Exhibit
10.5


 


FORM OF
COMMON STOCK WARRANT


 


THE SECURITIES REPRESENTED BY THIS
CERTIFICATE HAVE NOT BEEN REGISTERED, QUALIFIED, APPROVED OR DISAPPROVED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND
MAY NOT BE SOLD OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS OR
AN APPLICABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF SUCH ACT OR SUCH
LAWS AND NEITHER THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION NOR ANY
OTHER FEDERAL OR STATE REGULATORY AUTHORITY HAS PASSED ON OR ENDORSED THE
MERITS OF THESE SECURITIES.


 


THE SHARES OF COMMON STOCK ISSUABLE UPON THE
EXERCISE OF THE SECURITIES REPRESENTED HEREBY ARE SUBJECT TO AN INVESTOR RIGHTS
AGREEMENT AND A STOCK TRADING AGREEMENT, AS EACH OF THE SAME MAY BE AMENDED
FROM TIME TO TIME, COPIES OF WHICH ARE AVAILABLE FOR INSPECTION AT THE
PRINCIPAL OFFICES OF THE COMPANY.


 


WARRANT NO.
    


 


WARRANT CERTIFICATE


 


TO PURCHASE SHARES OF COMMON STOCK,


 


PAR VALUE $0.0001 PER SHARE


 


OF


 


ELECTRIC CITY CORP.


 


THIS IS TO CERTIFY THAT [Purchaser], a
                           
company, or its registered assigns (the “Holder”), is the owner of
                   
warrants (the “Warrants”), each of which entitles the registered Holder
thereof to purchase from Electric City Corp., a Delaware corporation (the “Company”),
one fully paid, duly authorized and nonassessable share of Common Stock, par
value $0.0001 per share (the “Common Stock”), of the Company at any time
or from time to time after sixty (60) days from the Issue Date (as defined in Section
2(a)), but on or before 5:00 p.m., New York City time, on the Warrant
Expiration Date, at an exercise price of $1.00 per share, subject to adjustment
from time to time as set forth herein (the “Exercise Price”), all on the
terms and subject to the conditions hereinafter set forth.


 


The number of shares of Common Stock issuable upon
exercise of each Warrant (the “Number Issuable”) shall be determined for
each Warrant by dividing $1.00 by the Exercise Price in effect at the time of
such exercise, and is initially one (1) share of Common Stock.  Capitalized terms used herein but not
otherwise defined shall have the meanings given them in Section 13
hereof or, if not therein defined, in the Securities Purchase Agreement.


 

















 


Section 1.                                            Exercise
Of Warrants.  Subject to the last
paragraph of this Section 1, the Warrants evidenced hereby may be
exercised, in whole or in part, by the registered Holder hereof at any time or
from time to time after sixty (60) days from the Issue Date, but on or before
5:00 p.m., New York City time, on the Warrant Expiration Date, upon delivery to
the Company at the principal executive office of the Company in the United
States of America, of


 


(a)                                  this
Warrant Certificate,


 


(b)                                 a
written notice stating that such Holder elects to exercise the Warrants
evidenced hereby in accordance with the provisions of this Section 1
and specifying the number of Warrants being exercised and the name or names in
which such Holder wishes the certificate or certificates for shares of Common
Stock to be issued, and


 


(c)                                  payment
of the Exercise Price for the shares of Common Stock issuable upon exercise of
such Warrants, which shall be payable by any one or any combination of the
following:


 


(i)                                     cash,


 


(ii)                                  certified
or official bank check payable to the order of the Company,


 


(iii)                               by
the surrender (which surrender shall be evidenced by cancellation of the
relevant number of Warrants represented by any Warrant certificate presented in
connection with a Cashless Exercise (as defined below)) of a Warrant or
Warrants (represented by one or more relevant Warrant certificates), and
without the payment of the Exercise Price in cash, in return for the delivery
to the surrendering Holder of such number of shares of Common Stock equal to
the number of shares of Common Stock for which such Warrant is exercised as of
the date of exercise (if the Exercise Price were being paid in cash) reduced by
that number of shares of Common Stock equal to the number of shares for which
such Warrant is exercised multiplied by a fraction, the numerator of which is
(A) the Exercise Price and the denominator of which is (B) the Market Price of
one share of Common Stock on the Business Day that immediately precedes the day
of exercise of the Warrant, or


 


(iv)                              by
the delivery of shares of Common Stock that are valued at the Market Price on
the Business Day immediately preceding the day of the exercise of the Warrant
that are either held by the Holder or are acquired in connection with such
exercise, and without payment of the Exercise Price in cash.


 


Any share of Common Stock delivered as payment of the Exercise Price in
connection with an In-Kind Exercise (as defined below) shall be deemed to have
a value equal to the Market Price of one share of Common Stock on the Business
Day that immediately precedes the day of exercise of the Warrant.  An exercise of a Warrant in accordance with
clause (iii) above is herein referred to as a “Cashless Exercise” and an
exercise of a Warrant in accordance with clause (iv) above is herein referred
to as an “In-Kind Exercise.”  The
documentation and consideration, if any, delivered in accordance with clauses
(a), (b) and (c) of this paragraph above are collectively referred to herein as
the “Warrant Exercise Documentation.” 
For the purposes of this Section 1, Market Price shall be
calculated without reference to the last sentence of the definition thereof.


 


2

















 


As promptly as practicable, and in any event within
two (2) Business Days after receipt of the Warrant Exercise Documentation, the
Company shall deliver or cause to be delivered certificates representing the
number of validly issued, fully paid and nonassessable shares of Common Stock
issuable in connection with such exercise, and if less than the full number of
Warrants evidenced hereby are being exercised, a new Warrant Certificate or
Certificates, of like tenor, for the number of Warrants evidenced by this Warrant
Certificate, less the number of Warrants then being exercised or surrendered; provided,
however, that no new Warrant Certificate need be delivered if the
Warrant Expiration Date has occurred. 
Such exercise shall be deemed to have been made at the close of business
on the date of delivery of the Warrant Exercise Documentation so that the
Person entitled to receive shares of Common Stock upon such exercise shall be
treated for all purposes as having become the record holder of such shares of
Common Stock at such time.


 


The Company shall pay all expenses in connection with,
and all taxes and other governmental charges (other than income taxes of the
Holder) that may be imposed in respect of the issue or delivery of any shares
of Common Stock issuable upon the exercise of the Warrants evidenced
hereby.  The Company shall not be
required, however, to pay any tax or other charge imposed in connection with
any transfer involved in the issue of any certificate for shares of Common
Stock in any name other than that of the registered Holder of the Warrants
evidenced hereby.


 


In connection with the exercise of any Warrants
evidenced hereby, at the Company’s option, no fractions of shares of Common
Stock shall be issued, but in lieu thereof the Company may elect to pay a cash
adjustment in respect of such fractional interest in an amount equal to any
such fractional interest multiplied by the current Market Price per share of
Common Stock on the Business Day that precedes the day of exercise.  If more than one such Warrant shall be
exercised by the Holder thereof at the same time, the number of full shares of
Common Stock issuable on such exercise shall be computed on the basis of the
total number of Warrants so exercised.


 


Notwithstanding
anything to the contrary contained herein:


 


(a)                                  the
number of shares of Common Stock that may be acquired by the Holder upon any
exercise of this Warrant (or otherwise in respect hereof) shall be limited to
the extent necessary to insure that, following such exercise (or other issuance),
the total number of shares of Common Stock then beneficially owned by such
Holder and its Affiliates and any other Persons whose beneficial ownership of
Common Stock would be aggregated with the Holder’s for purposes of Section
13(d) of the Exchange Act does not exceed 4.999% of the total number of issued
and outstanding shares of Common Stock (including for such purpose the shares
of Common Stock issuable upon such exercise). 
For such purposes, beneficial ownership shall be determined in accordance
with Section 13(d) of the Exchange Act and the rules and regulations
promulgated thereunder.  Each delivery
of an exercise notice hereunder will constitute a representation by the Holder
that it has evaluated the limitation set forth in this paragraph and determined
that issuance of the full number of shares of Common Stock requested in such
exercise notice is permitted under this paragraph.  By written notice to the Company, the Holder may waive the
provisions of this paragraph but (i) any such waiver will not be effective
until the 61st


 


3

















 


day after such notice is delivered to the Company, and
(ii) any such waiver will apply only to the Holder and not to any other holder
of Warrants.  This provision shall not
restrict the number of shares of Common Stock which a Holder may receive or
beneficially own in order to determine the amount of securities or other
consideration that such Holder may receive in the event of a merger or other
business combination or reclassification involving the Company as contemplated
in Section 2 of this Warrant.


 


(b)                                 the
number of shares of Common Stock that may be acquired by the Holder upon any
exercise of this Warrant (or otherwise in respect hereof) shall be limited to
the extent necessary to insure that, following such exercise (or other
issuance), the total number of shares of Common Stock then beneficially owned
by such Holder and its Affiliates and any other Persons whose beneficial
ownership of Common Stock would be aggregated with the Holder’s for purposes of
Section 13(d) of the Exchange Act does not exceed 9.999% of the total number of
issued and outstanding shares of Common Stock (including for such purpose the
shares of Common Stock issuable upon such exercise).  For such purposes, beneficial ownership shall be determined in
accordance with Section 13(d) of the Exchange Act and the rules and regulations
promulgated thereunder.  Each delivery
of an exercise notice hereunder will constitute a representation by the Holder
that it has evaluated the limitation set forth in this paragraph and determined
that issuance of the full number of shares of Common Stock requested in such
exercise notice is permitted under this paragraph.  This provision shall not restrict the number of shares of Common
Stock which a Holder may receive or beneficially own in order to determine the
amount of securities or other consideration that such Holder may receive in the
event of a merger or other business combination or reclassification involving the
Company as contemplated in Section 2 of this Warrant.


 


Section 2.                                            Adjustments.  The Exercise Price shall be subject to
adjustment from time to time as provided in this Section 2.


 


(a)                                  Adjustment
of Exercise Price Upon Issuance of Common Stock.  If after June 27, 2003 (the “Issue Date”) the Company
shall issue or sell any shares of its Common Stock (except upon exercise of the
Warrants and shares issued as a result of adjustments made under the terms of
the Warrants) for a price per share less than (including, without limitation,
those circumstances described in paragraphs (i) through (vii) below), the
Exercise Price in effect on the date immediately prior to the date of such
issue or sale, then, immediately upon such issue or sale, the Exercise Price
then in effect shall be reduced to such lower price per share.


 


(i)                                     Issuance
of Rights or Options.  In case at
any time after the Issue Date the Company shall in any manner grant (whether
directly or by assumption in a merger or otherwise), any rights to subscribe
for or to purchase, or any options or warrants for the purchase of, Common
Stock or any stock, notes or securities convertible into or exchangeable for
Common Stock (such convertible or exchangeable stock, notes or securities being
herein called “Convertible Securities”), whether or not such rights,
options or warrants or the right to convert or exchange any such Convertible
Securities are immediately exercisable, such grant shall be deemed a sale by
the Company of its Common Stock and the price per share for such deemed sale of
Common Stock shall be determined by dividing (A) the total amount, if any, in
cash or in property received or


 


4

















 


receivable by the Company as consideration for the
granting of such rights, options or warrants, plus the minimum aggregate amount
of additional consideration, if any, payable to the Company upon the exercise
of such rights, options or warrants, plus, in the case of such rights, options
or warrants that relate to Convertible Securities, the minimum aggregate amount
of additional consideration, if any, payable upon the issue or sale of such
Convertible Securities and upon the conversion or exchange thereof, by (B) the
total maximum number of shares of Common Stock issuable upon the exercise of
such rights, options or warrants or upon the conversion or exchange of all such
Convertible Securities issuable upon the exercise of such rights, options or
warrants.  Except as provided in Section 2(a)(iii),
no further adjustment of the Exercise Price shall be made upon the actual issue
of such Common Stock or of such Convertible Securities upon exercise of such
rights, options or warrants or upon the actual issue of such Common Stock upon
conversion or exchange of such Convertible Securities.


 


(ii)                                  Issuance
of Convertible Securities.  In case
at any time after the Issue Date the Company shall in any manner issue (whether
directly or by assumption in a merger or otherwise) or sell any Convertible
Securities, whether or not the rights to exchange or convert thereunder are
immediately exercisable, such issuance or sale of Convertible Securities shall
be deemed a sale by the Company of its Common Stock and the price per share for
such Common Stock shall be determined by dividing (A) the total amount received
or receivable in cash or in property by the Company as consideration for the
issue or sale of such Convertible Securities, plus the minimum aggregate amount
of additional consideration, if any, payable to the Company upon the conversion
or exchange thereof, by (B) the total maximum number of shares of Common Stock
issuable upon the conversion or exchange of all such Convertible Securities; provided,
however, that (I) except as otherwise provided in Section 2(a)(iii),
no further adjustment of the Exercise Price shall be made upon the actual issue
of such Common Stock upon conversion or exchange of such Convertible
Securities, and (II) if any such issue or sale of such Convertible Securities
is made upon exercise of any rights to subscribe for or to purchase or any
option to purchase any such Convertible Securities for which adjustments of the
Exercise Price have been or are to be made pursuant to other provisions of this
Section 2(a), no further adjustment of the Exercise Price shall be
made by reason of such issue or sale.


 


(iii)                               Change
in Option Price or Exercise Price. 
If the purchase price provided for in any right or option referred to in
Section 2(a)(i), the additional consideration, if any, payable upon
the conversion or exchange of any Convertible Securities referred to in Section 2(a)(i)
or 2(a)(ii), or the rate at which any Convertible Securities referred to
in Section 2(a)(i) or 2(a)(ii) are convertible into or
exchangeable for Common Stock shall change (other than under or by reason of
provisions designed to protect against dilution), the Exercise Price then in
effect hereunder shall forthwith be readjusted (increased or decreased, as the
case may be) to the Exercise Price that would have been in effect at such time
had such rights, options or Convertible Securities still outstanding provided
for such changed purchase price, additional consideration or conversion rate,
as the case may be, at the time initially granted, issued or sold.  No readjustment pursuant to the preceding
sentence shall have the effect of increasing the Exercise Price by an amount in
excess of the amount of the adjustment thereof originally made in respect of
the issue,


 


5

















 


sale, grant or assumption of rights, options or
Convertible Securities.  On the
expiration of any such option or right referred to in Section 2(a)(i)
or the termination of any such right to convert or exchange any such
Convertible Securities referred to in Section 2(a)(i) or 2(a)(ii),
the Exercise Price then in effect hereunder shall forthwith be readjusted
(increased or decreased, as the case may be) to the Exercise Price that would
have been in effect at the time of such expiration or termination had such
right, option or Convertible Securities, to the extent outstanding immediately
prior to such expiration or termination, never been granted, issued or
sold.  If the purchase price provided
for in any such right or option referred to in Section 2(a)(i) or
the rate at which any Convertible Securities referred to in Section 2(a)(ii)
are convertible into or exchangeable for Common Stock shall be reduced at any
time under or by reason of provisions with respect thereto designed to protect
against dilution, then in case of the delivery of shares of Common Stock upon
the exercise of any such right or option or upon conversion or exchange of any
such Convertible Securities, the Exercise Price then in effect hereunder shall,
if not already adjusted, forthwith be adjusted to such amount as would have obtained
had such right, option or Convertible Securities never been issued as to such
shares of Common Stock and had adjustments been made upon the issuance of the
shares of Common Stock delivered as aforesaid, but only if as a result of such
adjustment the Exercise Price then in effect hereunder is thereby reduced.


 


(iv)                              Consideration
for Stock.  Anything herein to the
contrary notwithstanding, in case at any time any shares of Common Stock or
Convertible Securities or any rights, options or warrants to purchase any such
Common Stock or Convertible Securities shall be issued or sold for cash, the
consideration received therefor shall be deemed to be the amount received by
the Company therefor, without deduction therefrom of any expenses incurred or
any underwriting commissions or concessions paid or allowed by the Company in
connection therewith.  In case at any
time any shares of Common Stock or Convertible Securities or any rights or
options to purchase any such shares of Common Stock or Convertible Securities
shall be issued or sold for a consideration other than cash, in whole or in
part, the amount of the consideration other than cash received by the Company
shall be deemed to be the fair value of such consideration as determined
reasonably and in good faith by the Board of Directors of the Company, without
deduction of any expenses incurred or any underwriting commissions or
concessions paid or allowed by the Company in connection therewith.  In case at any time any shares of Common
Stock or Convertible Securities or any rights or options to purchase such
shares of Common Stock or Convertible Securities shall be issued in connection
with any merger or consolidation in which the Company is the surviving company,
the amount of consideration received therefor shall be deemed to be the fair
value as determined reasonably and in good faith by the Board of Directors of
the Company of such portion of the assets and business of the nonsurviving
corporation as the Board may determine to be attributable to such shares of
Common Stock, Convertible Securities, rights or options, as the case may
be.  In case at any time any rights or
options to purchase any shares of Common Stock or Convertible Securities shall
be issued in connection with the issue and sale of other securities of the
Company, together comprising one integral transaction in which no consideration
is allocated to such rights or options by the parties thereto, such rights or
options shall be deemed to have been issued for an amount of consideration


 


6

















 


equal to the fair value thereof as determined
reasonably and in good faith by the Board of Directors of the Company.


 


(v)                                 Record
Date.  In case the Company shall
take a record of the holders of its Common Stock for the purpose of entitling
them to subscribe for or purchase shares of Common Stock or Convertible
Securities, then such record date shall be deemed to be the date of the issue
or sale of the shares of Common Stock deemed to have been issued or sold as a result
of the granting of such right of subscription or purchase.


 


(vi)                              Adjustment
to Determination of Exercise Price. 
When making the calculations and determinations described in this Section 2(a),
there shall not be taken into account (A) the issuance of Common Stock upon the
exercise of options or warrants outstanding on the Issue Date, (B) the issuance
of Common Stock upon the conversion of the Series A Preferred Stock of the
Company, (C) the issuance of Common Stock upon the conversion of the Series C Preferred
Stock of the Company (D) the issuance of Common Stock upon exercise of the
Warrants evidenced by this Warrant Certificate or any other warrants to
purchase Common Stock issued pursuant to the Securities Purchase Agreement, (E)
the issuance of shares of Series A Preferred Stock in payment of dividends upon
shares of Series A Preferred Stock, (F) the issuance of shares of Series C
Preferred Stock in payment of dividends upon shares of Series C Preferred
Stock, (G) the issuance of shares of Series D Preferred Stock in payment of
dividends upon shares of Series D Preferred Stock, and (H) the issuance of
22,562 shares of Common Stock pursuant to the Securities Purchase Agreement.


 


(vii)                           Good
Faith.  If any event occurs as to
which in the reasonable opinion of the Board of Directors of the Company, in
good faith, the other provisions of this Section 2 are not strictly
applicable but the lack of any adjustment in the Exercise Price or the Number
Issuable or both would not in the opinion of the Board of Directors of the
Company fairly protect the exercise rights of the Holder, in accordance with
the basic intent and principles of such provisions, then the Board of Directors
of the Company shall appoint a firm of independent certified public accountants
(which may be the regular auditors of the Company) of recognized national
standing, which shall give their opinion upon the adjustment, if any, to the
Exercise Price or Number Issuable or both, as the case may be, on a basis
consistent with the basic intent and principles of this Section 2,
necessary to preserve, without dilution, the exercise rights of all the
registered Holders of the Warrants in accordance with this Warrant Certificate.


 


(viii)                        Notice
of Change in Exercise Price.  The
Company promptly shall deliver to each registered Holder of Warrants at least
five (5) Business Days prior to effecting any transaction that would result in
an increase or decrease in the Exercise Price pursuant to this Section 2,
a statement, signed by its independent certified public accountants, setting
forth in reasonable detail the event requiring the adjustment and the method by
which such adjustment was calculated and specifying the increased or decreased
Exercise Price then in effect following such adjustment.


 


(b)                                 Subdivision;
Combination of Stock or Stock Dividends. 
In case the Company shall at any time subdivide its outstanding shares
of Common Stock into a greater


 


7

















 


number of shares, by split or otherwise, or issue additional shares of
Common Stock as a dividend (other than a dividend in respect of the Series A
Preferred Stock, the Series C Preferred Stockand/or the Series D Preferred
Stock in accordance with Section 3 of each of the Preferred Stock
Certificates of Designations (as defined in the Securities Purchase
Agreement)), or make any other distribution upon any class or series of stock
payable in shares of Common Stock or Convertible Securities, the Exercise Price
in effect immediately prior to such subdivision shall be proportionately
reduced and, conversely, in case the outstanding shares of Common Stock of the
Company shall be combined into a smaller number of shares, the Exercise Price
in effect immediately prior to such combination shall be proportionately increased.


 


(c)                                  Reorganization;
Reclassification; Consolidation; Merger or Sale of Assets.  In case of (i) any capital reorganization or
reclassification or other change of outstanding shares of Common Stock (other
than a change in par value, or from par value to no par value, or from no par
value to par value, or as a result of a subdivision or combination), (ii) any
consolidation or merger of the Company with or into another Person (other than
a consolidation or merger in which the Company is the resulting or surviving
Person and that does not result in any reclassification or change of
outstanding Common Stock) or (iii) transfer or sale of all or substantially all
of the Company’s Assets to another person (any of the foregoing, a
“Transaction”), the Company, or such successor or purchasing Person, as the
case may be, shall execute and deliver to each Holder of the Warrants evidenced
hereby, at least five (5) Business Days prior to effecting any of the foregoing
Transactions, a certificate that the Holder of each such Warrant then
outstanding shall have the right thereafter to exercise such Warrant into the
kind and highest amount of shares of stock or other securities (of the Company
or another issuer) or property or cash receivable upon such Transaction by a holder
of the number of shares of Common Stock into which such Warrant could have been
exercised immediately prior to such Transaction.  Such certificate shall provide for adjustments that shall be as
nearly equivalent as may be practicable to the adjustments provided for in this
Section 2 and shall contain other terms identical to the terms
hereof.   If, in the case of any such
Transaction, the stock, other securities, cash or property receivable thereupon
by a holder of Common Stock includes shares of stock or other securities of a
Person other than the successor or purchasing Persons and other than the
Company, who controls or is controlled by the successor or purchasing Person or
who, in connection with such Transaction, issues stock, securities, other property
or cash to holders of Common Stock, then such certificate also shall be
executed by such Person, and such Person shall, in such certificate,
specifically assume the obligations of such successor or purchasing Person and
acknowledge its obligations to issue such stock, securities, other property or
cash to Holders of the Warrants upon exercise thereof as provided above.  The provisions of this Section 2(c)
similarly shall apply to successive Transactions.


 


(d)                                 Adjustment
for Other Distributions.  If the
Company distributes to all holders of its Common Stock any of its assets
(including but not limited to cash), debt securities, preferred stock, or any
rights or warrants to purchase debt securities, preferred stock, assets or
other securities of the Company, the Exercise Price shall be adjusted in
accordance with the following formula:


 


	
  E’

  	
  =

  	
  E

  	
  x

  	
  M    -    F

  
	
   

  	
   

  	
   

  	
   

  	
  M

  



 


8

















 


where:


 


E’                                     =                                         the
adjusted Exercise Price.


 


E                                         =                                         the
current Exercise Price.


 


M                                    =                                         the
Market Price of one share of Common Stock on the record date mentioned below.


 


F                                         =                                         the
fair market value (determined in good faith by the Board of Directors of the
Company) on the record date of the assets, securities, rights or warrants
applicable to one share of Common Stock.


 


The adjustment shall be made successively whenever any
such distribution is made and shall become effective immediately after the
record date for the determination of stockholders entitled to receive the
distribution.  This Section 2(d)
does not apply to any dividend or distribution that results in an adjustment to
the Exercise Price pursuant to Section 2(a) or Section 2(b)
above.


 


Section 3.                                            Notice
of Certain Events.  In case at any
time or from time to time the Company shall declare any dividend or any other
distribution to the holders of its Common Stock, or shall authorize the
granting to the holders of its Common Stock of rights or warrants to subscribe
for or purchase any additional shares of stock of any class or any other right,
or shall authorize the issuance or sale of any other shares or rights that
would result in an adjustment to the Exercise Price pursuant to
Section 2(a) or Section 2(d), or there shall be any capital
reorganization or reclassification of the Common Stock or consolidation or
merger of the Company with or into another Person, or any sale or other
disposition of all or substantially all the assets of the Company, or there
shall be a voluntary or involuntary dissolution, liquidation or winding up of
the Company, then, in any one or more of such cases the Company shall mail to
each Holder of the Warrants evidenced hereby at such Holder’s address as it
appears on the transfer books of the Company, as promptly as practicable but in
any event at least ten (10) Business Days prior to the applicable date
hereinafter specified, a notice stating (a) the date on which a record is to be
taken for the purpose of such dividend, distribution, rights or warrants or, if
a record is not to be taken, the date as of which the holders of Common Stock
of record to be entitled to such dividend, distribution, rights or warrants are
to be determined, (b) the issue date of such dividend, distribution, rights or
warrants or (c) the date on which such reorganization, reclassification, consolidation,
merger, sale, disposition, dissolution, liquidation or winding up is expected
to become effective.  Such notice also
shall specify the date as of which it is expected that the holders of Common
Stock of record shall be entitled to exchange their Common Stock for shares of
stock or other securities or property or cash deliverable upon such
reorganization, reclassification, consolidation, merger, sale, disposition,
dissolution, liquidation or winding up.


 


Section 4.                                            Certain
Covenants.  The Company will at all
times reserve and keep available, free from preemptive rights, out of the
aggregate of its authorized but unissued Common Stock or its authorized and
issued Common Stock held as treasury stock, for the purpose of enabling it to
satisfy any obligation to issue Common Stock upon exercise of the Warrants, the
maximum number of shares of Common Stock that may then be deliverable upon


 


9

















 


the exercise of all outstanding Warrants.  The Company shall take all action required to increase the
authorized number of shares of Common Stock if at any time there shall be
insufficient authorized but unissued shares of Common Stock to permit such
reservation or to permit the exercise of all outstanding Warrants.


 


The Company or, if appointed, the transfer agent for
the Common Stock (the “Transfer Agent”) and every subsequent transfer
agent for any shares of the Company’s capital stock issuable upon the exercise
of any of the rights of purchase aforesaid will be irrevocably authorized and
directed at all times to reserve such number of authorized shares as shall be
required for such purpose.  The Company
will keep a copy of this Warrant Certificate on file with the Transfer Agent
and with every subsequent transfer agent for any shares of the Company’s
capital stock issuable upon the exercise of the rights of purchase represented
by the Warrants.  The Company will
furnish such Transfer Agent a copy of all notices of adjustments and
certificates related thereto transmitted to each Holder pursuant to Section 2(a)(viii)
hereof.


 


Before taking any action that would cause an
adjustment pursuant to Section 2 hereof to reduce the Exercise
Price below the then par value (if any) of the Common Stock, the Company will
take any corporate action that may, in the opinion of its counsel (which may be
counsel employed by the Company), be necessary in order that the Company may
validly and legally issue fully paid and nonassessable Common Stock at the
Exercise Price as so adjusted.


 


The Company covenants that all Common Stock that may
be issued upon exercise of the Warrants will, upon issue, be validly issued,
fully paid, nonassessable, free of preemptive rights and free from all taxes,
liens, charges and security interests with respect to the issue thereof.


 


Section 5.                                            Registered
Holder.  The person in whose name
this Warrant Certificate is registered shall be deemed the owner hereof and of
the Warrants evidenced hereby for all purposes.


 


Section 6.                                            Transfer
of Warrants.  Any transfer of the
rights represented by this Warrant Certificate shall be effected by the
surrender of this Warrant Certificate, along with the form of assignment
attached hereto, properly completed and executed by the registered Holder
hereof, at the principal executive office of the Company in the United States
of America.  Thereupon, the Company
shall issue in the name or names specified by the registered Holder hereof and,
in the event of a partial transfer, in the name of the registered Holder
hereof, a new Warrant Certificate or Certificates evidencing the right to
purchase such number of shares of Common Stock as shall be equal to the number
of shares of Common Stock then purchasable hereunder.


 


Section 7.                                            Restrictive
Legend.  Each certificate
representing the Common Stock issued upon exercise of this Warrant shall be
stamped or otherwise imprinted with a legend in the following form (in addition
to any legend required under applicable state securities laws):


 


THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE
NOT BEEN REGISTERED, QUALIFIED, APPROVED OR DISAPPROVED


 


10

















 


UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE
SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD OR OTHERWISE DISPOSED OF
EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT AND
APPLICABLE STATE SECURITIES LAWS OR AN APPLICABLE EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF SUCH ACT OR SUCH LAWS AND NEITHER THE UNITED
STATES SECURITIES AND EXCHANGE COMMISSION NOR ANY OTHER FEDERAL OR STATE
REGULATORY AUTHORITY HAS PASSED ON OR ENDORSED THE MERITS OF THESE SECURITIES.


 


THE SECURITIES REPRESENTED HEREBY ARE SUBJECT TO AN
INVESTOR RIGHTS AGREEMENT AND A STOCK TRADING AGREEMENT, AS EACH OF THE SAME
MAY BE AMENDED FROM TIME TO TIME, COPIES OF WHICH ARE AVAILABLE FOR INSPECTION
AT THE PRINCIPAL OFFICES OF THE COMPANY.


 


Said legends shall be removed by the Company, upon the request of the
holder thereof, at such time as the restrictions on the transfer of the
applicable security under applicable securities laws and the obligations
imposed on the holder thereof under the Investor Rights Agreement and the Stock
Trading Agreement, as applicable, shall have terminated.


 


Section 8.                                            Denominations.  The Company will, at its expense, promptly
upon surrender of this Warrant Certificate at the principal executive office of
the Company in the United States of America, execute and deliver to the
registered Holder hereof a new Warrant Certificate or Certificates in
denominations specified by such Holder for an aggregate number of Warrants
equal to the number of Warrants evidenced by this Warrant Certificate.


 


Section 9.                                            Replacement
of Warrants.  Upon receipt of
evidence satisfactory to the Company of the loss, theft, destruction or
mutilation of this Warrant Certificate and, in the case of loss, theft or
destruction, upon delivery of an indemnity reasonably satisfactory to the
Company (in the case of an insurance company or other institutional investor,
its own unsecured indemnity agreement shall be deemed to be reasonably
satisfactory), or, in the case of mutilation, upon surrender and cancellation
thereof, the Company will issue a new Warrant Certificate of like tenor for a
number of Warrants equal to the number of Warrants evidenced by this Warrant
Certificate.


 


Section 10.                                      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 Warrant Certificate 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 applicable to agreements made
and to be performed entirely within such State.


 


Section 11.                                      Rights
Inure to Registered Holder.  The
Warrants evidenced by this Warrant Certificate will inure to the benefit of and
be binding upon the registered Holder thereof and the Company and their
respective successors and permitted assigns. 
Nothing in this Warrant Certificate shall be construed to give to any
Person other than the Company and the


 


11

















 


registered Holder and their respective successors and permitted assigns
any legal or equitable right, remedy or claim under this Warrant Certificate,
and this Warrant Certificate shall be for the sole and exclusive benefit of the
Company and such registered Holder. 
Nothing in this Warrant Certificate shall be construed to give the
registered Holder hereof any rights as a Holder of shares of Common Stock until
such time, if any, as the Warrants evidenced by this Warrant Certificate are
exercised in accordance with the provisions hereof.


 


Section 12.                                      Notice.  All notices, demands and other
communications provided for or permitted hereunder shall be made in writing and
shall be given by registered or certified first-class mail, return receipt
requested, nationally recognized overnight delivery service or personal
delivery, (a) if to the Holder of a Warrant, at such Holder’s last known
address appearing on the books of the Company; and (b) if to the Company, at
its principal executive office in the United States located at the address
designated for notices in the Securities Purchase Agreement, or such other
address as shall have been furnished to the party given or making such notice,
demand or other communication.  All such
notices and communications shall be deemed to have been duly given: when
delivered by hand, if personally delivered; when delivered if delivered by a
nationally recognized overnight delivery service; and five (5) Business Days
after being deposited in the mail, as aforesaid, postage prepaid, if mailed.


 


Section 13.                                      Definitions.  For the purposes of this Warrant
Certificate, the following terms shall have the meanings indicated below:


 


“Business Day” means any day other than a
Saturday, Sunday or other day on which commercial banks in the City of New York
are authorized or required by law or executive order to close.


 


“Cashless Exercise” shall have the meaning set
forth in Section 1 hereof.


 


“Company” shall have the meaning set forth in
the preamble hereof.


 


“Common Stock” shall have the meaning set forth
in the preamble hereof.


 


“Convertible Securities” shall have the meaning
set forth in Section 2(a)(i) hereof.


 


“Exercise Price” shall have the meaning set
forth in the preamble hereof.


 


“Holder” shall have the meaning set forth in
the preamble.


 


“In-Kind Exercise” shall have the meaning set
forth in Section 1 hereof.


 


“Issue Date” shall have the meaning set forth
in Section 2(a) hereof.


 


“Market Price” means the last reported sale
price of the applicable security as reported by the American Stock Exchange or
the National Association of Securities Dealers, Inc. Automatic Quotations
System or, if the applicable security is listed or admitted for trading on
another securities exchange, the last reported sales price of the applicable
security on the principal exchange on which the applicable security is listed
or admitted for trading (which shall be for consolidated trading if applicable
to such exchange), or if neither so reported or listed or


 


12

















 


admitted for trading, the last reported bid price of the applicable
security in the over-the-counter market. 
In the event that the Market Price cannot be determined as aforesaid,
the Board of Directors of the Company shall determine the Market Price on the
basis of such quotations as it in good faith considers appropriate, in
consultation with a nationally recognized investment bank.  The Market Price shall be such price
averaged over a period of ten (10) consecutive Business Days ending two (2)
days prior to the day as of which “Market Price” is being determined.


 


“Number Issuable” shall have the meaning set
forth in the preamble.


 


“Person” means any individual, corporation,
limited liability company, partnership, trust, incorporated or unincorporated
association, joint venture, joint stock company, government (or an agency or
political subdivision thereof) or other entity of any kind.


 


“Securities Purchase Agreement” means that
certain Securities Purchase Agreement, dated as of June 27, 2003, among the
Company, the Holder and the other parties signatory thereto, as the same may be
amended, modified or otherwise supplemented from time to time in accordance
with its terms.


 


“Transaction” shall have the meaning set forth
in Section 2(c) hereof.


 


“Transfer Agent” shall have the meaning set
forth in Section 4 hereof.


 


“Warrants” shall have the meaning set forth in
the preamble hereof.


 


“Warrant Exercise Documentation” shall have the
meaning set forth in Section 1 hereof.


 


“Warrant Expiration Date” means June 27, 2007.


 


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


 


13

















 


IN WITNESS WHEREOF, the Company has caused
this Warrant Certificate to be duly executed as of the Issue Date.


 


 


	
   

  	
  COMPANY

  
	
   

  	
   

  
	
   

  	
  ELECTRIC CITY CORP.,

  a Delaware corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ John P. Mitola

  	
   

  
	
   

  	
  Name:

  	
  John P. Mitola

  
	
   

  	
  Title:

  	
  Chief Executive Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
  ATTEST:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  /s/ Jeffrey
  Mistarz

  	
   

  	
   

  
						



 


14

















 


Form of Assignment Form


 


[To be executed upon
assignment of Warrants]


 


The undersigned hereby assigns and transfers unto
                                          ,
whose Social Security Number or Tax ID Number is
                                          
and whose record address is                                                          
the rights represented by the attached Warrant Certificate with respect to
        Warrants to which the attached
Warrant Certificate relates, and irrevocably appoints
                          
as agent to transfer this security on the books of the Company.  Such agent may substitute another to act for
such agent.


 


	
   

  	
  Signature:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  (Signature must conform in all respects to name of
  holder as specified on the face of the Warrant Certificate)

  
	
   

  	
   

  
	
   

  	
  Signature Guarantee:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Date:

  	
   

  	
   

  	
   

  
				



 

















 


(SUBSCRIPTION FORM TO BE
EXECUTED UPON EXERCISE OF

SOME OR ALL OF THE WARRANTS)


 


The undersigned, registered Holder, successor or
assignee of such registered Holder of the within Warrant Certificate, hereby:


 


(a) subscribes for
        shares of Common Stock which the
undersigned is entitled to purchase under the terms of the within Warrant
Certificate, (b) makes the full cash payment therefor called for by the
within Warrant Certificate or elects a Cashless Exercise or In-Kind Exercise as
provided therein, and (c) directs that the Common Stock issuable upon exercise
of said Warrants be issued as described hereunder.


 


 


	
   

  	
   

  
	
   

  	
  (Name)

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  (Address)

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  SIGNATURE

  
	
   

  	
   

  
	
  Dated: