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.


 


1

















 


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 


 


2

















 


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:


 


3

















 


(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,


 


4

















 


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.]


 


5

















 


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

  	
   

  
								



 


6

















 


	
   

  	
  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

  	
   

  
					



 


7

















 


	
   

  	
  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

  



 


8