THIRD AMENDMENT

 

THIRD AMENDMENT, dated as of May 7, 2007 (this “Third Amendment”), to the Term
Loan Agreement, dated as of May 12, 2006 (as heretofore amended, supplemented or
otherwise modified, the “Loan Agreement”), among Integrated Electrical Services,
Inc., a Delaware corporation (the “Borrower”), the several lenders party thereto
(collectively, the “Lenders”) and Wilmington Trust Company, in its capacity as
administrative agent (in such capacity, the “Administrative Agent”).

 

W I T N E S S E T H :

WHEREAS, the Borrower, the Lenders and the Administrative Agent are parties to
the Loan Agreement; and

WHEREAS, the Borrower has requested that the Lenders agree to amend certain
financial covenants in the Loan Agreement, and the Lenders are agreeable to such
request but only upon the terms and subject to the conditions set forth herein.

NOW, THEREFORE, in consideration of the premises and mutual agreements contained
herein, and for other valuable consideration the receipt of which is hereby
acknowledged, the parties hereto agree as follows:

 

SECTION 1.    DEFINITIONS. Unless otherwise defined herein, capitalized terms
are used herein as defined in the Loan Agreement.

 

SECTION 2.

AMENDMENTS.

 

2.1        Amendments to Section 1.1. Section 1.1 of the Loan Agreement is
hereby amended by inserting the following new definitions in appropriate
alphabetical order:

 

““Third Amendment”: the Third Amendment, dated as of May 7, 2007, to this
Agreement.

 

“Third Amendment Effective Date”: the Third Amendment Effective Date under and
as defined in the Third Amendment.”

 

2.2        Amendments to Section 6.1. Section 6.1 of the Loan Agreement is
hereby amended by (i) deleting in its entirety paragraph (c) in such Section and
inserting in lieu thereof “(c) [Intentionally Omitted].”, (ii) deleting in its
entirety paragraph (d) in such Section and inserting in lieu thereof “(d)
[Intentionally Omitted].” and (iii) deleting in its entirety paragraph (f) in
such Section and inserting in lieu thereof the following new paragraph (f):

 

“(f) Consolidated Leverage Ratio. Permit the Consolidated Leverage Ratio, tested
monthly on the last day of each calendar month on a trailing twelve calendar
month basis, to exceed 4:00 to 1:00 for the period ending May 31, 2007 and the
last day of each calendar month thereafter.”

 

 

 

SECTION 3.

MISCELLANEOUS.

 

3.1        Limited Effect. Except as expressly amended hereby, the Loan
Agreement and the other Loan Documents are, and shall remain, in full force and
effect in accordance with their respective terms. This Third Amendment shall not
constitute an amendment of any provision of the Loan Agreement or the other Loan
Documents not expressly referred to herein and shall not be construed as (or
indicate the Lenders’ willingness to agree to) an amendment, waiver or consent
to any action on the part of the Borrower that would require an amendment,
waiver or consent of the Administrative Agent or the Lenders except as expressly
stated herein.

 

3.2        Effectiveness. This Third Amendment shall become effective as of the
date first set forth above (the “Third Amendment Effective Date”):

 

(a) upon receipt by the Administrative Agent and the Initial Lenders of (i)
counterparts hereof duly executed by the Borrower, the Administrative Agent, the
Required Lenders and the Initial Lenders and (ii) an effective amendment to the
ABL Facility Agreement duly executed by the requisite ABL Lenders, which
amendment shall be in form and substance reasonably satisfactory to the Required
Lenders and the Initial Lenders;

 

(b) receipt by the Administrative Agent of a fully earned, non-refundable fee
equal to $75,000 in immediately available funds, payable to each Lender on
account of its ratable share of the Aggregate Principal Amount Outstanding as of
the Third Amendment Effective Date; and

 

(c) no Default or Event of Default shall have occurred and be continuing on the
Third Amendment Effective Date after giving effect to this Third Amendment.

 

3.3        Representations and Warranties. In order to induce the Administrative
Agent and each Lender to enter into this Third Amendment, the Borrower hereby
represents and warrants to the Administrative Agent and each Lender that:

 

(a)        all of the representations and warranties contained in the Loan
Agreement and in each Loan Document are true and correct in all material
respects as of the date hereof after giving effect to this Third Amendment,
except to the extent that any such representations and warranties expressly
relate to an earlier date, in which case such representations and warranties
shall be true and correct in all material respects as of such earlier date;

 

(b)        the execution, delivery and performance by each Loan Party of this
Third Amendment have been duly authorized by all necessary corporate action
required on its part and this Third Amendment is the legal, valid and binding
obligation of each Loan Party, enforceable against it in accordance with its
terms;

 

(c)        the execution, delivery and performance of this Third Amendment by
each Loan Party does not contravene, and will not result in a breach of, or
violate (i) any provision of any Loan Party’s certificate or articles of
incorporation or bylaws or other similar constituent

 

documents, (ii) any law or regulation, or any order or decree of any court or
government instrumentality, or (iii) any loan agreement, indenture, mortgage,
deed of trust, lease, agreement or other instrument to which any Loan Party is a
party or by which any Loan Party or any of its property is bound; and

 

(d)        no Default or Event of Default shall have occurred and be continuing
after giving effect to this Third Amendment.

 

3.4        Counterparts. This Third Amendment may be executed by one or more of
the parties hereto on any number of separate counterparts, and all of said
counterparts taken together shall be deemed to constitute one and the same
instrument. This Third Amendment may be delivered by facsimile transmission of
the relevant signature pages hereof.

 

3.5        Consent of Guarantors. Each of the Guarantors acknowledges and
consents to all of the terms and conditions of this Third Amendment and agrees
that this Third Amendment does not operate to reduce or discharge such
Guarantor’s obligations under the Guarantee and Collateral Agreement or the
other Loan Documents to which such Guarantor is a party.

3.6        Successors and Assigns. This Third Amendment shall be binding upon
and inure to the benefit of the Borrower and its successors and assigns, and
upon the Administrative Agent and the Lenders and each of their respective
successors and assigns. The execution and delivery of this Third Amendment by
any Lender shall be binding upon its successors and assigns and shall be
effective as to any Loans assigned to it after such execution and delivery.

3.7        Administrative Agent. By executing this Third Amendment, the
undersigned Lenders constituting the Required Lenders are hereby directing the
Administrative Agent to execute and deliver this Third Amendment.

 

3.8        Release. Each Loan Party hereby acknowledges that is has no defense,
counterclaim, offset, cross-complaint, claim or demand of any kind or nature
whatsoever that can be asserted to reduce or eliminate all or any part of its
liability to repay the “Obligations” or to seek affirmative relief or damages of
any kind or nature from any Lender or the Administrative Agent. Each Loan Party
hereby voluntarily and knowingly releases and forever discharges the
Administrative Agent, the Lenders and their respective Affiliates, Subsidiaries,
agents, officers, directors, attorneys and advisors from all possible claims,
demands, actions, causes of action, damages, costs, expenses and liabilities
whatsoever, known or unknown, anticipated or unanticipated, suspected or
unsuspected, fixed, contingent or conditional, at law or in equity, originating
in whole or part on or before the date this Third Amendment is executed, which
any Loan Party may now or hereafter have against the Administrative Agent, the
Lenders and their respective Affiliates, Subsidiaries, agents, officers,
directors, attorneys and advisors and irrespective of whether any such claims
arise out of contract, tort, violation of law or regulations, or otherwise, and
arising from any Loans.          

 

3.9        GOVERNING LAW. THIS THIRD AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF
THE PARTIES HEREUNDER SHALL BE

 

GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE
STATE OF NEW YORK.

 

3.10      Headings. Section headings used in this Third Amendment are for
convenience of reference only, are not part of this Third Amendment and are not
to affect the construction of, or to be taken into consideration in interpreting
this Third Amendment.

 

 

IN WITNESS WHEREOF, the parties hereto have caused this Third Amendment to be
executed by their respective officers thereunto duly authorized as of the day
and year first above written.

 

INTEGRATED ELECTRICAL SERVICES, INC.

 

 

By:

 

 

Name:

 

Title:

 

 

[EACH LOAN PARTY]

 

 

 

WILMINGTON TRUST COMPANY, in its capacity as Administrative Agent

 

 

By:

 

 

Name:

 

Title:

 

 

 

 

ETON PARK FUND, L.P., by its investment manager Eton Park Capital Management,
L.P.

 

 

By:

_____________________________

 

Name:

 

 

Title:

 

 

 

ETON PARK MASTER FUND, LTD, by its investment manager Eton Park Capital
Management, L.P.

 

 

By:

_____________________________

 

Name:

 

 

Title:

 

 

 

 

FLAGG STREET PARTNERS LP, by its general partner Flagg Street Capital LLC

 

 

By:

_____________________________

 

Name:

 

 

Title:

 

 

 

FLAGG STREET PARTNERS QUALIFIED LP, by its general partner Flagg Street Capital
LLC

 

 

By:

_____________________________

 

Name:

 

 

Title:

 

 

 

FLAGG STREET OFFSHORE L.P., by its general partner Flagg Street Capital LLC

 

 

By:

_____________________________

 

Name:

 

 

Title:

 

 

 

 

[LENDER]

 

 

By:

_____________________________

 

Name:

 

 

Title: