exv10w2






Exhibit 10.2




DIRECTOR RECUSAL AGREEMENT




     This Director Recusal Agreement (this “Agreement”) is dated as of the 16th day of
January, 2009, and is made by and between Lime Energy Co., a Delaware corporation (the
“Company”), and Richard P. Kiphart (“Kiphart”).



W I T N E S S E T H:




     WHEREAS, pursuant to a Certificate of Designations filed on November 14, 2008 (the
“Certificate”), the Company has an authorized class of $0.01 par value Series A-1
Convertible Preferred Stock (the “Preferred Stock”).



     WHEREAS, the Company has the option to redeem the Preferred Stock at any time pursuant to
Section 5 of the Certificate.



     WHEREAS, Kiphart is a director and common stockholder of the Company, and also holds shares of
the Preferred Stock which he purchased pursuant to that certain Preferred Stock Purchase Agreement
dated as of November 14, 2008. (The shares of Preferred Stock owned by Kiphart are hereafter
referred to as the “Kiphart Shares.”)



     WHEREAS, the parties desire to set forth certain understandings between themselves relating to
the Kiphart Shares, all as more fully described herein;



     NOW, THEREFORE, in consideration of the premises and for other good and valuable
consideration, the parties hereby agrees as follows:



     1. Recusal on Redemption Votes. Kiphart hereby agrees to recuse himself from any vote
of the Board of Directors, or any committee thereof charged with acting for the Board of Directors,
with respect to a redemption or repurchase of the Preferred Stock by the Company, whether pursuant
to the Certificate or otherwise.



     2. No Effect on Quorum. The recusal set forth in Section 1 shall have no effect on
the counting of members present for purposes of a quorum of the Board of Directors, and Kiphart’s
attendance at any meeting shall be counted for such purpose.



     3. No Effect on Voting Rights. Nothing set forth in this Agreement shall be deemed
to limit Kiphart’s voting rights with respect to the Kiphart Shares or any other shares of Company
stock held by him.



     4. Termination of Agreement. This Agreement shall terminate and be of no further
force and effect at such point as Kiphart no longer beneficially owns any shares of Preferred
Stock, or Kiphart no longer serves as a director of the Company, whichever is earlier.



     5. Arbitration. In the event of any and all disagreements and controversies arising
from this Agreement, such disagreements and controversies shall be subject to binding arbitration
as arbitrated in accordance with the then current Commercial Arbitration Rules of the American
Arbitration Association in Chicago, Illinois before one neutral arbitrator. Either party may apply
to the arbitrator seeking injunctive relief until the arbitration award is rendered or the
controversy is otherwise resolved. Without waiving any remedy under this Agreement, either



 









 







party may also seek from any court having jurisdiction any interim or provisional relief that
is necessary to protect the rights or property of that party, pending the establishment of the
arbitral tribunal (or pending the arbitral tribunal’s determination of the merits of the
controversy). In the event of any such disagreement or controversy, neither party shall directly or
indirectly reveal, report, publish or disclose any information relating to such disagreement or
controversy to any person, firm or corporation not expressly authorized by the other party to
receive such information or use such information or assist any other person in doing so, except to
comply with actual legal obligations of such party, or unless such disclosure is directly related
to an arbitration proceeding as provided herein, including, but not limited to, the prosecution or
defense of any claim in such arbitration. The costs and expenses of the arbitration (excluding
attorneys’ fees) shall be paid by the non-prevailing party or as determined by the arbitrator.



     6. Miscellaneous.




	 	a.	 	All of the WHEREAS clauses and other recitals at the beginning of this
Agreement are hereby incorporated into and made part of this Agreement.
	 
	 	b.	 	This Agreement is personal to Kiphart. This Agreement shall be binding
upon, and shall inure solely to the benefit of, each of the parties hereto, and the
successors and assigns of the Company, and no other person shall acquire or have
any right under or by virtue of this Agreement. Kiphart shall not assign his
rights or obligations under this Agreement.
	 
	 	c.	 	This Agreement may be amended only by written execution by all parties.
No waiver of any provision of this Agreement shall in any event be effective unless
the same shall be in writing and acknowledged by the party against whom enforcement
is sought, and then any such waiver shall be effective only in the specific
instance and for the specific purpose for which given.
	 
	 	d.	 	The descriptive headings of the several sections and paragraphs of this
Agreement are inserted for convenience only and do not constitute a part of this
Agreement.
	 
	 	e.	 	All questions concerning the construction, validity, enforcement and
interpretation of this Agreement shall be governed by the internal laws of the
State of Illinois, without giving effect to any choice of law or conflict of law
provision or rule (whether of the State of Illinois or any other jurisdiction) that
would cause the application of the laws of any jurisdiction other than the State of
Illinois.
	 
	 	f.	 	Wherever possible, each provision of this Agreement shall be
interpreted in such manner as to be effective and valid under applicable law, but
if any provision of this Agreement shall be prohibited by, unenforceable or invalid
under any jurisdiction, such provision shall as to such jurisdiction, be severable
and be ineffective to the extent of such prohibition or invalidity, without
invalidating the remaining provisions of this Agreement or affecting the validity
or enforceability of such provision in any other jurisdiction.




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	 	g.	 	This Agreement may be executed in one or more counterparts, all of
which shall be deemed but one and the same agreement and each of which shall be
deemed an original. Delivery by facsimile of an executed counterpart of this
Agreement shall be effective as an original executed counterpart hereof and shall
be deemed a representation that an original executed counterpart hereof will be
delivered.
	 
	 	h.	 	THE PARTIES HERETO, AFTER CONSULTING OR HAVING HAD THE OPPORTUNITY TO
CONSULT WITH COUNSEL, EACH KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE
IRREVOCABLY, ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR
DEFEND ANY RIGHTS UNDER THIS AGREEMENT.
	 
	 	i.	 	ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION
WITH THIS AGREEMENT SHALL BE BROUGHT AND MAINTAINED EXCLUSIVELY IN THE COURTS OF
THE STATE OF ILLINOIS OR IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN
DISTRICT OF ILLINOIS; PROVIDED THAT NOTHING IN THIS AGREEMENT SHALL BE
DEEMED OR OPERATE TO PRECLUDE LENDER FROM BRINGING SUIT OR TAKING OTHER LEGAL
ACTION IN ANY OTHER JURISDICTION. EACH PARTY HEREBY EXPRESSLY AND IRREVOCABLY
SUBMITS TO THE JURISDICTION OF THE COURTS OF THE STATE OF ILLINOIS AND OF THE
UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS FOR THE PURPOSE
OF ANY SUCH LITIGATION AS SET FORTH ABOVE AND EXPRESSLY AND IRREVOCABLY WAIVES, TO
THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER
HAVE TO THE LAYING OF VENUE OF ANY SUCH LITIGATION BROUGHT IN ANY SUCH COURT
REFERRED TO ABOVE AND ANY CLAIM THAT ANY SUCH LITIGATION HAS BEEN BROUGHT IN AN
INCONVENIENT FORUM.




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     IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the day and year first
above written.



	 	 	 	 	 
	 	COMPANY:




Lime Energy Co.

 	 
	 	By:  	/s/ Jeffrey R. Mistarz
 	 
	 	 	Jeffrey R. Mistarz 	 
	 	 	Executive Vice President and CFO 	 
	 
	 	KIPHART:

 	 
	 	/s/ Richard P. Kiphart
 	 
	 	          Richard P. Kiphart 	 
	 	 	 
	 




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