ITEM 1.01 Entry Into a Material Definitive Agreement

DIP Facility

As previously announced, Integrated Electrical Services, Inc. (the “Company”) and certain of its subsidiaries (collectively with the Company, the “Debtors”) accepted a financing commitment letter, dated February 1, 2006 (the “Commitment Letter”), with Bank of America, N.A. (“BofA”). The Commitment Letter contemplates that BofA and any other lenders that choose to participate therein (collectively, the “DIP Lenders”) will provide a credit facility to the Debtors, as debtors-in-possession. The obligation of the DIP Lenders to extend credit under the Commitment Letter was subject to the satisfaction of certain conditions, including the negotiation of definitive documentation and bankruptcy court approval.

On February 15, 2006, the United States Bankruptcy Court for the Northern District of Texas, Dallas Division (the “Bankruptcy Court”), before which the Debtors’ Chapter 11 cases are pending, approved on an interim basis, pending a final hearing on the matter, the Debtors obtaining credit pursuant to the Debtor-in-Possession Loan and Security Agreement, dated February 14, 2006 (the “DIP Loan Agreement”). The DIP Loan Agreement embodies the terms set forth in the Commitment Letter.

The DIP Loan Agreement provides for aggregate financing of $80 million during the pendency of the Debtors’ Chapter 11 cases, consisting of a revolving credit facility of up to $80 million, with a $72 million sub-limit for letters of credit. The Company is currently party to a Loan and Security Agreement, dated August 1, 2005, with BofA (the “Prepetition Loan Agreement”). Under the DIP Loan Agreement, all letters of credit outstanding under the Prepetition Loan Agreement will constitute obligations under the DIP Loan Agreement.

Loans under the DIP Loan Agreement will bear interest at LIBOR plus 3.5% or the base rate plus 1.5% on the terms set forth therein. In addition, the Debtors will be charged monthly in arrears (i) an unused line fee of either 0.5% or .375% depending on the utilization of the credit line, (ii) a letter of credit fee equal to the applicable per annum LIBOR margin times the amount of all outstanding letters of credit and (iii) certain other fees and charges as specified in the DIP Loan Agreement.

Loans under the DIP Loan Agreement will mature on the earliest to occur of (i) 45 days after commencement of the Chapter 11 cases on February 14, 2006, if a final order approving the DIP Loan Agreement has not been entered by the Bankruptcy Court, (ii) the effective date of a confirmed plan of reorganization, (iii) the expiration of a period of 12 months from the closing date of the DIP Loan Agreement on February 15, 2006, or (iv) acceleration of the loans and termination of the DIP Loan Agreement in accordance with its terms. Obligations under the DIP Loan Agreement are entitled to superpriority administrative expense status pursuant to Section 364(c)(1) of Title 11 of the United States Bankruptcy Code (the “Bankruptcy Code”) and are secured by a first priority security interest, subject to certain permitted liens, on all unencumbered property of the Debtors as well as junior liens on all encumbered property, in each case excluding collateral pledged to sureties. The DIP Loan Agreement contemplates customary affirmative, negative and financial covenants binding on the Debtors as described therein.

The DIP Loan Agreement is filed as Exhibit 10.1 hereto and the foregoing summary of certain terms and conditions of the DIP Loan Agreement is qualified in its entirety by reference to such exhibit.

The Chubb Surety Agreement

The Company is party to that certain Underwriting, Continuing Indemnity, and Security Agreement, dated January 14, 2005 and related documents, as amended (the “Surety Agreement”), with Federal Insurance Company and its affiliates (collectively, “Chubb”), which provides for the provision of surety bonds to support the Company’s contracts with certain of its customers.

As previously announced, the Company entered into the Term Sheet for Surety Support, dated February 3, 2006 (the “Chubb DIP Agreement”). The Chubb DIP Agreement provides for Chubb, during the pendency of the Debtors’ Chapter 11 cases, (i) in its sole and absolute discretion, to issue up to an aggregate of $48 million in new surety bonds, with not more than $12 million in new surety bonds to be issued in any given month, and (ii) to give