REGISTRATION RIGHTS AGREEMENT
Exhibit 10.5
Registration Rights Agreement, dated as of May 12, 2006, by and among Integrated Electrical
Services, Inc., a Delaware corporation (“Company”), and the stockholders signatories
hereto.
W I T N E S S E T H:
WHEREAS, this Agreement is being entered into in connection with the acquisition of Common
Stock (as hereinafter defined) on or after the Effective Date (as hereinafter defined) by Holders
pursuant to the Plan (as hereinafter defined);
NOW, THEREFORE, in consideration of the premises and the covenants hereinafter contained, it
is agreed as follows:
1. Definitions. Unless otherwise defined herein, capitalized terms used herein and in
the recitals above shall have the following meanings:
“Additional Holders” shall mean the Permitted Assignees of Registrable Securities who,
from time to time, acquire Registrable Securities from a Holder or Holders and own Registrable
Securities at the relevant time, agree to be bound by the terms hereof and become Holders for
purposes of this Agreement.
“Affiliate” of a Person shall mean any Person that directly, or indirectly through one
or more intermediaries, controls, or is controlled by, or is under common control with, such other
Person. For purposes of this definition, “control” shall mean the ability of one Person to direct
the management and policies of another Person.
“Agreement” shall mean this Registration Rights Agreement, including all amendments,
modifications and supplements and any exhibits or schedules to any of the foregoing, and shall
refer to the Agreement as the same may be in effect at the time such reference becomes operative.
“Business Day” shall mean any day that is not a Saturday, a Sunday or a day on which
banks are required or permitted to be closed in the State of New York.
“Commission” shall mean the Securities and Exchange Commission or any other federal
agency then administering the Securities Act and other federal securities laws.
“Common Stock” shall mean the shares of common stock, $.01 par value per share, of
Company, as adjusted to reflect any merger, consolidation, recapitalization, reclassification,
split-up, stock dividend, rights offering or reverse stock split made, declared or effected with
respect to the Common Stock.
“Company” shall have the meaning assigned to such term in the preamble.
“Demand Registration” shall have the meaning assigned to such term in Section 2(b)
hereof.
“Effective Date” means the effective date of the Plan pursuant to the terms thereof.
“Exchange Act” shall mean the Securities Exchange Act of 1934, as amended, or any
similar federal statute, and the rules and regulations of the Commission thereunder, all as the
same shall be in effect from time to time.
“Holder” shall mean any (i) Person who owns Registrable Securities on the Effective
Date and is a party to this Agreement or (ii) any Additional Holder.
“Majority Holders” shall mean Holders holding at the time, shares of Registrable
Securities representing more than 50% of the then outstanding Registrable Securities.
“Permitted Assignee” shall mean any (a) Affiliate of any Holder who acquires
Registrable Securities from such Holder, or its Affiliates, or (b) any other Person who acquires
any Registrable Securities of any Holder or Holders who is designated as a Permitted Assignee by
such Holder in a written notice to Company; provided, however, that the rights of
any Person designated as a Permitted Assignee referred to in the foregoing clause (b) shall be
limited if, and to the extent, provided in such notice.
“Person” shall mean any individual, corporation, partnership, limited liability
company, joint venture, association, joint-stock company, trust, unincorporated organization,
government or any agency or political subdivision thereof or any other entity.
“Plan” shall mean the Second Amended Joint Plan of Reorganization under Chapter 11 of
the United States Bankruptcy Code of Company and certain of its subsidiaries, dated March 17, 2006,
as the same may be amended, modified or supplemented from time to time in accordance with the terms
thereof.
“Registrable Securities” shall mean the Common Stock of Company owned by the Holders
as of the date hereof or at any time in the future; and, if as a result of any reclassification,
stock dividends or stock splits or in connection with a combination of shares, recapitalization,
merger, consolidation, sale of all or substantially all of the assets of Company or other
reorganization or other transaction or event, any capital stock, evidence of indebtedness,
warrants, options, rights or other securities (collectively “Other Securities”) are issued or
transferred to a Holder in respect of Registrable Securities held by the Holder, references herein
to Registrable Securities shall be deemed to include such Other Securities; provided,
however, that a share of Common Stock will cease to be a Registrable Security if (a) a
registration statement covering such share of Common Stock has been declared effective by the
Commission and such share of Common Stock has been sold or disposed of pursuant to such effective
registration
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statement, or (b) such share of Common Stock has been sold or disposed of pursuant to Rule 144
(or any successor rule) under the Securities Act; or (c) such share of Common Stock is eligible for
resale pursuant to Rule 144(k); or (d) such share of Common Stock is eligible for resale pursuant
to Rule 144 and the Holder thereof does not then beneficially own more than 1% of such class of
securities; or (e) such share of Common Stock has been Transferred to a Person who is not (and does
not become as a result of such Transfer) a Holder; or (f) such share of Common Stock is held by the
Company or any of its subsidiaries; or (g) such share of Common Stock ceases to be outstanding.
“Securities Act” shall mean the Securities Act of 1933, as amended, or any similar
federal statute, and the rules and regulations of the Commission thereunder, all as the same shall
be in effect from time to time.
“Shelf Registration” means a registration effected pursuant to Section 2(a) hereof.
“Shelf Registration Statement” means a “shelf” registration statement of Company
relating to a “shelf” offering in accordance with Rule 415 of the Securities Act, or any similar
rule that may be adopted by the Commission, pursuant to the provisions of Section 2(a) hereof which
covers all of the Registrable Securities held by the Holders (other than any Holder that
unreasonably fails to furnish to Company in writing (within 10 days of request thereafter) such
information required in connection with such registration regarding such Holder and the
distribution of such Holder’s Registrable Securities), on an appropriate form under the Securities
Act, and all amendments and supplements to such registration statement, including post-effective
amendments, in each case including the prospectus contained therein, all exhibits thereto and all
material incorporated by reference therein.
2. Required Registration.
(a) After Company’s receipt of a written request from the Holders of Registrable Securities
holding at least 10% of the Registrable Securities outstanding as of the Effective Date to effect a
Shelf Registration, and subject to Section 7(c), Company shall use commercially reasonable efforts
to cause a Shelf Registration Statement to be filed and declared effective by the Commission within
120 days after the date of such request. Each Holder as to which any Shelf Registration is being
effected agrees to furnish to Company all information with respect to such Holder necessary to make
any information previously furnished to Company by such Holder not misleading. Company agrees to
use commercially reasonable efforts to keep the Shelf Registration Statement continuously effective
until the earliest to occur of (i) the expiration of two years from the date the Commission
declares the Shelf Registration Statement effective, (ii) the day after the date on which all
Registrable Securities covered by the Shelf Registration Statement have been sold pursuant to the
Shelf Registration Statement or (iii) the first date on which there shall cease to be any
Registrable Securities covered by the Shelf Registration Statement. Company further agrees, if
necessary, to promptly supplement or amend the Shelf Registration Statement, if required by the
rules,
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regulations or instructions applicable to the registration form used by Company for such Shelf
Registration Statement or by the Securities Act or by any other rules and regulations thereunder
for shelf registrations, and Company agrees to furnish to the Holders of Registrable Securities
copies of any such supplement or amendment promptly after its being used or filed with the
Commission.
(b) At any time the Shelf Registration Statement is not effective (other than a temporary
suspension of effectiveness, for a period not exceeding 90 days, due to any stop order, injunction
or other requirement of the Commission or other governmental agency or court applicable to the
Shelf Registration Statement) and after receipt of a written request from the Holders of at least
10% of the Registrable Securities then outstanding requesting that Company effect a registration
under the Securities Act covering such Registrable Securities (a “Demand Registration”),
and specifying the intended method or methods of disposition thereof, Company shall promptly notify
all Holders in writing of the receipt of such request and each such Holder, in lieu of exercising
its rights under Section 3 may elect (by written notice sent to Company within 10 Business Days
from the date of the aforementioned Company’s notice) to have Registrable Securities included in
such Demand Registration thereof pursuant to this Section 2. Thereupon Company shall, as
expeditiously as is possible, use its commercially reasonable efforts to effect the registration
under the Securities Act of all shares of Registrable Securities which Company has been so
requested to register by such Holders for sale, all to the extent required to permit the
disposition (in accordance with the intended method or methods thereof, as aforesaid) of the
Registrable Securities so registered; provided, however, that Company shall not be
required to effect more than two (2) registrations of any Registrable Securities pursuant to this
Section 2 unless Company shall be eligible at any time to file a registration statement on Form S-3
(or other comparable short form) under the Securities Act, in which event there shall be no limit
on the number of such registrations pursuant to this Section 2.
(c) A registration will not count as a Demand Registration until it has become effective
(unless the requesting Holders withdraw all their Registrable Securities and Company has performed
its obligations hereunder in all material respects, in which case such demand will count as a
Demand Registration unless the requesting Holders pay all registration expense in connection with
such withdrawn registration); provided, however, that if, after it has become
effective, an offering of Registrable Securities pursuant to a registration is interfered with by
any stop order, injunction or other order or requirement of the Commission or other governmental
agency or court (other than because of a violation of applicable law by a Holder) and remains in
effect for more than 90 days or is withdrawn because of any development affecting Company, such
registration will be deemed not to have been effected and will not count as a Demand Registration.
(d) If the managing underwriter of a Demand Registration shall advise Company in writing that,
in its opinion, the distribution of the Registrable Securities requested to be included in the
Demand Registration would materially and adversely affect the distribution of such Registrable
Securities, then all selling Holders
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shall reduce the amount of Registrable Securities each intended to distribute through such
offering on a pro-rata basis.
3. Incidental Registration. If Company at any time proposes to file on its behalf
and/or on behalf of any of its security holders (the “demanding security holders”) a registration
statement under the Securities Act on any form (other than a registration statement on Form S-4 or
S-8 or any successor form for securities to be offered in a transaction of the type referred to in
Rule 145 under the Securities Act or in connection with an exchange offer, or to employees of
Company pursuant to any employee benefit plan, respectively) for the general registration of
securities, it will give written notice to all Holders at least 30 days before the initial filing
with the Commission of such registration statement, which notice shall set forth the intended
method of disposition of the securities proposed to be registered by Company. The notice shall
offer to include in such filing the aggregate number of shares of Registrable Securities as such
Holders may request.
Each Holder desiring to have Registrable Securities registered under this Section 3 shall
advise Company in writing within 10 Business Days after the date of such offer from Company,
setting forth the amount of such Registrable Securities for which registration is requested.
Company shall thereupon include in such filing the number of shares of Registrable Securities for
which registration is so requested, subject to the next sentence, and shall use its commercially
reasonable efforts to effect registration under the Securities Act of such shares. If the managing
underwriter of a proposed public offering shall advise Company in writing that, in its opinion, the
distribution of the Registrable Securities requested to be included in the registration
concurrently with the securities being registered by Company or such demanding security holder
would materially and adversely affect the distribution of such securities by Company or such
demanding security holder, then all selling security holders (including the demanding security
holder who initially requested such registration) shall reduce the amount of securities each
intended to distribute through such offering on a pro-rata basis. Except as otherwise provided in
Section 5, all expenses of such registration shall be borne by Company.
4. Registration Procedures. If Company is required by the provisions of Section 2 or
3 to use its commercially reasonable efforts to effect the registration of any of its securities
under the Securities Act, Company will, as expeditiously as possible:
(a) prepare and file with the Commission a registration statement with respect to such
securities and use its commercially reasonable efforts to cause such registration statement to
become and remain effective for a period of time required for the disposition of such securities by
the holders thereof, but not to exceed 180 days (other than the Shelf Registration Statement which
shall be kept effective for such period as provided in Section 2(a)); provided,
however, that Company may discontinue any registration of its securities that cease to be
shares of Registrable Securities;
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(b) prepare and file with the Commission 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 and to comply with the provisions of the Securities Act with
respect to the sale or other disposition of all securities covered by such registration statement
until the earlier of such time as all of such securities have been disposed of in a public offering
or the expiration of 180 days (other than the Shelf Registration Statement which shall be kept
effective for such period as provided in Section 2(a)); provided, however, that
Company may discontinue any registration of its securities that cease to be shares of Registrable
Securities;
(c) furnish to such selling security holders such number of copies of a summary prospectus or
other prospectus, including a preliminary prospectus, in conformity with the requirements of the
Securities Act, and such other documents, as such selling security holders may reasonably request;
(d) use its commercially reasonable efforts to register or qualify the securities covered by
such registration statement under such other securities or blue sky laws of such jurisdictions
within the United States as each holder of such securities shall request (provided,
however, that Company shall not be obligated to qualify as a foreign corporation to do
business under the laws of any jurisdiction in which it is not then qualified, to subject itself to
taxation in such jurisdiction or to file any general consent to service or process), and do such
other reasonable acts and things as may be required of it to enable such holder to consummate the
disposition in such jurisdiction of the securities covered by such registration statement;
(e) promptly notify each Holder whose Registrable Securities are intended to be covered by
such registration statement and each underwriter and, if requested by any such Person, confirm such
notice in writing (i) when a prospectus or any prospectus supplement or post-effective amendment
has been filed and, with respect to a registration statement or any post-effective amendment, when
the same has become effective, (ii) of the issuance by any state securities or other regulatory
authority of any order suspending the qualification or exemption from qualification of any of the
Registrable Securities under state securities or “blue sky” laws or the initiation of any
proceedings for that purpose, (iii) any request by the Commission for the amending or supplementing
of such registration statement or prospectus or for additional information; and (iv) of the
happening of any event which requires the making of any changes in such registration statement or
prospectus so that they will not contain any untrue statement of a material fact or omit to state
any 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, and, as promptly as
practicable thereafter, prepare and file with the Commission and furnish a supplement or amendment
to such prospectus so that, as thereafter deliverable to the purchasers of such Registrable
Securities, such prospectus will not contain any untrue statement of a material fact or omit a
material fact necessary to make the statements therein, in light of the circumstances under which
they were made, not misleading, and in the case of this clause (iv) the time period during which
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such registration statement is required to remain effective shall be extended for the time
period during which such prospectus is so suspended;
(f) use commercially reasonable efforts to obtain and, if obtained, furnish, at the request of
any Holder requesting registration of Registrable Securities pursuant to Section 2, on the date
that such shares of Registrable Securities are delivered to the underwriters for sale pursuant to
such registration or, if such Registrable Securities are not being sold through underwriters, on
the date that the registration statement with respect to such shares of Registrable Securities
becomes effective, (1) an opinion, dated such date, of the independent counsel representing Company
for the purposes of such registration, addressed to the underwriters, if any, and if such
Registrable Securities are not being sold through underwriters, then to the Holders making such
request, in customary form and covering matters of the type customarily covered in such legal
opinions; and (2) a comfort letter dated such date, from the independent certified public
accountants of Company, addressed to the underwriters, if any, and if such Registrable Securities
are not being sold through underwriters, then to the Holder making such request and, if such
accountants refuse to deliver such letter to such Holder, then to Company, in a customary form and
covering matters of the type customarily covered by such comfort letters and as the underwriters or
such Holder shall reasonably request. Such opinion of counsel shall additionally cover such other
legal matters with respect to the registration in respect of which such opinion is being given as
such Holders may reasonably request. Such letter from the independent certified public accountants
shall additionally cover such other financial matters (including information as to the period
ending not more than five Business Days prior to the date of such letter) with respect to the
registration in respect of which such letter is being given as the Holders of a majority of the
Registrable Securities being so registered may reasonably request;
(g) enter into customary agreements (including an underwriting agreement in customary form)
and take such other actions as are reasonably required in order to expedite or facilitate the
disposition of such Registrable Securities; and
(h) otherwise use its best efforts to comply with all applicable rules and regulations of the
Commission, and make available to its security holders, as soon as reasonably practicable, but not
later than 18 months after the effective date of the registration statement, an earnings statement
covering the period of at least 12 months beginning with the first full month after the effective
date of such registration statement, which earnings statement shall satisfy the provisions of
Section 11(a) of the Securities Act.
It shall be a condition precedent to the obligation of Company to take any action pursuant to
this Agreement in respect of the securities which are to be registered at the request of any Holder
that such Holder shall furnish to Company such information regarding the securities held by such
Holder and the intended method of disposition thereof as Company shall reasonably request and as
shall be required in connection with the action taken by Company.
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Each Holder agrees that, upon receipt of any notice from Company of the happening of any event
of the kind described in Section 4(e)(iv), such Holder shall immediately discontinue such Holder’s
disposition of Registrable Securities pursuant to the registration statement relating to such
Registrable Securities until such Holder’s receipt of the copies of the supplemented or amended
prospectus contemplated by Section 4(e)(iv).
5. Expenses. All expenses incurred in complying with this Agreement, including,
without limitation, all registration and filing fees (including all expenses incident to filing
with any stock exchange or the National Association of Securities Dealers, Inc.), printing
expenses, fees and disbursements of counsel for Company, the reasonable fees and expenses of one
counsel for the selling security holders (selected by those holding a majority of the shares being
registered), expenses of any special audits incident to or required by any such registration and
expenses of complying with the securities or blue sky laws of any jurisdiction pursuant to Section
4(d), shall be paid by Company, except that:
(a) all such expenses in connection with any amendment or supplement to the registration
statement or prospectus filed more than 180 days after the effective date of such registration
statement because any Holder has not effected the disposition of the securities requested to be
registered shall be paid by such Holder; and
(b) Company shall not be liable for any fees, discounts or commissions to any underwriter or
any fees or disbursements of counsel for any underwriter or any applicable transfer taxes in
respect of the securities sold by such Holder.
6. Indemnification and Contribution.
(a) In the event of any registration of any Registrable Securities under the Securities Act
pursuant to this Agreement, Company shall indemnify and hold harmless to the fullest extent
permitted by law the Holder of such Registrable Securities, such Holder’s directors and officers,
and each other person (including each underwriter) who participated in the offering of such
Registrable Securities and each other person, if any, who controls such Holder or such
participating person within the meaning of the Securities Act, against any losses, claims, damages
or liabilities, joint or several, to which such Holder or any such director or officer or
participating person or controlling person may become subject under the Securities Act or any other
statute or at common law, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon (i) any alleged untrue statement of any material
fact contained, on the effective date thereof, in any registration statement under which such
securities were registered under the Securities Act, any preliminary prospectus or final prospectus
contained therein, or any amendment or supplement thereto, or (ii) any alleged omission to state
therein 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, and shall reimburse such
Holder or such director, officer or participating
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person or controlling person for any legal or any other expenses reasonably incurred by such
Holder or such director, officer or participating person or controlling person in connection with
investigating or defending any such loss, claim, damage, liability or action; provided,
however, that Company shall not be liable in any such case to the extent that any such
loss, claim, damage or liability arises out of or is based upon any actual or alleged untrue
statement or actual or alleged omission made in such registration statement, preliminary
prospectus, prospectus or amendment or supplement in reliance upon and in conformity with written
information furnished to Company by such Holder specifically for use therein or (in the case of any
registration pursuant to Section 2) so furnished for such purposes by any underwriter. Such
indemnity shall remain in full force and effect regardless of any investigation made by or on
behalf of such Holder or such director, officer or participating person or controlling person, and
shall survive the transfer of such securities by such Holder.
(b) Each Holder, by acceptance hereof, agrees to indemnify and hold harmless to the fullest
extent permitted by law, Company, its directors and officers and each other person, if any, who
controls Company within the meaning of the Securities Act against any losses, claims, damages or
liabilities, joint or several, to which Company or any such director or officer or any such person
may become subject under the Securities Act or any other statute or at common law, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based
upon information provided in writing to Company by such Holder specifically for use and contained
in any registration statement under which securities were registered under the Securities Act at
the request of such Holder, any preliminary prospectus or final prospectus contained therein, or
any amendment or supplement thereto. Notwithstanding the provisions of this paragraph (b) or
paragraph (d) below, no Holder shall be required to indemnify any person pursuant to this Section 6
or to contribute pursuant to paragraph (d) below in an amount in excess of the amount of the
aggregate net proceeds received by such Holder in connection with any such registration under the
Securities Act.
(c) Any Person entitled to indemnification hereunder will (i) give prompt written notice to
the indemnifying party of any claim with respect to which it seeks indemnification
(provided that the failure to give such notice shall not limit the rights of such Person,
except to the extent the indemnifying party is actually prejudiced thereby) and (ii) unless in such
indemnified party’s 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;
provided, however, that any person entitled to indemnification hereunder shall have
the right to employ separate counsel and to participate in the defense of such claim, but the fees
and expenses of such counsel shall be at the expense of such Person unless (A) the indemnifying
party has agreed to pay such fees or expenses or (B) the indemnifying party shall have failed to
assume the defense of such claim and employ counsel reasonably satisfactory to such Person. If
such defense is not assumed by the indemnifying party as permitted hereunder, the indemnifying
party will not be subject to any liability for any settlement made by the
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indemnified party without its consent (but such consent will not be unreasonably withheld or
delayed). If such defense is assumed by the indemnifying party pursuant to the provisions hereof,
such indemnifying party shall not settle or otherwise compromise the applicable claim unless (i)
such settlement or compromise contains a full and unconditional release of the indemnified party or
(ii) the indemnified party otherwise consents in writing, which consent shall not be unreasonably
withheld or delayed. An indemnifying party who is not entitled to, or elects not to, assume the
defense of a claim will not be obligated to pay the fees and expenses of more 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, in which
event the indemnifying party shall be obligated to pay the reasonable fees and disbursements of
such additional counsel or counsels.
(d) If the indemnification provided for in this Section 6 from the indemnifying party is
unavailable to an indemnified party hereunder in respect of any losses, claims, damages,
liabilities or expenses referred to therein, then the indemnifying party, in lieu of indemnifying
such indemnified party, shall contribute to the amount paid or payable by such indemnified party as
a result of such losses, claims, damages, liabilities or expenses in such proportion as is
appropriate to reflect the relative fault of the indemnifying party and indemnified parties in
connection with the actions which resulted in such losses, claims, damages, liabilities or
expenses, as well as any other relevant equitable considerations. The relative fault of such
indemnifying party and indemnified parties shall be determined by reference to, among other things,
whether any action in question, including any untrue or alleged untrue statement of a material fact
or omission or alleged omission to state a material fact, has been made by, or relates to
information supplied by, such indemnifying party or indemnified parties, and the parties’ relative
intent, knowledge, access to information and opportunity to correct or prevent such action. The
amount paid or payable by a party as a result of the losses, claims, damages, liabilities and
expenses referred to above shall be deemed to include any legal or other fees or expenses
reasonably incurred by such party in connection with any investigation or proceeding.
The parties hereto agree that it would not be just and equitable if contribution pursuant to
this Section 6(d) were determined by pro-rata allocation or by any other method of allocation which
does not take account of the equitable considerations referred to in the immediately preceding
paragraph. No Person guilty of fraudulent misrepresentation (within the meaning of Section 11(f)
of the Securities Act) shall be entitled to contribution from any Person who was not guilty of such
fraudulent misrepresentation.
7. Certain Limitations on Registration Rights. Notwithstanding the other provisions
of this Agreement:
(a) Company shall not be obligated to register the Registrable Securities of any Holder if, in
the opinion of counsel to Company reasonably satisfactory
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to the Holder and its counsel (or, if the Holder has engaged an investment banking firm, to
such investment banking firm and its counsel), the sale or other disposition of such Holder’s
Registrable Securities, in the manner proposed by such Holder (or by such investment banking firm),
may be effected without registering such Registrable Securities under the Securities Act; and
(b) Company shall not be obligated to register the Registrable Securities of any Holder
pursuant to Section 2 if Company has had a registration statement, under which such Holder had a
right to have its Registrable Securities included pursuant to Section 2 or 3, declared effective
within six months prior to the date of the request pursuant to Section 2; provided,
however, that if any Holder elected to have shares of its Registrable Securities included
under such registration statement but some or all of such shares were excluded pursuant to the
penultimate sentence of Section 3, then such six-month period shall be reduced to three months.
(c) Company shall have the right to delay the filing or effectiveness of a registration
statement required pursuant to Section 2 hereof or to suspend any Holder’s rights to make sales
pursuant to any effective registration statement during one or more periods aggregating not more
than 120 days in any twelve-month period in the event that (i) Company would, in accordance with
the advice of its counsel, be required to disclose in the prospectus information not otherwise then
required by law to be publicly disclosed and (ii) in the judgment of Company’s board of directors,
there is a reasonable likelihood that such disclosure, or any other action to be taken in
connection with the prospectus, would materially and adversely affect any existing or prospective
material business situation, transaction or negotiation or otherwise materially and adversely
affect Company.
8. Selection of Managing Underwriters. The managing underwriter or underwriters for
any offering of Registrable Securities to be registered pursuant to Section 2 shall be selected by
the holders of a majority of the Registrable Securities being so registered and shall be reasonably
acceptable to Company.
9. Interpretive Matters. Unless otherwise expressly provided or the context otherwise
requires, for purposes of this Agreement the following rules of interpretation apply:
(a) When calculating the period of time before which, within which or following which any act
is to be done or step taken pursuant to this Agreement, the date that is the reference date in
calculating such period is excluded. If the last day of such period is a non-Business Day, the
period in question ends on the next succeeding Business Day.
(b) Any reference in this Agreement to gender includes all genders, and words imparting the
singular number also include the plural and vice versa.
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(c) All references in this Agreement to any “Article,” or “Section,” are to the corresponding
Article or Section of this Agreement.
(d) The words “herein,” “hereinafter,” “hereof,” and “hereunder” refer to this Agreement as a
whole and not merely to a subdivision in which such words appear unless the context otherwise
requires.
(e) The word “including” or any variation thereof means “including, but not limited to,” and
does not limit any general statement that it follows to the specific or similar items or matters
immediately following it.
10. Miscellaneous.
(a) No Inconsistent Agreements. Company will not hereafter enter into any agreement
with respect to its securities which is inconsistent with the rights granted to the Holders in this
Agreement. Except for the Registration Rights Agreement, dated November 24, 2004, by and among
Company and the parties thereto, with respect to the Common Stock issuable upon conversion of
Company’s Senior Convertible Notes, Company has not previously entered into any agreement with
respect to any of its securities granting any registration rights to any Person which is effective
as of the date hereof.
(b) Remedies. Each Holder, in addition to being entitled to exercise all rights
granted by law, including recovery of damages, will be entitled to specific performance of its
rights under this Agreement. Company agrees that monetary damages would not be adequate
compensation for any loss incurred by reason of a breach by it of the provisions of this Agreement
and hereby agrees to waive the defense in any action for specific performance that a remedy at law
would be adequate. In any action or proceeding brought to enforce any provision of this Agreement
or where any provision hereof is validly asserted as a defense, the successful party shall be
entitled to recover reasonable attorneys’ fees in addition to any other available remedy.
(c) Amendments and Waivers. Except as otherwise provided herein, the provisions of
this Agreement may not be amended, modified or supplemented, and waivers or consents to departure
from the provisions hereof may not be given unless Company has obtained the written consent of the
Majority Holders; provided that if any such amendment, modification, supplement, waiver,
consent or departure would adversely affect the rights, preferences or privileges of any Holder
disproportionately with respect to the rights, preferences and privileges of the other Holders,
such Holder’s consent in writing shall be required.
(d) Notice Generally. Any notice, demand, request, consent, approval, declaration,
delivery or other communication hereunder to be made pursuant to the provisions of this Agreement
shall be sufficiently given or made if in writing and either delivered in person with receipt
acknowledged or sent by registered or certified
12
mail, return receipt requested, postage prepaid, or by telecopy and confirmed by telecopy
answerback, addressed as follows:
(i) If to any Holder, at its last known address appearing on the books of Company
maintained for such purpose.
(ii) If to Company, at
Integrated Electronic Services, Inc.
0000 Xxxx Xxxx Xxxxx
Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attention: General Counsel
Telecopy Number: (000) 000-0000
0000 Xxxx Xxxx Xxxxx
Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attention: General Counsel
Telecopy Number: (000) 000-0000
or at such other address as may be substituted by notice given as herein provided. The giving of
any notice required hereunder may be waived in writing by the party entitled to receive such
notice. Every notice, demand, request, consent, approval, declaration, delivery or other
communication hereunder shall be deemed to have been duly given or served on the date on which
personally delivered, with receipt acknowledged, telecopied and confirmed by telecopy answerback or
three Business Days after the same shall have been deposited in the United States mail.
(e) Rule 144. So long as Company is subject to the reporting requirements under the
Exchange Act, it shall comply with such requirements so as to permit sales of Registrable
Securities by the holders thereof pursuant to Rule 144 under the Securities Act.
(f) Successors and Assigns. This Agreement shall inure to the benefit of and be
binding upon the successors and permitted assigns of each of the parties hereto including any
person to whom Registrable Securities are transferred and becomes an Additional Holder in
accordance with this Agreement.
(g) Headings. The headings in this Agreement are for convenience of reference only
and shall not limit or otherwise affect the meaning hereof.
(h) Governing Law; Jurisdiction; Jury Waiver. This Agreement shall be governed by,
construed and enforced in accordance with the laws of the State of New York without giving effect
to the conflict of laws provisions thereof. Each of the parties hereby submits to non-exclusive
personal jurisdiction and waives any objection as to venue in the County of New York, State of New
York. Service of process on the parties in any action arising out of or relating to this Agreement
shall be effective if mailed to the parties in accordance with Section 10(d) hereof. The parties
hereto waive all right to trial by jury in any action or proceeding to enforce or defend any rights
hereunder.
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(i) Severability. Wherever possible, each provision of this Agreement shall be
interpreted in such manner as to be effective and valid under applicable law, but if any provision
of this Agreement shall be prohibited by or invalid under applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of
such provision or the remaining provisions of this Agreement.
(j) Entire Agreement. This Agreement represents the complete agreement and
understanding of the parties hereto in respect of the subject matter contained herein and therein.
This Agreement supersedes all prior agreements and understandings between the parties with respect
to the subject matter hereof.
(k) Counterparts. This Agreement may be executed in any number of counterparts and by
the parties hereto in separate counterparts (including by facsimile), each of which when so
executed shall be deemed to be an original and all of which taken together shall constitute one and
the same agreement.
(l) Termination. Company’s obligations under this Agreement shall cease with respect
to any Person when such Person ceases to be a Holder. Notwithstanding the foregoing, Company’s
obligations under Section 5 and Section 6 shall survive in accordance with their terms.
(m) Holdback. Each Holder agrees, unless otherwise agreed to by the managing
underwriter for any underwritten offering pursuant to this Agreement, and only if such Holder is
participating in such offering, not to effect any sale or distribution of any equity securities of
Company or securities convertible into or exchangeable or exercisable for equity securities of
Company, including any sale under Rule 144 under the Securities Act, during the period commencing
10 days prior to the date on which an underwritten offering of Common Stock pursuant to Section 2
or 3 commences and until 90 days after the date on which a prospectus is filed with the Commission
with respect to the pricing of such underwritten offering (or such shorter period as the
underwriters may require), except as part of such underwritten offering or to the extent that such
Holder is prohibited by applicable law from agreeing to withhold securities from sale or is acting
in its capacity as a fiduciary or an investment adviser. A Holder that is prohibited by applicable
law from agreeing to withhold securities from sale or is acting in its capacity as a fiduciary or
an investment adviser shall, if requested by Company not more than 30 days before the commencement
of such an underwritten offering, notify Company in writing of such prohibition at least 10 days
before the commencement of such underwritten offering. Without limiting the scope of the term
“fiduciary,” a Holder shall be deemed to be acting as a fiduciary or an investment adviser if its
actions or the securities proposed to be sold are subject to the Employee Retirement Income
Security Act of 1974, as amended, the Investment Company Act of 1940, as amended, or the Investment
Advisers Act of 1940, as amended, or if such securities are held in a separate account under
applicable insurance law or regulation.
14
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above
written.
| COMPANY | ||||
| INTEGRATED ELECTRICAL SERVICES, INC. | ||||
| By: | /s/ Xxxx X. Xxxxxxx | |||
| Name: Xxxx X. Xxxxxxx | ||||
| Title: Senior Vice President | ||||
| HOLDERS | ||||
| TONTINE CAPITAL PARTNERS, L.P. | ||||
| TONTINE PARTNERS, L.P. | ||||
| TONTINE OVERSEAS ASSOCIATES, L.L.C. | ||||
| XXXXXXX X. XXXXXXX | ||||
| By: | /s/ Xxxxxxx X. Xxxxxxx | |||
| Xxxxxxx X. Xxxxxxx, individually, | ||||
| and as managing member of | ||||
| Tontine Capital Management, L.L.C., | ||||
| general partner of Tontine Capital Partners, L.P., and | ||||
| as managing member of Tontine Management, L.L.C., | ||||
| general partner of Tontine Partners, L.P., and as | ||||
| managing member of Tontine Overseas Associates, L.L.C. | ||||
| SOUTHPOINT MASTER FUND, LP | ||||
| By: | Southpoint GP, LP, its general partner |
|||
| By: | Southpoint GP, LLC, its general partner | |||
| By: | /s/ Xxxxxx X. Xxxxx | |||
| Xxxxxx X. Xxxxx, Member | ||||
[Signature
Page to the Registration Rights Agreement]
|
||||
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