Document:

ex10-3.htm

 

Exhibit 10.3

 

 

EMPLOYMENT AGREEMENT

 

THIS EMPLOYMENT AGREEMENT (“Agreement”) is made this 11th day of September, 2013 (the "Effective Date") by and between Innovative Software Technologies, Inc. a Delaware corporation (“INIV" or the “Employer” and collectively with any entity that is wholly or partially owned by INIV, the “Company”), located at 2802 North Howard Avenue, Tampa, Florida 33607 and Charles Zivko, an individual residing at 3035 Berkeley Circle, Los Angeles, CA 90026, (the “Executive”).

RECITALS:

WHEREAS, the Company is public holding company engaged in the business of providing business internet web solutions and energy efficiency solutions to small and medium size businesses; and

WHEREAS, INIV desires to employ Executive as an officer in the capacity of Chief Technology Officer (CTO) of its Live Riot, Inc., subsidiary and Executive desires to be employed by INIV in such capacity, in accordance with the terms, covenants, and conditions as set forth in this Agreement.

NOW, THEREFORE, in consideration of the mutual promises set forth herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Employer and Executive agree as follows:

1.           Term.  Subject to the terms and conditions set forth herein and unless sooner terminated as hereinafter provided, INIV shall employ Executive as an officer, and Executive agrees to serve as an officer and accepts such employment for a three-year period, beginning on September 16, 2013 (the “Start Date”) and ending on the 3rd anniversary of the Start Date (the “Initial Employment Term”).  After the Initial Employment Term, this Agreement shall automatically renew for consecutive one year periods (“renewal term”), unless a written notice of a party’s intention to terminate this Agreement at the expiration of the Initial Employment Term (or any renewal term) is delivered by either party at least three (3) months prior to the expiration of the Initial Employment Term or any renewal term, as applicable.  For purposes of this Agreement, the period from the Start Date until the termination of the Executive’s employment shall hereinafter be referred to as the “Term”.

2.           Title and Duties. During the Term, INIV shall employ Executive in the capacity of CTO of its Live Riot, Inc., subsidiary.  Executive will report to and be subject to the general supervision and direction of the President of the Company.   Executive shall perform such duties as are customarily performed by someone holding the title of CTO in the same or similar businesses or enterprises as that engaged in by the Company and such other duties as the CEO and Board may assign from time to time.  As CTO, if requested, Executive will serve in similar capacities for each or any subsidiary of INIV without additional compensation.

3.           Compensation and Benefits of Executive.  The Company shall compensate Executive for Executive's services rendered under this Agreement as follows:

 

	  	
a.

	
Base Salary.  Executive’s base salary shall initially be $80,000 per annum (pro-rated based upon the number of days Executive is employed during any partial calendar year) (the “Base Salary”), which salary shall be payable in regular installments in accordance with the Company’s general payroll practices.  Such base salary may be increased but not decreased during the Term in the Company’s discretion based upon the Executive’s performance and any other factors the Company deems relevant. Such base salary shall be payable in accordance with the policy then prevailing for the Company’s executives.

 

	
  

	
b.

	
Bonus. In addition to such Base Salary, the Executive shall be entitled during the Term to participate in a performance bonus program and shall be eligible to participate in and receive payments or awards from all other bonus and other incentive compensation, stock option and restricted stock plans as may be adopted by the Company, all as recommended by the Compensation Committee of the Board of Directors and approved by the Board of Directors, in its sole discretion, and in each case payable to Executive in accordance with the terms and conditions of the applicable plan. Specifically, Executive shall be eligible for the following bonuses:

 

  

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(i)

	
Executive shall be entitled during the Term to participate in the annual performance bonus program established by the Board of Directors for all senior executives of the Company, with bonus potential of 500% of base salary.

	  	
(ii)

	
Executive shall also be entitled to participate in any annual grants under the Long Term Incentive Plan (“LTIP”), as determined by the Board of Directors for all senior executives of the Company, with a target award of 200% of base salary.

	
  

	
Bonus for the first year following the Start Date shall be a minimum of $20,000.

	
  

	
Payments. All amounts paid pursuant to this Agreement shall be subject to withholding or deduction by reason of the Federal Insurance Contribution Act, federal income tax, state and local income tax, if any, and comparable laws and regulations.

	  	
c.

	
Benefits.  Subject to the eligibility requirements (including, but not limited to, participation by part-time employees), and enrollment provisions of the Company’s employee benefit plans, Executive may, to the extent he so chooses, participate in any and all of the Company’s employee benefit plans, at the Company’s expense.  All Company benefits are identified in the Employee Handbook and are subject to change without notice or explanation.  In addition, subject to the eligibility requirements (including, but not limited to, participation by a part-time employee) and enrollment provisions of the Company’s executive benefit programs, Executive shall also be entitled to participate in any and all other benefits programs established for officers of the Company.

	  	
d.

	
Stock Options - Initial Grant.  On the Effective Date, Executive will be granted an option to purchase 500,000 shares of the Company’s common stock (the “Initial Options”) on the terms and conditions listed below.  Such Initial Options will have a strike price equal to the fair market value of the common stock as of the Effective Date, which pursuant to INIVs’ Amended and Restated Equity Incentive Plan (the “Plan”), shall be equal to the closing price per share of INIVs’ common stock on the last trading day immediately preceding the Effective Date.  The vesting provisions of such Initial Options shall be (1) 250,000 vesting on the six-month anniversary of the Effective Date and (2) 13,888.90 vesting each month beginning on the 7th monthly anniversary of the Effective Date and continuing on each monthly anniversary thereafter until the second anniversary of the Effective Date.  These Initial Options shall be treated as incentive stock options (ISOs) to the maximum extent permitted under applicable law, and the remainder of the Options, if any, shall be treated as non-qualified stock options.  The grant of these Initial Options will be made pursuant to the Company’s Plan and will be evidenced by a separate “Option Agreement” to be executed by the Company and Executive, which will contain all the terms and conditions of the Initial Options (including, but not limited to, the provisions set forth in this Section 3(d)).  So long as Executive remains employed by the Company, such Initial Options will have a seven-year term before expiration.

 

	  	
e.

	
Stock Options - Performance Grant.  At the date of completion and launch of LiveRiot(TM) technology (the "Launch Date"), Executive will be granted an option to purchase 250,000 shares of the Company’s common stock (the “Performance Options”) on the terms and conditions listed below.  Such Performance Options will have a strike price equal to the fair market value of the common stock as of the Launch Date, which pursuant to INIVs’ Amended and Restated Equity Incentive Plan (the “Plan”), shall be equal to the closing price per share of INIVs’ common stock on the last trading day immediately preceding the Launch Date.  The Performance Options shall vest fully upon issuance.  These Performance Options shall be treated as incentive stock options (ISOs) to the maximum extent permitted under applicable law, and the remainder of the Performance Options, if any, shall be treated as non-qualified stock options.  The grant of these Performance Options will be made pursuant to the Company’s Plan and will be evidenced by a separate “Option Agreement” to be executed by the Company and Executive, which will contain all the terms and conditions of the Performance Options (including, but not limited to, the provisions set forth in this Section 3(d)).  So long as Executive remains employed by the Company, such Performance Options will have a seven-year term before expiration.

 

  

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f.

	
Executive understands that, pursuant to the Plan, upon termination of his employment, he will only have ninety (90) days to exercise any vested portion of the Initial Options and the Performance Options.  All options awarded pursuant to these Sections 3(d) and 3(e) will contain a provision in the Option Agreement that allows for immediate vesting of any unvested portion of the Options in the event of a change of control of INIV.

	  	
g.

	
Paid Time-Off and Holidays.  Executive’s paid time-off (“PTO”) and holidays shall be consistent with the standards set forth in the Company’s Employee Handbook, as revised from time to time or as otherwise published by the Company.  Notwithstanding the previous sentence, Executive will be eligible for one hundred twenty (120) hours of PTO/year, which will accrue on a pro-rata basis throughout the year, provided, however, that it is the Company’s policy that no more than forty (40) hours of PTO can be accrued beyond this annual limit for any employee at any time.  Thus, when accrued PTO reaches one hundred sixty (160) hours, Executive will cease accruing PTO until accrued PTO is one hundred twenty (120) hours or less, at which point Executive will again accrue PTO until he reaches one hundred sixty (160) hours.  In addition to PTO, there are also six (6) paid national holidays and one (1) “floater” day available to Company employees.  Executive agrees to schedule such PTO so that it minimally interferes with the Company’s operations.  Such PTO does not include Board excused absences..

	  	
h.

	
Reimbursement of Normal Business Expenses.  The Company will reimburse all reasonable business expenses of Executive, including, but not limited to, cell phone expenses and business related travel, meals and entertainment expenses in accordance with the Company’s polices for such reimbursement.

 

	
  

	
i.

	
Office Will Be Provided.  The Company will pay for reasonable offices in California for Executive and employees, including utilities.

4.           Best Efforts of the Executive and Minimum Time Commitments of Employment. Executive agrees to perform all of the duties pursuant to the express and implicit terms of this Agreement to the reasonable satisfaction of the Employer.  The Company is aware that Executive has other business activities and investment outside of INIV, and none of these activities conflict with Companies interest.  Executive further agrees to perform such duties faithfully and to the best of his ability, talent, and experience and, unless otherwise agreed to with the Company in writing, to render such duties at least in the minimum. So long as the Executive and the Board have not agreed to adjust downward the Executive’s Base Salary specified in Section 3(a), Executive agrees that during the Term, except for those weeks where he is on PTO, he will spend a minimum of forty (40) per week on the Company’s business (such period as may be adjusted, the “Minimum Weekly Time Commitment”).

5.           Termination.  Either party may terminate Executive’s employment with the Company at any time upon giving sixty (60) days advance written notice to the other party. Executive agrees that in order to help facilitate an orderly transition of authority, unless otherwise agreed to by the parties, during such sixty (60) day notice period no more than two weeks of unused PTO may be utilized.  In the event of the death of Executive, the employment of Executive shall automatically terminate on the date of Executive's death.  Within 30 days following the date Executive’s employment terminates, the Company shall pay to Executive (or Executive’s estate if applicable) (a) the Executive’s accrued but unpaid Base Salary through the date of termination, (b) any bonus earned by, but not yet paid to, Executive from the prior fiscal year, (c) an amount equal to the reasonable business expenses incurred by Executive (in accordance with Company policy), but not yet reimbursed, prior to the termination date, and (d) other benefits due and owing to Executive through the termination date. Should the Company terminate Executive’s employment for Cause, as defined in Exhibit B attached hereto and incorporated herein, Executive shall receive no compensation whatsoever following the date of termination and all unvested options shall terminate.  Should the Company terminate Executive’s employment without Cause, the Executive shall continue to receive Base Salary for a period of six (6) months following the date of termination and all unvested options granted to Executive shall vest on the date of termination.

6.           Confidentiality, Non-Compete & Non-Solicitation Agreement.  Executive agrees to the terms of the Confidentiality, Non-Solicitation and Non-Compete Agreement attached hereto as Addendum A and has signed that Agreement.  Such Confidentiality, Non-Solicitation and Non-Compete Agreement is hereby incorporated into and made a part of this Agreement.

 

  

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7.           Importance of Certain Clauses.  Executive and Employer agree that the covenants contained in the Confidentiality, Non-Solicitation and Non-Compete Agreement attached hereto and incorporated into this Agreement are material terms of this Agreement and all parties understand the importance of such provisions to the ongoing business of the Employer.  As such, because the Employer's continued business and viability depend on the protection of such secrets and non-competition, these clauses are interpreted by the parties to have the widest and most expansive applicability as may be allowed by law and Executive understands and acknowledges his or her understanding of same.

8.           Consideration.  Executive acknowledges and agrees that the provision of employment under this Agreement and the execution by the Employer of this Agreement constitute full, adequate and sufficient consideration to Executive for the Executive's duties, obligations and covenants under this Agreement and under the Confidentiality, Non-Solicitation and Non-Compete Agreement incorporated into this Agreement.

9.           Acknowledgement of Post Termination Obligations.  Upon the effective date of termination of Executive’s employment (unless due to Executive’s death), if requested by the Employer, Executive shall participate in an exit interview with the Employer and certify in writing that Executive has complied with his contractual obligations and intends to comply with his continuing obligations under this Agreement, including, but not limited to, the terms of the Confidentiality, Non-Solicitation and Non-Compete Agreement.  To the extent it is known or applicable at the time of such exit interview, Executive shall also provide the Employer with information concerning Executive's subsequent employer and the capacity in which Executive will be employed. Executive's failure to comply shall be a material breach of this Agreement, for which the Employer, in addition to any other civil remedy, may seek equitable relief.

 

10.         Withholding. All payments made to Executive shall be made net of any applicable withholding for income taxes and Executive's share of FICA, FUTA or other employment taxes. The Company shall withhold such amounts from such payments to the extent required by applicable law and remit such amounts to the applicable governmental authorities in accordance with applicable law.

11.         Representations of Executive.  Executive represents and warrants to INIV that (a) nothing in his past legal and/or work and/or personal experiences, which if became broadly known in the marketplace, would impair his ability to serve as the CTO of a publicly-traded company or materially damage his credibility with public shareholders; (b) there are no restrictions, agreements, or understandings whatsoever to which he is a party which would prevent or make unlawful his execution of this Agreement or employment hereunder, (c) Executive’s execution of this Agreement and employment hereunder shall not constitute a breach of any contract, agreement or understanding, oral or written, to which he is a party or by which he is bound, (d) Executive is free and able to execute this Agreement and to continue  employment with INIV, and (e) Executive has not used and will not use confidential information or trade secrets belonging to any prior employers to perform services for the Company.

12.         Effect of Partial Invalidity.  The invalidity of any portion of this Agreement shall not affect the validity of any other provision.  In the event that any provision of this Agreement is held to be invalid, the parties agree that the remaining provisions shall remain in full force and effect.

13.         Entire Agreement.  This Agreement, together with the other documents referenced herein, reflects the complete agreement between the parties regarding the subject matter identified herein and shall supersede all other previous agreements, either oral or written, between the parties. The parties stipulate that neither of them, nor any person acting on their behalf has made any representations except as are specifically set forth in this Agreement and each of the parties acknowledges that it or he has not relied upon any representation of any third party in executing this Agreement, but rather have relied exclusively on it or his own judgment in entering into this Agreement.

14.         Assignment.  Employer may assign its interest and rights under this Agreement at its sole discretion and without approval of Executive to a successor in interest by the Employer’s merger, consolidation or other form of business combination with or into a third party where the Employer’s stockholders before such event do not control a majority of the resulting business entity after such event.  All rights and entitlements arising from this Agreement, including but not limited to those protective covenants and prohibitions set forth in the Confidentiality, Non-Solicitation and Non-Compete Agreement attached as Addendum A and incorporated into this Agreement shall inure to the benefit of any purchaser, assignor or transferee of this Agreement and shall continue to be enforceable to the extent allowable under applicable law.  Neither this Agreement, nor the employment status conferred with its execution is assignable or subject to transfer in any manner by Executive.

 

  

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15.         Notices.  All notices, requests, demands, and other communications shall be in writing and shall be given by registered or certified mail, postage prepaid, a) if to the Employer, at the Employer’s then current headquarters location, and b) if to Executive, at the most recent address on file with the Company for Executive or to such subsequent addresses as either party shall so designate in writing to the other party.

16.         Remedies.  If any action at law, equity or in arbitration, including an action for declaratory relief, is brought to enforce or interpret the provisions of this Agreement, the prevailing party may, if the court or arbitrator hearing the dispute, so determines, have its reasonable attorneys’ fees and costs of enforcement recouped from the non-prevailing party.

17.         Amendment/Waiver.  No waiver, modification, amendment or change of any term of this Agreement shall be effective unless it is in a written agreement signed by both parties.  No waiver by the Employer of any breach or threatened breach of this Agreement shall be construed as a waiver of any subsequent breach unless it so provides by its terms.

18.         Governing Law, Venue and Jurisdiction.  This Agreement and all transactions contemplated by this Agreement shall be governed by, construed, and enforced in accordance with the laws of the State of Florida without regard to any conflicts of laws, statutes, rules, regulations or ordinances.  Executive consents to personal jurisdiction and venue in the Circuit Court in and for Hillsborough County, Florida regarding any action arising under the terms of this Agreement and any and all other disputes between Executive and Employer.

19.         Arbitration.  Any and all controversies and disputes between Executive and Employer arising from this Agreement or regarding any other matter whatsoever shall be submitted to arbitration before a single unbiased arbitrator skilled in arbitrating such disputes under the American Arbitration Association, utilizing its Commercial Rules.  Any arbitration action brought pursuant to this section shall be heard in Hillsborough County, Florida.  The Circuit Court in and for Hillsborough County, Florida shall have concurrent jurisdiction with any arbitration panel for the purpose of entering temporary and permanent injunctive relief, but only with respect to any alleged breach of the Confidentiality, Non-Solicitation and Non-Compete Agreement.

20.         Headings.  The titles to the sections of this Agreement are solely for the convenience of the parties and shall not affect in any way the meaning or interpretation of this Agreement.

21.         Miscellaneous Terms.  The parties to this Agreement declare and represent that:

	  	
a.

	
They have read and understand this Agreement;

	  	
b.

	
They have been given the opportunity to consult with an attorney if they so desire;

	  	
c.

	
They intend to be legally bound by the promises set forth in this Agreement and enter into it freely, without duress or coercion;

	  	
d.

	
They have retained signed copies of this Agreement for their records; and

	  	
e.

	
The rights, responsibilities and duties of the parties hereto, and the covenants and agreements contained herein, shall continue to bind the parties and shall continue in full force and effect until each and every obligation of the parties under this Agreement has been performed.

22.         Counterparts.  This Agreement may be executed in counterparts and by facsimile, or by pdf, each of which shall be deemed an original for all intents and purposes.

  

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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above.

	  	  
	  	
INNOVATIVE SOFTWARE TECHNOLOGIES, INC., a Delaware Corporation

	  	  
	  	
By:

	  /s/ Jake Wand	 
	  	  	  
	  	
Name:

	
  Jake Wand

	  	  	  
	  	
Title:

	
  President

	  	  
	  	  

 

	  	
EXECUTIVE:

	  	  
	  	  /s/ Charles Zivko	 
	  	
Charles Zivko

 

 

 

  

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ADDENDUM A

CONFIDENTIALITY, NON-SOLICITATION AND NON-COMPETE AGREEMENT

This Confidentiality, Non-Solicitation and Non-Compete Agreement (the “Agreement”) dated this 11th day of September, 2013 is entered into by and between Charles Zivko (“Employee”) and Innovative Software Technologies, Inc., a Delaware corporation (“Employer” and collectively with Innovative Software Technologies, Inc., a Delaware corporation (the “Parent Company”) and any entity that is wholly or partially owned by the Employer or the Parent Company or otherwise affiliated with the Parent Company, the “Company”).  Hereinafter, each of the Employee or the Company maybe referred to as a “Party” and together be referred to as the “Parties”.

RECITALS:

WHEREAS, the Parties have entered into that certain letter agreement, dated September 11, 2013 that creates an employment relationship between the Employer and Employee (the “Employment Agreement”); and

WHEREAS, pursuant to the Employment Agreement, the Employee agreed to enter into the Company’s Confidentiality, Non-Solicitation and Non-Compete Agreement; and

WHEREAS, the Company desires to protect and preserve its Confidential Information and its legitimate business interests by having the Employee enter into this Agreement as part of the Employment Agreement; and

WHEREAS, the Employee desires to establish and maintain an employment relationship with the Company and as part of such employment relationship desires to enter into this Agreement with the Company; and

WHEREAS, the Employee acknowledges that the terms of the Employment Agreement including, but not limited to the Company’s commitments to the Employee with respect to base salary, fringe benefits and stock options are sufficient consideration to the Employee for the entry into this Agreement.

NOW, THEREFORE, in consideration of the mutual promises set forth herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:

1.             Term. Employee agree(s) that the term of this agreement is effective upon the Employee’s first day of employment with the Company and shall survive and continue to be in force and effect for two (2) years following the termination of any employment relationship between the Parties (“Term”), whether termination is by the Company with or without cause, wrongful discharge, or for any other reason whatsoever, or by the Employee unless an exception is specifically provided in certain situations in any such Restrictive Covenants.

 

2.             Definitions.

a.             The term “Confidential Information” as used herein shall include all business practices, methods, techniques, or processes that (i) derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use; and (ii) is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.  Confidential Information also includes, but is not limited to, files, letters, memoranda, reports, records, computer disks or other computer storage medium, data, models or any photographic or other tangible materials containing such information, Customer lists and names and other information, Customer contracts, other corporate contracts, computer programs, proprietary technical information and or strategies, sales, promotional or marketing plans or strategies, programs, techniques, practices, any expansion plans (including existing and entry into new geographic and/or product markets), pricing information, product or service offering specifications or plans thereof, business plans, financial information and other financial plans, data pertaining to the Company’s operating performance, employee lists, salary information, training manuals, and other materials and business information of a similar nature, including information about the Company itself or any affiliated entity, which Employee acknowledges and agrees has been compiled by the Company's expenditure of a great amount of time, money and effort, and that contains detailed information that could not be created independently from public sources.  Further, all data, spreadsheets, reports, records, know-how, verbal communication, proprietary and technical information and/or other confidential materials of similar kind transmitted by the Company to Employee or developed by the Employee on behalf of the Company as Work Product (as defined in Paragraph 7) are expressly included within the definition of “Confidential Information.”  The Parties further agree that the fact the Company may be seeking to complete a business transaction is “Confidential Information” within the meaning of this Agreement, as well as all notes, analysis, work product or other material derived from Confidential Information.  Nevertheless, Confidential Information shall not include any information of any kind which (1) is in the possession of the Employee prior to the date of this Agreement, as shown by the Employee’s files and records, or (2) prior or after the time of disclosure becomes part of the public knowledge or literature, not as a result of any violation of this Agreement or inaction or action of the receiving party, or (3) is rightfully received from a third party without any obligation of confidentiality; or (4) independently developed after termination without reference to the Confidential Information or materials based thereon; or (5) is disclosed pursuant to the order or requirement of a court, administrative agency, or other government body; or (6) is approved for release by the non-disclosing party.

 

  

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b.             The term “Customer” shall mean any person or entity which has purchased or ordered goods, products or services from the Company and/or entered into any contract for products or services with the Company within the one (1) year immediately preceding the termination of the Employee’s employment with the Company.

c.             The term “Prospective Customer” shall mean any person or entity which has evidenced an intention to order products or services with the Company within one year immediately preceding the termination of the Employee’s employment with the Company.

d.             The term “Restricted Area” shall include any geographical location anywhere in the United States.  If the Restricted Area specified in this Agreement should be judged unreasonable in any proceeding, then the period of Restricted Area shall be reduced so that the restrictions may be enforced as is judged to be reasonable.

e.             The phrase “directly or indirectly” shall include the Employee either on his/her own account, or as a partner, owner, promoter, joint venturer, employee, agent, consultant, advisor, manager, executive, independent contractor, officer, director, or a stockholder of 5% or more of the voting shares of an entity in the Business of Company.

f.             The term “Business” shall mean the business of providing social local and mobile solutions for small and medium sized business and energy efficiency solutions.

3.             Duty of Confidentiality.

a.           All Confidential Information is considered highly sensitive and strictly confidential. The Employee agrees that at all times during the term of this Agreement and after the termination of employment with the Company for as long as such information remains non-public information, the Employee shall (i) hold in confidence and refrain from disclosing to any other party all Confidential Information, whether written or oral, tangible or intangible, concerning the Company and its business and operations unless such disclosure is accompanied by a non-disclosure agreement executed by the Company with the party to whom such Confidential Information is provided, (ii) use the Confidential Information solely in connection with his or her employment with the Company and for no other purpose, (iii) take all reasonable precautions necessary to ensure that the Confidential Information shall not be, or be permitted to be, shown, copied or disclosed to third parties, without the prior written consent of the Company, (iv) observe all security policies implemented by the Company from time to time with respect to the Confidential Information, and (v) not use or disclose, directly or indirectly, as an individual or as a partner, joint venturer, employee, agent, salesman, contractor, officer, director or otherwise, for the benefit of himself or herself or any other person, partnership, firm, corporation, association or other legal entity, any Confidential Information, unless expressly permitted by this Agreement.  Employee agrees that protection of the Company’s Confidential Information constitutes a legitimate business interest justifying the restrictive covenants contained herein.  Employee further agrees that the restrictive covenants contained herein are reasonably necessary to protect the Company’s legitimate business interest in preserving its Confidential Information.

b.           In the event that the Employee is ordered to disclose any Confidential Information, whether in a legal or regulatory proceeding or otherwise, the Employee shall provide the Company with prompt notice of such request or order so that the Company may seek to prevent disclosure.

c.           Employee acknowledge(s) that this "Confidential Information" is of value to the Company by providing it with a competitive advantage over their competitors, is not generally known to competitors of the Company, and is not intended by the Company for general dissemination.  Employee acknowledges that this "Confidential Information" derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use, and is the subject of reasonable efforts to maintain its secrecy.  Therefore, the Parties agree that all "Confidential Information" under this Agreement constitutes “Trade Secrets” under Section 688.002 and Chapter 812 of the Florida Statutes.

4.             Limited Right of Disclosure.   Except as otherwise permitted by this Agreement, Employee shall limit disclosure of pertinent Confidential Information to Employee’s attorney, if any (“Representative(s)”), for the sole purpose of evaluating Employee’s relationship with the Company.  Paragraph 3 of this Agreement shall bind all such Representative(s).

 

  

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5.             Return of Company Property and Confidential Materials.  All tangible property, including cell phones, laptop computers and other Company purchased property, as well as all Confidential Information provided to Employee is the exclusive property of the Company and must be returned to the Company in accordance with the instructions of the Company either upon termination of the Employee’s employment or at such other time as is reasonably requested by the Company.  Employee agree(s) that upon termination of employment for any reason whatsoever Employee shall return all copies, in whatever form, including hard copies and computer disks, of Confidential Information to the Company, and Employee shall delete any copy of the Confidential Information on any computer file or database maintained by Employee and shall certify in writing that he/she has done so.  In addition to returning all Confidential Information to the Company as described above, Employee will destroy any analysis, notes, work product or other materials relating to or derived from the Confidential Information.  Any retention of Confidential Information may constitute “civil theft” as such term is defined in Chapter 772 of the Florida Statutes.

 

6.             Agreement Not To Circumvent.  Employee agrees not to pursue any transaction or business relationship that is directly competitive to the Business of the Company that makes use of any Confidential Information during the Term of this Agreement, other than through the Company or on behalf of the Company.  It is further understood and agreed that, after the Employee’s employment with the Company has been terminated, the Employee will direct all communications and requests from any third parties regarding Confidential Information or Business opportunities which use Confidential Information through the Company’s then chief executive officer or president.  Employee acknowledges that any violation of this covenant may subject Employee to the remedies identified in Paragraph 9 in addition to any other available remedies.

 

7.             Title to Work Product.  Employee agrees that all work products, (technical materials and diagrams, computer programs, financial plans and other written materials, websites, presentation materials, course materials, advertising campaigns, slogans, videos, pictures and other materials) created or developed by the Employee for the Company during the term of the Employee’s employment with the Company or any successor to the Company until the date of termination of the Employee (collectively, the “Work Product”), shall be considered a work made for hire and that the Company shall be the sole owner of all rights, including copyright, in and to the Work Product.  If the Work Product, or any part thereof, does not qualify as a work made for hire, the Employee agrees to assign, and hereby assigns, to the Company for the full term of the copyright and all extensions thereof all of its right, title and interest in and to the Work Product.  All discoveries, inventions, innovations, works of authorship, computer programs, improvements and ideas, whether or not patentable or copyrightable or otherwise protectable, conceived, completed, reduced to practice or otherwise produced by the Employee in the course of his or her services to the Company in connection with or in any way relating to the Business of the Company or capable of being used or adapted for use therein or in connection therewith shall forthwith be disclosed to the Company and shall belong to and be the absolute property of the Company unless assigned by the Company to another entity.

Employee hereby assigns to the Company all right, title and interest in all of the discoveries, inventions, innovations, works of authorship, computer programs, improvements, ideas and other work product; all copyrights, trade secrets, and trademarks in the same; and all patent applications filed and patents granted worldwide on any of the same for any work previously completed on behalf of the Company or work performed under the terms of this Agreement or the Employment Agreement.  Employee, if and whenever required to do so (whether during or after the termination of his or her employment), shall at the expense of the Company apply or join in applying for copyrights, patents or trademarks or other equivalent protection in the United States or in other parts of the world for any such discovery, invention, innovation, work of authorship, computer program, improvement, and idea as aforesaid and execute, deliver and perform all instruments and things necessary for vesting such patents, trademarks, copyrights or equivalent protections when obtained and all right, title and interest to and in the same in the Company absolutely and as sole beneficial owner, unless assigned by the Company to another entity.  Notwithstanding the foregoing, work product conceived by the Employee, which is not related to the Business of the Company, will remain the property of the Employee.

 

8.             Restrictive Covenant.  The Company and its affiliated entities are engaged in the Business of providing online marketing to small and medium sized businesses and energy efficiencyl services.  The covenants contained in this Paragraph 8 (the “Restrictive Covenants”) are given and made by Employee to induce the Company to employ Employee under the terms of the Employment Agreement, and Employee acknowledges sufficiency of consideration for these Restrictive Covenants.  Employee expressly covenants and agrees that, during his or her employment and for a period of two (2) years following termination of such employment (such period of time is hereinafter referred to as the "Restrictive Period"), he/she will abide by the following restrictive covenants unless an exception is specifically provided in certain situations in such Restrictive Covenants.

	  	
a.

	
Non-Solicitation.  Employee agrees and acknowledges that, during the Restrictive Period, he/she will not, directly or indirectly, in one or a series of transactions, as an individual or as a partner, joint venturer, employee, agent, salesperson, contractor, officer, director or otherwise, for the benefit of himself or herself or any other person, partnership, firm, corporation, association or other legal entity:

 

  

9

  

  

	  	
(i)

	
solicit or induce any Customer or Prospective Customer of the Company to patronize or do business with any other company (or business) that is in the Business conducted by the Company in any market in which the Company does Business; or

	  	
(ii)

	
request or advise any Customer or vendor, or any Prospective Customer or prospective vendor, of the Company, who was a Customer, Prospective Customer, vendor or prospective vendor within one year immediately preceding the termination of the Employee’s employment with the Company, to withdraw, curtail, cancel or refrain from doing Business with the Company in any capacity; or

	  	
(iii)

	
recruit, solicit or otherwise induce any proprietor, partner, stockholder, lender, director, officer, employee, sales agent, joint venturer, investor, lessor, supplier, Customer, agent, representative or any other person which has a business relationship with the Company or any Affiliated Entity to discontinue, reduce or detrimentally modify such employment, agency or business relationship with the Company; or

	  	
(iv)

	
employ or solicit for employment any person or agent who is then (or was at any time within twelve (12) months prior to the date Employee or such entity seeks to employ such person) employed or retained by the Company.  Notwithstanding the foregoing, to the extent the Employee works for a larger firm or corporation after his termination from the Company and he or she does not have any personal knowledge and/or control over the solicitation of or the employment of a Company employee or agent, then this provision shall not be enforceable.

 

	  	
b.

	
Non-Competition.  Employee agrees and acknowledges that, during the Restrictive Period, he or she will not, directly or indirectly, for himself , or on behalf of others, as an individual on Employee's own account, or as a partner, joint venturer, employee, agent, salesman, contractor, officer, director or otherwise, for himself or any other person, partnership, firm, corporation, association or other legal entity enter into, engage in or accept employment from any business that is in the Business of the Company in the Restricted Area during his last twelve months of employment. The parties agree that this non-competition provision is intended to cover situations where a future business opportunity in which the Employee is engaged or a future employer of the Employee is selling the same or similar products and services in a Business which may compete with the Company’s products and services to Customers and Prospective Customers of the Company in the Restricted Area.  This provision shall not cover future business opportunities or employers of the Employee that sell different types of products or services in the Restricted Area so long as such future business opportunities or employers are not in the Business of the Company.

Notwithstanding the preceding paragraphs, the spirit and intent of this non-competition clause is not to deny the Employee the ability to support his or her family, but rather to prevent the Employee from using the knowledge and experiences obtained from the Company in a similar competitive environment.

	  	
c.

	
Acknowledgements of Employee.

	  	
(i)

	
The Employee understands and acknowledges that any violation of the Restrictive Covenants shall constitute a material breach of this Agreement and the Employment Agreement, and it may cause irreparable harm and loss to the Company for which monetary damages will be an insufficient remedy.  Therefore, the Parties agree that in addition to any other remedy available, the Company will be entitled to the relief identified in Paragraph No. 9 below.

	  	
(ii)

	
The Restrictive Covenants shall be construed as agreements independent of any other provision in this Agreement and the existence of any claim or cause of action of Employee against the Company shall not constitute a defense to the enforcement of these Restrictive Covenants.

	  	
(iii)

	
Employee agrees that the Restrictive Covenants are reasonably necessary to protect the legitimate business interests of the Company.

 

  

10

  

 

	  	
(iv)

	
Employee agrees that the Restrictive Covenants may be enforced by the Company’s successor in interest by way of merger, business combination or consolidation where a majority of the surviving entity is not owned by Company’s shareholders who owned a majority of the Company’s voting shares prior to such transaction and Employee acknowledges and agrees that successors are intended beneficiaries of this Agreement.

	  	
(v)

	
Employee agrees that if any portion of the Restrictive Covenants is held by a court of competent jurisdiction to be unreasonable, arbitrary or against public policy for any reason, such shall be divisible as to time, geographic area and line of business and shall be enforceable as to a reasonable time, area and line of business.

 

	  	
(vi)

	
Employee acknowledges that any violations of the Restrictive Covenants, in any capacity identified herein, may be a material breach of this Agreement and may subject the Employee, and/or any individual(s), partnership, corporation, joint venture or other type of business with whom the Employee is then affiliated or employed, to monetary and other damages..

	  	
(vii)

	
Employee agrees that any failure of the Company to enforce the Restrictive Covenants against any other employee, for any reason, shall not constitute a defense to enforcement of the Restrictive Covenants against the Employee.

 

9.             Specific Performance; Injunction.  The Parties agree and acknowledge that the restrictions contained in Paragraphs 1-8 are reasonable in scope and duration and are necessary to protect the Company.  If any provision of Paragraphs 1-8 as applied to any party or to any circumstance is judged by a court to be invalid or unenforceable, the same shall in no way affect any other circumstance or the validity or enforceability of any other provision of this Agreement.  If any such provision, or any part thereof, is held to be unenforceable because of the duration of such provision or the area covered thereby, the court making such determination shall have the power to reduce the duration and/or area of such provision, and/or to delete specific words or phrases, and in its reduced form, such provision shall then be enforceable and shall be enforced.

Any unauthorized use or disclosure of Confidential Information in violation of Paragraphs 2-7 above or violation of the Restrictive Covenant in Paragraph 8 shall constitute a material breach of this Agreement and will cause irreparable harm and loss to the Company for which monetary damages may be an insufficient remedy.  Therefore, in addition to any other remedy available, the Company will be entitled to all of the civil remedies provided by Florida Statutes, including:

	  	
a.

	
Temporary and permanent injunctive relief, without the necessity of posting a bond, restraining Employee or Representatives and any other person, partnership, firm, corporation, association or other legal entity acting in concert with Employee from any actual or threatened unauthorized disclosure or use of Confidential Information, in whole or in part, or from rendering any service to any other person, partnership, firm, corporation, association or other legal entity to whom such Confidential Information in whole or in part, has been disclosed or used or is threatened to be disclosed or used; and

	  	
b.

	
Temporary and permanent injunctive relief, without the necessity of posting a bond, restraining the Employee from violating, directly or indirectly, the restrictions of the Restrictive Covenant in any capacity identified in Paragraph 8, supra, and restricting third parties from aiding and abetting any violations of the Restrictive Covenant; and

	  	
c.

	
Compensatory damages, including actual loss from misappropriation and unjust enrichment.

Notwithstanding the foregoing, the Company acknowledges and agrees that the Employee will not be liable for the payment of any damages or fees owed to the Company through the operation of Paragraphs 9c above, unless and until a court of competent jurisdiction has determined conclusively that the Company or any successor is entitled to such recovery.

Nothing in this Agreement shall be construed as prohibiting the Company from pursuing any other legal or equitable remedies available to it for actual or threatened breach of the provisions of Paragraphs 1 – 8 of this Agreement, and the existence of any claim or cause of action by Employee against the Company shall not constitute a defense to the enforcement by the Company of any of the provisions of this Agreement.  The Company and its Affiliated Entities have fully performed all obligations entitling it to the covenants of Paragraphs 1 – 8 of this Agreement and therefore such prohibitions are not executory or otherwise subject to rejection under the bankruptcy code.

 

  

11

  

 

10.           Governing Law, Venue and Personal Jurisdiction.  This Agreement shall be governed by, construed and enforced in accordance with the laws of state of Florida without regard to any statutory or common-law provision pertaining to conflicts of laws.  The parties agree that courts of competent jurisdiction in Hillsborough County, Florida and the United States District Court for the Southern District of Florida shall have concurrent jurisdiction for purposes of entering temporary, preliminary and permanent injunctive relief and with regard to any action arising out of any breach or alleged breach of this Agreement.  Employee waives personal service of any and all process upon Employee and consents that all such service of process may be made by certified or registered mail directed to Employee at the address stated in the signature section of this Agreement, with service so made deemed to be completed upon actual receipt thereof.  Employee waives any objection to jurisdiction and venue of any action instituted against Employee as provided herein and agrees not to assert any defense based on lack of jurisdiction or venue.

 

11.           Successors and Assigns.  This Agreement shall be binding upon and inure to the benefit of the Parties hereto and may not be assigned by Employee. This Agreement shall inure to the benefit of Company’s s successors.

 

12.           Entire Agreement.  This Agreement is the entire agreement of the Parties with regard to the matters addressed herein, and supersedes all prior negotiations, preliminary agreements, and all prior and contemporaneous discussions and understandings of the signatories in connection with the subject matter of this Agreement, except however, that this Agreement shall be read in pari materia with the Employment Agreement executed by Employee.  This Agreement may be modified only by written instrument signed by the Company and Employee.

 

13.           Severability.  In case any one or more provisions contained in this Agreement shall, for any reason, be held invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provision hereof and this Agreement shall be construed as if such invalid, illegal were unenforceable provision had not been contained herein.

 

14.           Waiver. The waiver by the Company of a breach or threatened breach of this Agreement by Employee cannot be construed as a waiver of any subsequent breach by Employee unless such waiver so provides by its terms.  The refusal or failure of the Company to enforce any specific restrictive covenant in this Agreement against Employee, or any other person for any reason, shall not constitute a defense to the enforcement by the Company of any other restrictive covenant provision set forth in this Agreement.

 

15.           Consideration.  Employee expressly acknowledges and agrees that the execution by the Company of the Employment Agreement with the Employee constitutes full, adequate and sufficient consideration to Employee for the covenants of Employee under this Agreement.

 

16.           Notices.  All notices required by this Agreement shall be in writing, shall be personally delivered or sent by U.S. Registered or Certified Mail, return receipt requested, and shall be addressed to the signatories at the addresses shown on the signature page of this Agreement.

 

17.           Acknowledgements.  Employee acknowledge(s) that he or she has reviewed this Agreement prior to signing it, that he or she knows and understands the contents, purposes and effect of this Agreement, and that he or she has been given a signed copy of this Agreement for his or her records. Employee further acknowledges and agrees that he or she has entered into this Agreement freely, without any duress or coercion.

 

18.           Counterparts.  This Agreement may be executed in counterparts, by facsimile or pdf each of which shall be deemed an original for all intents and purposes.

 

[REMAINDER OF PAGE LEFT BLANK]

  

12

  

IN WITNESS WHEREOF, THE UNDERSIGNED STATE THAT THEY HAVE CAREFULLY READ THIS AGREEMENT AND KNOW AND UNDERSTAND THE CONTENTS THEREOF AND THAT THEY AGREE TO BE BOUND AND ABIDE BY THE REPRESENTATIONS, COVENANTS, PROMISES AND WARRANTIES CONTAINED HEREIN.

INNOVATIVE SOFTWARE TECHNOLOGIES

/s/ Jake Wand                                                                                               September 11, 2013                      

Jake Wand, President                                                                                   Date

/s/ Charles Zivko                                                                                          September 11, 2013                           

Charles Zivko                                                                                                Date

 

 

 

  

13

  

  

Exhibit B

Definition of Cause

For purposes of this Agreement, the phrase "for cause" means: (a) the Executive's material breach of this Agreement if Executive has been given a reasonable opportunity to comply with such policy or cure his failure to comply (which reasonable opportunity must be granted during the fifteen-day period preceding termination of this Agreement); (b) the Executive's failure to adhere to any written Employer policy if the Executive has been given a reasonable opportunity to comply with such policy or cure his failure to comply (which reasonable opportunity must be granted during the fifteen-day period preceding termination of this Agreement); (c) the appropriation (or attempted appropriation) of a material business opportunity of the Employer, including attempting to secure or securing any personal profit in connection with any transaction entered into on behalf of the Employer; (d) the misappropriation (or attempted misappropriation) of any of the Employer's funds or property; or (e) the conviction of, (or its procedural equivalent), or the entering of a guilty plea or plea of no contest with respect to, a felony, the equivalent thereof, or any other crime with respect to which imprisonment is a possible punishment. Termination for cause shall be effected only through a vote of the majority of the board of directors.

 

 

 

 

 

  

14EX-10.1

 Exhibit 10.1 

JOINDER AND SECOND AMENDMENT TO 

CREDIT AND SECURITY AGREEMENT 

THIS JOINDER AND SECOND AMENDMENT TO CREDIT AND SECURITY AGREEMENT (this “Amendment”), dated September 13, 2013, is made
and entered into by and among WELLS FARGO BANK, NATIONAL ASSOCIATION (“Lender”), MAGNETECH INDUSTRIAL SERVICES, INC., an Indiana corporation; HK ENGINE COMPONENTS, LLC, an Indiana limited liability company,
(each, individually a “New Borrower”, and collectively, the “New Borrowers”), IES RENEWABLE ENERGY, LLC, a Delaware limited liability company, INTEGRATED ELECTRICAL SERVICES, INC., a Delaware
corporation; IES COMMERCIAL & INDUSTRIAL, LLC, a Delaware limited liability company; IES COMMERCIAL, INC., a Delaware corporation; IES MANAGEMENT, LP, a Texas limited partnership; IES MANAGEMENT ROO, LP, a Texas
limited partnership; IES PURCHASING & MATERIALS, INC., a Delaware corporation; IES RESIDENTIAL, INC., a Delaware corporation; INTEGRATED ELECTRICAL FINANCE, INC., a Delaware corporation; IES SUBSIDIARY HOLDINGS,
INC., a Delaware corporation; (each, individually an “Existing Borrower”, and collectively, the “Existing Borrowers”; and together with New Borrower, each, individually a “Borrower”, and
collectively, the “Borrowers”), IES CONSOLIDATION, LLC, a Delaware limited liability company; IES PROPERTIES, INC., a Delaware corporation; IES SHARED SERVICES, INC., a Delaware corporation; IES TANGIBLE
PROPERTIES, INC., a Delaware corporation; KEY ELECTRICAL SUPPLY, INC., a Texas corporation; IES OPERATIONS GROUP, INC., a Delaware corporation and ICS HOLDINGS LLC, an Arizona limited liability company (each, individually a
“Guarantor”, and collectively, the “Guarantors”). 
 RECITALS 

A. WHEREAS, Borrowers and Lender have entered into that certain Credit and Security Agreement dated as of August 9, 2012, as
amended by (i) that certain Joinder and First Amendment to Credit and Security Agreement dated as of February 12, 2013 and (ii) that certain Joinder Agreement dated as of March 15, 2013 (as the same may be further amended,
restated or modified from time to time, the “Credit Agreement”). Capitalized terms used but not otherwise defined herein shall have the meanings ascribed to them in the Credit Agreement. 

B. WHEREAS, Borrowers have requested that Lender (i) make a term loan to Borrowers in the amount of the Term Loan Amount
(ii) amend certain provisions in the Credit Agreement and (iii) join New Borrowers as Borrowers to the Credit Agreement in connection with the consummation of the Merger Agreement. 

C. WHEREAS, Lender has agreed to make such term loan to Borrowers in the amount of the Term Loan Amount, amend the provisions to the
Credit Agreement requested by Borrowers and join New Borrowers as Borrowers to the Credit Agreement in connection with the consummation of the Merger Agreement on the terms and conditions as set forth herein. 

NOW THEREFORE, in consideration of the foregoing and the mutual covenants herein contained, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the parties, intending to be legally bound agree as follows: 

 ARTICLE I. 

AMENDMENT 

Effective as of the Effective Date (as defined below), the Credit Agreement is hereby amended and supplemented as follows: 

1.01 Amendment to Section 2.2. Section 2.2 of the Credit Agreement is hereby amended and restated in its entirety to
read as follows: 
 “2.2 Term Loan. Lender made an advance to Borrowers on the First Amendment Closing
Date in the principal amount of $5,000,000 (the “Original Term Loan”). As of the Second Amendment Closing Date, the outstanding principal balance of the Original Term Loan is $3,541,666.69 (which is unconditionally owed as of the
Second Amendment Closing Date by Borrowers to Lender, without offset, defense, or counterclaim of any kind, nature, or description whatsoever). Subject to the terms and conditions of this Agreement, Lender will make an additional term loan to
Borrower in the principal amount of $13,708,333.34 (the “Additional Term Loan”). The Additional Term Loan shall be advanced on the Second Amendment Closing Date. The Additional Term Loan and the Original Term Loan shall be deemed a
single term which shall be in an aggregate principal amount equal to the Term Loan Amount (the “Term Loan”). The principal of the Term Loan shall be repaid on the first day of each calendar month beginning on the first calendar
month after the Second Amendment Closing Date, in monthly principal installments equal to $291,666.66, provided the entire outstanding unpaid principal balance (and all accrued and unpaid interest on the Term Loan) shall be due and payable on the
earlier of (i) August 9, 2016 (the “Term Loan Maturity Date”) or (ii) the Termination Date. Any principal amount of the Term Loan that is repaid or prepaid may not be reborrowed.” 

1.02 Amendment to Section 2.4(f). Section 2.4(f) is hereby amended by adding the following sentence thereto to read as
follows: 
 “If Lender obtains an appraisal of the Equipment at any time as permitted under this Agreement, and such
appraisal shows the aggregate unpaid principal amount of the Term Loan to exceed eighty-five percent (85%) of the Net Forced Liquidation Value of Eligible Equipment, then Lender may (x) require Borrowers to immediately prepay the unpaid
principal of the Term Loans in the amount of such excess or (y) decrease Availability in the amount of such excess.” 
 1.03
Amendment to Sections 2.13(a)-(b). Sections 2.13(a)-(b) of the Credit Agreement are hereby amended and restated in their entirety to read as follows: 

“(a) Subject to the terms and conditions of this Agreement, upon the request of a Borrower made in accordance herewith,
Lender agrees to issue a requested Letter of Credit for the account of such Borrower. By submitting a request to Lender for the issuance of a Letter of Credit, such Borrower shall be deemed to have requested that Lender issue the requested Letter of
Credit. Each request for the issuance of a Letter of Credit, or the amendment, renewal, or extension of any outstanding Letter of Credit, shall be made in writing by an Authorized Person and delivered to Lender via hand delivery, telefacsimile, or
other electronic method of transmission reasonably in advance of the requested 

  
 2 

 
date of issuance, amendment, renewal, or extension. Each such request shall be in form and substance reasonably satisfactory to Lender, and (i) shall specify (A) the amount of such
Letter of Credit, (B) the date of issuance, amendment, renewal, or extension of such Letter of Credit, (C) the proposed expiration date of such Letter of Credit, (D) the name and address of the beneficiary of the Letter of Credit, and
(E) such other information (including, the conditions to drawing, and, in the case of an amendment, renewal, or extension, identification of the Letter of Credit to be so amended, renewed, or extended) as shall be necessary to prepare, amend,
renew, or extend such Letter of Credit, and (ii) shall be accompanied by such Letter of Credit Agreements as Lender may request or require, to the extent that such requests or requirements are consistent with the Letter of Credit Agreements
that Lender generally requests for Letters of Credit in similar circumstances. With respect to each Letter of Credit existing as of the Second Amendment Closing Date, such Letter of Credit shall no longer be required to be a Cash Collateralized
Letter of Credit and Lender agrees to disburse the cash collateral held by Lender in Account Number 4946318813 with respect thereto upon the request and at the direction of Borrowers. 

(b) Lender shall have no obligation to issue, amend, renew or extend a Letter of Credit if, after giving effect to the
requested issuance, amendment, renewal, or extension, the Letter of Credit Usage would exceed the lesser of (x) the Maximum Revolver Amount less the outstanding amount of Advances, less Reserves (in accordance with Section 2.1(c) at
such time or (ii) $10,000,000.” 
 1.04 Amendment to Section 6.12(i). Section 6.12(i) of the Credit
Agreement is hereby amended and restated in its entirety to read as follows: 
 “(i) Controlled Accounts.

 (i) Within ninety (90) days following the Second Amendment Closing Date (the “Cash Management Transition
Period”), IES Subsidiary and each New Borrower shall establish and maintain at Lender all Cash Management Services, including all deposit accounts (other than the Permitted Petty Cash Account), and to the extent required hereunder or
otherwise utilized by Borrowers, lockbox services. Such Cash Management Services maintained by each Loan Party shall be of a type and on terms reasonably satisfactory to Lender; 

(ii) Until such time as IES Subsidiary and each New Borrower have established all of their Cash Management Services with
Lender (other than the Permitted Petty Cash Account), during the Cash Management Transition Period each such Loan Party shall maintain Cash Management Services of a type and on terms reasonably satisfactory to Lender at PNC National Bank (the
“Controlled Account Bank”), and shall take reasonable steps to ensure that all of the Account Debtors of each Loan Party and each of its Subsidiaries forward payment of the amounts owed by them directly to such Controlled Account
Bank, and (B) deposit or cause to be deposited promptly, and in any event no later than the first Business Day after the date of receipt thereof, all of their Collections (including those sent directly by their Account Debtors to a Loan Party
or to a Subsidiary of a Loan Party) into a bank account of such Loan Party (each, a “Controlled Account”) at one of the Controlled Account Banks; and 

  
 3 

 (iii) During the Cash Management Transition Period, each Loan Party shall
maintain Control Agreements with the applicable Controlled Account Bank, in form and substance reasonably acceptable to Lender. Each such Control Agreement shall provide, among other things, that (A) the Controlled Account Bank will comply with
any instructions originated by Lender directing the disposition of the collected funds in such Controlled Account without further consent by the applicable Loan Party, (B) the Controlled Account Bank waives, subordinates, or agrees not to
exercise any rights of setoff or recoupment or any other claim against the applicable Controlled Account other than for payment of its service fees and other charges directly related to the administration of such Controlled Account and for returned
checks or other items of payment, and (C) the Controlled Account Bank will forward, by daily standing wire transfer, all amounts in the applicable Controlled Account to the Collection Account or such other account as directed by Lender.”

 1.05 Amendment to Section 7.13. Section 7.13 of the Credit Agreement is hereby amended and restated in its
entirety to read as follows: 
 “Use of Proceeds. Use the proceeds of any loan made hereunder for any purpose other than
(a) on the Closing Date, (i) to repay, in full, the outstanding principal, accrued interest, and accrued fees and expenses owing under or in connection with Borrowers’ existing credit facility with Existing Lender and (ii) to pay
fees, costs, and expenses, including Lender Expenses, incurred in connection with this Agreement, the other Loan Documents, and the transactions contemplated hereby and thereby, and (b) thereafter, consistent with the terms and conditions
hereof, for (i) general corporate and working capital purposes for their lawful and permitted purposes and (ii) for purposes of consummating the transactions contemplated in the Merger Agreement, including payment of the “Cash
Consideration” (as defined in the Merger Agreement) (provided that no part of the proceeds of the loans made to Borrowers will be used to purchase or carry any such Margin Stock or to extend credit to others for the purpose of purchasing or
carrying any such Margin Stock or for any purpose that violates the provisions of Regulation T, U or X of the Board of Governors of the Federal Reserve System), excluding, in each case, repayments of the Seller Subordinated Debt whether or not
permitted hereunder.” 
 1.06 Amendment to Section 8(b). Section 8(b) of the Credit Agreement is hereby amended
and restated in its entirety to read as follows: 
 “(b) Intentionally Omitted.” 

1.07 Amendment to Section 9.10. Section 9.10 of the Credit Agreement is hereby amended by deleting the number
“$500,000” and inserting “$1,500,000” in lieu thereof. 
 1.08 Amendment to Schedule 1.1. 

(a) Schedule 1.1 of the Credit Agreement is hereby amended by adding the following defined terms in the appropriate alphabetical order:

 “‘Additional Term Loan’ has the meaning specified therefor in Section 2.2.” 

  
 4 

 “‘Eligible Equipment’ means Equipment owned by IES Subsidiary HK Engine,
and/or Magnetech as of the Second Amendment Closing Date designated by Lender as eligible from time to time in its sole discretion, but excluding Equipment having any of the following characteristics: 

(a) Equipment at premises other than those owned by any Borrower, unless Lender shall have entered into a Collateral Access
Agreement with the owner, operator or lessor of such premises and shall have received such other documents, instruments and agreements as Lender may request; 

(b) Equipment that is subject to any Lien other than in favor of Lender; 

(c) Equipment located outside the United States of America; 

(d) Equipment that is not subject to the first priority, valid and perfected security interest of Lender; 

(e) damaged or defective Equipment or Equipment not used or usable in the ordinary course of Borrowers’ business as
presently conducted or Equipment which is obsolete or not currently saleable or has been removed from service; 
 (f)
Equipment that is not covered by “all risk” hazard insurance for an amount equal to its replacement cost; 
 (g)
Equipment that requires proprietary software in order to operate in the manner in which it is intended when such software is not freely assignable to Lender or any potential purchaser of such Equipment; 

(h) Equipment consisting of computer hardware or software,; or 

(i) Equipment otherwise deemed unacceptable by Lender in its Permitted Discretion. 

Any Equipment which is not Eligible Equipment shall nonetheless constitute Collateral.” 

“‘Fixed Asset Availability’ means 85% of the Net Forced Liquidation Value of all Eligible Equipment. The Fixed Asset
Availability will be adjusted on the first Business Day of each month and reduced by $29,125.00 accordingly on such date, based upon a four (4) year amortization schedule for all Eligible Equipment as of the Second Amendment Closing Date.”

 “‘HK Engine’ means HK ENGINE COMPONENTS, LLC, an Indiana limited liability company.” 

“‘IES Subsidiary’ means IES Subsidiary Holdings, Inc., a Delaware corporation.” 

  
 5 

 “‘Magnetech’ means MAGNETECH INDUSTRIAL SERVICES, INC., an Indiana
corporation.” 
 “‘Merger Agreement’ means that certain Agreement and Plan of Merger dated as of March 13,
2013, by and among Parent, Miscor and IES Subsidiary, as amended b the First Amendment and Plan of Merger, dated as of July 10, 2013.” 

“‘Miscor’ means MISCOR Group, Ltd., an Indiana corporation.” 

“Net Forced Liquidation Value’ shall mean, as to Eligible Equipment, at any time, the value of such Eligible Equipment,
determined on a forced liquidation basis, reduced by such commissions, fees, costs and expenses as may be reasonably expected in connection with the liquidation thereof, as set forth in the most recent appraisal delivered, at the sole cost and
expense of Borrowers, to Lender, as to the Eligible Equipment, in form, scope, and methodology acceptable to Lender in its Permitted Discretion and performed by an appraiser acceptable to Lender in its Permitted Discretion, addressed to Lender and
upon which Lender is permitted to rely.” 
 “‘Original Term Loan’ has the meaning specified therefor in
Section 2.2.” 
 “‘Second Amendment’ means that certain Joinder and Second Amendment to Credit And
Security Agreement dated as of the Second Amendment Closing Date.” 
 “‘Second Amendment Closing Date’ means
September 13, 2013.” 
 (b) Schedule 1.1 of the Credit Agreement is hereby further amended by amending and restating the
following defined terms in the appropriate alphabetical order: 
 “‘Borrowers’ means, jointly and severally, Parent;
IES Commercial & Industrial, LLC, a Delaware limited liability company; IES Commercial, Inc., a Delaware corporation; IES Management, LP, a Texas limited partnership; IES Management ROO, LP, a Texas limited partnership; IES
Purchasing & Materials, Inc., a Delaware corporation; IES Residential, Inc., a Delaware corporation; Integrated Electrical Finance, Inc., a Delaware corporation, IES Renewable Energy, LLC, a Delaware limited liability company, IES
Subsidiary Holdings, Inc., a Delaware corporation, Magnetech Industrial Services, Inc., an Indiana corporation; HK Engine Components, LLC, an Indiana limited liability company and any other Person that becomes a Borrower pursuant to a joinder
agreement entered into pursuant to Section 6.16 hereof.” 
 “‘Borrowing Base’ means, as of any date of
determination, the result of: 
 (a) the Accounts Availability Amount, plus: 

(b) the lowest of 
 (i)
$5,000,000, 
 (ii) 65% of the Value of Eligible Inventory, or 

(iii) 85% times the most recently determined Net Liquidation Percentage times the Value of Eligible Inventory,
plus 

  
 6 

 (c) Fixed Asset Availability, minus 

(d) the General Reserve, minus 

(e) the Aged Payables Reserve, minus 

(f) the aggregate amount of Reserves, if any, established by Lender, minus 

(g) the outstanding principal balance of the Term Loan.” 

“‘Collateral Assignment of Purchase Agreement’ shall mean, individually and collectively, (i) that certain
Collateral Assignment of Purchase Agreement in form and substance entered into in connection with the Permitted Acquisition, by and among IES Residential, IES Renewable and Lender, as acknowledged and agreed to by certain other Persons party to the
Purchase Agreement and (ii) that certain Collateral Assignment of Merger Agreement in form and substance entered into in connection with the Merger Agreement.” 

“FCCR Testing Period’ means, (a) prior to December 31, 2013, any month during which Borrowers’ Liquidity was at
any time less than $15,000,000 or Excess Availability was at any time less than (i) $4,000,000 through the month ending September 30, 2013, (ii) $4,250,000 from October 1, 2013 through and including October 31, 2013,
(iii) $4,500,000 from November 1, 2013 through and including November 30, 2013 and (iv) $4,750,000 from December 1, 2013 through and including December 31, 2013 and (b) thereafter, any month during which
Borrowers’ Liquidity was at any time less than $20,000,000 or Excess Availability was at any time less than $5,000,000.” 

“Fixed Charges’ means, with respect to any fiscal period and with respect to Borrowers and their Subsidiaries determined on a
consolidated basis in accordance with GAAP, the sum, without duplication, of (a) cash Interest Expense paid during such period (other than interest paid-in-kind, amortization of financing fees, and other non-cash Interest Expense),
(b) principal payments paid in cash in respect of Indebtedness (other than Advances, but including, for the avoidance of doubt, scheduled payments on the Term Loan in accordance with Section 2.2 herein) paid during such period,
including cash payments with respect to Capital Leases, but excluding payments made to Tontine and/or its Affiliates on or about the First Amendment Closing Date, (c) any management, consulting, monitoring, and advisory fees paid to an
Affiliate (whether or not permitted hereunder), and (d) all Restricted Junior Payments (other than Pass-Through Tax Liabilities) and other distributions paid in cash during such period.” 

“‘Interest Rate Margin’ means, 

(a) with respect to the Term Loan, (x) for the period beginning on the Second Amendment Closing Date and ending on the one (1) year
anniversary of the Second Amendment Closing Date, 5.00 percentage points and (y) thereafter, as of any date of determination (with respect to any portion of the Term Loan outstanding on such date), the applicable margin set forth in the
following table that corresponds to the most recent Liquidity and Fixed Charge Coverage Ratio calculations delivered to Lender pursuant to Section 6.1 and accepted by Lender in its Permitted Discretion: 

  
 7 

					
	 Level
	  	 Liquidity/Excess Availability/Fixed Charge Coverage
Ratio
	  	Interest
Rate
Margin
	 I
	  	If Liquidity is less than or equal to $20,000,000 at any time during such period OR Excess Availability is less than or equal to $7,500,000 at any time during such period OR Fixed Charge Coverage Ratio is less than 1.0 to
1.0	  	5.00
percentage
points
	 II
	  	If Liquidity is greater than $20,000,000 at all times during such period and less than or equal to $30,000,000 at any time during such period AND Excess Availability is greater than $7,500,000 at all times during such period AND
Fixed Charge Coverage Ratio is 1.0 to 1.0 or greater	  	4.50
percentage
points
	 III
	  	If Liquidity is greater than $30,000,000 at all times during such period AND Excess Availability is greater than $7,500,000 at all times during such period AND Fixed Charge Coverage Ratio is 1.0 to 1.0 or greater	  	4.00
percentage
points

 and 

(b) Otherwise, as of any date of determination (with respect to any portion of the outstanding Advances on such date), the applicable margin
set forth in the following table that corresponds to the most recent Liquidity and Fixed Charge Coverage Ratio calculations delivered to Lender pursuant to Section 6.1 and accepted by Lender in its Permitted Discretion; provided,
however, that (i) the Interest Rate Margin shall be the margin set forth below as “Level I” for the period from the Closing Date through the thirtieth (30th) day following the date of delivery to Lender of the Liquidity
and Fixed Charge Coverage calculation delivered to Lender pursuant to Section 6.1 of the Agreement for the period ending February 28, 2013 and (ii) upon the occurrence and during the continuation of an Event of Default, shall
be the margin set forth below as “Level I” until the next Interest Rate Margin Redetermination Date (as defined below). 
  

					
	 Level
	  	 Liquidity/Excess Availability/Fixed Charge Coverage
Ratio
	  	Interest
Rate
Margin
	 I
	  	If Liquidity is less than or equal to $20,000,000 at any time during such period OR Excess Availability is less than or equal to $7,500,000 at any time during such period OR Fixed Charge Coverage Ratio is less than 1.0 to
1.0	  	4.00
percentage
points
	 II
	  	If Liquidity is greater than $20,000,000 at all times during such period and less than or equal to $30,000,000 at any time during such period AND Excess Availability is greater than $7,500,000 at all times during such period AND
Fixed Charge Coverage Ratio is 1.0 to 1.0 or greater	  	3.50
percentage
points
	 III
	  	If Liquidity is greater than $30,000,000 at all times during such period AND Excess Availability is greater than $7,500,000 at all times during such period AND Fixed Charge Coverage Ratio is 1.0 to 1.0 or greater	  	3.00
percentage
points

  
 8 

 Except as set forth in the foregoing proviso, the Interest Rate Margin shall be re-determined
quarterly on the first Business Day of each calendar quarter (such date being the “Interest Rate Margin Redetermination Date”) based upon the Liquidity and Fixed Charge Coverage Ratio for the immediately preceding calendar quarter.
In the event that the information contained in any certificate delivered pursuant to Section 6.1 of the Agreement is shown to be inaccurate, and such inaccuracy, if corrected, would have led to the application of a higher Interest Rate
Margin for any period than the Interest Rate Margin actually applied for such interest rate period, then (i) Borrowers shall immediately deliver to Lender a correct certificate for such period, (ii) the Interest Rate Margin shall be
determined as if the correct Interest Rate Margin (as set forth in the table above) were applicable for such period, and (iii) Borrowers shall immediately deliver to Lender full payment in respect of the accrued additional interest as a result
of such increased Interest Rate Margin for such interest rate period, which payment shall be promptly applied by Lender to the affected Obligations. In the event that the information contained in any certificate delivered pursuant to
Section 6.1 of the Agreement reflects that an Event of Default existed as of the Interest Rate Margin Redetermination Date, (i) the Interest Rate Margin shall be determined as if the Interest Rate Margin set forth above as
“Level I” were applicable as the first date of the existence of such Event of Default and (ii) Borrowers shall immediately deliver to Lender full payment in respect of the accrued additional interest as a result of such increased
Interest Rate Margin for such interest rate period, which payment shall be promptly applied by Lender to the affected Obligations. In the event the Borrowers fail to timely deliver any certificate, report or other documentation necessary for
determination of the Interest Rate Margin, the Interest Rate Margin shall be the margin set forth above as “Level I” from the date of such failure until the next Interest Rate Margin Redetermination Date.” 

“‘Term Loan Amount’ means $13,708,333.” 

(c) Schedule 1.1 of the Credit Agreement is hereby further amended by amending clause (b) of the definition of “Eligible
Inventory” to delete the phrase “raw materials”. 
 (d) Schedule 1.1 of the Credit Agreement is hereby further
amended by amending clause (f) of the definition of “Eligible Inventory” to delete “$100,000” and replace it with “$50,000”. 

1.09 Amendment to Schedule 2.12. Schedule 2.12 to the Credit Agreement is hereby amended by inserting the following
subsection (d) to the schedule of fees payable “Upon Demand by Lender or as otherwise specified in this Agreement” to read as follows: 

“(d) Second Amendment Fee. A Second Amendment fee in the amount of $50,000, which shall be deemed fully earned and non-refundable
on the Second Amendment Closing Date and shall be paid in immediately available funds on the earlier to occur of (i) February 1, 2014 and (ii) the Termination Date.” 

  
 9 

 1.10 Amendment to Exhibit A. Exhibit A to the Credit Agreement is hereby amended
and restated in its entirety in the form of Exhibit A attached hereto. 
 1.11 Amendment to Exhibit D. Exhibit D to the Credit
Agreement is hereby amended by adding a new Section 5.34 thereto to read as follows. 
 “5.34 Merger
Agreement: 
 (i) Borrowers have delivered to Lender a complete and correct copy of the Merger Agreement and all
documents contemplated therein including all schedules and exhibits thereto (the “Merger Documents”). The execution, delivery and performance of each of the Merger Documents has been duly authorized by all necessary action on the
part of each Borrower. Each Merger Document is the legal, valid and binding obligation of the applicable Borrowers, enforceable against such Borrowers in accordance with its terms, in each case, except (i) as may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws relating to or affecting generally the enforcement of creditors’ rights and (ii) the availability of the remedy of specific performance or injunctive or other
equitable relief is subject to the discretion of the court before which any proceeding therefor may be brought. Borrowers are not in default in the performance or compliance with any provisions thereof. All representations and warranties made by
each Borrower in the Merger Documents and in the certificates delivered in connection therewith are true and correct in all material respects. To each Borrower’s knowledge, none of Miscor’s representations or warranties in the Merger
Documents contain any untrue statement of a material fact or omit any fact necessary to make the statements therein not misleading, in any case that could reasonably be expected to result in a Material Adverse Change. 

(ii) As of the Second Amendment Closing Date, the transactions contemplated under the Merger Documents have been consummated
in all material respects, in accordance with all applicable laws. As of the Second Amendment Closing Date, all requisite approvals by Governmental Authorities having jurisdiction over Borrowers and, to each Borrower’s knowledge, Miscor, have
been obtained (including filings or approvals required under the Hart-Scott-Rodino Antitrust Improvements Act), except for any approval the failure to obtain could not reasonably be expected to be material to the interests of the Lender. As of the
Second Amendment Closing Date, after giving effect to the transactions contemplated by the Merger Documents, Borrowers will have good title to the assets acquired pursuant to the Merger Agreement, free and clear of all Liens other than Permitted
Liens.” 
 1.12 Amendment Exhibit E. Exhibit E to the Credit Agreement is hereby amended and restated in its entirety in
the form attached as Exhibit B hereto. 
 ARTICLE II 

JOINDER, ASSUMPTION AND CONSENT 

2.01 Joinder to the Credit Agreement and Loan Documents. Each New Borrower hereby joins in, assumes, adopts and becomes a
co-borrower and a co-obligor with respect to all Obligations (irrespective of when such Obligations first arose) under the Credit Agreement and all of the other Loan Documents. Without limiting the foregoing, each New Borrower hereby agrees to
(i) all of the terms and conditions contained in the Credit Agreement and the other Loan Documents with the same legal effect as if it was an original signatory thereto, including, without limitation, (x) all of the representations and
warranties of the Borrowers and all of the covenants, each as set forth in the Credit Agreement, (y) the grant to Lender of a continuing general lien upon, and security interest in, all of the Collateral in which

  
 10 

 
such New Borrower has rights as security for the Obligations as though it were an original signatory party to the Credit Agreement, and each New Borrower authorizes Lender to file UCC financing
statements to evidence the same, which financing statements may identify the Collateral as “all assets” or “all personal property” or words of like import and (z) the promises to pay all Obligations in full when due in
accordance with the Credit Agreement and the other Loan Documents. Further, each New Borrower agrees that the Obligations are performable in accordance with their terms, without setoff, defense, counter-claim or claims in recoupment. For the
avoidance of doubt, each Existing Borrower, New Borrower, Guarantor and Lender acknowledge and agree that this Section 2.01 shall be deemed effective immediately upon the Effective Time (as defined in the Merger Agreement). 

2.02 Consent to Joinder. Each Existing Borrower, Guarantor and Lender consent to the joinder of New Borrowers to the Credit
Agreement and all of the other Loan Documents, as more fully described above. 
 2.03 Lender Consent to Merger. For the
avoidance of doubt, upon the effectiveness of this Amendment, Lender hereby consents to the consummation of the transactions contemplated under the Merger Documents and agrees no Default or Event of Default shall occur as a result thereof. 

ARTICLE III 
 NO
WAIVER 
 3.01 No Waiver. Nothing contained in this Amendment shall be construed as a waiver by Lender of any covenant
or provision of the Credit Agreement, the other Loan Documents, this Amendment, or of any other contract or instrument between any Loan Party and Lender, and the failure of Lender at any time or times hereafter to require strict performance by the
Loan Parties of any provision thereof shall not waive, affect or diminish any right of Lender to thereafter demand strict compliance therewith. Lender hereby reserves all rights granted under the Credit Agreement, the other Loan Documents, this
Amendment and any other contract or instrument between any Loan Party and Lender. 
 ARTICLE IV 

CONDITIONS PRECEDENT 

4.01 Conditions to Effectiveness. This Amendment shall become effective only upon the satisfaction in full, in a manner
satisfactory to Lender, of the following conditions precedent (the first date upon which all such conditions have been satisfied being herein called the “Effective Date”): 

(a) Lender shall have received the following documents or items, each in form and substance satisfactory to Lender and its legal counsel: 

(i) a Second Amended and Restated Term Note, duly executed by each Borrower; 

(ii) a Third Amended and Restated Revolving Note, duly executed by each Borrower; 

(iii) a Pledged Interest Addendum duly executed by IES Subsidiary; 

(iv) an opinion of each Loan Party’s outside counsel (other than with respect to New Borrowers, which such opinion shall
be delivered pursuant to the Post Closing Agreement); 

  
 11 

 (v) With respect to each New Borrower, Lender shall have received a certificate
from the Secretary of each New Borrower (which shall be deemed released by New Borrower automatically upon the Effective Time (as defined in the Merger Agreement)) (i) attesting to the resolutions of such Loan Party’s Board of Directors
authorizing its execution, delivery, and performance of this Amendment and the other Loan Documents to which such Loan Party is a party, (ii) authorizing specific officers of such Loan Party to execute the same, (iii) attesting to the
incumbency and signatures of such specific officers of such Loan Party, (iv) certifying that the Governing Documents of such Loan Party attached thereto are true, correct and complete as of the date thereof) and (v) attesting to a
certificate of status with respect to each Loan Party, dated within 10 days of the Second Amendment Closing Date, such certificate to be issued by the appropriate officer of the jurisdiction of organization of each Loan Party, which certificate
shall indicate that such Loan Party is in good standing in such jurisdiction; 
 (vi) Lender shall have received a
certificate from the Secretary of each Loan Party (other than New Borrower’s) (i) attesting to the resolutions of such Loan Party’s Board of Directors authorizing its execution, delivery, and performance of this Amendment and the
other Loan Documents to which such Loan Party is a party, (ii) authorizing specific officers of such Loan Party to execute the same, (iii) attesting to the incumbency and signatures of such specific officers of such Loan Party,
(iv) representing and warranting that such Loan Party’s Governing Documents have not been amended or otherwise modified since February 12, 2013 (or attaching and attesting to any such amendments or modifications thereto as true,
correct and complete as of the date thereof) and (v) attesting to a certificate of status with respect to each Loan Party, dated within 10 days of the Second Amendment Closing Date, such certificate to be issued by the appropriate officer of
the jurisdiction of organization of each Loan Party, which certificate shall indicate that such Loan Party is in good standing in such jurisdiction; 

(vii) a fully executed copy of the Merger Agreement and each Disclosure Letter (as defined in the Merger Agreement), including
all amendments thereto, and all other requested agreements or documents in connection therewith, certified by an officer of Borrower as true, correct and complete; 

(viii) a fully executed Agreement Regarding Certain Matters (the “Post Closing Agreement”); 

(ix) a fully executed Information Certificate with respect to each Loan Party; 

(x) a fully executed mortgage and/or deed of trust, as applicable, with respect to the Real Property owned by Magnetech
located in Saraland, Alabama, together with title searches evidencing no other Liens other than Permitted Liens exist on such Real Property (or Liens to be satisfied pursuant to the Post Closing Agreement); 

(xi) a fully executed Collateral Assignment of Merger Agreement; 

(xii) a Patent and Trademark Security Agreement duly executed by IES Subsidiary and each New Borrower; 

(xiii) Current searches of each Loan Party in appropriate filing offices evidencing that (i) no Liens have been filed and
remain in effect against any Loan Party or any Collateral except Permitted Liens, and (ii) Wells Fargo has filed all UCC financing statements necessary to perfect the Security Interest, to the extent the Security Interest is capable of being
perfected by filing; 

  
 12 

 (xiv) Lender shall have received evidence that appropriate financing statements
have been duly filed, or in Lender’s discretion, will be filed, in such office or offices as may be necessary or, in the opinion of Lender, desirable to perfect the Lender’s Liens in and to the Collateral, and Lender shall have received
searches reflecting the filing of all such financing statements; 
 (xv) a letter, in form and substance satisfactory to
Lender, from PNC Bank, National Association (“PNC”) to Lender with respect to the amount necessary to repay in full all of the obligations of the New Borrowers owing to PNC (and any other lenders under Borrowers’ current loan
facility with PNC) and obtain a release of all of the Liens existing in favor of PNC in and to the assets of New Borrowers, together with termination statements and other documentation evidencing the termination by PNC of its Liens in and to the
properties and assets of the Loan Parties and their Subsidiaries; 
 (xvi) the Control Agreement(s) with PNC; 

(xvii) copies of the policies of insurance and certificates of insurance, together with the endorsements thereto, as are
required by Section 6.6 with respect to New Borrowers; 
 (xviii) Reserved; 

(xix) evidence that Borrowers shall have Excess Availability of at least $4,000,000 after giving effect to (a) the
funding of the Term Loan hereunder, (b) the payment of all fees and expenses required to be paid by Borrowers on the Second Amendment Closing Date under this Amendment and (c) the transactions contemplated by the Merger Agreement; 

(xx) evidence that Borrowers shall have Liquidity of at least $15,000,000 after giving effect to (a) the funding of the
Term Loan hereunder, (b) the payment of all fees and expenses required to be paid by Borrowers on the Second Amendment Closing Date under this Amendment and (c) the transactions contemplated by the Merger Agreement; 

(xxi) Lender shall have completed its business, legal, and collateral due diligence, including (i) a collateral
examination and review of each New Borrower’s and its Books and verification of each New Borrower’s representations and warranties to Lender, the results of which must be satisfactory to Lender, and (ii) an inspection of each of the
locations where the Inventory of each New Borrower is located, the results of which must be satisfactory to Lender; 

(xxii) Lender shall have completed (i) Patriot Act searches, OFAC/PEP searches and customary individual background checks
for each New Borrower, and (ii) OFAC/PEP searches and customary individual background searches for each New Borrower’s senior management and key principals, the results of which shall be satisfactory to Lender; and 

(xxiii) Lender shall have received all other documents Lender may reasonably request with respect to any matter relevant to
this Amendment or the transactions contemplated hereby and Borrowers shall have paid Lender, or made arrangements satisfactory to Lender to pay, all Lender Expenses incurred prior to or in connection with the preparation of this Amendment. 

(b) After giving effect to this Amendment, the representations and warranties made by each Loan Party contained herein and in the Credit
Agreement, as amended hereby, and the other Loan Documents, shall be true and correct in all material respects as of the date hereof, as if those representations and warranties were made for the first time on such date. 

  
 13 

 (c) After giving effect to this Amendment, each Loan Party is in compliance with all applicable
covenants and agreements contained in the Credit Agreement and the other Loan Documents. 
 (d) After giving effect to this Amendment, no
Default or Event of Default shall exist under any of the Loan Documents (as amended hereby), and no Default or Event of Default will result under any of the Loan Documents from the execution, delivery or performance of this Amendment. 

(e) All corporate and other proceedings, and all documents instruments and other legal matters in connection with the transactions
contemplated by this Amendment shall be satisfactory in form and substance to Lender and its counsel. 
 (f) Lender shall have received
final credit approval for the Credit Facility and the transactions described in this Amendment. 
 ARTICLE V 

RATIFICATIONS, REPRESENTATIONS AND WARRANTIES 

5.01 Ratifications. The terms and provisions set forth in this Amendment shall modify and supersede all inconsistent terms and
provisions set forth in the Credit Agreement and the other Loan Documents, and, except as expressly modified and superseded by this Amendment, the terms and provisions of the Credit Agreement and the other Loan Documents are ratified and confirmed
and shall continue in full force and effect. The Loan Parties hereby agree that all liens and security interest securing payment of the Obligations under the Credit Agreement are hereby collectively renewed, ratified and brought forward as security
for the payment and performance of the Obligations. The Loan Parties and Lender agree that the Credit Agreement and the other Loan Documents, as amended hereby, shall continue to be legal, valid, binding and enforceable in accordance with their
respective terms. 
 5.02 Representations and Warranties. Each Loan Party hereby represents and warrants, jointly and
severally, to Lender as of the date hereof as follows: (A) it is duly organized, validly existing and in good standing under the laws of its jurisdiction of organization; (B) the execution, delivery and performance by it of this Amendment,
the Credit Agreement and all other Loan Documents executed and/or delivered in connection herewith are within its powers, have been duly authorized, and do not contravene (i) its Governing Documents or (ii) any applicable law; (C) no
consent, license, permit, approval or authorization of, or registration, filing or declaration with any governmental body or other Person, is required in connection with the execution, delivery, performance, validity or enforceability of this
Amendment, the Credit Agreement or any of the other Loan Documents executed and/or delivered in connection herewith by or against it, except for those consents, approvals or authorizations which (i) will have been duly obtained, made or
compiled prior to the Effective Date and which are in full force and effect or (ii) the failure to obtain could not individually or in the aggregate reasonably be expected to cause a Material Adverse Change; (D) this Amendment, the Credit
Agreement and all other Loan Documents executed and/or delivered in connection herewith have been duly executed and delivered by it; (E) this Amendment, the Credit Agreement and all other Loan Documents executed and/or delivered in connection
herewith constitute its legal, valid and binding obligation enforceable against it in accordance with their terms, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the
enforcement of creditors’ rights generally or by general principles of equity; (F) no Default or Event of Default exists, has occurred and is continuing or would result by the execution, delivery or performance of this Amendment;
(G) each Loan Party is in compliance with all applicable covenants and agreements contained in the Credit Agreement and the other 

  
 14 

 
Loan Documents, as amended hereby; and (H) the representations and warranties contained in the Credit Agreement and the other Loan Documents are true and correct in all material respects on
and as of the date hereof as though made on and as of each such date, except to the extent that such representations and warranties expressly relate solely to an earlier date (in which case such representations and warranties shall have been true
and complete on and as of such earlier date). 
 ARTICLE VI 

MISCELLANEOUS PROVISIONS 

6.01 Survival of Representations and Warranties. All representations and warranties made in the Credit Agreement or the other
Loan Documents, including, without limitation, any document furnished in connection with this Amendment, shall survive the execution and delivery of this Amendment and the other Loan Documents, and no investigation by Lender shall affect the
representations and warranties or the right of Lender to rely upon them. 
 6.02 Reference to Credit Agreement. Each of the
Credit Agreement and the other Loan Documents, and any and all other agreements, documents or instruments now or hereafter executed and delivered pursuant to the terms hereof or pursuant to the terms of the Credit Agreement, as amended hereby, are
hereby amended so that any reference in the Credit Agreement and such other Loan Documents to the Credit Agreement shall mean a reference to the Credit Agreement as amended hereby. 

6.03 Expenses of Lender. The Borrowers agree to pay on demand all reasonable costs and expenses incurred by Lender in connection
with any and all amendments, modifications, and supplements to the other Loan Documents, including, without limitation, the reasonable costs and fees of Lender’s legal counsel, and all costs and expenses incurred by Lender in connection with
the enforcement or preservation of any rights under the Credit Agreement, as amended hereby, or any other Loan Documents, including, without, limitation, the costs and fees of Lender’s legal counsel. 

6.04 Severability. Any provision of this Amendment held by a court of competent jurisdiction to be invalid or unenforceable
shall not impair or invalidate the remainder of this Amendment and the effect thereof shall be confined to the provision so held to be invalid or unenforceable. 

6.05 Successors and Assigns. This Amendment is binding upon and shall inure to the benefit of Lender and each Loan Party and
their respective successors and assigns, except that no Loan Party may assign or transfer any of its respective rights or obligations hereunder without the prior written consent of Lender. 

6.06 Counterparts. This Amendment may be executed in one or more counterparts, each of which when so executed shall be deemed to
be an original, but all of which when taken together shall constitute one and the same instrument. 
 6.07 Effect of Waiver.
No consent or waiver, express or implied, by Lender to or for any breach of or deviation from any covenant or condition by any Loan Party shall be deemed a consent to or waiver of any other breach of the same or any other covenant, condition or
duty. 
 6.08 Headings. The headings, captions, and arrangements used in this Amendment are for convenience only and shall not
affect the interpretation of this Amendment. 
 6.09 Applicable Law. THIS AMENDMENT AND ALL OTHER AGREEMENTS EXECUTED PURSUANT
HERETO SHALL BE DEEMED TO HAVE BEEN MADE AND TO BE PERFORMABLE IN AND SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS. 

  
 15 

 6.10 Final Agreement. THE CREDIT AGREEMENT AND THE OTHER LOAN DOCUMENTS, EACH AS
AMENDED HEREBY, REPRESENT THE ENTIRE EXPRESSION OF THE PARTIES WITH RESPECT TO THE SUBJECT MATTER HEREOF ON THE DATE THIS AMENDMENT IS EXECUTED. THE CREDIT AGREEMENT AND THE OTHER LOAN DOCUMENTS, AS AMENDED HEREBY, MAY NOT BE CONTRADICTED BY
EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES. NO MODIFICATION, RESCISSION, WAIVER, RELEASE OR AGREEMENT OF ANY PROVISION OF THIS AMENDMENT SHALL BE MADE,
EXCEPT BY A WRITTEN AGREEMENT SIGNED BY THE BORROWERS AND LENDER. 
 6.11 Release. EACH LOAN PARTY HEREBY ACKNOWLEDGES THAT IT
HAS NO DEFENSE, COUNTERCLAIM, OFFSET, CROSS COMPLAINT, CLAIM OR DEMAND OF ANY KIND OR NATURE WHATSOEVER THAT CAN BE ASSERTED TO REDUCE OR ELIMINATE ALL OR ANY PART OF ITS LIABILITY TO REPAY ANY LOANS OR EXTENSIONS OF CREDIT FROM LENDER TO THE
BORROWERS UNDER THE CREDIT AGREEMENT OR THE OTHER LOAN DOCUMENTS OR TO SEEK AFFIRMATIVE RELIEF OR DAMAGES OF ANY KIND OR NATURE FROM LENDER. EACH LOAN PARTY HEREBY VOLUNTARILY AND KNOWINGLY RELEASES AND FOREVER DISCHARGES LENDER, ITS PREDECESSORS,
AGENTS, EMPLOYEES, SUCCESSORS AND ASSIGNS, FROM ALL POSSIBLE CLAIMS, DEMANDS, ACTIONS, CAUSES OF ACTION, DAMAGES, COSTS, EXPENSES, AND LIABILITIES WHATSOEVER, KNOWN OR UNKNOWN, ANTICIPATED OR UNANTICIPATED, SUSPECTED OR UNSUSPECTED, FIXED,
CONTINGENT, OR CONDITIONAL, AT LAW OR IN EQUITY, ORIGINATING IN WHOLE OR IN PART ON OR BEFORE THE DATE THIS AMENDMENT IS EXECUTED, WHICH ANY LOAN PARTY MAY NOW OR HEREAFTER HAVE AGAINST LENDER, ITS PREDECESSORS, AGENTS, EMPLOYEES, SUCCESSORS AND
ASSIGNS, IF ANY, AND IRRESPECTIVE OF WHETHER ANY SUCH CLAIMS ARISE OUT OF CONTRACT, TORT, VIOLATION OF LAW OR REGULATIONS, OR OTHERWISE, AND ARISING FROM ANY LOANS OR EXTENSIONS OF CREDIT FROM LENDER TO THE BORROWERS UNDER THE CREDIT AGREEMENT OR
THE OTHER LOAN DOCUMENTS, INCLUDING, WITHOUT LIMITATION, ANY CONTRACTING FOR, CHARGING, TAKING, RESERVING, COLLECTING OR RECEIVING INTEREST IN EXCESS OF THE HIGHEST LAWFUL RATE APPLICABLE, THE EXERCISE OF ANY RIGHTS AND REMEDIES UNDER THE CREDIT
AGREEMENT OR LOAN DOCUMENTS, AND NEGOTIATION FOR AND EXECUTION OF THIS AMENDMENT. 
 6.12 Consent of Guarantor. The
undersigned Guarantors hereby (a) consent to the transactions contemplated by this Amendment; and (b) agree that the Credit Agreement and the other Loan Documents (as amended, restated, supplemented or otherwise modified from time to time)
are and shall remain in full force and effect. Although each undersigned Guarantor has been informed of the matters set forth herein and has acknowledged and agreed to same, it understands that the Lender has no obligation to inform it of such
matters in the future or to seek its acknowledgment or agreement to future amendments, and nothing herein shall create such a duty. Each of the undersigned acknowledges that its Guaranty is in full force and effect and ratifies the same,
acknowledges that the undersigned has no defense, counterclaim, set-off or any other claim to diminish the undersigned’s liability under such documents, that the undersigned’s consent is not required to the effectiveness of the Credit
Agreement and that no consent by it is required for the effectiveness of any future amendment, modification, forbearance or other action with respect to the Collateral, the Advances, the Term Loan, the Credit Agreement or any of the other Loan
Documents. 

  
 16 

 [Remainder of page intentionally left blank] 

  
 17 

 IN WITNESS WHEREOF, the undersigned has executed this Amendment as of the date first above
written. 
  

			
	NEW BORROWER:
	
	HK ENGINE COMPONENTS, LLC
		
	By:	 	/s/ Robert W. Lewey
		 	  

	Name:	 	Robert W. Lewey
	Title:	 	Vice President
	
	MAGNETECH INDUSTRIAL SERVICES, INC.
		
	By: :	 	/s/ Robert W. Lewey
		 	  

	Name:	 	Robert W. Lewey
	Title:	 	Vice President
	
	EXISTING BORROWERS:
	
	INTEGRATED ELECTRICAL SERVICES, INC.
		
	By: :	 	/s/ Robert W. Lewey
		 	  

	Name:	 	Robert W. Lewey
	Title:	 	Senior Vice President
	
	IES COMMERCIAL & INDUSTRIAL, LLC
		
	By: :	 	/s/ Robert W. Lewey
		 	  

	Name:	 	Robert W. Lewey
	Title:	 	President
	
	IES COMMERCIAL, INC.
		
	By: :	 	/s/ Robert W. Lewey
		 	  

	Name:	 	Robert W. Lewey
	Title:	 	Vice President
	
	IES PURCHASING & MATERIALS, INC.
		
	By: :	 	/s/ Robert W. Lewey
		 	  

	Name:	 	Robert W. Lewey
	Title:	 	President

  

[SIGNATURE PAGE TO SECOND AMENDMENT TO
CREDIT AND SECURITY AGREEMENT] 

 
			
	IES RESIDENTIAL, INC.
		
	By: :	 	/s/ Robert W. Lewey
		 	  

	Name:	 	Robert W. Lewey
	Title:	 	Vice President
	
	INTEGRATED ELECTRICAL FINANCE, INC.
		
	By: :	 	/s/ Robert W. Lewey
		 	  

	Name:	 	Robert W. Lewey
	Title:	 	President
	
	IES MANAGEMENT, LP
	
	By: INTEGRATED ELECTRICAL FINANCE, INC., its General Partner
		
	By: :	 	/s/ Robert W. Lewey
		 	  

	Name:	 	Robert W. Lewey
	Title:	 	President
	
	IES MANAGEMENT ROO, LP
	
	By: IES OPERATIONS GROUP, INC., its General Partner
		
	By: :	 	/s/ Robert W. Lewey
		 	  

	Name:	 	Robert W. Lewey
	Title:	 	President
	
	IES RENEWABLE ENERGY, LLC
		
	By:	 	/s/ Robert W. Lewey
		 	  

	Name:	 	Robert W. Lewey
	Title:	 	Vice President
	
	IES SUBSIDIARY HOLDINGS, INC.
		
	By: :	 	/s/ Robert W. Lewey
		 	  

	Name:	 	Robert W. Lewey
	Title:	 	Chief Financial Officer

  

[SIGNATURE PAGE TO SECOND AMENDMENT TO
CREDIT AND SECURITY AGREEMENT] 

 
			
	GUARANTORS:
	
	IES CONSOLIDATION, LLC
		
	By: :	 	/s/ Robert W. Lewey
		 	  

	Name:	 	Robert W. Lewey
	Title:	 	President
	
	IES SHARED SERVICES, INC.
		
	By: :	 	/s/ Robert W. Lewey
		 	  

	Name:	 	Robert W. Lewey
	Title:	 	President
	
	IES PROPERTIES, INC.
		
	By: :	 	/s/ Robert W. Lewey
		 	  

	Name:	 	Robert W. Lewey
	Title:	 	President
	
	KEY ELECTRICAL SUPPLY, INC.
		
	By: :	 	/s/ Robert W. Lewey
		 	  

	Name:	 	Robert W. Lewey
	Title:	 	Vice President
	
	IES TANGIBLE PROPERTIES, INC.
		
	By: :	 	/s/ Robert W. Lewey
		 	  

	Name:	 	Robert W. Lewey
	Title:	 	President
	
	IES OPERATIONS GROUP, INC.
		
	By: : 	 	/s/ Robert W. Lewey
		 	  

	Name:	 	Robert W. Lewey
	Title:	 	President
	
	ICS HOLDINGS LLC
		
	By: :	 	/s/ Robert W. Lewey
		 	  

	Name:	 	Robert W. Lewey
	Title:	 	President

  

[SIGNATURE PAGE TO SECOND AMENDMENT TO
CREDIT AND SECURITY AGREEMENT] 

 IN WITNESS WHEREOF, the undersigned has executed this Amendment as of the date first above
written. 
  

			
	WELLS FARGO BANK, NATIONAL
	ASSOCIATION
		
	By: :	 	/s/ Howard I. Handman
		 	  

	Name:	 	Howard I. Handman
	Title:	 	Authorized Signatory

  

[SIGNATURE PAGE TO SECOND AMENDMENT TO
CREDIT AND SECURITY AGREEMENT]

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00221-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00221-of-00352.parquet"}]]