Document:

Exhibit 10.6

 

2006
Equity Incentive Plan

Option to Purchase:                                                      
shares

Granted to:                                                                                 

	
  

  	
   

  	
  This stock option has been granted on                             
  on behalf of

  	
   

  
	
   

  	
   

  	
  Comfort Systems USA, Inc. at the option price of $                       .

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  William F. Murdy

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Chief Executive Officer and President

  	
   

  

 

This is not a stock certificate or a negotiable instrument.  Non-Transferable.

Location:                     

Comfort
Systems USA, Inc. 2006 Equity Incentive Plan

Non-Qualified Stock Option Notice

	
  [Name]

  	
   

  	
  Grant Date:                  [Grant
  Date]

  
	
  [Address]

  	
   

  	
  Options Granted:         [Total
  Number of Options]

  
	
  [City, State Zip]

  	
   

  	
  Option Price:               [Option
  Price] 

  
	
   

  	
   

  	
  Last Date to Exercise: [                                         ]

  

 

We are pleased to inform
you that you have been granted an option to purchase Comfort Systems USA, Inc.
(the “Company”) common stock.  Your grant
has been made under the Company’s 2006 Equity 
Incentive Plan (the “Plan”), which together with the terms contained in
this Notice, sets forth the terms and conditions of your grant and is
incorporated herein by reference.  If
this is your first grant, a copy of the 2006 Equity  Incentive Plan and of the Prospectus is
enclosed.  Please review these documents
carefully.

Vesting:

Subject to the terms of the Plan, the option vests according
to the following schedule:

	
  Vesting Date

  	
   

  	
  Shares
  Vesting

  

 

Exercise:

You may exercise this
Option, in whole or in part, to purchase a whole number of vested shares at any
time, by following the exercise procedures set up by the Company.  All exercises must take place before the Last
Date to Exercise, or such earlier date as is set out in the Plan following your
death, disability or your ceasing to be an employee.  The number of shares you may purchase as of
any date cannot exceed the total number of shares vested by that date, less any
shares you have previously acquired by exercising this Option.

Employment Requirements:

The Plan sets out the
terms and conditions that govern this grant in the event of your termination of
employment, death or disability.  In the event of your separation from the Company for any reason and
under any circumstances, all further vesting of shares under this grant stops,
and all unvested shares are canceled.  As
set out in the Plan, you will have 3 months after your employment ceases or is
suspended to exercise your vested options, and in the event of your death or
total disability you or your estate will have a period of 1 year to exercise
any vested options.

Taxes and Withholding:

This option is not
intended to be an Incentive Stock Option, as defined under Section 422(b) of
the Internal Revenue Code.  Any exercise
of this option is normally a taxable event, and if the Company determines that
any federal, state, local or foreign tax or withholding payment is required relating
to the exercise or sale of shares arising from this grant, the Company shall
have the right to require such payments from you, or to withhold such amounts
from other payments due to you from the Company.Exhibit 10.7

 

2006 Stock Options/SAR Plan

for
Non-Employee Directors

Option to Purchase:                                                   
shares

Granted to:                                                                              

	
  

  	
  This stock
  option has been granted on                                on
  behalf of

  
	
   

  	
  Comfort Systems
  USA, Inc. at the option price of $               .

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  

  	
   

  
	
   

  	
   

  	
   

  	
  William F. Murdy

  	
   

  
	
   

  	
   

  	
   

  	
  Chief Executive
  Officer and President

  	
   

  

 

This is not a stock
certificate or a negotiable instrument. 
Non-Transferable.

Location:                                         

 

Comfort Systems USA, Inc. 2006
Stock Options/SAR

Plan for Non-Employee Directors

Non-Qualified Stock
Option Notice

 

	
  [Name]

  	
   

  	
  Grant Date:                  [Grant
  Date]

  
	
  [Address]

  	
   

  	
  Options Granted:         [Total
  Number of Options]

  
	
  [City, State
  Zip]

  	
   

  	
  Option Price:               [Option
  Price]

  
	
   

  	
   

  	
  Last Date to
  Exercise: [                                        ]

  

 

We are pleased to inform
you that you have been granted an option to purchase Comfort Systems USA, Inc.
(the “Company”) common stock.  Your grant
has been made under the Company’s 2006 Equity 
Incentive Plan (the “Plan”), which together with the terms contained in
this Notice, sets forth the terms and conditions of your grant and is
incorporated herein by reference.  If
this is your first grant, a copy of the 2006 Equity  Incentive Plan and of the Prospectus is
enclosed.  Please review these documents
carefully.

Vesting:

Subject to the terms of the Plan, the option vests according to the
following schedule:

 

	
  Vesting Date

  	
   

  	
  Shares Vesting

  

 

Exercise:

You may exercise this
Option, in whole or in part, to purchase a whole number of vested shares at any
time, by following the exercise procedures set up by the Company.  All exercises must take place before the Last
Date to Exercise, or such earlier date as is set out in the Plan following your
death, disability or your ceasing to be an employee.  The number of shares you may purchase as of
any date cannot exceed the total number of shares vested by that date, less any
shares you have previously acquired by exercising this Option.

Employment Requirements:

The Plan sets out the
terms and conditions that govern this grant in the event of your termination of
employment, death or disability. In the event of your
separation from the Company for any reason and under any circumstances, all
further vesting of shares under this grant stops, and all unvested shares are canceled.  As set out in the Plan, you will have 3
months after your employment ceases or is suspended to exercise your vested
options, and in the event of your death or total disability you or your estate
will have a period of 1 year to exercise any vested options.

Taxes and Withholding:

This option is not
intended to be an Incentive Stock Option, as defined under Section 422(b) of
the Internal Revenue Code.  Any exercise
of this option is normally a taxable event, and if the Company determines that
any federal, state, local or foreign tax or withholding payment is required
relating to the exercise or sale of shares arising from this grant, the Company
shall have the right to require such payments from you, or to withhold such
amounts from other payments due to you from the Company.Exhibit 10.12

EMPLOYMENT AGREEMENT

This
Employment Agreement (this “AGREEMENT”) by and among COMFORT SYSTEMS USA (TEXAS), L.P., a Texas limited partnership
(the “COMPANY”), and TRENT MCKENNA (“EMPLOYEE”) is hereby entered into and
effective as of the 1st day of January 2006.

R E C I T A L S

A.            The Company is engaged primarily in
the heating, ventilation, air conditioning, plumbing, mechanical contracting,
specialty fabrication, electrical, fire protection and process piping industry.

B.            Company desires to employ Employee
hereunder in a confidential relationship wherein Employee, in the course of his
employment, will become familiar with and aware of information as to the
Company’s customers, specific manner of doing business, processes, techniques
and trade secrets and future plans with respect thereto, all of which have been
and will be established and maintained at great expense to the Company, which
information is a trade secret and constitutes the valuable good will of the
Company; and

NOW,
THEREFORE, in consideration of the mutual promises and covenants set forth
herein, it is hereby agreed as follows:

A G R E E M E N T S

1.             EMPLOYMENT AND DUTIES.

(a)
Company hereby employs Employee to serve as Vice President, General Counsel,
and Secretary of the Company. As such, Employee shall have responsibilities,
duties and authority customarily accorded to and expected of an officer holding
such position directly with the Company. Employee hereby accepts this
employment upon the terms and conditions herein contained and agrees to devote
his full time, attention and efforts to promote and further the business of
Company.

(b)
Employee shall faithfully adhere to, execute and fulfill all policies
established by Company from time to time.

2.             COMPENSATION. For all services
rendered by Employee, Company shall compensate Employee as follows:

(a)           BASE SALARY.  Effective as of the Effective Date, the base
salary payable to Employee shall be $150,000 per year, payable on a regular
basis in accordance with Company’s standard payroll procedures but not less
frequently than monthly. On at least an annual basis, Company will review
Employee’s performance and may, in its sole discretion, (i) make 

 1
 

increases to such
base salary; (ii) pay a performance bonus; or (iii) recommend Employee for an
equity grant under the then existing stock plan(s) of Comfort Systems USA, Inc.

(b)           EMPLOYEE PERQUISITES, BENEFITS AND
OTHER COMPENSATION. Employee shall be entitled to receive additional benefits
and compensation from Company in such form and to such extent as specified
below:

(i)            Coverage,
subject to contributions required of executives of the Company generally, for
Employee and his dependent family members under health, hospitalization,
disability, dental, life and other insurance plans that Company may have in
effect from time to time.  Benefits
provided to Employee under this clause (i) shall be equal to such benefits
provided to other Company employees of the same level.

(ii)           Reimbursement
for all business travel and other out-of-pocket expenses reasonably incurred by
Employee in the performance of services pursuant to this Agreement.  All reimbursable expenses shall be
appropriately documented in reasonable detail by Employee upon submission of
any request for reimbursement, and in a format and manner consistent with
Company’s expense reporting policy.

(iii)          Company
shall provide Employee with other employee perquisites as may be available to
or deemed appropriate for Employee by Company and participation in all other
Company-wide employee benefits as are available from time to time.

3.             NONCOMPETITION AGREEMENT.

(a)
Employee shall not, during the term of his employment hereunder, be engaged in
any other business activity pursued for gain, profit or other pecuniary
advantage if such activity interferes with Employee’s duties and
responsibilities hereunder. The foregoing limitations shall not be construed as
prohibiting Employee from making personal investments in such form or manner as
will neither require his services in the operation or affairs of the companies
or enterprises in which such investments are made nor violate the terms of this
paragraph 3.  Employee will not, during
the period of his employment by or with Company, and for a period of two (2) years
immediately following the termination of his employment under this Agreement,
except as provided below, directly or indirectly, for himself or on behalf of
or in conjunction with any other person, persons, 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, in any business in direct competition
with Company or any of its subsidiaries and affiliates within 100 miles of
where the Company or any of its subsidiaries and affiliates conduct business,
including any territory serviced by the Company or any of such subsidiaries
(the “TERRITORY”);

(ii)           call
upon any person who is, at that time, an employee of Company or any of its
subsidiaries or affiliates sales or managerial capacity for the purpose or with
the intent of enticing such employee away from or out of the employ of Company
or any of its subsidiaries or affiliates or any its subsidiaries or affiliates;

 2
 

(iii)          call
upon any person or entity which is, at that time, or which has been, within one
(1) year prior to that time, a customer of the Company or any of its
subsidiaries or affiliates for the purpose of soliciting or selling products or
services in direct competition with the Company or any of its subsidiaries or
affiliates; or

(iv)          call
upon any prospective acquisition candidate, on Employee’s own behalf or on
behalf of any competitor, which candidate was, to Employee’s actual knowledge
after due inquiry, either called upon by Company or any of its subsidiaries or
affiliates or for which Employee participated in an acquisition analysis for
the purpose of acquiring such entity or all or substantially all of such entity’s
assets.

Notwithstanding
the above, the foregoing covenant shall not be deemed to prohibit Employee from
acquiring as a passive investment not more than two percent (2%) of the capital
stock of a competing business the stock of which is traded on a national
securities exchange or on an over-the -counter or similar market.

(b)
Because of the difficulty of measuring economic losses to Company or any of its
subsidiaries or affiliates as a result of a breach of the foregoing covenant,
and because of the immediate and irreparable damage that could be caused to
Company or any of its subsidiaries or affiliates for which they would have no
other adequate remedy, Employee agrees that the foregoing covenant may be
enforced by Company or any of its subsidiaries or affiliates in the event of
breach or threatened breach by Employee, by injunctions, restraining orders and
other appropriate equitable relief.

(c)
It is agreed by the parties that the foregoing covenants in this paragraph 3
impose a reasonable restraint on Employee in light of the activities and
business of the Company on the date of the execution of this Agreement and the
current plans of the Company or any of its subsidiaries or affiliates; but it
is also the intent of the Company and Employee that such covenants be construed
and enforced in accordance with the changing activities, business and locations
of the Company or any of its subsidiaries or affiliates throughout the term of
this covenant, whether before or after the date of termination of the employment
of Employee. For example, if, during the term of this Agreement, the Company or
any of its subsidiaries or affiliates engages in new and different activities,
enters a new business or establishes new locations for its current activities
or business in addition to or other than the activities or business enumerated
under the Recitals above or the locations currently established therefor, then
Employee will be precluded from soliciting the customers or Employees of such
new activities or business or from such new location and from directly
competing with such new business within 100 miles of its then-established
operating location(s) through the term of this covenant.

It
is further agreed by the parties hereto that, in the event that Employee shall
cease to be employed hereunder, and shall enter into a business or pursue other
activities not in competition with the Company or any of its subsidiaries or
affiliates, or similar activities or business in locations the operation of
which, under such circumstances, does not violate clause (i) of paragraph 3(a),
Employee shall not be chargeable with a violation of this paragraph 3 if the
Company or any of its subsidiaries or affiliates shall thereafter enter the
same, similar or a competitive (i) business, (ii) course of activities or (iii)
location, as applicable.

 3
 

(d)
The covenants in this paragraph 3 are severable and separate, and the
unenforceability of any specific covenant shall not affect the provisions of
any other covenant.  Moreover, in the
event any court of competent jurisdiction shall determine that the scope, time
or territorial restrictions set forth 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.

(e)
All of the covenants in this paragraph 3 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 Employee against Company or any of its subsidiaries
or affiliates, whether predicated on this Agreement or otherwise, shall not
constitute a defense to the enforcement by Company or any of its subsidiaries
or affiliates of such covenants. It is specifically agreed that the period of
two (2) years following termination of employment stated at the beginning of
this paragraph 3, during which the agreements and covenants of Employee made in
this paragraph 3 shall be effective, shall be computed by excluding from such
computation any time during which Employee is in violation of any provision of
this paragraph 3.

4.             PLACE OF PERFORMANCE; RELOCATION
RIGHTS.

(a)
Employee understands that he may be requested by Company or any of its
subsidiaries or affiliates to relocate from his present residence to another
geographic location in order to more efficiently carry out his duties and
responsibilities under this Agreement or as part of a promotion or other
increase in duties and responsibilities. In such event, if Employee agrees to
relocate, Company or any of its subsidiaries or affiliates will pay all
relocation costs to move Employee, his immediate family and their personal
property and effects. Such costs may include, by way of example, but are not
limited to, pre-move visits to search for a new residence, investigate schools
or for other purposes; temporary lodging and living costs prior to moving into
a new permanent residence; duplicate home carrying costs; all closing costs on
the sale of Employee’s present residence and on the purchase of a comparable
residence in the new location; and added income taxes that Employee may incur
if any relocation costs are not deductible for tax purposes. The general intent
of the foregoing is that Employee shall not personally bear any out-of-pocket cost
as a result of the relocation, with an understanding that Employee will use his
best efforts to incur only those costs which are reasonable and necessary to
effect a smooth, efficient and orderly relocation with minimal disruption to
the business affairs of Company or any of its subsidiaries or affiliates and
the personal life of Employee and his family.

(b)
Notwithstanding the above, if Employee is requested by Company to relocate his
primary residence and Employee refuses, such refusal shall not constitute “CAUSE”
for termination of this Agreement under the terms of paragraph 5(a)(iii).

5.             TERM; TERMINATION; RIGHTS ON
TERMINATION.

(a) TERM. The term of
this Agreement shall begin on the date hereof and continue for two (2) years
(the “INITIAL TERM”) unless terminated sooner as herein provided, and shall
automatically renew after the Initial Term on a year-to-year basis on the same
terms and conditions contained herein in effect as of the time of renewal
unless the Company notifies Employee at least 60 days prior to such expiration
(the “TERM”). This Agreement and Employee’s employment may be terminated in any
one of the following ways:

 4
 

(i)                               TERMINATION
AS A RESULT OF THE EMPLOYEE’S DEATH. The death of Employee shall immediately
terminate this Agreement and upon such termination Employee’s Estate shall
receive from the Company, in a lump-sum payment, the base salary at the rate
then in effect for one (1) year, provided, however, that such lump-sum payment
shall be reduced by the amount, if any, of benefit payable under any life
insurance policies to the extent such policies are procured and paid for by the
Company.

(ii)                            TERMINATION
ON ACCOUNT OF DISABILITY. If, as a result of incapacity due to physical or
mental illness or injury, Employee shall have been absent from his 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), Company may terminate Employee’s employment
hereunder provided Employee is unable to resume his full-time duties with or
without reasonable accommodation at the conclusion of such notice period. Also,
Employee may terminate his employment hereunder if his health should become
impaired to an extent that makes the continued performance of his duties
hereunder hazardous to his physical or mental health or his life, provided that
Employee shall have furnished Company with a written statement from a qualified
doctor to such effect and provided, further, that, at Company’s request made
within thirty (30) days of the date of such written statement, Employee shall
submit to an examination by a doctor selected by Company who is reasonably
acceptable to Employee or Employee’s doctor and such doctor shall have
concurred in the conclusion of Employee’s doctor. In the event this Agreement
is terminated as a result of Employee’s disability, Employee shall receive from
Company, in a lump-sum payment due within ten (10) days of the effective date
of termination, the base salary at the rate then in effect for whatever time
period is remaining under the Initial Term of this Agreement or for one (1)
year, whichever amount is greater; provided, however, that any such payments
shall be reduced by the amount of any disability insurance payments payable to
the Employee as a result of such disability.

(iii)                         TERMINATION
BY THE COMPANY FOR CAUSE. Company may terminate this Agreement immediately for “CAUSE,”
which shall be: (1) Employee’s willful and material breach of this Agreement
(which breach cannot be cured or, if capable of being cured, is not cured
within ten (10) days after receipt of written notice to cure); (2) Employee’s
gross negligence in the performance or intentional nonperformance of any of
Employee’s material duties and responsibilities hereunder; (3) Employee’s
willful dishonesty, fraud or misconduct with respect to the business or affairs
of Company or any of its subsidiaries or affiliates which materially and
adversely affects the operations or reputation of Company or any of its
subsidiaries or affiliates; (4) Employee’s conviction of a felony crime; (5)
Employee’s confirmed positive illegal drug test result; (6) confirmed sexual
harassment by Employee; or (7) Employee’s material and willful violation of the
Company’s Compliance and Business Ethics 

 5
 

Policies. In the event of
a termination for Cause, as enumerated above, Employee shall have no right to
any severance compensation.

(iv)                        TERMINATION
WITHOUT CAUSE. At any time after the commencement of employment, either
Employee or Company may, voluntarily or without cause, respectively, terminate
this Agreement and Employee’s employment, effective thirty (30) days after
written notice is provided to the other. Should Employee be terminated by
Company without Cause Employee shall receive from Company, in a lump-sum
payment due on the effective date of termination, the base salary at the rate
then in effect for one (1) year. Further, any termination without Cause by
Company shall operate to shorten the period set forth in paragraph 3(a) and
during which the terms of paragraph 3 apply to one (1) year from the date of
termination of employment.  Except as
provided in paragraph 12 below, if Employee resigns or otherwise terminates
this Agreement, the provisions of paragraph 3 hereof shall apply, except that
Employee shall receive no severance compensation. If Employee is terminated by
the Company without Cause, or if the Employee terminates his employment for
Good Reason pursuant to paragraph 12(c) below, then the Company shall make the
insurance premium payments contemplated by COBRA for a period of twelve (12)
months immediately following such termination.

(b) CHANGE IN CONTROL OF THE COMPANY. In the event of
a Change in Control of the Company (as defined below) during the Term,
paragraph 12 below shall apply.

(c) EFFECT OF TERMINATION. Upon termination of this
Agreement for any reason provided above, Employee shall be entitled to receive
all compensation earned and all benefits and reimbursements due through the
effective date of termination. Additional compensation subsequent to
termination, if any, will be due and payable to Employee only to the extent and
in the manner expressly provided herein. All other rights and obligations of
Company and Employee under this Agreement shall cease as of the effective date
of termination, except that Company’s obligations under paragraph 9 herein and
Employee’s obligations under paragraphs 3, 6, 7, 8 and 10 herein shall survive
such termination in accordance with their terms.

(d) BREACH BY COMPANY. 
If termination of Employee’s employment arises out of Company’s material
failure to pay Employee on a timely basis the amounts to which he is entitled
under this Agreement or as a result of any other breach of this Agreement by
Company, as determined by a court of competent jurisdiction or pursuant to the
provisions of paragraph 16 below, Company shall pay all amounts and damages to
which Employee may be entitled as a result of such breach, including interest
thereon and all reasonable legal fees and expenses and other costs incurred by
Employee to enforce her rights hereunder. 
Further, none of the provisions of paragraph 3 shall apply in the event
this Agreement is terminated as a result of a breach by Company.

 

 6

 

6.             RETURN OF COMPANY PROPERTY.  All records, designs, patents, business
plans, financial statements, manuals, memoranda, lists and other property
delivered to or compiled by Employee by or on behalf of the Company or its
representatives, vendors or customers which pertain to the business of the
Company shall be and remain the property of the Company and be subject at all
times to its discretion and control. 
Likewise, all correspondence, reports, records, charts, advertising
materials and other similar data pertaining to the business, activities or
future plans of the Company which is collected by Employee shall be delivered
promptly to the Company without request by it upon termination of Employee’s
employment.

7.             INVENTIONS. Employee 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 Employee, solely or jointly with another, during
the period of employment or within one (1) year thereafter, and which are
directly related to the business or activities of the Company and which
Employee conceives as a result of his employment hereunder. Employee hereby
assigns and agrees to assign all his interests therein to the Company or its
nominee. Whenever requested to do so by the Company, Employee 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. Employee agrees that
he will not, during or after the Term of this Agreement, disclose the specific
terms of the Company’s relationships or agreements with their respective
significant vendors or customers or any other significant and material trade
secret of the Company, whether in existence or proposed, to any person, firm,
partnership, corporation or business for any reason or purpose whatsoever,
except and only to the extent required by law or legal process following notice
to the Company.

9.             INDEMNIFICATION. In the event
Employee is made a party to any threatened, pending or completed action, suit
or proceeding, whether civil, criminal, administrative or investigative (other
than an action by Company against Employee), by reason of the fact that his is
or was performing services under this Agreement, then Company shall indemnify
Employee against all expenses (including attorneys’ fees), judgments, fines and
amounts paid in settlement, as actually and reasonably incurred by Employee in
connection therewith, to the maximum extent permitted by applicable law. The
advancement of expenses shall be mandatory to the extent permitted by
applicable law.  In the event that both Employee
and Company are made a party to the same third-party action, complaint, suit or
proceeding, Company agrees to engage counsel, and Employee agrees to use the
same counsel, provided that if counsel selected by Company shall have a
conflict of interest that prevents such counsel from representing Employee,
Employee may engage separate counsel and Company shall pay all reasonable
attorneys’ fees of such separate counsel. Company shall not be required to pay
the fees of more than one law firm except as described in the preceding
sentence, and shall not be required to pay the fees of more than two law firms
under any circumstances.  Further, while
Employee is expected at all times to use his best efforts to faithfully
discharge his duties under this Agreement, Employee cannot be held liable to
Company for errors or omissions made in good faith where Employee has not
exhibited gross, willful and wanton negligence or misconduct or performed
criminal or fraudulent acts.

 7
 

 

10.           NO PRIOR AGREEMENTS.  Employee hereby represents and warrants to
the Company that the execution of this Agreement by Employee and his employment
by Company and the performance of his duties hereunder will not violate or be a
breach of any agreement with a former Company, client or any other person or
entity. Further, Employee agrees to indemnify Company and 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 Company or any of its subsidiaries or
affiliates based upon or arising out of any noncompetition agreement, invention
or secrecy agreement between Employee and such third party which was in
existence as of the date of this Agreement.

11.           ASSIGNMENT; BINDING EFFECT. Employee
understands that he has been selected for employment by Company and/or the
Company on the basis of his personal qualifications, experience and skills.
Employee agrees, therefore, he cannot assign all or any portion of his
performance under this Agreement. Subject to the preceding two (2) sentences
and the express provisions of paragraph 12 below, 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.

12            CHANGE IN CONTROL.

(a)          Upon notice by Employee
at any time during the 90 days following a Change in Control, the Employee may
elect to terminate his employment and shall be entitled to receive in a lump-sum
payment due upon the date of such termination the amount equal to one (1) times
annual base salary then in effect, and the noncompetition provisions of
paragraph 3 shall apply for a period of one (1) year immediately following the
effective date of termination.

(b)         Upon a Change in Control,
any options or restricted stock outstanding to Employee that have not
previously vested shall be immediately vested.

(c)          In any Change in Control
situation, if Employee is terminated by Company without Cause at any time
during the twelve (12) months immediately following the closing of the
transaction giving rise to the Change in Control, or Employee terminates this
Agreement for Good Reason (as defined below) at any time during the twelve (12)
months immediately following the closing of the transaction giving rise to the
Change in Control, Employee shall be entitled to receive in a lump-sum payment,
due on the effective date of termination, the amount equal to one (1) times the
greater of (i) his annual base salary then in effect or (ii) his annual base
salary in effect immediately prior to the closing of the transaction giving
rise to the Change in Control, and the noncompetition provisions of paragraph 3
shall apply for a period of one (1) year immediately following the effective
date of termination. For purposes of this Agreement, Employee shall have “GOOD
REASON” to terminate this Agreement and his employment hereunder if, without
Employee’s consent, (x) Employee is demoted by means of a reduction in
authority, responsibilities, duties or title to a position of materially less
stature or importance within the Company than as described in paragraph 1
hereof or (y) the Company breaches this Agreement in any material respect and
fails to cure such breach within ten (10) days after Employee 

 8
 

 

       delivers
written notice and a written description of such breach to the Company, which
notice shall specifically refer to this section of this Agreement.

(d)         For purposes of applying
paragraph 5 under the circumstances described in (b) above, the effective date
of termination will be the closing date of the transaction giving rise to the
Change in Control and all compensation, reimbursements and lump-sum payments
due Employee must be paid in full by Company at or prior to such closing.
Further, Company shall ensure that Employee will be given sufficient time and
opportunity to elect whether to exercise all or any of his vested options to
purchase the Company’s Common Stock, including any options with accelerated
vesting under the provisions of the Company’s Long-Term Incentive Plans (or
other applicable plan then in effect), such that he may convert the options to
shares of the Company’s Common Stock at or prior to the closing of the
transaction giving rise to the Change in Control, if he so desires.

(e)          A “CHANGE IN CONTROL”
shall be deemed to have occurred if:

(i) any person, other than Comfort Systems USA, Inc.,
a Delaware corporation and the beneficial owner of the Company (“CSUSA”), or an
employee benefit plan of CSUSA, or any entity controlled by either, acquires
directly or indirectly the Beneficial Ownership (as defined in Section 13(d) of
the Securities Exchange Act of 1934, as amended) of any voting security of the
CSUSA and immediately after such acquisition such Person is, directly or
indirectly, the Beneficial Owner of voting securities representing fifty
percent (50%) or more of the total voting power of all of the then-outstanding
voting securities of CSUSA;

(ii) the following individuals no longer constitute a
majority of the members of the Board of Directors of CSUSA: (A) the individuals
who, as of the date hereof, constitute the Board of Directors of CSUSA (the “ORIGINAL
DIRECTORS”); (B) the individuals who thereafter are elected to the Board of
Directors of the CSUSA and whose election, or nomination for election, to the
Board of Directors of CSUSA was approved by a vote of at least two-thirds (2/3)
of the Original Directors then still in office (such directors becoming “ADDITIONAL
ORIGINAL DIRECTORS” immediately following their election); and (C) the
individuals who are elected to the Board of Directors of CSUSA and whose
election, or nomination for election, to the Board of Directors of CSUSA was
approved by a vote of at least two-thirds (2/3) of the Original Directors and
Additional Original Directors then still in office (such directors also
becoming “ADDITIONAL ORIGINAL DIRECTORS” immediately following their election);

(iii) the stockholders of CSUSA shall approve a
merger, consolidation, recapitalization, or reorganization of CSUSA, a reverse
stock split of outstanding voting securities, or consummation of any such
transaction if stockholder approval is not obtained, other than any such
transaction which would result in at least seventy-five percent (75%) of the
total voting power represented by the voting securities of the surviving entity
outstanding immediately after such transaction being Beneficially Owned by at
least seventy-five percent (75%) of the holders of outstanding voting
securities of CSUSA immediately prior to the transaction, with the voting power
of 

 9
 

 

each such continuing holder relative to other such
continuing holders not substantially altered in the transaction; or

(iv) the stockholders of CSUSA shall approve a plan of
complete liquidation of CSUSA or an agreement for the sale or disposition of
all or a substantial portion of the CSUSA’s assets (i.e., fifty percent (50%)
or more of the total assets of CSUSA).

(v) Employee must be notified in writing by Company or
any of its subsidiaries or affiliates at anytime that either Company or any of
its subsidiaries or affiliates anticipates that a Change in Control may take
place.

(f)            If it shall be
determined that any payment or distribution by Company, the Company or any
other person to or for the benefit of the Employee (a “PAYMENT”) would be
subject to the excise tax imposed by Section 4999 of the Internal Revenue Code
of 1986, as amended (the “EXCISE TAX”), as a result of the termination of
employment of the Employee in the event of a Change in Control, then Company,
the Company or the successor to the Company shall pay an additional payment (a “GROSS-UP
PAYMENT”) in an amount such that after payment by the Employee of all taxes,
including, without limitation, any income taxes and Excise Tax imposed on the
Gross-Up Payment, the Employee retains an amount of the Gross-Up Payment equal
to the Excise Tax imposed on the Payments. Such amount will be due and payable
by Company, the Company or the successor to the Company within ten (10) days
after the Employee delivers written request for reimbursement accompanied by a
copy of the Employee’s tax return(s) or other tax filings showing the excise
tax actually incurred by the Employee.

13.           COMPLETE AGREEMENT. This Agreement
sets forth the entire agreement of the parties hereto relating to the subject
matter hereof and supersedes any other employment agreements or understandings,
written or oral, between or among Company, the Company and Employee. This
Agreement is not a promise of future employment. Employee has no oral
representations, understandings or agreements with Company or any of its
subsidiaries or affiliates 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
Company and Employee 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. This written Agreement may not be
later modified except by a further writing signed by a duly authorized officer
of Company and Employee, and no term of this Agreement may be waived except in
writing signed by the party waiving the benefit of such term.

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

	
  To Company:

  	
   

  	
  Comfort Systems USA (Texas), L.P.

  
	
   

  	
   

  	
  777 Post Oak Blvd, Suite 500

  
	
   

  	
   

  	
  Houston, Texas 77056

  
	
   

  	
   

  	
  Attention: Law Department

  

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  To Employee:

  	
   

  	
  Trent McKenna

  
	
   

  	
   

  	
  7938 Clarion Way

  
	
   

  	
   

  	
  Houston, TX 77040

  

 

Notice
shall be deemed given and effective on the earlier of three (3) 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 by means
of hand delivery, delivery by Federal Express or other courier service, or by
facsimile transmission. Either party may change the address for notice by
notifying the other party of such change in accordance with this paragraph 14.1

15.           SEVERABILITY; HEADINGS. 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. The paragraph headings herein are for reference
purposes only and are not intended in any way to describe, interpret, define or
limit the extent or intent of this Agreement or of any part hereof.

16.           ARBITRATION. With the exception of
paragraphs 3 and 7, any unresolved dispute or controversy arising under or in
connection with this Agreement shall be settled exclusively by arbitration,
conducted before a panel of three (3) arbitrators in Houston, Texas, in
accordance with the National Rules for the Resolution of Employment Disputes of
the American Arbitration Association (“AAA”) then in effect, provided that
Employee shall comply with Company’s grievance procedures in an effort to
resolve such dispute or controversy before resorting to arbitration, and
provided further that the parties may agree to use arbitrators other than those
provided by the AAA. The arbitrators shall not have the authority to add to, detract
from, or modify any provision hereof nor to award punitive damages to any
injured party. The arbitrators shall have the authority to order back-pay,
severance compensation, vesting of options or restricted stock (or cash
compensation in lieu of vesting of options or restricted stock), reimbursement
of costs, including those incurred to enforce this Agreement, and interest
thereon in the event the arbitrators determine that Employee was terminated
without disability or Cause, as defined in paragraphs 5(a)(ii) and 5(a)(iii),
respectively, or that Company has breached this Agreement in any material
respect. A decision by a majority of the arbitration panel shall be final and
binding. Judgment may be entered on the arbitrators’ award in any court having jurisdiction.
The direct expense of any arbitration proceeding shall be borne by Company.

17.           GOVERNING LAW. This Agreement shall
in all respects be construed according to the laws of the State of Texas.

18.           COUNTERPARTS. This Agreement may be
executed simultaneously in two (2) or more counterparts, each of which shall be
deemed an original and all of which together shall constitute but one and the
same instrument.

19.           THIRD-PARTY BENEFICIARY. The Company
is intended to be a third-party beneficiary under this Agreement, and shall be
entitled to enforce the provisions hereof benefiting the Company.

 11
 

 

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

	
  

  	
  COMFORT SYSTEMS USA (TEXAS), L.P.

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  Comfort Systems USA G.P., Inc.

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ William F. Murdy

  	
   

  	
   

  
	
   

  	
   

  	
  William F. Murdy

  	
   

  	
   

  
	
   

  	
   

  	
  Chief Executive Officer

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  COMFORT SYSTEMS USA, INC.

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ William F. Murdy

  	
   

  	
   

  
	
   

  	
   

  	
  William F Murdy

  	
   

  	
   

  
	
   

  	
   

  	
  Chief Executive Officer

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  EMPLOYEE:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  /s/ Trent McKenna

  	
   

  	
   

  
	
   

  	
  Trent McKenna

  	
   

  	
   

  

 

 

 12

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