Document:

exv10w5

 

Exhibit 10.5

SUBSIDIARY GUARANTY

	 	 	 
	New York, New York

	 	February 28, 2005

          FOR VALUE RECEIVED, and in consideration of note purchases from, loans made or to be made or
credit otherwise extended or to be extended by Laurus Master Fund, Ltd. (“Laurus”) to or for the
account of Electric City Corp., a Delaware corporation (“Debtor”), from time to time and at any
time and for other good and valuable consideration and to induce Laurus, in its discretion, to
purchase such notes, make such loans or other extensions of credit and to make or grant such
renewals, extensions, releases of collateral or relinquishments of legal rights as Laurus may deem
advisable, each of the undersigned (and each of them if more than one, the liability under this
Guaranty being joint and several) (jointly and severally referred to as “Guarantors “ or “the
undersigned”) unconditionally guaranties to Laurus, its successors, endorsees and assigns the
prompt payment when due (whether by acceleration or otherwise) of all present and future
obligations and liabilities of any and all kinds of Debtor to Laurus and of all instruments of any
nature evidencing or relating to any such obligations and liabilities upon which Debtor or one or
more parties and Debtor is or may become liable to Laurus, whether incurred by Debtor as maker,
endorser, drawer, acceptor, guarantor , accommodation party or otherwise, and whether due or to
become due, secured or unsecured, absolute or contingent, joint or several, and however or whenever
acquired by Laurus, whether arising under, out of, or in connection with (i) that certain
Securities Purchase Agreement dated as of September 11, 2003 by and between the Debtor and Laurus
(as amended, modified or supplemented and in effect from time to time, the “Securities Purchase
Agreement”), (ii) each Related Agreement referred to in the Securities Purchase Agreement, (iii)
that certain Security Agreement dated as of September 11, 2003 by and between the Debtor and Laurus
(as amended, modified or supplemented and in effect from time to time the “Security Agreement”) and
(iv) each Ancillary Agreement referred to in the Security Agreement (the Securities Purchase
Agreement and each Related Agreement and the Security Agreement and each Ancillary Agreement, as
each may be amended, modified, restated or supplemented from time to time, are collectively
referred to herein as the “Documents”), or any documents, instruments or agreements relating to or
executed in connection with the Documents or any documents, instruments or agreements referred to
therein or otherwise, or any other indebtedness, obligations or liabilities of the Debtor to
Laurus, whether now existing or hereafter arising, direct or indirect, liquidated or unliquidated,
absolute or contingent, due or not due and whether under, pursuant to or evidenced by a note,
agreement, guaranty, instrument or otherwise (all of which are herein collectively referred to as
the “Obligations”), and irrespective of the genuineness, validity, regularity or enforceability of
such Obligations, or of any instrument evidencing any of the Obligations or of any collateral
therefor or of the existence or extent of such collateral, and irrespective of the allowability,
allowance or disallowance of any or all of the Obligations in any case commenced by or against
Debtor under Title 11, United States Code, including, without limitation, obligations or
indebtedness of Debtor for post-petition interest, fees, costs and charges that would have accrued
or been added to the Obligations but for the commencement of such case. Terms not otherwise
defined herein shall have the meaning assigned such terms in the Securities Purchase Agreement and
the Security

 

 

Agreement, as applicable. In furtherance of the foregoing, the undersigned hereby
agree as follows:

          1. No Impairment. Laurus may at any time and from time to time, either before or
after the maturity thereof, without notice to or further consent of the undersigned, extend the
time of payment of, exchange or surrender any collateral for, renew or extend any of the
Obligations or increase or decrease the interest rate thereon, or any other agreement with Debtor
or with any other party to or person liable on any of the Obligations, or interested therein, for
the extension, renewal, payment, compromise, discharge or release thereof, in whole or in part, or
for any modification of the terms thereof or of any agreement between Laurus and Debtor or any such
other party or person, or make any election of rights Laurus may deem desirable under the United
States Bankruptcy Code, as amended, or any other federal or state bankruptcy, reorganization,
moratorium or insolvency law relating to or affecting the enforcement of creditors’ rights
generally (any of the foregoing, an “Insolvency Law”) without in any way impairing or affecting
this Guaranty. This Guaranty shall be effective regardless of the subsequent incorporation, merger
or consolidation of Debtor, or any change in the composition, nature, personnel or location of
Debtor and shall extend to any successor entity to Debtor, including a debtor in possession or the
like under any Insolvency Law.

          2. Guaranty Absolute. Subject to Section 5(c) hereof, each of the undersigned jointly
and severally guarantees that the Obligations will be paid strictly in accordance with the terms of
the Documents and/or any other document, instrument or agreement creating or evidencing the
Obligations, regardless of any law, regulation or order now or hereafter in effect in any
jurisdiction affecting any of such terms or the rights of Debtor with respect thereto. Guarantors
hereby knowingly accept the full range of risk encompassed within a contract of “continuing
guaranty” which risk includes the possibility that Debtor will contract additional indebtedness for
which Guarantors may be liable hereunder after Debtor’s financial condition or ability to pay its
lawful debts when they fall due has deteriorated, whether or not Debtor has properly authorized
incurring such additional indebtedness. The undersigned acknowledge that (i) no oral
representations, including any representations to extend credit or provide other financial
accommodations to Debtor, have been made by Laurus to induce the undersigned to enter into this
Guaranty and (ii) any extension of credit to the Debtor shall be governed solely by the provisions
of the Documents. The liability of each of the undersigned under this Guaranty shall be absolute
and unconditional, in accordance with its terms, and shall remain in full force and effect without
regard to, and shall not be released, suspended, discharged, terminated or otherwise affected by,
any circumstance or occurrence whatsoever, including, without limitation: (a) any waiver,
indulgence, renewal, extension, amendment or modification of or addition, consent or supplement to
or deletion from or any other action or inaction under or in respect of the Documents or any other
instruments or agreements relating to the Obligations or any assignment or transfer of any thereof,
(b) any lack of validity or enforceability of any Document or other documents, instruments or
agreements relating to the Obligations or any assignment or transfer of any thereof, (c) any
furnishing of any additional security to Laurus or its assignees or any acceptance thereof or any
release of any security by Laurus or its assignees, (d) any limitation on any party’s liability or
obligation under the Documents or any other documents, instruments or agreements relating to the
Obligations or any assignment or transfer of any thereof or any invalidity or unenforceability, in
whole or in part, of any such document,

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instrument or agreement or any term thereof, (e) any
bankruptcy, insolvency, reorganization, composition, adjustment, dissolution, liquidation or other
like proceeding relating to Debtor, or any action taken with respect to this Guaranty by any
trustee or receiver, or by any court, in any such proceeding, whether or not the undersigned shall
have notice or knowledge of any of the foregoing, (f) any exchange, release or nonperfection of any
collateral, or any release, or amendment or waiver of or consent to departure from any guaranty or
security, for all or any of the Obligations or (g) any other circumstance which might otherwise
constitute a defense available to, or a discharge of, the undersigned. Any amounts due from the
undersigned to Laurus shall bear interest until such amounts are paid in full at the highest rate
then applicable to the Obligations. Obligations include post-petition interest whether or not
allowed or allowable.

          3. Waivers.

               (a) This Guaranty is a guaranty of payment and not of collection. Laurus shall be
under no obligation to institute suit, exercise rights or remedies or take any other action
against Debtor or any other person or entity liable with respect to any of the Obligations
or resort to any collateral security held by it to secure any of the Obligations as a
condition precedent to the undersigned being obligated to perform as agreed herein and each
of the Guarantors hereby waives any and all rights which it may have by statute or otherwise
which would require Laurus to do any of the foregoing. Each of the Guarantors further
consents and agrees that Laurus shall be under no obligation to marshal any assets in favor
of Guarantors, or against or in payment of any or all of the Obligations. The undersigned
hereby waives all suretyship defenses and any rights to interpose any defense, counterclaim
or offset of any nature and description which the undersigned may have or which may exist
between and among Laurus, Debtor and/or the undersigned with respect to the undersigned’s
obligations under this Guaranty, or which Debtor may assert on the underlying debt,
including but not limited to failure of consideration, breach of warranty, fraud, payment
(other than cash payment in full of the Obligations), statute of frauds, bankruptcy,
infancy, statute of limitations, accord and satisfaction, and usury.

               (b) Each of the undersigned further waives (i) notice of the acceptance of this
Guaranty, of the making of any such loans or extensions of credit, and of all notices and
demands of any kind to which the undersigned may be entitled, including, without limitation,
notice of adverse change in Debtor’s financial condition or of any other fact which might
materially increase the risk of the undersigned and (ii) presentment to or demand of payment
from anyone whomsoever liable upon any of the Obligations, protest, notices of presentment,
non-payment or protest and notice of any sale of collateral security or any default of any
sort.

               (c) Notwithstanding any payment or payments made by the undersigned hereunder, or any
setoff or application of funds of the undersigned by Laurus, the undersigned shall not be
entitled to be subrogated to any of the rights of Laurus against Debtor or against any
collateral or guarantee or right of offset held by Laurus for the payment of the
Obligations, nor shall the undersigned seek or be entitled to seek any contribution or
reimbursement from Debtor in respect of payments made by the undersigned hereunder, until
all amounts owing to Laurus by Debtor on account of the

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Obligations are indefeasibly paid in
full and Laurus’ obligation to extend credit pursuant to the Documents has been irrevocably
terminated. If, notwithstanding the foregoing, any amount shall be paid to the undersigned
on account of such subrogation rights at any time when all of the Obligations shall not have
been paid in full and Laurus’ obligation to extend credit pursuant to the Documents shall
not have been terminated, such amount shall be held by the undersigned in trust for Laurus,
segregated from other funds of the undersigned, and shall forthwith upon, and in any event
within two (2) business days of, receipt by the undersigned, be turned over to Laurus in the
exact form received by the undersigned (duly endorsed by the undersigned to Laurus, if
required), to be applied against the Obligations, whether matured or unmatured, in such
order as Laurus may determine, subject to the provisions of the Documents. Any and all
present and future debts and obligations of Debtor to any of the undersigned are hereby
waived and postponed in favor of, and subordinated to the full payment and performance of,
all present and future debts and Obligations of Debtor to Laurus.

          4. Security. All sums at any time to the credit of the undersigned and any property
of the undersigned in Laurus’ possession or in the possession of any bank, financial institution or
other entity that directly or indirectly, through one or more intermediaries, controls or is
controlled by, or is under common control with, Laurus (each such entity, an “Affiliate”) shall be
deemed held by Laurus or such Affiliate, as the case may be, as security for any and all of the
undersigned’s obligations to Laurus and to any Affiliate of Laurus, no matter how or when arising
and whether under this or any other instrument, agreement or otherwise.

          5. Representations and Warranties. Each of the undersigned hereby jointly and
severally represents and warrants (all of which representations and warranties shall survive until
all Obligations are indefeasibly satisfied in full and the Documents have been irrevocably
terminated), that:

               (a) Corporate Status. It is a corporation, partnership or limited liability
company, as the case may be, duly formed, validly existing and in good standing under the
laws of its jurisdiction of formation indicated on the signature page hereof and has full
power, authority and legal right to own its property and assets and to transact the business
in which it is engaged.

               (b) Authority and Execution. It has full power, authority and legal right to
execute and deliver, and to perform its obligations under, this Guaranty and has taken all
necessary corporate, partnership or limited liability company, as the case may be, action to
authorize the execution, delivery and performance of this Guaranty.

               (c) Legal, Valid and Binding Character. This Guaranty constitutes its legal,
valid and binding obligation enforceable in accordance with its terms, except as
enforceability may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other laws of general application affecting the enforcement of creditor’s
rights and general principles of equity that restrict the availability of equitable or legal
remedies.

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               (d) Violations. The execution, delivery and performance of this Guaranty will
not violate any requirement of law applicable to it or any contract, agreement or instrument
to which it is a party or by which it or any of its property is bound or result in the
creation or imposition of any mortgage, lien or other encumbrance other than in favor of
Laurus on any of its property or assets pursuant to the provisions of any of the foregoing,
which, in any of the foregoing cases, could reasonably be expected to have, either
individually or in the aggregate, a Material Adverse Effect.

               (e) Consents or Approvals. No consent of any other person or entity
(including, without limitation, any creditor of the undersigned) and no consent, license,
permit, approval or authorization of, exemption by, notice or report to, or registration,
filing or declaration with, any governmental authority is required in connection with the
execution, delivery, performance, validity or enforceability of this Guaranty by it, except
to the extent that the failure to obtain any of the foregoing could not reasonably be
expected to have, either individually or in the aggregate, a Material Adverse Effect and
except for consents which have been obtained prior to the execution thereof.

               (f) Litigation. No litigation, arbitration, investigation or administrative
proceeding of or before any court, arbitrator or governmental authority, bureau or agency is
currently pending or, to the best of its knowledge, threatened (i) with respect to this
Guaranty or any of the transactions contemplated by this Guaranty or (ii) against or
affecting it, or any of its property or assets, which, in each of the foregoing cases, if
adversely determined, could reasonably be expected to have a Material Adverse Effect.

               (g) Financial Benefit. It has derived or expects to derive a financial or
other advantage from each and every loan, advance or extension of credit made under the
Documents or other Obligation incurred by the Debtor to Laurus.

               (h) Solvency. As of the date of this Guaranty, (a) the fair saleable value of
its assets exceeds its liabilities and (b) it is meeting its current liabilities as they
mature.

          6. Acceleration.

               (a) If any breach of any covenant or condition or other event of default shall occur
and be continuing under any agreement made by Debtor or any of the undersigned to Laurus, or
either Debtor or any of the undersigned should at any time become insolvent, or make a
general assignment, or if a proceeding in or under any Insolvency Law shall be filed or
commenced by, or in respect of, any of the undersigned, or if a notice of any lien, levy,
or assessment is filed of record with respect to any assets of any of the undersigned by the
United States of America or any department, agency, or instrumentality thereof, or if any
taxes or debts owing at any time or times hereafter to any one of them becomes a lien or
encumbrance upon any assets of the undersigned in Laurus’ possession, or otherwise, any and
all Obligations shall for purposes hereof, at Laurus’ option, be deemed due and payable
without notice notwithstanding that any such Obligation is not then due and payable by
Debtor.

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               (b) Each of the undersigned will promptly notify Laurus of any default by such
undersigned in its respective performance or observance of any term or condition of any
agreement or agreements to which the undersigned is a party evidencing obligations in excess
of $100,000 in the aggregate if the effect of such default or defaults is to cause, or
permit the holder of any such obligation under such agreement to cause, such obligation to
become due prior to its stated maturity and, if such an event occurs, Laurus shall have the
right to accelerate such undersigned’s obligations hereunder.

          7. Payments from Guarantors. Laurus, in its sole and absolute discretion, with or
without notice to the undersigned, may apply on account of the Obligations any payment from the
undersigned or any other guarantors, or amounts realized from any security for the Obligations, or
may deposit any and all such amounts realized in a non-interest bearing cash collateral deposit
account to be maintained as security for the Obligations.

          8. Costs. The undersigned shall pay on demand, all costs, fees and expenses
(including expenses for legal services of every kind) relating or incidental to the enforcement or
protection of the rights of Laurus hereunder or under any of the Obligations.

          9. No Termination. This is a continuing irrevocable guaranty and shall remain in full
force and effect and be binding upon the undersigned, and each of the undersigned’s successors and
assigns, until all of the Obligations have been indefeasibly paid in full and Laurus’ obligation to
extend credit pursuant to the Documents has been irrevocably terminated. If any of the present or
future Obligations are guarantied by persons, partnerships or entities in addition to the
undersigned, the death, release or discharge in whole or in part or the bankruptcy, merger,
consolidation, incorporation, liquidation or dissolution of one or more of them shall not discharge
or affect the liabilities of any undersigned under this Guaranty.

          10. Recapture. Anything in this Guaranty to the contrary notwithstanding, if Laurus
receives any payment or payments on account of the liabilities guaranteed hereby, which payment or
payments or any part thereof are subsequently invalidated, declared to be fraudulent or
preferential, set aside and/or required to be repaid to a trustee, receiver, or any other party
under any Insolvency Law, common law or equitable doctrine, then to the extent of any sum not
finally retained by Laurus, the undersigned’s obligations to Laurus shall be reinstated and this
Guaranty shall remain in full force and effect (or be reinstated) until payment shall have been
made to Laurus, which payment shall be due on demand.

          11. Books and Records. The books and records of Laurus showing the account between
Laurus and Debtor shall be admissible in evidence in any action or proceeding, shall be binding
upon the undersigned for the purpose of establishing the items therein set forth and shall
constitute prima facie proof thereof.

          12. No Waiver. No failure on the part of Laurus to exercise, and no delay in
exercising, any right, remedy or power hereunder shall operate as a waiver thereof, nor shall any
single or partial exercise by Laurus of any right, remedy or power hereunder preclude any other or
future exercise of any other legal right, remedy or power. Each and every right, remedy and power
hereby granted to Laurus or allowed it by law or other agreement shall be cumulative and not
exclusive of any other, and may be exercised by Laurus at any time and from time to time.

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          13. Waiver of Jury Trial. EACH OF THE UNDERSIGNED DESIRES THAT ITS DISPUTES BE
RESOLVED BY A JUDGE APPLYING SUCH APPLICABLE LAWS. THEREFORE, TO ACHIEVE THE BEST COMBINATION OF
THE BENEFITS OF THE JUDICIAL SYSTEM AND OF ARBITRATION, EACH OF THE UNDERSIGNED HERETO WAIVES ALL
RIGHTS TO TRIAL BY JURY IN ANY ACTION, SUIT, OR PROCEEDING BROUGHT TO RESOLVE ANY DISPUTE, WHETHER
ARISING IN CONTRACT, TORT, OR OTHERWISE BETWEEN LAURUS, AND/OR ANY OF THE UNDERSIGNED ARISING OUT
OF, CONNECTED WITH, RELATED OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED BETWEEN THEM IN
CONNECTION WITH THIS GUARANTY, ANY DOCUMENT OR THE TRANSACTIONS RELATED HERETO OR THERETO.

          14. Governing Law; Jurisdiction. THIS GUARANTY CANNOT BE CHANGED OR TERMINATED
ORALLY, AND SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND PERFORMED IN SUCH STATE, WITHOUT REGARD TO
PRINCIPLES OF CONFLICTS OF LAWS. EACH OF THE UNDERSIGNED HEREBY CONSENTS AND AGREES THAT THE STATE
OR FEDERAL COURTS LOCATED IN THE COUNTY OF NEW YORK, STATE OF NEW YORK SHALL HAVE EXCLUSIVE
JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS OR DISPUTES BETWEEN ANY OF THE UNDERSIGNED, ON THE
ONE HAND, AND LAURUS, ON THE OTHER HAND, PERTAINING TO THIS GUARANTY OR ANY OF THE DOCUMENTS OR TO
ANY MATTER ARISING OUT OF OR RELATED TO THIS GUARANTY OR ANY OF THE DOCUMENTS; PROVIDED,
THAT EACH OF THE UNDERSIGNED ACKNOWLEDGES THAT ANY APPEALS FROM THOSE COURTS MAY HAVE TO BE HEARD
BY A COURT LOCATED OUTSIDE OF THE COUNTY OF NEW YORK, STATE OF NEW YORK; AND FURTHER
PROVIDED, THAT NOTHING IN THIS GUARANTY SHALL BE DEEMED OR OPERATE TO PRECLUDE LAURUS FROM
BRINGING SUIT OR TAKING OTHER LEGAL ACTION IN ANY OTHER JURISDICTION TO COLLECT THE OBLIGATIONS, TO
REALIZE ON THE COLLATERAL OR ANY OTHER SECURITY FOR THE OBLIGATIONS, OR TO ENFORCE A JUDGMENT OR
OTHER COURT ORDER IN FAVOR OF LAURUS. EACH OF THE UNDERSIGNED EXPRESSLY SUBMITS AND CONSENTS IN
ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR SUIT COMMENCED IN ANY SUCH COURT, AND EACH
UNDERSIGNED HEREBY WAIVES ANY OBJECTION WHICH IT MAY HAVE BASED UPON LACK OF PERSONAL JURISDICTION,
IMPROPER VENUE OR FORUM NON CONVENIENS. EACH OF THE UNDERSIGNED HEREBY WAIVES PERSONAL
SERVICE OF THE SUMMONS, COMPLAINT AND OTHER PROCESS ISSUED IN ANY SUCH ACTION OR SUIT AND AGREES
THAT SERVICE OF SUCH SUMMONS, COMPLAINT AND OTHER PROCESS MAY BE MADE BY REGISTERED OR CERTIFIED
MAIL ADDRESSED TO SUCH UNDERSIGNED IN ACCORDANCE WITH SECTION 18 AND THAT SERVICE SO MADE SHALL BE
DEEMED COMPLETED UPON THE EARLIER OF SUCH UNDERSIGNED’S ACTUAL RECEIPT THEREOF OR THREE (3) DAYS
AFTER DEPOSIT IN THE U.S. MAILS, PROPER POSTAGE PREPAID.

          15. Understanding With Respect to Waivers and Consents. Each Guarantor warrants and
agrees that each of the waivers and consents set forth in this Guaranty is made voluntarily

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and
unconditionally after consultation with outside legal counsel and with full knowledge of its
significance and consequences, with the understanding that events giving rise to any defense or
right waived may diminish, destroy or otherwise adversely affect rights which such Guarantor
otherwise may have against the Debtor, Laurus or any other person or entity or against any
collateral. If, notwithstanding the intent of the parties that the terms of this Guaranty shall
control in any and all circumstances, any such waivers or consents are determined to be
unenforceable under applicable law, such waivers and consents shall be effective to the maximum
extent permitted by law.

          16. Severability. To the extent permitted by applicable law, any provision of this
Guaranty which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall
not invalidate or render unenforceable such provision in any other jurisdiction.

          17. Amendments, Waivers. No amendment or waiver of any provision of this Guaranty nor
consent to any departure by the undersigned therefrom shall in any event be effective unless the
same shall be in writing executed by each of the undersigned directly affected by such amendment
and/or waiver and Laurus.

          18. Notice. All notices, requests and demands to or upon the undersigned, shall be in
writing and shall be deemed to have been duly given or made (a) when delivered, if by hand, (b)
three (3) days after being sent, postage prepaid, if by registered or certified mail, (c) when
confirmed electronically, if by facsimile, or (d) when delivered, if by a recognized overnight
delivery service in each event, to the numbers and/or address set forth beneath the signature of
the undersigned.

          19. Successors. Laurus may, from time to time, without notice to the undersigned,
sell, assign, transfer or otherwise dispose of all or any part of the Obligations and/or rights
under this Guaranty. Without limiting the generality of the foregoing, Laurus may assign, or grant
participations to, one or more banks, financial institutions or other entities all or any part of
any of the Obligations. In each such event, Laurus, its Affiliates and each and every immediate
and successive purchaser, assignee, transferee or holder of all or any part of the Obligations
shall have the right to enforce this Guaranty, by legal action or otherwise, for its own benefit as
fully as if such purchaser, assignee, transferee or holder were herein by name specifically given
such right. Laurus shall have an unimpaired right to enforce this Guaranty for its benefit with
respect to that portion of the Obligations which Laurus has not disposed of, sold, assigned, or
otherwise transferred.

          20. Joinder. It is understood and agreed that any person or entity that desires to
become a Guarantor hereunder, or is required to execute a counterpart of this Guaranty after the
date hereof pursuant to the requirements of any Document, shall become a Guarantor hereunder by (x)
executing a Joinder Agreement in form and substance satisfactory to Laurus, (y) delivering
supplements to such exhibits and annexes to such Documents as Laurus shall reasonably request and
(z) taking all actions as specified in this Guaranty as would have been taken by such such
Guarantor had it been an original party to this Guaranty, in each case with all

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documents required
above to be delivered to Laurus and with all documents and actions required above to be taken to
the reasonable satisfaction of Laurus.

          21. Release. Nothing except indefeasible payment in full of the Obligations shall
release any of the undersigned from liability under this Guaranty.

          22. Remedies Not Exclusive. The remedies conferred upon Laurus in this Guaranty are
intended to be in addition to, and not in limitation of any other remedy or remedies available to
Laurus.

          23. Limitation of Obligations under this Guaranty. Each Guarantor and Laurus (by its
acceptance of the benefits of this Guaranty) hereby confirms that it is its intention that this
Guaranty not constitute a fraudulent transfer or conveyance for purposes of the Bankruptcy Code,
the Uniform Fraudulent Conveyance Act of any similar Federal or state law. To effectuate the
foregoing intention, each Guarantor and Laurus (by its acceptance of the benefits of this Guaranty)
hereby irrevocably agrees that the Obligations guaranteed by such Guarantor shall be limited to
such amount as will, after giving effect to such maximum amount and all other (contingent or
otherwise) liabilities of such Guarantor that are relevant under such laws and after giving effect
to any rights to contribution pursuant to any agreement providing for an equitable contribution
among such Guarantor and the other Guarantors (including this Guaranty), result in the Obligations
of such Guarantor under this Guaranty in respect of such maximum amount not constituting a
fraudulent transfer or conveyance.

[REMAINDER OF THIS PAGE IS BLANK.

SIGNATURE PAGE IMMEDIATELY FOLLOWS]

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     IN WITNESS WHEREOF, this Guaranty has been executed by the undersigned as of the date and year
here above written.

	 	 	 	 	 
	 	GREAT LAKES CONTROLLED ENERGY CORPORATION

 	 
	 	By:  	/s/ Jeffrey Mistarz
 	 
	 	 	Name:  	Jeffrey Mistarz 	 
	 	 	Title:  	Treasurer 	 
	 

	 	 	 	 	 
	 	Address: 630 Bonnie Lane

Telephone: 847-437-7283

Facsimile: 847-437-7390

State of Formation: Delaware

 	 
	 	 	 
	 	 	 
	 	 	 
	 

10exv10w6

 

Exhibit 10.6

STOCK PLEDGE AGREEMENT

          This Stock Pledge Agreement (this “Agreement”), dated as of February 28, 2005, among
Laurus Master Fund, Ltd. (the “Pledgee”), Electric City Corp., a Delaware corporation (the
“Company”), and each of the other undersigned parties (other than the Pledgee) (the Company
and each such other undersigned party, a “Pledgor” and collectively, the
“Pledgors”).

BACKGROUND

          The Company has entered into a Securities Purchase Agreement, dated as of September 11, 2003
(as amended, modified, restated or supplemented from time to time, the “Securities Purchase
Agreement”), and a Security Agreement dated as of September 11, 2003 (as amended, modified,
restated or supplemented from time to time, the “Security Agreement”), pursuant to which
the Pledgee provides or will provide certain financial accommodations to the Company.

          In order to induce the Pledgee to provide or continue to provide the financial accommodations
described in the Securities Purchase Agreement and the Security Agreement, each Pledgor has agreed
to pledge and grant a security interest in the collateral described herein to the Pledgee on the
terms and conditions set forth herein.

          NOW, THEREFORE, in consideration of the premises and for other good and valuable consideration
the receipt of which is hereby acknowledged, the parties hereto agree as follows:

          1. Defined Terms. All capitalized terms used herein which are not defined shall have
the meanings given to them in the Securities Purchase Agreement and the Security Agreement, as
applicable.

          2. Pledge and Grant of Security Interest. To secure the full and punctual payment and
performance of (the following clauses (a) and (b), collectively, the “Indebtedness”) (a)
the obligations under the Securities Purchase Agreement and the Related Agreements referred to in
the Securities Purchase Agreement and the Security Agreement and the Ancillary Agreements referred
to in the Security Agreement (the Securities Purchase Agreement and the Related Agreements and the
Security Agreement and the Ancillary Agreements, as each may be amended, restated, modified and/or
supplemented from time to time, collectively, the “Documents”) and (b) all other
indebtedness, obligations and liabilities of each Pledgor to the Pledgee whether now existing or
hereafter arising, direct or indirect, liquidated or unliquidated, absolute or contingent, due or
not due and whether under, pursuant to or evidenced by a note, agreement, guaranty, instrument or
otherwise (in each case, irrespective of the genuineness, validity, regularity or enforceability of
such Indebtedness, or of any instrument evidencing any of the Indebtedness or of any collateral
therefor or of the existence or extent of such collateral, and irrespective of the allowability,
allowance or disallowance of any or all of such in any case commenced by or against any Pledgor
under Title 11, United States Code, including, without limitation, obligations or indebtedness of
each Pledgor for post-petition interest, fees, costs and

 

 

charges that would have accrued or been
added to the Indebtedness but for the commencement of such case), each Pledgor hereby pledges,
assigns, hypothecates, transfers and grants a security interest to Pledgee in all of the following
(the “Collateral”):

               (a) the shares of stock set forth on Schedule A annexed hereto and expressly made a
part hereof (together with any additional shares of stock or other equity interests acquired by any
Pledgor, the “Pledged Stock”), the certificates representing the Pledged Stock and all
dividends, cash, instruments and other property or proceeds from time to time received, receivable
or otherwise distributed in respect of or in exchange for any or all of the Pledged Stock;

               (b) all additional shares of stock of any issuer (each, an “Issuer”) of the Pledged
Stock from time to time acquired by any Pledgor in any manner, including, without limitation, stock
dividends or a distribution in connection with any increase or reduction of capital,
reclassification, merger, consolidation, sale of assets, combination of shares, stock split,
spin-off or split-off (which shares shall be deemed to be part of the Collateral), and the
certificates representing such additional shares, and all dividends, cash, instruments and other
property or proceeds from time to time received, receivable or otherwise distributed in respect of
or in exchange for any or all of such shares; and

               (c) all options and rights, whether as an addition to, in substitution of or in exchange for
any shares of any Pledged Stock and all dividends, cash, instruments and other property or proceeds
from time to time received, receivable or otherwise distributed in respect of or in exchange for
any or all such options and rights.

          3. Delivery of Collateral. All certificates representing or evidencing the Pledged
Stock shall be delivered to and held by or on behalf of Pledgee pursuant hereto and shall be
accompanied by duly executed instruments of transfer or assignments in blank, all in form and
substance satisfactory to Pledgee. Each Pledgor hereby authorizes the Issuer upon demand by the
Pledgee to deliver any certificates, instruments or other distributions issued in connection with
the Collateral directly to the Pledgee, in each case to be held by the Pledgee, subject to the
terms hereof. Upon the occurrence and during the continuance of an Event of Default (as defined
below), the Pledgee shall have the right, during such time in its discretion and without notice to
the Pledgor, to transfer to or to register in the name of the Pledgee or any of its nominees any or
all of the Pledged Stock. In addition, the Pledgee shall have the right at such time to exchange
certificates or instruments representing or evidencing Pledged Stock for certificates or
instruments of smaller or larger denominations.

          4. Representations and Warranties of each Pledgor. Each Pledgor jointly and severally
represents and warrants to the Pledgee (which representations and warranties shall be deemed to
continue to be made until all of the Indebtedness has been paid in full and each Document and each
agreement and instrument entered into in connection therewith has been irrevocably terminated)
that:

               (a) the execution, delivery and performance by each Pledgor of this Agreement and the pledge
of the Collateral hereunder do not and will not result in any violation

2

 

of any agreement, indenture, instrument, license, judgment, decree, order, law, statute, ordinance or other
governmental rule or regulation applicable to any Pledgor;

               (b) this Agreement constitutes the legal, valid, and binding obligation of each Pledgor
enforceable against each Pledgor in accordance with its terms;

               (c) (i) all Pledged Stock owned by each Pledgor is set forth on Schedule A hereto and
(ii) such Pledgor is the direct and beneficial owner of each such share of the Pledged Stock;

               (d) all of the shares of the Pledged Stock have been duly authorized, validly issued and are
fully paid and nonassessable;

               (e) except for consents to which have already been obtained, no consent or approval of any
person, corporation, governmental body, regulatory authority or other entity, is or will be
necessary for (i) the execution, delivery and performance of this Agreement, (ii) the exercise by
the Pledgee of any rights with respect to the Collateral or (iii) the pledge and assignment of, and
the grant of a security interest in, the Collateral hereunder;

               (f) there are no pending or, to the best of Pledgor’s knowledge, threatened actions or
proceedings before any court, judicial body, administrative agency or arbitrator which may
materially adversely affect the Collateral;

               (g) each Pledgor has the requisite power and authority to enter into this Agreement and to
pledge and assign the Collateral to the Pledgee in accordance with the terms of this Agreement;

               (h) each Pledgor owns each item of the Collateral and, except for the pledge and security
interest granted to Pledgee hereunder, the Collateral shall be, immediately following the execution
of this Agreement, free and clear of any other security interest, pledge, claim, lien, charge,
hypothecation, assignment, offset or encumbrance whatsoever (collectively, “Liens”);

               (i) there are no restrictions on transfer of the Pledged Stock contained in the certificate of
incorporation or by-laws (or equivalent organizational documents) of the Issuer or otherwise which
have not otherwise been enforceably and legally waived by the necessary parties;

               (j) none of the Pledged Stock has been issued or transferred in violation of the securities
registration, securities disclosure or similar laws of any jurisdiction to which such issuance or
transfer may be subject;

               (k) the pledge and assignment of the Collateral and the grant of a security interest under
this Agreement vest in the Pledgee all rights of each Pledgor in the Collateral to the extent
contemplated by this Agreement; and

               (l) The Pledged Stock constitutes one hundred percent (100%) of the issued and outstanding
shares of capital stock of each Issuer, as of the date of this Agreement.

3

 

          5. Covenants. Each Pledgor jointly and severally covenants that, until the
Indebtedness shall be indefeasibly satisfied in full and each Document and each agreement and
instrument entered into in connection therewith is irrevocably terminated:

               (a) No Pledgor will sell, assign, transfer, convey, or otherwise dispose of its rights in or
to the Collateral or any interest therein; nor will any Pledgor create, incur or permit to exist
any Lien whatsoever with respect to any of the Collateral or the proceeds thereof other than that
created hereby.

               (b) Each Pledgor will, at its expense, defend Pledgee’s right, title and security interest in
and to the Collateral against the claims of any other party.

               (c) Each Pledgor shall at any time, and from time to time, upon the written request of
Pledgee, execute and deliver such further documents and do such further acts and things as Pledgee
may reasonably request in order to effectuate the purposes of this Agreement including, but without
limitation, delivering to Pledgee, upon the occurrence of an Event of Default, irrevocable proxies
in respect of the Collateral in form satisfactory to Pledgee. Until receipt thereof, upon an Event
of Default that has occurred and is continuing beyond any applicable grace period, this Agreement
shall constitute Pledgor’s proxy to Pledgee or its nominee to vote all shares of Collateral then
registered in each Pledgor’s name.

               (d) No Pledgor will consent to or approve the issuance of (i) any additional shares of any
class of capital stock or other equity interests of the Issuer; or (ii) any securities convertible
either voluntarily by the holder thereof or automatically upon the occurrence or nonoccurrence of
any event or condition into, or any securities exchangeable for, any such shares, unless, in either
case, such shares are pledged as Collateral pursuant to this Agreement.

          6. Voting Rights and Dividends. In addition to the Pledgee’s rights and remedies set
forth in Section 8 hereof, in case an Event of Default shall have occurred and be continuing,
beyond any applicable cure period, the Pledgee shall (i) be entitled to vote the Collateral, (ii)
be entitled to give consents, waivers and ratifications in respect of the Collateral (each Pledgor
hereby irrevocably constituting and appointing the Pledgee, with full power of substitution, the
proxy and attorney-in-fact of each Pledgor for such purposes) and (iii) be entitled to collect and
receive for its own use cash dividends paid on the Collateral. No Pledgor shall be permitted to
exercise or refrain from exercising any voting rights or other powers if, in the reasonable
judgment of the Pledgee, such action would have a material adverse effect on the value of the
Collateral or any part thereof; and, provided, further, that each Pledgor shall
give at least five (5) days’ written notice of the manner in which such Pledgor intends to
exercise, or the reasons for refraining from exercising, any voting rights or other powers other
than with respect to any election of directors and voting with respect to any incidental matters.
Following the occurrence of an Event of Default, all dividends and all other distributions in
respect of any of the Collateral, shall be delivered to the Pledgee to hold as Collateral and
shall, if received by any Pledgor, be received in trust for the benefit of the Pledgee, be
segregated from the other property or funds of any other Pledgor, and be forthwith delivered to the
Pledgee as Collateral in the same form as so received (with any necessary endorsement).

4

 

          7. Event of Default. An Event of Default shall be deemed to have occurred and may be
declared by the Pledgee upon the happening of any of the following events:

               (a) An “Event of Default” under any Document or any agreement or note related to any Document
shall have occurred and be continuing beyond any applicable cure period;

               (b) Any Pledgor shall default in the performance of any of its obligations under any agreement
between any Pledgor and Pledgee, including, without limitation, this Agreement, and such default
shall not be cured during any applicable cure period;

               (c) Any representation or warranty of any Pledgor made herein, in any Document or in any
agreement, statement or certificate given in writing pursuant hereto or thereto or in connection
herewith or therewith shall be false or misleading in any material respect;

               (d) Any portion of the Collateral is subjected to a levy of execution, attachment, distraint
or other judicial process or any portion of the Collateral is the subject of a claim (other than by
the Pledgee) of a Lien or other right or interest in or to the Collateral and such levy or claim
shall not be cured, disputed or stayed within a period of fifteen (15) business days after the
occurrence thereof; or

               (e) Any Pledgor shall (i) apply for, consent to, or suffer to exist the appointment of, or the
taking of possession by, a receiver, custodian, trustee, liquidator or other fiduciary of itself or
of all or a substantial part of its property, (ii) make a general assignment for the benefit of
creditors, (iii) commence a voluntary case under any state or federal bankruptcy laws (as now or
hereafter in effect), (iv) be adjudicated a bankrupt or insolvent, (v) file a petition seeking to
take advantage of any other law providing for the relief of debtors, (vi) acquiesce to, or fail to
have dismissed, within sixty (60) days, any petition filed against it in any involuntary case under
such bankruptcy laws, or (vii) take any action for the purpose of effecting any of the foregoing.

          8. Remedies. In case an Event of Default shall have occurred and been declared by the
Pledgee, the Pledgee may:

               (a) Transfer any or all of the Collateral into its name, or into the name of its nominee or
nominees;

               (b) Exercise all corporate rights with respect to the Collateral including, without
limitation, all rights of conversion, exchange, subscription or any other rights, privileges or
options pertaining to any shares of the Collateral as if it were the absolute owner thereof,
including, but without limitation, the right to exchange, at its discretion, any or all of the
Collateral upon the merger, consolidation, reorganization, recapitalization or other readjustment
of the Issuer thereof, or upon the exercise by the Issuer of any right, privilege or option
pertaining to any of the Collateral, and, in connection therewith, to deposit and deliver any and
all of the Collateral with any committee, depository, transfer agent, registrar or other designated

5

 

agent upon such terms and conditions as it may determine, all without liability except to account
for property actually received by it; and

               (c) Subject to any requirement of applicable law, sell, assign and deliver the whole or, from
time to time, any part of the Collateral at the time held by the Pledgee, at any private sale or at
public auction, with or without demand, advertisement or notice of the time or place of sale or
adjournment thereof or otherwise (all of which are hereby waived, except such notice as is required
by applicable law and cannot be waived), for cash or credit or for other property for immediate or
future delivery, and for such price or prices and on such terms as the Pledgee in its sole
discretion may determine, or as may be required by applicable law.

               Each Pledgor hereby waives and releases any and all right or equity of redemption, whether
before or after sale hereunder. At any such sale, unless prohibited by applicable law, the Pledgee
may bid for and purchase the whole or any part of the Collateral so sold free from any such right
or equity of redemption. All moneys received by the Pledgee hereunder, whether upon sale of the
Collateral or any part thereof or otherwise, shall be held by the Pledgee and applied by it as
provided in Section 10 hereof. No failure or delay on the part of the Pledgee in exercising any
rights hereunder shall operate as a waiver of any such rights nor shall any single or partial
exercise of any such rights preclude any other or future exercise thereof or the exercise of any
other rights hereunder. The Pledgee shall have no duty as to the collection or protection of the
Collateral or any income thereon nor any duty as to preservation of any rights pertaining thereto,
except to apply the funds in accordance with the requirements of Section 10 hereof. The Pledgee
may exercise its rights with respect to property held hereunder without resort to other security
for or sources of reimbursement for the Indebtedness. In addition to the foregoing, Pledgee shall
have all of the rights, remedies and privileges of a secured party under the Uniform Commercial
Code of New York (the “UCC”) regardless of the jurisdiction in which enforcement hereof is sought.

          9. Private Sale. Each Pledgor recognizes that the Pledgee may be unable to effect (or
to do so only after delay which would adversely affect the value that might be realized from the
Collateral) a public sale of all or part of the Collateral by reason of certain prohibitions
contained in the Securities Act, and may be compelled to resort to one or more private sales to a
restricted group of purchasers who will be obliged to agree, among other things, to acquire such
Collateral for their own account, for investment and not with a view to the distribution or resale
thereof. Each Pledgor agrees that any such private sale may be at prices and on terms less
favorable to the seller than if sold at public sales and that such private sales shall be deemed to
have been made in a commercially reasonable manner. Each Pledgor agrees that the Pledgee has no
obligation to delay sale of any Collateral for the period of time necessary to permit the Issuer to
register the Collateral for public sale under the Securities Act.

          10. Proceeds of Sale. The proceeds of any collection, recovery, receipt,
appropriation, realization or sale of the Collateral shall be applied by the Pledgee as follows:

               (a) First, to the payment of all costs, reasonable expenses and charges of the Pledgee and to
the reimbursement of the Pledgee for the prior payment of such costs, reasonable expenses and
charges incurred in connection with the care and safekeeping of the Collateral (including, without
limitation, the reasonable expenses of any sale or any other disposition of any

6

 

of the Collateral),
attorneys’ fees and reasonable expenses, court costs, any other fees or expenses incurred or
expenditures or advances made by Pledgee in the protection, enforcement or exercise of its rights,
powers or remedies hereunder;

               (b) Second, to the payment of the Indebtedness, in whole or in part, in such order as the
Pledgee may elect, whether or not such Indebtedness is then due;

               (c) Third, to such persons, firms, corporations or other entities as required by applicable
law including, without limitation, Section 9-615(a)(3) of the UCC; and

               (d) Fourth, to the extent of any surplus to the Pledgors or as a court of competent
jurisdiction may direct.

               In the event that the proceeds of any collection, recovery, receipt, appropriation,
realization or sale are insufficient to satisfy the Indebtedness, each Pledgor shall be jointly and
severally liable for the deficiency plus the costs and fees of any attorneys employed by Pledgee to
collect such deficiency.

          11. Waiver of Marshaling. Each Pledgor hereby waives any right to compel any
marshaling of any of the Collateral.

          12. No Waiver. Any and all of the Pledgee’s rights with respect to the Liens granted
under this Agreement shall continue unimpaired, and Pledgor shall be and remain obligated in
accordance with the terms hereof, notwithstanding (a) the bankruptcy, insolvency or reorganization
of any Pledgor, (b) the release or substitution of any item of the Collateral at any time, or of
any rights or interests therein, or (c) any delay, extension of time, renewal, compromise or other
indulgence granted by the Pledgee in reference to any of the Indebtedness. Each Pledgor hereby
waives all notice of any such delay, extension, release, substitution, renewal, compromise or other
indulgence, and hereby consents to be bound hereby as fully and effectively as if such Pledgor had
expressly agreed thereto in advance. No delay or extension of time by the Pledgee in exercising
any power of sale, option or other right or remedy hereunder, and no failure by the Pledgee to give
notice or make demand, shall constitute a waiver thereof, or limit, impair or prejudice the
Pledgee’s right to take any action against any Pledgor or to exercise any other power of sale,
option or any other right or remedy.

          13. Expenses. The Collateral shall secure, and each Pledgor shall pay to Pledgee on
demand, from time to time, all reasonable costs and expenses, (including but not limited to,
reasonable attorneys’ fees and costs, taxes, and all transfer, recording, filing and other charges)
of, or incidental to, the custody, care, transfer, administration of the Collateral or any other
collateral, or in any way relating to the enforcement, protection or preservation of the rights or
remedies of the Pledgee under this Agreement or with respect to any of the Indebtedness.

          14. The Pledgee Appointed Attorney-In-Fact and Performance by the Pledgee. Upon the
occurrence of an Event of Default, each Pledgor hereby irrevocably constitutes and appoints the
Pledgee as such Pledgor’s true and lawful attorney-in-fact, with full power of substitution, to
execute, acknowledge and deliver any instruments and to do in such Pledgor’s name, place and stead,
all such acts, things and deeds for and on behalf of and in the name of such Pledgor, which

7

 

such Pledgor could or might do or which the Pledgee may deem necessary, desirable or convenient to
accomplish the purposes of this Agreement, including, without limitation, to execute such
instruments of assignment or transfer or orders and to register, convey or otherwise transfer title
to the Collateral into the Pledgee’s name. Each Pledgor hereby ratifies and confirms all that said
attorney-in-fact may so do and hereby declares this power of attorney to be coupled with an
interest and irrevocable. If any Pledgor fails to perform any agreement herein contained, the
Pledgee may itself perform or cause performance thereof, and any costs and expenses of the Pledgee
incurred in connection therewith shall be paid by the Pledgors as provided in Section 10 hereof.

          15. Waivers. THE PARTIES HERETO DESIRES THAT THEIR DISPUTES BE RESOLVED BY A JUDGE
APPLYING APPLICABLE LAW. THEREFORE, TO ACHIEVE THE BEST COMBINATION OF THE BENEFITS OF THE
JUDICIAL SYSTEM AND OF ARBITRATION, THE PARTIES HERETO WAIVE ALL RIGHTS TO TRIAL BY JURY IN ANY
ACTION, SUIT, OR PROCEEDING BROUGHT TO RESOLVE ANY DISPUTE, WHETHER ARISING IN CONTRACT, TORT, OR
OTHERWISE BETWEEN LAURUS, AND/OR ANY PLEDGOR ARISING OUT OF, CONNECTED WITH, RELATED OR INCIDENTAL
TO THE RELATIONSHIP ESTABLISHED BETWEEN THEM IN CONNECTION WITH THIS AGREEMENT, ANY OTHER DOCUMENT
OR THE TRANSACTIONS RELATED HERETO OR THERETO.

          16. Recapture. Notwithstanding anything to the contrary in this Agreement, if the
Pledgee receives any payment or payments on account of the Indebtedness, which payment or payments
or any part thereof are subsequently invalidated, declared to be fraudulent or preferential, set
aside and/or required to be repaid to a trustee, receiver, or any other party under the United
States Bankruptcy Code, as amended, or any other federal or state bankruptcy, reorganization,
moratorium or insolvency law relating to or affecting the enforcement of creditors’ rights
generally, common law or equitable doctrine, then to the extent of any sum not finally retained by
the Pledgee, each Pledgor’s obligations to the Pledgee shall be reinstated and this Agreement shall
remain in full force and effect (or be reinstated) until payment shall have been made to Pledgee,
which payment shall be due on demand.

          17. Captions. All captions in this Agreement are included herein for convenience of
reference only and shall not constitute part of this Agreement for any other purpose.

          18. Miscellaneous.

               (a) This Agreement constitutes the entire and final agreement among the parties with respect
to the subject matter hereof and may not be changed, terminated or otherwise varied except by a
writing duly executed by the parties hereto.

               (b) No waiver of any term or condition of this Agreement, whether by delay, omission or
otherwise, shall be effective unless in writing and signed by the party sought to be charged, and
then such waiver shall be effective only in the specific instance and for the purpose for which
given.

8

 

               (c) In the event that any provision of this Agreement or the application thereof to any
Pledgor or any circumstance in any jurisdiction governing this Agreement shall, to any extent, be
invalid or unenforceable under any applicable statute, regulation, or rule of law, such provision
shall be deemed inoperative to the extent that it may conflict therewith and shall be deemed
modified to conform to such statute, regulation or rule of law, and the remainder of this Agreement
and the application of any such invalid or unenforceable provision to parties, jurisdictions, or
circumstances other than to whom or to which it is held invalid or unenforceable shall not be
affected thereby, nor shall same affect the validity or enforceability of any other provision of
this Agreement.

               (d) This Agreement shall be binding upon each Pledgor, and each Pledgor’s successors and
assigns, and shall inure to the benefit of the Pledgee and its successors and assigns.

               (e) Any notice or other communication required or permitted pursuant to this Agreement shall
be given in accordance with the Security Agreement but to the address for Pledgor set forth under
its signature to this Agreement.

               (f) This Agreement and the other Documents shall be governed by and construed and enforced in
accordance with the laws of the State of New York applicable to contracts made and performed in
such State, without regard to principles of conflicts of law.

               (g) EACH PLEDGOR HEREBY CONSENTS AND AGREES THAT THE STATE OR FEDERAL COURTS LOCATED IN THE
COUNTY OF NEW YORK, STATE OF NEW YORK SHALL HAVE EXCLUSIVE JURISDICTION TO HEAR AND DETERMINE ANY
CLAIMS OR DISPUTES BETWEEN ANY PLEDGOR, ON THE ONE HAND, AND THE PLEDGEE, ON THE OTHER HAND,
PERTAINING TO THIS AGREEMENT OR ANY OF THE OTHER DOCUMENTS OR TO ANY MATTER ARISING OUT OF OR
RELATED TO THIS AGREEMENT OR ANY OF THE OTHER DOCUMENTS, PROVIDED, THAT EACH PLEDGOR
ACKNOWLEDGES THAT ANY APPEALS FROM THOSE COURTS MAY HAVE TO BE HEARD BY A COURT LOCATED OUTSIDE OF
THE COUNTY OF NEW YORK, STATE OF NEW YORK; AND FURTHER PROVIDED, THAT NOTHING IN
THIS AGREEMENT SHALL BE DEEMED OR OPERATE TO PRECLUDE THE PLEDGEE FROM BRINGING SUIT OR TAKING
OTHER LEGAL ACTION IN ANY OTHER JURISDICTION TO COLLECT THE INDEBTEDNESS, TO REALIZE ON THE
COLLATERAL OR ANY OTHER SECURITY FOR THE INDEBTEDNESS, OR TO ENFORCE A JUDGMENT OR OTHER COURT
ORDER IN FAVOR OF THE PLEDGEE. EACH PLEDGOR EXPRESSLY SUBMITS AND CONSENTS IN ADVANCE TO SUCH
JURISDICTION IN ANY ACTION OR SUIT COMMENCED IN ANY SUCH COURT, AND EACH PLEDGOR HEREBY WAIVES ANY
OBJECTION WHICH IT MAY HAVE BASED UPON LACK OF PERSONAL JURISDICTION, IMPROPER VENUE OR FORUM
NON CONVENIENS. EACH PLEDGOR HEREBY WAIVES PERSONAL SERVICE OF THE SUMMONS, COMPLAINT AND
OTHER PROCESS ISSUED IN ANY SUCH ACTION OR SUIT AND AGREES THAT SERVICE OF SUCH SUMMONS, COMPLAINT
AND OTHER PROCESS MAY BE MADE BY REGISTERED OR CERTIFIED MAIL ADDRESSED TO SUCH PLEDGOR AT THE
ADDRESS SET FORTH UNDER ITS SIGNATURE HERETO AND THAT SERVICE SO MADE SHALL BE DEEMED COMPLETED
UPON THE

9

 

EARLIER OF THE SUCH PLEDGOR’S ACTUAL RECEIPT THEREOF OR FIVE (5) DAYS AFTER DEPOSIT IN THE
U.S. MAILS, PROPER POSTAGE PREPAID.

               (h) It is understood and agreed that any person or entity that desires to become a Pledgor
hereunder, or is required to execute a counterpart of this Agreement after the date hereof pursuant
to the requirements of any Document, shall become a Pledgor hereunder by (x) executing a Joinder
Agreement in form and substance satisfactory to the Pledgee, (y) delivering supplements to such
exhibits and annexes to such Documents as the Pledgee shall reasonably request and (z) taking all
actions as specified in this Agreement as would have been taken by such Pledgor had it been an
original party to this Agreement, in each case with all documents required above to be delivered to
the Pledgee and with all documents and actions required above to be taken to the reasonable
satisfaction of the Pledgee.

               (i) This Agreement may be executed in one or more counterparts, each of which shall be deemed
an original and all of which when taken together shall constitute one and the same agreement. Any
signature delivered by a party by facsimile transmission shall be deemed an original signature
hereto.

[Remainder of Page Intentionally Left Blank]

10

 

     IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the day and year first
written above.

	 	 	 	 	 
	 	ELECTRIC CITY CORP.

 	 
	 	By:  	/s/ Jeffrey Mistarz 	 
	 	 	Name:  	Jeffrey Mistarz 	 
	 	 	Title:  	Chief Financial Officer & Treasurer
	 
	 	 	Address for Notices:

1280 Landmeier Road

Elk Grove Village, IL 60007 	 
	 
	 	GREAT LAKES CONTROLLED ENERGY CORPORATION

 	 
	 	By:  	/s/ Jeffrey Mistarz
 	 
	 	 	Name:  	Jeffrey Mistarz 	 
	 	 	Title:  	Treasurer

	 
	 	 	Address for Notices:

1280 Landmeier Road

Elk Grove Village, IL 60007 	 
	 
	 	LAURUS MASTER FUND, LTD.

 	 
	 	By:  	/s/ David Grin
 	 
	 	 	Name:  	David Grin 	 
	 	 	Title:  	Partner 	 
	 

11

 

SCHEDULE A to the Stock Pledge Agreement

Pledged Stock

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	Stock Certificate	 	 	 	 	 	 	 	Number of
	Pledgor	 	 	Issuer	 	 	Class of Stock	 	 	Number	 	 	Par Value	 	 	Shares
	Electric City Corp.

	 	 	Great Lakes

Controlled Energy

Corporation
	 	 	Common
	 	 	 	1	 	 	 	$	0.01	 	 	 	 	1,000	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Great Lakes

Controlled Energy

Corporation

	 	 	None

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