Exhibit
10.7
COMMERCIAL SECURITY
AGREEMENT
(Bright Futures Technologies,
LLC)
This COMMERCIAL
SECURITY AGREEMENT (this “ Agreement ”) is made
effective July 13, 2009, by and between BRIGHT FUTURES
TECHNOLOGIES, LLC, a Nevada limited liability company
qualified to do business in California(“ Grantor
”) and UMPQUA BANK (“ Lender
”).
RECITALS
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Pursuant to
that certain Loan Agreement dated July 13, 2009, (the “
Loan Agreement ”) by and between Lender and PREMIER
POWER RENEWABLE ENERGY, INC., a Delaware corporation ("
Borrower "), Lender has agreed to lend to Borrower, and
Borrower has agreed to borrow from Lender (i) a revolving line of
credit in a principal amount not to exceed Seven Million and 00/100
Dollars ($7,000,000.00) at any one time outstanding (the “
Line of Credit ”) and (ii) an Advised Guidance Line in
an amount not to exceed Five Million and 00/100 Dollars
($5,000,000.00) (the “ Guidance Line ” and
together with the Line of Credit, the “ Loans ”
and each a “ Loan ”).
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The Loans shall
be evidenced by (i) a Promissory Note (Line of Credit) in the
principal amount of Seven Million and No/100 Dollars
($7,000,000.00) (the “ Line of Credit Note "),
together with such additional promissory notes or modification
thereof as may be necessary to evidence advances under the Guidance
Line (the “ Notes ” and each a “
Note ”).
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Grantor is a
wholly owned subsidiary of Borrower. As a condition to Lender's
willingness to make the Loans, Lender has required Grantor to grant
to Lender a security interest in the Collateral (as defined herein)
for the purpose of securing the Indebtedness (as defined
herein). Grantor will derive substantial direct and
indirect benefit from Lender’s making the Loans to
Borrower.
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AGREEMENT
NOW, THEREFORE,
for good and valuable consideration, receipt and adequacy of which
are hereby acknowledged, Borrower and Lender hereby agree as
follows
1
GRANT OF SECURITY INTEREST. For valuable
consideration, Grantor hereby grants to Lender a continuing
security interest in all presently existing and hereafter arising
Collateral in order to secure prompt repayment of any and all
Indebtedness owed by Borrower to Lender and in order to
secure prompt performance by Grantor of each and all of its
covenants and obligations under this Agreement and otherwise
created. Lender's security interest in the Collateral shall attach
to all Collateral without further act on the part of Lender or
Grantor. In the event that any Collateral, including
proceeds, is evidenced by or consists of Negotiable Collateral,
Grantor, immediately upon the request of Lender, shall (a) endorse
or assign such Negotiable Collateral to Lender, (b) deliver actual
physical possession of such Negotiable Collateral to Lender, and
(c) mark conspicuously all of its records pertaining to such
Negotiable Collateral with a legend, in form and
substance satisfactory to Lender (and in the case of
Negotiable Collateral consisting of tangible chattel paper,
immediately mark all such tangible chattel paper with a conspicuous
legend in form and substance satisfactory to Lender), indicating
that the Negotiable Collateral is subject to the security interest
granted to Lender hereunder. This Agreement is the
“ Bright Futures Security Agreement ” described
in the Loan Agreement. Capitalized terms used but not
defined herein shall have the meanings ascribed in the Loan
Agreement.
THE RIDER TO
SECURITY AGREEMENT EXECUTED BY NONBORROWER GRANTOR SHALL BE
ATTACHED TO AND MADE A PART OF THIS AGREEMENT.
2
DEFINITIONS . The following words shall have the
following meanings when used in this Agreement. Terms not otherwise
defined in this Agreement or the Loan Agreement shall have the
meanings attributed to such terms in the Uniform Commercial Code.
All references to dollar amounts shall mean amounts in lawful money
of the United States of America.
2.1
Accounts. The word “ Accounts ” shall
mean and includes all presently existing and hereafter arising
accounts, including without limitation all accounts receivable,
contract rights and other forms of right to payment for monetary
obligations or receivables for property sold or to be sold, leased,
licensed, assigned or otherwise disposed of, or for services
rendered or to be rendered (including without limitation all
health-care-insurance receivables) owing to Borrower, and any
supporting obligations, credit insurance, guaranties or security
therefor, irrespective of whether earned by performance.
2.2
Agreement. The word " Agreement " means
this Commercial Security Agreement, as this Commercial
Security Agreement may be amended or modified from time to time,
together with all exhibits and schedules attached to this
Commercial Security Agreement from time to time.
2.3
Bank Expenses. The words “ Bank
Expenses ” shall mean and includes: all reasonable costs
or expenses required to be paid by Grantor under this Agreement
which are paid or advanced by Lender; taxes and insurance premiums
of every nature and kind of Borrower paid by Lender; filing,
recording, publication and search fees, appraiser fees, auditor
fees and costs, and title insurance premiums paid or incurred by
Lender in connection with Lender's transactions with Borrower;
reasonable costs and expenses incurred by Lender in collecting the
Accounts (with or without suit) to correct any default or enforce
any provision of this Agreement, or in gaining possession of,
maintaining, handling, preserving, storing, shipping, selling,
disposing of, preparing for sale and/or advertising to sell the
Collateral, whether or not a sale is consummated; reasonable costs
and expenses of suit incurred by Lender in enforcing or defending
this Agreement or any portion hereof, including, but not limited
to, expenses incurred by Lender in attempting to obtain relief from
any stay, restraining order, injunction or similar process which
prohibits Lender from exercising any of its rights or remedies; and
reasonable attorneys' fees and expenses incurred by Lender in
advising, structuring, drafting, reviewing, amending, terminating,
enforcing, defending, or concerning this Agreement, or
any portion hereof or any agreement related hereto,
whether or not suit is brought. Bank Expenses shall
include Lender's reasonable in-house legal charges, and other legal
and attorney’s fees at reasonable rates.
2.4
Grantor's Books. The words
“ Grantor’s Books ” shall mean and
includes all of Grantor's books and records including but not
limited to minute books; ledgers; records indicating, summarizing
or evidencing Grantor's assets, (including, without limitation,
the Accounts) liabilities, business operations or
financial condition, and all information relating thereto, computer
programs; computer disk or tape files; computer printouts; computer
runs; and other computer prepared information and equipment of any
kind.
2.5
Collateral. The word “ Collateral
” means the following described property of Grantor (except
to the extent certain property of Grantor is specifically excluded
from this Collateral definition by Lender in writing, whether now
owned or hereafter acquired, whether now existing or hereafter
arising, and wherever located: All personal and fixture property of
every kind and nature including without limitation all Goods
(including Inventory, Equipment ,and any accessions thereto),
Instruments (including promissory notes), Documents, Accounts,
Chattel Paper (whether tangible or electronic), Deposit Accounts,
Letter-of-Credit Rights (whether or not the letter of credit is
evidenced by a writing), Investment Property (including securities)
and all Supporting Obligations and proceeds, and all
General Intangibles (including Payment Intangibles).
In addition,
the term “ Collateral ” includes all the
following, whether now owned or hereafter acquired, whether now
existing or hereafter arising, and wherever located:
(a)
All attachments, accessions, accessories, tools, parts,
supplies, increases, and additions to and all replacements of and
substitutions for any property described above.
(b)
All products and produce of any of the property described in this
Collateral definition.
(c)
All accounts, general intangibles, instruments, rents,
monies, payments, and all other rights, arising out of a sale,
lease, or other disposition of any of the properly described in
this Collateral definition.
(d)
All proceeds (including insurance proceeds) from the sale,
destruction, loss, or other disposition of any of the property
described in this Collateral definition.
(e)
All records and data relating to any of the property
described in this Collateral definition, whether in the form of a
writing, photograph, microfilm, microfiche, or electronic media,
together with all of Grantor’s right, title, and interest in
and to all computer software required to utilize, create, maintain,
and process any such records or data on electronic
media.
2.6
Debt. The word “ Debt ”
shall mean, as of any applicable date of determination, all items
of indebtedness, obligation or liability of a Person, whether
matured or unmatured, liquidated or unliquidated, direct or
indirect, absolute or contingent, joint or several, that should be
classified as liabilities in accordance with GAAP. In
the case of Borrower, the term "Debt" shall include,
without limitation, the Indebtedness.
2.7
Event of Default. The words “ Event of
Default ” mean and include without limitation any of the
Events of Default set forth herein, in the Loan Agreement, or in
any of the other Loan Documents.
2.8
General Intangibles. The words “
General Intangibles ”shall mean and includes all of
Grantor’s present and future general intangibles and other
personal property (including without limitation all payment
intangibles, electronic chattel paper, contract rights, rights
arising under common law, statutes, or regulations, choses or
things in action, goodwill, patents, trade names, trademarks,
servicemarks, copyrights, blueprints, drawings, plans, diagrams,
schematics, purchase orders, customer lists, monies due or
recoverable from pension funds, route lists, rights to payment
(including without limitation, rights to payment evidenced by
chattel paper, documents or instruments) and other rights under any
royalty or licensing agreements, infringement claims, software
(including without limitation any computer program that is embedded
in goods that consist solely of the medium in which the program is
embedded), information contained on computer disks or tapes,
literature, reports, catalogs, insurance premium rebates, tax
refunds, and tax refund claims), other than goods, Accounts,
Inventory, Negotiable Collateral, and Grantor’s
Books.
2.9
Guarantor. The word " Guarantor " means
and includes without limitation each and all of the guarantors,
sureties, and accommodation parties in connection with the
Indebtedness.
2.10
Indebtedness. The word “
Indebtedness ” means the indebtedness evidenced by the
Loan Documents, including all principal and interest and other
amounts owing under the Note and any reimbursement agreements
entered into with respect to Letters of Credit, together with all
other indebtedness and costs and expenses for which Borrower is
responsible under this Agreement or under the Loan
Documents. In addition, the word “
Indebtedness ” includes all other loans, advances,
Letter of Credit Obligations, overdrafts, debts, liabilities
(including, without limitation, any and all amounts charged to
Borrower’s loan accounts pursuant to any agreement
authorizing Lender to charge Borrower’s loan accounts),
obligations, lease payments, guaranties, covenants and duties owing
by Borrower to Lender of any kind and description whether advanced
pursuant to or evidenced by this Agreement; by any note or other
instrument; or by any other agreement between Lender and Borrower
and whether or not for the payment of money, whether direct or
indirect, absolute or contingent, due or to become due now existing
or hereafter arising, including, without limitation, any interest,
fees, expenses, costs and other amounts owed to Lender that but for
the provisions of the United States Bankruptcy Code would have
accrued after the commencement of any Insolvency Proceeding, and
including, without limitation, any debt, liability, or obligations
owing from Borrower to others which Lender may have obtained by
assignment, participation, purchase or otherwise, and further
including, without limitation, all interest not paid when due and
all Bank Expenses which Borrower is required to pay or reimburse by
this Agreement, by law, or otherwise. The word “
Indebtedness ” shall also include all obligations,
debts and liabilities, plus interest thereon, of Borrower to
Lender, as well as all claims by Lender against Borrower, whether
existing now or later; whether they are voluntary or involuntary,
due or not due, direct or indirect, absolute or contingent,
liquidated or unliquidated; whether Borrower may be liable
individually or jointly with others; whether Borrower may be
obligated as guarantor, surety, accommodation party or otherwise;
whether recovery upon such indebtedness may be or hereafter may
become barred by any statute of limitations; and whether such
indebtedness may be or hereafter may become otherwise
unenforceable.
2.11
Insolvency Proceeding. The words
“ Insolvency Proceeding ” shall mean and
includes any proceeding or case commenced by or against Borrower or
Grantor, or any guarantor of the Indebtedness, or any of
Grantor’s account debtors, under any provisions of the United
States Bankruptcy Code, as amended, or any other bankruptcy or
insolvency law, including, but not limited to assignments for the
benefit of creditors, formal or informal moratoriums, composition
or extensions with some or all creditors, any proceeding seeking a
reorganization, arrangement or any other relief under the United
States Bankruptcy Code, as amended, or any other bankruptcy or
insolvency law.
2.12
Inventory. The word “
Inventory ” shall mean and includes all present and
future inventory in which Grantor has any interest, including, but
not limited to, goods held by Grantor for sale or lease or to be
furnished under a contract of service and all of Grantor’s
present and future raw materials, work in process, finished goods
(including without limitation any computer program embedded in any
of the foregoing goods and any supporting information provided in
connection therewith that (i) is associated with the goods in such
a manner that the program customarily is considered part of the
goods or that (ii) by becoming the owner of the goods, a person
acquires a right to use the program in connection with the goods),
together with any advertising materials and packing and shipping
materials, wherever located and any documents of title representing
any of the above, and any equipment, fixtures or other property
used in the storing, moving, preserving, identifying, accounting
for and shipping or preparing for the shipping
of inventory,
and any and all other items
hereafter acquired by Grantor by way of substitution, replacement,
return, repossession or otherwise, and all additions and accessions
thereto, and the resulting product or mass, and any documents of
title respecting any of the above.
2.13
Letter of Credit Obligations. The words “ Letter of
Credit Obligations ” shall mean, as of any applicable
date of determination, the sum of the undrawn amount of any
letter(s) of credit issued by Lender upon the application of and/or
for the account of Grantor, plus any unpaid reimbursement
obligations owing by Grantor to Lender in respect of any such
letter(s) of credit.
2.14
Negotiable Collateral. The words “ Negotiable
Collateral ” shall mean and include all of Grantor's
present and future letters of credit, advises of credit,
letter-of-credit rights, certificates of deposit, notes, drafts,
money, documents (including without limitation all negotiable
documents), instruments (including without limitation all
promissory notes), tangible chattel paper or any other similar
property.
2.15
Person or person. The word “
Person ” or “ person ” shall mean
and includes any individual, corporation, partnership, joint
venture, firm, association, trust, unincorporated
association, joint stock company, government, municipality,
political subdivision or agency or other entity.
3
OBLIGATIONS OF GRANTOR . Grantor warrants and
covenants to Lender as follows:
3.1
Perfection Of Security Interest . Grantor agrees
to execute such financing statements and to take whatever other
actions, including but not limited to delivery of documents of
title and warehouse receipts, that are reasonably requested by
Lender to perfect and continue Lender’s security interest in
the Collateral. Upon request of Lender, Grantor will deliver to
Lender any and all of the documents evidencing or constituting the
Collateral, and Grantor will note Lender’s interest upon any
and all chattel paper if not delivered to Lender for possession by
Lender. Grantor hereby appoints Lender as its attorney-in-fact
(which appointment is coupled with an interest and is irrevocable)
for the purpose of executing any documents necessary to perfect or
to continue the security interest granted in this Agreement. Lender
may at any time, and without further authorization from Grantor,
file a carbon, photographic or other reproduction of any financing
statement or of this Agreement for use as a financing statement.
Grantor will reimburse Lender for all reasonable expenses for the
perfection and the continuation of the perfection of Lenders
security interest in the Collateral. Grantor promptly will notify
Lender before any change in Grantor’s name including any
change to the assumed business names of Grantor. This is a
continuing Agreement and will continue in effect until the
Indebtedness and Lender’s obligation to make further Advances
has terminated.
3.2
No Violation . The execution and delivery of this
Agreement will not violate any law or agreement governing Grantor
or to which Grantor is a party, and its certificate or articles of
incorporation and bylaws do not prohibit any term or condition of
this Agreement.
3.3
Enforceability of Collateral . To the extent the
Collateral consists of Accounts, Chattel Paper, or General
Intangibles, the Collateral is legally enforceable in accordance
with its terms, is genuine, and complies with applicable laws
concerning form, content and manner of preparation and execution,
and all persons appearing to be obligated on the Collateral have
authority and capacity to contract and are in fact obligated as
they appear to be on the Collateral. At the time any Account
becomes subject to a security interest in favor of Lender, the
Account shall be a good and valid Account representing an
undisputed, bona fide indebtedness incurred by the account debtor,
and in the case of accounts receivable, for merchandise held
subject to delivery instructions or theretofore shipped or
delivered pursuant to a contract of sale, or for services
theretofore performed by Grantor with or for the account debtor
there shall be no setoffs or counterclaims against any such
account; and no agreement under which any deductions or discounts
may be claimed shall have been made with the account debtor except
those disclosed to Lender in writing.
3.4
Location of the Collateral . Grantor, upon
written request of Lender, will deliver to Lender in form
reasonably satisfactory to Lender a schedule of real properties and
Collateral locations relating to Grantor’s operations,
including without limitation the following: (a) all real
property owned or being purchased by Grantor; (b) all real property
being rented or leased by Grantor; (c) all storage facilities
owned, rented, leased, or being used by Grantor; and (d) all other
properties where Collateral is or may be located. Except in the
ordinary course of its business (which shall include, without
limitation, te disposition of worn, damaged, or obsolete Equipment,
and Equipment no longer used by Grantor), Grantor shall not remove
the Collateral from its existing locations without the prior
written consent of Lender, which consent shall not be unreasonably
withheld, conditioned or delayed.
3.5
Removal of Collateral . Grantor shall keep the Collateral
(or to the extent the Collateral consists of intangible property
such as Accounts, the records concerning the Collateral) at
Grantor’s principal place of business, or at such other
locations as such Collateral is currently located, or as may be
reasonably acceptable to Lender. Except in the ordinary course of
its business, including, without limitation, the sales of
Inventory, Grantor shall not remove, in any given calendar year,
Collateral having an aggregate value in excess of Twenty-Five
Thousand Dollars ($25,000) from its existing locations without the
prior written consent of Lender which consent shall not be
unreasonably withheld, conditioned or delayed. To the extent that
the Collateral consists of vehicles, or other titled property,
Grantor shall not take or permit any action which would require
application for certificates of title for the vehicles outside the
State of California, without the prior written consent of Lender
which consent shall not be unreasonably withheld, conditioned or
delayed.
3.6
Transactions Involving Collateral . Except for
Inventory sold or Accounts collected in the ordinary course of
Grantor’s business, and as otherwise expressly provided
herein, Grantor shall not sell, offer to sell, or otherwise
transfer or dispose of the Collateral in any calendar year of an
aggregate value in excess of Twenty-Five Thousand Dollars
($25,000). While Grantor is not in default under this
Agreement, Grantor may sell Inventory, but only in the ordinary
course of its business and only to buyers who qualify as a buyer in
the ordinary course of business. A sale in the ordinary
course of Grantor’s business does not include a transfer in
partial or total satisfaction of a debt or any bulk sale. Except
for Approved Prior Liens, Grantor shall not pledge, mortgage,
encumber or otherwise permit the Collateral to be subject to any
lien, security interest, encumbrance, or charge, other than the
security interest provided for in this Agreement, without the prior
written consent of Lender, which consent shall not be unreasonably
withheld, conditioned or delayed. This includes security interests
even if junior in right to the security interests granted under
this Agreement. Unless waived by Lender, all proceeds from any
disposition of the Collateral not permitted hereunder, shall be
held in trust for Lender and shall not be commingled with any other
funds; provided however, this requirement shall not constitute
consent by Lender to any sale or other disposition. Upon receipt,
Grantor shall immediately deliver any such proceeds to Lender or
use such proceeds to purchase replacement Collateral.
3.7
Title . Grantor represents and warrants to Lender
that, except for the lien of this Agreement and the Approved Prior
Liens, it holds good and marketable title to the Collateral, free
and clear of all liens and encumbrances, other than liens for taxes
not yet payable. To the best of Grantor’s knowledge, no
financing statement covering any of the Collateral is on file in
any public office other than those which reflect the security
interest created by this Agreement or to which Lender has
specifically consented. Grantor shall defend Lender’s rights
in the Collateral against the claims and demands of all other
persons.
3.8
Collateral Schedules and Locations . As
ofte
