Exhibit 10.3
Loan No. 68890396
ACKNOWLEDGEMENT, CONFIRMATION AND ESTOPPEL
(SPI)
     This Acknowledgement, Confirmation and Estoppel, dated as of June 22, 2010
(this “Estoppel”) is made by Solar Power, Inc., a California corporation (“SPI”)
in favor of Umpqua Bank, an Oregon corporation (“Lender”), and is made pursuant
to and in connection with (i) that certain Operations and Maintenance Agreement
dated December 11, 2009 by and between SPI and Solar Tax Partners 1, LLC, a
California limited liability company (“Borrower”) (the “Operations Agreement”),
a copy of which is attached hereto as Exhibit A and incorporated herein by this
reference; and (ii) that certain Photovoltaic System Energy Output Guaranty
dated as of December 18, 2009, executed by SPI in favor of Borrower and Master
Tenant 2008-C LLC, a Delaware limited liability company (“Master Tenant”) (the
“Output Guaranty”), a copy of which is attached hereto as Exhibit B and
incorporated herein by this reference..
     SPI acknowledges that it has been advised that Borrower has applied to
Lender for a loan (the “Loan”) to be secured by, among other collateral, a
collateral assignment of Borrower’s rights under the Operations Agreement (the
“Operations Agreement Assignment”), and Borrower’s and Master Tenant’s rights
under the Output Guaranty (the “Output Guaranty Assignment”). At the request of
Lender, and in order to induce Lender to make the Loan, SPI certifies and
represents to Lender as follows:
A. Operations Agreement
     1. The Operations Agreement is in full force and effect, and has not been
amended. Neither SPI nor, to the actual knowledge of SPI, Borrower, is in
default under the Operations Agreement, nor has any event or condition occurred
that, with the giving of notice or the passage of time, would constitute a
default under the Operations Agreement or entitle SPI to cease providing
services and otherwise performing its obligations under the Operations
Agreement.
     2. SPI acknowledges and consents to the Operations Agreement Assignment to
secure Borrower’s obligations to Lender under the Loan.
     3. To the actual knowledge of SPI, there is no existing lease, mortgage,
security interest or other interest in or lien which could attach to the
Operations Agreement other than the Operations Agreement Assignment.
     4. SPI agrees that it shall give written notice to Lender (the “Default
Notice”) of any event or circumstance that would entitle SPI to terminate the
Operations Agreement or to suspend its services thereunder on the basis of any
default or alleged default by Borrower (a) so long as any monetary default
(i.e., a default that may be cured by the mere payment of money to SPI or a
third person) is cured within thirty (30) calendar days after the date of
delivery of the Default Notice; or (b) in the case of a Non-Curable Default, so
long as Lender, within thirty (30) calendar days of delivery of the Default
Notice, cures any monetary default(s) and also commences, and thereafter
diligently prosecutes to completion, such efforts as may be necessary for it to
obtain control of the SEF (as defined in the Operations Agreement), which may
include foreclosure under the deed of trust executed by Borrower, as trustor,
for the benefit of Lender, as beneficiary, to further secure the Loan (the “Deed
of Trust”), either judicially or by power of sale, or to obtain a deed in lieu
of such foreclosure. Non-Curable Defaults include, but are not limited to, any
defaults that cannot be cured by Lender, the filing of any bankruptcy
proceedings by or on behalf of Borrower (whether the proceedings are voluntary
or involuntary), Borrower’s general assignment for the benefit of creditors, or
appointment of a receiver for Borrower or any of its assets. All cure periods
afforded Lender under this provision shall be suspended during the pendency of
any writ, order, or injunction of any court, or the automatic stay of
proceedings imposed by bankruptcy law, which
Acknowledgement, Confirmation
and Estoppel

1

--------------------------------------------------------------------------------

 

Loan No. 68890396
effectively prevent Lender from commencing or prosecuting a foreclosure under
the Deed of Trust, or taking any other action necessary to cure any default
under the Operations Agreement or to succeed to the interests of Borrower under
the Operations Agreement. Upon the completion of foreclosure proceedings or an
assignment in lieu thereof, all Non-Curable Defaults will be deemed waived by
SPI. Lender has no obligation to cure any defaults or events of default of
Borrower under the Operations Agreement, only the right to do so. SPI agrees to
accept the cure of a Borrower default by Lender.
     5. SPI agrees that, notwithstanding that Lender may succeed to the rights
or obligations of Borrower under the Operations Agreement, Lender shall not be
obligated to indemnify SPI with respect to any claims arising out of events,
conditions or circumstances that came into existence or occurred prior to the
date that Lender succeeded to the rights or obligations of Borrower under the
Operations Agreement.
     6. SPI agrees that by Lender’s acceptance of this Estoppel and the
Operations Agreement Assignment, Lender has not become personally liable under
the terms and obligations of the Operations Agreement and Lender will not become
so liable unless and until it assumes said obligations and is recognized by SPI
as the Owner under said Operations Agreement and shall be liable only so long as
Lender maintains ownership of the estate conferred by the Operations Agreement.
     7. SPI acknowledges and agrees that should Lender succeed to any of the
obligations of Borrower under the Operations Agreement, Lender shall have the
right to further assign those rights and obligations to one or more persons or
entities having the capacity to perform the obligations of Borrower under the
Operations Agreement.
B. Output Guaranty.
     1. The Output Guaranty is in full force and effect, and has not been
amended. No event or condition has occurred that, with the giving of notice or
the passage of time, would entitle SPI to terminate the Output Guaranty or cease
performance of its obligations under the Output Guaranty.
     2. SPI acknowledges and consents to the Output Guaranty Assignment to
secure Borrower’s obligations to Lender under the Loan.
     3. To the actual knowledge of SPI, there is no existing lease, mortgage,
security interest or other interest in or lien which could attach to the Output
Guaranty other than the Output Guaranty Assignment.
     4. SPI agrees that it shall give written notice to Lender (the “Default
Notice”) of any event or circumstance that would entitle SPI to terminate the
Output Guaranty or to cease performance of its obligations thereunder on the
basis of any default or alleged default by Borrower or Master Tenant (a) so long
as any monetary default (i.e., a default that may be cured by the mere payment
of money to SPI or a third person) is cured within thirty (30) calendar days
after the date of delivery of the Default Notice; or (b) in the case of a
Non-Curable Default, so long as Lender, within thirty (30) calendar days of
delivery of the Default Notice, cures any monetary default(s) and also
commences, and thereafter diligently prosecutes to completion, such efforts as
may be necessary for it to obtain control of the PV System (as defined in the
Output Guaranty), which may include foreclosure under the deed of trust executed
by Borrower, as trustor, for the benefit of Lender, as beneficiary, to further
secure the Loan (the “Deed of Trust”), either judicially or by power of sale, or
to obtain a deed in lieu of such foreclosure. Non-Curable Defaults include, but
are not limited to, any defaults that cannot be cured by Lender, the filing of
any bankruptcy proceedings by or on behalf of Borrower or Master Tenant (whether
the proceedings are voluntary or involuntary), Borrower’s or Master Tenant’s
general assignment for the benefit of creditors, or appointment of a receiver
for Borrower or Master Tenant, or for any of their respective assets. All cure
Acknowledgement, Confirmation
and Estoppel

2

--------------------------------------------------------------------------------

 

Loan No. 68890396
periods afforded Lender under this provision shall be suspended during the
pendency of any writ, order, or injunction of any court, or the automatic stay
of proceedings imposed by bankruptcy law, which effectively prevent Lender from
commencing or prosecuting a foreclosure under the Deed of Trust, or taking any
other action necessary to cure any default under the Output Guaranty or to
succeed to the interests of Borrower and/or Master Tenant under the Output
Guaranty. Upon the completion of foreclosure proceedings or an assignment in
lieu thereof, all Non-Curable Defaults will be deemed waived by SPI. Lender has
no obligation to cure any defaults or events of default of Borrower or Master
Tenant under the Output Guaranty, only the right to do so. SPI agrees to accept
the cure of a Borrower default or a Master Tenant default by Lender.
     5. SPI acknowledges and agrees that should Lender succeed to any of the
rights or obligations of Borrower or Master Tenant under the Output Guaranty,
Lender shall have the right to further assign those rights to one or more
persons or entities having the capacity to perform the obligations of Borrower
or Master Tenant under the Output Guaranty.
C. General Provisions
     1. As used in this Estoppel, the term “actual knowledge of SPI” shall mean
the actual knowledge of those officers or agents of SPI responsible for
management of SPI’s rights and responsibilities under the Operations Agreement
and the Output Guaranty, after diligent inquiry.
     2. All notices required to be given by SPI to Lender may be delivered in
person to the below-named officer, or transmitted via facsimile with receipt
confirmed by telephone, or by Federal Express or other similar overnight
delivery service, overnight charges prepaid, and addressed as follows:

     
 
  Umpqua Bank
 
  Attn: Ed Jensen
 
  One Capitol Mall, Suite 600
 
  Sacramento, CA 95814
 
  Facsimile: (916) 556-1570
 
   
With a copy to:
  Kraft Opich, LLP
 
  7509 Madison Avenue, Suite 111
 
  Citrus Heights, CA 95610
 
  Attention: Martha Evensen Opich
 
  Facsimile: (916) 880-3045

[Signatures appear on following page]
Acknowledgement, Confirmation
and Estoppel

3

--------------------------------------------------------------------------------

 

Loan No. 68890396
     Whereupon, this Estoppel is executed as of the date first above written.

          Solar Power, Inc.,
a California corporation
    By:   /s/ Stephen C. Kircher     Its: CEO