Exhibit 10.1

 

EMPLOYEE STOCK OPTION AGREEMENT

 

This Employee Stock Option Agreement (this “Agreement”) is made this 17th day of
April, 2010, between Lime Energy Co., a Delaware corporation (“Lime Energy”) and
                                 (the “Holder”).

 

W I T N E S S E T H:

 

WHEREAS, Holder is an employee of Lime Energy or a subsidiary of Lime Energy
(collectively, Lime Energy and its subsidiaries are referred to in this
Agreement as the “Company”), and Lime Energy desires, by affording Holder an
opportunity to purchase shares of Lime Energy’s common stock, par value $0.0001
per share (the “Common Stock”) as hereinafter provided, to help align the
long-term economic interests of the Holder with the long-term economic interests
of the Company;

 

NOW THEREFORE, in consideration of the mutual covenants hereinafter set forth
and for other good and valuable consideration, the parties hereto agree as
follows:

 

1.             Grant of Options.  Lime Energy hereby agrees to grant to the
Holder, on the date hereof (the “Grant Date”), options (the “Options”) to
purchase up to an aggregate of                     shares (the “Option Shares”)
of the Common Stock, pursuant to the Company’s 2008 Stock Incentive Plan and
subject to the terms and conditions set forth herein.  These Options are granted
subject to obtaining shareholder approval to an amendment to the Company’s 2008
Stock Incentive Plan at the 2010 annual meeting of shareholders to increase the
number of shares available under the Plan by 1,720,000 shares.

 

2.             Exercise Price.  The exercise price per Option Share, subject to
adjustment as hereinafter provided (the “Exercise Price”), under the Options
shall be $4.50 per share (the closing market price of the Common Stock on the
date prior to this Agreement).

 

3.             Vesting. The Options shall not be exercisable until vested, and
shall vest under the following conditions:

 

All of the Option Shares shall immediately vest if at any time prior to
December 31, 2015, the closing market price for the Company’s common stock has
exceeded $20 per share on any trading day, the Company has publicly reported
annual revenue for any fiscal year in excess of $242 million, and the Company
has publicly reported adjusted EBITDA for any fiscal year in excess of$24
million.  Adjusted EBITDA shall be defined as the Company’s net income during
any period, adjusted to add back the net interest expense, the provision for
income taxes, depreciation and amortization expense and share based compensation
expense for the period.

 

In addition to the vesting rights set forth above, any unvested Stock Options
shall automatically and immediately terminate and be of no further force or
effect if the Holder shall voluntarily cease working for the Company or if the
employment of the Holder by the Company is terminated by the Company for Due
Cause.  All unvested Stock Options shall immediately vest and become exercisable
if the employment of the Holder by the Company is terminated by the

 

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Company for any reason other than Due Cause.  As used in this Agreement, “Due
Cause” shall mean any of:

 

(i)            Failure by the Holder to perform any material and substantial
duties to the Company;

 

(ii)           Holder’s conviction on, or plea of guilty or of nolo contendre
to, a felony charge;

 

(iii)          misappropriation of Company property by Holder or any act of
dishonesty by Holder directed at the Company or while acting on behalf of the
Company;

 

(iv)          Holder’s breach of any provision of any employment,
non-disclosure, non-competition, non-solicitation, assignment of inventions, or
other similar agreement executed by Holder for the benefit of the Company;

 

(v)           violation of the Company’s drug and alcohol policy;

 

(vi)          any conduct, action or behavior by Holder that has a material
adverse effect on the reputation of the Company, its business, affiliates,
management, customers, vendors,  employees, prospects, name, reputation or
goodwill;

 

(vii)         Holder’s commission of an act of moral turpitude.

 

Upon the occurrence of a Change in Control, any unvested options shall be
automatically and immediately vested and become exercisable by Holder, subject
to the other applicable terms of this Agreement.  For all purposes of this
Agreement, a “Change in Control” shall an acquisition by any individual, entity
or group (within the meaning of Section 13(d)(3) or 14 (d)(2) of the Exchange
Act) (a “Person”) of beneficial ownership (within the meaning of Rule 13d-3
promulgated under the Exchange Act) of more than 50% the then outstanding shares
of common stock of the Company (the “Outstanding Company Common Stock”) in a
transaction or a series of transactions at a price equivalent to $15.00 or more
per share; excluding, however, the following:  (1) any acquisition directly from
the Company, other than an acquisition by virtue of the exercise of a conversion
privilege unless the security being so converted was itself acquired directly
from the Company, (2) any acquisition by the Company; (3) any acquisition by any
employee benefit plan (or related trust) sponsored or maintained by the Company
or any corporation controlled by the Company.

 

4.             Exercise of the Stock Options. Any vested Stock Options may be
exercised at any time after vesting by Holder’s compliance with the method of
exercise set forth in the Company’s 2008 Stock Incentive Plan, as in effect upon
the date of such exercise.

 

5.             Transferability. The Stock Options may not be sold, pledged,
assigned, hypothecated, gifted, transferred or disposed of in any manner either
voluntarily or involuntarily by operation of law, other than by will or by the
laws of descent or distribution. During the Holder’s lifetime, the Stock Option
is exercisable only by the Holder (or by such Holder’s legal guardian or
representative).

 

6.             Expiration of the Options.  The Stock Options will only be
exercisable by the Holder and only after vesting in accordance with paragraph 3
of this Agreement, and all Stock Options,

 

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vested or unvested, will expire on the earliest of (i) the tenth anniversary of
the date of this Agreement, or (ii) three months following the date the Holder
ceases to be a full time employee of the Company if such cessation is not by
reason of termination by the Company for Due Cause, or (iii) any termination of
the employment of the Holder for Due Cause.  In the event of the death of the
Holder, all then vested Stock Options will be exercisable by the Holder’s estate
(or the executor thereof) for a period of six months following the date of
death, whereupon all unexercised Stock Options will automatically terminate.

 

7.             Change in Status.  In the event that Holder’s employment or
affiliation with the Company ceases solely because the entity that continues to
employ him ceases, after the Grant Date, to remain part or an affiliate of the
Company then, for purposes of Section 6 above, Holder will be deemed to have
incurred a termination of employment with the Company for reasons other than Due
Cause.

 

8.             Adjustments.  The number of shares issuable as a result of the
exercise of any unexercised Stock Options, and the purchase price payable
therefore, may be adjusted from time to time to give effect to stock splits,
both forward and reverse, and any stock dividends which may be declared payable
to the holders of the outstanding Common Stock.

 

9.             Terms Governing Stock Options.  Unless otherwise provided herein,
the terms of the Stock Options shall be governed in accordance with the
provisions of the Company’s 2008 Long-Term Incentive Plan, as amended from time
to time (the “Plan”), which is incorporated herein by this reference.  The Stock
Options issued pursuant to this Agreement shall be incentive stock options to
the extent permitted by law and the terms of the Plan, and any balance shall be
non-qualified options.  Any dispute or disagreement which may arise in
connection with this Agreement shall be resolved by the Compensation Committee
of the Company’s Board of Directors (the “Committee”), in its sole discretion,
and any interpretation by the Committee of the terms of this Agreement or the
Plan and any determination made by the Committee under this Agreement or the
Plan may be made in the sole discretion of the Committee and shall be final,
binding, and conclusive. Any such determination need not be uniform and may be
made differently among Holders awarded Stock Options.

 

10.           Taxes.  Lime Energy will have the right to deduct from all cash or
property payments made to the Holder upon exercise of any Stock Option, any and
all federal, state or local taxes required to be withheld with respect to such
payments.

 

11.           Trading Restrictions.  Lime Energy shall have the right at any
time to impose trading restrictions on the Option Shares which may limit the
number of shares that can be sold on any trading day or during any 90 day period
and/or prohibit the sale of the Option Shares on any trading day, not to exceed
thirty (30) trading days a year.

 

12.           No Rights as a Stockholder.  Holder shall not have any of the
rights of a stockholder with respect to the Option Shares until such Option
Shares have been issued upon due exercise of this Option.  No adjustment will be
made for dividends or distributions or other rights for which the record date is
prior to the date of issuance of such Option Shares following the exercise of
this Option.

 

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13.           Governing Law.  The validity, construction and effect of this
Agreement and the rights of any and all persons having or claiming to have any
interest under this Agreement, shall be determined exclusively in accordance
with the laws of the State of Illinois without regard to its provisions
concerning the applicability of laws of other jurisdictions.  Any suit with
respect hereto will be brought in the federal or state courts in the districts
which include Chicago, Illinois, and you hereby agree and submit to the personal
jurisdiction and venue thereof.

 

14.           Headings.  The headings in this Agreement are for reference
purposes only and shall not affect the meaning or interpretation of this
Agreement.

 

15.           Entire Agreement.  This Agreement contains the entire agreement
between the Holder and the Company with respect to the Option.  Any oral or
written agreements, representations, warranties, written inducements, or other
communications made prior to the execution of this Agreement with respect to the
Options shall be void and ineffective for all purposes.

 

16.           Amendment.  This Agreement may be amended from time to time by the
Company in its discretion; provided, however, that this Agreement may not be
modified in a manner that would have a materially adverse effect on the Options
or Option Shares, as determined in the discretion of the Company, except as
provided in a written document signed by Holder and the Company.

 

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IN WITNESS WHEREOF, Lime Energy Co. and the Holder have duly executed this
Employee Stock Option Agreement effective as of the date first written above.

 

 

LIME ENERGY CO.

 

HOLDER

 

 

 

By:

 

 

 

 

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