EX-99.12 8 y93268a1exv99w12.txt SECURITIES PURCHASE AGREEMENT EXHIBIT 12 SECURITIES PURCHASE AGREEMENT This Securities Purchase Agreement (as it may be amended from time to time, this "Agreement"), is entered into as of December 19, 2003 by and among Morgan Stanley Dean Witter Equity Funding, Inc., a Delaware corporation ("MSDW"), Originators Investment Plan, L.P., a Delaware limited partnership ("OIP"), Augustine Fund LP, an Illinois limited partnership ("Augustine"), Technology Transformation Venture Fund, LP, a Delaware limited partnership ("TVF"), and John Donohue, an individual ("Donohue"). Collectively, MSDW and OIP are referred to herein as the "Sellers" and either may be referred to as a "Seller". Collectively, Augustine, TVF and Donohue are referred to herein as the "Purchasers" and any of them may be individually referred to as a "Purchaser". W I T N E S S E T H: WHEREAS, each Seller is the record and beneficial owners of certain shares of the Series A Convertible Preferred Stock, par value $0.01 per share (the "Series A Preferred Stock") and shares of the common stock, par value $0.0001 per share (the "Common Stock") of Electric City Corp., a Delaware corporation (the "Company"), and certain warrants to purchase shares of the Common Stock ("Common Stock Warrants"); and WHEREAS, each Seller desires to sell certain shares of Series A Preferred Stock, certain shares of Common Stock and certain Common Stock Warrants, and each Purchaser desires to purchase some of such securities from each Seller, in the amounts and for the purchase price and otherwise on the terms and subject to the conditions set forth herein; NOW, THEREFORE, in consideration of the premises and the mutual agreements contained herein, the parties hereto hereby agree as follows: ARTICLE 1 - DEFINITIONS 1.1 The following 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: "Agreement" shall have the meaning set forth in the preamble of this Agreement. "Ancillary Agreements" means, collectively, the Investor Rights Agreement, the Stock Trading Agreement and the Stockholders Agreement. "Closing" shall have the meaning set forth in Section 2.3 hereof. "Closing Date" shall have the meaning set forth in Section 2.3 hereof. "Commission" means the United States Securities and Exchange Commission or any other Governmental Authority at the time administering the Securities Act or the Exchange Act. - 1 - EXHIBIT 12 "Commission Documents" shall have the meaning set forth in Section 4.1(a) hereof. "Common Stock" has the meaning set forth in the first WHEREAS clause of this Agreement. "Common Stock Warrants" has the meaning set forth in the first WHEREAS clause of this Agreement. "Company" has the meaning set forth in the first WHEREAS clause of this Agreement. "Exchange Act" means the Securities Exchange Act of 1934, as amended, or any similar or successor federal statute, and the rules and regulations of the Commission thereunder, all as the same shall be in effect from time to time. "Governmental Authority" means the government of any nation, state or other political subdivision thereof, any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government, and any corporation or other entity owned or controlled, through stock or capital ownership or otherwise, by any of the foregoing. "Investor Rights Agreement" means that certain Investor Rights Agreement dated as of July 31, 2001, by and among the Company and the other parties thereto, as amended, restated, modified or supplemented and in effect from time to time. "Joinder Agreements" means, collectively, the Joinder to Investor Rights Agreement, the Joinder to Stock Trading Agreement and the Joinder to Stockholders Agreement. "Joinder to Investor Rights Agreement" means a Joinder to Investor Rights Agreement in the form of Exhibit A to this Agreement. "Joinder to Stock Trading Agreement" means a Joinder to Stock Trading Agreement in the form of Exhibit B to this Agreement. "Joinder to Stockholders Agreement" means a Joinder to Stockholders Agreement in the form of Exhibit C to this Agreement. "Person" shall mean any individual, partnership, limited liability company, joint venture, firm, corporation, association, trust or other enterprise or any government or political subdivision or any agency, department or instrumentality thereof. "Placement Agent" means Delano Securities Group, LLC. "Purchasers" shall have the meaning set forth in the preamble of this Agreement. "Purchaser" shall mean one of the Purchasers, as applicable in the context. - 2 - EXHIBIT 12 "Securities" means the shares of Series A Preferred, shares of Common Shares and the Common Stock Warrants which are to be sold by the Sellers to the Purchasers under 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 from time to time. "Series A Preferred Stock" has the meaning set forth in the first WHEREAS clause of this Agreement. "Stock Trading Agreement" means that certain Stock Trading Agreement dated as of July 31, 2001, by and among the Company and the other parties thereto, as amended, restated, modified or supplemented and in effect from time to time. "Stockholders Agreement" means that certain Investor Rights Agreement dated as of July 31, 2001, by and among the Company and the other parties thereto, as amended, restated, modified or supplemented and in effect from time to time. "Transactions" shall have the meaning set forth in Section 3.1(b). "Warrant Certificate" means a warrant certificate evidencing Common Stock Warrants, and any replacement certificate issued by the Company in respect thereof pursuant to transfer and sale of Common Stock Warrants pursuant to Closing of the Transactions under this Agreement. ARTICLE 2 - SALE AND PURCHASE OF SECURITIES 2.1 Sale and Purchase of Securities from MSDW. Subject to the terms and conditions herein set forth, MSDW hereby agrees to sell to each Purchaser, and each Purchaser severally for itself only agrees to purchase from MSDW, at the Closing, the number of shares of Series A Preferred Stock, the number of shares of Common Stock and the number of Common Stock Warrants, for the aggregate purchase price, set forth opposite such Purchaser's name on Schedule I hereto. Each Purchaser's obligations under this Section 2.1 are expressly not conditioned upon the purchase by any other Purchaser of any of the Securities that the other Purchasers hereunder have severally agreed to purchase from MSDW, or on the closing of the sale and purchase of Securities from OIP contemplated by Section 2.2 hereof, and no default by any Purchaser under this Section 2.1 or under Section 2.2, or by OIP under Section 2.2, shall excuse any other Purchaser from performing its obligations under this Section 2.1. 2.2 Sale and Purchase of Securities from OIP. Subject to the terms and conditions herein set forth, OIP hereby agrees to sell to each Purchaser, and each Purchaser severally for itself only agrees to purchase from OIP, at the Closing, the number of shares of Series A Preferred Stock, the number of shares of Common Stock and the number of Common Stock Warrants, for the aggregate purchase price, set forth opposite such Purchaser's name on Schedule II hereto. Each Purchaser's obligations under this Section 2.2 are expressly not conditioned upon the purchase by any other Purchaser of any of the Securities that the other - 3 - EXHIBIT 12 Purchasers hereunder have severally agreed to purchase from OIP, or on the closing of the sale and purchase of Securities from MSDW contemplated by Section 2.1 hereof, and no default by any Purchaser under this Section 2.2 or under Section 2.1, or by MSDW under Section 2.1, shall excuse any other Purchaser from performing its obligations under this Section 2.2. 2.3 Closing. Subject to the satisfaction or waiver of the conditions to closing set forth in Article 3, the closing of the purchase and sale of the Securities (the "Closing") shall take place at 10:00 a.m. Central Time on December 19, 2003 (the "Closing Date"), at the offices of the counsel for the Placement Agent, or at such other date, time and/or location as is mutually agreed upon by the Sellers and the Purchasers. ARTICLE 3 - CLOSING 3.1 Purchasers' Conditions to Closing With MSDW. Each Purchaser's obligation to purchase and pay for the Securities to be purchased by such Purchaser from MSDW at the Closing is subject to the satisfaction (or waiver by such Purchaser), on or before the Closing Date, of each of the following conditions: (a) Receipt of Securities. Such Purchaser shall have received delivery of stock certificates and Warrant Certificates evidencing the Securities to be sold to such Purchaser in accordance with Section 3.6; (b) No Litigation; No Order. No action, suit or proceeding relating to the transactions contemplated by this Agreement (the "Transactions") shall be pending that seeks to restrain or prevent any of the Transactions, and no order (including, without limitation, a temporary restraining order), decree, writ, judgment or injunction shall be in effect that restrains, enjoins or prevents the consummation of the Transactions; (c) Representations and Warranties. MSDW's representations and warranties set forth in this Agreement shall have been true and correct in all material respects (except to the extent that any of such representations and warranties is already qualified as to materiality, in which case, such representations and warranties shall be true and correct without further qualification) when made and shall continue to be true and correct in all material respects on the Closing Date (except, in either case, to the extent that any of such representations and warranties are specifically made as of a date prior to the date of this Agreement, in which case such representations and warranties shall have been true and correct as of the applicable earlier date(s)); (d) Compliance with this Agreement. MSDW shall have performed and complied with all of the covenants, agreements and conditions set forth or contemplated herein that are required to be performed or complied with by the Company on or before the Closing Date; (e) Joinder Agreements. Each of the Joinder Agreements shall have each been executed and delivered by the parties thereto, other than the Purchaser. (f) Consents and Approvals. All consents, waivers, approvals, exemptions, authorizations, or other actions by, or notices to, or filings with, any Governmental - 4 - EXHIBIT 12 Authority, self-regulatory agency and other Persons necessary or required in connection with the execution, delivery or performance by MSDW or enforcement against MSDW of this Agreement in connection with the consummation of the Transactions shall have been obtained or made and be in full force and effect. 3.2 MSDW's Conditions to Closing. MSDW's obligation to sell and transfer the Securities to be sold by it to each Purchaser at the Closing is subject to the satisfaction (or waiver by MSDW), on or before the Closing Date, of each of the following conditions: (a) Receipt of Purchase Price. MSDW shall have received from such Purchaser payment of the purchase price payable by such Purchaser by wire transfer of immediately available funds to the account specified for MSDW on Schedule III hereto; (b) No Litigation; No Order. No action, suit or proceeding relating to the Transactions shall be pending that in the reasonable good faith judgment of MSDW seeks to restrain or prevent any of the Transactions and has a reasonable probability of success; (c) Representations and Warranties. Such Purchaser's representations and warranties set forth in this Agreement shall have been true and correct in all material respects (except to the extent that any of such representations and warranties is already qualified as to materiality, in which case, such representations and warranties shall be true and correct without further qualification) when made and shall continue to be true and correct in all material respects on the Closing Date (except, in either case, to the extent that any of such representations and warranties are specifically made as of a date prior to the date of this Agreement, in which case such representations and warranties shall have been true and correct as of the applicable earlier date(s)); (d) Compliance with this Agreement. Such Purchaser shall have performed and complied with all of the covenants, agreements and conditions set forth or contemplated herein that are required to be performed or complied with by such Purchaser on or before the Closing Date; (e) Joinder Agreements. Each of the Joinder Agreements shall have each been executed and delivered by the parties thereto, including each Purchaser. (f) Consents and Approvals. All consents, waivers, approvals, exemptions, authorizations, or other actions by, or notices to, or filings with, any Governmental Authority, self-regulatory agency and other Persons necessary or required in connection with the execution, delivery or performance by such Purchaser or enforcement against such Purchaser of this Agreement in connection with the consummation of the Transactions shall have been obtained or made and be in full force and effect. 3.3 Purchasers' Conditions to Closing With OIP. Each Purchaser's obligation to purchase and pay for the Securities to be purchased by such Purchaser from OIP at the Closing is subject to the satisfaction (or waiver by such Purchaser), on or before the Closing Date, of each of the following conditions: - 5 - EXHIBIT 12 (a) Receipt of Securities. Such Purchaser shall have received delivery of stock certificates and Warrant Certificates evidencing the Securities to be sold to such Purchaser in accordance with Section 3.6; (b) No Litigation; No Order. No action, suit or proceeding relating to the Transactions shall be pending that seeks to restrain or prevent any of the Transactions, and no order (including, without limitation, a temporary restraining order), decree, writ, judgment or injunction shall be in effect that restrains, enjoins or prevents the consummation of the Transactions; (c) Representations and Warranties. OIP's representations and warranties set forth in this Agreement shall have been true and correct in all material respects (except to the extent that any of such representations and warranties is already qualified as to materiality, in which case, such representations and warranties shall be true and correct without further qualification) when made and shall continue to be true and correct in all material respects on the Closing Date (except, in either case, to the extent that any of such representations and warranties are specifically made as of a date prior to the date of this Agreement, in which case such representations and warranties shall have been true and correct as of the applicable earlier date(s)); (d) Compliance with this Agreement. OIP shall have performed and complied with all of the covenants, agreements and conditions set forth or contemplated herein that are required to be performed or complied with by the Company on or before the Closing Date; (e) Joinder Agreements. Each of the Joinder Agreements shall have each been executed and delivered by the parties thereto, other than the Purchasers. (f) Consents and Approvals. All consents, waivers, approvals, exemptions, authorizations, or other actions by, or notices to, or filings with, any Governmental Authority, self-regulatory agency and other Persons necessary or required in connection with the execution, delivery or performance by OIP or enforcement against OIP of this Agreement in connection with the consummation of the Transactions shall have been obtained or made and be in full force and effect. 3.4 OIP's Conditions to Closing. OIP's obligation to sell and transfer the Securities to be sold by it to each Purchaser at the Closing is subject to the satisfaction (or waiver by OIP), on or before the Closing Date, of each of the following conditions: (a) Receipt of Purchase Price. OIP shall have received from such Purchaser payment of the purchase price payable by such Purchaser by wire transfer of immediately available funds to the account specified for OIP on Schedule III hereto; (b) No Litigation; No Order. No action, suit or proceeding relating to the Transactions shall be pending that in the reasonable good faith judgment of OIP seeks to restrain or prevent any of the Transactions and has a reasonable probability of success; - 6 - EXHIBIT 12 (c) Representations and Warranties. Such Purchaser's representations and warranties set forth in this Agreement shall have been true and correct in all material respects (except to the extent that any of such representations and warranties is already qualified as to materiality, in which case, such representations and warranties shall be true and correct without further qualification) when made and shall continue to be true and correct in all material respects on the Closing Date (except, in either case, to the extent that any of such representations and warranties are specifically made as of a date prior to the date of this Agreement, in which case such representations and warranties shall have been true and correct as of the applicable earlier date(s)); (d) Compliance with this Agreement. Such Purchaser shall have performed and complied with all of the covenants, agreements and conditions set forth or contemplated herein that are required to be performed or complied with by such Purchaser on or before the Closing Date; (e) Joinder Agreements. Each of the Joinder Agreements shall have each been executed and delivered by the parties thereto, including the Purchasers. (f) Consents and Approvals. All consents, waivers, approvals, exemptions, authorizations, or other actions by, or notices to, or filings with, any Governmental Authority, self-regulatory agency and other Persons necessary or required in connection with the execution, delivery or performance by such Purchaser or enforcement against such Purchaser of this Agreement in connection with the consummation of the Transactions shall have been obtained or made and be in full force and effect. 3.5 Closing Deliveries by Each Purchaser. At the Closing, each Purchaser, severally for itself only, shall deliver the following: (a) the purchase price for the Securities being purchased by such Purchaser, as set forth on Schedules I and II hereto, by wire transfer of immediately available funds in the respective amounts payable to MSDW and OIP to their accounts specified on Schedule III hereto, which funds will be delivered in consideration of the Securities being sold to such Purchaser at the Closing by MSDW and OIP, respectively; and (d) each of the Joinder Agreements, executed by such Purchaser. 3.6 Closing Deliveries by the Company. At the Closing, each of MSDW and OIP shall deliver (or cause the Company to deliver) to each Purchaser which has complied with its obligations under Sections 3.2, 3.4 and 3.5: (a) a stock certificate representing the shares of Series A Preferred Stock being purchased by such Purchaser, registered in the name of such Purchaser or its nominee(s), as such Purchaser has specified in writing to the Sellers prior to the Closing; (b) a stock certificate representing the shares of Common Stock being purchased by such Purchaser, registered in the name of such Purchaser or its nominee(s), as such Purchaser has specified in writing to the Sellers prior to the Closing; - 7 - EXHIBIT 12 (c) a Warrant Certificate representing the Common Stock Warrants being purchased by such Purchaser, registered in the name of such Purchaser or its nominee(s), as such Purchaser has specified in writing to the Sellers prior to the Closing; and (d) each of the Joinder Agreements, executed by MSDW or OIP, as applicable, and by each of the other parties thereto other than the Purchasers. ARTICLE 4 - REPRESENTATIONS, WARRANTIES, COVENANTS AND AGREEMENTS. 4.1 Purchaser Representations, Warranties and Covenants. Each Purchaser, severally as to itself only and not jointly as to any other Purchaser, hereby represents and warrants to the Company, and agrees with the Company, as follows: (a) Such Purchaser has received or electronically been given access to, and has reviewed, copies of the following (collectively, the "Commission Documents"): (i) the Company's annual report on Form 10-KSB for the year ended December 31, 2002 filed with the Commission on March 31, 2003; (ii) the Company's current report on Form 8-K dated June 3, 2003 filed with the Commission on June 5, 2003; (iii) the Company's current report on Form 8-K dated June 27, 2003 filed with the Commission on July 2, 2003; (iv) the Company's quarterly report on Form 10-QSB for the period ended June 30, 2003 filed with the Commission on August 14, 2003; (v) the Company's current report on Form 8-K dated September 11, 2003 filed with the Commission on September 16, 2003; (vi) the Company's proxy statement for annual meeting of stockholders to be held on September 24, 2003, mailed to stockholders on August 29, 2003 and filed with the Commission on August 29, 2003; (vii) the Company's registration statement on Form SB-2 filed with the Commission on October 20, 2003, as amended by first amendment thereto filed with the Commission on November 14, 2003; and (viii) the Company's quarterly report on Form 10-QSB for the period ended September 30, 2003 filed with the Commission on November 13, 2003. Such Purchaser understands that no Person has been authorized to give any information or to make any representations for or on behalf of the Company other than as set forth in the Commission Documents, and each Purchaser represents and agrees that it has not relied on any such other information or representations in making a decision to purchase the Securities which such Purchaser agrees to purchase hereunder. Such Purchaser represents that such Purchaser has consulted with its own advisors concerning the purchase of Securities hereunder. Such - 8 - EXHIBIT 12 Purchaser understands that an investment in the Company involves a high degree of risk for the reasons, among others, set forth under the caption "RISK FACTORS" in the Company's registration statement referred to in clause (vii) above. (b) Such Purchaser has also been given copies of and has reviewed each of the Ancillary Agreements. Such Purchaser understands that it (or, if applicable, each managed account on whose behalf Securities are being purchased by such Purchaser) will become a party to and bound by each of the Ancillary Agreements pursuant to execution and delivery of the Joinder Agreements as contemplated hereby (c) Such Purchaser represents that it (or, if applicable, each managed account on whose behalf Securities are being purchased by such Purchaser) is a sophisticated investor and an "accredited investor" as defined in Rule 501 under the Securities Act. Such Purchaser further represents that it (or, if applicable, each managed account on whose behalf Securities are being purchased by such Purchaser) has such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of an investment in the Securities and making an informed investment decision with respect thereto, and can bear the economic risk of loss of the entire investment in the Securities being purchased. (d) Such Purchaser acknowledges that it has sole responsibility for its own due diligence investigation and its own investment decision, and that in connection with its investigation and its investment decision, such Purchaser has not relied on any representation by or on behalf of the Company not set forth in the Commission Documents, on the Placement Agent or any Person affiliated with the Placement Agent, on any representation by or on behalf of either Seller not set forth in this Agreement, or on the fact that any other Person has invested or decided to invest in the Securities or in capital stock of the Company. (e) Such Purchaser understands and expressly acknowledges and agrees that none of the Securities has been registered or qualified under the Securities Act, or under any applicable securities laws of any State of the United States ("Applicable State Law") and therefore the Securities may not be offered, sold, transferred, assigned, pledged, hypothecated or otherwise disposed of, directly or indirectly, unless subsequently registered or qualified under the Securities Act and under Applicable State Law or unless an exemption from the registration requirements of the Securities Act and Applicable State Law is available and an opinion of counsel indicates that such an exemption is available, in each case to the extent permitted by the terms of this Agreement. Such Purchaser further understands and acknowledges that the Ancillary Agreements impose certain further restrictions upon the sale or disposition of any of the Securities. (f) Such Purchaser understands and agrees that all certificates representing the shares of Series A Preferred Stock and Common Stock and all of the Warrant Certificates acquired by such Purchaser pursuant to this Agreement shall bear a legend which will be substantially in the form of the following: "THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF - 9 - EXHIBIT 12 1933, AS AMENDED (THE "ACT") OR ANY APPLICABLE STATE SECURITIES OR "BLUE SKY" LAWS ("APPLICABLE STATE LAW"). THESE SECURITIES MAY NOT BE OFFERED, SOLD, PLEDGED, TRANSFERRED OR HYPOTHECATED OR OTHERWISE ASSIGNED IN THE ABSENCE OF SUCH REGISTRATION OR AN OPINION OF COUNSEL, SATISFACTORY TO THE COMPANY, THAT THERE IS AN EXEMPTION FROM REGISTRATION. In addition, the certificates representing the shares of Series A Preferred Stock and Common Stock and all of the Warrant Certificates acquired by such Purchaser pursuant to this Agreement shall bear the legends required by the Investor Rights Agreement, the Stock Trading Agreement and the Stockholders Agreement in accordance with the terms thereof. (g) Such Purchaser (or, if applicable, each managed account on whose behalf Securities are being purchased by such Purchaser) will acquire the Securities pursuant to this Agreement (i) for its own account for investment and not with a view to, or in connection with, the resale or distribution thereof or in any arrangement or understanding with any other persons regarding the distribution of such Securities in violation of the Securities Act, and (ii) subject to the restrictions set forth in the Ancillary Agreements. (h) the execution and delivery of this Agreement by such Purchaser and the performance of this Agreement and the consummation by such Purchaser or its advisory clients, as the case may be, of the Transactions have been duly authorized by all necessary action of such Purchaser's directors and stockholders (if a corporation), partners (if a partnership) or members and managers (if a limited liability company) and, if applicable, such Purchaser's advisory clients; and this Agreement, when duly executed and delivered by such Purchaser, will constitute a valid and legally binding instrument, enforceable in accordance with its terms against such Purchaser or any of its advisory clients, as the case may be; except as the enforceability thereof may be limited by (i) bankruptcy, insolvency, moratorium and other laws affecting the rights and remedies of creditors and secured parties, and (ii) rules of law governing specific performance, injunctive relief or other equitable remedies and by general principles of equity. (i) Such Purchaser represents that: (i) If such Purchaser is a corporation, it is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation, with all requisite power and authority to perform its obligations under this Agreement and the Ancillary Agreements and the Joinder Agreements. If such Purchaser is a limited liability company, it is a limited liability company duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization or formation, with all requisite power and authority to perform its obligations under this Agreement and the Ancillary Agreements and the Joinder Agreements. The person executing this Agreement on behalf of such Purchaser is authorized to act for such Purchaser in purchasing the Securities and executing and delivery this Agreement and the Joinder Agreements. - 10 - EXHIBIT 12 (ii) If such Purchaser is a corporation acting in an advisory capacity, it is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation, with full power and authority (corporate and other) to act on behalf of its advisory clients under this Agreement and the Ancillary Agreements and the Joinder Agreements. If such Purchaser is a limited liability company acting in an advisory capacity, it is a limited liability company duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization or formation, with full power and authority (limited liability company and other) to act on behalf of its advisory clients under this Agreement and the Ancillary Agreements and the Joinder Agreements. (iii) If such Purchaser is a trust, the trustee thereunder has been duly appointed as trustee of such Purchaser with full power and authority to act on behalf of such Purchaser and to perform the obligations of such Purchaser under this Agreement and the Ancillary Agreements and the Joinder Agreements. Furthermore, the trustee under such trust has independently determined that the purchase of the Securities to be purchased by such Purchaser is a suitable investment for such trust as authorized by the terms thereof and applicable laws and regulations. (iv) If such Purchaser is a limited partnership, it is a limited partnership duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization, with full power and authority to perform its obligations under this Agreement and the Ancillary Agreements and the Joinder Agreements. (v) If such Purchaser is a limited partnership acting in an advisory capacity, it is a limited partnership duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization, with full power and authority to act on behalf of its advisory clients under this Agreement and the Ancillary Agreements and the Joinder Agreements. (vi) If such Purchaser is a corporation, limited liability company, partnership, trust or other form of business entity, the execution and delivery of this Agreement and the Ancillary Agreements and the Joinder Agreements by such Purchaser will not contravene or result in a default under any provision of existing law or regulation to which such Purchaser is subject, the provisions of its trust instrument, charter, by-laws or other governing documents or any indenture, mortgage or other agreement or instrument to which it is a party or by which it is bound and does not require on its part any approval, authorization, license or filing from or with any foreign, federal, state or municipal board or agency which has not been obtained or duly made. (vii) If such Purchaser is an individual, he or she has full power and authority to perform his or her obligations under this Agreement and the Ancillary Agreements and the Joinder Agreements. (j) No state, federal or foreign regulatory approvals, permits, licenses or consents or other contractual or legal obligations are required for such Purchaser to enter into this Agreement or otherwise purchase the Securities to be purchased by such Purchaser. - 11 - EXHIBIT 12 (k) Special Covenant and Voting Agreement. As an additional inducement to the Sellers hereto to enter into this Agreement, each of the Purchasers, severally for itself or himself, hereby agrees with the Sellers that, in the event that the Company at any time seeks the approval of the holders of outstanding Series A Preferred Stock, and any necessary consents pursuant to the Investor Rights Agreement, the Stock Trading Agreement and/or the Stockholders Agreement in order to effect a transaction in which holders of any shares of Series A Preferred Stock, with or without the participation of holders of other shares of preferred stock of the Company, may either: (i) participate in the redemption of some of their shares of Series A Preferred Stock for cash and concurrently exchange their remaining shares of Series A Preferred Stock for shares of a new series of the Company's convertible preferred stock which will have a lower dividend rate per annum (payable, at the election of the Company, in cash or additional shares of such new series of convertible preferred stock), or (ii) to exchange all of their shares of Series A Preferred Stock for shares of a different new series of the Company's convertible preferred stock which will have a dividend rate of 10% per annum (payable, at the election of the Company, in cash or additional shares of such new series of convertible preferred stock) and otherwise be similar in terms to the other new series of convertible preferred stock having the lower dividend rate; (a "Redemption and Exchange Transaction"), then (i) in connection with any vote, approval or written consent of the holders of shares of Series A Preferred Stock or the parties to the Stock Trading Agreement, the Stockholders Agreement and/or the Investor Rights Agreement pertaining to such proposed Redemption and Exchange Transaction, each of the Purchasers shall vote or otherwise grant its approval or written consent in favor of such proposed Redemption and Exchange Transaction if each other holder of Series A Preferred Stock grants its approval or written consent thereto. In addition, each of the Purchasers, severally for itself or himself, agrees with the Sellers that if a Redemption and Exchange Transaction is closed prior to February 1, 2004, that each Purchaser will elect to exchange all of its or his shares of Series A Preferred Stock for shares of a different new series of the Company's convertible preferred stock which will have a dividend rate of 10% per annum (payable, at the election of the Company, in cash or additional shares of such new series of convertible preferred stock), as described in and contemplated by clause (ii) above of this Section 4.1(k). 4.2 Each Seller's Representations, Warranties and Covenants. Each of the Sellers, for severally for itself and not jointly, hereby represents and warrants to each Purchaser, and agrees with each Purchaser, as follows: (a) Such Seller has been duly organized and is validly existing in good standing under the laws of the jurisdiction of its organization, with the requisite power and authority to perform its obligations under this Agreement and to consummate the Transactions on its part contemplated hereby. (b) The execution, delivery and performance of this Agreement by such Seller and the consummation by such Seller of the Transactions on its part contemplated hereby have been duly authorized by all necessary corporate or partnership action of such Seller and this Agreement has been duly executed and delivered by such Seller and constitutes a valid and legally binding obligation of such Seller, enforceable in accordance with its terms, except as the enforceability thereof may be limited by (i) bankruptcy, insolvency, moratorium and other laws affecting the rights and remedies of creditors and secured parties, and (ii) rules of law governing - 12 - EXHIBIT 12 specific performance, injunctive relief or other equitable remedies and by general principles of equity. (c) The execution and delivery by such Seller of this Agreement and the consummation by such Seller of the Transactions on its part herein contemplated do not (i) violate the certificate of incorporation or limited partnership certificate (as applicable) of such Seller, or the By-Laws or agreement of limited partnership (as applicable) of such Seller, or (ii) result in a material violation of any applicable statute or any order, judgment, decree, rule or regulation of any court or Governmental Authority having jurisdiction over such Seller or any of its assets; and (iii) no consent, approval, authorization, order, registration or qualification of or with any such court or Governmental Authority is required for the valid authorization, execution, delivery and performance by such Seller of this Agreement, or the consummation by such Seller of the other transactions on its part contemplated by this Agreement, except for such consents, approvals, authorizations, registrations or qualifications as have been obtained prior to execution of this Agreement by such Seller or as will be applicable upon execution of the Joinder Agreements by all parties thereto, including the Purchasers. (d) The Securities to be sold by such Seller to each Purchaser pursuant to this Agreement will be sold and delivered at Closing to each Purchaser free and clear of any liens, security interests or other encumbrances whatsoever, other than (i) restrictions applicable under the Ancillary Agreements, and (ii) restrictions generally applicable under state and federal securities laws. 4.3 Survival of Representations, Warranties and Agreements. Notwithstanding any investigation made by any party to this Agreement, all covenants, agreements, representations and warranties made by the Sellers and the Purchasers herein shall survive the execution of this Agreement, the delivery to the Purchasers of the Securities and the payment therefore. ARTICLE 5 - MISCELLANEOUS 5.1 Fees and Expenses. Each of the parties hereto shall be responsible for their own expenses incurred in connection with the negotiation and Closing of the purchase and sale of Securities contemplated hereby. 5.2 Binding Agreement; Assignment. This Agreement shall be binding upon, and shall inure solely to the benefit of, each of the parties hereto, and each of their respective heirs, executors, administrators, successors and permitted assigns, and no other person shall acquire or have any right under or by virtue of this Agreement. No Purchaser may assign any of its rights or obligations hereunder to any other person or entity without the prior written consent of each of the Sellers. 5.3 Entire Agreement. This Agreement constitutes the entire agreement among the parties hereto with respect to the subject matter hereof and may be amended only by written execution by all parties. 5.4 Governing Law; Consent To Jurisdiction; Prevailing Party Legal Fees and Expenses. THIS AGREEMENT SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, AND THE RIGHTS OF THE PARTIES SHALL BE GOVERNED - 13 - EXHIBIT 12 BY, THE LAWS OF THE STATE OF NEW YORK. FURTHERMORE, EACH PARTY HERETO HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF THE COURTS OF THE STATE OF ILLINOIS AND THE UNITED STATES OF AMERICA FOR THE NORTHERN DISTRICT OF ILLINOIS IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT. IN THE EVENT OF ANY LEGAL PROCEEDING CONCERNING ANY DISPUTE AMONG ANY OF THE PARTIES TO THIS AGREEMENT ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE PREVAILING PARTY OR PARTIES IN SUCH PROCEEDING SHALL BE ENTITLED TO RECOVER REASONABLE ATTORNEYS' FEES AND EXPENSES FROM THE NON-PREVAILING PARTY OR PARTIES. 5.5 Notices. All notices, requests, consents and other communication hereunder shall be in writing, shall be mailed by first class registered or certified mail, or nationally recognized overnight express courier postage prepaid, and shall be deemed given when so mailed and shall be delivered as addressed as follows: if to either of the Sellers, to: c/o Morgan Stanley Dean Witter Equity Funding, Inc. 1585 Broadway New York, NY 10036 Attn: James Wilmott or Peter Vogelsang if to Augustine, to: Augustine Fund LP 141 West Jackson Blvd., Suite 2182 Chicago, IL 60604 Attn: John Porter or Thomas Duszynski if to TTVF, to: Technology Transformation Venture Fund LP c/o Custer Management Inc. 14 S. High Street New Albany, OH 43054 Attn: William Custer If to Donohue, to: John Donohue 43896 Yosemite Drive Big Bear Lake, CA 92315 or to such other address as any party hereto shall designate to the other parties in writing in accordance herewith. 5.6 Counterparts. This Agreement may be executed in two or more counterparts, all of which shall be deemed but one and the same instrument and each of which shall be deemed an original, and it shall not be necessary in making proof of this Agreement to produce or account for more than one such counterpart 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. - 14 - EXHIBIT 12 5.7 Headings. The descriptive headings of the several paragraphs of this Agreement are inserted for convenience only and do not constitute a part of this Agreement. 5.8 Confidentiality. Each party hereto hereby agrees that he or it will not publicly disclose, and will not include in any public announcement, the existence of or any of the terms of this Agreement without the prior written consent of each of the other parties, unless such disclosure is required by law or applicable regulation, and then only to the extent of such requirement. Notwithstanding the foregoing, the parties agree that the existence of this Agreement and its terms may be disclosed to the Company and to the other parties to the Investor Rights Agreement, the Stock Trading Agreement and the Stockholders Agreement. [Balance of page intentionally left blank; signature pages follow.] - 15 - EXHIBIT 12 IN WITNESS WHEREOF, the parties have executed this Securities Purchase Agreement as of the date first above written. SELLERS: MORGAN STANLEY DEAN WITTER EQUITY FUNDING, INC. By:_________________________________________ Name:_______________________________________ Title:______________________________________ ORIGINATORS INVESTMENT PLAN, L.P. By:_________________________________________ Name:_______________________________________ Title:______________________________________ PURCHASERS: AUGUSTINE FUND LP By:_________________________________________ Name:_______________________________________ Title:______________________________________ TECHNOLOGY TRANSFORMATION VENTURE FUND, LP By:_________________________________________ Name:_______________________________________ Title:______________________________________ ____________________________________________ John Donohue - 16 - EXHIBIT 12 SCHEDULE I SECURITIES TO BE SOLD BY MSDW
Shares of Series Shares of Common Aggregate Purchaser A Preferred Stock Common Stock Warrants Purchase Price --------- ----------------- --------- -------------- -------------- Augustine Fund LP 104,500 20,956 195,938 $ 1,045,000 Technology Venture Fund LP 23,750 4,763 44,531 $ 237,500 John Donohue 23,750 4,763 44,531 $ 237,500
- 17 - EXHIBIT 12 SCHEDULE II SECURITIES TO BE SOLD BY OIP
Shares of Series Shares of Common Aggregate Purchaser A Preferred Stock Common Stock Warrants Purchase Price --------- ----------------- --------- -------------- -------------- Augustine Fund LP 5,500 1,102 10,312 $55,000 Technology Venture Fund LP 1,250 251 2,344 $12,500 John Donohue 1,250 251 2,344 $12,500
- 18 - EXHIBIT 12 SCHEDULE III PAYMENT INSTRUCTIONS Payments to MSDW: Citibank NY ABA No: 021-000089 Acct Name: Morgan Stanley Acct # : 38896527 Ref : Electric City Payments to OIP: Citibank NY ABA No: 021-000089 Acct Name: Originators Investment Plan L.P. Acct # : 30421543 Ref : Electric City - 19 -