William F. Murdy
Employment Agreement
Change in Control
Severance Policy

 
                              EMPLOYMENT AGREEMENT
 
      This Employment Agreement (this "AGREEMENT") by and among COMFORT SYSTEMS
USA (TEXAS), L.P., a Texas limited partnership (the "COMPANY"), and William F.
Murdy ("EMPLOYEE") is hereby entered into and effective as of the 27th day of
June, 2000.
 
                                    R E C I T A L S
 
A. The Company is engaged primarily in the heating, ventilation, air
conditioning, plumbing, electrical, fire protection and process piping industry.
 
B. Company desires to employ Employee hereunder in a confidential relationship
wherein Employee, in the course of his employment, will become familiar with and
aware of information as to the Company's customers, specific manner of doing
business, processes, techniques and trade secrets and future plans with respect
thereto, all of which have been and will be established and maintained at great
expense to the Company, which information is a trade secret and constitutes the
valuable good will of the Company; and
 
      NOW, THEREFORE, in consideration of the mutual promises and covenants set
forth herein, it is hereby agreed as follows:
 
                                  A G R E E M E N T S
 
1.    EMPLOYMENT AND DUTIES.
 
      (a) Company hereby employs Employee to serve as Chief Executive Officer of
the Company. As such, Employee shall have responsibilities, duties and authority
customarily accorded to and expected of an officer holding such position
directly with the Company. Employee hereby accepts this employment upon the
terms and conditions herein contained and agrees to devote his full time,
attention and efforts to promote and further the business of Company.
 
      (b) Employee shall faithfully adhere to, execute and fulfill all policies
established by Company from time to time.
 
2. COMPENSATION. For all services rendered by Employee, Company shall compensate
Employee as follows:
 
(a) BASE SALARY; PERFORMANCE BONUS; COMPANY STOCK OPTIONS. Effective as of the
Effective Date, the base salary payable to Employee shall be $400,000 per year,
payable on a regular basis in accordance with Company's standard payroll
procedures but not less frequently than monthly. On at least an annual basis,
Company will review Employee's performance and may, in its sole discretion, (i)
make
 
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increases to such base salary; (ii) pay a performance bonus; or (iii) recommend
Employee for the grant of Company stock options.
 
      (b) EMPLOYEE PERQUISITES, BENEFITS AND OTHER COMPENSATION. Employee shall
be entitled to receive additional benefits and compensation from Company in such
form and to such extent as specified below:
 
      (i) Coverage, subject to contributions required of executives of the
      Company generally, for Employee and his dependent family members under
      health, hospitalization, disability, dental, life and other insurance
      plans that Company may have in effect from time to time. Benefits provided
      to Employee under this clause (i) shall be equal to such benefits provided
      to other Company employees of the same level.
 
      (ii) Reimbursement for all business travel and other out-of-pocket
      expenses reasonably incurred by Employee in the performance of services
      pursuant to this Agreement. All reimbursable expenses shall be
      appropriately documented in reasonable detail by Employee upon submission
      of any request for reimbursement, and in a format and manner consistent
      with Company's expense reporting policy.
 
      (iii) Company shall provide Employee with other employee perquisites as
      may be available to or deemed appropriate for Employee by Company and
      participation in all other Company-wide employee benefits as are available
      from time to time.
 
3.    NONCOMPETITION AGREEMENT.
 
      (a) Employee shall not, during the term of his employment hereunder, be
engaged in any other business activity pursued for gain, profit or other
pecuniary advantage if such activity interferes with Employee's duties and
responsibilities hereunder. The foregoing limitations shall not be construed as
prohibiting Employee from making personal investments in such form or manner as
will neither require his services in the operation or affairs of the companies
or enterprises in which such investments are made nor violate the terms of this
paragraph 3. Employee will not, during the period of his employment by or with
Company, and for a period of two (2) years immediately following the termination
of his employment under this Agreement, except as provided below, directly or
indirectly, for himself or on behalf of or in conjunction with any other person,
persons, company, partnership, corporation or business of whatever nature:
 
      (i) engage, as an officer, director, shareholder, owner, partner, joint
      venturer, or in a managerial capacity, whether as an employee, independent
      contractor, consultant or advisor, or as a sales representative, in any
      business in direct competition with Company or any of its subsidiaries and
      affiliates within 100 miles of where the Company or any of its
      subsidiaries and affiliates conduct
 
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      business, including any territory serviced by the Company or any of such
      subsidiaries (the "TERRITORY");
 
      (ii) call upon any person who is, at that time, an employee of Company or
      any of its subsidiaries or affiliates sales or managerial capacity for the
      purpose or with the intent of enticing such employee away from or out of
      the employ of Company or any of its subsidiaries or affiliates or any its
      subsidiaries or affiliates;
 
      (iii) call upon any person or entity which is, at that time, or which has
      been, within one (1) year prior to that time, a customer of the Company or
      any of its subsidiaries or affiliates for the purpose of soliciting or
      selling products or services in direct competition with the Company or any
      of its subsidiaries or affiliates; or
 
      (iv) call upon any prospective acquisition candidate, on Employee's own
      behalf or on behalf of any competitor, which candidate was, to Employee's
      actual knowledge after due inquiry, either called upon by Company or any
      of its subsidiaries or affiliates or for which Employee participated in an
      acquisition analysis for the purpose of acquiring such entity or all or
      substantially all of such entity's assets.
 
      Notwithstanding the above, the foregoing covenant shall not be deemed to
prohibit Employee from acquiring as a passive investment not more than two
percent (2%) of the capital stock of a competing business the stock of which is
traded on a national securities exchange or on an over-the -counter or similar
market.
 
      (b) Because of the difficulty of measuring economic losses to Company or
any of its subsidiaries or affiliates as a result of a breach of the foregoing
covenant, and because of the immediate and irreparable damage that could be
caused to Company or any of its subsidiaries or affiliates for which they would
have no other adequate remedy, Employee agrees that the foregoing covenant may
be enforced by Company or any of its subsidiaries or affiliates in the event of
breach or threatened breach by Employee, by injunctions, restraining orders and
other appropriate equitable relief.
 
      (c) It is agreed by the parties that the foregoing covenants in this
paragraph 3 impose a reasonable restraint on Employee in light of the activities
and business of the Company on the date of the execution of this Agreement and
the current plans of the Company or any of its subsidiaries or affiliates; but
it is also the intent of the Company and Employee that such covenants be
construed and enforced in accordance with the changing activities, business and
locations of the Company or any of its subsidiaries or affiliates throughout the
term of this covenant, whether before or after the date of termination of the
employment of Employee. For example, if, during the term of this Agreement, the
Company or any of its subsidiaries or affiliates engages in new and different
activities, enters a new business or establishes new locations for its current
activities or business in addition to or other than the activities or business
enumerated under the Recitals above or the locations currently established
therefor, then Employee
 
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will be precluded from soliciting the customers or Employees of such new
activities or business or from such new location and from directly competing
with such new business within 100 miles of its then-established operating
location(s) through the term of this covenant.
 
      It is further agreed by the parties hereto that, in the event that
Employee shall cease to be employed hereunder, and shall enter into a business
or pursue other activities not in competition with the Company or any of its
subsidiaries or affiliates, or similar activities or business in locations the
operation of which, under such circumstances, does not violate clause (i) of
paragraph 3(a), Employee shall not be chargeable with a violation of this
paragraph 3 if the Company or any of its subsidiaries or affiliates shall
thereafter enter the same, similar or a competitive (i) business, (ii) course of
activities or (iii) location, as applicable.
 
      (d) The covenants in this paragraph 3 are severable and separate, and the
unenforceability of any specific covenant shall not affect the provisions of any
other covenant. Moreover, in the event any court of competent jurisdiction shall
determine that the scope, time or territorial restrictions set forth herein are
unreasonable, then it is the intention of the parties that such restrictions be
enforced to the fullest extent which the court deems reasonable, and this
Agreement shall thereby be reformed.
 
      (e) All of the covenants in this paragraph 3 shall be construed as an
agreement independent of any other provision in this Agreement, and the
existence of any claim or cause of action of Employee against Company or any of
its subsidiaries or affiliates, whether predicated on this Agreement or
otherwise, shall not constitute a defense to the enforcement by Company or any
of its subsidiaries or affiliates of such covenants. It is specifically agreed
that the period of two (2) years following termination of employment stated at
the beginning of this paragraph 3, during which the agreements and covenants of
Employee made in this paragraph 3 shall be effective, shall be computed by
excluding from such computation any time during which Employee is in violation
of any provision of this paragraph 3.
 
4.    PLACE OF PERFORMANCE; RELOCATION RIGHTS.
 
      (a) Employee understands that he may be requested by Company or any of its
subsidiaries or affiliates to relocate from his present residence to another
geographic location in order to more efficiently carry out his duties and
responsibilities under this Agreement or as part of a promotion or other
increase in duties and responsibilities. In such event, if Employee agrees to
relocate, Company or any of its subsidiaries or affiliates will pay all
relocation costs to move Employee, his immediate family and their personal
property and effects. Such costs may include, by way of example, but are not
limited to, pre-move visits to search for a new residence, investigate schools
or for other purposes; temporary lodging and living costs prior to moving into a
new permanent residence; duplicate home carrying costs; all closing costs on the
sale of Employee's present residence and on the purchase of a comparable
residence in the new location; and added income taxes that Employee may incur if
any relocation costs are not deductible
 
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for tax purposes. The general intent of the foregoing is that Employee shall not
personally bear any out-of-pocket cost as a result of the relocation, with an
understanding that Employee will use his best efforts to incur only those costs
which are reasonable and necessary to effect a smooth, efficient and orderly
relocation with minimal disruption to the business affairs of Company or any of
its subsidiaries or affiliates and the personal life of Employee and his family.
 
      (b) Notwithstanding the above, if Employee is requested by Company to
relocate and Employee refuses, such refusal shall not constitute "CAUSE" for
termination of this Agreement under the terms of paragraph 5(a)(iii).
 
5.    TERM; TERMINATION; RIGHTS ON TERMINATION.
 
      (a) TERM. The term of this Agreement shall begin on the date hereof and
 continue for three (3) years (the "INITIAL TERM") unless terminated sooner as
 herein provided, and shall automatically renew after the Initial Term on a
 year-to-year basis on the same terms and conditions contained herein in effect
 as of the time of renewal unless the Company notifies Employee at least 60 days
 prior to such expiration (the "TERM"). This Agreement and Employee's employment
 may be terminated in any one of the following ways:
 
      (i)   TERMINATION AS A RESULT OF THE EMPLOYEE'S DEATH. The death of
            Employee shall immediately terminate this Agreement and upon such
            termination Employee's Estate shall receive from the Company, in a
            lump-sum payment, the base salary at the rate then in effect for one
            (1) year, provided, however, that such lump-sum payment shall be
            reduced by the amount, if any, of benefit payable under any life
            insurance policies to the extent such policies are procured and paid
            for by the Company.
 
      (ii)  TERMINATION ON ACCOUNT OF DISABILITY. If, as a result of incapacity
            due to physical or mental illness or injury, Employee shall have
            been absent from his full-time duties hereunder for four (4)
            consecutive months, then thirty (30) days after receiving written
            notice (which notice may occur before or after the end of such four
            (4) month period, but which shall not be effective earlier than the
            last day of such four (4) month period), Company may terminate
            Employee's employment hereunder provided Employee is unable to
            resume his full-time duties with or without reasonable accommodation
            at the conclusion of such notice period. Also, Employee may
            terminate his employment hereunder if his health should become
            impaired to an extent that makes the continued performance of his
            duties hereunder hazardous to his physical or mental health or his
            life, provided that Employee shall have furnished Company with a
            written statement from a qualified doctor to such effect and
            provided, further, that, at Company's request made within thirty
            (30) days of the date of such written statement, Employee shall
            submit to an examination by a doctor selected by Company who is
            reasonably
 
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            acceptable to Employee or Employee's doctor and such doctor shall
            have concurred in the conclusion of Employee's doctor. In the event
            this Agreement is terminated as a result of Employee's disability,
            Employee shall receive from Company, in a lump-sum payment due
            within ten (10) days of the effective date of termination, the base
            salary at the rate then in effect for whatever time period is
            remaining under the Initial Term of this Agreement or for one (1)
            year, whichever amount is greater; provided, however, that any such
            payments shall be reduced by the amount of any disability insurance
            payments payable to the Employee as a result of such disability.
 
      (iii) TERMINATION BY THE COMPANY FOR CAUSE. Company may terminate this
            Agreement immediately for "CAUSE," which shall be: (1) Employee's
            willful and material breach of this Agreement (which breach cannot
            be cured or, if capable of being cured, is not cured within ten (10)
            days after receipt of written notice to cure); (2) Employee's gross
            negligence in the performance or intentional nonperformance of any
            of Employee's material duties and responsibilities hereunder; (3)
            Employee's willful dishonesty, fraud or misconduct with respect to
            the business or affairs of Company or any of its subsidiaries or
            affiliates which materially and adversely affects the operations or
            reputation of Company or any of its subsidiaries or affiliates; (4)
            Employee's conviction of a felony crime; (5) Employee's confirmed
            positive illegal drug test result; (6) confirmed sexual harassment
            by Employee; or (7) Employee's material and willful violation of the
            Company's Compliance and Business Ethics Policies. In the event of a
            termination for Cause, as enumerated above, Employee shall have no
            right to any severance compensation.
 
      (iv)  TERMINATION WITHOUT CAUSE. At any time after the commencement of
            employment, either Employee or Company may, voluntarily or without
            cause, respectively, terminate this Agreement and Employee's
            employment, effective thirty (30) days after written notice is
            provided to the other. Should Employee be terminated by Company
            without Cause during the Initial Term, Employee shall receive from
            Company, in a lump-sum payment due on the effective date of
            termination, the base salary at the rate then in effect for whatever
            time period is remaining under the Initial Term of this Agreement or
            for one (1) year, whichever amount is greater. Should Employee be
            terminated by Company without Cause after the Initial Term, Employee
            shall receive from Company, in a lump-sum payment due on the
            effective date of termination, the base salary at the rate then in
            effect equivalent to one (1) year of salary. Further, any
            termination without Cause by Company shall operate to shorten the
            period set forth in paragraph 3(a) and during which the terms of
            paragraph 3 apply to one (1) year from the date of termination of
            employment. Except as provided in paragraph 12 below,
 
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            if Employee resigns or otherwise terminates this Agreement, the
            provisions of paragraph 3 hereof shall apply, except that Employee
            shall receive no severance compensation. If Employee is terminated
            by the Company without Cause, or if the Employee terminates his
            employment for Good Reason pursuant to paragraph 12(c) below, then
            the Company shall make the insurance premium payments contemplated
            by COBRA for a period of twelve (12) months immediately following
            such termination.
 
            (b) CHANGE IN CONTROL OF THE COMPANY. In the event of a Change in
            Control of the Company (as defined below) during the Term, paragraph
            12 below shall apply.
 
            (c) EFFECT OF TERMINATION. Upon termination of this Agreement for
            any reason provided above, Employee shall be entitled to receive all
            compensation earned and all benefits and reimbursements due through
            the effective date of termination. Additional compensation
            subsequent to termination, if any, will be due and payable to
            Employee only to the extent and in the manner expressly provided
            herein. All other rights and obligations of Company and Employee
            under this Agreement shall cease as of the effective date of
            termination, except that Company's obligations under paragraph 9
            herein and Employee's obligations under paragraphs 3, 6, 7, 8 and 10
            herein shall survive such termination in accordance with their
            terms.
 
            (d) BREACH BY COMPANY. If termination of Employee's employment
            arises out of Company's material failure to pay Employee on a timely
            basis the amounts to which he is entitled under this Agreement or as
            a result of any other breach of this Agreement by Company, as
            determined by a court of competent jurisdiction or pursuant to the
            provisions of paragraph 16 below, Company shall pay all amounts and
            damages to which Employee may be entitled as a result of such
            breach, including interest thereon and all reasonable legal fees and
            expenses and other costs incurred by Employee to enforce his rights
            hereunder. Further, none of the provisions of paragraph 3 shall
            apply in the event this Agreement is terminated as a result of a
            breach by Company.
 
6. RETURN OF COMPANY PROPERTY. All records, designs, patents, business plans,
financial statements, manuals, memoranda, lists and other property delivered to
or compiled by Employee by or on behalf of the Company or its representatives,
vendors or customers which pertain to the business of the Company shall be and
remain the property of the Company and be subject at all times to its discretion
and control. Likewise, all correspondence, reports, records, charts, advertising
materials and other similar data pertaining to the business, activities or
future plans of the Company which is collected by Employee shall be delivered
promptly to the Company without request by it upon termination of Employee's
employment.
 
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7. INVENTIONS. Employee shall disclose promptly to the Company any and all
significant conceptions and ideas for inventions, improvements and valuable
discoveries, whether patentable or not, which are conceived or made by Employee,
solely or jointly with another, during the period of employment or within one
(1) year thereafter, and which are directly related to the business or
activities of the Company and which Employee conceives as a result of his
employment hereunder. Employee hereby assigns and agrees to assign all his
interests therein to the Company or its nominee. Whenever requested to do so by
the Company, Employee shall execute any and all applications, assignments or
other instruments that the Company shall deem necessary to apply for and obtain
Letters Patent of the United States or any foreign country or to otherwise
protect the Company's interest therein.
 
8. TRADE SECRETS. Employee agrees that he will not, during or after the Term of
this Agreement, disclose the specific terms of the Company's relationships or
agreements with their respective significant vendors or customers or any other
significant and material trade secret of the Company, whether in existence or
proposed, to any person, firm, partnership, corporation or business for any
reason or purpose whatsoever, except and only to the extent required by law or
legal process following notice to the Company.
 
9. INDEMNIFICATION. In the event Employee is made a party to any threatened,
pending or completed action, suit or proceeding, whether civil, criminal,
administrative or investigative (other than an action by Company against
Employee), by reason of the fact that he is or was performing services under
this Agreement, then Company shall indemnify Employee against all expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement, as
actually and reasonably incurred by Employee in connection therewith, to the
maximum extent permitted by applicable law. The advancement of expenses shall be
mandatory to the extent permitted by applicable law. In the event that both
Employee and Company are made a party to the same third-party action, complaint,
suit or proceeding, Company agrees to engage counsel, and Employee agrees to use
the same counsel, provided that if counsel selected by Company shall have a
conflict of interest that prevents such counsel from representing Employee,
Employee may engage separate counsel and Company shall pay all reasonable
attorneys' fees of such separate counsel. Company shall not be required to pay
the fees of more than one law firm except as described in the preceding
sentence, and shall not be required to pay the fees of more than two law firms
under any circumstances. Further, while Employee is expected at all times to use
his best efforts to faithfully discharge his duties under this Agreement,
Employee cannot be held liable to Company for errors or omissions made in good
faith where Employee has not exhibited gross, willful and wanton negligence or
misconduct or performed criminal or fraudulent acts.
 
10. NO PRIOR AGREEMENTS. Employee hereby represents and warrants to Company and
the Company that the execution of this Agreement by Employee and his employment
by Company and the performance of his duties hereunder will not violate or be a
breach of any agreement with a former Company, client or any other person or
entity. Further, Employee agrees to indemnify Company and the Company for any
claim,
 
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including, but not limited to, attorneys' fees and expenses of investigation, by
any such third party that such third party may now have or may hereafter come to
have against Company or any of its subsidiaries or affiliates based upon or
arising out of any noncompetition agreement, invention or secrecy agreement
between Employee and such third party which was in existence as of the date of
this Agreement.
 
11. ASSIGNMENT; BINDING EFFECT. Employee understands that he has been selected
for employment by Company and/or the Company on the basis of his personal
qualifications, experience and skills. Employee agrees, therefore, he cannot
assign all or any portion of his performance under this Agreement. Subject to
the preceding two (2) sentences and the express provisions of paragraph 12
below, this Agreement shall be binding upon, inure to the benefit of and be
enforceable by the parties hereto and their respective heirs, legal
representatives, successors and assigns.
 
12 CHANGE IN CONTROL.
 
      (a)   Upon notice by Employee at any time during the 90 days following a
            Change in Control, the Employee may elect to terminate his
            employment and shall be entitled to receive in a lump-sum payment
            due upon the date of such termination the amount equal to three (3)
            times his annual base salary then in effect, and the noncompetition
            provisions of paragraph 3 shall apply for a period of one (1) year
            immediately following the effective date of termination.
 
      (b)   Upon a Change in Control, any options outstanding to Employee that
            have not previously vested shall be immediately vested.
 
      (c)   In any Change in Control situation, if Employee is terminated by
            Company without Cause at any time during the twelve (12) months
            immediately following the closing of the transaction giving rise to
            the Change in Control, or Employee terminates this Agreement for
            Good Reason (as defined below) at any time during the twelve (12)
            months immediately following the closing of the transaction giving
            rise to the Change in Control, Employee shall be entitled to receive
            in a lump-sum payment, due on the effective date of termination, the
            amount equal to three (3) times the greater of (i) his annual base
            salary then in effect or (ii) his annual base salary in effect
            immediately prior to the closing of the transaction giving rise to
            the Change in Control, and the noncompetition provisions of
            paragraph 3 shall apply for a period of one (1) year immediately
            following the effective date of termination. For purposes of this
            Agreement, Employee shall have "GOOD REASON" to terminate this
            Agreement and his employment hereunder if, without Employee's
            consent, (x) Employee is demoted by means of a reduction in
            authority, responsibilities, duties or title to a position of
            materially less stature or importance within the Company than as
            described in paragraph 1 hereof or (y) the Company breaches this
            Agreement in any material respect and fails to cure such breach
            within ten (10) days after Employee delivers written notice and a
            written
 
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            description of such breach to the Company, which notice shall
            specifically refer to this section of this Agreement.
 
      (d)   For purposes of applying paragraph 5 under the circumstances
            described in (b) above, the effective date of termination will be
            the closing date of the transaction giving rise to the Change in
            Control and all compensation, reimbursements and lump-sum payments
            due Employee must be paid in full by Company at or prior to such
            closing. Further, Company shall ensure that Employee will be given
            sufficient time and opportunity to elect whether to exercise all or
            any of his vested options to purchase the Company's Common Stock,
            including any options with accelerated vesting under the provisions
            of the Company's 1998 Long-Term Incentive Plan (or other applicable
            plan then in effect), such that he may convert the options to shares
            of the Company's Common Stock at or prior to the closing of the
            transaction giving rise to the Change in Control, if he so desires.
 
      (e)   A "CHANGE IN CONTROL" shall be deemed to have occurred if:
 
            (i) any person, other than Comfort Systems USA, Inc., a Delaware
            corporation and the beneficial owner of the Company ("CSUSA"), or an
            employee benefit plan of CSUSA, or any entity controlled by either,
            acquires directly or indirectly the Beneficial Ownership (as defined
            in Section 13(d) of the Securities Exchange Act of 1934, as amended)
            of any voting security of the CSUSA and immediately after such
            acquisition such Person is, directly or indirectly, the Beneficial
            Owner of voting securities representing fifty percent (50%) or more
            of the total voting power of all of the then-outstanding voting
            securities of CSUSA;
 
            (ii) the following individuals no longer constitute a majority of
            the members of the Board of Directors of CSUSA: (A) the individuals
            who, as of the date hereof, constitute the Board of Directors of
            CSUSA (the "ORIGINAL DIRECTORS"); (B) the individuals who thereafter
            are elected to the Board of Directors of the CSUSA and whose
            election, or nomination for election, to the Board of Directors of
            CSUSA was approved by a vote of at least two-thirds (2/3) of the
            Original Directors then still in office (such directors becoming
            "ADDITIONAL ORIGINAL DIRECTORS" immediately following their
            election); and (C) the individuals who are elected to the Board of
            Directors of CSUSA and whose election, or nomination for election,
            to the Board of Directors of CSUSA was approved by a vote of at
            least two-thirds (2/3) of the Original Directors and Additional
            Original Directors then still in office (such directors also
            becoming "ADDITIONAL ORIGINAL DIRECTORS" immediately following their
            election);
 
            (iii) the stockholders of CSUSA shall approve a merger,
            consolidation, recapitalization, or reorganization of CSUSA, a
            reverse stock split of outstanding voting securities, or
            consummation of any such transaction if
 
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            stockholder approval is not obtained, other than any such
            transaction which would result in at least seventy-five percent
            (75%) of the total voting power represented by the voting securities
            of the surviving entity outstanding immediately after such
            transaction being Beneficially Owned by at least seventy-five
            percent (75%) of the holders of outstanding voting securities of
            CSUSA immediately prior to the transaction, with the voting power of
            each such continuing holder relative to other such continuing
            holders not substantially altered in the transaction; or
 
            (iv) the stockholders of CSUSA shall approve a plan of complete
            liquidation of CSUSA or an agreement for the sale or disposition of
            all or a substantial portion of the CSUSA's assets (i.e., fifty
            percent (50%) or more of the total assets of CSUSA).
 
            (f) Employee must be notified in writing by Company or any of its
            subsidiaries or affiliates at anytime that either Company or any of
            its subsidiaries or affiliates anticipates that a Change in Control
            may take place.
 
      (f)   If it shall be determined that any payment or distribution by
            Company, the Company or any other person to or for the benefit of
            the Employee (a "PAYMENT") would be subject to the excise tax
            imposed by Section 4999 of the Internal Revenue Code of 1986, as
            amended (the "EXCISE TAX"), as a result of the termination of
            employment of the Employee in the event of a Change in Control, then
            Company, the Company or the successor to the Company shall pay an
            additional payment (a "GROSS-UP PAYMENT") in an amount such that
            after payment by the Employee of all taxes, including, without
            limitation, any income taxes and Excise Tax imposed on the Gross-Up
            Payment, the Employee retains an amount of the Gross-Up Payment
            equal to the Excise Tax imposed on the Payments. Such amount will be
            due and payable by Company, the Company or the successor to the
            Company within ten (10) days after the Employee delivers written
            request for reimbursement accompanied by a copy of the Employee's
            tax return(s) or other tax filings showing the excise tax actually
            incurred by the Employee.
 
13. COMPLETE AGREEMENT. This Agreement sets forth the entire agreement of the
parties hereto relating to the subject matter hereof and supersedes any other
employment agreements or understandings, written or oral, between or among
Company, the Company and Employee. This Agreement is not a promise of future
employment. Employee has no oral representations, understandings or agreements
with Company or any of its subsidiaries or affiliates or any of its officers,
directors or representatives covering the same subject matter as this Agreement.
This Agreement is the final, complete and exclusive statement and expression of
the agreement between Company and Employee and of all the terms of this
Agreement, and it cannot be varied, contradicted or supplemented by evidence of
any prior or contemporaneous oral or written agreements. This written Agreement
may not be later modified except by a further writing signed by a duly
authorized officer of Company and Employee, and
 
                                       11
<PAGE>
no term of this Agreement may be waived except in writing signed by the party
waiving the benefit of such term.
 
14. NOTICE. Whenever any notice is required hereunder, it shall be given in
writing addressed as follows:
 
      To Company:       Comfort Systems USA (Texas), L.P.
                        777 Post Oak Blvd, Suite 500
                        Houston, Texas  77056
                        Attention: Law Department
 
      To Employee:      William F. Murdy
                        ---------------------------------------
                        ---------------------------------------
 
      Notice shall be deemed given and effective on the earlier of three (3)
days after the deposit in the U.S. mail of a writing addressed as above and sent
first class mail, certified, return receipt requested, or when actually received
by means of hand delivery, delivery by Federal Express or other courier service,
or by facsimile transmission. Either party may change the address for notice by
notifying the other party of such change in accordance with this paragraph 14.1
 
15. SEVERABILITY; HEADINGS. If any portion of this Agreement is held invalid or
inoperative, the other portions of this Agreement shall be deemed valid and
operative and, so far as is reasonable and possible, effect shall be given to
the intent manifested by the portion held invalid or inoperative. The paragraph
headings herein are for reference purposes only and are not intended in any way
to describe, interpret, define or limit the extent or intent of this Agreement
or of any part hereof.
 
16. ARBITRATION. With the exception of paragraphs 3 and 7, any unresolved
dispute or controversy arising under or in connection with this Agreement shall
be settled exclusively by arbitration, conducted before a panel of three (3)
arbitrators in Houston, Texas, in accordance with the National Rules for the
Resolution of Employment Disputes of the American Arbitration Association
("AAA") then in effect, provided that Employee shall comply with Company's
grievance procedures in an effort to resolve such dispute or controversy before
resorting to arbitration, and provided further that the parties may agree to use
arbitrators other than those provided by the AAA. The arbitrators shall not have
the authority to add to, detract from, or modify any provision hereof nor to
award punitive damages to any injured party. The arbitrators shall have the
authority to order back-pay, severance compensation, vesting of options (or cash
compensation in lieu of vesting of options), reimbursement of costs, including
those incurred to enforce this Agreement, and interest thereon in the event the
arbitrators determine that Employee was terminated without disability or Cause,
as defined in paragraphs 5(a)(ii) and 5(a)(iii), respectively, or that Company
has breached this Agreement in any material respect. A decision by a majority of
the arbitration panel shall be final and binding. Judgment may
 
                                       12
<PAGE>
be entered on the arbitrators' award in any court having jurisdiction. The
direct expense of any arbitration proceeding shall be borne by Company.
 
17. GOVERNING LAW. This Agreement shall in all respects be construed according
to the laws of the State of Texas.
 
18. COUNTERPARTS. This Agreement may be executed simultaneously in two (2) or
more counterparts, each of which shall be deemed an original and all of which
together shall constitute but one and the same instrument.
 
19. THIRD-PARTY BENEFICIARY. The Company is intended to be a third-party
beneficiary under this Agreement, and shall be entitled to enforce the
provisions hereof benefiting the Company.
 
      IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
 
                              COMFORT SYSTEMS USA (TEXAS), L.P.
 
                              By: Comfort Systems USA G.P., Inc.
 
 
 
                              By: /s/ William George
                                  WILLIAM GEORGE
                                  VICE PRESIDENT
 
                              COMFORT SYSTEMS USA, INC.
 
 
 
                              By: /s/ William George
                                  WILLIAM GEORGE
                                  SENIOR VICE PRESIDENT AND GENERAL COUNSEL
 
 
                              EMPLOYEE:
 
 
 
                              /s/ William F. Murdy
                              WILLIAM F. MURDY
 
                                       13
</TEXT>
</DOCUMENT>

 

EX-10.2 3 a2185250zex-10_2.htm EXHIBIT 10.2
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Exhibit 10.2


Comfort Systems USA, Inc.
Change in Control Agreement

        This Change in Control Agreement (this "Agreement") by and among Comfort Systems USA, Inc., a Delaware corporation (the "Company"), and [EMPLOYEE'S NAME] ("Employee") is hereby entered into and effective as of the [DATE].

R E C I T A L S

        A.    The Company recognizes that during Employee's service with the Company the possibility of a change in control of the Company may arise and that such possibility, and the uncertainty it may create, may result in the departure or distraction of Employee to the detriment of the Company and its shareholders.

        B.    The Company desires to provide the benefits set forth in this Agreement to help assure the Company of the continuation of Employee's service and to encourage Employee's attention and dedication to Employee's assigned duties without distraction in circumstances arising from the possibility of a change in control, and Employee desires to evidence his or her acceptance of such benefits.

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

A G R E E M E N T S

        1.     DEFINED TERMS. In addition to the capitalized terms defined elsewhere in this Agreement, the following capitalized terms shall have the meanings set forth below:


        2.     TERM. The term of this Agreement will begin on the date hereof and continue in full force and effect as long as Employee remains in his or her current position with the Company or any other position of equal or higher grade; provided that this Agreement shall terminate and cease to be in full force and effect upon Employee giving notice of his or her intent to terminate employment with the Company for any reason other than Good Reason, whether by retirement, early retirement, or otherwise.

        3.     CHANGE IN CONTROL.

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        4.     BINDING EFFECT. This Agreement shall be binding upon, inure to the benefit of and be enforceable by the parties hereto and their respective heirs, legal representatives, successors and

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assigns. In the event any Successor (as defined below) does not assume this Agreement by operation of law, the Company will seek to have such Successor, by agreement in form and substance satisfactory to Employee, expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it. If there has been a Change in Control prior to, or if a Change in Control will result from, any such succession, then failure of the Company to obtain at Employee's request such agreement prior to or upon the effectiveness of any such succession (unless assumption occurs by operation of law) shall constitute Good Reason for termination by Employee of his or her employment. "Successor" means any Person that succeeds to, or has the ability to control, the Company's business as a whole, directly by merger, consolidation, spin-off or similar transaction, or indirectly by purchase of the Company's voting securities or acquisition of all or substantially all of the assets of the Company.

        5.     COMPLETE AGREEMENT. This Agreement sets forth the entire agreement of the parties hereto relating to the subject matter hereof and supersedes any other employment agreements or understandings, written or oral, between the Company and Employee. This Agreement is the final, complete and exclusive statement and expression of the agreement between Company and Employee and of all the terms of this Agreement, and it cannot be varied, contradicted or supplemented by evidence of any prior or contemporaneous oral or written agreements. This Agreement may not be later modified except by a further writing signed by a duly authorized officer of Company and Employee, and no term of this Agreement may be waived except in writing signed by the party waiving the benefit of such term.

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

To Company:

 

Comfort Systems USA, Inc.
777 Post Oak Blvd, Suite 500
Houston, Texas 77056
Attention: Law Department


To Employee:


 


[ADDRESS]

        Notice shall be deemed given and effective on the earlier of three days after the deposit in the U.S. mail of a writing addressed as above and sent first class mail, certified, return receipt requested, or when actually received by means of hand delivery, delivery by Federal Express or other courier service, or by facsimile transmission. Either party may change the address for notice by notifying the other party of such change in accordance with this Section 6.

        7.     SEVERABILITY; HEADINGS. If any portion of this Agreement is held invalid or inoperative, the other portions of this Agreement shall be deemed valid and operative and, so far as is reasonable and possible, effect shall be given to the intent manifested by the portion held invalid or inoperative. The headings herein are for reference purposes only and are not intended in any way to describe, interpret, define or limit the extent or intent of this Agreement or of any part hereof.

        8.     ARBITRATION. Any unresolved dispute or controversy arising under or in connection with this Agreement shall be settled exclusively by arbitration, conducted before a panel of three arbitrators in Houston, Texas, in accordance with the National Rules for the Resolution of Employment Disputes of the American Arbitration Association ("AAA") then in effect, provided that Employee shall comply with Company's grievance procedures in an effort to resolve such dispute or controversy before resorting to arbitration, and provided further that the parties may agree to use arbitrators other than those provided by the AAA. The arbitrators shall not have the authority to add to, detract from, or modify any provision hereof nor to award punitive damages to any injured party. The arbitrators shall have the authority to order back-pay, severance compensation, vesting of options or restricted stock (or cash compensation in lieu of vesting of options or restricted stock), reimbursement of costs, including

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those incurred to enforce this Agreement, and interest thereon in the event the arbitrators determine that Employee was terminated without disability or Cause, or that Company has breached this Agreement in any material respect. A decision by a majority of the arbitration panel shall be final and binding. Judgment may be entered on the arbitrators' award in any court having jurisdiction. The direct expense of any arbitration proceeding shall be borne by Company.

        9.     GOVERNING LAW. This Agreement shall in all respects be construed according to the laws of the State of Texas, to the extent not preempted by federal law.

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

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

 

 

COMFORT SYSTEMS USA., INC.


 


 


By:




 


 


EMPLOYEE:


 


 



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EX-10.3 4 a2185250zex-10_3.htm EXHIBIT 10.3
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Exhibit 10.3


Comfort Systems USA, Inc.
Executive Severance Policy

I. PURPOSE

        The purpose of this Policy is to establish a severance program for senior level executives of Comfort Systems USA, Inc. (the "Company") that recognizes (i) the relatively more difficult employment transition that occurs upon the termination of employment of higher paid individuals; and (ii) that senior level executive employees serve at the pleasure of the Company and are employed "at will"—meaning that the Company may terminate the employment relationship at any time for any reason (or no reason) without liability to the employee.

II.    SCOPE

        This Policy covers the following employees of the Company: (i) Chief Executive Officer; (ii) President; (iii) Chief Financial Officer; (iv) Chief Operating Officer; (v) Chief Accounting Officer; (vi) Chief Legal Officer or General Counsel; (vii) any Executive Vice President; or (viii) any employee who has ever been deemed a Section 16 officer for SEC reporting purposes; and such other employees as may be designated by the Compensation Committee ("Compensation Committee") of the Board of Directors of the Company (each, a "Covered Executive"), and shall be applicable in the event that the Covered Executive's employment is terminated by the Company other than for cause (a "Termination").

        No benefits described in this policy will be payable or made available to a Covered Executive until such

        Covered Executive (or, in the event of death, a representative of the Covered Executive's heirs) executes a full and complete waiver and release of claims in a form acceptable to the Company. The Company and Covered Executive are sometimes referred to herein collectively as the "Parties".

III.  ADMINISTRATION

        The administration of this Policy is the responsibility of the Compensation Committee, which has final and binding authority to administer the plan in its discretion and in accordance with its stated terms. The Compensation Committee may delegate any administrative duties, including without limitation, duties with respect to the processing, review, investigation and approval and payment of severance benefits hereunder, to designated individuals or committees.

IV.    SEVERANCE PAY

        In the event of the Termination of the Covered Executive, the Covered Executive other than by reason of death or disability, the Covered Executive will receive a lump sum payment (the "Separation Allowance Benefits") equal to (i) the sum of the Covered Executive's current base salary plus Bonus ("Bonus" being the average of the prior three years' bonuses paid to Employee or the current annual incentive bonus payable determined following completion of the annual bonus period pursuant to the goals and objectives established for such bonus, whichever is greater) times (ii) the applicable multiplier set forth below:


(d)

In the event of a termination of the Covered Executive by reason of death or disability, the Covered Executive will receive a lump sum payment equal to one times (1X) the Covered Executive's current base salary, reduced by the amount, if any, of benefits payable under any life or disability insurance policies to the extent such policies are procured and paid for by the Company. A Covered Executive's Termination will be treated as occurring by reason of disability if it results from the Covered Executive's having been absent from full-time duties for four (4) consecutive months and being unable to resume full-time duties after thirty (30) days notice, or from an impairment of the health of the Covered Executive that makes the continued performance of duties hazardous to the physical or mental health of the Covered Executive, as determined by a qualified doctor with the concurrence of a qualified doctor selected by the Company and reasonably acceptable to the Covered Executive's doctor.

V. BENEFITS CONTINUATION

Health Insurance and Welfare Benefits

        In the event of Termination of a Covered Executive, the Covered Executive and his or her eligible dependents covered by the Company's health and dental plans at the time of Termination may elect to continue his or her health and dental coverage pursuant and subject to the requirements of the Consolidated Omnibus Budget Reconciliation Act of 1985 ("COBRA"). If the Covered Executive or an eligible dependent elects to continue his or her coverage pursuant to COBRA, the Company shall (except in the case of a Termination by reason of death or disability) reimburse the Covered Executive for premiums charged for COBRA coverage for up to 12 months following the date of Termination (the "Severance Period"). However, in no event will the Company reimburse the Covered Executive if the Covered Executive or his or her eligible dependents cease to be eligible for continued coverage under COBRA or become eligible to participate in another employee benefit plan providing health benefits.

        Participation in any other Company benefits ends on the last day of active employment, including the Covered Executive's participation in any of the following, to the extent applicable: life insurance, accidental death and dismemberment insurance, business travel accident insurance, short-term and long-term disability insurance, payment for vehicle leases, payment of club dues, payment of relocation expenses, and payment of credit card fees.

        Information regarding conversion privileges or portability of any of the foregoing benefits will be communicated at the time of separation.

Vacation

        No additional vacation will be earned during the Severance Period.

Long-Term Incentive Plans

        In the event of the Covered Executive's Termination, the terms of the Company's equity incentive plans and the specific provisions of any award agreement related thereto shall govern awards granted to the Covered Executive.

Other Provisions

        In addition to salary and benefit continuations as provided above, outplacement services will be made available (except in the case of the Covered Employee's disability) at the Company's expense, not to exceed $50,000.

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VI.   TIMING OF PAYMENTS

        The Separation Allowance Benefits shall be paid in a lump sum as soon as practicable after the Covered Executive signs and returns the release form required in Section II above, or, in the case of an amount determiend with reference to the annual bonus for the year of termination, as soon as practicable after such bonus is determined, if later. Notwithstanding the foregoing, if at the time of the Covered Executive's separation from service with the Company the Covered Executive is a "specified employee," as defined below, any and all amounts payable under this Agreement in connection with such separation from service that constitute deferred compensation subject to Section 409A of the Internal Revenue Code of 1986, as amended ("Section 409A"), as determined by the Company in its reasonable discretion, and that would (but for this sentence) be payable to the Covered Executive within the six months immediately following the date of such separation from service, shall instead be paid on the date that follows the date of such separation from service by six months (or, if earlier, the date of the Covered Executive's death). For purposes of the preceding sentence, "separation from service" shall be determined in a manner consistent with subsection (a)(2)(A)(i) of Section 409A and the term "specified employee" shall mean an individual determined by the Company to be a specified employee as defined in subsection (a)(2)(B)(i) of Section 409A.

VII. NO DUPLICATION OF SEVERANCE RIGHTS

        To the extent any Covered Executive is entitled to receive benefits for severance pursuant to statutory or regulatory requirements or an employment contract or arrangement, the benefits hereunder, which are not intended to duplicate such benefits, shall be reduced automatically to avoid any such duplication. The determination of the reduction is the responsibility of the Compensation Committee, whose decision will be final and binding on both the Company and the Covered Executive.

VIII.  AMENDMENT AND TERMINATION

        The Company reserves the right to amend or terminate this Policy in part or in whole, with respect to any or all Covered Executives, provided that any such action that would materially decrease the benefits to which a Covered Executive would have been entitled under the Policy as in effect prior to such action shall not take effect prior to 60 days following delivery of written notice to the Covered Executive. Any dispute or controversy arising in connection with any such action that is not resolved within 30 days following delivery of such written notice may be submitted for resolution in accordance with Section IX below.

IX.   ARBITRATION

        Any unresolved dispute or controversy arising under or in connection with this Policy shall be settled exclusively by arbitration, conducted before a panel of three (3) arbitrators in Houston, Texas, in accordance with the National Rules for the Resolution of Employment Disputes of the American Arbitration Association ("AAA") then in effect, provided that Covered Executive shall comply with the Company's grievance procedures in an effort to resolve such dispute or controversy before resorting to arbitration, and provided further that the Parties may agree to use arbitrators other than those provided by the AAA. The arbitrators shall not have the authority to add to, detract from, or modify any provision of this Policy nor to award punitive damages to any injured party. The arbitrators shall have the authority to order severance compensation, vesting of options or restricted stock (or cash compensation in lieu of vesting of options or restricted stock), reimbursement of costs, including those incurred to enforce this Policy, and interest thereon. A decision by a majority of the arbitration panel shall be final and binding. Judgment may be entered on the arbitrators' award in any court having jurisdiction. The direct expense of any arbitration proceeding shall be borne by the Company.

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Comfort Systems USA, Inc. Executive Severance Policy