Document:

exv4w6

 

Exhibit 4.6

AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT

     This Amended and Restated Investor Rights Agreement, dated as of March 19,
2004 (as it may be amended, restated or modified and in effect 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 Redemption and
Exchange Agreement (as defined below)).

WITNESSETH

     WHEREAS, each of the Investors (other than CIT Capital Securities Inc.) is
a holder of certain shares of the Company’s outstanding Series A Convertible
Preferred Stock (“Series A Preferred”), Series C Convertible Preferred
Stock (“Series C Preferred”) and/or Series D Convertible Preferred
Stock (“Series D Preferred” and, together with the Series A Preferred
and the Series C Preferred, the “Existing Preferred Stock”), and of
shares of the Company’s Common Stock; and

     WHEREAS, each of the Investors is a holder of Common Stock Warrants (as
herein defined); and certain of the Investors are also holders of certain
warrants to purchase additional shares of Series D Preferred Stock; and

     WHEREAS, the Parties have previously entered into that certain Investor
Rights Agreement dated as of July 31, 2001, as amended (the “Prior
Agreement”);

     WHEREAS, the Company and each of the Investors (other than CIT Capital
Securities Inc.) have entered into that certain Redemption and Exchange
Agreement, dated as of the date hereof (as it may be amended, restated or
modified and in effect from time to time, the “Redemption and Exchange
Agreement”), whereby the Company will redeem for cash and/or exchange for
shares of the Company’s newly created Series E Convertible Preferred Stock, par
value $0.01 per share (the “Series E Preferred Stock”), all of the
outstanding shares of Existing Preferred Stock held by the Investors, and
certain Investors will also exchange certain warrants to purchase shares of the
Series D Preferred for warrants to purchase shares of Series E Preferred Stock,
all as more fully described in the Redemption and Exchange Agreement; and

     WHEREAS, it is a condition to the obligations of such Investors to
exchange such securities pursuant to the Redemption and Exchange Agreement that
the parties hereto enter into this Agreement; and

     WHEREAS, the Parties desire that this Agreement supersede and replace the
Prior Agreement in its entirety;

     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 Redemption and
Exchange 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:

        “Additonal Securities Purchase Agreement” means the
Securities Purchase Agreement dated as of November 29, 2001 between the
Company and Leaf Mountain, as amended and in effect from time to time.

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

        “Closing Date” shall have the meaning given to it in the
Redemption and Exchange 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, collectively, the warrants to
purchase Common Stock which are listed on Schedule II to this
Agreement, and any warrants which may hereafter be issued by the Company
pursuant to transfer, partial exercise or subdivision of such warrants as
provided therein.

        “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 E Preferred Stock
issued or issuable pursuant to the Redemption and Exchange Agreement;
(ii) the shares of Common Stock issued or issuable upon exercise of the
Series E Preferred Stock Warrants and conversion of the Series E
Preferred Stock issued or issuable pursuant to such exercise; (iii) the
shares of Common Stock issued or issuable pursuant to conversion of any
shares of Series E Preferred Stock issued as dividends in respect of
outstanding shares of Series E Preferred Stock; (iv) the shares of Common
Stock issued or issuable upon exercise of the Common Stock Warrants; (v)
the shares of Common Stock issued pursuant to the Securities Purchase
Agreement, the Additional Securities Purchase Agreement, the Series C
Securities Purchase Agreement and the Series D Securities Purchase
Agreement; (vi) the shares of Common Stock issued prior to the Closing
Date pursuant to conversion of shares of Series A Preferred; and (vii)
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) and this clause

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(vii); 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.

        “Existing Preferred Stock” shall have the meaning set forth
in the first WHEREAS clause of this Agreement.

        “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.

        “Leaf Mountain” means Leaf Mountain Company, LLC, an Illinois
limited liability company.

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

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

        “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.

        “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).

        “Redemption and Exchange Agreement” shall have the meaning
set forth in the fourth WHEREAS clause of this Agreement.

        “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.

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        “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” means that certain Securities
Purchase Agreement, dated as of July 31, 2001, by and among the Company,
certain of the Investors and certain other Persons, as amended and in
effect from time to time.

        “Series C Securities Purchase Agreement” means that certain
Securities Purchase Agreement, dated as of May 31, 2002, between the
Company and Richard Kiphart, as amended and in effect from time to time.

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

        “Series E Preferred Stock” shall have the meaning set forth
in the fourth WHEREAS clause of this Agreement.

        “Series E Preferred Stock Warrants” means the warrants to
purchase shares of Series E Preferred Stock issued to certain of the
Investors pursuant to the Redemption and Exchange Agreement.

        “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

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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 has been 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 affect or diminish any other rights of such
Holder hereunder with respect to any other securities of the Company held by
such Holder.

     (d)     In addition to any rights Leaf Mountain may have under clause (a)
above, while it is the holders of not less than an aggregate of 750,000 shares
of the Common Stock (calculated assuming the exercise of all rights, options,
warrants to purchase Common Stock or securities convertible or exchangeable for
shares of Common Stock), may deliver to the Company, on a single occasion, a
Registration 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 Eligible Securities comprising not less than 750,000 shares of
Common Stock, on the terms and subject to the other conditions applicable to
any Registration Request under this Section. Within forty-eight (48) hours of
receipt of such Registration Request, the Company shall provide written notice
to all of holders of Series E Preferred Stock of such Registration Request.

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     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), 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

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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, and provide to 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,

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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 therefore 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 the 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

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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

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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 its Affiliates and the proposed distribution by it and
its Affiliates 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 2.3(e)(vi) hereof, such Holder and its Affiliates 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

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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 (and its Affiliates’) 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), 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 or 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 he, she or it 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

11

 

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.

12

 

     (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 considerations 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

13

 

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.

14

 

     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 Securities 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

15

 

        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 shares of Series E Preferred Stock or the exercise of the
Common Stock Warrants, or the Series E Preferred Stock issued upon the
exercise of Series E 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 E Preferred Stock as
dividends upon outstanding Series E Preferred Stock, 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

16

 

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 Redemption and Exchange Agreement.
	 
	(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. 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 Illinois.

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

     4.5     Counterparts. This Agreement may be executed in one 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

17

 

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. Effective as of the date hereof, this
Agreement amends and restates in its entirety the Prior 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.

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

18

 

     IN WITNESS WHEREOF, the Parties have executed this Amended and Restated
Investor Rights Agreement 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/ Daniel M. Morash

	Name:

	 	John Mitola
	 	Name:
	 	Daniel M. Morash
	Title:

	 	Chief Executive Officer
	 	Title:
	 	Managing Director
	 
	 	 	 	 	 	 
	 	 	 	 	CIT CAPITAL SECURITIES, INC. a
	 	 	 	 	Delaware corporation
	 
	 	 	 	 	 	 
	  

	 	 	 	By:
	 	/s/ Daniel M. Morash

	 

	 	 	 	Name:
	 	Daniel M. Morash
	 

	 	 	 	Title:
	 	Managing Director
	 
	 	 	 	 	 	 
	 	 	 	 	MORGAN STANLEY DEAN
WITTER
	 	 	 	 	EQUITY FUNDING, INC. a Delaware corporation
	 
	 	 	 	 	 	 
	  

	 	 	 	By:
	 	/s/ James T. Keane

	 

	 	 	 	Name:
	 	James T. Keane
	 

	 	 	 	Title:
	 	Vice President
	 
	 	 	 	 	 	 
	 	 	 	 	ORIGINATORS INVESTMENT PLAN, 
	 	 	 	 	L.P. a Delaware limited partnership
	 
	 	 	 	 	 	 
	 

	 	 	 	By:
	 	MSDW OIP Investors, Inc., its
	  

	 	 	 	 	 	general partner
	 
	 	 	 	 	 	 
	  

	 	 	 	By:
	 	/s/ James T. Keane

	 

	 	 	 	Name:
	 	James T. Keane
	 

	 	 	 	Title:
	 	Vice President
	 
	 	 	 	 	 	 
	 	 	 	 	CINERGY VENTURES II, LLC, a 
	 	 	 	 	Delaware limited liability company
	 
	 	 	 	 	 	 
	  

	 	 	 	By:
	 	/s/ Richard G. Beach

 

	 	 	 	 	 	 	 
	 

	 	 	 	Name:
	 	Richard G. Beach
	 

	 	 	 	Title:
	 	Assistant Secretary
	 
	 	 	 	 	 	 
	 	 	 	 	LEAF MOUNTAIN COMPANY, LLC an
	 	 	 	 	Illinois limited liability company
	 
	 	 	 	 	 	 
	  

	 	 	 	By:
	 	/s/ Jack J. Jiganti

	 

	 	 	 	Name:
	 	Jack J. Jiganti
	 

	 	 	 	Title:
	 	Manager
	 
	 	 	 	 	 	 
	 	 	 	 	SF CAPITAL PARTNERS, LTD. a British
	 	 	 	 	Virgin Islands company
	 
	 	 	 	 	 	 
	  

	 	 	 	By:
	 	/s/ Brian H. Davidson

	 

	 	 	 	Name:
	 	Brian H. Davidson
	 

	 	 	 	Title:
	 	Authorized Signatory
	 
	 	 	 	 	 	 
	 	 	 	 	  /s/ Richard Kiphart
	 	 	 	 	

	 	 	 	 	RICHARD KIPHART an individual
	 
	 	 	 	 	 	 
	 
 	 	 	 	  /s/ David P. Asplund

	 	 	 	 	DAVID P. ASPLUND an individual
	 
	 	 	 	 	 	 
	 	 	 	 	JOHN THOMAS HURVIS REVOCABLE 
	 	 	 	 	TRUST an Illinois trust
	 
	 	 	 	 	 	 
	  

	 	 	 	By:
	 	/s/ John Thomas Hurvis

	 

	 	 	 	Name:
	 	John Thomas Hurvis
	 

	 	 	 	Title:
	 	Trustee
	 
	 	 	 	 	 	 
	 	 	 	 	  /s/ John Donohue
	 	 	 	 	

	 

	 	 	 	JOHN DONOHUE an individual

	 
	 	 	 	 	 	 
	 	 	 	 	AUGUSTINE FUND, LP an
Illinois limited
	 	 	 	 	 partnership
	 
	 	 	 	 	 	 
	  

	 	 	 	By:
	 	/s/ Thomas Duszynski

20

 

	 	 	 	 	 	 	 
	 

	 	 	 	Name:
	 	Thomas Duszynski
	 

	 	 	 	Title:
	 	Chief Financial Officer
	 
	 	 	 	 	 	 
	 	 	 	 	TECHNOLOGY TRANSFORMATION 
	 	 	 	 	VENTURE FUND, LP a Delaware limited
	 	 	 	 	partnership
	 
	 	 	 	 	 	 
	  

	 	 	 	By:
	 	/s/ William M. Custer

	 

	 	 	 	Name:
	 	William M. Custer
	 

	 	 	 	Title:
	 	President

21

 

SCHEDULE I

INVESTORS

Newcourt Capital USA Inc.

CIT Capital Securities, Inc.

Morgan Stanley Dean Witter Equity Funding, Inc.

Originators Investment Plan, L.P.

Cinergy Ventures II, LLC

Leaf Mountain Company, LLC

SF Capital Partners Ltd.

Richard Kiphart

David R. Asplund

John Thomas Hurvis Revocable Trust

John Donohue

Augustine Fund LP

Technology Transformation Venture Fund, LP

 

 

SCHEDULE II

COMMON STOCK WARRANTS

	 	 	 
	1.

	 	Warrant No. 1 issued to Newcourt Capital Securities, Inc. (now named CIT
Capital Securities, Inc.) for 3,314,830 warrants having an expiry date of
September 7, 2008.
	 	 	 
	2.

	 	Warrant No. 17 issued to Newcourt Capital USA Inc. for 750,000 warrants
having an expiry date of September 7, 2008.
	 	 	 
	3.

	 	Warrant No. 72 issued to Morgan Stanley Dean Witter Equity Funding, Inc.
for 222,656 warrants having an expiry date of September 7, 2008.
	 	 	 
	4.

	 	Warrant No. 73 issued to Originators Investment Plan, L.P. for 11,719
warrants having an expiry date of September 7, 2008.
	 	 	 
	5.

	 	Warrant No. 22 issued to Leaf Mountain Company, LLC for 421,875 warrants
having an expiry date of May 28, 2005.
	 	 	 
	6.

	 	Warrant No. 25 issued to Richard P. Kiphart for 281,250 warrants having
an expiry date of December 4, 2006.
	 	 	 
	7.

	 	Warrant No 48 issued to Cinergy Ventures II, LLC for 600,000 warrants
having an expiry date of September 7, 2008.
	 	 	 
	8.

	 	Warrant No. 53 issued to Cinergy Ventures II, LLC for 84,375 warrants
having an expiry date of June 27, 2007.
	 	 	 
	9.

	 	Warrant No. 49 issued to Richard P. Kiphart for 525,000 warrants having
an expiry date of September 7, 2008.
	 	 	 
	10.

	 	Warrant No. 54 issued to Richard P. Kiphart for 73,829 warrants having an
expiry date of June 27, 2007.
	 	 	 
	11.

	 	Warrant No. 69 issued to Richard P. Kiphart for 121,875 warrants having
an expiry date of June 27, 2007.
	 	 	 
	12.

	 	Warrant No. 50 issued to SF Capital Partners, Ltd. for 300,000 warrants
having an expiry date of September 7, 2008.
	 	 	 
	13.

	 	Warrant No. 55 issued to SF Capital Partners, Ltd. for 42,188 warrants
having an expiry date of June 27, 2007.
	 	 	 
	14.

	 	Warrant No. 51 issued to John Thomas Hurvis Revocable Trust for 37,500
warrants having an expiry date of September 7, 2008.
	 	 	 
	15.

	 	Warrant No. 56 issued to John Thomas Hurvis Revocable Trust for 5,273
warrants having an expiry date of June 27, 2007.

23

 

	 	 	 
	16.

	 	Warrant No. 71 issued to John Thomas Hurvis Revocable Trust for 28,125
warrants having an expiry date of September 7, 2008.
	 	 	 
	17.

	 	Warrant No. 52 issued to David Asplund for 37,500 warrants having an
expiry date of September 7, 2008.
	 	 	 
	18.

	 	Warrant No. 57 issued to David Asplund for 5,273 warrants having an
expiry date of June 27, 2007.
	 	 	 
	19.

	 	Warrant No. 70 issued to Augustine Fund LP for 65,625 warrants having an
expiry date of September 7, 2008.
	 	 	 
	20.

	 	Warrant No. 65 issued to Augustine Fund LP for 206,250 warrants having an
expiry date of September 7, 2008.
	 	 	 
	21.

	 	Warrant No. 67 issued to John Donohue for 46,875 warrants having an
expiry date of September 7, 2008.
	 	 	 
	22.

	 	Warrant No. 66 issued to Technology Transformation Venture Fund LP for
46,875 warrants having an expiry date of September 7, 2008.

24exv4w7

 

Exhibit 4.7

AMENDED AND RESTATED STOCKHOLDERS AGREEMENT

     This Amended and Restated Stockholders Agreement, dated as of March 19,
2004 (as it may be amended, restated or modified and in effect from time to
time, this “Agreement”), is made by and among Electric City Corp., a
Delaware corporation (the “Company”), and the following persons and
entities (each, a “Holder,” and collectively the “Holders”,
except that, for purposes of this Agreement, Originators Investment Plan, L.P.
and Morgan Stanley Dean Witter Equity Funding, Inc. shall be considered
together as one “Holder”), Newcourt Capital USA, Inc. (“Newcourt
Capital”), Originators Investment Plan, L.P. (“OIP”), Morgan Stanley Dean
Witter Equity Funding, Inc., (“Morgan Stanley”), Cinergy Ventures II,
LLC (“Cinergy Ventures”), Leaf Mountain Company, LLC (“Leaf
Mountain”), Augustine Fund LP, (“Augustine”), Technology Transformation
Venture Fund, LP (“TVF”), John Donohue (“Donohue”), Richard P. Kiphart
(“Kiphart”), David R. Asplund (“Asplund”) and John Thomas Hurvis
Revocable Trust (“Hurvis Trust”).

W I T N E S S E T H:

     WHEREAS, each of the Holders is a holder of certain shares of the
Company’s outstanding Series A Convertible Preferred Stock (“Series A
Preferred”), Series C Convertible Preferred Stock (“Series C
Preferred”) and/or Series D Convertible Preferred Stock (“Series D
Preferred” and, together with the Series A Preferred and the Series C
Preferred, the “Existing Preferred Stock”); and

     WHEREAS, the Company and certain Holders have previously entered into that
certain Stockholders Agreement, dated as of July 31, 2001, as amended (the
“Prior Agreement”); and

     WHEREAS, the Company and the Holders and SF Capital Partners, Ltd. (“SF
Capital”) have entered into that certain Redemption and Exchange Agreement,
dated as of the date hereof (as it may be amended, restated or modified and in
effect from time to time, the “Redemption and Exchange Agreement”),
whereby the Company will redeem for cash and/or exchange for shares of the
Company’s newly created Series E Convertible Preferred Stock, par value $0.01
per share (the “Series E Preferred Stock”), all of the outstanding
shares of Existing Preferred Stock held by the Holders and by SF Capital, and
certain Holders will also exchange certain warrants to purchase shares of the
Series D Preferred for warrants to purchase shares of Series E Preferred Stock,
all as more fully described in the Redemption and Exchange Agreement; and

     WHEREAS, it is a condition to the obligations of the Holders to exchange
such securities pursuant to the Redemption and Exchange Agreement that the
parties hereto enter into this Agreement; and

     WHEREAS, the Company and the Holders desire that this Agreement supersede
and replace the Prior Agreement in its entirety;

     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 Redemption and
Exchange 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:

     “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.

     “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.

     “Closing Date” shall have the meaning given to it in the Redemption
and Exchange Agreement.

     “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 in the preamble.

     “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.

     “Parity Stock” shall have the meaning given to it in the Series E
Certificate of Designations.

     “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.

     “Redemption and Exchange Agreement” shall have the meaning set
forth in the third WHEREAS clause hereof.

     “Senior Stock” shall have the meaning given to it in the Series E
Certificate of Designations.

     “Series E 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 E Convertible Preferred Stock of Electric City
Corp., as filed with the Secretary of State of Delaware and as may be amended
and in effect from time to time.

     “Series E Preferred Stock” shall have the meaning set forth in the
third WHEREAS clause 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 the aggregate number of issued and outstanding shares
of Series E Preferred Stock is at least 90,000 shares (as adjusted for stock
splits, stock combinations, recapitalizations and the like), the four Holders
holding the greatest number of shares of Series E Preferred Stock, for so long
as each such Holder and its Affiliates hold in the aggregate at least 12.5% of
the aggregate number of issued and outstanding shares of Series E Preferred
Stock as

 

 

of the Closing Date (as adjusted for stock splits, stock combinations,
recapitalizations and the like, but excluding any unissued shares which such
Holder may have the right to acquire pursuant to any warrants to purchase
Series E Preferred Stock), shall each 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
E Preferred Stock, voting as a single class to the exclusion of all other
classes of the Company’s capital stock, each time Directors of the Company are
to be elected.

     (b)     For so long as the aggregate number of issued and outstanding shares
of Series E Preferred Stock is at least 65,000 shares but less than 90,000
shares (as adjusted for stock splits, stock combinations, recapitalizations and
the like), the three Holders holding the greatest number of shares of Series E
Preferred Stock, for so long as each such Holder and its Affiliates hold in the
aggregate at least 9.375% of the aggregate issued and outstanding shares of
Series E Preferred Stock as of the Closing Date (as adjusted for stock splits,
stock combinations, recapitalizations and the like, but excluding any unissued
shares which such Holder may have the right to acquire pursuant to any warrants
to purchase Series E Preferred Stock) shall each 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 E Preferred Stock, voting as a single class to the exclusion of all
other classes of the Company’s capital stock, each time Directors of the
Company are to be elected.

     (c)     For so long as the aggregate number of issued and outstanding shares
of Series E Preferred Stock is at least 45,000 shares but less than 65,000
shares (as adjusted for stock splits, stock combinations, recapitalizations and
the like), a majority-in-interest of the outstanding shares of Series E
Preferred Stock shall be entitled, through a nominating committee or other
procedure adopted by the Board, to designate for nomination by the Board two
nominees for election to the Board by the holders of the Series E Preferred
Stock, voting as a single class to the exclusion of all other classes of the
Company’s capital stock, each time Directors of the Company are to be elected.

     (d)     For so long as the aggregate number of issued and outstanding shares
of Series E Preferred Stock is at least 20,000 shares but less than 45,000
shares (as adjusted for stock splits, stock combinations, recapitalizations and
the like), a majority-in-interest of the outstanding shares of Series E
Preferred Stock 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 E Preferred
Stock, voting as a single class to the exclusion of all other classes of the
Company’s capital stock, each time Directors of the Company are to be elected.

     (e)     For the purposes of Sections 2.1(a) and 2.1(b), within 30 days of the
first day that any Holder and its Affiliates hold less than 12.5% in the case
of Section 2.1(a), or 9.375% in the case of Section 2.1(b), of the aggregate
issued and outstanding shares of Series E Preferred Stock as of the Closing Date (as adjusted for stock splits, stock combinations,
recapitalizations and the like, but excluding any unissued shares which such
Holder may have the right to acquire pursuant to any warrants to purchase
Series E Preferred Stock), 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 E Preferred Stock,
such Holder shall vote all of its shares of Series E Preferred Stock for the
election of all Directors nominated pursuant to Section 2.1 hereof. The
nominee designated by each Holder or Holders 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 E 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 E Preferred Stock for the purpose of obtaining a quorum and shall vote
or cause the vote of the Series E 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 E Preferred Stock in favor of
removal from the Board, upon notice by a Holder or Holders that an individual
designated by it or them, as the case may be, 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 a Holder in accordance
with this Agreement (unless such removal resulted from circumstances requiring
a resignation pursuant to Section 2.1(e) which resignation has not occurred).
Each Holder shall cooperate fully in connection with the nomination of
Directors, the voting of its shares of Series E 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 or Holders, as the case may be, 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 Certificates of Designations (unless such removal or withdrawal resulted
from circumstances requiring a resignation pursuant to Section 2.1(e) which
resignation has not occurred).

     (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 E Preferred Stock, or enter into any
arrangements of any kind with any Person with respect to its Series E 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 the Holders 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 the Holders of the Series E
Preferred Stock (unless such removal or withdrawal resulted from from
circumstances requiring a resignation pursuant to Section 2.1(e) which
resignation has not occurred), 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 shares of Series E Preferred Stock remain
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(e) of the Series E Certificate of
Designations.

     2.3     Board Observation Rights. If a Holder possesses the right to
designate for nomination to the Board its nominee pursuant to Section
2.1(a) or Section 2.1(b), or no longer possesses a right to
designate for nomination to the Board a nominee pursuant to Section 2.1(a)
or Section 2.1(b), 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, provided that, notwithstanding the foregoing, (i)
while Leaf Mountain holds 10,000 or more shares of Series E Preferred Stock (as
adjusted for stock splits, stock combinations and the like), Leaf Mountain
shall be entitled to designate one individual to serve as a Board Observer ,
and (ii) while Morgan Stanley and OIP collectively holds 7,500 or more shares
of Series E Preferred Stock (as adjusted for stock splits, stock combinations
and the like), Morgan Stanley 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 E Preferred Stock. Any Holder (including
its Affiliates) who converts more than 50% of the shares of Series E Preferred
Stock (as adjusted for stock splits, stock combinations and the like) received
by it upon closing under the Redemption and Exchange Agreement shall, at the
written request of the Company, convert all of its remaining shares of Series E
Preferred Stock, if any, within five (5) Business Days of receipt of such
request, in accordance with Section 7(c) of the Series E Certificate of
Designations. Any transferee of a Holder (other than a Holder’s Affiliates)
who converts more than 50% of the shares of Series E Preferred Stock
transferred to it by a Holder shall, at the written request of the Company,
convert all of its remaining shares of Series E Preferred Stock, if any, within
five (5) Business Days of receipt of such request, in accordance with Section 7(c)
of the Series E Certificate of Designations.

     2.5     Approval of Certain Actions by Holders.

     (a)     For so long as any shares of Series E 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 aggregate
number of shares of Series E 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 E Preferred Stock) (i) enter into any
agreement that would restrict the Company’s ability to perform under the
Redemption and Exchange Agreement; (ii) amend its Certificate of Incorporation
(including the Series E Certificate of Designations) or By-laws in any way that
could adversely affect, alter or change the rights, powers or preferences of
the Series E Preferred Stock, through merger, consolidation, recapitalization,
reclassification or otherwise; (iii) engage in any transaction that would
directly impair or reduce the rights, powers or preferences of the Series E
Preferred Stock as a class; or (iv) complete any Change of Control Transaction
(provided that if the aggregate number of shares of the Series E
Preferred Stock outstanding is less than 45,000 shares (as adjusted for stock
splits, stock combinations, recapitalizations and the like)) and the then
holders of Series E Preferred Stock refuse to consent to such Change of Control
Transaction, the Company may, at its option, redeem all, but not less than all,
of such Series E Preferred Stock pursuant to Section 6(e)(i)(D) of the Series E
Certificate of Designations.

     (b)     For so long as the aggregate number of issued and outstanding shares
of Series E Preferred Stock is at least 90,000 shares (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 record of
shares representing 66-2/3% of the aggregate number of shares of Series E
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 E
Preferred Stock): (i) authorize or issue any Senior Stock or Parity Stock or
any securities convertible or exchangeable into such securities, other than (x)
the Series E Preferred Stock Warrants, (y) Series E Preferred Stock issued upon
exercise of such Series E Preferred Stock Warrants, or (z) Series E Preferred
Stock issued as payment in kind of any accrued but unpaid dividends on the
Series E Preferred Stock; (ii) 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; (iii) authorize
or issue any debt securities of the Company, other than debt under the existing
credit facilities in effect as of March 12, 2004 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 E 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 E 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 the aggregate number of issued and outstanding shares
of Series E Preferred Stock is at least 130,000 shares (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 record of
shares of Series E Preferred Stock representing at least 66-2/3% of the
aggregate number of shares of Series E 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 E Preferred Stock): (i) terminate or newly
appoint the chief executive officer 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 shares of the Series E
Preferred Stock. The Company shall not permit the transfer of any shares of
the Series E Preferred Stock on its books or issue a new certificate
representing any shares of the Series E Preferred Stock unless and until the
Person to whom such shares of Series E Preferred Stock are 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) or Section 2.1(b) nor any rights under Section 2.3
(except in the case of Section 2.1(a) or Section 2.1(b) 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 E Preferred Stock held (or converted) by a Holder pursuant to this
Article II, the number of shares of Series E Preferred Stock held (or
converted) by all of such Holder’s Affiliates shall be aggregated with the
number of shares of Series E Preferred Stock held (or converted) by such
Holder.

ARTICLE III

GENERAL PROVISIONS

     3.1     Legend on Share Certificates.

     All certificates for shares of Series E 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
7.08 of the Redemption and Exchange Agreement (and any other

 

 

legend required by
any other agreement contemplated by the Redemption and Exchange 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 AMENDED AND RESTATED STOCKHOLDERS AGREEMENT,
DATED AS OF MARCH 19, 2004 (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
this Section 3.1(a), a certificate that no longer bears the legend set
forth in this 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 Illinois.

     3.5     Entire Agreement; Amendment; Waiver. Effective as of the date
hereof, this Agreement amends and restates in its entirety the Prior 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. 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.

     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 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 Redemption and
Exchange Agreement.

     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 By-laws 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 Holders (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.

[Balance of page intentionally left blank; signature pages follow.]

 

 

     IN WITNESS WHEREOF, the parties hereto have executed this Amended and
Restated Stockholders Agreement as of the day and year first above written.

	 	 	 	 	 	 	 
	COMPANY	 	HOLDERS
	ELECTRIC CITY CORP.,	 	NEWCOURT CAPITAL USA INC.,
	a Delaware corporation	 	a Delaware corporation
	 
	 	 	 	 	 	 
	By:

	 	/s/ John Mitola
	 	By:
	 	/s/ Daniel M. Morash
	

	 	

	 	 	 	

	Name:

	 	John Mitola
	 	Name:
	 	Daniel M. Morash
	Title:

	 	Chief Executive Officer
	 	Title:
	 	Managing Director
	 
	 	 	 	 	 	 
	 	 	 	 	MORGAN STANLEY DEAN WITTER
	 	 	 	 	EQUITY FUNDING, INC. a Delaware
	 	 	 	 	corporation
	 
	 	 	 	 	 	 
	

	 	 	 	By:
	 	/s/ James T. Keane
	

	 	 	 	 	 	

	

	 	 	 	Name:
	 	James T. Keane
	

	 	 	 	Title:
	 	Vice President
	 
	 	 	 	 	 	 
	 	 	 	 	ORIGINATORS INVESTMENT PLAN, 
	 	 	 	 	L.P. a Delaware limited partnership
	 
	 	 	 	 	 	 
	

	 	 	 	By:
	 	MSDW OIP Investors, Inc., its
	

	 	 	 	 	 	general partner
	 
	 	 	 	 	 	 
	

	 	 	 	By:
	 	/s/ James T. Keane
	

	 	 	 	 	 	

	

	 	 	 	Name:
	 	James T. Keane
	

	 	 	 	Title:
	 	Vice President
	 
	 	 	 	 	 	 
	 	 	 	 	CINERGY VENTURES II, LLC, a 
	 	 	 	 	Delaware limited liability company
	 
	 	 	 	 	 	 
	

	 	 	 	By:
	 	/s/ Richard G. Beach
	

	 	 	 	 	 	

	

	 	 	 	Name:
	 	Richard G. Beach
	

	 	 	 	Title:
	 	Assistant Secretary
	 
	 	 	 	 	 	 
	 	 	 	 	LEAF MOUNTAIN COMPANY, LLC an
	 	 	 	 	Illinois limited liability company
	 
	 	 	 	 	 	 
	

	 	 	 	By:
	 	/s/ Jack J. Jiganti
	

	 	 	 	 	 	

	

	 	 	 	Name:
	 	Jack J. Jiganti

12

 

	 	 	 	 	 	 	 
	

	 	 	 	Title:
	 	Manager
	 
	 	 	 	 	 	 
	 	 	 	 	/s/ Richard Kiphart
	 	 	 	 	

	 	 	 	 	RICHARD KIPHART an individual
	 
	 	 	 	 	 	 
	 	 	 	 	/s/ David P. Asplund
	 	 	 	 	

	 	 	 	 	DAVID P. ASPLUND an individual
	 
	 	 	 	 	 	 
	 	 	 	 	JOHN THOMAS HURVIS REVOCABLE 
	 	 	 	 	TRUST an Illinois trust
	 
	 	 	 	 	 	 
	

	 	 	 	By:
	 	/s/ John Thomas Hurvis
	

	 	 	 	 	 	

	

	 	 	 	Name:
	 	John Thomas Hurvis
	

	 	 	 	Title:
	 	Trustee
	 
	 	 	 	 	 	 
	 	 	 	 	/s/ John Donohue
	 	 	 	 	

	 	 	 	 	JOHN DONOHUE an individual
	 
	 	 	 	 	 	 
	 	 	 	 	AUGUSTINE FUND, LP an
Illinois limited
	 	 	 	 	 partnership
	 
	 	 	 	 	 	 
	

	 	 	 	By:
	 	/s/ Thomas Duszynski
	

	 	 	 	 	 	

	

	 	 	 	Name:
	 	Thomas Duszynski
	

	 	 	 	Title:
	 	Chief Financial Officer
	 
	 	 	 	 	 	 
	 	 	 	 	TECHNOLOGY TRANSFORMATION 
	 	 	 	 	VENTURE FUND, LP a Delaware limited
	 	 	 	 	partnership
	 
	 	 	 	 	 	 
	

	 	 	 	By:
	 	/s/ William M. Custer
	

	 	 	 	 	 	

	

	 	 	 	Name:
	 	William M. Custer
	

	 	 	 	Title:
	 	President

13

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