Document:

Professional and Leadership Incentive Plan - FY 2006

 Exhibit 10.7 
  
 CISCO SYSTEMS, INC. 
  
 PROFESSIONAL AND LEADERSHIP INCENTIVE PLAN 
 FY 2006 
  

	I.	INTRODUCTION 

  

	 	A.	The Objective of the Professional and Leadership (P&L) Incentive Plan (the “Plan” or the “P&L Plan”) is to provide eligible employees of Cisco
Systems, Inc. (“Cisco”) and its “subsidiaries” (as defined in Paragraph III.C. below), with the opportunity to receive a payment for their contributions to the success and profitability of Cisco. Participation in the Plan and the
payment of any sums hereunder shall be in the sole and absolute discretion of Cisco. “Cisco and its subsidiaries” are referred to herein as “the Company.” 

  

	 	B.	Participants: This Plan applies solely to regular employees of Cisco Systems, Inc. and its subsidiaries in salary grades 1 through 14, 083, 084, 090, 150, 200, and 888, whom
Cisco in its sole discretion determines meet the eligibility requirements set forth in Section II (“Plan Participants”). For purposes of this Plan and unless otherwise prohibited by applicable law, the term “regular employee”
means an individual who is deemed by Cisco to be both an employee of the Company and employed for an unspecified or indefinite period of time. 

  

	 	C.	Effective Date: This Plan is only effective for Cisco’s fiscal year 2006 beginning July 31, 2005, through July 29, 2006 (the “Fiscal Year”). This Plan is
limited in time and will expire automatically on July 29, 2006 (“Expiration Date”). 

  

	 	D.	Cisco Authority: Cisco reserves the right to interpret this Plan document on a fully discretionary basis; and to take any other action in relation to administration of the
Plan including but not limited to determine employee eligibility for participation in the Plan and to determine the amount, if any, to be paid under the Plan. Nothing in this Plan is intended to create an entitlement to any employee for any
incentive payment hereunder except as Cisco may determine in its discretion. Except as otherwise herein provided, Cisco’s authority as set forth herein shall be exercised by Cisco’s Senior Vice President of Human Resources and such other
persons to whom he/she expressly delegates authority. 

  

	 	E.	Changes in Plan: Cisco reserves the right to modify or terminate the Plan in total or in part, at any time. Any such modification or termination must be approved in writing
by Cisco’s President/CEO or Senior Vice President of Human Resources. If any change affects an executive officer of Cisco who is subject to Section 16 of the Exchange Act of 1934 (an “Executive Officer”), it must be approved in
writing by resolution of the Cisco Systems, Inc. Compensation & Management Development Committee of the Board of Directors (the “Compensation Committee”). 

			
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	 	F.	Entire Agreement: This Plan, as it may be modified in accordance with the foregoing, constitutes the entire writing and understanding regarding the subject matter of this
Plan and supersedes all prior bonus and incentive plans, employment contracts whether maintained by Cisco, any holding company, subsidiary, or affiliate thereof and any written and/or oral agreement, understanding, or representations regarding the
subject matter of this Plan. All payments under this Plan are fully discretionary payments. Participation in this Plan during the Fiscal Year will not convey any entitlement to participate in this or future plans or to the same or similar bonus
benefits, nor does this Plan constitute a guarantee or establish an obligation, for Cisco to maintain a similar plan or award similar bonus benefits in the future. Payments under this Plan are a discretionary and extraordinary item of compensation
that are outside the normal, regular or expected compensation, and in no way represent any portion of a Plan Participant’s salary, compensation, or other remuneration for the purpose of calculating any of the following payments: termination,
severance, redundancy, end-of-service premiums, bonuses, long-service awards, overtime premiums, pension or retirement benefits, and any other similar payments and extra benefits. 

  

	II.	ELIGIBILITY AND INCENTIVE PLAN ELEMENTS 

  

	 	A.	Eligibility: Assuming all other conditions of the Plan are met and that Cisco determines in its sole discretion to make payments under the Plan, to be considered for a
discretionary bonus payment hereunder, a Plan Participant must satisfy each of the following eligibility requirements: 

  

	 	1.	The employee must be deemed by Cisco to be employed by Cisco as a regular employee in a P&L Plan-eligible position on or before the first working day of the last fiscal quarter
of the Fiscal Year, and must be employed as a regular employee on the last working day of the Fiscal Year; 

  

	 	2.	The employee must not be providing services to Cisco as a temporary employee, intern or as an independent contractor, consultant, or agent under a written or oral contract, or
purchase order, and must not be classified by Cisco as a temporary employee, independent contractor, consultant, or agent (whether or not such classification is upheld upon review by a governmental, judicial or other agency); and

  

	 	3.	At both the time of calculation of the P&L Plan award and at the time of payout, the employee: 

			
	Professional & Leadership Plan FY 2006	  	Page 3 of 8

  

	 	a.	must not be concurrently on a sales incentive or commission plan; 

  

	 	b.	cannot have entered into an employment termination agreement (including, but not limited to, any agreement, other than an employment agreement or offer letter, in respect of an
employee’s termination of employment); 

  

	 	c.	must not be on a Performance Improvement Plan, letter of concern, work plan, etc.; 

  

	 	d.	must not be rated as “N” in his/her most recent performance evaluation; and 

  

	 	e.	must not be deemed by Cisco to have violated the business conduct requirements described in Paragraph III.A below. 

  
 All payments under the Plan rest within the sole and absolute discretion of
Cisco and, in particular, any payment for employees ranked in the bottom 5% of their organization and/or for employees who have been offered an employment termination agreement (including, but not limited to, any agreement, other than an employment
agreement or offer letter, in respect of termination of employment) must be approved in writing by Cisco’s President/CEO or Senior Vice President of Human Resources or, with respect to payments to Executive Officers, the Compensation Committee.

  
 Employees meeting all eligibility requirements of the Plan
who have less than one year of service will be eligible to receive a discretionary P&L Plan payout that is prorated from the effective date of participation in the Plan up to and including the Expiration Date. 
  

	 	B.	Elements of Calculation: 

  
 Subject to all other terms of the Plan, incentives under this Plan are calculated in accordance with the following formula: 
  

																	
	 	  	(Base Salary	  	 	  	X	  	 	  	Incentive Target Percentage)	  	 	  	X	  	 

  

																																	
																	
	 	 	 	 	 	  	 Company
 Performance
 Factor
	  	 	  	X	  	 	  	 Customer
 Satisfaction
 Factor
	  	 	  	X	  	 	  	 Individual
 Performance
 Factor
	  	 	  	X	  	 	  	 Teamwork and
 Collaboration
	  	 

  

																	
									
	 	  	X	  	 	  	Pro-ration Factor	  	 	  	=	  	 	  	Total Annual Incentive	  	 

  

	 	1.	Base Salary shall mean the annual base salary in effect (i) at the end of Q2 of the Fiscal Year for purposes of calculating midyear advances, if any (as described below); and
(ii) at the end of Q4 of the Fiscal Year for 

			
	Professional & Leadership Plan FY 2006	  	Page 4 of 8

  
 purposes of
calculating year-end payments, if any. If the Plan Participant’s salary currency changes during the Fiscal Year, the salary currency in effect before the change will be used as the basis for the P&L Plan calculation for the period in which
that currency was in effect and the post-change currency will be the basis for the P&L Plan calculation for the period in which that currency was in effect. These two prorated base salary amounts will be added together to determine the Base
Salary. P&L Plan payments will be made in the Plan Participant’s salary currency in effect at the end of Q2 of the Fiscal Year for midyear advances, if any, and at the end of Q4 of the Fiscal Year for year-end payments, if any. Except as
otherwise required by applicable law, Base Salary shall not include variable forms of compensation including, but not limited to, overtime, on-call pay, lead premiums, shift differentials, bonuses, incentive compensation, commissions, stock options,
or expense allowances, or reimbursement. Payment in lieu of Paid Time Off during active employment or upon termination is not included in base salary for purposes of the Plan. 
  

	 	2.	Incentive Target Percentage is a percentage of base salary determined by the grade level of the Plan Participant’s job classification and may be changed at the
discretion of Cisco at any time during the Fiscal Year. If the target is modified, affected Plan Participants will be notified. 

  

			
	 Grade/Level

	  	 Incentive Target
 Percentage    

	1-4	  	4%
	5-7	  	5%
	8 and 9	  	9%
	10 and 11	  	12%
	12	  	25%
	013, 014, 083, 084, and 090	  	35%
	200 and 888	  	50%
	150	  	60%

  

	 	3.	Company Performance Factor is based upon Cisco’s achievement of worldwide Revenue and Profit Before Interest and Tax targets, as determined by Cisco in its sole and
absolute discretion. This Company Performance Factor will range from 0.0 to 2.0. 

  

	 	4.	Customer Satisfaction Factor is based upon the average of two customer satisfaction survey scores drawn from Cisco worldwide. This factor will be calculated as the average of
Primary and Secondary Customer Satisfaction multipliers, and will range from 0.0 to 1.14. 

			
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	 	5.	Individual Performance Factor (IPF) is based upon evaluation of a Plan Participant’s individual and/or managerial performance and contribution for the Fiscal Year
(including, but not limited to, results that the individual achieved, the importance of the results to Cisco, the manner in which the results were achieved, the extent to which the individual represented Cisco’s best interests, and the
individual’s trend and commitment to continuous improvement) and will range from 0.0 to 2.0. Plan Participants who transfer or whose grade/level is changed during the Fiscal Year will have their Incentive Target Percentage adjusted to reflect
the applicable time spent in each grade/level. 

  

	 	6.	Teamwork and Collaboration Factor (TCF) is based upon the evaluation of a Plan Participant’s ability to work as a team player and collaborate with others across the
company, suppliers and/or customers. The factor will be fixed at 1.0. 

  

	 	7.	Pro-ration Factor accounts for the number of calendar days during the Fiscal Year that the Plan Participant was in a P&L Plan-eligible position under this Plan. For
example, the Pro-ration Factor for a Plan Participant who has been in the Plan the entire Fiscal Year will be 1.00. For a Plan Participant who has been in the Plan for 6 months of the Fiscal Year, this factor will be 0.50. Unless otherwise required
by law or a written Company policy, Plan Participants in the following situations will have a Pro-ration factor of less than 1.00: 

  

	 	•	 	Plan Participants who transfer to a new position not covered by the Plan. 

  

	 	•	 	Plan Participants who have been in the Plan less than 12 months (such as a new hire, or a Plan Participant who transfers from a non-P&L Plan eligible position into a P&L
Plan-eligible position). 

  

	 	•	 	Plan Participants who have been on a leave of absence of any duration during the Fiscal Year. 

  

	 	•	 	Plan Participants working less than the applicable full-time standard work week. Such Plan Participants will have a Pro-ration Factor that reflects the average number of hours
worked per week during the Fiscal Year. 

  
 Notwithstanding the foregoing, the Pro-ration Factor may be modified for any Plan Participant, provided that any modification to the Pro-ration Factor must be approved in writing in advance of the year-end close date by the next-level
Manager and the Senior Vice President of Human Resources, unless the Plan Participant is an Executive Officer, in which case, such modification must be approved by the Compensation Committee. 

			
	Professional & Leadership Plan FY 2006	  	Page 6 of 8

  

	 	8.	Adjustment of Factors. The Compensation Committee may adjust any of the above factors and may authorize funding in excess of any of these factors. 

 

	 	C.	Total Annual P&L Plan Incentive shall be the product of the foregoing seven factors and shall be less any advances, including, but not limited to, mid-year
advances and unearned commission advances, draws, other outstanding debts and appropriate withholdings. 

  

	 	D.	Incentive Formula and Calculation Example: Assuming a base salary of $95,000, Incentive Target Percentage of 9%, Individual Performance Factor of 1.00, Company Performance
Factor of 1.00, a Customer Satisfaction Factor of 1.05, Teamwork and Collaboration Factor of 1.0, and a Pro-ration Factor of 1.00, the Total Annual Incentive for an employee meeting all eligibility requirements, would be calculated as follows:

  
 Sample Calculation 
  

																	
	 	  	(Base Salary	  	 	  	 	  	 	  	Incentive Target Percentage)	  	 	  	 	  	 
	 	  	($95,000	  	 	  	X	  	 	  	0.09)	  	 	  	X	  	 

  

																																	
																	
	 	 	 	 	 	  	 Company
 Performance
 Factor
	  	 	  	 	  	 	  	 Customer
 Satisfaction
 Factor
	  	 	  	 	  	 	  	 Individual
 Performance
 Factor
	  	 	  	 	  	 	  	 Teamwork and
 Collaboration
	  	 
	 	 	 	 	 	  	1.0	  	 	  	X	  	 	  	1.05	  	 	  	X	  	 	  	1.0	  	 	  	X	  	 	  	1.0	  	 

  

																	
									
	 	  	 	  	 	  	Pro-ration Factor	  	 	  	 	  	 	  	Total Annual Incentive	  	 
	 	  	X	  	 	  	1.0	  	 	  	=	  	 	  	$8,977.50*	  	 

	*	less any advances, including, but not limited to, mid-year advances and unearned commission advances, draws, other outstanding debts, and appropriate withholdings.

  
 In this example, the total incentive equals
9.45% of base salary. 
  

	 	E.	Midyear Advance of Year-End Incentive Payment: If, at the midpoint of the Fiscal Year, Cisco determines, in its sole discretion, that Company Performance Factor is at a
minimum of 1.00, Cisco may elect to make an advance of P&L Plan payments at that time. Any such payment will be treated as an advance, and will not be more than 50% of the Incentive Target Percentage, times Base Salary, reduced by any advances,
including, but not limited to, mid-year advances and unearned commission advances, draws, other outstanding debts, and appropriate withholdings. This advance will be deducted from the Total Annual Incentive year-end payment, if any. Only Plan
Participants who have met job expectations, were hired in a P&L Plan eligible position under this Plan on or before the first 

			
	Professional & Leadership Plan FY 2006	  	Page 7 of 8

  
 working day of the
second quarter of the Fiscal Year and are actively employed as a regular employee by Cisco on the day of distribution will be eligible to receive a midyear advance. 
  
 If Cisco determines, in its sole and absolute discretion, that the Company Performance Factor is not at a minimum of 1.00 at
the midpoint of the Fiscal Year, but is at least .80, then a partial mid-year advance may, at the sole discretion of Cisco’s President/CEO, be distributed at that time. Such distribution may be made to some or all Plan Participants. Such
discretionary payment, if any, will be subject to the same terms and conditions set forth above for a mid-year advance based on a 1.00 Company Performance Factor, except that the maximum amount paid will be 25% of the Incentive Target Percentage,
times Base Salary. 
  

	 	F.	Year-End Discretionary P&L Plan Payment: If the Company Performance Factor is 0 at the end of the Fiscal Year, so that no Total Annual Incentive year-end payment
is payable under the Plan, then the President/CEO may, at his or her sole discretion, authorize a year-end payment in an amount up to 25% of the applicable Incentive Target Percentage, times Base Salary, to some or all Plan Participants. In no event
will an individual be eligible for such a discretionary payment unless he or she is employed as a regular employee on the last day of the Fiscal Year. Such discretionary payment, if any, will be subject to reduction for any advances, including but
not limited to mid-year advances, unearned commission advances, draws, other outstanding debts and appropriate withholding. 

  

	 	G.	Payments Subject to Compensation Committee Approval: Notwithstanding anything stated herein to the contrary, all payments hereunder to Executive Officers must be pre-approved
in writing by the Compensation Committee. 

  

	III.	MISCELLANEOUS 

  

	 	A.	Business Conduct: It is the established policy of Cisco and all of its subsidiaries to conduct business with the highest standards of business ethics. Employees may not
offer, give, solicit or receive any payment that could appear to be a bribe, kickback or other irregular type of payment from anyone involved in any way with an actual or potential business transaction. 

  

	 	B.	Employment at Will: The Company is an at-will employer, which means that an employee’s employment can be terminated by the employee or the Company at any time with or
without cause to the extent permitted by applicable law. The Company reserves the right to modify an employee’s duties, title or other terms and conditions of employment with or without cause. This Plan cannot and should not be interpreted to
alter the at-will nature of the employment relationship between the Company and any Plan Participant. In addition, none of the terms and conditions applicable to incentive compensation supersedes or modifies in any way the terms set forth in the
Plan Participant’s Proprietary Information and Inventions Agreement. 

			
	Professional & Leadership Plan FY 2006	  	Page 8 of 8

  

	 	C.	Subsidiaries: This Plan applies to employees of all Cisco subsidiaries, except where the employees of a subsidiary are expressly eligible for participation in a bonus or
incentive plan established by the subsidiary by which they are employed, and/or where employees of a Cisco subsidiary are expressly informed in writing that they are not eligible for participation in this Plan. Employees of Cisco-Linksys LLC are not
eligible for participation in this Plan. 

  
 It is
not Cisco’s intention that employees of Cisco or its subsidiaries be eligible for more than one bonus or incentive plan, unless expressly stated to the contrary. The Compensation Committee may approve plans or arrangements for eligible
individuals that may operate as an addendum to, or an addition or supplement to, this Plan. 
  

	 	D.	Dispute Resolution: Plan Participants and the Company acknowledge and agree that any and all disputes or claims arising from or relating to a Plan Participant’s
recruitment to or employment with the Company (including but not limited to disputes or claims arising from or relating the Plan or the Cisco Systems, Inc. Company Performance Award Plan), or the termination of the Plan Participant’s
employment, will be resolved solely and exclusively pursuant to final and binding arbitration in lieu of any evidentiary hearing before a government agency and/or a court trial before a judge or jury, pursuant to the terms of Cisco’s
Arbitration Agreement and Policy, a copy of which can be found at http://wwwin.cisco.com/HR/employee/proprietary_info/agreement2arbitrate.shtml. The parties’ agreement to arbitrate means that both Cisco and the Plan Participant have
expressly waived any and all rights to a trial before a court or a jury. 

  

	IV.	APPROVAL 

  
 This Plan was approved by the Compensation Committee on September 15, 2005 (and amended on June 7, 2006).Third Amendment to Credit Agreement

 Exhibit 10.1 
 THIRD AMENDMENT TO 
 CREDIT AGREEMENT, DEEDS OF TRUST AND 
 ASSIGNMENTS OF RENTS AND LEASES, PLEDGE AGREEMENT, 
 PLEDGE AGREEMENT OF PARTNERSHIP INTERESTS 
 (LIMITED PARTNERSHIP INTERESTS), AND CONTINUING GUARANTY

 BY AND AMONG 
 ACR GROUP, INC. 
 as Borrower, 
 and 
 WELLS FARGO BANK, NATIONAL ASSOCIATION 
 as Lender 
 and 
 SUBSIDIARIES OF BORROWER 
 Listed on
the Signature Pages Hereto 
 Effective as of September 13, 2006 
 Execution Copy 

 TABLE OF CONTENTS 
  

					
	 	  	Page
	 ARTICLE I - DEFINITIONS; CONSTRUCTION
	  	2
	 Section 1.01
	  	Defined Terms	  	2
	 Section 1.02
	  	Other Provisions	  	2
		
	 ARTICLE II - AMENDMENTS TO CREDIT AGREEMENT
	  	3
	 Section 2.01
	  	Amendments to Section 1.1 – DEFINITIONS	  	3
	 Section 2.02
	  	Amendments to Section 1.2 – LINE OF CREDIT	  	4
		
	 ARTICLE III - AMENDMENTS TO KATY DEED OF TRUST AND PASADENA DEED OF TRUST
	  	4
	 Section 3.01
	  	Amendment to Katy Deed of Trust	  	4
	 Section 3.02
	  	Amendment to Pasadena Deed of Trust	  	5
		
	 ARTICLE IV - AMENDMENT TO PLEDGE AGREEMENT
	  	7
	 Section 4.01
	  	Amendment to Preliminary Statements	  	7
		
	ARTICLE V - AMENDMENT TO PLEDGE AGREEMENT OF PARTNERSHIP INTERESTS (LIMITED PARTNERSHIP INTERESTS)	  	8
	 Section 5.01
	  	Amendment to Preliminary Statements	  	8
		
	 ARTICLE VI - AMENDMENTS TO GUARANTY
	  	9
	 Section 6.01
	  	Amendment to Paragraph 1	  	9
		
	 ARTICLE VII - CONDITIONS
	  	10
	 Section 7.01
	  	Loan Documents	  	10
	 Section 7.02
	  	Corporate Proceedings of Borrower and Guarantors	  	11
	 Section 7.03
	  	Representations and Warranties	  	11
	 Section 7.04
	  	No Default	  	11
	 Section 7.05
	  	No Change.	  	11
	 Section 7.06
	  	Security Instruments	  	11
	 Section 7.07
	  	Other Instruments or Documents	  	11
	 Section 7.08
	  	Fees	  	11
		
	 ARTICLE VIII - MISCELLANEOUS
	  	12
	 Section 8.01
	  	Adoption, Ratification and Confirmation	  	12
	 Section 8.02
	  	Ratification and Affirmation of Guaranty	  	12
	 Section 8.03
	  	Successors and Assigns	  	12
	 Section 8.04
	  	Counterparts; Delivery of Telecopy Signature Pages	  	12
	 Section 8.05
	  	Entire Agreement	  	12
	 Section 8.06
	  	Invalidity	  	12
	 Section 8.07
	  	Titles of Articles, Sections and Subsections	  	13
	 Section 8.08
	  	Governing Law	  	13

  

 -i- 
 Execution Copy 

 THIRD AMENDMENT TO 
 CREDIT AGREEMENT, DEEDS OF TRUST AND 
 ASSIGNMENTS OF RENTS AND LEASES, PLEDGE AGREEMENT,

 PLEDGE AGREEMENT OF PARTNERSHIP INTERESTS 
 (LIMITED PARTNERSHIP INTERESTS), AND CONTINUING GUARANTY 
 This THIRD AMENDMENT TO CREDIT
AGREEMENT, DEEDS OF TRUST AND ASSIGNMENTS OF RENTS AND LEASES, PLEDGE AGREEMENT, PLEDGE AGREEMENT OF PARTNERSHIP INTERESTS (LIMITED PARTNERSHIP INTERESTS), AND CONTINUING GUARANTY (this “Amendment”) executed effective as of the 13th
day of September, 2006 (the “Effective Date”), is entered into by and among ACR GROUP, INC., a corporation formed under the laws of the State of Texas (“Borrower”), WELLS FARGO BANK, NATIONAL ASSOCIATION (together
with its successors and assigns, “Lender”), and the Subsidiaries of Borrower set forth on the signature pages hereto (collectively, the “Guarantors”). 
 R E C I T A L S: 
 A. Borrower and Lender are parties to that certain Credit
Agreement dated as of September 7, 2004 (as amended, amended and restated, supplemented or modified from time to time, the “Credit Agreement”), pursuant to which Lender agreed, subject to certain terms and conditions, to extend
credit to Borrower. 
 B. Pursuant to the terms and conditions of the Credit Agreement, Borrower executed and delivered to Lender, among
other things, (i) that certain Term Loan Note dated as of September 7, 2004 in an original principal amount of $5,000,000.00 (the “Term Note”), (ii) that certain Line of Credit Note dated as of September 7, 2004
in the maximum principal amount of $30,000,000.00, (iii) that certain Restated Line of Credit Note dated as of August 31, 2005 in the maximum principal amount of $35,000,000.00, and (iv) that certain Second Amended and Restated Line
of Credit Note dated June 14, 2006 in the maximum principal amount of $40,000,000 (the line of credit notes referred to in the foregoing clauses (i) – (iv), the “Existing Line of Credit Notes”). 
 C. In connection with its execution of the Credit Agreement and in order to secure Borrower’s obligations governed thereby, including, without
limitation, under the Term Note and the Existing Line of Credit Notes and all other promissory notes now or hereafter executed in connection with the Credit Agreement, Borrower, Subsidiaries of Borrower, and Lender (as applicable) entered into,
among other documents, (i) that certain Deed of Trust and Assignment of Rents and Leases dated as of September 7, 2004 by Lifetime Filter, Inc., a Texas corporation and Subsidiary of Borrower as Grantor, and Danny Oliver as Trustee for the
benefit of Lender and that certain Deed of Trust and Assignment of Rents and Leases dated June 14, 2006 executed by Lifetime Filter, Inc., a Texas corporation and Subsidiary of Borrower as Grantor and Danny Oliver as Trustee for the benefit of
Lender (collectively, the “Katy Deed of Trust”), (ii) that certain Deed of Trust and Assignment of Rents and Leases dated as of September 7, 2004 by ACR Supply, Inc., a Texas corporation and Subsidiary of Borrower as
Grantor, and Danny Oliver as Trustee for the benefit of Lender and that certain Deed of Trust and Assignment 
  

 Execution Copy 

 of Rents and Leases dated as of June 14, 2006 by ACR Supply, L.P., a Texas limited partnership and Subsidiary of
Borrower as Grantor, and Danny Oliver as Trustee for the benefit of Lender (collectively, the “Pasadena Deed of Trust”), (iii) that certain Pledge Agreement dated as of September 7, 2004 from Borrower to Lender, that
certain Amended and Restated Pledge Agreement from Borrower to Lender (collectively, the “Pledge Agreement”), (iv) that certain Pledge Agreement of Partnership Interests (Limited Partnership Interests) made by ACR Supply, LLC,
a Nevada limited liability company, Westbrook GP, LLC, a Texas limited liability Company, and Heating and Cooling Supply, LLC, a Nevada limited liability company, to Lender (the “Pledge Agreement of Partnership Interests”) and
(v) and that certain Continuing Guaranty dated as of September 7, 2004, executed by the Subsidiaries signatory thereto in favor of Lender and that certain Continuing Guaranty dated June 14, 2006 executed by the Guarantors and joined
in by the Borrower (collectively the “Guaranty”, and together with the Katy Deed of Trust, the Pasadena Deed of Trust the Pledge Agreement, and the Pledge Agreement of Partnership Interests, the “Affected Security
Documents”); 
 D. Borrower has requested, and upon, and subject to, the terms and provisions hereof, of the Credit Agreement and of
the other Loan Documents, Lender has agreed, to increase the line of credit under the Credit Agreement to a maximum principal amount of $45,000,000 at any one time outstanding; and 
 E. In connection therewith, Borrower, Lender and the Guarantors have agreed to amend the Credit Agreement and the Affected Security Documents; Borrower
has agreed to execute and deliver to Lender a Third Amended and Restated Line of Credit Note dated as of the date hereof with a face amount of Forty-Five Million and 00/100 Dollars ($45,000,000.00) payable to the order of Lender (the “Third
Amended and Restated Line of Credit Note” and together with the Existing Line of Credit Notes and the Term Note, the “Notes”); and Guarantors have agreed to amend, and ratify, the Guaranty, all in the particulars
hereinafter provided. 
 NOW, THEREFORE, in consideration of the premises and the mutual covenants herein contained, and other good and
valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: 
 ARTICLE I

 DEFINITIONS; CONSTRUCTION 
 Section 1.01 Defined Terms. Terms used herein without definition (including, without limitation, in the Recitals hereof) shall have the meanings respectively assigned to such terms in the Credit Agreement.

 Section 1.02 Other Provisions. (a) The words “hereby”, “herein”, “hereinafter”,
“hereof”, “hereto” and “hereunder” when used in this Amendment shall refer to this Amendment as a whole and not to any particular Article, Section, subsection or provision of this Amendment, unless provided to the
contrary. 
 (b) Section, subsection and Exhibit references herein are to such Sections, subsections and Exhibits to this Amendment unless
otherwise specified. 
  

 -2- 
 Execution Copy 

 (c) Whenever the context requires, reference herein made to the single number shall be understood to
include the plural; and likewise, the plural shall be understood to include the singular. Words denoting gender shall be construed to include the masculine, feminine and neuter, when such construction is appropriate; and specific enumeration shall
not exclude the general but shall be construed as cumulative. Definitions of terms defined in the singular or plural shall be equally applicable to the plural or singular, as the case may be, unless otherwise expressed. 
 ARTICLE II 
 AMENDMENTS TO CREDIT
AGREEMENT 
 Borrower and Lender agree that the Credit Agreement is hereby amended, effective as of the Effective Date, in the
following particulars: 
 Section 2.01 Amendments to Section 1.1 – DEFINITIONS. (a) The definitions of “Line of
Credit Note” and of “Loan Documents” set forth in Section 1.1(a) of the Credit Agreement, are hereby respectively amended in their entirety to read as follows: 
 “Line of Credit Note” means (i) that certain Third Amended and Restated Line of Credit Note dated as of
September 13, 2006 made by Borrower payable to the order of the Bank in the maximum principal amount of Forty-Five Million and 00/100 Dollars ($45,000,000.00), (ii) that certain Second Amended and Restated Line of Credit Note dated as of
June 14, 2006 made by Borrower payable to the order of the Bank in the maximum principal amount of Forty Million and 00/100 Dollars ($40,000,000.00), (iii) that certain Restated Line of Credit Note dated as of August 31, 2005
made by Borrower payable to the order of the Bank in the maximum principal amount of Thirty-Five Million and 00/100 Dollars ($35,000,000.00), and (iv) that certain Line of Credit Note dated as of September 7, 2004 made by Borrower payable
to the order of the Bank in the maximum principal amount of Thirty Million and 00/100 Dollars ($30,000,000.00), and any amendments and modifications to any of the foregoing, any substitutions therefor, and any replacements, restatements, renewals or
extensions , in whole or in part, of any of the foregoing. 
 “Loan Documents” means, collectively, this
Agreement, the Term Loan Note, the Line of Credit Note, the Guaranty, the Security Agreement, the Pledge Agreement, the Pledge Agreement of Partnership Interests, the Deeds of Trust, the First Amendment, the Second Amendment and the Third Amendment
and each other document, instrument, certificate and agreement now or hereafter executed and delivered by the Borrower or any Subsidiary thereof, including, without limitation, any and all interest rate swap or similar agreements, in connection with
this Agreement or otherwise referred to herein or contemplated hereby, all as may be amended, restated, amended and restated, supplemented, renewed, extended or otherwise modified from time to time and including any document instrument or other
agreement given in renewal or substitution for any of the foregoing. 
  

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 (b) Section 1.1(a) of the Credit Agreement is hereby amended by adding the following definition
thereto: 
 “Third Amendment” means that certain Third Amendment to Credit Agreement, Deeds of Trust and
Assignments of Rents and Leases, Pledge Agreement, Pledge Agreement of Partnership Interests (Limited Partnership Interests), and Continuing Guaranty dated as of September 13, 2006 by and among Borrower, the Subsidiaries and Bank. 

Section 2.02 Amendments to Section 1.2 – LINE OF CREDIT. Section 1.2(a) of the Credit Agreement is hereby amended by deleting
the first sentence of Section 1.2(a) and replacing it with the following sentence: 
 “Subject to the terms and
conditions of this Agreement, Bank hereby agrees to make advances to Borrower from time to time up to and including the Termination Date (howsoever occurring), in an aggregate principal amount not to exceed at any time outstanding Forty-Five Million
and 00/100 Dollars ($45,000,000.00) (“Line of Credit”), the proceeds of which shall be used only for general business purposes of the Borrower and its Subsidiaries, including working capital and routine capital expenditures made in
the ordinary course of business, the repurchase of Stock as set forth in Section 5.10 below, and for no other purpose.” 
 ARTICLE III 
 AMENDMENTS TO KATY DEED OF TRUST 
 AND PASADENA DEED OF TRUST 
 Section 3.01 Amendment to Katy Deed of
Trust. The Katy Deed of Trust is hereby amended by deleting Section 2.1(a) in its entirety and replacing it with the following: 
 “(a) payment to Beneficiary of all sums at any time owing and performance of all other obligations arising under or in connection with that certain (i) Line of Credit Note dated as of September 7, 2004,
in the maximum principal amount of Thirty Million and 00/100 Dollars ($30,000,000.00), with interest as provided therein, executed by ACR Group, Inc. and payable to Beneficiary or its order, and maturing on August 31, 2006 (as renewed,
extended, amended, restated, modified or supplemented from time to time and including all instruments given in substitution or replacement thereof, the “Line of Credit Note”), together with the payment and performance of any other
indebtedness or obligations incurred in connection with the credit accommodation evidenced by the Line of Credit Note, whether or not specifically referenced therein, (ii) Restated Line of Credit Note dated as of August 31, 2005 in the
maximum principal amount of Thirty-Five Million and 00/100 Dollars ($35,000,000.00), with interest as provided therein, executed by ACR Group, Inc. and payable to Beneficiary or its order, and maturing on August 31, 2007 (as renewed, extended,
amended, restated, modified or supplemented from time to time and including all 
  

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 instruments given in substitution or replacement thereof, the “Restated Line of Credit
Note”), together with the payment and performance of any other indebtedness or obligations incurred in connection with the credit accommodation evidenced by the Restated Line of Credit Note, whether or not specifically referenced therein,
(iii) Second Amended and Restated Line of Credit Note dated as of June 14, 2006 in the maximum principal amount of Forty Million and 00/100 Dollars ($40,000,000.00), with interest as provided therein, executed by ACR Group, Inc. and
payable to Beneficiary or its order, and maturing on August 31, 2008 (as renewed, extended, amended, restated, modified or supplemented from time to time and including all instruments given in substitution or replacement thereof, the
“Second Amended and Restated Line of Credit Note”), together with the payment and performance of any other indebtedness or obligations incurred in connection with the credit accommodation evidenced by the Second Amended and Restated
Line of Credit Note, whether or not specifically referenced therein, (iv) Third Amended and Restated Line of Credit Note dated as of September 13, 2006 in the maximum principal amount of Forty-Five Million and 00/100 Dollars
($45,000,000.00), with interest as provided therein, executed by ACR Group, Inc. and payable to Beneficiary or its order, and maturing on August 31, 2008 (as renewed, extended, amended, restated, modified or supplemented from time to time and
including all instruments given in substitution or replacement thereof, the “Third Amended and Restated Line of Credit Note”), together with the payment and performance of any other indebtedness or obligations incurred in connection
with the credit accommodation evidenced by the Third Amended and Restated Line of Credit Note, whether or not specifically referenced therein, and (v) the Term Loan Note dated as of September 7, 2004 in the maximum principal amount of Five
Million and 00/100 Dollars ($5,000,000.00), with interest as provided therein, executed by ACR Group, Inc. and payable to Beneficiary or its order, and maturing on August 31, 2008, as amended (as renewed, extended, amended, restated, modified
or supplemented from time to time and including all instruments given in substitution or replacement thereof, the “Term Note”), together with the payment and performance of any other indebtedness or obligations incurred in
connection with the credit accommodation evidenced by the Term Loan Note, whether or not specifically referenced therein (the Line of Credit Note, the Restated Line of Credit Note, the Second Amended and Restated Line of Credit Note, the Third
Amended and Restated Line of Credit Note and the Term Loan Note, collectively, the “Notes”) and all other obligations arising under or pursuant to that certain Credit Agreement dated as of September 7, 2004 by and between
Beneficiary and said ACR Group, Inc., as amended from time to time (the “Credit Agreement”), pursuant to which the Notes are executed or any of the other “Loan Documents” (as defined in the Credit Agreement).”

 Section 3.02 Amendment to Pasadena Deed of Trust. The Pasadena Deed of Trust is hereby amended by deleting Section 2.1(a) in
its entirety and replacing it with the following: 
 “(a) payment to Beneficiary of all sums at any time owing and
performance of all other obligations arising under or in connection with that 
  

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 certain (i) Line of Credit Note dated as of September 7, 2004, in the maximum principal amount
of Thirty Million and 00/100 Dollars ($30,000,000.00), with interest as provided therein, executed by ACR Group, Inc. and payable to Beneficiary or its order, and maturing on August 31, 2006 (as renewed, extended, amended, restated, modified or
supplemented from time to time and including all instruments given in substitution or replacement thereof, the “Line of Credit Note”), together with the payment and performance of any other indebtedness or obligations incurred in
connection with the credit accommodation evidenced by the Line of Credit Note, whether or not specifically referenced therein, (ii) Restated Line of Credit Note dated as of August 31, 2005 in the maximum principal amount of Thirty-Five
Million and 00/100 Dollars ($35,000,000.00), with interest as provided therein, executed by ACR Group, Inc. and payable to Beneficiary or its order, and maturing on August 31, 2007 (as renewed, extended, amended, restated, modified or
supplemented from time to time and including all instruments given in substitution or replacement thereof, the “Restated Line of Credit Note”), together with the payment and performance of any other indebtedness or obligations
incurred in connection with the credit accommodation evidenced by the Restated Line of Credit Note, whether or not specifically referenced therein, (iii) Second Amended and Restated Line of Credit Note dated as of June 14, 2006 in the
maximum principal amount of Forty Million and 00/100 Dollars ($40,000,000.00), with interest as provided therein, executed by ACR Group, Inc. and payable to Beneficiary or its order, and maturing on August 31, 2008 (as renewed, extended,
amended, restated, modified or supplemented from time to time and including all instruments given in substitution or replacement thereof, the “Second Amended and Restated Line of Credit Note”), together with the payment and
performance of any other indebtedness or obligations incurred in connection with the credit accommodation evidenced by the Second Amended and Restated Line of Credit Note, whether or not specifically referenced therein, (iv) Third Amended and
Restated Line of Credit Note dated as of September 13, 2006 in the maximum principal amount of Forty-Five Million and 00/100 Dollars ($45,000,000.00), with interest as provided therein, executed by ACR Group, Inc. and payable to Beneficiary or
its order, and maturing on August 31, 2008 (as renewed, extended, amended, restated, modified or supplemented from time to time and including all instruments given in substitution or replacement thereof, the “Third Amended and Restated
Line of Credit Note”), together with the payment and performance of any other indebtedness or obligations incurred in connection with the credit accommodation evidenced by the Third Amended and Restated Line of Credit Note, whether or not
specifically referenced therein, and (v) the Term Loan Note dated as of September 7, 2004 in the maximum principal amount of Five Million and 00/100 Dollars ($5,000,000.00), with interest as provided therein, executed by ACR Group, Inc.
and payable to Beneficiary or its order, and maturing on August 31, 2008, as amended (as renewed, extended, amended, restated, modified or supplemented from time to time and including all instruments given in substitution or replacement
thereof, the “Term Note”), together with the payment and performance of any other indebtedness or obligations incurred in connection 
  

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 with the credit accommodation evidenced by the Term Loan Note, whether or not specifically referenced
therein (the Line of Credit Note, the Restated Line of Credit Note, the Second Amended and Restated Line of Credit Note, the Third Amended and Restated Line of Credit Note and the Term Loan Note, collectively, the “Notes”) and all
other obligations arising under or pursuant to that certain Credit Agreement dated as of September 7, 2004 by and between Beneficiary and said ACR Group, Inc., as amended from time to time (the “Credit Agreement”), pursuant to
which the Notes are executed or any of the other “Loan Documents” (as defined in the Credit Agreement).” 
 ARTICLE
IV 
 AMENDMENT TO PLEDGE AGREEMENT 
 Section 4.01 Amendment to Preliminary Statements. (a) The Pledge Agreement is hereby amended by deleting in its entirety the second paragraph of the Preliminary Statements set forth therein and replacing
the same with the following: 
 “WHEREAS, Pledgor and Lender have entered into that certain Credit Agreement dated
as of September 7, 2004, as amended (as may be further amended, restated, supplemented or otherwise modified from time to time the “Credit Agreement”), pursuant to which Lender has agreed to extend to Pledgor (i) a
revolving line of credit in an aggregate principal amount not to exceed at any time outstanding Forty-Five Million and 00/100 Dollars ($45,000,000.00) (as renewed, extended, amended, restated, modified or supplemented from time to time and including
all instruments given in substitution or replacement thereof, the “Line of Credit”) and (ii) a term loan in an amount equal to Five Million and 00/100 Dollars ($5,000,000.00) (the “Term Loan”) under the terms,
and subject to the conditions, set forth in the Credit Agreement and, as applicable, the Line of Credit Note dated September 7, 2004 in the maximum principal amount of $30,000,000.00 executed by Pledgor payable to the order of Lender (as
renewed, extended, amended, restated, modified or supplemented from time to time and including all instruments given in substitution or replacement thereof, the “Line of Credit Note”), the Restated Line of Credit Note dated
August 31, 2005 in the maximum principal amount of $35,000,000.00 executed by Pledgor payable to the order of Lender (as renewed, extended, amended, restated, modified or supplemented from time to time and including all instruments given in
substitution or replacement thereof, the “Restated Line of Credit Note”), the Second Amended and Restated Line of Credit Note dated June 14, 2006 in the maximum principal amount of $40,000,000.00 executed by Pledgor payable to
the order of Lender (as renewed, extended, amended, restated, modified or supplemented from time to time and including all instruments given in substitution or replacement thereof, the “Second Amended and Restated Line of Credit
Note”), the Third Amended and Restated Line of Credit Note dated September 13, 2006 in the maximum principal amount of $45,000,000.00 executed by Pledgor payable to the order of Lender (as renewed, extended, amended, restated, modified
or supplemented from time to time and including all 
  

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 instruments given in substitution or replacement thereof, the “Third Amended and Restated Line of
Credit Note”) and the Term Loan Note dated September 7, 2004, in the original principal amount of $5,000,000.00 executed by Pledgor payable to the order of Lender, as amended (as renewed, extended, amended, restated, modified or
supplemented from time to time and including all instruments given in substitution or replacement thereof, the “Term Note” and together with the Line of Credit Note, the Restated Line of Credit Note, the Second Amended and Restated
Line of Credit Note and the Third Amended and Restated Line of Credit Note, the “Notes”).” 
 (b) The Pledge Agreement
is hereby amended by deleting in its entirety the fifth paragraph of the Preliminary Statements set forth therein and replacing the same with the following: 
 “WHEREAS, Borrower has requested that Bank increase the line of credit under the Credit Agreement to Forty-five Million and 00/100
Dollars ($45,000,000.00).” 
 ARTICLE V 
 AMENDMENT TO PLEDGE AGREEMENT OF PARTNERSHIP INTERESTS 
 (LIMITED PARTNERSHIP
INTERESTS) 
 Section 5.01 Amendment to Preliminary Statements. (a) The Pledge Agreement of Partnership Interests
(Limited Partnership Interests) is hereby amended by deleting the fourth paragraph of the Preliminary Statements set forth therein in its entirety and replacing the same with the following: 
 “WHEREAS, Pledgor and Lender have entered into that certain Credit Agreement dated as of September 7, 2004, as amended
(as may be further amended, restated, supplemented or otherwise modified from time to time, the “Credit Agreement”), pursuant to which Lender has agreed to extend to Pledgor (i) a revolving line of credit in an aggregate
principal amount not to exceed at any time outstanding Forty-Five Million and 00/100 Dollars ($45,000,000.00) (as renewed, extended, amended, restated, modified or supplemented from time to time and including all instruments given in substitution or
replacement thereof, the “Line of Credit”) and (ii) a term loan in an amount equal to Five Million and 00/100 Dollars ($5,000,000.00) (the “Term Loan”) under the terms, and subject to the conditions, set forth
in the Credit Agreement and, as applicable, the Line of Credit Note dated September 7, 2004 in the maximum principal amount of $30,000,000.00 executed by Pledgor payable to the order of Lender (as renewed, extended, amended, restated, modified
or supplemented from time to time and including all instruments given in substitution or replacement thereof, the “Line of Credit Note”), the Restated Line of Credit Note dated August 31, 2005 in the maximum principal amount of
$35,000,000.00 executed by Pledgor payable to the order of Lender (as renewed, extended, amended, restated, modified or supplemented from time to time and including all instruments given in 
  

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 substitution or replacement thereof, the “Restated Line of Credit Note”), the Second
Amended and Restated Line of Credit Note dated June 14, 2006 in the maximum principal amount of $40,000,000.00 executed by Pledgor payable to the order of Lender (as renewed, extended, amended, restated, modified or supplemented from time to
time and including all instruments given in substitution or replacement thereof, the “Second Amended and Restated Line of Credit Note”), the Third Amended and Restated Line of Credit Note dated September 13, 2006 in the maximum
principal amount of $45,000,000.00 executed by Pledgor payable to the order of Lender (as renewed, extended, amended, restated, modified or supplemented from time to time and including all instruments given in substitution or replacement thereof,
the “Third Amended and Restated Line of Credit Note”) and the Term Loan Note dated September 7, 2004, in the original principal amount of $5,000,000.00 executed by Pledgor payable to the order of Lender, as amended (as renewed,
extended, amended, restated, modified or supplemented from time to time and including all instruments given in substitution or replacement thereof, the “Term Note” and together with the Line of Credit Note, the Restated Line of
Credit Note, the Second Amended and Restated Line of Credit Note and the Third Amended and Restated Line of Credit Note, the “Notes”).” 
 (b) The Pledge Agreement of Partnership Interests (Limited Partnership Interests) is hereby amended by deleting in its entirety the eighth paragraph of the Preliminary Statements set forth therein and replacing the
same with the following: 
 “WHEREAS, Borrower has requested that Bank increase the line of credit under the Credit
Agreement to Forty-five Million and 00/100 Dollars ($45,000,000.00).” 
 ARTICLE VI 
 AMENDMENTS TO GUARANTY 
 Section
6.01 Amendment to Paragraph 1. (a) The Guaranty is hereby amended by deleting the second sentence of Paragraph 1 in its entirety and replacing it with the following: 
 “The term “Indebtedness” is used herein in its most comprehensive sense and includes any and all advances, debts,
obligations and liabilities of Borrower, heretofore, now or hereafter made, incurred or created, whether voluntary or involuntary and however arising, whether due or not due, absolute or contingent, liquidated or unliquidated, determined or
undetermined, and whether Borrower may be liable individually or jointly with others, or whether recovery upon such Indebtedness may be or hereafter becomes unenforceable including, without limitation, all “Obligations” as said term is
defined in that certain Credit Agreement dated as September 7, 2004 by and between Borrower and Bank as amended, amended and restated, modified, supplemented or extended from time to time, including, without limitation, by that certain First
Amendment to Credit Agreement, Term Loan Note, Line of Credit Note, Security Agreement, Deeds of 
  

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 Trust and Assignments of Rents and Leases, Pledge Agreement and Continuing Guaranty dated effective as of
August 31, 2005 by and among Bank, Borrower and the Subsidiaries of Borrower therein set forth, that certain Second Amendment to Credit Agreement and Term Note executed effective as of June 14, 2006, by and between Bank and Borrower, and
that certain Third Amendment to Credit Agreement, Deeds of Trust and Assignments of Rents and Leases, Pledge Agreement, Pledge Agreement of Partnership Interests (Limited Partnership Interests), and Continuing Guaranty by and between Bank and
Borrower and, including, without limitation all indebtedness owing by Borrower to Bank pursuant to that certain (i) Line of Credit Note dated as of September 7, 2004 in the maximum principal amount of $30,000,000.00, (ii) Restated
Line of Credit Note dated as of August 31, 2005 in the maximum amount of $35,000,000.00, (iii) Second Amended and Restated Line of Credit Note dated as of June 14, 2006 in the maximum principal amount of $40,000,000.00,
(iv) Third Amended and Restated Line of Credit Note dated as of September 13, 2006 in the maximum principal amount of $45,000,000.00, and (v) that certain Term Note dated as of September 7, 2004 in the original principal amount
of $5,000,000.00, as amended, each of the foregoing as renewed, extended, amended, restated, modified or supplemented from time to time and including all instruments given in substitution or replacement thereof.” 
 (b) Amendment to Paragraph 2. The Guaranty is hereby further amended by deleting the first sentence of Paragraph 2 in its entirety and replacing
it with the following: 
 “The liability of Guarantors shall not exceed at any time the sum of Fifty Million and 00/100
Dollars ($50,000,000.00) plus all interest thereon plus costs, expenses and all other amounts owing pursuant to the Credit Agreement or any other Loan Document plus all costs and expenses pertaining to the enforcement of this Guaranty and/or the
collection of the Indebtedness of the Borrower to Bank, provided that the obligations of each Guarantor hereunder shall be limited to an aggregate amount equal to the largest amount that would not render its obligations hereunder subject to
avoidance under Section 548 of the United States Bankruptcy Code or any comparable provisions of any applicable state law.” 
 ARTICLE VII 
 CONDITIONS 
 Section 7.01 Loan Documents. Lender shall have received: 
 (a) multiple original counterparts of this
Amendment executed and delivered by a duly authorized officer of Borrower; and 
 (b) an original Third Amended and Restated Line of Credit
Note dated as of the Effective Date reflecting a maximum principal amount of Forty-Five Million and 00/100 Dollars ($45,000,000.00) payable to the order of Lender. 
  

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 Section 7.02 Corporate Proceedings of Borrower and Guarantors. Lender shall have received multiple
copies of the resolutions, in form and substance reasonably satisfactory to Lender, of the Boards of Directors of Borrower and the Guarantors, authorizing the execution, delivery and performance of this Amendment, each such copy being attached to an
original certificate of the Secretary or an Assistant Secretary of Borrower or the Guarantors, as applicable, dated as of the Effective Date, certifying (i) that the resolutions attached thereto are true, correct and complete copies of
resolutions duly adopted by written consents or at meetings of the Boards of Directors, (ii) that such resolutions constitute all resolutions adopted with respect to the transactions contemplated hereby, (iii) that such resolutions have
not been amended, modified, revoked or rescinded as of the Effective Date, (iv) that the respective articles of incorporation and bylaws of Borrower and the Guarantors have not been amended or otherwise modified since the effective date of the
Credit Agreement, except pursuant to any amendments attached thereto, and (v) as to the incumbency and signature of the officers of Borrower or the Guarantors, as applicable, executing this Amendment. 
 Section 7.03 Representations and Warranties. Each of the representations and warranties made by Borrower and the Guarantors in or pursuant to the
Loan Documents shall be true and correct as of the Effective Date, as if made on and as of such date. 
 Section 7.04 No Default. No
Default or Event of Default shall have occurred and be continuing as of the Effective Date. 
 Section 7.05 No Change.

 (a) No event shall have occurred since May 31, 2006, which, in the reasonable opinion of Lender, could have a material adverse effect
on the condition (financial or otherwise), business, operations or prospects of Borrower or any Guarantor. 
 (b) Neither Borrower nor any of
its Subsidiaries shall have sold, leased or otherwise disposed of any assets or other property since May 31, 2006, except in the ordinary course of business. 
 (c) No charge off or write down in excess of $100,000.00 of any assets or other property of Borrower or any of its Subsidiaries reflected in the most recent financial statements of Borrower and its Subsidiaries
provided to Lender shall have been taken. 
 Section 7.06 Security Instruments. Each of the Credit Agreement, the Security
Documents, the Guaranty and all other Loan Documents shall be in full force and effect and provide to Lender the rights, remedies, benefits and security intended thereby in the case of the Credit Agreement and the Affected Security Documents, as
amended and supplemented hereby. 
 Section 7.07 Other Instruments or Documents. Lender shall receive such other instruments or
documents as it may reasonably request. 
 Section 7.08 Fees. All reasonable fees of Lender’s legal counsel shall be paid
upon execution of this Amendment. 
  

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 ARTICLE VIII 
 MISCELLANEOUS 
 Section 8.01 Adoption, Ratification and Confirmation. Each of
Borrower, the Guarantors and Lender does hereby adopt, ratify and confirm the Credit Agreement, the Notes and the Affected Security Documents, each as amended hereby, and acknowledges and agrees that the Credit Agreement, the Notes, and the Affected
Security Documents, each as amended hereby, are and remain in full force and effect. 
 Section 8.02 Ratification and Affirmation of
Guaranty. Each Guarantor hereby expressly (i) acknowledges the terms of this Amendment, (ii) ratifies and affirms its obligations under the Guaranty, as amended, supplemented or otherwise modified hereby, (iii) acknowledges,
renews and extends its continued liability under the Guaranty, as amended, supplemented or otherwise modified hereby and agrees that the Guaranty, as amended, supplemented or otherwise modified hereby remains in full force and effect on and after
the execution and delivery of this Amendment, and (iv) guarantees, and promises to pay, to Lender, promptly when due all amounts owing or to be owing by it under the Guaranty, as amended, supplemented or otherwise modified hereby pursuant to,
and in accordance with, its terms and conditions. 
 Section 8.03 Successors and Assigns. This Amendment shall be binding upon
and inure to the benefit of the parties hereto and their respective successors and assigns permitted pursuant to the Credit Agreement. 
 Section 8.04 Counterparts; Delivery of Telecopy Signature Pages. This Amendment may be executed by one or more of the parties hereto in any number of separate counterparts, and all of such counterparts taken together shall be
deemed to constitute one and the same instrument and shall be enforceable as of the Effective Date upon the execution of one or more counterparts hereof by Borrower, the Guarantors and Lender. In this regard, each of the parties hereto acknowledges
that a counterpart of this Amendment containing a set of counterpart executed signature pages reflecting the execution of each party hereto shall be sufficient to reflect the execution of this Amendment by each necessary party hereto and shall
constitute one instrument. Delivery of an executed signature page of this Amendment by facsimile transmission shall be effective as delivery of an original executed signature page of this Amendment. 
 Section 8.05 Entire Agreement. This Amendment constitutes the entire agreement among the parties hereto with respect to the subject matter
hereof. All prior understandings, statements and agreements, whether written or oral, relating to the subject hereof are superseded by this Amendment. 
 Section 8.06 Invalidity. In the event that any one or more of the provisions contained in this Amendment shall for any reason be held invalid, illegal or unenforceable in any respect, such invalidity,
illegality or unenforceability shall not affect any other provision of this Amendment. 
  

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 Section 8.07 Titles of Articles, Sections and Subsections. All titles or headings to
Articles, Sections, Subsections or other divisions of this Amendment or the exhibits hereto, if any, are only for the convenience of the parties and shall not be construed to have any effect or meaning with respect to the other content of such
Articles, Sections, Subsections, other divisions or exhibits, such other content being controlling as the agreement among the parties hereto. 
 Section 8.08 Governing Law. This Amendment shall be deemed to be a contract made under and shall be governed by and construed in accordance with the internal laws of the State of Texas. 
 THIS AMENDMENT, THE CREDIT AGREEMENT, AS
AMENDED HEREBY, THE NOTES AND THE SECURITY DOCUMENTS, AS AMENDED HEREBY,
REPRESENT THE FINAL AGREEMENT AMONG THE PARTIES AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF
THE PARTIES. 
 THERE ARE NO UNWRITTEN
ORAL AGREEMENTS AMONG THE PARTIES. 
 [Remainder of Page
Intentionally Left Blank. Signatures on Following Pages.] 
  

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 IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed and delivered by
their proper and duly authorized officers as of the Effective Date. 
  

			
	WELLS FARGO BANK, NATIONAL ASSOCIATION
		
	By:	 	  

	Name:	 	John Kallina
	Title:	 	Vice President
	
	ACR GROUP, INC.
		
	By:	 	  

	Name:	 	Alex Trevino, Jr.
	Title:	 	President
	
	ACR SUPPLY, LLC
		
	By:	 	  

	Name:	 	A. Stephen Trevino
	Title:	 	President
	
	TOTAL SUPPLY, INC.
		
	By:	 	  

	Name:	 	A. Stephen Trevino
	Title:	 	Vice President
	
	FLORIDA COOLING SUPPLY, INC.
		
	By:	 	  

	Name:	 	A. Stephen Trevino
	Title:	 	Vice President

  

 Execution Copy 

			
	HEATING AND COOLING SUPPLY, LLC
		
	By:	 	  

	Name:	 	A. Stephen Trevino
	Title:	 	Vice President
	
	VALLEY SUPPLY, INC.
		
	By:	 	  

	Name:	 	A. Stephen Trevino
	Title:	 	Vice President
	
	WEST COAST HVAC SUPPLY, INC.
		
	By:	 	  

	Name:	 	A. Stephen Trevino
	Title:	 	Vice President
	
	ETI TEXAS, INC.
		
	By:	 	  

	Name:	 	A. Stephen Trevino
	Title:	 	Vice President
	
	LIFETIME FILTER, INC.
		
	By:	 	  

	Name:	 	A. Stephen Trevino
	Title:	 	Vice President
	
	CAC DISTRIBUTORS, INC.
		
	By:	 	  

	Name:	 	A. Stephen Trevino
	Title:	 	Vice President

  

 Execution Copy 

					
	WESTBROOK GP, LLC
		
	By:	 	  

	Name:	 	A. Stephen Trevino
	Title:	 	Vice President
	
	CONTRACTORS HEATING & SUPPLY, LP
		
	By:	 	 Westbrook GP, LLC,
 its sole
General Partner

			
		 	By:	 	  

		 	Name:	 	A. Stephen Trevino
		 	Title:	 	Vice President
	
	ACR SUPPLY, LP
		
	By:	 	 Westbrook GP, LLC,
 its sole
General Partner

			
		 	By:	 	  

		 	Name:	 	A. Stephen Trevino
		 	Title:	 	Vice President

  

 Execution Copy

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