EXHIBIT 10.7
AMENDED AND RESTATED SECURITY AGREEMENT
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This AMENDED AND RESTATED SECURITY AGREEMENT is made and entered into as of
this 24th day of November 1997 by and among ASTROPOWER, INC., a Delaware
corporation (the "Borrower") and MELLON BANK (DE), N.A., a national banking
association (the "Secured Party").
BACKGROUND
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1. The Secured Party and the Borrower are parties to that certain Amended
and Restated Loan Agreement dated as of the date hereof (as it may be amended
or modified from time to time, the "Loan Agreement") pursuant to which the
Secured Party agreed to make available to the Borrower various loans and credit
facilities upon the terms and conditions specified in the Loan Agreement. The
Loan Agreement and all agreements and documents executed in connection with the
Borrower's loans from the Secured Party shall be referred to as the "Existing
Loan Documents."
2. The obligations of the Borrower to the Secured Party under the Existing
Loan Documents are secured pursuant to, inter alia, (i) a Note and Security
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Agreement by the Borrower in favor of the Secured Party dated as of December 15,
1995; (ii) a Note and Security Agreement by the Borrower in favor of the
Secured Party dated as of May 22, 1996; and (iii) a Note and Security Agreement
by the Borrower in favor of the Secured Party dated as of February 4, 1993
(collectively, and as amended from time to time, the "Original Security
Agreement") and various UCC Financing Statements which have been duly recorded
in the appropriate offices.
3. The Borrower and the Secured Party have agreed to amend and restate in
their entirety certain of the Existing Loan Documents and amend certain other
Existing Loan Documents pursuant to the terms and conditions of the Loan
Agreement.
4. As a condition to entering into the Loan Agreement, the Secured Party
has required that the Borrower enter into this Amended and Restated Security
Agreement.
5. Capitalized terms which are used herein without definition shall have
the meanings ascribed to them in the Loan Agreement. Other terms used herein
without definition that are defined in the Uniform Commercial Code, as enacted
in Delaware and in effect on the date hereof (the "Uniform Commercial Code")
shall have the meanings ascribed to them therein, unless the context requires
otherwise.
6. THIS SECURITY AGREEMENT IS ISSUED IN ORDER TO AMEND, RESTATE AND
EVIDENCE AND TO BE A SUBSTITUTE FOR THE EXISTING SECURITY AGREEMENT, BUT IS NOT
INTENDED TO MODIFY OR ALTER IN ANY
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WAY THE SECURITY AND COLLATERAL PROVISIONS OF THE EXISTING SECURITY AGREEMENT
NOR THE PRIORITY OF ANY SECURITY INTERESTS HELD BY THE SECURED PARTY AS OF THE
DATE HEREOF.
NOW, THEREFORE, incorporating the Background Section herein and intending
to be legally bound, the Borrower and the Secured Party hereby agree as follows:
Section 1. Creation of Security Interest. The Borrower hereby grants to
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the Secured Party a lien and security interest in and to the property
hereinafter described, whether now owned or hereafter acquired or arising and
wherever located ("Collateral"):
All tangible and intangible personal property of the Borrower,
including but not limited to:
(1) all accounts, accounts receivable, rights under contracts, chattel
paper, instruments, and all obligations due the Borrower for goods sold or to be
sold, consigned or leased or to be leased, or services rendered or to be
rendered ("Accounts");
(2) all inventory, whether raw materials, work-in-process, finished
goods, parts or supplies or otherwise; all goods, merchandise and other property
held for sale or lease or to be furnished under any contract of service; all
documents of title covering any goods which are or are to become inventory and
any such goods which are leased or consigned to others and all returned,
reclaimed or repossessed goods sold, consigned, leased or otherwise furnished by
the Borrower to others ("Inventory");
(3) all leases and rental agreements for personal property between the
Borrower as lessor (whether by origination or derivation) and any and all
persons or parties as lessee(s), and all rentals, purchase option amounts, and
other sums due thereunder; and all inventory, equipment, goods and property
subject to such leases and rental agreements and all accessions, parts and tools
attached thereto or used therewith and all of the Borrower's residual or
reversionary rights therein;
(4) all machinery, equipment, furniture, fixtures, tools, motor
vehicles, and all accessories, parts and equipment now or hereafter attached
thereto or used in connection therewith, whether or not the same shall be deemed
affixed to real property, and all other tangible personal property
("Equipment");
(5) all general intangibles, which term shall have the meaning given
to it in the Uniform Commercial Code and shall additionally include but not be
limited to all tax refunds, but shall specifically exclude any and all
intellectual property and proprietary rights, patents, copyrights and
trademarks;
(6) all the property listed on any Schedule of Collateral attached to
this
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Security Agreement and any other such schedule hereafter made a schedule to this
Agreement;
(7) all additions, replacements, attachments, accretions, accessions,
components and substitutions to or for any Inventory or Equipment;
(8) all property of the Borrower, including without limitation,
monies, securities, instruments, chattel paper and documents, which at any time
the Secured Party shall have or have the right to have in its possession, or
which is in transit to it (pursuant to the terms of a letter of credit or
otherwise) and, independent of and in addition to the Secured Party's rights of
setoff (which the Borrower acknowledges), the balance of any account or any
amount which may be owing from time to time by the Secured Party to the
Borrower;
(9) all books and records evidencing or relating to the foregoing,
including, without limitation, billing records of every kind and description,
customer lists, data storage and processing media, software and related
material, including computer programs, computer tapes, cards, disks and
printouts, and including any of the foregoing which are in the possession of any
affiliate or any computer service bureau;
(10) all proceeds, which term shall have the meaning given to it in
the Uniform Commercial Code and shall additionally include but not be limited
to, whatever is received upon the use, lease, sale, exchange, collection or
other utilization or any disposition of any of the collateral described in
subparagraphs (a) through (i) above, whether cash or noncash, and including
without limitation, rental or lease payments, accounts, chattel paper,
instruments, documents, contract rights, general intangibles, equipment,
inventory and insurance proceeds; and all such proceeds of the foregoing
("Proceeds").
To the extent the Borrower has granted a security interest to the Secured
Party in any or all of the Collateral prior to the date of this Security
Agreement, either pursuant to the Original Security Agreement or otherwise, this
Security Agreement shall be deemed to be a reaffirmation of the previously
granted security interest(s). The Borrower acknowledges that this Security
Agreement does not extinguish the liens and security interests created under the
Original Security Agreement and the Borrower reaffirms the previously granted
security interests thereunder. It is the intention of the Borrower and the
Secured Party that all existing security interests will remain continuously
perfected.
Section 2. Secured Obligations. The security interest created herein is
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given as security for the prompt payment, performance, satisfaction and
discharge of the following obligations ("Obligations") of the Borrower:
(1) To pay the principal, interest, commitment fees and any other
liabilities of the Borrower to the Secured Party under the Loan Agreement and
the other Loan Documents in accordance with the terms thereof;
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(2) To satisfy all of the other liabilities of the Borrower to the
Secured Party, whether hereunder or otherwise, whether now existing or hereafter
incurred, whether or not evidenced by any Note or other instrument, matured or
unmatured, direct, absolute or contingent, joint or several, including any
extensions, modifications, renewals thereof and substitutions therefor;
(3) To repay the Secured Party all amounts advanced by the Secured
Party hereunder or otherwise on behalf of the Borrower, including, but without
limitation, advances for principal or interest payments to prior secured
parties, mortgagors or lienors, or for taxes, levies, insurance, rent, wages,
repairs to or maintenance or storage of any Collateral; and
(4) To reimburse the Secured Party, on demand, for all of the Secured
Party's expenses and costs, including the reasonable fees and expenses of its
counsel, in connection with the negotiation, preparation, administration,
amendment, modification, or enforcement of the Loan Agreement and the other Loan
Documents.
Section 3. Representations and Warranties. The Borrower, as of the date
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hereof and at the time of each advance or extension of credit under the Loan
Agreement, represents and warrants as follows:
3.1 Good Title to Collateral. The Borrower has good and marketable
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title to the Collateral free and clear of all liens and encumbrances other than
the security interests granted to the Secured Party hereunder and those liens
and encumbrances set forth in the Intercreditor Agreement.
3.2 Location of Books and Records. The locations of the offices
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where the Borrower maintains its books and records concerning the Collateral are
as set forth in Exhibit A or at the location(s) hereafter disclosed to the
Secured Party pursuant to Section 5.10 hereof.
3.3 Chief Executive Office. The chief executive offices of the
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Borrower are at the address set forth in Exhibit A or at the location(s)
hereafter disclosed to the Secured Party pursuant to Section 5.10 hereof
3.4 Location of Inventory and Equipment. All Inventory and Equipment
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of the Borrower is located at one or more of the addresses set forth in Exhibit
A or at the location(s) hereafter disclosed to the Secured Party pursuant to
Section 5.10 hereof.
3.5 Other Representations. Each representation, warranty or other
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statement by the Borrower in, or in connection with, any of the Loan Documents
is true and correct and states all material facts necessary to make it not
misleading.
Section 4. Collection, Disposition and Use of Collateral.
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4.1 [INTENTIONALLY LEFT BLANK]
4.2 Inventory. So long as there has been no default hereunder, the
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Borrower shall be permitted to process and sell its Inventory, but only to the
extent that such processing and sale are conducted in the ordinary course of the
Borrower's business.
4.3 Equipment. So long as there has been no default hereunder, the
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Borrower shall be permitted to use its Equipment in the ordinary course of its
business. No sale, lease or other disposition of any item of equipment valued
at more than $50,000 shall be permitted, except in accordance with such terms
and conditions as the Secured Party shall have expressly approved in writing and
except for the sale or other disposition of obsolete Equipment which is no
longer used or useful in the Borrower's business.
Section 5. Covenants and Agreements of the Borrower.
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5.1 Maintenance and Inspection of Books and Records. The Borrower
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shall maintain complete and accurate books and records and shall make all
necessary entries therein to
reflect the costs, values and locations of its Inventory and Equipment and the
transactions and documents giving rise to its Accounts and all payments, credits
and adjustments thereto. The Borrower shall keep the Secured Party fully
informed as to the location of all such books and records and shall permit the
Secured Party and its authorized agents to have full, complete and unrestricted
access thereto at any reasonable time and to inspect, audit and make copies of
all books and records, data storage and processing media, software, printouts,
journals, orders, receipts, invoices, correspondence and other documents and
written or printed matter related to any of the Collateral. The Secured Party's
rights hereunder shall be enforceable at law or in equity, and the Borrower
consents to the entry of judicial orders or injunctions enforcing specific
performance of such obligations hereunder.
5.2 Confirmation of Accounts. The Borrower agrees that the Secured
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Party shall at all times have the right to confirm orders and to verify any or
all of the Borrower's Accounts in the Secured Party's name, or in any fictitious
name used by the Secured Party for verifications, or through any public
accountants.
5.3 Delivery of Accounts Documentation. At such intervals as the
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Secured Party shall require, the Borrower shall deliver to the Secured Party
copies of purchase orders, invoices, contracts, shipping and delivery receipts
and any other document or instrument which evidences or gives rise to an
Account.
5.4 Physical Inspection of Inventory and Equipment. The Borrower
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shall permit the Secured Party and its authorized agents to inspect any or all
of the Borrower's Inventory and Equipment at all reasonable times.
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5.5 Notice of the Secured Party's Interests. If requested by the
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Secured Party, the Borrower shall give notice of the Secured Party's security
interests in the Collateral to any third person with whom the Borrower has any
actual or prospective contractual relationship or other business dealings.
5.6 Delivery of Certain Accounts and Documents to the Secured Party.
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Immediately upon receipt of any instrument, chattel paper, document of title
(including bills of lading and warehouse receipts), the Borrower shall deliver
such Collateral to the Secured Party and shall execute any form of assignment
requested by the Secured Party with respect thereto.
5.7 Accounts Agings. The Borrower shall furnish the Secured Party
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with agings of its Accounts in such form and detail and at such intervals as the
Secured Party may from time to time require.
5.8 Government Accounts. The Borrower shall immediately provide
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written notice to the Secured Party of any and all Accounts which arise out of
contracts with the United States or any department, agency or instrumentality
thereof, and shall execute and deliver to the Secured Party an assignment of
claims for such Accounts and cooperate with the Secured Party in taking any
other steps required, in the Secured Party's judgment, to perfect or continue
the perfected status of the Secured Party's security interest in such Accounts
and proceeds thereof under the Federal Assignment of Claims Act.
5.9 Insurance of Collateral. The Borrower shall keep its Inventory
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and Equipment insured against such perils, in such amounts and with such
insurance companies as required under the Loan Agreement. All insurance
policies shall name the Secured Party as lender loss payee and shall provide for
not less than thirty (30) days' advance notice in writing to the Secured Party
of any cancellation thereof. The Secured Party shall have the right (but shall
be under no obligation) to pay any of the premiums on such insurance. Any
premiums paid by the Secured Party shall, if the Secured Party so elects, be
considered an advance at the highest rate of interest provided in the Loan
Agreement, and all such accrued interest shall be payable on demand. Any credit
insurance covering Accounts shall name the Secured Party as loss payee. The
Borrower expressly authorizes its insurance carriers to pay proceeds of all
insurance policies covering any or all of the Collateral directly to the Secured
Party.
5.10 New Locations of Collateral and Books and Records. The Borrower
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shall immediately notify the Secured Party of any change in the location of its
chief executive office, of any new or additional address where its books and
records concerning the Collateral are located and of any new locations of
Inventory or Equipment not specified in Sections 3.02, 3.03 or 3.04 of this
Security Agreement, and if any such location is on leased or mortgaged premises,
promptly furnish the Secured Party with landlord's or mortgagee's waivers in
form and substance satisfactory to the Secured Party.
5.11 Perfection of the Secured Party's Interests. The Borrower
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agrees to cooperate and join, at its expense, with the Secured Party in taking
such steps as are necessary, in
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the Secured Party's judgment, to perfect or continue the perfected status of the
security interests granted hereunder, including, without limitation, the
execution and delivery of any financing statements, amendments thereto and
continuation statements, the delivery of chattel paper, documents or instruments
to the Secured Party, the obtaining of landlords' and mortgagees' waivers
required by the Secured Party, the notation of encumbrances in favor of the
Secured Party on certificates of title, and the execution and filing of any
collateral assignments and any other instruments requested by the Secured Party
to perfect its security interest in any and all of the Borrower's general
intangibles. The Secured Party is expressly authorized to file financing
statements without the Borrower's signature.
5.12 Maintenance of Inventory and Equipment. The Borrower shall care
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for and preserve the Inventory and Equipment in good condition and repair, and
will pay the cost of all replacement parts, repairs to and maintenance of the
Equipment. The Borrower will keep complete and accurate maintenance records
with respect to its Equipment.
5.13 Notification of Adverse Change in Collateral. The Borrower
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agrees immediately to notify the Secured Party if (a) any account debtor refuses
to retain or returns any goods, the sale or delivery of which gave rise to an
Account; (b) any Account has arisen pursuant to a sale under terms which differ
materially from those customarily offered by the Borrower; or (c) any event
occurs or is discovered which would cause a Qualified Account or any Qualified
Inventory to lose its qualified status or which would cause any material
diminution in the value of any significant item or type of Collateral.
5.14 Reimbursement and Indemnification. The Borrower agrees to
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reimburse the Secured Party on demand for out-of-pocket expenses incurred in
connection with the Secured Party's exercise of its rights under this Security
Agreement. The Borrower agrees to indemnify the Secured Party and hold it
harmless against any costs, expenses, losses, damages and liabilities (including
reasonable attorney's fees) incurred in connection with this Security Agreement,
other than as a direct result of the Secured Party's gross negligence or willful
misconduct.
Section 6. Power of Attorney. The Borrower hereby appoints the Secured
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Party as its lawful attorney-in-fact to do, at the Secured Party's option, and
at the Borrower's expense and liability, all acts and things which the Secured
Party may deem necessary or desirable to effectuate its rights under this
Security Agreement, including without limitation, (a) file financing statements
and otherwise perfect any security interest granted hereby, (b) correspond and
negotiate directly with insurance carriers, (c) upon the occurrence of a default
hereunder, receive, open and dispose of in any reasonable manner all mail
addressed to the Borrower and notify Postal Service authorities to change the
address for mail addressed to the Borrower to an address designated by the
Secured Party, (d) upon the occurrence of a default hereunder, communicate with
account debtors and other third parties for the purpose of protecting or
preserving the Collateral, and (e) upon the occurrence of a default hereunder,
in the Borrower's or the Secured Party's name, to demand, collect, receive, and
receipt for, compound, compromise, settle and give acquittance for, and
prosecute and discontinue or dismiss, with or without prejudice, any suit or
proceeding
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respecting any of the Collateral.
Section 7. Default. The occurrence of any one or more of the following
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shall be a default hereunder:
7.1 Default Under Loan Agreement. The occurrence of an Event of
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Default under the Loan Agreement or any of the Loan Documents.
7.2 Failure to Observe Covenants. The failure of the Borrower to
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keep, observe or perform any provisions of this Security Agreement.
7.3 Representations, Warranties. If any representation, warranty or
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certificate furnished by the Borrower under or in connection with this Security
Agreement shall, at any time, be materially false or incorrect.
Section 8. Secured Party's Rights Upon Default. Upon the occurrence of a
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default hereunder, or at any time thereafter, the Secured Party may immediately
and without notice do any or all of the following, which rights and remedies are
cumulative, may be exercised from time to time, and are in addition to any
rights and remedies available to the Secured Party under the Loan Agreement or
any other Loan Document:
8.1 Uniform Commercial Code Rights. Exercise any and all of the
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rights and remedies of a secured party under the Uniform Commercial Code,
including the right to require the Borrower to assemble the Collateral and make
it available to the Secured Party at a place reasonably convenient to the
parties.
8.2 Operation of Collateral. Operate, utilize, recondition and/or
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refurbish (at the Secured Party's sole option and discretion and in any manner)
any of the Collateral which is Equipment, for the purpose of enhancing or
preserving the value thereof or the value of any other Collateral.
8.3 Notification of Account Debtors. Notify the account debtors for
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any of the Accounts that such Accounts have been assigned to the Secured Party
and that payments are to be made directly to the Secured Party, or to such post
office box as the Secured Party may direct. The Borrower shall not compromise,
discharge, extend the time for payment or otherwise grant any indulgence or
allowance with respect to any Account without the prior written consent of the
Secured Party.
8.4 Sale of Collateral. Upon five (5) calendar days' prior written
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notice to the Borrower, which the Borrower hereby acknowledges to be sufficient,
commercially reasonable and proper, sell, lease or otherwise dispose of any or
all of the Collateral at any time and from time to time at public or private
sale, with or without advertisement thereof and apply the proceeds of any such
sale first to the Secured Party's expenses in preparing the Collateral for sale
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(including reasonable attorneys' fees) and second to the complete satisfaction
of the Obligations. The Borrower waives the benefit of any marshalling doctrine
with respect to the Secured Party's exercise of its rights hereunder. The
Borrower grants a royalty-free license to the Secured Party for all patents,
service marks, trademarks, tradenames, copyrights, computer programs and other
intellectual property and proprietary rights sufficient to permit Secured Party
to exercise all rights granted to Secured Party under this Section.
Section 9. Notices. Any written notices required or permitted by this
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Security Agreement shall be effective if delivered in accordance with Section
10.2 of the Loan Agreement.
Section 10. Miscellaneous.
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10.1 No Waiver. No delay or omission by the Secured Party in
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exercising any right or remedy hereunder shall operate as a waiver thereof or of
any other right or remedy, and no single or partial exercise thereof shall
preclude any further exercise thereof or the exercise of any other right or
remedy.
10.2 Preservation of Rights. The Secured Party shall have no
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obligation or responsibility to take any steps to enforce or preserve rights
against any parties to any Account and such obligation and responsibility shall
be those of the Borrower exclusively.
10.3 Successors. The provisions of this Security Agreement shall
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inure to the benefit of and be binding upon the Secured Party and the Borrower
and their respective successors and assigns, provided that the Borrower's
obligations hereunder may not be assigned without the written consent of the
Secured Party.
10.4 Amendments. No modification, rescission, waiver, release or
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amendment of any provisions of this Security Agreement shall be effective unless
set forth in a written agreement signed by the Borrower and an authorized
officer of the Secured Party.
10.5 Governing Law. This Security Agreement shall be construed under
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the internal laws of the State of Delaware without reference to conflict of laws
principles.
10.6 Severability. If any provision of this Security Agreement shall
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be held invalid or unenforceable under applicable law in any jurisdiction, such
invalidity or unenforceability shall not affect the validity or enforceability
of such provision in any other jurisdiction or the validity or enforceability of
any other provision of this Security Agreement that can be given effect without
such invalid or unenforceable provision.
10.7 Judicial Proceedings. Each party to this Agreement agrees that
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any suit, action or proceeding, whether claim or counterclaim, brought or
instituted by any party hereto or any successor or assign of any party, on or
with respect to this Agreement or the dealings of the parties with respect
hereto, shall be tried only by a court and not by a jury. EACH PARTY HEREBY
KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHT
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TO A TRIAL BY JURY IN ANY SUCH SUIT, ACTION OR PROCEEDING. Further, each party
waives any right it may have to claim or recover, in any such suit, action or
proceeding, any special, exemplary, punitive or consequential damages or any
damages other than, or in addition to, actual damages. THE BORROWER ACKNOWLEDGES
AND AGREES THAT THIS PARAGRAPH IS A SPECIFIC AND MATERIAL ASPECT OF THIS
AGREEMENT AND THAT THE SECURED PARTY WOULD NOT EXTEND CREDIT TO THE BORROWER IF
THE WAIVERS SET FORTH IN THIS PARAGRAPH WERE NOT A PART OF THIS AGREEMENT.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties hereto have caused this Security Agreement
to be executed and delivered by their authorized officers the day and year first
above written.
Attest: ASTROPOWER, INC.
By:
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Name:
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Title:
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MELLON BANK (DE), N.A.
By:
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Xxxx Xxxxxxxx
Vice President
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EXHIBIT A
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Location of books and records:
Xxxxx Xxxx
Xxxxxx, XX 00000-0000
Location of chief executive office:
Xxxxx Xxxx
Xxxxxx, XX 00000-0000
Location of Inventory and Equipment:
Xxxxx Xxxx
Xxxxxx, XX 00000-0000
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