Document:

Exhibit 10.24

                                     WARRANT

THE SECURITIES  REPRESENTED BY THIS WARRANT HAVE NOT BEEN  REGISTERED  UNDER THE
SECURITIES ACT OF 1933, AS AMENDED,  OR APPLICABLE  STATE  SECURITIES  LAWS. THE
SECURITIES  HAVE BEEN ACQUIRED FOR  INVESTMENT  AND MAY NOT BE OFFERED FOR SALE,
SOLD,  TRANSFERRED  OR  ASSIGNED  IN THE  ABSENCE OF AN  EFFECTIVE  REGISTRATION
STATEMENT FOR THE SECURITIES  UNDER THE  SECURITIES ACT OF 1933, AS AMENDED,  OR
APPLICABLE  STATE SECURITIES LAWS, OR AN OPINION OF COUNSEL IN A FORM REASONABLY
SATISFACTORY  TO THE ISSUER THAT  REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR
APPLICABLE  STATE SECURITIES LAWS OR UNLESS SOLD PURSUANT TO RULE 144 UNDER SAID
ACT.  NOTWITHSTANDING  THE FOREGOING,  THIS WARRANT MAY BE PLEDGED IN CONNECTION
WITH A BONA FIDE MARGIN ACCOUNT.

                            CITY NETWORK, INC.

                         WARRANT TO PURCHASE COMMON STOCK

Warrant No.: CCP-001                                 Number of Shares: 1,000,000

Date of Issuance: June 30, 2006

City Network, Inc., a Nevada corporation (the "COMPANY"),  hereby certifies that
for good and valuable  consideration,  the receipt and  sufficiency of which are
hereby  acknowledged,  CornellCornell  Capital  Partners,  LP  ("CORNELL"),  the
registered holder hereof or its permitted assigns,  is entitled,  subject to the
terms set forth  below,  to purchase  from the Company  upon  surrender  of this
Warrant,  at any time or times on or after the date hereof,  but not after 11:59
P.M.  Eastern  Time on the  Expiration  Date (as  defined  herein)  One  Million
(1,000,000)  fully paid and  nonassessable  shares of Common  Stock (as  defined
herein) of the Company (the  "WARRANT  SHARES") at the exercise  price per share
provided in Section 1(b) below or as subsequently adjusted;  provided,  however,
that in no event shall the holder be entitled  to  exercise  this  Warrant for a
number of Warrant Shares in excess of that number of Warrant Shares which,  upon
giving effect to such  exercise,  would cause the aggregate  number of shares of
Common Stock beneficially owned by the holder and its affiliates to exceed 4.99%
of the outstanding  shares of the Common Stock  following such exercise,  except
within sixty (60) days of the  Expiration  Date.  For purposes of the  foregoing
proviso,  the aggregate number of shares of Common Stock  beneficially  owned by
the holder and its affiliates shall include the number of shares of Common Stock
issuable upon  exercise of this Warrant with respect to which the  determination
of such proviso is being made,  but shall  exclude  shares of Common Stock which
would be issuable  upon (i)  exercise  of the  remaining,  unexercised  Warrants
beneficially  owned  by the  holder  and its  affiliates  and (ii)  exercise  or
conversion of the unexercised or unconverted  portion of any other securities of
the  Company  beneficially  owned by the holder and its  affiliates  (including,
without  limitation,  any  convertible  notes or preferred  stock)  subject to a
limitation  on  conversion  or exercise  analogous to the  limitation  contained
herein.  Except as set forth in the  preceding  sentence,  for  purposes of this

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paragraph,  beneficial  ownership shall be calculated in accordance with Section
13(d) of the Securities  Exchange Act of 1934, as amended.  For purposes of this
Warrant,  in  determining  the number of  outstanding  shares of Common  Stock a
holder may rely on the number of outstanding shares of Common Stock as reflected
in (1) the Company's most recent Form 10-QSB or Form 10-KSB, as the case may be,
(2) a more recent public  announcement by the Company or (3) any other notice by
the Company or its transfer  agent  setting forth the number of shares of Common
Stock  outstanding.  Upon the written  request of any holder,  the Company shall
promptly,  but in no event later than one (1) Business Day following the receipt
of such  notice,  confirm in writing to any such  holder the number of shares of
Common Stock then outstanding.  In any case, the number of outstanding shares of
Common Stock shall be determined after giving effect to the exercise of Warrants
(as defined below) by such holder and its affiliates  since the date as of which
such number of outstanding shares of Common Stock was reported.

     Section 1.

     (a) This  Warrant is the common  stock  purchase  warrant  (the  "WARRANT")
issued pursuant to the Securities Purchase Agreement dated March 16, 2006 by and
between the Company and Cornell.

     (b)  DEFINITIONS.  The  following  words and terms as used in this  Warrant
shall have the following meanings:

         (i)  "APPROVED  STOCK PLAN" means any  employee  benefit plan which has
been  approved by the Board of Directors  of the Company,  pursuant to which the
Company's  securities  may be issued to any  employee,  officer or director  for
services provided to the Company.

         (ii) "BUSINESS DAY" means any day other than Saturday,  Sunday or other
day on which commercial banks in the City of New York are authorized or required
by law to remain closed.

         (iii)  "CLOSING  BID PRICE" means the closing bid price of Common Stock
as quoted on the Principal  Market (as reported by Bloomberg  Financial  Markets
("BLOOMBERG") through its "Volume at Price" function).

         (iv) "COMMON  STOCK" means (i) the Company's  common  stock,  par value
$0.001 per share,  and (ii) any capital stock into which such Common Stock shall
have been changed or any capital stock resulting from a reclassification of such
Common Stock.

         (v) "CONVERTIBLE  SECURITIES"  shall mean any securities of the Company
convertible into Common Stock.

         (vi) "EXCLUDED SECURITIES" means, provided such security is issued at a
price which is greater  than or equal to the  arithmetic  average of the Closing
Bid  Prices  of the  Common  Stock  for the ten (10)  consecutive  trading  days
immediately  preceding  the  date of  issuance,  any of the  following:  (a) any
issuance by the Company of securities in connection with a strategic partnership
or a joint  venture  (the  primary  purpose  of  which  is not to  raise  equity

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capital),  (b) any issuance by the Company of securities as consideration  for a
merger or consolidation or the acquisition of a business,  product,  license, or
other assets of another  person or entity and (c) options to purchase  shares of
Common  Stock,  provided  (I) such  options  are  issued  after the date of this
Warrant to employees of the Company  within thirty (30) days of such  employee's
starting his  employment  with the Company,  and (II) the exercise price of such
options is not less than the Closing  Bid Price of the Common  Stock on the date
of issuance of such option.

         (vii) "EXPIRATION DATE" means the date five (5) years from the Issuance
Date of this  Warrant or, if such date falls on a Saturday,  Sunday or other day
on which banks are required or  authorized  to be closed in the City of New York
or the  State  of New  York or on  which  trading  does  not  take  place on the
Principal  Exchange or automated  quotation  system on which the Common Stock is
traded (a "HOLIDAY"), the next date that is not a Holiday.

         (viii) "ISSUANCE DATE" means the date hereof.

         (ix) "OPTIONS"  means any rights,  warrants or options to subscribe for
or purchase Common Stock or Convertible Securities.

         (x) "OTHER  SECURITIES"  means (i) those  options  and  warrants of the
Company issued prior to, and  outstanding on, the Issuance Date of this Warrant,
(ii) the  shares of Common  Stock  issuable  on  exercise  of such  options  and
warrants,  provided such options and warrants are not amended after the Issuance
Date of this Warrant and (iii) the shares of Common Stock issuable upon exercise
of this Warrant.

         (xi) "PERSON"  means an  individual,  a limited  liability  company,  a
partnership,  a  joint  venture,  a  corporation,  a  trust,  an  unincorporated
organization and a government or any department or agency thereof.

         (xii)  "PRINCIPAL  MARKET"  means  the New  York  Stock  Exchange,  the
American Stock Exchange, the Nasdaq National Market, the Nasdaq SmallCap Market,
whichever  is at the time the  principal  trading  exchange  or market  for such
security,  or the  over-the-counter  market on the electronic bulletin board for
such  security as reported by  Bloomberg  or, if no bid or sale  information  is
reported for such security by  Bloomberg,  then the average of the bid prices of
each of the market  makers for such security as reported in the "pink sheets" by
the National Quotation Bureau, Inc.

         (xiii) "SECURITIES ACT" means the Securities Act of 1933, as amended.

         (xiv) "WARRANT" means this Warrant and all Warrants issued in exchange,
transfer or replacement thereof.

         (xv)  "WARRANT  EXERCISE  PRICE"  shall be  $0.001  or as  subsequently
adjusted as provided in Section 8 hereof.

         (xvi) "WARRANT SHARES" means the shares of Common Stock issuable at any
time upon exercise of this Warrant.

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     (c) Other Definitional Provisions.

         (i) Except as otherwise  specified herein, all references herein (A) to
the Company shall be deemed to include the Company's  successors  and (B) to any
applicable law defined or referred to herein shall be deemed  references to such
applicable law as the same may have been or may be amended or supplemented  from
time to time.

         (ii)  When used in this  Warrant,  the words  "HEREIN",  "HEREOF",  and
"HEREUNDER" and words of similar import,  shall refer to this Warrant as a whole
and not to any provision of this Warrant,  and the words "SECTION",  "SCHEDULE",
and  "EXHIBIT"  shall refer to Sections of, and  Schedules and Exhibits to, this
Warrant unless otherwise specified.

         (iii) Whenever the context so requires,  the neuter gender includes the
masculine or feminine,  and the singular  number  includes the plural,  and vice
versa.

     Section 2. Exercise of Warrant.

     (a)  Subject  to the terms  and  conditions  hereof,  this  Warrant  may be
exercised by the holder hereof then registered on the books of the Company,  pro
rata as  hereinafter  provided,  at any time on any Business Day on or after the
opening of business on such  Business Day,  commencing  with the first day after
the date hereof, and prior to 11:59 P.M. Eastern Time on the Expiration Date (i)
by delivery of a written notice, in the form of the subscription notice attached
as EXHIBIT A hereto  (the  "EXERCISE  NOTICE"),  of such  holder's  election  to
exercise this Warrant,  which notice shall specify the number of Warrant  Shares
to be  purchased,  payment  to the  Company  of an amount  equal to the  Warrant
Exercise Price(s)  applicable to the Warrant Shares being purchased,  multiplied
by the number of Warrant Shares (at the applicable Warrant Exercise Price) as to
which this Warrant is being  exercised  (plus any  applicable  issue or transfer
taxes) (the "AGGREGATE  EXERCISE PRICE") in cash or wire transfer of immediately
available  funds  and the  surrender  of  this  Warrant  (or an  indemnification
undertaking  with  respect  to this  Warrant  in the case of its loss,  theft or
destruction)  to a common carrier for overnight  delivery to the Company as soon
as  practicable  following  such date  ("CASH  BASIS") or (ii) if at the time of
exercise,  the  Warrant  Shares  are not  subject to an  effective  registration
statement  or if an Event of Default has  occurred,  by  delivering  an Exercise
Notice and in lieu of making payment of the Aggregate  Exercise Price in cash or
wire  transfer,  elect instead to receive upon such exercise the "Net Number" of
shares of Common  Stock  determined  according  to the  following  formula  (the
"CASHLESS EXERCISE"):

     Net Number = (A x B) - (A x C)
                  -----------------
                           B

          For purposes of the foregoing formula:

          A = the total  number of  Warrant  Shares  with  respect to which this
          Warrant is then being exercised.

          B = the Closing Bid Price of the Common  Stock on the date of exercise
          of the Warrant.

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          C = the  Warrant  Exercise  Price  then in effect  for the  applicable
          Warrant Shares at the time of such exercise.

In the event of any  exercise  of the  rights  represented  by this  Warrant  in
compliance  with this Section 2, the Company  shall on or before the fifth (5th)
Business Day following the date of receipt of the Exercise Notice, the Aggregate
Exercise Price and this Warrant (or an indemnification  undertaking with respect
to this Warrant in the case of its loss,  theft or destruction)  and the receipt
of the representations of the holder specified in Section 6 hereof, if requested
by the Company (the "EXERCISE DELIVERY  DOCUMENTS"),  and if the Common Stock is
DTC eligible,  credit such  aggregate  number of shares of Common Stock to which
the holder shall be entitled to the holder's or its designee's  balance  account
with  The  Depository  Trust  Company;  provided,  however,  if the  holder  who
submitted the Exercise Notice requested  physical  delivery of any or all of the
Warrant  Shares,  or, if the Common Stock is not DTC  eligible  then the Company
shall,  on or before  the fifth  (5th)  Business  Day  following  receipt of the
Exercise  Delivery  Documents,  issue  and  surrender  to a common  carrier  for
overnight   delivery  to  the  address  specified  in  the  Exercise  Notice,  a
certificate,  registered in the name of the holder,  for the number of shares of
Common  Stock to which the holder  shall be entitled  pursuant to such  request.
Upon delivery of the Exercise Notice and Aggregate Exercise Price referred to in
clause  (i) or (ii)  above the  holder of this  Warrant  shall be deemed for all
corporate  purposes to have  become the holder of record of the  Warrant  Shares
with respect to which this Warrant has been exercised.  In the case of a dispute
as to the  determination of the Warrant Exercise Price, the Closing Bid Price or
the  arithmetic  calculation of the Warrant  Shares,  the Company shall promptly
issue to the holder the number of Warrant  Shares that is not disputed and shall
submit the disputed  determinations or arithmetic calculations to the holder via
facsimile  within  one (1)  Business  Day of receipt  of the  holder's  Exercise
Notice.

     If the holder and the Company are unable to agree upon the determination of
the Warrant  Exercise  Price or  arithmetic  calculation  of the Warrant  Shares
within one (1) day of such  disputed  determination  or  arithmetic  calculation
being  submitted to the holder,  then the Company shall  immediately  submit via
facsimile (i) the disputed  determination  of the Warrant  Exercise Price or the
Closing Bid Price to an independent,  reputable  investment banking firm or (ii)
the disputed  arithmetic  calculation of the Warrant Shares to its  independent,
outside  accountant.  The Company shall cause the investment banking firm or the
accountant,  as the case may be, to perform the  determinations  or calculations
and notify the Company  and the holder of the results no later than  forty-eight
(48)  hours  from  the  time  it  receives   the  disputed   determinations   or
calculations.  Such investment  banking firm's or accountant's  determination or
calculation,  as the case may be,  shall be deemed  conclusive  absent  manifest
error.

     (b) Unless the rights  represented  by this  Warrant  shall have expired or
shall have been fully  exercised,  the Company shall, as soon as practicable and
in no event later than five (5) Business  Days after any exercise and at its own
expense, issue a new Warrant identical in all respects to this Warrant exercised
except it shall  represent  rights to  purchase  the  number of  Warrant  Shares
purchasable  immediately  prior to such exercise  under this Warrant  exercised,
less the  number of  Warrant  Shares  with  respect  to which  such  Warrant  is
exercised.

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     (c) No  fractional  Warrant  Shares  are to be  issued  upon  any pro  rata
exercise of this  Warrant,  but rather the number of Warrant  Shares issued upon
such  exercise of this Warrant  shall be rounded up or down to the nearest whole
number.

     (d) If the Company or its  Transfer  Agent shall fail for any reason or for
no reason to issue to the holder within ten (10) days of receipt of the Exercise
Delivery Documents,  a certificate for the number of Warrant Shares to which the
holder is entitled or to credit the holder's balance account with The Depository
Trust Company for such number of Warrant  Shares to which the holder is entitled
upon the holder's  exercise of this Warrant,  the Company shall,  in addition to
any other remedies under this Warrant or otherwise available to such holder, pay
as  additional  damages in cash to such holder on each day the  issuance of such
certificate  for Warrant Shares is not timely effected an amount equal to 0.025%
of the product of (A) the sum of the number of Warrant  Shares not issued to the
holder  on a timely  basis  and to which the  holder  is  entitled,  and (B) the
Closing Bid Price of the Common Stock for the trading day immediately  preceding
the last  possible date which the Company could have issued such Common Stock to
the holder without violating this Section 2.

     (e) If within ten (10) days  after the  Company's  receipt of the  Exercise
Delivery Documents, the Company fails to deliver a new Warrant to the holder for
the  number of Warrant  Shares to which  such  holder is  entitled  pursuant  to
Section 2 hereof,  then, in addition to any other available  remedies under this
Warrant,  or  otherwise  available  to such  holder,  the  Company  shall pay as
additional  damages in cash to such  holder on each day after such tenth  (10th)
day that such  delivery of such new Warrant is not timely  effected in an amount
equal to 0.25% of the product of (A) the number of Warrant Shares represented by
the portion of this Warrant which is not being exercised and (B) the Closing Bid
Price of the Common  Stock for the trading day  immediately  preceding  the last
possible  date which the Company  could have  issued such  Warrant to the holder
without violating this Section 2.

     Section 3. Covenants as to Common Stock.  The Company hereby  covenants and
agrees as follows:

     (a) This  Warrant  is,  and any  Warrants  issued  in  substitution  for or
replacement  of this Warrant will upon issuance be, duly  authorized and validly
issued.

     (b) All Warrant  Shares which may be issued upon the exercise of the rights
represented by this Warrant will, upon issuance,  be validly issued,  fully paid
and nonassessable and free from all taxes, liens and charges with respect to the
issue thereof.

     (c) During the period within which the rights  represented  by this Warrant
may be exercised,  the Company will at all times have authorized and reserved at
least one hundred  percent (100%) of the number of shares of Common Stock needed
to provide for the exercise of the rights then  represented  by this Warrant and
the par  value of said  shares  will at all  times be less  than or equal to the
applicable  Warrant  Exercise  Price. If at any time the Company does not have a
sufficient  number of shares of Common Stock authorized and available,  then the
Company shall call and hold a special meeting of its  stockholders  within sixty
(60)  days of that  time  for the sole  purpose  of  increasing  the  number  of
authorized shares of Common Stock.

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     (d) If at  any  time  after  the  date  hereof  the  Company  shall  file a
registration statement, the Company shall include the Warrant Shares issuable to
the holder, pursuant to the terms of this Warrant and shall maintain, so long as
any other shares of Common Stock shall be so listed, such listing of all Warrant
Shares from time to time  issuable  upon the exercise of this  Warrant;  and the
Company  shall  so  list on  each  national  securities  exchange  or  automated
quotation  system,  as the case may be, and shall  maintain such listing of, any
other shares of capital stock of the Company  issuable upon the exercise of this
Warrant if and so long as any  shares of the same class  shall be listed on such
national securities exchange or automated quotation system.

     (e) The Company will not, by amendment of its Articles of  Incorporation or
through  any  reorganization,   transfer  of  assets,   consolidation,   merger,
dissolution,  issue or sale of securities,  or any other voluntary action, avoid
or seek to  avoid  the  observance  or  performance  of any of the  terms  to be
observed  or  performed  by it  hereunder,  but will at all times in good  faith
assist in the  carrying  out of all the  provisions  of this  Warrant and in the
taking of all such action as may  reasonably  be requested by the holder of this
Warrant in order to protect the exercise privilege of the holder of this Warrant
against dilution or other  impairment,  consistent with the tenor and purpose of
this  Warrant.  The  Company  will not  increase  the par value of any shares of
Common Stock  receivable  upon the  exercise of this  Warrant  above the Warrant
Exercise  Price  then in effect,  and (ii) will take all such  actions as may be
necessary or appropriate in order that the Company may validly and legally issue
fully paid and  nonassessable  shares of Common  Stock upon the exercise of this
Warrant.

     (f) This Warrant will be binding upon any entity  succeeding to the Company
by merger,  consolidation  or  acquisition  of all or  substantially  all of the
Company's assets.

     Section 4.  Taxes.  The  Company  shall pay any and all  taxes,  except any
applicable  withholding,  which may be payable  with respect to the issuance and
delivery of Warrant Shares upon exercise of this Warrant.

     Section 5.  Warrant  Holder Not Deemed a  Stockholder.  Except as otherwise
specifically  provided  herein,  no holder,  as such,  of this Warrant  shall be
entitled  to vote or  receive  dividends  or be deemed  the  holder of shares of
capital stock of the Company for any purpose,  nor shall  anything  contained in
this Warrant be construed to confer upon the holder hereof,  as such, any of the
rights of a  stockholder  of the Company or any right to vote,  give or withhold
consent to any corporate  action  (whether any  reorganization,  issue of stock,
reclassification  of stock,  consolidation,  merger,  conveyance or  otherwise),
receive  notice of  meetings,  receive  dividends  or  subscription  rights,  or
otherwise,  prior to the  issuance to the holder of this  Warrant of the Warrant
Shares which he or she is then entitled to receive upon the due exercise of this
Warrant.  In addition,  nothing  contained in this Warrant shall be construed as
imposing  any  liabilities  on such  holder to  purchase  any  securities  (upon
exercise of this  Warrant or  otherwise)  or as a  stockholder  of the  Company,
whether  such  liabilities  are  asserted by the Company or by  creditors of the
Company.  Notwithstanding this Section 5, the Company will provide the holder of
this Warrant with copies of the same notices and other  information given to the
stockholders of the Company generally, contemporaneously with the giving thereof
to the stockholders.

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     Section 6.  Representations of Holder.  The holder of this Warrant,  by the
acceptance hereof,  represents that it is acquiring this Warrant and the Warrant
Shares for its own account for investment  only and not with a view towards,  or
for resale in connection  with, the public sale or  distribution of this Warrant
or the Warrant Shares, except pursuant to sales registered or exempted under the
Securities Act; provided,  however,  that by making the representations  herein,
the holder does not agree to hold this Warrant or any of the Warrant  Shares for
any minimum or other  specific  term and  reserves  the right to dispose of this
Warrant and the Warrant  Shares at any time in accordance  with or pursuant to a
registration  statement or an exemption  under the Securities Act. The holder of
this Warrant further  represents,  by acceptance hereof,  that, as of this date,
such  holder  is an  "accredited  investor"  as  such  term is  defined  in Rule
501(a)(1) of Regulation D promulgated by the Securities and Exchange  Commission
under the  Securities  Act (an  "ACCREDITED  INVESTOR").  Upon  exercise of this
Warrant the holder shall, if requested by the Company,  confirm in writing, in a
form satisfactory to the Company, that the Warrant Shares so purchased are being
acquired  solely for the holder's own account and not as a nominee for any other
party,  for  investment,  and not with a view toward  distribution or resale and
that such holder is an  Accredited  Investor.  If such  holder  cannot make such
representations  because  they  would  be  factually  incorrect,  it  shall be a
condition to such  holder's  exercise of this  Warrant that the Company  receive
such other  representations  as the Company  considers  reasonably  necessary to
assure the Company that the  issuance of its  securities  upon  exercise of this
Warrant shall not violate any United States or state securities laws.

     Section 7. Ownership and Transfer.

     (a) The Company shall maintain at its principal  executive offices (or such
other  office or  agency of the  Company  as it may  designate  by notice to the
holder hereof),  a register for this Warrant,  in which the Company shall record
the name and address of the person in whose name this  Warrant has been  issued,
as well as the name and  address of each  transferee.  The Company may treat the
person in whose name any Warrant is  registered on the register as the owner and
holder thereof for all purposes, notwithstanding any notice to the contrary, but
in all events  recognizing  any transfers  made in accordance  with the terms of
this Warrant.

     Section 8. Adjustment of Warrant  Exercise Price and Number of Shares.  The
Warrant  Exercise  Price and the number of shares of Common Stock  issuable upon
exercise of this Warrant shall be adjusted from time to time as follows:

     (a) ADJUSTMENT OF WARRANT EXERCISE PRICE AND NUMBER OF SHARES UPON ISSUANCE
OF COMMON STOCK.  If and whenever on or after the Issuance Date of this Warrant,
the Company issues or sells,  or is deemed to have issued or sold, any shares of
Common Stock (other than (i) Excluded Securities and (ii) shares of Common Stock
which are issued or deemed to have been issued by the Company in connection with
an Approved  Stock Plan or upon exercise or conversion of the Other  Securities)
for a consideration  per share less than the current market price at the time of
such issuance (the "APPLICABLE PRICE"), then the Warrant Exercise Price shall be
adjusted  immediately  thereafter so that it shall equal the price determined by
multiplying the Warrant Exercise Price in effect  immediately prior thereto by a
fraction,  the  numerator  of which  shall be the sum of the number of shares of
Common Stock  outstanding  immediately  prior to the issuance of such additional
shares  and  the  number  of  shares  of  Common   Stock  which  the   aggregate
consideration received for the issuance of such additional shares would purchase

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at such current market price per share of Common Stock,  and the  denominator of
which  shall be the  number of shares of Common  Stock  outstanding  immediately
after the  issuance  of such  additional  shares.  Upon each  adjustment  of the
Warrant  Exercise Price  pursuant to this Section 8(a), the Warrant  outstanding
prior to the making of the  adjustment  in the Exercise  Price shall  thereafter
evidence the right to receive upon  payment of the Warrant  Exercise  Price that
number of shares of Common Stock (calculated to the nearest hundredth)  obtained
from the following formula:

     N'       =        N        x       E/E'

where:

     N' = the adjusted  number of Warrant  Shares  issuable  upon  exercise of a
Warrant by payment of the adjusted Exercise Price.

     N = the number of Warrant  Shares  previously  issuable  upon exercise of a
Warrant by payment of the Exercise Price prior to adjustment.

     E' = the adjusted Exercise Price.

     E = the Exercise Price prior to adjustment.

     (b) EFFECT ON WARRANT  EXERCISE  PRICE OF CERTAIN  EVENTS.  For purposes of
determining the adjusted  Warrant  Exercise Price under Section 8(a) above,  the
following shall be applicable:

         (i) ISSUANCE OF OPTIONS.  If after the date hereof,  the Company in any
manner  grants any Options and the lowest price per share for which one share of
Common Stock is issuable upon the exercise of any such Option or upon conversion
or exchange of any  Convertible  Securities  issuable  upon exercise of any such
Option is less than the Applicable  Price, then such share of Common Stock shall
be deemed to be  outstanding  and to have been issued and sold by the Company at
the time of the  granting or sale of such  Option for such price per share.  For
purposes of this Section 8(b)(i), the lowest price per share for which one share
of Common Stock is issuable upon exercise of such Options or upon  conversion or
exchange of such Convertible  Securities shall be equal to the sum of the lowest
amounts of  consideration  (if any)  received or  receivable by the Company with
respect  to any one  share of  Common  Stock  upon the  granting  or sale of the
Option,  upon  exercise  of the Option or upon  conversion  or  exchange  of any
convertible   security  issuable  upon  exercise  of  such  Option.  No  further
adjustment of the Warrant  Exercise Price shall be made upon the actual issuance
of such Common Stock or of such Convertible Securities upon the exercise of such
Options or upon the actual  issuance of such  Common  Stock upon  conversion  or
exchange of such Convertible Securities.

                                       9
<PAGE>
         (ii) ISSUANCE OF CONVERTIBLE  SECURITIES.  If the Company in any manner
issues or sells any  Convertible  Securities  and the lowest price per share for
which one share of Common  Stock is  issuable  upon the  conversion  or exchange
thereof is less than the Applicable Price, then such share of Common Stock shall
be deemed to be  outstanding  and to have been issued and sold by the Company at
the time of the issuance or sale of such  Convertible  Securities for such price
per share.  For the  purposes of this  Section  8(b) (ii),  the lowest price per
share for which one share of Common Stock is issuable  upon such  conversion  or
exchange  shall be equal to the sum of the lowest amounts of  consideration  (if
any)  received or  receivable by the Company with respect to one share of Common
Stock upon the issuance or sale of the convertible  security and upon conversion
or exchange of such convertible  security.  No further adjustment of the Warrant
Exercise Price shall be made upon the actual  issuance of such Common Stock upon
conversion or exchange of such Convertible Securities,  and if any such issue or
sale of such  Convertible  Securities  is made upon  exercise of any Options for
which  adjustment  of the  Warrant  Exercise  Price  had  been or are to be made
pursuant to other provisions of this Section 8(b), no further  adjustment of the
Warrant Exercise Price shall be made by reason of such issue or sale.

         (iii)  CHANGE IN OPTION  PRICE OR RATE OF  CONVERSION.  If the purchase
price provided for in any Options, the additional consideration, if any, payable
upon the issue,  conversion or exchange of any  Convertible  Securities,  or the
rate at which any Convertible  Securities are  convertible  into or exchangeable
for Common Stock changes at any time,  the Warrant  Exercise  Price in effect at
the time of such change  shall be adjusted to the Warrant  Exercise  Price which
would  have  been in  effect  at such  time  had  such  Options  or  Convertible
Securities provided for such changed purchase price, additional consideration or
changed  conversion  rate,  as the case may be, at the time  initially  granted,
issued or sold and the number of Warrant  Shares  issuable upon exercise of this
Warrant  shall be  correspondingly  readjusted.  For  purposes  of this  Section
8(b)(iii),  if  the  terms  of any  Option  or  convertible  security  that  was
outstanding  as of the  Issuance  Date of this Warrant are changed in the manner
described in the immediately preceding sentence, then such Option or convertible
security and the Common Stock  deemed  issuable  upon  exercise,  conversion  or
exchange  thereof  shall be deemed  to have  been  issued as of the date of such
change.  No  adjustment  pursuant  to this  Section  8(b)  shall be made if such
adjustment  would  result in an increase of the Warrant  Exercise  Price then in
effect.

     (c) EFFECT ON WARRANT  EXERCISE  PRICE OF CERTAIN  EVENTS.  For purposes of
determining  the adjusted  Warrant  Exercise Price under Sections 8(a) and 8(b),
the following shall be applicable:

         (i) CALCULATION OF CONSIDERATION RECEIVED. If any Common Stock, Options
or  Convertible  Securities  are issued or sold or deemed to have been issued or
sold for cash, the consideration received thereof will be the gross sales price.
If any Common Stock, Options or Convertible  Securities are issued or sold for a
consideration other than cash, the amount of such consideration  received by the
Company  will  be the  fair  value  of such  consideration,  except  where  such
consideration  consists of  marketable  securities,  in which case the amount of
consideration  received  by  the  Company  will  be the  market  price  of  such
securities  on the date of receipt  of such  securities.  If any  Common  Stock,
Options or Convertible  Securities are issued to the owners of the non-surviving
entity in  connection  with any  merger in which the  Company  is the  surviving
entity,  the  amount of  consideration  therefore  will be deemed to be the fair

                                       10
<PAGE>
value of such portion of the net assets and business of the non-surviving entity
as is attributable to such Common Stock, Options or Convertible  Securities,  as
the  case  may be.  The  fair  value of any  consideration  other  than  cash or
securities will be determined jointly by the Company and the holders of Warrants
representing  at  least  two-thirds  (b) of the  Warrant  Shares  issuable  upon
exercise of the Warrants then  outstanding.  If such parties are unable to reach
agreement  within  ten (10) days  after  the  occurrence  of an event  requiring
valuation (the "VALUATION EVENT"),  the fair value of such consideration will be
determined  within five (5) Business  Days after the tenth (10th) day  following
the Valuation Event by an independent,  reputable  appraiser jointly selected by
the Company and the holders of Warrants  representing at least two-thirds (b) of
the Warrant Shares issuable upon exercise of the Warrants then outstanding.  The
determination  of such appraiser shall be final and binding upon all parties and
the fees and expenses of such  appraiser  shall be borne  jointly by the Company
and the holders of Warrants.

         (ii)  INTEGRATED  TRANSACTIONS.   In  case  any  Option  is  issued  in
connection with the issue or sale of other  securities of the Company,  together
comprising one  integrated  transaction  in which no specific  consideration  is
allocated to such Options by the parties thereto,  the Options will be deemed to
have been issued for a consideration of $.01.

         (iii) TREASURY SHARES. The number of shares of Common Stock outstanding
at any given time does not include shares owned or held by or for the account of
the  Company,  and the  disposition  of any  shares  so  owned  or held  will be
considered an issue or sale of Common Stock.

         (iv)  RECORD  DATE.  If the  Company  takes a record of the  holders of
Common  Stock for the  purpose of  entitling  them (1) to receive a dividend  or
other distribution payable in Common Stock, Options or in Convertible Securities
or (2) to  subscribe  for or  purchase  Common  Stock,  Options  or  Convertible
Securities,  then such record date will be deemed to be the date of the issue or
sale of the shares of Common  Stock  deemed to have been issued or sold upon the
declaration  of such  dividend or the making of such other  distribution  or the
date of the granting of such right of subscription or purchase,  as the case may
be.

     (d) ADJUSTMENT OF WARRANT EXERCISE PRICE UPON SUBDIVISION OR COMBINATION OF
COMMON  STOCK.  If the  Company at any time after the date of  issuance  of this
Warrant  subdivides (by any stock split,  stock  dividend,  recapitalization  or
otherwise) one or more classes of its outstanding  shares of Common Stock into a
greater number of shares, any Warrant Exercise Price in effect immediately prior
to such subdivision will be proportionately  reduced and the number of shares of
Common Stock  obtainable  upon exercise of this Warrant will be  proportionately
increased;  provided that the Warrant  Exercise Price shall not be reduced below
the par value of the Common Stock.  If the Company at any time after the date of
issuance  of this  Warrant  combines  (by  combination,  reverse  stock split or
otherwise) one or more classes of its outstanding  shares of Common Stock into a
smaller number of shares, any Warrant Exercise Price in effect immediately prior
to such combination will be proportionately  increased and the number of Warrant
Shares issuable upon exercise of this Warrant will be proportionately decreased.
Any  adjustment  under this Section 8(d) shall become  effective at the close of
business on the date the subdivision or combination becomes effective.

                                       11
<PAGE>
     (e)  DISTRIBUTION  OF  ASSETS.  If the  Company  shall  declare or make any
dividend or other  distribution  of its assets (or rights to acquire its assets)
to holders of Common Stock, by way of return of capital or otherwise (including,
without  limitation,  any  distribution  of cash,  stock  or  other  securities,
property or options by way of a dividend, spin off, reclassification,  corporate
rearrangement  or other similar  transaction)  (a  "Distribution"),  at any time
after the  issuance  of this  Warrant,  then,  in each such  case:  any  Warrant
Exercise  Price in  effect  immediately  prior to the close of  business  on the
record date fixed for the  determination  of holders of Common Stock entitled to
receive the Distribution shall be reduced, effective as of the close of business
on such record date, to a price  determined by multiplying such Warrant Exercise
Price by a fraction of which (A) the  numerator  shall be the Closing Sale Price
of the Common Stock on the trading day  immediately  preceding  such record date
minus  the  value  of the  Distribution  (as  determined  in good  faith  by the
Company's Board of Directors)  applicable to one share of Common Stock,  and (B)
the  denominator  shall be the  Closing  Sale Price of the  Common  Stock on the
trading day  immediately  preceding such record date;  provided that the Warrant
Exercise Price shall not be reduced below the par value of the Common Stock.

     (f) CERTAIN  EVENTS.  If any event occurs of the type  contemplated  by the
provisions of this Section 8 but not expressly  provided for by such  provisions
(including,  without  limitation,  the  granting of stock  appreciation  rights,
phantom stock rights or other rights with equity  features),  then the Company's
Board of Directors will make an appropriate  adjustment in the Warrant  Exercise
Price and the number of shares of Common Stock  obtainable upon exercise of this
Warrant so as to protect  the rights of the holders of the  Warrants;  provided,
except as set forth in section 8(d),  that no such  adjustment  pursuant to this
Section 8(f) will increase the Warrant  Exercise Price or decrease the number of
shares of Common  Stock  obtainable  as  otherwise  determined  pursuant to this
Section 8; provided that the Warrant  Exercise  Price shall not be reduced below
the par value of the Common Stock.

     (g) NOTICES.

         (i) Immediately  upon any adjustment of the Warrant Exercise Price, the
Company will give written notice thereof to the holder of this Warrant,  setting
forth in reasonable detail, and certifying, the calculation of such adjustment.

         (ii) The Company will give written notice to the holder of this Warrant
at least ten (10) days prior to the date on which the  Company  closes its books
or takes a record (A) with  respect to any  dividend  or  distribution  upon the
Common Stock, (B) with respect to any pro rata subscription  offer to holders of
Common Stock or (C) for  determining  rights to vote with respect to any Organic
Change (as  defined  below),  dissolution  or  liquidation,  provided  that such
information  shall be made known to the public prior to or in  conjunction  with
such notice being provided to such holder.

         (iii) The Company will also give  written  notice to the holder of this
Warrant at least ten (10) days prior to the date on which any Organic Change (as
defined below),  dissolution or liquidation will take place,  provided that such
information  shall be made known to the public prior to or in  conjunction  with
such notice being provided to such holder.

                                       12
<PAGE>
     (h)  Limitations.  Notwithstanding  the above provisions of this Section 8,
the number of shares of Common  Stock  issuable  upon  exercise of this  Warrant
shall in no event be  increased  to an amount  such  that the Total  Transaction
Shares shall be equal to or greater than 5,500,000 shares,  until the holders of
Common  Stock  approve the  issuance  of the Total  Transaction  Shares.  "Total
Transaction  Shares"  shall mean, in the  aggregate,  the shares of Common Stock
issued to Cornell or its affiliates, and transferees, subsequent transferees, or
any other  party  pursuant to the  Securities  Purchase  Agreement  of even date
herewith among the Company and Cornell,  the Pledge and Escrow Agreement of even
date herewith between the Company and Cornell (the "Pledge Agreement"),  and the
Placement Agent Agreement dated as of even date herewith between the Company and
Monitor Capital,  Inc., together with the Warrant Shares, shares of Common Stock
issued as  Liquidated  Damages (as defined in the Investor  Registration  Rights
Agreement  dated as of the date herewith  between the Company and Cornell),  and
the Initial  Investor's  Shares (as defined in the Standby  Equity  Distribution
Agreement dated as of even date herewith  between Cornell Capital  Partners,  LP
and the Company).

         Section   9.   Purchase   Rights;   Reorganization,   Reclassification,
Consolidation, Merger or Sale.

         (a) In addition to any  adjustments  pursuant to Section 8 above, if at
any time the Company grants, issues or sells any Options, Convertible Securities
or rights to purchase stock, warrants,  securities or other property pro rata to
the record  holders of any class of Common Stock (the "PURCHASE  RIGHTS"),  then
upon the exercise of this Warrant the holder of this Warrant will be entitled to
acquire,  upon the terms  applicable  to such  Purchase  Rights,  the  aggregate
Purchase  Rights which such holder  could have  acquired if such holder had held
the  number of  shares  of  Common  Stock  acquired  pursuant  to such  exercise
immediately  before the date on which a record is taken for the grant,  issuance
or sale of such Purchase Rights,  or, if no such record is taken, the date as of
which the record  holders of Common  Stock are to be  determined  for the grant,
issue or sale of such Purchase Rights.

         (b)    Any    recapitalization,    reorganization,    reclassification,
consolidation,  merger, sale of all or substantially all of the Company's assets
to another Person or other  transaction in each case which is effected in such a
way that  holders of Common Stock are  entitled to receive  (either  directly or
upon subsequent  liquidation) stock,  securities or assets with respect to or in
exchange for Common Stock is referred to herein as an "ORGANIC CHANGE." Prior to
the  consummation of any (i) sale of all or  substantially  all of the Company's
assets to an acquiring  Person or (ii) other Organic Change  following which the
Company is not a  surviving  entity,  the  Company  will  secure from the Person
purchasing  such assets or the successor  resulting from such Organic Change (in
each case,  the "ACQUIRING  ENTITY") a written  agreement (in form and substance
satisfactory to the holders of Warrants  representing at least  two-thirds (iii)
of the Warrant Shares  issuable upon exercise of the Warrants then  outstanding)
to deliver to each holder of Warrants in exchange for such Warrants,  a security
of the Acquiring Entity evidenced by a written instrument  substantially similar
in form and  substance  to this Warrant and  satisfactory  to the holders of the
Warrants  (including an adjusted  warrant  exercise price equal to the value for
the Common Stock reflected by the terms of such  consolidation,  merger or sale,
and exercisable for a corresponding  number of shares of Common Stock acquirable

                                       13
<PAGE>
and receivable  upon exercise of the Warrants  without regard to any limitations
on  exercise,  if the value so  reflected  is less than any  Applicable  Warrant
Exercise Price immediately prior to such  consolidation,  merger or sale). Prior
to the  consummation  of any  other  Organic  Change,  the  Company  shall  make
appropriate  provision  (in form and  substance  satisfactory  to the holders of
Warrants representing a majority of the Warrant Shares issuable upon exercise of
the  Warrants  then  outstanding)  to  insure  that each of the  holders  of the
Warrants will  thereafter have the right to acquire and receive in lieu of or in
addition  to (as the case may be) the  Warrant  Shares  immediately  theretofore
issuable and  receivable  upon the exercise of such holder's  Warrants  (without
regard to any  limitations  on  exercise),  such shares of stock,  securities or
assets  that would  have been  issued or payable  in such  Organic  Change  with
respect to or in exchange for the number of Warrant Shares which would have been
issuable and  receivable  upon the exercise of such  holder's  Warrant as of the
date of such Organic  Change  (without  taking into account any  limitations  or
restrictions on the exercisability of this Warrant).

     Section 10. Lost, Stolen,  Mutilated or Destroyed Warrant.  If this Warrant
is lost, stolen,  mutilated or destroyed, the Company shall promptly, on receipt
of an indemnification  undertaking (or, in the case of a mutilated Warrant,  the
Warrant),  issue a new Warrant of like denomination and tenor as this Warrant so
lost, stolen, mutilated or destroyed.

     Section 11. Notice. Any notices, consents, waivers, or other communications
required or permitted to be given under the terms of this  Agreement  must be in
writing  and will be  deemed  to have  been  delivered  (i) upon  receipt,  when
delivered  personally  or by a  nationally  recognized  overnight  or world wide
courier; (ii) upon confirmation of receipt, when sent by facsimile; or (iii) ten
(10) days after being sent by U.S. certified mail, return receipt requested,  in
each case properly addressed to the party to receive the same. The addresses and
facsimile numbers for such communications shall be::

If to Cornell:                CornellCornell Capital Partners, LP
                              101 Hudson Street - Suite 3700
                              Jersey City, NJ  07302
                              Attention: Mark A. Angelo
                              Telephone: (201) 985-8300
                              Facsimile: (201) 985-8266

With Copy to:                 David Gonzalez, Esq.
                              101 Hudson Street - Suite 3700
                              Jersey City, NJ 07302
                              Telephone: (201) 985-8300
                              Facsimile: (201) 985-8266

If to the Company, to:        City Network, Inc
                              6F-3, No.16, Jian Ba Road
                              Jhonghe City, Taipei County, 235
                              Taiwan, ROC F5 235
                              Attention: Mr Tiao-Tsan Lai
                              Telephone: 886-2-8226-5566
                              Facsimile: 886-2-8226-8585

                                       14
<PAGE>
With a copy to:               Loeb & Loeb, LLP
                              345 Park Avenue
                              New York, NY 10154-0037
                              Attention: Mitchell Nussbaum, Esq.
                              Telephone: (212) 407-4159
                              Facsimile: (212) 407.4990

Each party shall provide five days' prior  written  notice to the other party of
any change in address or facsimile number.  Written  confirmation of receipt (A)
given by the  recipient  of such  notice,  consent,  facsimile,  waiver or other
communication,  (or (B) provided by a nationally  recognized  overnight delivery
service shall be rebuttable  evidence of personal service,  receipt by facsimile
or receipt from a nationally recognized overnight delivery service in accordance
with clause (i), (ii) or (iii) above, respectively.

     Section 12.  Date.  The date of this Warrant is set forth on page 1 hereof.
This  Warrant,  in all events,  shall be wholly void and of no effect  after the
close of business on the Expiration Date, except that  notwithstanding any other
provisions  hereof,  the provisions of Section 8(b) shall continue in full force
and effect after such date as to any Warrant Shares or other  securities  issued
upon the exercise of this Warrant.

     Section 13. Amendment and Waiver.  Except as otherwise provided herein, the
provisions  of the  Warrants  may be amended and the Company may take any action
herein prohibited, or omit to perform any act herein required to be performed by
it,  only if the  Company has  obtained  the  written  consent of the holders of
Warrants  representing  at least  two-thirds of the Warrant Shares issuable upon
exercise of the Warrants then  outstanding;  provided  that,  except for Section
8(d),  no such action may  increase the Warrant  Exercise  Price or decrease the
number of shares  or class of stock  obtainable  upon  exercise  of any  Warrant
without the written consent of the holder of such Warrant.

     Section 14. Descriptive  Headings;  Governing Law. The descriptive headings
of the  several  sections  and  paragraphs  of this  Warrant  are  inserted  for
convenience  only and do not  constitute a part of this  Warrant.  The corporate
laws of the State of Nevada  shall  govern all issues  concerning  the  relative
rights of the Company and its stockholders.  All other questions  concerning the
construction,  validity,  enforcement and interpretation of this Agreement shall
be governed by the  internal  laws of the State of New  Jersey,  without  giving
effect to any choice of law or conflict of law provision or rule (whether of the
State of New Jersey or any other jurisdictions) that would cause the application
of the laws of any jurisdictions  other than the State of New Jersey. Each party
hereby  irrevocably  submits  to the  exclusive  jurisdiction  of the  state and
federal courts sitting in Hudson County and the United States District Court for
the District of New Jersey,  for the adjudication of any dispute hereunder or in
connection herewith or therewith, or with any transaction contemplated hereby or
discussed herein, and hereby irrevocably waives, and agrees not to assert in any
suit, action or proceeding,  any claim that it is not personally  subject to the
jurisdiction of any such court,  that such suit, action or proceeding is brought
in an inconvenient forum or that the venue of such suit, action or proceeding is
improper.  Each party hereby  irrevocably waives personal service of process and
consents  to process  being  served in any such suit,  action or  proceeding  by

                                       15
<PAGE>
mailing a copy thereof to such party at the address for such notices to it under
this Agreement and agrees that such service shall constitute good and sufficient
service of process and notice thereof.  Nothing contained herein shall be deemed
to limit in any way any right to serve process in any manner permitted by law.

Section 15. Waiver of Jury Trial. AS A MATERIAL INDUCEMENT FOR EACH PARTY HERETO
TO ENTER INTO THIS WARRANT,  THE PARTIES  HERETO HEREBY WAIVE ANY RIGHT TO TRIAL
BY JURY IN ANY LEGAL  PROCEEDING  RELATED IN ANY WAY TO THIS WARRANT  AND/OR ANY
AND ALL OF THE OTHER DOCUMENTS ASSOCIATED WITH THIS TRANSACTION.

                   [REMAINDER OF PAGE INTENTIALLY LEFT BLANK]

                                       16
<PAGE>
     IN WITNESS WHEREOF,  the Company has caused this Warrant to be signed as of
the date first set forth above.

                                      CITY NETWORK, INC.

                                      By: /s/ Alice Chen
                                         ----------------------------------
                                      Name:  Alice Chen
                                      Title: Chairman, President and Chief
                                             Executive Officer

                                       17
<PAGE>
                              EXHIBIT A TO WARRANT

                                 EXERCISE NOTICE

                                 TO BE EXECUTED
                BY THE REGISTERED HOLDER TO EXERCISE THIS WARRANT

                               CITY NETWORK, INC.

     The   undersigned   holder   hereby   exercises   the  right  to   purchase
______________ of the shares of Common Stock ("WARRANT SHARES") of City Network,
Inc., a Nevada  corporation (the  "COMPANY"),  evidenced by the attached Warrant
(the "WARRANT").  Capitalized  terms used herein and not otherwise defined shall
have the respective meanings set forth in the Warrant.

Specify Method of exercise by check mark:

     1.   Cash Exercise

            (a)  Payment of Warrant  Exercise  Price.  The holder  shall pay the
            Aggregate  Exercise  Price  of  $______________  to the  Company  in
            accordance with the terms of the Warrant.

            (b) Delivery of Warrant  Shares.  The Company  shall  deliver to the
            holder _________  Warrant Shares in accordance with the terms of the
            Warrant.

     2.   Cashless Exercise

            (a) Payment of Warrant  Exercise Price. In lieu of making payment of
            the Aggregate Exercise Price, the holder elects to receive upon such
            exercise  the Net  Number of shares of Common  Stock  determined  in
            accordance with the terms of the Warrant.

            (b) Delivery of Warrant  Shares.  The Company  shall  deliver to the
            holder _________  Warrant Shares in accordance with the terms of the
            Warrant.

Date: _______________ __, ______

Name of Registered Holder

By:    ____________________
Name:  ____________________
Title: ____________________EMPLOYMENT
AGREEMENT

                    THIS
EMPLOYMENT AGREEMENT (the “Agreement”) is entered into on
February 9, 2007 (the “Effective Date”), by and between Integrated Electrical Services, Inc.
(the “Company”) and Dennis S. Baldwin (the “Executive”).

                    WHEREAS,
the Company desires to employ Executive as Vice President & Chief
Accounting Officer of the Company from and after the Effective Date until such
date as his employment shall end pursuant to the terms and conditions contained
herein; 

                    WHEREAS,
Executive desires to be employed by the Company in such position and for such
period pursuant to the terms and conditions contained herein; 

                    NOW,
THEREFORE, for and in consideration of the mutual promises,
covenants, and undertakings contained in this Agreement, and intending to be
legally bound, the Company and Executive
agree as follows: 

	
 

	
 

	
 

	
 

	
 

	
I.

	
Employment Term. 

	
 

	
 

	
 

	
Executive and the Company acknowledge that this
  employment relationship may be terminated at any time, upon written notice to
  the other party for any reason, at the option either of the Company or
  Executive. However, as described in this Agreement, Executive may be entitled
  to certain severance benefits depending upon the circumstances of Executive’s
  termination of employment. The period Executive is employed by the Company
  under this Agreement is referred to herein as the “Employment Term”.

	
 

	
 

	
II.

	
Position. 

	
 

	
 

	
 

	
A.

	
During the Employment Term, Executive shall serve as
  the Company’s Vice President & Chief Accounting Officer. In such
  position, Executive shall have authority, responsibilities, and duties
  reasonably accorded to, expected of and consistent with Executive’s position.
  Executive shall serve as a member of the Board without additional
  compensation. 

	
 

	
 

	
 

	
 

	
B.

	
During the Employment Term, Executive will devote
  Executive’s full business time and best efforts to the performance of
  Executive’s duties hereunder and will not engage in any other activity (for
  compensation or otherwise) which would, either individually or in the
  aggregate, conflict or interfere with or otherwise adversely affect the
  rendition of such performance either directly or indirectly, without the
  prior written consent of the Board. 

	
 

	
 

	
 

	
III.

	
Compensation. 

	
 

	
 

	
 

	
A.

	
Base Salary. During the Employment
  Term, the Company shall pay Executive a base salary at the annual rate of
  $225,000.00, payable in accordance with the 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Company’s payroll practices (the “Base Salary”).
  Executive shall be entitled to such increases in Base Salary, if any, as may
  be determined on at least an annual basis in the sole discretion of the
  Compensation Committee of the Board (the “Compensation Committee”).

	
 

	
 

	
 

	
 

	
 

	
Annual Bonus. For the Company’s
  fiscal year (“Fiscal Year”) 2007 and for each successive Fiscal Year
  during the Employment Term, Executive shall be given the opportunity to earn
  an incentive bonus (the “Annual Bonus”). Executive’s target Annual
  Bonus Opportunity for each Fiscal Year during the Employment Term shall be
  40% of Base Salary (the “Annual Bonus Opportunity”). The actual amount
  payable to Executive as an Annual Bonus with respect to a Fiscal Year (or
  portion thereof) shall be dependent upon the achievement of performance
  objectives established by the Compensation Committee during such Fiscal Year
  and may be greater or less than the Annual Bonus Opportunity. That portion of
  the Executive’s Annual Bonus Opportunity that is tied to objective targets
  established by the Compensation Committee may not be subsequently reduced by
  the Committee. The Compensation Committee reserves the sole and exclusive
  right to determine whether the Executive may be entitled to a discretionary
  bonus and to determine what if any criteria may be considered in making such
  decision.Any Annual Bonus shall be paid at the
  same time as similar bonuses are payable to other executive officers of the
  Company, but in no event later than two and a half (2-1/2) months following
  the end of the Fiscal Year with respect to which such Annual Bonus is to be
  paid. 

	
 

	
 

	
 

	
 

	
B.

	
Restricted Stock. On the Effective
  Date, Executive shall receive a grant of 3,600 restricted Company common
  shares under the Equity Plan (the “Restricted Shares”). The Restricted
  Shares shall vest one-third (1/3) on each of the first, second and third
  anniversaries of the Effective Date. The terms of the Restricted Shares shall
  be governed by the Equity Plan and the Restricted Stock Award Agreement to be
  executed on the Effective Date. 

	
 

	
 

	
 

	
 

	
C.

	
Employee Benefits. During the
  Employment Term, Executive shall be eligible to participate in the Company’s
  employee benefit plans as in effect from time to time (collectively “Employee
  Benefits”), on the same basis as such employee benefit plans are
  generally made available to other senior executives of the Company. 

	
 

	
 

	
 

	
 

	
D.

	
Business Expenses.

	
 

	
 

	
 

	
 

	
 

	
1.

	
Expenses. During the Employment
  Term, reasonable business expenses incurred by Executive in the performance
  of Executive’s duties hereunder shall be reimbursed by the Company in
  accordance with the Company’s expense policy. 

	
 

	
 

	
 

	
 

	
IV.

	
Termination. The Employment Term and Executive’s
  employment hereunder may be terminated by either party at any time and for
  any reason; provided that Executive will be 

2

	
 

	
 

	
 

	
 

	
 

	
 

	
required to give the
  Company at least thirty (30) days advance written notice of any resignation
  of Executive’s employment. Notwithstanding any other provision of this
  Agreement, the provisions of this Section IV shall exclusively govern
  Executive’s rights upon termination of employment with the Company and its
  affiliates.

	
 

	
 

	
 

	
 

	
 

	
 

	
A.

	
By the Company For Cause or Resignation By Executive
  Without Good Reason. 

	
 

	
 

	
 

	
 

	
 

	
1.

	
The Employment Term and Executive’s employment
  hereunder may be terminated by the Company for Cause (as defined below) or by
  Executive’s resignation without Good Reason (as defined in Section IV.C.2
  herein);

	
 

	
 

	
 

	
 

	
 

	
 

	
2.

	
For purposes of this Agreement, “Cause” shall
  mean (i) Executive’s willful, material and irreparable breach of his terms of
  employment as provided herein or otherwise (which remains uncured ten (10)
  business days after delivery of written notice specifically identifies such
  breach); (ii) Executive’s gross negligence in the performance or intentional
  nonperformance (in either case continuing for ten (10) business days after receipt
  of written notice of need to cure and sets forth such duty and
  responsibility) of any of Executive’s material duties and responsibilities to
  the Company; (iii) Executive’s dishonesty or fraud with respect to the
  business, reputation or affairs of the Company which materially and adversely
  affects the Company (monetarily or otherwise); (iv) Executive’s conviction of
  a felony or crime involving moral turpitude; (v) Executive’s confirmed drug
  or alcohol abuse that materially affects Executive’s service or results in a
  material violation of the Company’s drug or alcohol abuse policy; or (vi)
  Executive’s material violation of the Company’s personnel or similar policy,
  such policy having been made available to Executive by the Company which
  materially and adversely affects the Company and which remains uncured or
  continues ten (10) business days after delivery of written notice) and such
  notice specifically sets forth said violation.

	
 

	
 

	
 

	
 

	
 

	
 

	
3.

	
If Executive’s employment is terminated by the
  Company for Cause, or if Executive resigns without Good Reason, Executive
  shall be entitled to receive:

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
a.

	
The Base Salary through the date of termination;

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
b.

	
Reimbursement, within sixty (60) days following
  submission by Executive to the Company of appropriate supporting
  documentation, for any unreimbursed reasonable business expenses properly
  incurred by Executive in the performance of Executive’s duties in accordance
  with Company’s expense policy prior to the date of Executive’s termination;
  provided claims for such reimbursement (accompanied by appropriate supporting
  documentation) are submitted to the Company within ninety (90) 

3

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
days following the date of Executive’s termination
  of employment; and

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
c.

	
Such Employee Benefits, if any, as to which
  Executive may be entitled under the employee benefit plans of the Company
  (the amounts described in clauses (a) through (d) above being referred to as
  the “Accrued Rights”).

	
 

	
 

	
 

	
 

	
 

	
 

	
B.

	
Disability or Death.

	
 

	
 

	
 

	
 

	
 

	
1.

	
The Employment Term and Executive’s employment
  hereunder shall terminate upon Executive’s death and may be terminated by the
  Company if Executive becomes physically or mentally incapacitated and is
  therefore unable for a period of six (6) consecutive months or for an
  aggregate of nine (9) months in any twenty-four (24) consecutive month period
  to perform Executive’s duties hereunder (such incapacity is hereinafter
  referred to as “Disability”). Any question as to the existence of a
  Disability of Executive as to which Executive and the Company cannot agree
  shall be determined in writing by a qualified independent physician mutually
  acceptable to Executive and the Company. If Executive and the Company cannot
  agree as to a qualified independent physician, each shall appoint such a
  physician and those two physicians shall select a third who shall make such
  determination in writing. The determination of Disability made in writing to
  the Company and Executive shall be final and conclusive for all purposes of
  the Agreement.

	
 

	
 

	
 

	
 

	
 

	
 

	
2.

	
Upon termination of Executive’s employment hereunder
  for either death or Disability, Executive or Executive’s estate (as the case
  may be) shall be entitled to receive within thirty (30) days the following:

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
a.

	
The Accrued Rights; 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
b.

	
Pro rata portion (based on the percentage of the
  Fiscal Year that shall have elapsed through the date of Executive’s
  termination of employment) of the most recent Annual Bonus awarded to
  Executive (the “Pro Rata Bonus”); and

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
c.

	
Company paid COBRA coverage for twelve (12) months
  for Executive’s eligible dependents in the event of his death; 

	
 

	
 

	
 

	
 

	
 

	
 

	
C.

	
By the Company Without Cause or Resignation by
  Executive for Good Reason.

	
 

	
 

	
 

	
 

	
 

	
1.

	
The Employment Term and Executive’s employment
  hereunder may be terminated by the Company without Cause or by Executive’s
  resignation for Good Reason.

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
2.

	
For purposes of this Agreement, “Good Reason”
  shall mean (A) any material reduction in Executive’s position, duties,
  authority or 

4

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
compensation from those described in this Agreement;
  or (B) any relocation of the Company’s corporate office that is more than
  fifty (50) miles from its current location; or (C) the Company’s breach of a
  material term of this Agreement or material duty owed to the Executive; provided
  that either of the events described in clauses (A), (B), and (C) of this
  Section IV.C.2 shall constitute Good Reason only if the Company fails to cure
  such event within ten (10) business days after receipt from Executive of
  written notice of the event which constitutes Good Reason; provided, further,
  that “Good Reason” shall cease to exist for an event on the sixtieth (60th)
  day following the later of its occurrence or Executive’s knowledge thereof,
  unless Executive has given the Company written notice thereof prior to such
  date.

	
 

	
 

	
 

	
 

	
 

	
 

	
3.

	
If Executive’s employment is terminated by the
  Company without Cause (other than by reason of death or Disability) or if
  Executive resigns for Good Reason, Executive shall be entitled to receive:

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
a.

	
The Accrued Rights; 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
b.

	
Continued payment of the Base Salary for twelve (12)
  months immediately following the date of such termination, in accordance with
  the Company’s normal payroll practices as in effect on the date of such
  termination and within thirty (30) days of such termination the greater of
  (a) pro rata portion (based on the percentage of the Fiscal Year that shall
  have elapsed through the date of Executive’s termination of employment) of
  the Annual Bonus Opportunity for the Fiscal Year in which such termination
  occurs or (b) the most recent Annual Bonus awarded to Executive (Annual Bonus
  payment shall be paid within ten (10) business days following Executives
  termination); provided that the aggregate amount described in this
  Section IV.C.3.b. shall
  be reduced by the present value of any other cash severance or termination
  benefits payable to Executive under any other plans, programs or
  arrangements of the Company or its affiliates and not approved by the
  Compensation Committee or Board of Directors; 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
c.

	
Company paid COBRA coverage for twelve (12) months
  immediately following the date of such termination or until Executive obtains
  comparable employment, whichever is shorter; 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
d.

	
Outplacement services for twelve (12) months immediately
  following the date of such termination or until Executive obtains comparable
  employment, whichever is shorter; 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
e.

	
Executive shall be entitled to acceleration of
  vesting for all unvested equity awards of the Company (including but not
  limited to any unvested options and restricted stock) under the Equity Plan;
  and

5

	
 

	
 

	
 

	
 

	
 

	
 

	
D.

	
By the Company Without Cause or Resignation by
  Executive for Good Reason Within 12 Months Following a Change in Control.

	
 

	
 

	
 

	
 

	
 

	
1.

	
For purposes of this Agreement, a “Change in
  Control” means: 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
a.

	
Any person or any persons acting together which
  would constitute a “group” for purposes of Section 13(d) of the
  Exchange Act, other than Fidelity Management & Research Co., Southpoint
  Capital Advisors LP, Tontine Capital Partners L.P. and their respective
  affiliates, the Company or any subsidiary, shall “beneficially own”
  (as defined in Rule 13d-3 under the Securities Exchange Act of 1934, as
  amended from time to time), directly or indirectly, at least fifty percent (50%)
  of the ordinary voting power of all classes of capital stock of the Company
  entitled to vote generally in the election of the Board; or

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
b.

	
Current Directors (as defined below) shall cease for
  any reason to constitute at least a majority of the members of the Board (for
  these purposes, a “Current Director” means, as of the date of determination, any
  person who (1) was a member of the Board on the date that the
  Company’s Joint Plan of Reorganization under Chapter 11 of the United States
  Bankruptcy Code became effective or
  (2) was nominated for election or elected to the Board with the affirmative vote of a majority of
  the current directors who were members of the Board at the time of such
  nomination or election), or (B) at any meeting of the stockholders of
  the Company called for the purpose of electing directors, a majority of the
  persons nominated by the Board for election as directors shall fail to be
  elected; or

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
c.

	
The consummation of a sale, lease, exchange or other
  disposition (in one transaction or a series of transactions) of all or
  substantially all of the assets of the Company.

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
d.

	
A transaction shall not constitute a Change in
  Control if its sole purpose is to change the state of the Company’s
  incorporation or to create a holding company that will be owned in
  substantially the same proportions by the persons who held the Company’s
  securities immediately before such transaction.

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
2.

	
Upon the consummation of a Change in Control during
  the Employment Term, Executive shall be entitled to acceleration of vesting
  for all unvested equity awards of the Company (including but not limited to
  any unvested options and restricted stock) under the Equity Plan. 

	
 

	
 

	
 

	
 

	
 

	
 

	
3.

	
Notwithstanding the foregoing, for a period of two
  (2) years from the Effective Date of this Agreement, the Executive may, at Executive’s sole
  discretion, elect to terminate Executive’s employment on such Change in 

6

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Control by providing
  written notice to the Company prior to the closing of the transaction giving
  rise to the Change in Control. In such case, Executive shall receive from
  Company the following:

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
a.

	
Continued payment of the Base Salary for twelve (12)
  months immediately following the date of such termination, in accordance with
  the Company’s normal payroll practices as in effect on the date of such
  termination and within thirty (30) days of such termination the greater of
  (a) pro rata portion (based on the percentage of the Fiscal Year that shall
  have elapsed through the date of Executive’s termination of employment) of
  the Annual Bonus Opportunity for the Fiscal Year in which such termination
  occurs or (b) the most recent Annual Bonus awarded to Executive; provided
  that the aggregate amount described in this Section IV.D.3.a. shall be
  reduced by the present value of any other cash severance or termination
  benefits payable to Executive under any other plans, programs or arrangements
  of the Company or its affiliates and not approved by the Compensation
  Committee or Board of Directors;

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
b.

	
Company paid COBRA coverage for twelve (12) months
  immediately following the date of such termination or until Executive obtains
  comparable employment, whichever is shorter; 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
c.

	
Continuation of automobile allowance (as described
  in Section III.G.2. herein) for twelve (12) months immediately following the
  date of such termination or until Executive obtains comparable employment,
  whichever is shorter;

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
d.

	
Outplacement services for twelve (12) months
  immediately following the date of such termination or until Executive obtains
  comparable employment, whichever is shorter;

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
4.

	
Notwithstanding the foregoing, if Executive’s
  employment is terminated by the Company without Cause (other than by reason
  of death or Disability) or if Executive resigns for Good Reason within twelve
  (12) months following a Change in Control, Executive shall be entitled to the
  following:

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
a.

	
The Accrued Rights; 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
b.

	
Continued payment of the Base Salary for twenty-four
  (24) months immediately following the date of such termination, in accordance
  with the Company’s normal payroll practices, as in effect on the date of such
  termination and within thirty (30) days of such termination two (2) times the
  most recent Annual Bonus awarded to Executive; provided that the aggregate
  amount described in this Section IV.D.4.b. shall be reduced by the present
  value of any

7

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
other cash severance or termination benefits
  payable to Executive under any other plans, programs or arrangements of the
  Company or its affiliates or its affiliates and not approved by the
  Compensation Committee or Board of Directors;

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
c.

	
Company paid COBRA coverage for twelve (12) months
  immediately following the date of such termination or until Executive obtains
  comparable employment, whichever is shorter; 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
d.

	
Continuation of automobile allowance (as described
  in Section III.G.2. herein) for twelve (12) months immediately following the
  date of such termination or until Executive obtains comparable employment,
  whichever is shorter; and

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
e.

	
Outplacement services for twelve (12) months
  immediately following the date of such termination or until Executive obtains
  comparable employment, whichever is shorter; 

	
 

	
 

	
 

	
 

	
 

	
 

	
E.

	
Notice of Termination. Any
  purported termination of employment by the Company or by Executive (other
  than due to Executive’s death) shall be communicated by written Notice of
  Termination to the other party hereto in accordance with VIII.I. hereof. With
  respect to any termination of employment by Executive, such notice of
  termination shall be communicated to the Company at least thirty (30) days
  prior to such termination. For purposes of this Agreement, a “Notice of
  Termination” shall mean a notice which shall indicate the specific
  termination provision in this Agreement relied upon and shall set forth in
  reasonable detail the facts and circumstances claimed to provide a basis for
  termination of employment under the provision so indicated.

	
 

	
 

	
 

	
 

	
F.

	
Board/Committee Resignation. Upon
  termination of Executive’s employment for any reason, Executive agrees to
  resign, and shall be deemed to have resigned as of the date of such
  termination and to the extent applicable, from the Board (and any committees
  thereof) and the Board of Directors (and any committees thereof) of any of
  the Company’s subsidiaries.

8

	
 

	
 

	
 

	
 

	
 

	
V.

	
Non-Competition; Non-Solicitation.
  

	
 

	
 

	
 

	
A.

	
Executive acknowledges and recognizes the highly
  competitive nature of the businesses of the Company and its affiliates and
  accordingly agrees as follows:

	
 

	
 

	
 

	
 

	
B.

	
During the Employment Term and for a period of one
  year following the date Executive ceases to be employed by the Company (or
  for a period of two (2) years if Executive ceases to be employed by the
  Company by reason of employment termination pursuant to Section IV.A. above)
  (the “Restricted Period”), Executive will not, whether on Executive’s
  own behalf or on behalf of or in conjunction with any person, firm,
  partnership, joint venture, association, corporation or other business
  organization, entity or enterprise whatsoever (“Person”), directly or
  indirectly solicit or assist in soliciting in competition with the Company,
  the business of any client or prospective client: 

	
 

	
 

	
 

	
 

	
 

	
1.

	
with whom Executive had personal contact or dealings
  on behalf of the Company during the one year period preceding Executive’s
  termination of employment;

	
 

	
 

	
 

	
 

	
 

	
 

	
2.

	
with whom employees reporting to Executive have had
  personal contact or dealings on behalf of the Company during the one year
  immediately preceding the Executive’s termination of employment; or

	
 

	
 

	
 

	
 

	
 

	
 

	
3.

	
for whom Executive had direct or indirect
  responsibility during the one year immediately preceding Executive’s
  termination of employment.

	
 

	
 

	
 

	
 

	
 

	
C.

	
During the Restricted Period, Executive will not
  directly or indirectly:

	
 

	
 

	
 

	
 

	
 

	
1.

	
engage in any business that materially competes with
  any business of the Company or its affiliates (including, without limitation,
  businesses which the Company or its affiliates have specific plans to conduct
  within twelve months from the effective of the termination and as to which
  Executive is personally aware of or should be personally aware of such
  planning in the future and as to which Executive is aware of such planning)
  in any geographical area that is within 100 miles of any geographical area
  where the Company or its affiliates manufactures, produces, sells, leases,
  rents, licenses or otherwise provides its products or services (a “Competitive
  Business”);

	
 

	
 

	
 

	
 

	
 

	
 

	
2.

	
enter the employ of, or render any services to, any
  Person (or any division or controlled or controlling affiliate of any Person)
  who or which engages in a Competitive Business;

	
 

	
 

	
 

	
 

	
 

	
 

	
3.

	
acquire a financial interest in, or otherwise become
  actively involved with, any Competitive Business, directly or indirectly, as
  an individual, partner, shareholder, officer, director, principal, agent,
  trustee or consultant; or

9

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
4.

	
interfere with, or attempt to interfere with,
  business relationships (whether formed before, on or after the date of this
  Agreement) between the Company or any of its affiliates and customers,
  clients, suppliers, partners, members or investors of the Company or its
  affiliates.

	
 

	
 

	
 

	
 

	
 

	
D.

	
Notwithstanding anything to the contrary in this
  Agreement, Executive may, directly or indirectly own, solely as an
  investment, securities of any Person engaged in the business of the Company
  or its affiliates which are publicly traded on a national stock exchange or
  on the over-the-counter market if Executive (i) is not a controlling person
  of, or a member of a group which controls, such person and (ii) does not,
  directly or indirectly, own 5% or more of any class of securities of such
  Person.

	
 

	
 

	
 

	
 

	
E.

	
During the Restricted Period, Executive will not,
  whether on Executive’s own behalf or on behalf of or in conjunction with any
  Person, directly or indirectly:

	
 

	
 

	
 

	
 

	
 

	
1.

	
solicit or encourage any employee of the Company or
  its affiliates to leave the employment of the Company or its affiliates; or

	
 

	
 

	
 

	
 

	
 

	
 

	
2.

	
hire any such employee who was employed by the
  Company or its affiliates as of the date of Executive’s termination of
  employment with the Company or who left the employment of the Company or its
  affiliates coincident with, or within one year prior to or after, the
  termination of Executive’s employment with the Company.

	
 

	
 

	
 

	
 

	
 

	
F.

	
During the Restricted Period, Executive will not,
  directly or indirectly, solicit or encourage to cease to work with the
  Company or its affiliates any consultant then under contract with the Company
  or its affiliates.

	
 

	
 

	
 

	
 

	
G.

	
It is expressly understood and agreed that although
  Executive and agreed that although Executive and the Company consider the
  restrictions contained in this Section V to be reasonable, if a final
  judicial determination is made by a court of competent jurisdiction that the
  time or territory or any other restriction contained in this Agreement is an
  unenforceable restriction against Executive, the provisions of this Agreement
  shall not be rendered void but shall be deemed amended to apply as to such
  maximum time and territory and to such maximum extent as such court may
  judicially determine or indicate to be enforceable. Alternatively, if any
  court of competent jurisdiction finds that any restriction contained in this
  Agreement is unenforceable, and such restriction cannot be amended so as to
  make it enforceable, such finding shall not affect the enforceability of any
  of the other restrictions contained herein.

	
 

	
 

	
 

	
VI.

	
Confidentiality; Intellectual Property.

	
 

	
 

	
 

	
A.

	
Confidentiality.

	
 

	
 

	
 

	
 

	
 

	
1.

	
Executive will not at any time (whether during or
  after Executive’s employment with the Company) retain or use for the benefit,
  purposes or 

10

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
account of Executive or any other Person; or
  disclose, divulge, reveal, communicate, share, transfer or provide access to
  any Person outside the Company (other than its professional advisers who are
  bound by confidentiality obligations), any non-public, proprietary or
  confidential information – including without limitation trade secrets,
  know-how, research and development, software, databases, inventions,
  processes, formulae, technology, designs and other intellectual property,
  information concerning finances, investments, profits, pricing, costs,
  products, services, vendors, customers, clients, partners, investors,
  personnel, compensation, recruiting, training, advertising, sales, marketing,
  promotions, government and regulatory activities and approvals – concerning
  the past, current or future business, activities and operations of the
  Company, its subsidiaries or affiliates and/or any third party that has
  disclosed or provided any of same to the Company on a confidential basis (“Confidential
  Information”) without the prior written authorization of the Board.

	
 

	
 

	
 

	
 

	
 

	
 

	
2.

	
“Confidential Information” shall not include any
  information that is (a) generally known to the industry or the public other
  than as a result of Executive’s breach of this covenant or any breach of
  other confidentiality obligations by third parties; (b) made legitimately
  available to Executive by a third party without breach of any confidentiality
  obligation; or (c) required by law to be disclosed; provided that
  Executive shall give prompt written notice to the Company of such
  requirement, disclose no more information than is so required, and cooperate
  with any attempts by the Company to obtain a protective order or similar
  treatment.

	
 

	
 

	
 

	
 

	
 

	
 

	
3.

	
Upon termination of Executive’s employment with the
  Company for any reason, Executive shall cease and not thereafter commence use
  of any Confidential Information or intellectual property (including without
  limitation, any patent, invention, copyright, trade secret, trademark, trade
  name, logo, domain name or other source indicator)owned or used by the
  Company, its subsidiaries or affiliates; immediately destroy, delete, or
  return to the Company, at the Company’s option, all originals and copies in
  any form or medium (including memoranda, books, papers, plans, computer
  files, letters and other data) in Executive’s possession or control
  (including any of the foregoing stored or located in Executive’s office,
  home, laptop or other computer, whether or not Company property) that contain
  Confidential Information or otherwise relate to the business of the Company,
  its affiliates and subsidiaries, except that Executive may retain only those
  portions of any personal notes, notebooks and diaries that do not contain any
  Confidential Information; and notify and fully cooperate with the Company
  regarding the delivery or destruction of any other Confidential Information of
  which Executive is or becomes aware.

	
 

	
 

	
 

	
 

	
 

	
B.

	
Intellectual Property.

11

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
1.

	
If Executive has created, invented, designed,
  developed, contributed to or improved any works of authorship, inventions,
  intellectual property, materials, documents or other work product (including
  without limitation, research, reports, software, databases, systems,
  applications, presentations, textual works, content, or audiovisual
  materials) (“Works”), either alone or with third parties, prior to
  Executive’s employment by the Company, that are relevant to or implicated by
  such employment (“Prior Works”), Executive hereby grants the Company a
  perpetual, non-exclusive, royalty-free, worldwide, assignable, sublicensable
  license under all rights and intellectual property rights (including rights
  under patent, industrial property, copyright, trademark, trade secret, unfair
  competition and related laws) therein for all purposes in connection with the
  Company’s current and future business. 

	
 

	
 

	
 

	
 

	
 

	
 

	
2.

	
If Executive creates, invents, designs, develops,
  contributes to or improves any Works, either alone or with third parties, at
  any time during Executive’s employment by the Company and within the scope of
  such employment and/or with the use of any the Company resources (“Company
  Works”), Executive shall promptly and fully disclose same to the Company
  and hereby irrevocably assigns, transfers and conveys, to the maximum extent
  permitted by applicable law, all rights and intellectual property rights
  therein (including rights under patent, industrial property, copyright,
  trademark, trade secret, unfair competition and related laws) to the Company
  to the extent ownership of any such rights does not vest originally in the
  Company.

	
 

	
 

	
 

	
 

	
 

	
 

	
3.

	
Executive agrees to keep and maintain adequate and
  current written records (in the form of notes, sketches, drawings, and any
  other form or media requested by the Company) of all Company Works. The
  records will be available to and remain the sole property and intellectual
  property of the Company at all times.

	
 

	
 

	
 

	
 

	
 

	
 

	
4.

	
Executive shall take all requested actions and
  execute all requested documents (including any licenses or assignments
  required by a government contract) at the Company’s expense (but without
  further remuneration) to assist the Company in validating, maintaining,
  protecting, enforcing, perfecting, recording, patenting or registering any of
  the Company’s rights in the Prior Works and Company Works. If the Company is
  unable for any other reason to secure Executive’s signature on any document for
  this purpose, then Executive hereby irrevocably designates and appoints the
  Company and its duly authorized officers and agents as Executive’s agent and
  attorney in fact, to act for and in Executive’s behalf and stead to execute
  any documents and to do all other lawfully permitted acts in connection with
  the foregoing.

	
 

	
 

	
 

	
 

	
 

	
 

	
5.

	
Executive shall not improperly use for the benefit
  of, bring to any premises of, divulge, disclose, communicate, reveal,
  transfer or provide access to, or share with the Company any confidential,
  proprietary or non-

12

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
public information or intellectual property relating
  to a former employer or other third party without the prior written
  permission of such third party. Executive hereby indemnifies, holds harmless
  and agrees to defend the Company and its officers, directors, partners,
  employees, agents and representatives from any breach of the foregoing
  covenant. Executive shall comply with all relevant policies and guidelines of
  the Company, including regarding the protection of confidential information
  and intellectual property and potential conflicts of interest. Executive
  acknowledges that the Company may amend any such policies and guidelines from
  time to time, and that Executive remains at all times bound by their most
  current version.

	
 

	
 

	
 

	
 

	
 

	
C.

	
The provisions of this Section VI shall survive the
  termination of Executive’s employment for any reason.

	
 

	
 

	
 

	
VII.

	
Specific Performance. Executive
  acknowledges and agrees that the Company’s remedies at law for a breach or
  threatened breach of any of the provisions of Section V or Section VI herein
  would be inadequate and the Company would suffer irreparable damages as a
  result of such breach or threatened breach. In recognition of this fact,
  Executive agrees that, in the event of such a breach or threatened breach, in
  addition to any remedies at law, the Company, without posting any bond, shall
  be entitled to cease making any payments or providing any benefit otherwise
  required by this Agreement and obtain equitable relief in the form of
  specific performance, temporary restraining order, temporary or permanent
  injunction or any other equitable remedy which may then be available.

	
 

	
 

	
VIII.

	
Miscellaneous.

	
 

	
 

	
 

	
A.

	
Governing Law. This Agreement
  shall be governed by and construed in accordance with the laws of the State
  of Texas, without regard to conflict of laws principles thereof.

	
 

	
 

	
 

	
 

	
B.

	
Dispute Resolution. Any dispute,
  claim or controversy arising out of or relating to this Agreement or the
  breach, termination, enforcement, interpretation or validity thereof,
  including the determination of the scope or applicability of this Agreement
  to arbitrate, shall be determined by arbitration in Houston, Harris County,
  Texas before one arbitrator. The arbitration shall be administered by JAMS
  pursuant to its Comprehensive Arbitration Rules and Procedures (Streamlined
  Arbitration Rules and Procedures). Judgment on the award pursuant to such
  arbitration may be entered in any court having jurisdiction. This clause
  shall not preclude parties from seeking provisional remedies in aid of
  arbitration from a court of appropriate jurisdiction. The arbitrator may, in
  its award, allocate all or part of the costs of the arbitration, including
  the fees of the arbitrator and the reasonable attorneys’ fees of the
  prevailing party.

	
 

	
 

	
 

	
 

	
 

	
 

	
C.

	
Entire Agreement/Amendments. This
  Agreement contains the entire understanding of the parties with respect to
  the employment of Executive by the Company. There are no restrictions,
  agreements, promises, warranties, covenants 

13

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
or undertakings between the parties with respect to
  the subject matter herein other than those expressly set forth herein. This
  Agreement may not be altered, modified, or amended except by written
  instrument signed by the parties hereto.

	
 

	
 

	
 

	
 

	
D.

	
No Waiver. The failure of a party
  to insist upon strict adherence to any term of this Agreement on any occasion
  shall not be considered a waiver of such party’s rights or deprive such party
  of the right thereafter to insist upon strict adherence to that term or any
  other term of this Agreement.

	
 

	
 

	
 

	
 

	
E.

	
Severability. In the event that
  any one or more of the provisions of this Agreement shall be or become
  invalid, illegal or unenforceable in any respect, the validity, legality and
  enforceability of the remaining provisions of this Agreement shall not be
  affected thereby.

	
 

	
 

	
 

	
 

	
F.

	
Assignment. This Agreement, and
  all of Executive’s rights and duties hereunder, shall not be assignable or
  delegable by Executive. Any purported assignment or delegation by Executive
  in violation of the foregoing shall be null and void ab initio
  and of no force and effect. This Agreement may be assigned by the Company to
  a person or entity which is an affiliate or a successor in interest to
  substantially all of the business operations of the Company. Upon such
  assignment, the rights and obligations of the Company hereunder shall become
  the rights and obligations of such affiliate or successor person or entity.

	
 

	
 

	
 

	
 

	
G.

	
Compliance with IRC Section 409A.
  Notwithstanding anything herein to the contrary, (i) if at the time of
  Executive’s termination of employment with the Company Executive is a
  “specified employee” as defined in Section 409A of the Internal Revenue Code
  of 1986, as amended (the “Code”) and the deferral of the commencement
  of any payments or benefits otherwise payable hereunder as a result of such
  termination of employment is necessary in order to prevent any accelerated or
  additional tax under Section 409A of the Code, then the Company will defer
  the commencement of the payment of any such payments or benefits hereunder
  (without any reduction in such payments or benefits ultimately paid or
  provided to Executive) until the date that is six months following
  Executive’s termination of employment with the Company (or the earliest date
  as is permitted under Section 409A of the Code) and (ii) if any other
  payments of money or other benefits due to Executive hereunder could cause
  the application of an accelerated or additional tax under Section 409A of the
  Code, such payments or other benefits shall be deferred if deferral will make
  such payment or other benefits compliant under Section 409A of the Code, or
  otherwise such payment or other benefits shall be restructured, to the extent
  possible, in a manner, determined by the Board, that does not cause such an
  accelerated or additional tax. The Company shall consult with Executive in
  good faith regarding the implementation of the provisions of this Section
  VIII.G.; provided that neither the Company nor any of its employees or
  representatives shall have any liability to Executive with respect to
  thereto.

14

	
 

	
 

	
 

	
 

	
 

	
 

	
H.

	
Successors; Binding Agreement.
  This Agreement shall inure to the benefit of and be binding upon personal or
  legal representatives, executors, administrators, successors, heirs,
  distributees, devisees and legatees.

	
 

	
 

	
 

	
 

	
 

	
 

	
I.

	
Notices. For the purpose of this
  Agreement, notices and all other communications provided for in the Agreement
  shall be in writing and shall be deemed to have been duly given when
  delivered by hand or overnight courier or three days after it has been mailed
  by United States registered mail, return receipt requested, postage prepaid,
  addressed to the respective addresses set forth below in this Agreement, or
  to such other address as either party may have furnished to the other in
  writing in accordance herewith, except that notice of change of address shall
  be effective only upon receipt.

	
 

	
 

	
 

	
 

	
 

	
If to the Company:

	
 

	
 

	
 

	
 

	
 

	
Integrated
  Electrical Services, Inc.

	
 

	
 

	
1800 West Loop
  South, Suite 500

	
 

	
 

	
Houston, Texas
  77027

	
 

	
 

	
Attention:
  General Counsel

	
 

	
 

	
Fax: (713)
  860-1578

	
 

	
 

	
 

	
 

	
 

	
If to Executive:

	
 

	
 

	
 

	
 

	
 

	
Dennis S.
  Baldwin

	
 

	
 

	
1116
Danbury

	
 

	
 

	
Houston, TX
  77055

	
 

	
 

	
 

	
 

	
 

	
To the most recent address of Executive set forth in
  the personnel records of the Company.

	
 

	
 

	
 

	
 

	
J.

	
Executive Representation.
  Executive hereby represents to the Company that the execution and delivery of
  this Agreement by Executive and the Company and the performance by Executive
  of Executive’s duties hereunder shall not constitute a breach of, or
  otherwise contravene, the terms of any employment agreement or other
  agreement or policy to which Executive is a party or otherwise bound.

	
 

	
 

	
 

	
 

	
K.

	
Cooperation. Executive shall
  provide Executive’s reasonable cooperation in connection with any action or
  proceeding (or any appeal from any action or proceeding) which relates to
  events occurring during Executive’s employment hereunder. This provision
  shall survive any termination of this Agreement.

	
 

	
 

	
 

	
 

	
L.

	
Withholding Taxes. The Company may
  withhold from any amounts payable under this Agreement such Federal, state
  and local taxes as may be required to be withheld pursuant to any applicable
  law or regulation.

	
 

	
 

	
 

	
 

	
M.

	
Counterparts. This Agreement may
  be signed in counterparts, each of which shall be an original, with the same
  effect as if the signatures thereto and hereto were upon the same instrument.

15

                    IN
WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the
day and year first above written.

	
 

	
 

	
 

	
Integrated Electrical Services, Inc.

	
 

	
Dennis S. Baldwin

	
 

	
 

	
 

	
By:

	
 

	
 

	
 

	
 

	
 

	

	
 

	

	
Name: Robert B. Callahan

	
 

	
 

	
Title:  Sr. Vice President, Human
  Resources

	
 

	
 

16

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