Document:

Prepared by MerrillDirect

EXHIBIT 10.10

INVESTOR RIGHTS AGREEMENT

             This
Investor Rights Agreement, dated as of July 31, 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 each of the parties
set forth on Schedule I attached hereto from time to time (collectively, the “Investors”
and, together with the Company, the “Parties”) and shall become
effective on the Closing Date (as defined in the Securities Purchase
Agreement).

WITNESSETH

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

             WHEREAS,
it is a condition to the obligations of the Investors to purchase the
Securities pursuant to the Securities 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 Securities Purchase
Agreement, except where the context otherwise requires.  The following additional terms when used in
this Agreement, including its preamble and recitals, shall, except where the
context otherwise requires, have the following respective meanings, such
meanings to be equally applicable to the singular and plural forms thereof:

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

             

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

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

                           “Certificate
of Designations” means the Certificate of Designations, Preferences and
Relative, Participating, Optional and Other Special Rights of Preferred Stock
and Qualifications, Limitations and Restrictions Thereof of Series A
Convertible Preferred Stock of Electric City Corp. referenced in the Securities
Purchase Agreement.

                           “Closing
Date” shall have the meaning given to it in the Securities Purchase
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
$0.0001 per share.

                           “Common
Stock Warrants” means the warrants issued to each Investor pursuant to the
Securities Purchase Agreement to purchase 750,000 shares of Common Stock as
evidenced by those certain Warrant Certificates, of even date herewith, between
each Investor and the Company, as each such Warrant Certificate may be amended
from time to time.

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

                           “Eligible
Securities” means (i) the shares of Common Stock issued or issuable upon
the conversion of the Series A Preferred Stock issued or issuable pursuant to
the Securities Purchase Agreement or the Additional Purchase Agreement or
issued or issuable upon exercise of the Series A Preferred Stock Warrants and
conversion of the Series A Preferred Stock issued or issuable pursuant to such
exercise; (ii) the shares of Common Stock issued or issuable upon exercise of
the Placement Agent Warrants; (iii) the shares of Common Stock issued pursuant
to Securities Purchase Agreement; (iv) the shares of Common Stock issued or
issuable upon exercise of the Common Stock Warrants; and (v) any other shares
of Common Stock 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), (ii), (iii), (iv) and this clause (v); 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; and provided further that any
Eligible Securities sold pursuant to Rule 144 or sold in a registered public
offering that has been declared effective shall no longer be Eligible
Securities hereunder.

                           “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.

             

             “Fully-Exercising Investor”
shall have the meaning set forth in Section 3.1 hereof.

                           “Holder”
means a registered holder of record of outstanding Eligible Securities or
securities convertible into or exercisable for, directly or indirectly,
Eligible Securities.

             “Investors” shall have the
meaning set forth in the preamble hereto.

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

             “Parties” shall have the
meaning set forth in the preamble hereto.

                           “Placement
Agent Warrants” means the warrants issued by the Company to Newcourt
Capital Securities, Inc. to purchase 3,314,830 shares of Common Stock as
evidenced by that certain Warrant Certificate of even date herewith between the
Company and Newcourt Capital Securities Inc., as the same may be amended from
time to time.

             “Piggyback Request” shall
have the meaning set forth in Section 2.2(a) hereof.

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

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

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

             “Rule 144” means Rule 144
promulgated by the Commission under the Securities Act, as in effect from time
to time.

             “Securities” shall have the
meaning set forth in the first recital of this Agreement.

                           “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.

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

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

                           “Series
A Preferred Stock Warrants” means the warrants issued to certain of
the  Investors pursuant to the
Securities Purchase Agreement or the Additional Purchase Agreement to purchase
100,000 shares of Series A Preferred Stock as evidenced by those certain
Warrant Certificates, of even date herewith, between each such Investor and the
Company, as each such Warrant Certificate may be amended from time to time.

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

 

ARTICLE
II

REGISTRATION RIGHTS

             2.1        Requested Registration.

                           (a)         At any time after the Closing Date,
Holders holding at least a majority of the shares constituting Eligible
Securities may deliver to the Company a written request that the Company file
and use its best efforts to cause to become effective a registration statement
under the Securities Act with respect to such number of the Eligible Securities
owned by the Holders as shall be specified in such request (a “Registration
Request”), including, if specified in the Registration Request, 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) for an offering to be made on a delayed or continuous
basis pursuant to Rule 415 under the Securities Act; provided, however,
that the Company shall not be obligated to effect any such registration
pursuant to this Section 2.1 if the aggregate value on the date of the
Registration Request of the Eligible Securities to be registered thereon is
less than $5,000,000.  The Company shall
not be required to file and use its best efforts to cause to become effective,
pursuant to a Registration Request under this Section 2.1 more than four
(4) registration statements at the demand of the Holders.  The party (or parties) delivering a
Registration Request is hereinafter referred to as the “Requesting Holder.”

                           (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 public sale in accordance with the
method of disposition specified in such Registration Request, the number of
shares of Eligible Securities specified in such Registration Request (and the
number of Eligible Securities specified in all notices received from Holders
within 20 business days after notice of the Registration Request delivered
pursuant to Section 2.2 hereof). 
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 desire to sell for its own
account or for the account of other security holders or both.  If the method of sale designated is an
underwritten public offering, the managing underwriter or underwriters must be
reasonably acceptable to both the Requesting Holder (or the holders of a
majority of the shares of Eligible Securities held by all parties comprising
the Requesting Holder if more than one party is the Requesting Holder) and the
Company, which acceptance shall not be unreasonably withheld.  Notwithstanding the foregoing provisions of
this Section 2.1(b), 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 the Company shall be reduced (to zero, if
necessary); and

             

                                        (ii)         second, the number of shares of Common
Stock to be registered on behalf of Persons other than the Holders and their
Affiliates, if any, shall be reduced (to zero, if necessary) pro rata according
to the number of shares of restricted Common Stock held by each; and

                                        (iii)        third, the number of shares of Eligible
Securities to be registered on behalf of the Holders and their Affiliates shall
be reduced pro rata according to the number of shares of Eligible Securities
held by each.

                           (c)         Notwithstanding anything to the
contrary contained herein, the exercise by any Holder of any right hereunder
with respect to shares of Eligible Securities shall not effect or diminish any
other rights of such Holder hereunder with respect to any other securities of
the Company held by such Holder.

             2.2        Piggyback Registration.

                           (a)         If the Company at any time after the
Closing Date proposes to register Common Stock under the Securities Act for
sale to the public (including registrations pursuant to Section 2.1
hereof, but excluding the registration on Form SB-2 that the Company intends to
file by September 30, 2001 with respect to certain options, warrants and shares
of Common Stock outstanding as of the date of the Securities Purchase
Agreement), whether for its own account or for the account of other security
holders or both (except registration statements on Form S–8, S–4 or
another form not available for registering the Eligible Securities for sale to
the public), each such time it will give written notice to all Holders of its
intention to do so.  Upon the written
request of any Holder (a “Piggyback Request”), given within 20 business
days after receipt of any such notice, to register any of its Eligible
Securities, the Company shall, subject to Section 2.2(b) below, cause
the Eligible Securities as to which registration shall have been so requested
to be covered by the registration statement proposed to be filed by the
Company.

                           (b)        In the event that any registration
statement described in this Section 2.2 shall relate, in whole or in
part, to an underwritten public offering of shares of Common Stock, the
Eligible Securities to be registered must be sold through the same underwriters
as have been selected by the Company (or agreed to pursuant to Section 2.1
hereof, if applicable).  Otherwise, the
method of distribution of the Eligible Securities to be sold by any Holder
making a Piggyback Request shall be as specified therein.  Except with respect to all Holders (and
their respective Affiliates) in the case of a registration statement filed
pursuant to a Registration Request under Section 2.1 hereof, the number
of shares of Common Stock to be included in such registration statement on
account of any person may be reduced if and to the extent that the underwriter
or underwriters shall be of the opinion that such inclusion would materially
adversely affect the marketing of the total number of shares of Common Stock
proposed to be sold, and the number of shares to be registered and sold by each
person (other than the Company) shall be reduced pro rata according to the
relative number of fully diluted shares of Common Stock owned by such person.  Notwithstanding the foregoing provisions of
this Section 2.2, the Company may withdraw any registration statement
referred to in this Section 2.2 (other than a registration statement
filed pursuant to a Registration Request under Section 2.1) without
thereby incurring any liability for such withdrawal to any requesting Holder.

             

             2.3        Registration Procedures.  If and whenever the Company is required by the provisions of Sections
2.1 or 2.2 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 sale thereof in accordance with the method of distribution specified in
the applicable Registration Request, and the Company shall use its best efforts
(i) to cause such registration statement to be filed within 60 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 for a period of not less than 90
days or, in the case of a registration statement pursuant to a Registration
Request under Section 2.1, until such times as all securities registered
thereunder 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 2.3(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 2.3(e)(vi);

                           (c)         provide to the managing underwriter or
underwriters and not more than one counsel for all underwriters, the Holders of
Eligible Securities to be included in such registration statement and not more
than one counsel for all such Holders 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 2.3(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 such Holders 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 a Holder to such effect;

 

                           (e)         immediately notify the persons referred
to in Section 2.3(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 written or 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 2.3(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 prevent or
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 the Holders of at least a majority of the Eligible
Securities being sold in connection with an underwritten public offering,
promptly incorporate in a prospectus supplement or post–effective
amendment such information as such managing underwriter or underwriters or such
Holders 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 names and descriptions of such Holders, 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 each Holder of Eligible
Securities included in such registration and each underwriter and counsel for
Holder, if any, thereof 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 such Holder and managing underwriter, if any, may
reasonably request in order to facilitate the disposition of such Eligible
Securities by such 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 any Holder of such Eligible Securities 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 such Holder and any participating underwriter or
underwriters to consummate the disposition in such jurisdictions of such
Eligible Securities;

                           (j)          cooperate with the Holders of the
Eligible Securities included in such registration 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 the Holders of at least a majority of the Eligible Securities to
be included in such registration 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 the Holders of such Eligible Securities included
in such registration 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 the Holders of at least a
majority of such Eligible Securities and the underwriters, if any, may
reasonably request, addressed to each participating 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 the Holders of the Eligible Securities included in such
registration 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 the Holders of at least a
majority of the Eligible Securities included in such registration and the
underwriters, if any, to evidence compliance with clause (i) of this Section
2.3(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 2.4, 2.5 and 2.6 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, and, if not so listed, to be listed on the NASD automated
quotation system and, if listed on the NASD automated quotation system, use its
commercially reasonable efforts to secure designation of all such Eligible
Securities covered by the registration statement as a NASDAQ “national market
system security” within the meaning of Rule 11Aa2-1 of the Commission or,
failing that, to secure NASDAQ authorization for such Eligible Securities and,
without limiting the generality of the foregoing, to use its commercially
reasonable efforts to arrange for at least two market makers to register as
such with respect to such Eligible Securities with the NASD;

                            (n)       make
available on a reasonable basis senior management personnel of the Company to
participate in, and cause them to cooperate with the selling Holders of
Eligible Securities or the managing underwriter in any underwritten offering in
connection with “road show” and other customary marketing activities, including
“one-on-one” meetings with prospective purchasers of the Eligible Securities to
be sold in the underwritten offering and otherwise to facilitate, cooperate
with, and participate in each proposed offering contemplated herein and
customary selling efforts related thereto, in each case to the same extent as
if the Company were engaged in a primary registered offering of its capital
stock; and

 

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

             Notwithstanding
the provisions of Section 2.3(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 any Holder,
for a period not to exceed 90 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 all Holders
of the Company’s decision to defer filing of a registration statement and shall
notify all Holders promptly (but in any event not later than upon the
expiration of the 90-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) the
Holders 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 Holders are
entitled pursuant to Section 2.1(a).

             In
connection with each registration of Eligible Securities hereunder, each Holder
thereof 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.  Each such Holder also agrees to
notify the Company as promptly as practicable of any inaccuracy or change in
information previously furnished by such 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 such Holder or the distribution of such Eligible
Securities or omits to state any material fact regarding such 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 such 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. 
Each Holder further agrees that upon receipt of 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, such Holder shall
forthwith discontinue the disposition of Eligible Securities pursuant to the
registration statement applicable to such Eligible Securities until such Holder
shall have received copies of an amended or supplemented registration statement
or prospectus, and if so directed by the Company, such Holder shall deliver to
the Company (at the Company’s expense) all copies, other than permanent file
copies, then in such Holder’s possession of the prospectus covering such
Eligible Securities at the time of receipt of such notice.

             

             2.4        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 the selling
Holders, 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 the selling security holders), fees of the transfer taxes,
fees of transfer agents and registrars and stock exchange listing fees, but
excluding all fees and expenses of counsel for the underwriters, if any, and
all underwriting discounts and selling commissions applicable to the sale of
Eligible Securities.  All expenses of
participating sellers other than those assumed by the Company in this Agreement
shall be borne by such sellers in proportion to the number of shares of
Eligible Securities sold by each seller or as they may otherwise agree.

             2.5        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, to the fullest
extent permitted by law, each selling Holder, its Affiliates, each of their
respective officers, directors, employees and agents, each underwriter of such
Eligible Securities and each other person, if any, who controls such selling
Holder or underwriter within the meaning of the Securities Act, against any
losses, claims, damages or liabilities, joint or several, to which such selling
Holder, Affiliate, their respective officer, director, employee, agent,
underwriter or controlling person may become subject under the Securities Act
or otherwise or in any action in respect thereof, and will reimburse each such
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
or 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 any such selling Holder, Affiliate, officer, director, employee,
agent, 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 such selling Holder, Affiliate
officer, director, employee, agent, underwriter or controlling person in
writing specifically for use in such registration statement or prospectus.

             

                           (b)        Each selling Holder of such Eligible
Securities, severally and not jointly, 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, each director of the Company,
each other seller of securities registered by the registration statement
covering such Eligible Securities and each person, if any, who controls such
seller, against all losses, claims, damages or liabilities, joint or several,
to which the Company or any such officer, director, underwriter, other seller
or controlling person may become subject under the Securities Act or otherwise,
and shall reimburse the Company and each such officer, director, underwriter,
other seller 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, insofar as such losses, claims, damages or
liabilities (or action in respect thereof) arise out of or are based upon an
untrue statement or alleged untrue statement of material fact or omission or
alleged omission of a material fact required to be stated therein made in
reliance upon and in conformity with information pertaining to such Holder
furnished in writing to the Company by such Holder specifically for use in the
registration statement or prospectus relating to such Eligible Securities.  Notwithstanding the immediately preceding
sentence, the aggregate liability of each such Holder hereunder shall not in
any event exceed the net proceeds received by such 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 2.5 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 2.5.  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 2.5 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, without the indemnified party’s prior
written consent, 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 2.5 shall be made by periodic
payment during the course of the investigation or defense, as and when bills
are received and expenses incurred.

                            (f)        The
indemnification provided for under this Agreement shall remain in full force
and effect regardless of any investigation made by or on behalf of the
indemnified party or any officer, director, employee, agent, or controlling
person of such indemnified party and shall survive the transfer of securities.

             2.6        Contribution.  If for any reason the indemnity set forth in
Section 2.5 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
actual or alleged untrue statement of a material fact or actual or alleged
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
2.6(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 2.6 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 2.6, a 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 such Holder and distributed to the public
exceeds the amount of any damages that such 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.

             2.7        Underwriting Agreement.  If Eligible Securities are to be sold
pursuant to a registration statement in an underwritten offering pursuant to Sections
2.1 or 2.2, the Company and each selling Holder of Eligible
Securities shall 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
each such selling Holder and as are customary in the securities business for
such an arrangement among such underwriter or underwriters, each such selling
Holder and companies of the Company’s size and investment stature.  No Holder of Eligible Securities may
participate in any underwritten sale of Eligible Securities pursuant to Sections
2.1 or 2.2 hereof unless such Holder agrees to sell such Holder’s
securities in accordance with any underwriting arrangements approved by the
persons entitled hereunder to specify the method of distribution of the
securities being registered and completes and executes all questionnaires,
powers of attorney, indemnities, underwriting agreements and other documents
reasonably required under the terms of such underwriting arrangements.  Notwithstanding anything to the contrary
contained herein, no Holder of Eligible Securities shall be required to make
any representations and warranties to the Company or the underwriters other
than representations or warranties regarding the identity of such Holder, such
Holder’s Eligible Securities, such Holder’s ability to transfer title to such
Holder’s Eligible Securities and such Holder’s intended method of distribution
or any other representations required by applicable law.

             2.8        Limitations on Subsequent
Registration Rights.  If, subsequent
to the date hereof, the Company grants to any holders or prospective holders of
the Company’s securities the right to require that the Company register any
securities of the Company under the Securities Act, such registration rights
shall be granted subject to the rights of the Holders to include all or part of
their Eligible Securities in any such registration on the terms and conditions
set forth in Section 2.2.

             2.9        Reports Under Securities Exchange Act
of 1934.  With a view to making
available to the Holders the benefits of Rule 144 and any other rule or
regulation of the SEC that may at any time permit the Holders 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 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 Holders 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 each Holder, so long as such
Holder owns any Eligible Securities, forthwith upon request (i) a written
statement by the Company that it has complied with the reporting requirements
of 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.

             2.10      Market-Standoff
Agreement.

                           (a)         Market-Standoff
Period; Agreement.  If requested by
the Company and the managing underwriter of Common Stock of the Company, each
Holder agrees not to sell, make any short sale of, loan, grant any option for
the purchase of, or otherwise dispose of any securities of
the Company (other than those included in the
registration) without the prior written consent of such underwriter, for such
period of time (not to exceed 180 days) from the effective date of a
registration statement filed under the Act as may be requested by such
underwriter and to execute an agreement reflecting the foregoing as may be
requested by such underwriter at the time of the Company’s underwritten public
offering; provided that
such agreement shall only apply to the first such registration statement of the
Company including securities to be sold on its behalf to the public after the
date hereof.

                           (b)        Limitations.  The obligations described in Section
2.10(a) shall apply only if all officers and directors of the Company and
all significant equity holders of the Company enter into similar agreements,
and shall not apply to a registration relating solely to employee benefit
plans, or to a registration relating solely to a transaction pursuant to Rule
145 under the Act.  If any Person, including any officer or
director of the Company and any equity holder of the Company, is released from
its obligations under Section 2.10(a) or such similar arrangements, all
Holders shall be released from such obligations.

             2.11      Subsequent Public Offering.  At any time following the Closing, upon
request of Holders holding a majority of the Eligible Securities, the Company
shall use its best efforts to conduct a firmly underwritten primary registered
public offering of its Common Stock as promptly as practical following the
receipt of such notice, if, in the opinion of a major investment banking firm
selected by Holders holding a majority of the Eligible Securities, the public
equity markets would be receptive to such an offering.

 

ARTICLE
III

PARTICIPATION RIGHTS

             3.1        Right
of First Offer.  Subject to the terms and conditions
specified in this Section 3.1, the Company hereby grants to each
Investor a right of first offer with respect to future sales by the Company of
its Shares (as hereinafter defined).

             Each
time the Company proposes to offer any shares of, or securities convertible
into or exercisable for any shares of, any class of its capital stock (“Shares”),
the Company shall first make an offering of such Shares to each Investor in
accordance with the following provisions:

                           (a)         The
Company shall deliver a notice by registered or certified mail (“Notice”)
to the Investors stating (i) its bona fide intention to offer such Shares,
(ii) the number of such Shares to be offered and (iii) the price and
terms, if any, upon which it proposes to offer such Shares.

                           (b)        Within
30 calendar days after delivery of the Notice, each Investor may elect to
purchase or obtain, at the price and on the terms specified in the Notice, up
to that portion of such Shares that equals the proportion that the sum of
Common Stock acquired from time to time pursuant to this Article III and
the number of shares of Eligible Securities held by such Investor (and its Affiliates)
bears to the total number of shares of Common Stock then outstanding (assuming
full conversion and exercise of all convertible or exercisable
securities).  The Company shall
promptly, in writing, inform each Investor that elects to purchase all the
Shares available to it (each, a “Fully-Exercising Investor”) of any
other Investor’s failure to do likewise. 
During the 10-day period commencing after receipt of such information,
each Fully-Exercising Investor (and its Affiliates) shall be entitled to obtain
its initial allocation of the Shares, plus, if desired, that portion of the
Shares for which Investors were entitled to subscribe but that were not
subscribed for by the Investors that is equal to the proportion that the number
of shares of Eligible Securities issued and held by such Fully-Exercising
Investor (and its Affiliates) bears to the total number of shares of Eligible
Securities issued and held by all such Fully-Exercising Investors (and their
Affiliates) desiring to purchase such unsubscribed Shares.

             

                           (c)         The Company may, during the 90-day
period following the expiration of the periods provided in Section 3.1(b)
hereof, offer the remaining unsubscribed portion of the Shares to any person or
persons at a price not less than, and upon terms no more favorable to the
offeree than those specified in, the Notice. 
If the Company does not enter into an agreement for the sale of the
Shares within such period, or if such agreement is not consummated within 90
days of the execution thereof, the rights provided hereunder shall be deemed to
be revived and such Shares shall not be offered unless first reoffered to the
Investors in accordance herewith.

                           (d)        The
right of first offer in this Section 3.1 shall not be applicable (i) to
the issuance or sale of Common Stock (or options therefor) to employees,
consultants and directors, pursuant to plans or agreements approved by the
Board of Directors for the purpose of soliciting or retaining their services,
(ii) to the issuance of securities in connection with a bona fide business
acquisition of or by the Company, whether by merger, consolidation, sale of
assets, sale or exchange of stock or otherwise, (iii) to Common Stock
issued upon conversion of the Series A Preferred Stock or the exercise of
the Common Stock Warrants or the Placement Agent Warrants, or the Series A
Preferred Stock issued upon the exercise of Series A Preferred Stock Warrants,
(iv) to the issuance of securities pursuant to currently outstanding options,
warrants, notes or other rights to acquire securities of the Company, (v) to a
Qualified Primary Offering, (vi) to the issuance of Series A Preferred Stock
and Series A Preferred Stock Warrants pursuant to the Additional Purchase
Agreement, in compliance with Section 2.3 of the Securities Purchase
Agreement or (vii) to stock splits, stock dividends or like transactions.

ARTICLE
IV

MISCELLANEOUS

             4.1        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 any Holder of Eligible Securities 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 a Holder 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 permitted
transferee shall be entitled shall include, without limitation, the rights to
register Eligible Securities under Sections 2.1 or 2.2 hereof; provided,
however, that any such transferee shall not be entitled to deliver to
the Company a Registration Request pursuant to Section 2.1 hereof unless
such permitted transferee acquired from its transferor at least 1,000,000
Eligible Securities; provided, however, that the transfer of
registration rights held pursuant to this Agreement to an Affiliate,
shareholder, equity holder or officer of any Investor or its Affiliates shall
be without restriction as to minimum shareholding.

             4.2        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:

                                        1280 Landmeier Road

                                        Elk
Grove Village, IL 60007-2410

                                        Fax
No. 847-437-4969

                                        Attention:
General Counsel.

                           (ii)         If to an Investor: at the address set
forth in the Securities Purchase Agreement or Additional Purchase Agreement, as
applicable.

                           (iii)        If to a Holder other than an Investor,
at the most recent address for such Holder maintained in the books and records
of the Company.

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

             4.4        Amendments.

                           (a)         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.

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

             

             4.5        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.  It shall
not be necessary in making proof of this Agreement to produce or account for
more than one such counterpart for each of the parties hereto.  Delivery by facsimile by any of the parties
hereto of an executed counterpart of this Agreement shall be effective as an
original executed counterpart hereof and shall be deemed an original executed
counterpart hereof and a representation that an original executed counterpart
hereof will be delivered.

             4.6        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 at  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.

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

             4.8        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 the Investors and Holders shall be enforceable to the fullest extent permitted
by law.

             4.9        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.

	COMPANY	INVESTORS
	 	 
	ELECTRIC
  CITY CORP.,	NEWCOURT
  CAPITAL USA INC.,
	a
  Delaware corporation	a
  Delaware corporation
	 	 
	By:
  /s/ John Mitola

	By:
  /s/ Guy Piazza

	Name:
  	John
  Mitola	Name
  Guy Piazza

	Title:
  	Chief
  Executive Officer	Title:
  Vice President

				

 

	 	NEWCOURT
  CAPITAL SECURITIES, INC.
	 	 a Delaware corporation
	 	 
	 	By:
  /s/ Robert W. Sexton

	 	Name:
  Robert W. Sexton

	 	Title:
  Managing Director

 

	 	EP
  POWER FINANCE, L.L.C.,
	 	a
  Delaware limited liability company
	 	 
	 	By:
  /s/ Paul E. McGlinn

	 	Name:
  Paul E. McGlinn

	 	Title:
  Managing Director

 

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

	 	Name:
  Thomas A. Clayton
	 	Title:
  Vice President

 

	 	ORIGINATORS
  INVESTMENT PLAN, 

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

	 	Name:
  Thomas A. Clayton
	 	Title:
  Vice President

 

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

	 	Name:
  Gerald S. Stalun

	 	Title:
  EVP + Managing Director

 

SCHEDULE I

INVESTORS

Newcourt Capital USA Inc.

Newcourt Capital Securities, Inc.

EP Power Finance, L.L.C.

Morgan Stanley Dean Witter Equity
Funding, Inc.

Originators Investment Plan, L.P.

Duke Capital Partners, LLCPrepared by MerrillDirect

EXHIBIT
10.11

STOCKHOLDERS AGREEMENT

                           This Stockholders
Agreement, dated as of  July 31, 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 each of the other entities set forth on Schedule I hereto from time
to time and shall become effective on the Closing Date (as defined in the
Securities Purchase Agreement).

WITNESSETH

                           WHEREAS, the Company
and the Holders have entered into that certain Securities Purchase Agreement,
dated as of July 31, 2001 (as it may be amended from time to time, the “Securities
Purchase Agreement”), whereby the Company will sell and the Holders will
buy shares of the Company’s Series A Convertible Preferred Stock, par value
$.01 per share (the “Series A Preferred Stock”), together with shares of
Common Stock, warrants to purchase Series A Preferred Stock and warrants to
purchase Common Stock; and

                           WHEREAS, it is a
condition to the obligations of the Holders to purchase such securities
pursuant to the Securities Purchase Agreement that the parties hereto enter
into this Agreement.

AGREEMENT

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

ARTICLE I

DEFINITIONS

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

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

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

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

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

                           “Board Observer”
means an individual who shall not be a member of the Board and who shall have
the rights set forth in Section 2.3 hereof.

                           “Board” means the Board of Directors of the
Company.

                           “Certificate of
Designations” means the Certificate of Designations, Preferences and Relative,
Participating, Optional and Other Special Rights of Preferred Stock and
Qualifications, Limitations and Restrictions Thereof of Series A Convertible
Preferred Stock of Electric City Corp. referenced in the Securities Purchase
Agreement.

                           “Change of Control
Transaction” means a transaction that results in the occurrence of any of
the following events:  (i) any “person”
or “group” (as such terms are used in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934 (the “Exchange Act”)) is or becomes the
“beneficial owner” (as defined in Rules 13d-3 and 13d-5 under the Exchange Act,
except that a person shall be deemed to have “beneficial ownership” of all
securities that such person has the right to acquire, whether such right is
exercisable immediately or only after the passage of time), directly or
indirectly, of more than 40% of the total outstanding voting stock of the
Company; (ii) the Company consolidates with or merges with or into another
person or conveys, transfers, leases or otherwise disposes of all or
substantially all of its assets to any person, or any person consolidates with
or merges with or into the Company, in any such event, pursuant to a
transaction in which the outstanding voting stock of the Company is converted
into or exchanged for cash, securities or other property; (iii) any person
consolidates with or merges with or into a subsidiary of the Company and such
consolidation or merger results in the transfer of fifty percent (50%) or more
of the outstanding voting power of the Company or results in the holders of the
outstanding voting securities of this Company immediately prior to such
transaction holding less than a majority of the voting securities of this
Company or the surviving entity immediately thereafter; or (iv) the Company is
liquidated, dissolved or a special resolution is passed by the stockholders of
the Company approving the plan of liquidation or dissolution..

                           “Commission”
means the United States Securities and Exchange Commission or any other
governmental authority at the time administering the Securities Act of 1933, as
amended.

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

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

                           “Director” means a director of the Company.

             

                           “Holders” means the entities (or groups of
entities, as the case may be) set forth on Schedule I hereto from time
to time.

                           “Information” shall have the meaning
set forth in Section 3.13.

                           “Other Companies” means Persons that may
directly or indirectly compete with any or all of the business of the Company
or its subsidiaries.

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

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

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

                           “Unlimited Parties” shall have the meaning
set forth in Section 3.13.

ARTICLE II

VOTING

                           2.1        Board
Nominations.  The Company and
the Holders hereby agree that:

                                        (a)         For so long as a Holder (other than an
Additional Purchaser or its transferees) and its Affiliates hold at least 200,000
shares of Series A Preferred Stock (as adjusted for stock splits, stock
combinations and the like) in the aggregate, each such Holder shall be
entitled, through a nominating committee or other procedure adopted by the
Board, to designate for nomination by the Board one nominee for election to the
Board by the holders of the Series A Preferred Stock, voting as a single class,
each time Directors of the Company are to be elected.

                                        (b)        Within 30 days of the first day that a
Holder and its Affiliates hold less than 200,000 shares of Series A Preferred
Stock (as adjusted for stock splits, stock combinations and the like) in the
aggregate, such Holder shall cause the Director nominated by such Holder to
resign from the Board.

                           2.2        Board of
Directors of the Company.

                                        (a)         So long as a Holder shall hold any
shares of Series A Preferred Stock, such Holder shall vote all of its shares of
Series A Preferred Stock for the election of all Directors nominated pursuant
to Section 2.1 hereof.  The
nominee designated by each Holder shall be identified in a proxy statement
delivered to the Company stockholders in connection with any annual meeting of
stockholders or to the Holders in connection with a special meeting of the
Holders of Series A Preferred Stock, if such nominees have not been already
elected by written consent of the Holders.

                                        (b)        Each Holder shall appear in person or by
proxy at all annual or special meetings of stockholders and at all special
meetings of the holders of Series A Preferred Stock for the purpose of
obtaining a quorum and shall vote or cause the vote of the Series A Preferred
Stock owned by such Holder or by any Affiliate of such Holder, either in person
or by proxy, to be cast in accordance with the provisions of this Article II.

                                        (c)         Each Holder shall vote all of its
Series A Preferred Stock in favor of removal from the Board, upon notice by a
Holder that an individual designated by it pursuant to Section 2.1
should be removed, and to use its best efforts to cause the Board to fill the
vacancy so vacated with another person designated by such Holder (unless such
removal resulted from such Holder and its Affiliates holding less than an
aggregate of 200,000 shares of Series A Preferred Stock, as adjusted for stock
splits, stock combinations and the like). 
Each Holder shall cooperate fully in connection with the nomination of
Directors, the voting of its shares of Series A Preferred Stock, the execution
of written consents (if then permissible under the Certificate of Incorporation
(as amended and restated from time to time) of the Company), the calling of
meetings and other stockholder matters to effect the provisions of this Article
II.

                                        (d)        If any Director nominated pursuant to Section
2.1 is unable to serve, or once having commenced to serve, is removed or
withdraws from the Board, the Holder who designated such Director will be
entitled to designate an individual to fill the vacancy on the Board so created
and each Holder will use its best efforts to cause the Board to fill the vacancy
so created with the individual so designated, in accordance with the
Certificate of Designations (unless such removal or withdrawal resulted from
such Holder and its Affiliates holding less than an aggregate of 200,000 shares
of Series A Preferred Stock, as adjusted for stock splits, stock combinations
and the like).

                                        (e)         Each Holder shall not and shall not
permit any of its Affiliates to grant any proxy or enter into or be bound by
any voting trust or voting agreement with respect to its Series A Preferred
Stock, or enter into any arrangements of any kind with any Person with respect
to its Series A Preferred Stock, in any case in a manner that is inconsistent
with the provisions of this Agreement.

                                        (f)         The Company shall take such actions as
may be necessary to permit the Holders to elect the nominees of each Holder
pursuant to the provisions of this Article II or to appoint such
nominees to the Board to fill any vacancy resulting from the death,
resignation, removal or other withdrawal from the Board of a Director
previously designated by such Holder of the Series A Preferred Stock (unless
such removal or withdrawal resulted from such Holder and its Affiliates holding
less than an aggregate of 200,000 shares of Series A Preferred Stock (as
adjusted for stock splits, stock combinations and the like)), and if necessary,
to be included in the slate of nominees recommended by the Board to the
Company’s stockholders for election as Directors.

                                        (g)        For so long as any Series A Preferred
Stock is outstanding, the number of Directors serving on the Board shall be
fixed by resolution of the Board at twelve (12) and shall not be increased or
decreased except in accordance with Section 6(f) of the Certificate of
Designations.

                           2.3        Board Observation Rights.  If a Holder (other than an Additional
Purchaser or its transferees) (a) possesses the right to designate for
nomination to the Board its nominee pursuant to Section 2.1(a), or (b)
no longer possesses a right to designate for nomination to the Board its nominee
pursuant to Section 2.1(a) because such Holder and its Affiliates hold
less than an aggregate of 200,000 shares of Series A Preferred Stock (as
adjusted for stock splits, stock combinations and the like), but such Holder
and its Affiliates hold at least an aggregate of 2,000,000 shares of the Common
Stock (calculated assuming the exercise of all rights, options and warrants to
purchase Common Stock or securities convertible or exchangable for shares of
Common Stock, and the exchange or conversion of all securities convertible or
exchangeable for Common Stock), then such Holder shall be entitled to designate
one individual to serve as a Board Observer. 
Such Board Observer will be invited to attend all meetings of the Board
and any Board committees as an observer and to receive copies of all materials
and communications provided to the Board and Board committees when so
distributed.  The Board Observer will
not be excluded from any portion of Board meetings, Board committee meetings or
Board discussions except for those portions (a) in which the Company’s
counsel communicates with the Board on matters where Board Observer’s
attendance would result in loss of the attorney-client privilege for the
Company  and (b) in which, in the
good faith judgment of counsel to the Company, participation by the Board
Observer is not appropriate under applicable law.

                           2.4        Conversion of Series A Preferred
Stock.  Any Holder (including its
Affiliates) who converts more than 50% of the shares of Series A Preferred
Stock (as adjusted for stock splits, stock combinations and the like) purchased
by it pursuant to the Securities Purchase Agreement or Additional Purchase
Agreement, as applicable, shall, at the written request of the Company, convert
all of its remaining shares of Series A Preferred Stock, if any, within five
(5) Business Days of receipt of such request, in accordance with Section 7(c)
of the Certificate of Designations.  Any
transferee of a Holder (other than a Holder’s Affiliates) who converts more
than 50% of the shares of Series A Preferred Stock transferred to it by a
Holder shall, at the written request of the Company, convert all of its
remaining shares of Series A Preferred Stock, if any, within five (5) Business
Days of receipt of such request, in accordance with Section 7(c) of the
Certificate of Designations.

                           2.5        Approval of Certain Actions by
Holders of Series A Preferred Stock.

                                        (a)         For so long as any shares of Series A
Preferred Stock remain issued and outstanding, the Company shall not, without
the affirmative consent or approval of the holders of record representing 75%
or more of the shares of Series A Preferred Stock then outstanding, voting as a
single class to the exclusion of all other classes of the Company’s capital
stock (such consent or approval to be given by written consent in lieu of a
meeting if allowable under the Company’s Certificate of Incorporation or by
vote at a meeting called for such purpose for which notice shall have been
given to the holders of the Series A Preferred Stock): (i) enter into any
agreement that would restrict the Company’s ability to perform under the
Securities Purchase Agreement; (ii) amend its Certificate of Incorporation
(including the Certificate of Designations) or bylaws in any way that could
adversely affect, alter or change the rights, powers or preferences of the
Series A Preferred Stock; (iii) engage in any transaction that would
impair or reduce the rights, powers or preferences of the Series A
Preferred Stock as a class; or (iv) complete any Change of Control Transaction
(provided that if less than 400,000 shares of the Series A Preferred
Stock are then outstanding (as adjusted for stock splits, stock combinations,
recapitalizations and the like) and the then holders of Series A Preferred
Stock refused to consent to such Change of Control Transaction, the Company
may, at its option, redeem all, but not less than all, of such Series A
Preferred Stock pursuant to Section 6(e)(i)(D) of the Certificate of
Designations.

                                        (b)        For so long as at least 800,000 shares
of Series A Preferred Stock remain issued and outstanding (as adjusted for
stock splits, stock combinations, recapitalizations and the like), the Company
shall not, without the affirmative consent or approval of the holders of shares
representing 66-2/3% of the shares of Series A Preferred Stock then
outstanding, voting as a single class to the exclusion of all other classes of
the Company’s capital stock (such consent or approval to be given by written
consent in lieu of a meeting if allowable under the Company’s Certificate of
Incorporation or by vote at a meeting called for such purpose for which notice
shall have been given to the holders of the Series A Preferred Stock):  (i) authorize or issue any capital
stock or other equity security with rights, preferences or privileges that are
senior to or pari passu with the Series A Preferred Stock or any securities
convertible or exchangeable into such capital stock or equity, other than (x)
Series A Preferred Stock issued upon exercise of the Series A Preferred Stock
Warrants issued pursuant to the Securities Purchase Agreement, (y) Series A
Preferred Stock issued to the Additional Purchasers (as defined in the
Securities Purchase Agreement), if any, or issued upon exercise of the Series A
Preferred Stock Warrants issued to the Additional Purchasers, if any, in
compliance with Section 2.3 of the Securities Purchase Agreement, or (z) Series
A Preferred Stock issued as payment in kind of any accrued but unpaid dividends
on the Series A Preferred Stock; (ii) authorize or issue any options, rights or
warrants to purchase capital stock of the Company, other than Series A
Preferred Stock Warrants issued to the Additional Purchasers, if any, in
compliance with Section 2.3 of the Securities Purchase Agreement, or enter into
any agreement or amendment with respect to any outstanding options, rights or
warrants to purchase capital stock of the Company that reduces or that has the
effect of reducing the per share exercise price for any such options, rights or
warrants or by canceling existing options, rights or warrants in connection
with the grant of a new option, right or warrant; (iii) authorize or issue any
debt securities of the Company, other than debt under the Company’s existing
revolving lines of credit in effect on the date hereof or the replacement
thereof on substantially similar terms, and any additional debt up to
$1,000,000 in the aggregate issued or incurred in the ordinary course of
business (excluding trade payables incurred in the ordinary course of business);
(iv) purchase, redeem, or otherwise acquire any of the Company’s capital
stock, other than the redemption of the Series A Preferred Stock;
(v) enter into any acquisition, sale, merger, joint venture, consolidation
or reorganization involving the Company or any of its subsidiaries; (vi) sell
or lease assets of the Company or any of its subsidiaries, except in the
ordinary course of business; (vii) declare or pay any cash dividends or
make any distributions on any of its capital stock, other than on the
Series A Preferred Stock; (viii) authorize the payment or pay to any
individual employee of the Company of cash compensation in excess of
$500,000  per annum; or (ix) enter into
any transactions (or series of transactions), including loans, with any employee,
officer or director of the Company or to or with his, her or its Affiliates or
family members (other than with respect to payment of compensation to actual
full-time employees in the ordinary course of business) involving $50,000 or
more per year individually or $250,000 or more per year in the aggregate.

                                        (c)         For so long as at least 1,200,000
shares of Series A Preferred Stock remain issued and outstanding (as adjusted
for stock splits, stock combinations, recapitalizations and the like), the Company
shall not, without the affirmative consent or approval of the holders
representing 66-2/3% of the shares of Series A Preferred Stock then
outstanding, voting as a single class to the exclusion of all other classes of
the Company’s capital stock (such consent or approval to be given by written
consent in lieu of a meeting if allowable under the Company’s Certificate of
Incorporation or by vote at a meeting called for such purpose for which notice
shall have been given to the holders of the Series A Preferred Stock):  (i) terminate or newly appoint the chief
executive officer or president of the Company; (ii) approve any annual capital
budget if such budget provides for annual capital expenditures by the Company
and its subsidiaries in excess of $1,000,000 in the aggregate in any year; or
(iii) approve the incurrence of any single capital expenditure (or series of
related capital expenditures) in excess of $500,000; provided, however,
the Company shall have the right to make any reasonable emergency capital
expense that the Board of Directors determines is necessary to maintain
operations as a result of a catastrophic event.

                           2.6        Successors.  The provisions of this Agreement shall be
binding upon the successor in interest to any Holder of the Series A Preferred
Stock.  The Company shall not permit the
transfer of any of the Series A Preferred Stock on its books or issue a new
certificate representing any of the Series A Preferred Stock unless and until
the Person to whom such Series A Preferred Stock is to be transferred shall
have executed a written agreement, substantially in the form of this Agreement,
pursuant to which such Person becomes a party to this Agreement and agrees to
be bound by all the provisions hereof as if such Person were a Holder hereunder;
provided, however, that such successor Persons shall not have any
rights to designate any Directors pursuant to Section 2.1(a) nor any
rights under Section 2.3 (except in the case of Section 2.1(a) or
Section 2.3 if such Person is an Affiliate of a Holder having rights
thereunder).

                           2.7        Aggregation.
For purposes of determining the number of shares of Series A Preferred Stock
held (or converted) by a Holder pursuant to this Article II, the number
of shares of Series A Preferred Stock held (or converted) by all of such
Holder’s Affiliates shall be aggregated with the number of shares of Series A
Preferred Stock held (or converted) by such Holder.

                           2.8        Agreement of Additional Purchasers
Regarding Special Approval Rights Vote. 
In connection with any vote, approval or written consent of the holders
of shares of Series A Preferred Stock pursuant to Section 2.5 of this
Agreement (and/or Section 6(e) of the Certificate of Designations), each
Additional Purchaser (and its Affiliates or their respective transferees) shall
vote or otherwise grant its approval or written consent for its shares of
Series A Preferred Stock (prior to the close of voting but after the votes,
approvals or written consents of all of the other holders of Series A Preferred
Stock casting votes, approvals or written consents have been tallied) in the
same proportion to the aggregate affirmative and negative votes, approvals or
written consents of the other holders of Series A Preferred Stock, with respect
to each proposal submitted for vote, approval or written consent.

 

 

ARTICLE III

 GENERAL
PROVISIONS

                           3.1        Legend on Share
Certificates.

                                        (a)         All certificates for shares of Series A
Preferred Stock that are subject to the terms and provisions of Article 2, in addition to such other legends as
may be required by law, shall bear the legend set forth in Section 9.3 of the
Securities Purchase Agreement (and any other legend required by any other
agreement contemplated by the Securities Purchase Agreement), as applicable,
and the following legend:

THE
SHARES REPRESENTED BY THIS CERTIFICATE ARE ALSO SUBJECT TO CERTAIN REQUIREMENTS
AS TO VOTING CONTAINED IN THE STOCKHOLDERS AGREEMENT, DATED AS OF JULY 31, 2001
(AS SUCH AGREEMENT MAY BE AMENDED FROM TIME TO TIME), BETWEEN THE COMPANY AND
CERTAIN STOCKHOLDERS, A COPY OF WHICH IS ON FILE WITH THE SECRETARY OF THE
COMPANY.

                                        (b)        Upon the termination of this Agreement,
each Holder shall be entitled to receive, in exchange for any certificate
bearing the legend described in Section 3.1(a),
a certificate that no longer bears the legend set forth in Section 3.1(a),
unless the Company shall have sooner determined (based upon advice of legal
counsel) that such legend is no longer required by law.

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

                           3.3        Further
Assurances.  Each party
hereto shall do and perform or cause to be done and performed all such further
acts and things and shall execute and deliver all such other agreements,
certificates, instruments and documents as any other party hereto reasonably
may request in order to carry out the intent and accomplish the purposes of
this Agreement and the consummation of the transactions contemplated hereby.

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

                           

                           3.5        Entire
Agreement; Amendment; Waiver.

                                        (a)         This Agreement, together with the
Certificate of Designations, contains the entire agreement among the parties
hereto with respect to the subject matter hereof.  This Agreement may not be amended or supplemented except by an
instrument or counterparts thereof in writing signed by the Holders and by the
Company.  Any such amendment so approved
shall be binding on all Holders and all other Persons bound by this
Agreement.  No waiver of any term or
provision shall be effective unless in writing signed by the party to be
charged.

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

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

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

                           3.8        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. It shall not be necessary in making proof of this Agreement to
produce or account for more than one such counterpart for each of the parties
hereto.  Delivery by facsimile by any of
the parties hereto of an executed counterpart of this Agreement shall be
effective as an original executed counterpart hereof and shall be deemed a
representation that an original executed counterpart hereof will be delivered.

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

                                        (i)          If to the Company:

                                        1280
Landmeier Road

                                        Elk
Grove Village, IL 60007-2410

                                        Fax
No. 847-437-4969

                                        Attention:  General Counsel

                                        (ii)         If to a Holder: at the address set
forth in the Securities Purchase Agreement, or Additional Purchase Ageeement,
as applicable.

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

                           3.11      Representations and Warranties.  Each party to this Agreement represents and
warrants to the other parties to this Agreement that (i) all action on the part
of such party necessary for the authorization, execution, delivery and
performance of this Agreement has been taken and (ii) this Agreement is the
legally valid and binding obligation of such party, enforceable against such
party in accordance with its terms, subject to applicable bankruptcy,
insolvency, reorganization, moratorium, and similar laws affecting creditors’
rights and remedies generally and to equitable principles relating to
enforceability.

                           3.12      No Conflict.  The Company shall not enter into any
agreement that is inconsistent with or that would in any way interfere with the
rights of the parties hereto.  The
Company shall ensure that its Certificate of Incorporation and bylaws do not at
any time conflict with the provisions of this Agreement then in effect.  In the event that any such conflict should
nevertheless exist, the provisions of this Agreement shall control to the
extent permitted under applicable law.

                           3.13      Unlimited Parties.  All parties to this Agreement hereby
acknowledge and agree that:

                                        (a)         Nothing in this Agreement shall in any
way limit or be construed as limiting the ability of a Holder or its Affiliates
or Directors or Board Observers designated by such Holder (collectively, the “Unlimited Parties”), and such Unlimited
Parties may, in the past, present or future, carry out and engage in any and
all activities associated with their businesses, including, without limitation,
underwriting (including, without limitation, underwriting investments of
private equity of the Unlimited Parties or other persons in the business of
designing, developing, manufacturing or marketing of power conservation and
reliability systems, including, without limitation, direct competitors of the
Company), trading, brokerage, financing, derivatives, foreign exchange, asset
management activities and principal investment, and for the avoidance of doubt
and without limiting the generality of the foregoing, the Unlimited Parties
may: (i) purchase and hold long or short positions, otherwise make investments,
trade or otherwise effect transactions, for their own account or the account of
their customers, in the debt or equity securities or loans of persons which may
directly or indirectly compete with any or all of the business of the Company
(the “Other
Companies”); and (ii) provide financial advice to the Other
Companies; and

                                        (b)        The Unlimited Parties may have
information that may be of interest or value to the Company (“Information”) regarding various
matters including without limitation, (i) an Unlimited Party’s products, plans,
services and technology, and plan and strategies relating thereto, (ii) current
and future investments an Unlimited Party has made, may make, may consider or
may become aware of with respect to other companies and other products,
services and technology, including without limitation, Other Companies, and
(iii) developments with respect to the technologies, products and services, and
plans and strategies relating thereto, including, without limitation, Other
Companies.  The Company agrees that the
Unlimited Parties shall have no duty to disclose any Information to the Company
or permit the Company to participate in any investments or transactions based
on any Information, or to otherwise take advantage of any opportunity that may
be of interest to the Company if it were aware of such Information.

[SIGNATURE PAGE TO
FOLLOW]

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

	COMPANY	 	HOLDERS
	 	 	 
	ELECTRIC CITY CORP., a
  Delaware corporation	 	NEWCOURT CAPITAL USA
  INC., a Delaware corporation
	 
	 	 	 	 
	By:	/s/ John Mitola	 	By:	/s/ Guy Piazza
	 	

	 	 	

	Name:	John Mitola	 	Name:	Guy A Piazza
	 	 	 	 	

	Title:	Chief Executive
  Officer	 	Title:	Vice President
	 	 	 	 	

	 	 	 	 	 
	 	 	 	EP POWER FINANCE,
  L.L.C., a Delaware limited liability company
	 	 	 
	 	 	 	 	 
	 	 	 	By:	/s/ Paul E. McGlinn
	 	 	 	 	

	 	 	 	Name:	Paul E. McGlinn
	 	 	 	 	

	 	 	 	Title:	Managing Director
	 	 	 	 	

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

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

	 	 	 	Name:	Thomas Clayton
	 	 	 	Title:	Vice President
	 	 	 	 	 
	 	 	 	 	 
	 	 	 	DUKE CAPITAL PARTNERS,
  LLC, a Delaware limited liability company
	 	 	 
	 	 	 	 	 
	 	 	 	By:	/s/ Gerald S. Stalun
	 	 	 	 	

	 	 	 	Name:	Gerald S. Stalun
	 	 	 	 	

	 	 	 	Title:	EVP + Managing
  Director
	 	 	 	 	

							

[Signature Page to Stockholders Agreement]

SCHEDULE I

HOLDERS

 

1.          Newcourt Capital USA, Inc. is a
Holder.

2.          EP Power Finance, L.L.C. is a Holder

3.          Morgan Stanley Dean Witter Equity
Funding, Inc. together with Originators Investment Plan, L.P. are collectively
a Holder.

4.          Duke Capital Partners, LLC is a Holder.

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