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                                                                    EXHIBIT 10.7

                           TEXAS GENCO HOLDINGS, INC.
                              PERFORMANCE UNIT PLAN
                        (Effective as of January 1, 2003)

         1. PLAN. This Texas Genco Holdings, Inc. Performance Unit Plan (the
"Plan") was adopted by Texas Genco Holdings, Inc. (the "Company") to reward
certain corporate officers and other employees of the Company by providing for
certain cash benefits.

         2. OBJECTIVES. The purpose of this Plan is to further the interests of
the Company, its Subsidiaries and its shareholders by providing incentives in
the form of awards to employees. Such awards will recognize and reward
outstanding performance and individual contributions, thus enhancing the
proprietary and personal interest of such Participants in the Company's
continued success and progress. This Plan will also enable the Company and its
Subsidiaries to attract and retain such employees.

         3. DEFINITIONS. As used herein, the terms set forth below shall have
the following respective meanings:

                  "AUTHORIZED OFFICER" means the Chairman of the Board or the
         Chief Executive Officer of the Company (or any other senior officer of
         the Company to whom either of them shall delegate the authority to
         execute any Award Agreement, where applicable).

                  "AWARD AGREEMENT" means a written agreement setting forth the
         terms, conditions and limitations applicable to a Performance Unit
         Award.

                  "BOARD" means the Board of Directors of the Company.

                  Provided the Company is a CenterPoint Subsidiary, a "CHANGE OF
         CONTROL" shall be deemed to have occurred upon the occurrence of any of
         the following events:

                           (a) 30% OWNERSHIP CHANGE: Any Person makes an
                  acquisition of Outstanding Voting Stock and is, immediately
                  thereafter, the beneficial owner of 30% or more of the then
                  Outstanding Voting Stock, unless such acquisition is made
                  directly from CenterPoint in a transaction approved by a
                  majority of the Incumbent Directors; or any group is formed
                  that is the beneficial owner of 30% or more of the Outstanding
                  Voting Stock; or

                           (b) BOARD MAJORITY CHANGE: Individuals who are
                  Incumbent Directors cease for any reason to constitute a
                  majority of the members of the CenterPoint Board; or

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                           (c) MAJOR MERGERS AND ACQUISITIONS: Consummation of a
                  Business Combination unless, immediately following such
                  Business Combination, (i) all or substantially all of the
                  individuals and entities that were the beneficial owners of
                  the Outstanding Voting Stock immediately prior to such
                  Business Combination beneficially own, directly or indirectly,
                  more than 70% of the then outstanding shares of voting stock
                  of the parent corporation resulting from such Business
                  Combination in substantially the same relative proportions as
                  their ownership, immediately prior to such Business
                  Combination, of the Outstanding Voting Stock, (ii) if the
                  Business Combination involves the issuance or payment by
                  CenterPoint of consideration to another entity or its
                  shareholders, the total fair market value of such
                  consideration plus the principal amount of the consolidated
                  long-term debt of the entity or business being acquired (in
                  each case, determined as of the date of consummation of such
                  Business Combination by a majority of the Incumbent Directors)
                  does not exceed 50% of the sum of the fair market value of the
                  Outstanding Voting Stock plus the principal amount of
                  CenterPoint's consolidated long-term debt (in each case,
                  determined immediately prior to such consummation by a
                  majority of the Incumbent Directors), (iii) no Person (other
                  than any corporation resulting from such Business Combination)
                  beneficially owns, directly or indirectly, 30% or more of the
                  then outstanding shares of voting stock of the parent
                  corporation resulting from such Business Combination and (iv)
                  a majority of the members of the board of directors of the
                  parent corporation resulting from such Business Combination
                  were Incumbent Directors of CenterPoint immediately prior to
                  consummation of such Business Combination; or

                           (d) MAJOR ASSET DISPOSITIONS: Consummation of a Major
                  Asset Disposition unless, immediately following such Major
                  Asset Disposition, (i) individuals and entities that were
                  beneficial owners of the Outstanding Voting Stock immediately
                  prior to such Major Asset Disposition beneficially own,
                  directly or indirectly, more than 70% of the then outstanding
                  shares of voting stock of CenterPoint (if it continues to
                  exist) and of the entity that acquires the largest portion of
                  such assets (or the entity, if any, that owns a majority of
                  the outstanding voting stock of such acquiring entity) and
                  (ii) a majority of the members of the board of directors of
                  CenterPoint (if it continues to exist) and of the entity that
                  acquires the largest portion of such assets (or the entity, if
                  any, that owns a majority of the outstanding voting stock of
                  such acquiring entity) were Incumbent Directors of CenterPoint
                  immediately prior to consummation of such Major Asset
                  Disposition.

                  For purposes of the foregoing,

                           (1) the term "Person" means an individual, entity or
                  group;

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                           (2) the term "group" is used as it is defined for
                  purposes of Section 13(d)(3) of the Securities Exchange Act of
                  1934 (the "Exchange Act");

                           (3) the term "beneficial owner" is used as it is
                  defined for purposes of Rule 13d-3 under the Exchange Act;

                           (4) the term "Outstanding Voting Stock" means
                  outstanding voting securities of CenterPoint entitled to vote
                  generally in the election of directors; and any specified
                  percentage or portion of the Outstanding Voting Stock (or of
                  other voting stock) shall be determined based on the combined
                  voting power of such securities;

                           (5) the term "Incumbent Director" means a director of
                  CenterPoint (x) who was a director of CenterPoint on January
                  1, 2003 or (y) who becomes a director subsequent to such date
                  and whose election, or nomination for election by
                  CenterPoint's shareholders, was approved by a vote of a
                  majority of the Incumbent Directors at the time of such
                  election or nomination, except that any such director shall
                  not be deemed an Incumbent Director if his or her initial
                  assumption of office occurs as a result of an actual or
                  threatened election contest or other actual or threatened
                  solicitation of proxies by or on behalf of a Person other than
                  the CenterPoint Board;

                           (6) the term "election contest" is used as it is
                  defined for purposes of Rule 14a-11 under the Exchange Act;

                           (7) the term "Business Combination" means (x) a
                  merger or consolidation involving CenterPoint or its stock or
                  (y) an acquisition by CenterPoint, directly or through one or
                  more subsidiaries, of another entity or its stock or assets;

                           (8) the term "parent corporation resulting from a
                  Business Combination" means CenterPoint if its stock is not
                  acquired or converted in the Business Combination and
                  otherwise means the entity which as a result of such Business
                  Combination owns CenterPoint or all or substantially all
                  CenterPoint's assets either directly or through one or more
                  subsidiaries; and

                           (9) the term "Major Asset Disposition" means the sale
                  or other disposition in one transaction or a series of related
                  transactions of 70% or more of the assets of CenterPoint and
                  its subsidiaries on a consolidated basis; and any specified
                  percentage or portion of the assets of CenterPoint shall be
                  based on fair market value, as determined by a majority of the
                  Incumbent Directors.

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                           (10) the term "CenterPoint" means CenterPoint Energy,
                  Inc., a Texas corporation.

                           (11) the term "CenterPoint Board" means the Board of
                  Directors of CenterPoint.

                           (12) the term "CenterPoint Subsidiary means (a) in
                  the case of a corporation, any corporation of which
                  CenterPoint directly or indirectly owns shares representing
                  50% or more of the combined voting power of the shares of all
                  classes or series of capital stock of such corporation which
                  have the right to vote generally on matters submitted to a
                  vote of the stockholders of such corporation and (b) in the
                  case of a partnership or other business entity not organized
                  as a corporation, any such business entity of which
                  CenterPoint directly or indirectly owns 50% or more of the
                  voting, capital or profits interests (whether in the form of
                  partnership interests, membership interests or otherwise).

                  Notwithstanding anything herein to the contrary, if an event
         occurs that would otherwise be a Change of Control, but the Company is
         not a CenterPoint Subsidiary at such time, then, for purposes of this
         Plan, such event shall not constitute a Change of Control as
         contemplated herein.

                  "CODE" means the Internal Revenue Code of 1986, as amended
         from time to time.

                  "COMMITTEE" means the Board until such time as there is
         established a Compensation Committee of the Board, and thereafter the
         Compensation Committee of the Board.

                  "COMPANY" means Texas Genco Holdings, Inc., a Texas
         corporation.

                  "EMPLOYEE" means an employee of the Company or any of its
         Subsidiaries.

                  "GRANT DATE" means the date a Performance Unit Award is
         granted to a Participant pursuant to the Plan.

                  "PARTICIPANT" means an Employee to whom a Performance Unit
         Award has been granted under this Plan.

                  "PERFORMANCE UNIT" means a bookkeeping unit representing the
         right to receive cash upon the Company's attainment of one or more
         Performance Goals, subject to such applicable terms, conditions and
         limitations of the Plan and Award Agreement under which such unit is
         awarded.

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                  "PERFORMANCE UNIT AWARD" means an award of one or more
         Performance Units made pursuant to this Plan to a Participant that is
         subject to the attainment of one or more Performance Goals and pursuant
         to such applicable terms, conditions and limitations (including
         treatment as a Performance Unit Award) as the Committee may establish
         in order to fulfill the objectives of the Plan.

                  "PERFORMANCE GOAL" means a standard established by the
         Committee, to determine in whole or in part whether a Performance Unit
         Award shall be earned.

                  "SUBSIDIARY" means (a) in the case of a corporation, any
         corporation of which the Company directly or indirectly owns shares
         representing 50% or more of the combined voting power of the shares of
         all classes or series of capital stock of such corporation which have
         the right to vote generally on matters submitted to a vote of the
         stockholders of such corporation and (b) in the case of a partnership
         or other business entity not organized as a corporation, any such
         business entity of which the Company directly or indirectly owns 50% or
         more of the voting, capital or profits interests (whether in the form
         of partnership interests, membership interests or otherwise).

         4. ELIGIBILITY. All Employees are eligible for the grant of Performance
Unit Awards under this Plan.

         5. ADMINISTRATION.

                  (a) This Plan shall be administered by the Committee, except
         as otherwise provided herein.

                  (b) Subject to the provisions hereof, the Committee shall have
         full and exclusive power and authority to administer this Plan and to
         take all actions that are specifically contemplated hereby or are
         necessary or appropriate in connection with the administration hereof.
         The Committee shall also have full and exclusive power to interpret
         this Plan and to adopt such rules, regulations and guidelines for
         carrying out this Plan as it may deem necessary or proper, all of which
         powers shall be exercised in the best interests of the Company and in
         keeping with the objectives of this Plan. The Committee may, in its
         discretion, accelerate the vesting of a Performance Unit Award,
         eliminate or make less restrictive any restrictions applicable to a
         Performance Unit Award, waive any restriction or other provision of
         this Plan or a Performance Unit Award or otherwise amend or modify a
         Performance Unit Award in any manner that is either (i) not adverse to
         the Participant to whom such Performance Unit Award was granted or (ii)
         consented to by such Participant. The Committee may correct any defect
         or supply any omission or reconcile any inconsistency in this Plan or
         in any Performance Unit Award in the manner and to the extent the
         Committee deems necessary or desirable to further the Plan purposes.
         Any decision of the Committee in the interpretation and administration
         of this Plan shall lie within its

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         sole and absolute discretion and shall be final, conclusive and binding
         on all parties concerned.

                  (c) No member of the Committee or officer of the Company to
         whom the Committee has delegated authority in accordance with the
         provisions of paragraph 6 of this Plan shall be liable for anything
         done or omitted to be done by him or her, by any member of the
         Committee or by any officer of the Company in connection with the
         performance of any duties under this Plan, except for his or her own
         willful misconduct or as expressly provided by statute.

         6. DELEGATION OF AUTHORITY. The Committee may delegate to the Chief
Executive Officer and to other senior officers of the Company its duties under
this Plan pursuant to such conditions or limitations as the Committee may
establish. The Committee may engage or authorize the engagement of a third party
administrator to carry out administrative functions under the Plan.

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         7. PERFORMANCE UNIT AWARDS.

                  (a) The Committee shall determine the Performance Unit Awards
         to be made under this Plan and shall designate from time to time the
         Employees who are to be the recipients of such awards. A Performance
         Unit Award shall be payable in a cash payment and shall be paid, vested
         or otherwise deliverable solely on account of the attainment of one or
         more pre-established, objective Performance Goals established by the
         Committee prior to the earlier to occur of (x) 90 days after the
         commencement of the period of service to which the Performance Goal
         relates or (y) the lapse of 25% of the period of service (as scheduled
         in good faith at the time the goal is established), and in any event
         while the outcome is substantially uncertain; provided, however, that
         for units issued for the 2003-2005 performance cycle, the Performance
         Goals shall be established by the Committee within 30 days of the date
         the Plan is approved by the Board. A Performance Goal is objective if a
         third party having knowledge of the relevant facts could determine
         whether the goal is met. Such a Performance Goal may be based on one or
         more business criteria that apply to the Employee, one or more business
         units of the Company, or the Company as a whole, and may include one or
         more of the following: earnings per share, earnings per share growth,
         total shareholder return, economic value added, cash return on
         capitalization, increased revenue, revenue ratios (per employee or per
         customer), net income, stock price, market share, return on equity,
         return on assets, return on capital, return on capital compared to cost
         of capital, return on capital employed, return on invested capital,
         shareholder value, net cash flow, operating income, earnings before
         interest and taxes, cash flow, cash from operations, cost reductions,
         cost ratios (per employee or per customer), proceeds from dispositions,
         project completion time and budget goals, net cash flow before
         financing activities, solid fuel equivalent forced outage rate,
         customer growth and total market value. Goals may also be based on
         performance relative to a peer group of companies. Unless otherwise
         stated, such a Performance Goal need not be based upon an increase or
         positive result under a particular business criterion and could
         include, for example, maintaining the status quo or limiting economic
         losses (measured, in each case, by reference to specific business
         criteria). In interpreting Plan provisions applicable to Performance
         Goals and Performance Unit Awards, it is the intent of the Plan to
         conform with the standards of Section 162(m) of the Code and Treasury
         Regulation Section 1.162-27(e)(2)(i), and the Committee in establishing
         such goals and interpreting the Plan shall be guided by such
         provisions. Prior to the payment of any compensation based on the
         achievement of Performance Goals, the Committee must certify in writing
         that applicable Performance Goals and any of the material terms thereof
         were, in fact, satisfied. Subject to the foregoing provisions, the
         terms, conditions and limitations applicable to any Performance Unit
         Awards made pursuant to this Plan shall be determined by the Committee.

                  Each Performance Unit Award shall be embodied in an Award
         Agreement, which shall contain such terms, conditions and limitations
         as shall be determined by the Committee in its sole discretion and, if
         required by the

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         Committee, shall be signed by the Participant to whom the Performance
         Unit Award is granted and by an Authorized Officer for and on behalf of
         the Company. Performance Unit Awards may also be granted in combination
         or in tandem with, in replacement of, or as alternatives to, grants or
         rights under any other employee plan of the Company or any of its
         Subsidiaries, including the plan of any acquired entity. A Performance
         Unit Award may provide for the grant or issuance of additional,
         replacement or alternative Performance Unit Awards upon the occurrence
         of specified events, including the exercise of the original Performance
         Unit Award granted to a Participant. All or part of a Performance Unit
         Award may be subject to conditions established by the Committee, which
         may include, but are not limited to, continuous service with the
         Company and its Subsidiaries, achievement of specific business
         objectives, increases in specified indices, attainment of specified
         growth rates and other comparable measurements of performance. Upon the
         death, disability or termination of employment by a Participant, any
         deferred, unvested or unpaid Performance Unit Awards shall be treated
         as set forth in the applicable Award Agreement.

                  (b) Notwithstanding anything to the contrary contained in this
         Plan, no Participant may be granted a Performance Unit Award under this
         Plan in respect of any calendar year having a value determined on the
         Grant Date in excess of $3,500,000.

         8. PAYMENT.

                  (a) GENERAL. Payment made to a Participant pursuant to a
         Performance Unit Award shall be made in the form of cash and may
         include such restrictions as the Committee shall determine.

                  (b) DEFERRAL. With the approval of the Committee, amounts
         payable in respect of Performance Unit Awards may be deferred and paid
         either in the form of installments or as a lump-sum payment. The
         Committee may permit selected Participants to elect to defer payments
         of the Performance Unit Awards or any other compensation otherwise
         payable by the Company in accordance with procedures established by the
         Committee. Any deferred payment pursuant to a Performance Unit Award,
         whether elected by the Participant or specified by the Award Agreement
         or by the Committee, may be forfeited if and to the extent that the
         Award Agreement so provides.

                  (c) EARNINGS AND INTEREST. The Committee may establish rules
         and procedures for the crediting of interest or other earnings on
         deferred cash payments unless otherwise specified in the Award
         Agreement.

         9. TAXES. The Company or its designated third party administrator shall
have the right to deduct applicable taxes from any Performance Unit Award
payment and withhold, at the time of delivery under this Plan, an appropriate
amount for payment of taxes or other amounts

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required by law or to take such other action as may be necessary in the opinion
of the Company to satisfy all obligations for withholding of such taxes.

         10. AMENDMENT, MODIFICATION, SUSPENSION OR TERMINATION OF THE PLAN. The
Board may amend, modify, suspend or terminate this Plan for the purpose of
meeting or addressing any changes in legal requirements or for any other purpose
permitted by law, except that no amendment or alteration that would adversely
affect the rights of any Participant under any Performance Unit Award previously
granted to such Participant shall be made without the consent of such
Participant.

         11. ASSIGNABILITY. Unless otherwise determined by the Committee and
provided in the Award Agreement, no Performance Unit Award or any other benefit
under this Plan shall be assignable or otherwise transferable except by will or
the laws of descent and distribution or pursuant to a qualified domestic
relations order as defined by the Code or Title I of the Employee Retirement
Income Security Act, or the rules thereunder. The Committee may prescribe and
include in applicable Award Agreements other restrictions on transfer. Any
attempted assignment of a Performance Unit Award or any other benefit under this
Plan in violation of this paragraph 11 shall be null and void.

                  Subject to approval by the Committee in its sole discretion,
all or a portion of the Performance Unit Awards granted to a Participant under
the Plan may be transferable by the Participant, to the extent and only to the
extent specified in such approval, to (i) the spouse, parent, brother, sister,
children or grandchildren (including adopted and stepchildren and grandchildren)
of the Participant ("Immediate Family Members"), (ii) a trust or trusts for the
exclusive benefit of such Immediate Family Members ("Immediate Family Member
Trusts"), or (iii) a partnership or partnerships in which such Immediate Family
Members have at least 99% of the equity, profit and loss interests ("Immediate
Family Member Partnerships"); provided, however, that the Award Agreement
pursuant to which such Performance Unit Awards are granted (or an amendment
thereto) must expressly provide for transferability in a manner consistent with
this paragraph. Subsequent transfers of transferred Performance Unit Awards
shall be prohibited except by will or the laws of descent and distribution,
unless such transfers are made to the original Participant or a person to whom
the original Participant could have made a transfer in the manner described
herein. No transfer shall be effective unless and until written notice of such
transfer is provided to the Committee, in the form and manner prescribed by the
Committee. Following transfer, any such Performance Unit Awards shall continue
to be subject to the same terms and conditions as were applicable immediately
prior to transfer, and, except as otherwise provided herein, the term
"Participant" shall be deemed to refer to the transferee. The consequences of
termination of employment or service shall continue to be applied with respect
to the original Participant.

         12. UNFUNDED PLAN. This Plan shall be unfunded. Although bookkeeping
accounts may be established with respect to Participants under this Plan, any
such accounts shall be used merely as a bookkeeping convenience. The Company
shall not be required to segregate any assets for purposes of this Plan or
Performance Unit Awards hereunder, nor shall the Company, the Board or the
Committee be deemed to be a trustee of any benefit to be granted under this
Plan. Any liability or obligation of the Company to any Participant with respect
to a

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Performance Unit Award under this Plan shall be based solely upon any
contractual obligations that may be created by this Plan and any Award
Agreement, and no such liability or obligation of the Company shall be deemed to
be secured by any pledge or other encumbrance on any property of the Company.
Neither the Company nor the Board nor the Committee shall be required to give
any security or bond for the performance of any obligation that may be created
by this Plan.

         13. GOVERNING LAW. This Plan and all determinations made and actions
taken pursuant hereto, to the extent not otherwise governed by mandatory
provisions of the Code or the securities laws of the United States, shall be
governed by and construed in accordance with the laws of the State of Texas.

         14. EFFECTIVENESS. The Plan, as approved by the Board on May 29, 2003,
shall be effective as of January 1, 2003.

                                    TEXAS GENCO HOLDINGS, INC.

                                    By   /S/ David G. Tees
                                      ------------------------------------------
                                       David G. Tees
                                       President and Chief Executive Officer

ATTEST:

       /s/ Richard B. Dauphin
------------------------------------

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                                                                    EXHIBIT 10.1

                              EMPLOYMENT AGREEMENT

         THIS EMPLOYMENT AGREEMENT (this "Agreement") between Comfort Systems
USA (Texas), L.P., a Texas Limited Partnership (the "Company"), and Thomas N.
Tanner ("Executive") is entered into and effective as of the 14th day of June
2002. This Agreement supersedes any other employment agreements or
understandings, written or oral, between the Company and Executive.

                                    RECITALS

         The following statements are true and correct:

                  As of the date of this Agreement, the Company, and its
         affiliates (collectively, the "Comfort Group") are engaged in the
         business of mechanical contracting services, including heating,
         ventilation and air conditioning, plumbing, fire protection, piping and
         electrical and related services ("Services").

                  Executive is to be employed by the Company in a confidential
         relationship wherein Executive, in the course of Executive's employment
         with the Company, will become familiar with and aware of information as
         to the Comfort Group's customers, specific manner of doing business,
         including the processes, techniques and trade secrets utilized by the
         Comfort Group, employees and future plans with respect thereto, all of
         which has been and will be established and maintained at great expense
         the Comfort Group. This information is a trade secret and constitutes
         the valuable goodwill of the Company and the Comfort Group.

                  Each of Company and Executive desire to establish Executive's
         employment by the Company pursuant to this Agreement.

         NOW, THEREFORE, in consideration of the mutual promises, terms,
covenants and conditions set forth herein, the Company and Executive hereby
agree as follows:

                                   AGREEMENTS

         1. Employment and Duties.

                  (a) The Company hereby employs Executive in an executive
         position and Executive hereby accepts this employment upon the terms
         and conditions herein contained. Executive agrees to devote
         substantially all of Executive's business time, attention and efforts
         to promote and further the business of the Company.

                  (b) Executive shall faithfully adhere to, execute and fulfill
         all lawful policies established by the Company and the Comfort Group,
         including the Comfort Systems USA ("Comfort") Corporate Compliance
         Policy.

                  (c) Executive shall not, during the term of Executive's
         employment hereunder, be engaged in any other business activity pursued
         for gain, profit or other pecuniary advantage if such activity
         interferes in any material respect with Executive's duties and

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         responsibilities hereunder. The foregoing limitations shall not be
         construed as prohibiting Executive from making personal investments in
         such form or manner as will neither require Executive's services in the
         operation or affairs of the companies or enterprises in which such
         investments are made nor violate the terms of Section 4.

         2. Compensation. For all services rendered by Executive, the Company
shall compensate Executive as follows:

                  (a) Base Salary. Effective the date hereof, the base salary
         payable to Executive shall be $175,000 per year, payable on a regular
         basis in accordance with the Company's standard payroll procedures, but
         not less often than monthly. On at least an annual basis, the Company
         will review Executive's performance and may make adjustments to such
         base salary if, in its discretion, any such adjustment is warranted.

                  (b) Executive Perquisites, Benefits and Other Compensation.
         Executive shall be entitled to receive additional benefits and
         compensation from the Company in such form and to the extent specified
         below:

                           (i) Coverage, subject to contributions required of
                  employees generally, for Executive and Executive's dependent
                  family members under health, hospitalization, disability,
                  dental, life and other insurance plans that the Company may
                  have in effect from time to time for the benefit of its
                  employees.

                           (ii) Reimbursement for all business travel and other
                  out-of-pocket expenses reasonably incurred by Executive in the
                  performance of Executive's services pursuant to this
                  Agreement. Reimbursable expenses shall be appropriately
                  documented in reasonable detail by Executive, and shall be in
                  a format consistent with the Company's expense reporting
                  policy.

                           (iii) Participation in the Company's incentive
                  compensation plan for top-ranking regional executives.

         3. Confidentiality.

                  (a) Confidential Information. As used herein, the term
         "Confidential Information" means any information, technical data or
         know-how of the Company and the other members of the Comfort Group,
         including, but not limited to, that which relates to customers,
         business affairs, business plans, financial matters, financial plans
         and projections, pending and proposed acquisitions, operational and
         hiring matters, contracts and agreements, marketing, sales and pricing,
         prospects of the Comfort Group, and any information, technical data or
         know-how that contain or reflect any of the foregoing, whether prepared
         by the Company, any other member of the Comfort Group, Executive or any
         other person or entity; provided, however, that the term "Confidential
         Information" shall not include information, technical data or know-how
         that Executive can demonstrate is generally available to the public not
         as a result of any breach of this Agreement by Executive.

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                  (b) No Disclosure. Except in the performance of Executive's
         duties as an executive of the Company, Executive will not, during or
         after the term of Executive's engagement with the Company, disclose to
         any person or entity or use, for any reason whatsoever, any
         Confidential Information.

         4. Non-Competition Agreement.

                  (a) Competition. Executive will not, during the period of
         Executive's employment by or with the Company, and for a period of one
         year immediately following the termination of Executive's employment,
         for any reason whatsoever, directly or indirectly, on behalf of
         Executive or on behalf of or in conjunction with any other person,
         company, partnership, corporation or business of whatever nature:

                           (i) engage, as an officer, director, shareholder,
                   owner, partner, joint venturer, or in a managerial capacity,
                   whether as an employee, independent contractor, consultant or
                   advisor, or as a sales representative, or make or guarantee
                   loans or invest, in or for any business engaged in Services
                   in competition with the Company Group or any other member of
                   the Comfort Group within seventy-five (75) miles of where any
                   Comfort Group operation or subsidiary conducts business if
                   Executive has had responsibility for, or material input or
                   participation in, the management or operation of such other
                   operation or subsidiary (the "Territory");

                           (ii) call upon any person who is, at that time, an
                   employee of the Company or any other member of the Comfort
                   Group in a technical, managerial or sales capacity for the
                   purpose or with the intent of enticing such employee away
                   from or out of the employ of the Company or such other member
                   of the Comfort Group;

                           (iii) call upon any person or entity which is at that
                  time, or which has been within two (2) years prior to that
                  time, a customer of the Company or any other member of the
                  Comfort Group for the purpose of soliciting or selling
                  Services;

                           (iv) call upon any prospective acquisition candidate,
                  on Executive's own behalf or on behalf of any competitor,
                  which acquisition candidate either was called upon by the
                  Executive on behalf of the Company or any other member of the
                  Comfort Group or was the subject of an acquisition analysis
                  made by Executive on behalf of the Company or any other member
                  of the Comfort Group for the purpose of acquiring such
                  acquisition candidate.

         Notwithstanding the above, the foregoing covenants shall not be deemed
         to prohibit Executive from acquiring as an investment not more than one
         percent (1%) of the capital stock of a competing business whose stock
         is traded on a national securities exchange or on an over-the-counter
         or similar market.

                  (b) No Violation. It is specifically agreed that the period
         during which the agreements and covenants of Executive made in this
         Section 4 shall be effective shall be computed by excluding from such
         computation any time during which Executive is in violation of any
         provision of this Section 4.

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<PAGE>

                  (c) Extension. Notwithstanding the foregoing provisions of
         this paragraph 4, if this Agreement is terminated pursuant to paragraph
         5, then, upon written notice to Executive not later than 60 days
         following the date of such termination, the Company may at its option
         extend by up to twelve additional months the agreements and covenants
         contained in this paragraph 4 by paying to Executive a number of months
         of base salary equal to the length of the extension specified in such
         notice, any such amounts to be payable during such extension period in
         a manner consistent with the Company's standard pay practices.

         5. Term; Termination; Rights on Termination. The term of this Agreement
shall begin on the date hereof and continue for a term of two (2) years, unless
renewed or terminated under this Paragraph 5. At the end of the initial term
described in the preceding sentence, this Agreement shall automatically renew
for succeeding terms of one (1) year each (subject to termination under this
Paragraph), unless either party shall, at least 10 days prior to the expiration
of any term, give written notice of an intention not to renew this Agreement.
This Agreement and Executive's employment may be terminated in any one of the
following ways:

                  (a) Death. The death of Executive shall immediately terminate
         this Agreement with no severance compensation due to Executive's
         estate.

                  (b) Disability. If, as a result of incapacity due to physical
         or mental illness or injury, Executive shall have been absent from
         Executive's full-time duties hereunder for four (4) consecutive months,
         then thirty (30) days after receiving written notice (which notice may
         occur before or after the end of such four (4) month period, but which
         shall not be effective earlier than the last day of such four (4) month
         period), the Company may terminate Executive's employment hereunder,
         provided Executive is unable to resume Executive's full-time duties at
         the conclusion of such notice period. In the event this Agreement is
         terminated as a result of Executive's disability, Executive shall
         receive from the Company Executive's base salary at the rate then in
         effect for the lesser of the time period remaining under the Term or
         six (6) months, and such amount shall be payable during such period in
         a manner consistent with Company's standard pay practices. The amount
         payable hereunder shall be decreased by the amount of benefits
         otherwise actually paid by the Company to Executive or on Executive's
         behalf or under any insurance procured by the Company.

                  (c) Good Cause. The Company may terminate this Agreement ten
         (10) days after written notice to Executive for good cause, which shall
         include any of the following: (i) Executive's willful or material
         breach of this Agreement; (ii) Executive's failure to perform any of
         his material duties following notice by the Company to Executive of
         such improper performance and Executive's failure to correct the
         improper performance to the satisfaction of the Company within a
         reasonable time; (iii) Executive's gross negligence in the performance
         or intentional nonperformance of any of Executive's material duties and
         responsibilities hereunder; (iv) Executive's willful dishonesty, fraud
         or misconduct with respect to the business or affairs of the Company or
         any other member of the Comfort Group; (v) Executive's conviction of a
         felony crime; (vi) Executive's confirmed positive illegal drug test
         result; (vii) sexual harassment by Executive; or (viii) willful or
         material failure by Executive to comply with Comfort's Corporate
         Compliance Policy or other Company

                                       4
<PAGE>

         policies. In the event of a termination for good cause, as enumerated
         above, Executive shall have no right to any severance compensation.

                  (d) Without Cause. At any time after the commencement of
         Executive's employment, Executive or the Company may, without cause,
         terminate this Agreement and Executive's employment, effective fifteen
         (15) days after receipt of written notice. Should Executive be
         terminated by the Company without cause, Executive shall receive from
         the Company Executive's base salary at the rate then in effect for six
         (6) months, and such amount shall be payable during such period in a
         manner consistent with the Company's standard pay practices. If
         Executive resigns or otherwise terminates Executive's employment,
         Executive shall receive no severance compensation.

         6. Return of Company Property. All records, plans, manuals, "field
guides", memoranda, lists, documents, statements and other property delivered to
Executive by or on behalf of the Company or any other member of the Comfort
Group, by any customer of the Company or any other member of the Comfort Group
(including, but not limited to, any such customers obtained by Executive), by
any acquisition candidate of the Company or any other member of the Comfort
Group, and all records compiled by Executive which pertain to the business or
activities of the Company or any other member of the Comfort Group shall be and
remain the property of the Company and shall be subject at all times to its
discretion and control. Likewise, all correspondence with customers,
representatives or acquisition candidates, reports, records, charts, advertising
materials, and any data collected by Executive or by or on behalf of the Company
or any other member of the Comfort Group or any representative of any of them
shall be delivered promptly to the Company without request by it upon
termination of Executive's employment with the Company.

         7. Inventions. Executive shall disclose promptly to the Company any and
all significant conceptions and ideas for inventions, improvements and valuable
discoveries, whether patentable or not, which are conceived or made by
Executive, solely or jointly with another, during the period of Executive's
employment with the Company or within one (1) year thereafter, and which are
directly related to the business or activities of the Company or which Executive
conceives as a result of Executive's employment by the Company. Executive hereby
assigns and agrees to assign all Executive's interests therein to the Company or
its nominee. Whenever requested to do so by the Company, Executive shall execute
any and all applications, assignments or other instruments that the Company
shall deem necessary to apply for and obtain Letters Patent of the United States
or any foreign country or to otherwise protect the Company's interest therein.

         8. Trade Secrets. Executive agrees that Executive will not, during or
after the Term, disclose the specific terms of the Company's or any other member
of the Comfort Group's relationships or agreements with significant vendors or
customers or any other significant and material trade secret of the Company or
any other member of the Comfort Group, whether in existence or proposed, to any
person, firm, partnership, corporation or business for any reason or purpose
whatsoever.

         9. Prior Agreements. This Agreement supercedes any prior documents or
understandings with respect to Executive's employment with the Company.
Executive hereby represents and warrants to the Company that the execution of
this Agreement by Executive and Executive's employment by the Company and the
performance of Executive's duties hereunder will

                                       5
<PAGE>

not violate or be a breach of any agreement with a former employer, client or
any other person or entity. Further, Executive agrees to indemnify the Company
for any claim, including, but not limited to, attorneys' fees and expenses of
investigation, by any such third party that such third party may now have or may
hereafter come to have against the Company based upon or arising out of any
non-competition agreement, invention or secrecy agreement between Executive and
such third party which was in existence as of the date of this Agreement.

         10. Assignment; Binding Effect. Executive understands that Executive
has been selected for employment by the Company on the basis of Executive's
personal qualifications, experience and skills. Executive agrees, therefore,
that Executive cannot assign all or any portion of Executive's performance under
this Agreement. Executive, Executive's spouse and the estate of each shall not
have any right to encumber or dispose of any right to receive payments
hereunder, it being understood that such payments and the right thereto are
nonassignable and nontransferable; provided, however, that in the event of the
death of Executive, any payments that Executive is entitled to receive may be
assigned to the beneficiaries of Executive's estate. Subject to the preceding
three (3) sentences and the express provisions of Section 11, this Agreement
shall be binding upon, inure to the benefit of and be enforceable by the parties
hereto and their respective heirs, legal representatives, successors and
assigns.

         11. Complete Agreement. Executive has no oral representations,
understandings or agreements with the Company or any of its officers, directors
or representatives covering the same subject matter as this Agreement. This
Agreement is the final, complete and exclusive statement and expression of the
agreement between the Company and Executive and of all the terms of this
Agreement, and it cannot be varied, contradicted or supplemented by evidence of
any prior or contemporaneous oral or written agreements.

         12. Amendment; Waiver. This Agreement may not be modified except in a
writing signed by the parties, and no term of this Agreement may be waived
except by a writing signed by the party waiving the benefit of such term. No
waiver by the parties hereto of any default or breach of any term, condition or
covenant of this Agreement shall be deemed to be a waiver of any subsequent
default or breach of the same or any other term, condition or covenant contained
herein.

         13. Notice. Whenever any notice is required hereunder, it shall be
given in writing addressed as follows:

         To the Company:     Comfort Systems USA, Inc.
                             777 Post Oak, Suite 500
                             Houston, TX 77056
                             Attention: General Counsel

         To Executive:       Thomas N. Tanner
                             6862 Claret Circle
                             Fayetteville, NY 13066

Notice shall be deemed given and effective on the earlier of five (5) days after
the deposit in the U.S. mail of a writing addressed as above and sent first
class mail, certified, return receipt requested, or when actually received.
Either party may change the address for notice by notifying the other party of
such change in accordance with this Section 13.

                                       6
<PAGE>

         14. Severability; Enforceability. If any portion of this Agreement is
held invalid or inoperative, the other portions of this Agreement shall be
deemed valid and operative and, so far as is reasonable and possible, effect
shall be given to the intent manifested by the portion held invalid or
inoperative. Moreover, in the event any court of competent jurisdiction shall
determine that the scope, time or territorial restrictions set forth in any
covenant contained herein are unreasonable, then it is the intention of the
parties that such restrictions be enforced to the fullest extent which the court
deems reasonable, and this Agreement shall thereby be reformed. Each of the
covenants contained in this Agreement shall be construed as an agreement
independent of any other provision in this Agreement, and the existence of any
claim or cause of action of Executive against the Company, whether predicated on
this Agreement or otherwise, shall not constitute a defense to the enforcement
by the Company of such covenants.

         15. Survival. The provisions and covenants of Sections 3, 4, 6, 7 and 8
shall survive termination of this Agreement.

         16. Specific Performance Because of the difficulty of measuring
economic losses to the Company as a result of a breach of the covenants
contained in Sections 3, 4, 6, 7 and 8 and because of the immediate and
irreparable damage that could be caused to the Company for which it would have
no other adequate remedy, Executive agrees that the Company shall be entitled to
specific performance and that such covenants may be enforced by the Company in
the event of any breach or threatened breach by Executive, by injunctions,
restraining orders and other appropriate equitable relief. Executive further
agrees to waive any requirement for the securing or posting of any bond in
connection with the obtaining of any such injunctive or other equitable relief.

         17. Governing Law. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of Texas.

         18. Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall be deemed to be an original and all of which
together shall constitute one and the same instrument.

         IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.

EXECUTIVE:                              COMPANY:

                                        COMFORT SYSTEMS USA (TEXAS), L.P.

/s/ Thomas N. Tanner                    /s/ Dave Lanphar
--------------------                    ----------------------------------
Thomas N. Tanner                        Name:  Dave Lanphar
                                        Title: Senior Vice President

                                       7

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