Document:

Exhibit 10.5

 

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 $6.40, 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:

  	
  /s/
  Jeffrey R. Mistarz

  
	
   

  	
  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 10.6

 

ASSET PURCHASE
AGREEMENT

 

ELUTIONS, INC.

 

and

 

MAXIMUM
PERFORMANCE GROUP, INC.

 

 

August 10,
2009

 

 

TABLE OF
CONTENTS

 

	
  ARTICLE 1

  	
  SALE OF ASSETS AND CLOSING

  	
  1

  
	
   

  	
   

  	
   

  
	
   

  	
  Section 1.1

  	
  Assets Transferred

  	
  1

  
	
   

  	
  Section 1.2

  	
  Excluded Assets

  	
  3

  
	
   

  	
  Section 1.3

  	
  Liabilities

  	
  3

  
	
   

  	
  Section 1.4

  	
  Payment Terms; Allocation

  	
  4

  
	
   

  	
  Section 1.5

  	
  Closing

  	
  6

  
	
   

  	
  Section 1.6

  	
  Prorations

  	
  7

  
	
   

  	
  Section 1.7

  	
  Transition Period

  	
  7

  
	
   

  	
  Section 1.8

  	
  Further Assurances; Post-Closing
  Cooperation

  	
  7

  
	
   

  	
  Section 1.9

  	
  Third-Party Consents

  	
  8

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 2

  	
  REPRESENTATIONS AND WARRANTIES OF
  SELLER

  	
  9

  
	
   

  	
   

  	
   

  
	
   

  	
  Section 2.1

  	
  Corporate Existence of Seller

  	
  9

  
	
   

  	
  Section 2.2

  	
  Authority

  	
  9

  
	
   

  	
  Section 2.3

  	
  No Conflicts

  	
  9

  
	
   

  	
  Section 2.4

  	
  Governmental Approvals and Filings

  	
  10

  
	
   

  	
  Section 2.5

  	
  Legal Proceedings

  	
  10

  
	
   

  	
  Section 2.6

  	
  Compliance With Laws and Orders

  	
  10

  
	
   

  	
  Section 2.7

  	
  Tangible Personal Property

  	
  10

  
	
   

  	
  Section 2.8

  	
  Intellectual Property Rights

  	
  11

  
	
   

  	
  Section 2.9

  	
  Contracts

  	
  11

  
	
   

  	
  Section 2.10

  	
  Brokers

  	
  12

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 3

  	
  REPRESENTATIONS AND WARRANTIES OF
  PURCHASER

  	
  12

  
	
   

  	
   

  	
   

  
	
   

  	
  Section 3.1

  	
  Corporate Existence

  	
  12

  
	
   

  	
  Section 3.2

  	
  Authority

  	
  12

  
	
   

  	
  Section 3.3

  	
  No Conflicts

  	
  12

  
	
   

  	
  Section 3.4

  	
  Governmental Approvals and Filings

  	
  13

  
	
   

  	
  Section 3.5

  	
  Legal Proceedings

  	
  13

  
	
   

  	
  Section 3.6

  	
  Brokers

  	
  13

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 4

  	
  COVENANTS OF SELLER

  	
  13

  
	
   

  	
   

  	
   

  
	
   

  	
  Section 4.1

  	
  Regulatory and Other Approvals

  	
  13

  
	
   

  	
  Section 4.2

  	
  Delivery of Assets, Books, and
  Records

  	
  14

  
	
   

  	
  Section 4.3

  	
  Use of Intellectual Property

  	
  14

  
	
   

  	
  Section 4.4

  	
  Non-Solicitation

  	
  14

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 5

  	
  COVENANTS OF PURCHASER

  	
  14

  
	
   

  	
   

  	
   

  
	
   

  	
  Section 5.1

  	
  Regulatory and Other Approvals

  	
  14

  
	
   

  	
  Section 5.2

  	
  Fulfillment of Conditions

  	
  15

  
	
   

  	
  Section 5.3

  	
  Discontinuance of LIME Mark

  	
  15

  
	
   

  	
  Section 5.4

  	
  Preferred Vendor

  	
  15

  
	
   

  	
  Section 5.5

  	
  Purchaser Reports

  	
  15

  
	
   

  	
  Section 5.6

  	
  Late Payments

  	
  15

  
	
   

  	
  Section 5.7

  	
  Inspection and Audit Rights

  	
  16

  

 

i

 

	
  ARTICLE 6

  	
  CONDITIONS TO OBLIGATIONS OF
  PURCHASER

  	
  16

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Section 6.1

  	
  Representations and Warranties

  	
  16

  
	
   

  	
  Section 6.2

  	
  Performance

  	
  16

  
	
   

  	
  Section 6.3

  	
  Officers’ Certificates

  	
  16

  
	
   

  	
  Section 6.4

  	
  Orders and Laws

  	
  17

  
	
   

  	
  Section 6.5

  	
  Regulatory Consents and Approvals

  	
  17

  
	
   

  	
  Section 6.6

  	
  Third Party Consents

  	
  17

  
	
   

  	
  Section 6.7

  	
  Deliveries

  	
  17

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 7

  	
  CONDITIONS TO OBLIGATIONS OF SELLER

  	
  17

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Section 7.1

  	
  Representations and Warranties

  	
  17

  
	
   

  	
  Section 7.2

  	
  Performance

  	
  17

  
	
   

  	
  Section 7.3

  	
  Officers’ Certificates

  	
  17

  
	
   

  	
  Section 7.4

  	
  Orders and Laws

  	
  17

  
	
   

  	
  Section 7.5

  	
  Regulatory Consents and Approvals

  	
  17

  
	
   

  	
  Section 7.6

  	
  Third Party Consents

  	
  18

  
	
   

  	
  Section 7.7

  	
  Deliveries

  	
  18

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 8

  	
  SURVIVAL; NO OTHER REPRESENTATIONS

  	
  18

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Section 8.1

  	
  Survival of Representations,
  Warranties

  	
  18

  
	
   

  	
  Section 8.2

  	
  No Other Representations

  	
  18

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 9

  	
  INDEMNIFICATION

  	
  18

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Section 9.1

  	
  Indemnification

  	
  18

  
	
   

  	
  Section 9.2

  	
  Exclusivity

  	
  20

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 10

  	
  DEFINITIONS

  	
  20

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Section 10.1

  	
  Definitions

  	
  20

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 11

  	
  MISCELLANEOUS

  	
  24

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Section 11.1

  	
  Notices

  	
  24

  
	
   

  	
  Section 11.2

  	
  Bulk Sales Act

  	
  25

  
	
   

  	
  Section 11.3

  	
  Entire Agreement

  	
  25

  
	
   

  	
  Section 11.4

  	
  Expenses

  	
  25

  
	
   

  	
  Section 11.5

  	
  Public Announcements

  	
  25

  
	
   

  	
  Section 11.6

  	
  [Intentionally omitted]

  	
  25

  
	
   

  	
  Section 11.7

  	
  Waiver

  	
  26

  
	
   

  	
  Section 11.8

  	
  Amendment

  	
  26

  
	
   

  	
  Section 11.9

  	
  No Third Party Beneficiary

  	
  26

  
	
   

  	
  Section 11.10

  	
  No Assignment; Binding Effect

  	
  26

  
	
   

  	
  Section 11.11

  	
  Headings

  	
  26

  
	
   

  	
  Section 11.12

  	
  Invalid Provisions

  	
  26

  
	
   

  	
  Section 11.13

  	
  Governing Law and Arbitration

  	
  26

  
	
   

  	
  Section 11.14

  	
  Counterparts

  	
  27

  

 

ii

 

EXHIBITS

 

	
  Exhibit A

  	
  General Assignment and Bill of Sale

  
	
   

  	
   

  
	
  Exhibit B

  	
  Assumption Agreement

  
	
   

  	
   

  
	
  Exhibit C

  	
  Officer’s Certificate of Seller

  
	
   

  	
   

  
	
  Exhibit D

  	
  Secretary’s Certificate of Seller

  
	
   

  	
   

  
	
  Exhibit E

  	
  Officer’s Certificate of Purchaser

  
	
   

  	
   

  
	
  Exhibit F

  	
  Secretary’s Certificate of Purchaser

  
	
   

  	
   

  
	
  Exhibit G

  	
  Sales Transition Plan

  
	
   

  	
   

  
	
  Exhibit H

  	
  Press Release

  

 

 

This ASSET PURCHASE
AGREEMENT dated as of August 10, 2009, is made and entered into by and
between ELUTIONS, INC., a Delaware corporation (“Purchaser”), and MAXIMUM
PERFORMANCE GROUP, INC., a Delaware corporation (“Seller”).  Capitalized terms not otherwise defined
herein have the meanings set forth in Section 10.1.

 

RECITALS

 

A.            Seller is engaged in the business of providing energy
and asset management products and services marketed under its Energy Management
and Control (“eMAC”) system of controllers for heating, ventilation and
air-conditioning applications and its uMAC system for lighting applications,
(the “Business”).

 

B.            Seller desires to sell, transfer and assign to
Purchaser, and Purchaser desires to purchase and acquire from Seller,
substantially all of the assets of Seller relating to the operation of the
Business, and in connection therewith, Purchaser has agreed to assume certain
of the liabilities of Seller relating to the Business, all on the terms set
forth herein.

 

NOW, THEREFORE, in
consideration of the mutual covenants and agreements set forth in this
Agreement, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:

 

ARTICLE 1            SALE
OF ASSETS AND CLOSING

 

Section 1.1             Assets Transferred.  On the terms and subject to the conditions
set forth in this Agreement, Seller will sell, transfer, convey, assign and
deliver to Purchaser, and Purchaser will purchase, at the Closing, all of
Seller’s right, title and interest in, to and under the following assets and
properties of Seller used or held for use in connection with the Business,
except as otherwise provided in Section 1.2, as the same shall
exist on the Closing Date (collectively, the “Assets”):

 

(a)           Accounts
Receivable.  All trade accounts receivables and all notes,
invoices, and other evidences of Indebtedness of and rights to receive payments
arising out of sales occurring in the conduct of the Business and the Security
Agreements related thereto, as of the Closing Date, including any rights of
Seller with respect to any third party collection procedures or any other
Actions or Proceedings which have been commenced in connection therewith as
listed in Section 1.1(a) of the Disclosure Schedule (the
“Accounts Receivable”);

 

(b)           Inventory.  All inventories of raw materials,
work-in-process, finished goods, products under research and development,
demonstration equipment, office and other supplies, parts, packaging materials
and other accessories related thereto as listed in Section 1.1(b) of
the Disclosure Schedule, which are held at, or are in transit from or to, the
locations at which the Business is conducted, in each case, which are used or
held for use by Seller solely in the conduct of the Business, including any of
the foregoing purchased subject to any conditional sales or title retention
agreement in favor of any other Person, together with all rights of Seller
against suppliers of such inventories (the “Inventory”);

 

(c)           Tangible
Personal Property.  All servers, software and monitors used
solely in the conduct of the Business at the locations at which the Business is
conducted or otherwise used by Seller solely in the conduct of the Business
(including but not limited to the 

 

 

items
listed in Section 1.1(c) of the Disclosure Schedule),
including any of the foregoing purchased subject to any title retention
agreement in favor of any other Person (the “Tangible Personal Property”);

 

(d)           Business
Contracts.  Subject to Section 1.6 for
prepaid expenses, all Contracts (other than the Personal Property Leases and
the Accounts Receivable) to which Seller is a party and which are utilized
solely in the conduct of the Business, including without limitation Contracts
relating to suppliers, sales representatives, distributors, purchase orders,
marketing arrangements and manufacturing arrangements (the “Business
Contracts”);

 

(e)           Intellectual
Property.  All Intellectual Property, including pending
patents, trademarks, service marks, or copyrights, if any, used solely in the
conduct of the Business (including Seller’s goodwill therein) and listed in Section 1.1(e) of
the Disclosure Schedule (the “Intellectual Property”);

 

(f)            Customer
Records and Agreements.  Seller customer lists, customer information,
sales activity records customer orders, all customer agreements, including but
not limited to product purchases, maintenance and monitoring agreements,
product warranties and records of returned product, customer support, and other
customer records for the period January 1, 2006, through the Closing Date,
used or relating solely in the Business or otherwise relating solely to the
Assets, other than the Excluded Books and Records (the “Customer Records”);
provided that nothing herein shall preclude Lime Energy Co., parent of Seller,
from marketing to or doing business with, at any time, any and all past,
present and future customers of Seller.

 

To the extent any of the
Customer Records are items susceptible to duplication and are either (x) used
in connection with any of Seller’s businesses other than the Business or (y) are
required by Law to be retained by Seller, Seller may deliver photostatic copies
or other reproductions from which, in the case of Customer Records referred to
in clause (x), information solely concerning Seller’s businesses other than the
Business has been deleted.

 

(g)           Litigation
Claims.  Any rights (including indemnification) and
claims and recoveries under litigation of Seller against third parties relating
solely to the Assets and arising out of or relating to events prior to the
Closing Date; provided that this Section 1.1(g) does not apply
to claim of any type whatsoever from or against any directors, officers,
employees, representatives, agents or Affiliates of the Seller or Lime Energy
Co., respectively;

 

(h)           Sales
and Marketing Materials.  All sales and marketing materials and
collateral, in all forms, both hard copies and electronic versions relating
solely to the Business;

 

(i)            Technical
Product Materials.  All technical materials required to build,
modify, and operate the eMAC and uMAC systems, related software, and firmware,
including, but not limited to, all hardware technical drawings and
specifications, Gerber drawings, bills of materials, executable software code,
documentation, source files, libraries and development environments.

 

 

(j)            Hosted
Server Software.  All software, third party software licenses,
executable software code, documentation, source files, libraries and
development environments related solely to the hosted software application and
the servers, in each case constituting Tangible Personal Property.

 

Section 1.2             Excluded Assets.  Notwithstanding anything in this Agreement to
the contrary, the following Assets and Properties of Seller (the “Excluded
Assets”) shall be excluded from and shall not constitute Assets:

 

(a)           Cash.  Cash (including checks received prior to the
close of business on the Closing Date, whether or not deposited or cleared
prior to the close of business on the Closing Date), commercial paper,
certificates of deposit and other bank deposits, treasury bills and other cash
equivalents;

 

(b)           Insurance.  Life insurance policies of officers and other
employees of Seller and all other insurance policies relating to the operation
of the Business;

 

(c)           Employee
Benefit Plans.  All assets owned or held by any Benefit
Plans;

 

(d)           Tax
Refunds.  All refunds or credits, if any, of Taxes due
to or from Seller which cannot be assigned by Law;

 

(e)           Real
and Personal Property.  The real or personal property described in Section 1.2(e) of
the Disclosure Schedule;

 

(f)            Excluded
Books and Records.  Except for the Customer Records, all other
books and records of Seller including, without limitation, the minute books and
stock transfer books, the financial statements, tax returns, and computer files
(the “Excluded Books and Records”);

 

(g)           Excluded
Obligations.  The rights of Seller in, to and under all
Contracts of any nature, the obligations of Seller under which expressly are
not assumed by Purchaser pursuant to Section 1.3;

 

(h)           Trade
Name and Logo.  All of Seller’s right, title and interest in,
to and under the name and trademark “Lime Energy” and the Lime Energy logo; and

 

(i)            Seller’s
Rights.  Seller’s rights under this Agreement and the
Operative Agreements.

 

Section 1.3             Liabilities.

 

(a)           Assumed
Liabilities.  In connection with the sale, transfer,
conveyance, assignment and delivery of the Assets pursuant to this Agreement,
on the terms and subject to the conditions set forth in this Agreement, at the
Closing, Purchaser will assume and agree to pay, perform and discharge when due
the following obligations of Seller arising in connection with the operation of
the Business, as the same shall exist on the Closing Date (the “Assumed
Liabilities”), and no others:

 

 

(i)            Obligations
under Contracts and Licenses.  All obligations of Seller under the Business
Contracts arising and to be performed on or after the Closing Date, and
excluding any such obligations arising or to be performed prior to the Closing
Date;

 

(ii)           Returned
Goods.  All obligations of Seller with respect to
Seller’s product warranties for replacement of, or refund for, damaged,
defective or returned products, to the extent such products are subject to
outstanding warranties;

 

(iii)          Service
and Monitoring Contracts.  All obligations of Seller for maintenance,
servicing and monitoring eMAC controllers and systems installed on or prior to
the Closing Date for the customers and sites listed in Section 1.3(a)(iii) of
the Disclosure Schedule;

 

(iv)          Accrued
Expenses.  All obligations of Seller with respect to the
customer deposit, as more specifically listed in Section 1.3(a)(iv) of
the Disclosure Schedule; provided that if such customer demands a refund of its
deposit prior to depletion of such deposit applied to services rendered by
Purchaser, Seller shall be responsible for refund of such deposit as adjusted
for depletion for services rendered by Purchaser.  Upon request, Purchaser agrees to provide
Seller with records of services rendered to such customer; and

 

(v)           Product
Liabilities.  All liabilities arising out of claims of
third parties for damage or injury suffered as the result of defective products
sold by Seller prior to the Closing Date where the occurrence giving rise to
any such claim takes place on or after the Closing Date.

 

(b)           Retained
Liabilities.  Except for the Assumed Liabilities, Purchaser
shall not assume by virtue of this Agreement or the transactions contemplated
hereby, and shall have no liability for, any Liabilities of Seller of any kind,
character or description whatsoever (the “Retained Liabilities”).  Seller shall discharge in a timely manner or
shall make adequate provision for all of the Retained Liabilities, provided
that Seller shall have the ability to contest, in good faith, any such claim of
liability asserted in respect thereof by any Person other than Purchaser and
its Affiliates.

 

Section 1.4             Payment
Terms; Allocation.

 

(a)           Closing
Payment. On the Closing Date,
Purchaser shall pay to Seller in immediately available funds by wire transfer
the sum of Twenty-Five Thousand Dollars ($25,000.00) (“Closing Payment”).

 

(b)           Post-Closing
Payment.  On November 9, 2009, Purchaser also
shall pay to Seller in immediately available funds by wire transfer the sum of
Fifty Thousand Dollars ($50,000.00), subject to offset up to a maximum of such
$50,000, for any shortages in Inventory actually delivered by Seller as
compared to the Inventory listed in Section 1.1((b) of the
Disclosure Schedule, provided that any such shortage shall be reported by
Purchaser within thirty (30) days following delivery by Seller.  The amount to be offset, if any, shall be calculated
based upon the price per unit, part or system, as applicable, set forth in Section 1.1(b) of
the Disclosure Schedule and all documents referenced therein.

 

 

(c)           Payment
Terms.  Purchaser also will pay to Seller in
immediately available funds by wire transfer, or such other method as mutually
agreed, the amounts earned by Seller for a period of forty-eight (48) full
months from the Closing Date (such 48 months, the “Earn-out Period”) as
described below:

 

(i)            Purchaser
shall be responsible for collecting the outstanding Accounts Receivable, as
specifically set forth in Section 1.1(a) of the Disclosure
Schedule.  Purchaser shall remit ten
percent (10%) of all amounts collected of the Accounts Receivable to Seller
within ten (10) days of collection, less any actual out-of-pocket costs of
collection related thereto.

 

(ii)           Purchaser
shall pay Seller the following payouts (“Payout(s)”): (x) five percent
(5%) of the sale price of the Inventory (sold by Seller under this Agreement)
as it is sold until such Inventory is depleted, and (y) an additional ten
percent (10%) of the following (in addition to the Payout in clause (x), if
applicable,  but without duplication
among clauses (A) through (D) below): 
(A) the gross sale price of, and all software license fees,
without offset collected from the sale of, the eMAC or uMAC controllers (other
than the sale of the Inventory pursuant to clause (x) above), (B) the
gross sale price of eMAC or uMAC systems excluding from such sale price the
price of any Purchaser hardware or software that may be utilized to supplement
or expand such systems beyond the systems marketed in the Business of the
Seller as of the Closing Date, (C) all fees derived from monitoring and
maintenance contracts or services related to eMAC systems or uMAC systems, or
the controllers therein and (D) all fees from other services performed by
Purchaser or its Affiliates relating to eMAC or uMAC systems including repairs
and replacements, in each case as to clauses (A) through (D) above,
whether in the ordinary course of business, upon the sale of Purchaser’s assets
or otherwise, and including any similar or derivative fees or revenue however
characterized (all sources of sales proceeds, fees and other revenue upon which
Payouts will be computed and made under this clause (y), collectively, the
“eMAC System Sales and Monitoring Revenue”), and Purchaser shall remit to
Seller such Payouts within ten (10) days of receipt, directly or
indirectly, of any such sales proceeds or fees however characterized.

 

(iii)          Purchaser’s
obligation to make any Payout under Section 1.4(c)(ii) for
sales of Inventory and eMAC System Sales and Monitoring Revenue over the
Earn-Out Period shall terminate upon receipt by Seller from Purchaser of an
aggregate Four Million Dollars ($4,000,000.00) in Payouts and payments actually
made to Seller pursuant to Section 5.4 below.

 

(iv)          Purchaser
shall have no obligation to make any Payout with respect to the amount of the
customer deposit listed on Section 1.3(a)(iv) of the
Disclosure Schedule.

 

(v)           During
the Earn-out Period, for each 12-month period commencing August 10th through the following August 9th, with the first
12-month period running August 10, 2009 through August 9, 2010  (each such 12-month period, the “Yearly
Period”), the amount of Payouts to which the Seller shall be entitled during a
Yearly Period shall be subject to the following:

 

(A)    If
during a Yearly Period, the aggregate amount of sales of Inventory,  eMAC System Sales and Monitoring Revenue and
Other Revenue (ass 

 

 

defined
in Section 5.4 below shall be $1,000,000 or less, then no Payout for such
Yearly Period shall be due by Purchaser to Seller;

 

(B)    If
during a Yearly Period, the aggregate amount of sales of Inventory , eMAC
System Sales and Monitoring Revenue and Other Revenue shall be more than
$1,000,000 but less than $1.5 million, Purchaser shall be obligated to pay
Seller fifty percent (50%) of the Payout amount earned by Seller for such
Yearly Period; and

 

(C)    If
during a Yearly Period, the aggregate amount of sales of Inventory,  eMAC System Sales and Monitoring Revenue and
Other Revenue shall be more than $1.5 million, Purchaser shall be obligated to
pay Seller one hundred percent (100%) of the Payout amount earned by Seller for
such Yearly Period.

 

(vi)          Semi-annual
reconciliations for underpayments or overpayments made by Purchaser shall be
made by written report from the Purchaser to the Seller to take into effect the
revenue thresholds described in subclause (v) above.

 

(d)           Allocation.
Purchaser and Seller shall negotiate in good faith prior to the Closing Date
and determine the allocation of the consideration paid by Purchaser for the
Assets.  Each party hereto agrees (i) that
any such allocation shall be consistent with the requirements of Section 1060
of the Code and the regulations thereunder, (ii) to complete jointly and
to file separately Form 8594 with its Federal Income Tax Return consistent
with such allocation for the tax year in which the Closing Date occurs and (iii) that
no party will take a position on any income, transfer or gains Tax Return,
before any Governmental or Regulatory Authority charged with the collection of
any such Tax or in any judicial proceeding, that is in any manner inconsistent
with the terms of any such allocation without the consent of the other party.

 

Section 1.5             Closing.  The Closing will take place at the offices of
William Blair & Company in Chicago, Illinois on August 10, 2009,
or at such other place as Purchaser and Seller mutually agree, at 10:00 a.m.
local time, on the Closing Date. 
Simultaneously, (a) Seller will assign and transfer to Purchaser
all of its right, title and interest in and to the Assets (free and clear of
all Liens, other than Permitted Liens) by delivery of (i) a General
Assignment and Bill of Sale substantially in the form of Exhibit A
hereto (the “General Assignment”), duly executed by Seller, (ii) an
assignment of the Intellectual Property in form and substance reasonably
satisfactory to Purchaser, and (iii) such other good and sufficient instruments
of conveyance, assignment and transfer, in form and substance reasonably
acceptable to Purchaser’s counsel, as shall be effective to vest in Purchaser
good title to the Assets (the General Assignment and the other instruments
referred to in clauses (ii) and (iii) being collectively referred to
herein as the “Assignment Instruments”), and (b) Purchaser will assume
from Seller the due payment, performance and discharge of the Assumed
Liabilities by delivery of (i) an Assumption Agreement substantially in
the form of Exhibit B hereto (the “Assumption Agreement”), duly
executed by Purchaser, and (ii) such other good and sufficient instruments
of assumption, in form and substance reasonably acceptable to Seller’s counsel,
as shall be effective to cause Purchaser to assume the Assumed Liabilities as
and to the extent provided in Section 1.3(a) (the Assumption
Agreement and such other instruments referred to in clause (ii) being
collectively referred to herein as the “Assumption Instruments”).  At the Closing, there shall also be delivered

 

 

to
Seller and Purchaser the certificates and other contracts, documents and
instruments required to be delivered under Articles 6 and 7.

 

Section 1.6             Prorations.  The following prorations relating to the
Assets and the ownership and operation of the Business will be made as of the
Closing Date, with Seller liable to the extent such items relate to any time
period prior to the Closing Date and Purchaser liable to the extent such items
relate to periods beginning with and subsequent to the Closing Date:

 

(a)           All
prepaid expenses relating to the Business including, but not limited to, the
items listed in Section 1.6(a) of the Disclosure Schedule (the
“Prepaid Expenses”).

 

(b)           All
other items (excluding personal property taxes and other Taxes) normally
adjusted in connection with similar transactions

 

Except as otherwise
agreed by the parties, the net amount of all such prorations will be settled
and paid on the Closing.

 

Section 1.7             Transition
Period.

 

(a)           Following
the Closing and for a period or thirty (30) days, unless otherwise designated
herein (“Transition Period”), Seller will effect the transfer of the
following:  (i) records related to
the Accounts Receivable within five (5) days after Closing, (ii) Inventory
packaged and shipped to Purchaser at its Tampa, Florida headquarters within ten
(10) days after Closing, (iii) customer records will be made
available to Purchaser within ten (10) days after Closing, (iv) for
Employees, such records as Seller is permitted under applicable law to copy and
transfer to Purchaser, within five (5) days after Closing, provided that
if Purchaser elects not to hire any such Employee, Purchaser shall return
promptly to Seller all such Employee’s records and copies thereof made by
Purchaser, and (v) such other Transition Services as provided in Exhibit G
— Sales Transition Plan.  Should the
Transition Plan not be completed during the foregoing Transition Period, the
Parties agree to extend the Transition Period for an additional thirty (30)
days or such shorter period as reasonably necessary to complete all transition
activities.

 

(b)           Seller
will continue to provide hosting services for customers during the Transition
Period, and assist Purchaser in moving customers to Purchaser’s hosting
environment.  Should that process extend
beyond the Transition Period, Seller and Purchaser will negotiate a reasonable
services fee to be paid to Seller to continue hosting the service for up to an
additional thirty (30) days.

 

Section 1.8             Further
Assurances; Post-Closing Cooperation.

 

(a)           Subject
to the terms and conditions of this Agreement, at any time or from time to time
after the Closing, at Purchaser’s request and without further consideration,
Seller shall execute and deliver to Purchaser such other instruments of sale,
transfer, conveyance, assignment and confirmation, provide such materials and
information and take such other actions as Purchaser may reasonably deem
necessary in order more effectively to transfer, convey and assign to
Purchaser, and to confirm Purchaser’s title to, all of the Assets, and, to the
full extent permitted by Law, to put Purchaser in actual possession and
operating control of the Business and the Assets and to assist Purchaser in
exercising all rights with respect thereto, and 

 

 

otherwise
to cause Seller to fulfill its obligations under this Agreement and the
Operative Agreements.

 

(b)           Following
the Closing, each party will afford the other party, its counsel and its
accountants, during normal business hours, reasonable access to the books,
records and other data relating to the Business in its possession with respect
to periods prior to the Closing and the right to make copies and extracts
therefrom, to the extent that such access may be reasonably required by the
requesting party in connection with (i) the preparation of Tax Returns, (ii) the
determination or enforcement of rights and obligations under this Agreement or
any Operative Agreement or (iv) in connection with any actual or
threatened Action or Proceeding.  Further
each party agrees for a period extending three (3) years after the Closing
Date not to destroy or otherwise dispose of any such books, records and other
data unless such party shall first offer in writing to surrender such books,
records and other data to the other party and such other party shall not agree
in writing to take possession thereof during the ten (10) day period after
such offer is made.

 

(c)           On
or before August 17, 2009, Purchaser will determine which of Seller’s
Employees that it does not wish to retain (collectively, “Designated Employees”).  Seller shall have no obligation to retain any
Designated Employees, beyond August 17, 2009, or such earlier date as a
Designated Employee may be identified by Purchaser. With respect to Employees
of Seller who are not Designated Employees (collectively, “Post-Closing Seller
Employees”), Seller will continue to provide employment, salary and benefits
for each Post-Closing Seller Employee, until September 9, 2009, or such
earlier date as Purchaser may hire such Post-Closing Seller Employee.  If a Post-Closing Seller Employee shall be
hired by Purchaser, thereafter Purchaser shall be responsible for all
employment, salary and benefits to such Post-Closing Seller Employee.  For clarification, Seller shall have no
obligation to retain any of its Employees beyond September 9, 2009.

 

(d)           If,
in order properly to prepare its Tax Returns, other documents or reports
required to be filed with Governmental or Regulatory Authorities or its
financial statements or to fulfill its obligations hereunder, it is necessary
that a party be furnished with additional information, documents or records
relating to the Business not referred to in paragraph (b) above, and such
information, documents or records are in the possession or control of the other
party, such other party shall use its commercially reasonable efforts to
furnish or make available such information, documents or records (or copies
thereof) at the recipient’s request, cost and expense.  Any information obtained by such party in
accordance with this paragraph shall be held confidential by such party in
accordance with the Confidentiality Agreement.

 

(e)           Notwithstanding
anything to the contrary contained in this Section, if the parties are in an
adversarial relationship in litigation or arbitration, the furnishing of
information, documents or records in accordance paragraph (c) of this Section shall
be subject to applicable rules relating to discovery.

 

Section 1.9             Third-Party
Consents.  To the extent that any Business Contract is
not assignable without the consent of another party, this Agreement shall not
constitute an assignment or an attempted assignment thereof if such assignment
or attempted assignment would constitute a breach thereof or a default
thereunder.  Seller and Purchaser shall
use commercially reasonable efforts to obtain the consent of such other party
to the assignment of 

 

 

any
such Business Contract to Purchaser in all cases in which such consent is or
may be required for such assignment.  If
any such consent shall not be obtained, Seller shall cooperate with Purchaser
in any reasonable arrangement designed to provide for Purchaser the benefits
intended to be assigned to Purchaser under the relevant Business Contract,
including enforcement at the cost and for the account of Purchaser of any and
all rights of Seller against the other party thereto arising out of the breach
or cancellation thereof by such other party or otherwise.

 

ARTICLE 2            REPRESENTATIONS AND
WARRANTIES OF SELLER

 

Seller hereby represents
and warrants to Purchaser as follows:

 

Section 2.1             Corporate
Existence of Seller.  Seller is a corporation validly existing and
in good standing under the Laws of the State of Delaware, and has full
corporate power and authority to conduct the Business as and to the extent now
conducted and to own, use and lease the Assets.

 

Section 2.2             Authority.  Seller has full corporate power and authority
to execute and deliver this Agreement and the Operative Agreements to which it
is a party, to perform its obligations hereunder and thereunder and to
consummate the transactions contemplated hereby and thereby, including without
limitation to sell and transfer (pursuant to this Agreement) the Assets.  The execution and delivery by Seller of this
Agreement and the Operative Agreements to which it is a party, and the
performance by Seller of its obligations hereunder and thereunder, have been
duly and validly authorized by the Board of Directors of Seller, no other
corporate action on the part of Seller or its stockholders being necessary.  This Agreement has been duly and validly
executed and delivered by Seller and constitutes, and upon the execution and
delivery by Seller of the Operative Agreements to which it is a party, such
Operative Agreements will constitute, legal, valid and binding obligations of
Seller enforceable against Seller in accordance with their terms.

 

Section 2.3             No Conflicts.  The execution and delivery by Seller of this
Agreement do not, and the execution and delivery by Seller of the Operative
Agreements to which it is a party, the performance by Seller of its obligations
under this Agreement and such Operative Agreements and the consummation of the
transactions contemplated hereby and thereby will not:

 

(a)           conflict
with or result in a violation or breach of any of the terms, conditions or
provisions of the certificate of incorporation or by-laws of Seller;

 

(b)           subject
to obtaining the consents, approvals and actions, making the filings and giving
the notices disclosed in Section 2.4 of the Disclosure Schedule,
conflict with or result in a violation or breach of any term or provision of
any Law or Order applicable to Seller or any of its Assets and Properties
(other than such conflicts, violations or breaches (i) which could not in
the aggregate reasonably be expected to adversely affect the validity or
enforceability of this Agreement or any of such Operative Agreements or to have
a material adverse effect on the Condition of the Business or (ii) as
would occur solely as a result of the legal or regulatory status of Purchaser or
any of its Affiliates); or

 

 

(c)           except
as disclosed in Section 2.3 of the Disclosure Schedule or as could
not, individually or in the aggregate, reasonably be expected to be materially
adverse to the Condition of the Business or to adversely affect the ability of
Seller to consummate the transactions contemplated hereby or by any such
Operative Agreements or to perform its obligations hereunder or thereunder, (i) conflict
with or result in a violation or breach of, (ii) constitute (with or
without notice or lapse of time or both) a default under, (iii) require
Seller to obtain any consent, approval or action of, make any filing with or
give any notice to any Person as a result or under the terms of, or (iv) result
in the creation or imposition of any Lien upon Seller or any of its Assets or
Properties under, any Contract or License to which Seller is a party or by
which any of its Assets and Properties is bound.

 

Section 2.4             Governmental Approvals
and Filings.  Except as disclosed in Section 2.4
of the Disclosure Schedule, no consent, approval or action of, filing with or
notice to any Governmental or Regulatory Authority on the part of Seller is
required in connection with the execution, delivery and performance of this
Agreement or any of the Operative Agreements to which it is a party or the
consummation of the transactions contemplated hereby or thereby, except (i) where
the failure to obtain any such consent, approval or action, to make any such
filing or to give any such notice could not reasonably be expected to adversely
affect the ability of Seller to consummate the transactions contemplated by
this Agreement or any of such Operative Agreements or to perform its
obligations hereunder or thereunder, or to have a material adverse effect on
the Condition of the Business, and (ii) those as would be required solely
as a result of the identity or the legal or regulatory status of Purchaser or
any of its Affiliates.

 

Section 2.5             Legal Proceedings.  Except as disclosed in Section 2.5
of the Disclosure Schedule:

 

(a)           there
are no Actions or Proceedings pending or, to the Knowledge of Seller,
threatened against, relating to or affecting Seller with respect to the
Business or any of its Assets and Properties which could reasonably be expected
(i) to result in the issuance of an Order restraining, enjoining or
otherwise prohibiting or making illegal the consummation of any of the
transactions contemplated by this Agreement or any of the Operative Agreements,
or (ii) individually or in the aggregate with other such Actions or
Proceedings, to have a material adverse effect on the Condition of the
Business; and

 

(b)           there
are no Orders outstanding against Seller which, individually or in the
aggregate with other such Orders, materially adversely affect the Condition of
the Business.

 

Section 2.6             Compliance With Laws and Orders.  Except as disclosed in Section 2.6
of the Disclosure Schedule, Seller is not in violation of or in default under
any Law or Order applicable to the Business or the Assets the effect of which, individually
or in the aggregate with other such violations and defaults, could reasonably
be expected to be materially adverse to the Condition of the Business.

 

Section 2.7             Tangible
Personal Property.  Seller is in possession of and has good title
to, or has valid leasehold interests in or valid rights under Contract to use,
all the Tangible Personal Property used in and individually or in the aggregate
with other such property material to the Condition of the Business.  All the Tangible Personal Property is free
and clear of all Liens, other 

 

 

than
Permitted Liens and Liens disclosed in Section 2.7 of the
Disclosure Schedule, and is in all material respects in good working order and
condition, ordinary wear and tear excepted.

 

Section 2.8             Intellectual Property
Rights.  Section 1.1(e) of the
Disclosure Schedule discloses all Intellectual Property used in and
individually or in the aggregate with other such Intellectual Property material
to the Condition of the Business, each of which Seller either has all right,
title and interest in or a valid and binding rights under Contract to use.  Except as disclosed in Section 2.8
of the Disclosure Schedule, (i) all registrations with and applications to
Governmental or Regulatory Authorities in respect of Intellectual Property
owned by Seller and disclosed in Section 1.1(e) of the
Disclosure Schedule are valid and in full force and effect, (ii) there are
no material restrictions on the direct or indirect transfer of any Contract, or
any interest therein, held by Seller in respect of such Intellectual Property, (iii) to
the Knowledge of Seller, Seller is not, nor has it received any notice that it
is, in default (or with the giving of notice or lapse of time or both, would be
in default) in any material respect under any Contract to use such Intellectual
Property and (iv) to the Knowledge of Seller, such Intellectual Property
is not being infringed by any other Person. 
Seller has not received notice that Seller is infringing any
Intellectual Property of any other Person in connection with the conduct of the
Business, to the Knowledge of Seller no claim is pending or has been made to
such effect that has not been resolved and, to the Knowledge of Seller, Seller
is not infringing any Intellectual Property of any other Person the effect of
which, individually or in the aggregate, could reasonably be expected to be
materially adverse to the Condition of the Business.

 

Section 2.9             Contracts.

 

(a)           Section 2.9(a) of
the Disclosure Schedule contains a true and complete list of each of the
following Contracts (true and complete copies or, if none, reasonably complete
and accurate written descriptions of which, together with all amendments and
supplements thereto, have been delivered to Purchaser prior to the execution of
this Agreement) to which Seller is a party or by which any of the Assets is
bound:

 

(i)            all
Contracts (excluding Benefit Plans) providing for a commitment of employment or
consultation services for a specified or unspecified term to, or otherwise
relating to employment or the termination of employment of, any Employee, the
name, position and rate of compensation of each Employee party to such a
Contract and the expiration date of each such Contract;

 

(ii)           all
Contracts with any Person containing any provision or covenant prohibiting or
materially limiting the ability of Seller to engage in any business activity or
compete with any Person in connection with the Business or prohibiting or
materially limiting the ability of any Person to compete with Seller in connection
with the Business;

 

(iii)          all
material partnership, joint venture, shareholders’ or other similar Contracts
with any Person in connection with the Business;

 

(iv)          all
Contracts with distributors, dealers, manufacturer’s representatives, sales
agencies or franchises with whom Seller deals in connection with the Business
which in any case involve the payment or potential payment, pursuant to the
terms of any such Contract, by or to the Seller;

 

 

(v)           all
Contracts relating to the future disposition or acquisition of any Assets
individually or in the aggregate material to the Condition of the Business,
other than dispositions or acquisitions of Inventory in the ordinary course of
business; and

 

(vi)          all
collective bargaining or similar labor Contracts covering any Employee.

 

Section 2.10           Brokers.  Except for William Blair & Company,
L.L.C., whose fees, commissions and expenses are the sole responsibility of
Seller, all negotiations relative to this Agreement and the transactions
contemplated hereby have been carried out by Seller directly with Purchaser
without the intervention of any Person on behalf of Seller in such manner as to
give rise to any valid claim by any Person against Purchaser for a finder’s
fee, brokerage commission or similar payment.

 

ARTICLE 3            REPRESENTATIONS AND
WARRANTIES OF PURCHASER

 

Purchaser hereby
represents and warrants to Seller as follows:

 

Section 3.1             Corporate
Existence.  Purchaser is a corporation validly existing
and in good standing under the Laws of the State of Delaware.  Purchaser has full corporate power and
authority to enter into this Agreement and the Operative Agreements to which it
is a party, to perform its obligations hereunder and thereunder and to
consummate the transactions contemplated hereby and thereby.

 

Section 3.2             Authority.  The execution and delivery by Purchaser of
this Agreement and the Operative Agreements to which it is a party, and the
performance by Purchaser of its obligations hereunder and thereunder, have been
duly and validly authorized by the Board of Directors of Purchaser, no other
corporate action on the part of Purchaser or its stockholders being
necessary.  This Agreement has been duly
and validly executed and delivered by Purchaser and constitutes, and upon the
execution and delivery by Purchaser of the Operative Agreements to which it is
a party, such Operative Agreements will constitute, legal, valid and binding
obligations of Purchaser enforceable against Purchaser in accordance with their
terms.

 

Section 3.3             No Conflicts.  The execution and delivery by Purchaser of
this Agreement do not, and the execution and delivery by Purchaser of the
Operative Agreements to which it is a party, the performance by Purchaser of
its obligations under this Agreement and such Operative Agreements and the consummation
of the transactions contemplated hereby and thereby will not:

 

(a)           conflict
with or result in a violation or breach of any of the terms, conditions or
provisions of the certificate of incorporation or by-laws (or other comparable
corporate charter document) of Purchaser;

 

(b)           subject
to obtaining the consents, approvals and actions, making the filings and giving
the notices disclosed in Schedule 3.4 hereto, conflict with or
result in a violation or breach of any term or provision of any Law or Order
applicable to Purchaser or any of its Assets and Properties (other than such
conflicts, violations or breaches which could not in the aggregate reasonably
be expected to adversely affect the validity or enforceability of this
Agreement or any of such Operative Agreements); or

 

 

(c)           except
as disclosed in Schedule 3.3 hereto, or as could not, individually
or in the aggregate, reasonably be expected to adversely affect the ability of
Purchaser to consummate the transactions contemplated hereby or by any such
Operative Agreements or to perform its obligations hereunder or thereunder, (i) conflict
with or result in a violation or breach of, (ii) constitute (with or
without notice or lapse of time or both) a default under, (iii) require
Purchaser to obtain any consent, approval or action of, make any filing with or
give any notice to any Person as a result or under the terms of, or (iv) result
in the creation or imposition of any Lien upon Purchaser or any of its Assets
or Properties under, any Contract or License to which Purchaser is a party or
by which any of its Assets and Properties is bound.

 

Section 3.4             Governmental Approvals
and Filings.  Except as disclosed in Schedule 3.4
hereto, no consent, approval or action of, filing with or notice to any Governmental
or Regulatory Authority on the part of Purchaser is required in connection with
the execution, delivery and performance of this Agreement or the Operative
Agreements to which it is a party or the consummation of the transactions
contemplated hereby or thereby, except where the failure to obtain any such
consent, approval or action, to make any such filing or to give any such notice
could not reasonably be expected to adversely affect the ability of Seller to
consummate the transactions contemplated by this Agreement or any of such
Operative Agreements or to perform its obligations hereunder or thereunder.

 

Section 3.5             Legal Proceedings.  There are no Actions or Proceedings pending
or, to the knowledge of Purchaser, threatened against, relating to or affecting
Purchaser or any of its Assets and Properties which could reasonably be
expected to result in the issuance of an Order restraining, enjoining or
otherwise prohibiting or making illegal the consummation of any of the
transactions contemplated by this Agreement or any of the Operative Agreements.

 

Section 3.6             Brokers.  Except for Blitzer, Clancy &
Company, whose fees, commissions and expenses, if any,  are the sole responsibility of
Purchaser, all negotiations relative to this Agreement and the transactions
contemplated hereby have been carried out by Purchaser directly with Seller
without the intervention of any Person on behalf of Purchaser in such manner as
to give rise to any valid claim by any Person against Seller for a finder’s
fee, brokerage commission or similar payment.

 

ARTICLE 4            COVENANTS OF SELLER

 

Seller covenants and
agrees with Purchaser that after the Closing Date Seller will comply with all
covenants and provisions of this Article 4, except to the extent
Purchaser may otherwise consent in writing.

 

Section 4.1             Regulatory and Other
Approvals.  Seller will, as promptly as practicable, (a) take
all commercially reasonable steps necessary or desirable to obtain all
consents, approvals or actions of, make all filings with and give all notices
to Governmental or Regulatory Authorities or any other Person required of
Seller to consummate the transactions contemplated hereby and by the Operative
Agreements, including without limitation those described in Sections 2.3
and 2.4 of the Disclosure Schedule, (b) provide such other
information and communications to such Governmental or Regulatory Authorities
or other Persons as such Governmental or Regulatory Authorities or other
Persons may reasonably request in connection therewith and (c) provide reasonable
cooperation to Purchaser in connection with the performance of its obligations
under Section 5.1.  Seller
will provide prompt notification to 

 

 

Purchaser
when any such consent, approval, action, filing or notice referred to in clause
(a) above is obtained, taken, made or given, as applicable, and will
advise Purchaser of any communications (and, unless precluded by Law, provide
copies of any such communications that are in writing) with any Governmental or
Regulatory Authority or other Person regarding any of the transactions
contemplated by this Agreement or any of the Operative Agreements.

 

Section 4.2             Delivery
of Assets, Books, and Records.  On the Closing Date, Seller will deliver or
make available to Purchaser at the locations at which the Business is conducted
all of the Customer Records and such other Assets, including but not limited to
all records related to Intellectual Property associated with the eMAC and uMAC
systems, as are in Seller’s possession at other locations, and if at any time
after the Closing Seller discovers in its possession or under its control any
other Customer Records or other Assets, it will forthwith deliver such Customer
Records or other Assets to Purchaser.

 

Section 4.3             Use
of Intellectual Property.  Seller’s rights to all Intellectual Property
cease upon Closing.  Upon the Closing
Date, and at all times thereafter, Seller shall not use or license, nor shall
Seller cause or permit any third party directly or indirectly, create
derivative works from, reverse engineer, disassemble, decompile, appropriate,
disseminate, or otherwise modify the Intellectual Property.  Notwithstanding the foregoing, Seller may use
the Intellectual Property, as necessary, to carry out its obligations during
the Transition Period.

 

Section 4.4             Non-Solicitation.  Notwithstanding any provision to the contrary
herein, for the Earn-Out Period (or such shorter period if the Purchaser is no
longer engaged in eMAC system sales), Seller shall not solicit the sale,
installation or integration of any Competitive Product to any customer of
Seller identified on Schedule 4.4 of the Disclosure Schedule.

 

ARTICLE 5            COVENANTS OF PURCHASER

 

Purchaser covenants and
agrees with Seller that after the Closing Date, Purchaser will comply with all
covenants and provisions of this Article 5, except to the extent
Seller may otherwise consent in writing.

 

Section 5.1             Regulatory and Other
Approvals.  Purchaser will, as promptly as practicable, (a) take
all commercially reasonable steps necessary or desirable to obtain all
consents, approvals or actions of, make all filings with and give all notices
to Governmental or Regulatory Authorities or any other Person required of
Purchaser to consummate the transactions contemplated hereby and by the
Operative Agreements, including without limitation those described in Schedules 3.3
and 3.4 hereto, (b) provide such other information and
communications to such Governmental or Regulatory Authorities or other Persons
as such Governmental or Regulatory Authorities or other Persons may reasonably
request in connection therewith and (c) provide reasonable cooperation to
Seller in connection with the performance of its obligations under Section 4.1.  Purchaser will provide prompt notification to
Seller when any such consent, approval, action, filing or notice referred to in
clause (a) above is obtained, taken, made or given, as applicable, and
will advise Seller of any communications (and, unless precluded by Law, provide
copies of any such communications that are in writing) with any Governmental or
Regulatory Authority or other Person regarding any of the transactions
contemplated by this Agreement or any of the Operative Agreements.

 

 

Section 5.2             Fulfillment
of Conditions.  Purchaser will execute and deliver at the
Closing each Operative Agreement that Purchaser is hereby required to execute
and deliver as a condition to the Closing, will take all commercially
reasonable steps necessary or desirable and proceed diligently and in good
faith to satisfy each other condition to the obligations of Seller contained in
this Agreement and will not take or fail to take any action that could
reasonably be expected to result in the nonfulfillment of any such condition.

 

Section 5.3             Discontinuance
of LIME Mark.  Within thirty (30) days after the Closing
Date, Purchaser shall remove all marks, logos and other references to “Lime
Energy” or “LIME” contained on or affixed to any and all Inventory including,
without limitation, all eMAC and uMAC controllers sold to Purchaser hereunder,
and shall certify in writing satisfactory to Seller that such removal has been
completed.

 

Section 5.4             Preferred Vendor.  Purchaser shall use Seller (or Lime Energy
Co. if designated by Seller) as its preferred installation and integration
vendor for Purchaser’s eMAC and uMAC sales, provided that Seller’s quote to
provide such services is within ten percent (10%) of a bona fide third party
bid.  Upon Seller’s completion of the
installation and/or integration services, Purchaser shall pay all such
installation and integration service and parts costs to Seller within five (5) days
of receipt of payment relating to such sale (such amount of Seller’s service
and parts costs for which payment shall have been received by Purchaser,
referred to herein as “Other Revenue”), unless other payment arrangements shall
have been agreed upon in writing by Purchaser and Seller or Lime Energy
Co.  Seller may assign its rights and
obligations under this Section 5.4 to Lime Energy Co.  The actual amount of service and parts costs
paid to Seller by Purchaser for installation/integration services and parts
pursuant to this Section 5.4 shall be credited in favor of
Purchaser against the $4 million earnout cap set forth in Section 1.4.

 

Section 5.5             Purchaser Reports.  Together with each payment made to Seller
pursuant to Section 1.4(c)(i), Purchaser shall deliver to Seller a
written report stating in reasonable detail (i) the computation of the 10%
interest paid to Seller including the gross amount of collections of the
Accounts Receivable and the actual out-of pocket costs, if any, related to such
collections, and (ii) the computation of all sums paid to Seller pursuant
to Section 1.4(c)(i) including the gross amount of collections
of the Accounts Receivable from and after the Closing Date and the actual
out-of pocket costs, if any, related to such collections.  Together with each payment made to Seller
pursuant to Section 1.4(c)(ii), Purchaser shall deliver to Seller a
written report stating in reasonable detail (x) the computation of the 10%
interest paid to Seller including the gross amount of Inventory sold and the
eMAC System Sales and Monitoring Revenue, and (y) the computation of all
Payouts made to Seller pursuant to Section 1.4(c)(ii) including
the gross amount of Inventory sold and eMAC System Sales and Monitoring from
and after the Closing Date, as well as any adjustments made by Purchaser to the
Payout amount in accordance with and subject to Sections 1.4(c)(v) and
1.4(c)(vi).

 

Section 5.6             Late Payments.  It is specifically understood by Purchaser
that, with respect to payments and reports due to Seller, time is of the
essence and any payment due to Seller pursuant to this Agreement that is late
shall bear interest from ten (10) days after the date payment was due at
the published 90-day LIBOR rate plus 150 basis points per annum, until
remittance in full thereof to Seller. 
The operation of this clause is without prejudice to any other right or
remedy Seller may have pursuant to the terms of this Agreement or the law.

 

 

Section 5.7             Inspection
and Audit Rights.

 

(a)           Purchaser’s
books and records with respect to the Accounts Receivables and the Payouts
(whether paid or payable) for at least two (2) years following each
calendar year (or in the event of a dispute between the parties hereto, until two
(2) years after said dispute is resolved, whichever is later) shall be
kept in Tampa, Florida or New York, New York.

 

(b)           Once
during each calendar year during the term of this Agreement, and at any time
for a period of two (2) years after receipt of the respective report from
Purchaser, if there is a basis to believe an error has been made in the amount
of payments paid or payable to Seller pursuant to Sections 1.4(a)(i) or
(ii), Seller shall have the right through its accountants, during normal
business hours and upon reasonable notice to Purchaser, to inspect and audit on
a confidential basis the relevant books and records of Purchaser relating to
the amounts owed to Seller pursuant Sections 1.4(a)(i) or (ii) to
determine that the 10% interest paid or payable to Seller has been accurately
calculated and paid.  Purchaser shall
make such books and records available to the accountants retained by Seller or
Lime Energy Co. at Tampa, Florida or New York, New York, or such other location
as the parties agree, and shall cooperate in all reasonable ways with such
audit.  All costs of such audit shall be
borne by Seller or Lime Energy Co. unless Seller or Lime Energy Co. establishes
that it has been underpaid, on any payment period, by five percent (5%) or
more.  In the event of a disagreement or
dispute arising from Seller’s or Lime Energy Co.’s audit, the parties shall
seek to amicably resolve the dispute.  If
they are unable to do so, they shall submit the matter to binding arbitration
before one arbitrator selected from the retired judges panel of the American
Arbitration Association in accordance with Section 11.13, except
that only one arbitrator shall be appointed without regard to the amount in
question and except as otherwise provided in this Section 5.8.  Each party shall share in the arbitrator’s
fees and related costs, subject to the immediately following sentence.  The arbitrator shall award reasonable
attorneys’ fees and costs to the prevailing party in such arbitration.

 

ARTICLE 6            CONDITIONS TO OBLIGATIONS
OF PURCHASER

 

The obligations of
Purchaser hereunder to purchase the Assets and to assume and pay, perform and
discharge the Assumed Liabilities are subject to the fulfillment, at or before
the Closing, of each of the following conditions (all or any of which may be
waived in whole or in part by Purchaser in its sole discretion):

 

Section 6.1             Representations and
Warranties.  The representations and warranties made by
Seller in this Agreement, taken as a whole, shall be true and correct, in all
respects material to the validity and enforceability of this Agreement and the
Operative Agreements and to the Condition of the Business, on and as of the
Closing Date as though made on and as of the Closing Date or, in the case of
representations and warranties made as of a specified date earlier than the
Closing Date, on and as of such earlier date.

 

Section 6.2             Performance.  Seller shall have performed and complied
with, in all material respects, the agreements, covenants and obligations
required by this Agreement to be so performed or complied with by Seller at or
before the Closing.

 

Section 6.3             Officers’
Certificates.  Seller shall have delivered to Purchaser a
certificate, dated the Closing Date and executed in the name and on behalf of
Seller by the President or any 

 

 

Executive
or Senior Vice President of Seller, substantially in the form and to the effect
of Exhibit C hereto, and a certificate, dated the Closing Date and
executed by the Secretary or any Assistant Secretary of Seller, substantially
in the form and to the effect of Exhibit D hereto.

 

Section 6.4             Orders
and Laws.  There shall not be in effect on the Closing
Date any Order or Law restraining, enjoining or otherwise prohibiting or making
illegal the consummation of any of the transactions contemplated by this
Agreement or any of the Operative Agreements.

 

Section 6.5             Regulatory
Consents and Approvals.  All consents, approvals and actions of,
filings with and notices to any Governmental or Regulatory Authority necessary
to permit Seller to perform its obligations under this Agreement and the
Operative Agreements and to consummate the transactions contemplated hereby and
thereby shall have been duly obtained, made or given and shall be in full force
and effect, and all terminations or expirations of waiting periods imposed by
any Governmental or Regulatory Authority necessary for the consummation of the
transactions contemplated by this Agreement and the Operative Agreements.

 

Section 6.6             Third
Party Consents.  The consents (or in lieu thereof waivers)
listed in Section 6.6 of the Disclosure Schedule shall have been
obtained and shall be in full force and effect.

 

Section 6.7             Deliveries.  Seller shall have delivered to Purchaser the
General Assignment and the other Assignment Instruments.

 

ARTICLE 7            CONDITIONS
TO OBLIGATIONS OF SELLER

 

The obligations of Seller
hereunder to sell the Assets are subject to the fulfillment, at or before the
Closing, of each of the following conditions (all or any of which may be waived
in whole or in part by Seller in its sole discretion):

 

Section 7.1             Representations
and Warranties.  The representations and warranties made by
Purchaser in this Agreement, taken as a whole, shall be true and correct in all
material respects on and as of the Closing Date as though made on and as of the
Closing Date.

 

Section 7.2             Performance.  Purchaser shall have performed and complied
with, in all material respects, the agreements, covenants and obligations
required by this Agreement to be so performed or complied with by Purchaser at
or before the Closing.

 

Section 7.3             Officers’
Certificates.  Purchaser shall have delivered to Seller a
certificate, dated the Closing Date and executed in the name and on behalf of
Purchaser by the President or any Executive or Senior Vice President of
Purchaser, substantially in the form and to the effect of Exhibit E
hereto, and a certificate, dated the Closing Date and executed by the Secretary
or any Assistant Secretary of Purchaser, substantially in the form and to the
effect of Exhibit F hereto.

 

Section 7.4             Orders
and Laws.  There shall not be in effect on the Closing
Date any Order or Law restraining, enjoining or otherwise prohibiting or making
illegal the consummation of any of the transactions contemplated by this
Agreement or any of the Operative Agreements.

 

Section 7.5             Regulatory
Consents and Approvals.  All consents, approvals and actions of,
filings with and notices to any Governmental or Regulatory Authority necessary
to permit Purchaser to perform its obligations under this Agreement and the
Operative Agreements and to

 

 

consummate
the transactions contemplated hereby and thereby shall have been duly obtained,
made or given and shall be in full force and effect, and all terminations or
expirations of waiting periods imposed by any Governmental or Regulatory
Authority necessary for the consummation of the transactions contemplated by
this Agreement and the Operative Agreements shall have occurred.

 

Section 7.6                                      Third
Party Consents.  The consents (or in lieu thereof waivers)
listed in Section 7.6 of the Disclosure Schedule shall have been
obtained and shall be in full force and effect.

 

Section 7.7                                      Deliveries.  Purchaser shall have delivered to Seller the
Assumption Agreement and the other Assumption Instruments.

 

ARTICLE 8            SURVIVAL;
NO OTHER REPRESENTATIONS

 

Section 8.1                                      Survival
of Representations, Warranties.  The representations and warranties of Seller
and Purchaser contained in this Agreement will survive the Closing (a) indefinitely
with respect to the representations and warranties contained in Sections 2.2,  3.2 and 3.6 or (b) until
one (1) year following the Closing Date in the case of each other
representation and warranty except that any representation or warranty that
would otherwise terminate in accordance with this clause (b) will continue
to survive if a Claim Notice or Indemnity Notice (as applicable) shall have
been timely given in good faith based on facts reasonably expected to establish
a valid claim under Article 9 on or prior to such termination date,
until the related claim for indemnification has been satisfied or otherwise
resolved as provided in Article 9. 
This Section 8.1 shall not limit in any way the survival and
enforceability of any covenant or agreement of the parties hereto.

 

Section 8.2                                      No
Other Representations.  Notwithstanding anything to the contrary
contained in this Agreement, it is the explicit intent of each party hereto
that Seller is making no representation or warranty whatsoever, express or
implied, including but not limited to any implied representation or warranty as
to condition, merchantability or suitability as to any of the Assets or other
properties of the Business, except those representations and warranties
contained in Article 2.  It
is understood that, except to the extent otherwise expressly provided herein, Purchaser
takes the Assets “as is” and “where is”. 
In particular, Seller makes no representation or warranty to Purchaser
with respect to (i) the information set forth in the Confidential
Executive Summary, May 2009, relating to the Seller and its Business or (ii) any
financial projection or forecast relating to the Condition of the
Business.  With respect to any such
projection or forecast delivered by or on behalf of Seller to Purchaser,
Purchaser acknowledges that (i) there are uncertainties inherent in attempting
to make such projections and forecasts, (ii) it is familiar with such
uncertainties, (iii) it is taking full responsibility for making its own
evaluation of the adequacy and accuracy of all such projections and forecasts
furnished to it, and (iv) it shall have no claim against Seller with respect
thereto.

 

ARTICLE 9            INDEMNIFICATION

 

Section 9.1                                      Indemnification.

 

(a)           Subject
to paragraph (c) of this Section 9.1 and the other Sections of
this Article 9, Seller shall indemnify Purchaser and the Purchaser
Indemnified Parties in

 

 

respect
of, and hold each of them harmless from and against, any and all Losses
suffered, incurred or sustained by any of them or to which any of them becomes
subject, resulting from, arising out of or relating to (i) any breach of
representation or warranty or nonfulfillment of or failure to perform any
covenant or agreement on the part of Seller contained in this Agreement or (ii) a
Retained Liability. Seller shall have the right to control the defense of any
third party suit, action or proceeding at is own expense, including the
employment of counsel.

 

(b)                                 Subject
to the other Sections of this Article 9, Purchaser shall
indemnify Seller and the Seller Indemnified Parties in respect of, and hold
each of them harmless from and against, any and all Losses suffered, incurred
or sustained by any of them or to which any of them becomes subject, resulting
from, arising out of or relating to (i) any breach of representation or
warranty or nonfulfillment of or failure to perform any covenant or agreement
on the part of Purchaser contained in this Agreement or (ii) an Assumed
Liability.

 

(c)                                  Notwithstanding
anything to the contrary contained in this Agreement, no amounts of indemnity
shall be payable as a result of any claim in respect of a Loss arising under
paragraph (a) of Section 9.1:

 

(i)            (A) unless,
until and then only to the extent that Purchaser has suffered, incurred,
sustained or become subject to Losses referred to in such paragraph in excess
of $25,000.00 aggregate; (B) unless Purchaser has received payments in
respect of claims made under such paragraph of $75,000.00 (“Indemnity Cap”) or
less in the aggregate; and (C) unless the Indemnified Party has given the
Indemnifying Party a Claim Notice or Indemnity Notice, as applicable, with
respect to such claim, setting forth in reasonable detail the specific facts
and circumstances pertaining thereto, (x) as soon as practical following
the time at which the Indemnified Party discovered or reasonably should have
discovered such claim (except to the extent the Indemnifying Party is not
prejudiced by any delay in the delivery of such notice) and (y) in any
event prior to the applicable Cut-off Date; provided that the limitations
contained in clauses (i)(A) and (B) herein shall not apply to Losses
arising from breach of (x) the representations contained in Sections 2.2
and 2.10 of Seller or the agreements of Seller contained in Sections 11.4
and 11.6 and (y) Seller’s obligations hereunder with respect to
Retained Liabilities.

 

(ii)           to
the extent that the Indemnified Party had a reasonable opportunity, but failed,
in good faith to mitigate the Loss, including but not limited to the failure to
use commercially reasonable efforts to recover under a policy of insurance or
under a contractual right of set-off or indemnity other than this Agreement.

 

(d)                                 In
the event of any claim for indemnity under Section 9.1(a),
Purchaser agrees to give Seller and its Representatives reasonable access to
the Customer Records and employees in connection with the matters for which
indemnification is sought to the extent Seller reasonably deems necessary in
connection with its rights and obligations under this Article 9.

 

(e)                                  The
Indemnifying Party shall not, without the Indemnified Party’s prior written
consent, settle or compromise any third party claim or consent to the entry of
any judgment with respect to any third party claim which would have an adverse
effect on the Indemnified Party, except that the Indemnifying Party may,
without the Indemnified Party’s prior written consent, compromise or settle any
such third party claim or consent to entry of any

 

 

judgment
with respect to any third party claim which requires solely money damages paid
by the Indemnifying Party and which includes as an unconditional term thereof
the release by the claimant or the plaintiff of the Indemnified Party from all
liability in respect of such third party claim.

 

Section 9.2                                      Exclusivity.  After the Closing, to the extent permitted by
Law, the indemnities set forth in this Article 9 shall be the
exclusive remedies of Purchaser and Seller and their respective officers,
directors, employees, agents and Affiliates for any misrepresentation, breach
of warranty or nonfulfillment or failure by Seller to perform any covenant or
agreement contained in this Agreement, and Purchaser shall not be entitled to a
rescission of this Agreement or to any further indemnification rights or claims
of any nature whatsoever in respect thereof, all of which Purchaser hereby
waives.

 

ARTICLE 10          DEFINITIONS

 

Section 10.1                                Definitions.

 

(a)           Defined
Terms.  As used in this Agreement, the following
defined terms have the meanings indicated below:

 

“Accounts Receivable”
has the meaning ascribed to it in Section 1.1(a).

 

“Affiliate” means
any Person that directly, or indirectly through one of more intermediaries,
controls or is controlled by or is under common control with the Person
specified.  For purposes of this
definition, control of a Person means the power, direct or indirect, to direct
or cause the direction of the management and policies of such Person whether by
Contract or otherwise and, in any event and without limitation of the previous
sentence, any Person owning ten percent (10%) or more of the voting securities
of another Person shall be deemed to control that Person.

 

“Agreement” means
this Asset Purchase Agreement and the Exhibits, the Disclosure Schedule and the
Schedules hereto and the certificates delivered in accordance with Sections 6.3
and 7.3, as the same shall be amended from time to time.

 

“Assets” has the
meaning ascribed to it in Section 1.1.

 

“Assets and Properties”
of any Person means all assets and properties of every kind, nature, character
and description (whether real, personal or mixed, whether tangible or
intangible and wherever situated), including the goodwill related thereto,
operated, owned or leased by such Person.

 

“Assignment
Instruments” has the meaning ascribed to it in Section 1.5.

 

“Assumed Liabilities”
has the meaning ascribed to it in Section 1.3(a).

 

“Assumption Agreement”
has the meaning ascribed to it in Section 1.5.

 

“Assumption
Instruments” has the meaning ascribed to it in Section 1.5.

 

“Business” has the
meaning ascribed to it in the forepart of this Agreement.

 

 

“Business Contracts”
has the meaning ascribed to it in Section 1.1(d).

 

“Business Day”
means a day other than Saturday, Sunday or any day on which banks located in
the State of California and are authorized or obligated to close.

 

“Claim Notice”
means written notification pursuant to Section 9.1 of a Third Party
Claim as to which indemnity under Section 9.1 is sought by an
Indemnified Party, enclosing a copy of all papers served, if any, and
specifying the nature of and basis for such Third Party Claim and for the
Indemnified Party’s claim against the Indemnifying Party under Section 9.1,
together with the amount or, if not then reasonably determinable, the estimated
amount, determined in good faith, of the Loss arising from such Third Party
Claim.

 

“Closing” means
the closing of the transactions contemplated by Section 1.5.

 

“Closing Date”
means August 10, 2009, or such other date as Purchaser and Seller mutually
agree upon in writing.

 

“Code” means the
Internal Revenue Code of 1986, as amended, and the rules and regulations
promulgated thereunder.

 

“Competitive Product”
means any product that competes with the eMAC or uMAC devices or related
software so long as Purchaser offers such products for sale.

 

“Condition of the
Business” means the business, financial condition, results of operations
and Assets and Properties of the Business.

 

“Confidentiality
Agreement” means that certain Confidentiality Agreement dated May 22,
2009, between Seller and Purchaser.

 

“Contract” means
any agreement, lease, license, evidence of Indebtedness, mortgage, indenture,
security agreement or other contract.

 

“Customer Records”
has the meaning ascribed to it in Section 1.1(f).

 

“Cut-off Date”
means, with respect to any representation, warranty, covenant or agreement
contained in this Agreement, the date on which such representation, warranty,
covenant or agreement ceases to survive as provided in clause (b) of Section 8.1,
as applicable.

 

“Disclosure Schedule”
means the record delivered to Purchaser by Seller herewith and dated as of the
date hereof, containing all lists, descriptions, exceptions and other
information and materials as are required to be included therein by Seller
pursuant to this Agreement.

 

“Employee” means
each employee or consultant of Seller, other than an officer of Seller, engaged
full time in the conduct of the Business.

 

“Excluded Assets”
has the meaning ascribed to it in Section 1.2.

 

“Excluded Books and
Records” has the meaning ascribed to it in Section 1.2(f).

 

 

“General Assignment”
has the meaning ascribed to it in Section 1.5.

 

“Governmental or Regulatory
Authority” means any court, tribunal, arbitrator, authority, agency,
commission, official or other instrumentality of the United States, any foreign
country or any domestic or foreign state, county, city or other political
subdivision.

 

“Indebtedness” of
any Person means all obligations of such Person (i) for borrowed money, (ii) evidenced
by notes, bonds, debentures or similar instruments, (iii) for the deferred
purchase price of goods or services (other than trade payables or accruals
incurred in the ordinary course of business), (iv) under capital leases
and (v) in the nature of guarantees of the obligations described in
clauses (i) through (iv) above of any other Person.

 

“Indemnified Party”
means any Person claiming indemnification under any provision of Article 9.

 

“Indemnifying Party”
means any Person against whom a claim for indemnification is being asserted
under any provision of Article 9.

 

“Indemnity Notice”
means written notification pursuant to Section 9.1 of a claim for
indemnity under Article 9 by an Indemnified Party, specifying the
nature of and basis for such claim, together with the amount or, if not then
reasonably determinable, the estimated amount, determined in good faith, of the
Loss arising from such claim.

 

“Intellectual Property”
means as to the Seller, all patents and patent rights, the “eMAC” trademark and
related trademark rights, trade names and trade name rights, service marks and
service mark rights, service names and service name right, brand name,
inventions, copyrights and copyright rights, all processes, formulae, trade
dress, business and product names, logos, slogans, trade secrets, industrial
models, processes, designs, methodologies, computer programs (including all
source codes) and related documentation, hosted software applications ,
technical information, manufacturing, engineering and technical drawings, and
know-how (whether or not patented, copyrighted, trademarked, or patentable,
copyrightable, or able to be trademarked), and all pending applications for and
registrations of patents, trademarks, service marks and copyrights.

 

“Inventory” has
the meaning ascribed to it in Section 1.1(b).

 

“IRS” means the
United States Internal Revenue Service.

 

“Knowledge of Seller”
means the actual knowledge of the officers of Seller listed in Section 10.1
of the Disclosure Schedule.

 

“Law” means,
collectively, all laws, statutes, rules, regulations, ordinances and other
pronouncements having the effect of law of the United States or state, county,
city or other political subdivision or of any Governmental or Regulatory
Authority.

 

“Liabilities”
means all Indebtedness, obligations and other liabilities of a Person (whether
absolute, accrued, contingent, fixed or otherwise, or whether due or to become
due).

 

 

“Liens” means any
mortgage, pledge, assessment, security interest, lease, lien, adverse claim,
levy, charge or other encumbrance of any kind, or any conditional sale
Contract, title retention Contract or other Contract to give any of the
foregoing.

 

“Loss” means any
and all damages, fines, penalties, deficiencies, losses and expenses (including
without limitation interest, court costs, reasonable fees of attorneys,
accountants and other experts or other reasonable expenses of litigation or
other proceedings or of any claim, default or assessment).

 

“Operative Agreements”
means, collectively, the General Assignment and the other Assignment
Instruments, the Assumption Agreement and the other Assumption Instruments, and
any other written agreements between Seller and Purchaser to be entered into in
connection with this Agreement.

 

“Order” means,
collectively, any writ, judgment, decree, injunction or similar order of any
Governmental or Regulatory Authority (in each such case whether preliminary or
final).

 

“Person” means any
natural person, corporation, limited liability company, general partnership,
limited partnership, proprietorship, other business organization, trust, union,
association or Governmental or Regulatory Authority.

 

““Plan” means any
bonus, incentive compensation, deferred compensation, pension, profit sharing,
retirement, stock purchase, stock option, stock ownership, stock appreciation
rights, phantom stock, leave of absence, layoff, vacation, day or dependent
care, legal services, cafeteria, life, health, accident, disability, workmen’s
compensation or other insurance, severance, separation or other employee
benefit plan, practice, policy or arrangement of any kind, whether written or
oral, including, but not limited to, any “employee benefit plan” within the meaning
of Section 3(3) of ERISA.

 

“Purchase Terms”
has the meaning ascribed to it in Section 1.4(a).

 

“Purchaser” has
the meaning ascribed to it in the forepart of this Agreement.

 

“Purchaser Indemnified
Parties” means Purchaser and its officers, directors, employees, agents and
Affiliates.

 

“Qualified Plan”
means each Benefit Plan which is intended to qualify under Section 401 of
the Code.

 

“Representatives”
means the respective party’s officers, employees, counsel, accountants,
financial advisors, consultants and other representatives.

 

“Retained Liabilities”
has the meaning ascribed to it in Section 1.3(b).

 

“Security Agreements”
means any security arrangements and collateral securing the repayment or other
satisfaction of the Accounts Receivable.

 

“Seller” has the
meaning ascribed to it in the forepart of this Agreement.

 

 

“Seller Indemnified
Parties” means Seller and its officers, directors, employees, agents,
consultants and Affiliates.

 

“Tangible Personal
Property” has the meaning ascribed to it in Section 1.1(c).

 

“Third Party Claim”
has the meaning ascribed to it in Section 9.1.

 

(b)           Construction
of Certain Terms and Phrases.  Unless the context of this Agreement
otherwise requires, (i) words of any gender include each other gender; (ii) words
using the singular or plural number also include the plural or singular number,
respectively; (iii) the terms “hereof,” “herein,” “hereby” and derivative
or similar words refer to this entire Agreement; (iv) the terms “Article”
or “Section” refer to the specified Article or Section of this
Agreement; and (v) the phrase “ordinary course of business” refers to the
business of Seller in connection with the Business.  Whenever this Agreement refers to a number of
days, such number shall refer to calendar days unless Business Days are
specified.  All accounting terms used
herein and not expressly defined herein shall have the meanings given to them
under GAAP.  Any representation or
warranty contained herein as to the enforceability of a Contract shall be
subject to the effect of any bankruptcy, insolvency, reorganization, moratorium
or other similar law affecting the enforcement of creditors’ rights generally
and to general equitable principles (regardless of whether such enforceability
is considered in a proceeding in equity or at Law).

 

ARTICLE 11          MISCELLANEOUS

 

Section 11.1                                Notices.  All notices, requests and other
communications hereunder must be in writing and will be deemed to have been
duly given only if delivered personally or by facsimile transmission or sent by
reputable overnight carrier (with evidence of delivery) to the parties at the
following addresses or facsimile numbers:

 

If to Purchaser, to:

 

Elutions, Inc.

1300 East 8th Avenue, Suite 200

Tampa, Florida 33606

Facsimile No.: (813)
371-5501

Telephone No.: (813)
271-5500

Attn:  Patricia A. Kurlin, General Counsel

 

If to Seller, to:

 

Lime Energy Co.

1280 Landmeier Road

Elk Grove Village,
Illinois 60007

Facsimile No.: (847)
437-4969

Telephone No.: 847) 437-1666

Attn:  Jeffrey Mistarz, Executive Vice President and

   Chief Financial Officer

 

 

with a copy to:

 

Rutter Hobbs &
Davidoff Incorporated

1901 Avenue of the Stars,
Suite 1700

Los Angeles, California
90067

Facsimile No.: (310)
286-1728

Telephone No.: (310)
286-1700

Attn:  Joel Weinstein, Esq.

 

All such notices,
requests and other communications will (i) if delivered personally to the
address as provided in this Section, be deemed given upon delivery, (ii) if
delivered by facsimile transmission to the facsimile number as provided in this
Section, be deemed given upon receipt, and (iii) if delivered by overnight
courier in the manner described above to the address as provided in this
Section, be deemed given upon receipt (in each case regardless of whether such
notice, request or other communication is received by any other Person to whom
a copy of such notice, request or other communication is to be delivered
pursuant to this Section).  Any party
from time to time may change its address, facsimile number or other information
for the purpose of notices to that party by giving notice specifying such
change to the other party hereto.

 

Section 11.2           Bulk
Sales Act.  The parties hereby waive compliance with the
bulk sales act or comparable statutory provisions of each applicable
jurisdiction.

 

Section 11.3           Entire
Agreement.  This Agreement and the Operative Agreements
supersede all prior discussions and agreements between the parties with respect
to the subject matter hereof and thereof, including without limitation that
certain letter agreement between the parties dated May 22, 2009, and
contains the sole and entire agreement between the parties hereto with respect
to the subject matter hereof and thereof.

 

Section 11.4           Expenses.  Whether or not the transactions contemplated
hereby are consummated, each party will pay its own costs and expenses incurred
in connection with the negotiation, execution and closing of this Agreement and
the Operative Agreements and the transactions contemplated hereby and thereby.

 

Section 11.5           Public
Announcements.  At all times at or before the Closing, Seller
and Purchaser will not issue or make any reports, statements or releases to the
public or generally to the employees, customers, suppliers or other Persons to
whom Seller sells products or provides services in connection with the Business
or with whom Seller otherwise has significant business relationships in
connection with the Business with respect to this Agreement or the transactions
contemplated hereby without the consent of the other, in such party’s
discretion.  If either party is unable to
obtain the approval of its public report, statement or release from the other
party and such report, statement or release is, in the opinion of legal counsel
to such party, required by Law in order to discharge such party’s disclosure obligations,
then such party may make or issue the legally required report, statement or
release and promptly furnish the other party with a copy thereof.  Seller and Purchaser also will obtain the
other party’s prior approval of the press release, substantially in the form of
Exhibit H which will be issued immediately following the Closing
announcing the consummation of the transactions contemplated by this Agreement.

 

Section 11.6           [Intentionally
omitted].

 

 

Section 11.7           Waiver.  Any term or condition of this Agreement may
be waived at any time by the party that is entitled to the benefit thereof, but
no such waiver shall be effective unless set forth in a written instrument duly
executed by or on behalf of the party waiving such term or condition.  No waiver by any party of any term or
condition of this Agreement, in any one or more instances, shall be deemed to
be or construed as a waiver of the same or any other term or condition of this
Agreement on any future occasion.  All
remedies, either under this Agreement or by Law or otherwise afforded, will be
cumulative and not alternative.

 

Section 11.8           Amendment.  This Agreement may be amended, supplemented
or modified only by a written instrument duly executed by or on behalf of each
party hereto.

 

Section 11.9           No
Third Party Beneficiary.  The terms and provisions of this Agreement
are intended solely for the benefit of each party hereto and their respective
successors or permitted assigns, and it is not the intention of the parties to
confer third-party beneficiary rights upon any other Person, other than any
Person entitled to indemnity under Article 9, and other than to
Lime Energy Co., which is an intended third-party beneficiary, any may enforce
all rights and benefits of Seller hereunder.

 

Section 11.10         No
Assignment; Binding Effect.  Except as otherwise provided herein, neither
this Agreement nor any right, interest or obligation hereunder may be assigned
by any party hereto without the prior written consent of the other party hereto
and any attempt to do so will be void, except (a) for assignments and
transfers by operation of Law and (b) that Purchaser may assign any or all
of its rights, interests and obligations hereunder to a wholly-owned
subsidiary, provided that any such subsidiary agrees in writing to be bound by
all of the terms, conditions and provisions contained herein, but no such
assignment referred to in clause (b) shall relieve Purchaser of its
obligations hereunder.  Subject to the
preceding sentence, this Agreement is binding upon, inures to the benefit of
and is enforceable by the parties hereto and their respective successors and
assigns.

 

Section 11.11         Headings.  The headings used in this Agreement have been
inserted for convenience of reference only and do not define or limit the
provisions hereof.

 

Section 11.12         Invalid
Provisions.  If any provision of this Agreement is held to
be illegal, invalid or unenforceable under any present or future Law, and if
the rights or obligations of any party hereto under this Agreement will not be
materially and adversely affected thereby, (a) such provision will be
fully severable, (b) this Agreement will be construed and enforced as if
such illegal, invalid or unenforceable provision had never comprised a part
hereof and (c) the remaining provisions of this Agreement will remain in
full force and effect and will not be affected by the illegal, invalid or
unenforceable provision or by its severance herefrom.

 

Section 11.13         Governing
Law and Arbitration.  This Agreement shall be governed by and
construed in accordance with the Laws of the State of New York, without giving
effect to its conflicts of law principles. 
All disputes and controversies of every kind and nature between the
Parties hereto arising out of or in connection with this Agreement as to its
construction, validity, interpretation or meaning, performance,
non-performance, enforcement, operation or breach, shall be submitted to
binding arbitration in accordance with the then current rules of the
American Arbitration Association (“AAA”) before a single arbitrator if such
disputes involve $100,000 or less and before three arbitrators if such disputes
involve more than $100,000 in accordance with the Commercial Arbitration Rules of
the AAA. To the extent not otherwise

 

 

required
by the AAA or applicable law, the arbitrators shall be determined on the
following basis: each party shall select one arbitrator, those two arbitrators
shall then select the third arbitrator. If only a single arbitrator is
required, then the third arbitrator shall be the arbitrator; and if three
arbitrators are required, then all three arbitrators shall be the arbitrators
and the third arbitrator shall be Chairman or presiding arbitrator of the
arbitration panel.  Judgment upon the award
of the arbitrator(s) may be entered in any court having jurisdiction
thereof.  Arbitration shall be in lieu of
all other remedies and procedures available to the parties, provided that the
parties may seek preliminary injunctive or other interlocutory relief prior to
the commencement of or during such proceedings. 
The arbitrator(s) shall award reasonable costs and attorney fees to
the party, if any, that is deemed to be the prevailing party in the
arbitration.  Arbitration shall be
conducted in the City of New York, New York. 
The parties irrevocably waive any objection to lack of jurisdiction,
improper venue or inconvenient forum in New York, New York.

 

Section 11.14         Counterparts.  This Agreement may be executed in any number
of counterparts and by facsimile or portable digital format (.pdf), each of
which will be deemed an original, but all of which together will constitute one
and the same instrument.

 

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[SIGNATURES ON NEXT PAGE]

 

 

IN WITNESS WHEREOF, this Asset Purchase Agreement has
been duly executed and delivered by the duly authorized officer of each party
as of the date first above written.

 

 

	
   

  	
  “PURCHASER”

  ELUTIONS, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Bronwyne J. Bruer

  
	
   

  	
   

  	
  Name:

  	
  Bronwyne J. Bruer

  
	
   

  	
   

  	
  Title:

  	
  Chief Financial Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  “SELLER”

  MAXIMUM PERFORMANCE
  GROUP, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Jeffrey R. Mistarz

  
	
   

  	
   

  	
  Name:

  	
  Jeffrey R. Mistarz

  
	
   

  	
   

  	
  Title:

  	
  Chief Financial Officer
  and Secretary

  

 

 

EXHIBIT G

 

SALES
TRANSITION PLAN

 

In accordance with Section 1.7
of the Agreement, Seller will assist Purchaser in the transition of accounts
and customers as follows:

 

1.             Account Transfer Meeting.  Within five (5) days of closing, Seller
and Purchaser will schedule a meeting to take place at Seller’s offices to
address the matters set forth below. 
Additional meetings will be scheduled if necessary in order to complete
the transition.

 

a.             Review Accounts

 

·                  Current,
Prospect, Old

·                  Review
Contracts/Terms

·                  Review
Outstanding Deliverables/Issues/Timelines

·                  Provide
Account Contacts, Emails, Phone Numbers, Addresses

·                  Account
Warranty Issues (past/present, warranty log, resolution history)

·                  Account
installation details, number of units, architecture

 

b.             Discuss Solution Value Proposition

 

·                  Typical
benefits

·                  Measurable
Metrics

·                  ROI/Payback
History

 

c.             Review Product Feature/Functionality Set

 

·                  Presentation
Materials

·                  Training
Material/Manuals

·                  Custom
Product Enhancement “Wish List”

·                  White
Papers, Marketing Collateral

 

2.             Customer/Site Visits.  Following the Account Transfer Meeting(s),
the Parties will schedule site and customer visits.

 

a.             Account Visits – Seller and Purchaser will visit all
accounts, and Seller will schedule the visits.

 

b.             Review installation/architecture at the sites

 

c.             Introduction to Customer – Seller will introduce
Purchaser Sales VP to the Customers for the purpose of determining:

 

·                  Customer
Likes/Dislikes

·                  Realized
Business Benefits

·                  Energy
Vision – future opportunities/needs

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