Document:

Ex-10.1

 

Exhibit 10.1

RESTRICTED STOCK AWARD AGREEMENT

Pursuant to the

FINANCIAL INSTITUTIONS, INC.

1999 MANAGEMENT STOCK INCENTIVE PLAN

Name of Participant:                                         

Date of Grant: January 16, 2008

Number of Shares:                                         

Value of each Share on Date of Grant: $ 19.22

     This RESTRICTED STOCK AGREEMENT (the “Agreement”), dated as of                      20___, is made
between Financial Institutions, Inc. (the “Company”) and the above-named individual (the
“Participant”) to record the granting of Restricted Stock on January 16, 2008 (the “Date of Grant”)
to the Participant pursuant to the Financial Institutions, Inc. 1999 Management Stock Incentive
Plan (the “Plan”) by the Company’s Compensation Committee (the “Committee”) pursuant to Section 2
of the Plan.

     The Committee and the Participant hereby agree as follows:

     1. Grant of Shares. The Committee hereby grants to the Participant, as of the Date of
Grant, subject to and in accordance with the terms and conditions of the Plan and this Agreement,
                     shares of the Company’s Common Stock, par value $.01 per share (the “Common Stock”).
The grant of shares of Common Stock to the Participant, evidenced by this Agreement, is an award of
Restricted Stock (as defined in the Plan) and such shares of Restricted Stock are referred to
herein as the “Shares.”

     2. Vesting of Shares. There are two vesting requirements that must be satisfied
before the Participant becomes vested in the Shares: a service requirement and a performance
requirement. Both the performance requirement and the service requirement must be satisfied before
a Share will vest.

          a. Performance Requirement

          There are three applicable performance measures for determining whether the performance
requirement is satisfied: earnings per share; net charge offs and efficiency ratio. For purposes
of this Award, “earnings per share” and “Net charge offs” shall mean such amount as is reported on
the Company’s audited financial statements. “Efficiency ratio” shall mean the

 

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ratio of expense to revenue as reported in the Company’s annual report to shareholders on Form
10-K. As specified in the tables set forth below, separate performance targets have been
established for each performance measure (the “Performance Target”), and a number of Shares has
been designated as being subject to each performance measure.

     The number of Shares with respect to which the performance requirement is satisfied will
depend on the Company’s performance versus the Performance Target and the number of Shares that are
subject to a particular performance measure. The number of Shares with respect to which the
performance requirement is satisfied will be calculated in accordance with the following tables:

Performance Targets for 2008

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Maximum Shares that are
	 	 	 	 	 	 	Subject to Performance
	Performance Measure	 	Performance Target	 	Measure
	Earnings per Share
	 	 	 	 	 	60% of the grant
	Net Charge Offs
	 	 	 	 	 	20% of the grant
	Efficiency Ratio
	 	 	 	 	 	20% of the grant

     In the event that at least 95% of a Performance Target is achieved, the number of Shares that
will satisfy the performance requirement will be calculated by multiplying the maximum number of
Shares that are subject to a performance measure (per the above tables) by the applicable
percentage in the following table:

	 	 	 
	Percentage of Performance	 	Percentage of Shares that Satisfy
	Target Achieved	 	the Performance Requirement
	Less than 95%

	 	0%
	At least 95% but less than 96%
	 	92%
	At least 96% but less than 97%
	 	93%
	At least 97% but less than 98%
	 	94%
	At least 98% but less than 99%
	 	95%
	At least 99% but less than 100%
	 	96%
	At least 100% but less than 101%
	 	97%
	At least 101% but less than 102%
	 	98%
	At least 102% but less than 103%
	 	99%
	103% or greater
	 	100%

     For example, if for 2008 100% of the earnings per share performance target is met, 90% of the
net charge-offs performance target is met and 120% of the efficiency ratio performance target is
met, the number of shares that will satisfy the performance requirement for 2008 will be calculated
as follows: X Shares x 97% plus Y Shares x 0% plus Z Shares x 100%, for a total number of XXX
Shares. In the event that the calculation results in a number of Shares that is not a whole
number, the number of Shares so calculated will be rounded down to the nearest whole number.
Shares that do not satisfy the performance requirement will be immediately forfeited.

 

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Shares that satisfy the performance requirement must still satisfy the service requirement set
forth below before they become fully vested.

     The determination of the satisfaction of a performance requirement will be made as of the date
the Company files its audited financials with the Securities and Exchange Commission for the
relevant year; provided, however, that in the event those financials are restated the determination
shall be made as of the date the restated financials are filed with the SEC.

          b. Service Requirement

          Shares earned based on the performance requirement will also satisfy the service requirement
as follows:

          (i) if the Participant remains in continuous employment with the Company or one of its
Subsidiaries until the second anniversary of the Date of Grant, 50% of the Shares that satisfy the
performance requirement will vest; and

          (i) if the Participant remains in continuous employment with the Company or one of its
Subsidiaries until the third anniversary of the Date of Grant, the remaining 50% of the Shares that
satisfy the performance requirement will vest.

          Except as provided below, if the Participant ceases to be employed by the Company before the
Shares vest under the service vesting schedule, the Shares shall be immediately forfeited.

     Notwithstanding the foregoing, and subject to the Committee’s discretion under the terms of
the Plan, if prior to the date the Shares vest under the performance and service vesting
requirements set forth above there is a Change in Control (as that term is defined in the Plan) of
the Company, all of the Participant’s unvested Shares that have not been forfeited shall fully vest
as of the date of the Change in Control. Notwithstanding the foregoing, if prior to the date the
Shares vest under the service vesting requirement the Participant’s employment with the Company
terminates by reason of the Participant’s retirement on or after age 62, death, or disability, all
Shares that have vested under the performance requirement but have not yet vested under the service
requirement shall immediately vest. Other than the special rule set forth above for a Change in
Control, Shares that are subject to a performance requirement that is not satisfied shall be
forfeited.

     3. Forfeiture. Shares that do not become vested in accordance with the vesting
criteria set forth in Section 2 shall be forfeited to the Company.

     4. Legend. Each share certificate representing the Shares shall bear a legend
indicating that such Shares are “Restricted Stock” and are subject to the provisions of this
Agreement and the Plan.

     5. Withholding Taxes. If the Participant is an employee of the Company or any of its
Subsidiaries, the Participant shall remit to the Company in cash the amount needed to satisfy any
federal, state or local withholding taxes that may arise or be applicable as the result of the
award or vesting of the Shares. The Participant may, with the Committee’s consent, elect to

 

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satisfy, totally or in part, such Participant’s obligations pursuant to this section by
electing to have Shares withheld, or to deliver previously owned Shares that have been held for at
least six (6) months, provided that the election is made in writing on or prior to the vesting of
shares pursuant to Section 2 hereof.

     6. General Restrictions on Issuance of Stock Certificates. The Company shall not be
required to deliver any certificate representing the Shares until it has been furnished with such
opinions, representations or other documents as it may deem necessary or desirable, in its
discretion, to ensure compliance with any law or rules of the Securities and Exchange Commission or
any other governmental authority having jurisdiction under the Plan or over the Company, the
Participant, or the Shares or any interests granted thereunder.

     7. Rights as Shareholder. Except for the transfer and other restrictions set forth
elsewhere in this Agreement and in the Plan, the Participant, as record holder of the Shares, shall
possess all the rights of a holder of the Company’s Common Stock (including voting and dividend
rights); provided, however, that prior to vesting the certificates representing such Shares shall
be held by the Company for the benefit of the Participant. As the Shares vest, certificates
representing such Shares shall be released to the Participant. The Participant shall be entitled
to receive any dividends paid with respect to unvested Shares; provided, however, that no dividend
shall be payable to or for the benefit of the Participant for Shares with respect to record dates
occurring prior to the Date of Grant, or with respect to record dates occurring on or after the
date, if any, on which those Shares have been forfeited.

     8. Transferability - Restricted Share Certificates. The Shares may not be sold,
transferred, pledged, assigned, encumbered, or otherwise alienated or hypothecated until they
become fully vested in accordance with Section 2 of this Agreement and then only to the extent
permitted under this Agreement and the Plan and by applicable securities laws. Prior to full
vesting, all rights with respect to the Shares granted to a Participant under the Plan shall be
available, during such Participant’s lifetime, only to such Participant.

     9. Stock Power. Concurrently with the execution of this Agreement, the Participant
shall deliver to the Company a stock power, endorsed in blank, relating to the Shares. Such stock
power shall be in the form attached hereto as Exhibit A. The stock power with respect to any
certificate representing Shares that do not vest shall be completed in the name of the Company by
an officer of the Company, and the Shares shall be returned to either authorized but unissued
shares or treasury shares, depending on their original source.

     10. Section 83(b) Election. The Participant may elect, within 30 days of the Date of
Grant pursuant to Section 83(b) of the Internal Revenue Code, to include in his or her gross income
the fair market value of the Shares covered by this Agreement in the taxable year of grant. The
election must be made by filing the appropriate notice with the Internal Revenue Service within 30
days of the Date of Grant. If the Participant makes this election, the Participant shall promptly
notify the Company by submitting to the Committee a copy of the election notice filed with the
Internal Revenue Service.

 

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     11. Adjustment of Shares. As provided by the Plan, in the event of any change in the
Common Stock of the Company by reason of any stock dividend, stock split, recapitalization,
reorganization, merger, consolidation, split-up, combination, or exchange of Shares, or of any
similar change affecting the Common Stock, the Shares shall be adjusted automatically consistent
with such change to prevent substantial dilution or enlargement of the rights granted to, or
available for, the Participant hereunder.

     12. No Employment Rights. Neither the Plan nor this award shall confer upon the
Participant any right with respect to continuance of employment by the Company or any affiliate nor
shall they interfere in any way with the right of the Company or any affiliate to terminate the
Participant’s employment at any time, with or without cause.

     13. Coordination with Plan. The Employee hereby acknowledges receipt of a copy of the
Plan and agrees to be bound by all of the terms and provisions thereof including any that may
conflict with those contained in this Agreement. Capitalized terms used in this Agreement shall
have the meaning given to such terms under the Plan.

     14. Notices. All notices to the Company shall be in writing and sent to the Company’s
Corporate Secretary at the Company’s offices. Notices to the Employee shall be addressed to the
Employee at the Employee’s address as it appears on the Company’s records.

     IN WITNESS WHEREOF, the Committee and the Participant have caused this Restricted Stock
Agreement to be executed on the date set forth opposite their respective signatures, it being
further understood that the Date of Grant may differ from the date of signature.

	 	 	 	 	 	 	 
	Dated:                     	 	FOR THE COMMITTEE:	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Title:	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	Dated:                     	 	PARTICIPANT	 	 
	 
	 	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 

 

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EXHIBIT A

STOCK POWER

     FOR VALUE RECEIVED, the undersigned does hereby sell, assign and
transfer to Financial Institutions, Inc. (the “Company”),                      shares of the Company’s
common stock represented by Certificate No. ___. The undersigned authorizes the
Secretary of the Company to transfer the stock on the books of the Company in
the event of the forfeiture of any shares issued under the Restricted Stock
Agreement dated as of                      20___ between the Company and the undersigned.

Dated:                     

	 	 	 
	 
	 	 
	 	 	 
	[Participant’s Name]EX-10.1

 

Exhibit 10.1

REAL ESTATE PURCHASE AGREEMENT

     This REAL ESTATE PURCHASE AGREEMENT (this “Agreement”) is made and entered on January 16,
2007, by and between H & C HOLDINGS, LLC, a North Carolina limited liability company (“Seller”),
and POWERSECURE, INC., a Delaware corporation (“Purchaser”).

Recitals:

     WHEREAS, Seller is the owner of real property located at 1609 Heritage Commerce Court, Wake
Forest, Wake Forest County, North Carolina, and the commercial building located thereon, together
the parking lots, lawns, sidewalks and other improvements and all other rights, easements and
appurtenances related thereto, all as more fully described in this Agreement (the “Property”); and

     WHEREAS, Seller currently leases the Property to Purchaser under that certain Lease Agreement,
dated as of March, 2005, as amended and modified (the “Lease”); and

     WHEREAS, Seller desires to sell the Property to Purchaser, and Purchaser desires to purchase
the property from Seller, upon the terms and conditions set forth herein;

Agreement:

     NOW, THEREFORE, in consideration for the mutual covenants and agreements set forth herein, and
other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged,
the parties hereto, intending to be legally bound hereby, agree as follows:

     Section 1. Sale and Purchase of Property. At the Closing (as defined below), upon
the terms and subject to the conditions of this Agreement, Seller shall sell, assign, transfer,
convey and deliver to Purchaser, and Purchaser shall purchase and acquire from Seller, the Property
for a total purchase price of $3,300,000 (the “Purchase Price”), payable by wire transfer of
immediately available funds to an account designated by Seller.

     Section 2. Description of Property. The Property consists of the following: (i)
the real property located at 1609 Heritage Commerce Court, Wake Forest, Wake County, North
Carolina, as more fully described on Exhibit A hereto (the “Land”), (ii) the commercial
building constructed by Seller thereon, and all related fixtures and appurtenances (the
“Building”), (iii) the parking lots, lawns, sidewalks, and other improvements located on the Land
or in the Building (the “Improvements”), (iv) all fixtures, attachments, appliances, equipment,
machinery and other articles attached to or located on the Land, the Building or the Improvements
(the “Attachments”), and (v) all rights, privileges, easements and appurtenances to the Land, the
Building, the Improvements and the Attachments upon the Land.

 

 

     Section 3. Representations, Warranties, Covenants and Indemnities of Seller.

          (a) Seller hereby represents, warrants and covenants to and for the benefit of Purchaser the
following, which representations, warranties and covenants shall survive the Closing and the
passing of title to the Property to Purchaser:

               (i) Seller has all requisite right, power and authority, limited liability company or
otherwise, to execute, deliver, and perform its obligations under, this Agreement, including
selling the Property to Purchaser hereunder. The execution and delivery by Seller of this
Agreement and the performance by Seller of its obligations hereunder have been duly and validly
authorized by all requisite action, limited liability company or otherwise, of Seller, including
but not limited to actions duly taken and resolutions duly adopted by the managers and members of
Seller, as required by Seller’s organizational documents and applicable law.

               (ii) The execution and delivery by Seller of this Agreement and the performance by Seller of
the transactions contemplated hereby do not and will not, directly or indirectly, (A) violate,
conflict with, or constitute a breach of or a default (with or without the giving of notice or the
lapse or time or both) under, any term, condition or other provision of (I) the organizational
documents of Seller, (II) any contract, obligation, note, security agreement, mortgage, deed of
trust, bond, indenture, lease, loan or credit agreement, debt instrument or other instrument,
commitment, arrangement or agreement to which Seller is a party or by which Seller or the Property
is or may be bound, (III) any license, franchise, approval, certificate, permit or authorization
held by Seller or applicable to the Property, or (IV) any applicable federal, state, local or
foreign law, statute, rule, regulation or ordinance, or any order, injunction, writ, judgment,
decree or ruling of any court, arbitrator or Governmental Authority; (B) result in the creation or
imposition of any mortgage, lien, pledge, security interest, easement, or any other restriction,
encumbrance, condition, encroachment or claim of any kind or nature whatsoever on or against any of
the Property (“Encumbrances”); or (C) constitute an event which would either give any Person the
right to challenge any of the transactions contemplated hereby, or cause either Seller or Purchaser
to become subject to or liable for the payment of any tax, assessment or similar fee, other than
real estate transfer taxes and fees being paid by Seller.

               (iii) This Agreement has been duly and validly executed and delivered on behalf of Seller and
constitutes a legal, valid and binding obligation of Seller, enforceable against Seller in
accordance with its terms, except as such enforcement may be limited by applicable bankruptcy,
insolvency, receivership, reorganization, moratorium and other similar laws now or hereafter in
effect relating to or affecting creditors’ rights and remedies generally, and by general principles
of equity, whether applied by a court of law or in equity.

               (iv) There are no actions, suits, claims, complaints, disputes, demands, investigations,
arbitrations, hearings or other proceedings (whether civil, criminal, administrative, investigative
or informal) (“Proceedings”) pending or, to the knowledge of Seller, threatened by, before or
involving any court, arbitrator or Governmental Authority to which Seller is a party or which
otherwise affects or relates to the Property, and Seller has no knowledge of any facts,
circumstances, actions or omissions that could reasonably be expected to
create the basis for any such Proceeding. Neither Seller nor the Property is subject to any

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outstanding judgment, order, writ, injunction, decree, determination, award, verdict or ruling
issued by any court, arbitrator or Governmental Authority.

               (v) Seller has good and marketable title and rightful, peaceful, exclusive and quiet
possession of the Property, free and clear of any and all Encumbrances, other than (i) zoning
ordinances; (ii) legal highways; and (iii) other covenants, restrictions, conditions and easements
of record.

               (vi) The Property is in compliance in all material respects with all applicable use, zoning,
subdivision, land, building, safety, health and other statutes, ordinances, codes, laws,
regulations and other legal requirements, without any material restrictions or limitations thereon,
and Seller has not received any notice of any violation or claimed violation thereof, and has no
knowledge of any facts, circumstances, developments or events that could be reasonably expected to
result in a violation thereof (other than violations related to any actions of or use of the
Property by Purchaser).

               (vii) Seller is not insolvent or bankrupt and has not filed for relief or subject as a debtor
or subject to any filing under any federal or state bankruptcy, receivership or insolvency laws.

               (viii) There are no eminent domain, condemnation or similar proceedings or assessments
affecting the Property pending or, to the best of Seller’s knowledge, threatened by any
Governmental Authority.

               (ix) With respect to the Property, there are no present or pending representations, agreements
or commitments between Seller or any of its predecessors in title and any Governmental Authority
which would or could impose any obligation or require Purchaser to pay any sums or require any
development limitations (other than existing zoning and building codes).

               (x) Seller shall transfer the Property to Purchaser in its present condition, and will not
create or permit any additional defects, liens, restrictions or other encumbrances to be created on
or regarding the title thereto after the date of this Agreement, other than encumbrances that
terminate or are otherwise removed or attached to or related to the Property as of the Closing
Date.

               (xi) Other than the Lease and this Agreement, there are no (A) leases, subleases, licenses,
concessions or other agreements, written or oral, relating to the Property or granting to any other
Person the right to acquire, use or occupy any portion of, the Property, (B) outstanding options or
rights of first refusal to purchase all or any portion of the Property or any interest therein, and
(C) Persons (other than Seller) entitled to possession of any portion of the Property.

               (xii) Other than as relates to actions by Purchaser as lessee, to the best knowledge of
Seller, the Property is and has been in compliance in all material respects with all federal, state
and local laws (whether common or statutory), statutes, codes, rules, regulations,

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orders,
injunctions, decrees, judgments, compacts, treaties, conventions, legal doctrines, plans, demand
letters, agreements with any Governmental Authorities and all other requirements relating to
pollution or the protection of health, safety or the environment (“Environmental Laws”), including
without limitation the release, discharge or emission of any Hazardous Substances (as defined
below) into the environment (including, without limitation ambient air, surface water, ground
water, land surface, or subsurface strata) and the manufacture, generation, processing,
distribution, use, treatment, storage, disposal, transportation or handling of Hazardous
Substances. As used herein, the term “Hazardous Substance” means oil, petroleum and
petroleum-derived substances and products, radioactive materials, asbestos in any form that is or
could become friable, urea formaldehyde foam insulation, transformers or other equipment that
contain polychlorinated biphenyls, radon gas, and any other any chemicals, substances, materials or
wastes that are designated, defined, classified or considered to be “hazardous”, “toxic”,
“explosive”, “corrosive”, “flammable”, “infectious”, “radioactive”, “carcinogenic”, “mutagenic”,
“contaminants” or “pollutants,” or words of similar import, or whose existence, use or exposure is
regulated, under any Environmental Law. To the best of Seller’s knowledge, no Hazardous Substances
have been generated, used, treated, handled or stored upon, or transported to or from, or released,
discharged, injected, spilled, leaked, leached, dumped, emitted, escaped, emptied, seeped, or
placed into or upon, the Property. Seller has received no notice with respect to any Hazardous
Substances on the Property or any actual or alleged violation of any Environmental law, and no
Proceedings are pending or, to the knowledge of Seller, threatened, relating to the Property in
regards to any Environmental Law.

               (xiii) Seller is aware of the provisions of the Deficit Reduction Act of 1984, 26 U.S.C. §1445
et seq., and the Internal Revenue Service Regulations implementing such Act, regarding the
withholding tax on the disposition of United States real property interests by foreign persons and
foreign corporations, and Seller is not a foreign person or corporation as defined by such Act and
Regulations and shall provide Purchaser with an affidavit to that effect at the Closing (the
“FIRPTA Affidavit”).

               (xiv) Seller has not received any notices from the United States Corps of Engineers, North
Carolina Department of Natural Resources or the Federal or North Carolina Environmental Protection
Agencies indicating that the Property is or may be classified as jurisdictional wetlands by any of
such agencies.

          (b) All representations and warranties of Seller set forth in this Agreement shall be true and
correct on the date hereof and as at the Closing Date as if such representations and warranties
were made on such date.

          (c) The representations and warranties of Seller in this Agreement do not apply and are
subject to any actions taken by Purchaser as lessee under the Lease.

          (d) Seller shall indemnify, defend and hold harmless Purchaser, its affiliates, successors and
assigns from and against any and all claims, actions, suits, proceedings, demands, losses
(including diminutions in value), costs, expenses, obligations, taxes, liabilities, damages,
judgments, assessments, fines, recoveries and deficiencies (including, without limitation,
interest, fines, penalties, costs of investigation, reasonable attorneys’, accountants’ and other
professionals’

4

 

fees and expenses and amounts paid in settlement) (collectively, “Damages”) arising
out of, based upon or resulting from (i) any breach or violation of, inaccuracy or
misrepresentation in, or failure by Seller to perform, any representations, warranties, covenants,
agreements or other obligations of Seller made in this Agreement; (ii) the ownership of the
Property at any time prior to the Closing; (iii) any debt, liability or obligation of Seller, or
relating to the Property, arising or accruing prior to the Closing (including but not limited to
those relating to Environmental Laws or taxes relating to periods prior to the Closing Date); (iv)
any defects in the ownership or title of the Property; or (v) any claim by any Person to (A) all or
any portion of the Purchase Price or (B) any compensation, remuneration or other payment with
respect to this Agreement or any transaction contemplated hereby.

     Section 4. Representations, Warranties, Covenants and Indemnities of Purchaser.

          (a) Purchaser hereby represents, warrants and covenants to and for the benefit of Seller the
following, which representations, warranties and covenants shall survive the Closing and the
passing of title to the Property by Seller:

               (i) Purchaser has all requisite right, power and authority, corporate or otherwise, to
execute, deliver, and perform its obligations under, this Agreement, including purchasing the
Property from Seller hereunder. The execution and delivery by Purchaser of this Agreement and the
performance by Purchaser of its obligations hereunder have been duly and validly authorized by all
requisite action, corporate or otherwise, of Purchaser, including but not limited to actions duly
taken and resolutions duly adopted by the board of directors of Purchaser, as required by Purchaser
‘s organizational documents and applicable law.

               (ii) The execution and delivery by Purchaser of this Agreement and the performance by
Purchaser of the transactions contemplated hereby do not and will not, directly or indirectly, (A)
violate, conflict with, or constitute a breach of or a default (with or without the giving of
notice or the lapse or time or both) under, any term, condition or other provision of (I) the
organizational documents of Purchaser, (II) any contract, obligation, note, security agreement,
mortgage, deed of trust, bond, indenture, lease, loan or credit agreement, debt instrument or other
instrument, commitment, arrangement or agreement to which Purchaser is a party or by which
Purchaser is or may be bound, (III) any license, franchise, approval, certificate, permit or
authorization held by Purchaser, or (IV) any applicable federal, state, local or foreign law,
statute, rule, regulation or ordinance, or any order, injunction, writ, judgment, decree or ruling
of any court, arbitrator or Governmental Authority; or (B) constitute an event which would either
give any Person the right to challenge any of the transactions contemplated hereby, or cause either
Seller or Purchaser to become subject to or liable for the payment of any tax, assessment or
similar fee, other than real estate transfer taxes and fees being paid by Seller.

               (iii) This Agreement has been duly and validly executed and delivered on behalf of Purchaser
and constitutes legal, valid and binding obligation of Purchaser, enforceable against Purchaser in
accordance with its terms, except as such enforcement may be limited by applicable bankruptcy,
insolvency, receivership, reorganization, moratorium and other similar laws now or hereafter in
effect relating to or affecting creditors’ rights and remedies generally, and by general principles
of equity, whether applied by a court of law or in equity.

5

 

               (iv) There are no Proceedings pending or, to the knowledge of Purchaser, threatened by, before
or involving any court, arbitrator or Governmental Authority to which Purchaser is a party or which
otherwise affects or relates to the Property, and Purchaser has no knowledge of any facts,
circumstances, actions or omissions that could reasonably be expected to create the basis for any
such Proceeding.

          (b) All representations and warranties of Purchaser set forth in this Agreement shall be true
and correct on the date hereof and as at the Closing Date as if such representations and warranties
were made on such date.

          (c) Purchaser shall indemnify, defend and hold harmless Seller, its affiliates, successors and
assigns from and against any and all Damages arising out of, based upon or resulting from (i) any
breach or violation of, inaccuracy or misrepresentation in, or failure by Purchaser to perform, any
representations, warranties, covenants, agreements or other obligations of Seller made in this
Agreement; (ii) the ownership of the Property at any time after the Closing; (iii) any debt,
liability or obligation of Purchaser, or relating to the Property, arising or accruing after the
Closing; or (iv) any claim by any Person to any compensation, remuneration or other payment with
respect to this Agreement or any transaction contemplated hereby.

     Section 5. Due Diligence Period. Purchaser shall have until January 16, 2008, or
such later date as is acceptable to Seller in its sole discretion (the “Due Diligence Period”), to
complete its due diligence investigation of the Property, including any environmental inspections
and property surveys and appraisals, and to be satisfied in its sole discretion with the results of
its due diligence investigation. If Purchaser encounters any due diligence issues that it wishes
to be addressed and resolved prior to the Closing, Purchaser shall give written notice thereof to
Seller. In addition, Purchaser shall have until the expiration of the Due Diligence Period to
obtain financing of the Purchase Price on terms and conditions acceptable to it in its sole
discretion. If either (i) any due diligence issues are not resolved to Purchaser’s satisfaction
prior to the expiration of the Due Diligence Period, or (ii) Purchaser is not able to obtain
financing of the Purchase Price on terms and conditions acceptable to it in its sole discretion,
and if Purchaser gives notice thereof to Seller prior to the expiration of the Due Diligence Period
(the “Termination Notice”), then Purchaser shall have no obligation to purchase and acquire the
Property hereunder or to perform any other obligations hereunder, and shall be under no liability
therefore to Seller. However, if, by the expiration of the Due Diligence Period, Purchaser shall
not have given a Termination Notice to Seller, then Purchaser shall be obligated to purchase the
Property and perform its other obligations hereunder.

6

 

     Section 6. Evidence of Title.

          (a) Purchaser shall, at Purchaser’s cost and expense, obtain from a title insurance company
reasonably acceptable to Purchaser (the “Title Company”) and obtain an owner’s title insurance
commitment (“Title Commitment”) and policy (the “Title Policy”) (ALTA Form 2006) in the amount of
the Purchase Price. Purchaser shall pay any additional costs incurred in connection with mortgage
title insurance issued for the protection of Purchaser’s lender. Seller shall use its best efforts
to allow Purchaser to use and update Seller’s current title policy on the Property. Purchaser
shall notify Seller in writing of any objections to the Title Commitment or Survey (as defined in
Section 8 below) by the earlier of (i) ten (10) business days after Purchaser’s receipt of the
Title Commitment and the Survey; or (ii) before expiration of the Due Diligence Period. Failure to
timely provide such a notice of objections shall constitute an approval by Purchaser of all matters
disclosed in the Title Commitment and Survey. Any title and survey matters not objected to within
such period, or which are otherwise deemed waived or approved by Purchaser pursuant to the terms
hereof, shall be deemed “Permitted Encumbrances.”

          (b) The title evidence shall be certified to within thirty (30) days prior to the Closing with
endorsement not before 8:00 a.m. on the date of Closing, all in accordance with the standards
applicable in Wake County, North Carolina, and shall show in Seller good and marketable title to
the Property in fee simple, free and clear of all Encumbrances, except for Permitted Encumbrances.

          (c) If the Title Commitment discloses that title to all or part of the Property is
unmarketable or is subject to any Encumbrances other than the Permitted Encumbrances (collectively,
the “Title Defects”), then Seller shall, prior to the Closing Date, use its reasonable best efforts
to cure and remove all such Title Defects or to obtain title insurance without exception therefore.
If Seller fails to cure such Title Defects prior to the Closing Date, then Purchaser may, at its
option, either (i) elect to terminate this Agreement by giving written notice of such election to
Seller on or before the earlier of (A) ten (10) days after receipt of written notice by Seller that
it is unable or unwilling to cure such Title Defects, or (B) the Closing Date, in which case this
Agreement shall be null and void and neither Purchaser nor Seller shall have any further rights or
obligations hereunder, (ii) negotiate an appropriate reduction in the Purchase Price as is mutually
acceptable to Purchaser and Seller, prior to the Closing Date, or (iii) agree to accept such title
to the Property as Seller is able to transfer and convey, with such Title Defects, in which event
the Closing shall occur and Purchaser shall purchase the Property for the Purchase Price. At the
Closing, Seller shall sign and deliver to Purchaser a standard affidavit in accordance with the
community custom relating to unrecorded liens and unrecorded Encumbrances affecting the Property
sufficient to allow the Title Company to issue the Title Policy without exception for such matters
(the “Seller’s Affidavit”).

     Section 7. Warranty Deed. Seller shall pay for and shall deliver to Purchaser at
the Closing a transferable and recordable general warranty deed or fiduciary deed, as appropriate,
in a form acceptable to counsel to Purchaser, conveying to Purchaser good and marketable title to
the
Property in fee simple, free and clear of all Encumbrances whatsoever, except for the Permitted
Encumbrances (the “Deed”).

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     Section 8. Survey. Purchaser shall obtain, at its own cost and expense, a current
plat of pin survey of the Property (the “Survey”), prepared by a registered public surveyor
acceptable to Purchaser and to the Title Company, which survey shall (a) be sufficient to cause
such the Title Company to delete any exception as to survey matters, (b) include the legal
description of the Property, which must be identical to the description of the Property as
described in the Title Policy, and (c) state whether any portion of the Property is located within
a flood-prone or flood hazard area or within a floodplain as defined in the regulations of the
United States Department of Housing and Urban Development. In the event Purchaser is unable to
obtain such a survey prior to the expiration of the Due Diligence Period, then Purchaser shall have
the right to terminate its obligations hereunder as provided in Section 5. Seller shall provide to
Purchaser a copy of the most recent survey of the Property that Seller has in its possession.

     Section 9. Closing.

          (a) Closing Date and Place. The consummation of the sale and purchase of the Property
contemplated hereby (the “Closing”) shall take place at the offices of Seller’s counsel, Nicholls &
Crampton, P.A., 4300 Six Forks Road, Suite 700, Raleigh, North Carolina, at 10:00 a.m. local time,
on January 17, 2008, or at such other time, date or place as the parties shall mutually agree (the
“Closing Date”).

          (b) Deliveries by Seller. At the Closing, Seller shall deliver to Purchaser:

               (i) Full, actual and unimpeded possession and enjoyment of the Property;

               (ii) the Deed, duly executed and acknowledged by or on behalf of Seller as of the Closing
Date, assigning, transferring and conveying to Purchaser good and marketable title in and to the
Property, free and clear of any and all Encumbrances of any kind or nature whatsoever (other than
Permitted Encumbrances), and such other instruments of sale, conveyance, assignment and transfer as
may be reasonably requested by Purchaser, in order to vest in Purchaser all of Seller’s right,
title and interest in and to the Property;

               (iii) the Seller’s Affidavit, duly executed and acknowledged by or on behalf of Seller as of
the Closing Date;

               (iv) the FIRPTA Affidavit, duly executed and acknowledged by or on behalf of Seller as of
the Closing Date; and

               (v) Any other items required to be delivered by Seller pursuant to any provision of this
Agreement or reasonably required by Purchaser.

          (c) Deliveries by Purchaser. At the Closing, Purchaser shall deliver to Seller:

               (i) The Purchase Price, by wire transfer of immediately available funds to an account
designated by Seller; and

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               (ii) Any other items required to be delivered by Purchaser pursuant to any provision of this
Agreement or reasonably requested by Seller.

     Section 10. Possession of Property. Seller shall deliver to Purchaser possession,
occupancy and unimpeded use and enjoyment of the Property at the Closing.

     Section 11. Termination of Lease. At the Closing, the Lease, and the supplemental
lease between Seller and Purchaser relating to parking located on 1601 Heritage Commerce Court,
Wake Forest, North Carolina shall be terminated and all rights and obligations of Seller and
Purchaser thereunder shall be extinguished, except for rights and obligations that arose or accrued
prior to the Closing, which shall survive the Closing in accordance with the terms of the Lease.

     Section 12. Taxes and Assessments. At the Closing, Seller shall pay or credit to
the Purchase Price all transfer taxes with respect to the sale of the Property by Seller to
Purchaser. Seller hereby represents and warrants to Purchaser that, as of the date hereof, Seller
has not received any notification of future improvements that would result in costs being assessed
against the Property, other than the revaluation of all properties by Wake County, North Carolina,
beginning January 1, 2008, which rate will not be set until after the Closing Date but as to which
the parties shall use their best efforts to estimate such taxes for pro-ration purposes at Closing.

     Section 13. Risk of Loss. Risk of loss to the Property shall be borne by Seller
until the Closing, provided that if the Property shall be substantially damaged or destroyed prior
to the Closing, Purchaser may, at Purchaser’s option, either (a) proceed with the purchase of the
Property contemplated hereby at the Closing, and at and after such time be entitled to receive all
insurance proceeds, if any, payable to Seller under all policies covering the Property (and Seller
shall take all reasonable efforts to cause the insurance carrier to deliver such proceeds to
Purchaser or, if Seller receives any such proceeds, Seller shall be required to deliver such
proceeds to Purchase within five (5) business days of receipt thereof), or (b) rescind and
terminate this Agreement without liability hereunder, thereby terminating the rights of Seller and
Purchaser hereunder and releasing Seller and Purchaser from any duties, obligations or liabilities
hereunder, by giving written notice of Purchaser’s election to Seller within fifteen (15) business
days after Purchaser has written notice from Seller or otherwise becomes aware of such damage or
destruction. Failure by Purchaser to so notify Seller shall constitute an election to proceed with
the transactions contemplated hereby.

     Section 14. No Brokers. Purchaser and Seller each represents and warrants to the
other that no Person, whether as realtor or real estate broker or other capacity, has acted as
agent or broker on its behalf with respect to the transactions contemplated hereby and that it has
not entered into any agreements, contracts, understandings or other arrangements with respect to
any
broker’s, finder’s, or similar fees for which the other may be liable, and each agrees to defend,
reimburse, indemnify and hold harmless the other with respect thereto.

     Section 15. Conveyance and Recording Fees and Taxes. Seller shall pay any and all
transfer and conveyance fees and taxes relating to the sale of the Property contemplated hereby,
and

9

 

Purchaser shall pay all other filing and recording fees required in connection with the filing
and recording of the Deed or any other instruments referred to herein.

     Section 16. Further Assurances. After the Closing, Seller shall take such further
actions and shall execute, acknowledge, and deliver, or cause to be executed, acknowledged and
delivered, such further documents, instruments and agreements as may be necessary or advisable or
as Purchaser reasonably requests in order to fully effectuate the sale of the Property and other
transactions contemplated by this Agreement and to carry out its obligations under this Agreement
and under any document, certificate, or other instrument delivered pursuant hereto.

     Section 17. Purchaser’s Examination. Purchaser hereby acknowledges and agrees that,
except as otherwise expressly set forth herein, the Property is being transferred to Purchaser in
its present physical condition after examination by Purchaser and that Purchaser is relying solely
upon such examination with reference to the condition, value, character and size of the Property.

     Section 18. General Provisions.

          (a) Governing Law. This Agreement shall in all respects be governed by and construed
and enforced in accordance with the internal substantive laws of the State of North Carolina
without giving effect to any principle or rule of conflict or choice of laws. Any action suit, or
other proceeding seeking to enforce any right, remedy, obligation, duty, covenant or provision of,
or arising out of, this Agreement shall be brought and entered against any party hereto exclusively
in any federal or state court of the State of North Carolina or of the United States located in the
State of North Carolina. Each party hereto irrevocably submits to the personal jurisdiction of any
such court and irrevocably waives, to the fullest extent of the law, any objection that it may now
or hereafter have to the laying of venue in any such court and any claim that such action, suit or
proceeding has been brought in an inconvenient form.

          (b) Time of the Essence. Time is of the essence with respect to all provisions of
this Agreement.

          (c) Expenses. Except as otherwise expressly provided in this Agreement, each of the
parties to this Agreement agrees to pay its own costs and expenses incurred in connection with this
Agreement and the transactions contemplated hereby, including the fees and expenses of its counsel,
accountant and other advisers and agents.

          (d) Assignment. Neither this Agreement nor any of the rights or obligations
hereunder may be assigned by any party hereto without the prior written consent of all other
parties hereto, provided that Purchaser may, without the consent of Seller, assign or delegate its
rights or obligation, under this Agreement to any of its affiliates, in which case such assignee
shall be
substituted for Purchaser hereunder as though the assignee were the original party to this
Agreement, and Purchaser will be released from all obligations under this Agreement.

          (e) Amendments. This Agreement may not be amended, supplemented or modified in any
manner in whole or in part except by a writing signed by all parties to this Agreement that
specifically states that it amends this Agreement.

10

 

          (f) Notices. Any and all notices, claims, 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 to a party (i) upon receipt, when delivered to such party in person; (ii)
upon receipt of confirmation of transmission, when sent by facsimile transmission or electronic
mail; (iii) one business day after deposit during normal business hours with a nationally
recognized overnight courier service, specifying next business day delivery, with written
verification of receipt; or (iv) five business days after being sent by first class (certified or
registered) mail, postage prepaid, return receipt requested, in each case to such party at the
following addresses:

If to Purchaser:

PowerSecure, Inc.

1609 Heritage Commerce Court

Wake Forest, NC  27587

Attention: Sidney Hinton, President

Telephone: (919) 453-1750

Facsimile: (919) 453-1768

E-mail: shinton@powersecure.com

With a copy to:

Kegler, Brown, Hill & Ritter Co., L.P.A.

65 East State Street, Suite 1800

Columbus, Ohio 43215

Attn: Paul R. Hess, Esq.

Telephone: (614) 462-5400

Facsimile: (614) 464-2634

E-mail: phess@keglerbrown.com

11

 

If to Seller:

H & C Holdings, Inc.

700 Exposition Place

Suite 131

Raleigh, NC 27615

Attention: Charles C. Sites, Manager

Telephone: (   )                     

Facsimile: (   )                     

E-mail: chipsites@mindspring.com

With a copy to:

Nicholls & Crampton, P.A.

4300 Six Forks Road, Suite 700

P.O. Box 18237

Raleigh, North Carolina 27619

Attention: F. Timothy Nicholls, Esq.

Telephone: (919) 781-1311

Facsimile: (919) 782-0465

E-mail: TNicholls@nichollscrampton.com

     Any party may change its designated address by giving written notice thereof to all other
parties hereto in the manner provided in this Section 18(f). Any party hereto may send any notice,
request, demand, or other communication to the intended recipient at the address above by using any
other means (such as telecopy, telex, expedited courier, messenger, ordinary mail or electronic
mail), but no such notice, demand, request or other communication shall be deemed had been given
until it is actually received by the recipient.

          (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. No failure or delay on
the part of any party hereto in exercising any right, power or remedy hereunder shall operated as a
waiver thereof, nor shall any single or partial exercise of any such right, power or remedy
preclude any other or further exercise thereof or the exercise of any other right, power or
remedy.

          (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
or respect for any reason, then (i) the remaining provisions of this Agreement shall remain in full
force and effect, and the application of such provision in any other situation or respect shall not
be affected, and (ii) the parties hereto shall use their good faith efforts to agree to a suitable
and equitable provision to be substituted therefor in order to

12

 

carry
out, so far as may be legal, valid and enforceable, the intent and purpose of such illegal, invalid
or unenforceable provision.

          (i) Headings. The headings used in this Agreement are solely for convenience of
reference and shall be given no effect in the construction or interpretation of this Agreement.

          (j) Successors and Assigns. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and permitted assigns.

          (k) No Third Party Beneficiaries. Except as expressly provided in this Agreement,
this Agreement does not confer or create, is not intended by the parties hereto to confer or
create, and shall not be construed to as conferring or creating, upon any person or entity other
than the parties hereto and their successors and permitted assigns any rights, remedies or causes
of action under or by reason of this Agreement.

          (l) Construction. All parties to this Agreement participated in the negotiation and
drafting of this Agreement. In the event an ambiguity or question of 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.

          (m) 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 “Governmental Authority” means any federal, state, local or foreign government,
quasi-governmental administration or regulatory body, agency or authority.

               (iv) The term “Person” means and includes any individual, corporation, partnership, limited
liability company, joint venture, association, trust, unincorporated organization, estate, or any
other form of business or entity or Governmental Authority.

               (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.

13

 

               (vii) Each reference to a Section means such Section of this Agreement.

          (n) Public Announcement. Neither Seller nor Purchaser shall make any public
announcement or disclosure regarding the terms or existence of this Agreement or the transactions
contemplated hereby, without the prior consent of the other, which consent shall not be
unreasonably withheld or delayed, except (a) disclosures to third parties whose consent is required
in connection with the transaction contemplated by this Agreement, and (b) disclosures required by
law, judicial proceedings, regulatory requirement or stock exchange or stock market rule,
regulation or policy.

          (o) Specific Performance; Cumulative Remedies. The parties hereto acknowledge and
agree that the transactions contemplated by this Agreement are unique in that remedies at law for
any breach or threatened breach of this Agreement would be an inadequate remedy for any loss, and
that any defense in any action for specific performance that a remedy at law would be adequate is
hereby specifically waived. Accordingly, in the event of any actual or threatened breach to any of
the terms of this Agreement, the non-breaching party shall have the right of specific performance
and injunctive relief giving effect to its rights under this Agreement, in addition to any and all
other rights and remedies, at law or in equity, and all such rights and remedies are cumulative.

          (p) Counterparts. This Agreement may be executed in any number of counterparts,
including counterparts executed by less than all parties hereto, each of which when so executed
shall be deemed an original, but all of which together shall constitute one and the same
instrument.

          (q) Entire Agreement. This Agreement and the other documents, instruments and
agreements contemplated hereby constitute the entire agreement and understanding between the
parties hereto with respect to the subject matter hereof and supersede all prior and
contemporaneous arrangements, agreements and understandings, whether oral or written, among the
parties hereto in connection with the subject matter of this Agreement.

          (r) Legal Fees. In the event either Seller or Purchaser commences any action at law or
in equity against the other to secure or protect any of its rights or interests hereunder or to
enforce any of the terms, conditions, covenants or obligations of this Agreement, then the party
prevailing in such action shall be entitled to recover from the other party reasonable attorneys
fees and expenses and court costs, unless the court in such action determines that such fees and
expenses are unreasonable or inappropriate to be recovered.

(The next page is the Signature Page)

14

 

     IN WITNESS WHEREOF, this Real Estate Purchase Agreement has been executed and delivered by or
on behalf of the parties hereto by their duly authorized officers as of the date first above
written.

	 	 	 	 	 
	 	SELLER:

H & C HOLDINGS, INC.

 	 
	 	By:  	/s/
Charles. C. Sites 	 
	 	 	Charles. C. Sites, Manager 	 
	 	 	 	 
	 
	 	PURCHASER:

POWERSECURE, INC.

 	 
	 	By:  	/s/
Christopher T. Hutter 	 
	 	 	Christopher T. Hutter, Vice President and CFO 	 
	 	 	 	 
	 

15

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