EXHIBIT 4
STOCK TRADING AGREEMENT
This Stock Trading Agreement, dated as of July 31,
2001 (as may be amended from time to time, this "Agreement"), is
made by and among Newcourt Capital USA Inc., a Delaware
corporation, EP Power Finance, L.L.C., a Delaware limited
liability company, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ Equity Funding,
Inc., a Delaware corporation, Originators Investment Plan, L.P,
a Delaware limited partnership, Duke Capital Partners, LLC, a
Delaware limited liability company (collectively, the
"Purchasers"), Newcourt Capital Securities, Inc., a Delaware
corporation (the "Placement Agent") and each of the members of
management of Electric City Corp., a Delaware corporation (the
"Company"), set forth on the signature pages hereto, and shall
become effective upon the Closing under the Securities Purchase
Agreement.
WITNESSETH
WHEREAS, the Purchasers and the Company have entered
into that certain Securities Purchase Agreement, dated as of
July 31, 2001 (as it may be amended from time to time, the
"Securities Purchase Agreement"), whereby the Company will sell
and the Purchasers will buy shares of the Company's Series A
Convertible Preferred Stock, par value $0.01 per share (the
"Series A Preferred Stock"), together with warrants to purchase
Series A Preferred Stock, shares of Common Stock and warrants to
purchase Common Stock; and
WHEREAS, it is a condition to the obligations of the
Purchasers to purchase such securities pursuant to the
Securities Purchase Agreement that the Parties (as defined
below) enter into this Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing and
for other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the Parties agree as
follows:
ARTICLE I
DEFINITIONS
1.1 Defined Terms. All terms capitalized but not
defined herein shall have the meaning attributable to such terms
in the Securities Purchase Agreement, except where the context
otherwise requires. The following additional terms when used in
this Agreement, including its preamble and recitals, shall,
except where the context otherwise requires, have the following
meanings, such meanings to be equally applicable to the singular
and plural forms thereof:
"Additional Purchase Agreement" means the securities
purchase agreement, if any, providing for the issuance and sale
of Series A Preferred Stock and Series A Preferred Stock
Warrants to the Additional Purchasers, as contemplated by
Section 2.3 of the Securities Purchase Agreement.
"Additional Purchaser" shall mean each purchaser under
the Additional Purchase Agreement.
"Affiliate" means, as applied to any Person, any other
Person controlling, controlled by or under common control with
such Person. For purposes of this definition, "control"
(including, with correlative meanings, the terms "controlled by"
and "under common control with"), as applied to any Person,
shall mean the possession, directly or indirectly, of the power
to direct or cause the direction of the management and policies
of any such other Person, whether through the ownership of
voting securities or by contract or otherwise. With respect to
individuals, the term Affiliate shall also include such
individuals parents, spouse, children or grandchildren.
"Agreement" shall have the meaning set forth in the
preamble hereof.
"Average Daily Trading Volume" with respect to any
trading day, means the average daily trading volume of the
Common Stock as reported on the American Stock Exchange (or, if
not traded on the American Stock Exchange, any national
securities exchange or automated quotation services on which the
Common Stock is then listed for trading) for the twenty (20)
consecutive trading days (as adjusted to exclude the highest and
the lowest volume trading days for such twenty (20) consecutive
trading day period) ending on the date immediately prior to such
trading day.
"Block Sales" means a sale of at least 10,000 shares
of Common Stock.
"Closing" shall have the meaning set forth in the
Securities Purchase Agreement.
"Closing Price" means the closing price of the Common
Stock as reported on the American Stock Exchange (or, if not
traded on the American Stock Exchange, any national securities
exchange or automated quotation services on which the Common
Stock is then listed for trading).
"Common Stock" means and includes the Company's
authorized common stock, par value $0.0001 per share.
"Company" shall have the meaning set forth in the
preamble hereof.
"Covered Stock" means 75% of an Additional Purchaser's
total holdings of Common Stock (calculated assuming the exercise
of all rights, options and warrants to purchase Common Stock or
securities convertible or exchangeable for shares of Common
Stock, and the conversion or exchange of all securities
convertible or exchangeable for Common Stock) purchased under
the Additional Purchase Agreement (as adjusted for stock splits,
stock combinations and the like).
"Effective Date" means the Closing Date (as defined in
the Securities Purchase Agreement).
"Election Period" shall have the meaning set forth in
Section 2.2 hereof.
"Existing Stockholder" shall have the meaning set
forth in Section 3.1 hereof.
"MSDW" shall have the meaning set forth in Section 2.5
hereof.
"Parties" means all of the parties that are
signatories to this Agreement.
"Person" means and includes an individual, a
corporation, a limited liability company, an association, a
partnership, a trust or estate, a government or any department
or agency thereof.
"Purchasers" shall have the meaning set forth in the
preamble hereof.
"Qualified Primary Offering" means a firmly
underwritten primary registered public offering of Common Stock
by the Company that raises at least $35 million in aggregate
gross proceeds at a price of at least $5.00 per share (as
adjusted for stock splits, stock combinations and the like).
"Sale Notice" shall have the meaning set forth in
Section 2.2 hereof.
"Securities Purchase Agreement" shall have the meaning
set forth in the first recital hereof.
"Selling Party" shall have the meaning set forth in
Section 2.2 hereof.
"Series A Preferred Stock" shall have the meaning set
forth in the first recital hereof.
"Uncovered Stock" means any Additional Purchaser's
total holdings of Common Stock that is not Covered Stock.
ARTICLE II
TRADING RESTRICTIONS
2.1 Public Sales. Each Party (other than an
Additional Purchaser with respect to its Uncovered Stock) shall
be subject to the following trading restrictions from time to
time concerning its respective holdings of Common Stock:
(a) During the term of this Agreement, no Party
may sell any of its Common Stock into the public market before
the completion of a Qualified Primary Offering; provided,
however, that if a Qualified Primary Offering is not completed
within eighteen (18) months after the Effective Date, each Party
may sell its Common Stock into the public market, severally and
not jointly, subject to the following conditions:
(i) the Closing Price must exceed $4.00 per
share (as adjusted for stock splits,
stock combinations and the like) for
each of the twenty (20) consecutive
trading days immediately prior to the
date of sale;
(ii) the Average Daily Trading Volume
immediately prior to the date of sale
must exceed 150,000 shares;
(iii) the number of shares of Common
Stock sold by such Party on any trading
day may not exceed five percent of the
Average Daily Trading Volume;
(iv) the number of shares of Common Stock
sold by such Party into the public
market in any three-month period may
not exceed fifteen percent of such
Party's total holdings of Common Stock
(calculated assuming the exercise of
all rights, options and warrants to
purchase Common Stock or securities
convertible or exchangeable for shares
of Common Stock, and the conversion or
exchange of all securities convertible
or exchangeable for Common Stock) on
the Effective Date (as adjusted for
stock splits, stock combinations and
the like); and
(v) Block Sales must be executed at a
minimum price per share of 90% of the
ask price as reported on the American
Stock Exchange (or, if not traded on
the American Stock Exchange, any
national securities exchange or
automated quotation services on which
the Common Stock is then listed for
trading).
(b) If the Company completes a Qualified Primary
Offering during the term of this Agreement, each Party shall
comply with its obligations under any "lock-up" agreement
entered into by such Party in connection with such Qualified
Primary Offering. After any such "lock-up" period expires or is
terminated, each Party may sell its Common Stock into the public
market, severally and not jointly, subject to the following
conditions:
(i) the number of shares of Common Stock
sold by such Party on any trading day
may not exceed five percent of the
Average Daily Trading Volume;
(ii) the number of shares of Common Stock
sold by such Party into the public
market in any three-month period may
not exceed twenty percent of such
Party's holdings of Common Stock
(calculated assuming the exercise of
all rights, options and warrants to
purchase Common Stock or securities
convertible or exchangeable for shares
of Common Stock, and the conversion or
exchange of all securities convertible
or exchangeable for Common Stock) on
the Effective Date (as adjusted for
stock splits, stock combinations and
the like); and
(iii) Block Sales must be executed at a
minimum price per share of 90% of the
ask price as reported on the American
Stock Exchange (or, if not traded on
the American Stock Exchange, any
national securities exchange or
automated quotation services on which
the Common Stock is then listed for
trading).
2.2 Private Sales. If a Party (the "Selling Party")
intends to sell any of its shares of Company capital stock (or
securities exercisable or exchangeable for or convertible into
shares of Company capital stock) in a private transaction (other
than to an Affiliate), the Selling Party shall send written
notice (the "Sale Notice") of such intent to each other Party.
The Sale Notice shall include the following information: (a)
the type of Company capital stock or other securities the
Selling Party intends to sell; (b) the number of shares or other
securities the Selling Party intends to sell; (c) the proposed
sale price per share or per security, as applicable, and (d) any
other material terms of the offer. The other Parties shall
have two (2) business days after receipt of the Sale Notice (the
"Election Period") to elect to purchase the capital stock or
other securities that are the subject of the Sale Notice by
giving the Selling Party written notice thereof within the
Election Period, in which case the Selling Party and the Party
(or Parties) so electing to purchase shall complete such sale
within five (5) business days on the terms set forth in the Sale
Notice. If more than one Party elects to purchase the capital
stock or other securities set forth in the Sale Notice, then
such shares or securities shall be allocated among the Parties
so electing to purchase pro rata in proportion to their
respective holdings of Company Common Stock (calculated assuming
the exercise of all rights, options and warrants to purchase
Common Stock or securities convertible or exchangeable for
shares of Common Stock, and the conversion or exchange of all
securities convertible or exchangeable for Common Stock held by
such Parties so electing to purchase). If none of the Parties
provides written notice so electing to purchase within the
Election Period, then the Selling Party may sell the capital
stock or other securities that are the subject of the Sale
Notice on terms no less favorable to the Sellng Party than those
set forth in the Sale Notice to any third party within 10
business days of the date of the Sale Notice; provided, however,
that any sale of shares of Company capital stock (or securities
exercisable or exchangeble for or convertible into shares of
Company capital stock) to a party that is not a party to this
Agreement shall have as a condition to such sale that such party
shall become a Party to this Agreement. For purposes of
Sections 2.1(a)(iv) and 2.1(b)(ii), the purchasing party's
holdings (if such party was not a party to the Securities
Purchase Agreement) with respect to the shares of capital stock
or other securities it purchases shall be the number of shares
of Common Stock (calculated assuming the exercise of all rights,
options and warrants to purchase Common Stock or securities
convertible or exchangeable for shares of Common Stock, and the
conversion or exchange of all securities convertible or
exchangeable for Common Stock) purchased in the subject sale.
2.3 Transfer to Affiliates. Notwithstanding anything
in this Agreement to the contrary, any party may freely sell or
otherwise transfer any capital stock of the Company (or
securities exercisable or exchangeable for or convertible into
shares of Company capital stock) it owns to its Affiliates
without such sale or transfer being subject to the terms of this
Agreement; provided, however, that any such Affiliate shall
become a Party to this Agreement and its ownership and sales of
shares of Common Stock or other securities shall be aggregated
with the transferring Party for purposes of Section 2.1.
2.4 Term of Trading Agreement. The term of the
Trading Agreement shall commence on the Effective Date and
terminate three years from the Effective Date; provided,
however, that if a Qualified Primary Offering is completed
within three years from the Effective Date, the term of this
Agreement shall terminate at 5:00 p.m., New York time, on the
eighteen (18) month anniversary of the initial closing date of
such Qualified Primary Offering.
2.5 Amendments to the Trading Agreement.
(a) The Parties may amend the Trading Agreement
only upon the prior written consent of at least three (3) out of
the following Purchasers (i) ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ Equity
Funding Inc. ("MSDW") and Originators Investment Plan, L.P.
("OIP") (MSDW and OIP shall be deemed to be a single Purchaser
with MSDW acting on behalf of both such entities); (ii)
Newcourt Capital USA Inc.; (iii) EP Power Finance, L.L.C.; and
(iv) Duke Capital Partners, LLC; provided, however, the Parties
shall not make any amendment regarding the Uncovered Stock or
that disproportionately affects the Covered Stock without the
approval of each Additional Purchaser.
(b) The Company may enter into the Additional
Purchase Agreement. Each Investor agrees that upon each
Additional Purchaser's acquisition of Series A Preferred Stock
and Series A Preferred Stock Warrants in compliance with Section
2.3 of the Securities Purchase Agreement and execution and
delivery of a signature page to the joinder agreement between
the Company and each such Additional Purchaser pursuant to which
such Additional Purchaser agrees to become a Party and to be
bound by the terms hereof, each such Additional Purchaser shall
become a Party to this Agreement for all intents and purposes
and shall then be an Investor hereunder. The Company shall then
revise Schedule I to reflect the addition of each such
Additional Purchaser. The addition of such new parties and
revision of Schedule I shall not constitute a modification,
waiver or amendment of this Agreement that requires the consent
of or any writing from any of the Parties hereto.
2.6 Uncovered Stock. During the term of this
Agreement, no Additional Purchaser may sell any shares of its
Uncovered Stock into the public market before the completion of
a Qualified Primary Offering; provided, however, that if a
Qualified Primary Offering is not completed within twelve (12)
months after the Effective Date, each Additional Purchaser may
sell its shares of Uncovered Stock into the public market
without any restrictions under this Agreement.
2.7 Purchases by Management in the Public Market.
Notwithstanding anything in this Article II to the contrary, all
shares of Common Stock purchased by members of management that
are signatories hereto in the public market from other than the
Company or its underwriters shall not be subject to this Article
II.
ARTICLE III
CONDITIONS TO EFFECTIVENESS OF AGREEMENT
3.1 Additional Conditions. This Agreement shall not
become effective until each of ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇▇ (each an
"Existing Stockholder") shall amend his existing trade agreement
(in a form reasonably satisfactory to each of the Purchasers) to
include the following trading restrictions with respect to sales
of his (and his Affiliates') Common Stock in the public market:
(a) the number of shares of Common Stock sold by
such Existing Stockholder (including his Affiliates) on any
trading day may not exceed five percent of the Average Daily
Trading Volume; and
(b) the number of shares of Common Stock sold by
each Existing Stockholder (including his Affiliates) in any
three-month period shall not exceed fifteen percent of such
Existing Stockholder's (including his Affiliates) total holdings
of Common Stock (calculated assuming the exercise of all rights,
options and warrants to purchase Common Stock or securities
convertible or exchangeable for shares of Common Stock, and the
conversion or exchange of all securities convertible or
exchangeable for Common Stock) on the Effective Date (as
adjusted for stock splits, stock combinations and the like).
In addition, each Existing Stockholder shall amend his
trading agreement to state that if requested by the Company and
the managing underwriter, such Existing Stockholder shall agree
not to sell, make any short sale of, loan, grant any option for
the purchase of, or otherwise dispose of any securities of the
Company (other than those included in the registration) without
the prior written consent of such underwriter, for such period
of time (not to exceed 180 days) from the effective date of a
registration statement filed under the Securities Act of 1933,
as amended, as may be requested by such underwriter and to
execute an agreement reflecting the foregoing as may be
requested by such underwriter in connection with a Qualified
Primary Offering.
ARTICLE IV
GENERAL PROVISIONS
4.1 Legend on Share Certificates.
(a) All Company securities issued at the Closing
(as defined in the Securities Purchase Agreement) that are
subject to the terms and provisions of Article II, in addition
to such other legends as may be required by law and any other
legend required by any Transaction Document (as defined in the
Securities Purchase Agreement) shall bear the following legend:
THE SECURITIES REPRESENTED BY THIS
CERTIFICATE ARE ALSO SUBJECT TO CERTAIN
REQUIREMENTS AS TO TRADING CONTAINED IN THE
STOCK TRADING AGREEMENT, DATED JULY 31,
2001, BY AND AMONG THE COMPANY AND CERTAIN
SECURITY HOLDERS, A COPY OF WHICH IS ON FILE
WITH THE SECRETARY OF THE COMPANY.
(b) Upon the termination of this Agreement, each
Party shall be entitled to receive, in exchange for any security
bearing the legend regarding this Agreement specifically set
forth in Section 4.1(a), a security without such legend.
ARTICLE V
MISCELLANEOUS
5.1 Injunctive Relief. It is acknowledged that it is
impossible to measure in money the damages that would be
suffered if the Parties fail to comply with the obligations
imposed on them by this Agreement and that, in the event of any
such failure, an aggrieved Party would be irreparably damaged
and would not have an adequate remedy at law. Any such Party
shall, therefore, be entitled to injunctive relief and/or
specific performance to enforce such obligations, and if any
action should be brought in equity to enforce any of such
provisions of this Agreement, none of the Parties shall raise
the defense that there is an adequate remedy at law.
5.2 Governing Law. Except as to matters governed by
the General Corporation Law of the State of Delaware and
decisions thereunder of the Delaware courts applicable to
Delaware corporations, which shall be governed by such laws and
decisions, this Agreement shall be construed and enforced in
accordance with, and the rights of the parties shall be governed
by, the laws of the State of New York.
5.3 Entire Agreement; Waiver. This Agreement
contains the entire agreement among the parties hereto with
respect to the subject matter hereof. No waiver of any term or
provision shall be effective unless in writing signed by the
party to be charged.
5.4 Binding Effect. This Agreement shall be binding
on and inure to the benefit of the Parties and, subject to the
terms and provisions hereof, their respective legal
representatives, successors and assigns.
5.5 Invalidity of Provision. The invalidity or
unenforceability of any provision of this Agreement in any
jurisdiction shall not affect the validity or enforceability of
the remainder of this Agreement in that jurisdiction or the
validity or enforceability of this Agreement, including that
provision, in any other jurisdiction.
5.6 Counterparts. This Agreement may be executed in
two or more counterparts, all of which shall be deemed but one
and the same instrument and each of which shall be deemed an
original, and it shall not be necessary in making proof of this
Agreement to produce or account for more than one such
counterpart.
5.7 Notices. All notices, consents and other
communications under this Agreement shall be in writing and
shall be deemed to have been duly given when (a) delivered by
hand, (b) sent by telecopier (with receipt confirmed), provided
that a copy is mailed by certified or registered mail, return
receipt requested, or (c) when received by the addressee, if
sent by Express Mail, Federal Express or other express delivery
service (receipt requested), in each case to the appropriate
addresses and telecopier numbers set forth below (or to such
other addresses and telecopier numbers as a party may designate
as to itself by notice to the other parties):
(i) If to the Company:
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Fax No. ▇▇▇-▇▇▇-▇▇▇▇
Attention: General Counsel
(ii) If to another Party: at the address set
forth in the Securities Purchase Agreement or the Additional
Purchase Agreement or the signature page to this Agreement.
5.8 Headings. The descriptive headings of the
several paragraphs of this Agreement are inserted for
convenience only and do not constitute part of this Agreement.
[SIGNATURE PAGE TO FOLLOW]
IN WITNESS WHEREOF, the parties hereto have caused
this Agreement to be executed by their respective officers
thereunto duly authorized as of the day and year first above
written.
MANAGEMENT PURCHASERS
NEWCOURT CAPITAL USA, INC.,
a Delaware corporation
▇▇▇▇ ▇▇▇▇▇▇ By:
Name:
Title:
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ EP POWER FINANCE, L.L.C.,
a Delaware limited liability
company
By:
▇▇▇▇ ▇▇▇▇▇▇▇ Name:
Title:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇ (with respect to EQUITY FUNDING,
INC., a Delaware
50,000 shares of Common Stock) corporation
By:
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Title: Vice President
ORIGINATORS INVESTMENT PLAN,
PLACEMENT AGENT L.P., a Delaware limited
partnership
NEWCOURT CAPITAL SECURITIES By: MSDW OIP Investors,
Inc., its
INC., a Delaware corporation general
partner
By:
Name: By:
Title: Name: ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇
Title: Vice President
DUKE CAPITAL PARTNERS,
L.L.C.,
a Delaware limited liability
company
By:
Name:
Title:
11
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