Exhibit 10.2

 

EXECUTION VERSION

 

SHAREHOLDER AND INVESTOR RIGHTS AGREEMENT

 

SHAREHOLDER AND INVESTOR RIGHTS AGREEMENT, dated as of December 23, 2014, by and
among Lime Energy Co., a Delaware corporation (the “Company”), Bison Capital
Partners IV, L.P., a Delaware limited partnership or its permitted assigns
(“Purchaser”), and the Existing Shareholders (as defined below).

 

WITNESSETH

 

WHEREAS, the Company and Purchaser are parties to that certain Securities
Purchase Agreement dated as of even date herewith (the “Purchase Agreement”)
pursuant to which the Company has agreed to sell, and Purchaser has agreed to
purchase, shares of the Series C Preferred Stock of the Company (the
“Securities”), on the terms and subject to the conditions thereof;

 

WHEREAS, Purchaser’s obligations under the Purchase Agreement are conditioned
upon the execution and delivery of this Agreement; and

 

WHEREAS, effective as of the date hereof (after giving effect to the
transactions contemplated by the Purchase Agreement and the other Transaction
Documents), the capitalization of the Company is as set forth on Exhibit A
hereto.

 

NOW, THEREFORE, in consideration of the mutual covenants and agreements set
forth herein and for other good and valuable consideration, the receipt and
adequacy of which is hereby acknowledged, the parties hereto agree as follows:

 

ARTICLE 1

 

DEFINITIONS

 

1.1                               Definitions.  As used in this Agreement, and
unless the context requires a different meaning, the following terms have the
meanings indicated:

 

“Affiliate” shall mean, with respect to any Person, any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such Person.  For the purposes of this definition, “control” when
used with respect to any specified Person shall mean the power to direct the
management and policies of such Person, directly or indirectly, whether through
the ownership of Voting Securities, by contract or otherwise; and the terms
“controlling” and “controlled” have meanings correlative to the foregoing.
Without limiting the foregoing, the Company’s directors and officers shall be
deemed Affiliates of the Company.

 

“Agreement” shall mean this Agreement, as the same may be amended, restated,
supplemented or modified from time to time in accordance with the terms hereof.

 

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“Alternative Redemption” shall have the meaning set forth in Section 7.5(a).

 

“Alternative Redemption Date” shall have the meaning set forth in
Section 7.5(b).

 

“Alternative Redemption Notice” shall have the meaning set forth in
Section 7.5(b).

 

“Alternative Redemption Price” shall have the meaning set forth in
Section 7.5(a).

 

“Alternative Redemption Payment” shall have the meaning set forth in
Section 7.5(d).

 

“Anniversary Date” shall have the meaning set forth in Section 7.1.

 

“Audit Committee” means the audit committee of the Board of Directors,
maintained by the Board of Directors in accordance with NASDAQ Marketplace
Rules.

 

“Average Daily Trading Volume” means, as of any date of determination, the
average daily trading volume of the Common Stock for the sixty (60) consecutive
Trading Days immediately preceding such date.

 

“Beneficial Ownership” by a Person of any securities means ownership of such
securities in respect of which such Person is considered to be a “beneficial
owner” under Rule 13d-3 under the Exchange Act as in effect on the date hereof.

 

“Board of Directors” means the Board of Directors of the Company.

 

“Business Day” shall mean any day other than a Saturday, Sunday or other day on
which commercial banks in the City of New York, New York, are authorized or
required by law or executive order to close.

 

“Certificate of Designation” shall mean the Certificate of Designation of the
Company, dated the date hereof.

 

“Change of Control” shall mean (i) any sale, merger, consolidation, share
exchange, business combination, equity issuance or other transaction or series
of related transactions which result in the stockholders immediately prior to
the transaction(s) owning collectively less than 50% of the voting control
immediately following the transaction(s) or (ii) any sale, lease, exchange,
transfer or other disposition of substantially all of the assets, taken as a
whole, in a single transaction or series of transactions, excluding sales in the
ordinary course of business.

 

“Compensation Committee” shall have the meaning set forth in Section 5.1(d).

 

“Common Stock” shall mean the common stock, par value $0.0001, of the Company.

 

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“Common Stock Beneficially Owned” by a Person means the number of shares of
Common Stock that such Person owns plus the number of shares of Common Stock
which such Person would acquire upon the exercise of all securities owned by
such Person that are convertible into, or exercisable or exchangeable for shares
of Common Stock.  Without limiting the foregoing, the Common Stock Beneficially
Owned by Purchaser shall be deemed to include the maximum number of shares of
Common Stock that could be issued to them on any conversion of the Securities
held by them at such time for Common Stock pursuant to the Certificate of
Designation of the Company dated as of the date hereof.

 

“Common Stock Redemption Price” shall have the meaning set forth in
Section 7.5(a).

 

“Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.

 

“Existing Shareholders” shall mean Richard Kiphart, an individual, and The John
Thomas Hurvis Revocable Trust dated March 8, 2002 and each of their Affiliates
and assigns.

 

“Independent Director” means a member of the Board of Directors who is both
(i) “independent” within the meaning of that term used in Rule 5605(a)(2) of the
NASDAQ Marketplace Rules (including the NASDAQ interpretive materials related
thereto) or any successor rule thereto and (ii) independent for purposes of
serving on a compensation committee of the Board of Directors pursuant to
Rule 5605(d)(2)(A) (including the NASDAQ interpretive materials related thereto)
or any successor rule thereto.

 

“Liquid Sale” shall have the meaning set forth in Section 7.5(a).

 

“Liquid Shares” shall have the meaning set forth in Section 7.5(a).

 

“Major Shareholders” shall mean the Existing Shareholders and Purchaser.

 

“New Securities” shall have the meaning set forth in Section 2.4.

 

“Nominating Committee” shall have the meaning set forth in Section 5.1(a).

 

“Notice of Sale” shall have the meaning set forth in Section 7.1.

 

“Offer Notice” shall have the meaning set forth in Section 2.1.

 

“Person” shall mean and includes natural persons, corporations, limited
partnerships, general partnerships, limited liability companies, limited
liability partnerships, joint stock companies, joint ventures, associations,
companies, trusts, banks, trust companies, land trusts, business trusts, or
other organizations, irrespective of whether they are legal entities, and
governments and agencies and political subdivisions thereof.

 

“Preferred Director(s)” shall mean the member of the Board of Directors of the
Company appointed by Purchaser or its assigns and any additional members of the
Board of

 

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Directors of the Company that Purchaser shall have the right to appoint from
time to time, pursuant to this Agreement and the Certificate of Designation.

 

“Proceedings” shall have the meaning set forth in Section 9.13.

 

“Purchaser Designee” shall have the meaning set forth in Section 5.1(a).

 

“Purchaser Director” shall have the meaning set forth in Section 5.1(a).

 

“Purchaser Observer” shall have the meaning set forth in Section 5.4.

 

“Purchaser Support Agreement” shall have the meaning set forth in
Section 7.5(a).

 

“Qualified Compensation Director” means a member of the Board of Directors who
is (i) a “Non-Employee Director” as defined in Rule 16b-3(b)(3)(i) under the
Exchange Act and (ii) an “outside director” as defined in Treasury Regulations
Section 1.162-27(e)(3)(i).

 

“Related Person” of a Person shall mean (i) any Person that owns no less than a
ten percent (10%) equity interest in such other Person or in an Affiliate of
such other Person or (ii) any director, officer, manager or employee of such
other Person or of such other Person’s Affiliates or Related Persons.

 

“Rights Offering” means the issuance by the Company to existing holders of the
Company’s Common Stock of rights to buy, within a fixed time period, a
proportional number of newly issued shares of the Company’s capital stock.

 

“Sale” shall have the meaning set forth in Section 7.2.

 

“Sale Outside Date” shall have the meaning set forth in Section 7.5.

 

“Securities Act” shall mean the Securities Act of 1933, as amended.

 

“Standstill Period” shall have the meaning set forth in Section 6.1.

 

“Subsidiary” shall mean any corporation, association, trust or other business
entity of which the designated parent shall at any time own, directly or
indirectly through a Subsidiary or Subsidiaries, at least a majority (by number
of votes) of the outstanding capital stock having ordinary voting power to elect
a majority of the board of directors (or persons holding similar functions) of
the corporation, association, trust or other business entity involved, whether
or not the right so to vote exists by reason of the happening of a contingency.

 

“Support Agreement” shall have the meaning set forth in Section 7.6.

 

“Term” shall have the meaning set forth in Section 9.1.

 

“Trading Day” means any day on which the Common Stock is traded on The NASDAQ
Stock Market, or, if The NASDAQ Stock Market is not the principal trading market
for the Common Stock, then on the principal securities exchange or securities
market on which

 

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the Common Stock is then traded; provided that “Trading Day” shall not include
any day on which the Common Stock is scheduled to trade on such exchange or
market for less than 4.5 hours or any day that the Common Stock is suspended
from trading during the final hour of trading on such exchange or market (or if
such exchange or market does not designate in advance the closing time of
trading on such exchange or market, then during the hour ending at 4:00:00 p.m.,
New York Time).

 

“Trading Market” means any of the New York Stock Exchange, the NYSE AMEX, the
NASDAQ Global Select Market, the NASDAQ Global Market, the NASDAQ Capital
Market, the OTCBB or any other market on which the Common Shares are listed or
quoted for trading on the date in question.

 

“Transaction Documents” shall mean this Agreement, the Purchase Agreement, the
Registration Rights Agreement, the Voting Agreement and the other documents,
certificates or instruments entered into in connection therewith.

 

“Voting Agreement” shall mean that Voting Agreement dated as of even date
herewith among the Company, Purchaser and the Existing Shareholders.

 

“Voting Securities” shall mean shares of any class of capital stock of the
Company that are entitled to vote generally in the election of directors, and
any security that is convertible or exchangeable into such shares.

 

1.2                               Purchase Agreement Definitions. Terms used but
not defined herein shall have the meanings given them in the Purchase Agreement.

 

1.3                               General Construction.

 

(a)                                       Unless the context clearly requires
otherwise, the plural includes the singular, the singular includes the plural,
the part includes the whole, “including” is not limiting, and “or” has the
inclusive meaning of the phrase “and/or”.  The words “hereof”, “herein”,
“hereunder” and other similar terms in this Agreement refer to this Agreement as
a whole and not exclusively to any particular provision of this Agreement. 
Article, section, subsection and clause references are to this Agreement, unless
otherwise specified.  Any reference in this Agreement includes any and all
permitted alterations, amendments, changes, extensions, modifications, renewals,
or supplements thereto or thereof, as applicable.

 

(b)                                       Neither this Agreement nor any
uncertainty or ambiguity herein shall be construed or resolved against any
party, whether under any rule of construction or otherwise.  On the contrary,
this Agreement has been reviewed by each of the parties, and each has had the
opportunity to have the Agreement reviewed by its counsel.  Accordingly, this
Agreement shall be construed and interpreted in a fair and impartial manner
according to the ordinary meaning of the words used so as to accomplish the
stated purposes and intentions of all parties hereto.

 

(c)                                        Wherever in this Agreement there is a
reference to a specific number of shares of a class or series of capital stock
or an option exercise price then, upon the occurrence of any subdivision,
combination or stock dividend of such class or series of stock, the

 

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specific number of shares or option exercise price so referenced in this
Agreement will automatically be proportionally adjusted to reflect the effect of
such subdivision, combination or stock dividend on the outstanding shares of
such class or series of stock.

 

(d)                                       All shares held or acquired by
Affiliates and Related Persons of a Major Shareholder will be aggregated
together for the purpose of determining the availability of any rights under
this Agreement.

 

ARTICLE 2

 

PARTICIPATION RIGHTS

 

2.1                               General.  On the terms and subject to the
conditions specified in this Article 2, in the event the Company proposes to
offer or sell any New Securities, the Company shall first make an offering of
such New Securities to Purchaser in accordance with the following provisions of
this ARTICLE 2; provided however that the filing of a Form S-3 Registration
Statement pursuant to the Securities Act shall not in and of itself constitute a
proposal by the Company to offer or sell any New Securities for the purposes of
this Article 2 unless and until such time as the Company specifically proposes
to offer and sell any New Securities pursuant to such registration statement.

 

2.2                               Notice of Offering.  The Company shall deliver
a written notice (the “Offer Notice”) to Purchaser stating (i) its bona fide
intention to offer such New Securities, (ii) the number of such New Securities
to be offered, (iii) the price and terms upon which it proposes to offer such
New Securities, and (iv) the date on which the offering is scheduled to close.

 

2.3                               Notification of Exercise.  By written
notification received by the Company within thirty (30) days after delivery of
the Offer Notice, Purchaser may elect to purchase, at the price and on the terms
specified in the Offer Notice, up to that portion of such New Securities which
equals the proportion that the number of shares of Common Stock Beneficially
Owned by Purchaser on the date of the Offer Notice bears to the total number of
shares of Common Stock Outstanding on a Fully-Diluted Basis (as defined in the
Certificate of Designation) on such date.  In the event that New Securities are
sold at different prices in the offering, Purchaser shall pay, per share, the
weighted average of the prices in the offering.

 

2.4                               Refused Securities.  The Company may sell any
New Securities not subscribed for by Purchaser in accordance with Sections 2.2
and 2.3 to any Person or Persons at a price not less, and upon terms no more
favorable to the offeree, than those specified in the Offer Notice.  To the
extent such New Securities are not sold prior to the scheduled closing of the
offering, such New Securities shall not be offered unless first reoffered to
Purchaser in accordance with this ARTICLE 2.

 

2.5                               New Securities.  As used herein, “New
Securities” mean any of the Company’s capital stock (whether now authorized or
not), rights, options or warrants to purchase such capital stock and securities
of any type whatsoever that are, or may become, convertible into or exercisable
or exchangeable into such capital stock; but shall not include:

 

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(a)                                       shares of Common Stock, evidences of
indebtedness, shares or other securities directly or indirectly convertible into
or exchangeable for Common Stock or rights, options or warrants to subscribe
for, purchase or otherwise acquire Common Stock or securities convertible into
Common Stock issued to employees or directors of, or consultants to, the Company
and its Subsidiaries pursuant to a plan, agreement or arrangement duly approved
by the Board of Directors or a committee thereof;

 

(b)                                       the issuance of securities to
Purchaser or its assigns pursuant to the Transaction Documents;

 

(c)                                        the issuance of securities pursuant
to the conversion, exercise or exchange of convertible, exercisable or
exchangeable securities (i) outstanding on the date hereof as set forth in
Schedule 5.3(b) to the Purchase Agreement, or (ii) which have been issued after
the date hereof where notice of such issuance has been provided to the Purchaser
in accordance with Section 2.1;

 

(d)                                       securities issued in connection with
any stock split or stock dividend; or

 

(e)                                        Exempted Securities (as defined in
the Certificate of Designation).

 

2.6                               To the extent that the Company has a Rights
Offering or an offer that is made generally available to holders of Common Stock
as a result of their ownership of Common Stock, the Company shall offer to
Purchaser the same rights with respect to Purchaser’s Preferred Stock as
Purchaser would have had Purchaser converted its Preferred Stock to Common Stock
on the record date for the issuance of such right.

 

ARTICLE 3

 

PROTECTIVE PROVISIONS

 

During the Term, the Company shall comply, and shall cause of each of its
Subsidiaries to comply, with each of the provisions contained in this ARTICLE 3.

 

3.1                               Incurrence of Indebtedness.  Without the prior
written consent of Purchaser, other than Permitted Indebtedness (as defined in
the Purchase Agreement), none of the Company or any of its Subsidiaries shall
enter into, create, incur, assume or guarantee borrowed money of any kind,
including but not limited to, a guarantee, on or with respect to any of its
Property or assets now owned or hereafter acquired or any interest therein or
any income of profits therefrom.

 

3.2                               No Change to Business.  Without the prior
written approval of Purchaser, none of the Company or any of its Subsidiaries
shall (i) enter into or engage in any business, either directly or indirectly,
except for those lines of business in which the Company or its Subsidiaries are
engaged on the date hereof or that are reasonably related and ancillary thereto
or (ii) take any action designed or intended to impair or limit in any material
respect the ability of

 

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the Company or its Subsidiaries to conduct its business in the ordinary course
consistent with past practice.

 

3.3                               Commitment or Agreement.  Neither the Company
nor its Subsidiaries shall enter into, or commit to enter into, any arrangement,
agreement or understanding that would result in a breach or violation of any of
the covenants set forth in this ARTICLE 3.

 

ARTICLE 4

 

INFORMATIONAL COVENANTS

 

4.1                               Documents furnished to the Board of Directors
or Existing Shareholders.  The Company shall furnish or cause to be furnished to
Purchaser all items and documents furnished to (a) the Company’s Board of
Directors or (b) any Existing Shareholder (in such capacity), promptly after
delivery thereof; provided that Purchaser (or an affiliate thereof) is, at the
time of delivery thereof, with respect to the foregoing clause (a), entitled to
designate at least one director to the Company’s Board of Directors pursuant to
the terms of the Transaction Documents or, with respect to the foregoing clause
(b), the beneficial and record owner of fifty percent (50%) of the shares of
Preferred Stock (or Common Stock convertible therefrom) owned by Purchaser (or
an affiliate thereof) as of the Closing Date.

 

4.2                               Financial Information.

 

(a)                                 Budgets  No later than forty-five (45) days
prior to the end of each fiscal year, the Company shall deliver to Purchaser a
draft budget (including balance sheet and income statement) relative to the
Company and its Subsidiaries, prepared on a consolidated month by month basis,
for the succeeding fiscal year.  No later than one hundred twenty (120) days
after the end of each fiscal year, the Company shall deliver to Purchaser a
final budget (including balance sheet and income statement) relative to the
Company and its Subsidiaries, prepared on a consolidated and consolidating and
month-by-month basis, for the then current fiscal year.

 

(b)                                 Quarterly/Annual Financial Information. 
Within forty-five (45) days after the end of each of the first three fiscal
quarters of the Company’s fiscal year (or such shorter period as the SEC shall
require from time to time with respect to the filing by a reporting company of a
Quarterly Report on Form 10-Q), and within ninety (90) days after the end of the
fourth fiscal quarter of the Company’s fiscal year (or such shorter period as
the SEC shall require from time to time with respect to the filing by a
reporting company of Form 10-K annual reports), the Company shall deliver to
Purchaser a narrative discussion and analysis of the financial condition and
results of operations of the Company and its Subsidiaries for such fiscal
quarter and for the period from the beginning of the then current fiscal year to
the end of such fiscal quarter, as compared to the portion of the projections
covering such periods and to the comparable periods of the previous year.  The
information required by this clause (B) shall be deemed adequately and timely
provided so long as contained in the section entitled “Management’s Discussion
and Analysis of Financial Condition and Results of Operation” contained within
the Company’s annual or quarterly report, as the case may be, so long as the
same is timely filed as provided under the rules of the Exchange Act.

 

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(c)                                  Monthly Financial Information.  No later
than forty-five (45) days after the end of each calendar month, the Company
shall deliver to Purchaser unaudited monthly financial statements of the Company
and its Subsidiaries, prepared on a consolidated basis, consisting of a balance
sheet and statements of income and cash flows as of the end of the immediately
preceding calendar month.  All such financial statements shall be prepared in
accordance with GAAP consistently applied with prior periods (with the exception
of the omission of notes to financial statements).

 

ARTICLE 5

 

BOARD OF DIRECTORS

 

5.1                               Nomination of Directors.  From and after the
date that the holders of the Securities are no longer entitled to elect at least
one Preferred Director to the Board of Directors pursuant to the Certificate of
Designation, the following provisions apply:

 

(a)                                 For so long as Purchaser has Beneficial
Ownership of at least five percent (5%) of the outstanding shares of Voting
Stock, Purchaser shall have the right to designate such number of the authorized
number of directors to the Board of Directors consistent with the voting power
held by Purchaser on the date hereof, calculated as a percentage of the overall
votes entitled to be cast in the election of directors, rounded to the nearest
whole number, and the Company, acting through the committee of the Board of
Directors with authority to select or recommend director nominees for the
Board’s selection (the “Nominating Committee”), and, as necessary, the Board of
Directors, shall cause such individual or individuals (each, a “Purchaser
Designee” and together with the Preferred Directors, “Purchaser Directors”) to
be nominated for election or appointment to the Board of Directors as set forth
below; provided, that the Nominating Committee’s obligations under this
Agreement are subject to the requirements of the committee members’ fiduciary
duties as directors and Delaware General Corporation Law. At each meeting of the
Company’s stockholders at which the directors of the Company are to be elected
and, if the Board of Directors is classified at the time of such election, at
which the class of directors of which the Purchaser Designee is a member, the
Board of Directors agrees to recommend that the stockholders elect to the Board
of Directors each Purchaser Designee nominated for election at such meeting in
accordance with the provisions of Section 5.1(a), subject to the directors’
fiduciary duties as directors and the Delaware General Corporation Law.

 

(b)                                 At any time at which a vacancy shall be
created on the Board of Directors as a result of the death, disability,
retirement, resignation, removal or otherwise of a Purchaser Designee, Purchaser
shall then have, as a result thereof, the right to designate a replacement
person for nomination for election to the Board of Directors, as specified in
Section 5.1(a) and subject to the limitations thereof.  Purchaser shall have the
right to designate for appointment by the remaining directors under the Bylaws
of the Company an individual to fill such vacancy and serve as a director.  In
connection with the foregoing, Purchaser agrees to provide information to the
Nominating Committee as is necessary to determine that such individual will
qualify to serve as a director of the Company under any applicable law, rule or
regulation as well as under the terms of this Agreement.

 

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(c)                                  Each Existing Shareholder agrees to vote,
or cause to be voted, all Voting Securities owned by such Existing Shareholder,
or over which such Existing Shareholder has voting control, from time to time
and at all times, in whatever manner as shall be necessary to ensure that at
each annual or special meeting of stockholders at which an election of directors
is held or pursuant to any written consent of the stockholders, the Purchaser
Designee shall be elected to the Board.

 

(d)                                 For so long as either (i) the holders of the
Securities are entitled to elect at least one Preferred Director or
(ii) Purchaser has the right to designate at least one Purchaser Designee, the
Board of Directors shall maintain a compensation committee in accordance with
NASDAQ Marketplace Rules (the “Compensation Committee”) that shall consist of at
least (x) two or more Independent Directors (at least two of which are Qualified
Compensation Directors) and (ii) one or more Purchaser Directors who are
Independent Directors (unless no Purchaser Directors are Independent Directors).

 

(e)                                  For so long as either (i) the holders of
the Securities are entitled to elect at least one Preferred Director or
(ii) Purchaser has the right to designate at least one Purchaser Designee, if
the Board of Directors shall establish or maintain any committee (excluding the
Nominating Committee, Compensation Committee and Audit Committee and any
committees performing solely functions typically performed by one or more of the
Nominating Committee, Compensation Committee or Audit Committee), then at least
one Purchaser Director shall have the right to be a member of such committee.

 

5.2                               Removal and Replacement.  For all Purchaser
Directors:

 

(f)                                   In the event that Purchaser shall
determine to remove from office a then Purchaser Director, the Company shall
take all actions necessary and appropriate to cause such removal to be effected
promptly.

 

(g)                                  In the event of removal, resignation,
incapacity or death of a then Purchaser Director, the Company shall take all
actions necessary and appropriate to cause the successor Purchaser Director to
be elected or appointed as a director.

 

(h)                                 The Existing Shareholders shall not vote
their Voting Securities to remove any director in contravention of any provision
of this Agreement; provided that, this Section 5.2(c) shall not limit the
Existing Shareholders’ ability to vote to remove a Preferred Director for cause
as provided in clause (ii) of the last sentence of Section 5.2.1 of the
Certificate of Designation.

 

5.3                               No Liability for Election of Purchaser
Directors.  None of the Company, Purchaser nor the Existing Shareholders, nor
any officer, director, stockholder, partner, employee or agent of such party,
makes any representation or warranty as to the fitness or competence of the
Purchaser Directors to serve as a director by virtue of such party’s execution
of this Agreement, by the act of such party in voting for the Purchaser Director
pursuant to this Agreement or otherwise.

 

5.4                               Board Observer Right. Notwithstanding any
other provision of this Agreement, the Company shall also permit one
(1) additional representative of Purchaser (the

 

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“Purchaser Observer”), to attend all meetings of the Board of Directors (whether
in person, telephonic or other) in a non-voting, observer capacity and shall
provide to the Purchaser Observer, concurrently with the members of the Board of
Directors, and in the same manner, notice of such meeting and a copy of all
materials provided to such members. Notwithstanding any other provision of this
Agreement, the Company may exclude the Purchaser Observer from access to any
portion of any materials or meeting of the Board of Directors if the chairman of
the Board of Directors determines in good faith that such exclusion is necessary
to (a) preserve the attorney-client privilege with respect thereto, or (b) avoid
a conflict of interest.

 

5.5                               Purchaser Designee and Observer Obligations.
Each Purchaser Director shall, and Purchaser shall use reasonable efforts to
cause each Purchaser Director to, observe and abide by all rules and policies of
the Board of Directors applicable to all directors on the Board of Directors
generally.

 

5.6                               Manner of Voting.  Subject to applicable law,
the voting of interests pursuant to this Agreement may be effected in person, by
proxy, by written consent or in any other manner permitted by applicable law.

 

ARTICLE 6

 

STANDSTILL

 

6.1                               General.  Purchaser covenants to and agrees
with the Company that, without the Company’s prior written consent, Purchaser
will not (and will not assist, advise, act in concert or participate with or
encourage others to), directly or indirectly, through its affiliates or
otherwise, after the Closing Date (the “Standstill Period”):

 

(a)                                       acquire, offer to acquire, or agree to
acquire, directly or indirectly, by purchase or otherwise, any additional shares
of Common Stock, direct or indirect rights to acquire shares of Common Stock or
Beneficial Ownership of any of the foregoing; provided that, for the avoidance
of doubt, any increase in number of shares of Common Stock acquired by Purchaser
in accordance with the Transaction Documents shall not be deemed to be a
violation of this Section 6.1;

 

(b)                                       make any public announcement with
respect to, or submit a proposal for, any transaction involving the acquisition
of all or any part of the Company, its equity securities, assets or Change of
Control of the Company or any of its securities or assets (including, for the
avoidance of doubt, a tender offer or the acquisition of all or substantially
all of the assets of the Company and its Subsidiaries); provided that, the
foregoing shall not prohibit Purchaser from submitting a proposal to the Chief
Executive Officer or Chief Financial Officer of the Company on a confidential
basis so long as such proposal would not require the making of any public
announcement by the Company or otherwise require the public disclosure thereof;
provided further, that, if Purchaser engages in substantive discussions with
third parties with respect to the foregoing, Purchaser shall inform the Company
of such discussions promptly after the occurrence thereof;

 

(c)                                        seek or propose to influence, advise,
change or control the management, Board of Directors, governing instruments or
policies or affairs of the Company by

 

11

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way of any public communication or communication, directly or with any Person
other than the Company, or make, or in any way participate in, any
“solicitation” of “proxies” (as such terms are defined or used in Regulation 14A
under the Exchange Act) to vote any Voting Securities or become a “participant”
in any “election contest” (as such terms are defined and used in Rule 14a-11
under the Exchange Act) with respect to Voting Securities; provided, however,
that nothing in this clause (c) shall prevent the Purchaser or its Affiliates
from (x) voting in any manner any Voting Securities over which Purchaser or such
Affiliates has Beneficial Ownership or (y) communicating privately with
stockholders of the Company to the extent such communication does not constitute
a “solicitation” or “proxies” as such terms are defined or used in Regulation
14A under the Exchange Act; provided, further, that if Purchaser engages in
substantive communications with stockholders of the Company pursuant to the
foregoing clause (y), Purchaser shall inform the Company of such communications
promptly after the occurrence thereof.

 

(d)                                       For purposes of this Section 6.1, the
following will be deemed to be, without limitation, an acquisition of Beneficial
Ownership of shares of Common Stock: (1) establishing or increasing a call
equivalent position, or liquidating or decreasing a put equivalent position,
with respect to shares of Common Stock within the meaning of Section 16 of the
Exchange Act and (2) entering into any swap or other arrangement that results in
the acquisition of any of the economic consequences of ownership of shares of
Common Stock, whether such transaction is to be settled by delivery of such
shares, in cash or otherwise.

 

6.2                               Limitations.

 

(a)                                 Section 6.1 shall not apply with respect to
any actions that are not in respect of the Securities by (i) any Person who
holds or acquires Voting Securities as, or by or through, investment funds,
managed funds, managed accounts or other pooled investment vehicles in which
Purchaser or its Affiliates, directly or indirectly, has invested or may invest
and that are managed by third parties or (ii) any direct or indirect portfolio
company of the Purchaser or its Affiliates or any trading group of Purchaser or
its Affiliates so long as in each of clauses (i) and (ii), Purchaser has not
disclosed to such Affiliate any confidential information regarding the Company
obtained in its capacity as Purchaser, including, through its right to appoint a
Preferred Director or through any board observation rights (it being understood
and agreed that confidential information regarding the Company will
presumptively not be deemed to have been shared if such Person is restricted
from accessing such information through compliance with standard practices and
procedures restricting the flow of information from Purchaser to such
Affiliate), and Purchaser has not otherwise sought to influence such Person,
portfolio company or trading group to take any action Purchaser may not take
under Section 6.1.  In addition, the provisions of Section 6.1 shall not
prohibit Purchaser from engaging in ordinary course index-replicating
activities, provided that Purchaser’s traders effecting such trades have not
been provided by Purchaser with confidential information regarding the Company
obtained in its capacity as Purchaser. 

 

(b)                                       For the avoidance of doubt, the
provisions of Section 6.1 are not intended to be construed to impose any limit
on any action taken by any Purchaser Director in his or her capacity as a
director of the Company or upon any confidential communication by such Purchaser
Director with the Company or the Board of Directors in his or her capacity as a
member of the Board of Directors.

 

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(c)                                        Nothing in Section 6.1 shall prevent
Purchaser or its Affiliates from voting any of its Voting Securities to the
extent such securities have voting rights, with respect to any matter submitted
to the stockholders of the Company for approval.

 

(d)                                       Nothing in Section 6.1 shall prevent
Purchaser or its Affiliates from acquiring any Common Stock or direct or
indirect rights to acquires shares of Common Stock solely as a result of the
Purchaser holding Preferred Stock or Common Stock at a time when the Company
effects any subdivision, split, reverse split, stock dividend, combination,
reclassification or similar event with respect to such Preferred Stock or Common
Stock

 

(e)                                        Nothing in Section 6.1 shall prevent
Purchaser’s Affiliates from acquiring from the Company any Plan Securities (as
defined in the Purchase Agreement).

 

(f)                                         Section 6.1(a) shall not apply to
any acquisition of Common Stock or direct or indirect rights to acquires shares
of Common Stock pursuant to ARTICLE 2.

 

(g)                                        Nothing in Section 6.1 shall restrict
Purchaser from voting against any proposal of a third party regarding a merger
or other business combination, or opposing publicly or privately any tender or
exchange offer, regardless of whether such proposal or offer is supported by the
Board.

 

(h)                                       The restrictions set forth in
Section 6.1(a) and Section 6.1(b) shall be suspended during the time following
the Company entering into a definitive agreement with respect to, or publicly
announcing that it plans to enter into, a transaction involving all or a
controlling portion of the Company’s equity securities or all or substantially
all of the Company’s assets (whether by purchase, tender or exchange offer,
merger or other business combination or in any other manner), but shall be
resumed if such definitive agreement is terminated prior to consummation or if
the Company publicly announces that it no longer plans to enter into a
transaction described above.

 

6.3                               Termination of Standstill.  The Standstill
Period shall immediately terminate and expire upon:

 

(a)                                       any sale of more than 50% of the
assets of the Company and its Subsidiaries, taken as a whole; or

 

(b)                                       any merger, consolidation or other
business combination involving the Company or any of its Subsidiaries and a
third party, or any privatization transaction by the Company other than any such
transaction where (i) the holders of equity securities of the Company
outstanding immediately prior to such transaction continue to hold a majority of
the equity securities of the surviving or resulting company or its ultimate
parent immediately after giving effect to the transaction, and (ii) does not
otherwise involve either (A) any sale of more than 50% of the assets of the
Company and its Subsidiaries, taken as a whole or (B) a transaction where no
Person (other than Purchaser or the Existing Shareholders) after such
transaction will beneficially own (within the meaning of Rule 13d-3 under the
Exchange Act) more than 10% of any class of outstanding equity securities of the
Company.

 

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ARTICLE 7

 

COMPANY SALE

 

7.1                               If, on the fifth (5th) anniversary of the date
hereof or any succeeding anniversary of the date hereof (the “Anniversary
Date”), if ten percent (10%) of the Average Daily Trading Volume of the
Company’s Common Stock is less than (i) the number of shares of Common Stock
Beneficially Owned by Purchaser divided by (ii) 240, then Purchaser may elect to
deliver to the Company a notice stating that Purchaser desires that the Company
be sold (a “Notice of Sale”); provided that, the Notice of Sale must be given by
the seventieth (70th) day following the applicable Anniversary Date.

 

7.2                               Upon receipt of a Notice of Sale, the Company
shall actively take steps to engage a qualified investment bank reasonably
acceptable to Purchaser to effect the sale of the Company and/or its assets (the
“Sale”) and if the Company shall fail to engage such an investment bank within
sixty (60) days of the receipt of the Notice of Sale, then Purchaser may engage
an independent, unaffiliated investment bank on behalf of the Company to advise
the Company and assist it to effect a Sale.  The Company shall proceed with
reasonable diligence to effect the Sale with the investment bank so engaged.

 

7.3                               Subject to the terms of the Support Agreement,
each Existing Shareholder shall vote to approve the Sale (including, if
applicable, through the execution of one or more written consents if
stockholders of the Company are requested to vote through the execution of an
action by written consent in lieu of any such meeting of stockholders of the
Company) that may be required so that with respect to a stockholder vote to
approve a Sale, all Voting Securities held by such Existing Shareholder are
voted to approve the Sale. Each Existing Stockholder further agrees not to take
any other actions as a stockholder of the Company that is intended to, or is
reasonably likely to, directly or indirectly, circumvent, avoid or nullify the
voting arrangements required by this Section 7.3.

 

7.4                               Subject to the terms of the Support Agreement,
if any Sale shall be consummated pursuant to a tender offer for issued and
outstanding shares of Common Stock of the Company, each Existing Shareholder
agrees to tender their shares of Common Stock Beneficially Owned, or cause such
shares to be tendered, into the tender offer.  Each Existing Shareholder shall
not withdraw any shares of Common Stock Beneficially Owned so tendered, or cause
such shares to be withdrawn, from the tender offer at any time.

 

7.5                               Alternative Redemption Right.

 

(a)                                 If a Sale shall not occur within nine (9)
months of receipt of the Notice of Sale (the “Sale Outside Date”), then
Purchaser shall have a right that is in addition to (and not a replacement of)
the redemption rights set forth in the Certificate of Designation, to require
the Company to purchase all or any portion of its Preferred Stock or its Common
Stock into which the Preferred Stock has converted (an “Alternative Redemption”)
for a per share price equal to (i) in the case of Common Stock into which the
Preferred Stock has converted, the average closing price of the Common Stock
reported on the Trading Market for the sixty (60) Trading Days immediately
preceding the date of the Alternative Redemption Notice) (the “Common Stock
Redemption Price”); and (ii) in the case of Preferred Stock, the Common Stock

 

14

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Redemption Price multiplied by the number of shares of Common Stock into which a
share of Preferred Stock is convertible on the date of the Alternative
Redemption Notice; provided, however, if (A) the Board of Directors has approved
a Sale, the consummation of which would result in the receipt of solely cash or
Liquid Shares (as defined below) or a combination thereof by Purchaser for its
shares of Preferred Stock or Common Stock into which the Preferred Stock has
converted (a “Liquid Sale”), and (B) Purchaser has not promptly thereafter
executed a support agreement (which shall be in a form reasonably acceptable to
Purchaser and the Company) to the effect that Purchaser will participate in, and
reasonably cooperate in effecting, such Sale (a “Purchaser Support Agreement”),
then the price for the Alternative Redemption (to the extent it becomes
available) shall be (x) in the case of Preferred Stock, the Redemption Price set
forth in the Certificate of Designation as of the Alternative Redemption Date
multiplied by the number of shares of Preferred Stock subject to the Alternative
Redemption; and (y) in the case of Common Stock into which the Preferred Stock
has converted, the number of shares of Preferred Stock that were converted into
such shares of Common Stock multiplied by the Redemption Price set forth in the
Certificate of Designation as of the Alternative Redemption Date (the total
amount payable upon Alternative Redemption, whether or not pursuant to this
proviso, the “Alternative Redemption Price”).  Securities of the potential
acquirer shall constitute “Liquid Shares” if such securities are “covered
securities” under Section 18(b)(1) of the Securities Act, and as of any date of
determination, ten percent (10%) of the average daily trading volume of such
shares for the sixty (60) consecutive Trading Days immediately preceding such
date would be greater than (1) the number of Liquid Shares that Purchaser would
receive in the Sale divided by (2) 240.

 

(b)                                 Purchaser shall send written notice of the
exercise of any such Alternative Redemption pursuant hereto (the “Alternative
Redemption Notice”) to the Company not less than thirty (30) days prior to the
effective date of the Alternative Redemption (the “Alternative Redemption
Date”); provided that, in order to effect an Alternative Redemption that
satisfies all of the following conditions, Purchaser must (i) provide the
Alternative Redemption Notice in respect of all (but not less than all) of its
Preferred Stock and its Common Stock into which the Preferred Stock has
converted and (ii) provide the Alternative Redemption Notice to the Company by
such earlier time (which shall not be earlier than ten (10) days following the
date the Board of Directors has approved the Liquid Sale) as may be reasonably
necessary to permit the Company to consummate the Liquid Sale; (A) the Board of
Directors has approved a Liquid Sale, (B) Purchaser has not promptly thereafter
executed a Purchaser Support Agreement in respect of such Liquid Sale, and (C)
the Alternative Redemption Date may occur prior to the consummation or earlier
termination of a Liquid Sale.  Each Alternative Redemption Notice shall state
(i) the number of shares of Preferred Stock or Common Stock into which the
Preferred Stock has converted held by the Purchaser that the Company shall
redeem on the Alternative Redemption Date specified in the Alternative
Redemption Notice and (ii) the Alternative Redemption Date and the Alternative
Redemption Price, and shall include the certificate or certificates representing
such shares of Preferred Stock or Common Stock into which the Preferred Stock
has converted to be redeemed (or, if Purchaser alleges that such certificate has
been lost, stolen or destroyed, a lost certificate affidavit and agreement
reasonably acceptable to the Company (including a bond if required by the
Company’s transfer agent) to indemnify the Company against any claim that may be
made against the Company on account of the alleged loss, theft or destruction of
such certificate).  Within five (5) days of receipt of the Alternative
Redemption Notice, the Company shall send written notice to Purchaser
designating

 

15

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the manner and the place in which the Purchaser shall surrender its certificate
or certificates representing the shares of Preferred Stock or Common Stock into
which the Preferred Stock has converted to be redeemed.

 

(c)                                        In the event less than all of the
shares of Preferred Stock or Common Stock into which the Preferred Stock has
converted represented by a certificate are redeemed, a new certificate
representing the unredeemed shares of Preferred Stock or Common Stock, as
applicable, shall promptly be issued to the Purchaser.

 

(d)                                       If the Company fails to make the
Alternative Redemption Payment by the Alternative Redemption Date for any
reason, then, beginning with the Alternative Redemption Date, the Company shall
be liable for liquidated damages (which shall not be deemed a penalty) at the
rate of 15% per annum on the amount unpaid, measured from the Alternative
Redemption Date until the date paid, which rate shall increase by an additional
1% per annum on each three-month anniversary of the Alternative Redemption Date
thereafter, and which liquidated damages shall be added to the Alternative
Redemption Payment and compounded on each June [23] and December [23], with such
1% increases and compounding continuing until such time as the Company makes the
Alternative Redemption Payment and all associated liquidated damages. 
Notwithstanding the foregoing, the rate of liquidated damages shall not exceed
the maximum rate permitted by law. Purchaser shall continue to have all rights
associated with the Preferred Stock or Common Stock into which the Preferred
Stock has converted until the later of the Alternative Redemption Date or
Alternative Redemption Payment.

 

7.6                               To effectuate Section 7.3 and Section 7.4, the
Existing Shareholders hereby agree to execute a Support Agreement in the form
attached hereto as Exhibit B (the “Support Agreement”).

 

ARTICLE 8

 

REPRESENTATIONS AND
WARRANTIES

 

Each party represents and warrants to each other party as follows:

 

8.1                               Due Organization.  If such party is an entity,
it is duly organized and existing in good standing under the laws of the
jurisdiction of its organization.

 

8.2                               Authorization; No Contravention.  The
execution, delivery and performance by it of this Agreement: (a) is within its
power and authority and has been duly authorized by all necessary action;
(b) does not contravene the terms of its Governing Documents (if such party is
an entity); and (c) will not violate, conflict with or result in any breach or
contravention of any of its Contractual Obligations, or any order or decree
directly relating to it.

 

8.3                               Binding Effect. This Agreement has been duly
executed and delivered by it and constitutes its legal, valid and binding
obligation, enforceable against it in accordance with the terms hereof, except
as enforcement may be limited by equitable principles or by bankruptcy,

 

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insolvency, reorganization, moratorium, or similar laws relating to or limiting
creditors’ rights generally.

 

8.4                               Governmental Authorization; Third Party
Consent.  No approval, consent, compliance, exemption, authorization, or other
action by, or notice to, or filing with, any Governmental Authority or any other
Person is necessary or required in connection with the execution, delivery or
performance by it or enforcement against it of this Agreement.

 

8.5                               Title to Common Stock.  Each of the Existing
Shareholders represent to each other party as follows: As of the date hereof,
such Existing Shareholder is the beneficial owner of the shares of Common Stock
(including convertible securities, warrants and options convertible into shares
of Common Stock) set forth opposite such Existing Shareholder’s name on
Exhibit A attached hereto, such shares of Common Stock are owned free and clear
of all security interests, liens, claims, pledges, options, rights of first
refusal, agreements, limitations on such Existing Shareholder’s voting rights,
charges and other encumbrances, of any nature whatsoever, and such Existing
Shareholder has not appointed or granted any proxy, which appointment or grant
is still effective, with respect to such Common Stock owned by such Existing
Shareholder.

 

ARTICLE 9

 

MISCELLANEOUS

 

9.1                               Term; Termination.  This Agreement shall
continue in effect until Purchaser ceases to hold at least five percent (5%) of
the voting power represented by the Voting Securities (the “Term”).

 

9.2                               Fees.  Any and all Preferred Directors,
Purchaser Designees and board observers (per Section 5.4 hereof) shall be
entitled to receive such reimbursement of reasonable expenses in connection with
their services as a director or participation in meetings of the Board of
Directors which are reimbursed to directors (in their capacity as such) from
time to time, and Preferred Directors and Purchaser Designees shall be
indemnified by the Company to the fullest extent permitted by the Amended and
Restated Certificate of Incorporation, as amended from time to time, of the
Company and the Amended and Restated By-laws, as amended from time to time, of
the Company and shall be offered the opportunity to enter into any
indemnification agreement made available generally to each member of the Board
of Directors in his or her capacity as a director.

 

9.3                               Compensation of Preferred Directors and
Purchaser Designees.  Any Preferred Directors and Purchaser Designees shall be
entitled to participate in compensation plans designed for other non-employee
directors of the Company, including participation in equity plans approved by
the Board of Directors.

 

9.4                               D&O Insurance.  The Company shall at all times
maintain directors’ and officers’ liability insurance in respect of all
Purchaser Directors with the same insurer, in the same amount, on the same terms
and conditions and with the same deductibles as are applicable to all other
directors on the Board of Directors (including any Purchaser Directors), which

 

17

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insurance shall at all times provide at least an aggregate of $10,000,000(1) (or
such greater amount as the Board of Directors shall determine) of coverage for
directors’ and officers’ liability.

 

9.5                               Survival of Representations and Warranties. 
All of the representations and warranties made herein shall survive the
execution and delivery of this Agreement indefinitely.

 

9.6                               Obligations of the Company and the Existing
Shareholders.  The Existing Shareholders agree to use their reasonable efforts
to cause the Company to perform its obligations hereunder.  Subject to the terms
and conditions of this Agreement, the Company agrees to use its reasonable
efforts to ensure that the rights granted to Purchaser hereunder are effective
and that Purchaser enjoys the benefits thereof. Subject to the terms and
conditions of this Agreement, the Company will not, by any voluntary action,
avoid or seek to avoid the observance or performance of any of the terms to be
performed hereunder by the Company, but will at all times in good faith assist
in the carrying out of all the provisions of this Agreement.

 

9.7                               Notices.  All notices, demands and other
communications provided for or permitted hereunder shall be made in writing and
shall be by facsimile (with receipt confirmed), nationally recognized overnight
courier service or personal delivery to the address set forth opposite the
party’s names on the signature page hereto or to such other address provided by
such party in accordance herewith.  All such notices and communications shall be
deemed to have been duly given when delivered by hand, if personally delivered;
when delivered by courier, if delivered by nationally recognized overnight
courier service; or when sent, if sent via facsimile during the recipient’s
normal business hours with confirmation of sending.

 

9.8                               Assignment; Successors and Assigns;
Independent Nature of Obligations and Rights.

 

(a)                                       Subject to Section 9.8(b), Purchaser
and the Existing Shareholders hereby agree, and, and any transferee or assignee
of any shares of Voting Securities now owned or hereafter acquired by Purchaser
or the Existing Shareholders is hereby on notice, that any transfer or
assignment of such securities in a private transaction is conditioned upon such
transferee’s or assignee’s execution and delivery to the parties hereof of a
joinder agreement in the form of Exhibit C prior to such transfer or
assignment.  Any transfer or assignment of any such Voting Securities in
violation of this Section 9.8 shall be void and be of no force or effect.

 

(b)                                       Section 9.8(a) shall not apply to
(i) transferees pursuant to Rule 144 promulgated under the Securities Act, or
(ii) sales effected pursuant to a registration statement or underwritten
offering, so long as, after giving effect to sales under either clause (i) or
clause (ii), the Existing Shareholders and Purchaser will continue to hold, in
the aggregate, Beneficial Ownership of voting capital stock (excluding options,
warrants and other securities convertible into voting capital stock),
representing no less than a majority of the outstanding voting power of the
Company.

 

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(1)  NTD: To be confirmed.  We would like to see a broker’s analysis of coverage
limit vis a vis peers.

 

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(c)                                        This Agreement shall inure to the
benefit of and be binding upon the successors and permitted assigns of the
parties.  No Person other than the parties and their successors and permitted
assigns is intended to be a beneficiary of this Agreement.

 

(d)                                       Nothing contained in this Section 9.8
or elsewhere in this Agreement or any Transaction Document, shall be deemed to
constitute Purchaser and the Existing Shareholders as a partnership, an
association, a joint venture or any other kind of entity, or create a
presumption that Purchaser or the Existing Shareholders are in any way acting in
concert or as a group with respect to the obligations or the transactions
contemplated by Section 9.8, this Agreement or any Transaction Document. The
Company hereby confirms that it understands and agrees that Purchaser and the
Existing Shareholders are not acting as a “group” as that term is used in
Section 13(d) of the Exchange Act.  Without limiting the generality of the
foregoing, subject to the express obligations in this Agreement and the other
Transaction Documents concerning voting, acquisition or disposition of shares,
Purchaser and each Existing Shareholder shall be entitled to independently
protect and enforce their respective rights, including without limitation the
rights arising out of this Agreement or out of the other Transaction Documents,
and it shall not be necessary for any other Person to be joined as an additional
party in any proceeding for such purpose.

 

9.9                               Amendment and Waiver.

 

(a)                                       No failure or delay on the part of any
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.  The remedies provided for in
this Agreement are cumulative and are not exclusive of any remedies that may be
available to the parties hereto at law, in equity or otherwise.

 

(b)                                       Any amendment, supplement or
modification of or to any provision of this Agreement, any waiver of any
provision of this Agreement, and any consent to any departure by any party from
the terms of any provision of this Agreement, shall be effective (i) only if it
is made or given in writing and signed by all of the parties hereto, and
(ii) only in the specific instance and for the specific purpose for which it is
made or given.  No amendment, supplement or modification of or to any provision
of this Agreement, or any waiver of any such provision or consent to any
departure by any party from the terms of any such provision may be made orally.

 

9.10                        Signatures; Counterparts.  Facsimile (and
electronic) transmissions of any executed original document and/or
retransmission of any executed facsimile (or electronic) transmission shall be
deemed to be the same as the delivery of an executed original.  At the request
of any party hereto, the other parties hereto shall confirm facsimile
transmissions by executing duplicate original documents and delivering the same
to the requesting party or parties.  This Agreement may be executed in any
number of counterparts and by the parties hereto in separate counterparts, each
of which when so executed shall be deemed to be an original and all of which
taken together shall constitute one and the same agreement.

 

9.11                        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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9.12                        Governing Law.  THIS AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
DELAWARE, WITHOUT REGARD TO ITS CONFLICT OF LAW OR CHOICE OF LAW PRINCIPLES.

 

9.13                        Jurisdiction.  Any governmental, judicial or
adversarial proceeding (public or private), litigation, suits, arbitration,
disputes, demands, claims, actions, causes of action or investigations
(collectively, “Proceedings”) seeking to enforce any provision of, or based on
any matter arising out of or in connection with, this Agreement shall be brought
in the U.S. District Court for the District of Delaware (or, if subject matter
jurisdiction is unavailable, in the state courts of the State of Delaware), and
each of the parties hereby consents to the exclusive jurisdiction of such court
(and of the appropriate appellate courts) in any such Proceeding and waives any
objection to venue laid therein.  Process in any such Proceeding may be served
on any party anywhere in the world, whether within or without the State of
Delaware.  Without limiting the foregoing, the parties agree that service of
process upon such party at the address referred to on the signature pages hereto
together with written notice of such service to such party, shall be deemed
effective service of process upon such party.  EACH OF THE PARTIES HERETO HEREBY
IRREVOCABLY WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY SUIT, ACTION OR
PROCEEDING (INCLUDING ANY COUNTERCLAIM) ARISING OUT OF OR BASED UPON THIS
AGREEMENT.

 

9.14                        Severability.  If any one or more of the provisions
contained in this Agreement, or the application thereof in any circumstance, 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 hereof shall not be in any way impaired,
unless the provisions held invalid, illegal or unenforceable shall substantially
impair the benefits of the remaining provisions of this Agreement.  The parties
hereto further agree to replace such invalid, illegal or unenforceable provision
of this Agreement with a valid, legal and enforceable provision that will
achieve, to the extent possible, the economic, business and other purposes of
such invalid, illegal or unenforceable provision.

 

9.15                        Enforcement of Agreement.  The parties hereto
acknowledge and agree that if any of the provisions of this Agreement are not
performed in accordance with their specific terms by a party hereto, the
aggrieved party or parties would be irreparably damaged and such breach could
not be adequately compensated in all cases by monetary damages alone. 
Accordingly, in addition to any other right or remedy to which an aggrieved
party may be entitled, at law or in equity, it shall be entitled to enforce any
provision of this Agreement by seeking a decree of specific performance and
seeking temporary, preliminary and permanent injunctive relief to prevent
breaches or threatened breaches of any of the provisions of this Agreement,
without posting any bond or other undertaking.

 

9.16                        Entire Agreement.  This Agreement and the other
Transaction Documents are intended by the parties hereto as a final expression
of their agreement and intended to be a complete and exclusive statement of the
agreement and understanding of the parties in respect of the subject matter
contained herein and therein. There are no restrictions, promises, warranties or
undertakings, other than those set forth or referred to herein or therein.  This
Agreement and the Transaction Documents supersede all prior agreements and
understandings between the parties hereto with respect to such subject matter.

 

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9.17                        Further Assurances.  Each party hereto shall execute
such documents and perform such further acts as may be reasonably required or
desirable to carry out or to perform the provisions of this Agreement.

 

9.18                        Construction.  Each covenant contained herein shall
be construed (absent express provision to the contrary) as being independent of
each other covenant contained herein, so that compliance with any one covenant
shall not (absent such an express contrary provision) be deemed to excuse
compliance with any other covenant.  Where any provision herein refers to action
to be taken by any Person, or which such Person is prohibited from taking, such
provision shall be applicable whether such action is taken directly or
indirectly by such Person.

 

[Signature page follows]

 

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
and delivered by their respective officers hereunto duly authorized as of the
date first above written.

 

Address

 

 

 

 

 

Lime Energy Co.

 

LIME ENERGY CO., a Delaware corporation

16810 Kenton Drive, Suite 240

 

 

Huntersville, NC

 

By:

/s/ Adam Procell

Facsimile:

 

 

Name: Adam Procell

E-mail:

 

 

Title: President & CEO

Attention:

 

 

 

Signature Page to Shareholder Rights
Agreement

 

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Richard Kiphart

 

RICHARD KIPHART, an individual

c/o William Blair & Company LLC

 

 

222 W. Adams St

 

 

Chicago, IL 60606

 

/s/ Richard P. Kiphart

Facsimile: 773-442-0214

 

 

E-mail: rkiphart@williamblair.com

 

 

Attention:

 

 

 

Signature Page to Shareholder Rights
Agreement

 

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The John Thomas Hurvis Revocable Trust

 

THE JOHN THOMAS HURVIS REVOCABLE TRUST, a

 

 

 

 

 

 

 

 

By:

/s/ John Thomas Hurvis

 

 

 

Name: John Thomas Hurvis

 

 

 

Title Trustee

Facsimile:

 

 

E-mail:

 

 

Attention:

 

 

 

Signature Page to Shareholder Rights
Agreement

 

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Bison Capital Partners IV, L.P.

780 Third Avenue, 30th Floor

 

BISON CAPITAL PARTNERS IV, L.P., a Delaware limited partnership

New York, NY 10017

 

 

Tel:

646-792-2081

 

By:

Bison Capital Partners IV GP, L.P.

Fax:

646-590-9021

 

Its:

General Partner

Email:

ahildebrand@bisoncapital.com

 

 

 

 

 

 

 

 

 

By: Bison Capital Partners GP, LLC

 

 

 

Its: General Partner

 

 

 

 

 

By:

/s/ Andreas Hildebrand

 

 

 

Name:

Andreas Hildebrand

 

 

 

Title:

Member

 

Signature Page to Shareholder Rights
Agreement

 

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Exhibit A

 

Capitalization

 

Common Stock Beneficially Owned by Richard Kiphart and Affiliates and
Outstanding

 

4,090,689 shares

 

 

 

Common Stock Beneficially Owned by The John Thomas Hurvis Revocable Living Trust
and Affiliates and Outstanding

 

1,956,920 shares

 

 

 

Other Common Stock Outstanding

 

3,404,591 shares

 

 

 

Outstanding Options to Purchase Common Stock

 

345,332 shares

 

 

 

Series C Convertible Preferred Stock Outstanding

 

10,000 shares outstanding (initially convertible into 4,166,667 shares of Common
Stock but subject to limitations and adjustments set forth in the Certificate of
Designation)

 

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Exhibit B

 

Form of Support Agreement

 

See attached.

 

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FORM OF

 

SUPPORT AGREEMENT

 

THIS SUPPORT AGREEMENT dated as of [·], 20[·] (this “Agreement”), is by and
among Lime Energy Co., a Delaware corporation (the “Company”), [BUYER], a [STATE
OF ORGANIZATION] corporation (“Parent”), and the undersigned stockholders(1)
(“Stockholders”).

 

WHEREAS, concurrently with or following the execution of this Agreement, the
Company, Parent and [MERGER SUB], a [STATE OF ORGANIZATION] and wholly owned
subsidiary of Parent (“Merger Sub”), have entered, or will enter, into an
[Agreement and Plan of Merger] (as the same may be amended from time to time,
the “Merger Agreement”), providing for, among other things, [a tender offer by
Merger Sub and] the merger (the “Merger”)(2) of Merger Sub and the Company
pursuant to the terms and conditions of the Merger Agreement;

 

WHEREAS, as a condition to its willingness to enter into the Merger Agreement,
Parent has required that Stockholder execute and deliver this Agreement;

 

WHEREAS, in order to induce Parent to enter into the Merger Agreement,
Stockholder is willing to make certain representations, warranties, covenants
and agreements with respect to the shares of Common Stock Beneficially Owned by
Stockholder and set forth below Stockholder’s signature on the signature
page hereto (the “Original Shares” and, together with any additional shares of
Common Stock pursuant to Section 6 hereof, the “Shares”);

 

WHEREAS, the Company, [Bison Capital Equity Partners IV, L.P.], a Delaware
limited partnership or its permitted assigns (“Purchaser”), and [certain of]
Stockholders [and][or][Stockholder’s Affiliates] are parties to that certain
Shareholder and Investor Rights Agreement, dated as of December [·], 2014 (the
“Shareholder Rights Agreement”), pursuant to which Stockholders are obligated to
enter into this Agreement for the benefit of Purchaser; and

 

NOW THEREFORE, in consideration of the mutual covenants and agreements set forth
herein and for other good and valuable consideration, the receipt and adequacy
of which is hereby acknowledged, the parties hereto agree as follows.  Certain
capitalized terms used herein are defined in ARTICLE V below.  Any capitalized
terms used and not defined herein shall have the meanings ascribed to such terms
in the Merger Agreement.

 

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(1) It is contemplated that each “group” of stockholders subject to Section 7.6
of the Shareholder Agreement will sign a separate Support Agreement in this
form.

 

(2) Definitions of Merger Agreement and Merger to be modified and/or expanded to
reflect nature of transaction and transaction agreements.

 

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ARTICLE I.

Agreement to Vote(3)

 

Section 1.01                             Agreement to Vote.  Each Stockholder
agrees during the Term to vote its Shares, and to cause any holder of record of
its Shares to vote or execute a written consent or consents if stockholders of
the Company are requested to vote their shares through the execution of an
action by written consent in lieu of any such annual or special meeting of
stockholders of the Company:

 

(a)                                 in favor of the Merger and the Merger
Agreement, at every meeting (or in connection with any action by written
consent) of the stockholders of the Company at which such matters are considered
and at every adjournment or postponement thereof;

 

(b)                                 against (1) any Acquisition Proposal(4)
(except as otherwise provided in Section 4.02), (2) any action, proposal,
transaction or agreement which could reasonably be expected to result in a
breach of any covenant, representation or warranty or any other obligation or
agreement of the Company under the Merger Agreement or of Stockholder under this
Agreement and (3) any action, proposal, transaction or agreement that could
reasonably be expected to impede, interfere with, delay, discourage, adversely
affect or inhibit the timely consummation of the Merger or the fulfillment of
Parent’s, the Company’s or Merger Sub’s conditions under the Merger Agreement or
change in any manner the voting rights of any class of shares of the Company
(including any amendments to the Company’ Amended and Restated Certificate of
Incorporation or By-laws).

 

Section 1.02                             Irrevocable Proxy.  Each Stockholder
hereby appoints Parent and any designee of Parent, and each of them
individually, its proxies and attorneys-in-fact, with full power of substitution
and resubstitution, to vote or act by written consent during the term of this
Agreement with respect to the Shares in accordance with Section 1.01. This proxy
and power of attorney is given to secure the performance of the duties of each
Stockholder under this Agreement. Each Stockholder shall take such further
action or execute such other instruments as may be necessary to effectuate the
intent of this proxy. This proxy and power of attorney granted by each
Stockholder shall be irrevocable during the term of this Agreement, shall be
deemed to be coupled with an interest sufficient in law to support an
irrevocable proxy and shall revoke any and all prior proxies granted by
Stockholder with respect to the Shares. The power of attorney granted by
Stockholder herein is a durable power of attorney and shall survive the
dissolution, bankruptcy, death or incapacity of such Stockholder. The proxy and
power of attorney granted hereunder shall terminate upon the termination of this
Agreement.

 

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(3) This Article may be removed if the transaction is a two-step transaction and
there is no provision in the Merger Agreement terminating the tender offer and
reverting to a shareholder meeting if less than a defined threshold of shares is
tendered.

 

(4) To be defined in the same manner as in the no solicitation provision of the
Merger Agreement; i.e., that which the Company will be prohibited from
soliciting during the no shop period.

 

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Section 1.03                             Limitation.  Notwithstanding the
foregoing, if the Board of Directors of the Company has effected (and not
withdrawn) a Permitted Change of Recommendation(5) in accordance with the Merger
Agreement in response to a Superior Proposal(6), then the obligation to vote as
set forth in Section 1.01 above shall only apply to a number of Shares equal
to   %(7) of the total Company voting power outstanding on the record date for
such meeting or consent, allocated amongst the Stockholders as they determine in
their sole discretion, and the Stockholders may vote the remaining Shares in
their sole discretion, as they determine.

 

ARTICLE II.

Agreement to Tender(8)

 

Section 2.01                             Obligation to Tender.  Subject to
Section 2.02, each Stockholder shall duly tender, or cause to be tendered, in
the Tender Offer(9), all of its Shares pursuant to and in accordance with the
terms of the Tender Offer.  Promptly, but in any event no later than five
(5) Business Days after the commencement of the Tender Offer, each Stockholder
shall (i) deliver or cause to be delivered to the depositary designated in the
Tender Offer (the “Depositary”) (A) a letter of transmittal with respect to such
Shares complying with the terms of the Tender Offer, (B) a certificate or
certificates representing such Shares or an “agent’s message” (or such other
evidence, if any, of transfer as the Depositary may reasonably request) in the
case of a book-entry transfer of any Shares and (C) all other documents or
instruments required to be delivered pursuant to the terms of the Tender Offer,
and/or (ii) instruct its Broker to tender such Shares on a timely basis and in
accordance herewith pursuant to and in accordance with the terms of the Tender
Offer.  Each Stockholder agrees that once its Shares are so tendered, such
Stockholder will not, subject to Section 2.02, withdraw, nor permit the
withdrawal of, any tender of such

 

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(5) To be defined in the same manner as in the no solicitation provision of the
Merger Agreement for this concept.

 

(6) To be defined in the same manner as in the no solicitation provision of the
Merger Agreement; i.e., the type of Acquisition Proposal for which the Board
could effect a Permitted Change of Recommendation.

 

(7) This percentage to be completed based upon the opinion of Company counsel as
to the maximum percentage of shares that can be subject to a support agreement
consistent with Delaware law (taking into account the provisions of the Merger
agreement concerning the right of the Board to terminate the Merger Agreement
following a Permitted Change of Recommendation).  Reductions from total Shares
owned to this percentage will be proportional for every holder subject to a
support agreement in the transaction unless such holders agree differently
amongst themselves.  Within each support agreement (i.e., for each “group” of
related holders), the percent to be voted may be allocated amongst them as they
see fit.

 

(8) To be used if Merger is a two-step including a first step tender offer.

 

(9) Defined term to be same as used in two-step merger agreement

 

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Shares, unless and until (i) the Tender Offer shall have been terminated in
accordance with the terms of the Merger Agreement, or (ii) the Term of this
Agreement shall have ended.

 

Section 2.02          Limitation. Notwithstanding the foregoing, if the Board of
Directors of the Company has effected (and not withdrawn) a Permitted Change of
Recommendation(10) in accordance with the Merger Agreement in response to a
Superior Proposal(11), then the obligation to tender as set forth in
Section 2.01 above shall only apply to a number of Shares equal to    %(12) of
the total Company voting power outstanding on the record date for such meeting
or consent, allocated amongst the Stockholders as they determine in their sole
discretion, and the Stockholders may tender or refrain from tendering the
remaining Shares in their sole discretion, as they determine.

 

ARTICLE III.
Representations and Warranties

 

Section 3.01                             Representations and Warranties of the
Stockholders.  Each Stockholder hereby represents and warrants to the Company as
follows, as of the date of this Agreement and during the Term:

 

(a)                                 Due Organization.  If such Stockholder is an
entity, it is duly organized and existing in good standing under the laws of the
jurisdiction of its organization.

 

(b)                                 Authorization; No Contravention.  This
Agreement has been duly executed and delivered by it and constitutes its legal,
valid and binding obligation, enforceable against it in accordance with the
terms hereof, except as enforcement may be limited by equitable principles or by
bankruptcy, insolvency, reorganization, moratorium, or similar laws relating to
or limiting creditors’ rights generally.

 

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(10) To be defined in the same manner as in the no solicitation provision of the
Merger Agreement for this concept.

 

(11) To be defined in the same manner as in the no solicitation provision of the
Merger Agreement; i.e., the type of Acquisition Proposal for which the Board
could do a Permitted Change of Recommendation.

 

(12) This percentage to be completed based upon the opinion of Company counsel
as to the maximum percentage of shares that can be subject to a support
agreement consistent with Delaware law (taking into account the provisions of
the Merger agreement concerning the right of the Board to terminate the Merger
Agreement following a Permitted Change of Recommendation). Reductions from total
Shares owned to this percentage will be proportional for every holder subject to
a support agreement in the transaction unless such holders agree differently
amongst themselves. Within each support agreement (i.e., for each “group” of
related holders), the percent to be voted may be allocated amongst them as they
see fit.

 

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(c)                                  Governmental Authorization; Third Party
Consent. No approval, consent, compliance, exemption, authorization, or other
action by, or notice to, or filing with, any Governmental Authority or any other
Person is necessary or required in connection with the execution, delivery or
performance by it or enforcement against it of this Agreement. The Shares are
not, with respect to the voting or transfer of such shares, subject to any other
agreement, arrangement or understanding including any voting agreement,
stockholders agreement, irrevocable proxy or voting trust (other than agreements
with Purchaser).

 

(d)                                 Title to Shares. Each Stockholder is the
beneficial owner of the Shares (including convertible securities, warrants and
options convertible into shares of Common Stock) set forth opposite such
Stockholder’s name on Schedule I attached hereto, such Shares (or the securities
convertible into such Shares) are owned free and clear of all security
interests, liens, claims, pledges, options, rights of first refusal, agreements,
limitations on such Stockholder’s voting rights, charges and other encumbrances,
of any nature whatsoever.

 

(e)                                  No Litigation. There is no suit, claim,
action, investigation or proceeding pending or, to the knowledge of such
Stockholder, threatened against such Stockholder at law or in equity before or
by any Governmental Authority that could reasonably be expected to impair the
ability of such Stockholder to perform its obligations hereunder or consummate
the transactions contemplated hereby.

 

ARTICLE IV.
Other Provisions

 

Section 4.01                             Additional Securities. Stockholder
agrees that, in the event (a) of any stock dividend, stock split,
recapitalization, reclassification, combination or exchange of the Original
Shares Beneficially Owned by such Stockholder, or (b) that after the date of
this Agreement such Stockholder purchases or otherwise acquires or obtains
Beneficial Ownership or record ownership of or an interest in any Common Stock
(any such shares referred to in the foregoing clauses “(a)” or “(b),”
collectively, “Additional Securities”), that such Stockholder shall deliver
promptly (but no later than the second (2nd) Business Day following such
acquisition) to the Company written notice of its purchase, acquisition or
ownership of Additional Securities which notice shall state the number of
Additional Securities so purchased, acquired or owned. Each Stockholder agrees
that any Additional Securities purchased, acquired or owned during the Term by
such Stockholder shall be subject to the terms of this Agreement and shall
constitute Shares of such Stockholder to the same extent as if those Additional
Securities were owned by such Stockholder on the date of this Agreement.

 

Section 4.02                             Agreement for Superior Proposal. In the
event that the Merger Agreement entered into in connection with the Merger is
terminated in accordance with its terms and another agreement (an “Agreement for
Superior Proposal”) is entered into with a third party (the “Third Party”) with
respect to a Superior Proposal during the Term, then the Stockholder’s
agreements pursuant to ARTICLE I [and ARTICLE II] of this Agreement shall
terminate, and:

 

(a)                                 the provisions of this Agreement shall apply
instead to such other Agreement for Superior Proposal in the same fashion as
they apply to the Merger Agreement and the Merger (including the provisions of
ARTICLE II with respect to a tender offer), unless the Company and

 

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Purchaser shall have advised the Stockholders in writing that any provision of
this Agreement shall not apply to such other Agreement for Superior Proposal; or

 

(b)                                 if the Company and Purchaser shall so
request, each Stockholder agrees promptly, and in no event later than the second
(2nd) Business Day following such notice and request, to enter into a support
agreement with the Third Party, consistent with this Agreement but with such
changes as may be reasonably required in the opinion of the Company’s Board of
Directors to reflect the different terms of the Agreement for Superior Proposal
(“Third Party Support Agreement”), pursuant to which the Stockholders will agree
with the Third Party to vote their Shares and/or irrevocably tender their Shares
in accordance with the terms of the Agreement for Superior Proposal, and upon
each Stockholder’s entry into such Third Party Support Agreement, such
Stockholder’s duties under this Agreement shall terminate.

 

Section 4.03                             Waiver of Appraisal and Dissenters’
Rights and Actions. Each Shareholder hereby (a) waives and agrees not to
exercise any rights of appraisal or rights to dissent from the transaction
contemplated by the Merger Agreement that it may have and (b) agrees not to
commence or join in, and agrees to take all actions necessary to opt out of any
class in any class action with respect to, any claim, derivative or otherwise,
against the Company, Parent, Merger Sub or any Third Party or any of their
respective officers, directors, general partners, managers, affiliates or
successors (x) challenging the validity of, or seeking to enjoin the operation
of, any provision of this Agreement or (y) alleging a breach of any fiduciary
duty of any person with respect to the Merger Agreement or Agreement for
Superior Proposal.

 

Section 4.04                                    Restriction on Transfer. During
the Term, except for any action required or permitted pursuant to this
Agreement, each Stockholder (solely in its capacity as such and not, if
applicable, in its capacity as a director of the Company) shall not, directly or
indirectly, (a) offer, sell, transfer, tender, pledge, encumber, create a Lien,
assign, hypothecate or otherwise dispose of, or enter into any contract, option,
Constructive Sale or other agreement, arrangement or understanding with respect
to the offer, sale, transfer, tender, pledge, encumbrance, assignment,
hypothecation or other disposition of, any or all of the Shares, or grant any
proxy, power of attorney or other authorization or consent in or with respect to
any of its Shares that would be inconsistent with such Stockholder’s obligations
under this Agreement (any such action, a “Transfer”); or (b) enter into any
swap, hedge or other agreement, arrangement or understanding that transfers, in
whole or in part, any of the economic consequences of voting rights or ownership
of the Shares, or (c) commit or agree to take or publicly announce an intention
to commit or agree to take any of the foregoing actions. Any purported Transfer
not permitted under this Section 4.04 shall be null and void.

 

Section 4.05                                    No Agreement as Director or
Officer. No Stockholder makes any agreement in this Agreement in its capacity as
a director or officer of the Company or any of its subsidiaries (if Stockholder
holds such office), and nothing in this Agreement: (a) will limit or affect any
actions or omissions taken by a Stockholder in its capacity as such a director
or officer, including in exercising rights under the Merger Agreement, and no
such actions or omissions shall be deemed a breach of this Agreement or (b) will
be construed to prohibit, limit or restrict Stockholder from exercising
Stockholder’s fiduciary duties as an officer or director to the Company or its
stockholders.

 

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ARTICLE V.

Definitions

 

Section 5.01                                    Definitions. As used in this
Agreement, the following terms shall have the meanings set forth below:

 

“Additional Securities” shall have the meaning ascribed to such term in Section
4.01.

 

“Affiliate” shall mean, with respect to any Person, any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such Person. For the purposes of this definition, “control” when
used with respect to any specified Person shall mean the power to direct the
management and policies of such Person, directly or indirectly, whether through
the ownership of voting securities, by contract or otherwise; and the terms
“controlling” and “controlled” have meanings correlative to the foregoing.

 

“Broker” shall mean a DTC participant holding shares of Common Stock in “street
name”.

 

“Business Day” shall mean a day, other than a Saturday, Sunday or another day on
which commercial banking institutions in New York are authorized or required by
Law to be closed.

 

“Common Stock” shall mean the shares of common stock, par value $0.0001 per
share of the Company.(13)

 

“Beneficially Owned” or “Beneficial Ownership” by a Person shall mean ownership
of such securities in respect of which such Person is considered to be a
“beneficial owner” under Rule 13d-3 under the Exchange Act as in effect on the
date hereof.

 

“Company” shall have the meaning ascribed to such term in the Preamble.

 

“Constructive Sale” shall mean a short sale with respect to such security,
entering into or acquiring a derivative contract with respect to such security,
entering into or acquiring a futures or forward contract to deliver such
security or entering into any transaction that has substantially the same effect
as any of the foregoing.

 

“Depositary” shall have the meaning ascribed to such term in Section 2.01.

 

“Exchange Act” shall have the meaning ascribed to such term in the Recitals.

 

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(13) If any other voting securities are outstanding and held by a Stockholder,
definition to be modified and expanded to include all voting securities.

 

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“Governmental Authority” shall mean any federal, state, provincial, local or
other governmental department, commission, board, bureau, agency, central bank,
court, tribunal or other instrumentality or authority or subdivision thereof,
domestic or foreign, exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government including, without
limitation, the Financial Industry Regulatory Authority. Any stock exchange on
which shares of the Company’s Capital Stock are traded shall be deemed a
Governmental Authority.

 

“Lien” shall mean any lien, mortgage, charge, pledge, security interest,
encumbrance, any conditional sale or other title retention agreement or the
filing of or any agreement, arrangement or understanding to give any financing
statement under the laws of any jurisdiction including with respect to any
account with the Broker containing any Shares.

 

“Merger Agreement” shall have the meaning ascribed to such term in the Recitals.

 

“Person” shall mean any individual, corporation, limited liability company,
partnership, association, trust, unincorporated organization, other entity or
group (as defined in the Securities Exchange Act of 1934, as amended).

 

“Proceedings” shall have the meaning ascribed to such term in Section 6.06.

 

“Purchaser” shall have the meaning ascribed to such term in the Recitals.

 

“Shareholder Rights Agreement” shall have the meaning ascribed to such term in
the Recitals.

 

“Term” shall have the meaning ascribed to such term in Section 6.01.

 

“Third Party” shall have the meaning ascribed to such term in Section 4.02.

 

“Transfer” shall have the meaning ascribed to such term in Section 4.04.

 

ARTICLE VI.
Miscellaneous

 

Section 6.01          Term. The term of this Agreement (the “Term”) shall
commence on the date hereof and expire upon the first to occur of:
(a) consummation of the Merger, (b) as set forth in Section 4.02(b), or
(c) termination of the Merger Agreement in accordance with its terms in a
circumstance where Section 4.02 does not apply.

 

Section 6.02          Entire Agreement; Amendments. This Agreement is intended
by the parties hereto as a final expression of their agreement and intended to
be a complete and exclusive statement of the agreement and understanding of the
parties in respect of the subject matter contained herein and therein. 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 hereto with respect to such
subject matter.

 

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Section 6.03          Notices. All notices, demands and other communications
provided for or permitted hereunder shall be made in writing and shall be by
facsimile (with receipt confirmed), nationally recognized overnight courier
service or personal delivery to the address set forth opposite the party’s names
on the signature page hereto or to such other address provided by such party in
accordance herewith. All such notices and communications shall be deemed to have
been duly given when delivered by hand, if personally delivered; when delivered
by courier, if delivered by nationally recognized overnight courier service; or
when sent, if sent via facsimile during the recipient’s normal business hours
with confirmation of sending.

 

Section 6.04          Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE,
WITHOUT REGARD TO ITS CONFLICT OF LAW OR CHOICE OF LAW PRINCIPLES.

 

Section 6.05          Expenses. All expenses incurred by the Company in
connection with or related to the authorization, preparation or execution of
this Agreement and the consummation of the transactions contemplated hereby,
shall be borne solely and entirely by the Company, and all such expenses
incurred by any Stockholder shall be borne solely and entirely by such
Stockholder.

 

Section 6.06          Jurisdiction. Any governmental, judicial or adversarial
proceeding (public or private), litigation, suits, arbitration, disputes,
demands, claims, actions, causes of action or investigations (collectively,
“Proceedings”) seeking to enforce any provision of, or based on any matter
arising out of or in connection with, this Agreement shall be brought in the
U.S. District Court for the District of Delaware (or, if subject matter
jurisdiction is unavailable, in the state courts of the State of Delaware), and
each of the parties hereby consents to the exclusive jurisdiction of such court
(and of the appropriate appellate courts) in any such Proceeding and waives any
objection to venue laid therein. Process in any such Proceeding may be served on
any party anywhere in the world, whether within or without the State of
Delaware. Without limiting the foregoing, the parties agree that service of
process upon such party at the address referred to on the signature pages hereto
together with written notice of such service to such party, shall be deemed
effective service of process upon such party. EACH OF THE PARTIES HERETO HEREBY
IRREVOCABLY WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY SUIT, ACTION OR
PROCEEDING (INCLUDING ANY COUNTERCLAIM) ARISING OUT OF OR BASED UPON THIS
AGREEMENT.

 

Section 6.07          Successors and Assigns; Third Party Beneficiaries. Without
limiting or modifying Section 4.04, this Agreement shall inure to the benefit of
and be binding upon the successors and permitted assigns of the parties.
Purchaser is an intended third party beneficiary of this Agreement. No Person
other than the parties, Purchaser and their respective successors and permitted
assigns is intended to be a beneficiary of this Agreement.

 

Section 6.08          Signatures; Counterparts. Facsimile (and electronic)
transmissions of any executed original document and/or retransmission of any
executed facsimile (or electronic) transmission shall be deemed to be the same
as the delivery of an executed original. At the request of any party hereto, the
other parties hereto shall confirm facsimile transmissions by executing
duplicate original documents and delivering the same to the requesting party or
parties.

 

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This Agreement may be executed in any number of counterparts and by the parties
hereto in separate counterparts, each of which when so executed shall be deemed
to be an original and all of which taken together shall constitute one and the
same agreement.

 

Section 6.09          Severability. If any one or more of the provisions
contained in this Agreement, or the application thereof in any circumstance, 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 hereof shall not be in any way impaired,
unless the provisions held invalid, illegal or unenforceable shall substantially
impair the benefits of the remaining provisions of this Agreement. The parties
hereto further agree to replace such invalid, illegal or unenforceable provision
of this Agreement with a valid, legal and enforceable provision that will
achieve, to the extent possible, the economic, business and other purposes of
such invalid, illegal or unenforceable provision.

 

Section 6.10          Time of the Essence. Time is of the essence in the
performance of the obligations under this Agreement.

 

Section 6.11          Specific Performance. Each party hereto acknowledges that
it will be impossible to measure in money the damage to the other party if a
party hereto fails to comply with any of the obligations imposed by this
Agreement, that every such obligation is material and that, in the event of any
such failure, the other party will not have an adequate remedy at law or
damages. Accordingly, each party hereto agrees that injunctive relief or other
equitable remedy, in addition to remedies at law or damages, is the appropriate
remedy for any such failure and will not oppose the seeking of such relief on
the basis that the other party has an adequate remedy at law. Each party hereto
agrees that it will not seek, and agrees to waive any requirement for, the
securing or posting of a bond in connection with the other party’s seeking or
obtaining such equitable relief.

 

[Signature page follows]

 

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
and delivered by their respective officers hereunto duly authorized as of the
date first above written.

 

Address

 

 

 

 

 

Lime Energy Co.

 

LIME ENERGY CO., a Delaware corporation

16810 Kenton Drive, Suite 240

 

 

Huntersville, NC

 

By:

 

Facsimile: [·]

 

 

Name:

E-mail: [·]

 

 

Title:

Attention: [·]

 

 

 

 

 

 

 

 

[Address]

 

[Stockholder]

Facsimile: [·]

 

 

 

E-mail: [·]

 

 

Attention: [·]

 

By:

 

 

 

 

Name:

 

 

 

Title:

 

 

 

 

 

 

[Address]

 

[Stockholder]

Facsimile: [·]

 

 

E-mail: [·]

 

 

Attention: [·]

 

By:

 

 

 

 

Name:

 

 

 

Title:

 

[Support Agreement]

 

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SCHEDULE 1

 

Details of Ownership

 

12

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Exhibit C

 

Joinder Agreement

 

The undersigned                                       , by executing this
Joinder Agreement dated as of                                        , 200   ,
does hereby acknowledge the terms of, and agree to be bound as an “Existing
Shareholder” under, that certain Shareholder and Investor Rights Agreement,
dated as of December [·], 2014 by and among Lime Energy Co., Bison Capital
Partners IV L.P., and the Existing Shareholders listed on the signature
pages thereto (the term “Existing Shareholder” having the meaning ascribed to it
therein).

 

 

 

[Name of New Shareholder]

 

 

 

 

 

 

 

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