listed on Schedule 5.13 attached hereto
prior to the date hereof, (viii) to the knowledge of the Company and the
Stockholders, there are no underground storage tanks on, in or under any
properties owned by the Company and no underground storage tanks have been
closed or removed from any of such properties during the time such properties
were owned, leased or operated by the Company which are not listed on Schedule
5.13, (ix) to the knowledge of the Company and the Stockholders, there is no
asbestos or asbestos-containing material present in any of the properties owned
by the Company, and no asbestos has been removed from any of such properties
during the time such properties were owned, leased or operated by the Company,
and (x) neither the Company nor any of its respective properties are subject to
any material liabilities or expenditures (fixed or contingent) relating to any
suit, settlement, court order, administrative order, regulatory requirement,
judgment or claim asserted or arising under any Environmental Law.
(b) As used herein, "Environmental Law" means any Federal, state,
local or foreign law, statute, ordinance, rule, regulation, code, license,
permit, authorization, approval, consent, legal doctrine, order, judgment,
decree, injunction, requirement or agreement with any governmental entity
relating to (x) the protection, preservation or restoration of the environment
(including, without limitation, air, water vapor, surface water, groundwater,
drinking water supply, surface land, subsurface land, plant and animal life or
any other natural resource) or to human health or safety or (y) the exposure
to, or the use, storage, recycling, treatment, generation, transportation,
processing, handling, labeling, production, release or disposal of Hazardous
Substances, in each case as amended and as in effect on the Closing Date. The
term Environmental Law includes, without limitation, (i) the Federal
Comprehensive Environmental Response Compensation and Liability Act of 1980,
the Superfund Amendments and Reauthorization Act, the Federal Water Pollution
Control Act of 1972, the Federal Clean Air Act, the Federal Clean Water Act,
the Federal Resource Conservation and Recovery Act of 1976 (including the
Hazardous and Solid Waste Amendments thereto), the Federal Solid Waste Disposal
and the Federal Toxic Substances Control Act, the Federal Insecticide,
Fungicide and Rodenticide Act, the Federal Occupational Safety and Health Act
of 1970, each as amended and as in effect on the Closing Date, and (ii) any
common law or equitable doctrine (including, without limitation, injunctive
relief and tort doctrines such as negligence,
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nuisance, trespass and strict liability) that may impose liability or
obligations for injuries or damages due to, or threatened as a result of, the
presence of, effects of or exposure to any Hazardous Substance.
(c) As used herein, "Hazardous Substance" means any substance
presently or hereafter listed, defined, designated or classified as hazardous,
toxic, radioactive, or dangerous, or otherwise regulated, under any
Environmental Law. Hazardous Substance includes any substance to which
exposure is regulated by any government authority or any Environmental Law
including, without limitation, any toxic waste, pollutant, contaminant,
hazardous substance, toxic substance, hazardous waste, special waste,
industrial substance or petroleum or any derivative or by-product thereof,
radon, radioactive material, asbestos or asbestos-containing material, urea
formaldehyde foam insulation, lead or polychlorinated biphenyls.
5.14 PERSONAL PROPERTY. The Company has delivered to IES an
accurate list (which is set forth on Schedule 5.14) of (x) all personal
property material to the operations of the Company included in "plant, property
and equipment" on the balance sheet of the Company, (y) all other personal
property owned by the Company with an individual value in excess of $2,500 (i)
as of the Balance Sheet Date and (ii) acquired since the Balance Sheet Date and
(z) all material leases and agreements in respect of personal property,
including, in the case of each of (x), (y) and (z), (1) true, complete and
correct copies of all such leases and (2) an indication as to which assets are
currently owned, or were formerly owned, by Stockholders, relatives of
Stockholders, or Affiliates of the Company. Except as set forth on Schedule
5.14, (i) all personal property material to, and used by, the Company in its
business is either owned by the Company or leased by the Company pursuant to a
lease included on Schedule 5.14, (ii) all of the personal property listed on
Schedule 5.14 or replacement property thereof is in working order and
condition, ordinary wear and tear excepted and (iii) all leases and agreements
included on Schedule 5.14 are in full force and effect and constitute valid and
binding agreements of the parties (and their successors) thereto in accordance
with their respective terms.
5.15 SIGNIFICANT CUSTOMERS; MATERIAL CONTRACTS AND COMMITMENTS
(a) The Company has delivered to IES an accurate list (which is
set forth on Schedule 5.15) of all customers (persons or entities) representing
5% or more of the Company's annual revenues for any period covered by any of
the Financial Statements. Except to the extent set forth on Schedule 5.15,
none of such customers has canceled or substantially reduced or, to the best
knowledge of the Company and the Stockholders, are currently attempting or
threatening to cancel a contract or substantially reduce utilization of the
services provided by the Company.
(b) The Company has listed on Schedule 5.15 all material
contracts, commitments and similar agreements to which the Company is a party
or by which it or any of its properties are bound (including, but not limited
to, contracts with significant customers, joint venture or partnership
agreements, contracts with any labor organizations, strategic alliances and
options
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to purchase land), other than agreements listed on Schedules 5.10, 5.14 or
5.16, (a) in existence as of the Balance Sheet Date and (b) entered into since
the Balance Sheet Date, and in each case has delivered true, complete and
correct copies of such agreements to IES. Except for expenditures in the
ordinary course of business, the Company has also indicated on Schedule 5.15 a
summary description of all plans or projects involving the opening of new
operations, expansion of existing operations, or the acquisition of any
personal property, business or assets requiring, in any event, the payment of
more than 2% of the Company's revenues for fiscal 1996 by the Company during
any 12-month period.
(c) Except as set forth on Schedule 5.15, since January 1, 1997,
the Company has not experienced any difficulties in obtaining any inventory
items necessary to the operation of its business, and, to the knowledge of the
Company and the Stockholders, no such shortage of supply of inventory items is
threatened or pending. To the best knowledge of the Company and the
Stockholders, no customer or supplier of the Company will cease to do business
with, or substantially reduce its purchases from, the Company after the
consummation of the transactions contemplated hereby.
(d) Except as set forth on Schedule 5.15, the Company is not
required to provide any bonding or other financial security arrangements in any
material amount in connection with any contract listed on Schedule 5.15.
5.16 REAL PROPERTY. Schedule 5.16 includes a list of all real
property owned or leased by the Company at the date hereof and all other real
property, if any, used by the Company in the conduct of its business. Except
as set forth on Schedule 5.16, any such real property owned by the Company will
be sold or distributed by the Company on terms mutually acceptable to IES and
the Company and leased back by the Company on terms no less favorable to the
Company than those available from an unaffiliated party and otherwise
reasonably acceptable to IES at or prior to the Closing Date. The Company has
good and insurable title to any real property owned by it that is shown on
Schedule 5.16, other than property intended to be sold or distributed prior to
the Closing Date, and all real property so owned is subject to no mortgage,
pledge, lien, conditional sales agreement, encumbrance, lease, possessory
rights of third parties or charge, except for:
(i) liens reflected on Schedules 5.10 or 5.16 as securing
specified liabilities (with respect to which no material default
exists);
(ii) liens for current taxes not yet payable and
assessments not in default;
(iii) easements for utilities serving the property only; and
(iv) easements, covenants and restrictions and other
exceptions to title which do not adversely affect the current or
contemplated use of the property.
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Copies of all leases and agreements in respect of such real property
leased by the Company, which are true, complete and correct in all material
respects, are attached to Schedule 5.16, and an indication as to which such
properties, if any, are currently owned, or were formerly owned, by
Stockholders or Affiliates of the Company or Stockholders is included in
Schedule 5.16. Except as set forth on Schedule 5.16, all of such leases
included on Schedule 5.16 are in full force and effect and constitute valid and
binding agreements of the parties (and their successors) thereto in accordance
with their respective terms.
5.17 INSURANCE. The Company has delivered to IES (i) an accurate
list as of the Balance Sheet Date of all insurance policies carried by the
Company, (ii) an accurate list of all insurance loss runs or workers
compensation claims received for the past three policy years and (iii) true,
complete and correct copies of all insurance policies currently in effect.
Such insurance policies evidence all of the insurance the Company is required
to carry pursuant to all of its contracts and other agreements and pursuant to
all applicable laws. All of such insurance policies are currently in full
force and effect and shall remain in full force and effect through the
Consummation Date except as set forth on Schedule 5.17. Since January 1, 1995,
no insurance carried by the Company has been canceled by the insurer and the
Company has not been denied coverage.
5.18 COMPENSATION; EMPLOYMENT AGREEMENTS; LABOR MATTERS.
(a) The Company has delivered to IES an accurate list (which is
set forth on Schedule 5.18) showing all officers, directors and key employees
of the Company, listing all employment agreements with such officers, directors
and key employees and the rate of compensation (and the portions thereof
attributable to salary, bonus and other compensation, respectively) of each of
such persons as of (i) the Balance Sheet Date and (ii) the date hereof. The
Company has provided to IES true, complete and correct copies of any employment
agreements for persons listed on Schedule 5.18. Since the Balance Sheet Date,
except as disclosed on Schedule 5.18, there have been no increases in the
compensation payable or any special bonuses to any officer, director, key
employee or other employee, except ordinary salary increases implemented on a
basis consistent with past practices.
(b) Except as set forth on Schedule 5.18, (i) the Company is not
bound by or subject to (and none of its respective assets or properties is
bound by or subject to) any arrangement with any labor union, (ii) to the best
knowledge of the Company and the Stockholders, no campaign to establish such
arrangement is in progress and (iii) there is no pending or, to the best of the
Company's knowledge and the Stockholders' knowledge, threatened labor dispute
involving the Company and any group of its employees nor has the Company
experienced any labor interruptions over the past three years. The Company
believes its relationship with employees to be good.
(c) Except as set forth in Schedule 5.18 attached hereto, (i)
there are no significant controversies pending or, to the knowledge of the
Company and the Stockholders, threatened between the Company and any of its
employees, (ii) the Company has complied in all material
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respects with all laws relating to the employment of labor, including, without
limitation, any provisions thereof relating to wages, hours, collective
bargaining, and the payment of social security and similar taxes, and (iii) no
person has asserted that the Company is liable in any material amount for any
arrears of wages or any taxes or penalties for failure to comply with any of
the foregoing.
5.19 EMPLOYEE PLANS. The Company has delivered to IES an accurate
schedule (Schedule 5.19) showing all employee benefit plans of the Company,
including all employment agreements and other agreements or arrangements
containing "golden parachute" or other similar provisions, and deferred
compensation agreements, together with true, complete and correct copies of
such plans, agreements and any trusts related thereto, and classifications of
employees covered thereby as of the Balance Sheet Date and as of the date of
this Agreement. Except for the employee benefit plans, if any, described on
Schedule 5.19, the Company does not sponsor, maintain or contribute to any plan
program, fund or arrangement that constitutes an "employee pension benefit
plan", and neither the Company nor any subsidiary has any obligation to
contribute to or accrue or pay any benefits under any deferred compensation or
retirement funding arrangement on behalf of any employee or employees (such as,
for example, and without limitation, any individual retirement account or
annuity, any "excess benefit plan" (within the meaning of Section 3(36) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA")) or any
non-qualified deferred compensation arrangement). For the purposes of this
Agreement, the term "employee pension benefit plan" shall have the same meaning
as is given that term in Section 3(2) of ERISA. The Company has not sponsored,
maintained or contributed to any employee pension benefit plan other than the
plans set forth on Schedule 5.19, and the Company is not or could not be
required to contribute to any retirement plan pursuant to the provisions of any
collective bargaining agreement establishing the terms and conditions or
employment of any of the Company's employees.
Except as set forth on Schedule 5.19, the Company is not now, or will
not as a result of its past activities become, liable to the Pension Benefit
Guaranty Corporation or to any multiemployer employee pension benefit plan
under the provisions of Title IV of ERISA.
All employee benefit plans listed on Schedule 5.19 and the
administration thereof are in compliance in all material respects with their
terms and all applicable provisions of ERISA and the regulations issued
thereunder, as well as with all other applicable federal, state and local
statutes, ordinances and regulations.
All accrued contribution obligations of the Company with respect to
any plan listed on Schedule 5.19 have either been fulfilled in their entirety
or are fully reflected on the balance sheet of the Company as of the Balance
Sheet Date.
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5.20 COMPLIANCE WITH ERISA. All such plans listed on Schedule 5.19
that are intended to qualify (the "Qualified Plans") under Section 401 (a) of
the Code are, and have been so qualified and have been determined by the
Internal Revenue Service to be so qualified, and copies of such determination
letters are attached to Schedule 5.19. Except as disclosed on Schedule 5.20,
all reports and other documents required to be filed with any governmental
agency or distributed to plan participants or beneficiaries (including, but not
limited to, actuarial reports, audits or tax returns) have been timely filed or
distributed, and copies thereof are included as part of Schedule 5.19 hereof.
Neither Stockholders, any such plan listed in Schedule 5.19, nor the Company
has engaged in any transaction prohibited under the provisions of Section 4975
of the Code or Section 406 of ERISA. No such Plan listed in Schedule 5.19 has
incurred an accumulated funding deficiency, as defined in Section 412(a) of the
Code and Section 302(l) of ERISA; and the Company has not incurred any
liability for excise tax or penalty due to the Internal Revenue Service nor any
liability to the Pension Benefit Guaranty Corporation. The Company further
represents that except as set forth on Schedule 5.19 hereto:
(i) there have been no terminations, partial terminations
or discontinuations of contributions to any Qualified Plan intended to
qualify under Section 401(a) of the Code without notice to and
approval by the Internal Revenue Service;
(ii) no plan listed in Schedule 5.19 subject to the
provisions of Title IV of ERISA has been terminated;
(iii) there have been no "reportable events" (as that
phrase is defined in Section 4043 of ERISA) with respect to any such
plan listed in Schedule 5.19;
(iv) the Company (including any subsidiaries) has not
incurred liability under Section 4062 of ERISA; and
(v) no circumstances exist pursuant to which the Company
could have any direct or indirect liability whatsoever (including, but
not limited to, any liability to any multiemployer plan or the PBGC
under Title IV of ERISA or to the Internal Revenue Service for any
excise tax or penalty, or being subject to any statutory lien to
secure payment of any such liability) with respect to any plan now or
heretofore maintained or contributed to by any entity other than the
Company that is, or at any time was, a member of a "controlled group"
(as defined in Section 412(n)(6)(B) of the Code) that includes the
Company.
5.21 CONFORMITY WITH LAW; LITIGATION. Except to the extent set
forth on Schedule 5.21 or 5.13, the Company is not in violation of any law or
regulation or any order of any court or Federal, state, municipal or other
governmental department, commission, board, bureau, agency or instrumentality
having jurisdiction over it other than violations that would not have a
Material Adverse Effect on the Company; and except to the extent set forth on
Schedule 5.10 or 5.13, there are no claims, actions, suits or proceedings,
pending or, to the knowledge of the Company and the Stockholders, threatened
against or affecting, the Company,
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at law or in equity, or before or by any Federal, state, municipal or other
governmental department, commission, board, bureau, agency or instrumentality
having jurisdiction over any of them and no written notice of any claim,
action, suit or proceeding, whether pending or threatened, has been received by
the Company, and to the knowledge of the Company and the Stockholders there is
no basis for any such claim, action, suit or proceeding. The Company has
conducted and is now conducting its business in compliance in all material
respects with the requirements, standards, criteria and conditions set forth in
applicable Federal, state and local statutes, ordinances, orders, approvals,
variances, rules and regulations.
5.22 TAXES.
(a) The Company has timely filed all requisite Federal, state and
other Tax Returns or extension requests for all fiscal periods ended on or
before the Balance Sheet Date; and except as set forth on Schedule 5.22, there
are no examinations in progress or claims pending against any of them for
federal, state and other Taxes (including penalties and interest) for any
period or periods prior to and including the Balance Sheet Date and no notice
of any claim for Taxes, whether pending or threatened, has been received. All
Tax, including interest and penalties (whether or not shown on any Tax Return),
owed by the Company has been paid. The amounts shown as accruals for Taxes on
the Company Financial Statements are sufficient for the payment of all Taxes of
the kinds indicated (including penalties and interest) for all fiscal periods
ended on or before that date. Copies of (i) any tax examinations, (ii)
extensions of statutory limitations and (iii) the federal and local income Tax
Returns and franchise Tax Returns of Company for their last three (3) fiscal
years, or such shorter period of time as any of them shall have existed, are
attached hereto as Schedule 5.22 or have otherwise been delivered to IES. The
Company has a taxable year ended December 31. Except as set forth on Schedule
5.22, the Company uses the accrual method of accounting for income tax
purposes, and the Company's methods of accounting have not changed in the past
five years. The Company is not an investment Company as defined in Section
351(e)(1) of the Code. The Company is not and has not during the last five
years been a party to any tax sharing agreement or agreement of similar effect.
Except as set forth on Schedule 5.22, the Company is not and has not during the
last five years been a member of any consolidated group. The Company has not
received, been denied, or applied for any private letter ruling during the last
ten years.
(b) The Stockholders made a valid election under the provisions of
Subchapter S of the Code effective for the predecessor of the Company as of
January 1, 1996. Prior to such date, the Company's predecessor in interest was
taxed under the provisions of Subchapter C of the Code. The Stockholders shall
pay, and they hereby indemnify IES and the Company against, all income taxes
payable with respect to the Company's operations for all periods through and
including the Consummation Date.
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5.23 NO VIOLATIONS; NO CONSENT REQUIRED, ETC.
(a) The Company is not in violation of any charter document.
Neither the Company nor, to the best knowledge of the Company and the
Stockholders, any other party thereto, is in default under any lease,
instrument, agreement, license, or permit set forth on Schedule 5.12, 5.13,
5.14, 5.15 or 5.16 (the "Material Documents").
(b) The execution and delivery of this Agreement by each of the
Company and the Stockholders do not violate, conflict with or result in a
breach of any provision of, or constitute a default (or an event which, with
notice or lapse of time or both, would constitute a default) under, or result
in the termination of, or accelerate the performance required by, or result in
a right of termination or acceleration under, or result in the creation of any
lien, security interest, charge or encumbrance upon any of the properties or
assets of the Company under any of the terms, conditions or provisions of (i)
the Charter Documents of the Company, (ii) any statute, law, ordinance, rule,
regulation, judgment, decree, order, injunction, writ, permit or license of any
court or governmental authority applicable to the Company or any of its
properties or assets, or (iii) any Material Document to which the Company or
any of the Stockholders is now a party or by which any of the Stockholders or
the Company or any of its properties or assets may be bound or affected. The
consummation by the Company and the Stockholders of the transactions
contemplated hereby will not result in any material violation, conflict,
breach, right of termination or acceleration or creation of liens under any of
the terms, conditions or provisions of the items described in clauses (i)
through (iii) of the preceding sentence, subject, in the case of the terms,
conditions or provisions of the items described in clause (iii) above, to
obtaining (prior to the Effective Time) such consents as may be required from
commercial lenders, lessors or other third parties.
(c) Except as set forth on Schedule 5.23 and except for the
Xxxx-Xxxxx Act, none of the Material Documents requires notice to, or the
consent or approval of, any governmental agency or other third party with
respect to the consummation by the Company and the Stockholders of any of the
transactions contemplated hereby in order to remain in full force and effect,
and consummation by the Company and the Stockholders of the transactions
contemplated hereby will not give rise to any right to termination,
cancellation or acceleration or loss of any material right or benefit.
(d) Except for (i) the filing in connection with the IPO of a
registration statement on Form S-1 with the SEC pursuant to the 1933 Act, (ii)
the declaration of the effectiveness thereof by the SEC and filings with
various state blue sky authorities, and (iii) any filing required under the
Xxxx-Xxxxx Act in connection with the purchase and sale of the Company Stock,
no declaration, filing or registration with, or notice to, or authorization,
consent or approval of, any governmental or regulatory body or authority is
necessary for the execution and delivery of this Agreement by the Company and
the Stockholders or the consummation by the Company and the Stockholders of the
transactions contemplated hereby.
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(e) Except as set forth on Schedule 5.23, none of the Material
Documents prohibits the use or publication by the Company or IES of the name of
any other party to such Material Document, and none of the Material Documents
prohibits or restricts the Company from freely providing services or selling
products to any other customer or potential customer of the Company, IES or any
Other Founding Company.
5.24 GOVERNMENT CONTRACTS. Except as set forth on Schedule 5.24,
the Company is not now a party to any governmental contract subject to price
redetermination or renegotiation.
5.25 ABSENCE OF CHANGES. Since the Balance Sheet Date, except as
set forth on Schedule 5.25 or as otherwise contemplated hereby, there has not
been:
(i) any Material Adverse Change in the Company;
(ii) any damage, destruction or loss (whether or not
covered by insurance), alone or in the aggregate, which has caused a
Material Adverse Effect on the Company;
(iii) any change in the authorized capital of the Company
or its outstanding securities or any change in its ownership interests
or any grant of any options, warrants, calls, conversion rights or
commitments;
(iv) any declaration or payment of any dividend or
distribution in respect of the capital stock or any direct or indirect
redemption, purchase or other acquisition of any of the capital stock
of the Company except for distributions that would have been permitted
after the date hereof under Section 7.3(iii) hereof,
(v) any increase in the compensation, bonus, sales
commissions or fee arrangement payable or to become payable by the
Company to any of its officers, directors, Stockholders, employees,
consultants or agents, except for ordinary and customary bonuses and
salary increases for employees in accordance with past practice;
(vi) any work interruptions, labor grievances or claims
filed, or any event or condition of any character, which has caused a
Material Adverse Effect on the Company;
(vii) any sale or transfer, or any agreement to sell or
transfer, any material assets, property or rights of Company to any
person, including, without limitation, the Stockholders and their
affiliates, except inventory sold or transferred in the ordinary
course of business;
(viii) any cancellation, or agreement to cancel, any
indebtedness or other obligation owing to the Company, including
without limitation any indebtedness or obligation of any Stockholders
or any affiliate thereof;
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(ix) any plan, agreement or arrangement granting any
preferential rights to purchase or acquire any interest in any of the
material assets, property or rights of the Company or requiring
consent of any party to the transfer and assignment of any such
assets, property or rights;
(x) any purchase or acquisition of, or agreement, plan or
arrangement to purchase or acquire, any property, rights or assets
outside of the ordinary course of the Company's business;
(xi) any waiver of any material rights or claims of the
Company;
(xii) any amendment or termination of any material
contract, agreement, license, permit or other right to which the
Company is a party;
(xiii) any transaction by the Company outside the ordinary
course of its business;
(xiv) any cancellation or termination of a material
contract with a customer or client prior to the scheduled termination
date; or
(xv) any other distribution of property or assets by the
Company other than in the ordinary course of business and other than
distributions of real estate and other assets as permitted by this
Agreement (including the Schedules hereto).
5.26 DEPOSIT ACCOUNTS; POWERS OF ATTORNEY. The Company has
delivered to IES an accurate schedule (which is set forth on Schedule 5.26) as
of the date of the Agreement of:
(i) the name of each financial institution in which the
Company has accounts or safe deposit boxes;
(ii) the names in which the accounts or boxes are held;
(iii) the type of account and account number; and
(iv) the name of each person authorized to draw thereon or
have access thereto.
Schedule 5.26 also sets forth the name of each person, corporation, firm or
other entity holding a general or special power of attorney from the Company
and a description of the terms of such power.
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5.27 VALIDITY OF OBLIGATIONS. The execution and delivery of this
Agreement by the Company and the performance of the transactions contemplated
herein have been duly and validly authorized by the Board of Directors of the
Company and this Agreement has been duly and validly authorized by all
necessary corporate action and is a legal, valid and binding obligation of the
Company.
5.28 RELATIONS WITH GOVERNMENTS. None of the Company, any of the
Stockholders, or any affiliate of any of them has given or offered anything of
value to any governmental official, political party or candidate for government
office nor has it or any of them otherwise taken any action which would cause
the Company to be in violation of the Foreign Corrupt Practices Act of 1977, as
amended, or any law of similar effect.
5.29 DISCLOSURE. (a) This Agreement, including the Annexes and
Schedules hereto, to the extent they relate to the Company and the
Stockholders, and the completed Director and Officer Questionnaires, with
respect to any Stockholder who has completed such, and the completed S-1
Questionnaire furnished to IES by the Company and the Stockholders in
connection herewith, do not contain an untrue statement of a material fact
concerning the Company or the Stockholders or omit to state a material fact
concerning the Company or the Stockholders necessary to make the statements
herein and therein, in light of the circumstances under which they were made,
not misleading; provided, however, that the foregoing does not apply to
statements contained in or omitted from any of such documents made or omitted
in reliance upon information furnished in writing by IES. If, during the
period of time during which a prospectus is required to be delivered in
connection with the IPO, the Company or the Stockholders become aware of any
fact or circumstance which would affect the accuracy of a representation or
warranty of Company or Stockholders in this Agreement in any material respect,
the Company and the Stockholders shall immediately give notice of such fact or
circumstance to IES. However, subject to the provisions of Section 7.7, such
notification shall not relieve either the Company or the Stockholders of their
respective obligations under this Agreement, and, subject to the provisions of
Section 7.7, at the sole option of IES, the truth and accuracy of any and all
warranties and representations of the Company, or on behalf of the Company and
of Stockholders at the date of this Agreement and on the Closing Date and on
the Consummation Date, shall be a precondition to the consummation of this
transaction.
(b) The Company and the Stockholders acknowledge and agree (i)
that there exists no firm commitment, binding agreement, or promise or other
assurance of any kind, whether express or implied, oral or written, that a
Registration Statement will become effective or that the IPO pursuant thereto
will occur; (ii) that neither IES or any of its officers, directors, agents or
representatives nor any Underwriter shall have any liability to the Company,
the Stockholders or any other person affiliated or associated with the Company
for any failure of the Registration Statement to become effective, the IPO to
occur at a particular price or within a particular range of prices or to occur
at all; and (iii) that the decision of Stockholders to enter into this
Agreement, or to vote in favor of or consent to the proposed purchase and sale
of the Company Stock, has been or will be made independent of, and without
reliance upon, any statements, opinions or other communications, or due
diligence investigations which have been
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or will be made or performed by any prospective Underwriter, relative to IES or
the prospective IPO.
5.30 PROHIBITED ACTIVITIES. Except as set forth on Schedule 5.30,
the Company has not, between the Balance Sheet Date and the date hereof, taken
any of the actions (Prohibited Activities) set forth in Section 7.3.
5.31 NO WARRANTIES OR INSURANCE. Except as set forth on Schedule
5.31, the Company has no liability to any person under any warranty and the
Company does not offer or sell insurance or consumer protection plans or other
arrangements that could result in the Company being required to make any
payment to or perform any service for any person.
5.32 INTEREST IN CUSTOMERS AND SUPPLIERS AND RELATED PARTY
TRANSACTIONS. Except as described on Schedule 5.32, no Stockholder, officer,
director or Affiliate of the Company (i) possesses, directly or indirectly, any
financial interest in, or is a director, officer, employee or affiliate of, any
corporation, firm, association or business organization that is a client,
supplier, customer, lessor, lessee or competitor of the Company, or (ii) is or
will be a party to an agreement or relationship, that involves the receipt by
such person of compensation or property from the Company other than through a
customary employment relationship.
5.33 REGISTRATION STATEMENT. To the best of the Company's and the
Stockholders' knowledge, none of the information supplied or to be supplied by
the Company specifically for inclusion in the Registration Statement contained
or will contain any untrue statement of a material fact concerning the Company
or the Stockholders or omitted or will omit to state any material fact required
to be stated therein or necessary in order to make the statements therein
concerning the Company or the Stockholders, in light of the circumstances under
which they are made, not misleading. The Company shall have the right to
review and approve in advance any statements made about the Company in the
Registration Statement.
(B) Representations and Warranties of Stockholders.
Each Stockholder severally represents and warrants that the
representations and warranties set forth below are true as of the date of this
Agreement and, subject to Section 7.7 hereof, shall be true at the time of
Closing and on the Consummation Date, and that the representations and
warranties set forth in Section 5(B) shall survive the Consummation Date.
5.34 AUTHORITY; OWNERSHIP. Such Stockholder has the full legal
right, power and authority to enter into this Agreement. Such Stockholder owns
beneficially and of record all of the shares of the Company Stock or interests
in BW/BEC, BW/CEC and the Partnership identified on Annex I hereto as being
owned by such Stockholder, and, such Company Stock is owned free and clear of
all liens, encumbrances and claims of every kind.
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5.35 PREEMPTIVE RIGHTS. Such Stockholder does not have, or hereby
waives, any preemptive or other right to acquire shares of Company Stock,
interests in the Partnership or IES Stock that such Stockholder has or may have
had. Nothing herein, however, shall limit or restrict the rights of any
Stockholder to acquire IES Stock pursuant to (i) this Agreement or (ii) any
outstanding option granted by IES.
5.36 NO COMMITMENT TO DISPOSE OF IES STOCK. No Stockholder is
under any binding commitment or contract to sell, exchange or otherwise dispose
of shares of IES Stock received as described in Section 3.1 or Section 3.3.
6. REPRESENTATIONS OF IES
Except as otherwise qualified below, IES represents and warrants that
all of the following representations and warranties in this Section 6 are true
at the date of this Agreement and, subject to Section 7.7 hereof, shall be true
at the time of Closing and the Consummation Date, and that such
representations and warranties shall survive the Consummation Date for a period
of eighteen months (the last day of such period being the "Expiration Date"),
except that solely for purposes of determining whether a claim for
indemnification under Section 11.2(iii) hereof has been made on a timely basis,
and solely to the extent that in connection with the IPO, any of the
Stockholders actually incurs liability under the 1933 Act, the 1934 Act, or any
other Federal or state securities laws, the representations and warranties set
forth herein shall survive until the expiration of any applicable limitations
period, which shall be deemed to be the Expiration Date for such purposes.
IES acknowledges that in purchasing the shares of Company Stock, it is
relying upon its own independent investigation as well as the representations
and warranties of the Company and the Stockholders as set forth in this
Agreement. Except as set forth herein, the Company and the Stockholders
expressly disclaim any representation or warranty (express, implied or
otherwise) relating to the condition, assets or business of the Company and any
subsidiary including, without limitation, any warranty of merchantability or
fitness for a particular purpose except as expressly set forth herein.
6.1 DUE ORGANIZATION. IES is a corporation duly incorporated and
organized, validly existing and in good standing under the laws of the State of
Delaware, and has the requisite power and authority to carry on its business as
it is now being conducted and as contemplated by the IES Plan of Organization.
IES is duly qualified or authorized to do business and is in good standing in
each jurisdiction in which the nature of its business or the ownership or
leasing of its properties makes such qualification or authorization necessary,
except where the failure to be so qualified or authorized to do business would
not have a Material Adverse Effect. True, complete and correct copies of the
Certificate of Incorporation and By-laws, each as proposed to be amended, of
IES (the "IES Charter Documents") are attached hereto as Annex II.
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6.2 AUTHORIZATION. (i) The officers of IES executing this
Agreement have the authority to enter into and bind IES to the terms of this
Agreement and (ii) IES has the full legal right, power and authority to enter
into this Agreement and consummate the transactions contemplated hereby. All
corporate acts and other proceedings required to have been taken by IES to
authorize the execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby have been duly and
properly taken. A copy of the resolutions adopted by the Board of Directors of
IES, which approve this Agreement and the transactions contemplated hereby in
all respects, certified by the Secretary or an Assistant Secretary of the
Company as being in full force and effect on the date hereof, is attached
hereto in Annex II.
6.3 CAPITAL STOCK OF IES. The authorized capital stock of IES is
as set forth in Section 1.3(ii). Immediately prior to the Closing Date and the
Consummation Date, all of the issued and outstanding shares of the capital
stock of IES will be as set forth in the Registration Statement, free and clear
of all liens, security interests, pledges, charges, voting trusts,
restrictions, encumbrances and claims of every kind other than any restrictions
described in the Registration Statement. All of the issued and outstanding
shares of the capital stock of IES have been duly authorized and validly
issued, are fully paid and nonassessable and such shares were offered, issued,
sold and delivered by IES in compliance with all applicable state and Federal
laws concerning the issuance of securities. Further, none of such shares were
issued in violation of the preemptive rights of any past or present Stockholder
of IES.
6.4 TRANSACTIONS IN CAPITAL STOCK; ORGANIZATION ACCOUNTING.
Except for the Other Agreements and except as set forth in the Draft
Registration Statement, (i) no option, warrant, call, conversion right or
commitment of any kind exists which obligates IES to issue any of its
authorized but unissued capital stock; and (ii) IES has no obligation
(contingent or otherwise) to purchase, redeem or otherwise acquire any of its
equity securities or any interests therein or to pay any dividend or make any
distribution in respect thereof. The outstanding options, warrants or other
rights to acquire shares of the stock of IES will be as described in the
Registration Statement.
6.5 SUBSIDIARIES. IES has no subsidiaries. IES does not
presently own, of record or beneficially, or controls, directly or indirectly,
any capital stock, securities convertible into capital stock or any other
equity interest in any corporation, association or business entity, and IES is
not, directly or indirectly, a participant in any joint venture, partnership or
other non-corporate entity.
6.6 FINANCIAL STATEMENTS. The financial statements of IES
included in the Draft Registration Statement (the "IES Financial Statements")
have been prepared in accordance with generally accepted accounting principles
applied on a consistent basis throughout the periods indicated (except as noted
thereon), and the balance sheet included therein presents fairly the financial
position of IES as of its date.
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6.7 LIABILITIES AND OBLIGATIONS. Except as set forth in the Draft
Registration Statement, IES has no material liabilities or obligations of any
kind, character or description, whether accrued, absolute, secured or
unsecured, contingent or otherwise, other than liabilities incurred in the
ordinary course of business and consistent with past practices, liabilities or
obligations set forth in or contemplated by this Agreement and the Other
Agreements and except for fees incurred in connection with the transactions
contemplated hereby and thereby.
6.8 CONFORMITY WITH LAW; LITIGATION. Except to the extent set
forth in the Draft Registration Statement, IES is not in violation of any law
or regulation or any order of any court or Federal, state, municipal or other
governmental department, commission, board, bureau, agency or instrumentality
having jurisdiction over it and its stockholders and, there are no claims,
actions, suits or proceedings, pending or, to the knowledge of IES, threatened
against or affecting, IES, at law or in equity, or before or by any Federal,
state, municipal or other governmental department, commission, board, bureau,
agency or instrumentality having jurisdiction over it and no notice of any
claim, action, suit or proceeding, whether pending or threatened, has been
received. IES has conducted and is conducting its businesses in compliance in
all material respects with the requirements, standards, criteria and conditions
set forth in applicable Federal, state and local statutes, ordinances, permits,
licenses, orders, approvals, variances, rules and regulations and is not in
violation, in any material respect, of any of the foregoing.
6.9 NO VIOLATIONS. (a) IES is not in violation of any IES
Charter Document. Neither IES, nor, to the best knowledge of IES, any other
party thereto, is in default under any lease, instrument, agreement, license,
or permit to which IES is a party, or by which IES, or any of its properties,
are bound (collectively, the "IES Documents").
(b) The execution and delivery of this Agreement by IES do not
violate, conflict with or result in a breach of any provision of, or constitute
a default (or an event which, with notice or lapse of time or both, would
constitute a default) under, or result in the termination of, or accelerate the
performance required by, or result in a right of termination or acceleration
under, or result in the creation of any lien, security interest, charge or
encumbrance upon any of the properties or assets of IES under any of the terms,
conditions or provisions of (i) the IES Charter Documents, (ii) any statute,
law, ordinance, rule, regulation, judgment, decree, order, injunction, writ,
permit or license of any court or governmental authority applicable to IES or
any of its properties or assets, or (iii) any IES Document. The consummation
by IES of the transactions contemplated hereby will not result in any material
violation, conflict, breach, right of termination or acceleration or creation
of liens under any of the terms, conditions or provisions of the items
described in clauses (i) through (iii) of the preceding sentence, subject, in
the case of the terms, conditions or provisions of the items described in
clause (iii) above, to obtaining (prior to the Effective Time) such consents as
may be required from commercial lenders, lessors or other third parties.
(c) Except for (i) the filings with the SEC pursuant to the 1933
Act in connection with the IPO and the purchase and sale of the Company Stock,
(ii) the declaration of the
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effectiveness thereof by the SEC and filings with various state blue sky
authorities, and (iii) any filings required under the Xxxx-Xxxxx Act in
connection with the purchase and sale of the Company Stock or the capital stock
of the Other Founding Companies, none of the IES Documents requires notice to,
or the consent or approval of, any governmental agency or other third party
with respect to the consummation by IES of any of the transactions contemplated
hereby in order to remain in full force and effect, and consummation by IES of
the transactions contemplated hereby will not give rise to any right to
termination, cancellation or acceleration or loss of any material right or
benefit.
(d) Except for (i) the filings with the SEC pursuant to the 1933
Act in connection with the IPO and the purchase and sale of the Company Stock,
(ii) the declaration of the effectiveness thereof by the SEC and filings with
various state blue sky authorities, and (iii) any filings required under the
Xxxx-Xxxxx Act and under state securities laws in connection with the purchase
and sale of the Company Stock or the capital stock of the Other Founding
Companies, no declaration, filing or registration with, or notice to, or
authorization, consent or approval of, any governmental or regulatory body or
authority is necessary for the execution and delivery of this Agreement by IES
or the consummation by IES of the transactions contemplated hereby.
6.10 VALIDITY OF OBLIGATIONS. The execution and delivery of this
Agreement by IES and the performance of the transactions contemplated herein
have been duly and validly authorized by the Board of Directors of IES and this
Agreement has been duly and validly authorized by all necessary corporate
action and is a legal, valid and binding obligation of IES.
6.11 IES STOCK. At the time of issuance thereof and delivery to
the Stockholders, the IES Stock to be delivered to the Stockholders pursuant to
this Agreement will constitute valid, duly authorized and legally issued shares
of IES, fully paid and nonassessable, and with the exception of restrictions
upon resale set forth in Sections 15 and 16 hereof, will be identical in all
substantive respects (which do not include the form of certificate upon which
it is printed or the presence or absence of a CUSIP number on any such
certificate) to the IES Stock issued and outstanding as of the date hereof by
reason of the provisions of the Delaware GCL, other than the Restricted Common
Stock. The IES Stock issued and delivered to the Stockholders shall at the
time of such issuance and delivery be free and clear of any liens, claims or
encumbrances of any kind or character. The shares of IES Stock to be issued to
the Stockholders pursuant to this Agreement will not be registered under the
1933 Act, except as provided in Section 17 hereof.
6.12 NO SIDE AGREEMENTS. IES has not entered and will not enter
into any agreement with any of the Founding Companies or any of the
Stockholders of the Founding Companies or IES other than the Other Agreements
and the agreements contemplated by each of the Other Agreements and the
Registration Statement, including the employment agreements, leases and
Indemnification Agreements referred to herein or entered into in connection
with the transactions contemplated hereby and thereby.
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6.13 BUSINESS; REAL PROPERTY; MATERIAL AGREEMENTS. IES was formed
in June 1997 and has conducted only limited operations since that time. IES
has conducted no material business since the date of its inception, except in
connection with this Agreement, the Other Agreements and the IPO. Except as
described in the Draft Registration Statement, IES does not own and has not at
any time owned any real property or any material personal property and is not a
party to any other material agreement other than the Other Agreements and the
agreements contemplated thereby and to such agreements as will be filed as
Exhibits to the Registration Statement.
6.14 RELATIONS WITH GOVERNMENTS. Neither IES nor any of its
affiliates has given or offered anything of value to any government official,
political party or candidate for government office nor has it or any of them
otherwise taken any action which would cause IES to be in violation of the
Foreign Corrupt Practices Act of 1977, as amended, or any law of similar
effect.
6.15 DISCLOSURE. The Draft Registration Statement delivered to the
Company and the Stockholders, together with this Agreement and the information
finished to the Company and the Stockholders in connection herewith, does not
as of the date hereof contain an untrue statement of a material fact or omit to
state a material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading; provided, however,
that the foregoing does not apply to statements contained in or omitted from
any of such documents made or omitted in reliance upon information furnished by
the Company or the Stockholders for inclusion in the Registration Statement.
6.16 OTHER AGREEMENTS. The Other Agreements have been duly
authorized, executed and delivered by IES and constitute the legal, valid and
binding obligation of IES enforceable against IES in accordance with their
respective terms. The terms and conditions of the Other Agreements are
identical in all material respects to the terms and conditions in this
Agreement, except for differences reflecting the parties, Annex I and the
schedules thereto.
6.17 DRAFT REGISTRATION STATEMENT. The Draft Registration
Statement and the Registration Statement comply as to form in all material
respects with the requirements of the Form S-1 Registration Statement and
applicable requirements under Federal laws and regulations, provided that the
foregoing does not apply to any information that the Company and the
Stockholders have furnished to IES specifically for inclusion in the
Registration Statement.
7. COVENANTS PRIOR TO CLOSING
7.1 ACCESS AND COOPERATION; DUE DILIGENCE.
(a) Between the date of this Agreement and the Consummation Date,
the Company will afford to the officers and authorized representatives of IES
reasonable access during normal business hours to all of the Company's sites,
properties, books and records and will
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furnish IES with such additional financial and operating data and other
information as to the business and properties of the Company as IES may from
time to time reasonably request. The Company will cooperate with IES, its
representatives, auditors and counsel in the preparation of any documents or
other material which may be required in connection with any documents or
materials required by this Agreement. IES, the Stockholders and the Company
will treat all information obtained in connection with the negotiation and
performance of this Agreement or the due diligence investigations conducted
with respect to the Company as confidential in accordance with the provisions
of Section 14 hereof.
(b) Between the date of this Agreement and the Consummation Date,
IES will afford to the officers and authorized representatives of the Company
access to all of IES's sites, properties, books and records and will furnish
the Company with such additional financial and operating data and other
information as to the business and properties of IES as the Company may from
time to time reasonably request. IES will cooperate with the Company, its
representatives, auditors and counsel in the preparation of any documents or
other material which may be required in connection with any documents or
materials required by this Agreement. The Company will cause all information
obtained in connection with the negotiation and performance of this Agreement
to be treated as confidential in accordance with the provisions of Section 14
hereof.
7.2 CONDUCT OF BUSINESS PENDING CLOSING. Between the date of this
Agreement and the Consummation Date, the Company will, except as set forth on
Schedule 7.2:
(i) carry on its respective businesses in substantially
the same manner as it has heretofore and not introduce any material
new method of management, operation or accounting;
(ii) use all commercially reasonable efforts to maintain
its respective properties and facilities, including those held under
leases, in as good working order and condition as at present, ordinary
wear and tear excepted;
(iii) perform in all material respects all of its
respective obligations under agreements relating to or affecting its
respective assets, properties or rights;
(iv) use all reasonable efforts to keep in full force and
effect present insurance policies or other comparable insurance
coverage;
(v) use its commercially reasonable efforts to maintain
and preserve its business organization intact, retain its respective
present key employees and maintain its respective relationships with
suppliers, customers and others having business relations with the
Company;
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(vi) use reasonable efforts to maintain compliance with
all material permits, laws, rules and regulations, consent orders, and
all other orders of applicable courts, regulatory agencies and similar
governmental authorities;
(vii) maintain present debt and lease instruments in
accordance with their terms and not enter into new or amended debt or
lease instruments without the knowledge and consent of IES (which
consent shall not be unreasonably withheld), provided that debt and/or
lease instruments may be replaced without the consent of IES if such
replacement instruments are on terms at least as favorable to the
Company as the instruments being replaced;
(viii) maintain or reduce present salaries and commission
levels for all officers, directors, employees and agents except for
ordinary and customary bonus and salary increases for employees in
accordance with past practices; and
(ix) maintain the Company's cash at a level equal to or
above the minimum level of cash required to be maintained as described
in Annex I hereto.
7.3 PROHIBITED ACTIVITIES. Except as disclosed on Schedule 7.3,
between the date hereof and the Consummation Date, the Company will not,
without prior written consent of IES:
(i) make any change in its Charter Documents;
(ii) issue any securities, options, warrants, calls,
conversion rights or commitments relating to its securities of any
kind other than in connection with the exercise of options or warrants
listed in Schedule 5.4;
(iii) except as permitted pursuant to the terms and
conditions for equity distributions described in Annex I, declare or
pay any dividend, or make any distribution in respect of its stock
whether now or hereafter outstanding, or purchase, redeem or otherwise
acquire or retire for value any shares of its stock;
(iv) enter into any contract or commitment or incur or
agree to incur any liability or make any capital expenditures, except
if it is in the normal course of business (consistent with past
practice) or involves an amount not in excess of two percent (2%) of
the Company's revenues for fiscal 1996;
(v) create, assume or permit to exist any mortgage,
pledge or other lien or encumbrance upon any assets or properties
whether now owned or hereafter acquired, except (1) with respect to
purchase money liens incurred in connection with the acquisition of
equipment with an aggregate cost not in excess of two percent (2%) of
the Company's revenues for fiscal 1996 necessary or desirable for the
conduct of the businesses of the Company, (2) (A) liens for taxes
either not yet due or being contested
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in good faith and by appropriate proceedings (and for which contested
taxes adequate reserves have been established and are being
maintained) or (B) materialmen's, mechanics', workers', repairmen's,
employees' or other like liens arising in the ordinary course of
business (the liens set forth in clause (2) being referred to herein
as "Statutory Liens"), or (3) liens set forth on Schedule 5.10 and/or
5.15 hereto;
(vi) except as set forth in Schedule 7.3(vi) sell, assign,
lease or otherwise transfer or dispose of any property or equipment
except in the normal course of business and other than distributions
of real estate and other assets as permitted in this Agreement
(including the Schedules hereto);
(vii) negotiate for the acquisition of any business or the
start-up of any new business;
(viii) merge or consolidate or agree to merge or consolidate
with or into any other corporation;
(ix) waive any material rights or claims of the Company,
provided that the Company may negotiate and adjust bills and accounts
in the course of good faith disputes with customers in a manner
consistent with past practice, provided, further, that such
adjustments shall not be deemed to be included in Schedule 5.11 unless
specifically listed thereon;
(x) amend or terminate any material agreement, permit,
license or other right of the Company; or
(xi) enter into any other transaction outside the ordinary
course of its business or prohibited hereunder.
7.4 NO SHOP. None of the Stockholders, the Company, nor any
agent, officer, director, trustee or any representative of any of the foregoing
will, during the period commencing on the date of this Agreement and ending
with the earlier to occur of the Consummation Date or the termination of this
Agreement in accordance with its terms, directly or indirectly:
(i) solicit or initiate the submission of proposals or
offers from any person for,
(ii) participate in any discussions pertaining to, or
(iii) furnish any information to any person other than IES
or its authorized agents relating to, any acquisition or purchase of
all or a material amount of the assets of, or any equity interest in,
the Company or a merger, consolidation or business combination of the
Company.
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7.5 AGREEMENTS. Except as disclosed on Schedule 7.5, the
Stockholders and the Company shall terminate (i) any stockholders agreements,
voting agreements, voting trusts, options, warrants and employment agreements
between the Company and any employee listed on Schedule 9.12 hereto and (ii)
except as otherwise provided in this Agreement, any existing agreement between
the Company and any Stockholder, on or prior to the Consummation Date provided
that nothing herein shall prohibit or prevent the Company from paying (either
prior to or on the Closing Date) notes or other obligations from the Company to
the Stockholders in accordance with the terms thereof, which terms have been
disclosed to IES. Such termination agreements are listed on Schedule 7.5 and
copies thereof shall be attached thereto.
7.6 NOTIFICATION OF CERTAIN MATTERS. The Stockholders and the
Company shall give prompt notice to IES upon obtaining knowledge of (i) the
occurrence or non-occurrence of any event the occurrence or nonoccurrence of
which would be likely to cause any representation or warranty of the Company or
the Stockholders contained herein to be untrue or inaccurate in any material
respect at or prior to the Closing and (ii) any material failure of any
Stockholder or the Company to comply with or satisfy any covenant, condition or
agreement to be complied with or satisfied by such person hereunder. IES shall
give prompt notice to the Company of (i) the occurrence or non-occurrence of
any event the occurrence or non-occurrence of which would be likely to cause
any representation or warranty of IES contained herein to be untrue or
inaccurate in any material respect at or prior to the Closing and (ii) any
material failure of IES to comply with or satisfy any covenant, condition or
agreement to be complied with or satisfied by it hereunder. The delivery of
any notice pursuant to this Section 7.6 shall not be deemed to (i) modify the
representations or warranties hereunder of the party delivering such notice,
which modification may only be made pursuant to Section 7.7, (ii) modify the
conditions set forth in Sections 8 and 9, or (iii) limit or otherwise affect
the remedies available hereunder to the party receiving such notice.
7.7 AMENDMENT OF SCHEDULES. Each party hereto agrees that, with
respect to the representations and warranties of such party contained in this
Agreement, such party shall have the continuing obligation until 24 hours prior
to the anticipated effectiveness of the Registration Statement to supplement or
amend promptly the Schedules hereto with respect to any matter hereafter
arising or discovered which, if existing or known at the date of this
Agreement, would have been required to be set forth or described in the
Schedules or which may have been omitted from the schedules previously provided
by the Company; provided however, that supplements and amendments to Schedules
5.10, 5.11, 5.14 and 5.15 shall only have to be delivered at the Closing Date,
unless such Schedule is to be amended to reflect an event occurring other than
in the ordinary course of business. Notwithstanding the foregoing sentence, no
amendment or supplement to a Schedule prepared by the Company that constitutes
or reflects an event or occurrence that would have a Material Adverse Effect on
the Company may be made unless IES consents to such amendment or supplement;
and provided further, that no amendment or supplement to a Schedule prepared by
IES that constitutes or reflects an event or occurrence that would have a
Material Adverse Effect on IES may be made unless a majority of the Founding
Companies consent to such amendment or supplement. For all purposes of this
Agreement, including without limitation for purposes of determining whether
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the conditions set forth in Sections 8.1 and 9.1 have been fulfilled, the
Schedules hereto shall be deemed to be the Schedules as amended or supplemented
pursuant to this Section 7.7. In the event that the Company seeks to amend or
supplement a Schedule pursuant to this Section 7.7 to reflect an item not known
to the Company or the Stockholders at the time of entering into this Agreement
or an event occurring after the date of this Agreement, and IES does not
consent to such amendment or supplement, this Agreement shall be deemed
terminated by mutual consent as set forth in Section 12.1(i) hereof. In the
event that IES seeks to amend or supplement a Schedule pursuant to this Section
7.7 and a majority of the Founding Companies do not consent to such amendment
or supplement, this Agreement shall be deemed terminated by mutual consent as
set forth in Section 12.1(i) hereof. No amendment of or supplement to a
Schedule shall be made later than 24 hours prior to the anticipated
effectiveness of the Registration Statement.
7.8 COOPERATION IN PREPARATION OF REGISTRATION STATEMENT. The
Company and the Stockholders shall furnish or cause to be furnished to IES and
the Underwriters all of the information concerning the Company and the
Stockholders required for inclusion in, and will cooperate with IES and the
Underwriters in the preparation of, the Registration Statement and the
prospectus included therein (including audited and unaudited financial
statements, prepared in accordance with generally accepted accounting
principles, in form suitable for inclusion in the Registration Statement). The
parties hereto agree that the disclosure of information with respect to the
Company and its Stockholders in the Registration Statement and while marketing
the securities of IES in the IPO shall not be a violation of any
confidentiality agreement, including Article 14 of this Agreement, among the
parties hereto or their officers or stockholders. The Company and the
Stockholders agree promptly to advise IES if at any time during the period in
which a prospectus relating to the offering is required to be delivered under
the 1933 Act, they discover that any information contained in the prospectus
concerning the Company or the Stockholders becomes incorrect or incomplete in
any material respect, and to provide the information needed to correct such
inaccuracy. Subject to the Company's right to review and approve such
information in the Registration Statement set forth in Section 5.33 above, only
insofar as the information relates solely to the Company or the Stockholders
and is provided by them to IES specifically for inclusion in the Registration
Statement, the Company represents and warrants as to such information with
respect to itself, and each Stockholder represents and warrants, as to such
information with respect to the Company and himself or herself, that the
Registration Statement will not include an untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they
were made, not misleading.
7.9 FINAL FINANCIAL STATEMENTS. The Company shall provide at
least 10 days prior to the Consummation Date the unaudited consolidated
balance sheets of the Company as of the end of all fiscal quarters following
the Balance Sheet Date, and the unaudited consolidated statement of income,
cash flows and retained earnings of the Company for all fiscal quarters ended
after the Balance Sheet Date, disclosing no Material Adverse Change in the
Company or change which would cause a Material Adverse Effect in the financial
condition of the
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Company or the results of its operations from the financial statements as of
the Balance Sheet Date, except for the transactions permitted pursuant to the
terms and conditions for equity distributions described in Annex I. Such
financial statements shall have been prepared in accordance with generally
accepted accounting principles applied on a consistent basis throughout the
periods indicated (except as noted therein). Except as noted in such financial
statements, all of such financial statements will present fairly the results of
operations of the Company for the periods indicated therein.
7.10 FURTHER ASSURANCES. The parties hereto agree to execute and
deliver, or cause to be executed and delivered, such further instruments or
documents or take such other action as may be reasonably necessary or
appropriate to carry out the transactions contemplated hereby.
7.11 AUTHORIZED CAPITAL. Prior to the Consummation Date, IES
shall maintain its authorized capital stock as set forth in the Registration
Statement filed with the SEC except for stock splits, such changes in
authorized capital stock as are made to respond to comments made by the SEC or
requirements of any exchange or automated trading system for which application
is made to register the IES Stock and any changes necessary or advisable in
order to permit the delivery of the opinion contemplated by Section 8.12
hereof.
7.12 COMPLIANCE WITH THE XXXX-XXXXX ACT. All parties to this
Agreement hereby recognize that one or more filings under the Xxxx-Xxxxx Act
may be required in connection with the transactions contemplated herein. If it
is determined by the parties to this Agreement that filings under the
Xxxx-Xxxxx Act are required, then: (i) each of the parties hereto agrees to
cooperate and use its best efforts to comply with the Xxxx-Xxxxx Act, (ii) such
compliance by the Stockholders and the Company shall be deemed a condition
precedent in addition to the conditions precedent set forth in Section 9 of
this Agreement, and such compliance by IES shall be deemed a condition
precedent in addition to the conditions precedent set forth in Section 8 of
this Agreement, and (iii) the parties agree to cooperate and use their best
efforts to cause all filings required under the Xxxx-Xxxxx Act to be made. If
filings under the Xxxx-Xxxxx Act are required, the costs and expenses thereof
(including filing fees) shall be borne by IES. The obligation of each party to
consummate the transactions contemplated by this Agreement is subject to the
expiration or termination of the waiting period under the Xxxx-Xxxxx Act, if
applicable.
8. CONDITIONS PRECEDENT TO OBLIGATIONS OF STOCKHOLDERS AND COMPANY
The obligations of the Stockholders and the Company with respect to
actions to be taken on the Closing Date are subject to the satisfaction or
waiver on or prior to the Closing Date of all of the following conditions,
except Section 8.9. The obligations of the Stockholders and the Company with
respect to actions to be taken on the Consummation Date are subject to the
satisfaction or waiver on or prior to the Consummation Date of the condition
set forth in Section 8.9. As of the Closing Date or, with respect to the
conditions set forth in Section
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8.9, as of the Consummation Date, if any such conditions have not been
satisfied, any one or more Stockholders owning 51% or more of the Company Stock
shall have the right to terminate this Agreement, or in the alternative, waive
any condition not so satisfied. Any act or action of the Stockholders in
consummating the Closing or delivering the certificates representing Company
Stock as of the Consummation Date shall constitute a waiver of any conditions
not so satisfied. However, no such waiver shall be deemed to affect the
survival of the representations and warranties of IES contained in Section 6
hereof.
8.1 REPRESENTATIONS AND WARRANTIES; PERFORMANCE OF OBLIGATIONS.
All representations and warranties of IES contained in Section 6 shall be true
and correct in all material respects as of the Closing Date and the
Consummation Date as though such representations and warranties had been made
as of that time; all of the terms, covenants and conditions of this Agreement
to be complied with and performed by IES on or before the Closing Date and the
Consummation Date shall have been duly complied with and performed in all
material respects; and certificates to the foregoing effect dated the Closing
Date and the Consummation Date, respectively, and signed by the President or
any Vice President of IES shall have been delivered to the Stockholders.
8.2 SATISFACTION. All actions, proceedings, instruments and
documents that are not within the control of the Company or the Stockholders
and that are required to carry out this Agreement or incidental hereto shall be
reasonably satisfactory to the Company and its counsel. The Stockholders and
the Company shall be satisfied based on information then known to them that the
Registration Statement and the prospectus forming a part thereof, including any
amendments thereof or supplements thereto, shall not as they relate to the
Company or the Stockholders contain any untrue statement of a material fact, or
omit to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, provided that the
condition contained in this sentence shall be deemed satisfied if the Company
or Stockholders shall have failed to inform IES in writing prior to the
effectiveness of the Registration Statement of the existence of an untrue
statement of a material fact or the omission of such a statement of a material
fact.
8.3 NO LITIGATION. No action or proceeding before a court or any
other governmental agency or body shall have been instituted or threatened to
restrain or prohibit the purchase and sale of the Company Stock or the IPO.
8.4 OPINION OF COUNSEL. The Company shall have received an
opinion from counsel for IES, dated the Consummation Date, in the form annexed
hereto as Annex III.
8.5 REGISTRATION STATEMENT. The Registration Statement shall have
been declared effective by the SEC and not subject to any stop order
proceedings and the underwriters named therein shall have agreed to acquire on
a firm commitment basis, subject to the conditions set forth in the
underwriting agreement, on terms such that the aggregate value of the cash and
the number of shares of IES Stock to be received by the Stockholders is not
less than the Minimum Value set forth on Annex I.
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8.6 CONSENTS AND APPROVALS. All necessary consents of and filings
with any governmental authority or agency relating to the consummation of the
transactions contemplated herein shall have been obtained and made and no
action or proceeding shall have been instituted or threatened to restrain or
prohibit the purchase and sale of the Company Stock and no governmental agency
or body shall have taken any other action or made any request of Company as a
result of which Company deems it inadvisable to proceed with the transactions
hereunder.
8.7 GOOD STANDING CERTIFICATES. IES shall have delivered to the
Company a certificate, dated as of a date no later than ten days prior to the
Closing Date, duly issued by the Delaware Secretary of State and in each state
in which IES is authorized to do business, showing that IES is in good standing
and authorized to do business and that all state franchise and/or income tax
returns and taxes for IES for all periods prior to the Closing have been filed
and paid.
8.8 NO MATERIAL ADVERSE CHANGE. No event or circumstance shall
have occurred with respect to IES which would constitute and no change in the
disclosures in the Draft Registration Statement shall have been made which
reflects a Material Adverse Effect on IES.
8.9 CLOSING OF IPO. The closing of the sale of the IES Stock to
the Underwriters in the IPO shall have occurred simultaneously with the
Consummation Date hereunder.
8.10 SECRETARY'S CERTIFICATE. The Company shall have received a
certificate or certificates, dated the Closing Date and signed by the secretary
of IES, certifying the truth and correctness of attached copies of IES's
Certificate of Incorporation (including amendments thereto), By-Laws (including
amendments thereto), and resolutions of the board of directors and, if
required, the Stockholders of IES approving IES's entering into this Agreement
and the consummation of the transactions contemplated hereby.
8.11 EMPLOYMENT AGREEMENTS. Each of the persons listed on Schedule
9.12 shall have entered into an employment agreement substantially in the form
of Annex V hereto.
8.12 TAX MATTERS. The Stockholders shall have received an opinion
of Xxxxxxx & Xxxxx L.L.P. or other tax advisor reasonably acceptable to the
Stockholders that the IES Plan of Organization will qualify as a tax-free
transfer of property under Section 351 of the Code and that the Stockholders
will not recognize gain to the extent the Stockholders exchange stock of the
Company or interests in BW/CEC, BW/BEC or the Partnership for IES Stock (but
not cash or other property) pursuant to the IES Plan of Organization.
8.13 OTHER FOUNDING COMPANIES. If any two of the three Founding
Companies with the highest revenues for the most recent fiscal year fail or
refuse or are otherwise unable or unwilling to consummate the transactions
described in the Other Agreements, the Company may terminate this Agreement and
all previously delivered stock certificates representing Company Stock shall be
returned to the Stockholders.
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9. CONDITIONS PRECEDENT TO OBLIGATIONS OF IES
The obligations of IES with respect to actions to be taken on the
Closing Date are subject to the satisfaction or waiver on or prior to the
Closing Date of all of the following conditions, except Section 9.13. The
obligations of IES with respect to actions to be taken on the Consummation
Date are subject to the satisfaction or waiver on or prior to the Consummation
Date of the conditions set forth in Sections 9.1, 9.2, 9.4 and 9.13. As of the
Closing Date or, with respect to the conditions set forth in Sections 9.1, 9.2,
9.4 and 9.13, as of the Consummation Date, if any such conditions have not
been satisfied, IES shall have the right to terminate this Agreement, or waive
any such condition, but no such waiver shall be deemed to affect the survival
of the representations and warranties contained in Section 5 hereof.
9.1 REPRESENTATIONS AND WARRANTIES; PERFORMANCE AND OBLIGATIONS.
All the representations and warranties of the Stockholders and the Company
contained in this Agreement shall be true and correct in all material respects
as of the Closing Date and the Consummation Date with the same effect as
though such representations and warranties had been made on and as of such
date; all of the terms, covenants and conditions of this Agreement to be
complied with or performed by the Stockholders and the Company on or before the
Closing Date or the Consummation Date, as the case may be, shall have been
duly performed or complied with in all material respects; and the Stockholders
shall have delivered to IES certificates dated the Closing Date and the
Consummation Date, respectively, and signed by them to such effect.
9.2 NO LITIGATION. No action or proceeding before a court or any
other governmental agency or body shall have been instituted or threatened to
restrain or prohibit the purchase and sale of the Company Stock or the IPO.
9.3 SECRETARY'S CERTIFICATE. IES shall have received a
certificate, dated the Closing Date and signed by the secretary of the Company,
certifying the truth and correctness of attached copies of the Company's
Certificate of Incorporation (including amendments thereto), By-Laws (including
amendments thereto), and resolutions of the board of directors and the
Stockholders approving the Company's entering into this Agreement and the
consummation of the transactions contemplated hereby.
9.4 NO MATERIAL ADVERSE EFFECT. No event or circumstance shall
have occurred with respect to the Company which would constitute a Material
Adverse Effect, and the Company shall not have suffered any material loss or
damages to any of its properties or assets, whether or not covered by
insurance, which change, loss or damage materially affects or impairs the
ability of the Company to conduct its business.
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9.5 STOCKHOLDERS' RELEASE. The Stockholders shall have delivered
to IES an instrument dated the Closing Date which shall be effective only upon
the occurrence of the Consummation Date releasing the Company from (i) any and
all claims of the Stockholders against the Company and IES and (ii) obligations
of the Company and IES to the Stockholders, except for (x) items specifically
identified on Schedules 5.10 and 5.15 as being claims of or obligations to the
Stockholders, (y) continuing obligations to Stockholders relating to their
employment by the Company and (z) obligations arising under this Agreement or
the transactions contemplated hereby. In the event that the Consummation Date
does not occur, then the release instrument referenced herein shall be void and
of no further force or effect.
9.6 SATISFACTION. All actions, proceedings, instruments and
documents that are not within the control of IES and that are required to carry
out the transactions contemplated by this Agreement or incidental hereto shall
have been approved by counsel to IES.
9.7 TERMINATION OF RELATED PARTY AGREEMENTS. Except as set forth
on Schedule 9.7, all existing agreements between the Company and the
Stockholders (and between the Company and entities controlled by the
Stockholders) shall have been canceled effective prior to or as of the
Consummation Date.
9.8 OPINION OF COUNSEL. IES shall have received an opinion from
Counsel to the Company and the Stockholders, dated the Closing Date,
substantially in the form annexed hereto as Annex IV.
9.9 CONSENTS AND APPROVALS. All necessary consents of and filings
with any governmental authority or agency relating to the consummation of the
transactions contemplated herein shall have been obtained and made; all
consents and approvals of third parties listed on Schedule 5.23 shall have been
obtained; and no action or proceeding shall have been instituted or threatened
to restrain or prohibit the purchase and sale of the Company Stock and no
governmental agency or body shall have taken any other action or made any
request of IES as a result of which IES deems it inadvisable to proceed with
the transactions hereunder.
9.10 GOOD STANDING CERTIFICATES. The Company shall have delivered
to IES a certificate, dated as of a date no earlier than ten days prior to the
Closing Date, duly issued by the appropriate governmental authority in the
Company's state of incorporation and, unless waived by IES, in each state in
which the Company is authorized to do business, showing the Company is in good
standing and authorized to do business and that all state franchise and/or
income tax returns and taxes for the Company for all periods prior to the
Closing have been filed and paid.
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9.11 REGISTRATION STATEMENT. The Registration Statement shall have
been declared effective by the SEC.
9.12 EMPLOYMENT AGREEMENTS. Each of the persons listed on Schedule
9.12 shall enter into an employment agreement substantially in the form of
Annex V hereto.
9.13 CLOSING OF IPO. The closing of the sale of the IES Stock to
the Underwriters in the IPO shall have occurred simultaneously with the
Consummation Date hereunder.
9.14 FIRPTA CERTIFICATE. Each Stockholder shall have delivered to
IES a certificate to the effect that he is not a foreign person pursuant to
Section 1.1445-2(b) of the Treasury regulations.
9.15 RESIGNATIONS OF DIRECTORS. Any directors of the Company,
other than those identified on Schedules 2.1, shall have resigned as directors
of the Company.
10. COVENANTS OF IES AND THE STOCKHOLDERS AFTER CLOSING
10.1 RELEASE FROM GUARANTEES; REPAYMENT OF CERTAIN OBLIGATIONS.
IES shall use reasonable efforts to have the Stockholders released from any and
all guarantees of the Company's indebtedness, including bond obligations,
identified on Schedule 10.1. In the event that IES cannot obtain such releases
from the lenders of any such guaranteed indebtedness identified on Schedule
10.1 on or prior to 120 days subsequent to the Consummation Date, IES shall
promptly pay off or otherwise refinance or retire such indebtedness such that
the Stockholders' personal liability shall be released. IES will indemnify the
Stockholders against any loss or damage suffered during the 120 day period as a
result of the personal guarantees.
10.2 PRESERVATION OF TAX AND ACCOUNTING TREATMENT. Except as
contemplated by this Agreement or the Registration Statement, after the
Consummation Date, IES shall not and shall not permit any of its Subsidiaries
to undertake any act that would jeopardize the tax-free status of the exchange
of Company Stock for IES Stock (but not cash or other property), including
without limitation:
(a) the retirement or reacquisition, directly or
indirectly, of all or part of the IES Stock issued in connection with the
transactions contemplated hereby; or
(b) the entering into of financial arrangements for the
benefit of the Stockholders other than as described in the Registration
Statement or as described in this Agreement.
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10.3 PREPARATION AND FILING OF TAX RETURNS.
(i) The Company, if possible, or otherwise the
Stockholders shall file or cause to be filed all income Tax Returns
(federal, state, local or otherwise) of any Acquired Party for all
taxable periods that end on or before the Consummation Date, and
shall permit IES to review all such Tax Returns prior to such filings.
Unless the Company is a C corporation, the Stockholders shall pay or
cause to be paid all Tax liabilities (in excess of all amounts already
paid with respect thereto or properly accrued or reserved with respect
thereto on the Company Financial Statements) shown by such Returns to
be due.
(ii) IES shall file or cause to be filed all separate
Returns of, or that include, any Acquired Party for all taxable
periods ending after the Consummation Date.
(iii) Each party hereto shall, and shall cause its
subsidiaries and affiliates to, provide to each of the other parties
hereto such cooperation and information as any of them reasonably may
request in filing any Return, amended Return or claim for refund,
determining a liability for Taxes or a right to refund of Taxes or in
conducting any audit or other proceeding in respect of Taxes. Such
cooperation and information shall include providing copies of all
relevant portions of relevant Returns, together with relevant
accompanying schedules and relevant work papers, relevant documents
relating to rulings or other determinations by Taxing Authorities and
relevant records concerning the ownership and Tax basis of property,
which such party may possess. Each party shall make its employees
reasonably available on a mutually convenient basis at its cost to
provide explanation of any documents or information so provided.
Subject to the preceding sentence, each party required to file Returns
pursuant to this Agreement shall bear all costs of filing such
Returns.
(iv) Each of the Company, IES and each Stockholder shall
comply with the tax reporting requirements of Section 1.351-3 of the
Treasury Regulations promulgated under the Code, and treat the
transaction as a tax- free contribution under Section 351(a) of the
Code subject to gain, if any, recognized on the receipt of cash or
other property under Section 351(b) of the Code.
10.4 DIRECTORS. The persons named in the Draft Registration
Statement shall be appointed as directors and elected as officers of IES, as
and to the extent set forth in the Draft Registration Statement, promptly
following the Consummation Date.
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11. INDEMNIFICATION
The Stockholders and IES each make the following covenants that are
applicable to them, respectively:
11.1 GENERAL INDEMNIFICATION BY THE STOCKHOLDERS. The Stockholders
covenant and agree that they, jointly and severally, will indemnify, defend,
protect and hold harmless IES and the Company at all times, from and after the
date of this Agreement until the Expiration Date (provided that for purposes of
Section 11.1(iii) below, the Expiration Date shall be the date on which the
applicable statute of limitations expires), from and against all claims,
damages, actions, suits, proceedings, demands, assessments, adjustments, costs
and expenses (including specifically, but without limitation, reasonable
attorneys' fees and expenses of investigation) incurred by IES or the Company
as a result of or arising from (i) any breach of the representations and
warranties of the Stockholders or the Company set forth herein or on the
schedules or certificates delivered in connection herewith, (ii) any breach of
any agreement on the part of the Stockholders or the Company under this
Agreement, or (iii) any liability under the 1933 Act, the 1934 Act or other
Federal or state law or regulation, at common law or otherwise, arising out of
or based upon any untrue statement or alleged untrue statement of a material
fact relating solely to the Company or the Stockholders which was based upon
information provided to IES or its counsel by the Company or the Stockholders
and is contained in the Registration Statement or any prospectus forming a part
thereof, or any amendment thereof or supplement thereto, or arising out of or
based upon any omission or alleged omission to state therein a material fact
relating to the Company or the Stockholders required to be stated therein or
necessary to make the statements therein not misleading; provided, however,
that such indemnity shall not inure to the benefit of IES or the Company to the
extent that such untrue statement (or alleged untrue statement) was made in, or
omission (or alleged omission) occurred in, any preliminary prospectus and the
Stockholders provided, in writing, corrected information to IES counsel and to
IES for inclusion in the final prospectus, and such information was not so
included or properly delivered, and provided further, that no Stockholder shall
be liable for any indemnification obligation pursuant to this Section 11.1 to
the extent solely attributable to a breach of any representation, warranty or
agreement made herein individually by any other Stockholder.
IES acknowledges and agrees that other than the representations and
warranties of the Company or the Stockholders specifically contained in this
Agreement, there are no representations or warranties of the Company or the
Stockholders, either express or implied, with respect to the transactions
contemplated by this Agreement, the Company or its assets, liabilities and
business.
IES further acknowledges and agrees that its sole and exclusive remedy
with respect to any and all claims relating to this Agreement and the
transactions contemplated in this Agreement, shall be pursuant to the
indemnification provisions set forth in this Section 11. IES hereby waives to
the fullest extent permitted under applicable law, any and all other rights,
claims and causes of action it or any indemnified person may have against the
Company or any
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Stockholder relating to this Agreement or the transactions arising under or
based upon any federal, state, local or foreign statute, law, rule, regulation
or otherwise.
11.2 INDEMNIFICATION BY IES. IES covenants and agrees that it will
indemnify, defend, protect and hold harmless the Stockholders at all times from
and after the date of this Agreement until the Expiration Date, from and
against all claims, damages, actions, suits, proceedings, demands, assessments,
adjustments, costs and expenses (including specifically, but without
limitation, reasonable attorneys' fees and expenses of investigation) incurred
by the Stockholders as a result of or arising from (i) any breach by IES of its
representations and warranties set forth herein or on the schedules or
certificates attached hereto, (ii) any breach of any agreement on the part of
IES under this Agreement; or (iii) any liability under the 1933 Act, the 1934
Act or other Federal or state law or regulation, at common law or otherwise,
arising out of or based upon any untrue statement or alleged untrue statement
of a material fact relating to IES or any of the Other Founding Companies
contained in any preliminary prospectus, the Registration Statement or any
prospectus forming a part thereof, or any amendment thereof or supplement
thereto, or arising out of or based upon any omission or alleged omission to
state therein a material fact relating to IES or any of the Other Founding
Companies required to be stated therein or necessary to make the statements
therein not misleading, except to the extent such relates to the Company or the
Stockholders.
11.3 THIRD PERSON CLAIMS. Promptly after any party hereto
(hereinafter the "Indemnified Party") has received notice of or has knowledge
of any claim by a person not a party to this Agreement ("Third Person"), or the
commencement of any action or proceeding by a Third Person, the Indemnified
Party shall, as a condition precedent to a claim with respect thereto being
made against any party obligated to provide indemnification pursuant to Section
11.1 or 11.2 hereof (hereinafter the "Indemnifying Party"), give the
Indemnifying Party written notice of such claim or the commencement of such
action or proceeding. Such notice shall state the nature and the basis of such
claim and a reasonable estimate of the amount thereof. The Indemnifying Party
shall have the right to defend and settle, at its own expense and by its own
counsel, any such matter so long as the Indemnifying Party pursues the same in
good faith and diligently, provided that the Indemnifying Party shall not
settle any criminal proceeding without the written consent of the Indemnified
Party. If the Indemnifying Party undertakes to defend or settle, it shall
promptly notify the Indemnified Party of its intention to do so, and the
Indemnified Party shall cooperate with the Indemnifying Party and its counsel
in the defense thereof and in any settlement thereof. Such cooperation shall
include, but shall not be limited to, furnishing the Indemnifying Party with
any books, records or information reasonably requested by the Indemnifying
Party that are in the Indemnified Party's possession or control. All
Indemnified Parties shall use the same counsel, which shall be the counsel
selected by Indemnifying Party, provided that if counsel to the Indemnifying
Party shall have a conflict of interest that prevents counsel for the
Indemnifying Party from representing Indemnified Party, Indemnified Party shall
have the right to participate in such matter through counsel of its own
choosing and Indemnifying Party will reimburse the Indemnified Party for the
reasonable expenses of its counsel. After the Indemnifying Party has notified
the Indemnified Party of its intention to undertake to defend or settle any
such asserted liability,
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and for so long as the Indemnifying Party diligently pursues such defense, the
Indemnifying Party shall not be liable for any additional legal expenses
incurred by the Indemnified Party in connection with any defense or settlement
of such asserted liability, except (i) as set forth in the preceding sentence
and (ii) to the extent such participation is requested by the Indemnifying
Party, in which event the Indemnified Party shall be reimbursed by the
Indemnifying Party for reasonable additional legal expenses and out-of-pocket
expenses. If the Indemnifying Party desires to accept a final and complete
settlement of any such Third Person claim and the Indemnified Party refuses to
consent to such settlement, then the Indemnifying Party's liability under this
Section with respect to such Third Person claim shall be limited to the amount
so offered in settlement by said Third Person. Upon agreement as to such
settlement between said Third Person and the Indemnifying Party, the
Indemnifying Party shall, in exchange for a complete release from the
Indemnified Party, promptly pay to the Indemnified Party the amount agreed to
in such settlement. If the Indemnifying Party does not undertake to defend
such matter to which the Indemnified Party is entitled to indemnification
hereunder, or fails diligently to pursue such defense, the Indemnified Party
may undertake such defense through counsel of its choice, at the cost and
expense of the Indemnifying Party, and the Indemnified Party may settle such
matter, and the Indemnifying Party shall pay the Indemnified Party for the
settlement amount and any other liabilities or expenses incurred by the
Indemnified Party in connection therewith, provided, however, that under no
circumstances shall the Indemnified Party settle any Third Person claim without
the written consent of the Indemnifying Party, which consent shall not be
unreasonably withheld or delayed. All settlements hereunder shall effect a
complete release of the Indemnified Party, unless the Indemnified Party
otherwise agrees in writing. The parties hereto will make appropriate
adjustments for insurance proceeds in determining the amount of any
indemnification obligation under this Section.
11.4 EXCLUSIVE REMEDY. The indemnification provided for in this
Section 11 shall (except as prohibited by ERISA) be the exclusive remedy in any
action seeking damages or any other form of monetary relief brought by any
party to this Agreement against another party, provided that, nothing herein
shall be construed to limit the right of a party, in a proper case, to seek
injunctive relief for a breach of this Agreement. Any indemnity payment under
this Section 11 shall be treated as an adjustment to the exchange consideration
for tax purposes unless a final determination (which shall include the
execution of a Form 870-AD or successor form) with respect to the indemnified
party or any of its affiliate causes any such payment not to be treated as an
adjustment to the exchange consideration for U.S. Federal Income Tax purposes.
11.5 LIMITATIONS ON INDEMNIFICATION. IES and the other persons or
entities indemnified pursuant to Section 11.1 or 11.2 shall not assert any
claim for indemnification hereunder against the Stockholders until such time
as, and solely to the extent that, the aggregate of all claims which such
persons may have against such the Stockholders shall exceed the greater of (a)
3.0% of the sum of (i) the cash paid to the Stockholders pursuant to Section
1.2 plus (ii) the value of the IES Stock delivered to the Stockholders pursuant
to Section 1.2 (calculated as provided in this Section 11.5), or (b) $50,000
(the "Indemnification
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Threshold"). Stockholders shall not assert any claim for indemnification
hereunder against IES until such time as, and solely to the extent that, the
aggregate of all claims which Stockholders may have against IES shall exceed
$50,000. Even after the $50,000 threshold for IES or the Indemnification
Threshold for a Stockholder has been met, all claims must be made in $10,000
increments, which claims may be cumulated in order to meet such $50,000 and
$10,000 thresholds. For purposes of this paragraph, the IES Stock delivered to
the Stockholders shall be valued at the initial public offering price as set
forth in the Registration Statement.
No person shall be entitled to indemnification under this Section 11
if and to the extent that such person's claim for indemnification is directly
or indirectly related to a breach by such person of any representation,
warranty, covenant or other agreement set forth in this Agreement.
Notwithstanding any other term of this Agreement, no Stockholder shall
be liable under this Section 11 for an amount which exceeds eighty-five percent
(85%) of the amount of proceeds received by such Stockholder (valued as of the
Consummation Date) in connection with the purchase and sale of the Company
Stock or interests in BW/CEC, BW/BEC or the Partnership. For purposes of
crediting Stockholders for payments made pursuant to Section 11.1, the IES
Stock shall be valued at the greater of (a) the initial public offering price
as set forth in the Registration Statement and (b) the average of the closing
prices of the IES Stock (rounded to the nearest one thousandth) on the five
trading days preceding the date on which a claim for indemnification is made,
as reported in The Wall Street Journal.
12. TERMINATION OF AGREEMENT
12.1 TERMINATION. This Agreement may be terminated at any time
prior to the Consummation Date solely:
(i) by mutual consent of the boards of directors of IES
and the Company;
(ii) by the Stockholders or the Company (acting through
its board of directors), on the one hand, or by IES (acting through
its board of directors), on the other hand, if the transactions
contemplated by this Agreement to take place at the Closing shall not
have been consummated by February 28, 1998, unless the failure of such
transactions to be consummated is due to the willful failure of the
party seeking to terminate this Agreement to perform any of its
obligations under this Agreement to the extent required to be
performed by it prior to or on the Consummation Date;
(iii) by the Stockholders or the Company, on the one hand,
or by IES, on the other hand, if a material breach or default shall be
made by the other party in the observance or in the due and timely
performance of any of the covenants or agreements contained herein,
and the curing of such default shall not have been made on or before
the Consummation Date or by the Stockholders or the Company, if the
conditions set
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forth in Section 8 hereof have not been satisfied or waived as of the
Closing Date or the Consummation Date, as applicable, or by IES, if
the conditions set forth in Section 9 hereof have not been satisfied
or waived as of the Closing Date or the Consummation Date, as
applicable; or
(iv) pursuant to Section 4 hereof.
12.2 LIABILITIES IN EVENT OF TERMINATION. Except as provided in
Section 7.7 hereof, the termination of this Agreement will in no way limit any
obligation or liability of any party based on or arising from a breach or
default by such party with respect to any of its representations, warranties,
covenants or agreements contained in this Agreement including, but not limited
to, legal and audit costs and out of pocket expenses.
13. NONCOMPETITION
13.1 PROHIBITED ACTIVITIES. The Stockholders (excluding the
Employee Partners listed on Schedule 13.1 hereto who have previously executed
agreements which contain covenants not to compete) will not, without the prior
written consent of IES, for a period of two (2) years following the
Consummation Date, for any reason whatsoever, directly or indirectly, for
themselves or on behalf of or in conjunction with any other person, persons,
company, partnership, corporation or business of whatever nature:
(i) engage, as an officer, director, shareholder, owner,
partner, joint venturer, or in a managerial capacity, whether as an
employee, independent contractor, consultant or advisor, or as a sales
representative, in any electrical contracting business or operation or
related services business in direct competition with IES or any of the
subsidiaries thereof, within 100 miles of where the Company or any of
its subsidiaries conducted business prior to the Effective Time (the
"Territory");
(ii) call upon any person who is, at that time, within the
Territory, an employee of IES or any subsidiary thereof for the
purpose or with the intent of enticing such employee away from or out
of the employ of IES or any subsidiary thereof;
(iii) call upon any person or entity which is, at that
time, or which has been, within one (1) year prior to the
Consummation Date, a customer of IES or any subsidiary thereof, of the
Company or of any of the Other Founding Companies within the Territory
for the purpose of soliciting or selling products or services in
direct competition with IES within the Territory;
(iv) call upon any prospective acquisition candidate, on
any Stockholder's own behalf or on behalf of any competitor in the
electrical contracting business, which candidate, to the actual
knowledge of such Stockholder after due inquiry, was called upon by
IES or any subsidiary thereof or for which, to the actual knowledge of
such
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Stockholder after due inquiry, IES or any subsidiary thereof made an
acquisition analysis, for the purpose of acquiring such entity; or
(v) disclose customers, whether in existence or proposed,
of the Company to any person, firm, partnership, corporation or
business for any reason or purpose whatsoever except to the extent
that the Company has in the past disclosed such information to the
public for valid business reasons.
Notwithstanding the above, the foregoing covenant shall not be deemed
to prohibit any Stockholder from acquiring as a passive investment (i) not more
than one percent (1%) of the capital stock of a competing business whose stock
is traded on a national securities exchange, the NASDAQ Stock Market or
over-the-counter, or (ii) not more than five percent (5%) of the capital stock
of a competing business whose stock is not publicly traded if the Board of
Directors of IES consents to such acquisition.
13.2 DAMAGES. Because of the difficulty of measuring economic
losses to IES as a result of a breach of the foregoing covenant, and because of
the immediate and irreparable damage that could be caused to IES for which it
would have no other adequate remedy, each Stockholder agrees that the foregoing
covenant may be enforced by IES in the event of breach by such Stockholder, by
injunctions and restraining orders.
13.3 REASONABLE RESTRAINT. It is agreed by the parties hereto that
the foregoing covenants in this Section 13 impose a reasonable restraint on the
Stockholders in light of the activities and business of IES and the
subsidiaries thereof on the date of the execution of this Agreement and the
current plans of IES; but it is also the intent of IES and the Stockholders
that such covenants be construed and enforced in accordance with the changing
activities, business and locations of IES and its subsidiaries throughout the
term of this covenant.
13.4 SEVERABILITY; REFORMATION. The covenants in this Section 13
are severable and separate, and the unenforceability of any specific covenant
shall not affect the provisions of any other covenant. Moreover, in the event
any court of competent jurisdiction shall determine that the scope, time or
territorial restrictions set forth are unreasonable, then it is the intention
of the parties that such restrictions be enforced to the fullest extent which
the court deems reasonable, and the Agreement shall thereby be reformed.
13.5 INDEPENDENT COVENANT. All of the covenants in this Section 13
shall be construed as an agreement independent of any other provision in this
Agreement, and the existence of any claim or cause of action of any Stockholder
against IES or any subsidiary thereof, whether predicated on this Agreement or
otherwise, shall not constitute a defense to the enforcement by IES of such
covenants. It is specifically agreed that the period of two (2) years stated
at the beginning of this Section 13, during which the agreements and covenants
of each Stockholder made in this Section 13 shall be effective, shall be
computed by excluding from such computation any time during which such
Stockholder is in violation of any provision of this Section 13. The covenants
contained in Section 13 shall not be affected by any breach
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of any other provision hereof by any party hereto and shall have no effect if
the transactions contemplated by this Agreement are not consummated.
13.6 MATERIALITY. The Company and the Stockholders hereby agree
that this covenant is a material and substantial part of this transaction.
14. NONDISCLOSURE OF CONFIDENTIAL INFORMATION
14.1 STOCKHOLDERS. The Stockholders recognize and acknowledge that
they had in the past, currently have, and in the future may possibly have,
access to certain confidential information of the Company, the Other Founding
Companies, and/or IES, such as operational policies, customer lists, and
pricing and cost policies that are valuable, special and unique assets of the
Company's, the Other Founding Companies' and/or IES's respective businesses.
The Stockholders agree that they will not disclose such confidential
information to any person, firm, corporation, association or other entity for
any purpose or reason whatsoever, except (a) to authorized representatives of
IES, (b) following the Closing, such information may be disclosed by the
Stockholders as is required in the course of performing their duties for IES or
the Company and (c) to counsel and other advisers, provided that such advisers
(other than counsel) agree to the confidentiality provisions of this Section
14.1, unless (i) such information becomes known to the public generally through
no fault of the Stockholders, (ii) disclosure is required by law or the order
of any governmental authority under color of law, provided, that prior to
disclosing any information pursuant to this clause (ii), the Stockholders
shall, if possible, give prior written notice thereof to IES and provide IES
with the opportunity to contest such disclosure, or (iii) the disclosing party
reasonably believes that such disclosure is required in connection with the
defense of a lawsuit against the disclosing party. In the event of a breach or
threatened breach by any of the Stockholders of the provisions of this Section,
IES shall be entitled to an injunction restraining such Stockholders from
disclosing, in whole or in part, such confidential information. Nothing herein
shall be construed as prohibiting IES from pursuing any other available remedy
for such breach or threatened breach, including the recovery of damages. In
the event the transactions contemplated by this Agreement are not consummated,
Stockholders shall have none of the above-mentioned restrictions on their
ability to disseminate confidential information with respect to the Company.
14.2 IES. IES recognizes and acknowledges that it had in the past
and currently has access to certain confidential information of the Company,
such as operational policies, and pricing and cost policies that are valuable,
special and unique assets of the Company's business. IES agrees that, prior to
the Closing, or if the Transactions contemplated by this Agreement are not
consummated, it will not disclose such confidential information to any person,
firm, corporation, association or other entity for any purpose or reason
whatsoever, except (a) to authorized representatives of the Company, (b) to
counsel and other advisers, provided that such advisers (other than counsel)
agree to the confidentiality provisions of this Section 14.2, (c) to the Other
Founding Companies and their representatives pursuant to Section 7.1(a), unless
(i) such information becomes known to the public generally through no fault of
IES, (ii) disclosure is required by law or the order of any governmental
authority under color of law,
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provided, that prior to disclosing any information pursuant to this clause
(ii), IES shall, if possible, give prior written notice thereof to the Company
and the Stockholders and provide the Company and the Stockholders with the
opportunity to contest such disclosure, or (iii) the disclosing party
reasonably believes that such disclosure is required in connection with the
defense of a lawsuit against the disclosing party, and (d) to the public to the
extent necessary or advisable in connection with the filing of the Registration
Statement and the IPO and the securities laws applicable thereto and to the
operation of IES as a publicly held entity after the IPO. In the event of a
breach or threatened breach by IES of the provisions of this Section, the
Company and the Stockholders shall be entitled to an injunction restraining IES
from disclosing, in whole or in part, such confidential information. Nothing
herein shall be construed as prohibiting the Company and the Stockholders from
pursuing any other available remedy for such breach or threatened breach,
including the recovery of damages.
14.3 DAMAGES. Because of the difficulty of measuring economic
losses as a result of the breach of the foregoing covenants in Section 14.1 and
14.2, and because of the immediate and irreparable damage that would be caused
for which they would have no other adequate remedy, the parties hereto agree
that, in the event of a breach by any of them of the foregoing covenants, the
covenant may be enforced against the other parties by injunctions and
restraining orders.
14.4 SURVIVAL. The obligations of the parties under this Article
14 shall survive the termination of this Agreement for a period of five years
from the Consummation Date.
14.5 RETURN OF INFORMATION. If the transactions contemplated by
this Agreement are not consummated, IES will return or destroy all confidential
information regarding the Company.
15. TRANSFER RESTRICTIONS
15.1 TRANSFER RESTRICTIONS. Unless otherwise agreed by IES, except
for transfers to immediate family members who agree to be bound by the
restrictions set forth in this Section 15.1 (or trusts for the benefit of the
Stockholders or family members, or trusts in which a Stockholder is both the
grantor and the beneficiary, the trustees of which so agree), for a period of
two years from the Closing, except pursuant to Section 17 hereof, none of the
Stockholders shall sell, assign, exchange, transfer, appoint, or otherwise
dispose of any shares of IES Stock received by the Stockholders pursuant to
this Agreement. The certificates evidencing the IES Stock delivered to the
Stockholders pursuant to Section 3 of this Agreement will bear a legend
substantially in the form set forth below and containing such other information
as IES may deem necessary or appropriate:
THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT BE SOLD, ASSIGNED,
EXCHANGED, TRANSFERRED, DISTRIBUTED, APPOINTED OR OTHERWISE DISPOSED OF WITHOUT
THE WRITTEN CONSENT OF IES, AND THE ISSUER SHALL NOT BE REQUIRED TO GIVE EFFECT
TO ANY
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ATTEMPTED SALE, ASSIGNMENT, EXCHANGE, TRANSFER, DISTRIBUTION, APPOINTMENT OR
OTHER DISPOSITION PRIOR TO [THE SECOND ANNIVERSARY OF CLOSING DATE]. UPON THE
WRITTEN REQUEST OF THE HOLDER OF THIS CERTIFICATE, THE ISSUER AGREES TO REMOVE
THIS RESTRICTIVE LEGEND (AND ANY STOP ORDER PLACED WITH THE TRANSFER AGENT)
AFTER THE DATE SPECIFIED ABOVE.
16. FEDERAL SECURITIES ACT REPRESENTATIONS
16.1 COMPLIANCE WITH LAW. The Stockholders acknowledge that the
shares of IES Stock to be delivered to the Stockholders pursuant to this
Agreement have not been and will not be registered under the 1933 Act (except
as provided in Section 17 hereof) and therefore may not be resold without
compliance with the 1933 Act. The IES Stock to be acquired by such
Stockholders pursuant to this Agreement is being acquired solely for their own
respective accounts, for investment purposes only, and with no present
intention of distributing, selling or otherwise disposing of it in connection
with a distribution. The Stockholders covenant, warrant and represent that
none of the shares of IES Stock issued to such Stockholders will be offered,
sold, assigned, pledged, hypothecated, transferred or otherwise disposed of
except after full compliance with all of the applicable provisions of the 1933
Act and the rules and regulations of the SEC. All the IES Stock shall bear the
following legend in addition to the legend required under Section 15 of this
Agreement:
THE SHARES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933 (THE "ACT") AND MAY ONLY BE SOLD OR OTHERWISE TRANSFERRED IF THE HOLDER
HEREOF COMPLIES WITH THE ACT AND APPLICABLE SECURITIES LAW.
16.2 ECONOMIC RISK; SOPHISTICATION. The Stockholders are able to
bear the economic risk of an investment in the IES Stock to be acquired
pursuant to this Agreement and can afford to sustain a total loss of such
investment. Each Stockholder has substantial knowledge and experience in
making investment decisions of this type (or is relying on qualified purchaser
representatives with such knowledge and experience in making this decision),
and is capable, either individually or with such purchaser representatives, of
evaluating the merits and risks of this investment. The Stockholders party
hereto have had an adequate opportunity to ask questions and receive answers
from the officers of IES concerning any and all matters relating to the
transactions described herein including, without limitation, the background and
experience of the current and proposed officers and directors of IES, the plans
for the operations of the business of IES, the business, operations and
financial condition of the Founding Companies other than the Company, and any
plans for additional acquisitions and the like. The Stockholders have asked
any and all questions in the nature described in the preceding sentence and all
questions have been answered to their satisfaction. Except as set forth on
Schedule 16.2, each Stockholder is an "accredited investor" as defined in Rule
501(a) of the 1933 Act.
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17. REGISTRATION RIGHTS
17.1 PIGGYBACK REGISTRATION RIGHTS. At any time following the
Consummation Date, whenever IES proposes to register any IES Stock for its own
or others account under the 1933 Act for a public offering, other than (i) any
shelf or other registration of shares to be used as consideration for
acquisitions of additional businesses by IES and (ii) registrations relating to
employee benefit plans, IES shall give each of the Stockholders prompt written
notice of its intent to do so. Upon the written request of any of the
Stockholders given within 10 days after receipt of such notice, IES shall cause
to be included in such registration all of the IES Stock issued to such
Stockholders pursuant to this Agreement (including any stock issued as or
issuable upon the conversion or exchange of any convertible security, warrant,
right or other security which is issued by IES as a stock split, dividend or
other distribution with respect to, or in exchange for, or in replacement of
such IES Stock) which any such Stockholder requests, other than shares of IES
Stock which may be sold under Rule 144(k) (or any similar or successor
provision) promulgated under the 1933 Act, and other than shares of IES Stock
that have been theretofore sold by the Stockholder in accordance with the 1933
Act, provided that IES shall have the right to reduce pro rata the number of
shares of each Selling Stockholder included in such registration to the extent
that inclusion of such shares could, in the written opinion of tax counsel to
IES or its independent auditors, jeopardize the status of the transactions
contemplated hereby and by the Registration Statement as a tax-free
organization under Section 351 of the Code. In addition, if IES is advised in
writing in good faith by any managing underwriter of an underwritten offering
of the securities being offered pursuant to any registration statement under
this Section 17.1 that the number of shares to be sold by persons other than
IES is greater than the number of such shares which can be offered without
adversely affecting the success of the offering, IES may reduce pro rata (among
the Stockholders and all other selling security holders in the offering) the
number of shares offered for the accounts of such persons (based upon the
number of shares held by such person) to a number deemed satisfactory by such
managing underwriter. If any Stockholder disapproves of the terms of the
underwriting, that Stockholder may elect to withdraw therefrom by written
notice to IES and the managing underwriter. That Stockholder's shares of IES
Stock so withdrawn shall also be withdrawn from registration; provided,
however, that, if by the withdrawal of such shares a greater number of shares
of IES Stock held by other Stockholders may be included in such registration,
then IES shall offer to all other Stockholders of IES the right to include
additional shares in the same proportion used in effecting the above
limitations.
17.2 REGISTRATION PROCEDURES. Whenever IES is required to register
shares of IES Stock pursuant to Sections 17.1, IES will, as expeditiously as
possible:
(i) Prepare and file with the SEC a registration
statement with respect to such shares and use its best efforts to
cause such registration statement to become effective (provided that
before filing a registration statement or prospectus or any amendments
or supplements or term sheets thereto, IES will furnish a
representative of the Stockholders with copies of all such documents
proposed to be filed) as promptly as practical;
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(ii) Notify the Stockholders of any stop order issued or
threatened by the SEC and take all reasonable actions required to
prevent the entry of such stop order or to remove it if entered;
(iii) Prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus used in
connection therewith as may be necessary to keep such registration
statement effective for a period of not less than 120 days, cause the
prospectus to be supplemented by any required prospectus supplement,
and as so supplemented to be filed pursuant to Rule 474 under the 1933
Act; and comply with the provisions of the 1933 Act applicable to it
with respect to the disposition of all securities covered by such
registration statement during the applicable period in accordance with
the intended methods of disposition by the sellers thereof set forth
in such registration statement or supplement to the prospectus;
(iv) Furnish to each Stockholder who so requests such
number of copies of such registration statement, each amendment and
supplement thereto and the prospectus included in such registration
statement (including each preliminary prospectus and any term sheet
associated therewith), and such other documents as such Stockholder
may reasonably request in order to facilitate the disposition of the
relevant shares;
(v) Make "generally available to its security holders"
(within the meaning of Rule 158) an earnings statement satisfying the
provisions of Section 11(a) of the 1933 Act and Rule 158 thereunder no
later than 90 days after the end of the 12-month period beginning with
the first day of IES' first fiscal quarter commencing after the
effective date of the registration statement;
(vi) Make every reasonable effort to obtain the withdrawal
of any order suspending the effectiveness of the registration
statement at the earliest possible moment;
(vii) If requested by the managing underwriter or
underwriters, if any, or any participating Stockholder, promptly
incorporate in a prospectus supplement or post-effective amendment
such information as the managing underwriter or underwriters or any
participating Stockholder, as the case may be, reasonably requests to
be included therein, including, without limitation, information with
respect to the number of shares of IES Stock being sold by
participating Stockholders to any underwriter or underwriters, the
purchase price being paid therefor by such underwriter or underwriters
and with respect to any other terms of an underwritten offering of the
shares of IES Stock to be sold in such offering, and promptly make all
required filings of such prospectus by supplement or post-effective
amendment;
(viii) Make available for inspection by participating
Stockholders, any underwriter participating in any disposition
pursuant to such registration statement, and the counsel retained by
the participating Stockholders, counsel for the underwriters and any
accountant or other agent retained by participating Stockholders or
any such underwriter (collectively, the "Inspectors"), all financial
and other records, pertinent
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corporate documents and properties of IES (the "Records"), as shall be
reasonably necessary to enable them to exercise their due diligence
responsibility, and cause IES' officers, directors and employees to
supply all information reasonably requested by any such Inspectors in
connection with such registration statement; provided, that records
which IES determines, in good faith, to be confidential and which IES
notifies the Inspectors are confidential shall not be disclosed by the
Inspectors unless (i) the disclosure of such Records is necessary to
avoid or correct a misstatement or omission in the registration
statement or (ii) the release of such Records is ordered pursuant to a
subpoena or other order from a court of competent jurisdiction after
delivery of sufficient notice to IES to enable IES to contest such
subpoena or order;
(ix) Take all other steps reasonably necessary to effect
the registration of the shares of IES Stock contemplated hereby;
(x) Use its best efforts to register or qualify the
securities covered by such registration statement under such other
securities or blue sky laws of such jurisdictions as shall be
reasonably requested by the Stockholders, and to keep such
registration or qualification effective during the period such
registration statement is required to be kept effective, provided that
IES shall not be required to become subject to taxation, to qualify
generally to do business or to file a general consent to service of
process in any such states or jurisdictions;
(xi) Cause all such shares of IES Stock to be listed or
included not later than the date of the first sale of shares of IES
Stock under such registration statement on any securities exchanges or
trading systems on which similar securities issued by IES are then
listed or included; and
(xii) Notify each Stockholder at any time when a prospectus
relating thereto is required to be delivered under the 1933 Act within
the period that IES is required to keep the registration statement
effective of the happening of any event as a result of which the
prospectus included in such registration statement (as then in
effect), together with any associated term sheet, contains an untrue
statement of a material fact or omits to state any fact required to be
stated therein or necessary to make the statements therein (in the
case of the prospectus or any preliminary prospectus, in light of the
circumstances under which they were made) not misleading, and, at the
request of such Stockholder, IES promptly will prepare a supplement or
amendment to such prospectus so that, as thereafter delivered to the
purchasers of the covered shares, such prospectus will not contain an
untrue statement of material fact or omit to state any fact required
to be stated therein or necessary to make the statements therein (in
the case of the prospectus or any preliminary prospectus, in light of
the circumstances under which they were made) not misleading.
All expenses incurred in connection with the registration under this
Article 17 and compliance with securities and blue sky laws (including all
registration, filing, listing, escrow
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agent, qualification, legal, printer and accounting fees, but excluding
underwriting commissions and discounts), shall be borne by IES.
17.3 INDEMNIFICATION.
(a) In connection with any registration under Section
17.1, IES shall indemnify, to the extent permitted by law, each selling
Stockholder (an "Indemnified Party") against all losses, claims, damages,
liabilities and expenses arising out of or resulting from any untrue or alleged
untrue statement of material fact contained in any registration statement,
prospectus or preliminary prospectus or associated term sheet or any omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading except
insofar as the same are caused by or contained in or omitted from any
information furnished in writing to IES by such Indemnified Party expressly for
use therein or by any Indemnified Parties' failure to deliver a copy of the
registration statement or prospectus or any amendment or supplements thereto
after IES has furnished such Indemnified Party with a sufficient number of
copies of the same.
(b) In connection with any registration under Section
17.1, each Stockholder shall furnish to IES in writing such information
concerning the Stockholder and his or her proposed offering of shares as is
reasonably requested by IES for use in any such registration statement or
prospectus and will indemnify, to the extent permitted by law, IES, its
directors and officers and each person who controls IES (within the meaning of
the 0000 Xxx) against any losses, claims, damages, liabilities and expenses
resulting from any untrue or alleged untrue statement of a material fact or any
omission or alleged omission to state therein a material fact required to be
stated in the registration statement or prospectus or any amendment thereof or
supplement thereto or necessary to make the statements therein not misleading,
but only to the extent that such untrue or alleged untrue statement or omission
or alleged omission is contained in or omitted from information so furnished in
writing to IES by such Stockholder expressly for use in the registration
statement. Notwithstanding the foregoing, the liability of a Stockholder under
this Section 17.3 shall be limited to an amount equal to the net proceeds
actually received by such Stockholder from the sale of the relevant shares
covered by the registration statement.
(c) Any person entitled to indemnification hereunder will
(i) give prompt notice to the indemnifying party of any claim with respect to
which it seeks indemnification and (ii) unless in such indemnified parties'
reasonable judgment, a conflict of interest between such indemnified and
indemnifying parties may exist with respect to such claim, permit such
indemnifying party to assume the defense of such claim with counsel reasonably
satisfactory to the indemnified party. Any failure to give prompt notice shall
deprive a party of its right to indemnification hereunder only to the extent
that such failure shall have adversely affected the indemnifying party. If the
defense of any claim is assumed, the indemnifying party will not be subject to
any liability for any settlement made without its consent (but such consent
shall not be unreasonably withheld). An indemnifying party that is not
entitled or elects not, to assume the defense of a claim, will not be obligated
to pay the fees and expenses of more
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than one counsel for all parties indemnified by such indemnifying party with
respect to such claim, unless in the reasonable judgment of any indemnified
party, a conflict of interest may exist between such indemnified party and any
other of such indemnified parties with respect to such claim.
17.4 UNDERWRITING AGREEMENT. In connection with each registration
pursuant to Sections 17.1 covering an underwritten registered offering, IES and
each participating Stockholder agree to enter into a written agreement with the
managing underwriters in such form and containing such provisions as are
customary in the securities business for such an arrangement between such
managing underwriters and companies of IES's size and investment stature,
including indemnification; provided, however, that the Stockholder shall be
exempt and excluded from any indemnification of the managing underwriters other
than with respect to information provided by the respective Stockholders to IES
or the managing underwriters.
17.5 TRANSFER OF RIGHTS. The right to cause IES to register shares
of IES Stock under this Agreement may be assigned to a transferee or assignee
of any Stockholder to the extent that such transferee or assignee is a member
of the immediate family of a Stockholder, or a trust or partnership for the
benefit of any such persons.
17.6 RULE 144 REPORTING. With a view to making available the
benefits of certain rules and regulations of the SEC that may permit the sale
of IES stock to the public without registration, IES agrees to use its
reasonable efforts to:
(i) make and keep public information regarding IES
available as those terms are understood and defined in Rule 144 under
the 1933 Act for a period of six years beginning 90 days following the
effective date of the Registration Statement;
(ii) file with the SEC in a timely manner all reports and
other documents required of IES under the 1933 Act and the 1934 Act at
any time after it has become subject to such reporting requirements;
and
(iii) so long as a Stockholder owns any restricted IES
Common Stock, furnish to each Stockholder forthwith upon written
request a written statement by IES as to its compliance with the
current public information requirements of Rule 144 (at any time from
and after 90 days following the effective date of the Registration
Statement, and of the 1933 Act and the 1934 Act (any time after it has
become subject to such reporting requirements), a copy of the most
recent annual or quarterly report of IES, and such other reports and
documents so filed as a Stockholder may reasonably request in availing
itself of any rule or regulation of the SEC allowing a Stockholder to
sell any such shares without registration.
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18. GENERAL
18.1 COOPERATION. The Company, Stockholders and IES shall each
deliver or cause to be delivered to the other on the Consummation Date, and at
such other times and places as shall be reasonably agreed to, such additional
instruments as the other may reasonably request for the purpose of carrying out
this Agreement. The Company will cooperate and use its reasonable efforts to
have the present officers, directors and employees of the Company cooperate
with IES on and after the Consummation Date in furnishing information,
evidence, testimony and other assistance in connection with any tax return
filing obligations, actions, proceedings, arrangements or disputes of any
nature with respect to matters pertaining to all periods prior to the
Consummation Date.
18.2 SUCCESSORS AND ASSIGNS. 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, the
successors of IES, and the heirs and legal representatives of the Stockholders.
18.3 ENTIRE AGREEMENT. This Agreement (including the schedules,
exhibits and annexes attached hereto) and the documents delivered pursuant
hereto constitute the entire agreement and understanding among the
Stockholders, the Company and IES and supersede any prior agreement and
understanding relating to the subject matter of this Agreement. This
Agreement, upon execution, constitutes a valid and binding agreement of the
parties hereto enforceable in accordance with its terms and may be modified or
amended only by a written instrument executed by the Stockholders, the Company
and IES, acting through their respective officers or trustees, duly authorized
by their respective Boards of Directors. Any disclosure made on any Schedule
delivered pursuant hereto shall be deemed to have been disclosed for purposes
of any other Schedule required hereby, provided that the Company shall make a
good faith effort to cross reference disclosure, as necessary or advisable,
between related Schedules.
18.4 COUNTERPARTS. This Agreement may be executed simultaneously
in two (2) or more counterparts, each of which shall be deemed an original and
all of which together shall constitute but one and the same instrument. A
telecopied facsimile of an executed counterpart of this Agreement shall be
sufficient to evidence the binding agreement of each party to the terms hereof.
However, each party agrees to return to the other parties an original, duly
executed counterpart of this Agreement promptly after delivery of a telecopied
facsimile thereof.
18.5 BROKERS AND AGENTS. Except as disclosed on Schedule 18.5,
each party represents and warrants that it employed no broker or agent in
connection with this transaction and agrees to indemnify the other parties
hereto against all loss, cost, damages or expense arising out of claims for
fees or commission of brokers employed or alleged to have been employed by such
indemnifying party.
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18.6 EXPENSES. Whether or not the transactions herein contemplated
shall be consummated, IES will pay the fees, expenses and disbursements of IES
and its agents, representatives, accountants and counsel incurred in connection
with the subject matter of this Agreement and any amendments thereto, including
all costs and expenses incurred in the performance and compliance with all
conditions to be performed by IES under this Agreement, including the fees and
expenses of Xxxxxx Xxxxxxxx, XXX, Xxxxxxx & Xxxxx L.L.P., and any other person
or entity retained by IES, and the costs of preparing the Registration
Statement. Each Stockholder shall pay all sales, use, transfer, real property
transfer, recording, gains, stock transfer and other similar taxes and fees
("Transfer Taxes") imposed in connection with the purchase and sale of the
Company Stock, other than Transfer Taxes, if any, imposed by the State of
Delaware. Each Stockholder shall file all necessary documentation and Returns
with respect to such Transfer Taxes. In addition, each Stockholder
acknowledges that he, and not the Company or IES, will pay all taxes due by him
upon receipt of the consideration payable pursuant to Section 1 hereof. The
Stockholders acknowledge that the risks of the transactions contemplated hereby
include tax risks, with respect to which the Stockholders are relying partially
on the opinion contemplated by Section 8.12 hereof and representations by IES
in this Agreement.
18.7 NOTICES. All notices of communication required or permitted
hereunder shall be in writing and may be given by depositing the same in United
States mail, addressed to the party to be notified, postage prepaid and
registered or certified with return receipt requested, or by delivering the
same in person to an officer or agent of such party.
(a) If to IES addressed to it at:
Integrated Electrical Services, Inc.
0000 Xxxxxxx
Xxxxxxx, Xxxxx 00000
with copies to:
Xxxx X. Xxxxxxxx
Xxxxxxx & Xxxxx L.L.P.
0000 Xxxxx Xxxxxxxx Xxxxx
Xxxxxxx, Xxxxx 00000
(b) If to the Stockholders, addressed to them at their addresses
set forth on the signature pages hereto, with copies to:
W. Xxxx Xxxxx
Xxxxxxxxxxx, Blend, Xxxxxxxx & Xxxx, Inc.
000 Xxxxxxx, Xxxxx 000
Xxx Xxxxxxx, Xxxxx 00000
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(c) If to the Company, addressed to it at:
Bexar Electric Company, Ltd.
Attn: Xxx Xxxx
0000 Xxxx Xxxxxx
Xxx Xxxxxxx, Xxxxx 00000
W. Xxxx Xxxxx
Xxxxxxxxxxx, Blend, Xxxxxxxx & Xxxx, Inc.
000 Xxxxxxx, Xxxxx 000
Xxx Xxxxxxx, Xxxxx 00000
or to such other address or counsel as any party hereto shall specify pursuant
to this Section 18.7 from time to time.
18.8 GOVERNING LAW. This Agreement shall be construed in
accordance with the laws of the State of Texas, excluding any conflicts of
law, rule or principle that might refer same to the laws of another
jurisdiction.
18.9 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The
representations, warranties, covenants and agreements of the parties made
herein and at the time of the Closing or in writing delivered pursuant to the
provisions of this Agreement shall survive the consummation of the transactions
contemplated hereby and any examination on behalf of the parties until the
Expiration Date.
18.10 EXERCISE OF RIGHTS AND REMEDIES. Except as otherwise provided
herein, no delay of or omission in the exercise of any right, power or remedy
accruing to any party as a result of any breach or default by any other party
under this Agreement shall impair any such right, power or remedy, nor shall it
be construed as a waiver of or acquiescence in any such breach or default, or
of any similar breach or default occurring later; nor shall any waiver of any
single breach or default be deemed a waiver of any other breach or default
occurring before or after that waiver.
18.11 TIME. Time is of the essence with respect to this Agreement.
18.12 REFORMATION AND SEVERABILITY. In case any provision of this
Agreement shall be invalid, illegal or unenforceable, it shall, to the extent
possible, be modified in such manner as to be valid, legal and enforceable but
so as to most nearly retain the intent of the parties, and if such modification
is not possible, such provision shall be severed from this Agreement, and in
either case the validity, legality and enforceability of the remaining
provisions of this Agreement shall not in any way be affected or impaired
thereby. No provision of this Agreement shall be interpreted or construed
against any party solely because that party or its legal representative drafted
such provision.
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18.13 REMEDIES CUMULATIVE. No right, remedy or election given by
any term of this Agreement shall be deemed exclusive but each shall be
cumulative with all other rights, remedies and elections available at law or in
equity.
18.14 CAPTIONS. The headings of this Agreement are inserted for
convenience only, shall not constitute a part of this Agreement or be used to
construe or interpret any provision hereof.
18.15 AMENDMENTS AND WAIVERS. Any term of this Agreement may be
amended and the observance of any term of this Agreement may be waived only
with the written consent of IES, the Company and Stockholders who hold or held
at least 51% of the Company Stock. Any amendment or waiver effected in
accordance with this Section 18.15 shall be binding upon each of the parties
hereto, any other person receiving IES Stock in connection with the purchase
and sale of the Company Stock and each future holder of such IES Stock.
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IN WITNESS WHEREOF, the parties hereto have executed this Purchase
Agreement effective as of the date and year first above written.
COMPANY:
BW CONSOLIDATED, INC.
By: /s/
--------------------------------------
Xxx Xxxx, President
STOCKHOLDERS: SPOUSES:
/s/ /s/
----------------------------------------- ----------------------------------
Xxx Xxxx (Signature)
----------------------------------
THE XXXXXXXXX XXX XXXXX TRUST (Print Name)
OF 1996,
Xxxxxxxxx Xxx Xxxxx BW Consolidated "S"
Trust
By: /s/
--------------------------------------
Xxxxxxxxx Xxx Xxxxx, trustee
THE XXXX XXXXX XXXX TRUST OF 1996,
Xxxx Xxxxx Xxxx BW Consolidated "S" Trust
By: /s/
--------------------------------------
Xxxx Xxxxx Xxxx, trustee
PARTNERSHIPS;
BEXAR ELECTRIC COMPANY, LTD.
By: BW/BEC, Inc., its general partner
By: /s/
--------------------------------------
Xxx Xxxx, President
69
XXXXXXX ELECTRIC COMPANY, LTD.
By: BW/CEC, Inc., its general partner
By: /s/
--------------------------------------
Xxx Xxxx, President
EMPLOYEE PARTNERS: SPOUSES:
/s/ /s/
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Xxxx Xxxxxxxx (Signature)
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(Print Name)
/s/ /s/
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Xxxxxxx Xxxxx (Signature)
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(Print Name)
/s/ /s/
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Xxxxx Xxxxxx (Signature)
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(Print Name)
/s/ /s/
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Xxxxx Xxxxx (Signature)
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(Print Name)
/s/ /s/
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Xxxxx Xxxx (Signature)
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/s/ /s/
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Xxxxxxx Xxxxx (Signature)
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(Print Name)
/s/ /s/
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Xxxxxx Xxxxx, Jr. (Signature)
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(Print Name)
/s/ /s/
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Xxxxxx Xxxxxxxxx (Signature)
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(Print Name)
/s/ /s/
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Xxxxxx Xxxxxxx (Signature)
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(Print Name)
/s/ /s/
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Xxxx Xxxx (Signature)
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(Print Name)
/s/ /s/
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Xxxxxx Xxxxxxx (Signature)
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(Print Name)
71
/s/ /s/
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Xxxxxx Xxxxx (Signature)
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(Print Name)
/s/ /s/
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Xxxxx Xxxxxx (Signature)
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(Print Name)
/s/ /s/
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Xxxxxxx Xxxxxxxx (Signature)
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(Print Name)
/s/ /s/
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Xxxxx Xxxx (Signature)
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(Print Name)
/s/ /s/
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Xxxxxx Xxxxxxx (Signature)
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(Print Name)
/s/ /s/
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Xxxxxx Xxxxxxxxxx (Signature)
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(Print Name)
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/s/ /s/
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Xxxxx X. Xxxxxx (Signature)
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(Print Name)
INTEGRATED ELECTRICAL SERVICES,
INC.
By: /s/
--------------------------------------
Senior Vice President
and Chief Financial Officer
73
ANNEX I
TO THE STOCK PURCHASE AGREEMENT
DATED AS OF OCTOBER 21, 1997
BY AND AMONG
INTEGRATED ELECTRICAL SERVICES, INC.
AND BEXAR ELECTRIC COMPANY, LTD.
AND ITS STOCKHOLDERS
CONSIDERATION TO BE PAID TO THE STOCKHOLDERS
AGGREGATE CONSIDERATION TO BE PAID TO STOCKHOLDERS:
$34,783,406 in cash and the value of outstanding common stock of Integrated
Electrical Services, Inc. (IES) assuming a public offering price of $14.00 per
share, consisting of 1,863,397 shares of IES common stock and $8,695,852 of
cash, it being agreed that the actual amount of all shares shall remain
unchanged while the cash payments described in this Annex I will depend on the
actual initial public offering price of the common stock of IES in the IPO,
which may be more or less than $14.00 per share; provided, however that the
aggregate consideration shall not be less than the minimum value set forth
below. Such cash will be the cash consideration noted below multiplied by the
actual initial public offering price per share divided by $14.
Consideration to be paid to the STOCKHOLDERS:
Percentage
of Direct
and Indirect Shares of IES
Stockholder Ownership Common Stock(1) Cash
----------- --------- -------------- --- ----------------------
Xxx Xxxx 72.4697% 1,350,399 $ 6,301,861
"GRAT" 4.0000% 74,536 $ 347,834
Xxxxxxxxx Xxx Xxxxx Trust 2.0000% 37,268 $ 173,917
Xxxx Xxxxx Xxxx Trust 2.0000% 37,268 $ 173,917
Xxxx Xxxxxxxx 2.7256% 50,789 $ 237,014
Xxxxx Xxxx 1.2255% 22,836 $ 106,567
Xxxxx Xxxxxx 1.2255% 22,836 $ 106,567
Xxxxx Xxxxx 1.2255% 22,836 $ 106,567
Xxxxxxx Xxxxx 1.2255% 22,836 $ 106,567
Xxxxxxx Xxxxx 0.9191% 17,127 $ 79,925
Xxxxxx Xxxxx 0.6127% 11,418 $ 53,283
Xxxxxx Xxxxxxxxx 0.6127% 11,418 $ 53,283
Xxxxxx Xxxxxxx 0.6127% 11,418 $ 53,283
Xxxx Xxxx 0.6127% 11,418 $ 53,283
Xxxxxx Xxxxxxx 0.6127% 11,418 $ 53,283
Xxxxxx Xxxxx 0.6127% 11,418 $ 53,283
Xxxxx Xxxxxx 0.4596% 8,563 $ 39,962
Xxxxxxx Xxxxxxxx 0.4596% 8,563 $ 39,962
Xxxxx Xxxx 0.4596% 8,563 $ 39,962
74
Xxxxxx Stelfen 0.4596% 8,563 $ 39,962
Xxxxxx Xxxxxxxxxx 0.4596% 8,563 $ 39,962
Xxxxx Xxxxxx 5.0094% 93,345 $ 435,608
----------- ---------- ------------
100.0000% 1,863,397 $ 8,695,852
MINIMUM VALUE: 28,459,152
________________________
(1) After giving effect to the proposed stock split described in the Draft
Registration Statement.
75
S Corporations
1. All S Corporations may distribute any previously taxed earnings as of
June 30, 1997, to the extent of nonoperating net assets (as disclosed in
the Schedules to the definitive agreement) and excess cash, plus any
remaining excess cash (as set forth on the next page). To the extent
nonoperating assets and cash are not sufficient to fund a portion of the
distribution of previously taxed earnings, the company may complete the
distribution by issuing a note payable to shareholders which will be
funded by IES as soon as practical after the consummation date.
2. In addition to 1 above, all S Corporations are entitled to distribute
their net earnings (determined in accordance with generally accepted
accounting principles, provided that in determining any compensation
expense related to the issuance of cheap stock, such expense will be
limited to the appraised fair market value of the partnership interest
exchanged for such stock and any gain resulting from a disguised sale for
federal income tax purposes shall not be taken into account) and any
capital contributions made from July 1, 1997, through the consummation
date. To the extent the company does not have sufficient cash available
to distribute the net earnings from July 1, 1997, through the
consummation date, the distribution may be in the form of a note payable
to the shareholder(s) and will be funded by IES as soon as practical
after the consummation date.
3. The distributions described in 1 above may not exceed the company's
retained earnings as determined under generally accepted accounted
principles at June 30, 1997, and the total of all distributions in 1 and
2 above may not reduce the Company's equity as determined under generally
accepted accounted principles below the minimum cash requirements set
forth on the next page.
C Corporations
1. All C Corporations are entitled to their excess cash (as set forth on the
next page) at June 30, 1997, along with nonoperating net assets (as
disclosed in the Schedules to the definitive agreement) to be distributed
to the shareholder(s).
2. In addition to 1 above, all C Corporations are entitled to distribute all
net earnings after tax from July 1, 1997, through the consummation date.
To the extent the company does not have sufficient cash available to
distribute the net earnings from July 1, 1997, through the consummation
date, the distribution may be in the form of a note payable to the
shareholder(s) and will be funded by IES as soon as practical after the
consummation date.
3. The distributions described in 1 above may not exceed the company's
retained earnings as determined under generally accepted accounted
principles at June 30, 1997, and the total of all distributions in 1 and
2 above may not reduce the Company's equity as
76
determined under generally accepted accounting principles below the
minimum cash requirements set forth on the next page.
77
Cash and Cash
Equivalents as of Minimum Excess
June 30, 1997 Cash Required Cash
-----------------------------------------------------------------------
Ace Electric, Inc. 130,028 30,000 100,028
Amber Electric, Inc. 759,329 90,000 669,329
Bexar Electric Company, Ltd. 782,000 190,000 590,000
Xxxxxx Electrical Contractors, Inc. 1,200,831 100,000 1,100,831
Xxxxxxxx Electric, Inc. -37,746 40,000 0
Xxxxxxxx Electric, Inc. 13,314 50,000 0
Xxxxxxx-Xxxxxxxx Electric, Inc. 3,251,114 150,000 3,101,114
Xxxxx Investments, Inc. 395,827 150,000 245,827
Xxxxx Electrical Contractors, Inc. 2,021,000 300,000 1,721,000
Xxxx Electric, Inc. 9,000 100,000 0
Xxxxxxx Electric, Inc. 14,960 90,000 0
Xxxxxxxx Electric Corp. 138,951 40,000 98,951
Xxxxxxx Electric Company, Inc. 846,833 20,000 826,833
Summit Electric of Texas, Incorporated 32,129 60,000 0
Xxxxxx Xxxx & Company 598,361 20,000 578,361
Xxxxxxx & X'Xxxxxxx Corporation 1,479,550 30,000 1,449,550
