FORM OF PREFERRED STOCK PURCHASE
AGREEMENT
This
Preferred Stock Purchase Agreement (this “ Agreement
”) is dated as of the 14th day of November, 2008, and is made
by and between Lime
Energy Co ., a Delaware corporation (the “
Company ”), and Richard P. Kiphart (the
“ Investor ”).
A.
The Company wishes to sell to Investor shares of the
Company’s Series A-1 Convertible Preferred Stock, par
value $0.01 per share (“ Preferred Stock ”) as
designated by the Certificate of Designation attached hereto as
Exhibit A (the “ Certificate of
Designation ”).
B.
The Company has previously issued to Investor that certain Second
Amended and Restated Revolving Line of Credit Note No. AR-3
dated August 14, 2008 in the maximum principal amount of
$14,500,000 (the “ Revolving Note ”).
Contemporaneously with this Agreement, the Company has paid to
Investor all interest accrued through the date hereof on the
Revolving Note, leaving a remaining balance of $14,707,104.06. As
payment for the Preferred Stock, Investor desires to convert the
remaining balance of the Revolving Note.
C.
The parties desire to set forth certain additional understandings
among themselves relating to the foregoing and to certain other
matters, all as more fully described herein.
NOW,
THEREFORE, in consideration of the premises and mutual agreements
contained herein, the parties hereby agrees as follows:
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1.
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Purchase and Sale of Preferred
Stock .
Investor hereby purchases, and Company hereby sells to Investor,
Three Hundred Fifty-Eight Thousand and Seven Hundred Ten
(358,710) shares of Preferred Stock (the “ Purchased
Shares ”). Investor hereby converts all indebtedness
under the Revolving Note (including principal, interest and any
fees, charges or other amounts payable by the Company pursuant to
the terms of the Revolving Note, including without limitation any
“Unused Funds Fee” or “Termination Fee” as
those terms are defined in the Revolving Note) into the Purchased
Shares as full payment of the purchase price therefor. Upon
issuance of such shares to Investor, the Revolving Note shall be
considered paid in full. Investor will deliver to Company the
original Revolving Note for cancellation, and liens held by
Investor on any assets of the Company by virtue of the Revolving
Note shall be terminated. For clarification, liens on Company
assets held by Advanced Biotherapy, Inc., an affiliate of Investor,
shall not be terminated by reason of this Agreement.
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2.
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Condition to
Convertibility . Investor acknowledges and agrees
that, notwithstanding the provisions of the Certificate of
Designations, the Company is required, pursuant to the rules of The
NASDAQ Stock Market, Inc., including without limitation Marketplace
Rule 4350(i)(1)(D), to seek the approval of its stockholders
in order for the Purchased Shares to be convertible (“
Required Approval ”). The Company agrees to use its
reasonable best efforts to obtain the consent of a majority of its
stockholders and to file
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an
Information Statement on Schedule 14C under the Securities
Exchange Act of 1934, as amended, on or before February 1,
2009 for the purpose of obtaining the Required Approval, and
Investor agrees to vote or cause to be voted all shares of Company
stock over which he has voting power in favor of such action.
Notwithstanding any provisions of the Certificate of Designations
regarding convertibility of the Preferred Stock, Investor agrees,
for himself and his successors, assigns and transferees, that the
Purchased Shares shall not be convertible until the Required
Approval is obtained, and the Company shall not instruct its
transfer agent to issue any Conversion Shares until the Required
Approval is obtained. As used in this Agreement, the term “
Conversion Shares ” means shares of Company Common
Stock issued upon conversion of the Purchased Shares.
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3.
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Investor Representations and
Warranties .
Investor hereby represents to the Company that he is the sole legal
and beneficial owner of the Revolving Note, free and clear of any
and all liens and other adverse interests or claims.
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4.
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Company Representations and
Warranties .
Company hereby represents and warrants to Investor:
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a.
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The
Certificate of Designation was filed with the Delaware Secretary of
State on November 14, 2008 and is in full force and
effect.
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b.
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That (i) the Purchased Shares
are duly authorized, validly issued, and upon conversion of the
Revolving Note, fully paid and nonassessable, (ii) the
Conversion Shares, upon issuance to Investor in accordance with
this Agreement and the terms of the Certificate of Designation,
will be duly authorized, validly issued, fully paid and
non-assessable, and (iii) the Company has reserved 358,710
shares of authorized but unissued Common Stock for issuance upon
conversion of the Purchased Shares.
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c.
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There are no authorized, issued or
outstanding shares of preferred stock of the Company other than the
Preferred Stock and the Purchased Shares.
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d.
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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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e.
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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
Purchased Shares has been taken. This Agreement and the Certificate
of Designation 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 Purchased
Shares will not
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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.
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f.
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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, and 1,000,000 shares of
Preferred Stock, of which the Purchased Shares are the only shares
issued and outstanding as of the date hereof.
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g.
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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
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