exv10w1



 




Exhibit 10.1





 






INTEGRATED ELECTRICAL SERVICES, INC., AND THE

SUBSIDIARIES OF INTEGRATED ELECTRICAL SERVICES, INC.

SIGNATORY HERETO AS BORROWERS,

as Borrowers

 






THE SUBSIDIARIES OF INTEGRATED ELECTRICAL SERVICES, INC.

SIGNATORY HERETO AS GUARANTORS,

as Guarantors




 






LOAN AND SECURITY AGREEMENT




Dated: May 12, 2006




$80,000,000.00




 






THE FINANCIAL INSTITUTIONS

PARTY HERETO FROM TIME TO TIME, as Lenders




and




BANK OF AMERICA, N.A., as Agent




 






 









 








TABLE OF CONTENTS




	 	 	 	 	 
	 	 	Page	 
	SECTION 1. CREDIT FACILITIES
	 	 	2	 
	1.1. Commitment
	 	 	2	 
	1.2. Letter of Credit Facility
	 	 	3	 
	1.3. Bank Products
	 	 	8	 
	SECTION 2. INTEREST, FEES AND CHARGES
	 	 	8	 
	2.1. Interest
	 	 	8	 
	2.2. Fees
	 	 	10	 
	2.3. Computation of Interest and Fees
	 	 	11	 
	2.4. Reimbursement of Obligations
	 	 	11	 
	2.5. Bank Charges
	 	 	12	 
	2.6. Illegality
	 	 	13	 
	2.7. Increased Costs
	 	 	13	 
	2.8. Capital Adequacy
	 	 	14	 
	2.9. Funding Losses
	 	 	15	 
	2.10. Maximum Interest
	 	 	15	 
	2.11. Affected Lenders
	 	 	16	 
	SECTION 3. LOAN ADMINISTRATION
	 	 	17	 
	3.1. Manner of Borrowing and Funding Revolver Loans
	 	 	17	 
	3.2. Defaulting Lender
	 	 	20	 
	3.3. Special Provisions Governing LIBOR Loans
	 	 	20	 
	3.4. Borrowers’ Representative
	 	 	21	 
	3.5. All Loans to Constitute One Obligation
	 	 	21	 
	SECTION 4. PAYMENTS
	 	 	21	 
	4.1. General Repayment Provisions
	 	 	21	 
	4.2. Repayment of Revolver Loans
	 	 	22	 
	4.3. Intentionally Omitted
	 	 	23	 
	4.4. Payment of Other Obligations
	 	 	23	 
	4.5. Marshaling; Payments Set Aside
	 	 	23	 
	4.6. Agent’s Allocation of Payments and Collections
	 	 	23	 
	4.7. Application of Payments and Collections
	 	 	24	 
	4.8. Loan Accounts; the Register; Account Stated
	 	 	24	 
	4.9. Gross Up for Taxes
	 	 	25	 
	4.10. Withholding Tax Exemption
	 	 	25	 
	4.11. Nature and Extent of Each Borrower’s Liability
	 	 	26	 
	SECTION 5. ORIGINAL TERM AND TERMINATION OF COMMITMENTS
	 	 	27	 
	5.1. Original Term of Commitments
	 	 	27	 
	5.2. Termination
	 	 	27	 
	SECTION 6. COLLATERAL SECURITY
	 	 	28	 
	6.1. Grant of Security Interest
	 	 	28	 
	6.2. Lien on Deposit Accounts
	 	 	29	 
	6.3. Lien on Real Estate
	 	 	30	 
	6.4. Other Collateral
	 	 	30	 
	6.5. Lien Perfection; Further Assurances
	 	 	30	 
	SECTION 7. COLLATERAL ADMINISTRATION
	 	 	30	 
	7.1. General Provisions
	 	 	30	 
	7.2. Administration of Accounts
	 	 	31	 










i 









 








	 	 	 	 	 
	7.3. Administration of Inventory
	 	 	33	 
	7.4. Administration of Equipment
	 	 	33	 
	7.5. Borrowing Base Certificates
	 	 	34	 
	SECTION 8. REPRESENTATIONS AND WARRANTIES
	 	 	34	 
	8.1. General Representations and Warranties
	 	 	34	 
	8.2. Reaffirmation of Representations and Warranties
	 	 	40	 
	8.3. Survival of Representations and Warranties
	 	 	40	 
	SECTION 9. COVENANTS AND CONTINUING AGREEMENTS
	 	 	40	 
	9.1. Affirmative Covenants
	 	 	40	 
	9.2. Negative Covenants
	 	 	44	 
	9.3. Financial Covenants
	 	 	50	 
	9.4. Additional Cash Collateral
	 	 	53	 
	SECTION 10. CONDITIONS PRECEDENT
	 	 	53	 
	10.1. Conditions Precedent to Initial Credit Extensions
	 	 	53	 
	10.2. Conditions Precedent to All Credit Extensions
	 	 	55	 
	10.3. Inapplicability of Conditions
	 	 	56	 
	10.4. Limited Waiver of Conditions Precedent
	 	 	56	 
	SECTION 11. EVENTS OF DEFAULT; RIGHTS AND REMEDIES ON DEFAULT
	 	 	56	 
	11.1. Events of Default
	 	 	56	 
	11.2. Acceleration of the Obligations; Termination of Commitments
	 	 	59	 
	11.3. Other Remedies
	 	 	60	 
	11.4. Setoff
	 	 	61	 
	11.5. Remedies Cumulative; No Waiver
	 	 	61	 
	SECTION 12. AGENT
	 	 	62	 
	12.1. Appointment, Authority and Duties of Agent
	 	 	62	 
	12.2. Agreements Regarding Collateral
	 	 	64	 
	12.3. Reliance By Agent
	 	 	64	 
	12.4. Action Upon Default
	 	 	64	 
	12.5. Ratable Sharing
	 	 	65	 
	12.6. Indemnification of Agent
	 	 	65	 
	12.7. Limitation on Responsibilities of Agent
	 	 	66	 
	12.8. Successor Agent and Co-Agents
	 	 	66	 
	12.9. Consents, Amendments and Waivers ; Out-of-Formula Loans
	 	 	67	 
	12.10. Due Diligence and Non-Reliance
	 	 	69	 
	12.11. Representations and Warranties of Lenders
	 	 	69	 
	12.12. The Required Lenders
	 	 	69	 
	12.13. Several Obligations
	 	 	70	 
	12.14. Agent in its Individual Capacity
	 	 	70	 
	12.15. Third Party Beneficiaries
	 	 	70	 
	12.16. Notice of Transfer
	 	 	70	 
	12.17. Replacement of Certain Lenders
	 	 	70	 
	12.18. Remittance of Payments and Collections
	 	 	71	 
	SECTION 13. BENEFIT OF AGREEMENT; ASSIGNMENTS AND PARTICIPATIONS
	 	 	71	 
	13.1. Successors and Assigns
	 	 	71	 
	13.2. Participations
	 	 	72	 
	13.3. Assignments
	 	 	72	 
	SECTION 14. MISCELLANEOUS
	 	 	74	 
	14.1. Power of Attorney
	 	 	74	 
	14.2. General Indemnity
	 	 	74	 
	14.3. Survival of All Indemnities
	 	 	75	 






ii




 









 








	 	 	 	 	 
	14.4. Modification of Agreement
	 	 	75	 
	14.5. Severability
	 	 	75	 
	14.6. Cumulative Effect; Conflict of Terms
	 	 	75	 
	14.7. Execution in Counterparts
	 	 	75	 
	14.8. Consent
	 	 	75	 
	14.9. Notices
	 	 	76	 
	14.10. Performance of Credit Parties’ Obligations
	 	 	76	 
	14.11. Credit Inquiries
	 	 	76	 
	14.12. Time of Essence
	 	 	76	 
	14.13. Indulgences Not Waivers
	 	 	76	 
	14.14. Entire Agreement; Appendix A, Exhibits and Schedules
	 	 	76	 
	14.15. Interpretation
	 	 	77	 
	14.16. Obligations of Lenders Several
	 	 	77	 
	14.17. Confidentiality
	 	 	77	 
	14.18. Governing Law; Consent to Forum
	 	 	77	 
	14.19. Waivers by Credit Parties
	 	 	78	 
	14.20. No Further Agreements
	 	 	78	 
	SECTION 15. Guaranty
	 	 	78	 
	15.1. Guaranty
	 	 	78	 
	15.2. Guaranty of Payment
	 	 	79	 
	15.3. No Discharge or Diminishment of Guaranty
	 	 	79	 
	15.4. Defenses Waived
	 	 	80	 
	15.5. Rights of Subrogation
	 	 	80	 
	15.6. Reinstatement; Stay of Acceleration
	 	 	81	 
	15.7. Information
	 	 	81	 
	15.8. Termination
	 	 	81	 
	15.9. Taxes
	 	 	81	 
	15.10. Severability
	 	 	81	 
	15.11. Contribution
	 	 	82	 
	15.12. Liability Cumulative
	 	 	82	 
	15.13. Bermuda Insurance Act
	 	 	82	 






iii




 









 








LIST OF ANNEXES, EXHIBITS AND SCHEDULES




	 	 	 
	Annex I

	 	Subsidiaries of Integrated Electrical Services, Inc. which are Borrowers
	Annex II

	 	Subsidiaries of Integrated Electrical Services, Inc. which are Guarantors
	Exhibit A

	 	Form of Revolver Note
	Exhibit B

	 	Form of Borrowing Base Certificate
	Exhibit C

	 	Form of Notice of Conversion/Continuation
	Exhibit D

	 	Form of Notice of Borrowing
	Exhibit E

	 	Form of Compliance Certificate
	Exhibit F

	 	[Reserved]
	Exhibit G

	 	Form of Assignment and Acceptance
	Exhibit H

	 	Form of Notice
	 
	 	 
	Schedule 7.1.1

	 	Credit Parties’ Business Locations
	Schedule 7.1.2

	 	Credit Parties’ Insurance
	Schedule 7.2.1

	 	Form of WIP Report
	Schedule 8.1.1

	 	Jurisdictions in which Credit Parties and each Subsidiary is Authorized to do
Business
	Schedule 8.1.4

	 	Organizational Structure of Credit Parties
	Schedule 8.1.5

	 	Organizational Names
	Schedule 8.1.11

	 	Insolvent Subsidiaries
	Schedule 8.1.12

	 	Surety Obligations
	Schedule 8.1.13

	 	Tax Identification Numbers of Credit Parties and Subsidiaries
	Schedule 8.1.15

	 	Patents, Trademarks, Copyrights and Licenses
	Schedule 8.1.18

	 	Contracts Restricting Credit Parties’ Right to Incur Debts; Surety Obligations
	Schedule 8.1.19

	 	Litigation
	Schedule 8.1.21

	 	Capitalized and Operating Leases
	Schedule 8.1.22

	 	Pension Plans
	Schedule 8.1.24

	 	Labor Contracts
	Schedule 8.1.27

	 	Surety Contracts
	Schedule 8.1.28

	 	Existing Cash Collateral and LCs for Surety Bonds
	Schedule 9.2.5

	 	Permitted Liens
	Schedule 9.2.8

	 	Restrictions on Upstream Payment
	Schedule 9.2.13

	 	Restricted Investments
	Schedule A

	 	Existing Bonded Contracts
	Schedule B

	 	Restricted Subsidiaries
	Schedule C

	 	Shutdown Subsidiaries
	Schedule D

	 	Commercial Borrowers
	Schedule E

	 	Residential Borrowers







 










 







LOAN AND SECURITY AGREEMENT




     THIS LOAN AND SECURITY AGREEMENT is made on May 12, 2006, by and among INTEGRATED ELECTRICAL
SERVICES, INC. (individually and, in its capacity as the representative of the other Borrowers
pursuant to Section 3.4 hereof, “Parent”), a Delaware corporation with its chief executive office
and principal place of business at 1800 West Loop South, Suite 500, Houston, Texas 77027, and each
of the Subsidiaries of Parent listed on Annex I attached hereto and having the respective chief
executive office and principal place of business so listed on Annex I (Parent and such
Subsidiaries of Parent being herein referred to collectively as “Borrowers” and individually as a
“Borrower”), and each of the Subsidiaries of Parent listed on Annex II attached hereto and having
the respective chief executive office and principal place of business so listed on Annex II (such
Subsidiaries of Parent being herein referred to collectively as “Guarantors” and individually as a
“Guarantor”, and each Borrower and Guarantor being herein referred to collectively as “Credit
Parties” and individually as a “Credit Party”), the various financial institutions listed on the
signature pages hereof and their respective successors and permitted assigns which become “Lenders”
as provided herein; and BANK OF AMERICA, N.A., a national banking association with an office at 901
Main Street, 22nd Floor, Mail Code: TX1-492-22-13, Dallas, Texas 75202, in its capacity
as collateral and administrative agent for the Lenders pursuant to Section 12 hereof (together with
its successors in such capacity, “Agent”). Capitalized terms used in this Agreement have the
meanings assigned to them in Appendix A, General Definitions.



Recitals:




     Each Credit Party has requested that Lenders make available a revolving credit facility to
Borrowers, which shall be used by Borrowers to finance their mutual and collective enterprise of
providing electrical contracting services. In order to utilize the financial powers of each
Borrower in the most efficient and economical manner, and in order to facilitate the financing of
each Borrower’s needs, Lenders will, at the request of any Borrower, make loans to all Borrowers
under the revolving credit facility on a combined basis and in accordance with the provisions
hereinafter set forth. Borrowers’ business is a mutual and collective enterprise and Borrowers
believe that the consolidation of all revolving credit loans under this Agreement will enhance the
aggregate borrowing powers of each Borrower and ease the administration of their revolving credit
loan relationship with Lenders, all to the mutual advantage of Borrowers. Lenders’ willingness to
extend credit to Borrowers and to administer each Borrower’s collateral security therefor, on a
combined basis as more fully set forth in this Agreement, is done solely as an accommodation to
Borrowers and at Borrowers’ request in furtherance of Borrowers’ mutual and collective enterprise.



     Each Borrower has agreed to guarantee the obligations of each of the other Borrowers under
this Agreement and each of the other Loan Documents, and each Guarantor has agreed to guarantee the
obligations of each Borrower under this Agreement and each of the other Loan Documents.



     Each Credit Party (i) has determined that this credit facility is necessary or convenient to
the conduct, promotion or attainment of its business and (ii) agrees, represents and warrants that
provision of this credit facility to Borrowers will provide it with a substantial direct and
indirect economic benefit.



     NOW, THEREFORE, for Ten Dollars ($10.00) and other good and valuable consideration, the
parties hereto hereby agree as follows:




1









 








SECTION 1. CREDIT FACILITIES




     Subject to the terms and conditions of, and in reliance upon the representations and
warranties made in, this Agreement and the other Loan Documents, Lenders severally agree to the
extent and in the manner hereinafter set forth to make their respective Pro Rata shares of the
Commitments available to Borrowers, in an aggregate amount up to $80,000,000, as follows:



     1.1. Commitment.



          1.1.1. Revolver Loans. Each Lender agrees, severally and not jointly with the other
Lenders, upon the terms and subject to the conditions set forth herein, to make Revolver Loans to
Borrowers on any Business Day during the period from the date hereof through the Business Day
before the last day of the Original Term, not to exceed in aggregate principal amount outstanding
at any time such Lender’s Commitment at such time, which Revolver Loans may be repaid and
reborrowed in accordance with the provisions of this Agreement; provided, however,
that Lenders shall have no obligation to Borrowers whatsoever to make any Revolver Loan on or after
the Commitment Termination Date or if at the time of the proposed funding thereof the aggregate
principal amount of all of the Revolver Loans and Pending Revolver Loans then outstanding exceeds,
or would exceed after the funding of such Revolver Loan, the Borrowing Base. Each Borrowing of
Revolver Loans shall be funded by Lenders on a Pro Rata basis in accordance with their respective
Commitments (except for Bank with respect to Settlement Loans). The Revolver Loans shall bear
interest as set forth in Section 2.1 hereof. Each Revolver Loan shall, at the option of Borrowers,
be made or continued as, or converted into, part of one or more Borrowings that, unless
specifically provided herein, shall consist entirely of Base Rate Loans or LIBOR Loans.




          1.1.2. Out-of-Formula Loans. If the unpaid balance of Revolver Loans outstanding at
any time should exceed the Borrowing Base at such time (an “Out-of-Formula Condition”), such
Revolver Loans shall nevertheless constitute Obligations that are secured by the Collateral and
entitled to all of the benefits of the Loan Documents. In the event that Lenders are willing to,
in their sole and absolute discretion, make Out-of-Formula Loans, such Out-of-Formula Loans shall
be payable on demand and shall bear interest as provided in this Agreement for Revolver Loans
generally.




          1.1.3. Use of Proceeds. The proceeds of the Revolver Loans shall be used by Borrowers
solely for one or more of the following purposes: (i) to satisfy any Debt owed to DIP Agent or DIP
Lenders pursuant to the DIP Loan Agreement; (ii) to pay the fees and transaction expenses
associated with the closing of the transactions described herein; (iii) to pay any of the
Obligations; (iv) to implement the financial restructuring of Borrowers in accordance with the
Reorganization Plan and (v) to make expenditures for other lawful corporate purposes of Borrowers
to the extent such expenditures are not prohibited by this Agreement or Applicable Law. In no
event may any Revolver Loan proceeds be used by any Borrower to purchase or to carry, or to reduce,
retire or refinance any Debt incurred to purchase or carry, any Margin Stock or for any related
purpose that violates the provisions of Regulations T, U or X of the Board of Governors.




          1.1.4. Revolver Notes. The Revolver Loans made by each Lender and interest accruing
thereon shall be evidenced by the records of Agent and such Lender and by the Revolver Note payable
to such Lender (or the assignee of such Lender), which shall be executed by Borrowers, completed in
conformity with this Agreement and delivered to such Lender. All outstanding principal amounts and
accrued interest under the Revolver Notes shall be due and payable as set forth in Section 4.2
hereof.




2









 








     1.2. Letter of Credit Facility.



          1.2.1. Agreement to Issue or Cause To Issue. Subject to the terms and conditions of
this Agreement, the Agent agrees (i) to cause the Letter of Credit Issuer to issue for the account
of any one or more Borrowers one or more standby letters of credit (“Letter of Credit”) and/or (ii)
to provide credit support or other enhancement to a Letter of Credit Issuer acceptable to Agent,
which issues a Letter of Credit for the account of any Borrower (any such credit support or
enhancement being herein referred to as a “Credit Support”) from time to time during the term of
this Agreement. Agent, Lenders and Credit Parties agree that any Letters of Credit issued under
the DIP Loan Agreement and outstanding on the Closing Date are hereby deemed to have been issued
and outstanding under this Agreement as of the Closing Date.




          1.2.2. Amounts; Outside Expiration Date. The Agent shall not have any obligation to
issue or cause to be issued any Letter of Credit or to provide Credit Support for any Letter of
Credit at any time if: (i) the maximum face amount of the requested Letter of Credit is greater
than the Unused Letter of Credit Subfacility at such time; (ii) the maximum face amount of the
requested Letter of Credit and all commissions, fees, and charges due from the Borrowers in
connection with the opening thereof would exceed Availability at such time; or (iii) such Letter of
Credit has an expiration date less than 15 days prior to the last day of the Original Term or more
than 12 months from the date of issuance of such standby Letters of Credit. With respect to any
Letter of Credit which contains any “evergreen” or automatic renewal provision, each Lender shall
be deemed to have consented to any such extension or renewal unless any such Lender shall have
provided to the Agent, written notice that it declines to consent to any such extension or renewal
at least thirty (30) days prior to the date on which the Letter of Credit Issuer is entitled to
decline to extend or renew the Letter of Credit. If all of the requirements of this Section
1.2 are met and no Default or Event of Default has occurred and is continuing, no Lender shall
decline to consent to any such extension or renewal.




          1.2.3. Other Conditions. In addition to conditions precedent contained in Article
10, the obligation of the Agent to issue or to cause to be issued any Letter of Credit or to
provide Credit Support for any Letter of Credit is subject to the following conditions precedent
having been satisfied in a manner reasonably satisfactory to the Agent:





          (i) The Borrower shall have delivered to the Letter of Credit Issuer, at such times and
in such manner as such Letter of Credit Issuer may prescribe, an application in form and
substance satisfactory to such Letter of Credit Issuer and reasonably satisfactory to the
Agent for the issuance of the Letter of Credit and such other documents as may be required
pursuant to the terms thereof, and the form and terms of the proposed Letter of Credit shall
be reasonably satisfactory to the Agent and the Letter of Credit Issuer and its purpose
shall comply with Section 1.1.3; and




          (ii) As of the date of issuance, no order of any court, arbitrator or Governmental
Authority shall purport by its terms to enjoin or restrain money center banks generally from
issuing letters of credit of the type and in the amount of the proposed Letter of Credit,
and no law, rule or regulation applicable to money center banks generally and no request or
directive (whether or not having the force of law) from any Governmental Authority with
jurisdiction over money center banks generally shall prohibit, or request that the proposed
Letter of Credit Issuer refrain from, the issuance of letters of credit generally or the
issuance of such Letters of Credit.




In the event of any direct conflict between any document delivered pursuant to Section
1.2.3(i) and this Agreement, the terms hereof shall control.



3









 





          1.2.4. Issuance of Letters of Credit.





          (i) Request for Issuance. Borrower must notify the Agent of a requested Letter
of Credit at least three (3) Business Days prior to the proposed issuance date. Such notice
shall be irrevocable and must specify the original face amount of the Letter of Credit
requested, the Business Day of issuance of such requested Letter of Credit, whether such
Letter of Credit may be drawn in a single or in partial draws, the Business Day on which the
requested Letter of Credit is to expire, the purpose for which such Letter of Credit is to
be issued, and the beneficiary of the requested Letter of Credit. The Borrower shall attach
to such notice the proposed form of the Letter of Credit.




          (ii) Responsibilities of the Agent; Issuance. As of the Business Day
immediately preceding the requested issuance date of the Letter of Credit, the Agent shall
determine the amount of the applicable Unused Letter of Credit Subfacility and Availability.
If (a) the face amount of the requested Letter of Credit is less than the Unused Letter of
Credit Subfacility and (b) the amount of such requested Letter of Credit and all
commissions, fees, and charges due from the Borrower in connection with the opening thereof
would not exceed Availability, the Agent shall cause the Letter of Credit Issuer to issue
the requested Letter of Credit on the requested issuance date so long as the other
conditions hereof are met.




          (iii) No Extensions or Amendment. The Agent shall not be obligated to cause
the Letter of Credit Issuer to extend or amend any Letter of Credit issued pursuant hereto
unless the requirements of this Section 1.2 are met as though a new Letter of Credit
were being requested and issued.



          1.2.5. Payments Pursuant to Letters of Credit. Each Borrower agrees to reimburse
immediately the Letter of Credit Issuer for any draw under any Letter of Credit and the Agent for
the account of the Lenders upon any payment pursuant to any Credit Support, and to pay the Letter
of Credit Issuer the amount of all other charges and fees payable to the Letter of Credit Issuer in
connection with any Letter of Credit immediately when due, irrespective of any claim, setoff,
defense or other right which any Borrower may have at any time against the Letter of Credit Issuer
or any other Person. Each drawing under any Letter of Credit shall constitute a request by
Borrowers to the Agent for a Borrowing of a Base Rate Revolving Loan in the amount of such drawing.
The funding date with respect to such Borrowing shall be the date of such drawing.




          1.2.6. Indemnification; Exoneration; Power of Attorney.





          (i) Indemnification. In addition to amounts payable as elsewhere provided in
this Section 1.2, each Borrower agrees to protect, indemnify, pay and save the
Lenders and the Agent harmless from and against any and all claims, demands, liabilities,
damages, losses, costs, charges and expenses (including reasonable attorneys’ fees) which
any Lender or the Agent (other than a Lender in its capacity as Letter of Credit Issuer) may
incur or be subject to as a consequence, direct or indirect, of the issuance of any Letter
of Credit or the provision of any Credit Support or enhancement in connection therewith.
The Borrowers’ obligations under this Section shall survive payment of all other
Obligations.




          (ii) Assumption of Risk by the Borrower. As among the Borrowers, the Lenders,
and the Agent, each Borrower assumes all risks of the acts and omissions of, or misuse of
any of the Letters of Credit by, the respective beneficiaries of such Letters of Credit. In
furtherance and not in limitation of the foregoing, except to the extent caused by their
willful



4









 






misconduct or gross negligence, the Lenders and the Agent shall not be responsible for:
(a) the form, validity, sufficiency, accuracy, genuineness or legal effect of any document
submitted by any Person in connection with the application for and issuance of and
presentation of drafts with respect to any of the Letters of Credit, even if it should prove
to be in any or all respects invalid, insufficient, inaccurate, fraudulent or forged; (b)
the validity or sufficiency of any instrument transferring or assigning or purporting to
transfer or assign any Letter of Credit or the rights or benefits thereunder or proceeds
thereof, in whole or in part, which may prove to be invalid or ineffective for any reason;
(c) the failure of the beneficiary of any Letter of Credit to comply duly with conditions
required in order to draw upon such Letter of Credit; (d) errors, omissions, interruptions,
or delays in transmission or delivery of any messages, by mail, cable, telegraph, telex or
otherwise, whether or not they be in cipher; (e) errors in interpretation of technical
terms; (f) any loss or delay in the transmission or otherwise of any document required in
order to make a drawing under any Letter of Credit or of the proceeds thereof; (g) the
misapplication by the beneficiary of any Letter of Credit of the proceeds of any drawing
under such Letter of Credit; (h) any consequences arising from causes beyond the control of
the Lenders or the Agent, including any act or omission, whether rightful or wrongful, of
any present or future de jure or de facto Governmental
Authority or (i) the Letter of Credit Issuer’s honor of a draw for which the draw or any
certificate fails to comply in any respect with the terms of the Letter of Credit. None of
the foregoing shall affect, impair or prevent the vesting of any rights or powers of the
Agent or any Lender under this Section 1.2.6.




          (iii) Exoneration. Without limiting the foregoing, no action or omission
whatsoever by Agent or any Lender (excluding any Lender in its capacity as a Letter of
Credit Issuer) shall result in any liability of Agent or any Lender to any Borrower, or
relieve any Borrower of any of its obligations hereunder to any such Person.




          (iv) Rights Against Letter of Credit Issuer. Nothing contained in this
Agreement is intended to limit the Borrower’s rights, if any, with respect to the Letter of
Credit Issuer which arise as a result of the letter of credit application and related
documents executed by and between the Borrower and the Letter of Credit Issuer or under
Applicable Law.




          (v) Account Party. Each Borrower hereby authorizes and directs any Letter of
Credit Issuer to name the Borrower as the “Account Party” therein and to deliver to the
Agent all instruments, documents and other writings and property received by the Letter of
Credit Issuer pursuant to the Letter of Credit, and to accept and rely upon the Agent’s
instructions and agreements with respect to all matters arising in connection with the
Letter of Credit or the application therefor.



          1.2.7. Cash Collateral Account. If any LC Outstandings, whether or not then due or
payable, shall for any reason be outstanding (i) at any time when an Event of Default has occurred
and is continuing, (ii) on any date that Availability is less than zero, or (iii) on or at any time
after the Commitment Termination Date, then Borrowers shall, on Bank’s or Agent’s request,
forthwith deposit with Agent, in cash, an amount equal to 105% of the aggregate amount of LC
Outstandings or deliver to Agent as beneficiary a direct pay letter of credit in form and from an
issuing bank acceptable to Agent, in its sole discretion, and providing for the direct payment to
Agent of all LC Outstandings upon drawings thereunder. If Borrowers fail to make such deposit on
the first Business Day following Agent’s or Bank’s demand therefor, Lenders may (and shall upon
direction of the Required Lenders) advance such amount as Revolver Loans (whether or not an
Out-of-Formula Condition is created thereby). Such cash (together with any interest accrued
thereon) shall be held by Agent in the Cash Collateral Account and may be invested, in Agent’s
discretion, in Cash Equivalents. Each Borrower hereby pledges to Agent and grants to Agent a
security interest in, for the benefit of Agent in such capacity and for the Pro Rata benefit of




5









 







Lenders, all Cash Collateral held in the Cash Collateral Account from time to time and all
proceeds thereof, as security for the payment of all Obligations, whether or not then due or
payable. From time to time after cash is deposited in the Cash Collateral Account, Agent may apply
Cash Collateral then held in the Cash Collateral Account to the payment of any amounts, in such
order as Agent may elect, as shall be or shall become due and payable by Borrowers to Agent or any
Lender with respect to the LC Outstandings that may be then outstanding. Neither any Borrower nor
any other Person claiming by, through or under or on behalf of any Borrower shall have any right to
withdraw any of the Cash Collateral held in the Cash Collateral Account, including any accrued
interest, provided that (i) upon termination or expiration of all Letters of Credit and the payment
and satisfaction of all of the LC Outstandings, any Cash Collateral remaining in the Cash
Collateral Account shall be returned to Borrowers unless an Event of Default then exists (in which
event Agent may apply such Cash Collateral to the payment of any other Obligations outstanding,
with any surplus to be turned over to Borrowers) or (ii) if no Event of Default then exists,
Borrower has the Availability required by this Agreement after giving effect thereto and such is in
compliance with Section 2.2.3, then Borrower may withdraw such Cash Collateral.




          1.2.8. Letters of Credit; Intra-Lender Issues.





          (i) Notice of Letter of Credit Balance. On each Settlement Date the Agent
shall notify each Lender of the issuance of all Letters of Credit since the prior Settlement
Date.




          (ii) Participations in Letters of Credit.




          (a) Purchase of Participations. Immediately upon issuance of any
Letter of Credit in accordance with Section 1.2.4, each Lender (sometimes
referred to herein as a “Participating Lender”) shall be deemed to have irrevocably
and unconditionally purchased and received without recourse or warranty, an
undivided interest and participation equal to such Lender’s Pro Rata share of the
face amount of such Letter of Credit or the Credit Support provided through the
Agent to the Letter of Credit Issuer, if not the Bank, in connection with the
issuance of such Letter of Credit (including all obligations of the Borrowers with
respect thereto, and any security therefor or guaranty pertaining thereto).




          (b) Sharing of Reimbursement Obligation Payments. Whenever the Agent
receives a payment from the Borrowers on account of reimbursement obligations in
respect of a Letter of Credit or Credit Support as to which the Agent has previously
received for the account of the Letter of Credit Issuer thereof payment from a
Lender, the Agent shall promptly pay to such Lender such Lender’s Pro Rata share of
such payment from the Borrowers. Each such payment shall be made by the Agent on
the next Settlement Date.




          (c) Documentation. Upon the request of any Lender, the Agent shall
furnish to such Lender copies of any Letter of Credit, Credit Support for any Letter
of Credit, reimbursement agreements executed in connection therewith, applications
for any Letter of Credit, and such other documentation as may reasonably be
requested by such Lender.




          (d) Obligations Irrevocable. The obligations of each Lender to make
payments to the Agent with respect to any Letter of Credit or with respect to their
participation therein or with respect to any Credit Support for any Letter of Credit
or with respect to the Revolver Loans made as a result of a drawing under a Letter
of Credit and the obligations of the Borrower for whose account the Letter of Credit
or Credit Support



6









 






was issued to make payments to the Agent, for the account of the Lenders, shall
be irrevocable and shall not be subject to any qualification or exception
whatsoever, including any of the following circumstances:




          (1) any lack of validity or enforceability of this Agreement or any of
the other Loan Documents;




          (2) the existence of any claim, setoff, defense or other right which
any Borrower may have at any time against a beneficiary named in a Letter of
Credit or any transferee of any Letter of Credit (or any Person for whom any
such transferee may be acting), any Lender, the Agent, the issuer of such
Letter of Credit, or any other Person, whether in connection with this
Agreement, any Letter of Credit, the transactions contemplated herein or any
unrelated transactions (including any underlying transactions between any
Borrower or any other Person and the beneficiary named in any Letter of
Credit);




          (3) any draft, certificate or any other document presented under the
Letter of Credit proving to be forged, fraudulent, invalid or insufficient
in any respect or any statement therein being untrue or inaccurate in any
respect;




          (4) the surrender or impairment of any security for the performance or
observance of any of the terms of any of the Loan Documents;




          (5) the occurrence of any Default or Event of Default; or




          (6) the failure of the Borrowers to satisfy the applicable conditions
precedent set forth in Article 10.




          (iii) Recovery or Avoidance of Payments; Refund of Payments In Error. In the
event any payment by or on behalf of the Borrower received by the Agent with respect to any
Letter of Credit or Credit Support provided for any Letter of Credit and distributed by the
Agent to the Lenders on account of their respective participations therein is thereafter set
aside, avoided or recovered from the Agent in connection with any receivership, liquidation
or bankruptcy proceeding, the Lenders shall, upon demand by the Agent, pay to the Agent
their respective Pro Rata shares of such amount set aside, avoided or recovered, together
with interest at the rate required to be paid by the Agent upon the amount required to be
repaid by it. Unless the Agent receives notice from the Borrowers prior to the date on
which any payment is due to the Lenders that the Borrowers will not make such payment in
full as and when required, the Agent may assume that the Borrowers have made such payment in
full to the Agent on such date in immediately available funds and the Agent may (but shall
not be so required), in reliance upon such assumption, distribute to each Lender on such due
date an amount equal to the amount then due such Lender. If and to the extent the Borrowers
have not made such payment in full to the Agent, each Lender shall repay to the Agent on
demand such amount distributed to such Lender, together with interest thereon at the Federal
Funds Rate for each day from the date such amount is distributed to such Lender until the
date repaid.




          (iv) Indemnification by Lenders. To the extent not reimbursed by the Borrowers
and without limiting the obligations of the Borrowers hereunder, the Lenders agree to
indemnify the Letter of Credit Issuer ratably in accordance with
their respective Pro Rata shares, for any and all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses (including attorneys’ fees) or disbursements of any kind
and nature whatsoever that may



7









 






be imposed on, incurred by or asserted against the Letter of Credit Issuer in any way
relating to or arising out of any Letter of Credit or the transactions contemplated thereby
or any action taken or omitted by the Letter of Credit Issuer under any Letter of Credit or
any Loan Document in connection therewith; provided that no Lender shall be liable
for any of the foregoing to the extent it arises from the gross negligence or willful
misconduct of the Person to be indemnified. Without limitation of the foregoing, each
Lender agrees to reimburse the Letter of Credit Issuer promptly upon demand for its Pro Rata
share of any costs or expenses payable by the Borrowers to the Letter of Credit Issuer, to
the extent that the Letter of Credit Issuer is not promptly reimbursed for such costs and
expenses by the Borrowers. The agreement contained in this Section shall survive payment in
full of all other Obligations.



     1.3. Bank Products. The Borrowers may request and the Agent may, in its sole and
absolute discretion, arrange for the Borrowers to obtain from the Bank or the Bank’s Affiliates
Bank Products. If Bank Products are provided by an Affiliate of the Bank, the Borrowers agree to
indemnify and hold the Agent, the Bank and the Lenders harmless from any and all costs and
obligations now or hereafter incurred by the Agent, the Bank or any of the Lenders which arise from
any indemnity given by the Agent to its Affiliates related to such Bank Products; provided,
however, nothing contained herein is intended to limit the Borrowers’ rights, with respect
to the Bank or its Affiliates, if any, which arise as a result of the execution of documents by and
between the Borrowers and the Bank which relate to Bank Products. The agreement contained in this
Section shall survive termination of this Agreement. The Borrowers acknowledge and agree that the
obtaining of Bank Products from the Bank or the Bank’s Affiliates (i) is in the sole and absolute
discretion of the Bank or the Bank’s Affiliates, and (ii) is subject to all rules and regulations
of the Bank or the Bank’s Affiliates.



SECTION 2. INTEREST, FEES AND CHARGES




     2.1. Interest.



          2.1.1. Rates of Interest. Borrowers jointly and severally agree to pay interest in
respect of all unpaid principal amounts of the Revolver Loans from the respective dates such
principal amounts are advanced until paid (whether at stated maturity, on acceleration or
otherwise) at a rate per annum equal to the applicable rate indicated below:





          (i) for Revolver Loans made or outstanding as Base Rate Loans, the Applicable Margin
plus the Base Rate in effect from time to time; or




          (ii) for Revolver Loans made or outstanding as LIBOR Loans, the Applicable Margin
plus the relevant Adjusted LIBOR Rate for the applicable Interest Period selected by
a Borrower in conformity with this Agreement.



          Upon determining the Adjusted LIBOR Rate for any Interest Period requested by Borrowers, Agent
shall promptly notify Borrowers thereof by telephone and, if so requested by Borrowers, confirm the
same in writing. Such determination shall, absent manifest error, be final, conclusive and binding
on all parties and for all purposes. The applicable rate of interest for all Loans (or portions
thereof) bearing interest based upon the Base Rate shall be increased or decreased, as the case may
be, by an amount equal to any increase or decrease in the Base Rate, with such adjustments to be
effective as of the opening of business on the day that any such change in the Base Rate becomes
effective. Interest on each Loan shall accrue from and including the date on which such Loan is
made, converted to a Loan of another Type or continued as a LIBOR Loan to (but excluding) the date
of any
repayment thereof; provided, however, that, if a Loan is repaid on the same
day made, one day’s interest shall be paid on such Loan.




8









 








          2.1.2. Conversions and Continuations.





          (i) Borrowers may on any Business Day, subject to the giving of a proper Notice of
Conversion/Continuation as hereinafter described, elect (A) to continue all or any part of a
LIBOR Loan by selecting an Interest Period therefor, to commence on the last day of the
immediately preceding Interest Period, or (B) to convert all or any part of a Loan of one
Type into a Loan of another Type; provided, however, that no outstanding
Loans may be converted into or continued as LIBOR Loans when any Default or Event of Default
exists. Any conversion of a LIBOR Loan into a Base Rate Loan shall be made on the last day
of the Interest Period for such LIBOR Loan. Any conversion or continuation made with
respect to less than the entire outstanding balance of the Revolver Loans must be allocated
among Lenders on a Pro Rata basis, and the Interest Period for Loans converted into or
continued as LIBOR Loans shall be coterminous for each Lender.




          (ii) Whenever Borrowers desire to convert or continue Loans under Section 2.1.2(i),
Parent shall give Agent written notice (or telephonic notice promptly confirmed in writing)
substantially in the form of Exhibit C, signed by an authorized officer of Parent,
before 12:00 p.m. on the Business Day of the requested conversion date, in the case of a
conversion into Base Rate Loans, and at least 3 Business Days before the requested
conversion or continuation date, in the case of a conversion into or continuation of LIBOR
Loans. Promptly after receipt of a Notice of Conversion/Continuation, Agent shall notify
each Lender in writing of the proposed conversion or continuation. Each such Notice of
Conversion/Continuation shall be irrevocable and shall specify the aggregate principal
amount of the Loans to be converted or continued, the date of such conversion or
continuation (which shall be a Business Day) and whether the Loans are being converted into
or continued as LIBOR Loans (and, if so, the duration of the Interest Period to be
applicable thereto) or Base Rate Loans. If, upon the expiration of any Interest Period in
respect of any LIBOR Loans Borrowers shall have failed to deliver the Notice of
Conversion/Continuation, Borrowers shall be deemed to have elected to convert such LIBOR
Loans to Base Rate Loans.



          2.1.3. Interest Periods. In connection with the making or continuation of, or
conversion into, each Borrowing of LIBOR Loans, Borrowers shall select an interest period (each an
“Interest Period”) to be applicable to such LIBOR Loan, which interest period shall commence on the
date such LIBOR Loan is made and shall end on a numerically corresponding day in the first, third
or sixth month thereafter; provided, however, that:





          (i) the initial Interest Period for a LIBOR Loan shall commence on the date of such
Borrowing (including the date of any conversion from a Loan of another Type) and each
Interest Period occurring thereafter in respect of such Revolver Loan shall commence on the
date on which the next preceding Interest Period expires;




          (ii) if any Interest Period would otherwise expire on a day that is not a Business Day,
such Interest Period shall expire on the next succeeding Business Day, provided that, if any
Interest Period in respect of LIBOR Loans would otherwise expire on a day which is not a
Business Day but is a day of the month after which no further Business Day occurs in such
month, such Interest Period shall expire on the next preceding Business Day;




          (iii) any Interest Period that begins on a day for which there is no numerically
corresponding day in the calendar month at the end of such Interest Period shall expire on
the last Business Day of such calendar month; and



9









 






          (iv) no Interest Period shall extend beyond the last day of the Original Term.



          2.1.4. Interest Rate Not Ascertainable. If Agent shall determine (which determination
shall, absent manifest error, be final, conclusive and binding upon all parties) that on any date
for determining the Adjusted LIBOR Rate for any Interest Period, by reason of any changes arising
after the date of this Agreement affecting the London interbank market or any Lender’s or Bank’s
position in such market, adequate and fair means do not exist for ascertaining the applicable
interest rate on the basis provided for in the definition of Adjusted LIBOR Rate, then, and in any
such event, Agent shall forthwith give notice (by telephone confirmed in writing) to a Borrower of
such determination. Until Agent notifies a Borrower that the circumstances giving rise to the
suspension described herein no longer exist, the obligation of Lenders to make LIBOR Loans shall be
suspended, and such affected Loans then outstanding shall, at the end of the then applicable
Interest Period or at such earlier time as may be required by Applicable Law, bear the same
interest as Base Rate Loans.




          2.1.5. Default Rate of Interest. Borrowers shall pay interest (before as well as
after entry of judgment thereon, to the extent permitted by Applicable Law) at a rate per annum
equal to the Default Rate (i) with respect to the principal amount of any portion of the
Obligations (and, to the extent permitted by Applicable Law, all past due interest) that is not
paid on the due date thereof (whether due at stated maturity, on demand, upon acceleration or
otherwise) until paid in full; (ii) with respect to the principal amount of all of the Obligations
(and, to the extent permitted by Applicable Law, all past due interest) upon the earlier to occur
of (x) a Borrower’s receipt of notice from Agent of the Required Lenders’ election to charge the
Default Rate based upon the existence of any Event of Default (which notice Agent shall send only
with the consent or at the direction of the Required Lenders), whether or not acceleration or
demand for payment of the Obligations has been made, or (y) the commencement by or against any
Borrower of an Insolvency Proceeding whether or not under the circumstances described in clauses
(i) or (ii) hereof Agent elects to accelerate the maturity or demand payment of any of the
Obligations; and (iii) with respect to the principal amount of any Out-of-Formula Loans, whether or
not demand for payment thereof has been made by Agent. To the fullest extent permitted by
Applicable Law, the Default Rate shall apply and accrue on any judgment entered with respect to any
of the Obligations and to the unpaid principal amount of the Obligations during any Insolvency
Proceeding of a Borrower. Each Borrower acknowledges that the cost and expense to Agent and each
Lender attendant upon the occurrence of an Event of Default are difficult to ascertain or estimate
and that the Default Rate is a fair and reasonable estimate to compensate Agent and Lender for such
added cost and expense.




     2.2. Fees. In consideration of Lender’s establishment of the Commitments in favor of
Borrowers, and Agent’s agreement to serve as collateral and administrative agent hereunder,
Borrowers jointly and severally agree to pay the following fees:



          2.2.1. Underwriting Fee. Borrowers shall pay to Agent on the date hereof the
underwriting fee provided for in the Fee Letter.




          2.2.2. Unused Line Fee. Borrowers shall be jointly and severally obligated to pay to
Agent for the Pro Rata benefit of Lenders a fee based on the amount by which the Average Revolver
Loan Balance for any month (or portion thereof that the Commitments are in effect) is less than the
aggregate amount of the Commitments (the “Unused Amount”), such fee to be equal to 0.50% per annum
of the Unused Amount if such Unused Amount is equal to or less than 50% of the aggregate
amount of the Commitments, and such fee to be instead equal to .375% per annum of the Unused
Amount, if such Unused Amount is greater than 50% of the aggregate amount of the Commitments, such
fee to be paid on the first day of the following month; but if the Commitments are terminated on a
day other than the first day of a month, then any such fee payable for the month in which
termination shall occur shall be paid on the effective date of such termination.




10









 








          2.2.3. Letter of Credit Fee. The Borrowers jointly and severally agree to pay to the
Agent, for the account of the Lenders, in accordance with their respective Pro Rata shares, for
each Letter of Credit, a fee (the “Letter of Credit Fee”) equal to the per annum percentage equal
to the Applicable Margin for Revolver Loans which are LIBOR Loans, and to Agent for the benefit of
the Letter of Credit Issuer a fronting fee of one-quarter of one percent (0.25%) per annum of the
undrawn face amount of each Letter of Credit, and to the Letter of Credit Issuer, all out-of-pocket
costs, fees and expenses incurred by the Letter of Credit Issuer in connection with the application
for, processing of, issuance of, or amendment to any Letter of Credit, which costs, fees and
expenses shall include a “fronting fee” payable to the Letter of Credit Issuer. The Letter of
Credit Fee shall be payable monthly in arrears on the first day of each month following any month
in which a Letter of Credit is outstanding and on the Termination Date. The Letter of Credit Fee
shall be computed on the basis of a 360-day year for the actual number of days elapsed.




          2.2.4. Audit and Appraisal Fees. Borrowers shall be jointly and severally obligated
to reimburse Agent and Lenders for all reasonable costs and expenses incurred by Agent and Lenders
in connection with all audits and appraisals of any Obligor’s books and records and such other
matters pertaining to any Obligor or any Collateral as Agent shall deem appropriate. Borrowers
shall reimburse Agent and Lenders for all reasonable costs and expenses incurred by Agent or
Lenders in connection with appraisals of any Collateral as Agent shall deem appropriate and shall
pay to Agent $850.00 per day for each day that an employee or agent of Agent shall be engaged in a
field examination or an audit or review of any Borrower’s books and records.




          2.2.5. Annual Administrative Fee. In consideration of Bank’s syndication of the
Commitments and service as Agent hereunder, Borrowers shall be jointly and severally obligated to
pay to Agent for Agent’s own account an administrative fee of $200,000, per year, which fee shall
be payable on the Closing Date and on each anniversary of the date of this Agreement.




          2.2.6. General Provisions. All fees shall be fully earned by the identified recipient
thereof pursuant to the foregoing provisions of this Agreement and the Fee Letter on the due date
thereof (and, in the case of Letters of Credit, upon each issuance, renewal or extension of such
Letter of Credit) and, except as otherwise set forth herein or required by Applicable Law, shall
not be subject to rebate, refund or proration. All fees provided for in Section 2.2 are and shall
be deemed to be compensation for services and are not, and shall not be deemed to be, interest or
any other charge for the use, forbearance or detention of money.




     2.3. Computation of Interest and Fees. All fees and other charges provided for in
this Agreement that are calculated as a per annum percentage of any amount and all interest shall
be calculated daily and shall be computed on the actual number of days elapsed over a year of 360
days. For purposes of computing interest and other charges hereunder, all Payment Items and other
forms of payment received by Agent shall be deemed applied by Agent on account of the Obligations
(subject to final payment of such items) on the Business Day that Agent receives such items in
immediately available funds in the Payment Account, and Agent shall be deemed to have received such
Payment Item on the date specified in Section 4.7 hereof.



     2.4. Reimbursement of Obligations.



          2.4.1. Borrowers shall reimburse Agent and, during any period that an Event of Default then
exists, each Lender, for all legal, accounting, appraisal and other fees and expenses incurred by
Agent or any Lender in connection with (i) the negotiation and preparation of any of the Loan
Documents, any amendment or modification thereto, any waiver of any Default or Event of Default
thereunder, or any restructuring or forbearance with respect thereto; (ii) the administration of
the Loan




11









 







Documents and the transactions contemplated thereby, to the extent that such fees and
expenses are expressly provided for in this Agreement or any of the other Loan Documents; (iii)
action taken to perfect or maintain the perfection or priority of any of Agent’s Liens with respect
to any of the Collateral; (iv) any inspection of or audits conducted with respect to any Borrower’s
books and records or any of the Collateral; (v) any effort to verify, protect, preserve, or restore
any of the Collateral or to collect, sell, liquidate or otherwise dispose of or realize upon any of
the Collateral; (vi) any litigation, contest, dispute, suit, proceeding or action (whether
instituted by or against Agent, any Lender, any Obligor or any other Person) in any way arising out
of or relating to any of the Collateral (or the validity, perfection or priority of any of Agent’s
Liens thereon), any of the Loan Documents or the validity, allowance or amount of any of the
Obligations; (vii) the protection or enforcement or any rights or remedies of Agent or any Lender
in any Insolvency Proceeding; and (viii) any other action taken by Agent or any Lender to enforce
any of the rights or remedies of Agent or such Lender against any Obligor or any Account Debtors to
enforce collection of any of the Obligations or payments with respect to any of the Collateral.
All amounts chargeable to Borrowers under this Section 2.4 shall constitute Obligations that are
secured by all of the Collateral and shall be payable on demand to Agent. Borrowers shall also
reimburse Agent for expenses incurred by Agent in its administration of any of the Collateral to
the extent and in the manner provided in Section 7 hereof or in any of the other Loan Documents.
The foregoing shall be in addition to, and shall not be construed to limit, any other provision of
any of the Loan Documents regarding the reimbursement by Borrowers of costs, expenses or
liabilities suffered or incurred by Agent or any Lender.




          2.4.2. If at any time Agent or (with the consent of Agent) any Lender shall agree to indemnify
any Person (including Bank) against losses or damages that such Person may suffer or incur in its
dealings or transactions with any or all of Borrowers, or shall guarantee any liability or
obligation of any or all of Borrowers to such Person, or otherwise shall provide assurances of any
Borrower’s payment or performance under any agreement with such Person, including indemnities,
guaranties or other assurances of payment or performance given by Agent or any Lender with respect
to Cash Management Agreements or Interest Rate Contracts, Letters of Credit, then the Contingent
Obligation of Agent or any Lender providing any such indemnity, guaranty or other assurance of
payment or performance, together with any payment made or liability incurred by Agent or any Lender
in connection therewith, shall constitute Obligations that are secured by the Collateral and
Borrowers shall repay, on demand, any amount so paid or any liability incurred by Agent or any
Lender in connection with any such indemnity, guaranty or assurance, except that repayment with
respect to any Credit Support shall be due on the first Business Day following the date on which
Agent made the payment under the Credit Support. Nothing herein shall be construed to impose upon
Agent or any Lender any obligation to provide any such indemnity, guaranty or assurance except to
the extent provided in Section 1.2 hereof. The foregoing agreement of Borrowers shall apply
whether or not such indemnity, guaranty or assurance is in writing or oral and regardless of any
Borrower’s knowledge of the existence thereof, and shall be in addition to any provision of the
Loan Documents regarding reimbursement by Borrowers of costs, expenses or liabilities suffered or
incurred by Agent or any Lender.




     2.5. Bank Charges. Borrowers shall pay to Agent, on demand, any and all fees, costs
or expenses which Agent or any Lender pays to a bank or other similar institution (including any
fees paid by Agent or any Lender to
any Participant) arising out of or in connection with (i) the forwarding to a Borrower or any
other Person on behalf of Borrower by Agent or any Lender of proceeds of Loans made by Lenders to a
Borrower pursuant to this Agreement and (ii) the depositing for collection by Agent or any Lender
of any Payment Item received or delivered to Agent or any Lender on account of the Obligations.
Each Borrower acknowledges and agrees that Agent may charge such costs, fees and expenses to
Borrowers based upon Agent’s good faith estimate of such costs, fees and expenses as they are
incurred by Agent or any Lender.



12









 





     2.6. Illegality. Notwithstanding anything to the contrary contained elsewhere in this
Agreement, if (i) any change in any law or regulation or in the interpretation thereof by any
Governmental Authority charged with the administration thereof, in each case occurring after the
date hereof, shall make it unlawful for a Lender to make or maintain a LIBOR Loan or to give effect
to its obligations as contemplated hereby with respect to a LIBOR Loan or (ii) at any time such
Lender determines that the making or continuance of any LIBOR Loan has become impracticable as a
result of a contingency occurring after the date hereof which adversely affects the London
interbank market or the position of such Lender in such market, then such Lender shall give after
such determination Agent and any Borrower notice thereof and may thereafter (1) declare that LIBOR
Loans will not thereafter be made by such Lender, whereupon any request by a Borrower for a LIBOR
Loan shall be deemed a request for a Base Rate Loan unless such Lender’s declaration shall be
subsequently withdrawn (which declaration shall be withdrawn promptly after the cessation of the
circumstances described in clause (i) or (ii) above); and (2) require that all outstanding LIBOR
Loans made by such Lender be converted to Base Rate Loans, under the circumstances of clause (i) or
(ii) of this Section 2.6 insofar as such Lender determines the continuance of LIBOR Loans to be
impracticable, in which event all such LIBOR Loans shall be converted automatically to Base Rate
Loans as of the date of any Borrower’s receipt of the aforesaid notice from such Lender.



     2.7. Increased Costs. If, by reason of (a) the introduction, or any change (including
any change by way of imposition or increase of Statutory Reserves or other reserve requirements) in
or in the interpretation, of any law or regulation after the date hereof, or (b) the compliance
with any guideline or request issued after the date hereof from any central bank or other
Governmental Authority or quasi-Governmental Authority exercising control over banks or financial
institutions generally (whether or not having the force of law):




          (i) any Lender shall be subject after the date hereof, to any Tax, duty or other charge
with respect to any LIBOR Loan or its obligation to make LIBOR Loans, or a change shall
result in the basis of taxation of payment to any Lender of the principal of or interest on
its LIBOR Loans or its obligation to make LIBOR Loans (except for changes in the rate of Tax
on the overall net income or gross receipts of such Lender imposed by the jurisdiction in
which such Lender’s principal executive office is located); or




          (ii) any reserve (including any imposed by the Board of Governors), special deposits or
similar requirement against assets of, deposits with or for the account of, or credit
extended by, any Lender shall be imposed or deemed applicable or any other condition
affecting its LIBOR Loans or its obligation to make LIBOR Loans shall be imposed on such
Lender or the London interbank market;


and as a result thereof there shall be any increase in the cost to such Lender of agreeing to make
or making, funding or maintaining LIBOR Loans (except to the extent already included in the
determination of the applicable Adjusted LIBOR Rate for LIBOR Loans), or there shall be a reduction
in the amount received or receivable by such Lender, then such Lender shall, promptly after
determining the existence
or amount of any such increased costs for which such Lender seeks payment hereunder, give any
Borrower notice thereof and Borrowers shall from time to time, upon written notice from and demand
by such Lender (with a copy of such notice and demand to Agent), pay to Agent for the account of
such Lender, within 5 Business Days after the date specified in such notice and demand, an
additional amount sufficient to indemnify such Lender against such increased costs; provided that
such Lender shall not be entitled to any such increased costs related to periods prior to 180 days
before notice from such Lender. A certificate as to the amount of such increased cost, submitted
to Borrowers by such Lender, shall be final, conclusive and binding for all purposes, absent
manifest error.




13









 








     If any Lender shall advise Agent at any time that, because of the circumstances described
hereinabove in this Section 2.7 or any other circumstances arising after the date of this Agreement
affecting such Lender or the London interbank market or such Lender’s or Bank’s position in such
market, the Adjusted LIBOR Rate, as determined by Agent, will not adequately and fairly reflect the
cost to such Lender of funding LIBOR Loans, then, and in any such event:




          (i) Agent shall forthwith give notice (by telephone confirmed in writing) to Borrowers
and Lenders of such event;




          (iii) Borrowers’ right to request and such Lender’s obligation to make LIBOR Loans
shall be immediately suspended and Borrowers’ right to continue a LIBOR Loan as such beyond
the then applicable Interest Period shall also be suspended, until each condition giving
rise to such suspension no longer exists; and




          (iv) such Lender shall make a Base Rate Loan as part of the requested Borrowing of
LIBOR Loans, which Base Rate Loan shall, for all purposes, be considered part of such
Borrowing.



     For purposes of this Section 2.7, all references to a Lender shall be deemed to include any
bank holding company or bank parent of such Lender.



     2.8. Capital Adequacy. If any Lender determines that after the date hereof (a) the
adoption of any Applicable Law regarding capital requirements for banks or bank holding companies
or the subsidiaries thereof, (b) any change in the interpretation or administration of any such
Applicable Law by any Governmental Authority, central bank, or comparable agency charged with the
interpretation or administration thereof, or (c) compliance by such Lender or its holding company
with any request or directive of any such Governmental Authority, central bank or comparable agency
regarding capital adequacy (whether or not having the force of law), has the effect of reducing the
return on such Lender’s capital to a level below that which such Lender could have achieved (taking
into consideration such Lender’s and its holding company’s policies with respect to capital
adequacy immediately before such adoption, change or compliance and assuming that such Lender’s
capital was fully utilized prior to such adoption, change or compliance) but for such adoption,
change or compliance as a consequence of such Lender’s commitment to make the Loans pursuant hereto
by any amount deemed by such Lender to be material:




          (i) Agent shall promptly, after its receipt of a certificate from such Lender setting
forth such Lender’s determination of such occurrence, give notice thereof to any Borrower
and Lenders; and




          (ii) Borrowers shall pay to Agent, for the account of such Lender, as an additional fee
from time to time, on demand, such amount as such Lender certifies to be the amount
reasonably calculated to compensate such Lender for such reduction.



     A certificate of such Lender claiming entitlement to compensation as set forth above will be
conclusive in the absence of manifest error. Such certificate will set forth the nature of the
occurrence giving rise to such compensation, the additional amount or amounts to be paid to such
Lender (including the basis for such Lender’s determination of such amount), and the method by
which such amounts were determined; provided that such Lender shall not be entitled to such
additional amounts related to periods prior to 180 days before notice from such Lender. In
determining such amount, such Lender may use any reasonable averaging and attribution method. For
purposes of this Section 2.8 all references to a Lender shall be deemed to include any bank holding
company or bank parent of such Lender.



14









 





     2.9. Funding Losses. If for any reason (other than due to a default by a Lender or as
a result of a Lender’s refusal to honor a LIBOR Loan request due to circumstances described in
Section 2.6 or 2.7 hereof) a Borrowing of, or conversion to or continuation of, LIBOR Loans does
not occur on the date specified therefor in a Notice of Borrowing or Notice of Conversion/
Continuation (whether or not withdrawn), or if any repayment (including any conversions pursuant to
Section 2.1.2 hereof) of any of its LIBOR Loans occurs on a date that is not the last day of an
Interest Period applicable thereto, or if for any reason Borrowers default in their obligation to
repay LIBOR Loans when required by the terms of this Agreement, then Borrowers shall jointly and
severally pay to Agent, for the ratable benefit of the affected Lenders, within 10 days after
Agent’s or an affected Lender’s demand therefor, an amount (if a positive number) computed pursuant
to the following formula:



	 	 	 	 	 
	 	 	L = (R - T) x P x D
	 

	 	 	 	        360






	 	 	 	 	 
	 	 	where
	 
	 	 	 	 
	 

	 	L =
	 	amount payable
	 

	 	R =
	 	interest rate
applicable to the LIBOR Loan unborrowed or prepaid
	 

	 	T =
	 	effective interest rate
per annum at which any readily marketable bond or other
obligations of the United States, selected at Agent’s
sole discretion, maturing on or nearest the last day of
the then applicable or requested Interest Period for
such LIBOR Loan and in approximately the same amount as
such LIBOR Loan, can be purchased by Agent on the day of
such payment of principal or failure to borrow
	 

	 	P =
	 	the amount of principal
paid or the amount of the LIBOR Loan requested or to
have been continued or converted
	 

	 	D =
	 	the number of days
remaining in the Interest Period as of the date of such
prepayment or the number of days in the requested
Interest Period





Borrowers shall pay such amount upon presentation by Agent of a statement setting forth the amount
and Agent’s calculation thereof pursuant hereto, which statement shall be deemed true and correct
absent
manifest error. For purposes of this Section 2.9, all references to a Lender shall be deemed to
include any bank holding company or bank parent of such Lender.




     2.10. Maximum Interest. Regardless of any provision contained in any of the Loan
Documents, in no contingency or event whatsoever shall the aggregate of all amounts that are
contracted for, charged or received by Agent and Lenders pursuant to the terms of this Agreement or
any of the other Loan Documents and that are deemed interest under Applicable Law exceed the
highest rate permissible under any Applicable Law. No agreements, conditions, provisions or
stipulations contained in this Agreement or any of the other Loan Documents or the exercise by
Agent of the right to accelerate the payment or the maturity of all or any portion of the
Obligations, or the exercise of any option whatsoever contained in any of the Loan Documents, or
the prepayment by any or all Borrowers of any of the Obligations, or the occurrence of any
contingency whatsoever, shall entitle Agent or any Lender to charge or receive in any event,
interest or any charges, amounts, premiums or fees deemed interest by Applicable Law (such
interest, charges, amounts, premiums and fees referred to herein collectively as “Interest”) in
excess of the Maximum Rate and in no event shall Borrowers be obligated to pay Interest exceeding
such



15









 







Maximum Rate, and all agreements, conditions or stipulations, if any, which may in any event
or contingency whatsoever operate to bind, obligate or compel Borrowers to pay Interest exceeding
the Maximum Rate shall be without binding force or effect, at law or in equity, to the extent only
of the excess of Interest over such Maximum Rate. If any Interest is charged or received in excess
of the Maximum Rate (“Excess”), each Borrower acknowledges and stipulates that any such charge or
receipt shall be the result of an accident and bona fide error, and such Excess, to the extent
received, shall be applied first to reduce the principal Obligations and the balance, if any,
returned to Borrowers, it being the intent of the parties hereto not to enter into a usurious or
otherwise illegal relationship. The right to accelerate the maturity of any of the Obligations
does not include the right to accelerate any Interest that has not otherwise accrued on the date of
such acceleration, and Agent and Lenders do not intend to collect any unearned Interest in the
event of any such acceleration. Each Borrower recognizes that, with fluctuations in the rates of
interest set forth in Section 2.1.1 of this Agreement, and the Maximum Rate, such an unintentional
result could inadvertently occur. All monies paid to Agent or any Lender hereunder or under any of
the other Loan Documents, whether at maturity or by prepayment, shall be subject to any rebate of
unearned Interest as and to the extent required by Applicable Law. By the execution of this
Agreement, each Borrower covenants that (i) the credit or return of any Excess shall constitute the
acceptance by such Borrower of such Excess, and (ii) no Borrower shall seek or pursue any other
remedy, legal or equitable, against Agent or any Lender, based in whole or in part upon contracting
for, charging or receiving any Interest in excess of the Maximum Rate. For the purpose of
determining whether or not any Excess has been contracted for, charged or received by Agent or any
Lender, all Interest at any time contracted for, charged or received from any or all Borrowers in
connection with any of the Loan Documents shall, to the extent permitted by Applicable Law, be
amortized, prorated, allocated and spread in equal parts throughout the full term of the
Obligations. Borrowers, Agent and Lenders shall, to the maximum extent permitted under Applicable
Law, (i) characterize any non-principal payment as an expense, fee or premium rather than as
Interest and (ii) exclude voluntary prepayments and the effects thereof. The provisions of this
Section 2.10 shall be deemed to be incorporated into every Loan Document (whether or not any
provision of this Section is referred to therein). All such Loan Documents and communications
relating to any Interest owed by any or all Borrowers and all figures set forth therein shall, for
the sole purpose of computing the extent of Obligations, be automatically recomputed by Borrowers,
and by any court considering the same, to give effect to the adjustments or credits required by
this Section 2.10.



     2.11. Affected Lenders. Within thirty (30) days after receipt by Borrower of written
notice and demand from any Lender (an “Affected Lender”) for payment of additional amounts
or increased costs as provided in Sections 2.7 or 2.8, Borrower may, at its option, notify
Agent and such Affected Lender of its intention to replace the Affected Lender. So long as no
Default or Event of Default has occurred and is continuing Borrower, may obtain at Borrower’s
expense a replacement Lender (“Replacement Lender”) for the Affected Lender, which
Replacement Lender must be reasonably satisfactory to and consented to by Agent. If Borrower
obtains a Replacement Lender within ninety (90) days following notice of its intention to do so,
the Affected Lender must sell and assign its Loans and Commitments to such Replacement Lender for
an amount equal to the principal balance of all Loans held by the Affected Lender and all accrued
interest and fees with respect thereto through the date of such sale, and such assignment shall not
require the payment of an assignment fee to Agent; provided, that Borrower shall have
reimbursed such Affected Lender for the additional amounts or increased costs that it is entitled
to receive under this Agreement through the date of such sale and assignment. Notwithstanding the
foregoing, Borrower shall not have the right to obtain a Replacement Lender if the Affected Lender
rescinds its demand for increased costs or additional amounts within 15 days following its receipt
of Borrower’s notice of intention to replace such Affected Lender. Furthermore, if Borrower gives
a notice of intention to replace and does not so replace such Affected Lender within ninety (90)
days thereafter, Borrower’s rights under this Section 2.11 shall terminate with respect to
such Affected



16









 







Lender and Borrower shall promptly pay all increased costs or additional amounts
demanded by such Affected Lender pursuant to Sections 2.7 and 2.8.



SECTION 3. LOAN ADMINISTRATION




     3.1. Manner of Borrowing and Funding Revolver Loans. Borrowings under the Commitments
established pursuant to Section 1.1 hereof shall be made and funded as follows:



          3.1.1. Notice of Borrowing.





          (i) Whenever Borrowers desire to make a Borrowing under Section 1.1 of this Agreement
(other than a Borrowing resulting from a conversion or continuation pursuant to Section
2.1.2), Borrowers shall give Agent prior written notice (or electronic notice satisfactory
to Agent) of such Borrowing request (a “Notice of Borrowing”), which shall be in the form of
Exhibit D annexed hereto and signed by an authorized officer of Parent. Such Notice
of Borrowing shall be given by such Borrower no later than 12:00 noon at the office of Agent
designated by Agent from time to time (a) on the Business Day of the requested funding date
of such Borrowing, in the case of Base Rate Loans, and (b) at least 3 Business Days prior to
the requested funding date of such Borrowing, in the case of LIBOR Loans. Notices received
after 12:00 noon shall be deemed received on the next Business Day. Any Revolver Loans made
by each Lender on the Closing Date shall be in excess of $250,000 and shall be made as Base
Rate Loans and thereafter may be made or continued as or converted into Base Rate Loans or
LIBOR Loans. Each Notice of Borrowing (or telephonic notice thereof) shall be irrevocable
and shall specify (a) the principal amount of the Borrowing, (b) the date of Borrowing
(which shall be a Business Day), (c) whether the Borrowing is to consist of Base Rate Loans
or LIBOR Loans, (d) in the case of LIBOR Loans, the duration of the Interest Period to be
applicable thereto, and (e) the account of Borrowers to which the proceeds of such Borrowing
are to be disbursed. Borrowers may not request any LIBOR Loans if a Default or Event of
Default exists.




          (ii) Unless payment is otherwise timely made by Borrowers, the becoming due of any
amount required to be paid under this Agreement or any of the other Loan Documents with
respect to the Obligations (whether as principal, accrued interest, fees or other charges
including the repayment of any LC Outstandings) shall be deemed irrevocably to be a request
(without any requirement for the submission of a Notice of Borrowing) for Revolver Loans on
the due date of, and in an aggregate amount required to pay, such Obligations, and the
proceeds of such Revolver Loans may be disbursed by way of direct payment of the relevant
Obligation and shall bear interest as Base Rate Loans. Neither Agent nor any Lender shall
have any obligation to Borrowers to honor any deemed request for a Revolver Loan after the
Commitment Termination Date, when an Out-of-Formula Condition exists or would result
therefrom or when any condition precedent set forth in Section 10 hereof is not satisfied,
but may do so in their discretion and without regard to the existence of, and without being
deemed to have waived, any Default or Event of Default and regardless of whether such
Revolver Loan is funded after the Commitment Termination Date.




          (iii) If Borrowers elect to establish a Controlled Disbursement Account with Bank or
any Affiliate of Bank, then the presentation for payment by Bank of any check or other item
of payment drawn on the Controlled Disbursement Account at a time when there are
insufficient funds in such account to cover such check shall be deemed irrevocably to be a
request (without any requirement for the submission of a Notice of Borrowing) for Revolver
Loans on the date of such presentation and in any amount equal to the aggregate amount of
the items presented for payment, and the proceeds of such Revolver Loans may be disbursed to
the Controlled



17









 






Disbursement Account and shall bear interest as Base Rate Loans. Neither
Agent nor any Lender shall have any obligation to honor any deemed request for a Revolver
Loan after the Commitment Termination Date or when an Out-of-Formula Condition exists or
would result therefrom or when any condition precedent in Section 10 hereof is not
satisfied, but may do so in its discretion and without regard to the existence of, and
without being deemed to have waived, any Default or Event of Default and regardless of
whether such Revolver Loan is funded after the Commitment Termination Date.




          (iv) As an accommodation to Borrowers, Agent and Lenders may permit telephonic requests
for Borrowings and electronic transmittal of instructions, authorizations, agreements or
reports to Agent by Borrowers; provided, however, that Borrowers shall
confirm each such telephonic request for a Borrowing of LIBOR Loans by delivery of the
required Notice of Borrowing to Agent by facsimile transmission promptly, but in no event
later than 5:00 p.m. on the same day. Neither Agent nor any Lender shall have any liability
to Borrowers for any loss or damage suffered by such Borrowers as a result of Agent’s or any
Lender’s honoring of any requests, execution of any instructions, authorizations or
agreements or reliance on any reports communicated to it telephonically or electronically
and purporting to have been sent to Agent or Lenders by a Borrower and neither Agent nor any
Lender shall have any duty to verify the origin of any such communication or the identity or
authority of the Person sending it.



          3.1.2. Fundings by Lenders. Subject to its receipt of notice from Agent of a Notice
of Borrowing as provided in Section 3.1.1(i) (except in the case of a deemed request by a Borrower
for a Revolver Loan as provided in Sections 3.1.1(ii) or (iii) or 3.1.3(ii) hereof, in which event
no Notice of Borrowing need be submitted), each Lender shall timely honor its Commitment by funding
its Pro Rata share of each Borrowing of Revolver Loans that is properly requested by a Borrower and
that such Borrower is entitled to receive under the Loan Agreement. Agent shall endeavor to notify
Lenders of each Notice of Borrowing (or deemed request for a Borrowing pursuant to Section
3.1.1(ii) or (iii) hereof) by 12:00 noon on the proposed funding date (in the case of Base Rate
Loans) or by 3:00 p.m. at least 2 Business Days before the proposed funding date (in the case of
LIBOR Loans). Each Lender shall
deposit with Agent an amount equal to its Pro Rata share of the Borrowing requested or deemed
requested by such Borrower at Agent’s designated bank in immediately available funds not later than
2:00 p.m. on the date of funding of such Borrowing, unless Agent’s notice to Lenders is received
after 12:00 noon on the proposed funding date of a Base Rate Loan, in which event Lenders shall
deposit with Agent their respective Pro Rata shares of the requested Borrowing on or before 11:00
a.m. of the next Business Day. Subject to its receipt of such amounts from Lenders, Agent shall
make the proceeds of the Revolver Loans received by it available to such Borrower by disbursing
such proceeds in accordance with such Borrower’s disbursement instructions set forth in the
applicable Notice of Borrowing. Neither Agent nor any Lender shall have any liability on account
of any delay by any bank or other depository institution in treating the proceeds of any Revolver
Loan as collected funds or any delay in receipt, or any loss, of funds that constitute a Revolver
Loan, the wire transfer of which was initiated by Agent in accordance with wiring instructions
provided to Agent. Unless Agent shall have been notified in writing by a Lender prior to the
proposed time of funding that such Lender does not intend to deposit with Agent an amount equal
such Lender’s Pro Rata share of the requested Borrowing (or deemed request for a Borrowing pursuant
to Section 3.1.1(ii) or (iii) hereof), Agent may assume that such Lender has deposited or promptly
will deposit its share with Agent and Agent may in its discretion disburse a corresponding amount
to such Borrower on the applicable funding date. If a Lender’s Pro Rata share of such Borrowing is
not in fact deposited with Agent, then, if Agent has disbursed to such Borrower an amount
corresponding to such share, then such Lender agrees to pay, and in addition Borrowers jointly and
severally agree to repay, to Agent forthwith on demand such corresponding amount, together with
interest thereon, for each day from the date such amount is disbursed by Agent to or for the
benefit of such Borrower until the date such amount is paid or repaid to Agent, (a) in the case of
Borrowers, at the




18









 







interest rate applicable to such Borrowing and (b) in the case of such Lender, at
the Federal Funds Rate. If such Lender repays to Agent such corresponding amount, such amount so
repaid shall constitute a Revolver Loan, and if both such Lender and Borrowers shall have repaid
such corresponding amount, Agent shall promptly return to Borrowers such corresponding amount in
same day funds. A notice from Agent submitted to any Lender with respect to amounts owing under
this Section 3.1.2 shall be conclusive, absent manifest error.




          3.1.3. Settlement and Settlement Loans.





          (i) In order to facilitate the administration of the Revolver Loans under this
Agreement, Lenders agree (which agreement shall be solely between Lenders and Agent and
shall not be for the benefit of or enforceable by any Borrower) that settlement among them
with respect to the Revolver Loans shall take place at least once per week (each a
“Settlement Date”), which may occur before or after the occurrence or during the continuance
of a Default or Event of Default and whether or not all of the conditions set forth in
Section 10 of this Agreement have been met. On each Settlement Date, payment shall be made
by or to each Lender in the manner provided herein and in accordance with the Settlement
Report delivered by Agent to Lenders with respect to such Settlement Date so that, as of
each Settlement Date and after giving effect to the transaction to take place on such
Settlement Date, each Lender shall hold its Pro Rata share of all Revolver Loans and
participations in LC Outstandings then outstanding.




          (ii) Between Settlement Dates, Agent may request Bank to advance, and Bank may, but
shall in no event be obligated to, advance to Borrowers out of Bank’s own funds the entire
principal amount of any Borrowing of Revolver Loans that are Base Rate Loans requested or
deemed requested pursuant to this Agreement (any such Revolver Loan funded exclusively by
Agent being referred to as a “Settlement Loan”). Each Settlement Loan shall constitute a
Revolver Loan hereunder and shall be subject to all of the terms, conditions and security
applicable to other Revolver Loans, except that all payments thereon shall be payable to
Bank solely for its own account. The obligation of Borrowers to repay such Settlement Loans
to
Bank shall be evidenced by the records of Bank and need not be evidenced by any
promissory note. Agent shall not request Bank to make any Settlement Loan if (A) Agent
shall have received written notice from any Lender that one or more of the applicable
conditions precedent set forth in Section 10 hereof will not be satisfied on the requested
funding date for the applicable Borrowing or (B) the requested Borrowing would exceed the
amount of Availability on the funding date or would cause the then outstanding principal
balance of all Settlement Loans to exceed $10,000,000. Bank shall not be required to
determine whether the applicable conditions precedent set forth in Section 10 hereof have
been satisfied or the requested Borrowing would exceed the amount of Availability on the
funding date applicable thereto prior to making, in its sole discretion, any Settlement
Loan. On each Settlement Date, or, if earlier, upon demand by Agent for payment thereof,
the then outstanding Settlement Loans shall be immediately due and payable. As provided in
Section 3.1.1(ii), Borrowers shall be deemed to have requested (without the necessity of
submitting any Notice of Borrowing) Revolver Loans to be made on each Settlement Date in the
amount of all outstanding Settlement Loans and to have Agent cause the proceeds of such
Revolver Loans to be applied to the repayment of such Settlement Loans and interest accrued
thereon. Agent shall notify the Lenders of the outstanding balance of Revolver Loans prior
to 11:00 a.m. on each Settlement Date and each Lender (other than Bank) shall deposit with
Agent (without setoff, counterclaim or reduction of any kind) an amount equal to its Pro
Rata share of the amount of Revolver Loans deemed requested in immediately available funds
not later than 2:00 p.m. on such Settlement Date, and without regard to whether any of the
conditions precedent set forth in Section 10 hereof are satisfied or the Commitment
Termination Date has occurred. If as the result of the commencement by or against any
Borrower of any



19









 






Insolvency Proceeding or otherwise any Settlement Loan may not be repaid by
the funding by Lenders of Revolver Loans, then each Lender (other than Bank) shall be deemed
to have purchased as a participating interest in any unpaid Settlement Loan in an amount
equal to such Lender’s Pro Rata share of such Settlement Loan and shall transfer to Bank, in
immediately available funds, not later than the second Business Day after Bank’s request
therefor, the amount of such Lender’s participation. The proceeds of Settlement Loans may
be used solely for purposes for which Revolver Loans generally may be used in accordance
with Section 1.1.3 hereof. If any amounts received by Bank in respect of any Settlement
Loans are later required to be returned or repaid by Bank to any or all Borrowers or any
other Obligor or their respective representatives or successors-in-interest, whether by
court order, settlement or otherwise, the other Lenders shall, upon demand by Bank with
notice to Agent, pay to Agent for the account of Bank, an amount equal to each other
Lender’s Pro Rata share of all such amounts required to be returned by Bank.



          3.1.4. Disbursement Authorization. Each Borrower hereby irrevocably authorizes Agent
to disburse the proceeds of each Revolver Loan requested by any Borrower, or deemed to be requested
pursuant to Section 3.1.1 or Section 3.1.3(ii), as follows: (i) the proceeds of each Revolver Loan
requested under Section 3.1.1(i) shall be disbursed by Agent by wire transfer to such bank account
as may be agreed upon by any Borrower and Agent from time to time or elsewhere if pursuant to a
written direction from such Borrower; and (ii) the proceeds of each Revolver Loan requested under
Section 3.1.1(ii) or Section 3.1.3(ii) shall be disbursed by Agent by way of direct payment of the
relevant interest or other Obligation. Any Loan proceeds received by any Borrower or in payment of
any of the Obligations shall be deemed to have been received by all Borrowers.




     3.2. Defaulting Lender. If any Lender shall, at any time, fail to make any payment to
Agent that is required hereunder, Agent may, but shall not be required to, retain payments that
would otherwise be made to such defaulting Lender hereunder and apply such payments to such
defaulting Lender’s defaulted obligations hereunder,
at such time, and in such order, as Agent may elect in its sole discretion. With respect to
the payment of any funds from Agent to a Lender or from a Lender to Agent, the party failing to
make the full payment when due pursuant to the terms hereof shall, upon demand by the other party,
pay such amount together with interest on such amount at the Federal Funds Rate. The failure of
any Lender to fund its portion of any Revolver Loan shall not relieve any other Lender of its
obligation, if any, to fund its portion of the Revolver Loan on the date of Borrowing, but no
Lender shall be responsible for the failure of any other Lender to make any Revolver Loan to be
made by such Lender on the date of any Borrowing. Solely as among the Lenders and solely for
purposes of voting or consenting to matters with respect to any of the Loan Documents, Collateral
or any Obligations and determining a defaulting Lender’s Pro Rata share of payments and proceeds of
Collateral pending such defaulting Lender’s cure of its defaults hereunder, a defaulting Lender
shall not be deemed to be a “Lender” and such Lender’s Commitment shall be deemed to be zero (0).
The provisions of this Section 3.2 shall be solely for the benefit of Agent and Lenders and may not
be enforced by Borrowers.



     3.3. Special Provisions Governing LIBOR Loans.



          3.3.1. Number of LIBOR Loans. In no event may the number of LIBOR Loans outstanding
at any time to any Lender exceed six (6).




          3.3.2. Minimum Amounts. Each Borrowing of LIBOR Loans pursuant to Section 3.1.1(i),
and each continuation of or conversion to LIBOR Loans pursuant to Section 2.1.2 hereof, shall be in
a minimum amount of $500,000 and integral multiples of $500,000 in excess of that amount.




20









 








          3.3.3. LIBOR Lending Office. Each Lender’s initial LIBOR Lending Office is set forth
opposite its name on the signature pages hereof. Each Lender shall have the right at any time and
from time to time to designate a different office of itself or of any Affiliate as such Lender’s
LIBOR Lending Office, and to transfer any outstanding LIBOR Loans to such LIBOR Lending Office. No
such designation or transfer shall result in any liability on the part of Borrowers for increased
costs or expenses resulting solely from such designation or transfer. Increased costs or expenses
resulting from a change in Applicable Law occurring subsequent to any such designation or transfer
shall be deemed not to result solely from such designation or transfer.




          3.3.4. Funding of LIBOR Loans. Each Lender may, if it so elects, fulfill its
obligation to make, continue or convert LIBOR Loans hereunder by causing one of its foreign
branches or Affiliates (or an international banking facility created by such Lender) to make or
maintain such LIBOR Loans; provided, however, that such LIBOR Loans shall
nonetheless be deemed to have been made and to be held by such Lender, and the obligation of
Borrowers to repay such LIBOR Loans shall nevertheless be to such Lender for the account of such
foreign branch, Affiliate or international banking facility. The calculation of all amounts
payable to Lender under Section 2.7 and 2.9 shall be made as if each Lender had actually funded or
committed to fund its LIBOR Loan through the purchase of an underlying deposit in an amount equal
to the amount of such LIBOR Loan and having a maturity comparable to the relevant Interest Period
for such LIBOR Loans; provided, however, each Lender may fund its LIBOR Loans in
any manner it deems fit and the foregoing presumption shall be utilized only for the calculation of
amounts payable under Section 2.7 and Section 2.9.




     3.4. Borrowers’ Representative. Each Borrower hereby irrevocably appoints Parent and
Parent agrees to act under this Agreement, as the agent and representative of itself and each other
Borrower for all purposes under this Agreement, including requesting Borrowings, selecting whether
any Loan or portion thereof is to bear
interest as a Base Rate Loan or a LIBOR Loan, and receiving account statements and other
notices and communications to Borrowers (or any of them) from Agent. Agent may rely, and shall be
fully protected in relying, on any Notice of Borrowing, Notice of Conversion/Continuation,
disbursement instructions, reports, information, Borrowing Base Certificate or any other notice or
communication made or given by Parent, whether in its own name, on behalf of any Borrower or on
behalf of “the Borrowers,” and Agent shall have no obligation to make any inquiry or request any
confirmation from or on behalf of any other Borrower as to the binding effect on such Borrower of
any such Notice of Borrowing, Notice of Conversion, Continuation, instruction, report, information,
Borrowing Base Certificate or other notice or communication, nor shall the joint and several
character of Borrowers’ liability for the Obligations be affected, provided that the provisions of
this Section 3.4 shall not be construed so as to preclude any Borrower from directly requesting
Borrowings or taking other actions permitted to be taken by “a Borrower” hereunder. Agent may
maintain a single Loan Account in the name of “Integrated Electrical Services, Inc.” hereunder, and
each Borrower expressly agrees to such arrangement and confirms that such arrangement shall have no
effect on the joint and several character of such Borrower’s liability for the Obligations.



     3.5. All Loans to Constitute One Obligation. The Loans shall constitute one general
Obligation of Borrowers and (unless otherwise expressly provided in any Security Document) shall be
secured by Agent’s Lien upon all of the Collateral; provided, however, that Agent
and each Lender shall be deemed to be a creditor of each Borrower and the holder of a separate
claim against each Borrower to the extent of any Obligations jointly and severally owed by
Borrowers to Agent or such Lender.



SECTION 4. PAYMENTS




     4.1. General Repayment Provisions. All payments (including all prepayments) of
principal of and interest on the Loans, LC Outstandings and other Obligations that are payable to
Agent or any



21









 




Lender shall be made to Agent in Dollars without any offset or counterclaim and free
and clear of (and without deduction for) any present or future Taxes, and, with respect to payments
made other than by application of balances in the Payment Account, in immediately available funds
not later than 12:00 noon on the due date (and payment made after such time on the due date to be
deemed to have been made on the next succeeding Business Day). All payments received by Agent
shall be distributed by Agent in accordance with Section 4.6 hereof, subject to the rights of
offset that Agent may have as to amounts otherwise to be remitted to a particular Lender by reason
of amounts due Agent from such Lender under any of the Loan Documents.




     4.2. Repayment of Revolver Loans.



          4.2.1. Payment of Principal. The outstanding principal amounts with respect to the
Revolver Loans shall be repaid as follows:





          (i) Any portion of the Revolver Loans consisting of the principal amount of Base Rate
Loans shall be paid by Borrowers to Agent, for the Pro Rata benefit of Lenders (or, in the
case of Settlement Loans, for the sole benefit of Agent) unless timely converted to a LIBOR
Loan in accordance with this Agreement, immediately upon (a) each receipt by Agent, any
Lender or Borrower of any proceeds of any of the Accounts or Inventory, to the extent of
such proceeds, (b) the Commitment Termination Date, and (c) in the case of Settlement Loans,
the earlier of Agent’s demand for payment or on each Settlement Date with respect to all
Settlement Loans outstanding on such date.




          (ii) Any portion of the Revolver Loans consisting of the principal amount of LIBOR
Loans shall be paid by Borrowers to Agent, for the Pro Rata benefit of Lenders, unless
converted to a Base Rate Loan or continued as a LIBOR Loan in accordance with the terms of
this Agreement, immediately upon (a) the last day of the Interest Period applicable thereto
and (b) the Commitment Termination Date. In no event shall Borrowers be authorized to make
a voluntary prepayment with respect to any Revolver Loan outstanding as a LIBOR Loan prior
to the last day of the Interest Period applicable thereto unless (x) otherwise agreed in
writing by Agent or Borrowers are otherwise expressly authorized or required by any other
provision of this Agreement to pay any LIBOR Loan outstanding on a date other than the last
day of the Interest Period applicable thereto, and (y) Borrowers pay to Agent, for the Pro
Rata benefit of Lenders, concurrently with any prepayment of a LIBOR Loan, any amount due
Agent and Lenders under Section 2.9 hereof as a consequence of such prepayment.




          (iii) Notwithstanding anything to the contrary contained elsewhere in this Agreement,
if an Out-of-Formula Condition shall exist, Borrowers shall, on the sooner to occur of
Agent’s demand or the first Business Day after any Borrower has obtained knowledge of such
Out-of-Formula Condition, repay the outstanding Revolver Loans that are Base Rate Loans in
an amount sufficient to reduce the aggregate unpaid principal amount of all Revolver Loans
by an amount equal to such excess; and, if such payment of Base Rate Loans is not sufficient
to eliminate the Out-of-Formula Condition, then Borrowers shall immediately either (a)
deposit with Agent, for the Pro Rata benefit of Lenders, for application to any outstanding
Revolver Loans bearing interest as LIBOR Loans as the same become due and payable (whether
at the end of the applicable Interest Periods or on the Commitment Termination Date) cash in
an amount sufficient to eliminate such Out-of-Formula Condition, to be held by Agent pending
disbursement of same to Lenders, but subject to Agent’s Lien thereon and rights of offset
with respect thereto, or (b) pay the Revolver Loans outstanding as LIBOR Loans to the extent
necessary to eliminate such Out-of-Formula Condition and also pay to Agent for the Pro Rata
benefit of Lenders any and all



22









 






amounts required by Section 2.9 hereof to be paid by reason
of the prepayment of a LIBOR Loan prior to the last day of the Interest Period applicable
thereto.



          4.2.2. Payment of Interest. Interest accrued on the Revolver Loans shall be due and
payable on (i) the first calendar day of each month (for the immediately preceding month), computed
through the last calendar day of the preceding month, with respect to any Revolver Loan (whether a
Base Rate Loan or LIBOR Loan) and (ii) the last day of the applicable Interest Period in the case
of a LIBOR Loan. Accrued interest shall also be paid by Borrowers on the Commitment Termination
Date. With respect to any Base Rate Loan converted into a LIBOR Loan pursuant to Section 2.1.2 on
a day when interest would not otherwise have been payable with respect to such Base Rate Loan,
accrued interest to the date of such conversion on the amount of such Base Rate Loan so converted
shall be paid on the conversion date.




     4.3. Intentionally Omitted.



     4.4. Payment of Other Obligations. The balance of the Obligations requiring the
payment of money, including the LC Outstandings and Extraordinary Expenses incurred by Agent or any
Lender shall be repaid by Borrowers to Agent for allocation among Agent and Lenders as provided in
the Loan Documents, or, if no date of payment is otherwise specified in the Loan Documents, on
demand.



     4.5. Marshaling; Payments Set Aside.
None of Agent or any Lender shall be under any obligation to marshal any assets in favor of
any Borrower or any other Obligor or against or in payment of any or all of the Obligations. To
the extent that Borrowers make a payment or payments to Agent or Lenders or any of such Persons
receives payment from the proceeds of any Collateral or exercises its right of setoff, and such
payment or payments or the proceeds of such enforcement or setoff or any part thereof are
subsequently invalidated, declared to be fraudulent or preferential, set aside or required to be
repaid to a trustee, receiver or any other Person, then to the extent of any loss by Agent or
Lenders, the Obligations or part thereof originally intended to be satisfied, and all Liens, rights
and remedies therefor, shall be revived and continued in full force and effect as if such payment
or proceeds had not been made or received and any such enforcement or setoff had not occurred. The
provisions of the immediately preceding sentence of this Section 4.5 shall survive any termination
of the Commitments and payment in full of the Obligations.



     4.6. Agent’s Allocation of Payments and Collections.



          4.6.1. Allocation of Payments. All monies to be applied to the Obligations, whether
such monies represent voluntary payments by one or more Obligors or are received pursuant to demand
for payment or realized from any disposition of Collateral, shall be allocated among Agent and such
of the Lenders as are entitled thereto (and, with respect to monies allocated to Lenders, on a Pro
Rata basis unless otherwise provided herein): (i) first, to Agent to pay principal and accrued
interest on any portion of the Revolver Loans which Agent may have advanced on behalf of any Lender
and for which Agent has not been reimbursed by such Lender or Borrower; (ii) second, to Bank to pay
the principal and accrued interest on any portion of the Settlement Loans outstanding, to be shared
with Lenders that have acquired a participating interest in such Settlement Loans; (iii) third, to
the extent that Agent has not received from any Participating Lender a payment in connection with
an unreimbursed payment made by Agent under Credit Support, to Agent to pay all amounts owing to
Agent pursuant to payments made by Agent pursuant to Credit Support; (iv) fourth, to Agent to pay
the amount of Extraordinary Expenses and amounts owing to Agent pursuant to Section 14.10 hereof
that have not been reimbursed to Agent by Borrower or Lenders, together with interest accrued
thereon at the rate applicable to Revolver Loans




23









 







that are Base Rate Loans; (v) fifth, to Agent to
pay any Indemnified Amount that has not been paid to Agent by Obligors or Lenders, together with
interest accrued thereon at the rate applicable to Revolver Loans that are Base Rate Loans; (vi)
sixth, to Agent to pay any fees due and payable to Agent; (vii) seventh, to Lenders for any
Indemnified Amount that they have paid to Agent and any Extraordinary Expenses that they have
reimbursed to Agent or themselves incurred, to the extent that Lenders have not been reimbursed by
Obligors therefor; (viii) eighth, to Agent to pay principal and interest with respect to LC
Outstandings (or to the extent any of the LC Outstandings are contingent and an Event of Default
then exists, deposited in the Cash Collateral Account to provide security for the payment of the LC
Outstandings), which payment shall be shared with the Participating Lenders in accordance with
Section 1.2.8(b) hereof; (ix) ninth, to Lenders in payment of the unpaid principal and accrued
interest in respect of the Loans and any other Obligations (other than amounts relating to Bank
Products) then outstanding to be shared ratably in proportion to their respective shares of such
Loans and other obligations, or on such other basis as may be agreed upon in writing by Lenders
(which agreement or agreements may be entered into without notice to or the consent or approval of
Borrowers); and tenth, in payment of any amount relating to Bank Products. The allocations set
forth in this Section 4.6 are solely to determine the rights and priorities of Agent and Lenders as
among themselves and may be changed by Agent and Lenders without notice to or the consent or
approval of Borrower or any other Person.




          4.6.2. Erroneous Allocation. Agent shall not be liable for any allocation or
distribution of payments made by it in good faith and, if any such allocation or distribution is
subsequently determined to have been made in error, the sole recourse of any Lender to whom payment
was due but not made shall be to recover from the other Lenders any payment in excess of the amount
to which such other
Lenders are determined to be entitled (and such other Lenders hereby agree to return to such
Lender any such erroneous payments received by them).




     4.7. Application of Payments and Collections. All Payment Items received by Agent by
12:00 noon on any Business Day shall be deemed received on that Business Day. All Payment Items
received by Agent after 12:00 noon on any Business Day shall be deemed received on the following
Business Day. Except to the extent that the manner of application to the Obligations of payments
or proceeds of Collateral is expressly governed by other provisions of this Agreement, each
Borrower irrevocably waives the right to direct the application of any and all payments and
Collateral proceeds at any time or times hereafter received by Agent or any Lender from or on
behalf of such Borrower, and each Borrower does hereby irrevocably agree that Agent shall have the
continuing exclusive right to apply and reapply any and all such payments and Collateral proceeds
received at any time or times hereafter by Agent or its agent against the Obligations, in such
manner as Agent may deem advisable, notwithstanding any entry by Agent upon any of its books and
records. If as the result of Agent’s collection of proceeds of Accounts and other Collateral as
authorized by Section 7.2.6 a credit balance exists, such credit balance shall not accrue interest
in favor of Borrowers, but shall be available to Borrowers at any time or times for so long as no
Default or Event of Default exists. Lenders may, at their option, offset such credit balance
against any of the Obligations upon and after the occurrence of an Event of Default.



     4.8. Loan Accounts; the Register; Account Stated.



          4.8.1. Loan Accounts. Each Lender shall maintain in accordance with its usual and
customary practices an account or accounts (a “Loan Account”) evidencing the Debt of Borrowers to
such Lender resulting from each Loan owing to such Lender from time to time, including the amount
of principal and interest payable to such Lender from time to time hereunder and under each Note
payable to such Lender. Any failure of a Lender to record in the Loan Account, or any error in
doing so, shall not limit or otherwise affect the obligation of Borrowers hereunder (or under any
Note) to pay any amount owing hereunder to such Lender.




24









 








          4.8.2. The Register. Agent shall maintain a register (the “Register”) which shall
include a master account and a subsidiary account for each Lender and in which accounts (taken
together) shall be recorded (i) the date and amount of each Borrowing made hereunder, the Type of
each Loan comprising such Borrowing and any Interest Period applicable thereto, (ii) the effective
date and amount of each Assignment and Acceptance delivered to and accepted by it and the parties
thereto, (iii) the amount of any principal or interest due and payable or to become due and payable
from Borrowers to each Lender hereunder or under the Notes, and (iv) the amount of any sum received
by Agent from Borrowers or any other Obligor and each Lender’s share thereof. The Register shall
be available for inspection by Borrowers or any Lender at the offices of Agent at any reasonable
time and from time to time upon reasonable prior notice. Any failure of Agent to record in the
Register, or any error in doing so, shall not limit or otherwise affect the obligation of Borrowers
hereunder (or under any Note) to pay any amount owing with respect to the Loans or provide the
basis for any claim against Agent.




          4.8.3. Entries Binding. The entries made in the Register and each Loan Account shall
constitute rebuttably presumptive evidence of the information contained therein; provided,
however, that if a copy of information contained in the Register or any Loan Account is
provided to any Person, or any Person inspects the Register or any Loan Account, at any time or
from time to time, then the information contained in the Register or the Loan Account, as
applicable shall be conclusive and binding on such Person for all purposes absent manifest error,
unless such Person notifies Agent in writing within 30 days
after such Person’s receipt of such copy or such Person’s inspection of the Register or Loan
Account of its intention to dispute the information contained therein.




     4.9. Gross Up for Taxes. If Borrowers shall be required by Applicable Law to withhold
or deduct any Taxes from or in respect of any sum payable under this Agreement or any of the other
Loan Documents, (a) the sum payable to Agent or such Lender shall be increased as may be necessary
so that, after making all required withholding or deductions, Agent or such Lender (as the case may
be) receives an amount equal to the sum it would have received had no such withholding or
deductions been made, (b) Borrowers shall make such withholding or deductions, and (c) Borrowers
shall pay the full amount withheld or deducted to the relevant taxation authority or other
authority in accordance with Applicable Law.



     4.10. Withholding Tax Exemption. At least 5 Business Days prior to the first date on
which interest or fees are payable hereunder for the account of any Lender, each Lender that is not
incorporated under the laws of the United States or any state thereof agrees that it will deliver
to Borrowers and Agent 2 duly completed copies of United States Internal Revenue Service Form
W-8BEN or W-8ECI, certifying in either case that such Lender is entitled to receive payment under
this Agreement and its Notes without deduction or withholding of any United States federal income
taxes. Each Lender which so delivers a Form W-8BEN or W-8ECI further undertakes to deliver to
Borrowers and Agent 2 additional copies of such form (or a successor form) on or before the date
that such form expires (currently, 3 successive calendar years for Form W-8BEN and one calendar
year for Form W-8ECI) or becomes obsolete or after the occurrence of any event requiring a change
in the form so delivered by it, and such amendments thereto or extensions or renewals thereof as
may be reasonably requested by Borrowers or Agent, in each case, certifying that such Lender is
entitled to receive payments under this Agreement and its Notes without deduction or withholding of
any United States federal income taxes, unless an event (including any change in treaty, law or
regulation) has occurred prior to the date on which any such delivery would otherwise be required
that renders all such forms inapplicable or that would prevent such Lender from duly completing and
delivering any such form with respect to it and such Lender advises Borrowers and Agent that it is
not capable or receiving payments without any deduction or withholding of United States federal
income taxes.



25









 





     4.11. Nature and Extent of Each Borrower’s Liability.



          4.11.1. Joint and Several Liability. Each Borrower shall be liable for, on a joint
and several basis, and hereby guarantees the timely payment by all other Borrowers of, all of the
Loans and other Obligations, regardless of which Borrower actually may have received the proceeds
of any Loans or other extensions of credit hereunder or the amount of such Loans received or the
manner in which Agent or any Lender accounts for such Loans or other extensions of credit on its
books and records, it being acknowledged and agreed that Loans to any Borrower inure to the mutual
benefit of all Borrowers and that Agent and Lenders are relying on the joint and several liability
of Borrowers in extending the Loans and other financial accommodations hereunder. Each Borrower
hereby unconditionally and irrevocably agrees that upon default in the payment when due (whether at
stated maturity, by acceleration or otherwise) of any principal of, or interest owed on, any of the
Loans or other Obligations, such Borrower shall forthwith pay the same, without notice or demand.




          4.11.2. Unconditional Nature of Liability. Each Borrower’s joint and several
liability hereunder with respect to, and guaranty of, the Loans and other Obligations shall, to the
fullest extent permitted by Applicable Law, be unconditional irrespective of (i) the validity,
enforceability, avoidance or subordination of any of the Obligations or of any promissory note or
other document evidencing all or
any part of the Obligations, (ii) the absence of any attempt to collect any of the Obligations
from any other Obligor or any Collateral or other security therefor, or the absence of any other
action to enforce the same, (iii) the waiver, consent, extension, forbearance or granting of any
indulgence by Agent or any Lender with respect to any provision of any instrument evidencing or
securing the payment of any of the Obligations, or any other agreement now or hereafter executed by
any other Borrower and delivered to Agent or any Lender, (iv) the failure by Agent to take any
steps to perfect or maintain the perfected status of its security interest in or Lien upon, or to
preserve its rights to, any of the Collateral or other security for the payment or performance of
any of the Obligations or Agent’s release of any Collateral or of its Liens upon any Collateral,
(v) Agent’s or Lenders’ election, in any proceeding instituted under the Bankruptcy Code, for the
application of Section 1111(b)(2) of the Bankruptcy Code, (vi) any borrowing or grant of a security
interest by any other Borrower, as debtor-in-possession under Section 364 of the Bankruptcy Code,
(vii) the release or compromise, in whole or in part, of the liability of any Obligor for the
payment of any of the Obligations, (viii) any amendment or modification of any of the Loan
Documents or waiver of any Default or Event of Default thereunder, (ix) any increase in the amount
of the Obligations beyond any limits imposed herein or in the amount of any interest, fees or other
charges payable in connection therewith, or any decrease in the same, (x) the disallowance of all
or any portion of Agent’s or any Lender’s claims for the repayment of any of the Obligations under
Section 502 of the Bankruptcy Code, or (xi) any other circumstance that might constitute a legal or
equitable discharge or defense of any Borrower other than irrevocable payment. After the
occurrence and during the continuance of any Event of Default, Agent may proceed directly and at
once, without notice to any Obligor, against any or all of Obligors to collect and recover all or
any part of the Obligations, without first proceeding against any other Obligor or against any
Collateral or other security for the payment or performance of any of the Obligations, and each
Borrower waives any provision that might otherwise require Agent under Applicable Law to pursue or
exhaust its remedies against any Collateral or Obligor before pursuing another Obligor. Each
Borrower consents and agrees that Agent shall be under no obligation to marshal any assets in
favor of any Obligor or against or in payment of any or all of the Obligations.




          4.11.3. No Reduction in Liability for Obligations. No payment or payments made by an
Obligor or received or collected by Agent from a Borrower or any other Person by virtue of any
action or proceeding or any setoff or appropriation or application at any time or from time to time
in reduction of or in payment of the Obligations shall be deemed to modify, reduce, release or
otherwise affect the liability of any Borrower under this Agreement, each of whom shall remain
jointly and severally liable for the




26









 







payment and performance of all Loans and other Obligations
until the Obligations are paid in full and this Agreement is terminated.




          4.11.4. Contribution. Each Borrower is unconditionally obligated to repay the
Obligations as a joint and several obligor under this Agreement. If, as of any date, the aggregate
amount of payments made by a Borrower on account of the Obligations and proceeds of such Borrower’s
Collateral that are applied to the Obligations exceeds the aggregate amount of Loan
proceeds actually used by such Borrower in its business (such excess amount being referred to as an
“Accommodation Payment”), then each of the other Borrowers (each such Borrower being referred to as
a “Contributing Borrower”) shall be obligated to make contribution to such Borrower (the “Paying
Borrower”) in an amount equal to (A) the product derived by multiplying the sum of each
Accommodation Payment of each Borrower by the Allocable Percentage of the Borrower from whom
contribution is sought less (B) the amount, if any, of the then outstanding Accommodation
Payment of such Contributing Borrower (such last mentioned amount which is to be subtracted from
the aforesaid product to be increased by any amounts theretofore paid by such Contributing Borrower
by way of contribution hereunder, and to be decreased by any amounts theretofore received by such
Contributing Borrower by way of contribution hereunder); provided, however, that a
Paying Borrower’s recovery of contribution hereunder from the other Borrowers shall be limited to
that amount paid by the Paying Borrower in excess of its Allocable
Percentage of all Accommodation Payments then outstanding of all Borrowers. As used herein,
the term “Allocable Percentage” shall mean, on any date of determination thereof, a fraction the
denominator of which shall be equal to the number of Borrowers who are parties to this Agreement on
such date and the numerator of which shall be 1; provided, however, that such
percentages shall be modified in the event that contribution from a Borrower is not possible by
reason of insolvency, bankruptcy or otherwise by reducing such Borrower’s Allocable Percentage
equitably and by adjusting the Allocable Percentage of the other Borrowers proportionately so that
the Allocable Percentages of all Borrowers at all times equals 100%.




          4.11.5. Subordination. Each Borrower hereby subordinates any claims, including any
right of payment, subrogation, contribution and indemnity, that it may have from or against any
other Obligor, and any successor or assign of any other Obligor, including any trustee, receiver or
debtor-in-possession, howsoever arising, due or owing or whether heretofore, now or hereafter
existing, to the payment in full of all of the Obligations.




SECTION 5. ORIGINAL TERM AND TERMINATION OF COMMITMENTS




     5.1. Original Term of Commitments. Subject to each Lender’s right to cease making
Loans and other extensions of credit to Borrowers when any Default or Event of Default exists or
upon termination of the Commitments as provided in Section 5.2 hereof, the Commitments shall be in
effect for a period of two years from the date hereof, through the close of business on May 12,
2008 (the “Original Term”).



     5.2. Termination.



          5.2.1. Termination by Agent. The Commitments shall automatically terminate as of the
last day of the Original Term, unless extended in writing by Agent and all Lenders. In addition,
Agent may (and upon the direction of the Required Lenders, shall) terminate the Commitments without
notice upon or after the occurrence and during the continuation of an Event of Default; provided,
however, that the Commitments shall automatically terminate as provided in Section 11.2 hereof.




          5.2.2. Termination by Borrowers. Upon at least 10 days prior written notice to Agent,
any Borrower may, at its option, terminate the Commitments; provided, however, no
such termination by




27









 







any Borrower shall be effective until Borrowers have satisfied all of the
Obligations and executed in favor of and delivered to Agent and Lenders a general release of all
Claims that Borrowers may have against Agent or any Lender. Any notice of termination given by
Borrowers shall be irrevocable unless Agent otherwise agrees in writing. Borrowers may elect to
terminate the Commitments in their entirety only. No section of this Agreement, Type of Loan
available hereunder or Commitment may be terminated by Borrowers singly.




          5.2.3. Termination Charges. On the effective date of termination of the Commitments
pursuant to Section 5.2.2, Borrowers shall be jointly and severally obligated to pay to Agent, for
the Pro Rata benefit of Lenders (in addition to the then outstanding principal, accrued interest,
fees and other charges owing under the terms of this Agreement and any of the other Loan
Documents), as liquidated damages for the loss of the bargain and not as a penalty, an amount equal
to 1.00% of the aggregate Commitments.




          5.2.4. Effect of Termination. On the effective date of termination of the Commitments
by Agent or by Borrowers, all Obligations shall be immediately finally and indefeasibly due and
payable in full and Lenders shall have no obligation to make any Loans and Agent shall have no
obligation to
cause the Letter of Credit Issuer to issue any Letters of Credit. All undertakings,
agreements, covenants, warranties and representations of each Borrower contained in the Loan
Documents shall survive any such termination and Agent shall retain its Liens in the Collateral and
all of its rights and remedies under the Loan Documents notwithstanding such termination until
Borrowers have satisfied the Obligations to Agent and Lenders, in full. For purposes of this
Agreement, the Obligations shall not be deemed to have been satisfied until all Obligations for the
payment of money have been paid to Agent in same day funds and all Obligations that are at the time
in question contingent (including all LC Outstandings that exist by virtue of an outstanding Letter
of Credit) have been fully cash collateralized (in an amount of 105% of LC Outstandings) in favor
and to the satisfaction of Agent or Agent has received as beneficiary a direct pay letter of credit
in form and from an issuing bank acceptable to Agent and providing for direct payment to Agent of
all such contingent Obligations at the time they become fixed (including reimbursement of all sums
paid by Agent under any Credit Support). Notwithstanding the payment in full of the Obligations,
Agent shall not be required to terminate its security interests in any of the Collateral unless,
with respect to any loss or damage Agent may incur as a result of the dishonor or return of any
Payment Items applied to the Obligations, Agent shall have received either (i) a written agreement,
executed by Borrowers and any Person whose loans or other advances to Borrowers are used in whole
or in part to satisfy the Obligations, indemnifying Agent and Lenders from any such loss or damage;
or (ii) such monetary reserves or other security for such period of time as Agent, in its
reasonable discretion, may deem necessary to protect Agent from any such loss or damage. The
provisions of Sections 2.4, 2.7, 2.8, 2.9, 4.5, 4.9 and this Section 5.2.4 and all obligations of
Borrowers to indemnify Agent or any Lender pursuant to this Agreement or any of the other Loan
Documents shall in all events survive any termination of the Commitments.




SECTION 6. COLLATERAL SECURITY




     6.1. Grant of Security Interest. To secure the prompt payment and performance of all
of the Obligations, each Credit Party hereby grants to Agent, for the benefit of itself as Agent
and for the Pro Rata benefit of Lenders, a continuing security interest in and Lien upon all of the
following Property and interests in Property of such Credit Party (except to the extent such
Property constitutes Excluded Collateral), whether now owned or existing or hereafter created,
acquired or arising and wheresoever located:




          (i) All Accounts;



28









 






          (ii) All Inventory;




          (iii) All Equipment;




          (iv) All Instruments;




          (v) All Chattel Paper;




          (vi) All Documents;




          (vii) All General Intangibles;




          (viii) All Deposit Accounts;




          (ix) All Investment Property (but excluding any portion thereof that constitutes Margin
Stock unless otherwise expressly provided in any Loan Documents);




          (x) All monies now or at any time or times hereafter in the possession or under the
control of Agent or a Lender or a bailee or Affiliate of Agent or a Lender, including any
Cash Collateral in the Cash Collateral Account;




          (xi) All proceeds of claims of the Credit Parties for recovery or avoidance, as the
case may be, of obligations, transfers of Property, or interests in Property, offsets,
lawful currency or its equivalents, and other types or kinds of Property (or the value
thereof) recoverable or avoidable under Chapter 5 of the Bankruptcy Code in the Bankruptcy
Case or under other Applicable Law;




          (xii) All accessions to, substitutions for and all replacements, products and cash and
non-cash proceeds of (i) through (xi) above, including proceeds of and unearned premiums
with respect to insurance policies insuring any of the Collateral and claims against any
Person for loss of, damage to or destruction of any of the Collateral; and




          (xiii) All books and records (including customer lists, files, correspondence, tapes,
computer programs, print-outs, and other computer materials and records) of such Credit
Party pertaining to any of (i) through (xii) above.



     6.2. Lien on Deposit Accounts. As additional security for the payment and performance
of the Obligations, each Credit Party hereby grants to Agent, for the benefit of itself as Agent
and for the Pro Rata benefit of Lenders, a continuing security interest in and Lien upon, and
hereby collaterally assigns to Agent, all of such Credit Party’s right, title and interest in and
to each Deposit Account of such Credit Party (other than Excluded Cash Accounts) and in and to any
deposits or other sums at any time credited to each such Deposit Account, including any sums in any
blocked account or any special lockbox account and in the accounts in which sums are deposited. In
connection with the foregoing, each Credit Party hereby authorizes and directs each such bank or
other depository to pay or deliver to Agent upon its written demand therefor made at any time upon
the occurrence and during the continuation of an Event of Default and without further notice to
such Credit Party (such notice being hereby expressly waived), all balances in each Deposit Account
maintained by Credit Party with such depository for application to the Obligations then
outstanding, and the rights given Agent in this Section 6.4 shall be cumulative with and in
addition to Agent’s other rights and remedies in regard to the foregoing Property as proceeds of
Collateral. Each Credit Party hereby irrevocably appoints Agent as such Credit Party’s
attorney-in-fact to, following the occurrence and during the continuance of an Event of Default,
collect any and all such



29









 




balances to the extent any such payment is not made to Agent by such bank
or other depository after demand thereon is made by Agent pursuant hereto.




     6.3. Lien on Real Estate. The due and punctual payment and performance of the
Obligations shall also be secured by the Lien created by the Mortgage upon all Real Estate of the
relevant Borrower described therein.



     6.4. Other Collateral. In addition to the items of Property referred to in Section
6.1 above, the Obligations shall also be secured by the Cash Collateral to the extent provided
herein and all of the other items of Property from time to time described in any of the Loan
Documents as security for any of the Obligations.



     6.5. Lien Perfection; Further Assurances.
Promptly after Agent’s request therefor, Credit Parties shall execute or cause to be executed
and deliver to Agent such instruments, assignments, title certificates or other documents as are
necessary under the UCC or other Applicable Law (including any motor vehicle certificates of title
act) to perfect (or continue the perfection of) Agent’s Lien upon the Collateral, and shall take
such other action as may be requested by Agent to give effect to or carry out the intent and
purposes of this Agreement. Unless prohibited by Applicable Law, each Credit Party hereby
authorizes Agent to execute and file any such financing statement on such Credit Party’s behalf.
The parties agree that a carbon, photographic or other reproduction of this Agreement shall be
sufficient as a financing statement and may be filed in any appropriate office in lieu thereof.



SECTION 7. COLLATERAL ADMINISTRATION




     7.1. General Provisions.



          7.1.1. Location of Collateral. All tangible items of Collateral, other than Inventory
in transit and motor vehicles, shall at all times be kept by Credit Parties at one or more of the
business locations of Credit Parties set forth in Schedule 7.1.1 hereto and shall not be
moved therefrom, without the prior written approval of Agent, except that in the absence of an
Event of Default and acceleration of the maturity of the Obligations in consequence thereof, Credit
Parties may (i) make sales or other dispositions of any Collateral to the extent authorized by
Section 9.2.10 hereof, (ii) move Inventory or Equipment or any record relating to any Collateral to
a location in the United States other than those shown on Schedule 7.1.1 hereto so long as
Credit Parties have given Agent at least 30 calendar days (or such lesser period of time as shall
be acceptable in any specific instance to Agent) prior written notice of such new location and
prior to moving any Inventory or Equipment to such location there have been filed any UCC-1
financing statements and any other appropriate documentation necessary to perfect or continue the
perfection of Agent’s first priority Liens with respect to such Inventory or Equipment and (iii)
move Inventory and Equipment which is not included in the Borrowing Base, having an aggregate value
of less than $40,000,000, to a location in the United States other than those shown on Schedule
7.1.1 hereto, and without notifying Agent (“Permitted Offsite Collateral”). Notwithstanding
anything to the contrary contained in this Agreement, Credit Parties shall not be permitted to
keep, store or otherwise maintain any Collateral at any location (including any location described
in Section 7.1.1), unless (i) a Credit Party is the owner of such location, (ii) a Credit Party
leases such location and the landlord has executed in favor of Agent a Landlord Waiver, (iii) the
Collateral consists of Inventory placed with a warehouseman, bailee or processor, Agent has
received from such warehouseman, bailee or processor an acceptable Lien waiver agreement and an
appropriate UCC-1 financing statement has been filed with the appropriate Governmental Authority in
the jurisdiction where such warehouseman, bailee or processor is located in order to perfect, or to
maintain the uninterrupted perfection of, Agent’s security interest in such Inventory, or (iv) such
constitutes Permitted Offsite Collateral.




30









 








          7.1.2. Insurance of Collateral; Condemnation Proceeds.





          (i) Each Credit Party shall maintain and pay for insurance upon all Collateral,
wherever located, covering casualty, hazard, public liability, theft, malicious mischief,
and such other risks in such amounts and with such insurance companies as are reasonably
satisfactory to Agent. Schedule 7.1.2 describes all insurance of Credit Parties in
effect on the date hereof. Unless otherwise agreed by Agent, all proceeds payable under
each such policy shall be payable to Agent for application to the Obligations. Each Credit
Party shall deliver the originals or certified copies of such policies to Agent with
satisfactory lender’s loss payable endorsements reasonably satisfactory to Agent, naming
Agent as sole loss payee, assignee or additional insured, as appropriate. Each policy of
insurance for which Agent is an additional insured or loss payee shall contain a clause
requiring the insurer to give not less than 30 days
prior written notice to Agent in the event of cancellation of the policy for any reason
whatsoever and a clause specifying that the interest of Agent shall not be impaired or
invalidated by any act or neglect of any Credit Party or the owner of the Property or by the
occupation of the premises for purposes more hazardous than are permitted by said policy.
If any Credit Party fails to provide and pay for such insurance, Agent may, at its option,
but shall not be required to, procure the same and charge Borrowers therefor. Each Credit
Party agrees to deliver to Agent, promptly as rendered, true copies of all reports made in
any reporting forms to insurance companies. For so long as no Event of Default exists, each
Credit Party shall have the right to settle, adjust and compromise any claim with respect to
any insurance maintained by each Credit Party provided that all proceeds thereof are applied
in the manner specified in this Agreement, and Agent agrees promptly to provide any
necessary endorsement to any checks or drafts issued in payment of any such claim. At any
time that an Event of Default exists, only Agent shall be authorized to settle, adjust and
compromise such claims, Agent shall have all rights and remedies with respect to such
policies of insurance as are provided for in this Agreement and the other Loan Documents.




          (ii) Any proceeds of insurance referred to in this Section 7.1.2 and any condemnation
awards that are paid to Agent in connection with a condemnation of any of the Collateral
shall be paid to Agent and applied to the Obligations in the manner determined by Agent.



          7.1.3. Protection of Collateral. All expenses of protecting, storing, warehousing,
insuring, handling, maintaining and shipping any Collateral, all Taxes imposed under any Applicable
Law on any of the Collateral or in respect of the sale thereof, and all other payments required to
be made by Agent to any Person to realize upon any Collateral shall be borne and paid by Credit
Parties. Agent shall not be liable or responsible in any way for the safekeeping of any of the
Collateral or for any loss or damage thereto (except for reasonable care in the custody thereof
while any Collateral is in Agent’s actual possession) or for any diminution in the value thereof,
or for any act or default of any warehouseman, carrier, forwarding agency, or other Person
whomsoever, but the same shall be at Credit Parties’ sole risk.




          7.1.4. Defense of Title to Collateral. Each Credit Party shall at all times defend
its title to the Collateral and Agent’s Liens therein against all Persons and all claims and
demands whatsoever other than Permitted Liens.




     7.2. Administration of Accounts.



          7.2.1. Records and Schedules of Accounts. Each Borrower shall keep accurate and
complete records of its Accounts and all payments and collections thereon and shall submit to Agent
on such periodic basis as Agent shall request a sales and collections report for the preceding
period, in form satisfactory to Agent. Borrowers shall also provide to Agent on or before the 20th
day of each month (i) a




31









 







list and other detailed information, in form satisfactory to Agent, of all
Bonded Contracts and Bonded Accounts which shall specify the issuer of the Surety Bond issued in
connection therewith, (ii) a “WIP Report” substantially in the form of Schedule 7.2.1
attached hereto, and (iii) upon Agent’s request, a detailed aged trial balance of all Accounts
existing as of the last day of the preceding month, specifying the names, addresses, face value,
dates of invoices and due dates for each Account Debtor obligated on an Account so listed
(“Schedule of Accounts”) (provided, however, that at Agent’s discretion, Agent may require that
Borrowers report this information on a twice monthly basis), and, upon Agent’s request therefor,
copies of proof of delivery and a copy of all documents, including repayment histories and present
status reports relating to the Accounts so scheduled and such other matters and information
relating to the status of then existing Accounts as Agent shall reasonably request. In addition,
if Accounts in an aggregate face amount in excess of $1,000,000 cease to be Eligible Accounts
(other than by virture of aging) in whole or in part, Borrowers shall notify Agent of such
occurrence promptly (and in any event
within 2 Business Days) after any Borrower’s having obtained knowledge of such occurrence and
the Borrowing Base shall thereupon be adjusted to reflect such occurrence. Upon Agent’s request,
each Borrower shall deliver to Agent copies of invoices or invoice registers related to all of its
Accounts.




          7.2.2. Discounts, Disputes and Returns. If any Borrower grants any discounts,
allowances or credits that are not shown on the face of the invoice for the Account involved,
Borrowers shall report such discounts, allowances or credits, as the case may be, to Agent as part
of the next required Schedule of Accounts. If any amounts due and owing on Eligible Accounts in
excess of $1,000,000 are in dispute between any Borrower and any Account Debtor, or if any returns
are made in excess of $500,000 with respect to any Eligible Accounts owing from an Account Debtor,
Borrowers shall provide Agent with written notice thereof at the time of submission of the next
Schedule of Accounts, and upon Agent’s request, explaining in reasonable detail the reason for the
dispute or return, all claims related thereto and the amount in controversy. Upon and after the
occurrence of an Event of Default, Agent shall have the right to settle or adjust all disputes and
claims directly with the Account Debtor and to compromise the amount or extend the time for payment
of any Accounts comprising a part of the Collateral upon such terms and conditions as Agent may
deem advisable, and to charge the deficiencies, costs and expenses thereof, including attorneys’
fees, to Borrowers.




          7.2.3. Taxes. If an Account of any Borrower includes a charge for any Taxes payable
to any governmental taxing authority, Agent is authorized, in its sole discretion, to pay the
amount thereof to the proper taxing authority for the account of such Borrower and to charge
Borrowers therefor; provided, however, that neither Agent nor Lenders shall be
liable for any Taxes that may be due by any or all Borrowers.




          7.2.4. Account Verification. Whether or not a Default or an Event of Default exists,
Agent shall have the right at any time, in the name of Agent, any designee of Agent or any Credit
Party to verify the validity, amount or any other matter relating to any Accounts of any Credit
Party by mail, telephone, telegraph or otherwise. Credit Parties shall cooperate fully with Agent
in an effort to facilitate and promptly conclude any such verification process.




          7.2.5. Maintenance of Dominion Account. Consistent with the cash management
arrangement Borrowers have in place with Bank on the Closing Date, Borrowers shall maintain a
Dominion Account pursuant to a blocked account or other arrangement acceptable to Agent and, in the
case of such Dominion Account and blocked account arrangement, with such bank as may be selected by
Borrowers and be acceptable to Agent. Borrowers shall issue to each such depository bank an
irrevocable letter of instruction directing such bank to deposit all payments or other remittances
received in the blocked account to the Dominion Account. Borrowers shall enter into agreements, in
form satisfactory to Agent, with each bank at which a Dominion Account is maintained by which such
bank shall immediately transfer to the Payment Account all monies deposited to the Dominion
Account. All funds deposited in




32









 







each Dominion Account shall be subject to Agent’s Lien. Borrowers
shall obtain the agreement (in favor of and in form and content satisfactory to Agent) by each bank
at which a Dominion Account is maintained to waive any offset rights against the funds deposited to
such Dominion Account, except offset rights in respect of charges incurred in the administration of
such Dominion Account. Neither Agent nor Lenders assume any responsibility to any or all Borrowers
for such blocked account arrangement or Dominion Account, including any claim of accord and
satisfaction or release with respect to deposits accepted by any bank thereunder.




          7.2.6. Collection of Accounts and Proceeds of Collateral. To expedite collection,
Borrowers shall endeavor in the first instance to make collection of Borrowers’ Accounts for Agent
and Lenders. All Payment Items received by any Borrower in respect of its Accounts, together with
the proceeds of any other Collateral, shall be held by such Borrower as trustee of an express trust
for Agent’s
benefit and shall immediately deposit same in kind in the Dominion Account. Agent retains the
right at all times after the occurrence of an Event of Default to notify Account Debtors of each
Borrower that Accounts have been assigned to Agent and to collect Accounts directly in its own name
and to charge to Borrowers the collection costs and expenses, incurred by Agent or Lenders,
including reasonable attorneys’ fees.




     7.3. Administration of Inventory.



          7.3.1. Records and Reports of Inventory. Each Borrower shall keep accurate and
complete records of its Inventory and shall furnish Agent and Lenders inventory reports respecting
such Inventory in form and detail satisfactory to Agent and Lenders at such times as Agent and
Lenders may request, provided that until notified differently by Agent, such reports shall be due
monthly by the 23rd day of each month. Each Borrower shall, at Borrowers’ expense, conduct a
physical inventory no less frequently than annually and periodic cycle counts consistent with such
Borrower’s historical practices and shall provide to Agent and Lenders a report based on each such
physical inventory and cycle count promptly thereafter, together with such supporting information
as Agent shall request. Agent may participate in and observe each physical count or inventory.
Agent may at any time in its sole discretion require an appraisal of the Inventory of Borrowers,
each such appraisal to be performed at Borrowers’ expense and by an appraiser satisfactory to
Agents; provided, however, as long as no Default or Event of Default exists, Borrower shall
not be required to pay for such appraisal more frequently than once every twelve calendar months.




          7.3.2. Returns of Inventory. No Borrower shall return any of its Inventory to a
supplier or vendor thereof, or any other Person, whether for cash, credit against future purchases
or then existing payables, or otherwise, unless (i) such return is in the Ordinary Course of
Business of such Borrower and such Person; (ii) no Default or Event of Default exists or would
result therefrom; (iii) the return of such Inventory will not result in an Out-of-Formula
Condition; (iv) such Borrower promptly notifies Agent thereof if the aggregate Value of all
Eligible Inventory returned in any month exceeds $50,000; and (v) any payments received by any
Borrower in connection with any such return are promptly turned over to Agent for application to
the Obligations.




     7.4. Administration of Equipment.



          7.4.1. Records and Schedules of Equipment. Each Borrower shall keep accurate records
itemizing and describing the kind, type, quality, quantity and cost of its Equipment and all
dispositions made in accordance with Section 7.4.2 hereof, and shall furnish Agent and Lenders with
a current schedule containing the foregoing information at such times as Agent may request.
Promptly after request therefor by Agent, Borrowers shall deliver to Agent and Lenders any and all
evidence of ownership, if any, of any of the Equipment.




33









 








          7.4.2. Dispositions of Equipment. No Borrower will sell, lease or otherwise dispose
of or transfer any of the Equipment or any part thereof without the prior written consent of Agent;
provided, however, that the foregoing restriction shall not apply, for so long as
no Default or Event of Default exists, to (i) dispositions of Equipment after the Closing Date
which, in the aggregate during any consecutive 12-month period, has a fair market value or book
value, whichever is more, of $1,500,000 or less, provided that all Net Proceeds thereof are
remitted to Agent for application to the Obligations, or (ii) replacements of Equipment that is
substantially worn, damaged or obsolete with Equipment of like kind, function and value, provided
that the replacement Equipment shall be acquired prior to or within 60 days after any disposition
of the Equipment that is to be replaced, the replacement Equipment shall be free and clear of Liens
other than Permitted Liens that are not Purchase Money Liens.




          7.4.3. Condition of Equipment. The Equipment is, in all material respects, in good
operating condition and repair, and all necessary replacements of and repairs thereto shall be made
so that the value and operating efficiency of the Equipment shall be maintained and preserved,
reasonable wear and tear excepted. No Borrower will permit material portion any of the Equipment
to become affixed to any real Property leased to such Borrower so that an interest arises therein
under the real estate laws of the applicable jurisdiction unless the landlord of such real Property
has executed a landlord waiver or leasehold mortgage in favor of and in form acceptable to Agent,
and no Borrower will permit any material portion of the Equipment to become an accession to any
personal Property that is subject to a Lien unless the Lien is a Permitted Lien.




          7.4.4. Appraisals. Agent may in its sole discretion at any time require an appraisal
of the Equipment of the Borrowers, each such appraisal to be performed at Borrowers’ expense and by
an appraiser satisfactory to Agent; provided, however, as long as no Default or
Event of Default exists, Borrower shall not be required to pay for such appraisal more frequently
than once every twelve calendar months.




     7.5. Borrowing Base Certificates. On the Closing Date, Borrowers shall deliver to
Agent a Borrowing Base Certificate prepared as of the close of business on March 31, 2006 and
thereafter Borrowers shall deliver to Agent on or before the 23rd day of each month a Borrowing
Base Certificate prepared as of the close of business of the previous month, and Borrowers shall
deliver a Borrowing Base Certificate at such other times as Agent may request. All calculations of
Availability in connection with any Borrowing Base Certificate shall originally be made by
Borrowers and certified by a Senior Officer of Parent to Agent, provided that Agent shall have the
right to review and adjust, in the exercise of its reasonable credit judgment, any such calculation
(i) to reflect its reasonable estimate of declines in value of any of the Collateral described
therein and (ii) to the extent that such calculation is not in accordance with this Agreement or
does not accurately reflect the amount of the Availability Reserve.



SECTION 8. REPRESENTATIONS AND WARRANTIES




     8.1. General Representations and Warranties. To induce Agent and Lenders to enter
into this Agreement and to make available the Commitments, each Credit Party warrants and
represents to Agent and Lenders that:



          8.1.1. Organization and Qualification. Each Credit Party and each of its Subsidiaries
is an entity duly organized, validly existing and in good standing under the laws of the
jurisdiction of its organization. Each Credit Party and each of its Subsidiaries is duly qualified
and is authorized to do business and is in good standing as a foreign corporation in each state or
jurisdiction listed on Schedule 8.1.1 hereto and in all other states and jurisdictions in
which the failure of any such Credit Party or any of such Subsidiaries to be so qualified would
have a Material Adverse Effect.




34









 








          8.1.2. Power and Authority. Each Credit Party and each of its Subsidiaries is duly
authorized and empowered to enter into, execute, deliver and perform this Agreement and each of the
other Loan Documents to which it is a party. The execution, delivery and performance of this
Agreement and each of the other Loan Documents have been duly authorized by all necessary
corporate, limited liability company or partnership action and do not and will not (i) require any
consent or approval of any of the holders of the Equity Interests of any Credit Party or any of its
Subsidiaries; (ii) contravene the Organization Documents of any Credit Party or any of its
Subsidiaries; (iii) violate, or cause any Credit Party or any of its Subsidiaries to be in default
under, any provision of any Applicable Law, order, writ,
judgment, injunction, decree, determination or award in effect having applicability to such
Credit Party or any such Subsidiary, including without limitation any order of the Bankruptcy
Court; (iv) result in a breach of or constitute a default under any indenture or loan or credit
agreement or any other material agreement, lease or instrument to which any Credit Party or any of
its Subsidiaries is a party or by which it or its Properties may be bound or affected; or (v)
result in, or require, the creation or imposition of any Lien (other than Permitted Liens) upon or
with respect to any of the Properties now owned or hereafter acquired by any Credit Party or any of
its Subsidiaries.




          8.1.3. Legally Enforceable Agreement. This Agreement is, and each of the other Loan
Documents when delivered under this Agreement will be, a legal, valid and binding obligation of
each Credit Party and each of its Subsidiaries signatories thereto enforceable against them in
accordance with the respective terms of such Loan Documents, except as the enforceability thereof
may be limited by bankruptcy, insolvency or other similar laws of general application affecting the
enforcement of creditors’ rights.




          8.1.4. Capital Structure. As of the date hereof, Schedule 8.1.4 hereto states
(i) the correct name of each Subsidiary, its jurisdiction of incorporation or organization and the
percentage of its Equity Interests having voting powers owned by each Person, (ii) the name of each
corporate Affiliate of each Credit Party and the nature of the affiliation and (iii) the number of
authorized and issued Equity Interests (and treasury shares) of each Credit Party and each of its
Subsidiaries (other than Parent). Each Credit Party has good title to all of the shares it
purports to own of the Equity Interests of each of its Subsidiaries, free and clear in each case of
any Lien other than Permitted Liens. All such Equity Interests have been duly issued and are fully
paid and non-assessable. Since the date of the financial statements of Parent and its Subsidiaries
referred to in Section 8.1.9 hereof, no Credit Party has made, or obligated itself to make, any
Distribution. There are no outstanding options to purchase, or any rights or warrants to subscribe
for, or any commitments or agreements to issue or sell, or any Equity Interests or obligations
convertible into, or any powers of attorney relating to, shares of the capital stock of any Credit
Party (other than Parent) or any Subsidiary. Except as set forth on Schedule 8.1.4 hereto,
there are no outstanding agreements or instruments binding upon the holders of any Credit Party’s
Equity Interests relating to the ownership of its Equity Interests.




          8.1.5. Organizational Names. During the 5-year period preceding the date of this
Agreement, no Credit Party nor any of its Subsidiaries has been known as or used any corporate,
organizational, fictitious or trade names except those listed on Schedule 8.1.5 hereto.
Except as set forth on Schedule 8.1.5, no Credit Party nor any of its Subsidiaries has been
the surviving corporation or other entity of a merger or consolidation or acquired all or
substantially all of the assets of any Person.




          8.1.6. Business Locations; Agent for Process. As of the date hereof, the chief
executive office and other places of business of each Credit Party and each of its Subsidiaries are
as listed on Schedule 7.1.1 hereto. During the 5-year period preceding the date of this
Agreement, no Credit Party nor any of its Subsidiaries has had an office, place of business or
agent for service of process other than as listed on Schedule 7.1.1. Except as shown on
Schedule 7.1.1 on the date hereof, no Inventory of any




35









 







Credit Party or any Subsidiary is
stored with a bailee, warehouseman or similar Person, nor is any Inventory consigned to any Person.




          8.1.7. Title to Properties; Priority of Liens. Each Credit Party and each of its
Subsidiaries has good and indefeasible title to and fee simple ownership of, or valid and
subsisting leasehold interests in, all of its real Property, and good title to all of its personal
Property, including all Property reflected in the financial statements referred to in Section 8.1.9
or delivered pursuant to Section 9.1.3, in each case free and clear of all Liens except Permitted
Liens. Each Credit Party has paid or discharged, and has caused each of its Subsidiaries to pay
and discharge, all lawful claims (in excess of
$50,000 in the aggregate for each Credit Party) which, if unpaid, might become a Lien against
any Properties of such Credit Party or such Subsidiary that is not a Permitted Lien. The Liens
granted to Agent pursuant to this Agreement and the other Loan Documents are first priority Liens,
subject only to those Permitted Liens which are expressly permitted by the terms of this Agreement
to have priority over the Liens of Agent.




          8.1.8. Accounts. Agent may rely, in determining which Accounts are Eligible Accounts,
on all statements and representations made by a Borrower with respect to any Account. Unless
otherwise indicated in writing to Agent, with respect to each Account, Borrowers warrant that:





          (i) It is genuine and in all respects what it purports to be, and it is not evidenced
by a judgment;




          (ii) It arises out of a completed, bona fide sale and delivery of goods or rendition of
services by a Borrower in the Ordinary Course of its Business and substantially in
accordance with the terms and conditions of all purchase orders, contracts or other
documents relating thereto and forming a part of the contract between a Borrower and the
Account Debtor;




          (iii) It is for a sum certain maturing as stated in the duplicate invoice covering such
sale or rendition of services, a copy of which has been furnished or is available to Agent
on request;




          (iv) Such Account, and Agent’s security interest therein, is not, and will not (by
voluntary act or omission of a Borrower) be in the future, subject to any offset, Lien,
deduction, defense, dispute, counterclaim or any other adverse condition except for disputes
resulting in returned goods where the amount in controversy is deemed by Agent to be
immaterial, and each such Account is absolutely owing to a Borrower and is not contingent in
any respect or for any reason;




          (v) The contract under which such Account arose does not condition or restrict a
Borrower’s right to assign to Agent the right to payment thereunder unless (i) such Borrower
has obtained the Account Debtor’s consent to such collateral assignment or complied with any
conditions to such assignment or (ii) under the UCC or other Applicable Law any such
restrictions are ineffective to prevent the grant of a Lien upon such Account in favor of
Agent;




          (vi) Such Borrower has not made any agreement with any Account Debtor thereunder for
any extension, compromise, settlement or modification of any such Account or any deduction
therefrom, except discounts or allowances which are granted by a Borrower in the ordinary
course of its business for prompt payment and which are reflected in the calculation of the
net amount of each respective invoice related thereto and are reflected in the Schedules of
Accounts submitted to Agent pursuant to Section 7.2.1 hereof;



36









 






          (vii) To the best of such Borrower’s knowledge, there are no facts, events or
occurrences which are reasonably likely to impair in any material respect the validity or
enforceability of any of its Accounts or reduce the amount payable thereunder from the face
amount of the invoice and statements delivered to Agent with respect thereto;




          (viii) To the best of such Borrower’s knowledge, (1) the Account Debtor thereunder had
the capacity to contract at the time any contract or other document giving rise to the
Account was executed and (2) such Account Debtor is Solvent; and




          (ix) To the best of such Borrower’s knowledge, there are no proceedings or actions
which are pending against any Account Debtor thereunder and which are reasonably likely to
result in any material adverse change in such Account Debtor’s financial condition or the
collectibility of such Account.


8.1.9. Financial Statements. The Consolidated and consolidating balance sheets of
Parent and such other Persons described therein (including the accounts of all Subsidiaries of
Parent for the respective periods during which a Subsidiary relationship existed) as of March 31,
2006, and the related statements of operations, stockholders’ equity, and cash flows for the period
ended on such date, have been prepared in accordance with GAAP, and present fairly the financial
positions of Borrowers and such Persons at such date and the results of Borrowers’ operations for
such period; provided that the statements of stockholders’ equity and cash flows are not prepared
on a consolidating basis. Since March 31, 2006, and except for the filing and prosecution of the
Bankruptcy Case, there has been no material change in the condition, financial or otherwise, of the
Credit Parties, taken as a whole, as shown on the Consolidated balance sheet as of such date and no
material change in the aggregate value of Equipment and real Property owned by any Borrower or such
other Persons.



8.1.10. Full Disclosure. The financial statements referred to in Section 8.1.9 hereof
do not contain any untrue statement of a material fact and neither this Agreement nor any other
written statement contains or omits any material fact necessary to make the statements contained
herein or therein not materially misleading. There is no fact or circumstances in existence on the
date hereof which any Credit Party has failed to disclose to Agent in writing that may reasonably
be expected to have a Material Adverse Effect.



8.1.11. Solvent Financial Condition. Each Credit Party (other than the Shutdown
Subsidiaries and the Restricted Subsidiaries) is now Solvent and, after giving effect to the Loans
to be made hereunder, the Letters of Credit to be issued in connection herewith and the
consummation of the other transactions described in the Loan Documents, will be Solvent.



8.1.12. Surety Obligations. Except as set forth on Schedule 8.1.12 hereto on
the date hereof, no Credit Party nor any of its Subsidiaries is obligated as surety or indemnitor
under any surety or similar bond or other contract issued or has entered into any agreement to
assure payment, performance or completion of performance of any undertaking or obligation of any
Person.



8.1.13. Taxes. The FEIN of each Credit Party and each of its Subsidiaries is as shown
on Schedule 8.1.13 hereto. Each Credit Party and each of its Subsidiaries has filed all
federal, state and local tax returns and other reports it is required by law to file and has paid,
or made provision for the payment of, all Taxes upon it, its income and Properties as and when such
Taxes are due and payable, except to the extent being Properly Contested, or which in the aggregate
do not exceed $100,000 for all Credit Parties. The provision for Taxes on the books of each Credit
Party and each of its Subsidiaries are adequate for all years not closed by applicable statutes,
and for its current Fiscal Year.




37









 







8.1.14. Brokers. There are no claims against any Credit Party for brokerage
commissions, finder’s fees or investment banking fees in connection with the transactions
contemplated by this Agreement or any of the other Loan Documents.



8.1.15. Intellectual Property. Except as would not reasonably be expected to result
in a Material Adverse Effect, each Credit Party and each of its Subsidiaries each owns or has the
lawful right to use all Intellectual Property necessary for the present and planned future conduct
of its business without any conflict with the rights of others; there is no objection to, or
pending (or, to any Credit Party’s knowledge, threatened) Intellectual Property Claim with respect
to any Credit Party’s or any
Subsidiary’s right to use any such Intellectual Property and no Credit Party is aware of any
grounds for challenge or objection thereto; and, except as may be disclosed on Schedule
8.1.15, neither any Credit Party nor any Subsidiary pays any royalty or other compensation to
any Person for the right to use any Intellectual Property other than shrink-wrapped software
applications. All such patents, trademarks, service marks, trade names, copyrights, licenses and
other similar rights are listed on Schedule 8.1.15 hereto, to the extent they are
registered under any Applicable Law or are otherwise material to any Credit Party’s or any
Subsidiary’s business.



8.1.16. Governmental Approvals. Each Credit Party and each of its Subsidiaries has,
and is in good standing with respect to, all material Governmental Approvals necessary to continue
to conduct its business as heretofore or proposed to be conducted by it and to own or lease and
operate its Properties as now owned or leased by it.



8.1.17. Compliance with Laws. Each Credit Party and each of its Subsidiaries has duly
complied with, and its Properties, business operations and leaseholds are in compliance in all
material respects with, the provisions of all Applicable Law (except to the extent that any such
noncompliance with Applicable Law could not reasonably be expected to have a Material Adverse
Effect) and there have been no citations, notices or orders of noncompliance issued to any Credit
Party or any of the Subsidiaries under any such law, rule or regulation except to the extent not
reasonably expected to have a Material Adverse Effect. No Inventory has been produced in violation
of the FLSA.



8.1.18. Burdensome Contracts. No Credit Party nor any of the Subsidiaries is a party
or subject to any contract, agreement, or charter or other corporate restriction, which has or
could be reasonably expected to have a Material Adverse Effect. No Credit Party nor any of the
Subsidiaries is a party or subject to any Restrictive Agreement, except as set forth on
Schedule 8.1.18 hereto, none of which prohibit the execution or delivery of any of the Loan
Documents by any Obligor or the performance by any Obligor of its obligations under any of the Loan
Documents to which is a party, in accordance with the terms of such Loan Documents.



8.1.19. Litigation. Except as set forth on Schedule 8.1.19 hereto and any
litigation described in the Disclosure Statement, there are no actions, suits, proceedings or
investigations pending or, to the knowledge of any Credit Party, threatened on the date hereof,
against or affecting any Credit Party or any of the Subsidiaries, or the business, operations,
Properties, prospects, profits or condition of any Credit Party or any of the Subsidiaries, (i)
which relates to any of the Loan Documents or any of the transactions contemplated thereby or (ii)
which, if determined adversely to any Credit Party or any of the Subsidiaries, could reasonably be
expected to have a Material Adverse Effect. To the knowledge of any Credit Party, no Credit Party
nor any of the Subsidiaries is in default on the date hereof with respect to any order, writ,
injunction, judgment, decree or rule of any court, Governmental Authority or arbitration board or
tribunal.



8.1.20. No Defaults. No event has occurred and no condition exists which would
reasonably be expected to, upon or after the execution and delivery of this Agreement or any Credit




38









 







Party’s performance hereunder, constitute a Default or an Event of Default. No Credit Party nor
any of its Subsidiaries is in default, and no event has occurred and no condition exists which
constitutes or which with the passage of time or the giving of notice or both would constitute a
default, under any Material Contract or in the payment of any Debt of any Credit Party or a
Subsidiary to any Person for Money Borrowed.



          8.1.21. Leases. Schedule 8.1.21 hereto is a complete listing of each
capitalized and operating lease of each Credit Party and each of its Subsidiaries on the date
hereof that constitutes a Material Contract. Except to the extent not reasonably expected to have
a Material Adverse Effect, each
Credit Party and each of its Subsidiaries is in substantial compliance with all of the terms
of each of its respective capitalized and operating leases and there is no basis upon which the
lessors under any such leases could terminate same or declare such Credit Party or any of its
Subsidiaries in default thereunder.



          8.1.22. Pension Plans. Except as disclosed on Schedule 8.1.22 hereto, no
Credit Party nor any of its Subsidiaries has any Plan on the date hereof. Each Credit Party and
each of its Subsidiaries is in full compliance in all material respects with the requirements of
ERISA and the regulations promulgated thereunder with respect to each Plan. No fact or situation
that is reasonably likely to result in a material adverse change in the financial condition of any
Credit Party or any of its Subsidiaries exists in connection with any Plan. No Credit Party nor
any of its Subsidiaries has any withdrawal liability in connection with a Multi-employer Plan.



          8.1.23. Trade Relations. There exists no actual or threatened termination,
cancellation or limitation of, or any materially adverse modification or change in, the business
relationship between any Credit Party and any customer or any group of customers whose purchases
individually or in the aggregate are material to the business of such Credit Party, or with any
material supplier or group of suppliers, and there exists no condition or state of facts or
circumstances which is reasonably likely to have a Material Adverse Effect or prevent any Credit
Party from conducting such business after the consummation of the transactions contemplated by this
Agreement in substantially the same manner in which it has heretofore been conducted.



          8.1.24. Labor Relations. Except as described on Schedule 8.1.24 hereto, no
Credit Party nor any of the Subsidiaries is a party to any collective bargaining agreement on the
date hereof. Except as described on Schedule 8.1.24 hereto, on the date hereof, there are
no material grievances, disputes or controversies with any union or any other organization of any
Credit Party’s or any Subsidiary’s employees, or, to any Credit Party’s knowledge, any threats of
strikes, work stoppages or any asserted pending demands for collective bargaining by any union or
organization.



          8.1.25. Not a Regulated Entity. No Credit Party is (i) an “investment company” or a
“person directly or indirectly controlled by or acting on behalf of an investment company” within
the meaning of the Investment Company Act of 1940; (ii) a “holding company,” or a “subsidiary
company” of a “holding company,” or an “affiliate” of a “holding company” or of a “subsidiary
company” of a “holding company,” within the meaning of the Public Utility Holding Company Act of
1935; or (iii) subject to regulation under the Federal Power Act, the Interstate Commerce Act, any
public utilities code or any other Applicable Law regarding its authority to incur Debt.



          8.1.26. Margin Stock. No Credit Party nor any of its Subsidiaries is engaged,
principally or as one of its important activities, in the business of extending credit for the
purpose of purchasing or carrying any Margin Stock.




39









 







          8.1.27. Bonded Contracts. No Credit Party nor any of its Subsidiaries has any
agreement (including any intercreditor agreements) with any issuer of a Surety Bond (including but
not limited to Chubb) except as disclosed on Schedule 8.1.27.



          8.1.28. Surety Bonds Cash and LCs. No Credit Party nor any of its Subsidiaries has
provided any cash collateral or letters of credit to issuers of Surety Bonds except as disclosed on
Schedule 8.1.28.



          8.1.29. Restricted Subsidiaries. No Restricted Subsidiary has any operations or owns
any material assets.



          8.1.30. Confirmation of Plan. The Bankruptcy Court has entered a Final Order
confirming the Reorganization Plan.




     8.2. Reaffirmation of Representations and Warranties. Each representation and
warranty contained in this Agreement and the other Loan Documents shall be deemed to be reaffirmed
by each Credit Party on each day that any Credit Parties request or are deemed to have requested an
extension of credit or Letter of Credit hereunder, except for changes in the nature of a Credit
Party’s or, if applicable, any of its Subsidiaries’ business or operations that may occur after the
date hereof in the Ordinary Course of Business so long as Agent has consented to such changes or
such changes are not violative of any provision of this Agreement. Notwithstanding the foregoing,
representations and warranties which by their terms are applicable only to a specific date shall be
deemed made only at and as of such date.



     8.3. Survival of Representations and Warranties. All representations and warranties
of Credit Parties contained in this Agreement or any of the other Loan Documents shall survive the
execution, delivery and acceptance thereof by Agent, Lenders and the parties thereto and the
closing of the transactions described therein or related thereto.



SECTION 9. COVENANTS AND CONTINUING AGREEMENTS




     9.1. Affirmative Covenants. For so long as there are any Commitments outstanding and
thereafter until payment in full of the Obligations, each Credit Party covenants that, unless the
Required Lenders have otherwise consented in writing, it shall and shall cause each Subsidiary to:



          9.1.1. Visits and Inspections. Permit representatives of Agent, from time to time, as
often as may be reasonably requested, but only during normal business hours and (except when a
Default or Event of Default exists) upon reasonable prior notice to a Credit Party, to visit and
inspect the Properties of such Credit Party and each of its Subsidiaries, inspect, audit and make
extracts from each Credit Party’s and each Subsidiary’s books and records, and discuss with its
officers, its employees and its independent accountants, such Credit Party’s and each Subsidiary’s
business, financial condition, business prospects and results of operations. Representatives of
each Lender shall be authorized to accompany Agent on each such visit and inspection and to
participate with Agent therein, but at their own expense, unless a Default or Event of Default
exists. Neither Agent nor any Lender shall have any duty to make any such inspection and shall not
incur any liability by reason of its failure to conduct or delay in conducting any such inspection.




          9.1.2. Notices. Notify Agent and Lenders in writing, promptly after such Credit
Party’s obtaining knowledge thereof, (i) of the commencement of any litigation affecting any Credit
Party or any of its Properties, whether or not the claims asserted in such litigation are
considered by Borrowers to be covered by insurance, and of the institution of any administrative
proceeding, to the extent that such litigation or proceeding, if determined adversely to such
Credit Party, would reasonably be expected to




40









 







have a Material Adverse Effect; (ii) of any material
labor dispute to which any Credit Party may become a party, any strikes or walkouts relating to any
of its plants or other facilities, and the expiration of any labor contract to which it is a party
or by which it is bound; (iii) of any material default by any Credit Party under or termination of
any Material Contract or any note, indenture, loan agreement, mortgage, lease, deed, guaranty or
other similar agreement relating to any Debt of such Credit Party exceeding $250,000; (iv) of the
existence of any Default or Event of Default; (v) of any default by any Person under
any note or other evidence of Debt payable to a Credit Party in an amount exceeding $100,000;
(vi) of any judgment against any Obligor in an amount exceeding $250,000; (vii) of the assertion by
any Person of any Intellectual Property Claim, the adverse resolution of which could reasonably be
expected to have a Material Adverse Effect; (viii) of any violation or asserted violation by any
Credit Party of any Applicable Law (including ERISA, OSHA, FLSA or any Environmental Laws), the
adverse resolution of which could reasonably be expected to have a Material Adverse Effect; (ix) of
any Environmental Release by an Credit Party or on any Property owned or occupied by a Credit Party
that is required to be reported to any Governmental Authority; (x) of any claim made on Chubb
related to a Bonded Contract; (xi) of any addition of a Bonded Contract after the Closing Date if
an Account arising under such contract was previously reported on a Borrowing Base Certificate as
unbonded and (xii) of the discharge of Parent’s independent accountants or any withdrawal of
resignation by such independent accountants from their acting in such capacity. In addition,
Borrowers shall give Agent at least 30-calendar days (or such lesser period of time as shall be
acceptable in any specific instance to Agent) prior written notice of any Credit Party’s opening of
any new office or place of business.




          9.1.3. Financial and Other Reporting. Keep adequate records and books of account with
respect to its business activities in which proper entries are made in accordance with GAAP
reflecting all its financial transactions; and cause to be prepared and to be furnished to Agent
and Lenders the following (all to be prepared in accordance with GAAP applied on a consistent
basis, unless Parent’s certified public accountants concur in any change therein, such change is
disclosed to Agent and is consistent with GAAP and, if required by the Required Lenders, the
financial covenants set forth in Section 9.3 are amended in a manner requested by the Required
Lenders to take into account the effects of such change):





          (i) as soon as available, and in any event within 90 days after the close of each
Fiscal Year, unqualified audited balance sheets of Parent and its Subsidiaries as of the end
of such Fiscal Year and the related statements of operations, stockholders’ equity and cash
flow, on a Consolidated and consolidating basis (provided that statements of shareholders’
equity and cash flows are not reported on a consolidating basis), certified without material
qualification by a firm of independent certified public accountants of recognized national
standing selected by Parent but reasonably acceptable to Agent (except for a qualification
for a change in accounting principles with which the accountant concurs), and setting forth
in each case in comparative form the corresponding Consolidated and consolidating figures
for the preceding Fiscal Year;




          (ii) as soon as available, and in any event within 30 days after the end of each month
hereafter (but within 60 days after the last month in a Fiscal Year), including the last
month of Parent’s Fiscal Year, unaudited balance sheets of Parent and its Subsidiaries as of
the end of such month and the related unaudited Consolidated Statements of income and cash
flow for such month and for the portion of Parent’s Fiscal Year then elapsed, on a
Consolidated and consolidating basis (provided that statements of stockholders’ equity and
cash flow are not reported on a consolidating basis), setting forth in each case in
comparative form, the corresponding figures for the preceding Fiscal Year and certified by
the principal financial officer of Parent as prepared in accordance with GAAP and fairly
presenting the Consolidated financial position and results of operations of Parent and its
Subsidiaries for such month and period subject



41









 






only to changes from audit and year-end
adjustments and except that such statements need not contain notes;




          (iii) as soon as available, and in any event within 45 days after the end of each of
the first three Fiscal Quarters of Parent hereafter unaudited balance sheets of Parent and
its Subsidiaries as of the end of such Fiscal Quarter and the related unaudited Consolidated
Statements of income and cash flows for such Fiscal Quarter and for the portion of Parent’s
Fiscal
Year then elapsed, on a Consolidated and consolidating basis (provided that statements
of stockholders’ equity and cash flow are not reported on a consolidating basis), setting
forth in each case in comparative form, the corresponding figures for the preceding Fiscal
Year and certified by the principal financial officer of Parent as prepared in accordance
with GAAP and fairly presenting the Consolidated financial position and results of
operations of Parent and its Subsidiaries for such Fiscal Quarter and period subject only to
changes from audit and year-end adjustments and except that such statements need not contain
notes;




          (iv) as requested by Agent, a listing of all of each Borrower’s trade payables and any
royalty payments due as of the last Business Day of such month, specifying the name of and
balance due each trade creditor (or payee for royalty payments), and, at Agent’s request,
monthly detailed trade payable agings in form acceptable to Agent; and




          (v) promptly after the sending or filing thereof, as the case may be, copies of any
proxy statements, financial statements or reports which Parent has made generally available
to its shareholders and copies of any regular, periodic and special reports or registration
statements which Parent files with the SEC or any Governmental Authority which may be
substituted therefor, or any national securities exchange;




          (vi) promptly prior to the execution thereof, copies of substantially final drafts of
any proposed amendment, supplement, waiver or other modification with respect to the Tranche
B Agreement; and




          (vii) at least five (5) days prior to any request by any Credit Party for the issuance
of a Surety Bond from any Surety, notice of such Credit Party’s intent to request the
issuance of such Surety Bond from such Surety, which notice shall be in form and substance
satisfactory to Agent, and in any event shall include, without limitation, (a) the name of
the Credit Party requesting such Surety Bond, (b) the project related to such proposed
Surety Bond, (c) the name and address of the obligee under such proposed Surety Bond, and
(d) a certification by a Senior Officer of the Parent that (I) the information contained in
such notice is true and correct and (II) no Account included in the Borrowing Base at the
time of such notice would become a Bonded Account upon the issuance of such proposed Surety
Bond; provided, however, if any Account included in the Borrowing Base at
the time of such notice would become a Bonded Account upon the issuance of such proposed
Surety Bond, then, in lieu of providing the certification described in clause (d)(II) above,
such Senior Officer of the Parent may provide an updated Borrowing Base Certificate that
reflects the exclusion of such Account from the Borrowing Base and certifies that the sum of
all outstanding Revolver Loans and Pending Revolver Loans at the time of such notice does
not exceed the Borrowing Base as calculated pursuant to such updated Borrowing Base
Certificate.



          Concurrently with the delivery of the financial statements described in clause (i) of this
Section 9.1.3, Borrowers shall deliver to Agent and Lenders a copy of the accountants’ letter to
Parent’s management that is prepared in connection with such financial statements and also shall
cause to be prepared and shall deliver to Agent and Lenders a certificate of the aforesaid
certified public




42









 







accountants stating to Agent and Lenders that, based upon such accountants’ audit
of the Consolidated financial statements of Parent and its Subsidiaries performed in connection
with their examination of said financial statements, nothing came to their attention that caused
them to believe that Borrowers were not in compliance with Sections 9.2.2, 9.2.3, 9.2.5, 9.2.8,
9.2.9, 9.2.15, 9.2.16 or 9.3 hereof, or, if they are aware of such noncompliance, specifying the
nature thereof, and acknowledging, in a manner satisfactory to Agent, that they are aware that
Agent and Lenders are relying on such financial statements in making their decisions with respect
to the Loans. Concurrently with the delivery of the financial statements
described in clauses (i) and (ii) of this Section 9.1.3, or more frequently if requested by
Agent or any Lender during any period that a Default or Event of Default exists, Borrowers shall
cause to be prepared and furnished to Agent and Lenders a Compliance Certificate executed by the
chief financial officer of Parent in the form of Exhibit E attached hereto.



Promptly after the sending or filing thereof and upon the request of Agent, Borrowers shall also
provide to Agent copies of any annual report to be filed in accordance with ERISA in connection
with each Plan and such other data and information (financial and otherwise) as Agent, from time to
time, may reasonably request bearing upon or related to the Collateral or any Credit Party’s and
each of its Subsidiaries’ financial condition or results of operations.




          9.1.4. Landlord and Storage Agreements. Provide Agent with copies of all existing
agreements, and promptly after execution thereof provide Agent with copies of all future
agreements, between any Credit Party and any landlord, warehouseman or bailee which owns any
premises at which any Eligible Accounts, Eligible Inventory, books and records or any other
material Collateral) is, from time to time, kept.




          9.1.5. Projections. No later than 15 days prior to the end of each Fiscal Year of
Parent, deliver to Agent and Lenders the Projections of Parent and its Subsidiaries for the
forthcoming two Fiscal Years, year by year, and for the forthcoming Fiscal Year, month by month.




          9.1.6. Taxes. Pay and discharge all Taxes prior to the date on which such Taxes become
delinquent or penalties attach thereto, except and to the extent only that such Taxes are being
Properly Contested.




          9.1.7. Compliance with Laws. Comply with all Applicable Law, including ERISA, all
Environmental Laws, FLSA, OSHA, and all laws, statutes, regulations and ordinances regarding the
collection, payment and deposit of Taxes, and obtain and keep in force any and all Governmental
Approvals necessary to the ownership of its Properties or to the conduct of its business, to the
extent that any such failure to comply, obtain or keep in force could be reasonably expected to
have a Material Adverse Effect. Without limiting the generality of the foregoing, if any
Environmental Release required to be reported to any Governmental Authority shall occur at or on
any of the Properties of any Credit Party or any of its Subsidiaries, Borrowers shall, or shall
cause the applicable Subsidiary to, act promptly and diligently to investigate and report to Agent
and if required by Applicable Law all appropriate Governmental Authorities the extent of, and to
make appropriate remedial action as required by Applicable Law to eliminate, such Environmental
Release, whether or not ordered or otherwise directed to do so by any Governmental Authority.




          9.1.8. Insurance. In addition to the insurance required herein with respect to the
Collateral, maintain, with financially sound and reputable insurers, (i) insurance with respect to
its Properties and business against such casualties and contingencies of such type (including
product liability, workers’ compensation, or larceny, embezzlement or other criminal
misappropriation insurance) and in such amounts as is customary in the business of such Borrower or
such Subsidiary.




43









 








          9.1.9. Intellectual Property. Promptly after applying for or otherwise acquiring any
registered Intellectual Property, deliver to Agent in form and substance acceptable to Agent and in
recordable form, all documents necessary for Agent to perfect its Lien on such Intellectual
Property.




          9.1.10. [Intentionally Omitted]




          9.1.11. Pledged Shares. Pledge to Agent, for the benefit itself and Lenders, all of
the Equity Interests of each of their respective Subsidiaries from time to time pursuant to a
Pledge Agreement.




          9.1.12. Motor Vehicle Titles. Promptly deliver to Agent the originals of
substantially all certificates of title (now existing or hereafter arising) issued to any Credit
Party, on motor vehicles not subject to a Purchase Money Lien, and execute such documentation and
take such actions as shall be required by Agent in order for Agent, on behalf of itself and
Lenders, to obtain a perfected Lien subject to no Liens other than Permitted Liens in such motor
vehicles as collateral for the Obligations.




          9.1.13. [Intentionally Omitted].




          9.1.14. [Intentionally Omitted].




          9.1.15. Banking Relationship. In order to facilitate the administration of the credit
facility established pursuant to this Agreement and Agent’s security interest in the Collateral,
each Credit Party shall have established and as long as this Agreement is in effect thereafter
shall maintain Bank as such Credit Party’s principal depository bank, including for the maintenance
of operating, administrative, cash management, collection activity and other deposit accounts for
the conduct of such Credit Party’s business; provided that Credit Parties shall not be required to
maintain the Excluded Cash Account balances at Bank, or any other deposit accounts reasonably
approved by Agent for locations where Bank does not maintain a branch, as long as such other
deposit accounts (other than payroll accounts containing only amounts used to pay current payroll
related obligations) are governed by a control agreement in favor of Agent to be effective no later
than 90 days after the Closing Date.




          9.1.16. Compliance with Reorganization Plan. Credit Parties shall, at all times,
comply in all material respects with all terms, conditions and provisions of the Reorganization
Plan and the Confirmation Order.




          9.1.17. Tranche B Liens. Credit Parties hereby agree (a) that if Tranche B Agent or
Tranche B Lenders are granted a Lien in any Property of any Credit Party or any guarantor or any
other person or entity as security for the Tranche B Loan, Credit Parties shall ensure that Agent,
on behalf of Lenders, shall also promptly receive a Lien in such Property, and shall ensure that
Agent’s Lien in such Property shall be prior to such other Liens, pursuant to documentation
satisfactory to Agent in the good faith exercise of its credit judgment, and (b) that if any Person
guarantees all or any portion of the Tranche B Loan, Credit Parties shall ensure that a comparable
guarantee is promptly obtained in favor of Agent and Lenders in connection with the Obligations,
pursuant to documentation satisfactory to Agent in the good faith exercise of its credit judgment.




     9.2. Negative Covenants. For so long as there are any Commitments outstanding and
thereafter until payment in full of the Obligations, each Credit Party covenants that, unless the
Required Lenders have otherwise consented in writing, it shall not and shall not permit any of its
Subsidiaries to:



          9.2.1. Fundamental Changes. Merge, reorganize, consolidate or amalgamate with any
Person, or liquidate, wind up its affairs or dissolve itself, except for mergers or consolidations
of any




44









 







Subsidiary with another Subsidiary or Parent; change its name or conduct business under any
new fictitious name unless Agent is notified not less than thirty calendar days (or such lesser
period of time as shall be acceptable in any specific instance to Agent) in advance of such name
change; or change its FEIN.




          9.2.2. Loans. Make any loans or other advances of money to any Person other than to
(i) a Subsidiary or (ii) an officer or employee of a Borrower or a Subsidiary of a Borrower for
salary, travel advances, advances against commissions and other similar advances in the Ordinary
Course of Business.




          9.2.3. Permitted Debt. Create, incur, assume, guarantee or suffer to exist any Debt,
except:





          (i) the Obligations;




          (ii) the Tranche B Loan; provided, Agent shall have received a duly executed
Intercreditor Agreement in form and substance satisfactory to Agent;




          (iii) accounts payable, current accrued operating expenses (other than for borrowed
money) and other non-cash accruals by such Credit Party or any of its Subsidiaries that are
not aged more than 90 days from billing date or more than 30 days from the due date, in each
case incurred in the Ordinary Course of Business and paid within such time period of being
due (or billing date, as applicable), unless the same are being Properly Contested;




          (iv) obligations to pay Rentals permitted by Section 9.2.14;




          (v) Permitted Purchase Money Debt;




          (vi) Debt for accrued payroll, Taxes, and other operating expenses (other than for
Money Borrowed) incurred in the Ordinary Course of Business of such Credit Party or such
Subsidiary, including cash management obligations, in each case, so long as payment thereof
is not past due and payable unless, in the case of Taxes only, such Taxes are being Properly
Contested;




          (vii) Permitted Contingent Obligations;




          (viii) Debt in the form of reimbursement obligations for Surety Bonds procured in
Ordinary Course of Business, provided such Surety Bonds are issued pursuant to a bonding
program acceptable to Agent (for the avoidance of doubt, the bonding programs of Chubb, Sure
Tec and Scarborough in effect on the Closing Date are acceptable to Agent);




          (ix) Permitted Capitalized Lease Obligations;




          (x) Subordinated Debt in the amount existing on the date hereof;




          (xi) Debt among Credit Parties;




          (xii) Debt consisting of “Billings in Excess of Costs and Estimated Earnings On
Uncompleted Contracts”, and “Other Non Current Liabilities” each as listed on Parent’s
reported financial statements (which reporting is consistent with prior periods); provided
that such categories of Debt shall not include Debt for Money Borrowed;



45









 






          (xiii) Debt that is not included in any of the preceding paragraphs of this Section
9.2.3, is not secured by a Lien (unless such Lien is a Permitted Lien) and does not
exceed at any time, in the aggregate, the sum of $500,000 as to all Borrowers and all of
their Subsidiaries; and




          (xiv) Refinancing Debt so long as the Refinancing Conditions are met.



          9.2.4. Affiliate Transactions. Enter into, or be a party to any transaction with any
Affiliate or stockholder, except: (i) the transactions contemplated by the Loan Documents; (ii)
payment of reasonable compensation to officers and employees for services actually rendered to
Credit Parties or to their respective Subsidiaries; (iii) payment of customary directors’ fees and
indemnities; (iv) transactions with Affiliates that were consummated prior to the date hereof and
have been disclosed to Agent prior to the Closing Date; (v) transactions with Affiliates (including
among Credit Parties) in the Ordinary Course of Business and pursuant to the reasonable
requirements of such Credit Party’s or such Subsidiary’s business and upon fair and reasonable
terms that are no less favorable to such Credit Party or such Subsidiary than such Credit Party or
such Subsidiary would obtain in a comparable arm’s length transaction with a Person not an
Affiliate or stockholder of such Credit Party or such Subsidiary; and (vi) transactions solely
among Credit Parties; provided, that no Credit Party may make any loan, advance or contribution to
any Restricted Subsidiary if such loan, advance or contribution would cause all loans, advances and
contributions to Restricted Subsidiaries after the Closing Date to exceed $100,000 in the
aggregate.




          9.2.5. Limitation on Liens. Create or suffer to exist any Lien upon any of its
Property, income or profits, whether now owned or hereafter acquired, except the following
(collectively, “Permitted Liens”):





          (i) Liens at any time granted in favor of Agent;




          (ii) Liens for Taxes (excluding any Lien imposed pursuant to any of the provisions of
ERISA) not yet due or being Properly Contested;




          (iii) statutory Liens (excluding any Lien imposed pursuant to any of the provisions of
ERISA) arising in the Ordinary Course of Business of such Credit Party or a Subsidiary, but
only if and for long as (x) payment in respect of any such Lien is not at the time required
or the Debt secured by any such Lien is being Properly Contested and (y) such Liens do not
materially detract from the value of the Property of such Credit Party or such Subsidiary
and do not materially impair the use thereof in the operation of such Credit Party’s or such
Subsidiary’s business;




          (iv) Purchase Money Liens securing Permitted Purchase Money Debt;




          (v) Liens securing Debt of a Subsidiary of any Borrower to a Borrower or to another
Subsidiary;




          (vi) Liens arising by virtue of the rendition, entry or issuance against such Credit
Party or any of its Subsidiaries, or any Property of such Credit Party or any of its
Subsidiaries, of any judgment, writ, order, or decree for so long as any such Lien (a) is in
existence for less than 30 consecutive days after it first arises or is being Properly
Contested and (b) is at all times junior in priority to any Liens in favor of Agent;



46









 






          (vii) Liens incurred or deposits made in the Ordinary Course of Business to secure the
performance of tenders, bids, leases, contracts (other than for the repayment of Money
Borrowed), statutory obligations and other similar obligations or arising as a result of
progress payments under government contracts, provided that, to the extent any such Liens
attach to any of the Collateral, such Liens are at all times subordinate and junior to the
Liens upon the Collateral in favor of Agent;




          (viii) easements, rights-of-way, restrictions, covenants or other agreements of record
and other similar charges or encumbrances on real Property of such Credit Party or any of
its Subsidiaries listed in the Mortgages on the Closing Date as exceptions to title or that
do not materially interfere with the ordinary conduct of the business of such Credit Party
or such Subsidiary;




          (ix) normal and customary rights of setoff upon deposits of cash in favor of banks and
other depository institutions and Liens of a collection bank arising under the UCC on
Payment Items in the course of collection;




          (x) such other Liens of record and acceptable to Agent as appear on Schedule
9.2.5 hereto, to the extent provided therein;




          (xi) Liens in favor of Sureties in the Surety Collateral securing reimbursement
obligations for Surety Bonds procured by a Borrower in the Ordinary Course of Business
pursuant to a bonding program acceptable to Agent; provided, that such Surety (other than
Sure Tec) has, pursuant to documentation satisfactory to Agent in the good faith exercise of
its credit judgment: (a) agreed not to require segregation of funds as to its Bonded
Collateral without the prior written consent of Agent (though as to Chubb, Chubb will be
permitted such segregation upon a default under the Bonded Contract and notice to Agent from
Chubb) and (b) (i) acknowledged and agreed that pursuant to the Credit Parties’ cash
management system established in connection with this Agreement, proceeds of the Surety
Collateral, including Accounts arising from the Bonded Contracts (collectively, “Proceeds”)
may be commingled with proceeds of other Accounts and other Property of Borrowers in the
Dominion Account and other Deposit Accounts in which Agent has, or in the future may have,
security interests, Liens or other rights, and (ii) consented to such commingling and to
security interests, Liens or other rights in the Dominion Account and such other Deposit
Accounts, and (iii) released and waived any and all security interests and other legal and
equitable rights and interests that it may then or thereafter have (as secured party,
subrogee, trust fund beneficiary, or otherwise) in or to (A) the Dominion Account and such
other Deposit Accounts and (B) Proceeds that from time to time are in the Dominion Account
and such other Deposit Accounts are in the possession of Agent or Lenders, that have been
applied to indebtedness, liabilities or obligations from time to time owing to Agent or any
Lender by Borrowers, or have otherwise been removed from, set off against or applied from
the Dominion Account and such other Deposit Accounts; and provided, further, that in the
case of Sure Tec, such Borrower and Sure Tec are in compliance with the terms of the Sure
Tec Letter;




          (xii) Liens in favor of the Tranche B Agent but only to the extent such Liens secure
the Tranche B Loan and the other obligations under the Tranche B Documentation and such
Liens are subordinated to the Liens in favor of Agent to the extent provided in the
Intercreditor Agreement; and




          (xiii) such other Liens as Agent and the Required Lenders in their sole discretion may
hereafter approve in writing.



47









 




The foregoing negative pledge shall not apply to any Margin Stock to the extent that the
application of such negative pledge to such Margin Stock would require filings or other actions by
any Lender under such regulations or otherwise result in a violation of such regulations.




          9.2.6. [Intentionally Omitted].




          9.2.7. Distributions. Declare or make any Distributions, except for Upstream Payments
and repurchases of common stock of Parent from employees solely to satisfy their tax obligations
arising from their acquisition of such common stock in an aggregate amount not to exceed $1,500,000
in any fiscal year of Credit Parties; provided, that no such repurchases of common stock of
Parent shall be permitted unless Borrower has Availability of at least $10,000,000 at the time of
such repurchase after giving effect to such repurchase.




          9.2.8. Upstream Payments. Create or suffer to exist any encumbrance or restriction on
the ability of a Subsidiary to make any Upstream Payment, except for encumbrances or restrictions
(i) pursuant to the Loan Documents, (ii) pursuant to the Tranche B Documents to the extent such
encumbrances or restrictions are consistent with the encumbrances or restrictions contained in the
Loan Documents, (iii) existing under Applicable Law and (iv) identified and fully disclosed in
Schedule 9.2.8.




          9.2.9. Capital Expenditures. Make Capital Expenditures (including, expenditures by
way of capitalized leases) which in the aggregate, as to Parent and its Subsidiaries, exceed the
amount set forth for the corresponding period set forth below:




	 	 	 	 	 
	Period	 	Amount
	October 1, 2005 through May 31, 2006

	 	$	2,800,000	 
	 
	October 1, 2005 through June 30, 2006

	 	$	3,500,000	 
	 
	October 1, 2005 through July 31, 2006

	 	$	4,300,000	 
	 
	October 1, 2005 through August 31, 2006

	 	$	5,000,000	 
	 
	October 1, 2005 through September 30, 2006

	 	$	5,700,000	 






          9.2.10. Disposition of Assets. Sell, assign, lease, consign or otherwise dispose of
any of its Properties or any interest therein, including any disposition of Property as part of a
sale and leaseback transaction, to or in favor of any Person, except (i) sales of Inventory in the
Ordinary Course of Business for so long as no Event of Default exists hereunder, (ii) dispositions
of Equipment to the extent authorized by Section 7.4.2 hereof, (iii) a transfer of Property
to a Borrower by a Subsidiary, and (iv) other dispositions expressly authorized by other provisions
of the Loan Documents.




          9.2.11. Subsidiaries. Form or acquire any Subsidiary after the Closing Date or permit
any existing Subsidiary to issue any additional Equity Interests to any Person other than Parent
except director’s qualifying shares.




48









 








          9.2.12. Bill-and-Hold Sales and Consignments. Make a sale to any customer on a
bill-and-hold, guaranteed sale, sale and return, sale on approval or consignment basis, or any sale
on a repurchase or return basis.




          9.2.13. Restricted Investments. Except as disclosed on Schedule 9.2.13, make
or have any Restricted Investment. No Credit Party shall make any loan, advance or capital
contribution to any
Restricted Subsidiary if such loan, advance or contribution would cause all loans, advances
and contributions to Restricted Subsidiaries after the Closing Date to exceed $100,000 in the
aggregate.




          9.2.14. Leases. Become a lessee under any operating lease (other than a lease under
which a Credit Party or any of the Subsidiaries is lessor) of Property if the aggregate Rentals
payable during any current or future period of 12 consecutive months under the lease in question
and all other leases under which Parent or any of the Subsidiaries of Parent is then lessee would
exceed $25,000,000. The term “Rentals” means, as of the date of determination, all payments which
the lessee is required to make by the terms of any lease.




          9.2.15. Tax Consolidation. File or consent to the filing of any consolidated income
tax return with any Person other than Parent and its Subsidiaries.




          9.2.16. Accounting Changes. Make any significant change in accounting treatment or
reporting practices, except as may be required by GAAP or establish a fiscal year different from
the Fiscal Year.




          9.2.17. Organization Documents. Amend, modify or otherwise change any of the terms or
provisions in any of its Organization Documents as in effect on the Closing Date, except for
changes that do not affect in any way such Credit Party’s or any of its Subsidiaries’ rights and
obligations to enter into and perform the Loan Documents to which it is a party and to pay all of
the Obligations and that do not otherwise have a Material Adverse Effect.




          9.2.18. Restrictive Agreements. Enter into or become party to any Restrictive
Agreement other than those disclosed in Schedule 8.1.18 hereto, provided that none of such
disclosed agreements shall be amended without prior notice to and the consent of Agent.




          9.2.19. Conduct of Business. Engage in any business other than the business engaged
in by it on the Closing Date and any business or activities which are substantially similar,
related or incidental thereto.




          9.2.20. Payments on Subordinated Debt. Make any payment of principal, interest or
premiums on any Subordinated Debt unless such payment is specifically permitted by the provisions
of the relevant subordination agreement.




          9.2.21. Excluded Cash Accounts. Use funds in the Excluded Cash Accounts for any
purpose other than as listed in the definition thereof.




          9.2.22. Use of Proceeds in Connection with Bonded Contracts. Use proceeds of the
Loans in connection with funding work related to the Bonded Contracts unless such use is upon
terms, provisions and conditions acceptable to Agent, in its good faith discretion (such as,
without limitation, Agent being satisfied with its Lien priority and right to proceeds relating to
Borrowers’ assets and restrictions on when payments may be made by Borrowers in connection with
Bonded Contracts); provided, however, except as otherwise provided in the Chubb
Intercreditor, Lenders agree that the foregoing shall not be construed to prevent any ability of
Chubb to receive payment out of any assets of




49









 







any Borrower in which Chubb has a first priority Lien
in a circumstance where Chubb has made a payment on a Surety Bond and Chubb is seeking
reimbursement for such payment from such Borrower.




          9.2.23. Consent to Amendment of Reorganization Plan. Amend, supplement or modify any
of the terms of the Reorganization Plan, unless the consent of Agent for such amendment, supplement
or modification has been obtained.




          9.2.24. Prepayment of Tranche B Loan. Make any prepayment on account of the Tranche B
Loan unless such payment is not prohibited by the Intercreditor Agreement.




          9.2.25. Surety Bonds. Request the issuance of a Surety Bond from any Surety after the
Closing Date without (i) providing prior written notice thereof to Agent in accordance with Section
9.1.3(vii) and (ii) obtaining the prior written consent of Agent to the issuance of such Surety
Bond, which such consent shall be in Agent’s sole discretion.




     9.3. Financial Covenants. For so long as there are any Commitments outstanding and
thereafter until payment in full of the Obligations, Credit Parties covenant that, unless otherwise
consented to by the Required Lenders in writing, they shall:



          9.3.1. Minimum EBITDAR/EBITDA. Not permit the result of (i) (A) for periods occurring
prior to the date of this Agreement, Consolidated EBITDAR and (B) for all periods occurring
thereafter, Consolidated EBITDA, minus (ii) Shutdown EBIT, to be less than the amount set
forth below for the corresponding period set forth below as of the last day of such period:




	 	 	 	 	 
	Period	 	Amount
	October 1, 2005 through May 31, 2006

	 	$	13,000,000	 
	 
	October 1, 2005 through June 30, 2006

	 	$	15,000,000	 
	 
	October 1, 2005 through July 31, 2006

	 	$	17,000,000	 
	 
	October 1, 2005 through August 31, 2006

	 	$	19,000,000	 
	 
	October 1, 2005 through September 30, 2006

	 	$	20,000,000	 






          9.3.2. Shutdown EBIT. Not permit Shutdown EBIT to be less than the amount set forth
below for the corresponding period set forth below as of the last day of such period:




	 	 	 	 	 
	Period	 	Amount
	October 1, 2005 through May 31, 2006

	 	 	-$14,000,000	 
	 
	October 1, 2005 through June 30, 2006

	 	 	-$16,000,000	 
	 
	October 1, 2005 through July 31, 2006

	 	 	-$16,000,000	 






50









 






	 	 	 	 	 
	Period	 	Amount
	October 1, 2005 through August 31, 2006

	 	-$	17,000,000	 
	 
	October 1, 2005 through September 30, 2006

	 	-$	18,000,000	 
	 
	Any calendar month thereafter

	 	$	0	 






          9.3.3. Net Working Capital. Not permit Net Working Capital of the Credit Parties
(other than any Shutdown Subsidiaries), on a Consolidated basis, to be less than the amount set
forth below for the corresponding period set forth below as of the last day of such period:




	 	 	 	 	 
	Period	 	Amount
	May 1, 2006 through May 31, 2006

	 	$	114,000,000	 
	 
	June 1, 2006 through June 30, 2006

	 	$	115,000,000	 
	 
	July 1, 2006 through July 31, 2006

	 	$	117,000,000	 
	 
	August 1, 2006 through August 31, 2006

	 	$	118,000,000	 
	 
	September 1, 2006 through September 30, 2006

	 	$	121,000,000	 






          9.3.4. Conversion to Cash of Shutdown Subsidiaries’ Non-Cash Modified Net Working
Capital. Cause the Shutdown Subsidiaries to convert their aggregate Modified Net Working
Capital existing as of March 31, 2006 to cash in at least the amount set forth below for the
corresponding period set forth below as of the last day of such period:




	 	 	 	 	 
	 	 	Amount of Non-Cash
	 	 	Net Working Capital Converted
	Period	 	to Cash
	March 31, 2006 through May 31,
2006

	 	$	6,000,000	 
	 
	March 31, 2006 through June
30, 2006

	 	$	8,250,000	 
	 
	March 31, 2006 through July
31, 2006

	 	$	10,800,000	 
	 
	March 31, 2006 through August
31, 2006

	 	$	13,600,000	 
	 
	March 31, 2006 through
September 30, 2006

	 	$	15,500,000	 






51









 






	 	 	 	 	 
	 	 	Amount of Non-Cash
	 	 	Net Working Capital Converted
	Period	 	to Cash
	March 31, 2006 through October
31, 2006

	 	$	17,200,000	 
	 
	March 31, 2006 through
November 30, 2006

	 	$	18,900,000	 
	 
	March 31, 2006 through
December 31, 2006

	 	$	20,600,000	 
	 
	March 31, 2006 through January
31, 2007

	 	$	22,300,000	 
	 
	March 31, 2006 through
February 28, 2007

	 	$	22,600,000	 
	 
	March 31, 2006 through March
31, 2007

	 	$	23,600,000	 






          9.3.5. Commercial EBIT. Not permit monthly Commercial EBIT, tested as of the last day
of each calendar month for such calendar month, to be less than (i) $1,200,000 for any two
consecutive calendar months occurring in the fiscal year ending September 20, 2006 and (ii)
$1,250,000 for any two consecutive calendar months occurring thereafter.




          9.3.6. Residential EBIT. Not permit monthly Residential EBIT, tested as of the last
day of each calendar month for such calendar month, to be less than $1,750,000 for any two
consecutive calendar months.




          9.3.7. Fixed Charge Coverage Ratio. Maintain a Fixed Charge Coverage Ratio, on a
Consolidated basis, of not less than 1.25:1.00, with the Fixed Charge Coverage Ratio to be tested
on the last day of each calendar month, beginning with October 31, 2006, calculated on a trailing
twelve calendar month basis.




          9.3.8. Leverage Ratio. Maintain a Leverage Ratio, on a Consolidated basis, tested
monthly on the last day of each calendar month on a trailing twelve calendar month basis, beginning
October 31, 2006, of not more than the ratio set forth below opposite the relevant date set forth
below:




	 	 	 
	Period Ending	 	Leverage Ratio
	October 31, 2006

	 	4.75:1.00
	 
	November 30, 2006

	 	4.75:1.00
	 
	December 31, 2006

	 	4.75:1.00
	 
	January 31, 2007

	 	4.75:1.00
	 
	February 28, 2007

	 	4.75:1.00
	 
	March 31, 2007

	 	4.75:1.00
	 
	April 30, 2007 and last day of each month thereafter

	 	4.25:1.00






52









 






     9.4. Additional Cash Collateral. Maintain at all times Cash Collateral in the Cash
Collateral Account of at least 20,000,000.



SECTION 10. CONDITIONS PRECEDENT




     10.1. Conditions Precedent to Initial Credit Extensions. Initial Lenders shall not be
required to fund any Loan requested by Borrowers or otherwise extend credit to Borrowers and Agent
shall not be obligated to cause the Letter of Credit Issuer to issue any Letter of Credit on the
Closing Date, unless each of the following conditions has been satisfied:



          10.1.1. Loan Documents. Each of the Loan Documents shall have been duly executed and
delivered to Agent by each of the signatories thereto (and, with the exception of the Notes, in
sufficient counterparts for each Lender) and accepted by Agent and Initial Lenders and each Credit
Party shall be in compliance with all of the terms thereof.




          10.1.2. Availability. Subject to Agent confirming that Borrowers’ accounts payable
have been handled in the normal course of Borrowers’ business and consistent with Borrowers’
historical practices subject to the Chapter 11 proceeding, Agent shall have determined, and Initial
Lenders shall be satisfied that, immediately after Initial Lenders have made the initial Revolver
Loans to be made on the Closing Date and Letter of Credit Issuer has issued the Letters of Credit
to be issued or outstanding on the Closing Date, and Borrowers have paid (or made provision for
payment of) all closing costs incurred in connection with the Commitments, Availability plus Cash
Collateral deposited in a Cash Collateral Account in excess of the amount required pursuant to
Section 9.4 is not less than $10,000,000.




          10.1.3. Organization Documents. Agent shall have received copies of the Organization
Documents of each Credit Party, and all amendments thereto, certified by an officer of Parent or
such Credit Party.




          10.1.4. Good Standing Certificates. Agent shall have received good standing
certificates for each Obligor, issued by the Secretary of State or other appropriate official of
such Credit Party’s jurisdiction of organization and each jurisdiction where such Credit Party’s
principal place of business is located.




          10.1.5. Opinion Letters. Agent shall have received a favorable, written opinion of
Vinson & Elkins LLP, counsel to Credit Parties, covering, to Agent’s satisfaction, such matters as
shall be required by Agent.




          10.1.6. Insurance. Agent shall have received copies of the property and casualty
insurance policies of Credit Parties with respect to the Collateral, or certificates of insurance
with respect to such policies in form acceptable to Agent, and loss payable endorsements on Agent’s
standard form of loss payee endorsement naming Agent as loss payee with respect to each such policy
identified by Agent and copies of Credit Parties’ liability insurance policies, including product
liability policies, together with endorsements naming Agent as an additional insured on each policy
identified by Agent, all as required by the Loan Documents.




          10.1.7. [Intentionally Omitted].




          10.1.8. No Labor Disputes. Agent shall have received assurances satisfactory to it
that there are no threats of strikes or work stoppages by any employees, or organization of
employees, of any Obligor which Agent reasonably determines may have a Material Adverse Effect.




53









 








          10.1.9. Compliance with Laws and Other Agreements. Agent shall have determined or
received assurances satisfactory to it that none of the Loan Documents or any of the transactions
contemplated thereby violate any Applicable Law, court order or agreement binding upon any Obligor.




          10.1.10. No Material Adverse Change. Except for the filing and prosecution of the
Bankruptcy Case, no material adverse change in the assets, liabilities, business, financial
condition, business prospects or results of operations of the Credit Parties, taken as a whole,
shall have occurred since March 31, 2006.




          10.1.11. Amendment and Restatement of Mortgage. Agent shall have received duly
executed amendments and restatements of the Mortgage, in form and substance satisfactory to Agent.




          10.1.12. Payment of Fees. Borrowers shall have paid, or made provision for the
payment on the Closing Date of, all fees and expenses to be paid hereunder and under the Fee Letter
to Agent and Lenders on the Closing Date.




          10.1.13. LC Conditions. With respect to the issuance of any Letter of Credit on the
Closing Date, each of the conditions listed at Section 1.2.3 is satisfied.




          10.1.14. Dominion Accounts. To the extent required by Agent, Agent shall have
received the duly executed agreements establishing each Dominion Account, in each case with a
financial institution acceptable to Agent for the collection or servicing of the Accounts.




          10.1.15. Financial Statements. Agent and Lenders shall have received (a) updated
financial projections of Parent and Subsidiaries evidencing the Credit Parties’ ability to comply
with the financial covenants set forth in Section 9.3 and (b) interim unaudited balance sheet of
Parent and its Subsidiaries as of March 31, 2006 and the related unaudited Consolidated statements
of income and cash flow, each satisfactory in form and substance to Agent in all respects.




          10.1.16. Chubb Intercreditor. Agent shall have received the Chubb Intercreditor, in
form and substance satisfactory to Agent, duly executed by Chubb, Credit Parties and Agent.




          10.1.17. Intentionally Omitted.




          10.1.18.  Sure Tec Letter. Agent shall be satisfied in its sole discretion that the
structure of any bonding services provided by Sure Tec to Borrowers shall continue to be as
specified in the Sure Tec Letter.




          10.1.19. Scarborough Letter. Agent shall be satisfied in its sole discretion that the
structure of any bonding services provided by Scarborough to Borrowers shall continue to be as
specified in the Scarborough Letter.




          10.1.20. Surety Bonds. Agent shall have received evidence in form and substance
satisfactory to Agent in its sole discretion, that Borrowers shall have entered into agreements
with Sureties (including Chubb, Scarborough, and Sure Tec) for the issuance of Surety Bonds in an
aggregate amount up to $75,000,000 on terms and conditions acceptable to Agent and consistent with
the requirements of this Agreement.




          10.1.21. Tranche B Loan. The Tranche B Loan shall be contemporaneously funded, and
Agent shall have received a copy of all of the Tranche B Documentation, all of which shall be in
form and substance satisfactory to Agent.




54









 








          10.1.22. Intercreditor Agreement. Agent shall have received the Intercreditor
Agreement, in form and substance satisfactory to Agent, duly executed by Credit Parties, Tranche B
Agent and Agent.




          10.1.23. Payoff of Senior Convertible Notes. Agent shall have received evidence
satisfactory to Agent that the Senior Convertible Notes have been paid off in full.




          10.1.24. Treatment of Senior Subordinated Notes. The treatment of the Senior
Subordinated Notes in the Reorganization Plan shall not have been modified or amended.




          10.1.25. Confirmation of Reorganization Plan. The Reorganization Plan shall have been
confirmed by a Final Order of the Bankruptcy Court (the “Confirmation Order”), and which order
shall be in full force and effect and shall not have been stayed by the Bankruptcy Court or by any
other court having jurisdiction to issue any such stay.




          10.1.26. Effective Date. The “Effective Date” (as defined in the Reorganization Plan)
shall have occurred or shall occur concurrently with the Closing Date. All conditions to the
Effective Date shall have been satisfied or waived (or contemporaneously herewith satisfied or
waived) and Agent shall have received satisfactory evidence thereof.




          10.1.27. DIP Loan Agreement. No default exists under the DIP Loan Agreement or the
other loan documents executed in connection with the DIP Loan Agreement.




          10.1.28. Successful Syndication. Agent shall have assigned at least $40,000,000 of
the Commitments to other Lenders on terms and conditions satisfactory to Agent.




          10.1.29. Corporate and Capital Structure of Credit Parties. Agent shall have approved
the corporate and capital structure of the Credit Parties.




          10.1.30. Other Documents. All other documents and legal matters in connection with
the transactions contemplated by this Agreement shall have been delivered, executed or recorded and
shall be in form and substance reasonably satisfactory to Agent.




     10.2. Conditions Precedent to All Credit Extensions. Lenders shall not be required to
fund any Loans, or otherwise extend credit to or for the benefit of Borrowers, and Agent shall not
have the obligation to cause the Letter of Credit Issuer to issue any Letter of Credit, unless and
until each of the following conditions has been and continues to be satisfied:



          10.2.1. No Defaults. No Default or Event of Default exists at the time, or would
result from the funding, of any Loan or other extension of credit.




          10.2.2. Satisfaction of Conditions in Other Loan Documents. Each of the conditions
precedent set forth in any other Loan Documents shall have been and shall remain satisfied.




          10.2.3. No Litigation. No action, proceeding, investigation, regulation or
legislation shall have been instituted, threatened or proposed before any court, governmental
agency or legislative body to enjoin, restrain or prohibit, or to obtain damages in respect of, or
which is related to or arises out of, this Agreement or any of the other Loan Documents or the
consummation of the transactions contemplated hereby or thereby.




          10.2.4. No Material Adverse Effect. No event shall have occurred and no condition
shall exist which has or could be reasonably expected to have a Material Adverse Effect.





55










 







          10.2.5. Borrowing Base Certificate. Agent shall have received each Borrowing
Base Certificate required by the terms of this Agreement or otherwise requested by Agent.




          10.2.6. LC Conditions. With respect to the procurement of any Letter of Credit after
the Closing Date, each of the conditions to Section 1.2.3 is satisfied.




          10.2.7. Fees and Expenses. Agent shall have received (for the benefit of itself and
the Lenders) when due all fees and expenses payable to Agent and Lenders as set forth in this
Agreement or in the Loan Documents, including, without limitation, the fees set forth in Section
2.2 hereof.




          10.2.8. Borrowing Base. The amount of the Revolver Loans, after giving effect to the
requested Loan, shall not exceed the Borrowing Base.




          10.2.9. Reorganization Plan. The Reorganization Plan shall be in full force and
effect and shall not have been vacated, reversed, modified (other than as provided in Section
9.2.23) or stayed in any respect.




     10.3. Inapplicability of Conditions. None of the conditions precedent set forth in
Sections 10.1 or 10.2 shall be conditions to the obligation of (i) each Participating Lender to
make payments to Agent pursuant to participations purchased in any Credit Support or issued
Letters of Credit, (ii) each Lender to deposit with Agent such Lender’s Pro Rata share of a
Borrowing in accordance with Section 3.1.2, (iii) each Lender to fund its Pro Rata share of a
Revolver Loan to repay outstanding Settlement Loans to Agent as provided in Section 3.1.3(ii), (iv)
each Lender to pay any amount payable to Agent or any other Lender pursuant to this Agreement or
(v) Agent to pay any amount payable to any Lender pursuant to this Agreement.



     10.4. Limited Waiver of Conditions Precedent. If Lenders shall make any Loans or
Letter of Credit Issuer shall issue any Letter of Credit or otherwise extend any credit to
Borrowers under this Agreement at a time when any of the foregoing conditions precedent are not
satisfied (regardless of whether the failure of satisfaction of any such conditions precedent was
known or unknown to Agent or Lenders), the funding of such Loan or issuance of such Letter of
Credit shall not operate as a waiver of the right of Agent and Lenders to insist upon the
satisfaction of all conditions precedent with respect to each subsequent Borrowing requested by
Borrowers or a waiver of any Default or Event of Default as a consequence of the failure of any
such conditions to be satisfied, unless Agent, with the prior written consent of the Required
Lenders, in writing waives the satisfaction of any condition precedent, in which event such waiver
shall only be applicable for the specific instance given and only to the extent and for the period
of time expressly stated in such written waiver.



SECTION 11. EVENTS OF DEFAULT; RIGHTS AND REMEDIES ON DEFAULT




     11.1. Events of Default. The occurrence or existence of any one or more of the
following events or conditions shall constitute an “Event of Default” (each of which Events of
Default shall be deemed to exist unless and until waived by Agent and Lenders in accordance with
the provisions of Section 12.9 hereof):



          11.1.1. Payment of Obligations. Borrowers shall fail to pay any of the Obligations on
the due date thereof (whether due at stated maturity, on demand, upon acceleration or otherwise).




          11.1.2. Misrepresentations. Any representation, warranty or other written statement
to Agent or any Lender by or on behalf of any Credit Party or any other Obligor, whether made in or
furnished in compliance with or in reference to any of the Loan Documents, proves to have been
false or




56









 







misleading in any material respect when made or furnished or when reaffirmed pursuant to
Section 8.2 hereof.




          11.1.3. Breach of Specific Covenants. Any Credit Party or any other Obligor shall
fail or neglect to perform, keep or observe any covenant contained in Sections 6.5, 7.1.1, 7.2.4,
7.2.5, 7.2.6, 7.5, 9.1.1, 9.1.3, 9.2 or 9.3 hereof on the date that such Credit Party or any other
Obligor is required to perform, keep or observe such covenant.




          11.1.4. Breach of Other Covenants. Any Credit Party or any other Obligor shall fail
or neglect to perform, keep or observe any covenant contained in this Agreement (other than a
covenant which is dealt with specifically elsewhere in Section 11.1 hereof) and the breach of such
other covenant is not cured to Agent’s and the Required Lender’s satisfaction within 30 days after
the sooner to occur of any Senior Officer’s receipt of notice of such breach from Agent or the date
on which such failure or neglect first becomes known to any Senior Officer; provided,
however, that such notice and opportunity to cure shall not apply in the case of any
failure to perform, keep or observe any covenant which is not capable of being cured at all or
within such 30-day period or which is a willful and knowing breach by any Credit Party.




          11.1.5. Default Under Security Documents/Other Agreements. Any Credit Party or any
other Obligor shall default in the due and punctual observance or performance of any liability or
obligation to be observed or performed by it under any of the Other Agreements or Security
Documents.




          11.1.6. Other Defaults. There shall occur any default or event of default on the part
of any Credit Party or any Subsidiary under any agreement, document or instrument (excluding
immaterial customer contracts) to which such Credit Party or such Subsidiary is a party or by which
such Credit Party or such Subsidiary or any of their respective Properties is bound, creating or
relating to any Debt of Borrower (other than the Obligations) in excess of $500,000 and any grace
period applicable to such default or event of default shall have expired if the payment or maturity
of such Debt may be accelerated in consequence of such event of default or demand for payment of
such Debt may be made.




          11.1.7. Uninsured Losses. Any loss, theft, damage or destruction of any of the
Collateral not fully covered (subject to such deductibles as Agent shall have permitted) by
insurance if the amount not covered by insurance exceeds $100,000.




          11.1.8. [Intentionally Omitted].




          11.1.9. Solvency. Any Borrower (other than any Shutdown Subsidiary) shall cease to be
Solvent; provided that the occurrence of such an event with respect to a Borrower whose assets have
been sold pursuant to a transaction approved by Agent in writing shall not be an Event of Default
if such Borrower is added to the list of Shutdown Subsidiaries at the time of such transaction with
the consent of Agent.




          11.1.10. Insolvency Proceedings. Any Insolvency Proceeding shall be commenced by any
Obligor; an Insolvency Proceeding is commenced against any Obligor and any of the following events
occur: such Obligor consents to the institution of the Insolvency Proceeding against it, the
petition commencing the Insolvency Proceeding is not timely controverted by such Obligor, the
petition commencing the Insolvency Proceeding is not dismissed within 60 days after the date of the
filing thereof (provided that, in any event, during the pendency of any such period, Lenders shall
be relieved from
their obligation to make Loans or otherwise extend credit to or for the benefit of Borrowers
hereunder), an interim trustee is appointed to take possession of all or a substantial portion of
the Properties of such Obligor or to operate all or any substantial portion of the business of such
Obligor, or an order for relief

57









 








shall have been issued or entered in connection with such
Insolvency Proceeding; or any Obligor shall make an offer of settlement, extension or composition
to its unsecured creditors generally.




          11.1.11. Business Disruption; Condemnation. There shall occur a cessation of a
substantial part of the business of any Borrower for a period which may be reasonably expected to
have a Material Adverse Effect; or any Obligor shall suffer the loss or revocation of any license
or permit now held or hereafter acquired by such Obligor which is necessary to the continued or
lawful operation of any material portion of its business; or any Obligor shall be enjoined,
restrained or in any way prevented by court, governmental or administrative order from conducting
all or any material part of its business affairs; or any material lease or agreement pursuant to
which any Obligor leases or occupies any premises on which any Collateral is located shall be
canceled or terminated prior to the expiration of its stated term and such cancellation or
termination has a Material Adverse Effect or results in an Out-of-Formula Condition; or any
material part of the Collateral shall be taken through condemnation or the value of such Property
shall be materially impaired through condemnation.




          11.1.12. Change of Control. There shall occur a Change of Control.




          11.1.13. ERISA. A Reportable Event shall occur which Agent, in its reasonable
discretion, shall determine constitutes grounds for the termination by the Pension Benefit Guaranty
Corporation of any Plan or for the appointment by the appropriate United States district court of a
trustee for any Plan, or if any Plan shall be terminated or any such trustee shall be requested or
appointed, or if any Credit Party, any Subsidiary or any Obligor is in “default” (as defined in
Section 4219(c)(5) of ERISA) with respect to payments to a Multiemployer Plan resulting from such
Borrower’s, such Subsidiary’s or such Obligor’s complete or partial withdrawal from such Plan, each
of which could reasonably be expected to result in a Material Adverse Effect.




          11.1.14. Challenge to Loan Documents. Any Obligor or any of its Affiliates shall
challenge or contest in any action, suit or proceeding the validity or enforceability of any of the
Loan Documents, the legality or enforceability of any of the Obligations or the perfection or
priority of any Lien granted to Agent, or any of the Loan Documents ceases to be in full force or
effect for any reason other than a full or partial waiver or release by Agent and Lenders in
accordance with the terms thereof.




          11.1.15. Judgment. One or more judgments or orders for the payment of money in an
amount that exceeds, individually or in the aggregate, $500,000 shall be entered against any Credit
Party or any other Obligor and either (i) enforcement proceedings shall have been commenced by any
creditor upon such judgment or order or (ii) there shall be any period of 30 consecutive days
during which a stay of enforcement of such judgment or order, by reason of a pending appeal or
otherwise, shall not be in effect.




          11.1.16. Repudiation of or Default Under Guaranty. Any Guarantor shall revoke or
attempt to revoke the Guaranty signed by such Guarantor, shall repudiate such Guarantor’s liability
thereunder, or shall be in default under the terms thereof, or shall fail to confirm in writing,
promptly, after receipt of Agent’s written request therefor, such Guarantor’s ongoing liability
under the Guaranty in accordance with the terms thereof.




          11.1.17. Criminal Forfeiture. Any Obligor shall be convicted under any criminal law
that could lead to a forfeiture of any Property of such Obligor.




          11.1.18. Default Under or Modification of Tranche B Documentation or any Subordinated Debt
Documentation. (i) There shall occur any default or event of default (and such event or
condition is not cured within the applicable grace period, if any), however denominated, under the
Tranche B




58









 







Documentation or under any documentation relating to or executed in connection with any
Subordinated Debt if the payment or maturity of the Tranche B Loan or such Subordinated Debt,
respectively, may be accelerated in consequence of such event of default or demand for payment of
the Tranche B Loan or such subordinated Debt, respectively, may be made; or (ii) there shall occur
any modification to the Tranche B Documentation if the effect of such modification is to (a)
shorten the due dates of any principal or interest payments on the Tranche B Loan, (b) change the
prepayment provisions as to the Tranche B Loan, other than to extend the date thereof, (c) change
any default or event of default, or add any covenant more restrictive than the covenants in this
Agreement, with respect to the Tranche B Loan, (d) increase the interest rate on the Tranche B
Loan, (e) increase the maximum principal amount of the Tranche B Loan (other than any increase
caused by the capitalization of interest in accordance with the Tranche B Documentation), (f)
change or amend any other term if such change or amendment would result in a Default under this
Agreement, increase the obligations of any Credit Party in a manner adverse in any material respect
to such Credit Party or Agent or any Lender or confer additional material rights on Tranche B Agent
or any Tranche B Lender in a manner adverse in any material respect to any Credit Party or Agent or
any Lender or (iii) there shall occur any modification to the documentation relating to or executed
in connection with any Subordinated Debt unless such modification is permitted pursuant to the
provisions of the subordination agreement relating to such Subordinated Debt.




          11.1.19. Default under Surety Agreements. There shall occur any default or event of
default under any of the Chubb Agreements (or, as to any other Surety, under the documentation
among such Surety and Credit Parties relating to such Surety’s bonding program with some or all of
the Credit Parties) and, as a result thereof, Chubb (or such other Surety) has ceased issuing
Surety Bonds on behalf of any Credit Party, or has made demand on any Credit Party for performance
thereunder or has otherwise commenced exercising any remedies thereunder (including, without
limitation, attempting to segregate funds as to its Surety Collateral), or any unreimbursed claim
is made on Chubb (or such other Surety) related to any Bonded Contract against the issuer of any
Surety Bond.




     11.2. Acceleration of the Obligations; Termination of Commitments. Without in any way
limiting the right of Agent to demand payment of any portion of the Obligations payable on demand
in accordance with this Agreement:



          11.2.1. Upon or at any time after the occurrence of an Event of Default (other than pursuant
to Section 11.1.10 hereof) and for so long as such Event of Default shall exist, Agent may, in its
discretion (and, upon receipt of written instructions to do so from the Required Lenders, shall)
(a) declare the principal of and any accrued interest on the Loans and all other Obligations owing
under any of the Loan Documents to be, whereupon the same shall become without further notice or
demand (all of which notice and demand each Credit Party expressly waives), forthwith due and
payable and Credit Parties shall forthwith pay to Agent the entire principal of and accrued and
unpaid interest on the Loans and other Obligations plus reasonable attorneys’ fees and expenses if
such principal and interest are collected by or through an attorney-at-law and (b) terminate the
Commitments.




          11.2.2. Upon the occurrence of an Event of Default specified in Section 11.1.10 hereof, all of
the Obligations shall become automatically due and payable without declaration, notice or demand by
Agent to or upon any Credit Party and the Commitments shall automatically terminate as if
terminated by Agent pursuant to Section 5.2.1 hereof and with the effects specified in Section
5.2.4 hereof provided, however, that, if Agent or Lenders shall continue to make
Loans or otherwise extend credit to Borrowers pursuant to this Agreement after an automatic
termination of the Commitments by reason of
the commencement of an Insolvency Proceeding by or against Borrowers, such Loans and other
credit shall nevertheless be governed by this Agreement and enforceable against and recoverable
from each Obligor as if such Insolvency Proceeding had never been instituted.




59









 








     11.3. Other Remedies. Upon and after the occurrence of an Event of Default and for so
long as such Event of Default shall exist, Agent may in its discretion (and, upon receipt of
written direction of the Required Lenders, shall) exercise from time to time the following rights
and remedies (without prejudice to the rights of Agent or any Lender to enforce its claim against
any or all Obligors):



          11.3.1. All of the rights and remedies of a secured party under the UCC or under other
Applicable Law, and all other legal and equitable rights to which Agent may be entitled under any
of the Loan Documents, all of which rights and remedies shall be cumulative and shall be in
addition to any other rights or remedies contained in this Agreement or any of the other Loan
Documents, and none of which shall be exclusive.




          11.3.2. The right to collect all amounts at any time payable to a Credit Party from any
Account Debtor or other Person at any time indebted to such Credit Party.




          11.3.3. The right to take immediate possession of any of the Collateral, and to (i) require
Credit Parties to assemble the Collateral, at Borrowers’ expense, and make it available to Agent at
a place designated by Agent which is reasonably convenient to both parties, and (ii) enter any
premises where any of the Collateral shall be located and to keep and store the Collateral on said
premises until sold (and if said premises be the Property of a Credit Party, then such Credit Party
agrees not to charge Agent for storage thereof).




          11.3.4. The right to sell or otherwise dispose of all or any Collateral in its then condition,
or after any further manufacturing or processing thereof, at public or private sale or sales, with
such notice as may be required by Applicable Law, in lots or in bulk, for cash or on credit, all as
Agent, in its sole discretion, may deem advisable. Each Credit Party agrees that any requirement
of notice to Credit Parties or any other Obligor of any proposed public or private sale or other
disposition of Collateral by Agent shall be deemed reasonable notice thereof if given at least 10
days prior thereto, and such sale may be at such locations as Agent may designate in said notice.
Agent shall have the right to conduct such sales on any Credit Party’s or any other Obligor’s
premises, without charge therefor, and such sales may be adjourned from time to time in accordance
with Applicable Law. Agent shall have the right to sell, lease or otherwise dispose of the
Collateral, or any part thereof, for cash, credit or any combination thereof, and Agent may
purchase all or any part of the Collateral at public or, if permitted by law, private sale and, in
lieu of actual payment of such purchase price, may set off the amount of such price against the
Obligations. The proceeds realized from the sale or other disposition of any Collateral may be
applied, after allowing 2 Business Days for collection, first to any Extraordinary Expenses
incurred by Agent, second to interest accrued with respect to any of the Obligations; and third, to
the principal balance of the Obligations. If any deficiency shall arise, Obligors shall remain
jointly and severally liable to Agent and Lenders therefor.




          11.3.5. The right to the appointment of a receiver, without notice of any kind whatsoever, to
take possession of all or any portion of the Collateral and to exercise such rights and powers as
the court appointing such receiver shall confer upon such receiver.




          11.3.6. The right to exercise all of Agent’s rights and remedies under the Mortgage with
respect to any Real Estate.




          11.3.7. The right to require Borrowers to deposit with Agent funds equal to the LC
Outstandings and, if Borrowers fail promptly to make such deposit, Agent may (and shall upon the
direction of the Required Lenders) advance such amount as a Revolver Loan (whether or not an
Out-of-Formula Condition exists or is created thereby). Any such deposit or advance shall be held
by Agent as a reserve to fund future payments on any Credit Support and the Letters of Credits. At
such time as the




60









 







Credit Support has been paid or terminated and all Letters of Credit have been
drawn upon or expired, any amounts remaining in such reserve shall be applied against any
outstanding Obligations, or, if all Obligations have been indefeasibly paid in full, returned to
Borrowers.



Agent is hereby irrevocably granted a license or other right to use, without charge, any and all of
each Credit Party’s Intellectual Property and all of each Credit Party’s computer hardware and
software, trade secrets, brochures, customer lists, promotional and advertising materials, labels,
and packaging materials, and any Property of a similar nature, in advertising for sale, marketing,
selling and collecting and in completing the manufacturing of any Collateral, and each Credit
Party’s rights under all licenses and all franchise agreements shall inure to Agent’s benefit.




     11.4. Setoff. In addition to any Liens granted under any of the Loan Documents and
any rights now or hereafter available under Applicable Law, Agent and each Lender (and each of
their respective Affiliates) is hereby authorized by Credit Parties at any time, without notice to
Credit Parties or any other Person (any such notice being hereby expressly waived) to set off and
to appropriate and to apply any and all deposits, general or special (including Debt evidenced by
certificates of deposit whether matured or unmatured) and any other Debt at any time held or owing
by Agent, such Lender or any of their Affiliates to or for the credit or the account of any Credit
Party against and on account of the Obligations of Credit Parties arising under the Loan Documents
to Agent, such Lender or any of their Affiliates, including all Loans and LC Outstandings and all
claims of any nature or description arising out of or in connection with this Agreement,
irrespective of whether or not (i) Agent or such Lender shall have made any demand hereunder, (ii)
Agent, at the request or with the consent of the Required Lenders shall have declared the principal
of and interest on the Loans and other amounts due hereunder to be due and payable as permitted by
this Agreement and even though such Obligations may be contingent or unmatured or (iii) the
Collateral for the Obligations is adequate. If any party (or its Affiliate) exercises the right of
setoff provided for hereunder, such party shall be obligated to share any such setoff in the manner
and to the extent required by Section 12.5.



     11.5. Remedies Cumulative; No Waiver.



          11.5.1. All covenants, conditions, provisions, warranties, guaranties, indemnities, and other
undertakings of Credit Parties contained in this Agreement and the other Loan Documents, or in any
document referred to herein or contained in any agreement supplementary hereto or in any schedule
or in any Guaranty given to Agent or any Lender or contained in any other agreement between Agent
or any Lender and any or all Credit Parties, heretofore, concurrently, or hereafter entered into,
shall be deemed cumulative to and not in derogation or substitution of any of the terms, covenants,
conditions, or agreements of Credit Parties herein contained. The rights and remedies of Agent and
Lenders under this Agreement and the other Loan Documents shall be cumulative and not exclusive of
any rights or remedies that Agent or any Lender would otherwise have.




          11.5.2. The failure or delay of Agent or any Lender to require strict performance by Credit
Parties of any provision of any of the Loan Documents or to exercise or enforce any rights, Liens,
powers, or remedies under any of the Loan Documents or with respect to any Collateral shall not
operate as a waiver of such performance, Liens, rights, powers and remedies, but all such
requirements, Liens,
rights, powers, and remedies shall continue in full force and effect until all Loans and all
other Obligations owing or to become owing from Credit Parties to Agent and Lenders shall have been
finally and indefeasibly paid in full in cash and all Commitments of Agent and Lenders under this
Agreement and the other Loan Documents are terminated (including, in the case of Letters of Credit,
terminated or otherwise discharged or indemnified against in such manner and to such extent as is
satisfactory to Agent in the good faith exercise of its credit judgment.) None of the
undertakings, agreements, warranties, covenants and representations of Credit Parties contained in
this Agreement or any of the other Loan

61









 








Documents and no Event of Default by any Credit Party under
this Agreement or any other Loan Documents shall be deemed to have been suspended or waived by
Agent or any Lender, unless such suspension or waiver is by an instrument in writing specifying
such suspension or waiver and is signed by a duly authorized representative of Agent or such Lender
and directed to Credit Parties.




          11.5.3. If Agent or any Lender shall accept performance by a Borrower, in whole or in part, of
any obligation that a Credit Party is required by any of the Loan Documents to perform only when a
Default or Event of Default exists, or if Agent or any Lender shall exercise any right or remedy
under any of the Loan Documents that may not be exercised other than when a Default or Event of
Default exists, Agent’s or Lender’s acceptance of such performance by a Credit Party or Agent’s or
Lender’s exercise of any such right or remedy shall not operate to waive any such Event of Default
or to preclude the exercise by Agent or any Lender of any other right or remedy, unless otherwise
expressly agreed in writing by Agent or such Lender, as the case may be.




SECTION 12. AGENT




     12.1. Appointment, Authority and Duties of Agent.



          12.1.1. Each Lender hereby irrevocably appoints and designates Agent as Agent to act as herein
specified. Agent may, and each Lender by its acceptance of a Note shall be deemed irrevocably to
have authorized Agent to, enter into all Loan Documents to which Agent is or is intended to be a
party and all amendments hereto and all Security Documents at any time executed by any Borrower,
for its benefit and the Pro Rata benefit of Lenders and, except as otherwise provided in this
Section 12, to exercise such rights and powers under this Agreement and the other Loan Documents as
are specifically delegated to Agent by the terms hereof and thereof, together with such other
rights and powers as are reasonably incidental thereto. Each Lender agrees that any action taken
by Agent or the Required Lenders in accordance with the provisions of this Agreement or the other
Loan Documents, and the exercise by Agent or the Required Lenders of any of the powers set forth
herein or therein, together with such other powers as are reasonably incidental thereto, shall be
authorized and binding upon all Lenders. Without limiting the generality of the foregoing, Agent
shall have the sole and exclusive right and authority to (a) act as the disbursing and collecting
agent for Lenders with respect to all payments and collections arising in connection with this
Agreement and the other Loan Documents; (b) execute and deliver as Agent each Loan Document and
accept delivery of each such agreement delivered by any or all Borrowers or any other Obligor; (c)
act as collateral agent for Lenders for purposes of the perfection of all security interests and
Liens created by this Agreement or the Security Documents with respect to all material items of the
Collateral and, subject to the direction of the Required Lenders, for all other purposes stated
therein, provided that Agent hereby appoints, authorizes and directs each Lender to act as
a collateral sub-agent for Agent and the other Lenders for purposes of the perfection of all
security interests and Liens with respect to a Credit Party’s Deposit Accounts maintained with, and
all cash and Cash Equivalents held by, such Lender; (d) subject to the direction of the Required
Lenders, manage, supervise or otherwise deal with the Collateral; and (e) except as may be
otherwise specifically restricted by the terms of this Agreement and subject to the direction of
the Required Lenders, exercise all remedies given to Agent with respect to any of the Collateral
under the Loan Documents relating thereto, Applicable Law or otherwise. The duties of Agent shall
be ministerial and administrative in nature, and
Agent shall not have by reason of this Agreement or any other Loan Document a fiduciary
relationship with any Lender (or any Lender’s participants). Unless and until its authority to do
so is revoked in writing by Required Lenders, Agent alone shall be authorized to determine whether
any Accounts or Inventory constitute Eligible Accounts or Eligible Inventory (basing such
determination in each case upon the meanings given to such terms in Appendix A), or whether to
impose or release any reserve, and to exercise its own credit judgment in connection therewith,
which determinations and judgments, if

62









 








exercised in good faith, shall exonerate Agent from any
liability to Lenders or any other Person for any errors in judgment.




          12.1.2. Agent (which term, as used in this sentence, shall include reference to Agent’s
officers, directors, employees, attorneys, agents and Affiliates and to the officers, directors,
employees, attorneys and agents of Agent’s Affiliates) shall not: (a) have any duties or
responsibilities except those expressly set forth in this Agreement and the other Loan Documents or
(b) be required to take, initiate or conduct any litigation, foreclosure or collection proceedings
hereunder or under any of the other Loan Documents except to the extent directed to do so by the
Required Lenders during the continuance of any Event of Default. The conferral upon Agent of any
right hereunder shall not imply a duty on Agent’s part to exercise any such right unless instructed
to do so by the Required Lenders in accordance with this Agreement.




          12.1.3. Agent may perform any of its duties by or through its agents and employees and may
employ agents and attorneys-in-fact and shall not be responsible for the negligence or misconduct
of any such agents or attorneys-in-fact selected by it with reasonable care. Credit Parties shall
promptly (and in any event, on demand) reimburse Agent for all reasonable expenses (including all
Extraordinary Expenses) incurred by Agent pursuant to any of the provisions hereof or of any of the
other Loan Documents or in the execution of any of Agent’s duties hereby or thereby created or in
the exercise of any right or power herein or therein imposed or conferred upon it or Lenders
(excluding, however, general overhead expenses), and each Lender agrees promptly to pay to Agent,
on demand, such Lender’s Pro Rata share of any such reimbursement for expenses (including
Extraordinary Expenses) that is not timely made by Credit Parties to Agent.




          12.1.4. The rights, remedies, powers and privileges conferred upon Agent hereunder and under
the other Loan Documents may be exercised by Agent without the necessity of the joinder of any
other parties unless otherwise required by Applicable Law. If Agent shall request instructions
from the Required Lenders with respect to any act or action (including the failure to act) in
connection with this Agreement or any of the other Loan Documents, Agent shall be entitled to
refrain from such act or taking such action unless and until Agent shall have received instructions
from the Required Lenders; and Agent shall not incur liability to any Person by reason of so
refraining. Without limiting the foregoing, no Lender shall have any right of action whatsoever
against Agent as a result of Agent acting or refraining from acting hereunder or under any of the
Loan Documents pursuant to or in accordance with the instructions of the Required Lenders except
for Agent’s own gross negligence or willful misconduct in connection with any action taken by it.
Notwithstanding anything to the contrary contained in this Agreement, Agent shall not be required
to take any action that is in its opinion contrary to Applicable Law or the terms of any of the
Loan Documents or that would in its opinion subject it or any of its officers, employees or
directors to personal liability; provided, however, that if Agent shall fail or
refuse to take action that is not contrary to Applicable Law or to any of the terms of any of the
Loan Documents even if such action in Agent’s opinion would subject it to potential liability, the
Required Lenders may remove Agent and appoint a successor Agent in the same manner and with the
same effect as is provided in this Agreement with respect to Agent’s resignation.




          12.1.5. Agent shall promptly, upon receipt thereof, forward to each Lender (i) copies of any
significant written notices, reports, certificates and other information received by Agent from any
Obligor (but only if and to the extent such Obligor is not required by the terms of the Loan
Documents to supply such information directly to Lenders) and (ii) copies of the results of any
field audits by Agent with respect to Borrowers. Agent shall have no liability to any Lender for
any errors in or omissions from any field audit or other examination of any Credit Party or the
Collateral, unless such error or omission was the direct result of Agent’s willful misconduct.




63









 








          12.1.6. Each Lender hereby consents to the terms and provisions of the Intercreditor Agreement
and hereby authorizes Agent, on behalf of Lenders, to execute, deliver and perform under the
Intercreditor Agreement.




     12.2. Agreements Regarding Collateral. Lenders hereby irrevocably authorize Agent, at
its option and in its discretion, to release any Lien upon any Collateral (i) upon the termination
of the Commitments and payment or satisfaction of all of the Obligations or (ii) constituting
Equipment sold or disposed of in accordance with the terms of this Agreement if Borrowers certify
to Agent that the disposition is made in compliance with the terms of this Agreement (and Agent may
rely conclusively on any such certificate, without further inquiry) or (iii) if approved or
ratified by the Required Lenders. Agent shall have no obligation whatsoever to any of the Lenders
to assure that any of the Collateral exists or is owned by a Credit Party or is cared for,
protected or insured or has been encumbered, or that Agent’s Liens have been properly or
sufficiently or lawfully created, perfected, protected or enforced or entitled to any particular
priority or to exercise any duty of care with respect to any of the Collateral.



     12.3. Reliance By Agent. Agent shall be entitled to rely, and shall be fully
protected in so relying, upon any certification, notice or other communication (including any
thereof by telephone, telex, telegram, telecopier message or cable) believed by it to be genuine
and correct and to have been signed, sent or made by or on behalf of the proper Person or Persons,
and upon advice and statements of legal counsel, independent accountants and other experts selected
by Agent. As to any matters not expressly provided for by this Agreement or any of the other Loan
Documents, Agent shall in all cases be fully protected in acting or refraining from acting
hereunder and thereunder in accordance with the instructions of the Required Lenders, and such
instructions of the Required Lenders and any action taken or failure to act pursuant thereto shall
be binding upon Lenders.



     12.4. Action Upon Default. Agent shall not be deemed to have knowledge of the
occurrence of a Default or an Event of Default unless it has received written notice from a Lender
or any or all Borrowers specifying the occurrence and nature of such Default or Event of Default.
If Agent shall receive such a notice of a Default or an Event of Default or shall otherwise acquire
actual knowledge of any Default or Event of Default, Agent shall promptly notify Lenders in writing
and Agent shall take such action and assert such rights under this Agreement and the other Loan
Documents, or shall refrain from taking such action and asserting such rights, as the Required
Lenders shall direct from time to time. If any Lender shall receive a notice of a Default or an
Event of Default or shall otherwise acquire actual knowledge of any Default or Event of Default,
such Lender shall promptly notify Agent and the other Lenders in writing. As provided in Section
12.3 hereof, Agent shall not be subject to any liability by reason of acting or refraining to act
pursuant to any request of the Required Lenders except for its own willful misconduct or gross
negligence in connection with any action taken by it. Before directing Agent to take or refrain
from taking any action or asserting any rights or remedies under this Agreement and the other Loan
Documents on account of any Event of Default, the Required Lenders shall consult with and seek the
advice of (but without having
to obtain the consent of) each other Lender, and promptly after directing Agent to take or
refrain from taking any such action or asserting any such rights, the Required Lenders will so
advise each other Lender of the action taken or refrained from being taken and, upon request of any
Lender, will supply information concerning actions taken or not taken. In no event shall the
Required Lenders, without the prior written consent of each Lender, direct Agent to accelerate and
demand payment of the Loans held by one Lender without accelerating and demanding payment of all
other Loans or to terminate the Commitments of one or more Lenders without terminating the
Commitments of all Lenders. Each Lender agrees that, except as otherwise provided in any of the
Loan Documents and without the prior written consent of the Required Lenders, it will not take any
legal action or institute any action or proceeding against any Obligor with respect to any of the
Obligations or Collateral, or accelerate or otherwise enforce its portion of the Obligations.
Without limiting the generality of the foregoing, none of Lenders may exercise any right that it
might otherwise have under



64









 




Applicable Law to credit bid at foreclosure sales, UCC sales or other
similar sales or dispositions of any of the Collateral except as authorized by the Required
Lenders. Notwithstanding anything to the contrary set forth in this Section 12.4 or elsewhere in
this Agreement, each Lender shall be authorized to take such action to preserve or enforce its
rights against any Obligor where a deadline or limitation period is otherwise applicable and would,
absent the taking of specified action, bar the enforcement of Obligations held by such Lender
against such Obligor, including the filing of proofs of claim in any Insolvency Proceeding.




     12.5. Ratable Sharing. If any Lender shall obtain any payment or reduction (including
any amounts received as adequate protection of a bank account deposit treated as cash collateral
under the Bankruptcy Code) of any Obligation of Credit Parties hereunder (whether voluntary,
involuntary, through the exercise of any right of set-off or otherwise) in excess of its Pro Rata
share of payments or reductions on account of such Obligations obtained by all of the Lenders, such
Lender shall forthwith (i) notify the other Lenders and Agent of such receipt and (ii) purchase
from the other Lenders such participations in the affected Obligations as shall be necessary to
cause such purchasing Lender to share the excess payment or reduction, net of costs incurred in
connection therewith, on a Pro Rata basis, provided that if all or any portion of such excess
payment or reduction is thereafter recovered from such purchasing Lender or additional costs are
incurred, the purchase shall be rescinded and the purchase price restored to the extent of such
recovery or such additional costs, but without interest. Each Credit Party agrees that any Lender
so purchasing a participation from another Lender pursuant to this Section 12.5 may, to the fullest
extent permitted by Applicable Law, exercise all of its rights of payment (including the right of
set-off) with respect to such participation as fully as if such Lender were the direct creditor of
Credit Parties in the amount of such participation.



     12.6. Indemnification of Agent.



          12.6.1. Each Lender agrees to indemnify and defend the Agent Indemnitees (to the extent not
reimbursed by Credit Parties under this Agreement, but without limiting the indemnification
obligation of Credit Parties under this Agreement), on a Pro Rata basis, and to hold each of the
Agent Indemnitees harmless from and against, any and all Claims which may be imposed on, incurred
by or asserted against any of the Agent Indemnitees in any way related to or arising out of this
Agreement or any of the other Loan Documents or any other document contemplated by or referred to
herein or therein or the transactions contemplated hereby or thereby (including the costs and
expenses which Credit Parties are obligated to pay under Section 14.2 hereof or amounts Agent may
be called upon to pay in connection with any lockbox or Dominion Account arrangement contemplated
hereby) or the enforcement of any of the terms hereof or thereof or of any such other documents,
provided that no Lender shall be liable to any Agent Indemnitee for any of the foregoing to the
extent that they result solely from the willful misconduct or gross negligence of such Agent
Indemnitee.




          12.6.2. Without limiting the generality of the foregoing provisions of this Section 12.6, if
Agent should be sued by any receiver, trustee in bankruptcy, debtor-in-possession or other Person
on account of any alleged preference or fraudulent transfer received or alleged to have been
received from any Credit Party or any other Obligor as the result of any transaction under the Loan
Documents, then in such event any monies paid by Agent in settlement or satisfaction of such suit,
together with all Extraordinary Expenses incurred by Agent in the defense of same, shall be
promptly reimbursed to Agent by Lenders to the extent of each Lender’s Pro Rata share.




          12.6.3. Without limiting the generality of the foregoing provisions of this Section 12.6, if
at any time (whether prior to or after the Commitment Termination Date) any action or proceeding
shall be brought against any of the Agent Indemnitees by an Obligor or by any other Person claiming
by, through or under an Obligor, to recover damages for any act taken or omitted by Agent under any
of the

65









 








Loan Documents or in the performance of any rights, powers or remedies of Agent against any
Obligor, any Account Debtor, the Collateral or with respect to any Loans, or to obtain any other
relief of any kind on account of any transaction involving any Agent Indemnitees under or in
relation to any of the Loan Documents, each Lender agrees to indemnify, defend and hold the Agent
Indemnitees harmless with respect thereto and to pay to the Agent Indemnitees such Lender’s Pro
Rata share of such amount as any of the Agent Indemnitees shall be required to pay by reason of a
judgment, decree, or other order entered in such action or proceeding or by reason of any
compromise or settlement agreed to by the Agent Indemnitees, including all interest and costs
assessed against any of the Agent Indemnitees in defending or compromising such action, together
with attorneys’ fees and other legal expenses paid or incurred by the Agent Indemnitees in
connection therewith; provided, however, that no Lender shall be liable to any
Agent Indemnitee for any of the foregoing to the extent that they arise solely from the willful
misconduct or gross negligence of such Agent Indemnitee. In Agent’s discretion, Agent may also
reserve for or satisfy any such judgment, decree or order from proceeds of Collateral prior to any
distributions therefrom to or for the account of Lenders.




     12.7. Limitation on Responsibilities of Agent. Agent shall in all cases be fully
justified in failing or refusing to act hereunder unless it shall have received further assurances
to its satisfaction from Lenders of their indemnification obligations under Section 12.6 hereof
against any and all Claims which may be incurred by Agent by reason of taking or continuing to take
any such action. Agent shall not be liable to Lenders (or any Lender’s participants) for any
action taken or omitted to be taken under or in connection with this Agreement or the other Loan
Documents except as a result of actual gross negligence or willful misconduct on the part of Agent.
Agent does not assume any responsibility for any failure or delay in performance or breach by any
Obligor or any Lender of its obligations under this Agreement or any of the other Loan Documents.
Agent does not make to Lenders, and no Lender makes to Agent or the other Lenders, any express or
implied warranty, representation or guarantee with respect to the Loans, the Collateral, the Loan
Documents or any Obligor. Neither Agent nor any of its officers, directors, agents, attorneys or
employees shall be responsible to Lenders, and no Lender nor any of its officers, directors,
employees, attorneys or agents shall be responsible to Agent or the other Lenders, for: (i) any
recitals, statements, information, representations or warranties contained in any of the Loan
Documents or in any certificate or other document furnished pursuant to the terms hereof; (ii) the
execution, validity, genuineness, effectiveness or enforceability of, any of the Loan Documents;
(iii) the validity, genuineness, enforceability, collectibility, value, sufficiency or existence of
any Collateral, or the perfection or priority of any Lien therein; or (iv) the assets, liabilities,
financial condition, results of operations, business, creditworthiness or legal status of any
Obligor or any Account Debtor. Neither Agent nor any of its officers, directors, employees,
attorneys or agents shall have any obligation to any Lender to ascertain or inquire into the
existence of any Default or Event of Default, the observance or performance by any Obligor of any
of the duties or agreements of such Obligor under any of the Loan Documents or the
satisfaction of any conditions precedent contained in any of the Loan Documents. Agent may
consult with and employ legal counsel, accountants and other experts and shall be entitled to act
upon, and shall be fully protected in any action taken in good faith reliance upon, any advice
given by such experts.



     12.8. Successor Agent and Co-Agents.



          12.8.1. Subject to the appointment and acceptance of a successor Agent as provided below,
Agent may resign at any time by giving at least 30 days written notice thereof to each Lender and
Borrowers. Upon receipt of any notice of such resignation, the Required Lenders, after prior
consultation with (but without having to obtain consent of) each Lender, shall have the right to
appoint a successor Agent which shall be (i) a Lender, (ii) a United States based affiliate of a
Lender or (iii) a commercial bank that is organized under the laws of the United States or of any
State thereof and has a combined capital surplus of at least $100,000,000 and, provided no Default
or Event of Default then exists, is

66









 








reasonably acceptable to Borrowers (and for purposes hereof,
any successor to Agent shall be deemed acceptable to Borrowers). Upon the acceptance by a
successor Agent of an appointment to serve as an Agent hereunder, such successor Agent shall
thereupon succeed to and become vested with all the rights, powers, privileges and duties of the
retiring Agent without further act, deed or conveyance, and the retiring Agent shall be discharged
from its duties and obligations hereunder. After any retiring Agent’s resignation hereunder as
Agent, the provisions of this Section 12 (including the provisions of Section 12.6 hereof) shall
continue in effect for its benefit in respect of any actions taken or omitted to be taken by it
while it was acting as Agent. Notwithstanding anything to the contrary contained in this
Agreement, any successor by merger or acquisition of the stock or assets of Agent shall continue to
be Agent hereunder unless such successor shall resign in accordance with the provisions hereof.




          12.8.2. It is the purpose of this Agreement that there shall be no violation of any Applicable
Law denying or restricting the right of financial institutions to transact business as agent or
otherwise in any jurisdiction. It is recognized that, in case of litigation under any of the Loan
Documents, or in case Agent deems that by reason of present or future laws of any jurisdiction
Agent might be prohibited from exercising any of the powers, rights or remedies granted to Agent or
Lenders hereunder or under any of the Loan Documents or from holding title to or a Lien upon any
Collateral or from taking any other action which may be necessary hereunder or under any of the
Loan Documents, Agent may appoint an additional Person as a separate collateral agent or
co-collateral agent which is not so prohibited from taking any of such actions or exercising any of
such powers, rights or remedies. If Agent shall appoint an additional Person as a separate
collateral agent or co-collateral agent as provided above, each and every remedy, power, right,
claim, demand or cause of action intended by any of the Loan Documents to be exercised by or vested
in or conveyed to Agent with respect thereto shall be exercisable by and vested in such separate
collateral agent or co-collateral agent, but only to the extent necessary to enable such separate
collateral agent or co-collateral agent to exercise such powers, rights and remedies, and every
covenant and obligation necessary to the exercise thereof by such separate collateral agent or
co-collateral agent shall run to and be enforceable by either of them. Should any instrument from
Lenders be required by the separate collateral agent or co-collateral agent so appointed by Agent
in order more fully and certainly to vest in and confirm to him or it such rights, powers, duties
and obligations, any and all of such instruments shall, on request, be executed, acknowledged and
delivered by Lenders whether or not a Default or Event of Default then exists. In case any
separate collateral agent or co-collateral agent, or a successor to either, shall die, become
incapable of acting, resign or be removed, all the estates, properties, rights, powers, duties and
obligations of such separate collateral agent or co-collateral agent, so far as permitted by
Applicable Law, shall vest in and be exercised by the Agent until the appointment of a new
collateral agent or successor to such separate collateral agent or co-collateral agent.




     12.9. Consents, Amendments and Waivers ; Out-of-Formula Loans.



          12.9.1. No amendment or modification of any provision of this Agreement shall be effective
without the prior written agreement of the Required Lenders and Borrowers, and no waiver of any
Default or Event of Default shall be effective without the prior written consent of the Required
Lenders; provided, however, that, (i) without the prior written consent of Agent no
amendment or waiver shall be effective with respect to any provision of any of the Loan Documents
(including this Section 12) to the extent such provision relates to the rights, remedies, duties
or immunities of Agent; (ii) without the prior written consent of Agent, no amendment to the
provisions of Sections 1.2 or 3.1.3 shall be effective; (iii) without the prior written consent of
all Lenders, no waiver of any Default or Event of Default shall be effective if the Default or
Event of Default relates to Borrowers’ failure to observe or perform any covenant that may not be
amended without the unanimous written consent of Lenders (and, where so provided hereinafter, the
written consent of Agent) as hereinafter set forth in this Section 12.9.1; and (iv) the written
agreement of all Lenders (except a defaulting Lender as provided in Section 3.2 of this Agreement)
shall be required to effectuate any amendment, modification or waiver that would (a) alter the

67









 








provisions of Sections 2.2, 2.4, 2.6, 2.7, 2.8, 2.9, 4.6, 4.7, 4.9, 4.10, 5.1, 12, 13, 14.2 or
14.3, (b) amend the definitions of “Pro Rata,” “Required Lenders,” “Availability Reserve,”
“Borrowing Base” (and the other defined terms used in such definitions) or if the effect would be
to increase the amount of Availability, any provision of this Agreement obligating Agent to take
certain actions at the direction of the Required Lenders, or any provision of any of the Loan
Documents regarding the Pro Rata treatment or obligations of Lenders, (c) increase or otherwise
modify any of the Commitments (other than to reduce proportionately each Lender’s Commitment in
connection with any overall reduction in the amount of the Commitments), (d) alter or amend (other
than to increase) the rate of interest payable in respect of the Loans (except as may be expressly
authorized by the Loan Documents or as may be necessary, in Agent’s judgment, to comply with
Applicable Law), (e) waive or agree to defer collection of any fee, termination charge or other
charge provided for under any of the Loan Documents (except to the extent that the Required Lenders
agree after and during the continuance of any Event of Default to a waiver or deferral of any
termination charge provided for in Section 5.2.3 hereof) or the unused line fee in Section 2.2.3
hereof, (f) subordinate the payment of any of the Obligations to any other Debt or the priority of
any Liens granted to Agent under any of the Loan Documents to Liens granted to any other Person,
except as currently provided in or contemplated by the Loan Documents in connection with Credit
Parties’ incurrence of Permitted Purchase Money Debt, and except for Liens granted by an Obligor to
financial institutions with respect to amounts on deposit with such financial institutions to cover
returned items, processing and analysis charges and other charges in the Ordinary Course of
Business that relate to deposit accounts with such financial institutions, (g) alter the time or
amount of repayment of any of the Loans or waive any Event of Default resulting from nonpayment of
the Loans on the due date thereof (or within any applicable period of grace), (h) forgive any of
the Obligations, except any portion of the Obligations held by a Lender who consents in writing to
such forgiveness, or (i) release any Obligor from liability for any of the Obligations. No Lender
shall be authorized to amend or modify any Note held by it, unless such amendment or modification
is consented to in writing by all Lenders; provided, however, that the foregoing
shall not be construed to prohibit an amendment or modification to any provision of this Agreement
that may be effected pursuant to this Section 12.9.1 by agreement of Borrowers and the Required
Lenders even though such an amendment or modification results in an amendment or modification of
the Notes by virtue of the incorporation by reference in each of the Notes of this Agreement. The
making of any Loans hereunder by any Lender during the existence of a Default or Event of Default
shall not be deemed to constitute a waiver of such Default or Event of Default. Any waiver or
consent granted by Lenders hereunder shall be effective only if in writing and then only in the
specific instance and for the specific purpose for which it was given.




          12.9.2. In connection with any proposed amendment to any of the Loan Documents or waiver of
any of the terms thereof or any Default or Event of Default thereunder, no Borrower shall
solicit, request or negotiate for or with respect to any such proposed amendment or waiver of
any of the provisions of this Agreement or any of the other Loan Documents unless each Lender shall
be informed thereof by Borrowers or Agent (to the extent known by Agent) and shall be afforded an
opportunity of considering the same and supplied by Borrowers with sufficient information to enable
it to make an informed decision with respect thereto. No Borrower will, directly or indirectly,
pay or cause to be paid any remuneration or other thing of value, whether by way of supplemental or
additional interest, fee or otherwise, to any Lender (in its capacity as a Lender hereunder) as
consideration for or as an inducement to the consent to or agreement by such Lender with any waiver
or amendment of any of the terms and provisions of this Agreement or any of the other Loan
Documents unless such remuneration or thing of value is concurrently paid, on the same terms, on a
Pro Rata basis to all Lenders.




          12.9.3. Unless otherwise directed in writing by the Required Lenders, Agent may require
Lenders to honor requests by Borrowers for Out-of-Formula Loans (in which event, and
notwithstanding anything to the contrary set forth in Section 1.1.1 or elsewhere in this Agreement,
Lenders shall continue to make Revolver Loans up to their Pro Rata share of the Commitments) and to
forbear from requiring

68









 








Borrowers to cure an Out-of-Formula Condition, (1) when no Event of Default
exists (or if an Event of Default exists, when the existence of such Event of Default is not known
by Agent), if and for so long as (i) such Out-of-Formula Condition does not continue for a period
of more than 15 consecutive days, following which no Out-of-Formula Condition exists for at least
15 consecutive days before another Out-of-Formula Condition exists, (ii) the amount of the Revolver
Loans outstanding at any time does not exceed the aggregate of the Commitments at such time, and
(iii) the Out-of-Formula Condition is not known by Agent at the time in question to exceed
$2,000,000; and (2) regardless of whether or not an Event of Default exists, if Agent discovers the
existence of an Out-of-Formula Condition not previously known by it to exist, but Lenders shall be
obligated to continue making such Revolver Loans as directed by Agent only (A) if the amount of the
Out-of-Formula Condition is not increased by more than $1,000,000 above the amount determined by
Agent to exist on the date of discovery thereof and (B) for a period not to exceed 5 Business Days.
In no event shall Borrowers or any other Obligor be deemed to be a beneficiary of this Section
12.9.3 or authorized to enforce any of the provisions of this Section 12.9.3.




     12.10. Due Diligence and Non-Reliance. Each Lender hereby acknowledges and represents
that it has, independently and without reliance upon Agent or the other Lenders, and based upon
such documents, information and analyses as it has deemed appropriate, made its own credit analysis
of each Obligor and its own decision to enter into this Agreement and to fund the Loans to be made
by it hereunder and to purchase participations in the LC Outstandings pursuant to Section 1.3.2
hereof, and each Lender has made such inquiries concerning the Loan Documents, the Collateral and
each Obligor as such Lender feels necessary and appropriate, and has taken such care on its own
behalf as would have been the case had it entered into the other Loan Documents without the
intervention or participation of the other Lenders or Agent. Each Lender hereby further
acknowledges and represents that the other Lenders and Agent have not made any representations or
warranties to it concerning any Obligor, any of the Collateral or the legality, validity,
sufficiency or enforceability of any of the Loan Documents. Each Lender also hereby acknowledges
that it will, independently and without reliance upon the other Lenders or Agent, and based upon
such financial statements, documents and information as it deems appropriate at the time, continue
to make and rely upon its own credit decisions in making Loans and in taking or refraining to take
any other action under this Agreement or any of the other Loan Documents. Except for notices,
reports and other information expressly required to be furnished to Lenders by Agent hereunder,
Agent shall not have any duty or responsibility to provide any Lender with any notices, reports or
certificates furnished to Agent by any Obligor or any credit or other information concerning the
affairs, financial condition, business or Properties of any Obligor (or any of its Affiliates)
which may come into possession of Agent or any of Agent’s Affiliates.



     12.11. Representations and Warranties of Lenders. By its execution of this Agreement,
each Lender hereby represents and warrants to each Credit Party and the other Lenders that it has
the power to enter into and perform its obligations under this Agreement and the other Loan
Documents, and that it has taken all necessary and appropriate action to authorize its execution
and performance of this Agreement and the other Loan Documents to which it is a party, each of
which will be binding upon it and the obligations imposed upon it herein or therein will be
enforceable against it in accordance with the respective terms of such documents.



     12.12. The Required Lenders. As to any provisions of this Agreement or the other Loan
Documents under which action may or is required to be taken upon direction or approval of the
Required Lenders, the direction or approval of the Required Lenders shall be binding upon each
Lender to the same extent and with the same effect as if each Lender had joined therein.
Notwithstanding anything to the contrary contained in this Agreement, Credit Parties shall not be
deemed to be a beneficiary of, or be entitled to enforce, sue upon or assert as a defense to any of
the Obligations, any provisions of this Agreement that requires Agent or any Lender to act, or
conditions their authority to act, upon the direction or consent of the Required Lenders; and any
action taken by Agent or any Lender that requires



69









 




the consent or direction of the Required Lenders
as a condition to taking such action shall, insofar as Credit Parties are concerned, be presumed to
have been taken with the requisite consent or direction of the Required Lenders.




     12.13. Several Obligations. The obligations and commitments of each Lender under this
Agreement and the other Loan Documents are several and neither Agent nor any Lender shall be
responsible for the performance by the other Lenders of its obligations or commitments hereunder or
thereunder. Notwithstanding any liability of Lenders stated to be joint and several to third
Persons under any of the Loan Documents, such liability shall be shared, as among Lenders, Pro Rata
according to the respective Commitments of Lenders.



     12.14. Agent in its Individual Capacity. With respect to its obligation to lend under
this Agreement, the Loans made by it and each Note issued to it, Agent shall have the same rights
and powers hereunder and under the other Loan Documents as any other Lender or holder of a Note and
may exercise the same as though it were not performing the duties specified herein; and the terms
“Lenders,” “Required Lenders,” or any similar term shall, unless the context clearly otherwise
indicates, include Agent in its capacity as a Lender. Agent and its Affiliates may each accept
deposits from, maintain deposits or credit balances for, invest in, lend money to, act as trustee
under indentures of, serve as financial advisor to, and generally engage in any kind of business
with any Credit Party or any other Obligor, or any affiliate of a Credit Party or any other
Obligor, as if it were any other bank and without any duty to account therefor (or for any fees or
other consideration received in connection therewith) to the other Lenders.



     12.15. Third Party Beneficiaries. This Section 12 is not intended to confer any
rights or benefits upon any Credit Party or any other Person except Lenders and Agent, and no
Person (including any or all Credit Parties) other than Lenders and Agent shall have any right to
enforce any of the provisions of this Section 12 except as expressly provided in Section 12.17
hereof. As between Credit Parties and Agent, any action that Agent may take or purport to take on
behalf of Lenders under any of the Loan Documents shall be conclusively presumed to have been
authorized and approved by Lenders as herein provided.



     12.16. Notice of Transfer. Agent may deem and treat a Lender party to this Agreement
as the owner of such Lender’s portion of the Revolver Loans for all purposes, unless and until a
written notice of the assignment or transfer thereof executed by such Lender has been received by
Agent.



     12.17. Replacement of Certain Lenders. If a Lender (“Affected Lender”) shall have (i)
failed to fund its Pro Rata share of any Revolver Loan requested (or deemed requested) by Borrowers
which such Lender is obligated to fund under the terms of this Agreement and which such failure has
not been cured, (ii) requested compensation from Borrowers under Section 2.7 to recover increased
costs incurred by such Lender (or its parent or holding company) which are not being incurred
generally by the other Lenders (or their respective parents or holding companies), or (iii)
delivered a notice pursuant to Section 2.6 hereof claiming that such Lender is unable to extend
LIBOR Loans to Borrowers for reasons not generally applicable to the other Lenders, then, in any
such case and in addition to any other rights and remedies that Agent, any other Lender or any
Borrower may have against such Affected Lender, any Borrower or Agent may make written demand on
such Affected Lender (with a copy to Agent in the case of a demand by a Borrower and a copy to
Borrowers in the case of a demand by Agent) for the Affected Lender to assign, and such Affected
Lender shall assign pursuant to one or more duly executed Assignment and Acceptances within 5
Business Days after the date of such demand, to one or more Lenders willing to accept such
assignment or assignments, or to one or more Eligible Assignees designated by Agent, all of such
Affected Lender’s rights and obligations under this Agreement (including its Commitments and all
Loans owing to it) in accordance with Section 13 hereof. Agent is hereby irrevocably authorized to
execute one or more Assignment and Acceptances as attorney-in-fact for



70









 




any Affected Lender which
fails or refuses to execute and deliver the same within 5 Business Days after the date of such
demand. The Affected Lender shall be entitled to receive, in cash and concurrently with execution
and delivery of each such Assignment and Acceptance, all amounts owed to the Affected Lender
hereunder or under any other Loan Document, including the aggregate outstanding principal amount of
the Revolver Loans owed to such Lender, together with accrued interest thereon through the date of
such assignment. Upon the replacement of any Affected Lender pursuant to this Section 12.17, such
Affected Lender shall cease to have any participation in, entitlement to, or other right to share
in the Liens of Agent in any Collateral and such Affected Lender shall have no further liability to
Agent, any Lender or any other Person under any of the Loan Documents (except as provided in
Section 12.6 hereof as to events or transactions which occur prior to the replacement of such
Affected Lender), including any commitment to make Loans or purchase participations in LC
Outstandings.




     12.18. Remittance of Payments and Collections.



          12.18.1. All payments by any Lender to Agent shall be made not later than the time set forth
elsewhere in this Agreement on the Business Day such payment is due; provided,
however, that if such payment is due on demand by Agent and such demand is made on the
paying Lender after 12:00 noon on such Business Day, then payment shall be made by 12:00 noon on
the next Business Day. Payment by Agent to any Lender shall be made by wire transfer, promptly
following Agent’s receipt of funds for the account of such Lender and in the type of funds received
by Agent; provided, however, that if Agent receives such funds at or prior to 1:00
p.m., Agent shall pay such funds to such Lender by 2:00 p.m. on such Business Day, but if Agent
receives such funds after 1:00 p.m., Agent shall pay such funds to such Lender by 2:00 p.m. on the
next Business Day.




          12.18.2. With respect to the payment of any funds from Agent to a Lender or from a Lender to
Agent, the party failing to make full payment when due pursuant to the terms hereof shall, on
demand by the other party, pay such amount together with interest thereon at the Federal Funds
Rate. In no event shall Borrowers be entitled to receive any credit for any interest paid by Agent
to any Lender, or by any Lender to Agent, at the Federal Funds Rate as provided herein.




          12.18.3. If Agent pays any amount to a Lender in the belief or expectation that a related
payment has been or will be received by Agent from an Obligor and such related payment is not
received by Agent, then Agent shall be entitled to recover such amount from each Lender that
receives such amount. If Agent determines at any time that any amount received by it under this
Agreement or any of the other Loan Documents must be returned to an Obligor or paid to any other
Person pursuant to any Applicable Law, court order or otherwise, then, notwithstanding any other
term or condition of this Agreement or any of the other Loan Documents, Agent shall not be required
to distribute such amount to any Lender.




SECTION 13. BENEFIT OF AGREEMENT; ASSIGNMENTS AND PARTICIPATIONS




     13.1. Successors and Assigns. This Agreement shall be binding upon and inure to the
benefit of Credit Parties, Agent and Lenders and their respective successors and assigns (which, in
the case of Agent, shall include any successor Agent appointed pursuant to Section 12.8 hereof),
except that (i) no Credit Party shall have the right to assign its rights or delegate performance
of any of its obligations under any of the Loan Documents and (ii) any assignment by any Lender
must be made in compliance with Section 13.3 hereof. Agent may treat the payee of any Note as the
owner thereof for all purposes hereof unless and until such payee complies with Section 13.3 in the
case of an assignment thereof or, in the case of any other transfer, a written notice of the
transfer is filed with Agent. Any assignee or transferee of a Note agrees by acceptance thereof to
be bound by all the terms and provisions of the Loan Documents. Any request, authority or consent
of any Person, who at the time of making such request or



71









 




giving such authority or consent is the
holder of a Note, shall be conclusive and binding on any subsequent holder, transferee or assignee
of such Note or of any Note or Notes issued in exchange therefor.




     13.2. Participations.



          13.2.1. Permitted Participants; Effect. Any Lender may, in the ordinary course of its
business and in accordance with Applicable Law, at any time sell to one or more banks or other
financial institutions (each a “Participant”) participating interest in any of the Obligations
owing to such Lender, any Commitment of such Lender or any other interest of such Lender under any
of the Loan Documents. In the event of any such sale by a Lender of participating interests to a
Participant, such Lender’s obligations under the Loan Documents shall remain unchanged, such Lender
shall remain solely responsible to the other parties hereto for the performance of such
obligations, such Lender shall remain the holder of any Note for all purposes under the Loan
Documents, all amounts payable by Credit Parties under this Agreement and any of the Notes shall be
determined as if such Lender had not sold such participating interests, and Credit Parties and
Agent shall continue to deal solely and directly with such Lender in connection with such Lender’s
rights and obligations under the Loan Documents. If a Lender sells a participation to a Person
other than an Affiliate of such Lender, then such Lender shall give prompt written notice thereof
to Borrowers and the other Lenders.




          13.2.2. Voting Rights. Each Lender shall retain the sole right to approve, without
the consent of any Participant, any amendment, modification or waiver of any provision of the Loan
Documents other than an amendment, modification or waiver with respect to any Loans or Commitment
in which such Participant has an interest which forgives principal, interest or fees or reduces the
stated interest rate or the stated rates at which fees are payable with respect to any such Loan or
Commitment,
postpones the Commitment Termination Date, or any date fixed for any regularly scheduled
payment of interest or fees on such Revolver Loan or Commitment, or releases from liability any
Credit Party or releases any substantial portion of any of the Collateral.




          13.2.3. Benefit of Set-Off. Each Borrower agrees that each Participant shall be
deemed to have the right of set-off provided in Section 11.4 hereof in respect of its participating
interest in amounts owing under the Loan Documents to the same extent and subject to the same
requirements under this Agreement (including Section 12.5) as if the amount of its participating
interest were owing directly to it as a Lender under the Loan Documents, provided that each Lender
shall retain the right of set-off provided in Section 11.4 hereof with respect to the amount of
participating interests sold to each Participant. Lenders agree to share with each Participant,
and each Participant by exercising the right of set-off provided in Section 11.4 agrees to share
with each Lender, any amount received pursuant to the exercise of its right of set-off, such
amounts to be shared in accordance with Section 12.5 hereof as if each Participant were a Lender.




          13.2.4. Notices. Each Lender shall be solely responsible for notifying its
Participants of any matters relating to the Loan Documents to the extent that any such notice may
be required, and neither Agent nor any other Lender shall have any obligation, duty or liability to
any Participant of any other Lender. Without limiting the generality of the foregoing, neither
Agent nor any Lender shall have any obligation to give notices or to provide documents or
information to a Participant of another Lender.




     13.3. Assignments.



          13.3.1. Permitted Assignments. Subject to its giving at least 2 Business Days notice
to Agent and Borrowers, any Lender may, in accordance with Applicable Law, at any time assign to
any Eligible Assignee all or any part of its rights and obligations under the Loan Documents, so
long as

72









 








(i) each assignment is of a constant, and not a varying, ratable percentage of all of the
transferor Lender’s rights and obligations under the Loan Documents with respect to the Loans and
the LC Outstandings and, in the case of a partial assignment, is in a minimum principal amount of
$5,000,000 (unless otherwise agreed by Agent in its sole discretion) and integral multiples of
$1,000,000 in excess of that amount; (ii) except in the case of an assignment in whole of a
Lender’s rights and obligations under the Loan Documents or an assignment by one original signatory
to this Agreement to another such signatory, immediately after giving effect to any assignment, the
aggregate amount of the Commitments retained by the transferor Lender shall in no event be less
than $5,000,000 (unless otherwise agreed by Agent in its sole discretion); and (iii) the parties to
each such assignment shall execute and deliver to Agent, for its acceptance and recording, an
Assignment and Acceptance. The consent of Agent shall be required prior to an assignment becoming
effective with respect to an Eligible Assignee that is not a Lender or an Affiliate of a Lender.
Nothing contained herein shall limit in any way the right of Lenders to assign (i) to any Eligible
Assignee all of their rights and obligations under the Loan Documents or (ii) all or any portion of
the Loans owing to it to any Federal Reserve Bank or the United States Treasury as collateral
security pursuant to Regulation A of the Board of Governors and any Operating Circular issued by
such Federal Reserve Bank, provided that in the case of this clause (ii) any payment in respect of
such assigned Loans made by Borrowers to the assigning Lender in accordance with the terms of this
Agreement shall satisfy Borrowers’ obligations hereunder in respect of such assigned Loans to the
extent of such payment, but no such assignment shall release the assigning Lender from its
obligations hereunder.




          13.3.2. Effect; Effective Date. Upon (i) delivery to Agent of a notice of assignment
substantially in the form attached as Exhibit H hereto, together with any consents required
by Section 13.3.1, and (ii) payment of a $5,000 fee to the Agent for processing any assignment to
an Eligible Assignee that is not an Affiliate of the transferor Lender, such assignment shall
become effective on the effective date specified in such notice of assignment. On and after the
effective date of such assignment,
such Eligible Assignee shall for all purposes be a Lender party to the Agreement and any other
Loan Document executed by the Lenders and shall have all the rights and obligations of the Lender
under the Loan Documents to the same extent as if it were an original party thereto, and no further
consent or action by Credit Parties, Lenders or Agent shall be required to release the transferor
Lender with respect to the Commitment (or portion thereof) of such Lender and Obligations assigned
to such Eligible Assignee. Upon the consummation of any assignment to an Eligible Assignee
pursuant to this Section 13.3.2, the transferor Lender, Agent and Borrowers shall make appropriate
arrangements so that replacement Notes are issued to such transferor Lender and new Notes or, as
appropriate, replacement Notes, are issued to such Eligible Assignee, in each case in principal
amounts reflecting their respective Commitments, as adjusted pursuant to such assignment. If the
transferor Lender shall have assigned all of its interests, rights and obligations under this
Agreement pursuant to Section 13.3.1 hereof, such transferor Lender shall no longer have any
obligation to indemnify Agent with respect to any transactions, events or occurrences that
transpire after the effective date of such assignment, and each Eligible Assignee to which such
transferor shall make an assignment shall be responsible to Agent to indemnify Agent in accordance
with this Agreement with respect to transactions, events and occurrences transpiring on and after
the effective date of such assignment to it.




          13.3.3. Dissemination of Information. Each Credit Party authorizes each Lender and
Agent to disclose to any Participant, any Eligible Assignee or any other Person acquiring an
interest in the Loan Documents by operation of law (each a “Transferee”), and any prospective
Transferee, any and all information in Agent’s or such Lender’s possession concerning each Credit
Party, the Subsidiaries of each Credit Party or the Collateral, subject to appropriate
confidentiality undertakings on the part of such Transferee.

73









 









SECTION 14. MISCELLANEOUS




     14.1. Power of Attorney. Each Credit Party hereby irrevocably designates, makes,
constitutes and appoints Agent (and all Persons designated by Agent) as such Credit Party’s true
and lawful attorney (and agent-in-fact) and Agent, or Agent’s designee, may, without notice to such
Credit Party and in either such Credit Party’s or Agent’s name, but at the cost and expense of
Borrowers:



          14.1.1. At such time or times as Agent or said designee, in its sole discretion, may
determine, endorse such Credit Party’s name on any Payment Item or proceeds of the Collateral which
come into the possession of Agent or under Agent’s control.




          14.1.2. At any time that an Event of Default exists: (i) demand payment of the Accounts from
the Account Debtors, enforce payment of the Accounts by legal proceedings or otherwise, and
generally exercise all of such Credit Party’s rights and remedies with respect to the collection of
the Accounts; (ii) settle, adjust, compromise, discharge or release any of the Accounts or other
Collateral or any legal proceedings brought to collect any of the Accounts or other Collateral;
(iii) sell or assign any of the Accounts and other Collateral upon such terms, for such amounts and
at such time or times as Agent deems advisable; (iv) take control, in any manner, of any item of
payment or proceeds relating to any Collateral; (v) prepare, file and sign such Credit Party’s name
to a proof of claim in bankruptcy or similar document against any Account Debtor or to any notice
of Lien, assignment or satisfaction of Lien or similar document in connection with any of the
Collateral; (vi) receive, open and dispose of all mail addressed to such Credit Party and to notify
postal authorities to change the address for delivery thereof to such address as Agent may
designate; (vii) endorse the name of such Credit Party upon any of the items of payment or proceeds
relating to any Collateral and deposit the same to the account of Agent on account of the
Obligations; (viii) endorse the name of such Credit Party upon any chattel paper, document,
instrument, invoice, freight bill, bill of lading or similar document or agreement relating to
any Accounts or Inventory of any Obligor and any other Collateral; (ix) use such Credit Party’s
stationery and sign the name of such Credit Party to verifications of the Accounts and notices
thereof to Account Debtors; (x) use the information recorded on or contained in any data processing
equipment and computer hardware and software relating to the Accounts, Inventory, Equipment or any
other Collateral; (xi) make and adjust claims under policies of insurance; (xii) sign the name of
such Credit Party on any proof of claim in bankruptcy against Account Debtors and on notices of
Liens, claims of mechanic’s Liens or assignments or releases of mechanic’s Liens securing any
Accounts; (xiii) take all action as may be necessary to obtain the payment of any letter of credit
or banker’s acceptance of which such Credit Party is a beneficiary; and (xiv) do all other acts and
things necessary, in Agent’s determination, to fulfill such Credit Party’s obligations under this
Agreement.




     14.2. General Indemnity. Each Credit Party hereby agrees to indemnify and defend the
Indemnitees and to hold the Indemnitees harmless from and against any Claim ever suffered or
incurred by any of the Indemnitees arising out of or related to this Agreement or any of the other
Loan Documents, the performance by Agent or Lenders of their duties or the exercise of any of their
rights or remedies under this Agreement or any of the other Loan Documents, or as a result of any
Credit Party’s failure to observe, perform or discharge any of its duties hereunder. Each Credit
Party shall also indemnify and defend the Indemnitees against and save the Indemnitees harmless
from all Claims of any Person arising out of, related to or with respect to any transactions
entered into pursuant to this Agreement or Agent’s Lien upon the Collateral. Without limiting the
generality of the foregoing, this indemnity shall extend to any Claims asserted against or incurred
by any of the Indemnitees by any Person under any Environmental Laws or similar laws by reason of
any Credit Party’s or any other Person’s failure to comply with laws applicable to solid or
hazardous waste materials or other toxic substances. Additionally, if any Taxes (excluding Taxes
imposed upon or measured solely by the net income of Agent and Lenders, but including, any
intangibles tax, stamp tax, recording tax or franchise tax) shall be payable



74









 




by Agent or any
Obligor on account of the execution or delivery of this Agreement, or the execution, delivery,
issuance or recording of any of the other Loan Documents, or the creation or repayment of any of
the Obligations hereunder, by reason of any Applicable Law now or hereafter in effect, Credit
Parties will pay (or will promptly reimburse Agent and Lenders for the payment of) all such Taxes,
including any interest and penalties thereon, and will indemnify and hold Indemnitees harmless from
and against all liability in connection therewith. The foregoing indemnities shall not apply to
Claims incurred by any of the Indemnitees as a direct and proximate result of their own gross
negligence or willful misconduct or that arise out of any disputes arising solely between or among
Agent and any Lender.




     14.3. Survival of All Indemnities. Notwithstanding anything to the contrary in this
Agreement or any of the other Loan Documents, the obligation of each Credit Party and each Lender
with respect to each indemnity given by it in this Agreement, whether given by such Credit Party to
Agent Indemnitees, Lender Indemnitees or Agent Indemnitees or by any Lender to any Agent
Indemnitees or Agent Indemnitees, shall survive the payment in full of the Obligations and the
termination of any of the Commitments.



     14.4. Modification of Agreement. This Agreement may not be modified, altered or
amended, except by an agreement in writing signed by Borrowers and Agent and Lenders (or, where
otherwise expressly allowed by Section 12 hereof, the Required Lenders in lieu of Agent and
Lenders); provided, however, that no consent, written or otherwise, of any Borrower
shall be necessary or required in connection with any amendment of any of
the provisions of Sections 1.2.8, 3.1.3, 4.6, or 12 (other than Section 12.17) or any other
provision of this Agreement that affects only the rights, duties and responsibilities of Lenders
and Agent as among themselves so long as no such amendment imposes any additional obligations on
Credit Parties.



     14.5. Severability. Wherever possible, each provision of this Agreement shall be
interpreted in such manner as to be effective and valid under Applicable Law, but if any provision
of this Agreement shall be prohibited by or invalid under Applicable Law, such provision shall be
ineffective only to the extent of such prohibition or invalidity, without invalidating the
remainder of such provision or the remaining provisions of this Agreement.



     14.6. Cumulative Effect; Conflict of Terms. The provisions of the Other Agreements
and the Security Documents are hereby made cumulative with the provisions of this Agreement.
Without limiting the generality of the foregoing, the parties acknowledge that this Agreement and
the other Loan Documents may use several different limitations, tests or measurements to regulate
the same or similar matters and that such limitations, tests and measures are cumulative and each
must be performed, except as may be expressly stated to the contrary in this Agreement. Except as
otherwise provided in the Syndication Letter, or any of the other Loan Documents by specific
reference to the applicable provision of this Agreement, if any provision contained in this
Agreement is in direct conflict with, or inconsistent with, any provision in any of the other Loan
Documents, the provision contained in this Agreement shall govern and control.



     14.7. Execution in Counterparts. This Agreement and any amendments hereto may be
executed in any number of counterparts and by different parties hereto in separate counterparts,
each of which when so executed and delivered shall be deemed to be an original and all of which
counterparts taken together shall constitute but one and the same instrument.



     14.8. Consent. Whenever Agent’s, Lenders’ or Required Lenders’ consent is required to
be obtained under this Agreement or any of the other Loan Documents as a condition to any action,
inaction, condition or event, Agent and each Lender shall be authorized to give or withhold its
consent in its sole



75









 




and absolute discretion and to condition its consent upon the giving of
additional collateral security for the Obligations, the payment of money or any other matter.




     14.9. Notices. All notices, requests and demands to or upon a party hereto shall be
in writing and shall be sent by certified or registered mail, return receipt requested, personal
delivery against receipt or by telecopier or other facsimile transmission and shall be deemed to
have been validly served, given or delivered when delivered against receipt or, in the case of
facsimile transmission, when received (if on a Business Day and, if not received on a Business Day,
then on the next Business Day after receipt) at the office where the noticed party’s telecopier is
located, in each case addressed to the noticed party at the address shown for such party on the
signature page hereof or, in the case of a Person who becomes a Lender after the date hereof, at
the address shown on the Assignment and Acceptance by which such Person became a Lender.
Notwithstanding the foregoing, no notice to or upon Agent pursuant to Sections 1.2, 2.1.2, 3.1 or
5.2.2 shall be effective until after actually received by the individual to whose attention at
Agent such
notice is required to be sent. Any written notice, request or demand that is not sent in
conformity with the provisions hereof shall nevertheless be effective on the date that such notice,
request or demand is actually received by the individual to whose attention at the noticed party
such notice, request or demand is required to be sent.



     14.10. Performance of Credit Parties’ Obligations. If any Borrower shall fail to
discharge any covenant, duty or obligation hereunder or under any of the other Loan Documents,
Agent may, in its sole discretion at any time or from time to time, for Credit Parties’ account and
at Borrowers’ expense, pay any amount or do any act required of Credit Parties hereunder or under
any of the other Loan Documents or otherwise lawfully requested by Agent to enforce any of the Loan
Documents or Obligations, preserve, protect, insure or maintain any of the Collateral, or preserve,
defend, protect or maintain the validity or priority of Agent’s Liens in any of the Collateral,
including the payment of any judgment against any Credit Party, any insurance premium, any
warehouse charge, any finishing or processing charge, any landlord claim, or any other Lien upon or
with respect to any of the Collateral. All payments that Agent may make under this Section and all
out-of-pocket costs and expenses (including Extraordinary Expenses) that Agent pays or incurs in
connection with any action taken by it hereunder shall be reimbursed to Agent by Borrowers on
demand with interest from the date such payment is made or such costs or expenses are incurred to
the date of payment thereof at the Default Rate applicable for Revolver Loans that are Base Rate
Loans. Any payment made or other action taken by Agent under this Section shall be without
prejudice to any right to assert, and without waiver of, an Event of Default hereunder and to
proceed thereafter as provided herein or in any of the other Loan Documents.



     14.11. Credit Inquiries. Each Credit Party hereby authorizes and permits Agent and
Lenders (but Agent and Lenders shall have no obligation) to respond to usual and customary credit
inquiries from third parties concerning such Credit Party or any Subsidiaries.



     14.12. Time of Essence. Time is of the essence of this Agreement, the Other
Agreements and the Security Documents.



     14.13. Indulgences Not Waivers. Agent’s or any Lender’s failure at any time or times
hereafter, to require strict performance by Credit Parties of any provision of this Agreement shall
not waive, affect or diminish any right of Agent or any Lender thereafter to demand strict
compliance and performance therewith.



     14.14. Entire Agreement; Appendix A, Exhibits and Schedules. This Agreement and the
other Loan Documents, together with all other instruments, agreements and certificates executed by
the parties in connection therewith or with reference thereto, embody the entire understanding and
agreement between the parties hereto and thereto with respect to the subject matter hereof and
thereof and supersede



76









 







all prior agreements, understandings and inducements, whether express or
implied, oral or written. Appendix A, each of the Exhibits and each of the Schedules attached
hereto are incorporated into this Agreement and by this reference made a part hereof.



     14.15. Interpretation. No provision of this Agreement or any of the other Loan Documents shall be construed against
or interpreted to the disadvantage of any party hereto by any court or other governmental or
judicial authority by reason of such party having, or being deemed to have, structured, drafted or
dictated such provision.



     14.16. Obligations of Lenders Several. The obligations of each Lender hereunder are
several, and no Lender shall be responsible for the obligations or Commitment of any other Lender.
Nothing contained in this Agreement and no action taken by Lenders pursuant hereto shall be deemed
to constitute the Lenders to be a partnership, association, joint venture or any other kind of
entity. The amounts payable at any time hereunder to each Lender shall be a separate and
independent debt, and each Lender shall be entitled, to the extent not otherwise restricted
hereunder, to protect and enforce its rights arising out of this Agreement and any of the other
Loan Documents and it shall not be necessary for Agent or any other Lender to be joined as an
additional party in any proceeding for such purpose.



     14.17. Confidentiality. Agent and Lenders each agrees to exercise reasonable efforts
(and, in any event, with at least the same degree of care as it ordinarily exercises with respect
to confidential information of its other customers) to keep any confidential information that is
delivered or made available by Borrowers to it and that is marked confidential, including
information made available to Agent or any Lender in connection with a visit or investigation by
any Person contemplated in Section 9.1.1 hereof, confidential from any Person other than their
respective Affiliates and individuals employed or retained by Agent or such Lender who are or are
expected to become engaged in evaluating, approving, structuring, administering or otherwise giving
professional advice with respect to any of the Loans or Collateral (including any of their
respective legal counsel, auditors or other professional advisors); provided,
however, that nothing herein shall prevent Agent or any Lender from disclosing such
confidential information (i) to any party to this Agreement from time to time or any Participant
which agrees in writing to be bound by the provisions of this Section, (ii) pursuant the order of
any court or administrative agency, (iii) upon the request or demand of any regulatory agency or
authority having jurisdiction over Agent or such Lender, (iv) which has been publicly disclosed
other than by an act or omission of Agent or any Lender except as permitted herein, (v) to the
extent reasonably required in connection with any litigation (with respect to any of the Loan
Documents or any of the transactions contemplated thereby) to which Agent, any Lender or their
respective Affiliates may be a party, (vi) to the extent reasonably required in connection with the
exercise of any remedies hereunder, (vii) to any actual or proposed Participant, Assignee or other
Transferee of all or part of a Lender’s rights hereunder so long as such Transferee has agreed in
writing to be bound by the provisions of this Section, and (viii) to the National Association of
Insurance Commissioners or any similar organization or to any nationally recognized rating agency
that requires access to information about a Lender’s portfolio in connection with ratings issued
with respect to such Lender.



     14.18. Governing Law; Consent to Forum. This Agreement has been negotiated, executed
and delivered at and shall be deemed to have been made in Dallas, Texas. This Agreement shall be
governed by and construed in accordance with the laws of the State of Texas; provided,
however, that if any of the Collateral shall be located in any jurisdiction other than
Texas, the laws of such jurisdiction shall govern the method, manner and procedure for foreclosure
of Agent’s Lien upon such Collateral and the enforcement of Agent’s other remedies in respect of
such Collateral to the extent that the laws of such jurisdiction are different from or inconsistent
with the laws of the State of Texas. As part of the consideration for new value received, and
regardless of any present or future domicile or
principal place of business of any Borrower, any Lender or Agent, each Credit



77









 




Party hereby consents and agrees that any U.S. Federal or Texas State Court sitting in Dallas, Texas shall have
jurisdiction to hear and determine any claims or disputes among any or all of the Credit Parties,
Agent and Lenders pertaining to this Agreement or to any matter arising out of or related to this
Agreement. Each Credit Party expressly submits and consents in advance to such jurisdiction in any
action or suit commenced in any such Court, and each Credit Party hereby waives any objection which
such Credit Party may have based upon lack of personal jurisdiction, improper venue or
forum non conveniens and hereby consents to the granting of such legal or
equitable relief as is deemed appropriate by such Court. Each Credit Party hereby waives personal
service of the summons, complaint and other process issued in any such action or suit and agrees
that service of such summons, complaint and other process may be made by certified mail addressed
to such Credit Party at the address set forth in this Agreement and that service so made shall be
deemed completed upon the earlier of such Credit Party’s actual receipt thereof or 3 days after
deposit in the U.S. mails, proper postage prepaid. Nothing in this Agreement shall be deemed or
operate to affect the right of Agent to serve legal process in any other manner permitted by law,
or to preclude the enforcement by Agent of any judgment or order obtained in such forum or the
taking of any action under this Agreement to enforce same in any other appropriate forum or
jurisdiction.




     14.19. Waivers by Credit Parties. To the fullest extent permitted by Applicable Law,
each Credit Party waives (i) the right to trial by jury (which Agent and each Lender hereby also
waives) in any action, suit, proceeding or counterclaim of any kind arising out of or related to
any of the Loan Documents, the Obligations or the Collateral; (ii) presentment, demand and protest
and notice of presentment, protest, default, non payment, maturity, release, compromise,
settlement, extension or renewal of any or all commercial paper, accounts, contract rights,
documents, instruments, chattel paper and guaranties at any time held by Agent on which such Credit
Party may in any way be liable and hereby ratifies and confirms whatever Agent may do in this
regard; (iii) notice prior to taking possession or control of the Collateral or any bond or
security which might be required by any court prior to allowing Agent to exercise any of Agent’s
remedies; (iv) the benefit of all valuation, appraisement and exemption laws; and (v) notice of
acceptance hereof. Each Credit Party acknowledges that the foregoing waivers are a material
inducement to Agent’s and Lender’s entering into this Agreement and that Agent and Lenders are
relying upon the foregoing waivers in its future dealings with Borrowers. Each Credit Party
warrants and represents that it has reviewed the foregoing waivers with its legal counsel and has
knowingly and voluntarily waived its jury trial rights following consultation with legal counsel.
In the event of litigation, this Agreement may be filed as a written consent to a trial by the
Court.



     14.20. No Further Agreements. THIS WRITTEN AGREEMENT AND THE LOAN DOCUMENTS REPRESENT
THE FINAL AGREEMENT AMONG THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPERANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN AGREEMENTS
AMONG THE PARTIES.



SECTION 15. GUARANTY




     15.1. Guaranty. Each Guarantor (other than those that have delivered a separate
Guaranty; each to be referred to in this Article XV as a Guarantor and collectively as the
Guarantors) hereby agrees that it is jointly and
severally liable for, and, as primary obligor and not merely as surety, absolutely and
unconditionally guarantees to the Lenders the prompt payment when due, whether at stated maturity,
upon acceleration or otherwise, and at all times thereafter, of the Obligations and all costs and
expenses including, without limitation, all court costs and attorneys’ and paralegals’ fees
(including allocated costs of in-house counsel and paralegals) and expenses paid or incurred by the
Agent, the Letter of Credit



78









 







Issuer and the Lenders in endeavoring to collect all or any part of the
Obligations from, or in prosecuting any action against, any Borrower, any Guarantor or any other
guarantor of all or any part of the Obligations (such costs and expenses, together with the
Obligations, collectively the “Guaranteed Obligations”). Each Guarantor further agrees that
the Guaranteed Obligations may be extended or renewed in whole or in part without notice to or
further assent from it, and that it remains bound upon its guarantee notwithstanding any such
extension or renewal.



     15.2. Guaranty of Payment. This Guaranty is a guaranty of payment and not of
collection. Each Guarantor waives any right to require the Agent, the LC Issuer or any Lender to
sue any Borrower, any Guarantor, any other guarantor, or any other person obligated for all or any
part of the Guaranteed Obligations, or otherwise to enforce its payment against any collateral
securing all or any part of the Guaranteed Obligations.



     15.3. No Discharge or Diminishment of Guaranty.




          (i) Except as otherwise provided for herein and to the extent provided for herein, the
obligations of each Guarantor hereunder are unconditional and absolute and not subject to
any reduction, limitation, impairment or termination for any reason (other than the
indefeasible payment in full in cash of the Guaranteed Obligations), including:




          (a) any claim of waiver, release, extension, renewal, settlement, surrender,
alteration, or compromise of any of the Guaranteed Obligations, by operation of law
or otherwise;




          (b) any change in the corporate existence, structure or ownership of any
Borrower or any other guarantor of or other person liable for any of the Guaranteed
Obligations;




          (c) any insolvency, bankruptcy, reorganization or other similar proceeding
affecting any Borrower, any Guarantor, or any other guarantor of or other person
liable for any of the Guaranteed Obligations, or their assets or any resulting
release or discharge of any obligation of any Borrower, any Guarantor, or any other
guarantor of or other person liable for any of the Guaranteed Obligations; or




          (d) the existence of any claim, setoff or other rights which any Guarantor may
have at any time against any Borrower, any Guarantor, any other guarantor of the
Guaranteed Obligations, the Agent, the Letter of Credit Issuer, any Lender, or any
other person, whether in connection herewith or in any unrelated transactions.




          (ii) The obligations of each Guarantor hereunder are not subject to any defense or
setoff, counterclaim, recoupment, or termination whatsoever by reason of the invalidity,
illegality, or unenforceability of any of the Guaranteed Obligations or otherwise, or any
provision of applicable law or regulation purporting to prohibit payment by any Borrower,
any Guarantor or any other guarantor of or other person liable for any of the
Guaranteed Obligations, of the Guaranteed Obligations or any part thereof.




          (iii) Further, the obligations of any Guarantor hereunder are not discharged or
impaired or otherwise affected by:



79









 






          (a) the failure of the Agent, the Letter of Credit Issuer or any Lender to
assert any claim or demand or to enforce any remedy with respect to all or any part
of the Guaranteed Obligations;




          (b) any waiver or modification of or supplement to any provision of any
agreement relating to the Guaranteed Obligations;




          (c) any release, non-perfection, or invalidity of any indirect or direct
security for the obligations of any Borrower for all or any part of the Guaranteed
Obligations or any obligations of any other guarantor of or other person liable for
any of the Guaranteed Obligations;




          (iv) any action or failure to act by the Agent, the Letter of Credit Issuer or any
Lender with respect to any collateral securing any part of the Guaranteed Obligations; and




          (v) any default, failure or delay, willful or otherwise, in the payment or performance
of any of the Guaranteed Obligations, or any other circumstance, act, omission or delay that
might in any manner or to any extent vary the risk of such Guarantor or that would otherwise
operate as a discharge of any Guarantor as a matter of law or equity (other than the
indefeasible payment in full in cash of the Guaranteed Obligations).



     15.4. Defenses Waived. To the fullest extent permitted by applicable law, each
Guarantor hereby waives any defense based on or arising out of any defense of any Borrower or any
Guarantor or the unenforceability of all or any part of the Guaranteed Obligations from any cause,
or the cessation from any cause of the liability of any Borrower or any Guarantor, other than the
indefeasible payment in full in cash of the Guaranteed Obligations. Without limiting the generality
of the foregoing, each Guarantor irrevocably waives acceptance hereof, presentment, demand, protest
and, to the fullest extent permitted by law, any notice not provided for herein, as well as any
requirement that at any time any action be taken by any person against any Borrower, any Guarantor,
any other guarantor of any of the Guaranteed Obligations, or any other person. The Agent may, at
its election, foreclose on any Collateral held by it by one or more judicial or nonjudicial sales,
accept an assignment of any such Collateral in lieu of foreclosure or otherwise act or fail to act
with respect to any collateral securing all or a part of the Guaranteed Obligations, compromise or
adjust any part of the Guaranteed Obligations, make any other accommodation with any Borrower, any
Guarantor, any other guarantor or any other person liable on any part of the Guaranteed Obligations
or exercise any other right or remedy available to it against any Borrower, any Guarantor, any
other guarantor or any other person liable on any of the Guaranteed Obligations, without affecting
or impairing in any way the liability of such Guarantor under this Guaranty except to the extent
the Guaranteed Obligations have been fully and indefeasibly paid in cash. To the fullest extent
permitted by applicable law, each Guarantor waives any defense arising out of any such election
even though that election may operate, pursuant to applicable law, to impair or extinguish any
right of reimbursement or subrogation or other right or remedy of any Guarantor against any
Borrower, any other guarantor or any other person liable on any of the Guaranteed Obligations, as
the case may be, or any security.



     15.5. Rights of Subrogation. No Guarantor will assert any right, claim or cause of
action, including, without limitation, a claim of subrogation, contribution or indemnification that
it has against any Borrower, any Guarantor, any person liable on the Guaranteed Obligations, or any
collateral, until the Credit Parties have fully performed all their obligations to the Agent, the
Letter of Credit Issuer and the Lenders.



80









 





     15.6. Reinstatement; Stay of Acceleration. If at any time any payment of any portion
of the Guaranteed Obligations is rescinded or must otherwise be restored or returned upon the
insolvency, bankruptcy, or reorganization of any Borrower or otherwise, each Guarantor’s
obligations under this Guaranty with respect to that payment shall be reinstated at such time as
though the payment had not been made and whether or not the Agent, the LC Issuer and the Lenders
are in possession of this Guaranty. If acceleration of the time for payment of any of the
Guaranteed Obligations is stayed upon the insolvency, bankruptcy or reorganization of any Borrower,
all such amounts otherwise subject to acceleration under the terms of any agreement relating to the
Guaranteed Obligations shall nonetheless be payable by the Guarantors forthwith on demand by the
Agent.



     15.7. Information. Each Guarantor assumes all responsibility for being and keeping
itself informed of the Borrowers’ financial condition and assets, and of all other circumstances
bearing upon the risk of nonpayment of the Guaranteed Obligations and the nature, scope and extent
of the risks that each Guarantor assumes and incurs under this Guaranty, and agrees that neither
the Agent, the Letter of Credit Issuer nor any Lender shall have any duty to advise any Guarantor
of information known to it regarding those circumstances or risks.



     15.8. Termination. The Lenders may continue to make loans or extend credit to any
Borrower based on this Guaranty until thirty days after the Agent receives written notice of
termination from any Guarantor. Notwithstanding receipt of any such notice, each Guarantor will
continue to be liable to the Lender for any Guaranteed Obligations created, assumed or committed to
prior to the thirtieth day after receipt of the notice, and all subsequent renewals, extensions,
modifications and amendments with respect to, or substitutions for, all or any part of that
Guaranteed Obligations.



     15.9. Taxes. All payments of the Guaranteed Obligations will be made by each
Guarantor free and clear of and without deduction for or on account of any and all present or
future Taxes. If any Guarantor is required by law to deduct any Taxes from or in respect of any
sum payable to the Lenders under this Guaranty, (a) the sum payable must be increased as necessary
so that after making all required deductions (including deductions applicable to additional sums
payable under this provision) the Lenders receive an amount equal to the sum it would have received
had no such deductions been made, (b) the Guarantors must then make such deductions, and must pay
the full amount deducted to the relevant authority in accordance with applicable law, and (c) the
Guarantors must furnish to the Lender within forty-five days after their due date certified copies
of all official receipts evidencing payment thereof.



     15.10. Severability. The provisions of this Guaranty are severable, and in any action or proceeding involving any
state corporate law, or any state, federal or foreign bankruptcy, insolvency, reorganization or
other law affecting the rights of creditors generally, if the obligations of any Guarantor under
this Guaranty would otherwise be held or determined to be avoidable, invalid or unenforceable on
account of the amount of such Guarantor’s liability under this Guaranty, then, notwithstanding any
other provision of this Guaranty to the contrary, the amount of such liability shall, without any
further action by the Guarantors or the Lenders, be automatically limited and reduced to the
highest amount that is valid and enforceable as determined in such action or proceeding (such
highest amount determined hereunder being the relevant Guarantor’s “Maximum Liability”.
This Section with respect to the Maximum Liability of each Guarantor is intended solely to preserve
the rights of the Lenders to the maximum extent not subject to avoidance under applicable law, and
no Guarantor nor any other person or entity shall have any right or claim under this Section with
respect to such Maximum Liability, except to the extent necessary so that the obligations of any
Guarantor hereunder shall not be rendered voidable under applicable law. Each Guarantor agrees that
the Guaranteed Obligations may at any time and from time to time exceed the Maximum Liability of
each Guarantor without impairing this Guaranty or affecting the rights and remedies of the Lenders
hereunder, provided that, nothing in this sentence shall be construed to increase any Guarantor’s
obligations hereunder beyond its Maximum Liability.



81









 





     15.11. Contribution. In the event any Guarantor (a “Paying Guarantor”) shall
make any payment or payments under this Guaranty or shall suffer any loss as a result of any
realization upon any collateral granted by it to secure its obligations under this Guaranty, each
other Guarantor (each a “Non-Paying Guarantor”) shall contribute to such Paying Guarantor
an amount equal to such Non-Paying Guarantor’s “Pro Rata Share” of such payment or payments made,
or losses suffered, by such Paying Guarantor. For purposes of this Article XV, each
Non-Paying Guarantor’s “Pro Rata Share” with respect to any such payment or loss by a
Paying Guarantor shall be determined as of the date on which such payment or loss was made by
reference to the ratio of (i) such Non-Paying Guarantor’s Maximum Liability as of such date
(without giving effect to any right to receive, or obligation to make, any contribution hereunder)
or, if such Non-Paying Guarantor’s Maximum Liability has not been determined, the aggregate amount
of all monies received by such Non-Paying Guarantor from the Borrowers after the date hereof
(whether by loan, capital infusion or by other means) to (ii) the aggregate Maximum Liability of
all Guarantors hereunder (including such Paying Guarantor) as of such date (without giving effect
to any right to receive, or obligation to make, any contribution hereunder), or to the extent that
a Maximum Liability has not been determined for any Guarantor, the aggregate amount of all monies
received by such Guarantors from the Borrowers after the date hereof (whether by loan, capital
infusion or by other means). Nothing in this provision shall affect any Guarantor’s several
liability for the entire amount of the Guaranteed Obligations (up to such Guarantor’s Maximum
Liability). Each of the Guarantors covenants and agrees that its right to receive any contribution
under this Guaranty from a Non-Paying Guarantor shall be subordinate and junior in right of payment
to the payment in full in cash of the Guaranteed Obligations. This provision is for the benefit of
both the Agent, the LC Issuer, the Lenders and the Guarantors and may be enforced by any one, or
more, or all of them in accordance with the terms hereof.



     15.12. Liability Cumulative. The liability of each Credit Party as a Guarantor under
this Article XV is in addition to and shall be cumulative with all liabilities of each
Credit Party to the Agent, the Letter of Credit Issuer and the Lenders under this Agreement and the
other Loan Documents to which such Credit Party is a party or in respect of any obligations of
liabilities of the other Credit Parties, without any limitation as to amount, unless the instrument
or agreement evidencing or creating such other liability specifically provides to the contrary.



     15.13. Bermuda Insurance Act. Anything herein to the contrary notwithstanding, the
obligations under this Agreement of IES Reinsurance, Ltd., a Bermuda limited partnership (“IES
Reinsurance”), shall be subject to IES Reinsurance meeting its solvency margins and liquidity
ratios pursuant to the Bermuda Insurance Act of 1978 and related regulations.



[Signature Pages Follow]




82









 





     IN WITNESS WHEREOF, this Agreement has been duly executed in Dallas, Texas, on the day and
year specified at the beginning of this Agreement.



	 	 	 	 	 
	 	 	AGENT:
	 
	 	 	 	 
	 	 	BANK OF AMERICA, N.A., as Agent
	 
	 	 	 	 
	 

	 	By:	 	/s/ H. Michael Wills 
	 

	 	 	 	 
	 

	 	Name:	 	H. Michael Wills 
	 

	 	 	 	 
	 

	 	Title:	 	Senior Vice President 
	 

	 	 	 	 
	 
	 	 	 	 
	 	 	LENDERS:
	 
	 	 	 	 
	 	 	BANK OF AMERICA, N.A.
	 
	 	 	 	 
	 

	 	By:	 	/s/ H. Michael Wills 
	 

	 	 	 	 
	 

	 	Name:	 	H. Michael Wills 
	 

	 	 	 	 
	 

	 	Title:	 	Senior Vice President 
	 

	 	 	 	 
	 
	 	 	 	 
	 	 	WELLS FARGO FOOTHILL, LLC
	 
	 	 	 	 
	 

	 	By:	 	/s/ David P. Hill 
	 

	 	 	 	 
	 

	 	Name:	 	David P. Hill 
	 

	 	 	 	 
	 

	 	Title:	 	Vice President 
	 

	 	 	 	 
	 
	 	 	 	 
	 	 	THE CIT GROUP/BUSINESS CREDIT, INC.
	 
	 	 	 	 
	 

	 	By:	 	/s/ Kirk Wolverton 
	 

	 	 	 	 
	 

	 	Name:	 	Kirk Wolverton 
	 

	 	 	 	 
	 

	 	Title:	 	Vice President 
	 

	 	 	 	 





 









 






	 	 	 	 	 
	 	 	CREDIT PARTIES:
	 
	 	 	 	 
	 	 	INTEGRATED ELECTRICAL SERVICES, INC.
	 
	 	 	 	 
	 

	 	By:	 	/s/ Curt L. Warnock 
	 

	 	 	 	 
	 

	 	 	 	Curt L. Warnock
	 

	 	 	 	Senior Vice President






 









 





ALADDIN-WARD ELECTRIC & AIR, INC.

AMBER ELECTRIC, INC.

ARC ELECTRIC, INCORPORATED

BACHOFNER ELECTRIC, INC.

BEAR ACQUISITION CORPORATION

BRYANT ELECTRIC COMPANY, INC.

BW/BEC, INC.

BW CONSOLIDATED, INC.

CHARLES P. BAGBY CO., INC.

COLLIER ELECTRIC COMPANY, INC.

COMMERCIAL ELECTRICAL CONTRACTORS, INC.

CROSS STATE ELECTRIC, INC.

CYPRESS ELECTRICAL CONTRACTORS,INC.

DANIEL ELECTRICAL CONTRACTORS, INC.

DANIEL ELECTRICAL OF TREASURE COAST,

  INC.

DANIEL INTEGRATED TECHNOLOGIES, INC.

DAVIS ELECTRICAL CONSTRUCTORS, INC.

ELECTRO-TECH, INC.

EMC ACQUISITION CORPORATION

FEDERAL COMMUNICATIONS GROUP, INC.

GENERAL PARTNER, INC.

HATFIELD REYNOLDS ELECTRIC COMPANY

HOLLAND ELECTRICAL SYSTEMS, INC.

HOUSTON-STAFFORD ELECTRIC HOLDINGS

  III, INC.

HOUSTON-STAFFORD MANAGEMENT LLC

ICS HOLDINGS LLC

IES ALBUQUERQUE, INC.

IES AUSTIN, INC.

IES AUSTIN MANAGEMENT LLC

IES CHARLESTON, INC.

IES CHARLOTTE, INC.

IES COLLEGE STATION, INC.

IES COLLEGE STATION MANAGEMENT LLC

IES COMMUNICATIONS, INC.

IES CONTRACTORS MANAGEMENT LLC

IES DECATUR, INC.

IES EAST MCKEESPORT, INC.

IES ENC, INC.

IES ENC MANAGEMENT, INC.

IES MERIDIAN, INC.

IES NEW IBERIA, INC.

IES OKLAHOMA CITY, INC.




 









 





IES OPERATIONS GROUP, INC.

IES PROPERTIES, INC.

IES PROPERTIES MANAGEMENT, INC.

IES RALEIGH, INC.

IES RAPID CITY, INC.

IES RESIDENTIAL GROUP, INC.

IES SPECIALTY LIGHTING, INC.

IES VALDOSTA, INC.

IES VENTURES INC.

IES WILSON, INC.

INTEGRATED ELECTRICAL FINANCE, INC.

INTELLIGENT BUILDING SOLUTIONS, INC.

J.W. GRAY ELECTRIC CO., INC.

J.W. GRAY MANAGEMENT LLC

KAYTON ELECTRIC, INC.

KEY ELECTRICAL SUPPLY, INC.

LINEMEN, INC.

MARK HENDERSON, INCORPORATED

MENNINGA ELECTRIC, INC.

MID-STATES ELECTRIC COMPANY, INC.

MILLS ELECTRICAL CONTRACTORS, INC.

MILLS MANAGEMENT LLC

MITCHELL ELECTRIC COMPANY, INC.

M-S SYSTEMS, INC.

MURRAY ELECTRICAL CONTRACTORS, INC.

NBH HOLDING CO., INC.

NEAL ELECTRIC MANAGEMENT LLC

NEW TECHNOLOGY ELECTRICAL

  CONTRACTORS, INC.

NEWCOMB ELECTRIC COMPANY, INC.

PAN AMERICAN ELECTRIC COMPANY, INC.

PAN AMERICAN ELECTRIC, INC.

PAULIN ELECTRIC COMPANY, INC.

POLLOCK ELECTRIC, INC.

PRIMENET, INC.

PRIMO ELECTRIC COMPANY

RAINES ELECTRIC CO., INC.

RAINES MANAGEMENT LLC

RIVIERA ELECTRIC, LLC

RKT ELECTRIC, INC.

ROCKWELL ELECTRIC, INC.

RODGERS ELECTRIC COMPANY, INC.

RON’S ELECTRIC, INC.

SEI ELECTRICAL CONTRACTOR, INC.

SPECTROL, INC.

SUMMIT ELECTRIC OF TEXAS, INC.




 









 





	 	 	 	 	 
	 	 	TESLA POWER GP, INC.

THOMAS POPP & COMPANY

VALENTINE ELECTRICAL, INC.

WRIGHT ELECTRICAL CONTRACTING, INC.
	 
	 	 	 	 
	 

	 	By:	 	 /s/ Curt L. Warnock
	 

	 	 	 	 
	 

	 	 	 	Curt L. Warnock
	 

	 	 	 	Vice President
	 
	 	 	 	 
	 	 	IES CONTRACTORS, INC.
	 
	 	 	 	 
	 

	 	Name:	 	 /s/ Curt L. Warnock
	 

	 	 	 	 
	 

	 	 	 	Curt L. Warnock
	 

	 	 	 	Secretary
	 
	 	 	 	 
	 	 	IES REINSURANCE, LTD.
	 
	 	 	 	 
	 

	 	Name:	 	 /s/ Curt L. Warnock
	 

	 	 	 	 
	 

	 	 	 	Curt L. Warnock
	 

	 	 	 	President
	 
	 	 	 	 
	 	 	BEXAR ELECTRIC COMPANY, LTD.
	 

	 	By:
	 	BW/BEC, Inc., its general partner
	 
	 	 	 	 
	 

	 	Name:	 	 /s/ Curt L. Warnock
	 

	 	 	 	 
	 

	 	 	 	Curt L. Warnock
	 

	 	 	 	Vice President
	 
	 	 	 	 
	 	 	HAYMAKER ELECTRIC, LTD
	 

	 	By:
	 	General Partner, Inc., its general partner
	 
	 	 	 	 
	 

	 	Name:	 	 /s/ Curt L. Warnock
	 

	 	 	 	 
	 

	 	 	 	Curt L. Warnock
	 

	 	 	 	Vice President
	 
	 	 	 	 
	 	 	HOUSTON-STAFFORD ELECTRICAL 
CONTRACTORS LP
	 

	 	By:
	 	Houston-Stafford Management LLC, its general

partner
	 
	 	 	 	 
	 

	 	Name:	 	 /s/ Curt L. Warnock
	 

	 	 	 	 
	 

	 	 	 	Curt L. Warnock
	 

	 	 	 	Vice President






 









 






	 	 	 	 	 
	 	 	IES AUSTIN HOLDING LP
	 

	 	By:
	 	IES Austin Management LLC, its general partner
	 
	 	 	 	 
	 

	 	Name:	 	 /s/ Curt L. Warnock
	 

	 	 	 	 
	 

	 	 	 	Curt L. Warnock
	 

	 	 	 	Vice President
	 
	 	 	 	 
	 	 	IES COLLEGE STATION HOLDINGS, LP
	 

	 	By:
	 	IES College Station Management LLC, its general

partner
	 
	 	 	 	 
	 

	 	Name:	 	 /s/ Curt L. Warnock
	 

	 	 	 	 
	 

	 	 	 	Curt L. Warnock
	 

	 	 	 	Vice President
	 
	 	 	 	 
	 	 	IES FEDERAL CONTRACT GROUP, L.P.
	 

	 	By:
	 	IES Contractors Management LLC
	 
	 	 	 	 
	 

	 	Name:	 	 /s/ Curt L. Warnock
	 

	 	 	 	Curt L. Warnock
	 

	 	 	 	Vice President
	 
	 	 	 	 
	 	 	IES MANAGEMENT ROO, LP
	 

	 	By:
	 	Neal Electric Management LLC, its general partner
	 
	 	 	 	 
	 

	 	Name:	 	 /s/ Curt L. Warnock
	 

	 	 	 	 
	 

	 	 	 	Curt L. Warnock
	 

	 	 	 	Vice President
	 
	 	 	 	 
	 	 	IES MANAGEMENT, LP
	 

	 	By:
	 	IES Residential Group, Inc., its general partner
	 
	 	 	 	 
	 

	 	Name:	 	 /s/ Curt L. Warnock
	 

	 	 	 	 
	 

	 	 	 	Curt L. Warnock
	 

	 	 	 	Vice President
	 
	 	 	 	 
	 	 	IES PROPERTIES, LP
	 

	 	By:
	 	IES Properties Management, Inc., its general partner
	 
	 	 	 	 
	 

	 	Name:	 	 /s/ Curt L. Warnock
	 

	 	 	 	 
	 

	 	 	 	Curt L. Warnock
	 

	 	 	 	Vice President







 










 







	 	 	 	 	 	 	 
	 	 	J.W. GRAY ELECTRICAL CONTRACTORS LP
	 

	 	By:
	 	J.W. Gray Management LLC, its general partner	 	 
	 
	 	 	 	 	 	 
	 

	 	Name:	 	 /s/ Curt L. Warnock	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Curt L. Warnock	 	 
	 

	 	 	 	Vice President	 	 
	 
	 	 	 	 	 	 
	 	 	MILLS ELECTRIC LP
	 

	 	By:
	 	Mills Management LLC	 	 
	 
	 	 	 	 	 	 
	 

	 	Name:	 	 /s/ Curt L. Warnock	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Curt L. Warnock	 	 
	 

	 	 	 	Vice President	 	 
	 
	 	 	 	 	 	 
	 	 	NEAL ELECTRIC LP
	 

	 	By:
	 	BW/BEC, Inc., its general partner	 	 
	 
	 	 	 	 	 	 
	 

	 	Name:	 	 /s/ Curt L. Warnock	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Curt L. Warnock	 	 
	 

	 	 	 	Vice President	 	 
	 
	 	 	 	 	 	 
	 	 	POLLOCK SUMMIT ELECTRIC LP
	 

	 	By:
	 	Pollock Electric, Inc. and Summit Electric of	 	 
	 

	 	 	 	Texas, Inc., its general partners	 	 
	 
	 	 	 	 	 	 
	 

	 	Name:	 	 /s/ Curt L. Warnock	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Curt L. Warnock
	 	 
	 

	 	 	 	Vice President	 	 
	 
	 	 	 	 	 	 
	 	 	RAINES ELECTRIC LP
	 

	 	By:
	 	Raines Management LLC, its general partner	 	 
	 
	 	 	 	 	 	 
	 

	 	Name:	 	 /s/ Curt L. Warnock	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Curt L. Warnock	 	 
	 

	 	 	 	Vice President	 	 
	 
	 	 	 	 	 	 
	 	 	TESLA POWER AND AUTOMATION, L.P.
	 

	 	By:
	 	Telsa Power GP, Inc., its general partner	 	 
	 
	 	 	 	 	 	 
	 

	 	Name:	 	 /s/ Curt L. Warnock	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Curt L. Warnock	 	 
	 

	 	 	 	Vice President	 	 









 









 








	 	 	 	 	 	 	 
	 	 	TESLA POWER PROPERTIES, L.P.
	 

	 	By:
	 	Telsa Power GP, Inc., its general partner	 	 
	 
	 	 	 	 	 	 
	 

	 	Name:	 	 /s/ Curt L. Warnock	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Curt L. Warnock	 	 
	 

	 	 	 	Vice President	 	 










 









 







BEXAR ELECTRIC II LLC

BW/BEC II LLC

BW/BEC, L.L.C.

HOUSTON-STAFFORD HOLDINGS II LLC

HOUSTON-STAFFORD HOLDINGS LLC

IES AUSTIN HOLDINGS II LLC

IES AUSTIN HOLDINGS LLC

IES COLLEGE STATION HOLDINGS II LLC

IES COLLEGE STATION HOLDINGS LLC

IES CONTRACTORS HOLDINGS LLC

IES HOLDINGS II LLC

IES HOLDINGS LLC

IES PROPERTIES HOLDINGS II LLC

J.W. GRAY HOLDINGS II LLC

J.W. GRAY HOLDINGS LLC

MILLS ELECTRIC HOLDINGS II LLC

MILLS ELECTRICAL HOLDINGS LLC

POLLOCK SUMMIT HOLDINGS II LLC

RAINES HOLDINGS II LLC

RAINES HOLDINGS LLC

TESLA POWER (NEVADA) II LLC




	 	 	 	 	 	 	 
	 

	 	By:	 	/s/ Victor Duva 	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Victor Duva, Manager	 	 










 









 







IES PROPERTIES HOLDINGS, INC.

POLLOCK SUMMIT HOLDINGS INC.

TESLA POWER (NEVADA), INC.




	 	 	 	 	 	 	 
	 

	 	By:	 	/s/ Victor Duva 	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Victor Duva, President	 	 








 









 







APPENDIX A




GENERAL DEFINITIONS




     When used in the Loan and Security Agreement, dated May 12, 2006 (as at any time amended, the
“Agreement”), by and among Integrated Electrical Services, Inc., a Delaware corporation, and the
other Borrowers a party thereto, the Guarantors party thereto, each financial institution listed on
the signature pages attached thereto and its successors and assigns which become “Lenders” as
provided therein (such financial institutions and their respective successors and assigns referred
to collectively herein as “Lenders” and individually as a “Lender”), and Bank of America, N.A., a
national banking association (“Agent”), in its capacity as collateral and administrative agent for
itself and the Lenders, the following terms shall have the following meanings (terms defined in the
singular to have the same meaning when used in the plural and vice versa):




     Accounts — all of a Credit Party’s now owned or hereafter acquired accounts and
all other rights to payment for goods sold or leased or for services rendered which are not
evidenced by an Instrument or Chattel Paper, whether or not they have been earned by
performance.




     Account Debtor — any Person who is or may become obligated under or on account
of an Account.




     ACH Transactions – any cash management or related services including the
automatic clearing house transfer of funds by Bank for the account of a Borrower pursuant to
agreement or overdrafts.




     Accounts Formula Amount — on any date of determination thereof, an amount equal
to 85% of the net amount of Eligible Accounts on such date. As used herein, the phrase “net
amount of Eligible Accounts” shall mean the face amount of such Accounts on any date less
any and all returns, rebates, discounts (which may, at Lender’s option, be calculated on
shortest terms), credits, allowances or Taxes (including sales, excise or other taxes) at
any time issued, owing, claimed by Account Debtors, granted, outstanding or payable in
connection with, or any interest accrued on the amount of, such Accounts at such date.




     Adjusted LIBOR Rate — with respect to each Interest Period for a LIBOR Loan, an
interest rate per annum (rounded upwards, to the next 1/16th of 1%) equal to the quotient of
(a) the LIBOR Rate in effect for such Interest Period divided by (b) a percentage (expressed
as a decimal) equal to 100% minus Statutory Reserves.




     Adjusted Net Earnings from Operations — with respect to any period of the
Parent, the Parent’s net income on a consolidated basis after provision for income taxes for
such period, as determined in accordance with GAAP and reported on the Financial Statements
for such period, excluding any and all of the following to the extent included in such net
income: (a) gain or loss arising from the sale of any capital assets; (b) gain arising from
any write-up in the book value of any asset; (c) earnings of any Person, substantially all
the assets of which have been acquired by any Credit Party in any manner, to the extent
realized by such other Person prior to the date of acquisition; (d) earnings of any Person
(other than a Credit Party) in which any Credit Party has an ownership interest unless (and
only to the extent) such earnings shall actually have been received by such Credit Party in
the form of cash distributions; (e) earnings of any Person to which assets of any Credit
Party shall have been sold, transferred or disposed of, or into which any Credit Party shall
have been merged, or which has been a party with any Credit Party to any consolidation or
other form of reorganization, prior to the date of such transaction; (f) gain arising from
the acquisition of debt or equity securities of the Parent or from cancellation or
forgiveness



 









 






of Debt; and (g) gain arising from extraordinary items, as determined in accordance
with GAAP, or from any other non-recurring transaction.




     Affiliate — a Person (other than a Subsidiary): (i) which directly or
indirectly through one or more intermediaries controls, or is controlled by, or is under
common control with, another Person; (ii) which beneficially owns or holds 10% or more of
any class of the Equity Interests of a Person; or (iii) 10% or more of the Equity Interests
with power to vote of which is beneficially owned or held by another Person or a Subsidiary
of another Person. For purposes hereof, “control” means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and policies of
a Person, whether through the ownership of any Equity Interest, by contract or otherwise.




     Agent Indemnitees — Agent in its capacity as collateral and administrative
agent for the Lenders under the Loan Documents and all of Agent’s present and future
officers, directors, employees, agents and attorneys.




     Agreement — the Loan and Security Agreement referred to in the first sentence
of this Appendix A, all Exhibits and Schedules thereto and this Appendix A.




     Applicable Law — all laws, rules and regulations applicable to the Person,
conduct, transaction, covenant, Loan Document or Material Contract in question, including
all applicable common law and equitable principles; all provisions of all applicable state,
federal and foreign constitutions, statutes, rules, regulations and orders of governmental
bodies; and orders, judgments and decrees of all courts and arbitrators.




     Applicable Margin — a percentage equal to 1.50% with respect to Revolver Loans
that are Base Rate Loans, 3.50% with respect to Revolver Loans that are LIBOR Loans, and
3.50% with respect to fees payable to Lenders pursuant to Section 2.2.3.




     Assignment and Acceptance — an assignment and acceptance entered into by a
Lender and an Eligible Assignee and accepted by Agent, in the form of Exhibit G.




     Availability — on any date, the amount that Borrowers are entitled to borrow as
Revolver Loans or have Letters of Credit issued on such date, such amount being the
difference derived when the sum of the principal amount of Revolver Loans then outstanding
(including any amounts that Agent or Lenders may have paid for the account of Borrowers
pursuant to any of the Loan Documents and that have not been reimbursed by Borrowers) is
subtracted from the Borrowing Base on such date. If the amount outstanding is equal to or
greater than the Borrowing Base, Availability is zero.




     Availability Reserve — on any date of determination thereof, an amount equal to
the sum of the following (without duplication): (i) a reserve for general inventory
shrinkage, whether as a result of theft or otherwise, that is determined by Agent from time
to time in its reasonable credit judgment based upon Borrower’s historical losses due to
such shrinkage; (ii) all amounts of past due rent, fees or other charges owing at such time
by any Obligor to any landlord of any premises where any of the Collateral is located or to
any processor, repairman, mechanic or other Person who is in possession of any Collateral or
has asserted any Lien or claim thereto; (iii) an amount equal to three months rent as to any
location where any tangible Collateral (in excess of $50,000 for each such location), any
Eligible Collateral other than motor vehicles (without regard to amount), and/or any books
and records is located if Agent does not have in its possession a duly executed Landlord’s
Waiver in form and substance satisfactory to Agent; (iv) any amounts which any Obligor is
obligated to pay pursuant to the provisions of any of the Loan Documents



 









 






that Agent or any Lender elects to pay for the account of such Obligor in accordance
with authority contained in any of the Loan Documents; (v) aggregate amount of Bank Product
Reserves; (vi) all customer deposits or other prepayments held by a Borrower; (vii) a
general reserve of $10,000,000, until such time as Agent removes or reduces such reserve;
(viii) a reserve for sales taxes; and (ix) such additional reserves as Agent in its sole and
absolute discretion may elect to impose from time to time.




     Average Revolver Loan Balance — for any period, the amount obtained by adding
the aggregate of the unpaid balance of Revolver Loans and LC Outstandings at the end of each
day for the period in question and by dividing such sum by the number of days in such
period.




     Bank – Bank of America, N.A., a national banking association, or any successor
entity.




     Bank Products – any one or more of the following types of services or
facilities extended to any Borrower by the Bank or any Affiliate of the Bank in reliance on
Bank’s agreement to indemnify such Affiliate: (i) credit cards; (ii) ACH Transactions, cash
management, including controlled disbursement services; and (iii) Interest Rate Contracts.




     Bank Products Reserves – all reserves Agent from time to time establishes in
its reasonable discretion for Bank Products then provided or outstanding.




     Bankruptcy Case – collectively, each of the Cases, jointly administered under
Case No. 06-30602-BJH-11, filed by the Chapter 11 Debtors with the Bankruptcy Court.




     Bankruptcy Code — title 11 of the United States Code.




     Bankruptcy Court — the United States Bankruptcy Court for the Northern District
of Texas.




     Base Rate — the rate of interest announced or quoted by Bank from time to time
as its prime rate. The prime rate announced by Bank is a reference rate and does not
necessarily represent the lowest or best rate charged by Bank. Bank may make loans or other
extensions of credit at, above or below its announced prime rate. If the prime rate is
discontinued by Bank as a standard, a comparable reference rate designated by Bank as a
substitute therefor shall be the Base Rate.




     Base Rate Loan — a Loan, or portion thereof, during any period in which it
bears interest at a rate based upon the Base Rate.




     Board of Governors — the Board of Governors of the Federal Reserve System.




     Bonded Accounts – as to any Borrower, all now owned or hereafter acquired
accounts (as defined in the UCC) and (whether included in such definition) accounts
receivable; and proceeds (other than such proceeds which are negotiable instruments or cash
or Cash Equivalents in the possession or control of Agent), including without limitation,
all insurance proceeds and letter of credit proceeds, in each case solely to the extent such
accounts, accounts receivable, and proceeds arise out of a Bonded Contract, including, but
not limited to, Bonded Retainage, and all forms of obligations whatsoever owing to any
Credit Party under instruments and documents of title constituting the foregoing or proceeds
thereof; and all rights, securities, and guarantees with respect to each of the foregoing.



 









 






     Bonded Contract — the contracts listed on Schedule A attached hereto
and any future contract in respect of which any Surety Bond is issued on behalf of any
Borrower and Agent receives written notice of such Surety Bond from Borrower prior to any
Account related thereto being included in the Borrowing Base or reported on a Borrowing Base
Certificate.




     Bonded Equipment — all now owned or hereafter acquired right, title and
interest with respect to Equipment (as defined in the UCC), owned by a Borrower and (whether
or not included in such definition) all other personal property in each case which is
delivered to, prefabricated for or specifically ordered for a Bonded Job Site, whether or
not the same will be deemed to be affixed to, arise out of or relate to any real property,
together with all accessions thereto.




     Bonded Inventory — all now owned and hereafter acquired inventory of Borrowers,
including, without limitation, goods, merchandise and other personal property in each case
which is furnished under any Bonded Contract, all raw materials, work in process, finished
goods and materials and supplies of any kind, nature or description in each case which is
delivered to, prefabricated for or specifically ordered for a Bonded Job Site.




     Bonded Job Site — the site specified in a Bonded Contract where any Borrower is
to perform the specialized electrical and communication services required thereunder,
including all other labor, materials, equipment and services provided or to be provided to
fulfill its obligations thereunder.




     Bonded Retainage — contract proceeds periodically withheld by an account debtor
to provide further security for the performance by any Borrower of a Bonded Contract, and as
such are payable to it only upon a clear demonstration of compliance with terms of the
Bonded Contract.




     Borrowing — a borrowing consisting of Loans of one Type made on the same day by
Lenders (or by Agent in the case of a Borrowing funded by Settlement Loans) or a conversion
of a Loan or Loans of one Type from Lenders on the same day.




     Borrowing Base — on any date of determination thereof, an amount equal to the
lesser of: (a) the aggregate amount of the Commitments on such date minus the LC
Outstandings on such date, or (b) an amount equal to (i) the sum of the Accounts Formula
Amount plus the Inventory Formula Amount on such date plus the Eligible Cash
Collateral on such date minus (ii) the Availability Reserve on such date
minus (iii) the LC Reserves on such date minus (iv) the Restructuring
Expenses Reserve on such date.




     Borrowing Base Certificate — a certificate, in the form of Exhibit B
attached hereto, or as otherwise reasonably requested by Agent, by which Borrowers shall
certify to Agent and Lenders, with such frequency as Agent may request, the amount of the
Borrowing Base as of a date not more than 23 Business Days earlier than the date of
submission of such certificate to Agent (or such other date as is required by this
Agreement) and the calculation of such amount.




     Business Day — any day excluding Saturday, Sunday and any other day that is a
legal holiday under the laws of the State of Texas or is a day on which banking institutions
located in such state are closed; provided, however, that when used with
reference to a LIBOR Loan (including the making, continuing, prepaying or repaying of any
LIBOR Loan), the term “Business Day” shall also exclude any day on which banks are not open
for dealings in Dollar deposits on the London interbank market.



 









 






     Capital Expenditures — expenditures made or liabilities incurred for the
acquisition of any fixed assets or improvements, replacements, substitutions or additions
thereto which have a useful life of more than one year, including the total principal
portion of Capitalized Lease Obligations.




     Capitalized Lease Obligation — any Debt represented by obligations under a
lease that is required to be capitalized for financial reporting purposes in accordance with
GAAP.




     Cash Collateral — cash or Cash Equivalents, and any interest earned thereon,
that is deposited with Agent in a Cash Collateral Account in accordance with the Agreement
for the Pro Rata benefit of Lenders as security for the Obligations.




     Cash Collateral Account — a demand deposit, money market or other account
established by Agent at such financial institution as Agent may select in its discretion,
which account shall be in Agent’s name and as to which (a) Agent, for the benefit of itself
and Lenders, shall have a valid, enforceable first priority Lien, (b) no defense,
counterclaim, set off or dispute shall exist or be asserted with respect thereto and (c) no
Liens exist other than (i) the Lien of Agent and (ii) a subordinate Lien in favor of Tranche
B Agent, but only to the extent such Lien is consistent with the provisions of Section
9.2.5(xii) of this Agreement.




     Cash Equivalents — (i) marketable direct obligations issued or unconditionally
guaranteed by the United States government and backed by the full faith and credit of the
United States government having maturities of not more than 12 months from the date of
acquisition; (ii) domestic certificates of deposit and time deposits having maturities of
not more than 12 months from the date of acquisition, bankers’ acceptances having maturities
of not more than 12 months from the date of acquisition and overnight bank deposits, in each
case issued by any commercial bank organized under the laws of the United States, any state
thereof or the District of Columbia, which at the time of acquisition are rated A-1 (or
better) by S&P or P-1 (or better) by Moody’s, and (unless issued by a Lender) not subject to
offset rights in favor of such bank arising from any banking relationship with such bank;
(iii) repurchase obligations with a term of not more than 30 days for underlying securities
of the types described in clauses (i) and (ii) entered into with any financial institution
meeting the qualifications specified in clause (ii) above; and (iv) commercial paper having
at the time of investment therein or a contractual commitment to invest therein a rating of
A-1 (or better) by S&P or P-1 (or better) by Moody’s, and having a maturity within 9 months
after the date of acquisition thereof.




     Cash Management Agreements — any agreement entered into from time to time
between a Borrower or any of its Subsidiaries, on the one hand, and Bank or any of its
Affiliates or any other banking or financial institution, on the other, in connection with
cash management services for operating, collections, payroll and trust accounts of such
Borrower or its Subsidiaries provided by such banking or financial institution, including
automatic clearinghouse services, controlled disbursement services, electronic funds
transfer services, information reporting services, lockbox services, stop payment services
and wire transfer services.




     CERCLA — the Comprehensive Environmental Response Compensation and Liability
Act, 42 U.S.C. § 9601 et seq. and its implementing regulations.




     Change of Control — the occurrence of any of the following events after the
date of the Agreement: (a) any Person or group excluding the Principal Stockholders shall
own beneficially (as defined in Rule 13d-3 of the SEC under the Securities Exchange Act or
any successor provision thereto) more than 50% of the aggregate Voting Power of Parent; (b)
during any period of 24 consecutive months, individuals who at the beginning of such period
constituted the board of directors of a Borrower (together with any new director whose
election by such board of



 









 






directors or whose nomination for election by the shareholders of such Borrower was
approved by vote of a majority of the directors of such Borrower then still in office who
were directors at the beginning of such period or whose election or nomination for election
was previously so approved) cease for any reason to constitute a majority of the board of
directors of such Borrower then in office; or (c) any “Change of Control,” “Change in
Control” or similar event or circumstance, however defined or designated, under the Tranche
B Documentation shall occur.




     Chapter 11 Debtors – collectively, the Credit Parties other than IES
Reinsurance, Ltd.




     Chattel Paper — shall have the meaning given to “chattel paper” in the UCC.




     Chubb — Federal Insurance Company, an Indiana corporation, or any of its
Affiliates or Subsidiaries.




     Chubb Agreements – the agreements between the Credit Parties and Chubb listed
on Schedule 8.1.27.




     Chubb Intercreditor – that certain Intercreditor Agreement, dated as of the
date hereof, among Chubb, Agent and certain Credit Parties, as amended, restated,
supplemented or otherwise modified from time to time.




     Claims — any and all claims, demands, liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, awards, remedial response costs, expenses or
disbursements of any kind or nature whatsoever (including reasonable attorneys’,
accountants’, consultants’ or paralegals’ fees and expenses), whether arising under or in
connection with the Loan Documents, any Applicable Law (including any Environmental Laws) or
otherwise, that may now or hereafter be suffered or incurred by a Person and whether
suffered or incurred in or as a result of any investigation, litigation, arbitration or
other judicial or non-judicial proceeding or any appeals related thereto.




     Closing Date — the date on which all of the conditions precedent in Section 10
of the Agreement are satisfied or waived by Agent in writing.




     Collateral — all of the Property and interests in Property described in Section
6 of the Agreement, all Property described in any of the Security Documents as security for
the payment or performance of any of the Obligations, and all other Property and interests
in Property that now or hereafter secure (or are intended to secure) the payment and
performance of any of the Obligations.




     Commercial Borrowers – the Credit Parties listed on Schedule D.




     Commercial EBIT – solely with respect to the Commercial Borrowers, with respect
to any period of such Commercial Borrowers, on a Consolidated basis, Adjusted Net Earnings
from Operations, plus, to the extent deducted in the determination of Adjusted Net
Earnings from Operations for that period (but without duplication), interest expenses,
Federal, state, local and foreign income taxes and other identified non-cash items not
otherwise included which are acceptable to Agent.




     Commitment — at any date for any Lender, the obligation of such Lender to make
Revolver Loans and to purchase participations in LC Outstandings pursuant to the terms and
conditions of the Agreement, which shall not exceed the principal amount set forth opposite
such Lender’s name under the heading “Commitment” on the signature pages of the Agreement or
the



 









 






signature page of the Assignment and Acceptance by which it became a Lender, as
modified from time to time pursuant to the terms of the Agreement or to give effect to any
applicable Assignment and Acceptance; and “Commitments” means the aggregate
principal amount of the Commitments of all Lenders, the maximum amount of which shall be
$80,000,000.




     Commitment Termination Date — the date that is the soonest to occur of (i) the
last day of the Original Term unless extended in writing by Agent and Lenders; (ii) the date
on which either a Borrower or Agent terminates the Commitments pursuant to Section 5.2 of
the Agreement; or (iii) the date on which the Commitments are automatically terminated
pursuant to Section 11.2 of the Agreement.




     Compliance Certificate — a Compliance Certificate to be provided by Parent to
Agent in accordance with, and in the form annexed as Exhibit E to, the Agreement,
and the supporting schedules to be annexed thereto.




     Confirmation Order – shall have the meaning set forth in Section 10.1.24 of the
Agreement.




     Consolidated — the consolidation in accordance with GAAP of the accounts or
other items as to which such term applies.




     Contingent Obligation — with respect to any Person, any obligation of such
Person arising from any guaranty, indemnity or other assurance of payment or performance of
any Debt, lease, dividend or other obligation (“primary obligations”) of any other Person
(the “primary obligor”) in any manner, whether directly or indirectly, including (i) the
direct or indirect guaranty, endorsement (other than for collection or deposit in the
Ordinary Course of Business), co-making, discounting with recourse or sale with recourse by
such Person of the obligation of a primary obligor, (ii) the obligation to make take-or-pay
or similar payments, if required, regardless of nonperformance by any other party or parties
to an agreement, (iii) any obligation of such Person, whether or not contingent, (A) to
purchase any such primary obligation or any Property constituting direct or indirect
security therefor, (B) to advance or supply funds (1) for the purchase or payment of any
such primary obligations or (2) to maintain working capital or equity capital of the primary
obligor or otherwise to maintain the net worth or solvency of the primary obligor, (C) to
purchase Property, Securities or services primarily for the purpose of assuring the owner of
any such primary obligation of the ability of the primary obligor to make payment of such
primary obligation or (D) otherwise to assure or hold harmless the holder of such primary
obligation against loss in respect thereof. The amount of any Contingent Obligation shall
be deemed to be an amount equal to the stated or determinable amount of the primary
obligation with respect to which such Contingent Obligation is made (or, if less, the
maximum amount of such primary obligation for which such Person may be liable pursuant to
the terms of the instrument evidencing such Contingent Obligation) or, if not stated or
determinable, the maximum reasonably anticipated liability with respect thereto (assuming
such Person is required to perform thereunder), as determined by such Person in good faith.




     Control or controlled by or under common control — possession,
directly or indirectly, of the power to direct or cause the direction of management or
policies (whether through ownership of Voting Stock, by contract or otherwise, but not
solely by being an officer or director of that Person); provided, however,
that in any event any Person which beneficially owns, directly or indirectly, 10% or more
(in number of votes) of the Equity Interests having ordinary Voting Power with respect to a
corporation shall be conclusively presumed to control such corporation.



 









 






     Controlled Disbursement Account — a demand deposit account maintained by
Borrowers at Bank and to which proceeds of Loans will be wired from time to time.




     Credit Party — any Borrower or Guarantor.




     Credit Support – shall have the meaning specified in Section 1.2.1 of the
Agreement.




     Debt —  as applied to a Person means, without duplication: (i) all items which
in accordance with GAAP would be included in determining total liabilities as shown on the
liability side of a balance sheet of such Person as of the date as of which Debt is to be
determined, including Capitalized Lease Obligations; (ii) all Contingent Obligations of such
Person; (iii) all reimbursement obligations in connection with letters of credit or letter
of credit guaranties issued for the account of such Person; and (iv) in the case of
Borrowers (without duplication), the Obligations and the Tranche B Loan. The Debt of a
Person shall include any recourse Debt of any partnership or joint venture in which such
Person is a general partner or joint venturer, except to the extent such Person is not
liable pursuant to the terms of the documents related thereto.




     Debtors — the Chapter 11 Debtors as reorganized debtors upon the Effective
Date.




     Default — an event or condition the occurrence of which would, with the lapse
of time or the giving of notice, or both, become an Event of Default.




     Default Rate — on any date, a fluctuating rate per annum which is equal to the
interest rate otherwise in effect for such date plus 2%.




     Deposit Accounts — all of a Person’s demand, time, savings, passbook, money
market or other depository accounts, and all certificates of deposit, maintained by such
Person with any bank, savings and loan association, credit union or other depository
institution.




     DIP Agent – Bank of America, N.A., as “Agent” under the DIP Loan Agreement.




     DIP Lenders – each “Lender” under the DIP Loan Agreement.




     DIP Loan Agreement – that certain Debtor-In-Possession Loan and Security
Agreement, dated as of February 14, 2006, among Chapter 11 Debtors, DIP Agent and DIP
Lenders.




     Disclosure Statement — the Second Amended Disclosure Statement for the Second
Amended Joint Plan of Reorganization of Integrated Electrical Services, Inc. and Certain of
Its Direct and Indirect Subsidiaries Under Chapter 11 of the Bankruptcy Code, dated as of
March 17, 2006, approved by the Bankruptcy Court on March 10, 2006, describing the
Reorganization Plan and distributed to certain holders of claims in connection with voting
on the Reorganization Plan.




     Distribution — in respect of any entity, (i) any payment of any dividends or
other distributions on Equity Interests of the entity (except distributions in such Equity
Interests) and (ii) any purchase, redemption or other acquisition or retirement for value of
any Equity Interests of the entity or any Affiliate of the entity unless made
contemporaneously from the net proceeds of the sale of Equity Interests.




     Document — shall have the meaning given to “document” in the UCC.




     Dollars and the sign $ — lawful money of the United States of America.



 









 






     Domestic Subsidiary — a Subsidiary of a Borrower (other than a Subsidiary that
is a Borrower) that is incorporated under the laws of a state of the United States or the
District of Columbia.




     Dominion Account — a special account of Agent established by Borrowers at a
bank selected by Borrowers, but reasonably acceptable to Agent and Lenders in their
discretion, and over which Agent shall have sole and exclusive access and control for
withdrawal purposes.




     EBITDA — with respect to any period of the Credit Parties, on a consolidated
basis, Adjusted Net Earnings from Operations, plus, to the extent deducted in the
determination of Adjusted Net Earnings from Operations for that period (but without
duplication), interest expenses, Federal, state, local and foreign income taxes,
depreciation, amortization, non-cash compensation expenses, other identified non-cash items
not otherwise included which are acceptable to Agent, any paid restructuring expenses
(including professional fees) incurred in connection with the Bankruptcy Case, any unpaid
restructuring expenses (including professional fees) incurred in connection with the
Bankruptcy Case to the extent the amount of such unpaid expenses are not in excess of the
sum of (a) the Restructuring Expenses Reserve and (b) Cash Collateral deposited in a Cash
Collateral Account in excess of the amount required pursuant to Section 9.4, restructuring
expenses up to $8,600,000 related to impairments to Net Working Capital in connection with
the Shutdown Subsidiaries, and expenses related to fees of Glass & Associates in an amount
up to $200,000 in any calendar month incurred in the first three calendar months after the
Closing Date.




     EBITDAR — with respect to any period of the Borrowers, on a consolidated basis,
Adjusted Net Earnings from Operations, plus, to the extent deducted in the
determination of Adjusted Net Earnings from Operations for that period (but without
duplication), interest expenses, Federal, state, local and foreign income taxes,
depreciation, amortization, non-cash compensation expenses, other identified non-cash items
not otherwise included which are acceptable to Agent, and restructuring expenses (including
professional fees and restructuring expenses up to $8,600,000 related to impairments to Net
Working Capital in connection with the Shutdown Subsidiaries).




     Effective Date – shall have the same meaning as in the Reorganization Plan.




     Eligible Account — an Account which arises in the Ordinary Course of Business
of a Borrower’s business from the sale of goods or rendition of services, is payable in
Dollars, is subject to Agent’s duly perfected Lien, and is deemed by Agent, in its sole
credit judgment, to be an Eligible Account. Without limiting the generality of the
foregoing, no Account shall be an Eligible Account if: (i) it arises out of a sale made by
a Borrower to a Subsidiary or an Affiliate of any Borrower or to a Person controlled by an
Affiliate of any Borrower; (ii) it is unpaid for more than 60 days after the original due
date shown on the invoice; (iii) it is due or unpaid more than 90 days after the original
invoice date; (iv) 50% or more of the Accounts from the Account Debtor are not deemed
Eligible Accounts hereunder; (v) the total unpaid Accounts of the Account Debtor exceed 15%
of the aggregate amount of all Eligible Accounts or exceed a credit limit established by
Agent for such Account Debtor, in each case to the extent of such excess; (vi) any covenant,
representation or warranty contained in the Agreement with respect to such Account has been
breached; (vii) the Account Debtor is also a Borrower’s creditor or supplier, or the Account
Debtor has disputed liability with respect to such Account, or the Account Debtor has made
any claim with respect to any other Account due from such Account Debtor to a Borrower, or
the Account otherwise is or may become subject to any right of setoff, counterclaim, reserve
or chargeback, provided that, the Accounts of such Account Debtor shall be ineligible only
to the extent of such offset, counterclaim, disputed amount, reserve or chargeback; (viii)
an Insolvency



 









 






Proceeding has been commenced by or against the Account Debtor or the Account Debtor
has failed, suspended business or ceased to be Solvent; (ix) it arises from a sale to an
Account Debtor with its principal office, assets or place of business outside the United
States, unless the sale is backed by an irrevocable letter of credit issued or confirmed by
a bank acceptable to Agent and that is in form and substance acceptable to Agent and payable
in the full amount of the Account in freely convertible Dollars at a place of payment within
the United States, and, if requested by Agent, such letter of credit, or amounts payable
thereunder, is assigned to Agent; (x) it arises from a sale to the Account Debtor on a
bill-and-hold, guaranteed sale, sale-or-return, sale-on-approval, consignment or any other
repurchase or return basis; (xi) the Account Debtor is the United States of America or any
department, agency or instrumentality thereof, unless such Borrower is not prohibited from
assigning the Account and does assign its right to payment of such Account to Agent, in a
manner satisfactory to Agent, so as to comply with the Assignment of Claims Act of 1940 (31
U.S.C. §3727 and 41 U.S.C. §15), or is a state, county or municipality, or a political
subdivision or agency thereof and Applicable Law disallows or restricts an assignment of
Accounts on which it is the Account Debtor; (xii) the Account Debtor is located in any state
which imposes similar conditions on the right of a creditor to collect accounts receivable
unless such Borrower has either qualified to transact business in such state as a foreign
entity or filed a Notice of Business Activities Report or other required report with the
appropriate officials in such state for the then current year; (xiii) the Account Debtor is
located in a state in which such Borrower is deemed to be doing business under the laws of
such state and which denies creditors access to its courts in the absence of qualification
to transact business in such state or of the filing of any reports with such state, unless
such Borrower has qualified as a foreign entity authorized to transact business in such
state or has filed all required reports; (xiv) the Account is subject to a Lien other than a
Permitted Lien; (xv) the goods giving rise to such Account have not been delivered to and
accepted by the Account Debtor or the services giving rise to such Account have not been
performed by such Borrower and accepted by the Account Debtor or the Account otherwise does
not represent a final sale; (xvi) the Account is evidenced by Chattel Paper or an Instrument
of any kind, or has been reduced to judgment; (xvii) any portion of an Account that
represents a retainage or billings in excess of cost; (xviii) such Borrower has made any
agreement with the Account Debtor for any deduction therefrom, except for discounts or
allowances which are made in the Ordinary Course of Business for prompt payment and which
discounts or allowances are reflected in the calculation of the face value of each invoice
related to such Account, provided that such Account is ineligible only to the extent of the
deduction; (xix) it is a non-trade Account, (xx) it is a Bonded Account or (xxi) the Account
represents, in whole or in part, a billing for interest, fees or late charges, provided that
such Account shall be ineligible only to the extent of the amount of such billing.




     Eligible Assignee — a Lender or a U.S. based Affiliate of a Lender; a
commercial bank organized under the laws of the United States or any state that has total
assets in excess of $2 billion and that is acceptable to Agent; and any other Person (except
a Borrower or a Guarantor, or an Affiliate of either) approved by Agent and, unless a
Default or an Event of Default exists, Parent (such approval by Parent, when required, not
to be unreasonably withheld or delayed and to be deemed given by Parent if no objection is
received by the assigning Lender and Agent from Parent within 2 Business Days after notice
of such proposed assignment has been provided by the assigning Lender as set forth in
Section 13.3 of the Agreement).




     Eligible Cash Collateral — cash representing proceeds of Collateral or proceeds
from such other source of funding which is satisfactory to Agent, in its reasonable
discretion, that is deposited into a demand deposit, money market or other account in
Agent’s name and subject to Agent’s Liens, for the Pro Rata benefit of Lenders, and which
cash deposit is in addition to and not in substitution for amounts previously deposited into
the Cash Collateral Account pursuant to the provisions of Sections 1.2.7, of this Agreement
or the provisions of Sections 5.2.4 of this



 









 






Agreement; provided, however, the term “Eligible Cash Collateral” shall
not include (i) any cash (a) to the extent Agent, on behalf of itself and the Lenders, does
not have therein a valid, enforceable first priority Lien; (b) to the extent that any
defense, counterclaim, setoff or dispute exists or is asserted with respect thereto; or (c)
that it is subject to any Lien of any Person, other than (I) Liens in favor of Agent, on
behalf of itself and Lenders, or (II) a subordinate Lien in favor of Tranche B Agent, but
only to the extent such Lien is consistent with the provisions of Section 9.2.5(xii) of this
Agreement, or that is not owned by a Credit Party, or (ii) any Cash Collateral described in
the definition of “LC Reserve”.




     Eligible Collateral – Eligible Accounts, Eligible Cash Collateral and Eligible
Inventory.




     Eligible Inventory — such Inventory of a Borrower (other than packaging
materials, labels and supplies) which Agent, in its sole credit judgment, deems to be
Eligible Inventory. Without limiting the generality of the foregoing, no Inventory shall be
Eligible Inventory unless: (i) it is finished goods; (ii) it is owned by a Borrower and not
held by it on consignment or other sale or return terms; (iii) it is in good, new and
saleable condition and is not damaged or defective; (iv) it is not slow-moving, obsolete or
unmerchantable and is not goods returned to a Borrower by or repossessed from an Account
Debtor; (v) it meets all standards imposed by any Governmental Authority; (vi) it conforms
in all respects to the warranties and representations set forth in the Agreement; (vii) it
is at all times subject to Agent’s duly perfected, first priority security interest and no
other Lien except a Permitted Lien; (viii) it is in a Borrower’s possession and control at a
location in compliance with the Agreement, is not in transit or outside the continental
United States and is not consigned to any Person; (ix) it is not the subject of a negotiable
warehouse receipt or other negotiable Document; (x) it is not subject to any license
agreement or other agreement that limits, conditions or restricts a Borrower’s or Agent’s
right to sell or otherwise dispose of such Inventory unless the licensor has entered into a
licensor/lender Agreement with Agent; (xi) it is not the subject of an Intellectual Property
Claim and (xii) it is located at a location of Key Electrical Supply, Inc. or any other
location governed by a perpetual inventory system satisfactory to Agent or other controls to
properly account for on-hand inventory satisfactory to Agent.




     Eligible Inventory Net Orderly Liquidation Value Amount – the “net orderly
liquidation value” (less liquidation expenses) of the Eligible Inventory as determined by an
appraisal satisfactory to Agent from time to time.




     Enertech – Enertech Capital Partners II L.P.




     Environmental Laws — all federal, state and local laws, rules, regulations,
codes, ordinances, programs, permits, guidance documents promulgated by regulatory agencies,
orders and consent decrees, now or hereafter in effect and relating to human health and
safety or the protection or pollution of the environment, including CERCLA.




     Environmental Release — a release as defined in CERCLA or under any applicable
Environmental Laws.




     Equipment — all of each Credit Party’s machinery, apparatus, equipment,
fittings, furniture, fixtures, motor vehicles and other tangible personal Property (other
than Inventory) of every kind and description, whether now owned or hereafter acquired by a
Credit Party and wherever located, and all parts, accessories and special tools therefor,
all accessions thereto, and all substitutions and replacements thereof.



 









 






     Equity Interest — the interest of (i) a shareholder in a corporation, (ii) a
partner (whether general or limited) in a partnership (whether general, limited or limited
liability), (iii) a member in a limited liability company, or (iv) any other Person having
any other form of equity security or ownership interest.




     ERISA — the Employee Retirement Income Security Act of 1974, and all rules and
regulations from time to time promulgated thereunder.




     Event of Default — as defined in Section 11 of the Agreement.




     Excluded Cash Accounts — the deposit accounts maintained (i) by IES Reinsurance
Ltd. with Bank of Butterfield under account number 3023730237 holding up to $4,000,000 which
is held to secure obligations of the Credit Parties, (ii) by IES Finance, Inc. with First
American Bank under account number 335519729 holding up to $4,050,000 which is held to pay
payroll tax obligations, and (iii) by one or more Credit Parties constituting Sure Tec Bank
Accounts (as defined in the Sure Tec Letter).




     Excluded Collateral – the (i) Excluded Cash Accounts, (ii) the Surety
Collateral to the extent (a) the issuer of the Surety Bond is Chubb or a co-surety of Chubb
under the Chubb Agreements in effect on the Closing Date and (b) such Surety Collateral has
not previously been included in a Borrowing Base Certificate delivered to Agent, (iii) the
Borrower’s partnership interest in Enertech, (iv) all cash collateral pledged to Chubb
pursuant to the Chubb Agreements that is in the possession or under the control of Chubb,
and (v) cash collateral pledged to Sureties (other than Chubb) up to an aggregate amount of
$2,000,000 (exclusive of any drawings under letters of credit issued for the benefit of such
Surety) that is in the possession or under the control of such Surety; provided, however,
that in no event shall Excluded Collateral include any amounts which from time to time may
be in the Cash Collateral Account.




     Extraordinary Expenses —  all costs, expenses, fees or advances that Agent or
any Lender may suffer or incur, whether prior to or after the occurrence of an Event of
Default, and whether prior to, after or during the pendency of an Insolvency Proceeding of
an Obligor, on account of or in connection with (i) the audit, inspection, repossession,
storage, repair, appraisal, insuring, completion of the manufacture of, preparing for sale,
advertising for sale, selling, collecting or otherwise preserving or realizing upon any
Collateral; (ii) the defense of Agent’s Lien upon any Collateral or the priority thereof or
any adverse claim with respect to the Loans, the Loan Documents or the Collateral asserted
by any Obligor, any receiver or trustee for any Obligor or any creditor or representative of
creditors of any Obligor; (iii) the settlement or satisfaction of any Liens upon any
Collateral (whether or not such Liens are Permitted Liens); (iv) the collection or
enforcement of any of the Obligations; (v) the negotiation, documentation, and closing of
any restructuring or forbearance agreement with respect to the Loan Documents or
Obligations; (vi) amounts advanced by Agent pursuant to Section 7.1.3 of the Agreement;
(vii) the enforcement of any of the provisions of any of the Loan Documents; or (viii) any
payment under a guaranty, indemnity or other payment agreement provided by Agent or (with
Agent’s consent) any Lender, which is reimbursable to Agent or such Lender by Borrower
pursuant to Section 2.4.2 of the Agreement. Such costs, expenses and advances may include
transfer fees, taxes, storage fees, insurance costs, permit fees, utility reservation and
standby fees, legal fees, appraisal fees, brokers’ fees and commissions, auctioneers’ fees
and commissions, accountants’ fees, environmental study fees, wages and salaries paid to
employees of any or all Borrowers or independent contractors in liquidating any Collateral,
travel expenses, all other fees and expenses payable or reimbursable by Borrowers or any
other Obligor under any of the Loan Documents, and all other fees and expenses associated
with the enforcement of rights or remedies under any



 









 






of the Loan Documents, but excluding compensation paid to employees (including inside
legal counsel who are employees) of Agent.




     Federal Funds Rate — for any period, a fluctuating interest rate per annum
equal for each date during such period to the weighted average of the rates on overnight
federal funds transactions with members of the Federal Reserve System arranged by federal
funds brokers, as published for such day (or, if such day is not a Business Day, for the
next preceding Business Day) in Dallas, Texas by the Federal Reserve Bank of Dallas, or if
such rate is not so published for any day which is a Business Day, the average of the
quotations for such day on such transactions received by Agent from 3 federal funds brokers
of recognized standing selected by Agent.




     Fee Letter — the fee letter agreement between Agent and Parent dated on or
about February 10, 2006.




     FEIN — with respect to any Person, the Federal Employer Identification Number
of such Person.




     Final Order — an order or judgment of the Bankruptcy Court as entered on the
docket, in form and substance satisfactory to Agent, that has not been reversed, stayed,
modified or amended, and as to which the time to appeal, petition for certiorari, or seek
reargument, or rehearing has expired and as to which no appeal, reargument, petition for
certiorari, or rehearing is pending or as to which any right to appeal, reargue, petition
for certiorari or seek rehearing has been waived in writing in a manner satisfactory to
Agent or, if an appeal, reargument, petition for certiorari, or rehearing thereof has been
sought, the order or judgment of the Bankruptcy Court has been affirmed by the highest court
to which the order was appealed or from which the reargument or rehearing was sought, or
certiorari has been denied, and the time to take any further appeal or seek certiorari or
further reargument has expired.




     Fiscal Quarter — each three-month period ending each March, June, September and
December.




     Fiscal Year — the fiscal year of Parent and its Subsidiaries for accounting and
tax purposes, which ends on September 30 of each year.




     Fixed Charge Coverage Ratio — the ratio of (i) the result of (a) (I) for fiscal
periods occurring prior to the date of this Agreement, EBITDAR and (II) for all fiscal
periods thereafter, EBITDA minus (b) Shutdown EBIT to (ii) Fixed Charges.




     Fixed Charge Coverage Ratio Testing Date – as defined in Section 9.3.1 of the
Agreement.




     Fixed Charges — with respect to any period of the Borrower on a consolidated
basis, without duplication, cash interest expense, Capital Expenditures (excluding Capital
Expenditures funded with Debt other than Revolving Loans, but including, without
duplication, principal payments with respect to such Debt), principal payments of Debt
(other than Revolving Loans and mandatory prepayments from asset sales) and Federal, state,
local and foreign income taxes (including accrued taxes).




     FLSA — the Fair Labor Standards Act of 1938.




     Foreign Subsidiary — a Subsidiary that is not a Domestic Subsidiary.



 









 






     Funding Account — an account established by Borrowers or any of them for
receipt of proceeds of Loans or such other account as Borrowers may specify in writing.




     GAAP — generally accepted accounting principles in the United States of America
in effect from time to time.




     General Intangibles — all general intangibles of a Credit Party, whether now
owned or hereafter created or acquired by a Credit Party, including all choses in action,
causes of action, company or other business records, inventions, blueprints, designs,
patents, patent applications, trademarks, trademark applications, trade names, trade
secrets, service marks, goodwill, brand names, copyrights, registrations, licenses,
franchises, customer lists, permits, tax refund claims, computer programs, operational
manuals, internet addresses and domain names, insurance refunds and premium rebates, all
claims under guaranties, security interests or other security held by or granted to a Credit
Party to secure payment of any of a Credit Party’s Accounts by an Account Debtor, all rights
to indemnification and all other intangible property of a Credit Party of every kind and
nature (other than Accounts).




     Goochland Project — that certain construction project that is the subject of an
Agreement, dated December 12, 2003, by and between the County of Goochland, Virginia, as the
owner and Bryant Electric Company, Inc., as the contractor.




     Governmental Approvals — all authorizations, consents, approvals, licenses and
exemptions of, registrations and filings with, and reports to, all Governmental Authorities.




     Governmental Authority — any federal, state, municipal, national, foreign or
other governmental department, commission, board, bureau, court, agency or instrumentality
or political subdivision thereof or any entity or officer exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to any government or any
court, in each case whether associated with a state of the United States, the District of
Columbia or a foreign entity or government.




     Guarantors – the Persons on Annex II attached to the Agreement and each other
Person who guarantees payment or performance of the whole or any part of the Obligations.




     Guaranty – (i) the agreements of the Guarantors set forth in Section 15 of the
Agreement and (ii) each other guaranty agreement now or hereafter executed by a Guarantor in
favor of Agent with respect to any of the Obligations.




     Indemnified Amount — in the case of Agent Indemnitees, the amount of any loss,
cost, expenses or damages suffered or incurred by Agent Indemnitees and against which
Lenders or any Obligor have agreed to indemnify Agent Indemnitees pursuant to the terms of
the Agreement or any of the other Loan Documents; and in the case of Lender Indemnitees, the
amount of any loss, cost, expenses or damages suffered or incurred by Lender Indemnitees and
against which Lenders or any Obligor have agreed to indemnify Lender Indemnitees pursuant to
the terms of the Agreement or any of the other Loan Documents.




     Indemnitees — the Agent Indemnitees and the Lender Indemnitees.




     Initial Lenders – Bank of America, N.A., Wells Fargo Foothill, LLC and The CIT
Group/Business Credit, Inc. as the Lenders on the date hereof.



 









 






     Insolvency Proceeding — any action, case or proceeding commenced by or against
a Person, or any agreement of such Person, for (i) the entry of an order for relief under
any chapter of the Bankruptcy Code or other insolvency or debt adjustment law (whether
state, federal or foreign), (ii) the appointment of a receiver, trustee, liquidator or other
custodian for such Person or any part of its Property, (iii) an assignment or trust mortgage
for the benefit of creditors of such Person, or (iv) the liquidation, dissolution or winding
up of the affairs of such Person.




     Instrument — shall have the meaning ascribed to the term “instrument” in the
UCC.




     Intellectual Property — Property constituting under any Applicable Law a
patent, patent application, copyright, trademark, service mark, trade name, mask work, trade
secret or license or other right to use any of the foregoing.




     Intellectual Property Claim — the assertion by any Person of a claim (whether
asserted in writing, by action, suit or proceeding or otherwise) that a Borrower’s
ownership, use, marketing, sale or distribution of any Inventory, Equipment, Intellectual
Property or other Property is violative of any ownership or other right to use any
Intellectual Property of such Person.




     Intercreditor Agreement — the Intercreditor Agreement dated as of the date
hereof, among the Tranche B Agent, Agent and Credit Parties, pursuant to which, among other
things, the liens and security interests in any property securing the Tranche B Loan are
subordinated to the liens and security interests therein of Agent, for benefit of Lenders,
to the extent provided therein, as amended, restated, supplemented or otherwise modified
from time to time.




     Interest Period — shall have the meaning ascribed to it in Section 2.1.3 of the
Agreement.




     Interest Rate Contract — any interest rate agreement, interest rate collar
agreement, interest rate swap agreement, or other agreement or arrangement at any time
entered into by a Borrower with Bank that is designed to protect against fluctuations in
interest rates.




     Inventory — all of a Credit Party’s inventory, whether now owned or hereafter
acquired, including all goods intended for sale or lease by a Credit Party, to be furnished
by a Credit Party under contracts of service, or for display or demonstration; all work in
process; all raw materials and other materials and supplies of every nature and description
used or which might be used in connection with the manufacture, printing, packing, shipping,
advertising, selling, leasing or furnishing of such goods or otherwise used or consumed in a
Credit Party’s business; and all Documents evidencing and General Intangibles relating to
any of the foregoing, whether now owned or hereafter acquired by a Credit Party.




     Inventory Formula Amount — on any date of determination thereof, an amount
equal to the lesser of (i) $10,000,000 or (ii) the lesser of (a) 65% of the Value of
Eligible Inventory on such date and (b) 85% of the Eligible Inventory Net Orderly
Liquidation Value Amount on such date.




     Investment Property — shall have the meaning given to “investment property” in
the UCC and shall include all Securities (whether certificated or uncertificated), security
entitlements, securities accounts, commodity contracts and commodity accounts.




     Landlord Waiver — an agreement duly executed in favor of Agent, in form and
content acceptable to Agent, by which an owner or mortgagee of premises upon which any
Property of an Obligor is located agrees to waive or subordinate any Lien it may have with
respect to



 









 






such Property in favor of Agent’s Lien therein and to permit Agent to enter upon such
premises and to remove such Property or to use such premises to store or dispose of such
Property.




     LC Outstandings — on any date of determination thereof, an amount (in Dollars)
equal to the sum of (i) all amounts then due and payable by any Obligor on such date by
reason of any payment made on or before such date by Agent under any Credit Support
plus (ii) the aggregate undrawn amount of all Letters of Credit then outstanding or
to be issued by Letter of Credit Issuer under a Letter of Credit application theretofore
submitted to Letter of Credit Issuer.




     LC Reserve — at any date, the aggregate of all LC Outstandings outstanding on
such date, other than LC Outstandings that are fully secured (in an amount of 100% of such
LC Outstandings) by Cash Collateral pursuant to reasonable terms established by Agent.




     Lender Indemnitee — a Lender in its capacity as a lender under the Agreement
and its present and future officers, directors, employees, agents and attorneys.




     Lenders – Bank of America, N.A. (whether in its capacity as a provider of Loans
under Section 1 of the Agreement, or as the provider of Settlement Loans under Section 3.1.3
of the Agreement or as the procurer of Letters of Credit under Section 1.2 of the Agreement)
and any other Person who may from time to time become a “Lender” under the Agreement, and
their respective successors and permitted assigns.




     Letter of Credit – shall have the meaning specified in Section 1.2.1.




     Letter of Credit Issuer – the Bank, any Affiliate of the Bank or any other
financial institution that issues any Letter of Credit pursuant to this Agreement.




     Letter of Credit Subfacility — $72,000,000.




     Leverage Ratio — the ratio of (i) the sum of (a) Debt outstanding under this
Agreement plus (b) LC Outstandings plus (c) Debt outstanding under the
Tranche B Agreement minus (d) Eligible Cash Collateral to (ii) (A) for fiscal
periods occurring prior to the date of this Agreement, EBITDAR and (B) for all fiscal
periods thereafter, EBITDA.




     Leverage Ratio Testing Date – as defined in Section 9.3.2 of the Agreement.




     LIBOR Lending Office — with respect to a Lender, the office designated as a
LIBOR Lending Office for such Lender on the signature page hereof (or on any Assignment and
Acceptance, in the case of an assignee) and such other office of such Lender or any of its
Affiliates that is hereafter designated by written notice to Agent.




     LIBOR Loan — a Loan, or portion thereof, during any period in which it bears
interest at a rate based upon the applicable Adjusted LIBOR Rate.




     LIBOR Rate — with respect to an Interest Period, the rate per annum reported to
Agent by Bank as the rate at which deposits of U.S. Dollars approximately equal in principal
amount to or comparable to the amount of the LIBOR Loan to which such Interest Period
relates and for a term comparable to such Interest Period are offered to Bank by prime banks
in the London interbank foreign currency deposits market at approximately 11:00 a.m., London
time, 2 Business Days prior to the commencement of such Interest Period. Each determination
by Agent of any LIBOR Rate shall, in the absence of any manifest error, be conclusive.



 









 






     Lien — any interest in Property securing an obligation owed to, or a claim by,
a Person other than the owner of the Property, whether such interest is based on common law,
statute or contract. The term “Lien” shall also include reservations, exceptions,
encroachments, easements, rights-of-way, covenants, conditions, restrictions, leases and
other title exceptions and encumbrances affecting Property. For the purpose of the
Agreement, each Credit Party shall be deemed to be the owner of any Property which it has
acquired or holds subject to a conditional sale agreement or other arrangement pursuant to
which title to the Property has been retained by or vested in some other Person for security
purposes.




     Loan — a Revolver Loan (and each Base Rate Loan and LIBOR Loan comprising such
Loan).




     Loan Account — the loan account established by each Lender on its books
pursuant to Section 4.8 of the Agreement.




     Loan Documents — the Agreement, the Other Agreements and the Security
Documents.




     Loan Year — a period commencing each calendar year on the same month and day as
the date of the Agreement and ending on the same month and day in the immediately succeeding
calendar year, with the first such period (i.e. the first Loan Year) to commence on
the date of the Agreement.




     Margin Stock — shall have the meaning ascribed to it in Regulation U of the
Board of Governors.




     Material Adverse Effect — the effect of any event or condition which, alone or
when taken together with other events or conditions occurring or existing concurrently
therewith, (i) has a material adverse effect upon the business, operations, Properties or
condition (financial or otherwise) of the Credit Parties collectively; (ii) has or may be
reasonably expected to have any material adverse effect whatsoever upon the validity or
enforceability of the Agreement or any of the other Loan Documents; (iii) has any material
adverse effect upon the value of the whole or any material part of the Collateral, the Liens
of Agent with respect to the Collateral or the priority of any such Liens; (iv) materially
impairs the ability of any Obligor to perform its obligations under this Agreement or any of
the other Loan Documents, including repayment of any of the Obligations when due; or (v)
materially impairs the ability of Agent or any Lender to enforce or collect the Obligations
or realize upon any of the Collateral in accordance with the Loan Documents and Applicable
Law.




     Material Contract — an agreement to which an Obligor is a party (other than the
Loan Documents and the Tranche B Documentation) (i) which is deemed to be a material
contract as provided in Regulation S-K promulgated by the SEC under the Securities Act of
1933 or (ii) for which breach, termination, cancellation, nonperformance or failure to renew
could reasonably be expected to have a Material Adverse Effect.




     Maximum Rate — the maximum non-usurious rate of interest permitted by
Applicable Law that at any time, or from time to time, may be contracted for, taken,
reserved, charged or received on the Debt in question or, to the extent that at any time
Applicable Law may thereafter permit a higher maximum non-usurious rate of interest, then
such higher rate. Notwithstanding any other provision hereof, the Maximum Rate shall be
calculated on a daily basis (computed on the actual number of days elapsed over a year of
365 or 366 days, as the case may be). On each day, if any, that Texas law establishes the
Maximum Rate, the Maximum Rate shall be the “weekly ceiling” (as defined in the Texas
Finance Code) for that day.



 









 






     Modified Net Working Capital — at any date of determination, without
duplication, (i) the sum, for any Person and its Consolidated Subsidiaries, of (A) the
unpaid face amount (including retentions) of all Accounts of such Person and its
Consolidated Subsidiaries as at such date of determination, plus (B) the amount of
all Inventory of such Person and its Consolidated Subsidiaries as at such date of
determination, plus (C) the aggregate amount of all contract underbillings of such
Person and its Consolidated Subsidiaries as at such date of determination, minus
(ii) the sum, for such Person and its Consolidated Subsidiaries, of (A) the aggregate amount
of all contract overbillings of such Person and its Consolidated Subsidiaries as at such
date of determination, plus (B) the aggregate amount of outstanding and unpaid
claims up to $3,000,000 of such Person and its Consolidated Subsidiaries related to the
Goochland Project, in each case determined on a Consolidated basis in accordance with GAAP.




     Money Borrowed — as applied to any Person, (i) Debt arising from the lending of
money by any other Person to such Person; (ii) Debt, whether or not in any such case arising
from the lending of money by another Person to such Person, (A) which is represented by
notes payable or drafts accepted that evidence extensions of credit, (B) which constitutes
obligations evidenced by bonds, debentures, notes or similar instruments, or (C) upon which
interest charges are customarily paid (other than accounts payable) or that was issued or
assumed as full or partial payment for Property; (iii) Debt that constitutes a Capitalized
Lease Obligation; (iv) reimbursement obligations with respect to letters of credit or
guaranties of letters of credit and (v) Debt of such Person under any guaranty of
obligations that would constitute Debt for Money Borrowed under clauses (i) through (iii)
hereof, if owed directly by such Person.




     Moody’s — Moody’s Investors Services, Inc.




     Mortgage – collectively, each mortgage, deed of trust or deed to secure debt
executed or to be executed by the relevant Borrower in favor of Agent and by which such
Borrower shall grant and convey to Agent, for its benefit as Agent and for the Pro Rata
benefit of Lenders, Liens upon all the Real Estate of such Borrower, as security for the
payment of the Obligations.




     Multiemployer Plan — has the meaning set forth in Section 4001(a)(3) of ERISA.




     Net Proceeds -with respect to a disposition of any Collateral, proceeds
(including cash receivable (when received) by way of deferred payment) received by a Credit
Party in cash from the sale, lease, transfer or other disposition of any Property, including
insurance proceeds and awards of compensation received with respect to the destruction or
condemnation of all or part of such Property, net of: (i) the reasonable and customary costs
of such sale, lease, transfer or other disposition (including, for example, legal fees,
taxes and sales commissions); and (ii) amounts applied to repayment of Debt (other than the
Obligations) secured by a Permitted Lien on the Collateral disposed of that is senior to
Agent’s Liens with respect to such Collateral.




     Net Working Capital — at any date of determination, without duplication, (i)
the sum, for any Person and its Consolidated Subsidiaries, of (A) cash or Cash Equivalents
of such Person and its Consolidated Subsidiaries as at such date of determination,
plus (B) the unpaid face amount of all Accounts of such Person and its Consolidated
Subsidiaries as at such date of determination, plus (C) the amount of all Inventory
of such Person and its Consolidated Subsidiaries as at such date of determination,
plus (D) the aggregate amount of all contract underbillings of such Person and its
Consolidated Subsidiaries as at such date of determination, plus (E) the aggregate
amount of prepaid expenses of such Person and its Consolidated Subsidiaries as at such date
of determination, plus (F) the aggregate amount of all prepaid items to Chubb of
such Person and its Consolidated Subsidiaries as at such date of determination,
minus (ii) the sum, for such Person and its Consolidated Subsidiaries, of (A) the
aggregate amount of Debt outstanding under this



 









 






Agreement as at such date of determination, plus (B) the unpaid amount of all
accounts payable of such Person and its Consolidated Subsidiaries as at such date of
determination, plus (C) the aggregate amount of all accrued expenses of such Person
and its Consolidated Subsidiaries as at such date of determination, plus (D) the aggregate
amount of all contract overbillings of such Person and its Consolidated Subsidiaries as at
such date of determination (but, excluding from accounts payable and accrued expenses, the
current portion of long-term Debt and all accrued interest and Federal, state, local and
foreign income taxes), plus (E) the aggregate amount of accrued contract losses of
such Person and its Consolidated Subsidiaries as at such date of determination, plus
(F) the aggregate amount of all restructuring expenses (including professional fees)
incurred in connection with the Bankruptcy Case and unpaid by such Person and its
Consolidated Subsidiaries as at such date of determination, in each case determined on a
Consolidated basis in accordance with GAAP.




     Notes — each Revolver Note and any other promissory note executed by Borrowers
at Agent’s request to evidence any of the Obligations.




     Notice of Borrowing — as defined in Section 3.1.1(i) of the Agreement.




     Notice of Conversion/Continuation — as defined in Section 2.1.2(ii) of the
Agreement.




     Obligations — in each case, whether now in existence or hereafter arising, (i)
the principal of, and interest and premium, if any, on, the Loans; (ii) all LC Outstandings
and all other obligations of any Obligor to Agent or any Letter of Credit Issuer arising in
connection with the issuance of any Letter of Credit; (iii) all Debt and other obligations
of any Borrower under or in connection with any Interest Rate Contract, including any
premature termination or breakage costs; and (iv) all other Debts, covenants, duties and
obligations (including Contingent Obligations) now or at any time or times hereafter owing
by any Borrower to Agent or any Lender under or pursuant to the Agreement or any of the
other Loan Documents, whether evidenced by any note or other writing, whether arising from
any extension of credit, opening of a letter of credit, acceptance, loan, guaranty,
indemnification or otherwise and whether direct or indirect, absolute or contingent, due or
to become due, primary or secondary, or joint or several, including all interest, charges,
expenses, fees or other sums (including Extraordinary Expenses) chargeable to any or all
Obligors under the Agreement or under any of the other Loan Documents. “Obligations”
include, without limitation, (a) all debts, liabilities and obligations now or hereafter
arising from or in connection with the Letters of Credit, and (b) all debts, liabilities,
and obligations now or hereafter arising from or in connection with Bank Products.




     Obligor — each Borrower and each Guarantor, and any other Person that is at any
time liable for the payment of the whole or any part of the Obligations or that has granted
in favor of Agent a Lien upon any of any of such Person’s assets to secure payment of any of
the Obligations.




     Ordinary Course of Business — with respect to any transaction involving any
Person, the ordinary course of such Person’s business, as conducted by such Person in
accordance with past practices and undertaken by such Person in good faith and not for the
purpose of evading any covenant or restriction in any Loan Document.




     Organization Documents — with respect to any Person, its charter, certificate
or articles of incorporation, bylaws, articles of organization, operating agreement, members
agreement, partnership agreement, voting trust, or similar agreement or instrument governing
the formation or operation of such Person.



 









 






     Original Term — as defined in Section 5.1 of the Agreement.




     OSHA — the Occupational Safety and Hazard Act of 1970.




     Other Agreements — the Notes, each Credit Support, the Fee Letter, the
Intercreditor Agreement, each Interest Rate Contract with Agent or with Bank and subject to
credit enhancement from Agent, and any and all agreements, instruments and documents (other
than the Agreement and the Security Documents), heretofore, now or hereafter executed by any
Borrower, any other Obligor or any other Person and delivered to Agent or any Lender in
respect of the transactions contemplated by the Agreement.




     Out-of-Formula Condition — as defined in Section 1.1.2 of the Agreement.




     Out-of-Formula Loan — a Revolver Loan made when an Out-of-Formula Condition
exists or the amount of any Revolver Loan which, when funded, results in an Out-of-Formula
Condition.




     Participant — as defined in Section 13.2.1 of the Agreement.




     Participating Lender — as defined in Section 1.2.8(ii) of the Agreement.




     Payment Account — an account maintained by Agent to which all monies from time
to time deposited to a Dominion Account shall be transferred and all other payments shall be
sent in immediately available federal funds.




     Payment Items — all checks, drafts, or other items of payment payable to a
Borrower, including proceeds of any of the Collateral.




     Pending Revolver Loans — at any date, the aggregate principal amount of all
Revolver Loans which have been requested in any Notice of Borrowing received by Agent but
which have not theretofore been advanced by Agent or Lenders.




     Permitted Capitalized Lease Obligations — Capitalized Lease Obligations of a
Borrower and its Subsidiaries in an amount outstanding at any time which does not exceed
$2,000,000.




     Permitted Contingent Obligations — Contingent Obligations arising from
endorsements for collection or deposit in the Ordinary Course of Business; Contingent
Obligations arising from Interest Rate Contracts entered into in the Ordinary Course of
Business pursuant to the Agreement or with Agent’s prior written consent; Contingent
Obligations of a Borrower and its Subsidiaries existing as of the Closing Date, including
extensions and renewals thereof that do not increase the amount of such Contingent
Obligations as of the date of such extension or renewal; Contingent Obligations incurred in
the Ordinary Course of Business with respect to surety bonds, appeal bonds, performance
bonds and other similar obligations; Contingent Obligations arising under indemnity
agreements to title insurers to cause such title insurers to issue to Agent policies;
Contingent Obligations with respect to customary indemnification obligations in favor of
purchasers in connection with dispositions of Equipment permitted under Section 7.4.2 of the
Agreement; Contingent Obligations constituting indemnification obligations incurred in the
Ordinary Course of Business with customers, contractors, owners and subcontractors;
Contingent Obligations in connection with the Tranche B Loan; and other Contingent
Obligations not to exceed $500,000 in the aggregate at any time.




     Permitted Lien — as defined in Section 9.2.5 of the Agreement.



 









 






     Permitted Purchase Money Debt — Purchase Money Debt of a Borrower and its
Subsidiaries which is secured by no Lien or only by a Purchase Money Lien, provided that the
aggregate amount of Purchase Money Debt outstanding at any time does not exceed $2,000,000
and the incurrence of such Purchase Money Debt does not violate any limitation in the Loan
Documents regarding Capital Expenditures. For the purposes of this definition, the
principal amount of any Purchase Money Debt consisting of capitalized leases shall be
computed as a Capitalized Lease Obligation.




     Person — an individual, partnership, corporation, limited liability company,
limited liability partnership, joint stock company, land trust, business trust, or
unincorporated organization, or a Governmental Authority.




     Plan — an employee benefit plan now or hereafter maintained for employees of
any or all Borrowers that is covered by Title IV of ERISA.




     Pledge Agreement – any agreement granting Agent a security interest in the
Equity Interest of any Subsidiary (direct or indirect) of Parent, in each case to secure the
Obligations.




     Principal Stockholders — Fidelity Management & Research Co., Southpoint Capital
Advisors LP, Tontine Capital Partners L.P. and their respective Affiliates.




     Pro Rata — a share of or in all Loans, participations in LC Outstandings,
liabilities, payments, proceeds, collections, Collateral and Extraordinary Expenses, which
share for any Lender on any date shall be a percentage (expressed as a decimal, rounded to
the ninth decimal place) arrived at by dividing the amount of the Commitment of such Lender
on such date by the aggregate amount of the Commitments of all Lenders on such date.




     Proceeds – as defined in Section 9.2.5(xi) of the Agreement.




     Project Contract — means any existing or future contract of a Credit Party (i)
in respect of which a materials or service provider to, or subcontractor of, such Credit
Party is eligible to assert a mechanic’s or materialman’s lien or other similar Lien, or
(ii) in respect of which a Surety Bond has been issued.




     Projections — Borrowers’ forecasted (a) Consolidated and consolidating balance
sheets, profit and loss statements, cash flow statements, and capitalization statements
(provided that cash flow statements and capitalization statements are not prepared on a
consolidating basis), all prepared on a consistent basis with Borrowers’ historical
financial statements, together with (b) appropriate supporting details and a statement of
underlying assumptions, a projection of the Borrowing Base and Availability, all as
reasonably requested by Agent.




     Properly Contested — in the case of any Debt of an Obligor (including any
Taxes) that is not paid as and when due or payable by reason of such Obligor’s bona fide
dispute concerning its liability to pay same or concerning the amount thereof, (i) such Debt
is being properly contested in good faith by appropriate proceedings promptly instituted and
diligently conducted; (ii) such Obligor has established appropriate reserves as shall be
required in conformity with GAAP, (iii) the non-payment of such Debt will not have a
Material Adverse Effect and will not result in a forfeiture of any material assets of such
Obligor; (iv) no Lien is imposed upon any of such Obligor’s assets with respect to such Debt
unless such Lien is at all times junior and subordinate in priority to the Liens in favor of
Agent (except only with respect to property taxes that have priority as a matter of
applicable state law) and enforcement of such Lien is stayed during the period prior to the
final resolution or disposition of such dispute; (v) if the Debt results from, or is



 









 






determined by the entry, rendition or issuance against an Obligor or any of its assets
of a judgment, writ, order or decree, enforcement of such judgment, writ, order or decree is
stayed pending a timely appeal or other judicial review; and (vi) if such contest is
abandoned, settled or determined adversely (in whole or in part) to such Obligor, such
Obligor forthwith pays such Debt and all penalties, interest and other amounts due in
connection therewith.




     Property — any interest in any kind of property or asset, whether real,
personal or mixed and whether tangible or intangible.




     Purchase Money Debt — means and includes (i) Debt (other than the Obligations)
for the payment of all or any part of the purchase price of any fixed assets, (ii) any Debt
(other than the Obligations) incurred at the time of or within 10 days prior to or after the
acquisition of any fixed assets for the purpose of financing all or any part of the purchase
price thereof, and (iii) any renewals, extensions or refinancings (but not any increases in
the principal amounts) thereof outstanding at the time.




     Purchase Money Lien — a Lien upon fixed assets which secures Purchase Money
Debt, but only if such Lien shall at all times be confined solely to the fixed assets
acquired through the incurrence of the Purchase Money Debt secured by such Lien and such
Lien constitutes a purchase money security interest under the UCC.




     Real Estate — all parcels or tracts of real Property owned by Borrowers located
in the United States, including, without limitation, located in Texas, South Carolina,
Tennessee and Maryland.




     Refinancing Conditions — the following conditions, each of which must be
satisfied before Refinancing Debt shall be permitted under Section 9.2.3 of the Agreement:
(i) the Refinancing Debt is in an aggregate principal amount that does not exceed the
aggregate principal amount of the Debt being extended, renewed or refinanced plus any
premium payable in connection therewith, (ii) the Refinancing Debt has a later or equal
final maturity and a longer or equal weighted average life (based on the earliest call date
thereof) than the Debt being extended, renewed or refinanced, (iii) the Refinancing Debt
does not bear a rate of interest that exceeds a market rate (as determined in good faith by
a Senior Officer) as of the date of such extension, renewal or refinancing, (iv) if the Debt
being extended, renewed or refinanced, or any Lien associated therewith, is subordinate to
the Obligations, or the Liens granted hereunder, the Refinancing Debt, or any Lien
associated with the Refinancing Debt, is subordinated to the same extent, (v) the covenants
contained in any instrument or agreement relating to the Refinancing Debt are no less
favorable to Borrowers than those relating to the Debt being extended, renewed or
refinanced, and (vi) at the time of and after giving effect to such extension, renewal or
refinancing, no Default or Event of Default shall exist.




     Refinancing Debt — Debt for Money Borrowed that is permitted by Section 9.2.3
and that is the subject or the result of an extension, renewal or refinancing.




     Regulation D — Regulation D of the Board of Governors.




     Register — the register maintained by Agent in accordance with Section 4.8.2 of
the Agreement.




     Rentals — as defined in Section 9.2.14 of the Agreement.



 









 






     Reorganization Plan – the Second Amended Joint Plan of Reorganization dated
March 17, 2006, of the Debtors in the Bankruptcy Case, in form and substance satisfactory to
Agent.




     Reportable Event — any of the events set forth in Section 4043(b) of ERISA.




     Required Lenders — at any date of determination thereof, Lenders (excluding
each Lender that is in breach of its obligations under the Agreement) having Commitments
representing more than 50% of the aggregate Commitments at such time; provided
further, however, that if the Commitments have been terminated, the term
“Required Lenders” shall mean Lenders (excluding each Lender that is in breach of its
obligations hereunder) holding Loans (including Settlement Loans) representing more than 50%
of the aggregate principal amount of Loans (including Settlement Loans) outstanding at such
time.




     Residential Borrowers – the Credit Parties listed on Schedule E.




     Residential EBIT – solely with respect to the Residential Borrowers, with
respect to any period of such Residential Borrowers, on a Consolidated basis, Adjusted Net
Earnings from Operations, plus, to the extent deducted in the determination of
Adjusted Net Earnings from Operations for that period (but without duplication), interest
expenses, Federal, state, local and foreign income taxes and other identified non-cash items
not otherwise included which are acceptable to Agent.




     Restricted Investment — any acquisition of Property by a Credit Party or any of
its Subsidiaries in exchange for cash or other Property, whether in the form of an
acquisition of Equity Interests or Debt, or the purchase or acquisition by a Credit Party or
any Subsidiary of any other Property, or a loan, advance, capital contribution or
subscription, except acquisitions of the following: (i) fixed assets to be used in the
Ordinary Course of Business of a Credit Party or any Subsidiary; (ii) goods held for sale or
lease or to be used in the manufacture of goods or the provision of services by a Credit
Party or any Subsidiary in the Ordinary Course of Business; (iii) Current Assets arising
from the sale or lease of goods or the rendition of services in the Ordinary Course of
Business of a Credit Party or any if its Subsidiaries; (iv) investments in Subsidiaries; (v)
Cash Equivalents to the extent they are not subject to rights of offset in favor of any
Person other than Agent or a Lender; and (vi) loans and other advances of money to the
extent not prohibited by Section 9.2.2.




     Restricted Subsidiary — any one or more of the Guarantors listed on
Schedule B.




     Restrictive Agreement — an agreement (other than any of the Loan Documents or
any of the Tranche B Documentation) that, if and for so long as an Obligor or any Subsidiary
of such Obligor is a party thereto, would prohibit, condition or restrict such Obligor’s or
Subsidiary’s right to incur or repay Debt for Money Borrowed (including any of the
Obligations); grant Liens upon any of such Obligor’s or Subsidiary’s assets (including Liens
granted in favor of Agent pursuant to the Loan Documents and to the Tranche B Agent pursuant
to the Tranche B Documentation); declare or make Distributions; amend, modify, extend or
renew any agreement evidencing Debt for Money Borrowed (including any of the Loan
Documents); or repay any Debt owed to any Obligor.




     Restructuring Expenses Reserve — on any date of determination thereof, an
amount equal to the difference of (i) the sum of all restructuring expenses (including
professional fees) incurred in connection with the Bankruptcy Case and unpaid by the Credit
Parties as of such date less (ii) the aggregate amount of Cash Collateral on deposit
in all Cash Collateral Accounts in excess of



 









 






$20,000,000 on such date. If at any date of determination the aggregate amount of Cash
Collateral on deposit in all Cash Collateral Accounts in excess of $20,000,000 on such date
is greater than the sum of all restructuring expenses (including professional fees) incurred
in connection with the Bankruptcy Case and unpaid by the Credit Parties as of such date,
then the Restructuring Expenses Reserve shall be $0.




     Revolver Loan — a Loan made by Lenders as provided in Section 1.1 of the
Agreement (including any Out-of-Formula Loan) or a Settlement Loan funded solely by Agent.




     Revolver Note — a Revolver Note to be executed by Borrowers in favor of each
Lender in the form of Exhibit A attached hereto, which shall be in the face amount
of such Lender’s Commitment and which shall evidence all Revolver Loans made by such Lender
to Borrowers pursuant to the Agreement.




     S&P — Standard & Poor’s Ratings Group, a division of McGraw-Hill, Inc.




     Scarborough — Edmund C. Scarborough in his capacity as an individual Surety.




     Scarborough Letter – that certain letter agreement, dated as of March 22, 2006,
among Scarborough, Borrowers and Agent, as amended or supplemented from time to time.




     Schedule of Accounts — as defined in Section 7.2.1 of the Agreement.




     SEC — Securities and Exchange Commission.




     Security — shall have the same meaning as in Section 2(1) of the Securities Act
of 1933.




     Security Documents — the Pledge Agreements and all other instruments and
agreements now or at any time hereafter securing the whole or any part of the Obligations.




     Senior Convertible Notes – the Series A 6.5% Senior Convertible Notes and
Series B 6.5% Senior Convertible Notes, each due 2014 and each issued by Parent, together
with the subsidiary guarantees thereof.




     Senior Officer — the chairman of the board of directors, the president or the
chief financial officer of, or the general counsel to Parent.




     Senior Subordinated Notes – the 9 3/8% Senior Subordinated Notes due 2009
issued by Parent, together with the subsidiary guarantees thereof.




     Settlement Date — as defined in Section 3.1.3(i) of the Agreement.




     Settlement Loan — as defined in Section 3.1.3(ii) of the Agreement.




     Settlement Report — a report delivered by Agent to Lenders summarizing the
amount of the outstanding Revolver Loans as of the Settlement Date and the calculation of
the Borrowing Base as of such Settlement Date.




     Shutdown EBIT – solely with respect to the Shutdown Subsidiaries, with respect
to any period of such Shutdown Subsidiaries, on a Consolidated basis, Adjusted Net Earnings
from Operations, plus, to the extent deducted in the determination of Adjusted Net
Earnings from Operations for that period (but without duplication), interest expenses,
Federal, state, local and



 









 






foreign income taxes and other identified non-cash items not otherwise included which
are acceptable to Agent.




     Shutdown Subsidiaries – the Subsidiaries of Parent listed on Schedule
C.




     Solvent — as to any Person, such Person (i) owns Property whose fair saleable
value is greater than the amount required to pay all of such Person’s Debts (including
contingent Debts), (ii) is able to pay all of its Debts as such Debts mature, (iii) has
capital sufficient to carry on its business and transactions and all business and
transactions in which it is about to engage; and (iv) is not “insolvent” within the meaning
of Section 101(32) of the Bankruptcy Code; in each case specifically excluding any
inter-company accounts.




     Statutory Reserves — on any date, the percentage (expressed as a decimal)
established by the Board of Governors which is the then stated maximum rate for all reserves
(including any emergency, supplemental or other marginal reserve requirements) applicable to
any member bank of the Federal Reserve System in respect to Eurocurrency Liabilities (or any
successor category of liabilities under Regulation D). Such reserve percentage shall
include those imposed pursuant to Regulation D. The Statutory Reserve shall be adjusted
automatically on and as of the effective date of any change in such percentage.




     Subordinated Debt — Debt of any or all Borrowers that is fully and absolutely
subordinated in right of payment to the Obligations in a manner satisfactory to Agent.




     Subsidiary — any Person in which more than 50% of its outstanding Voting Stock
or more than 50% of all Equity Interests is owned directly or indirectly by a Borrower, by
one or more other Subsidiaries of a Borrower or by a Borrower and one or more other
Subsidiaries.




     Sure Tec – Sure Tec Insurance Company, or any of its Affiliates or
Subsidiaries.




     Sure Tec Letter – that certain letter agreement, dated as of October 14, 2005,
between Parent and Agent, as amended or supplemented from time to time.




     Surety – any Person who issues a Surety Bond.




     Surety Bond – any surety bond, insurance policy, indemnity agreement, guaranty,
letter of credit or other instrument provided by a third party (that is, excluding an
Affiliate of the obligor) to an obligee to assure the payment by and/or performance of an
obligor.




     Surety Collateral — (a) all of the right, title and interest of the Borrowers
in and to all existing and future Bonded Contracts and associated contract rights; (b)
Bonded Accounts; (c) all claims, rights and choses in action against any account debtor on
any Surety Bond or against any other Person with respect to any Surety Bond or Bonded
Contract; (d) to the extent assignable (other than to the extent that any such prohibition
and assignment term would be rendered ineffective pursuant to applicable law) all rights and
actions that any Borrower may have or acquire in any subcontract, purchase order or other
agreement in connection with any Bonded Contract, and against any subcontract, purchase
order or other agreement with any Person furnishing or agreeing to furnish or supply
vehicles, labor, supplies, machinery or other inventory or equipment in connection with or
on account of any Bonded Contract, and against any surety or sureties of any such
subcontractor, laborer or other Person; (e) Bonded Equipment; (f) Bonded Inventory; (g) any
and all books, accounts, computer software and other computer-stored information, and any
and all drawings, plans, specifications, shop and as-built drawings, in each case, used in
or necessary to fully perform all obligations and services required of any Borrower



 









 






under the Bonded Contracts; (h) all progress schedules, work in process schedules
(including, but not limited to, estimates of completion costs), accounts receivable ledgers,
accounts payable ledgers and estimates of completion costs relating to any and all Bonded
Contracts, and (i) any and all proceeds (other than such proceeds which are negotiable
instruments or cash or Cash Equivalents in the possession or control of Agent) remaining due
to Borrowers and products arising with respect thereto.




     Taxes — any present or future taxes, levies, imposts, duties, fees,
assessments, deductions, withholdings or other charges of whatever nature, including income,
receipts, excise, property, sales, use, transfer, license, payroll, withholding, social
security and franchise taxes now or hereafter imposed or levied by the United States or any
other Governmental Authority and all interest, penalties, additions to tax and similar
liabilities with respect thereto, but excluding, in the case of each Lender, taxes imposed
on or measured by the net income or overall gross receipts of such Lender.




     Tranche B Agent – Wilmington Trust Company, in its capacity as agent for the
Tranche B Lenders, and any successor in such capacity.




     Tranche B Lenders – the lenders from time to time party to the Tranche B
Agreement.




     Tranche B Agreement – that certain Term Loan Agreement, dated as of the date
hereof, by and among Parent, Tranche B Agent and the Tranche B Lenders, as the same may be
amended, restated, supplemented, refinanced, replaced or otherwise modified from time to
time.




     Tranche B Loan — the term loan in the amount of approximately $53,000,000
provided by Tranche B Lenders to Parent pursuant to the Tranche B Documentation, the
proceeds of which are primarily used to pay in full the Senior Convertible Notes.




     Tranche B Documentation — the Tranche B Agreement and all other documentation
evidencing, securing and otherwise executed in connection with or relating to the Tranche B
Loan, as amended, restated, supplemented or otherwise modified from time to time.




     Transferee — as defined in Section 13.3.3 of the Agreement.




     Type — any type of a Loan determined with respect to the interest option
applicable thereto, which shall be either a LIBOR Loan or a Base Rate Loan.




     UCC — the Uniform Commercial Code (or any successor statute) as adopted and in
force in the State of Texas or, when the laws of any other state govern the method or manner
of the perfection or enforcement of any security interest in any of the Collateral, the
Uniform Commercial Code (or any successor statute) of such state.




     Unused Letter of Credit Subfacility – an amount equal to $72,000,000
minus the sum of (i) the aggregate amount of all outstanding Letters of Credit
plus, without duplication, (ii) the aggregate unpaid reimbursement obligations with
respect to all Letters of Credit.




     Upstream Payment — a payment or distribution of cash or other Property by a
Subsidiary to a Borrower, whether in repayment of Debt owed by such Subsidiary to such
Borrower, to pay dividends on account of such Borrower’s ownership of Equity Interests or
otherwise.



 









 






     Value — with reference to the value of Eligible Inventory, value determined on
the basis of the lower of cost or market of such Eligible Inventory, with the cost thereof
calculated on a first-in, first-out basis, determined in accordance with GAAP.




     Voting Power — with respect to any Person, the power ordinarily (without the
occurrence of a contingency) to elect the members of the board of directors (or Persons
performing similar functions) of such Person.




     Voting Stock — Equity Interests of any class or classes of a corporation or
other entity the holders of which are ordinarily, in the absence of contingencies, entitled
to elect a majority of the corporate directors or Persons performing similar functions.



          Accounting Terms. Unless otherwise specified herein, all terms of an accounting
character used in the Agreement shall be interpreted, all accounting determinations under the
Agreement shall be made, and all financial statements required to be delivered under the Agreement
shall be prepared in accordance with GAAP, applied on a basis consistent with the most recent
audited Consolidated financial statements of Borrowers and the Subsidiaries heretofore delivered to
Agent and Lenders and using the same method for inventory valuation as used in such audited
financial statements, except for any change required by GAAP; provided, however,
that for purposes of determining Borrowers’ compliance with financial covenants contained in
Section 9.3 of the Agreement, all accounting terms shall be interpreted and all accounting
determinations shall be made in accordance with GAAP as in effect on the date of the Agreement and
applied on a basis consistent with the application used in the financial statements referred to in
Section 8.1.9 of the Agreement unless (i) Borrowers shall have objected to determining such
compliance on such basis at the time of delivery of such financial statements or (ii) Agent or any
Lender shall so object in writing within 30 days after the delivery of such financial statements,
in either of which events such calculations shall be made on a basis consistent with those used in
the preparation of the latest financial statements as to which such objection shall not have been
made. In the event of any change in GAAP that occurs after the date of the Agreement and that is
material to Borrowers, Agent and Lenders shall the right to require either that conforming
adjustments be made to any financial covenants set forth in the Agreement, or the components
thereof, that are affected by such change or that Borrowers report their financial condition based
on GAAP as in effect immediately prior to the occurrence of such change.




          Other Terms. All other terms contained in the Agreement shall have, when the context
so indicates, the meanings provided for by the UCC to the extent the same are used or defined
therein.




          Certain Matters of Construction. The terms “herein,” “hereof” and “hereunder” and
other words of similar import refer to the Agreement as a whole and not to any particular section,
paragraph or subdivision. Any pronoun used shall be deemed to cover all genders. In the
computation of periods of time from a specified date to a later specified date, the word “from”
means “from and including” and the words “to” and “until” each means “to but excluding.” The
section titles, table of contents and list of exhibits appear as a matter of convenience only and
shall not affect the interpretation of the Agreement. All references to statutes and related
regulations shall include any amendments of same and any successor statutes and regulations; to
any of the Loan Documents shall include any and all modifications thereto and any and all
restatements, extensions or renewals thereof; to any Person shall mean and include the successors
and permitted assigns of such Person; to “including” and “include” shall be understood to mean
“including, without limitation” (and, for purposes of the Agreement and each other Loan Document,
the parties agree that the rule of ejusdem generis shall not be applicable to limit a general
statement, which is followed by or referable to an enumeration of specific matters to matters
similar to the matters specifically mentioned); or to the time of day shall mean the time of day on
the day in question in Dallas, Texas, unless otherwise expressly provided in the Agreement. A
Default or an Event of Default shall be deemed to exist at all times during the period commencing
on the date that such




 









 







Default or Event of Default occurs to the date on which such Default or Event of Default is
waived in writing by Agent pursuant to the Agreement or, in the case of a Default, is cured within
any period of cure expressly provided in this Agreement; and an Event of Default shall “continue”
or be “continuing” until such Event of Default has been waived in writing by Lender. Whenever the
phrase “to the best of Borrowers’ knowledge” or words of similar import relating to the knowledge
or the awareness of Borrowers are used herein, such phrase shall mean and refer to (i) the actual
knowledge of a Senior Officer of any Borrower or (ii) the knowledge that a Senior Officer would
have obtained if they had engaged in good faith and diligent performance of his duties, including
the making of such reasonably specific inquiries as may be necessary of the employees or agents of
Borrowers and a good faith attempt to ascertain the existence or accuracy of the matter to which
such phrase relates.




 









 








     IN
WITNESS WHEREOF, this Appendix has been duly executed in Dallas,
Texas, on May 12, 2006.



	 	 	 	 	 	 	 
	 	 	AGENT:	 	 
	 
	 	 	 	 	 	 
	 	 	BANK OF AMERICA, N.A., as Agent	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/ H. Michael Wills 	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:	 	H. Michael Wills 	 	 
	 

	 	 	 	 	 	 
	 

	 	Title:	 	Senior Vice President 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	LENDERS:	 	 
	 
	 	 	 	 	 	 
	 	 	BANK OF AMERICA, N.A.	 	 
	 
	 

	 	By:	 	/s/ H. Michael Wills 	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:	 	H. Michael Wills 	 	 
	 

	 	 	 	 	 	 
	 

	 	Title:	 	Senior Vice President 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	WELLS FARGO FOOTHILL, LLC	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/ David P. Hill 	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:	 	David P. Hill 	 	 
	 

	 	 	 	 	 	 
	 

	 	Title:	 	Vice President 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	THE CIT GROUP/BUSINESS CREDIT, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/ Kirk Wolverton 	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:	 	Kirk Wolverton 	 	 
	 

	 	 	 	 	 	 
	 

	 	Title:	 	Vice President 	 	 
	 

	 	 	 	 	 	 





 









 






	 	 	 	 	 	 	 
	 	 	CREDIT PARTIES:	 	 
	 
	 	 	 	 	 	 
	 	 	INTEGRATED ELECTRICAL SERVICES, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/ Curt L. Warnock 	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Curt L. Warnock	 	 
	 

	 	 	 	Senior Vice President	 	 






 









 






	 	 	 
	 

	 	ALADDIN-WARD ELECTRIC & AIR, INC.
	 

	 	AMBER ELECTRIC, INC.
	 

	 	ARC ELECTRIC, INCORPORATED
	 

	 	BACHOFNER ELECTRIC, INC.
	 

	 	BEAR ACQUISITION CORPORATION
	 

	 	BRYANT ELECTRIC COMPANY, INC.
	 

	 	BW/BEC, INC.
	 

	 	BW CONSOLIDATED, INC.
	 

	 	CHARLES P. BAGBY CO., INC.
	 

	 	COLLIER ELECTRIC COMPANY, INC.
	 

	 	COMMERCIAL ELECTRICAL CONTRACTORS, INC.
	 

	 	CROSS STATE ELECTRIC, INC.
	 

	 	CYPRESS ELECTRICAL CONTRACTORS,INC.
	 

	 	DANIEL ELECTRICAL CONTRACTORS, INC.
	 

	 	DANIEL ELECTRICAL OF TREASURE COAST,
INC.
	 

	 	DANIEL INTEGRATED TECHNOLOGIES, INC.
	 

	 	DAVIS ELECTRICAL CONSTRUCTORS, INC.
	 

	 	ELECTRO-TECH, INC.
	 

	 	EMC ACQUISITION CORPORATION
	 

	 	FEDERAL COMMUNICATIONS GROUP, INC.
	 

	 	GENERAL PARTNER, INC.
	 

	 	HATFIELD REYNOLDS ELECTRIC COMPANY
	 

	 	HOLLAND ELECTRICAL SYSTEMS, INC.
	 

	 	HOUSTON-STAFFORD ELECTRIC HOLDINGS
III, INC.
	 

	 	HOUSTON-STAFFORD MANAGEMENT LLC
	 

	 	ICS HOLDINGS LLC
	 

	 	IES ALBUQUERQUE, INC.
	 

	 	IES AUSTIN, INC.
	 

	 	IES AUSTIN MANAGEMENT LLC
	 

	 	IES CHARLESTON, INC.
	 

	 	IES CHARLOTTE, INC.
	 

	 	IES COLLEGE STATION, INC.
	 

	 	IES COLLEGE STATION MANAGEMENT LLC
	 

	 	IES COMMUNICATIONS, INC.
	 

	 	IES CONTRACTORS MANAGEMENT LLC
	 

	 	IES DECATUR, INC.
	 

	 	IES EAST MCKEESPORT, INC.
	 

	 	IES ENC, INC.
	 

	 	IES ENC MANAGEMENT, INC.
	 

	 	IES MERIDIAN, INC.
	 

	 	IES NEW IBERIA, INC.
	 

	 	IES OKLAHOMA CITY, INC.






 









 






	 	 	 
	 

	 	IES OPERATIONS GROUP, INC.
	 

	 	IES PROPERTIES, INC.
	 

	 	IES PROPERTIES MANAGEMENT, INC.
	 

	 	IES RALEIGH, INC.
	 

	 	IES RAPID CITY, INC.
	 

	 	IES RESIDENTIAL GROUP, INC.
	 

	 	IES SPECIALTY LIGHTING, INC.
	 

	 	IES VALDOSTA, INC.
	 

	 	IES VENTURES INC.
	 

	 	IES WILSON, INC.
	 

	 	INTEGRATED ELECTRICAL FINANCE, INC.
	 

	 	INTELLIGENT BUILDING SOLUTIONS, INC.
	 

	 	J.W. GRAY ELECTRIC CO., INC.
	 

	 	J.W. GRAY MANAGEMENT LLC
	 

	 	KAYTON ELECTRIC, INC.
	 

	 	KEY ELECTRICAL SUPPLY, INC.
	 

	 	LINEMEN, INC.
	 

	 	MARK HENDERSON, INCORPORATED
	 

	 	MENNINGA ELECTRIC, INC.
	 

	 	MID-STATES ELECTRIC COMPANY, INC.
	 

	 	MILLS ELECTRICAL CONTRACTORS, INC.
	 

	 	MILLS MANAGEMENT LLC
	 

	 	MITCHELL ELECTRIC COMPANY, INC.
	 

	 	M-S SYSTEMS, INC.
	 

	 	MURRAY ELECTRICAL CONTRACTORS, INC.
	 

	 	NBH HOLDING CO., INC.
	 

	 	NEAL ELECTRIC MANAGEMENT LLC
	 

	 	NEW TECHNOLOGY ELECTRICAL
CONTRACTORS, INC.
	 

	 	NEWCOMB ELECTRIC COMPANY, INC.
	 

	 	PAN AMERICAN ELECTRIC COMPANY, INC.
	 

	 	PAN AMERICAN ELECTRIC, INC.
	 

	 	PAULIN ELECTRIC COMPANY, INC.
	 

	 	POLLOCK ELECTRIC, INC.
	 

	 	PRIMENET, INC.
	 

	 	PRIMO ELECTRIC COMPANY
	 

	 	RAINES ELECTRIC CO., INC.
	 

	 	RAINES MANAGEMENT LLC
	 

	 	RIVIERA ELECTRIC, LLC
	 

	 	RKT ELECTRIC, INC.
	 

	 	ROCKWELL ELECTRIC, INC.
	 

	 	RODGERS ELECTRIC COMPANY, INC.
	 

	 	RON’S ELECTRIC, INC.
	 

	 	SEI ELECTRICAL CONTRACTOR, INC.
	 

	 	SPECTROL, INC.
	 

	 	SUMMIT ELECTRIC OF TEXAS, INC.






 









 






	 	 	 	 	 	 	 
	 	 	TESLA POWER GP, INC.	 	 
	 	 	THOMAS POPP & COMPANY	 	 
	 	 	VALENTINE ELECTRICAL, INC.	 	 
	 	 	WRIGHT ELECTRICAL CONTRACTING, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/ Curt L. Warnock 	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Curt L. Warnock	 	 
	 

	 	 	 	Vice President	 	 
	 
	 	 	 	 	 	 
	 	 	IES CONTRACTORS, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	Name:	 	/s/ Curt L. Warnock 	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Curt L. Warnock	 	 
	 

	 	 	 	Secretary	 	 
	 
	 	 	IES REINSURANCE, LTD.	 	 
	 
	 	 	 	 	 	 
	 

	 	Name:	 	/s/ Curt L. Warnock 	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Curt L. Warnock	 	 
	 

	 	 	 	President	 	 
	 
	 	 	 	 	 	 
	 	 	BEXAR ELECTRIC COMPANY, LTD.	 	 
	 

	 	By:
	 	BW/BEC, Inc., its general partner	 	 
	 
	 	 	 	 	 	 
	 

	 	Name:	 	/s/ Curt L. Warnock 	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Curt L. Warnock	 	 
	 

	 	 	 	Vice President	 	 
	 
	 	 	 	 	 	 
	 	 	HAYMAKER ELECTRIC, LTD	 	 
	 

	 	By:
	 	General Partner, Inc., its general partner	 	 
	 
	 	 	 	 	 	 
	 

	 	Name:	 	/s/ Curt L. Warnock 	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Curt L. Warnock	 	 
	 

	 	 	 	Vice President	 	 
	 
	 	 	 	 	 	 
	 	 	HOUSTON-STAFFORD ELECTRICAL CONTRACTORS LP	 	 
	 

	 	By:	 	Houston-Stafford Management LLC, its general
partner	 	 
	 

	 	 	 		 	 
	 
	 	 	 	 	 	 
	 

	 	Name:	 	/s/ Curt L. Warnock 	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Curt L. Warnock	 	 
	 

	 	 	 	Vice President	 	 






 









 






	 	 	 	 	 	 	 
	 	 	IES AUSTIN HOLDING LP	 	 
	 

	 	By:
	 	IES Austin Management LLC, its general partner	 	 
	 
	 	 	 	 	 	 
	 

	 	Name:	 	/s/ Curt L. Warnock 	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Curt L. Warnock	 	 
	 

	 	 	 	Vice President	 	 
	 
	 	 	 	 	 	 
	 	 	IES COLLEGE STATION HOLDINGS, LP	 	 
	 

	 	By:	 	IES College Station Management LLC, its general
partner	 	 
	 

	 	 	 		 	 
	 

	 	Name:	 	/s/ Curt L. Warnock 	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Curt L. Warnock	 	 
	 

	 	 	 	Vice President	 	 
	 
	 	 	 	 	 	 
	 	 	IES FEDERAL CONTRACT GROUP, L.P.	 	 
	 

	 	By:
	 	IES Contractors Management LLC	 	 
	 
	 	 	 	 	 	 
	 

	 	Name:	 	/s/ Curt L. Warnock 	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Curt L. Warnock	 	 
	 

	 	 	 	Vice President	 	 
	 
	 	 	 	 	 	 
	 	 	IES MANAGEMENT ROO, LP	 	 
	 

	 	By:	 	Neal Electric Management LLC, its general
partner	 	 
	 

	 	 	 		 	 
	 

	 	Name:	 	/s/ Curt L. Warnock 	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Curt L. Warnock	 	 
	 

	 	 	 	Vice President	 	 
	 
	 	 	 	 	 	 
	 	 	IES MANAGEMENT, LP	 	 
	 

	 	By:
	 	IES Residential Group, Inc., its general partner	 	 
	 
	 	 	 	 	 	 
	 

	 	Name:	 	/s/ Curt L. Warnock 	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Curt L. Warnock	 	 
	 

	 	 	 	Vice President	 	 
	 
	 	 	 	 	 	 
	 	 	IES PROPERTIES, LP	 	 
	 

	 	By:	 	IES Properties Management, Inc., its general
partner	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	Name:	 	/s/ Curt L. Warnock 	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Curt L. Warnock	 	 
	 

	 	 	 	Vice President	 	 






 









 






	 	 	 	 	 	 	 
	 	 	J.W. GRAY ELECTRICAL CONTRACTORS LP	 	 
	 

	 	By:
	 	J.W. Gray Management LLC, its general partner	 	 
	 
	 	 	 	 	 	 
	 

	 	Name:	 	 /s/ Curt L. Warnock	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Curt L. Warnock	 	 
	 

	 	 	 	Vice President	 	 
	 
	 	 	MILLS ELECTRIC LP	 	 
	 

	 	By:
	 	Mills Management LLC	 	 
	 
	 	 	 	 	 	 
	 

	 	Name:	 	 /s/ Curt L. Warnock	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Curt L. Warnock	 	 
	 

	 	 	 	Vice President	 	 
	 
	 	 	 	 	 	 
	 	 	NEAL ELECTRIC LP	 	 
	 

	 	By:
	 	BW/BEC, Inc., its general partner	 	 
	 
	 	 	 	 	 	 
	 

	 	Name:	 	 /s/ Curt L. Warnock	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Curt L. Warnock	 	 
	 

	 	 	 	Vice President	 	 
	 
	 	 	 	 	 	 
	 	 	POLLOCK SUMMIT ELECTRIC LP	 	 
	 

	 	By:	 	Pollock Electric, Inc. and Summit Electric of
Texas, Inc., its general partners	 	 
	 

	 	 	 		 	 
	 
	 	 	 	 	 	 
	 

	 	Name:	 	 /s/ Curt L. Warnock	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Curt L. Warnock	 	 
	 

	 	 	 	Vice President	 	 
	 
	 	 	 	 	 	 
	 	 	RAINES ELECTRIC LP	 	 
	 

	 	By:
	 	Raines Management LLC, its general partner	 	 
	 
	 	 	 	 	 	 
	 

	 	Name:	 	 /s/ Curt L. Warnock	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Curt L. Warnock	 	 
	 

	 	 	 	Vice President	 	 
	 
	 	 	 	 	 	 
	 	 	TESLA POWER AND AUTOMATION, L.P.	 	 
	 

	 	By:
	 	Telsa Power GP, Inc., its general partner	 	 
	 
	 	 	 	 	 	 
	 

	 	Name:	 	 /s/ Curt L. Warnock	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Curt L. Warnock	 	 
	 

	 	 	 	Vice President	 	 






 









 






	 	 	 	 	 	 	 
	 	 	TESLA POWER PROPERTIES, L.P.	 	 
	 

	 	By:
	 	Telsa Power GP, Inc., its general partner	 	 
	 
	 	 	 	 	 	 
	 

	 	Name:	 	 /s/ Curt L. Warnock	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Curt L. Warnock	 	 
	 

	 	 	 	Vice President	 	 






 









 






	 	 	 
	 

	 	BEXAR ELECTRIC II LLC
	 

	 	BW/BEC II LLC
	 

	 	BW/BEC, L.L.C.
	 

	 	HOUSTON-STAFFORD HOLDINGS II LLC
	 

	 	HOUSTON-STAFFORD HOLDINGS LLC
	 

	 	IES AUSTIN HOLDINGS II LLC
	 

	 	IES AUSTIN HOLDINGS LLC
	 

	 	IES COLLEGE STATION HOLDINGS II LLC
	 

	 	IES COLLEGE STATION HOLDINGS LLC
	 

	 	IES CONTRACTORS HOLDINGS LLC
	 

	 	IES HOLDINGS II LLC
	 

	 	IES HOLDINGS LLC
	 

	 	IES PROPERTIES HOLDINGS II LLC
	 

	 	J.W. GRAY HOLDINGS II LLC
	 

	 	J.W. GRAY HOLDINGS LLC
	 

	 	MILLS ELECTRIC HOLDINGS II LLC
	 

	 	MILLS ELECTRICAL HOLDINGS LLC
	 

	 	POLLOCK SUMMIT HOLDINGS II LLC
	 

	 	RAINES HOLDINGS II LLC
	 

	 	RAINES HOLDINGS LLC
	 

	 	TESLA POWER (NEVADA) II LLC






	 	 	 	 	 	 	 
	 

	 	By:	 	 /s/ Victor Duva	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Victor Duva, Manager	 	 






 









 






	 	 	 	 	 	 	 
	 	 	IES PROPERTIES HOLDINGS, INC.	 	 
	 	 	POLLOCK SUMMIT HOLDINGS INC.	 	 
	 	 	TESLA POWER (NEVADA), INC.	 	 
	 
	 

	 	By:	 	/s/ Victor Duva 	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Victor Duva, President	 	 






 









 






Annex I




Borrowers




	 	 	 	 	 
	Aladdin-Ward Electric & Air, Inc.

	 	Florida
	 	 
	Amber Electric, Inc.

	 	Florida	 	 
	ARC Electric, Incorporated

	 	Delaware	 	 
	Bachofner Electric, Inc.

	 	Delaware	 	 
	Bexar Electric Company, Ltd.

	 	Texas	 	 
	Bryant Electric Company, Inc.

	 	North Carolina	 	 
	Charles P. Bagby Co., Inc

	 	Alabama	 	 
	Collier Electric Company, Inc.

	 	Florida	 	 
	Commercial Electrical Contractors, Inc.

	 	Delaware	 	 
	Cross State Electric, Inc.

	 	California	 	 
	Cypress Electrical Contractors, Inc.

	 	Delaware	 	 
	Daniel Electrical Contractors, Inc.

	 	Florida	 	 
	Daniel Electrical of Treasure Coast, Inc.

	 	Florida	 	 
	Daniel Integrated Technologies, Inc.

	 	Florida	 	 
	Davis Electrical Constructors, Inc.

	 	South Carolina	 	 
	Electro-Tech, Inc.

	 	Nevada	 	 
	Federal Communications Group, Inc.

	 	Delaware	 	 
	Hatfield Reynolds Electric Company

	 	Arizona	 	 
	Haymaker Electric, Ltd.

	 	Alabama	 	 
	Holland Electrical Systems, Inc

	 	Delaware	 	 
	Houston-Stafford Electrical Contractors LP

	 	Texas	 	 
	IES Contractors, Inc

	 	Delaware	 	 
	IES Federal Contract Group, LP

	 	Texas	 	 
	IES Management LP

	 	Texas	 	 
	IES Management ROO, LP

	 	Texas	 	 
	IES Properties LP

	 	Texas	 	 
	IES Ventures, Inc.

	 	Delaware	 	 
	Integrated Electrical Finance, Inc.

	 	Delaware	 	 
	Integrated Electrical Services, Inc.

	 	Delaware	 	 
	J.W. Gray Electric Co., Inc.

	 	Delaware	 	 
	J.W. Gray Electrical Contractors LP

	 	Texas	 	 
	Kayton Electric, Inc.

	 	Nebraska	 	 
	Key Electrical Supply, Inc.

	 	Texas	 	 
	Mark Henderson, Incorporated

	 	Delaware	 	 
	Menninga Electric, Inc.

	 	Delaware	 	 
	Mid-States Electric Company, Inc.

	 	Delaware	 	 
	Mills Electric LP

	 	Texas	 	 
	Mitchell Electric Company, Inc.

	 	Arizona	 	 
	M-S Systems, Inc.

	 	Tennessee	 	 
	Murray Electrical Contractors, Inc.

	 	Delaware	 	 
	Neal Electric LP

	 	Texas	 	 
	New Technology Electrical Contractors, Inc.

	 	Delaware	 	 
	Newcomb Electric Company, Inc.

	 	Delaware	 	 






 









 






	 	 	 	 	 
	Pan American Electric, Inc.

	 	Tennessee	 	 
	Paulin Electric Company, Inc.

	 	Delaware	 	 
	Pollock Summit Electric LP

	 	Texas	 	 
	PrimeNet, Inc.

	 	Delaware	 	 
	Primo Electric Company

	 	Delaware	 	 
	Raines Electric LP

	 	Texas	 	 
	Riviera Electric, LLC

	 	Delaware	 	 
	Rockwell Electric, Inc.

	 	Delaware	 	 
	Rodgers Electric Company, Inc.

	 	Washington	 	 
	Ron’s Electric, Inc.

	 	Delaware	 	 
	SEI Electrical Contractor, Inc.

	 	Florida	 	 
	Spectrol, Inc.

	 	Delaware	 	 
	Tesla Power & Automation, L.P.

	 	Texas	 	 
	Tesla Power Properties, L.P.

	 	Texas	 	 
	Thomas Popp & Company

	 	Ohio	 	 
	Valentine Electrical, Inc.

	 	Delaware	 	 






 









 






Annex II




Guarantors




	 	 	 	 	 
	Bear Acquisition Corporation

	 	Delaware
	 	 
	Bexar Electric II LLC

	 	Arizona	 	 
	BW Consolidated, Inc.

	 	Nevada	 	 
	BW/BEC II LLC

	 	Arizona	 	 
	BW/BEC, Inc.

	 	Delaware	 	 
	BW/BEC, LLC

	 	Nevada	 	 
	General Partners, Inc.

	 	Alabama	 	 
	Houston-Stafford Electric Holdings III, Inc.

	 	Delaware	 	 
	Houston-Stafford Holdings II LLC

	 	Delaware	 	 
	Houston-Stafford Holdings LLC

	 	Arizona	 	 
	Houston-Stafford Management LLC

	 	Arizona	 	 
	ICS Holdings LLC

	 	Arizona	 	 
	IES Charleston, Inc.

	 	South Carolina	 	 
	IES Communications, Inc.

	 	Delaware	 	 
	IES Contractors Holdings LLC

	 	Arizona	 	 
	IES Contractors Management LLC

	 	Arizona	 	 
	IES ENC Management, Inc.

	 	Delaware	 	 
	IES ENC, Inc.

	 	Delaware	 	 
	IES Holdings II LLC

	 	Delaware	 	 
	IES Holdings LLC

	 	Arizona	 	 
	IES Operations Group, Inc.

	 	Delaware	 	 
	IES Properties Holding, Inc.

	 	Delaware	 	 
	IES Properties Holdings II LLC

	 	Arizona	 	 
	IES Properties Management, Inc.

	 	Delaware	 	 
	IES Properties, Inc

	 	Delaware	 	 
	IES Rapid City, Inc.

	 	South Dakota	 	 
	IES Reinsurance, Ltd.

	 	Bermuda	 	 
	IES Residential Group, Inc.

	 	Delaware	 	 
	IES Specialty Lighting, Inc.

	 	Delaware	 	 
	Intelligent Buildings Solutions, Inc.

	 	Delaware	 	 
	J.W. Gray Holdings II LLC

	 	Delaware	 	 
	J.W. Gray Holdings LLC

	 	Arizona	 	 
	J.W. Gray Management LLC

	 	Arizona	 	 
	Linemen, Inc.

	 	Delaware	 	 
	Mills Electric Contractors, Inc.

	 	Delaware	 	 
	Mills Electric Holdings II LLC

	 	Delaware	 	 
	Mills Electrical Holdings LLC

	 	Arizona	 	 
	Mills Management LLC

	 	Arizona	 	 
	Neal Electric Management LLC

	 	Arizona	 	 
	Pan American Electric Company, Inc.

	 	New Mexico	 	 
	Pollock Electric, Inc.

	 	Delaware	 	 
	Pollock Summit Holdings II LLC

	 	Delaware	 	 
	Pollock Summit Holdings, Inc.

	 	Arizona	 	 
	Raines Electric Co., Inc.

	 	Delaware	 	 
	Raines Holdings II LLC

	 	Delaware	 	 






 









 






	 	 	 	 	 
	Raines Holdings LLC

	 	Arizona	 	 
	Raines Management LLC

	 	Arizona	 	 
	Summit Electric of Texas, Inc.

	 	Delaware	 	 
	Tesla Power (Nevada) , Inc.

	 	Nevada	 	 
	Tesla Power (Nevada) II LLC

	 	Delaware	 	 
	Tesla Power GP, Inc.

	 	Delaware	 	 
	EMC Acquisition Corporation

	 	Delaware	 	 
	IES New Iberia, Inc.

	 	Delaware	 	 
	IES Albuquerque, Inc.

	 	New Mexico	 	 
	IES Austin Holding LP

	 	Texas	 	 
	IES Austin Holdings II LLC

	 	Delaware	 	 
	IES Austin Holdings LLC

	 	Arizona	 	 
	IES Austin Management LLC

	 	Arizona	 	 
	IES Austin, Inc.

	 	Delaware	 	 
	IES Charlotte, Inc.

	 	Delaware	 	 
	IES College Station Holdings II, LLC

	 	Delaware	 	 
	IES College Station Holdings LLC

	 	Arizona	 	 
	IES College Station Holdings LP

	 	Texas	 	 
	IES College Station Management LLC

	 	Arizona	 	 
	IES College Station, Inc.

	 	Delaware	 	 
	IES Decatur, Inc.

	 	Delaware	 	 
	IES East McKeesport, Inc.

	 	Delaware	 	 
	IES Meridian, Inc.

	 	Delaware	 	 
	IES Oklahoma City, Inc.

	 	Delaware	 	 
	IES Raleigh, Inc.

	 	Delaware	 	 
	IES Valdosta Inc

	 	Georgia	 	 
	IES Wilson, Inc.

	 	Delaware	 	 
	NBH Holding Co., Inc,

	 	Delaware	 	 
	RKT Electric, Inc.

	 	Delaware	 	 
	Wright Electrical Contracting, Inc.

	 	Delaware	 	 







 










 







EXHIBIT A



FORM OF REVOLVER NOTE




			
	U.S. $                    
	 	                    , 2006

Dallas, Texas






     FOR VALUE RECEIVED, each of the undersigned (being hereinafter referred to collectively herein
as “Borrowers,” and individually as a “Borrower”) hereby unconditionally, and
jointly and severally, promise to pay to the order of                                          (herein,
together with any subsequent holder hereof, called the “Holder”) the principal sum of
$                     or such lesser sum as may constitute Holder’s Pro Rata share of the outstanding
principal amount of all Revolver Loans pursuant to the terms of the Loan Agreement (as defined
below) on the date on which such outstanding principal amounts become due and payable pursuant to
Section 4.2 of the Loan Agreement, in strict accordance with the terms thereof. Borrowers likewise
unconditionally, and jointly and severally, promise to pay to Holder interest from and after the
date hereof on Holder’s Pro Rata share of the outstanding principal amount of Revolver Loans at
such interest rates, payable at such times, and computed in such manner as are specified in Section
2.1 of the Loan Agreement, in strict accordance with the terms thereof.



     This Revolver Note (“Note”) is issued pursuant to, and is one of the “Revolver Notes”
referred to in, the Loan and Security Agreement dated as of even date herewith (as the same may be
amended from time to time, the “Loan Agreement”), among Borrowers, Bank of America, N.A.,
as collateral and administrative agent (in such capacity, “Agent”) for itself and the
financial institutions from time to time parties thereto as lenders (“Lenders”), and such
Lenders, and Holder is and shall be entitled to all benefits thereof and of all Loan Documents
executed and delivered in connection therewith. All capitalized terms used herein, unless
otherwise defined herein, shall have the meanings ascribed to such terms in the Loan Agreement.



     The repayment of the principal balance of this Note is subject to the provisions of Section
4.2 of the Loan Agreement. The entire unpaid principal balance and all accrued interest on this
Note shall be due and payable immediately upon the termination of the Commitments as set forth in
Section 5.2 of the Loan Agreement.



     All payments of principal and interest shall be made in Dollars in immediately available funds
as specified in the Loan Agreement.



     Upon or after the occurrence of an Event of Default and for so long as such Event of Default
exists, the principal balance and all accrued interest of this Note may be declared (or shall
become) due and payable in the manner and with the effect provided in the Loan Agreement, and the
unpaid principal balance hereof shall bear interest at the Default Rate as and when provided in
Section 2.1.5 of the Loan Agreement. Borrowers jointly and severally agree to pay, and save Holder
harmless against, any liability for the payment of, all costs and expenses, including, but not
limited to, reasonable attorneys’ fees, if this Note is collected by or through an attorney-at-law.



     All principal amounts of Revolver Loans made by Holder to Borrowers pursuant to the Loan
Agreement, and all accrued and unpaid interest thereon, shall be deemed outstanding under this Note
and shall continue to be owing by Borrowers until paid in accordance with the terms of this Note
and the Loan Agreement.



 









 





     In no contingency or event whatsoever, whether by reason of advancement of the proceeds hereof
or otherwise, shall the amount paid or agreed to be paid to Holder for the use, forbearance or
detention of money advanced hereunder exceed the highest lawful rate permissible under any law
which a court of competent jurisdiction may deem applicable hereto; and, in the event of any such
payment inadvertently paid by Borrowers or inadvertently received by Holder, such excess sum shall
be, at Borrowers’ option, returned to Borrowers forthwith or credited as a payment of principal,
but shall not be applied to the payment of interest. It is the intent hereof that Borrowers not
pay or contract to pay, and that Holder not receive or contract to receive, directly or indirectly
in any manner whatsoever, interest in excess of that which may be paid by Borrowers under
Applicable Law.



     Time is of the essence of this Note. To the fullest extent permitted by Applicable Law, each
Borrower, for itself and its legal representatives, successors and assigns, expressly waives
presentment, demand, protest, notice of dishonor, notice of non-payment, notice of maturity, notice
of protest, presentment for the purpose of accelerating maturity, diligence in collection, and the
benefit of any exemption or insolvency laws.



     Wherever possible each provision of this Note shall be interpreted in such a manner as to be
effective and valid under Applicable Law, but if any provision of this Note shall be prohibited or
invalid under Applicable Law, such provision shall be ineffective to the extent of such prohibition
or invalidity without invalidating the remainder of such provision or remaining provisions of this
Note. No delay or failure on the part of Holder in the exercise of any right or remedy hereunder
shall operate as a waiver thereof, nor as an acquiescence in any default, nor shall any single or
partial exercise by Holder of any right or remedy preclude any other right or remedy. Each
Borrower agrees that, without releasing or impairing any Borrower’s liability hereunder, Holder or
Agent may at any time release, surrender, substitute or exchange any Collateral securing this Note
and may at any time release any party primarily or secondarily liable for the indebtedness
evidenced by this Note.



     The rights of Holder and obligations of Borrowers hereunder shall be construed in accordance
with and governed by the laws (without giving effect to the conflict of law principles thereof) of
the State of Texas.



[REMAINDER OF PAGE BLANK; SIGNATURES IMMEDIATELY FOLLOW]





 









 








	 	 	 	 	 	 	 
	 	 	BORROWERS:	 	 
	 
	 	 	 	 	 	 
	 	 	INTEGRATED ELECTRICAL SERVICES, INC.
	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	  Curt L. Warnock	 	 
	 

	 	 	 	  Senior Vice President	 	 







 









 








	 	 	 
	 

	 	ALADDIN-WARD ELECTRIC & AIR, INC.
	 

	 	AMBER ELECTRIC, INC.
	 

	 	ARC ELECTRIC, INCORPORATED
	 

	 	BACHOFNER ELECTRIC, INC.
	 

	 	BEAR ACQUISITION CORPORATION
	 

	 	BRYANT ELECTRIC COMPANY, INC.
	 

	 	BW/BEC, INC.
	 

	 	BW CONSOLIDATED, INC.
	 

	 	CHARLES P. BAGBY CO., INC.
	 

	 	COLLIER ELECTRIC COMPANY, INC.
	 

	 	COMMERCIAL
ELECTRICAL CONTRACTORS, INC.

	 

	 	CROSS STATE ELECTRIC, INC.
	 

	 	CYPRESS ELECTRICAL CONTRACTORS,INC.
	 

	 	DANIEL ELECTRICAL CONTRACTORS, INC.
	 

	 	DANIEL ELECTRICAL OF TREASURE
COAST, INC.

	 

	 	DANIEL INTEGRATED TECHNOLOGIES, INC.
	 

	 	DAVIS ELECTRICAL CONSTRUCTORS, INC.
	 

	 	ELECTRO-TECH, INC.
	 

	 	EMC ACQUISITION CORPORATION
	 

	 	FEDERAL COMMUNICATIONS GROUP, INC.
	 

	 	GENERAL PARTNER, INC.
	 

	 	HATFIELD REYNOLDS ELECTRIC COMPANY
	 

	 	HOLLAND ELECTRICAL SYSTEMS, INC.
	 

	 	HOUSTON-STAFFORD ELECTRIC HOLDINGS
III, INC.

	 

	 	HOUSTON-STAFFORD MANAGEMENT LLC
	 

	 	ICS HOLDINGS LLC
	 

	 	IES ALBUQUERQUE, INC.
	 

	 	IES AUSTIN, INC.
	 

	 	IES AUSTIN MANAGEMENT LLC
	 

	 	IES CHARLESTON, INC.
	 

	 	IES CHARLOTTE, INC.
	 

	 	IES COLLEGE STATION, INC.
	 

	 	IES COLLEGE STATION MANAGEMENT LLC
	 

	 	IES COMMUNICATIONS, INC.
	 

	 	IES CONTRACTORS MANAGEMENT LLC
	 

	 	IES DECATUR, INC.
	 

	 	IES EAST MCKEESPORT, INC.
	 

	 	IES ENC, INC.
	 

	 	IES ENC MANAGEMENT, INC.
	 

	 	IES MERIDIAN, INC.
	 

	 	IES NEW IBERIA, INC.
	 

	 	IES OKLAHOMA CITY, INC.






 









 






	 	 	 
	 

	 	IES OPERATIONS GROUP, INC.
	 

	 	IES PROPERTIES, INC.
	 

	 	IES PROPERTIES MANAGEMENT, INC.
	 

	 	IES RALEIGH, INC.
	 

	 	IES RAPID CITY, INC.
	 

	 	IES RESIDENTIAL GROUP, INC.
	 

	 	IES SPECIALTY LIGHTING, INC.
	 

	 	IES VALDOSTA, INC.
	 

	 	IES VENTURES INC.
	 

	 	IES WILSON, INC.
	 

	 	INTEGRATED ELECTRICAL FINANCE, INC.
	 

	 	INTELLIGENT BUILDING SOLUTIONS, INC.
	 

	 	J.W. GRAY ELECTRIC CO., INC.
	 

	 	J.W. GRAY MANAGEMENT LLC
	 

	 	KAYTON ELECTRIC, INC.
	 

	 	KEY ELECTRICAL SUPPLY, INC.
	 

	 	LINEMEN, INC.
	 

	 	MARK HENDERSON, INCORPORATED
	 

	 	MENNINGA ELECTRIC, INC.
	 

	 	MID-STATES ELECTRIC COMPANY, INC.
	 

	 	MILLS ELECTRICAL CONTRACTORS, INC.
	 

	 	MILLS MANAGEMENT LLC
	 

	 	MITCHELL ELECTRIC COMPANY, INC.
	 

	 	M-S SYSTEMS, INC.
	 

	 	MURRAY ELECTRICAL CONTRACTORS, INC.
	 

	 	NBH HOLDING CO., INC.
	 

	 	NEAL ELECTRIC MANAGEMENT LLC
	 

	 	NEW TECHNOLOGY ELECTRICAL
CONTRACTORS, INC.

	 

	 	NEWCOMB ELECTRIC COMPANY, INC.
	 

	 	PAN AMERICAN ELECTRIC COMPANY, INC.
	 

	 	PAN AMERICAN ELECTRIC, INC.
	 

	 	PAULIN ELECTRIC COMPANY, INC.
	 

	 	POLLOCK ELECTRIC, INC.
	 

	 	PRIMENET, INC.
	 

	 	PRIMO ELECTRIC COMPANY
	 

	 	RAINES ELECTRIC CO., INC.
	 

	 	RAINES MANAGEMENT LLC
	 

	 	RIVIERA ELECTRIC, LLC
	 

	 	RKT ELECTRIC, INC.
	 

	 	ROCKWELL ELECTRIC, INC.
	 

	 	RODGERS ELECTRIC COMPANY, INC.
	 

	 	RON’S ELECTRIC, INC.
	 

	 	SEI ELECTRICAL CONTRACTOR, INC.
	 

	 	SPECTROL, INC.
	 

	 	SUMMIT ELECTRIC OF TEXAS, INC.






 









 






	 	 	 	 	 
	 	 	TESLA POWER GP, INC.
	 	 	THOMAS POPP & COMPANY
	 	 	VALENTINE ELECTRICAL, INC.
	 	 	WRIGHT ELECTRICAL CONTRACTING, INC.
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	 	 	Curt L. Warnock
	 

	 	 	 	Vice President
	 
	 	 	 	 
	 	 	IES CONTRACTORS, INC.
	 
	 	 	 	 
	 

	 	Name:	 	 
	 

	 	 	 	 
	 

	 	 	 	Curt L. Warnock
	 

	 	 	 	Secretary
	 
	 	 	 	 
	 	 	IES REINSURANCE, LTD.
	 
	 	 	 	 
	 

	 	Name:	 	 
	 

	 	 	 	 
	 

	 	 	 	Curt L. Warnock
	 

	 	 	 	President
	 
	 	 	 	 
	 	 	BEXAR ELECTRIC COMPANY, LTD.
	 

	 	By:
	 	BW/BEC, Inc., its general partner
	 
	 	 	 	 
	 

	 	Name:	 	 
	 

	 	 	 	 
	 

	 	 	 	Curt L. Warnock
	 

	 	 	 	Vice President
	 
	 	 	 	 
	 	 	HAYMAKER ELECTRIC, LTD
	 

	 	By:
	 	General Partner, Inc., its general partner
	 
	 	 	 	 
	 

	 	Name:	 	 
	 

	 	 	 	 
	 

	 	 	 	Curt L. Warnock
	 

	 	 	 	Vice President
	 
	 	 	 	 
	 	 	HOUSTON-STAFFORD ELECTRICAL CONTRACTORS LP
	 

	 	By:
	 	Houston-Stafford Management LLC, its general partner
	 
	 	 	 	 
	 

	 	Name:	 	 
	 

	 	 	 	 
	 

	 	 	 	Curt L. Warnock
	 

	 	 	 	Vice President






 









 






	 	 	 	 	 
	 	 	IES AUSTIN HOLDING LP
	 

	 	By:
	 	IES Austin Management LLC, its general partner
	 
	 	 	 	 
	 

	 	Name:	 	 
	 

	 	 	 	 
	 

	 	 	 	Curt L. Warnock
	 

	 	 	 	Vice President
	 
	 	 	 	 
	 	 	IES COLLEGE STATION HOLDINGS, LP
	 

	 	By:
	 	IES College Station Management LLC, its general partner
	 
	 	 	 	 
	 

	 	Name:	 	 
	 

	 	 	 	 
	 

	 	 	 	Curt L. Warnock
	 

	 	 	 	Vice President
	 
	 	 	 	 
	 	 	IES FEDERAL CONTRACT GROUP, L.P.
	 

	 	By:
	 	IES Contractors Management LLC
	 
	 	 	 	 
	 

	 	Name:	 	 
	 

	 	 	 	 
	 

	 	 	 	Curt L. Warnock
	 

	 	 	 	Vice President
	 
	 	 	 	 
	 	 	IES MANAGEMENT ROO, LP
	 

	 	By:
	 	Neal Electric Management LLC, its general partner
	 
	 	 	 	 
	 

	 	Name:	 	 
	 

	 	 	 	 
	 

	 	 	 	Curt L. Warnock
	 

	 	 	 	Vice President
	 
	 	 	 	 
	 	 	IES MANAGEMENT, LP
	 

	 	By:
	 	IES Residential Group, Inc., its general partner
	 
	 	 	 	 
	 

	 	Name:	 	 
	 

	 	 	 	 
	 

	 	 	 	Curt L. Warnock
	 

	 	 	 	Vice President
	 
	 	 	 	 
	 	 	IES PROPERTIES, LP
	 

	 	By:
	 	IES Properties Management, Inc., its general partner
	 
	 	 	 	 
	 

	 	Name:	 	 
	 

	 	 	 	 
	 

	 	 	 	Curt L. Warnock
	 

	 	 	 	Vice President






 









 






	 	 	 	 	 
	 	 	J.W. GRAY ELECTRICAL CONTRACTORS LP
	 

	 	By:
	 	J.W. Gray Management LLC, its general partner
	 
	 	 	 	 
	 

	 	Name:	 	 
	 

	 	 	 	 
	 

	 	 	 	Curt L. Warnock
	 

	 	 	 	Vice President
	 
	 	 	 	 
	 	 	MILLS ELECTRIC LP
	 

	 	By:
	 	Mills Management LLC
	 
	 	 	 	 
	 

	 	Name:	 	 
	 

	 	 	 	 
	 

	 	 	 	Curt L. Warnock
	 

	 	 	 	Vice President
	 
	 	 	 	 
	 	 	NEAL ELECTRIC LP
	 

	 	By:
	 	BW/BEC, Inc., its general partner
	 
	 	 	 	 
	 

	 	Name:	 	 
	 

	 	 	 	 
	 

	 	 	 	Curt L. Warnock
	 

	 	 	 	Vice President
	 
	 	 	 	 
	 	 	POLLOCK SUMMIT ELECTRIC LP
	 

	 	By:
	 	Pollock Electric, Inc. and Summit Electric of Texas, Inc., its general partners
	 
	 	 	 	 
	 

	 	Name:	 	 
	 

	 	 	 	 
	 

	 	 	 	Curt L. Warnock
	 

	 	 	 	Vice President
	 
	 	 	 	 
	 	 	RAINES ELECTRIC LP
	 

	 	By:
	 	Raines Management LLC, its general partner
	 
	 	 	 	 
	 

	 	Name:	 	 
	 

	 	 	 	 
	 

	 	 	 	Curt L. Warnock
	 

	 	 	 	Vice President
	 
	 	 	 	 
	 	 	TESLA POWER AND AUTOMATION, L.P.
	 

	 	By:
	 	Telsa Power GP, Inc., its general partner
	 
	 	 	 	 
	 

	 	Name:	 	 
	 

	 	 	 	 
	 

	 	 	 	Curt L. Warnock
	 

	 	 	 	Vice President






 









 






	 	 	 	 	 
	 	 	TESLA POWER PROPERTIES, L.P.
	 

	 	By:
	 	Telsa Power GP, Inc., its general partner
	 
	 	 	 	 
	 

	 	Name:	 	 
	 

	 	 	 	 
	 

	 	 	 	Curt L. Warnock
	 

	 	 	 	Vice President






 









 






	 	 	 	 	 
	 	 	BEXAR ELECTRIC II LLC
	 	 	BW/BEC II LLC
	 	 	BW/BEC, L.L.C.
	 	 	HOUSTON-STAFFORD HOLDINGS II LLC
	 	 	HOUSTON-STAFFORD HOLDINGS LLC
	 	 	IES AUSTIN HOLDINGS II LLC
	 	 	IES AUSTIN HOLDINGS LLC
	 	 	IES COLLEGE STATION HOLDINGS II LLC
	 	 	IES COLLEGE STATION HOLDINGS LLC
	 	 	IES CONTRACTORS HOLDINGS LLC
	 	 	IES HOLDINGS II LLC
	 	 	IES HOLDINGS LLC
	 	 	IES PROPERTIES HOLDINGS II LLC
	 	 	J.W. GRAY HOLDINGS II LLC
	 	 	J.W. GRAY HOLDINGS LLC
	 	 	MILLS ELECTRIC HOLDINGS II LLC
	 	 	MILLS ELECTRICAL HOLDINGS LLC
	 	 	POLLOCK SUMMIT HOLDINGS II LLC
	 	 	RAINES HOLDINGS II LLC
	 	 	RAINES HOLDINGS LLC
	 	 	TESLA POWER (NEVADA) II LLC
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	 	 	Victor Duva, Manager






 









 






	 	 	 	 	 
	 	 	IES PROPERTIES HOLDINGS, INC.
	 	 	POLLOCK SUMMIT HOLDINGS INC.
	 	 	TESLA POWER (NEVADA), INC.
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	 	 	Victor Duva, President







 









 








EXHIBIT B



Form of Borrowing Base Certificate




     The undersigned, being a Senior Officer (as defined in the Loan Agreement described
below) of INTEGRATED ELECTRICAL SERVICES, INC., a Delaware corporation (individually, and in its
capacity as the representative of the other Credit Parties (as defined in the Loan Agreement),
“Parent”), hereby gives this Borrowing Base Certificate to BANK OF AMERICA, N.A., as agent
pursuant to the below described Loan Agreement (in such capacity, “Agent”), and the Lenders
party to such Loan Agreement, pursuant to the terms and conditions of a Loan and Security Agreement
dated as of May 12, 2006 (the “Loan Agreement”) by and among the Lenders from time to time
party thereto, Agent, Parent, the other Borrowers and the other Credit Parties party thereto. All
capitalized terms not defined herein have the meanings given them in the Loan Agreement. The
undersigned hereby certifies that:



     BORROWING BASE AND COMPLIANCE



     Pursuant to the Loan Documents, the Credit Parties granted to Agent a lien on the
Collateral, including (except to the extent such Property constitutes Excluded Collateral) all of
their Accounts, Cash Collateral and Inventory. The amounts, calculations and representations set
forth in this Borrowing Base Certificate, in Schedule 1 attached hereto and in any other
attachments hereto are true and correct in all respects and were determined in accordance with the
Loan Agreement and GAAP. All of the Accounts, Cash Collateral and Inventory referred to herein
(other than those entered as ineligible) are Eligible Accounts, Eligible Cash Collateral and
Eligible Inventory, respectively.




	 	B.	 	General Certifications The undersigned further certifies to Agent and Lenders
that:






	 	(a)	 	Each of the representations and warranties made by the Credit Parties in or
pursuant to the Loan Documents are accurate in all material respects (except
for those representations and warranties made as of a specific date), and
Credit Parties are in compliance with all covenants, agreements and obligations
under the Loan Documents;
	 
	 	(b)	 	No Default or Event of Default has occurred or is continuing;
and
	 
	 	(c)	 	The certifications, representations, calculations and
statements herein will be true and correct as of the date hereof.





 









 





     IN WITNESS WHEREOF, the undersigned has caused this certificate to be executed as of the day
first written above.



	 	 	 	 	 	 	 
	 

	 	INTEGRATED ELECTRICAL SERVICES, INC.
	 	 
	 
	 	 	 	 	 	 
	 

	 	By: 	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Its:	 	 	 	 
	 

	 	 	 	 	 	 






2









 






SCHEDULE 1



TO BE DETERMINED















 







EXHIBIT C




Form of Notice of Conversion/Continuation




Date                                         ,                    




Bank of America, N.A., as Agent

901 Main Street

22nd Floor

Mail Code: TX1-492-22-13

Dallas, Texas 75202

Attention: Loan Administration Officer




	 	 	 	 	 
	 

	 	 Re:
	 	Loan and Security Agreement dated May 12, 2006, by and among Integrated
Electrical Services, Inc. and the other Borrowers party thereto, the Guarantors party
thereto, Bank of America, N.A., as collateral and administrative agent for certain
Lenders from time to time parties thereto, and such Lenders (as at any time amended,
the “Loan Agreement”)






Gentlemen:




     This Notice of Conversion/Continuation is delivered to you pursuant to Section 2.1.2(ii) of
the Loan Agreement. Unless otherwise defined herein, capitalized terms used herein shall have the
meanings attributable thereto in the Loan Agreement. Borrowers hereby give notice of its request
as follows:



Check as applicable:




     : A conversion of Loans from one Type to another, as follows:




	 	(i)	 	The requested date of the proposed conversion is
                                        , 20                     (the “Conversion Date”);
	 
	 	(ii)	 	The Type of Loans to be converted pursuant hereto are presently
                                         [select either LIBOR Loans or Base Rate Loans] in the
principal amount of $                                         outstanding as of the Conversion Date;
	 
	 	(iii)	 	The portion of the aforesaid Loans to be converted on the
Conversion Date is $                                         (the “Conversion Amount”);
	 
	 	(iv)	 	The Conversion Amount is to be converted into a                                         
[select either a LIBOR Loan or a Base Rate Loan] (the “Converted Loan”) on the
Conversion Date.
	 
	 	(v)	 	[In the event a Borrower selects a LIBOR Loan:] Borrowers
hereby request that the Interest Period for such Converted Loan be for a
duration of                      [insert length of Interest Period].





     : A continuation of LIBOR Loans for new Interest Period, as follows:




	 	(i)	 	The requested date of the proposed continuation is
                                        , 20                     (the “Continuation Date”);




 









 







	 	(ii)	 	The aggregate amount of the LIBOR Loans subject to such
continuation is $                                        ;
	 
	 	(iii)	 	The duration of the selected Interest Period for the LIBOR
Loans which are the subject of such continuation is:                                          [select
duration of applicable Interest Period];





     Each Borrower hereby ratifies and reaffirms all of its liabilities and obligations under the
Loan Documents and, in connection with each continuation of LIBOR Loan and each conversion of a
Base Rate Loan into a LIBOR Loan, certifies that no Default or Event of Default exists on the date
hereof.



     Borrowers have caused this Notice of Conversion/Continuation to be executed and delivered by
their duly authorized representative, this
                    
day of                                         , 20  
                   .



	 	 	 	 	 
	 	 	Integrated Electrical Services, Inc.
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 
	 

	 	  Title:	 
	 

	 	 	 	 





 









 






EXHIBIT D




Form of Notice of Borrowing




Date                                         , 200                    




Bank of America, N.A., as Agent

901 Main Street

22nd Floor

Mail Code: TX1-492-22-13

Dallas, Texas 75202

Attention: Loan Administration Officer





			
	           Re:	 	Loan and Security Agreement dated May 12, 2006, by and among Integrated
Electrical Services, Inc. and the other Borrowers party thereto, the Guarantors party
thereto, Bank of America, N.A., as collateral and administrative agent for certain
Lenders from time to time parties thereto, and such Lenders (as at any time amended,
the “Loan Agreement”)





Gentlemen:



          This Notice of Borrowing is delivered to you pursuant to Section 3.1.1 of the Loan Agreement.
Unless otherwise defined herein, capitalized terms used herein shall have the meanings attributable
thereto in the Loan Agreement. Borrowers hereby request a Revolver Loan in the aggregate principal
amount of $                                        , to be made on                            
             ,
                    , and to consist of:



	 	 	 	 	 	 	 	 	 
	 	 	Check as applicable:	 	: Base Rate Loans in the aggregate principal amount of
$                                        
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	: LIBOR Loans in the aggregate principal amount of $                                        , with
Interest Periods as follows:
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	(i)
	 	As to
$                                        , an Interest Period of                      month(s);
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	(ii)
	 	As to
$                                        , an Interest Period of                      months;
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	(iii)
	 	As to
$                                        , an Interest Period of                      months.






          Each Borrower hereby ratifies and reaffirms all of its liabilities and obligations under the
Loan Documents and hereby certifies that no Default or Event of Default exists on the date hereof.



          Borrowers have caused this Notice of Borrowing to be executed and delivered by their duly
authorized representative, this                      day of                                         , 20                    .



	 	 	 	 	 
	 	 	Integrated Electrical Services, Inc.
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	Title:	 	 
	 

	 	 	 	 





 









 






EXHIBIT E




COMPLIANCE CERTIFICATE




[Letterhead of Integrated Electrical Services, Inc.]




                                        , 20                    




Bank of America, N.A., as Agent

901 Main Street

22nd Floor

Mail Code: TX1-492-22-13

Dallas, Texas 75202

Attention: Loan Administration Officer




     The undersigned, the chief financial officer of Integrated Electrical Services, Inc., a
Delaware corporation (“Parent”), gives this certificate to Bank of America, N.A. (“Agent”) in
accordance with the requirements of Section 9.1.3 of that certain Loan and Security Agreement dated
May 12, 2006, among Parent and the other Borrowers party thereto, the Guarantors party thereto,
Agent and the Lenders referenced therein (“Loan Agreement”). Capitalized terms used in this
Certificate, unless otherwise defined herein, shall have the meanings ascribed to them in the Loan
Agreement.



          1. Based upon my review of the balance sheets and statements of income of Parent and its
Subsidiaries for the [Fiscal Year] [quarterly period] [calendar month] ending                                         ,
20                    , copies of which are attached hereto, I hereby certify that:





	[ 	(a)	 	Consolidated Fixed Charge Coverage Ratio is                      to                     ;
	 
	 	(b)	 	Consolidated Leverage Ratio is                      to                     ;
	 
	 	(c)	 	Cash Collateral in Cash Collateral Account is $                    ; and
	 
	 	(d)	 	Capital Expenditures during the period and for the
Fiscal Year to date total $                     for Borrowers.]





          2. No Default exists on the date hereof, other than:                                                                                                                         
[if none, so state]; and




          3. No Event of Default exists on the date hereof, other than                                                                                                                         
[if none, so state].




          4. As of the date hereof, each Borrower is current in its payment of all accrued rent and
other charges to Persons who own or lease any premises where any of the Collateral is located, and
there are no pending disputes or claims regarding any Borrower’s failure to pay or delay in payment
of any such rent or other charges.




 









 








          5. Attached hereto is a schedule showing the calculations that support Borrowers’ compliance
[non-compliance] with the financial covenants, as shown above.




	 	 	 
	 

	 	Very truly yours,
	 
	 	 
	 
	 	 
	 

	 	 
	 

	 	Chief Financial Officer






 









 






EXHIBIT F




[RESERVED]





 









 








EXHIBIT G




FORM OF ASSIGNMENT AND ACCEPTANCE




Dated as of                                         , 20                    




     Reference is made to the Loan and Security Agreement dated May 12, 2006 (at any time amended,
the “Loan Agreement”), among Integrated Electrical Services, Inc. and the other Borrowers party
thereto, the Guarantors party thereto, Bank of America, N.A., as collateral and administrative
agent for certain Lenders from time to time parties thereto, and such Lenders. Capitalized terms
used herein and not otherwise defined shall have the meanings assigned to such terms in the Loan
Agreement.



                                                           
                (the
          “Assignor”)           and                                                       
       (the “Assignee”) agree as follows:



     1. Assignor hereby assigns to Assignee and Assignee hereby purchases and assumes from Assignor
(i) a principal amount of $                                         of the outstanding Revolver Loans held by Assignor and
$                                         of participations of Assignor in LC Outstandings (which amount[s], according to the
records of Agent, represent[s]                                         % of the total principal amount of outstanding Revolver Loans
and LC Outstandings) and (ii) a principal amount of $                                         of Assignor’s Commitment (which
amount includes Assignor’s outstanding Revolver Loans being assigned to Assignee pursuant to clause
(i) above and which, according to the records of Agent, represents (                    %) of the total Commitments
of Lenders under the Loan Agreement) (the “Assigned Interest”), together with an interest in the
Loan Documents corresponding to the Assigned Interest. This Agreement shall be effective from the
date (the “Assignment Effective Date”) on which Assignor receives both (x) the principal amount of
the Assigned Interest in the Loans on the Assignment Effective Date, if any, and (y) a copy of this
Agreement duly executed by Assignee. From and after the Assignment Effective Date, Assignee hereby
expressly assumes, and undertakes to perform, all of Assignor’s obligations in respect of
Assignor’s Commitments to the extent, and only to the extent, of Assignee’s Assigned Interest, and
all principal, interest, fees and other amounts which would otherwise be payable to or for
Assignor’s account in respect of the Assigned Interest shall be payable to or for Assignee’s
account, to the extent such amounts have accrued subsequent to the Assignment Effective Date.



     2. Assignor (i) represents that as of the date hereof, the aggregate of its Commitments under
the Loan Agreement (without giving effect to assignments thereof, which have not yet become
effective) is $                    , and the outstanding balance of its Loans and participations in LC
Outstandings (unreduced by any assignments thereof, which have not yet become effective) is
$                                        ; (ii) makes no representation or warranty and assumes no responsibility with respect to
any statements, warranties or representations made in or in connection with the Loan Agreement or
the execution, legality, validity, enforceability, genuineness, sufficiency or value of the Loan
Agreement or any other instrument or document furnished pursuant thereto, other than that Assignor
is the legal and beneficial owner of the interest being assigned by it hereunder and that such
interest is free and clear of any adverse claim; and (iii) makes no representation or warranty and
assumes no responsibility with respect to the financial condition of Borrowers, the performance or
observance by Borrowers of any of their obligations under the Loan Agreement or any of the Loan
Documents; and (iv) attaches the Notes held by it and requests that Agent exchange such Notes for
new Notes payable to Assignee and the Assignor in the principal amounts set forth on Schedule
A hereto.



 









 





     3. Assignee (i) represents and warrants that it is legally authorized to enter into this
Assignment and Acceptance; (ii) confirms that it has received a copy of the Loan Agreement,
together with copies of the most recent financial statements delivered pursuant to Section 9.1.3
thereof, and copies of such other Loan Documents and information as it has deemed appropriate to
make its own credit analysis and decision to enter into this Assignment and Acceptance; (iii)
agrees that it shall, independently and without reliance upon the Assignor and based on such
documents and information as it shall deem appropriate at the time, continue to make its own credit
decisions in taking or not taking action under the Loan Agreement; (iv) confirms that it is
eligible to become an Assignee; (v) appoints and authorizes Agent to take such action as agent on
its behalf and to exercise such powers under the Loan Agreement as are delegated to Agent by the
terms thereof, together with such powers as are incidental thereto; (vi) agrees that it will
strictly observe and perform all the obligations that are required to be performed by it as a
“Lender” under the terms of the Loan Agreement and the other Loan Documents; and (vii) agrees that
it will keep confidential all information with respect to Borrowers furnished to it by Borrowers or
the Assignor to the extent provided in the Loan Agreement.



     4. Assignor acknowledges and agrees that it will not sell or otherwise dispose of the Assigned
Interest or any portion thereof, or grant any participation therein, in a manner which, or take any
action in connection therewith which, would violate the terms of any of the Loan Documents.



     5. This Agreement and all rights and obligations shall be interpreted in accordance with and
governed by the laws of the State of Texas. If any provision hereof would be invalid under
Applicable Law, then such provision shall be deemed to be modified to the extent necessary to
render it valid while most nearly preserving its original intent; no provision hereof shall be
affected by another provision’s being held invalid.



     6. Each notice or other communication hereunder shall be in writing, shall be sent by
messenger, by telecopy or facsimile transmission or by first-class mail, shall be deemed given when
sent and shall be sent as follows:



	 	 	 	 	 	 	 
	 	 	(a)	 	If to Assignee, to the following address (or to such other
address as Assignee may designate from time to time):
	 
	 	 	 	 	 	 
	 

	 	 	 	 

	 	 
	 

	 	 	 	 

	 	 
	 

	 	 	 	 

	 	 
	 
	 	 	 	 	 	 
	 	 	(b)	 	If to Assignor, to the following address (or to such other
address as Assignor may designate from time to time):
	 
	 	 	 	 	 	 
	 

	 	 	 	 

	 	 
	 

	 	 	 	 

	 	 
	 

	 	 	 	 

	 	 
	 

	 	 	 	 

	 	 






     Payments hereunder shall be made by wire transfer of immediately available Dollars as follows:



     If to Assignee, to the following account (or to such other account as Assignee may designate
from time to time):



	 	 	 	 	 	 	 
	 

	 	 	 	 

	 	 
	 

	 	 	 	ABA No.	 	 
	 

	 	 	 	 
	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	 

	 	 






 









 






	 	 	 	 	 	 	 
	 

	 	 	 	Account No.	 	 
	 

	 	 	 	 
	 	 
	 

	 	 	 	Reference: 	 	 
	 

	 	 	 	 
	 	 






     If to Assignor, to the following account (or to such other account as Assignor may designate
from time to time):



	 	 	 	 	 	 	 
	 

	 	 	 	 

	 	 
	 

	 	 	 	 

	 	 
	 

	 	 	 	 

	 	 
	 

	 	 	 	ABA No.	 	 
	 

	 	 	 	 
	 	 
	 

	 	 	 	For Account of:	 	 
	 

	 	 	 	 
	 	 
	 

	 	 	 	Reference:	 	 
	 

	 	 	 	 
	 	 






     IN WITNESS WHEREOF, the parties hereto have caused this Assignment and Acceptance to be
executed and delivered by their respective duly authorized officers, as of the date first above
written.



	 	 	 	 	 
	 
	 	 	 	 
	 	 	 
	 	 	(“Assignor”)
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 





	 	 	 	 	 
	 

	 	Title:	 	 
	 

	 	 	 	 





	 	 	 	 	 
	 
	 	 	 	 
	 	 	 
	 	 	(“Assignee”)






	 	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 





	 	 	 	 	 
	 

	 	Title:	 	 
	 

	 	 	 	 






 










 







SCHEDULE A TO ASSIGNMENT AND ACCEPTANCE














 








EXHIBIT H




FORM OF NOTICE




     Reference is made to (i) the Loan and Security Agreement dated May 12, 2006 (as at any time
amended, the “Loan Agreement”) among Integrated Electrical Services, Inc. and the other Borrowers
party thereto, the Guarantors party thereto, Bank of America, N.A., as collateral and
administrative agent for certain Lenders from time to time parties thereto, and such Lenders, and
(ii) the Assignment and Acceptance dated as of
                    , 20___ (the “Assignment Agreement”)
between                      (the “Assignor”) and                      (the “Assignee”). Except as
otherwise defined herein, capitalized terms used herein which are defined in the Loan Agreement are
used herein with the respective meanings specified therein.



     The Assignor hereby notifies Borrowers and Agent of Assignor’s intent to assign to Assignee
pursuant to the Assignment Agreement a principal amount of (i) $                     of the outstanding
Revolver Loans and participations in LC Outstandings held by Assignor, and (ii) $                     of
Assignor’s Commitment (which amount includes the Assignor’s outstanding Revolver Loans being
assigned to Assignee pursuant to clause (i) above), together with an interest in the Loan Documents
corresponding to the interest in the Loans and Commitment[s] so assigned. Pursuant to the
Assignment Agreement, Assignee has expressly assumed all of Assignor’s obligations under the Loan
Agreement to the extent of the Assigned Interest (as defined in the Assignment Agreement).



     For purposes of the Loan Agreement, Agent shall deem Assignor’s share of the Commitment to be
reduced by $                     and Assignee’s share of the Commitment to be increased by $                    .



     The address of the Assignee to which notices, information and payments are to be sent under
the terms of the Loan Agreement is:



	 	 	 	 	 
	 

	 	 

	 	 
	 

	 	 

	 	 
	 

	 	 

	 	 
	 

	 	 

	 	 






     Assignee’s LIBOR Lending Office address is as follows:



	 	 	 	 	 
	 

	 	 

	 	 
	 

	 	 

	 	 
	 

	 	 

	 	 
	 

	 	 

	 	 






     This Notice is being delivered to Borrowers and Agent pursuant to Section 13.3 of the Loan
Agreement. Please acknowledge your receipt of this Notice by executing and returning to Assignee
and Assignor a copy of this Notice.



 









 





     IN WITNESS WHEREOF, the undersigned have caused the execution of this Notice, as of
                    , 20___.



	 	 	 	 	 	 	 
	 	 	 	 	 
	 	 	(“Assignor”)	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 

	 	 
	 

	 	Title:	 	 	 	 
	 

	 	 	 	 

	 	 
	 
	 	 	 	 	 	 
	 	 	 	 	 
	 	 	(“Assignee”)	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 

	 	 
	 

	 	Title:	 	 	 	 
	 

	 	 	 	 

	 	 






ACKNOWLEDGED AND AGREED TO

AS OF THE DATE SET FORTH ABOVE:




BORROWERS:*




	 	 	 	 	 	 	 
	 	 	 
	 
	 	 	 	 	 	 
	By:
	 	 	 	 	 	 
	 	 	 	 	 
	 

	 	Title:	 	 	 	 
	 

	 	 	 	 

	 	 
	 
	 	 	 	 	 	 
	 	 	 
	 
	 	 	 	 	 	 
	By:
	 	 	 	 	 	 
	 	 	 	 	 
	 

	 	Title:	 	 	 	 
	 

	 	 	 	 

	 	 
	 
	 	 	 	 	 	 
	 	 	 
	 
	 	 	 	 	 	 
	By:
	 	 	 	 	 	 
	 	 	 	 	 
	 

	 	Title:	 	 	 	 
	 

	 	 	 	 

	 	 








 




			
	*	 	No signature required by any Borrower when an Event of Default exists.





BANK OF AMERICA, N.A.,

as Agent




	 	 	 	 	 	 	 
	By:
	 	 	 	 	 	 
	 	 	 	 	 
	 

	 	Title: