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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