Document:

Prepared by MerrillDirect

EXHIBIT 10.12

STOCK TRADING AGREEMENT

             This
Stock Trading Agreement, dated as of 
July 31, 2001 (as may be amended from time to time, this “Agreement”),
is made by and among Newcourt Capital USA Inc., a Delaware corporation, EP
Power Finance, L.L.C., a Delaware limited liability company, Morgan Stanley
Dean Witter Equity Funding, Inc., a Delaware corporation, Originators
Investment Plan, L.P, a Delaware limited partnership, Duke Capital Partners,
LLC, a Delaware limited liability company (collectively, the “Purchasers”),
Newcourt Capital Securities, Inc., a Delaware corporation (the “Placement
Agent”) and each of the members of management of Electric City Corp., a
Delaware corporation (the “Company”), set forth on the signature pages
hereto, and shall become effective upon the Closing under the Securities
Purchase Agreement.

WITNESSETH

             WHEREAS,
the Purchasers and the Company have entered into that certain Securities
Purchase Agreement, dated as of July 31, 2001 (as it may be amended from time
to time, the “Securities Purchase Agreement”), whereby the Company will
sell and the Purchasers will buy shares of the Company’s Series A Convertible
Preferred Stock, par value $0.01 per share (the “Series A Preferred Stock”),
together with warrants to purchase Series A Preferred Stock, shares of Common
Stock and warrants to purchase Common Stock; and

             WHEREAS,
it is a condition to the obligations of the Purchasers to purchase such
securities pursuant to the Securities Purchase Agreement that the Parties (as
defined below) enter into this Agreement.

AGREEMENT

             NOW,
THEREFORE, in consideration of the foregoing and for other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged, the
Parties agree as follows:

ARTICLE I

DEFINITIONS

             1.1        Defined Terms.  All terms capitalized but not defined herein
shall have the meaning attributable to such terms in the Securities Purchase
Agreement, except where the context otherwise requires.  The following additional terms when used in
this Agreement, including its preamble and recitals, shall, except where the
context otherwise requires, have the following meanings, such meanings to be
equally applicable to the singular and plural forms thereof:

             “Additional
Purchase Agreement” means the securities purchase agreement, if any,
providing for the issuance and sale of Series A Preferred Stock and Series A
Preferred Stock Warrants to the Additional Purchasers, as contemplated by
Section 2.3 of the Securities Purchase Agreement.

             

             “Additional Purchaser”
shall mean each purchaser under the Additional Purchase Agreement.

             “Affiliate” means, as applied to any Person, any
other Person controlling, controlled by or under common control with such
Person.  For purposes of this
definition, “control” (including, with correlative meanings, the terms
“controlled by” and “under common control with”), as applied to any Person,
shall mean the possession, directly or indirectly, of the power to direct or
cause the direction of the management and policies of any such other Person,
whether through the ownership of voting securities or by contract or
otherwise.  With respect to individuals,
the term Affiliate shall also include such individuals parents, spouse,
children or grandchildren.

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

             “Average
Daily Trading Volume” with respect to any trading day, means the average
daily trading volume of the Common Stock as reported on the American Stock
Exchange (or, if not traded on the American Stock Exchange, any national securities
exchange or automated quotation services on which the Common Stock is then
listed for trading) for the twenty (20) consecutive trading days (as adjusted
to exclude the highest and the lowest volume trading days for such twenty (20)
consecutive trading day period) ending on the date immediately prior to such
trading day.

             “Block
Sales” means a sale of at least 10,000 shares of Common Stock.

             “Closing”
shall have the meaning set forth in the Securities Purchase Agreement.

             “Closing
Price” means the closing price of the Common Stock as reported on the
American Stock Exchange (or, if not traded on the American Stock Exchange, any
national securities exchange or automated quotation services on which the
Common Stock is then listed for trading).

             “Common Stock” means and includes the Company’s
authorized common stock, par value $0.0001 per share.

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

             “Covered
Stock” means 75% of an Additional Purchaser’s total holdings of Common
Stock (calculated assuming the exercise of all rights, options and warrants to
purchase Common Stock or securities convertible or exchangeable for shares of
Common Stock, and the conversion or exchange of all securities convertible or
exchangeable for Common Stock) purchased under the Additional Purchase
Agreement (as adjusted for stock splits, stock combinations and the like).

             “Effective
Date” means the Closing Date (as defined in the Securities Purchase
Agreement).

             “Election
Period” shall have the meaning set forth in Section 2.2 hereof.

             

             “Existing Stockholder”
shall have the meaning set forth in Section 3.1 hereof.

             “MSDW”
shall have the meaning set forth in Section 2.5 hereof.

             “Parties”
means all of the parties that are signatories to this Agreement.

             “Person” means and includes an individual, a
corporation, a limited liability company, an association, a partnership, a
trust or estate, a government or any department or agency thereof.

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

             “Qualified
Primary Offering” means a firmly underwritten primary registered public
offering of Common Stock by the Company that raises at least $35 million in
aggregate gross proceeds at a price of at least $5.00 per share (as adjusted
for stock splits, stock combinations and the like).

             “Sale
Notice” shall have the meaning set forth in Section 2.2 hereof.

             “Securities Purchase Agreement” shall have the
meaning set forth in the first recital hereof.

             “Selling
Party” shall have the meaning set forth in Section 2.2 hereof.

             “Series A Preferred Stock” shall have the
meaning set forth in the first recital hereof.

             “Uncovered
Stock” means any Additional Purchaser’s total holdings of Common Stock that
is not Covered Stock.

ARTICLE
II

TRADING RESTRICTIONS

             2.1        Public Sales.  Each Party (other than an Additional
Purchaser with respect to its Uncovered Stock) shall be subject to the
following trading restrictions from time to time concerning its respective
holdings of Common Stock:

                           (a)         During the term of this Agreement, no
Party may sell any of its Common Stock into the public market before the
completion of a Qualified Primary Offering; provided, however,
that if a Qualified Primary Offering is not completed within eighteen (18)
months after the Effective Date, each Party may sell its Common Stock into the
public market, severally and not jointly, subject to the following conditions:

	 	(i)	the
  Closing Price must exceed $4.00 per share (as adjusted for stock splits,
  stock combinations and the like) for each of the twenty (20) consecutive
  trading days immediately prior to the date of sale;

 

	 	(ii)	the
  Average Daily Trading Volume immediately prior to the date of sale must
  exceed 150,000 shares;
	 	 	 
	 	(iii)	the
  number of shares of Common Stock sold by such Party on any trading day may
  not exceed five percent of the Average Daily Trading Volume;
	 	 	 
	 	(iv)	the
  number of shares of Common Stock sold by such Party into the public market in
  any three-month period may not exceed fifteen percent of such Party’s total
  holdings of Common Stock (calculated assuming the exercise of all rights,
  options and warrants to purchase Common Stock or securities convertible or
  exchangeable for shares of Common Stock, and the conversion or exchange of
  all securities convertible or exchangeable for Common Stock) on the Effective
  Date (as adjusted for stock splits, stock combinations and the like); and
	 	 	 
	 	(v)	Block
  Sales must be executed at a minimum price per share of 90% of the ask price
  as reported on the American Stock Exchange (or, if not traded on the American
  Stock Exchange, any national securities exchange or automated quotation
  services on which the Common Stock is then listed for trading).

                           (b)        If the Company completes a Qualified
Primary Offering during the term of this Agreement, each Party shall comply
with its obligations under any “lock-up” agreement entered into by such Party
in connection with such Qualified Primary Offering.  After any such “lock-up” period expires or is terminated, each
Party may sell its Common Stock into the public market, severally and not
jointly, subject to the following conditions:

	 	(i)	the
  number of shares of Common Stock sold by such Party on any trading day may
  not exceed five percent of the Average Daily Trading Volume;
	 	 	 
	 	(ii)	the
  number of shares of Common Stock sold by such Party into the public market in
  any three-month period may not exceed twenty percent of such Party’s holdings
  of Common Stock (calculated assuming the exercise of all rights, options and
  warrants to purchase Common Stock or securities convertible or exchangeable
  for shares of Common Stock, and the conversion or exchange of all securities
  convertible or exchangeable for Common Stock) on the Effective Date (as
  adjusted for stock splits, stock combinations and the like); and

 

	 	(iii)	Block
  Sales must be executed at a minimum price per share of 90% of the ask price
  as reported on the American Stock Exchange (or, if not traded on the American
  Stock Exchange, any national securities exchange or automated quotation
  services on which the Common Stock is then listed for trading).

 

             2.2        Private Sales.  If a Party (the “Selling Party”)
intends to sell any of its shares of Company capital stock (or securities
exercisable or exchangeable for or convertible into shares of Company capital
stock) in a private transaction (other than to an Affiliate), the Selling Party
shall send written notice (the “Sale Notice”) of such intent to each
other Party.  The Sale Notice shall
include the following information:  (a)
the type of Company capital stock or other securities the Selling Party intends
to sell; (b) the number of shares or other securities the Selling Party intends
to sell; (c) the proposed sale price per share or per security, as applicable,
and (d) any other material terms of the offer. 
The  other Parties shall have two
(2) business days after receipt of the Sale Notice (the “Election Period”)
to elect to purchase the capital stock or other securities that are the subject
of the Sale Notice by giving the Selling Party written notice thereof within
the Election Period, in which case the Selling Party and the Party (or Parties)
so electing to purchase shall complete such sale within five (5) business days
on the terms set forth in the Sale Notice. 
If more than one Party elects to purchase the capital stock or other
securities set forth in the Sale Notice, then such shares or securities shall
be allocated among the Parties so electing to purchase pro rata in proportion
to their respective holdings of Company Common Stock (calculated assuming the exercise
of all rights, options and warrants to purchase Common Stock or securities
convertible or exchangeable for shares of Common Stock, and the conversion or
exchange of all securities convertible or exchangeable for Common Stock held by
such Parties so electing to purchase). 
If none of the Parties provides written notice so electing to purchase
within the Election Period, then the Selling Party may sell the capital stock
or other securities that are the subject of the Sale Notice on terms no less
favorable to the Sellng Party than those set forth in the Sale Notice to any
third party within 10 business days of the date of the Sale Notice; provided,
however, that any sale of shares of Company capital stock (or securities
exercisable or exchangeble for or convertible into shares of Company capital
stock) to a party that is not a party to this Agreement shall have as a
condition to such sale that such party shall become a Party to this
Agreement.  For purposes of Sections
2.1(a)(iv) and 2.1(b)(ii), the purchasing party’s holdings (if such
party was not a party to the Securities Purchase Agreement) with respect to the
shares of capital stock or other securities it purchases shall be the number of
shares of Common Stock (calculated assuming the exercise of all rights, options
and warrants to purchase Common Stock or securities convertible or exchangeable
for shares of Common Stock, and the conversion or exchange of all securities
convertible or exchangeable for Common Stock) purchased in the subject sale.

             2.3        Transfer to Affiliates.  Notwithstanding anything in this Agreement
to the contrary, any party may freely sell or otherwise transfer any capital
stock of the Company (or securities exercisable or exchangeable for or
convertible into shares of Company capital stock) it owns to its Affiliates
without such sale or transfer being subject to the terms of this Agreement; provided,
however, that any such Affiliate shall become a Party to this Agreement
and its ownership and sales of shares of Common Stock or other securities shall
be aggregated with the transferring Party for purposes of Section 2.1.

             2.4        Term of Trading Agreement.  The term of the Trading Agreement shall
commence on the Effective Date and terminate three years from the Effective
Date; provided, however, that if a Qualified Primary Offering is
completed within three years from the Effective Date, the term of this
Agreement shall terminate at 5:00 p.m., New York time, on the eighteen (18)
month anniversary of the initial closing date of such Qualified Primary
Offering.

             2.5        Amendments to the Trading Agreement.

                           (a)         The Parties may amend the Trading
Agreement only upon the prior written consent of at least three (3) out of the
following Purchasers (i) Morgan Stanley Dean Witter Equity Funding Inc. (“MSDW”)
and Originators Investment Plan, L.P. (“OIP”) (MSDW and OIP shall be
deemed to be a single Purchaser with MSDW acting on behalf of both such
entities); (ii)  Newcourt Capital USA
Inc.; (iii) EP Power Finance, L.L.C.; and (iv) Duke Capital Partners, LLC;
provided, however, the Parties shall not make any amendment regarding the
Uncovered Stock or that disproportionately affects the Covered Stock without
the approval of each Additional Purchaser.

                           (b)        The Company may enter into the
Additional Purchase Agreement.  Each
Investor agrees that upon each Additional Purchaser’s acquisition of Series A
Preferred Stock and Series A Preferred Stock Warrants in compliance with
Section 2.3 of the Securities Purchase Agreement and execution and delivery of
a signature page to the joinder agreement between the Company and each such
Additional Purchaser pursuant to which such Additional Purchaser agrees to
become a Party and to be bound by the terms hereof, each such Additional
Purchaser shall become a Party to this Agreement for all intents and purposes
and shall then be an Investor hereunder. 
The Company shall then revise Schedule I to reflect the addition
of each such Additional Purchaser.  The
addition of such new parties and revision of Schedule I shall not
constitute a modification, waiver or amendment of this Agreement that requires
the consent of or any writing from any of the Parties hereto.

             2.6        Uncovered Stock. During the term
of this Agreement, no Additional Purchaser may sell any shares of its Uncovered
Stock into the public market before the completion of a Qualified Primary
Offering; provided, however, that if a Qualified Primary Offering
is not completed within twelve (12) months after the Effective Date, each
Additional Purchaser may sell its shares of Uncovered Stock into the public
market without any restrictions under this Agreement.

             2.7        Purchases by Management in the Public
Market.  Notwithstanding anything in
this Article II to the contrary, all shares of Common Stock purchased by
members of management that are signatories hereto in the public market from
other than the Company or its underwriters shall not be subject to this Article
II.

ARTICLE
III

CONDITIONS TO EFFECTIVENESS OF AGREEMENT

             3.1        Additional Conditions.  This Agreement shall not become effective
until each of Nickolas Konstant, Victor Conant, Kevin McEneely, Michael Stelter
and Joseph Marino (each an “Existing Stockholder”) shall amend his
existing trade agreement (in a form reasonably satisfactory to each of the
Purchasers) to include the following trading restrictions with respect to sales
of his (and his Affiliates’) Common Stock in the public market:

                           (a)         the number of shares of Common Stock
sold by such Existing Stockholder (including his Affiliates) on any trading day
may not exceed five percent of the Average Daily Trading Volume; and

                           (b)        the number of shares of Common Stock
sold by each Existing Stockholder (including his Affiliates) in any three-month
period shall not exceed fifteen percent of such Existing Stockholder’s (including
his Affiliates) total holdings of Common Stock (calculated assuming the
exercise of all rights, options and warrants to purchase Common Stock or
securities convertible or exchangeable for shares of Common Stock, and the
conversion or exchange of all securities convertible or exchangeable for Common
Stock) on the Effective Date (as adjusted for stock splits, stock combinations
and the like).

             In
addition, each Existing Stockholder shall amend his trading agreement to state
that if requested by the Company and the managing underwriter, such Existing
Stockholder shall agree not to sell, make any short sale of, loan, grant any
option for the purchase of, or otherwise dispose of any securities of the Company (other than those included in the
registration) without the prior written consent of such underwriter, for such
period of time (not to exceed 180 days) from the effective date of a
registration statement filed under the Securities Act of 1933, as amended, as
may be requested by such underwriter and to execute an agreement reflecting the
foregoing as may be requested by such underwriter in connection with a Qualified
Primary Offering.

ARTICLE IV

GENERAL
PROVISIONS

             4.1        Legend on Share
Certificates.

                           (a)         All Company securities issued at the
Closing (as defined in the Securities Purchase Agreement) that are subject to
the terms and provisions of Article II, in
addition to such other legends as may be required by law and any other legend
required by any Transaction Document (as defined in the Securities Purchase
Agreement) shall bear the following legend:

	 	THE
  SECURITIES REPRESENTED BY THIS CERTIFICATE ARE ALSO SUBJECT TO CERTAIN
  REQUIREMENTS AS TO TRADING CONTAINED IN THE STOCK TRADING AGREEMENT, DATED
  JULY 31, 2001, BY AND AMONG THE COMPANY AND CERTAIN SECURITY HOLDERS, A COPY
  OF WHICH IS ON FILE WITH THE SECRETARY OF THE COMPANY.	 

                           (b)        Upon the termination of this Agreement,
each Party shall be entitled to receive, in exchange for any security bearing
the legend regarding this Agreement specifically set forth in Section 4.1(a), a security without such legend.

ARTICLE V

MISCELLANEOUS

             5.1        Injunctive
Relief.  It is acknowledged
that it is impossible to measure in money the damages that would be suffered if
the Parties fail to comply with the obligations imposed on them by this
Agreement and that, in the event of any such failure, an aggrieved Party would
be irreparably damaged and would not have an adequate remedy at law.  Any such Party shall, therefore, be entitled
to injunctive relief and/or specific performance to enforce such obligations,
and if any action should be brought in equity to enforce any of such provisions
of this Agreement, none of the Parties shall raise the defense that there is an
adequate remedy at law.

             5.2        Governing Law.  Except as to matters governed by the General
Corporation Law of the State of Delaware and decisions thereunder of the
Delaware courts applicable to Delaware corporations, which shall be governed by
such laws and decisions, this Agreement shall be construed and enforced in accordance
with, and the rights of the parties shall be governed by, the laws of the State
of New York.

             5.3        Entire
Agreement; Waiver.  This
Agreement contains the entire agreement among the parties hereto with respect
to the subject matter hereof.  No waiver
of any term or provision shall be effective unless in writing signed by the
party to be charged.

             5.4        Binding Effect.  This Agreement shall be binding on and inure
to the benefit of the Parties and, subject to the terms and provisions hereof,
their respective legal representatives, successors and assigns.

             5.5        Invalidity of
Provision.  The invalidity or
unenforceability of any provision of this Agreement in any jurisdiction shall
not affect the validity or enforceability of the remainder of this Agreement in
that jurisdiction or the validity or enforceability of this Agreement,
including that provision, in any other jurisdiction.

             5.6        Counterparts.  This Agreement may be executed in two or
more counterparts, all of which shall be deemed but one and the same instrument
and each of which shall be deemed an original, and it shall not be necessary in
making proof of this Agreement to produce or account for more than one such
counterpart.

             5.7        Notices.  All notices, consents and other
communications under this Agreement shall be in writing and shall be deemed to
have been duly given when (a) delivered by hand, (b) sent by telecopier (with
receipt confirmed), provided that a copy is mailed by certified or registered
mail, return receipt requested, or (c) when received by the addressee, if sent
by Express Mail, Federal Express or other express delivery service (receipt
requested), in each case to the appropriate addresses and telecopier numbers
set forth below (or to such other addresses and telecopier numbers as a party
may designate as to itself by notice to the other parties):

 

	 	(i)	If to the Company:
	 	 	 
	 	 	1280 Landmeier Road
	 	 	Elk Grove Village, IL 60007-2410
	 	 	Fax No. 847-437-4969
	 	 	Attention: 
  General Counsel

 

                           (ii)         If
to another Party: at the address set forth in the Securities Purchase Agreement
or the Additional Purchase Agreement or the signature page to this Agreement.

             5.8        Headings.  The descriptive headings of the several
paragraphs of this Agreement are inserted for convenience only and do not constitute
part of this Agreement.

[SIGNATURE PAGE TO FOLLOW]

             IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by their respective officers thereunto duly authorized as of the day and year
first above written.

	MANAGEMENT	 	PURCHASERS
	 	 	 
	 	 	NEWCOURT
  CAPITAL USA, INC.,
	/s/
  John Mitola	 	a
  Delaware corporation
	

	 	 
	John  Mitola	 	By:	/s/
  Guy A. Piazza
	 	 	 	

	 	 	Name:	   Guy A. Piazza
	 	 	 	

	 	 	Title:	Vice
  President
	/s/
  Brian Kawamura	 	 	

	

	 	 
	Brian
  Kawamura	 	 
	 	 	EP
  POWER FINANCE, L.L.C.,
	 	 	a
  Delaware limited liability company
	/s/
  Jeffrey Mistarz	 	 
	

	 	By:	/s/
  Paul E. McGlinn
	Jeff
  Mistarz	 	 	

	 	 	Name:	  Paul E. McGlinn
	 	 	 	

	 	 	Title:	Managing
  Director
	 	 	 	

	/s/
  Denis Enberg	 	 	 
	

	 	MORGAN
  STANLEY DEAN WITTER EQUITY
	Denis
  Enberg (with respect to	 	FUNDING,
  INC., a Delaware corporation
	50,000
  shares of Common Stock)	 	 
	 	 	By:	/s/
  Thomas A. Clayton
	 	 	 	

	/s/
  Michael Pokora	 	Name:	Thomas
  A. Clayton
	

	 	Title:	Vice
  President
	Michael
  Pokora	 	 	 
	PLACEMENT
  AGENT	 	ORIGINATORS
  INVESTMENT PLAN, L.P., a Delaware limited partnership
	 	 	 
	NEWCOURT
  CAPITAL SECURITIES INC., a Delaware corporation	 	By:	MSDW
  OIP Investors, Inc., its general partner
	 	 	 
	By:	/s/
  Robert W. Sexton	 	 
	 	

	 	 
	Name:	Robert
  W. Sexton	 	By:	/s/
  Thomas A. Clayton
	 	

	 	 	

	Title:	Managing
  Director	 	Name:	Thomas
  A. Clayton
	 	

	 	 	 
	 	 	Title:	Vice
  President
	 	 	 	 
	 	 	DUKE
  CAPITAL PARTNERS, L.L.C.,
	 	 	a
  Delaware limited liability company
	 	 	 
	 	 	By:	/s/
  Gerald J. Stalun
	 	 	 	

	 	 	Name:	Gerald
  J. Stalun
	 	 	 	

	 	 	Title:	EVP+
  Managing Director
	 	 	 	

[Signature Page to Stock Trading Agreement]Prepared by MerrillDirect

EXHIBIT 10.13

ESCROW AGREEMENT

 

             This
Escrow Agreement (the “Escrow Agreement”) is made and entered into as of
the 31st of July, 2001, by and among Electric City Corp., a Delaware
corporation (the “Company”), EP Power Finance, L.L.C, a Delaware limited
liability company (“EPPC”), Originators Investment Plan, L.P., a
Delaware limited partnership (“OIP”), Morgan Stanley Dean Witter Equity
Funding, Inc., a Delaware corporation (“MSDW”), Duke Capital Partners,
LLC, a Delaware limited liability company (“Duke”) (EPPC, MSDW (together
with OIP) and Duke are each a “Purchaser” and collectively, the “Purchasers”),
Newcourt Capital Securities, Inc., a Delaware corporation (the “Placement
Agent”) and American National Bank and Trust Company of Chicago, as escrow
agent (the “Escrow Agent”).

RECITALS

             WHEREAS,
the Company, the Purchasers and Newcourt Capital USA Inc. have entered into
that certain Securities Purchase Agreement of even date herewith (the “Securities
Purchase Agreement”) for the purchase and sale of certain securities of the
Company, a copy of which is attached hereto as Exhibit A; and

             WHEREAS,
the Securities Purchase Agreement provides for the delivery by each of the
Purchasers of Four Million Dollars ($4,000,000) for a total of Twelve Million
Dollars ($12,000,000) (the “Escrow Fund”) (together with any interest
earned thereon in accordance with the provisions of this Escrow Agreement being
the “Escrowed Amount”) into escrow as provided herein until the earlier
of a closing of the transactions contemplated in the Securities Purchase
Agreement or the termination of the Securities Purchase Agreement; and

             WHEREAS,
the parties to this Escrow Agreement desire to set forth the terms and
conditions pursuant to which the Escrowed Amount will be held by, and/or distributed
by, the Escrow Agent.

AGREEMENT

             NOW,
THEREFORE, in consideration of the mutual covenants contained herein and in the
Securities Purchase Agreement, and for good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged, it is agreed as follows:

             SECTION
1.  Escrow Deposit; Defined
Terms.  The Escrow Agent
acknowledges receipt from each Purchaser of Four Million Dollars ($4,000,000),
simultaneously with the execution and delivery of this Escrow Agreement, which
has been deposited into an escrow account maintained by the Escrow Agent and
will be invested by the Escrow Agent pursuant to Section 3 of this
Escrow Agreement.  The Escrow Agent also
acknowledges receipt from each of EPPC, MSDW, OIP, Duke, Newcourt Capital USA
Inc., a Delaware corporation, and the Company counterpart signature pages to
the agreements set forth on Schedule 3 hereto (collectively, the “Signature
Pages to the Transaction Documents”). 
The Escrow Agent shall hold, administer and disburse the Escrowed Amount
and the Signature Pages to the Transaction Documents pursuant to the terms of
this Escrow Agreement.  Capitalized
terms used herein but not defined herein shall have the meanings ascribed such
terms in the Securities Purchase Agreement.

             SECTION
2.  Duties, Rights, and Immunities of
Escrow Agent.

             (a)  Escrow Agent.  The Escrow Agent undertakes to perform only
such duties as are expressly set forth herein and no duties shall be implied.
The Escrow Agent shall have no liability under and no duty to inquire as to the
provisions of any agreement other than this Escrow Agreement.  The Escrow Agent may rely upon and shall not
be liable for acting or refraining from acting upon any written notice,
instruction or request furnished to it hereunder and believed by it to be
genuine and to have been signed or presented by the proper party or
parties.  The Escrow Agent shall be
under no duty to inquire into or investigate the validity, accuracy or content
of any such document.  The Escrow Agent
shall have no duty to solicit any payments that may be due it or the Escrow
Fund.  The Escrow Agent shall not be
liable for any action taken or omitted by it in good faith except to the extent
that a court of competent jurisdiction determines that the Escrow Agent’s gross
negligence or willful misconduct was the primary cause of any loss to the
Company, the Purchasers and/or the Placement Agent. The Escrow Agent may
execute any of its powers and perform any of its duties hereunder directly or
through agents or attorneys (and shall be liable only for the careful selection
of any such agent or attorney) and may consult with counsel, accountants and
other skilled persons to be selected and retained by it.  The Escrow Agent shall not be liable for
anything done, suffered or omitted in good faith by it in accordance with the
advice or opinion of any such counsel, accountants or other skilled
persons.  In the event that the Escrow
Agent shall be uncertain as to its duties or rights hereunder or shall receive
instructions, claims or demands from any party hereto that, in its opinion,
conflict with any of the provisions of this Escrow Agreement, it shall be
entitled to refrain from taking any action and its sole obligation shall be to
keep safely all property held in escrow until it shall be directed otherwise in
writing by all of the other parties hereto or by a final order or judgment of a
court of competent jurisdiction. 
Anything in this Escrow Agreement to the contrary notwithstanding, in no
event shall the Escrow Agent be liable for special, indirect or consequential
loss or damage of any kind whatsoever (including but not limited to lost
profits), even if the Escrow Agent has been advised of the likelihood of such
loss or damage and regardless of the form of action.

             (b)  Fees.  The Company, the Purchasers and the Placement Agent agree jointly
and severally to (i) pay the Escrow Agent upon execution of this Escrow
Agreement and from time to time thereafter reasonable compensation for the
services to be rendered hereunder, which unless otherwise agreed in writing
shall be as described in Schedule 1 attached hereto, and (ii) pay or
reimburse the Escrow Agent upon request for all expenses, disbursements and
advances, including reasonable attorney’s fees and expenses, incurred or made
by it in connection with the preparation, execution, performance, delivery,
modification and termination of this Escrow Agreement.  As among the Company, the Purchasers and the
Placement Agent, the Company shall pay the amounts payable pursuant to this Section
2(b).  The Escrow Agent acknowledges
that all legal fees and other expenses and disbursements incurred by the Escrow
Agent in connection with the determination to enter into this Agreement are
included in the amount set forth on Schedule 1.

             (c)  Indemnity.  The Company, the Purchasers and the Placement Agent shall jointly
and severally indemnify, defend and save harmless the Escrow Agent and its
directors, officers, agents and employees (the “indemnitees”) from all
loss, liability or expense (including the reasonable fees and expenses of
in-house or outside counsel) arising out of or in connection with (i) the
Escrow Agent’s execution and performance of this Escrow Agreement, except in
the case of any indemnitee to the extent that such loss, liability or expense
is due to the gross negligence or willful misconduct of such indemnitee, or
(ii) its following any instructions or other directions from the Company, the
Purchasers or the Placement Agent, except to the extent that its following any
such instruction or direction is expressly forbidden by the terms hereof. The
parties hereto acknowledge that the foregoing indemnities shall survive the
resignation or removal of the Escrow Agent or the termination of this Escrow
Agreement.

             SECTION
3.  Investment of Escrow Fund.  During the term of this Escrow Agreement,
the Escrow Fund shall be invested and reinvested by the Escrow Agent in the
investment indicated on Schedule 1 or such other investments as shall be
directed in writing by each of the Purchasers and the Company and as shall be
acceptable to the Escrow Agent.  All
investment orders involving U.S. Treasury obligations, commercial paper and
other direct investments may be executed through broker-dealers selected by the
Escrow Agent (which shall include affiliates of the Escrow Agent).  Statements will be provided by the Escrow
Agent to the Company, each of the Purchasers and the Placement Agent on a
monthly basis.  The Company, each of the
Purchasers and the Placement Agent, upon written request, will receive a
statement of transaction details upon completion of any securities transaction
in the Escrow Fund without any additional cost. The Escrow Agent shall have the
right to liquidate any investments held in order to provide funds necessary to
make required payments under this Escrow Agreement.  The Escrow Agent shall have no liability for any loss sustained
as a result of any investment in an investment indicated on Schedule 1
or any investment made pursuant to the joint instructions of the parties hereto
or as a result of any liquidation of any investment prior to its maturity or
for the failure of the parties to give the Escrow Agent instructions to invest
or reinvest the Escrow Fund.

             SECTION
4.  Release of Escrowed Amount
and the Signature Pages to the Transaction Documents.  The Escrow Agent shall disburse the Escrowed
Amount and the Signature Pages to the Transaction Documents as follows:

             (a)         to the Company, upon joint written
instructions from the Placement Agent and each of the Purchasers that the Closing
is occurring pursuant to the Securities Purchase Agreement, credited towards
the payment of the cash consideration to be delivered to the Company by the
Purchasers at the Closing; or

             (b)        (i) 
to the Purchasers, the Escrowed Amount to be apportioned pro rata among
the Purchasers (it being understood that MSDW and OIP are collectively deemed
to be a single Purchaser hereunder) and (ii) to the signatories of the
Transaction Documents, their respective Signature Pages to the Transaction
Documents on the second business day following the business day on which joint
written notice from the Placement Agent and each of the Purchasers is delivered
to the Escrow Agent and the Company stating that the Securities Purchase
Agreement has been terminated pursuant to Article VII of the Securities
Purchase Agreement.

             (c)         in accordance with any other joint
written instructions of Placement Agent and each of the Purchasers and received
by the Escrow Agent and the Company.

             SECTION
5.  No Effect on Seller or Purchaser Claims.  Neither the Company nor the Purchasers shall
be precluded by the terms of this Escrow Agreement from pursuing any claim
against the other arising out of the Securities Purchase Agreement or documents
referred to therein (subject to the limitations contained therein).

             SECTION
6.  Termination of Escrow Agreement.  This Agreement shall terminate upon the
distribution of the Escrowed Amount and the Signature Pages to the Transaction
Documents held by the Escrow Agent in accordance with the provisions hereof.

             SECTION
7.  Successor Escrow Agent.  (a) 
The Escrow Agent may resign and be discharged from its duties or
obligations hereunder by giving 10 days advance notice in writing of such
resignation to the other parties hereto specifying a date when such resignation
shall take effect.  Any corporation or
association into which the Escrow Agent may be merged or converted or with
which it may be consolidated, or any corporation or association to which all or
substantially all the escrow business of the Escrow Agent’s corporate trust
line of business may be transferred, shall be the Escrow Agent under this
Escrow Agreement without further act provided it is bound by the terms of this
Agreement.

             (b)        If the Escrow Agent receives a written
notice signed by the Placement Agent, each of the Purchasers and the Company
stating that they have selected another escrow agent, any portion of the
Escrowed Amount invested by the Escrow Agent shall be promptly liquidated, and
the Escrow Agent shall deliver the Escrowed Amount and the Signature Pages to
the Transaction Documents to the successor escrow agent named in the aforesaid
notice within 10 days of its receipt of such notice.  If the other parties hereto have failed to appoint a successor
prior to the expiration of ten (10) days following receipt of the notice of
resignation or removal, the Escrow Agent may appoint a successor or may
petition any court of competent jurisdiction for the appointment of a successor
escrow agent or for other appropriate relief, and any such resulting
appointment shall be binding upon all of the parties hereto.

             SECTION
8.  Governing Law.  This Agreement shall take effect as a sealed
instrument and be construed under and governed by and enforced in accordance
with the laws of the State of New York.

             SECTION
9.  Tax Matters.  Each party to this Agreement (other than
Placement Agent) shall provide a completed I.R.S. Form W-8 or Form W-9 to the
Escrow Agent at the signing of this Agreement. 
For purposes of reporting to tax authorities, the Escrow Agent will
treat all income earned by the escrow as paid upon distribution. The Company
and each of the Purchasers, jointly and severally, covenant and agree to
indemnify and hold the Escrow Agent harmless against all liability for tax
withholding and/or reporting for any payments made by the Escrow Agent pursuant
to this Agreement.

             SECTION
10.  Notices.  All notices, requests, consents and other
communications under this Escrow Agreement shall be in writing and shall be
mailed by first class, registered or certified mail, postage prepaid, or sent
via overnight courier service, or delivered personally or sent by facsimile
machine:

	If
  to the Escrow Agent:	American
  National Bank and Trust Company of Chicago
	 	Address:  120 South LaSalle Street, 4th
  Floor
	 	Mail
  Suite IL-1250
	 	Fax:  (312) 661-6491
	 	Tel:  (312) 661-5667
	 	Attn:  Kevin M. Ryan, Corporate Trust Services
	 	 
	If
  to Company:	Electric
  City Corp.
	 	1280
  Landmeier Road
	 	Elk
  Grove Village, IL  60007
	 	Attn:  John Mitola
	 	Tel:  (847) 437-1666
	 	Fax:  (847) 437-4969
	 	 
	If
  to Purchasers:	Morgan
  Stanley Dean Witter
	 	Equity
  Funding, Inc. and
	 	Originators
  Investment Plan, L.P.
	 	1585
  Broadway
	 	New
  York, NY  10036
	 	Attn:  Barry D. Kupferberg and Thomas A. Clayton
	 	Tel:
  (212) 761-8590, (212) 761-7536
	 	Fax:
  (212) 761-0260
	 	 
	 	Duke
  Capital Partners, LLC
	 	128
  S. Tyron Street, Suite 1100
	 	Charlotte,
  NC  28202
	 	Attn:  Dean D’Angelo
	 	Tel:  (704) 373-4191
	 	Fax:
  (704) 373-4242
	 	 
	 	EP
  Power Finance, L.L.C.
	 	225
  West Washington Street, Suite 2185
	 	Chicago,
  IL  60606
	 	Attn:  Rick Noble and Mark Tarini
	 	Tel:  (781) 239-8192, (312) 263-6995
	 	Fax:  (781) 239-8197, (312) 263-6906
	 	 
	If
  to Placement Agent:	Newcourt
  Capital Securities, Inc.
	 	1211
  Avenue of the Americas, 22nd Floor
	 	New
  York, NY  10036
	 	Attn:  Guy Piazza
	 	Tel:
  (212) 382-7200
	 	Fax:
  (212) 382-9033

or to such other address of which the
addressee shall have notified the sender in writing.  Notices delivered personally shall be effective upon delivery
against receipt.  Notices transmitted by
telecopy shall be effective when received, provided that the burden of proving
when notice is transmitted by telecopy shall be the responsibility of the party
providing such notice.  Notices
delivered by overnight courier service shall be effective when received.  Notices delivered by registered or certified
mail shall be effective on the date set forth on the receipt of registered or
certified mail, or 96 hours after mailing, whichever is earlier.

             SECTION
11.  Headings.  The headings of the paragraphs of this
Escrow Agreement are inserted as a matter of convenience and for reference
purposes only, are of no binding effect, and in no respect define, limit or
describe the scope of this Escrow Agreement or the intent of any paragraph.

             SECTION 12.  Counterparts; Facsimile Signatures.  This Escrow Agreement may be executed in any
number of counterparts hereof, and by the different parties hereto on separate
counterparts hereof, each of which shall be deemed to be an original and all of
which together constitute one and the same agreement.  Facsimile signatures on this Escrow Agreement shall be deemed
original signatures.

             SECTION
13.  Entire Agreement.  This Escrow Agreement represents the entire
understanding and agreement among the parties hereto with respect to the
subject matter hereof, supersedes all prior negotiations between the parties,
and can be amended, modified, supplemented, extended, or changed only by an
agreement in writing that makes specific reference to this Escrow Agreement and
that is signed by all of the parties hereto.

             SECTION
14.  Security Procedures.  In the event funds transfer instructions are
given (other than in writing at the time of execution of this Escrow
Agreement), whether in writing, by telecopier or otherwise, the Escrow Agent is
authorized to seek confirmation of such instructions by telephone call-back to
the person or persons designated on Schedule 2 hereto, and the
Escrow Agent may rely upon the confirmation of anyone purporting to be the
person or persons so designated.  The
persons and telephone numbers for call-backs may be changed only in a writing
actually received and acknowledged by the Escrow Agent.  The Escrow Agent and the beneficiary’s bank
in any funds transfer may rely solely upon any account numbers or similar
identifying numbers provided by each of the Purchasers or the Company to
identify (i) the beneficiary, (ii) the beneficiary’s bank, or
(iii) an intermediary bank.  The
Escrow Agent may apply any of the Escrowed Funds for any payment order it
executes using any such identifying number, even where its use may result in a
person other than the beneficiary being paid, or the transfer of funds to a
bank other than the beneficiary’s bank or an intermediary bank designated.  The parties to this Escrow Agreement
acknowledge that these security procedures are commercially reasonable.

             SECTION
15.  Severability.  If any provision of this Escrow Agreement or
the application thereof to any person or circumstance shall be invalid or
unenforceable to any extent, the remainder of this Escrow Agreement and the
application of such provision to other persons or circumstances shall not be
affected thereby and shall be enforced to the greatest extent permitted by law,
but only as long as the continued validity, legality and enforceability of such
provision or application does not materially (a) alter the terms of this Escrow
Agreement, (b) diminish the benefits of this Escrow Agreement or (c) increase
the burdens of this Escrow Agreement, for any person.

             SECTION
16. Controlling Document.  To the
extent provisions of the Securities Purchase Agreement are inconsistent with
the provisions contained herewith, this Escrow Agreement shall be the
controlling document.

             IN
WITNESS WHEREOF, the undersigned have executed this Escrow Agreement to be
executed by their respective officers thereunto duly authorized as of the day
and year first above written.

	COMPANY	 	PLACEMENT
  AGENT
	 	 	 
	ELECTRIC
  CITY CORP.,	 	NEWCOURT
  CAPITAL SECURITIES,
	a
  Delaware corporation	 	INC.,
  a Delaware corporation
	 	 	 
	By:       /s/ John Mitola	 	By:      /s/ Robert W. Sexton
	 	

	 	

	Name:
  John Mitola	 	Name:  Robert W. Sexton
	 	 	

	Title:
  Chief Executive Officer	 	Title:     Managing Director
	 	 	

	 	 	 
	ESCROW
  AGENT	 	PURCHASERS
	 	 	 
	AMERICAN
  NATIONAL BANK AND TRUST	 	EP
  POWER FINANCE, L.L.C.,
	COMPANY
  OF CHICAGO, as Escrow Agent	 	a
  Delaware limited liability company
	By:       /s/ Kevin M. Ryan	 	By:      /s/ Paul E. McGlinn
	 	

	 	

	Name:  Kevin M. Ryan	 	Name:  Paul E. McGlinn
	 	

	 	

	Title:    Authorized Officer	 	Title:     Managing Director
	 	

	 	

	 	 	 
	 	 	MORGAN
  STANLEY DEAN WITTER
	 	 	EQUITY
  FUNDING, INC., a Delaware corporation
	 	 	By:      /s/ Thomas A Clayton
	 	 	

	 	 	Name:
  Thomas A. Clayton
	 	 	

	 	 	Title:
  Vice President
	 	 	

	 	 	 
	 	 	ORIGINATORS
  INVESTMENT PLAN, L.P., a Delaware limited partnership
	 	 	 
	 	 	By:  MSDW OIP Investors, Inc., its general
  partner
	 	 	 
	 	 	By:       /s/ Thomas A Clayton
	 	 	

	 	 	Name:  Thomas A. Clayton
	 	 	

	 	 	Title:  Vice President
	 	 	

	 	 	 
	 	 	DUKE
  CAPITAL PARTNERS, LLC,
	 	 	a
  Delaware limited liability company
	 	 	 
	 	 	By:      /s/ Gerald S. Stalun
	 	 	

	 	 	Name:  Gerald S. Stalun
	 	 	

	 	 	Title:     EVP + Managing Director
	 	 	

																

[SIGNATURE PAGE TO ESCROW
AGREEMENT]

Schedule 1

 

Effective Date:                            July __, 2001

Investment:

                           ý         The One Group Prime Money Market
Account;

                           o         A trust account with
__________________;

o         A money market mutual fund, for which
the Escrow Agent or any affiliate of the Escrow Agent serves as investment
manager, administrator, shareholder servicing agent and/or custodian or subcustodian,
notwithstanding that (i) the Escrow Agent or an affiliate of the Escrow Agent
receives fees from such funds for services rendered, (ii) the Escrow Agent
charges and collects fees for services rendered pursuant to this Escrow
Agreement, which fees are separate from the fees received from such funds, and
(iii) services performed for such funds and pursuant to this Escrow Agreement
may at times duplicate those provided to such funds by the Escrow Agent or its
affiliates.

o         Such other investments as the Company
and each of the Purchasers and Escrow Agent may from time to time mutually
agree upon in a writing executed and delivered by the  Company and each of the Purchasers and accepted by the Escrow
Agent.

 

Escrow Agent’s compensation:

 

Acceptance Fee:          $500.00

Annual Fee:                  $2,500

The Acceptance Fee and the Annual Fee are
billed in advance and payable prior to that year’s service.  These fees cover a full year, or any part
thereof, and thus are not prorated in the year of termination.

Any out-of-pocket expenses, or
extraordinary fees or expenses such as attorneys’ fees or messenger costs, are
additional and not included in the above schedule.

Schedule 2

 

Telephone Number(s) for
Call-Backs and

Person(s) Designated to Confirm Funds Transfer Instructions

If to Purchasers:

	 	Name	Telephone
  Number
	 	

	

	1.	Barry
  Kupferberg (MSDW/OIP) or	(212)
  761-8590
	 	Thomas
  A. Clayton	(212)
  761-7536
	 	 	 
	2.	Dean
  D’Angelo (Duke)	(704)
  373-5773
	 	 	 
	3.	Paul
  McGlinn (EPPC)	(312)
  263-6992
	 	 	 
	If
  to the Company:	 
	 	Name	Telephone
  Number
	 	

	

	1.	Jeff
  Mistarz	(847)
  437-1666
	 	 	 
	If
  to Placement Agent:	 
	 	 	 
	 	 	 
	 	Name	Telephone
  Number
	 	

	

	 	Guy
  Piazza	(212)
  382-7255
				

             Telephone
call-backs shall be made to the Company, each Purchaser and Placement Agent if
joint instructions are required pursuant to this Escrow Agreement.

Schedule 3

Transaction Documents

1.          Investor
Rights Agreement (as defined in the Securities Purchase Agreement)

2.          Stockholders
Agreement (as defined in the Securities Purchase Agreement)

3.          Stock
Trading Agreement (as defined in the Securities Purchase Agreement)

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