exv4w1



 





Exhibit 4.1



NEITHER THIS WARRANT NOR ANY SHARES OF COMMON STOCK ISSUABLE UPON THE EXERCISE OF THIS WARRANT HAVE
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS.
SUCH SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED UNLESS (A) SUBSEQUENTLY
REGISTERED PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, AND APPLICABLE STATE SECURITIES LAWS OR (B) THE HOLDER HEREOF SHALL HAVE DELIVERED TO THE
COMPANY A WRITTEN OPINION OF COUNSEL, IN FORM, SUBSTANCE AND SCOPE REASONABLY ACCEPTABLE TO THE
COMPANY, TO THE EFFECT THAT THE SHARES TO BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED ARE
BEING OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED PURSUANT TO AN EXEMPTION FROM SUCH
REGISTRATION.




LIME ENERGY CO.




Warrant To Purchase Common Stock




	 	 	 
	Warrant No.: 110

	 	Number of Shares: 865,385

	Original Date of Issuance: May 29, 2007
	 	 





Lime Energy Co., a Delaware corporation (the “Company”), hereby certifies that, for good and
valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Richard P.
Kiphart., the registered holder hereof or his permitted assigns registered on the books of the
Company (the “Holder”), is entitled, subject to the terms and conditions set forth below, to
purchase from the Company upon surrender of this Warrant, at any time or times on or after the date
hereof, but before May 29, 2011 (the “Expiration Date”), Eight Hundred Sixty Five Thousand Three
Hundred and Eighty Five (865,385) fully paid and nonassessable shares (the “Warrant Shares”) of the
Company’s common stock, par value $0.0001 per share (the “Common Stock”), at the exercise price per
share equal to $1.04, subject to adjustment as hereinafter provided (the “Warrant Exercise Price”).




     1. Definitions. In addition to the capitalized terms defined elsewhere herein, the
following terms as used in this Warrant shall have the following meanings:




     “Business Day” means any day other than Saturday, Sunday or other day on which
commercial banks in the City of Chicago are authorized or required by law to remain closed.




     “Fair Market Value” means, the fair market value of a share of Common Stock as of a
particular date (the “Determination Date”) as follows:



 









 






     (a) If the Common Stock is traded on the American Stock Exchange or another
national exchange or is quoted on the National or SmallCap Market of The Nasdaq
Stock Market, Inc.(“Nasdaq”), then the closing or last sale price, respectively,
reported for the last Business Day immediately preceding the Determination Date.




     (b) If the Common Stock is not traded on the American Stock Exchange or another
national exchange or on the Nasdaq but is traded on the NASD OTC Bulletin Board,
then the mean of the average of the closing bid and asked prices reported for the
last Business Day immediately preceding the Determination Date.




     (c) Except as provided in clause (d) of this definition below, if the Common
Stock is not then publicly traded, then as the Holder and the Company agree, or in
the absence of agreement as determined by arbitration in accordance with Section 17
hereof.




     (d) If the Determination Date is the date of a liquidation, dissolution or
winding up, or any event deemed to be a liquidation, dissolution or winding up
pursuant to the Company’s charter, then all amounts to be payable per share to
holders of the Common Stock pursuant to the charter in the event of such
liquidation, dissolution or winding up, plus all other amounts to be payable per
share in respect of the Common Stock in liquidation under the charter, assuming for
the purposes of this clause (d) that all of the shares of Common Stock then issuable
upon exercise of this Warrant are outstanding at the Determination Date.




     “Person” means an individual, a limited liability company, a partnership, a joint
venture, a corporation, a trust, an unincorporated organization or a government or any
department or agency thereof.




     “Securities Act” means the Securities Act of 1933, as amended.



     2. Exercise of Warrant.



     (a) Subject to the terms and conditions hereof, this Warrant may be exercised by the Holder,
in whole or in part, during normal business hours on any Business Day on or after the date hereof
and prior to 5:00 P.M. Chicago Time on the Expiration Date by




     (i) delivery of a duly executed written notice, in the form of the subscription
notice attached as Exhibit A hereto (the “Exercise Notice”), of such
Holder’s election to exercise this Warrant, which notice shall specify the number of
Warrant Shares to be purchased;



 









 






     (ii) payment to the Company of an amount equal to the Warrant Exercise Price
multiplied by the number of Warrant Shares as to which this Warrant is being
exercised (the “Aggregate Exercise Price”), either in cash or by certified check or
wire transfer of immediately available funds or by delivery of Warrant Shares
receivable upon exercise of this Warrant in accordance with Section 2(b) below; and




     (iii) delivery to the Company of this Warrant (or an indemnity and evidence
with respect to this Warrant in the case of its loss, theft, mutilation or
destruction as provided in Section 11).


In the event of any exercise of the rights represented by this Warrant in compliance with this
Section 2(a), the Company shall, on or before the tenth (10th) Business Day following
the date of its receipt of the Exercise Notice, the Aggregate Exercise Price and this Warrant (or
an indemnity and evidence with respect to this Warrant in the case of its loss, theft, mutilation
or destruction as provided in Section 11) (the “Exercise Delivery Documents”), deliver at the
Company’s expense to the Holder, a certificate or certificates for the Warrant Shares so purchased,
in such denominations as may be requested by Holder and registered in the name of Holder. Upon the
Company’s receipt of the Exercise Delivery Documents, the Holder shall be deemed for all corporate
purposes to have become the holder of record of the Warrant Shares with respect to which this
Warrant has been exercised, irrespective of the date of delivery of certificates evidencing such
Warrant Shares.




     (b) Notwithstanding any provisions herein to the contrary, 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 this Warrant for cash, the Holder may elect to receive shares equal
to the value (as determined below) of this Warrant (or the portion thereof being exercised) by
surrender of this Warrant at the principal office of the Company together with the properly
endorsed Exercise Notice in which event the Company 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 Warrant
or, if only a portion of the Warrant is being exercised, the portion of the
Warrant being exercised (at the date of such calculation)
	 
	 	 	A=	 the Fair Market Value of one share of the Company’s Common Stock
(at the date of such calculation)
	 
	 	 	B= 	Exercise Price (as adjusted to the date of such calculation)





 









 





          (c) Unless the rights represented by this Warrant shall have expired or shall have been fully
exercised, the Company shall, as soon as practicable and in no event later than ten (10) Business
Days after any exercise and at its own expense, issue a new Warrant identical in all respects to
this Warrant exercised, except it shall represent rights to purchase the number of Warrant Shares
purchasable immediately prior to such exercise under this Warrant exercised, less the number of
Warrant Shares with respect to which this Warrant is exercised.




          (d) No fractional shares of Common Stock are to be issued upon the exercise of this Warrant,
but rather the number of shares of Common Stock issued upon exercise of this Warrant shall be
rounded up or down to the nearest whole number.




     3. Covenants. The Company hereby represents, covenants and agrees as follows:



          (a) This Warrant is, and any Warrants issued in substitution for or replacement of this
Warrant will upon issuance be, duly authorized and validly issued.




          (b) All Warrant Shares which may be issued upon the exercise of the rights represented by this
Warrant will, upon issuance, be validly issued, fully paid and nonassessable.




          (c) The Company has full power and authority to enter into this Warrant, and to issue and
deliver this Warrant and the Warrant Shares, and to incur and perform fully the obligations
provided herein, all of which have been duly authorized by all necessary corporate action.




          (e) This Warrant has been duly executed and delivered and is the valid and binding obligation
of the Company enforceable in accordance with its terms, except as such enforceability may be
limited by bankruptcy, insolvency, moratorium and other similar laws affecting creditors’ rights
generally and by general principles of equity.




     4. Taxes. The Company shall pay any and all taxes, except income taxes, which may be
payable with respect to the issuance and delivery of Warrant Shares upon exercise of this Warrant.



     5. Holder Not Deemed a Stockholder. Except as otherwise specifically provided herein,
this Warrant shall not entitle Holder to vote or receive dividends or any other rights of a
stockholder of the Company, including, without limitation, any right to vote, give or withhold
consent to any corporate action (whether a reorganization, issue of stock, reclassification of
stock, consolidation, merger, conveyance or otherwise), receive notice of meetings or receive
subscription rights.



     6. Representations of Holder. The Holder, by the acceptance hereof, represents and
warrants that it:




     (a) is acquiring this Warrant and the Warrant Shares solely for its own account, for
investment and not with a view towards the distribution or resale thereof in violation of
the Securities Act or any applicable state securities laws;



 









 






     (b) has received such documents, materials and information as the Holder deems
necessary or appropriate for evaluation of the acquisition of this Warrant and the right to
acquire Warrant Shares hereunder;




     (c) is an “accredited investor” as such term is defined in Rule 501 of Regulation D
promulgated under the Securities Act and has such knowledge and experience in financial and
business matters that it is capable of evaluating the merits and risks of an investment in
this Warrant and the Warrant Shares;




     (d) understands that no U.S. federal, state or regulatory agency has recommended,
approved or endorsed, or passed upon the fairness or suitability of, an investment in this
Warrant or the Warrant Shares or passed up on the accuracy or adequacy of the information
provided to the Holder; and




     (e) recognizes that an investment in the Warrant Shares involves a high degree of
financial risk, and that it can bear the economic risk of losing its entire investment in
the Warrant Shares and has sought, or will seek, such accounting, legal and tax advice as it
has considered, or will consider, necessary to make an informed investment decision with
respect to its acquisition of this Warrant and of any Warrant Shares.


If the Holder cannot make any of the foregoing representations at the time of any exercise of this
Warrant because it would be factually incorrect at that time, the Holder shall so notify the
Company, and it shall be a condition to the Holder’s exercise of this Warrant at that time that the
Company receive such other assurances as the Company then considers reasonably necessary to assure
the Company that the issuance of the Warrant Shares upon such exercise of this Warrant at such time
shall not violate the Securities Act or any state securities laws.




     7. Restriction on Transfer.



          (a) This Warrant and the rights granted to Holder are transferable, in whole or in part, upon
surrender of this Warrant, together with a properly executed transfer endorsement in the form of
Exhibit B attached hereto; provided, however, that any transfer or assignment shall
be subject to the approval of the Company, such approval not to be unreasonably withheld, and the
conditions set forth in Section 7(b) below.




          (b) Holder represents and warrants that it understands that the Company is under no obligation
to register this Warrant or, except as set forth in Section 8 below, any of the Warrant Shares,
under the Securities Act and that this Warrant and Warrant Shares will be characterized as
“restricted securities” under the Securities Act because they are being acquired from the Company
in a transaction not involving a public offering. The Holder also represents and warrants that it
understands that neither the Warrant nor the Warrant Shares may be offered for sale, sold, assigned
or transferred unless (a) at that time they have been registered pursuant to an effective
registration statement under the Securities Act and applicable state securities laws, or (b) the
Holder shall have delivered to the Company a written opinion of counsel, in form, substance and
scope reasonably acceptable to the Company, to the effect that the securities to be offered for
sale, sold, assigned or transferred are being offered for sale, sold, assigned or transferred
pursuant to an exemption from such registration.




 









 








          (c) Unless upon their issuance such Warrant Shares are then registered under the Securities
Act pursuant to an effective registration statement, any certificates representing Warrant Shares
issued in accordance with this Warrant shall bear a legend substantially in the following form:





	 	 	THE SHARES OF COMMON STOCK OF LIME ENERGY CO. (THE “COMPANY”) REPRESENTED BY THIS
CERTIFICATE (THE “SHARES”) HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE “SECURITIES ACT”), AND MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR
ASSIGNED UNLESS (A) SUBSEQUENTLY REGISTERED PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS OR (B) THE HOLDER HEREOF SHALL
HAVE DELIVERED TO THE COMPANY A WRITTEN OPINION OF COUNSEL, IN FORM, SUBSTANCE AND SCOPE
REASONABLY ACCEPTABLE TO THE COMPANY, TO THE EFFECT THAT THE SHARES TO BE OFFERED FOR SALE,
SOLD, TRANSFERRED OR ASSIGNED ARE BEING OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED
PURSUANT TO AN EXEMPTION FROM SUCH REGISTRATION.





     8. Registration of Warrant Shares. The Company has granted Holder rights to seek to
register the Warrant Shares under the Securities Act, as more fully set forth in that certain
Investor Rights Agreement dated as of May ___, 2007 by and between the Company and Holder.



     9. Adjustment of Warrant Exercise Price and Number of Warrant Shares upon Subdivision or
Combination of Common Stock.



          (a) If the Company at any time after the date of issuance of this Warrant subdivides (by any
stock split or stock dividend of its Common Stock) its outstanding shares of Common Stock into a
greater number of shares of Common Stock, the Warrant Exercise Price in effect immediately prior to
such subdivision will be proportionately reduced and the number of Warrant Shares obtainable upon
exercise of this Warrant will be proportionately increased. If the Company at any time after the
date of issuance of this Warrant combines (by reverse stock split or otherwise) its outstanding
shares of Common Stock into a smaller number of shares of Common Stock, the Warrant Exercise Price
in effect immediately prior to such combination will be proportionately increased and the number of
Warrant Shares obtainable upon exercise of this Warrant will be proportionately decreased. Any
adjustment under this Section 9(a) shall become effective at the close of business on the date the
subdivision or combination becomes effective.




          (b) Upon any adjustment of the Warrant Exercise Price or number of issuable Warrant Shares
pursuant to Section 9(a), the Company will give written notice thereof to the Holder, setting forth
in reasonable detail the calculation of such adjustment.




     10. Reorganization, Reclassification, Consolidation, Merger or Sale. If at any time,
as a result of:



          (a) a capital reorganization or reclassification (other than a subdivision or combination
provided for in Section 9), or




 









 








          (b) a merger or consolidation of the Company with another corporation (whether or not the
Company is the surviving corporation) or sale of substantially all of the Company’s stock, the
Common Stock issuable upon exercise of this Warrant shall be changed into or exchanged for the same
or a different number of shares of any class or classes of capital stock of the Company or any
other Person, or other securities convertible into such shares, then, as a part of such
reorganization, reclassification, merger, consolidation or sale, appropriate adjustments shall be
made in the terms of this Warrant (or of any securities into which this Warrant is exercised or for
which this Warrant is exchanged), so that Holder shall thereafter be entitled to receive, upon
exercise of this Warrant or of such substitute securities, the kind and amount of shares of stock,
other securities, money and property which Holder would have received at the time of such capital
reorganization, reclassification, merger, consolidation or sale, if Holder had exercised this
Warrant immediately prior to such capital reorganization, reclassification, merger, consolidation
or sale. This Warrant, including, without limitation, the provisions of this Section 10 will be
binding upon any entity succeeding to the Company by merger, consolidation or acquisition of all or
substantially all of the Company’s assets. The provisions of this Section 10 shall similarly apply
to (x) successive capital reorganizations, reclassifications, mergers, consolidations and sale and
(y) the securities of any other Person that are at the time receivable upon the exercise of this
Warrant.




     11. Lost, Stolen, Mutilated or Destroyed Warrant. If this Warrant is lost, stolen,
mutilated or destroyed, the Company shall promptly, on receipt of evidence reasonably satisfactory
to the Company of the ownership of, and the loss, theft, mutilation or destruction of, this
Warrant, and an indemnity reasonably satisfactory to the Company (or in the case of a mutilated
Warrant, the Warrant), issue in lieu thereof a new Warrant of like denomination and tenor as this
Warrant so lost, stolen, mutilated or destroyed.



     12. Notice. Any notices, consents, waivers or other communications required or
permitted to be given under the terms of this Warrant must be in writing and will be deemed to have
been made upon receipt when delivered personally, via pre-paid overnight courier or by certified
mail, postage pre-paid, return receipt requested. The addresses for such communications shall be:


If to the Company:



Lime Energy Co.

1280 Landmeier Road

Elk Grove Village, IL 60007

Attention: General Counsel



If to the Holder:



Richard P. Kiphart



                                                            



                                                            



                                                            



or such other address as the Company or Holder, as applicable, may specify in written notice
given to the other party in accordance with this Section 12.




 









 








     13. Amendments. This Warrant and any term hereof may be changed, waived, discharged,
or terminated only by an instrument in writing signed by the party hereto against which enforcement
of such change, waiver, discharge or termination is sought.



     14. Expiration. This Warrant, in all events, shall be wholly void and of no effect
after 5:00 P.M. Chicago Time on the Expiration Date.



     15. Successors and Assigns. The terms and provisions of this Warrant shall inure to
the benefit of, and be binding upon, the Company and the Holder and their respective successors and
permitted assigns.



     16. Descriptive Headings; Governing Law. The descriptive headings of the several
sections and paragraphs of this Warrant are inserted for convenience only and do not constitute a
part of this Warrant. All questions concerning the construction, validity, enforcement and
interpretation of this Warrant 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.



     17. Arbitration. In the event of any and all disagreements and controversies arising
from this Warrant, 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 Warrant, 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.


[Remainder of page intentionally left blank; signature page follows]

 









 









     IN WITNESS WHEREOF, the Company has caused this Warrant to be signed by a duly authorized
officer, as of the 29th day of May 2007.



	 	 	 	 	 	 	 
	 	 	LIME ENERGY CO.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Jeffrey Mistarz	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:
	 	Jeffrey Mistarz
	 	 
	 

	 	Title:
	 	Chief Financial Officer	 	 






 









 






EXHIBIT A TO WARRANT




SUBSCRIPTION FORM

TO BE EXECUTED BY THE REGISTERED HOLDER TO EXERCISE THIS WARRANT



The undersigned, pursuant to the provisions set forth in the attached Warrant (No.___), hereby
irrevocably elects to purchase (check applicable box):



                    
                                         shares of the Common Stock covered by such Warrant; or



                     the maximum number of shares of Common Stock covered by such Warrant pursuant to the cashless
exercise procedure set forth in Section 2 of such Warrant.



The undersigned herewith makes payment of the Aggregate Exercise Price for such shares at the price
per share provided for in such Warrant, which is $                    . Such payment takes the form of
(check applicable box or boxes):



                     $                     in lawful money of the United States; and/or



___
the cancellation of such portion of the attached Warrant as is exercisable for a total of
                    
shares of Common Stock (using a Fair Market Value of $                     per share for purposes of
this calculation); and/or



___
the cancellation of such number of shares of Common Stock as is necessary, in accordance with
the formula set forth in Section 2(b), to exercise this Warrant with respect to the maximum number
of shares of Common Stock purchasable pursuant to the cashless exercise procedure set forth in
Section 2.



The undersigned requests that the certificates for such shares be issued in the name of, and
delivered to                                          whose address is                                         
                                                            .



The undersigned represents and warrants that all offers and sales by the undersigned of the
securities issuable upon exercise of the within Warrant shall be made pursuant to registration of
the Common Stock under the Securities Act of 1933, as amended (the “Securities Act”) or pursuant to
an exemption from registration under the Securities Act.




	 	 	 	 	 	 	 
	Date:                      ___, 200_

	 	 	 	 	 	 
	 	 	 	 	 
	 	 	[Name of Holder]	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Title:	 	 	 	 
	 

	 	 	 	 	 	 





 









 





EXHIBIT B TO WARRANT




FORM OF TRANSFEROR ENDORSEMENT

(To be signed only on transfer of Warrant)




     For value received, the undersigned hereby sells, assigns, and transfers unto the person(s)
named below under the heading “Transferees” the right represented by the within Warrant to purchase
the percentage and number of shares of Common Stock of Lime Energy Co. into which the within
Warrant relates specified under the headings “Percentage Transferred” and “Number Transferred,”
respectively, opposite the name(s) of such person(s) and appoints each such person Attorney to
transfer its respective right on the books of Lime Energy Co. with full power of substitution in
the premises.



	 	 	 	 	 	 	 
	 	 	 	 	Percentage	 	 
	Transferees	 	Address	 	Transferred	 	Number Transferred
	 
	 	 	 	 	 	 





	 	 	 	 	 	 	 
	Dated:                    

	 	 	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	(Signature must conform to name of holder as
specified on the face of the Warrant)	 	 
	 
	 	 	 	 	 	 
	Signed in the presence of:
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

(Name)

	 	 	 	 

(address)	 	 
	 
	 	 	 	 	 	 
	ACCEPTED AND AGREED:
	 	 	 	 	 	 
	 

	 	 	 	 	 	 
	[TRANSFEREE]

	 	 	 	(address)	 	 
	 
	 	 	 	 	 	 
	 

(Name)