AMENDMENT TO LOAN AND SECURITY AGREEMENT

Exhibit 10.1

AMENDMENT TO LOAN AND SECURITY AGREEMENT

THIS AMENDMENT TO LOAN AND SECURITY AGREEMENT (this “Amendment”) is made and entered into on December 11, 2007 by and among BANK OF AMERICA, N.A., a national banking association, (“BA”), in its capacity as collateral and administrative agent for the Lenders under the Loan Agreement (as hereinafter defined) (BA, in such capacity, the “Agent”), and BA as Lender under the Loan Agreement (BA, together with the various financial institutions listed on the signature pages hereof, in such capacity, the “Lenders”), and INTEGRATED ELECTRICAL SERVICES, INC., a Delaware corporation (“Parent”), and each of the Subsidiaries of Parent listed on Annex I attached hereto (Parent and such Subsidiaries of Parent being herein referred to collectively as the “Borrowers”), and the Subsidiaries of Parent listed on Annex II attached hereto (such Subsidiaries being referred to herein as the “Guarantors”, and Borrowers and Guarantors being referred to herein as the “Credit Parties”).

RECITALS

NOW, THEREFORE, in consideration of the premises herein contained and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties, intending to be legally bound, agree as follows:

AGREEMENT

1.01     

Capitalized terms used in this Amendment are defined in the Loan Agreement, as amended hereby, unless otherwise stated.

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

2.01     

Amendment and Restatement of Section 9.2.3(x). Effective as of the date hereof, Section 9.2.3(x) of the Loan Agreement is amended and restated in its entirety to read as follows:

“(x)     Subordinated Debt in the amount existing on the date hereof and the Tontine Subordinated Debt;”

2.02     

Amendment and Restatement of Section 9.2.7 of the Loan Agreement. Effective as of the date hereof, Section 9.2.7 of the Loan Agreement is amended and restated in its entirety to read as follows:

“">9.2.7     Distributions. Declare or make any Distributions, except for (i) Upstream Payments, (ii) repurchases of common stock of Parent from employees solely to satisfy their tax obligations arising from their acquisition of such common stock in an aggregate amount not to exceed $1,500,000 in any fiscal year of Credit Parties; provided, that no such repurchases of common stock of Parent shall be permitted unless Borrower has Availability of at least $10,000,000 at the time of such repurchase after giving effect to such repurchase and (iii) other repurchases of common stock of Parent; provided, that (a) Borrowers shall have entered into the Tontine Subordinated Debt Documentation, incurred the Tontine Subordinated Debt and prepaid the Tranche B Loan with the proceeds thereof and cash on hand prior to any such repurchase, (b) the aggregate amount paid in connection with all such repurchases during any period of two fiscal years of Credit Parties shall not exceed $27,500,000, (c) there shall not be any Revolver Loans outstanding at the time of any such repurchase, (d) Borrower shall have unrestricted cash on hand of at least $40,000,000 after giving effect to any such repurchase, (e) no such repurchase shall be of common stock of the Tontine Lenders or any of their Affiliates or of common stock of any officer, director, consultant, manager, agent or employee of any Credit Party or any Affiliate of any Credit Party but only if such repurchase is pursuant to a privately negotiated transaction between such Person and Parent (as distinguished from an open market repurchase by Parent, for example).”

2.03     

Amendment and Restatement of Section 9.3.8 of the Loan Agreement. Effective as of October 30, 2007, Section 9.3.8 of the Loan Agreement is amended and restated to read in its entirety as follows:

“Leverage Ratio – Maintain a Leverage Ratio, on a Consolidated basis, tested monthly on the last day of each calendar month on a trailing twelve calendar month basis, beginning October 31, 2007, of not more than the ratio set forth below opposite the relevant date set forth below:

2.04     

Amendment to Annex A. Effective as of September 29, 2007, Annex A to the Loan Agreement is amended as follows:

(i)     A new definition, “September 2007 Software Capital Expenditures” is added to Annex A to read in its entirety as follows:

“September 2007 Software Capital Expenditures – the actual capital expenditures incurred by Borrower (but in no event more than $2,300,000) in September of 2007 for software transactions involving SAP and ADP.”

(ii)     The definition of “Fixed Charges” is amended and restated to read in its entirety as follows:

“Fixed Charges – with respect to any period of Borrower on a consolidated basis, without duplication, cash interest expense, Capital Expenditures (excluding (i) Capital Expenditures funded with Debt other than Revolving Loans, but including, without duplication, principal payments with respect to such Debt, and (ii) September 2007 Software Capital Expenditures), principal payments of Debt (other than Revolving Loans and mandatory prepayments from asset sales), and Federal, state, local and foreign income taxes (including accrued taxes).”

2.05     

Amendment to Annex A. Effective as of the date hereof, Annex A to the Loan Agreement is amended to add the definitions of “Tontine Lenders”, “Tontine Subordinated Debt” and “Tontine Subordinated Debt Documentation” thereto in correct alphabetical order as follows:

“Tontine Lenders” – collectively, Tontine Capital Partners, L.P. and any Affiliate of Tontine Capital Partners, L.P. that joins in and becomes party to the Tontine Subordinated Debt Documentation in accordance with the terms thereof.”

“Tontine Subordinated Debt – unsecured Subordinated Debt of Borrowers in an aggregate principal amount not to exceed $25,000,000 plus any additional principal resulting from any in kind interest payment as permitted by the Tontine Subordinated Debt Documentation, payable to the Tontine Lenders pursuant to the Tontine Subordinated Debt Documentation.”

“Tontine Subordinated Debt Documentation – collectively, (a) that certain Note Purchase Agreement, dated as of December ___, 2007, among the Tontine Lenders and Borrowers and (b) each of those certain Senior Subordinated Notes, dated as of December ___, 2007, in the aggregate original principal amount of $25,000,000 payable by Borrowers to the Tontine Lenders, each in form and substance satisfactory to Agent in its sole discretion.

3.01     

Limited Waiver. Subject to the terms and conditions set forth herein and in reliance upon the representations and warranties of Credit Parties set forth herein, Agent and Lenders hereby consent to and waive any Event of Default that would otherwise exist or arise under the Loan Agreement solely as a result of Borrowers’ failure to comply with the Section 9.2.24 of the Loan Agreement upon any prepayment in full (but not in part) of the Tranche B Loan (the “Tranche B Loan Prepayment”) by Borrowers using the proceeds of unrestricted cash on hand; provided, that (i) such prepayment shall occur on or before December 31, 2007, (ii) Borrowers shall use all of the proceeds of the Tontine Subordinated Debt in connection with such prepayment, (iii) there shall not be any Revolver Loans outstanding at the time of such prepayment and (iv) Borrowers shall have unrestricted cash on hand of at least $40,000,000 after giving effect to such prepayment. Upon the Tranche B Loan Prepayment, all references to the “Tranche B Agent”, “Tranche B Lenders”, Tranche B Agreement”, Tranche B Loan”, “Tranche B Documentation” and “Intercreditor Agreement” in the Loan Agreement shall be deleted in their entirety.

4.01     

Conditions to Effectiveness. The effectiveness of this Amendment (including the agreements and waiver contained herein) is subject to the satisfaction of the following conditions precedent in a manner satisfactory to Agent, unless specifically waived in writing by Agent:

(a)     

Agent shall have received this Amendment, duly executed by each of the Credit Parties.

5.01     

Ratifications. The terms and provisions set forth in this Amendment shall modify and supersede all inconsistent terms and provisions set forth in the Loan Agreement and the other Loan Documents, and, except as expressly modified and superseded by this Amendment, the terms and provisions of the Loan Agreement and the other Loan Documents are ratified and confirmed and shall continue in full force and effect. Each Credit Party and Lenders and Agent agree that the Loan Agreement and the other Loan Documents, as amended hereby, shall continue to be legal, valid, binding and enforceable in accordance with their respective terms.

6.01     

Survival of Representations and Warranties. All representations and warranties made in the Loan Agreement or any other Loan Document, including, without limitation, any document furnished in connection with this Amendment, shall survive the execution and delivery of this Amendment and the other Loan Documents, and no investigation by Lender or Agent or any closing shall affect the representations and warranties or the right of Lender or Agent to rely upon them.

Amendment To      
Loan and Security Agreement

023528.0102/452728

IN WITNESS WHEREOF, this Amendment has been executed on December 11, 2007, to be effective as the respective date set forth above.

AGENT:

BANK OF AMERICA, N.A., as Agent


By:          
Name:____________________________________ ____
Title:_____________________________________ ____
LENDERS:

BANK OF AMERICA, N.A.


By:          
Name:____________________________________ ____
Title:_____________________________________ ____

WELLS FARGO FOOTHILL, LLC

By:          
Name:____________________________________ ____
Title:_____________________________________ ____
 
THE CIT GROUP/BUSINESS CREDIT, INC.


By:          
Name:____________________________________ ____
Title:_____________________________________ ____

Amendment To
Loan and Security Agreement

023528.0102/452728

CREDIT PARTIES:

INTEGRATED ELECTRICAL SERVICES, INC.

By:          

     Curt L. Warnock
     Senior Vice President

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.
ICS HOLDINGS, LLC.
INTEGRATED ELECTRICAL FINANCE, INC.
KEY ELECTRICAL SUPPLY
MARK HENDERSON INCORPORATED
MID-STATES ELECTRIC COMPANY, INC.
MILLS ELECTRICAL CONTRACTORS, INC.
MILLS MANAGEMENT, LLC.
PAN AMERICAN ELECTRIC, INC,
RAINES ELECTRIC CO, INC.
RAINES MANAGEMENT, LLC.
THOMAS POPP & COMPANY

_______________________________
Curt L. Warnock
Vice President

IES MANAGEMENT ROO, LP

______________________________
Neal Electric Management, LLC.
General Partner of IES Management ROO, LP.

IES MANAGEMENT, LP

_______________________________
IES Residential Group, Inc.
General Partner of IES Management, LP.

MILLS ELECTRIC, LP

________________________________
Mills Management, LLC.
General Partner of Mills Electric, LP.

RAINES ELECTRIC LP.

_________________________________
Raines Management, LLC.
General Partner of Raines Electric, LP.

MILLS ELECTRICAL HOLDINGS, LLC.
MILLS ELECTRIC HOLDINGS II, LLC.
RAINES HOLDINGS, LLC.
RAINES HOLDINGS II, LLC.

____________________________________
Curt L. Warnock
President

Annex I

Borrowers

Annex II

Guarantors