exv4w1



 






Exhibit 4.1



THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS. THIS WARRANT
AND THE COMMON STOCK ISSUABLE UPON EXERCISE OF THIS WARRANT MAY NOT BE SOLD, OFFERED FOR SALE,
PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THIS WARRANT
UNDER SAID ACT AND ANY APPLICABLE STATE SECURITIES LAWS OR AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO ELECTRIC CITY CORP. THAT SUCH REGISTRATION IS NOT REQUIRED.




Right to Purchase 2,000,000 Shares of Common Stock of

Electric City Corporation (subject to adjustment as

provided herein)




FORM OF COMMON STOCK PURCHASE WARRANT




			
	No. ___
	 	Issue Date: November 22, 2005






          ELECTRIC CITY CORP., a corporation organized under the laws of the State of Delaware, hereby
certifies that, for value received, LAURUS MASTER FUND, LTD., or assigns (the “Holder”), is
entitled, subject to the terms set forth below, to purchase from the Company (as defined herein)
from and after the Issue Date of this Warrant and at any time or from time to time before 5:00
p.m., New York time, through the close of business (Chicago time) November 22, 2012 (the
"Expiration Date”), up to 2,000,000 fully paid and nonassessable shares of Common Stock (as
hereinafter defined), $.0001 par value per share, at the applicable Exercise Price per share (as
defined below). The number and character of such shares of Common Stock and the applicable
Exercise Price per share are subject to adjustment as provided herein.



          As used herein the following terms, unless the context otherwise requires, have the following
respective meanings:



          (a)     The term “Company” shall include Electric City Corp. and any corporation which shall
succeed, or assume the obligations of, Electric City Corp. hereunder.



          (b)     The term “Common Stock” includes (a) the Company’s Common Stock, par value $.0001 per
share, and (b) any other securities into which or for which any of the securities described in (a)
may be converted or exchanged pursuant to a plan of recapitalization, reorganization, merger, sale
of assets or otherwise.



 









 





          (c)     The term “Other Securities” refers to any stock (other than Common Stock) and other
securities of the Company or any other person (corporate or otherwise) which the holder of the
Warrant at any time shall be entitled to receive, or shall have received, on the exercise of the
Warrant, in lieu of or in addition to Common Stock, or which at any time shall be issuable or shall
have been issued in exchange for or in replacement of Common Stock or Other Securities pursuant to
Section 4 or otherwise.



          (d)     The “Exercise Price” applicable under this Warrant shall be as follows:




	 	a.	 	$1.16 per share for all shares of Common Stock acquired hereunder.





     1.      Exercise of Warrant.



          1.1.     Number of Shares Issuable upon Exercise. From and after the date hereof through
and including the Expiration Date, the Holder shall be entitled to receive, upon exercise of this
Warrant in whole or in part, by delivery of an original or fax copy of an exercise notice in the
form attached hereto as Exhibit A (the “Exercise Notice”), shares of Common Stock of the Company,
subject to adjustment pursuant to Section 4.



          1.2.     Fair Market Value. For purposes hereof, the “Fair Market Value” of a share of
Common Stock as of a particular date (the “Determination Date”) shall mean:



               (a)      If the Company’s Common Stock is traded on the American Stock Exchange or another
national exchange or is quoted on the National or SmallCap Market of The Nasdaq Stock Market,
Inc.(“Nasdaq”), then the closing or last sale price, respectively, reported for the last business
day immediately preceding the Determination Date.



               (b)      If the Company’s Common Stock is not traded on the American Stock Exchange or another
national exchange or on the Nasdaq but is traded on the NASD OTC Bulletin Board, then the mean of
the average of the closing bid and asked prices reported for the last business day immediately
preceding the Determination Date.



               (c)      Except as provided in clause (d) below, if the Company’s Common Stock is not publicly
traded, then as the Holder and the Company agree or in the absence of agreement as determined by
arbitration in accordance with the rules then in effect of the American Arbitration Association,
before a single arbitrator to be chosen from a panel of persons qualified by education and training
to pass on the matter to be decided.



               (d)      If the Determination Date is the date of a liquidation, dissolution or winding up, or any
event deemed to be a liquidation, dissolution or winding up pursuant to the Company’s charter, then
all amounts to be payable per share to holders of the Common Stock pursuant to the charter in the
event of such liquidation, dissolution or winding up, plus all other amounts to be payable per
share in respect of the Common Stock in liquidation under the charter,



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assuming for the purposes of this clause (d) that all of the shares of Common Stock then
issuable upon exercise of the Warrant are outstanding at the Determination Date.



          1.3.      Company Acknowledgment. The Company will, at the time of the exercise of the
Warrant, upon the request of the holder hereof acknowledge in writing its continuing obligation to
afford to such holder any rights to which such holder shall continue to be entitled after such
exercise in accordance with the provisions of this Warrant. If the holder shall fail to make any
such request, such failure shall not affect the continuing obligation of the Company to afford to
such holder any such rights.



          1.4.      Trustee for Warrant Holders. In the event that a bank or trust company shall have
been appointed as trustee for the holders of the Warrant pursuant to Subsection 3.2, such bank or
trust company shall have all the powers and duties of a warrant agent (as hereinafter described)
and shall accept, in its own name for the account of the Company or such successor person as may be
entitled thereto, all amounts otherwise payable to the Company or such successor, as the case may
be, on exercise of this Warrant pursuant to this Section 1.



     2.      Procedure for Exercise.



          2.1      Delivery of Stock Certificates, etc. on Exercise. The Company agrees that the
shares of Common Stock purchased upon exercise of this Warrant shall be deemed to be issued to the
Holder as the record owner of such shares as of the close of business on the date on which this
Warrant shall have been surrendered and payment made for such shares in accordance herewith. As
soon as practicable after the exercise of this Warrant in full or in part, and in any event within
three (3) business days thereafter, the Company at its expense (including the payment by it of any
applicable issue taxes) will cause to be issued in the name of and delivered to the Holder, or as
such Holder (upon payment by such Holder of any applicable transfer taxes) may direct in compliance
with applicable securities laws, a certificate or certificates for the number of duly and validly
issued, fully paid and nonassessable shares of Common Stock (or Other Securities) to which such
Holder shall be entitled on such exercise, plus, in lieu of any fractional share to which such
holder would otherwise be entitled, cash equal to such fraction multiplied by the then Fair Market
Value of one full share, together with any other stock or other securities and property (including
cash, where applicable) to which such Holder is entitled upon such exercise pursuant to Section 1
or otherwise.



          2.2      Exercise. (a) Payment may be made either (i) in cash or by certified or official
bank check payable to the order of the Company equal to the applicable aggregate Exercise Price,
(ii) by delivery of the Warrant, or shares of Common Stock and/or Common Stock receivable upon
exercise of the Warrant in accordance with Section (b) below, or (iii) by a combination of any of
the foregoing methods, for the number of Common Shares specified in such Exercise Notice (as such
exercise number shall be adjusted to reflect any adjustment in the total number of shares of Common
Stock issuable to the Holder per the terms of this Warrant) and the Holder shall thereupon be
entitled to receive the number of duly authorized, validly issued, fully-paid and non-assessable
shares of Common Stock (or Other Securities) determined as provided herein. (b) Notwithstanding
any provisions herein to the contrary, if the Fair Market Value of one share of Common Stock is
greater than the Exercise Price (at the date of calculation as set forth below), in lieu of
exercising this



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Warrant for cash, the Holder may elect to receive shares equal to the value (as determined
below) of this Warrant (or the portion thereof being exercised) by surrender of this Warrant at the
principal office of the Company together with the properly endorsed Exercise Notice in which event
the Company shall issue to the Holder a number of shares of Common Stock computed using the
following formula:



     X=Y (A-B)

                 A



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




	 	 	 	Y=      the number of shares of Common Stock purchasable under the Warrant
or, if only a portion of the Warrant is being exercised, the portion of the
Warrant being exercised (at the date of such calculation)
	 
	 	 	 	A=      the Fair Market Value of one share of the Company’s Common Stock
(at the date of such calculation)
	 
	 	 	 	B=      Exercise Price (as adjusted to the date of such calculation)





     3.      Effect of Reorganization, etc.; Adjustment of Exercise Price.



          3.1      Reorganization, Consolidation, Merger, etc. In case at any time or from time to
time, the Company shall (a) effect a reorganization, (b) consolidate with or merge into any other
person, or (c) transfer all or substantially all of its properties or assets to any other person
under any plan or arrangement contemplating the dissolution of the Company, then, in each such
case, as a condition to the consummation of such a transaction, proper and adequate provision shall
be made by the Company whereby the Holder of this Warrant, on the exercise hereof as provided in
Section 1 at any time after the consummation of such reorganization, consolidation or merger or the
effective date of such dissolution, as the case may be, shall receive, in lieu of the Common Stock
(or Other Securities) issuable on such exercise prior to such consummation or such effective date,
the stock and other securities and property (including cash) to which such Holder would have been
entitled upon such consummation or in connection with such dissolution, as the case may be, if such
Holder had so exercised this Warrant, immediately prior thereto, all subject to further adjustment
thereafter as provided in Section 4.



          3.2      Dissolution. In the event of any dissolution of the Company following the
transfer of all or substantially all of its properties or assets, the Company, concurrently with
any distributions made to holders of its Common Stock, shall at its expense deliver or cause to be
delivered to the Holder the stock and other securities and property (including cash, where
applicable) receivable by the Holder of the Warrant pursuant to Section 3.1, or, if the Holder
shall so instruct the Company, to a bank or trust company specified by the Holder and having its
principal office in New York, NY as trustee for the Holder of the Warrant.



          3.3      Continuation of Terms. Upon any reorganization, consolidation, merger or transfer
(and any dissolution following any transfer) referred to in this Section 3, this Warrant shall
continue in full force and effect and the terms hereof shall be applicable to the shares of stock
and



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other securities and property receivable on the exercise of this Warrant after the
consummation of such reorganization, consolidation or merger or the effective date of dissolution
following any such transfer, as the case may be, and shall be binding upon the issuer of any such
stock or other securities, including, in the case of any such transfer, the person acquiring all or
substantially all of the properties or assets of the Company, whether or not such person shall have
expressly assumed the terms of this Warrant as provided in Section 4. In the event this Warrant
does not continue in full force and effect after the consummation of the transactions described in
this Section 3, then the Company’s securities and property (including cash, where applicable)
receivable by the Holders of the Warrant will be delivered to Holder or the Trustee as contemplated
by Section 3.2.



     4.      Extraordinary Events Regarding Common Stock. In the event that the Company shall (a) issue
additional shares of the Common Stock as a dividend or other distribution on outstanding Common
Stock, (b) subdivide its outstanding shares of Common Stock, or (c) combine its outstanding shares
of the Common Stock into a smaller number of shares of the Common Stock, then, in each such event,
the Exercise Price shall, simultaneously with the happening of such event, be adjusted by
multiplying the then Exercise Price by a fraction, the numerator of which shall be the number of
shares of Common Stock outstanding immediately prior to such event and the denominator of which
shall be the number of shares of Common Stock outstanding immediately after such event, and the
product so obtained shall thereafter be the Exercise Price then in effect. The Exercise Price, as
so adjusted, shall be readjusted in the same manner upon the happening of any successive event or
events described herein in this Section 4. The number of shares of Common Stock that the holder of
this Warrant shall thereafter, on the exercise hereof as provided in Section 1, be entitled to
receive shall be adjusted to a number determined by multiplying the number of shares of Common
Stock that would otherwise (but for the provisions of this Section 4) be issuable on such exercise
by a fraction of which (a) the numerator is the Exercise Price that would otherwise (but for the
provisions of this Section 4) be in effect, and (b) the denominator is the Exercise Price in effect
on the date of such exercise.



     5.      Certificate as to Adjustments. In each case of any adjustment or readjustment in the
shares of Common Stock (or Other Securities) issuable on the exercise of the Warrant, the Company
at its expense will promptly cause its Chief Financial Officer or other appropriate designee to
compute such adjustment or readjustment in accordance with the terms of the Warrant and prepare a
certificate setting forth such adjustment or readjustment and showing in detail the facts upon
which such adjustment or readjustment is based, including a statement of (a) the consideration
received or receivable by the Company for any additional shares of Common Stock (or Other
Securities) issued or sold or deemed to have been issued or sold, (b) the number of shares of
Common Stock (or Other Securities) outstanding or deemed to be outstanding, and (c) the Exercise
Price and the number of shares of Common Stock to be received upon exercise of this Warrant, in
effect immediately prior to such adjustment or readjustment and as adjusted or readjusted as
provided in this Warrant. The Company will forthwith mail a copy of each such certificate to the
holder of the Warrant and any Warrant agent of the Company (appointed pursuant to Section 11
hereof).



     6.      Reservation of Stock, etc. Issuable on Exercise of Warrant. The Company will at all times
reserve and keep available, solely for issuance and delivery on the exercise of the Warrant, shares
of Common Stock (or Other Securities) from time to time issuable on the exercise of the Warrant.



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     7.      Assignment; Exchange of Warrant. Subject to compliance with applicable securities laws,
this Warrant, and the rights evidenced hereby, may be transferred by any registered holder hereof
(a “Transferor”) in whole or in part. On the surrender for exchange of this Warrant, with the
Transferor’s endorsement in the form of Exhibit B attached hereto (the “Transferor Endorsement
Form”) and together with evidence reasonably satisfactory to the Company demonstrating compliance
with applicable securities laws, which shall include, without limitation, a legal opinion from the
Transferor’s counsel that such transfer is exempt from the registration requirements of applicable
securities laws, the Company at its expense but with payment by the Transferor of any applicable
transfer taxes) will issue and deliver to or on the order of the Transferor thereof a new Warrant
of like tenor, in the name of the Transferor and/or the transferee(s) specified in such Transferor
Endorsement Form (each a “Transferee”), calling in the aggregate on the face or faces thereof for
the number of shares of Common Stock called for on the face or faces of the Warrant so surrendered
by the Transferor.



     8.      Replacement of Warrant. On receipt of evidence reasonably satisfactory to the Company of
the loss, theft, destruction or mutilation of this Warrant and, in the case of any such loss, theft
or destruction of this Warrant, on delivery of an indemnity agreement or security reasonably
satisfactory in form and amount to the Company or, in the case of any such mutilation, on surrender
and cancellation of this Warrant, the Company at its expense will execute and deliver, in lieu
thereof, a new Warrant of like tenor.



     9.      Registration Rights. The Holder of this Warrant has been granted certain registration
rights by the Company. These registration rights are set forth in a Registration Rights Agreement
entered into by the Company and Purchaser dated as of November 22, 2005.



     10.      Maximum Exercise. Notwithstanding anything contained herein to the contrary, the Holder
shall not be entitled to exercise this Warrant in connection with that number of shares of Common
Stock which would exceed the difference between (i) 4.99% of the issued and outstanding shares of
Common Stock and (ii) the number of shares of Common Stock beneficially owned by the Holder For
the purposes of the immediately preceding sentence, beneficial ownership shall be determined in
accordance with Section 13(d) of the Exchange Act, as amended, and Regulation 13d-3 thereunder.
The conversion limitation described in this Section 10 shall automatically become null and void
following notice to the Company upon the occurrence and during the continuance of an Event of
Default under and as defined in the Note made by the Company to the Holder dated the date hereof
(as amended, modified or supplemented from time to time, the “Note”), or upon 75 days prior notice
to the Company. Notwithstanding anything contained herein to the contrary, the number of shares of
Common Stock issuable by the Company and acquirable by the Holder shall not exceed an aggregate of
10,154,300 shares of Common Stock (subject to appropriate adjustment for stock splits, stock
dividends, or other similar recapitalizations affecting the Common Stock) (the “Maximum Common
Stock Issuance”), unless the issuance of Common Stock hereunder shall first be approved by the
Company’s shareholders. If at any point in time and from time to time the number of shares of
Common Stock issuable pursuant to the terms of this Warrant, the Note, the Purchase Agreement or
any Related Agreement, together with the number of shares of Common Stock that would then be
issuable by the Company to the Holder in the event of a conversion or exercise pursuant to the
terms of this Warrant, the Note, the Purchase Agreement, any Related Agreement or otherwise, would
exceed the Maximum Common Stock Issuance but for this Section 10, the Company shall promptly



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call a shareholders meeting to solicit shareholder approval for the issuance of the shares of
Common Stock hereunder.



     11.      Warrant Agent. The Company may, by written notice to the each Holder of the Warrant,
appoint an agent for the purpose of issuing Common Stock (or Other Securities) on the exercise of
this Warrant pursuant to Section 1, exchanging this Warrant pursuant to Section 7, and replacing
this Warrant pursuant to Section 8, or any of the foregoing, and thereafter any such issuance,
exchange or replacement, as the case may be, shall be made at such office by such agent.



     12.      Transfer on the Company’s Books. Until this Warrant is transferred on the books of the
Company, the Company may treat the registered holder hereof as the absolute owner hereof for all
purposes, notwithstanding any notice to the contrary.



     13.      Notices, etc. All notices and other communications from the Company to the Holder of this
Warrant shall be mailed by first class registered or certified mail, postage prepaid, at such
address as may have been furnished to the Company in writing by such Holder or, until any such
Holder furnishes to the Company an address, then to, and at the address of, the last Holder of this
Warrant who has so furnished an address to the Company.



     14.      No Shorting. The Holder or any of its affiliates and investment partners will not and
will not cause any person or entity, directly or indirectly, to engage in “short sales” of the
Company’s Common Stock or any other hedging strategies.



     15.      Miscellaneous. This Warrant and any term hereof may be changed, waived, discharged or
terminated only by an instrument in writing signed by the party against which enforcement of such
change, waiver, discharge or termination is sought. This Warrant shall be governed by and construed
in accordance with the laws of State of New York without regard to principles of conflicts of laws.
Any action brought concerning the transactions contemplated by this Warrant shall be brought only
in the state courts of New York or in the federal courts located in the state of New York;
provided, however, that the Holder may choose to waive this provision and bring an action
outside the state of New York. The Company agrees to submit to the jurisdiction of such courts and
waive trial by jury. The prevailing party shall be entitled to recover from the other party its
reasonable attorneys fees and costs. In the event that any provision of this Warrant is invalid or
unenforceable under any applicable statute or rule of law, then such provision shall be deemed
inoperative to the extent that it may conflict therewith and shall be deemed modified to conform
with such statute or rule of law. Any such provision which may prove invalid or unenforceable
under any law shall not affect the validity or enforceability of any other provision of this
Warrant. The headings in this Warrant are for purposes of reference only, and shall not limit or
otherwise affect any of the terms hereof. The invalidity or unenforceability of any provision
hereof shall in no way affect the validity or enforceability of any other provision. The Company
acknowledges that legal counsel participated in the preparation of this Warrant and, therefore,
stipulates that the rule of construction that ambiguities are to be resolved against the drafting
party shall not be applied in the interpretation of this Warrant to favor any party against the
other party.


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




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     IN WITNESS WHEREOF, the Company has executed this Warrant as of the date first written above.



	 	 	 	 	 
	 	ELECTRIC CITY CORP.

 	 
	 	By:  	 	 
	 	 	Name:  	By: John Mitola 	 
	 	 	 	 
	 



Title: Chief Executive Officer Witness:




 





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Exhibit A




FORM OF SUBSCRIPTION




(To be signed only on exercise of Warrant)





			
	TO:	 	Electric City Corp.

1280 Landmeier Road

Elk Grove Village, Illinois 60007

Attention: Chief Financial Officer







The undersigned, pursuant to the provisions set forth in the attached Warrant (No.           ), hereby
irrevocably elects to purchase (check applicable box):



                     shares of the Common Stock covered by such Warrant; or



           the maximum number of shares of Common Stock covered by such Warrant pursuant to the cashless
exercise procedure set forth in Section 2.



The undersigned herewith makes payment of the full Exercise Price for such shares at the price per
share provided for in such Warrant, which is $          . Such payment takes the form of (check
applicable box or boxes):



           $                in lawful money of the United States; and/or



           the cancellation of such portion of the attached Warrant as is exercisable for a total of
          shares of Common Stock (using a Fair Market Value of $           per share for purposes of
this calculation); and/or



           the cancellation of such number of shares of Common Stock as is necessary, in accordance with
the formula set forth in Section 2.2, to exercise this Warrant with respect to the maximum number
of shares of Common Stock purchaseable pursuant to the cashless exercise procedure set forth in
Section 2.



The undersigned requests that the certificates for such shares be issued in the name of, and
delivered to            whose address is                      .



The undersigned represents and warrants that all offers and sales by the undersigned of the
securities issuable upon exercise of the within Warrant shall be made pursuant to registration of
the Common Stock under the Securities Act of 1933, as amended (the “Securities Act”) or pursuant to
an exemption from registration under the Securities Act.




	 	 	 
	Dated:
	 	 
	 

	 	 
	 

	 	(Signature must conform to name of holder as

specified on the face of the Warrant)
	 
	 	 
	 

	 	 
	 

	 	(Address)






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Exhibit B




FORM OF TRANSFER OR ENDORSEMENT




(To be signed only on transfer of Warrant)




     For value received, the undersigned hereby sells, assigns, and transfers unto the person(s)
named below under the heading “Transferees” the right represented by the within Warrant to purchase
the percentage and number of shares of Common Stock of Electric City Corp. into which the within
Warrant relates specified under the headings “Percentage Transferred” and “Number Transferred,”
respectively, opposite the name(s) of such person(s) and appoints each such person Attorney to
transfer its respective right on the books of Electric City Corp. with full power of substitution
in the premises.



	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	Transferees	 	 	Address	 	 	Percentage Transferred	 	 	Number Transferred	 
	 	 

	 	 	 
	 	 	 
	 	 	 	 
	 	 

	 	 	 
	 	 	 
	 	 	 	 
	 	 

	 	 	 
	 	 	 
	 	 	 	 
	 	 

	 	 	 
	 	 	 
	 	 	 	 
	 





	 	 	 
	Dated:
	 	 
	 

	 	 
	 

	 	(Signature must conform to name of holder as
specified on the face of the Warrant)
	 
	 	 
	Signed in the presence of:
	 	 
	 
	 	 
	 
	 	 
	 

	 	 
	(Name)
	 	(address)
	 
	 	 
	 
	 	 
	 

	 	 
	ACCEPTED AND AGREED:
	 	 
	[TRANSFEREE]

	 	(address)
	 
	 	 
	 
	 	 
	
 
	 	 
	(Name)
	 	 






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