EXHIBIT 10.1
ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT (this "AGREEMENT") is made and entered into
as of November 30, 2004 by and among INTEGRATED ELECTRICAL SERVICES, INC., a
Delaware corporation (the "PARENT"), XXXX ELECTRIC COMPANY, INC., a Delaware
corporation (the "COMPANY"), XXXX, INC., an Alabama corporation (the "BUYER"),
and XXXXXX XXXX XXXX, an individual and resident of the State of Alabama
("GUARANTOR")
WITNESSETH:
WHEREAS, the Parent owns, either directly or indirectly, all of the issued
and outstanding capital stock of the Company, which is engaged in the electrical
construction and services business (the "BUSINESS");
WHEREAS, the Parent and the Company desire to sell to the Buyer
substantially all of the Company's assets, which are more fully described in
Section 1.1 hereof, and the Buyer desires to acquire such assets in
consideration of the payment by the Buyer of the purchase price and the
assumption by the Buyer of the liabilities provided for herein, all upon the
terms and subject to the conditions hereinafter set forth;
WHEREAS, Guarantor is the President and owner of the Buyer and has agreed
to personally guarantee to the Parent and the Company the Buyer's performance of
all representations, warranties, covenants, agreements and conditions set forth
herein;
NOW, THEREFORE, for and in consideration of the premises and of the
respective representations, warranties, covenants, agreements and conditions of
the parties contained herein, it is hereby agreed as follows:
1. PURCHASE AND SALE OF ASSETS.
1.1 Transfer of Assets. On the terms and subject to the conditions set
forth in this Agreement, on the Closing Date (as defined in Section 2.1 hereof),
the Company shall sell, convey, assign, transfer and deliver to the Buyer, and
the Buyer shall purchase and acquire from the Company (except as provided in
Section 1.2 hereof) all of the assets, rights and properties of the Parent or
the Company set forth on Schedule 1.1. The assets described in this Section 1.1
as being sold, conveyed, assigned, transferred and delivered to the Buyer
hereunder are sometimes hereinafter referred to collectively as the "ASSETS".
1.2 Excluded Assets. It is expressly understood and agreed that the Assets
shall not include the following (such assets are hereinafter referred to
collectively as the "EXCLUDED ASSETS"):
(a) Cash and cash equivalents or similar type investments, such as
certificates of deposit, Treasury bills and other marketable securities;
(b) Claims for refunds of taxes and other governmental charges to
the extent such refunds relate to periods ending on or prior to the
Closing Date;
(c) Any asset, tangible or intangible, which is not freely
transferable without the consent of a third party, upon the failure to
obtain such consent;
(d) The original corporate minute books, stock books, financial
records, tax returns, personnel and payroll records and corporate policies
and procedures manuals of the Company and other records required by
applicable laws to be retained;
(e) Any contract or agreement, whether written or oral, between the
Company and IES Contractors, Inc.; and
(f) Any asset not set forth on Schedule 1.1.
1.3 Instruments of Conveyance and Transfer.
(a) At the Closing, the Buyer, the Company and the Parent shall
enter into a Xxxx of Sale, Assignment and Assumption Agreement in the form
attached hereto as Exhibit A, transferring to the Buyer good and
indefeasible title to all of the tangible personal property included in
the Assets, subject only to Permitted Encumbrances.
(b) At the Closing, the Buyer and the Parent shall deliver such
other instruments of transfer and assignment in respect of the Assets as
the Buyer shall reasonably require and as shall be consistent with the
terms and provisions of this Agreement.
(c) At the Closing, the Buyer shall, and shall cause the Transferred
Employees (as hereinafter defined) to, resign as officers and directors of
the Company and any other affiliates of the Parent.
1.4 Further Assurances. From time to time after the Closing, the Parent
and the Company will execute and deliver, or cause to be executed and delivered,
without further consideration, such other instruments of conveyance, assignment,
transfer and delivery and will take such other actions as the Buyer may
reasonably request in order to more effectively transfer, convey, assign and
deliver to the Buyer, and to place the Buyer in possession and control of any of
the Assets or to enable the Buyer to exercise and enjoy all rights and benefits
of the Company with respect thereto.
1.5 Liabilities. On the Closing Date, the Buyer will assume and agree to
pay and discharge all liabilities of the Company, known or unknown, absolute or
contingent (the "ASSUMED LIABILITIES") other than the liabilities set forth on
Schedule 1.5 (the "RETAINED LIABILITIES"), which shall be retained by the Parent
or the Company, respectively.
1.6 Expenses: Consents and Taxes. The Buyer shall pay, or cause to be paid
(i) all costs and expenses of obtaining all consents of third parties for the
assignment of any of the Assets, and (ii) all transfer, stamp, sales, use or
other similar taxes or duties payable in connection with the sale and transfer
of the Assets to the Buyer.
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2. CLOSING; PURCHASE PRICE.
2.1 Closing Date. The consummation of the transactions contemplated in
this Agreement (the "CLOSING") shall take place at the offices of Gardere Xxxxx
Xxxxxx LLP, 0000 Xxxxxxxxx, Xxxxx 0000, Xxxxxxx, Xxxxx at 10:00 a.m., Central
time, November 30, 2004 (the "CLOSING DATE") contemporaneously with the
execution of this Agreement or at such other place and time as the parties
hereto may mutually agree.
2.2 Purchase Price. The aggregate purchase price for the Assets shall be
$3,995,000.00 (the "PURCHASE PRICE"), subject to adjustment pursuant to Section
2.3 below, plus the Buyer's assumption of the Assumed Liabilities pursuant to
Section 1.5 above. The Purchase Price shall be payable by the Buyer at the
Closing to the Company in immediately available funds by confirmed wire transfer
to a bank account to be designated by the Company.
2.3 Cash Reconciliation. Within 30 days following the Closing Date, the
Company shall prepare and deliver to the Buyer a schedule setting forth, for the
period commencing on October 1, 2004, and ending as of the Closing, (a) the cash
disbursements funded by the Company, the Parent or any of their affiliates for
the benefit of the Company, to include those made in the ordinary course to
trade vendors and those made in the ordinary course for Company employee benefit
plans (the "DISBURSEMENTS"), and (b) the cash deposits made by the Company (the
"DEPOSITS"). Within three business days following the Buyer's receipt of such
schedule, (i) the Buyer shall remit to the Company in immediately available
funds, the amount by which the Disbursements exceed the Deposits, if any; or
(ii) the Company shall remit to the Buyer, in like manner and within such
period, the amount by which Deposits exceed the Disbursements, if any.
Disbursements shall include, but not be limited to, actual cash amounts paid by
the Company or the Parent on behalf of the Buyer, including (i) amounts paid
after September 30, 2004 for checks issued by the Company or Parent on behalf of
the Company on or before September 30, 2004 that had not cleared the banks on
September 30, 2004, which amounts were reflected on the September 30, 2004
balance sheet as negative cash amounts, and (ii) checks issued by the Buyer or
Parent on behalf of the Company subsequent to September 30, 2004, but before the
Closing that have not cleared the banks as of the Closing, and Deposits shall
include, but not be limited to, actual cash amounts received by the Company or
the Parent on behalf of the Company subsequent to September 30, 2004, but before
the Closing that have not been reflected in the Company's accounts as of the
Closing. Disbursements and Deposits will be accounted for in accordance with
Parent's accounting practices consistent with past periods.
2.4 Purchase Price Allocation. As soon as practicable after the Closing
Date, the Company shall prepare IRS Form 8594 to report the allocation of the
Purchase Price among the Assets. Each party hereto agrees not to assert, in
connection with any tax return, tax audit or similar proceeding, any allocation
that differs from that set forth in such Form 8594.
3. REPRESENTATIONS AND WARRANTIES.
3.1 Representations and Warranties of the Company and the Parent. The
Company and the Parent represent and warrant to the Buyer as follows:
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(a) Organization, Authority and Qualification of the Company. The
Company is a corporation duly organized and validly existing under the
laws of the State of Delaware and the Company has full corporate power and
authority to own or lease its properties and to carry on its business in
such state. The Company has the full corporate power and authority to
execute, deliver and perform this Agreement, and this Agreement has been
duly and validly executed and delivered by the Company and constitutes the
valid and legally binding obligation of the Company, subject to general
equity principles, enforceable in accordance with its terms, except as the
same may be limited by bankruptcy, insolvency, reorganization or similar
laws affecting the rights of creditors generally.
(b) No Violation. The Company is not in default under or in
violation of its Articles of Incorporation or Bylaws.
(c) Title to Properties; Absence of Liens and Encumbrances. The
Company owns good and indefeasible title to the Assets, free and clear of
all claims, liens, security interests, charges, leases, encumbrances,
licenses or sublicenses and other restrictions of any kind and nature,
other than the claims, liens, security interests, charges, leases,
encumbrances, licenses or sublicenses either included among the Assumed
Liabilities or specifically set forth on Schedule 3.1(c) hereto
("PERMITTED ENCUMBRANCES").
3.2 Representations and Warranties of the Buyer. The Buyer and Guarantor,
jointly and severally, represent and warrant to the Parent and the Company as
follows:
(a) Organization, Authority and Qualification of the Buyer. The
Buyer is a corporation duly organized and validly existing under the laws
of the State of Alabama and the Buyer has full corporate power and
authority to own or lease its properties and to carry on its business in
such state. The Buyer has the full corporate power and authority to
execute, deliver and perform this Agreement, and this Agreement has been
duly and validly executed and delivered by the Buyer and constitutes the
valid and legally binding obligation of the Buyer, subject to general
equity principles, enforceable in accordance with its terms, except as the
same may be limited by bankruptcy, insolvency, reorganization or similar
laws affecting the rights of creditors generally.
(b) No Violation. The Buyer is not in default under or in violation
of its Articles of Incorporation or Bylaws.
(c) Certain Fees. The Buyer has not employed any broker or finder or
incurred any other liability for any brokerage fees, commissions or
finders' fees in connection with the transactions contemplated hereby.
(d) Financial Information. The financial and management reports
(including, without limitation, WIP schedules) heretofore delivered or
made by Buyer or the Company to the Parent are true and correct in all
material respects and do not omit to state any fact necessary to make any
of them, in light of the circumstances in which made, not misleading. All
executed change orders have been recorded, all agreed change orders have
been
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executed or are listed on Schedule 3.2(d), and all checks and cash
received by the Company and its affiliates have been deposited.
3.3 No Warranty. The Buyer and the Guarantor acknowledge that the
Guarantor, through previous ownership and/or management of the Company, is
familiar with the Assets and the operations of the Company, and has access to
any information pertaining thereto and has made such information available to
Buyer. Neither the Company nor the Parent, nor any of their respective
directors, officers, employees, agents or representatives has made, or shall be
deemed to have made, and no such person shall be liable for, or bound in any
manner by, and Buyer and the Guarantor have not relied upon and will not rely
upon, any express or implied representations, warranties, guaranties, promises
or statements pertaining to the Business or Assets except as specifically
provided in this Section 3. The Buyer and the Guarantor acknowledge that in
making the decision to enter into this Agreement and to consummate the
transactions contemplated hereby, they have relied solely on the basis of their
own independent investigation of the Business and the Assets and upon the
express written representations, warranties and covenants in this Agreement.
Without diminishing the scope of the express written representations, warranties
and covenants of the Company and the Parent in this Agreement and without
affecting or impairing their right to rely thereon, the Buyer and the Guarantor
acknowledge that (a) they have not relied, in whole or in part, on any
information contained in documents, materials or other information provided to
them by, or on behalf of, Company or the Parent, and (b) neither Company nor the
Parent is making any representations or warranties with respect to (i) any such
documents, materials or other information, other than, in each case, as set
forth in this Agreement or (ii) the value, condition, merchantability,
marketability, profitability, suitability or fitness for a particular use or
purpose of the Assets. ACCORDINGLY, THE ASSETS ARE BEING TRANSFERRED "AS IS,
WHERE IS." EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES SET FORTH IN SECTION
3.1 OF THIS AGREEMENT, THE COMPANY AND PARENT MAKE ABSOLUTELY NO REPRESENTATIONS
OR WARRANTIES WHATSOEVER, EXPRESS OR IMPLIED, REGARDING THE ASSETS, INCLUDING
WITHOUT LIMITATION ANY IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS FOR A
PARTICULAR PURPOSE, OR THE ABILITY OF THE COMPANY TO ASSIGN THE ASSETS, OR
OBTAIN CONSENTS TO ANY ASSIGNMENT.
4. COVENANTS; ACTION SUBSEQUENT TO CLOSING.
4.1 Access to Books and Records. Until the third anniversary of the
Closing Date, the Parent and the Company shall afford, and will cause its
affiliates to afford, to the Buyer, its counsel, accountants and other
authorized representatives, during normal business hours, reasonable access to
the books, records and other data of the Company and the Business with respect
to periods ending on or prior to the Closing Date to the extent that such access
may be reasonably required by the Buyer to facilitate (i) the investigation,
litigation and final disposition of any claims which may have been or may be
made against the Buyer in connection with the Business or (ii) for any other
reasonable business purpose. Following the Closing, the Buyer shall prepare, on
behalf of the Company, all regularly prepared Company financial reports and
statements for periods up to and including the Closing Date, and shall cooperate
with and provide assistance to the Parent and the Company in their financial and
tax reporting obligations for the periods up to and including the Closing Date.
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4.2 Mail. The Parent and the Company authorize and empower the Buyer on
and after the Closing Date to receive and open all mail received by the Buyer
relating to the Business or the Assets and to deal with the contents of such
communications in any proper manner. The Parent and the Company shall promptly
deliver to the Buyer any mail or other communication received by them after the
Closing Date pertaining to the Business or the Assets. The Buyer shall promptly
deliver to the Parent any mail or other communication received by it after the
Closing Date pertaining to the Excluded Assets or Retained Liabilities, and any
cash, checks or other instruments of payment in respect of the Excluded Assets.
4.3 No Consent Contracts. To the extent that any contract of the Company
included in the Assets may not be assigned without the consent of any third
party, and such consent is not obtained prior to Closing (such contracts
referred to as "NO CONSENT CONTRACTS"), this Agreement and any assignment
executed at Closing pursuant hereto shall not constitute an assignment thereof,
but to the extent permitted by law shall constitute an equitable assignment by
the Company and assumption by the Buyer of the Company's rights and obligations
under the applicable No Consent Contract, with the Company making available to
the Buyer the benefits thereof and the Buyer performing the obligations
thereunder on the Company's behalf.
4.4 Preparation and Filing of Certain Tax Forms. The Buyer shall prepare
and timely file all Forms W-2, 940, 941 and 1099 with all appropriate
Governmental Entities, including without limitation any summary schedules and
transmittal forms, as well as any similar filings required by any state or local
Governmental Entity, with respect to all wages and other reportable payments for
the calendar year 2004. As used herein, "GOVERNMENTAL ENTITY" means any court or
tribunal in any jurisdiction (domestic or foreign) or any public, governmental
or regulatory body, agency, department, commission, board, bureau or other
authority or instrumentality, domestic or foreign. The Buyer shall pay all
administrative amounts owed as a result of or otherwise related to such filings
with the exception of any tax, interest, or penalties associated with periods
prior to the Closing. The Company will pay, on or before they become due, any
employment taxes withheld by it which have not been previously paid. The Buyer,
Parent and the Company shall cooperate in making all such filings and shall make
available to the others such information as any of them requires to assure such
filings are made on a timely and accurate basis.
4.5 The Parent Name and Logos. As soon as practicable (but in any event
within 90 days) after the Closing Date, the Buyer, at its expense, shall remove
all the Parent and its affiliates' names and logos from all of the Assets.
Except as specifically provided in Section 1, nothing in this Agreement shall
constitute a license or authorization for the Buyer to use in any manner any
name, logo or xxxx owned by or licensed to the Company, the Parent or their
respective affiliates which bears any reference to IES or any subsidiary of IES
other than the Company. The name "Xxxx" and "Xxxx Electric" shall become the
exclusive property of the Buyer following the Closing and shall not be used by
the Company, Parent or their respective affiliates; provided that Parent will be
given a reasonable period of time (not to exceed 60 days) to change the
Company's name after the Closing Date.
4.6 Leased Assets. At the Closing, the Buyer, at its expense, shall pay
off or refinance the leases on the vehicles listed on Schedule 4.6 attached
hereto, and in connection therewith shall obtain the release of Parent and the
Company for all liability under such vehicle leases. As soon as
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practicable (but in any event within 90 days) after the Closing Date, the Buyer,
at its expense, shall pay off or refinance the leases on the other assets listed
on Schedule 4.6 attached hereto, and in connection therewith shall obtain the
release of Parent and the Company for all liability under such leases.
4.7 Hyundai Change Orders. Buyer agrees that it shall pay over to the
Company, within three days of receipt, one half of the net amounts collected
(such net amounts collected representing the total collections, net of
reasonable costs of collection, including reasonable attorneys fees) after the
Closing Date by the Buyer or its assigns with respect to any of the change
orders or claims listed on Schedule 4.7 attached hereto. At any time following
the Closing, Parent will have the right on reasonable notice and during normal
business hours to audit the progress of the collection effort and determine
whether Schedule 4.7 represents a complete listing of all unbooked change orders
related to the Hyundai facility in existence on the Closing Date.
4.8 Chubb Bonds. Buyer agrees that at the Closing it shall execute and
deliver to the Federal Insurance Company and its subsidiary or affiliated
insurers and any applicable co-sureties (collectively, "FEDERAL"), a General
Agreement of Indemnity in the form attached as Exhibit B, pursuant to which
Buyer and Guarantor agree to (i) indemnify Federal with respect to the
performance and completion of the bonded obligations as set forth therein; and
(ii) replace within ninety (90) days the bonds identified as Cancelable Bonds
therein. Buyer further agrees to continue to provide to Federal monthly written
reports (with a copy to the Parent) as to the progress of the completion of the
bonded jobs. Buyer and Guarantor further agree to provide, from time to time and
at the request of the Parent, a certificate or certificates certifying that the
Cancelable Bonds have been replaced, and as to such other matters concerning the
performance by the Buyer of its post-closing obligations under this Agreement as
Parent shall request.
4.9 Retained Claims. The Company shall retain liability for certain
insured claims as set forth in Schedule 1.5, paragraph 5 (the "RETAINED
CLAIMS"). The Buyer and the Guarantor agree to cooperate with the Company and
the Parent in the defense of the Retained Claims and to make available the
Buyer's personnel and facilities for that purpose. The Company shall retain as
Excluded Assets and not transfer to the Buyer all books and records associated
with the Retained Claims, as well as any reserves established on the books of
the Company for the Retained Claims, which reserves shall be paid in cash by the
Buyer to the Company at Closing.
5. INDEMNIFICATION.
5.1 Survival. The representations and warranties of the Company, the
Parent, the Buyer and the Guarantor contained in this Agreement, any schedules
delivered by or on behalf of the Company and the Buyer pursuant to this
Agreement, or in any certificate, instrument, agreement or other writing
delivered by or on behalf of the Company, the Parent or the Buyer pursuant to
this Agreement shall survive the consummation of the transactions contemplated
herein; provided that all such representations and warranties of the Company and
the Parent shall be of no further force and effect, and no claim for
indemnification by the Buyer pursuant to this Section 5 may be brought for any
reason, after the expiration of twelve (12) months from the Closing Date (the
"SURVIVAL PERIOD"), except for the representations and warranties contained in
Section 3.1(c), which shall
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survive indefinitely. Anything to the contrary notwithstanding, a claim for
indemnification which is made but not resolved prior to the expiration of the
Survival Period may be pursued and resolved after such expiration.
5.2 Indemnification by the Company.
(a) In accordance with and subject to the provisions of this Section
5, the Company and the Parent shall indemnify and hold harmless the Buyer
from and against and in respect of any and all loss, damage, diminution in
value, liability, cost and expense, including reasonable attorneys' fees
and amounts paid in settlement (collectively, the "BUYER INDEMNIFIED
LOSSES"), suffered or incurred by the Buyer by reason of, or arising out
of (i) any misrepresentation or breach of representation or warranty of
the Company or the Parent contained in this Agreement, or in any schedules
delivered to the Buyer by or on behalf of the Company or the Parent
pursuant to this Agreement; (ii) the breach of any covenant or agreement
of the Company or the Parent contained in this Agreement; or (iii) the
Retained Liabilities.
(b) The Company and the Parent shall reimburse the Buyer on demand
for any Buyer Indemnified Losses suffered by the Buyer with respect to
matters other than claims, actions or demands brought, made or instituted
by a third party ("THIRD PARTY CLAIMS"). With respect to Third Party
Claims, the Company and the Parent shall reimburse the Buyer on demand for
any Buyer Indemnified Losses suffered by the Buyer, based on the judgment
of any court of competent jurisdiction or pursuant to a bona fide
compromise or settlement in respect of any Buyer Indemnified Losses. The
Company and the Parent shall have the opportunity to defend at their
expense any claim, action or demand for which the Buyer claims indemnity
against the Company or the Parent; provided that: (i) the defense is
conducted by reputable counsel; (ii) the defense is expressly assumed in
writing within twenty (20) days after written notice of the claim, action
or demand is delivered to the Company and the Parent; and (iii) counsel
for the Buyer may participate at all times and in all proceedings (formal
and informal) relating to the defense, compromise and settlement of the
claim, action or demand at the expense of the Buyer.
5.3 Indemnification by the Buyer.
(a) In accordance with and subject to the provisions of this Section
5, the Buyer and Guarantor, jointly and severally, shall indemnify and
hold harmless the Company, the Parent and their respective affiliates (for
purposes of this Section 5, the "COMPANY INDEMNITEES") from and against
and in respect of any and all loss, damage, diminution in value,
liability, cost and expense, including reasonable attorneys' fees and
amounts paid in settlement (collectively, the "COMPANY INDEMNIFIED
LOSSES"), suffered or incurred by the Company Indemnitees by reason of, or
arising out of (i) any misrepresentation or breach of representation or
warranty of the Buyer or Guarantor contained in this Agreement, or in any
schedules delivered to the Company or the Parent by or on behalf of the
Buyer or Guarantor pursuant to this Agreement; (ii) or the breach of any
covenant or agreement of the Buyer or Guarantor contained in this
Agreement; (iii) the Assumed Liabilities, including, without limitation,
any liability to sureties with respect to bonded jobs; or (iv) the
operation of the
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Business following the Closing, including, but not limited to, any claims
made by Transferred Employees concerning COBRA, the WARN Act, unemployment
claim liability, or any similar matters as a result of the termination by
Buyer of the Transferred Employees.
(b) The Buyer and the Guarantor, jointly and severally (the "BUYER
INDEMNIFYING PARTIES"), shall reimburse the Company Indemnitees on demand
for any Company Indemnified Losses suffered by the Company Indemnitees
with respect to matters other than Third Party Claims. With respect to
Third Party Claims, the Buyer Indemnifying Parties shall reimburse the
Company Indemnitees on demand for any Company Indemnified Losses suffered
by the Company Indemnitees, based on the judgment of any court of
competent jurisdiction or pursuant to a bona fide compromise or settlement
in respect of any Company Indemnified Losses. The Buyer Indemnifying
Parties shall have the opportunity to defend at their expense any claim,
action or demand for which the Company Indemnitees claim indemnity against
the Buyer Indemnifying Parties; provided that: (i) the defense is
conducted by reputable counsel; (ii) the defense is expressly assumed in
writing within twenty (20) days after written notice of the claim, action
or demand is delivered to the Buyer Indemnifying Parties; and (iii)
counsel for the Company and the Parent may participate at all times and in
all proceedings (formal and informal) relating to the defense, compromise
and settlement of the claim, action or demand at the expense of the
Company and the Parent.
5.4 Limitation and Payment on Claims. No claim shall be brought under this
Section 5 for breach of any representation or warranty, and no party hereto
shall be entitled to receive any payment with respect thereto, until such time
as, and only to the extent that, the aggregate amount of such claim(s) that such
party has equals or exceeds $100,000 (the "DEDUCTIBLE"); provided, however, that
the Deductible shall not apply to any obligations under Section 2.3. Anything to
the contrary notwithstanding, the Company and the Parent shall not be liable
under this Section 5 for Buyer Indemnified Losses in excess of the Purchase
Price.
5.5 Sole Remedy. The sole remedy of the Company, the Parent and the Buyer
Indemnifying Parties for breach of the representations and warranties set forth
in Section 3 shall be pursuant to this Section 5.
6. DISPUTE RESOLUTION.
6.1 Arbitration.
(a) Any controversy, dispute or claim arising out of or relating in
any way to this Agreement or the other agreements contemplated by this
Agreement or the transactions arising hereunder (including the validity,
interpretation or applicability of this Section 6.1) shall be settled
exclusively by final and binding arbitration in Houston, Texas. Such
arbitration will apply the laws of the State of Texas and the commercial
arbitration rules of AAA to resolve the dispute, and will be administered
by the AAA.
(b) Written notice of arbitration must be given within one year
after the notifying party has knowledge of accrual of the claim on which
the notice is based. If the
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claiming party fails to give notice of arbitration within that time, the
claim shall be deemed to be waived and shall be barred from either
arbitration or litigation.
(c) Such arbitration shall be conducted by one independent and
impartial arbitrator to be selected by mutual agreement of the parties, if
possible. If the parties fail to reach agreement regarding appointment of
an arbitrator within thirty (30) days following receipt by one party of
the other party's notice of arbitration, the arbitrator shall be selected
from a list or lists of proposed arbitrators submitted by AAA. Unless the
parties agree otherwise, the arbitrator shall be a licensed attorney with
at least ten years of experience in the practice of law. The selection
process shall be that which is set forth in the AAA commercial arbitration
rules then prevailing, except that (A) the number of preemptory strikes
shall not be limited and (B), if the parties fail to select an arbitrator
from one or more lists, AAA shall not initially have the power to make an
appointment but shall continue to submit additional lists until an
arbitrator has been selected, but if no such arbitrator is selected within
sixty (60) days after the receipt of the first notice of arbitration, the
AAA shall have the power to make an appointment and shall promptly do so.
Initially, however, promptly following its receipt of a request to submit
a list of proposed arbitrators, AAA shall convene the parties in person or
by telephone and attempt to facilitate their selection of an arbitrator by
agreement. If the arbitrator should die, withdraw or otherwise become
incapable of serving, a replacement shall be selected and appointed in a
like manner.
(d) The arbitrator shall render an opinion setting forth findings of
fact and conclusions of law with the reasons therefor stated. A transcript
of the evidence adduced at the hearing shall be made and shall, upon
request, be made available to either party. The fees and expenses of the
arbitrator shall be shared equally by the parties and advanced by them
from time to time as required; provided that at the conclusion of the
arbitration, the arbitrator may award costs and expenses (including the
costs of the arbitration previously advanced and the fees and expenses of
attorneys, accountants and other experts). No pre-arbitration discovery
shall be permitted, except that the arbitrator shall have the power in his
or her sole discretion, on application by either party, to order
pre-arbitration examination of the witnesses and documents that the other
party intends to introduce in its case-in-chief at the arbitration
hearing. The arbitrator shall render his or her opinion and/or award
within ninety (90) days of the conclusion of the arbitration hearing. The
arbitrator shall not be empowered to award to either party any punitive
damages in connection with any dispute between them arising out of or
relating in any way to this Agreement or the other agreements contemplated
hereby or the transactions arising hereunder or thereunder, and each party
hereby irrevocably waives any right to recover such damages. The
arbitration hearings and award shall be maintained in confidence.
Notwithstanding anything to the contrary provided in this Section 6.1 and
without prejudice to the above procedures, either party may apply to any court
of competent jurisdiction for temporary injunctive or other provisional judicial
relief if such action is necessary to avoid irreparable damage or to preserve
the status quo until such time as the arbitrator is selected and available to
hear such party's request for temporary relief. The award rendered by the
arbitrator shall be final and not subject to judicial review and judgment
thereon may be entered in any court of competent jurisdiction.
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7. EMPLOYEE MATTERS.
7.1 Hiring.
(a) The Buyer shall hire (subject to each employee's agreement),
effective as of the Closing Date, all of the employees of the Company on
the day immediately prior to the Closing Date, active or inactive (such
employees being hereafter referred to as the "TRANSFERRED EMPLOYEES") at a
comparable job and at a rate of pay not less than each such Transferred
Employee's pay as of September 30, 2004. Upon request of the Buyer, the
Company shall provide the Buyer reasonable access to data (including
computer data) regarding the ages, dates of hire, compensation and job
description of the Transferred Employees.
(b) The Buyer shall assume and be responsible for any severance
costs associated with the termination of the Transferred Employees'
employment with the Company. The Buyer shall discharge all liabilities and
claims based on occurrences or conditions first occurring or commencing on
or after the Closing Date with respect to Transferred Employees arising
out of their employment with the Buyer after the Closing Date, including,
but not limited to, any claims arising out of any employee benefit plan,
policy, program or arrangement maintained at any time by the Buyer (a
"BUYER PLAN" or collectively, the "BUYER PLANS"), except Buyer shall not
assume any liabilities with respect to the WARN Act or COBRA benefits for
any terminations occurring prior to the Closing Date (unless provided
otherwise by law or pursuant to applicable regulations) nor shall the
Company or the Parent be liable under the WARN Act, COBRA, or state
unemployment claims law for any Transferred Employee terminated by Buyer
after the Closing.
(c) At Closing, the Buyer shall establish and make available a group
medical plan for the Transferred Employees and their dependents that is
substantially similar to the group medical plan available to the
Transferred Employees immediately prior to Closing. The Buyer shall credit
the Transferred Employees with all service of the Transferred Employees
recognized under the employee benefit plans, policies, programs, or
arrangements maintained by the Parent or the Company (the "PARENT PLANS")
as service with the Buyer for purposes of eligibility to participate,
vesting and levels of benefits available, under all Buyer Plans. The Buyer
shall waive any coverage waiting period, pre-existing condition and
actively-at-work requirements under the Buyer Plans for the Transferred
Employees and shall provide that any expenses incurred before the Closing
Date by a Transferred Employee (and his or her dependents) during the
calendar year of the Closing shall be taken into account for purposes of
satisfying the applicable deductible, coinsurance and maximum
out-of-pocket provisions, and applicable annual and/or lifetime maximum
benefit limitations of the Buyer Plans. The Buyer Plans shall not require
contributions by Transferred Employees at a rate that exceeds the rate in
effect for other similarly situated employees of the Buyer. Any reports or
other information provided to Buyer by the Company or the Parent in
connection with Buyer performing his obligations under this Section 7.1(c)
shall be at the sole expense of the Buyer.
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7.2 Benefits. Except as provided in Section 7.1(b), the Buyer shall be
responsible for the payment of all amounts of wages, bonuses and other
remuneration (including discretionary benefits and bonuses) payable to the
Transferred Employees of the Company accrued with respect to periods on or prior
to the Closing (except for any employment taxes actually withheld by the
Company) together amounts payable to such employees in connection with events
occurring on or prior to the Closing. In addition, the Buyer shall be
responsible for:
(a) all vacation pay and pay for other compensated absences earned
or accrued by the Transferred Employees as of the close of business on the
Closing Date to the appropriate employee, including any related payroll
burden (FICA and other pension or other employee benefit plan
contributions and employment taxes) with respect thereto to the
appropriate Governmental Entity or other person, to the extent such pay
has been accrued on the books of the Company at such close of business,
based upon the remuneration of such employees normally used in computing
such pay for other compensated absences; and
(b) amounts accrued under the Integrated Electrical Services, Inc.
401(k) Retirement Savings Plan (the "PARENT 401(k) PLAN") for the
Transferred Employees as of the Closing Date but not yet transferred to
the trustee of the Parent 401(k) Plan, including without limitation, the
accrued match, accrued payroll deductions representing elective deferrals,
loan repayments and accrued profit sharing contribution, if any.
7.3 Parent 401(k) Plan. The Company, the Parent and the Buyer agree that,
as soon as practicable after Closing, but in any event within 90 days of the
Closing Date, the account balances in the Parent 401(k) Plan of the Transferred
Employees shall be transferred to a qualified 401(k) retirement savings plan
established by the Buyer (the "BUYER'S 401(k) PLAN") in accordance with Section
414(l) of the Internal Revenue Code of 1986, as amended (the "CODE"), and the
regulations promulgated thereunder. In connection with such transfer, the
following provisions shall apply:
(a) The account balances of the Transferred Employees transferred to
the Buyer's 401(k) Plan shall be subject to the provisions of the Buyer's
401(k) Plan effective as of the date of transfer; provided, however that
the Buyer's 401(k) Plan shall continue any benefits under the Parent
401(k) Plan as required under Section 411(d)(6) of the Code; and
(b) The outstanding loan of any Transferred Employee shall not be in
default as a result of the Transferred Employee's termination of
employment with the Parent or the Company, but such loan shall be
transferred to the Buyer's 401(k) Plan in accordance with (a) above.
The Buyer shall provide acceptable evidence to the Parent that the Buyer's
401(k) Plan meets the requirements of Section 401(a) of the Code prior to the
date of such transfer. The Buyer, the Parent and the Company agree to take
whatever action, including but not limited to plan amendments and resolutions,
to effectuate the transfer of the Transferred Employee's account balances
according to this section from the Parent 401(k) Plan to the Buyer's 401(k)
Plan.
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Notwithstanding the foregoing, nothing in this Section 7 shall be deemed or
construed to give rise to any rights, claims, benefits, or causes of action to
any Transferred Employee or third party whatsoever (including any Governmental
Entity).
8. MISCELLANEOUS.
8.1 Notices. All notices and communications required or permitted
hereunder shall be in writing and may be given by (a) depositing the same in the
United States mail, addressed to the party to be notified, postage prepaid and
registered or certified with return receipt requested, (b) by delivering the
same in person to an officer or agent of such party, or (c) overnight delivery
service. Such notice shall be deemed received on the date (i) on which it is
actually received if sent by overnight delivery service or hand delivery, or
(ii) on the third business day following the date on which it is mailed. For
purposes of notice, the addresses of the parties hereto shall be:
If to the Parent or the Company:
Integrated Electrical Services, Inc.
0000 Xxxx Xxxx Xxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attention: Chief Financial Officer
With a copy to:
Integrated Electrical Services, Inc.
0000 Xxxx Xxxx Xxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attention: Chief Legal Officer
If to the Buyer or Guarantor:
Xxxx, Inc.
000 Xxxxxxx Xxxx
Xxxxxxx, XX 00000
Attention: Xxxxxx Xxxx Xxxx, President
With a copy to:
Xxxxxxxx X. Xxxxxx
Xxxxxx Key Xxxx Xxxxxx & Xxxx, LLP
P. O. Xxx 0000
Xxxxxxx, XX 00000
or such other address as any party hereto shall specify pursuant to this Section
8.1 from time to time.
8.2 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, and all of which
together shall constitute one and the same instrument.
13
8.3 Governing Law. The validity and effect of this Agreement shall be
governed by and construed and enforced in accordance with the laws of the State
of Texas, without regard to its conflicts of laws rules.
8.4 Successors and Assigns. This Agreement shall be binding upon and shall
inure to the benefit of the parties hereto and their respective permitted heirs,
successors and assigns. Neither the Company, the Parent nor the Buyer may
assign, delegate or otherwise transfer any of their rights or obligations under
this Agreement without the written consent by each other party hereto.
8.5 Partial Invalidity and Severability. All rights and restrictions
contained herein may be exercised and shall be applicable and binding only to
the extent that they do not violate any applicable laws and are intended to be
limited to the extent necessary to render this Agreement legal, valid and
enforceable. If any term of this Agreement, or part thereof, not essential to
the commercial purpose of this Agreement shall be held to be illegal, invalid or
unenforceable by a forum of competent jurisdiction, it is the intention of the
parties that the remaining terms hereof, or part thereof, shall constitute their
agreement with respect to the subject matter hereof, and all such remaining
terms, or parts thereof, shall remain in full force and effect. To the extent
legally permissible, any illegal, invalid or unenforceable provision of this
Agreement shall be replaced by a valid provision which will implement the
commercial purpose of the illegal, invalid or unenforceable provision.
8.6 Waiver. Any term or condition of this Agreement may be waived at any
time by the party which is entitled to the benefit thereof, but only if such
waiver is evidenced by a writing signed by such party. No failure on the part of
any party hereto to exercise, and no delay in exercising, any right, power or
remedy created hereunder shall operate as a waiver thereof, nor shall any single
or partial exercise of any right, power or remedy by either party preclude any
other or further exercise thereof or the exercise of any other right, power or
remedy. No waiver by either party hereto of any breach of or default in any term
or condition of this Agreement shall constitute a waiver of or assent to any
succeeding breach of or default in the same or any other term or condition
hereof.
8.7 Headings. The headings of particular provisions of this Agreement are
inserted for convenience only and shall not be construed as a part of this
Agreement or serve as a limitation or expansion on the scope of any term or
provision of this Agreement.
8.8 Entire Agreement; Amendments. This Agreement supersedes all prior
discussions and agreements between the parties with respect to the subject
matter hereof (including without limitation any letters of intent executed by
the parties), and this Agreement contains the sole and entire agreement between
the parties with respect to the matters covered hereby. This Agreement shall not
be altered or amended except by an instrument in writing signed by or on behalf
of the party against whom enforcement is sought.
8.9 Disclosure of Agreement Terms. Neither Buyer nor the Guarantor shall
disclose the terms and conditions of this Agreement to any person or entity
without the prior written consent of an executive officer of the Parent or as
required by applicable law or an order from a court or administrative body of
competent jurisdiction (but only to the extent so required and only after
14
giving reasonable prior notice to the Company and the Parent and cooperating
with the Company and the Parent in any efforts to legally oppose such
disclosure). The foregoing notwithstanding, the Buyer and the Guarantor shall be
permitted to make such disclosures to their accountants, lawyers, financial
institutions, lending sources and related parties as may be appropriate,
provided that such parties are bound by the foregoing nondisclosure provisions.
8.10 Number and Gender. Where the context requires, the use of the
singular form herein shall include the plural, the use of the plural shall
include the singular, and the use of any gender shall include any and all
genders.
[Remainder of page intentionally left blank]
15
IN WITNESS WHEREOF, this Agreement has been executed effective as of the
date set forth above.
PARENT:
INTEGRATED ELECTRICAL SERVICES, INC.
By: /s/ Xxxxxxx X. Xxxxx
---------------------------------------
Name: Xxxxxxx X. Xxxxx
Title: Chief Executive Officer
COMPANY:
XXXX ELECTRIC COMPANY, INC.
By: /s/ Xxxx X. Xxxxxxx
---------------------------------------
Name: Xxxx X. Xxxxxxx
Title: Vice President
BUYER:
XXXX, INC.
By: /s/ Xxxxxx Xxxx Xxxx
---------------------------------------
Xxxxxx Xxxx Xxxx, President
GUARANTOR:
/s/ Xxxxxx Xxxx Xxxx
--------------------------------------------
Xxxxxx Xxxx Xxxx
16
EXHIBIT A
XXXX OF SALE, ASSIGNMENT AND ASSUMPTION AGREEMENT
This XXXX OF SALE, ASSIGNMENT AND ASSUMPTION AGREEMENT ("XXXX OF SALE") is
entered into as of the 30th day of November 2004, by and among INTEGRATED
ELECTRICAL SERVICES, INC., a Delaware corporation (the "PARENT"), XXXX ELECTRIC
COMPANY, INC., a Delaware corporation (the "COMPANY") and XXXX, INC., an Alabama
corporation (the "BUYER").
RECITALS
WHEREAS, pursuant to the terms of that certain Asset Purchase Agreement
(the "PURCHASE AGREEMENT") dated as of even date herewith by and among the
Buyer, the Parent, the Company, and Xxxx Xxxx, individual, the Company and the
Parent agreed to convey the Assets to the Buyer and the Buyer agreed to assume
the Assumed Liabilities. In order to evidence such conveyance and assumption,
the parties desire to enter into this Xxxx of Sale.
WHEREAS, all capitalized terms used herein but not defined herein shall
have the meanings ascribed to them in the Purchase Agreement.
ASSIGNMENT
NOW, THEREFORE, for and in consideration of the mutual covenants,
agreements, and benefits contained herein, the sum of TEN DOLLARS ($10.00) and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the Company and the Parent do hereby BARGAIN, GRANT, SELL,
CONVEY, TRANSFER, DELIVER and ASSIGN unto Buyer all the Assets.
The Assets are hereby conveyed free and clear of all encumbrances other
than the Permitted Encumbrances.
TO HAVE AND TO HOLD the Assets unto the Buyer and its successors and
assigns forever; and the Company and the Parent do hereby bind themselves and
their successors and assigns to WARRANT AND FOREVER DEFEND title to the Assets
in accordance with the terms and provisions of the Purchase Agreement.
The Buyer, upon execution below, accepts this Xxxx of Sale, and to the
extent provided for in the Purchase Agreement, hereby assumes the Assumed
Liabilities, but no others.
This assignment shall be binding upon and shall inure to the benefit of
the parties hereto and their respective permitted successors and assigns.
This Xxxx of Sale may be executed in any number of counterparts, and each
counterpart shall for all purposes be deemed to be an original.
This Xxxx of Sale is subject to all terms and conditions contained in the
Purchase Agreement and nothing herein shall be deemed to alter, amend, or
supersede the Purchase Agreement, the terms of which shall in all respects be
controlling.
[Remainder of page intentionally left blank]
IN WITNESS WHEREOF, the parties hereto have executed this Xxxx of Sale
effective as of the date set forth above.
PARENT:
INTEGRATED ELECTRICAL SERVICES, INC.
By: ________________________________________
Name: ______________________________________
Title: _____________________________________
COMPANY:
XXXX ELECTRIC COMPANY, INC.
By: ________________________________________
Name: ______________________________________
Title: _____________________________________
BUYER:
XXXX, INC.
By: ________________________________________
Name: ______________________________________
Title: _____________________________________
EXHIBIT B
FORM OF GENERAL AGREEMENT OF INDEMNITY
(attached hereto)
CHUBB GROUP OF INSURANCE COMPANIES
[CHUBB LOGO]
15 Mountain View Road, X.X. Xxx 0000, Xxxxxx, Xxx Xxxxxx 00000-0000
GENERAL AGREEMENT OF INDEMNITY
WHEREAS, the undersigned (hereinafter individually and collectively called
"Indemnitor") desires FEDERAL INSURANCE COMPANY or any of its subsidiary or
affiliated insurers (hereinafter called "Company") to execute bonds including
undertakings and other like obligations (hereinafter referred to as bond or
bonds) on its behalf and also desires the execution of bonds on behalf of
individuals, partnerships, corporations, limited liability companies or any
other similarly unincorporated associations of members (hereinafter called
"Affiliates").
WHEREAS, from time to time the Indemnitor may be a participant in joint
ventures with others, and bonds will be required on behalf of the Indemnitor
along with the other participants in such joint ventures.
WHEREAS, Indemnitor is the successor-in-interest to XXXX ELECTRIC COMPANY,
INC., A DELAWARE CORPORATION (along with any other affiliate or related entity
whose assets have been or will be assigned to Indemnitor hereinafter
individually and collectively called "Seller") as the assignee of all bonded
contract obligations, which Indemnitor has expressly assumed without
reservation.
NOW, THEREFORE, in consideration of the Company executing said bond or
bonds, and the undersigned Indemnitor hereby requests the execution thereof, and
in consideration of the consent of Company to the assignment and assumption of
the bonded obligations formerly undertaken by the Seller, as well as the sum of
One Dollar paid to the Indemnitor by said Company, the receipt whereof is hereby
acknowledged, the Indemnitor, being benefited by the execution and delivery of
said bond or bonds, including, without limitation all Bonds previously issued
prior to the date of this Agreement for the Seller, the bonded obligations of
which have been expressly assumed without reservation by Indemnitor(s) and as to
which Indemnitor(s) have agreed, and do hereby agree, to assume full
responsibility for work in place as well as the prompt and proper performance
and completion of all such bonded obligations, including, without limitation
those bonded obligations listed on Exhibit A attached hereto, hereby agrees that
it will at all times jointly and severally indemnify and save harmless said
Company from and against any and all loss, cost, damage or expense, including
court costs and attorneys' fees, which it shall at any time incur by reason of
its execution and/or delivery of said bond or bonds or its payment of any claim
or liability thereunder and will place the said Company in funds to meet all its
liability under said bond or bonds promptly on request and before it may be
required to make any payment thereunder and that the voucher or other evidence
of payment by said Company of any such loss, cost, damage, expense, claim, or
liability shall be prima facie evidence of the fact and amount of the
Indemnitor's liability to said Company under this Agreement.
IT IS UNDERSTOOD AND AGREED that with respect to any bonds on behalf of
the Indemnitor participating in a joint venture that if specific application is
filed with the Company for such bonds the liability of the Indemnitor to the
Company with respect to such joint venture bonds shall be limited to the amount
expressly set forth in said application.
IT IS UNDERSTOOD AND AGREED that all of the terms, provisions, and
conditions of this Agreement shall be extended to and for the benefit not only
of the Company either as a direct writing company or as a co-surety or reinsurer
but also for the benefit of any surety or insurance company or companies with
which the Company may participate as a co-surety or reinsurer and also for the
benefit of any other company which may execute any bond or bonds at the request
of the Company on behalf of the Indemnitor.
IT IS UNDERSTOOD AND AGREED that this Agreement is in addition to all
other rights and agreements which Company may have or be a party to in
connection with Bonds previously issued for the benefit of Seller and that the
assumption of responsibility therefor by Indemnitors as herein provided shall
not constitute a waiver or release by Company of any rights Company may have to
seek and recover indemnity from third parties having liability in connection
with the issuance of such Bonds including, but not limited to, the obligations
and liabilities of integrated Electrical Services, Inc., Xxxx Electric Company,
Inc. or their affiliates.
IT IS UNDERSTOOD AND AGREED that, notwithstanding anything herein to the
contrary, Indemnitor's agreements, covenants, and all obligations under this
General Agreement of Indemnity is limited to (1) the obligations assumed by
Indemnitor under the Asset Purchase Agreement by and among Integrated Electrical
Services, Inc., Xxxx Electric Company, Inc., Xxxx, Inc., and Robbert Xxxx Xxxx,
and (2) Company's obligations under the bonds listed on Exhibit A attached
hereto. Furthermore, Indemnitor has acknowledged and agreed that Indemnitor will
replace Bond No. 81967807, Bond No. 81955935, Bond No. 81878250, Bond No.
81889179, and Bond No. 81889027 identified on Exhibit A (the "Replaceable
Bonds") no later than ninety (90) days from the execution of this Agreement, and
hereby acknowledges and consents that the Replaceable Bonds will be canceled
upon the earlier of (i) the date of issuance of replacement bonds or (ii) the
date upon which Federal issues notice of cancellation in compliance with the
terms the Replaceable Bond(s) to be canceleed thereby. Indemnitor's obligation
under this Agreement with respect to any bond or bonds canceled or replaced as
contemplated herein will remain with respect to such liability accruing under
said bond or bonds.
IT IS FURTHER UNDERSTOOD AND AGREED that the Indemnitor, its heirs,
successors and assigns are jointly and severally bound by the foregoing
conditions of this Agreement.
IN WITNESS WHEREOF the Indemnitor has signed this instrument this, the
______ day of _________________ , 2004.
WITNESS: XXXX, INC., an Alabama Corporation
_____________________________ By: ________________________________________
Xxxxxx Xxxx Xxxx, President
WITNESS: XXXXXX XXXX XXXX, an Alabama resident
_____________________________ ____________________________________________
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