Exhibit 10.17

 

SECOND AMENDMENT TO

SUBORDINATED SECURED CONVERTIBLE PROMISSORY NOTE

 

This Second Amendment to Subordinated Secured Convertible Promissory Note (the
“Amendment”) is entered into as of March 30, 2016 by and between Lime Energy
Co., a Delaware corporation (the “Company”), and Bison Capital Partners IV, L.P.
(the “Holder”), and amends that certain Subordinated Secured Convertible
Promissory Note, dated as of March 24, 2015, as amended by that certain
Amendment to Subordinated Secured Convertible Promissory Note dated March 31,
2015 (the “First Amendment”), by the Company in favor of the Holder (as so
amended, the “Note”).  The Note is subject to the provisions of that certain
Note Purchase Agreement, dated as of March 24, 2015, by and among the Company
and the Holder (the “Purchase Agreement”).  Capitalized terms used and not
otherwise defined herein shall have the respective meanings ascribed to them in
the Note and the Purchase Agreement.

 

RECITAL

 

WHEREAS, Section 24 of the Note provides that the Note may be amended with the
written consent of the Company and the Person holding a majority of the
aggregate principal amount of the Notes outstanding.

 

WHEREAS, the Holder holds the Note representing the entire aggregate principal
amount of the Notes outstanding.

 

AGREEMENT

 

NOW, THEREFORE, for good and valuable consideration, the sufficiency and receipt
of which are hereby acknowledged and agreed, the parties hereby agree to amend
the Note, effective as of the date hereof, as follows:

 

1.             Amendment.

 

a.     With respect to Subsection 2(c) of the Note, the parties acknowledge that
based on the consolidated financial statements prepared by the Company for the
quarters listed in the table in Subsection 2(c), there was no Consolidated
EBITDA Shortfall for any of such quarters and hence no Additional Interest
Amount was required to be added to outstanding principal amount under the Note
pursuant to Subsection 2(c).

 

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b.     Section 2 of the Note shall be amended to redesignate Subsections
2(d) and 2(e) as Subsections 2(f) and 2(g), respectively, and to include new
Subsections (d) and (e), as follows:

 

“(d)         If Consolidated Adjusted EBITDA for the four consecutive fiscal
quarters ending on the last day of any one of the fiscal quarters listed in the
table below is less than the corresponding amount listed in the table below (a
“Primary Consolidated EBITDA Shortfall”), then an additional 2.1277 percent of
the original principal amount of this Note (a “Primary Additional Interest
Amount”) will accrue as additional Interest on the Note for that period, be
added to the outstanding principal amount under this Note at the next Interest
Payment Date following the applicable period end date for which the Primary
Consolidated EBITDA Shortfall occurred, and, from and after the date added to
the outstanding principal, accrue interest in the same manner as the outstanding
principal under this Note.  Each Primary Additional Interest Amount will accrue
in the same fashion for each Primary Consolidated EBITDA Shortfall.  For
example, if Consolidated Adjusted EBITDA for the four consecutive fiscal
quarters ending on June 30, 2016 is less than $6,738,000, Consolidated Adjusted
EBITDA for the four consecutive fiscal quarters ending on September 30, 2016 is
less than $7,416,000 and Consolidated Adjusted EBITDA for the four consecutive
fiscal quarters ending on December 31, 2016 is at least $8,000,000, then a
Primary Additional Interest Amount equal to $250,000 (2.1277 percent times the
$11,750,000 original principal amount of the Note) for the Q2 2016 Primary
Consolidated EBITDA Shortfall would accrue and be added to principal at the
first Interest Payment Date following June 30, 2016, and a second Primary
Additional Interest Amount equal to $250,000 for the Q3 2016 Primary
Consolidated EBITDA Shortfall would accrue and be added to principal at the
first Interest Payment Date following September 30, 2016.

 

Fiscal Quarter

 

Minimum
Primary Consolidated Adjusted EBITDA
(Trailing 4Qs)

 

Q1 2016

 

$

6,276,000

 

Q2 2016

 

$

6,738,000

 

Q3 2016

 

$

7,416,000

 

Q4 2016

 

$

8,000,000

 

 

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“(e)         In addition to and not in substitution of the Primary Additional
Interest Amounts determined in subsection (d) above, if Consolidated Adjusted
EBITDA for the four consecutive fiscal quarters ending on the last day of any
one of the fiscal quarters listed in the table below is less than the
corresponding amount listed in the table below (a “Secondary Consolidated EBITDA
Shortfall”), then an additional 2.1277 percent of the original principal amount
of this Note (a “Secondary Additional Interest Amount”) will accrue as
additional Interest on the Note for that period, be added to the outstanding
principal amount under this Note at the next Interest Payment Date following the
applicable period end date for which the Secondary Consolidated EBITDA Shortfall
occurred, and, from and after the date added to the outstanding principal,
accrue interest in the same manner as the outstanding principal under this
Note.  Each Secondary Additional Interest Amount will accrue in the same fashion
for each Secondary Consolidated EBITDA Shortfall.  For example, if Consolidated
Adjusted EBITDA for the four consecutive fiscal quarters ending on June 30, 2016
is less than $4,292,000, Consolidated Adjusted EBITDA for the four consecutive
fiscal quarters ending on September 30, 2016 is less than $4,998,000 and
Consolidated Adjusted EBITDA for the four consecutive fiscal quarters ending on
December 31, 2016 is at least $8,000,000 then a Secondary Additional Interest
Amount equal to $250,000 (2.1277 percent times the $11,750,000 original
principal amount of the Note) for the Q2 2016 Secondary Consolidated EBITDA
Shortfall would accrue and be added to principal at the first Interest Payment
Date following June 30, 2016, and a second Secondary Additional Interest Amount
equal to $250,000 for the Q3 2016 Secondary Consolidated EBITDA Shortfall would
accrue and be added to principal at the first Interest Payment Date following
September 30, 2016.

 

Fiscal Quarter

 

Minimum
Consolidated Adjusted EBITDA
(Trailing 4Qs)

 

Q1 2016

 

$

4,465,000

 

Q2 2016

 

$

4,292,000

 

Q3 2016

 

$

4,998,000

 

Q4 2016

 

$

8,000,000

 

 

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For the avoidance of doubt, each fiscal quarter during 2016 may have zero, one
or both of a Primary Additional Interest Amount and a Secondary Additional
Interest Amount added with respect to such quarter. Neither such Primary
Additional Interest Amount or Secondary Additional Interest Amount will increase
the Interest Rate (although each will increase the principal amount upon which
such Interest Rate applies upon being added to the outstanding principal amount
under the Note) and neither a Primary Consolidated EBITDA Shortfall or a
Secondary Consolidated EBITDA Shortfall shall in any event be deemed an Event of
Default under this Note.”

 

c.     Section 8(r) of the Note shall be amended and restated in full as
follows:

 

“(r)          permit Consolidated Adjusted EBITDA for the four consecutive
fiscal quarters ending on the last day of such fiscal quarter to fall below the
levels set forth below:

 

Fiscal Quarter

 

Minimum
Consolidated Adjusted EBITDA
(Trailing 4Qs)

 

Q1 2017

 

$

8,276,000

 

Q2 2017

 

$

8,738,000

 

Q3 2017

 

$

9,416,000

 

Q4 2017

 

$

10,000,000

 

Q1 2018

 

$

10,000,000

 

Q2 2018

 

$

10,000,000

 

Q3 2018

 

$

10,000,000

 

Q4 2018

 

$

10,000,000

 

Q1 2019

 

$

10,000,000

 

Q2 2019

 

$

10,000,000

 

Q3 2019

 

$

10,000,000

 

Q4 2019

 

$

10,000,000

 

Q1 2020

 

$

10,000,000

 

 

d.     Subsection 4(a) of the Note shall be amended to change “Subsection
2(b) and Subsection 2(c)” to “Subsections 2(b), 2(c), 2(d) and 2(e)”.

 

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e.     Subsection 5(a)(2) of the Note shall be amended to change “Subsection
2(b) and Subsection 2(c)” to “Subsections 2(b), 2(c), 2(d) and 2(e)”.

 

f.     Subsection 1(j) of the Note shall be amended by adding the following
sentence:

 

“For the avoidance of doubt, expense associated with accounts receivable written
off related to TRC shall not be excluded from Consolidated Adjusted EBITDA.”

 

g.     Subsection 1(p) of the Note shall be amended by adding the following
sentence:

 

“For the avoidance of doubt, state franchise taxes shall not be added to
Consolidated Net Income when calculating EBITDA.”

 

2.             Terms of Note.  Except as expressly modified hereby, all terms,
conditions and provisions of the Note shall continue in full force and effect. 
In the event of any inconsistency or conflict between the Note and this
Amendment, the terms, conditions and provisions of this Amendment shall govern
and control.  This Amendment shall be governed by, and construed in accordance
with, the laws of the State of Delaware (without reference to the conflicts of
law provisions thereof).

 

3.             Representations and Warranties of the Company. The Company makes
the following representations and warranties to Holders as of the date hereof:

 

a.     Due Authorization; No Conflict.

 

i.      The execution, delivery, and performance by the Company of this
Amendment has been duly authorized by all necessary action on the part of the
Company.

 

ii.     The execution, delivery, and performance by the Company of this
Amendment will not (1) violate any provision of federal, state, or local law or
regulation applicable to the Company, except where such violation contemplated
in this clause (1) would not reasonably be expected to have a material adverse
effect on the Company, (2) violate the Governing Documents of the Company, or
any order, judgment, or decree of any court or other Governmental Authority
binding on the Company,  (3) conflict with, result in a breach of, or constitute
(with due notice or lapse of time or both) a default under any other Contractual
Obligation of the Company, except where such conflict, breach or default
contemplated in this clause (3) would not reasonably be expected

 

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        to have a material adverse effect on the Company, (4) result in or
require the creation or imposition of any Lien of any nature whatsoever upon any
properties or assets of the Company, (5) require any approval of the Company’s
stockholders or any approval or consent of any Person under any other
Contractual Obligation of the Company, except where the failure to obtain
approval contemplated by this clause (5) would not reasonably be expected to
have a material adverse effect on the Company.

 

iii.    The execution, delivery, and performance by the Company of this
Amendment will not require any registration or filing with, consent, or approval
of, or notice to, or other action with or by, any Governmental Authority or
other Person, except where the failure to obtain, perform or provide such
registration, filing, consent, approval, notice or other action would not
reasonably be expected to have a material adverse effect on the Company.

 

iv.    This Amendment, when executed and delivered by the Company, will be the
legally valid and binding obligations of the Company, enforceable against the
Company in accordance with its terms, except as enforcement may be limited by
equitable principles or by bankruptcy, insolvency, reorganization, moratorium,
or similar laws relating to or limiting creditors’ rights generally.

 

v.     Any Taxes, fees and other governmental charges in connection with the
execution and delivery of this Amendment will be paid.

 

vi.    After giving effect to this Amendment, the security interests granted in
favor of Holder pursuant to the Security Documents are validly created,
perfected Liens and subject only to Permitted Liens.

 

b.     Fraudulent Transfer.

 

i.      The Company is, and after giving effect to the Amendment will be,
solvent.

 

ii.     No transfer of Property is being made by the Company and no obligation
is being incurred by the Company in connection with this Amendment with the
intent to hinder, delay, or defraud either present or future creditors of the
Company.

 

c.     Material Adverse Change.  Since December 31, 2014, there has been no
development or event that has had or would reasonably be expected to result in a
Material Adverse Change.

 

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4.                                      Representations and Warranties of the
Holder. The Holder makes the following representations and warranties to the
Company as of the date hereof:

 

a.              Authorization; No Contravention.  The execution, delivery and
performance by it of this Amendment:  (i) is within its power and authority and
has been duly authorized by all necessary action; (ii) does not contravene the
terms of its Governing Documents; and (iii) will not violate, conflict with or
result in any breach or contravention of any of its Contractual Obligations, or
any order or decree relating to it except where such violation would not
reasonably be expected to prohibit or place limitations on this Amendment.

 

b.              Binding Effect.  This Amendment has been duly executed and
delivered by it and this Amendment constitutes its legal, valid and binding
obligation, enforceable against it in accordance with its terms.

 

c.               Governmental Authorization; Third Party Consent.  No approval,
consent, compliance, exemption, authorization, or other action by, or notice to,
or filing with, any Governmental Authority or any other Person is necessary or
required on the part of the Holder in connection with the execution, delivery or
performance by it or enforcement against it of this Amendment.

 

5.                                      Fees and Expenses.  This Company shall
promptly reimburse to Holder all Fees and Expenses incurred by the Holder in
connection with this Amendment, up to $50,000.

 

6.                                      Entire Agreement.  This Amendment and
the Transaction Documents constitute the entire and exclusive agreement between
the parties with respect to this subject matter.  All previous discussions and
agreements with respect to the subject matter of this Amendment are superseded
by this Amendment.  This Amendment may be executed in one or more counterparts,
each of which shall be an original and all of which taken together shall
constitute one and the same instrument.

 

[Signature Pages Follow]

 

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IN WITNESS WHEREOF, the parties hereto have executed this Amendment to the
Subordinated Secured Convertible Promissory Note as of the date first above
written.

 

 

COMPANY:

LIME ENERGY CO.

 

 

 

 

 

By:

/s/ Adam Procell

 

 

 

 

Name:

Adam Procell

 

 

 

 

Title:

President

 

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IN WITNESS WHEREOF, the parties hereto have executed this Amendment to the
Subordinated Secured Convertible Promissory Note as of the date first above
written.

 

 

HOLDER:

BISON CAPITAL PARTNERS IV, L.P.

 

 

 

 

By: 

Bison Capital Partners IV GP, L.P.

 

Its: 

General Partner

 

 

 

 

 

 

By:

Bison Capital Partners GP, LLC

 

 

Its:

General Partner

 

 

 

 

By:

/s/ Andreas Hildebrand

 

 

 

 

Name:

Andreas Hildebrand

 

 

 

 

Title:

Member

 

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ACKNOWLEDGEMENT

 

By executing this Acknowledgment, each Guarantor hereby (i) consents to the
execution, delivery and performance by Company of this Amendment, and to each of
the transactions contemplated by the Amendment, (ii) agrees that nothing
contained in the Amendment shall diminish, alter, amend, except to the extent
expressly stated in the Amendment, or otherwise affect its respective
obligations under the Guarantee Agreement to which it is party, (iii) ratifies
and confirms that the Guarantee Agreement to which it is a party shall continue
in full force and effect and agrees that it shall continue to be liable under
such Guarantee Agreement in accordance with the terms thereof, (iv) represents
and warrants that it has no defense, counterclaim or offset right whatsoever
with respect to its obligations under the Guarantee Agreement to which it is a
party, (v)  represents and warrants that its execution and delivery of this
Acknowledgement has been duly authorized by all necessary action on the part of
such Guarantor, and (vi) represents and warrants that its consents and
agreements above are not necessary for the continued validity and enforceability
of the Guarantee Agreement to which it is a party.

 

GUARANTORS:

 

 

 

 

 

Lime Energy Services Co.

 

Landmark Electrical and Mechanical Services, LLC

 

 

 

By:

/s/ Adam Procell

 

By:

/s/ Adam Procell

Name: Adam Procell

 

Name: Adam Procell

Title: President

 

Title: President

 

 

 

ADVB Acquisition Corp.

 

EnerPath International Holding Company

 

 

 

 

By:

/s/ Adam Procell

 

By:

/s/ Adam Procell

Name: Adam Procell

 

Name: Adam Procell

Title: President

 

Title: President

 

 

 

Landmark Services Company

 

EnerPath Services, Inc.

 

 

 

By:

/s/ Adam Procell

 

By:

/s/ Adam Procell

Name: Adam Procell

 

Name: Adam Procell

Title: President

 

Title: President

 

 

 

Lime Energy Asset Development, LLC

 

EnerPath, Inc.

 

 

 

By:

/s/ Adam Procell

 

By:

/s/ Adam Procell

Name: Adam Procell

 

Name: Adam Procell

Title: President

 

Title: President

 

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Lime Finance, Inc.

 

Lime International Ventures Limited

 

 

 

By:

/s/ Adam Procell

 

By:

/s/ Adam Procell

Name: Adam Procell

 

Name: Adam Procell

Title: President

 

Title: Director

 

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