NON-COMPETITION AGREEMENT
Exhibit 10.4
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”), XXXXX ACQUISITION LLC, a California limited liability company (“Acquisition”), and Xxxxxx
Xxxxx, an individual (“Stockholder”) in connection with the merger by Xxxxx P.A.N.D.A. CORPORATION,
a California corporation (“Xxxxx”) into Acquisition (the “Merger”)
R E C I T A L S
A. ELC desires to acquire Xxxxx 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 Xxxxx 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 Xxxxx and will personally
benefit from the merger of Xxxxx into Acquisition. In addition, Stockholder has certain expertise
and knowledge related to the conduct of business of Xxxxx, which is selling and/or installing
energy efficient lighting and air-conditioning retrofits (the “Business”).
D. Through the Merger of Xxxxx into Acquisition, Acquisition will acquire the goodwill of
Xxxxx 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 Xxxxx 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.
| XXXXX ACQUISITION, LLC, a California | ||||||
| limited liability company | ||||||
| By: Name: |
/s/ Xxxxxxx X. Xxxxxxx
|
|||||
| Its: | Manager | |||||
| /s/ Xxxxxx Xxxxx | ||||||
| XXXXXX XXXXX, an individual | ||||||
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