Document:

exv10w2

 

EXHIBIT 10.2

PRIVILEGED AND CONFIDENTIAL

PROVIDED AS PART OF SETTLEMENT DISCUSSIONS

SUBJECT TO RULE 408 OF THE FEDERAL RULES OF EVIDENCE

AND ALL BANKRUPTCY AND STATE LAW EQUIVALENTS

PLAN SUPPORT AND LOCK-UP AGREEMENT REGARDING

INTEGRATED ELECTRICAL SERVICES, INC.

     THIS PLAN SUPPORT AND LOCK-UP AGREEMENT (the “Agreement”) dated as of February 13,
2006, is entered into by and among Integrated Electrical Services, Inc., a Delaware corporation
(the “Company”), and the holders (or investment managers or advisors having authority to
act on behalf of the beneficial owners) identified on Schedule 1 and signatory hereto (the
“Supporting Noteholders”) of the Integrated Electrical Services, Inc. 9 3/8% Senior
Subordinated Notes Due 2009 (the “Senior Subordinated Notes”) (the Company together with
the Supporting Noteholders, the “Parties” and each individually, a “Party”).

RECITALS

     WHEREAS, the Company has determined in the exercise of its fiduciary duty that it is
necessary, appropriate, and timely to undertake a restructuring of its debt and equity interests
and, to that end, is contemplating a restructuring of the financial obligations of the Company and
its subsidiaries (the “Financial Restructuring”) through the prosecution of jointly
administered chapter 11 bankruptcy cases (collectively the “Chapter 11 Cases”) under title
11 of the United States Code (as amended, the “Bankruptcy Code”), which shall be filed in
the United States Bankruptcy Court for the Northern District of Texas, Dallas Division (the
“Bankruptcy Court”);

     WHEREAS, the Supporting Noteholders hold, in the aggregate, not less than 61% of the
outstanding principal amount of the Senior Subordinated Notes;

     WHEREAS, certain of the Supporting Noteholders are members of an ad hoc committee of certain
holders of the Senior Subordinated Notes (the “Ad Hoc Committee”) that has engaged in good
faith negotiations with the Company with the objective of reaching an agreement regarding the
principal terms of the Financial Restructuring and has reached agreement in principle on the terms
and conditions as set forth in the Company’s proposed plan of reorganization (the “Plan”),
a copy of which is attached hereto as Exhibit A;

     WHEREAS, in order to implement the Financial Restructuring, the Company (a) has prepared the
Plan and a supporting disclosure statement (the “Disclosure Statement”), a copy of which is
attached hereto as Exhibit B; and (b) intends to (i) commence the Chapter 11 Cases in the
Bankruptcy Court, (ii) on the date of commencement of the Chapter 11 Cases, file the Plan and
Disclosure Statement with the Bankruptcy Court, and (iii) use commercially reasonable efforts to
have the Disclosure Statement approved and the Plan confirmed by the Bankruptcy Court, in

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each case, as expeditiously as reasonably practicable under the Bankruptcy Code and the
Federal Rules of Bankruptcy Procedure;

     WHEREAS, each Supporting Noteholder holds or is the legal or beneficial holder of, or the
investment manager with discretionary authority with respect to, the aggregate principal amount of
Senior Subordinated Notes set forth below each such Supporting Noteholder’s signature attached
hereto and, to facilitate the implementation of the Financial Restructuring, each of the Supporting
Noteholders is prepared to support the approval of the Disclosure Statement and confirmation of the
Plan, on the terms and subject to the conditions of this Agreement and applicable law, and, if and
when solicited to do so in accordance with applicable law, to vote (or, in the case of managed or
advised accounts, instruct its custodial agents to vote) to accept the Plan; and

     WHEREAS, the Company desires to obtain the commitment of the Supporting Noteholders to support
and vote for the Plan, subject to the terms and conditions set forth herein.

     NOW, THEREFORE, in consideration of the premises and the mutual covenants and agreements set
forth herein, and for other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, each of the Parties hereto hereby agrees as follows:

1. Incorporation of Recitals. The recitals set forth above are expressly incorporated
herein and made an integral part of this Agreement; provided that each Supporting Noteholder hereto
severally and not jointly makes each and any representation or warranty hereunder as to itself
only.

2. Support of Financial Restructuring.

     (a) As long as this Agreement has not been terminated pursuant to Section 5 hereof and the
documents that are reasonably necessary to effectuate the terms of the Plan (including, without
limitation, all material financing documents) are reasonably satisfactory in form and substance to
the Majority Supporting Noteholders (as defined below), each Supporting Noteholder severally agrees
with each other Supporting Noteholder and with the Company that, if the Company proposes the Plan,
such Supporting Noteholder (i) shall, subject to receipt of the Disclosure Statement, as soon as
practicable (but in no case later than any voting deadline stated therein), vote all of its Senior
Subordinated Notes, Claims (as defined below), and equity interests, as applicable, whether now
owned or hereafter acquired, to accept the Plan and otherwise support and take all reasonable
actions to facilitate the proposal, solicitation, confirmation, and consummation of the Plan; (ii)
shall not object to confirmation of, or vote to reject, the Plan or otherwise commence or
participate in any proceeding directly or indirectly for the purpose of opposing or altering the
Plan, the Disclosure Statement, the solicitation of acceptances of the Plan or any other
reorganization documents containing terms and conditions consistent in all material respects with
the Plan and this Agreement; (iii) shall vote against any restructuring, workout, or plan of
reorganization relating to the Company and/or its subsidiaries other than the Plan; and (iv) shall
not

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directly or indirectly seek, solicit, support, encourage, vote for, consent to, or participate
in the negotiation or formulation of (x) any plan of reorganization, proposal, offer, dissolution,
winding up, liquidation, reorganization, merger, or restructuring for the Company and/or its
subsidiaries other than the Plan, (y) any disposition outside of the Plan of all or any substantial
portion of the assets of the Company and/or its subsidiaries, or (z) any other action (including
any request to terminate exclusivity) that is inconsistent with, or that would delay or obstruct
the proposed solicitation, confirmation, or consummation of the Plan.

     (b) Agreement to Forbear. Each Supporting Noteholder agrees that until this Agreement
has been terminated in accordance with Section 5, it shall not (i) take any action or otherwise
pursue any right or remedy under applicable law, the Senior Subordinated Notes or the related
indentures, as applicable, or (ii) initiate, or have initiated on its behalf, any litigation or
proceeding of any kind with respect to the Senior Subordinated Notes or its Claims other than to
enforce this Agreement.

3. Proposal of the Plan. The Company represents to each Supporting Noteholder individually
that the Company shall (a) file the Chapter 11 Cases in the Bankruptcy Court on or prior to
February 14, 2006, and (b) subject to Bankruptcy Court approval, solicit acceptances of the Plan
from the holders of the Senior Subordinated Notes by means of the Disclosure Statement; and (c)
pursue the confirmation and consummation of such Plan as expeditiously as reasonably practical. As
long as this Agreement has not been terminated pursuant to Section 5 hereof, the Company shall use
commercially reasonable efforts, subject to its fiduciary duty to holders of equity interests and
creditors, to promptly and diligently carry out, and oppose any efforts to prevent, the actions
described in the first sentence of this Section 3.

4. Restrictions on Transfer. As long as this Agreement has not been terminated pursuant to
Section 5 hereof and the confirmation and effective date of the Plan have not occurred, no
Supporting Noteholder shall, directly or indirectly, sell, assign, transfer, hypothecate, grant any
option or right to acquire, or otherwise dispose of (each, a “Transfer”) all or any portion
of any Senior Subordinated Notes or Claims in the Company or any right or interest therein (voting
or otherwise), unless the purchaser, assignee, or transferee (the “Transferee”) agrees in
writing in the form attached hereto as Exhibit C (such writing a “Transferee
Acknowledgement”) at the time of such Transfer to be bound by all of the terms of this
Agreement in its entirety, without revisions, as a Party hereto, including without limitation
Section 2 hereof. Upon execution of the Transferee Acknowledgement, the Transferee shall be deemed
a Supporting Noteholder. Any Transfer not effected in accordance with the foregoing shall be
deemed void ab initio. In the event of a Transfer, the transferor shall, within three (3) business
days after such Transfer, provide notice of such Transfer to the Company, together with a copy of
the Transferee Acknowledgement.

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5. Termination.

     (a) This Agreement may be terminated in accordance with Section 5(b), if any of the
following events (any such event, a “Termination Event”) occurs and is not waived in
accordance with Section 12:

          (i) the Company has not commenced the Chapter 11 Cases in the Bankruptcy Court,
together with the filing of the Plan and Disclosure Statement with the Bankruptcy
Court, on or before February 14, 2006 (the “Commencement Date”);

          (ii) the solicitation pursuant to the Disclosure Statement of the Plan has not
commenced on or before the date which is 60 days after the Commencement Date;

          (iii) an order confirming the Plan shall not have been entered by the
Bankruptcy Court on or before the date which is 105 days after the Commencement
Date;

          (iv) the Plan shall not have been consummated on or before the date which is
120 days after the Commencement Date;

          (v) the Company files with the Bankruptcy Court a plan of reorganization on
terms and conditions materially different from, or a disclosure statement materially
inconsistent with, the Plan and Disclosure Statement;

          (vi) once filed, and prior to the confirmation of the Plan, any or all of the
Chapter 11 Cases shall have been converted to a case or cases under chapter 7, or
dismissed;

          (vii) an examiner is appointed pursuant to section 1104(c)(1) of the Bankruptcy
Code with expanded powers to run the business of the Company, or a trustee under
chapter 11 of the Bankruptcy Code is appointed for the Company in any of the Chapter
11 Cases;

          (viii) there shall have occurred any material breach of this Agreement by the
Company or any representation or warranty made by the Company in this Agreement
shall be incorrect in any material respect;

          (ix) the chief restructuring officer of the Company is dismissed or replaced
without the prior written consent of the Majority Supporting Noteholders, which
consent shall not be unreasonably withheld or delayed;

          (x) there shall occur an event which has a material adverse effect on the
business, assets, prospects or operations of the

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Company and its subsidiaries, taken as a whole, but excluding effects that
customarily occur as a result of events leading up to and following the commencement
of a case under chapter 11 of the Bankruptcy Code;

          (xi) any court of competent jurisdiction shall enter a final nonappealable
judgment or order declaring this Agreement to be unenforceable;

          (xii) the Bankruptcy Court shall have entered an order, the practical effect of
which is to render it highly unlikely that the Plan can be consummated; or

          (xiii) the Company shall withdraw the Plan or publicly announce its intention
not to support the Plan.

     (b) Upon the occurrence of a Termination Event that is not waived in accordance with Section
12, this Agreement shall terminate effective upon the fifth (5th) business day after written notice
of termination has been delivered to the Parties by the Supporting Noteholders who are not then in
breach of any of their obligations under this Agreement and who hold at least a majority in
aggregate principal of the Senior Subordinated Notes held by all Supporting Noteholders. During
the period following the commencement of the Chapter 11 Cases but prior to the effective date of
the Plan, enforcement of this Agreement as to the Company shall be limited by applicable bankruptcy
law. Termination in accordance with this paragraph shall not affect any Party’s remedies as a
result of any breach by any other Party.

     (c) Notwithstanding anything to the contrary set forth in this Agreement, this Agreement shall
terminate on July 14, 2006.

     (d) The Supporting Noteholders shall have no liability to the Company or each other in respect
of any termination of this Agreement in accordance with the terms hereof. The Company shall have
no liability to the Supporting Noteholders in respect of any termination of this Agreement in
accordance with the terms hereof.

6. Conditions to Effectiveness of this Agreement. This Agreement shall not become
effective until such time as each of the following conditions have been satisfied:

     (a) The receipt by the Company of the authorized signatures to this Agreement by at least 4
Supporting Noteholders holding, in the aggregate, not less than 61% of the outstanding principal
amount of the Senior Subordinated Notes; and

     (b) Execution of this Agreement by the Company.

7. Public Disclosures. Prior to the issuance of any public disclosures regarding the
Financial Restructuring, the Company shall consult with the Ad Hoc Committee, or if no such Ad Hoc
Committee then exists, the Supporting Noteholders that are willing to receive restricted
information at such time, as to the form and substance of such public disclosures, provided that at
all times the Company shall be solely responsible for each

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public disclosure made by it. Without limiting the generality of the foregoing, unless required by
lawful subpoena issued by a court of competent jurisdiction, the Company shall not, and shall cause
each of its direct and indirect subsidiaries not to, disclose (a) any Supporting Noteholder’s
identity or (b) the amount of such holder’s respective holdings of Senior Subordinated Notes,
without the prior written consent of such Supporting Noteholder in each case; and, if such
announcement or disclosure is so required, the Company shall afford the Supporting Noteholders a
reasonable opportunity to review and comment upon any such announcement or disclosure prior to the
applicable announcement or disclosure.

8. Fiduciary Duties. Notwithstanding anything to the contrary herein, nothing in this
Agreement shall require (a) the Company or any directors or officers of the Company (in such
person’s capacity as a director or officer of the Company) to take any action, or to refrain from
taking any action, to the extent required to comply with its or his fiduciary obligations under
applicable law or (b) any Supporting Noteholder that is a member of a statutory committee
established in the Chapter 11 Cases to take any action, or to refrain from taking any action, in
such person’s capacity as a statutory committee member to the extent required to comply with the
fiduciary obligations under the Bankruptcy Code. Nothing herein will limit or affect, or give rise
to any liability, to the extent required for the discharge of the fiduciary obligations described
in this Section 8.

9. Representations and Warranties.

     (a) Representations and Warranties of the Supporting Noteholders. Each Supporting
Noteholder hereto severally and not jointly, as to itself only, represents and warrants to each of
the Parties hereto that, as of the date of this Agreement, (i) such Supporting Noteholder either
(A) is the sole legal and beneficial owner of the Senior Subordinated Notes set forth opposite its
name on Schedule 1 hereto and all related claims, rights, and causes of action arising out of or in
connection with or otherwise relating to such Senior Subordinated Notes (the “Claims”), in
each case free and clear of all claims, liens, and encumbrances, other than ordinary course pledges
and/or swaps, or (B) has investment or voting discretion with respect to the Senior Subordinated
Notes and Claims and has the power and authority to bind the beneficial owner(s) of such Senior
Subordinated Notes and Claims to the terms of this Agreement and (ii) such Supporting Noteholder
has full power and authority to vote on and consent to all matters concerning such Senior
Subordinated Notes and Claims and to exchange, assign, and transfer such Senior Subordinated Notes
and Claims.

     (b) Representations and Warranties of the Company and the Supporting Noteholders. Each
of the Parties, hereto severally and not jointly, and as to itself only, represents and warrants to
the other Parties that the following statements, as applicable to it, are true, correct, and
complete as of the date hereof:

          (i) The execution and delivery of this Agreement and the performance of its
obligations hereunder have been duly authorized by all necessary corporate or
similar action on its part, subject, in the case of performance by the Company, to
required Bankruptcy Court approvals

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related to the solicitation, confirmation, and consummation of the Plan, and
that the person executing this Agreement on behalf of such Party has been duly
authorized to execute this Agreement on behalf of and bind such Party;

          (ii) This Agreement is the legally valid and binding obligation of it,
enforceable against it in accordance with its terms, subject in the case of the
Company, to required Bankruptcy Court approvals related to the solicitation,
confirmation, and consummation of the Plan;

          (iii) Subject in the case of the Company to required Bankruptcy Court approvals
related to the solicitation, confirmation, and consummation of a Plan, the
execution, delivery, and performance by it of this Agreement do not and shall not
(A) violate any provision of law, rule, or regulation applicable to it or any of its
affiliates or its certificate of incorporation or bylaws (or similar organization
documents), (B) conflict with, result in the breach of or constitute (with due
notice or lapse of time or both), a default under any material contractual
obligations to which it or any of its affiliates is a party or under its certificate
of incorporation or bylaws (or similar organization documents), or (C) require the
consent of any third party (including any governmental party) which has not been
obtained; and

          (iv) It has entered into this Agreement after receiving the advice of counsel
regarding the matters contemplated hereby.

     (c) Representations and Warranties of the Company. The Company hereby represents and
warrants to each Supporting Noteholder as follows: the Disclosure Statement, including the
exhibits thereto, contains information of a kind and in sufficient detail, as far as reasonably
practicable in light of the nature and history of the Company and its subsidiaries, that will
enable Supporting Noteholders to make an informed judgment about the Plan, and the projected
financial information contained therein was prepared in good faith and on the basis of assumptions
which, in light of the circumstances under which they were made, were believed by its management to
be reasonable.

     (d) Except as expressly set forth in this Agreement, none of the Parties hereto makes any
representation or warranty, written or oral, express or implied.

10. Notices. All notices, requests, elections, and demands under or in connection with
this Agreement shall be in writing and shall be delivered by hand, sent by recognized overnight
courier, or sent by facsimile or similar electronic means to the Party as set forth under its
signature hereto, or to such other address or facsimile number as such Party shall provide to all
other Parties hereto in writing, and shall be deemed sent or given hereunder, in the case of
personal delivery or delivery by recognized overnight courier, on the date of actual delivery, and
in the case of

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transmission by facsimile or similar electronic means, on the date of actual transmission.

11. Entire Agreement. This Agreement and the Plan (the provisions of which are
incorporated herein) constitute the entire agreement among the Parties as to the subject matter
hereof and supersede all prior and contemporaneous agreements, representations, warranties, and
understandings of the Parties, whether oral, written, or implied, as to the subject matter hereof
except that the Parties acknowledge that any confidentiality agreements heretofore executed between
the Company and each Supporting Noteholder shall continue in full force and effect.

12. Amendments and Waivers. This Agreement may not be modified, amended, or supplemented
except in a writing signed by the Company and Supporting Noteholders who are not then in breach
hereof and who hold at least fifty-one percent (51%) in aggregate principal amount of the Senior
Subordinated Notes held by the Supporting Noteholders (the “Majority Supporting Noteholders”);
provided, however, that any modification of, or amendment or supplement to, this Agreement that
materially and adversely affects any Party shall require the written consent of the Party so
affected; provided, further, that any modification of, or amendment or supplement to, this Section
12 shall require the written consent of all of the Parties.

13. Additional Claims or Equity Interests. To the extent any Supporting Noteholder (a)
acquires additional Senior Subordinated Notes or Claims, (b) holds or acquires any other claims
against the Company entitled to vote on the Plan or (c) holds or acquires equity interests in the
Company entitled to vote on the Plan, such Supporting Noteholder agrees that such Senior
Subordinated Notes, Claims, other claims and equity interests shall be subject to this Agreement
and that it shall vote (or cause to be voted) any such additional Senior Subordinated Notes,
Claims, other claims or equity interests (in each case, to the extent still held by it or on its
behalf at the time of such vote) in a manner consistent with Section 2(a).

14. No Third-Party Beneficiaries. Nothing contained in this Agreement is intended to
confer any rights or remedies under or by reason of, this Agreement on any person or entity other
than the Parties hereto, nor is anything in this Agreement intended to relieve or discharge the
obligation or liability of any third party to any Party to this Agreement, nor shall any provision
give any third party any right of subrogation or action over or against any Party to this
Agreement.

15. Successors and Assigns. This Agreement shall be binding upon, and shall inure to the
benefit of, each Party hereto and their respective legal representatives, successors, and assigns.

16. Good Faith Cooperation; Further Assurances; Acknowledgment; Definitive Documents. The
Parties shall cooperate with each other in good faith and shall coordinate their activities (to the
extent practicable and subject to the terms hereof) in respect of (a) all matters relating to their
rights in respect of the Company or otherwise in connection with their relationship with the
Company, (b) all matters concerning the

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implementation of the Financial Restructuring, and (c) the pursuit and support of the Financial
Restructuring. Furthermore, subject to the terms hereof, each of the Parties shall take such
action as may be reasonably necessary to carry out the purposes and intent of this Agreement,
including making and filing any required regulatory filings and voting any equity securities of the
Company in favor of the Financial Restructuring (provided that no Supporting Noteholder shall be
required to incur any expense, liability, or other obligation), and shall refrain from taking any
action that would frustrate the purposes and intent of this Agreement, including proposing a plan
of reorganization or liquidation that is not the Plan. This Agreement is not and shall not be
deemed a solicitation for consents to the Plan or a solicitation to tender or exchange any Senior
Subordinated Notes. Each Party hereby covenants and agrees (a) to negotiate in good faith the
definitive documents implementing, achieving, and relating to the Financial Restructuring,
including the order of the Bankruptcy Court confirming the Plan and definitive documentation
relating to the debtor in possession financing, exit financing, management incentive stock options,
charter, bylaws, registration rights agreement, and other related documents (collectively, the
“Definitive Documents”), each of which is more specifically described in the Plan, shall contain
terms and conditions consistent in all material respects with the Plan, and shall otherwise be
reasonably satisfactory in form and substance to the Supporting Noteholders, and (b) to execute (to
the extent they are a party thereto) and otherwise support the Definitive Documents. It is
understood that the provisions of Section 13 and this Section 16 shall not be applicable to any
Supporting Noteholder in connection with providing or potentially providing exit financing to the
Company.

17. Severability. If any portion of this Agreement shall be held to be invalid or
unenforceable, then that portion shall be deemed modified (only to the extent necessary and in a
manner consistent with the remainder of this Agreement) so as to be valid and enforceable, or if
such modification is not reasonably feasible, shall be deemed to have been severed out of this
Agreement, and the Parties acknowledge that the balance of this Agreement shall in any event be
valid and enforceable unless the effect shall be to materially alter the terms and conditions of
this Agreement.

18. Headings. The descriptive headings of the several sections of this Agreement are
inserted for convenience of reference only and do not constitute a part of this Agreement.

19. Specific Performance. This Agreement, including without limitation the Parties’
agreement herein to support the Plan and to facilitate its confirmation, is intended as a binding
commitment enforceable in accordance with its terms. It is understood and agreed by each of the
Parties hereto that money damages would not be a sufficient remedy for any breach of this Agreement
by any Party and each non-breaching Party shall be entitled to specific performance and injunctive
or other equitable relief as a remedy of any such breach.

20. Interpretation. This Agreement is the product of negotiations among the Parties, and
in the enforcement or interpretation hereof, is to be interpreted in a neutral manner, and any
presumption with regard to interpretation for or against any Party by reason of

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that Party having drafted or caused to be drafted this Agreement, or any portion hereof, shall not
be effective in regard to the interpretation hereof.

21. Consideration. It is hereby acknowledged by the Parties that no payment or additional
consideration shall be due or paid to the Supporting Noteholders, or their respective agents, for
their agreement to vote in accordance with and otherwise comply with the terms and conditions of
this Agreement other than the obligations of the other Parties hereunder.

22. Rule of Interpretation. Notwithstanding anything contained herein to the contrary, it
is the intent of the Parties that all references to votes or voting in this Agreement be
interpreted to include (a) votes or voting on a plan of reorganization under the Bankruptcy Code
and (b) all means of expressing agreement with, or rejection of, as the case may be, a
restructuring or reorganization transaction that is not implemented under the Bankruptcy Code.

23. Reservation of Rights. Except as expressly provided for in this Agreement, nothing
herein is intended to, nor does anything herein, waive, limit, impair, or restrict the ability of
each Supporting Noteholder to protect and preserve its rights, remedies, or interests, including
its claims against the Company. Nothing herein shall be deemed an admission of any kind. If the
transactions contemplated herein are not consummated, or this Agreement is terminated for any
reason, the Parties fully reserve any and all of their rights and defenses. Pursuant to Rule 408
of the Federal Rules of Evidence, any applicable state rules of evidence or any other applicable
law, foreign or domestic, this Agreement and all negotiations relating thereto shall not be
admissible into evidence in any proceeding other than the proceeding to enforce its terms.

24. Counterparts; Fax Signatures. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which together shall constitute
one and the same instrument. Delivery of an executed counterpart of a signature page by facsimile
transmission shall be effective as delivery of a manually executed counterpart.

25. Governing Law. Except to the extent that the Bankruptcy Code or Bankruptcy Rules are
applicable, the rights and obligations arising under this Agreement shall be governed by, and
construed and enforced in accordance with, the laws of the State of New York applicable to
contracts made and performed entirely within such state.

26. Jurisdiction. By its execution and delivery of this Agreement, each of the Parties
hereto irrevocably and unconditionally agrees that any legal action, suit, or proceeding against it
with respect to any matter under or arising out of or in connection with this Agreement or for
recognition or enforcement (including specific performance) of any judgment rendered in any such
action, suit or proceeding, shall be brought in the Bankruptcy Court or prior to the commencement
of the Chapter 11 Cases, in the federal district court or appropriate state court located within
the State of New York. By its execution and delivery of this Agreement, each of the Parties hereto
irrevocably accepts and submits itself to the jurisdiction of the Bankruptcy Court and the federal
and state

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courts located within the State of New York for such purposes and agrees that any such legal
action, suit, or proceeding shall constitute a core proceeding within the meaning of 28 U.S.C.
§157(b)(2).

27. Expenses.

     (a) In any action or proceeding brought by a Party hereto against any other Party hereto to
enforce any provision of this Agreement, or to seek damages for a breach of any provision hereof,
or where any provision hereof is validly asserted as a defense, the prevailing party shall be
entitled to recover reasonable attorneys’ fees and costs from the other party in addition to any
other available remedy.

     (b) The Company shall pay or procure the payment of, before the commencement of the Chapter 11
Cases, all reasonable prepetition fees and expenses of the Ad Hoc Committee, and Weil, Gotshal &
Manges LLP and Conway, Del Genio, Gries & Co., LLC as its respective legal and financial advisors
relating to the Financial Restructuring, outstanding at the time of such commencement and to
undertake in the Plan to pay, or procure the payment of, in the ordinary course of business, all
postpetition fees and expenses of the Ad Hoc Committee and Weil, Gotshal & Manges LLP and Conway,
Del Genio, Gries & Co., LLC as its respective legal and financial advisors relating to the Chapter
11 Cases and any outstanding balance upon the effective date of the Plan. For the avoidance of
doubt, nothing in this Section 27(b) shall require the Company to pay the fees and expenses of any
advisor retained by a Supporting Noteholder who is not also a Company-approved advisor to the Ad
Hoc Committee.

28. Recourse. The only remedy of the Supporting Noteholders for a breach of this Agreement
by the Company is to terminate this Agreement in accordance with its terms, other than to enforce
their rights under Section 27.

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     IN WITNESS WHEREOF, each of the Parties hereto has caused this Agreement to be executed and
delivered by its duly authorized officers as of the date first written above.

	 	 	 	 	 
	INTEGRATED ELECTRICAL SERVICES, INC.	 	 
	 
	 	 	 	 
	 
	 	 	 	 
	By:

	 	      /s/ Curt L.Warnock
 

	 	 
	Name:

	 	      Curt L.Warnock	 	 
	Title:

	 	      Senior Vice President	 	 

Notice
Address:

1800 West Loop South, Suite 500

Houston, Texas 77027

Attention: Curt L. Warnock

Phone: (713) 860-1500

Fax: (713) 860-1578

With a copy to:

Vinson & Elkins L.L.P.

2001 Ross Avenue, Suite 3700

Dallas, Texas 75201

Attention: Daniel C. Stewart

Phone: (214) 220-7761

Fax: (214) 999-7761

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	TONTINE CAPITAL PARTNERS, L.P.	 	 
	 
	 	 	 	 
	 
	 	 	 	 
	By:

	 	      /s/ Jeffrey L. Gendell
 

	 	 
	Name:

	 	     Jeffrey L. Gendell	 	 
	Title:

	 	     Managing Member	 	 
	 

	 	     Tontine Capital Mangement, LLC	 	 

Notice Address

55 Railroad Avenue

3rd Floor

Greenwich, Connecticut 06830

Phone: (203) 769-2015

Fax: (203) 769-2010

Attention: Joe Lash

	 	 	 	 	 
	SOUTHPOINT CAPITAL ADVISORS LP	 	 
	 
	 	 	 	 
	 
	 	 	 	 
	By:

	 	     /s/ Robert Butts
 

	 	 
	Name:

	 	     Robert Butts	 	 
	Title:

	 	     Managing Member	 	 

Notice Address

623 Fifth Avenue, 25th Floor

New York, New York 10022

Phone: (212) 692-6350

Fax: (212) 692-6355

Attention: Rob Butts

	 	 	 	 	 
	FIDELITY MANAGEMENT & RESEARCH CO.	 	 
	 
	 	 	 	 
	 
	 	 	 	 
	By:

	 	     /s/ NateVan Duzer
 

	 	 
	Name:

	 	     Nate Van Duzer	 	 
	Title:

	 	     Director, Restructuring and	 	 
	 

	 	     Legal Affairs	 	 

Notice Address

82 Devonshire Street E31C

Boston, Massachusetts 02109-3614

Phone: (617) 392-8129

Fax: 617-476-5174

Attention: Nate Van Duzer

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	FLAGG STREET CAPITAL LLC	 	 
	 
	 	 	 	 
	 
	 	 	 	 
	By:

	 	     /s/ Andrew Moss
 

	 	 
	Name:

	 	     Andrew Moss	 	 
	Title:

	 	     COO/GC	 	 

Notice Address

44 Brattle Street

Cambridge, Massachusetts 02138

Phone: (617) 876-6085

Fax: (617) 876-6081

Attention: Andrew Moss

With a copy in each case to:

Weil, Gotshal & Manges LLP

767 Fifth Avenue

New York, New York 10153

Attn: Ted S. Waksman

Phone: (212) 310-8362

Fax: (212) 310-8007

14

 

SCHEDULE 1

SUPPORTING NOTEHOLDERS

	 	 	 	 	 
	 	 	Principal Amount of Notes
	Tontine Capital Partners, L.P.
	 	$	65,822,000	 
	Southpoint Capital Advisors L.P.
	 	$	24,800,000	 
	Fidelity Management & Research Co.
	 	$	12,416,000	 
	Flagg Street Capital LLC
	 	$	3,627,000	 

 

 

EXHIBIT A

PLAN

THIS PLAN IS NOT AN OFFER WITH RESPECT TO ANY SECURITIES OF THE COMPANY OR A SOLICITATION OF
ACCEPTANCES OF A CHAPTER 11 PLAN OF REORGANIZATION. SUCH OFFER OR SOLICITATION WILL ONLY BE MADE IN
COMPLIANCE WITH ALL APPLICABLE SECURITIES LAWS AND/OR PROVISIONS OF THE BANKRUPTCY CODE.

 

 

EXHIBIT B

DISCLOSURE STATEMENT

THIS DISCLOSURE STATEMENT IS NOT AN OFFER WITH RESPECT TO ANY SECURITIES OF THE COMPANY OR A
SOLICITATION OF ACCEPTANCES OF A CHAPTER 11 PLAN OF REORGANIZATION. SUCH OFFER OR SOLICITATION WILL
ONLY BE MADE IN COMPLIANCE WITH ALL APPLICABLE SECURITIES LAWS AND/OR PROVISIONS OF THE BANKRUPTCY
CODE.

 

 

EXHIBIT C

TRANSFEREE ACKNOWLEDGMENT

[TO BE INSERTED INTO LETTERHEAD OF TRANSFEROR]

__________________ ___, 2006

______________________ (the “Transferee”)

Re: Transferee Acknowledgment

Ladies and Gentlemen:

This letter (this “Letter”) is in reference to paragraph 4 of that certain Plan Support
Agreement (the “PSA”) entered into as of February 13, 2006, among Integrated Electrical
Services, Inc., a Delaware corporation (the “Company”), and the Supporting Noteholders.
All capitalized terms used but not defined herein have the meanings given to them in the PSA.

Paragraph 4 of the PSA provides, in relevant part, as follows:

As long as this Agreement has not been terminated pursuant to Section 5 hereof and
the confirmation and effective date of the Plan have not occurred, no Supporting
Noteholder shall, directly or indirectly, sell, assign, transfer, hypothecate, grant
any option or right to acquire, or otherwise dispose of (each, a “Transfer”)
all or any portion of any Senior Subordinated Notes or Claims or any right or
interest therein (voting or otherwise), unless the purchaser, assignee, or
transferee (the “Transferee”) agrees in writing in the form attached hereto
as Exhibit C (such writing a “Transferee Acknowledgement”) at the time of
such Transfer to be bound by all of the terms of this Agreement in its entirety,
without revisions, as a Party hereto, including without limitation Section 2 hereof.
Upon execution of the Transferee Acknowledgement, the Transferee shall be deemed a
Supporting Noteholder. Any Transfer not effected in accordance with the foregoing
shall be deemed void ab initio. In the event of a Transfer, the transferor shall,
within three (3) business days after such Transfer, provide notice of such Transfer
to the Company, together with a copy of the Transferee Acknowledgement.

     As of                                                               , 2006, we, the undersigned have agreed to transfer the following principal
amount of Senior Subordinated Notes to the countersigning party, as Transferee:

	 	 	 	 	 
	 	 	 	 	PRINCIPAL
	 	 	 	 	AMOUNT
	ISSUANCE	 	MATURITY	 	TRANSFERRED
	9-3/8%
Senior Subordinated Notes
	 	February 1, 2009	 	 
	 
	 	 	 	 

 

 

By your countersignature in the space provided below, you, as Transferee, represent and warrant
that you have received the PSA (attached as Exhibit A) and the Plan (attached hereto as Exhibit B).

Please indicate your agreement to be bound by (a) the PSA as a Supporting Noteholder and (b) the
terms and conditions of this Letter, in each case in their entirety without revisions (including
with respect to any and all claims or interests you already may hold against or in the Company
prior to the Transfer of the interests described above), by countersigning below and returning a
copy of this Letter to the Transferor. This Letter may be executed in one or more counterparts,
each of which shall be deemed an original and all of which shall constitute one and the same
Letter. Delivery of an executed signature page of this Letter by facsimile shall be effective as
delivery of a manually executed signature page of this Letter. Upon receipt of your
countersignature to this Letter, which is a precondition to any Transfer of the interests described
above, this Letter shall be provided to the Company pursuant to paragraph 4 of the PSA.

Very truly yours,

[INSERT NAME OF TRANSFEROR]

ACCEPTED AND AGREED

[INSERT NAME OF TRANSFEREE]exv10w3

 

EXHIBIT 10.3

February 10, 2006

	 	 	 
	Integrated Electrical Services, Inc.

	 	 
	1800 West Loop South
	 	 
	Suite 500
	 	 
	Houston, Texas 77027
	 	 

	 	 	 
	Attention:

	 	Mr. David Miller
	 

	 	Chief Financial Officer

	 	 	 
	Re:

	 	Commitment for Senior Post-Confirmation Exit Credit Facility
	 
	 	 
	Dear Mr. Miller:

Bank of America, N.A. (“Bank”) is pleased to offer to be the sole and exclusive
administrative agent for an $80,000,000 senior post-confirmation exit credit facility (the
“Senior Credit Facility”) to Integrated Electrical Services, Inc. (“Parent”) and
such of the subsidiaries of Parent as shall be acceptable to Bank in its sole discretion (Parent
and such subsidiaries being hereinafter referred to as “Borrower”) to implement the
financial restructuring of Parent and its subsidiaries under a Plan of Reorganization to be filed
with the bankruptcy court in connection with the Chapter 11 bankruptcy of Parent and its
subsidiaries and which Plan of Reorganization shall be satisfactory to Bank in all respects, and
thereafter to issue letters of credit and finance ongoing working capital needs. Bank is further
pleased to offer its commitment to lend up to $40,000,000 of the Senior Credit Facility, upon and
subject to the terms and conditions of this letter and the Summary of Terms and Conditions attached
hereto as Exhibit A (the “Term Sheet”). Bank is pleased to further advise Borrower
of Bank’s willingness to use its commercially reasonable efforts to form a syndicate of financial
institutions (the “Lenders”) reasonably acceptable to Borrower for the Senior Credit
Facility.

Bank will act as sole and exclusive administrative agent for the Senior Credit Facility. No
additional agents, co-agents or arrangers will be appointed and no other titles will be awarded
without Bank’s prior written approval.

Bank intends to commence syndication efforts promptly, and Borrower agrees to actively assist Bank
in achieving a syndication of the Senior Credit Facility that is satisfactory to Bank. Such
assistance shall include (a) Borrower providing and causing its advisors to provide Bank and the
other Lenders upon request with all information reasonably deemed necessary by Bank to complete
syndication; (b) Borrower providing assistance in the preparation of an Offering Memorandum to be
used in connection with the syndication; and (c) Borrower otherwise assisting Bank in its
syndication efforts, including by making senior management and advisors of Borrower and its
subsidiaries available from time to time to attend and make presentations regarding the business
and prospects of Borrower and its subsidiaries, as appropriate, at one or more meetings of
prospective Lenders.

 

 

Integrated Electrical Services, Inc.

February 10, 2006

Page2

It is understood and agreed that Bank will manage and control all aspects of the syndication,
including decisions as to the selection of proposed Lenders and any titles offered to proposed
Lenders, when commitments will be accepted and the final allocations of the commitments among the
Lenders. It is further understood and agreed that no Lender participating in the Senior Credit
Facility will receive compensation from Borrower in order to obtain its commitment, except on the
terms contained herein, in the Term Sheet and in the Fee Letter described below.

In the event that the Senior Credit Facility cannot be successfully syndicated under the terms
outlined in the Term Sheet (a successful syndication being one in which Bank is able to achieve its
targeted hold level of $40,000,000), Borrower agrees that Bank shall be entitled, in consultation
with Borrower, to change the pricing, fees, structure, and other terms of the Senior Credit
Facility if Bank determines that such changes are necessary to ensure a successful syndication.
The Term Sheet shall be deemed to be amended to reflect such changes and the syndication process
shall continue. Successful syndication by closing is a condition precedent to Bank’s commitment
herein.

The commitment of Bank hereunder and the agreement of Bank to provide the services described herein
are subject to the agreement in the preceding paragraph and the satisfaction of each of the
following conditions precedent in a manner acceptable to Bank in its good faith discretion: (a)
satisfaction of each of the terms and conditions set forth herein and in the Term Sheet; (b) the
absence of a material breach of any representation, warranty or agreement of Borrower set forth
herein; (c) Bank’s satisfaction that prior to and during the syndication of the Senior Credit
Facility there shall be no competing offering, placement or arrangement of any debt securities or
bank financing by or on behalf of Borrower (other than an exit term facility to refinance Parent’s
senior convertible notes); (d) the negotiation, execution and delivery of definitive documentation
for the Senior Credit Facility consistent with the Term Sheet and otherwise satisfactory to Bank in
the exercise of its credit judgment; (e) since the date hereof, no material adverse change in or
material disruption of conditions in the financial, banking or capital markets which Bank, in its
sole discretion, deems material in connection with the syndication of the Senior Credit Facility
shall have occurred and be continuing; (f) no change, occurrence or development that could, in
Bank’s credit judgment, have a material adverse effect on the business, assets, liabilities (actual
or contingent), operations, condition (financial or otherwise) or prospects of Borrower and its
subsidiaries taken as a whole shall have occurred or become known to Bank (Bank hereby agreeing
that commencement and prosecution of the Chapter 11 bankruptcy of Parent and its subsidiaries shall
not constitute a development that could have a “material adverse effect”); and (g) Bank not
becoming aware after the date hereof of any information or other matter which in Bank’s credit
judgment is inconsistent in a material and adverse manner with any information or other matter
disclosed to Bank prior to the date hereof with respect to Borrower, its business or financial
condition, or the transactions contemplated in connection with the Senior Credit Facility
(in which case Bank may, in its sole discretion, suggest alternative financing amounts or
structures that ensure adequate protection for the Lenders or terminate this letter and any
commitment or undertaking hereunder).

Borrower hereby represents, warrants and covenants that (a) all information, other than Projections
(defined below), which has been or is hereafter made available to Bank or the Lenders

 

 

Integrated Electrical Services, Inc.

February 10, 2006

Page3

by Borrower
or any of Borrower’s representatives in connection with the transactions contemplated hereby (the
“Information”) is and will be complete and correct in all material respects and does not
and will not contain any untrue statement of a material fact or omit to state a material fact
necessary to make the statements contained therein not misleading, and (b) all financial
projections concerning Borrower and its subsidiaries that have been or are hereafter made available
to Bank or the Lenders by Borrower or any of Borrower’s representatives (the “Projections”)
have been or will be prepared in good faith based upon assumptions Borrower believes to be
reasonable. Borrower agrees to furnish Bank with such Information and Projections as Bank may
reasonably request and to supplement the Information and the Projections from time to time until
the closing date for the Senior Credit Facility so that the representations, warranties and
covenants in the preceding sentence are correct on such closing date. Borrower understands that in
arranging and syndicating the Senior Credit Facility, Bank will be using and relying on the
Information and the Projections without independent verification thereof.

By acceptance of this offer, Borrower agrees to pay all costs and expenses of Bank described in the
Term Sheet.

Borrower agrees to indemnify and hold harmless Bank, each Lender and each of their affiliates and
their directors, officers, employees, advisors and agents (each, an “Indemnified Party”)
from and against (and will reimburse each Indemnified Party for) any and all losses, claims,
damages, liabilities, and expenses (including, without limitation, the reasonable fees and expenses
of counsel) that may be incurred by or asserted or awarded against any Indemnified Party, in each
case arising out of or in connection with or by reason of (including, without limitation, in
connection with any investigation, litigation or proceeding or preparation of a defense in
connection therewith) any matters contemplated by this letter, any related transaction, the Senior
Credit Facility or any use made or proposed to be made with the proceeds thereof, unless and only
to the extent that, as to any Indemnified Party, it shall be determined in a final, nonappealable
judgment by a court of competent jurisdiction that such losses, claims, damages, liabilities or
expenses resulted primarily from the gross negligence or willful misconduct of such Indemnified
Party. Borrower agrees that no Indemnified Party shall have any liability for any indirect or
consequential damages in connection with the Senior Credit Facility.

In connection with the Senior Credit Facility, Borrower agrees to provide to Bank, in a reasonably
prompt manner and in any event at or before such time as Bank may deem necessary for a complete and
satisfactory review by Bank, all such documents, reports, agreements, financial and other
information, environmental reports, appraisals and other items as Bank or its counsel may
reasonably request with respect to Borrower and its business.

The terms of this letter, the Term Sheet and the fee letter of even date herewith among Parent and
Bank (the “Fee Letter”) are confidential and, except for disclosure on a confidential basis
to accountants, attorneys and other professional advisors retained by Borrower in connection with
the Senior Credit Facility, the members of the ad hoc committee of the holders of Parent’s senior
subordinated notes and their advisors, proposed providers of an exit term facility to refinance
Parent’s senior convertible notes and their advisors, existing and proposed providers of surety
bonds and their advisors or as may be required in connection with the Chapter 11 bankruptcy

 

 

Integrated Electrical Services, Inc.

February 10, 2006

Page4

proceeding of Parent and its subsidiaries or as may be required by law, may not be disclosed in
whole or in part to any other person or entity without Bank’s prior written consent.

All of Borrower’s reimbursement, indemnification and confidentiality obligations set forth in this
letter shall remain in full force and effect regardless of whether any definitive documentation for
the Senior Credit Facility shall be executed and notwithstanding the termination of this letter or
any commitment or undertaking hereunder.

If Borrower breaches any of its obligations or agreements set forth in this letter other than those
set forth in the third paragraph, the eighth paragraph (other than as to payment of the Commitment
Fee set forth in the Fee Letter), the first sentence of the ninth paragraph, or the tenth paragraph
of this letter, at Bank’s option this letter and Bank’s commitment hereunder shall terminate and
Borrower shall forfeit any fees paid to Bank prior to such termination. If Borrower breaches any
of its obligations or agreements set forth in the third paragraph, the eighth paragraph (other than
as to payment of the Commitment Fee set forth in the Fee Letter), the first sentence of the ninth
paragraph, or the tenth paragraph of this letter and such breach continues without a cure
satisfactory to Bank in its good faith discretion for a period of three business days after notice
from Bank, at Bank’s option this letter and Bank’s commitment hereunder shall terminate and
Borrower shall forfeit any fees paid to Bank prior to such termination.

Borrower agrees that Bank may charge any and all amounts due by Borrower to Bank under or in
connection with this letter to any account of Borrower maintained with Bank.

This letter, the Term Sheet and the Fee Letter shall be governed by laws of the State of Texas.
Each of Borrower and Bank hereby irrevocably waives all right to trial by jury in any action,
proceeding or counterclaim (whether based on contract, tort or otherwise) arising out of or
relating to this letter, the Term Sheet, the Fee Letter, the transactions contemplated hereby and
thereby or the actions of Borrower or Bank in the negotiation, performance or enforcement hereof.

This letter, together with the Term Sheet and the Fee Letter, set forth the entire understanding of
Borrower and Bank with respect to the Senior Credit Facility. This letter may be modified or
amended only by the written agreement of Borrower and Bank. This letter is not assignable by
Borrower without Bank’s prior written consent and is intended to be solely for the benefit of
Borrower, Bank and the Indemnified Parties.

This offer will expire at 5:00 p.m. Dallas, Texas time on February 10, 2006, unless Parent executes
this letter and the Fee Letter and returns them to Bank prior to that time (which may be by
facsimile transmission), together with all fees due upon acceptance of this commitment in
accordance with the terms of the Fee Letter, whereupon this letter and the Fee Letter (each of
which may be signed in one or more counterparts) shall become binding agreements. Thereafter, this
undertaking and commitment will expire on the earlier to occur of: (i) one hundred twentieth day
after commencement of the Chapter 11 bankruptcy of Parent and its subsidiaries or (ii) June 30,
2006, unless definitive documentation for the Senior Credit Facility is executed and delivered
prior to such date.

 

 

We look forward to working with you in the weeks ahead.

	 	 	 	 	 
	Very truly yours,	 	 
	 
	 	 	 	 
	BANK OF AMERICA, N.A.	 	 
	 
	 	 	 	 
	By:

Title

	 	/s/ Dan Hughes
 

Vice President

	 	  
	 
	 	 	 	 
	Accepted and Agreed to as of February 10, 2006	 	 
	 
	 	 	 	 
	INTEGRATED ELECTRICAL SERVICES, INC.	 	 
	 
	 	 	 	 
	By:

	 	/s/ David A. Miller
 

	 	 
	Title:

	 	Chief Financial Officer

	 	 

 

 

EXHIBIT A

TERM SHEET

SUMMARY OF PROPOSED TERMS AND CONDITIONS AS TO SENIOR SECURED POST-
CONFIRMATION EXIT CREDIT
FACILITY.

UNLESS OTHERWISE STATED, CAPITALIZED TERMS USED HEREIN ARE DEFINED IN THAT CERTAIN LOAN AND
SECURITY AGREEMENT DATED AUGUST 1, 2005, EXECUTED BY BANK OF AMERICA, N.A., AS AGENT AND SOLE
LENDER, PARENT AND ITS SUBSIDIARIES (“PRE-PETITION LOAN AGREEMENT”).

	 	 	 
	BORROWER:

	 	Reorganized Integrated Electrical Services, Inc. (“Parent”) and such subsidiaries of Parent as shall be
required by Bank (collectively, “Borrower”).
	 
	 	 
	GUARANTOR:

	 	Each subsidiary of Parent which is not a Borrower (“Guarantor”).
	 
	 	 
	AGENT:

	 	Bank of America, N.A. (“Bank”).
	 
	 	 
	LENDERS:

	 	A syndicate of financial institutions (including Bank) arranged by Bank, which institutions would be
acceptable to Borrower and Bank (collectively, the “Lenders”).
	 
	 	 
	CREDIT

FACILITY:

	 	A senior secured post-confirmation exit credit facility (the “Senior Credit Facility”) evidenced by a Loan
and Security Agreement (“Exit Financing Agreement”) and consisting of a revolving credit facility of up to
$80,000,000 (the “Credit Line”), including a $72,000,000 sub-limit for letters of credit (letters of
credit would be 100% reserved against borrowing availability under the Senior Credit Facility).
	 
	PURPOSE:

	 	The Senior Credit Facility would be used by Borrower to refinance the Post-Petition Indebtedness, to issue
standby or commercial letters of credit, to provide post-confirmation financing to implement the financial
restructuring of Borrower in accordance with a plan of reorganization, that is acceptable to Bank in all
respects, and to finance ongoing working capital needs. “Post Petition Indebtedness” means all
indebtedness incurred by Borrower to Bank in connection with any debtor-in-possession credit facility
provided by Bank to Borrower in connection with the Chapter 11 bankruptcy proceedings of Parent and its
subsidiaries (collectively, the “Chapter 11 Proceeding”).
	 
	 	 
	LOAN

AVAILABILITY:

	 	Advances under the Senior Credit Facility would be limited to, on any date of determination thereof, an
amount equal to the “Borrowing Base.” “Borrowing Base” means, on any date of determination

 

 

	 	 	 
	 

	 	thereof, an
amount equal to the lesser of (i) the amount of the Credit Line on such date, minus the LC Outstandings on
such date, or (ii) an amount equal to (A) the sum of the Accounts Formula Amount on such date, plus the
Inventory Formula Amount plus Eligible Cash Collateral (defined below) on such date, minus (B) the
Availability Reserve, minus (C) the LC Reserves on such date.
	 
	 	 
	 

	 	Eligible Cash Collateral shall mean cash collateral on deposit in the Cash Collateral Account as to which
(a) Agent shall have a valid, enforceable first priority Lien, (b) no defense, counterclaim, setoff or
dispute shall exist or be asserted with respect thereto, and (c) no Lien exists, other than the Lien of
Agent.
	 
	 	 
	SECURITY:

	 	All obligations to Agent and the Lenders would be secured by first priority liens upon all of Borrower’s
existing and future acquired assets, including accounts receivable, inventory, rolling stock, machinery
and equipment, real property, subsidiary capital stock, chattel paper, documents, instruments, deposit
accounts, contract rights, general intangibles, intellectual property and investment property.
Notwithstanding the foregoing, (1) a pledge in favor of Agent of the interest of Parent in Enertech will
not be required, and (2) a pledge in favor of Agent of the Excluded Collateral will not be required, and
(3) a Lien in favor of the relevant surety or sureties will be permitted in Bonded Collateral as to
contracts bonded by such surety, provided that such surety has pursuant to documentation satisfactory to
Bank: (a) agreed not to require segregation of funds as to its Bonded Collateral without the prior
written consent of Agent, absent a default under the Bonded Contract and notice to Agent from such surety
and (b) (i) acknowledged and agreed that pursuant to the cash management system established in connection
with the Exit Financing Agreement, proceeds of the Collateral, including Accounts arising from the Bonded
Contracts (collectively, “Proceeds”) may be commingled with proceeds of other accounts receivable and
other property of the Borrower in deposit and related banking and lockbox accounts in which Agent and/or
Bank has, or in the future may have security interests, liens or other rights (collectively, the “Banking
Accounts”), and (ii) consented to such commingling and to Agent’s and Bank’s security interests, liens or
other rights in such Banking Accounts, and (iii) released and waived any and all security interests and
other legal and equitable rights and interests that it may then or thereafter have (as secured party,
subrogee, trust fund beneficiary, or otherwise) in or to (A) the Banking Accounts and (B) Proceeds that
from time to time are in the Banking Accounts, are in the possession of Agent, Bank or Lenders, that have been applied to
indebtedness, liabilities or obligations from time to time owing to Agent or any Lender by Borrower, or have otherwise been removed
from, set off against or applied from the Banking Accounts.

2

 

	 	 	 
	MATURITY AND

AMORTIZATION:

	 	The Senior Credit Facility would mature 2 years after the closing date. In the event Borrower terminates
the Senior Credit Facility prior to the maturity date, Borrower would pay Lenders an early termination fee
of 1.00% of the Credit Line.
	 
	 	 
	INTEREST, FEES

AND EXPENSES:

	 	See Schedule 1 attached hereto.
	 
	 	 
	TERMS AND

CONDITIONS:

	 	The financing agreements would contain representations and warranties, covenants, events of default, and
other provisions acceptable to Bank, including, but not limited to, the following:

	 	1.	 	Financial covenants acceptable to Bank,
including, but not limited to (i) Borrower maintaining a ratio,
which shall be tested monthly on the last day of each calendar
month, beginning with the first calendar month ending after the
effective date of Borrower’s exit from the Chapter 11 Proceeding
(“Leverage Ratio Testing Date”), of (a) funded debt (less
Eligible Cash Collateral) of Borrower plus outstanding Letters of
Credit to (b) EBITDAR of Borrower of no more than the ratio
indicated below during the time period indicated below:

	 	 	 	 	 	 	 	 	 
	 	 	 	 	Time Period	 	 	 	Maximum Ratio
	 

	 	(a)
	 	Last day of each calendar month for period beginning
the last day of the first calendar month that immediately
follows the effective date of Borrower’s exit from the
Chapter 11 Proceeding through September 30, 2006
	 	(a)
	 	6.50 to
1.00
	 
	 

	 	(b)
	 	Last day of each calendar month for period beginning
with October 31, 2006 through September 30, 2007
	 	(b)
	 	6.00 to
1.00
	 
	 

	 	(c)
	 	last day of each thereafter occurring calendar month
	 	(c)
	 	5.00 to
1.00

, provided that as to any Leverage Ratio Testing Date occurring
during Borrower’s Fiscal Year 2006 (i.e. October 1, 2005 through
September 30, 2006), EBITDAR on any such specific Leverage Ratio
Testing Date shall be the aggregate amount of EBITDAR for the then
elapsed portion of Borrower’s Fiscal Year 2006, as

3

 

annualized, and
that as to any Leverage Ratio Testing Date occurring after Borrower’s
Fiscal Year 2006, EBITDAR on any such specific Leverage Ratio Testing
Date shall be EBITDAR for the twelve calendar months ending on such
Leverage Ratio Testing Date and (ii) Borrower maintaining a Fixed
Charge Coverage Ratio of not less than 1.25:1.00, with the Fixed
Charge Coverage Ratio to be tested on the last day of each calendar
month, beginning with the first calendar month ending after the
effective date of Borrower’s exit from the Chapter 11 Proceeding
(“Fixed Charge Coverage Ratio Testing Date”), provided that
as to any Fixed Charge Coverage Ratio Testing Date occurring during
Borrower’s Fiscal Year 2006, the components of the Fixed Charge
Coverage Ratio shall be the aggregate amount of such components for
the then elapsed portion of Borrower’s Fiscal Year 2006, and that as
to any Fixed Charge Coverage Ratio Testing Date occurring after
Borrower’s Fiscal Year 2006, the Fixed Charge Coverage Ratio shall be
calculated on a trailing twelve calendar month basis. “EBITDAR”
shall mean, with respect to any period of the Borrower, on a
consolidated basis, Adjusted Net Earnings from Operations,
plus, to the extent deducted in the determination of Adjusted
Net Earnings from Operations for that period (but without
duplication), interest expenses, Federal, state, local and foreign
income taxes, depreciation, amortization and other identified
non-cash items not otherwise included which are acceptable to Agent,
and restructuring expenses (including professional fees).
Calculation of such financial covenants and the definitions used in
determining such covenants will be required to be satisfactory to
Bank in its good faith discretion.

	 	2.	 	Borrower’s agreement to provide Agent and
the Lenders periodic financial and collateral reporting, including
annual audited financial statements, monthly and quarterly
internally prepared financial statements, annual financial
projections, and periodic borrowing base certificates, receivables
agings and inventory reports, and other information requested from
time to time by Agent, in each case satisfactory to Agent.
	 
	 	3.	 	Borrower’s agreement to maintain insurance
with insurance carriers (acceptable to Agent) against such risks and
in such
amounts as is customary for similar businesses, naming Agent as
mortgagee/loss payee.
	 
	 	4.	 	Restrictions on, among other things,
distributions and dividends, acquisitions and investments,
indebtedness, liens, affiliate transactions, and capital
expenditures.

4

 

	 	5.	 	Consistent with the cash management
agreement Borrower currently has in place with Bank, Borrower’s
agreement to cause all proceeds of accounts receivable to be
deposited in a blocked account under the control of Bank.

	 	 	 
	BANK PRODUCTS:

	 	In order to facilitate the administration of the Senior
Credit Facility and Agent’s security interest in Borrower’s
assets, Borrower would agree to maintain Bank as Borrower’s
principal depository bank, including for the maintenance of
operating, administrative, cash management, collection
activity and other deposit accounts for the conduct of
Borrower’s business.
	 
	 	 
	CONDITIONS

PRECEDENT:

	 	The extension of the aforementioned financing arrangement
is subject to the fulfillment of a number of conditions to
Bank’s satisfaction, including, but not limited to, the
following:

	 	1.	 	The execution and delivery, in form
and substance acceptable to Bank and its counsel, of Bank’s
customary agreements, documents, instruments, financing
statements, consents, evidences of corporate authority, and such
other writings to confirm and effectuate the Senior Credit
Facility as may be required by Bank in its good faith credit
judgment or by its counsel.
	 
	 	2.	 	Except for the filing of the Chapter
11 Proceeding, no material adverse change in Borrower’s assets,
liabilities, business, financial condition, business prospects, or
results of operations since the date of this Commitment Letter.
	 
	 	3.	 	Other than the filing of the Chapter
11 Proceeding, there shall exist no action, suit, investigation,
litigation, or proceeding pending or threatened in any court or
before any arbitrator or governmental instrumentality that in
Bank’s judgment (a) could reasonably be expected to have a
material adverse effect on Borrower’s assets, liabilities,
business, financial condition, business prospects, or results of
operations or which could impair Borrower’s ability to perform
satisfactorily under the Senior Credit Facility, or (b) could
reasonably be expected to
materially and adversely affect the Senior Credit Facility or the
transactions contemplated thereby.
	 
	 	4.	 	Bank shall have received, each in
form and substance satisfactory to Bank, (a) updated financial
projections of Borrower evidencing Borrower’s ability to comply
with the financial covenants set forth in the Senior Credit
Facility, and (b) interim financial statements for Borrower as of
a date not more than 30 days prior to the closing date.

5

 

	 	5.	 	Bank shall have received certificates
of insurance with respect to Borrower’s property and liability
insurance, together with a loss payable endorsement naming Bank as
loss payee, all in form and substance satisfactory to Bank.
	 
	 	6.	 	Bank’s receipt of such third party
documents as Bank may require in its good faith credit judgment,
all in form and substance acceptable to Bank.
	 
	 	7.	 	Any utilization of proceeds from the
Senior Credit Facility or proceeds of Collateral by Borrower in
connection with funding work related to the Bonded Contracts shall
only be upon terms, provisions and conditions acceptable to Bank,
in its good faith discretion (such as, without limitation, Bank
being satisfied with its lien priority and right to proceeds of
Collateral and restrictions on when payments may be made by
Borrower in connection with Bonded Contracts).
	 
	 	8.	 	(a) As to each Surety other than
Chubb or Sure Tec Insurance Company (“Sure Tec”), Bank shall be
satisfied, in its sole discretion, that the priority and scope of
the rights of such Surety in connection with the Borrower and
Borrower’s assets, including, without limitation, such Surety’s
rights as a lien holder, subrogee, trust fund beneficiary, or
otherwise under applicable law, and the application and receipt of
proceeds of Bonded Contracts and their payment into the existing
cash management system between Borrower and Bank is acceptable to
Bank, and (b) as to Chubb, Bank’s current intercreditor agreement
with Chubb will remain in effect, including as to collections on
Bonded Contracts and the application and receipt of proceeds of
Bonded Contracts bonded by Chubb shall continue in the same manner
as is currently occurring, and in all events all proceeds of
Bonded Contracts shall continue to be paid into the existing cash
management system between Borrower and Bank, and (c) as to Sure
Tec, the structure of the Sure Tec bonding program shall continue
to be as specified in the existing consent letter regarding the
Sure Tec bonding program entered into by Parent and Bank.
	 
	 	9.	 	Borrower’s Plan of Reorganization
(hereinafter so called), filed with the relevant U.S. Bankruptcy
Court having jurisdiction over the Chapter 11 Proceeding
(“Bankruptcy Court”), shall be satisfactory to Bank in all
respects. Bank is satisfied with the treatment of the Senior
Subordinated Notes as set forth in the February 10, 2006 draft
Plan of Reorganization provided by Borrower to Bank.
	 
	 	10.	 	As it exits the Chapter 11
Proceeding, Borrower shall have a corporate and capital structure
satisfactory to Bank. In

6

 

addition to and not in limitation of the
foregoing, Bank shall be satisfied with the treatment of the
Senior Subordinated Notes and Senior Convertible Notes in the Plan
of Reorganization. Bank is satisfied with the treatment of the
Senior Subordinated Notes as set forth in the February 10, 2006
draft Plan of Reorganization provided by Borrower to Bank.

	 	11.	 	As it exits the Chapter 11
Proceeding, Borrower shall have agreements with sureties for the
issuance of bonds of up to a $75,000,000, on terms and conditions
consistent with the requirements of Section 8 above.
	 
	 	12.	 	Bank will require that (a) all
accounts payable are being handled in the normal course of
Borrower’s business and consistent with Borrower’s historical
practice, subject to the Chapter 11 Proceeding, and after giving
effect to such requirement, Borrower on the closing date of the
Senior Credit Facility shall have minimum excess availability of
at least $10,000,000, and (b) Borrower agree in the Exit Financing
Agreement to at all times have Eligible Cash Collateral in the
amount specified in the Exit Financing Agreement, such amount to
be determined by the closing date and in any event to be
satisfactory to Bank in its sole discretion.
	 
	 	13.	 	A final, non-appealable order from
the Bankruptcy Court shall have been entered, in form and
substance satisfactory to Bank, confirming the Plan of
Reorganization in form and substance satisfactory to Bank,
including, without limitation, (i) approval of the Senior Credit
Facility, which Senior Credit Facility shall, among other things,
grant and establish the priority of liens and security interests
as contemplated herein, (Borrower and Senior Subordinated
Noteholders each supporting inclusion of such language in the
confirmation order granting and establishing liens as contemplated
herein), and (ii) providing that the Exit Financing Agreement and
all other loan and collateral documents related thereto or
executed in connection therewith are fully enforceable.
	 
	 	14.	 	Closing of the Senior Credit Facility
must occur within 120 days of the commencement of the Chapter 11
Proceeding.
	 
	 	15.	 	Bank shall have provided a
debtor-in-possession credit facility to Borrower in connection
with the Chapter 11 Proceeding.

	 	 	 
	OTHER:

	 	This term sheet is intended as an outline only of certain of the material terms of the
Senior Credit Facility and does not purport to summarize all of the conditions, covenants,
representations, warranties and other provisions which will be contained in definitive legal
documentation for the Senior Credit Facility.

7

 

SCHEDULE 1

INTEREST, FEES AND EXPENSES

	 	 	 
	CLOSING FEE:

	 	Borrower would pay a fee equal to $1,000,000 to Bank from
which all fees to participants would be paid. Such fee
would be for the underwriting, structuring and
syndication of the closing.
	 
	 	 
	ADMINISTRATION

FEE:

	 	Borrower would pay an annual administrative fee of
$125,000 to Bank, for its own account as Administrative
Agent for the Lenders under the Senior Credit Facility,
in advance on the date of the closing of the Senior
Credit Facility and on each anniversary thereof, until
the Senior Credit Facility terminates.
	 
	 	 
	UNUSED LINE

FEE:

	 	A 37.5 basis points per annum (calculated on the basis of
actual number of days elapsed in a year of 360 days)
unused line fee calculated on the unused portion of the
Revolving Credit Facility would be payable monthly in
arrears. Such Unused Line Fee shall adjust in accordance
with the Pricing Matrix attached hereto.
	 
	 	 
	INTEREST RATES:

	 	The Revolving Credit Facility would bear interest at a
rate equal to LIBOR plus 350 basis points or Base Rate
plus 150 basis points. LIBOR and Base Rate would be
defined in accordance with the existing provisions of the
Pre-Petition Loan Agreement. LIBOR loans would be
subject to the same provisions as are currently contained
in the Pre-Petition Loan Agreement. All interest would
be calculated on the basis of actual number of days
elapsed in a year of 360 days.
	 
	 	 
	LETTER OF CREDIT

FEES:

	 	Borrower would pay a letter of credit fee monthly in
arrears on all letters of credit equal to the applicable
per annum LIBOR margin (calculated on the basis of actual
number of days elapsed in a year of 360 days) and
customary fees and charges in connection with issuing
such Letters of Credit.
	 
	 	 
	EXPENSES:

	 	Borrower will pay (a) all reasonable out-of-pocket costs
and expenses (including legal fees of Bank’s counsel) of
Bank associated with the Senior Credit Facility,
including costs and expenses of (i) Bank’s due diligence,
including field examinations, appraisals and
environmental audits, and (ii) preparing, administering,
syndicating and enforcing all documents executed in
connection with the Senior Credit Facility, plus (b) a
$850 per day per field examiner charge, in addition to
all out-of-pocket expenses for field examinations.
Borrower will remain obligated for all such amounts
whether or not the Senior Credit Facility is consummated.

 

 

SCHEDULE 2

PRICING MATRIX

	 	 	 
	 	 	Unused
	Commitment	 	Line Fee
	Utilization	 	(Bps)
	£ 50%
	 	50
	> 50%
	 	37.5

 

 

CONFIDENTIAL

February 10, 2006

Integrated Electrical Services, Inc.

1800 West Loop South

Suite 500

Houston, Texas 77027

	 	 	 
	Attention:

	 	Mr. David Miller
	 

	 	Chief Financial Officer

	 	 	 
	Re:

	 	Exit Financing of Integrated Electrical Services, Inc. — Fee Letter
	 
	 	 
	Dear Mr. Miller:

Reference is made to our letter (the “Commitment Letter”) dated as of even date herewith
concerning the proposed senior secured post-confirmation exit financing of Integrated Electrical
Services, Inc. and certain of its subsidiaries. All terms defined in the Commitment Letter and not
otherwise defined herein having the same meanings when used herein. This letter is the “Fee
Letter” referred to in the Commitment Letter and supplements the Commitment Letter by setting forth
the arrangement relating to compensation for certain services and value rendered and to be rendered
by Bank of America, N.A. (“Bank”). You hereby agree to pay the following fees:

	 	1.	 	A fully earned commitment fee equal to
$100,000.00, such fee to be fully earned upon acceptance by you of the
Commitment Letter and this Fee Letter, payment of such fee to be due
and payable by 5:00 p.m., Dallas, Texas time, February 10, 2006, and
payment of such fees to be a condition precedent to Bank’s agreements
under the Commitment Letter. Such fee is non-refundable.

2. The fees described in Schedule I to the Term Sheet attached to the Commitment Letter
(“Schedule I Fees”).
Bank reserves the right to allocate, in whole or in part, the fees payable under this letter and/or
the Schedule I Fees to one or more of its affiliates.
The commitment of Bank and the other undertakings and agreements of Bank are subject to and
contingent upon your agreements set forth in the Commitment Letter and this Fee Letter.
If you are in agreement with the foregoing, please sign and return an enclosed counterpart of this
Fee Letter and the Commitment Letter. The offer contained in this Fee Letter and in the Commitment
Letter can only be accepted by your acceptance of both letters on or before 5:00 p.m., Dallas,
Texas time, on February 10, 2006.

2

 

THIS FEE LETTER SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE
STATE OF TEXAS. This Fee Letter may be executed in any number of counterparts and by different
parties hereto in separate counterparts, each of which when so executed and delivered shall be
deemed an original, but all such counterparts together shall constitute but one and the same
instrument.

	 	 	 	 	 	 	 
	 	 	Very truly yours,	 	 
	 
	 	 	 	 	 	 
	 	 	BANK OF AMERICA, N.A.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Dan Hughes
 

	 	 
	 

	 	Name:
	 	     Dan Hughes	 	 
	 

	 	 	 	 	 	 
	 

	 	Title:
	 	Vice President	 	 
	 

	 	 	 	 	 	 

	 	 	 	 	 
	AGREED AND ACCEPTED

this 10th day of February, 2006:	 	 
	 
	 	 	 	 
	INTEGRATED ELECTRICAL SERVICES, INC.	 	 
	 
	 	 	 	 
	By:

	 	/s/ David A. Miller
 

	 	 
	Name:

	 	     David A. Miller	 	 
	 

	 	 	 	 
	Title:

	 	Chief Financial Officer

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