## NOTE O — LEGAL PROCEEDINGS 

In February 1995, as part of an investigation by the New York County District Attorney’s office into the business affairs of a general contractor that did business with EMCOR’s subsidiary, Forest Electric Corp. (“Forest”), a search warrant was executed at Forest’s executive offices. On July 12, 2000, Forest was served with a Subpoena Duces Tecum to produce certain documents as part of a broader investigation by the New York County District Attorney’s office into illegal business practices in the New York City construction industry. Forest has been informed by the New York County District Attorney’s office that it and certain of its officers are targets of the investigation. Forest has produced documents in response to the subpoena and intends to cooperate fully with the District Attorney’s office investigation as it proceeds. 

On July 31, 1998, a former employee of a subsidiary of EMCOR filed a class-action complaint on behalf of the participants in two employee benefit plans sponsored by EMCOR against EMCOR and other defendants for breach of fiduciary duty under the Employee Retirement Income Security Act. All of the claims relate to alleged acts or omissions which occurred during the period May 1991 to December 1994. The principal allegations of the complaint are that the defendants breached their fiduciary duties by causing the plans to purchase and hold stock of EMCOR when it was then known as JWP, Inc. and when the defendants knew or should have known it was imprudent to do so. The action has been settled, subject to court approval. The amount to be paid by EMCOR in connection with the proposed settlement would not be material. 

In December 2001, the Company’s Canadian subsidiary, Comstock Canada Limited (“Comstock”), commenced an action against Atomic Energy of Canada Limited (“AECL”), claiming approximately Cdn. $6.0 million in connection with Comstock’s work on two medical isotope nuclear reactors and associated work at AECL’s facility at Chalk River, Ontario. Comstock’s claim is for holdback, unpaid change requests, loss of productivity and extended duration costs. AECL has filed a defense denying Comstock’s claim and counterclaimed against Comstock for Cdn. $47.0 million, claiming substantial deficiencies in Comstock’s work which are alleged to have resulted in the need to replace a portion of Comstock’s work and installed materials and the need to reinstall various components of the reactor systems. These deficiencies are alleged to have caused a significant delay in AECL’s ability to obtain the necessary certifications for operation of the systems. To date, there has been no 

document exchange or discovery in this litigation. The Company believes it has good and meritorious defenses to the AECL counterclaim. 

Substantial settlements or damage judgements against EMCOR arising out of these matters could have a material adverse effect on EMCOR’s business, operating results and financial condition. 

In addition to the above, EMCOR is involved in other legal proceedings and claims, asserted by and against EMCOR, which have arisen in the ordinary course of business. EMCOR believes it has a number of valid defenses to these actions and EMCOR intends to vigorously defend or assert these claims and does not believe that a significant liability will result. However, EMCOR cannot predict the outcome thereof or the impact that an adverse result of the matters discussed above will have upon EMCOR’s financial position or results of operations. Expenses related to the assertion of defense of claims are expensed as incurred. 

## NOTE P — SUBSEQUENT EVENT 

On February 11, 2002, EMCOR signed a definitive agreement with Comfort Systems USA, Inc. (“Comfort Systems”) to acquire nineteen of Comfort Systems’ subsidiaries. Under the terms of the agreement, EMCOR will pay Comfort Systems $186.25 million, approximately $164.25 million in cash and approximately $22.0 million by assumption of Comfort Systems notes payable to former owners of certain of the acquired companies. EMCOR will fund the acquisition through a combination of cash on hand and borrowings under its revolving credit facility. The acquisition is expected to close in the first quarter of 2002, pending customary closing conditions and regulatory approval. 

