EXHIBIT 10.21 NOTE PURCHASE AND LINE OF CREDIT AGREEMENT

EXHIBIT 10.21

 

NOTE PURCHASE AND LINE OF CREDIT AGREEMENT

 

This NOTE PURCHASE AND LINE OF CREDIT AGREEMENT , dated May 30, 2002, (this “ Agreement ”) is entered into by and among SUNPOWER CORPORATION a California corporation (“ Company ”), with its principal executive office at 430 Indio Way, Sunnyvale, California 94086 and CYPRESS SEMICONDUCTOR CORPORATION , a Delaware corporation (“ Purchaser ”).

 

RECITALS

 

A. On the terms and subject to the conditions set forth herein, the Purchaser is willing to purchase from Company, and Company is willing to sell to the Purchaser, from time to time, unsecured senior convertible promissory notes.

 

B. On the terms and subject to the conditions set forth herein, the Purchaser is willing to provide the Company with capital equipment, provide the Company with a line of credit, or guarantee the Company’s equipment lines of credit, up to a maximum of $25,000,000.

 

C. Capitalized terms not otherwise defined herein shall have the meaning set forth in the form of Note (as defined below) attached hereto as Exhibit A .

 

AGREEMENT

 

NOW THEREFORE, in consideration of the foregoing, and the representations, warranties, and conditions set forth below, the parties hereto, intending to be legally bound, hereby agree as follows:

 

1. The Notes .

 

(a) Issuance of Notes . At each Closing (as defined below), Company agrees to issue and sell to the Purchaser, and, subject to all of the terms and conditions hereof, the Purchaser agrees to purchase a Unsecured Senior Convertible Promissory Note substantially in the form of Exhibit A hereto (each a “ Note ”) in such principal amount as may be determined under Section 1(d).

 

(b) Delivery . The sale and purchase of a Note shall take place from time to time at a closing (each a “ Closing ”), the first closing to be held on April 1, 2003, and on the first day of each calendar month thereafter (each a “ Closing Date ”), until the earlier of either (1) the Warrant Expiration Date (as defined in the Warrant to Purchase Series Two Preferred Stock issued to Purchaser (the “ Series Two Warrant ”) or (2) the date that the Series Two Warrant is exercised. Except as set forth in (c) below, Purchaser shall have no obligation to purchase any additional Notes after the Warrant Expiration Date.

 

(c) Additional Notes . If Purchaser does not exercise the Series Two Warrant by the Warrant Expiration Date, Purchaser agrees to purchase additional Notes, at the monthly rate of one Note per

 

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month until the total principal amount of Notes purchased under this subsection (c) equals the difference between $2,000,000 and the amount of cash on hand at the Company on the Warrant Expiration Date. At each Closing, the Company shall deliver to the Purchaser the Note to be purchased, and the Purchaser shall deliver to the Company such principal amount (the “ Purchase Price ”). The Note will be registered in the Purchaser’s name in the Company’s records.

 

(d) Note Principal . The principal amount of each Note shall be four hundred thousand dollars ($400,000); however, in the event that the Purchaser does not exercise the Series Two Warrant, the principal amount of the last Note to be purchased may be less than $400,000.

 

(e) Use of Proceeds . The proceeds of the sale and issuance of the Note shall be used for general corporate purposes.

 

(f) Payments . The Company will make all cash payments due under the Note in immediately available funds in the manner and at the address of the Purchaser or at such other address as the Purchaser may from time to time direct in writing.

 

2. Line of Credit .

 

(a) Prior to the Warrant Expiration Date, Purchaser may, in its sole discretion, to the extent requested by the Company, (i) provide the Company with capital equipment for the Company’s planned manufacturing facility, (ii) provide the Company with a line of credit, on commercially reasonable terms, to purchase such capital equipment, or (iii) guarantee a line of credit for the Company, or (iv) any combination thereof, up to a maximum of $25,000,000. If Purchaser exercises the Series Two Warrant, Purchaser shall, to the extent requested by the Company, (i) provide the Company with such capital equipment, (ii) provide the Company with a line of credit, on commercially reasonable terms, to purchase such capital equipment, or (iii) guarantee the Company’s equipment line of credit to the extent needed to build a manufacturing facility, up to a maximum of $25,000,000. To the extent that Purchaser obtains such capital equipment for the Company other than by guaranteeing a line of credit or providing a line of credit to the Company, then Purchaser shall be treated for purposes of the warrant calculation set forth in subsection 2(b) and 2(c) below as though Purchaser had guaranteed or provided an equipment line of credit to the Company in an amount equal to the budgeted cost of such equipment in the Company’s capital equipment budget. If Purchaser provides the equipment, Purchaser will either lease such equipment to the Company based on the fair market value of the equipment at the time of the lease, or sell the equipment to the Company for such fair market value in cash.

 

(b)If, and to the extent that, Purchaser provides a line of credit or guarantees the Company’s equipment line of credit prior to the date two months after the Company first manufactures cells on four inch wafers that (a) meet the IEEE 1262 Photovoltaic Module Reliability Qualification and (b) demonstrate cell efficiency of at least 19%, each as certified by an independent certified testing laboratory (the “Four-Inch Wafer Qualification”), the Company shall issue Purchaser a warrant to purchase Company common stock substantially in the form of Exhibit B hereto (each a “Warrant”). In the case of a Warrant issued pursuant to this subsection 2(b), the number of shares into which such Warrant shall be exercisable shall be equal to ten percent (10%) of the amount guaranteed by Purchaser divided by $0.70, and the per share exercise price of the Warrant shall be $0.07.

 

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(c) If, and to the extent that, Purchaser provides a line of credit or guarantees the Company’s equipment line of credit on or after the date two months after the Company meets the Four-Inch Wafer Qualification, the Company shall issue Purchaser a Warrant. In the case of a Warrant issued pursuant to this subsection 2(c), the number of shares into which such Warrant shall be exercisable shall be equal to ten percent (10%) of the amount guaranteed by Purchaser divided by $1.00, and the per share exercise price of the Warrant shall be $0.10.

 

3. Representations and Warranties of Company . Company incorporates by reference all of the representations and warranties of the Company contained in the Series One Preferred Stock Purchase Agreement of even date herewith (the “Purchase Agreement”) and the Schedule of Exceptions attached as Exhibit F to the Purchase Agreement, and represents and warrants the same to the Purchaser as of the date hereof. All references therein to the “Agreement” shall be interpreted as referencing this Agreement and the transactions contemplated hereby.

 

4. Representations and Warranties of Purchaser . The Purchaser represents and warrants to Company upon the acquisition of the Note as follows:

 

(a) Binding Obligation . The Purchaser has full legal capacity, power and authority to execute and deliver this Agreement and to perform its obligations hereunder. Each of this Agreement and the Note issued to the Purchaser is a valid and binding obligation of the Purchaser, enforceable in accordance with its terms, except as limited by bankruptcy, insolvency or other laws of general application relating to or affecting the enforcement of creditors’ rights generally and general principles of equity.

 

(b) Securities Law Compliance . The Purchaser is an “accredited investor” within the meaning of Rule 501 of Regulation D of the Securities Act of 1933, as amended (the “Securities Act”), as presently in effect. The Purchaser acknowledges the Note has not been registered under the Securities Act, or any state securities laws and, therefore, cannot be resold unless it is registered under the Securities Act and applicable state securities laws or unless an exemption from such registration requirements is available. The Purchaser is aware that Company is under no obligation to effect any such registration with respect to the Note or to file for or comply with any exemption from registration. The Purchaser is purchasing the Note for its own account for investment, not as a nominee or agent, and not with a view to, or for resale in connection with, the distribution thereof. The Purchaser has sufficient knowledge and experience in financial and business matters that the Purchaser is capable of evaluating the merits and risks of such investment, is able to incur a complete loss of such investment and is able to bear the economic risk of such investment for an indefinite period of time.

 

(c) Access to Information . The Purchaser acknowledges that Company has given the Purchaser access to the corporate records and accounts of Company and to all information in its possession relating to Company, has made its officers and representatives available for interview by the Purchaser, and has furnished the Purchaser with all documents and other information required for the Purchaser to make an informed decision with respect to entering into this Agreement and committing to purchase the Notes.

 

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5. Conditions to Purchase of Notes . Purchaser’s obligation to purchase Notes at each Closing under this Agreement is subject to the satisfaction of all of the following conditions, any of which may be waived in whole or in part by Purchaser:

 

(a) Representations and Warranties . The representations and warranties made by the Company in Section 3 hereof, shall have been true and correct when made. Purchaser shall have received a certificate to such effect signed on behalf of the Company by the Company’s Chief Executive Officer and Chief Financial Officer.

 

(b) Governmental Approvals and Filings . Except for any notices required or permitted to be filed after each Closing Date with certain federal and state securities commissions, Company shall have obtained all governmental approvals required in connection with the lawful sale and issuance of each Note.

 

(c) Legal Requirements . As of the date of disbursement of the proceeds pursuant to each Note, the sale and issuance by Company, and the purchase by the Purchaser, of the Note shall be legally permitted by all laws and regulations to which the Purchaser or Company are subject.

 

(d) Note . The Note being purchased at such Closing, in the form attached hereto as Exhibit A , shall have been duly executed and delivered by the Company.

 

(e) No Material Adverse Change . Since the date of this Agreement, there shall not have been any circumstance, event or occurrence that, individually or in the aggregate, has resulted in a material adverse change to the Company’s business, assets (including intangible assets), condition (including financial condition) or results of operation, except to the extent that such change results from changes in general economic conditions that do not disproportionately affect the Company. Purchaser shall have received a certificate to such effect signed on behalf of the Company by the Company’s Chief Executive Officer and Chief Financial Officer.

 

6. Miscellaneous .

 

(a) Waivers and Amendments . Any provision of this Agreement may be amended, waived or modified only upon the written consent of Company and the Purchaser.

 

(b) Governing Law . This Agreement and all actions arising out of or in connection with this Agreement shall be governed by and construed in accordance with the laws of the State of California, without regard to the conflicts of law provisions of the State of California or of any other state.

 

(c) Survival. The representations, warranties, covenants and agreements made herein shall survive the execution and delivery of this Agreement and the Note and the purchase or transfer by the Purchaser of the Note.

 

(d) Successors and Assigns . Subject to the restrictions on transfer described in Section (e) below, the rights and obligations of Company and the Purchaser of the Note shall be binding upon and benefit the successors, assigns, heirs, administrators and transferees of the parties.

 

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(e) Registration, Transfer and Replacement of the Note . The Note issuable under this Agreement shall be a registered note. Company will keep, at its principal executive office, books for the registration and registration of transfer of the Note. Prior to presentation of the Note or any other Note issued in exchange thereof for registration of transfer, Company shall treat the Person in whose name such Note is registered as the owner and holder of such Note for all purposes whatsoever, whether or not such Note shall be overdue, and the Company shall not be affected by notice to the contrary. Subject to any restrictions on or conditions to transfer set forth in the Note or any other Note issued in exchange thereof, the holder of such Note, at its option, may in person or by duly authorized attorney surrender the same for exchange at Company’s chief executive office, and promptly thereafter and at Company’s expense, except as provided below, receive in exchange therefor a new Note, in the principal requested by such holder, dated the date to which interest shall have been paid on the Note so surrendered or, if no interest shall have yet been so paid, dated the date of the Note so surrendered and registered in the name of such Person or Persons as shall have been designated in writing by such holder or its attorney for the same aggregate principal amount as the then unpaid principal amount of the Note so surrendered. Upon receipt by Company of evidence reasonably satisfactory to it of the ownership of and the loss, theft, destruction or mutilation of the Note or any other Note and issued in exchange thereof (a) in the case of loss, theft or destruction, of indemnity reasonably satisfactory to it; or (b) in the case of mutilation, upon surrender thereof, the Company, at its expense, will execute and deliver in lieu thereof a new Note executed in the same manner as the Note being replaced, in the same principal amount as the unpaid principal amount of such Note and dated the date to which interest shall have been paid on such Note or, if no interest shall have yet been so paid, dated the date of such Note.

 

(f) Entire Agreement . This Agreement together with the Note constitute the full and entire understanding and agreement between the parties with regard to the subjects hereof and thereof.

 

(g) Notices . Any notice, request or other communication required or permitted hereunder shall be in writing and shall be deemed to have been duly given if personally delivered or mailed by registered or certified mail, postage prepaid, or by recognized overnight courier or personal delivery, addressed (i) if to the Purchaser, at the Purchaser’s address or at such other address as the Purchaser shall have furnished to the Company in writing, or (ii) if to any other holder of a Note, to such holder at such address as furnished to the Company in writing or (iii) if to Company, at its address set forth at the beginning of this Agreement, or at such other address as Company shall have furnished to the Purchaser in writing.

 

(h) Expenses . Company shall pay on demand all reasonable fees and expenses, including reasonable attorneys’ fees and expenses, incurred by Purchaser or any other Holder of a Note with respect to any amendments or waivers hereof requested by Company or in the enforcement or attempted enforcement of any of the obligations of Company to such Person under the Notes or in preserving any of such Person’s rights and remedies with respect to the Notes (including, without limitation, all such fees and expenses incurred in connection with any “workout” or restructuring affecting the Notes or any bankruptcy or similar proceeding involving Company or any of its subsidiaries).

 

(i) Severability of this Agreement . Company’s agreement with the Purchaser is a separate agreement and the sale of the Note to the Purchaser is a separate sale. If any provision of this Agreement shall be judicially determined to be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.

 

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(j) Counterparts . This Agreement may be executed in any number of counterparts, each of which shall be an original, but all of which together shall be deemed to constitute one instrument.

 

[Remainder of Page Intentionally Left Blank.]

 

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IN WITNESS WHEREOF, the parties have caused this Note Purchase and Line of Credit Agreement to be duly executed and delivered by their proper and duly authorized officers as of the date and year first written above.

 

 

 

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EXHIBIT A

 

FORM OF NOTE

 

 

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EXHIBIT A TO EXHIBIT 10.21

 

THIS NOTE AND THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THE SECURITIES UNDER SAID ACT OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.

 

SUNPOWER CORPORATION

 

UNSECURED SENIOR CONVERTIBLE PROMISSORY NOTE

 

 

FOR VALUE RECEIVED, SUNPOWER CORPORATION, a California corporation (“Company”) promises to pay to Cypress Semiconductor Corporation, a Delaware corporation. (“Holder”), or its registered assigns, the principal sum of                          Dollars ($                      ), or such lesser amount as shall equal the outstanding principal amount hereof, together with simple interest from the date of this Note on the unpaid principal balance at a rate equal to          percent (          %) per annum, which is equal to the short-term Applicable Federal Rate as of the date of this Note, computed on the basis of the actual number of days elapsed and a year of 360 days. All unpaid principal, together with any then accrued interest and other amounts payable hereunder, shall be due and payable on Holder’s written demand which may be made on or after                                  [fill in either (1) the actual date one year from the Warrant Expiration Date (if known at date of Note) or (2) “the date one year from the Warrant Expiration Date as defined in the Warrant to Purchase Series Two Preferred Stock issued by the Company to Holder”] , unless this Note is converted into shares of the Company’s capital stock pursuant to Section 8 hereof.

 

The following is a statement of the rights of Holder and the conditions to which this Note is subject, and to which Holder, by the acceptance of this Note, agrees:

 

1. Definitions . As used in this Note, the following capitalized terms have the following meanings:

 

(a) “Affiliate ,” with respect to any Person, means (i) any director, officer or employee of such Person, (ii) any Person directly or indirectly controlling or controlled by or under direct or indirect common control with such Person, and (iii) any Person beneficially owning or holding 5% or more of any class of voting securities of such Person or any corporation of which such Person beneficially owns or holds, in the aggregate, 5% or more of any class of voting securities. The term “control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise. The term “Affiliate,” when used herein without reference to any Person, shall mean an Affiliate of Company.

 

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(b) “Equity Securities ” of any Person shall mean (a) all common stock, preferred stock, participations, shares, partnership interests or other equity interests in and of such Person (regardless of how designated and whether or not voting or non-voting) and (b) all warrants, options and other rights to acquire any of the foregoing.

 

(c) “Event of Default ” has the meaning given in Section 5 hereof.

 

(d) “GAAP ” shall mean generally accepted accounting principles as in effect in the United States of America from time to time.

 

(e) “Holder ” shall mean the Person specified in the introductory paragraph of this Note or any Person who shall at the time be the registered holder of this Note.

 

(f) “Indebtedness ” shall mean and include the aggregate amount of, without duplication (i) all obligations for borrowed money, (ii) all obligations evidenced by bonds, debentures, notes or other similar instruments, (iii) all obligations to pay the deferred purchase price of property or services (other than accounts payable incurred in the ordinary course of business determined in accordance with GAAP), (iv) all obligations with respect to capital leases, (v) all obligations created or arising under any conditional sale or other title retention agreement with respect to property acquired by such Person, (vi) all reimbursement and other payment obligations, contingent or otherwise, in respect of letters of credit and similar surety instruments; and (vii) all guaranty obligations with respect to the types of Indebtedness listed in clauses (i) through (vi) above.

 

(g) “Lien ” shall mean, with respect to any property, any security interest, mortgage, pledge, lien, claim, charge or other encumbrance in, of, or on such property or the income therefrom, including, without limitation, the interest of a vendor or lessor under a conditional sale agreement, capital lease or other title retention agreement, or any agreement to provide any of the foregoing, and the filing of any financing statement or similar instrument under the Uniform Commercial Code or comparable law of any jurisdiction.

 

(h) “Note Purchase Agreement ” shall mean the Note Purchase and Line of Credit Agreement between the Company and the Holder dated April          , 2002.

 

(i) “Obligations ” shall mean and include all loans, advances, debts, liabilities and obligations, howsoever arising, owed by Company to Holder of every kind and description (whether or not evidenced by any note or instrument and whether or not for the payment of money), now existing or hereafter arising under or pursuant to the terms of this Note and the Note Purchase Agreement, including, all interest, fees, charges, expenses, attorneys’ fees and costs and accountants’ fees and costs chargeable to and payable by Company hereunder and thereunder, in each case, whether direct or indirect, absolute or contingent, due or to become due, and whether or not arising after the commencement of a proceeding under Title 11 of the United States Code (11 U. S. C. Section 101 et seq .), as amended from time to time (including post-petition interest) and whether or not allowed or allowable as a claim in any such proceeding.

 

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(j) “Person ” shall mean and include an individual, a partnership, a corporation (including a business trust), a joint stock company, a limited liability company, an unincorporated association, a joint venture or other entity or a governmental authority.

 

(k) “Senior Indebtedness ” shall mean, upon the consent of the Holder, the principal of (and premium, if any), unpaid interest on and amounts reimbursable, fees, expenses, costs of enforcement and other amounts due in connection with, (i) indebtedness of Company to banks, commercial finance lenders, insurance companies, leasing or equipment financing institutions or other lending institutions regularly engaged in the business of lending money (excluding venture capital, investment banking or similar institutions which sometimes engage in lending activities but which are primarily engaged in investments in Equity Securities), which is for money borrowed, or purchase or leasing of equipment in the case of lease or other equipment financing, whether or not secured, and (ii) any such indebtedness or any debentures, notes or other evidence of indebtedness issued in exchange for such Senior Indebtedness, or any indebtedness arising from the satisfaction of such Senior Indebtedness by a guarantor.

 

(l) “Subsidiary ” shall mean (a) any corporation of which more than 50% of the issued and outstanding Equity Securities having ordinary voting power to elect a majority of the Board of Directors of such corporation is at the time directly or indirectly owned or controlled by Company, (b) any partnership, joint venture, or other association of which more than 50% of the equity interest having the power to vote, direct or control the management of such partnership, joint venture or other association is at the time directly or indirectly owned and controlled by Company, (c) any other entity included in the financial statements of Company on a consolidated basis.

 

2. Interest . Interest shall accrue on this Note until the outstanding principal amount hereof shall be paid in full or until the outstanding principal amount and accrued interest therefrom are converted per Section 8.

 

3. Prepayment . Upon ten (10) days prior written notice to Holder, Company may prepay this Note in whole or in part; provided that the Holder within that ten (10) day period may exercise its conversion right as described in Section 8. Should the Holder fully convert the unpaid principal amount and all accrued interest, then this Note will be satisfied in full. Should the Holder exercise its conversion right only on a portion of the unpaid principal amount or accrued interest therefrom, then the Company may still exercise its right to prepay this Note to the extent of the remaining balance. The Holder shall notify the Company in writing of its intent to convert within the 10 day period.

 

4. Acceleration

 

(a) Acquisition . If an acquisition of the Company by means of an acquisition of all or substantially all of its assets, a merger, or other form of corporate reorganization in which the shareholders of the Company do not own a majority of the outstanding shares of the surviving corporation by virtue of their shares in the Company (an “Acquisition”), occurs, then the entire outstanding principal balance and any and all accrued interest hereunder shall become immediately due and payable.

 

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(b) Event of Default . If an Event of Default occurs, upon the election of the Holder, the entire outstanding principal balance and any and all accrued interest hereunder shall become immediately due and payable.

 

(c) Financing . If the Company gives notice to the Holder that an initial sale of capital stock of the Company to other than the Holder in an integrated transaction (a “Financing”) has occurred or that the Company has received a signed term sheet for a Financing, then unless converted into shares of the Company’s capital stock pursuant to Section 8, the lesser of: (1) the entire outstanding principal balance plus any and all accrued interest of this Note and all other Notes issued pursuant to the Note Purchase Agreement, or (2) an amount of principal and accrued interest of all Notes issued pursuant to the Note Purchase Agreement equal to one-half of the total amount raised by the Company in the Financing, shall become immediately due and payable. In the event of (2) above, then the same percentage of each Note issued pursuant to the Note Purchase Agreement shall become due and payable.

 

5. Events of Default . The occurrence of any of the following shall constitute an “Event of Default” under this Note:

 

(a) Failure to Pay . Company shall fail to pay when due any principal or interest payment on the due date hereunder and such payment shall not have bee