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EXHIBIT 10.2

                            ASSET PURCHASE AGREEMENT

      This ASSET PURCHASE AGREEMENT (this "AGREEMENT") is made and entered into
as of December 9, 2004 by and among INTEGRATED ELECTRICAL SERVICES, INC., a
Delaware corporation (the "PARENT"), B. RICE ELECTRIC LP, and CARROLL SYSTEMS
LP, both Texas limited partnerships (together, the "COMPANY"), BRITT RICE
CONSTRUCTION COMPANY, LP, a Texas limited partnership (the "BUYER") and BRITT L.
RICE, an individual and resident of the State of Texas ( "GUARANTOR").

                                   WITNESSETH:

      WHEREAS, the Parent owns, either directly or indirectly, all of the issued
and outstanding partnership interest of the Company, which is engaged in the
electrical construction and services business (the "BUSINESS");

      WHEREAS, the Parent and the Company desire to sell to the Buyer
substantially all of the Company's assets, which are more fully described in
Section 1.1 hereof, and the Buyer desires to acquire such assets in
consideration of the payment by the Buyer of the purchase price and the
assumption by the Buyer of the liabilities provided for herein, all upon the
terms and subject to the conditions hereinafter set forth;

      NOW, THEREFORE, for and in consideration of the premises and of the
respective representations, warranties, covenants, agreements and conditions of
the parties contained herein, it is hereby agreed as follows:

1.    PURCHASE AND SALE OF ASSETS.

      1.1 Transfer of Assets. On the terms and subject to the conditions set
forth in this Agreement, on the Closing Date (as defined in Section 2.1 hereof),
the Company shall sell, convey, assign, transfer and deliver to the Buyer, and
the Buyer shall purchase and acquire from the Company (except as provided in
Section 1.2 hereof) all of the assets, rights and properties of the Parent or
the Company set forth on Schedule 1.1. The assets described in this Section 1.1
as being sold, conveyed, assigned, transferred and delivered to the Buyer
hereunder are sometimes hereinafter referred to collectively as the "ASSETS".

      1.2 Excluded Assets. It is expressly understood and agreed that the Assets
shall not include the following (such assets are hereinafter referred to
collectively as the "EXCLUDED ASSETS"):

            (a) Cash and cash equivalents or similar type investments, such as
      certificates of deposit, Treasury bills and other marketable securities;

            (b) Claims for refunds of taxes and other governmental charges to
      the extent such refunds relate to periods ending on or prior to the
      Closing Date;

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            (c) Any asset, tangible or intangible, which is not freely
      transferable without the consent of a third party, upon the failure to
      obtain such consent;

            (d) The original corporate minute books, stock books, financial
      records, tax returns, personnel and payroll records and corporate policies
      and procedures manuals of the Company and other records required by
      applicable laws to be retained; provided, however, that the Buyer shall
      retain in its possession the documents and files set forth on Schedule 1.2
      (which shall continue to be owned by the Company), and make them
      immediately available to Parent and/or the Company on request, and further
      provided that Buyer shall not destroy any such records without the prior
      written consent of the Parent.

            (e) Any contract or agreement, whether written or oral, between the
      Company and IES Contractors, Inc.; and

            (f) Any asset not set forth on Schedule 1.1.

      1.3 Instruments of Conveyance and Transfer.

            (a) At the Closing, the Buyer, the Company and the Parent shall
      enter into a Bill of Sale, Assignment and Assumption Agreement in the form
      attached hereto as Exhibit A, transferring to the Buyer good and
      indefeasible title to all of the tangible personal property included in
      the Assets, subject only to Permitted Encumbrances.

            (b) At the Closing, the Buyer and the Parent shall deliver such
      other instruments of transfer and assignment in respect of the Assets as
      the Buyer shall reasonably require and as shall be consistent with the
      terms and provisions of this Agreement.

            (c) At the Closing, the Buyer shall, and shall cause the Transferred
      Employees (as hereinafter defined) to, resign as officers and directors of
      the Company and any other affiliates of the Parent.

      1.4 Further Assurances. From time to time after the Closing, the Parent
and the Company will execute and deliver, or cause to be executed and delivered,
without further consideration, such other instruments of conveyance, assignment,
transfer and delivery and will take such other actions as the Buyer may
reasonably request in order to more effectively transfer, convey, assign and
deliver to the Buyer, and to place the Buyer in possession and control of any of
the Assets or to enable the Buyer to exercise and enjoy all rights and benefits
of the Company with respect thereto.

      1.5 Liabilities. On the Closing Date, the Buyer will assume and agree to
pay and discharge all liabilities of the Company, known or unknown, absolute or
contingent (the "ASSUMED LIABILITIES") other than the liabilities set forth on
Schedule 1.5 (the "RETAINED LIABILITIES"), which shall be retained by the Parent
or the Company, respectively.

      1.6 Expenses: Consents and Taxes. The Buyer shall pay, or cause to be paid
(i) all costs and expenses of obtaining all consents of third parties for the
assignment of any of the Assets,

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and (ii) all transfer, stamp, sales, use or other similar taxes or duties
payable in connection with the sale and transfer of the Assets to the Buyer.

2.    CLOSING; PURCHASE PRICE.

      2.1 Closing Date. The consummation of the transactions contemplated in
this Agreement (the "CLOSING") shall take place at the offices of Gardere Wynne
Sewell LLP, 1000 Louisiana, Suite 3400, Houston, Texas at 10:00 a.m., Central
time, December 9, 2004 (the "CLOSING DATE") contemporaneously with the execution
of this Agreement or at such other place and time as the parties hereto may
mutually agree.

      2.2 Purchase Price. The aggregate purchase price for the Assets shall be
$6,629,000 (the "PURCHASE PRICE"), subject to adjustment pursuant to Section 2.3
below, plus the Buyer's assumption of the Assumed Liabilities pursuant to
Section 1.5 above. The Purchase Price shall be payable by the Buyer at the
Closing to the Company in immediately available funds by confirmed wire transfer
to a bank account to be designated by the Company.

      2.3 Cash Reconciliation. Within 30 days following the Closing Date, the
Company shall prepare and deliver to the Buyer a schedule setting forth, for the
period commencing on October 1, 2004, and ending as of the Closing, (a) the cash
disbursements funded by the Company, the Parent or any of their affiliates for
the benefit of the Company, to include those made in the ordinary course to
trade vendors and those made in the ordinary course for Company employee benefit
plans (the "DISBURSEMENTS"), and (b) the cash deposits made by the Company (the
"DEPOSITS"). Within three business days following the Buyer's receipt of such
schedule, (i) the Buyer shall remit to the Company in immediately available
funds, the amount by which the Disbursements exceed the Deposits, if any; or
(ii) the Company shall remit to the Buyer, in like manner and within such
period, the amount by which Deposits exceed the Disbursements, if any.
Disbursements shall include, but not be limited to, actual cash amounts paid by
the Company or the Parent on behalf of the Company, including (i) amounts paid
after September 30, 2004 for checks issued by the Company or Parent on behalf of
the Company on or before September 30, 2004 that had not cleared the banks on
September 30, 2004, which amounts were reflected on the September 30, 2004
balance sheet as negative cash amounts, (ii) checks issued by the Buyer or
Parent on behalf of the Company subsequent to September 30, 2004, but before the
Closing that have not cleared the banks as of the Closing, and (iii) workers
compensation, general liability, health and similar insurance premiums paid by
the Parent on behalf of the Company with respect to periods prior to the
Closing, whether accrued prior to or after the Closing, and Deposits shall
include, but not be limited to, actual cash amounts received by the Company or
the Parent on behalf of the Company subsequent to September 30, 2004, but before
the Closing that have not been reflected in the Company's accounts as of the
Closing. Disbursements and Deposits will be accounted for in accordance with
Parent's accounting practices consistent with past periods.

      2.4 Purchase Price Allocation. As soon as practicable after the Closing
Date, the Company and the Buyer shall jointly attempt to agree to and prepare
IRS Form 8594 to report the allocation of the Purchase Price among the Assets.
Each party hereto agrees not to assert, in connection with any tax return, tax
audit or similar proceeding, any allocation that differs from that set forth in
such Form 8594. If the Company and the Buyer cannot reach agreement as to the

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allocation of the Purchase Price among the Assets, the parties agree to allocate
the Purchase Price among the Assets for all purposes (including financial
accounting and tax purposes) independently.

3.    REPRESENTATIONS AND WARRANTIES.

      3.1 Representations and Warranties of the Company and the Parent. Each
Company and the Parent represent and warrant to the Buyer as follows:

            (a) Organization, Authority and Qualification of the Company. Each
      Company is a limited partnership duly organized and validly existing under
      the laws of the State of Texas and each Company has full power and
      authority to own or lease its properties and to carry on its business in
      such state. The Parent is a corporation duly organized and validly
      incorporated under the laws of the State of Delaware and Parent has full
      power and authority to own or lease its properties and to carry on its
      business in such state. Each Company and the Parent have the full power
      and authority to execute, deliver and perform this Agreement, and this
      Agreement has been duly and validly executed and delivered by each Company
      and the Parent and constitutes the valid and legally binding obligation of
      each of them, subject to general equity principles, enforceable in
      accordance with its terms, except as the same may be limited by
      bankruptcy, insolvency, reorganization or similar laws affecting the
      rights of creditors generally.

            (b) No Violation. Neither Company is in default under nor in
      violation of its Partnership Agreement.

            (c) Title to Properties; Absence of Liens and Encumbrances. Each
      Company owns good and indefeasible title to its Assets, free and clear of
      all claims, liens, security interests, charges, leases, encumbrances,
      licenses or sublicenses and other restrictions of any kind and nature,
      other than the claims, liens, security interests, charges, leases,
      encumbrances, licenses or sublicenses either included among the Assumed
      Liabilities or specifically set forth on Schedule 3.1(c) hereto
      ("PERMITTED ENCUMBRANCES").

      3.2 Representations and Warranties of the Buyer. The Buyer represents and
warrants to the Parent and the Company as follows:

            (a) Residence. The Buyer is a limited partnership that is duly
      organized and validly existing under the laws of the State of Texas.

            (b) Authorization. The Buyer has the capacity to execute, deliver
      and perform this Agreement, and this Agreement has been duly and validly
      executed and delivered by the Buyer and constitutes the valid and legally
      binding obligation of the Buyer, subject to general equity principles,
      enforceable in accordance with its terms, except as the same may be
      limited by bankruptcy, insolvency, reorganization or similar laws
      affecting the rights of creditors generally.

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            (c) Certain Fees. The Buyer has not employed any broker or finder or
      incurred any other liability for any brokerage fees, commissions or
      finders' fees in connection with the transactions contemplated hereby.

            (d) Financial Information. The financial and management reports
      (including, without limitation, WIP schedules) heretofore delivered or
      made by Guarantor or the Company to the Parent are true and correct in all
      material respects and do not omit to state any fact necessary to make any
      of them, in light of the circumstances in which made, not misleading. All
      executed change orders have been recorded, all agreed change orders have
      been executed or are listed on Schedule 3.2(d), and all checks and cash
      received by the Company and its affiliates have been deposited.

      3.3 No Warranty. The Buyer and Guarantor acknowledge that the Guarantor,
through previous ownership and/or the management of the Company, is familiar
with the Assets and the operations of the Company, and has access to any
information pertaining thereto and has made such information available to the
Buyer. Neither the Company nor the Parent, nor any of their respective
directors, officers, employees, agents or representatives has made, or shall be
deemed to have made, and no such person shall be liable for, or bound in any
manner by, and the Buyer and Guarantor have not relied upon and will not rely
upon, any express or implied representations, warranties, guaranties, promises
or statements pertaining to the Business or Assets except as specifically
provided in this Section 3. The Buyer and Guarantor acknowledge that in making
the decision to enter into this Agreement and to consummate the transactions
contemplated hereby, they have relied solely on the basis of their own
independent investigation of the Business and the Assets and upon the express
written representations, warranties and covenants in this Agreement. Without
diminishing the scope of the express written representations, warranties and
covenants of the Company and the Parent in this Agreement and without affecting
or impairing the Buyer's right to rely thereon, the Buyer and Guarantor
acknowledge that (a) they have not relied, in whole or in part, on any
information contained in documents, materials or other information provided to
them by, or on behalf of, Company or the Parent, and (b) neither Company nor the
Parent is making any representations or warranties with respect to (i) any such
documents, materials or other information, other than, in each case, as set
forth in this Agreement or (ii) the value, condition, merchantability,
marketability, profitability, suitability or fitness for a particular use or
purpose of the Assets. ACCORDINGLY, THE ASSETS ARE BEING TRANSFERRED "AS IS,
WHERE IS." EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES SET FORTH IN SECTION
3.1 OF THIS AGREEMENT, THE COMPANY AND PARENT MAKE ABSOLUTELY NO REPRESENTATIONS
OR WARRANTIES WHATSOEVER, EXPRESS OR IMPLIED, REGARDING THE ASSETS, INCLUDING
WITHOUT LIMITATION ANY IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS FOR A
PARTICULAR PURPOSE, OR THE ABILITY OF THE COMPANY TO ASSIGN (WHERE ASSIGNABILITY
HAS BEEN RESTRICTED BY THIRD PARTIES) THE ASSETS, OR OBTAIN CONSENTS TO ANY
ASSIGNMENT.

4.    COVENANTS; ACTION SUBSEQUENT TO CLOSING.

      4.1 Access to Books and Records. Until the third anniversary of the
Closing Date, the Parent and the Company shall afford, and will cause its
affiliates to afford, to the Buyer, its counsel,

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accountants and other authorized representatives, during normal business hours,
reasonable access to the books, records and other data of the Company and the
Business with respect to periods ending on or prior to the Closing Date to the
extent that such access may be reasonably required by the Buyer to facilitate
(i) the investigation, litigation and final disposition of any claims which may
have been or may be made against the Buyer in connection with the Business or
(ii) for any other reasonable business purpose. Following the Closing, the Buyer
shall prepare, on behalf of the Company, all regularly prepared Company
financial reports and statements for periods up to and including the Closing
Date, and shall cooperate with and provide assistance to the Parent and the
Company in their financial and tax reporting obligations for the periods up to
and including the Closing Date.

      4.2 Mail. The Parent and the Company authorize and empower the Buyer on
and after the Closing Date to receive and open all mail received by the Buyer
relating to the Business or the Assets and to deal with the contents of such
communications in any proper manner. The Parent and the Company shall promptly
deliver to the Buyer any mail or other communication received by them after the
Closing Date pertaining to the Business or the Assets. The Buyer shall promptly
deliver to the Parent any mail or other communication received by it after the
Closing Date pertaining to the Excluded Assets or Retained Liabilities, and any
cash, checks or other instruments of payment in respect of the Excluded Assets.

      4.3 No Consent Contracts. To the extent that any contract of the Company
included in the Assets may not be assigned without the consent of any third
party, and such consent is not obtained prior to Closing (such contracts
referred to as "NO CONSENT CONTRACTS"), this Agreement and any assignment
executed at Closing pursuant hereto shall not constitute an assignment thereof,
but to the extent permitted by law shall constitute an equitable assignment by
the Company and assumption by the Buyer of the Company's rights and obligations
under the applicable No Consent Contract, with the Company making available to
the Buyer the benefits thereof and the Buyer performing the obligations
thereunder on the Company's behalf.

      4.4 Preparation and Filing of Certain Tax Forms. The Buyer shall prepare
and timely file all Forms W-2, 940, 941 and 1099 with all appropriate
Governmental Entities, including without limitation any summary schedules and
transmittal forms, as well as any similar filings required by any state or local
Governmental Entity, with respect to all wages and other reportable payments for
the calendar year 2004. As used herein, "GOVERNMENTAL ENTITY" means any court or
tribunal in any jurisdiction (domestic or foreign) or any public, governmental
or regulatory body, agency, department, commission, board, bureau or other
authority or instrumentality, domestic or foreign. The Buyer shall pay all
administrative amounts owed as a result of or otherwise related to such filings
with the exception of any tax, interest, or penalties associated with periods
prior to the Closing. The Company will pay, on or before they become due, any
employment taxes withheld by it which have not been previously paid. The Buyer,
Parent and the Company shall cooperate in making all such filings and shall make
available to the others such information as any of them requires to assure such
filings are made on a timely and accurate basis.

      4.5 The Parent Name and Logos. As soon as practicable (but in any event
within 90 days) after the Closing Date, the Buyer, at its expense, shall remove
all the Parent and its affiliates' names and logos from all of the Assets.
Except as specifically provided in Section 1, nothing in this

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Agreement shall constitute a license or authorization for the Buyer to use in
any manner any name, logo or mark owned by or licensed to the Company, the
Parent or their respective affiliates which bears any reference to IES or any
subsidiary of IES other than the Company. The name "B. Rice Electric LP" or any
other name using the words "Britt Rice," the name "Carroll Systems LP" or any
other name using the word "Carroll" shall be the property of Buyer after the
Closing Date and will not be used by the Parent or the Company after the
Closing, except that Parent will be given a reasonable period of time (not to
exceed 60 days) to change any company names after the Closing Date.

      4.6 Leased Assets. At the Closing, the Buyer, at its expense, shall pay
off or refinance the leases on the vehicles listed on Schedule 4.6 attached
hereto, and in connection therewith shall obtain the release of Parent and the
Company for all liability under such vehicle leases. As soon as practicable (but
in any event within 90 days) after the Closing Date, the Buyer, at its expense,
shall pay off or refinance the leases on the other assets listed on Schedule 4.6
attached hereto, and in connection therewith shall obtain the release of Parent
and the Company for all liability under such leases. At the Closing, the Buyer
and the Company agree to enter into a Sublease Agreement in the form attached as
Exhibit B, pursuant to which the Company shall sublease to the Buyer, and the
Buyer shall sublease from the Company, the premises at 4707 Commercial Park
Drive, Austin, Texas.

      4.7 Chubb Bonds. Buyer agrees that at the Closing it shall execute and
deliver to the Federal Insurance Company and its subsidiary or affiliated
insurers and any applicable co-sureties (collectively, "FEDERAL"), a General
Agreement of Indemnity in the form attached as Exhibit C, pursuant to which
Buyer and Guarantor agree to (i) indemnify Federal with respect to the
performance and completion of the bonded obligations as set forth therein; and
(ii) replace within ninety (90) days the bonds identified as Cancelable Bonds
therein. Buyer further agrees to continue to provide to Federal monthly written
reports (with a copy to the Parent) as to the progress of the completion of the
bonded jobs. Buyer and Guarantor further agree to provide, from time to time and
at the request of the Parent, a certificate or certificates certifying that the
Cancelable Bonds have been replaced, and as to such other matters concerning the
performance by the Buyer of its post-closing obligations under this Agreement as
Parent shall request.

      4.8 Retained Claims. The Company shall retain liability for certain
insured claims as set forth in Schedule 1.5, paragraph 5 (the "RETAINED
CLAIMS"). The Buyer and the Guarantor agree to cooperate with the Company and
the Parent in the defense of the Retained Claims and to make available the
Buyer's personnel and facilities for that purpose. The Company shall retain as
Excluded Assets and not transfer to the Buyer all books and records associated
with the Retained Claims, as well as any reserves established on the books of
the Company for the Retained Claims, which reserves shall be paid in cash by the
Buyer to the Company at Closing.

5.    INDEMNIFICATION.

      5.1 Survival. The representations and warranties of the Company, the
Parent, the Buyer and the Guarantor contained in this Agreement, any schedules
delivered by or on behalf of the Company and the Buyer pursuant to this
Agreement, or in any certificate, instrument, agreement or other writing
delivered by or on behalf of the Company, the Parent. the Buyer or the Guarantor

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pursuant to this Agreement shall survive the consummation of the transactions
contemplated herein; provided that all such representations and warranties of
the Company, the Parent, the Buyer and the Guarantor shall be of no further
force and effect, and no claim for indemnification by the Buyer pursuant to this
Section 5 may be brought for any reason, after the expiration of twelve (12)
months from the Closing Date (the "SURVIVAL PERIOD"), except for the
representations and warranties contained in Section 3.1(c), which shall survive
indefinitely. Anything to the contrary notwithstanding, a claim for
indemnification which is made but not resolved prior to the expiration of the
Survival Period may be pursued and resolved after such expiration.

      5.2 Indemnification by the Company.

            (a) In accordance with and subject to the provisions of this Section
      5, the Company and the Parent shall indemnify and hold harmless the Buyer
      from and against and in respect of any and all loss, damage, diminution in
      value, liability, cost and expense, including reasonable attorneys' fees
      and amounts paid in settlement (collectively, the "BUYER INDEMNIFIED
      LOSSES"), suffered or incurred by the Buyer by reason of, or arising out
      of (i) any misrepresentation or breach of representation or warranty of
      the Company or the Parent contained in this Agreement, or in any schedules
      delivered to the Buyer by or on behalf of the Company or the Parent
      pursuant to this Agreement; (ii) the breach of any covenant or agreement
      of the Company or the Parent contained in this Agreement; or (iii) the
      Retained Liabilities.

            (b) The Company and the Parent shall reimburse the Buyer on demand
      for any Buyer Indemnified Losses suffered by the Buyer with respect to
      matters other than claims, actions or demands brought, made or instituted
      by a third party ("THIRD PARTY CLAIMS"). With respect to Third Party
      Claims, the Company and the Parent shall reimburse the Buyer on demand for
      any Buyer Indemnified Losses suffered by the Buyer, based on the judgment
      of any court of competent jurisdiction or pursuant to a bona fide
      compromise or settlement in respect of any Buyer Indemnified Losses. The
      Company and the Parent shall have the opportunity to defend at their
      expense any claim, action or demand for which the Buyer claims indemnity
      against the Company or the Parent; provided that: (i) the defense is
      conducted by reputable counsel; (ii) the defense is expressly assumed in
      writing within twenty (20) days after written notice of the claim, action
      or demand is delivered to the Company and the Parent; and (iii) counsel
      for the Buyer may participate at all times and in all proceedings (formal
      and informal) relating to the defense, compromise and settlement of the
      claim, action or demand at the expense of the Buyer.

      5.3 Indemnification by the Buyer.

            (a) In accordance with and subject to the provisions of this Section
      5, the Buyer and the Guarantor shall, jointly and severally, indemnify and
      hold harmless the Company, the Parent and their respective affiliates (for
      purposes of this Section 5, the "COMPANY INDEMNITEES") from and against
      and in respect of any and all loss, damage, diminution in value,
      liability, cost and expense, including reasonable attorneys' fees and
      amounts paid in settlement (collectively, the "COMPANY INDEMNIFIED
      LOSSES"), suffered or incurred by the Company Indemnitees by reason of, or
      arising out of (i) any misrepresentation or breach of

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      representation or warranty of the Buyer or the Guarantor contained in this
      Agreement, or in any schedules delivered to the Company or the Parent by
      or on behalf of the Buyer or the Guarantor pursuant to this Agreement;
      (ii) or the breach of any covenant or agreement of the Buyer or the
      Guarantor contained in this Agreement; (iii) the Assumed Liabilities,
      including, without limitation, any liability to sureties with respect to
      bonded jobs; or (iv) the operation of the Business following the Closing,
      including, but not limited to, any claims made by Transferred Employees
      concerning COBRA, the WARN Act, unemployment claim liability, or any
      similar matters as a result of the termination by Buyer of the Transferred
      Employees.

            (b) The Buyer and the Guarantor, jointly and severally (the "BUYER
      INDEMNIFYING PARTIES") shall reimburse the Company Indemnitees on demand
      for any Company Indemnified Losses suffered by the Company Indemnitees
      with respect to matters other than Third Party Claims. With respect to
      Third Party Claims, the Buyer Indemnifying Parties shall reimburse the
      Company Indemnitees on demand for any Company Indemnified Losses suffered
      by the Company Indemnitees, based on the judgment of any court of
      competent jurisdiction or pursuant to a bona fide compromise or settlement
      in respect of any Company Indemnified Losses. The Buyer Indemnifying
      Parties shall have the opportunity to defend at their expense any claim,
      action or demand for which the Company Indemnitees claim indemnity against
      the Buyer Indemnifying Parties; provided that: (i) the defense is
      conducted by reputable counsel; (ii) the defense is expressly assumed in
      writing within twenty (20) days after written notice of the claim, action
      or demand is delivered to the Buyer Indemnifying Parties; and (iii)
      counsel for the Company and the Parent may participate at all times and in
      all proceedings (formal and informal) relating to the defense, compromise
      and settlement of the claim, action or demand at the expense of the
      Company and the Parent.

      5.4 Limitation and Payment on Claims. No claim shall be brought under this
Section 5 for breach of any representation or warranty, and no party hereto
shall be entitled to receive any payment with respect thereto, until such time
as, and only to the extent that, the aggregate amount of such claim(s) that such
party has equals or exceeds $100,000 (the "DEDUCTIBLE"); provided, however, that
the Deductible shall not apply to any obligations under Section 2.3. Anything to
the contrary notwithstanding, the Company and the Parent shall not be liable
under this Section 5 for Buyer Indemnified Losses in excess of the Purchase
Price.

      5.5 Sole Remedy. The sole remedy of the Company, the Parent and the Buyer
Indemnifying Parties for breach of the representations and warranties set forth
in Section 3 shall be pursuant to this Section 5.

6.    DISPUTE RESOLUTION.

      6.1 Arbitration.

            (a) Any controversy, dispute or claim arising out of or relating in
      any way to this Agreement or the other agreements contemplated by this
      Agreement or the transactions arising hereunder (including the validity,
      interpretation or applicability of this Section 6.1) shall be settled
      exclusively by final and binding arbitration in Houston, Texas. Such

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      arbitration will apply the laws of the State of Texas and the commercial
      arbitration rules of AAA to resolve the dispute, and will be administered
      by the AAA.

            (b) Written notice of arbitration must be given within one year
      after the notifying party has knowledge of accrual of the claim on which
      the notice is based. If the claiming party fails to give notice of
      arbitration within that time, the claim shall be deemed to be waived and
      shall be barred from either arbitration or litigation.

            (c) Such arbitration shall be conducted by one independent and
      impartial arbitrator to be selected by mutual agreement of the parties, if
      possible. If the parties fail to reach agreement regarding appointment of
      an arbitrator within thirty (30) days following receipt by one party of
      the other party's notice of arbitration, the arbitrator shall be selected
      from a list or lists of proposed arbitrators submitted by AAA. Unless the
      parties agree otherwise, the arbitrator shall be a licensed attorney with
      at least ten years of experience in the practice of law. The selection
      process shall be that which is set forth in the AAA commercial arbitration
      rules then prevailing, except that (A) the number of preemptory strikes
      shall not be limited and (B), if the parties fail to select an arbitrator
      from one or more lists, AAA shall not initially have the power to make an
      appointment but shall continue to submit additional lists until an
      arbitrator has been selected, but if no such arbitrator is selected within
      sixty (60) days after the receipt of the first notice of arbitration, the
      AAA shall have the power to make an appointment and shall promptly do so.
      Initially, however, promptly following its receipt of a request to submit
      a list of proposed arbitrators, AAA shall convene the parties in person or
      by telephone and attempt to facilitate their selection of an arbitrator by
      agreement. If the arbitrator should die, withdraw or otherwise become
      incapable of serving, a replacement shall be selected and appointed in a
      like manner.

            (d) The arbitrator shall render an opinion setting forth findings of
      fact and conclusions of law with the reasons therefor stated. A transcript
      of the evidence adduced at the hearing shall be made and shall, upon
      request, be made available to either party. The fees and expenses of the
      arbitrator shall be shared equally by the parties and advanced by them
      from time to time as required; provided that at the conclusion of the
      arbitration, the arbitrator may award costs and expenses (including the
      costs of the arbitration previously advanced and the fees and expenses of
      attorneys, accountants and other experts). No pre-arbitration discovery
      shall be permitted, except that the arbitrator shall have the power in his
      or her sole discretion, on application by either party, to order
      pre-arbitration examination of the witnesses and documents that the other
      party intends to introduce in its case-in-chief at the arbitration
      hearing. The arbitrator shall render his or her opinion and/or award
      within ninety (90) days of the conclusion of the arbitration hearing. The
      arbitrator shall not be empowered to award to either party any punitive
      damages in connection with any dispute between them arising out of or
      relating in any way to this Agreement or the other agreements contemplated
      hereby or the transactions arising hereunder or thereunder, and each party
      hereby irrevocably waives any right to recover such damages. The
      arbitration hearings and award shall be maintained in confidence.

Notwithstanding anything to the contrary provided in this Section 6.1 and
without prejudice to the above procedures, either party may apply to any court
of competent jurisdiction for

                                       10
<PAGE>

temporary injunctive or other provisional judicial relief if such action is
necessary to avoid irreparable damage or to preserve the status quo until such
time as the arbitrator is selected and available to hear such party's request
for temporary relief. The award rendered by the arbitrator shall be final and
not subject to judicial review and judgment thereon may be entered in any court
of competent jurisdiction.

7.    EMPLOYEE MATTERS.

      7.1 Hiring.

            (a) The Buyer shall hire (subject to each employee's agreement),
      effective as of the Closing Date, all of the employees of the Company on
      the day immediately prior to the Closing Date, active or inactive (such
      employees being hereafter referred to as the "TRANSFERRED EMPLOYEES") at a
      comparable job and at a rate of pay not less than each such Transferred
      Employee's pay as of September 30, 2004. Upon request of the Buyer, the
      Company shall provide the Buyer reasonable access to data (including
      computer data) regarding the ages, dates of hire, compensation and job
      description of the Transferred Employees.

            (b) The Buyer shall assume and be responsible for any severance
      costs associated with the termination of the Transferred Employees'
      employment with the Company. The Buyer shall discharge all liabilities and
      claims based on occurrences or conditions first occurring or commencing on
      or after the Closing Date with respect to Transferred Employees arising
      out of their employment with the Buyer after the Closing Date, including,
      but not limited to, any claims arising out of any employee benefit plan,
      policy, program or arrangement maintained at any time by the Buyer (a
      "BUYER PLAN" or collectively, the "BUYER PLANS"), except Buyer shall not
      assume any liabilities with respect to the WARN Act or COBRA benefits for
      any terminations occurring prior to the Closing Date (unless provided
      otherwise by law or pursuant to applicable regulations) nor shall the
      Company or the Parent be liable under the WARN Act, COBRA, or state
      unemployment claims law for any Transferred Employee terminated by Buyer
      after the Closing.

            (c) At Closing, the Buyer shall establish and make available a group
      medical plan for the Transferred Employees and their dependents that is
      substantially similar to the group medical plan available to the
      Transferred Employees immediately prior to Closing. The Buyer shall credit
      the Transferred Employees with all service of the Transferred Employees
      recognized under the employee benefit plans, policies, programs, or
      arrangements maintained by the Parent or the Company (the "PARENT PLANS")
      as service with the Buyer for purposes of eligibility to participate,
      vesting and levels of benefits available, under all Buyer Plans. The Buyer
      shall waive any coverage waiting period, pre-existing condition and
      actively-at-work requirements under the Buyer Plans for the Transferred
      Employees and shall provide that any expenses incurred before the Closing
      Date by a Transferred Employee (and his or her dependents) during the
      calendar year of the Closing shall be taken into account for purposes of
      satisfying the applicable deductible, coinsurance and maximum
      out-of-pocket provisions, and applicable annual and/or lifetime maximum
      benefit limitations of the Buyer Plans. The Buyer Plans shall not require

                                       11
<PAGE>

      contributions by Transferred Employees at a rate that exceeds the rate in
      effect for other similarly situated employees of the Buyer. Any reports or
      other information provided to Buyer by the Company or the Parent in
      connection with Buyer performing his obligations under this Section 7.1(c)
      shall be at the sole expense of the Buyer.

      7.2 Benefits. Except as provided in Section 7.1(b), the Buyer shall be
responsible for the payment of all amounts of wages, bonuses and other
remuneration (including discretionary benefits and bonuses) payable to the
Transferred Employees of the Company accrued with respect to periods on or prior
to the Closing (except for any employment taxes actually withheld by the
Company) together with amounts payable to such employees in connection with
events occurring on or prior to the Closing. In addition, the Buyer shall be
responsible for:

            (a) all vacation pay and pay for other compensated absences earned
      or accrued by the Transferred Employees as of the close of business on the
      Closing Date to the appropriate employee, including any related payroll
      burden (FICA and other pension or other employee benefit plan
      contributions and employment taxes) with respect thereto to the
      appropriate Governmental Entity or other person, to the extent such pay
      has been accrued on the books of the Company at such close of business,
      based upon the remuneration of such employees normally used in computing
      such pay for other compensated absences; and

            (b) amounts accrued under the Integrated Electrical Services, Inc.
      401(k) Retirement Savings Plan (the "PARENT 401(k) PLAN") for the
      Transferred Employees as of the Closing Date but not yet transferred to
      the trustee of the Parent 401(k) Plan, including without limitation, the
      accrued match, accrued payroll deductions representing elective deferrals,
      loan repayments and accrued profit sharing contribution, if any.

      7.3 Parent 401(k) Plan. The Company, the Parent and the Buyer agree that,
as soon as practicable after Closing, but in any event within 90 days of the
Closing Date, the account balances in the Parent 401(k) Plan of the Transferred
Employees shall be transferred to a qualified 401(k) retirement savings plan
established by the Buyer (the "BUYER'S 401(k) PLAN") in accordance with Section
414(l) of the Internal Revenue Code of 1986, as amended (the "CODE"), and the
regulations promulgated thereunder. In connection with such transfer, the
following provisions shall apply:

            (a) The account balances of the Transferred Employees transferred to
      the Buyer's 401(k) Plan shall be subject to the provisions of the Buyer's
      401(k) Plan effective as of the date of transfer; provided, however that
      the Buyer's 401(k) Plan shall continue any benefits under the Parent
      401(k) Plan as required under Section 411(d)(6) of the Code; and

            (b) The outstanding loan of any Transferred Employee shall not be in
      default as a result of the Transferred Employee's termination of
      employment with the Parent or the Company, but such loan shall be
      transferred to the Buyer's 401(k) Plan in accordance with (a) above.

      The Buyer shall provide acceptable evidence to the Parent that the Buyer's
      401(k) Plan meets the requirements of Section 401(a) of the Code prior to
      the date of such transfer. The Buyer, the Parent and the Company agree to
      take whatever action, including but not limited

                                       12
<PAGE>

      to plan amendments and resolutions, to effectuate the transfer of the
      Transferred Employee's account balances according to this section from the
      Parent 401(k) Plan to the Buyer's 401(k) Plan.

Notwithstanding the foregoing, nothing in this Section 7 shall be deemed or
construed to give rise to any rights, claims, benefits, or causes of action to
any Transferred Employee or third party whatsoever (including any Governmental
Entity).

      7.4 Non-Competition and Other Employment Agreements. All (i)
non-competition and (ii) other employment agreements now existing between Buyer
and the Parent and/or the Company shall be terminated at the Closing and each
party thereto shall release the other from any liability associated therewith.

8.    MISCELLANEOUS.

      8.1 Notices. All notices and communications required or permitted
hereunder shall be in writing and may be given by (a) depositing the same in the
United States mail, addressed to the party to be notified, postage prepaid and
registered or certified with return receipt requested, (b) by delivering the
same in person to an officer or agent of such party, or (c) overnight delivery
service. Such notice shall be deemed received on the date (i) on which it is
actually received if sent by overnight delivery service or hand delivery, or
(ii) on the third business day following the date on which it is mailed. For
purposes of notice, the addresses of the parties hereto shall be:

         If to the Parent or the Company:

                  Integrated Electrical Services, Inc.
                  1800 West Loop South, Suite 500
                  Houston, Texas 77027
                  Attention:  Chief Financial Officer

         With a copy to:

                  Integrated Electrical Services, Inc.
                  1800 West Loop South, Suite 500
                  Houston, Texas 77027
                  Attention:  Chief Legal Officer

         If to the Buyer:

                  Britt Rice Construction Company, LP
                  3022D Longmore Drive
                  College Station, Texas  77845

         If to the Guarantor:

                                       13
<PAGE>

                  Britt L. Rice
                  3022 D Longmire Drive
                  College Station, TX  77845

or such other address as any party hereto shall specify pursuant to this Section
8.1 from time to time.

      8.2 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, and all of which
together shall constitute one and the same instrument.

      8.3 Governing Law. The validity and effect of this Agreement shall be
governed by and construed and enforced in accordance with the laws of the State
of Texas, without regard to its conflicts of laws rules.

      8.4 Successors and Assigns. This Agreement shall be binding upon and shall
inure to the benefit of the parties hereto and their respective permitted heirs,
successors and assigns. Neither the Company, the Parent nor the Buyer may
assign, delegate or otherwise transfer any of their rights or obligations under
this Agreement without the written consent by each other party hereto.

      8.5 Partial Invalidity and Severability. All rights and restrictions
contained herein may be exercised and shall be applicable and binding only to
the extent that they do not violate any applicable laws and are intended to be
limited to the extent necessary to render this Agreement legal, valid and
enforceable. If any term of this Agreement, or part thereof, not essential to
the commercial purpose of this Agreement shall be held to be illegal, invalid or
unenforceable by a forum of competent jurisdiction, it is the intention of the
parties that the remaining terms hereof, or part thereof, shall constitute their
agreement with respect to the subject matter hereof, and all such remaining
terms, or parts thereof, shall remain in full force and effect. To the extent
legally permissible, any illegal, invalid or unenforceable provision of this
Agreement shall be replaced by a valid provision which will implement the
commercial purpose of the illegal, invalid or unenforceable provision.

      8.6 Waiver. Any term or condition of this Agreement may be waived at any
time by the party which is entitled to the benefit thereof, but only if such
waiver is evidenced by a writing signed by such party. No failure on the part of
any party hereto to exercise, and no delay in exercising, any right, power or
remedy created hereunder shall operate as a waiver thereof, nor shall any single
or partial exercise of any right, power or remedy by either party preclude any
other or further exercise thereof or the exercise of any other right, power or
remedy. No waiver by either party hereto of any breach of or default in any term
or condition of this Agreement shall constitute a waiver of or assent to any
succeeding breach of or default in the same or any other term or condition
hereof.

      8.7 Headings. The headings of particular provisions of this Agreement are
inserted for convenience only and shall not be construed as a part of this
Agreement or serve as a limitation or expansion on the scope of any term or
provision of this Agreement.

                                       14
<PAGE>

      8.8 Entire Agreement; Amendments. This Agreement supersedes all prior
discussions and agreements between the parties with respect to the subject
matter hereof (including without limitation any letters of intent executed by
the parties), and this Agreement contains the sole and entire agreement between
the parties with respect to the matters covered hereby. This Agreement shall not
be altered or amended except by an instrument in writing signed by or on behalf
of the party against whom enforcement is sought.

      8.9 Disclosure of Agreement Terms. The Buyer shall not disclose the terms
and conditions of this Agreement to any person or entity without the prior
written consent of an executive officer of the Parent or as required by
applicable law or an order from a court or administrative body of competent
jurisdiction (but only to the extent so required and only after giving
reasonable prior notice to the Company and the Parent and cooperating with the
Company and the Parent in any efforts to legally oppose such disclosure). The
foregoing notwithstanding, the Buyer shall be permitted to make such disclosures
to its accountants, lawyers, financial institutions, lending sources, employees
and related parties as may be appropriate, provided that such parties are bound
by the foregoing nondisclosure provisions.

      8.10 Number and Gender. Where the context requires, the use of the
singular form herein shall include the plural, the use of the plural shall
include the singular, and the use of any gender shall include any and all
genders.

                                       15
<PAGE>

      IN WITNESS WHEREOF, this Agreement has been executed effective as of the
date set forth above.

                                         PARENT:

                                         INTEGRATED ELECTRICAL SERVICES, INC.

                                         By: /s/ Herbert R. Allen
                                             ----------------------------------
                                         Name: Herbert R. Allen
                                         Title: Chief Executive Officer

                                         COMPANY:

                                         B. RICE ELECTRIC LP

                                         By:  BRITT RICE MANAGEMENT LLC,
                                              its general partner

                                                  By: /s/ Curt L. Warnock
                                                      -------------------------
                                                  Name: Curt L. Warnock
                                                  Title: Vice President

                                         CARROLL SYSTEMS LP

                                         By:  CARROLL MANAGEMENT LLC,
                                                  its general partner

                                                  By: /s/ Curt L. Warnock
                                                      -------------------------
                                                  Name: Curt L. Warnock
                                                  Title: Vice President

                                         BUYER:

                                         BRITT RICE CONSTRUCTION COMPANY, LP

                                         By:  BRITT RICE HOLDING COMPANY, LLC,
                                                  its general partner

                                                  By: /s/ Britt L. Rice
                                                      -------------------------
                                                  Name: Britt L. Rice
                                                  Title: President

                                       16
<PAGE>

                                         GUARANTOR

                                                  /s/ Britt L. Rice
                                         ---------------------------------------
                                                  BRITT L. RICE

                                       17
<PAGE>

                                    EXHIBIT A

                BILL OF SALE, ASSIGNMENT AND ASSUMPTION AGREEMENT

      This BILL OF SALE, ASSIGNMENT AND ASSUMPTION AGREEMENT ("Bill of Sale") is
entered into as of the ___ day of October 2004, by and among INTEGRATED
ELECTRICAL SERVICES, INC., a Delaware corporation (the "Parent"), [__________],
a [________]corporation (the "Company") and [__________________], an individual
and resident of the State of [__________](the "Buyer").

                                    RECITALS

      WHEREAS, pursuant to the terms of that certain Asset Purchase Agreement
(the "Purchase Agreement") dated as of even date herewith by and among the
Buyer, the Parent and the Company, the Company and the Parent agreed to convey
the Assets to the Buyer and the Buyer agreed to assume the Assumed Liabilities.
In order to evidence such conveyance and assumption, the parties desire to enter
into this Bill of Sale.

      WHEREAS, all capitalized terms used herein but not defined herein shall
have the meanings ascribed to them in the Purchase Agreement.

                                   ASSIGNMENT

      NOW, THEREFORE, for and in consideration of the mutual covenants,
agreements, and benefits contained herein, the sum of TEN DOLLARS ($10.00) and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the Company and the Parent do hereby BARGAIN, GRANT, SELL,
CONVEY, TRANSFER, DELIVER and ASSIGN unto Buyer all the Assets.

      The Assets are hereby conveyed free and clear of all encumbrances other
than the Permitted Encumbrances.

      TO HAVE AND TO HOLD the Assets unto the Buyer and its successors and
assigns forever; and the Company and the Parent do hereby bind themselves and
their successors and assigns to WARRANT AND FOREVER DEFEND title to the Assets
in accordance with the terms and provisions of the Purchase Agreement.

      The Buyer, upon execution below, accepts this Bill of Sale, and to the
extent provided for in the Purchase Agreement, hereby assumes the Assumed
Liabilities, but no others.

      This assignment shall be binding upon and shall inure to the benefit of
the parties hereto and their respective permitted successors and assigns.

      This Bill of Sale may be executed in any number of counterparts, and each
counterpart shall for all purposes be deemed to be an original.

<PAGE>

      This Bill of Sale is subject to all terms and conditions contained in the
Purchase Agreement and nothing herein shall be deemed to alter, amend, or
supersede the Purchase Agreement, the terms of which shall in all respects be
controlling.

                  [Remainder of page intentionally left blank]

<PAGE>

      IN WITNESS WHEREOF, the parties hereto have executed this Bill of Sale
effective as of the date set forth above.

                                        PARENT:

                                        INTEGRATED ELECTRICAL SERVICES, INC.

                                        By: ____________________________________
                                        Name: __________________________________
                                        Title: _________________________________

                                        COMPANY:

                                        [                   ]

                                        By: ____________________________________
                                        Name: __________________________________
                                        Title: _________________________________

                                        BUYER:

                                        By: ____________________________________
                                        Name: __________________________________

<PAGE>

                                    EXHIBIT B

                           FORM OF SUBLEASE AGREEMENT

<PAGE>

                               SUBLEASE AGREEMENT

      This SUBLEASE AGREEMENT (this "SUBLEASe") is entered into as of December
____, 2004 (the "EFFECTIVE DATE"), between CARROLL SYSTEMS LP, a Texas limited
partnership ("SUBLESSOR") and BRITT RICE CONSTRUCTION COMPANY, LP, a Texas
limited partnership ("SUBLESSEE"), with reference to the following:

                                   WITNESSETH:

      WHEREAS, on December 20, 1999, WOLFE COMMONWEALTH I, LTD. ("LANDLORD"),
entered into that certain Standard Industrial/Commercial Single-Tenant Lease
(the "PRIMARY LEASE"), whereby certain premises (the "ORIGINAL PREMISES")
containing approximately 8,172 rentable square feet of office/warehouse space
located at 4707 Commercial Park Dr., Austin, Texas (the "BUILDING"), were leased
to Sublessor as Tenant;

      WHEREAS, the Primary Lease was amended pursuant to that certain Addendum
dated as of February 3, 2000 (the "ADDENDUM") and by that certain Second
Amendment to Lease (the "SECOND Amendment") wherein among other things, the
lessor was granted options to extend the term of the Primary Lease through May
31, 2006 (the Primary Lease, as amended by the Addendum and the Second
Amendment, and as further amended, supplement or restated, is hereinafter
referred to as the "Primary Lease"). Capitalized terms used herein but not
defined herein shall have the meanings set forth in the Primary Lease;

      WHEREAS, a copy of the Primary Lease and any subsequent amendments are
attached hereto as EXHIBIT "A" and incorporated herein by reference for all
purposes;

      WHEREAS, in connection with the transactions contemplated by that certain
Asset Purchase Agreement of even date herewith between Sublessor, Sublessee and
certain other parties (the "Purchase Agreement"), Sublessor desires to sublease
the Premises to Sublessee, and Sublessee wishes to sublease the Premises from
Sublessor;

      NOW THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Sublessor and Sublessee agree as
follows:

9. SUBLEASE. Sublessor subleases the Premises to Sublessee, and Sublessee
subleases the Premises from Sublessor (the Premises, as subleased to the
Sublessee, hereinafter referred to as the "SUBLEASED PREMISES").

10. TERM. The term (the "TERM") of the Sublease shall be for a period of six (6)
months commencing on December ___, 2004, and ending on June ___, 2005 (the
"EXPIRATION DATE"), unless extended month-to-month thereafter at the option of
the Sublessee; provided, however, that this Sublease shall terminate no later
than the termination, for any cause whatsoever, of the Primary Lease.

11. RENT.

<PAGE>

      11.1 Sublessee agrees to pay Sublessor for the use of the Subleased
Premises $4,339.33 per month, plus any applicable tax thereon ("BASE RENT").

      11.2 The Base Rent shall be paid in advance on or before the first day of
each calendar month without notice or demand. Base Rent for any partial month
shall be prorated and Sublessee agrees to pay the prorated amount of December's
Base Rent of $______ at the time of execution of this Sublease.

      11.3 Sublessee further agrees to pay, as additional rent (the "EXTRA
RENT"), all amounts billed by Landlord to Sublessor as Additonal Rental
(including without limitation, utility costs, expense escalation amounts and
real estate tax escalation amounts) due under the Primary Lease which is
applicable to the Term of this Sublease. Sublessor shall invoice Sublessee for
such Extra Rent by providing Sublessee copies of the invoice received by
Sublessor from the Landlord. Sublessee agrees to make all such payments to
Sublessor at least five (5) days prior to the date on which Sublessor is
required to make such payments to Landlord pursuant to the Primary Lease (Base
Rent plus Extra Rent hereinafter referred to as "RENT"). Notwithstanding
anything contained herein to the contrary, payment of the Extra Rent is due and
payable monthly.

12. USE. The Subleased Premises will be occupied and used by Sublessee only for
the purposes set forth in the Primary Lease.

13. PRIMARY LEASE.

      13.1 The terms and conditions of the Primary Lease are incorporated herein
by reference for all purposes (other than any renewal options, right to sublease
or assign and any economic concessions granted to Sublessor as the Tenant under
the Primary Lease), and Sublessee, by Sublessee's execution hereof, acknowledges
that Sublessor has furnished Sublessee with a copy of the Primary Lease and that
Sublessee has examined the Primary Lease and is familiar with the terms thereof.
Except as otherwise expressly provided in this Sublease, Sublessee agrees to
comply in all respects with the terms and conditions of the Primary Lease as if
Sublessee were the tenant under the Primary Lease insofar as the same are
applicable to the Subleased Premises.

      13.2 Except as otherwise set forth herein, as between Sublessor and
Sublessee, Sublessor shall be entitled to all of the rights and remedies
reserved by and granted to the landlord in the Primary Lease as if Sublessor was
the "Landlord" under the Primary Lease and Sublessee was the "Tenant" under the
Primary Lease, and such rights and remedies are incorporated herein by reference
for all purposes.

      13.3 This Sublease is subject and subordinate to all of the terms,
covenants and conditions of the Primary Lease and to all of the rights of
Landlord under the Primary Lease. If the Primary Lease terminates for any reason
prior to the expiration or termination of this Sublease, Sublessee shall not
have any claim whatsoever against Sublessor arising or resulting from such
termination of the Primary Lease.

14. LIMITATION OF LIABILITY AND INDEMNITY. Notwithstanding any provision of the
Primary Lease to the contrary, neither Landlord nor the Sublessor shall be
liable to Sublessee, or any of its agents, employees, servants or invitees, for
any damage to persons or property due to the condition

<PAGE>

or design or any defect in the Building or its mechanical systems which may
exist or subsequently occur, and Sublessee with respect to itself and its
agents, employees, servants and invitees, expressly assumes all risks and damage
to persons and property, either proximate or remote, by the reason of the
present or future condition of the Subleased Premises or the Building. All
indemnification, hold harmless and release provisions contained in the Primary
Lease running to the benefit of Landlord are incorporated herein by reference
with respect to the Subleased Premises for the benefit of Sublessor as if
Sublessor was the "Landlord" and Sublessee was the "Tenant" under the Primary
Lease. FURTHERMORE, NEITHER SUBLESSOR NOR LANDLORD SHALL BE LIABLE TO SUBLESSEE
FOR, AND UNLESS CAUSED BY THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF
SUBLESSOR, SUBLESSEE SHALL SAVE SUBLESSOR AND LANDLORD HARMLESS FROM AND
AGAINST, ANY AND ALL LOSS, COST, LIABILITY, CLAIM, DAMAGE AND EXPENSE,
INCLUDING, WITHOUT LIMITATION, REASONABLE COUNSEL FEES, PENALTIES AND FINES
INCURRED IN CONNECTION WITH OR ARISING FROM ANY INJURY OR DAMAGE TO SUBLESSEE OR
TO ANY OTHER PERSON OR FOR ANY DAMAGE TO, OR LOSS (BY THEFT OR OTHERWISE) OF,
ANY OF SUBLESSEE'S PROPERTY AND/OR OF THE PROPERTY OF ANY OTHER PERSON, CAUSED
BY OR RESULTING FROM ANY ACT OR OMISSION OF SUBLESSEE, ITS EMPLOYEES, AGENTS,
CONTRACTORS AND INVITEES. SUBLESSEE AGREES TO INDEMNIFY AND SAVE SUBLESSOR AND
LANDLORD HARMLESS FROM AND AGAINST ALL LOSS, COST, LIABILITY, CLAIMS, DAMAGE AND
EXPENSE (INCLUDING, WITHOUT LIMITATION, REASONABLE COUNSEL FEES), PENALTIES AND
FINES, INCURRED IN CONNECTION WITH OR ARISING FROM (A) ANY DEFAULT BY SUBLESSEE
IN THE OBSERVANCE OR PERFORMANCE OF ANY OF THE TERMS, COVENANTS OR CONDITIONS OF
THIS SUBLEASE, OR (B) THE USE OR OCCUPANCY OR MANNER OF USE OR OCCUPANCY OF THE
SUBLEASED PREMISES BY SUBLESSEE OR ANY PERSON CLAIMING THROUGH OR UNDER
SUBLESSEE, OR (C) ANY ACTS, OMISSIONS OR NEGLIGENCE OF SUBLESSEE, ITS EMPLOYEES,
AGENTS, CONTRACTORS AND INVITEES. IF ANY ACTION OR PROCEEDING SHALL BE BROUGHT
AGAINST SUBLESSOR OR LANDLORD BY REASON OF ANY SUCH CLAIM, SUBLESSEE, UPON
NOTICE FROM SUBLESSOR OR LANDLORD, AS THE CASE MAY BE, AGREES TO RESIST OR
DEFEND SUCH ACTION OR PROCEEDING AND TO EMPLOY COUNSEL THEREFORE REASONABLY
SATISFACTORY TO SUBLESSOR OR LANDLORD, AS THE CASE MAY BE. SUBLESSEE SHALL PAY
TO SUBLESSOR AND/OR LANDLORD AS THE CASE MAY BE, ON DEMAND, ALL REASONABLE SUMS
WHICH MAY BE OWING TO SUBLESSOR OR LANDLORD BY REASON OF THE PROVISIONS OF THIS
PARAGRAPH. SUBLESSEE'S OBLIGATIONS UNDER THIS PARAGRAPH SHALL SURVIVE THE
TERMINATION OR EXPIRATION OF THIS SUBLEASE.

15. CONDITION OF SPACE. Sublessee has inspected the Subleased Premises and
agrees to accept the same "AS-IS" condition during the Sublease Term without any
agreements, representation, understanding or obligation on the part of Sublessor
to perform any alterations, repairs or improvements. SUBLESSEE ACKNOWLEDGES THAT
NEITHER SUBLESSOR NOR LANDLORD HAS MADE OR WILL MAKE ANY WARRANTIES TO SUBLESSEE
WITH RESPECT TO THE QUALITY OF CONSTRUCTION OF ANY LEASEHOLD IMPROVEMENTS OR
TENANT FINISH WITHIN THE SUBLEASED PREMISES OR AS

<PAGE>

TO THE CONDITION OF THE SUBLEASED PREMISES, EITHER EXPRESS OR IMPLIED, AND THAT
SUBLESSOR AND LANDLORD EXPRESSLY DISCLAIM ANY IMPLIED WARRANTY THAT THE
SUBLEASED PREMISES ARE HABITABLE OR WILL BE SUITABLE FOR SUBLESSEE'S INTENDED
COMMERCIAL PURPOSES. EXCEPT AS EXPRESSLY PROVIDED HEREIN, SUBLESSEE'S OBLIGATION
TO PAY RENTALS UNDER THIS SUBLEASE IS NOT DEPENDENT UPON THE CONDITION OF THE
SUBLEASED PREMISES OR THE BUILDING (NOW OR IN THE FUTURE OR THE PERFORMANCE BY
LANDLORD OF ITS OBLIGATIONS UNDER THE PRIMARY LEASE, AND EXCEPT AS OTHERWISE
PROVIDED IN THIS SUBLEASE, SUBLESSEE SHALL CONTINUE TO PAY THE RENTALS HEREUNDER
WITHOUT ABATEMENT, SETOFF OR DEDUCTION NOTWITHSTANDING ANY BREACH BY SUBLESSOR
OF ITS DUTIES OR OBLIGATIONS HEREUNDER OR BY LANDLORD OF ITS DUTIES OR
OBLIGATIONS UNDER THE PRIMARY LEASE, WHETHER EXPRESS OR IMPLIED.

16. ALTERATIONS. Sublessee may not make any alterations, improvements or
additions to the Subleased Premises (collectively, "IMPROVEMENTS") without the
express prior written consent of Landlord and Sublessor. Any Improvements to
which Landlord and Sublessor consent must be constructed and installed in
accordance with (i) all requirements contained in the Primary Lease, and (ii)
any requirements imposed by Sublessor to protect Sublessor's interest in the
Primary Lease and/or in the Subleased Premises. Sublessee shall comply with the
requirements of the Primary Lease applicable to the tenant thereunder.

17. DAMAGE AND DESTRUCTION.

      17.1 If the Subleased Premises, or any portion thereof, are damaged or
destroyed by any cause whatsoever, such that the Primary Lease is terminated,
this Sublease shall terminate immediately upon termination of the Primary Lease.
Rent and any other payments for which Sublessee is liable shall be apportioned
and paid to the date of such damage or destruction, and Sublessee shall
immediately deliver possession of the Subleased Premises to Sublessor.

      17.2 If all or any portion of the Subleased Premises is damaged or
destroyed by any cause whatsoever, and such damage or destruction is not
significant enough to cause a termination of the Primary Lease, Sublessor
agrees, subject to the Primary Lease, to use good faith efforts to cause
Landlord to repair such damage. Notwithstanding any such damage, Sublessee shall
continue to be obligated to pay all rent under this Sublease during the period
of restoration to the extent Sublessor remains obligated to pay rent under the
Primary Lease.

18. CONDEMNATION. Upon any taking by condemnation or other eminent domain
proceeding of all or a portion of the Premises which results in the termination
of the Primary Lease, this Sublease shall terminate concurrently with the
Primary Lease. As between Sublessor and Sublessee, any awards or damages payable
as a result of such taking by condemnation or other eminent domain proceeding
shall be the sole property of Sublessor, and Sublessee shall have no claim to
any part thereof.

19. PARKING. Sublessor shall provide all of the unreserved parking spaces in the
Building Garage to which Sublessor is entitle under the Primary Lease (the
"PARKING SPACES") to Sublessee

<PAGE>

during the term of this Sublease. Sublessee agrees to observe, and cause its
employees, agents and invitees to observe, all rules and regulations of Landlord
relating to the use of the Parking Spaces. Sublessee acknowledges and agrees
that to the fullest extent permitted by law, neither Landlord nor Sublessor
shall be responsible for any loss or damage to Sublessee or Sublessee's property
(including without limitation, any loss or damage to Sublessee's automobiles or
the contents therefore due to theft, vandalism, or accident) arising from or
related to Sublessee's use of the Parking Facilities or exercise of any rights
under this Sublease or the Primary Lease, whether or not such loss or damage
results from Landlord's or Sublessor's active negligence or negligent omissions.
The limitation of Sublessor's liability under the preceding sentence shall not
apply, however, to loss or damage arising directly from Sublessor's willful
misconduct. Notwithstanding anything contained herein to the contrary, Sublessee
hereby voluntarily releases, discharges, waives, and relinquishes any and all
actions or causes of action for personal injury or property damage occurring to
Sublessee arising as a result of using the Parking Spaces, or any activities
incidental thereto, wherever or however the same may occur, and further agrees
that Sublessee will not prosecute any claim for personal injury or property
damage against Landlord or Sublessor, or any other their officers, agents,
servants, or employees for any such cause of action. It is the intention of
Sublessee by execution of this Sublease, to exempt and relieve Landlord and
Sublessor from liability for personal injury or property damage caused by
negligence.

20. BROKERS. Sublessee acknowledges that Sublessee has not employed a broker
with respect to this Sublease. Sublessee hereby agrees to defend, indemnify and
hold harmless Sublessor, from and against any claim by any other party for
brokerage, commission, finder's or other fees relative to this Sublease or the
subleasing of the Subleased Premises to Sublessee, and any court costs,
attorneys' fees or other costs or expenses arising therefrom, which are alleged
to be due by authorization of the indemnifying party.

21. SECURITY INTEREST. In consideration of the mutual benefits arising under
this Sublease, Sublessee hereby grants to Sublessor a lien and security interest
on all property of Sublessee now or hereafter placed in or upon the Subleased
Premises, and such property shall be and remain subject to such lien and
security interest of Sublessor herein. The provisions of this Section relating
to said lien and security interest shall constitute a security agreement under
the Uniform Commercial Code of the State of Texas ("CODE") so that Sublessor
shall have and may enforce a security interest on all property of Sublessee now
or hereafter placed in or on the Subleased Premises, including but not limited
to all fixtures, machinery, equipment, furnishings and other articles of
personal property now or hereafter placed in or upon the Subleased Premises by
Sublessee. Sublessee agrees to execute as debtor such financing statement or
statements as Sublessor may now or hereafter reasonably request in order that
such security interest on interests may be protected pursuant to said Code.
Sublessor may at its election at any time file a copy of this Sublease as a
financing statement. Sublessor, as secured party, shall be entitled to all of
the rights and remedies afforded a secured party under said Code in addition to
and cumulative of the Sublessor's liens and rights provided by law or by the
other terms and provisions of the Sublease. Notwithstanding the foregoing,
Sublessor agrees to subordinate such lien and security interest to the lien and
security interest of any lender providing to Sublessee purchase money, leasehold
improvement, equipment or working capital or financing either as of or after the
date of this Sublease in a form and substance reasonably acceptable to
Sublessor.

<PAGE>

22. WAIVER OF LIENS. Sublessee shall have no right, and Sublessee hereby waives
and relinquishes all rights which Sublessee might otherwise have, to claim any
nature of lien against the Building or the Subleased Premises or to withhold,
deduct from or offset against any Rent or other sums to be paid to Sublessor by
Sublessee, except as expressly provided under this Sublease.

23. SURRENDER. On the termination of this Sublease, Sublessee shall quit and
surrender the Subleased Premises to Sublessor broom-clean and in good order,
condition and repair, except for ordinary wear and tear, and in accordance with
the applicable provisions of the Primary Lease. If the Subleased Premises are
not surrendered upon the termination of this Sublease, Sublessee hereby
indemnifies Sublessor from and against any and all loss, cost, liability, claim,
damage and expense resulting from either the failure to surrender the Subleased
Premises in the manner required herein, or any delay by Sublessee in so
surrendering the Subleased Premises and Sublessee, at the option of Sublessor,
shall be deemed to be occupying the Subleased Premises as a tenant at
sufferance, at a monthly rental equal to one hundred fifty percent (150%) of the
Rent Sublessor is obligated to pay to Landlord during any such holdover period
for the Premises and subject to all of the other terms of this Sublease insofar
as the same are applicable to a month to month tenancy. In addition, Sublessee
agrees to indemnify Sublessor from and against any and all claims or loss
arising under any provisions of the Primary Lease due to the failure of
Sublessee to surrender possession of the Subleased Premises. Sublessee's
obligations under this Section shall survive the termination or expiration of
this Sublease.

24. WAIVER OF CLAIMS. SUBLESSOR SHALL NOT BE LIABLE TO SUBLESSEE AND SUBLESSEE
HEREBY WAIVES ANY AND ALL CLAIMS OR CAUSES OF ACTION IT MAY HAVE AGAINST
SUBLESSOR, FOR ANY LOSS OR DAMAGE INCLUDING BUT NOT LIMITED TO, LOSS OF
BUSINESS, TO ANY PROPERTY OR PERSON OCCASIONED BY THEFT, FIRE, ACT OF GOD,
PUBLIC ENEMY, INJUNCTION, RIOT, FLOOD, NATURAL DISASTER, STRIKE, INSURRECTION,
WAR, COURT ORDER, REQUISITION OR ORDER OF GOVERNMENTAL BODY OR AUTHORITY OR ANY
OTHER CAUSE, INCLUDING BUT NOT LIMITED TO, THE NEGLIGENCE OR MISCONDUCT OF
SUBLESSOR, BUT EXCLUDING THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF
SUBLESSOR.

25. DEFAULTS.

      25.1 Sublessee's Default. In the event that Sublessee shall default (i) in
the performance of any of the terms, covenants and conditions on its part to be
performed under this Sublease, or (ii) in the performance of any of the terms,
covenants and conditions to be performed on Sublessor's part under the Primary
Lease with respect to the Subleased Premises, and the same are not cured within
the time periods provided in the Primary Lease or the Sublease, whichever is
shorter, then Sublessor shall have the same rights and remedies with respect to
such default as are given to Landlord under the Primary Lease with respect to
defaults by Sublessor under the Primary Lease, all with the same force and
effect as though the provisions of the Primary Lease with respect to defaults
and the rights and remedies of Landlord thereunder in the event thereof were set
forth at length herein. Additionally, should any default exist beyond the
applicable cure period, Sublessor shall have the right to declare all Rent due
under this Sublease immediately due and payable and upon receipt of Sublessor's
written demand therefore, Sublessee shall immediately pay to Sublessor the
entire Rent due for the balance of the term hereof. Sublessor shall promptly
give notice to

<PAGE>

Sublessee of any notices of default relating to the Subleased Premises which may
be received by Sublessor from Landlord, but failure of Sublessor to give such
notice to Sublessee shall not diminish Sublessee's obligations hereunder. If
Sublessee shall default in the performance of any of Sublessee's obligations
under this Sublease or under the provisions of the Primary Lease, Sublessor,
without thereby waiving such default, may, at Sublessor's option, perform the
same for the account and at the expense of Sublessee. If Sublessor makes any
expenditures or incurs any obligations for the payment of money, including,
without limitation, reasonable counsel fees, in instituting, prosecuting or
defending any action or proceeding, by reason of any default of Sublessee under
this Sublease, such sums paid or obligations incurred shall be deemed to be
Extra Rent and shall be paid by Sublessee to Sublessor on demand. Failure of
Sublessor to declare any default immediately upon occurrence thereof, or delay
in taking any action in connection therewith, shall not waive such default, but
Sublessor shall have the right to declare any such default at any time and take
such action as might be lawful or authorized hereunder either in law or in
equity.

      25.2 Sublessor's Default. In the event that Sublessor shall default (i) in
the performance of any of the terms, covenants and conditions on its part to be
performed under this Sublease, or (ii) in the performance of any of the terms,
covenants and conditions to be performed by Sublessor under the Primary Lease
(which are not required to be performed by Sublessee on behalf of Sublessor
thereunder), and the same are not cured within the time periods provided in the
Primary Lease or this Sublease, whichever is shorter, then the Sublessee shall
have the same rights and remedies with respect to such default as are given to
Sublessor as Tenant, under the Primary Lease with respect to defaults by the
Landlord thereunder, all with the same force and effect as are such provisions
of the Primary Lease with respect to such defaults and the rights and remedies
of the Sublessor, as Tenant, thereunder in the event thereof were set forth at
length herein. Subject to the prior written approval of Landlord at such time,
Sublessee shall have the right to cure any defaults by Sublessor under the
Primary Lease to the extent Sublessee, in its sole reasonable discretion, deems
it necessary to do so in order to protect and preserve Sublessee's interests in
the Subleased Premises. Sublessor shall promptly, on demand from Sublessee,
reimburse Sublessee for all amounts expended by Sublessee in effecting any such
cure on behalf of Sublessor, including, without limitation, reasonable
attorneys' fees and costs. Notwithstanding the foregoing, however, Sublessee
shall have no obligation to cure defaults by Sublessor under the Primary Lease.

26. SERVICES. Sublessee hereby acknowledges and agrees that the only services,
amenities and rights to which Sublessee is entitled under this Sublease are
those to which Sublessor is entitled under the Primary Lease (subject to all the
provisions, restrictions and conditions imposed in the Primary Lease). Sublessor
shall in no event be liable to Sublessee for Landlord's failure to provide any
such services, amenities and rights, nor shall any such failure be construed as
a breach hereof by Sublessor or an eviction of Sublessee or entitle Sublessee to
an abatement of any of the rentals due under this Sublease, except and only to
the extent that Sublessor receives an abatement under the Primary Lease
specifically with respect to the Sublease Premises.

27. EXERCISE OF RIGHTS AND REMEDIES UNDER PRIME LEASE. Sublessee shall not have
the right to exercise any of Sublessor's options, renewal options or elections
permitted or authorized under the Primary Lease, or to institute any action or
proceeding against Landlord for the enforcement of the Primary Lease. If
Landlord defaults in the performance of any of its obligations under the Primary
Lease, Sublessor shall have no liability whatsoever to Sublessee as a
consequence of

<PAGE>

Landlord's failure or delay in performing its obligations under the Primary
Lease. Sublessee's obligations under this Sublease shall not be impaired nor
shall the performance thereof be excused because of any default of Landlord or
any failure or delay on Landlord's part in performing its obligations under the
Primary Lease, except and only to the extent that Sublessor's performance under
the Primary Lease is excused (as such performance pertains to the Subleased
Premises) because of any default of Landlord or any failure or delay on the part
of Landlord in performing its obligations under the Primary Lease.

28. CONSENTS DISCRETIONARY. Sublessor's consents to any proposed actions
requiring Sublessor's consent hereunder or pursuant to the Primary Lease shall
not be unreasonably withheld, but to the extent given, shall be subject to the
further consent of Landlord to the extent Landlord's consent is required
pursuant to the Primary Lease.

29. LIMITATION OF LIABILITY. Nothing contained in this Sublease is intended to
impose (nor shall it impose) any personal liability upon the employees,
officers, directors, partners, or agents of a party for any breach of this
Sublease by such party.

30. NOTICES. Any notice, demand or communication which, under the terms of this
Sublease or under any statute or municipal regulation (unless provided to the
contrary in such statute or regulation), which must or may be given by the
parties hereto shall be in writing and shall be deemed to have been duly given
on the date of delivery if delivered by facsimile or if personally to the party
to whom notice is to be given, or on the second business day following the day
of mailing, if mailed to the party to whom notice is to be given, by first class
mail, registered or certified, return receipt requested, postage prepaid, and
properly addressed to the party for whom intended at its address as set forth on
the signature page to this Sublease. Any party, however, may designate a new or
other address to which such notice, demand or communication shall thereafter be
given, made or mailed.

31. GENERAL TERMS. All terms defined in the Primary Lease and used herein but
not defined herein shall have the meanings set forth in the Primary Lease.

32. COUNTERPARTS. This Sublease may be executed by the parties hereto in
separate counterparts, each of which shall be deemed to be an original and all
of which shall constitute together but one and the same agreement.

33. BINDING EFFECT. This Sublease shall be binding upon the parties respective
successors and assigns. The parties shall have the right to assign their rights
and obligations hereunder to an affiliate of such party without the consent of
the other party, provided that absent the express written agreement of the
non-assigning party, no party to this agreement shall be released from its
obligations hereunder.

                  [Remainder of page intentionally left blank]

<PAGE>

      IN WITNESS WHEREOF, this Agreement has been executed effective as of the
date set forth above.

                                        SUBLESSOR:

                                        CARROLL SYSTEMS LP

                                        By: CARROLL MANAGEMENT LLC,
                                               its general partner

                                                 By: ___________________________
                                                 Name: _________________________
                                                 Title: ________________________

                                        Address:
                                        ______________________
                                        ______________________
                                        ______________________

                                        Facsimile: ___________

                                        SUBLESSEE:

                                        BRITT RICE CONSTRUCTION COMPANY, LP

                                        By:  BRITT RICE HOLDING COMPANY, LLC,
                                                 its general partner

                                                 By: ___________________________
                                                 Name: _________________________
                                                 Title: ________________________

                                        Address:
                                        ______________________
                                        ______________________
                                        ______________________
                                        Facsimile: ___________

<PAGE>

BY EXECUTION HEREUNDER, AS REQUIRED BY SECTION 12.1 OF THE PRIMARY LEASE,
LANDLORD HEREBY ACKNOWLEDGES AND CONSENTS TO THE SUBLEASE OF THE SUBLEASED
PREMISES BY SUBLESSOR TO SUBLESSEE PURSUANT TO THIS SUBLEASE AND REPRESENTS THAT
AS OF THE DATE HEREOF, THERE ARE NO UNCURED DEFAULTS BY SUBLESSOR UNDER THE
PRIMARY LEASE.

LANDLORD:

WOLFE COMMONWEALTH I, LTD.

By: ______________________________
Name: ____________________________
Title: ___________________________

Address:
__________________________
__________________________
__________________________
Facsimile: _______________

<PAGE>

                                    EXHIBIT A

                                  PRIMARY LEASE

                                   [ATTACHED]

<PAGE>

                                    EXHIBIT C

                     FORM OF GENERAL AGREEMENT OF INDEMNITY

                                (attached hereto)

<PAGE>

                       CHUBB GROUP OF INSURANCE COMPANIES

[CHUBB LOGO]

      15 Mountain View Road, P.O. Box 1615, Warren, New Jersey 07061-1615

                         GENERAL AGREEMENT OF INDEMNITY

      WHEREAS, the undersigned (hereinafter individually and collectively called
"Indemnitor") desires FEDERAL INSURANCE COMPANY or any of its subsidiary or
affiliated insurers (hereinafter called "Company") to execute bonds including
undertakings and other like obligations (hereinafter referred to as bond or
bonds) on its behalf and also desires the execution of bonds on behalf of
individuals, partnerships, corporations, limited liability companies or any
other similarly unincorporated associations of members (hereinafter called
"Affiliates").

      WHEREAS, from time to time the Indemnitor may be a participant in joint
ventures with others, and bonds will be required on behalf of the Indemnitor
along with the other participants in such joint ventures.

      WHEREAS, Indemnitor is the successor-in-interest to B. RICE ELECTRIC, L.P.
AND CARROLL SYSTEMS, L.P. (along with any other affiliate or related entity
whose assets have been or will be assigned to Indemnitor hereinafter
individually and collectively called "Seller") as the assignee of all bonded
contract obligations, which Indemnitor has expressly assumed without reservation

      NOW, THEREFORE, in consideration of the Company executing said bond or
bonds, and the undersigned Indemnitor hereby requests the execution thereof, and
in consideration of the consent of Company to the assignment and assumption of
the bonded obligations formerly undertaken by the Seller, as well as the sum of
One Dollar paid to the Indemnitor by said Company, the receipt whereof is hereby
acknowledged, the Indemnitor, being benefited by the execution and delivery of
said bond or bonds, including, without limitation all Bonds previously issued
prior to the date of this Agreement for the Seller, the bonded obligations of
which have been expressly assumed without reservation by Indemnitor(s) and as to
which Indemnitor(s) have agreed, and do hereby agree, to assume full
responsibility for work in place as well as the prompt and proper performance
and completion of all such bonded obligations, including, without limitation
those bonded obligations listed on Exhibit A attached hereto, hereby agrees that
it will at all times jointly and severally indemnify and save harmless said
Company from and against any and all loss, cost, damage or expense, including
court costs and attorneys' fees, which it shall at any time incur by reason of
its execution and/or delivery of said bond or bonds or its payment of any claim
or liability thereunder and will place the said Company in funds to meet all its
liability under said bond or bonds promptly on request and before it may be
required to make any payment thereunder and that the voucher or other evidence
of payment by said Company of any such loss, cost, damage, expense, claim, or
liability shall be prima facie evidence of the fact and amount of the
Indemnitor's liability to said Company under this Agreement.

<PAGE>

      IT IS UNDERSTOOD AND AGREED that with respect to any bonds on behalf of
the Indemnitor participating in a joint venture that if specific application is
filed with the Company for such bonds the liability of the Indemnitor to the
Company with respect to such joint venture bonds shall be limited to the amount
expressly set forth in said application.

      IT IS UNDERSTOOD AND AGREED that all of the terms, provisions, and
conditions of this Agreement shall be extended to and for the benefit not only
of the Company either as a direct writing company or as a co-surety or reinsurer
but also for the benefit of any surety or insurance company or companies with
which the Company may participate as a co-surety or reinsurer and also for the
benefit of any other company which may execute any bond or bonds at the request
of the Company on behalf of the Indemnitor .

      IT IS UNDERSTOOD AND AGREED that this Agreement is in addition to all
other rights and agreements which Company may have or be a party to in
connection with Bonds previously issued for the benefit of Seller and that the
assumption of responsibility therefor by Indemnitors as herein provided shall
not constitute a waiver or release by Company of any rights Company may have to
seek and recover indemnity from third parties having liability in connection
with the issuance of such Bonds including, but not limited to, the obligations
and liabilities of Integrated Electrical Services, Inc., B. Rice Electric, L.P.
or their affiliates.

      IT IS UNDERSTOOD AND AGREED that, notwithstanding anything herein to the
contrary, Indemnitor's agreements, covenants, and all obligations under this
General Agreement of Indemnity is limited to (1) the obligations assumed by
Indemnitor under the Asset Purchase Agreement by and among Integrated Electrical
Services, Inc., B. Rice Electric, L.P., Carroll Systems, L.P., Britt Rice
Construction Company, L.P.., and Britt L. Rice, and (2) Company's obligations
under the bonds listed on Exhibit A attached hereto.

      IT IS FURTHER UNDERSTOOD AND AGREED that the Indemnitor, its heirs,
successors and assigns are jointly and severally bound by the foregoing
conditions of this Agreement.

<PAGE>

      IN WITNESS WHEREOF the Indemnitor has signed this instrument this, the
_____________ day of December, 2004.

WITNESS:                             BRITT RICE CONSTRUCTION, L.P.,
                                     a Texas Limited Partnership

_______________________________      By: ______________________________________
                                          Its: ________________________________

WITNESS:                             BRITT L. RICE, a Texas resident

_______________________________      __________________________________________<PAGE>

                                                                   EXHIBIT 10.1

                         EXECUTIVE EMPLOYMENT AGREEMENT

This Executive Employment Agreement ("Agreement"), including the attached
Exhibit A, is entered into between NATCO Group Inc., a Delaware corporation,
having offices at 2950 N. Loop West, Suite 700, Houston, Texas 77092
("Company"), and John U. Clarke, an individual residing in Houston, Texas
("Employee"), to be effective as of December 7, 2004 (the "Effective Date").

Company is desirous of securing the services of Employee pursuant to the terms
and conditions and for the consideration set forth in this Agreement, and
Employee is desirous of entering employment with the Company or a subsidiary
thereof pursuant to such terms and conditions and for such consideration.
Therefore, for and in consideration of the mutual promises, covenants, and
obligations contained herein, Company and Employee agree as follows:

                        ARTICLE 1: EMPLOYMENT AND DUTIES

         1.1. Company shall employ, or shall cause a subsidiary to employ,
Employee, and Employee shall be employed by Company or such subsidiary,
beginning as of the Effective Date of this Agreement and continuing until the
date set forth on Exhibit A (the "Term"), subject to the terms and conditions
of this Agreement. This Agreement will expire by its own terms and the Employee
will automatically become an employee at will and be included in all general
employment and benefit arrangements at the end of the Term unless the Company
notifies Employee of its intention to extend the Term (such notice to include
the length of the intended extension) at least 60 days prior to the expiration
of the Term and Employee accepts such extension within 10 days of receipt of
such notice.

         1.2. Employee shall be employed in the position(s) set forth on
Exhibit A. Employee agrees to serve in the assigned position(s) and to perform
diligently and to the best of Employee's abilities the duties and services
appertaining to such position as determined by Company, as well as such
additional or different duties and services appropriate to such position which
Employee from time to time may be reasonably directed to perform by Company.
Employee shall at all times comply with and be subject to such policies and
procedures as Company may establish from time to time.

         1.3. Employee shall, during the period of Employee's employment by
Company or a subsidiary, devote Employee's full business time, energy, and best
efforts to the business and affairs of Company and its subsidiaries and
affiliated entities. Employee may not engage, directly or indirectly, in any
other business, investment, or activity that interferes with Employee's
performance of Employee's duties hereunder, is contrary to the interests of
Company, or requires any significant portion of Employee's business time. The
activities described as "permitted activities" on Exhibit A shall not be deemed
a violation of this Section 1.3.

         1.4. Employee acknowledges and agrees that Employee owes a fiduciary
duty of loyalty, fidelity and allegiance to act at all times in the best
interests of Company and its subsidiaries and to do no act which would injure
Company's business, its interests or its reputation. Employee agrees to comply
with the policies and procedures as described and contained in Company's
Business Ethics Policies and related policies, copies of which have been
provided to Employee.

                      ARTICLE 2: COMPENSATION AND BENEFITS

         2.1. Employee shall be paid base salary and bonus and shall accrue
vacation as set forth on Exhibit A. Employee's base salary shall be paid in
bi-weekly installments in accordance with Company's or the employing
subsidiary's standard payroll practice, and (as with all other payments made to
Employee by Company or such subsidiary) is subject to withholding of all
federal, state, city or other taxes as may be required by law.

         2.2. While employed by Company or a subsidiary (both during the Term
and thereafter), Employee shall be allowed to participate, on the same basis
generally as other employees of Company or such subsidiary, in all general
employee benefit plans and programs, including improvements or modifications of
the same, which on the effective date or thereafter are made available by
Company or such subsidiary to all or substantially all of its or their
employees. Such benefits, plans and programs may include, without limitation,
medical, dental care, life insurance, disability protection

<PAGE>

and qualified plans. Nothing in this Agreement is to be construed or
interpreted to provide greater rights, participation, coverage or benefits
under such benefit plans or programs than provided to similarly situated
employees pursuant to the terms and conditions of such benefit plans and
programs, except as may be approved by Company's Governance, Nominating &
Compensation Committee (or successor committee with responsibility for the
compensation function) and/or Board of Directors.

         2.3. Employee shall receive the grants and awards of restricted stock
and options as, and on the dates specified in Exhibit A, subject to his
continued employment on the date of grant. Employee shall be eligible to
participate in the Company's long-term incentive plans and Company's annual
incentive plan currently maintained or hereafter maintained by Company or a
subsidiary for its officers as a group. Any such grants, awards or
participation shall be subject to separate agreements containing the terms and
provisions applicable to each such grant, award or participation as provided in
the applicable incentive plan and by the committee administering such plan.

         2.4. Company shall not by reason of this Article 2 be obligated to
institute, maintain or refrain from changing, amending or discontinuing, any
such incentive compensation or employee benefit program or plan, so long as
such actions or inactions are similarly applicable to covered employees
generally. Moreover, unless specifically provided for in a written plan
document adopted by the Board of Directors of Company, none of the benefits or
arrangements described in this Article 2 shall be secured or funded in any way,
and each shall instead constitute an unfunded and unsecured promise to pay
money in the future exclusively from the general assets of Company.

         2.5. Company may withhold from any compensation, benefits or amounts
payable under this Agreement all federal, state, city or other taxes as may be
required by law.

         2.6. Company shall pay up to $2,500 in moving expenses to move
Employee's office furniture and effects to the Company's headquarters. Such
personal items shall remain the property of Employee.

                                   ARTICLE 3:
    TERMINATION PRIOR TO EXPIRATION OF TERM AND EFFECTS OF SUCH TERMINATION

         3.1. Notwithstanding any other provisions of this Agreement, Company
shall have the right to terminate Employee's employment under this Agreement at
any time prior to the expiration of the Term for any of the following reasons:

                  (a) For "cause" upon the determination by the Company's
         independent directors of the Board who are neither employees of nor
         Affiliated with Company or any subsidiary of Company apart from his or
         her capacity as a member of the Board and any Board committee and who
         otherwise have no interest in such determination ("Independent
         Directors") that "cause" exists for the termination of the employment
         relationship. As used in this Section 3.1(a), the term "cause" shall
         mean (i) Employee's gross negligence or willful misconduct in the
         performance of the duties and services required of Employee pursuant
         to this Agreement; or (ii) Employee's final conviction of a felony or
         of a misdemeanor involving moral turpitude; (iii) Employee's
         involvement in a conflict of interest as referenced in Sections 1.3
         and 1.4 with respect to which Company makes a good faith determination
         to terminate the employment of Employee; or (iv) Employee's material
         breach of any material provision of this Agreement which remains
         uncorrected for 30 days following written notice to Employee by
         Company of such breach. It is expressly acknowledged and agreed that
         the decision as to whether "cause" exists for termination of the
         employment relationship by Company is delegated to the Independent
         Directors of the Board of Company for determination;

                  (b) For any other reason whatsoever, with or without cause,
         in the sole discretion of the Company's Independent Directors of the
         Board;

                  (c) Upon Employee's death; or

                  (d) To the extent allowed by law, upon Employee's becoming
         incapacitated by accident, sickness or other circumstance which
         renders him or her mentally or physically incapable of performing the
         duties and services required of Employee, as determined in good faith
         by Company.

                                                                              2

<PAGE>

The termination of Employee's employment by Company prior to the expiration of
the Term shall constitute a "Termination for Cause" if made pursuant to Section
3.1(a); the effect of such termination is specified in Section 3.4. The
termination of Employee's employment by Company prior to the expiration of the
Term shall constitute an "Involuntary Termination" if made pursuant to Section
3.1(b); the effect of such termination is specified in Section 3.6(a). The
effect of the employment relationship being terminated pursuant to Section
3.1(c) or (d) as a result of Employee's death or disability is specified in
Section 3.6(b).

         3.2. Notwithstanding any other provisions of this Agreement except
Section 8.5, Employee shall have the right to terminate the employment
relationship under this Agreement at any time prior to the expiration of the
Term of employment for any of the following reasons:

                  (a) A material breach by Company of any material provision of
         this Agreement or the occurrence of an Involuntary Termination as
         defined in Section 3.5 which remains uncorrected for 30 days following
         written notice of such breach by Employee to Company; or

                  (b) For any other reason whatsoever, in the sole discretion
         of Employee.

The termination of Employee's employment by Employee prior to the expiration of
the Term shall constitute an "Involuntary Termination" if made pursuant to
Section 3.2(a); the effect of such termination is specified in Section 3.6(a).
The termination of Employee's employment by Employee prior to the expiration of
the Term shall constitute a "Voluntary Termination" if made pursuant to Section
3.2(b); the effect of such termination is specified in Section 3.3.

         3.3. Upon a "Voluntary Termination" of the employment relationship by
Employee prior to expiration of the Term, all future compensation to which
Employee would have been entitled and all future benefits for which Employee
would have been eligible shall cease and terminate as of the date of
termination. Employee shall be entitled to pro rata salary and accrued benefits
through the date of such termination, but Employee shall not be entitled to any
bonuses or incentive compensation not yet paid at the date of such termination.

         3.4. If Employee's employment hereunder shall be terminated by Company
for Cause prior to expiration of the Term, all future compensation to which
Employee would have been entitled and all future benefits for which Employee
would have been eligible shall cease and terminate as of the date of
termination. Employee shall be entitled to pro rata salary and accrued benefits
through the date of such termination, but Employee shall not be entitled to any
bonuses or incentive compensation not yet paid at the date of such termination.

         3.5. As used in this Agreement, "Involuntary Termination" shall also
mean termination of Employee's employment with Company if such termination
results from termination by Employee within 90 days of and in connection with
or based upon any of the following:

                  (a) A substantial and/or material reduction in the nature or
         scope of Employee's duties and/or responsibilities as such duties are
         constituted as of the effective date of this Agreement or later agreed
         to by Employee and Company, or if Employee is no longer an executive
         officer of the Company as defined as Section 16b in SEC regulations,
         which reduction remains in place and uncorrected for 30 days following
         written notice of such breach to Company by Employee;

                  (b) A reduction in Employee's base pay (except as part of a
        general cutback for all employees or officers);

                  (c) A change in the location for the primary performance of
         Employee's services under this Agreement from the city in which
         Employee was serving at the time of notification to a city which is
         more than 100 miles away from such location, which change is not
         approved by Employee.

                  3.6. Upon any Involuntary Termination of the employment
relationship by either Company or Employee prior to expiration of the Term,
Employee shall be entitled to receive pro rata base salary and benefits
(including payment for accrued, but unused, vacation) through the date of
termination. Depending upon the type of Involuntary Termination, Employee or
his estate may be entitled to additional compensation and/or benefits, as
described below.

                                                                              3

<PAGE>

                  (a) Upon an Involuntary Termination of the employment
         relationship by either Company or Employee prior to expiration of the
         Term pursuant to Section 3.1(b), 3.2(a) or 3.5, Employee shall be
         entitled, after execution of a Waiver and Release Agreement in
         consideration of Employee's continuing obligations hereunder after
         such termination (including, without limitation, Employee's
         non-competition obligations), to (i) the sum of one year's annual base
         salary payable as follows: half of the base salary shall be paid
         within 30 days of the termination date; the remaining half shall be
         paid at the end of the 6-month period following the termination date;
         (ii) the amount of the target bonus compensation earned by Employee
         under any applicable bonus plan then in effect in accordance with its
         terms through the date of termination, based on Company performance
         through such date and prorated by multiplying such bonus compensation
         by the fraction obtained by dividing the number of days in the year
         through the date of termination by 365, payable as follows: half of
         target bonus amount shall be paid within 30 days of the termination
         date; the remaining half shall be paid at the end of the 6-month
         period following the termination date; (iii) the continuation of the
         provision of health insurance, dental insurance and life insurance
         benefits for a period of one year following the date of termination to
         Employee and Employee's family at least equivalent to and to the same
         extent as those which would have been provided to them in accordance
         with this Employment Agreement and the plans, programs, practices and
         policies of Company as in effect and applicable generally to other
         peer executives and their families at the date of termination, at the
         election of Employee; provided, however, that if the Employee becomes
         re-employed with another employer and is eligible to receive medical
         or other welfare benefits under another employer provided plan, the
         medical and other welfare benefits described herein will be secondary
         to those provided under such other plan during such applicable period
         of eligibility; and (iv) any bonus compensation that has been earned
         under the bonus plan, the payment of which has been deferred under the
         terms of the bonus plan, will be paid to Employee in accordance with
         the terms of the bonus plan.

                  (b) Upon an Involuntary Termination of the employment
         relationship by either Company or Employee prior to expiration of the
         Term pursuant to Section 3.1(c) or (d), Employee or his beneficiary's
         shall be entitled to (i) cash in the amount of the target bonus
         compensation earned by Employee under any applicable bonus plan then
         in effect in accordance with its terms through the date of
         termination, based on Company performance through such date and
         prorated by multiplying such bonus compensation by the fraction
         obtained by dividing the number of days in the year through the date
         of termination by 365, payable no later than 90 days following the
         date of termination; and (ii) any bonus compensation that has been
         earned under the bonus plan, the payment of which has been deferred
         under the terms of the bonus plan, will be paid to Employee in
         accordance with the terms of the bonus plan.

                  (c) Upon an Involuntary Termination of the employment
         relationship by either Company or Employee prior to expiration of the
         Term pursuant to Section 3.1(b), 3.2(a) or 3.5 within 12 months
         following a Change of Control, Employee shall be entitled, after
         execution of a Waiver and Release Agreement in consideration of
         Employee's continuing obligations hereunder after such termination
         (including, without limitation, Employee's non-competition
         obligations), (i) to the sum of 1.5 times one year's annual base
         salary payable as follows: half of the base salary shall be paid
         within 30 days of the termination date; the remaining half shall be
         paid at the end of the 6-month period following the termination date;
         (ii) a lump sum cash amount equal to the product of 1.5 times the
         target bonus compensation at the greater of (A) the target bonus
         compensation in effect at the time notice of termination is given or
         (B) the target bonus compensation in effect immediately preceding the
         Change of Control Date, payable as follows: half of target bonus
         amount shall be paid within 30 days of the termination date; the
         remaining half shall be paid at the end of the 6-month period
         following the termination date; (iii) the continuation of the
         provision of health insurance, dental insurance and life insurance
         benefits for a period of 18 months following the date of termination
         to Employee and Employee's family at least equivalent to and to the
         same extent as those which would have been provided to them in
         accordance with this Employment Agreement and the plans, programs,
         practices and policies of Company as in effect and applicable
         generally to other peer executives and their families at the date of
         termination, at the election of Employee, or the cash-equivalent
         thereof; provided, however, that if the Employee becomes re-employed
         with another employer and is eligible to receive medical or other
         welfare benefits under another employer provided plan, the medical and
         other welfare benefits described herein will be secondary to those
         provided under such other plan during such applicable period of
         eligibility; and (iv) any bonus compensation

                                                                              4

<PAGE>

         that has been earned under the bonus plan, the payment of which has
         been deferred under the terms of the bonus plan, will be paid to
         Employee in accordance with the terms of the bonus plan. In addition,
         notwithstanding the terms of the any related incentive plan or
         agreement, or any award agreement evidencing awards of stock options
         or restricted stock to purchase stock of Company, in the event of a
         Change of Control while Employee is employed by Company, all
         outstanding stock options held by Employee shall fully vest as of the
         Change of Control Date and become immediately exercisable in
         accordance with their terms and all restrictions on any restricted
         stock of Company held by Employee shall lapse as of the Change of
         Control Date, and any such stock options shall be exercisable for 12
         months after the date of termination, unless the term of the stock
         options expires before the end of such longer period, in which case
         the stock option shall be exercisable until the expiration of its
         term.

                  (d) Upon an Involuntary Termination of the employment
         relationship by either Company or Employee prior to expiration of the
         Term pursuant to Section 3.1(b), 3.2(a) or 3.5 within 6 months prior
         to a Change of Control, Employee shall be entitled, after execution of
         a Waiver and Release Agreement in consideration of Employee's
         continuing obligations hereunder after such termination (including,
         without limitation, Employee's non-competition obligations), (i) to
         the sum of 1.5 times one year's annual base salary payable as follows:
         the full amount of such payment shall be paid at the end of the
         6-month period following the termination date, with the amount of such
         payment to be offset by any payment Employee has previously received
         under Section 3.6(a)(i); (ii) a lump sum cash amount equal to the
         product of 1.5 times the target bonus compensation at the greater of
         (A) the target bonus compensation in effect at the time notice of
         termination is given or (B) the target bonus compensation in effect
         immediately preceding the Change of Control Date, payable as follows:
         the full amount of such payment shall be paid at the end of the
         6-month period following the termination date, with the amount of such
         payment to be offset by any payment Employee has previously received
         under Section 3.6(a)(ii); (iii) the continuation of the provision of
         health insurance, dental insurance and life insurance benefits for a
         period of 18 months following the date of termination to Employee and
         Employee's family at least equivalent to and to the same extent as
         those which would have been provided to them in accordance with this
         Employment Agreement and the plans, programs, practices and policies
         of Company as in effect and applicable generally to other peer
         executives and their families at the date of termination, at the
         election of Employee, or the cash-equivalent thereof; provided,
         however, that if the Employee becomes re-employed with another
         employer and is eligible to receive medical or other welfare benefits
         under another employer provided plan, the medical and other welfare
         benefits described herein will be secondary to those provided under
         such other plan during such applicable period of eligibility; and (iv)
         any bonus compensation that has been earned under the bonus plan, the
         payment of which has been deferred under the terms of the bonus plan,
         will be paid to Employee in accordance with the terms of the bonus
         plan. In addition, Employee shall receive a cash payment, (x) with
         respect to any stock option that is forfeited as of the date of his
         termination of employment, equal to the difference between the closing
         price of the Company stock as of the Change of Control Date and such
         option's exercise price (or, if the term of such option would have
         expired before the Change of Control Date, the difference between the
         closing price of the Company stock as of the date of such option's
         expiration date and such option's exercise price) and (y) with respect
         to any restricted stock that is forfeited as of the date of his
         termination of employment, equal to the closing price of such stock as
         of the Change of Control Date, with such payment to be made within 30
         days of the Change of Control Date.

                  (e) "Change of Control" of Company shall occur if: (1)
         Company merges or consolidates with any other entity (other than one
         of NATCO Group Inc.'s majority owned subsidiaries) and the
         shareholders of NATCO Group Inc. own less than 50% of the surviving
         entity; (2) Company sells all or substantially all of its assets to
         any other person or entity (other than (i) a sale of equity interests
         in NATCO Group Inc. or (ii) a sale of assets to another majority owned
         subsidiary of NATCO Group Inc. and in connection therewith Employee
         becomes employed by such subsidiary, NATCO Group Inc. or a partnership
         in which NATCO Group Inc. is the general partner); (3) Company is
         dissolved or liquidated; (4) any third person or entity together with
         its Affiliates (including a "group" as contemplated by Paragraph
         13(d)(3) of the Securities Exchange Act of 1934, as amended) shall
         become, directly or indirectly, the Beneficial Owner of greater than
         50% of the voting stock of Company, based upon voting power (except as
         the result of a distribution of the voting securities of the Company
         to the shareholders); or (5) during such time as Company has a class
         of Voting Securities registered under the Securities Exchange Act of
         1934, the individuals who constituted the members of the Company's
         Board of Directors ("Incumbent Board") upon the effective date of such
         registration cease for any reason to

                                                                              5

<PAGE>

         constitute at least a majority thereof, provided that any person
         becoming a director whose election or nomination for election by
         Company stockholders was approved by a vote of at least two-thirds of
         the directors comprising the Incumbent Board (either by a specific
         vote or by approval of the proxy statement of the Company in which
         such person is named as a nominee for director, without objection to
         such nomination) shall be, for purposes of this subclause (5),
         considered as though such person were a member of the Incumbent Board.

                  (f) "Change of Control Date" shall mean the day on which a
         Change of Control becomes effective.

                  (g) Employee shall not be under any duty or obligation to
         seek or accept other employment following Involuntary Termination and,
         except as provided in Section 6.2, the amounts due Employee hereunder
         shall not be reduced or suspended if Employee accepts subsequent
         employment. Employee's rights under this Section 3.6 are Employee's
         sole and exclusive rights against Company, or its Affiliates, and
         Company's sole and exclusive liability to Employee under this
         Agreement, in contract, tort, or otherwise, for any Involuntary
         Termination of the employment relationship. Employee, to the extent
         permitted by law, covenants not to sue or lodge any claim, demand or
         cause of action against Company for any sums for Involuntary
         Termination other than those sums specified in this Section 3.6.

         3.7. In all cases, the payments payable to Employee under Section 3.6
of this Agreement upon termination of the employment relationship shall be
offset against any amounts to which Employee may otherwise be entitled under
any and all severance plans and policies of Company, or its Affiliates.

         3.8. Termination (including expiration of the Term) of the employment
relationship does not terminate those obligations imposed by this Agreement,
which are continuing obligations, including, without limitation, Employee's
obligations under Articles 5 and 6. Upon termination, Employee shall promptly
return all property of the Company and its Affiliates to the Company, including
books, records, computer files, etc.

         3.9. Limitation of Benefits.

                  (a) Anything in this Agreement to the contrary
         notwithstanding, in the event it shall be determined that any benefit,
         payment or distribution by Company to or for the benefit of Employee
         (whether payable or distributable pursuant to the terms of this
         Agreement or otherwise) (a "Payment") would, if paid, be subject to
         the excise tax imposed by Section 4999 of the Code (the "Excise Tax"),
         then the Payment shall be reduced to the extent necessary to avoid the
         imposition of the Excise Tax. Company may select the Payments to be
         limited or reduced.

                  (b) All determinations required to be made under this Section
         3.9, including whether an Excise Tax would otherwise be imposed and
         the assumptions to be utilized in arriving at such determination,
         shall be made by Independent Tax Counsel which shall provide detailed
         supporting calculations both to Company and Employee within 15
         business days of the receipt of notice from Employee that a Payment is
         due to be made, or such earlier time as is requested by Company. For
         purposes of this paragraph, "Independent Tax Counsel" will mean a
         lawyer, a certified public accountant with a nationally recognized
         accounting firm, or a compensation consultant with a nationally
         recognized actuarial and benefits consulting firm with expertise in
         the area of executive compensation, who will be selected by Company
         and will be reasonably acceptable to Employee, and whose fees and
         disbursements will be paid by Company. Any determination by the
         Independent Tax Counsel shall be binding upon Company and Employee.
         If, as a result of any uncertainty in the application of Section 4999
         of the Code at the time the initial determination is made by the
         Independent Tax Counsel hereunder, Payments hereunder have been
         unnecessarily limited by this Section 3.9 ("Underpayment"), consistent
         with the calculations required to be made hereunder, then the
         Independent Tax Counsel shall determine the amount of the Underpayment
         that has occurred and any such Underpayment shall be properly paid by
         Company to or for the benefit of Employee. If, however, Payments
         hereunder have not been sufficiently limited by this Section 3.9,
         consistent with the calculations required to be made hereunder, to
         prevent the imposition of an Excise Tax upon Employee (the
         "Overpayment"), then Employee shall notify Company in writing within
         15 days of any claim by the Internal Revenue Service, that, if
         successful, would require the payment by Employee of any Excise Tax,

                                                                              6

<PAGE>

         and the Independent Tax Counsel shall determine the amount of
         Overpayment that has occurred and any such Overpayment shall be
         properly refunded by Employee by or for the benefit of Company so as
         to properly prevent the imposition of the Excise Tax.

                                   ARTICLE 4:
CONTINUATION OF EMPLOYMENT BEYOND TERM; TERMINATION AND EFFECTS OF TERMINATION

         4.1. Should Employee remain employed by Company or a subsidiary beyond
the expiration of the Term of this Agreement, and this Agreement has not been
extended by Company, the employer-employee relationship shall be employment at
will, terminable at any time by either Company, its employing subsidiary or
Employee for any reason whatsoever, with or without cause.

         ARTICLE 5: OWNERSHIP AND PROTECTION OF INFORMATION; COPYRIGHTS

         5.1. All information, ideas, concepts, improvements, discoveries, and
inventions, whether patentable or not, which are conceived, made, developed or
acquired by Employee, individually or in conjunction with others, during
Employee's employment by Company or a subsidiary (whether during business hours
or otherwise and whether on Company's premises or otherwise) which relate to
Company's or such subsidiary's business, products or services (including,
without limitation, all such information relating to corporate opportunities,
research, financial and sales data, pricing and trading terms, evaluations,
opinions, interpretations, acquisition prospects, the identity of customers or
their requirements, the identity of key contacts within the customer's
organizations or within the organization of acquisition prospects, or marketing
and merchandising techniques, prospective names, and marks) shall be disclosed
to Company and are and shall be the sole and exclusive property of Company or
its subsidiary. Moreover, all drawings, memoranda, notes, records, files,
correspondence, drawings, manuals, models, specifications, computer programs,
maps and all other writings or materials of any type embodying any of such
information, ideas, concepts, improvements, discoveries and inventions are and
shall be the sole and exclusive property of Company or its subsidiary.

         5.2. Employee acknowledges that the business of Company and its
Affiliates is highly competitive and that its strategies, methods, books,
records and documents, its technical information concerning its products,
equipment, services, and processes, procurement procedures and pricing
techniques, the names of and other information (such as credit and financial
data) concerning its customers and business affiliates, all comprise
confidential business information and trade secrets which are valuable, special
and unique assets which Company or its Affiliates use in its or their business
to obtain a competitive advantage over its or their competitors. Employee
further acknowledges that protection of such confidential business information
and trade secrets against unauthorized disclosure and use is of critical
importance to Company and its Affiliates in maintaining its and their
competitive position. Employee acknowledges that under this Agreement, Employee
is being given access to confidential business information and trade secrets of
Company and its Affiliates, and Employee hereby agrees that Employee will not,
at any time during or after his or her employment by Company, make any
unauthorized disclosure of any confidential business information or trade
secrets of Company or its Affiliates, or make any use thereof, except in the
carrying out of his or her employment responsibilities hereunder, or as may be
required by law. NATCO Group Inc. and its Affiliates shall be third party
beneficiaries of Employee's obligations under this Section. As a result of
Employee's employment by Company or a subsidiary, Employee may also from time
to time have access to, or knowledge of, confidential business information or
trade secrets of third parties, such as customers, suppliers, partners,
joint-venturers and the like, of Company and its Affiliates. Employee also
agrees to preserve and protect the confidentiality of such third-party
confidential information and trade secrets to the same extent, and on the same
basis, as confidential business information and trade secrets of the Company
and its Affiliates. Employee acknowledges that money damages would not be a
sufficient remedy for any breach of this Article 5 by Employee, and Company
shall be entitled to enforce the provisions of this Article 5 to specific
performance and injunctive relief as remedies for such breach or any threatened
breach. Such remedies shall not be deemed the exclusive remedies for a breach
of this Article 5, but shall be in addition to all remedies available at law or
in equity to Company, including the recovery of damages from Employee and his
or her agents involved in such breach.

             ARTICLE 6: POST-EMPLOYMENT NON-COMPETITION OBLIGATIONS

         6.1. As part of the consideration for the compensation and benefits to
be paid to Employee hereunder, and as an additional incentive for Company to
enter into this Agreement, and in particular Company's agreement to the
protections contained in Section 3.6, Company and Employee agree to the
non-competition provisions of this Article 6

                                                                              7

<PAGE>

during the term of this Agreement. Employee agrees that during the period of
Employee's non-competition obligations hereunder, Employee will not, directly
or indirectly for Employee or for others, in any geographic area or market
where Company or any of its Affiliated companies are conducting any business as
of the date of termination of the employment relationship or have during the
previous 12 months conducted any business:

                  (a) engage in any business competitive with the business
         conducted by Company or its Affiliates;

                  (b) render advice or services to, or otherwise assist, any
         other person, association or entity who is engaged, directly or
         indirectly, in any business competitive with the business conducted by
         Company or its Affiliates; or

                  (c) induce any employee of Company or any of its Affiliates
         to terminate his or her employment with Company or its Affiliates, or
         hire or assist in the hiring of any such employee by person,
         association, or entity not Affiliated with Company or its Affiliates.
         These non-competition obligations shall continue for a period of one
         year after termination of this employment relationship.

         6.2. Employee understands that the foregoing restrictions may limit
his or her ability to engage in certain businesses during the 12-month period
provided for above, but acknowledges that Employee will receive sufficiently
high remuneration and other benefits under this Agreement to justify such
restriction. Employee acknowledges that money damages would not be sufficient
remedy for any breach of this Article 6 by Employee, and Company shall be
entitled to enforce the provisions of this Article 6 by terminating any
payments then owed to Employee under this Agreement and/or to specific
performance and injunctive relief as remedies for such breach or any threatened
breach. Such remedies shall not be deemed the exclusive remedies for a breach
of this Article 6, but shall be in addition to all remedies available at law or
in equity to Company, including, without limitation, the recovery of damages
from Employee and his or her agents involved in such breach.

         6.3. It is expressly understood and agreed that Company and Employee
consider the restrictions contained in this Article 6 to be reasonable and
necessary to protect the proprietary information of Company. Nevertheless, if
any of the aforesaid restrictions are found by a court having jurisdiction to
be unreasonable, or overly broad as to geographic area or time, or otherwise
unenforceable, the parties intend for the restrictions therein set forth to be
modified by such courts so as to be reasonable and enforceable and, as so
modified by the court, to be fully enforced.

                           ARTICLE 7: INDEMNIFICATION

         7.1 If, at any time during or after the Term of this Agreement,
Employee is made a party to, or is threatened to be made a party in, any civil,
criminal or administrative action, suit or proceeding by reason of the fact
that Employee is or was a director, officer, employee or agent of Company, or
of any other corporation or any partnership, joint venture, trust or other
enterprise for which Employee served as such at the request of Company, then
Employee shall be indemnified by Company, to the fullest extent permitted under
applicable law, against expenses actually and reasonably incurred by Employee
or imposed on Employee in connection with, or resulting from, the defense of
such action, suit or proceeding, or in connection with, or resulting from, any
appeal therein if Employee acted in good faith and in a manner Employee
reasonably believed to be in or not opposed to the best interest of Company,
and, with respect to any criminal action or proceeding, had no reasonable cause
to believe Employee's conduct was unlawful, except with respect to matters as
to which it is adjudged that Employee is liable to Company or to such other
corporation, partnership, joint venture, trust or other enterprise for gross
negligence or willful misconduct in the performance of the Employee's duties.
As used herein, the term "expenses" shall include all obligations actually and
reasonably incurred by the Employee for the payment of money, including,
without limitation, attorney's fees, judgments, awards, fines, penalties and
amounts paid in satisfaction of a judgment or in settlement of any such action,
suit or proceeding, except amounts paid to Company or such other corporation,
partnership, joint venture, trust or other enterprise by Employee. The
foregoing indemnification provisions shall be in addition to any other rights
to indemnification to which Employee may be entitled under any officers' and
directors' liability insurance maintained by Company or pursuant to any
separate agreement between Employee and Company with respect to
indemnification.

                                                                              8

<PAGE>

                            ARTICLE 8: MISCELLANEOUS

         8.1.     The following terms shall have the meanings ascribed to them
below for purposes of this Agreement:

                  (a) "Affiliates" or "Affiliated" means an entity who
         directly, or indirectly through one or more intermediaries, controls,
         is controlled by, or is under common control with Company.

                  (b) "Involuntary  Termination Date" shall mean Employee's last
         date of employment by reason of an Involuntary Termination.

         8.2. For purposes of this Agreement, notices and all other
communications provided for herein shall be in writing and shall be deemed to
have been duly given when personally delivered or when mailed by United States
registered or certified mail, return receipt requested, postage prepaid,
addressed as follows: If to Company, to:

         NATCO Group Inc.
         2950 N. Loop West
         Houston, Texas 77092
         Attention: Chairman of the Governance,
                    Nominating & Compensation Committee

If to Employee, to:

         John U. Clarke
         3850 Del Monte
         Houston, Texas 77019

Either Company or Employee may furnish a change of address to the other in
writing in accordance herewith, except that notices of changes of address shall
be effective only upon receipt.

         8.3. This Agreement shall be governed in all respects by the laws of
the State of Texas, excluding any conflict-of-law rule or principle that might
refer the construction of the Agreement to the laws of another state or
country.

         8.4. No failure by either party hereto at any time to give notice of
any breach by the other party of, or to require compliance with, any condition
or provision of this Agreement shall be deemed a waiver of similar or
dissimilar provisions or conditions at the same or at any prior or subsequent
time.

         8.5. If a dispute arises out of or related to this Agreement, other
than a dispute regarding Employee's obligations under Article 5, Section 5.2,
or Article 6, Section 6.1, and if the dispute cannot be settled through direct
discussions, then Company and Employee agree to first endeavor to settle the
dispute in an amicable manner by mediation, before having recourse to any other
proceeding or forum. Thereafter, the matter shall be submitted to binding
arbitration as follows:

         ANY DISPUTE, CLAIM, OR CONTROVERSY ARISING OUT OF OR RELATED IN ANY
WAY TO THIS AGREEMENT, INCLUDING BUT NOT LIMITED TO ITS ENFORCEABILITY,
VALIDITY, OR INTERPRETATION, OR RELATED IN ANY WAY TO EMPLOYEE'S EMPLOYMENT
WITH COMPANY OR A SUBSIDIARY THAT IS NOT FIRST RESOLVED BY AGREEMENT OR
MEDIATION AS PROVIDED ABOVE, SHALL BE SUBMITTED TO AND RESOLVED BY BINDING
ARBITRATION WITH THE AMERICAN ARBITRATION ASSOCIATION ("AAA") IN HOUSTON,
TEXAS, IN ACCORDANCE WITH THE AAA'S APPLICABLE RULES TO THE RESOLUTION OF
EMPLOYMENT DISPUTES. JUDGMENT UPON THE AWARD RENDERED BY THE ARBITRATOR(S) MAY
BE ENTERED IN ANY COURT HAVING JURISDICTION. IT IS SPECIFICALLY AGREED THAT THE
ARBITRATION PROVISION SHALL BE BINDING ON EMPLOYEE'S HEIRS, ADMINISTRATORS, AND
PERSONAL REPRESENTATIVES. THE PARAGRAPH SHALL BE GOVERNED BY THE FEDERAL
ARBITRATION ACT. NOTHING CONTAINED IN THE AGREEMENT SHALL PREVENT COMPANY FROM
SEEKING INJUNCTIVE RELIEF AGAINST EMPLOYEE FOR VIOLATION OF ANY AGREEMENT
PERTAINING TO NON-COMPETITION, TRADE SECRETS OR CONFIDENTIALITY.

Company shall pay all costs of such mediation and binding arbitration,
exclusive of Employee's legal fees.

         8.6. It is a desire and intent of the parties that the terms,
provisions, covenants and remedies contained in

                                                                              9

<PAGE>

this Agreement shall be enforceable to the fullest extent permitted by law. If
any such term, provision, covenant or remedy of this Agreement or the
application thereof to any person, association, or entity or circumstances
shall, to any extent, be construed to be invalid or unenforceable in whole or
in part, then such term, provision, covenant or remedy shall be construed in a
manner so as to permit its enforceability under the applicable law to the
fullest extent permitted by law. In any case, the remaining provisions of this
Agreement or the application thereof to any person, association or entity or
circumstances other than those to which they have been held invalid or
unenforceable, shall remain in full force and effect.

         8.7. This Agreement shall be binding upon and inure to the benefit of
Company and any other person, association or entity which may hereafter acquire
or succeed to all or substantially all of the business or assets of Company by
any means whether direct or indirect, by purchase, merger, consolidation or
otherwise. Company may assign this Agreement to any Affiliate or any other
entity of NATCO Group Inc. Employee's rights and obligations under this
Agreement hereof are personal and such rights, benefits, and obligations of
Employee shall not be voluntarily or involuntarily assigned, alienated, or
transferred, whether by operation of law or otherwise, without the prior
written consent of Company.

         8.8. There exist other agreements between Company and Employee
relating to the employment relationship between them, e.g., the agreement with
respect to Company policies contained in Company's Business Ethics Policies and
agreements with respect to indemnification and incentive matters. This
Agreement replaces and merges previous agreements and discussions pertaining to
the following subject matters covered herein: the nature of Employee's
employment relationship with Company and the term and termination of such
relationship. This Agreement constitutes the entire agreement of the parties
with regard to such subject matters, and contains all of the covenants,
promises, representations, warranties and agreements between the parties with
respect such subject matters. Each party to this Agreement acknowledges that no
representation, inducement, promise or agreement, oral or written, has been
made by either party with respect to such subject matters, which is not
embodied herein, and that no agreement, statement or promise relating to the
employment of Employee by Company that is not contained in this Agreement shall
be valid or binding. Any modification of this Agreement will be effective only
if it is in writing and signed by each party whose rights hereunder are
affected thereby, provided that any such modification must be authorized or
approved by the Board of Directors of Company.

IN WITNESS WHEREOF, Company and Employee have duly executed this Agreement in
multiple originals to be effective on the date first stated above.

NATCO GROUP INC.

By:
   ------------------------------------------
     George K. Hickox, Jr.
     Chairman of the Governance, Nominating &
       Compensation Committee of the
       NATCO Group Inc. Board of Directors

This 10th day of December 2004

JOHN U. CLARKE

---------------------------------------------

This 10th day of December 2004

                                                                             10

<PAGE>

                                   EXHIBIT A
                       TO EXECUTIVE EMPLOYMENT AGREEMENT
                  BETWEEN NATCO GROUP INC. AND JOHN U. CLARKE

Employee Name:                      John U. Clarke

Term:                               Approximately three years (expires
                                    December 31, 2007)

Position:                           Chairman of the Board of Directors and Chief
                                    Executive Officer of NATCO Group Inc.;
                                    Chief Executive Officer of National Tank
                                    Company

Reporting Relationship:             NATCO Group Inc. Board of Directors

Location:                           Houston, Texas

Annual Base Salary:                 Employee's annual base salary shall not be
                                    less than $396,000.

Bonus:                              Employee will be eligible to participate in
                                    the 2005 NATCO Group Inc. Annual Bonus Plan
                                    or any appropriate replacement bonus plan
                                    of Company or National Tank Company. All
                                    bonuses are discretionary and shall be paid
                                    in accordance with the terms and provisions
                                    of the applicable plan. The annual targeted
                                    incentive is 75% of the annual base salary.

                                    In consideration of Employee's service as
                                    interim CEO and acceptance of a permanent
                                    position with Company, Employee shall
                                    receive a one-time bonus payment of
                                    $100,000 on January 10, 2005.

Long Term Incentives:
                                    o   57,000 shares of non-performance based
                                        restricted stock, with restrictions
                                        lapsing after 3 years of service,
                                        subject to earlier lapse on Change of
                                        Control, death or disability, grant
                                        date January 5, 2005
                                    o   22,000 shares of performance based
                                        restricted stock, with restrictions
                                        lapsing upon achievement of $1.00 EPS as
                                        provided in, and having terms similar
                                        to, 9/9/04 grants to other senior
                                        officers, grant date December 7, 2004
                                    o   Nonqualified Stock Options to acquire
                                        up to 39,500 shares having terms
                                        similar to 9/9/04 grants to other
                                        senior officers, grant date December 7,
                                        2004
                                        43,000 shares of performance based
                                    o   restricted stock, with restrictions
                                        lapsing after the Company's stock has
                                        traded @ $12.00/share or more for 30
                                        consecutive trading days, expiring
                                        after 5 years if restrictions do
                                        not lapse prior to such time, grant
                                        date January 5, 2005
                                    o   Employee is eligible to participate in
                                        any long-term incentive plans as
                                        recommended and approved by the Board
                                        of Directors of NATCO Group Inc. In the
                                        event of a Change of Control as defined
                                        in Article 3, Section 3.6(e),
                                        accelerated vesting shall occur on the
                                        Change of Control date for all unvested
                                        options under any award grants that
                                        have not otherwise expired.

Vacation Benefits:                  Employee shall receive four weeks of
                                    vacation per year accrued on a bi-weekly
                                    basis.

Permitted Activities:               Authorized to continue to participate on
                                    Board of Director assignments with Houston
                                    Exploration Company, Harvest Natural
                                    Resources, Inc. and FuelQuest, provided that
                                    there are no conflicts of interest as
                                    determined by the NATCO Group Inc. Audit
                                    Committee.

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00075-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00075-of-00352.parquet"}]]