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                                                                   Exhibit 10.19

                                 LEASE AGREEMENT

     THIS LEASE AGREEMENT (the "Lease") by and between H & C HOLDINGS, LLC, a
North Carolina limited liability company ("Landlord"), and POWERSECURE, INC., a
Delaware corporation authorized to do business in North Carolina (hereinafter
"Tenant").

                                   WITNESSETH:

     In consideration of the mutual covenants and agreements contained herein,
the parties hereto agree for themselves, their successors and assigns, as
follows:

     SECTION 1. PREMISES.

     Landlord, jointly and severally, leases to Tenant, and Tenant leases from
Landlord, upon the terms and conditions set forth in this Lease, together with
all easements thereto and improvements thereon including, without limitation,
the buildings, parking areas, driveways and walkways (hereafter collectively the
"Premises"): (i) the real property (the "Land") located at 1601 HERITAGE
COMMERCE COURT, WAKE FOREST, WAKE COUNTY, NORTH CAROLINA, (ii) the commercial
building to be constructed by Landlord thereon, and all related fixtures and
appurtenances (the "Building"), (iii) the parking lots, lawns, sidewalks and
other improvements, now or in the future, located on the Land or the Building
(the "Improvements"), and (iv) and all rights, easements and appurtenances to
the Land, the Building and Improvements upon the Land.

     SECTION 2. TERM.

     The term of this Lease shall commence on the Commencement Date (as
identified in Section 30, below), and end at 11:59 p.m. on December 31, 2015
(the "Expiration Date") [herein the "Term"]. Promptly after the Commencement
Date, Landlord and Tenant shall execute an agreement, stating the commencement
date of this lease.

     If Tenant gives Landlord at least one hundred eighty (180) days advance
written notice of its intent to do so prior to the Expiration Date, and is not
in default at the time of giving the notice or as of the Expiration Date, Tenant
may extend the Term of this lease for one (1) additional term of five (5) years,
in which event the Expiration Date will be changed to December 31, 2020.

     SECTION 3. RENT AND SECURITY DEPOSIT.

     3.1 Commencing thirty (30) days following the Commencement Date (the "Rent
Commencement Date"), Tenant shall pay to Landlord an annual base rent as shown
on SCHEDULE A, which is attached hereto and made a part hereof. The annual base
rent shall be

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paid in equal monthly installments, in advance, on the first day of each
calendar month during the Term, as shown on SCHEDULE A. All rent due hereunder,
including additional rent, shall be paid by Tenant without notice or demand and
without right of counterclaim, deduction or set-off. If the Rent Commencement
Date is not the first day of a calendar month, Tenant shall pay to Landlord, on
the Rent Commencement Date, a fraction of the equal monthly installment, the
numerator of which is the number days from the Rent Commencement Date to the end
of the calendar month in which that date occurs and the denominator of which is
thirty (30).

     3.2 Each rental payment shall be made payable to Landlord and delivered to
its notice address, as hereinafter set forth, or at such other place as Landlord
may designate by notice to Tenant.

     3.3 Tenant agrees to pay a late charge equal to five percent (5%) of the
rent due with any rent payment made after the fifth (5th) day of the month. The
said late charge shall not release Tenant of any other obligations for payment
of rent or payment of interest on unpaid earned rent, which shall bear interest
at the rate of twelve percent (12%) per annum from the date due until paid.

     3.4 Tenant acknowledges and agrees that this Lease will be, except as
otherwise expressly stated herein, a complete "NET LEASE" to Landlord, and that,
except as otherwise expressly stated herein, Landlord is not responsible during
the Term for any costs, charges, expenses or outlays of any nature whatsoever,
arising from or relating to the Premises, or the use of and occupancy or
contents thereof. During the Term, Tenant shall pay, or reimburse Landlord for,
all charges, impositions, costs and expenses of every nature and kind relating
to the Premises, except as herein expressly provided to the contrary.

     3.5 All costs, charges and expenses that Tenant assumes, agrees to, or is
obligated to Landlord under this Lease shall be deemed additional rent. In the
event of nonpayment, Landlord shall have the same rights and remedies with
respect to the additional rent as is provided for herein in respect of the
payment and the nonpayment of the base annual rent.

     3.6 Tenant shall pay to Landlord, as of the Commencement Date, the sum of
$21,968.75 (the "Security Deposit") to be held by Landlord as security for the
performance by Tenant of all obligations imposed upon Tenant pursuant to this
Lease. The Security Deposit shall bear no interest and Landlord shall be
entitled to commingle the Security Deposit with Landlord's other funds. If
Tenant defaults with respect to any of the terms, provisions, conditions or
covenants of this Lease, Landlord may use or apply all or any part of the
Security Deposit to cure such default. Landlord shall not be required to apply
all or any portion of the Security Deposit with respect to any particular
violation or default by Tenant. Tenant shall reimburse Landlord for any portion
of the Security Deposit that Landlord shall, from time to time, apply with
respect to any violation by Tenant hereunder promptly upon notice of such
application by Landlord. Any portion of the Security Deposit that has not been
appropriated by Landlord in accordance with the provisions hereof shall be
returned to Tenant only after the expiration of the Term of this Lease,
notwithstanding that this Lease may have been terminated

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by Landlord prior thereto in accordance with its provisions, since it is the
intention of the parties that such sum of money shall secure Landlord not only
as to defaults by Tenant prior to such termination but also for any deficiency
of base rent or other charges due to Landlord thereafter under the terms of this
Lease. If Landlord transfers its interest in the Premises, Landlord shall have
the right to transfer the Security Deposit to the transferee of Landlord's
interest. In such event, Landlord shall be deemed released by Tenant from all
liability for the return of the Security Deposit and Tenant shall look solely to
the transferee for the return of the Security Deposit.

     SECTION 4. TAXES.

     4.1 Tenant shall promptly pay all real estate taxes, assessments and other
governmental charges levied against the Premises, whether ordinary or
extraordinary, or foreseen or unforeseen, together with any interest and
penalties thereon, which become due and payable during the Term ("Imposition").
Tenant's obligations under this Section shall survive the expiration or
termination of this Lease. Tenant shall provide to Landlord proof of payment of
any Imposition within 10 days after the same has been paid.

     4.2 Tenant may pay any impositions in installments, if payment may be made
without penalty, unless such installment payment would violate the terms of any
deed of trust against the Premises. All Impositions for the tax year in which
this Term begins or terminates shall be apportioned between Tenant and Landlord,
except that Tenant shall pay in full, at least 60 days before the Term expires,
any Imposition which it has elected to pay in installments.

     4.3 Tenant may contest the amount or validity of any Imposition by
appropriate proceedings. However, Tenant shall promptly pay any contested
Imposition unless the proceeding prevents or stays its collection and Tenant
deposits with Landlord the amount contested and unpaid, together with a sum to
cover all charges, interest and penalties that may be assessed against the
Premises in such proceeding. Upon the termination of such proceeding, Tenant
shall deliver to Landlord proof of the amount of such Imposition, as finally
determined. Landlord shall then pay such Imposition out of the sum so deposited
with it by Tenant and refund any balance to Tenant. If the amount deposited with
Landlord is insufficient to pay the full amount of the contested Imposition,
Tenant shall immediately pay any deficiency to Landlord. If, during such
proceeding, Landlord deems the sum deposited with it as insufficient, Tenant
shall, upon demand, deposit with Landlord such additional sum as Landlord may
reasonably request. Landlord, at Tenant's expense, shall join in any such
proceeding if required to do so.

     4.4 Beginning January 1, 2006, and on the first day of each calendar year
thereafter, Landlord may require Tenant to deposit with Landlord, with each
monthly payment of rent, an amount equal to one-twelfth (1/12th) of the amount
estimated by Landlord (in its reasonable discretion) as the ad valorem taxes due
against the Premises for such calendar year during the Term. Landlord will make
reasonable efforts to provide Tenant with Landlord's estimate of such monthly
deposit amount by December 15 of the preceding year.

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     SECTION 5. UTILITIES, ETC.

     During the Term, Tenant shall obtain and promptly pay for all sewer, water,
electric, heat, trash removal and other utilities and services, including
janitorial, furnished to or consumed on the Premises.

     SECTION 6. INSURANCE.

     6.1 During the Term, Tenant shall, at its expense, provide the following
insurance coverages:

          (a) Comprehensive and general, public liability insurance against
claims for personal injury, death, or property damage occurring in connection
with the use and occupancy of the Premises or arising out of their improvement,
repair or alteration. The limits of such insurance shall be not less than
$1,000,000 per occurrence.

          (b) Property damage insurance of not less than $250,000 for damage to
property arising out of any one occurrence.

          (c) Insurance on the Building against loss or damage by fire and other
risks embraced by the so-called "Broad Extended Coverage Endorsement" in amounts
at all times sufficient to prevent Landlord or Tenant from becoming a coinsurer
under the terms of the applicable policy but, in any event, in an amount not
less than 100% of the then full insurable value of the Premises, including the
Building and all Improvements. The term "Full Insurable Value" means actual
replacement value (exclusive of costs of excavation, foundations and footings).

          (d) Rental insurance against loss of rental under a rental value
insurance policy covering risk of loss due to the occurrence of any of the
hazards insured against under the fire and extended insurance on the Building,
in an amount sufficient to prevent Landlord from becoming a coinsurer but in any
event, in an amount sufficient to pay for one year the rent payable under this
Lease. All proceeds received by Landlord under rent insurance policies will be
credited as received against the rent due.

          (e) Landlord's risk public liability insurance with single limits of
$1,000,000.

          (f) Fire and extended coverage insurance (contents broad form) on
Tenant's personal property located in the Premises in amounts reasonably deemed
adequate by Tenant to fully insure such personal property.

     6.2 All insurance required hereunder shall name as insured's Landlord, its
employees and agents.

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     6.3 If, during the Term, higher limits of insurance than those referenced
above are appropriate, customary and generally required for like Premises
utilized for similar uses, Tenant shall, upon Landlord's request, procure such
increased limits insurance.

     6.4 All Insurance required hereunder shall be in companies rated "AAA" or
better in Best's Insurance Guide and which are qualified to do business in the
State of North Carolina. Tenant shall deliver to Landlord copies of policies of
such insurance, or certificates evidencing its existence.

     6.5 No policy shall be subject to reduction, cancellation or other
modification except after thirty (30) days' prior notice to Landlord and that
any loss otherwise payable under the policy shall be payable notwithstanding any
act or negligence of Landlord or Tenant that might, absent such agreement,
result in a forfeiture of all or a part of the insurance payment.

     6.6 No financed policy has a deductible greater than $5,000 without
Landlord's prior consent.

     6.7 All policies shall be written as primary, and not contributing with or
in excess of the coverage carried by Landlord or additional insured's, their
agents, servants and employees.

     6.8 Tenant's obligations herein may be brought within the coverage of a
"blanket policy." However, Landlord and additional insured's shall be named as
insured there under as their interests may appear. Furthermore, coverage afford
shall not be reduced or diminished by reason of the use of such blanket policy
and must be at least equal to the coverage required hereunder.

     6.9 The policy shall provide that it shall not be invalidated as to
Landlord or additional insured's by reason of any act or omission by Tenant or
any misrepresentations in its application for insurance.

     SECTION 7. WAIVER OF SUBROGATION.

     7.1 Landlord hereby releases Tenant, but only to the extent payment is
actually received under such coverage by Landlord, from any liability for loss
or damage covered by any insurance policies which Tenant carries with respect to
the Premises or any interest or property therein or thereon, whether or not such
insurance is required by this Lease and even if the insured peril shall be
brought about by the default, negligence or other action of Tenant, Tenant's
agent, employees, or any of them; provided, this release shall be in effect only
with respect to an insured loss and only so long as Tenant's policy applicable
to such loss contains a clause to the effect that this release shall not affect
the right of Landlord to recovery under such policy. Landlord does not waive and
hereby reserves the right to secure compensation from Tenant for any uninsured
loss, any amounts not paid because of deductibles, and other amounts not paid
for any reason whatsoever.

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     7.2 Tenant hereby releases Landlord but only to the extent of Tenant's
insurance coverage and only to the extent payment is actually received under
such coverage by Tenant, from any liability for loss or damage covered by any
insurance policies which Tenant carries with respect to the Premises or any
interest or property therein or thereon, whether or not such insurance is
required by this Lease and even if the insured peril shall be brought about by
the default, negligence or other action of Landlord, Landlord's agent,
employees, or any of them; provided, this release shall be in effect only with
respect to an insured loss and only so long as Tenant's policy applicable to
such loss contains a clause to the effect that this release shall not affect the
right of Tenant to recovery under such policy. Tenant does not waive and hereby
reserves the right to secure compensation from Landlord for any uninsured loss,
any amounts not paid because of deductibles, and other amounts not paid for any
reason whatsoever. This Section does not modify the limitations of Landlord's
liability to Tenant provided under any other sections of this Lease.

     SECTION 8. INDEMNIFICATION.

     8.1 Except to the extent due to Landlord's affirmative negligence or
willful misconduct, Landlord shall not be liable for any damage to or loss of,
property in the Premises belonging to Tenant, its employees, agents, visitors,
licensees, or other persons in or about the Premises, or for damage or loss
suffered by the business of Tenant, from any cause whatsoever.

     8.2 Tenant agrees that no claim shall be made against Landlord by Tenant,
or by any agent or servant of Tenant, or by others claiming the right to be in
the Premises through or under Tenant, for any injury, loss, business
interruption, or damage to the Premises or to any person or property occurring
upon the Premises from any cause other than the affirmative negligence or
willful misconduct of Landlord. In no event shall Landlord be liable to Tenant
for any consequential damages sustained by Tenant arising out of loss or damage
to any property of Tenant.

     8.3 Except for claims arising out of acts caused by the affirmative
negligence or willful misconduct of Landlord or its representatives, Tenant
shall indemnify and defend Landlord and the Premises, at Tenant's expense,
against all claims, expenses and liabilities arising from (i) the management of
or any occurrence on or about the Premises or any adjoining street, curb or
sidewalk, (ii) any default by Tenant hereunder, or, (iii) any act or negligence
of Tenant or its agent, contractors, employees or licensees.

     SECTION 9. REPAIRS AND MAINTENANCE.

     9.1 Throughout the Term hereof, Tenant, at its sole expense, shall take
good care of, and make all necessary repairs and replacements to the Premises,
whether interior or exterior, structural or nonstructural, ordinary or
extraordinary, or foreseen or unforeseen, as and when necessary. As used in this
Section, "repair" and "repairs" include all replacements, renewals, alterations,
additions and betterments. All repairs by Tenant shall be at least equal in
quality and class to the original work. Whether repairs are necessary and
adequate shall be measured by the appropriate standard for repairs of similar
construction and class.

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     9.2 In addition to making all necessary repairs, Tenant shall maintain all
portions of the Premises in a clean and orderly condition, free of dirt,
rubbish, snow, ice and unlawful or dangerous obstructions.

     9.3 If Tenant defaults in making such repairs or replacements, Landlord may
make them for Tenant's account, and all expenses and costs thereof shall
constitute and be collectible as additional rent.

     SECTION 10. ALTERATIONS.

     10.1 Tenant shall make no alterations, additions or improvements to the
Premises without Landlord's prior approval, which shall not be unreasonably
withheld or delayed. Any approved modifications, alterations or improvements
shall be made in a good and workmanlike manner and shall not weaken the
structure of the Premises or lessen its value. All modifications, alterations
and improvements shall become and remain the property of Landlord, except that
Landlord may require Tenant to remove them at the expiration of the Lease and
repair any damages occasioned by such installation or removal.

     10.2 Tenant may, without Landlord's consent, install temporary partitions,
shelves, appliances, equipment, trade fixtures and like personal property in the
Premises, which items shall remain Tenant's property and may be removed by
Tenant prior to the expiration or earlier termination of this Lease, provided,
Tenant shall repair any damage to the Premises caused by such removal.

     SECTION 11. FIRE OR OTHER CASUALTY.

     11.1 If the Premises are damaged in whole or in part by fire or other
casualty, then Landlord shall oversee the restoration of the Premises (but not
any improvements or alterations made to the Premises by Tenant) to a kind and
quality substantially similar to that which existed immediately prior to the
damage or destruction. Restoration shall be commenced within a reasonable time
and, subject to matters beyond Landlord's reasonable control, shall be completed
without delay. All insurance proceeds received by Landlord under the provisions
of this Lease, less any cost of such recovery, shall be held in trust and
applied by Landlord to the payment of such restoration as it progresses.

     11.2 If, at any time within 18 months before the end of the Term, the
Premises are so completely destroyed or damaged by fire or other casualty,
regardless of whether covered by insurance, so as to render it unfit for
Tenant's intended use, and repair or restoration is not economically feasible,
either party may terminate this Lease by giving notice to the other party no
less than 30, but not more than 60, days following the date of such damage or
destruction. If the Lease is so terminated, all basic and additional rent shall
be apportioned to the date of termination and all insurance proceeds shall
belong to Landlord.

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     11.3 If the Lease is not so terminated and the proceeds of insurance are
insufficient to pay the full cost of repair or restoration, Tenant shall pay the
deficiency to Landlord, within a reasonable period after demand for the same.
Any excess insurance proceeds shall belong to Tenant.

     11.4 Any disbursement of insurance proceeds by a holder of a deed of trust
against the Premises shall be deemed to have been made by Landlord. If any
holder of a deed of trust refuses to disburse any portion of insurance proceeds
to which Tenant is entitled, Landlord shall provide an equivalent sum from other
sources.

     11.5 Except as provided in 11.2, above, the fact that all or part of the
Premises is destroyed or damaged shall not affect the provisions of this Lease
and Tenant's obligations under this Lease, including the payment of basic rent,
additional rent, and other charges shall continue without abatement.

     SECTION 12. CONDEMNATION.

     12.1 If the whole of the Premises shall be taken for any public or
quasi-public use or purpose, or by right of eminent domain or by any private
purchase by any public authority in lieu of the exercise of the right of eminent
domain, or if any part of the Premises is so taken, and the part not so taken is
for the reasonable operation of Tenant's business then, in either of such
events, this Lease shall cease and expire on the date possession shall be taken
on any part thereof, and all rights and other charges shall be prorated and paid
to such date and this Lease shall thereafter terminate and neither party hereto
shall have any further obligation hereunder.

     12.2 If only a part of the Premises is so taken and the part not so taken
shall be sufficient for the reasonable operation of Tenant's business, this
Lease shall remain unaffected.

     12.3 In the event of any taking, Landlord shall be entitled to the entire
condemnation award, regardless of whether this Lease is terminated in accordance
with this Section, except that Tenant shall be entitled to any separate award
allocated by the condemning authority for Tenant's trade fixtures, personalty,
moving expenses, business interruption or loss of profits, and any such award
made directly to Tenant shall belong entirely to Tenant. Landlord and Tenant
agree that this Lease shall control the rights of Landlord and Tenant in any
such award.

     SECTION 13. DEFAULT.

     If any of the following events shall occur: (i) Tenant fails to pay the
rent or any other sums payable by Tenant under this Lease, and the failure
continues for a period of ten (10) days after notice from Landlord, (ii) Tenant
fails to perform any other obligations under this Lease and the failure
continues for thirty (30) days after written notice from Landlord, or for an
unreasonable period of time if thirty (30) days is not sufficient time to
repair, remedy or correct the obligation breached, (iii) Tenant abandons the
Premises, (iv) Tenant becomes bankrupt or insolvent or files or has filed
against it a petition in bankruptcy, or for the appointment of a receiver, or
for reorganization or arrangement or other relief under the National Bankruptcy
Act,

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or makes an assignment for the benefit of creditors, or (v) Tenant suffers the
Lease to be taken under any writ of execution and such writ is not vacated or
set aside within thirty (30) days, then, in any such event, Landlord shall have
the immediate right to re-enter the Premises, without resort to legal process,
with or without terminating this Lease. If Landlord elects to reenter the
Premises, as herein provided, or should it take possession pursuant to legal
proceedings, Landlord may either terminate this Lease or it may, from time to
time without terminating this Lease, relet the Premises for such term and at
such rentals and upon such other terms and conditions as Landlord may deem
advisable. If such reletting shall yield rents insufficient for any month to pay
the rental due by Tenant hereunder for that month, Tenant shall be liable to
Landlord for the deficiency and the same shall be paid monthly. No such reentry
or taking possession of the Premises by Landlord shall be construed as an
election to terminate this Lease unless notice of such termination is given by
Landlord to Tenant at the time of such reentry; but, notwithstanding any such
reentry and reletting without termination, Landlord may at any time thereafter,
elect to terminate this Lease for such previous breach. Landlord reserves all
rights and remedies available to Landlord at law or in equity as a result of
Tenant's default.

     SECTION 14. USE OF PREMISES.

     The Premises shall be used solely for the purpose of conducting a business
engaged in the design, engineering, manufacturing, marketing, distribution,
installation, monitoring and servicing of peak generation and energy information
management systems. Any other use will require Landlord's prior consent, but in
no event shall Tenant make any use of the Premises that is in violation of any
laws, codes or regulations pertaining to occupancy, environmental and safety
requirements, or which might constitute a nuisance or trespass, or which
increases, or would increase, the fire insurance premiums on the Premises.

     SECTION 15. ASSIGNMENT OR SUBLETTING.

     Tenant may not assign this Lease, or otherwise encumber this Lease, in
whole or in part, or sublet all or any part of the Premises, without Landlord's
prior consent. Notwithstanding any permitted assignment or subletting, Tenant
shall, at all times, remain directly, primarily and fully responsible and liable
for the payment of the rent herein specified, including any additional rent and
charges, and for compliance with all of the other obligations and conditions of
Tenant under this Lease. For purposes of this Section, an assignment shall
include a transfer of more than fifty percent (50%) ownership interest in
Tenant, or the transfer of substantially all of Tenant's assets, whether all at
once or within a period of twelve (12) consecutive months. Tenant shall pay all
of Landlord's costs and expenses in connection with reviewing and approving any
requested assignment, encumbrance or sublease, including reasonable attorneys'
fees.

     SECTION 16. SURRENDER OF PREMISES.

     Upon the expiration or earlier termination of this Lease, Tenant shall
surrender to Landlord the Premises in good condition and repair, ordinary wear
and tear, fire and other casualty, governmental takings and alterations which
are required pursuant to of this Lease,

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excepted.

     SECTION 17. NOTICES.

     All notices or communications required or permitted by this Lease shall be
in writing and shall be personally delivered, delivered by overnight courier, or
delivered by United States mail, to the applicable address set forth below, or
to such other address as may be designated by any party hereto by a notice to
the other party hereto in accordance with the provisions of this Section. All
notices hereunder shall be deemed to be duly given and received on the date of
delivery, if personally delivered or if delivered by overnight courier, or on
the date shown on the signed receipt, if mailed prepaid, by first class,
registered or certified mail.

     Landlord's Address:

          700 Exposition Place
          Suite 131
          Raleigh, NC 27615
          Attn: Charles C. Sites, Manager

     Tenant's Address:

          1601 Heritage Commerce Court
          Wake Forest, NC 27587
          Attn: Sidney Hinton, CEO

     SECTION 18. SUBORDINATION TO MORTGAGES.

     This Lease, and Tenant's rights under this Lease, are subject and
subordinate to the lien of any mortgage or deed of trust (hereinafter called
"Mortgage") now, or in the future, affecting the Premises, and all renewals,
modifications, consolidations, replacements, substitutions, additions and
extensions thereof, and no further agreements or documents shall be required to
render this Lease, and the Tenant's rights, subordinate to such Mortgage. Lessee
agrees, upon demand by Lessor, without charge, to execute any instrument that
may be required to effectuate such subordination. At Tenant's request and at
Tenant's expense, Landlord shall endeavor to obtain for Tenant, from any
mortgagee, a non-disturbance agreement in recordable form providing, in
substance, that Tenant's tenancy shall not be disturbed nor affected by any
default under the Mortgage provided that Tenant is not in default under this
Lease.

     SECTION 19. HOLDING OVER.

     If Tenant remains in possession of the Premises, or any part thereof, after
the expiration of the Term, whether with or without Landlord's acquiescence or
Landlord's written consent, Tenant shall be deemed only a tenant at will and
there shall be no renewal of this Lease without an agreement signed by both
parties specifying such renewal. The "monthly" rental payable by

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Tenant during any such tenancy at will period shall be one hundred fifty percent
(150%) of the monthly rental payable during the last month of the Term. Tenant
shall also remain liable for all other amounts due under this Lease as well as
for all damages, direct and consequential, suffered by Landlord as a result of
any holdover without Landlord's written acquiescence.

     SECTION 20. SIGNS.

     Tenant may not erect, install, or display any sign or advertising material
upon the exterior of the Premises or elsewhere on the Premises, or the walls
thereof, or in any window therein, without Landlord's prior consent, which
consent will not be unreasonably withheld or delayed. Any and all signs placed
on the Premises by Tenant shall be installed and maintained in compliance with
all applicable governmental laws and regulations, and Tenant shall be
responsible to Landlord for any damage caused by the installation, use or
maintenance of its signs. At the expiration or earlier termination of this
Lease, Tenant shall remove any of its signs and shall repair any damages
incidental to the installation or removal of such signs.

     SECTION 21. BROKERS.

     Landlord and Tenant shall defend, indemnify and hold the other harmless
from any and all claims for brokerage commissions or other compensation for
services rendered at its instance in connection with this transaction. The
provisions of this Section shall survive termination of this Lease.

     SECTION 22. RLGHT OF ENTRY.

     Landlord, and those persons authorized by it, shall have the right to enter
the Premises, during normal business hours and upon reasonable advance notice to
Tenant, for purposes of inspecting its condition, making repairs, showing the
same to prospective purchasers and/or lenders (at any time during the Term), or
prospective tenants (during the last twelve (12) months of the Term), as well as
at any time, and without prior notice to Tenant, in the event of emergency
involving possible injury to property or persons in or around the Premises.

     SECTION 23. HAZARDOUS MATERIALS.

     23.1 Landlord represents and warrants to Tenant that up and until the
Commencement Date no toxic, explosive or other dangerous materials or hazardous
substances have been concealed within, buried beneath or removed from and stored
off-site of the Premises, and Landlord shall indemnify Tenant against any and
all claims, demands, liabilities, losses and expenses, including consultant
fees, court costs and reasonable attorneys' fees, arising out of any breach of
the foregoing representation and warranty. As between the parties, Landlord
shall have sole responsibility for any clean-up or other costs resulting from
any environmental conditions existing on the Premises on the date of this Lease.

     23.2 Tenant represents and warrants to Landlord that from and after the

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Commencement Date, no toxic, explosive or other dangerous materials or hazardous
substances will be used, stored, generated or disposed of on or in the Premises,
and Tenant shall indemnify Landlord against any and all claims, demands,
liabilities, losses and expenses, including consultant fees, court costs and
reasonable attorneys' fees, arising out of any breach of the foregoing
representation and warranty. As between the parties, Tenant shall have sole
responsibility for any clean-up or other costs resulting from any environmental
conditions existing on the Premises on or after the date of this Lease.

     SECTION 24. QUIET ENJOYMENT.

     Landlord covenants that if Tenant pays the rent and performs all of its
obligations under this Lease, Tenant shall peaceably and quietly enjoy and
possess the Premises throughout the Term, subject only to the conditions set
forth in this Lease.

     SECTION 25. MECHANICS LIEN.

     Tenant shall have no authority, express or implied, to create or place any
lien or encumbrance of any kind or nature whatsoever upon, or in any manner to
bind, the interest of Landlord in the Premises or to charge the rent payable
hereunder for any claim in favor of any person dealing with Tenant, including
those who may furnish materials or perform labor for any construction or
repairs, and each such claim shall affect and attach to, if at all, only the
leasehold interest of Tenant hereunder. Tenant covenants and agrees that it will
pay, or cause to be paid, all sums legally due and payable by it on account of
any labor performed or materials furnished in connection with any work performed
on the Premises on which any lien is or can be validly and legally asserted
against its leasehold interest in the Premises and that it will save and hold
Landlord harmless from any and all loss, cost or expense based on or arising out
of asserted claims or liens against the leasehold estate or against the right,
title and interest of Landlord in the Premises or under the terms of this Lease.

     SECTION 26. LESSOR'S LIABILITY.

     Notwithstanding anything to the contrary contained in this Lease, Tenant
agrees and understands that Tenant shall look solely to the estate and property
of Landlord in the Premises for the enforcement of a judgment (or other judicial
decree) requiring the payment of money by Landlord to Tenant by reason for
default or breach of Landlord in the performance of its obligations under this
lease, it being intended that there will absolutely be no personal liability on
the part of Landlord, or Landlord's heirs, personal representatives, successors,
assigns, trustees, members, managers, shareholders, directors or employees, with
respect to any of the terms, covenants and conditions of this Lease, and no
other assets of Landlord, or of Landlord's heirs, personal representatives,
successors, assigns, trustees, members, managers, shareholders, directors or
employees, shall be subject to levy, execution, attachment, or any other legal
process for the enforcement or satisfaction of the remedies pursued by Tenant in
the event of such default or breach, this exculpation of liability to be
absolute and without exception whatsoever.

                                       12

<PAGE>

     SECTION 27. SECURITY INTEREST.

     (Intentionally Omitted).

     SECTION 28. FORCE MAJEURE.

     In the event Landlord or Tenant shall be delayed, hindered or prevented
from the performance of any act required hereunder, by reason of governmental
restrictions, scarcity of labor or materials, strikes, or any other reasons
beyond its reasonable control, the performance of such act shall be excused for
the period of delay, and the period of performance of any such act shall be
extended as necessary to complete performance after the delay period. However,
the provisions of this Section shall in no way be applicable to Tenant's
obligation to pay rent or any other amounts required by this Lease.

     SECTION 29. TRANSFER OF LANDLORD'S INTEREST.

     If Landlord shall sell, assign or transfer all or any part of its interest
in the Premises or in this Lease to a successor in interest which expressly
assumes the obligations of Landlord hereunder, then Landlord shall thereupon be
released or discharged from all covenants and obligations hereunder, and Tenant
shall look solely to such successor in interest for the performance of all of
Landlord's obligations and such successor shall be obligated to perform all of
Landlord's obligations under this Lease which accrue after the date of such
transfer. Tenant's obligations under this Lease shall in no manner be affected
by Landlord's sale, assignment, or transfer of all or any part of such
interest(s) of Landlord, and Tenant shall thereafter attorn and look solely to
such successor in interest as the landlord hereunder.

     SECTION 30. CONSTRUCTION OF IMPROVEMENTS AND TERM AND RENT COMMENCEMENT.

     30.1 The construction of the Building and Improvements (the "Construction")
shall be in accordance with Landlord's plans and specifications (the "Plans and
Specs"), a copy of which has been submitted to, and approved by, Tenant (as
evidenced by its initials to the pages thereof).

     30.2 Landlord shall begin the Construction as soon as reasonably possible
following the effective date of this Lease and shall complete the Construction
as soon thereafter as reasonably possible (with an expected completion on or
before January 1, 2006).

     30.3 Landlord, at its sole cost and expense, shall construct the Premises
in substantial conformance with the Plans and Specs. Landlord shall be
responsible for obtaining, at its sole cost and expense, all necessary zoning,
construction, use and occupancy permits for the Premises.

     30.4 The Construction shall be deemed substantially completed (the
"Completion Date") when Landlord obtains an occupancy permit for the Premises
and the Premises are made

                                       13

<PAGE>

available to Tenant for its permitted use.

     30.5 The "Commencement Date" shall be the Completion Date of the
Construction.

     30.6 The "Rent Commencement Date" shall be 30 days following the
Commencement Date.

     30.7 Tenant's taking possession of the Premises shall be conclusive
evidence, as against Tenant, that, at the time of the Commencement Date and
Tenant's taking possession of the Premises, Landlord substantially completed the
Construction and that Tenant takes the Premises in its "AS-IS" condition..
Within 30 business days after the Commencement Date, a representative of both
Landlord and Tenant shall survey the Premises for the purpose of determining
which items of the Construction remain to be completed, which they shall reduce
to an itemized agreed "punch" list. Landlord shall complete the punch list items
within a reasonable time.

     30.8 Landlord shall assign and deliver to Tenant all guaranties and
warranties of all components comprising the Construction and the Building and
Improvements, to the extent the same are assignable.

     30.9 If the Construction is delayed due to any act or omission of Tenant,
or of its agents, employees, or contractors, the Completion Date of the
Construction shall be the day on which the Construction would have been
completed but for the delay. For this purpose, a delay shall include

          (a) delay in submission of authorizations and approvals required for
the execution and completion of the Construction;

          (b) delay due to: (i) changes made by or on behalf of Tenant in the
Plans and Specs or in the Construction; (ii) postponement by Landlord of the
Construction, either at Tenant's request or because Tenant must perform work on
an item before Landlord does so( and Landlord agrees to give Tenant notice of
the delay and all additional costs resulting from it before commencing or
postponing the Construction); (iii) any other interference by Tenant or its
agents, servants or employees, with the Construction.

     30.10 If Landlord sustains additional costs or damages as a result of any
delay of the Construction by Tenant, Tenant shall pay to Landlord (in addition
to the rent) all reasonable costs and damages sustained by Landlord as a result
of such delay.

     SECTION 31. OPTION TO PURCHASE.

     31.1 Beginning one (1) year from the Commencement Date and continuing for a
period of six (6) months thereafter (the "Option Period"), Tenant shall have the
first right and option to purchase the Premises (the "Option").

     31.2 Tenant may exercise the Option at any time during the Option Period by
giving Landlord a duly executed notice of such exercise.

                                       14

<PAGE>

     SECTION 32. MISCELLANEOUS PROVISIONS.

     32.1 If any provision of this Lease or its application to any person or
circumstances shall, to any extent, be invalid or unenforceable, the remainder
of this Lease, or the application of that provision to persons or circumstances
other than those as to which it is invalid or unenforceable, shall not be
affected, and each provision of this Lease shall be valid and enforceable to the
fullest extent permitted by law.

     32.2 This Lease, together with all exhibits hereto, contains the complete
agreement of the parties concerning the subject matter, and there are no oral or
written understandings, representations or agreements pertaining thereto, which
have not been incorporated herein. This Lease creates only the relationship of
landlord and tenant between the parties, and nothing herein shall impose upon
either party any powers, obligations or restrictions not expressed herein.

     32.3 This Lease may be amended only by subsequent written agreement between
Landlord and Tenant.

     32.4 At Tenant's request, Landlord shall execute and deliver to Tenant a
memorandum of this Lease for recording purposes.

     32.5 TIME IS OF THE ESSENCE in every particular of this Agreement,
especially where the obligation to pay money is involved.

     32.6 This Lease shall bind, and inure to the benefit, of the parties and
their respective successors and assigns.

     32.7 If either party places in the hands of an attorney the enforcement of
this Lease, or any part thereof, for the collection of any rent or other charges
due or to become due hereunder, or recovery of the possession of the Premises,
or otherwise files suit hereunder, the non-prevailing (or defaulting) party
covenants and agrees to pay, and to indemnify the other party, against all
reasonable legal costs and expenses, including attorneys fees, lawfully and
reasonably incurred in connection with such proceeding or action.

     32.8 This Lease shall be governed by and construed and enforced under the
laws of North Carolina and the parties submit to the jurisdiction of the courts
of North Carolina.

     32.9 No waiver of any condition or covenant of this Lease by either party
shall be deemed to imply or constitute a further waiver of the same or any other
condition or covenant, and nothing contained in this Lease shall be construed to
be a waiver on the part of Landlord of any right or remedy in law or otherwise.

                                       15

<PAGE>

     32.10 The captions and headings in this Lease are for convenience and
reference only, and they shall, in no way, be held to explain, modify, or
construe the meaning of the terms of this Lease.

     32.11 For all purposes of this Lease, the singular shall include the
plural, the masculine the feminine and neuter, and vice versa.

     32.12 Effective as of the Rent Commencement Date, the lease between
Landlord and Tenant, of the premises located at 230 Capcom Avenue, Suite 107,
Wake Forest, NC 27587, shall terminate, and be null and void, and neither party
shall have any claim against, or obligation to, the other party except as to
those matters involving payments or other obligations then due one party to the
other.

                      (BALANCE OF PAGE INTENTIONALLY BLANK)

                                       16

<PAGE>

     EXECUTED by Tenant as of the _____ day of March, 2005.

                                        POWERSECURE, INC.

                                        By: /s/ Sidney Hinton
                                            ------------------------------------
                                            Sidney Hinton, President & CEO

     EXECUTED by Landlord as of the ____ day of March, 2005.

                                        H & C HOLDINGS, LLC

                                        By: /s/ Charles E. Sites
                                            ------------------------------------
                                            Charles E. Sites, Managing Member

                                       17

<PAGE>

                                   SCHEDULE A

                                      RENT

<TABLE>
<CAPTION>
Period              Annual Rent   Monthly Rent
------              -----------   ------------
<S>                 <C>           <C>
Rent Commencement
Date - 12/31/05
(if applicable)                    $21,968.75

1/1/06 - 12/31/06   $263,625.00    $21,968.75
1/1/07 - 12/31/07   $271,534.00    $22,627.84
1/1/08 - 12/31/08   $279,680.00    $23,306.67
1/1/09 - 12/31/09   $288,070.00    $24,005.84
1/1/10 - 12/31/10   $296,712.00    $24,726.00
1/1/11 - 12/31/11   $305,614.00    $25,467.84
1/1/12 - 12/31/12   $314,782.00    $26,231.84
1/1/13 - 12/31/13   $324,225.00    $27,018.75
1/1/14 - 12/31/14   $333,952.00    $27,829.34
1/1/15 - 12/31/15   $343,971.00    $28,664.25
</TABLE>

                                       18Exhibit 10.1

 

Exhibit 10.1

FIRST AMENDMENT TO 

AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT

     GMAC Commercial Finance LLC (“Lender”), Transcat, Inc. (“Parent”), Transmation
(Canada) Inc. (“Subsidiary”, or together with Parent, the “Borrowers”, or
individually a “Borrower”) enter into this First Amendment to Loan and Security Agreement
(the “Amendment”) on March 16, 2006.

BACKGROUND

     A. Borrowers and Lender entered into an Amended and Restated Loan and Security Agreement dated
November 1, 2004 (as amended from time to time, the “Loan Agreement”). Capitalized terms
used in this Amendment shall have the meanings set forth in the Loan Agreement unless otherwise
defined in this Amendment, and references to Sections refer to Sections of the Loan Agreement.

     B. Borrowers and Lender desire to amend the Loan Agreement.

     THEREFORE, in consideration of the mutual promises and agreements of the parties and for other
good and valuable consideration, the receipt and sufficiency of which is acknowledged, the parties
agree as follows:

TERMS AND CONDITIONS

     1. Consent to Asset Acquisition. Lender consents to Parent’s acquisition of
substantially all of the fixed and intangible assets of N.W. Calibration Inspection, Inc.
(“N.W.” and the “N.W. Assets”) for a cash purchase price not to exceed $830,000
(exclusive of any earn-out rights given to the Seller).

     2. Amendments.

	 	(A)	 	Interest Rate. The interest rate grid in Section
1(D) is amended and restated to read as follows:

	 	 	 	 	 	 	 	 	 
	 	 	Fixed Charge	 	 	 	 	 	 
	 	 	Coverage	 	Revolving	 	Cap-X Loans and	 	 
	Tier	 	Ratio*	 	Loans	 	Term Loan A	 	Term Loan B
	1

	 	1.249 or less
	 	(a) Prime Rate
minus 0.375% or (b)
LIBOR plus 2.375%
	 	(a) Prime Rate plus
0.125% or (b) LIBOR
plus 2.875%
	 	Prime Rate plus 0.375%
	 
	2

	 	1.25 to 1.49**
	 	(a) Prime Rate
minus 0.375% or (b)
LIBOR plus 2.125%
	 	(a) Prime Rate
minus 0.125% or (b)
LIBOR plus 2.625%
	 	Prime Rate plus 0.125%
	 
	3

	 	1.50 or greater
	 	(a) Prime Rate
minus 0.375% or (b)
LIBOR plus 1.875%
	 	(a) Prime Rate
minus 0.375% or (b)
LIBOR plus 2.375%
	 	Prime Rate minus
0.125%

1

 

	 	(B)	 	Term. The reference to “October 31, 2007” in Section 1(E)
is amended to read “October 31, 2008.”
	 
	 	(C)	 	Termination Premium. Section 3.4 is amended
and restated as follows:
	 
	 	 	 	If this Agreement is terminated or all Obligations are paid in full prior to
October 31, 2008, Borrower shall be obligated to pay Lender a termination
premium equal to the following (the “Termination Premium”):

	 	(a)	 	1% of the sum of the Advance Limit if
terminated before November 1, 2006; and
	 
	 	(b)	 	0.5% of the Advance Limit if terminated after
October 31, 2006 but before November 1, 2007; and
	 
	 	(c)	 	0.25% of the Advance Limit if terminated after
October 31, 2007 but other than on October 31, 2008.

	 	 	 	The Termination Premium will also be due and payable in connection with any
termination of this Agreement pursuant to Section 9.6 below and in
connection with termination of this Agreement by Lender upon an Event of
Default or by or on behalf of Borrower, whether voluntary or involuntary,
including upon an Event of Default which is not timely cured within any
applicable cure period, and including in connection with termination of this
Agreement or payment of the Obligations by any trustee or
debtor-in-possession in any Insolvency Proceeding. The Termination Premium
is presumed to be a reasonable estimate of the amount of damages sustained
by Lender as a result of the early termination of this Agreement and
Borrowers agree that such amount is reasonable under the circumstances
currently existing.
	 
	 	(D)	 	Capital Expenditures. Section 7.12 is amended
in its entirety to read as follows:
	 
	 	 	 	“Make or incur liabilities for Capital Expenditures
(including the purchase of assets associated with the
acquisition of the assets of N.W. Calibration Inspection,
Inc.) exceeding $2,000,000 for fiscal year 2006 and
$1,500,000 in any subsequent fiscal year.”

     3. Inclusion of N.W. Assets in Borrowing Base. Subject to the eligibility criteria in
the Loan Agreement, upon satisfaction of the conditions precedent set forth below, Lender will
include Accounts acquired from N.W. in the Borrowing Base.

     4. Conditions Precedent. Lender’s agreement to include N.W. Accounts in the Borrowing
Base will not be effective unless and until each of the following conditions are satisfied:

 

 

	 	(A)	 	All uniform commercial code, tax lien, litigation, judgment and
other searches conducted by Lender in respect of the Acquisition are
satisfactory to Lender and show that Lender will have security interests in the
N.W. Assets having the priorities called for by the Loan Agreement.
	 
	 	(B)	 	Lender and its counsel are reasonably satisfied with the terms
and conditions of all agreements entered into by Borrowers in connection with
the acquisition of the N.W. Assets.
	 
	 	(C)	 	No Material Adverse Change has occurred in the business or
financial condition of the Borrowers or N.W.

     5. Reaffirmation. Borrowers reaffirm, ratify and confirm their Obligations under the
Loan Agreement, acknowledge that all the terms and conditions in the Loan Agreement (except as
amended by this Amendment) remain in full force and effect and that the security interests granted
to Lender in the Collateral are valid and perfected.

     6. General Terms.

	 	(A)	 	Except as amended by this Amendment, all the terms and
conditions in the Loan Agreement remain in full force and effect.
	 
	 	(B)	 	This Amendment constitutes the entire agreement of the parties
in connection with the subject matter of this Amendment and cannot be changed
or terminated orally. All prior agreements, understandings, representations,
warranties and negotiations regarding the subject matter hereof, if any, are
merged into this Amendment.
	 
	 	(C)	 	This Amendment may be executed in counterparts, each of which
when so executed and delivered will be deemed an original, and all of such
counterparts together will constitute but one and the same agreement.

[Remainder of page left blank intentionally, signatures follow on next page]

 

 

	 	 	 	 	 	 	 	 
	GMAC Commercial Finance LLC	 	Transcat, Inc.	
	 
	 	 	 	 	 	 	
	By:

	 	/s/ Jeffrey J. Much
	 	By:
	 	/s/ Charles P. Hadeed	
	

	 	 	 	
	 	 	
	 

	 	     Name: Jeffrey J. Much
	 	 	 	     Name: C. Hadeed	
	 

	 	     Title: First Vice President
	 	 	 	     Title: COO	
	 
	 	 	 	 	 	 	
	Transmation (Canada) Inc.	 	 	 	 	
	 
	 	 	 	 	 	 	
	By:

	 	/s/ Charles P. Hadeed	 	 	 	 	
	

	 	 	 	
	 	 	
	 

	 	     Name: C. Hadeed	 	 	 	 	
	 

	 	     Title: CFO

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