RESERVE ACCOUNT SECURITY AGREEMENT
EXHIBIT 10.1
THIS RESERVE ACCOUNT SECURITY AGREEMENT (this “Agreement” or this “Reserve
Agreement”) is made as of January 7, 2011, by and between SOLAR POWER, INC., a California
corporation (“Pledgor”), and EAST WEST BANK, as lender under the Loan Agreement described
below (“Lender”).
Recitals
A. This Agreement is being executed in connection with a loan in the amount of $9,900,000 (the
“Loan”), evidenced by a Term Loan Note of even date herewith executed by Solar Tax Partners
I, LLC, a California limited liability company (“Borrower”), in favor of Lender (the
“Term Loan Note”), to refinance certain solar energy facilities located in Sacramento
County, California (the “Project”).
B. The Loan is being made on the terms and conditions set forth in a Term Loan Agreement of
even date herewith between the Borrower and Lender (the “Loan Agreement”). Capitalized
terms utilized but not defined in this Agreement shall have the respective meanings assigned
thereto in the Loan Agreement.
C. Borrower, Lender and Master Tenant 2008-C LLC (“Master Tenant’) have entered into
that certain Depositary Agreement dated as of the date hereof (the “Depositary Agreement”)
pursuant to which Borrower has agreed to the creation of a debt service reserve account (the
“Borrower Debt Service Reserve Account”) and pursuant to which Borrower has granted to
Lender a security interest in all of the accounts governed by the Depositary Agreement as security
for the Obligations.
D. As additional security for the Obligations, Pledgor has agreed to enter into this Agreement
and make certain deposits with Lender for debt service charges related to the Loan (the
“Reserves”).
Agreement
NOW, THEREFORE, in consideration of the above and the mutual promises contained in this
Agreement, the receipt and sufficiency of which are acknowledged, Pledgor and Lender agree as
follows:
1. Deposits to the Supplemental Debt Service Reserve Account. On or before the
Closing Date, Pledgor shall deposit or cause to be deposited with Lender in an account that meets
the standards for restricted accounts as required by Lender (the “Supplemental Debt Service
Reserve Account”) an amount equal to $400,000 (the “Supplemental Debt Service Reserve
Requirement”). Until the earlier of (a) the Discharge Date and (b) the date on which Tax
Equity Investor sells its interest in Master Tenant pursuant to the put/call option in the Master
Tenant Operating Agreement, Lender shall have the sole right to make withdrawals from the
Supplemental Debt Service Reserve Account. All interest earned on funds in the Supplemental Debt
Service Reserve Account shall be added to and become part of the Supplemental Debt Service Reserve
Account, provided that Lender shall not be responsible for any losses resulting from the investment
of the Supplemental Debt Service Reserve Account or for obtaining any specific level or percentage
of earnings on such investment.
2. Disbursements From Supplemental Debt Service Reserve Account Prior to Default.
Lender shall disburse amounts from the Supplemental Debt Service Reserve Account as necessary for
the payment of principal and interest on the Loan; provided, however, that (i) Lender shall not be
obligated to make disbursements from the Supplemental Debt Service Reserve Account at any time that
funds sufficient to cover all principal and interest payable at such time on the Loan are available
in the Borrower Blocked Account (as defined in the Depositary Agreement), the Borrower Debt Service
Reserve Account or from any other source and (ii) Lender shall not be obligated to make such
disbursements during the existence of an Event of Default (unless such Event of Default consists
solely of the failure to pay principal and/or interest on the Loan when due). Notwithstanding
anything herein to the contrary, and except for the application of funds by Lender pursuant to
Section 5(b) below, for so long as
Greystone Renewable Energy Manager, LLC (“Greystone”) is a member of Greystone
Renewable Energy Fund 2008-A, LLC (the “Fund”), and the Fund is a member of Master Tenant,
Lender shall not make any disbursements under this Agreement without the prior written consent of
Greystone, which consent shall not be unreasonably withheld, delayed or conditioned.
3. Security Interest. As collateral security for the prompt and complete payment and
performance when due of the Obligations, Pledgor hereby pledges, assigns, hypothecates and
transfers to Lender and grants to Lender a Lien on all of its right, title and interest in, to and
under the Supplemental Debt Service Reserve Account and all cash, instruments, investment property,
securities, “security entitlements” (as defined in Section 8-102(a)(17) of the UCC) and other
financial assets (within the meaning of Section 8-102(a)(9) of the UCC) at any time on deposit in
any such Supplemental Debt Service Reserve Account, including all income, earnings and
distributions thereon and all proceeds, products and accessions of and to any and all of the
foregoing, including whatever is received or receivable upon any collection, exchange, sale or
other disposition of any of the foregoing and any Property into which any of the foregoing is
converted, whether cash or non-cash proceeds, and any and all other amounts paid or payable under
or in connection with any of the foregoing.
4. Reduction of Supplemental Debt Service Reserve Requirement. On January 1 of each
year following the year in which this Agreement is entered into, provided that no Default or Event
of Default exists under the Loan Documents, and subject to confirmation by Greystone that there is
no default or breach under the terms of the Borrower’s operating agreement and/or the Master
Tenant’s operating agreement, Lender shall disburse to Pledgor from the Supplemental Debt Service
Reserve Account an amount equal to $80,000 and the Supplemental Debt Service Reserve Requirement
shall be reduced by such amount on such date.
5. Default.
(a) Default Under This Agreement. Pledgor shall be in default under this Agreement if
Pledgor fails to pay any amount due hereunder or if Pledgor fails to comply with any other
provision of this Agreement. Pledgor agrees that a default under this Agreement shall be deemed to
be an Event of Default under the Loan Documents, and that in addition to the remedies specified in
this Agreement, Lender shall be able to exercise all of its rights and remedies under the Loan
Documents.
(b) Application of Reserves Upon Default. Upon the occurrence and continuance of a
default under this Agreement or an Event of Default under the Loan Documents (other than a payment
default that can be cured by application by Lender of the Reserves as provided in Section 2
herein and with respect to which Greystone has granted its consent to such application within three
(3) Business Days of such payment default), Lender may in its sole and absolute discretion use the
Reserves (or any portion thereof) for any purpose relating to the Loan, including but not limited
to (A) repayment of any Obligations; provided, however, that such application of funds shall not
cure or be deemed to cure any default or Event of Default; (B) reimbursement of Lender for all
losses and reasonable expenses (including, without limitation, reasonable legal fees) suffered or
incurred by Lender as a result of such default or Event of Default; or (C) payment of any amount
expended in exercising all rights and remedies available to Lender at law or in equity or under
this Agreement or under any of the other Loan Documents. Nothing in this Agreement shall obligate
Lender to apply all or any portion of the Reserves on account of any default or Event of Default by
Pledgor or to repayment of the Obligations or in any specific order of priority.
6. Remedies Cumulative. None of the rights and remedies conferred upon or reserved to
Lender under this Agreement is intended to be exclusive of any other rights, and each and every
right shall be cumulative and concurrent, and may be enforced separately, successively or together,
and may be exercised from time to time as often as may be deemed necessary by Lender.
7. Indemnification. Pledgor agrees to indemnify Lender and to hold Lender harmless
for, from and against any and all actions, suits, claims, demands, liabilities, losses, damages,
obligations and costs and expenses (including litigation costs and reasonable attorneys’ fees and
expenses) (the “Claims”) arising from or in any way connected with this Agreement or the
holding or investment of the Reserves except as a result of Lender’s gross negligence or willful
misconduct.
8. Power of Attorney. Pledgor hereby constitutes and appoints Lender as its true and
lawful attorney-in-fact, with full power of substitution and full power to do any and all things
which Lender
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deems advisable or necessary to be done hereunder or with respect to the Supplemental Debt
Service Reserve Account as fully and effectively as the Pledgor might or could do but for this
appointment and hereby ratifies all that said attorney-in-fact shall lawfully do or cause to be
done by virtue hereof. Neither Lender nor its agents shall be liable for any acts or omissions or
for any error in judgment or mistake of fact or law in its capacity as such attorney-in-fact,
except due to its gross negligence or willful misconduct. This power of attorney is coupled with
an interest and shall be irrevocable so long as any Obligations shall remain outstanding.
9. Fees and Expenses. Pledgor shall pay within five days after written request from
Lender all reasonable costs and expenses incurred by Lender in connection with collecting, holding
and disbursing the Reserves pursuant to this Agreement.
10. Termination of Reserves. Promptly following the Discharge Date, Lender shall
disburse to Pledgor all amounts remaining in the Supplemental Debt Service Reserve Account.
11. Entire Agreement; Amendment and Waiver. This Agreement contains the complete and
entire understanding of the parties with respect to the matters covered and no change or amendment
shall be valid unless it is made in writing and executed by the parties to this Agreement. No
specific waiver or forbearance for any breach of any of the terms of this Agreement shall be
considered as a general waiver of that or any other term of this Agreement.
12. Notices. Any notice or other communication herein required or permitted to be
given to any party hereto shall be sent to such Person’s address as set forth below, or to such
other address as notified by such Person to the other party hereto in writing. Each notice
hereunder shall be in writing and may be personally served or sent by facsimile or United States
mail or courier service and shall be deemed to have been given when delivered in person or by
courier service and signed for against receipt thereof, upon receipt of facsimile, or three
Business Days after depositing it in the United States mail with postage prepaid and properly
addressed. Each party hereto may change its information for notices and other communications
hereunder by providing notice of such change to each other party hereto in accordance with this
Section 12. The party’s addresses for purposes of giving notices are as follows:
If to Lender:
|
East West Bank | |
| Loan Servicing Department | ||
| 0000 Xxxxx Xxxxx, 0xx Xxxxx | ||
| Xx Xxxxx, XX 00000 | ||
If to Pledgor:
|
Solar Power, Inc. | |
| 0000 Xxxxxxx Xxx., | ||
| Xxxxxxxxx, Xxxxxxxxxx 00000 |
13. Severability. The invalidity, illegality, or unenforceability of any provision of
this Agreement pursuant to judicial decree shall not affect the validity or enforceability of any
other provision of this Agreement, all of which shall remain in full force and effect.
14. Applicable Law; Waiver of Jury Trial. This Agreement shall be governed by and
construed in accordance with the laws of the State of California without regard to the conflict of
laws principles thereof. PLEDGOR AND LENDER HEREBY WAIVE ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY
ACTION OR PROCEEDING RELATING TO THIS AGREEMENT AND TO ANY OF THE LOAN DOCUMENTS, THE OBLIGATIONS
HEREUNDER OR THEREUNDER, ANY COLLATERAL SECURING THE OBLIGATIONS, OR ANY TRANSACTION ARISING
THEREFROM OR CONNECTED THERETO. PLEDGOR AND LENDER EACH REPRESENTS THAT THIS WAIVER IS KNOWINGLY,
WILLINGLY AND VOLUNTARILY GIVEN.
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The undersigned have executed this Agreement on the date and year first above written.
| PLEDGOR: SOLAR POWER, INC., a California corporation |
||||
| By: | /s/ Xxxxxxx X. Xxxxxxx | |||
| Name: | Xxxxxxx X. Xxxxxxx | |||
| Title: | CEO | |||
| LENDER: EAST WEST BANK, a California corporation |
||||
| By: | /s/ Xxx Xxxx | |||
| Authorized Signer | ||||
