REGISTRATION RIGHTS AGREEMENT
EXHIBIT 10.5
This
Registration Rights Agreement (this “Agreement”),
dated as of June 11, 2008, is by and
among Lime Energy Co., a Delaware corporation (the “Company”), and Xxxx XxXxxx, Xxxxxxx
Xxxxx, Xxxx Xxxxxxxx, Xxxx X’Xxxxxx and Xxxxx Xxxxx (each an “Investor,” collectively the
“Investors”).
RECITALS
WHEREAS, the Company and the Investors are parties to that certain Stock Purchase Agreement of
even date herewith (the “Purchase Agreement”); and
WHEREAS, the closings of the transactions contemplated by the Purchase Agreement are
conditioned, among other things, on the execution and delivery of this Agreement;
NOW, THEREFORE, in consideration of the foregoing and of the mutual covenants and agreements
set forth herein, and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, and intending to be legally bound hereby, the parties hereto agree as
follows:
1. Definitions.
As used in this Agreement, the following capitalized terms shall have the following meanings:
“Advice” shall have the meaning set forth in Section 4.2 hereof.
“Affiliate” shall have the meaning set forth in Rule 405 promulgated under the
Securities Act.
“Agreement” shall have the meaning set forth in the first paragraph of this
Agreement.
“Business Day” means any day other than a Saturday, Sunday or other day on which
banks in Chicago, Illinois are authorized or required by law to be closed.
“Common Stock” means the common stock of the Company.
“Company” shall have the meaning set forth in the first paragraph of this Agreement.
“Exchange Act” means the Securities Exchange Act of 1934, as amended, or any
successor federal law then in force.
“FINRA” means the Financial Industry Regulatory Authority.
“Holder” means a holder of Registrable Securities.
“Initial Public Offering” shall mean the sale of securities pursuant to the first
Registration Statement of the Company or any Related Issuer filed under the
Securities Act to register any class of securities which is declared effective by
the SEC or otherwise becomes effective by operation of law.
“Investor” shall have the meaning set forth in the first paragraph of this
Agreement.
“Notices” shall have the meaning set forth in Section 9.10 hereof.
“Other Holders” shall have the meaning set forth in Section 3.4 hereof.
“Person” means an individual, a partnership, an association, a joint venture, a
corporation, a trust, an unincorporated organization and a government or any
department, agency or principal subdivision thereof.
“Piggyback Notice” shall have the meaning set forth in Section 3.1 hereof.
“Piggyback Registration” shall have the meaning set forth in Section 3.1 hereof.
“Piggyback Registration Statement” shall have the meaning set forth in Section 3.1
hereof.
“Prospectus” is the prospectus included in any Registration Statement, as amended or
supplemented by any prospectus supplement, with respect to the terms of the offering
of any portion of the Registrable Securities covered by such Registration Statement
and by all other amendments and supplements to the prospectus, including
post-effective amendments and material incorporated by reference in such prospectus.
“Registrable Securities” means those shares of Common Stock acquired by the
Investors pursuant to the Purchase Agreement. As to any particular Registrable
Securities, such securities shall cease to be Registrable Securities when (a) a
Registration Statement with respect to the sale or transfer of such securities has
been declared effective under the Securities Act, (b) such securities shall become
saleable pursuant to Rule 144 (or any successor provision) under the Securities Act
(and the holder thereof is able to sell, transfer or otherwise convey all of such
Registrable Securities within any three-month period without violating any volume
restriction thereunder), (c) they shall have ceased to be outstanding or (d) the
shares are sold or transferred.
“Registration Expenses” shall have the meaning set forth in Section 6.1 hereof.
“Registration Statement” means any registration statement of the Company filed under
the Securities Act which covers any of its securities, including any prospectus
constituting a part thereof, amendments and supplements to such Registration
Statement, including post-effective amendments, all exhibits and all materials
incorporated by reference in such Registration Statement.
“Related Issuer” means (i) the Company’s successors, (ii) the parent of either the
Company or its successors, or (iii) the subsidiaries of either the Company or its
successors.
“SEC” means the Securities and Exchange Commission.
“Securities Act” means the Securities Act of 1933, as amended, or any successor
federal law then in force.
“Shelf Registration Statement” means a “shelf” registration statement of the Company
that covers all the Registrable Securities on an appropriate form under Rule 415
under the Securities Act, or any similar rule that may be adopted by the SEC, and
all amendments and supplements to such registration statement, including
post-effective amendments, in each case including the Prospectus contained therein,
all exhibits thereto and any document incorporated by reference therein.
2. Registration Under the Securities Act.
2.1 Right to Registration. The Company shall use its reasonable best efforts to cause
to be filed by December 31, 2008 a Shelf Registration Statement providing for the sale of all the
Registrable Securities by the Investors and to have such Shelf Registration Statement declared
effective by the SEC. The Company agrees to use its reasonable best efforts to keep the Shelf
Registration Statement continuously effective until the Investors are eligible to sell any of their
Registrable Securities under Rule 144.
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2.2 Restrictions. The Company may postpone for up to three months the filing or the
effectiveness of a Shelf Registration Statement if the Company reasonably believes that such Shelf
Registration Statement will have a material adverse effect on any proposal or plan by the Company
to engage in any financing, acquisition of assets (other than in the ordinary course of business)
or any merger, consolidation, tender offer or other significant transaction.
3. Piggyback Registrations.
3.1 Right to Piggyback. If the Company proposes to file a Registration Statement in
connection with a public offering of any of its securities and the registration form to be used may
be used for the registration of Registrable Securities (other than a Registration Statement on Form
S-4 or Form S-8, or any comparable successor form or form substituting therefor, or filed in
connection with any exchange offer or an offering of securities solely to the Company’s existing
equity holders) (a “Piggyback Registration Statement”), whether or not for sale for its own
account, then each such time the Company shall give written notice of a proposed offering (a
“Piggyback Notice”) to the Holders of its intention to effect such a registration at least twenty
(20) days prior to the anticipated filing date of such Piggyback Registration Statement. The
Piggyback Notice shall offer the Holders the opportunity to include in such Piggyback Registration
Statement such amount of Registrable Securities as they may request (“Piggyback Registration”).
The Company will, subject to the limitations set forth in Sections 3.3 and 3.4 of this Agreement,
include in such Piggyback Registration Statement (and related qualifications under blue sky laws)
and the underwriting, if any, involved therein, all Registrable Securities with respect to which
the Company has received a written request for inclusion therein within fifteen (15) days after
receipt of the Piggyback Notice (five (5) days if the Company gives telephonic notice to all
registered Holders, with written confirmation to follow promptly thereafter). Notwithstanding the
above, the Company may determine, at any time, not to proceed with such Piggyback Registration
Statement.
3.2 Underwriting Agreement. To the extent that the Holders request Piggyback
Registration of their Registrable Securities, the Holders shall (together with the Company) enter
into an underwriting agreement in customary form with the managing underwriter, if any, selected by
the Company for such underwriting.
3.3 Priority on Primary Registrations. If a Piggyback Registration involves an
underwritten offering and the managing underwriter or underwriters of any such proposed public
offering advises the Company in writing that, in such managing underwriter’s or underwriters’
opinion, the total number or kind of securities which such holders and any other Persons entitled
to be included in such public offering would adversely affect its ability to effect such an
offering, then the Company will include in such registration and underwriting, to the extent of the
number or kind of securities which the Company is so advised can be sold in (or during the time of)
such offering without having such an adverse effect: (a) first, all securities proposed by the
Company to be sold for its own account for working capital needs; and (b) second, other securities
proposed by the Company to be sold for its own account and the Registrable Securities and other
securities requested to be included in the registration pro rata among the Holders and other
securities requesting such registration, on the basis of the total number of shares of such
securities that each such Holder and other securities otherwise proposed to include in the
Piggyback Registration.
3.4 Priority on Secondary Registrations. If a Piggyback Registration is an
underwritten secondary registration on behalf of holders of the Company’s securities other than
Holders (the “Other Holders”), and the managing underwriter or underwriters advises the Company in
writing that in their opinion the number and kind of securities requested to be included in such
registration exceeds the number that can be sold in such offering, then the Company will include in
such registration: (a) first, the securities requested to be included therein by the Other Holders
exercising “demand” registration rights, up to that number which, in the opinion of the managing
underwriter or underwriters, can be sold in the offering; and (b) second, the Registrable
Securities and other securities requested to be included in such registration up to that number
which, in the opinion of the managing underwriter or underwriters, can be sold in such offering,
and if all such Registrable Securities and other securities cannot be so included, then pro rata
among the Holders and other securities requesting such registration on the basis of the number of
shares of Registrable Securities and other securities each holder otherwise sought to have included
in the Piggyback Registration.
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4. Registration Procedures.
4.1 Whenever the Holders have requested that any Registrable Securities be registered for sale
pursuant to this Agreement or the Company is otherwise required to register Registrable Securities
under this Agreement, the Company will use its commercially reasonable efforts to effect the
registration and the sale of such Registrable Securities in accordance with the intended method of
disposition thereof (subject to the Company’s right to not proceed with a Piggyback Registration
Statement in its sole discretion), and pursuant thereto the Company will as expeditiously as
commercially reasonably possible:
(a) Registration Statement. (i) Prepare and file with the SEC a Registration
Statement relating to the applicable registration on any appropriate form under the Securities Act,
which form shall be available for the sale of the Registrable Securities in accordance with the
intended method or methods of distribution thereof, and shall include all financial statements
required by the SEC to be filed therewith; (ii) cooperate and assist in any filings required to be
made with FINRA; and (iii) use its commercially reasonable efforts to cause such Registration
Statement to become effective; provided, however, that the Company may discontinue
any registration of securities to be offered by the Company at any time prior to the effective date
of the Piggyback Registration Statement relating thereto.
(b) Amendments and Supplements. (i) Prepare and file with the SEC such amendments,
post-effective amendments, and supplements to the Registration Statement as may be necessary to
keep such Registration Statement continuously effective for the applicable period, and (ii) cause
the Prospectus to be supplemented by any required Prospectus supplement, and as so supplemented to
be filed pursuant to Rule 424 under the Securities Act.
(c) Notifications. Notify the Holders covered thereby and the managing underwriter
or underwriters, if any, promptly, and (if requested by any such Person) confirm such advice in
writing: (i) when the Prospectus or any Prospectus supplement or post-effective amendment has been
filed, and, with respect to the Piggyback Registration Statement or any post-effective amendment,
when the same has become effective; (ii) of any request by the SEC for amendments or supplements to
the Registration Statement or the Prospectus or for additional information; (iii) of the issuance
by the SEC of any stop order suspending the effectiveness of the Registration Statement or the
initiation of any proceedings for that purpose; (iv) if at any time the representations and
warranties of the Company contemplated by Section 4.1(n)(i) below prove not to be true and correct
in all material respects as of the date made; (v) of the receipt by the Company of any notification
with respect to the suspension of the qualification of the Registrable Securities for sale in any
jurisdiction or the initiation or threatening of any proceeding for such purpose; or (vi) of the
happening of any event which makes any material statement made in the Registration Statement, the
Prospectus, or any document incorporated therein by reference untrue or which requires the making
of any changes in the Registration Statement, the Prospectus, or any document incorporated therein
by reference in order to make the material statements therein not misleading in light of the
circumstances under which they were made.
(d) Stop-Orders and Suspensions. In the event of the issuance of a stop-order or a
suspension in the sale of the Registrable Securities, make reasonable efforts to obtain promptly
the withdrawal of any order suspending the effectiveness of the Registration Statement or
otherwise prohibiting the offer or sale of the Registrable Securities, including those issued by
state governmental authorities.
(e) Distribution Disclosures. If requested by the managing underwriter or
underwriters or a Holder if the Registrable Securities are being sold in connection with an
underwritten offering, promptly incorporate in a Prospectus supplement or post-effective amendment
such information as the managing underwriter or underwriters and holders of majority of the
Registrable Securities being sold reasonably agree should be included therein relating to the plan
of distribution with respect to such Registrable Securities, including, without limitation,
information with respect to the amount of Registrable Securities being sold to such underwriters,
the purchase price being paid therefor by such underwriters, and with respect to any other terms of
the underwritten (or best efforts underwritten) offering of the Registrable Securities to be sold
in such offering; and make all required filings of such Prospectus supplement or post-effective
amendment promptly upon being notified of the matters to be incorporated in such Prospectus
supplement or post-effective amendment. The Company may require each of such holders to
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furnish to the Company such information regarding the distribution of such Registrable
Securities as the Company may from time to time reasonably request in writing.
(f) Copies of Registration Statement. Furnish to each holder of Registrable
Securities which are covered by a Registration Statement pursuant to this Agreement and each
managing underwriter, without charge, at least one signed or conformed copy of the Registration
Statement and any post-effective amendment thereto, including financial statements and schedules,
all documents incorporated therein by reference and all exhibits (including those incorporated by
reference).
(g) Copies of the Prospectus. Deliver to each holder of Registrable Securities which
are covered by a Registration Statement pursuant to this Agreement and the underwriters, if any,
without charge, as many copies of the Prospectus (including each preliminary prospectus) and any
amendment or supplement thereto as such Persons may reasonably request; and the Company hereby
consents to the use of the Prospectus or any amendment or supplement thereto by the Holders and the
underwriters, if any, in connection with the offering and sale of the Registrable Securities
covered by the Prospectus or any amendment or supplement thereto.
(h) Blue Sky Laws. Prior to any public offering of the Registrable Securities, use
its commercially reasonable efforts to register or qualify or cooperate with Holders, the
underwriters, if any, and their respective counsel in connection with the registration or
qualification of, such Registrable Securities for offer and sale under the securities or blue sky
laws of such jurisdictions (where an exemption is not available) as such holder or underwriter
reasonably requests in writing and do any and all other acts or things reasonably necessary or
advisable to enable the disposition in such jurisdictions of the Registrable Securities covered by
the Registration Statement; provided, however, that the Company will not be
required to qualify generally to do business in any jurisdiction where it is not then so qualified
or to take any action which would subject it to general service of process in any jurisdiction
where it is not then so subject or subject the Company to any income or sale tax in any such
jurisdiction where it is not then so subject.
(i) Removal of Legends. Cooperate with the holders of Registrable Securities and the
managing underwriter or underwriters, if any, to facilitate the timely preparation and delivery of
certificates representing Registrable Securities to be sold and not bearing any restrictive
legends; and enable such to be in such denominations and registered in such names as the managing
underwriter or underwriters may request at least two business days prior to any sale of Registrable
Securities to the underwriters.
(j) Other Governmental Filings. Use commercially reasonable efforts to cause the
Registrable Securities covered by the applicable Registration Statement to be registered with or
approved by such other governmental agencies or authorities as may be necessary to enable the
holders thereof or the underwriters, if any, to consummate the disposition of such Registrable
Securities.
(k) Prospectus Amendments and Supplements. Upon the occurrence of any event
contemplated by Section 4.1(c)(v) above, prepare and promptly file a supplement or post-effective
amendment to the Registration Statement or the related Prospectus or any document incorporated
therein by reference or file any other required document so that, as thereafter delivered to the
purchasers of the Registrable Securities, the Prospectus will not contain an untrue statement of a
material fact or omit to state any material fact necessary to make the statements therein not
misleading under the circumstances in which they were made.
(l) Securities Exchange Listings. Use commercially reasonable efforts to cause all
Registrable Securities covered by the Registration Statement to be listed on each securities
exchange on which similar securities issued by the Company are then listed, if any.
(m) Delivery of Certificates. Not later than the effective date of the applicable
Registration Statement, use its reasonable best efforts to provide a CUSIP number for the
Registrable Securities and provide the transfer agent with printed certificates for the Registrable
Securities which are in a form eligible for deposit with Depository Trust Company.
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(n) Agreements and Further Actions. Enter into such customary agreements (including
an underwriting agreement) and take all such other reasonable actions in connection therewith in
order to facilitate the disposition of such Registrable Securities and in such connection, whether
or not an underwriting agreement is entered into and whether or not the registration is an
underwritten registration (i) make such representations and warranties to the holders of
Registrable Securities and the underwriters, if any, in form, substance and scope as are
customarily made by issuers to underwriters in similar underwritten offerings and covering matters
including, without limitation, those set forth in an underwriting agreement; (ii) obtain opinions
of counsel to the Company and updates thereof (which opinions (in form, scope and substance) shall
be reasonably satisfactory to the managing underwriter or underwriters, if any, and not reasonably
objected to by the holders of a majority of the Registrable Securities being sold), addressed to
each holder selling Registrable Securities and the underwriters, if any, covering the matters
customarily covered in opinions requested in underwritten offerings and such other matters as may
be reasonably requested by a majority of the holders selling such Registrable Securities and the
underwriters, if any; (iii) obtain “cold comfort” letters and updates thereof from the Company’s
independent certified public accountants addressed to the holders of Registrable Securities and the
underwriters, if any, such letters to be in customary form and covering matters of the type
customarily covered in “cold comfort” letters by accountants in connection with primary
underwritten offerings; (iv) if an underwriting agreement is entered into, the same shall set forth
in full the indemnification provisions and procedures of Section 7 hereof with respect to all
parties to be indemnified pursuant to such section; and (v) the Company shall deliver such
documents and certificates as may be reasonably requested by the holders of a majority of the
Registrable Securities being sold and the managing underwriter or underwriters, if any, to evidence
compliance with Section 4.1(k) above and with any customary conditions contained in the
underwriting agreement or other agreement entered into by the Company. The above shall be done at
each closing under such underwriting or similar agreement or as and to the extent required
thereunder.
(o) Due Diligence Examination. Make available for inspection by any managing
underwriter or underwriters participating in any disposition pursuant to such Registration
Statement and any attorney or accountant retained by such underwriters, all financial and other
records, pertinent corporate documents and properties of the Company, and cause the Company’s
officers, directors and employees to supply all information reasonably requested by any such
representative, underwriter, attorney or accountant in connection with such Registration Statement.
(p) Earning Statements. Use its reasonable efforts to comply with all applicable
rules and regulations of the SEC, and make generally available to its security holders, earnings
statements satisfying the provision of Section 11(a) of the Securities Act no later than 45 days
after the end of each 12-month period (or 90 days after the end of each 12-month period, if such
period is a fiscal year end) (i) commencing at the end of any fiscal quarter in which Registrable
Securities are sold to underwriters in a firm or best efforts underwritten offering; or (ii) if not
sold to underwriters in such an offering, beginning with the first month of the Company’s first
fiscal quarter commencing after the effective date of the Registration Statement, which statements
shall cover each of such 12-month periods.
(q) Incorporated Documents. Promptly prior to the filing of any document which is to
be incorporated by reference into the Registration Statement or the Prospectus (after initial
filing of the Registration Statement), provide copies of such document to counsel to the holders of
Registrable Securities included in the Registration Statement and to the managing underwriters, if
any; and make the Company’s representatives available for discussion of such document, and make
such changes in such document (other than exhibits thereto) prior to the filing thereof as counsel
for such holders or underwriters may reasonably request.
4.2 Discontinuation of Distribution by Holders. Each holder of Registrable Securities
agrees, by acquisition of such Registrable Securities that, upon receipt of any notice from the
Company of the happening of any event of the kind that would require a Prospectus amendment or
supplement pursuant to Section 4.1(k) hereof, such holders will forthwith discontinue disposition
of Registrable Securities until such holder’s receipt of the copies of the supplemented or amended
Prospectus contemplated by Section 4.1(k) hereof, or until he is advised in writing (the “Advice”)
by the Company that the use of the Prospectus may be resumed, and has received copies of any
additional or supplemental filings which are incorporated by reference in the Prospectus, and, if
so directed by the Company, such holder will deliver to the Company (at the Company’s expense) all
copies, other than permanent file copies then in such holder’s possession, of the Prospectus
covering such Registrable Securities current at the time of receipt of such notice. In the event
the Company shall give any such notice, the time periods regarding the
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maintenance of the effectiveness of the term of this Agreement in Section 8.3 shall be
extended by the number of days during the period from and including the date of the giving of such
notice pursuant to Section 4.1(c)(vi) hereof to and including the date when such holder shall have
received the copies of the supplemented or amended prospectus contemplated by Section 4.1(k) hereof
or the Advice.
5. Lock-Up.
5.1 Lock-Up Agreements. With respect to any underwritten public offering of
securities pursuant to an effective Registration Statement, each holder of Registrable Securities
agrees, that he will not, without, the prior written consent of the managing underwriter or
underwriters in such underwritten offering (the “Underwriter”), for a period of ninety (90) days
from the effective date of the Registration Statement (the “Lock-Up Period”), directly or
indirectly, (i) offer, sell (including “short” selling), assign, transfer, encumber, pledge,
contract to sell, grant an option to purchase, establish an open “put equivalent position” within
the meaning of Rule 16a-1(h) under the Securities Act, or otherwise dispose of any Registrable
Securities, or (ii) enter any swap or other arrangement that transfers all or a portion of the
economic consequences associated with the ownership of any Registrable Securities; provided,
however, that if (a) during the last seventeen (17) days of the initial Lock-Up Period, the Company
releases earnings results or material news or a material event relating to the Company occurs or
(b) prior to the expiration of the initial Lock-Up Period, the Company announces that it will
release earnings results during the 16-day period beginning on the last day of the initial Lock-Up
Period, then in either case the Lock-Up Period will be extended until the expiration of the 18-day
period beginning on the date of release of the earnings results or the occurrence of the material
news or material event, as applicable, unless the Underwriter, in writing, such extension.
5.2 Notice. Each holder of Registrable Securities agrees that, prior to engaging in
any transaction or taking any other action that is subject to the terms of this Section 5 during
the period from and including the effective date of the Registration Statement through and
including the 34th day following the expiration of the 90-day period, the holder will give prior
notice thereof to the Company and will not consummate any such transaction or take any such action
unless he has received written confirmation from the Company that the Lock-Up Period (as the same
may have been extended pursuant to the previous paragraph) has expired.
5.3 Notwithstanding the foregoing, if the holder of Registrable Securities is an individual,
he or she may transfer any Registrable Securities either during his or her lifetime or on death
(i) by will or intestacy to his or her immediate family or to a trust the beneficiaries of which
are exclusively the undersigned and/or a member or members of his or her immediate family or
(ii) by bona fide gift or gifts to a donee or donees; provided, however, that prior to any such
transfer each transferee shall execute an agreement, satisfactory to the Underwriter pursuant to
which each transferee shall agree to receive and hold such Registrable Securities, subject to the
provisions hereof, and there shall be no further transfer except in accordance with the provisions
hereof. For the purposes of this paragraph, “immediate family” shall mean spouse, lineal
descendant, father, mother, brother or sister of the transferor. In addition, for the avoidance of
doubt, nothing in this Section 4 shall restrict the ability of the holder of Registrable Securities
to purchase shares of Common Stock on the open market or exercise any option to purchase shares of
Common Stock granted under any benefit plan of the Company.
6. Registration Expenses.
6.1 Expenses Borne by Company. Except as specifically otherwise provided in Section
6.2 hereof, the Company will be responsible for payment of all reasonable expenses incident to the
Company’s performance of or compliance with this Agreement and any registration hereunder,
including, without limitation, all registration and filing fees, fees and expenses of compliance
with securities or blue sky laws (including reasonable fees and disbursements of counsel for the
underwriters in connection with the blue sky qualifications of the Registrable Securities as the
managing underwriter or the holders of a majority of the Registrable Securities being sold may
designate), fees and expenses associated with filings required to be made with the NASD, printing
expenses (including expenses of printing certificates for the Registrable Securities in a form
eligible for deposit with Depository Trust Company and of prospectuses), messenger and delivery
expenses, and fees and disbursements of counsel for the Company and for all independent certified
public accountants (including the expenses of any special audit and “cold comfort” letters required
by or incident to such performance), underwriters (excluding discounts, commissions or fees of
underwriters, selling brokers, dealer managers or similar securities industry professionals
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relating to the distribution of the Registrable Securities), Securities Act liability
insurance if the Company so desires and other Persons retained by the Company in connection with
such registration (all such expenses borne by the Company being herein called the “Registration
Expenses”).
6.2 Expenses Borne by Holders. Each holder of Registrable Securities included in such
registration will be responsible for payment of brokerage discounts, commissions and other sales
expenses incident to the registration of any Registrable Shares registered hereunder. In addition,
holders of the Registrable Securities will be responsible for the payment of their own legal fees
if they retain legal counsel separate from that of the Company. The holders of the Registrable
Securities included in such registration shall be responsible for payment of their out-of-pocket
expenses and the out-of-pocket expenses of any agents who manage their account. Holders of
Registrable Securities included in such registration also shall be responsible for payment of any
underwriting fees associated with the sale of Registrable Securities. Any such expenses which are
common to the holders of the Registrable Securities included in the registration shall be divided
among such holders pro rata on the basis of the number of shares of Registrable Securities being
registered on behalf of such holder, or as such holders may otherwise agree.
7. Indemnification.
7.1 Indemnification by Company. In the event of any registration of any Registrable
Securities under the Securities Act, the Company hereby agrees to indemnify, to the fullest extent
permitted by law, and hold harmless each seller of the Registrable Securities hereby, its officers,
directors, employees, partners, and each Person who controls (within the meaning of Section 15 of
the Securities Act or Section 20 of the Exchange Act and the rules and regulations promulgated
thereunder) such holder, and each other Person who participates as an underwriter in the offering
or sale of such Registrable Securities, against all losses, claims, damages, liabilities and
expenses (including reasonable attorneys’ fees) in connection with defending against any such
losses, claims, damages and liabilities or in connection with any investigation or inquiry, in each
case caused by or based on any untrue or alleged untrue statement of material fact contained in any
Registration Statement in which such Registrable Securities are registered under the Securities
Act, Prospectus or preliminary prospectus contained therein, or any amendment thereof or supplement
thereto, or any omission or alleged omission of a material fact required to be stated therein or
necessary to make the statements therein not misleading, and the Company will reimburse each such
indemnified person for any reasonable legal or any other expenses reasonably incurred by them or
any of them in connection with investigating or defending any such claim (or action or proceeding
in respect thereof); provided, that the Company shall not be liable in any such
case to the extent that (i) same arises out of or is based on an untrue statement or alleged untrue
statement or omission or alleged omission made in such Registration Statement, any such Prospectus
or preliminary prospectus, or in any amendment or supplement thereto in reliance on and in
conformity with written information furnished to the Company by such holder of Registrable
Securities specifically stating that it is for use in the preparation thereof, (ii) such holder or
any underwriter or selling agents failed to deliver a copy of the Prospectus or any amendments or
supplements thereto to the Person asserting such loss, claim, damage, liability, or expense if the
Company had furnished such holder with a reasonably sufficient number of copies of the same, or
(iii) such holder has violated the provisions of Section 4.2 hereof. In connection with an
underwritten offering, the Company will indemnify such underwriters, their officers and directors
and each Person who controls (within the meaning of the Securities Act) such underwriters at least
to the same extent as provided above with respect to the indemnification of the holders of
Registrable Securities. Such indemnity shall remain in full force and effect regardless of any
investigation made by or on behalf of a holder or any such underwriter and shall survive the
transfer of the Registrable Securities by a holder.
7.2 Indemnification by Investors. In connection with any Registration Statement in
which a holder of Registrable Securities is participating, each such holder will furnish to the
Company in writing information concerning such holder that is required by the provisions of
applicable law and regulation to be included in a Registration Statement as the Company reasonably
requests for use in connection with any such Registration Statement or Prospectus and, to the
extent permitted by law, each such holder, jointly and severally, will indemnify the Company, its
directors and officers, and each Person who controls (within the meaning of the Securities Act) the
Company against any losses, claims, damages, liabilities and expenses resulting from any untrue or
alleged untrue statement of material fact contained in the Registration Statement, Prospectus or
preliminary prospectus or any amendment thereof or supplement thereto or any omission or alleged
omission of a material fact required to be stated therein or necessary to make the statements
therein not misleading, but only to the extent that such untrue
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statement or omission is contained in any information so furnished in writing by such holder
expressly for use in connection with such Registration Statement; provided,
however, that the indemnity agreement contained in this Section 7.2 shall not apply to
amounts paid in settlement of any such loss, claim, damage, liability, or action if such settlement
is effected without the consent of such holder, which consent shall not be unreasonably withheld or
delayed; and provided, further, that, in no event shall any indemnity under this
Section 7.2 exceed the net proceeds from the offering actually received by such holder.
7.3 Assumption of Defense by Indemnifying Party. Any Person entitled to
indemnification hereunder will (a) give prompt written notice to the indemnifying party of any
claim with respect to which it seeks indemnification and (b) permit such indemnifying party to
assume the defense of such claim with counsel reasonably satisfactory to the indemnified party;
provided, however, that any Person entitled to indemnification hereunder shall have
the right to employ separate counsel and to participate in the defense of such claim, but the fees
and expenses of such counsel shall be at the expense of such Person unless (i) the indemnifying
party has agreed to pay such fees or expenses, or (ii) the indemnifying party shall have failed to
assume the defense of such claim and employ counsel reasonably satisfactory to such Person or
(iii) in the reasonable judgment of any such Person, based upon written advice of its counsel, a
conflict of interest may exist between such Person and the indemnifying party with respect to such
claims (in which case, if the Person notifies the indemnifying party in writing that such Person
elects to employ separate counsel at the expense of the indemnifying party, the indemnifying party
shall not have the right to assume the defense of such claims on behalf of such Person). If such
defense is not assumed, the indemnifying party will not be subject to any liability for any
settlement made without its consent (but such consent will not be unreasonably withheld). An
indemnifying party which is not entitled to, or elects not to, assume the defense of a claim will
not be obligated to pay the fees and expenses of more than one counsel for all parties indemnified
by such indemnifying party with respect to such claim, unless in the reasonable judgment of any
indemnified party a conflict of interest may exist between such indemnified party and any other of
such indemnified parties with respect to such claim, in which case the indemnifying party shall pay
the reasonable fees and expenses of such additional counsel or counsels. The failure of any
indemnified party to provide the notice required by Section 7.3(a) above shall not relieve the
indemnifying party under this Section 7, except to the extent that the indemnifying party is
actually prejudiced by such failure to give notice.
7.4 Contribution. If for any reason the indemnification provided for in
Sections 7.1 and 7.2 is unavailable to an indemnified party or insufficient to hold it harmless as
contemplated by Sections 7.1 and 7.2, then the indemnifying party shall contribute to the amount
paid or payable by the indemnified party as a result of such loss, claim, damage or liability in
such proportion as is appropriate to reflect not only the relative benefits received by the
indemnified party and the indemnifying party, but also the relative fault of the indemnified party
and the indemnifying party, as well as any other relevant equitable considerations. No person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation.
7.5 Binding Effect. The indemnification provided for under this Agreement will remain
in full force and effect regardless of any investigation made by or on behalf of the indemnified
party or any officer, director or controlling Person of such indemnified party and will survive the
transfer of securities.
8. Participation in Underwritten Registrations.
8.1 Underwriting Arrangements. No Person may participate in any Piggyback
Registration Statement hereunder which is underwritten unless such Person (a) agrees to sell such
Person’s securities on the basis provided in any underwriting arrangements approved by the Person
or Persons entitled hereunder to approve such arrangements and (b) completes and executes all
questionnaires, powers of attorney, indemnities, underwriting agreements and other documents
required under such underwriting arrangements.
8.2 Agreement To Provide Information. Each holder of Registrable Securities seeking
registration of its Registrable Securities pursuant to the terms of this Agreement will furnish
promptly to the Company and any managing underwriter such information regarding such holder and the
proposed distribution of the Registrable Shares by such holder as they may request and as may be
required in connection with any registration, qualification, or compliance referred to in this
Agreement. In the event that a holder of Registrable Securities fails or refuses to provide such
information for any reason within a reasonable time after a request
9
therefor by the Company or the managing underwriter, if any, the Company will be relieved of
obligations to include such Registrable Securities in such registration.
9. General Provisions.
9.1 Remedies. All remedies under this Agreement, or by law or otherwise afforded to
any party hereto, shall be cumulative and not alternative. Any Person having rights under any
provision of this Agreement will be entitled to enforce such rights specifically to recover damages
caused by reason of any breach of any provision of this Agreement and to exercise all other rights
granted by law. The parties hereto agree and acknowledge that money damages may not be an adequate
remedy for any breach of the provisions of this Agreement and that any party may in its sole
discretion apply to any court of law or equity of competent jurisdiction (without posting any bond
or other security) for specific performance and for other injunctive relief in order to enforce or
prevent violation of the provisions of this Agreement.
9.2 Term. Except as specifically otherwise provided herein, the provisions of this
Agreement shall terminate upon the earliest to occur of the following: (i) no Registrable
Securities remain outstanding; or (ii) all of the Registrable Securities may be transferred, sold,
or otherwise disposed of in accordance with the provisions of Rule 144 promulgated under the
Securities Act (and the holders thereof are able to sell, transfer or otherwise convey all of such
Registrable Securities within any three-month period without violating any volume restriction
thereunder); provided, however, that the indemnification provisions in Section 7
shall survive the termination of this Agreement.
9.3 Amendments and Waivers. Except as otherwise specifically provided herein, this
Agreement may be amended or waived only upon the prior written consent of the Company and the
holders of at least two-thirds of the then outstanding Registrable Securities.
9.4 Assignment. Except as otherwise expressly provided herein, this Agreement shall
be binding upon and inure to the benefit and be enforceable by the parties hereto, and their
respective successors and permitted assigns, whether so expressed or not. In addition, whether or
not any express assignment has been made, the provisions of this Agreement which are for the
benefit of holders of Registrable Securities also are for the benefit of, and enforceable by, any
subsequent holder of such Registrable Securities who consents in writing to be bound by this
Agreement so long as, and to the extent that, such securities continue to be Registrable Securities
and have not been sold, assigned or otherwise transferred in violation of this Agreement.
9.5 Severability. Whenever possible, each provision of this Agreement will be
interpreted in such manner as to be effective and valid under applicable law, but if any provision
of this Agreement is held to be prohibited by or invalid under applicable law, such provision will
be ineffective only to the extent of such prohibition or invalidity, without invalidating the
remainder of this Agreement.
9.6 Counterparts. This Agreement may be executed in multiple counterparts, any one of
which need not contain the signatures of more than one party, but all such counterparts taken
together will constitute one and the same Agreement.
9.7 Descriptive Headings. The descriptive headings of this Agreement are inserted for
convenience only and do not constitute a part of this Agreement.
9.8 Governing Law. All questions concerning the construction, validity and
interpretation of this Agreement will be governed by and construed in accordance with the domestic
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.
9.9 Entire Agreement. This Agreement is intended by the parties as a final expression
of their agreement and intended to be a complete and exclusive statement of the agreement and
understanding of the parties hereto with respect of the subject matter contained herein. This
Agreement supersedes all prior agreements and understandings between the parties with respect to
such subject matter.
10
9.10 Notices. All notices, requests, demands or other communications (“Notices”)
required to be given pursuant to this Agreement by any party shall be in writing and shall be
delivered by (a) certified mail, postage prepaid, return receipt requested, (b) commercial
overnight courier service with signature required for delivery, or (c) electronic mail (with
confirmation of successful transmission). If the Notice is given by mail or courier service,
delivery shall be evidenced by the certified mail return receipt, or the commercial courier’s
standard method of confirming delivery. If the Notice is sent by electronic mail, delivery shall
be conclusively deemed made the first Business Day following successful transmission. Notices
shall be provided to the following addresses (any of which may be changed upon like notice to the
other parties to this Agreement):
If to the Company, to:
c/o Lime Energy Co.
0000 Xxxxxxxxx Xxxx
Xxx Xxxxx Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx Xxxxxxx
Telephone No.: 000.000.0000
Email to
0000 Xxxxxxxxx Xxxx
Xxx Xxxxx Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx Xxxxxxx
Telephone No.: 000.000.0000
Email to
with a copy (which shall not constitute notice) to:
Xxxx Xxxxx LLP
00 X. Xxxxxx Xx.
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxxxx, Esq.
Telephone No.: 000.000.0000
Email to
00 X. Xxxxxx Xx.
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxxxx, Esq.
Telephone No.: 000.000.0000
Email to
If to the Investors to:
Applied Energy Management, Inc.
00000 Xxxxxx Xxxxx, Xxxxx 000
Xxxxxxxxxxxx, XX 00000
Attention: Xxxx X. XxXxxx
Telephone No.: 000.000.0000
Email to
00000 Xxxxxx Xxxxx, Xxxxx 000
Xxxxxxxxxxxx, XX 00000
Attention: Xxxx X. XxXxxx
Telephone No.: 000.000.0000
Email to
11
with a copy to (which will not constitute notice):
Xxxxx, Xxxxxx & Xxxxxxx LLP
2700 Marquis One Tower
000 Xxxxxxxxx Xxxxxx Xxxxxx, X.X.
Xxxxxxx, XX 00000-0000
Attention: Xxxxx X. Xxxxxxxx
Telephone No.: 000.000.0000
Email to
2700 Marquis One Tower
000 Xxxxxxxxx Xxxxxx Xxxxxx, X.X.
Xxxxxxx, XX 00000-0000
Attention: Xxxxx X. Xxxxxxxx
Telephone No.: 000.000.0000
Email to
9.11 Delays or Omissions. No failure to exercise or delay in the exercise of any
right, power or remedy accruing to a party on any breach or default of another party under this
Agreement shall impair any such right, power or remedy nor shall it be construed to be a waiver of
any such breach.
[Remainder of Page Intentionally Left Blank – Signatures on Next Page]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above
written.
| INVESTORS: | ||||
| /s/ Xxxx X. Xxxxxx
|
||||
| /s/ Xxxxxxx Xxxxx | ||||
| XXXXXXX XXXXX, individually | ||||
| /s/ Xxxx Xxxxxxxx | ||||
| XXXX XXXXXXXX, individually | ||||
| /s/ Xxxx X’Xxxxxx | ||||
| XXXX X’XXXXXX, individually | ||||
| /s/ Xxxxx Xxxxx | ||||
| XXXXX XXXXX, individually |
| COMPANY: | ||||||
| LIME ENERGY CO. | ||||||
| By: | /s/ Xxxxxxx Xxxxxxx
|
|||||
| Name: | Xxxxxxx Xxxxxxx | |||||
Signature Page to Registration Rights Agreement
