Exhibit 10.1

 

ASSET PURCHASE AGREEMENT

 

This ASSET PURCHASE AGREEMENT (this “Agreement”) is made and entered into as of
January 7, 2005 by and among INTEGRATED ELECTRICAL SERVICES, INC., a Delaware
corporation (the “Parent”), ACE/PUTZEL ELECTRIC, INC., a Georgia corporation
(the “Company”), ACE ELECTRIC, INC., a Georgia corporation (the “Buyer”), and
THOMAS E. STALVEY, SR., an individual and resident of the State of Georgia
(“Guarantor”)

 

WITNESSETH:

 

WHEREAS, the Parent owns, either directly or indirectly, all of the issued and
outstanding capital stock of the Company, which is engaged in the electrical
construction and services business (the “Business”);

 

WHEREAS, the Parent and the Company desire to sell to the Buyer substantially
all of the Company’s assets, which are more fully described in Section 1.1
hereof, and the Buyer desires to acquire such assets in consideration of the
payment by the Buyer of the purchase price and the assumption by the Buyer of
the liabilities provided for herein, all upon the terms and subject to the
conditions hereinafter set forth;

 

WHEREAS, Guarantor is the President and owner of the Buyer and has agreed to
personally guarantee to the Parent and the Company the Buyer’s performance of
all representations, warranties, covenants, agreements and conditions set forth
herein;

 

NOW, THEREFORE, for and in consideration of the premises and of the respective
representations, warranties, covenants, agreements and conditions of the parties
contained herein, it is hereby agreed as follows:

 

1. PURCHASE AND SALE OF ASSETS.

 

1.1 Transfer of Assets. On the terms and subject to the conditions set forth in
this Agreement, on the Closing Date (as defined in Section 2.1 hereof), the
Company shall sell, convey, assign, transfer and deliver to the Buyer, and the
Buyer shall purchase and acquire from the Company (except as provided in Section
1.2 hereof) all of the assets, rights and properties of the Parent or the
Company set forth on Schedule 1.1. The assets described in this Section 1.1 as
being sold, conveyed, assigned, transferred and delivered to the Buyer hereunder
are sometimes hereinafter referred to collectively as the “Assets”.

 

1.2 Excluded Assets. It is expressly understood and agreed that the Assets shall
not include the following (such assets are hereinafter referred to collectively
as the “Excluded Assets”):

 

(a) Cash and cash equivalents or similar type investments, such as certificates
of deposit, Treasury bills and other marketable securities;

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(b) Claims for refunds of taxes and other governmental charges to the extent
such refunds relate to periods ending on or prior to the Closing Date;

 

(c) Any asset, tangible or intangible, which is not freely transferable without
the consent of a third party, upon the failure to obtain such consent;

 

(d) The original corporate minute books, stock books, financial records, tax
returns, personnel and payroll records and corporate policies and procedures
manuals of the Company and other records required by applicable laws to be
retained;

 

(e) Any contract or agreement, whether written or oral, between the Company and
IES Contractors, Inc.;

 

(f) All rights, privileges and obligations of the Parent and the Company for the
Phillips Arena season tickets; and

 

(g) Any asset not set forth on Schedule 1.1.

 

1.3 Instruments of Conveyance and Transfer.

 

(a) At the Closing, the Buyer, the Company and the Parent shall enter into a
Bill of Sale, Assignment and Assumption Agreement in the form attached hereto as
Exhibit A, transferring to the Buyer good and indefeasible title to all of the
tangible personal property included in the Assets, subject only to Permitted
Encumbrances.

 

(b) At the Closing, the Buyer and the Parent shall deliver such other
instruments of transfer and assignment in respect of the Assets as the Buyer
shall reasonably require and as shall be consistent with the terms and
provisions of this Agreement, including certificates of title of owned vehicles
and titled equipment.

 

(c) At the Closing, the Buyer shall, and shall cause the Transferred Employees
(as hereinafter defined) to, resign as officers and directors of the Company and
any other affiliates of the Parent.

 

1.4 Further Assurances. From time to time after the Closing, the Parent and the
Company will execute and deliver, or cause to be executed and delivered, without
further consideration, such other instruments of conveyance, assignment,
transfer and delivery and will take such other actions as the Buyer may
reasonably request in order to more effectively transfer, convey, assign and
deliver to the Buyer, and to place the Buyer in possession and control of any of
the Assets or to enable the Buyer to exercise and enjoy all rights and benefits
of the Company with respect thereto.

 

1.5 Liabilities. On the Closing Date, the Buyer will assume and agree to pay and
discharge all liabilities of the Company, known or unknown, absolute or
contingent (the “Assumed Liabilities”) other than the liabilities set forth on
Schedule 1.5 (the “Retained Liabilities”), which shall be retained by the Parent
or the Company, respectively.

 

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1.6 Expenses: Consents and Taxes. The Buyer shall pay, or cause to be paid (i)
all costs and expenses of obtaining all consents of third parties for the
assignment of any of the Assets, and (ii) all transfer, stamp, sales, use or
other similar taxes or duties payable in connection with the sale and transfer
of the Assets to the Buyer.

 

2. CLOSING; PURCHASE PRICE.

 

2.1 Closing Date. The consummation of the transactions contemplated in this
Agreement (the “Closing”) shall take place at the offices of Gardere Wynne
Sewell LLP, 1000 Louisiana, Suite 3400, Houston, Texas at 10:00 a.m., Central
time, January 7, 2005 (the “Closing Date”) contemporaneously with the execution
of this Agreement or at such other place and time as the parties hereto may
mutually agree.

 

2.2 Purchase Price. The aggregate purchase price for the Assets shall be
$3,494,000 (the “Purchase Price”), subject to adjustment pursuant to Section 2.3
below, plus the Buyer’s assumption of the Assumed Liabilities pursuant to
Section 1.5 above. The Purchase Price shall be payable by the Buyer at the
Closing to the Company in immediately available funds by confirmed wire transfer
to a bank account to be designated by the Company.

 

2.3 Cash Reconciliation. Within 30 days following the Closing Date, the Company
shall prepare and deliver to the Buyer a schedule setting forth, for the period
commencing on October 1, 2004, and ending as of the Closing, (a) the cash
disbursements funded by the Company, the Parent or any of their affiliates for
the benefit of the Company, to include those made in the ordinary course to
trade vendors and those made in the ordinary course for Company employee benefit
plans (the “Disbursements”), and (b) the cash deposits made by the Company (the
“Deposits”). Within three business days following the Buyer’s receipt of such
schedule, (i) the Buyer shall remit to the Company in immediately available
funds, the amount by which the Disbursements exceed the Deposits, if any; or
(ii) the Company shall remit to the Buyer, in like manner and within such
period, the amount by which Deposits exceed the Disbursements, if any.
Disbursements shall include, but not be limited to, actual cash amounts paid by
the Company or the Parent on behalf of the Company with respect to pre-Closing
periods, including (i) amounts paid after September 30, 2004 for checks issued
by the Company or Parent on behalf of the Company on or before September 30,
2004 that had not cleared the banks on September 30, 2004, which amounts were
reflected on the September 30, 2004 balance sheet as negative cash amounts, (ii)
checks issued by the Buyer or Parent on behalf of the Company subsequent to
September 30, 2004, but before the Closing that have not cleared the banks as of
the Closing, (iii) workers compensation, general liability, auto insurance,
health and similar insurance premiums paid by the Parent on behalf of the
Company with respect to periods prior to the Closing, whether accrued prior to
or after the Closing, and (iv) other amounts paid by the Company or by the
Parent on behalf of the Company with respect to periods prior to the Closing,
but for which invoices are received or accruals are made after the Closing Date.
Deposits shall include, but not be limited to, actual cash amounts received by
the Company or the Parent on behalf of the Company subsequent to September 30,
2004, but before the Closing that have not been reflected in the Company’s
accounts as of the Closing. For purposes of this calculation, Deposits shall
also include the amount of salary and expense reimbursement paid by the Company
from September 30, 2004 to the Closing Date with respect to Joe Dunn, Regional
Safety Manager. Disbursements and Deposits will be accounted for in accordance
with Parent’s accounting practices consistent with past periods.

 

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2.4 Purchase Price Allocation. As soon as practicable after the Closing Date,
the Company shall prepare IRS Form 8594 to report the allocation of the Purchase
Price among the Assets. Each party hereto agrees not to assert, in connection
with any tax return, tax audit or similar proceeding, any allocation that
differs from that set forth in such Form 8594.

 

3. REPRESENTATIONS AND WARRANTIES.

 

3.1 Representations and Warranties of the Company and the Parent. The Company
and the Parent represent and warrant to the Buyer as follows:

 

(a) Organization, Authority and Qualification of the Company. The Company is a
corporation duly organized and validly existing under the laws of the State of
Georgia and the Company has full corporate power and authority to own or lease
its properties and to carry on its business in such state. The Company has the
full corporate power and authority to execute, deliver and perform this
Agreement, and this Agreement has been duly and validly executed and delivered
by the Company and constitutes the valid and legally binding obligation of the
Company, subject to general equity principles, enforceable in accordance with
its terms, except as the same may be limited by bankruptcy, insolvency,
reorganization or similar laws affecting the rights of creditors generally. At
the Closing, the Parent shall deliver the appropriate Certificates of the
Secretaries of State, dated not more than five (5) days prior to the Closing
Date, attesting to the due organization and good standing of the Parent and the
Company (together, the “Sellers”) as corporations in their jurisdiction of
incorporation and a Certificate of an executive officer of each Seller as of the
Closing Date, attaching the relevant portions of resolutions duly adopted by the
Board of Directors of the Sellers authorizing the execution and delivery by the
Sellers of this Agreement and all other agreements contemplated herein, the
consummation of the transactions contemplated herein.

 

(b) No Violation. Neither the Company nor the Parent is in default under or in
violation of its Articles of Incorporation or Bylaws.

 

(c) No Other Violations or Breaches; Government Approval. The execution and
delivery of this Agreement and the other agreements and instruments to be
executed and delivered in connection herewith by the Sellers, the fulfillment of
and compliance by them with the terms and conditions hereof and thereof and the
consummation by them of the transactions contemplated hereby and thereby will
not:

 

(i) Require action by the Sellers, or any filing by any of them, with any
Governmental Entity prior to the Closing except in connection with the filing of
UCC lien release documents;

 

(ii) Contravene, conflict with or violate any of the provisions of the Articles
of Incorporation or Bylaws (or the equivalent) of the Sellers, or any
resolutions adopted by the Board of Directors or shareholders of the Sellers;

 

(iii) Result in the creation of any Encumbrance on any of the Assets except for
Permitted Encumbrances;

 

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(iv) Conflict with, or constitute a breach or default under, or give rise to any
right of termination, cancellation or acceleration under, any term or provision
of any contract, agreement, lease, mortgage, deed of trust, note, bond, loan
agreement, indenture, other instrument evidencing borrowed money to which the
Parent is a party or by which its assets are bound, or an event which with
notice, lapse of time, or both, would result in any such conflict, breach,
default or right; or

 

(v) Violate any provision of any law, statute, rule or administrative regulation
or any judgment, order, injunction or decree of any Governmental Entity
applicable to or binding upon the Sellers.

 

(d) Title to Properties; Absence of Liens and Encumbrances. The Company owns
good and indefeasible title to the Assets, free and clear of all claims, liens,
security interests, charges, leases, encumbrances, licenses or sublicenses and
other restrictions of any kind and nature, other than the claims, liens,
security interests, charges, leases, encumbrances, licenses or sublicenses
either included among the Assumed Liabilities or specifically set forth on
Schedule 3.1(c) hereto (“Permitted Encumbrances”).

 

3.2 Representations and Warranties of the Buyer. The Buyer and Guarantor,
jointly and severally, represent and warrant to the Parent and the Company as
follows:

 

(a) Organization, Authority and Qualification of the Buyer. The Buyer is a
corporation duly organized and validly existing under the laws of the State of
Georgia and the Buyer has full corporate power and authority to own or lease its
properties and to carry on its business in such state. The Buyer has the full
corporate power and authority to execute, deliver and perform this Agreement,
and this Agreement has been duly and validly executed and delivered by the Buyer
and constitutes the valid and legally binding obligation of the Buyer, subject
to general equity principles, enforceable in accordance with its terms, except
as the same may be limited by bankruptcy, insolvency, reorganization or similar
laws affecting the rights of creditors generally.

 

(b) No Violation. The Buyer is not in default under or in violation of its
Articles of Incorporation or Bylaws.

 

(c) Certain Fees. The Buyer has not employed any broker or finder or incurred
any other liability for any brokerage fees, commissions or finders’ fees in
connection with the transactions contemplated hereby.

 

(d) Financial Information. The financial and management reports (including,
without limitation, WIP schedules) heretofore delivered or made by Buyer or the
Company to the Parent are true and correct in all material respects and do not
omit to state any fact necessary to make any of them, in light of the
circumstances in which made, not misleading. All executed change orders have
been recorded, all agreed change orders have been executed or are listed on
Schedule 3.2(d), and all checks and cash received by the Company and its
affiliates have been deposited.

 

3.3 No Warranty. The Buyer and the Guarantor acknowledge that the Guarantor,
through previous ownership and/or management of the Company, is familiar with
the Assets and the

 

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operations of the Company, and has access to any information pertaining thereto
and has made such information available to Buyer. Neither the Company nor the
Parent, nor any of their respective directors, officers, employees, agents or
representatives has made, or shall be deemed to have made, and no such person
shall be liable for, or bound in any manner by, and Buyer and the Guarantor have
not relied upon and will not rely upon, any express or implied representations,
warranties, guaranties, promises or statements pertaining to the Business or
Assets except as specifically provided in this Section 3. The Buyer and the
Guarantor acknowledge that in making the decision to enter into this Agreement
and to consummate the transactions contemplated hereby, they have relied solely
on the basis of their own independent investigation of the Business and the
Assets and upon the express written representations, warranties and covenants in
this Agreement. Without diminishing the scope of the express written
representations, warranties and covenants of the Company and the Parent in this
Agreement and without affecting or impairing their right to rely thereon, the
Buyer and the Guarantor acknowledge that (a) they have not relied, in whole or
in part, on any information contained in documents, materials or other
information provided to them by, or on behalf of, Company or the Parent, and (b)
neither Company nor the Parent is making any representations or warranties with
respect to (i) any such documents, materials or other information, other than,
in each case, as set forth in this Agreement or (ii) the value, condition,
merchantability, marketability, profitability, suitability or fitness for a
particular use or purpose of the Assets. ACCORDINGLY, THE ASSETS ARE BEING
TRANSFERRED “AS IS, WHERE IS.” EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES SET
FORTH IN SECTION 3.1 OF THIS AGREEMENT, THE COMPANY AND PARENT MAKE ABSOLUTELY
NO REPRESENTATIONS OR WARRANTIES WHATSOEVER, EXPRESS OR IMPLIED, REGARDING THE
ASSETS, INCLUDING WITHOUT LIMITATION ANY IMPLIED WARRANTY OF MERCHANTABILITY OR
FITNESS FOR A PARTICULAR PURPOSE, OR THE ABILITY OF THE COMPANY TO ASSIGN THE
ASSETS, OR OBTAIN CONSENTS TO ANY ASSIGNMENT.

 

4. COVENANTS; ACTION SUBSEQUENT TO CLOSING.

 

4.1 Access to Books and Records. Until the third anniversary of the Closing
Date, the Parent and the Company shall afford, and will cause its affiliates to
afford, to the Buyer, its counsel, accountants and other authorized
representatives, during normal business hours, reasonable access to the books,
records and other data of the Company and the Business with respect to periods
ending on or prior to the Closing Date to the extent that such access may be
reasonably required by the Buyer to facilitate (i) the investigation, litigation
and final disposition of any claims which may have been or may be made against
the Buyer in connection with the Business or (ii) for any other reasonable
business purpose. Following the Closing, the Buyer shall prepare, on behalf of
the Company, all regularly prepared financial reports and statements for periods
up to and including the Closing Date, and shall cooperate with and provide
assistance to the Parent and the Company in their financial and tax reporting
obligations for the periods up to and including the Closing Date.

 

4.2 Mail. The Parent and the Company authorize and empower the Buyer on and
after the Closing Date to receive and open all mail received by the Buyer
relating to the Business or the Assets and to deal with the contents of such
communications in any proper manner. The Parent and the Company shall promptly
deliver to the Buyer any mail or other communication received by them after the
Closing Date pertaining to the Business or the Assets. The Buyer shall promptly
deliver to the Parent any mail or other communication received by it after the
Closing Date

 

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pertaining to the Excluded Assets or Retained Liabilities, and any cash, checks
or other instruments of payment in respect of the Excluded Assets.

 

4.3 No Consent Contracts. To the extent that any contract of the Company
included in the Assets may not be assigned without the consent of any third
party, and such consent is not obtained prior to Closing (such contracts
referred to as “No Consent Contracts”), this Agreement and any assignment
executed at Closing pursuant hereto shall not constitute an assignment thereof,
but to the extent permitted by law shall constitute an equitable assignment by
the Company and assumption by the Buyer of the Company’s rights and obligations
under the applicable No Consent Contract, with the Company making available to
the Buyer the benefits thereof and the Buyer performing the obligations
thereunder on the Company’s behalf.

 

4.4 Preparation and Filing of Certain Tax Forms. The Buyer shall prepare and
timely file all Forms W-2, 940, 941 and 1099 with all appropriate Governmental
Entities, including without limitation any summary schedules and transmittal
forms, as well as any similar filings required by any state or local
Governmental Entity, with respect to all wages and other reportable payments for
the calendar year 2004. As used herein, “Governmental Entity” means any court or
tribunal in any jurisdiction (domestic or foreign) or any public, governmental
or regulatory body, agency, department, commission, board, bureau or other
authority or instrumentality, domestic or foreign. The Buyer shall pay all
administrative amounts owed as a result of or otherwise related to such filings
with the exception of any tax, interest, or penalties associated with periods
prior to the Closing. The Company will pay, on or before they become due, any
employment taxes withheld by it which have not been previously paid. The Buyer,
Parent and the Company shall cooperate in making all such filings and shall make
available to the others such information as any of them requires to assure such
filings are made on a timely and accurate basis.

 

4.5 The Parent Name and Logos. As soon as practicable (but in any event within
90 days) after the Closing Date, the Buyer, at its expense, shall remove all the
Parent and its affiliates’ names and logos from all of the Assets. Except as
specifically provided in Section 1, nothing in this Agreement shall constitute a
license or authorization for the Buyer to use in any manner any name, logo or
mark owned by or licensed to the Company, the Parent or their respective
affiliates which bears any reference to IES or any subsidiary of IES other than
the Company. The names “Ace/Putzel Electric”, “Ace Electric”, “Ace
Technologies”, “Putzel Electric”, and “Putzel Electrical Contractors” shall be
among the Assets transferred to the Buyer and shall not be used by the Company,
Parent or their respective affiliates after the Closing; provided that Parent
will be given a reasonable period of time (not to exceed 60 days) to change the
Company’s name after the Closing Date.

 

4.6 Leased Assets. At the Closing, the Buyer, at its expense, shall pay off or
refinance the leases on the vehicles listed on Schedule 4.6 attached hereto, and
in connection therewith shall obtain the release of Parent and the Company for
all liability under such vehicle leases. As soon as practicable (but in any
event within 90 days) after the Closing Date, the Buyer, at its expense, shall
pay off or refinance the leases on the other assets listed on Schedule 4.6
attached hereto, and in connection therewith shall obtain the release of Parent
and the Company for all liability under such leases.

 

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4.7 Chubb Bonds. Buyer agrees that at the Closing it shall execute and deliver
to the Federal Insurance Company and its subsidiary or affiliated insurers and
any applicable co-sureties (collectively, “Federal”), a General Agreement of
Indemnity in the form attached as Exhibit B, pursuant to which Buyer and
Guarantor agree to (i) indemnify Federal with respect to the performance and
completion of the bonded obligations as set forth therein; and (ii) replace
within ninety (90) days the bonds identified as Cancelable Bonds therein. Buyer
further agrees to continue to provide to Federal monthly written reports (with a
copy to the Parent) as to the progress of the completion of the bonded jobs.
Buyer and Guarantor further agree to provide, from time to time and at the
request of the Parent, a certificate or certificates certifying that the
Cancelable Bonds have been replaced, and as to such other matters concerning the
performance by the Buyer of its post-closing obligations under this Agreement as
Parent shall request.

 

4.8 Retained Claims. The Company shall retain liability for certain insured
claims as set forth in Schedule 1.5, paragraph 5 (the “Retained Claims”). The
Buyer and the Guarantor agree to cooperate with the Company and the Parent in
the defense of the Retained Claims and to make available the Buyer’s personnel
and facilities for that purpose. The Company shall retain as Excluded Assets and
not transfer to the Buyer all books and records associated with the Retained
Claims, as well as any reserves established on the books of the Company for the
Retained Claims, which reserves shall be paid in cash by the Buyer to the
Company at Closing.

 

5. INDEMNIFICATION.

 

5.1 Survival. The representations and warranties of the Company, the Parent, the
Buyer and the Guarantor contained in this Agreement, any schedules delivered by
or on behalf of the Company and the Buyer pursuant to this Agreement, or in any
certificate, instrument, agreement or other writing delivered by or on behalf of
the Company, the Parent, the Buyer or the Guarantor pursuant to this Agreement
shall survive the consummation of the transactions contemplated herein; provided
that all such representations and warranties of the Company and the Parent shall
be of no further force and effect, and no claim for indemnification by the Buyer
pursuant to this Section 5 may be brought for any reason, after the expiration
of eighteen (18) months from the Closing Date (the “Survival Period”), except
for the representations and warranties contained in Section 3.1(c), which shall
survive indefinitely. Anything to the contrary notwithstanding, a claim for
indemnification which is made but not resolved prior to the expiration of the
Survival Period may be pursued and resolved after such expiration.

 

5.2 Indemnification by the Company.

 

(a) In accordance with and subject to the provisions of this Section 5, the
Company and the Parent shall indemnify and hold harmless the Buyer from and
against and in respect of any and all loss, damage, diminution in value,
liability, cost and expense, including reasonable attorneys’ fees and amounts
paid in settlement (collectively, the “Buyer Indemnified Losses”), suffered or
incurred by the Buyer by reason of, or arising out of (i) any misrepresentation
or breach of representation or warranty of the Company or the Parent contained
in this Agreement, or in any schedules delivered to the Buyer by or on behalf of
the Company or the Parent pursuant to this Agreement; (ii) the breach of any
covenant or agreement of the Company or the Parent contained in this Agreement;
or (iii) the Retained Liabilities.

 

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(b) The Company and the Parent shall reimburse the Buyer on demand for any Buyer
Indemnified Losses suffered by the Buyer with respect to matters other than
claims, actions or demands brought, made or instituted by a third party (“Third
Party Claims”). With respect to Third Party Claims, the Company and the Parent
shall reimburse the Buyer on demand for any Buyer Indemnified Losses suffered by
the Buyer, based on the judgment of any court of competent jurisdiction or
pursuant to a bona fide compromise or settlement in respect of any Buyer
Indemnified Losses. The Company and the Parent shall have the opportunity to
defend at their expense any claim, action or demand for which the Buyer claims
indemnity against the Company or the Parent; provided that: (i) the defense is
conducted by reputable counsel; (ii) the defense is expressly assumed in writing
within twenty (20) days after written notice of the claim, action or demand is
delivered to the Company and the Parent; and (iii) counsel for the Buyer may
participate at all times and in all proceedings (formal and informal) relating
to the defense, compromise and settlement of the claim, action or demand at the
expense of the Buyer.

 

5.3 Indemnification by the Buyer.

 

(a) In accordance with and subject to the provisions of this Section 5, the
Buyer and Guarantor shall, jointly and severally, indemnify and hold harmless
the Company, the Parent and their respective affiliates (for purposes of this
Section 5, the “Company Indemnitees”) from and against and in respect of any and
all loss, damage, diminution in value, liability, cost and expense, including
reasonable attorneys’ fees and amounts paid in settlement (collectively, the
“Company Indemnified Losses”), suffered or incurred by the Company Indemnitees
by reason of, or arising out of (i) any misrepresentation or breach of
representation or warranty of the Buyer or Guarantor contained in this
Agreement, or in any schedules delivered to the Company or the Parent by or on
behalf of the Buyer or Guarantor pursuant to this Agreement; (ii) or the breach
of any covenant or agreement of the Buyer or Guarantor contained in this
Agreement; (iii) the Assumed Liabilities, including, without limitation, any
liability to sureties with respect to bonded jobs; or (iv) the operation of the
Business following the Closing, including, but not limited to, any claims made
by Transferred Employees concerning COBRA, the WARN Act, unemployment claim
liability, or any similar matters as a result of the termination by Buyer of the
Transferred Employees.

 

(b) The Buyer and the Guarantor, jointly and severally (the “Buyer Indemnifying
Parties”), shall reimburse the Company Indemnitees on demand for any Company
Indemnified Losses suffered by the Company Indemnitees with respect to matters
other than Third Party Claims. With respect to Third Party Claims, the Buyer
Indemnifying Parties shall reimburse the Company Indemnitees on demand for any
Company Indemnified Losses suffered by the Company Indemnitees, based on the
judgment of any court of competent jurisdiction or pursuant to a bona fide
compromise or settlement in respect of any Company Indemnified Losses. The Buyer
Indemnifying Parties shall have the opportunity to defend at their expense any
claim, action or demand for which the Company Indemnitees claim indemnity
against the Buyer Indemnifying Parties; provided that: (i) the defense is
conducted by reputable counsel; (ii) the defense is expressly assumed in writing
within twenty (20) days after written notice of the claim, action or demand is
delivered to the Buyer Indemnifying Parties; and (iii) counsel for the Company
and the Parent may participate at all

 

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times and in all proceedings (formal and informal) relating to the defense,
compromise and settlement of the claim, action or demand at the expense of the
Company and the Parent.

 

5.4 Limitation and Payment on Claims. No claim shall be brought under this
Section 5 for breach of any representation or warranty, and no party hereto
shall be entitled to receive any payment with respect thereto, until such time
as, and only to the extent that, the aggregate amount of such claim(s) that such
party has equals or exceeds $25,000 (the “Deductible”); provided, however, that
the Deductible shall not apply to any obligations under Section 2.3. Anything to
the contrary notwithstanding, the Company and the Parent shall not be liable
under this Section 5 for Buyer Indemnified Losses in excess of the Purchase
Price.

 

5.5 Sole Remedy. The sole remedy of the Company, the Parent and the Buyer
Indemnifying Parties for breach of the representations and warranties set forth
in Section 3 shall be pursuant to this Section 5.

 

6. DISPUTE RESOLUTION.

 

6.1 Arbitration.

 

(a) Any controversy, dispute or claim arising out of or relating in any way to
this Agreement or the other agreements contemplated by this Agreement or the
transactions arising hereunder (including the validity, interpretation or
applicability of this Section 6.1) shall be settled exclusively by final and
binding arbitration in Houston, Texas. Such arbitration will apply the laws of
the State of Texas and the commercial arbitration rules of AAA to resolve the
dispute, and will be administered by the AAA.

 

(b) Written notice of arbitration must be given within one year after the
notifying party has knowledge of accrual of the claim on which the notice is
based. If the claiming party fails to give notice of arbitration within that
time, the claim shall be deemed to be waived and shall be barred from either
arbitration or litigation.

 

(c) Such arbitration shall be conducted by one independent and impartial
arbitrator to be selected by mutual agreement of the parties, if possible. If
the parties fail to reach agreement regarding appointment of an arbitrator
within thirty (30) days following receipt by one party of the other party’s
notice of arbitration, the arbitrator shall be selected from a list or lists of
proposed arbitrators submitted by AAA. Unless the parties agree otherwise, the
arbitrator shall be a licensed attorney with at least ten years of experience in
the practice of law. The selection process shall be that which is set forth in
the AAA commercial arbitration rules then prevailing, except that (A) the number
of preemptory strikes shall not be limited and (B), if the parties fail to
select an arbitrator from one or more lists, AAA shall not initially have the
power to make an appointment but shall continue to submit additional lists until
an arbitrator has been selected, but if no such arbitrator is selected within
sixty (60) days after the receipt of the first notice of arbitration, the AAA
shall have the power to make an appointment and shall promptly do so. Initially,
however, promptly following its receipt of a request to submit a list of
proposed arbitrators, AAA shall convene the parties in person or by telephone
and attempt to facilitate their selection of

 

10

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an arbitrator by agreement. If the arbitrator should die, withdraw or otherwise
become incapable of serving, a replacement shall be selected and appointed in a
like manner.

 

(d) The arbitrator shall render an opinion setting forth findings of fact and
conclusions of law with the reasons therefor stated. A transcript of the
evidence adduced at the hearing shall be made and shall, upon request, be made
available to either party. The fees and expenses of the arbitrator shall be
shared equally by the parties and advanced by them from time to time as
required; provided that at the conclusion of the arbitration, the arbitrator may
award costs and expenses (including the costs of the arbitration previously
advanced and the fees and expenses of attorneys, accountants and other experts).
No pre-arbitration discovery shall be permitted, except that the arbitrator
shall have the power in his or her sole discretion, on application by either
party, to order pre-arbitration examination of the witnesses and documents that
the other party intends to introduce in its case-in-chief at the arbitration
hearing. The arbitrator shall render his or her opinion and/or award within
ninety (90) days of the conclusion of the arbitration hearing. The arbitrator
shall not be empowered to award to either party any punitive damages in
connection with any dispute between them arising out of or relating in any way
to this Agreement or the other agreements contemplated hereby or the
transactions arising hereunder or thereunder, and each party hereby irrevocably
waives any right to recover such damages. The arbitration hearings and award
shall be maintained in confidence.

 

Notwithstanding anything to the contrary provided in this Section 6.1 and
without prejudice to the above procedures, either party may apply to any court
of competent jurisdiction for temporary injunctive or other provisional judicial
relief if such action is necessary to avoid irreparable damage or to preserve
the status quo until such time as the arbitrator is selected and available to
hear such party’s request for temporary relief. The award rendered by the
arbitrator shall be final and not subject to judicial review and judgment
thereon may be entered in any court of competent jurisdiction.

 

7. EMPLOYEE MATTERS.

 

7.1 Hiring.

 

(a) The Buyer shall hire (subject to each employee’s agreement), effective as of
the Closing Date, all of the employees of the Company on the day immediately
prior to the Closing Date, active or inactive (such employees being hereafter
referred to as the “Transferred Employees”) at a comparable job and at a rate of
pay not less than each such Transferred Employee’s pay as of September 30, 2004.
Upon request of the Buyer, the Company shall provide the Buyer reasonable access
to data (including computer data) regarding the ages, dates of hire,
compensation and job description of the Transferred Employees.

 

(b) The Buyer shall assume and be responsible for any severance costs associated
with the termination of the Transferred Employees’ employment with the Company.
The Buyer shall discharge all liabilities and claims based on occurrences or
conditions first occurring or commencing on or after the Closing Date with
respect to Transferred Employees arising out of their employment with the Buyer
after the Closing

 

11

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Date, including, but not limited to, any claims arising out of any employee
benefit plan, policy, program or arrangement maintained at any time by the Buyer
(a “Buyer Plan” or collectively, the “Buyer Plans”), except Buyer shall not
assume any liabilities with respect to the WARN Act or COBRA benefits for any
terminations occurring prior to the Closing Date (unless provided otherwise by
law or pursuant to applicable regulations) nor shall the Company or the Parent
be liable under the WARN Act, COBRA, or state unemployment claims law for any
Transferred Employee terminated by Buyer after the Closing.

 

(c) At Closing, the Buyer shall establish and make available a group medical
plan for the Transferred Employees and their dependents that is substantially
similar to the group medical plan available to the Transferred Employees
immediately prior to Closing. The Buyer shall credit the Transferred Employees
with all service of the Transferred Employees recognized under the employee
benefit plans, policies, programs, or arrangements maintained by the Parent or
the Company (the “Parent Plans”) as service with the Buyer for purposes of
eligibility to participate, vesting and levels of benefits available, under all
Buyer Plans. The Buyer shall waive any coverage waiting period, pre-existing
condition and actively-at-work requirements under the Buyer Plans for the
Transferred Employees and shall provide that any expenses incurred before the
Closing Date by a Transferred Employee (and his or her dependents) during the
calendar year of the Closing shall be taken into account for purposes of
satisfying the applicable deductible, coinsurance and maximum out-of-pocket
provisions, and applicable annual and/or lifetime maximum benefit limitations of
the Buyer Plans. The Buyer Plans shall not require contributions by Transferred
Employees at a rate that exceeds the rate in effect for other similarly situated
employees of the Buyer. Any reports or other information provided to Buyer by
the Company or the Parent in connection with Buyer performing his obligations
under this Section 7.1(c) shall be at the sole expense of the Buyer.

 

7.2 Benefits. Except as provided in Section 7.1(b), the Buyer shall be
responsible for the payment of all amounts of wages, bonuses and other
remuneration (including discretionary benefits and bonuses) payable to the
Transferred Employees of the Company accrued with respect to periods on or prior
to the Closing (except for any employment taxes actually withheld by the
Company) together with amounts payable to such employees in connection with
events occurring on or prior to the Closing. In addition, the Buyer shall be
responsible for:

 

(a) all vacation pay and pay for other compensated absences earned or accrued by
the Transferred Employees as of the close of business on the Closing Date to the
appropriate employee, including any related payroll burden (FICA and other
pension or other employee benefit plan contributions and employment taxes) with
respect thereto to the appropriate Governmental Entity or other person, to the
extent such pay has been accrued on the books of the Company at such close of
business, based upon the remuneration of such employees normally used in
computing such pay for other compensated absences; and

 

(b) amounts accrued under the Integrated Electrical Services, Inc. 401(k)
Retirement Savings Plan (the “Parent 401(k) Plan”) for the Transferred Employees
as of the Closing Date but not yet transferred to the trustee of the Parent
401(k) Plan, including without limitation, the accrued match, accrued payroll
deductions representing elective deferrals, loan repayments and accrued profit
sharing contribution, if any.

 

12

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7.3 Parent 401(k) Plan. The Company, the Parent and the Buyer agree that, as
soon as practicable after Closing, but in any event within 90 days of the
Closing Date, the account balances in the Parent 401(k) Plan of the Transferred
Employees shall be transferred to a qualified 401(k) retirement savings plan
established by the Buyer (the “Buyer’s 401(k) Plan”) in accordance with Section
414(l) of the Internal Revenue Code of 1986, as amended (the “Code”), and the
regulations promulgated thereunder. In connection with such transfer, the
following provisions shall apply:

 

(a) The account balances of the Transferred Employees transferred to the Buyer’s
401(k) Plan shall be subject to the provisions of the Buyer’s 401(k) Plan
effective as of the date of transfer; provided, however that the Buyer’s 401(k)
Plan shall continue any benefits under the Parent 401(k) Plan as required under
Section 411(d)(6) of the Code; and

 

(b) The outstanding loan of any Transferred Employee shall not be in default as
a result of the Transferred Employee’s termination of employment with the Parent
or the Company, but such loan shall be transferred to the Buyer’s 401(k) Plan in
accordance with (a) above.

 

The Buyer shall provide acceptable evidence to the Parent that the Buyer’s
401(k) Plan meets the requirements of Section 401(a) of the Code prior to the
date of such transfer. The Buyer, the Parent and the Company agree to take
whatever action, including but not limited to plan amendments and resolutions,
to effectuate the transfer of the Transferred Employee’s account balances
according to this section from the Parent 401(k) Plan to the Buyer’s 401(k)
Plan.

 

Notwithstanding the foregoing, nothing in this Section 7 shall be deemed or
construed to give rise to any rights, claims, benefits, or causes of action to
any Transferred Employee or third party whatsoever (including any Governmental
Entity).

 

8. MISCELLANEOUS.

 

8.1 Notices. All notices and communications required or permitted hereunder
shall be in writing and may be given by (a) depositing the same in the United
States mail, addressed to the party to be notified, postage prepaid and
registered or certified with return receipt requested, (b) by delivering the
same in person to an officer or agent of such party, or (c) overnight delivery
service. Such notice shall be deemed received on the date (i) on which it is
actually received if sent by overnight delivery service or hand delivery, or
(ii) on the third business day following the date on which it is mailed. For
purposes of notice, the addresses of the parties hereto shall be:

 

If to the Parent or the Company:

 

Integrated Electrical Services, Inc.

1800 West Loop South, Suite 500

Houston, Texas 77027

Attention: Chief Financial Officer

 

13

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With a copy to:

 

Integrated Electrical Services, Inc.

1800 West Loop South, Suite 500

Houston, Texas 77027

Attention: Chief Legal Officer

 

If to the Buyer or Guarantor:

 

Ace Electric, Inc.

4837 Inner Perimeter Road

Valdosta, GA 31602

Attention: Thomas E. Stalvey, Sr.

 

With a copy to:

 

Coleman Talley Law Firm

910 N. Patterson Street

Valdosta, GA 31601

Attention: Wade H. Coleman

 

or such other address as any party hereto shall specify pursuant to this Section
8.1 from time to time.

 

8.2 Counterparts. This Agreement may be executed in any number of counterparts,
each of which shall be deemed an original, and all of which together shall
constitute one and the same instrument.

 

8.3 Governing Law. The validity and effect of this Agreement shall be governed
by and construed and enforced in accordance with the laws of the State of Texas,
without regard to its conflicts of laws rules.

 

8.4 Successors and Assigns. This Agreement shall be binding upon and shall inure
to the benefit of the parties hereto and their respective permitted heirs,
successors and assigns. Neither the Company, the Parent nor the Buyer may
assign, delegate or otherwise transfer any of their rights or obligations under
this Agreement without the written consent by each other party hereto.

 

8.5 Partial Invalidity and Severability. All rights and restrictions contained
herein may be exercised and shall be applicable and binding only to the extent
that they do not violate any applicable laws and are intended to be limited to
the extent necessary to render this Agreement legal, valid and enforceable. If
any term of this Agreement, or part thereof, not essential to the commercial
purpose of this Agreement shall be held to be illegal, invalid or unenforceable
by a forum of competent jurisdiction, it is the intention of the parties that
the remaining terms hereof, or part thereof, shall constitute their agreement
with respect to the subject matter hereof, and all such remaining terms, or
parts thereof, shall remain in full force and effect. To the extent legally
permissible, any illegal, invalid or unenforceable provision of this Agreement
shall be replaced by a valid provision which will implement the commercial
purpose of the illegal, invalid or unenforceable provision.

 

14

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8.6 Waiver. Any term or condition of this Agreement may be waived at any time by
the party which is entitled to the benefit thereof, but only if such waiver is
evidenced by a writing signed by such party. No failure on the part of any party
hereto to exercise, and no delay in exercising, any right, power or remedy
created hereunder shall operate as a waiver thereof, nor shall any single or
partial exercise of any right, power or remedy by either party preclude any
other or further exercise thereof or the exercise of any other right, power or
remedy. No waiver by either party hereto of any breach of or default in any term
or condition of this Agreement shall constitute a waiver of or assent to any
succeeding breach of or default in the same or any other term or condition
hereof.

 

8.7 Headings. The headings of particular provisions of this Agreement are
inserted for convenience only and shall not be construed as a part of this
Agreement or serve as a limitation or expansion on the scope of any term or
provision of this Agreement.

 

8.8 Entire Agreement; Amendments. This Agreement supersedes all prior
discussions and agreements between the parties with respect to the subject
matter hereof (including without limitation any letters of intent executed by
the parties), and this Agreement contains the sole and entire agreement between
the parties with respect to the matters covered hereby. This Agreement shall not
be altered or amended except by an instrument in writing signed by or on behalf
of the party against whom enforcement is sought.

 

8.9 Disclosure of Agreement Terms. Neither Buyer nor the Guarantor shall
disclose the terms and conditions of this Agreement to any person or entity
without the prior written consent of an executive officer of the Parent or as
required by applicable law or an order from a court or administrative body of
competent jurisdiction (but only to the extent so required and only after giving
reasonable prior notice to the Company and the Parent and cooperating with the
Company and the Parent in any efforts to legally oppose such disclosure). The
foregoing notwithstanding, the Buyer and the Guarantor shall be permitted to
make such disclosures to their accountants, lawyers, financial institutions,
lending sources, senior employees and related parties as may be appropriate,
provided that such parties are bound by the foregoing nondisclosure provisions.

 

8.10 Number and Gender. Where the context requires, the use of the singular form
herein shall include the plural, the use of the plural shall include the
singular, and the use of any gender shall include any and all genders.

 

[Remainder of page intentionally left blank]

 

15

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IN WITNESS WHEREOF, this Agreement has been executed effective as of the date
set forth above.

 

PARENT:

INTEGRATED ELECTRICAL SERVICES, INC.

By:

--------------------------------------------------------------------------------

Name:

--------------------------------------------------------------------------------

Title:

--------------------------------------------------------------------------------

COMPANY:

ACE/PUTZEL ELECTRIC, INC.

By:

--------------------------------------------------------------------------------

Name:

--------------------------------------------------------------------------------

Title:

--------------------------------------------------------------------------------

BUYER:

ACE ELECTRIC, INC.

By:

--------------------------------------------------------------------------------

    Thomas E. Stalvey, Sr., President

GUARANTOR:

--------------------------------------------------------------------------------

Thomas E. Stalvey, Sr.

 

16

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EXHIBIT A

 

BILL OF SALE, ASSIGNMENT AND ASSUMPTION AGREEMENT

 

This BILL OF SALE, ASSIGNMENT AND ASSUMPTION AGREEMENT (“Bill of Sale”) is
entered into as of the 7th day of January 2005, by and among INTEGRATED
ELECTRICAL SERVICES, INC., a Delaware corporation (the “Parent”), ACE/PUTZEL
ELECTRIC, INC., a Georgia corporation (the “Company”) and ACE ELECTRIC, INC., a
Georgia corporation (the “Buyer”).

 

RECITALS

 

WHEREAS, pursuant to the terms of that certain Asset Purchase Agreement (the
“Purchase Agreement”) dated as of even date herewith by and among the Buyer, the
Parent, the Company, and Thomas E. Stalvey, Sr., individual, the Company and the
Parent agreed to convey the Assets to the Buyer and the Buyer agreed to assume
the Assumed Liabilities. In order to evidence such conveyance and assumption,
the parties desire to enter into this Bill of Sale.

 

WHEREAS, all capitalized terms used herein but not defined herein shall have the
meanings ascribed to them in the Purchase Agreement.

 

ASSIGNMENT

 

NOW, THEREFORE, for and in consideration of the mutual covenants, agreements,
and benefits contained herein, the sum of TEN DOLLARS ($10.00) and other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Company and the Parent do hereby BARGAIN, GRANT, SELL, CONVEY,
TRANSFER, DELIVER and ASSIGN unto Buyer all the Assets.

 

The Assets are hereby conveyed free and clear of all encumbrances other than the
Permitted Encumbrances.

 

TO HAVE AND TO HOLD the Assets unto the Buyer and its successors and assigns
forever; and the Company and the Parent do hereby bind themselves and their
successors and assigns to WARRANT AND FOREVER DEFEND title to the Assets in
accordance with the terms and provisions of the Purchase Agreement.

 

The Buyer, upon execution below, accepts this Bill of Sale, and to the extent
provided for in the Purchase Agreement, hereby assumes the Assumed Liabilities,
but no others.

 

This assignment shall be binding upon and shall inure to the benefit of the
parties hereto and their respective permitted successors and assigns.

 

--------------------------------------------------------------------------------

This Bill of Sale may be executed in any number of counterparts, and each
counterpart shall for all purposes be deemed to be an original.

 

This Bill of Sale is subject to all terms and conditions contained in the
Purchase Agreement and nothing herein shall be deemed to alter, amend, or
supersede the Purchase Agreement, the terms of which shall in all respects be
controlling.

 

[Remainder of page intentionally left blank]

 

--------------------------------------------------------------------------------

IN WITNESS WHEREOF, the parties hereto have executed this Bill of Sale effective
as of the date set forth above.

 

PARENT:

INTEGRATED ELECTRICAL SERVICES, INC.

By:

--------------------------------------------------------------------------------

Name:

--------------------------------------------------------------------------------

Title:

--------------------------------------------------------------------------------

COMPANY:

ACE/PUTZEL ELECTRIC, INC.

By:

--------------------------------------------------------------------------------

Name:

--------------------------------------------------------------------------------

Title:

--------------------------------------------------------------------------------

BUYER:

ACE ELECTRIC, INC.

By:

--------------------------------------------------------------------------------

Name:

--------------------------------------------------------------------------------

Title:

--------------------------------------------------------------------------------

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EXHIBIT B

 

FORM OF GENERAL AGREEMENT OF INDEMNITY

--------------------------------------------------------------------------------

CHUBB GROUP OF INSURANCE COMPANIES

 

LOGO [g32063gchubbindemnityx1x1.jpg]   15 Mountain View Road, P.O. Box 1615,
Warren, New Jersey 07061-1615

--------------------------------------------------------------------------------

 

GENERAL AGREEMENT OF INDEMNITY

 

WHEREAS, the undersigned (hereinafter individually and collectively called
“Indemnitor”) desires FEDERAL INSURANCE COMPANY or any of its subsidiary or
affiliated insurers (hereinafter called “Company”) to execute bonds including
undertakings and other like obligations (hereinafter referred to as bond or
bonds) on its behalf and also desires the execution of bonds on behalf of
individuals, partnerships, corporations, limited liability companies or any
other similarly unincorporated associations of members (hereinafter called
“Affiliates”).

 

WHEREAS, from time to time the Indemnitor may be a participant in joint ventures
with others, and bonds will be required on behalf of the Indemnitor along with
the other participants in such joint ventures.

 

WHEREAS, Indemnitor is the successor-in-interest to ACE/PUTZEL ELECTRIC, INC.
(along with any other affiliate or related entity whose assets have been or will
be assigned to Indemnitor hereinafter individually and collectively called
“Seller”) as the assignee of all bonded contract obligations, which Indemnitor
has expressly assumed without reservation

 

NOW, THEREFORE, in consideration of the Company executing said bond or bonds,
and the undersigned Indemnitor hereby requests the execution thereof, and in
consideration of the consent of Company to the assignment and assumption of the
bonded obligations formerly undertaken by the Seller, as well as the sum of One
Dollar paid to the Indemnitor by said Company, the receipt whereof is hereby
acknowledged, the Indemnitor, being benefited by the execution and delivery of
said bond or bonds, including, without limitation all Bonds previously issued
prior to the date of this Agreement for the Seller, the bonded obligations of
which have been expressly assumed without reservation by Indemnitor(s) and as to
which Indemnitor(s) have agreed, and do hereby agree, to assume full
responsibility for work in place as well as the prompt and proper performance
and completion of all such bonded obligations, including, without limitation
those bonded obligations listed on Exhibit A attached hereto, hereby agrees that
it will at all times jointly and severally indemnify and save harmless said
Company from and against any and all loss, cost, damage or expense, including
court costs and attorneys’ fees, which it shall at any time incur by reason of
its execution and/or delivery of said bond or bonds or its payment of any claim
or liability thereunder and will place the said Company in funds to meet all its
liability under said bond or bonds promptly on request and before it may be
required to make any payment thereunder and that the voucher or other evidence
of payment by said Company of any such loss, cost, damage, expense, claim, or
liability shall be prima facie evidence of the fact and amount of the
Indemnitor’s liability to said Company under this Agreement.

 

IT IS UNDERSTOOD AND AGREED that with respect to any bonds on behalf of the
Indemnitor participating in a joint venture that if specific application is
filed with the Company for such bonds the liability of the Indemnitor to the
Company with respect to such joint venture bonds shall be limited to the amount
expressly set forth in said application.

 

IT IS UNDERSTOOD AND AGREED that all of the terms, provisions, and conditions of
this Agreement shall be extended to and for the benefit not only of the Company
either as a direct writing company or as a co-surety or reinsurer but also for
the benefit of any surety or insurance company or companies with which the
Company may participate as a co-surety or reinsurer and also for the benefit of
any other company which may execute any bond or bonds at the request of the
Company on behalf of the Indemnitor .

 

IT IS UNDERSTOOD AND AGREED that this Agreement is in addition to all other
rights and agreements which Company may have or be a party to in connection with
Bonds previously issued for the benefit of Seller and that the assumption of
responsibility therefor by Indemnitors as herein provided shall not constitute a
waiver or release by Company of any rights Company may have to seek and recover
indemnity from third parties having liability in connection with the issuance of
such Bonds including, but not limited to, the obligations and liabilities of
Integrated Electrical Services, Inc., Delco Electric, Inc. or their affiliates.

 

        IT IS UNDERSTOOD AND AGREED that, notwithstanding anything herein to the
contrary, Indemnitor’s agreements, covenants, and all obligations under this
General Agreement of Indemnity is limited to (1) the obligations assumed by
Indemnitor under the Asset Purchase Agreement by and among Integrated Electrical
Services, Inc., Ace/Putzel Electric, Inc., Ace Electric, Inc. and Thomas E.
Stalvey, Sr. and (2) Company’s obligations under the bonds listed on Exhibit A
attached hereto. Furthermore, Indemnitor has acknowledged and agreed that
Indemnitor will replace Bond No. 81937057, Bond No. 81937101, and Bond No.
81566272 identified on Exhibit A (the “Cancelable Bonds”) no later than ninety
(90) days from the execution of this Agreement, and hereby acknowledges and
consents that the Cancelable Bonds will be canceled upon the earlier of (i) the
date of issuance of replacement bonds or (ii) the date upon which Federal issues
notice of cancellation in compliance with the terms the Cancelable
Bond(s) to be canceleed thereby. Indemnitor’s obligation under this Agreement
with respect to any bond or bonds canceled or replaced as contemplated herein
will remain with respect to such liability accruing under said bond or bonds.

 

IT IS FURTHER UNDERSTOOD AND AGREED that the Indemnitor, its heirs, successors
and assigns are jointly and severally bound by the foregoing conditions of this
Agreement.

--------------------------------------------------------------------------------

IN WITNESS WHEREOF the Indemnitor has signed this instrument this, the
                 day of January, 2005.

 

WITNESS:      

ACE ELECTRIC, INC., a Georgia corporation

        By:                

Its:

   

 

WITNESS:       THOMAS E. STALVEY, SR.                            

 

2

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CORPORATE ACKNOWLEDGMENT

 

STATE OF    

COUNTY OF

   

 

On this              day of             , 2005, before me personally came
                         to me known, who, being by me duly sworn, did depose
and say that he resides in the State of                             ; and that
he is the                          of ACE ELECTRIC, INC. the corporation
described in and which executed the foregoing instrument; that he knows the
corporate seal of said Corporation; that the seal affixed to said instrument is
such corporate seal; that it was so affixed by order and authority of the Board
of Directors of said Corporation; and that he signed his name thereto by like
order and authority.

 

(SEAL)

                

NOTARY PUBLIC

 

My commission expires:

 

 

                  

 

INDIVIDUAL ACKNOWLEDGMENT

 

STATE OF    

COUNTY OF

   

 

On this              day of             , 2005, before me personally came THOMAS
E. STALVEY, SR., to me known, who, being by me duly sworn, did depose and say
that he resides in the State of                                 ; and that he
executed the foregoing instrument for the purposes therein contained.

(SEAL)

                

NOTARY PUBLIC

 

My commission expires:

 

 

                  

 

3