LIME ENERGY CO. FORM OF SUBSCRIPTION AGREEMENT (Tranche A)
Exhibit 10.1
FORM OF SUBSCRIPTION AGREEMENT
(Tranche A)
(Tranche A)
This Subscription Agreement (this “Agreement”) is made and entered into by and between
Lime Energy Co., a Delaware corporation (the “Company”), and the undersigned purchaser (the
“Purchaser”) of the Units (defined below) effective as of November 13, 2008, the date on
which Purchaser’s subscription for the Units shall be deemed accepted by the Company if the Company
accepts the subscription pursuant to Section 1(a).
WHEREAS, Purchaser desires to subscribe for and purchase the Units for the Purchase Price (as
defined below); and
WHEREAS, the Company desires to issue and sell to Purchaser the Units for the Purchase Price.
NOW, THEREFORE, in consideration of the premises and the mutual obligations and covenants set
forth herein, the parties hereto agree as follows:
1. Purchase of Units.
(a) Purchaser hereby subscribes for (i) shares of Common Stock, par value $0.0001 per
share (the “Common Stock”), of the Company and, (ii) a warrant to purchase shares
of Common Stock (the “Warrant”, attached hereto as Exhibit A, the shares of Common
Stock and the Warrants together, the “Units”) for an aggregate purchase price of
(the “Purchase Price”).
The closing of the purchase and sale of the Units shall take place at the offices of ▇▇▇▇
▇▇▇▇▇ LLP, ▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ or at such other time and place as the
Company shall designate in writing to Purchaser. At the closing, the Purchase Price shall be
received by the Company from Purchaser by cashier’s check or wire transfer of immediately available
funds and the Company shall deliver the Units to Purchaser.
(b) This subscription shall be deemed accepted by the Company once this Agreement has been
executed by the Company and Purchaser and the Company has received the Purchase Price in full from
the Purchaser.
(c) Purchaser hereunder understands, acknowledges and agrees that:
(i) This subscription is and shall be irrevocable, except that Purchaser shall have no
obligation hereunder in the event that this subscription is for any reason rejected.
(ii) The Company is required, pursuant to the rules of The NASDAQ Stock Market, Inc., to seek
the approval of its stockholders to (A) issue Units and shares of stock issuable upon exercise of
the Warrants in amounts equal to twenty percent (20%) or more of the
common stock or 20% or more of the voting power outstanding before the issuance of the Units,
(B) to allow one or more affiliates of the Company to also purchase Units on the same terms and
conditions as those offered to Purchaser, and (C) to allow affiliated lenders of the Company to
purchase convertible preferred securities in exchange for cancellation of outstanding Company
indebtedness to such lenders (collectively, the “Required Approvals”). Purchaser agrees to
vote all shares of Common Stock purchased by it hereunder or hereafter acquired by Purchaser, and
any other shares of capital stock of the Company held by Purchaser to effect the Required
Approvals.
(iii) In reliance upon applicable exemptions, the Units have not been registered under the
Securities Act of 1933, as amended (the “Act”), and the rules and regulations thereunder or
any U.S. state securities laws and the rules and regulations thereunder.
(iv) No federal or state agency has made any finding or determination as to the fairness of
this subscription or investment or any recommendation or endorsement of the Units.
(v) Because the Units have not been registered under the Act or applicable U.S. state
securities laws, the economic risk of the investment must be borne indefinitely by Purchaser and
the Units may not be sold, pledged or hypothecated or otherwise transferred unless subsequently
registered under the Act and applicable U.S. state securities laws or an exemption from such
registration is available and only with the prior written consent of the Company. Registration
under the Act and applicable U.S. state securities laws is unlikely at any time in the future.
(vi) No assignment, sale, pledge, hypothecation, transfer, exchange or other disposition, or
offer thereof whether direct or indirect, of the Units may be made if, in the opinion of counsel to
the Company, such disposition or offer would require registration under the Act or would result in
the violation of applicable federal, state or foreign securities laws.
2. Representations, Warranties and Agreements of Purchaser. Purchaser hereby
represents, warrants, acknowledges and agrees that:
(a) Organization and Standing of Purchaser. If Purchaser is not an individual,
Purchaser is duly incorporated, organized or formed (as applicable), validly existing, and (if
applicable) in good standing under the law of the jurisdiction of its incorporation, organization
or formation; if required by applicable law, Purchaser is duly qualified and in good standing in
the jurisdiction of its principal place of business, if different from its jurisdiction of
incorporation, organization or formation; and Purchaser has full power and authority to execute and
deliver this Agreement and to perform its obligations thereunder, and all necessary actions by the
board of directors, stockholders, managers, members, partners, trustees, beneficiaries, or other
applicable persons necessary for the due authorization, execution, delivery and performance of this
Agreement by Purchaser have been duly taken.
(b) Authorization and Power. Purchaser has duly executed and delivered this
Agreement, and this Agreement constitutes the legal, valid and binding obligation of Purchaser
enforceable against it in accordance with its terms (except as may be limited by bankruptcy,
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insolvency or similar laws of general application and by the effect of general principles of
equity, regardless of whether considered at law or in equity).
(c) No Conflicts. Purchaser’s authorization, execution, delivery, and performance of
this Agreement does not and will not (i) conflict with, or result in a breach, default or violation
of, (A) the organizational documents of such Purchaser, if Purchaser is not an individual, (B) any
contract or agreement to which Purchaser is a party or is otherwise subject, or (C) any law, rule,
regulation, order, judgment, decree, writ, injunction or arbitral award to which Purchaser is
subject; or (ii) require any consent, approval or authorization from, filing or registration with,
or notice to, any governmental body or other person, unless such requirement has already been
satisfied.
(d) Communication by Purchaser. Purchaser has had a reasonable opportunity to ask
questions of and receive answers from the Company concerning the Units and the Company, and the
transactions which are the subject of the Required Approvals, and all such questions have been
answered to the full satisfaction of Purchaser. Furthermore, Purchaser represents that in
connection with its review of this Agreement and the transactions contemplated hereby, it either
(i) it has not been represented by counsel and assumes all risks thereto, or (ii) has been
represented by counsel other than counsel for the Company.
(e) Compliance with Securities Act. Purchaser understands that the Units have not
been registered under the Act in reliance on an exemption therefrom, and that the Company is under
no obligation to register the Units. Purchaser will not transfer the Units in violation of the Act
or any other applicable securities laws. Purchaser is purchasing the Units for its own account and
not for the account of any other person and not with a view to distribution or resale to others.
(f) Information on Purchaser. The Purchaser is, and will be at the time of the
issuance of the shares of Common Stock an “accredited investor”, as such term is defined in
Regulation D promulgated by the Commission under the Act, is experienced in investments and
business matters, has made investments of a speculative nature and has purchased securities in
private placements in the past and, with its representatives, has such knowledge and experience in
financial, tax and other business matters as to enable the Purchaser to utilize the information
made available by the Company to evaluate the merits and risks of and to make an informed
investment decision with respect to the proposed purchase, which represents a speculative
investment. If Purchaser is an individual, the Purchaser has the authority and is duly and legally
qualified to purchase and own the Units. The Purchaser is able to bear the risk of such investment
for an indefinite period and to afford a complete loss thereof.
(g) Communication of Offer. The offer to sell the Units was directly communicated to
the Purchaser by the Company. At no time was the Purchaser presented with or solicited by any
leaflet, newspaper or magazine article, radio or television advertisement, or any other form of
general advertising or solicited or invited to attend a promotional meeting otherwise than in
connection and concurrently with such communicated offer.
(h) Indemnification. Each Purchaser agrees to indemnify, hold harmless, reimburse and
defend the Company and each of the Company’s officers, directors, agents,
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affiliates, control persons against any claim, cost, expense, liability, obligation, loss or
damage (including reasonable legal fees) of any nature, incurred by or imposed upon the Company or
any such person which results, arises out of or is based upon (i) any material misrepresentation by
such Purchaser in this Agreement; or (ii) after any applicable notice and/or cure periods, any
breach or default in performance by such Purchaser of any covenant or undertaking to be performed
by such Purchaser hereunder, or any other agreement entered into by the Company and Purchasers,
relating hereto.
(i) Location of Purchaser. The address set forth below is Purchaser’s true and
correct residence or principal place of business and Purchaser has no present intention of becoming
a resident of any other state or jurisdiction or moving its principal place of business.
(j) Legends. It has been disclosed to Purchaser that the following restrictions and
limitations are applicable to Purchaser’s purchase and resales, pledges, hypothecations or other
transfers of the Units, and, therefore, that Purchaser must bear the economic risk of investment in
the Units for an indefinite period of time as described in Section 2(f):
(i) As described in Section 1(c)(v) above, the Units have not been registered and,
therefore, they may not be sold, pledged, hypothecated or otherwise transferred unless they are
registered under the Act and applicable state securities laws or an exemption from such
registration is available.
(ii) A legend will be placed on the certificate or certificates evidencing the shares of
Common Stock in substantially the following form:
THE SHARES OF COMMON STOCK OF LIME ENERGY CO. (THE “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.
(iii) A legend will be placed on the certificate or certificates evidencing the Warrants in
substantially the following form:
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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.
(iv) Stop transfer instructions may be placed with respect to the Units so as to restrict the
resale, pledge, hypothecation or other transfer thereof consistent with Section 1(c)(vi)
above.
(v) Stop transfer instructions consistent with Section 1(c)(vi) above may be placed
with respect to any new certificate representing the Units upon presentment by Purchaser of a
certificate for transfer.
(k) Correctness of Representations. The foregoing representations and warranties are
true and accurate as of the date hereof and will be true and accurate as of the date of Purchaser’s
subscription for the Units is accepted by the Company. If in any respect such representations and
warranties will not be true and accurate as of the date of Purchaser’s subscription for the Units
is accepted by the Company, Purchaser will give written notice of such fact to the Company
specifying which representations and warranties are not true and accurate and the reasons therefor.
3. Representations, Warranties and Agreements of the Company. In order to induce
Purchaser to enter into this Agreement and to invest in the Units, the Company hereby represents,
warrants and agrees that:
(a) Organization and Standing. The Company is a corporation duly incorporated and in
good standing under the laws of the State of Delaware. The Company has all requisite power and
authority to enter into and consummate the transactions described in this Agreement.
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(b) Authorization. All corporate action on the part of the Company necessary for the
authorization, execution and delivery by the Company of this Agreement, the consummation of the
transactions contemplated hereby and otherwise for the authorization, issuance and delivery of the
Units has been taken. This Agreement and the Warrants issued hereunder are the valid and binding
obligations of the Company, enforceable in accordance with their respective terms, except as such
enforceability may be limited by general principles of equity and subject to bankruptcy or other
laws relating to or affecting the rights of creditors generally. The execution, delivery and
performance by the Company of this Agreement and compliance therewith and the issuance and sale of
the Units will not result in any violation of and will not conflict with, or result in a breach of
any of the terms of, or constitute a default under, any provision of U.S. federal, state or foreign
law to which the Company is subject, or any mortgage, indenture, agreement, instrument, judgment,
decree, order, rule or regulation, or other restriction to which the Company is a party or by which
it or any of its assets are bound, or result in the creation of any mortgage, pledge, lien,
encumbrance or charge upon any of its assets.
(c) Capitalization. The authorized capital stock of the Company consists of
200,000,000 shares of Common Stock, of which 8,700,209 shares are issued and outstanding as of the
date hereof. All of the shares of Common Stock, including the Common Stock issued upon the
exercise of Warrants, when issued will be duly authorized and validly issued, fully paid and
nonassessable and issued in compliance with all applicable federal and U.S. state securities laws
and shall be free and clear of all liens and encumbrances. A number of shares of Common Stock
equal to the number of shares available for purchase as set forth in Section 1(a)(ii) have
been reserved for issuance pursuant to the Warrants.
(d) SEC Documents. Copies of the Company’s Annual Report on Form 10-K for the fiscal
year ended December 31, 2007, the Quarterly Report on Form 10-Q for the quarter ended June 30,
2008, and any Reports on Form 8-K filed by the Company after June 30, 2008 (collectively, the “SEC
Documents”) may be accessed on the SEC’s website and through the Company’s website. As of their
respective filing dates, each of the SEC Documents complied in all material respects with the
requirements of the Securities Exchange Act of 1934, as amended, and the rules and regulations of
the SEC promulgated thereunder.
(e) Absence of Certain Changes. Since June 30, 2008, there has not been any change
which by itself or in conjunction with all other such changes, has had or could reasonably be
expected to have a material adverse effect, except as disclosed in the SEC Documents or which has
otherwise been disclosed to Purchaser.
(f) Full Disclosure. No information furnished by the Company to the Purchaser in
connection with this Agreement (including, without limitation, the information contained in the SEC
Documents) contains any untrue statement of a material fact, taken as a whole.
(g) Litigation. There is no litigation, claim, proceeding, or governmental
investigation pending or threatened against the Company that seeks to delay or prevent the
consummation of, or which would be reasonably likely to adversely affect the Company’s ability to
consummate, the offering or sale of the Units.
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4. Governing Law. This Agreement shall be governed by and construed in accordance
with the laws of the State of Illinois without regard to conflicts of laws principles that would
result in the application of the substantive laws of another jurisdiction. Any action brought by
either party against the other concerning the transactions contemplated by this Agreement shall be
brought only in the civil or state courts of Illinois or in the federal courts located in ▇▇▇▇
County. The parties and the individuals executing this Agreement and other agreements delivered in
connection herewith on behalf of the Company agree to submit to the jurisdiction of such courts and
waive trial by jury. The prevailing party shall be entitled to recover from the other party its
reasonable attorney’s fees and costs.
5. Successors and Assigns. Except as otherwise expressly provided herein, the
provisions hereof will inure to the benefit of, and be binding upon, the successors, assigns,
heirs, executors and administrators of the parties hereto, except that Purchaser may not assign any
of its rights or obligations hereunder.
6. Entire Agreement; Amendment. This Agreement and the Warrant constitute the full
and entire understanding and agreement between the parties with regard to the subject matter
hereof. Neither this Agreement nor any term hereof may be amended, waived, discharged or
terminated except by a written instrument signed by the Company and Purchaser.
7. Notices, etc. All notices and other communications required or permitted hereunder
shall be in writing and shall be by registered mail, return receipt requested, telecopy, email,
courier service or personal delivery to the Company at its principal office at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇,
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇, to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, Esq., ▇▇▇▇ ▇▇▇▇▇ LLP, ▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, and to Purchaser at its address set forth on the signature page hereto.
All such notices and communications (and deliveries) shall be deemed to have been duly given: when
delivered by hand, if personally delivered; when delivered by courier, if delivered by commercial
overnight courier service; and when receipt is acknowledged, if telecopied or emailed.
8. Severability. If any provision of this Agreement is held to be illegal, invalid or
unenforceable under present or future laws effective during the term of this Agreement, such
provision shall be fully severable, this Agreement shall be construed and enforced as if such
illegal, invalid or unenforceable provisions had never comprised a part of this Agreement and the
remaining provisions of this Agreement shall remain in full force and effect and shall not be
affected by the illegal, invalid or unenforceable provisions or by their severance from this
Agreement. Furthermore, in lieu of each such illegal, invalid or unenforceable provision, there
shall be added automatically as a part of this Agreement a provision as similar in terms to such
illegal, invalid or unenforceable provision as may be possible and be legal, valid and enforceable.
9. Counterparts. This Agreement may be executed in any number of counterparts, each
of which will be an original, but all of which together will constitute one instrument.
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IN WITNESS WHEREOF, Company and Purchaser have accepted this subscription and agreed to this
Agreement to be effective as of the date first set forth above.
| [PURCHER] | ||||||||
| By: | ||||||||
| Name: | ||||||||
| Address: | ||||||||
| Lime Energy Co. | ||||||||
| By: | ||||||||
| Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇ | ||||||||
| Title: Chief Executive Officer | ||||||||
EXHIBIT A
FORM OF WARRANT