Document:

exv4w1

Exhibit 4.1

CERTIFICATE OF DESIGNATIONS, PREFERENCES AND RIGHTS

OF SERIES A-1 CONVERTIBLE PREFERRED STOCK

OF

LIME ENERGY CO.

     Lime Energy Co. (the “Corporation”), a corporation organized and existing under the General
Corporation Law of the State of Delaware, does hereby certify that, pursuant to authority conferred
upon the Board of Directors of the Corporation by the Certificate of Incorporation of the
Corporation, as amended (the “Certificate of Incorporation”), and pursuant to Section 151 of the
General Corporation Law of the State of Delaware, the Board of Directors of the Corporation duly
adopted resolutions providing for the designations, preferences and relative, participating,
optional or other rights, and the qualifications, limitations or restrictions thereof, of One
Million (1,000,000) shares of Series A-1 Convertible Preferred Stock of the Corporation, as
follows:

     RESOLVED, that pursuant to the authority granted to the Board of Directors of the Corporation
by Article Four of the Certificate of Incorporation, the Board of Directors hereby authorizes the
issuance of up to One Million (1,000,000) shares of Preferred Stock out of the Corporation’s
authorized but unissued Preferred Stock, $0.01 par value per share (“Preferred Stock”), such shares
to be designated as the Corporation’s Series A-1 Convertible Preferred Stock (the “Series A-1
Preferred”) and to have the following relative rights, preferences, and limitations.

          1. Definitions. The following terms when used herein shall, except where the
context otherwise requires, have the following meanings, such meanings to be equally
applicable to the singular and plural forms thereof:

     “Affiliate” means any director or executive officer of the Corporation, any immediate
family members (including adult family members) of such director or executive officer, and
any other Person who is controlled by such director or executive officer, directly or
indirectly through one or more intermediaries.

     “Asset Transfer” means a sale, lease or other disposition of all or substantially all
of the assets of the Corporation, individually, or of the Corporation and its subsidiaries,
on a consolidated basis.

     “Business Day” means a day other than Saturday or Sunday, or other day on which
commercial banks in Chicago, Illinois are authorized or required by law or executive order
to close.

     “Common Stock” means the Corporation’s authorized common stock, par value $.0001.

 

 

     “Control Transfer” means any consolidation or merger of the Corporation with or into
any other corporation or other entity or person, or any other corporate reorganization, in
which the stockholders of the Corporation immediately prior to such consolidation, merger or
reorganization, retain or receive on account of their securities of the Corporation less
than fifty percent (50%) of the surviving entity’s voting power immediately after such
consolidation, merger or reorganization, or any transaction or series of related
transactions in which in excess of fifty percent (50%) of the Corporation’s voting power is
acquired by a Person or a group of Persons; provided, however, the term “Control Transfer”
shall not include any transaction or series of related transactions pursuant to which any
Affiliates acquire or dispose of more than fifty percent (50%) of the Corporation’s voting
power and in which no non-Affiliates participate.

     “Cash Dividend Rate” shall be 9%.

     “Junior Stock” shall mean the Common Stock and any other capital stock of the
Corporation, other than the Series A-1 Preferred and Senior Stock.

     “Liquidation” shall mean any Control Transfer, liquidation, dissolution, or winding up
of the affairs of the Corporation, whether voluntary or involuntary.

     “Liquidation Amount” shall be an amount equal to the Original Issue Price, together
with accrued but unpaid dividends thereon.

     “Market Price” shall mean the last reported sale price of the Common Stock as reported
by the National Associated of Securities Dealers, Inc. Automatic Quotation System, or, if
the Common Stock is listed or admitted for trading on another securities exchange, the last
reported sales price of the Common Stock on the principal exchange on which the Common Stock
is listed or admitted for trading (which shall be for consolidated trading if applicable to
such exchange), or if neither so reported or listed or admitted for trading, the last
reported bid price of the Common Stock in the over-the-counter market. In the event that
the Market Price cannot be determined as aforesaid, the Board of Directors shall determine
the Market Price on the basis of such quotations as it in good faith considers appropriate,
in consultation with a nationally recognized investment bank. The Market Price shall be
such price averaged over a period of ten (10) consecutive Business Days ending two (2) days
prior to the day as of which “Market Price” is being determined.

     “Original Issue Price” of the Series A-1 Preferred shall be $41.00 per share.

     “Permitted Distribution” shall mean (i) acquisitions of Common Stock by the Corporation
pursuant to agreements which permit the Corporation to repurchase such shares upon
termination of services to the Corporation or in exercise of the Corporation’s right of
first refusal upon a proposed transfer, (ii) the acquisition of shares of Junior Stock in
exchange for shares of other Junior Stock, or (iii) the acquisition of shares pursuant to
the Corporation’s long-term benefit plan or employee stock purchase plan.

     “Person” means an individual, a corporation, a partnership, a limited liability
company, a trust, an unincorporated organization or governmental organization or an agency
or political subdivision thereof.

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     “PIK Dividend Rate” shall be (i) 6% on or prior to March 31, 2009; and (ii) 8% at any
time on or after April 1, 2009.

     “PIK Dividends” shall mean dividends paid in the form of issuance of additional shares
of Series A-1 Preferred, calculated by dividing, for each share of outstanding Series A-1
Preferred, (i) the amount of PIK Dividends accrued at the PIK Dividend Rate by (ii) the
Original Issue Price.

     “Senior Stock” mean any capital stock of the Corporation ranking on parity with or
senior to the Series A-1 Preferred in right of redemption, liquidation preference or
dividends, approved by the Board of Directors and otherwise established in accordance with
the requirements of Section 3(c) herein.

     “Special Majority Approval” means the approval (by vote or written consent, as provided
by law) of the holders of at least 2/3 of the then issued and outstanding shares of Series
A-1 Preferred, voting separately as a single class.

          2. Dividend Rights.

               a. The holders of Series A-1 Preferred, in preference to the Junior Stock but subject
to the preference rights of any Senior Stock, shall receive, but only out of funds that are
legally available therefor, cash dividends at the Cash Dividend Rate, and PIK
Dividends at the PIK Dividend Rate, in each case calculated per annum on the Original
Issue Price, all such dividends payable on each outstanding share of Series A-1 Preferred
and accruing from the date of issuance until paid. Dividends on the Series A-1 Preferred
shall accrue and be cumulative, whether or not earned or declared, until paid in accordance
with the terms hereof. Dividends hereunder shall be calculated on the basis of a 360-day
year consisting of twelve 30 day months, accruing and payable quarterly, in arrears, on the
last day in March, June, September and December of each year (each a “Dividend Payment
Date”), commencing on December 31, 2008 until such time as the Series A-1 Preferred is
retired in full. If any Dividend Payment Date occurs on a day that is not a Business Day,
any accrued dividends otherwise payable on such Dividend Payment Date shall be paid on the
next succeeding Business Day with the same effect as though made on such Dividend Payment
Date.

               b. So long as any shares of Series A-1 Preferred shall be outstanding, no dividend,
whether in cash or property, shall be paid or declared, nor shall any other distribution be
made, on any Junior Stock, nor shall any shares of any Junior Stock be purchased, redeemed,
or otherwise acquired for value by the Corporation (except for Permitted Distributions)
unless accrued and unpaid dividends on the Series A-1 Preferred, together with all dividends
that may become payable during the six month period following the date of payment on the
Junior Stock, shall have been paid or declared and set apart.

               c. All accrued and unpaid dividends on the Series A-1 Preferred shall be declared, due
and payable upon the earlier of (i) Liquidation of the Corporation, (ii) repurchase or
redemption of such Series A-1 Preferred by the Corporation, (iii)

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conversion of such Series A-1 Preferred into Common Stock in accordance with Section 6
herein, or (iv) an Asset Transfer.

               d. No fractional shares are to be issued upon the payment of PIK Dividends, but rather
the number of shares of Series A-1 Preferred issued upon payment of any PIK Dividend shall
be rounded up to the nearest whole share of Series A-1 Preferred. Certificates for shares
of Series A-1 Preferred representing PIK Dividends shall be delivered at the Company’s
expense to the Series A-1 Preferred stockholders within ten (10) Business Days of any
Dividend Payment Date.

          3. Voting Rights.

               a. General Rights. Except as required by law and as otherwise set forth in
this Section 3, the Series A-1 Preferred shall be voted along with the shares of the Common
Stock of the Corporation and not as a separate class, at any annual or special meeting of
stockholders of the Corporation, and may act by written consent in the same manner as the
Common Stock, in either case upon the following basis, each holder of shares of Series A-1
Preferred shall be entitled to such number of votes as shall be equal to number of shares of
Common Stock into which such holder’s aggregate number of shares of Series A-1 Preferred are
convertible (pursuant to Section 6 hereof) assuming for this purpose only that
fractional shares may be issued upon any such conversion. The number of votes for each
holder of Series A-1 Preferred shall be determined as of immediately after the close of
business on the record date fixed for such meeting or the effective date of such written
consent.

               b. Separate Vote of Preferred Stock. In addition to any other vote or consent
required herein or by law, Special Majority Approval shall be necessary for effecting or
validating the following actions (whether by merger, reorganization, consolidation or any
other corporate action or series of actions or otherwise): (i) any amendment, alteration,
repeal or waiver of any provision of the Certificate of Incorporation or this Certificate of
Designation or filing of any resolution of the Board of Directors with the Secretary of
State of Delaware which would alter or change the rights, preferences or privileges of the
Series A-1 Preferred or increase the number of authorized shares of Series A-1 Preferred; or
(ii) any waiver of the rights of the Series A-1 Preferred to an adjustment of the Series A-1
Preferred Conversion Price under Section 6.

               c. Protective Provisions. As long as at least thirty-five thousand eight
hundred seventy-one (35,871) shares of Series A-1 Preferred Stock remain outstanding, this
Corporation shall not without first obtaining Special Majority Approval, authorize or
issue, or obligate itself to issue, whether by merger, consolidation or otherwise, (i) any
other equity security, including any other security convertible into or exercisable for any
equity security having a preference over, or on a parity with the Series A-1 Preferred
Stock, or (ii) any shares of Series A-1 Preferred Stock after the date hereof other than shares issued as PIK Dividends.

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          4. Liquidation.

               a. Preference Upon Liquidation. In the event of any Liquidation, subject to
the prior preferences and other rights of any Senior Stock, if any, as to liquidation
preferences, the holders of the Series A-1 Preferred then outstanding shall be entitled
first as if members of a single class of securities to be paid out of the assets of the
Corporation, before any payment shall be made to the holders of the Junior Stock, the
Liquidation Amount per outstanding share.

               b. Insufficient Assets. In the event of any Liquidation, if the assets of the
Corporation are insufficient to pay the holders of the shares of Series A-1 Preferred Stock
the full amount to which they shall be entitled, the assets available therefor shall be
distributed to each holder of the Series A-1 Preferred Stock, pro rata based on the number
of shares of Series A-1 Preferred Stock held by each.

               c. Rights of Other Holders. In the event of any Liquidation, after payment
shall have been made to the holders of the Series A-1 Preferred Stock of all preferential
amounts to which they are entitled, the holders of shares of Junior Stock shall receive such
amounts as to which they are entitled by the terms thereof.

          5. Redemption.

               a. Mandatory Redemption. The Series A-1 Preferred shall not be subject to
mandatory redemption by the Corporation.

               b. Optional Redemption. At any time, any of the outstanding shares of Series
A-1 Preferred may be redeemed, at the option of the Corporation, at a price per share equal
to and in the form of cash in an amount equal to the Original Issue Price multiplied by (i)
1.1 if the Redemption Date (as defined below) occurs on or prior to March 31, 2009; (ii)
1.11 if the Redemption Date occurs during the period beginning on April 1, 2009 and ending
on June 30, 2009; and (iii) 1.12 if the Redemption Date occurs at any time after July 1,
2009 (the “Redemption Price”). If the Corporation has chosen to redeem less than all shares
of Series A-1 Preferred, the aggregate number of shares being redeemed may be allocated pro
rata among the Series A-1 Preferred Holders.

               c. Mechanics of Redemption. A notice of redemption (“Notice of Redemption”)
shall be sent by or on behalf of the Corporation not less than fifteen (15) Business Days
nor more than thirty (30) days prior to the date specified for redemption in such notice
(the “Redemption Date”), by nationally recognized overnight delivery service for next
Business Day delivery, to all affected holders of the Series A-1 Preferred at their last
addresses as they shall appear on the books of the Corporation; provided, however, that no
failure to give such notice or any defect therein or in the mailing thereof shall affect the
validity of the proceedings for the redemption of any shares of Series A-1 Preferred except
as to the affected holder to whom the Corporation has failed to give notice or except as to
the holder to whom notice was defective. In addition to any information required by law or
by the applicable rules of any exchange upon which the Common Stock may be listed or
admitted to trading, such notice shall state: (i) that such

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redemption is being made pursuant to the optional redemption provisions hereof; (ii)
the Redemption Date; (iii) a description of the formula for calculating the Redemption Price
and the Redemption Price; (iv) the number of outstanding shares of Series A-1 Preferred
Stock are to be redeemed; (v) the place or places where certificates for such shares are to
be surrendered for payment of the Redemption Price; and (vi) that dividends on the shares of
Series A-1 Preferred so redeemed will cease to accumulate on the Redemption Date. Upon the
sending of any such Notice of Redemption, the Corporation shall become obligated to effect
the redemption specified therein.

               d. If a Notice of Redemption has been mailed in accordance with Section 4(c) above and
if all cash necessary for such redemption, including but not limited to payment of accrued
but unpaid dividends on the aggregate number of shares being redeemed (computed through the
Redemption Date) shall have been set aside by the Corporation on or before the Redemption
Date, separate and apart from its other funds in trust for the benefit of the holders of the
outstanding shares of Series A-1 Preferred, so as to be, and to continue to be available
therefor, together with payment instructions on due and proper presentation by the holders
of the Series A-1 Preferred of their shares being redeemed, then dividends on the shares of
the Series A-1 Preferred so called for redemption shall cease to accrue or accumulate on the
Redemption Date, and such shares shall no longer be deemed to be outstanding and shall not
have the status of shares of Series A-1 Preferred on the Redemption Date, and all rights of
the holders thereof as stockholders of the Corporation (except the right to receive from the
Corporation the Redemption Price) shall cease on the Redemption Date. Upon surrender, in
accordance with such Notice of Redemption, of the certificates for any shares of Series A-1
Preferred so redeemed (properly endorsed or assigned for transfer, if the Corporation shall
so require and the Notice shall so state), such shares of Series A-1 Preferred shall be
redeemed by the Corporation at the Redemption Price paid in cash.

          6. Conversion Rights. The holders of the Series A-1 Preferred shall have the
following rights with respect to the conversion of the Series A-1 Preferred into shares of
Common Stock (the “Conversion Rights”):

               a. Optional Conversion. Subject to and in compliance with the provisions of
this Section 6, any shares of Series A-1 Preferred may, at the option of the holder, be
converted at any time after December 31, 2009 into fully-paid and nonassessable shares of
Common Stock. The number of shares of Common Stock to which a holder of Series A-1
Preferred shall be entitled upon conversion shall be the product obtained by multiplying the
Series A-1 Preferred Conversion Rate then in effect (determined as provided in Section 6(b))
by the number of shares of Series A-1 Preferred being converted.

               b. Series A-1 Preferred Conversion Rate. The conversion rate in effect at any
time for conversion of the Series A-1 Preferred (the “Series A-1 Preferred Conversion Rate”)
shall be the quotient obtained by dividing the Original Issue Price of the Series A-1
Preferred by the Series A-1 Preferred Conversion Price, calculated as provided in Section
6(c).

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               c. Conversion Price. The conversion price for the Series A-1 Preferred shall
initially be $4.10 (the “Series A-1 Preferred Conversion Price”). Such initial Series A-1
Preferred Conversion Price shall be adjusted from time to time in accordance with this
Section 6; provided, that under no circumstances shall the Series A-1 Preferred Conversion
Price be reduced to a level that is less than the par value of the Common Stock. All
references to the Series A-1 Preferred Conversion Price herein shall mean the Series A-1
Preferred Conversion Price as so adjusted.

               d. Mechanics of Conversion. Each holder of Series A-1 Preferred who desires to
convert the same into shares of Common Stock pursuant to this Section 6 shall surrender the
certificate or certificates therefor, duly endorsed, at the office of the Corporation or any
transfer agent for the Series A-1 Preferred, and shall give written notice to the
Corporation at such office that such holder elects to convert the same. Such notice shall
state the number of shares of Series A-1 Preferred being converted. Thereupon, the
Corporation shall promptly (but in no event more than ten (10) Business Days after delivery
of the notice required by the first sentence of this Section 6(d)) issue and deliver at such
office to such holder a certificate or certificates for the number of shares of Common Stock
to which such holder is entitled. No fractional shares of Common Stock shall be issued upon
conversion of shares of Series A-1 Preferred and in lieu thereof, the Corporation shall pay
in cash, at the Common Stock’s Market Price, the value of any fractional shares of Common
Stock otherwise issuable to any holder of Series A-1 Preferred as a result of such
conversion. In determining the number of shares of Common Stock and the payment in any, in
lieu of fractional shares that a holder of Series A-1 Preferred shall receive, the total
number of shares of Series A-1 Preferred surrendered for conversion by such holder shall be
aggregated. Such conversion shall be deemed to have been made at the close of business on
the date of such surrender of the certificates representing the shares of Series A-1
Preferred to be converted, and the person entitled to receive the shares of Common Stock
issuable upon such conversion shall be treated for all purposes as the record holder of such
 shares of Common Stock on such date.

               e. Adjustment for Stock Splits and Combinations. If the Corporation shall at
any time or from time to time after the date that the first share of Series A-1 Preferred is
issued (the “Original Issue Date”) effect a subdivision of the outstanding Common Stock
without a corresponding subdivision of the Preferred Stock, the Series A-1 Preferred
Conversion Price in effect immediately before that subdivision shall be proportionately
decreased. Conversely, if the Corporation shall at any time or from time to time after the
Original Issue Date combine the outstanding shares of Common Stock into a smaller number of
 shares without a corresponding combination of the Preferred Stock, the Series A-1 Preferred
Conversion Price in effect immediately before the combination shall be proportionately
increased. Any adjustment under this Section 6(e) shall become effective at the close of
business on the date the subdivision or combination becomes effective.

               f. Adjustment for Common Stock Dividends and Distributions. If the Corporation
at any time or from time to time after the Original Issue Date makes, or fixes a record date
for the determination of holders of Common Stock entitled to receive, a dividend or other
distribution payable in additional shares of Common Stock, in each

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such event the Series A-1 Preferred Conversion Price that is then in effect shall be
decreased as of the time of such issuance or, in the event such record date is fixed, as of
the close of business on such record date, by multiplying the Series A-1 Preferred
Conversion Price then in effect by a fraction (i) the numerator of which is the total number
of shares of Common Stock issued and outstanding immediately prior to the time of such
issuance or the close of business on such record date, and (ii) the denominator of which is
the total number of shares of Common Stock issued and outstanding immediately prior to the
time of such issuance or the close of business on such record date plus the number of shares
of Common Stock issuable in payment of such dividend or distribution.

               g. Adjustment for Reclassification, Exchange and Substitution. If at any time
or from time to time after the Original Issue Date, the Common Stock issuable upon the
conversion of the Series A-1 Preferred is changed into the same or a different number of
 shares of any class or classes of stock, whether by recapitalization, reclassification or
otherwise, and such event does not constitute a Liquidation or Capital Reorganization (as
defined in Section 6(h)), then each holder of Series A-1 Preferred shall have the right
thereafter to convert such stock into the kind and amount of stock and other securities and
property receivable upon such recapitalization, reclassification or other change by holders
of the maximum number of shares of Common Stock into which such shares of Series A-1
Preferred could have been converted immediately prior to such recapitalization,
reclassification or change, all subject to further adjustment as provided herein or with
respect to such other securities or property by the terms thereof.

               h. Reorganizations, Mergers or Consolidations. If at any time or from time to
time after the Original Issue Date, there is a reorganization of the Common Stock or the
merger or consolidation of the Corporation with or into another corporation or another
entity or person, and such reorganization, merger or consolidation does not result in a
Liquidation (a “Capital Reorganization”), then as a part of such Capital Reorganization,
provision shall be made so that the holders of the Series A-1 Preferred shall thereafter be
entitled to receive upon conversion of the Series A-1 Preferred the number of shares of
stock or other securities or property of the Corporation to which a holder of the number of
 shares of Common Stock deliverable upon conversion would have been entitled on such Capital
Reorganization, subject to adjustment in respect of such stock or securities by the terms
thereof. In any such case, appropriate adjustment shall be made in the application of the
provisions of this Section 6 with respect to the rights of the holders of Series A-1
Preferred after the Capital Reorganization to the end that the provisions of this Section 6
(including adjustment of the Series A-1 Preferred Conversion Price then in effect and the
number of shares issuable upon conversion of the Series A-1 Preferred) shall be applicable
after that event and be as nearly equivalent as practicable.

               i. Certificate of Adjustment. In each case of an adjustment or readjustment of
the Series A-1 Preferred Conversion Price for the number of shares of Common Stock or other
securities issuable upon conversion of the Series A-1 Preferred, if the Series A-1 Preferred
is then convertible pursuant to this Section 6, the Corporation, at its expense, shall
compute such adjustment or readjustment in accordance with the provisions hereof and prepare
a certificate showing such adjustment or readjustment, and

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shall send such certificate, by nationally recognized overnight delivery service for
next Business Day delivery, to each registered holder of Series A-1 Preferred at the
holder’s address as shown in the Corporation’s books. The certificate shall set forth such
adjustment or readjustment, showing in detail the facts upon which such adjustment or
readjustment is based, including a statement of (i) the consideration received or deemed to
be received by the Corporation for any Additional Shares of Common Stock issued or sold or
deemed to have been issued or sold, (ii) the Series A-1 Preferred Conversion Price at the
time in effect, (iii) the number of Additional Shares of Common Stock, and (iv) the type and
amount, if any, of other property which at the time would be received upon conversion of the
Series A-1 Preferred.

               j. Notices of Record Date. Upon (i) any taking by the Corporation of a record
of the holders of any class of securities for the purpose of determining the holders thereof
who are entitled to receive any dividend or other distribution, or (ii) any Liquidation,
Asset Transfer, Capital Reorganization or any reclassification or recapitalization of the
capital stock of the Corporation, (“Capital Transition Event”), the Corporation shall mail
to each holder of Series A-1 Preferred at least ten (10) days prior to the record date
specified therein (or such shorter period approved by a majority of the outstanding Series
A-1 Preferred) a notice specifying (A) the date on which any such record is to be taken for
the purpose of such dividend or distribution and a description of such dividend or
distribution, (B) the date on which any such Capital Transition Event is expected to become
effective, and (C) the date, if any, that is to be fixed as to when the holders of record of
Common Stock and Preferred Stock (or other securities) shall be entitled to exchange their
 shares of Common Stock and Preferred Stock (or other securities) for securities or other
property deliverable upon such Capital Transition Event.

               k. Reservation of Stock Issuable Upon Conversion. The Corporation shall at all
times reserve and keep available out of its authorized but unissued shares of Common Stock,
solely for the purpose of effecting the conversion of the shares of the Series A-1
Preferred, such number of its shares of Common Stock as shall from time to time be
sufficient to effect the conversion of all outstanding shares of the Series A-1 Preferred.
If at any time the number of authorized but unissued shares of Common Stock shall not be
sufficient to effect the conversion of all then outstanding shares of the Series A-1
Preferred, the Corporation will take such corporate action as may, in the opinion of its
counsel, be necessary to increase its authorized but unissued shares of Common Stock to such
number of shares as shall be sufficient for such purpose.

               l. Notices. Any notice required by the provisions of this Section 6 shall be
in writing and shall be deemed effectively given: (i) upon personal delivery to the party
to be notified, (ii) when sent by confirmed facsimile if sent during normal business hours
of the recipient; if not, then on the next Business Day, or (iii) one (1) day after deposit
with a nationally recognized overnight courier, specifying next day delivery, with
verification of receipt. All notices shall be addressed to each holder of record at the
address of such holder appearing on the books of the Corporation.

               m. Exclusion of Other Rights. Except as may otherwise be required by law, the
 shares of Series A-1 Preferred shall not have any voting powers

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preferences and relative, participating, optional or other special rights, other than
those specifically set forth in the resolution and in the Certificate of Incorporation.

               n. Mutilated or Missing Certificates. If any of the Series A-1 Preferred Stock
certificates shall be mutilated, lost, stolen or destroyed, the Corporation shall issue, in
exchange and in substitution for and upon cancellation of the mutilated Series A-1 Preferred
Stock certificate, or in lieu of and substitution for the Series A-1 Preferred Stock
certificate lost, stolen, or destroyed, a new Series A-1 Preferred Stock certificate of like
tenor and representing an equivalent amount of shares of Series A-1 Preferred Stock, but
only upon receipt of evidence of such loss, theft or destruction of such Series A-1
Preferred Stock certificate and indemnity, if requested, reasonably satisfactory to the
Corporation and the transfer agent (if other than the Corporation), or, in the case of
mutilation, upon surrender and cancellation of such mutilated certificate.

[SIGNATURE APPEARS ON THE NEXT PAGE]

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     IN WITNESS WHEREOF, the Corporation has caused this Certificate of Designation to be signed by
its duly authorized officer, this 14th day of November, 2008.

	 	 	 	 	 	 	 
	 	 	LIME ENERGY CO.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:

Name:
	 	/s/ Jeffrey R. Mistarz
 

Jeffrey R. Mistarz
	 	 
	 

	 	Title:
	 	Chief Financial Officer	 	 

11exv4w2

Exhibit 4.2

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.

Form of Warrant To Purchase Common Stock

			
	 	 	 
	Warrant No.: [  ]
	 	Number of Shares: [  ]
	Original Date of Issuance: _November 13, 2008	 	 

          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,             , 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 May 13,
2009 (the “Exercise Eligibility Date”), but before November 13, 2011 (the “Expiration Date”), [
] ( ) 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
$4.10, 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 NASDAQ Capital Market (“NASDAQ”) or another national
exchange, then the closing sale price reported for the last Business Day immediately preceding the
Determination Date.

          (b) If the Common Stock is not traded on NASDAQ or another national exchange but is traded on
the 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 20 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 Exercise
Eligibility Date 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; 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 13).

          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 13) (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) 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.

          (c) 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 to the nearest whole number.

          (d) If this Warrant shall have been exercised in part, the Company shall, at the time of
delivery of the certificate or certificates representing Warrant Shares, deliver to Holder a new
Warrant evidencing the rights of Holder to purchase the unpurchased Warrant Shares called for by
this Warrant, which new Warrant shall in all other respects be identical with this Warrant.

     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.

          (d) 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.

          (e) Unless required by law, the Company will not close its stockholder books or records in any
manner which prevents the timely exercise of this Warrant.

- 2 -

 

          (f) The Company agrees to maintain, at its aforesaid office, books for the registration and
the registration of transfer of the Warrants.

     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 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 (i) at that time
they have been registered pursuant to an effective registration statement under the Securities Act
and applicable state securities laws, or (ii) 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:

- 3 -

 

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.

          (d) If the last or appointed day for the taking of any action or the expiration of any right
required or granted herein shall be a Saturday, Sunday or a legal holiday, then such action may be
taken or such right may be exercised on the next succeeding day not a Saturday, Sunday or legal
holiday.

     8. 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 8(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 this Section 8, the Company will give written notice thereof to the Holder, setting
forth in reasonable detail the calculation of such adjustment.

     9. 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 8(a)), 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 9 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 9 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.

- 4 -

 

     10. Voluntary Adjustment by the Company. The Company may at any time during the term
of this Warrant reduce the then current Exercise Price to any amount and for any period of time
deemed appropriate by the Board of Directors of the company.

     11. Notice of Adjustment. Whenever the number of Warrant Shares or number or kind of
securities or other property purchasable upon the exercise of this Warrant or the Exercise Price is
adjusted, as herein provided, the Company shall promptly notify the Holder, in accordance with
Section 15 below, of such adjustment or adjustments setting forth the number of Warrant Shares (and
other securities or property) purchasable upon the exercise of this Warrant and the Exercise Price
of such Warrant Shares (and other securities or property) after such adjustment, seeing forth a
brief statement of the facts requiring such adjustment and setting forth the computation by which
such adjustment was made.

     12. Notice of Corporate Action. If at any time:

          (a) the Company shall take a record of the holders of its Common Stock for the purpose of
entitling them to receive a dividend or other distribution, or any right to subscribe for or
purchase any evidences of its indebtedness, any shares of stock of any class or any other
securities or property, or to receive any other right, or

          (b) there shall be any capital reorganization of the Company, any reclassification or
recapitalization of the capital stock of the Company or any consolidation or merger of the Company
with, or any sale, transfer or other disposition of all or substantially all the property, assets
or business of the Company to, another corporation, or

          (c) there shall be a voluntary or involuntary dissolution, liquidation or winding up of the
Company;

then, in any one or more of such cases, the Company shall give to Holder (i) at least 20 days’
prior written notice of the date on which a record date shall be selected for such dividend,
distribution or right or for determining rights to vote in respect of any such reorganization,
reclassification, merger, consolidation, sale, transfer, disposition, liquidation or winding up,
and (ii) in the case of any such reorganization, reclassification, merger, consolidation, sale,
transfer, disposition, dissolution, liquidation or winding up, at least 20 days’ prior written
notice of the date when the same shall take place. Such notice in accordance with the foregoing
clause also shall specify (i) the date on which any such record is to be taken for the purpose of
such dividend, distribution or right, the date on which the holders of Common Stock shall be
entitled to any such dividend, distribution or right, and the amount and character thereof, and
(ii) the date on which any such reorganization, reclassification, merger, consolidation, sale,
transfer, disposition, dissolution, liquidation or winding up is to take place and the time, if any
such time is to be fixed, as of which the holders of Common Stock shall be entitled to exchange
their Warrant Shares for securities or other property deliverable upon such disposition,
dissolution, liquidation or winding up.

     13. 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.

     14. Authorized Shares.

          (a) The Company covenants that during the period the Warrant is outstanding, it will reserve
from its authorized and unissued Common Stock a sufficient number of shares to provide for the
issuance of the Warrant Shares upon the exercise of any purchase rights under this Warrant. The
Company further covenants that its issuance of this Warrant shall constitute full authority to its
officers who are charged with the duty of executing stock certificates to execute and issue the
necessary certificates for the Warrant Shares upon the exercise of the purchase rights under this
Warrant. The Company will take all such reasonable action as may be necessary to assure that such
Warrant Shares may be issued as provided herein without violation of any applicable law or
regulation, or of any requirements of the market upon which the Common Stock may be listed.

          (b) The Company shall not by any action, including, without limitation, amending its
certificate of incorporation or though any reorganization, transfer of assets, consolidation,
merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to
avoid the observance or performance of any of the terms of this Warrant, but will at all times in
good faith assist in the carrying out of all such terms and in the taking of all such actions as
may be necessary or appropriate to protect the rights of Holder against impairment. Without
limiting the generality of the foregoing, the Company will (a) not increase the par value of any
Warrant Shares above the amount payable therefor upon such exercise immediately prior to such
increase in par value, (b) take all such action

- 5 -

 

as may be necessary or appropriate in order that the Company may validly and legally issue
fully paid and nonassessable Warrant Shares upon the exercise of this Warrant, and (c) use
commercially reasonable efforts to obtain all such authorizations, exemptions or consents from any
public regulatory body having jurisdiction thereof as may be necessary to enable the Company to
perform its obligations under this Warrant.

          (c) Before taking any action which would result in an adjustment in the number of Warrant
Shares for which this Warrant is exercisable or in the Exercise Price, the Company shall obtain all
such authorizations or exemptions thereof, or consents thereto, as may be necessary from any public
regulatory body or bodies having jurisdiction thereof.

     15. 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: Jeffrey R. Mistarz	 	 
	 
	 	 	 	 
	 

	 	If to the Holder:	 	 
	 
	 	 	 	 
	 

	 	 

	 	 
	 

	 	 

	 	 
	 

	 	 

	 	 
	 

	 	 

	 	 
	 

	 	 

	 	 

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 15.

     16. 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.

     17. 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.

     18. 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.

     19. 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.

     20. 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

- 6 -

 

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.

     21. Nonwaiver and Expenses. No course of dealing or any delay or failure to exercise
any right hereunder on the part of Holder shall operate as a waiver of such right or otherwise
prejudice Holder’s rights, powers or remedies, notwithstanding all rights hereunder terminate on
the Termination Date. If the Company willfully and knowingly fails to comply with any provision of
this Warrant, which results in any material damages to the Holder, the Company shall pay to Holder
such amounts as shall be sufficient to cover any costs and expenses including, but not limited to,
reasonable attorneys’ fees, including those of appellate proceedings, incurred by Holder in
collecting any amounts due pursuant hereto or in otherwise enforcing any of its rights, powers or
remedies hereunder.

     22. Limitation of Liability. No provision hereof, in the absence of affirmative
action by Holder to purchase Warrant Shares, and no enumeration herein of the rights or privileges
of Holder, shall give rise to any liability of Holder for the purchase price of any Common Stock or
as a stockholder of the Company, whether such liability is asserted by the Company or by creditors
of the Company.

     23. Remedies. Holder, in addition to being entitled to exercise all rights granted by
law, including recovery of damages, will be entitled to specific performance of its rights under
this Warrant. The Company agrees that monetary damages would not be adequate compensation for any
loss incurred by reason of a breach by it of the provisions of this Warrant and hereby agrees to
waive the defense in any action for specific performance that a remedy at law would be adequate.

- 7 -

 

     IN WITNESS WHEREOF , the Company has caused this Warrant to be signed by a duly authorized
officer, as of the 13th day of November, 2008.

	 	 	 	 	 
	 	LIME ENERGY CO.

 	 
	 	By:  	 	 
	 	 	Name:  	Jeffrey R. Mistarz 	 
	 	 	Title:  	Chief Financial Officer 	 
	 

- 8 -

 

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. 129),
hereby irrevocably elects to purchase                      shares of the Common Stock
covered by 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. Such payment takes the form of $ in lawful money of
the United States.

          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:                      , 20_____

	 	 	 	 	 	 	 
	 	 	

[PURCHASER]	 	 
	 
	 	 	 	 	 	 
	 

	 	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.

							
	 	 	 	 	 	 	 
	Transferees
	 	Address
	 	Percentage 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]	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	(Name) 
	 	 	 	(address)

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