UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report: November 24, 2004
Commission File No. 001-13783
INTEGRATED ELECTRICAL SERVICES, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 76-0542208
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
1800 West Loop South
Suite 500
Houston, Texas 77027
(Address of principal executive offices) (zip code)
Registrant's telephone number, including area code: (713) 860-1500
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions:
[ ] Written communications pursuant to Rule 425 under the Securities Act (17
CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
ITEM 1.01 ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT
On November 24, 2004, in connection with the closing of the private
placement (the "Private Placement") of $36 million in principal amount of its
Series A and Series B 6.5% Senior Convertible Notes due 2014 (the "Notes"),
Integrated Electrical Services, Inc. (the "Company") entered into (i) an
Indenture (the "Indenture") among the Company, The Bank of New York as trustee
(the "Trustee") and the Company's significant subsidiaries as guarantors of the
Notes (the "Guarantors") relating to the Notes and (ii) a Registration Rights
Agreement among the Company, the Guarantors and Amulet Limited and Marathon
Global Convertible Master Fund, Ltd. as purchasers of the Notes (the
"Purchasers").
The Registration Rights Agreement requires the Company to file within
180 days of the closing date of the Private Placement a shelf registration
statement on Form S-3 registering the offer and sale of the common stock
underlying the Notes and to cause such registration statement to become
effective no later than 360 days from the closing date of the Private Placement.
If the Company does not satisfy its registration obligations under the
Registration Rights Agreement, it will become obligated to pay liquidated
damages equal to 0.25% for the first 90 days, and 0.50% thereafter, of the
aggregate principal amount of the Notes or, with respect to shares of common
stock issued upon conversion of the Notes, of the conversion price then in
effect with respect to the Notes. The Company will bear any registration
expenses under the Registration Rights Agreement. The description of the
Registration Rights Agreement set forth in this Item 1.01 is qualified by the
terms of the Registration Rights Agreement itself, a copy of which is attached
as Exhibit 10.2 hereto.
The information disclosed with respect to the Indenture under Item 2.03
of this Current Report on Form 8-K is incorporated into this Item 1.01 in its
entirety.
ITEM 2.03 CREATION OF A DIRECT FINANCIAL OBLIGATION OR AN OBLIGATION UNDER AN
OFF-BALANCE SHEET ARRANGEMENT OF A REGISTRANT.
The Notes, which were issued under the Indenture on November 24, 2004,
constitute senior unsecured obligations of the Company. Pursuant to the
Indenture, the Notes require payment of interest semi-annually in arrears on May
1 and November 1 of each year at an annual rate of 6.5%, have a stated maturity
of November 1, 2014, are guaranteed on a senior unsecured basis by the
Guarantors and are convertible at the option of holders of the Notes into shares
of the Company's common stock at a conversion price of $3.25 per share, subject
to adjustment. The total number of shares of common stock deliverable upon
conversion of the Notes is limited to approximately 9.4 million shares
(including approximately 1.9 million treasury shares), plus any treasury shares
acquired after the closing date of the Private Placement, and upon exhausting
these reserved shares the Company will be required to settle its remaining
conversion obligations in cash absent stockholder approval of the issuance of
additional shares. Additionally, if stockholder approval of the issuance of such
additional shares is not obtained by March 1, 2006, liquidated damages will
begin to accrue on the Notes at a rate of 1% per year.
Under the Indenture, the Notes may be redeemed, in whole or in part, at
the option of the Company on or after November 1, 2008 so long as the last
reported trading price of the Company's common stock has exceeded 150% of the
conversion price then in effect for at least 20 trading days in the 30
consecutive trading days ending on the day prior to the date on which the
Company delivers notice of redemption. The Notes may be redeemed for cash at a
redemption price equal to the principal amount of the Notes redeemed plus
accrued and unpaid interest and liquidated damages, if any. Upon redemption,
holders of redeemed Notes will also be entitled to a redemption premium equal to
the net present value of remaining scheduled interest payments through the date
of maturity (a "Redemption Premium"). Following a redemption notice, holders of
Notes who elect to convert their Notes prior to the date of redemption will also
receive a Redemption Premium.
Holders of the Notes have the right, pursuant to the Indenture, to
require the Company to purchase all or any portion of the Notes upon the
delisting of the Company's common stock, certain changes in control of the
Company, the sale of substantially all of the assets of the Company or the
Company's liquidation or bankruptcy (any of the foregoing, a "Fundamental
Change") or at any time on or after November 1, 2008, in each case at a purchase
price equal to 100% of the Notes to be repurchased plus any accrued and unpaid
interest and liquidated damages, if any. The Company may elect to pay any such
purchase price in cash, shares of Company common stock, subject to certain
limitations, or a combination thereof. Holders of Notes who elect to convert
their Notes within the period beginning fifteen days prior to and ending fifteen
days after the effective date of a Fundamental Change will receive a make-whole
premium in addition to shares or cash delivered in satisfaction of the Company's
conversion obligation.
The Trustee or the holders of at least 25% in aggregate principal
amount of the Notes may declare the principal amount of the Notes, together with
accrued and unpaid interest and liquidated damages, if any, to be immediately
due and payable upon the occurrence of an event of default, including the
Company's and, in certain circumstances, the Guarantors': (i) failure to pay
principal on any Note when due at maturity, or failure to pay the redemption
price when due, (ii) failure to pay interest on the Notes, (iii) failure to
comply with the covenants or warranties relating to the Notes, (iv) failure to
deliver shares of common stock when required to do so upon conversion of any
Notes, (v) failure to give proper notice of a Fundamental Change, (vi) default
with respect to other indebtedness that results in acceleration of an amount in
excess of $25 million, (vii) failure to pay final judgments in excess of $25
million or (viii) bankruptcy, insolvency or reorganization. The description of
the Indenture set forth in this Item 2.03 is qualified by the terms of the
Indenture itself, a copy of which is attached as Exhibit 10.1 hereto.
ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS
(c) Exhibits
10.1 Indenture, dated November 24, 2004, among the Company, The
Bank of New York as trustee and the Guarantors named therein.
10.2 Registration Rights Agreement, dated November 24, 2004 among
the Company and the Purchasers and Guarantors named therein.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this Current Report to be signed on its behalf by
the undersigned, thereunto duly authorized.
INTEGRATED ELECTRICAL SERVICES, INC.
By: /s/ David A. Miller
---------------------------------
David A. Miller
Vice President and
Chief Accounting Officer
Dated: November 30, 2004
EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION
------- -----------
10.1 Indenture, dated November 24, 2004, among the Company, The Bank of
New York as trustee and the Guarantors named therein.
10.2 Registration Rights Agreement, dated November 24, 2004 among the
Company and the Purchasers and Guarantors named therein.