Exhibit 10.4
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”).
Recitals
     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);
Agreement
     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

 

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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’s
entitlement to the employee benefits, expenses, fringe benefits or perquisites
referred to in Section 4;
(C) The Corporation’s requiring Employee to be based at an office location or to
maintain his personal residence other than where it is on the date of the Change
in Control;
(D) The failure of the Corporation to obtain a satisfactory agreement from any
successor to the Corporation to assume and agree to perform this Agreement;
(E) The imposition on Employee of business travel obligations substantially
greater than his business travel obligations during the fiscal year prior to the
Change in Control;
(F) Any purported termination by the Corporation of Employee’s employment other
than as expressly permitted by this Agreement; or
(G) Any other failure by the Corporation to comply with any provision of this
Agreement, other than an insubstantial and inadvertent failure which is remedied
by the Corporation promptly after receipt of notice thereof given by Employee.
          (g) Expiration of Employment Term. In the event of the expiration of
the Employment Term (including any renewal or extension period hereunder)
without further renewal or extension, Employee shall be entitled to receive
(i) all amounts of the Base Salary and any bonuses and other compensation
earned, accrued or vested but unpaid through the date of expiration, and
(ii) any rights and benefits of any of the employee benefits earned, accrued or
vested (including under

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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.
          (h) No Further Obligation to Employee. The payments and benefits (if
any) required to be made or provided to Employee pursuant to this Section 5
shall be in full and complete satisfaction of, and shall constitute the full
settlement and release of the Company by Employee with regard to, all
obligations of the Company owed to Employee pursuant to this Agreement. After
the date of termination of Employee’s employment hereunder, the Company shall
have no further obligations to Employee under this Agreement except as otherwise
set forth herein.
          (i) Survival of Employee’s Obligations. Notwithstanding the
termination of this Agreement by either party hereto for any reason, the
obligations of Employee under Section 6 and the other provisions thereof shall
survive the termination or expiration of this Agreement or Employee’s employment
hereunder and shall remain in full force and effect for the period provided
therein.
          (j) Computation and Payment of Severance Amount. For purposes of this
Agreement, the term “Severance Amount” shall mean an amount equal to one and
one-half (1 1/2) times the Base Salary of Employee as in effect on the date
Employee’s employment terminates. The Severance Amount shall be payable in
approximately equal installments in accordance with the Company’s customary
payroll practices over the 18 months following the termination of Employee’s
employment hereunder.
          (k) Computation and Payment of Separation Bonus. For purposes of this
Agreement, the term “Separation Bonus” shall mean an amount equal to one and
one-half (1 1/2) times the average of any bonuses awarded to Employee for the
three fiscal years of the Company immediately preceding the fiscal year in which
Employee’s employment is terminated (or, if greater, for the fiscal year in
which Employee’s employment is terminated and the two prior fiscal years). The
Separation Bonus shall be payable in approximately equal installments in
accordance with the Company’s customary payroll practices over the period
commencing upon the termination of Employee’s employment hereunder and
continuing through March 14 of the calendar year following such termination.
          (l) Section 409A Savings Clause. The Company intends that any and all
post-employment compensation under this Agreement satisfy the requirements of
Section 409A and any regulations or guidance promulgated thereunder to avoid the
imposition of excise taxes thereunder, and the provisions of this Agreement
shall be interpreted in a manner that is consistent with such intention.
Notwithstanding any other provision of this Agreement, no deferred compensation
shall be granted, deferred, accelerated, extended, paid out, or modified under
this Agreement in a manner that would result in the imposition of an additional
tax under Section 409A upon Employee. In the event that it is reasonably
determined by the Company that, as a result of Section 409A, payments in respect
of any post-employment compensation distribution may not be made at the time
contemplated by the terms of this Agreement without causing Employee to be
subject to taxation under Section 409A, the Company will make such payment on
the first day that would not result in the Employee incurring any tax liability
under Section 409A. Except as provided in Section 409A, the time or schedule of
any post-employment payment to Employee under this Agreement cannot be
accelerated.

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     Section 6. Covenants. In consideration in part for the compensation to be
paid to Employee hereunder by the Company, and in order to induce the Company to
enter into this Agreement, Employee hereby makes the following covenants to the
Company:
          (a) Covenant Not to Compete. During the Employment Term and for a
period of 18 months thereafter regardless of the reason for the termination of
Employee’s employment hereunder (the “Restricted Period”), Employee shall not,
directly or indirectly, alone or in association with others, whether as owner,
shareholder, employee, Employee, director, partner, manager, member, lender,
investor, consultant, principal, agent, independent contractor, co-venturer or
in any other capacity, invest in, engage in, have a financial interest in, be in
any other way connected or affiliated with, or render advice or services to, any
Person that is in competition with the Company in the United States or in any
other country in which the Company does a material amount of business or
otherwise has material operations.
               (i) Competition with the Company. For purposes of this Agreement,
(A) the phrase “in competition with the Company” shall be deemed to include
competition with the Company and its subsidiaries and Affiliates, or their
respective successors or assigns, or the businesses of any of them, and (B) a
business shall be deemed to be in competition with the Company if it is engaged
in any business activity or has products or services that are the same or
similar to the business activities, products or services of the Company during
the Employment Term. Notwithstanding the foregoing, nothing herein contained
shall prevent Employee from acquiring and holding for investment up to five
percent (5%) of any class of securities of any corporation, if such securities
are listed or traded on a national securities exchange or the Nasdaq Stock
Market or in the over-the-counter market.
               (ii) Interpretation of Covenant. The parties hereto acknowledge
and agree that the duration and area for which the covenant not to compete set
forth in this Section 6(a) is to be effective are fair and reasonable and are
reasonably necessary for the protection of the Company and its business and good
will, and Employee hereby waives any objections to or defenses in respect
thereof. In the event that any court determines that any portion of the time
period or the area, or both of them, are unreasonable, arbitrary or against
public policy, and that such covenant is to such extent unenforceable, illegal
or invalid, the parties hereto agree that this Section 6(a) shall be deemed
amended to delete therefrom such provisions or portions adjudicated to be
unenforceable, illegal or invalid so that the covenant shall remain in full
force and effect for the greatest time period and in the greatest geographical
area that would render it enforceable, legal and valid. The parties intend that
the covenant set forth in this Section 6(a) shall be deemed to be a series of
separate covenants, one for each and every county of each and every state of the
United States of America and one for each and every political subdivision of
each and every other country where the covenant is intended to be effective and
is not proscribed by law.
          (b) Covenant Regarding Disclosure or Use of Confidential Information.
               (i) Employee acknowledges that during the Employment Term and as
a result of his employment by the Company, he has and will continue to learn,
obtain and have access to confidential and proprietary information regarding the
business and affairs of the Company and its Affiliates. Employee hereby agrees
that at all times during and after the Employment Term he shall keep strictly
confidential and hold in confidence all Confidential Information (as defined
below), and shall not, directly or indirectly, use any Confidential Information
for Employee’s own benefit or for the benefit of any other Person or divulge,
disclose, communicate or otherwise reveal any

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Confidential Information to any Person in any manner whatsoever, other than to
the directors, employees and agents of the Company, and then only in the course
of the Company’s affairs to the extent necessary for them to perform services to
and responsibilities on behalf of the Company.
               (ii) As used herein, “Confidential Information” means any and all
information, however documented, which is confidential property or otherwise
non-public, related to the business and affairs of the Company and its
Affiliates, including, but not limited to, their assets, properties, operations,
finances, practices, procedures, policies, methods, contracts, agreements and
arrangements, lending policies, pricing policies, price lists, financial plans,
business plans, financial information, financial projections, budgets, marketing
strategies and techniques; the identity and location of all past, present and
prospective customers, suppliers, affiliates, debtors, creditors, lenders,
employees, consultants, advisors, agents, distributors, wholesalers, clients and
others who have dealings with the Company; trade secrets, processes,
photographs, graphics, product specifications, formulas, compositions, samples,
inventions, ideas, research and development; patents, patent applications;
copyrights and copyright applications (in any such case, whether registered or
to be registered in the United States or any foreign country) applied for,
issued to or owned by the Company; any and all processes, computer programs and
software (including object code and source codes, database, technologies,
engineering or technical data, drawings, sketches or designs, manufacturing or
distribution methods or techniques; and any other information known to Employee
to be confidential, proprietary, secret or otherwise non-public information.
               (iii) Employee hereby acknowledges and agrees that, as between
the Company and Employee, all of the Confidential Information, however
documented, whether or not developed, created or modified by Employee, is the
exclusive property of the Company.
               (iv) Upon the termination or expiration of the Employment Term,
Employee shall leave with or return to the Company, without making or retaining
any copies, or other records of, all Confidential Information including all
copies, summaries, abstracts thereof and all memoranda, notes, records, reports,
books, letters, customer lists, manuals and other writings or documents
whatsoever pertaining thereto. Notwithstanding the foregoing, as used herein
Confidential Information does not mean or include any information that is
generally available to the public other than as a result of a direct or indirect
disclosure by Employee.
          (c) Covenants Regarding Business Relationships. Employee agrees that
during and throughout the Employment Term and the Restricted Period, except when
acting on behalf of the Company, he shall not, directly or indirectly,
(i) employ, solicit, induce, engage or cause any director, officer, employee,
independent contractor, consultant, salesman or other agent of the Company
(whether now or hereafter engaged by the Company) to (A) terminate his
employment or engagement with the Company, (B) accept employment or engagement
or otherwise render services to any other Person or business (wherever located,
and regardless of type of business conducted), or (C) interfere with the
business of the Company; or (ii) solicit any clients or customers of the Company
or interfere in any business relationship between the Company and any other
Person, including any Person who was at any time an employee, consultant,
contractor, advisor, supplier, lender or customer of the Company. Employee shall
not, at any time during or after the Employment Term, disparage the business
reputation of the Company or any of its shareholders, directors, officers,
employees or agents or take actions that are harmful to the Company’s good will
with others.

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          (d) Intellectual Property. During and throughout the Employment Term
and the Restricted Period, Employee agrees to disclose to the Company any and
all ideas, improvements, techniques, modifications, processes, inventions,
developments, discoveries, trade secrets, trademarks, service marks, copyrights,
trade names, business plans and any work of authorship (“Intellectual Property”)
developed, conceived, created, made, devised, discovered, acquired or acquired
knowledge of, by Employee during the Employment Term, either by himself or in
conjunction with any other Person, which relates in any way, directly or
indirectly, or may be useful in any manner in the business of the Company or its
Affiliates, and any such item that is based upon or utilizes Confidential
Information, whether or not the Company or its Affiliates obtains a patent,
trademark, service mark or copyright thereon. Employee hereby agrees that the
Intellectual Property shall become and remain the sole and exclusive property of
the Company. Employee hereby acknowledges that all of Employee’s writing, works
of authorship and other Intellectual Property are works made for hire and the
property of the Company, including patents, trademarks, service marks,
copyrights and other intellectual property rights pertaining thereto. Employee
shall, at the request and cost of the Company or any of its Affiliates, render
assistance as the Company deems necessary or desirable to secure, prosecute
and/or defend the rights thereto by patent, trademark, service mark, copyright
to otherwise to the Company or its Affiliates, including without limitation the
assignment, transfer and conveyance to the Company or its Affiliates of all of
Employee’s right, title and interest in and to the Intellectual Property.
          (e) Employee’s Acknowledgment. The Company spends considerable amounts
of time, money and effort in developing and maintaining good will in its
industry. Employee agrees the covenants contained within this Section 6 (i) are
reasonable and necessary in all respects to protect the goodwill, trade secrets,
confidential information, and business interests of the Company; (ii) are not
oppressive to Employee; (iii) do not impose any greater restraint on Employee
than is reasonably necessary to protect the goodwill, trade secrets,
confidential information and legitimate business interests of the Company; and
(iv) will not, upon the termination, of Employee’s employment with the Company
for any reason whatsoever, cause Employee to be unable to earn a living that is
suitable and acceptable to Employee.
          (f) Equitable Relief. Employee hereby acknowledges and agrees that his
services to be rendered to the Company hereunder and his obligations contained
in this Section 6 are of special, unique and personal character which gives them
a peculiar value to the Company, that the Company cannot be reasonably or
adequately compensated in money damages in an action at law in the event
Employee breaches any obligations under this Section 6, and that the provisions
of this Section 6 are reasonable and necessary to protect the business of the
Company. Employee therefore expressly agrees that, in addition to any other
rights or remedies which the Company may have at law or in equity or by reason
of any other agreement, the Company shall be entitled to injunctive and other
equitable relief in the form of temporary, preliminary and permanent injunctions
without posting bond or other security in the event of any actual or threatened
breach of any such obligation by Employee and without the necessity of proving
actual damages, and to discontinue any salary, bonus, benefits and/or insurance
continuation provided hereunder. Nothing in this Agreement shall be construed to
prohibit the Company from pursuing any other remedy, and Employee agrees that
all remedies of the Company are cumulative.
          (g) Nature of Covenants. Employee’s covenants in Section 6 are
independent covenants, and the existence of any claim by Employee against the
Company under this Agreement or otherwise will not excuse Employee’s breach of,
or waive Employee’s obligation to perform, any covenant in this Section 6. If
Employee’s employment hereunder terminates for any reason, or the Employment
Term expires, this Section 6, and the other terms

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and conditions of this Agreement necessary or appropriate to enforce the
covenants of Employee in Section 6, shall survive and remain in full force and
effect.
     Section 7. Representations and Warranties of Employee. Employee represents
and warrants to the Company that (a) Employee is under no contractual or other
restriction, arrangement or obligation which is or will be breached by or in
conflict or inconsistent with his execution and delivery of this Agreement, the
performance of his duties hereunder, or the other rights of the Company
hereunder, and (b) Employee is under no physical or mental disability or
incapacity that would hinder the performance of his duties under this Agreement.
     Section 8. Consolidation, Merger or Sale of Assets. Nothing in this
Agreement shall preclude the Company from consolidating with, merging into, or
transferring all or substantially all of its assets to another entity which
assumes all of the Company’s obligations and undertakings hereunder. Upon such a
consolidation, merger or transfer of assets, the term “Company” as used herein
shall mean such other entity, and this Agreement shall continue in full force
and effect.
     Section 9. Employee Acknowledgment; Counsel. Employee acknowledges by
executing this Agreement and delivering it to the Company that (i) he has read
all of the terms and conditions hereof, including his obligations, covenants,
representations and warranties to the Company; (ii) the covenants of Employee in
Section 6 are essential elements of this Agreement, and the Company would not
have entered into this Agreement without Employee’s agreement to comply with
such covenants; (iii) each and every term, covenant and restriction in this
Agreement is reasonable and necessary for the proper protection of the Company’s
business; and (iv) he has been advised by the Company that he should consult
with independent counsel of his choice and have such counsel review this
Agreement and render advice thereon to Employee, and Employee has either done so
or voluntarily elected not to do so.
     Section 10. Taxes. All payments required to be made by the Company
hereunder to Employee shall be subject to withholding of such amounts relating
to taxes as the Company may reasonably determine it should withhold pursuant to
any applicable federal, state or local law or regulation. In lieu of withholding
such amounts, in whole or in part, the Company may, in its sole discretion,
accept other provision for payment of taxes, provided it is satisfied that all
requirements of law affecting its responsibilities to withhold such taxes have
been satisfied.
     Section 11. No Attachment. Except as required by law, no right to receive
payment under this Agreement shall be subject to anticipation, commutation,
alienation, sale, assignment, encumbrance, charge, pledge or hypothecation or to
execution, attachment, levy, or similar process of assignment by operation of
law, and any attempt, voluntary or involuntary, to effect any such action shall
be null, void and of no effect.
     Section 12. Arbitration. Any dispute, controversy or claim arises out of,
under or in connection with, or otherwise relating to, this Agreement (other
than the Company’s rights under Section 6) (a “Dispute”), including but not
limited to the parties’ rights and obligations hereunder, or any actual or
alleged breach hereof, shall be determined and settled by binding arbitration in
North Carolina in accordance with the rules of the commercial rules and
procedures of the American Arbitration Association, as amended by this
Agreement. Promptly after a Dispute arises, the parties agree to make a good
faith effort to select one mutually

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agreeable arbitrator. If the parties are unable to reach agreement on an
arbitrator within thirty (30) days after the Dispute is submitted to
arbitration, one arbitrator shall be selected in accordance with the commercial
rules and procedures of the American Arbitration Association. Any determination,
resolution or award made by the arbitrators shall specify the findings of fact
of the arbitrators and the reasons for the determination, resolution or award,
and such determination, resolution or award shall be final and binding. If the
parties hereto mutually agree to a resolution of any Dispute prior to the
arbitrators’ decision, the agreement of the parties shall resolve the Dispute.
The party prevailing in any arbitration, as determined by the arbitrator, shall
be entitled to an award of all of its out-of-pocket costs and expenses incurred
in connection with the Dispute, including but not limited to reasonable
attorneys’ fees, court costs and expert fees. An arbitration award or decision
may be entered by any court of competent jurisdiction, or application may be
made to such a court for judicial acceptance of the award or decision and any
appropriate order, including enforcement. The parties hereby consent to the
submission of any Dispute for settlement by binding arbitration in accordance
with this Section 12 and agrees to carry out without delay the provisions of any
arbitration award, decision or resolution.
     Section 13. General Provisions.
          (a) Governing Law. This Agreement shall in all respects be governed
by, and construed in accordance with, the internal substantive laws of the State
of Delaware, without giving effect to any conflict or choice of law principles
or rules.
          (b) Amendment. This Agreement may not be amended or modified in whole
or in part in any manner except in a writing which makes reference to this
Agreement executed by both parties hereto.
          (c) Assignment. Neither the Agreement, nor any rights, obligations or
duties hereunder, may be assigned or delegated by any party hereto without the
prior written consent of the other party hereto; provided, however, that this
Agreement shall inure to the benefit of and be binding upon the successors and
assigns of the Company upon any sale of all or substantially all of the
Company’s stock or assets, or upon any merger, consolidation or reorganization
of the Company with or into any other Person, so long as such successors or
assigns assume all of the Company’s obligations hereunder. As used in this
Agreement, the term “Company” shall be deemed to refer to any such successor or
assign of the Company referred to in the preceding sentence.
          (d) Successors and Assigns. This Agreement shall inure to the benefit
of and be binding upon the parties hereto and their respective successors and
permitted assigns.
          (e) Entire Agreement.
               (i) This Agreement sets forth the entire agreement and
understanding of the parties hereto with respect to the subject matter hereof
and supersedes in their entirety all prior and contemporaneous written and oral
agreements, arrangements, understandings, negotiations, communications,
covenants, representations and warranties among the parties hereto relating to
the subject matter hereof.

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               (ii) Employee acknowledges that from time to time, the Company
may establish, maintain or distribute the employee manuals or handbooks or
personnel policy manuals, and Employees or other representatives of the Company
may make written or oral statements relating to personal policies and
procedures. Such manuals, handbooks and statements are intended only for general
guidance. No policies, procedures or statements of any nature by or on behalf of
the Company (whether written or oral, and whether or not contained in any the
employee manual or handbook or personnel policy manual), and no acts or
practices of any nature, shall be construed to modify this Agreement.
          (f) Notices. Any and all notices, demands, requests, elections and
other communications required or permitted to be given hereunder shall be in
writing and shall be deemed to have been duly given (i) upon personal delivery;
(ii) upon confirmation of receipt when sent by facsimile transmission; (iii) one
business day after deposit during normal business hours with a nationally
recognized overnight courier, specifying next day delivery, with written
verification of receipt; (iv) five business days after being sent by first class
(certified or registered) mail, postage prepaid, return receipt requested, in
each case to the following addresses:
If to the Company:
Southern Flow Companies, Inc.
132 Demanade Blvd.
Lafayette, Louisiana 70503
Attn: Chairman of the Board
Telephone: (337) 233-2066
Facsimile: (337) 237-3790
With copies to:
PowerSecure International, Inc.
1609 Heritage Commerce Court
Wake Forest, North Carolina 27587
Attn: Sidney Hinton, Chief Executive Officer
Telephone: (919) 453-1750
Facsimile: (919) 453-1768
and:
Paul R. Hess, Esq.
Kegler, Brown, Hill & Ritter Co., L.P.A.
65 E. State Street, Suite 1800
Columbus, Ohio 43215
Telephone: (614) 462-5400
Facsimile: (614) 464-2634
If to Employee to:
John D. Bernard

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Lafayette, Louisiana                               
Telephone: (337)                     -                
Any party hereto may send any notice, demand, request, election or other
communication to the intended recipient at its address set forth above using any
other means (such as expedited courier, messenger service, telecopy, telex,
ordinary mail or electronic mail), but no such notice, demand, request or other
communication shall be deemed to have been given until it is actually received
by the recipient. Any party hereto may change its designated address by giving
written notice to all other parties.
          (g) Waiver. The obligations of any party hereunder may be waived only
with the written consent of the party or parties entitled to the benefits the
obligations so involved. Any waiver of a breach or violation of or default under
any provision of this Agreement shall not be construed or operate as, or
constitute, a waiver of any other or subsequent breach or violation of or
default under that provision or any other provision of this Agreement. The
failure of any party to insist upon strict compliance with any provision of this
Agreement on any one or more occasions shall not be construed or operate as, or
constitute, a continuing waiver of, or an estoppel of that party’s right to
insist upon strict compliance with, that provision or any other provision of
this Agreement.
          (h) Severability. The provisions of this Agreement shall be deemed
severable. If any provision of this Agreement is determined to be illegal,
invalid or unenforceable in any situation: (i) the parties hereto shall agree to
a suitable and equitable provision to be substituted therefor in order to carry
out, so far as may be valid and enforceable, the intent and purpose of such
invalid or unenforceable provision; and (ii) the remainder of this Agreement
shall remain in full force and effect, and the application of such provision in
any other situation shall not be affected.
          (i) Counterparts. This Agreement may be executed in any number of
counterparts (including counterparts executed by less than all parties hereto),
each of which shall be deemed to be an original, but all of which together shall
constitute one and the same instrument.
          (j) Headings. The headings used herein are solely for convenience of
reference and shall not be given any effect in the construction or
interpretation of this Agreement.
          (k) No Third Party Beneficiaries. Nothing in this Agreement, express
or implied, in intended to create or confer and shall not be construed or
operate as creating or conferring, any rights or remedies under or by reason of
this Agreement, upon any Person other than the parties hereto and their
respective successors and permitted assigns.
          (l) Further Assurances. The parties hereto agree to take or cause to
be taken all actions, which are necessary, convenient or desirable in order to
effect the transactions contemplated by this Agreement.

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          (m) Best Efforts. Each of the parties hereto shall act in good faith
and use its best efforts to bring about the transactions contemplated by this
Agreement.
          (n) Expenses. Except as otherwise expressly provided herein, each of
the parties to this Agreement shall pay his or its own costs and expenses
incurred in connection with this Agreement and the consummation of the
transactions contemplated hereby.
          (o) Construction. In the event an ambiguity or question or intent or
interpretation arises, this Agreement shall be construed as if drafted jointly
by the parties hereto and no presumption or burden of proof shall arise favoring
or disfavoring any party hereto by virtue of the authorship of any of the
provisions of this Agreement.
          (p) Specific Performance. Each of the parties hereto acknowledges and
agrees that the other parties hereto would suffer irreparable damage for which
an adequate remedy at law would not be available in the event any of the
provisions of this Agreement is not performed in accordance with its specific
terms or otherwise is breached. Accordingly, each of the parties hereto agrees
that the non-breaching parties shall be entitled to an injunction, restraining
order or other form of equitable relief from any court of competent jurisdiction
to prevent breaches of, and to specifically enforce, the provisions of this
Agreement.
          (q) Interpretation of Certain Provisions. Except as otherwise
expressly provided herein, as used in this Agreement:
               (i) Any reference to any federal, state, local or foreign statute
or law shall be deemed also to include a reference to all rules and regulations
promulgated thereunder.
               (ii) The term “including” means “including, without limitation”.
               (iii) The term “Entity” means and includes a corporation,
partnership, limited liability company, joint venture, trust, association,
unincorporated organization, governmental or regulating body or authority, or
any other form of business or entity.
               (iv) The term “Person” means and includes an individual and an
Entity.
               (v) The number and gender of each noun and pronoun and the terms
“Person” and “Persons” and the like shall be construed to mean such number and
gender as the context, the circumstances or its antecedent may require.
               (vi) The terms “hereof”, “herein”, “hereunder” and words of
similar import refer to this Agreement as a whole, and not to any Section,
subsection or clause of this Agreement.
               (vii) Each reference to a Section means such Section of this
Agreement.
*     *     *     *     *     *     *     *     *

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     IN WITNESS WHEREOF, this Second Amended and Restated Employment and
Non-Competition Agreement has been executed and delivered by or on behalf the
parties hereto, effective as of the date first above written.

            THE COMPANY:

Southern Flow Companies, Inc.
      By:   /s/ Sidney Hinton        Sidney Hinton, Chairman             
EMPLOYEE:
      /s/ John D. Bernard       John D. Bernard           

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