2.4.0.81140 - Disclosure - Subordinated Convertible Term Notestruefalsefalse1false falsefalseD2012http://www.sec.gov/CIK0001065860duration2012-01-01T00:00:002012-12-31T00:00:001true 1lime_SubordinatedConvertibleTermNotesDisclosureAbstractlime_falsenadurationfalsefalsefalsefalsefalsefalsefalsefalse1falsefalsefalse00falsefalsefalsexbrli:stringItemTypestringfalse0Subordinated Convertible Term Notes2false 2us-gaap_SubordinatedBorrowingsDisclosureTextBlockus-gaap_truenadurationfalsefalsefalsefalsefalsefalsefalsefalseterseLabel1falsefalsefalse00<div style="font-size:10.0pt;font-family:Times New Roman;"> Note 14 — Subordinated Convertible Term Notes   On October 22, 2012, the Company entered into a Convertible Note and Warrant Purchase Agreement (the “Purchase Agreement”) with a group of investors including Mr. Richard Kiphart, the Company’s Chairman and largest individual stockholder, and Mr. Christopher Capps, a member of its Board of Directors (collectively with the other investors, the “Holders”).  Pursuant to the terms of the Purchase Agreement, the Holders lent the Company $6,050,000 under a Subordinated Secured Convertible Pay-In-Kind Note (the “Notes”).  The Note has a term of five years, will accrue interest at the rate of 12-1/2% per year, payable semi-annually at the Company’s election in cash or additional Notes.   The Holders are entitled to convert the Notes at any time, at their election, into shares of the Company’s common stock at a conversion price equal to $0.7325 per share (the “Conversion Price’).  The Company can require conversion of the notes  if the weighted average price for the its common stock (i) during the period commencing on the issuance date and terminating on the first anniversary of the issuance date, is at least two hundred percent (200%) of the Conversion Price for at least 20 trading days during a 30 trading day period ending within 5 trading days prior to the Company sending a notice of forced conversion to the holders of the Notes, or (ii) during the period commencing on the day following the first anniversary of the issuance date and terminating on the maturity date, is at least one hundred seventy-five percent (175%) of the Conversion Price for at least 20 trading days during a 30-trading day period ending within 5 trading days prior to the Company sending a forced conversion notice to the holders of the Notes.  The number of shares the Company shall be obligated to issue will be limited such at it would not violate any requirements of any exchange upon which it might be listed at the time of the conversion.   The Holders can require that the Company redeem all or any portion of the Notes upon the occurrence of a Trigger Event.  Trigger Events include (i) failure to have sufficient authorized shares at any time following the 60th day after issuance, (ii) failure to pay any amount of principal, interest or other amounts when and as due under the notes, (iii) if it voluntarily or involuntarily seeks protection under bankruptcy laws, or iv) if it breaches any representation, warranty or covenant or other term or condition of any transaction document.   The Company is required to redeem the Notes upon a Change of Control at the Change of Control Premium.  The Change of Control Premium is defined as (i) 130% from the Issuance Date through the second anniversary of the Issuance Date, (ii) 120% after the second anniversary of the Issuance Date through the fourth anniversary of the Issuance Date and (iii) 100% thereafter.   Under the terms of the Note, the Company covenants not to ( i) redeem debt that is subordinated to the Notes, or (ii) redeem, repurchase or declare or pay a cash dividend or distribution on its capital stock.  The Notes are subordinated to (i) all commercial loans or other credit facilities that are or will be secured by all or substantially all of the assets of the Company and that have been approved by the Company’s Board of Directors as senior in rank to the Notes and (ii) any and all obligations to the issuers of surety bonds and performance bonds for which the Company or any of its subsidiaries is the principal obligor.   In connection with the entry into the Purchase Agreement, the Company issued the Holders warrants to purchase 4,514,927 shares of its common stock at $0.67 per share (the “Warrants”).  These warrants expire on the 5th anniversary of their issuance and contain a cashless-exercise option.  The Company determined the value of the Warrants to be $1.4 million using a trinomial option pricing model.   The Purchase Agreement requires that the Company seek stockholder approval and file an amendment to the Company Certificate of Incorporation with the Delaware Secretary of State to increase the Company’s authorized number of shares of Common Stock by February 28, 2013 to, at a minimum, a number that will allow the Company to issue all shares of Common Stock issuable upon conversion of the Notes and exercise of the Warrants.  In addition, in accordance with NASDAQ rules, the aggregate number of shares issuable upon conversion of the Notes and exercise of the Warrants shall not exceed 20% of the issued and outstanding shares prior to the transaction unless the stockholders of the Company have approved the transaction.  The Company has determined that it has a sufficient number of authorized shares to cover the conversion of the Notes and exercise of the Warrants, therefore did not need to seek stockholder approval to increase the number of authorized shares.   In recording the transaction, the Company allocated the value of the proceeds to the Notes and Warrants based on their relative fair values.  In doing so, it determined that the Notes contained a beneficial conversion feature since the fair market value of the common stock issuable upon conversion of the Notes (determined on the Note issuance date) exceeded the value allocated to the Notes of $4,924,000.  The Term Notes are convertible into 8,259,386 shares of common stock, which at the market price of $0.64 per share on date of issuance of the Notes was worth $5,286,000.  The difference between the market value of the shares issuable upon conversion and the value allocated to the Notes of $362,000 was considered to be the value of the beneficial conversion feature.   The value of the beneficial conversion feature and the value of the warrants were recorded as a discount to the Notes which was then amortized over the term of the Notes using the effective interest method.  Amortization of the discount of $50,000 was included in interest expense during the year ended December 31, 2012.   In addition, the Company incurred costs of approximately $37,000 relative to issuance of the Notes.  These costs were capitalized and were also being amortized over the term of the Notes using the effective interest method.  Amortization of the deferred issuance costs of $2,000 was included in interest expense during the year ended December 31, 2012.   The Company elected to pay the interest accrued through December 31, 2012, of $137,000 in additional Notes. </div>falsefalsefalsenonnum:textBlockItemTypenaThe entire disclosure for borrowings under subordinated debt agreements that qualify as available in computing net capital under SEC's uniform net capital rule, including restrictive covenants, collateral, interest rates and due dates, amounts due by date and amount owed in total.Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher AICPA -Name Audit and Accounting Guide (AAG) -Number AAG-BRD -Paragraph 80 -Subparagraph Exhibit 4-8, 9 -IssueDate 2006-05-01 -Chapter 4 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher AICPA -Name Audit and Accounting Guide (AAG) -Number AAG-BRD -Paragraph 08 -IssueDate 2006-05-01 -Chapter 4 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. false0Subordinated Convertible Term NotesfalseSubordinated Convertible Term NotesUnKnownUnKnownUnKnownUnKnowntruefalsefalseNoteshttp://www.lime-energy.com/role/DisclosureSubordinatedConvertibleTermNotes12