Document:

Exhibit 10.1

 

Schedules and Exhibits

 

	
  Exhibit 2.1

  	
   

  	
  Revolving
  Note

  
	
  Exhibit 2.2(b)

  	
   

  	
  Borrowing
  Notice

  
	
  Exhibit 2.3(c)

  	
   

  	
  Continuation/Conversion
  Notice

  
	
  Exhibit 2.8

  	
   

  	
  Intentionally
  Left Blank

  
	
  Exhibit 6.2(b)

  	
   

  	
  Certificate
  Accompanying Financial Statements

  
	
  Exhibit 10.5

  	
   

  	
  Assignment
  and Acceptance Agreement

  
	
   

  	
   

  	
   

  
	
  Schedule
  1.1(a)

  	
   

  	
  Existing
  Liens

  
	
  Schedule
  3.1

  	
   

  	
  Lenders
  Schedule

  
	
  Schedule
  4.1

  	
   

  	
  Security
  Documents

  
	
  Schedule
  5

  	
   

  	
  Disclosure
  Schedule

  
	
   

  	
   

  	
  Section 5.6

  	
  Material
  Adverse Effect

  
	
   

  	
   

  	
  Section 5.7

  	
  Material
  Restrictions

  
	
   

  	
   

  	
  Section 5.9

  	
  Litigation

  
	
   

  	
   

  	
  Section 5.10

  	
  Labor
  Disputes and Acts of God

  
	
   

  	
   

  	
  Section 5.11

  	
  ERISA
  Disclosures

  
	
   

  	
   

  	
  Section 5.12

  	
  Environmental
  and Other Laws

  
	
   

  	
   

  	
  Section 5.13

  	
  Names
  and Places of Business

  
	
   

  	
   

  	
  Section 5.14

  	
  Subsidiaries

  
	
  Schedule 7.1

  	
   

  	
  Existing Indebtedness

  

 

1

 

EXHIBIT 2.1

 

AMENDED AND
RESTATED REVOLVING NOTE

 

	
  Houston, Texas

  	
   

  	
  February           ,
  2007

  

 

FOR VALUE RECEIVED, the
undersigned, Comfort Systems USA, Inc., a Delaware corporation (herein
called “Borrower”), hereby promises to pay to the order of                                                                             
(herein called “Lender”), the principal sum equal to its Revolving Loan
Commitment as set forth in the Credit Agreement (as hereinafter defined), or,
if greater or less, the aggregate unpaid principal amount of the Revolving
Loans made by Lender to Borrower pursuant to the terms of the Credit Agreement
(as hereinafter defined), together with interest on the unpaid principal balance
thereof as set forth in the Credit Agreement, both principal and interest
payable as herein provided in lawful money of the United States of America at
the offices of Agent under the Credit Agreement, or at such other place within
Houston, Harris County, Texas, as from time to time may be designated by the
holder of this Note.

 

This Note (a) is issued
and delivered under that certain Amended and Restated Credit Agreement of even
date herewith among Borrower, Wachovia Bank, N.A., as Lead Arranger and Administrative
Agent, and the lenders (including Lender) referred to therein (herein, as from
time to time supplemented, amended or restated, called the “Credit Agreement”),
and is a “Note” as defined therein, (b) is subject to the terms and
provisions of the Credit Agreement, which contains provisions for payments and
prepayments hereunder and acceleration of the maturity hereof upon the
happening of certain stated events, and (c) is secured by and entitled to
the benefits of certain Security Documents (as identified and defined in the
Credit Agreement).  Payments on this Note
shall be made and applied as provided in the Credit Agreement.  Reference is hereby made to the Credit Agreement
for a description of certain rights, limitations of rights, obligations and
duties of the parties hereto and for the meanings assigned to terms used and
not defined herein and to the Security Documents for a description of the
nature and extent of the security thereby provided and the rights of the
parties thereto.

 

Notwithstanding the
foregoing paragraph and all other provisions of this Note, in no event shall
the interest payable hereon, whether before or after maturity, exceed the
maximum amount of interest which, under applicable Law, may be contracted for,
charged, or received on this Note, and this Note is expressly made subject to
the provisions of the Credit Agreement which more fully set out the limitations
on how interest accrues hereon.  In the
event applicable Law provides for an interest ceiling under Chapter 303 of the
Texas Finance Code (the “Texas Finance Code”) as amended, for that day, the
ceiling shall be the “weekly ceiling” as defined in the Texas Finance Code and
shall be used in this Note for calculating the Highest Lawful Rate and for all
other purposes.  The term “applicable law”
as used in this Note shall mean the laws of the State of Texas or the laws of
the United States, whichever laws allow the greater interest, as such laws now
exist or may be changed or amended or come into effect in the future.

 

If this Note is placed in
the hands of an attorney for collection after default, or if all or any part of
the indebtedness represented hereby is proved, established or collected in any
court or in any bankruptcy, receivership, debtor relief, probate or other court
proceedings, Borrower and 

 

2

 

all
endorsers, sureties and guarantors of this Note jointly and severally agree to
pay reasonable attorneys’ fees and collection costs to the holder hereof in
addition to the principal and interest payable hereunder.

 

Borrower and all endorsers,
sureties and guarantors of this Note hereby severally waive demand,
presentment, notice of demand and of dishonor and nonpayment of this Note,
protest, notice of protest, notice of intention to accelerate the maturity of
this Note, declaration or notice of acceleration of the maturity of this Note,
diligence in collecting, the bringing of any suit against any party and any
notice of or defense on account of any extensions, renewals, partial payments
or changes in any manner of or in this Note or in any of its terms, provisions
and covenants, or any releases or substitutions of any security, or any delay,
indulgence or other act of any trustee or any holder hereof, whether before or
after maturity.

 

This Note and the rights and
duties of the parties hereto shall be governed by the Laws of the State of
Texas (without regard to principles of conflicts of law), except to the extent
the same are governed by applicable federal Law.

 

This indebtedness evidenced
by this Note is given in partial renewal, extension and restatement of (but not
in extinguishment or novation of) the Prior Indebtedness, as defined and
described in the Credit Agreement.

 

	
   

  	
  COMFORT
  SYSTEMS USA, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  

 

3

 

EXHIBIT 2.2(b)

 

BORROWING
NOTICE

 

Reference is made to that
certain Amended and Restated Credit Agreement dated as of February           ,
2007 (as from time to time amended, the “Agreement”), by and among Comfort
Systems USA, Inc. (“Borrower”), Wachovia Bank, N.A., as Lead Arranger and
Administrative Agent, and certain financial institutions (“Lenders”).  Terms which are defined in the Agreement are
used herein with the meanings given them in the Agreement.  Borrower hereby requests a Borrowing of new
Revolving Loans to be advanced pursuant to Section 2.2(a) of the
Agreement as follows:

 

	
  Aggregate
  amount of Borrowing:

  	
   

  	
  $____________________

  
	
  Type
  of Loans in Borrowing:

  	
   

  	
  _____________________

  
	
  Date
  on which Revolving Loans are to be advanced:

  	
   

  	
  _____________________

  
	
  Length
  of Interest Period for

  	
   

  	
   

  
	
  Eurodollar
  Loans (1, 2, 3, or 6 months):

  	
   

  	
                    months

  
	
  If combined with existing
  Revolving Loans see attached Continuation/Conversion Notice.

  	
   

  	
   

  

 

To induce Lenders to make
such Revolving Loans, Borrower hereby represents, warrants, acknowledges, and
agrees to and with Agent and each Lender that:

 

(a)                                  The officer of
Borrower signing this instrument is the duly elected, qualified and acting officer
of Borrower as indicated below such officer’s signature hereto having all
necessary authority to act for Borrower in making the request herein contained.

 

(b)                                 The
representations and warranties of Borrower set forth in the Agreement and the
other Loan Documents are true and correct in all material respects (without
duplication of materiality qualifiers contained therein) on and as of the date
hereof (except to the extent that the facts on which such representations and
warranties are based have been changed by the extension of credit under the
Agreement), with the same effect as though such representations and warranties
had been made on and as of the date hereof, except for any such representation
or warranty that expressly applies to a specified earlier date, in which case
such representation or warranty shall have been true in all material respects
on and as of such earlier date.

 

(c)                                  There does not
exist on the date hereof any condition or event which constitutes a Default
which has not been waived in writing as provided in Section 10.1(a) of
the Agreement; nor will any such Default exist upon Borrower’s receipt and
application of the Loans requested hereby. 
Borrower will use the Loans hereby requested in compliance with Section 2.4
of the Agreement.

 

(d)                                 Except to the
extent waived in writing as provided in Section 10.1(a) of the
Agreement, each Restricted Person has performed and complied with all
agreements and conditions in the Agreement required to be performed or complied
with by such Restricted 

 

1

 

Person
on or prior to the date hereof, and each of the conditions precedent to
Advances contained in the Agreement remains satisfied.

 

(e)                                  Intentionally
Left Blank.

 

(f)                                    The Loan
Documents have not been modified, amended or supplemented by any unwritten
representations or promises, by any course of dealing, or by any other means
not provided for in Section 10.1(a) of the Agreement.  The Agreement and the other Loan Documents
are hereby ratified, approved, and confirmed in all respects.

 

The officer of Borrower
signing this instrument hereby certifies that, to the best of his knowledge
after due inquiry, the above representations, warranties, acknowledgments, and
agreements of Borrower are true, correct and complete.

 

IN WITNESS WHEREOF, this
instrument is executed as of                         ,
20    .

 

	
   

  	
  COMFORT
  SYSTEMS USA, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  

 

2

 

EXHIBIT 2.3(c)

 

CONTINUATION/CONVERSION
NOTICE

 

Reference is made to that
certain Amended and Restated Credit Agreement dated as of February           ,
2007 (as from time to time amended, the “Agreement”), by and among Comfort
Systems USA, Inc. (“Borrower”), Wachovia Bank, N.A., as Lead Arranger and
Administrative Agent, and the lenders referred to therein (“Lenders”).  Terms which are defined in the Agreement are
used herein with the meanings given them in the Agreement.

 

Borrower hereby requests a
Conversion or Continuation of existing Loans into a new Borrowing pursuant to Section 2.3
of the Agreement as follows:

 

Existing Borrowing(s) to
be continued or converted:

 

$                        
of Eurodollar Loans with Interest Period ending                                  

$                        
of Base Rate Loans

 

If being combined with new
Loans, $                        
of new Loans to be advanced on                                               

 

Aggregate amount of Borrowing:                $                        

 

Type of Loans in new Borrowing:                                      

 

Date of Continuation or Conversion:                        

 

Length of Interest Period for Eurodollar
Loans (1, 2, 3, or 6 months):                                                     months

 

IN WITNESS WHEREOF this
instrument is executed as of                              .

 

	
   

  	
  COMFORT
  SYSTEMS USA, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  

 

1

 

EXHIBIT 2.8

 

INTENTIONALLY
LEFT BLANK

 

1

 

EXHIBIT 6.2(b)

 

CERTIFICATE
ACCOMPANYING

FINANCIAL STATEMENTS

 

Reference is made to that
certain Amended and Restated Credit Agreement dated as of February           ,
2007 (as from time to time amended, the “Agreement”), by and among Comfort
Systems USA, Inc. (“Borrower”), 
Wachovia Bank, N.A., as Lead Arranger and Administrative Agent, and
certain financial institutions (“Lenders”), which Agreement is in full force
and effect on the date hereof.  Terms
which are defined in the Agreement are used herein with the meanings given them
in the Agreement.

 

This Certificate is
furnished pursuant to Section 6.2(b) of the Agreement.  Together herewith Borrower is furnishing to
Agent and each Lender s the [audited/unaudited] financial statements of
Borrower (the “Financial Statements”) as at                         
(the “Reporting Date”).  Borrower hereby
represents, warrants, and acknowledges to Agent and each Lender that:

 

(a)                                  the officer of
Borrower signing this instrument is the duly elected, qualified and acting                         
of Borrower and as such is Borrower’s chief financial officer;

 

(b)                                 the Financial
Statements are fair and complete in all material respects and satisfy the
requirements of the Agreement;

 

(c)                                  attached hereto
is a schedule of calculations showing Borrower’s compliance as of the Reporting
Date with the requirements of Section 7.11 of the Agreement *[and Borrower’s
non-compliance as of such date with the requirements of Section                         
of the Agreement];

 

(d)                                 on the
Reporting Date Borrower was, and on the date hereof Borrower is, in full
compliance with the disclosure requirements of Section 6.2 of the
Agreement, and no Default otherwise existed on the Reporting Date or otherwise
exists on the date of this instrument *[except for Default(s) under
Section(s)                         
of the Agreement, which *[is/are] more fully described on a schedule attached
hereto].

 

The officer of Borrower
signing this instrument hereby certifies that he has reviewed the Loan
Documents and the Financial Statements and has otherwise undertaken such
inquiry as is in his opinion necessary to enable him to express an informed
opinion with respect to the above.

 

IN WITNESS WHEREOF, this
instrument is executed as of                         ,
20        .

 

	
   

  	
  Comfort
  Systems USA, Inc.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  

 

1

 

EXHIBIT 10.5

 

ASSIGNMENT
AND ACCEPTANCE

 

Reference is made to the
Amended and Restated Credit Agreement dated as of February           ,
2007 (the “Credit Agreement”) among Comfort Systems USA, Inc., a Delaware
corporation (the “Borrower”), the Lenders (as defined in the Credit Agreement)
and Wachovia Bank, N.A., as Lead Arranger and Administrative Agent for the
Lenders (the “Agent”).  Terms defined in
the Credit Agreement are used herein with the same meaning.

 

The “Assignor” and the “Assignee”
referred to on Schedule 1 agree as follows:

 

1.                                       The Assignor
hereby sells and assigns to the Assignee, without recourse and without
representation or warranty except as expressly set forth herein, and the Assignee
hereby purchases and assumes from the Assignor, an interest in and to the
Assignor’s rights and obligations under the Credit Agreement and the other Loan
Documents as of the date hereof equal to the percentage interest specified on
Schedule 1 of all outstanding rights and obligations under the Credit Agreement
and the other Loan Documents.  After
giving effect to such sale and assignment, the Assignee’s Commitment and the
amount of the Loans owing to the Assignee will be as set forth on Schedule 1.

 

2.                                       The Assignor (i) represents
and warrants that it is the legal and beneficial owner of the interest being
assigned by it hereunder and that such interest is free and clear of any
adverse claim; (ii) makes no representation or warranty and assumes no responsibility
with respect to any statements, warranties or representations made in or in
connection with the Loan Documents or the execution, legality, validity,
enforceability, genuineness, sufficiency or value of the Loan Documents or any
other instrument or document furnished pursuant thereto; (iii) makes no
representation or warranty and assumes no responsibility with respect to the
financial condition of any Restricted Person or the performance or observance
by any Restricted Person of any of its obligations under the Loan Documents or
any other instrument or document furnished pursuant thereto; and (iv) attaches
the Note held by the Assignor and requests that Agent exchange such Note for
new Notes payable to the order of the Assignee in an amount equal to the
Commitment assumed by the Assignee pursuant hereto and to the Assignor in an
amount equal to the Commitment retained by the Assignor, if any, as specified
on Schedule 1.

 

3.                                       The Assignee (i) confirms
that it has received a copy of the Credit Agreement, together with copies of
the financial statements referred to in Section 6.2 thereof and such other
documents and information as it has deemed appropriate to make its own credit
analysis and decision to enter into this Assignment and Acceptance; (ii) agrees
that it will, independently and without reliance upon Agent, the Assignor or
any other Lender and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under the Credit Agreement; (iii) confirms that it is an
Eligible Assignee; (iv) appoints and authorizes Agent to take such action
as Agent on its behalf and to exercise such powers and discretion under the
Credit Agreement as are delegated to Agent by the terms thereof, together with
such powers and discretion as are reasonably incidental thereto; (v) agrees
that it will perform in accordance with their terms all of the obligations that
by the terms 

 

1

 

of
the Credit Agreement are required to be performed by it as a Lender; and (vi) attaches
any required U.S. Internal Revenue Service forms.

 

4.                                       Following the
execution of this Assignment and Acceptance, it will be delivered to Agent for
acceptance and recording by Agent and (unless an Event of Default shall have
occurred and be continuing) acceptance by Borrower.  The effective date for this Assignment and
Acceptance (the “Effective Date”) shall be the date of acceptance hereof by
Agent and, unless an Event of Default shall have occurred and be continuing,
Borrower, unless otherwise specified on Schedule 1.

 

5.                                       Upon such
acceptance and recording by Agent, as of the Effective Date, (i) the
Assignee shall be a party to the Credit Agreement and, to the extent provided
in this Assignment and Acceptance, have the rights and obligations of a Lender
thereunder and (ii) the Assignor shall, to the extent provided in this
Assignment and Acceptance, relinquish its rights and be released from its
obligations under the Credit Agreement. 
Upon such acceptance and recording by Agent, from and after the
Effective Date, Agent shall make all payments under the Credit Agreement and
the Notes in respect of the interest assigned hereby (including, without
limitation, all payments of principal, interest and commitment fees with
respect thereto) to the Assignee.  The
Assignor and Assignee shall make all appropriate adjustments in payments under
the Credit Agreement and the Notes for periods prior to the Effective Date
directly between themselves.

 

6.                                       This Assignment
and Acceptance shall be governed by, and construed in accordance with, the Laws
of the State of Texas.

 

7.                                       This Assignment
and Acceptance may be executed in any number of counterparts and by different
parties hereto in separate counterparts, each of which when so executed shall
be deemed to be an original and all of which taken together shall constitute
one and the same agreement.  Delivery of
an executed counterpart of Schedule 1 to this Assignment and Acceptance by telecopier
shall be effective as delivery of a manually executed counterpart of this
Assignment and Acceptance.

 

IN WITNESS WHEREOF, the
Assignor and the Assignee have caused Schedule 1 to this Assignment and
Acceptance to be executed by their officers thereunto duly authorized as of the
date specified thereon.

 

2

 

SCHEDULE 1

to

ASSIGNMENT AND ACCEPTANCE

 

	
  Percentage
  interest assigned:

  	
   

  	
   

  	
   

  	
   

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  Assignee’s
  Revolving Loan Commitment:

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Aggregate outstanding principal amount of
  Revolving Loans assigned:

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Principal
  amount of Revolving Note payable to Assignee:

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Principal
  amount of Revolving Note payable to Assignor:

  	
  $

  	
   

  	
   

  

 

	
  Effective Date (if other than date of acceptance
  by Agent):

  	
   

  	
  *            ,
  20        

  

 

 

	
   

  	
  [NAME
  OF ASSIGNOR], as Assignor

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
  Dated:

  	
   

  	
     ,
  20

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  [NAME
  OF ASSIGNEE], as Assignee

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
  Domestic
  Lending Office:

  
	
   

  	
   

  
	
   

  	
  Eurodollar Lending Office:

  
						

 

*                                         This date should be no
earlier than five Business Days after the delivery of this Assignment and
Acceptance to Agent.

 

Accepted [and Approved] **

this        day
of                       ,
20   

 

3

 

	
  Wachovia Bank, N.A.

  	
   

  
	
   

  	
   

  

 

	
  By:

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  

 

	
   

  	
   

  
	
  [Approved
  this          day

  	
   

  
	
  of
                          ,
  20        

  	
   

  
	
   

  	
   

  
	
  [NAME
  OF BORROWER]

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
  ]**

  	
   

  
	
  Title:

  	
   

  
				

 

**                                  Required if the
Assignee is an Eligible Transferee solely by reason of subsection (b) of
the definition of “Eligible Transferee”.

 

4

 

SCHEDULE 1.1(A)

 

EXISTING LIENS

 

	
  Debtor

  	
   

  	
  Jurisdiction

  	
   

  	
  Filing Number

  	
   

  	
  Filing

  Date

  	
   

  	
  Secured Party

  
	
  Accurate
  Air Systems, L.P.

  	
   

  	
  Texas

  	
   

  	
  95-00073962

  	
   

  	
  04/14/95

  	
   

  	
  HT
  Financial Corp. dba Vical Financial

  
	
  Accurate
  Air Systems, L.P.

  	
   

  	
  Texas

  	
   

  	
  00-756074

  	
   

  	
  01/20/00

  	
   

  	
  HT
  Financial Corp dba Vical Financial

  
	
  Accurate
  Air Systems, L.P.

  	
   

  	
  Texas

  	
   

  	
  05-00016690

  	
   

  	
  01/14/05

  	
   

  	
  HT
  Financial Corp dba Vical Financial

  
	
  Accurate
  Air Systems, L.P.

  	
   

  	
  Texas

  	
   

  	
  04-0051134644

  	
   

  	
  12/16/03

  	
   

  	
  US
  Bancorp

  
	
  Atlas
  Comfort Systems USA, L.P. (f/k/a Atlas Air Conditioning, L.P.)

  	
   

  	
  Texas

  	
   

  	
  30002699594

  	
   

  	
  9/25/02

  	
   

  	
  Inter-tel
  Leasing, Inc.

  
	
  Atlas
  Comfort Systems USA, L.P.

  	
   

  	
  Texas

  	
   

  	
  05-0034118375

  	
   

  	
  11/03/05

  	
   

  	
  Inter-tel
  Leasing, Inc.

  
	
  Atlas
  Comfort Systems USA, L.P.

  	
   

  	
  Texas

  	
   

  	
  06-0035384544

  	
   

  	
  10/25/06

  	
   

  	
  US
  Bancorp

  
	
  Atlas
  Comfort Systems USA, L.P.

  	
   

  	
  Texas

  	
   

  	
  06-0038714039

  	
   

  	
  11/27/06

  	
   

  	
  US
  Bancorp

  
	
  Atlas
  Comfort Systems USA, L.P.

  	
   

  	
  Texas

  	
   

  	
  06-0041092860

  	
   

  	
  12/19/06

  	
   

  	
  Inter-Tel
  Leasing, Inc.

  
	
  Batchelor’s
  Mechanical Contractors, Inc.

  	
   

  	
  Alabama

  	
   

  	
  04-0972077

  	
   

  	
  12/17/04

  	
   

  	
  Beard
  Equipment Company

  
	
  Batchelor’s
  Mechanical Contractors, Inc.

  	
   

  	
  Alabama

  	
   

  	
  05-0060985

  	
   

  	
  01/24/05

  	
   

  	
  Beard
  Equipment Company

  
	
  California
  Comfort Systems USA, Inc.

  	
   

  	
  California

  	
   

  	
  04-7007236776

  	
   

  	
  11/24/04

  	
   

  	
  Employment
  Development Department

  
	
  Comfort
  Systems USA, Inc.

  	
   

  	
  Delaware

  	
   

  	
  10923560

  	
   

  	
  8/13/01

  	
   

  	
  Pullman
  Bank and Trust Company

  
	
  Comfort
  Systems USA, Inc.

  	
   

  	
  Delaware

  	
   

  	
  20326656

  	
   

  	
  01/14/02

  	
   

  	
  Pacific
  Rim Capital, Inc.

  
	
  Comfort
  Systems USA, Inc.

  	
   

  	
  Delaware

  	
   

  	
  20654099

  	
   

  	
  02/22/02

  	
   

  	
  Pullman
  Bank and Trust Company

  
	
  Comfort
  Systems USA, Inc.

  	
   

  	
  Delaware

  	
   

  	
  62628436

  	
   

  	
  07/31/06

  	
   

  	
  Pullman
  Bank and Trust Company

  
	
  Comfort
  Systems USA, Inc.

  	
   

  	
  Delaware

  	
   

  	
  30438237

  	
   

  	
  1/27/03

  	
   

  	
  Ford
  Motor Credit Co.

  
	
  Comfort
  Systems USA, Inc.

  	
   

  	
  Delaware

  	
   

  	
  40458184

  	
   

  	
  2/19/04

  	
   

  	
  Citicorp
  Leasing, Inc.

  
	
  Comfort
  Systems USA, Inc.

  	
   

  	
  Florida

  	
   

  	
  200202820287

  	
   

  	
  12/11/02

  	
   

  	
  Liberty
  North America Corporation

  
	
  Comfort
  Systems USA, Inc.

  	
   

  	
  Indiana

  	
   

  	
  200200006843530

  	
   

  	
  6/29/02

  	
   

  	
  Ford
  Motor Credit Co.

  

 

1

 

	
  Debtor

  	
   

  	
  Jurisdiction

  	
   

  	
  Filing Number

  	
   

  	
  Filing

  Date

  	
   

  	
  Secured Party

  
	
  Comfort
  Systems USA, Inc.

  	
   

  	
  Texas

  	
   

  	
  20036050096

  	
   

  	
  7/3/02

  	
   

  	
  Ford
  Motor Credit Co.

  
	
  Comfort
  Systems USA (Bristol), Inc.

  	
   

  	
  Delaware

  	
   

  	
  11204911

  	
   

  	
  09/21/01

  	
   

  	
  The
  Cit Group/Equipment

  
	
  Comfort
  Systems USA (Bristol), Inc.

  	
   

  	
  Delaware

  	
   

  	
  32720319

  	
   

  	
  10/07/03

  	
   

  	
  Greene
  County Bank

  
	
  Comfort
  Systems USA (Bristol), Inc.

  	
   

  	
  Texas

  	
   

  	
  20030770988

  	
   

  	
  5/20/02

  	
   

  	
  Farmers
  State Bank

  
	
  Comfort
  Systems USA G.P., Inc.

  	
   

  	
  Delaware

  	
   

  	
  10923560

  	
   

  	
  08/13/01

  	
   

  	
  Pullman
  Bank and Trust Company

  
	
  Comfort
  Systems USA G.P., Inc.

  	
   

  	
  Delaware

  	
   

  	
  20326656

  	
   

  	
  01/14/02

  	
   

  	
  Pacific
  Rim Capital, Inc.

  
	
  Comfort
  Systems USA G.P., Inc.

  	
   

  	
  Delaware

  	
   

  	
  20654099

  	
   

  	
  02/22/02

  	
   

  	
  Pullman
  Bank and Trust Company

  
	
  Comfort
  Systems USA G.P., Inc.

  	
   

  	
  Delaware

  	
   

  	
  62628436

  	
   

  	
  07/31/06

  	
   

  	
  Pullman
  Bank and Trust Company

  
	
  Comfort
  Systems USA G.P., Inc.

  	
   

  	
  Delaware

  	
   

  	
  22295701

  	
   

  	
  09/09/02

  	
   

  	
  US
  Bancorp

  
	
  Comfort
  Systems USA G.P., Inc.

  	
   

  	
  Delaware

  	
   

  	
  30438237

  	
   

  	
  01/27/03

  	
   

  	
  Ford
  Motor Credit Co

  
	
  Comfort
  Systems USA G.P., Inc.

  	
   

  	
  Delaware

  	
   

  	
  40458184

  	
   

  	
  02/19/04

  	
   

  	
  Citicorp
  Leasing, Inc.

  
	
  Comfort
  Systems USA (Hartford), Inc.

  	
   

  	
  Delaware

  	
   

  	
  52376490

  	
   

  	
  08/02/05

  	
   

  	
  The
  City Group/Equipment Financing, Inc.

  
	
  Comfort
  Systems USA (Southeast), Inc.

  	
   

  	
  Delaware

  	
   

  	
  62475481

  	
   

  	
  07/18/06

  	
   

  	
  Thompson
  Tractor Co., Inc.

  
	
  Comfort
  Systems USA (Pasadena), L.P. (f/k/a United Environmental Services, L.P.)

  	
   

  	
  Texas

  	
   

  	
  30008112429

  	
   

  	
  11/14/02

  	
   

  	
  IOS
  Capital, LLC

  
	
  Comfort
  Systems USA (Western Michigan), Inc.

  	
   

  	
  Michigan
  

  	
   

  	
  D937345

  	
   

  	
  07/23/02

  	
   

  	
  New
  Equipment Leasing Inc.

  
	
  Comfort
  Systems USA (Western Michigan), Inc.

  	
   

  	
  Michigan
  

  	
   

  	
  2003056075-1

  	
   

  	
  3/25/03

  	
   

  	
  New
  Equipment Leasing Inc.

  
	
  Helm
  Corporation

  	
   

  	
  Colorado

  	
   

  	
  20012028540

  	
   

  	
  04/12/01

  	
   

  	
  Citicorp
  Vendor Finance Inc.

  
	
  Helm
  Corporation

  	
   

  	
  Colorado

  	
   

  	
  2006F033790

  	
   

  	
  04/07/06

  	
   

  	
  Citicorp
  Vendor Finance Inc.

  
	
  North
  American Mechanical, Inc.

  	
   

  	
  Delaware

  	
   

  	
  53961126

  	
   

  	
  12/21/05

  	
   

  	
  Rhyme
  Business Products

  
	
  Quality
  Air Heating and Cooling, Inc.

  	
   

  	
  Michigan
  

  	
   

  	
  D960195

  	
   

  	
  09/30/02

  	
   

  	
  Ervin
  Leasing Company

  
	
  Salmon &
  Alder, LLC

  	
   

  	
  Utah

  	
   

  	
  01-707637

  	
   

  	
  02/27/01

  	
   

  	
  The
  City Group/Equipment Financing Inc.

  
	
  S.I.
  Goldman Company, Inc.

  	
   

  	
  Delaware

  	
   

  	
  31620932

  	
   

  	
  05/23/03

  	
   

  	
  Canon
  Financial Services, Inc.

  
	
  S.I.
  Goldman Company, Inc.

  	
   

  	
  Delaware

  	
   

  	
  31841157

  	
   

  	
  06/13/03

  	
   

  	
  Canon
  Financial Services, Inc.

  

 

2

 

	
  Debtor

  	
   

  	
  Jurisdiction

  	
   

  	
  Filing Number

  	
   

  	
  Filing

  Date

  	
   

  	
  Secured Party

  
	
  S.I.
  Goldman Company, Inc.

  	
   

  	
  Delaware

  	
   

  	
  50011917

  	
   

  	
  01/03/05

  	
   

  	
  Safeco
  Credit Co. Inc.

  
	
  S.M.
  Lawrence Co., Inc.

  	
   

  	
  Tennessee
  

  	
   

  	
  101031279

  	
   

  	
  05/23/01

  	
   

  	
  Nikon
  Inc. Instrument Group

  
	
  Tri-City
  Mechanical, Inc.

  	
   

  	
  Arizona

  	
   

  	
  200513584560

  	
   

  	
  04/01/05

  	
   

  	
  Marlin
  Leasing Corp

  
	
  Western
  Building Services, Inc.

  	
   

  	
  Colorado

  	
   

  	
  2004F123574

  	
   

  	
  11/09/04

  	
   

  	
  Dell
  Financial Services, L.P.

  

 

3

 

SCHEDULE 3.1

 

LENDERS
SCHEDULE

 

	
  Domestic Lending Office

  	
   

  	
  Eurodollar

  Lending

  Office

  	
   

  	
  Percentage

  Share

  	
   

  	
  Revolving Loan

  Commitment

  	
   

  
	
  Wachovia
  Bank, N.A.

  2800
  Post Oak Blvd., Suite 3400

  Houston,
  Texas 77056

  Telephone:
  (713) 402-3614

  	
   

  	
  Same

  	
   

  	
  25

  	
  %

  	
  $

  	
  25,000,000

  	
   

  
	
  Capital
  One, N.A.

  5718
  Westheimer, Suite 600

  Houston,
  Texas 77057

  Telephone:
  (713) 435-5024

  Fax:
  (713) 706-5499

  	
   

  	
  Same

  	
   

  	
  25

  	
  %

  	
  $

  	
  25,000,000

  	
   

  
	
  Bank
  of Texas, N.A.

  5
  Houston Center

  1401
  McKinney, Suite 1650

  Houston,
  Texas 77010

  Telephone:
  (713) 289-5855

  Fax:
  (713) 289-5825

  	
   

  	
  Same

  	
   

  	
  25

  	
  %

  	
  $

  	
  25,000,000

  	
   

  
	
  Bank
  of Scotland

  565
  Fifth Avenue

  New
  York, NY 10017

  Telephone:
  (212) 450-0837

  Fax:
  (212)479-2806

  	
   

  	
  Same

  	
   

  	
  25

  	
  %

  	
  $

  	
  25,000,000

  	
   

  

 

1

 

SCHEDULE 4.1

 

SECURITY
DOCUMENTS

 

1.                                       Amended and
Restated Security Agreement by and among Borrower and its subsidiaries and
Wachovia Bank, N.A., as Lead Arranger and Administrative Agent.

 

2.                                       Amended and
Restated Pledge Agreement by and among Borrower and its subsidiaries and
Wachovia Bank, N.A., as Lead Arranger and Administrative Agent.

 

3.                                       Assignment of
Notes and Liens dated as of February 20, 2007 (the “Assignment of Prior
Credit Documents”) among Capital One, N.A., formerly known as Hibernia National
Bank, as agent and lender, Bank of Texas, Bank of Scotland, First Bank &
Trust and RZB Finance LLC, as lenders, and Wachovia Bank, N.A., as
administrative agent and lender, Bank of Texas, N.A., Bank of Scotland and
Capital One, N.A., as lenders, and Borrower.

 

4.                                       Intercreditor
Agreement dated as of October 23, 2003 among Federal Insurance Company, an
Indiana corporation, Arch Insurance Company, a Missouri corporation, and Bank
of Texas, N.A., as amended by the First Amendment to Intercreditor Agreement
dated as of March 1, 2005, as amended by the Second Amendment to
Intercreditor Agreement dated as of June 30, 2005, as assigned to the
Prior Agent pursuant to the Assignment of Notes and Liens dated June 30,
2005 among Bank of Texas, N.A., the Prior Agent and the Borrower, as amended by
the Third Amendment to Intercreditor Agreement dated as of September 29,
2006, as amended by the Fourth Amendment to Intercreditor Agreement dated as of
February 20, 2007, and as assigned to Wachovia Bank, N.A., as Lead
Arranger and Administrative Agent, pursuant to the Assignment of Prior Credit
Documents.

 

1

 

SECTION 5.6
to SCHEDULE 5

 

Material
Adverse Effect

 

NONE

 

1

 

SECTION 5.7
to SCHEDULE 5

 

Material
Restrictions

 

NONE

 

1

 

SECTION 5.9
to SCHEDULE 5

 

Litigation

 

NONE

 

1

 

SECTION 5.10
to SCHEDULE 5

 

Labor Disputes
and Acts of God

 

NONE

 

1

 

SECTION 5.11
to SCHEDULE 5

 

ERISA Plans
and Liabilities

 

ERISA Plans

 

Comfort Systems USA, Inc. 401(k)

Comfort Systems USA Section 125 Plan

Comfort Systems USA Health Plan

Comfort Systems USA Basic and Voluntary Life
Insurance Plan

Comfort Systems USA Basic and Voluntary Accidental
Death and Dismemberment Plan

Comfort Systems USA Long Term Disability Income
Benefit Plan

Comfort Systems USA Short Term Disability Income
Benefit Plan

Woodcock & Armani Mechanical Contractors
Health Plan

ABJ Fire Protection Health Plan

Eastern Heating & Cooling Health Plan

MJ Mechanical Health Plan

 

1

 

SECTION 5.12
to SCHEDULE 5

 

Environmental
and Other Laws

 

NONE

 

1

 

SECTION 5.13
to SCHEDULE 5

 

Names and
Places of Business

 

	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  PRIOR

  	
   

  	
  PRIOR NAMES

  
	
  ENTITY NAME

  	
   

  	
  ADDRESS TYPE

  	
   

  	
  ADDRESS

  	
   

  	
  ADDRESSES

  	
   

  	
  & TRADE NAMES

  
	
  ACI
  Mechanical, Inc.

  	
   

  	
  Principal
  Place of Business

  	
   

  	
  3116
  S. Duff Avenue, Ames, Iowa 50010

  	
   

  	
   

  	
   

  	
  CS35
  Acquisition

  
	
  ARC
  Comfort Systems USA, Inc.

  	
   

  	
  Principal
  Place of Business

  	
   

  	
  777
  Post Oak Blvd., Suite 500, Houston, TX 77056

  	
   

  	
  1110
  East Douglas Ave.

  Visailia,
  CA 93292

  	
   

  	
  American
  Refrigeration Contractors; MDC Service Corporation  

  Superior Mechanical Systems, Inc.  

  CS17 Acquisition Corp.  

  Comfort Systems USA (Central California), Inc.

  
	
  Accurate
  Air Systems, L.P.

  	
   

  	
  Principal
  Place of Business

  	
   

  	
  9745
  Bent Oak Drive, Houston, Texas 77040

  	
   

  	
   

  	
   

  	
   

  
	
  Accu-Temp
  GP, Inc.

  	
   

  	
  Principal
  Place of Business

  	
   

  	
  777
  Post Oak Blvd Suite 500, Houston, Texas 77056

  	
   

  	
   

  	
   

  	
   

  
	
  Accu-Temp
  LP, Inc.

  	
   

  	
  Principal
  Place of Business

  	
   

  	
  777
  Post Oak Blvd Suite 500, Houston, Texas 77056

  	
   

  	
   

  	
   

  	
   

  
	
  AirTemp, Inc.

  	
   

  	
  Principal
  Place of Business

  	
   

  	
  11
  Wallace Avenue, South Portland, Maine 04106

  	
   

  	
   

  	
   

  	
   

  
	
  Atlas-Accurate
  Holdings, L.L.C.

  	
   

  	
  Principal
  Place of Business

  	
   

  	
  777
  Post Oak Blvd. Suite 500, Houston, Texas 77056

  	
   

  	
   

  	
   

  	
   

  
	
  Atlas
  Comfort Systems USA, L.P.

  	
   

  	
  Principal
  Place of Business

  	
   

  	
  4133
  Southerland, Houston, Texas 77092

  	
   

  	
   

  	
   

  	
  Atlas
  Air Conditioning Company, L.P.

  
	
   

  	
   

  	
  Satellite

  	
   

  	
  10693
  Wakeman Drive, Manassas, Virginia 20110

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Satellite

  	
   

  	
  1225
  E. Crosby Road, Suite B-14, Carrollton, Texas 75006

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Satellite

  	
   

  	
  17745
  Ashley Drive, Suite B, Panama City Beach, Florida 32413

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Satellite

  	
   

  	
  340
  East Shelbourne Avenue, Las Vegas, Nevada 89123

  	
   

  	
   

  	
   

  	
  Atlas
  Comfort Systems Nevada  

  Comfort Systems USA Las Vegas

  
	
   

  	
   

  	
  Satellite

  	
   

  	
  620
  Magnolia avenue, Suite E, Ontario, California 91762

  	
   

  	
   

  	
   

  	
   

  
	
  Batchelor’s
  Mechanical Contractors, Inc.

  	
   

  	
  Principal
  Place of Business

  	
   

  	
  3110
  Old Shell Road, Mobile, Alabama 36607

  	
   

  	
   

  	
   

  	
   

  
	
  BCM
  Controls Corporation

  	
   

  	
  Principal
  Place of Business

  	
   

  	
  19
  Wheeling Avenue, Woburn, Massachusetts 01801

  	
   

  	
   

  	
   

  	
   

  

 

1

 

	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  PRIOR

  	
   

  	
  PRIOR
  NAMES

  
	
  ENTITY
  NAME

  	
   

  	
  ADDRESS
  TYPE

  	
   

  	
  ADDRESS

  	
   

  	
  ADDRESSES

  	
   

  	
  &
  TRADE NAMES

  
	
  California
  Comfort Systems USA, Inc.

  	
   

  	
  Principal
  Place of Business

  	
   

  	
  9750
  Distribution Avenue, San Diego, California 92121

  	
   

  	
  650
  Alpine Way

  Escondido,
  CA 92029

  4660
  Viewridge Ave.

  San
  Diego, CA 92123

  	
   

  	
  Golden
  State Mechanical, Inc.  

  Helm Corporation San Diego  

  Weather Engineering, Inc.  

  RMC2 Mechanical Systems, Inc.

  
	
  Climate
  Control, Inc.

  	
   

  	
  Principal
  Place of Business

  	
   

  	
  1057
  Bill Tuck Highway, So Boston, Virginia 24592

  	
   

  	
   

  	
   

  	
  CS43
  Acquistion Corp.  

  Comfort Systems USA (Raleigh), Inc.  

  CCI Systems, Inc.  

  Comfort Systems USA (South Boston), Inc.

  
	
  Comfort
  Systems USA (Arkansas), Inc.

  	
   

  	
  Principal
  Place of Business

  	
   

  	
  4806
  Rixey Road, North Little Rock, Arkansas 72117

  	
   

  	
   

  	
   

  	
  CS16
  Acquisition Corp.  

  River City Mechanical, Inc.

  
	
   

  	
   

  	
  Satellite

  	
   

  	
  1915
  North Shiloh, Fayetteville, Arkansas 72704

  	
   

  	
   

  	
   

  	
   

  
	
  Comfort
  Systems USA (Atlanta), Inc.

  	
   

  	
  Principal
  Place of Business

  	
   

  	
  2275
  Northwest Parkway Rd., Suite 105, Bldg.3, Marietta, Georgia 30067

  	
   

  	
   

  	
   

  	
  H &
  M Mechanical, Inc.

  
	
  Comfort
  Systems USA (Baltimore), Inc.

  	
   

  	
  Principal
  Place of Business

  	
   

  	
  2105
  Emmorton Park Road, Suite 104, Edgewood, Maryland 21040

  	
   

  	
   

  	
   

  	
  CS49
  Acquisition Corp.

  
	
  Comfort
  Systems USA (Bristol), Inc.

  	
   

  	
  Principal
  Place of Business

  	
   

  	
  294
  Blevins Blvd., Bristol, Virginia 24203-0757

  	
   

  	
   

  	
   

  	
  Fred
  Hayes Heating & Air Conditioning  Fred Hayes
  Mechanical Contractors

  
	
  Comfort
  Systems USA (Carolinas), Inc.

  	
   

  	
  Principal
  Place of Business

  	
   

  	
  6600-A
  North Park Blvd., Charlotte, North Carolina 28216

  	
   

  	
   

  	
   

  	
   

  
	
  Comfort
  Systems USA (Florida), Inc.

  	
   

  	
  Principal
  Place of Business

  	
   

  	
  799
  Bennett Drive, Longwood, Florida 32750

  	
   

  	
   

  	
   

  	
  The
  Drake Corporation  

  All Temp Services  Air Masters of Tampa Bay

  
	
  Comfort
  Systems USA (Hartford), Inc.

  	
   

  	
  Principal
  Place of Business

  	
   

  	
  50
  Baker Hollow Road Ste. A, Windsor, Connecticut 06095

  	
   

  	
   

  	
   

  	
  Comfort
  Systems USA Energy Services  The Harvey Robbin Company  

  MBS Acquisition Corp.

  
	
  Comfort
  Systems USA (Intermountain), Inc.

  	
   

  	
  Principal
  Place of Business

  	
   

  	
  2035
  S. Milestone Drive, Salt Lake City, Utah 84104

  	
   

  	
   

  	
   

  	
  Air
  Pro Heating & Air Conditioning  CSI/Bonneville  

  Contract Services  Freeway Heating &
  Air Conditioning  

  Pond Plumbing & Heating  

  Salmon & Alder

  
	
  Comfort
  Systems USA National Accounts LLC

  	
   

  	
  Principal
  Place of Business

  	
   

  	
  2655
  Fortune Circle West, Suite E-F, Indianapolis, Indiana 46241

  	
   

  	
   

  	
   

  	
  Accu-Temp,
  LLC  

  Comfort Systems USA National Service Organization, Inc.  

  CS33 Acquisition Corp.

  
	
  Comfort
  Systems USA (Ohio), Inc.

  	
   

  	
  Principal
  Place of Business

  	
   

  	
  30300
  Bruce Industrial Parkway, Solon, Ohio 44139

  	
   

  	
   

  	
   

  	
  Comfort
  Systems USA (Cleveland), Inc.  Tech Heating
  and Air Conditioning, Inc.

  

 

2

 

	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  PRIOR

  	
   

  	
  PRIOR NAMES

  
	
  ENTITY NAME

  	
   

  	
  ADDRESS TYPE

  	
   

  	
  ADDRESS

  	
   

  	
  ADDRESSES

  	
   

  	
  & TRADE NAMES

  
	
   

  	
   

  	
  Satellite

  	
   

  	
  2874
  E. Kemper Road, Sharonville, Ohio 45241

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Satellite

  	
   

  	
  3080
  South Tech Blvd, Miamisburg, Ohio 45342

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Satellite

  	
   

  	
  670
  K Lakeview Plaza Blvd., Worthington, Oh 43085

  	
   

  	
   

  	
   

  	
   

  
	
  Comfort Systems USA (Pasadena), L.P.

  	
   

  	
  Principal Place of Business

  	
   

  	
  777 Post Oak Blvd., Suite 500, Houston, TX
  77056

  	
   

  	
  4107 New West Drive

  Pasadena, TX 77507

  85 IH10 North, Ste 110

  Beaumont, TX 77707

  	
   

  	
  United Environmental Services, L.P.

  
	
  Comfort
  Systems USA (Southeast), Inc.

  	
   

  	
  Principal
  Place of Business

  	
   

  	
  435
  Corday Street, Pensacola, Florida 32503

  	
   

  	
   

  	
   

  	
  Gulfside
  Mechanical, Inc.

  Neel
  Mechanical Contractors, Inc.

  CS22
  Acquisition Corp.

  
	
   

  	
   

  	
  Satellite

  	
   

  	
  250
  Commercial Drive, Thomasville, Georgia 31757

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Satellite

  	
   

  	
  255
  Southgate Road, Dothan, Alabama 36301

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Satellite

  	
   

  	
  4251
  Alden Drive, Mobile, Alabama 36693

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Satellite

  	
   

  	
  4518
  Val North Drive, Valdosta, Georgia 31602

  	
   

  	
   

  	
   

  	
   

  
	
  Comfort
  Systems USA (Syracuse), Inc.

  	
   

  	
  Principal
  Place of Business

  	
   

  	
  6500
  New Venture Gear Drive, East Syracuse, New York 13057

  	
   

  	
   

  	
   

  	
  Armani
  Plumbing & Mechanical

  ABJ
  Fire Protection Company

  Woodcock &
  Associates

  Woodcock &
  Armani

  
	
  Comfort
  Systems USA (Texas), L.P.

  	
   

  	
  Principal
  Place of Business

  	
   

  	
  777
  Post Oak Blvd. Suite 500, Houston, Texas 77056

  	
   

  	
   

  	
   

  	
   

  
	
  Comfort
  Systems USA G.P., Inc.

  	
   

  	
  Principal
  Place of Business

  	
   

  	
  777
  Post Oak Blvd. Suite 500, Houston, Texas 77056

  	
   

  	
   

  	
   

  	
   

  
	
  Comfort
  Systems USA (Twin Cities), Inc.

  	
   

  	
  Principal
  Place of Business

  	
   

  	
  777
  Post Oak Blvd, Suite 500, Houston, TX 77056

  	
   

  	
  2611
  Hamiline Avenue North, Suite 150

  Roseville,
  MN 55113

  	
   

  	
  EDS

  Energy
  Development Services

  
	
  Comfort
  Systems USA (Western Michigan), Inc.

  	
   

  	
  Principal
  Place of Business

  	
   

  	
  777
  Post Oak Blvd. Suite 500, Houston, Texas 77056

  	
   

  	
  421
  North Lafayette St.  

  Greenville,
  MI 48838

  	
   

  	
  River
  City Mechanical, Inc.

  Troost
  Service Co.

  H &
  H Plumbing. Heating & Hardware

  
	
  CS53
  Acquisition Corp.

  	
   

  	
  Principal
  Place of Business

  	
   

  	
  777
  Post Oak Blvd. Suite 500, Houston, Texas 77056

  	
   

  	
   

  	
   

  	
   

  
	
  Design
  Mechanical, Incorporated

  	
   

  	
  Principal
  Place of Business

  	
   

  	
  168
  CTC Blvd. Suite D, Louisville, Colorado 80027

  	
   

  	
   

  	
   

  	
  Colorado
  Plumbing Services

  DMI
  Acquisition Corp.

  
	
  Design
  Mechanical, Inc.

  	
   

  	
  Satellite

  	
   

  	
  P.O. Box
  3070, 210 Marmot Lane, Suite B5 & B8, Eagle, Colorado
  81631-3070

  	
   

  	
   

  	
   

  	
   

  
	
  Eastern
  Heating & Cooling, Inc.

  	
   

  	
  Principal
  Place of Business

  	
   

  	
  880
  Broadway, Albany, New York 12207-1316

  	
   

  	
   

  	
   

  	
   

  

 

3

 

	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  PRIOR

  	
   

  	
  PRIOR NAMES

  
	
  ENTITY NAME

  	
   

  	
  ADDRESS TYPE

  	
   

  	
  ADDRESS

  	
   

  	
  ADDRESSES

  	
   

  	
  & TRADE NAMES

  
	
  Eastern
  Refrigeration Co., Inc.

  	
   

  	
  Principal
  Place of Business

  	
   

  	
  880
  Broadway, Albany, New York 12207-1316

  	
   

  	
   

  	
   

  	
   

  
	
  Granite
  State Holdings Company, Inc.

  	
   

  	
  Principal
  Place of Business

  	
   

  	
  777
  Post Oak Blvd, Suite 500, Houston, Texas 77056

  	
   

  	
   

  	
   

  	
   

  
	
  Granite
  State Plumbing & Heating LLC

  	
   

  	
  Principal
  Place of Business

  	
   

  	
  10
  N. Riverdale Road, Weare, New Hampshire 03281

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Satellite

  	
   

  	
  26
  Waterford Place, Gilford, New Hampshire 03249

  	
   

  	
   

  	
   

  	
   

  
	
  H&M
  Mechanical, Inc.

  	
   

  	
  Principal
  Place of Business

  	
   

  	
  135
  Belcher Drive, Pelham, Alabama 35124

  P.O. Box
  36397 Birmingham, AL 35236

  	
   

  	
   

  	
   

  	
  Comfort
  Systems USA (Atlanta), Inc.

  CS31
  Acquisition Corp

  Helm
  Corporation

  H&M
  Plumbing Company, Inc.

  H&M
  Mechanical Contractors, Inc.

  
	
  Helm
  Corporation

  	
   

  	
  Principal
  Place of Business

  	
   

  	
  168
  CTC Blvd. Suite D, Louisville, Colorado 80027

  	
   

  	
   

  	
   

  	
   

  
	
  Hess
  Mechanical Corporation

  	
   

  	
  Principal
  Place of Business

  	
   

  	
  9600
  Fallard Court, Upper Marlboro, Maryland 20772-6703

  	
   

  	
   

  	
   

  	
  CS12
  Acquisition Corp.

  
	
  Hudson
  River Heating and Cooling, Inc.

  	
   

  	
  Principal
  Place of Business

  	
   

  	
  10
  Airline Drive Suite 205, Albany, New York 12205

  	
   

  	
   

  	
   

  	
   

  
	
  H-VAC
  Supply, L.L.C.

  	
   

  	
  Principal
  Place of Business

  	
   

  	
  P.O. Box
  4956, Suite 1134, Caguas, Puerto Rico 00726-4956

  	
   

  	
   

  	
   

  	
   

  
	
  HydroKool,
  L.L.C.

  	
   

  	
  Principal
  Place of Business

  	
   

  	
  6875
  W. Galveston, Chandler, Arizona 85226

  	
   

  	
   

  	
   

  	
   

  
	
  J&J
  Mechanical, Inc.

  	
   

  	
  Principal
  Place of Business

  	
   

  	
  3405
  Robards Court, Louisville, Kentucky 40218

  	
   

  	
  4006
  South Brook Street

  Louisville,
  KY 40218

  	
   

  	
  CS54
  Acquisition Corp.

  
	
  James
  Air Conditioning Enterprise Inc.

  	
   

  	
  Principal
  Place of Business

  	
   

  	
  P.O. Box
  4956 Ste 1134, Caguas, Puerto Rico 00726-4956

  Caguas,
  PR 00726-4956 Carr #1KM -23 HM.O B.O. , Rio Guaynbabo, PR 00970

  	
   

  	
   

  	
   

  	
   

  
	
  Martin
  Heating, Inc.

  	
   

  	
  Principal
  Place of Business

  	
   

  	
  2035
  S. Milestone Drive, Salt Lake City, Utah 84104

  	
   

  	
  1655
  W. High School Rd.

  Jackson
  Hole, WY 83001

  	
   

  	
   

  
	
  Mechanical
  Technical Services, L.P.

  	
   

  	
  Principal
  Place of Business

  	
   

  	
  9601
  Dessau Road, Bldg 3, Suite 303, Austin, Texas 78754

  	
   

  	
   

  	
   

  	
  MTECH  

  FHN Enterprises, Ltd.

  

 

4

 

	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  PRIOR

  	
   

  	
  PRIOR NAMES

  
	
  ENTITY NAME

  	
   

  	
  ADDRESS TYPE

  	
   

  	
  ADDRESS

  	
   

  	
  ADDRESSES

  	
   

  	
  & TRADE NAMES

  
	
  MJ
  Mechanical Services, Inc.

  	
   

  	
  Principal
  Place of Business

  	
   

  	
  2040
  Military Road, Tonawanda, New York 14150

  	
   

  	
   

  	
   

  	
  JM
  State Refrigeration

  MJ
  Acquistion Corp.

  Vastola
  Heating & Air Conditioning

  
	
  MJ
  Mechanical Services, Inc.

  	
   

  	
  Satellite

  	
   

  	
  300
  Fire Tower Drive, Tonawanda, New York 14150

  	
   

  	
   

  	
   

  	
   

  
	
  North
  American Mechanical, Inc.

  	
   

  	
  Principal
  Place of Business

  	
   

  	
  6135
  North American Lane, De Forest, Wisconsin 53532

  	
   

  	
   

  	
   

  	
  CS13
  Acquisition Corp.

  
	
  Quality
  Air Heating and Cooling, Inc.

  	
   

  	
  Principal
  Place of Business

  	
   

  	
  3395
  Kraft Avenue, SE, Grand Rapids, Michigan 49512

  	
   

  	
   

  	
   

  	
  Control
  Logic

  Precision
  Services, Inc.

  
	
   

  	
   

  	
  Satellite

  	
   

  	
  2306
  Winters Drive, Portage, Michigan 49002

  	
   

  	
   

  	
   

  	
   

  
	
  Quality
  Professional Employer Organization LLC

  	
   

  	
  Principal
  Place of Business

  	
   

  	
  3395
  Kraft Avenue, SE, Grand Rapids, Michigan 49512

  	
   

  	
   

  	
   

  	
   

  
	
  S.I.
  Goldman Company, Inc.

  	
   

  	
  Principal
  Place of Business

  	
   

  	
  799
  Bennett Drive, Longwood, Florida 32750

  	
   

  	
   

  	
   

  	
  CS14
  Acqustion Corp.

  Central
  Construction

  Mechanical
  Service Group

  
	
   

  	
   

  	
  Satellite

  	
   

  	
  320
  Melody Lane, Casselberry, Florida 32707

  	
   

  	
   

  	
   

  	
   

  
	
  S.M.
  Lawrence Co., Inc.

  	
   

  	
  Principal
  Place of Business

  	
   

  	
  245
  Preston Street, Jackson, Tennessee 38301

  	
   

  	
   

  	
   

  	
  CEL, Inc.

  Casey
  Electric

  
	
   

  	
   

  	
  Satellite

  	
   

  	
  667
  Chaney Drive, Collierville, Tennessee 38017

  	
   

  	
   

  	
   

  	
   

  
	
  SA
  Associates, Inc.

  	
   

  	
  Principal
  Place of Business

  	
   

  	
  777
  Post Oak Blvd., Suite 500, Houston, TX 77056

  	
   

  	
   

  	
   

  	
  Salmon &
  Alder Associates

  
	
  Salmon &
  Alder, LLC

  	
   

  	
  Principal
  Place of Business

  	
   

  	
  777
  Post Oak Blvd., Suite 500, Houston, TX 77056

  	
   

  	
   

  	
   

  	
   

  
	
  Seasonair, Inc.

  	
   

  	
  Principal
  Place of Business

  	
   

  	
  16001-A
  Industrial Drive, Gaithersburg, Maryland 20877

  	
   

  	
   

  	
   

  	
   

  
	
  Sheren
  Plumbing & Heating, Inc.

  	
   

  	
  Principal
  Place of Business

  	
   

  	
  3801
  Rennie School Road, Traverse City, Michigan 49684

  	
   

  	
   

  	
   

  	
  CS9
  Acquisition Corp.

  
	
  Temp-Right
  Service, Inc.

  	
   

  	
  Principal
  Place of Business

  	
   

  	
  101
  North Catlin, Missoula, Montana 59801

  	
   

  	
   

  	
   

  	
  Carson
  Brothers

  TRS
  Acquistion Corp.l

  C.B.
  Inc.

  
	
   

  	
   

  	
  Satellite

  	
   

  	
  Carson
  Brothers, 1639 MT Highway 35, Kalispell, Montana 59901

  	
   

  	
   

  	
   

  	
   

  
	
  The
  Capital Refrigeration Company

  	
   

  	
  Principal
  Place of Business

  	
   

  	
  619
  E. Jefferson Street, Montgomery, Alabama 36104

  	
   

  	
   

  	
   

  	
  CS37
  Acquisition Corp.

  
	
   

  	
   

  	
  Satellite

  	
   

  	
  480
  North Dean Road-Unit G-3, Auburn, Alabama 36830

  	
   

  	
   

  	
   

  	
   

  
	
  Tri-City
  Mechanical, Inc.

  	
   

  	
  Principal
  Place of Business

  	
   

  	
  6875
  W. Galveston, Chandler, Arizona 85226

  	
   

  	
   

  	
   

  	
   

  

 

5

 

	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  PRIOR

  	
   

  	
  PRIOR NAMES

  
	
  ENTITY NAME

  	
   

  	
  ADDRESS TYPE

  	
   

  	
  ADDRESS

  	
   

  	
  ADDRESSES

  	
   

  	
  & TRADE NAMES

  
	
   

  	
   

  	
  Satellite

  	
   

  	
  3250
  S. Dodge Blvd #7, Tucson, Arizona 85713

  	
   

  	
  3450
  S. Broadmont Blvd., Suite 100

  Tucson,
  AZ 85713

  	
   

  	
  Dave’s
  Refrigeration & Heating Corp.

  Tri-City
  Acquisition Corp.

  
	
  Western
  Building Services, Inc.

  	
   

  	
  Principal
  Place of Business

  	
   

  	
  800
  E. 64th Avenue Ste 17, Denver, Colorado 80229

  	
   

  	
   

  	
   

  	
  Colorado
  Plumbing Service

  B.E.S.T.
  HVAC

  Western
  Energy Services, Inc.

  

 

6

 

SECTION 5.14
to SCHEDULE 5

 

Subsidiaries

 

COMFORT SYSTEMS USA, INC. - SUBSIDIARIES

 

	
  ENTITY NAME

  	
   

  	
  DOMESTIC JURISDICTION

  	
   

  	
  FORMATION DATE

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ACI
  Mechanical, Inc.

  	
   

  	
  Delaware

  	
   

  	
  06/26/1998

  
	
  ARC
  Comfort Systems USA, Inc.

  	
   

  	
  Delaware

  	
   

  	
  03/17/1998

  
	
  Accurate
  Air Systems, L.P.

  	
   

  	
  Texas

  	
   

  	
  07/23/1981

  
	
  Accu-Temp
  GP, Inc.

  	
   

  	
  Delaware

  	
   

  	
  05/21/1998

  
	
  Accu-Temp
  LP, Inc.

  	
   

  	
  Delaware

  	
   

  	
  05/20/1998

  
	
  AirTemp, Inc.

  	
   

  	
  Delaware

  	
   

  	
  10/15/1998

  
	
  Atlas-Accurate
  Holdings, L.L.C.

  	
   

  	
  Delaware

  	
   

  	
  12/28/1998

  
	
  Atlas
  Comfort Systems USA, L.P.

  	
   

  	
  Texas

  	
   

  	
  06/28/1983

  
	
  Batchelor’s
  Mechanical Contractors, Inc.

  	
   

  	
  Alabama

  	
   

  	
  03/16/1981

  
	
  BCM
  Controls Corporation

  	
   

  	
  Massachusetts

  	
   

  	
  10/03/1984

  
	
  California
  Comfort Systems USA, Inc.

  	
   

  	
  California

  	
   

  	
  05/18/1983

  
	
  Climate
  Control, Inc.

  	
   

  	
  Delaware

  	
   

  	
  09/17/1998

  
	
  Comfort
  Systems USA (Arkansas), Inc.

  	
   

  	
  Delaware

  	
   

  	
  03/17/1998

  
	
  Comfort
  Systems USA (Atlanta), Inc.

  	
   

  	
  Georgia

  	
   

  	
  01/25/2005

  
	
  Comfort
  Systems USA (Baltimore), Inc.

  	
   

  	
  Delaware

  	
   

  	
  10/15/1998

  
	
  Comfort
  Systems USA (Bristol), Inc.

  	
   

  	
  Delaware

  	
   

  	
  08/25/1997

  
	
  Comfort
  Systems USA (Carolinas), Inc.

  	
   

  	
  Delaware

  	
   

  	
  06/09/2006

  
	
  Comfort
  Systems USA (Florida), Inc.

  	
   

  	
  Florida

  	
   

  	
  10/04/1976

  
	
  Comfort
  Systems USA (Hartford), Inc.

  	
   

  	
  Delaware

  	
   

  	
  08/25/1997

  
	
  Comfort
  Systems USA (Intermountain), Inc.

  	
   

  	
  Utah

  	
   

  	
  05/06/1969

  
	
  Comfort
  Systems USA National Accounts LLC

  	
   

  	
  Indiana

  	
   

  	
  07/28/1998

  
	
  Comfort
  Systems USA (Ohio), Inc.

  	
   

  	
  Ohio

  	
   

  	
  10/10/1979

  
	
  Comfort
  Systems USA (Pasadena), L.P.

  	
   

  	
  Texas

  	
   

  	
  12/29/1999

  
	
  Comfort
  Systems USA (Southeast), Inc.

  	
   

  	
  Delaware

  	
   

  	
  03/24/1998

  
	
  Comfort
  Systems USA (Syracuse), Inc.

  	
   

  	
  New York

  	
   

  	
  03/08/1965

  
	
  Comfort
  Systems USA (Texas), L.P.

  	
   

  	
  Texas

  	
   

  	
  08/14/1998

  
	
  Comfort
  Systems USA G.P., Inc.

  	
   

  	
  Delaware

  	
   

  	
  08/12/1998

  
	
  Comfort
  Systems USA (Twin Cities), Inc.

  	
   

  	
  Minnesota

  	
   

  	
  08/01/2001

  
	
  Comfort
  Systems USA (Western Michigan), Inc.

  	
   

  	
  Michigan

  	
   

  	
  07/21/1989

  
	
  CS53
  Acquisition Corp.

  	
   

  	
  Delaware

  	
   

  	
  01/26/1999

  
	
  Design
  Mechanical, Incorporated

  	
   

  	
  Delaware

  	
   

  	
  10/30/1997

  
	
  Eastern
  Heating & Cooling, Inc.

  	
   

  	
  New York

  	
   

  	
  12/19/1988

  
	
  Eastern
  Refrigeration Co., Inc.

  	
   

  	
  New York

  	
   

  	
  01/30/1990

  
	
  Granite
  State Holdings Company, Inc.

  	
   

  	
  Delaware

  	
   

  	
  11/02/2005

  
	
  Granite
  State Plumbing & Heating LLC

  	
   

  	
  Delaware

  	
   

  	
  07/31/2001

  
	
  H&M
  Mechanical, Inc.

  	
   

  	
  Delaware

  	
   

  	
  06/25/1998

  
	
  Helm
  Corporation

  	
   

  	
  Colorado

  	
   

  	
  10/26/1972

  
	
  Hess
  Mechanical Corporation

  	
   

  	
  Delaware

  	
   

  	
  03/17/1998

  
	
  Hudson
  River Heating and Cooling, Inc.

  	
   

  	
  Delaware

  	
   

  	
  08/19/2005

  
	
  H-VAC
  Supply, L.L.C.

  	
   

  	
  Puerto Rico

  	
   

  	
  10/18/06

  

 

1

 

COMFORT SYSTEMS USA, INC. - SUBSIDIARIES

 

	
  ENTITY NAME

  	
   

  	
  DOMESTIC JURISDICTION

  	
   

  	
  FORMATION DATE

  
	
  Hydro-Kool,
  L.L.C.

  	
   

  	
  Delaware

  	
   

  	
  03/16/2006

  
	
  J&J
  Mechanical, Inc.

  	
   

  	
  Kentucky

  	
   

  	
  02/10/1981

  
	
  James
  Air Conditioning Enterprise Inc.

  	
   

  	
  Puerto Rico

  	
   

  	
  07/02/1991

  
	
  Martin
  Heating, Inc.

  	
   

  	
  Wyoming

  	
   

  	
  03/15/2000

  
	
  Mechanical
  Technical Services, L.P.

  	
   

  	
  Texas

  	
   

  	
  08/31/1999

  
	
  MJ
  Mechanical Services, Inc.

  	
   

  	
  Delaware

  	
   

  	
  12/12/1997

  
	
  North
  American Mechanical, Inc.

  	
   

  	
  Delaware

  	
   

  	
  03/17/1998

  
	
  Quality
  Air Heating and Cooling, Inc.

  	
   

  	
  Michigan

  	
   

  	
  09/10/1980

  
	
  Quality
  Professional Employer Organization LLC

  	
   

  	
  Delaware

  	
   

  	
  12/01/2004

  
	
  S.I.
  Goldman Company, Inc.

  	
   

  	
  Delaware

  	
   

  	
  03/17/1998

  
	
  S.M.
  Lawrence Co., Inc.

  	
   

  	
  Tennessee

  	
   

  	
  03/08/1973

  
	
  SA
  Associates, Inc.

  	
   

  	
  Utah

  	
   

  	
  03/27/1984

  
	
  Salmon &
  Alder, LLC

  	
   

  	
  Utah

  	
   

  	
  07/08/1996

  
	
  Seasonair, Inc.

  	
   

  	
  Maryland

  	
   

  	
  10/28/1966

  
	
  Sheren
  Plumbing & Heating, Inc.

  	
   

  	
  Delaware

  	
   

  	
  01/26/1999

  
	
  Temp-Right
  Service, Inc.

  	
   

  	
  Delaware

  	
   

  	
  09/25/1997

  
	
  The
  Capital Refrigeration Company

  	
   

  	
  Delaware

  	
   

  	
  08/06/1998

  
	
  Tri-City
  Mechanical, Inc.

  	
   

  	
  Arizona

  	
   

  	
  12/23/1977

  
	
  Western
  Building Services, Inc.

  	
   

  	
  Colorado

  	
   

  	
  06/12/1980

  

 

2

 

SCHEDULE 7.1

 

Existing
Indebtedness

 

NONE

 

1Exhibit 10.1

 

EMPLOYMENT AGREEMENT

 

THIS EMPLOYMENT AGREEMENT (“Agreement”) is made and entered into
by and between Karen S. Rohan an individual (“Employee”), and, Magellan Health
Services, Inc. on behalf of itself and its subsidiaries and affiliates
(collectively referred to herein as “Employer”) on this 28th day of July,
2009 effective as of August 1, 2009.

 

WHEREAS, Employer desires to obtain the services of Employee
and Employee desires to continue to render services to Employer; and

 

WHEREAS, Employer and Employee desire to set forth the terms
and conditions of Employee’s employment with Employer under this Agreement;

 

NOW, THEREFORE, in consideration of the foregoing recitals and of
the mutual covenants and agreements contained in this Agreement and Amendment No. 1
to this Agreement executed simultaneously herewith (hereinafter “Amendment No. 1”),
the parties agree as follows:

 

STATEMENT OF AGREEMENT

 

1.             Employment.  Employer
agrees to employ Employee, and Employee accepts such employment in accordance with
the terms of this Agreement, for a term of one year commencing on  August 1, 2009 and, unless terminated
earlier in accordance with the terms of this Agreement, ending on July 31,
2010. Thereafter, this Agreement shall automatically renew for twelve (12)
month periods, unless sooner terminated as provided herein.  If either party desires not to renew the
Agreement, they must provide the other party with written notice of their
intent not to renew the Agreement at least one hundred eighty (180) days prior
to the next renewal date. Non-renewal of the Agreement by either party will in
all cases result in termination of employment at the non-renewal date.  Employer’s notice of intent not to renew the
Agreement shall be deemed to be a termination without cause and the provisions
of Section 6(c) shall apply.

 

2.             Position and Duties of
Employee.  Employee will serve as President of Employer.
Employee agrees to serve in such position, or in such other positions as
Employer determines, and with agreement from Employee, from time to time, and
to perform the duties that Employer may assign from time to time to Employee,
at the same or greater base salary level and a similar location, until the
expiration of the term or such time as Employee’s employment with Employer is
terminated pursuant to this Agreement.

 

3.             Time Devoted. 
Employee
will devote his or her full business time and energy to the business affairs
and interests of Employer, and will use his or her best efforts and abilities
to promote Employer’s interests. 
Employee agrees that he or she will diligently endeavor to perform
services contemplated by this Agreement in a manner consistent with his or her
position and in accordance with the policies established by the Employer.  Excluding charitable and civic organizations,
Employee shall not serve on any outside boards of directors of any
organizations without the prior approval of the board of directors of Employer.

 

 

4.             Compensation.

 

(a)           Base Salary. 
Employer will pay Employee an annual base salary in the amount of
$530,000 which amount will be paid in semi-monthly intervals less appropriate
withholdings for federal and state taxes and other deductions authorized by
Employee.  Such salary will be subject to
review and adjustment by Employer not less than annually.

 

(b)          Annual Bonus. 
Employee’s annual target bonus opportunity will be 75% of Base Salary (“Target
Bonus”) under the Company’s Short-Term Incentive Plan (or successor annual
incentive plan applicable to similarly situated executive officers).   The actual payout to Employee will be based
on Company and individual performance during the measurement period.  Any such bonus payable to Employee shall be
paid to Employee during the period January 1 to March 15 of each year
in respect of service in the preceding year provided that Employee is still
employed by Employer at the time the bonus is paid. Subject to the conditions
for payment of bonus stated above in this paragraph, for the year 2009 Employee’s
Target Bonus shall be 37.5% of Base Salary (“2009 Target”).

 

(c)           Sign on Equity Grant. Employee will receive a grant of options
with a total value of $1,375,000, to purchase that number of shares equal to
$1,375,000 divided by the Black Sholes value of an option to purchase a share
of stock of Employer as determined by Employer on the first business day of the
month following the month of commencement of her employment under this
Agreement (the “Grant Date”) at an exercise price equal to the closing price of
a share of the Common Stock of Employer on NASDAQ on the Grant Date.  Such options shall be granted on terms
provided to other employees of Employer under the Employer’s 2008 Management
Incentive Plan on the Grant Date and shall vest ratably in annual installments
over a period of three years from the Grant Date.

 

(d)           Benefits.  Employee will
be eligible to participate in Employer’s Benefit Plans commensurate with his or
her position on a basis at least as favorable as other similarly situated
senior level executives of Employer. 
Employee will receive separate information detailing the terms of such
Benefit Plans and the terms of those plans will control.  Employee also will be eligible to participate
in any annual incentive plan and stock option plan applicable to Employee by
their terms respectively on terms at least as favorable as other similarly
situated senior level executives of Employer. 
Annual incentive payments, if any, will be determined and paid (unless
validly deferred if then permitted by the Company) between January 1 and March 15
of the year following the performance year. 
During the term of this Agreement, Employee will be entitled to such
other benefits of employment with Employer as are now or may later be in effect
for salaried employees of Employer, and also will be eligible to participate in
other benefits adopted for employees at his or her level.

 

2

 

5.             Expenses.  During the
term of this Agreement, Employer will reimburse Employee promptly for all
reasonable travel, entertainment, parking, business meetings and similar
expenditures in pursuance and furtherance of Employer’s business upon receipt
of reasonably supporting documentation as required by Employer’s policies
applicable to its employees generally, subject to Section 10(a) (iii).

 

6.             Termination.

 

(a)           Termination Due to Resignation. 
Employee may resign his or her employment at any time by giving 90 days
written notice of resignation to Employer. 
Except as otherwise set forth in this Agreement, Employee’s employment,
and Employee’s right to receive compensation and benefits from Employer, will
terminate upon the effective date of Employee’s termination.

 

If Employee resigns pursuant to this Section 6(a),
Employer’s only remaining financial obligation to Employee under this Agreement
will be to pay, subject to Section 10: (i) any earned but unpaid Base
Salary and accrued Paid Time Off through the effective date of Employee’s
termination; (ii) reimbursement of expenses incurred by Employee through
the effective date of termination which are reimbursable pursuant to this
Agreement; and (iii) the Employee’s vested portion of any Magellan
deferred compensation or other benefit plan.

 

(b)           Termination
with Cause.  Except as otherwise set forth in this
Agreement, Employee’s employment, and Employee’s right to receive compensation
and benefits from Employer, will be terminated for cause at the discretion of
Employer under the following circumstances:

 

(i)          Employee’s
commission of an act of fraud or dishonesty involving his or her duties on
behalf of Employer;

 

(ii)         Employee’s
failure or refusal to faithfully and diligently perform duties assigned to
Employee or other breach of any material term under this Agreement;

 

(iii)        Employee’s
failure or refusal to abide by Employer’s policies, rules, procedures or
directives; or

 

(iv)        Employee’s
conviction of a felony or a misdemeanor involving moral turpitude.

 

If Employee is terminated pursuant to
this Section 6(b), Employer’s only remaining financial obligation to
Employee under this Agreement will be to pay, subject to Section 10: (i) any
earned but unpaid Base Salary and accrued Paid Time Off through the date of
Employee’s termination; (ii) reimbursement of expenses incurred by
Employee through the date of termination which are reimbursable pursuant to
this Agreement; and (iii) the Employee’s vested portion of any Magellan
deferred compensation or other benefit plan.

 

For the events described in Sections 6(b) (ii) and
(iii), Employer will give Employee written notice of such deficiency and a reasonable
opportunity to cure such situation, but in no event more than thirty days.

 

3

 

(c)           Termination Without Cause. 
Employer may terminate this Agreement for any reason without cause at
any time.  “Without cause” termination
shall also include, but not be limited to (i) Employer’s notice to
Employee of its intent not to renew this Agreement in accordance with the
provisions of Section 1 hereof; (ii) Employer’s notice to Employee
that his or her position will be relocated to an office which is greater than
50 miles from Employee’s prior office location; or (iii) Employer’s
material reduction of Employee’s base salary to an amount less than the base
salary identified in Section 4(a) of this Agreement (a reduction with
an annualized value of 1.5% of Employee’s base pay or more, taking into account
any related effect of the reduction on annual incentive, shall be deemed
material); provided, however, that in the case of the reasons stated in (i), (ii) and
(iii) above, Employee must have given notice to Employer that an event
under clause (i), (ii) or (iii) has occurred, that the Employee
objects to such action by the Employer and the circumstance must remain
uncorrected by Employer after the expiration of 30 days after receipt of such
notice.  If Employer terminates this
Agreement without cause, Employer shall continue to pay, subject to Section 10,
Employee the compensation provided for in Section 4(a) of this
Agreement for a period of time equal to one year.  Such pay continuation is contingent upon
Employee executing Employer’s standard severance agreement, which incorporates
a general release, at the time of termination. 
In addition, Employee will receive (i) any earned but unpaid Base
Salary and accrued Paid Time Off through the date of Employee’s termination; (ii) reimbursement
of expenses incurred by Employee through the date of termination which are
reimbursable pursuant to this Agreement; and (iii) the Employee’s vested
portion of any Magellan Health Services, Inc. deferred compensation or
other benefit plan, including but not limited to, any stock option or
restricted stock grant plans, in accordance with the terms of those plans. If
Employee participates in any bonus plan(s), including but not limited to, any
long term bonus plan(s), Employer may in its sole discretion pay Employee, on a
pro-rata basis, the amount of such plan(s) as Employee would have earned
if Employee had been employed for the full calendar year. The pro-ration will
be determined by the fraction of the number of months in the calendar year in
which the Employee worked (rounded to the nearest whole month) divided by 12
months. In determining whether a pro-rata bonus shall be paid to Employee, the
Employer may consider factors that include but are not limited to (i) the
Employee’s target bonus (percentage of base salary), (ii) the Company’s
financial performance and (iii) the Employee’s achievement of his or her
specific performance objectives. At the time of termination, Employer shall determine
the Employee’s bonus amount, if any. Notwithstanding the foregoing, any payout
of such bonus amount shall be at the Employer’s sole discretion and shall be
contingent upon the Company satisfying the financial targets established by the
Company’s Board of Directors. Payment of bonus, if any, shall be made at the
time of the annual bonus payout for all employees, subject to Section 4(b).
Also, notwithstanding the foregoing, Employer shall have sole discretion to
make any additional payments to Employee. 
COBRA coverage may be elected to continue health,
dental, and vision insurance during the Severance Period and beyond. If COBRA
coverage is elected, Employee will pay only the employee contribution rate for
the health insurance portion of the COBRA coverage during the Severance
Period.  Dental and vision coverage under
COBRA will be billed at the full COBRA rate.

 

(d)           Automatic Termination. 
This Agreement will terminate automatically upon the death or permanent
disability of Employee.  Employee will be
deemed to be “Disabled” or to suffer from a “Disability” within the meaning of
this Agreement if, because of a physical or mental 

 

4

 

impairment,
Employee has been unable to perform the essential functions of his or her
position, with or without reasonable accommodation, for a period of 180
consecutive days, or if Employee can reasonably be expected to be unable to
perform the essential functions of his or her position for such period.  If Employee is terminated pursuant to this Section 6(d),
Employee or her estate will receive, subject to Section 10, (i) any
earned but unpaid Base Salary and accrued Paid Time Off through the date of
Employee’s termination; (ii) reimbursement of expenses incurred by
Employee through the date of termination which are reimbursable pursuant to
this Agreement; and (iii) the Employee’s vested portion of any Magellan
Health Services retirement, deferred compensation or other benefit plan,
including but not limited to, any stock option or restricted stock grant plans,
in accordance with the terms of those plans. If Employee participates in any
bonus plan(s), including but not limited to, any long term bonus plan(s),
Employer may at its sole discretion pay Employee or her estate, on a pro-rata
basis, the amount of such plan(s) as Employee would have earned if
Employee had been employed for the full calendar year. The pro-ration will be
determined by the fraction of the number of months in the calendar year in
which the Employee worked (rounded to the nearest whole month) divided by 12
months.  In determining whether a
pro-rata bonus shall be paid to Employee or her estate, the Employer may
consider factors that include but are not limited to (i) the Employee’s
target bonus (percentage of base salary); (ii) the Company’s financial
performance; and (iii) the Employee’s achievement of her specific
performance objectives. At the time of termination, Employer shall determine
the Employee’s bonus amount, if any. Notwithstanding the foregoing, any payout
of such bonus amount shall be at Employer’s sole discretion and shall be
contingent upon the Company satisfying the financial targets established by the
Company’s Board of Directors. Payment of bonus, if any, shall be made at the
time of the annual bonus payout for all employees, subject to Section 4(b).

 

(e)           Effect of Termination. 
Except as otherwise provided for in this Section 6, upon
termination of this Agreement, all rights and obligations under this Agreement
will cease except for (i) the rights and obligations under Sections 4 and
5 to the extent Employee has not been compensated or reimbursed for services
performed prior to termination (the amount of compensation to be prorated for
the portion of the pay period prior to termination); (ii) the rights and
obligations under Sections 7, 8 and 9; and (iii) all procedural and
remedial provisions of this Agreement.

 

7.             Protection of Confidential
Information/Non-Competition/Non-Solicitation.

 

Employee covenants and agrees as follows:

 

(a)(i)        Confidential
Information:  During Employer’s
employment of Employee and for a period of one year following the termination
of Employee’s employment for any reason, Employee will not use or disclose,
directly or indirectly, for any reason whatsoever or in any way, other than at
the direction of Employer during the course of Employee’s employment or after
receipt of the prior written consent of Employer, any confidential information
of Employer or its controlled subsidiaries or affiliates, that comes into her
knowledge during her employment by Employer (the “Confidential Information” as
hereinafter defined).  The obligation not
to use or disclose any Confidential Information will not apply to any
Confidential Information that is or becomes public knowledge through no fault
of Employee, and that may be utilized by the public without any direct or
indirect obligation to Employer, but the termination of the obligation for
non-use or nondisclosure by 

 

5

 

reason of such information becoming public will extend only from the
date such information becomes public knowledge. 
The above will be without prejudice to any additional rights or remedies
of Employer under any state or federal law protecting trade secrets or other
information.

 

(a)(ii)       Trade Secrets. 
Employee shall hold in confidence all Trade Secrets of Employer, its
direct and indirect subsidiaries or affiliates, and/or its customers that came
into her knowledge during her employment by Employer and shall not disclose, publish
or make use of at any time after the date hereof such Trade Secrets, other than
at the direction of Employer, for as long as the information remains a Trade
Secret.

 

(a)(iii)      For purposes of this Agreement, the
following definitions apply:

 

“Confidential Information”
means any data or information, other than Trade Secrets, that is valuable to
Employer and not generally known to the public or to competitors of
Employer.  It is understood that the term
“Confidential Information” does not mean and shall not include information
which:

 

(a)         is or subsequently becomes publicly
available without the breach of any obligation owed to the Employer;

 

(b)        is disclosed with the prior written
approval of the Employer; or

 

(c)         is obligated to be produced under order of a court of
competent jurisdiction or a valid administrative, congressional, or other
subpoena, civil investigative demand or similar process; provided,
however, that upon issuance of any such order, subpoena, demand or
other process, the Employee shall promptly notify the Employer and shall
provide the Employer with an opportunity (if then available) to contest, at the
Employer’s expense, the propriety of such order or subpoena (or to arrange for
appropriate safeguards against any further disclosure by the court or
administrative or congressional body seeking to compel disclosure of such
Confidential Information).

 

“Trade Secret” means information including, but not limited to, any
technical or non-technical data, formula, pattern, compilation, program,
device, method, technique, drawing, process, financial data, financial plan,
product plan, list of actual or potential customers or suppliers or other
information similar to any of the foregoing, which (i) derives economic
value, actual or potential, from not being generally known to, and not being
readily ascertainable by proper means by, other persons who can derive economic
value from its disclosure or use; and (ii) is the subject of efforts that
are reasonable under the circumstances to maintain its secrecy.

 

(a)(iv)     Interpretation. 
The restrictions stated in paragraphs 7(a)(i) and 7(a)(ii) are
in addition to and not in lieu of protections afforded to trade secrets and
confidential information under applicable state law.  Nothing in this Agreement is intended to or
shall be interpreted as diminishing or otherwise limiting Employer’s right
under applicable state law to protect its trade secrets and confidential
information.

 

6

 

(b)           Non-Competition.

 

(i)           Employee
covenants and agrees that during the term of her employment with Employer and
for a period of one year immediately following the termination of said
employment for any reason, she will not, on her own behalf or as a partner,
officer, director, employee, agent, or consultant of any other person or
entity, directly or indirectly, engage or attempt to engage in the business of
providing or selling services in the United States that are services offered by
Employer or any of its subsidiaries and affiliates at the time of the
termination of this Agreement, unless waived in writing by Employer in its sole
discretion. Employee recognizes that the above restriction is reasonable and
necessary to protect the interest of the Employer and its subsidiaries and affiliates.

 

(ii)          During
the one year period immediately following Employee’s termination from her
employment with Employer, Employee may submit a written request to Employer
outlining a proposed employment or other employment opportunity that Employee
is considering. Employer will review such request, and make a determination
within ten (10) business days following receipt of such request, in its
sole discretion, as to whether the opportunity would constitute a breach of the
non-competition covenant.

 

(c)           Non-Solicitation.  To protect the
goodwill of Employer and its controlled subsidiaries and affiliates, or the
customers of Employer and its subsidiaries and affiliates, Employee agrees
that, for a period of one year immediately following the termination of her
employment with Employer, she will not, without the prior written permission of
Employer, directly or indirectly, for herself or on behalf of any other person
or entity, solicit, divert away, take away or attempt to solicit or take away
any Customer of Employer for purposes of providing or selling services that are
offered by Employer, if Employer, or the particular subsidiary or affiliate of
Employer, is then still engaged in the sale or provision of such services at
the time of the solicitation.  For purposes
of this Section 7(c), “Customer” means any individual or entity to whom
Employer or its controlled subsidiaries or affiliates has provided, or
contracted to provide, services and with whom Employee had, alone or in
conjunction with others, contact with or knowledge of, during the twelve months
prior to the termination of his or her employment.  For purposes of this Section 7(c),
Employee had contact with or knowledge of a customer if (i) Employee had
business dealings with the customer on behalf of Employer or its subsidiaries
or affiliates; (ii) Employee was responsible for supervising or
coordinating the dealings between the customer and Employer or its subsidiaries
or affiliates; or (iii) Employee obtained or had access to trade secrets
or confidential information about the customer as a result of Employee’s
association with Employer or its subsidiaries or affiliates.

 

(d)           Solicitation or Hiring of Employees.  During
Employer’s employment of Employee and for a period of one year following the
termination of Employee’s employment with Employer for any reason, Employee
will not, on her own behalf or on behalf of any other person or

 

7

 

entity, solicit
for employment or hire, directly or indirectly, any employee of Employer or any
of its subsidiaries or affiliates who was employed with Employer or its
subsidiaries or affiliates within the one year period immediately prior to
Employee’s termination.

 

8.             Work Made for Hire.  Employee agrees that any written program materials,
protocols, research papers, other writings, as well as improvements,
inventions, new techniques, programs or products (the “Work”) made or developed
by Employee within or after normal working hours relating to the business or
activities of Employer or any of its subsidiaries, shall be deemed to have been
made or developed by Employee solely for the benefit of Employer and will be
considered “work made for hire” within the meaning of the United States
Copyright Act, Title 17, United States Code, which vests all copyright interest
in and to the Work in the Employer.  In the event, however, that any court
of competent jurisdiction finally declares that the Work is not or was not a
work made for hire as agreed, Employee agrees to assign, convey, and transfer
to the Employer all right, title and interest Employee may presently have or
may have or be deemed to have in and to any such Work and in the copyright of
such work, including but not limited to, all rights of reproduction,
distribution, publication, public performance, public display and preparation
of derivative works, and all rights of ownership and possession of the original
fixation of the Work and any and all copies. Additionally, Employee agrees to
execute any documents necessary for Employer to record and/or perfect its
ownership of the Work and the applicable copyright.

 

9.             Property of Employer. 
Employee
agrees that, upon the termination of Employee’s employment with Employer,
Employee will immediately surrender to Employer all property, equipment, funds,
lists, books, records and other materials of Employer or its controlled
subsidiaries or affiliates in the possession of or provided to Employee.

 

10.          Special
Rules for Compliance with Code Section 409A.  This Section 10 serves to ensure
compliance with applicable requirements of Section 409A of the Internal
Revenue Code (the “Code”).  Certain
provisions of this Section 10 modify other provisions of this
Agreement.  If the terms of this Section 10
conflict with other terms of the Agreement, the terms of this Section 10
control.

 

(a)           Timing of Certain Payments.  Payments and benefits specified under this
Agreement shall be paid at the times specified as follows:

 

(i)            Accrued
Payments at Termination. 
Sections 6(a) — (d) of this Agreement and Section I.1 (ii) of
the Amendment No. 1 to the Employment Agreement relating to Change in
Control (the “CIC Amendment”) require payment of amounts earned but unpaid or
accrued at the date of Employee’s termination. 
Unless the amount is payable under an applicable plan, program or
arrangement on explicit terms providing for a delay in payment compliant with
Code Section 409A, these amounts shall be payable at the date the amounts
otherwise would have been payable under the applicable plans, programs and
arrangements in the absence of termination but in no event more than 30 days
after Employee’s termination of employment (subject to 10(d)).

 

8

 

(ii)                                  Gross-Up.  Gross-up payments payable under the CIC
Amendment will be paid as promptly as practicable after the excise tax is
payable by Employee, and in any event must be paid no later than the end of
Employee’s taxable year next following the taxable year in which Employee
remits the excise tax or related taxes to the taxing authorities; provided,
however, that any gross-up payment will be subject to Section 10(d) if
applicable under Section 409A.

 

(iii)                               Expense
Reimbursements.  Any payment under Section 5
or otherwise as an expense reimbursement hereunder must be paid no later than
the end of Employee’s taxable year next following the taxable year in which
Employee incurred the reimbursable expense.

 

(iv)                              Other Payments.  Any other payment or benefit required under
this Agreement to be paid in a lump sum or otherwise to be paid promptly at or
following a date or event shall be paid within five days after the due date,
subject to Section 10(b), (c) and (d) below.

 

(v)                                 No Influence on Year of
Payment.  In the case of any payment
under the Agreement payable during a specified period of time following a
termination or other event (including any payment for which the permitted
payment period begins in one calendar year and ends in a subsequent calendar year),
Employee shall have no right to elect in which year the payment will be made,
and the Company’s determination of when to make the payment shall not be
influenced in any way by Employee.

 

(b)           Special Rules for
Severance Payments.  In the case of
payments in the nature of continuation of payments under Section 4(a) required
under Section 6(c) (“Pre-CIC Severance Payments”) and severance
payable under Section I.1(iii) of the CIC Amendment  (the “CIC Severance Payments” and, with the “Pre-CIC
Severance Payment, the “Severance Payments”), the following rules will
apply:

 

(i)                                     Separate
Payments.  Each monthly
installment of the Pre-CIC Severance Payments shall be deemed to be a separate
payment for all purposes, including for purposes of Section 409A.  The portion of the CIC Severance Payments
that exceeds the Pre-CIC Severance Payments (or the present value thereof, if
such present valuing is required to comply with Section 409A), and the
portion attributable to inclusion of Target Bonus in the calculation of CIC
Severance Payments (or, if so required, the present value thereof) as compared
to Pre-CIC Severance Payments, shall be deemed to be a separate payment for all
purposes, including for purposes of Section 409A (the “Separate Lump Sum”).

 

(ii)                                  Severance Payment
Timing Rules.  Each
installment of Pre-CIC Severance Payments shall be treated as follows for
purposes of Section 409A:

 

(A)      Installments payable during
the year of termination and by March 15 of the year following termination
shall, to the maximum extent possible, be deemed to 

 

9

 

constitute a short-term deferral under Treasury Regulation § 1.409A-1(b) (4);

 

(B)  Installments payable during the period within six months
after termination, to the extent not covered by Section 10(b)(ii)(A),
shall, to the maximum extent possible, be deemed to constitute amounts payable
under the “two-year/two-times” exclusion from being a deferral of compensation
under Treasury Regulation § 1.409A-1(b)(9)(iii);

 

(C)  To the extent that the “two-year/two-times” exclusion from
being a deferral of compensation under Treasury Regulation § 1.409A-1(b)(9)(iii) has
not been fully applied by virtue of Section 10(b)(ii)(B), installments
payable as Pre-CIC Severance Payments shall be excluded, to the maximum extent
possible, by such “two-years/two-times” exclusion (applied in the reverse order
of payment of the installments — that is, to the latest installments first);
and

 

(D) All installments of the Pre-CIC Severance Payment not covered
by Section 10(b)(ii)(A), (B) and (C) shall be paid at the
applicable installment payment date in compliance with Section 409A,
except that any such payment shall be subject to the six-month delay rule of
Section 10(d).

 

The portions of the CIC Severance Payments that correspond to the
Pre-CIC Severance Payments (that is, deemed to be the same payment for purposes
of Section 409A) shall be governed by Section 10(b)(ii)(A) — (D) above,
provided that amounts of the CIC Severance Payments corresponding to Pre-CIC
Severance Payments covered by Section 10(b)(ii)(A), (B), and (C) above
shall be payable as a lump sum within five days after termination of
employment.   The Separate Lump Sum shall
be treated as follows for purposes of Section 409A:

 

(E)         The Separate
Lump Sum shall, to the maximum extent possible, be deemed to constitute a
short-term deferral under Treasury Regulation § 1.409A-1(b) (4);

 

(F)  To the extent that the “two-year/two-times” exclusion from
being a deferral of compensation under Treasury Regulation § 1.409A-1(b)(9)(iii) has
not been fully applied by virtue of Section 10(b)(ii)(B) and (C), the
Separate Lump Sum, to the extent not covered by Section 10(b)(ii)(E),
shall, to the maximum extent possible, be deemed to constitute amounts payable
under the “two-year/two-times” exclusion; and

 

(G)  Any portion of the Separate Lump Sum not covered by Section 10(b)(ii)(E) and  (F) shall be paid within five days after
the qualifying termination of employment in compliance with Section 409A,
except that any such payment shall be subject to the six-month delay rule and
other provisions of Section 10(d) and except to the extent that the
Separate Lump Sum is not deemed to be a valid separate payment from amounts
governed by Section 10(b)(ii)(D).

 

Any portions of the CIC Severance Payments corresponding to Pre-CIC
Severance Payments governed by Section 10(b)(ii)(D) shall be payable,
subject to Section 10(d), in a lump sum within five days after the
qualifying termination of employment if such termination has occurred within
two years following a change in the ownership of the Company, a change in
effective control of the Company, or a change in the ownership 

 

10

 

of a substantial portion of the assets of the Company as defined in
Treasury Regulation § 1.409A-3(i)(10) (a “409A Change in Control”),
and in any other case shall be payable at the applicable time under Section 10(b)(ii)(D).

 

(c)           Special Rules for
Other Payments.  With respect to
amounts payable under Section I.1 (ii) of the CIC Amendment (relating
to incentive awards), the following rules will apply:

 

(i)                                     Separate
Payments.  The amounts
payable thereunder shall each be deemed to be a separate payment for all
purposes, including for purposes of Section 409A (subject to any further
designation of separate payments explicitly made in any separately identifiable
plan or arrangement for purposes of Section 409A).

 

(ii)                                  Payment Timing
Rules.  A payment referenced in Section 10(c)(i) shall
be payable as a lump-sum payment within five days after termination of
employment if and to the extent that (A) the separate payment constitutes
short-term deferral under Treasury Regulation § 1.409A-1(b)(4), (B) the
amount of the separate payment  not
covered by Section 10(c)(ii)(A) can be paid under the “two-year/two-times”
exclusion from being a deferral of compensation under Treasury Regulation §
1.409A-1(b)(9)(iii), after first applying such exclusion under Section 10(b)(ii),
(C) the separate payment is covered by any other applicable exclusion or
exemption under Treasury Regulation § 1.409A-1(b)(9) (provided that the
exclusion under subsection (b)(9)(v)(D) shall be used only to the extent
not relied upon for other payments or benefits) and (D), the six-month delay rule in
Section 10(d) does not apply to the separate payment (except as
otherwise provided in Section 10(c)(iii)). 
Any other such separate payment (i.e., amounts subject to the six-month
delay rule) shall be subject to the six-month delay rule of Section 10(d),
subject to Section 10(c) (iii). 
Any delay in payment under the six-month delay rule shall not limit
Employee’s rights under this Agreement to not forfeit a specified item of
compensation as a result of Employee’s termination.

 

(iii)                               Payments of
409A Deferrals For a Termination Not Within Two Years After a 409A Change in
Control.  If a payment referenced in Section 10(c)(ii) is
a direct payment or a substitute or replacement for a right to payment (the “Original
Payment Right”) that constitutes a deferral of compensation under Section 409A,
and if either (A) the Change in Control does not involve a 409A Change in
Control, or (B) Employee’s termination triggering payments hereunder did
not occur within the two-year period following a 409A Change in Control, then
such payments (i.e., payments that constitute deferrals under Section 409A)
must be paid at the times and in the form applicable to a separation from
service under the terms of the Original Payment Right, subject to Section 10(d).   If in no circumstances was such payment
payable upon a separation from service under the Original Payment Right, then
this Section 10(c)(iii) shall not apply.

 

(d)           Six-Month Delay Rule.

 

11

 

(i)                                     General Rule.  The six-month delay rule will apply to
payments and benefits under the Agreement if all of the following conditions
are met:

 

(A)      Employee is a “key employee” (as defined in Code Section 416(i) without
regard to paragraph (10) thereof) for the year in which the termination
occurs.  The Company will determine
status of “key employees” annually, under administrative procedures applicable
to all Section 409A plans and arrangements and applied in accordance with
Treasury Regulation § 1.409A-1(i).

 

(B)        The Company’s stock is publicly traded on an
established securities market or otherwise.

 

(C)        The payment or benefit in question is a deferral of
compensation and not excepted, exempted or excluded from being such by the
short-term deferral rule, or the “two-years/two-times” rule in Treasury
Regulation § 1.409A-1(b)(9)(iii), or any other exception, exemption or
exclusion; provided, however, that the exclusion under Treasury Regulation
§ 1.409A-1(b)(9)(v)(D) shall apply only if and to the extent that it
is not necessary to apply to any other payment or benefit payable within six
months after Employee’s termination.

 

(ii)                                  Effect of Rule.  If it applies, the six-month delay rule will
delay a payment or benefit which otherwise would be payable under this
Agreement within six months after Employee’s separation from service.

 

(A)      Any delayed payment or benefit shall be paid on the
date six months after Employee’s separation from service.

 

(B)        During the six-month delay period, accelerated
payment will occur in the event of the Employee’s death but not for any other
reason (including no acceleration upon a Change in Control), except for
accelerations expressly permitted under Treasury Regulation § 1.409A-1 — A-6.

 

(C)        Any payment that is not triggered by a termination,
or is triggered by a termination but would be made more than six months after
the termination (without applying this six-month delay rule), or would be
payable at a fixed date not tied to termination that is earlier than the
expiration of the six-month delay period, shall be unaffected by the six-month
delay rule.

 

(iii)                               Limit to
Application of Six-Month Delay Rule.  If the terms of this Agreement or other plan
or arrangement or document relating to this Agreement or payments hereunder
impose this six-month delay rule in circumstances in which it is not
required for compliance with Section 409A, those terms shall not be given
effect.

 

(e)           Other Provisions.

 

12

 

(i)                                     Good Reason.  Termination for “Good Reason” as defined
under the CIC Amendment  and termination
without cause under the related rules governing constructive termination
not for cause are intended to qualify as “involuntary separations” within the
meaning of Treasury Regulation § 1.409A-1(n)(2)(i), and shall be so construed and
interpreted.

 

(ii)                                  Non-transferability.  No right to any payment or benefit under this
Agreement shall be subject to anticipation, alienation, sale, transfer,
assignment, pledge, encumbrance, attachment, or garnishment by Employee’s
creditors or creditors of any of Employee’s beneficiaries.

 

(iii)                               No Acceleration.  The timing of payments and benefits under the
Agreement which constitute a deferral of compensation under Code Section 409A
may not be accelerated to occur before the time specified for payment
hereunder, except to the extent permitted under Treasury Regulation
§ 1.409A-3(j)(4) or as otherwise permitted under Code Section 409A
without Employee incurring a tax penalty.

 

(iv) Timing Relating to Release.  Other provisions of this Agreement (including
this Section 10) notwithstanding, if Employee is obligated to execute a
release, non-competition, or other agreement as a condition to receipt of a
payment hereunder, the Company will supply to Employee a form of such release
or other document not later than the date of Employee’s termination, which must
be returned within the time period required by law and must not be revoked by
Employee within the applicable time period in order for Employee to satisfy any
such condition, such that it becomes legally effective.  If any amount payable during a fixed period
following Employee’s termination is subject to a requirement or condition
requiring Employee’s execution of a release (including any case in which such
fixed period would begin in one year and end in the next), the Company, in
determining the time of payment of any such amount, will not be influenced by
the timing of any action by Employee including execution of such a release or
other document and expiration of any revocation period.  In particular, the Company will be entitled
in its discretion to deposit any payment hereunder in escrow at any time during
such fixed period, so that such deposited amount is constructively received and
taxable income to Employee upon deposit (it may be constructively received even
in the absence of such deposit) but with distribution from such escrow
remaining subject to Employee’s execution and non-revocation of such release or
other document.

 

(v)                                 Definition of
Termination of Employment.  For
purposes of this Agreement, the term “termination of employment” shall mean a
separation from service as defined in Treasury Regulation § 1.409A-1(h);
provided, however, that if a date for termination of employment is designated
by the Company but Employee has a separation from service prior to such
designated date, the designated termination date shall be deemed the date of
termination for any compensation payable under this Agreement that would fully
qualify for the short-term deferral exception under Treasury Regulation § 

 

13

 

1.409A-1(b)(4) and/or the “two-year/two-times” exclusion from
being a deferral of compensation under Treasury Regulation § 1.409A-1(b)(9)(iii) under
both circumstances (i.e., assuming the separation from service date was the
termination date hereunder or that the designated termination of employment
date was the termination date hereunder).

 

(vi)                              Continued
Medical Coverage.  Any continued medical coverage following
termination of employment, to the extent provided under Section 6 or any
other provision of this Agreement, if and to the extent such medical coverage
(or the Company’s contributions or reimbursement of such coverage) represents
taxable income to Employee, is intended to qualify as excluded from being a
deferral of compensation under Treasury Regulation § 1.409A-1(b)(9)(v)(B), and
the rights to such coverage shall be limited to the extent necessary to qualify
thereunder.

 

(vii)                           References to
Other Plans.  References
in the Agreement to the obligation of the Company to pay amounts under other
plans, including Employee’s vested portion of any Magellan deferred
compensation or other benefit plan, shall not be construed to modify the timing
of payment, which shall be governed by such other plans..

 

11.          Remedies. 
An actual or threatened violation by Employee of the covenants and
obligations set forth in Sections 7, 8 and 9 will cause irreparable harm to
Employer or its controlled subsidiaries or affiliates and that the remedy at
law for any such violation will be inadequate. Employee agrees, therefore, that
Employer or its controlled subsidiaries or affiliates will be entitled to
appropriate equitable relief, including, but not limited to, a temporary
restraining order and a preliminary injunction, without the necessity of
posting a bond.  Employee will also be
entitled to seek equitable relief against Employer in connection with
enforcement of the covenants and obligations set forth in Sections 7, 8 and 9.  The provisions of Sections 4, 5, 6, 7, 8 and
9 will survive the termination of this Agreement in accordance with the terms
set forth in each Section.

 

12.          Arbitration. 
Except for an action for injunctive relief as described in Section 11,
any disputes or controversies arising under this Agreement will be settled by
arbitration in Avon, Connecticut in accordance with the rules of the
American Arbitration Association relating to the arbitration of employment
disputes.  The determination and findings
of such arbitrators will be final and binding on all parties and may be
enforced, if necessary, in any court of competent jurisdiction.  The costs and expenses of the arbitration
shall be paid for by Employer, but each party shall pay its own attorney’s fees
and other litigation costs.

 

Employee’s
Initials

 

13.          Notices. 
Any notice or request required or permitted to be given to any party
will be given in writing and, excepting personal delivery, will be given at the
address set forth below or at such other address as such party may designate by
written notice to the other party to this Agreement:

 

14

 

	
  To Employee:

  	
   

  	
  Name: Karen S.
  Rohan

  	
   

  	
   

  
	
  Address on file

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  To Employer:

  	
   

  	
  Magellan Health
  Services, Inc.

  	
   

  	
   

  
	
   

  	
   

  	
  55 Nod Road

  	
   

  	
   

  
	
   

  	
   

  	
  Avon, CT 06001

  	
   

  	
   

  
	
   

  	
   

  	
  Attention:
  General Counsel

  	
   

  	
   

  

 

Each notice given
in accordance with this Section will be deemed to have been given, if
personally delivered, on the date personally delivered; if delivered by
facsimile transmission, when sent and confirmation of receipt is received; or,
if mailed, on the third day following the day on which it is deposited in the
United States mail, certified or registered mail, return receipt requested,
with postage prepaid, to the address last given in accordance with this
Section.

 

14.          Headings.  The
headings of the sections of this Agreement have been inserted for convenience
of reference only and should not be construed or interpreted to restrict or
modify any of the terms or provisions of this Agreement.

 

15.          Severability. 
If any provision of this Agreement is held to be illegal, invalid, or
unenforceable under present or future laws effective during the term of this
Agreement, such provision will be fully severable and this Agreement and each
separate provision will be construed and enforced as if such illegal, invalid
or unenforceable provision had never comprised a part of this Agreement, and
the remaining provisions of this Agreement will remain in full force and effect
and will not be affected by the illegal, invalid or unenforceable provision or
by its severance from this Agreement.  In
addition, in lieu of such illegal, invalid or unenforceable provision, there
will be added automatically, as a part of this Agreement, a provision as
similar in terms to such illegal, invalid or unenforceable provision as may be
possible and be legal, valid and enforceable, to the extent such reformation is
allowable under applicable law.

 

16.          Governing Law. 
This Agreement and all issues relating to the validity, interpretation,
and performance will be governed by, interpreted,
and enforced under the laws of the State of Connecticut.

 

17.          Binding Effect. 
This Agreement and Amendment No. 1 hereto will be binding upon and
shall inure to the benefit of each party and each party’s respective
successors, heirs and legal representatives. 
This Agreement may not be assigned by Employee to any other person or
entity but may be assigned by Employer to any subsidiary or affiliate of
Employer or to any successor to or transferee of all, or any part, of the stock
or assets of Employer.

 

18.          Employer Policies, Regulations, and
Guidelines for Employees.  Employer may
issue policies, rules, regulations, guidelines, procedures or other material,
whether in the form of handbooks, memoranda, or otherwise, relating to its
Employees.  These materials are general 

 

15

 

guidelines for
Employee’s information and will not be construed to alter, modify, or amend
this Agreement for any purpose whatsoever.

 

19.           Background Check, Drug
Screening, Employment Eligibility.  This
Agreement  and Employee’s employment
hereunder are subject to and conditioned upon: (i) satisfactory completion
of a background investigation of Employee by Employer at Employer’s expense; (ii) Employee’s
receipt of a drug screening test conducted in accordance with Employer’s
customary practice for all new employees, with results acceptable to Employer
in accordance with such practice, to be arranged by Employer and Employer at
Employer’s expense; (iii) Employee shall complete an Officer’s
Questionnaire containing answers satisfactory to Employer, and (iv) Employee  shall provide Employer documentation
indicating  her eligibility to work
within the United States pursuant to The Immigration Reform and Control Act of
1986.   Notwithstanding anything herein
to the contrary, the effective date of this Agreement shall be the date on
which the conditions contained in this Section 19 are fulfilled.

 

20.           Indemnification.   Employer shall indemnify Employee  for her services as an officer of Employer to
the fullest extent permitted by Delaware law, subject to all requirements and
conditions of such law.

 

21.          Entire Agreement. 
This Agreement and Amendment No. 1 embodies the entire agreement
and understanding between the parties with respect to its subject matter and
supersedes all prior agreements and understandings, whether written or oral,
relating to its subject matter, unless expressly provided otherwise within this
Agreement.  No amendment or modification
of this Agreement will be valid unless made in writing and signed by each of
the parties.  No representations,
inducements, or agreements have been made to induce either Employee or Employer
to enter into this Agreement, which are not expressly set forth within this
Agreement.    Employee and Employer
acknowledge and agree that Employer’s controlled subsidiaries and affiliates
are express third party beneficiaries of this Agreement.

 

IN
WITNESS WHEREOF,
the parties hereto have executed this Agreement on the     day of 
August, 2009 but shall not become effective until the conditions
contained in Section 19 have been fulfilled.

 

 

	
   

  	
   

  	
  MAGELLAN
  HEALTH SERVICES, INC.

  
	
  “Employee”

  	
   

  	
  “Employer”

  
	
   

  	
   

  	
   

  
	
  /s/ Karen S.
  Rohan

  	
   

  	
   

  
	
  Karen S. Rohan

  	
  By:

  	
  /s/ René Lerer

  
	
   

  	
   

  	
  Name: René
  Lerer, M.D.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Title: Chairman
  and Chief Executive

  

 

16

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