Document:

Prepared by MerrillDirect

 

 

Exhibit
10.60

 

 

 

LEASE
AGREEMENT

 

 

 

Between

 

THE ST.
JOE COMPANY,

a Florida corporation,

LANDLORD

 

and

 

NEXTEL
WIP LEASE CORPORATION,

a Delaware corporation,

TENANT

 

***Confidential treatment requested

 

TABLE
OF CONTENTS

 

 

	SECTION
  1:  TERM	SUBSECTION
	 	 
	Property and Premises	1.1
	Common Areas	1.2
	Initial Term	1.3
	Extension Term(s)	1.4
	Term of this Lease	1.5
	 	 
	SECTION 2:  CONSTRUCTION; DELIVERY OF PREMISES	 
	 	 
	Construction	2.1
	Delivery of Premises	2.2
	 	 
	SECTION 3:  RENT AND OTHER CHARGES	 
	 	 
	Base Rent	3.1
	Late Charges	3.2
	Additional Rent	3.3
	Common Area Maintenance Charges,
  Operating Expenses	3.4
	Utilities and Service	3.5
	 	 
	SECTION 4:  USE OF PROPERTY	 
	 	 
	Permitted Uses	4.1
	Compliance with Laws	4.2
	Hazardous Material	4.3
	Signs and Auctions	4.4
	Landlord’s Access	4.5
	Quiet Possession	4.6
	Covenants and Restrictions	4.7
	Parking	4.8
	 	 
	SECTION 5:  TENANT ALTERATIONS.	 
	 	 
	SECTION 6:  INSURANCE AND INDEMNITY.	 
	 	 
	Tenant’s Insurance	6.1
	Landlord’s Insurance	6.2
	Release and Waiver of Subrogation Rights	6.3
	Indemnification of the Parties	6.4

 

 

 

	SECTION 7:  DAMAGE, DESTRUCTION AND CONDEMNATION	 
	 	 
	Destruction or Damages to Premises	7.1
	Condemnation	7.2
	 	 
	SECTION 8:  MAINTENANCE AND REPAIRS	 
	 	 
	Landlord’s Obligations	8.1
	Tenant’s Obligations	8.2
	Condition Upon Termination	8.3
	 	 
	SECTION 9:  DEFAULT AND REMEDIES	 
	 	 
	Default by Tenant	9.1
	Remedies	9.2
	Costs	9.3
	Waiver	9.4
	Default by Landlord	9.5
	 	 
	SECTION 10:  PROTECTION OF LENDERS	 
	 	 
	Subordination and Attornment	10.1
	Estoppel
  Certificates and Subordination and Non-Disturbance Agreement	10.2
	Tenant’s Financial Condition	10.3
	 	 
	SECTION 11:  TELECOMMUNICATIONS	 
	 	 
	SECTION 12.  MISCELLANEOUS PROVISIONS	 
	 	 
	Landlord’s Liability; Certain Duties	12.1
	Interpretation	12.2
	Incorporation of Prior Agreements;
  Modifications	12.3
	Notices	12.4
	Radon Gas Notice	12.5
	Waivers	12.6
	No Recordation	12.7
	Force Majeure	12.8
	Execution of Lease	12.9
	Authority	12.10
	Florida Law	12.11
	Counterpart	12.12
	Holding Over	12.13
	Time of Essence	12.14
	Approval of Plans and Specifications	12.15
	Relationship	12.16
	Broker’s Fee	12.17
	 	 
	 	 

 

 

	 	 
	Waiver
  of Trial by Jury	12.18
	Riders
  and Exhibits Incorporated	12.19
	Tenant
  Assignment	12.20
	Landlord
  Assignment	12.21
	 	 
	 	 
	EXHIBITS	 
	 	 
	EXHIBIT "A-1" –
  Site Plan	 
	EXHIBIT “A-2” – Legal
  Description	 
	EXHIBIT “B” – Commencement
  Agreement	 
	EXHIBIT “C” – Construction
  Addendum	 
	EXHIBIT “D” – Rules and
  Regulations	 

 

***Confidential
treatment requested

LEASE AGREEMENT

 

             THIS LEASE AGREEMENT ("Lease")
is made as of May ___, 2001 by and between THE ST. JOE COMPANY, a Florida corporation,
an address of which is 1650 Prudential Drive, Suite 400, Jacksonville, Florida
32207 ("Landlord") and NEXTEL WIP LEASE CORPORATION, a Delaware
corporation, an address of which is 4500 Carillon Point, Kirkland, Washington
98033 ("Tenant").

W I T N
E S S E T H :

1.          TERM

1.1        PROPERTY
AND PREMISES.

Landlord
hereby leases to Tenant and Tenant hereby leases from Landlord the following
described property:

Approximately
30,000 square feet of rentable area (the "Premises")
constituting a portion of the Building (as defined herein) to be constructed on
certain real property located in Panama City Beach, Bay County, Florida.  The Building and the location of the
Premises are as shown on the Site Plan attached hereto as Exhibit A-1.  The Building will contain approximately 67,414
square feet of rentable area and will be included in a multiple building,
business and industrial park known as Beckrich Office
Park situated on that certain real property located in Panama City Beach, Bay
County, Florida and more particularly described on Exhibit A-2 (the
"Property").   The
actual rentable area of the Premises, the Additional Premises ( as defined
below) and the Building (and Tenant's Share, as defined herein) will be
determined upon Substantial Completion of the same, as defined in the
Construction Addendum.  The rentable
area of the Premises, the Additional Premises and the Building will be computed
whenever required pursuant to this Lease in accordance with the American
National Standard Method of Measuring Floor Area in Office Buildings of the
Building Owners and Managers Association International (ANSI Z65.1 - 1996).  For purposes of this Lease, "Building"
will mean the Base Building and the Leasehold Improvements, as such terms are
defined in the Construction Addendum.

Effective
as of that date which is 365 days from and after the Term Commencement Date (as
defined in the Construction Addendum) (the "Effective Date"),
Landlord hereby leases to Tenant and Tenant hereby leases from Landlord
approximately *** additional
square feet of rentable area (the "Additional Premises"),
constituting the remaining rentable space in the Building.  Notwithstanding the definition of
"Effective Date" set forth above, Tenant may deliver a written notice
to Landlord to set the Effective Date earlier than 365 days from and after the
Term Commencement Date.  If Tenant
delivers to Landlord such written notice, the Effective Date shall thereafter
be deemed to be the date of such notice; provided, however, in no event shall
such notice be dated earlier than the date of Substantial Completion of the
Additional Premises or later than 365 days from and after the Term Commencement
Date.  Upon the Effective Date, (i) the
Additional Premises will be included in the Premises for purposes of this
Lease, (ii) Tenant will pay Base Rent (at the then existing rate as specified
in Section 3.1.1; provided, however, in the event
the Effective Date occurs during the first 12 months after the Term
Commencement Date, Tenant will pay Base Rent specified for lease months 1-12 in
Section 3.1.1 plus an amount equivalent to *** multiplied by *** square feet until lease month *** when the rates set forth in Section 3.1.1 will control), and (iii) the lease of the
Additional Premises will be on the same covenants, agreements, terms provisions
and conditions as provided herein for the Premises.

1.2        COMMON AREAS.

Tenant
and its employees and customers will have the non-exclusive right during the
Term (as defined below) to use the parking areas, streets, driveways, aisles,
sidewalks, curbs, delivery passages, loading areas, lighting facilities, and
all other areas situated on or in the Property which are designated by
Landlord, from time to time, for use by all tenants of the Building or the
Property (collectively, the “Common Areas”), in common with Landlord,
other tenants of the Building and the Property and other persons designated by
Landlord, subject to the Rules and Regulations promulgated by Landlord from
time to time.

1.3        INITIAL TERM.

The
initial term of this Lease (the "Initial Term") will commence
on the Term Commencement Date (as defined in the Construction Addendum) and end
on the last day of the calendar month which is *** months after the Term Commencement Date (the “Expiration
Date”), unless renewed, terminated or extended on the terms and conditions
set forth herein.  Each of the parties
hereto agrees, upon demand of the other, to execute a Commencement Agreement
substantially in accordance with Exhibit B attached hereto setting forth
the Term Commencement Date, the Expiration Date, the rentable area of the
Premises, and Tenant's Share.

1.4        EXTENSION
TERM(S).

Tenant,
at its option, will be entitled to the privilege of *** successive extensions of the Term, each extension to be
for a period of *** years (each,
an "Extension Term"). 
Each Extension Term will be on the same covenants, agreements, terms,
provisions and conditions as are contained herein for the Initial Term, except
the Base Rent payable during any Extension Term will be as provided in Section
3.1.2 and except for such provisions as are, by
their terms, inapplicable to an Extension Term.

Tenant
may extend the Term provided that it is not in material or monetary default
under this Lease by giving to Landlord a notice in writing at least 180 days
before the expiration of the previously established Term, and thereupon the
Term will be extended without the execution of any other document; provided,
however, that, at any time after an Extension Term has become effective,
Landlord and Tenant, upon request of either, will execute an agreement
supplementary hereto setting out the date to which such Extension Term will
extend and the Base Rent payable during such Extension Term.

1.5        TERM OF THIS LEASE.

For
purposes of this Lease, "Term" will mean the Initial Term and
any Extension Term which may become effective pursuant to Section 1.4.  In no
event will the Term, including the Initial Term and all Extension Terms, exceed
*** years.

2.          CONSTRUCTION; DELIVERY OF PREMISES.

2.1        CONSTRUCTION.

Landlord
will promptly commence, at its sole expense (except as otherwise provided in
this Lease or the Construction Addendum), and will pursue with due diligence
and continuously until completion, the construction of the Building in
accordance with the provisions of the Construction Addendum attached hereto as Exhibit C.

2.2        DELIVERY OF PREMISES.

The
Leasehold Improvements (as defined in the Construction Addendum) will be
completed, and possession of the Premises (including the Additional Premises)
will be delivered to Tenant, in accordance with the provisions of the
Construction Addendum.

3.          RENT
AND OTHER CHARGES.

3.1        BASE RENT.

3.1.1     Base Rent; Initial Term.  Tenant hereby covenants and agrees to pay
Base Rent for the Premises in advance in equal monthly installments on the
first day of each month in lawful United States currency, together with any and
all rental, sales or use taxes levied by any governmental body having authority
upon the use or occupancy of the Premises and any rent or other charges payable
hereunder in accordance with the following schedule:

	Lease
  Monthsin Initial Term	Annual
  Base Rent	 	Monthly
  BaseRent	 	Monthly Sales Tax*	 	Monthly
  Rent**	 
	***	***	 	***	 	***	 	***	 
	***	***	 	***	 	***	 	***	 
	***	***	 	***	 	***	 	***	 
	***	***	 	***	 	***	 	***	 
	***	***	 	***	 	***	 	***	 
	***	***	 	***	 	***	 	***	 
	***	***	 	***	 	***	 	***	 
	***	***	 	***	 	***	 	***	 
	***	***	 	***	 	***	 	***	 
	***	***	 	***	 	***	 	***	 
	***	***	 	***	 	***	 	***	 

*Calculated at the current Bay County,
Florida sales tax rate of 7%.

**Does
not include Tenant’s Share of Operating Expenses.

3.1.2     Base Rent; Extension Term(s). Tenant
hereby covenants and agrees to pay Base Rent during any Extension Term in
advance in equal monthly installments on the first day of each month in lawful
United States currency, together with any and all rental, sales or use taxes
levied by any governmental body having authority upon the use or occupancy of
the Premises and any rent or other charges payable hereunder in accordance with
the following schedule:

	Lease
  Months in First Extension Term	Annual
  Base Rent	 	Monthly
  Base Rent	 	Monthly
  Sales Tax	 	Monthly
  Rent**	 
	***	***	 	***	 	***	 	***	 
	***	***	 	***	 	***	 	***	 
	***	***	 	***	 	***	 	***	 
	***	***	 	***	 	***	 	***	 
	***	***	 	***	 	***	 	***	 
	***	***	 	***	 	***	 	***	 

*Calculated
at the current Bay County, Florida sales tax rate of 7%.

**Does
not include Tenant’s Share of Operating Expenses.

	Lease
  Months in Second Extension Term	Annual
  Base Rent	 	Monthly
  Base Rent	 	Monthly
  Sales Tax	 	Monthly
  Rent**	 
	***	***	 	***	 	***	 	***	 
	***	***	 	***	 	***	 	***	 
	***	***	 	***	 	***	 	***	 
	***	***	 	***	 	***	 	***	 
	***	***	 	***	 	***	 	***	 

*Calculated
at the current Bay County, Florida sales tax rate of 7%.

**Does not include Tenant’s Share of Operating Expenses.

3.1.3     Payment of Base Rent. Base Rent will
be due and payable beginning on the Term Commencement Date and continuing on
the first day of each and every month thereafter throughout the Term and will
be paid without demand, set-off or deduction, except as provided for herein or
by the laws of the State of Florida, to Landlord at its address above or such
other address as Landlord directs in writing from time to time with 45 days
advance notice. Provided however, that if the Term Commencement Date should be
a date other than the first day of a calendar month, the monthly Base Rent set
forth above will be prorated to the end of that calendar month.

3.1.4      Triple Net Lease.  This Lease is what is commonly called a
"triple net lease," it being understood that Landlord will receive
the Base Rent free and clear of any and all impositions, taxes, liens, charges
or expenses of any nature whatsoever in connection with the ownership and
operation of the Premises, except as expressly provided in this Lease.

3.2        LATE CHARGES.

If
any Base Rent or other payment due under this Lease is not received by Landlord
within 10 days of the due date of such payment, Tenant will pay, in addition to
such payment a late charge equal to ***.  If any payment due from Tenant shall remain
overdue for more than 10 days, interest will accrue daily on the past due
amount from the date such amount was due until paid or judgment is entered at a
rate equivalent to the lesser of 18% per annum and the highest rate permitted
by law.  Interest on the past due amount
will be in addition to and not in lieu of the late charge set forth above or
any other remedy available to Landlord.

3.3        ADDITIONAL RENT.

All
charges payable by Tenant under the terms of this Lease other than Base Rent
are called "Additional Rent." Unless this Lease provides
otherwise, all Additional Rent will be paid by Tenant to Landlord with the next
monthly installment of Base Rent and will include all applicable sales or use
taxes.  Base Rent and Additional Rent
are collectively referred to herein as "Rent."

3.4        COMMON AREA MAINTENANCE
CHARGES, OPERATING EXPENSES.

In
addition to the Base Rent payable under this Section 3, Tenant agrees to
pay as Additional Rent its proportionate share of the "Operating
Expenses" (as defined herein) for the Building and for the Property to the
extent that any item of Operating Expenses is directly applicable to the
Property but is not attributable to any particular building in the Property or
any tenant(s) therein.  The
proportionate share to be paid by Tenant (the "Share") will be
a fraction, the numerator of which will be the rentable square footage of the
Premises and the denominator of which will be the rentable square footage of
the Building, all as determined as measured by Landlord in accordance with Section
1.1. 
Tenant’s Share at the inception of the Lease is ***. 
The Share is subject to change from time to time as and if the rentable
square footage of the Premises or the Building changes including, without
limitation, when the Additional Premises is included in the Premises.  Tenant will pay to Landlord on a monthly
basis an amount equal to one-twelfth (1/12) of Tenant's Share of annual Operating
Expenses, together with applicable sales and use taxes.  Said amount will be payable without demand,
set-off or deduction at the same time and in the same manner as Base Rent.  Upon the establishment of the Term
Commencement Date, Landlord will notify Tenant of the estimated amount of
Operating Expenses (including the estimated monthly payment) due from Tenant
for the balance of 2002.  Within 90 days
after the end of each calendar year, Landlord will send to Tenant a statement
of Operating Expenses for the prior year describing in reasonable detail all
Operating Expenses incurred in the operation of the Building and, to the extent
applicable, the Property, along with the amount of the Share (the "Operating
Expense Statement").  Tenant
will be given a credit against its Share of future Operating Expenses payable
to the extent of any overpayment of Operating Expenses that have been paid up
to the time of the Operating Expense Statement unless the Operating Expense
Statement is rendered at the end of the Term, in which case any overpayment
made by Tenant will be reimbursed by Landlord to Tenant at the time Tenant
delivers the Premises to Landlord..  If
Tenant has underpaid its Share of Operating Expenses, then Tenant will pay the
balance due to Landlord as Additional Rent within 30 days of the date of the
Operating Expense Statement unless the Operating Expense Statement is rendered
at the end of the Term, in which case any overage due Landlord will be paid at
the time Tenant delivers the Premises to Landlord.  Concurrently with the Operating Expense Statement, Landlord will
provide an estimate of the Operating Expenses for the current calendar year and
a statement of the estimated monthly Operating Expenses payable by Tenant.  Landlord’s failure to provide an Operating
Expense Statement will not prejudice Landlord’s right to collect a shortfall or
Tenant’s right to receive a credit for over payments.

"Operating
Expenses" will mean any expenses incurred whether by Landlord or by
others on behalf of Landlord, directly arising out of Landlord’s maintenance,
operation, repair, replacement (if such replacement is generally regarded in
the industry as increasing operating efficiency or is required under any
Applicable Laws (as defined in Section 4.2) that
were not applicable to the Property or the Building as of the Term Commencement
Date) and administration of the Property, the Building and the Common Areas,
including, without limitation:  (i) all
real estate, personal property and other ad valorem taxes, and any other
levies, charges, local improvement rates, and assessments whatsoever assessed
or charged against the Property, the Building and the Common Areas, the
equipment and improvements therein contained, including any amounts assessed or
charged in substitution for or in lieu of any such taxes, excluding only income
or capital gains taxes imposed upon Landlord, and including all costs
associated with the appeal of any assessment on taxes; (ii) insurance which
Landlord is obligated or permitted to obtain under this Lease and any
deductible amount applicable to any claim made by Landlord under such
insurance; (iii) reasonable security expenses; (iv) reasonable landscaping and
pest control expenses; (v) a reasonable management fee; (vi) electricity,
water, sewer, gas, window washing, janitorial services, trash and debris and
other maintenance and utility charges; (vii) reasonable wages and benefits
payable to employees of Landlord to compensate such employees for their
performance of duties that are directly connected with the operation and
maintenance of the Property, the Building or the Common Areas; (viii) dues and
assessments under any applicable deed restrictions or declarations of covenants
and restrictions; and (ix) except as expressly limited by any of the items
referred to below, such other reasonable costs and expenses actually incurred
by Landlord in the maintenance, repair and operation of the Building, but only
to the extent that such other costs and expense are customarily incurred as an
operating expense in accordance with good property management practices.  Such other reasonable costs will include a
pro rata share, equitably allocated to the Building, of any costs and expenses
similar to those set forth above which are incurred by Landlord, by a property
owners association, or by another entity for maintenance, operation, and repair
of any Common Areas or facilities serving the Property.

Operating
Expenses will not include any of the following:

	 	(i)	principal
  and interest payments on loans secured by mortgages or trust deeds on the
  Premises and any financing or refinancing costs;

	 	(ii)	cost
  of capital improvements, except that Operating Expenses includes the cost
  during the Term, as reasonably amortized over the useful life of the capital
  improvement by Landlord with interest at the then current rates for
  construction financing on the unamortized amount, of any capital improvements
  made during the Term which (a) can reasonably be expected to reduce the
  Operating Expenses, or (b) are made in order to comply with any Applicable
  Laws hereafter promulgated by any governmental authority or board of fire
  underwriters;

	 	(iii)	depreciation;

	 	(iv)	cost
  of any repairs, restoration or other work necessitated by fire, windstorm or
  other insured casualty to the extent that insurance proceeds have been
  received by Landlord;

	 	(v)	cost
  of off-site personnel (except as otherwise provided for above);

	 	(vi)	expenses
  in the nature of costs, fines or penalties resulting directly from any act or
  omission of Landlord;

	 	(vii)	any
  costs included in Operating Expenses representing an amount paid to an entity
  or person related to Landlord to the extent such amount is in excess of the
  amount which would have been paid in the absence of such relationship;

	 	(viii)	professional
  fees incurred in connection with the preparation of financial statements, tax
  returns and other documents and information for Landlord or its mortgagees;

	 	(ix)	any
  repairs or alterations made by Landlord to comply with Applicable Laws
  existing as of the execution hereof; and

	 	(x)	leasing
  commissions, advertising costs and other expenses incurred solely to locate
  new tenants for the Building.

 

If
the nature of Tenant’s business within the Premises is such that additional
costs are incurred by Landlord for insurance, cleaning, utilities, sanitation,
trash removal, pest control, disposal services or other Operating Expenses,
Tenant agrees to pay to Landlord on demand as Additional Rent the amount of
such additional costs which are exclusively and directly related to Tenant’s
business or Tenant's use or occupancy of the Premises.

If
any tax expense, insurance expense, or other Operating Expense is not assessed
separately or charged specifically to the Building, but is charged against the
Property as a whole, Landlord will reasonably determine the portion of such
Operating Expenses chargeable to Tenant.

3.5        UTILITIES AND SERVICE.

3.5.1     Utility Service.  Landlord will provide or cause to be
provided the mains, conduits and other facilities necessary to supply water,
gas, electricity, telephone service and sewage service to the Premises.  Tenant will however, be responsible, at its
expense, to make provisions for connecting or hooking up to such utilities
directly with the appropriate utility company furnishing same.  Landlord will not cause, without Tenant’s
prior written consent, which consent will not be unreasonably withheld, the
provider of these utilities to change.

3.5.2     Tenant Responsible for Charges.  Tenant will promptly pay all charges and
deposits for electricity, water, gas, telephone service and sewage service and
other utilities furnished to the Premises. 
Landlord will not be liable for any interruption  in utility services except to the extent
that such interruption is caused by the negligence of Landlord, its agents,
contractors, or employees.

4.          USE OF
PROPERTY.

4.1        PERMITTED USES.

Tenant
may use the Premises only for commercial office purposes, including, without
limitation, for the operation of a call center and a phone programming and distribution
center (collectively, the "Permitted Use").  Tenant will observe all reasonable rules and
regulations established by Landlord from time to time for the Building.  The rules and regulations in effect as of
the date hereof are attached to and made a part of this Lease as Exhibit D
(the "Rules and Regulations").  Landlord will have the right at all times to change and amend the
rules and regulations in any reasonable manner as it may deem advisable for the
safety, care and operation or use of the Premises or the Property.

4.2        COMPLIANCE
WITH LAWS.

4.2.1     Landlord’s Compliance.  During the Term, Landlord will be
responsible for making any modifications to the Building and the Property and
their appurtenances, excluding the Premises, but including the Common Areas,
elevators and entrances serving the Property and the Building, required
pursuant to any federal, state or local laws, 
ordinances, building codes, and rules and regulations of governmental
entities having jurisdiction over the Property, including but not limited to
the Board of Fire Underwriters and the Americans with Disabilities Act and all
regulations and orders promulgated pursuant thereto (collectively, “Applicable
Laws”).  Any modifications to the
Property and/or the Building made by Landlord pursuant to the provisions of
this Section 4.2.1will initially be at
Landlord’s expense; however, such expense may be included in Landlord’s
Operating Expenses of the Building as set forth above.

4.2.2     Tenant’s Compliance.  Tenant will comply with all Applicable Laws
relating to its use or occupancy of the Premises, and will promptly comply with
all governmental orders and directives for the correction, prevention, and
abatement of nuisances in, upon, or connected with the Premises, all at
Tenant’s sole expense.  Tenant warrants
that all Tenant Alterations (as defined in Section 5 below) of the Premises made by Tenant or Tenant’s
employees, agents or contractorsor any other work performed by or on behalf of
Tenant in and to the Premises,
either prior to Tenant’s occupancy of the Premises or at any time during the
Term, will comply with all Applicable Laws. 
Landlord represents that the Leasehold Improvements constructed by or
under the direction of Landlord will comply with all Applicable Laws in effect
on or before the Term Commencement Date. 
Tenant will procure at its own expense all permits and licenses required
for the transaction of its business in the Premises.  In addition, Tenant warrants that its use of the Premises will be
in strict compliance with all Applicable Laws. 
During the Term, Tenant will, at its sole cost and expense, make any
modifications to the Premises that may be required pursuant to any Applicable
Laws relating to Tenant’s use or occupancy of the Premises and enacted after
the Term Commencement Date.

4.3        HAZARDOUS
MATERIAL.

Throughout
the Term, Tenant will not  use,
generate, release, discharge, store, dispose, or transport  any Hazardous Materials (as defined herein)
on, under, in, above, to, or from the Premises except that Hazardous Materials
may be used in the Premises as necessary for the customary maintenance of the
Premises provided that same are used, stored and disposed of in strict
compliance with Applicable Laws.  For
purposes of this provision, the term “Hazardous Materials” will mean and
refer to any wastes, materials, or other substances of any kind or character
that are or become regulated as hazardous or toxic waste or substances, or
which require special handling or treatment, under any Applicable Laws.

If
Tenant’s activities at the Premises or Tenant’s use of the Premises (a) results
in a release of Hazardous Materials that is not in compliance with Applicable
Laws or permits issued thereunder; (b) gives rise to any claim or requires a
response under common law or Applicable Laws or permits issued thereunder; (c)
causes a significant public health effect; or (d) creates a nuisance; then
Tenant will, at its sole cost and expense: 
(i) immediately provide verbal notice thereof to Landlord as well as
written notice to Landlord in the manner required by this Lease, which written
notice will identify the Hazardous Materials involved and the emergency
procedures taken or to be taken; and (ii) promptly take all action in response
to such situation required by Applicable Laws, provided that Tenant will first
obtain Landlord’s approval of the non-emergency remediation plan to be
undertaken.

Landlord
represents, warrants and agrees (1) that, to Landlord's knowledge, neither
Landlord nor any third party has used, generated, stored or disposed of, or
permitted the use, generation, storage or disposal of, any Hazardous Substances
on, under, about or within the Land (as defined in the Construction Addendum)
in violation of any Applicable Laws, and (2) that Landlord will not, and will
not permit any third party to use, generate, store or dispose of any Hazardous
Materials on, under, about or within the Premises or the Building in violation
of any Applicable Laws.  Landlord and
Tenant each indemnify and agree to defend and hold harmless the other and the
other's officers, directors, partners, affiliates, agents and employees against
any and all losses, liabilities, claims and/or costs (including reasonable
attorneys’ fees and costs) arising from any breach of any representation, warranty
or agreement contained in this Section 4.3.

All
warranties and representations of Landlord made herein are made to
"Landlord's knowledge" as of the Term Commencement Date.  "Landlord's knowledge" will be
deemed to mean only the actual knowledge of xxx, xxx, xxx, xxx, xxx, xxx of
Landlord who have given substantive attention to the development of Beckrich  Office Park,
whom Landlord represents are responsible for such matters and are in a position
to have knowledge thereof, as evidenced by his/their receipt of actual notice,
without imputation or attribution of knowledge of any other parties and without
any obligation to investigate or independently verify any of the matters
contained herein.  The definition of "Landlord's
knowledge" set forth above is not intended to limit Landlord's obligation
to comply with Applicable Laws relating to Hazardous Materials as set forth
herein.

4.4        SIGNS AND AUCTIONS.

Tenant
will not place any signs on the Premises, the Building or the Property except
with the prior written consent of Landlord, including consent as to location
and design, which consent will not be unreasonably withheld.  Any and all such approved signs will be
installed and maintained by Tenant, at its sole cost and expense, and will be
in compliance with the Rules and Regulations and all Applicable Laws.  Tenant will be responsible to Landlord for
the installation, use, or maintenance of said signs and any damage caused
thereby.  Tenant agrees to remove said
signs prior to termination of the Lease and upon such removal to repair all
damage incident to such removal.

4.5        LANDLORD'S
ACCESS.

With
the exception of the Computer Room (which Computer Room is situated as shown in
the Building Plans) for which notice will always be required, Landlord will be
entitled at all reasonable times and upon reasonable notice (but no notice is
required in an Emergency except as otherwise set forth herein) to enter the
Premises to examine them and to make such repairs, alterations, or improvements
thereto as Landlord is required by this Lease to make or which Landlord
considers necessary or desirable. 
Tenant will not unduly obstruct any pipes, conduits, or mechanical or
other electrical equipment so as to prevent reasonable access thereto.  Landlord will exercise its rights under this
Section 4.5, to the extent possible in the
circumstances, in such manner so as to reduce, if practical, interference with
Tenant’s use and enjoyment of the Premises. 
Landlord and its agents have the right to enter the Premises at all
reasonable times and upon reasonable notice to show them to prospective
purchasers, lenders, or anyone having a prospective interest in the Building,
and, during the last six months of the Term, to show them to prospective
tenants. Landlord may place customary “For Sale” or “For Lease” signs on the
Property and, during the last six months of the Term, on the Premises and/or
the Building, as Landlord deems necessary. 
Notwithstanding the foregoing to the contrary and with the exception of
the designated Computer Room, Landlord will have the right at all times, and
without notice, to enter the Premises in the event of an Emergency affecting
the Premises.  For purposes hereof,
"Emergency" means fire, release of hazardous substances,
explosion, severe weather, hazardous situations necessitating the extraction of
personnel, any condition which Landlord reasonably believes poses an eminent
threat of bodily injury, death, environmental or property damage, or other
similar incidents.

4.6        QUIET POSSESSION.

If
Tenant pays the Rent and all other charges and fully performs all of its
obligations under this Lease, Tenant will be entitled to peaceful and quiet
enjoyment of the Premises for the full Term without interruption or
interference by Landlord or any person claiming through Landlord, subject,
however, to the Permitted Exceptions (as defined in the Construction Addendum).

4.7        COVENANTS AND RESTRICTIONS.

Tenant hereby acknowledges and agrees
that the Building, and Tenant’s occupancy thereof, may be subject to certain
declarations and agreements (collectively, the “Declaration”), which
Declaration, if in existence, has been recorded among the Public Records of Bay
County, Florida.

4.8        PARKING.

From
and after the Term Commencement Date, Tenant will have a non-exclusive license,
at no additional charge to Tenant, to use 270 parking spaces associated with the Building.  Within 12 months from and after the Term
Commencement Date, Landlord will grant Tenant a non-exclusive license, at no
additional charge to Tenant, to use an additional 194
parking spaces associated with the Building. 
All such parking spaces will be located as shown in the Building Plans
(as defined in the Construction Addendum). 
Landlord reserves the right from time to time to assign or re-assign the
location of such parking spaces in any manner that Landlord in Landlord’s
reasonable discretion deems beneficial to the operation of the Building.  Tenant agrees that it will employ its best
efforts to prevent the use by Tenant’s employees and visitors of parking spaces
allocated exclusively to other tenants. 
All motor vehicles (including all contents thereof) will be parked in
such spaces at the sole risk of Tenant, its employees, agents, invitees and
licensees, it being expressly agreed and understood that Landlord has no duty
to insure any of said motor vehicles (including the contents thereof), and that
Landlord is not responsible for the protection and security of such vehicles,
or the contents thereof.

5.          TENANT
ALTERATIONS.

Tenant
will not make or allow to be made any alterations in or to the Premises ("Tenant
Alterations") without first obtaining the written consent of Landlord,
which consent will not be unreasonably withheld.  Landlord may require Tenant to provide demolition and/or lien and
completion bonds in form and amount satisfactory to Landlord.  All Tenant Alterations will be accomplished
in a good and workmanlike manner at Tenant’s sole expense, in conformity with
all Applicable Laws, by a licensed and bonded contractor approved in advance by
Landlord, such approval of contractor not to be unreasonably withheld or
delayed.  All contractors performing
Tenant Alterations in the Premises will carry workers’ compensation insurance,
commercial general liability insurance, automobile insurance and excess
liability insurance in amounts reasonably acceptable to Landlord and will
deliver a certificate of insurance evidencing such coverages to Landlord prior
to commencing work in the Premises. 
Upon completion of any such Tenant Alterations, Tenant will provide
Landlord with “as built” plans, copies of all construction contracts, and proof
of payment for all labor and materials. 
Any Tenant Alterations to the Premises made by or installed by either
party hereto will remain upon and be surrendered with the Premises and become
the property of Landlord upon the expiration or earlier termination of this
Lease without credit to Tenant; provided, however, Landlord, at its option, may
require Tenant to remove and/or repair any Tenant Alterations to restore the
Premises to the condition existing at the time Tenant took possession, with all
costs of removal, repair, restoration, or alterations to be borne by
Tenant.  Prior to the completion of any
Tenant Alterations, Landlord and Tenant agree to execute a written statement as
to whether or not Tenant will be required to remove any such Tenant Alterations
upon the expiration or earlier termination of the Lease.  This clause will not apply to moveable
equipment, furniture or moveable trade fixtures owned by Tenant, which may be
removed by Tenant at the end of the Term if Tenant is not then in default and
if such equipment and furniture are not then subject to any other rights, liens
or interests of Landlord.  Tenant will
have no authority or power, express or implied, to create or cause any
construction lien or mechanics’ or materialmen’s lien or claim of any kind
against the Premises, the Property or any portion thereof.  Tenant will promptly cause any such liens or
claims to be released by payment, bonding or otherwise within 30 days after
request by Landlord, and will indemnify Landlord against losses arising out of
any such claim including, without limitation, legal fees and court costs.  EXCEPT TO THE EXTENT THAT LANDLORD IS
RESPONSIBLE FOR THE PAYMENT TO CONTRACTORS PURSUANT TO THE TERMS OF THIS LEASE
OR THE CONSTRUCTION ADDENDUM, NOTICE IS HEREBY GIVEN THAT LANDLORD WILL NOT BE
LIABLE FOR ANY LABOR, SERVICES OR MATERIAL FURNISHED OR TO BE FURNISHED TO
TENANT, OR TO ANYONE HOLDING THE PREMISES THROUGH OR UNDER TENANT, AND THAT NO
MECHANICS’ OR OTHER LIENS FOR ANY SUCH LABOR, SERVICES OR MATERIALS WILL ATTACH
TO OR AFFECT THE INTEREST OF LANDLORD IN THE PREMISES.  TENANT WILL DISCLOSE THE FOREGOING
PROVISIONS TO ANY CONTRACTOR ENGAGED BY TENANT PROVIDING LABOR, SERVICES OR
MATERIAL TO THE PREMISES.

6.          INSURANCE
AND INDEMNITY.

6.1        TENANT’S
INSURANCE.

Tenant
will throughout the Term (and any other period when Tenant is in possession of
the Premises) carry and maintain, at its sole cost and expense, the following
types of insurance, which will provide coverage on an occurrence basis, with
respect to the Premises, in the amounts specified with deductible amounts
reasonably satisfactory to Landlord and in the form hereinafter provided for:

(a)         Commercial General Liability
Insurance.  Commercial general
liability insurance covering claims arising from bodily injury and property
damage with minimum limits of $1,000,000 per occurrence and $2,000,000 general
aggregate and insuring against legal liability of the insured with respect to
the Premises or arising out of the maintenance, use or occupancy thereof.  The liability policy also will cover, but
not be limited to, the contractual liabilities of Tenant arising from this
Lease.

(b)        Comprehensive Automobile Liability
Insurance.   Comprehensive automobile
liability insurance with a limit of not less than $1,000,000 per occurrence for
bodily injury, $500,000 per person and $100,000 property damage or a combined
single limit of $1,000,000 for both owned and non-owned vehicles.

(c)         Excess Liability Insurance.  Tenant will also carry and maintain umbrella
liability insurance with a limit of not less that $5,000,000 per occurrence.

(d)        Property Insurance.  Extended or broad form coverage property
insurance including plate glass coverage on a replacement cost basis, with
coverage equal to the full replacement value of all personal property,
decorations, trade fixtures, furnishings, equipment, Tenant Alterations,
leasehold improvements and betterments made by Tenant, and all other contents
located or placed in the Premises. 
Tenant’s policy will also include business interruption/extra expense
coverage in sufficient amounts.

(e)         Workers’ Compensation and Employers’
Liability Insurance.  Workers’
Compensation Insurance covering all employees of Tenant, as required by the
laws of the State of Florida and Employer's Liability coverage subject to a
limit of no less than $100,000 each employee, $100,000 each accident, and
$1,000,000 policy limit.

(f)         Policy Form.  All policies referred to above will:  (i) be taken out with insurers licensed to
do business in Florida having an A.M. Best’s rating of A-, Class 9, or
otherwise approved in advance by Landlord; (ii) name Landlord and its property
manager as additional insureds; (iii) be non-contributing with, and apply only
as primary and not as excess to any other insurance available to Landlord or
any mortgagee of Landlord; and  (iv)
contain an obligation of the insurers to notify Landlord by certified mail not
less than 15 days prior to any material change, cancellation, or termination of
any such policy.  Certificates of
insurance on Landlord’s standard form or, if required by a mortgagee, copies of
such insurance policies certified by an authorized officer of Tenant’s insurer
as being complete and current, will be delivered to Landlord promptly upon
request.  If (a) Tenant fails to take
out or to keep in force any insurance referred to in this Section 6.1, or should any such insurance not be approved by
either Landlord or any mortgagee, and (b) Tenant does not commence and continue
to diligently cure such default within 48 hours after written notice by
Landlord to Tenant specifying the nature of such default, then Landlord has the
right, without assuming any obligation in connection therewith, to procure such
insurance at the sole cost of Tenant, and all outlays by Landlord will be paid
by Tenant to Landlord as Additional Rent without prejudice to any other rights
or remedies of Landlord under this Lease. 
Tenant will not keep or use in the Premises any article which may be
prohibited by any fire or casualty insurance policy in force from time to time
covering the Premises or the Building.

6.2        LANDLORD’S
INSURANCE.

During
the Term, Landlord will carry and maintain the following types of insurance
with respect to the Building and the Property in such amounts or percentages of
replacement value as Landlord or its insurance advisor deems reasonable in
relation to the age, location, type of construction and physical conditions of
the Building and the Property and the availability of such insurance at
reasonable rates:  (i) broad form or
extended coverage insurance on the Building (excluding any property with
respect to which Tenant and other tenants are obliged to insure pursuant to Section
6.1 or similar sections of their respective leases);
(ii) public liability and property damage insurance with respect to Landlord’s
operations in the Building; and (iii) such other forms of insurance as Landlord
or its mortgagee reasonably considers advisable.  Such insurance will be in such reasonable amounts and with such
reasonable deductibles as would be carried by a prudent owner of a similar
building, having regard to size, age, and location.  Landlord will have the right to self insure any or all of its
liabilities with respect to the Building or the Property.

6.3        RELEASE AND WAIVER OF
SUBROGATION RIGHTS.

The
parties hereto, for themselves and anyone claiming through or under them,
hereby release and waive any and all rights of recovery, claims, actions or
causes of action, against each other, their respective agents, directors,
officers and employees, for any loss or damage that may occur to the Premises
or the Building, and to all property, whether real, personal or mixed, located
in the Premises or the Building, by reason of any cause against which the
releasing party is actually insured or, regardless of the releasing party’s
actual insurance coverage, against which the releasing party is required to be
insured pursuant to the provisions of Sections 6.1
or 6.2.  This
mutual release and waiver will apply regardless of the cause or origin of the
loss or damage, including negligence of the parties hereto, their respective
agents and employees.  Each party agrees
to provide the other with reasonable evidence of its insurance carrier’s consent
to such waiver of subrogation upon request. 
This Section 6.3
supersedes any provision to the contrary which may be contained in this Lease.

6.4        INDEMNIFICATION
OF THE PARTIES.

Tenant
indemnifies and agrees to defend and hold harmless Landlord from and against
any and all liability for any loss, injury or damage, including, without
limitation, consequential damage including, without limitation, all costs,
expenses, court costs and reasonable attorneys’ fees, imposed on Landlord by
any person whomsoever that occurs (i) in the Premises, except for any such
loss, injury or damage that is caused by or results from the gross negligence
or willful misconduct of Landlord, its employees, agents, other tenants or
contractors; (ii) in the Building or anywhere on the Property except for any
such loss, injury or damage that is caused by or results from the negligence or
willful misconduct of Landlord, its employees, agents, other tenants or
contractors; or (iii) in the Building or anywhere on the Property which is caused
by or results from the negligent act or omission of Tenant, its employees,
agents or contractors.  The commercial
liability insurance that Tenant is required to carry pursuant to Section 6.1(a) of this Lease will include coverage of the
foregoing contractual indemnity. 
Landlord indemnifies and agrees to defend and hold harmless Tenant from
and against any and all liability for any loss, injury or damage, including,
without limitation, all costs, expenses, court costs and reasonable attorneys’
fees, imposed on Tenant by any person whomsoever that occurs in the Building or
anywhere on the Property and that is caused by or results from the gross
negligence or willful misconduct of Landlord or its employees, agents or
contractors.  The provisions of this Section
6.4 will survive the expiration or earlier
termination of this Lease.

7.          DAMAGE, DESTRUCTION AND CONDEMNATION.

7.1        DESTRUCTION
OR DAMAGE TO PREMISES.

If
the Premises are at any time damaged or destroyed in whole or in part by fire,
casualty or other causes, Landlord will have 30 days from such damage or
destruction to reasonably determine and inform Tenant whether Landlord will
restore the Premises to substantially the condition which existed immediately
prior to the occurrence of the casualty. 
If Landlord elects to rebuild, Landlord will use diligent, good faith
efforts to complete such repairs to the extent of insurance proceeds within 120
days from the end of the 30 day period and,
if reasonably practical and if not contrary to any agreements to which Landlord
is bound (including any agreements with Landlord's insurance carriers, but not
including any agreements with other tenants of Landlord), Landlord will
diligently attempt to cause such repairs to be a priority if other of
Landlord's properties require repairs contemporaneously with the repairs to the
Premises.  If such repairs have not been completed
within that 120 day period, and Tenant desires to terminate the Lease as a
result thereof, then Tenant must notify Landlord prior to Landlord’s completion
of the repairs of Tenant’s intention to terminate this Lease.  Landlord will then have 30 days after
Landlord’s receipt of written notice of Tenant’s election to terminate to
complete such repairs (as evidenced by a certificate of completion from Landlord's
architect).  If Landlord does complete
such repairs prior to the expiration of such 30 day cure period, Tenant will
have no such right to terminate this Lease. 
Tenant will, upon substantial completion by Landlord, promptly and
diligently, and at its sole cost and expense, repair and restore any Tenant
Alterations or other improvements to the Premises made by Tenant to the
condition which existed immediately prior to the occurrence of the casualty to
the extent of insurance proceeds.  For
purposes of this Section 7.1, "substantial
completion" will be deemed to have occurred when Landlord's repair and
restoration of the Building has reached a stage of completion that allows full
and reasonable use of the Premises for the Permitted Use, with only minor,
non-structural "punch list" type items, if any, remaining to be
completed. If, in the mutual opinion of Landlord and Tenant, the Premises
cannot be restored within 150 days of such damage or destruction (the "Probable
Restoration Period"), then either Landlord or Tenant may terminate
this Lease as of a date specified in a written notice to the other, which date
will not be less than 30 nor more than 60 days after the date such written
notice is given.  If Landlord and Tenant
disagree as to the Probable Restoration Period, then such period will be
determined by a qualified independent general contractor reasonably acceptable
to both parties, and, upon receipt of notice of the Probable Restoration
Period, as determined by such general contractor, Landlord and Tenant will have
10 days within which to exercise their option to terminate this Lease, if
applicable.  Until the restoration of
the Premises is complete, there will be an abatement or reduction of Base Rent
in the same proportion that the square footage of rentable area in the Premises
so damaged or destroyed and under restoration bears to the total square footage
of rentable area in the Premises, unless the damaging event was caused by the
negligence or willful misconduct of Tenant, its employees, officers, agents,
licensees, invitees, visitors, customers, concessionaires, assignees,
subtenants, contractors or subcontractors, in which event there will be no such
abatement or reduction.

Notwithstanding
the foregoing or the following, either Landlord or Tenant may, at their option,
terminate this Lease by notifying the other party in writing of such
termination within 30 days of the date of damage if such damage to the Premises
is in excess of 50% of the value of the Premises, as determined by a qualified
independent general contractor reasonably acceptable to both parties.

Notwithstanding
the foregoing provisions of this Section 7.1, if
damage to or destruction of the Premises in excess of 50% of the value of the
Premises occurs within the last year of the Term, as the same may be extended
as provided herein, the obligation of Landlord to restore the Premises will not
arise unless (i) Landlord, at its sole option, elects to restore such work;
(ii) Landlord, at its sole option, elects to provide Tenant with the
opportunity of extending the Term for an additional period so as to expire 5
years from the date of the completion by Landlord of the repairs and
restoration of the Premises; and (iii) Tenant gives written notice to Landlord
within 30 days after Landlord’s request that Tenant agrees to such
extension.  Such extension will be on
the terms and conditions provided herein, if an option to extend this Lease
remains to be exercised by Tenant hereunder, or under the terms prescribed in
Landlord’s notice, if no such further extension period is provided for
herein.  Upon receipt of such notice
from Tenant, Landlord agrees to repair and restore the Premises within a
reasonable time.  If Tenant fails to
timely extend the Term as provided herein, Landlord at its option will have the
right to terminate this Lease as of the date of the damaging event, or to
restore the Premises and the Lease will continue for the remainder of the then
unexpired Term, or until the Lease is otherwise terminated as provided herein.

7.2        CONDEMNATION.

7.2.1     TOTAL OR PARTIAL TAKING.

If
the whole of the Premises (provided that if 25% or more of the Premises are
taken, Tenant may deem that the whole of the Premises are taken), or such
portion thereof as will make the Premises unusable, in Tenant's commercially
reasonable judgment, for the purposes leased hereunder, shall be taken by any
public authority under the power of eminent domain or sold to public authority
under threat or in lieu of such taking, the Term will cease as of the day possession
or title is taken by such public authority, whichever is earlier (“Taking
Date”), whereupon the Rent and all other charges will be paid up to the
Taking Date with a proportionate refund by Landlord of any Rent and all other
charges paid for a period subsequent to the Taking Date.  If less than the whole of the Premises, or
less than such portion thereof as will make the Premises unusable as of the
Taking Date, is taken, Base Rent and other charges payable to Landlord will be
reduced in proportion to the amount of the Premises taken.  If this Lease is not terminated, Landlord
will repair any damage to the Premises caused by the taking to the extent
necessary to make the Premises reasonably tenantable within the limitations of
the available compensation awarded for the taking (exclusive of any amount
awarded for land).  Notwithstanding the
foregoing to the contrary, if the whole of the Premises are taken, Landlord
will have the right, at its option, to relocate Tenant into other space within
the Building or the Property comparable to the Premises (the "New
Premises") and, in such event, the Term will not cease as provided
above.  Upon such relocation, the New
Premises will be deemed the Premises and the prior space originally demised
(the "Old Premises") will in all respects be released  from the effect of this Lease.  If Landlord elects to relocate Tenant as
above described, (i) the New Premises will contain approximately the same as,
or greater rental area than the Old Premises, (ii) Landlord will improve the
New Premises, at Landlord's cost (other than the cost of stock, trade fixtures,
furniture, and other personal property belonging to Tenant which shall be the
responsibility of Tenant), to at least the standards of the Old Premises, (iii)  Base Rent, Tenant's Share of Operating
Expenses, and all other charges hereunder will be adjusted for variation in the
square footage of the rental area of the New Premises, and (iv) all other terms
of this Lease will apply to the New Premises, except as otherwise provided
herein.

7.2.2     AWARD.

All
compensation awarded or paid upon a total or partial taking of the Premises or
the Building including the value of the leasehold estate created hereby will
belong to and be the property of Landlord without any participation by Tenant;
Tenant will have no claim to any such award based on Tenant’s leasehold
interest.  However, nothing contained
herein will be construed to preclude Tenant, at its cost, from independently
prosecuting any claim directly against the condemning authority in such
condemnation proceeding for damage to, or cost of removal of, stock, trade
fixtures, furniture, and other personal property belonging to Tenant; provided,
however, that no such claim will diminish or otherwise adversely affect
Landlord’s award or the award of any mortgagee.

8.          MAINTENANCE
AND REPAIRS.

8.1        LANDLORD'S
OBLIGATIONS.

Provided
Tenant is not in default under this Lease, Landlord will furnish the following
services (the "Services") at its expense (however, such
expenses may be included in Operating Expenses):

(i)          Repairs and maintenance, for
maintaining in good order at all times the exterior walls, windows, doors, and
roof of the Building, the heating, ventilating and air conditioning systems,
electrical and plumbing systems of the Building, and the walks, paving and
landscaping surrounding the Building.  
Tenant will be responsible for damage, other than normal wear and tear,
to the Premises that is caused by Tenant's usage and occupancy of the Premises.

(ii)         Grounds care, including the sweeping of
walks and parking areas and the maintenance of landscaping in an attractive
manner.

(iii)        Fire and extended coverage insurance to
protect Landlord's interest in the Building.

(iv)       General management, including
supervision, inspections and management functions.

8.1.1     Services will be provided for the Building
during the hours of 8:00 A.M. to 6:00 P.M. on Mondays through Fridays, and from
8:00 A.M. to 1:00 P.M. on Saturday, except for legal holidays observed by
Tenant.  Tenant will advise Landlord of
its local holiday schedule and any changes thereto from time to time.

8.1.2     If Tenant uses Services for a period in
excess of that provided for herein, then Landlord reserves the right to charge
Tenant, as Additional Rent, a reasonable sum as reimbursement for the direct
cost of such added Services.

8.1.3     Landlord will not be liable for any damages
directly or indirectly resulting from the installation, use, malfunction, or
interruption of use of any equipment in connection with the furnishing of Services
referred to herein, and particularly any interruption in Services by any cause
beyond the immediate control of Landlord; but Landlord will exercise due care
in furnishing adequate and uninterrupted Services.  Without limitation on the foregoing, under no circumstances will
Landlord incur liability for damages caused directly or indirectly by any
malfunction of a computer system or systems within the Building resulting from
or arising out of the failure or malfunction of any electrical, air-conditioning
or other system serving the Building.

8.2        TENANT'S
OBLIGATIONS.

8.2.1     Except as specifically provided to the
contrary in Section 8.1 above, Tenant will, at
Tenant's sole cost and expense, maintain in good order, condition and repair
the Premises and the fixtures and appurtenances therein, and will suffer no
active or permissive waste or injury thereof, and Tenant's responsibilities in
conjunction therewith will include, but not be limited to, the cleaning of
window coverings, the shampooing of the carpeting located in the Premises, as
well as the regular painting and decorating of the Premises so as to maintain
the Premises in a first class condition. If any portion of the Premises or any
system or equipment in the Premises which Tenant is obligated to repair cannot
be fully repaired, Tenant will promptly replace the same.  To the extent that the useful life of such
replacement (as determined in accordance with the General Depreciation System
of accounting, or such similar system or method as the parties may reasonably
agree upon) extends beyond the Term, Tenant will, promptly after its purchase
of the replacement, submit to Landlord satisfactory payment and depreciation
evidence with respect to the replacement and, within 30 days after receipt of
the same, Landlord will reimburse Tenant for the prorated cost of said
replacement from the end of the Term to the end of the useful life of such
replacement.  Tenant will, at Tenant's
expense, but under the direction of Landlord and performed by Landlord's employees,
or with Landlord's express written consent, by persons requested by Tenant and
authorized in writing by Landlord, promptly repair any injury or damage to
Premises or Building caused by misuse or neglect thereof by Tenant, or by
persons permitted on the Premises by Tenant, or by Tenant moving in or out of
the Premises.

8.2.2     Tenant agrees that all personal property
brought into the Premises by Tenant, its employees, licensees and invitees will
be at the sole risk of Tenant; and Landlord will not be liable for theft
thereof or of money deposited therein or for any damages thereto, such theft or
damage being the sole responsibility of Tenant.

8.2.3     Tenant will obtain Landlord's consent, such
consent not to be unreasonably withheld, as to the location or relocation
within the Premises of any heavy objects or furnishings such as file cabinets,
vending machines, etc., so as not to cause damage to the Building.

8.3        CONDITION UPON TERMINATION.

Upon
the termination of the Lease, Tenant will surrender the Premises to Landlord,
broom clean and in the same condition as received except for ordinary wear and
tear which Tenant was not otherwise obligated to remedy under any provision of
this Lease. However, Tenant will not be obligated to repair any damage which
Landlord is required to repair under Section 8.1.  All property of Tenant remaining on the
Premises after expiration of the Term will be deemed conclusively abandoned and
may be removed by Landlord, and Tenant will reimburse Landlord for the
reasonable cost of removing the same, subject however, to Landlord’s right to
require Tenant to remove any Tenant Alterations made to Premises by Tenant
pursuant to Section 5.  Tenant will repair, at Tenant's expense, any damage to the
Premises or the Building caused by the removal of any of Tenant’s personal
property, including but not limited to furniture, machinery and equipment.  In no event, however, will Tenant remove any
of the following materials or equipment without Landlord's prior written
consent: any power wiring or power panels; lighting or lighting fixtures;
millwork and cabinetry; wall coverings; drapes, blinds or other window
coverings; carpets or other floor coverings; heaters, air conditioners, or any
other heating or air conditioning equipment; fencing or security gates;
plumbing fixtures, water fountains; or other similar building operating
equipment and decorations.

9.          DEFAULT
AND REMEDIES:

9.1        DEFAULT BY TENANT.  The following will be events of default by Tenant under this
Lease:

(a)         Failure to pay when due any installment
of Rent or any other payment required 
pursuant to this Lease;

(b)        The filing of a petition for bankruptcy
or insolvency under any applicable federal or state bankruptcy or insolvency
law, which is not dismissed within 60 days after the date of filing thereof; an
adjudication of bankruptcy or insolvency or an admission that it cannot meet
its financial obligations as they become due, or the appointment or a receiver
or trustee for all or substantially all of the assets of Tenant, which receiver
is not discharged within 60 days after the appointment thereof;

(c)         A transfer by Tenant in fraud of
creditors or an assignment by Tenant for the benefit of creditors;

(d)        Any act which results in a lien being
filed against the Premises or the Property and such lien not being removed
within 30 days after written notice thereof to Tenant;

(e)         The liquidation, termination or
dissolution of Tenant; and

(f)         Failure to cure any non-monetary
provision of this Lease within 20 days after written notice thereof to Tenant,
provided, however, that in the event such failure to perform cannot reasonably
be cured within such 20 day period, Landlord will not exercise any right or
remedy hereunder if Tenant begins to cure the default within the 20 day period
and continues actively and diligently in good faith to completely cure said
default.

9.2        REMEDIES.   In the event of any default hereunder by Tenant, then without
prejudice to any other rights which it has pursuant to this Lease or at law or
in equity, Landlord will have the following rights and remedies, which are
cumulative and not alternative:

(a)         Landlord may terminate this Lease by
notice to Tenant and retake possession of the Premises for Landlord’s
account.  Tenant will then quit and
surrender the Premises to Landlord. 
Tenant’s liability under all of the provisions of this Lease will
continue notwithstanding any expiration and surrender, or any re-entry,
repossession, or disposition hereunder, including to the extent legally
permissible, payment of all Rent and other charges until the date this Lease
would have expired had such termination not occurred. If Landlord so elects,
Rent will be accelerated and Tenant will pay Landlord damages in the amount of
any and all sums which would have been due for the remainder of the Term.  In the event of such acceleration, Landlord
will use commercially reasonable efforts to relet the Premises and, if the
Premises is relet, will reimburse to Tenant, on a quarterly basis, the accelerated
Rent paid by Tenant to Landlord hereunder to the extent Landlord receives
equivalent sums from its new tenant.

(b)        Landlord may enter the Premises as agent
of Tenant to take possession of any property of Tenant on the Premises, to
store such property at the expense and risk of Tenant or to sell or otherwise
dispose of such property in such manner as Landlord may see fit without notice
to Tenant.  Re-entry and removal may be
effected by summary dispossess proceedings, by any suitable action or proceeding,
or otherwise.  Landlord will not be liable
in any way in connection with its actions pursuant to this section, to the
extent that its actions are in accordance with law.

(c)         Landlord may relet all or any part of
the Premises for all or any part of the unexpired portion of the Term or for
any longer period, and may accept any Rent then attainable; grant any
concessions of Rent, and agree, at Tenant’s expense, to paint or make any
special repairs, alterations, and decorations for any new Tenant as it may deem
advisable in its sole and absolute discretion. 
Landlord covenants to use such commercially reasonable efforts to relet
the Premises as are imposed by law.

(d)        Landlord may remedy or attempt to remedy
any default of Tenant under this Lease for the account of Tenant and to enter
upon the Premises for such purposes.  No
notice of Landlord’s intention to perform such covenants need be given Tenant
unless expressly required by this Lease. 
Except to the extent of any loss or damage caused by the gross
negligence or willful misconduct of Landlord, its employees, agents or
contractors, Landlord will not be liable to Tenant for any loss or damage
caused by acts of Landlord in remedying or attempting to remedy such default
and Tenant will pay to Landlord all expenses incurred by Landlord in connection
with remedying or attempting to remedy such default.  Any expenses incurred by Landlord will accrue interest from the
date of payment by Landlord until repaid by Tenant at the highest rate
permitted by law.

             9.3        COSTS.

In the event it is necessary for either
party to this Lease to retain an attorney to enforce any covenant, condition,
or provision hereof, it is agreed that the prevailing party shall be entitled
to recover, in addition to any damages proven, its reasonable attorneys' fees.  In addition, upon any default by Tenant,
Tenant will also be liable to Landlord for the expenses to which Landlord may
be put in re-entering the Premises, reletting the Premises and putting the
Premises into the condition necessary for such reletting (including attorneys’
fees and disbursements, marshall’s fees, and brokerage fees, in so doing), and
any other expenses reasonably incurred by Landlord.

9.4        WAIVER.

No
delay or omission by Landlord in exercising a right or remedy will exhaust or
impair the same or constitute a waiver of, or acquiescence to, a default.

9.5        DEFAULT BY LANDLORD.

In
the event of any default by Landlord, Tenant’s exclusive remedy will be an
action for damages; provided, however, prior to any such action Tenant will
give Landlord written notice specifying such default with particularity, and
Landlord will have a period of 20 days following the date of such notice in
which to commence the appropriate cure of such default.  Unless and until Landlord fails to commence
and diligently pursue the appropriate cure of such default after such notice or
complete same within a reasonable period of time, Tenant will not have any
remedy or cause of action by reason thereof. 
Notwithstanding any provision of this Lease, Landlord will not at any
time have any personal liability under this Lease, and Tenant’s sole remedy
with respect thereto will be a suit for damages and not a termination of the
Lease.  As a material inducement to
Landlord to enter into this Lease with Tenant, Tenant hereby acknowledges and
agrees that Landlord's liability for any breach or default by Landlord of any
term or provision of this Lease is limited to the greater of the following (the
"Liability Cap"):  (i)
Landlord's equity or interest then owned by Landlord in the Building, or (ii) a
cumulative maximum of $2,500,000.00. 
Notwithstanding the foregoing, in the event that any breach or default
by Landlord of any term or provision of this Lease results from Landlord's
gross negligence or willful misconduct, the Liability Cap set forth above shall
be increased to a cumulative maximum of $5,000,000.00.  In no event will any deficiency judgment be
sought or obtained against Landlord in the event Tenant's damages exceed the
Liability Cap, and Tenant hereby expressly waives any claims for damages in excess
of the Liability Cap.

10.        PROTECTION
OF LENDERS.

10.1      SUBORDINATION
AND ATTORNMENT.   This Lease
will be subject and subordinated at all times to the terms of each and every
ground or underlying lease which now exist or may hereafter be executed affecting
the Premises, and to the liens of each and every mortgage and deed of trust in
any amount or amounts whatsoever now or hereafter existing encumbering the
Premises, the Building or the Property, and to all modifications, renewals and
replacements thereto without the necessity of having further instruments
executed by Tenant to effect such subordination.  Subject to the specific provisions of a subordination and
non-disturbance agreement, so long as no default or event which with the
passing of time or giving of notice would constitute a default, exists under
this Lease, the peaceable possession of Tenant in and to the Premises for the
Term will not be disturbed in the event of the foreclosure of any such mortgage
or deed of trust or in the event of a termination of any ground or underlying
leases affecting the Premises.  If
Landlord’s interest in the Building and or the Property is acquired by any
ground lessor, beneficiary under a deed of trust, mortgagee, or purchaser at a
foreclosure sale or transfer in lieu thereof, Tenant will attorn to the
transferee of or successor to Landlord’s interest in the Premises, the Building
or the Property and recognize such transferee or successor as Landlord under
this Lease.

10.2      ESTOPPEL CERTIFICATES AND
SUBORDINATION AND NON-DISTURBANCE AGREEMENT.  Within 15 days of receipt of a written request of Landlord, any
lender or prospective lender of the Building or Property, or at the request of
any purchaser or prospective purchaser of the Building or the Property, Tenant
will deliver an estoppel certificate, attaching a true and complete copy of
this Lease, including all amendments relative thereto, and certifying with
particularity, among other things, (i) a description of any renewal or
expansion options, if any; (ii) the amount of Rent currently and actually paid
by Tenant under this Lease; (iii) that the Lease is in full force and effect as
modified; (iv) that Tenant is in possession of the Premises; (v) stating
whether either Landlord or Tenant is in default under the Lease and, if so,
summarizing such default(s); and (vi) stating whether Tenant or Landlord has
any offsets or claims against the other party and, if so, specifying with
particularity the nature and amount of such offset or claim.  Landlord will likewise deliver a similar
estoppel certificate within 15 days of the request of Tenant, any lender or
prospective lender of Tenant, or assignee approved by Landlord.

10.3      TENANT'S FINANCIAL CONDITION.   Within 10 days after written request from
Landlord, Tenant will deliver to Landlord such financial statements as are
reasonably required by Landlord to verify the net worth of Tenant, or any
assignee, subtenant, or guarantor of Tenant. In addition, Tenant will deliver
to any lender designated by Landlord any financial statements required by such
lender to facilitate the financing or refinancing of the Building or the
Property. Tenant represents and warrants to Landlord that each such financial
statement is a true and accurate statement as of the date of such statement.
All financial statements will be confidential and will be used only for the
purposes set forth herein.  If there is
a material adverse change in Tenant’s financial condition, Tenant will give
immediate notice of such material adverse change to Landlord.  If Tenant fails to give such immediate notice
to Landlord, such failure will be deemed an event of default under this Lease.

 

	11.	TELECOMMUNICATIONS.
  Tenant acknowledges and agrees that all telephone and telecommunications
  services desired by Tenant will be ordered and utilized at the sole expense
  of Tenant.  All installations of
  telecommunications equipment and wires will be accomplished pursuant to plans
  and specifications approved in advance in writing by Landlord.  Unless Landlord otherwise requests or
  consents in writing, all of Tenant’s telecommunications equipment will be and
  remain solely in the Premises and the telephone closet(s) on the floor(s) on
  which the Premises is located, in accordance with rules and regulations
  adopted by Landlord from time to time. 
  Landlord will have no responsibility for the maintenance of Tenant’s
  telecommunications equipment, including wire, or for any wiring or other
  infrastructure to which Tenant’s telecommunications equipment may be
  connected.  Tenant agrees that, to the
  extent any such service is interrupted, curtailed or discontinued from any
  cause whatsoever, whether or not such loss or damage results from any fault,
  default, negligence, act or omission of Landlord or its agents, servants,
  employees, or any other person for whom Landlord is in law responsible,
  Landlord will have no obligation or liability with respect thereto and it
  will be the sole obligation of Tenant at its expense to obtain substitute
  service.

Landlord
will have the right, upon reasonable prior notice to Tenant, to interrupt or
turn off telecommunications facilities in the event of an Emergency or as
necessary in connection with the operation of the Building or installation of
telecommunications equipment for other tenants of the Building.

Tenant
will not utilize any wireless communications equipment (other than usual and
customary cellular telephones), including antennae and satellite receiver
dishes, within the Premises or the Building, without Landlord’s prior written
consent.  Such consent may be
conditioned in such a manner so as to protect Landlord’s financial interests
and the interests of the Building, and the other tenants therein, in a manner
similar to the arrangements described in the immediately preceding paragraphs.

In
the event that telecommunications equipment, wiring and facilities installed by
or at the request of Tenant within the Premises, or elsewhere within the
Building causes interference to equipment used by another party, Tenant will
assume all liability related to such interference, Tenant will use reasonable
efforts, and will cooperate with Landlord and other parties, to promptly
eliminate such interference.  In the
event that Tenant is unable to do so, Tenant will substitute alternative
equipment which remedies the situation. 
If such interference persists, Tenant will discontinue the use of such
equipment, and, at Landlord’s discretion, remove such equipment according to
the foregoing specifications.

12.        MISCELLANEOUS
PROVISIONS.

12.1      LANDLORD'S LIABILITY; CERTAIN DUTIES.   As used in the Lease, the term
"Landlord" means only the current owner or owners of the fee title to
the Premises, the Building or the Property or the leasehold estate under a
ground lease of the Premises, the Building or the Property at the time in question.
Each landlord is obligated to perform the obligations of Landlord under this
Lease only during the time such landlord owns such interest or title. Any
landlord who transfers its title or interest is relieved of all liability with
respect to the obligations of Landlord under this Lease to be performed on or
after the date of transfer, provided that such transfer is not for the primary
purpose of avoiding such obligations. However, each landlord will deliver to
its transferee all funds previously paid by Tenant if such funds have not yet
been applied under the terms of this Lease.

12.2      INTERPRETATION.

The
captions of the Articles or Sections of this Lease are to assist the parties in
reading this Lease and are not a part of the terms or provisions of this Lease.
Whenever required by the context of this Lease, the singular will include the
plural and the plural will include the singular. The masculine, feminine and
neuter genders will each include the other. In any provision relating to the
conduct, acts or omissions of Tenant the term "Tenant" will include
Tenant's agents, employees, contractors, invitees, successors or others using
the Premises, the Building or the Property with Tenant's expressed or implied
permission.  This Lease will not be
construed more or less favorably with respect to either party as a consequence
of the Lease or various provisions hereof having been drafted by one of the
parties hereto.

12.3      INCORPORATION OF PRIOR
AGREEMENTS; MODIFICATIONS.

This
Lease is the only agreement between the parties pertaining to the lease of the
Premises, the Building or the Property and no other agreements either oral or
otherwise are effective unless embodied herein.  All amendments to this Lease will be in writing and signed by all
parties. Any other attempted amendment will be void.

12.4      NOTICES.

Any
notices which may be permitted or required hereunder will be in writing and
will be deemed to have been duly given as of the date and time the same are
personally delivered, transmitted electronically (i.e., telecopier device) or
within three days after depositing with the United States Postal Service,
postage prepaid by registered or certified mail, return receipt requested, or
within one day after depositing with Federal Express or other overnight delivery
service from which a receipt may be obtained, and addressed as follows:

To
Landlord at the following address:

St.
Joe Commercial

415 Beckrich Road, Suite 350

Panama City Beach, Florida  32407

Telephone:  ***

Telecopy:  ***

Attn:  ***

Copies to:

The St.
Joe Company

1650 Prudential Drive, Suite 400

Jacksonville, Florida 32207

Attn:  ***

Telephone:  *** 

Telecopy:  ***

                           and

The
St. Joe Company

1650 Prudential Drive, Suite 400

Jacksonville, Florida 32207

Attn:  ***

Telephone: *** 

Telecopy: ***

To
Tenant at the following address:

Nextel
WIP Lease Corporation

4500 Carillon Point

Kirkland, WA  98033

Attn: General Counsel

Telephone: (425) 576-3600

Telecopy: (425) 576-3650

                           And

Nextel
Partners

Attn: Facilities Manager.

10901 Bren Road East

Minnetonka, Minnesota 55343

or
at such other address as either party hereto will from time to time designate
to the other party by notice in writing as herein provided.

12.5      RADON GAS NOTICE.

Radon
is a naturally occurring radioactive gas that, when it has accumulated in a
building in sufficient quantities, may present health risks to persons who are
exposed to it over time. Levels of radon that exceed federal and state
guidelines have been found in buildings in Florida. Additional information
regarding radon and radon testing may be obtained from your county public
health unit.  Landlord does not conduct
radon testing with respect to the Building and disclaims any and all
representations and warranties as to the absence of radon gas or radon gas
producing conditions with respect to the Building.

12.6      WAIVERS.

All
waivers must be in writing and signed by the waiving party.  Landlord's failure to enforce any provision
of this Lease or its acceptance of Rent will not be a waiver and will not
prevent Landlord from enforcing that provision or any other provision of this
Lease in the future. No statement on a payment check from Tenant or in a letter
accompanying a payment check will be binding on Landlord.  Landlord may, with or without notice to
Tenant, negotiate such check without being bound to the conditions of such
statement.

12.7      NO RECORDATION.

Tenant
will not record this Lease or any memorandum of lease without prior written
consent from Landlord.

12.8      FORCE MAJEURE.

If
either party cannot perform any of its obligations (except the payment of Rent,
or other sums of money) due to events beyond that party's control, the time
provided for performing such obligations will be extended by a period of time
equal to the duration of such events. Events beyond control include, but are
not limited to, Excusable Delays (as defined in the Construction Addendum),
acts of the other party, acts of God, war, civil commotion, labor disputes,
strikes, fire, flood or other casualty, shortages of labor or material,
government regulation or restriction and weather conditions.

12.9      EXECUTION OF
LEASE.

Submission
or preparation of this Lease by Landlord will not constitute an offer by
Landlord or option for the Premises, and this Lease will constitute an offer,
acceptance or contract only as expressly specified by the terms of this Section 12.9.  In the event that Tenant executes this Lease
first, such action will constitute an offer to Landlord, which may be accepted
by Landlord by executing this Lease, and once this Lease is so executed by
Landlord, such offer may not be revoked by Tenant and this Lease will become a
binding contract.  In the event that
Landlord executes this Lease first, such action will constitute an offer to
Tenant, which may be accepted by Tenant only by delivery to Landlord of a fully
executed copy of this Lease, together with a fully executed copy of any and all
guaranty agreements and addendums provided that in the event that any party
other than Landlord makes any material or minor alteration of any nature
whatsoever to any of said documents, then such action will merely constitute a
counteroffer, which Landlord, may, at Landlord's election, accept or
reject.  Notwithstanding that the Term
Commencement Date may occur and the Term may commence after the date of
execution of this Lease, upon delivery and acceptance of this Lease in
accordance with the terms of this Lease, this Lease will be fully effective,
and in full force and effect and valid and binding against the parties in
accordance with, but on and subject to, the terms and conditions of this Lease.

12.10    AUTHORITY.

As
a material inducement to Landlord to enter into this Lease, Tenant, intending
that Landlord rely thereon, represents and warrants the following to Landlord:

(i)          This Lease constitutes a valid and
binding obligation of Tenant, enforceable against Tenant in accordance with the
terms of this Lease;

(ii)         Tenant is duly organized, validly
existing and in good standing under the laws of the state of Tenant's
organization and has full power and authority to transact business in the State
of Florida; and

(iii)        The execution and delivery of this Lease
by the individual or individuals executing this Lease on behalf of Tenant, and
the performance by Tenant of Tenant's obligations under this Lease, have been
duly authorized and approved by all necessary corporate or partnership action,
as the case may be, and the execution, delivery and performance of this Lease
by Tenant is not in conflict with Tenant's organizational documents or other
charters, agreements, rules or regulations governing Tenant's business as any
of the foregoing may have been supplemented or amended in any manner.

12.11    FLORIDA LAW.

This
Lease will be governed by the laws of the State of Florida.

12.12    COUNTERPART.

This
Lease may be executed in multiple counterparts, each counterpart of which will
be deemed an original and any of which will be deemed to be complete in and of
itself and may be introduced into evidence or used for any purpose without the
production of the other counterpart or counterparts.

12.13    HOLDING OVER.

In
addition to and not limiting any other rights or remedies which Landlord may
have on account of Tenant holding over without written consent of Landlord,
Tenant will pay to Landlord rent in the amount of 125% of the Base Rent, as well
as any and all direct and consequential damages incurred by Landlord on account
of such unapproved holding over including claims by tenants entitled to future
possession.

12.14    TIME IS OF THE ESSENCE.

TIME
IS OF THE ESSENCE OF THIS LEASE AND ALL PROVISIONS CONTAINED HEREIN.

12.15    APPROVAL OF PLANS AND SPECIFICATIONS.

Neither
review nor approval by or on behalf of Landlord of any Tenant's plans nor any
plans and specifications for any Tenant Alterations or any other work performed
by or on behalf of Tenant in and to the Premises, will constitute a
representation or warranty by Landlord, any of Landlord's beneficiaries, the
managing agent of the Building or the Property or any of their respective
agents, partners or employees that such plans and specifications either (i) are
complete or suitable for their intended purpose, or (ii) comply with Applicable
Laws, it being expressly agreed by Tenant that neither Landlord, nor any of
Landlord's beneficiaries, nor the managing agent of the Building or the Property
nor any of their respective agents, partners or employees assume any
responsibility or liability whatsoever to Tenant or to any other person or
entity for such completeness, suitability or compliance.

12.16    RELATIONSHIP.

Landlord
and Tenant disclaim any intention to create a joint venture, partnership or
agency relationship.

12.17    BROKER'S FEE.

Tenant
covenants, represents and warrants that Tenant had no dealings or negotiations
with any broker or agent in connection with the consummation of this
Lease.  Advantis Real Estate Services
Company (“Advantis”) is the sole broker with whom Landlord has dealt in
this transaction and Landlord agrees to pay any commissions due Advantis.  Tenant acknowledges that Advantis represents
solely Landlord with respect to this transaction.  Tenant and Landlord covenant and agree to hold harmless and
indemnify each other from and against any and all costs, expenses (including
reasonable attorneys’ fees before trial, at trial, on appeal and in bankruptcy)
or liability for any compensation, commissions, or charges claimed by any
broker or agent claiming to have been engaged by or to have had dealings with
the indemnifying party with respect to this Lease or the negotiation thereof
other than Advantis.

12.18    WAIVER OF TRIAL BY JURY.

LANDLORD
AND TENANT EACH HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE TRIAL BY
JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM BROUGHT BY EITHER OF THE PARTIES
HERETO AGAINST THE OTHER ON ANY MATTER WHATSOEVER ARISING OUT OF OR IN ANY WAY
CONNECTED WITH THIS LEASE.

12.19    RIDERS AND
EXHIBITS.

All
Riders, Addenda, Schedules and Exhibits attached hereto will be deemed to be a
part hereof and are hereby incorporated herein.

12.20    TENANT
ASSIGNMENT.  Tenant will not
assign this Lease, in whole or in part, or sublease the Premises, in whole or
in part, without the prior written consent of Landlord, which consent will not
be unreasonably withheld, subject to Landlord’s right of recapture set forth
below, and in no event will Tenant be released from any obligation or liability
under this Lease following any such assignment or sublease; provided, however,
that Tenant will have the right, without Landlord's consent, to assign this
Lease or sublet all or any part of the Premises to an Affiliate of Tenant.  For purposes of this Section 12.20, the term "Affiliate" means an
entity which (either directly or indirectly, through one or more
intermediaries) controls, is in common control with or is controlled by
Tenant.  For purposes of this
definition, the term "control" means (a) legal or beneficial
ownership of more than fifty percent (50%) of the voting interests of an
entity, or (b) the possession, directly or indirectly, of the power to direct
or cause the direction of the management or policies of a person or entity,
whether through the ownership of voting securities, by contract or
otherwise.  No sublessee of the Premises
or any portion thereof, may further assign or sublease its interest in the
Premises or any portion thereof.  Other
than an assignment to an Affiliate of Tenant as previously defined, Tenant will
pay Landlord an assignment fee in an amount of $500, together with all legal
fees and expenses incurred by Landlord in connection with the review by
Landlord of Tenant’s requested assignment or sublease pursuant to this Section
12.20, together with any legal fees and
disbursements incurred in the preparation and/or review of any documentation
(collectively, the "Assignment Costs").  Such sums will be paid by Tenant as
Additional Rent within 30 days of invoice for payment thereof.  If the rent due and payable by any assignee
or sublessee under any permitted assignment or sublease together with any other
consideration received by Tenant exceeds the Rent payable under this Lease for
such space, Tenant will pay to Landlord all such excess rent and other excess
consideration within 10 days following receipt thereof by Tenant; provided
however, Tenant may deduct from such excess rent and other excess consideration
the Assignment Costs and any other commercially reasonably costs incurred by
Tenant in connection with establishing such assignment/subletting (e.g., a
reasonable brokerage commission) provided that Tenant provides Landlord with
satisfactory payment evidence of such costs.

Within
15 days after Landlord’s receipt of Tenant’s request for Landlord’s consent to
a proposed assignment or sublease, excluding any assignment or sublease to an
Affiliate of Tenant, Landlord will have the right to require Tenant to reconvey
to Landlord that portion of the Premises which Tenant is seeking to assign or
sublet.  Tenant will reconvey that
portion of the Premises in consideration of Landlord’s release of Tenant from
all future Rent and other obligations, which would not otherwise survive
termination of the Lease, with respect to the portion of the Premises so
reconveyed.  Any such reconveyance will
be evidenced by an agreement reasonably acceptable to Landlord and Tenant in
form and substance.

12.21    LANDLORD ASSIGNMENT.  Landlord will have the right to sell,
transfer or assign, in whole or in part, its rights and obligations under this
Lease and in the Property.  Any such
sale, transfer or assignment will operate to release Landlord from any and all
liability under this Lease arising after the date of such sale, assignment or
transfer.

 

 

[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK]

 

 

IN
WITNESS WHEREOF, Tenant and Landlord
have caused this Lease to be duly executed as of the date first above written
by their respective duly authorized officers, agents or attorneys in fact as
the case may be.

 

	SIGNED,
  SEALED AND DELIVERED IN THE PRESENCE OF:

	"Tenant"
  
	 	NEXTEL
  WIP LEASE CORPORATION, a Delaware corporation
	 	 
	 	 
	

	 	By:	

	Print
  Name:	

	 	Print
  Name:	

	 	Its:	

	President
	 	Date:	

	

	 	 
	Print
  Name:	

	 	(Corporate Seal)
	 	 
	 	"Landlord"
	 	 
	 	THE
  ST. JOE COMPANY, a Florida corporation
	 	 
	 	 
	

	 	By:	

	Print
  Name:	

	 	Print
  Name:	

	 	Its:	

	President
	 	Date:	

	

	 	 
	Print
  Name:	

	 	(Corporate Seal)
	 	 
											

 

EXHIBIT
A-1

SITE
PLAN

 

EXHIBIT
A-2

LEGAL
DESCRIPTION

 

EXHIBIT
B

LEASE
COMMENCEMENT DATE AGREEMENT

 

             THIS AGREEMENT is made and entered into as
of ____________________, 200__, by and between THE ST. JOE COMPANY, a Florida
corporation ("Landlord") and ______________________________, a
________________________ ("Tenant").

WITNESSETH

             WHEREAS, Landlord and Tenant entered into a
lease dated __________________, 2001 (“Lease”) setting forth the terms
of occupancy by Tenant for Suites _____ and _____ at ____________________
located at _______________; and

WHEREAS, Landlord and Tenant
desire to confirm certain dates and other information relating to the Lease as
hereafter set forth.

             NOW THEREFORE, in consideration of the
premises and the covenants hereafter set forth, it is agreed,

             1.          The
foregoing recitals are true and correct and are incorporated herein by
reference.  Capitalized terms used
herein but not defined herein will have the meaning given to them in the Lease.

             2.          The
Term Commencement Date of the Lease is ____________________, 200__ and the
Expiration Date of the Lease is _______________________, 200_, unless sooner
terminated or extended pursuant to the Lease.

             3.          The
Premises contain ____ square feet of rentable area.

             4.          Tenant’s
Share is ______%.

             IN WITNESS WHEREOF,
Landlord and Tenant have executed this document as of the first date set forth
in the first paragraph above.

 

	"Landlord"	"Tenant"
	 	 
	THE
  ST. JOE COMPANY, a Florida
  corporation	 	,
  a
	 	

	 
	 	 
	 	

	 	 
	 	 
	By:	 	 	By:	 
	 	

	 	 	

	Name:	 	 	Name:	 
	 	

	 	 	

	Its:	 	President	 	Its:	 	President
	 	

	 	 	 	

	 
	Date:	 	 	Date:	 
	 	

	 	 	

	 	 
	 	 
														

 

EXHIBIT
C

CONSTRUCTION
ADDENDUM

ATTACHED
TO AND MADE A PART OF THE

LEASE
DATED _________________, 2001 BETWEEN

THE ST.
JOE COMPANY, AS LANDLORD,

AND

NEXTEL
WIP LEASE CORPORATION, AS TENANT

ARTICLE
I

CERTAIN
DEFINITIONS

             For the purposes of this Exhibit (herein called the “Addendum”),
unless the context otherwise requires, the following terms will have the
respective meanings assigned to them in this Article I or the section or
article referred to below:

             1.1        "Additional
Premises" will have the meaning ascribed to the same in Section 1.1 of
the Lease.

             1.2        “Allowance
Amount” will have the meaning set forth in Section 5.2.

             1.3        “Base
Building Architect” will mean Rolland, DelValle & Bradley, Inc., or
such other firm which may hereafter be designated by Landlord and approved in
writing by Tenant, in Tenant's reasonable discretion.

             1.4        “Base
Building Plans” will mean the final, detailed working plans,
specifications, drawings, and construction documents for the Base Building to
be prepared and sealed by the Base Building Architect and approved in writing
by Landlord, and (only to the extent necessary to obtain all requisite building
and other permits) the City of Panama City Beach,
Florida, as such Base Building Plans may be modified in accordance with this
Addendum.

             1.5        “Base
Building” will be that certain one-story building to contain approximately 67,414
square feet of rentable area, together with the Base Building Systems, grading,
drainage, site work and related improvements to be built on the Land in
accordance with the Base Building Plans, all Legal Requirements, and the
provisions of this Addendum.

             1.6         “Base Building Systems” will mean with respect
to the Base Building:   (a) the HVAC unit
on the roof, the plumbing system,
and the restrooms; (b) the
electrical, telephone, telecommunication conduit, water, storm sewer and
sanitary sewer utility systems and connections; (c) the sprinkler and fire protection systems; (d) the lighting systems in the restrooms; (e)  the ceiling
system in the restrooms; (f) the paving and other improvements
for pedestrian and vehicular access and vehicular parking, together with all
equipment, machinery, shafts, flues, piping, wiring, panels and instrumentation
and other appurtenances relating to any or all of the foregoing, all as more
specifically set forth in the Base Building Plans.

             1.7        "Building"
will mean the Base Building and the Leasehold Improvements relating to the
Premises (but not the Leasehold Improvements relating to the Additional
Premises).

             1.8        “Building
Plans” will mean the Base Building Plans and the Leasehold Improvement
Plans.

             1.9        “Building
Work” will mean all construction work, services performed, or materials
provided to the Property in connection with the construction of the Base
Building.

             1.10      “Business
Day” will mean any day other than a Saturday, Sunday, or legal holiday
observed by Tenant.  Tenant will advise
Landlord of its local holiday schedule and any changes thereto from time to
time.

             1.11      “Construction
Contract” will mean any construction contract and/or construction
management agreement to be entered into by Landlord, as owner, for the
construction and/or management of construction of all or any part of the
Building and the other improvements called for in the Building Plans.

             1.12      "Construction Schedule" will
mean the design and construction schedule attached to this Addendum as Schedule
3 and made a part hereof.

             1.13      “Early Occupancy Date” will mean
the date 30 days prior to the date of Substantial Completion as such date of Substantial
Completion is projected by Landlord in good faith.  On the Early Occupancy Date, the construction of the Building and
the Leasehold Improvements relating to the Additional Premises will be
completed to a degree which will allow the installation of Tenant's Lines (as defined in Section 4.5
hereof) without any undue delay or material adverse cost to Tenant; provided,
however, that the Work in the Building and the Additional Premises may continue
as of such date and such completion will not be deemed Substantial Completion
(as defined in Section 1.33 hereof). 
Prior to the installation of Tenant's Lines, Landlord, Tenant and their respective representatives,
will walk through the Building and the Additional Premises to determine the
condition of space within the Building and the Additional Premises as of such
date.  Tenant will be responsible for
all costs of repair of damage to the Building and the Additional Premises
caused by Tenant, its employees, agents or contractors during the period
between the Early Occupancy Date and the Term Commencement Date or the
Effective Date (as defined in Section 1.1 of the Lease), as the case may be.

             1.14      “Excusable
Delay” will mean any delay in Substantial Completion of the Building or the
Leasehold Improvements relating to the Additional Premises due to strikes,
lockouts, or other labor or industrial disturbance (other than on the part of
employees of Landlord), civil disturbance, future order of any government,
court or regulatory body claiming jurisdiction, act of the public enemy, war,
riot, sabotage, blockade, embargo, failure or inability to secure or delay in
securing materials, supplies, or labor through ordinary sources by reason of
shortages or priority or regulation or order of any government or regulatory
body, lightning, earthquake, fire, storm, hurricane, tornado, flood, washout,
explosion, unusually inclement weather, or any cause whatsoever beyond the
reasonable control of Landlord, whether or not similar to any of the other
causes hereinabove stated; provided, however, that for purposes of this
definition, Landlord's or any other person's lack of funds will not be deemed
to be a cause beyond the control of Landlord, and an Excusable Delay will be
deemed to exist only so long as Landlord has timely identified the occurrence
and nature of the delay in accordance with the provisions of Section 4.3
and exercises reasonable due diligence to remove or overcome it.

             1.15      “General
Contractor” will mean the general contractor or construction manager
selected by Landlord for the construction of the Base Building
and the Leasehold Improvements.

             1.16      “Governmental
Authority” will mean any and all courts, boards, agencies, commissions,
offices, or authorities of any nature whatsoever of any governmental unit
(federal, state, county, district, municipal, city, or otherwise) whether now
or hereafter in existence, which have jurisdiction over the Building and the
Additional Premises.

             1.17      “Land”
will mean that tract of real property situated in Bay  County, Florida, and being more particularly depicted  on Exhibit A-1 attached to the Lease.

             1.18      “Leasehold
Contract” will mean the Construction Contract awarded for the construction
of the Leasehold Improvements.

             1.19      “Leasehold
Improvement Architect” will mean firm which may hereafter be designated by Landlord
and approved in writing by Tenant,
in Tenant's reasonable discretion.

             1.20      “Leasehold
Improvement Cost” will mean the maximum cost of construction of the
Leasehold Improvements as established pursuant to Section 2.4.

             1.21      “Leasehold
Improvement Plans” will mean the final, detailed working plans,
specifications, drawings, and construction documents for the Leasehold
Improvements to be prepared and sealed by the Leasehold Improvement Architect
and approved in writing by Landlord, Tenant, and (only to the extent necessary
to obtain all requisite building and other permits) the appropriate
Governmental Authority, as such Leasehold Improvement Plans may be modified in
accordance with this Addendum.

             1.22      “Leasehold
Improvements” will mean all leasehold improvements to be constructed and/or
installed in the Premises and the Additional Premises, including all
partitions, doors and hardware, wall coverings, painting, lighting systems,
supplemental HVAC and electrical systems, ceiling systems, floor coverings,
millwork and other tenant finish improvements (but specifically excluding the
Base Building Systems and other improvements which are defined as part of the
Base Building), all as more specifically set forth in the Leasehold Improvement
Plans.   Leasehold
Improvements will not include furniture, furnishings, office equipment, signs,
artwork, trade fixtures, or special systems installed by Tenant that are in the
nature of movable or removable fixtures or equipment.  Additionally, Leasehold Improvements will not include Tenant's Lines, any items installed
at Tenant's request by General
Contractor, or any other contractor, pursuant to a separate contract with
Tenant, and not otherwise required to be installed in accordance with the
Building Plans.

             1.23      “Leasehold
Improvements Work” will mean all construction work, services performed, or
materials provided to the Property in connection with the construction of the
Leasehold Improvements.

             1.24      “Legal Requirements” will mean (a)
any and all judicial decisions, orders, injunctions, writs, statutes, rulings,
rules, regulations, permits, certificates, or ordinances of any Governmental
Authority in any way applicable to Landlord, Tenant, the Property or the
Project including, but not limited to, any of the aforesaid dealing with the
design, construction, ownership, use, leasing, maintenance, service, operation,
sale, exchange, or condition of real property, or zoning or environmental
matters in effect as of the date of final approval of the Building Plans by the
appropriate Governmental Authority,  (b)
any and all loan documents, construction contracts, leases, declaration of
covenants, conditions or restrictions, or other agreements (written or oral)
and any and all insurance requirements, documents, or instruments relating to
Landlord, Tenant, the Property or the Project to which Landlord, Tenant or the
Property may be bound or encumbered, and (c) any and all covenants,
restrictions, and easements for the Property or the Project as may be recorded
by Landlord in its sole discretion.

             1.25      "Premises" will have the meaning ascribed to
the same in Section 1.1 of the Lease and, for purposes of this Addendum, will
specifically exclude the Additional Premises.

             1.26      “Permitted
Exceptions” will mean only (a) those Title Exceptions as are listed in
attached Schedule 1, (b) those easements (temporary and permanent) which
are reasonably and customarily necessary to service or benefit the development,
use, operation and ownership of the Building or the Additional Premises and
that do not adversely affect the use or occupancy of the Building, the
Additional Premises and Building Facilities by Tenant, and (c) such other Title
Exceptions as may hereafter be approved in writing by Tenant.

             1.27      “Project”
will mean the approximately 10.0 acre tract of real property, of which the
Land, as defined in Section 1.16 above is a part, on which Landlord is
developing a mixed use multiple building business and industrial park known as Beckrich Office Park, including the common drives, walkways, drainage
facilities, and other improvements as generally depicted on the Master
Development Plan for Beckrich Office Park, attached to and made a
part of the Review Plans and Specifications attached to this Addendum as Schedule
2, all as such Beckrich Office Park business and industrial
park may be developed, constructed or modified from time to time by Landlord in
its sole discretion.

             1.28      “Projected
Completion Date” will mean January 1, 2002 with respect to the completion
of the Building, and March 31, 2002 with respect to the completion of the
Leasehold Improvements for the Additional Premises.

             1.29      “Property”
will mean the Building, the Additional Premises and the Land and all
appurtenances thereto.

             1.30      “Punch
List Items” will mean those items of construction, decoration, and
mechanical adjustment relating to the Building or the Leasehold Improvements
relating to the Additional Premises, as the case may be, which, individually or
in the aggregate, are minor in character and do not materially interfere with
Tenant's use or enjoyment of the Building or the Leasehold Improvements
relating to the Additional Premises, as the case may be, and the appurtenances
thereto and for which it may be reasonably anticipated that the completion will
occur within 30 days after Substantial Completion, subject to extension for
Excusable Delay. The Base Building Architect (as to the Base Building) and the
Leasehold Improvement Architect (as to the Leasehold Improvements) will each
prepare a schedule of Punch List Items upon Substantial Completion of each
relevant portion of the Building or the Leasehold Improvements relating to the
Additional Premises (i.e., a schedule of Punch List Items upon Substantial
Completion of Building and a separate schedule of Punch List Items upon
Substantial Completion of Leasehold Improvements of the Building), each such
schedule to be reviewed and approved in writing by Landlord, Tenant, General Contractor and, as
appropriate, the Base Building
Architect and the Leasehold
Improvement Architect.

             1.31      “Review
Plans and Specifications” will mean the preliminary plans, drawings, and
specifications for the Base Building (including the Base Building Systems)
approved by Landlord and Tenant and more particularly described in Schedule
2 attached to this Addendum and made a part hereof.

             1.32      “Substantial
Completion” or “Substantially Complete” will mean the completion by
Landlord of the construction of the Building or the Leasehold Improvements for
the Additional Premises, as the case may be, or relevant portion thereof, all
as more specifically set forth in the Building Plans, including, but not
limited to, the construction and installation of the Base Building Systems, in
accordance with the Building Plans, all applicable Legal Requirements and this
Addendum, in a good and workmanlike manner, and in accordance with good
construction and engineering practices, free from known material defects
(structural, mechanical, or otherwise) in design, workmanship, and materials,
with new materials (unless otherwise specified in the Building Plans), and with
the only additional construction to be effected being Punch List Items.  Without limiting the foregoing, “Substantial
Completion” will not be deemed to have occurred until all of the following
conditions have been satisfied (or waived in writing by Tenant):  (a) receipt of a Certificate of Substantial
Completion by the Base Building Architect (as to the Base Building) and the Leasehold Improvement
Architect (as to the Leasehold Improvements) on AIA
Form G704 (or a substantially similar form) relating to the construction of the
Building, or the Leasehold Improvements relating to the Additional Premises, or
relevant portion thereof, as the case may be; (b) substantially all exterior
work will have been performed (except as to Punch List Items) and all outside
hoists have been removed from the Building; (c) the City, county or other
Governmental Authority has conducted all inspections, and issued all
certificates and approvals, necessary for legal occupancy of the Building or
the Additional Premises or relevant portion thereof by Tenant, as the case may
be (unless the failure to obtain any necessary certificate or approval is
caused   by
Tenant’s failure to complete the installation of Tenant's
Lines); (d) Tenant, its employees, agents and
invitees have ready access to, and parking adjacent to, the Building; and (e)
all necessary utilities and plumbing are available in capacities not less than
as set forth in the Building Plans. At Landlord's request, Tenant will execute
and deliver to Landlord a written acknowledgment that Substantial Completion
has occurred.  Acceptance of possession,
use or occupancy of the Premises or the Additional Premises by Tenant will not
be deemed to constitute a waiver of Landlord's duties, obligations or
warranties expressly set forth in this Addendum or the Lease.

             1.33      “Tenant Delay” will mean any delay
in Substantial Completion of the Building (or relevant portion thereof) or the
Leasehold Improvements for the Additional Premises, as the case may be, which
is due directly or indirectly to any act or omission of Tenant, its employees,
agents, contractors, or subcontractors, including,
without limitation, any changes to the Building Plans or
in the Work made by or at the request of Tenant pursuant to Section 3.2,
and any failure of Tenant or Tenant's Consultant to review and comment on,
within the time frames set forth in this Addendum, any plans, drawings,
specifications or other construction documents required by this Addendum to be
submitted to Tenant or Tenant's Consultant by Landlord.  No Tenant Delay will be deemed to have
occurred under this Addendum unless Landlord has identified the occurrence and
nature of the delay in accordance with the provisions of Section 4.3.  There will be excluded from the number of
days of Tenant Delays any days of delay which are caused by any act or omission
of Landlord, its employees, agents, contractors or subcontractors (including,
but not limited to, the Base Building Architect) and any Excusable Delays.  Landlord will have no obligation to attempt
to mitigate, through expediting the prosecution of any Work or changing the
scope of the Work or otherwise, the actual or presumed effects of a Tenant
Delay on Landlord’s ability to achieve Substantial Completion; provided,
however, that at Tenant’s request and with a written agreement by Tenant to pay
any additional costs incurred by Landlord resulting therefrom, Landlord will
use all reasonable efforts to accelerate the performance of the Work to
mitigate the effects of any Tenant Delay.

             1.34      “Tenant's
Consultant” will mean such individual or firm (if any) as is so designated
by Tenant from time to time.

             1.35      “Tenant's
Building Changes” will have the meaning set forth in Section 3.2.

             1.36      “Tenant's
Cost” will have the meaning set forth in Section 5.2.

             1.37      “Tenant's
Delay Damages” will have the meaning set forth in Section 6.1.

             1.38      "Tenant's Lines" will
have the meaning set forth in Section 4.5.

             1.39      Term Commencement Date” will mean the date of
Substantial Completion of the Building as accelerated one day for each day of
Tenant Delay.

             1.40      “Title Exception” will mean any
lien, mortgage, security interest, encumbrance, pledge, assignment, claim,
charge, lease (surface, space, mineral, or otherwise), condition, restriction,
option, conditional sale contract, right of first refusal, restrictive
covenant, exception, easement (temporary or permanent), right-of-way,
encroachment, overlap, or other outstanding claim, interest, estate, or equity
of any nature whatsoever affecting or pertaining to the Property or any portion
thereof.

             1.41      “Work” will mean the Building Work
and the Leasehold Improvements Work.

             Additional
defined terms may appear in other provisions of this Addendum and, if so, will
have the respective meanings assigned to them. Capitalized terms not
specifically defined in this Addendum will have the same meanings as ascribed
thereto in the Lease.  The definition of
a term or phrase in the singular will include and allow for a reference to such
term or phrase in the plural or vice versa.

ARTICLE
II

BUILDING
PLANS AND

CONSTRUCTION CONTRACTS

             2.1        Preparation
of Building Plans.

             (a)         Base
Building Plans.  Landlord will cause
the Base Building Architect to prepare (and, as appropriate, revise) site
plans, concept plans, foundation and shell building construction documents and
other plans, drawings, specifications and construction documents for the Base
Building.  All
such plans, drawings, specifications and other construction documents will be
consistent in all material respects with the scope, design or general quality
of the Base Building as reflected in the Review Plans and Specifications.  On or before May 24,
2001, all such plans, drawings, specifications and
construction documents will be submitted to Tenant and Tenant’s Consultant (if
any), not for Tenant’s approval, but only to allow Tenant to confirm that the
same are consistent in all material respects with the scope, design or general
quality of the Base Building as reflected in the Review Plans and
Specifications, and Tenant may, by appropriate marking, provide specific
indications of any non-compliance with the Review Plans and Specifications or
any requested revisions (in which event the relevant plans,
drawing, specifications or other construction documents will be revised by the
Base Building Architect and resubmitted to Tenant on or before 10 Business Days
after Landlord's receipt of Tenant's specific indications of any non-compliance
or requested revisions, and the process repeated, until finally completed in
full; provided, however, in no event will this process extend beyond June 30,
2001).  In no
event will Tenant's requested revisions require or result in a material change
in the scope, design or general quality of the Base Building as reflected in
the Review Plans and Specifications, including, without limitation, any change
in the rentable or useable floor area of the Base Building. Tenant will provide
specific indications of any non-compliance with the Review Plans and
Specifications or requested revisions to any items submitted pursuant to this
subparagraph (a) no later than 5 Business Days after
receipt by Tenant and Tenant’s Consultant (if any). The failure of Tenant to
notify Landlord of any non-compliance or requested revisions within 5 Business Days after Tenant's receipt of such items will
be deemed to be a lack of objection thereof by Tenant.

             (b)        Leasehold Improvement Plans.
Landlord will cause the Leasehold Improvement Architect to prepare (and, as
appropriate, revise) plans, drawings specifications and construction documents
for the Leasehold Improvements.  In no event will any such plans, drawings,
specifications and other construction documents require or result in a change
in the scope, design or general quality of the Base Building as reflected in
the Review Plans and Specifications and/or the Base Building Plans.  On or before August 1,
2001, all such plans, drawings, specifications and
construction documents will be submitted to Tenant and Tenant will, by
appropriate marking, either approve the same or provide specific indications of
rejections and requested revisions (in which event the relevant plans,
drawings, specifications or other construction documents will be revised by the
Leasehold Improvement Architect and resubmitted to Tenant on
or before 10 Business Days after Landlord's receipt of Tenant's specific
indications of rejections or requested revisions,
and the process repeated, until finally approved in full;
provided, however, in no event will this process extend beyond August 26,
2001). 
Notwithstanding the generality of the foregoing, in no event will Tenant
have any right to reject or request any revision to any plans, drawings,
specifications or other construction documents for the Leasehold Improvements
if the same would (i) require or result in a change in the scope, design or
general quality of the Base Building as reflected in the Review Plans and
Specifications and/or the Building Plans, (ii) have an adverse impact on the
Base Building Systems, (iii) have an adverse impact on the exterior appearance
of the Building or the Additional Premises, or (iv) have an adverse impact on
the appearance or functionality of any common areas located on a floor where
the Tenant does not lease the entire floor. Tenant will approve or provide
specific indications of rejections and requested revisions to any items
submitted (or resubmitted) pursuant to this subparagraph (b) no later than 5 Business Days after receipt by
Tenant. The failure of Tenant to notify Landlord of approval or disapproval of
the items submitted to Tenant under this subsection (b) within 5 Business Days after Tenant's
receipt of such items will be deemed to be an approval thereof by Tenant, and
to the extent appropriate, incorporated in the Work.

             (c)         Final Plans and Specifications.  Upon final approval by Landlord
andTenant of the plans, drawings, specifications, and construction
documents for the Building and the Leasehold Improvements for the Additional
Premises, whether actual or deemed as set forth in this Section 2.1, two
sets thereof will be initialed by, and delivered to, Landlord and Tenant to
reflect their applicability to the Lease and same will become a part of the
Building Plans.

             (d)        Cooperation.  Notwithstanding anything contained in this Section
2.1 to the contrary, it is the intent of Landlord and Tenant to proceed as
quickly as reasonably possible to resolve any issues regarding the consistency
of the proposed Building Plans with the Review Plans and Specifications and
finalize the Building Plans, and Landlord and Tenant agree to fully cooperate
with each other in an effort to accelerate the completion and finalization of
the Building Plans.

             2.2        Effect
of Approval.  To the extent that
Tenant’s approval or consent is required or contemplated hereunder, approval by
Tenant (whether actual or deemed) will (a) be non-technical approval of design,
materials, and equipment, (b) not be deemed to mean approval of structural
capacity of the Base Building or the Base Building Systems, size of ducts and
piping, adequacy of electrical wiring, system/equipment capacities and, without
limitation, other technical matters, (c) not relieve Landlord of responsibility
for proper and adequate design of the Base Building or construction of the
Building or the Leasehold Improvements relating to the Additional Premises, and
(d) not be deemed approval by Tenant of any extension of the period in which
Landlord is to Substantially Complete construction of the Building or the Leasehold
Improvements relating to the Additional Premises, as provided in the
Lease.  Provided however, Tenant will
promptly notify Landlord of any defects or problems in the Building Plans and
the construction of the Building or the Leasehold Improvements for the
Additional Premises to the extent that Tenant has actual knowledge
thereof.  In addition, where Tenant
contemplates installation of Leasehold Improvements, trade fixtures, or
equipment which are not specifically identified in the Review Plans and Specifications,
and which require structural, electrical or mechanical capacity in excess of
such capacity as shown in the Review Plans and Specifications, Tenant will be
obligated to advise Landlord of such requirements and request appropriate
modification to the Base Building Plans as otherwise provided for in this
Addendum.  Landlord will ensure that the
structure and detail of the utilities and the mechanical, electrical and other
Base Building Systems meet all applicable Legal Requirements and the Building Plans
and that all of the Work satisfies all Legal Requirements.  Landlord will obtain from General
Contractor, and Landlord will use its reasonable efforts
to obtain from the Base Building Architect, the Leasehold Improvement
Architect, and any electrical, mechanical or structural engineer providing
services for the design or construction of the Building and the Leasehold
Improvements relating to the Additional Premises, warranties and guarantees, in
a form acceptable to Landlord, in Landlord's reasonable discretion, as to the
sufficiency and adequacy of the construction of the Base Building, the Base
Building Systems and the Leasehold Improvements.  Landlord will obtain from the Base Building Architect and the
Leasehold Improvement Architect, certificates, in a form acceptable to
Landlord, in Landlord's reasonable discretion, as to the sufficiency and
adequacy of the design of the Base Building, the Base Building Systems and the
Leasehold Improvements.

             2.3        Construction
Contract for Base Building. 
Landlord may solicit bids for or enter into on a negotiated basis
Construction Contracts for the construction of the Base Building, as determined
by Landlord.

             2.4        Construction Contract for Leasehold
Improvements.  Landlord will solicit
a bid from General Contractor) for the construction of the Leasehold Improvements, and
any changes thereto, for each of the following
components of the Leasehold Improvements:  HVAC; electrical; drywall; and
plumbing/mechanical. 
Promptly after receipt of the bid, Landlord and Tenant will establish the Leasehold
Improvement Cost.  The Leasehold Improvement Cost will only include
“general conditions” cost items as the same will be addressed in the
Construction Contract for the Base Building for the period of time which occurs
after Substantial Completion of the Building, or the Leasehold Improvements
relating to the Additional Premises, as the case may be, or which require
special general conditions related specifically to the nature of the Leasehold
Improvement Work.  Landlord will have
the right in Landlord's sole discretion to elect as to whether the Leasehold
Contract will be awarded on a guaranteed maximum cost basis or on a lump sum
basis.  In the event the established
Leasehold Improvement Cost exceeds the Allowance Amount, Tenant, at its option,
will have the right to have the Leasehold Improvements redesigned, in a manner
reasonably acceptable to Landlord, so as to lower the Leasehold Improvement
Cost, and have the project renegotiated,
with General Contractor to re-establish the
Leasehold Improvement Cost; provided, however, that if any such redesign causes changes in materials or other Construction Schedule
impacts or is the cause of a delay in obtaining a building permit beyond the
applicable deadline date set forth in the Construction Schedule, then such
delay will constitute a Tenant Delay. Notwithstanding the foregoing, Landlord
and Tenant acknowledge that, by mutual agreement of Landlord and Tenant,
negotiated contracts may be let as to certain aspects of the development and
construction of the Leasehold Improvements and, accordingly, the Leasehold
Improvement Cost may be established as a negotiated amount.  To the extent practical and possible,
Landlord will give to Tenant and Tenant's Consultant (if any) 5 days' prior
notice of any pre-bid conferences with General Contractor and will permit Tenant and Tenant's Consultant
(if any) to attend such meetings for purposes of clarifying the scope of work
and the levels of craftsmanship which will be acceptable for the Leasehold Improvements.

ARTICLE III

CHANGES IN BUILDING

PLANS AND COST OF CHANGES

             3.1        Changes
to the Building Plans by Landlord. 
Landlord will not make, or permit to be made, any material changes or
any other changes which would materially and adversely affect Tenant's use or
enjoyment of the Premises or the Additional Premises in the Building Plans or
approve or acquiesce in any material deviations from the Building Plans without
the prior written consent of Tenant, except as may be required to comply with
Legal Requirements or to correct construction defects or hazardous
conditions.  From time to time, Landlord
may request, by submitting an analysis of the additional cost or savings and
change, if any, in the Substantial Completion date, that Tenant approve any
such changes in the Building Plans, or to the work already installed prior to
Substantial Completion.  If Tenant
should fail to approve in writing such change requested by Landlord within 10
Business Days following receipt thereof, the same will be disapproved in all
respects by Tenant, and Landlord will not be authorized to make such requested
change.  Landlord will be solely liable
and obligated to pay all costs, expenses and changes relating to or resulting
from any changes to the Building Plans requested by Landlord. No change in the
Building Plans requested by Landlord (whether or not approved by Tenant) will
be the basis of any Tenant Delay.

             3.2        Changes
to the Building Plans by Tenant. 
From time to time after Tenant has reviewed the Base Building Plans and
approved the Leasehold Improvement Plans, Tenant may request Landlord to make
changes in the Building Plans or to the Work already installed prior to
Substantial Completion.  Any changes to
the Building Plans so requested by Tenant (herein referred to as “Tenant's
Building Changes”) will be subject to Landlord's prior written approval,
which will not be unreasonably withheld; provided, however, that such approval
may be withheld in Landlord’s sole discretion if such proposed change requires
or results in a change in the scope, design, general quality or rentable area
of the Base Building or a delay in the Substantial Completion of the Building
or the Leasehold Improvements relating to the Additional Premises, as the case
may be.  Landlord will, within 20
Business Days following receipt of Tenant's proposed changes, deliver to Tenant
(a) a statement of the estimated change, if any, in the cost of construction of
the Building or the Leasehold Improvements for the Additional Premises, as the
case may be (the “Building Cost”) in connection with such Tenant's
Building Changes as above provided, and (b) an estimate of the period of time,
if any, that such Tenant's Building Changes will delay the Substantial
Completion of the Building or the Leasehold Improvements for the Additional
Premises, as the case may be.  In the
case of Tenant's Building Changes requested prior to the awarding of a
Construction Contract for the subject work, Landlord's statement of estimated
change in the Building Cost will be based on a good faith estimate of such
costs by Landlord and, in the case of Tenant's Building Changes requested after
the awarding of a Construction Contract for the subject work, the statement of
estimated change in Building Cost will be based on the proposed change order to
the Construction Contract to be issued and approved by Landlord for such
Tenant's Building Changes.  If Tenant
fails to approve in writing Landlord's submission within 10 Business Days
following receipt thereof, the same will be deemed disapproved in all respects
by Tenant, and Landlord will not be authorized to make the change.  If Tenant approves in writing the statement
of cost and the delay in Substantial Completion as submitted by Landlord,
Landlord will promptly cause the Building Plans to be modified to provide for
such change and will submit such modified Building Plans to Tenant.

             3.3        Accounting for Changes.  During the construction of the Work,
Landlord will cause to be submitted to Tenant and Tenant's Consultant monthly
progress reports prepared by General Contractor, and
approved by the Base Building Architect and the Leasehold Improvement Architect
as to the Building Work and the Leasehold Improvements Work, respectively,
specifying any change in the estimated date of Substantial Completion, and
showing the progress of the Work, and, as to those items for which the cost is
the responsibility of Tenant, the amount of estimated costs and/or savings
attributable to any approved changes or delay of any kind including Tenant
Delay.  Landlord will submit to Tenant
such accounts, records, invoices, and evidences of payment as Tenant may
reasonably request to evidence the costs or savings as to those items for which
the cost is the responsibility of Tenant or for which the savings will benefit
Tenant.  Within 30 days after
Substantial Completion, an analysis will be completed to determine the sum
total of additional charges due to Landlord (after crediting savings and, to
the extent applicable, the Allowance Amount) by reason solely of Tenant's
Building Changes or Tenant Delay.  If an
amount is due to Landlord after crediting savings and, to the extent
applicable, the Allowance Amount, and after submission to and approval by
Tenant of such accounts, records, invoices, and evidence of payments as Tenant
may reasonably request, such amount (plus interest accrued thereon at an agreed
rate of the then “prime rate” as published in The Wall Street Journal  plus 2% interest per annum from the date of
Landlord's payment), to the extent not added to the Base Rent as provided in Section
5.2 of this Addendum, will be paid in cash by Tenant to Landlord within 30
days after the analysis and determination have been completed.  Tenant will be obligated to pay the fees
(including, but not limited to, the fees of the Base
Building Architect, the Leasehold
Improvement Architect, and other professionals
engaged and utilized by the Landlord), expenses, and charges of Landlord and
all contractors, subcontractors, suppliers, materialmen, and laborers to the
extent, but only to the extent, that such fees, expenses, and charges are
directly or indirectly incurred as a result of Tenant's Building Changes or
Tenant Delay and, to the extent the same relate to the Leasehold Improvements,
only to the extent the same cause the Leasehold Improvement Cost to exceed the
Allowance Amount.

ARTICLE IV

CONSTRUCTION OF THE BUILDING

             4.1        Performance. 
Landlord will cause to be furnished, installed, and performed completely
all of the Work for the construction and completion of the Building and  the Leasehold Improvements for the
Additional Premises as shown on and in accordance with the Building Plans, as
modified by approved changes as provided in Article III.  Landlord will be fully responsible for all
matters that must be accomplished to complete the Work in accordance with the
provisions of this Addendum including, without limitation, filing plans and
other required documentation with the proper Governmental Authority, securing
all necessary permits, supervising all details of the Work, and promptly
removing or otherwise handling to Tenant's reasonable satisfaction all
mechanics', materialmen's and like liens from the public record by payment or
surety bond. Landlord will cause all construction on or in the Building and the
Leasehold Improvements for the Additional Premises to be performed in
accordance with all applicable Legal Requirements in a good and workmanlike
manner and in accordance with good construction and engineering practices, free
from material defects (structural, mechanical, or otherwise) in design,
workmanship, and materials, and with new materials (unless otherwise specified
in the Building Plans), all as more specifically set forth in the Building
Plans, excluding any items installed at Tenant's request by General
Contractor, or any other contractor, pursuant to a separate contract with
Tenant, and not otherwise required to be installed in accordance with the
Building Plans.

             4.2        Non-Liability of Tenant.  Subject to the terms and conditions of Sections 4.4 and 4.5,
Tenant will not be liable for any injury, loss, or damage to any person
(including, but not limited to, death) or property on or about the Property
during construction, unless caused by Tenant, its employees, agents,  contractors 
or invitees, and Landlord will indemnify and save Tenant harmless
against and from any such liability, and any costs or charges (including,
without limitation, reasonable attorneys' fees and court costs) which Tenant
may incur on account of such injury, loss, or damage.

             4.3        Information;
Monthly Report.  During the period
prior to the Term Commencement Date (and, with respect to the Additional
Premises, prior to the Effective Date), Landlord will provide all reasonable
cooperation to keep Tenant informed as to material aspects pertaining to the
design, construction, use, maintenance, operation, service, or insurance of the
Building and the Additional Premises. 
Accordingly, upon written request, Landlord will furnish Tenant's
Designated Representative (as defined below) with copies of all progress
reports, correspondence, or other 
information as may be material and pertinent to the Property, other than
internal communications or confidential matters between Landlord and its
attorneys or accountants and materials and information relating to the cost of
the Building and the Leasehold Improvements relating to the Additional Premises
(except to the extent the same relate to cost items which are the
responsibility of Tenant). Tenant's Designated Representative and Tenant’s
Consultant (if any) will have the right to attend scheduled meetings material
to the interest of Tenant as may be held with respect to the Property between
Landlord, General Contractor, the
Base Building Architect, the Leasehold Improvement Architect, and any other
outside person or firm (other than Landlord's attorneys or accountants)
furnishing materials, services, or labor to or with respect to the Property.
Landlord agrees to make a good faith effort to provide Tenant with reasonable
prior notice of any scheduled meetings material to the interest of Tenant, but
will not be obligated to attempt to schedule any such meetings to accommodate
Tenant’s availability or convenience. 
Furthermore, Tenant’s failure to timely attend any such scheduled
meetings will not constitute a basis for any claim by Tenant that Landlord has
violated the foregoing provisions. 
Prior to the Term Commencement Date (and, with respect to the Additional
Premises, prior to the Effective Date), Landlord and its construction team will
meet no less frequently than once each month to discuss and analyze the
progress of construction and Landlord will prepare and deliver to Tenant a
written report (which may be in the form of the minutes of the meeting) (a “Construction
Meeting Report”) summarizing the material items discussed at such meeting
and the effect of such items, if any, on the Construction Schedule.  Each Construction Meeting Report will
specifically identify any event or condition which would constitute an Excusable
Delay or a Tenant Delay (and any incurred cost directly or indirectly resulting
from a Tenant Delay) which has occurred since issuance of the immediately prior
Construction Meeting Report.

             4.4        General
Access.  Landlord will afford
Tenant, its employees, and its representatives regular access during normal
business hours to the Land and the Building and the Additional Premises, all
materials thereon and therein, and all Work being performed thereon and
therein; provided, however, that in exercising such right of access, Tenant and
its employees and representatives will comply with all Legal Requirements
(including, but not limited to, OSHA safety regulations and standards) and will
coordinate such access with General Contractor. Tenant
will be required to provide at least 24 hours prior notice to General
Contractor for the purpose of coordinating Tenant’s entry onto the Property
with Work then in progress.  Tenant
acknowledges that its ability to gain entry to the Property occasionally may be
limited or restricted due to the particular stage of Work then in progress and
Tenant will at all times be accompanied by a representative of Landlord except
during periods in which Tenant, its employees and representatives are engaged
in the installation of Tenant's equipment and other property as provided in Section
4.5. Tenant indemnifies and agrees to hold harmless Landlord, General
Contractor from and against any and all claims arising
from, or claimed to arise from, any negligence, act or failure to act, of
Tenant, its employees, representatives, and invitees while on the Land or the
Project, or in the Building  or the
Additional Premises prior to the Term Commencement Date (and prior to the
Effective Date with respect to the Additional Premises), or for any other
reason whatsoever arising out of Tenant's access to or being on the Land or in
the Building or the Additional Premises prior to the Term Commencement Date or
the Effective Date, as the case may be. Tenant’s indemnification obligation
pursuant to the provisions of this Section 4.4 will survive and continue
in full force and effect after the Term Commencement Date and the expiration or
termination of the Lease (regardless of how same may occur).

             4.5
       Installation of Tenant's Lines; Early Occupancy.  At such time as the
Building or the Additional Premises, as the case may be, shall be in a state
suitable for the commencement of the installation of Tenant's Lines
(as defined below) (as reasonably determined by
Landlord in good faith), which in any event will be no later than the Early
Occupancy Date, Tenant and its employees, agents, contractors, and
subcontractors may enter upon the Property for the purpose of installing and
arranging Tenant's electrical and
telecommunications cabling (Tenant's
Lines”).  In exercising such right of access, Tenant
and its employees, agents, contractors and subcontractors will comply with all
reasonable standards and regulations established by Landlord and will
coordinate their efforts with General Contractor to insure timely completion of all Work in the Building
and the Additional Premises, and maintenance of the Property in a safe
condition.  During performance of any
such work, Tenant's employees, agents, contractors and subcontractors will also
coordinate with Landlord the delivery, storage, movement and installation of Tenant's Lines.  Any work performed by Tenant's employees,
agents, contractors or subcontractors will be conducted in such manner so as to
maintain harmonious labor relations and not to interfere with or delay General Contractor or Landlord's construction
of the Building, the Leasehold Improvements relating to the Additional Premises
or any other improvements to the Property. 
Landlord will provide Tenant's employees, agents, contractors and
subcontractors with reasonable access to the Building, the Premises and the
Additional Premises for the purpose of making inspections and taking
measurements in advance of the period for the installation of Tenant's Lines; provided that the
construction of the Building and the Leasehold Improvements relating to the
Additional Premises will have reached a point in Landlord's reasonable judgment
such that Landlord will not be unreasonably delayed or hampered in the
completion thereof by permitting such early access.  In connection with the access permitted under this Section 4.5, Tenant covenants (i) to cease
immediately upon request by Landlord any activity or work during any period
which, in Landlord's reasonable judgment, will unreasonably interfere with or
delay Landlord's prosecution or completion of the Building, the Additional
Premises or any other improvements to the Property, or in the Landlord’s or General Contractor’s reasonable judgement will create any
unsafe condition at the Property (ii) that such access will be at the sole risk
of Tenant and will be deemed to be a license, (iii) that prior to exercising
such right, Tenant will deliver to Landlord the certificates of insurance
evidencing such insurance as is required by Landlord, in Landlord's reasonable
discretion, including public liability, property damage and worker's
compensation to protect Landlord, General Contractor and
Tenant during the period of Tenant's access, and (iv) that Tenant indemnifies
and agrees to hold harmless Landlord and General Contractor from and against
any and all claims arising from, or claimed to arise from, or out of the
performance of any work by or on behalf of Tenant on or in the Property other
than by Landlord or Landlord's contractors, agents, employees or
representatives, or which may arise by reason of any matter collateral thereto,
and from and against any and all claims arising from, or claimed to arise from,
any negligence, act or failure to act, of Tenant, its contractors,
subcontractors, decorators, servants, agents 
employees or invitees, or for any other reason whatsoever arising out of
Tenant's access to the Property or being in the Premises, or the Additional
Premises or in connection with the work to be performed by or for Tenant by
anyone other than Landlord or Landlord's contractors, agents, employees or
representatives. Tenant’s indemnification obligation pursuant to the provisions
of this Section 4.5 will survive and continue in full force and effect
after the Term Commencement Date and the expiration or termination of the Lease
(regardless of how same may occur). Tenant or Tenant's contractors will carry
comprehensive general insurance, which will include coverage of the foregoing
contractual liability. Tenant will not permit any mechanic's or materialmen's
lien to be placed upon the Property caused by or resulting from any work
performed, materials furnished or obligation incurred in connection with the
installation of Tenant's Lines
and, in the case of the filing of any such lien Tenant will promptly pay same
or bond around such claims to the satisfaction of Landlord, in Landlord's
reasonable discretion.

             4.6        No Assumption of Responsibility.  Except as otherwise expressly provided
herein, neither the exercise nor the failure to exercise by Tenant or its
representatives of any right afforded Tenant under this Addendum (including
specifically, but without limitation, the exercise or the failure to exercise
of a right to review, comment upon, approve, or disapprove documents, plans,
specifications, drawings, or other matters, or the performance by Landlord) or
the failure by Tenant to insist upon the performance by Landlord of any
obligation imposed upon Landlord under this Addendum, will (a) impose upon
Tenant, or be deemed to be an assumption by Tenant, of any obligation or
liability with respect to the construction, operating, or insurance of the
Building, the Leasehold Improvements relating to the
Additional Premises, or the design of the Base
Building, or (b) constitute or be deemed to constitute acquiescence by Tenant
to any act or failure to act on the part of Landlord which is in conflict with
any provision of this Addendum.

             4.7        Designated
Representatives.  Landlord and
Tenant each hereby appoint a representative (each a “Designated
Representative”), and in the event that a Designated Representative is
unavailable for any reason whatsoever, an alternative representative (each an “Alternative
Representative”), to make timely binding decisions on design, development
and construction matters (but not other matters) relating to the Building and
the Leasehold Improvements.  The
Designated Representatives are:

	Landlord	xxx 
	Tenant	xxx 
	 	 
	The
  Alternative Representatives are:

	Landlord	xxx 
	Tenant	xxx 

At any time and from
time to time hereafter, Landlord and Tenant will each have the right to appoint
a successor or substitute Designated Representative and/or Alternative
Representative to act on behalf of such party, each such appointment to be
effected by delivering 10 days' prior written notice to the other party hereto
in accordance with the terms and provisions of Section 12.4 of the Lease. Any
action which may be taken by a Designated Representative may also be taken by
an Alternative Representative and any party may rely thereon as if such action
had been taken by the Designated Representative and such party will have no
duty to inquire why the Designated Representative was unavailable to act.

ARTICLE
V

COST
OBLIGATIONS

             5.1        Landlord's
Cost.  Except as otherwise
specifically provided in Article III or in Section 5.2, Landlord
will be liable and obligated to pay for all costs of preparation of the Base
Building Plans, the Leasehold Improvement Plans, and all costs of developing and constructing the Base
Building, including, but not limited to, all labor and materials.  In addition, to the
extent provided in Section 5.2 and except as otherwise specifically provided in
Article III, Landlord will be obligated to fund the cost of developing and constructing the Leasehold
Improvements, and for all costs of developing and
constructing the Leasehold Improvements in excess of the established Leasehold
Improvement Cost (unless such increase is a direct result of
Tenant Delay or Tenant's Changes to the Leasehold Improvement Plans or the
Leasehold Improvements Work as provided in Article III).

             5.2        Tenant's
Cost.  Tenant will be liable for and
obligated to pay the cost of any increase in Landlord’s costs of developing and
constructing the Base Building resulting directly from Tenant Delay.  Tenant also will be liable for and obligated
to pay the cost of constructing and completing the Leasehold Improvements,
including, without limitation, labor and materials (“Tenant’s Cost”);
provided, however, that, Tenant’s Cost will in no event exceed the Leasehold
Improvement Cost (unless such increase is a direct result of Tenant Delay or
Tenant’s changes to the Leasehold Improvement Plans or the Leasehold
Improvements Work as provided in Article III); and provided further that
Tenant will be entitled to receive, and Landlord will be obligated to pay, an
amount equal to *** times the
number of square feet of rentable area contained in the Premises and the
Additional Premises (the “Allowance Amount”). In the event Tenant’s Cost
is less than the Allowance Amount, Tenant will have the right to apply the
difference as an offset against the first rents due under the Lease.  In the event that Tenant’s Cost exceeds the
Allowance Amount and/or charges are to be paid by Tenant as a result of
Tenant’s Building Changes as provided in Article III, then up to an
aggregate amount equal to the product of ***
multiplied by the number of square feet of rentable area contained in the
Premises and the Additional Premises (“Excess Improvements Amortization
Limit”), Tenant will pay the excess amount to Landlord either (i) in a lump
sum payment due within the times established in Section 3.3 of this
Addendum, or (ii) in equal amortized monthly installments over 120 months at an
annual interest rate of 12%, with such monthly installments being added to the
Base Rent due and payable over the Term, as Tenant will elect. Any Tenant’s
Cost in excess the  Allowance
Amount  plus the Excess Improvements
Amortization Limit,  i.e. in excess of an
aggregate cost of *** times the
number of square feet of rentable area contained in the Premises and the
Additional Premises, will be paid by Tenant to Landlord in a lump sum payment
due within the times established in 3.3 of this Addendum.  Landlord will use its reasonable and good
faith efforts to obtain and credit against the cost of completion and
construction of the Leasehold Improvements all discounts, commissions, and
rebates offered by any contractor or subcontractor.  In accordance with the other terms and provisions of this
Addendum, Landlord will provide to Tenant and Tenant's Consultant during normal
business hours full and complete access to all books, records, and accounts to
verify the amount of costs for the construction and completion of the Leasehold
Improvements.

ARTICLE
VI

SCHEDULE
FOR CONSTRUCTION

             6.1        Time
to Complete.  Time is of the essence
to this Addendum.  Landlord will cause
the construction of the Building and the Leasehold Improvements relating to the
Additional Premises in accordance with the Building Plans, all applicable Legal
Requirements, and the provisions of this Addendum with reasonable diligence,
which requires Landlord to Substantially Complete (a) the Building and the
Leasehold Improvements relating to the Additional Premises on or before the
Projected Completion Date, as extended by Excusable Delays and/or Tenant
Delays, in which case the Projected Completion Date, if adversely affected by
Excusable Delay and/or Tenant Delay, will be extended by one day for each day
of such Excusable Delay and/or Tenant Delay. If the Building or the Leasehold
Improvements for the Additional Premises, as the case may be, will not be
Substantially Complete on or before the date 30 days after the  Projected Completion Date, as extended by
Tenant Delay and/or Excusable Delay, (the “Late Date”), Landlord will
then be liable to Tenant for damages (“Tenant's Delay Damages”) as
provided below. Tenant’s Delay Damages will not exceed the lesser of actual
cost incurred by Tenant or the product of $2,000.00 multiplied by the number of
days in the late period. Tenant's actual damages for late Substantial Completion
of the Building or the Leasehold Improvements for the Additional Premises are
difficult and impractical to ascertain, and the Tenant's Delay Damages are
intended to be reasonable estimates for the amounts of damages that Tenant will
suffer by reason of Landlord's delay in completing the Building or the
Leasehold Improvements for the Additional Premises.  Tenant will provide Landlord, from time to time, and in any event
not later than 10 days after the Term Commencement Date (and, with respect to
the Additional Premises, not later than 10 days after the Effective Date), with
a written statement specifying the nature and amount of Tenant’s Delay Damage
claimed by Tenant.  Landlord will first
credit the amount of unpaid Tenant's Delay Damages, if any, against the amount
of the charges, if any, owed by Tenant for Tenant Building Changes or Tenant
Delay or Tenant’s Cost, and the balance remaining, if any, will, within 30 days
of receipt of Tenant’s statement, be paid in cash by Landlord to Tenant;
provided, however, that if Landlord contests Tenant’s claim for Tenant’s Delay
Damages, then Tenant’s ability to claim such offset (and Tenant’s corresponding
obligation to pay the charges which would be subject to offset) will be
postponed until a final adjudication is reached with respect to such
claim.  If any Tenant’s Delay Damages
are not paid to Tenant when due, Tenant will have the right to apply such due
amount as an offset against the rent due under the Lease.  Except in those circumstances under which
Tenant will be entitled to terminate the Lease as provided in Section 6.2
of this Addendum, the payment to Tenant by Landlord of Tenant's Delay Damages
will constitute Tenant's sole remedy for Landlord's failure to timely
Substantially Complete the Building or the Leasehold Improvements relating to
the Additional Premises. Tenant’s Delay Damages relate solely to the late
Substantial Completion of the Building and the Leasehold Improvements relating
to the Additional Premises and are not intended to limit or define Tenant’s
damages or other rights and remedies for any default by Landlord in the
performance of its other obligations under this Addendum or the Lease.

             6.2        Outside
Date for Date of Substantial Completion. 
Notwithstanding anything to the contrary herein contained, if
Substantial Completion of the Building has not occurred by a date 60 days after
the Projected Completion Date for the Building, as extended by both Tenant
Delay and Excusable Delay (the “Outside Date”), Tenant may terminate the
Lease by giving written notice of such election to Landlord, on or before the
date 30 days following the Outside Date in which event  the parties will have no further obligations
and liabilities under this Lease except for such obligations and liabilities
which specifically survive the termination of the Lease and except, further,
that Landlord will be liable for, and within 30 days after the date of Tenant's
notice of election to terminate will pay to Tenant, all unpaid Tenant’s Delay
Damages relating to the Building which have accrued through the Outside Date.
The payment by Landlord to Tenant of Tenant's Delay Damages relating to the
Building will constitute Tenant's sole remedy for Landlord's failure to timely
Substantially Complete the Building and the termination of the Lease.

ARTICLE
VII

LEASE

             7.1        Term
Commencement Date. The Term of the Lease will commence upon the Term
Commencement Date.  On the Term
Commencement Date, Landlord agrees that: (a) Landlord will deliver possession
of the Premises, free of all leases, tenancies, occupants, construction lien
claims not discharged or transferred to security within 10  days of the filing thereof, and material
defects in material and workmanship; (b) the Building will be in compliance
with all Legal Requirements other than as may be applied due solely to a
special use by Tenant; (c) the Property will not be subject to any Title
Exceptions except Permitted Exceptions; and (d) Landlord will satisfy all those
obligations imposed upon Landlord by the provisions of the Lease which are
required to be complied with prior to the commencement of the Term of the
Lease.

ARTICLE
VIII

GENERAL
COVENANTS OF LANDLORD

             8.1        Insurance.  Landlord will obtain and maintain or will
require General Contractor to
obtain and maintain, from the date hereof until the Term Commencement Date
(and, with respect to the Additional Premises, until the Effective Date), at no
cost to Tenant, builder's risk insurance, automobile liability insurance and
comprehensive general liability insurance against liability for bodily injury
and death and property damage, in reasonable and customary amounts and
forms.  Landlord will also provide or
cause to be provided and kept in force workers' compensation coverage with
statutory benefits covering employees of General Contractor and with such endorsements as may be reasonably requested
by Tenant.  Landlord will deliver to
Tenant, promptly as same are issued, true and complete copies or certificates
of all policies of insurance, together with all subsequent endorsements thereto,
as are required to be obtained and maintained by Landlord pursuant to the terms
hereof. Any insurance required by the terms of this Section 8.1 to be
carried by Landlord may be under a blanket policy (or policies) covering other
properties of Landlord and/or its affiliates; provided, however that Landlord
will procure and deliver to Tenant a statement from the insurer or general
agent of the insurer setting forth the coverage maintained and the amounts
thereof allocated to the risks intended to be insured hereunder.

Schedule
1

(Schedule
of Permitted Encumbrances)

 

Schedule
2

(Review
Plans and Specifications)

 

Schedule
3

(Construction
Schedule)

 

EXHIBIT
D

RULES
AND REGULATIONS

Capitalized terms not
specifically defined in this Exhibit will have the same meanings as ascribed
thereto in the Lease.

	1.	Tenant
  will not install or operate any machinery or apparatus other than usual small
  business machines without specific written approval of Landlord.  No article deemed hazardous because of
  flammability and no explosive or other articles of an intrinsically hazardous
  nature will be brought into the Building.

	2.	No
  additional locks or similar devices will be placed upon doors of the Premises
  and no locks will be changed except with written consent of Landlord. Such
  consent of Landlord will not be unreasonably withheld.  Upon termination of the Lease, Tenant will
  surrender to Landlord all keys to the Premises.

	3.	Tenant
  will be permitted to move furniture and office furnishings into or out of the
  Building at its own risk.  Any damage
  caused to the Premises or Building will be repaired at the expense of Tenant.

	4.	Provided
  Landlord is required to furnish janitorial services, no person will be
  employed by Tenant to do janitorial work in the Premises, and no persons
  other than the janitors for the Building will clean the Premises, unless
  Landlord will first give its written consent.  Any person employed by Tenant with Landlord's consent to do
  janitorial work will, while in the Premises and Building, be subject to and
  under the control and direction of Landlord, but will not be considered the
  agent or servant of Landlord.

	5.	Window
  coverings other than building standard, either inside or outside the windows,
  may not be installed without Landlord's prior written consent and must be
  furnished, installed and maintained at the expense of Tenant and at Tenant's
  risk, and must be of such shape, color, material, quality and design as may
  be prescribed by Landlord.

	6.	If
  Tenant desires additional telecommunications connections, or the installation
  of any other electrical wiring, Landlord will, upon receiving a written
  request from Tenant and at Tenant's expense, direct the electricians as to
  where and how the wires are to be introduced and run, and without such direction
  no boring, cutting or installation of wires will be permitted.  Tenant will not install or erect any
  satellite dish, antennae, aerial wires or any other equipment inside or
  outside the Premises and Building without in every instance obtaining prior
  written approval from Landlord.

 

	7.	The
  sidewalks, entrances, passages, courts, corridors, vestibules, halls,
  stairways and elevators (if any) in or about the Premises and Building will
  not be obstructed or used for storage or for any purpose other than ingress
  and egress by Tenant.

	8.	Tenant
  will not create or maintain a nuisance in the Premises nor make or permit any
  noise or odor or use or operate any electrical or electronic devices that
  emit loud sounds, air waves, or odors, that are objectionable to other
  tenants of this Building or any adjoining building or premises; nor will the
  Premises be used for lodging or sleeping or for any immoral or illegal
  purpose that will violate any law, damage the Premises, or injure the
  reputation of the Building or the Property.

	9.	Tenant
  and its occupants will observe and obey all parking and traffic regulations
  from time to time imposed by Landlord on the Premises, the Building or the
  Property. Landlord in all cases reserves the right to designate "no
  parking" zones, traffic right-of-ways and general parking area
  procedures.  Failure of Tenant to
  comply with parking regulations will constitute an event of default under the
  Lease.  Landlord may institute such
  measures for proper parking as are necessitated by conditions existing at a
  particular time;  including but not
  limited to towing, impounding and/or tagging of improperly parked vehicles,
  and instituting a control system to insure only properly authorized vehicles
  are parking in assigned areas.

	10.	Landlord
  reserves the right at all times to exclude newsboys, loiterers, vendors,
  solicitors and peddlers from the Building and the Property as deemed
  necessary and to require registration, satisfactory identification and
  credentials from all persons seeking access to any part of the Building or
  the Property.  Landlord will exercise
  its best judgement in executing such control but will not be held liable for
  granting or refusing such access.

	11.	Any
  sign, letter, picture, notice, advertisement or the like installed within the
  Premises, which is visible from outside the Premises, will be installed in
  such manner and be of such character and style as Landlord will approve in
  writing.  No sign, lettering, picture,
  notice, advertisement or the like will be placed on any outside window or in
  a position to be visible from outside the Building without prior written
  approval of Landlord.

	12.	Tenant
  will not use the name of the Building or the Property for any purpose other
  than that of the business address of Tenant, and will not use any picture or
  likeness of the Building or the Property in any circulars, notices,
  advertisements or correspondence without Landlord's prior written consent.

	13.	No
  animals, pets, bicycles or skateboards or other vehicles will be brought or
  permitted to be in the Premises or the Building.

	14.	Tenant
  will not make any room-to-room canvass to solicit business from other Tenants
  of the Building or the Property.

 

	15.	Tenant
  will not waste electricity, water or air conditioning, and will cooperate
  fully with Landlord to assure the most effective and efficient operation of
  the Building.  Tenant will not adjust
  any common controls other than room thermostats installed for specific use.  Tenant will not tie, wedge, or otherwise
  fasten open any water faucet or outlet. 
  Tenant will keep all common corridor doors closed.

	16.	Tenant
  assumes full responsibility for protecting the Premises from theft, robbery,
  pilferage and other crimes.  Except
  during Tenant's normal business hours, Tenant will not prop open any common
  doors to the Building, and will be liable for any loss caused by negligence
  thereto.

	17.	Tenant
  will not overload any floor and will not install any heavy objects, safes,
  business machines, files or other equipment without having received
  Landlord's prior written consent as to size, maximum weight, routing and
  location thereof.  Safes, furniture,
  equipment, machines and other large or bulky articles will be brought through
  the Building and into and out of the Premises at such times and in such
  manner as Landlord will direct and at Tenant's sole risk and responsibility.

	18.	Tenant,
  its employees, agents, guests and invitees will not in any manner deface or
  damage the Building and will be responsible for any repairs required.

	19.	Tenant
  will not use more electrical current from individual or collective circuits
  than is designated by the amperage rating of said circuits at the circuit
  breaker panels for Tenant's suite. 
  Should Tenant exceed the safe capacity as designed and as stated on the
  circuit breakers for said circuits then Tenant will bear the entire expense
  of modifications to adjust or increase the amperage for Tenant's safe and
  proper electrical consumption. 
  Landlord's consent to such modifications to the electrical system will
  not relieve Tenant from the obligation not to use more electricity than such
  safe capacity.

	20.	Tenant,
  its employees, invitees and guests will not smoke in the Premises, the
  Building or any Common Areas.  Smoking
  is allowed in designated smoking areas only.

	21.	Tenant
  will be responsible for any damage including stoppage caused by failure to
  use the apparatus as instructed or for the purpose constructed done to any
  Common Area including but not limited to restrooms, elevators, stairways,
  hallways, lobbies, sidewalks, parking lots, landscape areas caused by Tenant,
  its licensees, guests, agents, contractors or invitees negligence or misuse.

	22.	Landlord
  reserves the right to establish rules and regulations which will govern the
  access, activity, conduct and set specific rules and regulations with respect
  to contractors, subcontractors, agents or consultants which perform
  activities in the Building, the Premises and or the Property.

	23.	Landlord
  reserves the right to make such further reasonable rules and regulations as
  in its judgment may from time to time be necessary for the safety, care and
  cleanliness of the Premises and the preservation of good order therein. Any
  additional rules and regulations promulgated by Landlord will be binding upon
  the parties hereto with the same force and effect as if they had been
  inserted herein at the time of execution hereof. Tenant will be responsible
  for the observance of all of the foregoing rules and regulations by Tenant's
  employees, agents, clients, customers, invitees and guests.  Landlord will not be responsible for any
  violation of the foregoing rules and regulations by other Tenants of the
  Building and will have no obligation to enforce the same against other
  tenants.

	24.	Tenant
  will not conduct or permit any auctions or sales at the Premises or the
  Property.Prepared by MerrillDirect

Exhibit 10.1

 

 

 

CONVERTIBLE SENIOR SUBORDINATED

PROMISSORY NOTE AND WARRANT PURCHASE AGREEMENT

Dated
as of April 18, 2001

BY
AND BETWEEN

ELECTRIC
CITY CORP.

and

NEWCOURT
CAPITAL USA, INC.

             This
CONVERTIBLE SENIOR SUBORDINATED PROMISSORY NOTE PURCHASE AGREEMENT is made as
of April 18, 2001 by and between Electric City Corp., a Delaware corporation
(the “Company”), and Newcourt Capital USA, Inc., a Delaware corporation
(“Lender”).

WITNESSETH

             WHEREAS,
Lender intends to loan to the Company up to $2,000,000 aggregate principal
amount;

             WHEREAS,
the parties intend for the Company to issue to Lender in return for such
advances one or more convertible senior subordinated promissory notes in the
form attached hereto as Exhibit “A” (individually, as amended from time
to time, a “Note” and collectively, the “Notes” and a warrant in
the form attached hereto as Exhibit “B” (as amended from time to time,
the “Bridge Warrant”); and

             WHEREAS,
the parties hereto wish to provide for the sale and issuance of the Bridge Warrant
and the Notes in return for such advances, pursuant to the terms and conditions
set forth in this Agreement and the exhibits and schedules attached hereto.

AGREEMENT

             NOW,
THEREFORE, in consideration of the mutual covenants and agreements set forth
herein and for good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties agree as follows:

ARTICLE
I.

DEFINITIONS

             Section 1.1   Definitions.  As used in this Agreement, and unless the
context clearly requires a different meaning, the following terms have the
meanings indicated:

             “Additional
Loans” shall have the meaning set forth in Section 2.1 hereof.

             “Advance
Date” shall have the meaning set forth in Section 2.1 hereof.

             “Affiliate”
means, as applied to any Person, any other Person that, directly or indirectly,
controls, is controlled by or is under common control with such Person.  For the 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 such Person, whether through the
ownership of voting securities or by contract or otherwise.

“Agreement”
means this Convertible Senior Subordinated Promissory Note Purchase Agreement,
together with all exhibits and schedules hereto, as the same may be amended,
supplemented or modified in accordance with the terms hereof from time to time.

 

“Assets”
shall have the meaning set forth in Section 5.5 hereof.

             “Availability
Period” shall mean the period from and after the Closing Date through the
earliest to occur of (i) the closing of a Qualified Transaction and (ii) June
1, 2001.

             “Bank
Credit Agreement” shall mean that certain Loan Agreement dated as of the 22nd
day of March, 2001, made by and between American National Bank and Trust
Company of Chicago, a national banking association, the Company and the
Company’s Subsidiary, and the Loan Documents (as defined in the Bank Credit
Agreement) as the same may be amended from time to time.

             “Bridge
Warrant” shall have the meaning set forth in recitals hereof.

             “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.

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

             “Closing
Date” shall have the meaning set forth in Section 2.2 hereof.

             “Code”
means the Internal Revenue Code of 1986, as amended.

             “Commission”
means the Securities and Exchange Commission or any other governmental
authority at the time administering the Securities Act or the Exchange Act.

             “Commission
Documents” shall have the meaning set forth in Section 5.24 hereof.

             “Common
Stock” shall mean and include the Company’s authorized common stock, $.0001
par value per share.

             “Company”
shall have the meaning set forth in the preamble of this Agreement.

             “Company
IP” shall have the meaning set forth in Section 5.13 hereof.

             “Company
Personnel” shall have the meaning set forth in Section 5.15 hereof.

             “Conversion
Stock” shall have the meaning set forth in Section 6.1 hereof.

             “Customers”
shall have the meaning set forth in Section 5.20 hereof.

             “Designated
Senior Debt” shall mean (a) the indebtedness of the Company outstanding
under the Bank Credit Agreement in an aggregate amount not to exceed $2,500,000
plus accrued interest thereon and other fees as provided for in the Bank Credit
Agreement and under the Marino Term Note in an aggregate amount not to exceed
$982,000; and (b) indebtedness incurred to refinance the indebtedness referred
to in clause (a), up to such permitted principal amounts.

 

             “Employee
Plans” shall have the meaning set forth in Section 5.15 hereof.

             “Environmental
Condition” shall have the meaning set forth in Section 5.16 hereof.

             “Environmental
Law” shall have the meaning set forth in Section 5.16 hereof.

             “ERISA”
shall have the meaning set forth in Section 5.15 hereof.

             “Exchange
Act” means the Securities Exchange Act of 1934, as amended, or any similar
or successor federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect from time to time.

             “Governmental
Authority” means the government of any nation, state or other political
subdivision thereof, any entity exercising executive, legislative, judicial,
regulatory or administrative functions of or pertaining to government, and any
corporation or other entity owned or controlled, through stock or capital
ownership or otherwise, by any of the foregoing.

             “Great
Lakes Transaction” shall have the meaning set forth in Section 3.2(i)
hereof.

             “Hazardous
Substances” shall have the meaning set forth in Section 5.16 hereof.

             “Initial
Loan” shall have the meaning set forth in Section 2.1 hereof.

             “Interim
Financial Statements” shall have the meaning set forth in Section 5.8
hereof.

             “Indemnifiable
Costs and Expenses”, “Indemnifying Party” and “Indemnified Person”
have the meanings assigned thereto in Section 7.1 hereof.

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

             “Litigation”
shall have the meaning set forth in Section 3.1(d) hereof.

             “Loans”
shall have the meaning set forth in Section 2.1 hereof.

             “Marino
Term Note” shall mean that certain Subordinated Secured Term Note dated May
30, 2000 made by the Company in favor of Joseph Marino, and the General
Security Agreement related thereto, made as of May 31, 2000 by the Company in
favor of Joseph Marino, each as may be amended from time to time.

“Note”
or “Notes” shall have the meaning set forth in the recitals hereof.

             “Notice”
shall have the meaning set forth in Section 2.1 hereof.

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

 

             “Placement
Agent Warrant” means the warrant to be issued by the Company to Lender as
placement agent upon the closing of a Qualifying Transaction in substantially
the form attached as Exhibit D to the Securities Purchase Agreement, as the
same may be amended from time to time.

             “PPM”
means that certain Confidential Private Placement Memorandum of the Company
dated February 16, 2001, including any supplements thereto issued prior to the
Closing Date.

             “Projections”
shall have the meaning set forth in Section 5.23 hereof.

             “Properties”
shall have the meaning set forth in Section 5.16 hereof.

             “Qualifying
Transaction” means the issuance and sale by the Company, on or prior to
July 16, 2001, of shares of Series A Preferred Stock for an aggregate purchase
price of not less than $8 million, including the outstanding principal amount
of the Notes and accrued but unpaid interest thereon, if the aggregate purchase
price of all such sales of Series A Preferred Stock together with the
outstanding principal amount of the Notes, and accrued but unpaid interest
thereon, would equal or exceed $8 million.

             “Registration
Rights Agreement” means that certain Registration Rights Agreement to be
entered into by and between the Company and Lender at the Closing, in the form
attached hereto as Exhibit “C”, as amended from time to time.

             “Release”
shall have the meaning set forth in Section 5.16 hereof.

             “Securities
Act” means the Securities Act of 1933, as amended, and any similar or
successor federal statute, and the rules and regulations of the Commission
thereunder, all as the same may be in effect from time to time.

             “Securities
Purchase Agreement” shall mean the securities purchase agreement in
substantially the form attached hereto as Exhibit “D”, together with the
exhibits thereto, to be entered into by the Company and the initial purchasers
of Series A Preferred Stock pursuant to a private placement in which Lender
serves as placement agent, as amended from time to time.

             “Series
A Preferred Stock” means shares of a new series of preferred stock that may
be sold by the Company from time to time with the terms set forth in a
Certificate of Designations of Series A Preferred Stock of the Company, in
substantially the form attached hereto as Exhibit “A” to the Securities
Purchase Agreement, to be filed at or prior to the time that such shares are
sold.

             “Subordinated
Obligations” shall have the meaning set forth in Section 8.1 hereof.

             “Subsidiary”
of a Person means any corporation, association, partnership, joint venture or
other business entity of which more than 50% of the voting stock or other
equity interests (in the case of Persons other than corporations), is owned or
controlled, directly or indirectly, by the Person, or one or more of the
Subsidiaries of the Person, or a combination thereof.  Unless the context otherwise clearly requires, references herein
to the “Subsidiary” refers to Switchboard Apparatus, Inc., the sole
Subsidiary of the Company (prior to the consummation of the Great Lakes
Transaction).

 

             “Taxes”
means any federal, state, county, local or foreign taxes, charges, fees,
levies, or other assessments, including, without limitation, all net income,
gross income, sales and use, ad valorem, transfer, gains, profits, excise,
franchise, real and personal property, gross receipt, capital stock, business
and occupation, disability, employment, payroll, license, estimated, or
withholding taxes or charges imposed by any governmental entity, and includes
any interest and penalties on or additions to any such taxes (and, in the case
of the Company and its Subsidiary, Taxes for which the Company or its
Subsidiary may be liable in its own right, or as the transferee of the assets
of, or as successor to, any other corporation, association, partnership, joint
venture, or other entity, or under Treasury Regulation Section 1.1502–6
or any similar provision of state or local law).

             “Tax
Return” means a report, return or other information required to be supplied
to a Governmental Authority with respect to Taxes including, where permitted or
required, combined, unitary, group or consolidated returns for any group of
entities that includes the Company or its Subsidiary.

             “Transaction
Documents” means each of this Agreement, the Note, the Bridge Warrant and
the Registration Rights Agreement, each dated as of the date hereof, and all
exhibits and schedules attached thereto.

             “Union
Plan” means the defined contribution plan described on Schedule 5.15(g)
hereof.

The foregoing definitions shall be
equally applicable to both the singular and plural forms of the defined
terms.  The use of the word “including”
herein shall be interpreted to mean “including, without limitation,” unless the
context clearly requires another interpretation.

ARTICLE II.

LENDER COMMITMENT AND LOANS

 

             Section 2.1       Lender Commitment; Purchase and Sale
of Notes.  The aggregate principal amount of Loans to
be made by Lender under this Agreement shall not exceed $2,000,000 (Two Million
U.S. Dollars) (such amount being hereinafter referred to as the “Commitment”).
Subject to the terms and conditions set forth herein and in the Notes, Lender
agrees to make a Loan to the Company on the Closing Date by purchasing a Note
in the principal amount of $1,000,000 (One Million U.S. Dollars) (the “Initial
Loan”).  Subject to the terms and
conditions set forth herein and in the Notes, Lender further agrees to make one
or more additional Loans to the Company by purchasing one or more Notes, each
in the principal amount of not less than $500,000 (Five Hundred Thousand U.S.
Dollars), which together with the Initial Loan shall in no event exceed in the
aggregate the amount of the Commitment, (each, an “Additional Loan” and
together with the Initial Loan, the “Loans”) from time to time during
the Availability Period.  Each
Additional Loan to be made by Lender shall be upon notice given by the Company
to Lender (the “Notice”) no later than three (3) Business Days prior to
the date on which the Company desires to receive the proceeds of such
Additional Loan (the “Advance Date”), which Notice shall specify (i) the
amount to be advanced by Lender on such Advance Date, (ii) the amount of the
remaining available Commitment after giving effect to the Loan to be advanced
on the Advance Date, and (iii) the wire transfer instructions for the account
into which such Additional Loan is to be made. 
On the Closing Date, and on each subsequent Advance Date, Lender shall
make its Loan by wire transfer of immediately available funds to the account
specified in the Notice, against the issuance and delivery to Lender by the
Company of a duly executed Note in the principal amount of such Loan, together
with such other certificates and documents as may be required under this Agreement
or the Notes.

 

             Section
2.2       Closing.  The purchase of the Note pursuant to
the Initial Loan will take place at a closing (the “Closing”) to be held
at the offices of Lender, 1211 Avenue of the Americas, 22nd Floor, New York, NY
10036 not later than five (5) Business Days after the date on which the
conditions set forth in Article III are satisfied or waived or such
later date as the Company and Lender may mutually agree in writing (the “Closing
Date”).

             Section 2.3       Termination and Reduction of Commitment.  Unless previously
terminated pursuant to this Agreement, the Commitment shall terminate on the
last day of the Availability Period. 
The principal amounts of any Loans that are prepaid or repaid under the
Notes may not be reborrowed, and the Commitment in respect thereto shall be
deemed utilized.  Any termination or
reduction of the Commitment shall be permanent.

             Section
2.4       Repayment of Loans.  The Company hereby irrevocably and
unconditionally promises to pay to Lender the total outstanding principal
amount of all Loans, with accrued but unpaid interest thereon, subject to any
prepayments of principal and interest pursuant to the terms of the Notes and to
acceleration thereunder, in one (1) installment on the Maturity Date (as
defined in the Notes).

             Section 2.5       Surrender of Bridge Warrant.  Upon Lender’s receipt of the Placement Agent
Warrant, on terms and conditions consistent with those set forth in the warrant
attached as Exhibit “D” to the Securities Purchase Agreement, at the closing of
the transactions contemplated by the Securities Purchase Agreement, Lender
shall surrender the Bridge Warrant to the Company for cancellation.

ARTICLE
III.

CONDITIONS
PRECEDENT

             Section
3.1       Lender’s Conditions to
Closing.  Lender’s obligation to make the Initial Loan
to the Company through the purchase of a Note under this Agreement is subject
to the satisfaction, on or before the Closing Date, of the following
conditions:

             (a)         Receipt of Note and Other
Transaction Documents.  The Company shall have executed and
delivered to Lender a Note in the principal amount of the Initial Loan, the
Bridge Warrant and each other Transaction Document to which the Company is a
party.

             (b)        Opinion of the Company’s Counsel.  Lender shall have received from Schwartz,
Cooper, Greenberger & Krauss, Chartered, special counsel to the Company in
connection with this transaction, an opinion, dated the Closing Date, as to the
matters set forth on Exhibit “F” attached hereto, in form and substance
reasonably satisfactory to Lender and its special counsel.

 

             (c)         No Litigation; No Order.  No action, suit or proceeding shall be
pending or, to the knowledge of the Company, threatened, that seeks to restrain
or prevent, or seeks changes in connection with, the consummation of the
transactions contemplated by this Agreement or the contemplated issuance and
sale of Series A Preferred Stock and no order (including, without limitation, a
temporary restraining order), decree, writ, judgment or injunction shall be in
effect that restrains, enjoins or prevents the consummation of the transactions
contemplated by this Agreement or the contemplated issuance and sale of Series
A Preferred Stock (collectively, “Litigation”).

             (d)        Proceedings.  On or prior to the Closing Date, all
corporate and other proceedings required to be taken under applicable laws,
rules and all regulations and all rules of the American Stock Exchange in
connection with the transactions contemplated by this Agreement or any
Transaction Document (except those contemplated in Section 3.2(e) and 3.2(f)
hereof), if any, shall have been taken and all filings and documents incident
thereto shall be reasonably satisfactory in form and substance to Lender and
its special counsel, and Lender and its special counsel shall have received all
such counterpart originals or certified or other copies of such documents as
they may reasonably request.  The
American Stock Exchange shall have approved for listing 3.7 million shares of
Common Stock issuable upon conversion of the Notes and exercise of the Bridge
Warrant.

             (e)         Representations and Warranties.  The representations and warranties of the
Company contained in Article V hereof shall be true and correct in all
material respects on and as of the Closing Date with the same effect as though
made on and as of the Closing Date.

             (f)         Compliance with this Agreement.  The Company shall have performed and
complied with all of its agreements and conditions set forth or contemplated
herein that are required to be performed or complied with by the Company on or before
the Closing Date.

             (g)        Officer’s Certificate.  Lender shall have received a certificate,
dated the Closing Date and signed by the Chief Executive Officer of the
Company, certifying that the conditions set forth in Sections 3.1(c), 3.1(d),
3.1(e), 3.1(f), 3.1(j), 3.1(k), 3.1(m), 3.1(n),
3.1(o), 3.1(p), 3.1(q) 3.1(r), 3.1(s), and 3.1(t)
hereof have been satisfied on and as of the Closing Date.

             (h)        Secretary’s Certificate  Lender shall have received a certificate,
dated the Closing Date and signed by the Secretary of the Company, attaching
good standing certificates from the Secretary of State of the States of
Delaware and Illinois with respect to the Company and its Subsidiary and
certifying the authenticity of attached copies of (i) the Certificate of
Incorporation and by-laws of the Company and the certificate of incorporation
and by-laws of Subsidiary, in each case as amended and currently in effect; and
(ii) resolutions of the Board of Directors of the Company approving this
Agreement and the transactions contemplated by this Agreement.

             (i)          Purchase Permitted by Applicable
Laws;
Legal Investment.  The delivery of the Notes and the
consummation of the transactions contemplated by this Agreement:  (i) shall not be prohibited by any
applicable law or governmental regulation; (ii) shall not subject Lender to any
penalty or, in its reasonable judgment, other onerous conditions under or
pursuant to any applicable law or governmental regulation; and (iii) shall be
permitted by the laws and regulations of the jurisdictions to which each party
hereto is subject.

             (j)          Consents and Approvals  All consents, waivers, approvals,
exemptions, authorizations, or other actions by, or notices to, or filings
with, Governmental Authorities and other Persons necessary or required in
connection with the execution, delivery or performance by the Company or
enforcement against the Company of this Agreement, any Transaction Document or
any other document executed in connection with the consummation of the
transactions contemplated by this Agreement or any Transaction Document shall
have been obtained and be in full force and effect, and Lender and its special
counsel shall have been furnished with appropriate evidence thereof.

             (k)         No Material Adverse Change.  Since December 31, 1999, there shall have
been no material adverse change, nor shall any such change be threatened, in
the assets, business, properties, operations or condition (financial or
otherwise) of the Company and its Subsidiary, taken as a whole.

             (l)          Market Conditions   At any time after the date hereof and prior
to the Closing Date, (i) trading in securities generally on the American Stock
Exchange or any other U.S. securities exchange or Nasdaq shall not have been
suspended or limited, nor shall additional material governmental restrictions,
not in force on the date of this Agreement, have been imposed upon trading in
securities generally or by order of the Commission or any court or other
Governmental Authority, (ii) a general banking moratorium shall not have been
declared by either federal or New York State authorities and (iii) any material
adverse change in the financial or securities markets in the United States or
in political, financial or economic conditions in the United States or any
outbreak or material escalation of hostilities or declaration by the United
States of a national emergency or war or other calamity or crisis shall not
have occurred.

          (m)        Execution of Confidentiality
Agreements By Employees.  The Company shall have obtained from all of
the employees and consultants identified in Schedule 3.1(m) executed
agreements in form and substance reasonably satisfactory to Lender concerning
the assignment of inventions, nondisclosure of confidential information and
covenants not to compete.

             (n)        Denis Enberg.  The Company shall have obtained from Denis
Enberg an executed agreement, in form reasonably satisfactory to Lender and its
special counsel, assigning to the Company any and all ownership of and
intellectual property rights to any improvements to the EnergySaverTM system,
including without limitation, the GlobalCommander system, that he may have.

(o)        Great
Lakes Acquisition.  The Company and Great Lakes Controlled
Energy Corporation shall have executed a letter of intent providing for the
Company’s acquisition of Great Lakes Controlled Energy Corporation on terms and
conditions reasonably satisfactory to Lender.

             (p)        No Default or Event of Default.  At the time of and immediately after giving
effect to such Initial Loan, (i) no default or event of default shall have
occurred and be continuing under this Agreement, (ii) no default or event of
default under any Designated Senior Debt or under any other indebtedness of the
Company with a principal amount greater than $250,000 shall have occurred and
be continuing, and (iii) the Initial Loan under this Agreement shall not cause
a default or event of default under any Designated Senior Debt or under any
other indebtedness of the Company with a principal amount greater than
$250,000.

             (q)        Payment of Legal Fees.  The Company shall have provided Lender
written authorization to pay, from the proceeds of the Initial Loan, Latham
& Watkins $57,000 for services rendered by Latham & Watkins in
connection with (i) this Agreement and the transactions contemplated hereby and
(ii) the Securities Purchase Agreement and the transactions contemplated
thereby.

             (r)         Payment of Marketing and Consulting
Fees.  The Company shall have provided Lender
written authorization to pay, from the proceeds of the Initial Loan, $70,000 in
the aggregate to Lender’s engineering and marketing consultant for services
rendered by them in connection with the transactions contemplated by the
Securities Purchase Agreement.

             (s)         Insurance.  The Company shall have provided evidence of
insurance in types and amounts satisfactory to Lender.

             (t)         Waivers.  The Company shall have obtained the waivers
set forth in Schedule 3.1.(t) regarding registration rights.

             Section 3.2       Conditions Precedent to Lender’s
Obligations to Make Additional Loans.  Lender’s obligations to make each Additional
Loan to the Company through the purchase of Note(s) under this Agreement are
subject to the satisfaction, on or before the applicable Advance Date, of the
following conditions:

             (a)         Proper Notice.  The Lender shall have received a Notice in
proper form and content and all supporting documentation in accordance with Section
2.1.

             (b)        No Litigation; No Order.  No action, suit or proceeding shall be
pending or, to the knowledge of the Company, threatened, that seeks to restrain
or prevent, or seeks changes in connection with, the consummation of the
transactions contemplated by this Agreement or the contemplated issuance and
sale of Series A Preferred Stock, and no order (including, without limitation,
a temporary restraining order), decree, writ, judgment or injunction shall be
in effect that restrains, enjoins or prevents the consummation of the
transactions contemplated by this Agreement or the contemplated issuance and
sale of Series A Preferred Stock.

             (c)         Representations and Warranties.  The representations and warranties of the
Company contained in Article V hereof shall be true and correct in all
material respects on and as of the Advance Date with the same effect as though
made on and as of the Advance Date.

             (d)        Compliance with this Agreement.  The Company shall have performed and
complied with all of its agreements and conditions set forth or contemplated
herein or under any outstanding Note that are required to be performed or
complied with by the Company on or before the applicable Advance Date.

 

             (e)         Securities Purchase Agreement.
The execution, delivery and performance of the Securities Purchase Agreement
and the transactions contemplated thereby, shall have been approved by the
Board of Directors of the Company, and the Board of Directors of the Company
shall have authorized and directed the Company’s management to obtain the
required approval of the Company’s stockholders of the execution, delivery and
performance of the Securities Purchase Agreement and the transactions
contemplated thereby in accordance with applicable law and the rules of the
American Stock Exchange.

             (f)         Approval of Charter Amendment.  The Board of Directors of the Company shall
have approved a charter amendment that increases the Company’s authorized
Common Stock from 60,000,000 shares to 75,000,000 shares, and the Board of
Directors of the Company shall have authorized and directed the Company’s
management to obtain the required approval of the Company’s stockholders of
such charter amendment in accordance with applicable law and the rules of the
American Stock Exchange.

             (g)        Voting Agreements.  Each of Pino, LLC and NCVC, LLC, and DYDX,
LLC, shall have entered into a voting agreement with Lender, in substantially
the form attached hereto as Exhibit “E.”

             (h)        No Material Adverse Change.  Since December 31, 1999, there shall have
been no material adverse change, nor shall any such change be threatened, in
the assets, business, properties, operations or condition (financial or
otherwise) of the Company and its Subsidiary, taken as a whole.

             (i)          Great Lakes Acquisition.  The Company shall have completed the
acquisition of Great Lakes Controlled Energy Corporation (the “Great Lakes
Acquisition”) on terms and conditions reasonably satisfactory to Lender.

             (j)          Key Man Life Insurance.  The Company shall have obtained key man life
insurance for each of John Mitola and Brian Kawamura in the amount of
$5,000,000 that will be in full force and effect through December 31, 2005.

             (k)         Joseph Marino.  The Company shall have obtained from Joseph
Marino an executed agreement, in form reasonably satisfactory to Lender and its
special counsel, assigning to the Company any and all ownership of and
intellectual property rights to any improvements to the EnergySaverTM system
that he may have.

             (l)          Officer’s Certificate.  Lender shall have received a certificate,
dated the applicable Advance Date and signed by the Chief Executive Officer of
the Company, certifying that the conditions set forth in Sections 3.2(b)-3.2(k),
3.2(m) and 3.2(o) hereof have been satisfied on and as of the
Advance Date.

             (m)        Payment of Legal Fees.  The Company shall have provided Lender
written authorization to pay $50,000 in the aggregate from the proceeds of the
first Additional Loan to Latham & Watkins for services rendered by Latham
& Watkins in connection with the placement of Series A Preferred
Stock.    

 

             (n)        Purchase Permitted by Applicable
Laws; Legal Investment.  The delivery of the Note for such Additional
Loan and the consummation of the transactions contemplated by this
Agreement:  (i) shall not be prohibited
by any applicable law or governmental regulation; (ii) shall not subject Lender
to any penalty or, in its reasonable judgment, other onerous conditions under
or pursuant to any applicable law or governmental regulation; and (iii) shall
be permitted by the laws and regulations of the jurisdictions to which each
party hereto is subject.

             (o)        No Default or Event of Default.  At the time of and immediately after giving
effect to such Additional Loan, (i) no default or event of default shall have
occurred and be continuing under this Agreement or any outstanding Note, (ii)
no default or event of default under any Designated Senior Debt or under any
other indebtedness of the Company with a principal amount greater than $250,000
shall have occurred and be continuing; and (iii) the Additional Loan under this
Agreement shall not cause a default or event of default under any Designated
Senior Debt or under any other indebtedness of the Company with a principal
amount greater than $250,000.

             (p)        Market Conditions.  At any time on or after the Closing Date and
prior to the Advance Date, (i) trading in securities generally on the American
Stock Exchange or any other U.S. securities exchange or Nasdaq shall not have
been suspended or limited, nor shall additional material governmental
restrictions, not in force on the date of this Agreement, have been imposed
upon trading in securities generally or by order of the Commission or any court
or other Governmental Authority, (ii) a general banking moratorium shall not
have been declared by either federal or New York State authorities and (iii)
any material adverse change in the financial or securities markets in the
United States or in political, financial or economic conditions in the United
States or any outbreak or material escalation of hostilities or declaration by
the United States of a national emergency or war or other calamity or crisis
shall not have occurred.

             (q)        Augustine, L.P.    The Company shall have entered into an
agreement with Augustine, L.P., satisfactory to Lender in its sole discretion,
pursuant to which Augustine, L.P. either waives the default described in item 2
of Schedule 5.3 hereof or otherwise agrees not to seek any damages from
the Company arising out of or related to such default.

ARTICLE
IV.

CERTAIN
COVENANTS

             For
so long as the principal amount of any Loans remains outstanding and unpaid or
any interest is owing to the Lender with respect to the Notes:

             Section
4.1       Incorporation of All
Covenants from Bank Credit Agreement.  The Company shall, and (where contemplated
by the terms of the Bank Credit Agreement) shall cause its Subsidiary to,
comply with all covenants set forth in Sections 4.1-4.22 of the Bank Credit Agreement,
as in effect on the date hereof and regardless of whether the Bank Credit
Agreement is subsequently amended, modified, supplemented, discharged or
terminated, and such covenants are incorporated by reference into this
Agreement for the benefit of Lender.  Notwithstanding anything in this Section
4.1 to the contrary, the Company may issue capital stock as dividends to
holders of Series A Convertible Preferred Stock and Series B Convertible
Preferred Stock in accordance with the terms of the Series A Convertible
Preferred Stock certificate of designations and Series B Convertible Preferred
Stock certificate of designations, as applicable.

 

             Section 4.2       Use of Proceeds.  The proceeds from the issuance and sale of
the Notes will be used by the Company solely for the working capital needs of
the Company and its Subsidiary.  The proceeds from the issuance and sale of
the Notes will not be used to repay or prepay any Designated Senior Debt of the
Company or other indebtedness of the Company, other than trade payables
incurred in the ordinary course of the Company’s business and the minimum
required scheduled payments to American National Bank & Trust Company of
Chicago.

             Section
4.3       Certain Actions.  A copy of all information, documents and
notices required to be furnished to the lender under the Bank Credit Agreement,
including without limitation, pursuant to Sections 4.5, 4.7, 4.9, 4.21 and 4.22
of the Bank Credit Agreement, shall be furnished concurrently to Lender under
this Agreement.  From the date hereof
through the expiration of the Availability Period, the Company shall not, and
shall cause its Subsidiary not to, take any action that would cause any of the
representations or warranties of the Company set forth herein to become untrue
or misleading.

             Section
4.4       Stockholder Approval.  The Company shall use its reasonable best
efforts to obtain all required approvals by the stockholders of the Company of
the charter amendment described in Section 3.2(f) hereof and the
Securities Purchase Agreement and the transactions contemplated thereby, and to
file the charter amendment contemplated in Section 3.2(f) hereof with
the Secretary of State of the State of Delaware, in each case within 90 days of
the date of this Agreement.

             Section
4.5       No Modification of Resolutions.  The Company’s Board of Directors shall not
rescind or modify in any manner the resolutions adopted in accordance with Section
3.2(e) and Section 3.2(f) hereof.

             Section
4.6       Sale of Series A Preferred
Stock.
The Company shall use its reasonable best efforts to take, or cause to be
taken, all actions, and to do, or cause to be done, all things reasonably
necessary, proper or advisable under applicable laws, rules and regulations and
the rules of the American Stock Exchange to consummate and make effective the
transactions contemplated by the Securities Purchase Agreement as promptly as
practicable.

             Section 4.7       Waiver of Stay, Extension or Usury
Laws.  The Company covenants (to the extent that it
may lawfully do so) that it shall not at any time insist upon, plead, or in any
manner whatsoever claim or take the benefit or advantage of, any stay or
extension law or any usury law or other law, which would prohibit or forgive
the Company from paying all or any portion of the principal of and/or interest,
if any, on the Loans as contemplated herein, wherever enacted, now or at any
time hereafter in force, or which may affect the covenants or the performance
of this Agreement or any other Transaction Document; and (to the extent that it
may lawfully do so) the Company hereby expressly waives all benefit or
advantage of any such law, and covenants that it shall not hinder, delay or
impede the execution of any power granted to the Lender herein or in any other
Transaction Document, but shall suffer and permit the execution of every such
power as though no such law had been enacted.

 

ARTICLE V.

REPRESENTATIONS, WARRANTIES AND

COVENANTS OF THE COMPANY

             The
Company represents and warrants to the Lender that:

             Section
5.1       Organization; Standing and
Qualification of Company and its Subsidiary; Corporate Authority.

                           (a)         Each of the Company and its Subsidiary,
is a corporation duly organized and existing in good standing under the laws of
the jurisdiction of its organization, and has the corporate power to own its
property and to carry on its business as now being conducted, and is duly
qualified and in good standing as a foreign corporation to do business in every
jurisdiction where the character of the properties owned or leased by it or the
nature of any business transacted by it makes such qualification necessary,
except where such nonqualification or lack of good standing would not have a
material adverse effect on the business of the Company and its Subsidiary,
taken as a whole.  Each of the Company
and its Subsidiary has delivered to the Lender true, complete and correct
copies of its certificate of incorporation and its by–laws, as amended
through the date hereof, which are in full force and effect on the date hereof.

                           (b)        The execution and delivery by the Company
of this Agreement and the Transaction Documents, and the performance by the
Company of all transactions and obligations contemplated hereby and thereby are
within its corporate authority.  The
execution, delivery and performance each of the Transaction Documents and each
other agreement contemplated by the terms hereof and thereof have been duly
authorized by all necessary corporate proceedings on the part of the Company
(except for (i) the Board approvals contemplated in Sections 3.2(e) and 3.2(f)
hereof, which the Company shall cause to occur on or prior to the first
Advance Date, and (ii) any necessary stockholder approval referred to in Sections
3.2(e) and 3.2(f), which is subject to Section 4.4
hereof).  Each of the Transaction
Documents constitutes the legal, valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms, subject to
applicable bankruptcy, insolvency, reorganization, moratorium and similar laws
affecting creditors’ rights and remedies generally or by equitable principles
relating to enforceability.  If Lender
exercises its right to convert amounts outstanding under the Notes into Series
A Preferred Stock pursuant to the Notes, such Series A Preferred Stock when
issued, will be duly authorized, validly issued, fully paid and nonassessable
and subject to no preemptive rights.  If
Lender exercises its right to convert amounts outstanding under the Notes into
Common Stock pursuant to the Notes, such Common Stock when issued will be duly
authorized, validly issued, fully paid and nonassessable and subject to no
preemptive rights.  The shares of Common
Stock issuable upon exercise of the Bridge Warrant will, on or prior to the
Closing Date, be duly authorized and reserved for issuance, and, when issued
upon exercise of the Bridge Warrant, will be validly issued, fully paid and
nonassessable and subject to no preemptive rights.

 

             Section
5.2       Capital Stock.

                           (a)         As of the date hereof, the Company has
authorized 60,000,000 shares of Common Stock and 5,000,000 shares of preferred
stock, of which 2,000 have been designated Series B Preferred Stock.  As of the date hereof, the Company has
issued 28,959,755 issued and outstanding shares of Common Stock and 2,000 shares
of Series B Convertible Preferred Stock convertible into 492,611 shares of
Common Stock (calculated based on a conversion price of $4.06 and subject to
adjustment as provided in the Series B Preferred Stock certificate of
designations).  All outstanding shares
of the Common Stock and the Series B Preferred Stock have been duly authorized,
validly issued and are fully paid and nonassessable and free of preemptive
rights.  All outstanding shares of
Common Stock and the Series B Convertible Preferred Stock were issued in
compliance with all applicable federal and state securities laws.

                           (b)        Except for 200,000 shares of Common
Stock the Company expects to grant in options to each of Denis Enberg and
Eugene Borucki pursuant to the letter agreement regarding the acquisition of
Great Lakes Controlled Energy Corporation by the Company, dated March 16, 2001,
or as otherwise stated in this Section 5.2 or in Schedule 5.2,
the Company has not granted or issued, or agreed to grant or issue, any
options, warrants or similar rights to acquire or receive any of the authorized
but unissued shares of its capital stock of any class or any securities
convertible into shares of its capital stock of any class or any stock
appreciation rights.  Except as set
forth in Schedule 5.2(b), no adjustment to the “Conversion Price” as
defined in the certificate of designations of the Series B Convertible
Preferred Stock nor to the exercise price of any outstanding options or
warrants of the Company will be required as a result of the transactions
contemplated hereby.

                           (c)         Except as set forth in Schedule
5.2(c), no holder of shares of Common Stock (or securities convertible into
or exchangeable or exercisable for Common Stock) has any rights to purchase or
receive additional or other securities upon the occurrence of an event that
might dilute such holder’s percentage interest in the Company.

             Section
5.3       No Defaults.
Except as set forth in Schedule 5.3, neither the Company nor its
Subsidiary is in violation of, or in default under, nor has there been any
waiver given with respect to, any term or provision of any charter, by–law,
mortgage, indenture, agreement, instrument, statute, rule, regulation,
judgment, decree, order, writ, or injunction applicable to it, such that such
violations and defaults in the aggregate could reasonably be expected to result
in any material adverse change in the business, assets, properties, condition
(financial or otherwise) or results of operations of the Company and its
Subsidiary, taken as a whole, or materially adversely affect the ability of the
Company to perform in any material respect its obligations under this
Agreement.

             Section
5.4       Burdensome and Conflicting
Agreements and Charter Provisions.  Neither the execution or delivery of the
Transaction Documents by the Company, nor fulfillment of, or compliance with,
the terms and provisions of the Transaction Documents by the Company will,
except as set forth in Schedule 5.4, conflict with, or result in a
breach of the terms, conditions or provisions of, or constitute a default
under, or result in any violation of, or result in the creation of any lien
upon any of the properties or assets of the Company or its Subsidiary, or
require any consent, approval or other action by, or notice to, or filing with,
any court or administrative or governmental body or any other Person or
pursuant to the certificate of incorporation or by-laws of the Company or the
certificate of incorporation or by-laws of the Subsidiary, any award of any
arbitrator or any material agreement (including any agreement with stockholders),
instrument, order, judgment, decree, statute, law, rule or regulation to which
the Company or its Subsidiary is subject, except for such approvals or waivers
identified on Schedule 5.4, which shall have been obtained by the
Closing Date.

             Section
5.5       Title to Assets, Etc.  The Company has good and marketable fee
simple title to the assets reflected on the balance sheet set forth on Schedule
5.5 (the “Assets”).  Except
as set forth in Schedule 5.5, none of the Assets is subject to any
encumbrances, except for minor liens that in the aggregate are not substantial
in amount, do not materially detract from the value of the property or assets
subject thereto or interfere with the present use and have not arisen other
than in the ordinary course of business. There are no pending or threatened
condemnation proceedings relating to any of the facilities of the Company.  The real property improvements (including
leasehold improvements) and fixtures and equipment of the Company are
adequately insured and are structurally sound with no known material defects.
The facilities, fixtures and equipment of the Company are in good operating
condition and repair (except for ordinary wear and tear and any defect for
which the cost of repairing would not be material), are sufficient for the
operation of the Company’s business as presently conducted and are in
conformity in all material respects with all applicable laws, ordinances,
orders, regulations and other requirements (including applicable zoning,
environmental, motor vehicle safety or standards, occupational safety and
health laws and regulations) relating thereto currently in effect, except where
the failure to conform would not have a material adverse effect on the business
or financial condition of the Company. 
The Assets are valued at or below actual cost less an adequate and
proper depreciation charge. The Company has not depreciated any of the Assets
on an accelerated basis or in any other manner inconsistent with applicable
Internal Revenue Service tax and fiscal guidelines, if any.

             Section
5.6       Leases.  Each of the Company and its Subsidiary
enjoys peaceful and undisturbed possession of all leases material to it, and
necessary for the operation of its properties and assets.  All such leases are valid and subsisting and
are in full force and effect.

             Section
5.7       Contracts.  Except as set forth in Schedule 5.7,
there is no contract, agreement or understanding required to be described in or
filed as an exhibit to any Commission Documents that is not described in or
filed as required by the Securities Act or the Exchange Act, as the case may
be.  Except as set forth in Schedule
5.7, each such contract, agreement and understanding is valid and binding
and is in full force and effect and enforceable in accordance with its terms
(except enforceability may be limited by applicable bankruptcy, insolvency or
similar laws affecting the enforcement of creditors’ rights generally or as may
be limited by equitable principles relating to enforceability), except in the
case of such contracts, agreements or understandings that are by their terms no
longer in force or effect.  Except as
set forth on Schedule 5.7, (i) no approval or consent of, or notice to,
any Person is needed in order that such contract, agreement or understanding
shall continue in full force and effect in accordance with its terms without
penalty, acceleration or rights of early termination following the consummation
of the transactions contemplated by this Agreement and the Transaction
Documents, other than such notices, consents and approvals as have been
obtained and (ii) except as set forth in Schedule 5.3, each of the
Company and its Subsidiary is not in violation of, breach of, or default under
any such contract, agreement or understanding nor is any other party to any
such contract, agreement or understanding.

             Section
5.8       Financial Statements.  The Company has furnished Lender with (a)
balance sheets of each of the Company and its Subsidiary as at December 31,
1999 and the related statements of income, stockholders’ equity and cash flows
of the Company and its Subsidiary for the fiscal year ended December 31, 1999,
all certified by BDO Seidmen LP, including in each case the related schedules
and notes, (b) an unaudited balance sheet of the Company as at September 30,
2000 and statements of income, stockholders’ equity and cash flows of the
Company for the period ended on such date, prepared by the Company and
certified by its principal financial officer, and (c) the unaudited balance
sheet of Subsidiary as at September 30, 2000 and statements of income,
stockholders’ equity and cash flows of Subsidiary for the period ended on such
date prepared by Subsidiary and certified by its chief financial officer (items
(b) and (c) are collectively referred to as the Interim Financial Statements).

                           (a)         All such financial statements
(including any related schedules and notes) have been prepared in accordance
with generally accepted accounting principles consistently applied, except to
the extent set forth in the notes to such financial statements and except for
the absence of footnotes to the Interim Financial Statements and except that
the Interim Financial Statements are subject to normal year end adjustments and
to adjustments made in the course of an audit that would not in the aggregate
be material, throughout the periods involved and to the extent required by such
principles show all liabilities, direct and contingent, of the Company and
Subsidiary required to be shown thereon in accordance with generally accepted accounting
principles.  The balance sheets and the
related schedules and notes fairly present the financial condition of the
Company and its Subsidiary.  Except as
set forth in Schedule 5.8, the Company has incurred no material
liabilities since September 30, 2000, other than those incurred in the ordinary
course of business.  The net income and
stockholders’ equity statements and the related schedules and notes fairly
present the results of the operations of the Company and its Subsidiary for the
periods indicated.

                           (b)        Except for matters set forth in Schedule
5.8, there has been no material adverse change in the assets, business,
properties, operations or condition, financial or otherwise, of the Company and
its Subsidiary, taken as a whole, since December 31, 1999.

             Section
5.9       Actions Pending.  There is no action, suit, investigation or
proceeding pending or, to the knowledge of the Company, threatened against the
Company or its Subsidiary before any court, arbitrator or administrative or
governmental body that (a) seeks to enjoin or otherwise prevent the
consummation of the transactions contemplated hereby or the sale or issuance of
the Series A Preferred Stock or (b) materially and adversely affects, or as to
which there is a reasonable possibility of an adverse decision that would
materially and adversely affect, either individually or collectively, the
assets, business, properties, operations or condition, financial or otherwise,
of the Company and its Subsidiary. 
Neither the Company nor its Subsidiary is in violation of any judgment,
order, writ, injunction, decree, rule or regulation of any court or
governmental department, commission, board, bureau, agency or instrumentality,
the violation of which reasonably could be expected to, either individually or
collectively, materially and adversely affect the business, property, assets,
operations or condition (financial or otherwise) of the Company and its
Subsidiary, taken as a whole.

 

             Section
5.10     Offering of Series A Preferred
Stock.  Assuming that each purchaser of Series A
Preferred Stock makes representations and warranties substantially similar to
those of Lender set forth in Article VI hereof, the offer, sale and
issuance of the Series A Preferred Stock and the issuance of the Placement
Agent Warrant will be exempt from the registration requirements of the
Securities Act.  Neither the Company nor
any agent on its behalf has solicited or will solicit any offers to sell or has
offered to sell or will offer to sell all or any part of the Series A
Preferred Stock to any Person so as to bring the offering and sale of such
Series A Preferred Stock by the Company within the registration provisions
of the Securities Act.  The Company will
file all notices and satisfy all registration or qualification requirements of
any state securities or Blue Sky law of any applicable jurisdiction with
respect to the offer, issuance and sale of the Series A Preferred Stock and the
issuance of the Placement Agent Warrant.

             Section
5.11     Broker’s or Finder’s
Commissions.  Other than the fee payable to the Lender
(which will be paid by the Company) no broker’s or finder’s or placement fee or
commission will be payable with respect to the sale or the issuance of the
Notes or the Common Stock issuable upon the conversion thereof or the Series A
Preferred Stock as a result of any act or omission by the Company, and the
Company will hold the Lender harmless from any claim, demand or liability for
broker’s or finder’s or placement fees or commissions alleged to have been
incurred in connection with the sale or the issuance of the Notes or the Common
Stock issuable upon the conversion thereof or the Series A Preferred Stock, due
to any actions of the Company or its Subsidiaries or any of their respective
directors, officers or agents.

             Section
5.12     [Omitted.].

             Section
5.13     Intellectual Property.

                           (a)         Each of the Company and its Subsidiary
exclusively owns or possesses the requisite licenses or rights (on reasonable
commercial terms) to use all patents, trade secrets, trademarks, service marks,
service names, trade names, copyrights and other intellectual property rights
necessary to enable it to conduct its business as now operated (collectively,
the “Company IP”) except for those items listed on Schedule 5.13(a),
which rights shall have been obtained by the Closing Date.  There is no claim or action by any Person
pertaining to, or proceeding pending, or to the Company’s knowledge threatened,
that challenges the rights of the Company or its Subsidiary with respect to any
Company IP.  To the Company’s knowledge,
neither of the Company’s nor its Subsidiary’s current and intended products and
services, infringe on any patents, licenses, trademarks, service marks, service
names, trade names, copyrights or other intellectual property rights held by
any Person and neither the Company nor its Subsidiary is aware of any facts or
circumstances that might give rise to any of the foregoing.

                           (b)        Except as set forth in Schedule
5.13(b), no proceedings or claims in which the Company alleges that any Person
is infringing upon, or otherwise violating, any Company IP are pending, and
none has been served by, instituted or asserted by the Company or its
Subsidiary, nor are any proceedings threatened alleging any such violation or
infringement.

                           (c)         The Company has taken and will take all
commercially reasonable actions that are necessary or advisable in order to
fully protect the Company IP, in a manner consistent with prudent commercial
practice.

             Section 5.14     Taxes.  Each of the Company and its Subsidiary has
timely filed (or caused to be filed) all Tax Returns that are required to be
filed by (or with respect to) it on or before the date hereof and has paid all
Taxes due on or before the date hereof whether or not reflected on such Tax
Returns, including pursuant to any assessment received by it.  All such Tax Returns were true, correct and
complete in all material respects except that the Company has not yet paid
approximately $19,330 of real estate taxes on its Elk Grove Village, Illinois
premises which first became due on March 1, 2001 (The Company may pay such
taxes by May 1, 2001, with a penalty of $580.12).  None of such Tax Returns has been audited by the relevant taxing
authority, and no taxing authority has notified (or threatened) the Company or its
Subsidiary, orally or in writing, that such taxing authority will or may audit
any such return.  Each of the Company
and its Subsidiary has complied with all requirements of the Code, the Treasury
Regulations and any state, local or foreign law relating to the payment and
withholding of Taxes relating to it, and each of the Company and its Subsidiary
has, within the time and in the manner prescribed by applicable law, paid over
to the proper taxing authorities all amounts required to be so withheld and paid
over relating to it.  The charges,
accruals and reserves on the books of the Company and its Subsidiary in respect
of Taxes or other governmental charges are adequate to cover any liability of
the Company and its Subsidiary for Taxes through the date hereof.  There are no liens for Taxes with respect to
any asset of the Company or its Subsidiary, except for liens with respect to
Taxes that are not yet due and payable other than as described above with
respect to real estate taxes for its Elk Grove, Illinois premises.  No taxing authority in a jurisdiction where
the Company or its Subsidiary, as the case may be, does not file tax returns
has made a claim, assertion or threat that the Company or its Subsidiary is or
may be subject to taxation in such jurisdiction.

             Section 5.15     ERISA.

                           (a)         Schedule
5.15 sets forth each plan, agreement, arrangement or commitment that is
an employment or consulting agreement, executive or incentive compensation
plan, bonus plan, deferred compensation agreement, employee pension, profit
sharing, savings or retirement plan, employee stock option or stock purchase
plan, group life, health, or accident insurance or other employee benefit plan,
agreement, arrangement or commitment, including, without limitation, any
severance, holiday, vacation, Christmas or other bonus plans (including, but
not limited to, “employee benefit plans,” as defined in Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended (“ERISA”)),
maintained by the Company or its Subsidiary for any present or former
employees, officers or directors of the Company or its Subsidiary (“Company
Personnel”) or with respect to which the Company or any Subsidiary has
liability or makes or has an obligation to make contributions (“Employee
Plans”).

                          (b)        Except
as to the Union Plan, the Company has provided Lender with access to (i)
copies of all Employee Plans or, in the case of an unwritten plan, a written
description thereof, (ii) copies of any annual, financial or actuarial reports
and Internal Revenue Service determination letters relating to such Employee
Plans and (iii) copies of all summary plan descriptions (whether or not
required to be furnished under ERISA) and employee communications relating to
such Employee Plans that materially modify an existing summary plan description
and distributed to Company Personnel, in each case under this subsection (iii),
existing or in effect during or within the past five years.

 

                           (c)         Except
as set forth on Schedule 5.15(c), no Employee Plan (except
the Union Plan, which is excluded from this representation and warranty)
entitles Company Personnel to (i) any pension benefit that is unfunded or (ii)
any pension or other benefit to be paid after termination of employment other
than required by Section 601 of ERISA or pursuant to plans intending to be
qualified under Section 401(a) of the Code and listed on the Schedule
5.15(c), and no other benefits whatsoever are payable to any Company
Personnel after termination of employment (including retiree medical and death
benefits).

                           (d)        Each
Employee Plan (except the Union Plan, which is excluded from this
representation and warranty) that is an employee welfare benefit plan under
Section 3(1) of ERISA is either (i) funded through an insurance company
contract and is not a “welfare benefit fund” within the meaning of Section 419
of the Code or (ii) unfunded.

                           (e)         Each
Employee Plan (except the Union Plan, which is excluded from this
representation and warranty) by its terms and operation is in compliance in all
material respects with all applicable laws (including, but not limited to,
ERISA, the Code and the Age Discrimination in Employment Act of 1967, as
amended).

                           (f)         There
are no actions, suits or claims pending or, to the Company’s knowledge,
threatened against any Employee Plan (other than the Union Plan, which is
excluded from this representation and warranty) or administrator or fiduciary
of any such Employee Plan (other than routine noncontested claims for benefits)
nor, to the Company’s knowledge, does any set of circumstances exist that may
reasonably give rise to such a claim. 
As to each Employee Plan for which an annual report is required to be
filed by the Company under ERISA or the Code, all such filings, including
schedules, have been made on a timely basis and with respect to the most recent
report regarding each such Employee Plan liabilities do not exceed assets, and
no material adverse change has occurred with respect to the financial materials
covered thereby.

                           (g)        Except
as set forth on Schedule 5.15(g), neither the Company nor any
entity that is or was at any time treated as a single employer with the Company
under Section 414(b), (c), (m) or (o) of the Code has at any time (i)
maintained, contributed to or been required to contribute to any plan under
which more than one employer makes contributions (within the meaning of Section
4064(a) of ERISA) or any plan that is a multiemployer plan, (ii) incurred or
expects to incur any liability to the Pension Benefit Guaranty Corporation or
otherwise under Title IV of ERISA or (iii) incurred or expects to incur
liability in connection with an “accumulated funding deficiency” within the
meaning of Section 412 of the Code whether or not waived.

                           (h)        Each
Employee Plan (except the Union Plan, which is excluded from this
representation and warranty) intended to be qualified under Section 401(a) of
the Code and, if applicable, Section 401(k) of the Code has received a
favorable determination letter from the Internal Revenue Service stating that
such Employee Plan is qualified under Section 401(a) and, if applicable,
Section 401(k) of the Code and the related trust is exempt from tax under
Section 501(a) and nothing has occurred since the date of such letter to cause
the letter to be no longer valid or effective.

                           (i)          Neither the Company nor,
to the knowledge of the Company, any other person, including any fiduciary, has
engaged in any “prohibited transaction” (as defined in Section 4975 of the Code
or Section 406 of ERISA), that could subject any of the Employee Plans (or
their trusts), the Company, or any person who the Company has an obligation to
indemnify, to any tax or penalty imposed under Section 4975 of the Code or
Section 502 of ERISA.  No “reportable
event” (as such term is defined in Section 4043 of ERISA) for which the notice
requirement has not been waived by the Pension Benefit Guaranty Corporation has
occurred or is expected to occur with respect to any Employee Plan and the
Company will provide each Lender notice of any reportable events upon learning
of the same.

                           (j)          Except
as set forth on Schedule 5.15(j), the events contemplated by this
Agreement (either alone or together with any other event) will not (i) entitle
any Company Personnel to severance pay, unemployment compensation, or other
similar payments under any Employee Plan or law, (ii) accelerate the time of
payment or vesting or increase the amount of benefits due under any Employee
Plan or compensation to any Company Personnel, (iii) result in any payments
(including parachute payments) under any Employee Plan or law becoming due to
any Company Personnel or (iv) terminate or modify or give a third party a right
to terminate or modify the provisions or terms of any Employee Plan.

                           (k)         Except
as set forth in Schedule 5.15(k), neither the Company nor any
Subsidiary (nor any entity that is or was at any time treated as a single
employer with the Company or any Subsidiary under Section 414(b), (c), (m) or
(o) of the Code or ERISA) has any obligation or liability (contingent or
otherwise) relating to or in connection with the Union Plan.  The Union Plan is not subject to Title IV of
ERISA.  Except as set forth in Schedule
5.15(k), all contributions required to be made by the Company or any Subsidiary
to the Union Plan have been made when due and, to the best of the Company’s
knowledge, if the Company and the Subsidiaries were to withdraw from the Union
Plan on the Closing Date, neither the Company nor any Subsidiary would incur
any liability relating to or in connection with the Union Plan.

             Section 5.16     Environmental.

                           (a)         Except
as set forth on Schedule 5.16(a), the Company and its
Subsidiary comply, and the Company, its Subsidiary and their respective
predecessors at all times during their existence have complied, with all
applicable Environmental Laws (as defined below).

                           (b)        There
is not now pending or, to the knowledge of the Company or its Subsidiary,
threatened, any action, claim, proceeding or investigation, nor has the
Company, its Subsidiary, or any of their respective predecessors received any
notice, claim, demand letter or request for information at any time, alleging
that the Company, its Subsidiary, or any of their respective predecessors may
be or is in violation of, or liable under, any Environmental Law, nor does
there exist any basis for any such action, claim, proceeding or investigation.

                           (c)         Except as disclosed on Schedule
5.16(c), there are no Hazardous
Substances (as defined below) located on any of the properties currently or
formerly owned or operated by the Company, its Subsidiary or any of their
respective predecessors (including soil, groundwater and surface features and
buildings and structures thereon) (the “Properties”), and none of the
Properties contains, or has contained, any underground improvements, including,
but not limited to, treatment or storage tanks, sumps, water, gas or oil wells,
or associated piping.

                           (d)        The Company and its Subsidiary does not
have any contingent liability in connection with a Release (as defined below)
or threatened Release of any Hazardous Substance at any location.

                           (e)         To the knowledge of the Company and its
Subsidiary, there are no present or past Environmental Conditions (as defined
below) in any way related to the Company, its Subsidiary, or any of their
respective predecessors that have, or may have, individually or in the
aggregate, a material adverse effect with respect to any Property or the
business or condition of the Company or its Subsidiary, taken as a whole.

                           (f)         As used
herein, “Environmental Law” means any federal, state, local or
foreign law, regulation, order, decree, judgment, opinion, common law or
binding equitable principle or agency requirement relating to pollution,
contamination, wastes, hazardous material or the protection of the environment,
human health or safety.

                           (g)        As used
herein, “Hazardous Substance” means any substance that is listed,
classified under or regulated by any governmental authority pursuant to any
Environmental Law, including, without limitation, any petroleum product or by–product,
asbestos–containing material, lead–containing paint or plumbing,
polychlorinated biphenyls, radioactive material or radon.

                           (h)        As used herein, “Release”
means any release, spill, emission, leaking, pumping, injection, deposit,
discharge, dispersal, leaching or migrating into the indoor or outdoor
environment of any Hazardous Substance.

                           (i)          As used herein, “Environmental
Condition” means the Release or threatened Release of any Hazardous
Substance upon, under, in or about any of the Properties, or any other
circumstance involving any Property or the Company, its Subsidiary, or any of
their respective predecessors that could be expected to result in any claim,
liability, costs or losses, or any restriction on the ownership, use or
transfer of any Property pursuant to any Environmental Law.

             Section
5.17     Insurance.  The Company maintains or is covered by valid
policies of workers’ compensation insurance and of insurance with respect to
its properties and business.  The
Company currently maintains in full force insurance covering the respective
risks of the Company and its Subsidiary of such types and in such amounts, with
such deductibles and with such insurance companies as are customary for other
companies engaged in similar lines of business.

             Section
5.18     Transactions with Affiliates.  Except as set forth on Schedule 5.18,
neither the Company nor its Subsidiary is directly or indirectly a party to or
otherwise involved in any transaction including, without limitation, the
purchase, sale, lease or exchange of any property or the rendering of any
service, with any Affiliate.  The
Company has delivered to the Lender copies of all agreements and documents
related to all transactions listed on Schedule 5.18.

             Section
5.19     Employees; Labor Matters.  Except as set forth on Schedule 5.19,
the Company is not a party to any labor agreement with respect to its employees
with any labor organization, group or association. The Company is not
delinquent in payments to any of the employees of the Company for any wages,
salaries, commissions, bonuses or other direct compensation for any services
performed for it to the date hereof or amounts required to be reimbursed to
such employees.  The Company is in
material compliance with all applicable laws respecting employment practices,
terms and conditions of employment and wages and hours and is not engaged in
any unfair labor practice.  There is no
unfair labor practice charge or complaint against the Company pending before
any Governmental Authority arising out of the Company’s activities, and the
Company has no knowledge of any facts or information that would give rise
thereto.  There is no labor strike or
labor disturbance pending or threatened against the Company nor, except as set
forth on Schedule 5.19, is any grievance currently being asserted, and
the Company has not experienced a work stoppage or other labor difficulty. The
Company has not received any information indicating that any of its employment
policies or practices is currently being audited or investigated by any
Governmental Authority.  The Company is,
and at all times has been, in compliance with the requirements of the
Immigration Reform Control Act of 1986.

             Section
5.20     Customers, Suppliers and
Distributors.  Schedule 5.20 sets forth a listing of
any customer that accounted for more than $100,000 in revenue for the Company
for the year ended December 31, 2000 (collectively, the “Customers”).  The relationships of the Company with its
Customers, suppliers, distributors and manufacturer’s representatives are good
commercial working relationships.  To
the knowledge of the Company, no material Customer, supplier, distributor or
manufacturer’s representative of the Company intends to terminate or materially
reduce its business relationship with the Company for any reason.

             Section
5.21     Agreements with Stockholders.  Schedule 5.21 lists all agreements,
arrangements or understandings between the Company and one or more stockholders
of the Company relating to the transfer of any class of securities of the
Company (including, without limitation, tag–along rights, drag–along
rights, rights of first offer or any similar rights or obligations) or voting
of any class of securities of the Company. 
The Company has delivered to Lender copies of all agreements and
documents relating thereto.

             Section
5.22     Company Qualifies as a “Smaller
Enterprise”.  The Company qualifies as a “smaller
enterprise” under the Code of Federal Regulations, such that a small business
investment company is permitted to make an investment in the Company.

             Section
5.23     Projections.  Prior to the date hereof, the Company
delivered to Lender financial projections relating to the Company and contained
in the PPM (the “Projections”). In the opinion of management of the
Company, the assumptions used in preparation of the Projections were reasonable
when made and continue to be reasonable as of the date hereof and as of the
Closing Date.  The Projections have been
prepared in good faith.

             Section
5.24     Commission Documents.  The Company has filed all registration
statements, proxy statements, information statements, reports and other
documents required to be filed by it under the Securities Act or the Exchange
Act, and all amendments thereto (collectively, the “Commission Documents”).  The Company has furnished Lender copies of
all Commission Documents, each as filed with the Commission, since January
1996.  Each Commission Document when
filed with the Commission was true and accurate in all material respects and in
compliance in all material respects with the requirements of its respective
report form and the rules and regulations of the Commission.  No Commission Document contained any untrue
statement of a material fact or omitted to state a material fact necessary in
order to make the statements contained therein, in light of the circumstances
under which made, not misleading.

             Section
5.25     Disclosure.  Neither this Agreement nor any other
document, certificate or statement prepared by or on behalf of the Company by
its authorized representatives or agents and furnished to or made available to
Lender in writing by or on behalf of the Company by its authorized
representatives or agents in connection herewith, including without limitation,
the PPM, contains any untrue statement of a material fact or omits to state a
material fact necessary in order to make the statements contained herein and
therein, in the light of the circumstances under which made, not misleading.

 

ARTICLE VI.

REPRESENTATIONS AND WARRANTIES OF LENDER

             Lender
represents and warrants to the Company as of the date of this Agreement that:

             Section 6.1       Investment Purpose.  Lender is purchasing the Note for Lender’s
own account for investment only and not with a view toward or in connection
with the public sale or distribution thereof. 
Lender will not resell the Note or the Common Stock issued upon
conversion of the Note (the “Conversion Stock”) except pursuant to sales that
are exempt from the registration requirements of the Securities Act and all
applicable state securities laws, and/or sales registered under the Securities
Act and all applicable state securities laws. 
Lender understands that Lender may bear the economic risk of this
investment indefinitely, unless the Conversion Stock is registered pursuant to
the Securities Act and any applicable state securities laws or an exemption
from such registration is available, and that the Company has no present
intention of registering the Conversion Stock other than as contemplated by the
Registration Rights Agreement.

             Section
6.2       Accredited
Investor Status.  Lender is an “accredited investor” as that
term is defined in Rule 501(a) of Regulation D promulgated under the Securities
Act.  By reason of its business and
financial experience, sophistication and knowledge, Lender is capable of
evaluating the risks and merits of the investment made pursuant to this
Agreement.

             Section
6.3       Authorization;
Enforcement.  This Agreement and each Transaction Document
to which Lender will be a party have been duly and validly authorized, executed
and delivered on behalf of Lender and are the legal, valid and binding
agreements of Lender enforceable in accordance with their terms, except as
enforceability may be limited by applicable bankruptcy, insolvency, or similar
laws affecting the enforcement of creditors’ rights generally or by equitable
principles relating to enforceability.

             Section 6.4       Broker’s or Finder’s Commissions.  Other than the fee payable to the Lender
(which will be paid to Lender by the Company) no broker’s or finder’s or
placement fee or commission will be payable with respect to the sale or the
issuance of the Notes or the Common Stock issuable upon the conversion thereof
or the Series A Preferred Stock as a result of any act or omission by the
Lender, and the Lender will hold the Company harmless from any claim, demand or
liability for broker’s or finder’s or placement fees or commissions alleged to
have been incurred in connection with the sale or the issuance of the Notes or
the Common Stock issuable upon the conversion thereof or the Series A Preferred
Stock, due to any actions of the Lender.

ARTICLE
VII.

INDEMNIFICATION

             Section 7.1       General.

                           (a)         The Company (the “Indemnifying
Party”) agrees and covenants to hold harmless and indemnify Lender and each
of its Affiliates, and its respective employees, directors, officers,
principals, controlling Persons, advisors and agents (each of the foregoing
Persons being an “Indemnified Person”), from and against any losses,
claims, damages, liabilities and expenses (including reasonable attorneys’ fees
and expenses of investigation) incurred by such Indemnified Person
(collectively,
“Indemnifiable Costs and Expenses”)
(i) arising out of or based upon any breach by the Indemnifying Party of
any of its representations, warranties or covenants contained herein or in the
other Transaction Documents to which it is a party or in any agreement,
instrument or document delivered by the Company hereunder or thereunder or
(ii) in connection with enforcing the rights of an Indemnified Person
under this Agreement or under the other Transaction Documents to which it is a
party.

                           (b)        The
obligations of the Indemnifying Party hereunder shall survive the Closing.

             Section 7.2       Procedure.  Promptly after receipt by an Indemnified
Person of notice from any third party of the commencement of any lawsuit,
inquiry or other proceeding or investigation thereof, such Indemnified Person
will, if a claim in respect thereof is to be made against the Indemnifying
Party hereunder, notify the Indemnifying Party in writing of the commencement thereof;
but the omission so to notify the Indemnifying Party will not relieve the
Indemnifying Party (x) from any liability which it may have to any
Indemnified Person hereunder unless the Indemnifying Party is actually
prejudiced thereby or (y) from any liability which it may have to any
Indemnified Person otherwise than pursuant to this Article VII.  Each Indemnified Person shall permit the
Indemnifying Party to assume the defense of such claim with counsel reasonably
satisfactory to such Indemnified Person; provided, however, that
any Indemnified Person shall have the right to employ separate counsel and to
participate in the defense of such claim, but the fees and expenses of such
counsel shall be at the expense of such Indemnified Person unless (A) the
Indemnifying Party has agreed to pay such fees or expenses, (B) the
Indemnifying Party shall have failed to assume the defense of such claim and
employ
counsel reasonably satisfactory to such Indemnified
Person in a timely manner or (C) in the reasonable judgment of such
Indemnified Person, based upon advice of its counsel, a conflict of interest
may exist between such Indemnified Person and the Indemnifying Party with
respect to such claims (in which case, if such Indemnified Person notifies the
Indemnifying Party in writing that such Indemnified Person elects to employ
separate counsel at the expense of the Indemnifying Party, the Indemnifying
Party shall not have the right to assume the defense of such claim on behalf of
such Indemnified Person).  The Indemnifying
Party will not be subject to any liability for any settlement made without its
consent (but such consent will not be unreasonably withheld or delayed).  No Indemnified Person will be required to
consent to entry of any judgment or enter into any settlement that does not
include as an unconditional term thereof the giving by the claimant or
plaintiff to such Indemnified Person of a release from all liability in
respect of such claim or litigation.  An
Indemnifying Party who is not entitled to, or elects not to, assume the defense
of a claim will not be obligated to pay the fees and expenses of more than one
counsel for all Indemnified Persons with respect to such claim, as well as one
local counsel in each relevant jurisdiction.

             Section 7.3       Contribution.

                           (a)         In order to provide for just and
equitable contribution in circumstances under which the indemnity provided for
in this Article VII is for any reason held to be unenforceable by the
Indemnified Person, the Indemnifying Party, in lieu of indemnifying such
Indemnified Person, shall have an obligation to
contribute, and shall contribute to the amount paid or payable by such
Indemnified Person as a result of such losses, claims, damages, liabilities or
expenses in such proportion as is appropriate to reflect not only the relative
benefits received by the Indemnifying Party and the Indemnified Persons, but
also to reflect the relative fault of the Indemnifying Party and the
Indemnified Persons in connection with the statement or omissions that result
in such losses, claims, damages, liabilities or expenses, as well as any other
relevant equitable considerations; provided, however, that no
Person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any Person
who was not guilty of such
fraudulent misrepresentation.  The relative fault of the Indemnifying Party and the Indemnified
Persons shall be determined, if applicable, by reference to, among other
things, whether the untrue statement of a material fact or the omission to
state a material fact has been made by, or relates to information supplied by,
the Indemnifying Party or Indemnified Persons and the Persons’ relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission.  The amount paid
or payable by a Person as a result of the losses, claims, damages, liabilities
and expenses referred to above shall be deemed to include any reasonable legal
or other fees or expenses reasonably incurred by such Person in connection with
investigation or defending any such claim.

                           (b)        The Company and Lender agree that it
would not be just and equitable if contribution pursuant to the immediately
preceding paragraph were determined by any method of allocation that does not
take into account the equitable considerations referred to in such paragraph.

Section 7.4       Notification  Each party agrees to
notify in writing promptly the other party of the commencement of any
litigation or proceeding against it or any of its stockholders, officers,
directors or agents in connection with the issuance and sale of any Note.

 

ARTICLE VIII.

SUBORDINATION

             Section 8.1       Notes Subordinated to Designated
Senior Debt.  The Company for itself and its successors,
and the Lender, by its acceptance of the Notes, agrees that the payment of the
principal amount of the Notes and interest thereon (other than payment by way
of conversion of all or a portion of the Notes into capital stock of the
Company), and any claim for rescission or damages in respect thereof under any
applicable law (the “Subordinated Obligations”) is subordinated, to the
extent and in the manner provided in this Article VIII, to the prior
payment of Designated Senior Debt (whether outstanding on the date hereof or
hereafter created, incurred, assumed or guaranteed).

             Section 8.2       No Payment on Notes in Certain
Circumstances.

                           (a)         No
payment will be made on account of the Subordinated Obligations, or to
acquire the Notes for cash, property or securities (other than payment by way
of conversion of all or a portion of the Notes into capital stock of the
Company) (x) upon the maturity of any Designated Senior Debt by lapse of time,
acceleration or otherwise, unless and until all such Designated Senior Debt
shall first be paid in full in cash or cash equivalents or provision for the
payment in full in cash or cash equivalents have been made with respect
thereto, in each case, in a manner satisfactory to the holders of Designated
Senior Debt or (y) in the event that the Company defaults in the payment of any
principal of or interest on or any other amounts payable on or due in
connection with any Designated Senior Debt when it becomes due and payable,
whether at maturity or at a date fixed for prepayment or by declaration or
otherwise, unless and until such default has been cured or waived in writing.

                           (b)        Upon
the occurrence of any event of default (or if an event of default would
result upon any payment with respect to the Subordinated Obligations) with
respect to any Designated Senior Debt, as such event of default is defined in
the instruments evidencing such Designated Senior Debt or under which it is
outstanding, permitting the holders to accelerate its maturity (if the default
is other than default in payment of the principal of or interest on or any
other amount due in connection with such Designated Senior Debt), upon written
notice of the event of default given to the Company by the holders of such
Designated Senior Debt (or their agent or representative), then, unless and
until such event of default has been cured or waived in writing, no payment
will be made by the Company with respect to the Subordinated Obligations or to
acquire the Note for cash, property or securities (other than payment by way of
conversion of all or a portion of the Notes into capital stock of the Company);
provided that the foregoing will
not prevent the making of any payment for a period of more than 179 days after
the date the written notice of the default is given unless such Designated
Senior Debt in respect of which such event of default exists has been declared
due and payable in its entirety within that period, and that declaration has
not been rescinded.  If such Designated Senior
Debt is not declared due and payable within 179 days after the written notice
of the default is given, promptly after the end of the 179–day period the
Company will pay all sums not paid during the 179–day period because of
this paragraph (b) unless paragraph (a) above is then applicable.  During any period of 360 consecutive days
only one such period during which payment of principal of, or interest on, the
Notes may not be made may commence and the duration of such period may not
exceed 179 days.

                           (c)         If any payment or distribution of assets of the Company
is received by the Lender under the Notes in respect of the Subordinated
Obligations at a time when that payment or distribution should not have been
made because of paragraph (a) or (b) above, such payment or distribution will
be received and held in trust for and will be paid over to the holders of
Designated Senior Debt which is due and payable and remains unpaid or
unprovided for (pro rata as to each of such holders on the basis of the
respective amounts of such Designated Senior Debt which is due and payable)
until all such Designated Senior Debt has been paid in full in cash or cash
equivalents or provided for in cash or cash equivalents in a manner
satisfactory to the holders of Designated Senior Debt, after giving effect to
any concurrent payment or distribution or provision therefor to the holders of
such Designated Senior Debt.

             Section 8.3       Notes
Subordinated to Prior Payment of all Designated Senior Debt on Dissolution,
Liquidation or Reorganization.

                           (a)         Upon any distribution of assets of the
Company upon any dissolution, winding up, liquidation or reorganization of the
Company (whether in bankruptcy, insolvency, receivership or similar proceeding
related to the Company or its property or upon an assignment for the benefit of
creditors, any marshaling of the Company’s assets or liabilities, or
otherwise):

                                        (i)          the holders of all Designated Senior
Debt will first be entitled to receive payment in full in cash or cash
equivalents or provision for payment in full in cash or cash equivalents in a
manner satisfactory to the holders of Designated Senior Debt of the principal
of and interest on Designated Senior Debt and other amounts due in connection
with Designated Senior Debt at the rate provided for in the documents governing
such Designated Senior Debt (whether or not such interest is an allowed claim
enforceable against the debtor in a bankruptcy case under Title 11 of the
United States Code), before the Lender under the Notes is entitled to receive
any payment on account of the principal of or interest on the Notes;

                                        (ii)         any payment or distribution of assets
of the Company of any kind or character, whether in cash, property or
securities, to which the Lender would be entitled except for the provisions of
this Section 8.3 will be paid by the liquidating trustee or agent or
other person making such a payment or distribution directly to the holders of
Designated Senior Debt or their representatives to the extent necessary to make
payment in full in cash or cash equivalents or provision for payment in full in
cash or cash equivalents in a manner satisfactory to the holders of Designated
Senior Debt of all Designated Senior Debt remaining unpaid, after giving effect
to any concurrent payment or distribution or provision therefor to the holders
of such Designated Senior Debt; and

                                        (iii)        if,
notwithstanding the foregoing, any payment or distribution of assets of the
Company of any kind or character, whether in cash, property or securities is
received by the Lender on account of the Subordinated Obligations (other than
by way of conversion of all or a portion of the Notes into the capital stock of
the Company) before all Designated Senior Debt is paid in full in cash or cash
equivalents or provided for in cash or cash equivalents in a manner
satisfactory to the holders of Designated Senior Debt, such payment or
distribution will be received and held in trust for and will be paid over to
the holders of the Designated Senior Debt remaining so unpaid or unprovided for
or their representatives for application to the payment of such Designated
Senior Debt until all such Designated Senior Debt has been paid in full in cash
or cash equivalents or provided for in cash or cash equivalents in a manner
satisfactory to the holders of Designated Senior Debt, after giving effect to
any concurrent payment or distribution or provision therefor to the holders of
such Designated Senior Debt.

                           (b)        the
Company will give prompt written notice to the Lender under the Notes of
any dissolution, winding up, liquidation or reorganization of it or any
assignment for the benefit of its creditors and of any event of default in
respect of Designated Senior Debt.

                           (c)         For purposes of this Section 8.3,
the words “cash, property or securities”
shall not be deemed to include (x) shares of common stock of the Company as
reorganized or readjusted, (y) securities of the Company or any other
corporation provided for by a plan of reorganization or readjustment, which
securities are subordinated, to at least the same extent as the Notes, to the
payment of all Designated Senior Debt then outstanding or (z) any payment or
distribution of securities of the Company or any other corporation authorized
by an order or decree giving effect, and stating in such order or decree that
effect has been given, to subordination of the Notes to Designated Senior Debt
and made by a court of competent jurisdiction in a reorganization proceeding
under any applicable bankruptcy, insolvency or similar law.  For purposes of this Section 8.3, “distribution” and “payment” with respect to the Company or
its assets include payments, distributions and other transfers of assets by or
on behalf of the Company from any source, of any kind or character, whether
direct or indirect, by set-off or otherwise, whether in cash, property or
securities.

 

             Section
8.4       Lender Under the Notes to be
Subrogated to Rights of Holders of the Designated Senior Debt.  Following the payment in full in cash or
cash equivalents or provision for payment in full in cash or cash equivalents
in a manner satisfactory to the holders of Designated Senior Debt of all
Designated Senior Debt, Lender under the Notes will be subrogated to the rights
of the holders of Designated Senior Debt to receive payments or distributions
of assets of the Company applicable to the Designated Senior Debt until all
amounts owing on the Notes have been paid in full, and for the purpose of such
subrogation no such payments or distributions to the holders of Designated
Senior Debt by or on behalf of  the
Company or by or on behalf of the Lender under the Notes by virtue of this Article
VIII that otherwise would have been made to the Lender under the Notes
will, as between the Company and the Lender, be deemed to be payment by the
Company to or on account of the Designated Senior Debt, it being understood
that the provisions of this Article VIII are and are intended solely for
the purpose of defining the relative rights of the Lender under the Notes, on
the one hand, and the holders of Designated Senior Debt, on the other hand.

             Section 8.5       Obligations of the Company
Unconditional.  Nothing contained in this Article VIII
or elsewhere in the Notes is intended to or will impair, as between the Company
and the Lender under the Notes, the obligations of the Company, which are
absolute and unconditional, to pay to the Lenders under the Notes the
Subordinated Obligations as and when they become due and payable in accordance
with their terms, or is intended to or will affect the relative rights of the
Lenders under the Notes and creditors of the Company other than the holders of
the Designated Senior Debt, nor will anything herein or therein prevent the
Lender from exercising all remedies otherwise permitted by applicable law upon
default under the Notes, subject to the rights if any, under this Article
VIII of the holders of Designated Senior Debt.

             Section 8.6       Subordination Rights not Impaired by
Acts or Omissions of the Company or Holders of Designated Senior Debt.  No right of any present or future holders of
any Designated Senior Debt to enforce subordination as provided herein will at
any time or in any way be prejudiced or impaired by any act or failure to act
on the part of the Company or by any act or failure to act by any such holder,
or by any noncompliance by the Company with the terms of this Article VIII,
regardless of any knowledge thereof which any such holder may have or otherwise
be charged with.  The holders of
Designated Senior Debt may extend, renew, modify or amend the terms of the
Designated Senior Debt (but not to increase the aggregate principal amount of
indebtedness of the Company permitted thereunder) or any security or guarantee
therefor or thereof, release, sell or exchange such security, exercise or
refrain from exercising any rights against the Company, any of its Subsidiaries
or any other Person and otherwise deal freely with the Company, all without
affecting the liabilities and obligations of the parties to the document or the
Lender under the Notes.  No amendment to
these provisions will be effective against the holders of the Designated Senior
Debt who have not consented thereto in writing.

             Section 8.7       Not to Prevent Events of Default.  The failure to make a payment on account of
the Subordinated Obligations by reason of any provision of this Article VIII
will not be construed as preventing the occurrence of an Event of Default.

             Section 8.8       Miscellaneous.  If, upon any proceeding referred to in Section
8.3, the Lender under the Notes does not file a claim in such proceeding
prior to fifteen (15) days before the expiration of the time to file such
claim, the holders of the Designated Senior Debt or their agent or
representative, at the expense of the holders of Designated Senior Debt, may
file such claim on behalf of such Lender.

 

ARTICLE
IX.

MISCELLANEOUS

             Section 9.1       Entire Agreement;
Survival of Provisions.  This Agreement, together with the other
agreements, instruments and documents expressly referred to herein, constitute
the entire agreement of the parties with respect to the transactions contemplated
hereby and supersede all prior agreements and understandings with respect
thereto, whether written or oral. 
Unless this Agreement has been terminated prior to the Closing Date, all
of the covenants of the parties made herein shall remain operative and in full
force and effect regardless of acceptance of any of the Notes and payment
therefor.  The representations and
warranties set forth herein shall survive the execution
and delivery of this Agreement and the issuance of the Notes and shall in no
way be affected by any investigation of the subject matter thereof made by or
on behalf of the Lender
or the Company.  The
representations, warranties, agreements and covenants made herein and in the
other Transaction Documents shall be deemed to have been relied upon by the
parties hereto.

             Section 9.2       No Waiver;
Modifications in Writing.  No failure or delay by a party in exercising
any right, power or remedy hereunder shall operate as a waiver thereof, nor
shall any single or partial exercise of any such right, power or remedy
preclude any other or further exercise thereof or the exercise of any other
right, power or remedy.  The remedies
provided for herein are cumulative and are not exclusive of any remedies that
may be available to any party at law or in equity or otherwise.  No waiver of or consent to any departure by
a party from any provision of this Agreement shall be effective unless signed
in writing by the parties entitled to the benefit thereof.  No amendment, modification or termination of
any provision of this Agreement shall be effective unless signed in writing by
the Company and Lender. Any amendment,
supplement or modification of or to any provision of
this Agreement, any waiver of any provision of this Agreement, and any consent
to any departure from the terms of any provision of this Agreement, shall be
effective only in the specific instance and for the specific purpose for which
made or given.

             Section 9.3       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 registered or certified
mail, return receipt requested or (c) when received by the addressee, if sent
by Express Mail, Federal Express or other express overnight 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:
	 	 
	 	Electric City Corp.
	 	1286 Landmeier Road,
	 	Elk Grove Village, IL 60007-2410,
	 	Fax No.: 847-437-4969
	 	Attention:  General Counsel
	 	 
	(ii)	If
  to Lender:
	 	 
	 	Newcourt
  Capital USA, Inc.
	 	c/o
  The CIT Group
	 	1211
  Avenue of the Americas, 22nd Floor
	 	New
  York, New York 10036
	 	Fax
  No.:  212-382-9033
	 	Attn:  Guy Piazza or Jeffrey A. Marcks
	 	 

             Section
9.4       Headings; Table of Contents.  The descriptive headings of the several
paragraphs of this Agreement are inserted for convenience only and do not
constitute a part of this Agreement.

             Section
9.5       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.

             Section 9.6       Binding Effect; Assignment.  The rights and obligations of the parties
under this Agreement may not be assigned or otherwise transferred to any other
Person, except with the prior written consent of the other party hereto,
provided that Lender may assign or otherwise transfer any or all of such rights
and/or obligations to any of its respective Affiliates without obtaining
any such consent.  Except as expressly
provided in this Agreement, this Agreement shall not be construed so as to
confer any right or benefit upon any Person other than the parties to this Agreement
or any Affiliate of any such Person (as designated in writing to the other
parties hereto) and its respective successors and permitted assigns.  This Agreement shall be binding upon and
shall inure to the benefit of the Company, Lender and its respective successors
and permitted assigns.

             Section
9.7       Governing Law.  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. 
This Agreement may not be changed orally.

             Section
9.8       Consent
to Jurisdiction and Service of Process.  ANY SUIT, ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY MAY BE INSTITUTED IN ANY FEDERAL COURT SITUATED IN THE
STATE OF NEW YORK OR ANY STATE COURT OF THE STATE OF NEW YORK IN EACH CASE, IN
THE BOROUGH OF MANHATTAN, CITY OF NEW YORK, AND EACH PARTY AGREES NOT TO
ASSERT, BY WAY OF MOTION, AS A DEFENSE OR OTHERWISE, IN ANY SUCH SUIT, ACTION
OR PROCEEDING, ANY CLAIM THAT IT IS NOT SUBJECT PERSONALLY TO THE JURISDICTION
OF SUCH COURT, THAT THE SUIT, ACTION OR PROCEEDING IS BROUGHT IN AN
INCONVENIENT FORUM, THAT THE VENUE OF THE SUIT, ACTION OR PROCEEDING IS
IMPROPER OR THAT THIS AGREEMENT OR THE SUBJECT MATTER HEREOF MAY NOT BE ENFORCED
IN OR BY SUCH COURT.  EACH PARTY FURTHER
IRREVOCABLY SUBMITS TO THE JURISDICTION OF SUCH COURT IN ANY SUCH SUIT, ACTION
OR PROCEEDING.  ANY AND ALL SERVICE OF
PROCESS AND ANY OTHER NOTICE IN ANY SUCH SUIT, ACTION OR PROCEEDING SHALL BE
EFFECTIVE AGAINST ANY PARTY IF GIVEN PERSONALLY OR BY REGISTERED OR CERTIFIED MAIL, RETURN RECEIPT REQUESTED,
OR BY ANY OTHER MEANS OF MAIL THAT REQUIRES A SIGNED RECEIPT, POSTAGE FULLY
PREPAID, MAILED TO SUCH PARTY AS HEREIN PROVIDED.  NOTHING HEREIN CONTAINED SHALL BE DEEMED TO AFFECT THE RIGHT OF
ANY PARTY TO SERVE PROCESS IN ANY MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL
PROCEEDINGS OR OTHERWISE PROCEED AGAINST ANY OTHER PARTY IN ANY OTHER
JURISDICTION.

             Section
9.9       Further Assurances.  The Company shall from time to time and at
all times hereafter make, do, execute or cause or procure to be made, done and
executed such further acts, deeds, conveyances, consents and assurances,
without further consideration, that may reasonably be required to effect the
transactions contemplated by this Agreement or the Notes.

             Section 9.10     Specific Performance.  The Company acknowledges that irreparable
damage would occur to Lender in the event that any of the provisions of this
Agreement or the other Transaction Documents were not performed by the Company
in accordance with their specific terms or were otherwise breached by the
Company and that money damages would not provide an adequate remedy to the
Lender.  It is accordingly agreed that
the Lender shall be entitled to an injunction and other equitable remedies to
prevent breaches by the Company of this Agreement and the other Transaction
Documents and to enforce specifically the terms and provisions hereof or
thereof.

             Section 9.11     Severability of Provisions.  Any provision of this Agreement that is
prohibited or unenforceable shall be ineffective to
the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof.

             Section 9.12     Costs, Expenses and Taxes.  The Company shall pay any and all stamp,
transfer and other similar Taxes payable or determined to be payable in
connection with the execution and delivery at the Closing Date of this
Agreement or the original issuance of the Notes, and shall save and hold Lender
harmless from and against any and all liabilities with
respect to or resulting from any delay in paying, or omission to pay, such
Taxes.  The Company shall pay its own
expenses and legal fees incurred on its behalf with respect to the negotiation,
execution and delivery of this Agreement and the other Transaction Documents.  The Company shall also pay the legal fees
and expenses of Lender incurred on its behalf with respect to the negotiation,
execution and delivery of this Agreement and the other Transaction Documents.

             Section 9.13     Publicity.  The parties agree that no public release or
announcement concerning this Agreement and the other Transaction Documents or
the transactions contemplated hereby or thereby shall be made without advance
review and approval by each party hereto, except as otherwise required by
applicable law.

[SIGNATURE
PAGE FOLLOWS]

             IN
WITNESS WHEREOF, the parties hereto have caused Agreement to be executed by
their respective officers hereunto duly authorized, as of the date first above
written.

	 	ELECTRIC
  CITY CORP., 
	 	a
  Delaware corporation
	 	 	 
	 	By:	            /s/ John Mitola
	 	 	

	 	 	Name:  John Mitola
	 	 	Title:   Chief Executive Officer

 

	 	NEWCOURT
  CAPITAL USA, INC.,
	 	a
  Delaware corporation
	 	 	 
	 	By:	             /s/ Guy Piazza
	 	 	

	 	 	Name:  Guy Piazza
	 	 	

	 	 	Title:     Managing Director
	 	 	

	 	 	 

 

 

 

 

[SIGNATURE PAGE TO
NOTE PURCHASE AGREEMENT]

 

	ARTICLE
  I. DEFINITIONS	 
	Section
  1.1	Definitions	 
	 	 	 
	ARTICLE II.
  LENDER COMMITMENT AND LOANS	 
	Section
  2.1	Lender
  Commitment; Purchase and Sale of Notes	 
	Section
  2.2	Closing	 
	Section
  2.3	Termination
  and Reduction of Commitment	 
	Section 2.4	Repayment of Loans	 
	Section 2.5	Surrender of
  Bridge Warrant	 
	 	 	 
	ARTICLE III.
  CONDITIONS PRECEDENT	 
	Section 3.1	Lender’s Conditions
  to Closing	 
	(a)	Receipt
  of Note and Other Transaction Documents	 
	(b)	Opinion of the
  Company’s Counsel	 
	(c)	No
  Litigation; No Order	 
	(d)	Proceedings	 
	(e)	Representations
  and Warranties	 
	(f)	Compliance with
  this Agreement	 
	(g)	Officer’s
  Certificate	 
	(h)	Secretary’s Certificate	 
	(i)	Purchase
  Permitted by Applicable Laws; Legal Investment	 
	(j)	Consents
  and Approvals	 
	(k)	No Material Adverse
  Change	 
	(l)	Market
  Conditions	 
	(m)	Execution
  of Confidentiality Agreements By Employees	 
	(n)	Denis Enberg	 
	(o)	Great Lakes Acquisition	 
	(p)	No Default or
  Event of Default	 
	(q)	Payment
  of Legal Fees	 
	(r)	Payment
  of Marketing and Consulting Fees	 
	(s)	Insurance	 
	(t)	Waivers	 
	Section
  1.2	Conditions
  Precedent to Lender’s Obligations to Make Additional Loans	 
	(a)	Proper
  Notice	 
	(b)	No Litigation; No
  Order	 
	(c)	Representations
  and Warranties	 
	(d)	Compliance with
  this Agreement	 
	(e)	Securities
  Purchase Agreement	 
	(f)	Approval of
  Charter Amendment	 
	(g)	Voting
  Agreements	 
	(h)	No Material Adverse
  Change	 
	(i)	Great Lakes Acquisition	 
	(j)	Key
  Man Life Insurance	 
	(k)	Joseph
  Marino	 
	(l)	Officer’s
  Certificate	 
	(m)	Payment
  of Legal Fees	 
	(n)	Purchase
  Permitted by Applicable Laws; Legal Investment	 
	(o)	No Default or
  Event of Default	 
	(p)	Market
  Conditions	 
	(q)	Augustine,
  L.P	 
	 	 	 
	ARTICLE IV. CERTAIN
  COVENANTS	 
	Section
  4.1	Incorporation
  of All Covenants from Bank Credit Agreement	 
	Section 4.2	Use of Proceeds	 
	Section 4.3	Certain Actions	 
	Section 4.4	Stockholder
  Approval	 
	Section
  4.5	No
  Modification of Resolutions	 
	Section
  4.6	Sale of
  Series A Preferred Stock	 
	Section
  4.7	Waiver
  of Stay, Extension or Usury Laws	 
	 	 	 
	ARTICLE V. REPRESENTATIONS,
  WARRANTIES AND COVENANTS OF THE COMPANY	 
	Section
  5.1	Organization;
  Standing and Qualification of Company and its Subsidiary; Corporate Authority	 
	Section
  5.2	Capital
  Stock	 
	Section
  5.3	No
  Defaults	 
	Section
  5.4	Burdensome
  and Conflicting Agreements and Charter Provisions	 
	Section 5.5	Title to Assets, Etc.	 
	Section
  5.6	Leases	 
	Section
  5.7	Contracts	 
	Section 5.8	Financial
  Statements	 
	Section 5.9	Actions Pending	 
	Section
  5.10	Offering
  of Series A Preferred Stock	 
	Section
  5.11	Broker’s
  or Finder’s Commissions	 
	Section
  5.12	[Omitted.]	 
	Section 5.13	Intellectual
  Property	 
	Section
  5.14	Taxes	 
	Section 5.15	ERISA	 
	Section 5.16	Environmental	 
	Section
  5.17	Insurance	 
	Section
  5.18	Transactions
  with Affiliates	 
	Section 5.19	Employees;
  Labor Matters	 
	Section
  5.20	Customers,
  Suppliers and Distributors	 
	Section
  5.21	Agreements
  with Stockholders	 
	Section 5.22	Company Qualifies as
  a “Smaller Enterprise”	 
	Section
  5.23	Projections	 
	Section 5.24	Commission
  Documents	 
	Section
  5.25	Disclosure	 
	 	 	 
	ARTICLE VI.
  REPRESENTATIONS AND WARRANTIES OF LENDER	 
	Section 6.1	Investment Purpose	 
	Section 6.2	Accredited Investor
  Status	 
	Section 6.3	Authorization;
  Enforcement	 
	Section 6.4	Broker’s or Finder’s
  Commissions	 
	 	 	 
	ARTICLE VII.
  INDEMNIFICATION	 
	Section
  7.1	General	 
	Section
  7.2	Procedure	 
	Section
  7.3	Contribution	 
	Section 7.4	Notification	 
	 	 	 
	ARTICLE VIII.
  SUBORDINATION	 
	Section
  8.1	Notes
  Subordinated to Designated Senior Debt	 
	Section
  8.2	No
  Payment on Notes in Certain Circumstances	 
	Section
  8.3	Notes
  Subordinated to Prior Payment of all Designated Senior Debt on Dissolution,
  Liquidation or Reorganization	 
	Section
  8.4	Lender
  Under the Notes to be Subrogated to Rights of Holders of the Designated
  Senior Debt	 
	Section
  8.5	Obligations
  of the Company Unconditional	 
	Section
  8.6	Subordination
  Rights not Impaired by Acts or Omissions of the Company or Holders of
  Designated Senior Debt	 
	Section
  8.7	Not to
  Prevent Events of Default	 
	Section 8.8	Miscellaneous	 
	 	 	 
	ARTICLE IX.
  MISCELLANEOUS	 
	Section
  9.1	Entire
  Agreement; Survival of Provisions	 
	Section
  9.2	No
  Waiver; Modifications in Writing	 
	Section
  9.3	Notices	 
	Section
  9.4	Headings;
  Table of Contents	 
	Section
  9.5	Counterparts	 
	Section 9.6	Binding
  Effect; Assignment	 
	Section
  9.7	Governing
  Law	 
	Section 9.8	Consent to Jurisdiction
  and Service of Process	 
	Section 9.9	Further Assurances	 
	Section 9.10	Specific
  Performance	 
	Section 9.11	Severability
  of Provisions	 
	Section 9.12	Costs,
  Expenses and Taxes	 
	Section
  9.13	Publicity	 

 

Exhibit
A

THIS NOTE AND THE SECURITIES ISSUABLE
UPON THE CONVERSION HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933 (THE “ACT”) OR STATE SECURITIES LAWS AND NO TRANSFER OF THIS NOTE OR SUCH
SECURITIES MAY BE MADE EXCEPT (A) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE ACT AND THE RULES AND REGULATIONS THEREUNDER AND OF ALL
APPLICABLE STATE SECURITIES OR “BLUE SKY” LAWS, OR (B) PURSUANT TO AN EXEMPTION
THEREFROM UNDER THE ACT AND ALL APPLICABLE STATE SECURITIES OR “BLUE SKY” LAWS.

ELECTRIC
CITY CORP.

CONVERTIBLE
SENIOR SUBORDINATED PROMISSORY NOTE

	$1,000,000	April 18, 2001
	 	New York, New York

             FOR
VALUE RECEIVED, the undersigned, Electric City Corp., a Delaware corporation
(the “Company” or “Payor”), hereby promises to pay to Newcourt
Capital USA, Inc., a Delaware corporation (“CIT” or “Payee”), at
1211 Avenue of the Americas, 22nd Floor, New York, NY 10036 (or at
such other place within the County of New York as Payee shall hereafter direct
by notice in writing to Payor) and its registered assigns, the principal sum of
One Million Dollars ($1,000,000), together with interest thereon at the rate
provided for herein from the date hereof, with such principal and interest
payable as herein provided.

1.          Loan,
Interest Rate and Payment Provisions.

             1.1        This Note is one of a duly authorized
issue of Notes issued pursuant to the Convertible Senior Subordinated
Promissory Note and Warrant Purchase Agreement, dated as of April 18, 2001 (as
it may be amended from time to time, the “Note Purchase Agreement”) by
and between the Company and CIT.  This
Note is transferable and assignable to one or more purchasers, in accordance
with applicable law.  The Company agrees
to issue from time to time replacement Notes in the form hereof to facilitate
such transfers and assignments.  The
Company shall keep at its principal office a register (the “Register”)
in which shall be entered the names and addresses of the registered holder of
this Note and particulars of all transfers of such Note.  References to the “holder” shall mean the
Person listed in the Register as the payee of this Note.  The ownership of the Note shall be proven by
the Register.

             1.2        The principal amount of this Note
outstanding from time to time shall bear interest from the date hereof, at a
rate of interest equal to the 11% per annum (the “Note Rate”).  Interest on this Note shall be computed on the
basis of a 365-day year and paid for the actual number of days elapsed.  Unless previously paid pursuant to the terms
of Section 3, or converted pursuant to the terms of Sections 4.1
or 4.2 hereof, all unpaid interest and principal on this Note shall be
paid in full on the Maturity Date.

 

             1.3        Unless previously converted pursuant to Sections
4.1 or 4.2 hereof, if payment of the principal amount of this Note,
together with accrued unpaid interest thereon at the Note Rate, is not paid in
full on the Maturity Date, or if any payment of interest is not paid when due,
then interest shall accrue on such unpaid amount at the Note Rate plus two
percent (2%) from and after such date of default to the date of the payment in
full of such unpaid amount (including from and after the date of the entry of
judgment in favor of Payee in an action to collect this Note).

             1.4        In no event shall Payee be entitled to
receive interest, at an effective rate in excess of the maximum rate permitted
by law.

             1.5        All payments made by the Payor on this
Note shall be in U.S. Dollars.  All
payments made by the Payor on this Note shall be applied first to the payment
of accrued but unpaid interest on this Note and then to the reduction of the
unpaid principal balance of this Note. 
In the event the date for the payment of any amount payable under this
Note falls due on a Saturday, Sunday or public holiday under the laws of the
State of New York, the time for payment of such amount shall be extended to the
next succeeding Business Day and interest at the Note Rate shall continue to
accrue on any principal amount so effected until the payment thereof on such
extended due date.

             1.6        Defined terms used herein shall, unless
otherwise defined herein, have the meanings assigned thereto in the Note
Purchase Agreement.  For purposes of
this Note, the term “Maturity Date” shall mean the earliest to occur
of:  (i) July 16, 2001; (ii) the closing
of a Qualifying Transaction; and (iii) the date of acceleration of the
indebtedness under this Note pursuant to Section 6.

2.          Replacement
of Note.  In case this Note is
mutilated, destroyed, lost or stolen, Payor shall, at its sole expense, execute
and deliver a new Note, in exchange and substitution for this Note.  In the case of destruction, loss or theft,
Payee shall furnish to Payor indemnity reasonably satisfactory to Payor, and in
any such case, and in the case of mutilation, Payee shall also furnish to Payor
evidence to its reasonable satisfaction of the mutilation, destruction, loss or
theft of this Note and of the ownership thereof.  Any replacement Note so issued shall be in the same outstanding
principal amount as this Note and dated the date to which interest shall have
been paid on this Note or, if no interest shall have yet been paid, dated the
date of this Note.

3.          Prepayment.  At the option of Payor, the principal amount
of this Note may be prepaid in whole at any time, or in part from time to time,
without penalty or premium, together with interest thereon accrued through the
date of such prepayment.  Each partial
prepayment of this Note shall first be applied to interest accrued through the
date of prepayment and then to principal.

4.          Conversion.

             4.1        Qualifying Transaction.  Concurrently with the closing of a
Qualifying Transaction, at the option of Payee, all or any part of the
principal of, and accrued interest on, this Note to the extent then outstanding
and unpaid, may, upon written notice delivered to Payor in the form attached
hereto as Exhibit “A”, be converted into that number of shares of Series
A Preferred Stock of Payor being sold in such Qualifying Transaction equal to
the amount of principal and interest that Payee elects to convert divided by
the per share purchase price of the Series A Preferred Stock sold in such
Qualifying Transaction.  Payor and Payee
agree that such conversion shall be subject to all of the applicable terms and
conditions of this Note, the Note Purchase Agreement and the Securities
Purchase Agreement.  Upon conversion of
all or any part of the principal of, and accrued interest on, this Note, Payee
shall become a party to the Securities Purchase Agreement and all documents
related to the issuance and sale of the Series A Preferred Stock and shall be
deemed to be a purchaser thereunder.

             4.2        No Qualifying Transaction.  In the event that a Qualifying Transaction
does not occur prior to July 16, 2001, then Payee may, at its sole option,
elect at any time and from time to time thereafter, by written notice delivered
to Payor in the form attached hereto as Exhibit “A”, to convert all or
any part of the principal of, and accrued interest on, this Note to the extent
outstanding and unpaid as of the date of conversion into that number of shares
of Common Stock of Payor equal to the sum that Payee elects to convert divided
by the lesser of (i) the average closing price of the Common Stock as quoted on
the American Stock Exchange (or any national securities exchange or automated
quotation service on which the Common Stock is then listed for trading) during
the five consecutive trading days ending on the day immediately prior to the
date of conversion or (ii) $1.00 (the “Conversion Price”) (as such
amount shall be adjusted from time to time pursuant to Section 4.3).  Payee agrees that such conversion shall be
subject to all of the applicable terms and conditions of this Note and the Note
Purchase Agreement.

             4.3        Adjustments.  If at any time after the date hereof Payor:
(i) pays a dividend in Common Stock or makes a distribution on its Common Stock
in shares of its Common Stock; (ii)
subdivides its outstanding shares of Common Stock into a greater number of
shares; (iii) combines its outstanding shares of Common Stock into a smaller
number of shares; (iv) makes a distribution on its Common Stock in
shares of its capital stock other than Common Stock; or (v) issues by reclassification of its Common Stock any shares
of its capital stock; then the Conversion
Price in effect immediately prior to such action shall be proportionately
adjusted so that Payee may thereafter receive upon conversion of this Note the
aggregate number and kind of shares of capital stock of the Company that Payee
would have owned immediately following such action if Payee had converted this
Note immediately prior to such action.  The adjustment shall become effective
immediately after the record date in the case of a dividend or distribution and
immediately after the effective date in the case of a subdivision, combination
or reclassification.  Such adjustment
shall be made successively whenever any event listed above shall occur.

             4.4        Reorganization.  If Payor is a party to a consolidation,
combination, merger, reorganization or transfer or lease of all or
substantially all of its assets that reclassifies or changes its outstanding
Common Stock (a “Reorganization”), the person obligated to deliver
securities, cash or other assets upon conversion of this Note shall, as a
condition to effectiveness of the Reorganization, enter into an amendment to
this Note.  The amended Note shall
provide that Payee may convert it into the kind and amount of securities, cash
or other assets that Payee would have owned immediately after the
Reorganization if it had converted the Note immediately before the effective
date of the Reorganization.  The Payor
shall not effect any such Reorganization, unless upon or prior to the
consummation thereof the successor corporation (if other than the Company)
shall assume by written instrument the obligation to deliver to the Payee such
securities, cash or other assets as Payee shall be entitled to purchase in
accordance with the foregoing provisions. 
The successor to the Company shall provide to the Payee a notice briefly
describing the Reorganization and such successor’s compliance with this Section
4.4.  If this Section 4.4
applies as to a transaction, then Section 4.3 does not apply with
respect to such transaction.

 

             4.5        Reservation of Shares.  Payor has reserved and shall continue to
reserve out of its authorized but unissued shares of Common Stock enough shares
of Common Stock to permit the full conversion of this Note pursuant to Section
4.2.  All shares of Common Stock
that may be issued upon conversion of this Note shall be duly authorized,
validly issued, fully paid and non-assessable. 
Payor shall list such shares on each national securities exchange or
automated quotation service on which the Common Stock is listed for trading.

             4.6        Notices.  Whenever the Conversion Price is adjusted,
Payor shall promptly mail to Payee a notice of the adjustment, briefly stating
the facts requiring the adjustment and the manner of computing it.  If the Company takes any action that would
require an amendment to this Note pursuant to Section 4.4 hereof or
there is a liquidation or dissolution of the Company, the Company shall deliver
to Payee a notice stating the proposed record date for a dividend,
distribution, issuance, combination, reclassification, consolidation, merger,
transfer, lease, sale, liquidation or dissolution.  The Company shall provide such notice at least 20 days before
such date.

             4.7        Registration Rights.  The Company hereby grants to Payee
registration rights with respect to the resale of shares of Common Stock
issuable upon conversion of this Note, pursuant to the Registration Rights
Agreement.

5.          Covenants
of Payor.  In addition, Payor covenants
and agrees that, so long as this Note remains outstanding and unpaid, in whole
or in part:

             5.1        Payor will faithfully and in all
material respects perform all of its covenants and agreements under the
Transaction Documents.

             5.2        Payor will not issue any equity or debt
securities to any Person or issue or incur any debt without the prior written
consent of Payee; provided, however, Payor may issue (a)
securities as consideration for its contemplated acquisition of Great Lakes
Controlled Energy Corporation on terms reasonably satisfactory to Payee; (b)
stock options to employees of the Company to purchase Common Stock not to
exceed options to purchase in the aggregate more than 2,000,000 shares of
Common Stock; and (c) Common Stock issued to holders of the Company’s Series B
Convertible Preferred Stock as dividends in accordance with the Series B
Convertible Preferred Stock certificate of designations or pursuant to
conversion of the Series B Convertible Preferred Stock, or pursuant to the
exercise of currently outstanding options and warrants.

             5.3        Payor will promptly pay and discharge
all lawful taxes, assessments and governmental charges or levies imposed upon
it or upon its income and profits, or upon any of its property, before the same
shall become in default, as well as all lawful claims for labor, materials and
supplies that, if unpaid, might become a lien or charge upon such properties or
any part thereof, provided, that Payor shall have until May 1, 2001 to
pay real estate taxes applicable to its Elk Grove Village, Illinois premises.

 

             5.4        Payor will not make any loans or
advances to any Persons, other than accounts receivable arising in the ordinary
course of Payor’s business.  Payor will
not declare or pay any dividends or make any distributions on any of its equity
securities (other than Common Stock issued to holders of the Company’s Series B
Convertible Preferred Stock issued as dividends in accordance with the Series B
Convertible Preferred Stock certificate of designations), nor purchase or
otherwise acquire or redeem any of its equity securities.

             5.5        Payor will, promptly following its
obtaining knowledge of the occurrence of an Event of Default (as defined below)
or of any condition or event that, with the giving of notice or the lapse of
time or both, would constitute an Event of Default, furnish a statement of
Payor’s Chief Executive Officer to Payee setting forth the details of such
Event of Default or condition or event and the action that Payor intends to
take with respect thereto.

6.          Events
of Default.  The occurrence of any
of the following events shall be deemed an event of default hereunder (each an
“Event of Default”):

             6.1        Payor shall (a) default in the payment
when due of principal or interest on this Note or (b) default in the due
observance or performance of any other covenant, condition or agreement on the
part of Payor to be observed or performed pursuant to the terms of this Note or
any other note issued pursuant to the Note Purchase Agreement, or Payor shall
default in the due observance or performance of any covenant, condition or
agreement on the part of Payor to be observed or performed pursuant to the
terms of any Transaction Document to which Payor is a party and the same shall
continue for ten (10) days after such default; or

             6.2        The dissolution of Payor or its
Subsidiary or any vote in favor thereof by the board of directors and/or
stockholders of Payor or its Subsidiary, as the case may be; or

             6.3        Payor or its Subsidiary shall become
insolvent, however evidenced, or make an assignment for the benefit of
creditors, or file with a court of competent jurisdiction an application for
appointment of a receiver or similar official with respect to it or any
substantial part of its assets or there shall be filed by Payor or its
Subsidiary a petition seeking relief under any provision of the Federal
Bankruptcy Code or any other federal or state statute now or hereafter in
effect affording relief to debtors, or there shall be filed against Payor or
its Subsidiary any such application or petition; or

             6.4        Payor or its Subsidiary shall admit in
writing its inability to pay its debts as they mature; or

             6.5        Payor or its Subsidiary shall sell all
or substantially all of its assets or merge or be consolidated with or into
another entity other than, in the case of any Subsidiary, Payor or another
Subsidiary of Payor provided, however, that the Company may consummate the
acquisition of Great Lakes Controlled Energy Corporation; or

 

             6.6        There occurs and continues any default
or event of default under the Designated Senior Debt or other indebtedness of
the Company with a principal amount greater than $250,000 and the same entitles
the holders thereof to accelerate payment thereof, or there commences and
continues any proceeding to foreclose a security interest or lien in any
material property or assets of Payor or its Subsidiary upon default in the
payment or performance of any debt of Payor or its Subsidiary; or

             6.7        The entry against Payor or its
Subsidiary of a final judgment for the payment of money of $10,000 or more by a
court of competent jurisdiction if such judgment has not been discharged (or
the discharge thereof not duly provided for) in accordance with its terms
within thirty (30) days of the date of entry thereof, or a stay of execution
thereof procured within thirty (30) days from the date of entry thereof and,
within such period (or such longer period during which execution of such
judgment shall have been effectively stayed) an appeal therefrom shall not have
been prosecuted and the execution thereof caused to be stayed during such
appeal; or

             6.8        An attachment or garnishment shall have
been levied against any material assets of Payor or its Subsidiary and such
levy is not vacated, bonded or otherwise terminated within thirty (30) days
after the date of the effectiveness of the levy.

Upon the occurrence of any Event of
Default and at any time thereafter, Payee shall have the right to declare the
principal of, accrued but unpaid interest on, and all other amounts payable
under this Note to be forthwith due and payable, whereupon all such amounts
shall be immediately due and payable to Payee, without presentment, demand,
protest or other notice of any kind, all of which are hereby expressly waived; provided,
however, in case of the occurrence of an Event of Default under Sections
6.3 or 6.4, such amounts shall become immediately due and payable
without any such declaration by Payee.

7.          Suits
for Enforcement and Remedies.  If
any one or more Events of Default shall occur and be continuing, Payee may
proceed to (a) protect and enforce Payee’s rights either by suit in equity
or by action at law, or both, whether for the specific performance of any
covenant, condition or agreement contained in this Note or in any agreement or
document referred to herein or in aid of the exercise of any power granted in
this Note or in any agreement or document referred to herein, (b) enforce
the payment of this Note, or (c) enforce any other legal or equitable
right of Payee under this Note.  No
right or remedy herein or in any other agreement or instrument conferred upon
Payee is intended to be exclusive of any other right or remedy, and each and
every such right or remedy shall be cumulative and shall be in addition to
every other right and remedy given hereunder or now or hereafter existing at
law or in equity or by statute or otherwise.

8.          Subordination.  This Note is subordinated to principal and
accrued interest and fees on Designated Senior Debt to the extent provided in
the Note Purchase Agreement.  The
Company agrees, and each holder by accepting this Note agrees, to such
subordination.

9.          Unconditional
Obligation; Fees, Waivers, etc.

             9.1        The obligations to make the payments
provided for in this Note are absolute and unconditional and not subject to any
defense, set-off, counterclaim, rescission, recoupment or adjustment
whatsoever.

 

             9.2        If Payee shall seek to enforce the
collection of any amount of principal of and/or interest on this Note, there
shall be immediately due and payable from Payor, in addition to the then unpaid
principal of, and accrued unpaid interest on, this Note, all costs and expenses
incurred by Payee in connection therewith, including, without limitation,
reasonable attorneys’ fees, costs of suit and disbursements, including
reasonable out-of-pocket expenses of Payee or its attorneys.

             9.3        No forbearance, indulgence, delay or
failure to exercise any right or remedy with respect to this Note shall operate
as a waiver, nor as an acquiescence in any default, nor shall any single or
partial exercise of any right or remedy preclude any other or further exercise
thereof or the exercise of any other right or remedy.

             9.4        Any term, covenant, agreement or
condition of this Note may, with the consent of Payor, be amended or compliance
therewith may be waived (either generally or in a particular instance and
either retroactively or prospectively), if Payor shall have obtained the
consent in writing of Payee.

             9.5        Payor hereby expressly waives demand and
presentment for payment, notice of nonpayment, notice of dishonor, protest,
notice of protest, bringing of suit, and diligence in taking any action to
collect amounts called for hereunder, and shall be directly and primarily
liable for the payment of all sums owing and to be owing hereon, regardless of
and without any notice, diligence, act or omission with respect to the
collection of any amount called for hereunder or in connection with any right,
lien, interest or property at any and all times which Payee had or is existing
as security for any amount called for hereunder, except as specifically
provided herein.

10.        Miscellaneous.

             10.1      The headings of the various paragraphs of
this Note are for convenience of reference only and shall in no way modify any
of the terms or provisions of this Note.

             10.2      Notices, demands or other communications
given or made in connection with this Note shall be in writing and delivered in
accordance with the provisions of Section 9.3 of the Note Purchase Agreement.

             10.3      This Note and the obligations of Payor and
the rights of Payee shall be governed by and construed in accordance with the
internal substantive laws of the State of New York without giving effect to the
choice of laws rules thereof.

 

             10.4      PAYOR
(A) AGREES THAT ANY LEGAL SUIT, ACTION OR PROCEEDING ARISING OUT OF OR
RELATING TO THIS NOTE WILL BE INSTITUTED EXCLUSIVELY IN THE COURTS OF THE STATE
OF NEW YORK SITTING IN THE BOROUGH OF MANHATTAN, OR ANY FEDERAL COURT IN THE
STATE OF NEW YORK, (B) WAIVES ANY OBJECTION THAT PAYOR MAY HAVE NOW OR
HEREAFTER BASED UPON FORUM NON CONVENIENS OR TO THE VENUE OF ANY SUCH SUIT,
ACTION OR PROCEEDING, AND (C) IRREVOCABLY CONSENTS TO THE JURISDICTION OF
THE STATE COURTS LOCATED IN THE STATE OF NEW YORK IN ANY SUCH SUIT, ACTION OR
PROCEEDING.  PAYOR FURTHER AGREES TO
ACCEPT AND ACKNOWLEDGE SERVICE OF ANY AND ALL PROCESS THAT MAY BE SERVED IN ANY
SUCH SUIT, ACTION OR PROCEEDING IN THE COURTS OF THE STATE OF NEW YORK, AND
AGREES THAT SERVICE OF PROCESS UPON THE PAYOR, MAILED BY CERTIFIED MAIL TO
PAYOR’S ADDRESS, WILL BE DEEMED IN EVERY RESPECT EFFECTIVE SERVICE OF PROCESS
UPON PAYOR, IN ANY SUIT, ACTION OR PROCEEDING. 
FURTHER, BOTH PAYOR AND PAYEE HEREBY WAIVE TRIAL BY JURY IN ANY ACTION
TO ENFORCE THIS NOTE.

             10.5      This Note shall bind the Company and its
successors and assigns.

             IN
WITNESS WHEREOF, the Company has caused this instrument to be duly executed as
of the date first written above.

 

	 	ELECTRIC
  CITY CORP.	 
	 	a
  Delaware corporation	 
	 	 	 
	 	By
  	 
	 	

	 
	 	             Name: John Mitola	 
	 	             Title:  Chief Executive Officer	 

 

 

 

 

[SIGNATURE PAGE TO CONVERTIBLE SENIOR SUBORDINATED PROMISSORY
NOTE]

 

CONVERTIBLE SENIOR SUBORDINATED

PROMISSORY
NOTE

GRID

 

 

	DATE	 	Amount of Loan	 	Note Rate	 	Principal Amount of
  Note and/or Interest Repaid or Converted and Date	 	Notation Made By
	

	 	

	 	

	 	

	 	

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 

Exhibit
A

THIS NOTE AND THE SECURITIES ISSUABLE
UPON THE CONVERSION HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933 (THE “ACT”) OR STATE SECURITIES LAWS AND NO TRANSFER OF THIS NOTE OR SUCH
SECURITIES MAY BE MADE EXCEPT (A) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE ACT AND THE RULES AND REGULATIONS THEREUNDER AND OF ALL
APPLICABLE STATE SECURITIES OR “BLUE SKY” LAWS, OR (B) PURSUANT TO AN EXEMPTION
THEREFROM UNDER THE ACT AND ALL APPLICABLE STATE SECURITIES OR “BLUE SKY” LAWS.

ELECTRIC
CITY CORP.

CONVERTIBLE
SENIOR SUBORDINATED PROMISSORY NOTE

	$1,000,000	April 18, 2001
	 	New York, New York

             FOR
VALUE RECEIVED, the undersigned, Electric City Corp., a Delaware corporation
(the “Company” or “Payor”), hereby promises to pay to Newcourt
Capital USA, Inc., a Delaware corporation (“CIT” or “Payee”), at
1211 Avenue of the Americas, 22nd Floor, New York, NY 10036 (or at
such other place within the County of New York as Payee shall hereafter direct
by notice in writing to Payor) and its registered assigns, the principal sum of
One Million Dollars ($1,000,000), together with interest thereon at the rate
provided for herein from the date hereof, with such principal and interest
payable as herein provided.

1.          Loan,
Interest Rate and Payment Provisions.

             1.1        This Note is one of a duly authorized
issue of Notes issued pursuant to the Convertible Senior Subordinated
Promissory Note and Warrant Purchase Agreement, dated as of April 18, 2001 (as
it may be amended from time to time, the “Note Purchase Agreement”) by
and between the Company and CIT.  This
Note is transferable and assignable to one or more purchasers, in accordance
with applicable law.  The Company agrees
to issue from time to time replacement Notes in the form hereof to facilitate
such transfers and assignments.  The
Company shall keep at its principal office a register (the “Register”)
in which shall be entered the names and addresses of the registered holder of
this Note and particulars of all transfers of such Note.  References to the “holder” shall mean the
Person listed in the Register as the payee of this Note.  The ownership of the Note shall be proven by
the Register.

             1.2        The principal amount of this Note
outstanding from time to time shall bear interest from the date hereof, at a
rate of interest equal to the 11% per annum (the “Note Rate”).  Interest on this Note shall be computed on
the basis of a 365-day year and paid for the actual number of days
elapsed.  Unless previously paid
pursuant to the terms of Section 3, or converted pursuant to the terms
of Sections 4.1 or 4.2 hereof, all unpaid interest and principal
on this Note shall be paid in full on the Maturity Date.

 

             1.3        Unless previously converted pursuant to Sections
4.1 or 4.2 hereof, if payment of the principal amount of this Note,
together with accrued unpaid interest thereon at the Note Rate, is not paid in
full on the Maturity Date, or if any payment of interest is not paid when due,
then interest shall accrue on such unpaid amount at the Note Rate plus two
percent (2%) from and after such date of default to the date of the payment in
full of such unpaid amount (including from and after the date of the entry of
judgment in favor of Payee in an action to collect this Note).

             1.4        In no event shall Payee be entitled to
receive interest, at an effective rate in excess of the maximum rate permitted
by law.

             1.5        All payments made by the Payor on this
Note shall be in U.S. Dollars.  All
payments made by the Payor on this Note shall be applied first to the payment
of accrued but unpaid interest on this Note and then to the reduction of the
unpaid principal balance of this Note. 
In the event the date for the payment of any amount payable under this
Note falls due on a Saturday, Sunday or public holiday under the laws of the
State of New York, the time for payment of such amount shall be extended to the
next succeeding Business Day and interest at the Note Rate shall continue to
accrue on any principal amount so effected until the payment thereof on such
extended due date.

             1.6        Defined terms used herein shall, unless
otherwise defined herein, have the meanings assigned thereto in the Note
Purchase Agreement.  For purposes of
this Note, the term “Maturity Date” shall mean the earliest to occur
of:  (i) July 16, 2001; (ii) the closing
of a Qualifying Transaction; and (iii) the date of acceleration of the
indebtedness under this Note pursuant to Section 6.

2.          Replacement
of Note.  In case this Note is
mutilated, destroyed, lost or stolen, Payor shall, at its sole expense, execute
and deliver a new Note, in exchange and substitution for this Note.  In the case of destruction, loss or theft,
Payee shall furnish to Payor indemnity reasonably satisfactory to Payor, and in
any such case, and in the case of mutilation, Payee shall also furnish to Payor
evidence to its reasonable satisfaction of the mutilation, destruction, loss or
theft of this Note and of the ownership thereof.  Any replacement Note so issued shall be in the same outstanding
principal amount as this Note and dated the date to which interest shall have
been paid on this Note or, if no interest shall have yet been paid, dated the
date of this Note.

3.          Prepayment.  At the option of Payor, the principal amount
of this Note may be prepaid in whole at any time, or in part from time to time,
without penalty or premium, together with interest thereon accrued through the
date of such prepayment.  Each partial
prepayment of this Note shall first be applied to interest accrued through the
date of prepayment and then to principal.

4.          Conversion.

             4.1        Qualifying Transaction.  Concurrently with the closing of a
Qualifying Transaction, at the option of Payee, all or any part of the principal
of, and accrued interest on, this Note to the extent then outstanding and
unpaid, may, upon written notice delivered to Payor in the form attached hereto
as Exhibit “A”, be converted into that number of shares of Series A
Preferred Stock of Payor being sold in such Qualifying Transaction equal to the
amount of principal and interest that Payee elects to convert divided by the
per share purchase price of the Series A Preferred Stock sold in such
Qualifying Transaction.  Payor and Payee
agree that such conversion shall be subject to all of the applicable terms and
conditions of this Note, the Note Purchase Agreement and the Securities
Purchase Agreement.  Upon conversion of
all or any part of the principal of, and accrued interest on, this Note, Payee
shall become a party to the Securities Purchase Agreement and all documents
related to the issuance and sale of the Series A Preferred Stock and shall be
deemed to be a purchaser thereunder.

             4.2        No Qualifying Transaction.  In the event that a Qualifying Transaction
does not occur prior to July 16, 2001, then Payee may, at its sole option,
elect at any time and from time to time thereafter, by written notice delivered
to Payor in the form attached hereto as Exhibit “A”, to convert all or
any part of the principal of, and accrued interest on, this Note to the extent
outstanding and unpaid as of the date of conversion into that number of shares
of Common Stock of Payor equal to the sum that Payee elects to convert divided
by the lesser of (i) the average closing price of the Common Stock as quoted on
the American Stock Exchange (or any national securities exchange or automated
quotation service on which the Common Stock is then listed for trading) during
the five consecutive trading days ending on the day immediately prior to the
date of conversion or (ii) $1.00 (the “Conversion Price”) (as such
amount shall be adjusted from time to time pursuant to Section 4.3).  Payee agrees that such conversion shall be
subject to all of the applicable terms and conditions of this Note and the Note
Purchase Agreement.

             4.3        Adjustments.  If at any time after the date hereof Payor:
(i) pays a dividend in Common Stock or makes a distribution on its Common Stock
in shares of its Common Stock; (ii)
subdivides its outstanding shares of Common Stock into a greater number of
shares; (iii) combines its outstanding shares of Common Stock into a smaller
number of shares; (iv) makes a distribution on its Common Stock in
shares of its capital stock other than Common Stock; or (v) issues by reclassification of its Common Stock any shares
of its capital stock; then the Conversion
Price in effect immediately prior to such action shall be proportionately
adjusted so that Payee may thereafter receive upon conversion of this Note the
aggregate number and kind of shares of capital stock of the Company that Payee
would have owned immediately following such action if Payee had converted this
Note immediately prior to such action.  The adjustment shall become effective
immediately after the record date in the case of a dividend or distribution and
immediately after the effective date in the case of a subdivision, combination
or reclassification.  Such adjustment
shall be made successively whenever any event listed above shall occur.

             4.4        Reorganization.  If Payor is a party to a consolidation,
combination, merger, reorganization or transfer or lease of all or
substantially all of its assets that reclassifies or changes its outstanding
Common Stock (a “Reorganization”), the person obligated to deliver
securities, cash or other assets upon conversion of this Note shall, as a
condition to effectiveness of the Reorganization, enter into an amendment to
this Note.  The amended Note shall
provide that Payee may convert it into the kind and amount of securities, cash or
other assets that Payee would have owned immediately after the Reorganization
if it had converted the Note immediately before the effective date of the
Reorganization.  The Payor shall not
effect any such Reorganization, unless upon or prior to the consummation
thereof the successor corporation (if other than the Company) shall assume by
written instrument the obligation to deliver to the Payee such securities, cash
or other assets as Payee shall be entitled to purchase in accordance with the
foregoing provisions.  The successor to
the Company shall provide to the Payee a notice briefly describing the
Reorganization and such successor’s compliance with this Section 4.4.  If this Section 4.4 applies as to a
transaction, then Section 4.3 does not apply with respect to such
transaction.

 

             4.5        Reservation of Shares.  Payor has reserved and shall continue to
reserve out of its authorized but unissued shares of Common Stock enough shares
of Common Stock to permit the full conversion of this Note pursuant to Section
4.2.  All shares of Common Stock
that may be issued upon conversion of this Note shall be duly authorized,
validly issued, fully paid and non-assessable. 
Payor shall list such shares on each national securities exchange or
automated quotation service on which the Common Stock is listed for trading.

             4.6        Notices.  Whenever the Conversion Price is adjusted,
Payor shall promptly mail to Payee a notice of the adjustment, briefly stating
the facts requiring the adjustment and the manner of computing it.  If the Company takes any action that would
require an amendment to this Note pursuant to Section 4.4 hereof or
there is a liquidation or dissolution of the Company, the Company shall deliver
to Payee a notice stating the proposed record date for a dividend,
distribution, issuance, combination, reclassification, consolidation, merger,
transfer, lease, sale, liquidation or dissolution.  The Company shall provide such notice at least 20 days before
such date.

             4.7        Registration Rights.  The Company hereby grants to Payee
registration rights with respect to the resale of shares of Common Stock
issuable upon conversion of this Note, pursuant to the Registration Rights
Agreement.

5.          Covenants
of Payor.  In addition, Payor
covenants and agrees that, so long as this Note remains outstanding and unpaid,
in whole or in part:

             5.1        Payor will faithfully and in all
material respects perform all of its covenants and agreements under the
Transaction Documents.

             5.2        Payor will not issue any equity or debt
securities to any Person or issue or incur any debt without the prior written
consent of Payee; provided, however, Payor may issue (a)
securities as consideration for its contemplated acquisition of Great Lakes
Controlled Energy Corporation on terms reasonably satisfactory to Payee; (b)
stock options to employees of the Company to purchase Common Stock not to
exceed options to purchase in the aggregate more than 2,000,000 shares of
Common Stock; and (c) Common Stock issued to holders of the Company’s Series B
Convertible Preferred Stock as dividends in accordance with the Series B
Convertible Preferred Stock certificate of designations or pursuant to
conversion of the Series B Convertible Preferred Stock, or pursuant to the
exercise of currently outstanding options and warrants.

             5.3        Payor will promptly pay and discharge
all lawful taxes, assessments and governmental charges or levies imposed upon
it or upon its income and profits, or upon any of its property, before the same
shall become in default, as well as all lawful claims for labor, materials and
supplies that, if unpaid, might become a lien or charge upon such properties or
any part thereof, provided, that Payor shall have until May 1, 2001 to
pay real estate taxes applicable to its Elk Grove Village, Illinois premises.

 

             5.4        Payor will not make any loans or
advances to any Persons, other than accounts receivable arising in the ordinary
course of Payor’s business.  Payor will
not declare or pay any dividends or make any distributions on any of its equity
securities (other than Common Stock issued to holders of the Company’s Series B
Convertible Preferred Stock issued as dividends in accordance with the Series B
Convertible Preferred Stock certificate of designations), nor purchase or
otherwise acquire or redeem any of its equity securities.

             5.5        Payor will, promptly following its
obtaining knowledge of the occurrence of an Event of Default (as defined below)
or of any condition or event that, with the giving of notice or the lapse of
time or both, would constitute an Event of Default, furnish a statement of
Payor’s Chief Executive Officer to Payee setting forth the details of such
Event of Default or condition or event and the action that Payor intends to
take with respect thereto.

6.          Events
of Default.  The occurrence of any
of the following events shall be deemed an event of default hereunder (each an
“Event of Default”):

             6.1        Payor shall (a) default in the payment
when due of principal or interest on this Note or (b) default in the due
observance or performance of any other covenant, condition or agreement on the
part of Payor to be observed or performed pursuant to the terms of this Note or
any other note issued pursuant to the Note Purchase Agreement, or Payor shall
default in the due observance or performance of any covenant, condition or
agreement on the part of Payor to be observed or performed pursuant to the
terms of any Transaction Document to which Payor is a party and the same shall
continue for ten (10) days after such default; or

             6.2        The dissolution of Payor or its
Subsidiary or any vote in favor thereof by the board of directors and/or
stockholders of Payor or its Subsidiary, as the case may be; or

             6.3        Payor or its Subsidiary shall become
insolvent, however evidenced, or make an assignment for the benefit of creditors,
or file with a court of competent jurisdiction an application for appointment
of a receiver or similar official with respect to it or any substantial part of
its assets or there shall be filed by Payor or its Subsidiary a petition
seeking relief under any provision of the Federal Bankruptcy Code or any other
federal or state statute now or hereafter in effect affording relief to
debtors, or there shall be filed against Payor or its Subsidiary any such
application or petition; or

             6.4        Payor or its Subsidiary shall admit in
writing its inability to pay its debts as they mature; or

             6.5        Payor or its Subsidiary shall sell all
or substantially all of its assets or merge or be consolidated with or into
another entity other than, in the case of any Subsidiary, Payor or another
Subsidiary of Payor provided, however, that the Company may consummate the
acquisition of Great Lakes Controlled Energy Corporation; or

 

             6.6        There occurs and continues any default
or event of default under the Designated Senior Debt or other indebtedness of
the Company with a principal amount greater than $250,000 and the same entitles
the holders thereof to accelerate payment thereof, or there commences and
continues any proceeding to foreclose a security interest or lien in any material
property or assets of Payor or its Subsidiary upon default in the payment or
performance of any debt of Payor or its Subsidiary; or

             6.7        The entry against Payor or its
Subsidiary of a final judgment for the payment of money of $10,000 or more by a
court of competent jurisdiction if such judgment has not been discharged (or
the discharge thereof not duly provided for) in accordance with its terms
within thirty (30) days of the date of entry thereof, or a stay of execution
thereof procured within thirty (30) days from the date of entry thereof and,
within such period (or such longer period during which execution of such
judgment shall have been effectively stayed) an appeal therefrom shall not have
been prosecuted and the execution thereof caused to be stayed during such
appeal; or

             6.8        An attachment or garnishment shall have
been levied against any material assets of Payor or its Subsidiary and such
levy is not vacated, bonded or otherwise terminated within thirty (30) days
after the date of the effectiveness of the levy.

Upon the occurrence of any Event of
Default and at any time thereafter, Payee shall have the right to declare the
principal of, accrued but unpaid interest on, and all other amounts payable
under this Note to be forthwith due and payable, whereupon all such amounts
shall be immediately due and payable to Payee, without presentment, demand,
protest or other notice of any kind, all of which are hereby expressly waived; provided,
however, in case of the occurrence of an Event of Default under Sections
6.3 or 6.4, such amounts shall become immediately due and payable
without any such declaration by Payee.

7.          Suits
for Enforcement and Remedies.  If
any one or more Events of Default shall occur and be continuing, Payee may
proceed to (a) protect and enforce Payee’s rights either by suit in equity
or by action at law, or both, whether for the specific performance of any
covenant, condition or agreement contained in this Note or in any agreement or
document referred to herein or in aid of the exercise of any power granted in
this Note or in any agreement or document referred to herein, (b) enforce
the payment of this Note, or (c) enforce any other legal or equitable
right of Payee under this Note.  No
right or remedy herein or in any other agreement or instrument conferred upon
Payee is intended to be exclusive of any other right or remedy, and each and
every such right or remedy shall be cumulative and shall be in addition to
every other right and remedy given hereunder or now or hereafter existing at
law or in equity or by statute or otherwise.

8.          Subordination.  This Note is subordinated to principal and
accrued interest and fees on Designated Senior Debt to the extent provided in
the Note Purchase Agreement.  The
Company agrees, and each holder by accepting this Note agrees, to such
subordination.

9.          Unconditional
Obligation; Fees, Waivers, etc.

             9.1        The obligations to make the payments
provided for in this Note are absolute and unconditional and not subject to any
defense, set-off, counterclaim, rescission, recoupment or adjustment
whatsoever.

 

             9.2        If Payee shall seek to enforce the
collection of any amount of principal of and/or interest on this Note, there
shall be immediately due and payable from Payor, in addition to the then unpaid
principal of, and accrued unpaid interest on, this Note, all costs and expenses
incurred by Payee in connection therewith, including, without limitation,
reasonable attorneys’ fees, costs of suit and disbursements, including
reasonable out-of-pocket expenses of Payee or its attorneys.

             9.3        No forbearance, indulgence, delay or
failure to exercise any right or remedy with respect to this Note shall operate
as a waiver, nor as an acquiescence in any default, nor shall any single or
partial exercise of any right or remedy preclude any other or further exercise
thereof or the exercise of any other right or remedy.

             9.4        Any term, covenant, agreement or
condition of this Note may, with the consent of Payor, be amended or compliance
therewith may be waived (either generally or in a particular instance and
either retroactively or prospectively), if Payor shall have obtained the
consent in writing of Payee.

             9.5        Payor hereby expressly waives demand and
presentment for payment, notice of nonpayment, notice of dishonor, protest, notice
of protest, bringing of suit, and diligence in taking any action to collect
amounts called for hereunder, and shall be directly and primarily liable for
the payment of all sums owing and to be owing hereon, regardless of and without
any notice, diligence, act or omission with respect to the collection of any
amount called for hereunder or in connection with any right, lien, interest or
property at any and all times which Payee had or is existing as security for
any amount called for hereunder, except as specifically provided herein.

10.        Miscellaneous.

             10.1      The headings of the various paragraphs of
this Note are for convenience of reference only and shall in no way modify any
of the terms or provisions of this Note.

             10.2      Notices, demands or other communications
given or made in connection with this Note shall be in writing and delivered in
accordance with the provisions of Section 9.3 of the Note Purchase Agreement.

             10.3      This Note and the obligations of Payor and
the rights of Payee shall be governed by and construed in accordance with the
internal substantive laws of the State of New York without giving effect to the
choice of laws rules thereof.

 

             10.4      PAYOR
(A) AGREES THAT ANY LEGAL SUIT, ACTION OR PROCEEDING ARISING OUT OF OR
RELATING TO THIS NOTE WILL BE INSTITUTED EXCLUSIVELY IN THE COURTS OF THE STATE
OF NEW YORK SITTING IN THE BOROUGH OF MANHATTAN, OR ANY FEDERAL COURT IN THE
STATE OF NEW YORK, (B) WAIVES ANY OBJECTION THAT PAYOR MAY HAVE NOW OR
HEREAFTER BASED UPON FORUM NON CONVENIENS OR TO THE VENUE OF ANY SUCH SUIT,
ACTION OR PROCEEDING, AND (C) IRREVOCABLY CONSENTS TO THE JURISDICTION OF
THE STATE COURTS LOCATED IN THE STATE OF NEW YORK IN ANY SUCH SUIT, ACTION OR
PROCEEDING.  PAYOR FURTHER AGREES TO
ACCEPT AND ACKNOWLEDGE SERVICE OF ANY AND ALL PROCESS THAT MAY BE SERVED IN ANY
SUCH SUIT, ACTION OR PROCEEDING IN THE COURTS OF THE STATE OF NEW YORK, AND
AGREES THAT SERVICE OF PROCESS UPON THE PAYOR, MAILED BY CERTIFIED MAIL TO
PAYOR’S ADDRESS, WILL BE DEEMED IN EVERY RESPECT EFFECTIVE SERVICE OF PROCESS
UPON PAYOR, IN ANY SUIT, ACTION OR PROCEEDING. 
FURTHER, BOTH PAYOR AND PAYEE HEREBY WAIVE TRIAL BY JURY IN ANY ACTION
TO ENFORCE THIS NOTE.

             10.5      This Note shall bind the Company and its
successors and assigns.

             IN
WITNESS WHEREOF, the Company has caused this instrument to be duly executed as
of the date first written above.

 

	 	ELECTRIC
  CITY CORP.	 
	 	a
  Delaware corporation	 
	 	 	 
	 	By  /s/ Jeffrey Mistarz	 
	 	

	 
	 	             Name:  Jeffrey Mistarz	 
	 	             Title:  Chief Financial Officer	 

 

 

 

 

[SIGNATURE PAGE TO CONVERTIBLE SENIOR SUBORDINATED PROMISSORY
NOTE]

 

CONVERTIBLE SENIOR SUBORDINATED

PROMISSORY
NOTE

GRID

 

 

	DATE	 	Amount of Loan	 	Note Rate	 	Principal Amount of
  Note and/or Interest Repaid or Converted and Date	 	Notation Made By
	

	 	

	 	

	 	

	 	

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 

 

EXHIBIT
A

Form
of Conversion Notice

Dated:
____________________, ____

To:       Electric
City Corp. (the “Company”)

                           Reference
is made to the Convertible Senior Subordinated Promissory Note and Warrant
Purchase Agreement (as it may be amended from time to time, the “Agreement”)
dated April 18, 2001.  Terms defined
therein are used herein as therein defined.

                           The
undersigned, pursuant to the provisions set forth in the Agreement and the
Note, hereby irrevocably elects and agrees to convert (i) outstanding
principal under the Note in the amount of $_______, and (ii) accrued but
unpaid interest thereon in the amount of $_______, which together are
convertible in the aggregate into _______ shares of Series A Preferred Stock
[Common Stock] of the Company.

                           The
undersigned hereby represents that it is converting such principal and accrued
interest under the Note for its own account for investment purposes and not
with the view to any sale or distribution and that the undersigned will not
offer, sell or otherwise dispose of such securities in violation of applicable
securities laws.

	 	Newcourt
  Capital USA, Inc.,	 
	 	a
  Delaware corporation	 
	 	 	 
	 	By:	 
	 	 	

	 	 	Name:  
	 	 	

	 	Title:	 
	 	 	

	 	 	 
					

 

Exhibit
B

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
COMMON STOCK ISSUABLE UPON THE EXERCISE OF THE SECURITIES REPRESENTED HEREBY
ARE SUBJECT TO A REGISTRATION RIGHTS AGREEMENT, AS 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. 11

WARRANT CERTIFICATE

TO PURCHASE SHARES OF COMMON STOCK,

PAR VALUE $.0001 PER SHARE

OF

ELECTRIC CITY CORP.

             THIS IS TO CERTIFY THAT Newcourt
Capital USA, Inc., a Delaware corporation or its registered assigns (the “Holder”),
is the owner of 1,700,000 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 $.0001 per share (the “Common
Stock”), of the Company at any time or from time to time on or before 5:00
p.m., New York City time, on the Warrant Expiration Date (which shall in no
event be later than April 18, 2004), at an exercise price of $2.50 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 $2.50 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 Note Purchase Agreement.

             Section 1.         Exercise Of Warrant.  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 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 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
exercisable 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 exercisable 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 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) is herein
referred to as a “Cashless Exercise” and an exercise of a Warrant in
accordance with clause (iv) 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.

              
As promptly as practicable, and in any event within two 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; 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.

             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 April 18, 2001 (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 consideration per share less than (including, without
limitation, those circumstances described in paragraphs (i) through (ix) 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 the price (calculated to the nearest cent)
determined by dividing (I) an amount equal to the sum of (A) the aggregate
consideration to be received by the Company upon the full exercise of this
Warrant (the “Aggregate Price”) and (B) the aggregate consideration, if
any, received by the Company for all shares of Common Stock issued or sold on
the date of such issue or sale, by (II) an amount equal to the sum of (X) the
Number Issuable prior to adjustment and (Y) the number of shares of Common
Stock issued or sold on the date of such issuance or sale.

             No adjustment of the Exercise
Price, however, shall be made in an amount less than $.01 per share, but any
lesser adjustment shall be carried forward and shall be made upon the time of
and together with the next subsequent adjustment, if any.

             For the purposes of this Section
2(a), the following paragraphs (i) through (ix) shall also be applicable:

                           (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, and the price per share for which Common Stock is issuable upon
the exercise of such rights, options or warrants or upon conversion or exchange
of such Convertible Securities (determined by dividing (A) the total amount, if
any, in cash or in property received or 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) shall be less than the Exercise
Price in effect immediately prior to the time of the granting of such rights,
options or warrants, then the total maximum number of shares of Common Stock
issuable upon the exercise of such rights, options or warrants or upon
conversion or exchange of all such Convertible Securities issuable upon the
exercise of such rights, options or warrants shall (as of the date of granting
of such rights or options) be deemed to be outstanding and to have been issued
for such price per share.  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, and the
price per share for which Common Stock is issuable upon such conversion or
exchange (determined by dividing (A) the total amount in cash or in property
received or receivable 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) shall be less than the Exercise
Price in effect immediately prior to the time of such issue or sale, then the
total maximum number of shares of Common Stock issuable upon conversion or
exchange of all such Convertible Securities shall (as of the date of the issue
or sale of such Convertible Securities) be deemed to be outstanding and to have
been issued for such price per share; 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.  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,
and the Common Stock issuable thereunder shall no longer be deemed to be
outstanding.  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)       Stock Dividends.  In case at any time the Company shall
declare a dividend or make any other distribution upon any class or series of
stock of the Company payable in shares of Common Stock or Convertible
Securities, any shares of Common Stock or Convertible Securities, as the case
may be, issuable in payment of such dividend or distribution shall be deemed to
have been issued or sold without consideration.

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

                           (vi)       Record Date.  In case the Company shall take a record of
the holders of its Common Stock for the purpose of entitling them (A) to
receive a dividend or other distribution payable in shares of Common Stock or
in Convertible Securities or (B) 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 declaration of such dividend or the making of
such other distribution or the date of the granting of such right of
subscription or purchase, as the case may be.

                           (vii)      Treasury Shares.  The number of shares of Common Stock
outstanding at any given time shall not include shares owned or held by or for
the account of the Company, and the disposition of any such shares shall be
considered an issue or sale of Common Stock for the purposes of this Section
2(a).

                           (viii)     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 or upon conversion of the
Notes and (B) the issuance of Common Stock upon exercise of the Warrants evidenced
by this Warrant Certificate.

                           (ix)        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 holders of the Warrants, 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.

                           (x)         Notice of Change in Exercise Price.  The Company promptly shall deliver to each
registered Holder of Warrants at least five Business Days prior to effecting
any transaction that would result in an increase or decrease in the Exercise
Price pursuant to this Section 2, together with a certificate, signed by
the Chief Executive Officer, President or a Vice–President and by the
Treasurer, an Assistant Treasurer, the Secretary or an Assistant Secretary of
the Company, 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
or Combination of Stock.  In case
the Company shall at any time subdivide its outstanding shares of Common Stock
into a greater number of shares, 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 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), or in case
of 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) (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 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 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)        Special
Distributions.  In the event that
the Company shall declare a dividend or make any other distribution (including,
without limitation, in cash, in notes or other debt securities or in capital
stock (which shall include, without limitation, any options, warrants or other
rights to acquire capital stock)) of the Company, whether or not pursuant to a
stockholder rights plan, “poison pill” or similar arrangement (but excluding any
dividend or distribution that results in an adjustment to the Exercise Price
pursuant to Section 2(a)) in other property or assets, to holders of
Common Stock (a “Special Distribution”), then the Board of Directors
shall set aside the amount of such dividend or distribution that each Holder of
Warrants would have been entitled to receive had it exercised such Warrants
prior to the record date for such dividend or distribution.  Upon the exercise of a Warrant evidenced
hereby, the Holder shall be entitled to receive such dividend or distribution
that such Holder would have received had such Warrant been exercised
immediately prior to the record date for such dividend or distribution.  

             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 would result in a Special
Distribution described in 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 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 in its treasury, 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 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)(x) 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.  The
registered Holder of this Warrant Certificate, in its capacity as such, shall
not be entitled to any rights whatsoever as a stockholder of the Company,
except as herein provided.

             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 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. 

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

Said legend 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 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 its successors and permitted assigns.  Nothing in this Warrant Certificate shall be
construed to give to any Person other than the Company and the registered
Holder and its successors thereof 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 by registered or certified first–class mail, return
receipt requested, nationally recognized overnight 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 Note 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 Business Days after being
deposited in the mail, as aforesaid, postage prepaid, if mailed.

             Section 13.       Definitions.  Capitalized terms used herein but not
otherwise defined have the meanings given to them in the Securities Purchase
Agreement.  For the purposes of this
Warrant Certificate, the following terms shall have the meanings indicated
below:

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

             “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
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 10 consecutive Business Days ending two days prior to
the day as of which “Market Price” is being determined.

             “Note Purchase Agreement”
means that certain Convertible Senior Subordinated Promissory Note and Warrant
Purchase Agreement, dated as of April 18, 2001, among the Company and the
Holder, as the same may be amended, modified or otherwise supplemented from
time to time in accordance with its terms.

             “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.

             “Special Distribution” shall
have the meaning set for this Section 2(d) hereof.

             “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 the third anniversary of the Issue Date.

 

[Signature Page Follows]

 

             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:	     
	 	 	

	 	Name:	 John Mitola
	 	 	

	 	Title:	    CEO
	 	 	

	 	 
	 	HOLDER
	 	 	 
	 	NEWCOURT CAPITAL USA,
	 	INC., a Delaware
  corporation
	 	 
	 	 
	 	By:	      
	 	 	

	 	Name:	 Guy Piazza
	 	 	

	 	Title:	 Managing Director
	 	 	

	 
	 
	 	By:	     
	 	 	

	 	Name:	 Karen Scowcroft
	 	 	

	 	Title:	 Vice President
	 	 	

	 
							

 

 

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
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:	

	 
	 	 	 

 

Exhibit C

REGISTRATION RIGHTS AGREEMENT

             This
Registration Rights Agreement, dated as of April 18, 2001 (as it may be amended
from time to time, this “Agreement”), is made by and among Electric City
Corp., a Delaware corporation (the “Company”), and Newcourt Capital
Securities, Inc., a Delaware corporation (“Holder”, together with the
Company, the “Parties”).

WITNESSETH

             WHEREAS,
Holder intends to loan to the Company up to $2,000,000 aggregate principal
amount pursuant to that certain Convertible Senior Subordinated Promissory Note
and Warrant Purchase Agreement (as it may be amended from time to time, the “Note
Purchase Agreement”);

             WHEREAS,
the parties intend for the Company to issue in return for such advances one or
more convertible senior subordinated promissory notes (individually, as it may
be amended from time to time, a “Note” and collectively, the “Notes”)
and certain warrants to purchase shares of Common Stock of the Company (as it
may be amended from time to time, the “Warrants”); and

             WHEREAS,
it is a condition to the obligation of Holder to loan to the Company up to
$2,000,000 pursuant to the Note Purchase Agreement that the Parties execute and
deliver 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        Definitions.  All terms capitalized but not defined herein
shall have the meaning attributable to such terms in the Note 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 respective meanings, such
meanings to be equally applicable to the singular and plural forms thereof:

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

                           “Commission”
means the United States Securities and Exchange Commission or other
governmental authority at the time administering the Securities Act.

             

                           “Common
Stock” means and includes the Company’s authorized common stock, par value
$.0001 per share.

                           “Company”
shall have the meaning set forth in the preamble of this Agreement.

             “Eligible Securities” means
(i) the shares of Common Stock issued upon conversion of any outstanding
principal or accrued interest under the Notes pursuant to Section 4.2 of such
Notes; (ii) the shares of Common Stock issued or issuable upon exercise of the
Warrants; and (iii) any other shares of Common Stock of the Company issued as
(or issuable upon the conversion or exercise of any warrant, right or other
security that is issued as) a dividend or other distribution with respect to or
in exchange for or in replacement of, the shares described in clauses (i) and
(ii) and this clause (iii); provided, however, that the foregoing
definition shall exclude in all cases any Eligible Securities sold by a Holder
in a transaction in which its rights under this Agreement are not also
assigned.

             “Exchange Act” means the
Securities Exchange Act of 1934, as amended, and any similar or successor
federal statute, and the rules and regulations of the Commission thereunder,
all as the same may be in effect at the time.

              “Holder” means have the meaning set forth in the preamble
of this Agreement.

             “Note” or “Notes”
shall have the meaning set forth in the recitals hereof.

             “Note Purchase Agreement”
shall have the meaning set forth in the recitals hereof.

              “Parties” shall have the meaning set forth in the preamble
of this Agreement.

             “Registration Request” shall
have the meaning set forth in Section 2.1 hereof.

                            “Securities Act” means the Securities
Act of 1933, as amended, and any similar or successor federal statute, and the
rules and regulations of the Commission thereunder, all as the same may be in
effect at the time.

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

ARTICLE
II

REGISTRATION RIGHTS

             2.1        Requested Registration.

                                        (a)         At any time after the date hereof,
Holder may deliver to the Company a written request (a “Registration Request”)
that the Company file and use its best efforts to cause to become effective a
“shelf” registration statement on Form S-3 (or if Form S-3 is not then
available, Form S-1 or such other form that the Company is eligible to use with
respect to the Eligible Securities) under the Securities Act for an offering to
be made on a continuous basis pursuant to Rule 415 under the Securities Act
with respect to such number of Eligible Securities owned by Holder as shall be
specified in such request; provided, however, that the Company
shall not be required to effect more than two registrations on Form S-1 (or any
successor form) and two registrations on Form S-3 (or any successor form)
pursuant to this Section 2.1.  If
such offering is to be an underwritten offering, the managing underwriter or
underwriters must be reasonably acceptable to both Holder and the Company, which
acceptance shall not be unreasonably withheld. The Company shall also be
entitled to include in any registration statement filed pursuant to a
Registration Request, for sale in accordance with the method of disposition
specified in such Registration Request, such number of shares of Common Stock
as the Company shall be contractually obligated to sell for the account of
other security holders.  
Notwithstanding the foregoing provisions of this Section 2.1(a),
to the extent that, in the opinion of the underwriter or underwriters (if the
method of disposition shall be an underwritten public offering), marketing
considerations require the reduction of the number of shares of Common Stock
covered by any such registration, the number of shares of Common Stock to be
registered and sold pursuant to such registration shall be reduced as follows:

                           (i)          First, the number of shares of Common
Stock to be registered on behalf of Persons other than the Holder, if any,
shall be reduced (to zero, if necessary) pro rata according to the number of
shares of restricted Common Stock held by each to the extent permitted by the
Company’s agreements with such Persons; and

                           (ii)         Second, the number of shares of
Eligible Securities to be registered on behalf of the Holder and of shares of
Common Stock held by other Persons holding registration rights granted by the
Company entitled to be included pro rata with the Holder shall be reduced pro
rata according to the number of shares of Eligible Securities held by each. 

             In
the event that the number of shares of Eligible Securities that are actually
registered under any Registration Request under this Section 2.1(a) is
less than the number requested to be registered by the Holder because of
inclusion of shares of Common Stock held by other Persons with registration
rights that must be included in such registration pursuant to clause (ii)
above, then such Registration Request shall not be deemed to be one of the
Registration Requests that may be demanded by the Holder pursuant to this Section
2.1(a).

                                        (b)        As soon as practicable following the
receipt of a Registration Request, the Company will use its best efforts to
register under the Securities Act, for an offering to be made on a continuous
basis pursuant to Rule 415 of the Securities Act, the number of shares of
Eligible Securities specified in such Registration Request.

                           2.2        Registration Procedures.  If and whenever the Company is required by
the provisions of Section 2.1 to effect the registration of any Eligible
Securities under the Securities Act, the Company shall:

                                        (a)         prepare and file with the Commission a
registration statement with respect to such securities that will permit the
public resale thereof without restriction under the Securities Act and in
accordance with the method of distribution specified in the Registration
Request, and the Company shall use its best efforts (i) to cause such
registration statement to be filed within 45 days of receipt of the
Registration Request, (ii) to cause such registration statement to be declared
effective as promptly as practicable and (iii) to maintain the effectiveness of
such registration statement until such time as all securities registered
thereunder shall have been sold;

                                        (b)        promptly prepare and file with the
Commission such amendments and supplements to such registration statement and
the prospectus used in connection therewith as may be necessary to effect and
maintain the effectiveness of such registration statement for the period
specified in Section 2.2(a) and as to comply with the provisions of the
Securities Act with respect to the disposition of all Eligible Securities
covered by such registration statement in accordance with the intended method
of disposition set forth in such registration statement for such period,
including such amendments or supplements as are necessary to cure any untrue
statement or omission referred to in Section 2.2(e)(vi);

                                        (c)         provide to the managing underwriter or
underwriters, not more than one counsel for all underwriters, Holder and not
more than one counsel for Holder the opportunity to participate in the
preparation of (i) such registration statement, (ii) each prospectus relating
thereto and included therein or filed with the Commission and (iii) each
amendment or supplement thereto;

                                        (d)        make available for inspection by the
parties referred to in Section 2.2(c) such financial and other
information and books and records of the Company, and cause the officers,
directors and employees of the Company, and counsel and independent certified
public accountants of the Company, to respond to such inquiries, as shall be
reasonably necessary, in the judgment of respective counsel to Holder and such
underwriter or underwriters, to conduct a reasonable investigation within the
meaning of the Securities Act; provided, however, that each such
person shall be required to retain in confidence and not to disclose to any
other person any information or records reasonably designated by the Company in
writing as being confidential until such time as such information becomes a
matter of public record (whether by virtue of its inclusion in such
registration statement or otherwise), unless (i) such person shall be required
to disclose such information pursuant to the subpoena or order of any court or
other governmental agency or body having jurisdiction over the matter or (ii)
such information is required to be set forth in such registration statement or
the prospectus included therein or in an amendment to such registration
statement or an amendment or supplement to such prospectus in order that such
registration statement, prospectus, amendment or supplement, as the case may
be, shall not contain an untrue statement of a material fact or omit to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, and such information has not been so set
forth after the request by Holder to such effect;

                                        (e)         immediately notify the persons referred
to in Section 2.2(c) and (if requested by any such person) confirm such
advice in writing, (i) when such registration statement or any prospectus
included therein or any amendment or supplement thereto has been filed and,
with respect to such registration statement or any such amendment, when the
same has become effective, (ii) of any material comments by the Commission with
respect thereto or any request by the Commission for amendments or supplements
to such registration statement or prospectus or for additional information,
(iii) of the issuance by the Commission of any stop order suspending the
effectiveness of such registration statement or the initiation of any
proceedings for that purpose, (iv) if at any time the representations and
warranties of the Company contemplated by Section 2.2(1)(i) cease to be
true and correct in all material respects, (v) of the receipt by the Company of
any notification with respect to the suspension of the qualification of any
Eligible Securities for sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose or (vi) at any time when a
prospectus is required to be delivered under the Securities Act, of the
occurrence or failure to occur of any event, or any other change in law, fact
or circumstance, as a result of which such registration statement, prospectus
or any amendment or supplement thereto, or any document incorporated by
reference in any of the foregoing, contains an untrue statement of a material
fact or omits to state a material fact required to be stated therein or
necessary to make the statements therein not misleading in light of the
circumstances then existing;

                                        (f)         take reasonable efforts to obtain the
withdrawal at the earliest practicable date of any order suspending the
effectiveness of such registration statement or any post–effective
amendment thereto;

                                        (g)        if requested by the managing underwriter
or underwriters or Holder, promptly incorporate in a prospectus supplement or
post–effective amendment such information as such managing underwriter or
underwriters or Holder reasonably specify should be included therein relating
to the terms of the sale of such Eligible Securities, including, without
limitation, information with respect to the number of Eligible Securities being
sold to such underwriters, the name and description of Holder, the purchase
price being paid therefor by such underwriters and any other terms of the
underwritten (or best efforts underwritten) offering of the Eligible Securities
to be sold in such offering, and make all required filings of such prospectus supplement
or post–effective amendment promptly after notification of the matters to
be incorporated in such prospectus supplement or post–effective
amendment;

                                        (h)        furnish to Holder and each underwriter
and counsel for Holder, if any, a copy of such executed registration statement,
each such amendment and supplement thereto (in each case including all exhibits
thereto, whether or not such exhibits are incorporated by reference therein)
and such number of copies of the prospectus included in such registration
statement (including each preliminary prospectus and any summary prospectus)
and each amendment or supplement thereto, in conformity with the requirements
of the Securities Act, as Holder and managing underwriter, if any, may
reasonably request in order to facilitate the disposition of Eligible
Securities by Holder or by the participating underwriters;

                                        (i)          use its best efforts to (i) register
or qualify the Eligible Securities to be included in such registration
statement under such other securities laws or blue sky laws of such
jurisdictions as Holder and each managing underwriter, if any, thereof shall
reasonably request, (ii) keep such registrations or qualifications in effect
for so long as is necessary to effect the disposition of such Eligible Securities
in the manner contemplated by the registration statement, the prospectus
included therein and any amendment or supplement thereto and (iii) take any and
all such actions as may be reasonably necessary or advisable to enable Holder
and any participating underwriter or underwriters to consummate the disposition
in such jurisdictions of such Eligible Securities;

                                        (j)          cooperate with Holder and the managing
underwriters, if any, to facilitate the timely preparation and delivery of
certificates representing Eligible Securities to be sold, which certificates
shall be printed, lithographed or engraved, or produced by any combination of
such methods, and which shall not bear any restrictive legends; and, in the
case of an underwritten public offering, enable such Eligible Securities to be
registered in such names as the underwriter or underwriters may request at
least two (2) business days prior to any sale of such Eligible Securities;

                                        (k)         provide not later than the effective
date of the registration statement a transfer agent and registrar for such
Eligible Securities and a CUSIP number for all Eligible Securities;

                                        (l)          enter into an underwriting agreement,
engagement letter, agency agreement, “best efforts” underwriting agreement or
similar agreement, as appropriate, and take such other actions in connection
therewith as Holder shall reasonably request in order to expedite or facilitate
the disposition of such Eligible Securities, and in connection therewith,
whether or not an underwriting agreement is entered into and whether or not the
registration is an underwritten public offering, (i) make such representations
and warranties to Holder and the underwriters, if any, in form, substance and
scope as are customarily made in an underwritten public offering; (ii) obtain
an opinion of counsel to the Company in customary form and covering such
matters as are customarily covered by such an opinion as Holder and the
underwriters, if any, may reasonably request, addressed to Holder and the
underwriters, if any, and dated the effective date of such registration
statement (or, if such registration includes an underwritten public offering,
dated the date of the closing under the underwriting agreement); (iii) obtain a
“cold comfort” letter from the independent certified public accountants of the
Company addressed to Holder and the underwriters, if any, dated the effective
date of such registration statement (and, if such registration includes an
underwritten public offering, also dated the date of the closing under the
underwriting agreement), such letter to be in customary form and covering such
matters as are customarily covered by such letters; (iv) deliver such documents
and certificates as may be reasonably requested by Holder and the managing
underwriter or underwriters, if any, to evidence compliance with clause (i) of
this Section 2.2(1) and with any customary conditions contained in the
underwriting agreement or other agreement entered into by the Company and (v)
undertake such obligations relating to expense reimbursement, indemnification
and contribution as are provided in Sections 2.3, 2.4 and 2.5
hereof;

                                        (m)        cause all such Eligible Securities
registered hereunder to be listed on each securities exchange or
over-the-counter market on which similar securities issued by the Company are
then listed, if applicable; and

                                        (n)        otherwise use its best efforts to comply
with all applicable rules and regulations of the Commission.

                                        Notwithstanding
the provisions of Section 2.2(a), the Company’s obligation to file a
registration statement, or cause such registration statement to become
effective, shall be suspended, without incurring any liability to Holder, for a
period not to exceed 60 days if there exists at the time material non–public
information relating to the Company that, in the reasonable opinion of the
Company, should not be disclosed, provided that any such suspension shall occur
no more than once in any 12–month period.  In such an event, the Company shall promptly inform Holder of the
Company’s decision to defer filing of a registration statement and shall notify
Holder promptly (but in any event not later than upon the expiration of the 60–day
period specified in the immediately preceding sentence) of the recommencement
of the Company’s best efforts to file the registration statement and to cause
the registration statement to become effective.  If the Company shall so postpone the filing of a registration
statement, (i) the Company shall use its reasonable best efforts to limit the
delay to as short a period as is practicable and (ii) Holder shall have the
right to withdraw the request for registration by giving written notice to the
Company at any time.  In the event of
such withdrawal, such request shall not be counted for purposes of the number of
requests for registration to which the Holder is entitled pursuant to Section
2.1(a).

                                        In
connection with each registration of Eligible Securities hereunder, Holder will
furnish to the Company in writing such information with respect to it and the
proposed distribution by it as shall be reasonably necessary in order to assure
compliance with applicable federal and state securities laws.  Holder also agrees to notify the Company as
promptly as practicable of any inaccuracy or change in information previously
furnished by Holder to the Company or of the occurrence of any other event, in
either case as a result of which any prospectus relating to such registration
contains an untrue statement of a material fact regarding Holder or the
distribution of such Eligible Securities or omits to state any material fact
regarding Holder or the distribution of such Eligible Securities required to be
stated therein or necessary to make the statements therein not misleading in
light of the circumstances then existing, and promptly to furnish to the
Company any additional information required to correct and update such
previously furnished information or required so that such prospectus shall not
contain, with respect to Holder or the distribution of such Eligible Securities,
an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading, in light of the circumstances then existing.  Holder further agrees that upon giving any notice
referred to in the immediately preceding sentence, or upon receipt of any
notice from the Company pursuant to Section 2.2(e)(vi) hereof, Holder
shall forthwith discontinue the disposition of Eligible Securities pursuant to
the registration statement applicable to such Eligible Securities until Holder
shall have received copies of an amended or supplemented registration statement
or prospectus, and if so directed by the Company, Holder shall deliver to the
Company (at the Company’s expense) all copies, other than permanent file
copies, then in Holder’s possession of the prospectus covering such Eligible
Securities at the time of receipt of such notice.

             2.3        Expense.  The Company shall pay all expenses incurred
in complying with Sections 2.1 and 2.2, including without
limitation all registration and filing fees, printing expenses, fees and
disbursements of counsel and independent public accountants for the Company,
fees and expenses of one counsel for Holder, fees and expenses (including
counsel fees) incurred in connection with complying with state securities or
“blue sky” laws (other than those that by law must be paid by selling security
holders), transfer taxes, fees of transfer agents and registrars and stock
exchange listing fees, but excluding all underwriting discounts and selling
commissions applicable to the sale of Eligible Securities.

             2.4        Indemnification.

                           (a)         In the event of a registration of
Eligible Securities under the Securities Act pursuant to Sections 2.1
and 2.2, the Company shall indemnify and hold harmless Holder, each
officer and director of Holder, each underwriter of such Eligible Securities
thereunder and each other person, if any, who controls Holder or underwriter
within the meaning of the Securities Act, against any losses, claims, damages
or liabilities, joint or several, to which Holder, or such officer, director,
underwriter or controlling person may become subject under the Securities Act
or otherwise or in any action in respect thereof, and will reimburse Holder and
each such officer, director, underwriter and controlling person for any legal
or other expenses reasonably incurred by them in connection with investigating
or defending any such loss, claim, damage, liability or action as such expenses
are incurred, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon any untrue statement
or alleged untrue statement of any material fact contained in any registration
statement under which such Eligible Securities were registered under the
Securities Act pursuant to Sections 2.1 and 2.2, any preliminary
prospectus or final prospectus contained therein, or any amendment or
supplement thereof, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading; provided, however,
that the Company shall not be liable to Holder or such officer, director,
underwriter or controlling person in any such case if and to the extent that
any such loss, claim, damage or liability arises out of or is based upon an
untrue statement or alleged untrue statement or omission or alleged omission
made in conformity with information furnished by Holder, or such officer, director,
underwriter or controlling person in writing specifically for use in such
registration statement or prospectus.

                           (b)        Holder will indemnify and hold harmless
the Company, each underwriter and each person, if any, who controls the Company
or any underwriter within the meaning of the Securities Act, each officer of
the Company who signs the registration statement, and each director of the
Company, against all losses, claims, damages or liabilities, joint or several,
to which the Company or any such officer, director, underwriter, or controlling
person may become subject under the Securities Act or otherwise, and shall
reimburse the Company and each such officer, director, underwriter and
controlling person for any legal or other expenses reasonably incurred by them
in connection with investigating or defending any such loss, claim, damage,
liability or action, but only to the extent that any such loss, claim, damage
or liability (or action in respect thereof) arises out of or is based upon an
untrue statement or alleged untrue statement or omission or alleged omission
made in reliance upon and in conformity with information pertaining to Holder
furnished in writing to the Company by Holder specifically for use in the
registration statement or prospectus relating to such Eligible Securities.  Notwithstanding the immediately preceding
sentence, the liability of Holder hereunder shall not in any event exceed the
net proceeds received by Holder from the sale of Eligible Securities covered by
such registration statement.

                           (c)         Promptly after receipt by an
indemnified party hereunder of notice of the commencement of any action, such
indemnified party, if a claim in respect thereof is to be made against an
indemnifying party hereunder, shall notify such indemnifying party in writing
thereof, but the omission so to notify such indemnifying party shall not
relieve such indemnifying party from any liability that it may have to any
indemnified party other than under this Section 2.4 and, unless the
failure to so provide notice materially adversely affects or prejudices such
indemnifying party’s defense against any action, shall not relieve such
indemnifying party from any liability that it may have to any indemnified party
under this Section 2.4.  In case
any such action shall be brought against any indemnified party and it shall
notify an indemnifying party of the commencement thereof, such indemnifying
party shall be entitled to participate in and, to the extent it shall wish, to
assume and undertake the defense thereof with counsel reasonably satisfactory
to such indemnified party, and, after notice from such indemnifying party to
such indemnified party of its election so to assume and undertake the defense
thereof, such indemnifying party shall not be liable to such indemnified party
under this Section 2.4 for any legal expenses subsequently incurred by
such indemnified party in connection with the defense thereof other than
reasonable costs of investigation and of liaison with counsel so selected; provided,
however, that, if the defendants in any such action include both the
indemnified party and the indemnifying party and the indemnified party shall
have reasonably concluded that there may be reasonable defenses available to it
that are different from or additional to those available to the indemnifying
party or if the interests of the indemnified party reasonably may be deemed to
conflict with the interests of the indemnifying party, the indemnified party
shall have the right to select a separate counsel and to assume and undertake
the defense of such action, with the expenses and fees of such separate counsel
and other expenses related to such defense to be reimbursed by the indemnifying
party as incurred.

                           (d)        No indemnifying party shall be liable
for any amounts paid in a settlement effected without the consent of such
indemnifying party, which consent shall not be unreasonably withheld or
delayed.  No indemnifying party shall
consent to entry of any judgment or enter into any settlement that does not
include as an unconditional term thereof the giving by the plaintiff to the
indemnified party of a release from all liability in respect of such claim or
litigation.

                           (e)         The reimbursements required by this Section
2.4 shall be made by periodic payment during the course of the
investigation or defense, as and when bills are received and expenses incurred.

             2.5        Contribution.  If for any reason the indemnity set forth in
Section 2.4 is unavailable or is insufficient to hold harmless an
indemnified party, then the indemnifying party shall contribute to the amount
paid or payable by such indemnified party as a result of the aggregate losses,
claims, damages, liabilities and expenses of the nature contemplated by said
indemnity (a) in such proportion as is appropriate to reflect the relative
fault of the indemnifying party on the one hand and such indemnified party on
the other hand (determined by reference to, among other things, whether the
untrue statement of a material fact or omission to state a material fact relates
to information supplied by the indemnifying party or such indemnified party and
the parties’ relative intent, knowledge, access to information and opportunity
to correct or prevent such untrue statement or omission) or (b) if the
allocation provided by 

Section 2.5(a) above is not permitted by applicable law or provides a
lesser sum to such indemnified party than the amount hereinafter calculated, in
such proportion as is appropriate to reflect not only the relative fault of the
indemnifying party and such indemnified party but also the relative benefits
received by the indemnifying party on the one hand and such indemnified party
on the other hand, as well as any other relevant equitable considerations.

                           The
Parties agree that it would not be just and equitable if contribution pursuant
to this Section 2.5 were determined by pro rata allocation or by any
other method of allocation that does not take account of the equitable
consideration referred to in the immediately preceding paragraph.  The amount paid or payable by an indemnified
party as a result of the losses, claims, damages, liabilities or expenses
referred to in such paragraph shall be deemed to include, subject to the
limitations set forth above, any legal or other expenses reasonably incurred by
such indemnified party in connection with investigating or defending any such
action or claim.  Notwithstanding the
provisions of this Section 2.5, Holder shall not be required to
contribute any amount in excess of the amount by which the net proceeds of the
sale of Eligible Securities sold by Holder and distributed to the public
exceeds the amount of any damages that Holder has otherwise been required to
pay by reason of such untrue or alleged untrue statement or omission or alleged
omission.  No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person that is not
guilty of such fraudulent misrepresentation.

             2.6        Underwriting Agreement.  If Eligible Securities are to be sold
pursuant to a registration statement in an underwritten offering pursuant to Sections
2.1 and 2.2, each of the Company and Holder agrees to enter into a
written agreement with the managing underwriter or underwriters selected in the
manner herein provided in such form and containing such provisions as are
reasonably satisfactory to the Company and Holder and as are customary in the
securities business for such an arrangement among such underwriter or
underwriters, Holder and companies of the Company’s size and investment
stature. Holder shall not be required to make any representations and
warranties to the Company or the underwriters other than representations or
warranties regarding the identity of Holder, Holder’s Eligible Securities, Holder’s
ability to transfer title to Holder’s Eligible Securities and Holder’s intended
method of distribution or any other representations required by applicable law.

             

             2.7        Reports Under Securities Exchange Act of 1934.  With a view to making available to the
Holder the benefits of Rule 144 promulgated under the Securities Act and any
other rule or regulation of the SEC that may at any time permit the Holder to
sell securities of the Company to the public without registration or pursuant
to a registration on Form S-3, the Company agrees to:

                           (a)         make and keep public information
available, as those terms are understood and defined in SEC Rule 144, at all
times so long as the Company remains subject to the periodic reporting
requirements under Sections 13 or 15(d) of the Exchange Act;

                           (b)        take such action, including the
voluntary registration of its Common Stock under Section 12 of the Exchange
Act, as is necessary to enable the Holder to use Form S-3 for the sale of its
Eligible Securities;

                           (c)         file with the SEC in a timely manner
all reports and other documents as may be required of the Company under the
Securities Act and the Exchange Act; and

                           (d)        furnish to Holder, so long as Holder
owns any Eligible Securities, forthwith upon request (i) a written statement by
the Company that it has complied with the reporting requirements of SEC Rule
144, the Securities Act and the Exchange Act (at any time after it has become
subject to such reporting requirements), or that it qualifies as a registrant
whose securities may be resold pursuant to Form S-3 (at any time after it so
qualifies), (ii) a copy of the most recent annual or quarterly report of the
Company and such other reports and documents so filed by the Company, and (iii)
such other information as may be reasonably requested in availing any Holder of
any rule or regulation of the SEC which permits the selling of any such
securities without registration or pursuant to such form.

ARTICLE
III

MISCELLANEOUS

             3.1        Assignment; Third Party Beneficiaries.  All covenants and agreements contained in
this Agreement by or on behalf of any of the signatories shall bind and inure
to the benefit of the respective successors and assigns of the signatories,
whether so expressed or not.  If any
transferee of Holder shall acquire Eligible Securities in any manner (other
than by way of a registered public offering), whether by operation of law or
otherwise, such Eligible Securities shall be held subject to all of the terms
of this Agreement, and by taking and holding such Eligible Securities such
transferee shall be entitled to receive the benefits of and be conclusively
deemed to have agreed to be bound by and to perform all of the terms and
provisions of this Agreement.  The
benefits to which any such transferee shall be entitled shall include, without
limitation, the rights to register Eligible Securities under Sections 2.1
and 2.2.

 

             

             3.2        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 registered or certified 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: 1286 Landmeier
Road, Elk Grove Village, IL 60007-2410, Fax No. 847-437-4969, Attention:
General Counsel.

                           (ii)         If to Holder: at the address set forth
in the Note Purchase Agreement.

             3.3        Governing Law.  This Agreement shall be governed by and
construed in accordance with the laws of the State of New York.

             3.4        Amendments.  This Agreement may not be amended or
modified, and no provision hereof may be waived, except in writing, and any
such writing shall only be effective with respect to a Party who has executed
such writing.  The failure of any of the
Parties to insist upon strict adherence to any term of this Agreement on any
occasion shall not be considered a waiver of that term or deprive such Party of
the right thereafter to insist upon strict adherence to that term or any other
term of this Agreement.

             3.5        Counterparts.  This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.

             3.6        Remedies.  The Parties acknowledge that there may be no
adequate remedy at law if any Party fails to perform any of its obligations
hereunder and that each Party may be irreparably harmed by any such failure,
and accordingly agree that each Party, in addition to any other remedy that it
may be entitled in law or in equity, shall be entitled to compel specific
performance of the obligations of any other Party under this Agreement in
accordance with the terms and conditions of this Agreement in any court of the
United States or any state thereof having jurisdiction.

             3.7        Headings.  The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.

             3.8        Severability.  In the event that any one or more of the
provisions contained herein, or the application thereof in any circumstances,
is held invalid, illegal or unenforceable in any respect for any reason, the
validity, legality and enforceability of any such provision in every other
respect and of the remaining provisions contained herein shall not be in any
way impaired thereby, it being intended that all of the rights and privileges
of Holder shall be enforceable to the fullest extent permitted by law.

             3.9        Entire Agreement.  This Agreement is intended by the Parties as
a final expression of their agreement and a complete and exclusive statement of
the agreement and understanding of the parties hereto in respect of the subject
matter contained herein.  There are no
restrictions, promises, warranties or undertakings other than those set forth
or referred to herein or therein.  This
Agreement supersedes all prior agreements and understandings between the
Parties with respect to such subject matter.

[Signature
Page Follows]

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

 

ELECTRIC
CITY CORP.,

a Delaware corporation

 

	 	By:        
	 	

	 	Name:   John Mitola
	 	

	 	Title:     CEO
	 	

 

NEWCOURT
CAPITAL USA, INC.,

a Delaware corporation

 

	 	By:         
	 	

	 	Name:   Guy Piazza
	 	

	 	Title:      Managing Director
	 	

 

	 	By:        
	 	

	 	Name:   Karen Scowcroft
	 	

	 	Title:     Vice President

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