Document:

Exhibit 4.37

 

AGENCY
AGREEMENT NO. 35-06-23

 

	
  City
  of Moscow

  	
   

  	
  November 1, 2006

  

 

                This Agreement is entered into
by and between Rostelecom, Open Joint-Stock Company for Long-Distance and
International Telecommunications, hereinafter, “Rostelecom”, represented by OAO
Rostelecom General Director D.Ye. Yerokhin, authorized to act by the Charter,
on the one part, and “North-Western Telecom”, Open Joint-Stock Company,
hereinafter referred to as the “Operator”, represented by General Director V.A.
Akulich, authorized to act by the Charter, on the other part, hereinafter
collectively referred to as the “Parties”, as follows:

 

SECTION I.
GENERAL PROVISIONS

 

1.         TERMS AND DEFINITIONS

 

In
this Agreement the following terms and definitions have the following meanings
if not otherwise indicated by this Agreement:

 

1.1.                  “Agreement”
means the Agreement including all Appendices, Revisions, Addenda and Additional
Agreements.

 

1.2.                  “Associated
Operator” means a telecommunications operator who meets all
of the following criteria:

 

                                      1.                                                 (i) its
telecommunications network is connected to the Operator’s network at a local or
a zonal level, or

 

                                                                                                (ii) a
Telecommunications operator whose telecommunication network is connected to
another telecommunications operator’s network which is connected to the
Operator’s network at a local or a zonal level,

 

                                      2.                                                 Any
long-distance and international traffic generated inside such operator’s
network is routed via the Operator’s network and Rostelecom network,

 

                                      3.                                                 Such operators
provide their users with access to long-distance and international telephone
communication service offered by Rostelecom

 

4.                                                   Such operator is not a
telecommunication operator whose telecommunication network is connected to the
Operator’s network on the local or zonal level, in respect of whose Users the
Operator performs legal and actual acts pursuant to Clause 2 of Contract No. 03-01-1035
dated December 12, 2005 executed by the Parties.

 

1.3.                  “Users” (“Subscribers”)
shall mean legal entities and individuals ordering and (or) using Rostelecom’s
telephone services via the Operator or via a telecommunication operator whose
telecommunication network is connected to the Operator’s network on the local
or zonal level, in respect of which legal entities and individuals the Operator
performs legal and actual acts pursuant to Clause 2 hereof.

 

1.4.                  “Reporting
period” means a calendar month during which Telecommunication
Services were rendered to the Users”.

 

 

2.         SUBJECT MATTER

 

2.1.                  Pursuant to this Agreement,
the Operator undertakes to perform the following legal and other acts, on
behalf and at the expense of Rostelecom:

 

2.1.1.                     Enter into agreements, on
behalf of Rostelecom, using one of the forms (Form 1 or Form 2)
provided in Appendix No. 1 hereto, with each of Associated Operators,
except as expressly provided for in paras 6.2., 6.7. and 6.9. below.

 

2.1.2.                     Enter, on behalf of
Rostelecom, using the form provided in Appendix No. 2 hereto, agreements
for provision, by Rostelecom, of long-distance and international
telecommunication services, with Users which may apply to Operator for such
agreements, by means of a single document.

 

2.1.3.                     Where required in connection
with the entering into agreements referred to in para. 2.1.1. above, negotiate
with all Associated Operators to agree on the terms and conditions of
agreements provided in Appendix No. 1 hereto, and generally to do anything
as may be necessary to assure that such agreements are entered into with
Associated Operators.

 

·                  activities for sale of services to Users —
from the first contact to through contract execution;

 

·                  provision to a potential User of necessary
information related to rendering of long-distance and international
telecommunication services;

 

·                  selection of a tariff plan;

 

·                  contract execution.

 

3.         GENERAL REQUIREMENTS TO THE FULFILLMENT OF THE COMMISSION

 

3.1.                  Agreements with Associated
Operators as referred to in para. 2.1.1. above shall be entered into with each
of the Associated Operators, except as expressly provided for in paras 6.2.,
6.7. and 6.9. below, and further with the exception of:

 

3.1.1.                     Associated Operators whose
telecommunication networks are effectively connected to the Operator’s network
as of the effective date of this Agreement — until the moment when a network
connection agreement is entered into between the Operator and the respective
Associated Operator whereby the Associated Operator shall provide the call
initiation service to the Operator in accordance with the “Network connection and
interaction regulations” approved by Resolution of the Russian Government No. 161
dt. 28.03.2005, in connection with the long-distance and international
telecommunication services provided by Rostelecom to Associated Operators’
Users;

 

3.1.2.                     other Connection Operators,
with the exception of those referred to in para. 3.1.1. — concurrently with a
network interconnection agreement being entered into between the Operator and
respective Associated Operator whereby the Associated Operator shall provide
the call initiation service to the Operator in accordance with the “Network  interconnection and interaction regulations”
approved by Resolution of the Russian Government No. 161
dt. 28.03.2005, in connection with the long-distance and international
telecommunication services provided by Rostelecom to Associated Operators’
Users.

 

3.2.                  Where a Form 1 or a Form 2
agreement referred to in para. 2.1.1. is entered into with Associated
Operators, the Operator shall not depart from the terms and conditions of such
agreements as stated in Form 1 or Form 2, respectively, of Appendix No. 1
hereto. If a Associated Operator refuses to enter into an agreement on terms
and conditions set forth in Form 1 or Form 2 of Appendix No. 2
to this Agreement, proposing amendments to such terms and conditions, the
Operator shall not agree to such amended terms and conditions without
Rostelecom’s prior written consent.

 

 

2

 

 

3.3.                  Where an agreement referred
to in para. 2.1.2 is entered into with Users, the Operator shall not depart
from the terms and conditions of such an agreement as set forth in Appendix No. 2
hereto.

 

SECTION II. ENTERING INTO AGREEMENTS WITH ASSOCIATED OPERATORS

 

4.         AGREEMENT OFFERINGS

 

4.1.                  Within fifteen (15) days after
the effective date of this Agreement, the Operator shall submit to Rostelecom a
list of Associated Operators (see Appendix No. 4) specifying trade name,
legal and actual address, based on information available with the Operator,
with which agreements are to entered into using forms provided in Attachment No. 1.

 

4.2.                  Within ten (10) days
after the effective date of this Agreement, Rostelecom shall issue a certified
power of attorney to the Operator authorizing the latter to perform actions
described in para. 2.1 hereof. Such power of attorney shall be with the right
of sub-delegation.

 

4.3.                  Within ten (10) days
after receipt of the power of attorney from Rostelecom as referred to in para.
4.2. above, the Operator shall send each Associated Operator a cover letter
with a binding offer prepared based on Form 1 and a binding offer prepared
based on Form 2 as provided in Appendix No. 1 hereto (hereinafter
collectively the “Offers” and separately “Offer”) attached, each in three
counterparts. Each counterpart of the Offers so given shall be signed by the
Operator’s authorized signatory. Also, a copy of the power of attorney referred
to in para. 4.2. shall be enclosed with the Offers of this Agreement.

 

4.4.                  A cover letter to the
Associated Operator referred to in para. 4.3. above shall contain the
following:

 

4.4.1.                     An offer to the Associated
Operator to accept either of the proposed Offer options (Form 1 or Form 2),
at the Associated Operator’s discretion.

 

4.4.2.                     a reasonable time period for
the acceptance of the Offer. Such time period shall be determined by the
Operator at its discretion, provided that it shall not exceed thirty (30) days
after the date on which the Offers are sent to the Associated Operator.

 

4.4.3.                     Acceptance
format requirements as defined in para. 5.1 below of this Agreement.

 

4.5.                  Within three (3) business
days after expiration of the time period referred to in para. 4.3, The Operator
shall submit a report on sent offers to Associated Operators by e-mail in the Excel
                     
e-mail format or by fax No.                       

 

5.                          ACCEPTANCE

 

5.1.                  An acceptance
of a Offer by a Associated Operator shall only be acknowledged by the Operator
if executed in the following manner and with the time period allowed for such
acceptance in the cover letter pursuant to para. 4.4.1 above, and in particular
provided that:

 

·      the Associated Operator submitted two
counterparts of accepted Offer signed by an authorized representative of the
Associated Operator and verified with the Associated Operator’s seal.

 

5.2.                  If the Associated Operator
accepts one of the Offers sent to it, one counterpart of the binding agreement
signed by the Operator and the Associated Operator shall be submitted to
Rostelecom within five (5) business days after the date on which such
documents are received by the Operator from the Associated Operator.

 

5.3.                  This Agreement may provide
for circumstances (see Article 6 below) in which the Operator may be
obligated to acknowledge acceptance of a Offer executed in a manner inconsistent
with the provision of para. 5.1 above of this Agreement.

 

3

 

6.         NO ACCEPTANCE

 

6.1.                  If a Associated Operator to
whom Offers were given does not accept either of them, then, pursuant to the
terms and conditions stated in Article 5 of this Agreement, the Operator
shall notify Rostelecom to that effect within time frames referred to in paras
6.2, 6.7, 6.9 below and shall concurrently provide Rostelecom with the
following information:

 

·                  Associated Operator’s trade name;

 

·                  Associated Operator’s legal and physical
addresses;

 

·                  Names of contact persons;

 

·                  Grounds or reasons for disagreement, if the
Associated Operator submitted a letter to the Operator stating reasons for its
disagreement with the proposed agreement;

 

·                  Contact telephones, faxes, e-mail address.

 

6.2.                  If within the time period
provided for acceptance of the Offer by a Associated Operator, the Operator
receives a message from the Associated Operator stating its refusal to enter
into the agreement or its intent to enter into an agreement whereof subject
matter is different from that stated in Form 1 or Form 2 of Appendix No. 1,
or if no message related to the Offer is received by the Operator or
Rostelecom, the Operator shall notify Rostelecom to that effect within three (3) business
days after the expiration of the time period provided for acceptance by the
Associated Operator. The Operator shall be discharged from its agency
obligations with respect to the relevant Associated Operator as from the moment
when the information referred to in para. 6.1. is sent to Rostelecom.

 

6.3.                  If within the time period
provided for acceptance of the Offer by a Associated Operator, the Operator
receives a message from the Associated Operator stating its willingness to
enter into the agreement on terms and conditions (other than subject matter)
different from those stated in Form 1 or Form 2 of Appendix No. 1,
i.e. a counter-offer, the Operator shall notify Rostelecom to that effect
within three (3) business days after the expiration of the time period
provided for the acceptance by the Associated Operator.

 

6.4.                  Within ten (10) days
after receipt of notice from the Operator as referred to in para. 6.3.,
Rostelecom shall notify the Operator of its full or partial consent or refusal
to give consent to the Associated Operator’s counter-proposals.

 

6.5.                  If full consent to the
Associated Operator’s counter-proposals is given by Rostelecom, the Operator
shall accept the Associated Operator’s counter-offer; in case of Rostelecom’s
partial consent or refusal to give consent to the Associated Operator’s
counter-proposals, the Operator shall negotiate with the Associated Operator to
agree on the terms and conditions of the Offer which were not accepted by the
Associated Operator. Maximum duration of such negotiations shall not exceed
fifteen (15) days after their commencement date. The Operator shall notify
Rostelecom of the results of such negotiations within three (3) business
days after their completion. If as the result of such negotiations the
Associated Operator gave full consent to the terms and conditions of the Offer
based on either Form 1 or Form 2 as provided in Appendix No. 1
and accepted such Offer, the Operator shall, concurrently with the negotiations
results notice, submit documents referred to in para. 5.2 above to Rostelecom
of this Agreement.

 

6.6.                  If as the result of such
negotiations, the Associated Operator did not give full consent to the terms
and conditions of the Offer based on either Form 1 or Form 2 as
provided in Appendix No. 1, Rostelecom shall within five (5) business
days after receipt of the negotiations result notice from the Operator as
provided for in para. 6.5. above, shall resolve upon whether entering into an 

 

4

 

agreement with the Connected  Operator on the terms and conditions proposed
by the latter (i.e. acceptance of counter-offer) is possible.

 

6.7.                  If Rostelecom notifies the
Operator within the time period referred to in para. 6.6. above of its
willingness to enter into the agreement on the terms and conditions proposed by
the Associated Operator, the Operator shall enter into an agreement with the
Associated Operator on  the terms and
conditions agreed upon as the result of negotiations, accept the Associated
Operator’s counter-offer and submit originals of executed agreement and/or
documents evidencing the entering into such agreement with the Associated
Operator on such terms and conditions within three (3) business days. If
Rostelecom notifies the Operator within the time period referred to in para.
6.6. above of its decision not to enter into the agreement on the terms and
conditions proposed by the Associated Operator, the Operator shall be relieved
from its agency obligations with respect to the relevant Associated Operator as
from the moment of receipt of such notice.

 

6.8.                  If within the time period
provided for the acceptance of the Offer by the Associated Operator the latter
gives full and unconditional acceptance of the Offer whether based on Form 1
or Form 2, but other than in compliance with the Offer acceptance
requirements set forth in Article 5, the Operator shall notify Rostelecom
to that effect within three (3) days after receipt of such acceptance of
the Offer from the Associated Operator. Rostelecom shall, within three (3) days
after receipt of such notice from the Operator, determine whether such
acceptance is to be considered valid and sufficient and shall notify the
Operator of such a determination.

 

If the Associated Operator gives full and unconditional acceptance of
the Offer whether based on Form 1 or Form 2, but with a delay of not
more than 30 days, and provided no other breach of Offer acceptance
requirements exists, Rostelecom shall determine that such acceptance is to be
considered valid and sufficient, and shall take action described in para. 6.9
below.

 

6.9.                  If Rostelecom determines
acceptance to be valid and sufficient, the Operator shall, within three (3) business
days after receipt of a notice from Rostelecom stating such determination,
submit documents to Rostelecom evidencing the entering into an agreement on
terms and conditions as set forth in Form 1 or Form 2 of  Appendix No. 1 to this Agreement. If
Rostelecom determines acceptance by the Associated Operator to be invalid
and/or insufficient, the operator shall, within three (3) business days
after receipt of a notice from Rostelecom stating such determination, give a
message to the Associated Operator requiring it to give acceptance on the terms
and conditions provided in para. 5.1 above. If the Operator does not receive
from the Associated Operator acceptance of the Offer on the above terms and
conditions and before expiration of the time period provided for such
acceptance, the Operator shall be relieved from its agency obligations with
respect to the relevant Associated Operator.

 

SECTION III. CONCLUDING AGREEMENTS WITH USERS

 

7.         CONCLUDING AGREEMENTS WITH USERS

 

7.1.                  Whenever any User (or its
properly authorized representative) applies to the Operator for an agreement
for provision by Rostelecom of long-distance and international
telecommunications service, the Operator shall forthwith enter into an
agreement with such User in accordance with the form provided in Appendix No. 2
to this Agreement.

 

7.2.                  The agreement with the User
is signed in three copies and sealed with the stamps of its parties. One of the
copies shall be given to the respective User while the other copy shall be sent
to Rostelecom within five (5) days following the execution of such contract.

 

5

 

SECTION IV. MISCELLANEOUS

 

8.         AGENCY FEE AND REIMBURSEMENT OF AGENT’S EXPENSES

 

8.1.                  In consideration of
performance, by the Operator, of its agency obligations hereunder, Rostelecom
shall pay agency fees to the Operator as follows:

 

8.1.1.           For each agreement entered into with a Associated
Operator pursuant to para. 2.1.1. of this Agreement, Rubles twenty thousand
(20,000) if the agreement is entered into in accordance with Form 1 of
Appendix No. 1, or Rubles forty thousand (40,000) if the agreement is
entered into in accordance with Form 2 of Appendix No. 1, provided
that:

 

a) the agreement is entered into by the Operator on the terms and
conditions set forth in respective forms (Form 1 or Form 2) provided
in Appendix No. 1 hereto, or

 

b)
the agreement is entered into by the Operator on terms and conditions different
from those set forth in Appendix No. 1 hereto, based on a determination
made by Rostelecom in accordance with paras 6.6. and 6.7.

 

The fee is stated net of VAT which shall be calculated at a rate
applicable at the time when appropriate invoice is issued

 

8.1.2.           For each agreement entered into with a User pursuant
to para. 2.1.1 of the Agreement, a lump sum of Rubles five hundred (500) net of
VAT calculated at the rate valid at the moment of the relevant invoice.

 

8.2.                  Rostelecom further
undertakes to reimburse the Operator for any properly evidenced expenses
incurred by it in connection with performance of its agency obligations hereunder.

 

9.         REPORTS AND MUTUAL SETTLEMENTS PROCEDURE

 

9.1.                  The Parties shall effect
settlements on basis of the approved Report indicated in Appendix 3 hereto.

 

9.2.                  Before the 5th day of each
month, the Operator shall submit to Rostelecom a Report evidencing performance
of the agency assignment of the previous month (“Reporting
period”).  The Report shall
list the contracts with Associated Operators and Contracts with Users entered
into by the Operator within the Reporting period subject to the terms and conditions
indicated in paras 8.1.1. and 8.1.2. hereof. These documents shall also be
supported by originals of source documents evidencing expenses incurred by the
Operator to perform its agency commission hereunder.

 

9.3.                  Within ten (10) days
following the receipt of the Report from the Operator, Rostelecom shall verify
and, provided that it has no objections, approve the Report and submit it to
the Operator.

 

9.4.                  If there are any objections
Rostelecom, within ten (10) days following the receipt of the Report from
the Operator, shall submit those objections to the Operator following which the
Parties shall hold negotiations in order to resolve the objections.

 

9.5.                  Within 5 days following the
receipt of the approved Report, the Operator shall issue an invoice for
Rostelecom. A copy shall be sent by fax while the original shall be sent by
mail. The date of receipt of the facsimile copy shall be deemed the date of
receipt of the invoice.

 

9.6.                  Within 10 days following the
receipt of the invoice,  Rostelecom shall
pay to the Operator, on basis of the approved Report, the fee calculated  in accordance with para. 8.1. and shall
reimburse the Operator for  any and all
properly evidenced expenses incurred by the Operator in connection with
performance of its agency commission hereunder during the Reporting period.

 

6

 

10.      RESPONSIBILITY OF PARTIES

 

10.1.            The Parties shall be held
responsible for their failure to perform, or improper performance, of their
respective obligations hereunder in the manner and within the scope as provided
for by the applicable law of the Russian Federation and this Agreement.

 

10.2.            Indemnity shall be given for
actual damage inflicted upon the other Party by the Party’s failure to perform
or improper performance of its obligations hereunder.

 

10.3.            If either Party breaches any
deadline for the performance of its obligations hereunder, or performs such
obligations in an unsatisfactory manner, the delinquent Party shall pay the
other Party, upon the latter’s request, a penalty of 0.01% of the total agency
fee specified in paras 8.1.1 and 8.1.2. above in respect of the calendar month
during which such breach occurred, for each day of a delay with proper
performance of its obligations, but not more than 10% of such agency fee
amount.  The penalty shall be paid within
10 days after receipt of an appropriate request from the other Party.

 

11.       CONFIDENTIALITY

 

11.1.            The entire relationship of
the Parties hereunder shall be subject to the confidentiality terms and
conditions as set forth in the Confidentiality Agreement No.               
entered into by the Parties on                           .

 

11.2.            Any exchange of information
between the Parties hereunder shall be in a manner which shall allow for it to
be kept in confidence in accordance with the Confidentiality Agreement
Provisions.

 

12.      EFFECTIVE PERIOD AND TERMINATION PROVISIONS

 

12.1.            This Agreement is entered
into for one year and shall take effect from the moment when it is signed by
the Parties. If neither Party announces termination of this Agreement thirty
(30) calendar days before its stated expiration, this Agreement shall be
automatically extended for each subsequent year. There shall not be any limit
to the number of periods for which this Agreement may be extended. The Parties
agree that the terms and conditions of this Contract shall apply to their
relationships arising as from January 01, 2006.

 

12.2.            Early termination of this
Agreement shall be possible upon mutual consent of the Parties or for other
causes provided for by the applicable law of the Russian Federation.

 

12.3.            Upon termination of this
Contract, the Parties shall settle mutual accounts within thirty days after the
termination date.

 

13.      MISCELLANEOUS

 

13.1.            This Agreement is prepared
in two counterparts of equal legal effect, one counterpart for each Party.

 

13.2.            Neither Party shall assign
any of its rights and obligations hereunder within prior written consent of the
other Party.

 

13.3.            Each Party acknowledges the
other Party’s rights to all brands, trademarks and names and covenants not to
make any use thereof within prior written consent. The covenants undertaken
herein shall survive termination of this Agreement.

 

13.4.            Authority to enter into
agreements with Associated Operators in accordance with the form provided in
Attachment No. 1 shall not be delegated to any third parties within
Rostelecom’s consent.

 

13.5.            Any notices and
communications may be given by the Parties via facsimile, electronic mail,
registered mail or courier delivery service with receipt acknowledged.  A delivery confirmation generated by
appropriate e-mail software or, in case of facsimile transmission of a notice,
a copy 

 

7

 

of the notice with sender’s fax machine stamp
(report) evidencing normal transmission to proper telephone number, shall be
sufficient evidence of delivery.

 

13.6.            Appendix List:

 

Appendix No. 1 Agency Agreement Forms (Form 1 and Form 2).

 

Appendix No. 2 Form of agreement for provision of
long-distance and international telecommunications by Rostelecom.

 

Appendix No. 3 Operator’s Agency Report.

 

Appendix No. 4 List of Associated Operators

 

13.7.            Either Party to this
Agreement may propose on amendments hereto. Any amendments and additions
properly agreed upon and executed shall constitute integral parts of this
Agreement.

 

14.                   SIGNATURES OF PARTIES

 

	
  Rostelecom

  	
   

  	
  Operator

  
	
  OAO
  Rostelecom

  	
   

  	
  OAO
  NWT

  
	
  Location: 5,
  Delegatskaya st.,

  Moscow, 127091

  	
   

  	
  Location: 26/14 B.
  Morskaya Str., 191186 St. Petersburg

  
	
  Postal
  address

  5, Delegatskaya st.,

  Moscow, 127091

  OAO Rostelecom

  	
   

  	
  Postal
  address

  26/14 B. Morskaya Str.,

  191186 St. Petersburg

  OAO North-West Telecom

  
	
  TIN: 7707049388

  	
   

  	
  TIN:

  
	
  Contact
  tel: (095) 787-2849

  	
   

  	
  Contact
  tel: (812) 719 93 24

  
	
  Telephone/fax: (095)
  787-2850

  	
   

  	
  Telephone/fax: (812) 710 62
  77

  
	
  e-mail:

  	
   

  	
  e-mail: info@nwtelecom.ru

  
	
  Acc.:  40702810800000001375 with ZAO Russian Industrial Bank,

  Moscow

  	
   

  	
  Acc.:
  40702810900300000001 with OAO AKB Svyaz-Bank,

  St. Petersburg

  
	
  BIK 044552202

  	
   

  	
  BIK 044030759

  
	
  Correspondent
  account:

  30101810500000000202

  	
   

  	
  Correspondent
  account:

  30101810200000000759

  
	
  Postal
  address of the Bank:

  building 1, 40, Schepkina st.,

  Moscow, 129110

  	
   

  	
  Postal
  address of the Bank:

  12 Baskov Lane, 181014 St. Petersburg

  
	
  OKVED
  code:

  	
   

  	
  64.20

  	
   

  	
  OKVED
  code:

  	
   

  	
  64.20

  
	
  OKPO code:

  	
   

  	
  17514186

  	
   

  	
  OKPO code:

  	
   

  	
   

  
	
  KPP
  code:

  	
   

  	
  774050001

  	
   

  	
  KPP
  code:

  	
   

  	
  7840010001

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  OAO
  Rostelecom:

  	
   

  	
   

  	
   

  	
  Operator:

  	
   

  	
   

  
	
  General
  Director

  	
   

  	
   

  	
   

  	
  General
  Director

  	
   

  	
   

  
	
  OAO
  Rostelecom

  	
   

  	
   

  	
   

  	
  OAO
  NWT

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  D.Ye.
  Yerokhin

  	
   

  	
   

  	
   

  	
  V.A.
  Akulich

  
	
  November 1,
  2006

  	
   

  	
   

  	
   

  	
  November 1,
  2006

  	
   

  	
   

  
	
  Seal
  here

  	
   

  	
   

  	
   

  	
  Seal
  here

  	
   

  	
   

  

 

 

8

 

APPENDIX
NO. 1

to
Agency Agreement

No. 35-06-23 dt. November 1,
2006

 

FORMS OF AGENCY AGREEMENT

 

1.              Form 1, with calculation on
basis of revenue earned from users for services rendered;

 

2.              Form 2, with calculation on
basis of revenue accrued from users for services rendered;

 

 

9

 

APPENDIX
NO. 2

to
Agency Agreement

No. 35-06-23 dt. November 1, 2006

 

FORM OF AGREEMENT FOR LONG-DISTANCE AND INTERNATIONAL

TELECOMMUNICATION SERVICES RENDERED BY OAO ROSTELECOM

 

 

10

 

APPENDIX
NO. 3

to
Agency Agreement

No. 35-06-23 dt. November 1, 2006

 

Operator’s Agency Report

Under Contract No.                  
dt.

for                     
month (reporting period) of                  

 

Form 1. Operator’s Report on
Telecommunications agreements entered into with Users during the Reporting
period pursuant to para. 2.1.2. of this Agreement.

 

	
  Ref. No.

  	
   

  	
  Corporate user name (user — legal entity)

  	
   

  	
  INN

  	
   

  	
  Bill-to party’s unique identifier (to fill out, use algorithm
  described in notes to forms provided in Appendix No. 4 to the Assistance
  Agreement)

  	
   

  	
  Revenue earned in service provision by Rostelecom during the Billing
  Period, in RUR (net of VAT)

  	
   

  	
  Amount of discount from client tariff

  	
   

  	
  Date of Agreement conclusion

  	
   

  	
  Number of agreement

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Total

  	
   

  	
   

  	
   

  	
  —

  	
   

  	
  —

  	
   

  	
   

  	
   

  	
  —

  	
   

  	
  —

  	
   

  	
  —

  	
   

  

 

Form 2.
List of Associated Operators with whom agency agreements have been entered into
in the manner prescribed by para. 2.1.1. of this Agreement.

 

	
  Ref. No.

  	
   

  	
  Associated Operator’s

  trade name

  	
   

  	
  Agreement form

  	
   

  	
  Date

  of entry

  	
   

  	
  Number

  of agreement

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Total

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

 

11

 

Form 3.  Calculation of fee for contracts executed
within the reporting period in accordance with para. 2  hereof.

 

	
  Agreements entered into during
  Reporting period

  	
   

  	
  Total entered into

  during Billing Period

  	
   

  	
  Fee due for agreements

  entered into, in RUR

  	
   

  	
  Total amount,

  in RUR, net of VAT

  	
   

  
	
  With Users

  	
   

  	
   

  	
   

  	
  500

  	
   

  	
   

  	
   

  
	
  With Associated operators (form 1)

  	
   

  	
   

  	
   

  	
  20,000

  	
   

  	
   

  	
   

  
	
  With Associated operators (form 2)

  	
   

  	
   

  	
   

  	
  40,000

  	
   

  	
   

  	
   

  
	
  total

  	
   

  	
  —

  	
   

  	
  —

  	
   

  	
   

  	
   

  

 

Operator’s
fee is RUR                                                 net of VAT

VAT
amount @ 18% is RUR                                                 
..

Total
Operator’s fee is RUR                                                             including
VAT.

 

 

	
  OAO Rostelecom:

  	
   

  	
   

  	
   

  	
  Operator:

  	
   

  	
   

  
	
  General Director

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  OAO Rostelecom

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  D.Ye. Yerokhin

  	
   

  	
   

  	
   

  	
  200 

  
	
   

  	
   

  	
  200 

  	
   

  	
  Seal here

  	
   

  	
   

  
	
  Seal here

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

 

12

 

APPENDIX
NO. 4

to
Agency Agreement

No. 35-06-23 dt. November 1, 2006

 

List of Associated Operators

 

	
  Ref. No.

  	
   

  	
  Operator’s full name

  	
   

  	
  Operator’s trade name

  	
   

  	
  License number

  	
   

  	
  Legal address

  	
   

  	
  Physical address

  	
   

  
	
  1.

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3.

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

 

	
  OAO Rostelecom:

  	
   

  	
   

  	
   

  	
  Operator:

  	
   

  	
   

  
	
  General Director

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  OAO Rostelecom

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  D.Ye. Yerokhin

  	
   

  	
   

  	
   

  	
  200 

  
	
   

  	
   

  	
  200 

  	
   

  	
  Seal here

  	
   

  	
   

  
	
  Seal here

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

 

13Exhibit 4.1

        
         

        
        Execution
        Version

        
         

        

        
        
        Note
        
        Purchase Agreement

        By and
        Among

        
        
        Tontine Capital Partners,
        L.P.
        ,

        
        
        Integrated Electrical Services, Inc.

        and

        the other Borrower Parties hereto

        

        
        
        December
        12
        ,
        2007

        
        

        

        

        

        
        

        
        

        

             

        

        

        
        
        TABLE OF
        CONTENTS

        
        
        Page

        
        ARTICLE
        1     Definitions     1

        
        ARTICLE 2     Issuance
        of Note     5

        
        2.1     Issuance of
        Notes     5

        
        2.2     Delivery of
        Purchase Price and Notes     5

        
        2.3     Closing
        Date     5

        
        ARTICLE
        3     Lenders’ Representations and
        Warranties     5

        
        3.1     Organization
        and Qualification     5

        
        3.2     Authorization;
        Enforcement     5

        
        3.3     Securities
        Matters     6

        
        3.4     Restrictions on
        Transfer     6

        
        ARTICLE
        4     Representations and Warranties of the
        Borrowers     6

        
        4.1     Organization
        and Qualification     6

        
        4.2     Authorization;
        Enforcement     7

        
        4.3     Capital Stock
        and Related Matters     7

        
        4.4     No
        Conflicts     7

        
        4.5     SEC Documents;
        Financial Statements.     8

        
        4.6     Absence of
        Certain Changes     9

        
        4.7     Absence of
        Litigation     9

        
        4.8     Intellectual
        Property     9

        
        4.9     Tax
        Status     10

        
        4.10     Permits;
        Compliance.     10

        
        4.11     Environmental
        Matters     11

        
        4.12     Title to
        Property     11

        
        4.13     No Investment
        Company or Real Property Holding Company     11

        
        4.14     No
        Brokers     12

        
        4.15     Labor
        Relations     12

        
        4.16     Transactions
        with Affiliates and Employees     12

        
        4.17     Insurance     12

        
        4.18     ERISA
             12

        
        4.19     Use of
        Proceeds; Federal Regulations     12

        
        4.20     Usury     13

        
        4.21     Solvency
             13

        
        4.22     Disclosure     13

        
        ARTICLE
        5     Covenants     13

        
        5.1     Use of
        Proceeds     13

        
        5.2     Expenses     13

        
        5.3     Affirmative
        Covenants     13

        
        5.4     Incurring
        Debt     14

        
        5.5     Liens     15

        
        5.6     Fundamental
        Changes     16

        
        5.7     Sale of
        Assets     16

        
        5.8     Reporting     16

        
        ARTICLE
        6     Conditions To The Borrowers'
        Obligation     17

        
        6.1     Delivery of
        Transaction Documents     17

        
        6.2     Payment of
        Purchase Price     17

        
        6.3     Representations
        and Warranties     17

        
        6.4     Litigation     17

        
        ARTICLE
        7     Conditions to The Lenders’
        Obligation     18

        
        7.1     Delivery of
        Transaction Documents; Issuance of Notes     18

        
        7.2     Delivery of
        Authority Documents     18

        
        7.3     Representations
        and Warranties     19

        
        7.4     Consents     19

        
        7.5     Litigation
             19

        
        7.6     Opinion     19

        
        7.7     No Material
        Adverse Change     19

        
        ARTICLE
        8     Termination     19

        
        8.1     Termination
        Provisions     19

        
        8.2     Effect of
        Termination     20

        
        ARTICLE
        9     Indemnification     20

        
        9.1     Indemnification
        by the Borrowers     20

        
        9.2     Notification     20

        
        ARTICLE
        10     Governing Law;
        Miscellaneous     21

        
        10.1     Governing
        Law     21

        
        10.2     Counterparts;
        Electronic Signatures     21

        
        10.3     Headings     21

        
        10.4     Severability
             21

        
        10.5     Entire
        Agreement; Amendments     21

        
        10.6     Notices     21

        
        10.7     Successors and
        Assigns     22

        
        10.8     Third Party
        Beneficiaries     23

        
        10.9     Publicity     23

        
        10.10     Further
        Assurances     23

        
        10.11     No Strict
        Construction     23

        
        10.12     Rights
        Cumulative     23

        
        10.13     Survival     23

        
        10.14     Knowledge
             23

        

        
        

        

        

        
        

        
        
        Note Purchase Agreement

        
        

         

        
        
        This NOTE
        PURCHASE AGREEMENT, dated as
        of December
        12,
        2007
        , is entered into by
        and among
        INTEGRATED
        ELECTRICAL SERVICES,
        INC.,
        a Delaware
        corporation (the
        “Company
        ”),
        the Subsidiaries (as defined
        below) of the Company party hereto (together with the
        Company, hereinafter
        individually referred to
        as a
        “Borrower
        ” and collectively
        referred to as the
        “Borrowers
        ”),
        and the Tontine Capital
        Partners, L.P. (together with any additional Tontine fund, if any, identified on
        Schedule I
        hereto, pursuant to
        Section
        2.4, a
        “Lender
        ” and collectively, the
        “Lenders
        ”).

        
        
        Recitals
        :

        
        
        A.     The
        Lenders desire
        to
        provide financing to the
        Borrowers, and the Borrowers desire to obtain financing from the Lenders,
        upon the terms and conditions
        set forth in this Agreement,
        in connection with the
        Borrowers’ repayment of its existing term loan (the
        “Term
        Loan”)
        made under the Term Loan Agreement dated as of May 12, 2006, among the Company, the several
        lenders party thereto (the
        “Term
        Lenders”)
        and Wilmington Trust Company, as administrative agent (the
        “Agent
        ”), as amended;
        and

        
        
        B.     The total financing being provided by the Lenders to the
        Borrowers hereunder shall consist of the provision by the Lenders of debt financing of
        $25,000,000 (the
        “Debt
        Financing”),
        in exchange for Senior Subordinated Notes from the Borrowers in like principal amount,
        substantially in the form attached hereto as
        Exhibit A
        (individually, a
        “Note
        ” and collectively, the
        “Notes
        ”).

        
        
        Agreemen
        t

        
        
        NOW THEREFORE, the
        Borrowers
        and the
        Lenders
        hereby agree as
        follows:

        

        	
                	
                    
                    ARTICLE
                    1     

                	
                    

                    
                    Definitions

                

        

        

        

        
        
        “1933
        Act”
        means the Securities Act of
        1933, as amended.

        
        
        “1934
        Act”
        means the Securities Exchange
        Act of 1934, as amended.

        
        
        “Action
        ”
        means any action, suit claim,
        inquiry, notice of violation, proceeding (including any partial proceeding such as a
        deposition) or investigation against or affecting the Company, any of its Subsidiaries or
        any of their respective properties before or by any court, arbitrator, governmental or
        administrative agency, regulatory authority (federal, state, county, local or foreign),
        public board, stock market, stock exchange or trading facility.

        
        
        “Agent
        ” has the meaning set
        forth in the recitals.

        
        
        “Agreement
        ”
        means this
        Note
        Purchase
        Agreement.

        
        
        “Borrower
        ”
        and
        “Borrowers
        ” have
        the meaning set forth in the
        preamble.

        
        “
        Borrowing
        Subsidiary”
        means any Subsidiary that is a Borrower.

        
        
        “Claim
        ” has the meaning set
        forth in
        Section
        9
        .2.

        
        
        “Closing
        ”
        has the meaning set forth
        in
        Section
        2.3
        .

        
        
        “Closing
        Date”
        has the meaning set forth
        in
        Section
        2.3
        .

        
        “
        Code
        ” has the meaning set
        forth in Section
        4.13.

        
        
        “Company
        ” has the meaning set
        forth in the preamble.

        
        “
        Contingent
        Obligations”
        means, with respect
        to the Company or any
        Subsidiary, any obligation of
        the Company or such
        Subsidiary arising
        from any guaranty, indemnity or other assurance of payment or performance of any
        Indebtedness
        , lease, dividend or other
        obligation
        (“primary
        obligations”)
        of any other p
        erson (the
        “primary
        obligor”)
        in any manner, whether directly or indirectly, including (a
        ) the direct or indirect
        guaranty, endorsement (other than for collection or deposit in the
        o
        rdinary
        c
        ourse of
        b
        usiness), co-making,
        discounting with recourse or sale with recourse by such
        p
        erson of the obligation of a
        primary obligor, (b
        ) the obligation to make
        take-or-pay or similar payments, if required, regardless of nonperformance by any other
        party or parties to an agreement, (c
        ) any obligation of
        such p
        erson, whether or not
        contingent, (i
        ) to purchase any such
        primary obligation or any
        p
        roperty constituting direct
        or indirect security therefor, (ii
        ) to advance or supply
        funds (A ) for
        the purchase or payment of any such primary obligations or (B
        ) to maintain working
        capital or equity capital of the primary obligor or otherwise to maintain the net worth or
        solvency of the primary obligor, (iii
        ) to purchase
        p
        roperty,
        s
        ecurities 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 (iv
        ) 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 p
        erson 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 p
        erson is required to perform
        thereunder), as determined by such
        p
        erson in good
        faith.

        
        “
        Contractual
        Obligations”
        means any provision of any security issued by the Company or any of its Subsidiaries, or of
        any agreement, instrument or other undertaking as to which the Company or any of its
        Subsidiaries is a party or by which it or any of
        its property is
        bound.

        
        
        “Debt
        Financing”
        has the meaning set forth in
        the
        Recitals.

        
        
        “Environmental
        Laws”
        has the meaning set forth
        in
        Section
        4.11
        .

        
        “
        ERISA
        ” has the meaning set
        forth in
        Section
        4.18
        .

        
        
        “Event of Default” has the meaning set forth in the
        Notes.

        
        
        “GAAP
        ” has the meaning set
        forth in
        Section
        4.5
        (b).

        
        
        “Hazardous
        Materials”
        has the meaning set forth
        in
        Section
        4.11
        .

        
        “
        Indebtedness
        ” means and includes:
        (a) all items arising from the borrowing of money that, according to GAAP, would be
        included in determining total liabilities as shown on the consolidated balance sheet of the
        Company or any Subsidiary; (b) all obligations secured by any lien in property owned by the
        Company or any Subsidiary whether or not such obligations shall have been assumed (provided
        that, in the case of any lien securing obligations of a third party unaffiliated with the
        Company or any Subsidiary, the Indebtedness as defined hereunder shall be limited to the
        value of such property); (c) all guaranties and similar Contingent Obligations with respect
        to obligations of others; and (d) all other obligations (including without limitation
        letters of credit) evidencing obligations to others.

        
        
        “Indemnified
        Party”
        has the meaning set forth in
        Section
        9.2
        .

        
        
        “Intellectual
        Property”
        has the meaning set forth
        in
        Section
        4.8
        .

        
        
        “Investment
        Company”
        has the meaning set forth
        in
        Section
        4.13
        .

        
        
        “Legal
        Requirement”
        means any federal, state, local, municipal, foreign, international, multinational or other
        law, rule, regulation, order, judgment, decree, ordinance, policy or directive, including
        those entered, issued, made, rendered or required by any court, administrative or other
        governmental body, agency or authority, or any arbitrator.

        
        
        “Lender
        ”
        and
        “Lender
        s
        ” have
        the meaning set forth in the
        preamble.

        
        “
        Liens ”
        means any mortgage, pledge, hypothecation, assignment, deposit arrangement, encumbrance,
        restriction, covenant, easement, lien (statutory or other), charge or other security
        interest or any preference, priority or other security agreement or preferential
        arrangement of any kind or nature whatsoever (including any conditional sale or other title
        retention agreement and any capital lease having the same economic effect as any of the
        foregoing).

        
        
        “Material
        Adverse
        Effect”
        means any material adverse
        effect on the business, operations, assets,
        financial condition
        or prospects
        of the Company
        and its Subsidiaries taken as
        a whole.

        
        “
        Note ”
        and
        “Notes
        ” have the
        meaning set forth in the
        Recitals.

        
        
        “Permits
        ”
        has the meaning set forth
        in
        Section 
        4.10
        .

        
        
        “Permitted
        Contingent
        Obligations”
        means (a)
        Contingent Obligations
        arising from endorsements for collection or deposit in the
        o
        rdinary
        c
        ourse of business;
        (b)
        Contingent Obligations
        arising from any interest rate agreement, interest rate collar agreement, interest rate
        swap agreement, or other
        similar
        agreement or
        similar
        arrangement at any time
        entered into by the Company or its Subsidiaries in the ordinary course of business pursuant
        to the Senior Indebtedness Loan Documents;
        (c)
        Contingent Obligations of the
        Company and its Subsidiaries existing as of the Closing Date, as identified on
        Schedule
        1
        , including extensions and
        renewals thereof that do not increase the amount of such Contingent Obligations as of the
        date of such extension or renewal;
        (d)
        Contingent Obligations
        incurred in the ordinary course of business with respect to surety bonds, appeal bonds,
        performance bonds and other similar obligations;
        (e)
        Contingent Obligations
        arising under indemnity agreements to title insurers to cause such title insurers to issue
        to Agent policies;
        (f)
        Contingent Obligations with
        respect to customary indemnification obligations in favor of purchasers in connection with
        dispositions of
        e
        quipment permitted
        under the Senior Indebtedness
        Loan Documents;
        (g)
        Contingent Obligations
        constituting indemnification obligations incurred in the
        o
        rdinary
        c
        ourse of
        b
        usiness with customers,
        contractors, owners and subcontractors; and
        (h)
        other Contingent Obligations
        not to exceed $500,000 in the aggregate at any time.

        
        
        “Permitted
        Encumbrances”
        has the meaning set forth in
        Section
        5.5
        .

        
        
        “Properly
        Contested”
        means, with respect to any obligation of the Company or the Subsidiaries (including
        obligations with respect to taxes) that is not paid as and when due or payable by reason of
        the Company’s or the applicable Subsidiary’s bona fide dispute concerning its
        liability to pay the same or concerning the amount thereof: (a) such obligation is being
        properly contested in good faith by appropriate proceedings promptly instituted and
        diligently conducted; (b) the Company or Subsidiary, as applicable, has established
        appropriate reserves as shall be required in conformity with GAAP; (c) the non-payment of
        such obligation will not have a Material Adverse Effect and will not result in a forfeiture
        of any material assets of the Company or any Subsidiary; (d) any Lien imposed on the
        Company’s or any Subsidiary’s assets with respect to such obligation is stayed
        during the period prior to the final resolution or disposition of such dispute; (e) if the
        obligation results from, or is determined by the entry, rendition or issuance against the
        Company, any of the Subsidiaries, or any of its or their 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 (f) if such contest is abandoned, settled or
        determined adversely (in whole or in part) to the Company or any Subsidiary, the Company or
        such Subsidiary forthwith satisfies such obligation in full, together with all penalties,
        interest and other amounts due in connection therewith.

        
        
        “Purchase
        Price”
        has the meaning set forth
        in
        Section
        2.1
        .

        
        
        “SEC
        ”
        means the United States
        Securities and Exchange Commission.

        
        
        “SEC
        Documents”
        has the meaning set forth
        in
        Section
        4.5
        .

        
        “
        Senior
        Indebtedness”
        means the Indebtedness of the Company and its Subsidiaries under the Loan and Security
        Agreement among the Company, the Subsidiaries party thereto, the financial institutions
        named therein, and Bank of America, N.A., as in effect on the date thereof and as hereafter
        amended, supplemented or otherwise modified from time to time (the
        “Senior
        Indebtedness Credit
        Agreement”),
        provided that the availability under, and principal and accrued but unpaid interest
        outstanding at any time under, the Senior Indebtedness Loan Documents may not exceed
        $80,000,000 without the prior written consent of the Lenders.

        
        
        “Senior
        Indebtedness Loan
        Documents”
        means the Senior Indebtedness Credit Agreement (as defined in the definition of Senior
        Indebtedness) together with all other documents and instruments evidencing and/or securing
        same, as each of such documents and/or instruments is in effect on the date
        hereof.

        
        
        “Senior Lender” means Bank of America, N.A., or any successor
        thereto under the Senior Indebtedness Loan Documents.

        
        
        “Subsidiar
        y
        ”
        means, with respect to the
        Company, any corporation, partnership, limited liability company or other entity of which
        shares of stock or other ownership interests having the voting power to elect a majority of
        the board of directors or other managers of such corporation, partnership, limited
        liability company or
        other entity are at the time
        owned, or the management of which is otherwise controlled, directly or indirectly, through
        one or more intermediaries, or both, by the Company.

        
        “
        Surety
        Bonds”
        has the meaning set forth in the Senior Indebtedness Loan
        Documents.

        
        “
        Surety
        Collateral
        ”
        has the meaning set forth in the Senior Indebtedness Loan
        Documents.

        
        “
        Term
        Lenders”
        has the meaning set forth in the Recitals.

        
        
        “Term Loan” has the meaning set forth in the Recitals.

        
        
        “Transaction
        Documents”
        means this Agreement
        and the Notes, together with
        any amendment, waiver, supplement or other modification thereto.

        

        	
                	
                    
                    ARTICLE
                    2     

                	
                    

                    
                    Issuance of
                    Note

                

        

        

        

        
        

        
        
        2.1     

        
        

        
        Issuance of Notes. Subject to the terms
        and conditions of this Agreement, on the Closing Date, each Lender shall provide a portion
        of the Debt Financing to the Borrowers in the amount that is set forth in Schedule I
        in accordance with Section 2.4, in the aggregate amount of $25,000,000 (the
        “Purchase Price”) and the Borrowers shall issue a Note in like
        principal amount to each Lender. The terms and conditions of the Notes are incorporated
        herein by reference.

        

        
        

        

        	
                	
                    
                    
                    2.2     

                	
                    
                    Delivery of Purchase
                    Price and Notes. On the Closing Date each Lender shall pay the
                    Purchase Price by wire transfer of immediately available funds in accordance
                    with the Borrowers’ written instructions. At the Closing, upon payment by
                    the Lenders of the Purchase Price, the Borrowers shall issue and deliver to the
                    Lenders the Notes in the principal amount of the total Debt
                    Financing.

                

        

        	
                	
                    
                    
                    2.3     

                	
                    
                    Closing Date. Subject to the
                    terms of this Agreement, the closing of the transactions contemplated by this
                    Agreement shall occur on or before the date that is five (5) days after the
                    date that the last of the conditions set forth in Article 6 and
                    Article 7 have been satisfied, or at such other time as may be mutually
                    agreed upon by the parties to this Agreement (the “Closing
                    Date”), at the offices of Barack Ferrazzano Kirschbaum &
                    Nagelberg LLP, 200 W. Madison Street, Suite 3900, Chicago, Illinois 60606 or at
                    such other location or by such other method (including exchange of signed
                    documents) as may be mutually agreed upon by the parties to this Agreement
                    (“Closing”).

                

        

        	
                	
                    
                    
                    2.4     

                	
                    
                    Additional Lenders. The
                    Company acknowledges and agrees that additional Tontine funds other than those
                    identified on the signature page hereto may participate in the purchase of
                    Notes hereunder; provided that each such additional Tontine fund shall execute
                    and deliver a joinder to this agreement in the form of Exhibit C
                    attached hereto. Prior to the Closing Date, the Lenders shall provide the
                    Company with a final version of Schedule I that includes the
                    following information for each Lender hereunder: (a) such Lender’s name
                    and jurisdiction of organization; and (b) the portion of the Debt Financing to
                    be provided by such Lender.

                

        

        	
                	
                    
                    ARTICLE
                    3     

                	
                    

                    
                    Lender
                    s’
                    Representations and Warranties

                

        

        

        

        
        
        Each Lender represents and warrants
        to the
        Borrowers
        that:

        
        

        
        
        3.1     

        
        

        
        Organization and Qualification. Each of
        the Lenders is an entity of the type identified on Schedule I hereto duly organized,
        validly existing and in good standing under the laws of the jurisdiction of its
        organization, with full power and authority to provide the Debt Financing and otherwise
        perform its obligations under this Agreement and the other Transaction
        Documents.

        

        
        

        

        	
                	
                    
                    
                    3.2     

                	
                    
                    Authorization; Enforcement.
                    This Agreement and each of the other Transaction Documents to be executed by
                    the Lenders and the consummation of the transactions contemplated hereby and
                    thereby have been duly and validly authorized by, and duly executed and
                    delivered on behalf of, such Lender. This Agreement and each of the other
                    Transaction Documents to be executed by the Lenders constitutes the valid and
                    binding agreement of such Lender enforceable in accordance with its terms,
                    except as such enforceability may be limited by: (i) applicable bankruptcy,
                    insolvency, reorganization, moratorium or other similar laws in effect that
                    limit creditors’ rights generally; (ii) equitable limitations on the
                    availability of specific remedies; and (iii) principles of equity.

                

        

        	
                	
                    
                    
                    3.3     

                	
                    
                    Securities Matters. In
                    connection with the Borrowers’ compliance with applicable securities
                    laws:

                

        

        

        

        
        
        a.     

        
        

        
        Such Lender is purchasing the Notes for its own
        account, not as a nominee or agent, for investment purposes and not with a present view
        towards resale, except pursuant to sales exempted from registration under the 1933 Act, or
        registered under the 1933 Act.

        

        

        	
                	
                    
                    
                    b.     

                	
                    
                    
                    Such Lender has been offered an opportunity to ask questions of, and receive
                    answers from, the Borrowers concerning the Company and its Subsidiaries and
                    Lender’s proposed purchase of the Notes, and such Lender is satisfied
                    with the Borrowers’ responses to any such requests.

                

        

        	
                	
                    
                    
                    c.     

                	
                    
                    Such Lender is an “accredited
                    investor” as that term is defined in Rule 501(a) of Regulation D
                    under the 1933 Act, and has
                    such knowledge and experience in financial and business matters as to be
                    capable of evaluating the merits and risks of an investment in the Notes. Such
                    Lender understands that its investment in the Notes involves a significant
                    degree of risk. Such Lender understands that no United States federal or state
                    agency or any other government or governmental agency has passed upon or made
                    any recommendation or endorsement of the Notes.

                

        

        

        

        
        
        3.4     

        
        

        
        Restrictions on Transfer. Such Lender
        understands that the issuance of the Notes has not been and is not being registered
        under the 1933 Act or any applicable state securities laws. Such Lender may be required to
        hold the Notes indefinitely and the Notes may not be transferred unless (i) the Notes are
        sold pursuant to an effective registration statement under the 1933 Act, or (ii) the Notes
        to be sold or transferred may be sold or transferred pursuant to an exemption from such
        registration. Such Lender understands that until such time, if any, as the resale of the
        Notes has been registered under the 1933 Act or otherwise may be sold pursuant to an
        exemption from registration, the Notes may bear a restrictive legend in substantially the
        following form:

        

        
        
        “ THE SECURITY
        REPRESENTED HEREBY HAS
        NOT BEEN REGISTERED UNDER THE
        SECURITIES ACT OF 1933, AS AMENDED
        (THE
        “ACT”) OR
        APPLICABLE STATE SECURITIES LAWS, AND
        MAY NOT BE OFFERED
        OR
        SOLD
        IN THE ABSENCE OF AN
        EFFECTIVE REGISTRATION
        STATEMENT UNDER THE ACT
        AND SUCH STATE SECURITIES
        LAWS, OR AN EXEMPTION FROM REGISTRATION
        THEREUNDER
        .
        ”

        

        

        	
                	
                    
                    ARTICLE
                    4     

                	
                    

                    
                    Representations
                    and Warranties of the
                    Borrowers

                

        

        

        

        
        
        Except as set forth in the
        Borrowers’
        Disclosure Schedule attached
        hereto, each of the
        Borrowers represents
        and warrants to the
        Lenders
        that:

        
        

        
        
        4.1     

        
        

        
        Organization and Qualification. The
        Company and each of its Subsidiaries is a corporation, limited partnership, limited
        liability company, or joint venture, as applicable, duly organized and validly existing
        under the laws of the jurisdiction in which it is incorporated or organized, with
        corporate, limited liability or limited partnership power and authority to own, lease, use
        and operate its properties and to carry on its business as now operated and conducted. The
        Company and each of its Subsidiaries (i) is in good standing under its law of the
        jurisdiction in which it is organized and (ii) is duly qualified as a foreign corporation,
        limited liability company or limited partnership to do business and is in good standing in
        each jurisdiction in which its ownership or use of property or the nature of the business
        conducted by it makes such qualification necessary, except in the case of each of (i) and
        (ii) where the failure to be so qualified or in good standing would not have a Material
        Adverse Effect. Neither the Company nor any Subsidiary is in violation of any provision of
        its respective certificate or articles of incorporation, partnership agreement, bylaws or
        other organizational or charter documents, as the same may have been amended. Attached
        hereto as Schedule 4.1 is a complete and accurate organizational chart of the
        Company and its Subsidiaries. The Borrowing Subsidiaries are the only operating
        Subsidiaries of the Company.

        

        
        

        

        	
                	
                    
                    
                    4.2     

                	
                    
                    Authorization; Enforcement.
                    Each Borrower has all requisite corporate, limited liability or partnership, as
                    applicable, power and authority to enter into and perform this Agreement and
                    each of the other Transaction Documents and to consummate the transactions
                    contemplated hereby and thereby and to issue the Notes, in accordance with the
                    terms hereof and thereof. The execution and delivery of this Agreement and each
                    of the other Transaction Documents by each Borrower and the consummation by
                    them of the transactions contemplated hereby and thereby (including, without
                    limitation, the issuance of the Notes) have been duly authorized by the Board
                    of Directors or other governing body of such Borrower and no further consent or
                    authorization of any Borrower, its respective Board of Directors or other
                    governing body, or its respective stockholders is required. This Agreement and
                    each of the other Transaction Documents have been duly executed and delivered
                    by the Borrowers. This Agreement and each of the other Transaction Documents
                    will constitute upon execution and delivery by each Borrower, a legal, valid
                    and binding obligation of such Borrower enforceable against such Borrower in
                    accordance with its terms, except as such enforceability may be limited by: (i)
                    applicable bankruptcy, insolvency, reorganization, moratorium or other similar
                    laws in effect that limit creditors’ rights generally; (ii) equitable
                    limitations on the availability of specific remedies; (iii) principles of
                    equity (regardless of whether such enforcement is considered in a proceeding in
                    law or in equity); and (iv) to the extent rights to indemnification and
                    contribution may be limited by federal securities laws or the public policy
                    underlying such laws.

                

        

        	
                	
                    
                    
                    4.3     

                	
                    
                    Capital Stock and Related
                    Matters. Schedule 4.3 correctly sets forth (i) the state or states
                    in which each Borrower conducts its business, and (ii) a list of each class of
                    stock of the Company and the number of authorized and issued and outstanding
                    shares of each class of stock of the Company. Except as set forth on
                    Schedule 4.3, there is no plan, agreement or understanding providing
                    for, or contemplating, the issuance of any additional shares of capital stock
                    of the Company, and all of the outstanding capital stock of the Company has
                    been duly authorized, legally and validly issued, fully paid and nonassessable.
                    Except as set forth on Schedule 4.3, there are, as of the date hereof,
                    no outstanding options, rights, warrants or other agreements or instruments
                    obligating the Company to issue, deliver or sell, or cause to be issued,
                    delivered or sold, additional shares of the capital stock of the Company or
                    obligating the Company to grant, extend or enter into any such agreement or
                    commitment.

                

        

        	
                	
                    
                    
                    4.4     

                	
                    
                    No Conflicts. The execution,
                    delivery and performance of this Agreement and each of the other Transaction
                    Documents by each Borrower and the consummation by each Borrower of the
                    transactions contemplated hereby and thereby (including, without limitation,
                    the issuance of the Notes) will not (i) conflict with or result in a violation
                    of any provision of the articles or certificate of incorporation, certificate
                    or articles of organization, bylaws, operating agreement, partnership agreement
                    or other charter documents of any Borrower, (ii) violate or conflict with, or
                    result in a breach of any provision of, or constitute a default (or an event
                    which with notice or lapse of time or both could become a default) under, or
                    give to others any rights of termination, amendment, acceleration or
                    cancellation of, any material agreement, indenture, patent, patent license or
                    instrument to which the Company or any of its Subsidiaries is a party, or (iii)
                    result in a violation of any Legal Requirement (including federal and state
                    securities laws and regulations and regulations of any self-regulatory
                    organizations to which the Company or its securities are subject) applicable to
                    the Company or any of its Subsidiaries or by which any property or asset of the
                    Company or any of its Subsidiaries is bound or affected, except (A) such
                    conflicts, defaults, terminations, amendments, accelerations, cancellations and
                    violations set forth on Schedule 4.4, as to which consents,
                    authorizations, filings and notices shall have been obtained and be in full
                    force and effect as of the Closing Date, or (B) such conflicts, defaults,
                    terminations, amendments, accelerations, cancellations and violations as would
                    not, individually or in the aggregate, have a Material Adverse Effect. Neither
                    the Company nor any of its Subsidiaries is in default (and no event has
                    occurred which with notice or lapse of time would result in a default) under,
                    and neither the Company nor any of its Subsidiaries has taken any action or
                    failed to take any action that would give to others any rights of termination,
                    amendment, acceleration or cancellation of, any agreement or instrument to
                    which the Company or any of its Subsidiaries is a party or by which any
                    property or assets of the Company or any of its Subsidiaries is bound or
                    affected, except for possible defaults, actions and failure to take action as
                    would not, individually or in the aggregate, have a Material Adverse Effect.
                    Except as set forth on Schedule 4.4, the Borrowers are not required to
                    obtain any consent, authorization or order of, or make any filing or
                    registration with, any court, governmental agency, regulatory agency, self
                    regulatory organization or stock market or any third party in order for it to
                    execute, deliver or perform any of its obligations under the Transaction
                    Documents. All consents, authorizations, orders, filings and registrations that
                    any Borrower is required to effect or obtain pursuant to the preceding sentence
                    shall have been obtained and be in full force and effect as of the Closing
                    Date.

                

        

        

        

        
        
        4.5      SEC Documents; Financial
        Statements.

        
        
        a.     

        
        Since December 31, 2005, the Company has
        timely filed all reports, schedules, forms, statements and other documents required to be
        filed by it with the SEC pursuant to the reporting requirements of the 1933 Act and the
        1934 Act (all of the foregoing filed prior to the date hereof and all exhibits included
        therein and financial statements and schedules thereto and documents (other than exhibits
        to such documents) incorporated by reference therein, being hereinafter referred to herein
        as the “SEC Documents”), or has timely filed for a valid
        extension of such time of filing and has filed any such SEC Documents prior to the
        expiration of any such extension. As of their respective dates, the SEC Documents complied
        in all material respects with the requirements of the 1933 Act and the 1934 Act and the
        rules and regulations of the SEC promulgated thereunder applicable to the SEC Documents,
        and none of the SEC Documents, at the time they were filed with the SEC and when taken as a
        whole, contained any untrue statement of a material fact or omitted to state a material
        fact required to be stated therein or necessary in order to make the statements therein, in
        light of the circumstances under which they were made, not misleading.

        
        
        b.      As of their respective dates, the financial
        statements of the Company included in the SEC Documents complied as to form in all material
        respects with applicable accounting requirements and the published rules and regulations of
        the SEC with respect thereto. Such financial statements have been prepared in accordance
        with United States generally accepted accounting principles
        (“GAAP”), consistently applied, during the periods involved
        (except (i) as may be otherwise indicated in such financial statements or the notes
        thereto, or (ii) in the case of unaudited interim statements, to the extent they may not
        include footnotes, year end adjustments or may be condensed or summary statements) and
        fairly present in all material respects the consolidated financial position of the Company
        and its consolidated Subsidiaries as of the dates thereof and the consolidated results of
        their operations and cash flows for the periods then ended (subject, in the case of
        unaudited statements, to normal year-end audit adjustments). Except as set forth in the
        financial statements of the Company included in the SEC Documents, and except for
        liabilities and Contractual Obligations which, individually or taken in the aggregate would
        not reasonably be expected to have a Material Adverse Effect the Borrowers have no
        liabilities, contingent or otherwise, other than (i) liabilities incurred in the ordinary
        course of business subsequent to December 31, 2006, and (ii) Contractual Obligations
        incurred in the ordinary course of business and not required under GAAP to be reflected in
        such financial statements.

        

        	
                	
                    
                    
                    c.     

                	Each of the
                Borrowers has established and maintains disclosure controls and procedures (as such
                term is defined in Rule 13a-15(e) under the 1934 Act). Such disclosure controls and
                procedures: (A) are designed to ensure that material information relating to such
                Borrower and, with respect to the Company its Subsidiaries, is made known to such
                Borrower’s chief executive officer, president, chief operating officer and
                its chief financial officer by others within those entities, particularly during
                the periods in which the Company’s reports and filings under the 1934 Act are
                being prepared, (B) have been evaluated for effectiveness as of the end of the most
                recent annual period reported to the SEC, and (C) are effective to perform the
                functions for which they were established. Except as set forth on Schedule
                4.5(c), neither the auditors of the Borrowers nor the Board of Directors of any
                Borrower has been advised of: (x) any significant deficiencies or material
                weaknesses in the design or operation of the internal controls over financial
                reporting (as such term is defined in Rule 13a-15(f) under the 1934 Act) of any of
                the Borrowers that have materially affected any of the Borrowers internal control
                over financial reporting; or (y) any fraud, whether or not material, that involves
                management or other employees who have a role in the internal controls over
                financial reporting of any of the Borrowers. 

        

        

        

        
        
        4.6     

        
        Absence of Certain Changes. Except
        with respect to the transactions contemplated hereby and by each of the other Transaction
        Documents and except as set forth on Schedule 4.6, since December 31, 2006, (i) the
        Company and each of its Subsidiaries has conducted its business only in the ordinary
        course, consistent with past practice, and since that date, no changes have occurred that
        would reasonably be expected to have a Material Adverse Effect; and (ii) neither the
        Company nor its Subsidiaries has incurred any liabilities (contingent or otherwise) other
        than (A) trade payables, accrued expenses and other liabilities incurred in the ordinary
        course of business consistent with past practice and (B) liabilities not required to be
        reflected on the Company’s financial statements pursuant to GAAP or required to be
        disclosed in filings made with the SEC.

        
        

        

        	
                	
                    
                    
                    4.7     

                	Absence of
                Litigation. There is no Action pending or, to the knowledge of the Borrowers,
                threatened against or affecting the Company or any of its Subsidiaries that (i)
                adversely affects or challenges the legality, validity or enforceability of this
                Agreement, or (ii) would, if there were an unfavorable decision, have or reasonably
                be expected to have a Material Adverse Effect. Neither the Company nor any of its
                Subsidiaries, nor, to the knowledge of the Borrowers any director or officer
                thereof (in his capacity as such), is or has been the subject of any Action
                involving a claim of violation of or liability under federal or state securities
                laws or a claim of breach of fiduciary duty. To the knowledge of the Borrowers,
                there is not pending any investigation by the SEC involving the Company or any of
                its Subsidiaries or any current or former director or officer of the Company or its
                Subsidiaries (in his or her capacity as such). 

        

        	
                	
                    
                    
                    4.8     

                	Intellectual
                Property. The Company and each of its Subsidiaries owns or possesses the
                requisite licenses or rights to use all patents, patent applications, patent
                rights, inventions, know-how, trade secrets, copyrights, trademarks, trademark
                applications, service marks, service names, trade names and copyrights
                (“Intellectual Property”) necessary to enable it to
                conduct its business as now operated (and, to the Borrowers’ knowledge, as
                presently contemplated to be operated in the future); except as set forth on
                Schedule 4.8, there is no claim or Action by any person pertaining to, or
                proceeding pending, or to the Borrowers’ knowledge threatened, which
                challenges the right of the Company or of a Subsidiary with respect to any
                Intellectual Property necessary to enable it to conduct its business as now
                operated and to the Borrowers’ knowledge, the Company’s or its
                Subsidiaries’ current products and processes do not infringe on any
                Intellectual Property or other rights held by any person, except where any such
                infringement would not reasonably be expected to have a Material Adverse
                Effect.

        

        	
                	
                    
                    
                    4.9     

                	Tax
                Status. The Company and each of its Subsidiaries has made or filed all federal,
                state and foreign income and all other material tax returns, reports and
                declarations required by any jurisdiction to which it is subject (unless and only
                to the extent that the Company and each of its Subsidiaries has set aside on its
                books provisions reasonably adequate for the payment of all unpaid and unreported
                taxes) and has paid all taxes and other governmental assessments and charges that
                are material in amount, shown or determined to be due on such returns, reports and
                declarations, except those being Properly Contested. To the knowledge of the
                Borrowers, there is no basis for any claim by the taxing authority of any
                jurisdiction against the Company or any of its Subsidiaries for unpaid taxes in any
                material amount. Neither the Company nor its Subsidiaries has executed a waiver
                with respect to the statute of limitations relating to the assessment or collection
                of any foreign, federal, state or local tax.

        

        

        

        
        
        4.10      Permits; Compliance.

        
        
        a.     

        
        The Company and each of its Subsidiaries is
        in possession of all franchises, grants, authorizations, licenses, permits, easements,
        variances, exemptions, consents, certificates, approvals and orders necessary to own, lease
        and operate its properties and to carry on its business as it is now being conducted
        (collectively, “Permits”), and there is no Action pending or, to
        the knowledge of the Borrowers, threatened regarding suspension or cancellation of any of
        the Permits. Neither the Company nor any of its Subsidiaries is in conflict with, or in
        default or violation of, any of the Permits, except for any such conflicts, defaults or
        violations which, individually or in the aggregate, would not reasonably be expected to
        have a Material Adverse Effect.

        

        	
                	
                    
                    
                    b.     

                	Since December 31,
                2006, no event has occurred or, to the knowledge of the Borrowers, circumstance
                exists that (with or without notice or lapse of time): (a) would reasonably be
                expected to constitute or result in a violation by the Company or any of its
                Subsidiaries, or a failure on the part of the Company or its Subsidiaries to comply
                with, any Legal Requirement; or (b) would reasonably be expected to give rise to
                any obligation on the part of the Company or any of its Subsidiaries to undertake,
                or to bear all or any portion of the cost of, any remedial action of any nature in
                connection with a failure to comply with any Legal Requirement, except in either
                case that would not reasonably be expected to have a Material Adverse Effect.
                Neither the Company nor any of its Subsidiaries has received any notice or other
                communication from any regulatory authority or any other person, nor do the
                Borrowers have any knowledge regarding: (x) any actual, alleged, possible or
                potential violation of, or failure to comply with, any Legal Requirement, or (y)
                any actual, alleged, possible or potential obligation on the part of the Company or
                any of its Subsidiaries to undertake, or to bear all or any portion of the cost of,
                any remedial action of any nature in connection with a failure to comply with any
                Legal Requirement, except in either case that would not reasonably be expected to
                have a Material Adverse Effect.

        

        	
                	
                    
                    
                    c.     

                	The Company is in
                compliance in all material respects with the provisions of the Sarbanes-Oxley Act
                of 2002 and the rules and regulations promulgated thereunder that are applicable to
                it and has taken reasonable steps such that the Company expects to be in a position
                to comply with the requirements of Section 404 of the Sarbanes-Oxley Act of 2002
                and the rules and regulations promulgated thereunder at such time as Section 404
                becomes applicable to the Company.

        

        	
                	
                    
                    
                    d.     

                	The Company is, and
                has reason to believe that for the foreseeable future it will continue to be, in
                compliance with all applicable rules of the Nasdaq Global Market. The Company has
                not received notice from Nasdaq that the Company is not in compliance with the
                rules or requirements thereof. The issuance and sale of the Notes under this
                Agreement does not contravene the rules and regulations of the Nasdaq Global
                Market, and no approval of the stockholders of the Company is required for the
                Company to issue the Notes as contemplated by this Agreement.

        

        

        

        
        
        4.11     

        
        Environmental Matters.
        “Environmental Laws” shall mean, collectively, all Legal
        Requirements, including any federal, state, local or foreign statute, laws, rule,
        regulation, ordinance, code, policy or rule of common law or any judicial or administrative
        interpretation thereof, including any judicial or administrative order, consent, decree or
        judgment issued against the Company or its Subsidiaries, relating to pollution or
        protection of human health, the environment (including, without limitation, ambient air,
        surface water, groundwater, land surface or subsurface strata) or wildlife, including,
        without limitation, laws and regulations relating to the release or threatened release of
        chemicals, pollutants, contaminants, wastes, toxic substances, hazardous substances,
        petroleum or petroleum products (collectively, “Hazardous Materials
        ”) or to the manufacture, processing, distribution, use, treatment, storage,
        disposal, transport or handling of Hazardous Materials.
        Except for such matters as would not, singly or
        in the aggregate, reasonably be expected to result in a Material Adverse Effect: (i) the
        Company and its Subsidiaries have complied and are in compliance with all applicable
        Environmental Laws; (ii) without limiting
        the generality of the foregoing, the Company and its Subsidiaries have obtained, have
        complied, and are in compliance with all Permits that are required pursuant to
        Environmental Laws for the occupation of their respective facilities and the operation of
        their respective businesses; (iii) none
        of the Company or its Subsidiaries has received any written notice, report or other
        information regarding any actual or alleged violation of Environmental Laws, or any
        liabilities or potential liabilities (including fines, penalties, costs and expenses),
        including any investigatory, remedial or corrective obligations, relating to any of them or
        their respective facilities arising under Environmental Laws, nor, to the knowledge of the
        Borrowers is there any factual basis therefore; (iv)
        there are no underground storage tanks,
        polychlorinated biphenyls, urea formaldehyde or other hazardous substances (other than
        small quantities of hazardous substances for use in the ordinary course of the operation of
        the Company’s and its Subsidiaries’ respective businesses, which are stored and
        maintained in accordance and in compliance with all applicable Environmental Laws), in, on,
        over, under or at any real property owned or operated by the Company and/or its
        Subsidiaries; (v) to the knowledge of the
        Borrowers there are no conditions existing at any real property or with respect to the
        Company or any of its Subsidiaries that require remedial or corrective action, removal,
        monitoring or closure pursuant to the Environmental Laws
        and (vi) to the knowledge of the Borrowers,
        neither the Company nor any of its Subsidiaries has contractually, by operation of law, or
        otherwise amended or succeeded to any liabilities arising under any Environmental Laws of
        any predecessors or any other Person.

        
        

        

        	
                	
                    
                    
                    4.12     

                	Title to
                Property. The Company and its Subsidiaries have good and indefeasible title to
                all real property and all personal property owned by them which is material to the
                business of the Company and its Subsidiaries. Any leases of real property and
                facilities of the Company and its Subsidiaries are valid and effective in
                accordance with their respective terms, except as would not have a Material Adverse
                Effect. All property and assets of any kind (real or personal, tangible or
                intangible) of the Company and any Subsidiary are free from any Liens, except as
                permitted by Section 5.5, and except for any Liens securing the Term
                Loans, which Liens will be released simultaneously with or immediately following
                the Closing in accordance with Section 5.1. 

        

        	
                	
                    
                    
                    4.13     

                	No Investment
                Company or Real Property Holding Company. No Borrower is, and upon the issuance
                and sale of the Notes as contemplated by this Agreement will be, an
                “investment company” as defined under the Investment Company Act of
                1940 (“Investment Company”). No Borrower is controlled by
                an Investment Company. No Borrower is a United States real property holding
                company, as defined under the Internal Revenue Code of 1986, as amended (the
                “Code ”).

        

        	
                	
                    
                    
                    4.14     

                	No Brokers.
                No Borrower has taken any action which would give rise to any claim by any person
                for brokerage commissions, transaction fees or similar payments relating to this
                Agreement or the transactions contemplated hereby.

        

        	
                	
                    
                    
                    4.15     

                	Labor
                Relations. No labor or employment dispute exists or, to the knowledge of the
                Borrowers, is imminent or threatened, with respect to any of the employees of any
                Borrower that has, or would reasonably be expected to have, individually or in the
                aggregate, a Material Adverse Effect.

        

        	
                	
                    
                    
                    4.16     

                	Transactions with
                Affiliates and Employees. Except as set forth in the SEC Documents, none of the
                officers or directors of any of the Borrowers, and to the knowledge of the
                Borrowers, none of the employees of any of the Borrowers, is presently a party to
                any transaction or agreement with the any of the Borrowers (other than for services
                as employees, officers and directors) exceeding $60,000, including any Contractual
                Obligation providing for the furnishing of services to or by, providing for rental
                of real or personal property to or from, or otherwise requiring payments to or from
                any officer, director or such employee or, to the knowledge of any of the
                Borrowers, any entity in which any officer, director, or any such employee has a
                substantial interest or is an officer, director, trustee or
                partner.

        

        	
                	
                    
                    
                    4.17     

                	Insurance.
                The Company and its Subsidiaries have insurance policies in full force and effect
                of a type, covering such risks and in such amounts, and having such deductibles and
                exclusions as are customary for conducting businesses and owning assets similar in
                nature and scope to those of the Company and its Subsidiaries. The amounts of all
                such insurance policies and the risks covered thereby are in accordance in all
                material respects with all material Contractual Obligations and with all applicable
                Legal Requirements. With respect to each such insurance policy: (i) the policy is
                valid, outstanding and enforceable in accordance with its terms, except as such
                enforceability may be limited by applicable bankruptcy, insolvency, reorganization,
                moratorium or other similar laws in effect that limit creditors’ rights
                generally, equitable limitations on the availability of specific remedies and
                principles of equity (regardless of whether such enforcement is considered in a
                proceeding in law or in equity); (ii) neither the Company nor any of its
                Subsidiaries is in breach or default with respect to its obligations thereunder in
                any material respect; and (iii) no party to the policy has repudiated, or given
                notice of an intent to repudiate, any provision thereof.

        

        	
                	
                    
                    
                    4.18     

                	ERISA. Based
                upon the Employee Retirement Income Security Act of 1974, as amended
                (“ERISA”), and the regulations and published
                interpretations thereunder: (i) neither the Company nor any of its Subsidiaries has
                engaged in any Prohibited Transactions (as defined in Section 406 of ERISA and
                Section 4975 of the Code); (ii) the Company and each of its Subsidiaries has met
                all applicable minimum funding requirements under Section 302 of ERISA in respect
                to its plans; (iii) none of the Borrowers has any knowledge of any event or
                occurrence which would cause the Pension Benefit Guaranty Corporation to institute
                proceedings under Title IV of ERISA to terminate any employee benefit plan(s); (iv)
                neither the Company nor any of its Subsidiaries has any fiduciary responsibility
                for investments with respect to any plan existing for the benefit of persons other
                than its or such Subsidiary’s employees; and (v) neither the Company nor any
                of its Subsidiaries has withdrawn, completely or partially, from any multi-employer
                pension plan so as to incur liability under the Multiemployer Pension Plan
                Amendments Act of 1980.

        

        	
                	
                    
                    
                    4.19     

                	Use of Proceeds;
                Federal Regulations. The Borrowers shall use the proceeds of the Debt
                Financing, together with available cash on hand, to repay the Term Loan. No part of
                the proceeds of the Debt Financing will be used (a) directly or indirectly, for
                “buying” or “carrying” any “margin stock”
                within the respective meanings of each of the quoted terms under Regulation U of
                the FRB as now and from time to time hereafter in effect, or (b) so as to involve
                the Borrowers or the Lenders in a violation of Regulation U of the
                FRB.

        

        	
                	
                    
                    
                    4.20     

                	Usury. None
                of the amounts to be received by the Lenders as interest under the Notes is
                usurious or illegal under applicable Legal Requirements.

        

        	
                	
                    
                    
                    4.21     

                	Solvency.
                After giving effect to the consummation of the transactions contemplated by this
                Agreement, the Borrowers have sufficient capital to carry on its business and
                transactions and all business and transactions in which they are about to engage,
                and are solvent and able to pay their debts as they mature. 

        

        	
                	
                    
                    
                    4.22     

                	Disclosure.
                The Borrowers understand and confirm that the Lenders will rely on the
                representations and covenants contained herein in effecting the transactions
                contemplated by this Agreement and the other Transaction Documents. All
                representations and warranties provided to the Lenders, including the disclosures
                in the Borrowers’ disclosure schedules attached hereto furnished by or on
                behalf of the Borrowers, taken as a whole are true and correct and do not contain
                any untrue statement of material fact or omit to state any material fact necessary
                in order to make the statements made therein, in the light of the circumstances
                under which they were made, not misleading. No event or circumstance has occurred
                or information exists with respect to the Company or its Subsidiaries or its or
                their businesses, properties, prospects, operations or financial conditions, which,
                under applicable law, rule or regulation, requires public disclosure or
                announcement by the Company but which has not been so publicly announced or
                disclosed. 

        

        	
                	
                    
                    ARTICLE
                    5     

                	
                    

                    
                    Covenants

                

        

        

        

        
        

        
        
        5.1     

        
        

        
        Use of Proceeds. The Borrowers shall use
        the proceeds from the sale of the Notes, together with available cash on hand, to repay the
        Term Loan simultaneously with or immediately following the Closing. In connection with such
        repayment of the Term Loan, the Borrowers shall obtain from the Term Lenders and the Agent
        payoff letters, in form and substance reasonably satisfactory to the Lenders, and evidence
        reasonably satisfactory to the Lenders of the release of all Liens on the assets of the
        Company or any of its Subsidiaries in connection with the Term Loan, including, without
        limitation, UCC-3 termination statements, or binding commitments to deliver such
        statements, releasing all security interests relating to such assets.

        

        
        

        

        	
                	
                    
                    
                    5.2     

                	
                    
                    Expenses. The Borrowers shall
                    pay the reasonable fees and expenses, including without limitation reasonable
                    attorneys’ fees and expenses and out-of-pocket travel costs and expenses,
                    incurred by the Lenders in connection with their due diligence review of the
                    Borrowers and the negotiation, preparation, execution, delivery and performance
                    of this Agreement and the other Transaction Documents and the transactions
                    hereunder and thereunder, including without limitation any collection and/or
                    enforcement of the Notes.

                

        

        	
                	
                    
                    
                    5.3     

                	
                    
                    Affirmative Covenants. So
                    long as the Notes are outstanding, each Borrower shall, and the Company shall
                    cause each of its Subsidiaries to:

                

        

        

        

        
        
        a.     

        
        

        
        Pay, discharge or otherwise satisfy at or before
        maturity or before they become delinquent, as the case may be, all material obligations of
        whatever nature, including without limitation taxes, except where the amount or validity
        thereof is currently being Properly Contested.

        

        

        	
                	
                    
                    
                    b.     

                	
                    
                    (i) Preserve, renew and keep in full
                    force and effect its organizational existence; and (ii) take all reasonable
                    action to maintain all rights, privileges and franchises necessary or desirable
                    in the ordinary course of business, except, in each case, as permitted by
                    Sections 5.7 and 5.8 and except, in the case of clause
                    (ii), to the extent that the failure to do so would not have a Material Adverse
                    Effect.

                

        

        	
                	
                    
                    
                    c.     

                	
                    
                    Comply in all material respects with
                    all Contractual Obligations and Legal Requirements (including, without
                    limitation, all Environmental Laws and ERISA).

                

        

        	
                	
                    
                    
                    d.     

                	
                    
                    (i) Keep proper books of record and
                    account in which full, true and correct entries in conformity with GAAP and all
                    Legal Requirements shall be made of all dealings and transactions in relation
                    to its business and activities, and (ii) permit representatives of the Lenders
                    upon reasonable advance notice to visit and inspect any of its properties and
                    examine and make abstracts from any of its books and records at any reasonable
                    time, but only during normal business hours.

                

        

        

        

        
        
        5.4     

        
        

        
        Incurring Debt. Without the prior written
        consent of the Lenders, which consent shall not be unreasonably withheld, the Company shall
        not itself, nor shall it cause, permit or allow any Subsidiary to create, assume, incur,
        have outstanding, or in any manner become liable in respect of any Indebtedness other
        than:

        

        
        
        a.     

        
        

        
        the Senior Indebtedness;

        

        

        	
                	
                    
                    
                    b.     

                	
                    
                    Indebtedness with respect to the
                    acquisition of fixed or capital assets in an aggregate principal amount not to
                    exceed $2,000,000 at any one time outstanding;

                

        

        	
                	
                    
                    
                    c.     

                	
                    
                    unsecured Indebtedness created,
                    incurred or maintained that is expressly subordinate and junior in all respects
                    (including, without limitation, with respect to the right of payment) to the
                    Notes, in an amount not to exceed $15,000,000 at any one time
                    outstanding;

                

        

        	
                	
                    
                    
                    d.     

                	
                    
                    accounts payable, current accrued
                    operating expenses (other than for borrowed money) and other non-cash accruals
                    by the Company or any of its Subsidiaries that are not aged more than ninety
                    (90) days from the billing date or more than thirty (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 the billing date, as applicable), unless the
                    same are being Properly Contested;

                

        

        	
                	
                    
                    
                    e.     

                	
                    
                    payments that the Company or any of
                    its Subsidiaries is required to make as the lessee by the terms of any lease to
                    which it is a party, so long as the aggregate of such rental payments payable
                    during any current or future period of twelve (12) consecutive months under the
                    lease in question and all other leases under which the Company or any of its
                    Subsidiaries is then lessee do not exceed $25,000,000;

                

        

        	
                	
                    
                    
                    f.     

                	
                    
                    Indebtedness for accrued payroll,
                    taxes, and other operating expenses (other than for borrowed money) incurred in
                    the ordinary course of business of the Company or any of its Subsidiaries,
                    including cash management obligations, in each case so long as payment thereof
                    is not past due and payable and unless, in the case of taxes only, such taxes
                    are being Properly Contested;

                

        

        	
                	
                    
                    
                    g.     

                	
                    
                    Permitted Contingent
                    Obligations;

                

        

        	
                	
                    
                    
                    h.     

                	
                    
                    Debt in the form of reimbursement
                    obligations for Surety Bonds procured in the ordinary course of business;
                    and

                

        

        	
                	
                    
                    
                    i.     

                	
                    
                    Indebtedness consisting of
                    “Billings in Excess of Costs and Estimated Earnings On Uncompleted
                    Contracts,” and “Other Non Current Liabilities,” each as
                    listed on the Company’s reported financial statements (which reporting is
                    consistent with prior periods), provided that such categories of Indebtedness
                    shall not include Indebtedness for borrowed money.

                

        

        

        

        
        
        5.5     

        
        

        
        Refinancing of the Senior Indebtedness.
        Subject to Section 5.4, if any of the Borrowers enter into an agreement or
        agreements (a “New Credit Facility”) for the refinancing
        of the Senior Indebtedness which (a) contemplates the repayment of all amounts then
        outstanding under the Senior Indebtedness Loan Documents by amounts advanced under the New
        Credit Facility, and (b) provides for the issuance of term loans to any of the Borrowers
        with an aggregate principal amount of at least $50,000,000, then the Lenders may at their
        option and upon written notice to the Borrowers require the Borrowers to repay the Notes in
        full contemporaneously with the closing of the New Credit Facility. Borrowers shall give
        the Lenders written notice of their intent to obtain a New Credit Facility at least thirty
        (30) days prior to the closing thereof.

        

        

        	
                	
                    
                    
                    5.6     

                	
                    
                    Liens. Without the prior
                    written consent of the Lenders, which consent shall not be unreasonably
                    withheld, the Company shall not itself, nor shall it cause, permit or allow any
                    Subsidiary to create, assume, incur, suffer or permit to exist any Lien upon or
                    with respect to any of their real or personal property, other than the
                    following (collectively, “Permitted
                    Encumbrances”):

                

        

        

        

        
        
        a.     

        
        

        
        Liens for taxes not yet due or that are being
        Properly Contested;

        

        

        	
                	
                    
                    
                    b.     

                	
                    
                    Carriers’,
                    warehousemen’s, mechanics’, materialmen’s, repairmen’s
                    or other like Liens arising in the ordinary course of business that are not
                    overdue for a period of more than thirty (30) days or that are being Properly
                    Contested;

                

        

        	
                	
                    
                    
                    c.     

                	
                    
                    Easements, rights-of-way,
                    restrictions and other similar encumbrances incurred in the ordinary course of
                    business that, in the aggregate, are not substantial in amount and that do not
                    materially interfere with the ordinary conduct of the business of the Company
                    or any of its Subsidiaries;

                

        

        	
                	
                    
                    
                    d.     

                	
                    
                    Liens securing Indebtedness
                    permitted by Section 5.4(b), provided that (i) such Liens are created
                    substantially simultaneously with the acquisition of such fixed or capital
                    assets; (ii) such Liens do not at any time encumber any property other than the
                    property financed by such Indebtedness; and (iii) the amount of Indebtedness
                    secured thereby is not subsequently increased;

                

        

        	
                	
                    
                    
                    e.     

                	
                    
                    Statutory Liens (excluding any Liens
                    imposed pursuant to any of the provisions of ERISA) arising in the ordinary
                    course of business of the Company or a Subsidiary, but only if and for so long
                    as (a) payment in respect of any such Lien is not at the time required, or the
                    Indebtedness secured by any such Lien is being Properly Contested, and (b) such
                    Liens do not materially detract from the value of the property or assets of the
                    Company or such Subsidiary and do not materially impair the use thereof in the
                    operation of the Company’s or such Subsidiary’s
                    business;

                

        

        	
                	
                    
                    
                    f.     

                	
                    
                    Liens arising solely by virtue of
                    the rendition, entry, or issuance against the Company or any Subsidiary, or any
                    property or assets of the Company or any Subsidiary, of any judgment, writ,
                    order or decree for so long as any such Lien is in existence for less than
                    thirty (30) consecutive days after it first arises or is being Properly
                    Contested.

                

        

        	
                	
                    
                    
                    g.     

                	
                    
                    Liens incurred or deposits made in
                    the ordinary course of business to secure the performance of tenders, bids,
                    leases, trade contracts (other than for borrowed money), and other similar
                    obligations or arising in the ordinary course of business as a result of
                    progress payments under government contracts;

                

        

        	
                	
                    
                    
                    h.     

                	
                    
                    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;

                

        

        	
                	
                    
                    
                    i.     

                	
                    
                    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 Uniform
                    Commercial Code on payment items in the course of collection; and

                

        

        	
                	
                    
                    
                    j.     

                	
                    
                    Liens securing the Senior
                    Indebtedness.

                

        

        

        

        
        
        5.7     

        
        

        
        Fundamental Changes. Neither the Company
        nor any Subsidiary shall enter into any merger, consolidation or amalgamation, or
        liquidate, wind up or dissolve itself (or suffer any liquidation or dissolution), or sell,
        lease, assign, convey, transfer or otherwise dispose of all or substantially all of its
        property or business, except that: (a) any Subsidiary may be merged or consolidated with
        any Borrowing Subsidiary or with the Company (provided that the Borrowing Subsidiary or the
        Company, as the case may be, be the continuing or surviving corporation); and (b) any
        Subsidiary may sell, lease, assign, convey, transfer or otherwise dispose of any or all of
        its assets to any Borrowing Subsidiary, to the Company, or as permitted by Section
        5.8.

        

        
        

        

        	
                	
                    
                    
                    5.8     

                	
                    
                    Sale of Assets. Neither the
                    Company nor any Subsidiary shall sell, lease, assign, convey, transfer or
                    otherwise dispose of any material property or assets, whether now owned or
                    hereafter acquired, except for (a) the disposition of obsolete or worn-out
                    property in the ordinary course of business; (b) the sale of inventory in the
                    ordinary course of business; (c) sales and other dispositions the net cash
                    proceeds of which are used to repay all outstanding principal and interest
                    accrued under the Notes; (d) sales, transfers and other dispositions permitted
                    by the Senior Indebtedness Loan Documents as set forth on Schedule 5.7,
                    provided that any sales, transfers and other dispositions permitted by this
                    Section 5.7(d) shall, in the aggregate, have a value of no more
                    than $4,000,000, and provided, further, that any sales, transfers and other
                    dispositions that are permitted by the Senior Indebtedness Loan Documents only
                    with the prior consent of the Senior Lender shall require the prior written
                    consent of the Lenders, which consent shall not be unreasonably
                    withheld.

                

        

        	
                	
                    
                    
                    5.9     

                	
                    
                    Reporting. The Borrowers
                    shall furnish and deliver, or cause to be furnished and delivered, to the
                    Lenders:

                

        

        

        

        
        
        a.     

        
        

        
        As soon as available, but in no event more than
        ninety (90) days after the close of each fiscal year of the Company, a copy of the audited
        consolidated balance sheet of the Company and its consolidated Subsidiaries as at the end
        of such year and the related consolidated statements of income and of cash flows for such
        year, setting forth in each case in comparative form the figures for the precious year,
        reported on without a “going concern” or like qualification or exception, or
        qualification arising out of the scope of the audit, by Ernst & Young LLP or other
        independent certified public accountants of nationally recognized standing;

        

        

        	
                	
                    
                    
                    b.     

                	
                    
                    As soon as available, but in no
                    event more than forty-five (45) days after the end of each of the first three
                    quarterly periods of each fiscal year of the Company, the unaudited
                    consolidated balance sheet of the Company and its consolidated Subsidiaries as
                    at the end of such quarter and the related unaudited consolidated statements of
                    income and of cash flows for such quarter and the portion of the fiscal year
                    through the end of such quarter, setting forth in each case in comparative form
                    the figures for the previous year, certified by the chief financial officer of
                    the Company as being fairly stated in all material respects (subject to normal
                    year-end adjustments);

                

        

        	
                	
                    
                    
                    c.     

                	
                    
                    At the same time that the annual and
                    quarterly financial statements required by paragraphs (a) and (b) of this
                    Section 5.9, a compliance certificate signed by the chief
                    executive officer of the Company certifying that (i) the Borrowers are in
                    compliance in all material respects with all covenants contained in this
                    Agreement and the Notes; (ii) no Event of Default has occurred or is
                    continuing; and (iii) the Borrowers’ representations and warranties are
                    true and correct in all material respects (provided, however, that such
                    qualification shall only apply to representations or warranties not otherwise
                    qualified by materiality or Material Adverse Effect) as of the date of such
                    certificate;

                

        

        	
                	
                    
                    
                    d.     

                	
                    
                    Promptly prior to the execution
                    thereof, copies of substantially final drafts of any proposed amendment,
                    supplement, waiver or other modification with respect to the Senior
                    Indebtedness;

                

        

        	
                	
                    
                    
                    e.     

                	
                    
                    Immediately after receiving
                    knowledge thereof, notice in writing of any Action initiated by, or brought
                    before, any court or governmental authority, in connection with the Company or
                    any Subsidiary; provided, however that the Borrowers shall not be required to
                    provide such notice in connection with ordinary course business litigation
                    that, if adversely decided, would not have a Material Adverse
                    Effect;

                

        

        	
                	
                    
                    
                    f.     

                	
                    
                    Promptly after the occurrence
                    thereof, notice of any other matter that has resulted in, or would reasonably
                    be expected to result in, an Event of Default or a Material Adverse Effect;
                    and

                

        

        	
                	
                    
                    
                    g.     

                	
                    
                    Promptly, such additional financial
                    and other information as the Lenders may from time to time reasonably request,
                    so long as such information is not confidential.

                

        

        

        

        

        

        	
                	
                    
                    ARTICLE
                    6     

                	
                    

                    
                    Conditions To The
                    Borrowers’
                    Obligation

                

        

        

        

        
        
        The obligation of the
        Borrowers
        hereunder to issue and sell
        the Notes
        to
        the Lenders
        at the Closing is subject to
        the satisfaction, at or before the Closing Date, of each of the following conditions
        thereto, provided that these conditions are for the
        Borrowers’
        sole benefit and may be
        waived by the
        Borrowers
        at any time in its sole
        discretion:

        
        

        
        
        6.1     

        
        

        
        Delivery of Transaction Documents. The
        Lenders shall have executed and delivered the Transaction Documents to which it is a party
        to the Borrowers.

        

        
        

        

        	
                	
                    
                    
                    6.2     

                	
                    
                    Payment of Purchase Price.
                    The Lenders shall have delivered the Purchase Price in accordance with
                    Section 2.2 above.

                

        

        	
                	
                    
                    
                    6.3     

                	
                    
                    Representations and
                    Warranties. The representations and warranties of the Lenders shall be true
                    and correct in all material respects (provided, however, that such
                    qualification shall only apply to representations or warranties not otherwise
                    qualified by materiality) as of the date when made and as of the Closing Date
                    as though made at that time (except for representations and warranties that
                    speak as of a specific date), and the applicable Lender shall have performed,
                    satisfied and complied in all material respects with the covenants, agreements
                    and conditions required by this Agreement to be performed, satisfied or
                    complied with by the applicable Lender at or prior to the Closing
                    Date.

                

        

        	
                	
                    
                    
                    6.4     

                	
                    
                    Litigation. No litigation,
                    statute, rule, regulation, executive order, decree, ruling or injunction shall
                    have been enacted, entered, promulgated or endorsed by or in any court or
                    governmental authority of competent jurisdiction or any self-regulatory
                    organization having authority over the matters contemplated hereby which
                    prohibits the consummation of any of the transactions contemplated by this
                    Agreement.

                

        

        	
                	
                    
                    ARTICLE
                    7     

                	
                    

                    
                    Conditions to
                    The Lenders’
                    Obligation

                

        

        

        

        
        
        The obligation of the
        Lenders
        hereunder to purchase
        the Notes
        at the Closing is subject to
        the satisfaction, at or before the Closing Date, of each of the following conditions,
        provided that these conditions are for the Lenders
        ’
        sole benefit and may be
        waived by the
        Lenders
        at any time in
        their
        sole
        discretion:

        
        

        
        
        7.1     

        
        

        
        Delivery of Transaction Documents; Issuance
        of Notes. The Borrowers shall have executed and delivered the Transaction
        Documents to the Lenders, including the Notes.

        

        
        

        

        	
                	
                    
                    
                    7.2     

                	
                    
                    Delivery of Authority
                    Documents. The Borrowers shall have executed and delivered the
                    following:

                

        

        

        

        
        
        a.     

        
        

        
        A copy, certified by the Secretary of State of
        the Sate of Delaware, of the Certificate of Incorporation of the Company, as
        amended.

        

        

        	
                	
                    
                    
                    b.     

                	
                    
                    A copy, certified by the appropriate
                    jurisdictional authority, of the certificate or articles of incorporation of
                    each Borrower that is a corporation, the certificate or articles of formation
                    of each Borrower that is a limited liability company, and the certificate or
                    articles of limited partnership of each Borrower that is a limited partnership,
                    as well as any comparable formation documents of any Borrower not otherwise
                    specifically referenced herein.

                

        

        	
                	
                    
                    
                    c.     

                	
                    
                    Good standing certificates of the
                    Company issued by the Secretary of State of Delaware and Texas.

                

        

        	
                	
                    
                    
                    d.     

                	
                    
                    Good standing certificate for each
                    Borrowing Subsidiary from its jurisdiction of formation.

                

        

        	
                	
                    
                    
                    e.     

                	
                    
                    A copy, certified by the secretary
                    or an assistant secretary of each Borrower, of the bylaws or other applicable
                    organizational documents of such Borrower.

                

        

        	
                	
                    
                    
                    f.     

                	
                    
                    A copy, certified by the secretary
                    or an assistant secretary of each Borrower, of the resolutions of the Board of
                    Directors or other governing body of such Borrower authorizing the execution,
                    delivery and performance of this Agreement and the other Transaction
                    Documents.

                

        

        	
                	
                    
                    
                    g.     

                	
                    
                    An incumbency certificate of the
                    secretary or an assistant secretary of each Borrower certifying the names of
                    the officer or officers of such Borrower authorized to sign this Agreement, the
                    Notes and the other Transaction Documents, together with a sample of the true
                    signature of each such officer (and the Lenders may conclusively rely on such
                    certificate until formally advised by a like certificate of any changes
                    therein).

                

        

        	
                	
                    
                    
                    h.     

                	
                    
                    A certificate of the secretary or an
                    assistant secretary of each Borrower certifying that, since the date of the
                    issuance of the respective certificate of good standing of such Borrower, no
                    action has been taken by such Borrower or its shareholders, directors or
                    officers in contemplation of the filing of any document in contemplation of the
                    liquidation or dissolution of such Borrower and no event has affecting in any
                    manner whatsoever the good standing such Borrower.

                

        

        	
                	
                    
                    
                    i.     

                	
                    
                    Such other certificates, affidavits,
                    schedules, resolutions, opinions, notes and/or other documents that are
                    provided for hereunder or as the Lenders may reasonably request.

                

        

        

        

        
        
        7.3     

        
        

        
        Representations and Warranties. The
        representations and warranties of the Borrowers shall be true and correct in all material
        respects (provided, however, that such qualification shall only apply to representations or
        warranties not otherwise qualified by materiality or Material Adverse Effect) as of the
        date when made and as of the Closing Date as though made at such time (except for
        representations and warranties that speak as of a specific date) and the Borrowers shall
        have performed, satisfied and complied in all material respects with the covenants,
        agreements and conditions required by this Agreement to be performed, satisfied or complied
        with by the Borrowers at or prior to the Closing Date, and the Borrowers shall have
        delivered a certificate executed by the chief executive officer of the Company certifying
        compliance with this Section 7.3.

        

        
        

        

        	
                	
                    
                    
                    7.4     

                	
                    
                    Consents
                    . Any consents or approvals
                    required to be secured by the
                    Borrowers
                    for the consummation of the
                    transactions contemplated by the Transaction Documents, including without
                    limitation the consent of the Senior Lender
                    shall have been obtained and shall
                    be reasonably satisfactory to the
                    Lenders and shall include the
                    Senior Lender’s consent to the repurchase by the Company of its common
                    shares, and the Borrowers shall have provided the Lenders with copies,
                    certified by the secretary or an assistant secretary of each Borrower, of all
                    such consents and
                    approvals.

                

        

        	
                	
                    
                    
                    7.5     

                	
                    
                    Litigation. No Action shall
                    have been enacted, entered, promulgated or endorsed by or in any court or
                    governmental authority of competent jurisdiction or any self-regulatory
                    organization having authority over the matters contemplated hereby which
                    prohibits the consummation of any of the transactions contemplated by this
                    Agreement.

                

        

        	
                	
                    
                    
                    7.6     

                	
                    
                    Opinion. The Lenders shall
                    have received an opinion of the Borrowers’ counsel, dated as of the
                    Closing Date, in form, scope and substance reasonably satisfactory to the
                    Lenders with respect to the matters set forth in Exhibit B
                    attached hereto.

                

        

        	
                	
                    
                    
                    7.7     

                	
                    
                    No Material Adverse
                    Change. There shall not have occurred a Material Adverse Effect prior to
                    the Closing Date.

                

        

        	
                	
                    
                    ARTICLE
                    8     

                	
                    

                    
                    Termination

                

        

        

        

        
        

        
        
        8.1     

        
        

        
        Termination Provisions. This Agreement
        may be terminated at any time before the Closing Date:

        

        
        
        a.     

        
        

        
        By mutual consent of the Borrowers and the
        Lenders;

        

        

        	
                	
                    
                    
                    b.     

                	
                    
                    By either the Borrowers or the
                    Lenders as applicable, in the event that any of the conditions precedent to
                    their respective obligations to consummate the transactions contemplated hereby
                    as set forth in Article 6 or Article 7, through no fault of the
                    terminating party, have not been met and satisfied and have become impossible
                    of fulfillment;

                

        

        	
                	
                    
                    
                    c.     

                	
                    
                    By either the Borrowers or the
                    Lenders if the Closing Date does not occur before December 15, 2007, or such
                    later date as the parties may mutually agree upon (provided that the
                    terminating party is not then in material breach of any representation,
                    warranty, covenant or other agreement contained herein, provided, however, that
                    such qualification as to materiality shall only apply to representations or
                    warranties not otherwise qualified by materiality or Material Adverse
                    Effect);

                

        

        	
                	
                    
                    
                    d.     

                	
                    
                    By the Lenders if there has been any
                    material breach of any representation, warranty, agreement or covenant in this
                    Agreement by the Borrowers, which breach cannot be or has not been cured within
                    thirty (30) days after giving written notice thereof to the Borrowers,
                    provided, however, that such qualification as to materiality shall only apply
                    to representations or warranties not otherwise qualified by materiality or
                    Material Adverse Effect; and

                

        

        	
                	
                    
                    
                    e.     

                	
                    
                    By the Borrowers if there has been
                    any material breach of any representation, warranty, agreement or covenant in
                    this Agreement by the Lenders, which breach cannot be or has not been cured
                    within thirty (30) days after giving written notice thereof to the Lenders;
                    provided, however, that such qualification as to materiality shall only apply
                    to representations or warranties not otherwise qualified by
                    materiality.

                

        

        

        

        
        
        8.2     

        
        

        
        Effect of Termination. Upon the
        termination of this Agreement pursuant to the terms hereof, this Agreement will be void and
        neither party will have any further liability or obligations with respect hereof, except as
        otherwise provided in this Agreement or except and to the extent termination results from
        the intentional breach by a party of any of its representations, warranties or covenants
        hereunder.

        

        

        	
                	
                    
                    ARTICLE
                    9     

                	
                    

                    
                    Indemnification

                

        

        

        

        
        

        
        
        9.1     

        
        

        
        Indemnification by the Borrowers.
        The Borrowers, jointly and severally, agree to indemnify each Lender and its affiliates and
        hold each Lender and its affiliates harmless from and against any and all liabilities,
        losses, damages, costs and expenses of any kind (including, without limitation, the
        reasonable fees and disbursements of such Lender’s counsel in connection with any
        investigative, administrative or judicial proceeding), which may be incurred by such Lender
        or such affiliates as a result of any claims made against such Lender or such affiliates by
        any person that relate to or arise out of (i) any breach by any Borrower of any of the
        representations, warranties or covenants contained in this Agreement or in the Transaction
        Documents, or (ii) any litigation, investigation or proceeding instituted by any person
        with respect to this Agreement or the Notes (excluding, however, any such litigation,
        investigation or proceeding which arises solely from the acts or omissions of the Lenders
        or their affiliates).

        

        
        

        

        	
                	
                    
                    
                    9.2     

                	
                    
                    Notification. Any person
                    entitled to indemnification hereunder (“Indemnified
                    Party”) will (i) give prompt notice to the Borrowers, of any
                    third party claim, action or suit with respect to which it seeks
                    indemnification (the “Claim”) (but omission of such
                    notice shall not relieve the Borrowers from liability hereunder except to the
                    extent it is actually prejudiced by such failure to give notice),
                    specifying in reasonable detail the factual basis
                    for the Claim, the amount thereof, estimated in good faith, and the method of
                    computation of the Claim, all with reasonable particularity and containing a
                    reference to the provisions of this Agreement in respect of which such
                    indemnification is sought with respect to the Claim, and (ii) unless in
                    such Indemnified Party’s reasonable judgment a conflict of interest may
                    exist between such Indemnified Party and the Borrowers with respect to such
                    claim, permit the Borrowers to assume the defense of the Claim with counsel
                    reasonably satisfactory to the Indemnified Party. The Indemnified Party shall
                    cooperate fully with the
                    Borrowers with respect to the defense of
                    the Claim and, if the
                    Borrowers
                    elect to assume control of the defense of the
                    Claim, the Indemnified Party shall have the right to participate in the defense
                    of the Claim at its own expense. If the
                    Borrowers do
                    not elect to assume control or otherwise participate in the defense of the
                    Claim, then the Indemnified Party may defend through counsel of its own
                    choosing. If such defense is not assumed by the Borrowers, the Borrowers
                    will not be subject to any liability under this Agreement or otherwise for any
                    settlement made without their consent (but such consent will not be
                    unreasonably withheld or delayed). If the Borrowers elect not to or are not
                    entitled to assume the defense of a Claim, they will not be obligated to pay
                    the fees and expenses of more than one counsel for all Indemnified Parties with
                    respect to the Claim, unless an actual conflict of interest exists between such
                    Indemnified Party and any other of such Indemnified Parties with respect to the
                    Claim, in which event the Borrowers will be obligated to pay the fees and
                    expenses of such additional counsel or counsels.

                

        

        	
                	
                    
                    ARTICLE
                    10     

                	
                    

                    
                    Governing Law;
                    Miscellaneous

                

        

        

        

        
        

        
        
        10.1     

        
        

        
        Governing Law. This Agreement shall be
        enforced, governed by and construed in accordance with the laws of the State of New York
        applicable to agreements made and to be performed entirely within such state, without
        regard to the principles of conflict of laws. The parties hereto hereby submit to the
        exclusive jurisdiction of the United States Federal Courts located in the State of New York
        with respect to any dispute arising under this Agreement, the agreements entered into in
        connection herewith or the transactions contemplated hereby or thereby. All parties
        irrevocably waive the defense of an inconvenient forum to the maintenance of such suit or
        proceeding. All parties further agree that service of process upon a party mailed by first
        class mail shall be deemed in every respect effective service of process upon the party in
        any such suit or proceeding. Nothing herein shall affect any party’s right to serve
        process in any other manner permitted by law. All parties agree that a final non-appealable
        judgment in any such suit or proceeding shall be conclusive and may be enforced in other
        jurisdictions by suit on such judgment or in any other lawful manner. The party which does
        not prevail in any dispute arising under this Agreement shall be responsible for all
        reasonable fees and expenses, including reasonable attorneys’ fees, incurred by the
        prevailing party in connection with such dispute.

        

        
        

        

        	
                	
                    
                    
                    10.2     

                	
                    
                    Counterparts; Electronic
                    Signatures. This Agreement may be executed in one or more counterparts,
                    each of which shall be deemed an original but all of which shall constitute one
                    and the same agreement and shall become effective when counterparts have been
                    signed by each party and delivered to the other party. This Agreement, once
                    executed by a party, may be delivered to the other party hereto by electronic
                    transmission of a copy of this Agreement bearing the signature of the party so
                    delivering this Agreement.

                

        

        	
                	
                    
                    
                    10.3     

                	
                    
                    Headings. The headings of
                    this Agreement are for convenience of reference only and shall not form part
                    of, or affect the interpretation of, this Agreement.

                

        

        	
                	
                    
                    
                    10.4     

                	
                    
                    Severability. In the event
                    that any provision of this Agreement is invalid or unenforceable under any
                    applicable statute or rule of law, then such provision shall be deemed
                    inoperative to the extent that it may conflict therewith and shall be deemed
                    modified to conform to such statute or rule of law. Any provision hereof which
                    may prove invalid or unenforceable under any law shall not affect the validity
                    or enforceability of any other provision hereof.

                

        

        	
                	
                    
                    
                    10.5     

                	
                    
                    Entire Agreement; Amendments.
                    This Agreement and the instruments referenced herein contain the entire
                    understanding of the parties with respect to the matters covered herein and
                    therein and supersede all previous understandings or agreements between the
                    parties with respect to such matters. No provision of this Agreement may be
                    waived other than by an instrument in writing signed by the party to be charged
                    with enforcement. The provisions of this Agreement may be amended only by a
                    written instrument signed by the Borrowers and the Lenders.

                

        

        	
                	
                    
                    
                    10.6     

                	
                    
                    Notices. Any notices required
                    or permitted to be given under the terms of this Agreement shall be sent by
                    certified or registered mail (return receipt requested) or delivered personally
                    or by courier (including a recognized, receipted overnight delivery service) or
                    by facsimile and shall be effective five days after being placed in the mail,
                    if mailed by regular United States mail, or upon receipt, if delivered
                    personally or by courier (including a recognized overnight delivery service) or
                    by facsimile, in each case addressed to a party. The addresses for such
                    communications shall be:

                

        

        

        

        
        
        If to any or all of
        the Borrowers:

        
        
        Integrated Electrical Services, Inc.

        18-00 West Loop South, Suite 500

        Houston, Texas 77027-3233

        
        
        Telephone: (713)
        860-1542

        
        
        Facsimile: 713-860-1578

        
        
             Attention: Randolph Guba

        
        
        With copy to:

        
        
             Andrews Kurth LLP

                  600 Travis, Suite 4200

                  Houston, Texas 77002

                  Telephone: 713-220-4274

                  Facsimile: 713-238-7122

                  Attention: Douglas J.
        Dillon

        

        
        
        If to the
        Lenders
        :

        
        
        Tontine Capital Partners, L.P.

        
        
        55 Railroad Avenue,
        1st
        Floor

        
        
        Greenwich, Connecticut 06830

        Attention: Mr. Jeffrey L. Gendell

        Telephone: (203) 769-2000

        
        
        Facsimile: (203) 769-2010

        

        
        
        With copy to:

        
        
        Barack Ferrazzano Kirschbaum & Nagelberg LLP

        
        200 W. Madison Street, Suite 3900

        Chicago, Illinois 60606

        
        
        Attention: John E. Freechack, Esq.

        Telephone:     (312) 984-3100

        
        
        Facsimile:      (312) 984-3150

        

        
        
        Each party shall provide notice to the other party of any change in address.

        

        
        
        10.7     

        
        

        
        Successors and Assigns. This Agreement
        shall be binding upon and inure to the benefit of the parties hereto and their successors
        and assigns. The Borrowers shall not assign this Agreement or any rights or obligations
        hereunder without the prior written consent of the Lenders. The Lenders shall have the
        right, without the consent of the Borrowers, to transfer or assign, in whole or in part,
        their respective rights and interests in and to this Agreement.

        

        
        

        

        	
                	
                    
                    
                    10.8     

                	
                    
                    Third Party Beneficiaries.
                    This Agreement is intended for the benefit of the parties hereto and their
                    respective permitted successors and assigns, and is not for the benefit of, nor
                    may any provision hereof be enforced by, any other person.

                

        

        	
                	
                    
                    
                    10.9     

                	
                    
                    Publicity. The Borrowers and
                    the Lenders shall have the right to review a reasonable period of time before
                    issuing any press releases or any other public statements with respect to the
                    transactions contemplated hereby; provided, however, that the Company shall be
                    entitled, without the prior approval of the Lenders, to make any press release
                    with respect to such transactions as is required by applicable law and
                    regulations (although the Lenders shall be consulted by the Company in
                    connection with any such press release prior to its release and shall be
                    provided with a copy thereof and be given an opportunity to comment thereon).
                    Notwithstanding the foregoing, the Company shall file with the SEC a Form 8-K
                    disclosing the transactions herein within four (4) business days of the Closing
                    Date and attach the relevant agreements and instruments thereto, and the
                    Lenders may make such filings as may be required under Section 13 and Section
                    16 of the 1934 Act.

                

        

        	
                	
                    
                    
                    10.10     

                	
                    
                    Further Assurances. Each
                    party shall do and perform, or cause to be done and performed, all such further
                    acts and things, and shall execute and deliver all such other agreements,
                    certificates, instruments and documents, as the other party may reasonably
                    request in order to carry out the intent and accomplish the purposes of this
                    Agreement and the consummation of the transactions contemplated
                    hereby.

                

        

        	
                	
                    
                    
                    10.11     

                	
                    
                    No Strict Construction. The
                    language used in this Agreement will be deemed to be the language chosen by the
                    parties to express their mutual intent, and no rules of strict construction
                    will be applied against any party.

                

        

        	
                	
                    
                    
                    10.12     

                	
                    
                    Rights Cumulative. Each and
                    all of the various rights, powers and remedies of the parties shall be
                    considered cumulative with and in addition to any other rights, powers and
                    remedies which such parties may have at law or in equity in the event of the
                    breach of any of the terms of this Agreement or the Transaction Documents. The
                    exercise or partial exercise of any right, power or remedy shall neither
                    constitute the exclusive election thereof nor the waiver of any other right,
                    power or remedy available to such party.

                

        

        	
                	
                    
                    
                    10.13     

                	
                    
                    Survival. Any covenant or
                    agreement in this Agreement required to be performed following the Closing
                    Date, shall survive the Closing Date. Without limitation of the foregoing, the
                    respective representations and warranties given by the parties hereto shall
                    survive the Closing Date and continue in full force and effect as long as there
                    remains unperformed any obligations to the Lenders hereunder or under the Notes
                    or any other Transaction Documents, and thereafter shall expire and have no
                    further force and effect..

                

        

        	
                	
                    
                    
                    10.14     

                	
                    
                    Knowledge. The term
                    "knowledge of the Borrowers" or any similar formulation of knowledge shall
                    mean, with respect to the Company, the actual knowledge after due inquiry of
                    the named executive officers of the Company as set forth in its 2007 Proxy
                    Statement, and, with respect to any Borrower that is a Subsidiary of the
                    Company, shall mean the actual knowledge after due inquiry of the executive
                    officers of such Subsidiary.

                

        

        

        

        

        

        

        
        HOU:2746741.2

        

        
        
        IN WITNESS WHEREOF, the undersigned have caused this Agreement to be duly executed as of
        the date first above written.

        
        
        COMPANY
        :

        

        
        
        INTEGRATED ELECTRICAL SERVICES, INC.

        

        
        
        By:
                                      

        
        
        Name:     
                                 

        
        
        Title:
             
                                 

          

        
        
        BORROWING
        SUBSIDIARIES
        :

         

        
        
        IES INDUSTRIAL, INC.

        

        
        
        By:
                                      

        
        
        Name:     
                                 

        
        
        Title:
             
                                 

        

        
        
        IES RESIDENTIAL, INC.

        

        
        
        By:
                                      

        
        
        Name:     
                                 

        
        
        Title:
             
                                 

        

        
        
        IES COMMERCIAL, INC.

        

        
        
        By:
                                      

        
        
        Name:     
                                 

        
        
        Title:
             
                                 

        

        
        
        IES HOUSTON RESOURCES, INC.

        

        
        
        By:
                                      

        
        
        Name:     
                                 

        
        
        Title:
             
                                 

        

        
        
        KEY ELECTRICAL SUPPLY, INC.

        

        
        
        By:
                                      

        
        
        Name:     
                                 

        
        
        Title:
             
                                 

        

        
        
        [Lenders’ signatures continue on next page]

        
        

        

        

        
        S-2

        
        S-1

        
        
        LENDERS
        :

        

        
        
        TONTINE CAPITAL PARTNERS, L.P.

         

        
        
        By:     Tontine Capital Management, LLC, its general
        partner

        

        
        
        By:     
                                      

        
        
             Jeffrey L. Gendell, as managing member

        

        
        

        

        

        
        
        Schedule I

         

        

        	
                    
                    
                    Name

                	
                    
                    
                    Jurisdiction of Organization
                    and Form of
                    Entity

                	
                    
                    
                    Portion of Debt Financing

                
	
                    
                    
                    Tontine Capital Partners, L.P.

                	
                    
                    
                    Delaware Limited Partnership

                	
                    
                    
                    $25,000,000

                

        

        

        

        
        

        

        

        
        HOU:2746741.2

        
             
        A-1

        
        
        Exhibit
        A

        
        
        Form of Note

        

        
        
        See Attached

        

        
        

        

        

        
        HOU:2746741.2

        
        
        B -1

        
        
        Exhibit
        B

        Form
        of Legal Opinion

        
        
             1.
        Each Borrower
        is a corporation,
        limited liability company or
        limited partnership, as applicable,
        validly existing and in good
        standing under the laws of the state of the jurisdiction in which it is
        organized
        
        .

             2.
        Each Borrower
        has all necessary corporate,
        limited liability company or partnership, as applicable,
        power and authority to
        execute, deliver and perform its obligations under each of the Transaction Documents. The
        execution, delivery and performance of each
        of the Transaction Documents
        have been duly
        authorized by all necessary corporate
        limited liability company or
        partnership, as applicable,
        action on the part of
        each
        Borrower
        
        .

             
        3
        .
        Each of the Transaction
        Documents has been duly executed and delivered by the
        Borrowers
        and constitutes the legal,
        valid and binding obligation of the
        Borrowers
        , enforceable against
        each Borrower
        
        in accordance with its terms.

             
        4
        . The issuance, sale and
        delivery of the
        Notes
        and the execution, delivery
        and performance by the
        Borrowers
        of the Transaction Documents
        and the consummation by the
        Borrowers
        of the transactions
        contemplated thereby do not
        violate
        , contravene,
        or result in a breach of or
        default under
        (a)
        the
        governing documents of each
        Borrower; (b) to our knowledge, any court order, judgment, decree, statute, law, rule or
        regulation applicable to the Company or its Subsidiaries; or (c) to our knowledge and
        except as contemplated by the Agreement, any contractual restriction affecting the Company
        or any Subsidiary, which contravention or violation could reasonably be expected to result
        in a Material Adverse Effect.

             5.
        To our knowledge, there are no actions, suits, proceedings, claims or disputes pending or
        threatened against, or affecting, the Borrowers, at law, in equity, in arbitration or
        before any governmental authority that contest the execution, validity or performance of
        the Transaction Documents.

             
        6
        . Except for filings,
        authorizations or approvals contemplated by the Agreement, to our knowledge no
        authorizations or approvals of, and no filings with, any governmental authority are
        necessary or required for the execution, delivery or performance by, or enforcement
        against, the
        Borrowers
        of any of the Transaction
        Documents.

        
        
             
        7
        .
        Assuming that the
        representations made by the
        Lenders
        in the Agreement are true and
        correct and that any required filings are made pursuant to Rule 503 of Regulation D as
        promulgated under the
        Securities
        Act of 1933, the offering,
        sale and issuance of the
        Notes
        pursuant to the Agreement do
        not require registration under the Securities Act of 1933, as amended
        and the rules promulgated
        thereunder as they currently exist or registration or qualification under any state
        securities laws.

        
             

        
        

        

        

        
        
        EXHIBIT C

        Form of Joinder to Note Purchase Agreement

         

        
        The
        undersigned,
        ______________________________,
        hereby agrees to become a party to, and be bound by, that
        certain Note
        Purchase Agreement, dated
        December __, 2007,
        by and
        among
        INTEGRATED
        ELECTRICAL SERVICES,
        INC.,
        a Delaware
        corporation (the
        “Company
        ”),
        the Subsidiaries (as defined
        therein) of the Company party thereto (together with
        the Company, the “Borrowers
        ”),
        and
        , and the Borrowers
        agree to accept the undersigned, as though the
        undersigned were a “Lender
        ” under the
        Note Purchase Agreement.
        Upon the execution of this Joinder by each of
        the undersigned and the
        Borrowers, the Borrowers and the undersigned each
        agree that the undersigned shall be entitled to the rights and privileges, and be bound by
        the obligations and shall make the representations and warranties, of a Lender
        under the Note
        Purchase Agreement. This Joinder shall take effect and shall
        become an integral part of the Note
        Purchase Agreement immediately upon execution and delivery
        by all parties
        hereto. This Joinder may be executed in any number of counterparts, each of which so
        executed shall be deemed to be an original, but all such counterparts shall together
        constitute but one and the same
        instrument.

        
        Dated:
                                 

        
        
        COMPANY
        :

        

        
        
        INTEGRATED ELECTRICAL SERVICES, INC.

        

        
        
        By:
                                      

        
        
        Name:     
                                 

        
        
        Title:
             
                                 

          

        
        
        BORROWING
        SUBSIDIARIES
        :

         

        
        
        IES INDUSTRIAL, INC.

        

        
        
        By:
                                      

        
        
        Name:     
                                 

        
        
        Title:
             
                                 

        

        
        
        IES RESIDENTIAL, INC.

        

        
        
        By:
                                      

        
        
        Name:     
                                 

        
        
        Title:
             
                                 

        

        
        
        IES COMMERCIAL, INC.

        

        
        
        By:
                                      

        
        
        Name:     
                                 

        
        
        Title:
             
                                 

        

        
        
        IES HOUSTON RESOURCES, INC.

        

        
        
        By:
                                      

        
        
        Name:     
                                 

        
        
        Title:
             
                                 

        

        
        
        KEY ELECTRICAL SUPPLY, INC.

        

        
        
        By:
                                      

        
        
        Name:     
                                 

        
        
        Title:
             
                                 

        

        
        
        ADDITIONAL
        LENDERS:

        

        
                                      
        [Signature block]

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