Document:

Exhibit
      10.31

     

    AR
      NOTE ISSUANCE AGREEMENT

     

    This
      AR
      Note Issuance Agreement (this “Agreement”)
      is
      dated as of the 6th day of June, 2008, and is made by and between Lime Energy
      Co., a Delaware corporation (the “Company”),
      and
      Richard P. Kiphart (“Kiphart”)
      and
      Advanced Biotherapy, Inc. (“ADVB”
and
      together with Kiphart, “Noteholders”).

     

    W
      I T N E
      S S E T H:

     

    WHEREAS,
      the Company and the Noteholders are parties to that certain Note Issuance
      Agreement dated as of March 12, 2008 (the “Existing
      Agreement”),
      pursuant to which the Company issued to the Noteholders that certain
Revolving
      Line of Credit Note dated March 12, 2008 and due March 31, 2009, in the maximum
      principal amount of $3,000,000 (the “Existing
      Note”);
      and

     

    WHEREAS,
      Kiphart desires to increase his commitment to the Company, and the parties
      desire to amend and restate the Existing Note and to divide it into two separate
      Notes (the “AR
      Notes”)
      payable to each Lender and separately reflecting each Lender’s commitment to the
      Company; 

     

    WHEREAS,
      the Company has agreed to make the AR Notes convertible if they are not paid
      at
      maturity; and

     

    WHEREAS,
      the parties desire to set forth certain additional understandings among
      themselves relating to the obligations of the Company to Noteholders and to
      certain other matters, all as more fully described herein;

     

    NOW,
      THEREFORE, in consideration of the premises and mutual agreements contained
      herein, the parties hereby agrees as follows:

     

    1.  Amended
      and Restated Notes.
      Contemporaneously with the execution of this Agreement and delivery by the
      Company to the Noteholders of the AR Notes, Noteholders shall deliver to the
      Company the original Existing Note.

     

    2.  Condition
      to Advances.
      It
      shall be a condition to each advance under the AR Notes that no Event of Default
      (as defined in the 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.

     

    3.  Manner
      of Advances, Repayments and Prepayments.
      All
      advances requested by the Company shall be drawn 95/110 from Kiphart’s AR Note
      and 15/110 from ADVB’s AR Note. As long as both AR Notes remain outstanding, all
      repayments and prepayments shall be made between the two AR Notes in the same
      proportion.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    4.  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 its
      AR
      Note remains outstanding continue to reserve a sufficient amount of cash or
      other immediately liquid assets as to enable it to make advances under its
      AR
      Note.

     

    5.  Subordination
      by Noteholders.
      Each
      Noteholder agrees to subordinate its AR Note 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.

     

    6.  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 AR Notes, subject to the Company’s
      obligations under Regulation F-D.

     

    7.  Arbitration.
      In the
      event of any and all disagreements and controversies arising from this Agreement
      or the 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.

     

    8.  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 AR Note permitted by the terms
      thereof.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (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.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    IN
      WITNESS
      WHEREOF, the undersigned have executed this Agreement as of the day and year
      first above written.

     

    LIME
      ENERGY CO.

    

    By:
      /s/
      Jeffrey
      Mistarz                
         

    Name:
      Jeffrey R. Mistarz

    Title:
      Executive Vice President and Chief Financial Officer

     

    NOTEHOLDERS:

    

    By:
      /s/
      Richard
      Kiphart                        

    Name: RICHARD
      P. KIPHART

     

    ADVANCED
      BIOTHERAPY
      INC.

    

    By:
      /s/
      Christopher
      Capps                   

             Christopher
      W. Capps, Presidentv117221_ex10-1 -- Converted by SECPublisher 2.1.1.8, created by BCL Technologies Inc., for SEC Filing

  

    

      Exhibit
        10.1

      

      Pursuant
        to 17 C.F.R. 240-24b-2 confidential information in
        the
        License Agreement has been omitted in places marked “(***)” and has been filed
        separately with the United States Securities and Exchange Commission (the
        “Commission”) pursuant to a Confidential Treatment Application filed with the
        Commission.

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