NOTE ISSUANCE AGREEMENT
Exhibit 10.3
This Note Issuance Agreement (this “Agreement”) is dated as of the 14th day of
August, 2008, and is made by and between Lime Energy Co., a Delaware corporation (the “Company”),
Xxxxxxx X. Xxxxxxx (“Xxxxxxx”) and Advanced Biotherapy, Inc. (“ADVB” and together with Xxxxxxx,
“Noteholders”).
WITNESSETH:
WHEREAS, the Company and the Noteholders are parties to that certain AR Note Issuance
Agreement dated as of June 6, 2008 (the “Existing Agreement”), pursuant to which the Company issued
to (i) Xxxxxxx, that certain Amended and Restated Revolving Line of Credit Note dated June 6, 2008
in the maximum principal amount of $9,500,000 (the “Xxxxxxx Note”) and (ii) ADVB, that certain
Amended and Restated Revolving Line of Credit Note dated June 6, 2008 in the maximum principal
amount of $1,500,000 (the “ADVB Note” and together with the Xxxxxxx Note, the “Existing Notes”);
and
WHEREAS, Xxxxxxx has agreed to loan an additional $5,000,000 to the Company to be evidenced by
that certain Second Amended and Restated Revolving Line of Credit Note dated the date hereof made
by the Company in favor of Xxxxxxx (the “AR Xxxxxxx Note”).
WHEREAS, the Company has agreed to modify the floating convertibility feature of the Existing
Notes pursuant to (i) the AR Xxxxxxx Note and (ii) that certain Second Amended and Restated
Revolving Line of Credit Note dated the date hereof made by the Company in favor of ADVB (the “AR
ADVB Note” and together with the AR Xxxxxxx Note, the “Second AR Notes”); and
WHEREAS, the parties desire to set forth certain additional understandings among themselves as
more fully described herein; and
NOW, THEREFORE, in consideration of the premises and mutual agreements contained herein, the
parties hereby agrees as follows:
1. The Second AR Notes. Contemporaneously with the execution of this Agreement and
delivery by the Company to the Noteholders of the Second AR Notes, the Noteholders shall deliver to
the Company the original Existing Notes.
2. Security Agreement. On the date hereof, the Company and the Noteholders shall
enter into that certain Security Agreement dated as of the date hereof (the “Security Agreement”)
made by the Company in favor of the Noteholders to secure the obligations of the Company under the
Second AR Notes.
3. Condition to Advances. It shall be a condition to each advance under the Second AR
Notes that no Event of Default (as defined in the Second AR Notes) shall have occurred and be
continuing. At the time of each request for an advance, the Company shall provide to the
Noteholders a certificate, executed by the Chief Executive Officer or Chief Financial Officer of
the Company, stating that no Event of Default has occurred and is continuing.
4. Manner of Advances, Repayments and Prepayments. The parties acknowledge and agree
that the AR ADVB Note is at present fully drawn to its Maximum Principal Amount (as defined in the
AR ADVB Note), and accordingly future advances requested by the Company shall be drawn against the
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AR Xxxxxxx Note, unless and until such time, if any, as the outstanding principal balance
under the AR ADVB Note is less than the Maximum Principal Amount stated in the AR ADVB Note, at
which point future advances will be drawn equally against the Second AR Notes to the extent of the
Maximum Principal Amount defined in the respective Second AR Notes. As long as both of the Second
AR Notes remain outstanding, all repayments and prepayments by the Company shall be made first to
the AR Xxxxxxx Note until it is reduced to an amount equal to the AR ADVB Note, with any further
repayments and prepayments made equally to the AR Xxxxxxx Note and the AR ADVB Note.
5. Commitment by ADVB. ADVB hereby covenants and agrees that it has reserved cash or
other immediately liquid assets in the amount of $1,500,000 and shall at all times while the AR
ADVB Note remains outstanding continue to reserve a sufficient amount of cash or other immediately
liquid assets as to enable it to make advances under the AR ADVB Note.
6. Subordination by Noteholders. Each Noteholder agrees to subordinate its Second AR
Note and its security interests evidenced by the Security Agreement in the event the Company
arranges to have a commercial lender provide financing to the Company for similar purposes, which
subordination must be on terms and conditions acceptable to the Noteholders in their reasonable
discretion.
7. Information Regarding Use of Proceeds. Promptly following request therefore by
either Noteholder, the Company shall provide Noteholders with reasonable detail regarding the use
of proceeds with respect to any advance made under the Second AR Notes, subject to the Company’s
obligations under Regulation F-D.
8. Arbitration. In the event of any and all disagreements and controversies arising
from this Agreement or the Second AR Notes, 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.
Any party involved in such disagreement or controversy may apply to the arbitrator seeking
injunctive relief until the arbitration award is rendered or the controversy is otherwise resolved.
Without waiving any remedy under this Agreement, any involved party may also seek from any court
having jurisdiction any interim or provisional relief that is necessary to protect the rights or
property of that party, pending the establishment of the arbitral tribunal (or pending the arbitral
tribunal’s determination of the merits of the controversy). In the event of any such disagreement
or controversy, no party shall directly or indirectly reveal, report, publish or disclose any
information relating to such disagreement or controversy to any person, firm or corporation not
expressly authorized by the other party to receive such information or use such information or
assist any other person in doing so, except to comply with actual legal obligations of such party,
or unless such disclosure is directly related to an arbitration proceeding as provided herein,
including, but not limited to, the prosecution or defense of any claim in such arbitration. The
costs and expenses of the arbitration (excluding attorneys’ fees) shall be paid by the
non-prevailing party or as determined by the arbitrator.
9. Miscellaneous.
(a) All of the WHEREAS clauses and other recitals at the beginning of this Agreement are
hereby incorporated into and made part of this Agreement.
(b) This Agreement shall be binding upon, and shall inure solely to the benefit of, each of
the parties hereto, and each of their respective heirs, executors, administrators, successors and
permitted assigns, and no other person shall acquire or have any right under or by virtue of this
Agreement. No Noteholder shall assign its rights under this Agreement except in connection with an
assignment under the Second AR Notes permitted by the terms thereof.
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(c) This Agreement amends and restates the Existing Agreement in its entirety as of the date
hereof, and this Agreement may be amended only by written execution by all parties. No waiver of
any provision of this Agreement shall in any event be effective unless the same shall be in writing
and acknowledged by the party against whom enforcement is sought, and then any such waiver shall be
effective only in the specific instance and for the specific purpose for which given.
(d) The descriptive headings of the several sections and paragraphs of this Agreement are
inserted for convenience only and do not constitute a part of this Agreement.
(e) All questions concerning the construction, validity, enforcement and interpretation of
this Agreement shall be governed by the internal laws of the State of Illinois, without giving
effect to any choice of law or conflict of law provision or rule (whether of the State of Illinois
or any other jurisdiction) that would cause the application of the laws of any jurisdiction other
than the State of Illinois.
(f) Wherever possible, each provision of this Agreement shall be interpreted in such manner as
to be effective and valid under applicable law, but if any provision of this Agreement shall be
prohibited by, unenforceable or invalid under any jurisdiction, such provision shall as to such
jurisdiction, be severable and be ineffective to the extent of such prohibition or invalidity,
without invalidating the remaining provisions of this Agreement or affecting the validity or
enforceability of such provision in any other jurisdiction.
(g) This Agreement may be executed in one or more counterparts, all of which shall be deemed
but one and the same agreement and each of which shall be deemed an original. Delivery by
facsimile of an executed counterpart of this Agreement shall be effective as an original executed
counterpart hereof and shall be deemed a representation that an original executed counterpart
hereof will be delivered.
(h) THE PARTIES HERETO, AFTER CONSULTING OR HAVING HAD THE OPPORTUNITY TO CONSULT WITH
COUNSEL, EACH KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE IRREVOCABLY, ANY RIGHT TO A TRIAL BY
JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS UNDER THIS AGREEMENT.
(i) ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH THIS
AGREEMENT SHALL BE BROUGHT AND MAINTAINED EXCLUSIVELY IN THE COURTS OF THE STATE OF ILLINOIS OR IN
THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS; PROVIDED THAT
NOTHING IN THIS AGREEMENT SHALL BE DEEMED OR OPERATE TO PRECLUDE LENDER FROM BRINGING SUIT OR
TAKING OTHER LEGAL ACTION IN ANY OTHER JURISDICTION. EACH PARTY HEREBY EXPRESSLY AND IRREVOCABLY
SUBMITS TO THE JURISDICTION OF THE COURTS OF THE STATE OF ILLINOIS AND OF THE UNITED STATES
DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS FOR THE PURPOSE OF ANY SUCH LITIGATION AS SET
FORTH ABOVE AND EXPRESSLY AND IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY
OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUCH LITIGATION BROUGHT
IN ANY SUCH COURT REFERRED TO ABOVE AND ANY CLAIM THAT ANY SUCH LITIGATION HAS BEEN BROUGHT IN AN
INCONVENIENT FORUM.
[Signatures on following page]
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IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the day and year first
above written.
| LIME ENERGY CO. | ||||
By: Name: |
/s/ Xxxxxxx Xxxxxxx
|
|||
Title:
|
Executive Vice President and Chief Financial Officer | |||
| NOTEHOLDERS: | ||||
| /s/ Xxxxxxx X. Xxxxxxx | ||||
| Xxxxxxx X. Xxxxxxx | ||||
| Advanced Biotherapy Inc. | ||||
By:
|
/s/ Xxxxxxxxxxx X. Xxxxx
|
|||
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