INTERCREDITOR AGREEMENT
Exhibit 10.2
Lone No. 68890396
THIS INTERCREDITOR AGREEMENT (this “Agreement”), dated as of June 22, 2010 is made among Solar
Tax Partners 1, LLC, a California limited liability company (“Borrower”), Umpqua Lender, an Oregon
corporation (“Lender”), Solar Power, Inc., a California corporation (“Creditor”) and HEK Partners,
LLC, a California limited liability company (“Maker”).
RECITALS
A. Creditor and Borrower are parties to that certain Engineering, Procurement and Construction
Agreement dated September 30, 2009 (the “EPC”), pursuant to which Creditor constructed and
delivered to Borrower a photovoltaic solar generating facility (the “Generating Facility”). In
consideration for the construction of the Generating Facility, Borrower agreed to pay certain sums
to Creditor.
B. Maker is the manager of Borrower. As part of Maker’s capital contribution to Borrower,
Maker agreed to assume a portion of Borrower’s obligations to Creditor under the EPC. Maker’s
obligation to Creditor in this regard is evidenced by a Promissory Note dated December 22, 2009 in
the original principal amount of Three Million Six Hundred Thirty Thousand One Hundred Sixty-Four
and 00/100 Dollars ($3,630,164.00) (the “Subordinated Note”). The Subordinated Note is unsecured.
In connection with Creditor’s acceptance of the Subordinated Note from Maker, Creditor has executed
and delivered a release of a portion of Borrower’s payment obligations to Creditor under the EPC
pursuant to Section 8.10 of the Amended and Restated Operating Agreement of Borrower.
C. Borrower and Lender are parties to a Loan Agreement dated as of June _, 2010 (as it may be
amended, modified, renewed, extended or replaced from time to time, the “Senior Loan Agreement”),
pursuant to which Lender has agreed to extend a loan in the original principal amount of Nine
Million Nine Hundred Fifty Thousand and 00/100 Dollars ($9,950,000.00) to Borrower (the “Senior
Loan”). The Senior Loan is also evidenced by a Promissory Note of even date with the Senior Loan
Agreement in the original principal amount of Nine Million Nine Hundred Fifty Thousand and 00/100
Dollars ($9,950,000.00) (the “Senior Note”).
D. It is a condition to Lender’s willingness to make the Senior Loan and to accept the Senior
Note that Creditor execute and deliver this Agreement to provide for the subordination of Maker’s
obligations to Creditor under the Subordinated Note to the payment and performance of Borrower’s
obligations to Creditor under the Senior Note and the other Senior Loan Documents. Upon the terms
and subject to the conditions set forth in this Agreement, Creditor has agreed to the subordination
of Borrower’s indebtedness to it. Creditor will derive substantial direct and indirect value from
Lender’s making the Loan to Borrower, in that Loan funds will be applied by Borrower to pay a
portion of the indebtedness owed by Borrower to Creditor under the EPC.
Whereupon, for valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties agree as follows:
SECTION 1. Definitions; Interpretation.
(a) Certain Defined Terms. As used in this Agreement, the following terms shall have
the following meanings:
“Creditor Collateral” means any property now existing or hereafter acquired (including any
property of Borrower) which may at any time be or become subject to a security interest, lien,
charge or encumbrance of any kind (collectively, a “Lien”) in favor of any Creditor securing
payment and performance of the Subordinated Debt.
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“Senior Debt” means all indebtedness, liabilities and other obligations of Borrower to Lender,
whether created under, arising out of or in connection with the Senior Loan Documents or otherwise,
including all interest accrued thereon, all fees (including attorneys fees) due under the Senior
Loan Documents and all other amounts payable by Borrower to Lender thereunder or in connection
therewith, whether now existing or hereafter arising, and whether due or to become due, absolute or
contingent, liquidated or unliquidated, determined or undetermined.
“Senior Loan Documents” means the Senior Loan Agreement, the Senior Note and all other
contracts, agreements, instruments and other documents (including all amendments, modifications and
supplements thereto) executed and delivered in connection with the Senior Loan at any time.
“Subordinated Debt” means all indebtedness, liabilities and other obligations of Maker to
Creditor, whether now existing or hereafter arising, and whether due or to become due, absolute or
contingent, liquidated or unliquidated, determined or undetermined, including all principal on the
Subordinated Note, all interest accrued thereon, all fees and all other amounts payable by Maker to
Creditor under or in connection with the Subordinated Note and any other documents or instruments
related thereto.
“Subordinated Debt Payment” means any payment or distribution by or on behalf of Maker,
directly or indirectly, of assets of Maker of any kind or character, whether in cash, property or
securities, including on account of the purchase, redemption or other acquisition of Subordinated
Debt, as a result of any collection, sale or other disposition of collateral, or by setoff,
exchange or in any other manner, for or on account of the Subordinated Debt.
(b) Interpretation. In this Agreement, except to the extent the context otherwise
requires:
(i) Any reference in this Agreement to an Article, a Section, a Schedule or an Exhibit is a
reference to an article hereof, a section hereof, a schedule hereto or an exhibit hereto,
respectively, and to a subsection hereof or a clause hereof is, unless otherwise stated, a
reference to a subsection or a clause of the Section or subsection in which the reference appears.
(ii) The words “hereof,” “herein,” “hereto,” “hereunder” and the like mean and refer to this
Agreement as a whole and not merely to the specific Article, Section, subsection, paragraph or
clause in which the respective word appears.
(iii) The meaning of defined terms shall be equally applicable to both the singular and plural
forms of the terms defined.
(iv) The words “including,” “includes” and “include” shall be deemed to be followed by the
words “without limitation”.
(v) References to agreements and other contractual instruments shall be deemed to include all
subsequent amendments and other modifications thereto.
(vi) References to statutes or regulations are to be construed as including all statutory and
regulatory provisions consolidating, amending or replacing the statute or regulation referred to.
(vii) The captions and headings are for convenience of reference only and shall not affect the
construction of this Agreement.
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SECTION 2. Agreement of Subordination.
(a) Subordination to Payment of Senior Debt. All payments on account of the
Subordinated Debt shall be subject, subordinate and junior, in right of payment and exercise of
remedies, to the extent and in the manner set forth herein, to the prior payment in full in cash or
cash equivalents of the Senior Debt.
(b) Subordination of Liens. The Subordinated Debt is, and at all times shall remain,
unsecured. In the event, however, that Creditor acquires or obtains a Lien of any kind on any
Creditor Collateral, then all Liens of any Creditor on any Creditor Collateral shall be subject,
subordinate and junior in all respects and at all times to the Liens now or hereafter existing of
Lender therein, regardless of the time or order of attachment or perfection of such Liens, the time
or order of filing of financing statements, the acquisition of purchase money or other Liens, the
time of giving or failure to give notice of the acquisition or expected acquisition of any purchase
money or other Liens, or any other circumstances whatsoever.
SECTION 3. Payments on Subordinated Debt.
(a) Permitted Payments. Prior to the occurrence of any Event of Default (as defined
in the Senior Loan Documents),Maker may make, and Creditor shall be entitled to accept and receive,
only regularly scheduled payments on account of principal of and interest on the Subordinated Debt,
in accordance with the terms of the Subordinated Note. Maker shall in no event make, and Creditor
shall in no event accept or receive, any prepayments on account of the Subordinated Debt.
(b) No Payment Upon Senior Debt Defaults. Upon the occurrence of any Event of
Default, and until such Event of Default is cured by Borrower or waived by Lender, Maker shall not
make, and Creditor shall not accept or receive, any Subordinated Debt Payment.
SECTION 4. Subordination of Remedies. As long as any Senior Debt shall remain outstanding
and unpaid, Creditor shall not, without the prior written consent of Lender:
(a) accelerate, make demand or otherwise make due and payable prior to the original stated
maturity thereof any Subordinated Debt or bring suit or institute any other actions or proceedings
to enforce its rights or interests under or in respect of any of the Subordinated Note; or
(b) exercise any rights under or with respect to (i) any guaranties of the Subordinated Debt,
or (ii) any Creditor Collateral, including causing or compelling the pledge or delivery of any
Creditor Collateral, any attachment of, levy upon, execution against, foreclosure upon or the
taking of other action against or institution of other proceedings with respect to any Creditor
Collateral, notifying any account debtors of Maker or Borrower, or asserting any claim or interest
in any insurance with respect to Creditor Collateral, or attempt to do any of the foregoing; or
(c) exercise any rights to set-offs and counterclaims in respect of any indebtedness,
liabilities or obligations of Creditor to Maker or Borrower against any of the Subordinated Debt;
or
(d) commence, or cause to be commenced, or join with any creditor other than Lender in
commencing, any Bankruptcy, insolvency or receivership proceeding against Maker or Borrower; or
(e) assert that any default by Maker with respect to the Subordinated Debt has the effect of
reviving or reinstating any obligations of Borrower to Creditor under the EPC.
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SECTION 5. Payment Over to Lender. In the event that, notwithstanding the provisions of
Sections 3 and 4, any Subordinated Debt Payment shall be received by a Creditor in
contravention of such Sections 3 and 4 before all Senior Debt is paid in full in cash or
cash equivalents, such Subordinated Debt Payments shall be held in trust for the benefit of Lender
and shall be paid over or delivered to Lender for application to the payment in full in cash or
cash equivalents of all Senior Debt remaining unpaid to the extent necessary to give effect to such
Sections 3 and 4, after giving effect to any concurrent payments or distributions to Lender
in respect of the Senior Debt.
SECTION 6. Representations and Warranties. Creditor represents and warrants to Lender
that:
(a) Organization and Powers. Creditor has all requisite power and authority to
execute, deliver and perform its obligations under this Agreement.
(b) Authorization; No Conflict. The execution, delivery and performance by Creditor
of this Agreement has been duly authorized by all necessary action of Creditor and do not and will
not contravene the terms of the articles of incorporation or bylaws under which Creditor was formed
and is operating. The execution, delivery and performance by each Creditor of this Agreement do
not and will not (i) result in a breach of or constitute a default under any indenture or loan or
any other agreement, lease or instrument to which Creditor is a party or by which it or its
properties may be bound or affected, or (ii) violate any provision of any law, rule, regulation,
order, writ, judgment, injunction, decree or the like binding on or affecting Creditor.
(c) Binding Obligation. This Agreement constitutes the legal, valid and binding
obligation of Creditor, enforceable against Creditor in accordance with its terms.
(d) Consents. No authorization, consent, approval, license, exemption of, or filing
or registration with, any governmental authority, or approval or consent of any other person or
entity, is required for the due execution, delivery or performance by Creditor of this Agreement.
(e) No Prior Assignment. Creditor has not previously assigned any interest in the
Subordinated Debt or any Creditor Collateral; no person or entity other than Creditor owns an
interest in the Subordinated Debt or Creditor Collateral (whether as joint holders of the
Subordinated Debt, participants or otherwise); and the entire Subordinated Debt is owing only to
Creditor.
(f) Independent Investigation. The Creditor hereby acknowledges that it has
undertaken its own independent investigation of the financial condition of Borrower and Maker and
of all other matters pertaining to this Agreement and further acknowledges that it is not relying
in any manner upon any representation or statement of Lender with respect thereto. The Creditor
represents and warrants that it is aware of the terms of the Senior Loan Documents and that it is
in a position to obtain, and it hereby assumes full responsibility for obtaining, any additional
information concerning the financial condition of Borrower and Maker and any other matters
pertinent hereto or thereto that Creditor may desire. The Creditor is not relying upon or
expecting Lender to furnish to Creditor any information now or hereafter in Lender’s possession
concerning the financial condition of Borrower or Maker, or any other matter.
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SECTION 7. Certain Agreements of Creditor.
(a) Not Third Party Beneficiaries. The Creditor understands that there may be various
agreements between Lender and Borrower evidencing and governing the Senior Debt, and Creditor
acknowledges and agree that it is not a third party beneficiary of such agreements and that Lender
shall have no obligation to Creditor or any other person or entity to exercise any rights, enforce
any remedies, or take any actions which may be available to them under such agreements.
(b) No Interference. The Creditor acknowledges that Borrower has granted Lender a
security interest in certain of Borrower’s assets and agrees not to interfere with or in any manner
oppose a disposition of any collateral by Lender in accordance with applicable law.
(c) Reliance by Lender. The Creditor acknowledges and agrees that Lender will have
relied upon and will continue to rely upon the subordination provisions provided for herein and the
other provisions hereof in entering into the Senior Loan Agreement and extending the Senior Loan.
(d) Waivers. The Creditor waives any and all notice of the incurrence of the Senior
Debt or any part thereof and any right to require marshalling of assets.
(e) Obligations of Creditor Not Affected. The Creditor agrees that at any time and
from time to time, without notice to or the consent of Creditor, without incurring responsibility
to Creditor, and without impairing or releasing the subordination provided for herein or otherwise
impairing the rights of Lender hereunder:
(i) the time for Borrower’s performance of or compliance with any of its agreements contained
in the Senior Loan Agreement or any other Loan Document may be extended or such performance or
compliance may be waived by Lender;
(ii) the agreements of Borrower with respect to the Senior Loan Documents may from time to
time be modified by Borrower and Lender for the purpose of adding any requirements thereto or
changing in any manner the rights and obligations of Borrower and Lender thereunder;
(iii) the manner, place or terms for payment of Senior Debt or any portion thereof may be
altered or the terms for payment extended, or the Senior Debt may be increased or renewed in whole
or in part;
(iv) the maturity of the Senior Debt may be accelerated in accordance with the terms of any
present or future agreement by Borrower and Lender;
(v) any collateral may be sold, exchanged, released or substituted and any Lien in favor of
Lender may be terminated, subordinated or fail to be perfected or become unperfected;
(vi) any person or entity liable in any manner for Senior Debt may be discharged, released or
substituted; and
(vii) all other rights against Borrower, any other person or entity or with respect to any
collateral may be exercised (or Lender may waive or refrain from exercising such rights).
(f) Rights of Lender Not to Be Impaired. No right of Lender to enforce the
subordination provided for herein or to exercise its other rights hereunder shall at any time in
any way be prejudiced or impaired by any act or failure to act by Borrower or Lender hereunder or under or in connection
with the other Senior Loan
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Documents or by any noncompliance by Borrower with the terms and
provisions and covenants herein or in any other Senior Loan Document, regardless of any knowledge
thereof Lender may have or otherwise be charged with.
(g) Financial Condition of Borrower and Maker. The Creditor shall not have any right
to require Lender to obtain or disclose any information with respect to: (i) the financial
condition or character of Borrower or Maker or the ability of Borrower to pay and perform Senior
Debt; (ii) the Senior Debt; (iii) the collateral or other security for any or all of the Senior
Debt; (iv) the existence or nonexistence of any guarantees of, or any other subordination
agreements with respect to, all or any part of the Senior Debt; (v) any action or inaction on the
part of Lender or any other person or entity; or (vi) any other matter, fact or occurrence
whatsoever.
SECTION 8. Subrogation.
(a) Subrogation. Until the payment and performance in full of all Senior Debt,
Creditor shall not have, and shall not directly or indirectly exercise, rights, if any, that it may
acquire by way of subrogation under this Agreement, by any payment or distribution to Lender
hereunder or otherwise. Upon the payment and performance in full of all Senior Debt, Creditor
shall be subrogated to the rights of Lender to receive payments or distributions applicable to the
Senior Debt until the Subordinated Debt shall be paid in full. For the purposes of the foregoing
subrogation, no payments or distributions to Lender of any cash, property or securities to which
Creditor would be entitled except for the provisions of Section 3 or 4 shall, as among
Borrower, its Creditor (other than Lender) and Creditor, be deemed to be a payment by Borrower to
or on account of the Senior Debt.
(b) Payments Over to Creditor. If any payment or distribution to which Creditor would
otherwise have been entitled but for the provisions of Section 3 or 4 shall have been
applied pursuant to the provisions of Section 3 or 4 to the payment of all amounts payable
under the Senior Debt, Creditor shall be entitled to receive from Lender any payments or
distributions received by Lender in excess of the amount sufficient to pay in full all amounts
payable under or in respect of the Senior Debt. If any such excess payment is made to Lender,
Lender shall promptly remit such excess to Creditor for the benefit of Creditor and Creditor shall
then promptly apply such amounts in accordance with the terms of the Subordinated Note.
SECTION 9. Continuing Agreement; Reinstatement.
(a) Continuing Agreement. This Agreement is a continuing agreement of subordination
and shall continue in effect and be binding upon Creditor until payment and performance in full of
the Senior Debt and termination of Lender’s obligations under the Senior Loan Agreement. The
subordinations, agreements and priorities set forth herein shall remain in full force and effect
regardless of whether any party hereto in the future seeks to rescind, amend, terminate or reform,
by litigation or otherwise, its respective agreements with Borrower.
(b) Reinstatement. This Agreement shall continue to be effective or shall be
reinstated, as the case may be, if, for any reason, any payment of the Senior Debt by or on behalf
of Borrower shall be rescinded or must otherwise be restored by Lender.
SECTION 10. Payments. The Creditor shall make each payment hereunder, unconditionally in
full without set-off, counterclaim or other defense, on the day when due in Dollars and in same day
or immediately available funds, to Lender at its office located at Xxx Xxxxxxx Xxxx, Xxxxx 000,
Xxxxxxxxxx, Xxxxxxxxxx 00000, or to such other office of Lender as Lender from time to time shall
designate in a written notice to Creditor.
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SECTION 11. Transfer of Subordinated Debt. The Creditor may not assign or transfer its
rights and obligations under the Subordinated Note or any interest in the Subordinated Debt or
Creditor Collateral without the prior written consent of Lender, and any such transferee or
assignee, as a condition to acquiring the Subordinated Note or interest in the Subordinated Debt or
Creditor Collateral shall agree to be bound hereby, in form satisfactory to Lender.
SECTION 12. Amendments of Subordinated Debt. Neither Maker nor Creditor shall, without the
prior written consent of Lender, agree to or permit any amendment, modification or waiver of any
material provisions of the Subordinated Note or any other agreement relating to any Subordinated
Debt (including any amendment, modification or waiver pursuant to an exchange of other securities
or instruments for outstanding Subordinated Debt) if the effect of such amendment, modification or
waiver is to: (i) increase the interest rate on the Subordinated Debt or change (to earlier dates)
the dates upon which principal and interest are due thereon; (ii) alter the redemption, prepayment
or subordination provisions thereof; (iii) alter the covenants and events of default in a manner
which would make such provisions more onerous or restrictive to Borrower or any subsidiary; or (iv)
otherwise increase the obligations of Maker in respect of the Subordinated Debt or confer
additional rights upon Creditor which individually or in the aggregate would be adverse to
Borrower, Maker or Lender.
SECTION 13. Obligations of Maker Not Affected. The provisions of this Agreement are
intended solely for the purpose of defining the relative rights against Borrower and Maker of
Creditor, on the one hand, and Lender, on the other hand. Nothing contained in this Agreement
shall impair, as between Maker and Creditor, the obligation of Maker to pay the principal of or
interest on the Subordinated Note and its other obligations with respect to the Subordinated Debt
as and when the same shall become due and payable in accordance with the terms thereof.
SECTION 14. Endorsement of Subordinated Note; Further Assurances and Additional Acts.
(a) Endorsement of Subordinated Note. At the request of Lender, the Subordinated Note
and all other documents and instruments evidencing any of the Subordinated Debt shall be endorsed
with a legend noting that the Subordinated Note and such other documents and instruments are
subject to this Agreement, and Creditor shall promptly deliver to Lender evidence of the same.
(b) Further Assurances and Additional Acts. Each of Creditor, Maker and Borrower
shall execute, acknowledge, deliver, file, notarize and register at its own expense all such
further agreements, instruments, certificates, financing statements, documents and assurances, and
perform such acts as Lender shall deem necessary or appropriate to effectuate the purposes of this
Agreement, and promptly provide Lender with evidence of the foregoing satisfactory in form and
substance to Lender.
SECTION 15. Notices. All notices and other communications provided for hereunder shall,
unless otherwise stated herein, be in writing (including by facsimile transmission) and shall be
mailed, sent or delivered at or to the address or facsimile number of the respective party or
parties set forth below, or at or to such other address or facsimile number as such party or
parties shall have designated in a written notice to the other party or parties. All such notices
and communications shall be effective (i) if delivered
by hand, when delivered; (ii) if sent by mail, upon the earlier of the date of receipt or five
business days after deposit in the mail, first class, postage prepaid; and (iii) if sent by
facsimile transmission, when sent.
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To Lender: |
Umpqua Bank | |
| Attn: Xx Xxxxxx | ||
| Xxx Xxxxxxx Xxxx, Xxxxx 000 | ||
| Xxxxxxxxxx, XX 00000 | ||
| Facsimile: (000) 000-0000 | ||
With a copy to: |
Kraft Opich, LLP | |
| 0000 Xxxxxxx Xxxxxx, Xxxxx 000 | ||
| Xxxxxx Xxxxxxx, XX 00000 | ||
| Attention: Xxxxxx Xxxxxxx Xxxxx | ||
| Facsimile: (000) 000-0000 | ||
To Borrower |
Solar Tax Partners 1, LLC | |
| 0000 00xx Xxxxxx | ||
| Xxx Xxxxxxxxx, XX 00000 | ||
| Facsimile: (000) 000-0000 | ||
With a copy to: |
Greystone Renewable Energy Fund 2008-A LLC | |
| 000 Xxxx 00xx Xxxxxx, 00xx Xxxxx | ||
| Xxx Xxxx, XX 00000 | ||
| Attn: Xxxxxx Xxxxxxx | ||
| Facsimile: (000) 000-0000 | ||
And: |
Solar Power, Inc. | |
| 0000 Xxxxxxx Xxxxxx | ||
| Xxxxxxxxx, XX 00000 | ||
| Attn: | ||
| Facsimile: (000) 000-0000 | ||
To Maker: |
HEK Partners, LLC | |
| 0000 00xx Xxxxxx | ||
| Xxx Xxxxxxxxx, XX 00000 | ||
With a copy to: |
Solar Power, Inc. | |
| 0000 Xxxxxxx Xxxxxx | ||
| Xxxxxxxxx, XX 00000 | ||
| Facsimile: (000) 000-0000 | ||
To Creditor: |
Solar Power, Inc. | |
| 0000 Xxxxxxx Xxxxxx | ||
| Xxxxxxxxx, XX 00000 | ||
| Attn: | ||
| Facsimile: (000) 000-0000 | ||
With a copy to: |
Xxxxxxxxx Genshlea Chediak | |
| 000 Xxxxxxx Xxxx, Xxxxx 0000 | ||
| Xxxxxxxxxx, XX 00000 | ||
| Attn: Xxxxx X. Xxxxx | ||
| Facsimile: (000) 000-0000 |
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SECTION 16. No Waiver; Cumulative Remedies. No failure on the part of Lender to exercise,
and no delay in exercising, any right, remedy, power or privilege hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of any such right, remedy, power or
privilege preclude any other or further exercise thereof or the exercise of any other right,
remedy, power or privilege. The rights and remedies under this Agreement are cumulative and not
exclusive of any rights, remedies, powers and privileges that may otherwise be available to Lender.
SECTION 17. Costs and Expenses.
(a) Payments by Borrower. Borrower agrees to pay to Lender on demand the reasonable
out-of-pocket costs and expenses of Lender, and the reasonable fees and disbursements of counsel to
Lender (including allocated costs of internal counsel), in connection with the negotiation,
preparation, execution, delivery and administration of this Agreement, and any amendments,
modifications or waivers of the terms thereof.
(b) Payments by Borrower and Creditor. Each of Borrower and Creditor jointly and
severally agrees to pay to Lender on demand all costs and expenses of Lender, and the fees and
disbursements of counsel (including allocated costs of internal counsel), in connection with the
enforcement or attempted enforcement of, and preservation of rights or interests under, this
Agreement, including any losses, costs and expenses sustained by Lender as a result of any failure
by Creditor to perform or observe its obligations contained in this Agreement.
SECTION 18. Survival. All covenants, agreements, representations and warranties made in
this Agreement shall, except to the extent otherwise provided herein, survive the execution and
delivery of this Agreement, and shall continue in full force and effect so long as any Senior Debt
remains unpaid. Without limiting the generality of the foregoing, the obligations of Borrower and
Creditor under Section 17 shall survive the satisfaction of the Senior Debt and the termination of
the line of credit.
SECTION 19. Benefits of Agreement. This Agreement is entered into for the sole protection
and benefit of the parties hereto and their respective successors and assigns, and no other person
or entity shall be a direct or indirect beneficiary of, or shall have any direct or indirect cause
of action or claim in connection with, this Agreement.
SECTION 20. Binding Effect. This Agreement shall be binding upon, inure to the benefit of
and be enforceable by Borrower, each Creditor and Lender and its respective successors and assigns.
SECTION 21. Governing Law. This Agreement shall be governed by and construed in accordance
with the law of the State of California.
SECTION 22. Dispute Resolution.
(a) Jury Trial Waiver. Borrower waives any right to trial by jury with respect to any
action or proceeding relating to the Loan or the Loan Documents, or any understandings or prior
dealings between the parties.
THE PARTIES ACKNOWLEDGE THAT THE RIGHT TO TRIAL BY JURY IS A CONSTITUTIONAL ONE, BUT THAT IT
MAY BE WAIVED UNDER CERTAIN CIRCUMSTANCES. TO THE EXTENT PERMITTED BY LAW, EACH PARTY,
AFTER CONSULTING (OR HAVING HAD THE OPPORTUNITY TO CONSULT) WITH COUNSEL
OF ITS, HIS OR HER CHOICE, KNOWINGLY AND VOLUNTARILY, AND FOR THE MUTUAL BENEFIT OF ALL
PARTIES, WAIVES ANY RIGHT TO TRIAL BY JURY IN THE EVENT OF LITIGATION ARISING OUT OF OR
RELATED TO THIS AGREEMENT, THE INDEBTEDNESS, AND ANY OF
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THE LOAN DOCUMENTS, OR ANY OTHER DOCUMENT, INSTRUMENT OR AGREEMENT BETWEEN THE UNDERSIGNED PARTIES.
Initials: [Insert initials of parties].
(b) Judicial Reference Provision.
(i) In the event the Jury Trial Waiver set forth above is not enforceable, the parties elect
to proceed under this Judicial Reference Provision.
(ii) With the exception of the items specified in clause (c), below, any controversy, dispute
or claim (each, a “Claim”) between the parties arising out of or relating to the Loan or this
Agreement or any other document, instrument or agreement between the undersigned parties
(collectively in this Section, the “Bank Documents”), will be resolved by a reference proceeding in
California in accordance with the provisions of Sections 638 et seq. of the California Code of
Civil Procedure (“CCP”), or their successor sections, which shall constitute the exclusive remedy
for the resolution of any Claim, including whether the Claim is subject to the reference
proceeding. Except as otherwise provided in the Bank Documents, venue for the reference proceeding
will be in the state or federal court in the county or district where the real property involved in
the action, if any, is located or in the state or federal court in the county or district where
venue is otherwise appropriate under applicable law (the “Court").
(iii) The matters that shall not be subject to a reference are the following: (i) nonjudicial
foreclosure of any security interests in real or personal property, (ii) exercise of self-help
remedies (including, without limitation, set-off), (iii) appointment of a receiver and (iv)
temporary, provisional or ancillary remedies (including, without limitation, writs of attachment,
writs of possession, temporary restraining orders or preliminary injunctions). This reference
provision does not limit the right of any party to exercise or oppose any of the rights and
remedies described in clauses (i) and (ii) or to seek or oppose from a court of competent
jurisdiction any of the items described in clauses (iii) and (iv). The exercise of, or opposition
to, any of those items does not waive the right of any party to a reference pursuant to this
reference provision as provided herein.
(iv) The referee shall be a retired judge or justice selected by mutual written agreement of
the parties. If the parties do not agree within ten (10) days of a written request to do so by any
party, then, upon request of any party, the referee shall be selected by the Presiding Judge of the
Court (or his or her representative). A request for appointment of a referee may be heard on an ex
parte or expedited basis, and the parties agree that irreparable harm would result if ex parte
relief is not granted. Pursuant to CCP § 170.6, each party shall have one peremptory challenge to
the referee selected by the Presiding Judge of the Court (or his or her representative).
(v) The parties agree that time is of the essence in conducting the reference proceedings.
Accordingly, the referee shall be requested, subject to change in the time periods specified herein
for good cause shown, to (i) set the matter for a status and trial-setting conference within
fifteen (15) days after the date of selection of the referee, (ii) if practicable, try all issues
of law or fact within one hundred twenty (120) days after the date of the conference and (iii)
report a statement of decision within twenty (20) days after the matter has been submitted for
decision.
(vi) The referee will have power to expand or limit the amount and duration of discovery. The
referee may set or extend discovery deadlines or cutoffs for good cause, including a party’s
failure to provide requested discovery for any reason whatsoever. Unless otherwise ordered based
upon good cause shown, no party shall be entitled to “priority” in conducting discovery,
depositions may be taken by either party upon seven (7) days written notice, and all other
discovery shall be responded to within fifteen (15) days after service. All
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disputes relating to discovery which cannot be resolved by the parties shall be submitted to the referee whose decision
shall be final and binding.
(vii) Except as expressly set forth herein, the referee shall determine the manner in which
the reference proceeding is conducted including the time and place of hearings, the order of
presentation of evidence, and all other questions that arise with respect to the course of the
reference proceeding. All proceedings and hearings conducted before the referee, except for trial,
shall be conducted without a court reporter, except that when any party so requests, a court
reporter will be used at any hearing conducted before the referee, and the referee will be provided
a courtesy copy of the transcript. The party making such a request shall have the obligation to
arrange for and pay the court reporter. Subject to the referee’s power to award costs to the
prevailing party, the parties will equally share the cost of the referee and the court reporter at
trial.
(viii) The referee shall be required to determine all issues in accordance with existing case
law and the statutory laws of the State of California. The rules of evidence applicable to
proceedings at law in the State of California will be applicable to the reference proceeding. The
referee shall be empowered to enter equitable as well as legal relief, enter equitable orders that
will be binding on the parties and rule on any motion which would be authorized in a court
proceeding, including without limitation motions for summary judgment or summary adjudication. The
referee shall issue a decision at the close of the reference proceeding, which disposes of all
claims of the parties that are the subject of the reference. Pursuant to CCP §644, such decision
shall be entered by the Court as a judgment or an order in the same manner as if the action had
been tried by the Court and any such decision will be final, binding and conclusive. The parties
reserve the right to appeal from the final judgment or order or from any appealable decision or
order entered by the referee. The parties reserve the right to findings of fact, conclusions of
laws, a written statement of decision, and the right to move for a new trial or a different
judgment, which new trial, if granted, is also to be a reference proceeding under this provision.
(ix) If the enabling legislation, which provides for appointment of a referee is repealed (and
no successor statute is enacted), any dispute between the parties that would otherwise be
determined by reference procedure will be resolved and determined by arbitration. The arbitration
will be conducted by a retired judge or justice, in accordance with the California Arbitration Act
§1280 through §1294.2 of the CCP as amended from time to time. The limitations with respect to
discovery set forth above shall apply to any such arbitration proceeding.
(x) THE PARTIES RECOGNIZE AND AGREE THAT ALL CONTROVERSIES, DISPUTES AND CLAIMS RESOLVED UNDER
THIS REFERENCE PROVISION WILL BE DECIDED BY A REFEREE AND NOT BY A JURY. AFTER CONSULTING (OR
HAVING HAD THE OPPORTUNITY TO CONSULT) WITH COUNSEL OF ITS, HIS OR HER OWN CHOICE, EACH PARTY
KNOWINGLY AND VOLUNTARILY, AND FOR THE MUTUAL BENEFIT OF ALL PARTIES, AGREES THAT THIS REFERENCE
PROVISION WILL APPLY TO ANY CONTROVERSY, DISPUTE OR CLAIM BETWEEN OR AMONG THEM ARISING OUT OF OR
IN ANY WAY RELATED TO, THE LOAN OR THIS AGREEMENT, OR THE OTHER BANK DOCUMENTS.
Initials: [Insert initials of parties].
SECTION 23. Entire Agreement; Amendments and Waivers.
(a) Entire Agreement. This Agreement constitutes the entire agreement of Borrower,
Maker, Lender and Creditor with respect to the matters set forth herein and supersedes any prior
agreements, commitments, drafts, communications, discussions and understandings, oral or written,
with respect thereto. There are no conditions to the full effectiveness of this Agreement.
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(b) Amendments and Waivers. This Agreement may not be amended except by a writing
signed by Borrower, Maker, Creditor and Lender. No waiver of any rights of Lender under any
provision of this Agreement or consent to any departure by Creditor, Maker or Borrower therefrom
shall be effective unless in writing and signed by Lender. Any such amendment, waiver or consent
shall be effective only in the specific instance and for the specific purpose for which given.
SECTION 24. Conflicts. In case of any conflict or inconsistency between any terms of this
Agreement, on the one hand, and the Subordinated Note or any other document or instrument relating
to the Subordinated Debt, on the other hand, then the terms of this Agreement shall control.
SECTION 25. Severability. Whenever possible, each provision of this Agreement shall be
interpreted in such manner as to be effective and valid under all applicable laws and regulations.
If, however, any provision of this Agreement shall be prohibited by or invalid under any such law
or regulation in any jurisdiction, it shall, as to such jurisdiction, be deemed modified to conform
to the minimum requirements of such law or regulation, or, if for any reason it is not deemed so
modified, it shall be ineffective and invalid only to the extent of such prohibition or invalidity
without affecting the remaining provisions of this Agreement or the validity or effectiveness of
such provision in any other jurisdiction.
SECTION 26. Interpretation. This Agreement is the result of negotiations between and has
been reviewed by counsel to Lender, Maker, Creditor, Borrower and other parties, and is the product
of all parties hereto. Accordingly, this Agreement shall not be construed against Lender merely
because of Lender’s involvement in the preparation thereof.
SECTION 27. Counterparts. This Agreement may be executed in any number of counterparts and
by different parties hereto in separate counterparts, each of which when so executed shall be
deemed to be an original and all of which taken together shall constitute but one and the same
agreement.
SECTION 28. Termination of Agreement. Upon payment and performance in full of the Senior
Debt and the termination of the line of credit thereunder, this Agreement shall terminate and
Lender shall promptly execute and deliver to Borrower. Maker and Creditor such documents and
instruments as shall be necessary to evidence such termination; provided, however,
that the obligations of Borrower and Creditor under Section 17 shall survive such
termination.
(Signatures begin on the following page)
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IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the date first
above written.
BORROWER:
Solar Tax Partners 1, LLC, a California limited liability company
| By: | HEK Partners, LLC, a California limited liability company | |||||||
| Its: | Managing Member | |||||||
| By: | /s/ Xxxxxxx Xxxxxx | |||||||
| By: | /s/ Xxxxxx Xxx | |||||||
| By: | /s/ Xxxxxxx X. Xxxxxxx | |||||||
| MAKER: | ||||||||
| HEK Partners, LLC, a California limited liability company | ||||||||
| By: | /s/ Xxxxxxx Xxxxxx | |||||||
| XXXXXXX XXXXXX, Manager | ||||||||
| By: | /s/ Xxxxxx Xxx | |||||||
| XXXXXX XXX, Manager | ||||||||
| By: | /s/ Xxxxxxx X. Xxxxxxx | |||||||
| XXXXXXX X. XXXXXXX, Manager | ||||||||
| CREDITOR: | ||||||||
| Solar Power, Inc., | ||||||||
| a California corporation | ||||||||
| By: | /s/ Xxxxxxx X. Xxxxxxx | |||||||
| Its: | CEO | |||||||
| LENDER: | ||||||||
| Umpqua Bank, | ||||||||
| an Oregon corporation | ||||||||
| By: | /s/ Xx Xxxxxx | |||||||
| Xx Xxxxxx | ||||||||
| Senior Vice President | ||||||||
