EX-10.1







EXHIBIT 10.1




LIME ENERGY CO.

2009 MANAGEMENT INCENTIVE COMPENSATION PLAN




Effective August 4, 2009




1. PURPOSE




     The Lime Energy Co. 2009 Management Incentive Compensation Plan (“Plan”) is designed to promote the
interests of Lime Energy Co. (the “Company”) and its stockholders by providing incentives to
participating officers and key employees of the Company and its subsidiaries to make significant
contributions to the Company and its subsidiaries and to reward outstanding performance on the part
of those individuals whose decisions and actions most significantly affect the growth,
profitability and efficient operation of the Company and its subsidiaries during the “Plan Year.”
The Plan Year is the fiscal year of the Company.



     The Plan is designed to:




	 	•	 	Provide an incentive program to achieve overall corporate objectives and to
enhance stockholder value
	 
	 	•	 	Reward those individuals who significantly impact corporate results
	 
	 	•	 	Incorporate an incentive program in the Company’s overall compensation program
to help attract and retain officers and key employees.





2. ADMINISTRATION




     The Plan shall be administered by the Compensation Committee of the Company’s Board; provided,
however, that, if at any time no such Committee shall be in office, the Plan shall be administered
by the Board. The Plan may be administered by different Committees with respect to different
groups of Eligible Individuals as directed by the Board or its Compensation Committee. As used
herein, the term “Administrator” means the Board or any of its Committees as shall be administering
the Plan, as the context may require.



     The Administrator shall have plenary authority to grant Awards pursuant to the Plan and absolute
discretion to determine the amount of Awards. Participation shall be limited to such Eligible
Individuals as are selected by the Administrator; subject to any eligibility restrictions
applicable to Awards under the other provisions of the Plan. The provisions of Awards need not be
the same with respect to each Participant.



     The Administrator shall have the authority to adopt, alter and repeal such administrative rules,
guidelines and practices governing the Plan as it shall, from time to time, deem advisable, to
interpret the terms and provisions of the Plan and any Award



 









 







issued under the Plan (and any
agreement relating thereto) and to otherwise supervise the administration of the Plan.



     Except to the extent prohibited by applicable law, the Administrator may allocate any or any
portion of its responsibilities and powers to any one or more of its members and may delegate all
or any portion of its responsibilities and powers to any other person or persons selected by it.
Any such allocation or delegation may be revoked by the Administrator at any time. The
Administrator may authorize any one or more of its members, or any officer of the Company, to
execute and deliver documents on behalf of the Administrator.



     Any determination made by the Administrator, or pursuant to authority delegated in accordance with
the provisions of the Plan, with respect to any Award shall be made in the sole discretion of the
Administrator or such delegate at the time of the grant of the Award or, unless in contravention of
any express term of the Plan, at any time thereafter. All decisions made by the Administrator or
any appropriate delegate pursuant to the provisions of the Plan shall be final and binding on all
persons, including the Company and Participants.



     No member of the Administrator, and no officer of the Company, shall be liable for any action taken
or omitted to be taken by such individual or by any other member of the Administrator or officer of
the Company in connection with the performance of duties under this Plan, except for such
individual’s own willful misconduct or as expressly provided by law. Such persons shall be
entitled to indemnification and reimbursement from the Company for their service with respect to
the Plan to the fullest extent allowed by law. The Company, its Subsidiaries and Affiliates, all
officers and directors of any such corporation, and all members of the Administrator shall have no
liability with respect to any Participant for any taxes, penalties or related interest imposed upon
such Participant in connection with any Award granted under this Plan.



3. PARTICIPANTS IN THE PLAN




     Eligible Individuals must be approved by the Administrator, based on a recommendation from the
Chief Executive Officer or the Board and meet all of the following conditions:



     (a) Service Requirement. An individual shall be eligible to participate in the Plan if he
or she has been an active Employee in a position which is designated as eligible for participation
in the Plan for a period of not less than six (6) consecutive months at the close of the Plan Year
for which an Award is payable, except as provided in Section 9 herein. An individual shall be
considered an “Employee” as long as such individual remains employed by the Company or one or more
of its subsidiaries.



     (b) Performance Requirement. During the term of the current Plan Year, the Employee must
not have been subject to a disciplinary action and must have achieved a satisfactory performance
evaluation, if applicable to such Employee, during the Plan Year.



 









 





     (c) No Participation in Other Cash Incentive Plans. The Employee must not be eligible to
participate in any other cash incentive plan of the Company, provided, however, this shall not
affect the ability of the Participant to receive a discretionary bonus which is not pursuant to a
written plan.



     (d) Participant Groups. Participants in the Plan may be placed into groups based on their
reporting relationship to the Chief Executive Officer, their salary, title or on other criteria, or
on no criteria as determined by the Administrator. Groupings used in the Plan, if any, may vary
from one group to another, and shall not convey any rights, privileges or obligations except as
they relate to the Plan. If groupings are used in the Plan, the specifics of the Plan may vary
from one group to another.



     (e) Initial Eligible Individuals. Upon adoption of the Plan by the Board, the initial
Eligible Individuals shall be the Company’s Chief Executive Officer, President, Chief Operating
Officer and Chief Financial Officer.



4. FORM OF INCENTIVE AWARD PAYMENTS




     Award payments shall be made in cash, provided that, in lieu of cash, Award payments may be made
through the issuance of shares of Stock or options to purchase Stock (“Stock Options”), or by a
combination of cash, shares of Stock and/or Stock Options, at the discretion of the Administrator.
In the event that the Administrator elects to pay Awards in shares of Stock or Stock Options, the
Administrator, in its sole discretion, will make a determination of the number of shares of Stock
or Stock Options to be issued to each Plan Participant based, in part, on the market value of the
Stock or Stock Options and the ratio that the Participant’s Award amount bears to the aggregate
amount of Awards earned by all Participants for the Plan Year. The issuance of shares of Stock and
Stock Options will be subject to the availability of shares of Stock and the other terms of the
Company’s 2008 Long-Term Incentive Plan, as amended from time to time.



5. PERFORMANCE GOAL CATEGORIES




     As determined and approved by the Administrator, the performance goals for the Participants
will be set in various goal categories, including, but not necessarily limited to: (a) Company
performance, and (b) individual performance (collectively, the “Performance Goal Categories”). The
Performance Goal Categories may be adjusted, expanded or otherwise modified, as the Administrator
deems necessary or appropriate. The relative importance, or weight, of goals in these Performance
Goal Categories will be set in writing by the Administrator for each Participant at the beginning
of, or soon after the beginning of, the Plan Year.



     The relative weight (“Goal Weight”) among the Performance Goal Categories may vary based on the
individual’s position within the Company. The weighting will be reviewed annually and may be
adjusted, as necessary or appropriate, by the Administrator.



     (a) Company Objectives. At the beginning of, or soon after the beginning of, the Plan
Year, the Chief Executive Officer and the Administrator will decide the Company performance
objectives, which shall be comprised of the following two components: (i) revenue and (ii)
earnings before interest, taxes, depreciation, amortization and stock-based compensation (“Adjusted
EBITDA”) for the Plan Year.



 









 





     (b) Individual Goals. At the beginning of, or soon after the beginning of, the Plan Year,
individual goals will be established for each Participant. The specific goals in this category
will be discussed and agreed upon between the Participant and the Chief Executive Officer, provided
that in the case of the Chief Executive Officer, his or her individual goals will be discussed
between such Participant and the Administrator or its designee on the Board. All goals in these
categories must be in writing, and accepted and approved by the Administrator.



     (c) Performance Evaluation. Performance on all Individual goals will be evaluated by the
Chief Executive Officer (or his designee), subject to the review and approval of the Administrator.



6. INCENTIVE OPPORTUNITIES




     Each Participant shall be told at the beginning of, or soon after the beginning of, the Plan Year
of his or her Plan Base Salary which will be the basis for determining incentive opportunity for
that Participant, and which will be allocated among the Participant’s Performance Goal Categories.



     Performance on each Performance Goal Category will be designated at three performance levels (each
a “Performance Level”): a Threshold (minimum level), a Target and a Maximum level as determined by
the Administrator. If a Participant’s performance does not at least equal the minimum threshold
level, no bonus will be payable under that Performance Goal Category. The incentive opportunity
for each Performance Level will be set at a percentage (“Incentive Opportunity Percentage”) of the
Plan Base Salary, approved by the Administrator. The Incentive Opportunity Percentage may be
adjusted for each Plan Year, as necessary or appropriate. The Award earned will be directly
related to the Participant’s performance on each Performance Goal Category.



     For illustration purposes, for a Plan Year a Participant may be given a table like the following,
showing the basis for computing the Award for the Company Revenue objective on the basis of the
Goal Weight percentage and the Incentive Opportunity Percentage for each Performance Level (the
numbers are for illustration only):



	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	Incentive
	 	 	 	 	 	 	Goal	 	Opportunity
	For Company Revenue Goal “X”	 	Plan Base Salary	 	Weight	 	Percentage
	For meeting Threshold
	 	$	250,000	 	 	 	35	%	 	 	25	%
	For meeting the Target level
	 	$	250,000	 	 	 	35	%	 	 	50	%
	For meeting the Maximum level
	 	$	250,000	 	 	 	35	%	 	 	87.5	%






     Performance that falls between two Performance Levels (e.g., above the Threshold, but below the
Target level) will produce a prorated bonus. Performance that exceeds the Maximum level will not
result in an Award in excess of the Maximum level. There is an annual maximum Award limitation
under this Plan for each Participant. The maximum Award limitation will be the product of (i) the
Maximum Incentive Opportunity Percentage as approved by the Administrator, and (ii) the Plan Base
Salary of each Participant, as approved by the Administrator.



 









 





     Performance on each Performance Goal Category will be measured independently and will lead to an
Award determined separately for each Performance Goal Category. Thus, Awards may be earned in one,
two or all three Performance Goal Categories, provided that at least the Threshold level shall have
been achieved for at least one Performance Goal Category as a condition to the grant of an Award to
a Participant.



7. CALCULATION OF CASH INCENTIVE AWARD




     At the beginning of, or soon after the beginning of, the Plan Year (a) the Administrator will
determine the Participant’s Plan Base Salary; (b) the Administrator will establish the Goal Weight
Percentage for each of the Company components and the individual component; and (c) the
Administrator will establish the Incentive Opportunity Percentage multipliers for each of the three
performance levels, i.e., Threshold, Target and Maximum levels. The cash Award for each Company
component is equal to the product of (i) the Plan Base Salary of the Participant, (ii) the Goal
Weight Percentage for the specific Company Performance Goal Category, and (iii) the Incentive
Opportunity Percentage for the Performance Level achieved as of the end of the Plan Year. The Goal
Weight percentage for the individual Performance Goal Category and the Incentive Opportunity
Percentage for the individual Performance Level achieved as of the end of the Plan Year, which is
based on an individual’s performance against objectives, are used in the same way to compute the
individual Performance Goal Category cash Award.



     For illustration purposes, the example below shows a sample cash Award calculation under the Plan:



     Suppose the Participant’s Plan Base Salary is $250,000. Further suppose, the “Target” Performance
Level is achieved for the three Performance Goal Categories, i.e., the Company revenue and the
Company Adjusted EBITDA Performance Goal Categories and the individual Performance Goal Category,
then the Award would be computed as follows (the numbers are for illustration only):



	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Incentive	 	 
	Plan Base	 	Performance	 	Goal	 	Performance	 	Opportunity	 	Award
	Salary	 	Goal Category	 	Weight	 	Level	 	Percentage	 	Amount
	$	250,000	 	 	Corporate Revenue
	 	 	35	%	 	Target	 	 	50	%	 	$	43,750	 
	$	250,000	 	 	Corporate Adjusted EBITDA
	 	 	35	%	 	Target	 	 	50	%	 	$	43,750	 
	$	250,000	 	 	Individual-Participant Specific
	 	 	30	%	 	Target	 	 	50	%	 	$	43,750	 
	Total	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	$	125,000	 






	 	 	 	 	 
	Company Performance Goal Categories
	 	$	87,500	 
	Individual Performance Goal Category
	 	$	37,500	 
	 
	 	 	 
	Total
	 	$	125,000	 






8. TIMING AND PAYMENT OF AWARDS




     Awards are not earned until the Award is approved by the Administrator. Therefore, even if the
Plan Year has ended, a Participant is not entitled to an Award unless



 









 







the Administrator determines
the Participant is entitled to receive the Award. A Participant must be on the active payroll of
the Company or its Subsidiaries at the time the Award is approved for it to be paid, except for
special provisions for certain separations described in Section 9, Changes in Employment Status,
herein.



     No Awards will be approved, and therefore cannot be earned, until after the completion of the Plan
Year audit of the Company’s financial statements by its independent auditors.



     Awards will be approved, if earned, promptly after completion of the Plan Year audit, Awards will
be paid in a single cash payment within thirty (30) days after the Award has been approved by the
Administrator, subject to Section 4 regarding payment of Awards in Stock or Stock Options, and
subject to the Company’s available cash. In the event that the Administrator, upon consultation
with the Board, determines that it is in the best interest of the Company to delay payment of all
or a portion of cash Awards in any Plan Year, then the unpaid balance of such cash Awards shall
accrue interest at a commercial rate to be determined by the Administrator commencing as of the
date such Awards shall be approved by the Administrator.



9. CHANGES IN EMPLOYMENT STATUS




     Payments of proposed Awards will be subject to the following changes in employment status:



     (a) Transfers and Promotions. Transfer or promotion into a position not eligible under
this Plan, or from an ineligible position to an eligible one, will make the Participant eligible
for a prorated Award, as long as he or she has been in an eligible position for not less than six
(6) months in the current Plan Year.



     (b) Plan Base Salary Adjustment. Adjustments to a Participant’s Plan Base Salary during a
Plan Year will make the Participant eligible for a prorated Award based on the average weighted
Plan Base Salary for such Plan Year.



     (c) Involuntary Termination. Involuntary termination for reasons due to job elimination or
staff reduction, except termination for “cause” (as set forth in Section 10(b)), will make the
Participant eligible for a prorated Award (subject to the recommendation of the Chief
Executive Officer or the then next senior executive officer), as long as the participant has been
in an eligible position for not less than six (6) months in the current Plan Year.



     (d) Disability. Total and permanent disability will make the Participant eligible for a
prorated Award, subject to actual performance on the Performance Goal Categories set for the
Participant or for the Company.



     (e) Death. A prorated Award may be paid, in the discretion of the Administrator, to a
Participant’s estate, assuming performance prior to his or her death reached or exceeded the
Threshold Performance Level for one or more Performance Goal Categories.



 









 





     (f) Retirement. Retirement from active employment, subject to qualifying for retirement
benefits under existing Company retirement plans will make the Participant eligible for a prorated
Award, subject to meeting all other performance requirements.



     (g) Leave of Absence. An approved leave of absence will be treated in the same manner as a
transfer from or into an eligible position.



     For purposes of Sections 9(a), (b), (d), (e) and (f), the prorated Award will be computed based on
a 365-day year and the actual number of days that the Participant shall have been in an eligible
position. All prorated Awards shall be subject to the approval of the Administrator in its
discretion.



10. TERMINATION




     (a) Company Initiated. If employment of a Participant is terminated by the Company for
reasons other than for “cause” or those previously listed in Section 9, the Participant will be
eligible for a prorated Award (subject to the recommendation of the Chief Executive Officer or the
then most senior executive officer), as long as the Participant has been in an eligible position
for not less than six (6) months in the then current Plan Year.



     (b) Termination for Cause. If employment of Participant is terminated for “cause” (or any
variation of that term), as that term may be defined in the Participant’s employment agreement with
the Company, if applicable or if no such employment agreement exists or shall be applicable, then
under applicable law, the Participant shall be ineligible to receive any Award for the then current
Plan Year.



     (c) Voluntary Termination. Participants terminating employment by their own action during
the Plan Year forfeit all rights to any Award.



11. DESIGNATION OF BENEFICIARY




     A Participant may file with the Company a designation of a beneficiary or beneficiaries on a form
provided by the Administrator. The designation may be changed or revoked by the Participant’s sole
action, provided that
such change or revocation is filed in writing with the Administrator.



12. 409A EXEMPTION




     All Awards granted under this Plan shall be issued on such terms and conditions as will exempt such
Awards from the regulation under Code Section 409A, and all Awards shall be interpreted and
administered to preserve that exempt status.



13. PLAN AMENDMENTS




     The Plan shall become effective when adopted by the Compensation Committee or the Board. The
Compensation Committee or the Board may at any time amend, suspend or terminate the Plan, even if
such amendment, suspension or termination may adversely affect the rights of a Participant.



 









 





14. BENEFITS UNFUNDED




     No amounts awarded or accrued under this Plan shall actually be funded, set aside or otherwise
segregated prior to payment. The obligation to pay the Awards hereunder shall at all times be an
unfunded and unsecured obligation of the Company. Plan Participants that have received an Award
approved by the Administrator and that has become due and payable shall have the status of general
creditors and shall look solely to the general assets of the Company for the payment of their
Awards.



15. BENEFITS NONTRANSFERABLE




     No Plan Participant shall have the right to transfer any interest in, alienate, pledge or encumber
his or her interest in this Plan, and such interest shall not (to the extent permitted by law) be
subject in any way to the claims of the Participant’s creditors or to attachment, execution or
other process of law.



16. OTHER PLANS




     Nothing contained in the Plan shall prevent the Company or any Affiliate from adopting other
or additional compensation arrangements for its employees, directors and contract service
providers.



17. NO EMPLOYMENT RIGHTS




     The adoption of the Plan shall not confer upon any employee, director, consultant, independent
contractor or advisor any right to continued employment, directorship or service, nor shall it
interfere in any way with the right of the Company or any Subsidiary or Affiliate to terminate the
employment or service of any employee, consultant or advisor at any time.



18. WITHHOLDING TAXES AND OFFSETS




     No later than the date as of which an amount first becomes includible in the gross income of
the Participant for federal income tax purposes with respect to any Award under the Plan, the
Participant shall pay to the Company, or make arrangements satisfactory to the Company regarding
the payment of, any federal, state, local or foreign taxes of any kind required by law to be
withheld with respect to such amount. The obligations of the Company under the Plan shall be
conditioned on such payment arrangements, and the Company, its Subsidiaries and its Affiliates
shall, to the extent permitted by law, have the right to deduct any such taxes from any payment
otherwise due to the Participant. The Administrator may establish such procedures as it deems
appropriate for the settlement of withholding obligations with Stock or Stock Options.



     Any amounts owed to the Company or an Affiliate by the Participant of whatever nature may be
offset by the Company from the cash, or value of any shares of Stock, or other thing of value under
this Plan or an agreement to be transferred to the Participant, and no cash or shares of Stock, or
other thing of value under this Plan or an agreement shall be transferred unless and until all
disputes between the Company and the Participant have



 









 







been fully and finally resolved and the
Participant has waived all claims to such against the Company and Affiliates.



19. EXCLUSIVE PLAN DOCUMENT




     This Plan and each agreement granting an Award constitute the entire agreement with respect to the
subject matter hereof and thereof.



20. GOVERNING LAW




     This Plan, and all Awards, agreements and actions hereunder, shall be governed by, and construed in
accordance with, the laws of the State of Delaware, without regard to its choice of law provisions.



21. GENERAL PROVISIONS




     (a) The grant of an Award shall in no way affect the right of the Company to adjust, reclassify,
reorganize or otherwise change its capital or business structure or to merge, consolidate,
dissolve, liquidate or sell or transfer all or any part of its business or assets.



     (b) If any payment or right accruing to a Participant under this Plan (without the application of
this Section 21(b)), either alone or together with other payments or rights accruing to the
Participant from the Company or an Affiliate (“Total Payments”) would constitute a “parachute
payment” (as defined in Section 280G of the Code and regulations thereunder), such payment or right
shall be reduced to the largest amount or greatest right that will result in no portion of the
amount payable or right accruing under this Plan being subject to an excise tax under
Section 4999 of the Code or being disallowed as a deduction under Section 280G of the Code,
provided, however, that the foregoing shall not apply to the extent provided otherwise in an Award
or in the event the Participant is party to an agreement with the Company or an Affiliate that
explicitly provides for an alternate treatment of payments or rights that would constitute
“parachute payments.” The determination of whether any reduction in the rights or payments under
this Plan is to apply shall be made by the Administrator in good faith after consultation with the
Participant, and such determination shall be conclusive and binding on the Participant. The
Participant shall cooperate in good faith with the Administrator in making such determination and
providing the necessary information for this purpose. The foregoing provisions of this Section
21(b) shall apply with respect to any person only if, after reduction for any applicable Federal
excise tax imposed by Section 4999 of the Code and Federal income tax imposed by the Code, the
Total Payments accruing to such person would be less than the amount of the Total Payments as
reduced, if applicable, under the foregoing provisions of this Plan and after reduction for only
Federal income taxes. The Company shall have no liability or obligation under this Plan to
reimburse or make whole any Participant for any tax, interest or penalty accruing with respect to
any “parachute payment.”



     (c) To the extent that the Administrator determines that the restrictions imposed by the Plan
preclude the achievement of the material purposes of the Awards in jurisdictions outside the United
States, the Administrator in its discretion may modify those restrictions as it determines to be
necessary or appropriate to conform to applicable requirements or practices of jurisdictions
outside of the United States.



 









 





     (d) The headings contained in this Plan are for reference purposes only and shall not affect the
meaning or interpretation of this Plan.



     (e) If any provision of this Plan shall for any reason be held to be invalid or unenforceable, such
invalidity or unenforceability shall not affect any other provision hereby, and this Plan shall be
construed as if such invalid or unenforceable provision were omitted.



     (f) This Plan shall inure to the benefit of, and be binding upon, each successor and assign of the
Company. All obligations imposed upon a Participant, and all rights granted to the Company
hereunder, shall be binding upon the Participant’s heirs, legal Representatives and successors.



22. DEFINITIONS




     For purposes of this Plan, the following terms are defined as set forth below:



     (a) “Affiliate” means a corporation or other entity controlled by the Company and designated by the
Administrator as such.



     (b) “Award” means a cash award or an Award made in Stock or denominated in shares of Stock.



     (c) “Board” means the Board of Directors of the Company.



     (d) “Code” means the Internal Revenue Code of 1986, as amended from time to time, and any successor
thereto.



     (e) “Committee” means the Compensation Committee of Directors appointed by the Board to administer
this Plan.



     (f) “Company” means Lime Energy Co., a Delaware corporation.



     (g) “Director” means a member of the Company’s Board of Directors.



     (h) “Effective Date” means August ___, 2009.



     (i) “Eligible Individual” means any officer or full-time Employee of the Company or a Subsidiary or
Affiliate.



     (j) “Participant” means a person granted an Award.



     (k) “Plan Base Salary” means the actual base salary of the Participant as of the date of
determination, or such salary amount adjusted to competitive market levels as approved by the
Administrator for purposes of computations of Awards under the Plan.



     (l) “Representative” means (i) the person or entity acting as the executor or administrator of a
Participant’s estate pursuant to the last will and testament of a Participant or pursuant to the
laws of the jurisdiction in which the Participant had his or her primary residence at the date of
the Participant’s death; (ii) the person or entity acting as the guardian or temporary guardian of
a Participant; or (iii) the person or entity which is the beneficiary of the Participant upon or
following the Participant’s death; provided that only one of the foregoing shall be the



 









 







Representative at any point in time as determined under applicable law and recognized by the
Administrator.



     (m) “Stock” means common stock, par value $0.0001 per share, of the Company.



     (n) “Subsidiary” means any company during any period in which it is a “subsidiary corporation” (as
such term is defined in Section 424(f) of the Code) with respect to the Company.



     In addition, certain other terms used herein have the definitions given to them in the first
places in which they are used.



IN WITNESS WHEREOF, this 2009 Management Incentive Compensation Plan, having been first duly
adopted, is hereby executed below by a duly authorized officer on behalf of the Company on this 4th
day of August, 2009, to take effect as provided herein.



	 	 	 	 	 
	 	LIME ENERGY CO.

 	 
	 	By:  	/s/ Jeffrey Mistarz
 	 
	 	 	Jeffrey Mistarz
[Print Name] 	 
	 	 	Title:  	Chief Financial Officer 	 



 









 






	 	 	 	 	 



EXHIBIT B

LIME ENERGY CO.

2008 LONG-TERM INCENTIVE PLAN

NOTICE OF AWARD OPPORTUNITY



All terms in this Notice of Award Opportunity shall have the same meaning as ascribed to them in
the Lime Energy Co. 2008 Long-Term Incentive Plan, as amended (collectively the “Plan”).




	 	 	 	 	 	 	 
	 

	 	Name of Participant:
	 	     
	 	 
	 

	 	 	 	 	 	 
	 

	 	Address:
	 	     
	 	 
	 

	 	 	 	 	 	 
	 

	 	 
	 	     
	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	 	 	 




You are eligible for an Award consisting of Stock and Stock Options based on the Company’s and your
performance as determined by the Committee, subject to the terms and conditions of the Plan and
subject to the availability of shares of Stock under the Plan, as follows:




	 	 	 	 	 
	Plan Year
	 	 	_____	 
	Base Salary
	 	$	_____	 
	Percentage (%) of Base Salary
	 	 	_____	%
	Total Value of Stock Award and Stock Options(1)
	 	$	_____	 






	 	 	 	 	 
	Stock Award and Stock Options	 	Percentage of Total Value
	Stock Award (Restricted Stock)
	 	 	_____	%
	Stock Options (Incentive Stock Options)
	 	 	_____	%
	Total
	 	 	100	%








 




			
	(1)	 	Awards will be annually comprised of ___% Restricted Stock and
___% Incentive Stock Option (or such other allocated percentages as may be
determined by the Committee), which will vest ratably over a three-year period. The
value of the Awards will be determined at the time of the Awards. The value of
Restricted Stock will be based on the Fair Market Value of the Company Common Stock
on the day prior to the Date of Grant. The value of Incentive Stock Options will be
determined at the Date of Grant using a trinomial lattice option pricing model, or
such other methodology as approved by the Committee.




 









 









Restated Stock and Stock Options. The Award of Restricted Stock and Stock Options will be
evidenced by an Employee Restricted Stock Agreement and an Employee Stock Option Agreement,
substantially in the form of Exhibit A and Exhibit B affixed hereto.




Termination. If Participant shall no longer be an Employee of the Company, the Award
opportunity represented by this Notice of Award Opportunity shall terminate automatically on the
date of termination of employment, unless otherwise provided in the Plan or determined by the
Committee.



Integration and Acknowledgment. Participant acknowledges receipt of, and understands and
agrees to this Notice of Award Opportunity together with Exhibit A and Exhibit B
hereto, and the Plan. Participant further acknowledges that as of the date of execution by the
Company set forth below, this Notice of Award Opportunity, the Exhibits hereto, and the Plan set
forth the entire understanding between the Participant and the Company regarding the incentive
opportunity of Participant under the Plan for the
Plan Year set forth above, and supersede all prior and contemporaneous representations, agreements
and understandings (oral or written) on that subject.




	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	LIME ENERGY CO.	 	 	 	 	 	 	 	 	 
	a Delaware
corporation

	 	 	 	PLAN PARTICIPANT	 
	By: 
	 	 	 	 	 	 	 	 	 	 	 	 	 
		 	 	 	 	 	 	 	 
 	 
	 

	 	Signature
	 	 	 	Signature	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 
	 

	 	Print Name
	 	 	 	Print Name	 	 	 
	Title:	 	Chief Executive Officer	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 
	Date:

	 	 	,	 	 	 	 	Date:	 	 	,	 	 
	 

	 	 	 	 	 	 	 	 	 	 	 	 	 





 









 






EXHIBIT C




LIME ENERGY CO.

2008 LONG-TERM INCENTIVE PLAN

NOTICE OF AWARD OPPORTUNITY



All terms in this Notice of Award Opportunity shall have the same meaning as ascribed to them in
the Lime Energy Co. 2008 Long-Term Incentive Plan, as amended (collectively the “Plan”).




	 	 	 	 	 	 	 
	 

	 	Name of Participant:
	 	     
	 	 
	 

	 	 	 	 	 	 
	 

	 	Address:
	 	     
	 	 
	 

	 	 	 	 	 	 
	 

	 	 
	 	     
	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	 	 	 





You are eligible for an Award consisting of Stock and Stock Options based on the Company’s and your
performance as determined by the Committee, subject to the terms and conditions of the Plan and
subject to the availability of shares of Stock under the Plan, as follows:



	 	 	 	 	 
	Plan Year
	 	 	_____	 
	Base Salary
	 	$	_____	 
	Percentage (%) of Base Salary
	 	 	_____	%
	Total Value of Stock Award and Stock Options(1)
	 	$	_____	 






	 	 	 	 	 
	Stock Award and Stock Options	 	Percentage of Total Value
	Stock Award (Restricted Stock)
	 	 	_____	%
	Stock Options (Incentive Stock Options)
	 	 	_____	%
	Total
	 	 	100	%








 




			
	(1)	 	Awards will be annually comprised of ___% Restricted Stock and
___% Incentive Stock Option (or such other allocated percentages as may be
determined by the Committee), which will vest ratably over a three-year period. The
value of the Awards will be determined at the time of the Awards. The value of
Restricted Stock will be based on the Fair Market Value of the Company Common Stock
on the day prior to the Date of Grant. The value of Incentive Stock Options will be
determined at the Date of Grant using a trinomial lattice option pricing model, or
such other methodology as approved by the Committee.




 









 









Restated Stock and Stock Options. The Award of Restricted Stock and Stock Options will be
evidenced by an Employee Restricted Stock Agreement and an Employee Stock Option Agreement,
substantially in the form of Exhibit A and Exhibit B affixed hereto.



Termination. If Participant shall no longer be an Employee of the Company, the Award
opportunity represented by this Notice of Award Opportunity shall terminate automatically on the
date of termination of employment, unless otherwise provided in the Plan or determined by the
Committee.



Integration and Acknowledgment. Participant acknowledges receipt of, and understands and
agrees to this Notice of Award Opportunity together with Exhibit A and Exhibit B
hereto, and the Plan. Participant
further acknowledges that as of the date of execution by the Company set forth below, this Notice
of Award Opportunity, the Exhibits hereto, and the Plan set forth the entire understanding between
the Participant and the Company regarding the incentive opportunity of Participant under the Plan
for the Plan Year set forth above, and supersede all prior and contemporaneous representations,
agreements and understandings (oral or written) on that subject.






	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	LIME ENERGY CO.	 	 	 	 	 	 	 	 	 
	a Delaware
corporation

	 	 	 	PLAN PARTICIPANT	 
	By: 
	 	 	 	 	 	 	 	 	 	 	 	 	 
		 	 	 	 	 	 	 	 
 	 
	 

	 	Signature
	 	 	 	Signature	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 
	 

	 	Print Name
	 	 	 	Print Name	 	 	 
	Title:	 	Chief Executive Officer	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 
	Date:

	 	 	,	 	 	 	 	Date:	 	 	,	 	 
	 

	 	 	 	 	 	 	 	 	 	 	 	 	 






 









 





EXHIBIT A




LIME ENERGY CO.




Employee Stock Option Agreement




     This Employee Stock Option Agreement (this “Agreement”) is made this [•] day of [•], [•],
between Lime Energy Co., a Delaware corporation (“Lime Energy”) and [•] (the
“Holder”).



RECITALS




     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”). 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 “Stock Options”) to purchase up to an
aggregate of [•] shares (the “Option Shares”) of the Common Stock, subject to the terms and
conditions set forth herein.



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



3. Vesting. The Stock Options shall not be exercisable until vested, and shall vest
according to the following schedule:



	 	 	 
	Vesting Date	 	Number of Option Shares Vested
	[•]
	 	[•]
	[•]
	 	[•]
	[•]
	 	[•]





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. All unvested Stock Options shall immediately vest and become
exercisable if the employment of the Holder by the Company is terminated by the 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 contendere 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 Stock 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 be deemed to have
occurred when (i) the Company is merged or consolidated with another entity which is not then
controlled by the Company and, as a result of such merger or consolidation, an unrelated entity
acquires the ability to elect a majority of the Company’s Board of Directors, or (ii) substantially
all of the Company’s assets are sold or otherwise transferred to another entity that is not then
controlled by or affiliated with the Company.



The provisions of this Section relate only to the vesting of the Stock Options and do not in anyway
change the at-will nature of the employment of Holder by the Company.



4. Exercise of the Stock Options. Any vested Stock Options may be exercised at any time
after vesting by delivering the Exercise Price, paid in cash, along with a notice of exercise in
the form attached as Exhibit A-1, to Lime Energy at its headquarters address (currently,
1280 Landmeier Road, Elk Grove Village, Illinois 60007; Attention: Chief Financial Officer). The
Exercise Price of the Option Shares as to which any Stock Options are being exercised shall be paid
in full, in cash, at the time of exercise, provided, that if the Fair Market Value of one
share of Common Stock is greater than the Exercise Price (at the date of calculation as set forth
below), in lieu of exercising the Stock Options for cash, the Holder may elect to receive shares of
Common Stock equal to the value (as determined below) of the Stock Options (or the portion thereof
being exercised) by surrender of this Agreement with respect to the Stock Options being exercised
at the principal office of the Company, together with the executed Exercise Notice, in which event
Lime Energy shall issue to the Holder a number of shares of Common Stock computed using the
following formula:




	 	 	 	 	 
	 

	 	X = Y
	 	(A-B)
	 

	 	 	 	A






	 	 	 
	Where:

	 	X = the number of shares of Common Stock to be issued to the Holder;
	 

	 	Y = the number of shares of Common Stock purchasable under the Stock Options
or, if only a portion of the Stock Options is being exercised, the portion of the
Stock Options being exercised (at the date of such calculation);
	 

	 	A = the Fair Market Value of one share of the Common Stock (at the date of such
calculation); and
	 

	 	B = Exercise Price (as adjusted to the date of such calculation)






 









 






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 Stock 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, vested or unvested, will expire on the earliest of (i) the tenth (10th) anniversary of the
date of this Agreement, or (ii) three (3) 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) immediately upon
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 Stock
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. Incentive Stock Options. This Option is intended to be an Incentive Stock Option
within the meaning of Section 422(b) of the Code, but the Company does not represent or warrant
that this Option qualifies as such. The Optionee should consult with the Optionee’s own tax
advisor regarding the tax effects of this Option and the requirements necessary to obtain favorable
income tax treatment under Section 422 of the Code, including, but not limited to, holding period
requirements. (NOTE TO OPTIONEE: If the Option is exercised more than three (3) months after the
date on which you cease to be an Employee (other than by reason of your death or permanent and
total disability as defined in Section 22(e)(3) of the Code), the Option will be treated as a
Nonstatutory Stock Option and not as an Incentive Stock Option to the extent required by Section
422 of the Code.) To the extent that the Option Agreement (together with all Incentive Stock
Options granted to the Optionee under all stock option plans of the Participating Company Group,
including the Plan) becomes exercisable for the first time during any calendar year for shares
having a Fair Market Value greater than One Hundred Thousand Dollars ($100,000), the portion of
such options which exceeds such amount will be treated as Nonstatutory Stock Options. For purposes
of this Paragraph 10, options designated as Incentive Stock Options are taken into



 









 







account in the
order in which they were granted, and the Fair Market Value of stock is determined as of the time
the option with respect to such stock is granted. If the Code is amended to provide for a
different limitation from that set forth in this Paragraph 10, the Optionee may designate which
portion of such Option the Optionee is exercising. In the absence of such designation, the
Optionee shall be deemed to have exercised the Incentive Stock Option portion of the Option first.
Separate certificates representing each such portion shall be issued upon the exercise of the
Option. (NOTE TO OPTIONEE: If the aggregate Exercise Price of the Option (that is, the Exercise
Price multiplied by the Number of Option Shares) plus the aggregate exercise price of any other
Incentive Stock Options you hold (whether granted pursuant to the Plan or any other stock option
plan of the Company) is greater than $100,000, you should contact your own tax advisor to ascertain
whether the entire Option qualifies as an Incentive Stock Option.


11. Taxes. Upon exercise of any Stock Options, Lime Energy will have the right to deduct
from
payments of any kind otherwise due to the Holder, any and all federal, state or local taxes
required to be withheld with respect to the purchase of Option Shares by the Holder. The inability
of the Company to obtain from any regulatory body having jurisdiction the authority, if any, deemed
by the Company’s legal counsel to be necessary to the lawful issuance and sale of any shares
subject to the Option shall relieve the Company of any liability in respect of the failure to issue
or sell such shares as to which such requisite authority shall not have been obtained. As a
condition to the exercise of the Option, the Company may require the Optionee to satisfy any
qualifications that may be necessary or appropriate, to evidence compliance with any applicable law
or regulation and to make any representation or warranty with respect thereto as may be requested
by the Company.



12. Trading Restrictions and Other 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 ninety (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. The inability of
the Company to obtain from any regulatory body having jurisdictional authority, if any, deemed by
the Company’s legal counsel to be necessary to the lawful issuance and sale of any shares subject
to the Option shall relieve the Company of any liability in respect of the failure to issue or sell
such shares as to which such requisite authority shall not have been obtained. As a condition to
the exercise of the Option, the Company may require the Optionee to satisfy any qualifications that
may be necessary or appropriate, to evidence compliance with any applicable law or regulation and
to make any representation or warranty with respect thereto as may be requested by the Company.



13. 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
the Stock Options. 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 the Stock Options.



14. 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 shall be brought in the federal or state courts located in Chicago, Illinois. The parties
hereby irrevocably agree and submit to the personal jurisdiction and venue of such courts and
irrevocably waive any objections to improper venue or inconvenient forum in Chicago, Illinois.



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




 









 








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



     17. 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 Stock Options or Stock Option Shares, as determined in the
discretion of the Company, except as provided in a written document signed by Holder and the
Company.



     IN WITNESS WHEREOF, the duly authorized representative of 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:
	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 

	 	Its:
	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	Print or Type Name





 









 






EXHIBIT B




LIME ENERGY CO.




Employee Restricted Stock Agreement




     This Restricted Stock Agreement (this “Agreement”) is made this [•] day of [•], [•],
between Lime Energy Co., a Delaware corporation (“Lime Energy”) and [•] (the
“Holder”).



RECITALS




     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”). Lime Energy desires,
by granting Holder restricted 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:



18. Grant of Shares. The Company, subject to the terms and conditions set forth in this
Agreement, hereby grants [•] shares (“Shares”) of Common Stock (“Common Stock”) to Holder. Holder
agrees that the Shares shall be subject to forfeiture provisions set forth in Section 2 hereof, and
otherwise subject to the terms and conditions of this Agreement.



19. Vesting.



     a. The Shares shall be subject to forfeiture until vested, and shall vest according to the
following schedule:



	 	 	 
	Vesting Date	 	Number of Option Shares Vested
	[•]
	 	[•]
	[•]
	 	[•]
	[•]
	 	[•]





Notwithstanding the vesting rights set forth above, any unvested Shares shall be automatically
forfeited by Holder as of (i) the date the Holder shall voluntarily cease working for the Company,
(ii) the date the Holder’s employment at the Company shall be terminated for Due Cause. Shares
forfeited pursuant to this Section 2(a) shall be transferred to, and reacquired by, the Company
payment of $0.001 per Share, payable by stock rounded to the nearest cent by the Company, and
neither the Holder nor any of the Holder’s successors, heirs, assigns or personal representatives
shall thereafter have any further rights or interests in such Shares. If certificates for any such
Shares containing restrictive legends shall have been delivered to the Holder, such certificates
shall be returned to the Company, complete with any necessary signatures or instruments of
transfer.




     b. All unvested Shares shall immediately vest if the employment of the Holder by the Company is
terminated by the Company for any reason other than Due Cause, death or permanent disability. As
used in this Agreement, “Due Cause” shall mean any of:




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





 









 





	 	(ix)	 	Holder’s conviction on, or plea of guilty or of nolo contendere to, a
felony charge;
	 
	 	(x)	 	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;
	 
	 	(xi)	 	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;
	 
	 	(xii)	 	violation of the Company’s drug and alcohol policy;
	 
	 	(xiii)	 	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;
	 
	 	(xiv)	 	Holder’s commission of an act of moral turpitude.




Upon the occurrence of a Change in Control, any unvested Shares shall be automatically and
immediately vested, subject to the other applicable terms of this Agreement. For all purposes of
this Agreement, a “Change in Control” shall be deemed to have occurred when (i) the Company is
merged or consolidated with another entity which is not then controlled by the Company and, as a
result of such merger or consolidation, an unrelated entity acquires the ability to elect a
majority of the Company’s Board of Directors, or (ii) substantially all of the Company’s assets are
sold or otherwise transferred to another entity that is not then controlled by or affiliated with
the Company.



The provisions of this Section relate only to the vesting of the Shares and do not in anyway change
the at-will nature of the employment of Holder by the Company.



20. Restrictions on Transfer. The Holder shall not sell, assign, transfer, pledge,
hypothecate or otherwise dispose of, by operation of law or otherwise (collectively “transfer”) any
Shares, or any interest therein, that are subject to forfeiture pursuant to Section 2, except that
the Holder may transfer such Shares (i) to or for the benefit of any spouse, children and any other
relatives approved by the Board of Directors (collectively, “Approved Relatives”) or to a trust
established solely for the benefit of the Holder and/or Approved Relatives, provided that such
Shares shall remain subject to this Agreement (including without limitation the restrictions on
transfer set forth in this Section 3 and the forfeiture provisions set forth in Section 2), and
such permitted transferee shall, as a condition to such transfer, deliver to the Company a written
instrument confirming that such transferee shall be bound by all of the terms and conditions of
this Agreement; or (ii) as part of a Change in Control.



21. Escrow. The certificate or certificates evidencing the Shares and, together with stock
powers separate from certificates in blank for the Shares, shall be delivered to and deposited with
the Secretary of the Company as escrow agent (“Escrow Agent”) upon issuance. The Shares may also
be held in a restricted book entry account in the name of the Holder. Such certificates or such
book entry shares are to be held by the Escrow Agent until such time as the Shares become vested
Shares, at which time they shall be released by the Escrow Agent to the Holder, together with stock
powers separate from certificates in blank for such vested Shares.



22. Restrictive Legends. All certificates representing Shares shall have affixed thereto
legends in substantially the following form, in addition to any other legends that may be required
under federal or state securities laws:




 









 









     “The shares of stock represented by this certificate are subject to restrictions on
transfer set forth in a certain Employee Restricted Stock Agreement between the
corporation and the registered owner of these shares (or his predecessor in
interest), and such Agreement is available for inspection without charge at the
office of the Secretary of the corporation.”




     “The shares represented by this certificate have not been registered under the
Securities Act of 1933, as amended, and may not be sold, transferred or otherwise
disposed of in the absence of an effective registration statement under such Act or
an opinion of counsel satisfactory to the corporation to the effect that such
registration is not required.”


23. 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 date of
this Agreement, to remain part or an affiliate of the Company then, for purposes of Section 2
above, Holder will be deemed to have incurred a termination of employment with the Company for
reasons other than Due Cause.



24. Adjustments. If from time to time there is any stock split, stock dividend, stock
distribution or other reclassification of the Common Stock, any and all new, substituted or
additional securities to which the Holder is entitled by reason of his ownership of the Shares
shall be immediately subject to the forfeiture provisions, the restrictions on transfer and the
other provisions of this Agreement in the same manner and to the same extent as the Shares.



25. Terms Governing Shares. Unless otherwise provided herein, the terms of the Shares
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. 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 Shares.



26. Investment Representations. The Holder represents, warrants and covenants as follows:




     a. The Holder is acquiring the Shares for his own account for investment only, and not with a view
to, or for sale in connection with, any distribution of the Shares in violation of the Securities
Act, or any rule or regulation under the Securities Act.



     b. The Holder has had such opportunity as he has deemed adequate to obtain from representatives of
the Company such information as is necessary to permit him to evaluate the merits and risks of his
investment in the Company.



     c. The Holder has sufficient experience in business, financial and investment matters to be able to
evaluate the risks involved in the purchase of the Shares and to make an informed investment
decision with respect to such purchase.



     d. The Holder can afford a complete loss of the value of the Shares and is able to bear the
economic risk of holding such Shares for an indefinite period.



 









 





     e. Unless otherwise notified by the Company, the Holder understands that (i) the Shares have not
been registered under the Securities Act and are “restricted securities” within the meaning of Rule
144 under the Securities Act, (ii) the Shares cannot be sold, transferred or otherwise disposed of
unless they are subsequently registered under the Securities Act or an exemption from registration
is then available; (iii) in any event, the exemption from registration under Rule 144 will not be
available for at least six (6) months and even then will not be available unless a public market
then exists for the Common Stock, adequate information concerning the Company is then available to
the public, and other terms and conditions of Rule 144 are complied with; and (iv) the Company and
the Company has no obligation or current intention to register the Shares under the Securities Act.



     f. The Holder is an “accredited investor” within the meaning of Rule 501 under the
Securities Act by reason of having (i) an individual net worth, or joint net worth with Holder’s
spouse, of more than $1,000,000 or (ii) had an individual income in excess of $200,000 in each of
the two most recent years or joint income with Holder’s spouse in excess of $300,000 in each of
those years and a reasonable expectation of reaching the same income level in the current year.


27. Taxes. The Holder acknowledges and agrees that the Company has the right to deduct
from payments of any kind otherwise due to the Holder any federal, state or local taxes of any kind
required by law to be withheld with respect to the purchase of the Shares by the Holder or the
lapse of the forfeiture provisions of this Agreement.



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



29. Section 83(b) Election. The Holder has reviewed with the Holder’s own tax advisors the
federal, state, local and foreign tax consequences of this investment and the transactions
contemplated by this Agreement. The Holder is relying solely on such advisors and not on any
statements or representations of the Company or any of its agents. The Holder understands that the
Holder (and not the Company) shall be responsible for the Holder’s own tax liability that may arise
as a result of this investment or the transactions contemplated by this Agreement. The Holder
understands that it may be beneficial in many circumstances to elect to be taxed at the time the
Shares are acquired rather than when and as the forfeiture provisions hereunder expire by filing an
election under Section 83(b) of the Code with the IRS within thirty (30) days from the date of this
Agreement as first set forth above.




     THE EMPLOYEE ACKNOWLEDGES THAT IT IS THE EMPLOYEE’S SOLE RESPONSIBILITY AND NOT THE COMPANY’S TO
FILE TIMELY THE ELECTION UNDER SECTION 83(B), EVEN IF THE EMPLOYEE REQUESTS THE COMPANY OR ITS
REPRESENTATIVES TO MAKE THIS FILING ON THE EMPLOYEE’S BEHALF.


30. 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 shall be brought in the federal or state courts located in Chicago, Illinois. The parties
hereby irrevocably agree and submit to the personal jurisdiction and venue of such courts and
irrevocably waive any objections to improper venue or inconvenient forum in Chicago, Illinois.



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





 









 







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



33. 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 Shares, as determined in the discretion of the Company, except
as provided in a written document signed by Holder and the Company.



34. Holder’s Acknowledgements. The Holder acknowledges that he: (i) has read this
Agreement; (ii) has been represented in the preparation, negotiation, and execution of this
Agreement by legal counsel of the Holder’s own choice or has voluntarily declined to seek such
counsel; (iii) understands the terms and consequences of this Agreement; (iv) is fully aware of the
legal and binding effect of this Agreement;
and (v) understands that the Company’s law firm does not act as counsel for the Holder in
connection with this Agreement or otherwise.




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






	 	 	 	 	 	 	 	 	 
	LIME ENERGY CO.	 	 	 	HOLDER
	 
	 	 	 	 	 	 	 	 
	By:
	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 

	 	Its:
	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	Print or Type Name