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EXHIBIT 10.26
EMPLOYMENT AGREEMENT
This Employment Agreement (this "AGREEMENT") by and among COMFORT
SYSTEMS USA (TEXAS), L.P., a Texas limited partnership (the "COMPANY"), and Gary
E. Hess ("EMPLOYEE") is hereby entered into and effective as of the 2nd day of
January, 2001.
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 President and Chief
Operating 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. Effective as of the Effective Date, the base salary
payable to Employee shall be $250,000 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
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may, in its sole discretion, (i) make 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 his primary residence and Employee refuses, such refusal shall not
constitute "CAUSE" for termination of this Agreement under the terms of
paragraph 5(a)(iii).
5. TERM; TERMINATION; RIGHTS ON TERMINATION.
(a) TERM. The term of this Agreement shall begin on the date hereof and
continue for 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 Employee shall receive
from Company, in a lump-sum payment due on the effective date
of termination, the base salary at the rate then in effect for
one (1) year. Further, any termination without Cause by
Company shall operate to shorten the period set forth in
paragraph 3(a) and during which the terms of paragraph 3 apply
to one (1) year from the date of termination of employment.
Except as provided in paragraph 12 below, if Employee resigns
or otherwise terminates this Agreement, the provisions of
paragraph 3 hereof shall apply, except that Employee shall
receive no severance compensation. If Employee is terminated
by the Company without Cause, or if the Employee terminates
his employment for Good Reason pursuant to paragraph 12(c)
below, then the Company shall make the insurance premium
payments
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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.
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
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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, 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.
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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 two (2) 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 two (2) 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 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
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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 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
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such continuing holder relative to other such continuing
holders not substantially altered in the transaction; or
(iv) the stockholders of CSUSA shall approve a plan of
complete liquidation of CSUSA or an agreement for the sale or
disposition of all or a substantial portion of the CSUSA's
assets (i.e., fifty percent (50%) or more of the total assets
of CSUSA).
(v) Employee must be notified in writing by Company or any of
its subsidiaries or affiliates at anytime that either Company
or any of its subsidiaries or affiliates anticipates that a
Change in Control may take place.
(f) If it shall be determined that any payment or distribution by
Company, the Company or any other person to or for the benefit
of the Employee (a "PAYMENT") would be subject to the excise
tax imposed by Section 4999 of the Internal Revenue Code of
1986, as amended (the "EXCISE TAX"), as a result of the
termination of employment of the Employee in the event of a
Change in Control, then Company, the Company or the successor
to the Company shall pay an additional payment (a "GROSS-UP
PAYMENT") in an amount such that after payment by the Employee
of all taxes, including, without limitation, any income taxes
and Excise Tax imposed on the Gross-Up Payment, the Employee
retains an amount of the Gross-Up Payment equal to the Excise
Tax imposed on the Payments. Such amount will be due and
payable by Company, the Company or the successor to the
Company within ten (10) days after the Employee delivers
written request for reimbursement accompanied by a copy of the
Employee's tax return(s) or other tax filings showing the
excise tax actually incurred by the Employee.
13. COMPLETE AGREEMENT. This Agreement sets forth the entire agreement of
the parties hereto relating to the subject matter hereof and supersedes any
other employment agreements or understandings, written or oral, between or among
Company, the Company and Employee. This Agreement is not a promise of future
employment. Employee has no oral representations, understandings or agreements
with Company or any of its subsidiaries or affiliates or any of its officers,
directors or representatives covering the same subject matter as this Agreement.
This Agreement is the final, complete and exclusive statement and expression of
the agreement between Company and Employee and of all the terms of this
Agreement, and it cannot be varied, contradicted or supplemented by evidence of
any prior or contemporaneous oral or written agreements. This written Agreement
may not be later modified except by a further writing signed by a duly
authorized officer of Company and Employee, and no term of this Agreement may be
waived except in writing signed by the party waiving the benefit of such term.
14. NOTICE. Whenever any notice is required hereunder, it shall be given in
writing addressed as follows:
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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
5110 San Felipe 363W
Houston, TX 77056
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 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.
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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 Murdy
---------------------------------------
William Murdy
Chief Executive Officer
COMFORT SYSTEMS USA, INC.
By: /s/ William Murdy
---------------------------------------
William Murdy
Chief Executive Officer
EMPLOYEE:
/s/ Gary E. Hess
------------------------------------------
Gary E. Hess
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