EXHIBIT 99.3
REDEMPTION AND EXCHANGE AGREEMENT
This Redemption and Exchange Agreement (the "Agreement") is entered
into as of March 19, 2004, by and among Electric City Corp., a Delaware
corporation (the "Company"), and the undersigned holders of Preferred Stock of
the Company listed on the Schedule of Investors (the "Schedule of Investors")
attached hereto as Schedule A (each, a "Participating Investor", and
collectively, the "Participating Investors").
RECITALS
WHEREAS, the Participating Investors are holders of shares of the
Company's Series A Convertible Preferred Stock, Series C Convertible Preferred
Stock, and/or Series D Convertible Preferred Stock (collectively, the "Prior
Preferred Stock") and certain of the Participating Investors are also holders of
warrants to purchase shares of Series D Convertible Preferred Stock (the "Prior
Warrants"); and
WHEREAS, the Company desires to redeem and/or exchange all of the
outstanding shares of Prior Preferred Stock and all the outstanding Prior
Warrants from the Participating Investors, and the Participating Investors
desire to have such shares and warrants redeemed and/or exchanged; and
WHEREAS, the Company shall grant to all Participating Investors the
option to (i) have certain of their shares of Prior Preferred Stock redeemed and
all their remaining shares of Prior Preferred Stock exchanged for shares of the
Company's newly issued Series E Convertible Preferred Stock, par value $0.01 per
share (the "Series E Preferred Stock") all their Prior Warrants exchanged for
new warrants in substantially the form attached hereto as Exhibit A (the "Series
E Warrants") to purchase shares of Series E Preferred Stock (the "Series E
Warrant Shares"), or (ii) not have any of their shares of Prior Preferred Stock
redeemed and instead have all of their shares of Prior Preferred Stock exchanged
for shares of the Series E Preferred Stock and all of their Prior Warrants
exchanged for Series E Warrants; and
WHEREAS, the Participating Investors desire to enter into this
Agreement to provide for the redemption and/or exchange of the Prior Preferred
Stock and Prior Warrants as described above;
NOW THEREFORE, in consideration of the foregoing and of the mutual
promises and covenants contained herein, and subject to the terms and conditions
hereof, the parties hereby agree as follows:
1. Redemption of Prior Preferred Stock. Subject to the terms and
conditions of this Agreement, each Participating Investor (each, a "Redeeming
Investor" and collectively, the "Redeeming Investors") listed on Schedule B
attached hereto (the "Redemption Schedule"), agrees, severally and not jointly,
to sell, and the Company agrees to purchase from each Redeeming Investor, the
number and type of shares of Prior Preferred Stock (the "Redeemed
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Shares") set forth opposite such Redeeming Investor's name on the Redemption
Schedule at the cash purchase price per share set forth opposite such Redeeming
Investor's name on the Redemption Schedule and at the aggregate purchase price
set forth opposite such Redeeming Investor's name on the Redemption Schedule
(the "Redemption Price"). The Company's agreement with each Redeeming Investor
is a separate agreement, and the purchase of the Redeemed Shares from each
Redeeming Investor is a separate purchase.
2. Series E Authorization. The Company has authorized (a) 300,000
shares of Series E Preferred Stock (the "Series E Shares"), having the rights,
privileges, preferences and restrictions set forth in 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 the Company, in
the form attached hereto as Exhibit B (the "Series E Certificate of
Designations"), (b) the issuance of Series E Warrants for the purchase of Series
E Warrant Shares, and (c) the reservation of shares of the Company's Common
Stock for issuance upon conversion of the Series E Shares and Series E Warrant
Shares (the "Series E Conversion Shares").
3. Exchange of Prior Preferred Stock for Series E Preferred
Stock. Subject to the terms and conditions of this Agreement and immediately
after the consummation of the redemption in accordance with Section 1 and the
other provisions of this Agreement, each Participating Investor, severally and
not jointly, agrees to exchange, and the Company hereby agrees to issue Series E
Shares to each Participating Investor in exchange for, such Participating
Investor's remaining shares of Prior Preferred Stock held by such Redeeming
Investor, at a ratio of one (1) Series E Share for every ten (10) shares of
Prior Preferred Stock, in each case in the amount set forth on Schedule C
attached hereto (the "Series E Exchange Schedule"). The Series E Shares issued
pursuant to this Agreement shall have the rights, preferences, privileges and
restrictions as set forth in the Series E Certificate of Designations and shall
be subject to the terms set forth in the Amended and Restated Stockholders
Agreement (the "Stockholders Agreement") and the Amended and Restated Investor
Rights Agreement (the "Investor Rights Agreement"), each dated of even date
herewith (collectively, the "Ancillary Agreements").
4. Exchange of Prior Warrants for Series E Warrants. Subject to
the terms and conditions of this Agreement, the Company hereby agrees to issue
to each Participating Investor holding any Prior Warrants, in exchange for such
Prior Warrants, Series E Warrants to purchase up to the number of Series E
Warrant Shares equal to the number of shares of Prior Preferred Stock for which
the Prior Warrant is exercisable divided by ten, as set forth on Schedule D
attached hereto (the "Warrant Exchange Schedule"). The Series E Warrants shall
be exercisable at a price per share equal to the exercise price of the Prior
Warrants multiplied by ten, subject to adjustment in certain circumstances, and
shall have an expiration date which is the same as that of the Prior Warrants.
The Company's agreement with each Participating Investor holding Prior Warrants
is a separate agreement, and the issuance of a Series E Warrant to each such
Participating Investor is a separate issuance.
5. Closing.
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5.1 The Closing Date. The closing of the foregoing
redemptions and exchanges (the "Closing") shall take place at the offices of
Schwartz, Cooper, Xxxxxxxxxxx & Xxxxxx, Chartered, 000 X. XxXxxxx Xx., Xxxxxxx,
Xxxxxxxx 00000, at 2:00 p.m. Chicago time on March 19, 2004 or such other date,
time and/or location as the Company and a majority in interest of Participating
Investors shall agree.
5.2 Delivery. At the Closing,
(a) each Participating Investor will deliver to the Company, as
applicable, (i) a stock certificate or stock certificates representing the
shares of Prior Preferred Stock to be redeemed and/or exchanged, registered in
the name of such Participating Investor, together with (ii) an executed Stock
Power in the form of Exhibit C attached hereto, and (iii) the Prior Warrants, if
any, held by such Participating Investor;
(b) the Company shall deliver to each Participating Investor, as
applicable, (i) the Redemption Price set forth opposite such Participating
Investor's name on the Redemption Schedule as payment for the shares of Prior
Preferred Stock being redeemed by check or by wire transfer pursuant to such
Participating Investor's instructions, (ii) stock certificates representing the
number of Series E Shares set forth opposite such Participating Investor's name
on the Series E Exchange Schedule, (iii) Series E Warrants replacing any Prior
Warrants of such Participating Investor, (iv) an opinion of counsel to the
Company in substantially the form attached hereto as Exhibit D.
5.3 Ancillary Agreements. At the Closing, the Company and
the Participating Investors shall enter into the Ancillary Agreements.
5.4 Restatement of Stock Trading Agreements. In addition,
the Stock Trading Agreement dated as of July 31, 2001 by and among certain of
the Participating Investors and certain other persons and entities (the "2001
Stock Trading Agreement"), the Stock Trading Agreement dated as of June 4, 2002
by the Company and Xxxxxxx X. Xxxxxxx (the "2002 Stock Trading Agreement"); and
the Stock Trading Agreement dated as of June 27, 2003 by and among the Company
and certain of the Participating Investors (the "2003 Stock Trading Agreement"
and, collectively with the 2001 Stock Trading Agreement and the 2002 Stock
Trading Agreement, the "Stock Trading Agreements") shall collectively be
combined, amended and restated into a single Amended and Restated Stock Trading
Agreement in the form of Exhibit E hereto (the "Amended and Restated Stock
Trading Agreement".
6. Representations and Warranties of the Company. In connection
with the redemption of Prior Preferred Stock and the exchange of shares of Prior
Preferred Stock and Prior Warrants for shares of Series E Preferred Stock or
Series E Warrants, as the case may be, hereunder, the Company hereby represents
and warrants as follows:
6.1 Organization of the Company. The Company has been
duly organized and is validly existing in good standing under the laws of the
jurisdiction of its organization, with the
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requisite power and authority to perform its obligations under this Agreement,
to consummate the transactions contemplated hereby and to conduct its business
as currently conducted.
6.2 Authority. The Company has full corporate power and
authority to execute and deliver this Agreement, to perform its obligations
hereunder and to consummate the transactions contemplated hereby. The execution
and delivery by the Company of this Agreement, and the performance by the
Company of its obligations hereunder, have been duly and validly authorized by
all necessary corporate action on the part of the Company. This Agreement has
been duly and validly executed and delivered by the Company and constitutes a
legal, valid and binding obligation of the Company enforceable against the
Company in accordance with its terms, except as the enforceability thereof may
be limited by (i) bankruptcy, insolvency, moratorium and other laws affecting
the rights and remedies of creditors and secured parties and (ii) rules of law
governing specific performance, injunctive relief or other equitable remedies
and by general principles of equity. Each of the Series E Warrants, when
executed and delivered by the Company under this Agreement, will have been duly
and validly executed and delivered by the Company and will constitute a legal,
valid and binding obligation of the Company enforceable against the Company in
accordance with its terms, except as the enforceability thereof may be limited
by (i) bankruptcy, insolvency, moratorium and other laws affecting the rights
and remedies of creditors and secured parties and (ii) rules of law governing
specific performance, injunctive relief or other equitable remedies and by
general principles of equity. The shares of Series E Preferred Stock to be
issued hereunder, when issued in accordance with the terms of this Agreement,
will be validly issued, fully paid and nonassessable.
6.3 Capitalization. As of the date hereof, the Company
has authorized 120,000,000 shares of Common Stock and 5,000,000 shares of
preferred stock. As of the date hereof, the Company has 34,922,021 issued and
outstanding shares of Common Stock, 2,351,589 issued and outstanding shares of
Series A Convertible Preferred Stock, 233,613 issued and outstanding shares of
Series C Convertible Preferred Stock and 157,769 issued and outstanding shares
of Series D Convertible Preferred Stock. Other than the securities described in
this Section 6.3 and other outstanding options, rights and warrants to purchase
up to 20,017,048 shares of Common Stock and the Prior Warrants to purchase up to
375,000 shares of Series D Preferred Stock, the Company does not have any other
securities or rights to purchase its securities outstanding. The Series E
Certificate of Designations in the form of Exhibit B hereto has been duly filed
in the office of the Secretary of State of Delaware and is effective. Upon
closing of the transactions contemplated hereby, the Company will not have
outstanding any shares of Prior Preferred Stock or any Prior Warrants and will
have outstanding 210,469 shares of Series E Preferred Stock and Series E
Warrants to purchase up to 3,750 additional shares of Series E Preferred Stock.
All shares of Series E Preferred Stock which will be issued and outstanding upon
closing of the transactions contemplated hereby will be fully paid and
non-assessable and subject to no preemptive rights in favor of other persons or
entities which have not been waived. Assuming the accuracy of the
representations of each Participating Investor in this Agreement, the shares of
Series E Preferred Stock and Series E Warrants issued to such Participating
Investor hereunder will be issued in compliance with all applicable federal and
state
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securities laws. The Company has reserved for issuance under the Series E
Warrants 3,750 shares of Series E Preferred Stock. Shares of Series E Preferred
Stock which are issued pursuant to exercise of the Series E Warrants in
accordance with the terms thereof will be fully-paid and non-assessable and
subject to no preemptive rights in favor of other persons or entities which have
not been waived. The Company has also reserved for issuance pursuant to
conversion of the shares of Series E Preferred Stock to be issued hereunder or
upon exercise of the Series E Warrants, 21,421,900 shares of its Common Stock,
par value $0.0001 per share. Shares of such Common Stock which are issued
pursuant to conversion of shares of Series E Preferred Stock in accordance with
the terms thereof will be fully-paid and non-assessable and subject to no
preemptive rights in favor of other persons or entities which have not been
waived.
6.4 No Conflicts. The execution and delivery by the
Company of this Agreement does not, and the performance by the Company of its
obligations under this Agreement and the consummation of the transactions
contemplated hereby will not, (a) conflict with or result in a violation or
breach of any of the terms, conditions or provisions of the Certificate of
Incorporation (including the Certificates of Designations of Prior Preferred
Stock) or the bylaws, as amended, of the Company; or (b) conflict with or result
in a material violation or material breach of any term or provision of any
agreement to which the Company is a party, after giving effect to the consents
and waivers of the Participating Investors set forth in this Agreement; or (c)
result in a material violation of any applicable law, statute or any order,
judgment, decree, rule or regulation of any court or governmental authority
having jurisdiction over the Company or any of its subsidiaries or any of their
properties or assets. No consent, approval, authorization, order, registration
or qualification of or with any such court or governmental authority is required
for the valid authorization, execution, delivery and performance by the Company
of this Agreement, the issue of the shares of Series E Preferred Stock and
Series E Warrants hereunder or the consummation by the Company of the other
transactions on its part contemplated by this Agreement, except for such
consents, approvals, authorizations, registrations or qualifications as may be
required under Federal securities law or Applicable State Law, American Stock
Exchange listing requirements or with respect to requirements applicable to the
Participating Investors. Giving effect to Section 7.12 hereof, the Company has
obtained all consents, approvals, waivers of rights and other authorizations
from securityholders of the Company and other persons and entities necessary to
permit the Company to consummate the transactions contemplated by this
Agreement.
6.5 SEC Filings. Since March 31, 2003, the Company has
filed all reports, schedules, forms, statements and other documents required to
be filed by it with the Securities and Exchange Commission (the "Commission")
pursuant to the reporting requirements of the Securities Exchange Act of 1934,
as amended (the "Exchange Act") (all of the foregoing filed prior to the date
hereof (including all exhibits included therein and financial statements and
schedules thereto and documents incorporated by reference therein) being
hereinafter referred to as the "Commission Documents"). As of their respective
dates, the Commission Documents complied in all material respects with the
requirements of the Exchange Act and the rules and regulations of the Commission
promulgated thereunder applicable to the Commission Documents, except that the
Company's filing of the pro forma financial information which is set
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forth in the Company's current report on Form 8-K filed on July 2, 2003 was not
timely filed within 15 days after the Company's sale of the assets of
Switchboard Apparatus, Inc. The Commission Documents, taken as a whole, do not
as of the date hereof contain an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary in order to
make the statements therein in light of the circumstances in which they were
made not misleading. The Commission Documents, including the financial
statements, when they were filed with the Commission, conformed in all material
respects with the applicable accounting requirements and the published rules and
regulations of the Commission with respect thereto, except that the Company's
filing of the pro forma financial information which is set forth in the
Company's current report on Form 8-K filed on July 2, 2003 was not timely filed
within 15 days after the Company's sale of the assets of Switchboard Apparatus,
Inc. Such financial statements have been prepared in accordance with generally
accepted accounting principles, consistently applied, during the periods
involved (except (i) as may be otherwise indicated in such financial statements
or the notes thereto, or (ii) in the case of unaudited interim statements, to
the extent they may exclude footnotes or may be condensed or summary statements)
and fairly present in all material respects the financial position of the
Company as of the dates thereof and the results of operations and cash flows for
the periods then ended. The Company is not required to file and will not be
required to file any agreement, note, lease, mortgage, deed or other instrument
entered into prior to the date hereof or the Closing Date and to which the
Company or any of its subsidiaries is a party or by which the Company or any of
its subsidiaries is bound which has not been previously filed as an exhibit to
the Company's reports filed or made with the Commission under the Exchange Act.
6.6 No Material Loss. Since December 31, 2002, neither
the Company nor any of its subsidiaries has sustained any material loss or
interference with its business from fire, explosion, flood or other calamity,
whether or not covered by insurance, or from any labor dispute or court or
governmental action, order or decree.
6.7 Cancellation of Prior Preferred Stock. Upon
consummation of the redemption and exchange transactions contemplated by
Sections 1, 3 and 4 hereof, all shares of Prior Preferred Stock shall be
cancelled and thereafter treated as authorized shares of the Company's preferred
stock undesignated as to series and no further shares of Prior Preferred Stock
shall be issued by the Company.
6.8 Required Registration. The Company agrees that, on or
before July 7, 2004, shall use commercially reasonable efforts, subject to
receipt of all necessary information from the Participating Investors who desire
to have shares registered thereunder, the Company will prepare and file with the
Commission a registration statement covering the resale of the shares of Common
Stock which may be acquired by pursuant to conversion of shares of Series E
Preferred Stock through the American Stock Exchange, the over-the-counter market
or in privately-negotiated transactions or otherwise. Such registration shall
otherwise be in accordance with the provisions of the Investor Rights Agreement
applicable to a "Requested Registration" thereunder but shall not be deemed to
be a "Requested Registration" for purposes thereof.
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7. Representations, Warranties and Covenants of the Participating
Investor. In connection with the transactions contemplated hereunder, each
Participating Investor hereby represents, warrants and covenants to the Company
as follows:
7.1 Ownership of Shares. The Participating Investor owns,
beneficially and of record, all the shares of Prior Preferred Stock and Prior
Warrants tendered hereunder and has good and valid title to all such shares of
Prior Preferred Stock and Prior Warrants, free and clear of all liens, charges,
pledges, claims, restrictions on transfer, mortgages, security interests or
encumbrances of any kind whatsoever, and of any rights of first refusal of any
kind (other than those under the Stock Trading Agreement dated as of July 31,
2001 by and among the Participating Investors, certain other parties and the
Company, as amended, which restrictions are being waived under Section 7.12
hereof), and the Participating Investor has not granted any rights to purchase
such shares of Prior Preferred Stock to any other person or entity. The
Participating Investor has the unrestricted power and authority to transfer its
shares of Prior Preferred Stock to the Company. Upon delivery to the Company of
the stock certificates representing its shares of Prior Preferred Stock and/or
Prior Warrants, as the case may be, and upon the Closing of the redemptions
and/or exchanges set forth herein, the Company shall acquire good and valid
title to such shares of Prior Preferred Stock and/or Prior Warrants, as the case
may be, free and clear of all liens, charges, pledges, claims, restrictions on
transfer, mortgages, security interests or encumbrances of any kind whatsoever.
7.2 Authorization; No Violation. The Participating
Investor has, and will have on the Closing Date, full legal capacity, power and
authority to execute, deliver and perform this Agreement and to consummate the
transactions contemplated hereby. This Agreement has been duly executed and
delivered by the Participating Investor and constitutes his, her or its legal,
valid and binding obligation, enforceable against him, her or it in accordance
with its terms, except as the enforceability thereof may be limited by (i)
bankruptcy, insolvency, moratorium and other laws affecting the rights and
remedies of creditors and secured parties and (ii) rules of law governing
specific performance, injunctive relief or other equitable remedies and by
general principles of equity. Neither the execution, delivery and performance of
this Agreement by the Participating Investor nor the consummation of any of the
transactions provided for hereby will result in any violation or breach of or
default (or an event which with notice or the passage of time or both would
constitute a default) under any contract, franchise or permit to which the
Participating Investor is a party, or by which the Participating Investor is
bound, after giving effect to the consents and waivers of the Participating
Investors set forth in this Agreement.
7.3 Broker's or Finder's Commissions. No broker's or
finder's or placement fee or commission or other remuneration has been paid or
given directly or indirectly by the Participating Investor for soliciting the
redemption or the exchange of shares of Prior Preferred Stock or Prior Warrants
for shares of Series E Preferred Stock or Series E Warrants hereunder, and the
Participating Investor will hold the Company harmless from any claim, demand or
liability for broker's or finder's or placement fees or commissions or other
remuneration alleged to have been incurred in connection with the sale and
issuance of the Series E Shares and/or the Series E Warrants due to any actions
of the Participating Investor.
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7.4 Restricted Securities. The Participating Investor
understands that the Series E Shares, the Series E Warrants, the Series E
Warrant Shares and the Series E Conversion Shares (i) have not been registered
under the Securities Act of 1933, as amended (the "Securities Act"), (ii) are
"restricted securities" under Rule 144 of the Securities Act and (iii) are being
issued pursuant to an exemption from registration contained in the Securities
Act based in part upon the representations of the Participating Investor
contained herein.
7.5 Acquisition for Investment. The Participating
Investor is acquiring the Series E Shares, the Series E Warrants, the Series E
Warrant Shares and the Series E Conversion Shares, as the case may be, for his,
her or its own account for investment and not as a nominee and not with a view
to the distribution thereof. The Participating Investor understands that the
Participating Investor must bear the economic risk of such investment
indefinitely unless such Series E Shares, Series E Warrants, Series E Warrant
Shares or Series E Conversion Shares are registered pursuant to the Securities
Act, or an exemption from such registration is available, and that the Company
has no present intention of registering the Series E Shares, the Series E
Warrants, the Series E Warrant Shares or the Series E Conversion Shares other
than as contemplated by the Investor Rights Agreement.
7.6 Economic Risk. By reason of the Participating
Investor's business or financial experience, the Participating Investor has the
capacity to protect its own interests in connection with the acquisition of the
Series E Shares, the Series E Warrants, the Series E Warrant Shares and the
Series E Conversion Shares, as the case may be, and has the ability to bear the
economic risk (including the risk of total loss) of the Participating Investor's
investment.
7.7 Disclosure. The Participating Investor represents
that it or he has such knowledge and experience in financial and business
matters as to be capable of evaluating the merits and risks of participating in
the transactions contemplated hereby and making an informed investment decision
with respect thereto, and acknowledges that it or he has sole responsibility for
its or his own due diligence investigation and its own investment decision, and
that in connection with its investigation and its investment decision, it or he
has not relied on any representation by or on behalf of the Company not set
forth in the Commission Documents or in this Agreement, or on the fact that any
other person or entity has decided to participate in such transactions or invest
in any securities or in capital stock of the Company.
7.8 Legends. The Participating Investor understands and
acknowledges that the certificates evidencing the Series E Shares, the Series E
Warrants and the Series E Warrant Shares to be issued hereunder will be
imprinted with the following legends (in addition to any legend required by
state securities laws or any of the Ancillary Agreements):
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR THE
SECURITIES LAWS OF ANY STATE. THE SECURITIES MAY NOT BE SOLD,
TRANSFERRED, ASSIGNED, PLEDGED OR HYPOTHECATED EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT AND APPLICABLE
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STATE SECURITIES LAWS OR PURSUANT TO AN APPLICABLE EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF SUCH ACT AND SUCH LAWS.
THE SHARES OF COMMON STOCK ISSUABLE UPON THE [CONVERSION] [EXERCISE] OF
THE SECURITIES REPRESENTED HEREBY ARE SUBJECT TO AN AMENDED AND
RESTATED INVESTOR RIGHTS AGREEMENT, AN AMENDED AND RESTATED
STOCKHOLDERS AGREEMENT AND AN AMENDED AND RESTATED STOCK TRADING
AGREEMENT, EACH AS IT MAY BE AMENDED FROM TIME TO TIME, COPIES OF WHICH
ARE AVAILABLE FOR INSPECTION AT THE PRINCIPAL OFFICES OF THE COMPANY.
7.9 Accredited Investor. The Participating Investor is an
"accredited investor" as defined in Rule 501(a) of Regulation D under the
Securities Act.
7.10 Understanding of Terms of Series E Preferred Stock.
The Participating Investor acknowledges that it has had an opportunity to review
the provisions of the Series E Certificate of Designations and understands the
differences in rights, preferences, privileges and restrictions between the
shares of Prior Preferred Stock and Series E Preferred Stock.
7.11 Advice of Counsel and Other Advisors. Each
Participating Investor has reviewed this Agreement in its entirety, has had an
opportunity to obtain the advice of counsel and any other advisors deemed
appropriate by the Participating Investor prior to executing this Agreement and
fully understands all provisions hereof. Each Participating Investor has
reviewed with such Participating Investor's own tax advisors the federal, state,
local and foreign tax consequences of the transactions contemplated by this
Agreement, and is relying solely on such advisors and not on any statements or
representations of the Company or any of its agents. Each Participating Investor
understands that each Participating Investor (and not the Company) shall be
responsible for each Participating Investor's own tax liability that may arise
as a result of the transactions contemplated by this Agreement.
7.12 Consents and Waivers. (a) Each Participating Investor
hereby consents to the Company's and each other Participating Investor's
entering into this Agreement and performing his, her or its obligations
hereunder, including effecting the redemption of certain shares of Prior
Preferred Stock and the exchange of shares of Prior Preferred Stock for shares
of Series E Preferred and the exchange of Prior Warrants for Series E Warrants,
all as provided herein. Each Participating Investor also consents to the
Company's and each other Participating Investor's entering into the Ancillary
Agreements and performing his, her or its obligations thereunder. Each
Participating Investor also consents to the Company's and each other
Participating Investor's entering into the Amended and Restated Stock Trading
Agreement and performing his, her or its obligations thereunder.
(b) Each Participating Investor hereby waives any and all
defaults and events of default which arise or may arise pursuant to or by reason
of any the actions described in
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Section 7.12(a) above on the part of the Company or any other Participating
Investor under any agreements, instruments or documents to which or by which any
Participating Investor and the Company may be bound immediately prior to the
execution of this Agreement, including, without limitation, (i) the Certificate
of Designations, Preferences and Relative, Participating, Optional and Other
Special Rights of Preferred Stock and Qualifications, Limitations and
Restrictions Thereof of Series A Convertible Preferred Stock of the Company;
(ii) the Certificate of Designations, Preferences and Relative, Participating,
Optional and Other Special Rights of Preferred Stock and Qualifications,
Limitations and Restrictions Thereof of Series C Convertible Preferred Stock of
the Company; and (iii) the Certificate of Designations, Preferences and
Relative, Participating, Optional and Other Special Rights of Preferred Stock
and Qualifications, Limitations and Restrictions Thereof of Series D Convertible
Preferred Stock of the Company; and (iv) any and all agreements entered into in
connection with such Participating Investor's original purchase of Prior
Preferred Stock from the Company, including without limitation, any securities
purchase agreement, investor rights agreement and any stockholders agreement and
any supplements or amendments thereto.
(c) Each Participating Investor and the Company hereby
acknowledges that this Agreement is being entered into in connection with (i)
the Company's issuance of up to 5,000,000 shares of Common Stock and warrants to
purchase up to 1,750,000 additional shares of Common Stock to Security Benefit
Group, Inc. and/or affiliates thereof (the "Purchaser") for gross proceeds of up
to $11,000,000, a portion of which gross proceeds will be used by the Company to
effect the redemptions under Section 1 hereof, and (ii) the concurrent sale by
Xxxxxx Xxxxxxx and OIP of an aggregate of 1,000,000 shares of Common Stock to
the Purchaser (which will be issued pursuant to the concurrent conversion of
100,000 shares of Series A Preferred by Xxxxxx Xxxxxxx and OIP). Each
Participating Investor and the Company hereby further acknowledges that the sale
by Xxxxxx Xxxxxxx and OIP described in clause (ii) preceding is for a per share
price which is below the current market price of the Common Stock and is being
consummated as a requirement of the Purchaser to its agreement to purchase the
Common Stock and warrants from the Company described in clause (ii) preceding.
Each Participating Investor and the Company hereby further acknowledges that the
Purchaser has required, as a condition to entering into such transactions, that
the securities which the Purchaser is to acquire from the Company and from
Xxxxxx Xxxxxxx and OIP shall not be subject to the Ancillary Agreements or any
of the existing Stock Trading Agreements and the Purchaser shall not be a party
to any of such agreements, and each Participating Investor and the Company
hereby agrees and consents thereto. Each Participating Investor further
acknowledges that the Purchaser has required, as a condition to entering into
such transactions, that the securities which the Purchaser is to acquire from
the Company and from Xxxxxx Xxxxxxx and OIP shall be registered by the Company
under the Securities Act of 1933, as amended, and further required that the
parties to the Investor Rights Agreement dated as of July 31, 2001, as amended
(the "Prior Investor Rights Agreement") and the parties to the Investor Rights
Agreement to be executed in connection with Closing under this Agreement agree
to waive their piggyback registration rights and the provisions of section 2.8
of the Prior Investor Rights Agreement and the Investor Rights Agreement in
respect of such registration for the Purchasers, and each Participating Investor
hereby agrees and consents thereto and waives its piggyback registration rights
and rights under
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section 2.8 under each of the Prior Investor Rights Agreement and the Investor
Rights Agreement with respect to such registration.
(d) Each Participating Investor, other than Xxxxxxx,
hereby acknowledges that Xxxxxxx is also a director of the Company and hereby
waives any and all claims of conflicts of interest against Xxxxxxx arising from
or with respect to Xxxxxxx'x participation in the transactions contemplated
hereby.
(e) Each Participating Investor hereby agrees that, for
purposes of the remaining term of the 2001 Stock Trading Agreement referred to
in Section 5.3 hereof, the number of shares of "Uncovered Stock" of Leaf
Mountain Company, LLC thereunder immediately following the Closing Date
hereunder shall remain unchanged as a result of the transaction (calculated in
accordance with the provisions of the 2001 Stock Trading Agreement).
(f) Each Participating Investor other than SF Capital
hereby consents to the termination of the Stock Trading Agreement dated as of
February 27, 2003 between the Company and SF Capital, effective upon
consummation of the redemption and exchange transactions pursuant to Sections 1,
3 and 4 hereof.
(g) Each Participating Investor hereby consents to the
Company and Cinergy Ventures II, LLC entering into an amendment to the Series E
Warrant issued to Cinergy Ventures at Closing hereunder to extend the expiration
date thereunder to October 31, 2004, provided that the Company's board of
directors shall have approved such action by the Company.
7.13 Termination of Rights Associated with Redeemed
Shares. With respect to a Participating Investor who is a Redeeming Investor,
such Redeeming Investor acknowledges that upon the Closing, all of the Redeeming
Investor's rights under any and all agreements entered into in connection with
the Redeeming Investor's original purchase of the Redeemed Shares, including
without limitation, any securities purchase agreement, investor rights agreement
and any stockholders agreement and any supplements or amendments thereto, shall
immediately terminate and be of no further force and effect with respect to the
Redeemed Shares. The Redeeming Holder further agrees to execute and deliver any
additional instruments necessary to document such termination of rights and to
fully carry out the purposes of these covenants.
7.14 Accrued Dividends On Prior Preferred Shares Up To
Closing. The Company hereby agrees that each Participating Investor shall
receive credit for accrued dividends on its Prior Preferred Shares for the
period from and including January 1, 2004 up to but not including the Closing
Date at the dividend rate applicable under the Prior Preferred Shares. The
Participating Investors agree that the Company may satisfy this obligation by
calculating and paying the initial dividend payable with respect to the Series E
Shares following the Closing Date on a basis that equitably reflects such
agreement by the Company.
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8. Conditions to Investors' Obligations to Close. Each
Participating Investor's obligation to redeem and/or exchange its Prior
Preferred Shares or Prior Warrants at the Closing is subject to the fulfillment
on or before the Closing of each of the following conditions, unless waived by
the applicable Participating Investor:
8.1 Receipt of Consideration. Such Participating Investor
shall have received delivery of the cash to be issued to such Participating
Investor in accordance with Section 1, if applicable, and the Series E Shares
and Series E Warrants to be issued to such Participating Investor in accordance
with Sections 3 and 4.
8.2 Representations and Warranties. The representations
and warranties made by the Company in Section 6 shall be true and correct in all
material respects as of the date of the Closing
8.3 Covenants. All covenants agreements and conditions
contained in this Agreement to be performed by the Company on or prior to the
Closing shall have been performed or complied with in all material respects (it
being understood that the Company shall be deemed to have certified as to the
satisfaction of the conditions set forth in Section 8..2 above and this Section
8.3 by consummating the transactions hereunder).
8.4 Qualifications. All authorizations, approvals or
permits, if any, of any governmental authority or regulatory body of the United
States or of any state that are required in connection with the lawful issuance
and sale of the Series E Shares, the Series E Warrants, the Series E Warrant
Shares and the Series E Conversion Shares pursuant to this Agreement shall be
obtained and effective as of the Closing.
8.5 Certificates of Designations. The Series E
Certificate of Designations and shall have been duly authorized, executed and
filed with and accepted by the Secretary of State of the State of Delaware.
8.6 Investor Rights Agreement. The Company and the
Participating Investors shall have executed and delivered the Investor Rights
Agreement.
8.7 Stockholders Agreement. The Company and the
Participating Investors shall have executed and delivered the Stockholders
Agreement.
8.8 Amended and Restated Stock Trading Agreement. The
Company and the Participating Investors and certain officers of the Company
shall have executed and delivered the Amended and Restated Stock Trading
Agreement.
8.9 Proceedings and Documents. All corporate and other
proceedings required to carry out the transactions contemplated by this
Agreement, and all instruments and other documents relating to such
transactions, shall be reasonably satisfactory in form and substance to the
Participating Investors, and the Participating Investors shall have been
furnished with such instruments and documents as they shall have reasonably
requested.
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8.10 Consents and Waivers. The Company shall have obtained
any and all consents, permits and waivers necessary or appropriate for the
performance by the Company of its obligations pursuant to the Agreement.
8.11 No Litigation; No Order. No action, suit or
proceeding relating to the transactions contemplated by this Agreement shall be
pending that in the reasonable good faith judgment of the Participating
Investors seeks to restrain or prevent any of such transactions and has a
reasonable probability of success.
8.12 Full Participation By Holders. All holders of any
shares of Prior Preferred Stock and all holders of any Prior Warrants shall be
signatories hereto and shall participate in the redemption and exchange
transactions contemplated hereby, such that upon closing hereunder no shares of
Prior Preferred Stock and no Prior Warrants shall remain outstanding or be
issuable by the Company.
9. Conditions to Company's Obligation to Close. The Company's
obligation to redeem the shares of Prior Preferred Stock and to accept for
exchange shares of Prior Preferred Stock and Prior Warrants and issue the Series
E Shares and the Series E Warrants at the Closing is subject to the fulfillment
on or before the Closing of the following conditions, unless waived by the
Company:
9.1 Receipt of Consideration. The Company shall have
received from each Participating Investor stock certificates representing the
shares of Prior Preferred Stock to be redeemed or exchanged pursuant hereto,
accompanied by executed stock powers in acceptable form, and any Prior Warrants
of such Participating Investor, as the case may be.
9.2 Representations and Warranties. The representations
and warranties made by the Participating Investors in Section 7 shall be true
and correct in all material respects as of the date of the Closing.
9.3 Covenants. All covenants, agreements and conditions
contained in the Agreements to be performed by Participating Investors on or
prior to the date of the Closing shall have been performed or complied with in
all material respects as of the date of the Closing (it being understood that
each Participating Investors shall be deemed to have certified as to himself,
herself or itself, as to the satisfaction of the conditions set forth in Section
9.2 above and this Section 9.3 by consummating the transactions hereunder).
9.4 Compliance with Securities Laws. The Company shall be
satisfied that the offer and sale of the Series E Shares, the Series E Warrants,
the Series E Warrant Shares and the Series E Conversion Shares shall be
qualified or exempt from registration or qualification under all applicable
federal and state securities laws (including receipt by the Company of all
necessary blue sky law permits and qualifications required by any state, if
any).
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9.5 Certificate of Designations. The Series E Certificate
of Designations shall have been duly authorized, executed and filed with and
accepted by the Secretary of State of the State of Delaware.
9.6 Investor Rights Agreement. The Company and the
Participating Investors shall have executed and delivered the Investors Rights
Agreement.
9.7 Stockholders Agreement. The Company and the
Participating Investors shall have executed and delivered the Stockholders
Agreement.
9.8 Amended and Restated Stock Trading Agreement. The
Company and the Participating Investors and certain officers of the Company
shall have executed and delivered the Amended and Restated Stock Trading
Agreement.
9.9 Consents and Waivers. The Company and the
Participating Investors shall have obtained any and all consents, permits and
waivers necessary or appropriate for consummation of the transactions
contemplated by the Agreement.
9.10 Proceedings and Documents. All corporate and other
proceedings required to carry out the transactions contemplated by this
Agreement, and all instruments and other documents relating to such
transactions, shall be reasonably satisfactory in form and substance to the
Company, and the Company shall have been furnished with such instruments and
documents as it shall have reasonably requested.
9.11 No Litigation; No Order. No action, suit or
proceeding relating to the transactions contemplated by this Agreement shall be
pending that in the reasonable good faith judgment of the Company seeks to
restrain or prevent any of such transactions and has a reasonable probability of
success.
10. Other Provisions.
10.1 Governing Law; Consent to Jurisdiction. 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. FURTHERMORE, EACH PARTY
HERETO HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF THE COURTS OF THE STATE
OF ILLINOIS AND THE UNITED STATES OF AMERICA FOR THE NORTHERN DISTRICT OF
ILLINOIS IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT.
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10.2 Further Assurances. The parties agree to execute such
further instruments and to take such further action as may reasonably be
necessary to carry out the intent of this Agreement.
10.3 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.
10.4 Entire Agreement. This Agreement represents the
entire agreement between the parties with respect to the subject matter hereof
and may be modified or amended only in a writing signed by the Company and a
majority in interest of Participating Investors.
10.5 Severability. If one or more provisions of this
Agreement are held to be unenforceable under applicable law, such provision
shall be excluded from this Agreement and the balance of the Agreement shall be
interpreted as if such provision were so excluded and shall be enforceable in
accordance with its terms.
10.6 Notices. All notices and other communications
required or permitted hereunder shall be in writing and shall be delivered
personally or transmitted by facsimile, or, if sent within the U.S., mailed by
first-class mail, postage prepaid, addressed (i) if to a Participating Investor,
at such Participating Investor's address set forth in the Schedule of Investors,
or at such other address as such Participating Investor shall have furnished to
the Company in writing, or (ii) if to the Company, at its address set forth
below
Electric City Corp.
0000 Xxxxxxxxx Xxxx
Xxx Xxxxx Xxxxxxx, Xxxxxxxx 00000
Attention: Chief Financial Officer
Facsimile No.: (000)-000-0000
or at such other address as the Company shall have furnished to such
Participating Investor in writing. All such notices and other communications
shall be deemed to have been duly given when delivered by hand, if personally
delivered; when delivered by courier, if delivered by commercial courier
service; three (3) business days after being deposited in the mail, postage
prepaid, first class registered or certified, if mailed, and when receipt is
mechanically acknowledged, if telecopied.
10.7 Headings. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.
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10.8 Amendment and Waiver. No failure or delay on the part
of the parties hereto in exercising any right, power or remedy hereunder shall
operate as a waiver thereof, nor shall any single or partial exercise of any
such right, power or remedy preclude any other or further exercise thereof or
the exercise of any other right, power or remedy. Any amendment, to any
provision of this Agreement shall be effective only if it is made or given in
writing and signed by the Company and each of the Participating Investors. Any
waiver of any provision of this Agreement, and any consent to any departure by
the Company or any Participating Investor from the terms of any provision of
this Agreement, shall be effective only if it is made or given in writing and
signed by each party which is entitled to the benefit of enforcement of such
provision.
10.9 Survival of Representations, Warranties and
Agreements. Notwithstanding any investigation made by any party to this
Agreement, all covenants, agreements, representations and warranties made by the
Company and the Participating Investors herein shall survive the execution of
this Agreement and consummation of the redemption and exchange transactions
contemplated by Sections 1, 3 and 4 hereof.
[Balance of page intentionally left blank; signature page follows.]
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IN WITNESS WHEREOF, the undersigned have executed this Redemption and
Exchange Agreement as of the date set forth above.
COMPANY PARTICIPATING INVESTORS
ELECTRIC CITY CORP., NEWCOURT CAPITAL USA INC.,
By: _____________________________ By: __________________________________
Name: Xxxx Xxxxxx Name: ________________________________
Title: Chief Executive Officer Title: _______________________________
XXXXXX XXXXXXX XXXX XXXXXX
EQUITY FUNDING, INC.
By: __________________________________
Name: ________________________________
Title: _______________________________
ORIGINATORS INVESTMENT PLAN,
L.P.
By: __________________________________
Name: ________________________________
Title: _______________________________
CINERGY VENTURES II, LLC,
By: __________________________________
Name: ________________________________
Title: _______________________________
LEAF MOUNTAIN COMPANY, LLC
By: __________________________________
Name: ________________________________
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Title: _______________________________
SF CAPITAL PARTNERS, LTD.
By: __________________________________
Name: ________________________________
Title: _______________________________
______________________________________
XXXXXXX XXXXXXX
______________________________________
XXXXX X. XXXXXXX
XXXX XXXXXX HURVIS REVOCABLE
TRUST
By: __________________________________
Name: ________________________________
Title: _______________________________
______________________________________
XXXX XXXXXXX
AUGUSTINE FUND, LP
By: __________________________________
Name: ________________________________
Title: _______________________________
TECHNOLOGY TRANSFORMATION
VENTURE FUND, LP
By: __________________________________
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Name: ________________________________
Title: _______________________________
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