Lime Energy amends convertibles sold to Kiphart, Advanced Biotherapy

By Devika Patel

Knoxville, Tenn., Aug. 19 - Lime Energy Co. said in an 8-K filed Tuesday with the Securities and Exchange Commission that it has amended its agreements with Richard Kiphart and Advanced Biotherapy, Inc. relating to the convertible line of credit notes the company sold in a private placement.

Among other things, the notes' principal was increased by $5 million to $16 million by increasing Kiphart's investment to $14.5 million from $9.5 million. Advanced Biotherapy's notes remained unchanged at $1.5 million.

The amendments also granted Kiphart and Advanced Biotherapy a security interest in all of the company's assets, subordinate to any senior lender, and modified the provision that permits the note holders to convert the notes if they are not repaid on or before the maturity date, March 31, 2009, to fix the conversion price at $7.93 per share.

The notes continue to bear interest at 17% per annum, with 12% payable in cash and the remaining 5% to be capitalized and added to the principal balance on the notes.

The notes also require the payment of an unused funds fee of 4% per annum on the unused portion of the notes.

The company may borrow any amount, at any time during the term of the note as long as it is not in default at the time of the advance, provided that the total advances under the notes may not exceed $11 million.

If the company terminates the notes before their scheduled maturity, it will be required to pay a termination fee based on a formula that is equal to approximately $1,500 for each day remaining before the scheduled maturity.

Proceeds from the increased funds under the notes will be used to fund the company's working capital needs and for other general corporate purposes.

Kiphart is the company's chairman of the board of directors and is its largest individual stockholder. Kiphart is also is the chairman of the board of Advanced Biotherapy and owns the majority of Advanced Biotherapy's common stock.

David Valentine, one of Lime Energy's directors, is also a director and stockholder of Advanced Biotherapy.

Based in Elk Grove Village, Ill., Lime Energy is an energy technology and engineering company.

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