CREDIT FACILITY AGREEMENT
THIS
CREDIT FACILITY AGREEMENT (the "Agreement"), is made and entered into and
effective as of September 19, 2006, by and between Welund Fund, Inc., a Nevada
corporation ("Welund") and Solar Power, Inc., a California corporation ("SPI").
For
good
and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereby agree as follows:
1. Purpose.
Welund
and SPI are parties to a certain Agreement and Plan of Merger dated as of August
23, 2006, by and among Welund, SPI and Welund Acquisition Corp. (the “Merger
Sub”), a Nevada corporation and wholly owned subsidiary of Welund (the “Merger
Agreement”). Pursuant to the Merger Agreement, the parties contemplate that SPI
will merge into the Merger Sub with SPI as the surviving entity (the “Merger”).
Welund is conducting a private placement offering in the aggregate amount of
$16,000,000 in order to raise working capital to be used by SPI upon the
consummation of the Merger. SPI is currently in need of working capital. Welund
desires to provide working capital to SPI and SPI desires to draw upon the
Welund commitment to provide a revolving line of credit for up to an aggregate
of Two Million Dollars ($2,000,000) for such purposes, pursuant to the terms
and
conditions of this Agreement
2. Definitions.
The
following terms shall have the meanings ascribed to them for purposes of this
Agreement, the Exhibits, Attachments and Schedules thereto, unless otherwise
specifically defined in such Exhibits, Attachments and Schedules.
“Advances”
means
the aggregate of funds made under the Revolving Loan Commitment to SPI during
the term of this Agreement, including all accrued and unpaid
interest.
“Applicable
Rate”
means,
with respect to any Advance, as the case may be, the interest rate of eight
percent (8%) simple interest per annum charged by Welund.
“Commitments”
means
the Revolving Loan Commitments under this Agreement.
“Default”
means
any event or condition which constitutes an Event of Default or which upon
notice, lapse of time or both would, unless cured or waived, become an Event
of
Default, as defined in the Security Agreement attached to this
Agreement.
“Event
of Default”
has
the
meaning assigned to such term in the Security Agreement attached
hereto.
“Loan
Documents”
means,
collectively, this Agreement, the Security Documents, Security Agreement, and
other schedules, exhibits and attachments hereto.
1
“Maturity
Date”
means
March 31, 2007, unless this Agreement is extended, as provided herein, in which
case the Maturity Date shall be the date of termination of any
extension.
“Notes”
means,
collectively, the Promissory Notes substantially in the form attached as
Exhibit
A
hereto,
and made by SPI to Welund in connection with each Advance.
“Person”
means
any natural person, corporation, trust, foundation, limited liability
corporation, limited liability partnership, association, limited partnership,
general partnership, or other entity, and their respective successors or
assigns.
“Revolving
Loan Availability Period”
means
the period from and including the Effective Date to and including February
28,
2007, unless extended by Welund, in its sole discretion, for additional
terms.
“Revolving
Loan Commitment”
means
the commitment of Welund to make one or more Revolving Loans hereunder during
the Revolving Loan Availability Period, expressed as an amount representing
the
maximum aggregate principal amount of the Revolving Loans to be made by Welund
which shall be outstanding at any one time hereunder. The aggregate amount
of
the Revolving Loan Commitment is $2,000,000.
“Revolving
Loans”
means
the revolving loans made by Welund to the SPI pursuant to Section
3.
“Security
Agreement”
means
a
Security Agreement substantially in the form of Exhibit
B
between
SPI, as the same shall be modified and supplemented and in effect from time
to
time.
“Security
Documents”
means,
collectively, the Security Agreement, all California Commercial Code financing
statements (Form UCC-1) and all other filings required by the Security Agreement
to be filed with respect to the security interests in real property, personal
property and fixtures created pursuant to the Security Agreement.
3. Credit
Facility.
Advances and reports shall be governed by this Section 3.
(a) The
Commitments.
Subject
to the terms and conditions set forth herein, Welund agrees to make one or
more
Revolving Loans to the SPI during the Revolving Loan Availability Period up
to
the Revolving Loan Commitment subject to the terms and conditions set forth
herein.
(b) Notice
by SPI.
To
request an Advance (other than any Advance on the date hereof or prior to the
date hereof), SPI shall notify Welund of such request at least one (1) Business
Day before the date of the proposed Advance. Each such request shall be
irrevocable and shall be in a form approved by Welund and signed by the
SPI.
2
(c) Content
of Advance Requests.
Each
telephonic and written request for an Advance shall specify the following
information:
(i) the
aggregate amount of such requested Advance;
(ii) the
date
of such requested Advance to be deposited into SPI’s account, which shall be a
Business Day during the Revolving Loan Availability Period; and
(iii)
the
location, account number, and other relevant wire transfer instructions for
SPI’s account to which funds are to be disbursed.
(d) Funding
of Advances.
Welund
shall make each Advance on the proposed date thereof by wire transfer of
immediately available funds by 12:00 noon (P.S.T.), to the account of SPI as
designated by it for such purpose in the request for Advance.
(e) Termination
and Reduction of the Commitments.
(i) Scheduled
Termination.
Unless
previously terminated, the Revolving Loan Commitments shall terminate at 5:00
p.m. (P.S.T.), on the last day of the Revolving Loan Availability
Period.
(ii) Voluntary
Termination or Reduction.
SPI may
at any time terminate, or from time to time reduce, the Revolving Loan
Commitments; provided that SPI shall not reduce or terminate the Revolving
Loan
Commitments if after giving effect to any concurrent prepayment of Advances,
the
Advances outstanding would exceed the total Revolving Loan
Commitments.
(iii) Notice
of Voluntary Termination or Reduction.
SPI
shall notify Welund of any election to terminate or reduce the Revolving Loan
Commitments under Section 3(e)(ii) of this Section at least three Business
Days
prior to the effective date of such termination or reduction, specifying such
election and the effective date thereof. Each notice delivered by SPI pursuant
to this Section shall be irrevocable.
(iv) Effect
of Termination or Reduction.
Any
termination or reduction of the Commitments shall be permanent.
(f)
Repayment
of Advances; Evidence of Debt.
(i) Repayment.
SPI
hereby unconditionally promises to pay to Welund the aggregate outstanding
principal amount of the Advances and accrued interest on the Maturity
Date.
(ii) Maintenance
of Records by Welund.
Welund
shall maintain in accordance with its usual practice records evidencing the
Advances to SPI resulting from each Advance, including the amounts of principal
and interest payable and paid to Welund from time to time
hereunder.
3
(iii) Effect
of Entries.
The
entries made by Welund in its records maintained pursuant to Section 3(f)(ii)
of
this Section shall be prima facie evidence of the existence and amounts of
the
obligations recorded therein; provided that the failure of Welund maintain
such
records or any error therein shall not in any manner affect the obligation
of
SPI to repay the Advances in accordance with the terms of this
Agreement.
(iv) Promissory
Notes.
For
each Advance, SPI shall prepare, execute and deliver to Welund a Note payable
to
Welund.
(g) Prepayments.
(i) Subject
to the requirements of this Section, SPI shall have the right from time to
time,
on any Business Day, to prepay any Revolving Borrowings in whole or in
part.
(ii) SPI
shall
notify the President and Vice-President of Welund by telephone (confirmed by
telecopy) of any prepayment hereunder not later than 12:00 noon (P.S.T.), three
(3) Business Days before the date of prepayment. Each such notice shall be
irrevocable and shall specify the Advances to be prepaid, the prepayment date,
and the principal amount of such Advance.
(h) Interest.
(i) Advances.
Each
Advance shall bear interest at a rate per annum equal to the Applicable
Rate.
(ii) Payment
of Interest.
Accrued
interest on the Advances shall be payable on the Maturity Date.
4. Representations
and Warranties of SPI.
As
a
material inducement to Welund to enter into and execute this Agreement and
to
perform its covenants, agreements, duties and obligations hereunder, and in
consideration therefore, SPI hereby makes the following representations and
warranties, each of which (i) is material and is being relied upon by Welund
as
a material inducement to enter into this Agreement and (ii) is true at and
as of
the date hereof.
(a) Authority.
SPI has
full power and authority to enter into and perform its obligations set forth
in
this Agreement and to borrow and repay Advances under this
Agreement.
(b) Compliance
with Laws, Etc.
The
execution and delivery of this Agreement and the drawing of Advances hereunder
does not and will not violate any requirement of law or any contractual
obligation of SPI.
4
(c) Defaults.
SPI is
not currently in default of any contractual obligation that would have a
material adverse effect on SPI's business, assets or financial
condition.
(d) Litigation.
There
is no litigation, arbitration or other proceedings taking place, pending or
to
the knowledge of SPI threatened against SPI or any of its assets which questions
the validity of this Agreement or the right of SPI to enter into it or to
consummate the transactions contemplated hereby.
5. Covenants.
Until
the
Revolving Commitments have expired or been terminated and the principal of
and
interest on each Advance and all fees payable hereunder shall have been paid
in
full, SPI covenants and agrees with Welund that promptly upon written request
by
Welund SPI shall deliver:
(a) A
certificate of a duly authorized financial officer of SPI certifying as to
whether a Default has occurred and, if a Default has occurred, specifying the
details thereof and any action taken or proposed to be taken with respect
thereto;
(b) Such
other information regarding the operations, business affairs and financial
condition of SPI, or compliance with the terms of this Agreement and the other
Loan Documents, Welund may reasonably request.
6. Use
of
Proceeds.
The
proceeds of the Advances will be used for working capital.
7. Miscellaneous.
(a) Notices.
Except
as provided in Section 3(g)(ii), any and all notices required or permitted
to be
given to a party pursuant to the provisions of this Agreement will be in writing
and shall be deemed to have been duly given on the earliest of (i) if delivered
personally, the date when received, (ii) if transmitted by facsimile, the date
upon receipt of a confirmation of receipt, (iii) if sent by e-mail, the date
upon transmission, (iv) if sent by U.S. nationally recognized overnight courier
service, the date of mailing, or (v) the date upon actual receipt by the party
to whom such notice is required to be given. All such notices, requests, demands
and other communications shall be addressed to the following addresses, unless
written notice is provided to each of the parties identified below of a new
address or contact delivered at least 30-days in advance:
If
to Welund:
|
Welund
Fund, Inc.
|
Attn:
Xxxxxx Xxxxxxxx, President
|
|
000
Xxxx Xxxxx Xxxxxx, Xxxxx 0000
|
|
Xxxx
Xxxx Xxxx, Xxxx 00000
|
|
Fax:
(000) 000-0000
|
5
If
to SPI:
|
Solar
Power, Inc.
|
Attn:
Xxxxxxx X. Xxxxxxx, Chief Executive Officer
|
|
0000
Xxxxxx Xxxxxxxx Xxxx, Xxxxx 000
|
|
Xxxxxxx
Xxx, Xxxxxxxxxx 00000
|
|
Fax:
|
(000)
000-0000
|
and
Copy to:
|
Bullivant
Xxxxxx Xxxxxx PC
|
Attn:
Xxxxx X. Xxxxx, Esq.
|
|
0000
X Xxxxxx, Xxxxx 0000
|
|
Xxxxxxxxxx,
XX 00000
|
|
Fax:
(000) 000-0000
|
(b) Counterparts.
This
Agreement may be executed in two or more counterparts, all of which when taken
together shall be considered one and the same agreement and shall become
effective when counterparts have been signed by each party and delivered to
the
other party, it being understood that both parties need not sign the same
counterpart. In the event that any signature is delivered by facsimile
transmission, such signature shall create a valid and binding obligation of
the
party executing (or on whose behalf such signature is executed) with the same
force and effect as if such facsimile signature page were an original
thereof.
(c) Entire
Agreement.
This
Agreement, the attached Exhibits, Schedules, and other documents, including
agreements entered into in connection herewith, supersede all prior negotiations
and agreements (whether written or oral) and constitute the entire understanding
among the parties hereto.
(d) Successors.
This
Agreement shall inure to the benefit of and be binding upon the parties named
herein and their respective successors and assigns.
(e) Headings.
The
section headings contained in this Agreement are for convenience only and shall
not control or affect the meaning or construction of any of the provisions
of
this Agreement.
(f)
Governing
Law.
This
Agreement shall be construed and enforced in accordance with the laws of the
State of California, and in the event of any litigation or other dispute in
connection with this Agreement or any of the exhibits attached hereto, the
venue
and jurisdiction shall be in Sacramento, California.
(g) Delay;
Waiver.
No
delay or omission to exercise any right, power or remedy accruing to any party
hereto shall impair any such right, power or remedy of such party nor be
construed to be a waiver of any such right, power or remedy nor constitute
any
course of dealing or performance hereunder. A waiver of an event shall not
constitute a waiver of similar or subsequent events, unless expressly stated
in
a written amendment to this Agreement.
6
(h) Costs
and Attorneys' Fees.
If any
action, suit, arbitration proceeding or other proceeding is instituted arising
out of this Agreement, the prevailing party shall recover all of such party's
costs, including, without limitation, the court costs and reasonable attorneys'
fees incurred therein, including any and all appeals or petitions
therefrom.
(i)
Further
Assurances, Etc.
SPI
will cooperate with Welund in order to effectuate the transactions contemplated
by this Agreement and, in that regard, will execute and deliver such
instruments, documents and further assurances as Welund from time to time may
reasonably request.
(j)
Amendment.
Any of
the terms and provisions of this Agreement may be waived at any time by the
party that is entitled to the benefit thereof, but only by a written instrument
executed by such party. This Agreement may be amended only by an agreement
in
writing executed by the parties.
(k) Assignment.
Neither
this Agreement nor any right pursuing hereto or interest herein shall be
assignable by either of the parties hereto without the prior written consent
of
the other party hereto.
[INTENTIONALLY
LEFT BLANK - SIGNATURE PAGE NEXT FOLLOWS]
7
IN
WITNESS WHEREOF, the undersigned parties hereto have duly executed this
Agreement effective as of the date first above written.
WELUND
FUND, INC.
|
||
By
|
/s/
Xxxxx
Xxxxxxxx
|
|
Xxxxx
Xxxxxxxx, President
|
||
SOLAR
POWER, INC.
|
||
By
|
/s/
Xxxxx
Xxxxxxxx
|
|
Xxxxx
Xxxxxxxx, Chief Financial Officer
|
8
EXHIBIT
A
FORM
OF SECURED PROMISSORY NOTE
Sacramento,
California
|
|
$__________
|
September
___2006
|
This
Secured Promissory Note (this "Note") is made and delivered pursuant to that
certain Credit Facility Agreement dated as of September __, 2006 between Solar
Power, Inc., a California corporation (“Borrower”) and Welund Fund, Inc., a
Nevada corporation (“Lender” or “Holder”), as such may be amended from time to
time (the "Credit Agreement"). Unless otherwise defined herein, all capitalized
terms used in this Note shall have the same meanings that are given to such
terms in the Credit Agreement, the terms of which are incorporated into this
Note by reference.
1. Obligation.
The
Borrower hereby promises to pay to the order of Lender or Holder on or before
the Maturity Date, at Lender's principal place of business, or at such other
place as Holder may direct, the principal sum of TWO MILLION Dollars
($2,000,000.00) or so much thereof as may be advanced and outstanding, together
with all interest accrued on unpaid principal, to be computed on each Advance
from the date of its disbursement to Borrower, at a rate equal to eight percent
(8%) simple interest per annum, as provided in the Credit Agreement. The
outstanding principal amount of this Note, together with accrued interest
thereon, shall be due and payable in full on the Maturity Date. The outstanding
unpaid principal balance of this Note at any time shall be the total principal
amounts advanced hereunder by Holder less the amounts of payments of principal
made hereon by Borrower, which balance may be endorsed hereon from time to
time
by Holder in accordance with Section 2.
2. Recording
Advances and Payments.
Holder
is authorized to record on Schedule A hereto, and on any continuation(s) of
such
Schedule that may be attached to this Note: (a) the date and principal amount
of
each Advance by Lender under the Credit Agreement; and (b) the date and amount
of each payment or prepayment of principal and/or accrued interest of any
Advance; which recordation will constitute prima facie evidence of the accuracy
of the information so endorsed on Schedule A; provided however, that any failure
to record such information on such Schedule or continuation thereof will not
in
any manner affect the obligations of Borrower to make payments of principal
and
interest in accordance with the terms of this Note. Holder will promptly provide
Borrower with a copy of each recordation made by Holder on Schedule A attached
hereto.
3. Security.
This
Note is subject to a Security Agreement executed September ___, 2006 between
Lender as the Secured party and Borrower as Debtor.
4. Prepayment.
Prepayment of unpaid principal and/or interest due under this Note may be made
at any time without penalty as specified in the Credit Agreement. Unless
otherwise agreed in writing by Holder, all payments will be made in lawful
tender of the United States and will be applied (a) first, to the payment of
accrued interest, and (b) second, (to the extent that the amount of such
prepayment exceeds the amount of all such accrued interest), to the payment
of
principal.
5. Default,
Acceleration of Obligation.
Borrower will be deemed to be in default under this Note and the outstanding
unpaid principal balance of this Note, together with all interest accrued
thereon, will immediately become due and payable in full, without the need
for
any further action on the part of Holder, upon the occurrence of any Event
of
Default (as defined in the Credit Agreement or the Security Agreement) not
otherwise remedied pursuant to the terms of the Credit Agreement or the Security
Agreement.
6. Remedies
on Default; Acceleration.
Upon
any Event of Default, Holder will have, in addition to its rights and remedies
under this Note, the Credit Agreement and Security Agreement, full recourse
against any real, personal, tangible or intangible assets of Borrower, and
may
pursue any legal or equitable remedies that are available to Holder, and may
declare the entire unpaid principal amount of this Note and all unpaid accrued
interest under this Note to be immediately due and payable in full.
7. Waiver
and Amendment.
Any
provision of this Note may be amended or modified only by a writing signed
by
both Borrower and Holder. Except as provided below with respect to waivers
by
Borrower, no waiver or consent with respect to this Note will be binding or
effective unless it is set forth in writing and signed by the party against
whom
such waiver is asserted. No course of dealing between Borrower and Holder will
operate as a waiver or modification of any party's rights or obligations under
this Note. No delay or failure on the part of either party in exercising any
right or remedy under this Note will operate as a waiver of such right or any
other right. A waiver given on one occasion will not be construed as a bar
to,
or as a waiver of, any right or remedy on any future occasion.
8. Waiver
of Borrower.
Borrower
hereby waives presentment, notice of non-payment, notice of dishonor, protest,
demand and diligence. This Note may be amended only by a writing executed by
Borrower and Holder.
9. Governing
Law.
This
Note will be governed by and construed in accordance with the internal laws
of
the State of California as applied to agreements between residents thereof
to be
performed entirely within such State, without reference to that body of law
relating to conflict of laws or choice of law.
10.
Severability;
Headings.
The
invalidity or unenforceability of any term or provision of this Note will not
affect the validity or enforceability of any other term or provision hereof.
The
headings in this Note are for convenience of reference only and will not alter
or otherwise affect the meaning of this Note.
11.
Jurisdiction;
Venue.
Borrower, by its execution of this Note, hereby irrevocably submits to the
in
personal jurisdiction of the state courts of the State of California and of
the
United States District Court for the Northern District of California that are
located in Sacramento, California, for the purpose of any suit, action or other
proceeding arising out of or based upon this Note.
12.
Assignment.
This
Note is not assignable by Holder without the written consent of Borrower. This
Note may not be assigned or delegated by Borrower, whether by voluntary
assignment or transfer, operation of law, merger or otherwise.
13.
Credit
Agreement and Security Agreement.
This
Note incorporates by reference all the provisions of the Credit Agreement and
the Security Agreement, including but not limited to all provisions contained
therein with respect to Events of Default, waivers, remedies and covenants,
and
the description of the benefits, rights and obligations of each of Borrower
and
Holder under the Credit Agreement and the Security Agreement.
IN
WITNESS WHEREOF, the Borrower has executed and delivered this Note effective
as
of the date first above written.
SOLAR
POWER, INC.
|
|
/s/
Xxxxx
Xxxxxxxx
|
|
Xxxxx
Xxxxxxxx, Chief Financial Officer
|
SCHEDULE
A
LOANS
AND
PAYMENTS OF PRINCIPAL
Date
|
Amount
of Loan
|
Amount
of Principal Repaid
|
Notation
Made By
|
EXHIBIT
B
SECURITY
AGREEMENT