Document:

jrcc_ex0401.htm

    Exhibit 4.1

     

    AMENDMENT
NO. 3

    
      to

      RIGHTS
AGREEMENT

      

      THIS AMENDMENT NO. 3 (“Amendment No. 3”) to the
Rights Agreement (the “Rights
Agreement”) dated as of May 25, 2004 and amended as of November 3,
2006 and August 2, 2007, between JAMES RIVER COAL COMPANY, a
Virginia corporation (the “Company”), and COMPUTERSHARE TRUST COMPANY, N.A.
(successor rights agent to SUNTRUST BANK), as rights
agent (the “Rights
Agent”), is made by and between the Company and the Rights Agent
effective this 3rd day of November, 2009.  All capitalized terms not
otherwise defined herein shall have the meanings ascribed thereto in the Rights
Agreement.

      

      W I T N E S S E T H:

      

      WHEREAS, the Company has
generated net operating losses for United States federal income tax purposes
(“NOLs”) and certain
other tax benefits, which may potentially provide valuable tax benefits to the
Company, and the Company desires to avoid an “ownership change” within the
meaning of Section 382 (as defined below) and thereby maximize its ability
to utilize such NOLs and other tax benefits and, in furtherance of such
objective, the Company desires to enter into this Amendment No. 3;
and

       

      WHEREAS, the Company has
determined to amend the Rights Agreement in accordance with Section 27 of the
Rights Agreement and the Rights Agent is directed to join in this Amendment No.
1 to the Rights Agreement as set forth herein.

       

      AGREEMENT

       

      NOW, THEREFORE, for and in
consideration of the premises and the mutual agreements contained herein, the
parties hereto agree that the Rights Agreement shall be amended as
follows:

       

      1. New
Section 1 Definitions.  Section 1 of the Rights Agreement shall
be deleted in its entirety and replaced by the following new Section
1:

       

      

       

      Section 1.    
Definitions.  The
following terms, as used herein, have the following meanings:

       

      (a)    
“Acquiring
Person” means any
Person who or which, together with all Affiliates and Associates of such Person,
shall be the Beneficial Owner (A) until the NOL Protections Termination Date, of
4.9% or more of the shares of Common Stock then outstanding, and (B) after the
NOL Protections Termination Date, of 20% or more of the shares of Common Stock
then outstanding (such percentage of the shares of Common Stock outstanding
being referred to herein as the “Trigger
Percentage”);

       

      
        
           

        

        
          
          

          
            

          

        

        
           

        

      

      

       

      provided, however, that, an
“Acquiring Person” shall
not include the following Persons:

       

      (i)          
  any Excluded Person,

       

      (ii)       
   any Person who is the Beneficial Owner of 20% or more of the
shares of Common Stock outstanding as of the Effective Date, provided, further, that in the
event that a Person does not become an Acquiring Person by reason of
this clause (ii) such Person nonetheless shall become an Acquiring Person if such
Person thereafter becomes the Beneficial Owner of an additional 2% or more of
the Common Stock then outstanding over and above the shares beneficially owned
by such Person as of the Effective Date, unless the acquisition of such Common
Stock is an Approved Acquisition,

       

      (iii)           any
Person, who alone or together with its Affiliates or Associates becomes the
Beneficial Owner of 20% or more of the shares of Common Stock then outstanding
as a result of an Approved Acquisition; or

       

      (iv)           a
Grandfathered Person (until the NOL Protections Termination Date, after which
this subsection (iv) shall be of no further force nor effect).

       

      Notwithstanding
the foregoing, if the Board of Directors of the Company determines in good faith
that a Person who would otherwise be an “Acquiring Person” as defined
pursuant to the foregoing provisions of this Section 1(a) has become such
inadvertently, and such Person divests as promptly as practicable a sufficient
number of shares of Common Stock so that such Person would no longer be an
“Acquiring Person” as
defined pursuant to the foregoing provisions of this Section 1(a), then such Person
shall not be deemed an Acquiring Person for any purposes of this
Agreement.  Such sales of shares should be effected in a manner
satisfactory to the Board of Directors of the Company with due regard for the
potential adverse impact on the trading markets for the Company’s Common
Stock.

       

      (b)    
“Affiliate” and “Associate” have the respective meanings
ascribed to such terms in Rule 12b-2 under the Exchange Act as in effect on the
date hereof.

       

      (c)    
 “Approved
Acquisition”
means any acquisition of Common Stock that (i) causes a Person to become the
Beneficial Owner of (A) shares of Common Stock then outstanding equal to or
greater than the Trigger Percentage, or (B) if already a Beneficial Owner of
shares of Common Stock then outstanding equal to or greater than the Trigger
Percentage, any additional shares of Common Stock then outstanding, and (ii) is
approved in advance by a
majority of the Board of Directors.

       

      (d)     
A Person shall be deemed the “Beneficial
Owner” of, and
shall be deemed to “beneficially
own,” any securities:

       

      
        
           

        

        
          2

          
            

          

        

        
           

        

      

      (i)           
 which such Person or any of its Affiliates or Associates beneficially owns
(as determined pursuant to Rule 13d-3 under the Exchange Act as in effect on the
date hereof), directly or indirectly;

       

      (ii)      
    which such Person or any of its Affiliates or
Associates, directly or indirectly, has

       

      (A)           the
right to acquire (whether such right is exercisable immediately or only upon the
occurrence of certain events or the passage of time or both) pursuant to any
agreement, arrangement or understanding (whether or not in writing) or upon the
exercise of conversion rights, exchange rights, rights (other than pursuant to
the Rights), warrants, options or otherwise; provided, however, that a
Person shall not be deemed the “Beneficial Owner” of, or to
“beneficially own,” any
securities tendered pursuant to a tender or exchange offer made by or on behalf
of such Person or any of its Affiliates or Associates until such tendered
securities are accepted for purchase or exchange; or

       

      (B)           the
right to vote or dispose of (whether such right is exercisable immediately or
only upon the occurrence of certain events or the passage of time or both)
pursuant to any agreement, arrangement or understanding (whether or not in
writing) or otherwise; provided, however, that a
Person shall not be deemed the “Beneficial Owner” of, or to
“beneficially own,” any
security under this clause (B) as a result of an agreement, arrangement or
understanding to vote such security if such agreement, arrangement or
understanding (1) arises solely from a revocable proxy or consent given to such
Person in response to a public proxy or consent solicitation made pursuant to,
and in accordance with, the applicable rules and regulations promulgated under
the Exchange Act, and (2) is not also then reportable by such Person on Schedule
13D under the Exchange Act (or any comparable or successor report);
or

       

      (iii)           which
are beneficially owned, directly or indirectly, by any other Person (or any
Affiliate or Associate thereof) with which such Person (or any of its Affiliates
or Associates) has any agreement, arrangement or understanding (whether or not
in writing) for the purpose of acquiring, holding, voting (except pursuant to a
revocable proxy as described in Subsection (ii)(B) above) or
disposing of any such securities;

       

      (iv)           of
which any other Person is the “Beneficial Owner”, if such
Person or any of such Person’s Affiliates or Associates has any formal or
informal understanding (whether or not in writing) with such other Person (or
any of such other Person’s Affiliates or Associates) to make a “coordinated
acquisition” of shares within the meaning of Treasury Regulation § 1.382-3(a)(1)
or is otherwise treated as included in the same “entity” within the meaning of
Treasury Regulation 1.382-3(a)(1) in which such other Person is also
included; or

       

      
        
           

        

        
          3

          
            

          

        

        
           

        

      

      

       

      (v)         
 which are the subject of a derivative action entered into by such Person,
or derivative security acquired by such Person, which gives such Person the
economic equivalent of ownership of an amount of such securities due to the fact
that the value of the derivative is explicitly determined by reference to the
price or value of such securities, without regard to whether (A) such
derivative conveys any voting rights in such securities to such Person,
(B) the derivative is required to be, or capable of being, settled through
delivery of such securities, or (C) such Person may have entered into other
transactions that hedge the economic effect of such derivative.  In
determining the number of securities deemed beneficially owned by virtue of this
Section 1(d)(v), the
subject Person shall be deemed to “beneficially own” (without
duplication) the number of securities that are synthetically owned pursuant to
such derivative securities.

       

      Provided, however, that nothing
in this Section 1(d)
shall cause any Person engaged in business as an underwriter of securities who
acquires any securities of the Company through such Person’s participation in
good faith in a firm commitment underwriting to be deemed the “Beneficial Owner” of, or to
“beneficially own,” such
securities until the expiration of 40 days after the date of such
acquisition.

       

      Notwithstanding
anything herein to the contrary, to the extent not within the foregoing
provisions of this Section 1(d), a Person
shall be deemed the “Beneficial
Owner” of and to “beneficially own” stock or
securities which such Person would be deemed to constructively own or which
otherwise would be aggregated with stock or securities owned by such Person
pursuant to Section 382 and the Treasury Regulations
thereunder.

       

      (e)    
“Business
Day” means any
day other than a Saturday, Sunday or a day on which banking institutions in the
Commonwealth of Virginia and State of New York are authorized or obligated by
law or executive order to close.

       

      (f)   
  “Close of
Business” on any
given date means 5:00 P.M., Richmond, Virginia time, on such date; provided, however, that if such
date is not a Business Day, then it shall mean 5:00 P.M., Richmond, Virginia
time, on the next succeeding Business Day.

       

      (g)    
“Code” means the Internal Revenue
Code of 1986, as amended, or any successor statute.

       

      (h)    
“Common
Stock” means the
Common Stock, par value $0.01 per share, of the Company, except that, when used
with respect to any Person other than the Company, “Common Stock” means the
capital stock (or other equity interests) of such Person with the greatest
voting power, or the equity securities or other equity interests having the
power to control or direct the management of such Person.

       

      
        
           

        

        
          4

          
            

          

        

        
           

        

      

      (i)     
“Distribution
Date” means the
earlier of (i) the Close of Business on the tenth day (or such later day as may
be designated by action of a majority of the Board of Directors) after the Share
Acquisition Date, and (ii) the Close of Business on the tenth Business Day (or
such later day as may be designated by action of a majority of the Board of
Directors) after the date of the commencement by any Person (other than an
Excluded Person) of, or of the first public announcement of the intention by any
Person (other than an Excluded Person) to commence, a tender or exchange offer
if, upon consummation thereof, such Person, together with all Affiliates and
Associates of such Person, would be the Beneficial Owner of 15% or more of the
shares of Common Stock then outstanding.

       

      (j)     
“Employee
Benefit Plan”
means any employee benefit plan of the Company or any of its Subsidiaries or any
Person organized, appointed or established by the Company or any of its
Subsidiaries for or pursuant to the terms of any such plan.

       

      (k)     
“Exchange
Act” means the
Securities Exchange Act of 1934, as amended.

       

      (l)      
“Excluded
Person”
means:

       

      (i)         
   the Company, any of its Subsidiaries or any Employee Benefit
Plan, and

       

      (ii)       
    until the NOL Protections Termination Date, any Person
who or which would otherwise be an Acquiring Person but whose Beneficial
Ownership (together with all Affiliates and Associates of such Person) of 4.9%
or more of the Common Stock then outstanding would not, as determined by the
Board of Directors of the Company in its sole discretion, jeopardize, endanger
or limit (in timing or amount) the availability to the Company of its Tax
Benefits, at any time prior to the time at which the Company’s right of
redemption expires pursuant to Section 23(a) of this Agreement; provided, however, that such a
Person (together with all Affiliates and Associates of such Person) will cease
to be an “Excluded Person” if (i) such Person (together with all Affiliates
and Associates of such Person) ceases to beneficially own 4.9% or more of the
Common Stock then outstanding or (ii) the Board of Directors of the Company
subsequently makes a contrary determination in which case such Person (together
with all Affiliates and Associates of such Person) will become an “Acquiring
Person”. A purchaser, assignee or transferee of Common Stock from an Excluded
Person shall not thereby become an Excluded Person, except that a transferee
from the estate of an Excluded Person who receives Common Stock as a bequest or
inheritance from an Excluded Person shall be an Excluded Person so long as such
Person continues to be the Beneficial Owner of 4.9% or more of the Common Stock
then outstanding.

       

      (m)    
“Expiration
Date” means the
earlier of (i) the Final Expiration Date, and (ii) the time at which all Rights
are redeemed as provided in Section 23 or exchanged as
provided in Section
24.

       

      (n)    
“Final
Expiration Date”
means the Close of Business on May 25, 2014.

       

      (o)    
“Flip-in
Event” means any
event described in Section 11(a)(ii)(A), (B) or (C), but excluding any event
described in Section 11(a)(ii)(D).

       

      (p)    
“Flip-over
Event” means any
event described in Section 13(a)(x), (y), or (z).

       

      
        
           

        

        
          5

          
            

          

        

        
           

        

      

      (q)    
“Grandfathered
Person” means any
Person (together with all Affiliates and Associates of such Person) who would
otherwise be an Acquiring Person as of the date of this Amendment No. 3 as a
result of being the “Beneficial
Owner” of 4.9% or more, but less than 20% or more, of the shares of
Common Stock then outstanding; provided, however, that such
Person (together with all Affiliates and Associates of such Person) shall cease
to be a “Grandfathered Person” at such time as either:

       

      (i)            
the Beneficial Ownership of Common Stock of such Person (or any Affiliates or
Associates of such Person) increases by more than one-half of one percent (.5%)
of the shares of Common Stock then outstanding without the prior written
approval of the Company, other than any increase pursuant to or as a result of
(A) a reduction in the amount of Common Stock outstanding, (B) the
exercise of any options, warrants, rights or similar interests (including shares
of restricted stock) granted by the Company to its directors, officers and
employees, (C) any unilateral grant of any Common Stock by the Company,
(D) any issuance of Common Stock by the Company or any stock dividend,
stock split or similar transaction effected by the Company in which all holders
of Common Stock are treated equally or (E) any Approved Acquisition,
or

       

      (ii)           
the Beneficial Ownership of Common Stock of such Person (together with all
Affiliates and Associates of such Person) decreases to an amount less than 4.9%
of the Common Stock then outstanding.

       

      (r)     
“NOLs” shall have the meaning set
forth in the recitals to this Amendment No. 3.

       

      (s)    
“NOL
Protections Termination Date” means December 5,
2010.

       

      (t)     
“Person” means an individual,
corporation, partnership, limited liability company, association, trust or any
other entity or organization.

       

      (u)    
“Preferred
Stock” means the
Series A Participating Cumulative Preferred Stock, par value $1.00 per share, of
the Company having the terms set forth in the form of certificate of designation
attached hereto as Exhibit
A.

       

      (v)    
“Purchase
Price” means the
price (subject to adjustment as provided herein) at which a holder of a Right
may purchase one one-hundredth of a share of Preferred Stock (subject to
adjustment as provided herein) upon exercise of a Right, which price shall
initially be $200.00.

       

      (w)    
“Qualifying
Tender Offer” means a tender or exchange offer for all outstanding shares
of Common Stock of the Company approved by a majority of the Board of Directors
then in office, after taking into account the potential long-term value of the
Company and all other factors that they consider relevant.

       

      (x)     
“Section
382” means
Section 382 of the Code or any successor or replacement provision.

       

      (y)    
“Securities
Act” means the
Securities Act of 1933, as amended.

       

      
        
           

        

        
          6

          
            

          

        

        
           

        

      

      (z)    
“Share
Acquisition Date”
means the date of the first public announcement (including the filing of a
report on Schedule 13D under the Exchange Act (or any comparable or successor
report)) by the Company or an Acquiring Person expressly stating that an
Acquiring Person has become such pursuant to the provisions of the Agreement;
provided, that if such Person is determined by the Board of Directors of the
Company not to have become an Acquiring Person pursuant to Section 1(a) of this
Agreement, then no Share Acquisition Date will be deemed to have
occurred.

       

      (aa)  
“Subsidiary” means, with respect to any
Person, any other Person of which securities or other ownership interests having
ordinary voting power, in the absence of contingencies, to elect a majority of
the board of directors or other Persons performing similar functions are at the
time directly or indirectly owned or controlled by such first
Person.

       

      (bb)   “Tax
Benefits” means
NOLs, capital loss carryovers, general business credit carryovers, alternative
minimum tax credit carryovers, foreign tax credit carryovers, any loss or
deduction attributable to a “net unrealized built-in loss” within the meaning of
Section 382, of the Company or any of its Subsidiaries and any other
attribute the benefit of which is subject to possible limitation under
Section 382 or Section 383 of the Code.

       

      (cc)   “Trading
Day” means a day
on which the principal national securities exchange or inter-dealer quotation
system on which the shares of Common Stock are listed, admitted to trading or
quoted is open for the transaction of business or, if the shares of Common Stock
are not listed, admitted to trading or quoted on any national securities
exchange or inter-dealer quotation system, a Business Day.

       

      (dd)   
“Treasury
Regulations”
“Treasury Regulations” shall mean the final, temporary and proposed regulations
promulgated by the United States Department of the Treasury under the Code as
amended or superseded from time to time.

       

      (ee)   
“Triggering
Event” means any
Flip-in Event or any Flip-over Event.

       

      2. No
Further Amendments. Except as amended hereby, the Rights Agreement
remains in full force and effect.

      

      IN
WITNESS WHEREOF, the parties hereto have executed this Amendment No. 3 by their
duly authorized representatives effective the date set forth above.

      

      
        	
                James
      River Coal Company

                 

              	
                Computershare
      Trust Company, N.A.

              
	
                By:  /s/ Samuel M. Hopkins,
      II               
      

              	
                By: 
      /s/ Kellie
      Gwinn                      
      

              
	
                Name: 
      Samuel M. Hopkins II

              	
                Name: 
      Kellie Gwinn

              
	
                Title: 
      Vice President

              	
                Title: 
      Vice President

              
	 
      	 
      
	 
      	
                Address
      for notice:

                 

                350 Indiana Street, Suite 750

                Golden, Colorado  80901

                Attn:  Client Services

              

      

      

      
        
           

        

        
          7exhibit10-1.htm

     Exhibit
10.1

    

    Supplemental Schedules and
Exhibits

    

    

    
      	
              Exhibit
      2.10

            	
              Letter
      of Credit Application and Agreement

            
	
              Exhibit
      4.1(g)(i)

            	
              Opinion
      of Bracewell and Giuliani LLP

            
	
              Exhibit
      4.1(g)(ii)

            	
              Opinion
      of Trent McKenna

            
	
              Schedule
      1.1(b)

            	
              Existing
      Letters of Credit

            

    

    

     

    
      

      
        
          
             

          

          
            
              

               

            

          

          
             

          

        

      

      

      EXHIBIT
4.1(g)(i)

       

      Bracewell
& Giuliani LLP

      711
Louisiana Street

      Suite
2300

      Houston,
Texas

      713.223.2300

      713.221.1212

      

      bgllp.com

      February
20, 2007

       

      To the
Lenders and the Agent

      referred
to herein

      

      Ladies
and Gentlemen:

       

      We have
acted as Texas counsel for Comfort Systems USA, Inc., a Delaware corporation
(the "Borrower"), and the
subsidiaries of the Borrower named on the attached Exhibit A (each, an
"Opinion
Subsidiary" and, collectively, the "Opinion
Subsidiaries") in connection with the Amended and Restated Credit
Agreement dated as of February 20, 2007 (the "Credit Agreement"),
among the Borrower, the financial institutions listed on the signature pages
thereof (the "Lenders"), and
Wachovia Bank, N.A., as administrative agent for the Lenders (in such capacity,
the "Agent").  The
Borrower and the Opinion Subsidiaries are sometimes referred to herein
individually as a "Transaction Party"
and collectively as the "Transaction
Parties."  This opinion letter is delivered to you pursuant to
Section 4.1(g) of the Credit Agreement.

       

      Capitalized
terms used herein and not otherwise defined herein have the meanings assigned to
such terms in the Credit Agreement. As used herein, (i) "Texas UCC" means the
Uniform Commercial Code, as amended and in effect in the State of Texas on the
date hereof; (ii) "Delaware UCC" means
the Uniform Commercial Code, as amended and in effect in the State of Delaware
on the date hereof; and (iii) "Applicable Law"
means, with respect to each Transaction Party, the General Corporation Law of
the State of Delaware, the Revised Limited Partnership Act of the State of
Delaware, the Limited Liability Company Act of the State of Delaware, the
Delaware UCC, and those laws, rules, and regulations of the State of Texas and
of the United States of America as in effect on the date hereof which in our
experience are normally applicable to such Transaction Party and to transactions
of the type provided for in the Opinion Documents to which such Transaction
Party is a party); provided, however,
that Applicable Law does not include (i) except for our opinion in paragraph 8
below as to the 1940 Act, any federal or state securities, commodities,
insurance, or investment company laws and regulations; (ii) any federal or state
labor, pension, or other employee benefit laws and regulations; (iii) any
federal or state antitrust, trade or unfair competition laws and regulations;
(iv) any federal or state laws and regulations relating to the environment,
safety, health, or other similar matters; (v) any laws, rules, and regulations
of any county, municipality, subdivision or similar local authority of any
jurisdiction or any agency or instrumentality thereof; (vi) any federal or state
tax laws or regulations; (vii) any federal or state laws or regulations relating
to copyrights, patents, trademarks, or other intellectual property; or (viii)
any federal or state laws or regulations relating to usury or otherwise limiting
the amount of interest that may be charged.

       

      

      
        
          
             

          

          
             

            
              

            

          

          
             

          

        

      

      

      To the Lenders and Agent

      February 20, 2007

      Page 2 of 11

      
 

      In
connection with the opinions expressed herein, we have examined such documents,
records and matters of law as we have deemed necessary for the purposes of such
opinions. We

       

      have
examined each of the following agreements, instruments and documents
(hereinafter called the "Opinion
Documents"):

       

      (a)           an
executed copy of the Credit Agreement;

       

      
        	
                 
      

              	
                (b)

              	
                executed
      copies of the three Amended and Restated Revolving Notes and the one
      Revolving Note (the "Notes")
      delivered to the Lenders on the date
hereof;

              

      

       

      
        	
                 
      

              	
                (c)

              	
                an
      executed copy of the Amended and Restated Security Agreement dated as of
      the date hereof (the "Security
      Agreement") among the Borrower, the other Transaction Parties party
      thereto, and the Agent;

              

      

       

      
        	
                 
      

              	
                (d)

              	
                an
      executed copy of the Amended and Restated Pledge Agreement dated as of the
      date hereof (the "Pledge
      Agreement"), among the Borrower, the other Transaction Parties
      party thereto, and the Agent; and

              

      

       

      
        	
                 
      

              	
                (e)

              	
                an
      executed copy of the Amended and Restated Subsidiary Guaranty dated as of
      the date hereof (the "Guaranty") of
      the Transaction Parties party thereto for the benefit of the Agent and the
      Lenders.

              

      

       

      We have
also examined the financing statements, each naming a Transaction Party as
debtor and the Agent as secured party, listed on Exhibit B hereto
(collectively, the "Financing
Statements").

       

      In
addition to reviewing the Opinion Documents and Financing Statements described
above, the following (hereinafter called, the "Reliance Materials")
have also been reviewed by our firm in connection with this
opinion:

       

      (i)           a
copy of the Certificate of Incorporation of the Borrower certified by the
Secretary of State of the State of Delaware on February 13, 2007 and certified
by an officer of the Borrower as being complete and correct and in full force
and effect as of the date hereof;

       

      (ii)           a
copy of a certificate dated February 13, 2007 of the Secretary of State of the
State of Delaware as to the existence and good standing of the Borrower in the
State of Delaware as of such date;

       

      (iii)           a
copy of a certificate dated February 13, 2007 of the Secretary of State of the
State of Texas as to the existence of the Borrower and the filing by the
Borrower of an Application for Certificate of Authority, in each case in the
State of Texas as of such date; and

       

      (iv)           a
copy of a certificate dated February 13, 2007 of the Texas Comptroller of Public
Accounts as to the good standing of the Borrower in the State of Texas as of
such date.

       

      

      
        
          
             

          

          
             

            
              

            

          

          
             

          

        

      

      To the Lenders and Agent

      February 20, 2007

      Page 3 of 11

       

      In all
such examinations, we have assumed the legal capacity of all natural persons
executing documents, the genuineness of all signatures, the authenticity of
original and certified documents, and the conformity to original or certified
copies of all copies submitted to us as conformed or reproduction copies. As to
various questions of fact relevant to the opinions expressed herein, we have
relied upon, and assume the accuracy of, representations and warranties
contained in the Opinion Documents and certificates and oral or written
statements and other information of or from representatives of the Transaction
Parties and others and assume compliance on the part of the Transaction Parties
with their covenants and agreements contained therein.  In connection
with the opinions expressed in the first sentence of paragraph 1 below, we have
relied solely upon certificates of public officials as to the factual matters
and legal conclusions set forth therein. With respect to the opinions expressed
in paragraphs 1, 2, and 3 below, our opinions are limited (x) to our actual
knowledge, if any, of the specially regulated business activities and properties
of the Transaction Parties based solely upon certificates of officers of the
Transaction Parties in respect of such matters and without any independent
investigation or verification on our part and (y) to only those laws and
regulations that, in our experience, are normally applicable to transactions of
the type contemplated by the Opinion Documents.

       

      Based upon the foregoing, and subject
to the limitations, qualifications and assumptions set forth herein, we are of
the opinion that:

       

      1.           Existence and Good Standing
Opinions.  The Borrower is a corporation duly incorporated and
existing in good standing under the laws of the State of Delaware and is
authorized or qualified to do business and in good standing as a foreign
corporation in the State of Texas. Each Transaction Party has the corporate,
limited partnership, or limited liability company power and authority to enter
into and to incur and perform its obligations under the Opinion Documents to
which it is a party.

       

      2.           Authorization
Opinion.  The execution and delivery to the Agent and the
Lenders by each Transaction Party of the Opinion Documents to which it is a
party and the performance by such Transaction Party of its obligations
thereunder have been authorized by all necessary corporate, limited partnership,
or limited liability company, as applicable, action by, and partner or member,
as applicable, action in respect of, such Transaction Party.

       

      3.           Approvals; Other Required
Actions.  The execution and delivery to the Agent and the
Lenders by each Transaction Party of the Opinion Documents to which it is a
party and the performance by such Transaction Party of its obligations
thereunder do not require under Applicable Law any filing or registration by
such Transaction Party with, or approval or consent to such Transaction Party
of, any Governmental Authority that has not been made or obtained except (a)
those required in the ordinary course of business in connection with the
performance by such Transaction Party of its obligations under certain covenants
contained in the Opinion Documents to which it is a party and to perfect
security interests, if any, granted by such Transaction Party thereunder, (b)
pursuant to securities and other laws that may be applicable to the disposition
of any collateral subject thereto, (c) other filings under securities laws, and
(d) filings, registrations, consents or approvals in each case not required to
be made or obtained by the date hereof.

       

      
        
          
             

          

          
             

            
              

            

          

          
             

          

        

      

      To the Lenders and Agent

      February 20, 2007

      Page 4 of 11

       

      4.           Execution, Delivery, and
Enforceability Opinion.  Each Opinion Document has been duly
executed and delivered on behalf of each Transaction Party signatory
thereto.  Each Opinion document constitutes, with respect to each
Transaction Party that is a party thereto, a legal, valid and binding obligation
of such Transaction Party, enforceable against such Transaction Party in
accordance with its terms.

       

      5.           "No Violation"
Opinions.  The execution and delivery to the Agent and the
Lenders by each Transaction Party of the Opinion Documents to which it is a
party and the performance by such Transaction Party of its obligations
thereunder do not violate (a) any provision of the certificate or articles of
incorporation, certificate of formation, certificate of limited partnership,
bylaws, limited liability company agreement, operating agreement, partnership
agreement, or other organizational documents of such Transaction Party, (b) any
Applicable Law, or (c) any agreement binding upon such Transaction Party or its
property that is listed on Schedule 2 to the
Officer's Certificate attached as Exhibit C hereto or
(d) any court decree or order binding upon such Transaction Party or its
property that is listed on Schedule 1 to the
Officer's Certificate attached as Exhibit C hereto;
provided that we express no opinion with respect to any violation not readily
ascertainable from the face of any such agreement, decree or order, or arising
under or based upon any cross default provision insofar as it relates to a
default under an agreement not so identified to us, or arising under or based
upon any covenant or other provision of a financial or numerical nature or
requiring computation).

       

      6.           No Creation of Liens
Opinion.  The execution and delivery to the Agent and the
Lenders by each Transaction Party of the Opinion Documents to which it is a
party and the performance by such Transaction Party of its obligations
thereunder, will not result in or require the creation or imposition of any
security interest or lien upon any of its properties pursuant to the provisions
of any agreement binding upon such Transaction Party or its properties that is
listed on the attached Exhibit C, other than
security interests or liens in favor of the Agent created under any of the
Opinion Documents or arising under applicable law.

       

      7.           Margin Regulations
Opinion.  The borrowings by the Borrower under the Credit
Agreement, the application of the proceeds thereof as provided in the Credit
Agreement, and the grant of security interests under the Pledge Agreement and
the Security Agreement will not violate Regulation T, U or X of the Board of
Governors of the Federal Reserve System (the "Margin
Regulations").

       

      8.           Investment Company Act
Opinion.  Based solely on facts certified to us by the
Transaction Parties, no Transaction Party is required to register as an
"investment company" (under, and as defined in, the Investment Company Act of
1940, as amended (the "1940 Act")), and no
Transaction Party is a company controlled by a company required to register as
such under the 1940 Act.

       

      9.           Creation of Security
Interests Opinion.  The Security Agreement creates in favor of
the Agent, as security for the Secured Obligations, a valid security interest in
each Transaction Party's rights in the Collateral (as defined in the Security
Agreement) to the extent a security interest in such Collateral may be created
under Article 9 of the Texas UCC (the "Article 9
Collateral").

       

      

      
        
          
             

          

          
             

            
              

            

          

          
             

          

        

      

      To the Lenders and Agent

      February 20, 2007

      Page 5 of 11

       

      10.           Central Filing Perfection
Opinions.  Upon the effective filing of the Delaware Financing
Statements with the Secretary of State of Delaware (the "Delaware Filing
Office"), the Agent will have, for the benefit of the Agent and the
Lenders, a perfected security interest in that portion of the Article 9
Collateral described therein in which a security interest may be perfected by
filing a financing statement with the Delaware Filing Office under the Delaware
UCC (the "Delaware
Filing Collateral"). Upon the effective filing of the Texas Financing
Statements with the Secretary of State of Texas (the "Texas Filing
Office"), the Agent will have, for the benefit of itself and the Lenders,
a perfected security interest in that portion of the Article 9 Collateral
described therein in which a security interest may be perfected by filing a
financing statement with the Texas Filing Office under the Texas UCC (the "Texas Filing
Collateral").

       

      11.           Perfection of Security
Interests in Certificated Securities by Control.  When each
Transaction Party that has granted to the Agent for the benefit of itself and
the Lenders a security interest in certificated securities (as defined in the
Texas UCC) pursuant to the Security Agreement delivers to the Agent in the State
of Texas each of the certificates representing such certificated securities,
together with an instrument of transfer or assignment related to any such
certificated security which is a registered certificated security, duly indorsed
in blank by an authorized officer of such Transaction Party, the Agent for the
benefit of the Agent and the Lenders will have perfected security interests in
such certificated securities under the Texas UCC.

       

      12.           Article 9 Priority Opinion
re Certificated Securities.   The security interest of the
Agent in Article 9 Collateral constituting certificated securities, to the
extent perfected by “control” as described in our paragraph 11 above, will be
prior to a security interest of any other secured party created under Article 9
of the Texas UCC in such certificated securities, assuming no other secured
party has perfected its security interest in such certificated securities by
control prior to the date the Agent’s interest becomes perfected by control and
assuming that no other secured party claims control through the
Agent.

       

      The
opinions set forth above are subject to the following assumptions and
qualifications, and with your permission, all of the following assumptions and
statements of reliance have been made without any independent investigation or
verification on our part except to the extent, if any, otherwise expressly
stated, and we express no opinion with respect to the subject matter or accuracy
of the assumptions or items upon which we have relied.  Further,
whenever our opinion is based on circumstances, matters or facts "to our
knowledge after due inquiry" we have relied exclusively on certificates of
certain officers of the Transaction Parties as to the existence or non-existence
of the circumstances, matters or facts upon which such opinion is
based.  While we have not made any independent or other investigation
or inquiry as to any such circumstances, matters or facts, we have no reason to
believe that any such certificate is untrue or inaccurate in any material
respect.

       

      (A) Our
opinions are subject to (i) applicable bankruptcy, insolvency, reorganization,
fraudulent transfer and conveyance, voidable preference, moratorium,
receivership, conservatorship, arrangement or similar laws, and related
regulations and judicial doctrines, affecting creditors' rights and remedies
generally, (ii) general principles of equity (including, without limitation,
standards of materiality, good faith, fair dealing and reasonableness, equitable
defenses, the exercise of judicial discretion and limits on the availability of
equitable remedies),

       

      

      
        
          
             

          

          
             

            
              

            

          

          
             

          

        

      

      To the Lenders and Agent

      February 20, 2007

      Page 6 of 11

      

      whether
such principles are considered in a proceeding at law or in equity, and (iii)
the qualification that certain provisions of the Opinion Documents may be
unenforceable in whole or in part under the laws (including judicial decisions)
of the State of Texas or the United States of America, but the inclusion of such
provisions does not affect the validity as against the Transaction Parties party
thereto of the Opinion Documents as a whole and the Opinion Documents contain
adequate provisions for the practical realization of the principal benefits
provided by the Opinion Documents, in each case subject to the other
qualifications contained in this letter.

       

      (B) We
express no opinion as to the validity or enforceability of any provision in the
Opinion Documents:

       

      (i) providing
that any person or entity may sell or otherwise dispose of, or purchase, any
collateral subject thereto, or enforce any other right or remedy thereunder
(including without limitation any self-help or taking-possession remedy), except
in compliance with the UCC and other applicable laws;

       

      (ii) establishing
standards for the performance of the obligations of good faith, diligence,
reasonableness and care prescribed by the Texas UCC or of any of the rights or
duties referred to in Section 9.603 of the Texas UCC;

       

      (iii) relating
to indemnification, contribution, exculpation or release of liability in
connection with violations of any securities laws or statutory duties or public
policy, or in connection with willful, reckless or unlawful acts or gross
negligence or strict liability of the indemnified, released or exculpated party
or the party receiving contribution;

       

      (iv) providing
that any person or entity may exercise set-off rights other than in accordance
with and pursuant to applicable law;

       

      (v) relating
to choice of governing law to the extent that the enforceability of any such
provision is to be determined by any court other than a court of the State of
Texas or may be subject to constitutional limitations;

       

      (vi) waiving
any rights to trial by jury;

       

      (vii) purporting
to confer, or constituting an agreement with respect to, personal or subject
matter jurisdiction of United States federal courts to adjudicate any
matter;

       

      (viii) purporting
to create a trust or other fiduciary relationship;

       

      (ix) specifying
that provisions may be waived only in writing, to the extent that an oral
agreement or an implied agreement by trade practice or course of conduct has
been created that modifies any provision of such Opinion Documents;

       

      (x) giving
any person or entity the power to accelerate obligations or to foreclose upon
collateral without any notice to the Transaction Party.

       

                   (xi)           providing
for the performance by any guarantor of any of the nonmonetary obligations of
any person or entity not controlled by such guarantor;

       

      

      
        
          
             

          

          
             

            
              

            

          

          
             

          

        

      

      To the Lenders and Agent

      February 20, 2007

      Page 7 of 11

      

          (xii)           providing
that decisions by a party are conclusive or may be made in its sole
discretion;

       

          (xiii)           purporting
to create a power of attorney;

       

          (xiv)           to
the extent it requires any Transaction Party to indemnify any other party to a
Document against loss in obtaining the currency due under a Document from a
court judgment in another currency;

       

          (xv)           relating
to arbitration;

       

          (xvi)           providing
for liquidated damages to the extent that it may be deemed a
penalty;

       

          (xvii)           providing
for restraints on alienation of property and purporting to render transfers of
such property void and of no effect or prohibiting or restricting the assignment
or transfer of property or rights to the extent that any such prohibition or
restriction is ineffective pursuant to Sections 9.406 through 9.409 of the Texas
UCC; or

       

          (xviii)           relating
to integration, statute of frauds or notice of the entire agreement of the
parties.

       

      (C) Our
opinions as to enforceability are subject to the effect of generally applicable
rules of law that:

       

      (i) provide
that forum selection clauses in contracts are not necessarily binding on the
court(s) in the forum selected; and

       

      (ii) may,
where less than all of a contract may be unenforceable, limit the enforceability
of the balance of the contract to circumstances in which the unenforceable
portion is not an essential part of the agreed exchange, or that permit a court
to reserve to itself a decision as to whether any provision of any agreement is
severable.

       

      (D) We
express no opinion as to the enforceability of any purported waiver, release,
variation, disclaimer, consent or other agreement to similar effect (all of the
foregoing, collectively, a "Waiver") by any
Transaction Party under Opinion Documents to the extent limited by Sections
9.602 or 9.624 of the Texas UCC or other provisions of applicable law (including
judicial decisions), or to the extent that such a Waiver applies to a right,
claim, duty or defense or a ground for, or a circumstance that would operate as,
a discharge or release otherwise existing or occurring as a matter of law
(including judicial decisions).

       

      (E) Our
opinions in paragraphs 9, 10, 11, and 12 are subject to the following
assumptions, qualifications and limitations:

       

      (i) Any
security interest in the proceeds of collateral is subject in all respects to
the limitations set forth in Section 9.315 of the Texas UCC.

       

      (ii) We
express no opinion as to the nature or extent of the rights, or the power to
transfer rights, of any Transaction Party in, or title of any Transaction Party
to, any collateral under any of the Opinion Documents, or property purporting to
constitute such collateral, or the value, validity, enforceability or
effectiveness for any purpose of any

       

      

      
        
          
             

          

          
             

            
              

            

          

          
             

          

        

      

      To the Lenders and Agent

      February 20, 2007

      Page 8 of 11

      
 

      such
collateral or purported collateral, and we have assumed that each Transaction
Party has sufficient rights in, or power to transfer rights in, all such
collateral or purported collateral for the security interests provided for under
the Opinion Documents to attach. Additionally, we express no opinion as to the
nature or extent of the Securities Intermediary's interests or other rights in
the securities or other financial assets underlying any Pledged Security
Entitlement.

       

      (iii) Other
than as expressly noted in paragraphs 9, 10, 11, and 12  above, we
express no opinion as to (x) the creation, validity or enforceability of, any
pledge, security interest, assignment for security, lien or other encumbrance,
as the case may be, that may be created or purported to be created under the
Opinion Documents, or (y) the priority of any pledge, security interest,
assignment for security, lien or other encumbrance, as the case may be, that may
be created or purported to be created under the Opinion Documents. We express no
opinion as to security interests in any commercial tort claims.

       

      (iv) In the
case of property that becomes collateral under the Opinion Documents after the
date hereof, Section 552 of the United States Bankruptcy Code limits the extent
to which property acquired by a debtor after the commencement of a case under
the United States Bankruptcy Code may be subject to a lien arising from a
security agreement entered into by the debtor before the commencement of such
case.

       

      (v) We
express no opinion as to the enforceability of the security interests under the
Opinion Documents in any item of collateral subject to any restriction on or
prohibition against transfer contained in or otherwise applicable to such item
of collateral or any contract, agreement, license, permit, security, instrument
or document constituting, evidencing or relating to such item, except to the
extent that any such restriction is rendered ineffective pursuant to any of
Sections 9-406 through 9-409, inclusive, of the  UCC.

       

      (vi) We call
to your attention that Article 9 of the UCC requires the filing of continuation
statements within the period of six months prior to the expiration of five years
from the date of original filing of financing statements under the UCC in order
to maintain the effectiveness of such financing statements and that additional
financing statements may be required to be filed to maintain the perfection of
security interests if the debtor granting such security interests makes certain
changes to its name, or changes its location (including through a change in its
jurisdiction of organization) or the location of certain types of collateral all
as provided in the UCC.

       

      (vii) We call
to your attention that a Transaction Party (as defined in the UCC) other than a
debtor may have rights under Part 6 of Article 9 of the UCC.

       

      (viii) With
respect to our opinion in paragraph 10 above, we express no opinion with respect
to the perfection of any such security interest in any Article 9 Collateral
constituting timber to be cut, as extracted collateral, cooperative interests,
or property described in Section 9.311(a) of the Texas UCC (including, without
limitation, property subject to a certificate-of-title statute), and we express
no opinion with respect to the effectiveness of any financing statement filed or
purported to be filed as a fixture filing.

       

         

      

      

      
        
          
             

          

          
             

            
              

            

          

          
             

          

        

      

      

      
        To the Lenders and Agent

        February 20, 2007

        Page 9 of 11

        
 

      

      (ix) We
express no opinion as to the effectiveness of a description of collateral as
"all the debtor's assets" or "all the debtor's personal property" or words to
similar effect in the Security Agreement for purposes of Sections 9.108 or 9.203
of the Texas UCC.

       

      (x) We
express no opinion as to any matter relating to a security interest created or
perfected prior to July 1, 2001 or as to the effect of, or compliance with,
Article 7 of the Texas UCC or the Delaware UCC.

       

      (xi) We have
assumed that each Transaction Party is organized solely under the laws of the
state identified as such Transaction Party's jurisdiction of organization in the
Reliance Materials related to such Transaction Party and that the Financing
Statements contain the correct legal name, mailing address, type of
organization, jurisdiction of organization, and organizational identification
number of each Transaction Party named therein.  We have also assumed
that the Financing Statements contain the correct mailing address of the Agent
as secured party.

       

      (I)           For
purposes of our opinions insofar as they relate to each Transaction Party other
than the Borrower, acting as a guarantor under the Guaranty, we have assumed
that such Transaction Party's obligations under the Opinion Documents are, and
would be deemed by a court of competent jurisdiction to be, in furtherance of
its corporate purposes, necessary or convenient to the conduct, promotion or
attainment of its business, and for its direct or indirect benefit.

       

      (J)           For
purposes of our opinions above insofar as they relate to any Transaction Party
that is not organized under the laws of the State of Texas or the State of
Delaware, we have assumed that (i) such Transaction Party is validly existing in
good standing in its jurisdiction of organization, has all requisite power and
authority, and has obtained all requisite corporate, shareholder, limited
liability company, member, limited partnership, partnership, partner, third
party and governmental authorizations, consents and approvals, and made all
requisite filings and registrations, necessary to execute, deliver and perform
the Opinion Documents to which it is a party and to grant the security interests
and guaranties contemplated thereby, and that such execution, delivery,
performance and grant will not violate or conflict with any law, rule,
regulation, order, decree, judgment, instrument or agreement binding upon or
applicable to it or its properties, and (ii) the Opinion Documents to which such
Transaction Party is a party have been duly executed and delivered by
it.  To the extent it may be relevant to the opinions expressed
herein, we have assumed that (i) the parties to the Opinion Documents (other
than the Transaction Parties) have the power to enter into and perform such
documents and to consummate the transactions contemplated thereby and that such
documents have been duly authorized, executed and delivered by, and constitute
legal, valid and binding obligations of, such parties, and (ii) the execution
and delivery  of the Opinion Documents by each of the parties thereto
(other than the Transaction Parties), and the performance of such party's
obligations thereunder, does not violate will not violate or conflict with any
law, rule, regulation, order, decree, judgment, instrument or agreement binding
upon or applicable to it or its properties.

       

      (K)           For
purposes of the opinions set forth in paragraph 7 above, we have assumed that
(i) neither the Agent nor any of the Lenders has or will have the benefit of any
agreement or arrangement (excluding the Opinion Documents) pursuant to which any
extensions of credit to any Transaction Party are directly or indirectly secured
by "margin stock" (as defined under the

       

    

    

      
        
          
             

          

          
             

            
              

            

          

          
             

          

        

      

      To the Lenders and Agent

      February 20, 2007

      Page 10 of 11

      Margin
Regulations), (ii) neither the Agent nor any of the Lenders nor any of their
respective affiliates has extended or will extend any other credit to any
Transaction Party directly or indirectly secured by margin stock, and (iii)
neither the Agent nor any of the Lenders has relied or will rely upon any margin
stock as collateral in extending or maintaining any extensions of credit
pursuant to the Credit Agreement.

       

      (L)           Our
opinions are limited to those expressly set forth herein, and we express no
opinions by implication.

       

      (M)           We
express no opinion as to the compliance or noncompliance, or the effect of the
compliance or noncompliance, of each of the addressees or any other person or
entity with any state or federal laws or regulations (including, without
limitation, the policies, procedures, guidelines, and practices of any
regulatory authority with respect thereto) applicable to each of them by reason
of their status as or affiliation with a federally insured depository
institution, a financial holding company, a bank holding company, a
state-chartered non-federally insured depository institution, a securities
dealer, an investment company or an insurance company, except as expressly set
forth in paragraph 7 above.

       

      (N)           Our
opinions in paragraphs 9, 10, 11, and 12 are limited to Articles 8 and 9 of the
Texas UCC and Delaware UCC, and therefore such opinions do not address laws of
jurisdictions other than Texas and Delaware, and of Texas and Delaware except
for Articles 8 and 9 of the Texas UCC and the Delaware UCC.  Further,
we express no opinion under the choice of law rules of the Texas UCC or the
Delaware UCC with respect to the law governing perfection and priority of any
security interests.  Insofar as our opinions relate to the Federal
Book-Entry Regulations, such opinions are limited to regulations published in
the Code of Federal Regulations, without regard to any interpretations,
operating circulars or other communications from the Department of the Treasury,
the Board of Governors of the Federal Reserve System, any Federal Reserve Bank,
the Department of Housing and Urban Development or any other federal agency or
instrumentality.

       

      (O)           Our
opinions as to any matters governed by the Delaware UCC are based solely upon
our review of the Delaware UCC as published in the Delaware Uniform Commercial
Code Annotated, 2006-2007 Edition, published by Lexis Nexis, Matthew Bender
& Company, Inc., maintained in the library of our firm's Houston office and
reflecting that it was copyrighted in 2006, without any review or consideration
of any decisions or opinions of courts or other adjudicative bodies or
governmental authorities of the State of Delaware, whether or not reported or
summarized in the foregoing publication.

       

      (P)           Insofar
as our opinion in paragraph 4 above relates to the enforceability under Texas
law of the choice of law provisions contained in the Opinion Documents selecting
Texas law as the governing law thereof, it is rendered in reliance upon Section
35.51 of the Texas Business and Commerce Code.  To our knowledge, no
Texas court has construed Section 35.51 in a published judicial decision and,
therefore, our opinions (x) are limited by any subsequent judicial
interpretation thereof and (y) assume the constitutionality of such
statute.  In addition, insofar as such opinions relate to the
enforceability of the choice of law provisions contained in the Opinion
Documents, we (i) express no opinion as to the choice of governing law with
respect to (A) any issue or matter as to which Section 35.51 does not apply or
(B) any issue or matter that another Texas statute (such as Section 1.301(b) of
the Texas UCC), or a federal statute, provides is governed by the laws of
another jurisdiction, and (ii) note that any such enforceability

       

      
        
          
             

          

          
             

            
              

            

          

          
             

          

        

      

      To the Lenders and Agent

      February 20, 2007

      Page 11 of 11

      may be
subject to constitutional limitations and the exercise of judicial discretion in
favor of another jurisdiction

       

      (V)           This
opinion has been prepared in accordance with the customary practice of lawyers
who regularly give and lawyers who regularly advise recipients regarding
opinions of this kind, and our opinions herein are to be interpreted in
accordance with the Legal
Opinion Principles, 53 Bus. Law 831.

       

      We are
qualified to practice law in the State of Texas and we do not purport to express
an opinion on any laws other than Applicable Law.  The opinions
expressed herein are solely for the benefit of the addressees hereof and of any
other person or entity becoming a Lender or Agent under and in accordance with
the provisions of the Credit Agreement, in each case above, in connection with
the transaction referred to herein and may not be relied on by such addressees
or such other persons or entities for any other purpose or in any manner or for
any purpose by any other person or entity.  This opinion letter is
rendered as of the date set forth above.  We expressly disclaim any
obligation to update this letter after such date.

       

      
        	 
      	
                Very
      truly yours,

              
	 
      	 
      
	 
      	
                /s/ Bracewell & Giuliani
      LLP

                BRACEWELL
      & GIULIANI LLP

              
	 
      	 
      

      

      

       

         

      

      
        
          
             

          

          
             

            
              

            

          

          
             

          

        

      

      
Exhibit
A

    

     

    OPINION
SUBSIDIARIES

     

    
      	 
      	
              Entity

            
	
              1. 

            	
              ACI
      Mechanical, Inc.

            
	
              2. 

            	
              ARC
      Comfort Systems USA, Inc.

            
	
              3. 

            	
              Accurate
      Air Systems, L.P.

            
	
              4. 

            	
              Accu-Temp
      GP, Inc.

            
	
              5. 

            	
              Accu-Temp
      LP, Inc.

            
	
              6. 

            	
              AIRTEMP,
      Inc.

            
	
              7. 

            	
              Atlas-Accurate
      Holdings, L.L.C.

            
	
              8. 

            	
              Atlas
      Comfort Systems USA, L.P.

            
	
              9. 

            	
              Batchelor's
      Mechanical Contractors, Inc.

            
	
              10. 

            	
              BCM
      Controls Corporation.

            
	
              11. 

            	
              California
      Comfort Systems USA, Inc.

            
	
              12. 

            	
              Climate
      Control, Inc.

            
	
              13. 

            	
              Comfort
      Systems USA (Arkansas), Inc.

            
	
              14. 

            	
              Comfort
      Systems USA (Atlanta), Inc.

            
	
              15. 

            	
              Comfort
      Systems USA (Baltimore), Inc.

            
	
              16. 

            	
              Comfort
      Systems USA (Bristol), Inc.

            
	
              17. 

            	
              Comfort
      Systems USA (Carolinas), Inc.

            
	
              18. 

            	
              Comfort
      Systems USA (Florida), Inc.

            
	
              19. 

            	
              Comfort
      Systems USA G.P., Inc.

            
	
              20. 

            	
              Comfort
      Systems USA (Hartford), Inc.

            
	
              21. 

            	
              Comfort
      Systems USA (Intermountain), Inc.

            
	
              22. 

            	
              Comfort
      Systems USA National Accounts, LLC

            
	
              23. 

            	
              Comfort
      Systems USA (Ohio), Inc.

            
	
              24. 

            	
              Comfort
      Systems USA (Pasadena), L.P.

            
	
              25. 

            	
              Comfort
      Systems USA (Southeast), Inc.

            
	
              26. 

            	
              Comfort
      Systems USA (Syracuse), Inc.

            
	
              27. 

            	
              Comfort
      Systems USA (Texas), L.P.

            
	
              28. 

            	
              Comfort
      Systems USA (Twin Cities), Inc.

            
	
              29. 

            	
              Comfort
      Systems USA (Western Michigan), Inc.

            
	
              30. 

            	
              CS53
      Acquisition Corp.

            
	
              31. 

            	
              Design
      Mechanical Incorporated

            
	
              32. 

            	
              Eastern
      Heating & Cooling, Inc.

            
	
              33. 

            	
              Eastern
      Refrigeration Co., Inc.

            
	
              34. 

            	
              Granite
      State Holdings Company, Inc.

            
	
              35. 

            	
              Granite
      State Plumbing & Heating, LLC

            
	
              36. 

            	
              H
      & M Mechanical, Inc.

            
	
              37. 

            	
              Helm
      Corporation

            
	
              38. 

            	
              Hess
      Mechanical Corporation

            
	
              39. 

            	
              Hudson
      River Heating and Cooling, Inc.

            
	
              40. 

            	
              H-VAC
      Supply, L.L.C.

            
	
              41. 

            	
              Hydrokool,
      L.L.C.

            
	
              42. 

            	
              J
      & J Mechanical, Inc.

            
	
              43. 

            	
              James
      Air Conditioning Enterprise Inc.

            
	
              44. 

            	
              Martin
      Heating, Inc.

            
	
              45. 

            	
              Mechanical
      Technical Services, L.P.

            
	
              46. 

            	
              MJ
      Mechanical Services, Inc.

            
	
              47. 

            	
              North
      American Mechanical, Inc.

            
	
              48. 

            	
              Quality
      Air Heating & Cooling, Inc.

            
	
              49. 

            	
              Quality
      Professional Employer Organization LLC

            
	
              50. 

            	
              S.
      I. Goldman Company, Inc.

            
	
              51. 

            	
              S.M.
      Lawrence Company, Inc.

            
	
              52. 

            	
              SA
      Associates, Inc.

            
	
              53. 

            	
              Salmon
      & Alder, LLC

            
	
              54. 

            	
              Seasonair,
      Inc.

            
	
              55. 

            	
              Sheren
      Plumbing & Heating, Inc.

            
	
              56. 

            	
              Temp-Right
      Service, Inc.

            
	
              57. 

            	
              The
      Capital Refrigeration Company

            
	
              58. 

            	
              Tri-City
      Mechanical, Inc.

            
	
              59. 

            	
              Western
      Building Services, Inc.

            

    

     

     

       

    

    
       

      
         

        
          

        

      

       

    

    

    Exhibit
B

     

    FINANCING
STATEMENTS

     

    "Delaware Financing
Statements" shall mean the UCC-1 financing statements filed against each
of the debtors listed below in the Office of the Secretary of State of
Delaware:

     

    
      	 
      	
              Debtor

            	
              Filing
      Jurisdiction

            
	
              1. 

            	
              Accu-Temp
      GP, Inc.

            	
              Delaware

            
	
              2. 

            	
              Accu-Temp
      LP, Inc.

            	
              Delaware

            
	
              3. 

            	
              ACI
      Mechanical, Inc.

            	
              Delaware

            
	
              4. 

            	
              AirTemp,
      Inc.

            	
              Delaware

            
	
              5. 

            	
              ARC
      Comfort Systems USA, Inc.

            	
              Delaware

            
	
              6. 

            	
              Atlas-Accurate
      Holdings, L.L.C.

            	
              Delaware

            
	
              7. 

            	
              Climate
      Control, Inc.

            	
              Delaware

            
	
              8. 

            	
              Comfort
      Systems USA (Arkansas), Inc.

            	
              Delaware

            
	
              9. 

            	
              Comfort
      Systems USA (Baltimore), Inc.

            	
              Delaware

            
	
              10. 

            	
              Comfort
      Systems USA (Bristol), Inc.

            	
              Delaware

            
	
              11. 

            	
              Comfort
      Systems USA (Carolinas), Inc.

            	
              Delaware

            
	
              12. 

            	
              Comfort
      Systems USA (Florida), Inc.

            	
              Delaware

            
	
              13. 

            	
              Comfort
      Systems USA (Hartford), Inc.

            	
              Delaware

            
	
              14. 

            	
              Comfort
      Systems USA (Southeast), Inc.

            	
              Delaware

            
	
              15. 

            	
              Comfort
      Systems USA G.P., Inc.

            	
              Delaware

            
	
              16. 

            	
              CS53
      Acquisition Corp.

            	
              Delaware

            
	
              17. 

            	
              Design
      Mechanical, Inc.

            	
              Delaware

            
	
              18. 

            	
              Granite
      State Holdings Company, Inc.

            	
              Delaware

            
	
              19. 

            	
              Granite
      State Plumbing & Heating LLC

            	
              Delaware

            
	
              20. 

            	
              H&M
      Mechanical, Inc.

            	
              Delaware

            
	
              21. 

            	
              Hess
      Mechanical Corporation

            	
              Delaware

            
	
              22. 

            	
              Hudson
      River Heating and Cooling, Inc.

            	
              Delaware

            
	
              23. 

            	
              HydroKool,
      L.L.C.

            	
              Delaware

            
	
              24. 

            	
              MJ
      Mechanical Services, Inc.

            	
              Delaware

            
	
              25. 

            	
              North
      American Mechanical, Inc.

            	
              Delaware

            
	
              26. 

            	
              Quality
      Professional Employer Organization LLC

            	
              Delaware

            
	
              27. 

            	
              S.I.
      Goldman Company, Inc.

            	
              Delaware

            
	
              28. 

            	
              Sheren
      Plumbing & Heating, Inc.

            	
              Delaware

            
	
              29. 

            	
              Temp-Right
      Service, Inc.

            	
              Delaware

            
	
              30. 

            	
              The
      Capital Refrigeration Company

            	
              Delaware

            

    

    

    "Texas Financing
Statements" shall mean the UCC-1 financing statements filed against each
of the debtors listed below in the Office of the Secretary of State of
Texas:

     

    
      	 
      	
              Debtor

            	
              Filing
      Jurisdiction

            
	
              1. 

            	
              Accurate
      Air Systems, L.P.

            	
              Texas

            
	
              2. 

            	
              Atlas
      Comfort Systems USA, L.P.

            	
              Texas

            
	
              3. 

            	
              Comfort
      Systems USA (Pasadena), L.P.

            	
              Texas

            
	
              4. 

            	
              Comfort
      Systems USA (Texas), L.P.

            	
              Texas

            
	
              5. 

            	
              Mechanical
      Technical Services, L.P.

            	
              Texas

            

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    Exhibit
C

    

    OFFICER'S
CERTIFICATE

    

    [See
attached.]

     

     

       

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    OFFICER’S
CERTIFICATE

    

    The
undersigned is a duly authorized officer of Comfort Systems USA, Inc. (the
“Borrower”) and
hereby executes and delivers this certificate to Bracewell & Giuliani LLP
(“B&G”) and
the Agent and the Lenders described below, in connection with the opinion to be
delivered by B&G on the date hereof (the “B&G Opinion”)
pursuant to the Amended and Restated Credit Agreement dated as of February 20,
2007 (the “Credit
Agreement”) among the Borrower, the financial institutions parties
thereto from time to time as Lenders (the “Lenders”) and
Wachovia Bank, N.A. as agent for such Lenders (the “Agent”).  The
terms “Guarantor” and “Guarantors” shall
have the meanings given such term in the B&G Opinion.

    

    The
undersigned certifies to the best of his/her knowledge:

    

    1.           Due
inquiry has been made by the undersigned of all persons deemed necessary or
appropriate to verify or confirm the statements contained herein.

    

    2.           The
Borrower and each Guarantor:

    

    a.           is
not and does not hold itself out as being engaged primarily, and does not
propose to engage primarily, in the business of investing, reinvesting, or
trading in securities;

    

    b.           is
not engaged and does not propose to engage in the business of issuing
face-amount certificates of the installment type, and has not been engaged in
such business and has no such certificate outstanding;

    

    c.           is
not engaged and does not propose to engage in the business of investing,
reinvesting, owning, holding or trading in securities, and does not own or
propose to acquire investment securities, having a value exceeding 40% of its
total assets (exclusive of government securities and cash items) on an
unconsolidated basis; and

    

    d.           is
not engaged principally, or as one of its important activities, in the business
of extending credit for the purpose of purchasing or carrying “margin
stock”.

    

    For the
purpose of the preceding sentence, the term “investment securities” means all
securities other than government securities and securities issued by majority
owned subsidiaries of the owner which are not engaged in, have not engaged in,
and do not propose to engage in, any of the following business: (a) the business
of investing, reinvesting, or trading in securities; (b) the business of issuing
face-amount certificates of the installment type; or (c) the business of
investing, reinvesting, owning, holding or trading in securities, and owning or
proposing to acquire investment securities having a value exceeding 40% of the
value of such total assets (exclusive of government securities and cash items)
on an unconsolidated basis.  The United States of America Securities
and Exchange Commission has not issued an order (or taken any action with
respect to considering or issuing such an order) declaring or determining any
person to control the Borrower or any Guarantor within the meaning of the
Investment Company Act of 1940, as amended.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    4.           (a)
There are no material orders, judgments, writs, injunctions, awards or decrees
of any court, arbitrator or governmental authority applicable to the Borrower or
any Guarantor except those listed on Schedule 1 hereto,
and (b) neither the Borrower nor any Guarantor is a party to, nor are any such
party’s assets bound by, any material indenture, material lease, or other
material agreement except those listed on Schedule 2
hereto.

    

    5.           B&G
is entitled to rely upon any certificates delivered in connection with the
Opinion Documents.

    

    This
Officer’s Certificate is dated as of the 20th day
of February, 2007.

     

     

     

    
      
        	 	Comfort Systems USA,
      Inc.	 
	 	 	 	 
	
                 

              	
                By:
      

              	/s/ William
      George III	 
	 	 	William
      George III	 
	 	 	Executive
      Vice President, Chief Financial Officer and Assistant Secretary	 
	 	 	 	 

      

    

     

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     Schedule
1

     to
Officer’s Certificate

    

    Material Orders, Judgments,
Writs, Injunctions, Awards or Decrees

    

    

     None.

       

       

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     Schedule
2

     to
Officer’s Certificate

    

    Material
Agreements

    

    

    1.    The
Amended and Restated Credit Agreement dated as of February 20, 2007 among the
Borrower, the Lenders party thereto, and Wachovia Bank, N.A. as administrative
agent for such Lenders, and the other documents related to the transaction
contemplated therein.

     

    2.    The
Underwriting, Indemnity, and Security Agreement dated as of October 23, 2003
among the Borrower, the Guarantors, Federal Insurance Company and Arch Insurance
Company, as amended by the First Amendment to Underwriting, Indemnity, and
Security Agreement dated as of March 1, 2005, the Second Amendment to
Underwriting, Indemnity, and Security Agreement  dated as of June 30,
2005, and the Third Amendment to Underwriting, Indemnity, and Security Agreement
dated As of September 29, 2006.

     

     

       

    

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

     

    COMFORT
SYSTEMS USA, INC.

    

    
      	 
      	
              Office
      of the General Counsel

            
	
              Trent
      T. McKenna

            	
              777
      Post Oak Blvd., Suite 500

            
	
              General
      Counsel

            	
              Houston,
      Texas 77056

            
	 
      	
              800-723-8431
      Toll Free

            
	 
      	
              713-830-9600
      Phone

            
	 
      	
              713-830-9659
      Fax

            

    

    

    February
20, 2007

    

    

    To each
of the Lenders party to the

    Credit
Agreement described below

    and
Wachovia Bank, N.A.,

    as
administrative agent for such Lenders

    

    

    Ladies
and Gentlemen:

    

    I am
general counsel to Comfort Systems USA, Inc., a Delaware corporation (the “Company”), and the
subsidiaries of the Company (the “Guarantors”) in
connection with the Amended and Restated Credit Agreement dated as of February
20, 2007 (the “Credit
Agreement”), by and among the Company, the financial institutions parties
thereto from time to time as Lenders (the “Lenders”), and
Wachovia Bank, N.A., a national banking association, as administrative agent for
such Lenders (the “Agent”).  The
Company has requested that I render this opinion pursuant to Section 4.1(g) of
the Credit Agreement.  Capitalized terms used herein and defined in
the Credit Agreement but not defined herein are used herein as therein
defined.

     

    In
connection with this opinion, I have examined originals or copies of such
records and documents as I have deemed necessary and relevant for purposes of
this opinion.  In addition, I have relied on certificates or
comparable documents of public officials and of officers of the Company and the
Guarantors as to matters of fact relating to this opinion and have made such
investigations of law as I have deemed necessary and relevant as a basis for
this opinion.  I have assumed (a) the authenticity of all documents
and records submitted to me as originals and (b) the conformity to original
documents and records of all documents and records submitted to me as
copies.

    

    Based on
the foregoing and subject to the limitations and assumptions set forth in this
opinion, and having due regard for such legal considerations as I deem relevant,
I am of the opinion that:

    

    1.           The
Company and each of the Guarantors that is a corporation is duly incorporated
and validly existing as a corporation.

    

    2.           Each
of the Guarantors that is a limited partnership or a limited liability company
is duly formed and validly existing as a limited partnership or limited
liability company, as the case may be.

     

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    
      To each
of the Lenders party to the

      Credit
Agreement 

      February 20, 2007

      Page 2

      
 

    

    3.           The
Company and each of the Guarantors is in good standing under the laws of its
jurisdiction of incorporation or formation, and is duly qualified or registered
and in good standing as a foreign corporation, limited partnership or limited
liability company, as the case may be, in those jurisdictions where a failure to
do so would constitute a Material Adverse Change.

    

    4.           To
my knowledge after due inquiry, no litigation, investigation, or administrative
proceeding of or before any court, arbitrator, or governmental authority is
pending or threatened against the Company or any Guarantor (a) with respect to
the Loan Documents or (b) that, if adversely determined, reasonably would be
expected to have a material adverse effect on the business or financial
condition of the Company and the Guarantors, taken as a whole, after giving
effect to any reserves maintained by the Company and the Guarantors for such
litigation, investigation, or administrative proceeding.

    

    The
foregoing opinion is, with your concurrence, predicated on and qualified in its
entirety by the following:  I am a member of the Bar of the State of
Texas.  The foregoing opinion is based on and is limited to the laws
of the State of Texas, the General Corporation Law, Limited Liability Company
Law and Limited Partnership Law of the State of Delaware, and the relevant
federal laws of the United States of America.  I render no opinion
with respect to the law of any other jurisdiction.

    

    This
opinion is to be delivered only to you and your assignees permitted under the
Loan Documents and only in connection with the transactions described above and
may not be quoted, circulated, or published, in whole or in part, or furnished
to any other Person without my prior written consent.

     

     

     

    
      
        	 	Very truly
    yours,	 
	 	 	 	 
	
                 

              	
                By:
      

              	/s/ Trent
      T. McKenna	 
	 	 	Trent
      T. McKenna	 
	 	 	General
      Counsel to Comfort Systems USA, Inc.	 
	 	 	 	 

      

    

     

    

      
        
           

        

        
           

          
            

          

        

        
           

        

      

    SCHEDULE
1.1(b)

    

    EXISTING LETTERS OF
CREDIT

    

    

    

    

    
      	
              Obligor

            	
              
                Date
      Issued

                Cancelled
      or

                Reduced

              

            	
              Maturity

              Dates

            	 	
              January
      31, 2007

              Notional
      Amount

            	 
	
              Comfort
      Systems USA, Inc.

            	
              1/14/2004

            	
              12/17/2007

            	 	 	$20,287,414.00	 
	
              Comfort
      Systems USA, Inc. (Fagan)

            	
              2/25/2004

            	
              12/31/2007

            	 	 	50,000.00	 
	
              Comfort
      Systems USA, Inc. (Fagan)

            	
              1/28/2004

            	
              12/31/2007

            	 	 	200,000.00	 
	
              Comfort
      Systems USA, Inc. (EL Pruitt)

            	
              2/5/2004

            	
              3/9/2007

            	 	 	106,795.00	 
	
              Comfort
      Systems USA, Inc. (Shambaugh)

            	
              2/5/2004

            	
              4/1/2007

            	 	 	284,468.00	 
	
              Comfort
      Systems USA, Inc.

            	
              1/28/2004

            	
              12/31/2007

            	 	 	90,000.00	 
	
              Comfort
      Systems USA, Inc.

            	
              11/29/2006

            	
              4/30/2008

            	 	 	3,127,011.00	 
	
              Grand
      Totals

            	 
      	 
      	 	 	$24,145,688.00

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