Exhibit 10.1
Letter of Credit AGREEMENT
THIS LETTER OF CREDIT AGREEMENT (this
“ Agreement ”) is made as of July 11, 2008,
between Lime Energy Co., a Delaware corporation (“
Lime ”) and Richard P. Kiphart (“
Guarantor ”).
WHEREAS,
Applied Energy Management, Inc. and its subsidiaries (collectively,
“ AEM ”) are subsidiaries of Lime.
WHEREAS,
AEM is in need of letters of credit (“ Letters of
Credit ”) guaranteeing certain future liabilities of AEM
to construction surety bonding companies (each a “ Bonding
Company ”) in connection with construction surety bonds
issued in support of AEM projects subject to bonded construction
contracts (“ Bonded Projects ”).
WHEREAS,
Guarantor has agreed to cause the issuance of certain Letters of
Credit for the account and on behalf of Lime and/or AEM in an
aggregate amount of $10,000,000 under the terms set forth
herein.
NOW,
THEREFORE, the parties hereto agree as follows:
Letters of Credit . Guarantor hereby agrees to cause the
issuance of any and all Letters of Credit for the benefit of
Bonding Companies at Lime’s request, up to an aggregate
amount of $10,000,000.
Termination of Guarantor’s Obligation . Guarantor will
have no obligation to cause the issuance of or leave in place any
Letters of Credit on and after the earlier of
(i) July 10, 2009 or (ii) the date on which Lime
completes an offering resulting in gross proceeds to Lime of at
least $20,000,000 (the “ New Obligation Termination
Date ”); provided, however, that each existing Letter of
Credit issued prior to the New Obligation Termination Date shall
remain in place and in effect, subject to a reduction of the amount
of the Letter of Credit to the extent permitted by the subject
Bonding Company, until completion of the applicable Bonded Project
and release or termination of the accompanying surety bond. The
date on which each Letter of Credit is terminated shall be its
“ Termination Date ”.
Indemnification Obligation . Lime hereby agrees to indemnify
the Guarantor for any liability in connection with any payment or
disbursement made under any Letter of Credit (the “ Letter
of Credit Liability ”). Lime hereby agrees that the
entire amount of any Letter of Credit Liability incurred by
Guarantor shall be payable within ten (10) business days of
Lime’s receipt of Guarantor’s written demand.
Letter of Credit Expenses . Lime agrees to reimburse the
Guarantor for all fees and out-of-pocket expenses incurred by
Guarantor with respect to each Letter of Credit (including, without
limitation, all fees associated with the procurement of, amendment
to, drawing under, banker’s acceptance pursuant to, or
transfer of a Letter of Credit) (the “ Letter of Credit
Expenses ”) within ten (10) business days of
Lime’s receipt of Guarantor’s written demand following
the Guarantor’s payment of the Letter of Credit
Expenses.
Guarantor’s Fees . For each outstanding Letter of
Credit, Lime agrees that it will pay, on the first business day of
each calendar quarter and on the Termination Date, to the
Guarantor, a fee equal to the product of 3-5/8% per annum
multiplied by the average daily face amount of the outstanding
Letter of Credit during the immediately preceding calendar quarter
or shorter period if calculated to the first calendar quarter
hereafter or the Termination Date (the “ Guarantor
Fees ”). The Guarantor Fees shall be computed on the
basis of a 360-
