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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report: July 14, 1998
Commission File No. 001-13783
INTEGRATED ELECTRICAL SERVICES, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 76-0542208
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
515 Post Oak Boulevard
Suite 450
Houston, Texas 77027-9408
(Address of principal executive offices) (zip code)
Registrant's telephone number, including area code: (713) 860-1500
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On June 30, 1998, Integrated Electrical Services, Inc. (the "Company")
consummated the acquisition of all of the issued and outstanding capital stock
of Mark Henderson, Incorporated, Holland Electrical Systems, Inc., and Spectrol,
Inc. (collectively, the "Businesses Acquired"). The Businesses Acquired perform
electrical contracting in Atlanta, Georgia, with additional operations in North
Carolina. The consideration paid by the Company for the Businesses Acquired was
determined through negotiations between representatives of the Company and the
owners of the Businesses Acquired and consisted of an aggregate of 684,211
shares of common stock of the Company and approximately $10.2 million in cash.
The cash portion of the consideration paid for the Businesses Acquired was
funded through borrowings under the Company's $70.0 million credit facility.
The Company intends to continue using the assets of the Businesses Acquired in
the electrical contracting business.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(A) FINANCIAL STATEMENTS OF BUSINESSES ACQUIRED
The Company believes that it is impractical to provide financial statements
of the Businesses Acquired on the date of this filing, and will, if required,
file such financial statements when available but not later than 60 days after
the date on which this Current Report on Form 8-K must be filed.
(B) PRO FORMA FINANCIAL INFORMATION
The Company believes that it is impractical to provide pro forma financial
information reflecting the Businesses Acquired, and will, if required, file such
financial information when available but not later than 60 days after the date
on which this Current Report on Form 8-K must be filed.
(C) EXHIBITS
2.1 Agreement and Plan of Merger dated as of June 18, 1998 among
Integrated Electrical Services, Inc., Mark Henderson Acquisition
Corporation, Mark Henderson, Incorporated, and Mark Henderson and Bill
Collins.
2.2 Agreement and Plan of Merger dated as of June 18, 1998 among
Integrated Electrical Services, Inc., Mark Henderson Acquisition
Corporation, Holland Electrical Systems, Inc. and Amy B. Henderson and
Mary Sue Holland.
2.3 Agreement and Plan of Merger dated as of June 18, 1998 among
Integrated Electrical Services, Inc., Mark Henderson Acquisition
Corporation, Spectrol, Inc. and David Lytle.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
INTEGRATED ELECTRICAL SERVICES, INC.
Date: July 14, 1998 By: /s/ Jim P. Wise
------------------------------------
Jim P. Wise
Senior Vice President and Chief Financial
Officer
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EXHIBIT INDEX
2.1 Agreement and Plan of Merger dated as of June 18, 1998 among Integrated Electrical Services,
Inc., Mark Henderson Acquisition Corporation, Mark Henderson, Incorporated, and Mark
Henderson and Bill Collins.
2.2 Agreement and Plan of Merger dated as of June 18, 1998 among Integrated Electrical Services,
Inc., Mark Henderson Acquisition Corporation, Holland Electrical Systems, Inc. and
Amy B. Henderson and Mary Sue Holland.
2.3 Agreement and Plan of Merger dated as of June 18, 1998 among Integrated Electrical Services,
Inc., Mark Henderson Acquisition Corporation, Spectrol, Inc. and David Lytle.
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EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
DATED AS OF
JUNE 18, 1998
AMONG
INTEGRATED ELECTRICAL SERVICES, INC.,
MARK HENDERSON ACQUISITION CORPORATION,
MARK HENDERSON, INCORPORATED
AND
MARK HENDERSON AND BILL COLLINS
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TABLE OF CONTENTS
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ARTICLE I The Merger..............................................................................................1
Section 1.1 The Merger................................................................................1
Section 1.2 Conversion of Shares......................................................................2
Section 1.3 Surrender and Payment.....................................................................2
Section 1.4 Withholding Rights........................................................................2
Section 1.5 Lost Certificates.........................................................................3
Section 1.6 Other Documents to be Delivered Immediately Prior to the
Effective Time.........................................................................3
Section 1.7 Conditions to the Obligations of the Company Stockholders.................................4
Section 1.8 Conditions to the Obligations of IES......................................................4
Section 1.9 Termination...............................................................................5
ARTICLE II The Surviving Corporation..............................................................................6
Section 2.1 Certificate of Incorporation..............................................................6
Section 2.2 Bylaws....................................................................................6
Section 2.3 Directors and Officers....................................................................6
ARTICLE III Representations and Warranties of the Company Stockholders............................................6
Section 3.1 Organization and Qualification............................................................6
Section 3.2 Capitalization; Ownership.................................................................6
Section 3.3 Authorization.............................................................................7
Section 3.4 Consents and Approvals; No Violation......................................................7
Section 3.5 Affiliate Relationships...................................................................8
Section 3.6 Financial Statements......................................................................8
Section 3.7 Undisclosed Liabilities...................................................................9
Section 3.8 Accounts and Notes Receivables............................................................9
Section 3.9 Assets....................................................................................9
Section 3.10 Material Contracts, Commitments and Customers...........................................10
Section 3.11 Operating Authority.....................................................................11
Section 3.12 Bank Account Information................................................................11
Section 3.13 Conduct of Business Since Company Unaudited Balance Sheet Date..........................11
Section 3.14 Litigation; Orders......................................................................11
Section 3.15 Labor Matters...........................................................................12
Section 3.16 Compliance with Laws....................................................................12
Section 3.17 Insurance...............................................................................12
Section 3.18 Environmental Matters...................................................................12
Section 3.19 Taxes...................................................................................13
Section 3.20 Employee Benefit Plans..................................................................15
Section 3.21 Brokerage Fees and Commissions..........................................................17
Section 3.22 Tax Treatment...........................................................................17
Section 3.23 Section 368(a)(2)(D) Representations....................................................17
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ARTICLE IV Representations and Warranties of IES.................................................................19
Section 4.1 Organization and Qualification...........................................................19
Section 4.2 Capitalization...........................................................................19
Section 4.3 Authorization............................................................................19
Section 4.4 Consents and Approval; No Violation......................................................20
Section 4.5 SEC Filings..............................................................................20
Section 4.6 Tax Treatment............................................................................21
Section 4.7 Section 368(a)(2)(D)Representations......................................................21
ARTICLE V Additional Covenants and Agreements....................................................................23
Section 5.1 Reasonable Best Efforts..................................................................23
Section 5.2 Certain Filings..........................................................................23
Section 5.3 Public Announcements.....................................................................23
Section 5.4 Further Assurances.......................................................................23
Section 5.5 Notices of Certain Events................................................................23
Section 5.6 Release from Guarantees..................................................................24
Section 5.7 Future Cooperation; Tax Matters..........................................................24
Section 5.8 Expenses.................................................................................24
Section 5.9 Repayment of Related Party Indebtedness..................................................24
Section 5.10 Tax-Free Organization...................................................................24
Section 5.11 FIRPTA Certificate......................................................................24
Section 5.12 Preparation and Filing of Tax Returns...................................................25
Section 5.13 Antitrust Law Compliance................................................................25
Section 5.14 Pending Closing.........................................................................25
Section 5.15 Notification of Certain Matters.........................................................28
ARTICLE VI Indemnification.......................................................................................28
Section 6.1 Indemnification by the Company Stockholders..............................................28
Section 6.2 Indemnification Related to Tax Liabilities...............................................29
Section 6.3 Indemnification by IES...................................................................29
Section 6.4 Indemnification Proceedings..............................................................29
Section 6.5 Other Remedies...........................................................................30
Section 6.6 Indemnification if Negligence of Indemnitee..............................................30
Section 6.7 No Third Party Beneficiaries.............................................................31
Section 6.8 Limitation Upon Indemnity................................................................31
ARTICLE VII Noncompetition Covenants.............................................................................31
Section 7.1 Prohibited Activities....................................................................31
Section 7.2 Equitable Relief.........................................................................32
Section 7.3 Reasonable Restraint.....................................................................32
Section 7.4 Severability; Reformation................................................................32
Section 7.5 Material and Independent Covenant........................................................32
Section 7.6 Materiality..............................................................................33
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ARTICLE VIII Applicable Securities Laws/Transfer Restrictions....................................................33
Section 8.1 Company Stockholders' Representations and Warranties Concerning
Securities...........................................................................33
Section 8.2 Transfer Restrictions....................................................................33
ARTICLE IX Nondisclosure of Confidential Information.............................................................34
Section 9.1 General..................................................................................34
Section 9.2 Equitable Relief.........................................................................34
Section 9.3 Non-Public Information...................................................................34
Section 9.4 Survival.................................................................................34
ARTICLE X Miscellaneous..........................................................................................35
Section 10.1 Governing Law...........................................................................35
Section 10.2 Entire Agreement........................................................................35
Section 10.3 Expenses and Fees.......................................................................35
Section 10.4 Notices.................................................................................35
Section 10.5 Successors and Assigns..................................................................35
Section 10.6 Headings; Definitions...................................................................36
Section 10.7 Amendments and Waivers..................................................................36
Section 10.8 Construction of Certain Provisions......................................................36
Section 10.9 Survival of Representations and Warranties..............................................36
Section 10.10 Severability...........................................................................36
Section 10.11 Jurisdiction...........................................................................37
Section 10.12 Waiver of Jury Trial...................................................................37
Section 10.13 Specific Performance...................................................................37
Section 10.14 Counterparts; Effectiveness............................................................37
Section 10.15 Mutual Indemnification Against Claims of Brokers.......................................37
Section 10.16 Definitions and Usage..................................................................37
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EXHIBITS AND SCHEDULES
Exhibit A Form of Employment Agreement
Exhibit B Form of Opinion of Counsel to Company Stockholders
Exhibit C Form of Certificate of Secretary of the Company
Exhibit D Form of Company Stockholder Release
Exhibit E Form of Company Affiliate Letter
Exhibit F Form of Company Stockholder Receipt
Exhibit G Form of Cross-Receipt
Exhibit H Form of Opinion of Andrews & Kurth, L.L.P.
Exhibit I Form of Lease Agreement
Schedule 2.3 Officers of Surviving Corporation
Schedule 3.1 Organization and Qualification of Company and Subsidiaries
Schedule 3.2(a) Ownership of Company Shares and Delivery Instructions
Schedule 3.2(b) Subsidiary Corporate History, Subsidiary Stock, Other Securities
and Non-Corporate Entity Participation
Schedule 3.4 Company Consents and Approvals; No Violation
Schedule 3.5 Affiliate Relationships
Schedule 3.6 Company Financial Statements
Schedule 3.7 Company Undisclosed Liabilities
Schedule 3.8 Company Accounts and Notes Receivables
Schedule 3.9 Company Assets
Schedule 3.10 Material Contracts, Commitments and Customers
Schedule 3.11 Company Operating Authority
Schedule 3.12 Company Bank Account Information
Schedule 3.13 Company Conduct of Business
Schedule 3.14 Company Litigation; Orders
Schedule 3.15 Company Labor Agreements
Schedule 3.17 Company Insurance
Schedule 3.18 Company Disposal Sites
Schedule 3.19 Company Taxes
Schedule 3.20 Company Employee Benefit Plans
Schedule 3.21 Company Brokerage Fees and Commissions
Schedule 4.6 IES Affiliates
Schedule 5.7 Company Stockholder Guarantees
Schedule 5.10 Repayment of Advances, Receivables and Loans
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER ("Agreement") dated as of June
18, 1998 among Integrated Electrical Services, Inc., a Delaware corporation
("IES"), MARK HENDERSON ACQUISITION CORPORATION, a Delaware corporation and a
wholly owned subsidiary of IES ("Acquisition"), MARK HENDERSON, INCORPORATED, a
Georgia corporation ("Company"), and MARK HENDERSON and BILL COLLINS, who are
all of the stockholders of the Company (together, the "Company Stockholders").
RECITALS:
WHEREAS, the Boards of Directors of IES and the Company have
determined that the combination of Acquisition and the Company is in the best
interests of the stockholders of IES and the Company, respectively;
WHEREAS, the Company Stockholders desire to sell to IES all of
the issued and outstanding shares of capital stock of the Company, free and
clear of all liens, and the Company Stockholders agree to be bound by a covenant
not to compete;
WHEREAS, IES desires to acquire such shares of capital stock
of the Company as more fully set forth herein and enforce the covenant not to
compete; and
WHEREAS, IES, the Company and the Company Stockholders intend
the combination of Acquisition and the Company, to the extent the capital stock
of the Company is exchanged for capital stock of IES and not for cash or other
property, to qualify as a tax-free reorganization under the provisions of
Section 368 of the Internal Revenue Code of 1986, as amended (the "Code"), and
the regulations thereunder; and
NOW, THEREFORE, in consideration of the mutual covenants and
agreements set forth herein, the parties hereto agree as follows:
ARTICLE I
THE MERGER
SECTION I.1 THE MERGER. (a) At the Closing (as defined) and
upon the execution of this Agreement and the delivery of the documents listed in
Section 1.6, at the Effective Time (as hereinafter defined), the Company shall
be merged (the "Merger") with and into Acquisition in accordance with the
General Corporation Law of the State of Delaware ("Delaware Law") and the laws
of the State of Georgia ("Georgia Law"), whereupon the separate existence of the
Company shall cease, and Acquisition shall be the surviving corporation (the
"Surviving Corporation").
(2) Immediately following the delivery of the documents listed in
Section 1.6, the Company and Acquisition will file a certificate of merger (the
"Delaware Certificate of Merger") with the Delaware Secretary of State, a
certificate of merger (the "Georgia Certificate of Merger")
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with the Georgia Secretary of State and make all other filings or recordings
required by Delaware Law and Georgia Law in connection with the Merger. The
Merger shall become effective at such time (the "Effective Time") as the
Delaware Certificate of Merger is duly filed with the Delaware Secretary of
State (or at such later time as may be agreed in writing by the parties hereto
and specified in the Delaware Certificate of Merger).
(3) From and after the Effective Time, the Surviving Corporation shall
possess all the rights, assets, powers, privileges, and franchises and be
subject to all of the obligations, liabilities, restrictions, and disabilities
of the Company and Acquisition, all as provided under Delaware Law and Georgia
Law.
(4) The closing of the transactions contemplated by this Agreement (the
"Closing") shall take place at the offices of IES in Houston, Texas, at 10:00
a.m., within 5 business days following the date on which regulatory approval
under the HSR Act (as defined) is received or on such other day and time as
shall be agreed to by the parties (the "Closing Date").
SECTION I.2 CONVERSION OF SHARES. At the Effective Time the
shares of common stock, $1.00 par value, of the Company ("Company Common Stock")
outstanding immediately prior to the Effective Time shall be converted into the
right to receive, without interest, an aggregate of (i) 643,663 shares of common
stock, $0.01 par value, of IES ("IES Common Stock") and (ii) $12,986,400 less
the sum of (A) the broker fee payable to Geneva Finance Corporation with respect
to the transaction contemplated hereby (which will be paid by IES at the
Effective Time) and (B) any cash distributions from the Company to the Company
Stockholders made after February 28, 1998 ((i) and (ii) being collectively the
"Merger Consideration").
SECTION I.3 SURRENDER AND PAYMENT. At the Effective Time, the
Company Stockholders will deliver to IES the certificates listed on Schedule
3.2(a) (the "Certificates") representing all of the outstanding shares of
Company Common Stock, and IES will deliver, in exchange therefor, the Merger
Consideration divided among the Company Stockholders in accordance with the
written instructions provided in Schedule 3.2(a). The Certificates will be duly
endorsed (or accompanied by duly executed stock powers), with signatures of
those Company Stockholders not present at the closing guaranteed by a commercial
bank or by a member firm of the New York Stock Exchange (the "NYSE") for any
Company Stockholder that is not present at the closing of the Merger.
SECTION I.4 WITHHOLDING RIGHTS. Each of the Surviving
Corporation and IES shall be entitled to deduct and withhold from the
consideration otherwise payable to any Person (as defined in Section 10.16)
pursuant to this Article I such amounts as it is required to deduct and withhold
with respect to the making of such payment under any provision of federal,
state, local, or foreign tax law. To the extent that amounts are so withheld by
the Surviving Corporation or IES, as the case may be, such withheld amounts
shall be treated for all purposes of this Agreement as having been paid to the
holder of the shares of Company Common Stock in respect of which such deduction
and withholding was made by the Surviving Corporation or IES, as the case may
be.
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SECTION I.5 LOST CERTIFICATES. If any Certificate shall have
been lost, stolen, or destroyed, upon the making of an affidavit of that fact by
the Person claiming such Certificate to be lost, stolen, or destroyed and, if
required by the Surviving Corporation, the posting by such Person of a bond, in
such reasonable amount as the Surviving Corporation may direct, as indemnity
against any claim that may be made against it with respect to such Certificate,
IES will issue in exchange for such lost, stolen, or destroyed Certificate the
Merger Consideration to be paid in respect of the shares of Company Common Stock
represented by such Certificates as contemplated by this Article I.
SECTION I.6 OTHER DOCUMENTS TO BE DELIVERED IMMEDIATELY
PRIOR TO THE EFFECTIVE TIME.
(5) At the Closing and immediately prior to the Effective Time, the
Company and the Company Stockholders will deliver to IES:
(1) Employment Agreements (the "Employment Agreements"), each
in the form attached hereto as Exhibit A, for each of the following
employees of the Company:
(A) Mark Henderson; and
(B) Bill Collins;
(2) an opinion of counsel to the Company Stockholders in the
form attached hereto as Exhibit B;
(3) a Certificate of the Secretary of the Company in the form
attached hereto as Exhibit C;
(4) a release executed by the Company Stockholders in the form
attached hereto as Exhibit D;
(5) the minute book and corporate seal of the Company;
(6) letters from the affiliates of the Company in the form
attached hereto as Exhibit E;
(7) receipts executed by the Company Stockholders in the form
attached hereto as Exhibit F;
(8) a cross-receipt executed by the Company Stockholders in
the form attached hereto as Exhibit G;
(9) an opinion of counsel to the Company Stockholders
regarding tax matters; and
(10) FIRPTA certificates from each Company Stockholder.
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(6) At the Closing and immediately prior to the Effective Time, IES
will deliver to the Company Stockholders:
(1) the Employment Agreements executed by a duly authorized
representative of IES on behalf of the Surviving Corporation for each
of the employees listed in Section 1.6(a)(i) above;
(2) an opinion of Andrews & Kurth L.L.P. in the form attached
hereto as Exhibit H;
(3) a cross-receipt executed by IES in the form attached
hereto as Exhibit G;
(4) a lease agreement in the form attached hereto as Exhibit
I.
SECTION I.7 CONDITIONS TO THE OBLIGATIONS OF THE COMPANY
STOCKHOLDERS. The obligations of the Company Stockholders to consummate the
Merger are subject to the fulfillment, at or before the Closing, of all of the
following conditions, any one or more of which may be waived by the Company
Stockholders.
(7) The representations and warranties of IES contained in this
Agreement shall be true as of the Closing.
(8) All of the obligations of IES to be performed at or before the
Closing pursuant to the terms of this Agreement shall have been duly performed.
(9) The documents necessary to consummate the Merger shall have been
filed with the Secretary of State of the State of Delaware and the Secretary of
State of the State of Georgia.
(10) The Company Stockholders shall have received an opinion of counsel
regarding matters.
SECTION I.8 CONDITIONS TO THE OBLIGATIONS OF IES. The
obligations of IES to consummate the Merger are subject to the fulfillment, at
or before the Closing, of all the following conditions, any one or more of which
may be waived by IES.
(11) The representations and warranties of the Company Stockholders
contained in this Agreement shall be true as of the Closing, subject to changes
in the Schedules that have been approved in writing by IES.
(12) All of the obligations of the Company and the Company Stockholders
to be performed at or before the Closing pursuant to the terms of this Agreement
shall have been duly performed, including without limitation those set forth in
Article I hereof.
(13) The documents necessary to consummate the Merger shall have been
filed with the Secretary of State of the State of Delaware and the Secretary of
State of the State of Georgia.
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(14) All waiting, review and investigation periods (and any extensions
thereof) applicable to the consummation of the Merger under the HSR Act shall
have expired or been terminated.
(15) IES shall have received a receipt from Geneva Finance Corporation
evidencing payment of its broker fee.
SECTION I.9 TERMINATION. (a) This Agreement may be terminated
at any time prior to the Closing solely:
(1) by mutual consent of IES and the Company Stockholders
(2) by all of the Company Stockholders on the one hand, or by
IES (acting through its board of directors), on the other hand, if the
transactions contemplated by this Agreement to take place at the
Closing shall not have been consummated by September 30, 1998, unless
the failure of such transactions to be consummated is due to the
willful failure of the party seeking to terminate this Agreement to
perform any of its obligations under this Agreement to the extent
required to be performed by it prior to the Closing; or
(3) by the Company Stockholders on the one hand, or by IES, on
the other hand, if a material breach or default shall be made by the
other party in the observance or in the due and timely performance of
any of the covenants or agreements contained herein, and the curing or
waiver of such default shall not have been made on or before the
Closing.
(16) The termination of this Agreement will in no way limit any
obligation or liability of any party based on or arising from a breach or
default by such party with respect to any of its representations, warranties,
covenants or agreements contained in this Agreement.
ARTICLE II
THE SURVIVING CORPORATION
SECTION II.1 CERTIFICATE OF INCORPORATION. The certificate of
incorporation of Acquisition in effect at the Effective Time shall be the
certificate of incorporation of the Surviving Corporation.
SECTION II.2 BYLAWS. The bylaws of Acquisition in effect at
the Effective Time shall be the bylaws of the Surviving Corporation until
amended in accordance with applicable law.
SECTION II.3 DIRECTORS AND OFFICERS. From and after the
Effective Time, until successors are duly elected or appointed and qualified in
accordance with applicable law, (i) the director of Acquisition at the Effective
Time shall be the sole director of the Surviving Corporation and (ii) the
officers of the Surviving Corporation shall be as set forth on Schedule 2.3
hereto.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE
COMPANY STOCKHOLDERS
The Company Stockholders jointly and severally represent and
warrant to IES as follows:
SECTION III.1 ORGANIZATION AND QUALIFICATION. The Company, and
each of its subsidiaries, if any, are listed on Schedule 3.1 (the
"Subsidiaries"), and each is a corporation duly organized, validly existing, and
in good standing under the laws of the state of its incorporation and has the
requisite corporate power to carry on its business as it is now being conducted.
The Company, and each of the Subsidiaries, is duly qualified to conduct business
as a foreign corporation in every state of the United States in which its
ownership or lease of property or the conduct of its business and operations
makes such qualification necessary, except for such states in which the
Company's or the Subsidiaries' failure to be so qualified is not reasonably
expected to have, individually or in the aggregate, a Company Material Adverse
Effect (as defined in Section 10.16). Schedule 3.1 contains a list of all
jurisdictions in which the Company and each of the Subsidiaries is authorized or
qualified to do business. The Company has heretofore delivered to IES true and
complete copies of the charter and bylaws of the Company and each of the
Subsidiaries, in each instance including any amendments thereto, as currently in
effect.
SECTION III.2 CAPITALIZATION; OWNERSHIP. (a) The authorized
capital stock of the Company consists of 100,000 shares of Company Common Stock,
of which 1,000 shares are issued and outstanding (the "Company Shares"). The
Company Shares are all of the issued and outstanding shares of capital stock of
the Company and have been duly authorized and validly issued and are fully paid
and nonassessable and free of preemptive rights. There are not, as of the date
hereof, any outstanding or authorized subscriptions, options, warrants, calls,
rights, commitments, or any other agreements of any character (any of the
foregoing, a "Commitment") obligating the Company to issue any additional shares
of capital stock of the Company, or any other securities convertible into or
evidencing the right to subscribe for any shares of capital stock of the
Company. The Company Stockholders own the respective number of shares of Company
Common Stock set forth on Schedule 3.2(a) attached hereto, free and clear of all
Liens (as defined in Section 10.16). Each of the Company Stockholders has full
legal right, power and authority to exchange, assign and transfer or cause to be
exchanged, assigned or transferred their respective shares of Company Common
Stock. The delivery to IES of the Company Shares pursuant to the terms of this
Agreement will transfer valid title thereto, free and clear of all Liens.
(17) The authorized capital stock of each of the Subsidiaries consists
of the number and type of shares of capital stock set forth on Schedule 3.2(b)
(collectively, "Subsidiary Stock"). Schedule 3.2(b) also sets forth the number
and type of shares of Subsidiary Stock which are issued and outstanding
(collectively, "Subsidiary Shares"), the securities of any other corporation
owned by the Company or any of the Subsidiaries, as well as the names of any
joint venture, partnership or other noncorporate entity in which the Company or
any of the Subsidiaries is a participant. The Subsidiary Shares are all of the
issued and outstanding shares of capital stock of the Subsidiaries and are
directly or ultimately owned by the Company, free and clear of any Liens, and
have been duly authorized and validly issued and are fully paid and
nonassessable and free of preemptive rights.
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Also set forth on Schedule 3.2(b) is a listing of all names under which the
Company and the Subsidiaries have done business, as well as the names of all
predecessors of the Company and the Subsidiaries, including the names of any
entities from whom the Company or the Subsidiaries previously acquired
significant assets. There are not, as of the date hereof, any Commitments
obligating any of the Subsidiaries to issue any additional shares of capital
stock of any such Subsidiaries, or any other securities convertible into or
evidencing the right to subscribe for any shares of capital stock of any such
Subsidiary.
SECTION III.3 AUTHORIZATION. The Company has the requisite
corporate power and authority to execute and deliver this Agreement and to
consummate the transactions contemplated by this Agreement. The Company
Stockholders and the Board of Directors of the Company have by unanimous written
consent (a) determined that participating in the Merger is in the best interests
of the Company and its stockholders and (b) approved this Agreement and the
Merger. No other corporate proceedings on the part of the Company or the Company
Stockholders are necessary to authorize the execution and delivery of this
Agreement or the consummation by the Company and the Company Stockholders of the
transactions contemplated hereby. This Agreement has been duly authorized,
executed, and delivered by the Company and the Company Stockholders and
constitutes the valid and binding obligation of the Company and the Company
Stockholders, enforceable against the Company and the Company Stockholders in
accordance with its terms.
SECTION III.4 CONSENTS AND APPROVALS; NO VIOLATION. Neither
the execution and delivery of this Agreement by the Company or the Company
Stockholders, nor the consummation by the Company or the Company Stockholders of
the transactions contemplated by this Agreement, will: (a) require any consent,
approval, authorization, or permit of, or filing with or notification to, any
Governmental Authority, except (i) the filing of a Certificate of Merger in
accordance with Delaware Law and Georgia Law, (ii) any regulatory approvals or
routine governmental consents normally acquired after the consummation of
transactions such as transactions of the nature contemplated by this Agreement,
which consents and approvals are listed on Schedule 3.4, (iii) where the failure
to obtain such consent, approval, authorization, or permit, or to make such
filing or notification, is not reasonably expected to have, individually or in
the aggregate, a Company Material Adverse Effect or prevent or delay, in any
material respect, the consummation of the transactions contemplated by this
Agreement, or (iv) approvals required pursuant to the HSR Act; (b) result in a
default (or give rise to any right of termination, cancellation, or
acceleration) under any of the terms, conditions, or provisions of any contract,
commitment or similar agreement to which the Company or any of the Subsidiaries
is a party, except (i) as set forth on Schedule 3.4 or (ii) for such defaults
(or rights of termination, cancellation, or acceleration) as to which requisite
waivers or consents have been obtained or which are not reasonably expected to
have, individually or in the aggregate, a Company Material Adverse Effect or
prevent or delay, in any material respect, the consummation of the transactions
contemplated by this Agreement; or (c) assuming compliance with the matters
referred to in Section 3.4(a), violate any order, writ, injunction, decree,
statute, rule, or regulation applicable to the Company, any of the Subsidiaries,
or any of their assets, except for violations which are not reasonably expected
to have, individually or in the aggregate, a Company Material Adverse Effect or
prevent or delay, in any material respect, the consummation of the transactions
contemplated by this Agreement. The Company is not in violation of its charter
or bylaws.
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SECTION III.5 AFFILIATE RELATIONSHIPS. Except as set forth on
Schedule 3.5, none of the Company Stockholders nor any affiliate of any of the
Company Stockholders, and no director, officer, employee or agent of or
consultant to the Company or any of the Subsidiaries, owns, directly or
indirectly, in whole or in part, any property, assets or right, tangible or
intangible, which is associated with any property, asset or right owned by the
Company or any of the Subsidiaries or which the Company or any of the
Subsidiaries is operating or using or the use of which is necessary for its
business. Also included in Schedule 3.5 is disclosure of any relationships which
any of the Company Stockholders have, or any director, officer, employee, or
agent of or consultant to the Company or any of the Subsidiaries has, with the
Company or any of the Subsidiaries or any other corporation, partnership, firm,
association or business organization, entity or enterprise which is a
competitor, potential competitor, supplier or customer of the Company or any of
the Subsidiaries. The Persons named on Schedule 3.5 are the only Persons who may
be deemed affiliates of the Company under Rule 145 of the Securities Act of
1933, as amended (the "1933 Act").
SECTION III.6 FINANCIAL STATEMENTS. Attached as Schedule 3.6
are (a) the audited consolidated balance sheet, statement of income and
statement of cash flows of the Company and the Subsidiaries as of and for the
years ended February 28, 1995, 1996 and 1997 and the short fiscal period ended
September 30, 1997 (the "Company Audited Financial Statements") and (b) the
unaudited consolidated balance sheet, statement of income and statement of cash
flows of the Company and the Subsidiaries for the six months ended March 31,
1998 (the "Company Unaudited Financial Statements"). The Company Audited
Financial Statements and the Company Unaudited Financial Statements present
fairly the consolidated financial position, results of operations, and changes
in financial position of the Company and the Subsidiaries as of the respective
dates or for the respective periods to which they apply in accordance with
United States generally accepted accounting principles, consistently applied
("GAAP").
SECTION III.7 UNDISCLOSED LIABILITIES. Schedule 3.7 sets forth
an accurate list as of the Company Unaudited Balance Sheet Date (as defined
below) of (i) all liabilities of the Company and the Subsidiaries which are
reflected in the balance sheet contained in the Company Unaudited Financial
Statements and (ii) any liabilities of any kind of the Company or the
Subsidiaries which are not reflected in the balance sheet included in the
Company Unaudited Financial Statements. Except as set forth on Schedule 3.7 or
as reflected, reserved against, or otherwise disclosed in the Company Unaudited
Financial Statements, neither the Company nor any of the Subsidiaries had, at
the date of the unaudited balance sheet included in the Company Unaudited
Financial Statements (the "Company Unaudited Balance Sheet Date") and do not
have, at the date hereof, any liabilities or obligations, whether accrued,
contingent, absolute, determined, determinable or otherwise, that may have,
individually or in the aggregate, a Company Material Adverse Effect.
SECTION III.8 ACCOUNTS AND NOTES RECEIVABLES. Schedule 3.8
sets forth an accurate list as of the Company Unaudited Balance Sheet Date of
the accounts and notes receivable of the Company and the Subsidiaries, including
receivables from and advances to employees of the Company, employees of the
Subsidiaries and the Company Stockholders. Included in Schedule 3.8 is an aging
of all accounts and notes receivable showing amounts due in 30-day aging
categories.
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The trade and other accounts receivable of the Company and the Subsidiaries
which are classified as current assets on the balance sheet as of the Company
Unaudited Balance Sheet Date are bona fide receivables, were acquired in the
ordinary course of business, are stated in accordance with GAAP and, subject to
the reserve for doubtful accounts, need not be written-off as uncollectible.
Except to the extent reflected on Schedule 3.8, such accounts and notes are,
subject to the reserve for doubtful accounts, collectible in the amount shown on
Schedule 3.8.
SECTION III.9 ASSETS. Schedule 3.9 sets forth an accurate list
of all real and personal property included in "property and equipment" on the
balance sheet of the Company as of the Company Unaudited Balance Sheet Date and
all other tangible assets of the Company with a value in excess of $5,000 (i)
owned by the Company or the Subsidiaries as of the Company Unaudited Balance
Sheet Date and (ii) acquired since the Company Unaudited Balance Sheet Date,
including in each case true, complete and correct copies of leases for
significant equipment and for all real property leased by the Company or the
Subsidiaries and descriptions of all real property on which buildings,
warehouses, workshops, garages and other structures used in the operation of the
business of the Company and the Subsidiaries are situated. Schedule 3.9
indicates which assets are currently owned, or were formerly owned, by the
Company Stockholders or affiliates of the Company or the Company Stockholders.
Except as specifically identified on Schedule 3.9, all of the tangible assets,
vehicles and other significant machinery and equipment of the Company and the
Subsidiaries listed on Schedule 3.9 are in good working order and condition,
ordinary wear and tear excepted, and have been maintained in accordance with
standard industry practices. All fixed assets used by the Company and the
Subsidiaries that are material to the operation of the Company's and the
Subsidiaries' business are either owned by the Company or the Subsidiaries or
leased under an agreement identified on Schedule 3.9. All leases set forth on
Schedule 3.9 are in full force and effect and constitute valid and binding
agreements of the parties thereto in accordance with their respective terms.
Schedule 3.9 contains true, complete and correct copies of all
title reports and title insurance policies received or owned by the Company and
the Subsidiaries. Schedule 3.9 also includes a summary description of all plans
or projects involving the opening of new operations, expansion of existing
operations or the acquisition of any real property or existing business, to
which management of the Company and the Subsidiaries has devoted effort or
expenditure in the two-year period prior to the date of this Agreement, which if
pursued by the Company or the Subsidiaries would require additional expenditures
of capital.
The Company and the Subsidiaries have good and indefeasible
title to the tangible and intangible personal property and the real property
owned and used in their business, including the properties identified on
Schedule 3.9, subject to no mortgage, pledge, lien, claim, conditional sales
agreement, encumbrance or charge, except for liens reflected on Schedule 3.9,
liens for current taxes not yet payable and assessments not in default,
easements for utilities serving only the property, and easements, covenants and
restrictions and other exceptions to title shown of record in the appropriate
public records in the jurisdictions in which the properties, assets and
leasehold estates are located, which do not adversely affect the Company's or
the Subsidiaries' use of the property.
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SECTION III.10 MATERIAL CONTRACTS, COMMITMENTS AND CUSTOMERS.
Schedule 3.10 sets forth an accurate list as of the Company Unaudited Balance
Sheet Date of (i) all material contracts, commitments and similar agreements to
which the Company or any of the Subsidiaries is a party or by which they or any
of their property is bound (including, but not limited to, joint venture or
partnership agreements, contracts with any labor organizations, loan agreements,
indemnity or guaranty agreements, bonds, mortgages, liens, pledges or other
security agreements) and the Company Stockholders have delivered true copies of
such agreements to IES and (ii) all customers representing 5% or more of the
Company's and the Subsidiaries' revenues, taken as a whole, in any of the
periods covered by the Company Audited Financial Statements or the Company
Unaudited Financial Statements. Except as disclosed on Schedule 3.10, all such
agreements are in full force and effect and none of such contracts or agreements
unduly burdens or restricts the Company or any of the Subsidiaries in the
ordinary course of its business. None of the Company's or the Subsidiaries'
customers or suppliers have canceled service or products, as appropriate. Except
to the extent set forth on Schedule 3.10, (i) the Company and the Subsidiaries
have complied with all material commitments and obligations and are not in
default under any contracts and agreements and no notice of default has been
received and (ii) none of the Company's or the Subsidiaries' customers listed
pursuant to (ii) above has canceled or substantially reduced or is currently
attempting or threatening to cancel or substantially reduce its use of the
Company's products or services. Except as set forth on Schedule 3.10, neither
the Company nor any of the Subsidiaries is now, nor has any of them ever been, a
party to any contracts subject to price redetermination or renegotiation.
SECTION III.11 OPERATING AUTHORITY. The Company and each of
the Subsidiaries, as applicable, possess all material governmental licenses,
permits, franchises, and other authorizations of any Governmental Authority
("Licenses") that are necessary to the ownership or operation of their business
as currently conducted, and all such Licenses are in full force and effect,
except where the failure to possess any License or the failure to be in full
force and effect is not reasonably expected to have, individually or in the
aggregate, a Company Material Adverse Effect, and neither the Company nor any of
the Subsidiaries is in default in any respect relating thereto. No proceeding is
pending or, to the Company Stockholders' Knowledge, is threatened seeking the
revocation or limitation of any such License that is reasonably expected to
have, individually or in the aggregate, a Company Material Adverse Effect.
Schedule 3.11 sets forth an accurate list and summary
description as of the Company Unaudited Balance Sheet Date of all Licenses,
certificates, trademarks, trade names, patents, patent applications and
copyrights related to the assets owned or held by the Company or the
Subsidiaries. The Licenses and other rights listed on Schedule 3.11 are valid,
and the Company has not received any notice that any person intends to cancel,
terminate or not renew any such License or other right. The Company has
conducted and is conducting its business in compliance in all material respects
with the requirements, standards, criteria and conditions set forth in the
Licenses and other rights listed on Schedule 3.11 and is not in violation of any
of the foregoing in any material respect. Except as specifically provided in
Schedule 3.11, the consummation of the transactions contemplated by this
Agreement will not result in a default under or a breach or violation of, or
adversely affect the rights and benefits afforded to the Company by, any such
Licenses or other rights.
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SECTION III.12 BANK ACCOUNT INFORMATION. Schedule 3.12
contains an accurate list of the names and addresses of every bank and other
financial institution in which the Company or any of the Subsidiaries maintains
an account (whether checking, savings or otherwise), lock box, or safe deposit
box, and the account numbers and persons having signature authority or legal
access thereto.
SECTION III.13 CONDUCT OF BUSINESS SINCE COMPANY UNAUDITED
BALANCE SHEET DATE. Except as expressly contemplated by this Agreement and
except as set forth on Schedule 3.13, since the Company Unaudited Balance Sheet
Date, (a) the business and operations of the Company and the Subsidiaries have
been conducted in the ordinary and usual course in all material respects in
accordance with past practices, (b) neither the Company nor any of the
Subsidiaries has paid or declared any dividend on, or made any distribution with
respect to, or purchased or redeemed any of its capital stock and (c) no Company
Material Adverse Effect has occurred and is continuing.
SECTION III.14 LITIGATION; ORDERS. Except as set forth on
Schedule 3.14, as of the date hereof, there are no Actions pending or, to the
Company Stockholders' Knowledge, threatened against the Company or any of the
Subsidiaries. Except as set forth on Schedule 3.14, as of the date hereof there
are no judgments or outstanding orders, injunctions, decrees, stipulations, or
awards (whether rendered by a court or administrative agency or by arbitration)
against the Company or any of the Subsidiaries.
SECTION III.15 LABOR MATTERS. Except as set forth on Schedule
3.15, there are no agreements with labor unions or associations representing
employees of the Company or any of the Subsidiaries. No material work stoppage
against the Company or any of the Subsidiaries is pending or, to the Company
Stockholders' Knowledge, threatened. Neither the Company nor any of the
Subsidiaries has been or is involved in or, to the Company Stockholders'
Knowledge, is threatened with any labor dispute, arbitration, lawsuit, or
administrative proceeding relating to labor matters involving the employees of
the Company or the Subsidiaries (excluding routine workers' compensation claims)
that is reasonably expected to have, individually or in the aggregate, a Company
Material Adverse Effect.
SECTION III.16 COMPLIANCE WITH LAWS. The conduct of the
business by the Company and each of the Subsidiaries complies with all statutes,
laws, regulations, ordinances, rules, judgments, orders, or decrees applicable
thereto (other than Environmental Laws (as hereinafter defined) which are
governed solely by Section 3.18), except for violations or failures so to
comply, if any, that would not have, individually or in the aggregate, a Company
Material Adverse Effect.
SECTION III.17 INSURANCE. Schedule 3.17 sets forth a list of
all insurance policies issued in favor of the Company and the Subsidiaries which
relate to their businesses, and all such policies are currently in force and
effect. True and complete copies of all such policies have been delivered to
IES. Attached to Schedule 3.17 is a complete list of all insurance loss runs and
workers' compensation claims received for the past three (3) policy years. The
insurance carried by the Company, which the Company Stockholders believe to be
adequate in character and amount, is with insurers that are, to the Company
Stockholders' Knowledge, financially sound and reputable and that are
unaffiliated with any of the Company Stockholders or the Company. None of such
policies is
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a "claims made" policy. All insurance policies carried by the Company are
currently in full force and effect. The Company's insurance has never been
canceled and the Company has never been denied coverage or experienced a
substantial increase in premiums or substantial reduction in coverage from one
policy period to the next period.
SECTION III.18 ENVIRONMENTAL MATTERS. Other than violations
that would not have, individually or in the aggregate, a Company Material
Adverse Effect, the Company and the Subsidiaries are in compliance with all
applicable Environmental Laws. Without limitation of the foregoing, there are no
pre-existing, pending or, to the Company Stockholders' Knowledge, threatened
actions, suits, investigations, inquiries, proceedings or clean-up obligations
by or to any Governmental Authority relating to any Environmental Laws with
respect to the Company or any of the Subsidiaries, except for actions, suits,
investigations, inquiries, proceedings, and obligations that would not have,
individually or in the aggregate, a Company Material Adverse Effect. All
notices, permits, or similar authorizations, if any, required to be obtained or
filed in connection with the operations of the Company or the Subsidiaries,
including, without limitation, treatment, storage, disposal, or release of a
hazardous substance or solid waste into the environment, have been duly obtained
or filed, other than any such notices, permits, or similar authorizations the
failure of which to obtain or file is not reasonably expected to have,
individually or in the aggregate, a Company Material Adverse Effect. To the
Company Stockholders' Knowledge, there are no underground storage tanks on, in
or under any properties owned by the Company and no underground storage tanks
have been closed or removed from any of such properties during the time such
properties were owned, leased or operated by the Company which are not listed on
Schedule 3.18. To the Company Stockholders' Knowledge, there is no asbestos or
asbestos-containing material present in any of the properties owned by the
Company, and no asbestos has been removed from any of such properties during the
time such properties were owned, leased or operated by the Company. Neither the
Company nor any of its respective properties are subject to any material
liabilities or expenditures (fixed or contingent) relating to any suit,
settlement, court order, administrative order, regulatory requirement, judgment
or claim asserted or arising under any Environmental Law. The term "release" has
the meaning specified in CERCLA (as hereinafter defined), and the term
"disposal" (or "disposed") has the meaning specified in RCRA (as hereinafter
defined). For the purposes hereof, "Environmental Laws" shall mean any and all
laws, statutes, ordinances, rules, regulations, orders, or determinations of any
Governmental Authority pertaining to the environment in effect on the date of
this Agreement and in effect at such time in any and all jurisdictions in which
the Company or any of the Subsidiaries operate, including, without limitation,
the Clean Air Act, as amended, the Comprehensive Environmental Response,
Compensation and Liability Act, as amended ("CERCLA"), the Federal Water
Pollution Control Act, as amended, the Resource Conservation and Recovery Act,
as amended ("RCRA"), the Safe Drinking Water Act, as amended, the Toxic
Substances Control Act, as amended, comparable state and local laws and other
material environmental protection laws in effect on the date of this Agreement.
Schedule 3.18 lists all disposal sites which the Company and the Subsidiaries
have utilized as of the Company Unaudited Balance Sheet Date.
SECTION III.19 TAXES. (a) (i) Except as set forth on Schedule
3.19, the Company and each of the Subsidiaries have filed when due all Company
Returns (as defined in Section 10.16), and have, except for Taxes that are being
contested in good faith and set forth on Schedule 3.19,
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timely paid and discharged all Tax obligations shown thereon and adequate
reserves have been established on the books of the Company for all Taxes for
which the Company is liable but payment is not yet due, (ii) the Company Returns
correctly and accurately reflect the facts regarding the income, business and
assets, operations, activities, status, or other matters of the Company and the
Subsidiaries, and any other information required to be shown thereon, and are
not subject to penalties under Section 6662 of the Code, relating to
accuracy-related penalties, or any corresponding provision of applicable state,
local, or foreign Tax law or any predecessor provision of law, and (iii) neither
the Company nor any of the Subsidiaries has received any notice of any Tax
deficiency outstanding, proposed, or assessed against or allocable to it, nor
has either of them executed any waiver of any statute of limitations on the
assessment or collection of any Tax, or executed or filed with the Internal
Revenue Service or any other governmental body (any of these to be referred to
hereinafter as a "Taxing Authority") any agreement now in effect extending the
period for assessment or collection of any Taxes against the Company or any of
the Subsidiaries. No liens for Taxes exist upon the assets of the Company except
Liens for Taxes which are not yet due. The Company is not and never has been,
subject to Tax in any jurisdiction outside the United States. No litigation with
respect to any Tax for which the Company is asserted to be liable is pending or,
to the knowledge of the Company or any Stockholder, threatened, and no basis
which the Company or any Stockholder believes to be valid exists on which any
claim for any such Tax can be asserted against the Company. There are no
requests for rulings or determinations in respect of any Taxes pending between
the Company and any taxing authority. No issues have been raised and remain
pending by any taxing authority in connection with the examination of any Return
of the Company. All deficiencies asserted and assessments made, if any, as a
result of or in connection with any examination have been paid in full or are
fully reflected as a liability in the Financial Statements. The Company is not
and never has been party to any tax allocation or sharing agreement. All amounts
required to be withheld by the Company and paid to governmental agencies for
income, social security, unemployment insurance, sales, excise, use and other
Taxes have been collected or withheld and paid to the proper taxing authority.
For purposes of this Agreement, "Tax" or "Taxes" means taxes of any kind,
levies, or other like assessments, customs, duties, imposts, charges, or fees,
including, without limitation, income, gross receipts, ad valorem, value added,
excise, real or personal property, asset, sales, use, license, payroll,
transaction, capital, net worth and franchise taxes, estimated taxes,
withholding, employment, social security, workers compensation, utility,
severance, production, unemployment compensation, occupation, premium, windfall
profits, transfer, and gains taxes or other governmental taxes imposed or
payable to the United States, or any state, county, local, or foreign government
or subdivision or agency thereof, and in each instance such term shall include
any interest, penalties, or additions to tax attributable to or imposed with
respect to any such Tax, including penalties for the failure to file any Tax
return or report.
(18) Except for the group of which the Company is currently the parent,
neither the Company nor any of the Subsidiaries has ever been a member of an
affiliated group of corporations, within the meaning of Section 1504 of the
Code, other than as a common parent corporation.
(19) Except as set forth on Schedule 3.19, none of the assets of the
Company or any of the Subsidiaries is property that the Company is required to
treat as being owned by any other Person pursuant to the "safe harbor lease"
provisions of former Section 168(f)(8) of the Code.
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(20) None of the assets of the Company or any of the Subsidiaries
directly or indirectly secures any debt the interest on which is tax-exempt
under Section 103(a) of the Code.
(21) None of the assets of the Company or any of the Subsidiaries is
"tax-exempt use property" within the meaning of Section 168(h) of the Code.
(22) Neither the Company nor any of the Subsidiaries has agreed to
make, nor is any of them required to make, any adjustment under Section 481(a)
of the Code by reason of a change in accounting method or otherwise.
(23) Neither the Company nor any of the Subsidiaries has participated
in, nor will any of them participate in, an international boycott within the
meaning of Section 999 of the Code.
(24) Neither the Company nor any of the Subsidiaries has or had a
permanent establishment in any foreign country, as defined in any applicable tax
treaty or convention between the United States and such foreign country.
(25) Neither the Company nor any of the Subsidiaries has filed a
consent pursuant to the collapsible corporation provisions of Section 341(f) of
the Code (or any corresponding provision of state, local, or foreign income tax
law) or agreed to have Section 341(f)(2) of the Code (or any corresponding
provision of state, local, or foreign income tax law) apply to any disposition
of any asset owned by it.
(26) Neither the Company nor any Company Stockholder is a "foreign
person" as that term is defined in Section 1445(f)(3).
(27) The Company has not made, is not obligated to make and is not a
party to any agreement that could require it to make any payment that is not
deductible under Section 280G of the Code.
(28) No asset of the Company is subject to any provision of applicable
law which eliminates or reduces the allowance for depreciation or amortization
in respect of that asset below the allowance generally available to an asset of
its type.
(29) The Company is an S corporation as defined in Section 1361 and has
not incurred tax liabilities itself.
SECTION III.20 EMPLOYEE BENEFIT PLANS. (a) Schedule 3.20
contains a list of all "employee pension benefit plans" (as defined in Section
3(2) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA")) (sometimes referred to herein as "Company Pension Plans"), "employee
welfare benefit plans" (as defined in Section 3(l) of ERISA, hereinafter a
"Company Welfare Plan"), stock option, stock purchase, incentive, bonus,
deferred compensation plans or arrangements, vacation, change in control,
stay-on bonus plans or arrangements, and other material employee compensation
and fringe benefit plans or agreements, maintained, contributed to, or pursuant
to which the Company or any of the Subsidiaries has or may have any liability,
whether or not heretofore terminated (all the foregoing being herein called
"Company Benefit
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Plans"). The Company has delivered to IES an accurate list (which is set forth
on Schedule 3.20) showing all officers, directors and key employees of the
Company, listing all employment agreements with such officers, directors and key
employees and the rate of compensation (and the portions thereof attributable to
salary, bonus and other compensation, respectively) of each of such persons as
of (i) December 31, 1997 and (ii) the date hereof. The Company has provided to
IES true, complete and correct copies of any employment agreements for persons
listed on Schedule 3.20. Since December 31, 1997, except as disclosed on
Schedule 3.20, there have been no increases in the compensation payable or any
special bonuses to any officer, director, key employee or other employee, except
ordinary salary increases implemented on a basis consistent with past practices.
The Company has made available to IES true, complete, and correct copies of (i)
each Company Benefit Plan and any subsequently adopted amendments thereto (or,
in the case of unwritten Company Benefit Plans, descriptions thereof), (ii) the
most recent annual report on Form 5500 filed with respect to each Company
Benefit Plan (if any such report was required), (iii) the most recent summary
plan description for each Company Benefit Plan for which such a summary plan
description is required (with all summaries of material modifications provided
after the most recent summary plan description was distributed), (iv) each trust
agreement, group annuity contract and service agreement relating to any Company
Benefit Plan and (v) each favorable determination letter from the Internal
Revenue Service with respect to each Company Benefit Plan that is intended to be
qualified under Section 401(a) of the Code.
(30) With respect to all Company Benefit Plans, the Company and each
Subsidiary have complied with all applicable laws and, except as set forth on
Schedule 3.20, all Company Benefit Plans are and have been administered in
compliance with their terms and all applicable laws, including, without
limitation, ERISA and the Code; and there are no pending or, to the Company
Stockholders' Knowledge, threatened investigations by any governmental entity,
termination proceedings, or other claims, suits or proceedings against or
involving any Company Benefit Plan. All such plans listed on Schedule 3.20 that
are intended to qualify (the "Qualified Plans") under Section 401(a) of the Code
are, and have been so qualified and have been determined by the Internal Revenue
Service to be so qualified, and copies of such determination letters are
attached to Schedule 3.20. Except as disclosed on Schedule 3.20, all reports and
other documents required to be filed with any governmental agency or distributed
to plan participants or beneficiaries (including, but not limited to, actuarial
reports, audits or tax returns) have been timely filed or distributed, and
copies thereof are included as part of Schedule 3.20 hereof.
(31) All contributions to, and payments from, the Company Benefit Plans
required to be made in accordance with the Company Benefit Plans or applicable
law have been timely made. All accrued contribution obligations of the Company
with respect to any Company Benefit Plan have either been fulfilled in their
entirety or are fully reflected on the balance sheet in the Company Audited
Financial Statements.
(32) No Company Benefit Plan is subject to Section 302 or Title IV of
ERISA or Section 412 of the Code or is a "multiemployer plan" within the meaning
of Section 4001(a)(3) of ERISA or a "multiple employer plan," within the meaning
of Section 413(c) of the Code.
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(33) (i) No "prohibited transaction" (under Section 4975 of the Code or
Section 406 of ERISA) has occurred with respect to any Company Benefit Plan and
(ii) there has been no breach of any fiduciary duty with respect to any Company
Benefit Plan.
(34) Neither the Company nor any of the Subsidiaries maintains or
contributes to any Company Welfare Plan which could not be unilaterally
terminated by the Company or any of the Subsidiaries at any time without
liability.
SECTION III.21 BROKERAGE FEES AND COMMISSIONS. Except as set
forth on Schedule 3.21, neither the Company nor the Company Stockholders has
incurred any obligation or entered into any agreement for any investment
banking, brokerage or finder's fee, or commission in respect of the transactions
contemplated by this Agreement for which IES or the Company shall incur any
liability.
SECTION III.22 TAX TREATMENT. Neither the Company nor, to the
Company Stockholders' Knowledge, any of its affiliates has taken, has agreed or
failed to take, or intends to take any action or has any knowledge of any fact
or circumstance that would prevent the Merger from qualifying as a
reorganization within the meaning of Section 368 of the Code (a "368
Reorganization").
SECTION III.23 SECTION 368(a)(2)(D) REPRESENTATIONS. The
Company and each Company Stockholder hereby represents and warrants the
following to be true and correct as of the Effective Time and understands that
counsel rendering any tax opinions pursuant to Section 1.6 will rely on such
representations and warranties and will assume them to be correct, without
further inquiry as of the Effective Time and that the inaccuracy of any of the
following may negatively affect those opinions:
(35) The fair market value of the IES Common Stock and other
consideration received by each Company Stockholder will be approximately equal
to the fair market value of the Company Common Stock surrendered in the
exchange.
(36) There is no plan or intention of the Company Stockholders to have
IES redeem, or have a party related to IES acquire, shares of IES Common Stock
received in the Merger which would reduce the Company Stockholders' ownership of
a number shares of IES Common Stock received in the Merger to a number of shares
having a value, as of the date of the Merger, of less than 50% of the sum of (i)
the value at the effective time of all the Company Common Stock held immediately
prior to the Merger by the Company Stockholders and (ii) the value at the
Effective Time of any other instruments (such as debt of the Company which is
guaranteed by the Company Stockholders) which are classified for federal income
tax purposes as stock of the Company (collectively, "Shares") and which are held
immediately prior to the Merger by the Company Stockholders. For purposes of
this representation, Shares outstanding immediately prior to the Merger include
Shares exchanged for cash in lieu of fractional shares of IES Common Stock as
well as Shares redeemed prior to the Merger by reason of this Agreement or
otherwise as part of the Merger, and the value of all Shares outstanding
immediately prior to the Merger shall be determined with regard to any
extraordinary distributions (i.e., distributions with respect to Shares other
than
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regular, normal dividends) by the Company by reason of this Agreement or
otherwise as part of the Merger. For purposes of this representation, a party is
related to IES if such party and IES would be treated as related parties within
the meaning of Treasury Regulations Section 1.368-1(e)(3).
(37) Acquisition will acquire at least 90 percent of the fair market
value of the net assets and at least 70 percent of the fair market value of the
gross assets held by the Company immediately prior to the Merger. For purposes
of this representation, amounts paid by the Company to dissenters, amounts paid
by the Company to Company Stockholders who receive cash or other property,
amounts used by the Company to pay reorganization expenses, and all redemptions
and distributions (except for regular, normal dividends, if any) made by the
Company immediately preceding the Merger, will be included as assets of the
Company held immediately prior to the Merger.
(38) The liabilities of the Company assumed by Acquisition and the
liabilities to which the transferred assets of the Company are subject were
incurred by the Company in the ordinary course of its business.
(39) The Company and the Company Stockholders will pay their respective
expenses, if any, incurred in connection with the Merger.
(40) There is no intercorporate indebtedness existing between IES and
the Company or between Acquisition and the Company that was issued, acquired or
will be settled at a discount.
(41) The Company is not an investment company. For purposes of this
representation, an investment company means a regulated investment company (as
defined in the Code), a real estate investment trust (as defined in the Code),
or a corporation, 50 percent or more of the value of whose total assets are
stock and securities and 80 percent or more of the value of whose total assets
are assets held for investment within the meaning of Section 368(a)(2)(F)(iii)
of the Code.
(42) The Company is not under the jurisdiction of a court in a case
under Title 11 of the United States Code, or a receivership, foreclosure, or
similar proceeding in a Federal or State court.
(43) On the date of the Merger, the fair market value of the assets of
the Company will exceed the sum of its liabilities, plus the amount of
liabilities, if any, to which its assets are subject.
(44) None of the compensation received by any stockholder-employees of
the Company will be separate consideration for, or allocable to, any of their
shares of Company Common Stock. None of the shares of IES Common Stock to be
received by any stockholder-employee will be separate consideration for, or
allocable to, any employment agreements, and the compensation paid to any
stockholder-employee will be for services actually rendered and will be
commensurate with amounts paid to third parties bargaining at arm's length for
similar services.
(45) The payment of cash in lieu of issuing fractional shares of IES
Common Stock is solely for the purpose of avoiding the expense and inconvenience
to IES of issuing fractional shares and does not represent separately
bargained-for consideration. The total cash consideration that will be paid in
the Merger to the Company Stockholders instead of issuing fractional shares of
IES Common Stock will not exceed one percent of the total consideration that
will be issued in the
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Merger to the Company Stockholders in exchange for their shares of Company
Common Stock. The fractional share interests of each Company Stockholder will be
aggregated and no Company Stockholder will receive cash in consideration of a
fractional share interest in an amount equal to or greater than the value of one
full share of IES Common Stock.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF IES
IES represents and warrants to the Company Stockholders as
follows:
SECTION IV.1 ORGANIZATION AND QUALIFICATION. Each of IES and
Acquisition is a corporation duly organized, validly existing and in good
standing under the laws of the state of its incorporation, and IES has the
requisite corporate power to carry on its business as it is now conducted. IES
is duly qualified to conduct business as a foreign corporation in each
jurisdiction in which its ownership or lease of property or the conduct of its
business and operations makes such qualification necessary, except for such
jurisdictions in which the IES's failure to be so qualified is not reasonably
expected to have, individually or in the aggregate, an IES Material Adverse
Effect (as defined in Section 10.16).
SECTION IV.2 CAPITALIZATION. (a The authorized capital stock
of IES consists of 100,000,000 shares of IES Common Stock, 2,655,709 shares of
restricted voting common stock and 10,000,000 shares of preferred stock. As of
March 31, 1998, there were outstanding 21,759,627 shares of IES Common Stock
(including no shares of treasury stock), 2,655,709 shares of restricted voting
common stock and, no shares of preferred stock. All outstanding shares of
capital stock of IES have been duly authorized and validly issued and are fully
paid and non-assessable and free of preemptive rights.
(46) The shares of IES Common Stock to be issued as part of the Merger
Consideration have been duly authorized and, when issued and delivered in
accordance with the terms of this Agreement, will have been validly issued and
will be fully paid and non-assessable, and the issuance thereof is not subject
to any preemptive or other similar right.
SECTION IV.3 AUTHORIZATION. The execution, delivery and
performance by IES of this Agreement, and the consummation by IES and
Acquisition of the transactions contemplated hereby, are within the corporate
powers of IES and Acquisition and have been duly authorized by all necessary
corporate action. This Agreement has been duly executed and delivered by IES and
Acquisition and constitutes the valid and binding obligation of IES and
Acquisition enforceable against IES and Acquisition in accordance with its
terms.
SECTION IV.4 CONSENTS AND APPROVAL; NO VIOLATION. Neither the
execution and delivery of this Agreement by IES and Acquisition, nor the
consummation by IES and Acquisition of the transactions contemplated by this
Agreement, will: (a) require any consent, approval, authorization, or permit of,
or filing with or notification to, any Governmental Authority, except (i) the
filing of a certificate or certificates of merger in accordance with Delaware
Law and Georgia
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Law, (ii) compliance with any applicable requirements of the 1933 Act, the
Securities Exchange Act of 1934, as amended (the "1934 Act"), and foreign or
state securities or Blue Sky laws, (iii) any regulatory approvals or routine
governmental consents normally acquired after the consummation of transactions
such as transactions of the nature contemplated by this Agreement, (iv) where
the failure to obtain such consent, approval, authorization, or permit, or to
make such filing or notification, is not reasonably expected to have,
individually or in the aggregate, an IES Material Adverse Effect or prevent or
delay, in any material respect, the consummation of the transactions
contemplated by this Agreement, or (v) approvals required pursuant to the HSR
Act; (b) result in a default (or give rise to any right of termination,
cancellation, or acceleration) under any of the terms, conditions, or provisions
of any agreement or other instrument binding upon IES or any of its
subsidiaries, except for such defaults (or rights of termination, cancellation,
or acceleration) as to which requisite waivers or consents have been obtained or
which are not reasonably expected to have, individually or in the aggregate, an
IES Material Adverse Effect or prevent or delay, in any material respect, the
consummation of the transactions contemplated by this Agreement; or (c) assuming
compliance with the matters referred to in Section 4.4(a), violate any order,
writ, injunction, decree, statute, rule, or regulation applicable to IES or any
of its subsidiaries or any of their assets, except for violations which are not
reasonably expected to have, individually or in the aggregate, an IES Material
Adverse Effect or prevent or delay, in any material respect, the consummation of
the transactions contemplated by this Agreement.
SECTION IV.5 SEC FILINGS. (a IES has filed with the SEC all
material forms, statements, reports and documents (the "IES SEC Filings")
required to be filed by it under the 1934 Act and the rules and regulations
thereunder.
(47) As of its filing date, each IES SEC Filing complied as to form in
all material respects with the applicable requirements of the 1934 Act.
(48) As of its filing date, each IES SEC Filing filed pursuant to the
1934 Act did not contain any untrue statement of a material fact or omit to
state any material fact necessary in order to make the statements made therein,
in the light of the circumstances under which they were made, not misleading.
(49) IES has previously delivered to the Company Stockholders copies of
IES's prospectus, dated February 9, 1998, as supplemented (the "Prospectus"). As
of its date, the Prospectus did not contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances under which they
were made, not misleading.
SECTION IV.6 TAX TREATMENT. Neither IES nor, to IES's
Knowledge, any of its affiliates has taken, has agreed or failed to take, or
intends to take any action or has any knowledge of any fact or circumstance that
would prevent the Merger from qualifying as a 368 Reorganization.
SECTION IV.7 SECTION 368(a)(2)(D)REPRESENTATIONS. IES hereby
represents and warrants the following to be true and correct as of the Effective
Time and understands that counsel rendering any tax opinions pursuant to Section
1.6 will rely on such representations and warranties
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and will assume them to be correct, without further inquiry, as of the Effective
Time and that the inaccuracy of any of the following may negatively affect those
opinions:
(50) The fair market value of the IES Common Stock and other
consideration received by each Company Stockholder will be approximately equal
to the fair market value of the Company Common Stock surrendered in the
exchange.
(51) Neither IES, nor related parties, will dispose of a substantial
part of the value of the proprietary interest in the Company following the
Merger. IES has no plan or intention to redeem, or have a party related to IES
acquire, shares of IES Common Stock issued in the Merger. For purposes of this
representation and the following representations, a party is related to IES if
such party and IES would be treated as related parties within the meaning of
Treasury Regulations Section 1.368-1(e)(3).
(52) Acquisition will acquire at least 90 percent of the fair market
value of the net assets and at least 70 percent of the fair market value of the
gross assets held by the Company immediately prior to the Merger. For purposes
of this representation, amounts paid by the Company to dissenters, amounts paid
by the Company to Company Stockholders who receive cash or other property,
amounts used by the Company to pay reorganization expenses, and all redemptions
and distributions (except for regular, normal dividends, if any) made by the
Company immediately preceding the Merger, will be included as assets of the
Company held immediately prior to the Merger.
(53) Prior to the Merger, IES will be in control of Acquisition. For
purposes of this representation and the following representations, control is
defined as the ownership of stock possessing at least 80 percent of the total
combined voting power of all classes of stock entitled to vote and at least 80
percent of the total number of shares of all other classes of stock of the
corporation.
(54) Following the Merger, Acquisition will not issue additional shares
of its capital stock that would result in IES losing control of Acquisition.
(55) Neither IES, nor related parties, have a plan or intention to
reacquire any shares of IES Common Stock issued in the Merger.
(56) IES has no plan or intention to liquidate Acquisition subsequent
to the Merger; to merge Acquisition with or into another corporation subsequent
to the Merger; to sell or otherwise dispose of the stock of Acquisition
subsequent to the Merger, or to cause Acquisition to sell or otherwise dispose
of any of its assets or any assets acquired from the Company subsequent to the
Merger, except for dispositions made in the ordinary course of business.
(57) Following the Merger, Acquisition will continue the historic
business of the Company or use a significant portion of the Company's historic
business assets in a business.
(58) IES and Acquisition will pay their respective expenses, if any,
incurred in connection with the Merger.
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(59) There is no intercorporate indebtedness existing between IES and
the Company or between Acquisition and the Company that was issued, acquired or
will be settled at a discount.
(60) Neither IES nor Acquisition are investment companies. For purposes
of this representation, an investment company means a regulated investment
company (as defined in the Code), a real estate investment trust (as defined in
the Code) or a corporation, 50 percent or more of the value of whose total
assets are stock and securities and 80 percent or more of the value of whose
total assets are assets held for investment within the meaning of Section
368(a)(2)(F)(iii) of the Code.
(61) No capital stock of Acquisition will be issued in the Merger.
(62) None of the compensation received by any stockholder-employees of
the Company will be separate consideration for, or allocable to, any of their
shares of the Company Common Stock. None of the shares of IES Common Stock to be
received by any stockholder-employee will be separate consideration for, or
allocable to, any employment agreements, and the compensation paid to any
stockholder-employee will be for services actually rendered and will be
commensurate with amounts paid to third parties bargaining at arm's length for
similar services.
(63) The payment of cash in lieu of issuing fractional shares of IES
Common Stock is solely for the purpose of avoiding the expense and inconvenience
to IES of issuing fractional shares and does not represent separately
bargained-for consideration. The total cash consideration that will be paid in
the Merger to the Company Stockholders instead of issuing fractional shares of
IES Common Stock will not exceed one percent of the total consideration that
will be issued in the Merger to the Company Stockholders in exchange for their
shares of Company Common Stock. The fractional share interests of each Company
Stockholder will be aggregated and no Company Stockholder will receive cash in
consideration of a fractional share interest in an amount equal to or greater
than the value of one full share of IES Common Stock.
ARTICLE V
ADDITIONAL COVENANTS AND AGREEMENTS
SECTION V.1 REASONABLE BEST EFFORTS. Subject to the terms and
conditions of this Agreement, each party will use its reasonable best efforts to
take, or cause to be taken, all actions and to do, or cause to be done, all
things necessary, proper, or advisable under applicable laws and regulations to
consummate the transactions contemplated by this Agreement.
SECTION V.2 CERTAIN FILINGS. The Company and IES shall
cooperate with one another (i) in determining whether any action by or in
respect of, or filing with, any Governmental Authority is required, or any
actions, consents, approvals, or waivers are required to be obtained from
parties to any material agreements, in connection with the consummation of the
transactions contemplated by this Agreement and (ii) in taking such actions or
making such filings, furnishing information required in connection therewith and
seeking timely to obtain such actions, consents, approvals, or waivers.
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SECTION V.3 PUBLIC ANNOUNCEMENTS. Without the prior consent of
the other, which consent shall not be unreasonably withheld, none of the Company
or the Company Stockholders will issue, or permit any agent or affiliate to
issue, any press releases or otherwise make or permit any agent or affiliate to
make, any public statements with respect to this Agreement or the transactions
contemplated by this Agreement.
SECTION V.4 FURTHER ASSURANCES. At and after the Effective
Time, the officers and directors of the Surviving Corporation will be authorized
to execute and deliver, in the name and on behalf of the Company or Acquisition,
any deeds, bills of sale, assignments, or assurances and to take and do, in the
name and on behalf of the Company or Acquisition, any other actions and things
to vest, perfect, or confirm of record or otherwise in the Surviving Corporation
any and all right, title, and interest in, to, and under any of the rights,
properties, or assets of the Company acquired or to be acquired by the Surviving
Corporation as a result of, or in connection with, the Merger.
SECTION V.5 NOTICES OF CERTAIN EVENTS. Each of the Company,
the Company Stockholders and IES shall promptly notify the other parties hereto
of:
(64) any notice or other communication from any Person alleging that
the consent of such Person is or may be required in connection with the
transactions contemplated by this Agreement;
(65) any notice or other communication from any Governmental Authority
in connection with the transactions contemplated by this Agreement;
(66) any actions, suits, claims, investigations or proceedings
commenced or, to its knowledge, threatened against, relating to, or involving or
otherwise affecting such party that relate to the consummation of the
transactions contemplated by this Agreement; and
(67) any material failure on its part to comply with or satisfy any
covenant, condition or agreement to be complied with or satisfied by it
hereunder; provided, however, that the delivery of any notice pursuant to this
Section 5.6(d) shall not limit or otherwise affect the remedies available
hereunder to the party receiving such notice.
SECTION V.6 RELEASE FROM GUARANTEES. Following the Effective
Time, IES and the Surviving Corporation shall use reasonable efforts to have the
Company Stockholders released from the personal guarantees of the Company's
indebtedness identified on Schedule 5.7. In the event that IES cannot obtain
releases of any such guarantees on or prior to one hundred and twenty (120) days
subsequent to the Effective Time, IES shall pay off or otherwise refinance or
retire such indebtedness.
SECTION V.7 FUTURE COOPERATION; TAX MATTERS. The Company, the
Company Stockholders and IES shall each deliver or cause to be delivered to the
other following the Effective Time such additional instruments as the other may
reasonably request for the purpose of fully carrying out this Agreement. The
Company Stockholders will cooperate and use their reasonable best efforts to
have the present officers, directors and employees of the Company cooperate with
IES at and after the Effective Time in furnishing information, evidence,
testimony and other assistance
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in connection with any actions, proceedings, arrangements or disputes of any
nature with respect to matters pertaining to all periods prior to the Effective
Time.
SECTION V.8 EXPENSES. IES and the Company Stockholders will
each pay their own fees, expenses and disbursements of their respective agents,
representatives, accountants and counsel incurred in connection with the
execution, delivery and performance of this Agreement and any amendment thereto.
SECTION V.9 REPAYMENT OF RELATED PARTY INDEBTEDNESS.
Concurrently with the execution of this Agreement, (i) the Company Stockholders
shall repay to the Company all amounts outstanding as advances to or receivables
from the Company Stockholders and (ii) the Company shall repay all amounts
outstanding under loans to the Company from the Company Stockholders. Such
advances, receivables and loans, and the amounts thereof, are listed on Schedule
5.10.
SECTION V.10 TAX-FREE ORGANIZATION. IES and the Company
Stockholders shall each use its best efforts to cause the Merger to be treated
as a reorganization within the meaning of Section 368(a) of the Code.
SECTION V.11 FIRPTA CERTIFICATE. Each Company Stockholder will
deliver to IES a certificate to the effect that he is not a foreign person
pursuant to Section 1.1445-2(b) of the Treasury regulations.
SECTION V.12 PREPARATION AND FILING OF TAX RETURNS.
(68) The Company Stockholders shall file or cause to be filed all tax
returns for all taxable periods that end on or before the Closing Date, but in
each case only after IES has reviewed such filings and consented thereto.
(69) IES shall file or cause to be filed all tax returns for all
taxable periods ending after the Closing Date.
(70) Each party hereto shall, and shall cause its subsidiaries and
affiliates to, provide to each of the other parties hereto such cooperation and
information as any of them reasonably may request in filing any tax returns,
amended tax returns or claim for refund, determining a liability for Taxes or a
right to refund of Taxes or in conducting any audit or other proceeding in
respect of Taxes. Such cooperation and information shall include providing
copies of all relevant portions of relevant tax returns, together with relevant
accompanying schedules and relevant work papers, relevant documents relating to
rulings or other determinations by taxing authorities and relevant records
concerning the ownership and Tax basis of property, which such party may
possess. Each party shall make its employees reasonably available on a mutually
convenient basis at its cost to provide explanation of any documents or
information so provided. Subject to the preceding sentence, each party required
to file tax returns pursuant to this Agreement shall bear all costs of filing
such tax returns.
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SECTION V.13 ANTITRUST LAW COMPLIANCE. Not later than five
business days after the date hereof, (a) the Company, the Company Stockholders
and (b) IES shall prepare and file with the United States Department of Justice
(the "Department") and the Federal Trade Commission (the "FTC") the notification
and report form with respect to the transactions contemplated by this Agreement
as required pursuant to the Hart-Scott-Rodino Antitrust Improvements Act of 1976
(the "HSR Act"). The Company, the Company Stockholders and IES shall each
cooperate with the other in preparation of such filings and shall promptly
comply with any reasonable request by the Department or the FTC for supplemental
information and shall use their best efforts to obtain early termination of the
waiting period under the HSR Act.
SECTION V.14 PENDING CLOSING. (a Between the date of this
Agreement and the Consummation Date, the Company Stockholders will, and will
cause the Company to, except as set forth on Schedule 5.12:
(1) carry on it's respective businesses in substantially the
same manner as it has heretofore;
(2) use all commercially reasonable efforts to maintain its
properties and facilities, including those held under leases, in as
good working order and condition as at present, ordinary wear and tear
excepted;
(3) perform in all material respects all of its respective
obligations under agreements relating to or affecting its respective
assets, properties or rights;
(4) use all reasonable efforts to keep in full force and
effect present insurance policies or other comparable insurance
coverage;
(5) use its commercially reasonable efforts to maintain and
preserve its business organization intact, retain its respective
present key employees and maintain its respective relationships with
suppliers, customers and others having business relations with the
Company;
(6) use reasonable efforts to maintain compliance with all
material permits, laws, rules and regulations, consent orders, and all
other orders of applicable courts, regulatory agencies and similar
governmental authorities;
(7) maintain present debt and lease instruments in accordance
with their terms and not enter into new or amended debt or lease
instruments without the knowledge and consent of IES (which consent
shall not be unreasonably withheld), provided that debt and/or lease
instruments may be replaced without the consent of IES if such
replacement instruments are on terms at least as favorable to the
Company as the instruments being replaced;
(8) maintain or reduce present salaries and commission levels
for all officers, directors, employees and agents except for ordinary
and customary bonus and salary increases for employees in accordance
with past practices; and
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(9) afford to the officers and authorized representatives of
IES reasonable access during normal business hours to all of the
Company's sites, properties, books and records and will furnish IES
with such additional financial and operating data and other information
as to the business and properties of the Company as IES may from time
to time reasonably request.
(71) Except as disclosed on Schedule 5.12, between the date hereof and
the Consummation Date, the Company will not, without prior written consent of
IES:
(1) make any change in its charter or Bylaws;
(2) issue any securities, options, warrants, calls, conversion
rights or commitments relating to its securities of any kind;
(3) declare or pay any dividend, or make any distribution in
respect of its stock whether now or hereafter outstanding, or purchase,
redeem or otherwise acquire or retire for value any shares of its
stock;
(4) enter into any contract or commitment or incur or agree to
incur any liability or make any capital expenditures, except if it is
in the normal course of business (consistent with past practice) or
involves an amount not in excess of two percent (2%) of the Company's
revenues for the 12 months ended September 30, 1997;
(5) create, assume or permit to exist any mortgage, pledge or
other lien or encumbrance upon any assets or properties whether now
owned or hereafter acquired, except with respect to purchase money
liens incurred in connection with the acquisition of equipment with an
aggregate cost not in excess of two percent (2%) of the Company's
revenues for the 12 months ended September 30, 1997, necessary or
desirable for the conduct of the businesses of the Company;
(6) sell, assign, lease or otherwise transfer or dispose of
any property or equipment except in the normal course of business;
(7) negotiate for the acquisition of any business or the
start-up of any new business;
(8) merge or consolidate or agree to merge or consolidate with
or into any other corporation;
(9) waive any material rights or claims of the Company,
provided that the Company may negotiate and adjust bills and accounts
in the course of good faith disputes with customers in a manner
consistent with past practice, provided, further, that such adjustments
shall not be deemed to be included in Schedule 5.12 unless specifically
listed thereon;
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(10) amend or terminate any material agreement, permit,
license or other right of the Company; or
(11) enter into any other transaction outside the ordinary
course of its business or prohibited hereunder.
(72) None of the Company Stockholders, the Company, nor any agent,
officer, director, trustee or any representative of any of the foregoing will,
during the period commencing on the date of this Agreement and ending with the
earlier to occur of the Effective Date or the termination of this Agreement in
accordance with its terms, directly or indirectly: (i solicit or initiate the
submission of proposals or offers from any person for, (ii participate in any
discussions pertaining to, or (iii furnish any information to any person other
than IES or its authorized agents relating to, any acquisition or purchase of
all or a material amount of the assets of, or any equity interest in, the
Company or a merger, consolidation or business combination of the Company.
SECTION V.15 NOTIFICATION OF CERTAIN MATTERS. The Company
Stockholders shall give prompt notice to IES upon obtaining knowledge of (i) the
occurrence or non-occurrence of any event of which would be likely to cause any
representation or warranty contained herein to be untrue or inaccurate and (ii)
any failure of any Company Stockholder or the Company to comply with or satisfy
any covenant, condition or agreement to be complied with or satisfied by such
person hereunder. IES shall give prompt notice to the Company Stockholders of
(i) the occurrence or non-occurrence of any event of which would be likely to
cause any representation or warranty of IES contained herein to be untrue or
inaccurate and (ii) any failure of IES to comply with or satisfy any covenant,
condition or agreement to be complied with or satisfied by it hereunder.
ARTICLE VI
INDEMNIFICATION
The Company Stockholders and IES each make the following
covenants:
SECTION VI.1 INDEMNIFICATION BY THE COMPANY STOCKHOLDERS. The
Company Stockholders covenant and agree that they, jointly and severally, will
indemnify, defend, protect, and hold harmless IES, the Company, and the
Surviving Corporation, and their respective officers, directors, employees,
stockholders, agents, representatives, and affiliates (the "IES Indemnitees") at
all times from and after the date of this Agreement from and against all claims,
damages, losses, liabilities (joint or several), obligations, penalties,
defenses, actions, lawsuits, proceedings, judgments, demands, assessments,
adjustments, costs, and expenses (including specifically, but without
limitation, fees, disbursements, and expenses of attorneys, accountants, other
professional advisors and of expert witnesses and costs of investigation and
preparation), directly or indirectly resulting from, relating to or arising out
of:
(73) any breach of or inaccuracy in, or any allegation or claim by a
third party which if true would constitute a breach of or inaccuracy in, any
representation or warranty set forth herein or in the Schedules or certificates
delivered in connection herewith;
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(74) any breach or non-performance, partial or total, by the Company or
any of the Company Stockholders of any covenant or agreement of the Company (or
any affiliate or subsidiary thereof) or the Company Stockholders (or any
affiliate or subsidiary thereof) contained in this Agreement;
(75) any actual or threatened violation of or non-compliance with any
Environmental Laws arising from any event, condition, circumstance, activity,
practice, incident, action, or plan existing or occurring prior to the Effective
Time relating in any way to the assets or the business of the Company or the
Subsidiaries (including without limitation the ownership, operation, or use of
the Company's or the Subsidiaries' assets and the conduct of the business of the
Company and the Subsidiaries prior to the Effective Time; the presence of any
underground storage tanks or any hazardous substances or solid waste on, in,
under, or affecting all or any portion of the Company's or the Subsidiaries'
properties or any surrounding areas, and any release (as defined in CERCLA) or
threatened release with respect to such underground storage tanks or hazardous
substances or solid waste; and the storage, disposal, or treatment, or
transportation for storage, disposal, or treatment, of hazardous substances or
solid waste; but excluding any violation of or non-compliance with any
Environmental Laws that is attributable solely to a change by IES in the
structure, use or condition of any of the Company's or the Subsidiaries' assets
after the Effective Time);
(76) any losses or costs of defending against any claims which may be
made against IES by any Person claiming violations by the Company of any local,
state, or federal laws relating to the employment relationship, including, but
not limited to, wages, hours, concerted activity, nondiscrimination,
occupational health and safety, and the payment and withholding of Taxes, where
such claims arise out of circumstances occurring prior to the Effective Time.
Notwithstanding any provision to the contrary in this
Agreement, in no event whatsoever shall the aggregate liability of the Company
Stockholders under this Agreement (including all costs, expenses and attorneys'
fees paid or incurred by the Company and/or the Company Stockholders in
connection therewith or with respect to the curing of any and all
misrepresentations or breaches under this Agreement) exceed the amount of the
Merger Consideration actually paid to the Company Stockholders as provided in
Section 1.2 hereof.
SECTION VI.2 INDEMNIFICATION RELATED TO TAX LIABILITIES. The
Company Stockholders shall retain liability, and shall indemnify IES, for the
payment of any Tax liabilities with respect to the conduct of the business of
the Company or the Subsidiaries during all periods ending as of or prior to the
Effective Time.
SECTION VI.3 INDEMNIFICATION BY IES. IES covenants and agrees
that it will indemnify, defend, protect and hold harmless the Company
Stockholders (the "Stockholder Indemnitees") at all times from and after the
date of this Agreement from and against all claims, damages, losses, liabilities
(joint or several), obligations, penalties, defenses, actions, lawsuits,
proceedings, judgments, demands, assessments, adjustments, costs, and expenses
(including specifically, but without limitation, fees, disbursements, and
expenses of attorneys, accountants, other professional advisors and of expert
witnesses and costs of investigation and preparation), directly or indirectly
resulting from, relating to or arising out of:
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(77) any breach of any representation or warranty of IES set forth
herein or in the Schedules or certificates delivered in connection herewith; and
(78) any breach or non-performance, partial or total, by IES of any
covenant or agreement of IES (or any affiliate or subsidiary thereof) contained
in this Agreement.
SECTION VI.4 INDEMNIFICATION PROCEEDINGS. Promptly after a
party indemnified pursuant to this Article VI ("Indemnitee") has received notice
of or has knowledge of any claim by a person not a party to this Agreement
("third party") or the commencement of any action or proceeding by a third
party, the Indemnitee shall promptly, and in any event within 60 days of the
assertion of any claim or the discovery of any fact upon which Indemnitee
intends to base a claim for indemnification under this Agreement ("Indemnitee
Claim"), as a condition precedent to the Indemnitee Claim, give written notice
to the party or parties from whom indemnification is sought ("Indemnitor") of
such claim by the third party. Such notice shall state the nature and the basis
of such claim and a reasonable estimate of the amount thereof. In the event of
any Indemnitee Claim, Indemnitor, at its option, shall have the right to defend
or settle, at its own expense and by its own counsel (which must be reasonably
approved by Indemnitee), any such matter so long as the Indemnitor pursues the
same in good faith and diligently. If the Indemnitor undertakes to defend or
settle, it shall promptly notify the Indemnitee of its intention to do so, and
the Indemnitee shall cooperate with the Indemnitor and its counsel in the
defense thereof and in any settlement thereof. Notwithstanding the foregoing,
the Indemnitee shall have the right to participate in any matter through counsel
of its own choosing at Indemnitee's expense; provided that the Indemnitor's
counsel shall always be lead counsel and shall determine all litigation and
settlement steps, strategy and the like. Except as set forth in the preceding
sentence, after the Indemnitor has notified the Indemnitee of its intention to
undertake to defend or settle any such asserted liability, and for so long as
the Indemnitor diligently pursues such defense, the Indemnitor shall not be
liable for any additional legal expenses incurred by the Indemnitee in
connection with any defense or settlement of such asserted liability, except to
the extent such participation is requested by the Indemnitor, in which event the
Indemnitee shall be reimbursed by the Indemnitor for reasonable additional legal
expenses, out-of-pocket expenses and allocable share of employee compensation
incurred in connection with such participation for any employee whose
participation is so requested. If the Indemnitor desires to accept a final and
complete settlement of any such third party claim and the Indemnitee refuses to
consent to any such settlement which contains a complete and irrevocable release
of Indemnitee of all current and future claims arising out of the matter in
dispute, then the Indemnitor's liability under this Section with respect to such
third party claim shall be limited to the amount so offered in settlement by
said third party. If the Indemnitor does not undertake to defend such matter to
which the Indemnitee is entitled to indemnification hereunder, or fails
diligently to pursue such defense, the Indemnitee may undertake such defense
through counsel of its choice, at the cost and expense of the Indemnitor, and
the Indemnitee may settle such matter, without the consent of the Indemnitor,
and the Indemnitor shall immediately reimburse the Indemnitee for the amount
paid in such settlement and any other liabilities or expenses (including all
legal fees and expenses) incurred by the Indemnitee in connection therewith as
such amounts, liabilities, expenses and fees are incurred.
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SECTION VI.5 OTHER REMEDIES. Notwithstanding the
indemnification obligations contained within this Article VI, in no event shall
the indemnification provisions hereof limit in any way the ability of any of the
parties to this Agreement to seek any other remedies which may be available to
them under law.
SECTION VI.6 INDEMNIFICATION IF NEGLIGENCE OF INDEMNITEE. The
indemnification provided in this Article VI shall be applicable whether or not
negligence of the Indemnitee is alleged or proven.
SECTION VI.7 NO THIRD PARTY BENEFICIARIES. The foregoing
indemnification is given solely for the purpose of protecting the IES
Indemnitees and the Stockholder Indemnitees and shall not be deemed extended to,
or interpreted in a manner to confer any benefit, right, or cause of action
upon, any other Person.
SECTION VI.8 LIMITATION UPON INDEMNITY. The Company
Stockholders, on the one hand, and IES, on the other hand, shall be entitled to
indemnification from the other party under the provisions of this Article VI for
all claims subject to indemnification by such party, but only after such time
that the amount of, and to the extent that such claims exceed, in the aggregate
$250,000.
ARTICLE VII
NONCOMPETITION COVENANTS
SECTION VII.1 PROHIBITED ACTIVITIES. The Company Stockholders
will not, for a period of two (2) years following the Effective Time, directly
or indirectly, for themselves or on behalf of or in conjunction with any or
Person:
(79) engage, as an officer, director, shareholder, owner, partner,
joint venturer, or in a managerial or advisory capacity, whether as an employee,
independent contractor, consultant, or advisor, or as a sales representative, in
any business offering any services or products in direct competition with IES or
any of its subsidiaries within 100 miles of where IES or any of its subsidiaries
conducts business, including any territory serviced by IES or any of its
subsidiaries (the "Territory");
(80) call upon any Person who is, at that time, within the Territory,
an employee of IES or any of its subsidiaries for the purpose or with the intent
of enticing such employee away from or out of the employ of IES or any of its
subsidiaries;
(81) call upon any Person who is, at that time, or which has been,
within one (1) year prior to that time, a customer of IES or any of its
subsidiaries within the Territory for the purpose of soliciting or selling
services or products in direct competition with IES or any of its subsidiaries
within the Territory;
(82) call upon any prospective acquisition candidate, on any Company
Stockholder's own behalf or on behalf of any competitor in the electrical
contracting business, which candidate, to the actual knowledge of such Company
Stockholder after due inquiry, was called upon by IES or any
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subsidiary thereof or for which, to the actual knowledge of such Company
Stockholder after due inquiry, IES or any subsidiary thereof made an acquisition
analysis, for the purpose of acquiring such entity; or
(83) disclose customers, whether in existence or proposed, of the
Company to any person, firm, partnership, corporation or business for any reason
or purpose whatsoever except to the extent that the Company has in the past
disclosed such information to the public for valid business reasons.
Notwithstanding the above, the foregoing covenant shall not be
deemed to prohibit any Company Stockholder from acquiring, as a passive investor
with no involvement in the operations of the business, not more than one percent
(1%) of the capital stock of a business providing services similar to those
provided by IES whose stock is publicly traded on a national securities exchange
or over the counter.
SECTION VII.2 EQUITABLE RELIEF. Because of the difficulty of
measuring economic losses to IES as a result of a breach of the foregoing
covenant, and because of the immediate and irreparable damage that could be
caused to IES for which it would have no other adequate remedy, each Company
Stockholder agrees that the foregoing covenant may be enforced by IES by
injunctions, restraining orders, and other equitable actions.
SECTION VII.3 REASONABLE RESTRAINT. It is agreed by the
parties hereto that the foregoing covenants in this Article VII impose a
reasonable restraint on the Company Stockholders in light of the activities and
business of IES on the date of the execution of this Agreement and the current
plans of IES; but it is also the intent of IES and the Company Stockholders that
such covenants be construed and enforced in accordance with the changing
activities, business, and locations of IES and its subsidiaries throughout the
term of this covenant. During the term of this covenant, if IES or one of its
subsidiaries engages in new and different activities, enters a new business, or
establishes new locations for its current activities or business in addition to
or other than the activities or business it is currently conducting in the
locations currently established therefor, then the Company Stockholders will be
precluded from soliciting the customers or employees of such new activities or
business or from such new location and from directly competing with such new
activities or business within 100 miles of its then-established operating
location(s) through the term of these covenants.
SECTION VII.4 SEVERABILITY; REFORMATION. The covenants in this
Article VII are severable and separate, and the unenforceability of any specific
covenant shall not affect the continuing validity and enforceability of any
other covenant. In the event any court of competent jurisdiction shall determine
that the scope, time or territorial restrictions set forth in this Article VII
are unreasonable, then it is the intention of the parties that such restrictions
be enforced to the fullest extent which the court deems reasonable, and this
Agreement shall thereby be reformed.
SECTION VII.5 MATERIAL AND INDEPENDENT COVENANT. The Company
Stockholders acknowledge that their agreements with the covenants set forth in
this Article VII are material conditions to IES's agreement to execute and
deliver this Agreement and to consummate the transactions contemplated hereby.
All of the covenants in this Article VII shall be construed as an
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agreement independent of any other provision in this Agreement, and the
existence of any claim or cause of action of any Company Stockholder against IES
or one of its subsidiaries, whether predicated on this Agreement or otherwise,
shall not constitute a defense to the enforcement by IES of such covenants. It
is specifically agreed that the two-year period during which the agreements and
covenants of each Company Stockholder made in this Article VII shall survive
shall be computed by excluding from such computation any time during which such
Company Stockholder is in violation of any provision of this Article VII. The
covenants contained in this Article VII shall not be affected by any breach of
any other provision hereof by any party hereto.
SECTION VII.6 MATERIALITY. The Company and the Stockholders
hereby agree that this covenant is a material and substantial part of this
transaction.
ARTICLE VIII
APPLICABLE SECURITIES LAWS/TRANSFER RESTRICTIONS
SECTION VIII.1 COMPANY STOCKHOLDERS' REPRESENTATIONS AND
WARRANTIES CONCERNING SECURITIES. As of the date hereof (which is the same date
as the Effective Time), the Company Stockholders hereby make the following
representations and warranties to and for the benefit of IES: (i) that the
Company Stockholders have been provided with copies of the Prospectus and have
been provided as much time and opportunity as they deemed appropriate to review
and study such Prospectus, and to consult with IES regarding the merits and
risks of the transactions contemplated by this Agreement; (ii) that the Company
Stockholders have had adequate opportunity to ask questions of and receive
answers from the officers of IES pertaining to the purchase of the IES Common
Stock pursuant to the Merger, and (iii) all such questions have been answered to
the satisfaction of the Company Stockholders.
SECTION VIII.2 TRANSFER RESTRICTIONS. Unless otherwise agreed
by IES, except for transfers to immediate family members who agree to be bound
by the restrictions set forth in this Section 8.2 (or trusts for the benefit of
the Stockholders or family members, or trusts in which a Stockholder is both the
grantor and the beneficiary, the trustees of which so agree), for a period of
two years from the date of this Agreement, none of the Stockholders shall sell,
assign, exchange, transfer, appoint, or otherwise dispose of any shares of IES
Common Stock received by the Company Stockholders pursuant to this Agreement.
The certificates evidencing the IES Common Stock delivered to the Company
Stockholders pursuant to this Agreement will bear a legend substantially in the
form set forth below and containing such other information as IES may deem
necessary or appropriate:
THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT BE SOLD, ASSIGNED, EXCHANGED,
TRANSFERRED, DISTRIBUTED, APPOINTED OR OTHERWISE DISPOSED OF WITHOUT THE WRITTEN
CONSENT OF IES, AND THE ISSUER SHALL NOT BE REQUIRED TO GIVE EFFECT TO ANY
ATTEMPTED SALE, ASSIGNMENT, EXCHANGE, TRANSFER, DISTRIBUTION, APPOINTMENT OR
OTHER DISPOSITION PRIOR TO [THE SECOND ANNIVERSARY OF CLOSING DATE]. UPON
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THE WRITTEN REQUEST OF THE HOLDER OF THIS CERTIFICATE, THE ISSUER AGREES TO
REMOVE THIS RESTRICTIVE LEGEND (AND ANY STOP ORDER PLACED WITH THE TRANSFER
AGENT) AFTER THE DATE SPECIFIED ABOVE.
ARTICLE IX
NONDISCLOSURE OF CONFIDENTIAL INFORMATION
SECTION IX.1 GENERAL. The Company Stockholders recognize and
acknowledge that they had in past, currently have, and in the future may
possibly have, access to certain confidential information of the Company or the
Surviving Corporation, such as lists of customers, operational policies, and
pricing and cost policies that are valuable, special, and unique assets of the
Company and will be valuable, special, and unique assets of the Surviving
Corporation. The Company Stockholders agree that they will not disclose such
confidential information to any Person for any purpose or reason whatsoever
(except such information as the Company Stockholders may be required to disclose
to any Governmental Authority or to authorized representatives of IES). In the
event of a breach or threatened breach by the Company Stockholders of the
provisions of this Section, IES shall be entitled to an injunction restraining
the Company Stockholders from disclosing, in whole or in part, such confidential
information. Nothing herein shall be construed as prohibiting IES from pursuing
any other available remedy for such breach or threatened breach, including the
recovery of damages.
SECTION IX.2 EQUITABLE RELIEF. Because of the difficulty of
measuring economic losses as a result of the breach of the foregoing covenants,
and because of the immediate and irreparable damage that would be caused for
which the Company, the Surviving Corporation, and/or IES would have no other
adequate remedy, the Company Stockholders agree that the foregoing covenants may
be enforce against them by injunctions, restraining orders, and other equitable
actions.
SECTION IX.3 NON-PUBLIC INFORMATION. The Company Stockholders
hereby acknowledge that if they become aware of "material non-public
information" (as defined under applicable securities laws) regarding IES, that
they will be required, under applicable securities laws, to refrain from trading
in IES securities or disclosing any such information while such information is
non-public. The Company Stockholders further agree to communicate such
requirement to all personnel of the Company, the Surviving Corporation or
others, having knowledge of such "material non-public information" regarding
IES.
SECTION IX.4 SURVIVAL. The obligations of the parties under
this Article IX shall survive the termination of this Agreement.
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ARTICLE X
MISCELLANEOUS
SECTION X.1 GOVERNING LAW. This Agreement shall be governed by
and construed in accordance with the laws of the State of Texas without
reference to the choice of law principles thereof.
SECTION X.2 ENTIRE AGREEMENT. This Agreement, together with
the Schedules and Exhibits hereto, constitute the entire agreement between the
parties with respect to the subject matter hereof, and there are no agreements,
understandings, representations, or warranties between the parties other than
those set forth or referred to herein.
SECTION X.3 EXPENSES AND FEES. All costs and expenses incurred
in connection with this Agreement shall be paid by the party incurring such cost
or expense.
SECTION X.4 NOTICES. All notices hereunder shall be sufficient
upon receipt for all purposes hereunder if in writing and delivered personally,
sent by documented overnight delivery service or, to the extent receipt is
confirmed, telecopy, telefax, or other electronic transmission service to the
appropriate address or number as set forth below.
If to IES or Acquisition, to:
Integrated Electrical Services, Inc.
515 Post Oak Blvd., Suite 450
Houston, Texas 77027
Attention: John F. Wombwell
Fax Number: (713) 860-1599
if to the Company or the Company Stockholders, to:
-------------------------
-------------------------
-------------------------
Attention:
--------------
SECTION X.5 SUCCESSORS AND ASSIGNS. This Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns; provided, however, that no party may assign, delegate,
or otherwise transfer any of its rights or obligations under this Agreement
without the consent of each other party hereto, except IES or Acquisition may
transfer or assign, in whole or from time to time in part, to one or more of
their affiliates, the right to enter into the transactions contemplated by this
Agreement, but any such transfer or assignment will not relieve IES or
Acquisition of its obligations hereunder. This Agreement is not intended to
confer upon any Person not a party hereto any rights or remedies hereunder, and
no Person other than the parties hereto or such Persons described above is
entitled to rely on any representation, warranty, or covenant contained herein.
SECTION X.6 HEADINGS; DEFINITIONS. The Section and Article
headings contained in this Agreement are inserted for convenience of reference
only and will not affect the meaning or
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interpretation of this Agreement. All references to Sections or Articles
contained herein mean Sections or Articles of this Agreement unless otherwise
stated. All capitalized terms defined herein are equally applicable to both the
singular and plural forms of such terms.
SECTION X.7 AMENDMENTS AND WAIVERS. This Agreement may not be
modified or amended except by an instrument or instruments in writing signed by
the party against whom enforcement of any such modification or amendment is
sought. Any party hereto may, only by an instrument in writing, waive compliance
by any other party hereto with any term or provision of this Agreement on the
part of such other party hereto to be performed or complied with. The waiver by
any party hereto of a breach of any term or provision of this Agreement shall
not be construed as a waiver of any subsequent breach.
SECTION X.8 CONSTRUCTION OF CERTAIN PROVISIONS. It is
understood and agreed that the specification of any dollar amount in the
representations and warranties contained in this Agreement or the inclusion of
any specific item in the Schedules or Exhibits is not intended to imply that
such amounts or higher or lower amounts, or the items so included or other
items, are or are not material, and no party shall use the fact of the setting
of such amounts or the fact of the inclusion of any such item in the Schedules
in any dispute or controversy between the parties as to whether any obligation,
item, or matter not described herein or included in a Schedule or Exhibit is or
is not material for purposes of this Agreement. It is agreed that neither party
shall allege that a provision of this Agreement shall be construed against a
party because such party drafted such provision.
SECTION X.9 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. Except
for those contained in Sections 3.2, 3.19, 4.2, 5.7 and 5.12, the
representations, warranties, covenants and agreements of the parties made herein
and at the time of the Closing or in writing delivered pursuant to the
provisions of this Agreement shall survive the consummation of the transactions
contemplated hereby and any examination on behalf of the parties until the
second anniversary of the Closing Date. The provisions of Sections 3.19, 4.2,
5.7 and 5.12 shall survive the consummation of the transactions contemplated
hereby and any examination on behalf of the parties until the expiration of any
applicable statute of limitations. The provisions of Sections 3.2 and 4.2 shall
survive the consummation of the transactions contemplated hereby.
SECTION X.10 SEVERABILITY. If any term or other provision of
this Agreement is invalid, illegal, or incapable of being enforced by any rule
of law or public policy, all other conditions and provisions of this Agreement
shall nevertheless remain in full force and effect. Upon such determination that
any term or other provision is invalid, illegal, or incapable of being enforced,
the parties hereto shall negotiate in good faith to modify this Agreement so as
to effect the original intent of the parties as closely as possible in an
acceptable manner to the end that the transactions contemplated by this
Agreement are fulfilled to the extent possible.
SECTION X.11 JURISDICTION. Any legal action, suit, or
proceeding in law or equity arising out of or relating to this Agreement and
transactions contemplated by this Agreement may be instituted in any state or
federal court in Harris County, Houston, Texas, and each party agrees not to
assert, by way of motion, as a defense, or otherwise, in any such action, suit,
or proceeding, any claim that it is not subject personally to the jurisdiction
of such court, that its property is exempt
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or immune from attachment or execution, that the action, suit, or proceeding is
brought in an inconvenient forum, that the venue of the action, suit, or
proceeding is improper or that this Agreement, or the subject matter hereof or
thereof may not be enforced in or by such court. Each party further irrevocably
submits to the jurisdiction of any such court in any such action, suit, or
proceeding. Any and all service of process and any other notice in any such
action, suit, or proceeding shall be effective against any party if given by
registered or certified mail, return receipt requested, or by any other means of
mail which requires a signed receipt, postage prepaid, mailed to such party at
the address listed in Section 10.4. Nothing herein contained shall be deemed to
affect the right of any party to serve process in any manner permitted by law.
SECTION X.12 WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO
HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL
PROCEEDING ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY.
SECTION X.13 SPECIFIC PERFORMANCE. The parties hereto agree
that irreparable damage would occur in the event any provision of this Agreement
was not performed in accordance with the terms hereof and that the parties shall
be entitled to specific performance of the terms hereof in addition to any other
remedy to which they are entitled at law or in equity.
SECTION X.14 COUNTERPARTS; EFFECTIVENESS. This Agreement may
be executed in one or more counterparts, all of which shall be considered one
and the same agreement, and shall become effective when one or more counterparts
have been signed by each of the parties and delivered to the other party. In
making proof of this Agreement, it shall not be necessary to produce or account
for more than one such counterpart. A telecopied facsimile of an executed
counterpart of this Agreement shall be sufficient to evidence the binding
agreement of each party to the terms hereof. However, each party agrees to
promptly deliver to the other parties an original, duly executed counterpart of
this Agreement.
SECTION X.15 MUTUAL INDEMNIFICATION AGAINST CLAIMS OF BROKERS.
Each party agrees to indemnify the other against all loss, cost, damages or
expense arising out of claims for fees or commissions of brokers employed or
alleged to have been employed by such party.
SECTION X.16 DEFINITIONS AND USAGE. For the purposes of this
Agreement:
"368 Reorganization" shall have the meaning specified in
Section 3.22.
"1933 Act" shall have the meaning specified in Section 3.5.
"1934 Act" shall have the meaning specified in Section 4.4.
"Acquisition" shall have the meaning specified in the
introductory paragraph of this Agreement.
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"Action" shall mean any action, suit, arbitration, inquiry,
proceeding, or investigation by or before any Governmental Authority.
"affiliate" means, with respect to any Person, any other
Person directly or indirectly controlling, controlled by, or under common
control with such Person.
"Agreement" shall have the meaning specified in the
introductory paragraph of this Agreement and Plan of Merger.
"attorneys' fees" means attorneys' fees actually and
reasonably incurred for the reasonable expenditure of a reasonable number of
hours at normal and customary hourly rates for the attorneys involved, without
reliance upon any statutes that may allow such fees to be calculated on a
percentage basis, which statutory provisions are hereby waived.
"CERCLA" shall have the meaning specified in Section 3.18.
"Certificates" shall have the meaning specified in Section
1.3.
"Closing" shall have the meaning specified in Section 1.1(d)
"Closing Date" shall have the meaning specified in Section
1.1(d)
"Code" shall mean the Internal Revenue Code of 1986, as
amended, and any successor thereto.
"Commitment" shall have the meaning specified in Section
3.2(a).
"Company" shall have the meaning specified in the introductory
paragraph of this Agreement.
"Company Audited Financial Statements" shall have the meaning
specified in Section 3.6.
"Company Benefit Plans" shall have the meaning specified in
Section 3.20(a).
"Company Common Stock" shall have the meaning specified in
Section 1.2(a).
"Company Material Adverse Effect" shall mean any fact,
circumstance, event, or condition which has or would have a materially adverse
effect on the business, operations, properties, condition (financial or
otherwise), assets, liabilities, results of operations or prospects of the
Company and the Subsidiaries, taken as a whole.
"Company Pension Plans" shall have the meaning specified in
Section 3.20(a).
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"Company Returns" shall mean all returns, declarations,
reports, statements, and other documents required to be filed by the Company or
the Subsidiaries in respect of Taxes, and the term "Company Return" means any
one of the foregoing Company Returns.
"Company Shares" shall have the meaning specified in Section
3.2(a).
"Company Stock" shall have the meaning specified in Section
1.2(a).
"Company Stockholders" shall have the meaning specified in the
introductory paragraph of this Agreement.
"Company Unaudited Balance Sheet Date" shall have the meaning
specified in Section 3.7.
"Company Unaudited Financial Statements" shall have the
meaning specified in Section 3.6.
"Company Welfare Plan" shall have the meaning specified in
Section 3.20(a).
"Delaware Certificate of Merger" shall have the meaning
specified in Section 1.1(b).
"Delaware Law" shall have the meaning prescribed in Section
1.1(a).
"Department" shall have the meaning specified in Section 5.11.
"disposal" or "disposed" shall have the meaning specified in
Section 3.18.
"Effective Time" shall have the meaning specified in Section
1.1(b).
"Employment Agreements" shall have the meaning specified in
Section 1.6(a)(i).
"Environmental Laws" shall have the meaning specified in
Section 3.18.
"ERISA" shall have the meaning specified in Section 3.20(a).
"FTC" shall have the meaning specified in Section 5.11.
"GAAP" shall have the meaning specified in Section 3.6.
"Georgia Certificate of Merger" shall have the meaning
specified in Section 1.1(b).
"Georgia Law" shall have the meaning prescribed in Section
1.1(a)
"Governmental Authority" shall mean (a) the United States of
America, (b) any state, county, municipality, or other governmental subdivision
within the United States of America, and (c) any court or any governmental
department, commission, board, bureau, agency, or other
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instrumentality of the United States of America or of any state, county,
municipality, water rights, taxing, or zoning authority, or other governmental
subdivision within the United States of America.
"HSR Act" shall have the meaning specified in Section 5.11.
"IES" shall have the meaning specified in the introductory
paragraph of this Agreement.
"IES Common Stock" shall have the meaning specified in Section
1.2(a).
"IES Indemnitees" shall have the meaning specified in Section
6.1.
"IES Material Adverse Effect" shall mean any fact,
circumstance, event, or condition which has or would have a materially adverse
effect on the business, operations, properties, condition (financial or
otherwise), assets, liabilities, results of operations or prospects of IES and
its subsidiaries, taken as a whole.
"IES SEC Filings" shall have the meaning specified in Section
4.5(a).
"Indemnitee" shall have the meaning specified in Section 6.4.
"Indemnitee Claim" shall have the meaning specified in Section
6.4.
"Indemnitor" shall have the meaning specified in Section 6.4.
"Knowledge" when used in relation to any Person shall mean the
actual (but not constructive) knowledge of such Person or such Person's officers
after reasonable inquiry.
"Licenses" shall have the meaning specified in Section 3.11.
"Liens" shall mean all liens, mortgages, security interests,
pledges, equities, claims, options and other encumbrances of any kind.
"Merger" shall have the meaning specified in Section 1.1(a).
"Merger Consideration" shall have the meaning specified in
Section 1.2(a).
"NYSE" shall have the meaning specified in Section 1.3.
"officer" means in the case of IES and the Company, any
executive officer of IES or the Company, as applicable, within the meaning of
Rule 3b-7 of the 1934 Act.
"Person" shall mean an individual, partnership, corporation,
limited liability company, trust, incorporated or unincorporated association,
joint venture, joint stock company, Governmental Authority or other legal entity
of any kind.
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"Prospectus" shall have the meaning specified in Section
4.5(d).
"RCRA" shall have the meaning specified in Section 3.18.
"release" shall have the meaning specified in Section 3.18.
"SEC" shall have the meaning specified in Section 3.22.
"Shares" shall have the meaning specified in Section 3.23(b).
"Stockholder Indemnitees" shall have the meaning specified in
Section 6.3.
"Subsidiaries" shall have the meaning specified in Section
3.1.
"subsidiary" means, with respect to any Person, any entity of
which securities or other ownership interests having ordinary voting power to
elect a majority of the board of directors or other Persons performing similar
functions are at any time directly or indirectly owned by such Person.
"Subsidiary Shares" shall have the meaning specified in
Section 3.2(b).
"Subsidiary Stock" shall have the meaning specified in Section
3.2(b).
"Surviving Corporation" shall have the meaning specified in
Section 1.1(a).
"Tax" or "Taxes" shall have the meaning specified in Section
3.19(a).
"Taxing Authority" shall have the meaning specified in Section
3.19(a).
"Territory" shall have the meaning specified in Section
7.1(a).
"third party" shall have the meaning specified in Section 6.4.
A reference in this Agreement to any statute shall be to such
statute as amended from time to time, and the rules and regulations promulgated
thereunder.
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their respective authorized officers as of the
day and year first above written.
INTEGRATED ELECTRICAL SERVICES, INC.
By: /s/ John Wombwell
-------------------------------------
Name: John Wombwell
Title: Senior Vice President
MARK HENDERSON ACQUISITION
CORPORATION
By: /s/ John Wombwell
-------------------------------------
Name: John Wombwell
Title: President
MARK HENDERSON, INCORPORATED
By: /s/ Mark Henderson
-------------------------------------
Name: Mark Henderson
Title: President
COMPANY STOCKHOLDERS
/s/ Mark Henderson
----------------------------------------
Mark Henderson
Social Security Number ###-##-####
/s/ Bill Collins
----------------------------------------
Bill Collins
Social Security Number ###-##-####
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EXHIBIT 2.2
AGREEMENT AND PLAN OF MERGER
DATED AS OF
JUNE 18, 1998
AMONG
INTEGRATED ELECTRICAL SERVICES, INC.,
MARK HENDERSON ACQUISITION CORPORATION
HOLLAND ELECTRICAL SYSTEMS, INC.
AND
AMY B. HENDERSON AND MARY SUE HOLLAND
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TABLE OF CONTENTS
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ARTICLE I The Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.1 The Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.2 Conversion of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 1.3 Surrender and Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 1.4 Withholding Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 1.5 Lost Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 1.6 Other Documents to be Delivered Immediately Prior to the
Effective Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 1.7 Conditions to the Obligations of the Company Stockholders . . . . . . . . . . . . . . . . . . . 4
Section 1.8 Conditions to the Obligations of IES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 1.9 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
ARTICLE II The Surviving Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 2.1 Certificate of Incorporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 2.2 Bylaws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 2.3 Directors and Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
ARTICLE III Representations and Warranties of the Company Stockholders . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 3.1 Organization and Qualification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 3.2 Capitalization; Ownership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 3.3 Authorization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 3.4 Consents and Approvals; No Violation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 3.5 Affiliate Relationships . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 3.6 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 3.7 Undisclosed Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 3.8 Accounts and Notes Receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 3.9 Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 3.10 Material Contracts, Commitments and Customers . . . . . . . . . . . . . . . . . . . . . . . 10
Section 3.11 Operating Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 3.12 Bank Account Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 3.13 Conduct of Business Since Company Unaudited Balance Sheet Date . . . . . . . . . . . . . . . 11
Section 3.14 Litigation; Orders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 3.15 Labor Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 3.16 Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 3.17 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 3.18 Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 3.19 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 3.20 Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 3.21 Brokerage Fees and Commissions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 3.22 Tax Treatment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 3.23 Section 368(a)(2)(D) Representations . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
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ARTICLE IV Representations and Warranties of IES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 4.1 Organization and Qualification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 4.2 Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 4.3 Authorization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 4.4 Consents and Approval; No Violation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 4.5 SEC Filings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 4.6 Tax Treatment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 4.7 Section 368(a)(2)(D)Representations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
ARTICLE V Additional Covenants and Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 5.1 Reasonable Best Efforts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 5.2 Certain Filings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 5.3 Public Announcements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 5.4 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 5.5 Notices of Certain Events . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 5.6 Release from Guarantees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 5.7 Future Cooperation; Tax Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 5.8 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 5.9 Repayment of Related Party Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 5.10 Tax-Free Organization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 5.11 FIRPTA Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 5.12 Preparation and Filing of Tax Returns . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 5.13 Antitrust Law Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 5.14 Pending Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 5.15 Notification of Certain Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
ARTICLE VI Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 6.1 Indemnification by the Company Stockholders . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 6.2 Indemnification Related to Tax Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 6.3 Indemnification by IES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 6.4 Indemnification Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 6.5 Other Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 6.6 Indemnification if Negligence of Indemnitee . . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 6.7 No Third Party Beneficiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 6.8 Limitation Upon Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
ARTICLE VII Noncompetition Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 7.1 Prohibited Activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 7.2 Equitable Relief . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 7.3 Reasonable Restraint . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 7.4 Severability; Reformation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 7.5 Material and Independent Covenant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 7.6 Materiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
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ARTICLE VIII Applicable Securities Laws/Transfer Restrictions . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 8.1 Company Stockholders' Representations and Warranties
Concerning Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 8.2 Transfer Restrictions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
ARTICLE IX Nondisclosure of Confidential Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Section 9.1 General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Section 9.2 Equitable Relief . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Section 9.3 Non-Public Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Section 9.4 Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
ARTICLE X Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Section 10.1 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Section 10.2 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Section 10.3 Expenses and Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Section 10.4 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Section 10.5 Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Section 10.6 Headings; Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Section 10.7 Amendments and Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Section 10.8 Construction of Certain Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Section 10.9 Survival of Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . 36
Section 10.10 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Section 10.11 Jurisdiction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Section 10.12 Waiver of Jury Trial . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Section 10.13 Specific Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Section 10.14 Counterparts; Effectiveness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Section 10.15 Mutual Indemnification Against Claims of Brokers . . . . . . . . . . . . . . . . . . . . . 37
Section 10.16 Definitions and Usage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
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EXHIBITS AND SCHEDULES
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Exhibit A Form of Employment Agreement
Exhibit B Form of Opinion of Counsel to Company Stockholders
Exhibit C Form of Certificate of Secretary of the Company
Exhibit D Form of Company Stockholder Release
Exhibit E Form of Company Affiliate Letter
Exhibit F Form of Company Stockholder Receipt
Exhibit G Form of Cross-Receipt
Exhibit H Form of Opinion of Andrews & Kurth, L.L.P.
Exhibit I Form of Lease Agreement
Schedule 2.3 Officers of Surviving Corporation
Schedule 3.1 Organization and Qualification of Company and Subsidiaries
Schedule 3.2(a) Ownership of Company Shares and Delivery Instructions
Schedule 3.2(b) Subsidiary Corporate History, Subsidiary Stock, Other Securities
and Non-Corporate Entity Participation
Schedule 3.4 Company Consents and Approvals; No Violation
Schedule 3.5 Affiliate Relationships
Schedule 3.6 Company Financial Statements
Schedule 3.7 Company Undisclosed Liabilities
Schedule 3.8 Company Accounts and Notes Receivables
Schedule 3.9 Company Assets
Schedule 3.10 Material Contracts, Commitments and Customers
Schedule 3.11 Company Operating Authority
Schedule 3.12 Company Bank Account Information
Schedule 3.13 Company Conduct of Business
Schedule 3.14 Company Litigation; Orders
Schedule 3.15 Company Labor Agreements
Schedule 3.17 Company Insurance
Schedule 3.18 Company Disposal Sites
Schedule 3.19 Company Taxes
Schedule 3.20 Company Employee Benefit Plans
Schedule 3.21 Company Brokerage Fees and Commissions
Schedule 4.6 IES Affiliates
Schedule 5.7 Company Stockholder Guarantees
Schedule 5.10 Repayment of Advances, Receivables and Loans
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER ("Agreement") dated as of June
18, 1998 among INTEGRATED ELECTRICAL SERVICES, INC., a Delaware corporation
("IES"), MARK HENDERSON ACQUISITION CORPORATION, a Delaware corporation and a
wholly owned subsidiary of IES ("MHI"), HOLLAND ELECTRICAL SYSTEMS, INC., a
Georgia corporation ("Company"), and AMY B. HENDERSON AND MARY SUE HOLLAND,
(together, the "Company Stockholders").
RECITALS:
WHEREAS, the Boards of Directors of IES and the Company have
determined that the combination of MHI and the Company is in the best interests
of the stockholders of IES and the Company, respectively;
WHEREAS, the Company Stockholders desire to sell to IES all
shares of capital stock of the Company owned by them, free and clear of all
liens, and the Company Stockholders agree to be bound by a covenant not to
compete;
WHEREAS, IES desires to acquire such shares of capital stock
of the Company as more fully set forth herein and enforce the covenant not to
compete; and
WHEREAS, IES, the Company and the Company Stockholders intend
the combination of MHI and the Company, to the extent the capital stock of the
Company is exchanged for capital stock of IES and not for cash or other
property, to qualify as a tax-free reorganization under the provisions of
Section 368 of the Internal Revenue Code of 1986, as amended (the "Code"), and
the regulations thereunder; and
NOW, THEREFORE, in consideration of the mutual covenants and
agreements set forth herein, the parties hereto agree as follows:
ARTICLE I
THE MERGER
SECTION I.1 THE MERGER. (a) At the Closing (as defined)
and upon the execution of this Agreement and the delivery of the documents
listed in Section 1.6, at the Effective Time (as hereinafter defined), the
Company shall be merged (the "Merger") with and into MHI in accordance with the
General Corporation Law of the State of Delaware ("Delaware Law") and the laws
of the State of Georgia ("Georgia Law"), whereupon the separate existence of
the Company shall cease, and MHI shall be the surviving corporation (the
"Surviving Corporation").
(2) Immediately following the delivery of the documents listed in
Section 1.6, the Company and MHI will file a certificate of merger (the
"Delaware Certificate of Merger") with the Delaware Secretary of State, a
certificate of merger (the "Georgia Certificate of Merger) with the
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Georgia Secretary of State and make all other filings or recordings required by
Delaware Law and Georgia Law in connection with the Merger. The Merger shall
become effective at such time (the "Effective Time") as the Delaware
Certificate of Merger is duly filed with the Delaware Secretary of State (or at
such later time as may be agreed in writing by the parties hereto and specified
in the Delaware Certificate of Merger).
(3) From and after the Effective Time, the Surviving Corporation
shall possess all the rights, assets, powers, privileges, and franchises and be
subject to all of the obligations, liabilities, restrictions, and disabilities
of the Company and MHI, all as provided under Delaware Law and Georgia Law.
(4) The closing of the transactions contemplated by this Agreement
(the "Closing") shall take place at the offices of IES in Houston, Texas, at
10:00 a.m., within 5 business days following the date on which regulatory
approval under the HSR Act (as defined) is received or on such other day and
time as shall be agreed to by the parties (the "Closing Date").
SECTION I.2 CONVERSION OF SHARES.
(5) At the Effective Time the shares of common stock, $1.00 par
value, of the Company ("Company Common Stock") held by the Company Stockholders
immediately prior to the Effective Time shall be converted into the right to
receive, without interest, an aggregate of (i) 32,653 shares of common stock,
$0.01 par value, of IES ("IES Common Stock") and (ii) $413,600 less any cash
distributions from the Company to the Company Stockholders made after February
28, 1998 ((i) and (ii) being collectively the "Merger Consideration").
(6) At the Effective Time the shares of Company Common Stock held
by MHI or IES immediately prior to the Effective Time shall be canceled, no
consideration shall be paid in exchange therefor and they shall cease to exist
from and after the Effective Time.
SECTION I.3 SURRENDER AND PAYMENT. At the Effective Time,
the Company Stockholders will deliver to IES the certificates listed on
Schedule 3.2(a) (the "Certificates") representing all of the outstanding shares
of Company Common Stock not owned by MHI or IES, and IES will deliver, in
exchange therefor, the Merger Consideration divided among the Company
Stockholders in accordance with the written instructions provided in Schedule
3.2(a). The Certificates will be duly endorsed (or accompanied by duly
executed stock powers), with signatures of those Company Stockholders not
present at the Closing guaranteed by a commercial bank or by a member firm of
the New York Stock Exchange (the "NYSE").
SECTION I.4 WITHHOLDING RIGHTS. Each of the Surviving
Corporation and IES shall be entitled to deduct and withhold from the
consideration otherwise payable to any Person (as defined in Section 10.16)
pursuant to this Article I such amounts as it is required to deduct and
withhold with respect to the making of such payment under any provision of
federal, state, local, or foreign tax law. To the extent that amounts are so
withheld by the Surviving Corporation or IES, as the case may be, such withheld
amounts shall be treated for all purposes of this Agreement as having been paid
to the holder of the shares of Company Common Stock in respect of which such
deduction and withholding was made by the Surviving Corporation or IES, as the
case may be.
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SECTION I.5 LOST CERTIFICATES. If any Certificate shall
have been lost, stolen, or destroyed, upon the making of an affidavit of that
fact by the Person claiming such Certificate to be lost, stolen, or destroyed
and, if required by the Surviving Corporation, the posting by such Person of a
bond, in such reasonable amount as the Surviving Corporation may direct, as
indemnity against any claim that may be made against it with respect to such
Certificate, IES will issue in exchange for such lost, stolen, or destroyed
Certificate the Merger Consideration to be paid in respect of the shares of
Company Common Stock represented by such Certificates as contemplated by this
Article I.
SECTION I.6 OTHER DOCUMENTS TO BE DELIVERED IMMEDIATELY
PRIOR TO THE EFFECTIVE TIME.
(7) At the Closing and immediately prior to the Effective Time,
the Company and the Company Stockholders will deliver to IES:
(1) an Employment Agreement (the "Employment Agreement"),
in the form attached hereto as Exhibit A, for Mike Holland;
(2) an opinion of counsel to the Company Stockholders in
the form attached hereto as Exhibit B;
(3) a Certificate of the Secretary of the Company in the
form attached hereto as Exhibit C;
(4) a release executed by the Company Stockholders in the
form attached hereto as Exhibit D;
(5) the minute book and corporate seal of the Company;
(6) letters from the affiliates of the Company in the form
attached hereto as Exhibit E;
(7) receipts executed by the Company Stockholders in the
form attached hereto as Exhibit F;
(8) a cross-receipt executed by the Company Stockholders
in the form attached hereto as Exhibit G;
(9) an opinion of counsel to the Company Stockholders
regarding tax matters; and
(10) FIRPTA certificates from each Company Stockholder.
(8) At the Closing and immediately prior to the Effective Time,
IES will deliver to the Company Stockholders:
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(1) the Employment Agreement executed by a duly authorized
representative of IES on behalf of the Surviving Corporation for each of
the employees listed in Section 1.6(a)(i) above;
(2) an opinion of Andrews & Kurth L.L.P. in the form
attached hereto as Exhibit H;
(3) a cross-receipt executed by IES in the form attached
hereto as Exhibit G;
(4) a lease agreement in the form attached hereto as
Exhibit I.
SECTION I.7 CONDITIONS TO THE OBLIGATIONS OF THE COMPANY
STOCKHOLDERS. The obligations of the Company Stockholders to consummate the
Merger are subject to the fulfillment, at or before the Closing, of all of the
following conditions, any one or more of which may be waived by the Company
Stockholders.
(9) The representations and warranties of IES contained in this
Agreement shall be true as of the Closing.
(10) All of the obligations of IES to be performed at or before the
Closing pursuant to the terms of this Agreement shall have been duly performed.
(11) The documents necessary to consummate the Merger shall have
been filed with the Secretary of State of the State of Delaware and the
Secretary of State of the State of Georgia.
(12) The Company Stockholders shall have received an opinion of
counsel regarding tax matters.
SECTION I.8 CONDITIONS TO THE OBLIGATIONS OF IES. The
obligations of IES to consummate the Merger are subject to the fulfillment, at
or before the Closing, of all the following conditions, any one or more of
which may be waived by IES.
(13) The representations and warranties of the Company Stockholders
contained in this Agreement shall be true as of the Closing, subject to changes
in the Schedules that have been approved in writing by IES.
(14) All of the obligations of the Company and the Company
Stockholders to be performed at or before the Closing pursuant to the terms of
this Agreement shall have been duly performed, including without limitation
those set forth in Article I hereof.
(15) The Stock Option Agreement dated December 1, 1994, by and
between the Company Stockholders shall have been terminated.
(16) The Agreement of Shareholders of Holland Electrical Systems,
Inc. by and among the Company Stockholders and the predecessor of MHI dated
December 1, 1994, shall have been terminated.
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(17) Provisions one and two under the heading "Added Personal Items
Note Bond with the Employment" set forth in the attachment to the Employment
Agreement by and between Thomas J. Mullarkey and the Company shall have been
terminated.
(18) The documents necessary to consummate the Merger shall have
been filed with the Secretary of State of the State of Delaware and the
Secretary of State of the State of Georgia.
(19) All waiting, review and investigation periods (and any
extensions thereof) applicable to the consummation of the Merger under the HSR
Act shall have expired or been terminated.
SECTION I.9 TERMINATION. (a) This Agreement may be
terminated at any time prior to the Closing solely:
(1) by mutual consent of IES and the Company Stockholders
(2) by all of the Company Stockholders on the one hand,
or by IES (acting through its board of directors), on the other hand, if
the transactions contemplated by this Agreement to take place at the
Closing shall not have been consummated by September 30, 1998, unless the
failure of such transactions to be consummated is due to the willful
failure of the party seeking to terminate this Agreement to perform any of
its obligations under this Agreement to the extent required to be performed
by it prior to the Closing; or
(3) by the Company Stockholders on the one hand, or by
IES, on the other hand, if a material breach or default shall be made by
the other party in the observance or in the due and timely performance of
any of the covenants or agreements contained herein, and the curing or
waiver of such default shall not have been made on or before the Closing.
(20) The termination of this Agreement will in no way limit any
obligation or liability of any party based on or arising from a breach or
default by such party with respect to any of its representations, warranties,
covenants or agreements contained in this Agreement.
ARTICLE II
THE SURVIVING CORPORATION
SECTION II.1 CERTIFICATE OF INCORPORATION. The certificate
of incorporation of MHI in effect at the Effective Time shall be the
certificate of incorporation of the Surviving Corporation.
SECTION II.2 BYLAWS. The bylaws of MHI in effect at the
Effective Time shall be the bylaws of the Surviving Corporation until amended
in accordance with applicable law.
SECTION II.3 DIRECTORS AND OFFICERS. From and after the
Effective Time, until successors are duly elected or appointed and qualified in
accordance with applicable law, (i) the director of MHI at the Effective Time
shall be the sole director of the Surviving Corporation and (ii) the officers
of the Surviving Corporation shall be as set forth on Schedule 2.3 hereto.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE
COMPANY STOCKHOLDERS
The Company Stockholders jointly and severally represent and
warrant to IES as follows:
SECTION III.1 ORGANIZATION AND QUALIFICATION. The Company,
and each of its subsidiaries, if any, are listed on Schedule 3.1 (the
"Subsidiaries"), and each is a corporation duly organized, validly existing,
and in good standing under the laws of the state of its incorporation and has
the requisite corporate power to carry on its business as it is now being
conducted. The Company, and each of the Subsidiaries, is duly qualified to
conduct business as a foreign corporation in every state of the United States
in which its ownership or lease of property or the conduct of its business and
operations makes such qualification necessary, except for such states in which
the Company's or the Subsidiaries' failure to be so qualified is not reasonably
expected to have, individually or in the aggregate, a Company Material Adverse
Effect (as defined in Section 10.16). Schedule 3.1 contains a list of all
jurisdictions in which the Company and each of the Subsidiaries is authorized
or qualified to do business. The Company has heretofore delivered to IES true
and complete copies of the charter and bylaws of the Company and each of the
Subsidiaries, in each instance including any amendments thereto, as currently
in effect.
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SECTION III.2 CAPITALIZATION; OWNERSHIP. (a) The
authorized capital stock of the Company consists of 100,000 shares of Company
Common Stock, of which 1,000 shares are issued and outstanding (the "Company
Shares"). The Company Shares are all of the issued and outstanding shares of
capital stock of the Company and have been duly authorized and validly issued
and are fully paid and nonassessable and free of preemptive rights. There are
not, as of the date hereof, any outstanding or authorized subscriptions,
options, warrants, calls, rights, commitments, or any other agreements of any
character (any of the foregoing, a "Commitment") obligating the Company to
issue any additional shares of capital stock of the Company, or any other
securities convertible into or evidencing the right to subscribe for any shares
of capital stock of the Company. The Company Stockholders own the respective
number of shares of Company Common Stock set forth on Schedule 3.2(a) attached
hereto, free and clear of all Liens (as defined in Section 10.16). Each of the
Company Stockholders has full legal right, power and authority to exchange,
assign and transfer or cause to be exchanged, assigned or transferred their
respective shares of Company Common Stock. The delivery to IES of the Company
Shares pursuant to the terms of this Agreement will transfer valid title
thereto, free and clear of all Liens.
(21) The authorized capital stock of each of the Subsidiaries
consists of the number and type of shares of capital stock set forth on
Schedule 3.2(b) (collectively, "Subsidiary Stock"). Schedule 3.2(b) also sets
forth the number and type of shares of Subsidiary Stock which are issued and
outstanding (collectively, "Subsidiary Shares"), the securities of any other
corporation owned by the Company or any of the Subsidiaries, as well as the
names of any joint venture, partnership or other noncorporate entity in which
the Company or any of the Subsidiaries is a participant. The Subsidiary Shares
are all of the issued and outstanding shares of capital stock of the
Subsidiaries and are directly or ultimately owned by the Company, free and
clear of any Liens, and have been duly authorized and validly issued and are
fully paid and nonassessable and free of preemptive rights. Also set forth on
Schedule 3.2(b) is a listing of all names under which the Company and the
Subsidiaries have done business, as well as the names of all predecessors of
the Company and the Subsidiaries, including the names of any entities from whom
the Company or the Subsidiaries previously acquired significant assets. There
are not, as of the date hereof, any Commitments obligating any of the
Subsidiaries to issue any additional shares of capital stock of any such
Subsidiaries, or any other securities convertible into or evidencing the right
to subscribe for any shares of capital stock of any such Subsidiary.
SECTION III.3 AUTHORIZATION. The Company has the requisite
corporate power and authority to execute and deliver this Agreement and to
consummate the transactions contemplated by this Agreement. The Company
Stockholders and the Board of Directors of the Company have by unanimous
written consent (a) determined that participating in the Merger is in the best
interests of the Company and its stockholders and (b) approved this Agreement
and the Merger. No other corporate proceedings on the part of the Company or
the Company Stockholders are necessary to authorize the execution and delivery
of this Agreement or the consummation by the Company and the Company
Stockholders of the transactions contemplated hereby. This Agreement has been
duly authorized, executed, and delivered by the Company and the Company
Stockholders and constitutes the valid and binding obligation of the Company
and the Company Stockholders, enforceable against the Company and the Company
Stockholders in accordance with its terms.
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SECTION III.4 CONSENTS AND APPROVALS; NO VIOLATION.
Neither the execution and delivery of this Agreement by the Company or the
Company Stockholders, nor the consummation by the Company or the Company
Stockholders of the transactions contemplated by this Agreement, will: (a)
require any consent, approval, authorization, or permit of, or filing with or
notification to, any Governmental Authority, except (i) the filing of a
Certificate of Merger in accordance with Delaware Law and Georgia Law, (ii) any
regulatory approvals or routine governmental consents normally acquired after
the consummation of transactions such as transactions of the nature
contemplated by this Agreement, which consents and approvals are listed on
Schedule 3.4, (iii) where the failure to obtain such consent, approval,
authorization, or permit, or to make such filing or notification, is not
reasonably expected to have, individually or in the aggregate, a Company
Material Adverse Effect or prevent or delay, in any material respect, the
consummation of the transactions contemplated by this Agreement, or (iv)
approvals required pursuant to the HSR Act; (b) result in a default (or give
rise to any right of termination, cancellation, or acceleration) under any of
the terms, conditions, or provisions of any contract, commitment or similar
agreement to which the Company or any of the Subsidiaries is a party, except
(i) as set forth on Schedule 3.4 or (ii) for such defaults (or rights of
termination, cancellation, or acceleration) as to which requisite waivers or
consents have been obtained or which are not reasonably expected to have,
individually or in the aggregate, a Company Material Adverse Effect or prevent
or delay, in any material respect, the consummation of the transactions
contemplated by this Agreement; or (c) assuming compliance with the matters
referred to in Section 3.4(a), violate any order, writ, injunction, decree,
statute, rule, or regulation applicable to the Company, any of the
Subsidiaries, or any of their assets, except for violations which are not
reasonably expected to have, individually or in the aggregate, a Company
Material Adverse Effect or prevent or delay, in any material respect, the
consummation of the transactions contemplated by this Agreement. The Company is
not in violation of its charter or bylaws.
SECTION III.5 AFFILIATE RELATIONSHIPS. Except as set forth
on Schedule 3.5, none of the Company Stockholders nor any affiliate of any of
the Company Stockholders, and no director, officer, employee or agent of or
consultant to the Company or any of the Subsidiaries, owns, directly or
indirectly, in whole or in part, any property, assets or right, tangible or
intangible, which is associated with any property, asset or right owned by the
Company or any of the Subsidiaries or which the Company or any of the
Subsidiaries is operating or using or the use of which is necessary for its
business. Also included in Schedule 3.5 is disclosure of any relationships
which any of the Company Stockholders have, or any director, officer, employee,
or agent of or consultant to the Company or any of the Subsidiaries has, with
the Company or any of the Subsidiaries or any other corporation, partnership,
firm, association or business organization, entity or enterprise which is a
competitor, potential competitor, supplier or customer of the Company or any of
the Subsidiaries. The Persons named on Schedule 3.5 are the only Persons who
may be deemed affiliates of the Company under Rule 145 of the Securities Act of
1933, as amended (the "1933 Act").
SECTION III.6 FINANCIAL STATEMENTS. Attached as Schedule
3.6 are (a) the audited balance sheet, statement of income and statement of
cash flows of the Company as of and for the years ended February 29, 1996 and
February 28, 1997 and 1998 (the "Company Audited Financial Statements") and (b)
the unaudited balance sheet, statement of income and statement of cash flows
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of the Company for the two month period ended April 30, 1998 (the "Company
Unaudited Financial Statements"). The Company Audited Financial Statements and
the Company Unaudited Financial Statements present fairly the consolidated
financial position, results of operations, and changes in financial position of
the Company and the Subsidiaries as of the respective dates or for the
respective periods to which they apply in accordance with United States
generally accepted accounting principles, consistently applied ("GAAP").
SECTION III.7 UNDISCLOSED LIABILITIES. Schedule 3.7 sets
forth an accurate list as of the Company Unaudited Balance Sheet Date (as
defined below) of (i) all liabilities of the Company and the Subsidiaries which
are reflected in the balance sheet contained in the Company Unaudited Financial
Statements and (ii) any liabilities of any kind of the Company or the
Subsidiaries which are not reflected in the balance sheet included in the
Company Unaudited Financial Statements. Except as set forth on Schedule 3.7 or
as reflected, reserved against, or otherwise disclosed in the Company Unaudited
Financial Statements, neither the Company nor any of the Subsidiaries had, at
the date of the unaudited balance sheet included in the Company Unaudited
Financial Statements (the "Company Unaudited Balance Sheet Date") and do not
have, at the date hereof, any liabilities or obligations, whether accrued,
contingent, absolute, determined, determinable or otherwise, that may have,
individually or in the aggregate, a Company Material Adverse Effect.
SECTION III.8 ACCOUNTS AND NOTES RECEIVABLES. Schedule 3.8
sets forth an accurate list as of the Company Unaudited Balance Sheet Date of
the accounts and notes receivable of the Company and the Subsidiaries,
including receivables from and advances to employees of the Company, employees
of the Subsidiaries and the Company Stockholders. Included in Schedule 3.8 is
an aging of all accounts and notes receivable showing amounts due in 30-day
aging categories. The trade and other accounts receivable of the Company and
the Subsidiaries which are classified as current assets on the balance sheet as
of the Company Unaudited Balance Sheet Date are bona fide receivables, were
acquired in the ordinary course of business, are stated in accordance with
GAAP and, subject to the reserve for doubtful accounts, need not be written-off
as uncollectible. Except to the extent reflected on Schedule 3.8, such
accounts and notes are, subject to the reserve for doubtful accounts,
collectible in the amount shown on Schedule 3.8.
SECTION III.9 ASSETS. Schedule 3.9 sets forth an accurate
list of all real and personal property included in "property and equipment" on
the balance sheet of the Company as of the Company Unaudited Balance Sheet Date
and all other tangible assets of the Company with a value in excess of $5,000
(i) owned by the Company or the Subsidiaries as of the Company Unaudited
Balance Sheet Date and (ii) acquired since the Company Unaudited Balance Sheet
Date, including in each case true, complete and correct copies of leases for
significant equipment and for all real property leased by the Company or the
Subsidiaries and descriptions of all real property on which buildings,
warehouses, workshops, garages and other structures used in the operation of
the business of the Company and the Subsidiaries are situated. Schedule 3.9
indicates which assets are currently owned, or were formerly owned, by the
Company Stockholders or affiliates of the Company or the Company Stockholders.
Except as specifically identified on Schedule 3.9, all of the tangible assets,
vehicles and other significant machinery and equipment of the Company and the
Subsidiaries listed on Schedule 3.9 are in good working order and condition,
ordinary wear and tear
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excepted, and have been maintained in accordance with standard industry
practices. All fixed assets used by the Company and the Subsidiaries that are
material to the operation of the Company's and the Subsidiaries' business are
either owned by the Company or the Subsidiaries or leased under an agreement
identified on Schedule 3.9. All leases set forth on Schedule 3.9 are in full
force and effect and constitute valid and binding agreements of the parties
thereto in accordance with their respective terms.
Schedule 3.9 contains true, complete and correct copies of all
title reports and title insurance policies received or owned by the Company and
the Subsidiaries. Schedule 3.9 also includes a summary description of all
plans or projects involving the opening of new operations, expansion of
existing operations or the acquisition of any real property or existing
business, to which management of the Company and the Subsidiaries has devoted
effort or expenditure in the two-year period prior to the date of this
Agreement, which if pursued by the Company or the Subsidiaries would require
additional expenditures of capital.
The Company and the Subsidiaries have good and indefeasible
title to the tangible and intangible personal property and the real property
owned and used in their business, including the properties identified on
Schedule 3.9, subject to no mortgage, pledge, lien, claim, conditional sales
agreement, encumbrance or charge, except for liens reflected on Schedule 3.9,
liens for current taxes not yet payable and assessments not in default,
easements for utilities serving only the property, and easements, covenants and
restrictions and other exceptions to title shown of record in the appropriate
public records in the jurisdictions in which the properties, assets and
leasehold estates are located, which do not adversely affect the Company's or
the Subsidiaries' use of the property.
SECTION III.10 MATERIAL CONTRACTS, COMMITMENTS AND
CUSTOMERS. Schedule 3.10 sets forth an accurate list as of the Company
Unaudited Balance Sheet Date of (i) all material contracts, commitments and
similar agreements to which the Company or any of the Subsidiaries is a party
or by which they or any of their property is bound (including, but not limited
to, joint venture or partnership agreements, contracts with any labor
organizations, loan agreements, indemnity or guaranty agreements, bonds,
mortgages, liens, pledges or other security agreements) and the Company
Stockholders have delivered true copies of such agreements to IES and (ii) all
customers representing 5% or more of the Company's and the Subsidiaries'
revenues, taken as a whole, in any of the periods covered by the Company
Audited Financial Statements or the Company Unaudited Financial Statements.
Except as disclosed on Schedule 3.10, all such agreements are in full force and
effect and none of such contracts or agreements unduly burdens or restricts the
Company or any of the Subsidiaries in the ordinary course of its business.
None of the Company's or the Subsidiaries' customers or suppliers have canceled
service or products, as appropriate. Except to the extent set forth on
Schedule 3.10, (i) the Company and the Subsidiaries have complied with all
material commitments and obligations and are not in default under any contracts
and agreements and no notice of default has been received and (ii) none of the
Company's or the Subsidiaries' customers listed pursuant to (ii) above has
canceled or substantially reduced or is currently attempting or threatening to
cancel or substantially reduce its use of the Company's products or services.
Except as set forth on Schedule 3.10, neither the Company nor any of the
Subsidiaries is now, nor has any of them ever been, a party to any contracts
subject to price redetermination or renegotiation.
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SECTION III.11 OPERATING AUTHORITY. The Company and each
of the Subsidiaries, as applicable, possess all material governmental licenses,
permits, franchises, and other authorizations of any Governmental Authority
("Licenses") that are necessary to the ownership or operation of their business
as currently conducted, and all such Licenses are in full force and effect,
except where the failure to possess any License or the failure to be in full
force and effect is not reasonably expected to have, individually or in the
aggregate, a Company Material Adverse Effect, and neither the Company nor any
of the Subsidiaries is in default in any respect relating thereto. No
proceeding is pending or, to the Company Stockholders' Knowledge, is threatened
seeking the revocation or limitation of any such License that is reasonably
expected to have, individually or in the aggregate, a Company Material Adverse
Effect.
Schedule 3.11 sets forth an accurate list and summary
description as of the Company Unaudited Balance Sheet Date of all Licenses,
certificates, trademarks, trade names, patents, patent applications and
copyrights related to the assets owned or held by the Company or the
Subsidiaries. The Licenses and other rights listed on Schedule 3.11 are valid,
and the Company has not received any notice that any person intends to cancel,
terminate or not renew any such License or other right. The Company has
conducted and is conducting its business in compliance in all material respects
with the requirements, standards, criteria and conditions set forth in the
Licenses and other rights listed on Schedule 3.11 and is not in violation of
any of the foregoing in any material respect. Except as specifically provided
in Schedule 3.11, the consummation of the transactions contemplated by this
Agreement will not result in a default under or a breach or violation of, or
adversely affect the rights and benefits afforded to the Company by, any such
Licenses or other rights.
SECTION III.12 BANK ACCOUNT INFORMATION. Schedule 3.12
contains an accurate list of the names and addresses of every bank and other
financial institution in which the Company or any of the Subsidiaries maintains
an account (whether checking, savings or otherwise), lock box, or safe deposit
box, and the account numbers and persons having signature authority or legal
access thereto.
SECTION III.13 CONDUCT OF BUSINESS SINCE COMPANY UNAUDITED
BALANCE SHEET DATE. Except as expressly contemplated by this Agreement and
except as set forth on Schedule 3.13, since the Company Unaudited Balance Sheet
Date, (a) the business and operations of the Company and the Subsidiaries have
been conducted in the ordinary and usual course in all material respects in
accordance with past practices, (b) neither the Company nor any of the
Subsidiaries has paid or declared any dividend on, or made any distribution
with respect to, or purchased or redeemed any of its capital stock and (c) no
Company Material Adverse Effect has occurred and is continuing.
SECTION III.14 LITIGATION; ORDERS. Except as set forth on
Schedule 3.14, as of the date hereof, there are no Actions pending or, to the
Company Stockholders' Knowledge, threatened against the Company or any of the
Subsidiaries. Except as set forth on Schedule 3.14, as of the date hereof
there are no judgments or outstanding orders, injunctions, decrees,
stipulations, or awards (whether rendered by a court or administrative agency
or by arbitration) against the Company or any of the Subsidiaries.
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SECTION III.15 LABOR MATTERS. Except as set forth on
Schedule 3.15, there are no agreements with labor unions or associations
representing employees of the Company or any of the Subsidiaries. No material
work stoppage against the Company or any of the Subsidiaries is pending or, to
the Company Stockholders' Knowledge, threatened. Neither the Company nor any
of the Subsidiaries has been or is involved in or, to the Company Stockholders'
Knowledge, is threatened with any labor dispute, arbitration, lawsuit, or
administrative proceeding relating to labor matters involving the employees of
the Company or the Subsidiaries (excluding routine workers' compensation
claims) that is reasonably expected to have, individually or in the aggregate,
a Company Material Adverse Effect.
SECTION III.16 COMPLIANCE WITH LAWS. The conduct of the
business by the Company and each of the Subsidiaries complies with all
statutes, laws, regulations, ordinances, rules, judgments, orders, or decrees
applicable thereto (other than Environmental Laws (as hereinafter defined)
which are governed solely by Section 3.18), except for violations or failures
so to comply, if any, that would not have, individually or in the aggregate, a
Company Material Adverse Effect.
SECTION III.17 INSURANCE. Schedule 3.17 sets forth a list
of all insurance policies issued in favor of the Company and the Subsidiaries
which relate to their businesses, and all such policies are currently in force
and effect. True and complete copies of all such policies have been delivered
to IES. Attached to Schedule 3.17 is a complete list of all insurance loss
runs and workers' compensation claims received for the past three (3) policy
years. The insurance carried by the Company, which the Company Stockholders
believe to be adequate in character and amount, is with insurers that are, to
the Company Stockholders' Knowledge, financially sound and reputable and that
are unaffiliated with any of the Company Stockholders or the Company. None of
such policies is a "claims made" policy. All insurance policies carried by the
Company are currently in full force and effect. The Company's insurance has
never been canceled and the Company has never been denied coverage or
experienced a substantial increase in premiums or substantial reduction in
coverage from one policy period to the next period.
SECTION III.18 ENVIRONMENTAL MATTERS. Other than
violations that would not have, individually or in the aggregate, a Company
Material Adverse Effect, the Company and the Subsidiaries are in compliance
with all applicable Environmental Laws. Without limitation of the foregoing,
there are no pre-existing, pending or, to the Company Stockholders' Knowledge,
threatened actions, suits, investigations, inquiries, proceedings or clean-up
obligations by or to any Governmental Authority relating to any Environmental
Laws with respect to the Company or any of the Subsidiaries, except for
actions, suits, investigations, inquiries, proceedings, and obligations that
would not have, individually or in the aggregate, a Company Material Adverse
Effect. All notices, permits, or similar authorizations, if any, required to
be obtained or filed in connection with the operations of the Company or the
Subsidiaries, including, without limitation, treatment, storage, disposal, or
release of a hazardous substance or solid waste into the environment, have been
duly obtained or filed, other than any such notices, permits, or similar
authorizations the failure of which to obtain or file is not reasonably
expected to have, individually or in the aggregate, a Company Material Adverse
Effect. To the Company Stockholders' Knowledge, there are no underground
storage tanks on, in or under any properties owned by the Company and no
underground storage tanks have been closed or removed from any of such
properties during the time such properties were
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owned, leased or operated by the Company which are not listed on Schedule 3.18.
To the Company Stockholders' Knowledge, there is no asbestos or
asbestos-containing material present in any of the properties owned by the
Company, and no asbestos has been removed from any of such properties during
the time such properties were owned, leased or operated by the Company.
Neither the Company nor any of its respective properties are subject to any
material liabilities or expenditures (fixed or contingent) relating to any
suit, settlement, court order, administrative order, regulatory requirement,
judgment or claim asserted or arising under any Environmental Law. The term
"release" has the meaning specified in CERCLA (as hereinafter defined), and the
term "disposal" (or "disposed") has the meaning specified in RCRA (as
hereinafter defined). For the purposes hereof, "Environmental Laws" shall mean
any and all laws, statutes, ordinances, rules, regulations, orders, or
determinations of any Governmental Authority pertaining to the environment in
effect on the date of this Agreement and in effect at such time in any and all
jurisdictions in which the Company or any of the Subsidiaries operate,
including, without limitation, the Clean Air Act, as amended, the Comprehensive
Environmental Response, Compensation and Liability Act, as amended ("CERCLA"),
the Federal Water Pollution Control Act, as amended, the Resource Conservation
and Recovery Act, as amended ("RCRA"), the Safe Drinking Water Act, as amended,
the Toxic Substances Control Act, as amended, comparable state and local laws
and other material environmental protection laws in effect on the date of this
Agreement. Schedule 3.18 lists all disposal sites which the Company and the
Subsidiaries have utilized as of the Company Unaudited Balance Sheet Date.
SECTION III.19 TAXES. (a) (i) Except as set forth on
Schedule 3.19, the Company and each of the Subsidiaries have filed when due all
Company Returns (as defined in Section 10.16), and have, except for Taxes that
are being contested in good faith and set forth on Schedule 3.19, timely paid
and discharged all Tax obligations shown thereon and adequate reserves have
been established on the books of the Company for all Taxes for which the
Company is liable but payment is not yet due, (ii) the Company Returns
correctly and accurately reflect the facts regarding the income, business and
assets, operations, activities, status, or other matters of the Company and the
Subsidiaries, and any other information required to be shown thereon, and are
not subject to penalties under Section 6662 of the Code, relating to
accuracy-related penalties, or any corresponding provision of applicable state,
local, or foreign Tax law or any predecessor provision of law, and (iii)
neither the Company nor any of the Subsidiaries has received any notice of any
Tax deficiency outstanding, proposed, or assessed against or allocable to it,
nor has either of them executed any waiver of any statute of limitations on the
assessment or collection of any Tax, or executed or filed with the Internal
Revenue Service or any other governmental body (any of these to be referred to
hereinafter as a "Taxing Authority") any agreement now in effect extending the
period for assessment or collection of any Taxes against the Company or any of
the Subsidiaries. No liens for Taxes exist upon the assets of the Company
except Liens for Taxes which are not yet due. The Company is not and never has
been, subject to Tax in any jurisdiction outside the United States. No
litigation with respect to any Tax for which the Company is asserted to be
liable is pending or, to the knowledge of the Company or any Stockholder,
threatened, and no basis which the Company or any Stockholder believes to be
valid exists on which any claim for any such Tax can be asserted against the
Company. There are no requests for rulings or determinations in respect of any
Taxes pending between the Company and any taxing authority. No issues have
been raised and remain pending by any taxing authority in connection with the
examination of any Return of the Company.
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All deficiencies asserted and assessments made, if any, as a result of or in
connection with any examination have been paid in full or are fully reflected
as a liability in the Financial Statements. The Company is not and never has
been party to any tax allocation or sharing agreement. All amounts required to
be withheld by the Company and paid to governmental agencies for income, social
security, unemployment insurance, sales, excise, use and other Taxes have been
collected or withheld and paid to the proper taxing authority. For purposes of
this Agreement, "Tax" or "Taxes" means taxes of any kind, levies, or other like
assessments, customs, duties, imposts, charges, or fees, including, without
limitation, income, gross receipts, ad valorem, value added, excise, real or
personal property, asset, sales, use, license, payroll, transaction, capital,
net worth and franchise taxes, estimated taxes, withholding, employment, social
security, workers compensation, utility, severance, production, unemployment
compensation, occupation, premium, windfall profits, transfer, and gains taxes
or other governmental taxes imposed or payable to the United States, or any
state, county, local, or foreign government or subdivision or agency thereof,
and in each instance such term shall include any interest, penalties, or
additions to tax attributable to or imposed with respect to any such Tax,
including penalties for the failure to file any Tax return or report.
(22) Except for the group of which the Company is currently the
parent, neither the Company nor any of the Subsidiaries has ever been a member
of an affiliated group of corporations, within the meaning of Section 1504 of
the Code, other than as a common parent corporation.
(23) Except as set forth on Schedule 3.19, none of the assets of
the Company or any of the Subsidiaries is property that the Company is required
to treat as being owned by any other Person pursuant to the "safe harbor lease"
provisions of former Section 168(f)(8) of the Code.
(24) None of the assets of the Company or any of the Subsidiaries
directly or indirectly secures any debt the interest on which is tax-exempt
under Section 103(a) of the Code.
(25) None of the assets of the Company or any of the Subsidiaries
is "tax-exempt use property" within the meaning of Section 168(h) of the Code.
(26) Neither the Company nor any of the Subsidiaries has agreed to
make, nor is any of them required to make, any adjustment under Section 481(a)
of the Code by reason of a change in accounting method or otherwise.
(27) Neither the Company nor any of the Subsidiaries has
participated in, nor will any of them participate in, an international boycott
within the meaning of Section 999 of the Code.
(28) Neither the Company nor any of the Subsidiaries has or had a
permanent establishment in any foreign country, as defined in any applicable
tax treaty or convention between the United States and such foreign country.
(29) Neither the Company nor any of the Subsidiaries has filed a
consent pursuant to the collapsible corporation provisions of Section 341(f) of
the Code (or any corresponding provision of state, local, or foreign income tax
law) or agreed to have Section 341(f)(2) of the Code (or any corresponding
provision of state, local, or foreign income tax law) apply to any disposition
of any asset owned by it.
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(30) Neither the Company nor any Company Stockholder is a "foreign
person" as that term is defined in Section 1445(f)(3).
(31) The Company has not made, is not obligated to make and is not
a party to any agreement that could require it to make any payment that is not
deductible under Section 280G of the Code.
(32) No asset of the Company is subject to any provision of
applicable law which eliminates or reduces the allowance for depreciation or
amortization in respect of that asset below the allowance generally available
to an asset of its type.
SECTION III.20 EMPLOYEE BENEFIT PLANS. (a) Schedule 3.20
contains a list of all "employee pension benefit plans" (as defined in Section
3(2) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA")) (sometimes referred to herein as "Company Pension Plans"), "employee
welfare benefit plans" (as defined in Section 3(l) of ERISA, hereinafter a
"Company Welfare Plan"), stock option, stock purchase, incentive, bonus,
deferred compensation plans or arrangements, vacation, change in control,
stay-on bonus plans or arrangements, and other material employee compensation
and fringe benefit plans or agreements, maintained, contributed to, or pursuant
to which the Company or any of the Subsidiaries has or may have any liability,
whether or not heretofore terminated (all the foregoing being herein called
"Company Benefit Plans"). The Company has delivered to IES an accurate list
(which is set forth on Schedule 3.20) showing all officers, directors and key
employees of the Company, listing all Employment Agreement with such officers,
directors and key employees and the rate of compensation (and the portions
thereof attributable to salary, bonus and other compensation, respectively) of
each of such persons as of (i) December 31, 1997 and (ii) the date hereof. The
Company has provided to IES true, complete and correct copies of any Employment
Agreement for persons listed on Schedule 3.20. Since December 31, 1997, except
as disclosed on Schedule 3.20, there have been no increases in the compensation
payable or any special bonuses to any officer, director, key employee or other
employee, except ordinary salary increases implemented on a basis consistent
with past practices. The Company has made available to IES true, complete, and
correct copies of (i) each Company Benefit Plan and any subsequently adopted
amendments thereto (or, in the case of unwritten Company Benefit Plans,
descriptions thereof), (ii) the most recent annual report on Form 5500 filed
with respect to each Company Benefit Plan (if any such report was required),
(iii) the most recent summary plan description for each Company Benefit Plan
for which such a summary plan description is required (with all summaries of
material modifications provided after the most recent summary plan description
was distributed), (iv) each trust agreement, group annuity contract and service
agreement relating to any Company Benefit Plan and (v) each favorable
determination letter from the Internal Revenue Service with respect to each
Company Benefit Plan that is intended to be qualified under Section 401(a) of
the Code.
(33) With respect to all Company Benefit Plans, the Company and
each Subsidiary have complied with all applicable laws and, except as set forth
on Schedule 3.20, all Company Benefit Plans are and have been administered in
compliance with their terms and all applicable laws, including, without
limitation, ERISA and the Code; and there are no pending or, to the Company
Stockholders' Knowledge, threatened investigations by any governmental entity,
termination
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proceedings, or other claims, suits or proceedings against or involving any
Company Benefit Plan. All such plans listed on Schedule 3.20 that are intended
to qualify (the "Qualified Plans") under Section 401(a) of the Code are, and
have been so qualified and have been determined by the Internal Revenue Service
to be so qualified, and copies of such determination letters are attached to
Schedule 3.20. Except as disclosed on Schedule 3.20, all reports and other
documents required to be filed with any governmental agency or distributed to
plan participants or beneficiaries (including, but not limited to, actuarial
reports, audits or tax returns) have been timely filed or distributed, and
copies thereof are included as part of Schedule 3.20 hereof.
(34) All contributions to, and payments from, the Company Benefit
Plans required to be made in accordance with the Company Benefit Plans or
applicable law have been timely made. All accrued contribution obligations of
the Company with respect to any Company Benefit Plan have either been fulfilled
in their entirety or are fully reflected on the balance sheet in the Company
Audited Financial Statements.
(35) No Company Benefit Plan is subject to Section 302 or Title IV
of ERISA or Section 412 of the Code or is a "multiemployer plan" within the
meaning of Section 4001(a)(3) of ERISA or a "multiple employer plan," within
the meaning of Section 413(c) of the Code.
(36) (i) No "prohibited transaction" (under Section 4975 of the
Code or Section 406 of ERISA) has occurred with respect to any Company Benefit
Plan and (ii) there has been no breach of any fiduciary duty with respect to
any Company Benefit Plan.
(37) Neither the Company nor any of the Subsidiaries maintains or
contributes to any Company Welfare Plan which could not be unilaterally
terminated by the Company or any of the Subsidiaries at any time without
liability.
SECTION III.21 BROKERAGE FEES AND COMMISSIONS. Except as
set forth on Schedule 3.21, neither the Company nor the Company Stockholders
has incurred any obligation or entered into any agreement for any investment
banking, brokerage or finder's fee, or commission in respect of the
transactions contemplated by this Agreement for which IES or the Company shall
incur any liability.
SECTION III.22 TAX TREATMENT. Neither the Company nor, to
the Company Stockholders' Knowledge, any of its affiliates has taken, has
agreed or failed to take, or intends to take any action or has any knowledge of
any fact or circumstance that would prevent the Merger from qualifying as a
reorganization within the meaning of Section 368 of the Code (a "368
Reorganization").
SECTION III.23 SECTION 368(A)(2)(D) REPRESENTATIONS. The
Company and each Company Stockholder hereby represents and warrants the
following to be true and correct as of the Effective Time and understands that
counsel rendering any tax opinions pursuant to Section 1.6 will rely on such
representations and warranties and will assume them to be correct, without
further inquiry as of the Effective Time and that the inaccuracy of any of the
following may negatively affect those opinions:
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(38) The fair market value of the IES Common Stock and other
consideration received by each Company Stockholder will be approximately equal
to the fair market value of the Company Common Stock surrendered in the
exchange.
(39) There is no plan or intention of the Company Stockholders to
have IES redeem, or have a party related to IES acquire, shares of IES Common
Stock received in the Merger which would reduce the Company Stockholders'
ownership of a number shares of IES Common Stock received in the Merger to a
number of shares having a value, as of the date of the Merger, of less than 50%
of the sum of (i) the value at the effective time of all the Company Common
Stock held immediately prior to the Merger by the Company Stockholder and (ii)
the value at the Effective Time of any other instruments (such as debt of the
Company which is guaranteed by the Company Stockholder) which are classified
for federal income tax purposes as stock of the Company (collectively,
"Shares") and which are held immediately prior to the Merger by the Company
Stockholder. For purposes of this representation, Shares outstanding
immediately prior to the Merger include Shares exchanged for cash in lieu of
fractional shares of IES Common Stock as well as Shares redeemed prior to the
Merger by reason of this Agreement or otherwise as part of the Merger, and the
value of all Shares outstanding immediately prior to the Merger shall be
determined with regard to any extraordinary distributions (i.e., distributions
with respect to Shares other than regular, normal dividends) by the Company by
reason of this Agreement or otherwise as part of the Merger. For purposes of
this representation, a party is related to IES if such party and IES would be
treated as related parties within the meaning of Treasury Regulations Section
1.368-1(e)(3).
(40) MHI will acquire at least 90 percent of the fair market value
of the net assets and at least 70 percent of the fair market value of the gross
assets held by the Company immediately prior to the Merger. For purposes of
this representation, amounts paid by the Company to dissenters, amounts paid by
the Company to Company Stockholders who receive cash or other property, amounts
used by the Company to pay reorganization expenses, and all redemptions and
distributions (except for regular, normal dividends, if any) made by the
Company immediately preceding the Merger, will be included as assets of the
Company held immediately prior to the Merger.
(41) The liabilities of the Company assumed by MHI and the
liabilities to which the transferred assets of the Company are subject were
incurred by the Company in the ordinary course of its business.
(42) The Company and the Company Stockholders will pay their
respective expenses, if any, incurred in connection with the Merger.
(43) There is no intercorporate indebtedness existing between IES
and the Company or between MHI and the Company that was issued, acquired or
will be settled at a discount.
(44) The Company is not an investment company. For purposes of
this representation, an investment company means a regulated investment company
(as defined in the Code), a real estate investment trust (as defined in the
Code), or a corporation, 50 percent or more of the value of whose total assets
are stock and securities and 80 percent or more of the value of whose total
assets are assets held for investment within the meaning of Section
368(a)(2)(F)(iii) of the Code.
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(45) The Company is not under the jurisdiction of a court in a case
under Title 11 of the United States Code, or a receivership, foreclosure, or
similar proceeding in a Federal or State court.
(46) On the date of the Merger, the fair market value of the assets
of the Company will exceed the sum of its liabilities, plus the amount of
liabilities, if any, to which its assets are subject.
(47) None of the compensation received by any stockholder-employees
of the Company will be separate consideration for, or allocable to, any of
their shares of Company Common Stock. None of the shares of IES Common Stock to
be received by any stockholder-employee will be separate consideration for, or
allocable to, any Employment Agreement, and the compensation paid to any
stockholder-employee will be for services actually rendered and will be
commensurate with amounts paid to third parties bargaining at arm's length for
similar services.
(48) The payment of cash in lieu of issuing fractional shares of
IES Common Stock is solely for the purpose of avoiding the expense and
inconvenience to IES of issuing fractional shares and does not represent
separately bargained-for consideration. The total cash consideration that will
be paid in the Merger to the Company Stockholders instead of issuing fractional
shares of IES Common Stock will not exceed one percent of the total
consideration that will be issued in the Merger to the Company Stockholders in
exchange for their shares of Company Common Stock. The fractional share
interests of each Company Stockholder will be aggregated and no Company
Stockholder will receive cash in consideration of a fractional share interest
in an amount equal to or greater than the value of one full share of IES Common
Stock.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF IES
IES represents and warrants to the Company Stockholders as follows:
SECTION IV.1 ORGANIZATION AND QUALIFICATION. Each of IES
and MHI is a corporation duly organized, validly existing and in good standing
under the laws of the state of its incorporation, and IES has the requisite
corporate power to carry on its business as it is now conducted. IES is duly
qualified to conduct business as a foreign corporation in each jurisdiction in
which its ownership or lease of property or the conduct of its business and
operations makes such qualification necessary, except for such jurisdictions in
which the IES's failure to be so qualified is not reasonably expected to have,
individually or in the aggregate, an IES Material Adverse Effect (as defined in
Section 10.16).
SECTION IV.2 CAPITALIZATION. (a The authorized capital
stock of IES consists of 100,000,000 shares of IES Common Stock, 2,655,709
shares of restricted voting common stock and 10,000,000 shares of preferred
stock. As of March 31, 1998, there were outstanding 21,759,627 shares of IES
Common Stock (including no shares of treasury stock), 2,655,709 shares of
restricted voting common stock and, no shares of preferred stock. All
outstanding shares of capital stock of IES have been duly authorized and
validly issued and are fully paid and non-assessable and free of preemptive
rights.
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(49) The shares of IES Common Stock to be issued as part of the
Merger Consideration have been duly authorized and, when issued and delivered
in accordance with the terms of this Agreement, will have been validly issued
and will be fully paid and non-assessable, and the issuance thereof is not
subject to any preemptive or other similar right.
SECTION IV.3 AUTHORIZATION. The execution, delivery and
performance by IES of this Agreement, and the consummation by IES and MHI of
the transactions contemplated hereby, are within the corporate powers of IES
and MHI and have been duly authorized by all necessary corporate action. This
Agreement has been duly executed and delivered by IES and MHI and constitutes
the valid and binding obligation of IES and MHI enforceable against IES and MHI
in accordance with its terms.
SECTION IV.4 CONSENTS AND APPROVAL; NO VIOLATION. Neither
the execution and delivery of this Agreement by IES and MHI, nor the
consummation by IES and MHI of the transactions contemplated by this Agreement,
will: (a) require any consent, approval, authorization, or permit of, or filing
with or notification to, any Governmental Authority, except (i) the filing of a
certificate or certificates of merger in accordance with Delaware Law and
Georgia Law, (ii) compliance with any applicable requirements of the 1933 Act,
the Securities Exchange Act of 1934, as amended (the "1934 Act"), and foreign
or state securities or Blue Sky laws, (iii) any regulatory approvals or routine
governmental consents normally acquired after the consummation of transactions
such as transactions of the nature contemplated by this Agreement, (iv) where
the failure to obtain such consent, approval, authorization, or permit, or to
make such filing or notification, is not reasonably expected to have,
individually or in the aggregate, an IES Material Adverse Effect or prevent or
delay, in any material respect, the consummation of the transactions
contemplated by this Agreement, or (v) approvals required pursuant to the HSR
Act; (b) result in a default (or give rise to any right of termination,
cancellation, or acceleration) under any of the terms, conditions, or
provisions of any agreement or other instrument binding upon IES or any of its
subsidiaries, except for such defaults (or rights of termination, cancellation,
or acceleration) as to which requisite waivers or consents have been obtained
or which are not reasonably expected to have, individually or in the aggregate,
an IES Material Adverse Effect or prevent or delay, in any material respect,
the consummation of the transactions contemplated by this Agreement; or (c)
assuming compliance with the matters referred to in Section 4.4(a), violate any
order, writ, injunction, decree, statute, rule, or regulation applicable to IES
or any of its subsidiaries or any of their assets, except for violations which
are not reasonably expected to have, individually or in the aggregate, an IES
Material Adverse Effect or prevent or delay, in any material respect, the
consummation of the transactions contemplated by this Agreement.
SECTION IV.5 SEC FILINGS. (a IES has filed with the SEC
all material forms, statements, reports and documents (the "IES SEC Filings")
required to be filed by it under the 1934 Act and the rules and regulations
thereunder.
(50) As of its filing date, each IES SEC Filing complied as to form
in all material respects with the applicable requirements of the 1934 Act.
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(51) As of its filing date, each IES SEC Filing filed pursuant to
the 1934 Act did not contain any untrue statement of a material fact or omit to
state any material fact necessary in order to make the statements made therein,
in the light of the circumstances under which they were made, not misleading.
(52) IES has previously delivered to the Company Stockholders
copies of IES's prospectus, dated February 9, 1998, as supplemented (the
"Prospectus"). As of its date, the Prospectus did not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
SECTION IV.6 TAX TREATMENT. Neither IES nor, to IES's
Knowledge, any of its affiliates has taken, has agreed or failed to take, or
intends to take any action or has any knowledge of any fact or circumstance
that would prevent the Merger from qualifying as a 368 Reorganization.
SECTION IV.7 SECTION 368(A)(2)(D)REPRESENTATIONS. IES
hereby represents and warrants the following to be true and correct as of the
Effective Time and understands that counsel rendering any tax opinions pursuant
to Section 1.6 will rely on such representations and warranties and will assume
them to be correct, without further inquiry, as of the Effective Time and that
the inaccuracy of any of the following may negatively affect those opinions:
(53) The fair market value of the IES Common Stock and other
consideration received by each Company Stockholder will be approximately equal
to the fair market value of the Company Common Stock surrendered in the
exchange.
(54) Neither IES, nor related parties, will dispose of a
substantial part of the value of the proprietary interest in the Company
following the Merger. IES has no plan or intention to redeem, or have a party
related to IES acquire, shares of IES Common Stock issued in the Merger. For
purposes of this representation and the following representations, a party is
related to IES if such party and IES would be treated as related parties within
the meaning of Treasury Regulations Section 1.368-1(e)(3).
(55) MHI will acquire at least 90 percent of the fair market value
of the net assets and at least 70 percent of the fair market value of the gross
assets held by the Company immediately prior to the Merger. For purposes of
this representation, amounts paid by the Company to dissenters, amounts paid by
the Company to Company Stockholders who receive cash or other property, amounts
used by the Company to pay reorganization expenses, and all redemptions and
distributions (except for regular, normal dividends, if any) made by the
Company immediately preceding the Merger, will be included as assets of the
Company held immediately prior to the Merger.
(56) Prior to the Merger, IES will be in control of MHI. For
purposes of this representation and the following representations, control is
defined as the ownership of stock possessing at least 80 percent of the total
combined voting power of all classes of stock entitled to vote and at least 80
percent of the total number of shares of all other classes of stock of the
corporation.
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(57) Following the Merger, MHI will not issue additional shares of
its capital stock that would result in IES losing control of MHI.
(58) Neither IES, nor related parties, have a plan or intention to
reacquire any shares of IES Common Stock issued in the Merger.
(59) IES has no plan or intention to liquidate MHI subsequent to
the Merger; to merge MHI with or into another corporation subsequent to the
Merger; to sell or otherwise dispose of the stock of MHI subsequent to the
Merger, or to cause MHI to sell or otherwise dispose of any of its assets or
any assets acquired from the Company subsequent to the Merger, except for
dispositions made in the ordinary course of business.
(60) Following the Merger, MHI will continue the historic business
of the Company or use a significant portion of the Company's historic business
assets in a business.
(61) IES and MHI will pay their respective expenses, if any,
incurred in connection with the Merger.
(62) There is no intercorporate indebtedness existing between IES
and the Company or between MHI and the Company that was issued, acquired or
will be settled at a discount.
(63) Neither IES nor MHI are investment companies. For purposes of
this representation, an investment company means a regulated investment company
(as defined in the Code), a real estate investment trust (as defined in the
Code) or a corporation, 50 percent or more of the value of whose total assets
are stock and securities and 80 percent or more of the value of whose total
assets are assets held for investment within the meaning of Section
368(a)(2)(F)(iii) of the Code.
(64) No capital stock of MHI will be issued in the Merger.
(65) None of the compensation received by any stockholder-employees
of the Company will be separate consideration for, or allocable to, any of
their shares of the Company Common Stock. None of the shares of IES Common
Stock to be received by any stockholder-employee will be separate consideration
for, or allocable to, any Employment Agreement, and the compensation paid to
any stockholder-employee will be for services actually rendered and will be
commensurate with amounts paid to third parties bargaining at arm's length for
similar services.
(66) The payment of cash in lieu of issuing fractional shares of
IES Common Stock is solely for the purpose of avoiding the expense and
inconvenience to IES of issuing fractional shares and does not represent
separately bargained-for consideration. The total cash consideration that will
be paid in the Merger to the Company Stockholders instead of issuing fractional
shares of IES Common Stock will not exceed one percent of the total
consideration that will be issued in the Merger to the Company Stockholders in
exchange for their shares of Company Common Stock. The fractional share
interests of each Company Stockholder will be aggregated and no Company
Stockholder will receive cash in consideration of a fractional shares interest
in an amount equal to or greater than the value of one full share of IES Common
Stock.
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ARTICLE V
ADDITIONAL COVENANTS AND AGREEMENTS
SECTION V.1 REASONABLE BEST EFFORTS. Subject to the terms
and conditions of this Agreement, each party will use its reasonable best
efforts to take, or cause to be taken, all actions and to do, or cause to be
done, all things necessary, proper, or advisable under applicable laws and
regulations to consummate the transactions contemplated by this Agreement.
SECTION V.2 CERTAIN FILINGS. The Company and IES shall
cooperate with one another (i) in determining whether any action by or in
respect of, or filing with, any Governmental Authority is required, or any
actions, consents, approvals, or waivers are required to be obtained from
parties to any material agreements, in connection with the consummation of the
transactions contemplated by this Agreement and (ii) in taking such actions or
making such filings, furnishing information required in connection therewith
and seeking timely to obtain such actions, consents, approvals, or waivers.
SECTION V.3 PUBLIC ANNOUNCEMENTS. Without the prior
consent of the other, which consent shall not be unreasonably withheld, none of
the Company or the Company Stockholders will issue, or permit any agent or
affiliate to issue, any press releases or otherwise make or permit any agent or
affiliate to make, any public statements with respect to this Agreement or the
transactions contemplated by this Agreement.
SECTION V.4 FURTHER ASSURANCES. At and after the Effective
Time, the officers and directors of the Surviving Corporation will be
authorized to execute and deliver, in the name and on behalf of the Company or
MHI, any deeds, bills of sale, assignments, or assurances and to take and do,
in the name and on behalf of the Company or MHI, any other actions and things
to vest, perfect, or confirm of record or otherwise in the Surviving
Corporation any and all right, title, and interest in, to, and under any of the
rights, properties, or assets of the Company acquired or to be acquired by the
Surviving Corporation as a result of, or in connection with, the Merger.
SECTION V.5 NOTICES OF CERTAIN EVENTS. Each of the
Company, the Company Stockholders and IES shall promptly notify the other
parties hereto of:
(67) any notice or other communication from any Person alleging
that the consent of such Person is or may be required in connection with the
transactions contemplated by this Agreement;
(68) any notice or other communication from any Governmental
Authority in connection with the transactions contemplated by this Agreement;
(69) any actions, suits, claims, investigations or proceedings
commenced or, to its knowledge, threatened against, relating to, or involving
or otherwise affecting such party that relate to the consummation of the
transactions contemplated by this Agreement; and
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(70) any material failure on its part to comply with or satisfy any
covenant, condition or agreement to be complied with or satisfied by it
hereunder; provided, however, that the delivery of any notice pursuant to this
Section 5.6(d) shall not limit or otherwise affect the remedies available
hereunder to the party receiving such notice.
SECTION V.6 RELEASE FROM GUARANTEES. Following the
Effective Time, IES and the Surviving Corporation shall use reasonable efforts
to have the Company Stockholders released from the personal guarantees of the
Company's indebtedness identified on Schedule 5.7. In the event that IES
cannot obtain releases of any such guarantees on or prior to one hundred and
twenty (120) days subsequent to the Effective Time, IES shall pay off or
otherwise refinance or retire such indebtedness.
SECTION V.7 FUTURE COOPERATION; TAX MATTERS. The Company,
the Company Stockholders and IES shall each deliver or cause to be delivered to
the other following the Effective Time such additional instruments as the other
may reasonably request for the purpose of fully carrying out this Agreement.
The Company Stockholders will cooperate and use their reasonable best efforts
to have the present officers, directors and employees of the Company cooperate
with IES at and after the Effective Time in furnishing information, evidence,
testimony and other assistance in connection with any actions, proceedings,
arrangements or disputes of any nature with respect to matters pertaining to
all periods prior to the Effective Time.
SECTION V.8 EXPENSES. IES and the Company Stockholders
will each pay their own fees, expenses and disbursements of their respective
agents, representatives, accountants and counsel incurred in connection with the
execution, delivery and performance of this Agreement and any amendment thereto.
SECTION V.9 REPAYMENT OF RELATED PARTY INDEBTEDNESS.
Concurrently with the execution of this Agreement, (i) the Company Stockholders
shall repay to the Company all amounts outstanding as advances to or
receivables from the Company Stockholders and (ii) the Company shall repay all
amounts outstanding under loans to the Company from the Company Stockholders.
Such advances, receivables and loans, and the amounts thereof, are listed on
Schedule 5.10.
SECTION V.10 TAX-FREE ORGANIZATION. IES and the Company
Stockholders shall each use its best efforts to cause the Merger to be treated
as a reorganization within the meaning of Section 368(a) of the Code.
SECTION V.11 FIRPTA CERTIFICATE. Each Company Stockholder
will deliver to IES a certificate to the effect that he is not a foreign person
pursuant to Section 1.1445-2(b) of the Treasury regulations.
SECTION V.12 PREPARATION AND FILING OF TAX RETURNS.
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(71) The Company Stockholders shall file or cause to be filed all
tax returns for all taxable periods that end on or before the Closing Date, but
in each case only after IES has reviewed such filings and consented thereto.
(72) IES shall file or cause to be filed all tax returns for all
taxable periods ending after the Closing Date.
(73) Each party hereto shall, and shall cause its subsidiaries and
affiliates to, provide to each of the other parties hereto such cooperation and
information as any of them reasonably may request in filing any tax returns,
amended tax returns or claim for refund, determining a liability for Taxes or a
right to refund of Taxes or in conducting any audit or other proceeding in
respect of Taxes. Such cooperation and information shall include providing
copies of all relevant portions of relevant tax returns, together with relevant
accompanying schedules and relevant work papers, relevant documents relating to
rulings or other determinations by taxing authorities and relevant records
concerning the ownership and Tax basis of property, which such party may
possess. Each party shall make its employees reasonably available on a
mutually convenient basis at its cost to provide explanation of any documents
or information so provided. Subject to the preceding sentence, each party
required to file tax returns pursuant to this Agreement shall bear all costs of
filing such tax returns.
SECTION V.13 ANTITRUST LAW COMPLIANCE. Not later than five
business days after the date hereof, (a) the Company, the Company Stockholders
and (b) IES shall prepare and file with the United States Department of Justice
(the "Department") and the Federal Trade Commission (the "FTC") the
notification and report form with respect to the transactions contemplated by
this Agreement as required pursuant to the Hart-Scott-Rodino Antitrust
Improvements Act of 1976 (the "HSR Act"). The Company, the Company
Stockholders and IES shall each cooperate with the other in preparation of such
filings and shall promptly comply with any reasonable request by the Department
or the FTC for supplemental information and shall use their best efforts to
obtain early termination of the waiting period under the HSR Act.
SECTION V.14 PENDING CLOSING. (a Between the date of this
Agreement and the Consummation Date, the Company Stockholders will, and will
cause the Company to, except as set forth on Schedule 5.12:
(1) carry on it's respective businesses in substantially
the same manner as it has heretofore;
(2) use all commercially reasonable efforts to maintain
its properties and facilities, including those held under leases, in as
good working order and condition as at present, ordinary wear and tear
excepted;
(3) perform in all material respects all of its
respective obligations under agreements relating to or affecting its
respective assets, properties or rights;
(4) use all reasonable efforts to keep in full force and
effect present insurance policies or other comparable insurance coverage;
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(5) use its commercially reasonable efforts to maintain
and preserve its business organization intact, retain its respective
present key employees and maintain its respective relationships with
suppliers, customers and others having business relations with the Company;
(6) use reasonable efforts to maintain compliance with
all material permits, laws, rules and regulations, consent orders, and all
other orders of applicable courts, regulatory agencies and similar
governmental authorities;
(7) maintain present debt and lease instruments in
accordance with their terms and not enter into new or amended debt or lease
instruments without the knowledge and consent of IES (which consent shall
not be unreasonably withheld), provided that debt and/or lease instruments
may be replaced without the consent of IES if such replacement instruments
are on terms at least as favorable to the Company as the instruments being
replaced;
(8) maintain or reduce present salaries and commission
levels for all officers, directors, employees and agents except for
ordinary and customary bonus and salary increases for employees in
accordance with past practices; and
(9) afford to the officers and authorized representatives
of IES reasonable access during normal business hours to all of the
Company's sites, properties, books and records and will furnish IES with
such additional financial and operating data and other information as to
the business and properties of the Company as IES may from time to time
reasonably request.
(74) Except as disclosed on Schedule 5.12, between the date hereof
and the Consummation Date, the Company will not, without prior written consent
of IES:
(1) make any change in its charter or Bylaws;
(2) issue any securities, options, warrants, calls,
conversion rights or commitments relating to its securities of any kind;
(3) declare or pay any dividend, or make any distribution
in respect of its stock whether now or hereafter outstanding, or purchase,
redeem or otherwise acquire or retire for value any shares of its stock;
(4) enter into any contract or commitment or incur or
agree to incur any liability or make any capital expenditures, except if it
is in the normal course of business (consistent with past practice) or
involves an amount not in excess of two percent (2%) of the Company's
revenues for fiscal 1997;
(5) create, assume or permit to exist any mortgage,
pledge or other lien or encumbrance upon any assets or properties whether
now owned or hereafter acquired, except
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with respect to purchase money liens incurred in connection with the
acquisition of equipment with an aggregate cost not in excess of two
percent (2%) of the Company's revenues for fiscal 1997 necessary or
desirable for the conduct of the businesses of the Company;
(6) sell, assign, lease or otherwise transfer or dispose
of any property or equipment except in the normal course of business;
(7) negotiate for the acquisition of any business or the
start-up of any new business;
(8) merge or consolidate or agree to merge or consolidate
with or into any other corporation;
(9) waive any material rights or claims of the Company,
provided that the Company may negotiate and adjust bills and accounts in
the course of good faith disputes with customers in a manner consistent
with past practice, provided, further, that such adjustments shall not be
deemed to be included in Schedule 5.12 unless specifically listed thereon;
(10) amend or terminate any material agreement, permit,
license or other right of the Company; or
(11) enter into any other transaction outside the ordinary
course of its business or prohibited hereunder.
(75) None of the Company Stockholders, the Company, nor any agent,
officer, director, trustee or any representative of any of the foregoing will,
during the period commencing on the date of this Agreement and ending with the
earlier to occur of the Effective Date or the termination of this Agreement in
accordance with its terms, directly or indirectly: (i solicit or initiate the
submission of proposals or offers from any person for, (ii participate in any
discussions pertaining to, or (iii furnish any information to any person
other than IES or its authorized agents relating to, any acquisition or
purchase of all or a material amount of the assets of, or any equity interest
in, the Company or a merger, consolidation or business combination of the
Company.
SECTION V.15 NOTIFICATION OF CERTAIN MATTERS. The Company
Stockholders shall give prompt notice to IES upon obtaining knowledge of (i)
the occurrence or non-occurrence of any event of which would be likely to cause
any representation or warranty contained herein to be untrue or inaccurate and
(ii) any failure of any Company Stockholder or the Company to comply with or
satisfy any covenant, condition or agreement to be complied with or satisfied
by such person hereunder. IES shall give prompt notice to the Company
Stockholders of (i) the occurrence or non-occurrence of any event of which
would be likely to cause any representation or warranty of IES contained herein
to be untrue or inaccurate and (ii) any failure of IES to comply with or
satisfy any covenant, condition or agreement to be complied with or satisfied
by it hereunder.
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ARTICLE VI
INDEMNIFICATION
The Company Stockholders and IES each make the following
covenants:
SECTION VI.1 INDEMNIFICATION BY THE COMPANY STOCKHOLDERS.
The Company Stockholders covenant and agree that they, jointly and severally,
will indemnify, defend, protect, and hold harmless IES, the Company, and the
Surviving Corporation, and their respective officers, directors, employees,
stockholders, agents, representatives, and affiliates (the "IES Indemnitees")
at all times from and after the date of this Agreement from and against all
claims, damages, losses, liabilities (joint or several), obligations,
penalties, defenses, actions, lawsuits, proceedings, judgments, demands,
assessments, adjustments, costs, and expenses (including specifically, but
without limitation, fees, disbursements, and expenses of attorneys,
accountants, other professional advisors and of expert witnesses and costs of
investigation and preparation), directly or indirectly resulting from, relating
to or arising out of:
(76) any breach of or inaccuracy in, or any allegation or claim by
a third party which if true would constitute a breach of or inaccuracy in, any
representation or warranty set forth herein or in the Schedules or certificates
delivered in connection herewith;
(77) any breach or non-performance, partial or total, by the
Company or any of the Company Stockholders of any covenant or agreement of the
Company (or any affiliate or subsidiary thereof) or the Company Stockholders
(or any affiliate or subsidiary thereof) contained in this Agreement;
(78) any actual or threatened violation of or non-compliance with
any Environmental Laws arising from any event, condition, circumstance,
activity, practice, incident, action, or plan existing or occurring prior to
the Effective Time relating in any way to the assets or the business of the
Company or the Subsidiaries (including without limitation the ownership,
operation, or use of the Company's or the Subsidiaries' assets and the conduct
of the business of the Company and the Subsidiaries prior to the Effective
Time; the presence of any underground storage tanks or any hazardous substances
or solid waste on, in, under, or affecting all or any portion of the Company's
or the Subsidiaries' properties or any surrounding areas, and any release (as
defined in CERCLA) or threatened release with respect to such underground
storage tanks or hazardous substances or solid waste; and the storage,
disposal, or treatment, or transportation for storage, disposal, or treatment,
of hazardous substances or solid waste; but excluding any violation of or
non-compliance with any Environmental Laws that is attributable solely to a
change by IES in the structure, use or condition of any of the Company's or the
Subsidiaries' assets after the Effective Time);
(79) any losses or costs of defending against any claims which may
be made against IES by any Person claiming violations by the Company of any
local, state, or federal laws relating to the employment relationship,
including, but not limited to, wages, hours, concerted activity,
nondiscrimination, occupational health and safety, and the payment and
withholding of Taxes, where such claims arise out of circumstances occurring
prior to the Effective Time.
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Notwithstanding any provision to the contrary in this
Agreement, in no event whatsoever shall the aggregate liability of the Company
Stockholders under this Agreement (including all costs, expenses and attorneys'
fees paid or incurred by the Company and/or the Company Stockholders in
connection therewith or with respect to the curing of any and all
misrepresentations or breaches under this Agreement) exceed the amount of the
Merger Consideration actually paid to the Company Stockholders as provided in
Section 1.2 hereof.
SECTION VI.2 INDEMNIFICATION RELATED TO TAX LIABILITIES.
The Company Stockholders shall retain liability, and shall indemnify IES, for
the payment of any Tax liabilities with respect to the conduct of the business
of the Company or the Subsidiaries during all periods ending as of or prior to
the Effective Time.
SECTION VI.3 INDEMNIFICATION BY IES. IES covenants and
agrees that it will indemnify, defend, protect and hold harmless the Company
Stockholders (the "Stockholder Indemnitees") at all times from and after the
date of this Agreement from and against all claims, damages, losses,
liabilities (joint or several), obligations, penalties, defenses, actions,
lawsuits, proceedings, judgments, demands, assessments, adjustments, costs, and
expenses (including specifically, but without limitation, fees, disbursements,
and expenses of attorneys, accountants, other professional advisors and of
expert witnesses and costs of investigation and preparation), directly or
indirectly resulting from, relating to or arising out of:
(80) any breach of any representation or warranty of IES set forth
herein or in the Schedules or certificates delivered in connection herewith;
and
(81) any breach or non-performance, partial or total, by IES of any
covenant or agreement of IES (or any affiliate or subsidiary thereof) contained
in this Agreement.
SECTION VI.4 INDEMNIFICATION PROCEEDINGS. Promptly after a
party indemnified pursuant to this Article VI ("Indemnitee") has received
notice of or has knowledge of any claim by a person not a party to this
Agreement ("third party") or the commencement of any action or proceeding by a
third party, the Indemnitee shall promptly, and in any event within 60 days of
the assertion of any claim or the discovery of any fact upon which Indemnitee
intends to base a claim for indemnification under this Agreement ("Indemnitee
Claim"), as a condition precedent to the Indemnitee Claim, give written notice
to the party or parties from whom indemnification is sought ("Indemnitor") of
such claim by the third party. Such notice shall state the nature and the
basis of such claim and a reasonable estimate of the amount thereof. In the
event of any Indemnitee Claim, Indemnitor, at its option, shall have the right
to defend or settle, at its own expense and by its own counsel (which must be
reasonably approved by Indemnitee), any such matter so long as the Indemnitor
pursues the same in good faith and diligently. If the Indemnitor undertakes to
defend or settle, it shall promptly notify the Indemnitee of its intention to
do so, and the Indemnitee shall cooperate with the Indemnitor and its counsel
in the defense thereof and in any settlement thereof. Notwithstanding the
foregoing, the Indemnitee shall have the right to participate in any matter
through counsel of its own choosing at Indemnitee's expense; provided that the
Indemnitor's counsel shall always be lead counsel and shall determine all
litigation and settlement steps, strategy and the like. Except as set forth in
the preceding sentence, after the Indemnitor has notified the Indemnitee
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of its intention to undertake to defend or settle any such asserted liability,
and for so long as the Indemnitor diligently pursues such defense, the
Indemnitor shall not be liable for any additional legal expenses incurred by
the Indemnitee in connection with any defense or settlement of such asserted
liability, except to the extent such participation is requested by the
Indemnitor, in which event the Indemnitee shall be reimbursed by the Indemnitor
for reasonable additional legal expenses, out-of-pocket expenses and allocable
share of employee compensation incurred in connection with such participation
for any employee whose participation is so requested. If the Indemnitor
desires to accept a final and complete settlement of any such third party claim
and the Indemnitee refuses to consent to any such settlement which contains a
complete and irrevocable release of Indemnitee of all current and future claims
arising out of the matter in dispute, then the Indemnitor's liability under
this Section with respect to such third party claim shall be limited to the
amount so offered in settlement by said third party. If the Indemnitor does
not undertake to defend such matter to which the Indemnitee is entitled to
indemnification hereunder, or fails diligently to pursue such defense, the
Indemnitee may undertake such defense through counsel of its choice, at the
cost and expense of the Indemnitor, and the Indemnitee may settle such matter,
without the consent of the Indemnitor, and the Indemnitor shall immediately
reimburse the Indemnitee for the amount paid in such settlement and any other
liabilities or expenses (including all legal fees and expenses) incurred by the
Indemnitee in connection therewith as such amounts, liabilities, expenses and
fees are incurred.
SECTION VI.5 OTHER REMEDIES. Notwithstanding the
indemnification obligations contained within this Article VI, in no event shall
the indemnification provisions hereof limit in any way the ability of any of
the parties to this Agreement to seek any other remedies which may be available
to them under law.
SECTION VI.6 INDEMNIFICATION IF NEGLIGENCE OF INDEMNITEE.
The indemnification provided in this Article VI shall be applicable whether or
not negligence of the Indemnitee is alleged or proven.
SECTION VI.7 NO THIRD PARTY BENEFICIARIES. The foregoing
indemnification is given solely for the purpose of protecting the IES
Indemnitees and the Stockholder Indemnitees and shall not be deemed extended
to, or interpreted in a manner to confer any benefit, right, or cause of action
upon, any other Person.
SECTION VI.8 LIMITATION UPON INDEMNITY. The Company
Stockholders, on the one hand, and IES, on the other hand, shall be entitled to
indemnification from the other party under the provisions of this Article VI
for all claims subject to indemnification by such party, but only after such
time that the amount of, and to the extent that such claims exceed, in the
aggregate $10,500.
ARTICLE VII
NONCOMPETITION COVENANTS
SECTION VII.1 PROHIBITED ACTIVITIES. The Company
Stockholders will not, for a period of two (2) years following the Effective
Time, directly or indirectly, for themselves or on behalf of or in conjunction
with any or Person:
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(82) engage, as an officer, director, shareholder, owner, partner,
joint venturer, or in a managerial or advisory capacity, whether as an
employee, independent contractor, consultant, or advisor, or as a sales
representative, in any business offering any services or products in direct
competition with IES or any of its subsidiaries within 100 miles of where IES
or any of its subsidiaries conducts business, including any territory serviced
by IES or any of its subsidiaries (the "Territory");
(83) call upon any Person who is, at that time, within the
Territory, an employee of IES or any of its subsidiaries for the purpose or
with the intent of enticing such employee away from or out of the employ of IES
or any of its subsidiaries;
(84) call upon any Person who is, at that time, or which has been,
within one (1) year prior to that time, a customer of IES or any of its
subsidiaries within the Territory for the purpose of soliciting or selling
services or products in direct competition with IES or any of its subsidiaries
within the Territory;
(85) call upon any prospective acquisition candidate, on any
Company Stockholder's own behalf or on behalf of any competitor in the
electrical contracting business, which candidate, to the actual knowledge of
such Company Stockholder after due inquiry, was called upon by IES or any
subsidiary thereof or for which, to the actual knowledge of such Company
Stockholder after due inquiry, IES or any subsidiary thereof made an
acquisition analysis, for the purpose of acquiring such entity; or
(86) disclose customers, whether in existence or proposed, of the
Company to any person, firm, partnership, corporation or business for any
reason or purpose whatsoever except to the extent that the Company has in the
past disclosed such information to the public for valid business reasons.
Notwithstanding the above, the foregoing covenant shall not be
deemed to prohibit any Company Stockholder from acquiring, as a passive
investor with no involvement in the operations of the business, not more than
one percent (1%) of the capital stock of a business providing services similar
to those provided by IES whose stock is publicly traded on a national
securities exchange or over the counter.
SECTION VII.2 EQUITABLE RELIEF. Because of the difficulty
of measuring economic losses to IES as a result of a breach of the foregoing
covenant, and because of the immediate and irreparable damage that could be
caused to IES for which it would have no other adequate remedy, each Company
Stockholder agrees that the foregoing covenant may be enforced by IES by
injunctions, restraining orders, and other equitable actions.
SECTION VII.3 REASONABLE RESTRAINT. It is agreed by the
parties hereto that the foregoing covenants in this Article VII impose a
reasonable restraint on the Company Stockholders in light of the activities and
business of IES on the date of the execution of this Agreement and the current
plans of IES; but it is also the intent of IES and the Company Stockholders
that such covenants be construed and enforced in accordance with the changing
activities, business, and locations of IES and its subsidiaries throughout the
term of this covenant. During the term of this
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covenant, if IES or one of its subsidiaries engages in new and different
activities, enters a new business, or establishes new locations for its current
activities or business in addition to or other than the activities or business
it is currently conducting in the locations currently established therefor,
then the Company Stockholders will be precluded from soliciting the customers
or employees of such new activities or business or from such new location and
from directly competing with such new activities or business within 100 miles
of its then-established operating location(s) through the term of these
covenants.
SECTION VII.4 SEVERABILITY; REFORMATION. The covenants in
this Article VII are severable and separate, and the unenforceability of any
specific covenant shall not affect the continuing validity and enforceability
of any other covenant. In the event any court of competent jurisdiction shall
determine that the scope, time or territorial restrictions set forth in this
Article VII are unreasonable, then it is the intention of the parties that such
restrictions be enforced to the fullest extent which the court deems
reasonable, and this Agreement shall thereby be reformed.
SECTION VII.5 MATERIAL AND INDEPENDENT COVENANT. The
Company Stockholders acknowledge that their agreements with the covenants set
forth in this Article VII are material conditions to IES's agreement to execute
and deliver this Agreement and to consummate the transactions contemplated
hereby. All of the covenants in this Article VII shall be construed as an
agreement independent of any other provision in this Agreement, and the
existence of any claim or cause of action of any Company Stockholder against
IES or one of its subsidiaries, whether predicated on this Agreement or
otherwise, shall not constitute a defense to the enforcement by IES of such
covenants. It is specifically agreed that the two-year period during which the
agreements and covenants of each Company Stockholder made in this Article VII
shall survive shall be computed by excluding from such computation any time
during which such Company Stockholder is in violation of any provision of this
Article VII. The covenants contained in this Article VII shall not be affected
by any breach of any other provision hereof by any party hereto.
SECTION VII.6 MATERIALITY. The Company and the
Stockholders hereby agree that this covenant is a material and substantial part
of this transaction.
ARTICLE VIII
APPLICABLE SECURITIES LAWS/TRANSFER RESTRICTIONS
SECTION VIII.1 COMPANY STOCKHOLDERS' REPRESENTATIONS AND
WARRANTIES CONCERNING SECURITIES. As of the date hereof (which is the same
date as the Effective Time), the Company Stockholders hereby make the following
representations and warranties to and for the benefit of IES: (i) that the
Company Stockholders have been provided with copies of the Prospectus and have
been provided as much time and opportunity as they deemed appropriate to review
and study such Prospectus, and to consult with IES regarding the merits and
risks of the transactions contemplated by this Agreement; (ii) that the Company
Stockholders have had adequate opportunity to ask questions of and receive
answers from the officers of IES pertaining to the purchase of the IES
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Common Stock pursuant to the Merger, and (iii) all such questions have been
answered to the satisfaction of the Company Stockholders.
SECTION VIII.2 TRANSFER RESTRICTIONS. Unless otherwise
agreed by IES, except for transfers to immediate family members who agree to be
bound by the restrictions set forth in this Section 8.2 (or trusts for the
benefit of the Stockholders or family members, or trusts in which a Stockholder
is both the grantor and the beneficiary, the trustees of which so agree), for a
period of two years from the date of this Agreement, none of the Stockholders
shall sell, assign, exchange, transfer, appoint, or otherwise dispose of any
shares of IES Common Stock received by the Company Stockholders pursuant to
this Agreement. The certificates evidencing the IES Common Stock delivered to
the Company Stockholders pursuant to this Agreement will bear a legend
substantially in the form set forth below and containing such other information
as IES may deem necessary or appropriate:
THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT BE SOLD, ASSIGNED,
EXCHANGED, TRANSFERRED, DISTRIBUTED, APPOINTED OR OTHERWISE DISPOSED OF WITHOUT
THE WRITTEN CONSENT OF IES, AND THE ISSUER SHALL NOT BE REQUIRED TO GIVE EFFECT
TO ANY ATTEMPTED SALE, ASSIGNMENT, EXCHANGE, TRANSFER, DISTRIBUTION,
APPOINTMENT OR OTHER DISPOSITION PRIOR TO [THE SECOND ANNIVERSARY OF CLOSING
DATE]. UPON THE WRITTEN REQUEST OF THE HOLDER OF THIS CERTIFICATE, THE ISSUER
AGREES TO REMOVE THIS RESTRICTIVE LEGEND (AND ANY STOP ORDER PLACED WITH THE
TRANSFER AGENT) AFTER THE DATE SPECIFIED ABOVE.
ARTICLE IX
NONDISCLOSURE OF CONFIDENTIAL INFORMATION
SECTION IX.1 GENERAL. The Company Stockholders recognize
and acknowledge that they had in past, currently have, and in the future may
possibly have, access to certain confidential information of the Company or the
Surviving Corporation, such as lists of customers, operational policies, and
pricing and cost policies that are valuable, special, and unique assets of the
Company and will be valuable, special, and unique assets of the Surviving
Corporation. The Company Stockholders agree that they will not disclose such
confidential information to any Person for any purpose or reason whatsoever
(except such information as the Company Stockholders may be required to
disclose to any Governmental Authority or to authorized representatives of
IES). In the event of a breach or threatened breach by the Company
Stockholders of the provisions of this Section, IES shall be entitled to an
injunction restraining the Company Stockholders from disclosing, in whole or in
part, such confidential information. Nothing herein shall be construed as
prohibiting IES from pursuing any other available remedy for such breach or
threatened breach, including the recovery of damages.
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SECTION IX.2 EQUITABLE RELIEF. Because of the difficulty
of measuring economic losses as a result of the breach of the foregoing
covenants, and because of the immediate and irreparable damage that would be
caused for which the Company, the Surviving Corporation, and/or IES would have
no other adequate remedy, the Company Stockholders agree that the foregoing
covenants may be enforce against them by injunctions, restraining orders, and
other equitable actions.
SECTION IX.3 NON-PUBLIC INFORMATION. The Company
Stockholders hereby acknowledge that if they become aware of "material
non-public information" (as defined under applicable securities laws) regarding
IES, that they will be required, under applicable securities laws, to refrain
from trading in IES securities or disclosing any such information while such
information is non-public. The Company Stockholders further agree to
communicate such requirement to all personnel of the Company, the Surviving
Corporation or others, having knowledge of such "material non-public
information" regarding IES.
SECTION IX.4 SURVIVAL. The obligations of the parties
under this Article IX shall survive the termination of this Agreement.
ARTICLE X
MISCELLANEOUS
SECTION X.1 GOVERNING LAW. This Agreement shall be
governed by and construed in accordance with the laws of the State of Texas
without reference to the choice of law principles thereof.
SECTION X.2 ENTIRE AGREEMENT. This Agreement, together
with the Schedules and Exhibits hereto, constitute the entire agreement between
the parties with respect to the subject matter hereof, and there are no
agreements, understandings, representations, or warranties between the parties
other than those set forth or referred to herein.
SECTION X.3 EXPENSES AND FEES. All costs and expenses
incurred in connection with this Agreement shall be paid by the party incurring
such cost or expense.
SECTION X.4 NOTICES. All notices hereunder shall be
sufficient upon receipt for all purposes hereunder if in writing and delivered
personally, sent by documented overnight delivery service or, to the extent
receipt is confirmed, telecopy, telefax, or other electronic transmission
service to the appropriate address or number as set forth below.
If to IES or MHI, to:
Integrated Electrical Services, Inc.
515 Post Oak Blvd., Suite 450
Houston, Texas 77027
Attention: John F. Wombwell
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Fax Number: (713) 860-1599
if to the Company or the Company Stockholders, to:
_________________________
_________________________
_________________________
Attention: ______________
SECTION X.5 SUCCESSORS AND ASSIGNS. This Agreement shall
be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns; provided, however, that no party may assign,
delegate, or otherwise transfer any of its rights or obligations under this
Agreement without the consent of each other party hereto, except IES or MHI may
transfer or assign, in whole or from time to time in part, to one or more of
their affiliates, the right to enter into the transactions contemplated by this
Agreement, but any such transfer or assignment will not relieve IES or MHI of
its obligations hereunder. This Agreement is not intended to confer upon any
Person not a party hereto any rights or remedies hereunder, and no Person other
than the parties hereto or such Persons described above is entitled to rely on
any representation, warranty, or covenant contained herein.
SECTION X.6 HEADINGS; DEFINITIONS. The Section and Article
headings contained in this Agreement are inserted for convenience of reference
only and will not affect the meaning or interpretation of this Agreement. All
references to Sections or Articles contained herein mean Sections or Articles
of this Agreement unless otherwise stated. All capitalized terms defined
herein are equally applicable to both the singular and plural forms of such
terms.
SECTION X.7 AMENDMENTS AND WAIVERS. This Agreement may not
be modified or amended except by an instrument or instruments in writing signed
by the party against whom enforcement of any such modification or amendment is
sought. Any party hereto may, only by an instrument in writing, waive
compliance by any other party hereto with any term or provision of this
Agreement on the part of such other party hereto to be performed or complied
with. The waiver by any party hereto of a breach of any term or provision of
this Agreement shall not be construed as a waiver of any subsequent breach.
SECTION X.8 CONSTRUCTION OF CERTAIN PROVISIONS. It is
understood and agreed that the specification of any dollar amount in the
representations and warranties contained in this Agreement or the inclusion of
any specific item in the Schedules or Exhibits is not intended to imply that
such amounts or higher or lower amounts, or the items so included or other
items, are or are not material, and no party shall use the fact of the setting
of such amounts or the fact of the inclusion of any such item in the Schedules
in any dispute or controversy between the parties as to whether any obligation,
item, or matter not described herein or included in a Schedule or Exhibit is or
is not material for purposes of this Agreement. It is agreed that neither
party shall allege that a provision of this Agreement shall be construed
against a party because such party drafted such provision.
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SECTION X.9 SURVIVAL OF REPRESENTATIONS AND WARRANTIES.
Except for those contained in Sections 3.2, 3.19, 4.2, 5.7 and 5.12, the
representations, warranties, covenants and agreements of the parties made
herein and at the time of the Closing or in writing delivered pursuant to the
provisions of this Agreement shall survive the consummation of the transactions
contemplated hereby and any examination on behalf of the parties until the
second anniversary of the Closing Date. The provisions of Sections 3.19, 4.2,
5.7 and 5.12 shall survive the consummation of the transactions contemplated
hereby and any examination on behalf of the parties until the expiration of any
applicable statute of limitations. The provisions of Sections 3.2 and 4.2
shall survive the consummation of the transactions contemplated hereby.
SECTION X.10 SEVERABILITY. If any term or other provision
of this Agreement is invalid, illegal, or incapable of being enforced by any
rule of law or public policy, all other conditions and provisions of this
Agreement shall nevertheless remain in full force and effect. Upon such
determination that any term or other provision is invalid, illegal, or
incapable of being enforced, the parties hereto shall negotiate in good faith
to modify this Agreement so as to effect the original intent of the parties as
closely as possible in an acceptable manner to the end that the transactions
contemplated by this Agreement are fulfilled to the extent possible.
SECTION X.11 JURISDICTION. Any legal action, suit, or
proceeding in law or equity arising out of or relating to this Agreement and
transactions contemplated by this Agreement may be instituted in any state or
federal court in Harris County, Houston, Texas, and each party agrees not to
assert, by way of motion, as a defense, or otherwise, in any such action,
suit, or proceeding, any claim that it is not subject personally to the
jurisdiction of such court, that its property is exempt or immune from
attachment or execution, that the action, suit, or proceeding is brought in an
inconvenient forum, that the venue of the action, suit, or proceeding is
improper or that this Agreement, or the subject matter hereof or thereof may
not be enforced in or by such court. Each party further irrevocably submits to
the jurisdiction of any such court in any such action, suit, or proceeding.
Any and all service of process and any other notice in any such action, suit,
or proceeding shall be effective against any party if given by registered or
certified mail, return receipt requested, or by any other means of mail which
requires a signed receipt, postage prepaid, mailed to such party at the address
listed in Section 10.4. Nothing herein contained shall be deemed to affect the
right of any party to serve process in any manner permitted by law.
SECTION X.12 WAIVER OF JURY TRIAL. EACH OF THE PARTIES
HERETO HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY
LEGAL PROCEEDING ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY.
SECTION X.13 SPECIFIC PERFORMANCE. The parties hereto
agree that irreparable damage would occur in the event any provision of this
Agreement was not performed in accordance with the terms hereof and that the
parties shall be entitled to specific performance of the terms hereof in
addition to any other remedy to which they are entitled at law or in equity.
SECTION X.14 COUNTERPARTS; EFFECTIVENESS. This Agreement
may be executed in one or more counterparts, all of which shall be considered
one and the same agreement, and shall
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become effective when one or more counterparts have been signed by each of the
parties and delivered to the other party. In making proof of this Agreement,
it shall not be necessary to produce or account for more than one such
counterpart. A telecopied facsimile of an executed counterpart of this
Agreement shall be sufficient to evidence the binding agreement of each party
to the terms hereof. However, each party agrees to promptly deliver to the
other parties an original, duly executed counterpart of this Agreement.
SECTION X.15 MUTUAL INDEMNIFICATION AGAINST CLAIMS OF
BROKERS. Each party agrees to indemnify the other against all loss, cost,
damages or expense arising out of claims for fees or commissions of brokers
employed or alleged to have been employed by such party.
SECTION X.16 DEFINITIONS AND USAGE. For the purposes of
this Agreement:
"368 Reorganization" shall have the meaning specified in
Section 3.22.
"1933 Act" shall have the meaning specified in Section 3.5.
"1934 Act" shall have the meaning specified in Section 4.4.
"Action" shall mean any action, suit, arbitration, inquiry,
proceeding, or investigation by or before any Governmental Authority.
"affiliate" means, with respect to any Person, any other
Person directly or indirectly controlling, controlled by, or under common
control with such Person.
"Agreement" shall have the meaning specified in the
introductory paragraph of this Agreement and Plan of Merger.
"attorneys' fees" means attorneys' fees actually and
reasonably incurred for the reasonable expenditure of a reasonable number of
hours at normal and customary hourly rates for the attorneys involved, without
reliance upon any statues that may allow such fees to be calculated on a
percentage basis, which statutory provisions are hereby waived.
"CERCLA" shall have the meaning specified in Section 3.18.
"Certificates" shall have the meaning specified in Section
1.3.
"Closing" shall have the meaning specified in Section 1.1(d)
"Closing Date" shall have the meaning specified in Section
1.1(d)
"Code" shall mean the Internal Revenue Code of 1986, as
amended, and any successor thereto.
"Commitment" shall have the meaning specified in Section
3.2(a).
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"Company" shall have the meaning specified in the introductory
paragraph of this Agreement.
"Company Audited Financial Statements" shall have the meaning
specified in Section 3.6.
"Company Benefit Plans" shall have the meaning specified in
Section 3.20(a).
"Company Common Stock" shall have the meaning specified in
Section 1.2(a).
"Company Material Adverse Effect" shall mean any fact,
circumstance, event, or condition which has or would have a materially adverse
effect on the business, operations, properties, condition (financial or
otherwise), assets, liabilities, results of operations or prospects of the
Company and the Subsidiaries, taken as a whole.
"Company Pension Plans" shall have the meaning specified in
Section 3.20(a).
"Company Returns" shall mean all returns, declarations,
reports, statements, and other documents required to be filed by the Company or
the Subsidiaries in respect of Taxes, and the term "Company Return" means any
one of the foregoing Company Returns.
"Company Shares" shall have the meaning specified in Section
3.2(a).
"Company Stock" shall have the meaning specified in Section
1.2(a).
"Company Stockholders" shall have the meaning specified in the
introductory paragraph of this Agreement.
"Company Unaudited Balance Sheet Date" shall have the meaning
specified in Section 3.7.
"Company Unaudited Financial Statements" shall have the
meaning specified in Section 3.6.
"Company Welfare Plan" shall have the meaning specified in
Section 3.20(a).
"Delaware Certificate of Merger" shall have the meaning
specified in Section 1.1(b).
"Delaware Law" shall have the meaning prescribed in Section
1.1(a).
"Department" shall have the meaning specified in Section 5.11.
"disposal" or "disposed" shall have the meaning specified in
Section 3.18.
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43
"Effective Time" shall have the meaning specified in Section
1.1(b).
"Employment Agreement" shall have the meaning specified in
Section 1.6(a)(i).
"Environmental Laws" shall have the meaning specified in
Section 3.18.
"ERISA" shall have the meaning specified in Section 3.20(a).
"FTC" shall have the meaning specified in Section 5.11.
"GAAP" shall have the meaning specified in Section 3.6.
"Georgia Certificate of Merger" shall have the meaning
specified in Section 1.1(b).
"Georgia Law" shall have the meaning prescribed in Section
1.1(a)
"Governmental Authority" shall mean (a) the United States of
America, (b) any state, county, municipality, or other governmental subdivision
within the United States of America, and (c) any court or any governmental
department, commission, board, bureau, agency, or other instrumentality of the
United States of America or of any state, county, municipality, water rights,
taxing, or zoning authority, or other governmental subdivision within the
United States of America.
"HSR Act" shall have the meaning specified in Section 5.11.
"IES" shall have the meaning specified in the introductory
paragraph of this Agreement.
"IES Common Stock" shall have the meaning specified in Section
1.2(a).
"IES Indemnitees" shall have the meaning specified in Section
6.1.
"IES Material Adverse Effect" shall mean any fact,
circumstance, event, or condition which has or would have a materially adverse
effect on the business, operations, properties, condition (financial or
otherwise), assets, liabilities, results of operations or prospects of IES and
its subsidiaries, taken as a whole.
"IES SEC Filings" shall have the meaning specified in Section
4.5(a).
"Indemnitee" shall have the meaning specified in Section 6.4.
"Indemnitee Claim" shall have the meaning specified in Section
6.4.
"Indemnitor" shall have the meaning specified in Section 6.4.
"Knowledge" when used in relation to any Person shall mean the
actual (but not constructive) knowledge of such Person or such Person's
officers after reasonable inquiry.
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"Licenses" shall have the meaning specified in Section 3.11.
"Liens" shall mean all liens, mortgages, security interests,
pledges, equities, claims, options and other encumbrances of any kind.
"MHI" shall have the meaning specified in the introductory
paragraph of this Agreement.
"Merger" shall have the meaning specified in Section 1.1(a).
"Merger Consideration" shall have the meaning specified in
Section 1.2(a).
"NYSE" shall have the meaning specified in Section 1.3.
"officer" means in the case of IES and the Company, any
executive officer of IES or the Company, as applicable, within the meaning of
Rule 3b-7 of the 1934 Act.
"Person" shall mean an individual, partnership, corporation,
limited liability company, trust, incorporated or unincorporated association,
joint venture, joint stock company, Governmental Authority or other legal
entity of any kind.
"Prospectus" shall have the meaning specified in Section
4.5(d).
"RCRA" shall have the meaning specified in Section 3.18.
"release" shall have the meaning specified in Section 3.18.
"SEC" shall have the meaning specified in Section 3.22.
"Shares" shall have the meaning specified in Section 3.23(b).
"Stockholder Indemnitees" shall have the meaning specified in
Section 6.3.
"Subsidiaries" shall have the meaning specified in Section
3.1.
"subsidiary" means, with respect to any Person, any entity of
which securities or other ownership interests having ordinary voting power to
elect a majority of the board of directors or other Persons performing similar
functions are at any time directly or indirectly owned by such Person.
"Subsidiary Shares" shall have the meaning specified in
Section 3.2(b).
"Subsidiary Stock" shall have the meaning specified in Section
3.2(b).
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"Surviving Corporation" shall have the meaning specified in
Section 1.1(a).
"Tax" or "Taxes" shall have the meaning specified in Section
3.19(a).
"Taxing Authority" shall have the meaning specified in Section
3.19(a).
"Territory" shall have the meaning specified in Section
7.1(a).
"third party" shall have the meaning specified in Section 6.4.
A reference in this Agreement to any statute shall be to such
statute as amended from time to time, and the rules and regulations promulgated
thereunder.
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their respective authorized officers as of the
day and year first above written.
INTEGRATED ELECTRICAL SERVICES, INC.
By: /s/ John Wombwell
------------------------------------
Name: John Wombwell
-----------------------------
Title: Senior Vice President
-----------------------------
MARK HENDERSON ACQUISITION
CORPORATION
By: /s/ John Wombwell
------------------------------------
Name: John Wombwell
-----------------------------
Title: President
-----------------------------
HOLLAND ELECTRICAL SYSTEMS, INC.
By: /s/ Mark Henderson
------------------------------------
Name: Mark Henderson
-----------------------------
Title: President
-----------------------------
COMPANY STOCKHOLDERS:
/s/ Amy B. Henderson
---------------------------------------
Amy B. Henderson
Social Security Number ###-##-####
/s/ Mary Sue Holland
---------------------------------------
Mary Sue Holland
Social Security Number ###-##-####
1
EXHIBIT 2.3
AGREEMENT AND PLAN OF MERGER
DATED AS OF
JUNE 18, 1998
AMONG
INTEGRATED ELECTRICAL SERVICES, INC.,
MARK HENDERSON ACQUISITION CORPORATION
SPECTROL, INC.
AND
DAVID LYTLE
2
TABLE OF CONTENTS
-----------------
Page
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ARTICLE I The Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.1 The Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.2 Conversion of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 1.3 Surrender and Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 1.4 Withholding Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 1.5 Lost Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 1.6 Other Documents to be Delivered Immediately Prior to the
Effective Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 1.7 Conditions to the Obligations of the Company Stockholder . . . . . . . . . . . . . . . . . . . 4
Section 1.8 Conditions to the Obligations of IES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 1.9 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
ARTICLE II The Surviving Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 2.1 Certificate of Incorporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 2.2 Bylaws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 2.3 Directors and Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
ARTICLE III Representations and Warranties of the Company Stockholder . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 3.1 Organization and Qualification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 3.2 Capitalization; Ownership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 3.3 Authorization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 3.4 Consents and Approvals; No Violation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 3.5 Affiliate Relationships . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 3.6 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 3.7 Undisclosed Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 3.8 Accounts and Notes Receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 3.9 Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 3.10 Material Contracts, Commitments and Customers . . . . . . . . . . . . . . . . . . . . . . . 10
Section 3.11 Operating Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 3.12 Bank Account Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 3.13 Conduct of Business Since Company Unaudited Balance Sheet Date . . . . . . . . . . . . . . . 11
Section 3.14 Litigation; Orders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 3.15 Labor Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 3.16 Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 3.17 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 3.18 Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 3.19 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 3.20 Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 3.21 Brokerage Fees and Commissions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 3.22 Tax Treatment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 3.23 Section 368(a)(2)(D) Representations . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
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ARTICLE IV Representations and Warranties of IES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 4.1 Organization and Qualification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 4.2 Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 4.3 Authorization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 4.4 Consents and Approval; No Violation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 4.5 SEC Filings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 4.6 Tax Treatment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 4.7 Section 368(a)(2)(D)Representations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
ARTICLE V Additional Covenants and Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 5.1 Reasonable Best Efforts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 5.2 Certain Filings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 5.3 Public Announcements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 5.4 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 5.5 Notices of Certain Events . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 5.6 Release from Guarantees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 5.7 Future Cooperation; Tax Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 5.8 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 5.9 Repayment of Related Party Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 5.10 Tax-Free Organization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 5.11 FIRPTA Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 5.12 Preparation and Filing of Tax Returns . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 5.13 Antitrust Law Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 5.14 Pending Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 5.15 Notification of Certain Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
ARTICLE VI Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 6.1 Indemnification by the Company Stockholder . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 6.2 Indemnification Related to Tax Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 6.3 Indemnification by IES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 6.4 Indemnification Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 6.5 Other Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 6.6 Indemnification if Negligence of Indemnitee . . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 6.7 No Third Party Beneficiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 6.8 Limitation Upon Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
ARTICLE VII Noncompetition Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 7.1 Prohibited Activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 7.2 Equitable Relief . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 7.3 Reasonable Restraint . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 7.4 Severability; Reformation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 7.5 Material and Independent Covenant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 7.6 Materiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
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ARTICLE VIII Applicable Securities Laws/Transfer Restrictions . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 8.1 Company Stockholder's Representations and Warranties Concerning
Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 8.2 Transfer Restrictions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
ARTICLE IX Nondisclosure of Confidential Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 9.1 General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 9.2 Equitable Relief . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 9.3 Non-Public Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Section 9.4 Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
ARTICLE X Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Section 10.1 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Section 10.2 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Section 10.3 Expenses and Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Section 10.4 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Section 10.5 Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Section 10.6 Headings; Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Section 10.7 Amendments and Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Section 10.8 Construction of Certain Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Section 10.9 Survival of Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . 36
Section 10.10 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Section 10.11 Jurisdiction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Section 10.12 Waiver of Jury Trial . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Section 10.13 Specific Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Section 10.14 Counterparts; Effectiveness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Section 10.15 Mutual Indemnification Against Claims of Brokers . . . . . . . . . . . . . . . . . . . . . 37
Section 10.16 Definitions and Usage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
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EXHIBITS AND SCHEDULES
----------------------
Exhibit A Form of Opinion of Counsel to Company Stockholders
Exhibit B Form of Certificate of Secretary of the Company
Exhibit C Form of Company Stockholder Release
Exhibit D Form of Company Affiliate Letter
Exhibit E Form of Company Stockholder Receipt
Exhibit F Form of Cross-Receipt
Exhibit G Form of Opinion of Andrews & Kurth, L.L.P.
Exhibit H Form of Lease Agreement
Schedule 2.3 Officers of Surviving Corporation
Schedule 3.1 Organization and Qualification of Company and Subsidiaries
Schedule 3.2(a) Ownership of Company Shares and Delivery Instructions
Schedule 3.2(b) Subsidiary Corporate History, Subsidiary Stock, Other Securities
and Non-Corporate Entity Participation
Schedule 3.4 Company Consents and Approvals; No Violation
Schedule 3.5 Affiliate Relationships
Schedule 3.6 Company Financial Statements
Schedule 3.7 Company Undisclosed Liabilities
Schedule 3.8 Company Accounts and Notes Receivables
Schedule 3.9 Company Assets
Schedule 3.10 Material Contracts, Commitments and Customers
Schedule 3.11 Company Operating Authority
Schedule 3.12 Company Bank Account Information
Schedule 3.13 Company Conduct of Business
Schedule 3.14 Company Litigation; Orders
Schedule 3.15 Company Labor Agreements
Schedule 3.17 Company Insurance
Schedule 3.18 Company Disposal Sites
Schedule 3.19 Company Taxes
Schedule 3.20 Company Employee Benefit Plans
Schedule 3.21 Company Brokerage Fees and Commissions
Schedule 4.6 IES Affiliates
Schedule 5.7 Company Stockholder Guarantees
Schedule 5.10 Repayment of Advances, Receivables and Loans
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER ("Agreement") dated as of
June 18, 1998 among Integrated Electrical Services, Inc., a Delaware
corporation ("IES"), MARK HENDERSON ACQUISITION CORPORATION, a Delaware
corporation and a wholly owned subsidiary of IES ("MHI"), SPECTROL, INC., a
Georgia corporation ("Company"), and DAVID LYTLE (the "Company Stockholder").
RECITALS:
WHEREAS, the Boards of Directors of IES and the Company have
determined that the combination of MHI and the Company is in the best interests
of the stockholders of IES and the Company, respectively;
WHEREAS, the Company Stockholder desires to sell to IES all
shares of capital stock of the Company owned by him, free and clear of all
liens, and the Company Stockholder agrees to be bound by a covenant not to
compete;
WHEREAS, IES desires to acquire such shares of capital stock
of the Company as more fully set forth herein and enforce the covenant not to
compete; and
WHEREAS, IES, the Company and the Company Stockholder intend
the combination of MHI and the Company, to the extent the capital stock of the
Company is exchanged for capital stock of IES and not for cash or other
property, to qualify as a tax-free reorganization under the provisions of
Section 368 of the Internal Revenue Code of 1986, as amended (the "Code"), and
the regulations thereunder; and
NOW, THEREFORE, in consideration of the mutual covenants and
agreements set forth herein, the parties hereto agree as follows:
ARTICLE I
THE MERGER
SECTION I.1 THE MERGER. (a) At the Closing (as defined)
and upon the execution of this Agreement and the delivery of the documents
listed in Section 1.6, at the Effective Time (as hereinafter defined), the
Company shall be merged (the "Merger") with and into MHI in accordance with the
General Corporation Law of the State of Delaware ("Delaware Law") and the laws
of the State of Georgia ("Georgia Law"), whereupon the separate existence of
the Company shall cease, and MHI shall be the surviving corporation (the
"Surviving Corporation").
(2) Immediately following the delivery of the documents listed in
Section 1.6, the Company and MHI will file a certificate of merger (the
"Delaware Certificate of Merger") with the Delaware Secretary of State, a
certificate of merger (the "Georgia Certificate of Merger) with the Georgia
Secretary of State and make all other filings or recordings required by
Delaware Law and
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Georgia Law in connection with the Merger. The Merger shall become effective
at such time (the "Effective Time") as the Delaware Certificate of Merger is
duly filed with the Delaware Secretary of State (or at such later time as may
be agreed in writing by the parties hereto and specified in the Delaware
Certificate of Merger).
(3) From and after the Effective Time, the Surviving Corporation
shall possess all the rights, assets, powers, privileges, and franchises and be
subject to all of the obligations, liabilities, restrictions, and disabilities
of the Company and MHI, all as provided under Delaware Law and Georgia Law.
(4) The closing of the transactions contemplated by this Agreement
(the "Closing") shall take place at the offices of IES in Houston, Texas, at
10:00 a.m., within 5 business days following the date on which regulatory
approval under the HSR Act (as defined) is received or on such other day and
time as shall be agreed to by the parties (the "Closing Date").
SECTION I.2 CONVERSION OF SHARES. (a) At the Effective
Time the shares of common stock, $100.00 par value, of the Company ("Company
Common Stock") held by the Company Stockholder immediately prior to the
Effective Time shall be converted into the right to receive, without interest,
an aggregate of (i) 7,895 shares of common stock, $0.01 par value, of IES ("IES
Common Stock") and (ii) $100,000 less any cash distributions from the Company
to the Company Stockholder made after February 28, 1998 ((i) and (ii) being
collectively the "Merger Consideration").
(b) At the Effective Time the shares of Company Common Stock held
by MHI or IES immediately prior to the Effective Time shall be canceled, no
consideration shall be paid in exchange therefor and they shall cease to exist
from and after the Effective Time.
SECTION I.3 SURRENDER AND PAYMENT. At the Effective Time,
the Company Stockholder will deliver to IES the certificates listed on Schedule
3.2(a) (the "Certificates") representing all of the outstanding shares of
Company Common Stock not owned by MHI or IES, and IES will deliver, in exchange
therefor, the Merger Consideration to the Company Stockholder in accordance
with the written instructions provided in Schedule 3.2(a). The Certificates
will be duly endorsed (or accompanied by duly executed stock powers), with the
signature of the Company Stockholder, if he is not present at the Closing,
guaranteed by a commercial bank or by a member firm of the New York Stock
Exchange (the "NYSE").
SECTION I.4 WITHHOLDING RIGHTS. Each of the Surviving
Corporation and IES shall be entitled to deduct and withhold from the
consideration otherwise payable to any Person (as defined in Section 10.16)
pursuant to this Article I such amounts as it is required to deduct and
withhold with respect to the making of such payment under any provision of
federal, state, local, or foreign tax law. To the extent that amounts are so
withheld by the Surviving Corporation or IES, as the case may be, such withheld
amounts shall be treated for all purposes of this Agreement as having been paid
to the holder of the shares of Company Common Stock in respect of which such
deduction and withholding was made by the Surviving Corporation or IES, as the
case may be.
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SECTION I.5 LOST CERTIFICATES. If any Certificate shall
have been lost, stolen, or destroyed, upon the making of an affidavit of that
fact by the Person claiming such Certificate to be lost, stolen, or destroyed
and, if required by the Surviving Corporation, the posting by such Person of a
bond, in such reasonable amount as the Surviving Corporation may direct, as
indemnity against any claim that may be made against it with respect to such
Certificate, IES will issue in exchange for such lost, stolen, or destroyed
Certificate the Merger Consideration to be paid in respect of the shares of
Company Common Stock represented by such Certificates as contemplated by this
Article I.
SECTION I.6 OTHER DOCUMENTS TO BE DELIVERED IMMEDIATELY
PRIOR TO THE EFFECTIVE TIME.
(5) At the Closing and immediately prior to the Effective Time,
the Company and the Company Stockholder will deliver to IES:
(1) an opinion of counsel to the Company Stockholder in
the form attached hereto as Exhibit A;
(2) a Certificate of the Secretary of the Company in the
form attached hereto as Exhibit B;
(3) a release executed by the Company Stockholder in the
form attached hereto as Exhibit C;
(4) the minute book and corporate seal of the Company;
(5) letters from the affiliates of the Company in the
form attached hereto as Exhibit D;
(6) receipts executed by the Company Stockholder in the
form attached hereto as Exhibit E;
(7) a cross-receipt executed by the Company Stockholder
in the form attached hereto as Exhibit F;
(8) an opinion of counsel to the Company Stockholder
regarding tax matters; and
(9) FIRPTA certificates from each Company Stockholder.
(6) At the Closing and immediately prior to the Effective Time,
IES will deliver to the Company Stockholder:
(i) an opinion of Andrews & Kurth L.L.P. in the form
attached hereto as Exhibit G;
(1) a cross-receipt executed by IES in the form attached
hereto as Exhibit F;
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(2) a lease agreement in the form attached hereto as
Exhibit H.
SECTION I.7 CONDITIONS TO THE OBLIGATIONS OF THE COMPANY
STOCKHOLDER. The obligations of the Company Stockholder to consummate the
Merger are subject to the fulfillment, at or before the Closing, of all of the
following conditions, any one or more of which may be waived by the Company
Stockholder.
(7) The representations and warranties of IES contained in this
Agreement shall be true as of the Closing.
(8) All of the obligations of IES to be performed at or before the
Closing pursuant to the terms of this Agreement shall have been duly performed.
(9) The documents necessary to consummate the Merger shall have
been filed with the Secretary of State of the State of Delaware and the
Secretary of State of the State of Georgia.
(10) The Company Stockholder shall have received an opinion of
counsel regarding tax matters.
SECTION I.8 CONDITIONS TO THE OBLIGATIONS OF IES. The
obligations of IES to consummate the Merger are subject to the fulfillment, at
or before the Closing, of all the following conditions, any one or more of
which may be waived by IES.
(11) The representations and warranties of the Company Stockholder
contained in this Agreement shall be true as of the Closing, subject to changes
in the Schedules that have been approved in writing by IES.
(12) All of the obligations of the Company and the Company
Stockholder to be performed at or before the Closing pursuant to the terms of
this Agreement shall have been duly performed, including without limitation
those set forth in Article I hereof.
(13) The Stock Option Agreement dated January 8, 1998, by and
between MHI and the Company Stockholder shall have been terminated.
(14) The Cross Purchase Agreement for Stock of the Company dated
December 1, 1997, by and among MHI and the Company Stockholder shall have been
terminated.
(15) The documents necessary to consummate the Merger shall have
been filed with the Secretary of State of the State of Delaware and the
Secretary of State of the State of Georgia.
(16) All waiting, review and investigation periods (and any
extensions thereof) applicable to the consummation of the Merger under the HSR
Act shall have expired or been terminated.
SECTION I.9 TERMINATION. (a) This Agreement may be
terminated at any time prior to the Closing solely:
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(1) by mutual consent of IES and the Company Stockholder
(2) by the Company Stockholder on the one hand, or by IES
(acting through its board of directors), on the other hand, if the
transactions contemplated by this Agreement to take place at the
Closing shall not have been consummated by September 30, 1998, unless
the failure of such transactions to be consummated is due to the
willful failure of the party seeking to terminate this Agreement to
perform any of its obligations under this Agreement to the extent
required to be performed by it prior to the Closing; or
(3) by the Company Stockholder on the one hand, or by
IES, on the other hand, if a material breach or default shall be made
by the other party in the observance or in the due and timely
performance of any of the covenants or agreements contained herein,
and the curing or waiver of such default shall not have been made on
or before the Closing.
(17) The termination of this Agreement will in no way limit any
obligation or liability of any party based on or arising from a breach or
default by such party with respect to any of its representations, warranties,
covenants or agreements contained in this Agreement.
ARTICLE II
THE SURVIVING CORPORATION
SECTION II.1 CERTIFICATE OF INCORPORATION. The certificate
of incorporation of MHI in effect at the Effective Time shall be the
certificate of incorporation of the Surviving Corporation.
SECTION II.2 BYLAWS. The bylaws of MHI in effect at the
Effective Time shall be the bylaws of the Surviving Corporation until amended
in accordance with applicable law.
SECTION II.3 DIRECTORS AND OFFICERS. From and after the
Effective Time, until successors are duly elected or appointed and qualified in
accordance with applicable law, (i) the director of MHI at the Effective Time
shall be the sole director of the Surviving Corporation and (ii) the officers
of the Surviving Corporation shall be as set forth on Schedule 2.3 hereto.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY STOCKHOLDER
The Company Stockholder represents and warrants to IES as
follows:
SECTION III.1 ORGANIZATION AND QUALIFICATION. The Company,
and each of its subsidiaries, if any, are listed on Schedule 3.1 (the
"Subsidiaries"), and each is a corporation duly organized, validly existing,
and in good standing under the laws of the state of its incorporation and has
the requisite corporate power to carry on its business as it is now being
conducted. The Company, and each of the Subsidiaries, is duly qualified to
conduct business as a foreign corporation in every state of the United States
in which its ownership or lease of property or the conduct of its
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business and operations makes such qualification necessary, except for such
states in which the Company's or the Subsidiaries' failure to be so qualified
is not reasonably expected to have, individually or in the aggregate, a Company
Material Adverse Effect (as defined in Section 10.16). Schedule 3.1 contains a
list of all jurisdictions in which the Company and each of the Subsidiaries is
authorized or qualified to do business. The Company has heretofore delivered
to IES true and complete copies of the charter and bylaws of the Company and
each of the Subsidiaries, in each instance including any amendments thereto, as
currently in effect.
SECTION III.2 CAPITALIZATION; OWNERSHIP. (a) The
authorized capital stock of the Company consists of 5,000 shares of Company
Common Stock, of which 400 shares are issued and outstanding (the "Company
Shares"). The Company Shares are all of the issued and outstanding shares of
capital stock of the Company and have been duly authorized and validly issued
and are fully paid and nonassessable and free of preemptive rights. There are
not, as of the date hereof, any outstanding or authorized subscriptions,
options, warrants, calls, rights, commitments, or any other agreements of any
character (any of the foregoing, a "Commitment") obligating the Company to
issue any additional shares of capital stock of the Company, or any other
securities convertible into or evidencing the right to subscribe for any shares
of capital stock of the Company. The Company Stockholder owns the respective
number of shares of Company Common Stock set forth on Schedule 3.2(a) attached
hereto, free and clear of all Liens (as defined in Section 10.16). The Company
Stockholder has full legal right, power and authority to exchange, assign and
transfer or cause to be exchanged, assigned or transferred his shares of
Company Common Stock. The delivery to IES of the Company Shares pursuant to the
terms of this Agreement will transfer valid title thereto, free and clear of
all Liens.
(18) The authorized capital stock of each of the Subsidiaries
consists of the number and type of shares of capital stock set forth on
Schedule 3.2(b) (collectively, "Subsidiary Stock"). Schedule 3.2(b) also sets
forth the number and type of shares of Subsidiary Stock which are issued and
outstanding (collectively, "Subsidiary Shares"), the securities of any other
corporation owned by the Company or any of the Subsidiaries, as well as the
names of any joint venture, partnership or other noncorporate entity in which
the Company or any of the Subsidiaries is a participant. The Subsidiary Shares
are all of the issued and outstanding shares of capital stock of the
Subsidiaries and are directly or ultimately owned by the Company, free and
clear of any Liens, and have been duly authorized and validly issued and are
fully paid and nonassessable and free of preemptive rights. Also set forth on
Schedule 3.2(b) is a listing of all names under which the Company and the
Subsidiaries have done business, as well as the names of all predecessors of
the Company and the Subsidiaries, including the names of any entities from whom
the Company or the Subsidiaries previously acquired significant assets. There
are not, as of the date hereof, any Commitments obligating any of the
Subsidiaries to issue any additional shares of capital stock of any such
Subsidiaries, or any other securities convertible into or evidencing the right
to subscribe for any shares of capital stock of any such Subsidiary.
SECTION III.3 AUTHORIZATION. The Company has the requisite
corporate power and authority to execute and deliver this Agreement and to
consummate the transactions contemplated by this Agreement. The Company
Stockholder and the Board of Directors of the Company have by unanimous written
consent (a) determined that participating in the Merger is in the best
interests of
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the Company and its stockholders and (b) approved this Agreement and the
Merger. No other corporate proceedings on the part of the Company or the
Company Stockholder are necessary to authorize the execution and delivery of
this Agreement or the consummation by the Company and the Company Stockholder
of the transactions contemplated hereby. This Agreement has been duly
authorized, executed, and delivered by the Company and the Company Stockholder
and constitutes the valid and binding obligation of the Company and the Company
Stockholder, enforceable against the Company and the Company Stockholder in
accordance with its terms.
SECTION III.4 CONSENTS AND APPROVALS; NO VIOLATION.
Neither the execution and delivery of this Agreement by the Company or the
Company Stockholder, nor the consummation by the Company or the Company
Stockholder of the transactions contemplated by this Agreement, will: (a)
require any consent, approval, authorization, or permit of, or filing with or
notification to, any Governmental Authority, except (i) the filing of a
Certificate of Merger in accordance with Delaware Law and Georgia Law, (ii) any
regulatory approvals or routine governmental consents normally acquired after
the consummation of transactions such as transactions of the nature
contemplated by this Agreement, which consents and approvals are listed on
Schedule 3.4, (iii) where the failure to obtain such consent, approval,
authorization, or permit, or to make such filing or notification, is not
reasonably expected to have, individually or in the aggregate, a Company
Material Adverse Effect or prevent or delay, in any material respect, the
consummation of the transactions contemplated by this Agreement, or (iv)
approvals required pursuant to the HSR Act; (b) result in a default (or give
rise to any right of termination, cancellation, or acceleration) under any of
the terms, conditions, or provisions of any contract, commitment or similar
agreement to which the Company or any of the Subsidiaries is a party, except
(i) as set forth on Schedule 3.4 or (ii) for such defaults (or rights of
termination, cancellation, or acceleration) as to which requisite waivers or
consents have been obtained or which are not reasonably expected to have,
individually or in the aggregate, a Company Material Adverse Effect or prevent
or delay, in any material respect, the consummation of the transactions
contemplated by this Agreement; or (c) assuming compliance with the matters
referred to in Section 3.4(a), violate any order, writ, injunction, decree,
statute, rule, or regulation applicable to the Company, any of the
Subsidiaries, or any of their assets, except for violations which are not
reasonably expected to have, individually or in the aggregate, a Company
Material Adverse Effect or prevent or delay, in any material respect, the
consummation of the transactions contemplated by this Agreement. The Company is
not in violation of its charter or bylaws.
SECTION III.5 AFFILIATE RELATIONSHIPS. Except as set forth
on Schedule 3.5, neither of the Company Stockholder nor any affiliate of any of
the Company Stockholder, and no director, officer, employee or agent of or
consultant to the Company or any of the Subsidiaries, owns, directly or
indirectly, in whole or in part, any property, assets or right, tangible or
intangible, which is associated with any property, asset or right owned by the
Company or any of the Subsidiaries or which the Company or any of the
Subsidiaries is operating or using or the use of which is necessary for its
business. Also included in Schedule 3.5 is disclosure of any relationships
which the Company Stockholder has, or any director, officer, employee, or agent
of or consultant to the Company or any of the Subsidiaries has, with the
Company or any of the Subsidiaries or any other corporation, partnership, firm,
association or business organization, entity or enterprise which is a
competitor, potential competitor, supplier or customer of the Company or any of
the Subsidiaries. The Persons
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named on Schedule 3.5 are the only Persons who may be deemed affiliates of the
Company under Rule 145 of the Securities Act of 1933, as amended (the "1933
Act").
SECTION III.6 FINANCIAL STATEMENTS. Attached as Schedule
3.6 are (a) the reviewed balance sheet, statement of income and statement of
cash flows of the Company and the Subsidiaries as of and for the years ended
April 30, 1996 and 1997 (the "Company Reviewed Financial Statements") and (b)
the unaudited consolidated balance sheet, statement of income and statement of
cash flows of the Company and the Subsidiaries for the year April 30, 1998 (the
"Company Unaudited Financial Statements"). The Company Reviewed Financial
Statements and the Company Unaudited Financial Statements present fairly the
consolidated financial position, results of operations, and changes in
financial position of the Company and the Subsidiaries as of the respective
dates or for the respective periods to which they apply in accordance with
United States generally accepted accounting principles, consistently applied
("GAAP").
SECTION III.7 UNDISCLOSED LIABILITIES. Schedule 3.7 sets
forth an accurate list as of the Company Unaudited Balance Sheet Date (as
defined below) of (i) all liabilities of the Company and the Subsidiaries which
are reflected in the balance sheet contained in the Company Unaudited Financial
Statements and (ii) any liabilities of any kind of the Company or the
Subsidiaries which are not reflected in the balance sheet included in the
Company Unaudited Financial Statements. Except as set forth on Schedule 3.7 or
as reflected, reserved against, or otherwise disclosed in the Company Unaudited
Financial Statements, neither the Company nor any of the Subsidiaries had, at
the date of the unaudited balance sheet included in the Company Unaudited
Financial Statements (the "Company Unaudited Balance Sheet Date") and do not
have, at the date hereof, any liabilities or obligations, whether accrued,
contingent, absolute, determined, determinable or otherwise, that may have,
individually or in the aggregate, a Company Material Adverse Effect.
SECTION III.8 ACCOUNTS AND NOTES RECEIVABLES. Schedule 3.8
sets forth an accurate list as of the Company Unaudited Balance Sheet Date of
the accounts and notes receivable of the Company and the Subsidiaries,
including receivables from and advances to employees of the Company, employees
of the Subsidiaries and the Company Stockholder. Included in Schedule 3.8 is
an aging of all accounts and notes receivable showing amounts due in 30-day
aging categories. The trade and other accounts receivable of the Company and
the Subsidiaries which are classified as current assets on the balance sheet as
of the Company Unaudited Balance Sheet Date are bona fide receivables, were
acquired in the ordinary course of business, are stated in accordance with
GAAP and, subject to the reserve for doubtful accounts, need not be written-off
as uncollectible. Except to the extent reflected on Schedule 3.8, such
accounts and notes are, subject to the reserve for doubtful accounts,
collectible in the amount shown on Schedule 3.8.
SECTION III.9 ASSETS. Schedule 3.9 sets forth an accurate
list of all real and personal property included in "property and equipment" on
the balance sheet of the Company as of the Company Unaudited Balance Sheet Date
and all other tangible assets of the Company with a value in excess of $5,000
(i) owned by the Company or the Subsidiaries as of the Company Unaudited
Balance Sheet Date and (ii) acquired since the Company Unaudited Balance Sheet
Date, including in each case true, complete and correct copies of leases for
significant equipment and for
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all real property leased by the Company or the Subsidiaries and descriptions of
all real property on which buildings, warehouses, workshops, garages and other
structures used in the operation of the business of the Company and the
Subsidiaries are situated. Schedule 3.9 indicates which assets are currently
owned, or were formerly owned, by the Company Stockholder or affiliates of the
Company or the Company Stockholder. Except as specifically identified on
Schedule 3.9, all of the tangible assets, vehicles and other significant
machinery and equipment of the Company and the Subsidiaries listed on Schedule
3.9 are in good working order and condition, ordinary wear and tear excepted,
and have been maintained in accordance with standard industry practices. All
fixed assets used by the Company and the Subsidiaries that are material to the
operation of the Company's and the Subsidiaries' business are either owned by
the Company or the Subsidiaries or leased under an agreement identified on
Schedule 3.9. All leases set forth on Schedule 3.9 are in full force and
effect and constitute valid and binding agreements of the parties thereto in
accordance with their respective terms.
Schedule 3.9 contains true, complete and correct copies of all
title reports and title insurance policies received or owned by the Company and
the Subsidiaries. Schedule 3.9 also includes a summary description of all
plans or projects involving the opening of new operations, expansion of
existing operations or the acquisition of any real property or existing
business, to which management of the Company and the Subsidiaries has devoted
effort or expenditure in the two-year period prior to the date of this
Agreement, which if pursued by the Company or the Subsidiaries would require
additional expenditures of capital.
The Company and the Subsidiaries have good and indefeasible
title to the tangible and intangible personal property and the real property
owned and used in their business, including the properties identified on
Schedule 3.9, subject to no mortgage, pledge, lien, claim, conditional sales
agreement, encumbrance or charge, except for liens reflected on Schedule 3.9,
liens for current taxes not yet payable and assessments not in default,
easements for utilities serving only the property, and easements, covenants and
restrictions and other exceptions to title shown of record in the appropriate
public records in the jurisdictions in which the properties, assets and
leasehold estates are located, which do not adversely affect the Company's or
the Subsidiaries' use of the property.
SECTION III.10 MATERIAL CONTRACTS, COMMITMENTS AND
CUSTOMERS. Schedule 3.10 sets forth an accurate list as of the Company
Unaudited Balance Sheet Date of (i) all material contracts, commitments and
similar agreements to which the Company or any of the Subsidiaries is a party
or by which they or any of their property is bound (including, but not limited
to, joint venture or partnership agreements, contracts with any labor
organizations, loan agreements, indemnity or guaranty agreements, bonds,
mortgages, liens, pledges or other security agreements) and the Company
Stockholder has delivered true copies of such agreements to IES and (ii) all
customers representing 5% or more of the Company's and the Subsidiaries'
revenues, taken as a whole, in any of the periods covered by the Company
Reviewed Financial Statements or the Company Unaudited Financial Statements.
Except as disclosed on Schedule 3.10, all such agreements are in full force and
effect and none of such contracts or agreements unduly burdens or restricts the
Company or any of the Subsidiaries in the ordinary course of its business.
None of the Company's or the Subsidiaries' customers or suppliers have canceled
service or products, as appropriate. Except to the extent set forth on
Schedule 3.10, (i) the Company and the Subsidiaries
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have complied with all material commitments and obligations and are not in
default under any contracts and agreements and no notice of default has been
received and (ii) none of the Company's or the Subsidiaries' customers listed
pursuant to (ii) above has canceled or substantially reduced or is currently
attempting or threatening to cancel or substantially reduce its use of the
Company's products or services. Except as set forth on Schedule 3.10, neither
the Company nor any of the Subsidiaries is now, nor has any of them ever been,
a party to any contracts subject to price redetermination or renegotiation.
SECTION III.11 OPERATING AUTHORITY. The Company and each
of the Subsidiaries, as applicable, possess all material governmental licenses,
permits, franchises, and other authorizations of any Governmental Authority
("Licenses") that are necessary to the ownership or operation of their business
as currently conducted, and all such Licenses are in full force and effect,
except where the failure to possess any License or the failure to be in full
force and effect is not reasonably expected to have, individually or in the
aggregate, a Company Material Adverse Effect, and neither the Company nor any
of the Subsidiaries is in default in any respect relating thereto. No
proceeding is pending or, to the Company Stockholder's Knowledge, is threatened
seeking the revocation or limitation of any such License that is reasonably
expected to have, individually or in the aggregate, a Company Material Adverse
Effect.
Schedule 3.11 sets forth an accurate list and summary
description as of the Company Unaudited Balance Sheet Date of all Licenses,
certificates, trademarks, trade names, patents, patent applications and
copyrights related to the assets owned or held by the Company or the
Subsidiaries. The Licenses and other rights listed on Schedule 3.11 are valid,
and the Company has not received any notice that any person intends to cancel,
terminate or not renew any such License or other right. The Company has
conducted and is conducting its business in compliance in all material respects
with the requirements, standards, criteria and conditions set forth in the
Licenses and other rights listed on Schedule 3.11 and is not in violation of
any of the foregoing in any material respect. Except as specifically provided
in Schedule 3.11, the consummation of the transactions contemplated by this
Agreement will not result in a default under or a breach or violation of, or
adversely affect the rights and benefits afforded to the Company by, any such
Licenses or other rights.
SECTION III.12 BANK ACCOUNT INFORMATION. Schedule 3.12
contains an accurate list of the names and addresses of every bank and other
financial institution in which the Company or any of the Subsidiaries maintains
an account (whether checking, savings or otherwise), lock box, or safe deposit
box, and the account numbers and persons having signature authority or legal
access thereto.
SECTION III.13 CONDUCT OF BUSINESS SINCE COMPANY UNAUDITED
BALANCE SHEET DATE. Except as expressly contemplated by this Agreement and
except as set forth on Schedule 3.13, since the Company Unaudited Balance Sheet
Date, (a) the business and operations of the Company and the Subsidiaries have
been conducted in the ordinary and usual course in all material respects in
accordance with past practices, (b) neither the Company nor any of the
Subsidiaries has paid or declared any dividend on, or made any distribution with
respect to, or purchased or redeemed any of its capital stock and (c) no Company
Material Adverse Effect has occurred and is continuing.
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SECTION III.14 LITIGATION; ORDERS. Except as set forth on
Schedule 3.14, as of the date hereof, there are no Actions pending or, to the
Company Stockholder's Knowledge, threatened against the Company or any of the
Subsidiaries. Except as set forth on Schedule 3.14, as of the date hereof
there are no judgments or outstanding orders, injunctions, decrees,
stipulations, or awards (whether rendered by a court or administrative agency
or by arbitration) against the Company or any of the Subsidiaries.
SECTION III.15 LABOR MATTERS. Except as set forth on
Schedule 3.15, there are no agreements with labor unions or associations
representing employees of the Company or any of the Subsidiaries. No material
work stoppage against the Company or any of the Subsidiaries is pending or, to
the Company Stockholder's Knowledge, threatened. Neither the Company nor any
of the Subsidiaries has been or is involved in or, to the Company Stockholder's
Knowledge, is threatened with any labor dispute, arbitration, lawsuit, or
administrative proceeding relating to labor matters involving the employees of
the Company or the Subsidiaries (excluding routine workers' compensation
claims) that is reasonably expected to have, individually or in the aggregate,
a Company Material Adverse Effect.
SECTION III.16 COMPLIANCE WITH LAWS. The conduct of the
business by the Company and each of the Subsidiaries complies with all
statutes, laws, regulations, ordinances, rules, judgments, orders, or decrees
applicable thereto (other than Environmental Laws (as hereinafter defined)
which are governed solely by Section 3.18), except for violations or failures
so to comply, if any, that would not have, individually or in the aggregate, a
Company Material Adverse Effect.
SECTION III.17 INSURANCE. Schedule 3.17 sets forth a list
of all insurance policies issued in favor of the Company and the Subsidiaries
which relate to their businesses, and all such policies are currently in force
and effect. True and complete copies of all such policies have been delivered
to IES. Attached to Schedule 3.17 is a complete list of all insurance loss
runs and workers' compensation claims received for the past three (3) policy
years. The insurance carried by the Company, which the Company Stockholder
believes to be adequate in character and amount, is with insurers that are, to
the Company Stockholder's Knowledge, financially sound and reputable and that
are unaffiliated with the Company Stockholder or the Company. None of such
policies is a "claims made" policy. All insurance policies carried by the
Company are currently in full force and effect. The Company's insurance has
never been canceled and the Company has never been denied coverage or
experienced a substantial increase in premiums or substantial reduction in
coverage from one policy period to the next period.
SECTION III.18 ENVIRONMENTAL MATTERS. Other than
violations that would not have, individually or in the aggregate, a Company
Material Adverse Effect, the Company and the Subsidiaries are in compliance
with all applicable Environmental Laws. Without limitation of the foregoing,
there are no pre-existing, pending or, to the Company Stockholder's Knowledge,
threatened actions, suits, investigations, inquiries, proceedings or clean-up
obligations by or to any Governmental Authority relating to any Environmental
Laws with respect to the Company or any of the Subsidiaries, except for
actions, suits, investigations, inquiries, proceedings, and obligations that
would not have, individually or in the aggregate, a Company Material Adverse
Effect. All notices, permits, or similar authorizations, if any, required to
be obtained or filed in connection with
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the operations of the Company or the Subsidiaries, including, without
limitation, treatment, storage, disposal, or release of a hazardous substance
or solid waste into the environment, have been duly obtained or filed, other
than any such notices, permits, or similar authorizations the failure of which
to obtain or file is not reasonably expected to have, individually or in the
aggregate, a Company Material Adverse Effect. To the Company Stockholder's
Knowledge, there are no underground storage tanks on, in or under any
properties owned by the Company and no underground storage tanks have been
closed or removed from any of such properties during the time such properties
were owned, leased or operated by the Company which are not listed on Schedule
3.18. To the Company Stockholder's Knowledge, there is no asbestos or
asbestos-containing material present in any of the properties owned by the
Company, and no asbestos has been removed from any of such properties during
the time such properties were owned, leased or operated by the Company.
Neither the Company nor any of its respective properties are subject to any
material liabilities or expenditures (fixed or contingent) relating to any
suit, settlement, court order, administrative order, regulatory requirement,
judgment or claim asserted or arising under any Environmental Law. The term
"release" has the meaning specified in CERCLA (as hereinafter defined), and the
term "disposal" (or "disposed") has the meaning specified in RCRA (as
hereinafter defined). For the purposes hereof, "Environmental Laws" shall mean
any and all laws, statutes, ordinances, rules, regulations, orders, or
determinations of any Governmental Authority pertaining to the environment in
effect on the date of this Agreement and in effect at such time in any and all
jurisdictions in which the Company or any of the Subsidiaries operate,
including, without limitation, the Clean Air Act, as amended, the Comprehensive
Environmental Response, Compensation and Liability Act, as amended ("CERCLA"),
the Federal Water Pollution Control Act, as amended, the Resource Conservation
and Recovery Act, as amended ("RCRA"), the Safe Drinking Water Act, as amended,
the Toxic Substances Control Act, as amended, comparable state and local laws
and other material environmental protection laws in effect on the date of this
Agreement. Schedule 3.18 lists all disposal sites which the Company and the
Subsidiaries have utilized as of the Company Unaudited Balance Sheet Date.
SECTION III.19 TAXES. (a) (i) Except as set forth on
Schedule 3.19, the Company and each of the Subsidiaries have filed when due all
Company Returns (as defined in Section 10.16), and have, except for Taxes that
are being contested in good faith and set forth on Schedule 3.19, timely paid
and discharged all Tax obligations shown thereon and adequate reserves have
been established on the books of the Company for all Taxes for which the
Company is liable but payment is not yet due, (ii) the Company Returns
correctly and accurately reflect the facts regarding the income, business and
assets, operations, activities, status, or other matters of the Company and the
Subsidiaries, and any other information required to be shown thereon, and are
not subject to penalties under Section 6662 of the Code, relating to
accuracy-related penalties, or any corresponding provision of applicable state,
local, or foreign Tax law or any predecessor provision of law, and (iii)
neither the Company nor any of the Subsidiaries has received any notice of any
Tax deficiency outstanding, proposed, or assessed against or allocable to it,
nor has either of them executed any waiver of any statute of limitations on the
assessment or collection of any Tax, or executed or filed with the Internal
Revenue Service or any other governmental body (any of these to be referred to
hereinafter as a "Taxing Authority") any agreement now in effect extending the
period for assessment or collection of any Taxes against the Company or any of
the Subsidiaries. No liens for Taxes exist upon the assets of the Company
except Liens for Taxes which are not yet due. The
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Company is not and never has been, subject to Tax in any jurisdiction outside
the United States. No litigation with respect to any Tax for which the Company
is asserted to be liable is pending or, to the knowledge of the Company or the
Company Stockholder, threatened, and no basis which the Company or the Company
Stockholder believes to be valid exists on which any claim for any such Tax can
be asserted against the Company. There are no requests for rulings or
determinations in respect of any Taxes pending between the Company and any
taxing authority. No issues have been raised and remain pending by any taxing
authority in connection with the examination of any Return of the Company. All
deficiencies asserted and assessments made, if any, as a result of or in
connection with any examination have been paid in full or are fully reflected
as a liability in the Financial Statements. The Company is not and never has
been party to any tax allocation or sharing agreement. All amounts required to
be withheld by the Company and paid to governmental agencies for income, social
security, unemployment insurance, sales, excise, use and other Taxes have been
collected or withheld and paid to the proper taxing authority. For purposes of
this Agreement, "Tax" or "Taxes" means taxes of any kind, levies, or other like
assessments, customs, duties, imposts, charges, or fees, including, without
limitation, income, gross receipts, ad valorem, value added, excise, real or
personal property, asset, sales, use, license, payroll, transaction, capital,
net worth and franchise taxes, estimated taxes, withholding, employment, social
security, workers compensation, utility, severance, production, unemployment
compensation, occupation, premium, windfall profits, transfer, and gains taxes
or other governmental taxes imposed or payable to the United States, or any
state, county, local, or foreign government or subdivision or agency thereof,
and in each instance such term shall include any interest, penalties, or
additions to tax attributable to or imposed with respect to any such Tax,
including penalties for the failure to file any Tax return or report.
(19) Except for the group of which the Company is currently the
parent, neither the Company nor any of the Subsidiaries has ever been a member
of an affiliated group of corporations, within the meaning of Section 1504 of
the Code, other than as a common parent corporation.
(20) Except as set forth on Schedule 3.19, none of the assets of
the Company or any of the Subsidiaries is property that the Company is required
to treat as being owned by any other Person pursuant to the "safe harbor lease"
provisions of former Section 168(f)(8) of the Code.
(21) None of the assets of the Company or any of the Subsidiaries
directly or indirectly secures any debt the interest on which is tax-exempt
under Section 103(a) of the Code.
(22) None of the assets of the Company or any of the Subsidiaries
is "tax-exempt use property" within the meaning of Section 168(h) of the Code.
(23) Neither the Company nor any of the Subsidiaries has agreed to
make, nor is any of them required to make, any adjustment under Section 481(a)
of the Code by reason of a change in accounting method or otherwise.
(24) Neither the Company nor any of the Subsidiaries has
participated in, nor will any of them participate in, an international boycott
within the meaning of Section 999 of the Code.
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(25) Neither the Company nor any of the Subsidiaries has or had a
permanent establishment in any foreign country, as defined in any applicable
tax treaty or convention between the United States and such foreign country.
(26) Neither the Company nor any of the Subsidiaries has filed a
consent pursuant to the collapsible corporation provisions of Section 341(f) of
the Code (or any corresponding provision of state, local, or foreign income tax
law) or agreed to have Section 341(f)(2) of the Code (or any corresponding
provision of state, local, or foreign income tax law) apply to any disposition
of any asset owned by it.
(27) Neither the Company nor the Company Stockholder is a "foreign
person" as that term is defined in Section 1445(f)(3).
(28) The Company has not made, is not obligated to make and is not
a party to any agreement that could require it to make any payment that is not
deductible under Section 280G of the Code.
(29) No asset of the Company is subject to any provision of
applicable law which eliminates or reduces the allowance for depreciation or
amortization in respect of that asset below the allowance generally available
to an asset of its type.
SECTION III.20 EMPLOYEE BENEFIT PLANS. (a) Schedule 3.20
contains a list of all "employee pension benefit plans" (as defined in Section
3(2) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA")) (sometimes referred to herein as "Company Pension Plans"), "employee
welfare benefit plans" (as defined in Section 3(l) of ERISA, hereinafter a
"Company Welfare Plan"), stock option, stock purchase, incentive, bonus,
deferred compensation plans or arrangements, vacation, change in control,
stay-on bonus plans or arrangements, and other material employee compensation
and fringe benefit plans or agreements, maintained, contributed to, or pursuant
to which the Company or any of the Subsidiaries has or may have any liability,
whether or not heretofore terminated (all the foregoing being herein called
"Company Benefit Plans"). The Company has delivered to IES an accurate list
(which is set forth on Schedule 3.20) showing all officers, directors and key
employees of the Company, listing all Employment Agreement with such officers,
directors and key employees and the rate of compensation (and the portions
thereof attributable to salary, bonus and other compensation, respectively) of
each of such persons as of (i) December 31, 1997 and (ii) the date hereof. The
Company has provided to IES true, complete and correct copies of any Employment
Agreement for persons listed on Schedule 3.20. Since December 31, 1997, except
as disclosed on Schedule 3.20, there have been no increases in the compensation
payable or any special bonuses to any officer, director, key employee or other
employee, except ordinary salary increases implemented on a basis consistent
with past practices. The Company has made available to IES true, complete, and
correct copies of (i) each Company Benefit Plan and any subsequently adopted
amendments thereto (or, in the case of unwritten Company Benefit Plans,
descriptions thereof), (ii) the most recent annual report on Form 5500 filed
with respect to each Company Benefit Plan (if any such report was required),
(iii) the most recent summary plan description for each Company Benefit Plan
for which such a summary plan description is required (with all summaries of
material modifications provided after the most recent summary plan description
was distributed), (iv) each trust agreement, group annuity contract and
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service agreement relating to any Company Benefit Plan and (v) each favorable
determination letter from the Internal Revenue Service with respect to each
Company Benefit Plan that is intended to be qualified under Section 401(a) of
the Code.
(30) With respect to all Company Benefit Plans, the Company and
each Subsidiary have complied with all applicable laws and, except as set forth
on Schedule 3.20, all Company Benefit Plans are and have been administered in
compliance with their terms and all applicable laws, including, without
limitation, ERISA and the Code; and there are no pending or, to the Company
Stockholder's Knowledge, threatened investigations by any governmental entity,
termination proceedings, or other claims, suits or proceedings against or
involving any Company Benefit Plan. All such plans listed on Schedule 3.20
that are intended to qualify (the "Qualified Plans") under Section 401(a) of
the Code are, and have been so qualified and have been determined by the
Internal Revenue Service to be so qualified, and copies of such determination
letters are attached to Schedule 3.20. Except as disclosed on Schedule 3.20,
all reports and other documents required to be filed with any governmental
agency or distributed to plan participants or beneficiaries (including, but not
limited to, actuarial reports, audits or tax returns) have been timely filed or
distributed, and copies thereof are included as part of Schedule 3.20 hereof.
(31) All contributions to, and payments from, the Company Benefit
Plans required to be made in accordance with the Company Benefit Plans or
applicable law have been timely made. All accrued contribution obligations of
the Company with respect to any Company Benefit Plan have either been fulfilled
in their entirety or are fully reflected on the balance sheet in the Company
Reviewed Financial Statements.
(32) No Company Benefit Plan is subject to Section 302 or Title IV
of ERISA or Section 412 of the Code or is a "multiemployer plan" within the
meaning of Section 4001(a)(3) of ERISA or a "multiple employer plan," within
the meaning of Section 413(c) of the Code.
(33) (i) No "prohibited transaction" (under Section 4975 of the
Code or Section 406 of ERISA) has occurred with respect to any Company Benefit
Plan and (ii) there has been no breach of any fiduciary duty with respect to
any Company Benefit Plan.
(34) Neither the Company nor any of the Subsidiaries maintains or
contributes to any Company Welfare Plan which could not be unilaterally
terminated by the Company or any of the Subsidiaries at any time without
liability.
SECTION III.21 BROKERAGE FEES AND COMMISSIONS. Except as
set forth on Schedule 3.21, neither the Company nor the Company Stockholder has
incurred any obligation or entered into any agreement for any investment
banking, brokerage or finder's fee, or commission in respect of the
transactions contemplated by this Agreement for which IES or the Company shall
incur any liability.
SECTION III.22 TAX TREATMENT. Neither the Company nor, to
the Company Stockholder's Knowledge, any of its affiliates has taken, has
agreed or failed to take, or intends to take any action or has any knowledge of
any fact or circumstance that would prevent the Merger
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from qualifying as a reorganization within the meaning of Section 368 of the
Code (a "368 Reorganization").
SECTION III.23 SECTION 368(a)(2)(D) REPRESENTATIONS. The
Company Stockholder hereby represents and warrants the following to be true and
correct as of the Effective Time and understands that counsel rendering any tax
opinions pursuant to Section 1.6 will rely on such representations and
warranties and will assume them to be correct, without further inquiry as of
the Effective Time and that the inaccuracy of any of the following may
negatively affect those opinions:
(35) The fair market value of the IES Common Stock and other
consideration received by the Company Stockholder will be approximately equal
to the fair market value of the Company Common Stock surrendered in the
exchange.
(36) There is no plan or intention of the Company Stockholder to
have IES redeem, or have a party related to IES acquire, shares of IES Common
Stock received in the Merger which would reduce the Company Stockholder's
ownership of a number shares of IES Common Stock received in the Merger to a
number of shares having a value, as of the date of the Merger, of less than 50%
of the sum of (i) the value at the effective time of all the Company Common
Stock held immediately prior to the Merger by the Company Stockholder and (ii)
the value at the Effective Time of any other instruments (such as debt of the
Company which is guaranteed by the Company Stockholder) which are classified
for federal income tax purposes as stock of the Company (collectively,
"Shares") and which are held immediately prior to the Merger by the Company
Stockholder. For purposes of this representation, Shares outstanding
immediately prior to the Merger include Shares exchanged for cash in lieu of
fractional shares of IES Common Stock as well as Shares redeemed prior to the
Merger by reason of this Agreement or otherwise as part of the Merger, and the
value of all Shares outstanding immediately prior to the Merger shall be
determined with regard to any extraordinary distributions (i.e., distributions
with respect to Shares other than regular, normal dividends) by the Company by
reason of this Agreement or otherwise as part of the Merger. For purposes of
this representation, a party is related to IES if such party and IES would be
treated as related parties within the meaning of Treasury Regulations Section
1.368-1(e)(3).
(37) MHI will acquire at least 90 percent of the fair market value
of the net assets and at least 70 percent of the fair market value of the gross
assets held by the Company immediately prior to the Merger. For purposes of
this representation, amounts paid by the Company to dissenters, amounts paid by
the Company to the Company Stockholder receiving cash or other property,
amounts used by the Company to pay reorganization expenses, and all redemptions
and distributions (except for regular, normal dividends, if any) made by the
Company immediately preceding the Merger, will be included as assets of the
Company held immediately prior to the Merger.
(38) The liabilities of the Company assumed by MHI and the
liabilities to which the transferred assets of the Company are subject were
incurred by the Company in the ordinary course of its business.
(39) The Company and the Company Stockholder will pay their
respective expenses, if any, incurred in connection with the Merger.
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(40) There is no intercorporate indebtedness existing between IES
and the Company or between MHI and the Company that was issued, acquired or
will be settled at a discount.
(41) The Company is not an investment company. For purposes of
this representation, an investment company means a regulated investment company
(as defined in the Code), a real estate investment trust (as defined in the
Code), or a corporation, 50 percent or more of the value of whose total assets
are stock and securities and 80 percent or more of the value of whose total
assets are assets held for investment within the meaning of Section
368(a)(2)(F)(iii) of the Code.
(42) The Company is not under the jurisdiction of a court in a case
under Title 11 of the United States Code, or a receivership, foreclosure, or
similar proceeding in a Federal or State court.
(43) On the date of the Merger, the fair market value of the assets
of the Company will exceed the sum of its liabilities, plus the amount of
liabilities, if any, to which its assets are subject.
(44) None of the compensation received by any stockholder-employees
of the Company will be separate consideration for, or allocable to, any of
their shares of Company Common Stock. None of the shares of IES Common Stock to
be received by any stockholder-employee will be separate consideration for, or
allocable to, any Employment Agreement, and the compensation paid to any
stockholder-employee will be for services actually rendered and will be
commensurate with amounts paid to third parties bargaining at arm's length for
similar services.
(45) The payment of cash in lieu of issuing fractional shares of
IES Common Stock is solely for the purpose of avoiding the expense and
inconvenience to IES of issuing fractional shares and does not represent
separately bargained-for consideration. The total cash consideration that will
be paid in the Merger to the Company Stockholder instead of issuing fractional
shares of IES Common Stock will not exceed one percent of the total
consideration that will be issued in the Merger to the Company Stockholder in
exchange for his shares of Company Common Stock. The Company Stockholder will
not receive cash in consideration of a fractional share interest in an amount
equal to or greater than the value of one full share of IES Common Stock.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF IES
IES represents and warrants to the Company Stockholder as
follows:
SECTION IV.1 ORGANIZATION AND QUALIFICATION. Each of IES
and MHI is a corporation duly organized, validly existing and in good standing
under the laws of the state of its incorporation, and IES has the requisite
corporate power to carry on its business as it is now conducted. IES is duly
qualified to conduct business as a foreign corporation in each jurisdiction in
which its ownership or lease of property or the conduct of its business and
operations makes such qualification necessary, except for such jurisdictions in
which the IES's failure to be so qualified is not reasonably expected to have,
individually or in the aggregate, an IES Material Adverse Effect (as defined in
Section 10.16).
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SECTION IV.2 CAPITALIZATION. (a The authorized capital
stock of IES consists of 100,000,000 shares of IES Common Stock, 2,655,709
shares of restricted voting common stock and 10,000,000 shares of preferred
stock. As of March 31, 1998, there were outstanding 21,759,627 shares of IES
Common Stock (including no shares of treasury stock), 2,655,709 shares of
restricted voting common stock and, no shares of preferred stock. All
outstanding shares of capital stock of IES have been duly authorized and
validly issued and are fully paid and non-assessable and free of preemptive
rights.
(46) The shares of IES Common Stock to be issued as part of the
Merger Consideration have been duly authorized and, when issued and delivered
in accordance with the terms of this Agreement, will have been validly issued
and will be fully paid and non-assessable, and the issuance thereof is not
subject to any preemptive or other similar right.
SECTION IV.3 AUTHORIZATION. The execution, delivery and
performance by IES of this Agreement, and the consummation by IES and MHI of
the transactions contemplated hereby, are within the corporate powers of IES
and MHI and have been duly authorized by all necessary corporate action. This
Agreement has been duly executed and delivered by IES and MHI and constitutes
the valid and binding obligation of IES and MHI enforceable against IES and MHI
in accordance with its terms.
SECTION IV.4 CONSENTS AND APPROVAL; NO VIOLATIOn. Neither
the execution and delivery of this Agreement by IES and MHI, nor the
consummation by IES and MHI of the transactions contemplated by this Agreement,
will: (a) require any consent, approval, authorization, or permit of, or filing
with or notification to, any Governmental Authority, except (i) the filing of a
certificate or certificates of merger in accordance with Delaware Law and
Georgia Law, (ii) compliance with any applicable requirements of the 1933 Act,
the Securities Exchange Act of 1934, as amended (the "1934 Act"), and foreign
or state securities or Blue Sky laws, (iii) any regulatory approvals or routine
governmental consents normally acquired after the consummation of transactions
such as transactions of the nature contemplated by this Agreement, (iv) where
the failure to obtain such consent, approval, authorization, or permit, or to
make such filing or notification, is not reasonably expected to have,
individually or in the aggregate, an IES Material Adverse Effect or prevent or
delay, in any material respect, the consummation of the transactions
contemplated by this Agreement, or (v) approvals required pursuant to the HSR
Act; (b) result in a default (or give rise to any right of termination,
cancellation, or acceleration) under any of the terms, conditions, or
provisions of any agreement or other instrument binding upon IES or any of its
subsidiaries, except for such defaults (or rights of termination, cancellation,
or acceleration) as to which requisite waivers or consents have been obtained
or which are not reasonably expected to have, individually or in the aggregate,
an IES Material Adverse Effect or prevent or delay, in any material respect,
the consummation of the transactions contemplated by this Agreement; or (c)
assuming compliance with the matters referred to in Section 4.4(a), violate any
order, writ, injunction, decree, statute, rule, or regulation applicable to IES
or any of its subsidiaries or any of their assets, except for violations which
are not reasonably expected to have, individually or in the aggregate, an IES
Material Adverse Effect or prevent or delay, in any material respect, the
consummation of the transactions contemplated by this Agreement.
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SECTION IV.5 SEC FILINGS. (a IES has filed with the SEC
all material forms, statements, reports and documents (the "IES SEC Filings")
required to be filed by it under the 1934 Act and the rules and regulations
thereunder.
(47) As of its filing date, each IES SEC Filing complied as to form
in all material respects with the applicable requirements of the 1934 Act.
(48) As of its filing date, each IES SEC Filing filed pursuant to
the 1934 Act did not contain any untrue statement of a material fact or omit to
state any material fact necessary in order to make the statements made therein,
in the light of the circumstances under which they were made, not misleading.
(49) IES has previously delivered to the Company Stockholder copies
of IES's prospectus, dated February 9, 1998, as supplemented (the
"Prospectus"). As of its date, the Prospectus did not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
SECTION IV.6 TAX TREATMENT. Neither IES nor, to
IES's Knowledge, any of its affiliates has taken, has agreed or failed to take,
or intends to take any action or has any knowledge of any fact or circumstance
that would prevent the Merger from qualifying as a 368 Reorganization.
SECTION IV.7 SECTION 368(a)(2)(D)REPRESENTATIONS.
IES hereby represents and warrants the following to be true and correct as of
the Effective Time and understands that counsel rendering any tax opinions
pursuant to Section 1.6 will rely on such representations and warranties and
will assume them to be correct, without further inquiry, as of the Effective
Time and that the inaccuracy of any of the following may negatively affect
those opinions:
(50) The fair market value of the IES Common Stock and other
consideration received by the Company Stockholder will be approximately equal
to the fair market value of the Company Common Stock surrendered in the
exchange.
(51) Neither IES, nor related parties, will dispose of a
substantial part of the value of the proprietary interest in the Company
following the Merger. IES has no plan or intention to redeem, or have a party
related to IES acquire, shares of IES Common Stock issued in the Merger. For
purposes of this representation and the following representations, a party is
related to IES if such party and IES would be treated as related parties within
the meaning of Treasury Regulations Section 1.368-1(e)(3).
(52) MHI will acquire at least 90 percent of the fair market value
of the net assets and at least 70 percent of the fair market value of the gross
assets held by the Company immediately prior to the Merger. For purposes of
this representation, amounts paid by the Company to dissenters, amounts paid by
the Company to the Company Stockholder receiving cash or other property,
amounts used by the Company to pay reorganization expenses, and all redemptions
and distributions (except for regular, normal dividends, if any) made by the
Company immediately preceding the Merger, will be included as assets of the
Company held immediately prior to the Merger.
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(53) Prior to the Merger, IES will be in control of MHI. For
purposes of this representation and the following representations, control is
defined as the ownership of stock possessing at least 80 percent of the total
combined voting power of all classes of stock entitled to vote and at least 80
percent of the total number of shares of all other classes of stock of the
corporation.
(54) Following the Merger, MHI will not issue additional shares of
its capital stock that would result in IES losing control of MHI.
(55) Neither IES, nor related parties, have a plan or intention to
reacquire any shares of IES Common Stock issued in the Merger.
(56) IES has no plan or intention to liquidate MHI subsequent to
the Merger; to merge MHI with or into another corporation subsequent to the
Merger; to sell or otherwise dispose of the stock of MHI subsequent to the
Merger, or to cause MHI to sell or otherwise dispose of any of its assets or
any assets acquired from the Company subsequent to the Merger, except for
dispositions made in the ordinary course of business.
(57) Following the Merger, MHI will continue the historic business
of the Company or use a significant portion of the Company's historic business
assets in a business.
(58) IES and MHI will pay their respective expenses, if any,
incurred in connection with the Merger.
(59) There is no intercorporate indebtedness existing between IES
and the Company or between MHI and the Company that was issued, acquired or
will be settled at a discount.
(60) Neither IES nor MHI are investment companies. For purposes of
this representation, an investment company means a regulated investment company
(as defined in the Code), a real estate investment trust (as defined in the
Code) or a corporation, 50 percent or more of the value of whose total assets
are stock and securities and 80 percent or more of the value of whose total
assets are assets held for investment within the meaning of Section
368(a)(2)(F)(iii) of the Code.
(61) No capital stock of MHI will be issued in the Merger.
(62) None of the compensation received by any stockholder-employees
of the Company will be separate consideration for, or allocable to, any of
their shares of the Company Common Stock. None of the shares of IES Common
Stock to be received by any stockholder-employee will be separate consideration
for, or allocable to, any Employment Agreement, and the compensation paid to
any stockholder-employee will be for services actually rendered and will be
commensurate with amounts paid to third parties bargaining at arm's length for
similar services.
(63) The payment of cash in lieu of issuing fractional shares of
IES Common Stock is solely for the purpose of avoiding the expense and
inconvenience to IES of issuing fractional shares and does not represent
separately bargained-for consideration. The total cash consideration that will
be paid in the Merger to the Company Stockholder instead of issuing fractional
shares of IES
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Common Stock will not exceed one percent of the total consideration that will
be issued in the Merger to the Company Stockholder in exchange for his shares
of Company Common Stock. The Company Stockholder will not receive cash in
consideration of a fractional share interest in an amount equal to or greater
than the value of one full share of IES Common Stock.
ARTICLE V
ADDITIONAL COVENANTS AND AGREEMENTS
SECTION V.1 REASONABLE BEST EFFORTS. Subject to the terms
and conditions of this Agreement, each party will use its reasonable best
efforts to take, or cause to be taken, all actions and to do, or cause to be
done, all things necessary, proper, or advisable under applicable laws and
regulations to consummate the transactions contemplated by this Agreement.
SECTION V.2 CERTAIN FILINGS. The Company and IES shall
cooperate with one another (i) in determining whether any action by or in
respect of, or filing with, any Governmental Authority is required, or any
actions, consents, approvals, or waivers are required to be obtained from
parties to any material agreements, in connection with the consummation of the
transactions contemplated by this Agreement and (ii) in taking such actions or
making such filings, furnishing information required in connection therewith
and seeking timely to obtain such actions, consents, approvals, or waivers.
SECTION V.3 PUBLIC ANNOUNCEMENTS. Without the prior
consent of the other, which consent shall not be unreasonably withheld, the
Company nor the Company Stockholder will issue, or permit any agent or
affiliate to issue, any press releases or otherwise make or permit any agent or
affiliate to make, any public statements with respect to this Agreement or the
transactions contemplated by this Agreement.
SECTION V.4 FURTHER ASSURANCES. At and after the Effective
Time, the officers and directors of the Surviving Corporation will be
authorized to execute and deliver, in the name and on behalf of the Company or
MHI, any deeds, bills of sale, assignments, or assurances and to take and do,
in the name and on behalf of the Company or MHI, any other actions and things
to vest, perfect, or confirm of record or otherwise in the Surviving
Corporation any and all right, title, and interest in, to, and under any of the
rights, properties, or assets of the Company acquired or to be acquired by the
Surviving Corporation as a result of, or in connection with, the Merger.
SECTION V.5 NOTICES OF CERTAIN EVENTS. Each of the
Company, the Company Stockholder and IES shall promptly notify the other
parties hereto of:
(64) any notice or other communication from any Person alleging
that the consent of such Person is or may be required in connection with the
transactions contemplated by this Agreement;
(65) any notice or other communication from any Governmental
Authority in connection with the transactions contemplated by this Agreement;
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(66) any actions, suits, claims, investigations or proceedings
commenced or, to its knowledge, threatened against, relating to, or involving
or otherwise affecting such party that relate to the consummation of the
transactions contemplated by this Agreement; and
(67) any material failure on its part to comply with or satisfy any
covenant, condition or agreement to be complied with or satisfied by it
hereunder; provided, however, that the delivery of any notice pursuant to this
Section 5.6(d) shall not limit or otherwise affect the remedies available
hereunder to the party receiving such notice.
SECTION V.6 RELEASE FROM GUARANTEES. Following the
Effective Time, IES and the Surviving Corporation shall use reasonable efforts
to have the Company Stockholder released from the personal guarantees of the
Company's indebtedness identified on Schedule 5.7. In the event that IES
cannot obtain releases of any such guarantees on or prior to one hundred and
twenty (120) days subsequent to the Effective Time, IES shall pay off or
otherwise refinance or retire such indebtedness.
SECTION V.7 FUTURE COOPERATION; TAX MATTERS. The Company,
the Company Stockholder and IES shall each deliver or cause to be delivered to
the other following the Effective Time such additional instruments as the other
may reasonably request for the purpose of fully carrying out this Agreement.
The Company Stockholder will cooperate and use his reasonable best efforts to
have the present officers, directors and employees of the Company cooperate
with IES at and after the Effective Time in furnishing information, evidence,
testimony and other assistance in connection with any actions, proceedings,
arrangements or disputes of any nature with respect to matters pertaining to
all periods prior to the Effective Time.
SECTION V.8 EXPENSES. IES and the Company Stockholder will
each pay their own fees, expenses and disbursements of their respective agents,
representatives,accountants and counsel incurred in connection with the
execution, delivery and performance of this performance of this Agreement and
any amendment thereto.
SECTION V.9 REPAYMENT OF RELATED PARTY INDEBTEDNESS.
Concurrently with the execution of this Agreement, (i) the Company Stockholder
shall repay to the Company all amounts outstanding as advances to or
receivables from the Company Stockholder and (ii) the Company shall repay all
amounts outstanding under loans to the Company from the Company Stockholder.
Such advances, receivables and loans, and the amounts thereof, are listed on
Schedule 5.10.
SECTION V.10 TAX-FREE ORGANIZATION. IES and the Company
Stockholder shall each use their best efforts to cause the Merger to be treated
as a reorganization within the meaning of Section 368(a) of the Code.
SECTION V.11 FIRPTA CERTIFICATE. The Company Stockholder
will deliver to IES a certificate to the effect that he is not a foreign person
pursuant to Section 1.1445-2(b) of the Treasury regulations.
SECTION V.12 PREPARATION AND FILING OF TAX RETURNS.
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(68) The Company Stockholder shall file or cause to be filed all
tax returns for all taxable periods that end on or before the Closing Date, but
in each case only after IES has reviewed such filings and consented thereto.
(69) IES shall file or cause to be filed all tax returns for all
taxable periods ending after the Closing Date.
(70) Each party hereto shall, and shall cause its subsidiaries and
affiliates to, provide to each of the other parties hereto such cooperation and
information as any of them reasonably may request in filing any tax returns,
amended tax returns or claim for refund, determining a liability for Taxes or a
right to refund of Taxes or in conducting any audit or other proceeding in
respect of Taxes. Such cooperation and information shall include providing
copies of all relevant portions of relevant tax returns, together with relevant
accompanying schedules and relevant work papers, relevant documents relating to
rulings or other determinations by taxing authorities and relevant records
concerning the ownership and Tax basis of property, which such party may
possess. Each party shall make its employees reasonably available on a
mutually convenient basis at its cost to provide explanation of any documents
or information so provided. Subject to the preceding sentence, each party
required to file tax returns pursuant to this Agreement shall bear all costs of
filing such tax returns.
SECTION V.13 ANTITRUST LAW COMPLIANCE. Not later than five
business days after the date hereof, if necessary (a) the Company, the Company
Stockholder and (b) IES shall prepare and file with the United States
Department of Justice (the "Department") and the Federal Trade Commission (the
"FTC") the notification and report form with respect to the transactions
contemplated by this Agreement as required pursuant to the Hart-Scott-Rodino
Antitrust Improvements Act of 1976 (the "HSR Act"). The Company, the Company
Stockholder and IES shall each cooperate with the other in preparation of such
filings and shall promptly comply with any reasonable request by the Department
or the FTC for supplemental information and shall use their best efforts to
obtain early termination of the waiting period under the HSR Act.
SECTION V.14 PENDING CLOSING. (a Between the date of this
Agreement and the Consummation Date, the Company Stockholder will, and will
cause the Company to, except as set forth on Schedule 5.12:
(1) carry on it's respective businesses in substantially
the same manner as it has heretofore;
(2) use all commercially reasonable efforts to maintain
its properties and facilities, including those held under leases, in
as good working order and condition as at present, ordinary wear and
tear excepted;
(3) perform in all material respects all of its
respective obligations under agreements relating to or affecting its
respective assets, properties or rights;
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(4) use all reasonable efforts to keep in full force and
effect present insurance policies or other comparable insurance
coverage;
(5) use its commercially reasonable efforts to maintain
and preserve its business organization intact, retain its respective
present key employees and maintain its respective relationships with
suppliers, customers and others having business relations with the
Company;
(6) use reasonable efforts to maintain compliance with
all material permits, laws, rules and regulations, consent orders, and
all other orders of applicable courts, regulatory agencies and similar
governmental authorities;
(7) maintain present debt and lease instruments in
accordance with their terms and not enter into new or amended debt or
lease instruments without the knowledge and consent of IES (which
consent shall not be unreasonably withheld), provided that debt and/or
lease instruments may be replaced without the consent of IES if such
replacement instruments are on terms at least as favorable to the
Company as the instruments being replaced;
(8) maintain or reduce present salaries and commission
levels for all officers, directors, employees and agents except for
ordinary and customary bonus and salary increases for employees in
accordance with past practices; and
(9) afford to the officers and authorized representatives
of IES reasonable access during normal business hours to all of the
Company's sites, properties, books and records and will furnish IES
with such additional financial and operating data and other
information as to the business and properties of the Company as IES
may from time to time reasonably request.
(71) Except as disclosed on Schedule 5.12, between the date hereof
and the Consummation Date, the Company will not, without prior written consent
of IES:
(1) make any change in its charter or Bylaws;
(2) issue any securities, options, warrants, calls,
conversion rights or commitments relating to its securities of any
kind;
(3) declare or pay any dividend, or make any distribution
in respect of its stock whether now or hereafter outstanding, or
purchase, redeem or otherwise acquire or retire for value any shares
of its stock;
(4) enter into any contract or commitment or incur or
agree to incur any liability or make any capital expenditures, except
if it is in the normal course of business (consistent with past
practice) or involves an amount not in excess of two percent (2%) of
the Company's revenues for fiscal 1997;
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(5) create, assume or permit to exist any mortgage,
pledge or other lien or encumbrance upon any assets or properties
whether now owned or hereafter acquired, except with respect to
purchase money liens incurred in connection with the acquisition of
equipment with an aggregate cost not in excess of two percent (2%) of
the Company's revenues for fiscal 1997 necessary or desirable for the
conduct of the businesses of the Company;
(6) sell, assign, lease or otherwise transfer or dispose
of any property or equipment except in the normal course of business;
(7) negotiate for the acquisition of any business or the
start-up of any new business;
(8) merge or consolidate or agree to merge or consolidate
with or into any other corporation;
(9) waive any material rights or claims of the Company,
provided that the Company may negotiate and adjust bills and accounts
in the course of good faith disputes with customers in a manner
consistent with past practice, provided, further, that such
adjustments shall not be deemed to be included in Schedule 5.12 unless
specifically listed thereon;
(10) amend or terminate any material agreement, permit,
license or other right of the Company; or
(11) enter into any other transaction outside the ordinary
course of its business or prohibited hereunder.
(72) The Company Stockholder, the Company, nor any agent, officer,
director, trustee or any representative of any of the foregoing will, during
the period commencing on the date of this Agreement and ending with the earlier
to occur of the Effective Date or the termination of this Agreement in
accordance with its terms, directly or indirectly: (i solicit or initiate the
submission of proposals or offers from any person for, (ii participate in any
discussions pertaining to, or (iii furnish any information to any person
other than IES or its authorized agents relating to, any acquisition or
purchase of all or a material amount of the assets of, or any equity interest
in, the Company or a merger, consolidation or business combination of the
Company.
SECTION V.15 NOTIFICATION OF CERTAIN MATTERS. The Company
Stockholder shall give prompt notice to IES upon obtaining knowledge of (i) the
occurrence or non-occurrence of any event of which would be likely to cause any
representation or warranty contained herein to be untrue or inaccurate and (ii)
any failure of the Company Stockholder or the Company to comply with or satisfy
any covenant, condition or agreement to be complied with or satisfied by such
person hereunder. IES shall give prompt notice to the Company Stockholder of
(i) the occurrence or non-occurrence of any event of which would be likely to
cause any representation or warranty of IES contained herein to be untrue or
inaccurate and (ii) any failure of IES to comply with or satisfy any covenant,
condition or agreement to be complied with or satisfied by it hereunder.
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ARTICLE VI
INDEMNIFICATION
The Company Stockholder and IES each make the following
covenants:
SECTION VI.1 INDEMNIFICATION BY THE COMPANY STOCKHOLDER.
The Company Stockholder covenants and agrees that he will indemnify, defend,
protect, and hold harmless IES, the Company, and the Surviving Corporation, and
their respective officers, directors, employees, stockholders, agents,
representatives, and affiliates (the "IES Indemnitees") at all times from and
after the date of this Agreement from and against all claims, damages, losses,
liabilities (joint or several), obligations, penalties, defenses, actions,
lawsuits, proceedings, judgments, demands, assessments, adjustments, costs, and
expenses (including specifically, but without limitation, fees, disbursements,
and expenses of attorneys, accountants, other professional advisors and of
expert witnesses and costs of investigation and preparation), directly or
indirectly resulting from, relating to or arising out of:
(73) any breach of or inaccuracy in, or any allegation or claim by
a third party which if true would constitute a breach of or inaccuracy in, any
representation or warranty set forth herein or in the Schedules or certificates
delivered in connection herewith;
(74) any breach or non-performance, partial or total, by the
Company of the Company Stockholder of any covenant or agreement of the Company
(or any affiliate or subsidiary thereof) or the Company Stockholder (or any
affiliate or subsidiary thereof) contained in this Agreement;
(75) any actual or threatened violation of or non-compliance with
any Environmental Laws arising from any event, condition, circumstance,
activity, practice, incident, action, or plan existing or occurring prior to
the Effective Time relating in any way to the assets or the business of the
Company or the Subsidiaries (including without limitation the ownership,
operation, or use of the Company's or the Subsidiaries' assets and the conduct
of the business of the Company and the Subsidiaries prior to the Effective
Time; the presence of any underground storage tanks or any hazardous substances
or solid waste on, in, under, or affecting all or any portion of the Company's
or the Subsidiaries' properties or any surrounding areas, and any release (as
defined in CERCLA) or threatened release with respect to such underground
storage tanks or hazardous substances or solid waste; and the storage,
disposal, or treatment, or transportation for storage, disposal, or treatment,
of hazardous substances or solid waste; but excluding any violation of or
non-compliance with any Environmental Laws that is attributable solely to a
change by IES in the structure, use or condition of any of the Company's or the
Subsidiaries' assets after the Effective Time);
(76) any losses or costs of defending against any claims which may
be made against IES by any Person claiming violations by the Company of any
local, state, or federal laws relating to the employment relationship,
including, but not limited to, wages, hours, concerted activity,
nondiscrimination, occupational health and safety, and the payment and
withholding of Taxes, where such claims arise out of circumstances occurring
prior to the Effective Time.
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Notwithstanding any provision to the contrary in this
Agreement, in no event whatsoever shall the aggregate liability of the Company
Stockholder under this Agreement (including all costs, expenses and attorneys'
fees paid or incurred by the Company and/or the Company Stockholder in
connection therewith or with respect to the curing of any and all
misrepresentations or breaches under this Agreement) exceed the amount of the
Merger Consideration actually paid to the Company Stockholder as provided in
Section 1.2 hereof.
SECTION VI.2 INDEMNIFICATION RELATED TO TAX LIABILITIES.
The Company Stockholder shall retain liability, and shall indemnify IES, for
the payment of any Tax liabilities with respect to the conduct of the business
of the Company or the Subsidiaries during all periods ending as of or prior to
the Effective Time.
SECTION VI.3 INDEMNIFICATION BY IES. IES covenants and
agrees that it will indemnify, defend, protect and hold harmless the Company
Stockholder (the "Stockholder Indemnitee") at all times from and after the date
of this Agreement from and against all claims, damages, losses, liabilities
(joint or several), obligations, penalties, defenses, actions, lawsuits,
proceedings, judgments, demands, assessments, adjustments, costs, and expenses
(including specifically, but without limitation, fees, disbursements, and
expenses of attorneys, accountants, other professional advisors and of expert
witnesses and costs of investigation and preparation), directly or indirectly
resulting from, relating to or arising out of:
(77) any breach of any representation or warranty of IES set forth
herein or in the Schedules or certificates delivered in connection herewith;
and
(78) any breach or non-performance, partial or total, by IES of any
covenant or agreement of IES (or any affiliate or subsidiary thereof) contained
in this Agreement.
SECTION VI.4 INDEMNIFICATION PROCEEDINGS. Promptly after a
party indemnified pursuant to this Article VI ("Indemnitee") has received
notice of or has knowledge of any claim by a person not a party to this
Agreement ("third party") or the commencement of any action or proceeding by a
third party, the Indemnitee shall promptly, and in any event within 60 days of
the assertion of any claim or the discovery of any fact upon which Indemnitee
intends to base a claim for indemnification under this Agreement ("Indemnitee
Claim"), as a condition precedent to the Indemnitee Claim, give written notice
to the party or parties from whom indemnification is sought ("Indemnitor") of
such claim by the third party. Such notice shall state the nature and the
basis of such claim and a reasonable estimate of the amount thereof. In the
event of any Indemnitee Claim, Indemnitor, at its option, shall have the right
to defend or settle, at its own expense and by its own counsel (which must be
reasonably approved by Indemnitee), any such matter so long as the Indemnitor
pursues the same in good faith and diligently. If the Indemnitor undertakes to
defend or settle, it shall promptly notify the Indemnitee of its intention to
do so, and the Indemnitee shall cooperate with the Indemnitor and its counsel
in the defense thereof and in any settlement thereof. Notwithstanding the
foregoing, the Indemnitee shall have the right to participate in any matter
through counsel of its own choosing at Indemnitee's expense; provided that the
Indemnitor's counsel shall always be lead counsel and shall determine all
litigation and settlement steps, strategy and the like. Except as set forth in
the preceding sentence, after the Indemnitor has notified the Indemnitee
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of its intention to undertake to defend or settle any such asserted liability,
and for so long as the Indemnitor diligently pursues such defense, the
Indemnitor shall not be liable for any additional legal expenses incurred by
the Indemnitee in connection with any defense or settlement of such asserted
liability, except to the extent such participation is requested by the
Indemnitor, in which event the Indemnitee shall be reimbursed by the Indemnitor
for reasonable additional legal expenses, out-of-pocket expenses and allocable
share of employee compensation incurred in connection with such participation
for any employee whose participation is so requested. If the Indemnitor
desires to accept a final and complete settlement of any such third party claim
and the Indemnitee refuses to consent to any such settlement which contains a
complete and irrevocable release of Indemnitee of all current and future claims
arising out of the matter in dispute, then the Indemnitor's liability under
this Section with respect to such third party claim shall be limited to the
amount so offered in settlement by said third party. If the Indemnitor does
not undertake to defend such matter to which the Indemnitee is entitled to
indemnification hereunder, or fails diligently to pursue such defense, the
Indemnitee may undertake such defense through counsel of its choice, at the
cost and expense of the Indemnitor, and the Indemnitee may settle such matter,
without the consent of the Indemnitor, and the Indemnitor shall immediately
reimburse the Indemnitee for the amount paid in such settlement and any other
liabilities or expenses (including all legal fees and expenses) incurred by the
Indemnitee in connection therewith as such amounts, liabilities, expenses and
fees are incurred.
SECTION VI.5 OTHER REMEDIES. Notwithstanding the
indemnification obligations contained within this Article VI, in no event shall
the indemnification provisions hereof limit in any way the ability of any of
the parties to this Agreement to seek any other remedies which may be available
to them under law.
SECTION VI.6 INDEMNIFICATION IF NEGLIGENCE OF INDEMNITEE.
The indemnification provided in this Article VI shall be applicable whether or
not negligence of the Indemnitee is alleged or proven.
SECTION VI.7 NO THIRD PARTY BENEFICIARIES. The foregoing
indemnification is given solely for the purpose of protecting the IES
Indemnitees and the Stockholder Indemnitee and shall not be deemed extended to,
or interpreted in a manner to confer any benefit, right, or cause of action
upon, any other Person.
SECTION VI.8 LIMITATION UPON INDEMNITY. The Company
Stockholder, on the one hand, and IES, on the other hand, shall be entitled to
indemnification from the other party under the provisions of this Article VI
for all claims subject to indemnification by such party, but only after such
time that the amount of, and to the extent that such claims exceed, in the
aggregate $2,500.
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ARTICLE VII
NONCOMPETITION COVENANTS
SECTION VII.1 PROHIBITED ACTIVITIES. The Company
Stockholder will not, for a period of two (2) years following the Effective
Time, directly or indirectly, for himself or on behalf of or in conjunction
with any or Person:
(79) engage, as an officer, director, shareholder, owner, partner,
joint venturer, or in a managerial or advisory capacity, whether as an
employee, independent contractor, consultant, or advisor, or as a sales
representative, in any business offering any services or products in direct
competition with IES or any of its subsidiaries within 100 miles of where IES
or any of its subsidiaries conducts business, including any territory serviced
by IES or any of its subsidiaries (the "Territory");
(80) call upon any Person who is, at that time, within the
Territory, an employee of IES or any of its subsidiaries for the purpose or
with the intent of enticing such employee away from or out of the employ of IES
or any of its subsidiaries;
(81) call upon any Person who is, at that time, or which has been,
within one (1) year prior to that time, a customer of IES or any of its
subsidiaries within the Territory for the purpose of soliciting or selling
services or products in direct competition with IES or any of its subsidiaries
within the Territory;
(82) call upon any prospective acquisition candidate, on any
Company Stockholder's own behalf or on behalf of any competitor in the
electrical contracting business, which candidate, to the actual knowledge of
such Company Stockholder after due inquiry, was called upon by IES or any
subsidiary thereof or for which, to the actual knowledge of such Company
Stockholder after due inquiry, IES or any subsidiary thereof made an
acquisition analysis, for the purpose of acquiring such entity; or
(83) disclose customers, whether in existence or proposed, of the
Company to any person, firm, partnership, corporation or business for any
reason or purpose whatsoever except to the extent that the Company has in the
past disclosed such information to the public for valid business reasons.
Notwithstanding the above, the foregoing covenant shall not be
deemed to prohibit the Company Stockholder from acquiring, as a passive
investor with no involvement in the operations of the business, not more than
one percent (1%) of the capital stock of a business providing services similar
to those provided by IES whose stock is publicly traded on a national
securities exchange or over the counter.
SECTION VII.2 EQUITABLE RELIEF. Because of the difficulty
of measuring economic losses to IES as a result of a breach of the foregoing
covenant, and because of the immediate and irreparable damage that could be
caused to IES for which it would have no other adequate remedy, the Company
Stockholder agrees that the foregoing covenant may be enforced by IES by
injunctions, restraining orders, and other equitable actions.
SECTION VII.3 REASONABLE RESTRAINT. It is agreed by the
parties hereto that the foregoing covenants in this Article VII impose a
reasonable restraint on the Company Stockholder in light of the activities and
business of IES on the date of the execution of this Agreement and the
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current plans of IES; but it is also the intent of IES and the Company
Stockholder that such covenants be construed and enforced in accordance with
the changing activities, business, and locations of IES and its subsidiaries
throughout the term of this covenant. During the term of this covenant, if IES
or one of its subsidiaries engages in new and different activities, enters a
new business, or establishes new locations for its current activities or
business in addition to or other than the activities or business it is
currently conducting in the locations currently established therefor, then the
Company Stockholder will be precluded from soliciting the customers or
employees of such new activities or business or from such new location and from
directly competing with such new activities or business within 100 miles of its
then- established operating location(s) through the term of these covenants.
SECTION VII.4 SEVERABILITY; REFORMATION. The covenants in
this Article VII are severable and separate, and the unenforceability of any
specific covenant shall not affect the continuing validity and enforceability
of any other covenant. In the event any court of competent jurisdiction shall
determine that the scope, time or territorial restrictions set forth in this
Article VII are unreasonable, then it is the intention of the parties that such
restrictions be enforced to the fullest extent which the court deems
reasonable, and this Agreement shall thereby be reformed.
SECTION VII.5 MATERIAL AND INDEPENDENT COVENANT. The
Company Stockholder acknowledges that his agreement with the covenants set
forth in this Article VII is a material condition to IES's agreement to execute
and deliver this Agreement and to consummate the transactions contemplated
hereby. All of the covenants in this Article VII shall be construed as an
agreement independent of any other provision in this Agreement, and the
existence of any claim or cause of action of the Company Stockholder against
IES or one of its subsidiaries, whether predicated on this Agreement or
otherwise, shall not constitute a defense to the enforcement by IES of such
covenants. It is specifically agreed that the two-year period during which the
agreements and covenants of the Company Stockholder made in this Article VII
shall survive shall be computed by excluding from such computation any time
during which the Company Stockholder is in violation of any provision of this
Article VII. The covenants contained in this Article VII shall not be affected
by any breach of any other provision hereof by any party hereto.
SECTION VII.6 MATERIALITY. The Company and the Company
Stockholders hereby agrees that this covenant is a material and substantial
part of this transaction.
ARTICLE VIII
APPLICABLE SECURITIES LAWS/TRANSFER RESTRICTIONS
SECTION VIII.1 COMPANY STOCKHOLDER'S REPRESENTATIONS AND
WARRANTIES CONCERNING SECURITIES. As of the date hereof (which is the same
date as the Effective Time), the Company Stockholder hereby makes the following
representations and warranties to and for the benefit of IES: (i) that the
Company Stockholder has been provided with copies of the Prospectus and has
been provided as much time and opportunity as he deemed appropriate to review
and study such Prospectus, and to consult with IES regarding the merits and
risks of the transactions
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contemplated by this Agreement; (ii) that the Company Stockholder has had
adequate opportunity to ask questions of and receive answers from the officers
of IES pertaining to the purchase of the IES Common Stock pursuant to the
Merger, and (iii) all such questions have been answered to the satisfaction of
the Company Stockholder.
SECTION VIII.2 TRANSFER RESTRICTIONS. Unless otherwise
agreed by IES, except for transfers to immediate family members who agree to be
bound by the restrictions set forth in this Section 8.2 (or trusts for the
benefit of the Company Stockholder or family members, or trusts in which the
Company Stockholder is both the grantor and the beneficiary, the trustees of
which so agree), for a period of two years from the date of this Agreement, the
Company Stockholder shall not sell, assign, exchange, transfer, appoint, or
otherwise dispose of any shares of IES Common Stock received by the Company
Stockholder pursuant to this Agreement. The certificates evidencing the IES
Common Stock delivered to the Company Stockholder pursuant to this Agreement
will bear a legend substantially in the form set forth below and containing
such other information as IES may deem necessary or appropriate:
THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT BE SOLD, ASSIGNED,
EXCHANGED, TRANSFERRED, DISTRIBUTED, APPOINTED OR OTHERWISE DISPOSED OF WITHOUT
THE WRITTEN CONSENT OF IES, AND THE ISSUER SHALL NOT BE REQUIRED TO GIVE EFFECT
TO ANY ATTEMPTED SALE, ASSIGNMENT, EXCHANGE, TRANSFER, DISTRIBUTION,
APPOINTMENT OR OTHER DISPOSITION PRIOR TO [THE SECOND ANNIVERSARY OF CLOSING
DATE]. UPON THE WRITTEN REQUEST OF THE HOLDER OF THIS CERTIFICATE, THE ISSUER
AGREES TO REMOVE THIS RESTRICTIVE LEGEND (AND ANY STOP ORDER PLACED WITH THE
TRANSFER AGENT) AFTER THE DATE SPECIFIED ABOVE.
ARTICLE IX
NONDISCLOSURE OF CONFIDENTIAL INFORMATION
SECTION IX.1 GENERAL. The Company Stockholder recognizes
and acknowledges that he had in past, currently has, and in the future may
possibly have, access to certain confidential information of the Company or the
Surviving Corporation, such as lists of customers, operational policies, and
pricing and cost policies that are valuable, special, and unique assets of the
Company and will be valuable, special, and unique assets of the Surviving
Corporation. The Company Stockholder agrees that he will not disclose such
confidential information to any Person for any purpose or reason whatsoever
(except such information as the Company Stockholder may be required to disclose
to any Governmental Authority or to authorized representatives of IES). In the
event of a breach or threatened breach by the Company Stockholder of the
provisions of this Section, IES shall be entitled to an injunction restraining
the Company Stockholder from disclosing, in whole or in part, such confidential
information. Nothing herein shall be construed as prohibiting IES from
pursuing any other available remedy for such breach or threatened breach,
including the recovery of damages.
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SECTION IX.2 EQUITABLE RELIEF. Because of the difficulty
of measuring economic losses as a result of the breach of the foregoing
covenants, and because of the immediate and irreparable damage that would be
caused for which the Company, the Surviving Corporation, and/or IES would have
no other adequate remedy, the Company Stockholder agrees that the foregoing
covenants may be enforced against him by injunctions, restraining orders, and
other equitable actions.
SECTION IX.3 NON-PUBLIC INFORMATION. The Company
Stockholder hereby acknowledges that if he becomes aware of "material
non-public information" (as defined under applicable securities laws) regarding
IES, that he will be required, under applicable securities laws, to refrain
from trading in IES securities or disclosing any such information while such
information is non-public. The Company Stockholder further agrees to
communicate such requirement to all personnel of the Company, the Surviving
Corporation or others, having knowledge of such "material non-public
information" regarding IES.
SECTION IX.4 SURVIVAL. The obligations of the parties
under this Article IX shall survive the termination of this Agreement.
ARTICLE X
MISCELLANEOUS
SECTION X.1 GOVERNING LAW. This Agreement shall be
governed by and construed in accordance with the laws of the State of Texas
without reference to the choice of law principles thereof.
SECTION X.2 ENTIRE AGREEMENT. This Agreement, together
with the Schedules and Exhibits hereto, constitute the entire agreement between
the parties with respect to the subject matter hereof, and there are no
agreements, understandings, representations, or warranties between the parties
other than those set forth or referred to herein.
SECTION X.3 EXPENSES AND FEES. All costs and expenses
incurred in connection with this Agreement shall be paid by the party incurring
such cost or expense.
SECTION X.4 NOTICES. All notices hereunder shall be
sufficient upon receipt for all purposes hereunder if in writing and delivered
personally, sent by documented overnight delivery service or, to the extent
receipt is confirmed, telecopy, telefax, or other electronic transmission
service to the appropriate address or number as set forth below.
If to IES or MHI, to:
Integrated Electrical Services, Inc.
515 Post Oak Blvd., Suite 450
Houston, Texas 77027
Attention: John F. Wombwell
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Fax Number: (713) 860-1599
if to the Company or the Company Stockholder, to:
-----------------------
-----------------------
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Attention:
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SECTION X.5 SUCCESSORS AND ASSIGNS. This Agreement shall
be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns; provided, however, that no party may assign,
delegate, or otherwise transfer any of its rights or obligations under this
Agreement without the consent of each other party hereto, except IES or MHI may
transfer or assign, in whole or from time to time in part, to one or more of
their affiliates, the right to enter into the transactions contemplated by this
Agreement, but any such transfer or assignment will not relieve IES or MHI of
its obligations hereunder. This Agreement is not intended to confer upon any
Person not a party hereto any rights or remedies hereunder, and no Person other
than the parties hereto or such Persons described above is entitled to rely on
any representation, warranty, or covenant contained herein.
SECTION X.6 HEADINGS; DEFINITIONS. The Section and Article
headings contained in this Agreement are inserted for convenience of reference
only and will not affect the meaning or interpretation of this Agreement. All
references to Sections or Articles contained herein mean Sections or Articles
of this Agreement unless otherwise stated. All capitalized terms defined
herein are equally applicable to both the singular and plural forms of such
terms.
SECTION X.7 AMENDMENTS AND WAIVERS. This Agreement may not
be modified or amended except by an instrument or instruments in writing signed
by the party against whom enforcement of any such modification or amendment is
sought. Any party hereto may, only by an instrument in writing, waive
compliance by any other party hereto with any term or provision of this
Agreement on the part of such other party hereto to be performed or complied
with. The waiver by any party hereto of a breach of any term or provision of
this Agreement shall not be construed as a waiver of any subsequent breach.
SECTION X.8 CONSTRUCTION OF CERTAIN PROVISIONS. It is
understood and agreed that the specification of any dollar amount in the
representations and warranties contained in this Agreement or the inclusion of
any specific item in the Schedules or Exhibits is not intended to imply that
such amounts or higher or lower amounts, or the items so included or other
items, are or are not material, and no party shall use the fact of the setting
of such amounts or the fact of the inclusion of any such item in the Schedules
in any dispute or controversy between the parties as to whether any obligation,
item, or matter not described herein or included in a Schedule or Exhibit is or
is not material for purposes of this Agreement. It is agreed that neither
party shall allege that a provision of this Agreement shall be construed
against a party because such party drafted such provision.
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SECTION X.9 SURVIVAL OF REPRESENTATIONS AND WARRANTIES.
Except for those contained in Sections 3.2, 3.19, 4.2, 5.7 and 5.12, the
representations, warranties, covenants and agreements of the parties made
herein and at the time of the Closing or in writing delivered pursuant to the
provisions of this Agreement shall survive the consummation of the transactions
contemplated hereby and any examination on behalf of the parties until the
second anniversary of the Closing Date. The provisions of Sections 3.19, 4.2,
5.7 and 5.12 shall survive the consummation of the transactions contemplated
hereby and any examination on behalf of the parties until the expiration of any
applicable statute of limitations. The provisions of Sections 3.2 and 4.2
shall survive the consummation of the transactions contemplated hereby.
SECTION X.10 SEVERABILITY. If any term or other provision
of this Agreement is invalid, illegal, or incapable of being enforced by any
rule of law or public policy, all other conditions and provisions of this
Agreement shall nevertheless remain in full force and effect. Upon such
determination that any term or other provision is invalid, illegal, or
incapable of being enforced, the parties hereto shall negotiate in good faith
to modify this Agreement so as to effect the original intent of the parties as
closely as possible in an acceptable manner to the end that the transactions
contemplated by this Agreement are fulfilled to the extent possible.
SECTION X.11 JURISDICTION. Any legal action, suit, or
proceeding in law or equity arising out of or relating to this Agreement and
transactions contemplated by this Agreement may be instituted in any state or
federal court in Harris County, Houston, Texas, and each party agrees not to
assert, by way of motion, as a defense, or otherwise, in any such action,
suit, or proceeding, any claim that it is not subject personally to the
jurisdiction of such court, that its property is exempt or immune from
attachment or execution, that the action, suit, or proceeding is brought in an
inconvenient forum, that the venue of the action, suit, or proceeding is
improper or that this Agreement, or the subject matter hereof or thereof may
not be enforced in or by such court. Each party further irrevocably submits to
the jurisdiction of any such court in any such action, suit, or proceeding.
Any and all service of process and any other notice in any such action, suit,
or proceeding shall be effective against any party if given by registered or
certified mail, return receipt requested, or by any other means of mail which
requires a signed receipt, postage prepaid, mailed to such party at the address
listed in Section 10.4. Nothing herein contained shall be deemed to affect the
right of any party to serve process in any manner permitted by law.
SECTION X.12 WAIVER OF JURY TRIAL. EACH OF THE PARTIES
HERETO HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY
LEGAL PROCEEDING ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY.
SECTION X.13 SPECIFIC PERFORMANCE. The parties hereto
agree that irreparable damage would occur in the event any provision of this
Agreement was not performed in accordance with the terms hereof and that the
parties shall be entitled to specific performance of the terms hereof in
addition to any other remedy to which they are entitled at law or in equity.
SECTION X.14 COUNTERPARTS; EFFECTIVENESS. This Agreement
may be executed in one or more counterparts, all of which shall be considered
one and the same agreement, and shall
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become effective when one or more counterparts have been signed by each of the
parties and delivered to the other party. In making proof of this Agreement,
it shall not be necessary to produce or account for more than one such
counterpart. A telecopied facsimile of an executed counterpart of this
Agreement shall be sufficient to evidence the binding agreement of each party
to the terms hereof. However, each party agrees to promptly deliver to the
other parties an original, duly executed counterpart of this Agreement.
SECTION X.15 MUTUAL INDEMNIFICATION AGAINST CLAIMS OF
BROKERS. Each party agrees to indemnify the other against all loss, cost,
damages or expense arising out of claims for fees or commissions of brokers
employed or alleged to have been employed by such party.
SECTION X.16 DEFINITIONS AND USAGE. For the purposes of
this Agreement:
"368 Reorganization" shall have the meaning specified in
Section 3.22.
"1933 Act" shall have the meaning specified in Section 3.5.
"1934 Act" shall have the meaning specified in Section 4.4.
"Action" shall mean any action, suit, arbitration, inquiry,
proceeding, or investigation by or before any Governmental Authority.
"affiliate" means, with respect to any Person, any other
Person directly or indirectly controlling, controlled by, or under common
control with such Person.
"Agreement" shall have the meaning specified in the
introductory paragraph of this Agreement and Plan of Merger.
"attorneys' fees" means attorneys' fees actually and
reasonably incurred for the reasonable expenditure of a reasonable number of
hours at normal and customary hourly rates for the attorneys involved, without
reliance upon any statutes that may allow such fees to be calculated on a
percentage basis, which statutory provisions are hereby waived.
"CERCLA" shall have the meaning specified in Section 3.18.
"Certificates" shall have the meaning specified in Section
1.3.
"Closing" shall have the meaning specified in Section 1.1(d)
"Closing Date" shall have the meaning specified in Section
1.1(d)
"Code" shall mean the Internal Revenue Code of 1986, as
amended, and any successor thereto.
"Commitment" shall have the meaning specified in Section
3.2(a).
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"Company" shall have the meaning specified in the introductory
paragraph of this Agreement.
"Company Reviewed Financial Statements" shall have the meaning
specified in Section 3.6.
"Company Benefit Plans" shall have the meaning specified in
Section 3.20(a).
"Company Common Stock" shall have the meaning specified in
Section 1.2(a).
"Company Material Adverse Effect" shall mean any fact,
circumstance, event, or condition which has or would have a materially adverse
effect on the business, operations, properties, condition (financial or
otherwise), assets, liabilities, results of operations or prospects of the
Company and the Subsidiaries, taken as a whole.
"Company Pension Plans" shall have the meaning specified in
Section 3.20(a).
"Company Returns" shall mean all returns, declarations,
reports, statements, and other documents required to be filed by the Company or
the Subsidiaries in respect of Taxes, and the term "Company Return" means any
one of the foregoing Company Returns.
"Company Shares" shall have the meaning specified in Section
3.2(a).
"Company Stock" shall have the meaning specified in Section
1.2(a).
"Company Stockholder" shall have the meaning specified in the
introductory paragraph of this Agreement.
"Company Unaudited Balance Sheet Date" shall have the meaning
specified in Section 3.7.
"Company Unaudited Financial Statements" shall have the
meaning specified in Section 3.6.
"Company Welfare Plan" shall have the meaning specified in
Section 3.20(a).
"Delaware Certificate of Merger" shall have the meaning
specified in Section 1.1(b).
"Delaware Law" shall have the meaning prescribed in Section
1.1(a).
"Department" shall have the meaning specified in Section 5.11.
"disposal" or "disposed" shall have the meaning specified in
Section 3.18.
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"Effective Time" shall have the meaning specified in Section
1.1(b).
"Employment Agreement" shall have the meaning specified in
Section 1.6(a)(i).
"Environmental Laws" shall have the meaning specified in
Section 3.18.
"ERISA" shall have the meaning specified in Section 3.20(a).
"FTC" shall have the meaning specified in Section 5.11.
"GAAP" shall have the meaning specified in Section 3.6.
"Georgia Certificate of Merger" shall have the meaning
specified in Section 1.1(b).
"Georgia Law" shall have the meaning prescribed in Section
1.1(a)
"Governmental Authority" shall mean (a) the United States of
America, (b) any state, county, municipality, or other governmental subdivision
within the United States of America, and (c) any court or any governmental
department, commission, board, bureau, agency, or other instrumentality of the
United States of America or of any state, county, municipality, water rights,
taxing, or zoning authority, or other governmental subdivision within the
United States of America.
"HSR Act" shall have the meaning specified in Section 5.11.
"IES" shall have the meaning specified in the introductory
paragraph of this Agreement.
"IES Common Stock" shall have the meaning specified in Section
1.2(a).
"IES Indemnitees" shall have the meaning specified in Section
6.1.
"IES Material Adverse Effect" shall mean any fact,
circumstance, event, or condition which has or would have a materially adverse
effect on the business, operations, properties, condition (financial or
otherwise), assets, liabilities, results of operations or prospects of IES and
its subsidiaries, taken as a whole.
"IES SEC Filings" shall have the meaning specified in Section
4.5(a).
"Indemnitee" shall have the meaning specified in Section 6.4.
"Indemnitee Claim" shall have the meaning specified in Section
6.4.
"Indemnitor" shall have the meaning specified in Section 6.4.
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"Knowledge" when used in relation to any Person shall mean the
actual (but not constructive) knowledge of such Person or such Person's
officers after reasonable inquiry.
"Licenses" shall have the meaning specified in Section 3.11.
"Liens" shall mean all liens, mortgages, security interests,
pledges, equities, claims, options and other encumbrances of any kind.
"MHI" shall have the meaning specified in the introductory
paragraph of this Agreement.
"Merger" shall have the meaning specified in Section 1.1(a).
"Merger Consideration" shall have the meaning specified in
Section 1.2(a).
"NYSE" shall have the meaning specified in Section 1.3.
"officer" means in the case of IES and the Company, any
executive officer of IES or the Company, as applicable, within the meaning of
Rule 3b-7 of the 1934 Act.
"Person" shall mean an individual, partnership, corporation,
limited liability company, trust, incorporated or unincorporated association,
joint venture, joint stock company, Governmental Authority or other legal
entity of any kind.
"Prospectus" shall have the meaning specified in Section
4.5(d).
"RCRA" shall have the meaning specified in Section 3.18.
"release" shall have the meaning specified in Section 3.18.
"SEC" shall have the meaning specified in Section 3.22.
"Shares" shall have the meaning specified in Section 3.23(b).
"Stockholder Indemnitee" shall have the meaning specified in
Section 6.3.
"Subsidiaries" shall have the meaning specified in Section
3.1.
"subsidiary" means, with respect to any Person, any entity of
which securities or other ownership interests having ordinary voting power to
elect a majority of the board of directors or other Persons performing similar
functions are at any time directly or indirectly owned by such Person.
"Subsidiary Shares" shall have the meaning specified in
Section 3.2(b).
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"Subsidiary Stock" shall have the meaning specified in Section
3.2(b).
"Surviving Corporation" shall have the meaning specified in
Section 1.1(a).
"Tax" or "Taxes" shall have the meaning specified in Section
3.19(a).
"Taxing Authority" shall have the meaning specified in Section
3.19(a).
"Territory" shall have the meaning specified in Section
7.1(a).
"third party" shall have the meaning specified in Section 6.4.
A reference in this Agreement to any statute shall be to such
statute as amended from time to time, and the rules and regulations promulgated
thereunder.
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their respective authorized officers as of the
day and year first above written.
INTEGRATED ELECTRICAL SERVICES, INC.
By: /s/ John Wombwell
-----------------------------------
Name: John Wombwell
-----------------------------
Title: Senior Vice President
-----------------------------
MARK HENDERSON ACQUISITION
CORPORATION
By: /s/ John Wombwell
-----------------------------------
Name: John Wombwell
-----------------------------
Title: President
-----------------------------
SPECTROL, INC.
By: /s/ David Lytle
-----------------------------------
Name: David Lytle
-----------------------------
Title: Vice President
-----------------------------
COMPANY STOCKHOLDER:
/s/ David Lytle
---------------------------------------
David Lytle
