SECOND AMENDED AND
RESTATED
EMPLOYMENT AND NON-COMPETITION AGREEMENT
This SECOND
AMENDED AND RESTATED EMPLOYMENT AND NON-COMPETITION AGREEMENT
(this “ Agreement ”) is made and entered into as
of December 31, 2008 by and between Southern Flow
Companies, Inc. , a Delaware corporation (the “
Company ”), and John D. Bernard , an individual
who resides in Lafayette, Louisiana (“ Employee
”).
WHEREAS, Employee
is the President and Chief Executive Officer of the Company;
and
WHEREAS, the
continued involvement of Employee in the Company’s ongoing
business is vital to the success of the Company; and
WHEREAS, the
Company desires to continue to employ Employee, and Employee
desires to continue to serve the Company, upon the terms and
subject to the conditions set forth herein; and
WHEREAS, the
Company and Employee have previously entered into that certain
Employment and Non-Competition Agreement, dated as of
November 15, 2005, amended and restated on April 16,
2007; and
WHEREAS, the
Company and Officer desire to amend certain terms and conditions of
that Amended and Restated Employment and Non-Competition 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);
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 Employee, intending to be legally
bound hereby, agree as follows:
Section 1. Employment . The Company hereby
agrees to continue to employ Employee, and Employee 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 Employee’s
employment hereunder shall continue until and expire on
December 31, 2009, 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 Employee’s
employment hereunder shall be automatically extended without
further action by the Company or Employee 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 thirty (30) days prior to the commencement of any
one-year extension period. The term of Employee’s
employment
hereunder,
including any extension period, is sometimes hereinafter referred
to as the “ Employment Term .”
Section 3. Duties of Employee .
(a) General Duties and Responsibilities . During and
throughout the Employment Term, Employee shall faithfully and
diligently, to the best of his ability, serve as the President and
Chief Executive Officer and a member of the Board of Directors 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, and shall have such other duties as may be assigned
to him from time to time by the Board or by the Chairman of the
Board of the Company (the “ Chairman ”).
Employee 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.
Employee shall use his best efforts to promote the best interests
of the Company. Employee shall always be subject to the direction,
approval and control of the Board and the Chairman in the
performance of his duties. Employee 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, Employee shall devote his full time,
attention, skill, ability and energy during normal business hours
(and outside such hours when reasonably necessary to perform
Employee’s duties hereunder) exclusively to the business and
affairs of the Company and the performance of his duties under this
Agreement. Employee 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
Employee 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 which do not interfere or conflict with the performance of
Employee’s duties hereunder and are not adverse to the
business or best interests of the Company.
(c) Place of Employment . Employee shall perform his
services hereunder at the Company’s principal executive
offices in Lafayette, Louisiana or at such other location as
mutually agreed with the Board; provided, however, that Employee
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 Employee’s duties hereunder.
Section 4. Compensation . During and throughout
the Employment Term, as compensation for the services performed and
other covenants made by Employee to the Company hereunder, the
Company shall pay and provide or cause to be provided to Employee
the following:
(a) Base Salary . The Company shall pay Employee a
base salary equal to $[190,000] per year (the “ Base
Salary ”), payable in approximately equal installments in
accordance with the Company’s customary payroll practices.
Employee’s Base Salary shall be
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reviewed by or
under the authority of the Board no less frequently than annually
and may be increased (but never decreased) in the sole discretion
of the Board or its designee (although the Board has no obligation
to do so) based upon whatever factors the Board or its designee
deems appropriate including, but not limited to, Employee’s
individual performance, the overall performance, profitability and
prospects of the Company and prevailing economic and industry
factors.
(b) Bonuses . If the Company shall adopt a bonus
program or any other form of profit-sharing participation for
employees of the Company generally or for senior executive officers
of the Company specifically, Employee shall be eligible to
participate in such program as authorized by the Board, in its sole
discretion.
(c) Vehicle . The Company shall provide to Employee a
Company-owned or leased vehicle suitable and appropriate for
Employee to perform his duties hereunder, and Employee 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 Employee, the Company may pay an automobile allowance to
Employee in an amount sufficient to meet its obligations in this
Section 4(c).
(d) Employee Benefit Plans . Employee 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 the employee benefit plan or arrangement, to
the extent permitted by the terms of such plans or arrangements,
and shall not be required to compensate Employee for the
elimination of any such employee benefit plans or
arrangements.
(e) Expenses . The Company shall, upon presentment by
Employee of appropriate receipts and vouchers therefor, reimburse
Employee for all reasonable, ordinary and necessary out-of-pocket
business expenses incurred by Employee 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.
(f) Vacation . Employee 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 Employee’s employment hereunder shall terminate as
follows:
(a) Death . Employee’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.
(b) Disability . The Company shall have the right, in
its sole discretion, to terminate Employee’s employment
hereunder in the event of Employee’s Disability (as defined
below) upon giving at least 30 days written notice to Employee
of its intention to terminate
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Employee’s employment. In such event, the
Company shall pay to Employee the pro rata portion of his Base
Salary and all other accrued and vested but unpaid compensation
through the date of termination. For purposes of this Agreement,
“ Disability ” means the physical or mental
inability of Employee, 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 Employee’s
employment hereunder at any time for Cause (as defined below)
immediately upon giving written notice of termination to Employee.
Upon his termination for Cause, Employee 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 Employee
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 options (the “ Stock Options
”) to purchase shares of common stock, par value $.01 per
share, of PowerSecure International, Inc. (“ POWR
”), the corporate parent of the Company, shall expire without
vesting. Employee 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 Employee to perform any of his duties
hereunder, or the breach by Employee of any of his obligations,
covenants, representations, warranties or acknowledgments
hereunder, which failure, refusal or breach remains unremedied or
uncured for a period of twenty (20) business days after
specific written notice thereof is given to Employee by the Board
or the Chairman;
(ii) Any
act of dishonesty, disloyalty, insubordination, fraud, breach of
fiduciary duty or bad faith by Employee that is materially
detrimental to the Company or that results in substantial personal
enrichment of Employee; or
(iii) The
conviction of Employee, or the entering of a guilty plea or a plea
of no contest by Employee with respect to (A) a felony, or
(B) a misdemeanor that involves theft, fraud or dishonesty,
results in Employee’s imprisonment or impairs
Employee’s ability to perform his duties hereunder or 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
Employee’s employment hereunder at any time effective upon
the giving of written notice of such termination to Employee (or at
such later date as the notice provides). In such event, Employee
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, defined, 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); and
(iv) 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 Employee
shall not attain vested status in any plans or benefits in which he
is not vested on the date of termination.
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(e) Termination by Employee . Employee agrees not to
voluntarily terminate his employment hereunder except by giving at
least sixty (60) days written notice to the Company, except as
provided in Section 4(f). Upon such voluntary termination by
Employee, Employee 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; 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 Employee 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 either
the Company or POWR occurs, and within three years after such date
the Company shall terminate Employee’s employment without
Cause or the employment of Employee shall be terminated by Employee
for Good Reason (as defined in below), then:
(A) The
Company shall pay to Employee 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
(IV) In
the case of compensation previously deferred by Employee, all
amounts of such compensation previously deferred and not yet paid
by the Company; and
(B) The
Company shall, promptly upon submission by Employee of supporting
documentation, pay or reimburse to Employee all costs and expenses
paid or incurred by Employee prior to the date of termination which
would have been payable under this Agreement if Employee’s
employment had not terminated; and
(C) For a
period of 18 months from the date of termination, Employee 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 Employee is no longer an employee of the
Company, then the Company itself shall, to the extent necessary,
pay or provide for payment of benefits to Employee and/or
Employee’s family, or where applicable, pay or
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provide to
Employee and/or Employee’s family the difference between the
benefits payable pursuant to this Section 5(f) and the benefits
actually payable pursuant to the terms of such plans, in each case
at the time such payments would be payable pursuant to the terms of
such plans, programs and policies.
(ii) Definition of Change in Control . For the
purpose of this Agreement, a “ Change in Control
” of either the Company or POWR (each a “
Corporation ” in this Section 5 (f)(ii)) 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
Corporation’s then outstanding voting securities entitled to
vote generally in the election of directors of the Corporation;
provided, however, that the following acquisitions shall not
constitute a Change in Control: (I) any acquisition directly
from the Corporation (excluding an acquisition by virtue of the
exercise of a conversion privilege), (II) any acquisition by
the Corporation or any subsidiary of the Corporation, or
(III) any acquisition by any employee benefit plan (or related
trust) for employees or any subsidiary of the Corporation;
or
(B) Individuals who, as of the date hereof,
constitute the Board of Directors of the Corporation (the “
Board ” generally, and as of the date hereof, the
“ Incumbent Board ”) cease for any reason to
constitute at least a majority of the Board, provided that any
person becoming a director subsequent to the date hereof whose
election, or nomination for election by the Corporation’s
stockholders, was approved by a vote of at least three-fifths of
the directors then comprising the Incumbent Board (other than an
election or nomination of an individual whose initial assumption of
office is in connection with an actual or threatened election
contest relating to the election of the directors of the
Corporation, as such terms are used in Rule 14a-11 of
Regulation 14A promulgated under the Exchange Act) shall be,
for purposes of this Agreement, considered as though such
individual were a member of the Incumbent Board; or
(C) Approval by the Corporation of a
reorganization, merger, combination, or consolidation, in each
case, unless, following such reorganization, merger, combination,
or consolidation, (I) more than 50% of, respectively, the then
outstanding shares of common stock of the corporation or other
entity resulting from such reorganization, merger, combination or
consolidation and the aggregate voting power of the then
outstanding voting securities of the resulting corporation or other
entity entitled to vote generally in the election of directors is
then beneficially owned, directly or indirectly, by all or
substantially all of the individuals and entities who were the
beneficial owners, respectively, of the outstanding Common Stock
and outstanding voting securities of the Corporation immediately
prior to such reorganization, merger, combination, or
consolidation, in substantially the same proportion as their
ownership immediately prior to such reorganization, merger,
combination, or consolidation, and (II) at least a majority of
the members of the board of directors of the corporation or other
entity
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resulting from
such reorganization, merger, combination or consolidation were
members of the Incumbent Board at the time of the execution of the
initial agreement providing for such reorganization, merger,
combination or consolidation; or
(D) Approval by the Corporation of the sale
or other disposition of all or substantially all of the assets of
the Corporation, other than to a corporation or other entity with
respect to which following such sale or other disposition the
conditions described in clauses (I) and (II) of
Section 5(f)(ii)(C) are satisfied.
(iii) Definition of Good Reason . For purposes
of this Agreement, “ Good Reason ”
means:
(A)
(I) The assignment to Employee of any position, authority,
duties or responsibilities inconsistent in any respect with
Employee’s position (including, without limitation, status,
offices, title and reporting requirements), authority, duties or
responsibilities, prior to the Change in Control, or (II) any
other action by the Corporation which results in a diminution in
such position, authority, duties or responsibilities, other than an
insubstantial and inadvertent action which is remedied by the
Corporation promptly after receipt of notice thereof given by
Employee;
(B) Any
reduction in Employee’s Base Salary or in the extent of
Employee
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