Document:

exv10w4

 

Exhibit 10.4

NON-COMPETITION AGREEMENT

     THIS NON-COMPETITION AGREEMENT (this “Agreement”), is made and entered into effective as of
the 30th day of June, 2006, by and among ELECTRIC CITY CORP., a Delaware corporation
(“ELC”), PARKE ACQUISITION LLC, a California limited liability company (“Acquisition”), and Daniel
Parke, an individual (“Stockholder”) in connection with the merger by Parke P.A.N.D.A. CORPORATION,
a California corporation (“Parke”) into Acquisition (the “Merger”)

R E C I T A L S

     A. ELC desires to acquire Parke by means of a transaction which is described in Section 368 of
the Internal Revenue Code of 1986, as amended and accorded tax-free treatment thereunder except to
the extent otherwise required in respect of cash consideration.

     B. In order to consummate the transactions contemplated herein, Acquisition has been formed
and Parke will be merged with and into Acquisition (with Acquisition as the surviving entity), upon
and subject to the terms as further specified in this Agreement.

     C. Stockholder, together with his spouse, beneficially owns 100% of Parke and will personally
benefit from the merger of Parke into Acquisition. In addition, Stockholder has certain expertise
and knowledge related to the conduct of business of Parke, which is selling and/or installing
energy efficient lighting and air-conditioning retrofits (the “Business”).

     D. Through the Merger of Parke into Acquisition, Acquisition will acquire the goodwill of
Parke as required by California Business & Professions Code Section 16601.

     E. In connection with and as a condition to Acquisition consummating the transactions
contemplated by the Merger Agreement, Acquisition has required that Stockholder agree and covenant
not to compete with Acquisition in the manner and to the extent specified below.

AGREEMENT

     NOW, THEREFORE, in consideration of the above recitals, including Acquisition’s execution of
and consummation of the transactions contemplated by the Merger Agreement, the mutual covenants and
agreements hereinafter contained and other good and valuable consideration, the receipt,
sufficiency and mutuality of which are hereby acknowledged, the parties agree as follows:

     1.1. Covenant Not To Compete. For the term and within the geographic territory
specified in this Agreement, Stockholder shall not in any manner, either directly or indirectly,
own, manage, operate or control, or participate in the ownership, management, operation or control
of, or be employed by or act as consultant or advisor to any corporation, limited liability
company, partnership, person, firm or other business that is engaged in the

 

 

Business. Notwithstanding anything to the contrary contained in this Agreement, Stockholder
may own (beneficially or of record) (a) common stock of Electric City Corp. in any amount, and (b)
securities issued by any entity, if such securities are listed on any national securities exchange
or are registered under Section 12(g) of the Securities Exchange Act of 1934, and such ownership
does not exceed five percent (5%) of the aggregate issued and outstanding shares or units of such
securities.

     2. Term. The term of Stockholder’s obligations under this Agreement shall be for two
(2) years following June 30, 2006; provided, however, that the Stockholder’s obligations hereunder
shall terminate earlier if the Stockholder’s employment by Acquisition after the Merger is
terminated by Acquisition without “Due Cause” (as such term is defined in the Employment Agreement
dated as of June 30, 2006 between Stockholder and Acquisition).

     3. Geographic Territory. The parties hereto acknowledge and agree that the Business
of Parke extended throughout the State of California. Accordingly, the obligations of Stockholder
under this Agreement shall apply throughout the State of California.

     4. Consideration to Consultant. The consideration provided by Acquisition to
Stockholder for the non-competition covenants contained in this Agreement is Acquisition entering
into and consummating the transactions contemplated by the Merger Agreement, it being understood
that Acquisition would not enter into or consummate the transactions contemplated by the Merger
Agreement unless Stockholder provided the non-competition covenants as specified in this Agreement.

     5. Specific Enforcement and Reimbursement of Fees. Stockholder agrees that any breach
of the covenants in this Agreement may cause Acquisition irreparable harm for which there is no
adequate remedy at law and, without limiting whatever other rights or remedies Acquisition may have
under this Agreement, Stockholder hereby acknowledges and agrees that Acquisition is authorized and
entitled to obtain an injunction in favor of Acquisition enjoining the breach by Stockholder of any
of the aforesaid covenants by any court of competent jurisdiction, and such relief may be granted
without the necessity of proving actual damages. In the event of an alleged breach by Stockholder
of the obligations under this Agreement, the prevailing party shall be entitled to recover from the
losing party all costs and expenses it incurs in connection with the dispute, including attorney
fees.

     6. Construction/Severability. Wherever possible, each provision of this Agreement
shall be interpreted in such a manner as to be effective and valid under applicable law, and if any
provision of this Agreement shall be prohibited by or invalid under applicable law, such provision
shall be ineffective only to the extent of such prohibition or invalidity, without invalidating the
remainder of such provision or the remaining provisions of this Agreement. If any or all of the
above covenants are held to be unenforceable because of their scope or duration or the area covered
thereby, the parties agree that the court making such determination shall have the power to reduce
the scope, duration and/or area of such covenant(s) to the extent that allows the maximum scope,
duration and/or area permitted by applicable law.

     7. Waiver. The failure of any party hereto to enforce any right under this Agreement
shall not be construed to be a waiver of that right, or of damages caused thereby, or

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of any rights under this Agreement. Any waiver of any right must be specific and in writing
and be signed by the party alleged to have waived its right hereunder.

     8. Amendment. This Agreement shall not be varied, altered, modified, changed or in
any way amended except by an instrument in writing executed by the parties hereto.

     9. Entire Agreement. This Agreement embodies the entire understanding of the parties
with respect to the subject matter hereof.

     10. Successors and Assigns. This Agreement shall be binding upon and shall inure to
the benefit of the parties hereto and their respective heirs, representatives, successors and
assigns; provided, however, that Stockholder may not assign any rights or obligations under this
Agreement.

     11. Governing Law. This Agreement shall be construed in accordance with and governed
by the laws of the State of California.

     12. Consent to Jurisdiction and Service of Process. Each of Acquisition and
Stockholder hereby irrevocably consents that any legal action or proceeding against it under,
arising out of, or in any manner relating to this Agreement or any other agreement, document or
instrument arising out of or executed in connection with this Agreement shall be brought only in a
state or federal court of competent jurisdiction in the State of California. Each party by the
execution and delivery of this Agreement, expressly and irrevocably consents and submits to the
personal jurisdiction of any of such courts in any such action or proceeding. Each party hereby
expressly and irrevocably waives any claim or defense in any action or proceeding based on any
alleged lack of personal jurisdiction, improper venue, forum non conveniens, or any similar basis.

     13. Counterparts. This Agreement may be executed in one or more counterparts, each of
which shall be deemed to be an original for all purposes and all of which together shall constitute
one and the same instrument.

[signatures on following page]

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     IN WITNESS WHEREOF, the parties hereto have executed this Non-Competition Agreement effective
as of the day and year first above written.

	 	 	 	 	 	 	 
	 	 	PARKE ACQUISITION, LLC, a California	 	 
	 	 	limited liability company	 	 
	 
	 	 	 	 	 	 
	 

	 	By:

Name:
	 	/s/ Jeffrey R. Mistarz
 

Jeffrey R. Mistarz
	 	 
	 

	 	Its:
	 	Manager	 	 
	 
	 	 	 	 	 	 
	 	 	/s/ Daniel Parke	 	 
	 	 	 	 	 
	 	 	DANIEL PARKE, an individual	 	 

4exv10w5

 

Exhibit 10.5

Employee Stock Option Agreement

This Employee Stock Option Agreement (this “Agreement”) is made this 30th day of June,
2006, between Electric City Corp., a Delaware corporation (the “Company”) and Daniel Parke
(the “Holder”).

WHEREAS, Holder is an employee of Parke Industries, LLC, a subsidiary of the Company, and the
Company desires, by affording Holder an opportunity to purchase its common shares of $0.0001 par
value common stock (the “Common Stock”) as hereinafter provided, to help align the long-term
economic interests of the Holder with the long-term economic interests of the Company.

NOW THEREFORE, in consideration of the mutual covenants hereinafter set forth and for other good
and valuable consideration, the parties hereto agree as follows:

1. Grant of Option. The Company hereby agrees to grant to the Holder, on the date hereof
(the “Grant Date”), options (the “Options”) to purchase up to an aggregate of
46,667 shares (the “Option Shares”) of the Company’s common stock, par value $0.001 (the
“Common Stock”), subject to the terms and conditions set forth herein.

2. Exercise Price. The exercise price per Option Share, subject to adjustment as
hereinafter provided (the “Exercise Price”) under the Options shall be equal to the closing
market price of the Company’s common stock on [the date immediately following the date of this
Agreement].

3. Vesting. The Options shall vest according to the following schedule:

	 	 	 	 	 
	Vesting Date	 	Number of Shares
	The Grant Date
	 	 	15,555	 
	 
	 	 	 	 
	The First Anniversary of the Grant Date (except as
otherwise provided in that certain Employment Agreement
dated as of the date hereof between the Holder and Parke
Industries, LLC)
	 	 	15,556	 
	 
	 	 	 	 
	The Second Anniversary of the Grant Date
(except as otherwise provided in that certain Employment
Agreement dated as of the date hereof between the Holder
and Parke Industries, LLC)
	 	 	15,556	 

Reference is made to the Employment Agreement dated as of the date hereof between Holder and
Parke Industries, LLC (the “Employment Agreement”) for additional terms and conditions
relating to the vesting of any unvested Stock Options in the event that Holder ceases to be
employed by Parke Industries, LLC.

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4. Exercise of the Option. Any vested Options may be exercised at any time after vesting by
delivering the Exercise Price, paid in cash, along with a notice of exercise to the Company. The
Exercise Price of the shares as to which Option shall be exercised shall be paid in full, in cash
at the time of exercise, provided, that if the Fair Market Value of one share of Common Stock is
greater than the Exercise Price (at the date of calculation as set forth below), in lieu of
exercising this Option for cash, the Holder may elect to receive shares equal to the value (as
determined below) of this Option (or the portion thereof being exercised) by surrender of this
Option at the principal office of the Company together with the properly endorsed Exercise Notice
in which event the Company shall issue to the Holder a number of shares of Common Stock computed
using the following formula:

	 	 	 	 	 	 	 	 	 	 	 
	 

	 	X
	 	=
	 	Y
	 	(A-B)
 

A
	 	 

	 	 	 
	Where:

	 	X = the number of shares of Common Stock to be issued to the Holder;
	 
	 	 
	 

	 	Y = the number of shares of Common Stock purchasable under the Option or, if
only a portion of the Option is being exercised, the portion of the Option being
exercised (at the date of such calculation);
	 
	 	 
	 

	 	A = the Fair Market Value of one share of the Company’s Common Stock (at the date
of such calculation); and
	 
	 	 
	 

	 	B = Exercise Price (as adjusted to the date of such calculation)

5. Transferability. Except as otherwise provided in the Employment Agreement, the
Options shall not be transferable except by will or the laws of dissent and distribution, and the
Options will only be exercised during the lifetime of Holder, and only by Holder.

6. Expiration of the Options. The Options will expire on the earlier of the tenth
anniversary of the date of this Agreement or as provided in the Employment Agreement if the Holder
ceases to be a full time employee of the Parke Industries, LLC or the Company.

7. Adjustments. The number of shares issuable as a result of the exercise of any
unexercised Options, and the purchase price payable therefore, may be adjusted from time to time to
give effect to stock splits, both forward and reverse, and any stock dividends which may be
declared payable to the holders of the outstanding Common Stock.

8. Terms Governing Stock Options. Except to the extent otherwise expressly provided herein,
the terms of the Options shall be governed in accordance with the provisions of the Company’s 2001
Employee Stock Incentive Plan (the “Plan”), as it may be amended and in effect from time to
time. The Options shall be incentive stock options to the extent permitted by law and the terms of
the Plan, and the balance shall be non-qualified options.

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9. Taxes. The Company will have the right to deduct from all cash or property payments made
to the Holder upon exercise of the Option, any and all federal, state or local taxes required to be
withheld with respect to such payments.

10. Trading Restrictions. The Company shall have the right at any time to impose trading
restrictions on the shares issuable pursuant to the exercise of the Options (the “Option
Shares”) which may limit the number of shares that can be sold on any trading day or during any
90 day period and/or prohibit the sale of the Option Shares on any trading day, not to exceed
thirty (30) trading days a year.

[Balance of page intentionally left blank; signature page follows.]

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     IN WITNESS WHEREOF, the Company has caused this Agreement to be executed as of the date first
written above.

	 	 	 	 	 	 	 	 	 
	ELECTRIC CITY CORP.	 	 	 	HOLDER	 	 
	 
	 	 	 	 	 	 	 	 
	By:

Name:

	 	/s/ Jeffrey Mistarz
 

Jeffrey Mistarz
	 	 
	 	/s/ Daniel Parke
 

Daniel Parke
	 	 
	Title:

	 	Chief Financial Officer	 	 	 	 	 	 

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