DEPOSIT ACCOUNT PLEDGE
AGREEMENT
(SPI Reserve Account Pledge)
THIS DEPOSIT
ACCOUNT PLEDGE AGREEMENT (this “ Agreement ”),
dated June 22, 2010, is entered into between Solar Power,
Inc., a California corporation (“ Grantor ”) and
Umpqua Bank, an Oregon corporation (“ Lender ”).
For valuable consideration, Grantor grants to Lender a security
interest in the Collateral to secure the Indebtedness of Solar Tax
Partners 1, LLC, a California limited liability company (“
Borrower ”) and agrees that Lender shall have the
rights stated in this Agreement with respect to the Collateral, in
addition to all other rights which Lender may have under the Loan
Documents or by law.
DEFINITIONS . The following words shall have the following
meanings when used in this Agreement. Terms not otherwise defined
in this Agreement or in the Loan Agreement shall have the meanings
attributed to such terms in the Uniform Commercial Code. All
references to dollar amounts shall mean amounts in lawful money of
the United States of America.
Collateral
. The word “ Collateral ” means the following
described property of Grantor, whether now owned or hereafter
acquired, whether now existing or hereafter arising, and wherever
located: Umpqua Bank deposit account No. 991976481,
established in the name of Grantor (the “ Deposit
Account ”). The Deposit Account is the “SPI Reserve
Account” as such term is defined in the Loan Agreement.
Grantor acknowledges that the Deposit Account is a
“blocked” account and that the funds therein are
available only to Lender for application to the Indebtedness as and
when permitted by the Loan Documents.
In addition, the
word “ Collateral ” includes all the following,
whether now owned or hereafter acquired, whether now existing or
hereafter arising, and wherever located:
(a) All
increases, and additions to and all replacements of and
substitutions for the Collateral.
(b) All
products and produce of the Collateral, including but not limited
to interest.
(c) All
accounts, general intangibles, instruments, rents, monies,
payments, and all other rights, arising out of a sale, lease, or
other disposition of any of the Collateral.
(d) All
proceeds (including insurance proceeds) from the sale, destruction,
loss, or other disposition of any of the property described in this
Collateral section.
(e) All
records and data relating to any of the property described in this
Collateral section, whether in the form of a writing, photograph,
microfilm, microfiche, or electronic media, together with all of
Grantor’s right, title, and interest in and to all computer
software required to utilize, create, maintain, and process any
such records or data on electronic media.
Event of
Default . The words “ Event of Default ”
mean and include without limitation any of the Events of Default
set forth in any of the Loan Documents.
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Indebtedness . The word “ Indebtedness ”
means the indebtedness evidenced by the Note, including all
principal and interest, together with all other indebtedness and
costs and expenses for which Borrower is responsible under the Loan
Documents. In addition, the word “Indebtedness”
includes all other obligations, debts and liabilities, plus
interest thereon, of Borrower to Lender, as well as all claims by
Lender against Borrower whether existing now or later; whether they
are voluntary or involuntary, due or not due, direct or indirect,
absolute or contingent, liquidated or unliquidated; whether
Borrower may be liable individually or jointly with others; whether
Borrower may be obligated as guarantor, surety, accommodation party
or otherwise; whether recovery upon such indebtedness may be or
hereafter may become barred by any statute of limitations; and
whether such indebtedness may be or hereafter may become otherwise
unenforceable.
Note . The
word “ Note ” means that certain Promissory Note
of even date herewith, executed by Borrower in favor of Lender, in
the principal amount of Nine Million Nine Hundred Fifty Thousand
and 00/100 Dollars ($9,950,000.00).
Loan
Agreement . The words “ Loan Agreement ”
mean that certain Loan Agreement executed by Borrower and Lender of
even date herewith, with respect to the Note and the
Indebtedness.
Loan
Documents . The words “ Loan Documents ”
means all documents evidencing, securing, or executed in connection
with the Indebtedness, whether now or hereafter existing, including
but not limited to the Loan Agreement, the Note, the Security
Documents and this Agreement, each as they may be modified,
amended, extended, renewed, superseded or substituted from time to
time.
Uniform
Commercial Code. The words “ Uniform Commercial
Code ” shall mean the California Uniform Commercial Code,
as it may be amended from time to time.
OBLIGATIONS OF
GRANTOR . Grantor warrants and covenants to Lender as
follows:
Perfection
of Security Interest .
Grantor agrees to take whatever actions are requested by Lender to
create, perfect and continue Lender’s security interest in
the Collateral, including but not limited to execution of signature
cards, deposit account agreements and similar documents. Upon
request of Lender, Grantor will deliver to Lender any and all of
the documents evidencing or constituting the Collateral, and
Grantor will note Lender’s interest upon any and all chattel
paper if not delivered to Lender for possession by Lender. Grantor
hereby appoints Lender as its irrevocable attorney-in-fact for the
purpose of executing any documents necessary to create, perfect or
continue the security interest granted in this Agreement. Lender
may at any time, and without further authorization from Grantor,
file a carbon, photographic or other reproduction of any financing
statement or of this Agreement for use as a financing statement.
Grantor will reimburse Lender for all expenses for the perfection
and the continuation of the perfection of Lender’s security
interest in the Collateral. Grantor promptly will notify Lender
before any change in Grantor’s name, including any change to
any assumed business names of Grantor. This
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is a continuing
agreement and will continue in effect until the Indebtedness is
indefeasibly paid and performed in full; provided, however that: if
(1) Borrower has achieved a Debt Service Coverage Ratio of not
less than 1.20:1.00 as of the end of the Fourth Loan Year and the
Fifth Loan Year, or if Borrower achieves a Debt Service Coverage
Ratio of not less than 1.20:1.00 as of the end of each of two
subsequent and consecutive Loan Years beginning with the Sixth Loan
Year, and (2) at that time the Debt Service Reserve Account is
fully funded in the amount of $700,000, or more, then the Lender
will release its security interest in the SPI Reserve
Account.
No
Violation . The execution and delivery of this Agreement will
not violate any law or agreement governing Grantor or to which
Grantor is a party, and its articles of incorporation and bylaws do
not prohibit any term or condition of this Agreement.
Transactions
Involving Collateral . Grantor shall not sell, offer to sell,
or otherwise transfer or dispose of the Collateral. Grantor shall
not pledge, mortgage, encumber or otherwise permit the Collateral
to be subject to any lien, security interest, encumbrance, or
charge, other than the security interest provided for in this
Agreement, without the prior written consent of Lender. This
includes security interests even if junior in right to the security
interests granted under this Agreement.
Title .
Grantor represents and warrants to Lender that it holds good and
marketable title to the Collateral, free and clear of all liens and
encumbrances except for the lien of this Agreement. No financing
statement covering any of the Collateral is on file in any public
office other than those which reflect the security interest created
by this Agreement or to which Lender has specifically consented,
and Grantor has not entered into any control agreement with any
other creditor concerning the Deposit Account. Grantor shall defend
Lender’s rights in the Collateral against the claims and
demands of all other persons.
Liens .
Grantor will pay when due all taxes, assessments and liens upon the
Collateral. Grantor may withhold any such payment or may elect to
contest any lien if Grantor is in good faith conducting an
appropriate proceeding to contest the obligation to pay and so long
as Lender’s interest in the Collateral is not jeopardized in
Lender’s sole opinion. If the Collateral is subjected to a
lien which is not discharged within fifteen (15) days, Grantor
shall deposit with Lender cash, a sufficient corporate surety bond,
or other security satisfactory to Lender in an amount adequate to
provide for the discharge of the lien plus any interest, costs,
attorneys’ fees or other charges that could accrue as a
result of any lien on the Collateral. In any contest Grantor shall
defend itself and Lender, and shall satisfy any final adverse
judgment before enforcement against the Collateral. Grantor shall
name Lender as an additional obligee under any surety bond
furnished in the contest proceedings.
Compliance
with Governmental Requirements . Grantor shall comply promptly
with all laws, ordinances, rules and regulations of all
governmental authorities, now or hereafter in effect, applicable to
the ownership, production, disposition, or use of the Collateral.
Grantor may contest in good faith any such law, ordinance or
regulation and withhold compliance during any proceeding, including
appropriate appeals, so long as Lender’s interest in the
Collateral, in Lender’s opinion, is not
jeopardized.
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EXPENDITURES
BY LENDER . If not discharged or paid when due, Lender may (but
shall not be obligated to) discharge or pay any amounts required to
be discharged or paid by Grantor under this Agreement, including
without limitation all taxes, liens, security interests,
encumbrances, and other claims, at any time levied or placed on the
Collateral. Lender also may (but shall not be obligated to) pay all
costs for insuring, maintaining and preserving the Collateral. All
such expenditures incurred or paid by Lender for such purposes will
then bear interest at the rate charged under the Note from the date
incurred or paid by Lender to the date of repayment by Grantor. All
such expenses shall become a part of the Indebtedness and, at
Lender’s option, will: (a) be payable on demand;
(b) be added to the balance of the Note and be apportioned
among and be payable with any installment payments to become due
during either: (i) the remaining term of the Note; or
(ii) be treated as a balloon payment which will be due and
payable at the Note’s maturity. This Agreement also will
secure payment of these amounts. Such right shall be in addition to
all other rights and remedies to which Lender may be entitled upon
the occurrence of an Event of Default.
CONSENTS OF
GRANTOR : The Grantor hereby unconditionally consents and
agrees that, without notice to or further assent from the
Grantor:
(a) the
principal amount of the Indebtedness may be increased or decreased
and additional Indebtedness or obligations of the Borrower under
the Loan Documents may be incurred, by one or more amendments,
modifications, renewals or extensions of any Loan Document or
otherwise;
(b) the
time, manner, place or terms of any payment under any Loan Document
may be extended or changed, including by an increase or decrease in
the interest rate on any Indebtedness or any fee or other amount
payable related to the Indebtedness or under such Loan Document, by
an amendment, modification or renewal of any Loan Document or
otherwise;
(c) the
time for the Borrower’s (or any other Person’s)
performance of or compliance with any term, covenant or agreement
on its part to be performed or observed under any Loan Document may
be extended, or such performance or compliance waived, or failure
in or departure from such performance or compliance consented to,
all in such manner and upon such terms as the Lender may deem
proper;
(d) the
Lender may discharge or release, in whole or in part, any other
grantor of security for the Indebtedness, or any Guarantor or other
Person liable for the payment and performance of all or any part of
the Indebtedness, and may permit or consent to any such action or
any result of such action, and shall not be obligated to demand or
enforce payment upon any of the collateral for the Indebtedness,
nor shall the Lender be liable to the Grantor for any failure to
collect or enforce payment or performance of the Indebtedness from
any Guarantor or Person or to realize on the collateral
therefor;
(e) in
addition to the collateral encumbered by the Security Documents,
the Lender may take and hold other security (legal or equitable) of
any kind, at any time, as collateral for the Indebtedness, and may,
from time to time, in whole or in part, exchange, sell, surrender,
release, subordinate, modify, waive, rescind, compromise or extend
such security and may permit
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or consent to
any such action or the result of any such action, and may apply
such security and direct the order or manner of sale
thereof;
(f) the
Lender may request and accept other guaranties of the Indebtedness
and any other obligations or liabilities of the Borrower to the
Lender and may, from time to time, in whole or in part, surrender,
release, subordinate, modify, waive, rescind, compromise or extend
any such guaranty and may permit or consent to any such action or
the result of any such action; and
(g) the
Lender may exercise, or waive or otherwise refrain from exercising,
any other right, remedy, power or privilege (including the right to
accelerate the maturity of any Indebtedness and any power of sale)
granted by any Loan Document or Security Document or agreement, or
otherwise available to the Lender, with respect to the
Indebtedness, any of the collateral or other security for any or
all of the Indebtedness, even if the exercise of such right,
remedy, power or privilege affects or eliminates any right of
subrogation or any other right of the Grantor against the
Borrower;
all as the Lender
may deem advisable, and all without impairing, abridging, releasing
or affecting this Agreement.
(a) Grantor
waives and agrees not to assert:
(i) any
right to require the Lender to marshal assets in favor of the
Borrower, the Grantor, any Guarantor or any other Person, to
proceed against the Borrower, any other grantor of collateral for
the Indebtedness or any Guarantor or other Person, to proceed
against or exhaust any of the collateral or any other security held
for the Indebtedness, to give notice of the terms, time and place
of any public or private sale of personal property security
constituting the collateral or any other collateral or security for
the Indebtedness or comply with any other provisions of §9504
of the Uniform Commercial Code (or any equivalent provision of any
other applicable law) or to pursue any other right, remedy, power
or privilege of the Lender whatsoever;
(ii) the
defense of the statute of limitations in any action hereunder or
for the collection or performance of the Indebtedness;
(iii) any
defense arising by reason of any lack of corporate or other
authority or any other defense of the Borrower, the Grantor, any
Guarantor, or any other Person;
(iv) any
defense based upon the Lender or Trustee’s errors or
omissions in the administration of the Indebtedness;
(v) any
rights to set-offs and counterclaims;
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(vi) (A) the
Grantor’s rights of subrogation, reimbursement,
indemnification, and contribution and (B) any other rights and
defenses that are or may become available to the Grantor by reason
of California Civil Code Sections 2787 to 2855,
inclusive;
(vii) any
rights or defenses the Grantor may have in respect of its
obligations as a grantor of collateral for the Indebtedness, a
guarantor or other surety by reason of any election of remedies by
the creditor;
(viii) any
rights or defenses Grantor may have because the Loan obligation is
secured by real property or an estate for years. These rights or
defenses include, but are not limited to, any rights or defenses
that are based upon directly or indirectly, the application of
Section 580a, 580b, 580d or 726 of the California Code of
Civil Procedure to the Loan;
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