Document:

Exhibit 10.1

 

2009 REVOLVING LINE OF
CREDIT NOTE

 

	
  $2,000,000

  	
   

  	
  Dated: August 10, 2009

  

 

Lime Energy Co., a Delaware corporation (the “Company”),
for value received, promises to pay to Richard P. Kiphart (“Noteholder”),
the principal amount of Two Million Dollars ($2,000,000.00) (the “Maximum
Principal Amount”), or so much thereof as may be advanced and be outstanding,
together with interest thereon, to be computed on each advance from the date of
its disbursement as set forth herein. 
This Note is issued pursuant to that certain 2009 Note Issuance
Agreement (“Issuance Agreement”) dated of even date herewith, by and between
the Company and Noteholder, and the obligation of the Noteholder to make
advances is subject to the Company’s compliance with the conditions set forth
in the Issuance Agreement.

 

Noteholder authorizes the Company to record on the
grid sheet accompanying this Note (the “Grid Sheet”) all advances, repayments,
prepayments and the unpaid principal balance from time to time.  Noteholder agrees that, in the absence of
manifest error, the record kept by the Company on the Grid Sheet shall be
conclusive evidence of the matters recorded, provided that the failure of the
Company to record or correctly record any amount or date shall not affect the
obligation of the Company to pay the outstanding principal balance of the
advances and the interest thereon in accordance with this Note.

 

The following is a statement of the rights of
Noteholder and the conditions to which this Note is subject, and to which Noteholder,
by the acceptance of this Note, agrees:

 

1.                                       Payment
of Principal and Interest.

 

1.1                                 Interest.  The outstanding principal balance hereunder
shall bear interest at the rate of seventeen percent (17%) per annum with
twelve percent (12%) per annum payable in cash (the “Current
Interest”) and the remaining five percent (5%) per annum to be
capitalized (the “Capitalized Interest”).  The Current Interest shall be payable on the
first day of each calendar quarter, commencing on October 1, 2009, and
continuing until the principal balance hereunder shall have been paid in
full.  The Capitalized Interest shall be
added to the then outstanding principal balance of this Note on the first
calendar day of each calendar quarter that this Note remains outstanding (the “Capitalized Interest”) and shall be due and payable on the
Maturity Date (as hereinafter defined) or on such other date as may be required
hereby.  As used herein, references to
the “principal balance” shall include Capitalized Interest.  For the avoidance of doubt, Capitalized
Interest shall bear interest at the same interest rate and shall be payable on
the same terms as principal advanced by the Noteholder.  Capitalized Interest and Current Interest
shall be calculated based on a 365-day year for the actual number of days
elapsed.  Without limiting the foregoing,
the Company shall be obligated to pay a minimum of three (3) months’
Current Interest and Capitalized Interest on the principal amount of each
advance from the date of its disbursement to the Company unless such advance
shall be repaid in three (3) months or more from the date of its
disbursement.

 

1.2                                 Principal.  The entire outstanding principal balance and
all accrued and unpaid interest shall be immediately due and payable on February 10,
2010 (the “Maturity Date”).

 

1.3                                 Borrowing
and Repayment.  The Company may from time to time during the
term of this Note borrow, partially or wholly, repay its outstanding
borrowings, and reborrow, subject to all of the limitations, terms and
conditions of this Note; provided, however, that the total outstanding
borrowings under this Note shall not at any time exceed the Maximum Principal
Amount. The outstanding principal balance of 

 

 

this
Note, together with all accrued but unpaid interest, including, without
limitation, all Capitalized Interest, shall be due and payable in full on the
Maturity Date.

 

1.4                                 Business
Purpose: Usury Savings Clause.  This Note is being issued for business
purposes.  The Company and Noteholder
intend to comply at all times with applicable usury laws.  If at any time such laws would render
usurious any amounts due under this Note under applicable law, then it is the
Company’s and Noteholder’s express intention that the Company not be required
to pay interest on this Note at a rate in excess of the maximum lawful rate,
that the provisions of this Section 1.4 shall control over all other
provisions of this Note which may be in apparent conflict hereunder, that such
excess amount shall be immediately credited to the principal balance of this
Note (or, if this Note has been fully paid, refunded by Noteholder to the
Company), and the provisions hereof shall be immediately reformed and the
amounts thereafter decreased, so as to comply with the then applicable usury
law, but so as to permit the payment of the maximum amount otherwise due under
this Note.

 

1.5                                 Application
of Payments.  Payments by the Company shall be applied
first to any and all accrued interest through the payment date and second to
the unpaid principal balance.

 

2.                                       Unused
Funds Fee.  The Company agrees to pay to Noteholder a fee
(the “Unused Funds Fee”) calculated by
multiplying (a) seven percent (7%) times (b) the daily amount by
which the Maximum Principal Amount exceeds the outstanding advances made to the
Company, excluding Capitalized Interest, dividing the product by (c) 365
and then multiplying the quotient by (d) the number of days in such
calendar quarter.  The Unused Funds Fee
shall be payable quarterly in arrears on the first Business Day (as hereinafter
defined) of each calendar quarter for the immediately preceding calendar
quarter commencing on the first such date following the date hereof, with a
final payment on the Maturity Date or any earlier date on which all amounts
payable hereunder become due pursuant to the terms hereof.  Any Unused Funds Fee that shall not be paid
by the tenth (10th) day of each calendar quarter shall accrue interest at
the rate of seventeen percent (17%) per annum until paid in full together
with such accrued interest.  “Business Day” shall mean any day, other than a Saturday,
Sunday, a day that is a legal holiday under the laws of the State of Illinois
or any other day on which banking institutions located in Chicago, Illinois are
authorized or required by law or other governmental action to close.

 

3.                                       Termination
Fee.  In the event, and on the date (the “Termination Date”), that the Company delivers written notice
to Noteholder terminating the lending relationship evidenced by this Note prior
to the Maturity Date, the Company agrees to pay a termination fee to the
Noteholder (the “Termination Fee”) equal to the
difference (if positive) between (i) Seventy Thousand Dollars
($70,000.00), and (ii) the sum of the aggregate Unused Funds Fee and the
amount of Current Interest and Capitalized Interest actually received by
Noteholder determined as of the Termination Date.

 

4.                                       [Intentionally
Omitted].

 

5.                                       Events
of Default.

 

5.1                                 Definition.  For purposes of this Note, an “Event of Default” shall be deemed to have occurred if:

 

(a)                                  the
Company fails to pay within ten (10) days after written demand the Current
Interest or Unused Funds Fee then due and payable on this Note; or

 

 

(b)                                 the
Company fails to pay in full the principal balance (including, without
limitation, the Capitalized Interest) outstanding together with accrued but
unpaid interest thereon on the Maturity Date; or

 

(c)                                  the
Company fails to pay the Termination Fee on the Termination Date; or

 

(d)                                 the
Company makes an assignment for the benefit of creditors or admits in writing
its inability to pay its debts generally as they become due; or an order,
judgment or decree is entered adjudicating the Company bankrupt or insolvent;
or any order for relief with respect to the Company is entered under the
Federal Bankruptcy Code; or the Company petitions or applies to any tribunal
for the appointment of a custodian, trustee, receiver or liquidator of the
Company, or of any substantial part of the assets of the Company, or commences
any proceeding relating to the Company under bankruptcy reorganization,
arrangement, insolvency, readjustment of debt, dissolution or liquidation law
of any jurisdiction; or any such petition or application is filed, or any such
proceeding is commenced, against the Company and such petition, application or
proceeding is not dismissed within sixty (60) days, or

 

(e)                                  the
Company sells all or substantially all of its assets.

 

5.2                                 Consequences
of an Event of Default.  If any Event of Default has occurred and is
continuing, Noteholder may declare all or any portion of the outstanding
principal balance of this Note (together with all accrued interest and all
other amounts due and payable with respect to this Note) to be immediately due
and payable and may demand, by written notice delivered to the Company,
immediate payment of all or any portion of the outstanding principal balance of
this Note (together with all such other amounts then due and payable under this
Note).

 

6.                                       Waiver.  The Company waives presentment, demand for
performance, notice of nonperformance, protest, notice of protest, and notice
of dishonor.  No delay on the part of
Noteholder in exercising any right hereunder shall operate as a waiver of such
right under this Note.

 

7.                                       Collection.  If the indebtedness represented by this Note
or any part thereof is collected at law or in equity or in bankruptcy,
receivership or other judicial proceedings or if this Note is placed in the
hands of attorneys for collection after default, the Company agrees to pay, in
addition to the principal and interest payable hereon, reasonable attorneys’
fees and costs incurred by Noteholder.

 

8.                                       Security.  The Company’s obligations under this Note are
secured by that certain 2009 Security Agreement dated as of the date hereof
made by the Company in favor of the Noteholder.

 

9.                                       General
Provisions.

 

9.1                                 Notices.  Any notice, request, demand or other
communication required or permitted hereunder shall be in writing and shall be
deemed to have been duly given (a) three (3) days after being sent by
registered or certified mail, return receipt requested, or (b) on the
first Business Day after being deposited with a nationally recognized overnight
delivery service for next Business Day delivery, or (c) when personally
delivered, in each case with all postage and fees prepared and addressed, as
the case may be, to Noteholder c/o William Blair & Co. LLC, 222 West
Adams Street, Chicago, Illinois 60606, or to the Company at the address below
its name on the signature page hereof, or to such other person or address
as either party shall designate to the other from time to time in writing
delivered in like manner.

 

9.2                                 Amendment.  The provisions of this Note may be amended
only by written agreement of the Company and Noteholder.

 

 

9.3                                 Severability;
Headings.  In case any provision of this Note shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be effected or impaired thereby,
unless to do so would deprive Noteholder or the Company of a substantial part
of its bargain.  AH headings used herein
are used for convenience only and shall not be used to construe or interpret
this Note.

 

9.4                                 Entire
Agreement: Changes.  This Note contains the entire agreement
between the parties hereto superseding and replacing any prior agreement or
understanding relating to the subject matter hereof.  Neither this Note nor any term hereof may be
changed, waived, discharged or terminated orally but, except as provided in Section 9.2
above, only by an instrument in writing signed by the party against which
enforcement of the change, waiver, discharge or termination is sought.

 

9.5                                 Successors
and Assigns.  This Note shall be binding upon the Company’s
successors and assigns.

 

9.6                                 Remedies
Cumulative.  The Noteholder’s rights and remedies set forth
in this Note are not intended to be exhaustive and the exercise by Noteholder
of any right or remedy does not preclude the exercise of any other rights or
remedies that may now or subsequently exist in law or in equity or by statute
or otherwise.

 

9.7                                 Governing
Law.  This Note shall be construed and enforced in
accordance with, and governed by, the internal laws of the State of Illinois,
excluding that body of law applicable to conflicts of law.

 

IN WITNESS WHEREOF, the Company has caused this Note
to be signed in its name as of the date first written above.

 

	
   

  	
  LIME ENERGY CO., a Delaware corporation  

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Jeffrey R. Mistarz

  
	
   

  	
  Name: 

  	
  Jeffrey R. Mistarz  

  
	
   

  	
  Title: 

  	
  Executive Vice President and

  Chief Financial Officer  

  
	
   

  	
  Address: 

  	
  1280 Landmeier Road  

  Elk Grove, Illinois 60007  

  Attn: Chief Financial Officer  

  Facsimile: (847) 437-4969

  
				

 

 

GRID SHEET FOR

2009 REVOLVING LINE OF
CREDIT NOTE

 

ADVANCES AND PAYMENTS OF
PRINCIPAL

 

	
  Date

  	
   

  	
  Amount of

  Advance

  	
   

  	
  Amount of

  Principal Paid

  	
   

  	
  Unpaid Principal

  Balance

  	
   

  	
  Notation Made ByExhibit 10.2

 

2009 NOTE ISSUANCE AGREEMENT

 

This 2009 Note Issuance Agreement (this “Agreement”) is dated as of August 10, 2009, and
is made by and between Lime Energy Co., a Delaware corporation (the “Company”),
and Richard P. Kiphart (“Kiphart,” also referred to as “Lender”).

 

R E C I T A L S

 

A.                                   Kiphart has agreed to provide the Company
with a revolving line of credit in the maximum principal amount of Two Million
Dollars ($2,000,000.00) (“Maximum Principal Amount”) to be evidenced by the
2009 Revolving Line of Credit Note dated the date hereof executed by the
Company in favor of Kiphart (the “2009  Note”).

 

B.                                     The parties desire to set forth the terms and
conditions with respect to the issuance of the 2009 Note.

 

NOW, THEREFORE, in consideration of the foregoing
recitals and mutual agreements contained herein, the parties hereby agree as
follows:

 

1.                                       The
2009 Note.  Contemporaneously with the execution and
delivery to Kiphart of this Agreement and the 2009 Note by the Company, Kiphart
shall execute and deliver this Agreement to the Company.

 

2.                                       Security
Agreement.  On the date hereof, the Company and the
Lender shall enter into that certain 2009 Security Agreement dated as of the
date hereof (the “Security Agreement”)
made by the Company in favor of the Lender to secure the obligations of the
Company under the 2009 Note.

 

3.                                       Condition
to Advances.  It shall be a condition to each advance under
the 2009 Note that no Event of Default (as defined in the 2009 Note) shall have
occurred and be continuing.  At the time
of each request for an advance, the Company shall provide to the Lender a
certificate, executed by the Chief Executive Officer or Chief Financial Officer
of the Company, stating that no Event of Default has occurred and is
continuing.

 

4.                                       Manner
of Advances.  The Company may draw and the Lender will
advance all or portions of the Maximum Principal Amount in accordance with the
2009 Note.

 

5.                                       Subordination
by Lenders.  The Lender agrees to subordinate the 2009
Note and its security interest evidenced by the Security Agreement in the event
the Company arranges to have a commercial lender provide financing to the
Company for similar purposes, which subordination must be on terms and
conditions acceptable to the Lender in his reasonable discretion.

 

6.                                       Information
Regarding Use of Proceeds.  Promptly following request therefore by the
Lender, the Company shall provide Lender with reasonable detail regarding the
use of proceeds with respect to any advance made under the 2009 Note.

 

7.                                       Warrants.  On the date hereof, the Company shall issue
to Lender the following:  (a) a
four-year warrant (“Warrant”) to purchase Seventy-Five Thousand (75,000) shares
of Company common stock, par value $0.0001 per share (“Common Stock”) at an
exercise price per share of $6.40.  The
Warrant shall be substantially in the form affixed hereto as Exhibit A,
and (b) a warrant to purchase sixty one thousand five 

 

 

hundred
thirty eight (61,538) shares of Common Stock at an exercise price of $6.40 per
share, exercisable only if the outstanding principal balance and all accrued
interest thereon shall not be paid in full by February 20, 2009 (“Contingent Warrant”). 
The Contingent Warrant shall be substantially in the form affixed hereto
as Exhibit B.

 

8.                                       Arbitration.  In the event of any and all disagreements and
controversies arising from this Agreement, the 2009 Note, or the Security
Agreement such disagreements and controversies shall be subject to binding
arbitration as arbitrated in accordance with the then current Commercial Arbitration
Rules of the American Arbitration Association (“AAA”) in Chicago, Illinois
before one neutral arbitrator.  Any party
involved in such disagreement or controversy may apply to the arbitrator
seeking injunctive relief until the arbitration award is rendered or the
controversy is otherwise resolved. 
Without waiving any remedy under this Agreement, any involved 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, no 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.  Each party irrevocably consents to
jurisdiction for arbitration in Chicago, Illinois, and irrevocably waives any
objection to improper venue or inconvenient forum in Chicago, Illinois.

 

9.                                       Miscellaneous.

 

(a)                                  All
of the RECITAL clauses at the beginning of this Agreement are hereby
incorporated into and made part of this Agreement.

 

(b)                                 This
Agreement shall be binding upon, and shall inure solely to the benefit of, each
of the parties hereto, and each of their respective heirs, executors,
administrators, successors and permitted assigns, and no other person shall
acquire or have any right under or by virtue of this Agreement.  The Lender shall not assign its rights under
this Agreement except in connection with an assignment under the 2009 Note
permitted by the terms thereof.

 

(c)                                  This
Agreement made not be amended unless the amendment is in writing and signed by
both parties.

 

(d)                                 No
waiver of any provision of this Agreement shall in any event be effective
unless the same shall be in writing and acknowledged by the party against whom
enforcement is sought, and then any such waiver shall be effective only in the
specific instance and for the specific purpose for which given.

 

(e)                                  The
descriptive headings of the several sections and paragraphs of this Agreement
are inserted for convenience only and do not constitute a part of this
Agreement.

 

(f)                                    All
questions concerning the construction, validity, enforcement and interpretation
of this Agreement shall be governed by the internal laws of the State of
Illinois, without giving effect to any choice of law or conflict of law
provision or rule (whether of the State of Illinois or any other
jurisdiction) that would cause the application of the laws of any jurisdiction
other than the State of Illinois.

 

 

(g)                                 Wherever
possible, each provision of this Agreement shall be interpreted in such manner
as to be effective and valid under applicable law, but if any provision of this
Agreement shall be prohibited by, unenforceable or invalid under any
jurisdiction, such provision shall as to such jurisdiction, be severable and be
ineffective to the extent of such prohibition or invalidity, without
invalidating the remaining provisions of this Agreement or affecting the
validity or enforceability of such provision in any other jurisdiction.

 

(h)                                 This
Agreement may be executed in one or more counterparts, all of which shall be
deemed but one and the same agreement and each of which shall be deemed an
original.  Delivery by facsimile of an
executed counterpart of this Agreement shall be effective as an original
executed counterpart hereof and shall be deemed a representation that an
original executed counterpart hereof will be delivered.

 

(i)                                     THE
PARTIES HERETO, AFTER CONSULTING OR HAVING HAD THE OPPORTUNITY TO CONSULT WITH
COUNSEL, EACH KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE IRREVOCABLY, ANY
RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY
RIGHTS UNDER THIS AGREEMENT.

 

(j)                                     SUBJECT
TO SECTION 8, ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN
CONNECTION WITH THIS AGREEMENT SHALL BE BROUGHT AND MAINTAINED EXCLUSIVELY IN
THE COURTS OF THE STATE OF ILLINOIS OR IN THE UNITED STATES DISTRICT COURT FOR
THE NORTHERN DISTRICT OF ILLINOIS; PROVIDED THAT, EXCEPT FOR SECTION 8,
NOTHING IN THIS AGREEMENT SHALL BE DEEMED OR OPERATE TO PRECLUDE LENDER FROM
BRINGING SUIT OR TAKING OTHER LEGAL ACTION IN ANY OTHER JURISDICTION.  EACH PARTY HEREBY EXPRESSLY AND IRREVOCABLY
SUBMITS TO THE JURISDICTION OF THE COURTS OF THE STATE OF ILLINOIS AND OF THE
UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS FOR THE
PURPOSE OF ANY SUCH LITIGATION AS SET FORTH ABOVE AND EXPRESSLY AND IRREVOCABLY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW
OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUCH LITIGATION BROUGHT IN ANY
SUCH COURT REFERRED TO ABOVE AND ANY CLAIM THAT ANY SUCH LITIGATION HAS BEEN
BROUGHT IN AN INCONVENIENT FORUM.

 

[REMAINDER OF THIS PAGE
INTENTIONALLY LEFT BLANK]

 

 

IN WITNESS WHEREOF, the
undersigned have executed this 2009 Note Issuance Agreement as of the day and
year first above written.

 

	
  THE COMPANY:

  	
   

  
	
   

  	
   

  
	
  LIME ENERGY CO.,

  	
   

  
	
  a Delaware corporation

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ Jeffrey R. Mistarz

  	
   

  
	
  Name:

  	
  Jeffrey R. Mistarz

  	
   

  
	
  Title:

  	
  Executive Vice President and Chief Financial Officer

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  LENDER:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  /s/ Richard P. Kiphart

  	
   

  
	
  RICHARD P. KIPHART

  	
   

  
				

 

 

EXHIBIT A

 

Form of Warrant to
Purchase Common Stock

 

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.:

  	
   

  	
  Number
  of Shares: 75,000

  

 

Original
Date of Issuance: August 10, 2009

 

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 August 10,
2009 (the “Exercise Eligibility Date”), but
before August 10, 2013, (the “Expiration Date”),
Seventy-Five Thousand (75,000) 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 $6.50, 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.

 

(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 he
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 he 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:

 

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.

 

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 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, Illinois 60007

Attention:
Jeffrey R. Mistarz

Executive Vice President and

Chief Financial Officer

 

If to the Holder:

 

Richard P. Kiphart

c/o William Blair & Co. LLC

222 West Adams Street

Chicago,
Illinois 60606

 

 

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 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.

 

IN WITNESS WHEREOF, the Company
has caused this Warrant to be signed by a duly authorized officer, as of the
10th day of August, 2009.

 

 

	
   

  	
  LIME
  ENERGY CO., a Delaware corporation 

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:
  Jeffrey R. Mistarz 

  
	
   

  	
  Title:

  	
  Executive
  Vice President and

  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
              
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  

  	
   

  
	
   

  	
  Richard P.
  Kiphart

  

 

 

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 n the face of the Warrant)

  
	
   

  	
   

  	
   

  
	
  Signed in the presence
  of:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  (Name)

  	
   

  	
  (Address)

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  ACCEPTED AND AGREED:

  [TRANSFEREE]

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  (Name)

  	
   

  	
  (Address)

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (Address)

  

 

 

EXHIBIT B

 

Form of Contingent
Warrant to Purchase Common Stock

 

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.:

  	
   

  	
  Number of Shares: 62,500

  

 

Original
Date of Issuance: August 10, 2009

 

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 including Section 2
hereof, to purchase from the Company upon surrender of this Warrant, at any
time or times on or after February 20, 2010 (the “Exercise
Eligibility Date”), but before February 20, 2014 (the “Expiration Date”), Sixty Two Thousand, Five Hundred (62,500)
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 $6.40, subject to adjustment as hereinafter provided (the “Warrant Exercise Price”).

 

24.                                 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.

 

“Note” means the 2009 Revolving Line of Credit Note issued by
the Company in favor of Richard P. Kiphart in the original principal
amount of $2 million.

 

“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.

 

25.                                 Exercise of Warrant.

 

(a)                                  If and only if the outstanding principal
balance of the Note, together with accrued but unpaid interest thereon, shall
not have been paid in full by February 20, 2010, then 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.

 

26.                                 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.

 

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

 

27.                                 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.

 

28.                                 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.

 

29.                                 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.

 

30.                                 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 he
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 he 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:

 

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.

 

31.                                 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.

 

32.                                 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.

 

33.                                 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.

 

34.                                 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.

 

35.                                 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.

 

36.                                 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.

 

37.                                 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 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.

 

38.                                 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, Illinois 60007

Attention: Jeffrey R. Mistarz

Executive Vice President and

Chief Financial Officer

 

If to the Holder:

 

Richard P. Kiphart

c/o William Blair & Co. LLC

222 West Adams Street

Chicago, Illinois 60606

 

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.

 

39.                                 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.

 

40.                                 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.

 

41.                                 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.

 

42.                                 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.

 

43.                                 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.

 

 

44.                                 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.

 

45.                                 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.

 

46.                                 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.

 

IN WITNESS WHEREOF, the Company
has caused this Warrant to be signed by a duly authorized officer, as of the
10th day of August, 2009.

 

 

	
   

  	
  LIME
  ENERGY CO., a Delaware corporation 

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:
  Jeffrey R. Mistarz 

  
	
   

  	
  Title:

  	
  Executive
  Vice President and

  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
                    
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  

  	
   

  
	
   

  	
  Richard P.
  Kiphart

  

 

 

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 n the face of the Warrant)

  
	
   

  	
   

  	
   

  
	
  Signed in the presence
  of:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  (Name)

  	
   

  	
  (Address)

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  ACCEPTED AND AGREED:

  [TRANSFEREE]

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  (Name)

  	
   

  	
  (Address)

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (Address)

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