Among INTEGRATED ELECTRICAL SERVICES, INC. as Borrower, THE FINANCIAL INSTITUTIONS NAMED IN THIS CREDIT AGREEMENT as Banks, and

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EXHIBIT 10.5

[Execution Version]

CREDIT AGREEMENT

Among

INTEGRATED ELECTRICAL SERVICES, INC.
as Borrower,

THE FINANCIAL INSTITUTIONS
NAMED IN THIS CREDIT AGREEMENT
as Banks,

and

NATIONSBANK OF TEXAS, N.A.,
as Agent for the Banks

$65,000,000

January 30, 1998

Arranged By:
NATIONSBANC ▇▇▇▇▇▇▇▇▇▇ SECURITIES L.L.C.

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TABLE OF CONTENTS

ARTICLE 1. DEFINITIONS AND ACCOUNTING TERMS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Certain Defined Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Computation of Time Periods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
1.3 Accounting Terms; Preparation of Financials . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
1.4 Types . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
1.5 Interpretation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

ARTICLE 2. CREDIT FACILITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
2.1 Revolving Loan Facility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
2.2 Letter of Credit Facility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
2.3 Swing Line Facility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
2.4 Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
2.5 Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
2.6 Breakage Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
2.7 Increased Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
2.8 Illegality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
2.9 Market Failure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
2.10 Payment Procedures and Computations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
2.11 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
2.12 Change of Lending Office. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32

ARTICLE 3. CONDITIONS PRECEDENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
3.1 Conditions Precedent to Initial Extension of Credit . . . . . . . . . . . . . . . . . . . . . . . . 33
3.2 Conditions Precedent to Each Extension of Credit . . . . . . . . . . . . . . . . . . . . . . . . . . 34

ARTICLE 4. REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
4.1 Organization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
4.2 Authorization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
4.3 Enforceability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
4.4 Absence of Conflicts and Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
4.5 Investment Companies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
4.6 Public Utilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
4.7 Financial Condition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
4.8 Condition of Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
4.9 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36

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4.10 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
4.11 Laws and Regulations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
4.12 Environmental Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
4.13 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
4.14 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
4.15 True and Complete Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37

ARTICLE 5. COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
5.1 Organization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
5.2 Reporting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
5.3 Inspection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
5.4 Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
5.5 Financial Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
5.6 Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
5.7 Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
5.8 Other Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
5.9 Corporate Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
5.10 Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
5.11 Transactions with Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
5.12 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
5.13 Investments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
5.14 Lines of Business. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
5.15 Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
5.16 Environmental Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
5.17 ERISA Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
5.18 Payment of Certain Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
5.19 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45

ARTICLE 6. DEFAULT AND REMEDIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
6.1 Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
6.2 Termination of Revolving Loan Commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
6.3 Acceleration of Credit Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
6.4 Cash Collateralization of Letters of Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
6.5 Default Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
6.6 Right of Setoff . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
6.7 Actions Under Credit Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
6.8 Remedies Cumulative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
6.9 Application of Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48

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ARTICLE 7. THE AGENT AND THE ISSUING BANK . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
7.1 Authorization and Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
7.2 Reliance, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
7.3 Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
7.4 Bank Credit Decision . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
7.5 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
7.6 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
7.7 Successor Agent and Issuing Bank . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51

ARTICLE 8. MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
8.1 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
8.2 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
8.3 Modifications, Waivers, and Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
8.4 Survival of Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
8.5 Assignment and Participation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
8.6 Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
8.7 Choice of Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
8.8 Forum Selection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
8.9 Service of Process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
8.10 Waiver of Jury Trial . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
8.11 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
8.12 No Further Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57

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EXHIBITS

Exhibit A - Form of Compliance Certificate
Exhibit B - Form of Revolving Loan Borrowing Request
Exhibit C - Form of Continuation/Conversion Request
Exhibit D - Form of Revolving Loan Note
Exhibit E - Form of Assignment and Acceptance
Exhibit F - Closing Documents List
Exhibit G - Form of Joinder Agreement
Exhibit H - Form of Acquisition Certificate

SCHEDULES

Schedule I - Administrative Information (Borrower; Agent; Banks)
Schedule II - Disclosures (Existing Other Debt; Existing Subsidiaries)

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CREDIT AGREEMENT

This Credit Agreement dated as of January 30, 1998, is among
Integrated Electrical Services, Inc., a Delaware corporation, as Borrower, the
financial institutions named herein, as Banks, and NationsBank of Texas, N.A.,
as Agent for the Banks.

The parties hereto agree as follows:

ARTICLE 1. DEFINITIONS AND ACCOUNTING TERMS.

1.1 Certain Defined Terms. As used in this Agreement, the
following terms shall have the following meanings (unless otherwise indicated,
such meanings to be equally applicable to both the singular and plural forms of
the terms defined):

"Acquisition" means the direct or indirect purchase or acquisition,
whether in one or more related transactions, of any Person or group of Persons
or any related group of assets, liabilities, or securities of any Person or
group of Persons.

"Acquisition Advance Date" means the date on which the first amounts
are advanced hereunder by the Banks or the Swing Line Lender in connection with
any Acquisition.

"Acquisition Certificate" means an acquisition certificate executed by
a Responsible Officer of the Borrower in substantially the form of Exhibit H.

"Affiliate" means, as to any Person, any other Person that, directly
or indirectly, through one or more intermediaries, controls, is controlled by,
or is under common control with, such Person or any Subsidiary of such Person.
The term "control" (including the terms "controlled by" or "under common
control with") means the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of a Person,
whether through ownership, by contract, or otherwise.

"Agent" means NationsBank in its capacity as an agent pursuant to
Article 7 and any successor agent pursuant to Section 7.7.

"Agent Fee Letter" means the confidential letter agreement dated as of
November 26, 1997, between the Borrower, the Agent, and the Arranger regarding
certain fees owed by the Borrower to the Agent in connection with this
Agreement.

"Agreement" means this Credit Agreement.

"Applicable Margin" means, with respect to interest rates, unused
commitment fees, and letter of credit fees and as of any date of its
determination, an amount equal to the percentage amount set forth in the table
below opposite the applicable ratio of (a) the consolidated Debt of the
Borrower as of the end of the fiscal quarter then most recently ended to (b)
the consolidated EBITDA of the Borrower for the four fiscal quarters then most
recently ended:

Applicable Margin
Debt LIBOR Tranches and Applicable Margin Applicable Margin
to EBITDA Letter of Credit Fee Prime Rate Tranche Commitment Fee
--------- -------------------- ------------------ ---------------

less than 1.00 1.00% 0.00% 0.250%
>1.00 but #1.50 1.25% 0.00% 0.250%
>1.50 but #2.00 1.50% 0.00% 0.300%
>2.00 2.00% 0.50% 0.375%

Until delivery of the first Compliance Certificate, the foregoing ratio shall
be deemed to be 1.01. Thereafter, the ratio and resulting Applicable Margin
shall be based upon Schedule B or Schedule D, at the Borrower's option, of the
most recent Compliance Certificate delivered to the Agent pursuant to Section
5.2(a) or Section 5.2(b) (provided that for the period from the determination
of the Applicable Margin based on the first Compliance Certificate until the
date when the Applicable Margin is reset based upon the Compliance Certificate
for the period ending June 30, 1998, the ratio shall be deemed to be the
greater of the ratio as so determined or 1.01 and the Applicable Margin shall
be set accordingly).

Any adjustments to the Applicable Margin shall become effective on the 45th
day following the last day of each fiscal quarter or on the 90th day following
the last day of each fiscal year as applicable; provided, however, that if any
such Compliance Certificate is not delivered when required hereunder, the
Applicable Margin shall be deemed to be the maximum percentage amount in each
table from such 45th or 90th day until such Compliance Certificate is received
by the Agent.

Upon any change in the Applicable Margin, the Agent shall promptly notify the
Borrower and the Banks of the new Applicable Margin.

"Applicable Lending Office" means, with respect to each Bank and for
any particular type of transaction, the office of such Bank set forth in
Schedule I to this Agreement (or in the applicable Assignment and Acceptance by
which such Bank joined this Agreement) as its applicable lending office for
such type of transaction or such other office of such Bank as such Bank may
from time to time specify in writing to the Borrower and the Agent for such
particular type of transaction.

"Arranger" means NationsBanc ▇▇▇▇▇▇▇▇▇▇ Securities L.L.C., formerly
known as NationsBanc ▇▇▇▇▇▇▇▇▇▇ Securities, Inc.

"Assignment and Acceptance" means an Assignment and Acceptance in
substantially the form of Exhibit E executed by an assignor Bank, an assignee
Bank, and the Agent, in accordance with Section 8.5.

"Banks" means the lenders listed as Banks on the signature pages of
this Agreement and each Eligible Assignee that shall become a party to this
Agreement pursuant to Section 8.5(b).

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"Base Rate" means, for any day, the fluctuating rate per annum of
interest equal to the greater of (a) the Prime Rate in effect on such day or
(b) the Federal Funds Rate in effect on such day plus 0.50%.

"Borrower" means Integrated Electrical Services, Inc., a Delaware
corporation.

"Business Day" means any Monday through Friday during which commercial
banks are open for business in Houston, Texas, Dallas, Texas, and, if the
applicable Business Day relates to any LIBOR Tranche, on which dealings are
carried on in the London interbank market.

"Capital Expenditures" means, with respect to any Person and any
period of its determination, the consolidated expenditures of such Person
during such period that are required to be included in or are reflected by the
consolidated property, plant, or equipment accounts of such Person, or any
similar fixed asset or long term capitalized asset accounts of such Person, on
the consolidated balance sheet of such Person in conformity with generally
accepted accounting principles.

"Capital Leases" means, with respect to any Person, any lease of any
property by such Person which would, in accordance with generally accepted
accounting principles, be required to be classified and accounted for as a
capital lease on the balance sheet of such Person.

"Cash Taxes" means, with respect to any Person and for any period of
its determination, the consolidated cash taxes paid by such Person during such
period, or with respect to any Persons which were organized as partnerships or
subchapter S corporations during such period, all amounts distributed by such
Persons to their respective partners or shareholders with respect to taxes
during such period.

"Change of Control" means, with respect to the Borrower, (a) the
direct or indirect acquisition after the date hereof by any Person or related
Persons constituting a group of (i) beneficial ownership of issued and
outstanding shares of Voting Securities of the Borrower, the result of which
acquisition is that such Person or such group possesses 35% or more of the
combined voting power of all then-issued and outstanding Voting Securities of
the Borrower or (ii) the power to elect, appoint, or cause the election or
appointment of at least a majority of the members of the board of directors of
the Borrower, or (b) the individuals who, at the beginning of any period of 12
consecutive months, constitute the Borrower's board of directors (together with
any new director whose election by the Borrower's board of directors or whose
nomination for election by the Borrower's stockholders entitled to vote thereon
was approved by a vote of at least a majority of the directors then still in
office who either were directors at the beginning of such period or whose
election or nomination for election was previously so approved) cease for any
reason (other than death or disability) to constitute a majority of the
Borrower's board of directors then in office.

"Code" means the Internal Revenue Code of 1986, as amended, or any
successor statute.

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"Commonly Controlled Entity" means, with respect to any Person, any
other Person which is under common control with such Person within the meaning
of Section 414 of the Code.

"Compliance Certificate" means a compliance certificate executed by a
Responsible Officer of the Borrower in substantially the form of Exhibit A,
including the following attached Schedules:

Schedule A: The applicable financial reports provided under
Section 5.2(a) or 5.2(b) ending on the date of the computation of the
financial covenants.

Schedule B: The computation of the financial covenants under this
Agreement based upon the financial reports in Schedule A to the
Compliance Certificate in a form acceptable to the Agent.

Schedule C: A schedule of any adjustments to the financial
reports in Schedule A to the Compliance Certificate that are requested
by the Borrower to reflect the financial results of Acquisitions made
prior to the end of the applicable period, together with the
supporting financial reports of the Acquisitions from which the
Borrower prepared such adjustments, prepared in accordance with
Section 1.3(c) and otherwise in a form acceptable to the Agent.

Schedule D: The computation of the financial covenants under this
Agreement based upon the financial reports in Schedule C to the
Compliance Certificate in a form acceptable to the Agent.

"Continuation/Conversion Request" means a Continuation/Conversion
Request in substantially the form of Exhibit C executed by a Responsible
Officer of the Borrower and delivered to the Agent.

"Contract Status Report" means a report, in form and substance
acceptable to the Agent, detailing the status of each contract of any
Restricted Entity which contract has a value equal to or greater than
$7,500,000.

"Credit Documents" means this Agreement, the Revolving Loan Notes, the
Swing Line Note, the Agent Fee Letter, the Letter of Credit Documents, the
Guaranty, the Security Documents, the Interest Hedge Agreements, and each other
agreement, instrument, or document executed at any time in connection with this
Agreement.

"Credit Obligations" means all principal, interest, fees,
reimbursements, indemnifications, and other amounts now or hereafter owed by
the Borrower to the Agent and the Banks (or with respect to the Interest Hedge
Agreements, any Affiliates of the Banks) under this Agreement, the Revolving
Loan Notes, the Swing Line Note, the Letter of Credit Documents, and the other
Credit Documents and any increases, extensions, and rearrangements of those
obligations under any

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amendments, supplements, and other modifications of the documents and agreements
creating those obligations.

"Credit Parties" means the Borrower and the Guarantors.

"Debt" means, with respect to any Person, without duplication, (a)
indebtedness of such Person for borrowed money, (b) obligations of such Person
evidenced by bonds, debentures, notes, or other similar instruments, (c)
obligations of such Person to pay the deferred purchase price of property or
services (other than trade debt and normal operating liabilities incurred in
the ordinary course of business), (d) obligations of such Person as lessee
under Capital Leases, (e) obligations of such Person under or relating to
letters of credit, guaranties, purchase agreements, or other creditor
assurances assuring a creditor against loss in respect of indebtedness or
obligations of others of the kinds referred to in clauses (a) through (d) of
this definition, (f) nonrecourse indebtedness or obligations of others of the
kinds referred to in clauses (a) through (e) of this definition secured by any
Lien on or in respect of any property of such Person, and (g) obligations of
such Person evidenced by preferred stock or other equity interests in such
Person which provide for mandatory redemption, mandatory payment of dividends,
or similar rights to the payment of money. For the purposes of determining the
amount of any Debt, the amount of any Debt described in clause (e) of the
definition of Debt shall be valued at the maximum amount of the contingent
liability thereunder, the amount of any Debt described in clause (f) that is
not covered by clause (e) shall be valued at the lesser of the amount of the
Debt secured or the book value of the property securing such Debt, and the
amount of any Debt described in clause (g) shall be valued at the stated
redemption value of such Debt as of the date of determination.

"Default" means (a) an Event of Default or (b) any event or condition
which with notice or lapse of time or both would, unless cured or waived,
become an Event of Default.

"Default Rate" means, with respect to any amount due hereunder, a per
annum interest rate equal to (a) if such amount is either outstanding principal
accruing interest based upon a rate established elsewhere in this Agreement or
accrued but unpaid interest thereon, the sum of (i) the interest rate
established elsewhere in this Agreement from time to time for such principal
amount, including any applicable margin, plus (ii) 2.00% per annum or (b) in
all other cases, the Base Rate in effect from time to time plus the Applicable
Margin for the Prime Rate Tranche in effect from time to time plus 2.00% per
annum.

"Derivatives" means any swap, hedge, cap, collar, or similar
arrangement providing for the exchange of risks related to price changes in any
commodity, including money.

"Dollars or $" means lawful money of the United States of America.

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11
"EBITDA" means, with respect to any Person and for any period of its
determination, the consolidated net income of such Person for such period, plus
the consolidated interest expense and income taxes of such Person for such
period, plus the consolidated depreciation and amortization of such Person for
such period, in each case excluding extraordinary items (except extraordinary
losses incurred subsequent to the date of the initial public offering of the
Borrower, which shall remain included).

"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.

"Eligible Assignee" means, with respect to any assignment hereunder at
the time of such assignment, any commercial bank organized under the laws of
the United States or any of the countries parties to the Organization for
Economic Cooperation and Development or any political subdivision of any
thereof which has primary capital (or its equivalent) of not less than
$250,000,000, is approved by the Agent, and, so long as no Event of Default
exists, is approved by the Borrower, in either case, such approval not to be
unreasonably withheld.

"Environmental Law" means all federal, state, and local laws, rules,
regulations, ordinances, orders, decisions, agreements, and other requirements
now or hereafter in effect relating to the pollution, destruction, loss, or
injury of the environment, the presence of any contaminant in the environment,
the protection, cleanup, remediation, or restoration of the environment, the
creation, handling, transportation, use, or disposal of any waste product in
the environment, exposure of persons to any contaminant, waste, or hazardous
substance in the environment, and the health and safety of employees in
relation to their environment.

"Event of Default" has the meaning specified in Section 6.1.

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

"Federal Reserve Board" means the Board of Governors of the Federal
Reserve System or any of its successors.

"Guaranty" means the Guaranty dated as of January 30, 1998, made by
the Subsidiaries of the Borrower in favor of the Agent guaranteeing the Credit
Obligations.

-6-
12
"Guarantors" means (a) the Subsidiaries of the Borrower that have
executed the Guaranty in connection with the execution of this Agreement and
(b) any future Subsidiaries of the Borrower that join the Guaranty pursuant to
Section 5.19.

"Hazardous Materials" means any substance or material identified as a
hazardous substance pursuant to the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended and as now or hereafter in
effect; any substance or material regulated as a hazardous waste pursuant to
the Resource Conservation and Recovery Act of 1976, as amended and as now or
hereafter in effect; and any substance or material designated as a hazardous
substance or hazardous waste pursuant to any other Environmental Law.

"Highest Lawful Rate" means the maximum lawful interest rate, if any,
that at any time or from time to time may be contracted for, charged, or
received under the laws applicable to the relevant Bank which are presently in
effect or, to the extent allowed by law, under such applicable laws which may
hereafter be in effect and which allow a higher maximum nonusurious interest
rate than applicable laws now allow. The maximum lawful rate under this
Agreement shall be the weekly indicated rate ceiling under Article 5069-1.04 of
the Texas Revised Civil Statutes, as amended, unless any other lawful rate
ceiling exceeds the rate ceiling so determined, and then the higher rate
ceiling shall apply.

"Interest Expense" means, with respect to any Person and for any
period of its determination, the consolidated interest expense of such Person
during such period.

"Interest Hedge Agreements" means any swap, hedge, cap, collar, or
similar arrangement between the Borrower and any Bank (or any Affiliate of any
Bank) providing for the exchange of risks related to price changes in the
interest rate on the Revolving Loan Advances under this Agreement.

"Interest Period" means, with respect to each LIBOR Tranche, the
period commencing on the date of such LIBOR Tranche and ending on the last day
of the period selected by the Borrower pursuant to the provisions below. The
duration of each such Interest Period shall be one, two, three, or six months,
in each case as the Borrower may select in the applicable Revolving Loan
Borrowing Request or Continuation/Conversion Request (unless there shall exist
any Default or Event of Default, in which case the Borrower may only select one
month Interest Periods); provided, however, that:

(a) whenever the last day of any Interest Period would otherwise
occur on a day other than a Business Day, the last day of such Interest Period
shall be extended to occur on the next succeeding Business Day; provided that
if such extension would cause the last day of such Interest Period to occur in
the next following calendar month, the last day of such Interest Period shall
occur on the next preceding Business Day;

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13
(b) any Interest Period which begins on the last Business Day of
the calendar month (or on a day for which there is no numerically corresponding
day in the calendar month at the end of such Interest Period) shall end on the
last Business Day of the calendar month in which it would have ended if there
were a numerically corresponding day in such calendar month; and

(c) the Borrower may not select an Interest Period for any LIBOR
Tranche which ends after the Revolving Loan Maturity Date.

"Issuing Bank" means NationsBank and any successor issuing bank pursuant to
Section 7.7.

"LIBOR" means, for any LIBOR Tranche for any Interest Period therefor,
the rate per annum (rounded upwards, if necessary, to the nearest 1/100 of 1%)
appearing on Telerate Page 3750 (or any successor page) as the London interbank
offered rate for deposits in Dollars at approximately 11:00 a.m. (London time)
two Business Days prior to the first day of such Interest Period for a term
comparable to such Interest Period. If for any reason such rate is not
available, the term "LIBOR" shall mean, for any LIBOR Tranche for any Interest
Period therefor, the rate per annum (rounded upwards, if necessary, to the
nearest 1/100 of 1%) appearing on Reuters Screen LIBO Page as the London
interbank offered rate for deposits in Dollars at approximately 11:00 a.m.
(London time) two Business Days prior to the first day of such Interest Period
for a term comparable to such Interest Period; provided, however, if more than
one rate is specified on Reuters Screen LIBO Page, the applicable rate shall be
the arithmetic mean of all such rates.

"LIBOR Tranche" shall mean any Tranche which bears interest based upon
the LIBOR, as determined in accordance with Section 2.5.

"Letter of Credit" means any commercial or standby letter of credit
issued by the Issuing Bank for the account of the Borrower pursuant to the
terms of this Agreement.

"Letter of Credit Application" means the Issuing Bank's standard form
letter of credit application for either a commercial or standby letter of
credit, as the case may be, which has been executed by the Borrower and
accepted by the Issuing Bank in connection with the issuance of a Letter of
Credit.

"Letter of Credit Application Amendment" means the Issuing Bank's
standard form application to amend a letter of credit for either a commercial
or standby letter of credit, as the case may be, which has been executed by a
Borrower and accepted by the Issuing Bank in connection with the increase or
extension of a Letter of Credit.

"Letter of Credit Collateral Account" means a special cash collateral
account pledged to the Agent containing cash deposited pursuant to Sections
2.2(d) or 6.4 to be maintained with the Agent in accordance with Section
2.2(g).

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14
"Letter of Credit Documents" means all Letters of Credit, Letter of
Credit Applications, Letter of Credit Application Amendments, and agreements,
documents, and instruments entered into in connection with or relating thereto.

"Letter of Credit Exposure" means, as of any date of its
determination, the aggregate outstanding undrawn amount of Letters of Credit
plus the aggregate of the reimbursement obligations of the Borrower under the
Letter of Credit Applications and this Agreement.

"Letter of Credit Sublimit" means $10,000,000.

"Lien" means any mortgage, lien, pledge, charge, deed of trust,
security interest, encumbrance, or other type of preferential arrangement to
secure or provide for the payment of any obligation of any Person, whether
arising by contract, operation of law, or otherwise (including any title
retention for such purposes under any conditional sale agreement, any Capital
Lease, or any other title transfer or retention agreement).

"Majority Banks" means, at any time, Banks holding more than 66 2/3%
of the then aggregate unpaid principal amount of the Revolving Loan Notes held
by the Banks and the Letter of Credit Exposure of the Banks at such time;
provided that if no such principal amount or Letter of Credit Exposure is then
outstanding, "Majority Banks" shall mean Banks having more than 66 2/3% of the
aggregate amount of the Revolving Loan Commitments at such time.

"Material Adverse Change" means any material adverse change in the
business, operations, or financial condition of the Borrower and its
Subsidiaries on a consolidated basis.

"NationsBank" means NationsBank of Texas, N.A., in its individual
capacity.

"Net Worth" means, with respect to any Person and as of any date of
its determination, the excess of (a) the assets of such Person over (b) the
liabilities of such Person.

"PBGC" means Pension Benefit Guaranty Corporation or its successor.

"Permitted Debt" means all of the following Debt:

(a) Debt in the form of the Credit Obligations;

(b) Debt in the form of indebtedness for borrowed money
and letters of credit owed by any Subsidiary of the Borrower prior to
the acquisition of such Subsidiary by the Borrower in an Acquisition
transaction, or owed by any Person that is the subject of any
Acquisition assumed by the Borrower or any Subsidiary of the Borrower
in connection with such Acquisition, provided that with respect to any
such indebtedness, arrangements satisfactory to the Agent for the
repayment of such indebtedness within 30 days following

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15
the closing of the Acquisition are made prior to the closing of the
Acquisition and such arrangements are executed;

(c) Debt in the form of (i) purchase money indebtedness
and Capital Leases, (ii) indebtedness for borrowed money and letters
of credit owed by any Subsidiary of the Borrower prior to the
acquisition of such Subsidiary by the Borrower in an Acquisition
transaction, or owed by any Person that is the subject of any
Acquisition assumed by the Borrower or any Subsidiary of the Borrower
in connection with such Acquisition, and (iii) other indebtedness,
which Debt under clauses (i), (ii), and (iii) together are in an
aggregate outstanding amount not to exceed $3,000,000;

(d) Debt in the form of Subordinated Debt;

(e) Debt in the form of Qualified Preferred Stock; and

(f) Debt in the form of reimbursement obligations for
performance bonds issued in the ordinary course of business.

"Permitted Investments" means all of the following investments:

(a) investments (including investments in the form of
loans) in wholly-owned Subsidiaries of the Borrower;

(b) investments in the form of loans, guaranties, open
accounts, and other extensions of trade credit in the ordinary course
of business;

(c) investments in commercial paper, bankers'
acceptances, loan participation agreements, and other similar
investments, in each case, maturing in twelve months or less from the
date of issuance and which, at the time of acquisition are rated A-2
or better by Standard & Poor's Corporation and P-2 or better by
▇▇▇▇▇'▇ Investors Services, Inc;

(d) investments in direct obligations of the United
States, or investments in any Person which investments are guaranteed
by the full faith and credit of the United States, in either case
maturing in twelve months or less from the date of acquisition thereof
and repurchase agreements having a term of less than one year and
fully collateralized by such obligations which are entered into with
banks or trust companies described in clause (e) below or brokerage
companies having net worth in excess of $250,000,000;

(e) investments in time deposits or certificates of
deposit maturing within one year from the date such investment is
made, issued by a bank or trust company organized under the laws of
the United States or any state thereof having capital, surplus, and
undivided profits aggregating at least $250,000,000 or a foreign
branch thereof and whose long-term

-10-
16
certificates of deposit are, at the time of acquisition thereof, rated
A-2 by Standard & Poor's Corporation or Prime-2 by ▇▇▇▇▇'▇ Investors
Services, Inc.;

(f) investments in money market funds which invest solely
in the types of investments described in paragraphs (c) through (e)
above; and

(g) loans and advances to directors, officers, and
employees of the Credit Parties made in the ordinary course of
business in an aggregate outstanding amount not to exceed $250,000.

In valuing any investments for the purpose of applying the limitations set
forth in this Agreement, such investments shall be taken at the original cost
thereof (but without reduction for any subsequent appreciation or depreciation
thereof) less any amount actually repaid or recovered on account of capital or
principal (but without reduction for any offsetting investments made by the
investee in the investor). For purposes of this Agreement, at any time when a
corporation becomes a Subsidiary of the Borrower, all investments of such
corporation at such time shall be deemed to have been made by such corporation
at such time.

"Permitted Liens" means all of the following Liens:

(a) Liens securing the Credit Obligations;

(b) Liens securing purchase money debt, Capital Leases,
and assumed or acquired indebtedness for borrowed money and letters of
credit permitted under clause (b) of the definition of Permitted Debt
provided that no such Lien is spread to cover any property not (i)
purchased in connection with the incurrence of such Debt, in the case
of purchase money debt, or (ii) covered by such Lien at the time of
the assumption or acquisition of the indebtedness secured thereby, in
the case of assumed or acquired indebtedness for borrowed money and
letters of credit; and

(c) Liens arising in the ordinary course of business
which are not incurred in connection with the borrowing of money, the
obtaining of advances or credit, or payment of legal judgments and
which do not materially detract from the value of any Restricted
Entity's assets or materially interfere with any Restricted Entity's
business, including such (i) Liens for taxes, assessments, or other
governmental charges or levies; (ii) Liens in connection with worker's
compensation, unemployment insurance, or other social security, old
age pension, or public liability obligations; (iii) Liens in the form
of legal or equitable encumbrances deemed to exist by reason of
negative pledge covenants and other covenants or undertakings of like
nature; (iv) Liens in the form of vendors', carriers', warehousemen's,
repairmen's, mechanics', workmen's, materialmen's, construction, or
other like Liens arising by operation of law in the ordinary course of
business or incident to the construction or improvement of any
property, including liens securing reimbursement obligations for
performance bonds

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17
issued in the ordinary course of business; and (v) Liens in the form
of zoning restrictions, easements, licenses, and other restrictions on
the use of real property or minor irregularities in title thereto
which do not materially impair the use of such property in the
operation of the business of the applicable Restricted Entity or the
value of such property.

"Person" means an individual, partnership, corporation (including a
business trust), joint stock company, trust, unincorporated association, joint
venture, or other entity, or a government or any political subdivision or
agency thereof, or any trustee, receiver, custodian, or similar official.

"Plan" means any (a) employee medical benefit plan under Section 3(1)
of ERISA, (b) employee pension benefit plan under Section 3(2) of ERISA, (c)
multiemployer plan under Section 4001(a)(3) of ERISA, and (d) employee account
benefit plan under Section 3(2) of ERISA.

"Pledge Agreement" means the Pledge Agreement dated as of January 30,
1998, made by Borrower and the Subsidiaries of Borrower in favor of the Agent
granting the Agent a security interest in the capital stock of each Subsidiary
(whether direct or indirect) of Borrower to secure the Credit Obligations.

"Prime Rate" means, for any day, the fluctuating per annum interest
rate in effect on such day equal to the rate of interest publicly announced by
the Agent as its prime rate, whether or not the Borrower has notice thereof.

"Prime Rate Borrowing" shall mean that portion of any Revolving Loan
Borrowing which bears interest based upon the Base Rate as determined in
accordance with Section 2.5.

"Prime Rate Tranche" shall mean the Tranche which bears interest based
upon the Base Rate, as determined in accordance with Section 2.5.

"Prohibited Transaction" means any transaction set forth in Section
406 of ERISA or Section 4975 of the Code.

"Qualified Preferred Stock" means, with respect to the Borrower and as
of any date of its issuance, any shares of preferred stock of the Borrower that
(a) is issued after the date of this Agreement, (b) provides for its mandatory
redemption on a date, if at all, that is on or after the first anniversary of
the latest maturity of any of the Credit Obligations at the time issued, and
(c) provides in the applicable certificate of designation for the redemption of
such shares and for the blockage of Restricted Payments in respect of such
shares during the existence of a Default or an Event of Default (i) on the
terms and conditions set forth on Schedule IV, or (ii) on terms approved by the
Agent and the Majority Banks in their sole discretion, all such provisions to
be in form and content satisfactory to the Agent and the Majority Banks in
their sole discretion.

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18
"ratable share" or "pro rata share" means, with respect to any Bank
and as of any date of its determination, either (a) the ratio of such Bank's
Revolving Loan Commitment at such time to the aggregate Revolving Loan
Commitments at such time or (b) if the Revolving Loan Commitments have been
terminated, the ratio of such Bank's aggregate outstanding Revolving Loan
Advances and share of the Letter of Credit Exposure at such time to the
aggregate outstanding Revolving Loan Advances and Letter of Credit Exposure at
such time.

"Registration Statement" means the public offering registration
statement of the Borrower as filed with the Securities and Exchange Commission
on October 24, 1997, and as refiled on November 28, 1997, under Registration
Number 333-38715.

"Related Parties" means, with respect to any Person, such Person's
stockholders, directors, officers, employees, agents, Affiliates, successors,
and assigns, and their respective stockholders, directors, officers, employees,
and agents, and, with respect to any Person that is an individual, such
Person's family relations and heirs.

"Reportable Event" means any of the events set forth in Section 4043
of ERISA.

"Responsible Officer" means, with respect to any Person, such Person's
Chief Executive Officer, President, Chief Financial Officer, Secretary,
Treasurer, or any other officer of such Person designated by any of the
foregoing in writing from time to time.

"Restricted Entities" means the Borrower and each Subsidiary of the
Borrower.

"Restricted Payment" means the declaration or making by any Person of
any (a) dividends; (b) purchase, redemption, retirement, or other acquisition
for value any of its capital stock now or hereafter outstanding, or any
distribution of assets to its stockholders as such, whether in cash, assets, or
in obligations of it; (c) allocation or other setting apart of any sum for the
payment of any dividend or distribution on, or for the purchase, redemption, or
retirement of, any shares of its capital stock; or (d) making of any other
distribution by reduction of capital or otherwise in respect of any shares of
its capital stock; in each case, other than any such dividends, distributions,
and payments payable in such Person's common stock.

"Revolving Loan" means the aggregate outstanding principal amount of
the Revolving Loan Borrowings.

"Revolving Loan Advance" means the outstanding principal from a Bank
which represents such Bank's ratable share of a Revolving Loan Borrowing.

"Revolving Loan Borrowing" means any aggregate amount of principal
advanced on the same day and pursuant to the same Revolving Loan Borrowing
Request under the revolving loan facility created in Section 2.1.

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19
"Revolving Loan Borrowing Request" means a Revolving Loan Borrowing
Request in substantially the form of Exhibit B executed by a Responsible
Officer of the Borrower and delivered to the Agent.

"Revolving Loan Commitment" means, for any Bank, the amount set forth
below such Bank's name on the signature pages of this Agreement as its
Revolving Loan Commitment, or if such Bank has entered into any Assignment and
Acceptance since the date of this Agreement, as set forth for such Bank as its
Revolving Loan Commitment in the Register maintained by the Agent pursuant to
Section 8.5(c), in each case as such amount may be terminated pursuant to
Section 6.2.

"Revolving Loan Maturity Date" means January 31, 2001.

"Revolving Loan Note" means a promissory note of the Borrower payable
to the order of a Bank, in substantially the form of Exhibit D, evidencing the
indebtedness of the Borrower to such Bank resulting from Revolving Loan
Advances made by such Bank to the Borrower.

"Security Agreement" means the Security Agreement dated as of January
30, 1998, made by the Borrower and the Subsidiaries of the Borrower in favor of
the Agent granting the Agent a security interest in the accounts receivable of
each such Credit Party to secure the Credit Obligations.

"Security Documents" means the Security Agreement, the Pledge
Agreement, and any other document creating or consenting to Liens in favor of
the Agent securing Credit Obligations.

"Subordinated Debt" means, with respect to the Borrower and as of any
date of its issuance, any unsecured indebtedness for borrowed money for which
the Borrower is directly and primarily obligated that (a) arises after the date
of this Agreement, (b) does not have any stated maturity before the latest
maturity of any of the Credit Obligations at the time incurred, (c) has terms
that are no more restrictive than the terms of the Credit Documents, and (d) is
expressly subordinated to the Credit Obligations (i) on the terms and
conditions set forth on Schedule III, or (ii) on terms approved by the Agent
and the Majority Banks in their sole discretion, including payment
subordination, remedy subordination, and related terms satisfactory to the
Agent and the Majority Banks in their sole discretion.

"Subsidiary" means, with respect to any Person, any other Person, a
majority of whose outstanding Voting Securities (other than directors'
qualifying shares) shall at any time be owned by such Person or one or more
Subsidiaries of such person.

"Swing Line Lender" means NationsBank.

"Swing Line Loan" means the aggregate outstanding principal amount of
the advances made under the Swing Line Note.

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20
"Swing Line Note" means the promissory note of the Borrower in the
principal amount of $5,000,000 payable to the order of the Swing Line Lender
evidencing the indebtedness of the Borrower to the Swing Line Lender resulting
from advances to the Borrower under the line of credit created thereunder.

"Tranche" means any tranche of principal outstanding under the
Revolving Loan accruing interest on the same basis whether created in
connection with new advances of principal under the Revolving Loan pursuant to
Section 2.5(a)(i) or by the continuation or conversion of existing tranches of
principal under such Loan pursuant to Section 2.5(a)(ii) and shall include the
Prime Rate Tranche or any LIBOR Tranche.

"Type" has the meaning set forth in Section 1.4.

"Voting Securities" means (a) with respect to any corporation, any
capital stock of the corporation having general voting power under ordinary
circumstances to elect directors of such corporation, (b) with respect to any
partnership, any partnership interest having general voting power under
ordinary circumstances to elect the general partner or other management of the
partnership, and (c) with respect to any other Person, such ownership interests
in such Person having general voting power under ordinary circumstances to
elect the management of such Person, in each case irrespective of whether at
the time any other class of stock, partnership interests, or other ownership
interest might have special voting power or rights by reason of the happening
of any contingency.

1.2 Computation of Time Periods. In this Agreement in the
computation of periods of time from a specified date to a later specified date,
the word "from" means "from and including" and the words "to" and "until" each
means "to but excluding."

1.3 Accounting Terms; Preparation of Financials.

(a) All accounting terms, definitions, ratios, and other
tests described herein shall be construed in accordance with United States
generally accepted accounting principles applied on a consistent basis with
those applied in the preparation of the Registration Statement, except as
expressly set forth in this Agreement.

(b) The Restricted Entities shall prepare their financial
statements in accordance with United States generally accepted accounting
principles applied on a consistent basis with those applied in the preparation
of the Registration Statement, unless otherwise approved in writing by the
Agent. In accordance with the foregoing, (i) any Acquisition which is
permitted to be treated as a pooling transaction shall be treated as a pooling
transaction, and following such an Acquisition the consolidated financial
statements of the Borrower shall be adjusted to reflect the results of such
Acquisition during the periods prior to such Acquisition in accordance with
generally accepted accounting principles and (ii) any Acquisition which is not
permitted to be treated as a pooling transaction shall be treated as an asset
purchase, without adjustment for prior periods.

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21
(c) Where expressly permitted in this Agreement, the
Borrower may elect to use the compliance calculations set forth in Schedule D
of a Compliance Certificate to calculate the Applicable Margin or compliance
with a financial covenant under this Agreement. In such case the accounting
terms, definitions, ratios, and other tests used in making such calculation
shall be construed as required by paragraph (a) above except that the
consolidated financial results of the Borrower shall be deemed to be the
adjusted consolidated financial results of the Borrower set forth in Schedule C
of the Compliance Certificate. The Borrower shall prepare Schedule C and D of
the Compliance Certificate in accordance with the following provisions:

(i) The Borrower may select one or more
Acquisitions for inclusion in the adjustments permitted in Schedule C
or D of the Compliance Certificate; provided that if the inclusion of
any Acquisition results in an increase in the consolidated EBITDA of
the Borrower over the consolidated EBITDA of the Borrower required to
be reported in Schedule A or B of the Compliance Certificate, then the
Borrower must include all Acquisitions which would cause a decrease in
the consolidated EBITDA of the Borrower in Schedule C and D of the
Compliance Certificate.

(ii) If the Acquisition is treated as a pooling
transaction, the Borrower shall adjust the pooling accounting
treatment of the Acquisition to reflect nonrecurring items (both
positive and negative) that are permitted to be adjusted in accordance
with the guidelines established by the Securities and Exchange
Commission for acquisition accounting for reported acquisitions by
public companies or as approved by the Agent.

(iii) If the Acquisition is not treated as a
pooling transaction, the financial results of the acquired Person or
assets shall be added to the applicable financial results of the
Borrower in the same manner as if such transaction were a pooling
transaction with such adjustments thereto as are required to reflect
nonrecurring items (both positive and negative) that are permitted to
be adjusted in accordance with the guidelines established by the
Securities and Exchange Commission for acquisition accounting for
reported acquisitions by public companies or as approved by the Agent.

(iv) No Acquisition may be included in Schedule C
or D of the Compliance Certificate at the request of the Borrower
unless the financial reports of the acquired Person or assets from
which Schedule C and D are prepared are audited financial reports
prepared by independent certified public accounting firms of national
standing or are approved by the Agent.

1.4 Types. The "Type" of a Tranche refers to the determination
whether such tranche is a LIBOR Tranche or the Prime Rate Tranche.

1.5 Interpretation. Article, Section, Schedule, and Exhibit
references are to this Agreement, unless otherwise specified. All references
to instruments, documents, contracts, and

-16-
22

agreements are references to such instruments, documents, contracts, and
agreements as the same may be amended, supplemented, and otherwise modified from
time to time, unless otherwise specified. The word "including" shall mean
"including but not limited to." The word "or" shall mean "and/or" wherever
necessary to prevent interpretation of any provision against the Agent or the
Banks. Whenever the Borrower has an obligation under this Agreement and the
Credit Documents the expense of complying with that obligation shall be an
expense of the Borrower unless otherwise specified. Whenever any determination
is to be made by the Agent or any Bank, such determination shall be in such
Person's sole discretion unless otherwise specified in this Agreement. If any
provision in this Agreement and the Credit Documents is held to be illegal,
invalid, not binding, or unenforceable, such provision shall be fully severable
and this Agreement and the Credit Documents shall be construed and enforced as
if such illegal, invalid, not binding, or unenforceable provision had never
comprised a part of this Agreement and the Credit Documents, and the remaining
provisions shall remain in full force and effect. This Agreement and the Credit
Documents have been reviewed and negotiated by sophisticated parties with access
to legal counsel and shall not be construed against the drafter. In the event
of a conflict between this Agreement and any other Credit Documents, this
Agreement shall control.

ARTICLE 2. CREDIT FACILITIES.

2.1 Revolving Loan Facility.

(a) Revolving Loan Commitments. Each Bank severally
agrees, on the terms and conditions set forth in this Agreement and for the
purposes set forth in Section 5.4, to make Revolving Loan Advances to the
Borrower as such Bank's ratable share of Revolving Loan Borrowings requested by
the Borrower from time to time on any Business Day during the period from the
date of this Agreement until the Revolving Loan Maturity Date provided that the
aggregate outstanding principal amount of Revolving Loan Advances made by such
Bank plus such Bank's ratable share of the Swing Line Loan plus such Bank's
ratable share of the Letter of Credit Exposure shall not exceed such Bank's
Revolving Loan Commitment. Revolving Loan Borrowings must be made in an amount
equal to or greater than $1,000,000, in the case of any Revolving Loan
Borrowing comprised of a LIBOR Tranche, or $1,000,000, in the case of any Prime
Rate Borrowing, and be made in multiples of $500,000, in the case of any
Revolving Loan Borrowing comprised of a LIBOR Tranche, or $100,000, in the case
of any Prime Rate Borrowing. Within the limits expressed in this Agreement,
the Borrower may from time to time borrow, prepay, and reborrow Revolving Loan
Borrowings. The indebtedness of the Borrower to the Banks resulting from the
Revolving Loan Advances made by the Banks shall be evidenced by Revolving Loan
Notes made by the Borrower.

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(b) Method of Advancing

(i) Each Revolving Loan Borrowing shall be made
pursuant to a Revolving Loan Borrowing Request given by the Borrower to the
Agent in writing or by telecopy not later than the time required pursuant to
Section 2.5(a)(i) to select the interest rate basis for the Revolving Loan
Borrowing. Each Revolving Loan Borrowing Request shall be fully completed and
shall specify the information required therein, and shall be irrevocable and
binding on the Borrower. Upon receipt of the Revolving Loan Borrowing Request
by the Agent, the Agent shall promptly forward notice of the Revolving Loan
Borrowing to the Banks. Each Bank shall, before 1:00 p.m. (local time at the
Applicable Lending Office of the Agent) on the date of the requested Revolving
Loan Borrowing, make available from its Applicable Lending Office to the Agent
at the Agent's Applicable Lending Office, in immediately available funds, such
Bank's ratable share of such Revolving Loan Borrowing. Subject to the
satisfaction of all applicable conditions precedent, after receipt by the Agent
of such funds, the Agent shall, by 4:00 p.m. (local time at the Applicable
Lending Office of the Agent), on the date requested for such Revolving Loan
Borrowing make such Revolving Loan Borrowing available to the Borrower in
immediately available funds at any account of Borrower which is designated in
writing by the Borrower to the Agent.

(ii) Unless the Agent shall have received notice
from a Bank before the date of any Revolving Loan Borrowing that such Bank
shall not make available to the Agent such Bank's ratable share of such
Revolving Loan Borrowing, the Agent may assume that such Bank has made its
ratable share of such Revolving Loan Borrowing available to the Agent on the
date of such Revolving Loan Borrowing in accordance with paragraph (i) above
and the Agent may, in reliance upon such assumption, make available to the
Borrower on such date a corresponding amount. If and to the extent that such
Bank shall not have so made its ratable share of such Revolving Loan Borrowing
available to the Agent, such Bank agrees that it shall pay interest on such
amount for each day from the date such amount is made available to the Borrower
by the Agent until the date such amount is paid to the Agent by such Bank at
the Federal Funds Rate in effect from time to time, provided that with respect
to such Bank if such amount is not paid by such Bank by the end of the second
day after the Agent makes such amount available to the Borrower, the interest
rates specified above shall be increased by a per annum amount equal to 2.00%
on the third day and shall remain at such increased rate thereafter. Interest
on such amount shall be due and payable by such Bank upon demand by the Agent.
If such Bank shall pay to the Agent such amount and interest as provided above,
such amount so paid shall constitute such Bank's Revolving Loan Advance as part
of such Revolving Loan Borrowing for all purposes of this Agreement even though
not made on the same day as the other Revolving Loan Advances comprising such
Revolving Loan Borrowing. In the event that such Bank has not repaid such
amount by the end of the fifth day after such amount was made available to the
Borrower, the Borrower agrees to repay to the Agent on demand such amount,
together with interest on such amount for each day from the date such amount
was made available to the Borrower until the date such amount is repaid to the
Agent at the interest rate charged to the Borrower for such Revolving Loan
Borrowing under the terms of this Agreement.

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(iii) The failure of any Bank to make available its
ratable share of any Revolving Loan Borrowing shall not relieve any other Bank
of its obligation, if any, to make available its ratable share of such
Revolving Loan Borrowing. No Bank shall be responsible for the failure of any
other Bank to honor such other Bank's obligations hereunder, including any
failure to make available any funds as part of any Revolving Loan Borrowing.

(i) The Borrower may prepay the outstanding
principal amount of the Revolving Loan pursuant to written notice given by the
Borrower to the Agent in writing or by telecopy not later than (A) 1:00 p.m.
(local time at the Applicable Lending Office of the Agent) on the third
Business Day before the date of the proposed prepayment, in the case of the
prepayment of any portion of the Revolving Loan which is comprised of LIBOR
Tranches, or (B) 11:00 a.m. (local time at the Applicable Lending Office of the
Agent) on the same Business Day of the proposed prepayment, in the case of the
prepayment of any portion of the Revolving Loan comprised solely of the Prime
Rate Tranche. Each such notice shall specify the principal amount and Tranche
or Tranches of the Revolving Loan which shall be prepaid, the date of the
prepayment, and shall be irrevocable and binding on the Borrower. Prepayments
of the Revolving Loan shall be made in integral multiples of $500,000, in the
case of prepayments of any LIBOR Tranches, or $100,000, in the case of
prepayments of the Prime Rate Tranche. If the prepayment would cause the
aggregate outstanding principal amount of any LIBOR Tranche comprising all or
any part of the Revolving Loan or the aggregate outstanding principal amount of
the Prime Rate Tranche comprising all or any part of the Revolving Loan, to be
less than $1,000,000, in the case of any such LIBOR Tranche, or $1,000,000, in
the case of the Prime Rate Tranche, the prepayment must be in an amount equal
to the entire outstanding principal amount of such LIBOR Tranche under the
Revolving Loan or the entire outstanding principal amount of the Prime Rate
Tranche under the Revolving Loan, as the case may be. Upon receipt of any
notice of prepayment, the Agent shall give prompt notice of the intended
prepayment to the Banks. For each such notice given by the Borrower, the
Borrower shall prepay the Revolving Loan in the specified amount on the
specified date as set forth in such notice. The Borrower shall have no right
to prepay any principal amount of the Revolving Loan except as provided in this
Section 2.1(c)(i).

(ii) Each prepayment of principal of any LIBOR
Tranche under the Revolving Loan pursuant to this Section 2.1(c) shall be
accompanied by payment of all accrued but unpaid interest on the principal
amount prepaid and any amounts required to be paid pursuant to Section 2.6 as a
result of such prepayment.

(d) Repayment. The Borrower shall pay to the Agent for
the ratable benefit of the Banks the aggregate outstanding principal amount of
the Revolving Loan on the Revolving Loan Maturity Date.

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2.2 Letter of Credit Facility.

(a) Commitment for Letters of Credit. The Issuing Bank
shall, on the terms and conditions set forth in this Agreement and for the
purposes set forth in Section 5.4, issue, increase, and extend Letters of
Credit at the request of the Borrower from time to time on any Business Day
during the period from the date of this Agreement until the Revolving Loan
Maturity Date provided that (i) the Letter of Credit Exposure shall not exceed
the Letter of Credit Sublimit and (ii) the aggregate outstanding principal
amount of Revolving Loan Borrowings plus the Letter of Credit Exposure plus the
Swing Line Loan shall not exceed the aggregate amount of the Revolving Loan
Commitments. No Letter of Credit may have an expiration date later than 12
months after its issuance date, and each Letter of Credit which is
self-extending beyond its expiration date must be cancelable upon no more than
30 days notice prior to each extension period given by the Issuing Bank to the
beneficiary of such Letter of Credit. No Letter of Credit may have an
expiration date later than 12 months after the Revolving Loan Maturity Date
unless approved by the Issuing Bank, the Agent, and the Banks. Each Letter of
Credit must be in form and substance acceptable to the Issuing Bank. The
indebtedness of the Borrower to the Issuing Bank resulting from Letters of
Credit requested by the Borrower shall be evidenced by the Letter of Credit
Applications made by the Borrower.

(b) Requesting Letters of Credit. Each Letter of Credit
shall be issued, increased, or extended pursuant to a Letter of Credit
Application or Letter of Credit Application Amendment, as applicable, given by
the Borrower to the Issuing Bank in writing or by telecopy promptly confirmed
in writing, such Letter of Credit Application or Letter of Credit Application
Amendment being given not later than 1:00 p.m. (local time at the Applicable
Lending Office of the Agent) on the third Business Day before the date of the
proposed issuance, increase, or extension of the Letter of Credit. Each Letter
of Credit Application or Letter of Credit Application Amendment shall be fully
completed and shall specify the information required therein (including the
proposed form of the Letter of Credit or change thereto), and shall be
irrevocable and binding on the Borrower. Upon receipt by the Issuing Bank of
the Letter of Credit Application or Letter of Credit Application Amendment, the
Issuing Bank shall give prompt notice thereof to the Agent, and the Agent shall
promptly inform the Banks of the proposed Letter of Credit or change thereto.
Subject to the satisfaction of all applicable conditions precedent, the Issuing
Bank shall, by 4:00 p.m. (local time at the Applicable Lending Office of the
Agent), on the date requested by the Borrower for the issuance, increase, or
extension of such Letter of Credit issue, increase, or extend such Letter of
Credit to the specified beneficiary. Upon the date of the issuance, increase,
or extension of a Letter of Credit, the Issuing Bank shall be deemed to have
sold to each other Bank and each other Bank shall be deemed to have purchased
from the Issuing Bank a ratable participation in the related Letter of Credit
or change thereto. The Issuing Bank shall notify the Agent of each Letter of
Credit issued, increased, or extended and the date and amount of each Bank's
participation in such Letter of Credit, and the Agent shall in turn notify the
Banks.

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(c) Reimbursements for Letters of Credit. With respect
to any Letter of Credit and in accordance with the related Letter of Credit
Application, the Borrower agrees to pay to the Issuing Bank on demand fees due
with respect to such Letter of Credit as specified in Section 2.4(b)). If the
Borrower does not pay upon demand of the Issuing Bank any amount due to the
Issuing Bank under any Letter of Credit Application, in addition to any rights
the Issuing Bank may have under such Letter of Credit Application, the Issuing
Bank may upon written notice to the Agent request the satisfaction of such
obligation by the making of a Revolving Loan Borrowing. Concurrently with such
notice to the Agent, the Issuing Bank will use reasonable efforts provide like
notice to the Borrower, provided that failure to provide such notice to the
Borrower at such time shall not invalidate the effectiveness of such request
for a Revolving Loan Borrowing. Upon such request, the Borrower shall be
deemed to have requested the making of a Revolving Loan Borrowing in the amount
of such obligation and the transfer of the proceeds thereof to the Issuing
Bank. Such Revolving Loan Borrowing shall be a Prime Rate Borrowing. The
Agent shall promptly forward notice of such Revolving Loan Borrowing to the
Borrower and the Banks, and each Bank shall, in accordance with the procedures
of Section 2.1(b), other than limitations on the size of Revolving Loan
Borrowings, and notwithstanding the failure of any conditions precedent, make
available such Bank's ratable share of such Revolving Loan Borrowing to the
Agent, and the Agent shall promptly deliver the proceeds thereof to the Issuing
Bank for application to such Bank's share of the obligations under such Letter
of Credit. The Borrower hereby unconditionally and irrevocably authorizes,
empowers, and directs the Issuing Bank to make such requests for Revolving Loan
Borrowings on behalf of the Borrower, and the Banks to make Revolving Loan
Advances to the Agent for the benefit of the Issuing Bank in satisfaction of
such obligations. The Agent and each Bank may record and otherwise treat the
making of such Revolving Loan Borrowings as the making of Revolving Loan
Borrowings to the Borrower under this Agreement as if requested by the
Borrower. Nothing herein is intended to release the Borrower's obligations
under any Letter of Credit Application, but only to provide an additional
method of payment therefor. The making of any Revolving Loan Borrowing under
this Section 2.2(c) shall not constitute a cure or waiver of any Default or
Event of Default, other than the payment Default or Event of Default which is
satisfied by the application of the amounts deemed advanced hereunder, caused
by the Borrower's failure to comply with the provisions of this Agreement or
any Letter of Credit Application.

(d) Prepayments of Letters of Credit. In the event that
any Letters of Credit shall be outstanding according to their terms after the
Revolving Loan Maturity Date, the Borrower shall pay to the Agent an amount
equal to the Letter of Credit Exposure allocable to such Letters of Credit to
be held in the Letter of Credit Collateral Account and applied in accordance
with paragraph (g) below.

(e) Obligations Unconditional. The obligations of the
Borrower and each Bank under this Agreement and the Letter of Credit
Applications to make payments as required to reimburse the Issuing Bank for
draws under Letters of Credit and to make other payments due in respect of
Letters of Credit shall be unconditional and irrevocable, and shall be paid
strictly in accordance with the terms of this Agreement and the Letter of
Credit Applications under all

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circumstances, including: (i) any lack of validity or enforceability of any
Letter of Credit Document; (ii) any amendment, waiver, or consent to departure
from any Letter of Credit Document; (iii) the existence of any claim, set-off,
defense, or other right which the Borrower or any Bank may have at any time
against any beneficiary or transferee of any Letter of Credit (or any Persons
for whom any such beneficiary or any such transferee may be acting), the
Issuing Bank, or any other person or entity, whether in connection with the
transactions contemplated in this Agreement or any unrelated transaction; (iv)
any statement or any other document presented under such Letter of Credit
proving to be forged, fraudulent, invalid, or insufficient in any respect or
any statement therein being untrue or inaccurate in any respect; or (v) payment
by the Issuing Bank under any Letter of Credit against presentation of a draft
or certificate which does not comply with the terms of such Letter of Credit;
provided, however, that nothing contained in this paragraph (d) shall be deemed
to constitute a waiver of any remedies of the Borrower or any Bank in
connection with the Letters of Credit or the Borrower's or such Bank's rights
under paragraph (e) below.

(f) Liability of Issuing Bank. The Issuing Bank shall
not be liable or responsible for: (i) the use which may be made of any Letter
of Credit or any acts or omissions of any beneficiary or transferee in
connection therewith; (ii) the validity, sufficiency, or genuineness of
documents related to Letters of Credit, or of any endorsement thereon, even if
such documents should prove to be in any or all respects invalid, insufficient,
fraudulent, or forged; (iii) payment by the Issuing Bank against presentation
of documents which do not strictly comply with the terms of a Letter of Credit,
including failure of any documents to bear any reference or adequate reference
to the relevant Letter of Credit; or (iv) any other circumstances whatsoever in
making or failing to make payment under any Letter of Credit (INCLUDING THE
ISSUING BANK'S OWN NEGLIGENCE); except that the Issuing Bank shall be liable to
the Borrower or any Bank to the extent of any direct, as opposed to
consequential, damages suffered by the Borrower or such Bank which the Borrower
or such Bank proves were caused by (A) the Issuing Bank's gross negligence or
willful misconduct in determining whether documents presented under a Letter of
Credit comply with the terms of such Letter of Credit, (B) the Issuing Bank's
willful failure to make or delay in making lawful payment under any Letter of
Credit after the presentation to it of documentation strictly complying with
the terms and conditions of such Letter of Credit or the Issuing Bank's payment
of greater than the maximum amount permitted under any Letter of Credit, or (C)
the Issuing Bank's negligence in the handling of money.

(g) Letter of Credit Collateral Account.

(i) If the Borrower is required to deposit funds
in the Letter of Credit Collateral Account pursuant to Sections 2.2(d) or 6.4,
then the Borrower and the Agent shall establish the Letter of Credit Collateral
Account and the Borrower shall execute any documents and agreements, including
the Agent's standard form assignment of deposit accounts, that the Agent
reasonably requests in connection therewith to establish the Letter of Credit
Collateral Account and grant the Agent a first priority security interest in
such account and the funds therein. The Borrower hereby pledges to the Agent
and grants the Agent a security interest in the Letter of Credit Collateral

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Account, whenever established, all funds held in the Letter of Credit
Collateral Account from time to time, and all proceeds thereof as security for
the payment of the Obligations.

(ii) Funds held in the Letter of Credit Collateral
Account shall be held as cash collateral for obligations with respect to
Letters of Credit and promptly applied by the Agent at the request of the
Issuing Bank to any reimbursement or other obligations under Letters of Credit
that exist or occur. To the extent that any surplus funds are held in the
Letter of Credit Collateral Account above the Letter of Credit Exposure, during
the existence of an Event of Default the Agent may (A) hold such surplus funds
in the Letter of Credit Collateral Account as cash collateral for the Credit
Obligations or (B) apply such surplus funds to any Credit Obligations in
accordance with Section 6.9. If no Default exists, the Agent shall release to
the Borrower at the Borrower's written request any funds held in the Letter of
Credit Collateral Account above the amounts required by Section 2.2(d).

(iii) Funds held in the Letter of Credit Collateral
Account shall be invested in money market funds of the Agent or in another
investment if mutually agreed upon by the Borrower and the Agent, but the Agent
shall have no other obligation to make any other investment of the funds
therein. The Agent shall exercise reasonable care in the custody and
preservation of any funds held in the Letter of Credit Collateral Account and
shall be deemed to have exercised such care if such funds are accorded
treatment substantially equivalent to that which the Agent accords its own
property, it being understood that the Agent shall not have any responsibility
for taking any necessary steps to preserve rights against any parties with
respect to any such funds.

2.3 Swing Line Facility.

(a) Commitment. The Swing Line Lender agrees, on the
terms and conditions set forth in the Swing Line Note, to make advances to the
Borrower under the Swing Line Note. No Bank shall have any rights thereunder
(but each Bank shall have the obligation to reimburse the Swing Line Lender in
accordance with paragraph (b) below). The indebtedness of the Borrower to the
Swing Line Lender resulting from the advances under the Swing Line Note made by
the Swing Line Lender shall be evidenced by the Swing Line Note made by the
Borrower.

(b) Reimbursements for Swing Line Loan Obligations. With
respect to the Swing Line Loan and the interest, premium, fees, and other
amounts owed by the Borrower to the Swing Line Lender in connection with the
Swing Line Note, and in accordance with the terms of the Swing Line Note, the
Borrower agrees to pay to the Swing Line Lender such amounts when due and
payable to the Swing Line Lender under the Swing Line Note. If the Borrower
does not pay to the Swing Line Lender any such amounts when due and payable to
the Swing Line Lender under the Swing Line Note, in addition to any rights the
Swing Line Lender may have under such Swing Line Note, the Swing Line Lender
may upon written notice to the Agent request the satisfaction of such
obligation by the making of a Revolving Loan Borrowing in the amount of any
such amounts not paid when due and payable. Concurrently with such notice to
the Agent, the Swing Line Lender will

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use reasonable efforts provide like notice to the Borrower, provided that
failure to provide such notice to the Borrower at such time shall not
invalidate the effectiveness of such request for a Revolving Loan Borrowing.
Upon such request, the Borrower shall be deemed to have requested the making of
a Revolving Loan Borrowing in the amount of such obligation and the transfer of
the proceeds thereof to the Swing Line Lender. Such Revolving Loan Borrowing
shall be a Prime Rate Borrowing. The Agent shall promptly forward notice of
such Revolving Loan Borrowing to the Borrower and the Banks, and each Bank
shall, in accordance with the procedures of Section 2.1(b), other than
limitations on the size of Revolving Loan Borrowings, and notwithstanding the
failure of any conditions precedent, make available such Bank's ratable share
of such Revolving Loan Borrowing to the Agent, and the Agent shall promptly
deliver the proceeds thereof to the Swing Line Lender for application to such
amounts owed to the Swing Line Lender. The Borrower hereby unconditionally and
irrevocably authorizes, empowers, and directs the Swing Line Lender to make
such requests for Revolving Loan Borrowings on behalf of the Borrower, and the
Banks to make Revolving Loan Advances to the Agent for the benefit of the Swing
Line Lender in satisfaction of such obligations. The Agent and each Bank may
record and otherwise treat the making of such Revolving Loan Borrowings as the
making of a Revolving Loan Borrowing to the Borrower under this Agreement as if
requested by the Borrower. Nothing herein is intended to release the
Borrower's obligations under the Swing Line Note, but only to provide an
additional method of payment therefor. The making of any Borrowing under this
Section 2.3(b) shall not constitute a cure or waiver of any Default or Event of
Default, other than the payment Default or Event of Default which is satisfied
by the application of the amounts deemed advanced hereunder, caused by the
Borrower's failure to comply with the provisions of this Agreement or the Swing
Line Note.

2.4 Fees.

(a) Commitment Fees. The Borrower shall pay to the Agent
for the ratable benefit of the Banks an unused commitment fee in an amount
equal to the product of the Applicable Margin for unused commitment fees in
effect from time to time multiplied by the average daily amount by which (i)
the aggregate amount of the Revolving Loan Commitments exceeds (ii) the
aggregate outstanding principal amount of the Revolving Loan plus the Letter of
Credit Exposure. The unused commitment fee shall be due and payable in arrears
on the last day of each calendar quarter and on the Revolving Loan Maturity
Date.

(b) Fees for Letters of Credit. For each Letter of
Credit issued by the Issuing Bank, the Borrower shall pay to the Agent for the
ratable benefit of the Banks a letter of credit fee equal to the Applicable
Margin for letter of credit fees per annum on the face amount of such Letter of
Credit for the stated term of such Letter of Credit, with a minimum fee of
$500. In addition, for each Letter of Credit issued by the Issuing Bank, the
Borrower shall pay to the Agent for the benefit of the Issuing Bank a fronting
fee of 0.125% per annum on the face amount of such Letter of Credit for the
stated term of such Letter of Credit, with a minimum fee of $500. The Borrower
shall pay such letter of credit fees for each Letter of Credit quarterly in
arrears within ten days after when billed therefor by the Issuing Bank.

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(c) Agent Fee Letter. The Borrower shall pay to the
parties specified therein the fees and other amounts payable under the Agent
Fee Letter.

2.5 Interest.

(a) Election of Interest Rate Basis. The Borrower may
select the interest rate basis for the Revolving Loan in accordance with the
terms of this Section 2.5(a):

(i) Under the Revolving Loan Borrowing Request
provided to the Agent in connection with the making of each Revolving Loan
Borrowing, the Borrower shall select the amount and the Type of the Tranches,
and for each LIBOR Tranche selected, any permitted Interest Period for each
such LIBOR Tranche, which will comprise such Revolving Loan Borrowing, provided
that (A) at no time shall there be more than ten separate LIBOR Tranches
outstanding and (B) each LIBOR Tranche must be in a principal amount equal to
or greater than $1,000,000 and be made in multiples of $500,000, and the Prime
Rate Tranche must be in a principal amount equal to or greater than$1,000,000
and be made in multiples of $100,000. Such interest rate elections must be
provided to the Agent in writing or by telecopy not later than 1:00 p.m. (local
time at the Applicable Lending Office of the Agent) on the third Business Day
before the date of any proposed Revolving Loan Borrowing comprised of a LIBOR
Tranche or 11:00 a.m. (local time at the Applicable Lending Office of the
Agent) on the same day of any proposed Revolving Loan Borrowing which is a
Prime Rate Borrowing. The Agent shall promptly forward copies of such interest
rate elections to the Banks. In the case of any Revolving Loan Borrowing
comprised of a LIBOR Tranche, upon determination by the Agent, the Agent shall
promptly notify the Borrower and the Banks of the applicable interest rate for
such Tranche.

(ii) With respect to any Tranche, the Borrower may
continue or convert any portion of any LIBOR Tranche or the Prime Rate Tranche
to form new LIBOR Tranches or increase or decrease the amount of the Prime Rate
Tranche in accordance with this paragraph. Each such continuation or
conversion shall be deemed to create a new LIBOR Tranche or increase or
decrease the amount of the Prime Rate Tranche, as applicable, for all purposes
of this Agreement. Each such continuation or conversion shall be made pursuant
to a Continuation/Conversion Request given by the Borrower to the Agent in
writing or by telecopy not later than 1:00 p.m. (local time at the Applicable
Lending Office of the Agent) on the third Business Day before the date of the
proposed continuation or conversion. Each Continuation/Conversion Request
shall be fully completed and shall specify the information required therein,
and shall be irrevocable and binding on the Borrower. The Agent shall promptly
forward notice of the continuation or conversion to the Banks. In the case of
any continuation or conversion into LIBOR Tranches, upon determination by the
Agent, the Agent shall notify the Borrower and the Banks of the applicable
interest rate. Continuations and conversions of LIBOR Tranches shall be made
in integral multiples of $500,000, and continuations and conversions of the
Prime Rate Tranche shall be made in integral multiples of $100,000. No
continuation or conversion shall be permitted if such continuation or
conversion would cause the aggregate outstanding principal amount of any LIBOR
Tranche which would remain

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31
outstanding to be less than $1,000,000, or the aggregate outstanding principal
amount of the Prime Rate Tranche which would remain outstanding to be less than
$1,000,000. At no time shall there be more than ten separate LIBOR Tranches
outstanding. Any conversion of an existing LIBOR Tranche is subject to Section
2.5. Subject to the satisfaction of all applicable conditions precedent, the
Agent and the Banks shall before close of business on the date requested by the
Borrower for the continuation or conversion, make such continuation or
conversion.

(iii) At the end of the Interest Period for any
LIBOR Tranche if the Borrower has not continued or converted such LIBOR Tranche
into new Tranches as provided for in paragraph (ii) above, the Borrower shall
be deemed to have continued such LIBOR Tranche as a new LIBOR Tranche with an
Interest Period of one month. All of the Prime Rate Tranche shall continue as
the Prime Rate Tranche unless the Borrower converts such Prime Rate Tranche as
provided for in paragraph (ii) above.

(b) LIBOR Tranches. Each LIBOR Tranche shall bear
interest during its Interest Period at a per annum interest rate equal to the
sum of the LIBOR for such Tranche plus the Applicable Margin for LIBOR Tranches
in effect from time to time. The Borrower shall pay to the Agent for the
ratable benefit of the Banks all accrued but unpaid interest on each LIBOR
Tranche on the last day of the applicable Interest Period for such LIBOR
Tranche (and with respect to LIBOR Tranches with Interest Periods of greater
than three months, on the date which is three months after the first date of
the Interest Period for such LIBOR Tranche), when required upon prepayment as
specified elsewhere in this Agreement, on any date when such LIBOR Tranche is
prepaid in full, and on the Revolving Loan Maturity Date.

(c) Prime Rate Tranche. The Prime Rate Tranche shall
bear interest at a per annum interest rate equal to the Base Rate in effect
from time to time plus the Applicable Margin for the Prime Rate Tranche in
effect from time to time. The Borrower shall pay to the Agent for the ratable
benefit of the Banks all accrued but unpaid interest on the aggregate
outstanding principal amount of the Prime Rate Tranche on the last day of each
calendar quarter, when required upon prepayment as specified elsewhere in this
Agreement, on any date the Prime Rate Tranche is prepaid in full, and on the
Revolving Loan Maturity Date.

(d) Usury Protection.

(i) If, with respect to any Bank and the
Borrower, the effective rate of interest contracted for by such Bank with the
Borrower under the Credit Documents, including the stated rates of interest
contracted for hereunder and any other amounts contracted for under the Credit
Documents which are deemed to be interest, at any time exceeds the Highest
Lawful Rate, then the outstanding principal amount of the loans made by such
Bank to the Borrower hereunder shall bear interest at a rate which would make
the effective rate of interest on the loans made by such Bank to the Borrower
under the Credit Documents equal the Highest Lawful Rate until the difference
between the amounts which would have been due by the Borrower to such Bank at
the stated rates

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and the amounts which were due by the Borrower to such Bank at the Highest
Lawful Rate (the "Lost Interest") has been recaptured by such Bank. If, when
the loans made hereunder are repaid in full, the Lost Interest has not been
fully recaptured by such Bank pursuant to the preceding paragraph, then, to the
extent permitted by law, the interest rates charged by such Bank to the
Borrower hereunder shall be retroactively increased such that the effective
rate of interest on the loans made by such Bank to the Borrower under the
Credit Documents was at the Highest Lawful Rate since the effectiveness of this
Agreement to the extent necessary to recapture the Lost Interest not recaptured
pursuant to the preceding sentence and, to the extent allowed by law, the
Borrower shall pay to such Bank the amount of the Lost Interest remaining to be
recaptured by such Bank.

(ii) In calculating all sums paid or agreed to be
paid to any Bank by the Borrower for the use, forbearance, or detention of
money under the Credit Documents, such amounts shall, to the extent permitted
by applicable law, be amortized, prorated, allocated, and spread in equal parts
throughout the term of the Credit Documents.

(iii) NOTWITHSTANDING THE FOREGOING OR ANY OTHER
TERM IN THIS AGREEMENT AND THE CREDIT DOCUMENTS TO THE CONTRARY, it is the
intention of each Bank and the Borrower to conform strictly to any applicable
usury laws. Accordingly, if any Bank contracts for, charges, or receives any
consideration from the Borrower which constitutes interest in excess of the
Highest Lawful Rate, then any such excess shall be canceled automatically and,
if previously paid, shall at such Bank's option be applied to the outstanding
amount of the loans made hereunder by such Bank to the Borrower or be refunded
to the Borrower.

2.6 Breakage Costs. If (i) any payment of principal on or any
conversion of any LIBOR Tranche is made on any date other than the last day of
the Interest Period for such LIBOR Tranche, whether as a result of any
voluntary or mandatory prepayment (other than a prepayment upon the occurrence
of any event subject to Section 2.8 or 2.9), any acceleration of maturity, or
any other cause, (ii) any payment of principal on any LIBOR Tranche is not made
when due, or (iii) any LIBOR Tranche is not borrowed, converted, or prepaid in
accordance with the respective notice thereof provided by the Borrower to the
Agent, whether as a result of any failure to meet any applicable conditions
precedent for borrowing, conversion, or prepayment, the permitted cancellation
of any request for borrowing, conversion, or prepayment, the failure of the
Borrower to provide the respective notice of borrowing, conversion, or
prepayment, or any other cause not specified above which is created by the
Borrower, then the Borrower shall pay to each Bank upon demand any amounts
required to compensate such Bank for any losses, costs, or expenses, including
lost profits and administrative expenses, which are reasonably allocable to
such action, including losses, costs, and expenses related to the liquidation
or redeployment of funds acquired or designated by such Bank to fund or
maintain such Bank's ratable share of such LIBOR Tranche or related to the
reacquisition or redesignation of funds by such Bank to fund or maintain such
Bank's ratable share of such LIBOR Tranche following any liquidation or
redeployment of such funds caused by such action. Such Bank need not prove
matched funding of any particular funds, and a certificate as to

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the amount of such loss, cost, or expense detailing the calculation thereof and
certifying that such Bank customarily charges such amounts to its other
customers in similar circumstances submitted by such Bank to the Borrower shall
be conclusive and binding for all purposes, absent manifest error.

2.7 Increased Costs.

(a) Cost of Funds. If due to either (i) any introduction
of, change in, or change in the interpretation of any law or regulation, in
each case, after the date of this Agreement or (ii) compliance with any
guideline or request from any central bank or other governmental authority
having appropriate jurisdiction (whether or not having the force of law) given
after the date of this Agreement, there shall be any increase in the costs of
any Bank attributable to (x) committing to make any Revolving Loan Advance or
obtaining funds for the making, funding, or maintaining of such Bank's ratable
share of any LIBOR Tranche in the relevant interbank market or (y) committing
to make Letters of Credit or issuing, funding, or maintaining Letters of Credit
(including any increase in any applicable reserve requirement specified by the
Federal Reserve Board, including those for emergency, marginal, supplemental,
or other reserves), then the Borrower shall pay to such Bank upon demand any
amounts required to compensate such Bank for such increased costs, such amounts
being due and payable upon demand by such Bank. A certificate as to the cause
and amount of such increased cost detailing the calculation of such cost and
certifying that such Bank customarily charges such amounts to its other
customers in similar circumstances submitted by such Bank to the Borrower shall
be conclusive and binding for all purposes, absent manifest error. No Bank may
make any claim for compensation under this Section 2.7(a) for increased costs
incurred before 90 days prior to the delivery of any such certificate.

(b) Capital Adequacy. If, due to either (i) any
introduction of, change in, or change in the interpretation of any law or
regulation, in each case, after the date of this Agreement or (ii) compliance
with any guideline or request from any central bank or other governmental
authority having appropriate jurisdiction (whether or not having the force of
law) given after the date of this Agreement, there shall be any increase in the
capital requirements of any Bank or its parent or holding company attributable
to (x) committing to make Revolving Loan Advances or making, funding, or
maintaining Revolving Loan Advances or (y) committing to make Letters of Credit
or issuing, funding, or maintaining Letters of Credit, as such capital
requirements are allocated by such Bank, then the Borrower shall pay to such
Bank upon demand any amounts required to compensate such Bank or its parent or
holding company for such increase in costs (including an amount equal to any
reduction in the rate of return on assets or equity of such Bank or its parent
or holding company), such amounts being due and payable upon demand by such
Bank. A certificate as to the cause and amounts detailing the calculation of
such amounts and certifying that such Bank customarily charges such amounts to
its other customers in similar circumstances submitted by such Bank to the
Borrower shall be conclusive and binding for all purposes, absent manifest
error. No Bank may make any claim for compensation under this Section 2.7(b)
for increased costs incurred before 90 days prior to the delivery of any such
certificate.

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2.8 Illegality. Notwithstanding any other provision in this
Agreement, if it becomes unlawful for any Bank to obtain deposits or other
funds for making or funding such Bank's ratable share of any LIBOR Tranche in
the relevant interbank market, such Bank shall so notify the Borrower and the
Agent and such Bank's commitment to create LIBOR Tranches shall be suspended
until such condition has passed, all LIBOR Tranches applicable to such Bank
shall be converted to the Prime Rate Tranche as of the end of each applicable
Interest Period or earlier if necessary, and all subsequent requests for LIBOR
Tranches shall be deemed to be requests for Prime Rate Borrowings or
continuations and conversions of the Prime Rate Tranche, as applicable, with
respect to such Bank.

2.9 Market Failure. Notwithstanding any other provision in this
Agreement, if the Agent determines that: (a) quotations of interest rates for
the relevant deposits referred to in the definition of "LIBOR" are not being
provided in the relevant amounts, or maturities for purposes of determining the
rate of interest referred to in the definition of "LIBOR" or (b) the relevant
rates of interest referred to in the definition of "LIBOR" which are used as
the basis to determine the rate of interest for LIBOR Tranches will not
adequately cover the cost to any Bank of making or maintaining such Bank's
ratable share of any LIBOR Tranche, then if the Agent so notifies the Borrower,
the Agent and the Banks' commitment to create LIBOR Tranches shall be suspended
until such condition has passed, all LIBOR Tranches shall be converted to the
Prime Rate Tranche as of the end of each applicable Interest Period or earlier
if necessary, and all subsequent requests for LIBOR Tranches shall be deemed to
be requests for Prime Rate Borrowings or continuations and conversions of the
Prime Rate Tranche, as applicable, with respect to such Bank.

2.10 Payment Procedures and Computations.

(a) Payment Procedures. Time is of the essence in
this Agreement and the Credit Documents. All payment hereunder shall be made
in Dollars. The Borrower shall make each payment under this Agreement and
under the Revolving Loan Notes not later than 12:00 noon (local time at the
Applicable Lending Office of the Agent) on the day when due to the Agent at the
Agent's Applicable Lending Office in immediately available funds. All payments
by the Borrower hereunder shall be made without any offset, abatement,
withholding, deduction, counterclaim, or reduction. Upon receipt of payment
from the Borrower of any principal, interest, or fees due to the Banks, the
Agent shall promptly after receipt thereof distribute to the Banks their
ratable share of such payments for the account of their respective Applicable
Lending Offices. If and to the extent that the Agent shall not have so
distributed to any Bank its ratable share of such payments, the Agent agrees
that it shall pay interest on such amount for each day after the day when such
amount is made available to the Agent by the Borrower until the date such
amount is paid to such Bank by the Agent at the Federal Funds Rate in effect
from time to time, provided that if such amount is not paid by the Agent by the
end of the third day after the Borrower makes such amount available to the
Agent, the interest rates specified above shall be increased by a per annum
amount equal to 2.00% on the fourth day and shall remain at such increased rate
thereafter. Interest on such amount shall be due and payable by the Agent upon
demand by such Bank. Upon receipt of other amounts due solely to the Agent,
the

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Issuing Bank, the Swing Line Lender, or a specific Bank, the Agent shall
distribute such amounts to the appropriate party to be applied in accordance
with the terms of this Agreement.

(b) Agent Reliance. Unless the Agent shall have received
written notice from the Borrower prior to any date on which any payment is due
to the Banks that the Borrower shall not make such payment in full, the Agent
may assume that the Borrower has made such payment in full to the Agent on such
date and the Agent may, in reliance upon such assumption, cause to be
distributed to each Bank on such date an amount equal to the amount then due
such Bank. If and to the extent the Borrower shall not have so made such
payment in full to the Agent, each Bank shall repay to the Agent forthwith on
demand such amount distributed to such Bank, together with interest thereon
from the date such amount is distributed to such Bank until the date such Bank
repays such amount to the Agent, at an interest rate equal to, the Federal
Funds Rate in effect from time to time, provided that with respect to such
Bank, if such amount is not repaid by such Bank by the end of the second day
after the date of the Agent's demand, the interest rates specified above shall
be increased by a per annum amount equal to 2.00% on the third day after the
date of the Agent's demand and shall remain at such increased rate thereafter.

(c) Sharing of Payments. Each Bank agrees that if it
should receive any payment (whether by voluntary payment, by realization upon
security, by the exercise of the right of setoff or banker's lien, by
counterclaim or cross action, by the enforcement of any right under the Credit
Documents, or otherwise) in respect of any obligation of the Borrower to pay
principal, interest, fees, or any other obligation incurred under the Credit
Documents in a proportion greater than the total amount of such principal,
interest, fees, or other obligation then owed and due by the Borrower to such
Bank bears to the total amount of principal, interest, fees, or other
obligation then owed and due by the Borrower to all of the Banks immediately
prior to such receipt, then such Bank receiving such excess payment shall
purchase for cash without recourse from the other Banks an interest in the
obligations of the Borrower to such Banks in such amount as shall result in a
participation by all of the Banks, in proportion with the Banks' respective pro
rata shares, in the aggregate unpaid amount of principal, interest, fees, or
any such other obligation, as the case may be, owed by the Borrower to all of
the Banks; provided that if all or any portion of such excess payment is
thereafter recovered from such Bank, such purchase shall be rescinded and the
purchase price restored to the extent of such recovery, in proportion with the
Banks' respective pro rata shares, but without interest.

(d) Authority to Charge Accounts. The Agent, if and to
the extent payment owed to the Agent or any Bank is not made when due, may
charge from time to time against any account of the Borrower with the Agent any
amount so due. The Agent agrees promptly to notify the Borrower after any such
charge and application made by the Agent provided that the failure to give such
notice shall not affect the validity of such charge and application.

(e) Interest and Fees. Unless expressly provided for in
this Agreement, (i) all computations of interest based on the Prime Rate
(including the Base Rate, when applicable) shall be made on the basis of a
365/366 day year, as the case may be, (ii) all computations of interest based

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on the Federal Funds Rate (including the Base Rate, when applicable) shall be
made on the basis of a 360 day year, (iii) all computations of interest based
upon the LIBOR shall be made on the basis of a 360 day year, and (iv) all
computations of fees shall be made on the basis of a 360 day year, in each case
for the actual number of days (including the first day, but excluding the last
day) occurring in the period for which such interest or fees are payable. Each
determination by the Agent of an interest rate or fee shall be conclusive and
binding for all purposes, absent manifest error.

(f) Payment Dates. Whenever any payment shall be stated
to be due on a day other than a Business Day, such payment shall be made on the
next succeeding Business Day, and such extension of time shall in such case be
included in the computation of payment of interest or fees, as the case may be.
If the time for payment for an amount payable is not specified in this
Agreement or in any other Credit Document, the payment shall be due and payable
on demand by the Agent or the applicable Bank.

2.11 Taxes.

(a) No Deduction for Certain Taxes. Any and all payments
by the Borrower shall be made free and clear of and without deduction for any
and all present or future taxes, levies, imposts, deductions, charges, or
withholdings, and all liabilities with respect thereto, other than taxes
imposed on the income and franchise taxes imposed on the Agent, any Bank, or
the Applicable Lending Office thereof by any jurisdiction in which any such
entity is a citizen or resident or any political subdivision of such
jurisdiction (all such nonexcluded taxes, levies, imposts, deductions, charges,
withholdings, and liabilities being hereinafter referred to as "Taxes"). If
the Borrower shall be required by law to deduct any Taxes from or in respect of
any sum payable to the Agent, any Bank, or the Applicable Lending Office
thereof, (i) the sum payable shall be increased as may be necessary so that,
after making all required deductions (including deductions applicable to
additional sums payable under this Section 2.11), such Person receives an
amount equal to the sum it would have received had no such deductions been
made; (ii) the Borrower shall make such deductions; and (iii) the Borrower
shall pay the full amount deducted to the relevant taxation authority or other
authority in accordance with applicable law.

(b) Other Taxes. The Borrower agrees to pay any present
or future stamp or documentary taxes or any other excise or property taxes,
charges, or similar levies which arise from any payment made or from the
execution, delivery, or registration of, or otherwise with respect to, this
Agreement or the other Credit Documents (other than those which become due as a
result of any Bank joining this Agreement as a result of any Assignment and
Acceptance, which shall be paid by the Bank which becomes a Bank hereunder as a
result of such Assignment and Acceptance).

(c) Foreign Bank Withholding Exemption. Each Bank and
Issuing Bank that is not incorporated under the laws of the United States of
America or a state thereof agrees that it shall deliver to the Borrower and the
Agent (i) two duly completed copies of United States Internal Revenue Service
Form 1001 or 4224 or successor applicable form, as the case may be, certifying
in

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each case that such Bank is entitled to receive payments under this Agreement
and the Revolving Loan Notes payable to it, without deduction or withholding of
any United States federal income taxes, (ii) if applicable, an Internal Revenue
Service Form W-8 or W-9 or successor applicable form, as the case may be, to
establish an exemption from United States backup withholding tax, and (iii) any
other governmental forms which are necessary or required under an applicable
tax treaty or otherwise by law to reduce or eliminate any withholding tax,
which have been reasonably requested by the Borrower. Each Bank which delivers
to the Borrower and the Agent a Form 1001 or 4224 and Form W-8 or W-9 pursuant
to the next preceding sentence further undertakes to deliver to the Borrower
and the Agent two further copies of the said letter and Form 1001 or 4224 and
Form W-8 or W-9, or successor applicable forms, or other manner of
certification, as the case may be, on or before the date that any such letter
or form expires or becomes obsolete or after the occurrence of any event
requiring a change in the most recent letter and form previously delivered by
it to the Borrower and the Agent, and such extensions or renewals thereof as
may reasonably be requested by the Borrower and the Agent certifying in the
case of a Form 1001 or 4224 that such Bank is entitled to receive payments
under this Agreement without deduction or withholding of any United States
federal income taxes. If an event (including without limitation any change in
treaty, law or regulation) has occurred prior to the date on which any delivery
required by the preceding sentence would otherwise be required which renders
all such forms inapplicable or which would prevent any Bank from duly
completing and delivering any such letter or form with respect to it and such
Bank advises the Borrower and the Agent that it is not capable of receiving
payments without any deduction or withholding of United States federal income
tax, and in the case of a Form W-8 or W-9, establishing an exemption from
United States backup withholding tax, such Bank shall not be required to
deliver such letter or forms. The Borrower shall withhold tax at the rate and
in the manner required by the laws of the United States with respect to
payments made to a Bank failing to provide the requisite Internal Revenue
Service forms in a timely manner. Each Bank which fails to provide to the
Borrower in a timely manner such forms shall reimburse the Borrower upon demand
for any penalties paid by the Borrower as a result of any failure of the
Borrower to withhold the required amounts that are caused by such Bank's
failure to provide the required forms in a timely manner.

2.12 Change of Lending Office.

(a) Each Bank agrees that if it makes any demand for payment under
Section 2.7 or 2.11(a), or if any adoption or change of the type described in
Section 2.8 shall occur with respect to it, it will use reasonable efforts
(consistent with its internal policy and legal and regulatory restrictions and
so long as such efforts would not be disadvantageous to it, as determined in
its sole discretion) to designate a different lending office if the making of
such a designation would reduce or obviate the need for the Borrower to make
payments under Section 2.7 or 2.11(a), or would eliminate or reduce the effect
of any adoption or change described in Section 2.8.

(b) If any Bank (including any participant Bank under Section 8.5)
shall assert that any adoption or change of the type described in Section 2.8
hereof has occurred with respect to it, or if

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38

any Bank (including any participant Bank under Section 8.5) requests
compensation under Section 2.7, or if the Borrower is required to pay any
additional amount to any Bank or any authority for the account of any Bank
pursuant to Section 2.11, then the Borrower may, at its expense and effort, upon
notice to such Bank and the Agent, require such Bank to, and such Bank promptly
shall, assign and delegate, without recourse (in accordance with and subject to
the restrictions contained in Section 8.5), all its interests, rights, and
obligations under this Agreement to an assignee that shall assume such
obligations (which assignee may be another Bank, if a Bank accepts such
assignment); provided that (i) if such assignee is not a Bank or an Affiliate
thereof, the Borrower shall have received the prior written consent of the Agent
and the Issuing Bank which consents shall not unreasonably be withheld or
delayed, (ii) such Bank shall have received payment of an amount equal to the
aggregate outstanding principal of such Bank's Revolving Loan Advances and its
participations in Letters of Credit, accrued interest thereon, accrued fees and
all other amounts payable to it hereunder, from the assignee (at least to the
extent of such outstanding principal) and the Borrower (in the case of all other
amounts), and (iii) in the case of any such assignment resulting from a claim
for compensation under Section 2.7 or payment required to be made pursuant to
Section 2.11, such assignment will result in a reduction in such compensation or
payments compared to the compensation or payments payable to the assigning Bank.
A Bank shall not be required to make any such assignment and delegation if,
prior thereto, as a result of a waiver by such Bank or otherwise, the
circumstances entitling the Borrower to require such assignment and delegation
no longer exist or cease to apply.

ARTICLE 3. CONDITIONS PRECEDENT.

3.1 Conditions Precedent to Initial Extension of Credit. The
obligation of each Bank to make the initial extension of credit under this
Agreement, including the making of any Revolving Loan Advances and the issuance
of any Letters of Credit, and the obligation of the Swing Line Lender to make
any advances under the Swing Line Loan shall be subject to the following
conditions precedent:

(a) Documents. The Borrower shall have delivered or
shall have caused to be delivered the documents and other items listed on
Exhibit F, together with any other documents requested by the Agent to document
the agreements and intent of the Credit Documents, each in form and with
substance satisfactory to the Agent;

(b) Initial Public Offering; Mergers. The Borrower shall
have completed on or before February 15, 1998, an initial public offering with
proceeds to the Borrower, net of underwriter's fees and transaction costs, of
not less than $69,000,000, and the Agent shall have received evidence
satisfactory to the Agent that the mergers and other transactions described in
the Registration Statement shall have been completed to the satisfaction of the
Agent in conformity with laws and on conditions and terms satisfactory to the
Agent; and

(c) Material Adverse Change. No Material Adverse Change
shall have occurred since September 30, 1997 (as determined for the Borrower
and all of its post initial public offering

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39
Subsidiaries as reflected in the proforma combined financial statements
contained in the Registration Statement).

3.2 Conditions Precedent to Each Extension of Credit. The
obligation of each Bank to make any extension of credit under this Agreement,
including the making of any Revolving Loan Advances and the issuance, increase,
or extension of any Letters of Credit, and the obligation of the Swing Line
Lender to make any advances under the Swing Line Loan shall be subject to the
further conditions precedent that on the date of such extension of credit:

(a) Representations and Warranties. As of the date of
the making of any extension of credit hereunder, the representations and
warranties contained in each Credit Document shall be true and correct in all
material respects as of such date (and the Borrower's request for the making of
any extension of credit hereunder shall be deemed to be a restatement,
representation, and additional warranty of the representations and warranties
contained in each Credit Document as of such date); and

(b) Default. As of the date of the making of any
extension of credit hereunder, there shall exist no Default or Event of
Default, and the making of the extension of credit would not cause a Default or
Event of Default.

ARTICLE 4. REPRESENTATIONS AND WARRANTIES. The Borrower represents and
warrants to the Agent and each Bank, and with each request for any extension of
credit hereunder, including the making of any Revolving Loan Advances, and the
issuance, increase, or extension of any Letters of Credit, again represents and
warrants to the Agent and each Bank, as follows:

4.1 Organization. As of the date of this Agreement, each
Restricted Entity (a) is duly organized, validly existing, and in good standing
under the laws of such Person's respective jurisdiction of organization and (b)
is duly licensed, qualified to do business, and in good standing in each
jurisdiction in which such Person is organized, owns property, or conducts
operations to the extent that any failure to be so licensed, qualified, or in
good standing in accordance with this clause (b) could reasonably be expected
to cause a Material Adverse Change.

4.2 Authorization. The execution, delivery, and performance by
each Credit Party of the Credit Documents to which such Credit Party is a party
and the consummation of the transactions contemplated thereby (a) do not
contravene the organizational documents of such Credit Party, (b) have been
duly authorized by all necessary corporate action of each Credit Party, and (c)
are within each Credit Party's corporate powers.

4.3 Enforceability. Each Credit Document to which any Credit
Party is a party has been duly executed and delivered by each Credit Party
which is a party to such Credit Document and constitutes the legal, valid, and
binding obligation of each such Credit Party, enforceable against each such
Credit Party in accordance with such Credit Document's terms, except as limited
by

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40
applicable bankruptcy, insolvency, reorganization, moratorium, or similar laws
at the time in effect affecting the rights of creditors generally and subject
to the availability of equitable remedies.

4.4 Absence of Conflicts and Approvals. The execution, delivery,
and performance by each Credit Party of the Credit Documents to which such
Credit Party is a party and the consummation of the transactions contemplated
thereby, (a) do not result in any violation or breach of any provisions of, or
constitute a default under, any note, indenture, credit agreement, security
agreement, credit support agreement, or other similar agreement to which such
Credit Party is a party or any other material contract or agreement to which
such Credit Party is a party, (b) do not violate any law or regulation binding
on or affecting such Credit Party, (c) do not require any authorization,
approval, or other action by, or any notice to or filing with, any governmental
authority, and (d) do not result in or require the creation or imposition of
any Lien prohibited by this Agreement.

4.5 Investment Companies. No Restricted Entity or Affiliate
thereof is an "investment company" or a company "controlled" by an "investment
company" within the meaning of the Investment Company Act of 1940, as amended.

4.6 Public Utilities. No Restricted Entity or Affiliate thereof
is a "holding company," or a "subsidiary company" of a "holding company," or an
"affiliate" of a "holding company" or of a "subsidiary company" of a "holding
company," within the meaning of the Public Utility Holding Company Act of 1935,
as amended. No Restricted Entity or Affiliate thereof is a regulated public
utility.

4.7 Financial Condition.

(a) The Borrower has delivered to the Agent the
Registration Statement, including therein the proforma combined balance sheet
of the Borrower following the public offering of securities contemplated
therein and proforma combined statement of income for the periods shown
therein, which accurately and completely, in all material respects, present
fairly the financial condition of Borrower as of such date.

(b) As of the date of the Registration Statement, there
were no material contingent obligations, liabilities for taxes, unusual forward
or long-term commitments, or unrealized or anticipated losses of the Borrower
or any of the Borrower's Subsidiaries, except as disclosed in the Registration
Statement and adequate reserves for such items have been made in accordance
with generally accepted accounting principles. No Material Adverse Change has
occurred since the date of the Registration Statement. No Default exists.

4.8 Condition of Assets. Each Restricted Entity has good and
indefeasible title to substantially all of its owned property and valid
leasehold rights in all of its leased property, as reflected in the financial
statements most recently provided to the Agent free and clear of all Liens
except Permitted Liens. Each Restricted Entity possesses and has properly
approved, recorded, and

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41
filed, where applicable, all permits, licenses, patents, patent rights or
licenses, trademarks, trademark rights, trade names rights, and copyrights
which are useful in the conduct of its business and which the failure to
possess could reasonably be expected to cause a Material Adverse Change. The
material properties used in the operations of each Restricted Entity are in
good repair, working order, and condition, normal wear and tear excepted. The
properties of each Restricted Entity have not been adversely affected as a
result of any fire, explosion, earthquake, flood, drought, windstorm, accident,
strike or other labor disturbance, embargo, requisition or taking of property
or cancellation of contracts, permits, or concessions by a governmental
authority, riot, activities of armed forces, or acts of God or of any public
enemy in any manner which (after giving effect to any insurance proceeds) could
reasonably be expected to cause a Material Adverse Change.

4.9 Litigation. There are no actions, suits, or proceedings
pending or, to the knowledge of the Borrower, threatened against any Restricted
Entity at law, in equity, or in admiralty, or by or before any governmental
department, commission, board, bureau, agency, instrumentality, domestic or
foreign, or any arbitrator which could reasonably be expected to cause a
Material Adverse Change.

4.10 Subsidiaries. As of the date of this Agreement, the Borrower
has no Subsidiaries except as disclosed in Schedule II. The Borrower has no
Subsidiaries which have not been disclosed in writing to the Agent.

4.11 Laws and Regulations. Each Restricted Entity is in compliance
with all federal, state, and local laws and regulations which are applicable to
the operations and property of such Person where the failure to comply with the
same could reasonably be expected to cause a Material Adverse Change.

4.12 Environmental Compliance. Each Restricted Entity has been and
is in compliance with all Environmental Laws and has obtained and is in
compliance with all related permits necessary for the ownership and operation
of any such Person's properties, in each case, where the failure to be in
compliance with the same could reasonably be expected to cause a Material
Adverse Change. Each Restricted Entity has not received notice of and has not
been investigated for any violation or alleged violation of any Environmental
Law in connection with any such Person's presently or previously owned
properties which currently threaten action or suggest liabilities which could
reasonably be expected to cause a Material Adverse Change. Each Restricted
Entity does not and has not created, handled, transported, used, or disposed of
any Hazardous Materials on or about any such Person's properties (nor has any
such Person's properties been used for those purposes); has never been
responsible for the release of any Hazardous Materials into the environment in
connection with any such Person's operations and has not contaminated any
properties with Hazardous Materials; and does not and has not owned any
properties contaminated by any Hazardous Materials, in each case in any manner
which could reasonably be expected to cause a Material Adverse Change.

4.13 ERISA. Each Restricted Entity and each of their respective
Commonly Controlled

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42
Entities are in compliance with all provisions of ERISA to the extent that the
failure to be in compliance could reasonably be expected to cause a Material
Adverse Change. No Restricted Entity nor any of their respective Commonly
Controlled Entities participates in or during the past five years has
participated in any employee pension benefit plan covered by Title IV of ERISA
or any multiemployer plan under Section 4001(a)(3) of ERISA. With respect to
the Plans of the Restricted Entities, no Material Reportable Event or
Prohibited Transaction has occurred and exists that could reasonably be
expected to cause a Material Adverse Change.

4.14 Taxes. Each Restricted Entity has filed all United States
federal, state, and local income tax returns and all other domestic and foreign
tax returns which are required to be filed by such Person and has paid, or
provided for the payment before the same became delinquent of, all taxes due
pursuant to such returns or pursuant to any assessment received by such Person
except for tax payments being contested in good faith, for which adequate
reserves have been established and reported in accordance with general accepted
accounting principals, and which could not reasonably be expected to cause a
Material Adverse Change. The charges, accruals, and reserves on the books of
the Restricted Entities in respect of taxes are adequate in accordance with
generally accepted accounting principles.

4.15 True and Complete Disclosure. All factual information
furnished by or on behalf of any Credit Party in writing to the Agent or any
Bank in connection with the Credit Documents and the transactions contemplated
thereby is true and accurate in all material respects on the date as of which
such information was dated or certified and does not contain any untrue
statement of material fact or omit to state any material fact necessary to make
the statements contained therein not misleading. All projections, estimates,
and pro forma financial information furnished by any Credit Party were prepared
on the basis of assumptions, data, information, tests, or conditions believed
to be reasonable at the time such projections, estimates, and pro forma
financial information were furnished.

ARTICLE 5. COVENANTS. Until the Agent and the Banks receive irrevocable
payment of the Credit Obligations and have terminated this Agreement and each
other Credit Document, the Borrower shall comply with and cause compliance with
the following covenants:

5.1 Organization. The Borrower shall cause each Restricted Entity
to (a) maintain itself as an entity duly organized, validly existing, and in
good standing under the laws of such Person's respective jurisdiction of
organization and (b) be duly licensed, qualified to do business, and in good
standing in each jurisdiction in which such Person is organized, owns property,
or conducts operations and which requires such licensing or qualification where
failure to be so licensed, qualified, or in good standing as required by this
clause (b) could reasonably be expected to cause a Material Adverse Change;
provided, however, that nothing in this Section 5.1 shall be interpreted to be
violated as a result of a transaction permitted by Section 5.9.

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5.2 Reporting. The Borrower shall furnish to the Agent all of the
following:

(a) Annual Reports. As soon as available and in any
event not later than 90 days after the end of each fiscal year of the Borrower,
(i) a copy of the annual audit report for such fiscal year for the Borrower,
including therein the consolidated balance sheets of the Borrower as of the end
of such fiscal year and the consolidated statements of income, stockholders'
equity, and cash flows for the Borrower for such fiscal year, setting forth the
consolidated financial position and results of the Borrower for such fiscal
year and certified, without any qualification or limit of the scope of the
examination of matters relevant to the financial statements, by a nationally
recognized certified public accounting firm, (ii) a completed Compliance
Certificate duly certified by a Responsible Officer of the Borrower, and (iii)
a completed Contract Status Report duly certified by a Responsible Officer of
the Borrower;

(b) Quarterly Reports. As soon as available and in any
event not later than 45 days after the end of each of the first three fiscal
quarters of the Borrower of each year, and in each case in form and substance
acceptable to the Agent, (i) a copy of the internally prepared consolidated
financial statements of the Borrower for such fiscal quarter and for the fiscal
year to date period ending on the last day of such fiscal quarter, including
therein the consolidated balance sheets of the Borrower as of the end of such
fiscal quarter and the consolidated statements of income, and cash flows for
such fiscal quarter and for such fiscal year to date period, setting forth the
consolidated financial position and results of the Borrower for such fiscal
quarter and fiscal year to date period, all in reasonable detail and duly
certified by a Responsible Officer of the Borrower as having been prepared in
accordance with generally accepted accounting principles, including those
applicable to interim financial reports which permit normal year end
adjustments and do not require complete financial notes, (ii) for each such
fiscal quarter ending on or after March 31, 1998, a completed Compliance
Certificate duly certified by a Responsible Officer of the Borrower, and (iii)
for each such fiscal quarter ending on or after March 31, 1998, a completed
Contract Status Report duly certified by a Responsible Officer of the Borrower;

(c) Semi-annual Subsidiary Update. As soon as available
and in any event not later than 45 days after the end of the second fiscal
quarter of the Borrower of each year and 90 days after the end of the fourth
fiscal quarter of the Borrower of each year, an update of the information
included in Schedule II, including all Subsidiaries acquired by the Borrower
since the previous update of such scheduled information.

(d) Acquisition Information. As soon as available prior
to the closing of any Acquisition requiring approval of the Majority Banks, and
on or prior to the closing of any Acquisition not requiring such approval, a
completed Acquisition Certificate duly certified by a Responsible Officer of
the Borrower, which the Agent shall forward to the Banks for any Acquisition
requiring approval of the Majority Banks (and prior to the consummation of the
Acquisition, the Borrower shall, upon request by the Agent, make available to
the Agent at the Borrower's offices in Houston, Texas, the acquisition
documents regarding the acquired assets, including schedules

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reflecting litigation liabilities, environmental liabilities, and other assumed
liabilities, and any other information regarding the acquired assets as the
Agent may reasonably request);

(e) SEC Filings. As soon as available and in any event
not later than thirty days after the filing or delivery thereof, copies of all
financial statements, reports, and proxy statements which the Borrower shall
have sent to its stockholders generally and copies of all regular and periodic
reports, if any, which any Restricted Entity shall have filed with the
Securities and Exchange Commission;

(f) Defaults. Promptly, but in any event within five
Business Days after the discovery thereof, a notice of any facts known to a
Responsible Officer of any Restricted Entity which constitute a Default,
together with a statement of a Responsible Officer of the Borrower setting
forth the details of such facts and the actions which the Borrower has taken
and proposes to take with respect thereto (and the Agent shall, promptly upon
receipt from the Borrower of a notice pursuant to this Section 5.2(e), forward
a copy of such notice to each Bank);

(g) Litigation. Promptly, but in any event within 10
Business Days after the commencement thereof, notice of all actions, suits, and
proceedings before any court or governmental department, commission, board,
bureau, agency, or instrumentality, domestic or foreign, affecting any
Restricted Entity which, if determined adversely, could reasonably be expected
to cause a Material Adverse Change;

(h) Material Agreement Default. Promptly, but in any
event within 10 Business Days after a Responsible Officer obtains knowledge
thereof, notice of any breach by any Restricted Entity of any contract or
agreement which breach could reasonably be expected to cause a Material Adverse
Change;

(i) Material Changes. Prompt written notice of any other
condition or event of which a Responsible Officer of any Restricted Entity has
knowledge, which condition or event has resulted or could reasonably be
expected to cause a Material Adverse Change; and

(j) Other Information. Such other information respecting
the business operations or property of any Restricted Entity, financial or
otherwise, as the Agent or the Majority Banks may from time to time reasonably
request.

5.3 Inspection. The Borrower shall cause each Restricted Entity
to permit the Agent and the Banks to visit and inspect any of the properties of
such Restricted Entity, to examine all of such Person's books of account,
records, reports, and other papers, to make copies and extracts therefrom, and
to discuss their respective affairs, finances, and accounts with their
respective officers, employees, and independent public accountants all at such
reasonable times and as often as may be reasonably requested, provided that the
Borrower is given at least one Business Day advance notice thereof and
reasonable opportunity to be present when independent public accountants or
other third

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parties are contacted, and provided further that so long as no Default or Event
of Default exists, the Agent and the Banks shall not exercise the foregoing
inspection right more often than once in any calendar year.

5.4 Use of Proceeds. The proceeds of the Revolving Loan
Borrowings shall be used by the Borrower for Acquisitions, working capital
needs, Capital Expenditures, and for other lawful corporate purposes. The
Borrower shall not, directly or indirectly, use any part of such proceeds for
any purpose which violates, or is inconsistent with, Regulations G, T, U, or X
of the Board of Governors of the Federal Reserve System.

5.5 Financial Covenants. The Agent shall determine compliance
with the following financial covenants based upon the applicable Schedule of
the most recent Compliance Certificate delivered to the Agent pursuant to
Section 5.2(a) or 5.2(b).

(a) Net Worth. The Borrower shall not permit the
consolidated Net Worth of the Borrower as of the last day of each fiscal
quarter to be less than the sum of (i) 90% of the consolidated Net Worth of the
Borrower on the date of the closing of the initial public offering of the
Borrower as reflected in the opening balance sheet of the Borrower, plus (ii)
90% of the cumulative quarterly consolidated net income of the Borrower since
the initial public offering of the Borrower for each fiscal quarter ending
after the date of the initial public offering of the Borrower during which the
Borrower has positive consolidated net earnings; plus (iii) 100% of the net
proceeds received by Borrower from any sale or issuance of any equity
securities of, or any other additions to capital by, the Borrower or its
Subsidiaries since the date of the initial public offering of the Borrower;
plus (iv) to the extent that the required consolidated Net Worth under this
Section 5.5(a) was not increased in clauses (i) through (iii) above as a result
of any Acquisition, 100% of any increase in the consolidated Net Worth of the
Borrower resulting from any Acquisition. Compliance with this paragraph (a)
shall be determined based upon Schedule B of the applicable Compliance
Certificate.

(b) Maximum Debt to EBITDA Ratio. As of the last day of
each fiscal quarter of the Borrower, the Borrower shall not permit the ratio of
(i) the consolidated Debt of the Borrower as of end of such fiscal quarter to
(ii) the consolidated EBITDA of the Borrower for the preceding four fiscal
quarters then ended, to be greater than 2.50 to 1.00. Compliance with this
paragraph (b) shall be determined based upon Schedule B or D, at the Borrower's
option, of the applicable Compliance Certificate.

(c) Minimum Fixed Charge Coverage Ratio. As of the last
day of each fiscal quarter, the Borrower shall not permit the ratio of (i) the
consolidated EBITDA of the Borrower for the preceding four fiscal quarters then
ended less consolidated Cash Taxes paid by the Borrower during such period to
(ii) (A) the consolidated Interest Expense of the Borrower for the preceding
four fiscal quarters then ended plus (B) the aggregate amount of Restricted
Payments declared or paid by the Borrower during such period plus (C) the
consolidated Capital Expenditures (other than

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Capital Expenditures that are deemed to occur solely because of the making of
an Acquisition) of the Borrower during such period plus (D) the consolidated
current maturities of the Borrower (including Capital Leases) plus (E) the
greater of (1) 20% of the outstanding amount of the Revolving Loan as of the
last day of such fiscal quarter or (2) $4,000,000, to be less than 1.75 to
1.00. Compliance with this paragraph (c) shall be determined based upon
Schedule B or D, at the Borrower's option, of the applicable Compliance
Certificate.

(d) Capital Expenditures. The Borrower shall not permit
the consolidated Capital Expenditures (other than Capital Expenditures that are
deemed to occur because of the making of an Acquisition) of the Borrower during
any four quarter period to exceed an amount equal to 6% of the consolidated Net
Worth of the Borrower as of the end of the applicable four quarter period.
Compliance with this paragraph (d) shall be determined based upon Schedule B of
the applicable Compliance Certificate.

5.6 Debt.

(a) The Borrower shall not permit any Restricted Entity
to create, assume, incur, suffer to exist, or in any manner become liable,
directly, indirectly, or contingently in respect of, any Debt other than
Permitted Debt.

(b) The Borrower shall, as soon as available but in any
event not less than 10 Business Days prior to the issuance of any preferred
stock or subordinated indebtedness, deliver to the Agent a copy of the
certificate of designation or subordinated debt documents, as applicable,
together with a certificate, signed by a Responsible Officer of the Borrower,
certifying that such preferred stock or subordinated indebtedness constitutes
Qualified Preferred Stock or Subordinated Debt pursuant to the terms of this
Agreement.

5.7 Liens. The Borrower shall not permit any Restricted Entity to
create, assume, incur, or suffer to exist any Lien on any of its real or
personal property whether now owned or hereafter acquired, or assign any right
to receive its income, except for Permitted Liens.

5.8 Other Obligations.

(a) The Borrower shall not permit any Restricted Entity
to create, incur, assume, or suffer to exist any obligations in respect of
unfunded vested benefits under any pension Plan or deferred compensation
agreement in an aggregate outstanding amount in excess of $1,000,000.

(b) The Borrower shall not permit any Restricted Entity
to create, incur, assume, or suffer to exist any obligations in respect of
Derivatives, other than Derivatives used by any Restricted Entity in such
Restricted Entity's respective business operations in aggregate notional
quantities not to exceed the reasonably anticipated consumption of such
Restricted Entity of the underlying commodity for the relevant period, but no
Derivatives which are speculative in nature.

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5.9 Corporate Transactions. The Borrower shall not, without the
Agent's consent, permit any Restricted Entity to (a) merge, consolidate, or
amalgamate with another Person, or liquidate, wind up, or dissolve itself (or
take any action towards any of the foregoing), (b) convey, sell, lease, assign,
transfer, or otherwise dispose of any of its property, businesses, or other
assets outside of the ordinary course of business, or (c) make any Acquisition
except that:

(i) Any Subsidiary of the Borrower may merge,
consolidate, or amalgamate into the Borrower or any wholly owned
Subsidiary of the Borrower, or convey, sell, lease, assign, transfer,
or otherwise dispose of any of its assets to the Borrower or any
wholly-owned Subsidiary of the Borrower (and if such disposition
transfers all or substantially all of the assets of transferring
Subsidiary, such subsidiary may then liquidate, wind up, or dissolve
itself); provided that the Borrower or the wholly-owned Subsidiary, as
applicable, is the surviving or acquiring entity; and

(ii) The Borrower or any Subsidiary of the Borrower may
make any Acquisition (by purchase or merger) provided that (A) the
Borrower or such Subsidiary of the Borrower is the acquiring or
surviving entity, (B) the aggregate of all consideration (other than
common stock of the Borrower) paid by the Restricted Entities in
connection with any Acquisition made on or after the Acquisition
Advance Date does not exceed $10,000,000 without the prior consent of
the Majority Banks, (C) the aggregate of all consideration (other than
common stock of the Borrower) paid by the Restricted Entities in
connection with all Acquisitions during any calendar year (exclusive
of any such consideration paid prior to the Acquisition Advance Date)
does not exceed $30,000,000 without the prior consent of the Majority
Banks, (D) no Default or Event of Default exists and the Acquisition
would not reasonably be expected to cause a Default or Event of
Default (including any default under Section 5.5 with respect to
historical and future proforma financial status and results), and (E)
the acquired assets are in substantially the same business as the
Borrower; provided that to the extent that the Borrower obtains the
consent of the Majority Banks to an Acquisition pursuant to
subsections (B) or (C) above, the consideration paid by the Restricted
Entities in connection with such Acquisition shall not be included in
the calculations of the limitations contained in such subsections.

5.10 Distributions. The Borrower shall not (a) declare or pay any
dividends; (b) purchase, redeem, retire, or otherwise acquire for value any of
its capital stock now or hereafter outstanding; or make any distribution of
assets to its stockholders as such, whether in cash, assets, or in obligations
of it; (c) allocate or otherwise set apart any sum for the payment of any
dividend or distribution on, or for the purchase, redemption, or retirement of,
any shares of its capital stock; or (d) make any other distribution by
reduction of capital or otherwise in respect of any shares of its capital
stock, except that the Borrower may make payments of dividends on Qualified
Preferred Stock.

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5.11 Transactions with Affiliates. The Borrower shall not
permit any Restricted Entity to enter into any transaction directly or
indirectly with or for the benefit of an Affiliate except transactions
with an Affiliate for the leasing of property, the rendering or
receipt of services, or the purchase or sale of inventory or other
assets in the ordinary course of business if the monetary or business
consideration arising from such a transaction would be substantially
as advantageous to such Restricted Entity as the monetary or business
consideration which such Restricted Entity would obtain in a
comparable arm's length transaction.

5.12 Insurance.

(a) The Borrower shall cause each Restricted Entity to
maintain insurance with responsible and reputable insurance companies or
associations reasonably acceptable to the Agent in such amounts and covering
such risks as are usually carried by companies engaged in similar businesses
and owning similar properties in the same general areas in which such Persons
operate. Without limiting the foregoing, the Borrower shall maintain insurance
coverage for the Restricted Entities equal to or better than, on an item by
item basis for each item, the coverage for the Restricted Entities existing on
the date of this Agreement. The Borrower shall deliver to the Agent
certificates evidencing such policies or copies of such policies at the Agent's
request following a reasonable period to obtain such certificates taking into
account the jurisdiction where the insurance is maintained.

(b) All policies representing liability insurance of the
Restricted Entities shall name the Agent and the Banks as additional named
insureds in a form satisfactory to the Agent. All proceeds of such liability
insurance coverage for the Agent and the Banks shall be paid as directed by the
Agent to indemnify the Agent or the applicable Bank for the liability covered.
In the event that proceeds of property or liability insurance are paid to any
Restricted Entity in violation of the foregoing, the Restricted Entity shall
hold the proceeds in trust for the Agent, segregate the proceeds from the other
funds of such Restricted Entity, and promptly pay the proceeds to the Agent
with any necessary endorsement. The Agent shall have the right, but not the
obligation, during the existence of an Event of Default, to make proof of loss
under, settle and adjust any claim under, and receive the proceeds under the
insurance, and the reasonable expenses incurred by the Agent in the adjustment
and collection of such proceeds shall be paid by the Borrower. The Borrower
irrevocably appoints the Agent as its attorney in fact to take such actions in
its name. If the Agent does not take such actions, the Borrower may take such
actions subject to the approval of any final action by the Agent. The Agent
shall not be liable or responsible for failure to collect or exercise diligence
in the collection of any proceeds.

5.13 Investments. The Borrower shall not permit any Restricted
Entity to make or hold any direct or indirect investment in any Person,
including capital contributions to the Person, investments in the debt or
equity securities of the Person, and loans, guaranties, trade credit, or other
extensions of credit to the Person, except for Permitted Investments.

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5.14 Lines of Business. The Borrower shall not permit the
Restricted Entities to change the character of their business as conducted on
the date of this Agreement, or engage in any type of business not reasonably
related to such business as presently and normally conducted.

5.15 Compliance with Laws. The Borrower shall cause each
Restricted Entity to comply with all federal, state, and local laws and
regulations which are applicable to the operations and property of such
Persons, in each case, where the failure to comply could reasonably be expected
to cause a Material Adverse Change.

5.16 Environmental Compliance. The Borrower shall cause each
Restricted Entity to comply with all Environmental Laws and obtain and comply
with all related permits necessary for the ownership and operation of any such
Person's properties, in each case, where the failure to comply could reasonably
be expected to cause a Material Adverse Change. The Borrower shall cause each
Restricted Entity to promptly disclose to the Agent any notice to or
investigation of such Persons for any violation or alleged violation of any
Environmental Law in connection with any such Person's presently or previously
owned properties which represent liabilities which could reasonably be expected
to cause a Material Adverse Change. The Borrower shall not permit any
Restricted Entity to create, handle, transport, use, or dispose of any
Hazardous Materials on or about any such Person's properties; release any
Hazardous Materials into the environment in connection with any such Person's
operations or contaminate any properties with Hazardous Materials; or own
properties contaminated by any Hazardous Materials, in each case in any manner
that could reasonably be expected to cause a Material Adverse Change.

5.17 ERISA Compliance. The Borrower shall cause each Restricted
Entity to (i) comply in all material respects with all applicable provisions of
ERISA and prevent the occurrence of any Reportable Event or Prohibited
Transaction with respect to, or the termination of, any of their respective
Plans, in each case, where the failure to do so could reasonably be expected to
cause a Material Adverse Change and (ii) not create or participate in any
employee pension benefit plan covered by Title IV of ERISA or any multiemployer
plan under Section 4001(a)(3) of ERISA.

5.18 Payment of Certain Claims. The Borrower shall cause each
Restricted Entity to pay and discharge, before the same shall become
delinquent, (a) all taxes, assessments, levies, and like charges imposed upon
any such Person or upon any such Person's income, profits, or property by
authorities having competent jurisdiction prior to the date on which penalties
attach thereto except for tax payments being contested in good faith for which
adequate reserves have been established and reported in accordance with
generally accepted accounting principals which could not reasonably be expected
to cause a Material Adverse Change and (b) all trade payables and current
operating liabilities, unless the same are less than 90 days past due or are
being contested in good faith, have adequate reserves established and reported
in accordance with general accepted accounting principals, and could not
reasonably be expected to cause a Material Adverse Change.

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5.19 Subsidiaries. Upon the formation or acquisition of any new
Subsidiary, the Borrower shall and shall cause such Subsidiary to promptly, but
in any event within 30 days after the formation or acquisition of such new
Subsidiary, execute and deliver to the Agent such guaranties, security
agreements, pledge agreements, amendment agreements, and other documents and
agreements as the Agent requests so that such Subsidiary guarantees and secures
the Credit Obligations on the same terms as the existing Subsidiaries of the
Borrower (including the execution and delivery of a Joinder Agreement in
substantially the form of Exhibit G for the purpose of joining such Subsidiary
as a party to the Guaranty, the Security Agreement, and, if applicable, the
Pledge Agreement, or the execution of such new guaranties, pledge agreements,
and security agreements as the Agent determines are necessary to have the same
effect in different jurisdictions). In connection therewith and within 30 days
after the formation or acquisition of such new Subsidiary, the Borrower shall
provide corporate documentation and opinion letters reasonably satisfactory to
the Agent reflecting the corporate status of such new Subsidiary of the
Borrower and the enforceability of such agreements.

ARTICLE 6. DEFAULT AND REMEDIES.

6.1 Events of Default. Each of the following shall be an "Event
of Default" for the purposes of this Agreement and for each of the Credit
Documents:

(a) Payment Failure. The Borrower (i) fails to pay when
due any principal amounts due under this Agreement or any other Credit Document
or (ii) fails to pay when due any interest, fees, reimbursements,
indemnifications, or other amounts due under this Agreement or any other Credit
Document and such failure has not been cured within five Business Days;

(b) False Representation. Any written representation or
warranty made by any Credit Party or any Responsible Officer thereof in this
Agreement or in any other Credit Document proves to have been false or
erroneous in any material respect at the time it was made or deemed made;

(c) Breach of Covenant. (i) Any breach by the Borrower
of any of the covenants contained in Sections 5.1(a) (with respect to the
Borrower), 5.2, 5.3, 5.4, 5.6, 5.7, 5.8, 5.9, 5.10, 5.13 or 5.19 or (ii) any
breach by any Credit Party of any other covenants contained in this Agreement,
or any other Credit Document and such breach is not cured within 30 days
following the earlier of knowledge of such breach by a Responsible Officer of
such Credit Party or the receipt of written notice thereof from the Agent;

(d) Security and Support Documents. Any Security
Document shall at any time and for any reason (other than one within the
reasonable control of any Bank) cease to create the Lien on the property
purported to be subject to such agreement in accordance with the terms of such
agreement, or cease to be in full force and effect, or shall be contested by
any party thereto;

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(e) Guaranty. (i) the Guaranty shall at any time and for
any reason cease to be in full force and effect with respect to any Guarantor
(except as permitted under Section 5.9 hereof) or shall be contested by any
Guarantor, or any Guarantor shall deny it has any further liability or
obligation thereunder, or (ii) any breach by any Guarantor of any of the
covenants contained in Section 1 of the Guaranty;

(f) Material Debt Default. (i) Any principal, interest,
fees, or other amounts due on any Debt of any Restricted Entity (other than the
Credit Obligations) is not paid when due, whether by scheduled maturity,
required prepayment, acceleration, demand, or otherwise, and such failure is
not cured within the applicable grace period, if any, and the aggregate amount
of all Debt of such Persons so in default exceeds $250,000; (ii) any other
event shall occur or condition shall exist under any agreement or instrument
relating to any Debt of any such Person (other than the Credit Obligations) the
effect of which is to accelerate or to permit the acceleration of the maturity
of any such Debt, whether or not any such Debt is actually accelerated, and
such event or condition shall not be cured within the applicable grace period,
if any, and the aggregate amount of all Debt of such Persons so in default
exceeds $1,000,000; (iii) any Debt of any such Person shall be declared to be
due and payable, or required to be prepaid (other than by a regularly scheduled
prepayment) prior to the stated maturity thereof, and the aggregate amount of
all Debt of such Persons so accelerated exceeds $1,000,000; or (iv) any default
or event of default, however denominated, occurs under the Swing Line Note;

(g) Material Agreement Default. There shall occur any
breach by any Restricted Entity of any contract or agreement which breach could
reasonably be expected to cause a Material Adverse Change and such breach is
not cured within the applicable grace period, if any;

(h) Bankruptcy and Insolvency. (i) there shall have been
filed against any Restricted Entity or any such Person's properties, without
such Person's consent, any petition or other request for relief seeking an
arrangement, receivership, reorganization, liquidation, or similar relief under
bankruptcy or other laws for the relief of debtors and such request for relief
(A) remains in effect for 60 or more days, whether or not consecutive, or (B)
is approved by a final nonappealable order, or (ii) any such Person consents
to or files any petition or other request for relief of the type described in
clause (i) above seeking relief from creditors, makes any assignment for the
benefit of creditors or other arrangement with creditors, or admits in writing
such Person's inability to pay such Person's debts as they become due (the
occurrence of any Event of Default under clause (i) or (ii) of this paragraph
being a "Bankruptcy Event of Default");

(h) Adverse Judgment. The aggregate outstanding amount
of judgments against the Restricted Parties not discharged or stayed pending
appeal or other court action within 30 days following entry is greater than
$250,000; or

(i) Change of Control. There shall occur any Change of
Control.

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6.2 Termination of Revolving Loan Commitments. Upon the
occurrence of any Bankruptcy Event of Default, all of the commitments of the
Agent and the Banks hereunder shall terminate. During the existence of any
Event of Default other than a Bankruptcy Event of Default, the Agent shall at
the request of the Majority Banks declare by written notice to the Borrower all
of the commitments of the Agent and the Banks hereunder terminated, whereupon
the same shall immediately terminate.

6.3 Acceleration of Credit Obligations. Upon the occurrence of
any Bankruptcy Event of Default, the aggregate outstanding principal amount of
all loans made hereunder, all accrued interest thereon, and all other Credit
Obligations shall immediately and automatically become due and payable. During
the existence of any Event of Default other than a Bankruptcy Event of Default,
the Agent shall at the request of the Majority Banks declare by written notice
to the Borrower the aggregate outstanding principal amount of all loans made
hereunder, all accrued interest thereon, and all other Credit Obligations to be
immediately due and payable, whereupon the same shall immediately become due
and payable. In connection with the foregoing, except for the notice provided
for above in this Article VI, the Borrower waives notice of any Default or
Event of Default, grace, notice of intent to accelerate, notice of
acceleration, presentment, demand, notice of nonpayment, protest, and all other
notices.

6.4 Cash Collateralization of Letters of Credit. Upon the
occurrence of any Bankruptcy Event of Default, the Borrower shall pay to the
Agent an amount equal to the Letter of Credit Exposure to be held in the Letter
of Credit Collateral Account for disposition in accordance with Section 2.2(g).
During the existence of any Event of Default other than a Bankruptcy Event of
Default, the Agent shall at the request of the Majority Banks require by
written notice to the Borrower that the Borrower pay to the Agent an amount
equal to the Letter of Credit Exposure to be held in the Letter of Credit
Collateral Account for disposition in accordance with Section 2.2(g), whereupon
the Borrower shall pay to the Agent such amount for such purpose.

6.5 Default Interest. If any Event of Default exists based upon a
default in the payment of any amounts owing hereunder, the Agent shall at the
request of the Majority Banks declare by written notice to the Borrower that
the Credit Obligations specified in such notice shall bear interest beginning
on the date specified in such notice until paid in full at the applicable
Default Rate for such Credit Obligations, whereupon the Borrower shall pay such
interest to the Agent for the benefit of the Agent and the Banks, as
applicable, upon demand by the Agent. If any other Event of Default exists,
the Agent shall at the request of the Majority Banks declare by written notice
to the Borrower that, unless such Event of Default is cured to the satisfaction
of the Agent and the Majority Banks on or before the 30th day following the
occurrence of such Event of Default, the Credit Obligations specified in such
notice shall bear interest beginning on such 30th day until paid in full at the
applicable Default Rate for such Credit Obligations, whereupon the Borrower
shall, if such Event of Default is not cured by such date, pay such interest to
the Agent for the benefit of the Agent and the Banks, as applicable, upon
demand by the Agent after such date.

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6.6 Right of Setoff. During the existence of an Event of Default,
the Agent and each Bank is hereby authorized at any time, to the fullest extent
permitted by law, to set off and apply any indebtedness owed by the Agent or
such Bank to the Borrower against any and all of the obligations of the
Borrower under this Agreement and the Credit Documents, irrespective of whether
or not the Agent or such Bank shall have made any demand under this Agreement
or the Credit Documents and although such obligations may be contingent and
unmatured. The Agent and each Bank, as the case may be, agrees promptly to
notify the Borrower after any such setoff and application made by such party
provided that the failure to give such notice shall not affect the validity of
such setoff and application.

6.7 Actions Under Credit Documents. Following an Event of
Default, the Agent shall at the request of the Majority Banks take any and all
actions permitted under the other Credit Documents, including the Guaranty and
the Security Documents.

6.8 Remedies Cumulative. No right, power, or remedy conferred to
the Agent or the Banks in this Agreement and the Credit Documents, or now or
hereafter existing at law, in equity, by statute, or otherwise, shall be
exclusive, and each such right, power, or remedy shall to the full extent
permitted by law be cumulative and in addition to every other such right,
power, or remedy. No course of dealing and no delay in exercising any right,
power, or remedy conferred to the Agent or the Banks in this Agreement and the
Credit Documents, or now or hereafter existing at law, in equity, by statute,
or otherwise, shall operate as a waiver of or otherwise prejudice any such
right, power, or remedy.

6.9 Application of Payments. Prior to the Revolving Loan Maturity
Date or any acceleration of the Credit Obligations, all payments made hereunder
shall be applied to the Credit Obligations as directed by the Borrower, subject
to the rules regarding the application of payments to certain Credit
Obligations provided for hereunder and in the Credit Documents. Following the
Revolving Loan Maturity Date or any acceleration of the Credit Obligations, all
payments and collections shall be applied to the Credit Obligations in the
following order:

First, to the payment of the costs, expenses, reimbursements
(other than reimbursement obligations with respect to draws
under Letters of Credit), and indemnifications of the Agent
that are due and payable under the Credit Documents;

Then, ratably to the payment of the costs, expenses,
reimbursements (other than reimbursement obligations with
respect to draws under Letters of Credit), and
indemnifications of the Banks that are due and payable under
the Credit Documents;

Then, ratably to the payment of all accrued but unpaid
interest and fees and obligations under Interest Hedge
Agreements due and payable under the Credit Documents;

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Then, ratably to the payment of all outstanding principal and
reimbursement obligations for draws under Letters of Credit due
and payable under the Credit Documents;

Then, ratably to the payment of any other amounts due and
owing with respect to the Credit Obligations; and

Finally, any surplus held by the Agent and remaining after
payment in full of all the Credit Obligations and reserve for
Credit Obligations not yet due and payable shall be promptly
paid over to the Borrower or to whomever may be lawfully
entitled to receive such surplus. All applications shall be
distributed in accordance with Section 2.10(a).

ARTICLE 7. THE AGENT AND THE ISSUING BANK

7.1 Authorization and Action. Each Bank hereby appoints and
authorizes the Agent to take such action as agent on its behalf and to exercise
such powers under this Agreement as are delegated to the Agent by the terms
hereof and of the other Credit Documents, together with such powers as are
reasonably incidental thereto. Statements under the Credit Documents that the
Agent may take certain actions, without further qualification, means that the
Agent may take such actions with or without the consent of the Banks or the
Majority Banks, but where the Credit Documents expressly require the
determination of the Banks or the Majority Banks, the Agent shall not take any
such action without the prior written consent thereof. As to any matters not
expressly provided for by this Agreement or any other Credit Document
(including, without limitation, enforcement or collection of the Revolving Loan
Notes), the Agent shall not be required to exercise any discretion or take any
action, but shall be required to act or to refrain from acting (and shall be
fully protected in so acting or refraining from acting) upon the written
instructions of the Majority Banks, and such instructions shall be binding upon
all Banks and all holders of Revolving Loan Notes; provided, however, that the
Agent shall not be required to take any action which exposes the Agent to
personal liability or which is contrary to this Agreement, any other Credit
Document, or applicable law.

7.2 Reliance, Etc. Neither the Agent, the Issuing Bank, nor any
of their respective Related Parties (for the purposes of this Section 7.2,
collectively, the "Indemnified Parties") shall be liable for any action taken
or omitted to be taken by any Indemnified Party under or in connection with
this Agreement or the other Credit Documents, INCLUDING ANY INDEMNIFIED PARTY'S
OWN NEGLIGENCE, except for any Indemnified Party's gross negligence or willful
misconduct. Without limitation of the generality of the foregoing, the Agent
and the Issuing Bank: (a) may treat the payee of any Revolving Loan Note as
the holder thereof until the Agent receives written notice of the assignment or
transfer thereof signed by such payee and in form satisfactory to the Agent;
(b) may consult with legal counsel (including counsel for the Borrower),
independent public accountants, and other experts selected by it and shall not
be liable for any action taken or omitted to be taken in good faith by it in
accordance with the advice of such counsel, accountants,

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or experts; (c) makes no warranty or representation to any Bank and
shall not be responsible to any Bank for any statements, warranties,
or representations made in or in connection with this Agreement or the
other Credit Documents; (d) shall not have any duty to ascertain or to
inquire as to the performance or observance of any of the terms,
covenants, or conditions of this Agreement or any other Credit
Document on the part of the Credit Parties or to inspect the property
(including the books and records) of the Credit Parties; (e) shall not
be responsible to any Bank for the due execution, legality, validity,
enforceability, genuineness, sufficiency, or value of this Agreement
or any other Credit Document; and (f) shall incur no liability under
or in respect of this Agreement or any other Credit Document by acting
upon any notice, consent, certificate, or other instrument or writing
(which may be by telecopier or telex) reasonably believed by it to be
genuine and signed or sent by the proper party or parties.

7.3 Affiliates. With respect to its Revolving Loan Commitments,
the Revolving Loan Advances made by it, its interests in the Letters of Credit,
and the Revolving Loan Notes issued to it, the Agent and the Issuing Bank shall
have the same rights and powers under this Agreement as any other Bank and may
exercise the same as though it were not the Agent. The term "Bank" or "Banks"
shall, unless otherwise expressly indicated, include the Agent and the Issuing
Bank in their individual capacity. The Agent, the Issuing Bank, and their
respective Affiliates may accept deposits from, lend money to, act as trustee
under indentures of, and generally engage in any kind of business with, any
Credit Party, and any Person who may do business with or own securities of any
Credit Party, all as if the Agent were not an agent hereunder and the Issuing
Bank were not the issuer of Letters of Credit hereunder and without any duty to
account therefor to the Banks.

7.4 Bank Credit Decision. Each Bank acknowledges that it has,
independently and without reliance upon the Agent or any other Bank and based
on the Registration Statement and such other documents and information as it
has deemed appropriate, made its own credit analysis and decision to enter into
this Agreement. Each Bank also acknowledges that it shall, independently and
without reliance upon the Agent or any other Bank and based on such documents
and information as it shall deem appropriate at the time, continue to make its
own credit decisions in taking or not taking action under this Agreement.

7.5 Expenses. To the extent not paid by the Borrower, each Bank
severally agrees to pay to the Agent and the Issuing Bank on demand such Bank's
ratable share of the following: (a) all reasonable out-of-pocket costs and
expenses of the Agent and the Issuing Bank in connection with the preparation,
execution, delivery, administration, modification, and amendment of this
Agreement and the other Credit Documents, including the reasonable fees and
expenses of outside counsel for the Agent and the Issuing Bank with respect to
advising the Agent and the Issuing Bank as to their respective rights and
responsibilities under this Agreement and the Credit Documents, and (b) all
out-of-pocket costs and expenses of the Agent and the Issuing Bank in
connection with the preservation or enforcement of the rights of the Agent, the
Issuing Bank, and the Banks under this Agreement and the other Credit
Documents, whether through negotiations, legal proceedings, or otherwise,
including fees and expenses of counsel for the Agent and the Issuing Bank. The

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provisions of this paragraph shall survive the repayment and termination of the
credit provided for under this Agreement and any purported termination of this
Agreement which does not expressly refer to this paragraph.

7.6 Indemnification. To the extent not reimbursed by the
Borrower, each Bank severally agrees to protect, defend, indemnify, and hold
harmless the Agent, the Issuing Bank, and each of their respective Related
Parties (for the purposes of this Section 7.6, collectively, the "Indemnified
Parties"), from and against all demands, claims, actions, suits, damages,
judgments, fines, penalties, liabilities, and out-of-pocket costs and expenses,
including reasonable costs of attorneys and related costs of experts such as
accountants (collectively, the "Indemnified Liabilities"), actually incurred by
any Indemnified Party which are related to any litigation or proceeding
relating to this Agreement, the Credit Documents, or the transactions
contemplated thereunder, INCLUDING ANY INDEMNIFIED LIABILITIES CAUSED BY ANY
INDEMNIFIED PARTY'S OWN NEGLIGENCE, but not Indemnified Liabilities which are a
result of any Indemnified Party's gross negligence or willful misconduct. The
provisions of this paragraph shall survive the repayment and termination of the
credit provided for under this Agreement and any purported termination of this
Agreement which does not expressly refer to this paragraph.

7.7 Successor Agent and Issuing Bank. The Agent or the Issuing
Bank may resign at any time by giving written notice thereof to the Banks and
the Borrower and may be removed at any time with or without cause by the
Majority Banks upon receipt of written notice from the Majority Banks to such
effect. Upon receipt of notice of any such resignation or removal, the
Majority Banks shall have the right to appoint a successor Agent or Issuing
Bank with the consent of the Borrower, which consent shall not be unreasonably
withheld. If no successor Agent or Issuing Bank shall have been so appointed
by the Majority Banks with the consent of the Borrower, and shall have accepted
such appointment, within 30 days after the retiring Agent's or Issuing Bank's
giving of notice of resignation or the Majority Banks' removal of the retiring
Agent or Issuing Bank, then the retiring Agent or Issuing Bank may, on behalf
of the Banks and the Borrower, appoint a successor Agent or Issuing Bank, which
shall be, in the case of a successor agent, a commercial bank organized under
the laws of the United States of America or of any State thereof and having a
combined capital and surplus of at least $500,000,000 and, in the case of the
Issuing Bank, a Bank. Upon the acceptance of any appointment as Agent or
Issuing Bank by a successor Agent or Issuing Bank, such successor Agent or
Issuing Bank shall thereupon succeed to and become vested with all the rights,
powers, privileges, and duties of the retiring Agent or Issuing Bank, and the
retiring Agent or Issuing Bank shall be discharged from any duties and
obligations under this Agreement and the other Credit Documents after such
acceptance, except that the retiring Issuing Bank shall remain the Issuing Bank
with respect to any Letters of Credit outstanding on the effective date of its
resignation or removal and the provisions affecting the Issuing Bank with
respect to such Letters of Credit shall inure to the benefit of the retiring
Issuing Bank until the termination of all such Letters of Credit. After any
Agent's or Issuing Bank's resignation or removal hereunder as Agent or Issuing
Bank, the provisions of this Article 7 shall inure to such Person's benefit as
to any actions taken or omitted to be taken by

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such Person while such Person was Agent or Issuing Bank under this Agreement
and the other Credit Documents.

ARTICLE 8. MISCELLANEOUS.

8.1 Expenses. The Borrower shall pay on demand of the applicable
party specified herein (a) all reasonable out-of-pocket costs and expenses of
the Agent and the Issuing Bank in connection with the preparation, execution,
delivery, administration, modification, and amendment of this Agreement and the
other Credit Documents, including the reasonable fees and expenses of outside
counsel for the Agent and the Issuing Bank, and (b) all out-of-pocket costs and
expenses of the Agent, the Issuing Bank, and each Bank in connection with the
preservation or enforcement of their respective rights under this Agreement and
the other Credit Documents, whether through negotiations, legal proceedings, or
otherwise, including fees and expenses of counsel for the Agent, the Issuing
Bank, and each Bank. The provisions of this paragraph shall survive the
repayment and termination of the credit provided for under this Agreement and
any purported termination of this Agreement which does not expressly refer to
this paragraph.

8.2 Indemnification. The Borrower agrees to protect, defend,
indemnify, and hold harmless the Agent, the Issuing Bank, each Bank, and each
of their respective Related Parties (for the purposes of this Section 8.2,
collectively, the "Indemnified Parties"), from and against all demands, claims,
actions, suits, damages, judgments, fines, penalties, liabilities, and
out-of-pocket costs and expenses, including reasonable costs of attorneys and
related costs of experts such as accountants (collectively, the "Indemnified
Liabilities"), actually incurred by any Indemnified Party which are related to
any litigation or proceeding relating to this Agreement, the Credit Documents,
or the transactions contemplated thereunder, INCLUDING ANY INDEMNIFIED
LIABILITIES CAUSED BY ANY INDEMNIFIED PARTY'S OWN NEGLIGENCE, but not
Indemnified Liabilities which are a result of any Indemnified Party's gross
negligence or willful misconduct. The provisions of this paragraph shall
survive the repayment and termination of the credit provided for under this
Agreement and any purported termination of this Agreement which does not
expressly refer to this paragraph.

8.3 Modifications, Waivers, and Consents. No modification or
waiver of any provision of this Agreement or the Revolving Loan Notes, nor any
consent required under this Agreement or the Revolving Loan Notes, shall be
effective unless the same shall be in writing and signed by the Agent and
Majority Banks and the Borrower, and then such modification, waiver, or consent
shall be effective only in the specific instance and for the specific purpose
for which given; provided, however, that no modification, waiver, or consent
shall, unless in writing and signed by the Agent, all the Banks, and the
Borrower do any of the following: (a) waive any of the conditions specified in
Section 3.1 or 3.2, (b) increase the Revolving Loan Commitments of the Banks,
(c) forgive or reduce the amount or rate of any principal, interest, or fees
payable under the Credit Documents, or postpone or extend the time for payment
thereof, (d) release any Guaranty or any material collateral securing the
Credit Obligations (except as otherwise permitted or required herein), or (e)
change the

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percentage of Banks required to take any action under this Agreement, the
Revolving Loan Notes, or the Security Documents, including any amendment of the
definition of "Majority Banks" or this Section 8.3. No modification, waiver,
or consent shall, unless in writing and signed by the Agent or the Issuing Bank
affect the rights or obligations of the Agent or the Issuing Bank, as the case
may be, under the Credit Documents. The Agent shall not modify or waive or
grant any consent under any other Credit Document of such action would be
prohibited under this Section 8.3 with respect to the Credit Agreement or the
Revolving Loan Notes.

8.4 Survival of Agreements. All representations, warranties, and
covenants of the Borrower in this Agreement and the Credit Documents shall
survive the execution of this Agreement and the Credit Documents and any other
document or agreement.

8.5 Assignment and Participation. This Agreement and the Credit
Documents shall bind and inure to the benefit of the Borrower and their
respective successors and assigns and the Agent and the Banks and their
respective successors and assigns. The Borrower may not assign its rights or
delegate its duties under this Agreement or any Credit Document.

(a) Assignments. Any Bank may assign to one or more
banks or other entities all or any portion of its rights and obligations under
this Agreement (including, without limitation, all or a portion of its
Revolving Loan Commitments, the Revolving Loan Advances owing to it, the
Revolving Loan Notes held by it, and the participation interest in the Letters
of Credit owned by it); provided, however, that (i) each such assignment shall
be of a constant, and not a varying, percentage of all of such Bank's rights
and obligations under this Agreement, (ii) assignments of Revolving Loan
Commitments shall be made in minimum amounts of $5,000,000 and be made in
integral multiples of $1,000,000 and the assigning Bank, if it retains any
Revolving Loan Commitments, shall maintain at least $5,000,000 in Revolving
Loan Commitments, (iii) each such assignment shall be to an Eligible Assignee,
(iv) the parties to each such assignment shall execute and deliver to the
Agent, for its acceptance and recording in the Register, an Assignment and
Acceptance, together with the Revolving Loan Notes subject to such assignment,
and (v) each Eligible Assignee (other than the Eligible Assignee of the Agent)
shall pay to the Agent a $3,500 administrative fee. Upon such execution,
delivery, acceptance and recording, from and after the effective date specified
in each Assignment and Acceptance, which effective date shall be at least three
Business Days after the execution thereof, (A) the assignee thereunder shall be
a party hereto for all purposes and, to the extent that rights and obligations
hereunder have been assigned to it pursuant to such Assignment and Acceptance,
have the rights and obligations of a Bank hereunder and (B) such Bank
thereunder shall, to the extent that rights and obligations hereunder have been
assigned by it pursuant to such Assignment and Acceptance, relinquish its
rights and be released from its obligations under this Agreement (and, in the
case of an Assignment and Acceptance covering all or the remaining portion of
such Bank's rights and obligations under this Agreement, such Bank shall cease
to be a party hereto).

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(b) Term of Assignments. By executing and delivering an
Assignment and Acceptance, the Bank thereunder and the assignee thereunder
confirm to and agree with each other and the other parties hereto as follows:
(i) other than as provided in such Assignment and Acceptance, such Bank makes
no representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with this
Agreement or the execution, legality, validity, enforceability, genuineness,
sufficiency of value of this Agreement or any other instrument or document
furnished pursuant hereto; (ii) such Bank makes no representation or warranty
and assumes no responsibility with respect to the financial condition of any
Credit Party or the performance or observance by any Credit Party of any of its
obligations under this Agreement or any other instrument or document furnished
pursuant hereto; (iii) such assignee confirms that it has received a copy of
this Agreement, together with copies of the Registration Statement and such
other documents and information as it has deemed appropriate to make its own
credit analysis and decision to enter into such Assignment and Acceptance; (iv)
such assignee shall, independently and without reliance upon the Agent, such
Bank or any other Bank and based on such documents and information as it shall
deem appropriate at the time, continue to make its own credit decisions in
taking or not taking action under this Agreement; (v) such assignee appoints
and authorizes the Agent to take such action as agent on its behalf and to
exercise such powers under this Agreement as are delegated to the Agent by the
terms hereof, together with such powers as are reasonably incidental thereto;
and (vi) such assignee agrees that it shall perform in accordance with their
terms all of the obligations which by the terms of this Agreement are required
to be performed by it as a Bank.

(c) The Register. The Agent shall maintain at its
address referred to in Section 8.6 a copy of each Assignment and Acceptance
delivered to and accepted by it and a register for the recordation of the names
and addresses of the Banks and the Revolving Loan Commitments of each Bank from
time to time (the "Register"). The entries in the Register shall be conclusive
and binding for all purposes, absent manifest error, and the Borrower, the
Agent, the Issuing Bank, and the Banks may treat each Person whose name is
recorded in the Register as a Bank hereunder for all purposes of this
Agreement. The Register shall be available for inspection by the Borrower or
any Bank at any reasonable time and from time to time upon reasonable prior
notice.

(d) Procedures. Upon its receipt of an Assignment and
Acceptance executed by a Bank and an Eligible Assignee, together with the
Revolving Loan Notes subject to such assignment, the Agent shall, if such
Assignment and Acceptance has been completed in the appropriate form, (i)
accept such Assignment and Acceptance, (ii) record the information contained
therein in the Register, and (iii) give prompt notice thereof to the Borrower.
Within five Business Days after its receipt of such notice, the Borrower shall
execute and deliver to the Agent in exchange for the surrendered Revolving Loan
Notes a new Revolving Loan Note to the order of such Eligible Assignee in an
amount equal to the Revolving Loan Commitment assumed by it pursuant to such
Assignment and Acceptance and, if such Bank has retained any Revolving Loan
Commitment hereunder, a new Revolving Loan Note to the order of such Bank in an
amount equal to the

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Revolving Loan Commitment retained by it hereunder. Such new Revolving Loan
Notes shall be dated the effective date of such Assignment and Acceptance and
shall be in the appropriate form.

(e) Participation. Each Bank may sell participation to
one or more banks or other entities in or to all or a portion of its rights and
obligations under this Agreement (including, without limitation, all or a
portion of its Revolving Loan Commitments, the Revolving Loan Advances owing to
it, its participation interest in the Letters of Credit, and the Revolving Loan
Notes held by it); provided, however, that (i) such Bank's obligations under
this Agreement (including, without limitation, its Revolving Loan Commitments
to the Borrower hereunder) shall remain unchanged, (ii) such Bank shall remain
solely responsible to the other parties hereto for the performance of such
obligations, (iii) such Bank shall remain the holder of any such Revolving Loan
Notes for all purposes of this Agreement, (iv) the Borrower, the Agent, and the
Issuing Bank and the other Banks shall continue to deal solely and directly
with such Bank in connection with such Bank's rights and obligations under this
Agreement, and (v) such Bank shall not require the participant's consent to any
matter under this Agreement, except that upon 10 days' written notice of such
participation to the Agent and the Borrower, such Bank may permit the
participant to possess consent rights with respect to changes in the principal
amount of the Revolving Loan Notes, reductions in fees or interest, extensions
of the applicable maturity date, or releases of any collateral or guarantor
(except to the extent otherwise permitted herein or in any of the other Credit
Documents). The Borrower hereby agrees that participants shall have the same
rights under Sections 2.6, 2.7, 2.8, 2.9, 2.10, and 8.2 as a Bank to the extent
of their respective participation.

(f) Assignments or Pledges to Federal Reserve Banks. In addition
to the foregoing rights of assignment and participation, any Bank may assign or
pledge any portion of its rights under this Agreement (including the Revolving
Loan Advances owed to such Bank) to any Federal Reserve Bank in accordance with
applicable law without notice to or the consent of the Borrower or the Agent,
provided that (i) such Bank shall not be relieved of its obligations under this
Agreement as a result thereof and (ii) in no event shall the Federal Reserve
Bank be entitled to direct the actions of the pledging or assigning Bank under
this Agreement.

8.6 Notice. All notices and other communications under this
Agreement and the Revolving Loan Notes shall be in writing and mailed by
certified mail (return receipt requested), telecopied, telexed, hand delivered,
or delivered by a nationally recognized overnight courier, to the address for
the appropriate party specified in Schedule I or at such other address as shall
be designated by such party in a written notice to the other parties. Mailed
notices shall be effective when received. Telecopied or telexed notices shall
be effective when transmission is completed or confirmed by telex answerback.
Delivered notices shall be effective when delivered by messenger

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or courier. Notwithstanding the foregoing, notices and communications to the
Agent pursuant to Article 2 or 7 shall not be effective until received by the
Agent.

8.7 Choice of Law. This Agreement and the Revolving Loan Notes
have been prepared, are being executed and delivered, and are intended to be
performed in the State of Texas, and the substantive laws of the State of Texas
and the applicable federal laws of the United States shall govern the validity,
construction, enforcement, and interpretation of this Agreement and the
Revolving Loan Notes; provided however, Chapter 15 of the Texas Credit Code
does not apply to this Agreement or the Revolving Loan Notes. Each Letter of
Credit shall be governed by the Uniform Customs and Practice for Documentary
Credits, International Chamber of Commerce Publication No. 500 (1993 version).

8.8 Forum Selection. THE BORROWER IRREVOCABLY CONSENTS TO THE
JURISDICTION OF THE COURTS OF THE STATE OF TEXAS AND OF ANY FEDERAL COURT
LOCATED IN SUCH STATE IN CONNECTION WITH ANY ACTION OR PROCEEDING ARISING OUT
OF OR RELATING TO THE CREDIT DOCUMENTS OR ANY TRANSACTIONS RELATED THERETO.
THE BORROWER AGREES AND SHALL NOT CONTEST THAT PROPER FORUM AND VENUE FOR ANY
ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THE CREDIT DOCUMENTS OR ANY
TRANSACTIONS RELATING THERETO ARE IN THE COURTS OF THE STATE OF TEXAS IN ▇▇▇▇▇▇
COUNTY, TEXAS, AND THE FEDERAL COURTS LOCATED IN ▇▇▇▇▇▇ COUNTY, TEXAS. THE
BORROWER IRREVOCABLY WAIVES ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO
THE FOREGOING BASED UPON CLAIMS THAT THE FOREGOING COURTS ARE AN INCONVENIENT
FORUM.

8.9 Service of Process. IN ANY ACTION OR PROCEEDING ARISING OUT
OF OR RELATING TO THE CREDIT DOCUMENTS OR ANY TRANSACTIONS RELATING THERETO,
THE BORROWER WAIVES PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT, OR OTHER
PROCESS OR NOTICE AND AGREES THAT SERVICE BY FIRST CLASS MAIL, RETURN RECEIPT
REQUESTED, TO THE BORROWER AT ITS ADDRESS FOR NOTICES HEREUNDER, OR ANY OTHER
FORM OF SERVICE PROVIDED FOR IN THE TEXAS CIVIL PRACTICE LAW AND RULES THEN IN
EFFECT SHALL CONSTITUTE GOOD AND SUFFICIENT SERVICE UPON THE BORROWER.

8.10 Waiver of Jury Trial. THE BORROWER IRREVOCABLY WAIVES ANY
RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO
THE CREDIT DOCUMENTS OR ANY TRANSACTIONS RELATING THERETO.

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8.11 Counterparts. This Agreement may be executed in multiple
counterparts which together shall constitute one and the same instrument.

8.12 No Further Agreements. THIS WRITTEN AGREEMENT AND THE CREDIT
DOCUMENTS REPRESENT THE FINAL AGREEMENT AMONG THE PARTIES AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES.

THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.

EXECUTED as of the date first above written.

BORROWER:

INTEGRATED ELECTRICAL SERVICES, INC.

By:
---------------------------------
J. ▇▇▇▇ ▇▇▇▇▇▇▇
Vice President and
Chief Accounting Officer

AGENT:

NATIONSBANK OF TEXAS, N.A., as Agent

By:
--------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Vice President

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BANKS:

NATIONSBANK OF TEXAS, N.A.

By:
--------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Vice President

Revolving Loan Commitment: $65,000,000

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[Execution Version]

GUARANTY
(Subsidiaries of Integrated Electrical Services, Inc.)

This Guaranty dated as of January 30, 1998 ("Agreement"), is made by
the undersigned subsidiaries of Integrated Electrical Services, Inc., a
Delaware corporation (each a "Guarantor"), in favor of NationsBank of Texas,
N.A., in its capacity as agent ("Agent") for certain financial institutions
which are or may become parties to the Credit Agreement described below.

INTRODUCTION

This Agreement is given in connection with the Credit Agreement dated
as of January 30, 1998 (as modified from time to time, the "Credit
Agreement"), among Integrated Electrical Services, Inc., a Delaware corporation
("Borrower"), certain financial institutions which are or may become parties
thereto, and the Agent, the defined terms of which are used herein unless
otherwise defined herein. It is a condition precedent to the obligation of the
Banks to make any extension of credit under the Credit Agreement that the
Guarantors execute and deliver this Agreement to the Agent. Each Guarantor is
a Subsidiary of the Borrower. Because each Guarantor receives and, as a result
of its ownership by the Borrower, expects to continue to receive financial and
management support from the Borrower, each Guarantor will obtain substantial
benefit from the extensions of credit expected to be made to the Borrower under
the Credit Agreement.

Therefore, to induce the Agent and such financial institutions to
enter into the Credit Agreement, the Guarantors jointly and severally agree
with the Agent as follows:

Section 1. Guaranty. The Guarantors irrevocably and jointly and
severally guarantee to the Agent the full payment when due of (a) all
principal, interest, fees, reimbursements, indemnifications, and other amounts
now or hereafter owed by the Borrower to the Agent and the Banks (and with
respect to the Interest Hedge Agreements, the Affiliates of the Banks) under
the terms of the Credit Agreement and the other Credit Documents, including
amounts owed under the terms of the Credit Agreement and the other Credit
Documents for which the Borrower has obtained relief under bankruptcy or other
laws providing for relief from creditors, and (b) any increases, extensions,
and rearrangements of the foregoing obligations under any amendments,
supplements, and other modifications of the documents and agreements creating
the foregoing obligations (collectively, the "Guaranteed
65
Obligations"). This is a guaranty of payment and not merely a guaranty of
collection, and each Guarantor is liable as a primary obligor. If any of the
Guaranteed Obligations are not punctually paid when due, whether by maturity,
acceleration, or otherwise, and the Agent shall notify any Guarantor of such
default and make demand for payment hereunder, such Guarantor shall immediately
pay to the Agent the full amount of the Guaranteed Obligations which are due
and payable. Each Guarantor shall make each payment to the Agent in U.S.
Dollars in immediately available funds as directed by the Agent. The Agent is
hereby authorized at any time following any demand for payment hereunder to set
off and apply any indebtedness owed by the Agent to any Guarantor against any
and all of the obligations of such Guarantor under this Agreement. The Agent
agrees to promptly notify such Guarantor after any such setoff and application,
but the failure to give such notice shall not affect the validity of such
setoff and application.

Section 2. Guaranty Absolute.

2.1 This Agreement shall be deemed accepted by the Agent upon
receipt, and the obligations of the Guarantors under this Agreement are
effective immediately and are continuing and cover all Guaranteed Obligations
arising prior to and after the date hereof. This Agreement may not be revoked
by any Guarantor and shall continue to be effective with respect to Guaranteed
Obligations arising or created after any attempted revocation by any Guarantor.

2.2 Each Guarantor guarantees that the Guaranteed Obligations will
be paid strictly in accordance with the terms of the Credit Agreement and the
other Credit Documents, regardless of any law, regulation, or order now or
hereafter in effect in any jurisdiction affecting any of such terms or the
rights of the Agent or the Banks with respect thereto. Each Guarantor agrees
that such Guarantor's obligations under this Agreement shall not be released,
diminished, or impaired by, and waives any rights which such Guarantor might
otherwise have which relate to:

(a) Any lack of validity or enforceability of the
Guaranteed Obligations, any Credit Document, or any other agreement or
instrument relating thereto; any increase, reduction, extension, or
rearrangement of the Guaranteed Obligations; any amendment, supplement, or
other modification of the Credit Documents; any waiver or consent granted under
the Credit Documents, including waivers of the payment and performance of the
Guaranteed Obligations; or any sale, assignment, delegation, or other transfer
of the Guaranteed Obligations or the Credit Documents;

(b) Any grant of any security or support for the
Guaranteed Obligations or any impairment of any security or support for the
Guaranteed Obligations, including any

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full or partial release, exchange, subordination, or waste of any collateral
for the Guaranteed Obligations or any full or partial release of the Borrower,
any Guarantor, or any other Person liable for the payment or performance of the
Guaranteed Obligations; any change in the organization or structure of the
Borrower, any Guarantor, or any other Person liable for the payment or
performance of the Guaranteed Obligations; or the insolvency, bankruptcy,
liquidation, or dissolution of the Borrower, any Guarantor, or any other Person
liable for the payment or performance of the Guaranteed Obligations;

(c) The manner of applying payments on the Guaranteed
Obligations or the proceeds of any security or support for the Guaranteed
Obligations against the Guaranteed Obligations;

(d) The failure to give notice of the occurrence of any
of the events or actions referred to in this Section 2.2, notice of any default
or event of default, however denominated, under the Credit Documents, notice of
intent to demand, notice of demand, notice of presentment for payment, notice
of nonpayment, notice of intent to protest, notice of protest, notice of grace,
notice of dishonor, notice of intent to accelerate, notice of acceleration,
notice of bringing of action to enforce the payment or performance of the
Guaranteed Obligations, notice of any sale or foreclosure of any collateral for
the Guaranteed Obligations, notice of any transfer of the Guaranteed
Obligations, notice of the financial condition of or other circumstances
regarding the Borrower, any Guarantor, or any other Person liable for the
Guaranteed Obligations, or any other notice of any kind relating to the
Guaranteed Obligations (and the parties intend that no Guarantor shall be
considered a "Debtor" as defined in Section 9.105 of the Texas Business and
Commerce Code for the purpose of notices required to be given to a Debtor
thereunder); or

(e) Any other action taken or omitted which affects the
Guaranteed Obligations, whether or not such action or omission prejudices any
Guarantor or increases the likelihood that any Guarantor will be required to
pay the Guaranteed Obligations pursuant to the terms hereof--it is the
unambiguous and unequivocal intention of each Guarantor that such Guarantor
shall be obligated to pay the Guaranteed Obligations when due, notwithstanding
any occurrence, circumstance, event, action, or omission whatsoever, whether
contemplated or uncontemplated, and whether or not particularly described
herein.

2.3 This Agreement shall continue to be effective or be
reinstated, as the case may be, if any payment on the Guaranteed Obligations
must be refunded for any reason including any bankruptcy proceeding. In the
event that the Agent or any Bank must refund any payment received against the
Guaranteed Obligations, any prior release from the terms of this Agreement
given to any Guarantor by the Agent shall be without effect, and this Agreement
shall be reinstated in full force and effect. It is the intention of each
Guarantor that such

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Guarantor's obligations hereunder shall not be discharged except by final
payment of the Guaranteed Obligations.

2.4 (a) Each Guarantor is a Subsidiary of the Borrower and
receives and, because of its ownership by the Borrower, expects to continue to
receive business opportunities, financial support, and management support from
the Borrower. Each Guarantor has agreed to enter into this Agreement so that
the Borrower can receive the benefits of the Guaranteed Obligations and
continue to provide these services to such Guarantor.

(b) In consummating the transactions contemplated by the
Credit Documents, no Guarantor intends to disturb, delay, hinder, or defraud
either present or future creditors of such Guarantor. Each Guarantor is
familiar with, and has independently reviewed books and records regarding, the
financial condition of the Borrower and is familiar with the value of the
security and support for the payment and performance of the Guaranteed
Obligations. Based upon such examination, and taking into account the fairly
discounted value of such Guarantor's contingent obligations under this
Agreement and the value of the subrogation and contribution claims such
Guarantor could make in connection with this Agreement, and assuming each of
the transactions contemplated by the Credit Documents is consummated and the
Borrower makes full use of the credit facilities thereunder, the present
realizable fair market value of the assets of such Guarantor exceeds the total
obligations of such Guarantor, and such Guarantor is able to realize upon its
assets and pay its obligations as such obligations mature in the normal course
of business.

(c) If notwithstanding the foregoing it is judicially
determined with respect to any Guarantor that entering into this Agreement
would violate Section 548 of the United States Bankruptcy Code or any
comparable provisions of any state law, then such Guarantor shall be liable
under this Guaranty only for amounts aggregating up to the largest amount that
would not render such Guarantor's obligations hereunder subject to avoidance
under Section 548 of the United States Bankruptcy Code or any comparable
provisions of any state law.

(d) Each Guarantor agrees that each Guarantor shall have
rights of contribution and subrogation against each other Guarantor with
respect to any payments made in connection with the Guaranteed Obligations.

Section 3. Unimpaired Collection.

3.1 There are no conditions precedent to the enforcement of this
Agreement, except as expressly contained herein. It shall not be necessary for
the Agent, in order to

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68
enforce payment by any Guarantor under this Agreement, to show any proof of the
Borrower's default, to exhaust the Agent's remedies against the Borrower, any
Guarantor, or any other Person liable for the payment or performance of the
Guaranteed Obligations, to enforce any security or support for the payment or
performance of the Guaranteed Obligations, or to enforce any other means of
obtaining payment or performance of the Guaranteed Obligations. Each Guarantor
waives any rights under Chapter 34 of the Texas Business and Commerce Code,
Section 17.001 of the Texas Civil Practice and Remedies Code, and Rule 31 of
the Texas Rules of Civil Procedure related to the foregoing. Neither the Agent
nor the Banks shall be required to mitigate damages or take any other action to
reduce, collect, or enforce the Guaranteed Obligations.

3.2 With respect to each Guarantor, all Subordinated Obligations
of such Guarantor (as defined below) shall be subordinate and junior in right
of payment and collection to the payment and collection in full of all
Guaranteed Obligations as described below:

(a) As used herein, the term "Subordinated Obligations" for
such Guarantor means: (i) all present and future indebtedness, liabilities, and
obligations of any kind owed by the Borrower, any Guarantor, or any other
Person liable for the payment or performance of the Guaranteed Obligations to
such Guarantor, including debt obligations, equity obligations, and other
contractual obligations requiring payments of any kind to be made to such
Guarantor and including any right of subrogation (including any statutory
rights of subrogation under Section 509 of the Bankruptcy Code, 11 U.S.C.
Section 509, or under Chapter 34 of the Texas Business and Commerce Code),
contribution, indemnification, reimbursement, exoneration, or any right to
participate in any claim or remedy of the Agent against the Borrower, any
Guarantor, or any Person liable for the payment or performance of the
Guaranteed Obligations, or any collateral which the Agent now has or may
acquire, and (ii) any increases, extensions, and rearrangements of the
foregoing obligations under any amendments, supplements, and other
modifications of the documents and agreements creating the foregoing
obligations.

(b) Until all Guaranteed Obligations have been
irrevocably paid in full (and therefore the payment thereof is no longer
subject to being set aside or returned under the law), such Guarantor agrees
not to take any action to enforce payment of such the Subordinated Obligations
of such Guarantor, but this standstill is not intended as a permanent waiver of
the subrogation, contribution, indemnification, reimbursement, exoneration,
participation, or other rights of such Guarantor.

(c) Upon any receivership, insolvency proceeding,
bankruptcy proceeding, assignment for the benefit of creditors, reorganization,
arrangement with creditors, sale of

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assets for creditors, dissolution, liquidation, or marshaling of the assets of
the Borrower, any Guarantor, or any other Person liable for the payment or
performance of the Guaranteed Obligations, all amounts due with respect to the
Guaranteed Obligations shall be paid in full before such Guarantor shall be
entitled to collect or receive any payment with respect to the Subordinated
Obligations of such Guarantor, and all payments to which such Guarantor would
be entitled to collect or receive on the Subordinated Obligations of such
Guarantor shall be paid over to the Agent for application to the Guaranteed
Obligations.

(d) Following notice from the Agent to the Borrower that
an Event of Default exists and that no further payments shall be made on the
Subordinated Obligations of such Guarantor until (i) all amounts due with
respect to the Guaranteed Obligations shall be paid in full or (ii) the Agent
revokes such notice, such Guarantor shall not be entitled to collect or receive
any payment with respect to the Subordinated Obligations of such Guarantor.

(e) Any lien, security interest, or assignment securing
the repayment of the Subordinated Obligations of such Guarantor shall be fully
subordinate to any lien, security interest, or assignment in favor of the Agent
which secures the Guaranteed Obligations. At the request of the Agent, such
Guarantor will take any and all steps necessary to fully evidence the
subordination granted hereunder, including amending or terminating financing
statements and executing and recording subordinations of liens.

(f) This is an absolute and irrevocable agreement of
subordination and the Agent may, without notice to such Guarantor, take any
action described in Section 2.2 without impairing or releasing the obligations
of such Guarantor hereunder.

(g) Such Guarantor shall not assign or otherwise transfer
to any other Person any interest in the Subordinated Obligations of such
Guarantor unless such Guarantor causes the assignee or other transferee to
execute and deliver to the Agent a subordination agreement in substantially the
form of the subordination provisions in this Agreement.

(h) If any amount shall be paid to such Guarantor in
violation of this Section 3.2, such amount shall be held in trust for the
benefit of the Agent and immediately turned over to the Agent, with any
necessary endorsement, to be applied to the Guaranteed Obligations.

Section 4. Miscellaneous.

4.1 Each Guarantor hereby affirms and shall comply with the
representations, warranties, and covenants made by the Borrower in the Credit
Agreement to the extent that

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such representations, warranties, and covenants are applicable to such
Guarantor, including all of the representations and warranties in Section 4 of
the Credit Agreement and all of the covenants in Section 5 of the Credit
Agreement.

4.2 Each Guarantor shall pay to the Agent on demand (a) all
reasonable out-of-pocket costs and expenses of the Agent in connection with the
preparation, execution, delivery, administration, modification, and amendment
of this Agreement and the other Credit Documents to which such Guarantor is a
party, including the reasonable fees and out-of-pocket expenses of outside
counsel for the Agent with respect to advising the Agent as to its rights and
responsibilities under this Agreement and the Credit Documents to which such
Guarantor is a party, and (b) all costs and expenses of the Agent in connection
with the enforcement of the Agent's rights under this Agreement and the other
Credit Documents to which such Guarantor is a party, whether through
negotiations, legal proceedings, or otherwise, including fees and expenses of
counsel for the Agent. The provisions of this paragraph shall survive any
purported termination of this Agreement and the Credit Documents that does not
expressly reference this paragraph.

4.3 Each Guarantor agrees to protect, defend, indemnify, and hold
harmless the Agent, each Bank, and each of their respective Related Parties
(collectively, the "Indemnified Parties"), from and against all demands,
claims, actions, suits, damages, judgments, fines, penalties, liabilities, and
costs and expenses, including reasonable costs of attorneys and related costs
of experts such as accountants (collectively, the "Indemnified Liabilities"),
actually incurred by the Indemnified Parties which are related to any
litigation or proceeding relating to this Agreement, the Credit Documents, or
the transactions contemplated thereunder, INCLUDING INDEMNIFIED LIABILITIES
CAUSED BY ANY INDEMNIFIED PARTIES' OWN NEGLIGENCE, but not Indemnified
Liabilities which are a result of any Indemnified Parties' gross negligence or
willful misconduct or negligence in the handling of money. The provisions of
this paragraph shall survive any purported termination of this Agreement and
the Credit Documents that does not expressly reference this paragraph.

4.4 Each Guarantor agrees that this Agreement shall be governed by
the laws of the State of Texas. If any provision in this Agreement is held to
be unenforceable, such provision shall be severed and the remaining provisions
shall remain in full force and effect. All representations, warranties, and
covenants of any Guarantor in this Agreement shall survive the execution of
this Agreement and any other contract or agreement. The Agent's remedies under
this Agreement and the Credit Documents to which any Guarantor is a party shall
be cumulative, and no delay in enforcing this Agreement and the Credit
Documents to which such Guarantor is a party shall act as a waiver of the
Agent's rights thereunder. The provisions of this Agreement may be waived or
amended only in a writing signed by the

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71
party against whom enforcement is sought. This Agreement shall bind and inure
to the benefit of each Guarantor and the Agent and their respective successors
and assigns. Each Guarantor may not assign its rights or delegate its duties
under this Agreement. The Agent may assign its rights and delegate its duties
under this Agreement in accordance with the terms of the Credit Agreement.
This Agreement may be executed in multiple counterparts each of which shall
constitute one and the same agreement. Unless otherwise specified, all notices
and other communications between such Guarantor and the Agent provided for in
this Agreement and the Credit Documents to which such Guarantor is a party
shall be in writing, including telecopy, and delivered or transmitted to the
addresses set forth below, or to such other address as shall be designated by
such Guarantor or the Agent in written notice to the other party. Notice sent
by telecopy shall be deemed to be given and received when receipt of such
transmission is acknowledged, and delivered notice shall be deemed to be given
and received when receipted for by, or actually received by, an authorized
officer of such Guarantor or the Agent, as the case may be.

If to any Guarantor:

[Guarantor]
c/o Integrated Electrical Services, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇ ▇. ▇▇▇▇, Assistant Treasurer
telephone: ▇▇▇-▇▇▇-▇▇▇▇
telecopier: ▇▇▇-▇▇▇-▇▇▇▇

If to the Agent:

NationsBank of Texas, N.A.,
as Agent under the Credit Agreement
dated as of January 30, 1998, among
Integrated Electrical Services, Inc., the financial
institutions parties thereto, and the Agent
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Vice President
telephone: ▇▇▇-▇▇▇-▇▇▇▇
telecopier: ▇▇▇-▇▇▇-▇▇▇▇

4.5 Any present or future Subsidiary of the Borrower may become a
Guarantor under and a party to this Agreement by executing and delivering to
the Agent a Joinder

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72
Agreement in accordance with Section 5.19 of the Credit Agreement or by
otherwise assuming in writing in favor of the Agent the liabilities of a
Guarantor under this Agreement. Upon execution and delivery of a Joinder
Agreement or otherwise assuming the liabilities of a Guarantor under this
Agreement such Subsidiary shall be deemed to be a Guarantor under this
Agreement and a party to this Agreement for all purposes hereunder.

4.6 WAIVER OF JURY TRIAL. EACH GUARANTOR IRREVOCABLY WAIVES ANY
RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO
THE CREDIT DOCUMENTS OR ANY TRANSACTIONS RELATING THERETO.

[the remainder of this page is intentionally blank]

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73
THIS WRITTEN AGREEMENT AND THE CREDIT DOCUMENTS REPRESENT THE FINAL AGREEMENT
AMONG THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.

THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES.

EXECUTED as of the date first above written.

ACE ELECTRIC, INC.
AMBER ELECTRIC, INC.
BW CONSOLIDATED, INC.
B/W CEC, INC.
B/W BEC, INC.
B/W CEC, LLC
B/W BEC, LLC
▇▇▇▇▇▇ ELECTRICAL CONTRACTORS, INC.
▇▇▇▇▇▇ ELECTRICAL OF TREASURE COAST, INC.
▇▇▇▇▇▇▇▇ ELECTRIC, INC.
▇▇▇▇▇▇▇▇ ELECTRIC, LTD.
▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ ELECTRIC, INC.
▇▇▇▇▇ INVESTMENTS, INC.
▇▇▇▇▇ ELECTRICAL CONTRACTORS, INC.
FORT WORTH REGIONAL ELECTRICAL
SYSTEMS, L.L.C
▇▇▇▇ ELECTRIC, INC.
▇▇▇▇▇▇▇ ELECTRIC, INC.
▇▇▇▇▇▇▇▇ ELECTRIC CORP.
▇▇▇▇▇▇▇ ELECTRIC CO., INC.
SUMMIT ELECTRIC OF TEXAS, INC.
▇▇▇▇▇▇ ▇▇▇▇ & CO., INC.
THURMANN & ▇'▇▇▇▇▇▇▇ CORP.
INTEGRATED ELECTRICAL FINANCE, INC.

By:
---------------------------------------
▇▇▇ ▇. ▇▇▇▇
Assistant Treasurer

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74

[Execution Version]

PLEDGE AGREEMENT
(Integrated Electrical Services, Inc., and certain Subsidiaries)

This Pledge Agreement dated as of January 30, 1998 ("Agreement"), is
made by Integrated Electrical Services, Inc., a Delaware corporation
("Borrower") and the undersigned subsidiaries of the Borrower (the Borrower and
each such undersigned subsidiary, individually, a "Pledgor," and collectively,
the "Pledgors"), in favor of NationsBank of Texas, N.A., as agent under the
Credit Agreement described below ("Secured Party").

INTRODUCTION

Reference is made to the Credit Agreement dated as of January 30, 1998
(as modified from time to time, the "Credit Agreement"), among the Borrower,
certain financial institutions which are or may become parties thereto (the
"Banks"), and the Secured Party. It is a condition precedent to the obligation
of the Banks to make any extension of credit under the Credit Agreement that
the Pledgors shall have entered into this Agreement. Therefore, in
consideration of the credit expected to be received in connection with the
Credit Agreement, the Pledgors jointly and severally agree with the Secured
Party as follows:

Section 1. Definitions. The terms "deposit account," "account," "general
intangible," "security," "instrument," "document," "chattel paper,"
"equipment," "fixture," "inventory," "goods," and "proceeds" shall have the
meanings specified by Article 9 of the Uniform Commercial Code ("UCC").
Capitalized terms used but not defined herein shall have the meanings set forth
in the Credit Agreement. As used herein, the following terms shall have the
following meanings:

"Collateral" means the Pledged Securities, Records, and Proceeds.

"Pledged Securities" means all of the issued and outstanding shares of
stock of each Subsidiary of the Borrower (including those indirect Subsidiaries
of the Borrower which are direct Subsidiaries of the other Pledgors), including
in each case the shares described on the attached Schedule I, together with all
dividends, cash, instruments, and other proceeds from time to time received or
otherwise distributed in respect of the foregoing, including stock rights,
options, rights to subscribe, dividends, liquidating dividends, stock
dividends, new securities, or other properties or benefits to which any Pledgor
may become entitled to receive on account of such property.
75
"Proceeds" means all present and future proceeds of the Pledged
Securities, whether arising from the collection, sale, exchange, assignment, or
other disposition of any Pledged Securities, the realization upon any Pledged
Securities, or any other transaction or occurrence, including all claims of
such Pledgor against third parties for impairment, loss, or damage to any
Pledged Securities, all proceeds payable under any put, call, hedge, or other
protection for the value of any Pledged Securities, and all rights under any
indemnity, warranty, or guaranty of or for any of the foregoing, whether such
proceeds are represented as money, deposit accounts, accounts, general
intangibles, securities, instruments, documents, chattel paper, inventory,
equipment, fixtures, or goods.

"Records" means all present and future contracts, accounting records,
files, computer files, computer programs, and other records relating to the
Pledged Securities and Proceeds.

"Secured Obligations" means (a) all principal, interest, premium,
fees, reimbursements, indemnifications, and other amounts now or hereafter owed
by the Borrower to the Secured Party and the Banks (and with respect to the
Interest Hedge Agreements, any Affiliates of the Banks) under the Credit
Agreement and the other Credit Documents, (b) all amounts now or hereafter
owed by any other Pledgor to the Secured Party and the Banks (and with respect
to the Interest Hedge Agreements, any Affiliates of the Banks) under the
Guaranty, this Agreement, and the other Credit Documents, and (c) any
increases, extensions, renewals, replacements, and rearrangements of the
foregoing obligations under any amendments, supplements, and other
modifications of the agreements creating the foregoing obligations or any
increases, extensions, renewals, replacements, and rearrangements of the
foregoing obligations.

"UCC" means the Uniform Commercial Code as in effect on the date
hereof in the State of Texas, as amended from time to time, and any successor
statute.

Section 2. Security Interest.

2.1 Grant of Security Interest. Each Pledgor hereby grants to the
Secured Party a security interest in all of such Pledgor's right, title, and
interest in and to the Collateral to secure the payment and performance of the
Secured Obligations.

2.2 Pledgors Remain Liable. Anything herein to the contrary
notwithstanding: (a) each Pledgor shall remain liable under the contracts and
agreements included in the Collateral to the extent set forth therein to
perform its obligations thereunder to the same extent as if this Agreement had
not been executed; (b) the exercise by Secured Party of any rights hereunder
shall not release any Pledgor from any obligations under the contracts and

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76
agreements included in the Collateral; and (c) Secured Party shall not have any
obligation under the contracts and agreements included in the Collateral by
reason of this Agreement, nor shall Secured Party be obligated to perform or
fulfill any of the obligations of any Pledgor thereunder, including any
obligation to make any inquiry as to the nature or sufficiency of any payment
such Pledgor may be entitled to receive thereunder, to present or file any
claim, or to take any action to collect or enforce any claim for payment
thereunder.

Section 3. General Provisions. Each Pledgor represents and warrants to
and agrees with the Secured Party as follows:

3.1 Ownership. Each Pledgor has good and indefeasible title to
the Collateral free from any liens, security interests, assignments, options,
adverse claims, restrictions, and other encumbrances whatsoever. The shares of
stock representing the Pledged Securities are duly authorized and validly
issued and are fully paid and nonassessable. The Pledged Securities constitute
100% of the issued and outstanding shares of capital stock of each Subsidiary
of the Borrower (including those indirect Subsidiaries of the Borrower which
are direct Subsidiaries of the other Pledgors). No effective pledge or other
transfer regarding the Pledged Securities of any Pledgor is in effect. No
recorded financing statement or similar recording or filing covering any part
of the Collateral is in effect or on file in any recording office, except those
filed in connection with this Agreement. No Pledgor shall, without the prior
written consent of the Secured Party, grant any lien, security interest,
assignment, option, restriction, claim, or other encumbrance on or against the
Collateral, or lease, sell, or otherwise transfer any of its rights in the
Collateral, except (a) as permitted under Section 5.9(i) of the Credit
Agreement, or (b) to the Secured Party pursuant to the terms of this Agreement.

3.2 Perfection. All certificates or instruments representing the
Pledged Securities of the applicable Pledgor have been delivered to the Secured
Party in a form suitable for transfer by delivery, or accompanied by duly
executed instruments of transfer or assignment in blank, all in form and
substance satisfactory to the Secured Party, and each Pledgor shall deliver to
the Secured Party in such manner all certificates and instruments representing
the Pledged Securities of such Pledgor acquired by such Pledgor after the date
of this Agreement. No other authorization, approval, or other action is
necessary to allow such Pledgor to perform its obligations hereunder, or to
permit the Secured Party to exercise its rights and remedies hereunder (except
as may be required in connection with such disposition by laws affecting the
offering and sale of securities generally).

3.3 Priority. The security interest created by this Agreement is
first priority, and each Pledgor shall preserve and maintain the status of such
security interest to the end that this Agreement shall remain a first priority
security interest in the Collateral.

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3.4 Use and Condition.

(a) So long as no Default or Event of Default shall exist
and until the Borrower has received notice from the Secured Party pursuant to
Section 4.1(c) of this Agreement (which notice the Borrower shall promptly
forward to the other Pledgors), each Pledgor shall be entitled to receive and
retain any cash dividends distributed in respect of the Pledged Securities of
such Pledgor, provided that any: (i) non-cash dividends, instruments, and other
property received or otherwise distributed in respect of or in substitution for
any such Pledged Securities; (ii) cash dividends and other distributions in
connection with a partial or total liquidation or dissolution of an issuer of
any such Pledged Securities or in connection with a reduction of capital,
capital surplus, or paid-in-surplus of an issuer of such Pledged Securities;
and (iii) cash distributed in respect of a redemption of principal of, or in
exchange for, any such Pledged Securities, shall be promptly delivered to the
Secured Party for disposition in accordance with Section 4.3 and shall, if
received by any Pledgor, be received in trust for the benefit of the Secured
Party, be segregated from the other property or funds of such Pledgor, and be
promptly delivered to the Secured Party as Collateral in the same form as so
received, with any necessary endorsement.

(b) With regard to the Pledged Securities of each
Pledgor, so long as no Default or Event of Default shall exist and until the
Borrower has received notice from the Secured Party pursuant to Section 4.1(d)
of this Agreement (which notice the Borrower shall promptly forward to the
other Pledgors), each Pledgor shall be entitled to exercise any voting and
other consensual rights pertaining to the Pledged Securities of such Pledgor
for any purpose not inconsistent with the terms of this Agreement. The Secured
Party shall execute and deliver (or cause to be executed and delivered) to such
Pledgor all proxies and other instruments that such Pledgor may reasonably
request to enable such Pledgor to exercise the voting and other rights which it
is entitled to exercise hereunder and to receive the dividends or interest
payments which it is authorized to receive and retain hereunder.

3.5 Further Assurances.

(a) Each Pledgor agrees that at any time such Pledgor
shall promptly execute and deliver all further agreements, and take all further
action, that may be necessary or that the Secured Party may reasonably request,
in order to further evidence the security interests granted or purported to be
granted hereunder and perfect and protect the same or to enable the Secured
Party to exercise and enforce its rights and remedies hereunder. Without
limiting the foregoing, each Pledgor shall at the Secured Party's reasonable
request: (i) ▇▇▇▇ conspicuously any tangible Collateral with a legend, in form
and substance satisfactory to the Secured Party, indicating that such
Collateral is subject to the security interest granted or purported to be
granted hereunder; and (ii) execute stock powers, pledge registration

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requests, financing statements, amendments and continuations of financing
statements, and such other documents and agreements as the Secured Party may
reasonably request in order to perfect and preserve the security interests
granted or purported to be granted hereunder. Each Pledgor shall furnish to
the Secured Party from time to time any statements and schedules further
identifying and describing any of the Collateral and such other reports in
connection with the Collateral as the Secured Party may reasonably request.

(b) During the existence of an Event of Default, each
Pledgor agrees that, if such Pledgor fails to perform under this Agreement, the
Secured Party may, but shall not be obligated to, after written request to such
Pledgor to perform, perform such Pledgor's obligations under this Agreement and
any expenses reasonably incurred by the Secured Party in performing such
Pledgor's obligations shall be paid by such Pledgor. Any such performance by
the Secured Party may be made by the Secured Party in reasonable reliance on
any statement, invoice, or claim, without inquiry into the validity or accuracy
thereof. The amount and nature of any expense of the Secured Party hereunder
shall be conclusively established, absent manifest error, by a certificate of
any officer of the Secured Party.

(c) Each Pledgor irrevocably appoints the Secured Party
as such Pledgor's attorney in fact, with full authority to act during the
existence of an Event of Default for such Pledgor and in the name of such
Pledgor, to take any action and execute any agreement which the Secured Party
deems necessary or advisable to accomplish the purposes of this Agreement,
including taking actions the Secured Party is expressly authorized to take
pursuant to this Agreement (such as the matters described in paragraph (b)
above), instituting proceedings the Secured Party deems necessary or desirable
to enforce the rights of the Secured Party with respect to this Agreement, and
taking actions with respect to receiving, endorsing, and collecting instruments
made payable to such Pledgor representing any dividend, interest payment, or
other distribution in respect of the Pledged Securities of such Pledgor and
giving full discharge for the same. Provided, that the Secured Party shall
first request in writing that such Pledgor take actions and such Pledgor shall,
after reasonable opportunity, have failed to do so.

(d) The powers conferred on the Secured Party under this
Agreement are solely to protect its rights under this Agreement and shall not
impose any duty upon it to exercise any such powers. Except as elsewhere
provided hereunder, the Secured Party shall have no duty as to any of the
Collateral or as to the taking of any necessary steps to preserve rights
against prior parties or any other rights pertaining to the Collateral. The
Secured Party shall have no responsibility for (i) ascertaining or taking
action with respect to calls, conversions, exchanges, maturities, tenders, or
other matters relative to any Pledged Securities, whether or not the Secured
Party has or is deemed to have knowledge of such

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matters, or (ii) taking any necessary steps to preserve rights against any
parties with respect to any Pledged Securities.

Section 4. Remedies. During the continuation of any Event of Default:

4.1 Interim Remedies.

(a) The Secured Party may exercise all the rights and
remedies of a secured party under the UCC.

(b) The Secured Party may prosecute actions in equity or
at law for the specific performance of any covenant or agreement herein
contained or in aid of the execution of any power herein granted or for the
enforcement of any other appropriate legal or equitable remedy.

(c) Following written notice to the Borrower (which
notice the Borrower shall promptly forward to the other Pledgors) and to the
extent specified in such written notice, all rights of the Pledgors to receive
cash dividends shall cease, and all such rights shall thereupon become vested
in the Secured Party who shall thereupon have the sole right to receive such
cash dividends. All cash dividends received by any Pledgor in violation of the
foregoing shall be received in trust for the benefit of the Secured Party,
shall be segregated from other funds of such Pledgor, and shall be promptly
paid over to the Secured Party to be held as Pledged Securities in the same
form as so received (with any necessary endorsement).

(d) Following written notice to the Borrower (which
notice the Borrower shall promptly forward to the other Pledgors) and to the
extent specified in such written notice, all rights of the Pledgors to exercise
the voting and other consensual rights which they would otherwise be entitled
to exercise pursuant to this Agreement shall cease, and all such rights shall
thereupon become vested in the Secured Party who shall thereupon have the sole
right to exercise such voting and other consensual rights.

(e) Following written notice to the Borrower (which
notice the Borrower shall promptly forward to the other Pledgors) and to the
extent specified in such written notice, the Secured Party shall have the
right, without further notice to any Pledgor, to transfer or to register, in
the name of the Secured Party or any of its nominees, any of the Pledged
Securities. In addition, the Secured Party shall have the right at any time to
exchange the certificates or instruments representing the Pledged Securities
for certificates or instruments of smaller or larger denominations.

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(f) The Secured Party may require any Pledgor to promptly
assemble any tangible Collateral of such Pledgor and make it available to the
Secured Party at a place to be designated by the Secured Party. The Secured
Party may occupy any premises owned or leased by any Pledgor where the
Collateral is assembled for a reasonable period in order to effectuate its
rights and remedies hereunder or under law, without obligation to such Pledgor
with respect to such occupation. The Secured Party shall have no obligation to
take any action to assemble or otherwise take control of the Collateral,
whether for the purposes of sale or otherwise.

(g) The Secured Party may take any action permitted under
the Credit Agreement or other Credit Documents, including declaring the unpaid
portion of the Secured Obligations to be immediately due and payable under the
terms of the Credit Agreement.

4.2 Foreclosure.

(a) The Secured Party may foreclose on the Collateral in
any manner permitted by the courts of or in the State of Texas. If the Secured
Party should institute a suit for the collection of the Secured Obligations and
for the foreclosure of this Agreement, the Secured Party may at any time before
the entry of a final judgment dismiss the same, and take any other action
permitted by this Agreement.

(b) The Secured Party may exercise all the rights and
remedies of a secured party under the UCC, including foreclosure.

(i) If, in the opinion of the Secured Party,
there is any question that a public or semipublic sale or distribution of any
Collateral will violate any state or federal securities law, the Secured Party
in its discretion (A) may offer and sell securities privately to purchasers who
will agree to take them for investment purposes and not with a view to
distribution and who will agree to imposition of restrictive legends on the
certificates representing the security, or (B) may, if lawful, sell such
securities in an intrastate offering under Section 3(a)(11) of the Securities
Act of 1933, as amended, and no sale so made in good faith by the Secured Party
shall be deemed to be not "commercially reasonable" because so made. Each
Pledgor shall cooperate fully with Secured Party in all respects in selling or
realizing upon all or any part of the Collateral. In addition, each Pledgor
shall fully comply with the securities laws of the United States, the State of
Texas, and other states and take such actions as may be necessary to permit the
Secured Party to sell or otherwise dispose of any securities pledged hereunder
in compliance with such laws.

(ii) The Secured Party may sell, after notice to
the Debtor, any Collateral at public or private sale, at the office of the
Secured Party or elsewhere, for cash

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or credit and upon such other terms as the Secured Party deems commercially
reasonable. The Secured Party may sell any Collateral at one or more sales,
and the security interest granted hereunder shall remain in effect as to the
unsold portion of the Collateral. Each Pledgor hereby deems ten days advance
notice of the time and place of any public or private sale reasonable
notification, recognizing that if the Collateral is perishable or threatens to
decline speedily in value or is of a type customarily sold on a recognized
market, shorter notice may be reasonable. The Secured Party shall not be
obligated to make any sale of Collateral regardless of notice of sale having
been given. The Secured Party may adjourn any sale by announcement at the time
and place fixed therefor, and such sale may, without further notice, be made at
the time and place to which it was adjourned. In the event that any sale
hereunder is not completed or is defective in the opinion of the Secured Party,
the Secured Party shall have the right to cause subsequent sales to be made
hereunder. Any statements of fact or other recitals made in any ▇▇▇▇ of sale,
assignment, or other document representing any sale hereunder, including
statements relating to the occurrence of an Event of Default, acceleration of
the Secured Obligations, notice of the sale, the time, place, and terms of the
sale, and other actions taken by the Secured Party in relation to the sale
shall be conclusive evidence of the truth of the matters so stated. The
Secured Party may delegate to any agent the performance of any acts in
connection with any sale hereunder, including the sending of notices and the
conduct of the sale.

4.3 Application of Proceeds. Unless otherwise specified herein,
any cash proceeds received by the Secured Party from the sale of, collection
of, or other realization upon any part of the Collateral shall be applied by
the Secured Party in accordance with and in the manner specified by Section 6.9
of the Credit Agreement.

4.4 Waiver of Certain Rights. To the full extent each Pledgor may
do so, no Pledgor shall insist upon, plead, claim, or take advantage of any law
providing for any appraisement, valuation, stay, extension, or redemption, and
each Pledgor hereby waives and releases the same, and all rights to a
marshaling of the assets of such Pledgor, including the Collateral, or to a
sale in inverse order of alienation in the event of foreclosure of the liens
and security interests hereby created. No Pledgor shall assert any right under
any law pertaining to the marshaling of assets, sale in inverse order of
alienation, the administration of estates of decedents or other matters
whatever to defeat, reduce, or affect the right of the Secured Party under the
terms of this Agreement.

Section 5. Miscellaneous.

5.1 Notices. All notices and other communications from the
Secured Party to any Pledgor provided for in this Agreement shall be delivered
or transmitted to the Borrower, and shall be deemed delivered to any such
Pledgor upon delivery to the Borrower. All notices and

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other communications between the parties provided for in this Agreement shall
be delivered or transmitted as provided in the Credit Agreement to the
applicable address set forth therein.

5.2 General. This miscellaneous provisions contained in Article 8
of the Credit Agreement are incorporated herein as if fully set forth herein.
This Agreement may be executed in multiple counterparts each of which shall
constitute one and the same agreement.

THIS WRITTEN AGREEMENT REPRESENTS THE FINAL AGREEMENT AMONG THE PARTIES AND MAY
NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES.

THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES.

Executed as of the date first above written.

Pledgors:

INTEGRATED ELECTRICAL SERVICES, INC.

By:
----------------------------------
J. ▇▇▇▇ ▇▇▇▇▇▇▇
Vice President and
Chief Accounting Officer

BW CONSOLIDATED, INC.

By:
----------------------------------
▇▇▇ ▇. ▇▇▇▇
Assistant Treasurer

▇▇▇▇▇ ELECTRICAL CONTRACTORS, INC.

By:
----------------------------------
▇▇▇ ▇. ▇▇▇▇

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Assistant Treasurer

Secured Party:

NATIONSBANK OF TEXAS, N.A., as Agent

By:
----------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Vice President

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[Execution Version]

PROMISSORY NOTE
(NationsBank of Texas, N.A.)

$65,000,000 Houston, Texas January 30, 1998

For value received, the undersigned INTEGRATED ELECTRICAL SERVICES,
INC., a Delaware corporation ("Borrower"), hereby promises to pay to the order
of NATIONSBANK OF TEXAS, N.A. ("Bank"), the principal amount of Sixty-Five
Million and No/100 Dollars ($65,000,000) or, if less, the aggregate outstanding
principal amount of the Revolving Loan Advances (as defined in the Credit
Agreement referred to below) made by the Bank to the Borrower, together with
accrued but unpaid interest on the principal amount of each such Revolving Loan
Advance from the date of such Revolving Loan Advance until such principal
amount is paid in full, at such interest rates, and at such times, as are
specified in the Credit Agreement.

This Note is one of the Notes referred to in, and is entitled to the
benefits of, and is subject to the terms of, the Credit Agreement dated as of
January 30, 1998 (as the same may be modified from time to time, the "Credit
Agreement"), among the Borrower, the financial institutions parties thereto
("Banks"), and NationsBank of Texas, N.A., as agent for the Banks ("Agent").
Capitalized terms used herein but not defined herein shall have the meanings
specified by the Credit Agreement. The Credit Agreement, among other things,
(a) provides for the making of Revolving Loan Advances by the Bank to the
Borrower from time to time, the indebtedness of the Borrower resulting from
each such Revolving Loan Advance being evidenced by this Note, and (b) contains
provisions for acceleration of the maturity of this Note upon the happening of
certain events stated in the Credit Agreement and for prepayments of principal
prior to the maturity of this Note upon the terms and conditions specified in
the Credit Agreement.

Both principal and interest are payable to the Agent in the currency,
at the times, in the locations, and in the manner specified in the Credit
Agreement. The Bank shall record all Revolving Loan Advances and payments of
principal made under this Note, but no failure of the Bank to make such
recordings shall affect the Borrower's repayment obligations under this Note.

It is contemplated that because of prepayments there may be times when
no indebtedness is owed under this Note. Notwithstanding such prepayments,
this Note shall remain valid and shall
85
be in force as to Revolving Loan Advances made pursuant to the Credit Agreement
after such prepayments.

It is the intention of the Bank and the Borrower to conform strictly
to any applicable usury laws. Accordingly, the terms of the Credit Agreement
relating to the prevention of usury will be strictly followed.

EXECUTED as of the date first above written.

INTEGRATED ELECTRICAL SERVICES, INC.

By:
----------------------------------------------------------
J. ▇▇▇▇ ▇▇▇▇▇▇▇
Vice President and
Chief Accounting Officer

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[Execution Version]

PROMISSORY NOTE
(Swing Line)

$5,000,000.00 January 30, 1998

INTEGRATED ELECTRICAL SERVICES, INC., a Delaware corporation
("Borrower"), for value received, hereby promises to pay to the order of
NATIONSBANK OF TEXAS, N.A. ("Lender"), the principal sum of FIVE MILLION AND
NO/100 DOLLARS ($5,000,000.00) or, if less, the outstanding principal amount
advanced under this Promissory Note ("Note") and interest thereon, all as
required by this Note.

This Note is the Swing Line Note referred to in, and is entitled to
the benefits of, and is subject to the terms of, the Credit Agreement dated as
of January 30, 1998 (as modified from time to time, the "Credit Agreement"),
among the Borrower, the financial institutions parties thereto ("Banks"), and
NationsBank of Texas, N.A., as agent for the Banks ("Agent"). Capitalized
terms used herein but not defined herein shall have the meanings specified by
the Credit Agreement.

Subject to the terms of this Note, the Lender shall from time to time
prior to the Maturity Date (hereinafter defined) make advances ("Advances") to
the Borrower under this Note. The aggregate outstanding principal amount of
such advances shall not exceed the face amount of this Note. The Borrower
shall request Advances by providing the Lender with notice not later than 11:00
a.m., Houston, Texas, time on the date of the requested Advance. The request
must specify the amount of the requested Advance and the date of funding for
such Advance. The Lender shall, before 4:00 p.m., Houston, Texas, time on the
date of such Advance, make such Advance available to the Borrower in
immediately available funds at the Borrower's account with the Lender.

Subject to the terms hereof, the Borrower may prepay the Advances on
this Note by providing the Lender with notice of the intended prepayment not
later than 11:00 a.m., Houston, Texas, time on the date of prepayment,
specifying the amount and the date of such prepayment. Each partial prepayment
of the Advances shall be in a minimum amount of $100,000 or an integral
multiple thereof or, if the aggregate outstanding principal amount of the
Advances would be less than $100,000 following the prepayment, in the remaining
aggregate outstanding principal amount of the Advances, together with accrued
interest to the date of such prepayment on the principal amount prepaid.
Amounts prepaid shall be applied in the inverse order of maturity.

Notwithstanding anything herein to the contrary, the Borrower shall
pay to the Lender the outstanding principal balance of this Note on January 31,
2001 ("Maturity Date").
87
It is contemplated that because of prepayments there may be times when
no indebtedness is owed under this Note. Notwithstanding such prepayments,
this Note shall remain valid and shall be in force as to Advances made pursuant
to the Credit Agreement after such prepayments.

The Advances shall bear interest at a per annum rate equal to the
difference of (a) (i) the Adjusted Base Rate in effect from time to time plus
(ii) the Applicable Margin for the Prime Rate Tranche in effect from time to
time, calculated on the basis of a 365/366-day year for the actual number of
days elapsed, minus (b) the Applicable Margin for Commitment Fees in effect
from time to time, calculated on the basis of a 360-day year for the actual
number of days elapsed.

The Borrower shall pay to the Lender all accrued but unpaid interest
on the aggregate outstanding principal amount of the Advances on the last day
of each calendar quarter, when the Advances are prepaid in full, and on the
Maturity Date.

The Lender shall record in its records all Advances made under this
Note and all payments of principal and interest on the Advances. Any failure
of the Lender to make such recordings, however, shall not affect the Borrower's
repayment obligations. The Lender's records shall be presumptive evidence of
the principal and interest owed by the Borrower.

The Borrower shall make each payment required under this Note not
later than 12:00 noon, Houston, Texas, time on the date when due in Dollars to
the Lender at such location as is specified by the Lender in writing in
immediately available funds. During the existence of an Event of Default, the
Borrower hereby authorizes the Lender, if and to the extent payment is not made
when due under this Note, to charge from time to time against any account of
the Borrower with the Lender any amount so due. Whenever any payment to be
made under this Note shall be stated to be due on a day other than a day on
which the Lender is open for business in Houston, Texas ("Business Day"), such
payment shall be made on the next succeeding Business Day, and such extension
of time shall in such case be included in the computation of the payment of
interest. All payments shall be applied as directed by the Borrower or, if not
directed by the Borrower, as determined by the Lender.

Each of the following shall be an "Event of Default" for the purposes
of this Note: (a) the Borrower (i) fails to pay when due any principal amounts
due under this Note or (ii) fails to pay when due any interest or other amounts
due under this Note and such failure has not been cured within five Business
Days, (b) there shall occur any Event of Default under the Credit Agreement, or
(c) the Lender shall resign or be removed as Agent under the Credit Agreement.

During the continuation of any Event of Default, the Lender may
declare by written notice to the Borrower all of the commitments of the Lender
hereunder terminated (whereupon the same shall terminate) and the Lender may
declare by written notice to the Borrower the aggregate outstanding principal
amount of the Advances, all accrued interest thereon, and all other amounts
payable by the Borrower under this Note to be immediately due and payable
(whereupon the same

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shall immediately and automatically become due and payable). Upon the
occurrence of any Event of Default relating to bankruptcy or insolvency, all of
the commitments of the Lender hereunder shall terminate, and the aggregate
outstanding principal amount of all Advances made under this Note, all accrued
interest thereon, and all other amounts payable by the Borrower under this Note
shall immediately and automatically become due and payable.

Except for the notices provided for above and in the Credit Agreement,
the Borrower waives notice of intent to demand, demand, presentment for
payment, notice of nonpayment, protest, notice of setoff, notice of protest,
notice of dishonor, notice of intent to accelerate, notice of acceleration, and
all other notices in connection with the foregoing.

During the existence of an Event of Default, the Lender is authorized
at any time, to the fullest extent permitted by law, to setoff and apply any
indebtedness owed by the Lender to the Borrower against any and all of the
obligations of the Borrower under this Note, irrespective of whether or not the
Lender shall have made any demand under this Note and although such obligations
may be contingent and unmatured. Following an Event of Default, the Lender may
exercise (a) all of its rights under this Note and the Credit Agreement
(including Section 2.3(b) thereof) (such agreements being the "Loan Documents")
and (b) all other rights at law or in equity. During the existence of an Event
of Default, all payments and collections shall be applied in the order
determined by the Lender.

No right, power, or remedy conferred to the Lender in the Credit
Agreement or any Loan Document, or now or hereafter existing at law, in equity,
by statute, or otherwise shall be exclusive, and each such right, power, or
remedy shall to the full extent permitted by law be cumulative and in addition
to every other such right, power or remedy. No course of dealing and no delay
in exercising any right, power, or remedy conferred to the Lender in this Note,
or now or hereafter existing at law, in equity, by statute, or otherwise shall
operate as a waiver of or otherwise prejudice any such right, power, or remedy.
No notice to or demand upon the Borrower shall entitle the Borrower to similar
notices or demands in the future.

If the Borrower fails to pay when due any amount payable under this
Note, at the request of the Lender the amount not paid when due shall bear
interest beginning on the date due until paid in full at the rate otherwise set
for outstanding principal hereunder plus 2.00%.

It is the intention of the Lender and the Borrower to conform strictly
to any applicable usury laws. Accordingly, the terms of the Credit Agreement
relating to the prevention of usury will be strictly followed.

This Note shall be governed by the laws of the State of Texas without
regard to any principles of conflicts of laws. If any provision in this Note
is held to be unenforceable, such provision shall be severed and the remaining
provisions shall remain in full force and effect. All representations,
warranties, and covenants of the Borrower in this Note shall survive the
execution

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89
of this Note, the other Loan Documents, and any other contract or agreement.
The Lender's remedies under this Note and the Loan Documents shall be
cumulative, and no delay in enforcing this Note or the other Loan Documents
shall act as a waiver of the Lender's rights hereunder. The provisions of this
Note may be waived or amended only in a writing signed by the party against
whom enforcement of such waiver or amendment is sought. This Note shall bind
the Borrower and the Borrower's successors and assigns and shall inure to the
benefit of the Lender and the Lender's successors and assigns. The Borrower
may not assign the Borrower's rights or delegate the Borrower's duties under
this Note or the other Loan Documents. The Lender may assign and participate
the Lender's rights and delegate the Lender's duties under this Note. Unless
otherwise specified, all notices provided for in this Note shall be made in
accordance with the terms of the Credit Agreement.

THIS WRITTEN AGREEMENT REPRESENTS THE FINAL AGREEMENT BETWEEN THE
PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR
SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.

THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.

EXECUTED as of the date first above written.

INTEGRATED ELECTRICAL SERVICES, INC.

By: ______________________________
J. ▇▇▇▇ ▇▇▇▇▇▇▇
Vice President and
Chief Accounting Officer

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Among INTEGRATED ELECTRICAL SERVICES, INC. as Borrower, THE FINANCIAL INSTITUTIONS NAMED IN THIS CREDIT AGREEMENT as Banks, and

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