/S/ CHARLES W. KLAPPERICH Director
Charles W. Klapperich
/S/ SAMUEL M. LAWRENCE, III Director
Samuel M. Lawrence, III
/S/ JOHN C. PHILLIPS Director
John C. Phillips
/S/ ROBERT J. POWERS Director
Robert J. Powers
/S/ STEVEN S. HARTER Director
Steven S. Harter
_____________________________ Director
Larry Martin
_____________________________ Director
John Mercadante, Jr.
II-6
EXHIBIT 4.3
1998 EMPLOYEE STOCK PURCHASE PLAN
(Effective January 1, 1998)
ARTICLE I - BACKGROUND
1.1 ESTABLISHMENT OF THE PLAN.
Comfort Systems USA, Inc. (the "Company"), hereby establishes a stock purchase
plan, effective January 1, 1998, to be known as the "1998 Employee Stock
Purchase Plan" (the "Plan"), as set forth in this document. The Plan is intended
to be a qualified employee stock purchase plan within the meaning of Section 423
of the Internal Revenue Code of 1986, as amended, and the regulations and
rulings thereunder.
1.2 APPLICABILITY OF THE PLAN.
The provisions of this Plan are applicable only to certain individuals who, on
or after January 1, 1998, are employees of the Company and its subsidiaries
participating in the Plan.
1.3 PURPOSE.
The purpose of the Plan is to enhance the proprietary interest among the
employees of the Company and its participating subsidiaries through ownership of
Common Stock of the Company.
ARTICLE II - DEFINITIONS
Whenever capitalized in this document, the following terms shall have the
respective meanings set forth below.
2.1 ADMINISTRATOR.
Administrator shall mean the person or persons (who may be officers or employees
of the Company) selected by the Committee to operate the Plan, perform
day-to-day administration of the Plan, and maintain records of the Plan.
2.2 BOARD.
Board shall mean the Board of Directors of the Company.
1
2.3 CODE.
Code shall mean the Internal Revenue Code of 1986, as amended from time to time,
and the regulations thereunder.
2.4 COMMITTEE.
Committee shall mean a committee which consists of members of the Board and
which has been designated by the Board to have the general responsibility for
the administration of the Plan. Members of the Committee shall not be eligible
to participate in the Plan. Each member of the Committee shall not be eligible
to participate in the Plan. Each member of the Committee shall be a
"disinterested person" within the meaning of Section 16 of, and Rule 16b-3
under, the Securities Exchange Act of 1934. The Committee shall satisfy the
requirements of Section 16 of the Securities Exchange Act of 1934, and all rules
and regulations thereunder, regarding disinterested administration.
Subject to the express provisions of the Plan, the Committee shall have plenary
authority in its sole and absolute discretion to interpret and construe any and
all provisions of the Plan, to adopt rules and regulations for administering the
Plan, and to make all other determinations necessary or advisable for
administering the Plan. The Committee's determinations on the foregoing matters
shall be conclusive and binding upon all persons.
2.5 COMMON STOCK.
Common Stock shall mean Common Stock, $0.01 par value per share, of the Company.
2.6 COMPANY.
Company shall mean Comfort Systems USA, Inc.
2.7 COMPENSATION.
(a) For purposes of this Plan, "Total Compensation" shall mean, for any
Participant, for any period, the Participant's total compensation
including fixed and variable components of base compensation and
cash incentive compensation paid to the Participant for the
respective period; but excluding car allowances, life insurance
premiums, moving expenses, income from disqualifying dispositions of
incentive stock options and other similar items.
(b) Total Compensation shall include any amounts deferred by the
Participant under a plan maintained by an Employer under Code
Section 401(k) or amounts contributed by the Participant under a
plan maintained by an Employer under Code Section 125.
2
2.8 DATE OF GRANT.
Date of Grant shall mean the first day of each Option Period.
2.9 EFFECTIVE DATE.
Effective Date shall mean January 1, 1998.
2.10 EMPLOYEE.
Employee shall mean an employee of an Employer.
2.11 EMPLOYER.
Employer shall mean the Company and any Subsidiary designated by the Committee
as an employer participating in the Plan.
2.12 ENROLLMENT FORM.
Enrollment Form shall mean an Employee's authorization either in writing on a
form approved by the Administrator or through telephonic communication approved
by the Administrator that specifies the Employee's payroll deduction, and
contains such other terms and provisions as may be required by the
Administrator.
2.13 EXERCISE DATE.
Exercise Date shall mean the last day of each Option Period.
2.14 FAIR MARKET VALUE.
Fair Market Value of a share of Common Stock, as of any applicable date, shall
mean --
(a) if the Common Stock is not traded on the applicable date on a
national stock exchange, the closing price for the Common Stock as
reported on the New York Stock Exchange for that date or, if no
closing price is so reported for that date, the closing price on the
next preceding date for which a closing price was reported; or
(b) if the Common Stock is traded on the applicable date on a national
stock exchange, the closing price on such date of a share of Common
Stock as traded on the largest stock exchange on which it is then
traded or, if no shares were traded on such date, on the next
preceding day on which shares were traded on such exchange, as
reported by National Quotation Bureau, Inc., or other national
quotation service.
3
If at any time shares of Common Stock are not traded on an exchange or in the
over-the- counter market, Fair Market Value shall be the value determined by the
Board or the Committee, taking into consideration those factors affecting or
reflecting value which they deem appropriate.
2.15 OPTION.
Option shall mean a right to purchase Common Stock under the Plan.
2.16 OPTION PERIOD.
Option Period shall mean each six-month period beginning each January 1 and July
1.
2.17 OPTION PRICE.
Option Price shall mean the purchase price of Common Stock determined under
Section 5.1.
2.18 PARTICIPANT.
Participant shall mean any Employee who meets the eligibility requirements of
Section 3.1 and who has elected to participate in the Plan under Section 3.3 and
who has an account balance under the Plan.
2.19 PLAN.
Plan shall mean the 1998 Employee Stock Purchase Plan, as amended and in effect
from time to time.
2.20 REPORTING PERSON.
Reporting Person shall mean a Participant who, on the relevant date, is a
director, executive officer or 10% shareholder of the Company as defined in
Section 16(a) of the Securities Exchange Act of 1934, as amended.
2.21 SUBSIDIARY.
Subsidiary shall mean any present or future corporation that is a "subsidiary
corporation" of the Company as defined in Code Section 424.
Except when otherwise indicated by the context, the definition of any term
herein in the singular may also include the plural.
4
ARTICLE III - ELIGIBILITY AND PARTICIPATION
3.1 ELIGIBILITY.
Each Employee who is an Employee regularly scheduled to work at least twenty
hours each week shall be eligible to participate in the Plan as of the later of:
(a) the first Date of Grant following the Employee's last date of hire
by an Employer; or
(b) the Effective Date.
Notwithstanding the foregoing, no Employee shall be granted an Option for an
Option Period if, immediately after the grant, the Employee would own stock,
and/or hold outstanding options to purchase stock, possessing five percent (5%)
or more of the total combined voting power or value of all classes of stock of
the Company or any Subsidiary. For purposes of this section, the attribution
rules of Code Section 424(d) shall apply in determining stock ownership of any
Employee.
3.2 LEAVE OF ABSENCE.
For purposes of Section 3.1, an individual on a leave of absence from an
Employer shall be deemed to be an Employee for all or such portion of such leave
of absence as the Committee shall determine, with all such determinations to be
made in a nondiscriminatory manner. Such individual's employment with the
Employer shall be deemed to terminate in accordance with such determination by
the Committee or in accordance with the rules adopted from time to time by the
Committee for such purpose.
3.3 INITIAL PARTICIPATION.
An Employee eligible to participate in the Plan under Section 3.1 may submit an
Enrollment Form to the Administrator for an Option Period. The Enrollment Form
shall authorize a regular payroll deduction from the Employee's Total
Compensation for the Option Period subject to the limits and procedures
described in Article VI. A Participant's Enrollment Form authorizing a regular
payroll deduction shall remain effective from Option Period to Option Period
until amended or canceled under Section 6.3.
ARTICLE IV - STOCK AVAILABLE
4.1 IN GENERAL.
Subject to the adjustments in Sections 4.2 and 4.3, an aggregate of Three
Hundred Thousand (300,000) shares of Common Stock shall be available for
purchase by
5
Participants pursuant to the provisions of the Plan. These shares may be
authorized and unissued shares or may be shares issued and subsequently acquired
by the Company or an independent agent of the Company if the Company should
choose to use one. If an Option under the Plan expires or terminates for any
reason without having been exercised in whole or part, the shares subject to
such Option that are not purchased shall again be available for subsequent
Option grants under the Plan. If the total number of shares of Common Stock for
which Options are exercised on any Exercise Date exceeds the maximum number of
shares available for the Option Period, the Committee shall make a pro rata
allocation of the shares available in as nearly a uniform manner as shall be
practicable and as it shall determine to be equitable; and the balance of the
cash credited to Participants' accounts shall be distributed to the Participants
as soon as practicable.
4.2 ADJUSTMENT IN EVENT OF CHANGES IN CAPITALIZATION.
In the event of a stock dividend, stock split or combination of shares,
recapitalization or other change in the Company's capitalization, or other
distribution with respect to holders of the Company's Common Stock other than
normal cash dividends, an automatic adjustment shall be made in the number and
kind of shares as to which outstanding Options or portions thereof then
unexercised shall be exercisable and in the available shares set forth in
Section 4.1, so that the proportionate interest of the Participants shall be
maintained as before the occurrence of such event. This adjustment in
outstanding Options shall be made without change in the total price applicable
to the unexercised portion of such Options and with a corresponding adjustment
in the Option Price per share.
4.3 DISSOLUTION, LIQUIDATION OR MERGER.
Upon the dissolution or liquidation of the Company, or upon a reorganization,
merger, or consolidation of the Company with one or more corporations in which
the Company is not the surviving corporation, or upon a sale of substantially
all of the property or stock of the Company to another corporation, the holder
of each Option then outstanding under the Plan shall be entitled to receive at
the next Exercise Date upon the exercise of such Option for each share as to
which such Option shall be exercised, as nearly as reasonably may be determined,
the cash, securities, or property that a holder of one share of the Common Stock
was entitled to receive upon and at the time of such transaction. The Board
shall take such steps in connection with these transactions as the Board deems
necessary or appropriate to assure that the provisions of this section shall
thereafter be applicable, as nearly as reasonably may be determined, in relation
to the cash, securities, or property which the holder of the Option may
thereafter be entitled to receive. In lieu of the foregoing, the Committee may
terminate the Plan in accordance with Section 8.2.
6
ARTICLE V - OPTION PROVISIONS
5.1 OPTION PRICE.
The Option Price of a share of Common Stock purchased for a Participant pursuant
to the exercise of an Option for the Option Period shall be set by the Committee
at the lesser of:
(a) Eighty-five percent of the Fair Market Value of a share of Common
Stock on the Date of Grant; or
(b) Eighty-five percent of the Fair Market Value of a share of Common
Stock on the Exercise Date.
5.2 CALENDAR YEAR $25,000 LIMIT.
Notwithstanding anything else contained herein, no Employee may be granted an
Option which permits such Employee's rights to purchase Common Stock under this
Plan and any other qualified employee stock purchase plan (within the meaning of
Code Section 423) of the Company and its Subsidiaries to accrue at a rate which
exceeds $25,000 of Fair Market Value of such Common Stock for each calendar year
in which an Option is outstanding at any time. For purposes of this section,
Fair Market Value shall be determined as of the Date of Grant.
ARTICLE VI - PURCHASING COMMON STOCK
6.1 PARTICIPANT'S ACCOUNT.
The Administrator shall establish a book account in the name of each
Participant. As discussed in Section 6.2 below, a Participant's payroll
deductions shall be credited to the Participant's account, without interest,
until such cash is withdrawn, distributed, or used to purchase Common Stock as
described below.
All cash received or held by the Company under the Plan may be used by the
Company for any corporate purpose. The Company shall not be obligated to
segregate any assets held under the Plan.
As soon as practicable following each Exercise Date, the Company shall deliver
to each Participant a stock certificate evidencing the Participant's shares of
Common Stock acquired upon exercise of an Option on such Exercise Date. A
Participant shall have all ownership rights as to the shares evidenced by such
certificate from and after the relevant Exercise Date.
7
6.2 PAYROLL DEDUCTIONS
(a) PAYROLL DEDUCTIONS.
By submitting an Enrollment Form before the beginning of any Option Period
in accordance with rules adopted by the Committee, an Employee eligible to
participate in the Plan under Section 3.1 may authorize a payroll
deduction to purchase Common Stock under the Plan for the Option Period.
The payroll deduction shall be in any whole percentage from two (2) to
eight (8) percent of such Employee's Total Compensation payable each pay
period, and at any other time an element of Total Compensation is payable.
A Participant's payroll deduction, however, shall be at least ten dollars
($10.00) each payroll period.
(b) OPTION PERIOD $2,000 LIMIT.
Notwithstanding anything else contained herein, no Employee may have more
than $2,000 deducted during any Option Period.
(c) DURATION.
A Participant's Enrollment Form authorizing a regular payroll deduction
shall remain effective, from Option Period to Option Period, until amended
or canceled under Section 6.3.
6.3 DEDUCTION CHANGES AND DISCONTINUANCE.
A Participant may not increase his or her payroll deduction during an Option
Period. A Participant may increase payroll deductions for a future Option Period
by filing a new Enrollment Form in accordance with rules adopted by the
Administrator.
A Participant may decrease, or completely discontinue, his or her payroll
deductions by filing a new Enrollment Form with the Administrator. This decrease
or discontinuance shall be effective on the first pay period commencing at least
twenty days after receipt of the Enrollment Form by the Administrator.
If a Participant who is not a Reporting Person discontinues his or her payroll
deductions during an Option Period, such Participant may not recommence
participation in the Plan until the next Option Period. Any amount held in the
Participant's account after the effective date of the discontinuance of his or
her payroll deductions will either be refunded or used to purchase Common Stock
in accordance with Section 7.1.
If a Participant who is a Reporting Person discontinues his or her payroll
deductions during an Option Period, the Reporting Person may not recommence
participation in the Plan until the next Option Period commencing at least six
months after the effective date
8
of the discontinuance of his or her payroll deductions. Any amount held in the
Reporting Person's account after such effective date of discontinuance shall be
refunded to the Reporting Person as soon as practicable.
6.4 LEAVE OF ABSENCE; TRANSFER TO INELIGIBLE STATUS.
If a Participant either begins a leave of absence, is transferred to employment
with a Subsidiary not participating in the Plan, or remains employed with an
Employer but is no longer customarily scheduled to work at least twenty hours
each week, the Participant shall cease to be eligible for payroll deductions to
his or her account pursuant to Section 6.2. The cash standing to the credit of
the Participant's account shall become subject to the provisions of Section 7.1.
However, any amount held in the account of a Reporting Person shall be refunded
to the Reporting Person as soon as practicable.
If the Participant returns from the leave of absence before being deemed to have
ceased employment with the Employer under Section 3.2, or again becomes an
Employee of the Employer customarily scheduled to work at least twenty (20)
hours each week, the Enrollment Form, if any, in effect immediately before the
leave of absence or disqualifying change in employment status shall be deemed
void and the Participant must again complete a new Enrollment Form to resume
participation in the Plan. A Participant who is a Reporting Person must wait at
least six months from the date such Reporting Person ceased to be eligible for
payroll deductions before recommencing his or her participation in the Plan.
6.5 AUTOMATIC EXERCISE.
Unless the cash credited to a Participant's account is withdrawn or distributed
as provided in Article VII, his or her Option shall be deemed to have been
exercised automatically on the Exercise Date, for the purchase of the number of
full shares of Common Stock which the cash credited to his or her account at
that time will purchase at the Option Price. However, in no event may a
Participant purchase more than two thousand (2,000) shares of Common Stock on
any Exercise Date. Moreover, the amount of cash that may be used to purchase
shares of Common Stock may not exceed the Compensation restrictions set forth in
Section 6.2.
Except in the case of cash that would have been used to purchase fractional
shares as described in the following paragraph, if the cash credited to a
Participant's account on the Exercise Date exceeds the applicable Compensation
restrictions of Section 6.2 or exceeds the amount necessary to purchase the
maximum number of shares of Common Stock available during the Option Period,
such excess cash shall be refunded to the Participant. The excess cash may not
be used to purchase shares of Common Stock or retained in the Participant's
account for a future Option Period.
Fractional shares of Common Stock shall not be issued or purchased under the
Plan. Any accumulated cash balances which would have been used to purchase
fractional shares
9
shall be held in the Participant's account for the next Option Period if a valid
Enrollment Form is in effect for such Option Period, or otherwise distributed to
the Participant without interest.
6.6 LISTING REGISTRATION AND QUALIFICATION OF SHARES.
The granting of Options for, and the sale and delivery of, Common Stock under
the Plan shall be subject to the effecting by the Company of any listing,
registration, or qualification of the shares subject to that Option upon any
securities exchange or market or under any federal or state law, or the
obtaining of the consent or approval of any governmental regulatory body deemed
necessary or desirable for the issuance or purchase of the shares covered.
ARTICLE VII - WITHDRAWALS; DISTRIBUTIONS
7.1 DISCONTINUANCE OF DEDUCTIONS; LEAVE OF ABSENCE; TRANSFER TO INELIGIBLE
STATUS.
In the event of a Participant's (other than a Reporting Person's) complete
discontinuance of payroll deductions under Section 6.3 or a Participant's (other
than a Reporting Person's) leave of absence or transfer to an ineligible status
under Section 6.4, the cash balance then standing to the credit of the
Participant's account shall be:
(a) returned to the Participant, in cash, without interest, as soon as
practicable, upon the Participant's written request received by the
Administrator at least twenty days before the next Exercise Date; or
(b) held under the Plan and used to purchase Common Stock for the
Participant under the automatic exercise provisions of Section 6.5.
In the event of a Reporting Person's complete discontinuance of payroll
deductions under Section 6.3 or 6.4, the cash balance standing to the credit of
the Reporting Person's account as of the effective date of the discontinuance
shall be returned to the Reporting Person, in cash, without interest, as soon as
practicable, without the necessity of receiving a written request.
7.2 TERMINATION OF EMPLOYMENT FOR REASONS OTHER THAN DEATH.
If a Participant terminates employment with the Company and the Subsidiaries for
reasons other than death, the cash balance in the Participant's account shall be
returned to the Participant in cash, without interest, as soon as practicable.
10
7.3 DEATH.
In the event a Participant dies, the cash balance in his or her account shall be
distributed to the Participant's beneficiary, in cash, without interest, as soon
as practicable.
In the event of the Participant's death, the Participant's beneficiary shall be
the person or entity identified on the Participant's Enrollment Form or on such
other form as determined by the Administrator. This designation of beneficiary
may be changed by the Participant in accordance with procedures established by
the Administrator.
7.4 REGISTRATION OF CERTIFICATES.
The Common Stock certificates, when distributed under this Plan, shall be
registered only in the name of the Participant (or beneficiary, if applicable).
No other names may be included in the Common Stock registration. For each
distribution of Common Stock, only one Common Stock certificate shall be issued
to a Participant or beneficiary representing the Participant's shares of Common
Stock. In lieu of delivering a stock certificate to each Participant, the
Administrator may, in its discretion, implement a designated broker program and
direct the Company to issue a single stock certificate to a broker designated by
the Administrator. Such designated broker shall establish an account for each
Participant and shall effect transfers and sales from each such account at the
direction of the specified Participant. To facilitate the designated broker
program, the Administrator may require, as a condition to participation in the
Plan, that a Participant agree to the issuance of his or her stock certificates
directly to the designated broker.
ARTICLE VIII - AMENDMENT AND TERMINATION
8.1 AMENDMENT.
The Committee shall have the right to amend or modify the Plan, in full or in
part, at any time and from time to time; provided, however, that no amendment or
modification shall
(a) affect any right or obligation with respect to any grant previously
made, unless required by law, or
(b) unless previously approved by the stockholders of the Company, where
such approval is necessary to satisfy federal securities laws, the
Code, or rules of any stock exchange or market on which the
Company's Common Stock is listed
(1) in any manner materially affect the eligibility requirements
set forth in Sections 3.1 and 3.2, or change the definition of
Employer as set forth in Section 2.11,
11
(2) increase the number of shares of Common Stock subject to any
options issued to Participants (except as provided in Sections
4.2 and 4.3), or
(3) materially increase the benefits to Participants under the
Plan.
8.2 TERMINATION.
The Committee may terminate the Plan at any time in its sole and absolute
discretion. The Plan shall be terminated by the Committee if at any time the
number of shares of Common Stock authorized for purposes of the Plan is not
sufficient to meet all purchase requirements, except as specified in Section
4.1.
Upon termination of the Plan, the Administrator shall give notice thereof to
Participants and shall terminate all payroll deductions. Cash balances then
credited to Participants' accounts shall be distributed as soon as practicable,
without interest.
ARTICLE IX - MISCELLANEOUS
9.1 SHAREHOLDER APPROVAL.
The Plan shall be approved and ratified by the stockholders of the Company, not
later than July 1, 1998, pursuant to Treasury regulation Section 1.423-2(c). If
for any reason such approval is not given by such date, the Plan shall be null
and void, and all payroll deductions and direct cash payments to the Plan shall
cease. The cash balances and Common Stock credited to Participants' accounts
shall be promptly distributed to them; and any Common Stock certificates issued
and delivered to Participants prior to such date shall remain the property of
the Participants.
9.2 EMPLOYMENT RIGHTS.
Neither the establishment of the Plan, nor the grant of any Options thereunder,
nor the exercise thereof shall be deemed to give to any Employee the right to be
retained in the employ of the Company or any Subsidiary or to interfere with the
right of the Company or any Subsidiary to discharge any Employee or otherwise
modify the employment relationship at any time.
9.3 TAX WITHHOLDING.
The Administrator may make appropriate provisions for withholding of federal,
state, and local income taxes, and any other taxes, from a Participant's Total
Compensation to the extent the Administrator deems such withholding to be
legally required.
12
9.4 RIGHTS NOT TRANSFERABLE.
Rights and Options granted under this Plan are not transferable by the
Participant other than by will or by the laws of descent and distribution and
are exercisable only by the Participant during his or her lifetime.
9.5 NO REPURCHASE OF STOCK BY COMPANY.
The Company is under no obligation to repurchase from any Participant any shares
of Common Stock acquired under the Plan.
9.6 GOVERNING LAW.
The Plan shall be governed by and construed in accordance with the laws of the
State of Delaware except to the extent such laws are preempted by the laws of
the United States.
**************
IN WITNESS WHEREOF, COMFORT SYSTEMS USA, INC. has caused this document to be
executed on this ______ day of ____________________, 1997.
By: ____________________________
Title: __________________________
ATTEST:
By: ____________________________
Title: __________________________
13
EXHIBIT 5.1
October 15, 1997
Comfort Systems USA, Inc.
Three Riverway, Suite 200
Houston, Texas 77056
Ladies and Gentlemen:
We have acted as counsel to Comfort Systems USA, Inc., a Delaware
corporation (the "Company"), in connection with the preparation and filing of a
Registration Statement on Form S-8 (the "Registration Statement") with the
Securities and Exchange Commission pursuant to the Securities Act of 1933, as
amended, relating to an aggregate of 3,750,000 shares (the "Shares") of the
Company's common stock, par value $.01 per share, to be offered upon the terms
and subject to the conditions set forth in the Comfort Systems USA, Inc. 1997
Long-Term Incentive Plan , the Comfort Systems USA, Inc. 1997 Non-Employee
Director Plan and the Comfort System 1998 Employee Stock Purchase Plan (the
"Plans").
We have examined such corporate records, documents, instruments and
certificates of the Company and have received such representations from the
officers and directors of the Company and have considered such questions of law
as we have deemed necessary, relevant or appropriate to enable us to render the
opinion expressed herein. In such examination, we have assumed the genuineness
of all signatures and the authenticity of all documents, instruments, records
and certificates submitted to us as originals. We have not independently
verified any matter of fact relating to this opinion.
Based on such examination and review and on representations made to us by
officers of the Company, we are of the opinion that the Shares have been duly
and validly authorized and will, on issuance and delivery against payment
therefor as contemplated in the Plans, be validly issued, fully paid and
nonassessable.
This firm consents to the filing of this opinion as an exhibit to the
Registration Statement. This opinion is delivered solely for your benefit and
may not be used or relied upon for any purpose by any other person or entity
without our express prior written authorization.
Very truly yours,
Bracewell & Patterson, L.L.P.
EXHIBIT 23.1
As independent public accountants, we hereby consent to the incorporation by
reference in this registration statement of our report dated March 25, 1997
included in Comfort System USA, Inc.'s Form S-1 (File No. 333-32595) for the
year ended December 31, 1996, and to all references to our Firm included in this
registration statement.
Houston, Texas
October 14, 1997
