**Exhibit 10.3**

** **

**AMENDMENT TOLOAN AND SECURITY AGREEMENT**

 

**THIS AMENDMENT TO LOAN AND SECURITY AGREEMENT**(this “Amendment”) is made andentered into on May 7, 2008, by and among **BANK OFAMERICA, N.A.**, a national banking association (“BA”), in itscapacity as collateral and administrative agent for the Lenders under the LoanAgreement (as hereinafter defined) (BA, in such capacity, the “Agent”),BA, as Lender under the Loan Agreement (BA, together with the various financialinstitutions listed on the signature pages hereof, in such capacity, the “Lenders”),the Lenders, **INTEGRATED ELECTRICAL SERVICES, INC.**,a Delaware corporation (“Parent”), each of the Subsidiaries of Parentlisted on Annex I attached hereto (Parent and such  Subsidiaries of Parent being herein referredto collectively as the “Borrowers”), and the Subsidiaries of Parentlisted on Annex II attached hereto (such Subsidiaries being referred to hereinas the “Guarantors”, and Borrowers and Guarantors being referred toherein as the “Credit Parties”).

 

**RECITALS**

 

A.            Agent, Lenders and Credit Parties have entered into thatcertain Loan and Security Agreement, dated as of May 12, 2006 (the Loanand Security Agreement, as amended from time to time, being referred to hereinas the “Loan Agreement”).

 

B.            Credit Parties, Agent and Lenders desire to amend theLoan Agreement as hereinafter set forth, subject to the terms and conditionshereinafter set forth.

 

**NOW, THEREFORE**, in consideration of the premises herein containedand other good and valuable consideration, the receipt and sufficiency of whichare hereby acknowledged, the parties, intending to be legally bound, agree asfollows:

 

**AGREEMENT**

 

# **ARTICLE IDefinitions**

# ** **

## **1.01       **Capitalized terms used in this Amendmentare defined in the Loan Agreement, as amended hereby, unless otherwise stated.

##  

# **ARTICLE IIAmendments**

# ** **

Effective as of the respective date hereinafterspecified, the Loan Agreement is hereby amended as follows:

 

## **2.01        Amendmentof Section 1.**  Effective as of the datehereof, the introductory paragraph of Section 1 of the LoanAgreement is amended to replace the amount “$80,000,000” with the amount “$60,000,000”.

##  

## **2.02        Amendmentof Section 2.2**.  Effective as of the datehereof, Section 2.2.3 of the Loan Agreement is hereby amended andrestated in its entirety to read as follows:

##  

### 

###  

### “2.2.3  Letter of Credit Fee.  The Borrowers jointly and severally agree topay (i) to the Agent, for the account of the Lenders, in accordance withtheir respective Pro Rata shares, for each Letter of Credit, a fee (the “Letterof Credit Fee”) (a) for the period from the Amendment Closing Date throughSeptember 30, 2008, equal to three percent (3.00%) per annum and (b) atany thereafter, equal to the Applicable Margin for Revolver Loans that areLIBOR Loans, and (ii) to Agent for the benefit of the Letter of CreditIssuer a fronting fee of one-quarter of one percent (0.25%) per annum of theundrawn face amount of each Letter of Credit, and (iii) to the Letter ofCredit Issuer, all out-of-pocket costs, fees and expenses incurred by theLetter of Credit Issuer in connection with the application for, processing of,issuance of, or amendment to any Letter of Credit, which costs, fees andexpenses shall include a “fronting fee” payable to the Letter of CreditIssuer.  The Letter of Credit Fee shallbe payable monthly in arrears on the first day of each month following anymonth in which a Letter of Credit is outstanding and on the TerminationDate.  The Letter of Credit Fee shall becomputed on the basis of a 360-day year for the actual number of days elapsed.”

###  

## **2.03        Amendmentof Section 5.1.**  Effective as of the datehereof, Section 5.1 of the Loan Agreement is hereby amended andrestated in its entirety to read as follows:

##  

**“5.1       ****Original Term of Commitments****.** Subject to each Lender’s right to cease making Loans and otherextensions of credit to Borrowers when any Default or Event of Default existsor upon termination of the Commitments as provided in **Section 5.2** hereof, the Commitmentsshall be in effect through the close of business on May 12, 2010 (the “OriginalTerm”).”

 

## **2.04        Amendmentof Section 5.2.3.**  Effective asof the date hereof, Section 5.2.3 of the Loan Agreement is herebyamended and restated in its entirety to read as follows:

##  

##                 “5.2.3      **Termination Charges**.  On the effective date of termination of theCommitments pursuant to **Section 5.2.2**,Borrowers shall be jointly and severally obligated to pay to Agent, for the ProRata benefit of Lenders (in addition to the then outstanding principal, accruedinterest, fees and other charges owing under the terms of this Agreement andany of the other Loan Documents), as liquidated damages for the loss of thebargain and not as a penalty, an amount equal to (a) 0.50% of theaggregate Commitments if such termination occurs on or before May 11,2009, (b) 0.25% of the aggregate Commitments if such termination occurs onor after May 12, 2009 and before May 12, 2010 and (c) $0 at anytime thereafter.”

##  

## **2.05        Amendmentof Section 9.2.7. **Effective as of the date hereof, Section 9.2.7of the Loan Agreement is amended and restated in its entirety to read asfollows:

##  

### “9.2.7      Distributions.  Declare or make any Distributions, except for(i) Upstream Payments, (ii) repurchases of common stock of Parentfrom employees solely to satisfy their tax obligations arising from theiracquisition of such common stock in an aggregate amount not to exceed$1,500,000 in any fiscal year 

 

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### of Credit Parties;provided, that no such repurchases of common stock of Parent shall bepermitted unless Borrower has Availability of at least $10,000,000 at the timeof such repurchase after giving effect to such repurchase and (iii) otherrepurchases of common stock of Parent; provided, that (a) Borrowersshall have entered into the Tontine Subordinated Debt Documentation, incurredthe Tontine Subordinated Debt and prepaid the Tranche B Loan with the proceedsthereof and Unrestricted Cash On Hand prior to any such repurchase, (b) theaggregate amount paid in connection with all such repurchases during any periodof two fiscal years of Credit Parties shall not exceed $27,500,000, (c) thereshall not be any Revolver Loans outstanding at the time of any such repurchase,(d) Borrower shall have Unrestricted Cash On Hand of at least $40,000,000after giving effect to any such repurchase, (e) no such repurchase shallbe of common stock of the Tontine Lenders or any of their Affiliates or ofcommon stock of any officer, director, consultant, manager, agent or employeeof any Credit Party or any Affiliate of any Credit Party but only if suchrepurchase is pursuant to a privately negotiated transaction between suchPerson and Parent (as distinguished from an open market repurchase by Parent,for example).”

###  

## **2.06        Amendmentto Section 9.3**.  Effective as of the datehereof, Section 9.3.7 of the Loan Agreement is amended and restatedto read in its entirety as follows:

##  

## “9.3.7.  Fixed Charge Coverage Ratio.  At any time the aggregate amount ofUnrestricted Cash On Hand of the Credit Parties plus Availability is less than$50,000,000, maintain a Fixed Charge Coverage Ratio, on a Consolidated basis,of not less than 1.25:1.00 as of the end of the immediately preceding month forwhich financial statements were required to be delivered pursuant to **Section 9.1**, calculated on a trailing twelve calendarmonth basis,****and as of the end of each monththereafter, calculated on a trailing twelve calendar month basis, until suchtime as the aggregate amount of Unrestricted Cash On Hand of the Credit Partiesplus Availability has been at least $50,000,000 for a period of 60 consecutivedays.”

##  

## **2.07        Amendmentto Section 9.3**.  Effective as of the datehereof, Section 9.3.8 of the Loan Agreement is amended and restatedto read in its entirety as follows:

##  

“9.3.8  Leverage Ratio –At any time the aggregate amount of Unrestricted Cash On Hand of the CreditParties plus Availability is less than $50,000,000, maintain a Leverage Ratio,on a Consolidated basis, of not more than 3.50 to 1.00 as of the end of theimmediately preceding month for which financial statements were required to bedelivered pursuant to **Section 9.1**hereof, calculated ona trailing twelve calendar month basis, and as of the end of eachmonth thereafter,calculated on a trailing twelve calendar month basis, until suchtime as the aggregate amount of Unrestricted Cash On Hand of the Credit Partiesplus Availability has been $50,000,000 for a period of 60 consecutive days.

 

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## **2.08        Amendmentto Section 9.4**.  Effective as of the datehereof, the text of Section 9.4 of the Loan Agreement is herebydeleted in its entirety and replaced with the phrase “[INTENTIONALLY OMITTED]”.

##  

## **2.09        Amendmentto Appendix A.**  Effective as of the date hereof, thedefinition of “Accounts Formula Amount” in Appendix A to the LoanAgreement is hereby amended to replace “85%” with “80%”.

##  

## **2.10        Amendmentto Appendix A.**  Effective as of the date hereof, thedefinition of “Applicable Margin” in Appendix A to the Loan Agreement ishereby amended and restated in its entirety as follows:

##  

“Applicable Margin – (i) for the period from the AmendmentClosing Date through September 30, 2008, a percentage equal to (a) 1.00%with respect to Revolver Loans that are Base Rate Loans, (b) 3.00% withrespect to Revolver Loans that are LIBOR Loans, and (c) 3.00% with respectto fees payable to Lenders pursuant to **Section 2.2.3** and (ii) at any time thereafter, theApplicable Margin shall equal the applicable LIBOR margin or Base Rate marginin effect from time to time determined as set forth below based upon theapplicable Total Liquidity then in effect pursuant to the appropriate column inthe table below:

 
| **Total Liquidity**                           | ** ** | **Applicable  LIBOR  Margin** | ** ** | **Applicable  Base Rate  Margin** | ** ** |
|----------------------------------------------------|------------|-------------------------------|------------|----------------------------------------|------------|
| Greater than or equal to $60,000,000               |       | 2.75                          | %          | .75                                    | %          |
| Greater than $40,000,000 and less than $60,000,000 |       | 3.00                          | %          | 1.00                                   | %          |
| Less than or equal to $40,000,000                  |       | 3.25                          | %          | 1.25                                   | %          |

 

The Applicable Margin shall be adjusted (up or down)prospectively on a quarterly basis three days after delivery to the Agent ofBorrower’s quarterly (i.e. for the last month of the applicable quarter) orannual (as applicable) Compliance Certificate pursuant to **Section 9.1.3**hereof (commencing with the Compliance Certificate for the period ending September 30,2008).  If the Credit Parties shall failto deliver any quarterly or annual Compliance Certificate by the date requiredpursuant to **Section 9.1.3**, then, at theAgent’s election, effective as of the first day of the month following the endof the fiscal month for which such Compliance Certificate was to have beendelivered, and continuing through the first day of the month following the date(if ever) when such Compliance Certificate is finally delivered, the ApplicableMargin shall be conclusively presumed to equal the highest Applicable Marginspecified in the pricing table set forth above.

 

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If, as a result of any restatement of or other adjustment to thefinancial statements of the Borrowers or for any other reason, the Agentdetermines that (a) the Total Liquidity as calculated by the Borrowers asof any applicable date was inaccurate and (b) a proper calculation of theTotal Liquidity would have resulted in different pricing for any period, then (i) ifthe proper calculation of the Total Liquidity would have resulted in higherpricing for such period, the Borrowers shall automatically and retroactively beobligated to pay to the Agent, promptly on demand by the Agent, an amount equalto the excess of the amount of interest and fees that should have been paid forsuch period over the amount of interest and fees actually paid for such period;and (ii) if the proper calculation of the Total Liquidity would haveresulted in lower pricing for such period, Agent shall provide the Borrowers acredit with respect to any interest or fees paid in excess of the amountsthereof that should have been paid for such period (such credit to be allocatedratably among all Lenders); provided that if, as a result of any restatement orother event a proper calculation of the Total Liquidity would have resulted inhigher pricing for one or more periods and lower pricing for one or more otherperiods (due to the shifting of income or expenses form one period to anotherperiod or any similar reason), then (x) the amount payable by theBorrowers pursuant to clause (i) above shall be based upon the excess, ifany, of the amount of interest and fees that should have been paid for allapplicable periods over the amount of interest and fees paid for all suchperiods or (y) the amount to be credited by the Lenders pursuant to clause(ii) above shall be based upon the excess, if any, of the amount ofinterest and fees paid for all applicable periods over the amount of interestand fees that should have been paid for all such periods.”

 

## **2.11        Amendmentto Appendix A**.  Effective as of the date hereof, clause (vii) ofthe definition of “Availability Reserve” in Appendix A to the LoanAgreement is hereby amended and restated in its entirety to read as follows:

##  

“(vii) a general reserve of $8,000,000, untilsuch time as Agent removes or reduces such reserve; provided that suchgeneral reserve will be reduced to $5,000,000 if no Default or Event of Defaulthas occurred and is continuing upon the date Agent receives the audited September 30,2008 financial statements delivered pursuant to **Section 9.1**hereof;”

 

## **2.12        Amendmentto Appendix A.**  Effective as of the date hereof, thedefinition of “Commitments” in Appendix A to the Loan Agreement ishereby amended to replace the amount “$80,000,000” with the amount “$60,000,000”.

##  

## **2.13        Amendmentto Appendix A.**  Effective as of the date hereof, thedefinition of “Letter of Credit Subfacility” in Appendix A to the LoanAgreement is amended and restated in its entirety to read as follows:

##  

“Letter of Credit Subfacility - $60,000,000.”

 

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## **2.14        Amendmentto Appendix A.**  Effective as of the date hereof, thefollowing new definitions are inserted into Appendix A to the LoanAgreement in appropriate alphabetical order, each to read in its entirety asfollows:

##  

“Amendment Closing Date – May 7, 2008.”

 

“Average Daily Availability – for any givenperiod, the quotient of (a) the sum of daily Availability for each dayduring such period divided by (b) the number of days during such period.”

 

“Total Liquidity – for any given period, thesum of (i) Average Daily Availability for such period plus (ii) averagedaily Unrestricted Cash On Hand for such period.”

 

“Unrestricted Cash On Hand”- at any date of determination, and without duplication, the sum of thefollowing for all Credit Parties: (i) Institutional Balances and (ii) CashEquivalents (other than Eligible Cash Collateral), in each case as towhich no Lien shall exist, other than a Lien in favor of the Lenders. “InstitutionalBalances”, as used in the preceding definition, shall mean the amount ofall cash of the Credit Parties as reflected on the books of the depositinstitutions where any Credit Party maintains an account balance.

 

## **2.15        Amendmentto Title Page.**  Effective as of the date hereof, the title page tothe Loan Agreement is hereby amended and restated in its entirety in the formof Exhibit A attached hereto.

##  

# **ARTICLE IIINo Waiver**

# ** **

## **3.01        No Further Waiver**.  Except as specifically provided in thisAmendment, nothing inthis Amendment shall directly or indirectly whatsoever either:  (i) be construed as a waiver of anycovenant or provision of the Loan Agreement, any other Loan Document or anyother contract or instrument or (ii) impair, prejudice or otherwiseadversely affect any right of Agent or Lender at any time to exercise anyright, privilege or remedy in connection with the Loan Agreement, any otherLoan Document or any other contract or instrument, or (iii) constitute anycourse of dealing or other basis for altering any obligation of Credit Partiesor any right, privilege or remedy of Agent or Lenders under the Loan Agreement,any other Loan Document or any other contract or instrument or constitute anyconsent by Agent or Lenders to any prior, existing or future violations of theLoan Agreement or any other Loan Document. Credit Parties hereby agree and acknowledge that hereafter CreditParties are expected to strictly comply with their duties, obligations and agreementsunder the Loan Agreement and the other Loan Documents.

##  

# **ARTICLE IVConditions Precedent**

# ** **

## **4.01        Conditionsto Effectiveness.**  The effectiveness of thisAmendment (including the agreements and waiver contained herein) is subject tothe satisfaction of the following conditions precedent in a manner satisfactoryto Agent, unless specifically waived in writing by Agent:

 

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### (a)           Agentshall have received this Amendment, duly executed by each of the Credit Parties.

###  

### (b)           Therepresentations and warranties contained herein and in the Loan Agreement andthe other Loan Documents, as each is amended hereby, shall be true and correctin all material respects as of the date hereof, as if made on the date hereof,except for those representations and warranties specifically made as of anearlier date, which shall be true and correct in all material respects as ofsuch earlier date.

###  

### (c)           Aftergiving effect to the provisions of this Amendment, no Default or Event of Defaultshall have occurred and be continuing, unless such Default or Event of Defaulthas been otherwise specifically waived in writing by Agent.

###  

### (d)           Allorganizational proceedings taken in connection with the transactionscontemplated by this Amendment and all documents, instruments and other legalmatters incident thereto shall be reasonably satisfactory to Agent and itslegal counsel.

###  

(e)           Agent shall havereceived, for the pro rata application among the Lenders, an amendment fee of$75,000.

 

# **ARTICLE VRatifications, Representations and Warranties**

# ** **

## **5.01        Ratifications.** The terms and provisions set forth in this Amendment shall modify andsupersede all inconsistent terms and provisions set forth in the Loan Agreementand the other Loan Documents, and, except as expressly modified and supersededby this Amendment, the terms and provisions of the Loan Agreement and the otherLoan Documents are ratified and confirmed and shall continue in full force andeffect.  Each Credit Party and Lendersand Agent agree that the Loan Agreement and the other Loan Documents, asamended hereby, shall continue to be legal, valid, binding and enforceable inaccordance with their respective terms.

##  

## **5.02        Representationsand Warranties.**  Each Credit Party hereby represents andwarrants to Lenders and Agent that (a) the execution, delivery andperformance of this Amendment and any and all other Loan Documents executedand/or delivered in connection herewith have been authorized by all requisiteorganizational action on the part of such Credit Party and will not violate theorganizational or governing documents of such Credit Party; (b) therepresentations and warranties contained in the Loan Agreement, as amendedhereby, and any other Loan Document are true and correct in all material respectson and as of the date hereof and on and as of the date of execution hereof asthough made on and as of each such date, except for those representations andwarranties specifically made as of an earlier date, which shall be true andcorrect in all material respects as of such earlier date; (c) no Defaultor Event of Default under the Loan Agreement, as amended hereby, has occurredand is continuing, unless such Default or Event of Default has beenspecifically waived in writing by Agent; (d) each Credit Party is inmaterial compliance with all covenants and agreements contained in the LoanAgreement and the other Loan Documents, as amended hereby; and (e) noCredit Party has 

 

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## amended its organizational or governing documents since the date ofexecution of the Loan Agreement other than as has been previously disclosed anddelivered to the Agent.

##  

# **ARTICLE VIMiscellaneous Provisions**

# ** **

## **6.01        Survivalof Representations and Warranties.**  Allrepresentations and warranties made in the Loan Agreement or any other LoanDocument, including, without limitation, any document furnished in connectionwith this Amendment, shall survive the execution and delivery of this Amendmentand the other Loan Documents, and no investigation by Lender or Agent or anyclosing shall affect the representations and warranties or the right of Lenderor Agent to rely upon them.

##  

## **6.02        Referenceto Loan Agreement.**  Each of the Loan Agreement andthe other Loan Documents, and any and all other Loan Documents, documents orinstruments now or hereafter executed and delivered pursuant to the termshereof or pursuant to the terms of the Loan Agreement, as amended hereby, arehereby amended so that any reference in the Loan Agreement and such other LoanDocuments to the Loan Agreement shall mean a reference to the Loan Agreement,as amended hereby, and any reference in the Loan Agreement and such other LoanDocuments to any other Loan Document amended by the provisions of thisAmendment shall mean a reference to such other Loan Documents, as amendedhereby.

##  

## **6.03        Expensesof Lender.**  As provided in the Loan Agreement, eachCredit Party agrees to pay on demand all costs and out-of-pocket expensesincurred by Agent in connection with the preparation, negotiation, andexecution of this Amendment and the other Loan Documents executed pursuanthereto and any and all amendments, modifications, and supplements thereto,including, without limitation, the costs and fees of Agent’s legal counsel, andall costs and out-of-pocket expenses incurred by Agent in connection with theenforcement or preservation of any rights under the Loan Agreement, as amendedhereby, or any other Loan Documents, including, without, limitation, the costsand fees of Agent’s legal counsel and consultants retained by Agent or retainedby Agent’s legal counsel.

##  

## **6.04        Severability.** Any provision of this Amendment held by a court of competentjurisdiction to be invalid or unenforceable shall not impair or invalidate theremainder of this Amendment and the effect thereof shall be confined to theprovision so held to be invalid or unenforceable.

##  

## **6.05        Successorsand Assigns.**  This Amendment is binding upon and shallinure to the benefit of Lenders and Agent and each Credit Party and their respectivesuccessors and assigns, except that no Credit Party may assign or transfer anyof its rights or obligations hereunder without the prior written consent ofLender and Agent.

##  

## **6.06        Counterparts.** This Amendment may be executed in one or more counterparts, each ofwhich when so executed shall be deemed to be an original, but all of which whentaken together shall constitute one and the same instrument.

##  

## **6.07        Effectof Waiver.**  No consent or waiver, express or implied, byLenders or Agent to or for any breach of or deviation from any covenant orcondition by any Credit Party 

 

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shall be deemed a consent to or waiver of any other breach of the sameor any other covenant, condition or duty.

##  

## **6.08        Headings.** The headings, captions, and arrangements used in this Amendment are forconvenience only and shall not affect the interpretation of this Amendment.

##  

## **6.09        ApplicableLaw.**  THIS AMENDMENT AND ALL OTHER LOAN DOCUMENTSEXECUTED PURSUANT HERETO SHALL BE DEEMED TO HAVE BEEN MADE AND TO BEPERFORMABLE IN AND SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THELAWS OF THE STATE OF TEXAS.

##  

## **6.10        FinalAgreement.**  **THE LOAN AGREEMENT AND THEOTHER LOAN DOCUMENTS, EACH AS AMENDED HEREBY, REPRESENT THE ENTIRE EXPRESSIONOF THE PARTIES WITH RESPECT TO THE SUBJECT MATTER HEREOF ON THE DATE THISAMENDMENT IS EXECUTED.  THE LOANAGREEMENT AND THE OTHER LOAN DOCUMENTS, AS AMENDED HEREBY, MAY NOT BECONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORALAGREEMENTS OF THE PARTIES.**  **THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.**  NO MODIFICATION, RESCISSION, WAIVER, RELEASEOR AMENDMENT OF ANY PROVISION OF THIS AMENDMENT SHALL BE MADE, EXCEPT BY AWRITTEN AGREEMENT SIGNED BY EACH CREDIT PARTY AND LENDERS AND AGENT.

##  

## **6.11       ****Release****.**  EACH CREDITPARTY HEREBY ACKNOWLEDGES THAT IT HAS NO DEFENSE, COUNTERCLAIM, OFFSET,CROSS-COMPLAINT, CLAIM OR DEMAND OF ANY KIND OR NATURE WHATSOEVER THAT CAN BEASSERTED TO REDUCE OR ELIMINATE ALL OR ANY PART OF ITS LIABILITY TO REPAYTHE “OBLIGATIONS” OR TO SEEK AFFIRMATIVE RELIEF OR DAMAGES OF ANY KIND ORNATURE FROM LENDER OR AGENT.  EACH CREDITPARTY HEREBY VOLUNTARILY AND KNOWINGLY RELEASES AND FOREVER DISCHARGES LENDERSAND AGENT AND ITS RESPECTIVE PREDECESSORS, AGENTS, EMPLOYEES, SUCCESSORS ANDASSIGNS, FROM ALL POSSIBLE CLAIMS, DEMANDS, ACTIONS, CAUSES OF ACTION, DAMAGES,COSTS, EXPENSES, AND LIABILITIES **(INCLUDING ALL STRICTLIABILITIES)**WHATSOEVER, KNOWN OR UNKNOWN, ANTICIPATED ORUNANTICIPATED, SUSPECTED OR UNSUSPECTED, FIXED, CONTINGENT, OR CONDITIONAL, ATLAW OR IN EQUITY, ORIGINATING IN WHOLE OR IN PART ON OR BEFORE THE DATETHIS AMENDMENT IS EXECUTED, WHICH ANY CREDIT PARTY MAY NOW OR HEREAFTERHAVE AGAINST LENDERS OR AGENT OR ITS RESPECTIVE PREDECESSORS, AGENTS,EMPLOYEES, SUCCESSORS AND ASSIGNS, IF ANY, AND IRRESPECTIVE OF WHETHER ANY SUCHCLAIMS ARISE OUT OF CONTRACT, TORT, VIOLATION OF LAW OR REGULATIONS, OROTHERWISE, AND ARISING FROM ANY “LOANS,” INCLUDING, WITHOUT LIMITATION, ANYCONTRACTING FOR, CHARGING, TAKING, RESERVING, COLLECTING OR RECEIVING INTERESTIN EXCESS OF THE HIGHEST LAWFUL RATE APPLICABLE, THE EXERCISE OF ANY RIGHTS ANDREMEDIES UNDER THE LOAN AGREEMENT OR OTHER LOAN DOCUMENTS, AND NEGOTIATION FORAND EXECUTION OF THIS AMENDMENT.

 

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** **

**IN WITNESS WHEREOF**, this Amendment has been executed on the date firstwritten above, to be effective as the respective date set forth above.

 
|       |       | AGENT:                                   |
|------------|------------|------------------------------------------|
|       |       |                                     |
| ** ** | ** ** | **BANK OF  AMERICA, N.A.**, as Agent     |
| ** ** | ** ** | ** **                               |
|       |       |                                     |
|       |       | By:                                      |           /s/  H Michael Wills |
|       |       | Name:                                    |      H  Michael Wills |
|       |       | Title:                                   |        Senior  Vice President |
|       |       |                                     |
|       |       | LENDERS:                                 |
|       |       |                                     |
| ** ** | ** ** | **BANK OF  AMERICA, N.A.**               |
| ** ** | ** ** | ** **                               |
|       |       |                                     |
|       |       | By:                                      |           /s/  H Michael Wills |
|       |       | Name:                                    |      H  Michael Wills |
|       |       | Title:                                   |       Senior  Vice President |
|       |       |                                     |   |
|       |       |                                     |
| ** ** | ** ** | **WELLS  FARGO FOOTHILL, LLC**           |
|       |       |                                     |
|       |       | By:                                      |           /s/  David P Hill |
|       |       | Name:                                    |      David  Hill |
|       |       | Title:                                   |        Vice  President |
|       |       |                                     |   |
|       |       |                                     |
| ** ** | ** ** | **THE CIT  GROUP/BUSINESS CREDIT, INC.** |
| ** ** | ** ** | ** **                               |
| ** ** | ** ** | ** **                               |
|       |       | By:                                      |          /s/  Chris Handler |
|       |       | Name:                                    |      Chris  Handler |
|       |       | Title:                                   |         Assistant  Vice President |
|            |            |                                          |  |  |  |  |  |  |  |

 

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|   | CREDIT PARTIES:                           |
|--------|-------------------------------------------|
|   |                                      |
|   | **INTEGRATED ELECTRICAL SERVICES,  INC.** |
|   |                                      |
|   | By:                                       | /s/  Curt L. Warnock |
|   |                                      | Curt L. Warnock |
|   |                                      | Senior Vice President |
|        |                                           |  |  |

 

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|   | BRYANT ELECTRIC COMPANY, INC.             |
|--------|-------------------------------------------|
|   | IES INDUSTRIAL, INC.                      |
|   | IES RESIDENTIAL, INC.                     |
|   | IES COMMERCIAL, INC.                      |
|   | IES HOUSTON RESOURCES, INC.               |
|   | IES PROPERTIES, INC.                      |
|   | IES TANGIBLE PROPERTIES, INC.             |
|   | IES PURCHASING & MATERIALS, INC. |
|   | IES CONSOLIDATION, LLC                    |
|   | IES SHARED SERVICES, INC.                 |
|   | IES OPERATIONS GROUP, INC.                |
|   | IES RESIDENTIAL GROUP, INC.               |
|   | ICS HOLDINGS LLC                          |
|   | INTEGRATED ELECTRICAL FINANCE, INC.       |
|   | KEY ELECTRICAL SUPPLY, INC.               |
|   | MARK HENDERSON, INCORPORATED              |
|   | MID-STATES ELECTRIC COMPANY, INC.         |
|   | MILLS ELECTRICAL CONTRACTORS, INC.        |
|   | MILLS MANAGEMENT LLC                      |
|   | NEAL ELECTRIC MANAGEMENT LLC              |
|   | PAN AMERICAN ELECTRIC, INC,               |
|   | PAN AMERICAN ELECTRIC COMPANY, INC.       |
|   | RAINES ELECTRIC CO., INC.                 |
|   | RAINES MANAGEMENT LLC                     |
|   | THOMAS POPP & COMPANY            |
|   |                                      |
|   |                                      |
|   | /s/ Curt L. Warnock                       |
|   | Curt L. Warnock                           |
|   | Vice President                            |

 

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|   | IES MANAGEMENT ROO, LP                    |
|--------|-------------------------------------------|
|   |                                      |
|   | By: Neal Electric Management LLC          |
|   | General Partner of IES Management ROO, LP |
|   |                                      |
|   | By:                                       | /s/ Curt L. Warnock |
|   | Name:                                     | Curt L. Warnock |
|   | Title:                                    | Vice President |
|   |                                      |
|   |                                      |
|   | IES MANAGEMENT LP                         |
|   |                                      |
|   |                                      |
|   | By: IES Residential Group, Inc.      |
|   | General Partner of IES Management LP      |
|   |                                      |
|   | By:                                       | /s/ Curt L. Warnock |
|   | Name:                                     | Curt L. Warnock |
|   | Title:                                    | Vice President |
|   |                                      |
|   |                                      |
|   | MILLS ELECTRIC, LP                        |
|   |                                      |
|   |                                      |
|   | By: Mills Management LLC                  |
|   | General Partner of Mills Electric, LP     |
|   |                                      |
|   | By:                                       | /s/ Curt L. Warnock |
|   | Name:                                     | Curt L. Warnock |
|   | Title:                                    | Vice President |
|   |                                      |
|   |                                      |
|   | RAINES ELECTRIC LP                        |
|   |                                      |
|   |                                      |
|   | By: Raines Management LLC                 |
|   | General Partner of Raines Electric LP     |
|   |                                      |
|   | By:                                       | /s/ Curt L. Warnock |
|   | Name:                                     | Curt L. Warnock |
|   | Title:                                    | Vice President |
|        |                                           |  |  |  |  |  |  |

 

----

 
|   | MILLS ELECTRICAL HOLDINGS, LLC.  |
|--------|----------------------------------|
|   | MILLS ELECTRIC HOLDINGS II, LLC. |
|   | RAINES HOLDINGS, LLC.            |
|   | RAINES HOLDINGS II, LLC.         |
|   |                             |
|   |                             |
|   | /s/ Curt L. Warnock              |
|   | Curt L. Warnock                  |
|   | President                        |
|   |                             |
|   |                             |
|   | IES REINSURANCE, LTD.            |
|   |                             |
|   |                             |
|   | /s/ Curt L. Warnock              |
|   | Curt L. Warnock                  |
|   | President                        |

 

----

 

**Annex I**

 

**Borrowers**

** **
| Bryant Electric  Company, Inc.             | North Carolina |
|-------------------------------------------------|----------------|
| IES  Commercial, Inc.                      | Delaware       |
| IES  Consolidation LLC                          | Delaware       |
| IES Houston  Resources, Inc.               | Delaware       |
| IES  Industrial, Inc.                      | South Carolina |
| IES Management,  LP                             | Texas          |
| IES Management  ROO, LP                         | Texas          |
| IES Properties  Inc.                            | Delaware       |
| IES  Purchasing & Materials, Inc. | Delaware       |
| IES  Residential, Inc.                     | Delaware       |
| IES Shared  Services, Inc.                 | Delaware       |
| IES Tangible  Properties, Inc.             | Delaware       |
| Integrated  Electrical Finance, Inc.       | Delaware       |
| Integrated  Electrical Services, Inc.      | Delaware       |
| Key Electrical  Supply, Inc.               | Texas          |
| Mark Henderson,  Incorporated                   | Delaware       |
| Mid-States  Electric Company, Inc.         | Delaware       |
| Mills Electric  LP                              | Texas          |
| Mills Electrical  Contractors, Inc.        | Delaware       |
| Pan American  Electric, Inc.               | Tennessee      |
| Raines Electric  LP                             | Texas          |
| Thomas  Popp & Company                 | Ohio           |

 

----

 

Annex II

**Guarantors**

** **
| ICS Holdings LLC                          | Arizona    |
|-------------------------------------------|------------|
| IES Operations  Group, Inc.          | Delaware   |
| IES Reinsurance  Ltd.                     | Bermuda    |
| IES Residential  Group, Inc.         | Delaware   |
| Mills Electric  Holdings II LLC           | Delaware   |
| Mills Electrical  Holdings LLC            | Arizona    |
| Mills Management  LLC                     | Arizona    |
| Neal Electric  Management LLC             | Arizona    |
| Pan American  Electric Company, Inc. | New Mexico |
| Raines Electric  Co., Inc.           | Delaware   |
| Raines Holdings  II LLC                   | Delaware   |
| Raines Holdings  LLC                      | Arizona    |
| Raines  Management LLC                    | Arizona    |

 

----

 

**Exhibit A**

 

**INTEGRATEDELECTRICAL SERVICES, INC., AND THE**

**SUBSIDIARIESOF INTEGRATED ELECTRICAL SERVICES, INC.SIGNATORY HERETO AS BORROWERS,**

as Borrowers

 

 

**THESUBSIDIARIES OF INTEGRATED ELECTRICAL SERVICES, INC.SIGNATORY HERETO AS GUARANTORS,**as Guarantors

 

 

**LOANAND  SECURITY  AGREEMENT**

 

Dated:  May 12, 2006

 

**$60,000,000.00**

 

 

**THEFINANCIAL INSTITUTIONS**

**PARTYHERETO FROM TIME TO TIME**, as Lenders

 

and

 

**BANKOF AMERICA, N.A.**,as Agent

 

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