EXHIBIT 10.16

SIXTH AMENDMENT

TO

EMPLOYMENT AGREEMENT

This Sixth Amendment to Employment Agreement is made and entered into effective
as of January 1, 2006, by and between WATSCO, INC., a Florida corporation
(hereinafter called the “Company”), and ALBERT H. NAHMAD (hereinafter called the
“Employee”).

RECITALS

WHEREAS, the Company and the Employee entered into an Employment Agreement
effective as of January 31, 1996 (the “Employment Agreement”) pursuant to which
the Employee renders certain services to the Company; and

WHEREAS, the Compensation Committee of the Company’s Board of Directors amended
the Employment Agreement effective as of January 1, 2001, January 1,
2002, January 1, 2003, January 1, 2004 and January 1, 2005; and

WHEREAS, the Compensation Committee of the Company’s Board of Directors has
determined to increase the Employee’s Base Salary from $850,000 to $960,000,
effective as of January 1, 2006, and has set the targets for the performance
based compensation payable by the Company to the Employee for the year 2006; and

WHEREAS, the Company and the Employee now desire to amend the Employment
Agreement and Exhibit A-1 to the Employment Agreement to reflect the increase in
Base Salary and specify the performance based compensation amount payable by the
Company to the Employee for the calendar year 2006.

NOW, THEREFORE, in consideration of the mutual promises and covenants set forth
in this Sixth Amendment, and other good and valuable consideration, the parties
to this Sixth Amendment agree as follows:

1. All capitalized terms in this Sixth Amendment shall have the same meaning as
in the Employment Agreement, unless otherwise specified.

2. The first sentence of Section 4 of the Employment Agreement is hereby amended
to read as follows:

“Effective as of January 1, 2006, the Company agrees to pay to Employee and
Employee agrees to accept from the Company a salary at the annual rate of not
less than Nine Hundred Sixty Thousand ($960,000) Dollars, payable in bi-weekly
or monthly installments.”

3. The Employment Agreement is hereby amended by replacing “Exhibit A-1 — 2005
Performance Goals and Performance Based Compensation” with the attached “Exhibit
A-1 — 2006 Performance Goals and Performance Based Compensation” thereto.

4. All other terms and conditions of the Employment Agreement shall remain the
same.

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IN WITNESS WHEREOF, the parties have caused this Sixth Amendment to be duly
executed effective as of the day and year first above written.

 

COMPANY: WATSCO, INC. By:  

/s/ Barry S. Logan

  Barry S. Logan, Senior Vice President EMPLOYEE:

/s/ Albert H. Nahmad

ALBERT H. NAHMAD

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EXHIBIT A-1

2006 Performance Goals and Performance Based Compensation

 

IV.

   Formula             

Performance

Based

Compensation Formula

A.    Earnings Per Share       For each $.01 increase    $ 65,250

B.

   Increase in Common Stock Price       (i) If the closing price of a share of
Common Stock on 12/31/06 does not exceed $59.81    $ 0    (ii) If the closing
price of a share of Common Stock on 12/31/06 exceeds $59.81 but does not equal
or exceed $70.25, for each $0.01 increase in per share price of a share of
Common Stock above $59.81    $ 1,200    (iii) If the closing price of a share of
Common Stock on 12/31/06 equals or exceeds $70.25, for each $0.01 increase in
per share price of a share of Common Stock above $59.81    $ 1,800

V.

   Method of Payment      

A.     Cash. The Performance Based Compensation determined for 2006 under the
formula set forth in Section I above shall be paid in cash if and to the extent
such Compensation does not exceed $5,000,000.

  

B.     Restricted Stock. If the Performance Based Compensation determined for
2006 under the formula set forth in Section I above exceeds $5,000,000 (such
excess amount being referred to as the “Additional Amount”), the Executive shall
be granted a number of shares of restricted Class B Common Stock of the Company
(the “Shares”) equal to the amount determined by dividing (i) two times the
Additional Amount, by (ii) the closing price for the Class B Common Stock of the
Company on the American Stock Exchange as of the close of trading on December
31, 2006. The value of any fractional shares shall be paid in cash. The
restrictions on the Shares shall lapse on the first to occur of (i) October 15,
2018 (ii) termination of the Executive’s employment with the Company by reason
of Executive’s disability or death, (iii) the Executive’s termination of
employment with the Company for Good Reason; (iv) the Company’s termination of
Executive’s employment without Cause, or (v) the occurrence of a Change in
Control of the Company (“Good Reason”, “Cause”, and “Change in Control” to be
defined in a manner consistent with the most recent grant of Restricted Stock by
the Company to the Executive).

VI.

   2001 Incentive Compensation Plan   

The performance based award and method of payment specified above (the “Award”)
were made by the Compensation Committee in accordance with Section 8 of the
Company’s 2001 Incentive Compensation Plan (the “Incentive Plan”) and are
subject to the limitations contained in Section 5 of the Incentive Plan. The
Award is intended to qualify as “performance based compensation” under Section
162(m) of the Internal Revenue Code.

 

Dated: Effective as of January 1, 2006  

/s/ Paul F. Manley

  Paul F. Manley, Chairman   Compensation Committee   Acknowledged and Accepted:
 

/s/ Albert H. Nahmad

  Albert H. Nahmad