Exhibit 10.6

 

JOINDER AND SECOND AMENDMENT TO INVESTOR RIGHTS AGREEMENT

 

This Joinder and Second Amendment to Investor Rights Agreement (this
“Agreement”) is dated as of June 27, 2003 and is by and among Electric City
Corp., a Delaware corporation (the “Company”), Newcourt Capital USA Inc., a
Delaware corporation, Newcourt Capital Securities, Inc., a Delaware corporation,
EP Power Finance L.L.C., a Delaware limited liability company, Morgan Stanley
Dean Witter Equity Funding, Inc., a Delaware corporation, Originators Investment
Plan, L.P., a Delaware limited partnership, Duke Capital Partners, LLC, a
Delaware limited liability company, Leaf Mountain Company, LLC, an Illinois
limited liability company, Richard P. Kiphart, an individual, Cinergy Ventures
II, LLC, a Delaware limited liability company(“Cinergy”), SF Capital Partners, a
British Virgin Islands company (“SFCP”), John Thomas Hurvis Revocable Trust
(“Hurvis Trust”) and David R. Asplund, an individual (“Asplund”).

 

W I T N E S S E T H:

 

WHEREAS, the parties hereto other than Cinergy, SFCP, Asplund and Hurvis are
parties to that certain Investor Rights Agreement dated as of July 31, 2001, as
amended (as in effect on the date hereof, the “Existing Agreement”); and

 

WHEREAS, Cinergy, SFCP, Asplund and Hurvis, along with Richard P. Kiphart and
the Company, are parties to that certain Securities Purchase Agreement, dated as
of June 27, 2003 (as it may be amended from time to time, the “Series D
Securities Purchase Agreement”), whereby the Company has agreed to sell and
Cinergy, SFCP, Asplund, Hurvis and Mr. Kiphart (collectively, the “Series D
Investors”) have agreed to purchase shares of the Company’s Series D Preferred
Stock (as herein defined) together with shares of the Company’s Common Stock (as
defined in the Existing Agreement) and warrants to purchase additional shares of
Series D Preferred Stock and warrants to purchase additional shares of Common
Stock; and

 

WHEREAS, it is a condition precedent to the obligation of each of the Series D
Investors to purchase such shares of Series D Preferred Stock and Common Stock
and such warrants that the parties hereto enter into this Agreement and the
Company and the other parties hereto are agreeable to the same; and

 

WHEREAS, on the date hereof, the Series D Investors will also be acquiring
certain shares of Series A Preferred Stock, Common Stock and warrants to
purchase shares of Common Stock from EP Power Finance L.L.C. and Duke Capital
Partners, LLC and accordingly shall become Series A Investors hereunder and the
Parties desire to evidence the same by execution and delivery of this Agreement;

 

NOW, THEREFORE, the Parties agree as follows:

 

1.                                       Definitions.  All terms capitalized but
not defined herein shall have the meaning attributable to such terms in the
Existing Agreement, except where the context otherwise requires.

 

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2.                                       Amendment of Existing Agreement.  The
Existing Agreement is hereby amended as follows:

 

A.                                   The following new defined terms are added
to the definitions in Section 1.1:

 

“Series D Investors” means, collectively, each of the following in his or its
capacity as a holder of Series D Preferred Stock, Richard P. Kiphart, an
individual, Cinergy Ventures II, LLC, a Delaware limited liability company, SF
Capital Partners, a British Virgin Islands company, John Thomas Hurvis Revocable
Trust, an Illinois trust, and David R. Asplund, an individual.  “Series D
Investor” means any of such entities in such capacity.

 

“Series D Preferred Stock” means shares of the Company’s Series D Convertible
Preferred Stock, par value $0.01 per share, issued pursuant to the Series D
Securities Purchase Agreement, or issued pursuant to the Series D Preferred
Stock Warrants, or issued as dividends upon shares of the Series D Preferred
Stock issued pursuant to the Series D Securities Purchase Agreement or the
Series D Preferred Stock Warrants.

 

“Series D Preferred Stock Warrants” means the warrants issued to the Series D
Investors to purchase 37,500 shares of Series D Preferred Stock as evidenced by
those certain warrant certificates dated June 27, 2003 issued by the Company to
the Series D Investors, as they may be amended from time to time, as they may be
amended from time to time with the consent of the Investors.

 

“Series D Securities Purchase Agreement” means that certain Securities Purchase
Agreement dated as of June 27, 2003 by and among the Series D Investors and the
Company, as it may be amended from time to time with the consent of the
Investors.

 

B.                                     The definition of Common Stock Warrants
is amended and restated in its entirety as follows:

 

“Common Stock Warrants” means (a) the warrants issued to the Series A Investors
pursuant to the Securities Purchase Agreement and the Additional Purchase
Agreement, as each may be amended from time to time, (b) the warrants to
purchase up to 281,250 shares of Common Stock issued to the Series C Investor
pursuant to the Series C Securities Purchase Agreement, as amended from time to
time, and (c) the warrants to purchase up to 22,562 shares of Common Stock
issued to the Series D Investors pursuant to the Series D Securities Purchase
Agreement, as amended from time to time

 

C.                                     The definition of Eligible Securities is
amended and restated in its entirety as follows:

 

“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; (ii)
the shares of Common Stock issued or issuable upon the conversion of the Series
C Preferred Stock issued or issuable pursuant to the Series C Securities
Purchase Agreement; (iii) the shares of Common Stock issued or issuable upon the
conversion of the Series D Preferred Stock

 

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issued or issuable pursuant to the Series D Securities Purchase Agreement or
issued or issuable upon exercise of the Series D Preferred Stock Warrants and
conversion of the Series D Preferred Stock issued or issuable pursuant to such
exercise (iv) the shares of Common Stock issued pursuant to Securities Purchase
Agreement; (v) the shares of Common Stock issued pursuant to the Series C
Securities Purchase Agreement; (vi) the shares of Common Stock issued pursuant
to the Series D Securities Purchase Agreement, (vii) the shares of Common Stock
issued or issuable upon exercise of the Common Stock Warrants or upon exercise
of the Placement Agent Warrants; and (viii) 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), (v), (vi), (vii) and this clause (viii); 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.

 

D.                                    The definition of Investors is amended and
restated in its entirety as follows:

 

“Investors” means the Series A Investors, the Placement Agent, the Series C
Investor and the Series D Investors, collectively, and “Investor” means any of
them.

 

E.                                      The definition of Parties is amended and
restated in its entirety as follows:

 

“Parties” means the Series A Investors, the Placement Agent, the Series C
Investor, the Series D Investors and the Company, collectively, and “Party”
means any of them.

 

F.                                      The definition of Series A Investors is
amended and restated in its entirety as follows:

 

“Series A Investors” means, collectively, each of the following in his or its
capacity as a holder of Series A Preferred Stock, Newcourt Capital USA Inc., a
Delaware corporation, EP Power Finance L.L.C., a Delaware limited liability
company, Morgan Stanley Dean Witter Equity Funding, Inc., a Delaware
corporation, Originators Investment Plan, L.P., a Delaware limited partnership,
Duke Capital Partners, LLC, a Delaware limited liability company, Richard P.
Kiphart, an individual, Cinergy Ventures II, LLC, a Delaware limited liability
company, SF Capital Partners, a British Virgin Islands company, David R.
Asplund, an individual, and John Thomas Hurvis Revocable Trust, an Illinois
trust.  “Series A Investor” means any of such entities in such capacity.

 

G.                                     The definition of Series C Investor is
amended and restated in its entirety as follows:

 

“Series C Investor” means Richard P. Kiphart, in his capacity as the holder of
the Series C Preferred Stock.

 

G.                                     Clause (d) of Section 3.1 is amended and
restated in its entirety as follows:

 

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(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
therefore) 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
Series C Preferred Stock or the Series D Preferred Stock or the exercise of the
Common Stock Warrants or the Placement Agent Warrants, (iv) to any Series D
Preferred Stock issued upon the exercise of Series D Preferred Stock Warrants,
(v) to the issuance of securities pursuant to options, warrants, notes or other
rights to acquire securities of the Company which were outstanding on July 31,
2001, (vi) to a Qualified Primary Offering, (vii) 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 (viii) to stock splits, stock dividends or like transactions.

 

G.                                     Clause (ii) of Section 4.2 is amended and
restated in its entirety as follows:

 

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

 

H.                                    Schedule I is amended and restated in its
entirety as follows:

 

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, LLC
Leaf Mountain Company, LLC
Richard P. Kiphart
Cinergy Ventures II, LLC
SF Capital Partners
David R. Asplund
John Thomas Hurvis Revocable Trust

3.                                       Joinder.  Each of the parties to this
Agreement hereby agrees that from and after date hereof each of Cinergy Ventures
II, LLC, SF Capital Partners, Asplund and Hurvis Trust shall be a party to and
be bound by the Investor Rights Agreement, as amended by this Agreement, as an
Investor and a Holder thereunder (as such terms are defined therein).

 

4.                                       Representations.  Each party to this
Agreement hereby represents and warrants to each of the other parties to this
Agreement that this Agreement has been duly executed and delivered by such party
and constitutes the valid and binding obligation of such party,

 

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enforceable against such party in accordance with its terms, subject to
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and
similar laws of general applicability relating to or affecting creditors’ rights
and to general equity principles.  Each of Cinergy Ventures II, LLC, SF Capital
Partners, Asplund and Hurvis Trust hereby acknowledges that it has received a
copy of the Investor Rights Agreement.

 

5.                                       Miscellaneous.

 

(a)                                  All terms, covenants, agreements,
representations, warranties and undertakings in this Agreement shall bind and
inure to the benefit of the respective successors and assigns of the parties
hereto whether so expressed or not.

 

(b)                                 Changes in or additions to this Agreement
may be made or compliance with any term, covenant, agreement, condition or
provision set forth herein may be omitted or waived, only in accordance with the
provisions of the Investor Rights Agreement, as amended hereby.

 

(c)                                  This Agreement shall be governed and
construed in accordance with the laws of the State of New York without giving
effect to the conflict of laws principles thereof.

 

(d)                                 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.

 

(e)                                  The section and paragraph headings herein
are for convenience only and shall not effect the construction hereof.

 

(f)                                    The invalidity or unenforceability of any
provision hereof shall in no way affect the validity or enforceability of any
other provision.

 

(g)                                 The obligations of each Investor under the
Investor Rights Agreement are several and not joint with the obligations of any
other Investor, and no Investor shall be responsible in any way for the
performance of the obligations of any other Investor under the Investor Rights
Agreement.  Nothing contained in this Agreement or the Investor Rights
Agreement, and no action taken by any Investor or other party hereto pursuant
hereto or thereto, shall be deemed to constitute the Investors and such parties
as a partnership, an association, a joint venture or any other kind of entity,
or create a presumption that such parties are in any way acting in concert or as
a group with respect to such obligations or the transactions contemplated by the
Investor Rights Agreement as amended hereby.

 

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

 

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IN WITNESS WHEREOF, the parties hereto have caused this Joinder and Second
Amendment to Investor Rights Agreement to be executed 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/ Karen Scowcroft

 

Name:

John Mitola

Name:

  Karen Scowcroft

 

Title:

Chief Executive Officer

Title:

  Vice President

 

 

 

 

 

 

EP POWER FINANCE, L.L.C.,
a Delaware limited liability company

 

 

 

 

 

By:

  /s/ Robert W. Baker

 

 

Name:

  Robert W. Baker

 

 

Title:

  President

 

 

 

 

 

 

MORGAN STANLEY DEAN WITTER
EQUITY FUNDING, INC., a Delaware
corporation

 

 

 

 

 

By:

  /s/ James Wilmott

 

 

Name:

  James Wilmott

 

 

Title:

  Vice President

 

 

 

 

 

 

ORIGINATORS INVESTMENT PLAN,
L.P., a Delaware limited partnership

 

 

 

 

 

By:

MSDW OIP Investors, Inc., its general
partner

 

 

 

 

 

By:

  /s/ James Wilmott

 

 

Name:

  James Wilmott

 

 

Title:

  Vice President

 

 

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DUKE CAPITAL PARTNERS, LLC,
a Delaware limited liability company

 

 

 

 

 

By:

  /s/ Dennis Magna

 

 

Name:

  Dennis Magna

 

 

Title:

  Managing Director

 

 

 

 

 

 

NEWCOURT CAPITAL SECURITIES,
INC., a Delaware corporation

 

 

 

 

 

By:

  /s/ Karen Scowcroft

 

 

Name:

  Karen Scowcroft

 

 

Title:

  Vice President

 

 

 

 

 

 

LEAF MOUNTAIN COMPANY, LLC,
an Illinois limited liability company

 

 

 

 

 

By:

  /s/ John J. Jiganti

 

 

Name:

  John J. Jiganti

 

 

Title:

  Manager

 

 

 

 

 

 

  /s/ Richard P. Kiphart

 

 

Richard P. Kiphart

 

 

 

 

 

CINERGY VENTURES II, LLC,
a Delaware limited liability company

 

 

 

 

 

By:

  /s/ R. Foster Duncan

 

 

Name:

  R. Foster Duncan

 

 

Title:

  President

 

 

 

 

 

 

SF CAPITAL PARTNERS, a British Virgin
Islands company

 

 

 

 

 

By:

  /s/ Brian H. Davidson

 

 

Name:

  Brian H. Davidson

 

 

Title:

  Authorized Signatory

 

 

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JOHN THOMAS HURVIS REVOCABLE
TRUST, an Illinois trust

 

 

 

 

 

By:

  /s/ John Thomas Hurvis

 

 

Name:

John Thomas Hurvis

 

 

Title:

Trustee

 

 

 

 

 

 

  /s/ David R. Asplund

 

 

David R. Asplund

 

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