AMENDED AND RESTATED
EMPLOYMENT AND NON-COMPETITION AGREEMENT
This AMENDED
AND RESTATED EMPLOYMENT AND NON-COMPETITION AGREEMENT (this
“ Agreement ”) is made and entered into as of
December 31, 2008 by and between PowerSecure International,
Inc. , a Delaware corporation (the “ Company
”), and Christopher T. Hutter , an individual residing
in the State of North Carolina (“ Officer
”).
WHEREAS, Officer
was engaged as an employee and appointed as the Vice President and
Chief Financial Officer of the Company on December 10, 2007;
and
WHEREAS, the
Company and Officer entered into an Employment and Non-Competition
Agreement on December 10, 2007, setting forth the terms and
conditions of Officer’s employment with the Company;
and
WHEREAS, the
Company and Officer desire to amend certain terms and conditions of
this Agreement in order to achieve compliance with
Section 409A of the Internal Revenue Code of 1986, as amended
(as amended, modified or supplemented from time to time, “
Section 409A ”), and the Treasury Regulations
promulgated thereunder (as amended, modified or supplemented from
time to time); and
WHEREAS, the
Company desires to continue to employ Officer, and Officer desires
to continue to serve the Company, upon the terms and subject to the
conditions set forth herein;
NOW, THEREFORE, in
consideration of the premises and of the mutual covenants and
agreements set forth herein, and of other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the Company and Officer, intending to be legally
bound hereby, agree as follows:
Section 1. Employment . The Company hereby
agrees to continue to employ Officer, and Officer hereby agrees to
continue to serve as an employee of the Company, upon the terms and
subject to the conditions set forth herein.
Section 2. Term . The term of Officer’s
employment hereunder shall continue until and expire on
December 10, 2012, unless earlier terminated in accordance
with the provisions of Section 5. In the event that this Agreement
has not been earlier terminated in accordance with the provisions
of Section 5, the term of Officer’s employment hereunder
shall be automatically extended without further action by the
Company or Officer for additional successive one-year periods
unless either party, for any reason or no reason, shall have given
written notice of termination to the other party no less than
90 days prior to the commencement of any one-year extension
period. The term of Officer’s employment hereunder, including
any extension period, is sometimes hereinafter referred to as the
“ Employment Term .”
Section 3. Duties of Officer .
(a) General Duties and Responsibilities . During and
throughout the Employment Term, Officer shall faithfully and
diligently, to the best of his ability, serve as the Vice President
and Chief Financial Officer of the Company, and in such additional
management offices and capacities and with such additional titles
and duties as shall be designated by the Company’s Board of
Directors (the “ Board ”) during the Employment
Term, shall have the authority and perform the duties and
responsibilities customary for such offices, shall report to the
Chief Executive Officer of the Company (the “ CEO
”) and to the Board, and shall have such other duties as may
be assigned to him from time to time by the CEO and the Board.
Officer shall perform his duties hereunder in accordance with the
policies from time to time established and amended by the Company
and in accordance with all applicable laws and regulations. Officer
shall use his best efforts to promote the best interests of the
Company. Officer shall always be subject to the direction, approval
and control of the CEO and the Board in the performance of his
duties. Officer acknowledges and agrees that he may be required by
the Company, without additional compensation, to perform services
for any other entity controlling, controlled by, under common
control with or otherwise affiliated with, the Company (any such
entity hereinafter referred to as an “ Affiliate
”), and to accept such office or position with any Affiliate
as the Board may reasonably require, including but not limited to
service as an officer and/or director of an Affiliate.
(b) Performance of Services . During and throughout
the Employment Term, Officer shall devote his full time, attention,
skill, ability and energy during normal business hours (and outside
such hours when reasonably necessary to perform Officer’s
duties hereunder) exclusively to the business and affairs of the
Company and the performance of his duties under this Agreement.
Officer shall not, directly or indirectly, render any services of a
business, commercial or professional nature to any Person without
the prior written consent of the Board; provided, however, that the
provisions this Section 3(b) shall not preclude Officer from
devoting time, ability, energy and attention outside normal
business hours throughout the Employment Term to reasonable
participation in community, civic, charitable or similar
organizations, or the pursuit of personal legal and financial
affairs (including complying with Section 6 of the General
Release Agreement between Officer and ADVO, Inc., his previous
employer) which do not interfere or conflict with the performance
of Officer’s duties hereunder and are not adverse to the
business or best interests of the Company.
(c) Place of Employment . Officer shall perform his
services hereunder at the Company’s principal executive
offices in Wake Forest, North Carolina or at such other location as
mutually agreed with the Board; provided, however, that Officer
agrees to undertake all reasonable travel required by the Company
to be conducted in connection with the business of the Company and
the performance of Officer’s duties hereunder.
Section 4. Compensation . During and throughout
the Employment Term, as compensation for the services performed and
other covenants made by Officer to the Company hereunder, the
Company shall pay and provide or cause to be provided to Officer
the following:
(a) Base Salary . The Company shall pay Officer a
base salary equal to $275,000 per year (the “ Base
Salary ”), payable in approximately equal installments in
accordance with the Company’s customary payroll practices.
Officer’s Base Salary shall be reviewed by or under the
authority of the Board (through its Compensation Committee) no
less
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frequently than
annually and may be increased (but never decreased) in the sole
discretion of the Board or the Compensation Committee (although
neither the Board nor the Compensation Committee has any obligation
to do so) based upon whatever factors the Board or the Compensation
Committee deems appropriate including, but not limited to,
Officer’s individual performance, the overall performance,
profitability and prospects of the Company and prevailing economic
and industry factors.
(b) Bonuses . So long as he remains employed with the
Company, Officer shall be entitled to receive the following
bonuses:
(i) Annual Performance Bonus . Officer shall be
eligible to receive a bonus in a target amount of 35% of his Base
Salary, as from time to time in effect, for excellent service to
the Company, based upon the achievement of such performance goals
as shall be established annually by the Compensation Committee of
the Board based in part upon the recommendation of the
CEO.
(ii) General Bonus Program . Officer’s
eligibility to participate in any other bonus program or any other
form of profit-sharing participation for senior executive officers
of the Company not expressly provided for in this Agreement shall
be in the sole discretion of the Board or the Compensation
Committee.
(c) Restricted Stock Grant . The Company has granted
to Officer an award of Restricted Shares (as defined below) under
the Company’s 1998 Stock Incentive Plan, as amended and
restated from time to time, upon the following terms and
conditions. The award consists of 25,000 shares of Common Stock,
par value $.01 per share, of the Company (the “ Restricted
Shares ”) that are subject to the terms and conditions of
the form of Restricted Stock Agreement attached hereto as
Exhibit A , and shall include 2,500 Restricted Shares
that vest on the date of this Agreement, 12,500 Restricted Shares
that vest on December 10, 2012, provided Officer has been
employed continuously with the Company from the date hereof through
such vesting date, subject to earlier vesting under certain
circumstances as provided in the Restricted Stock Agreement (the
“ Service Restricted Shares ”); and
(ii) 10,000 Restricted Shares that vest in four equal annual
installments for fiscal years 2008 through 2011 based upon
performance targets set forth in the Restricted Stock Agreement
(the “ Performance Restricted Shares ”). In the
event of a Change in Control of the Company (either as defined
below or as defined in the Company’s 1998 Stock Incentive
Plan, as amended and restated, under which the Restricted Shares
are issued), any unvested Restricted Shares (regardless of whether
they are Service Restricted Shares or Performance Restricted
Shares) shall immediately vest in full upon the effective date of
the Change in Control.
(d) Vehicle . The Company shall provide to Officer a
Company-owned or leased vehicle suitable and appropriate for
Officer to perform his duties hereunder, and Officer shall be
permitted to use such vehicle for personal use so long as it is not
used for any purpose that violates applicable law or is detrimental
to the Company. In lieu of the foregoing, but only with the consent
of Officer, the Company may pay an automobile allowance to Officer
in an amount sufficient to meet its obligations in this
Section 4(d).
(e) Relocation Expenses . The Company shall reimburse
Officer for the reasonable out-of-pocket expenses incurred by
Officer (subject to providing reasonable
3
documentation
to the Company thereof) in connection with (i) Officer’s
efforts to locate a principal residence in the Raleigh/Wake Forest,
North Carolina area and then relocating his family and possessions
to such new residence (excluding real estate commissions, housing
costs and mortgage expenses), and (ii) Officer’s living
expenses in Wake Forest while he serves the Company prior to such
relocation (which living expenses shall include lodging expenses at
a hotel designated by the CEO). All such reimbursements are subject
to the Company’s prior receipt of written supporting
documentation of such expenses.
(f) Employee Benefit Plans . Officer shall be
entitled to participate in all pension, 401(k), retirement, life,
disability and health insurance, hospitalization, major medical and
other the employee benefit plans and arrangements, if any (as in
effect and as amended from time to time), to the extent that his
position, tenure, salary, age, health and other qualifications make
his eligible to participate, generally made available by the
Company to comparable level employees, subject to and on a basis
consistent with the terms, rules and regulations, conditions and
overall administration of such plans and arrangements.
Notwithstanding the foregoing sentence, the Company may discontinue
at any time any such employee benefit plan or arrangement, to the
extent permitted by the terms of such plans or arrangements, and
shall not be required to compensate Officer for the elimination of
any such employee benefit plans or arrangements.
(g) Expenses . The Company shall, upon presentment by
Officer of appropriate receipts and vouchers therefor, reimburse
Officer for all reasonable, ordinary and necessary out-of-pocket
business expenses incurred by Officer in connection with the
performance of his duties under this Agreement, provided that such
expenses are incurred and accounted for in accordance with and
subject to the normal policies and procedures of the
Company.
(h) Vacation . Officer shall be entitled to
reasonable paid vacation time in accordance with the policies of
the Company applicable to executive officers of the
Company.
Section 5. Termination of Employment .
Notwithstanding the provisions of Section 2, the Employment
Term and Officer’s employment hereunder shall terminate as
follows:
(a) Death . Officer’s employment hereunder
shall automatically terminate upon his death, and the Company shall
pay to his designated beneficiaries (or, if none, to his estate)
the pro rata portion of his Base Salary and all other accrued and
vested but unpaid compensation through the date of his death,
including, if he dies on or after July 1 of any fiscal year, a
prorated portion of any bonus that would have been earned based on
criteria established by the Board for that fiscal year, but for his
death (a “ Stub Bonus ”).
(b) Disability . The Company shall have the right, in
its sole discretion, to terminate Officer’s employment
hereunder in the event of Officer’s Disability (as defined
below) upon giving at least 30 days written notice to Officer
of its intention to terminate Officer’s employment. In such
event, the Company shall pay to Officer the pro rata portion of his
Base Salary and all other accrued and vested but unpaid
compensation through the date of termination. Upon termination by
the Company in the event of Officer’s Disability, Officer
shall be entitled to receive the following: (i) the accrued
but unpaid portion of his Base Salary and any bonuses and other
compensation that are earned, accrued or vested but unpaid through
the date of termination, including, if notice of Disability is
given on or after July 1 of any fiscal year, any Stub Bonus
applicable to that fiscal year; (ii) an amount equal to
one-half of the full Severance Amount, computed and payable as
provided in Section 5(j), except that the Severance Amount
shall be
4
payable in
approximately equal installments in accordance with the
Company’s customary payroll practices over the 12 months
following the termination of Officer’s employment;
(iii) an amount equal to one-half of the full Separation
Bonus, computed and payable as provided in Section 5(k),
except that the average Bonus shall be computed based only on the
three fiscal years preceding the fiscal year in which
Officer’s employment is terminated (or, if less, the number
of fiscal years preceding his termination that Officer has been
employed hereunder); (iv) for a period of two years from the
date of termination, the Company shall pay for, or otherwise
provide for at Company expense, the continuation of the same (if
available, and to the extent not available similar) life,
accidental death, disability, medical, dental and other insurance
plans and benefits in which Officer and his family participated
prior to such termination; and (v) any other rights and
benefits of any of the employee benefits earned, accrued or vested
(including under any plans in which he was participating) as of the
date of such termination, subject to the terms and conditions of
such plans and benefits, but Officer shall not attain vested status
in any plans or benefits in which he is not vested on the date of
termination. For purposes of this Agreement, “
Disability ” means the physical or mental inability of
Officer, due to illness, accident or other incapacity, to
effectively perform the essential functions of his duties hereunder
for any period of 90 consecutive days, or 180 days during any
twelve-month period, or which results from an incapacity determined
to be total and permanent as determined by an independent physician
selected by the Company.
(c) By the Company for Cause . The Company shall have
the right, in its sole discretion, to terminate Officer’s
employment hereunder at any time for Cause (as defined below)
immediately upon giving written notice of termination to Officer.
Upon his termination for Cause, Officer shall be entitled to
receive only the accrued but unpaid portion of his Base Salary
through the date of termination, plus any accrued and vested but
unpaid bonuses and other compensation as of such date, but Officer
shall not be entitled to any other bonus or incentive compensation
for the fiscal year in which he was terminated. In addition, any
unvested portion of any option to purchase shares of Common Stock,
and any unvested portion of the Restricted Shares, shall expire
without vesting. Officer shall have no right to receive any other
or further compensation or benefits. For purposes of this
Agreement, “ Cause ” means only the
following:
(i) The
failure or refusal by Officer to perform any of his material duties
hereunder, or the breach by Officer of any of his obligations,
covenants, representations, warranties or acknowledgments
hereunder, which failure, refusal or breach is confirmed by a
resolution adopted by the Board and that remains unremedied or
uncured for a period of 30 consecutive days after specific written
notice thereof is given to Officer by on or behalf of the
Board;
(ii) Any
act of dishonesty, fraud, breach of fiduciary duty or bad faith by
Officer that is materially detrimental to the Company or that
results in substantial personal enrichment of Officer;
or
(iii) The
conviction of Officer, or the entering of a guilty plea or a plea
of no contest by Officer with respect to (A) a felony, or
(B) a misdemeanor that involves theft, fraud or dishonesty,
results in Officer’s imprisonment or materially impairs
Officer’s ability to perform his duties hereunder or
materially damages the reputation or business of the
Company.
(d) By the Company Without Cause . The Company shall
have the right, in its sole discretion, to terminate
Officer’s employment hereunder at any time, without Cause,
which termination shall be effective upon the giving of written
notice of such termination to Officer (or at
5
such later date
as the notice provides). In such event, Officer shall be entitled
to receive the following: (i) all amounts of the Base Salary
and any bonuses and other earned but unpaid compensation that are
earned, accrued or vested but unpaid through the date of
termination; (ii) an amount equal to the Severance Amount,
computed and payable as provided in Section 5(j);
(iii) an amount equal to the Separation Bonus, computed and
payable as provided in Section 5(k); (iv) any unvested
portion of the Restricted Shares shall vest as follows:
(A) the Service Restricted Shares, if then unvested, shall
immediately vest, and (B) the unvested Performance Restricted
Shares applicable for the fiscal year in which the termination
occurs shall vest in the event the Company attains the applicable
Performance Goal for that fiscal year; (v) for a period of two
years from the date of termination, the Company shall pay for, or
otherwise provide for at Company expense, the continuation of the
same (if available, and to the extent not available similar) life,
accidental death, disability, medical, dental and other insurance
plans and benefits in which Officer and his family participated
prior to such termination; and (vi) any rights and benefits of
any of the employee benefits earned, accrued or vested (including
under any plans in which he was participating) as of the date of
such termination, subject to the terms and conditions of such plans
and benefits, but Officer shall not attain vested status in any
plans or benefits in which he is not vested on the date of
termination.
(e) By Officer . Officer agrees not to voluntarily
terminate his employment hereunder, except by giving at least
60 days written notice to the Company. Upon such voluntary
termination by Officer, Officer shall be entitled to receive only
the following: (i) the accrued but unpaid portion of his Base
Salary and any bonuses and other compensation that are earned,
accrued or vested but unpaid through the date of termination; and
(ii) any rights and benefits of any of the employee benefits
earned, accrued or vested (including under any plans in which he
was participating) as of the date of such termination, subject to
the terms and conditions of such plans and benefits, but Officer
shall not attain vested status in any plans or benefits in which he
is not vested on the date of termination.
(f) Compensation Upon Termination of Employment Following a
Change in Control .
(i) Amount of Compensation . If, during the
Employment Term, a Change in Control (as defined below) of the
Company occurs, and within three years after such date the Company
shall terminate Officer’s employment without Cause or the
employment of Officer shall be terminated by Officer for any
reason, then:
(A) The
Company shall pay to Officer in a lump sum in cash within
30 days after the date of termination the aggregate of the
following amounts:
(I) To the
extent not theretofore paid, the Base Salary through the date of
termination at the rate in effect on the date the notice of
termination was given along with any earned but unpaid bonuses or
other compensation; and
(II) the
Severance Amount;
(III) the
Separation Bonus; and
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(IV) In
the case of compensation previously deferred by Officer, all
amounts of such compensation previously deferred and not yet paid
by the Company; and
(B) The
Company shall, promptly upon submission by Officer of supporting
documentation, pay or reimburse to Officer all costs and expenses
paid or incurred by Officer prior to the date of termination which
would have been payable under this Agreement if Officer’s
employment had not terminated; and
(C) For a
period of two years from the date of termination, Officer and his
family shall be permitted to continue to participate in all life,
accidental death, disability, medical, dental and other insurance
plans of the Company. If, despite the provisions of this
Section 5(f), benefits shall not be available under any of
such plans because Officer is no longer an employee of the Company,
then the Company itself shall, to the extent necessary, pay or
provide for payment of similar benefits to Officer and/or
Officer’s family.
(ii) Definition of Change in Control . For the
purpose of this Agreement, a “ Change in Control
” of the Company shall be deemed to have occurred only
if:
(A) Any
person or group (as such terms are used in Sections 13 (d)
(3) and 14 (d) (2) of the Securities Exchange Act of
1934, as amended (the “ Exchange Act ”) acquires
the beneficial ownership (within the meaning of Rule 13d-3
promulgated under the Exchange Act), directly or indirectly, of 50%
or more of the aggregate voting power of all classes of the
Company’s then outstanding voting securities entitled to vote
generally in the election of directors of the Company;
or
(B) Individuals who, as of any given date,
constitute the Board of Directors of the Company (the “
Board ” generally, and as of the date hereof, the
“ Incumbent Board ”) cease for any reason to
constitute at l
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