Exhibit 4.23
STOCK TRADING AGREEMENT
This Stock Trading Agreement, dated as of June 4, 2002 (as may be amended
from time to time, this "AGREEMENT"), is made by Electric City Corp., a Delaware
corporation, and Xxxxxxx X. Xxxxxxx, an individual ("Xxxxxxx").
W I T N E S S E T H:
WHEREAS, Xxxxxxx and the Company are parties to that certain Securities
Purchase Agreement, dated as of May 31, 2002 (as it may be amended from time to
time, the "SERIES C SECURITIES PURCHASE AGREEMENT"), whereby the Company has
agreed to sell and Xxxxxxx has agreed to purchase shares of the Company's Series
C Preferred Stock (as herein defined) together with shares of the Company's
Common Stock (as defined herein) and warrants to purchase additional shares of
Series C Preferred Stock and warrants to purchase additional shares of Common
Stock; and
WHEREAS, it is a condition precedent to the obligation of the Company to
issue and sell, and the obligation of Xxxxxxx to purchase, such shares of Series
C Preferred Stock and Common Stock and such warrants that the Parties hereto
enter into this 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. 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:
"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
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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 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.
"ELECTION PERIOD" shall have the meaning set forth in SECTION 2.2
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.
"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.
"SERIES C PREFERRED STOCK" means shares of the Company's Series C
Convertible Preferred Stock, $0.01 per share.
"SERIES C SECURITIES PURCHASE AGREEMENT" means that certain
Securities Purchase Agreement dated as of May 31, 2002 between Xxxxxxx X.
Xxxxxxx and the Company, as it may be amended from time to time.
"SPECIFIED INVESTORS" means and includes Newcourt Capital USA Inc., a
Delaware corporation, EP Power Finance, L.L.C., a Delaware limited
liability company, Xxxxxx Xxxxxxx Xxxx Xxxxxx Equity Funding, Inc., a
Delaware corporation, Originators Investment Plan, L.P, a Delaware limited
partnership, Duke Capital Partners, LLC, a Delaware limited liability
company, Newcourt Capital Securities, Inc., a Delaware corporation, Leaf
Mountain Company, LLC, an Illinois limited liability company.
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ARTICLE II
TRADING RESTRICTIONS
2.1 AGREEMENT FOR BENEFIT OF COMPANY AND SPECIFIED INVESTORS. Xxxxxxx
hereby agrees that his obligations under this Agreement are for the benefit of
the Company and the Specified Investors and further agrees that the Company or
any of the Specified Investors shall be entitled to enforce Xxxxxxx'x
obligations under this Agreement.
2.2 PUBLIC SALES. Xxxxxxx shall be subject to the following trading
restrictions from time to time concerning his respective holdings of Common
Stock:
(a) During the term of this Agreement, Xxxxxxx may not sell any of his
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 prior to March 7, 2003, Xxxxxxx may sell his Common Stock into the
public market, 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 Xxxxxxx 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 Xxxxxxx into the public
market in any three-month period may not exceed fifteen percent of
Xxxxxxx'x 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) the date of this Agreement (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, Xxxxxxx shall comply with his obligations under any
"lock-up" agreement entered into by Xxxxxxx in connection with such Qualified
Primary Offering. After any such "lock-up" period expires or is terminated,
Xxxxxxx may sell his 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 Xxxxxxx on any trading
day may not exceed five percent of the Average Daily Trading Volume;
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(ii) the number of shares of Common Stock sold by Xxxxxxx into the public
market in any three-month period may not exceed twenty percent of
Xxxxxxx'x 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 date of this Agreement (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).
2.3 PRIVATE SALES. If Xxxxxxx intends to sell any of his 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), he shall send written notice (the "SALE NOTICE")
of such intent to each of the Specified Investors. The Sale Notice shall include
the following information:
(a) the type of Company capital stock or other securities Xxxxxxx
intends to sell;
(b) the number of shares or other securities Xxxxxxx intends to sell;
(c) the proposed sale price per share or per security, as applicable;
and
(d) any other material terms of the offer.
Each of the Specified Investors 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
Xxxxxxx written notice thereof within the Election Period, in which case the
Specified Investor(s) 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 Specified Investor 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 Specified Investors 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 Specified Investors so electing to purchase). If none of the
Specified Investors provides written notice so electing to purchase within the
Election Period, then Xxxxxxx may sell the capital stock or other securities
that are the subject of the Sale Notice on terms no less favorable to Xxxxxxx
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 or a similar agreement with the Company and/or the Specified
Investors shall have as a condition to such sale that such party shall become a
party to this Agreement or such a
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similar agreement. For purposes of SECTIONS 2.2(a)(iv) and 2.2(b)(ii), the
purchasing party's holdings 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.
2.4 TRANSFER TO AFFILIATES. Notwithstanding anything in this Agreement
to the contrary, Xxxxxxx 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) he owns to his 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 Xxxxxxx'x for purposes of SECTION 2.2.
2.5 TERM OF TRADING AGREEMENT. The term of this Agreement shall commence
on the Closing Date under the Series C Securities Purchase Agreement and
terminate September 7, 2004; PROVIDED, HOWEVER, that if a Qualified Primary
Offering is completed prior to September 7, 2004, 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.
2.6 AMENDMENTS TO THE TRADING AGREEMENT. The Parties may amend this
Agreement only upon the prior written consent of at least three (3) out of the
following Specified Investors (i) Xxxxxx Xxxxxxx Xxxx Xxxxxx 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.
ARTICLE III
GENERAL PROVISIONS
3.1 LEGEND ON SHARE CERTIFICATES.
(a) All Company securities issued at the Closing (as defined in the
Series C 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 agreement or document executed in
connection with the Closing under the Series C 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 JUNE 4, 2002, BY AND
AMONG THE COMPANY AND CERTAIN SECURITY HOLDERS, A COPY OF
WHICH IS ON FILE WITH THE SECRETARY OF THE COMPANY.
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(b) Upon the termination of this Agreement, Xxxxxxx shall be entitled to
receive, in exchange for any security bearing the legend regarding this
Agreement specifically set forth in SECTION 3.1(a), a security without such
legend.
ARTICLE IV
MISCELLANEOUS
4.1 INJUNCTIVE RELIEF. It is acknowledged that it is impossible to
measure in money the damages that would be suffered if Xxxxxxx fails to comply
with the obligations imposed on him by this Agreement and that, in the event of
any such failure, the Company and/or the Specified Investors would be
irreparably damaged and would not have an adequate remedy at law. The Company
and the Specified Investors, severally, shall, therefore, be entitled to
injunctive relief and/or specific performance to enforce such obligations of
Xxxxxxx, and if any action should be brought in equity to enforce any of such
provisions of this Agreement, Xxxxxxx shall not raise the defense that there is
an adequate remedy at law.
4.2 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 (and, to the extent they are
beneficiaries hereof, the Specified Investors) shall be governed by, the laws of
the State of New York.
4.3 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, and, if so required, the required Specified Investors
in accordance herewith.
4.4 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. This Agreement shall
also inure to the benefit of the Specified Investors.
4.5 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.
4.6 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.
4.7 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
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and telecopier numbers as a Party may designate as to itself by notice to the
other Party):
(i) If to the Company: 0000 Xxxxxxxxx Xxxx
Xxx Xxxxx Xxxxxxx, XX 00000-0000
Fax No. 000-000-0000
Attention: General Counsel
(ii) If to Xxxxxxx: at the address set forth in the Series C Securities
Purchase Agreement.
4.8 HEADINGS. The descriptive headings of the several paragraphs of this
Agreement are inserted for convenience only and do not constitute part of this
Agreement.
[Balance of page intentionally left blank; signature page follows.]
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IN WITNESS WHEREOF, the Parties hereto have executed this Stock Trading
Agreement as of the day and year first above written.
ELECTRIC CITY CORP.
By: /s/ Xxxx X. Xxxxxx
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Name: Xxxx X. Xxxxxx
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Title: CEO
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/s/ Xxxxxxx X. Xxxxxxx
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Xxxxxxx X. Xxxxxxx
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