Exhibit 10.3
ELECTRIC CITY CORP.
SECURITY AGREEMENT
To:
Laurus Master Fund, Ltd.
c/o Onshore Corporate Services, Ltd.
P.O. Box 1234 G.T
Queensgate House
South Church Street
Grand Cayman, Cayman Islands
Gentlemen:
1.
TO SECURE THE PAYMENT OF ALL OBLIGATIONS (AS HEREAFTER DEFINED),
WE HEREBY GRANT TO YOU A CONTINUING SECURITY INTEREST IN ALL OF THE FOLLOWING
PROPERTY NOW OWNED OR AT ANY TIME HEREAFTER ACQUIRED BY US, OR IN WHICH WE NOW
HAVE OR AT ANY TIME IN THE FUTURE MAY ACQUIRE ANY RIGHT, TITLE OR INTEREST (THE
"COLLATERAL"): ALL ACCOUNTS, INVENTORY, EQUIPMENT, GOODS, DOCUMENTS, INSTRUMENTS
(INCLUDING, WITHOUT LIMITATION, PROMISSORY NOTES), CONTRACT RIGHTS, GENERAL
INTANGIBLES (INCLUDING, WITHOUT LIMITATION, PAYMENT INTANGIBLES AND AN ABSOLUTE
RIGHT TO LICENSE ON TERMS NO LESS FAVORABLE THAN THOSE CURRENT IN EFFECT AMONG
OUR AFFILIATES, BUT NOT OWN INTELLECTUAL PROPERTY), CHATTEL PAPER, SUPPORTING
OBLIGATIONS, INVESTMENT PROPERTY, LETTER-OF-CREDIT RIGHTS, TRADEMARKS AND
TRADESTYLES IN WHICH WE NOW HAVE OR HEREAFTER MAY ACQUIRE ANY RIGHT, TITLE OR
INTEREST, ALL PROCEEDS AND PRODUCTS THEREOF (INCLUDING, WITHOUT LIMITATION,
PROCEEDS OF INSURANCE) AND ALL ADDITIONS, ACCESSIONS AND SUBSTITUTIONS THERETO
OR THEREFOR.
IN THE EVENT WE WISH TO FINANCE THE ACQUISITION OF ANY HEREAFTER
ACQUIRED EQUIPMENT AND HAVE OBTAINED A COMMITMENT FROM A FINANCING SOURCE TO
FINANCE SUCH EQUIPMENT FROM AN UNRELATED
THIRD PARTY, YOU AGREE TO RELEASE YOUR
SECURITY INTEREST ON SUCH HEREAFTER ACQUIRED EQUIPMENT SO FINANCED BY SUCH THIRD
PARTY FINANCING SOURCE.
2.
THE TERM "OBLIGATIONS" AS USED HEREIN SHALL MEAN AND INCLUDE ALL
DEBTS, LIABILITIES AND OBLIGATIONS OWING BY (A) US TO YOU HEREUNDER AND UNDER
THE CONVERTIBLE TERM NOTE DATED AS OF THE DATE HEREOF MADE BY US IN FAVOR OF YOU
IN THE ORIGINAL PRINCIPAL AMOUNT OF $1,000,000, AS AMENDED, MODIFIED AND
SUPPLEMENTED FROM TIME TO TIME OR OTHERWISE (AS AMENDED, MODIFIED AND
SUPPLEMENTED FROM TIME TO TIME, THE "NOTE").
3.
WE HEREBY REPRESENT, WARRANT AND COVENANT TO YOU THAT: (A) WE ARE
A COMPANY VALIDLY EXISTING, IN GOOD STANDING AND FORMED UNDER THE LAWS OF THE
STATE OF DELAWARE
AND WE WILL PROVIDE YOU THIRTY (30) DAYS' PRIOR WRITTEN
NOTICE OF ANY CHANGE IN OUR STATE OF FORMATION; (B) OUR LEGAL NAME IS ELECTRIC
CITY CORP., AS SET FORTH IN OUR CERTIFICATE OF INCORPORATION AS AMENDED THROUGH
THE DATE HEREOF; (C) WE ARE THE LAWFUL OWNER OF THE COLLATERAL AND HAVE THE SOLE
RIGHT TO GRANT A SECURITY INTEREST THEREIN AND WILL DEFEND THE COLLATERAL
AGAINST ALL CLAIMS AND DEMANDS OF ALL PERSONS AND ENTITIES; (D) WE WILL KEEP THE
COLLATERAL FREE AND CLEAR OF ALL ATTACHMENTS, LEVIES, TAXES, LIENS, SECURITY
INTERESTS AND ENCUMBRANCES OF EVERY KIND AND NATURE ("ENCUMBRANCES"), OTHER THAN
PERMITTED ENCUMBRANCES (AS HEREINAFTER DEFINED), EXCEPT TO THE EXTENT SAID
ENCUMBRANCE DOES NOT SECURE INDEBTEDNESS IN EXCESS OF $100,000 AND SUCH
ENCUMBRANCE IS REMOVED OR OTHERWISE RELEASED WITHIN 10 DAYS OF THE CREATION
THEREOF; (E) WE WILL AT OUR OWN COST AND EXPENSE KEEP THE COLLATERAL IN GOOD
STATE OF REPAIR (ORDINARY WEAR AND TEAR EXCEPTED) AND WILL NOT WASTE OR DESTROY
THE SAME OR