SECURITY AGREEMENT
This Security
Agreement (the “Agreement”), dated as of September 19,
2006, is entered into by and between Solar Power, Inc. a California
corporation (the “Debtor”), and Welund Fund, Inc., a
Nevada corporation (the “Secured Party”).
RECITALS
WHEREAS, Debtor and
Secured Party have entered into that certain Credit Facility
Agreement dated as of the date hereof (as amended, supplemented or
modified from time to time, the “Credit Facility
Agreement”), pursuant to which Debtor has agreed to borrow
from Secured Party, and Secured Party has agreed to extend to
Debtor a revolving line of credit in an amount not to exceed Two
Million Dollars ($2,000,000.00) (the “Commitment”),
which borrowings shall be evidenced by the Promissory Notes, in the
form attached as Exhibit A to the Credit Facility Agreement,
with all of the other agreements, documents, instruments,
certificates, reports and financing statements heretofore or
hereafter executed in connection therewith or with the Advances (as
defined in the Credit Facility Agreement) to be made under the
Credit Facility Agreement, as the same may be amended, supplemented
or modified from time to time, shall collectively be collectively
referred to herein as the “Loan Documents”);
WHEREAS, as a condition precedent to the
obligation of Secured Party to execute, delivery and perform under
the Credit Facility Agreement and the other Loan Documents and to
make Advances to Debtor pursuant to the Credit Facility Agreement,
Debtor is required, and has agreed, to enter into and deliver this
Agreement and to grant to Secured Party a security interest in the
Collateral (as defined herein) as security for Debtor’s
obligations under the Credit Facility Agreement; and
WHEREAS, Secured Party is willing to execute,
deliver and perform under the Credit Facility Agreement and the
other Loan Documents and to make the Advances available only upon
the condition that Debtor executed and delivers to the Secured
Party this Agreement and Debtor agrees to perform and complete its
obligations under this Agreement.
AGREEMENT
NOW, THEREFORE, in
consideration of the above recitals and for other good and valuable
consideration, the receipt and adequacy of which is hereby
acknowledged, Debtor and the Secured Party hereby agree as
follows:
1. Definitions
. The following words shall have the following meanings when used
in this Agreement. Terms not otherwise defined in this Agreement
shall have the meanings attributed to such terms in the Code (as
defined herein). All references to dollar amounts shall mean
amounts in lawful money of the United States of America.
Account
Debtor . Account Debtor shall mean any Person who is or may
become obligated with respect to, or on account of, an Account,
Chattel Paper or General Intangibles (including a Payment
Intangible).
Accounts .
Accounts shall mean all “accounts” as such term is
defined in the Code, now owned or hereafter acquired by Debtor,
including: (a) all accounts receivable, other receivables, book
debts and other forms of obligations (other than forms of
obligations evidenced by Chattel Paper or Instruments) (including
any such obligations that may be characterized as an account or
contract right under the Code); (b) all of Debtor’s rights
in, to, and under, all purchase orders or receipts for goods or
services; (c) all of Debtor’s rights to any goods represented
by any of the foregoing (including unpaid sellers’ rights of
rescission, replevin, reclamation and stoppage in transit and
rights to returned, reclaimed or repossessed goods); (d) all rights
to payment due to Debtor for Goods or other property sold, leased,
licensed, assigned or otherwise disposed of, for a policy of
insurance issued or to be issued, for a secondary obligation
incurred or to be incurred, or for services rendered or to be
rendered by Debtor or in connection with any other transaction
(whether or not yet earned by performance on the part of Debtor);
(e) all health care insurance receivables; and (f) all collateral
security of any kind given by any Account Debtor or any other
Person with respect to any of the foregoing.
Books and
Records . Books and Records shall mean all books, records,
board minutes, contracts, licenses, insurance policies,
environmental audits, business plans, files, computer files,
computer discs and other data and software storage and media
devices, accounting books and records, financial statements (actual
and pro forma), filings with Governmental Authorities, and any and
all records and instruments relating to the Collateral or
Debtor’s business.
Chattel Paper
. Chattel Paper shall mean all “chattel paper,” as such
term is defined in the Code, including electronic chattel paper,
now owned or hereafter acquired by any Person.
Code . Code
shall mean the Uniform Commercial Code as the same may, from time
to time, be in effect in the State of California.
Collateral .
Collateral is defined in Section 2.
Contracts .
Contracts shall mean all the contracts, undertakings, or agreements
(other than rights evidenced by Chattel Paper, Documents or
Instruments) in or under which Debtor may now or hereafter have any
right, title or interest, including any agreement relating to the
terms of payment or the terms of performance of any Account.
Copyright
License . Copyright License shall mean rights under any written
agreement now owned or hereafter acquired by Debtor granting the
right to use any Copyright or Copyright registration of any
Person.
Copyrights .
Copyrights shall mean all of the following now owned or hereafter
acquired by any Person: (a) all copyrights in any original work of
authorship fixed in any tangible medium of expression, now known or
later developed, all registrations and applications for
registration of any such copyrights in the U.S. Copyright Office or
any other country, including registrations, recordings and
applications, and supplemental registrations, recordings, and
applications in the U.S. Copyright Office; and (b) all Proceeds of
the foregoing, including license royalties and proceeds of
infringement suits, the right to sue for past, present and future
infringements, all rights corresponding thereto throughout the
world and all renewals and extensions thereof.
Deposit
Accounts . Deposit Accounts shall have the meaning as such term
is defined in the Code, now or hereafter held in the name of
Debtor.
Documents .
Documents shall have the meaning as such term is defined in the
Code, now owned or hereafter acquired by any Person, wherever
located, including all bills of lading, dock warrants, dock
receipts, warehouse receipts, and other documents of title, whether
negotiable or non-negotiable.
General
Intangibles . General Intangible shall have the meaning as such
term is defined in the Code, now owned or hereafter owned by
Debtor, including all right, title and interest that Debtor may now
or hereafter have in or under any Contract, all Payment
Intangibles, customer lists, Licenses, Intellectual Property,
interests in partnerships, joint ventures and other business
associations, permits, proprietary or confidential information,
inventions (whether or not patented or patentable), technical
information, procedures, designs, knowledge, know-how, software,
data bases, data, skill, expertise, experience, processes, models,
drawings, materials, Books and Records, Goodwill (including the
Goodwill associated with any Intellectual Property), all rights and
claims in or under insurance policies (including insurance for
fire, damage, loss, and casualty, whether covering personal
property, real property, tangible rights or intangible rights, all
liability, life, key-person, and business interruption insurance,
and all unearned premiums), uncertificated securities, choses in
action, Deposit Accounts, rights to receive tax refunds and other
payments, rights to received dividends, distributions, cash,
Instruments and other property, and rights of indemnification.
Goods . Goods
shall have the meaning as such term is defined in the Code, now
owned or hereafter owned by Debtor, wherever located, including
equipment, embedded software to the extent included in
“goods” as defined in the Code, manufactured homes,
standing timber that is cut and removed for sale and unborn young
of animals.
Goodwill .
Goodwill shall mean all goodwill, trade secrets, proprietary or
confidential information, technical information, procedures,
formulae, quality control standards, designs, operating and
training manuals, customer lists, and distribution agreements now
owned or hereafter owned by Debtor.
Indebtedness
. Indebtedness shall mean the indebtedness evidenced by the Credit
Facility Agreement, together with all other indebtedness and costs,
or expenses for which Debtor is responsible under the Credit
Facility Agreement and this Agreement. In addition, the word
“Indebtedness” includes all other obligations, debts
and liabilities, plus interest thereon, of Debtor to Secured Party,
as well as all claims by Secured Party against Debtor, 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 Debtor may be liable
individually or jointly with others; whether Debtor may be
obligated as Debtor, 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.
Instruments .
Instruments shall have the meaning as such term is defined in the
Code, now owned or hereafter owned by any Person, wherever located,
including all certificated securities and all notes and other
evidences of indebtedness, other than instruments that constitute,
or are a part of a group of writings that constitute, Chattel
Paper.
Intellectual
Property . Intellectual Property shall mean any and all
Licenses, Copyrights, Patents, Trademarks, Trade Secrets and
customer lists.
Inventory .
Inventory shall have the meaning as such term is defined in the
Code, now owned or hereafter owned by Debtor, wherever located,
including all inventory, merchandise, goods and other personal
property that are held by or on behalf of Debtor for sale or lease
or are furnished or are to be furnished under a contract of service
or that constitute raw materials, work in process, finished goods,
returned goods, or materials or supplies of any kind, nature or
description used or consumed or to be used or consumed in
Debtor’s business or in the processing, production,
packaging, promotion, delivery or shipping of the same, including
all supplies and embedded software.
Investment
Property . Investment Property shall have the meaning as such
term is defined in the Code, now or hereafter acquired by any
Person, wherever located.
License .
License shall mean any Copyright License, Patent License, Trademark
License or other license of rights or interests now held or
hereafter held by any Person.
Lien . 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 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 Code or comparable law of
any jurisdiction.
Patents .
Patents shall mean all of the following in which any Person now
holds or hereafter holds any interest: (a) all Patent Applications;
(b) all letters patent of any country and all registrations and
recordings thereof; and (c) all reissues, continuations,
continuations-in-part or extensions thereof.
Payment
Intangibles . Payment Intangibles shall have the meaning as
such term is defined in the Code, now owned or hereafter owned by
any Person.
Permitted
Liens . Permitted Liens shall mean (a) Liens for taxes not yet
delinquent or Liens for taxes being contested in good faith and by
appropriate proceedings for which adequate reserves have been
established; (b) Liens in respect of property or assets imposed by
law which were incurred in the ordinary course of business, such as
carriers’, warehousemen’s, materialmen’s and
mechanics’ Liens and other similar Liens arising in the
ordinary course of business which are not delinquent or remain
payable without penalty or which are being contested in good faith
and by appropriate proceedings for which adequate reserves have
been established; (c) Liens incurred or deposits made in the
ordinary course of business in connection with workers’
compensation, unemployment insurance and other types of social
security, and mechanic’s Liens, carrier’s Liens and
other Liens to secure the performance of tenders, statutory
obligations, contract bids, government contracts, performance and
return of money bonds and other similar obligations, in each case
incurred in the ordinary course of business, whether pursuant to
statutory requirements, common law or consensual arrangements; (d)
Liens securing obligations under a capital lease if such Liens do
not extend to property other than the property leased under such
capital lease; (e) Liens upon any equipment acquired or held by
Debtor or any of its subsidiaries to secure the purchase price of
such equipment or indebtedness incurred solely for the purpose of
financing the acquisition of such equipment, so long as such Lien
extends only to the equipment financed, and any accessions,
replacements, substitutions and proceeds (including insurance
proceeds) thereof or thereto; (f) Liens arising from judgments,
decrees or attachments in circumstances where they are undischarged
for not more than 30 days; (g) Liens in favor of customs and
revenue authorities arising as a matter of law to secure payments
of customs duties in connection with the importation of goods, (h)
Liens which constitute rights of setoff of a customary nature or
banker’s liens, whether arising by law or by contract; (i)
Liens on insurance proceeds in favor of insurance companies granted
solely as security for financed premiums; and (j) leases or
subleases and licenses or sublicenses granted in the ordinary
course of Debtor’s business.
Person .
Person shall mean 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 governmental authority.
Proceeds .
Proceeds shall have the meaning as such term is defined in the Code
and, in any event, shall include: (a) any and all proceeds of any
insurance, indemnity, warranty or guaranty payable to Debtor
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