Exhibit 10.3

PROMISSORY NOTE

 

Principal    Loan Date    Maturity    Loan No    Call / Coll      Account   
Officer    Initials $9,000,000.00    12-23-2011    12-31-2012    129100054     
41          JHO   

References in the boxes above are for Lender’s use only and do not limit the
applicability of this document to any particular loan or item.

Any item above containing “***” has been omitted due to text length limitations.

 

Borrower:  

SOLAR POWER, INC.

2240 Douglas Blvd., Suite 200

Roseville, CA 95661

  Lender:  

CATHAY BANK, a California Banking Corp. HIGH TECHNOLOGY DIVISION

20111 STEVENS CREEK BLVD., #200 CUPERTINO, CA 95014

 

 

 

 

Principal Amount: $9,000,000.00    Date of Note: December 23, 2011

PROMISE TO PAY. SOLAR POWER, INC. (“Borrower”) promises to pay to CATHAY BANK, a
California Banking Corp. (“Lender”), or order, in lawful money of the United
States of America, the principal amount of Nine Million & 00/100 Dollars
($9,000,000.00) or so much as may be outstanding, together with interest on the
unpaid outstanding principal balance of each advance. Interest shall be
calculated from the date of each advance until repayment of each advance.

PAYMENT. Borrower will pay this loan in one payment of all outstanding principal
plus all accrued unpaid interest on December 31, 2012. In addition, Borrower
will pay regular monthly payments of all accrued unpaid interest due as of each
payment date, beginning January 31, 2012, with all subsequent interest payments
to be due on the last day of each month after that. Unless otherwise agreed or
required by applicable law, payments will be applied first to any accrued unpaid
interest; then to principal; then to any late charges; and then to any unpaid
collection costs. Borrower will pay Lender at Lender’s address shown above or at
such other place as Lender may designate in writing.

VARIABLE INTEREST RATE. The interest rate on this Note is subject to change from
time to time based on changes in an independent index which is the PRIME RATE AS
PUBLISHED IN THE WALL STREET JOURNAL (the “Index”). The Index is not necessarily
the lowest rate charged by Lender on its loans. If the Index becomes unavailable
during the term of this loan, Lender may designate a substitute index after
notifying Borrower. Lender will tell Borrower the current Index rate upon
Borrower’s request. The interest rate change will not occur more often than each
DAY. Borrower understands that Lender may make loans based on other rates as
well. Interest on the unpaid principal balance of this Note will be calculated
as described in the “INTEREST CALCULATION METHOD” paragraph using a rate of
1.250 percentage points over the Index. NOTICE: Under no circumstances will the
interest rate on this Note be more than the maximum rate allowed by applicable
law.

INTEREST CALCULATION METHOD. Interest on this Note is computed on a 365/360
basis; that is, by applying the ratio of the interest rate over a year of 360
days, multiplied by the outstanding principal balance, multiplied by the actual
number of days the principal balance is outstanding. All interest payable under
this Note is computed using this method. This calculation method results in a
higher effective interest rate than the numeric interest rate stated in this
Note. (Initial Here            )

PREPAYMENT. Borrower agrees that all loan fees and other prepaid finance charges
are earned fully as of the date of the loan and will not be subject to refund
upon early payment (whether voluntary or as a result of default), except as
otherwise required by law. Except for the foregoing, Borrower may pay without
penalty all or a portion of the amount owed earlier than it is due. Early
payments will not, unless agreed to by Lender in writing, relieve Borrower of
Borrower’s obligation to continue to make payments of accrued unpaid interest.
Rather, early payments will reduce the principal balance due. Borrower agrees
not to send Lender payments marked “paid in full”, “without recourse”, or
similar language. If Borrower sends such a payment, Lender may accept it without
losing any of Lender’s rights under this Note, and Borrower will remain
obligated to pay any further amount owed to Lender. All written communications
concerning disputed amounts, including any check or other payment instrument
that indicates that the payment constitutes “payment in full” of the amount owed
or that is tendered with other conditions or limitations or as full satisfaction
of a disputed amount must be mailed or delivered to: CATHAY BANK, a California
Banking Corp.; HIGH TECHNOLOGY DIVISION; 20111 STEVENS CREEK BLVD., #200;
CUPERTINO, CA 95014.

LATE CHARGE. If a payment is 11 days or more late, Borrower will be charged
5.000% of the regularly scheduled payment or $5.00, whichever is greater.

INTEREST AFTER DEFAULT. Upon default, the interest rate on this Note shall, if
permitted under applicable law, immediately increase by adding an additional
5.000 percentage point margin (“Default Rate Margin”). The Default Rate Margin
shall also apply to each succeeding interest rate change that would have applied
had there been no default.

DEFAULT. Each of the following shall constitute an event of default (“Event of
Default”) under this Note:

Payment Default. Borrower fails to make any payment when due under this Note.

Other Defaults. Borrower fails to comply with or to perform any other term,
obligation, covenant or condition contained in this Note or in any of the
related documents or to comply with or to perform any term, obligation, covenant
or condition contained in any other agreement between Lender and Borrower.

Default in Favor of Third Parties. Borrower or any Grantor defaults under any
loan, extension of credit, security agreement, purchase or sales agreement, or
any other agreement, in favor of any other creditor or person that may
materially affect any of Borrower’s property or Borrower’s ability to repay this
Note or perform Borrower’s obligations under this Note or any of the related
documents.

False Statements. Any warranty, representation or statement made or furnished to
Lender by Borrower or on Borrower’s behalf under this Note or the related
documents is false or misleading in any material respect, either now or at the
time made or furnished or becomes false or misleading at any time thereafter.

Insolvency. The dissolution or termination of Borrower’s existence as a going
business, the insolvency of Borrower, the appointment of a receiver for any part
of Borrower’s property, any assignment for the benefit of creditors, any type of
creditor workout, or the commencement of any proceeding under any bankruptcy or
insolvency laws by or against Borrower.

Creditor or Forfeiture Proceedings. Commencement of foreclosure or forfeiture
proceedings, whether by judicial proceeding, self-help, repossession or any
other method, by any creditor of Borrower or by any governmental agency against
any collateral securing the loan. This includes a garnishment of any of
Borrower’s accounts, including deposit accounts, with Lender. However, this
Event of Default shall not apply if there is a good faith dispute by Borrower as
to the validity or reasonableness of the claim which is the basis of the
creditor or forfeiture proceeding and if Borrower gives Lender written notice of
the creditor or forfeiture proceeding and deposits with Lender monies or a
surety bond for the creditor or forfeiture proceeding, in an amount determined
by Lender, in its sole discretion, as being an adequate reserve or bond for the
dispute.

Events Affecting Guarantor. Any of the preceding events occurs with respect to
any Guarantor of any of the indebtedness or any Guarantor dies or becomes
incompetent, or revokes or disputes the validity of, or liability under, any
guaranty of the indebtedness evidenced by this Note.

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Change In Ownership. Any change in ownership of twenty-five percent (25%) or
more of the common stock of Borrower.

Adverse Change. A material adverse change occurs in Borrower’s financial
condition, or Lender believes the prospect of payment or performance of this
Note is impaired.

Insecurity. Lender in good faith believes itself insecure.

LENDER’S RIGHTS. Upon default, Lender may declare the entire unpaid principal
balance under this Note and all accrued unpaid interest immediately due, and
then Borrower will pay that amount.

ATTORNEYS’ FEES; EXPENSES. Lender may hire or pay someone else to help collect
this Note if Borrower does not pay. Borrower will pay Lender that amount. This
includes, subject to any limits under applicable law, Lender’s attorneys’ fees
and Lender’s legal expenses, whether or not there is a lawsuit, including
attorneys’ fees, expenses for bankruptcy proceedings (including efforts to
modify or vacate any automatic stay or injunction), and appeals. Borrower also
will pay any court costs, in addition to all other sums provided by law.

JURY WAIVER. To the extent permitted by applicable law, Lender and Borrower
hereby waive the right to any jury trial in any action, proceeding, or
counterclaim brought by either Lender or Borrower against the other.

GOVERNING LAW. This Note will be governed by federal law applicable to Lender
and, to the extent not preempted by federal law, the laws of the State of
California without regard to its conflicts of law provisions. This Note has been
accepted by Lender in the State of California.

CHOICE OF VENUE. If there is a lawsuit, Borrower agrees upon Lender’s request to
submit to the jurisdiction of the courts of SANTA CLARA County, State of
California.

RIGHT OF SETOFF. To the extent permitted by applicable law, Lender reserves a
right of setoff in all Borrower’s accounts with Lender (whether checking,
savings, or some other account). This includes all accounts Borrower holds
jointly with someone else and all accounts Borrower may open in the future.
However, this does not include any IRA or Keogh accounts, or any trust accounts
for which setoff would be prohibited by law. Borrower authorizes Lender, to the
extent permitted by applicable law, to charge or setoff all sums owing on the
indebtedness against any and all such accounts.

COLLATERAL. Borrower acknowledges this Note is secured by property as described
in a UCC Financing Statement.

LINE OF CREDIT. This Note evidences a revolving line of credit. Advances under
this Note may be requested orally by Borrower or as provided in this paragraph.
All oral requests shall be confirmed in writing on the day of the request. All
communications, instructions, or directions by telephone or otherwise to Lender
are to be directed to Lender’s office shown above. The following person or
persons are authorized to request advances and authorize payments under the line
of credit until Lender receives from Borrower, at Lender’s address shown above,
written notice of revocation of such authority: Stephen C. Kircher, Chief
Executive Officer of SOLAR POWER, INC.; and James R. Pekarsky, Chief Financial
Officer of SOLAR POWER, INC. Borrower agrees to be liable for all sums either:
(A) advanced in accordance with the instructions of an authorized person or
(B) credited to any of Borrower’s accounts with Lender. The unpaid principal
balance owing on this Note at any time may be evidenced by endorsements on this
Note or by Lender’s internal records, including daily computer print-outs.
Lender will have no obligation to advance funds under this Note if: (A) Borrower
or any guarantor is in default under the terms of this Note or any agreement
that Borrower or any guarantor has with Lender, including any agreement made in
connection with the signing of this Note; (B) Borrower or any guarantor ceases
doing business or is insolvent; (C) any guarantor seeks, claims or otherwise
attempts to limit, modify or revoke such guarantor’s guarantee of this Note or
any other loan with Lender; (D) Borrower has applied funds provided pursuant to
this Note for purposes other than those authorized by Lender; or (E) Lender in
good faith believes itself insecure.

            (INITIAL) ARBITRATION. Lender and Borrower and Guarantor agree that
all disputes, claims and controversies between them, whether individual, joint,
or class in nature, arising from the Note, Guaranty, or any other loan document,
including without limitation contract and tort disputes, shall be arbitrated
pursuant to the rules of the American Arbitration Association (“AAA”) in
accordance with its Commercial Arbitration Rules and Supplemental Procedures for
Financial Services Disputes, upon request of either party. No act to take or
dispose of any collateral securing the Note or Guaranty shall constitute a
waiver of this arbitration agreement or be prohibited by this arbitration
agreement. This includes, without limitation, obtaining injunctive relief or a
temporary restraining order; invoking a power of sale under any deed of trust or
mortgage; obtaining a writ of attachment or imposition of a receiver; or
exercising any rights relating to personal property, including taking or
disposing of such property with or without judicial process pursuant to Article
9 of the Uniform Commercial Code. Any disputes, claims, or controversies
concerning the lawfulness or reasonableness of any act, or exercise of any
right, concerning any collateral securing the Note, Guaranty, or any other loan
document, including without limitation, any claim to rescind, reform, or
otherwise modify any agreement relating to the collateral securing the Note or
Guaranty shall also be arbitrated, provided however that no arbitrator shall
have the right or the power to enjoin or restrain any act of any party. Lender
and Borrower and Guarantor agree that in the event of an action for judicial
foreclosure pursuant to California Code of Civil Procedure Section 726, or any
similar provision in any other State, the commencement of such an action will
not constitute a waiver of the right to arbitrate and the court shall refer to
arbitration as much of such action, including counterclaims, as lawfully may be
referred to arbitration. Judgment upon any award rendered by any arbitrator may
be entered in any court having jurisdiction. The arbitrators shall not have
power to make an award of $1.0 million or more against any party to an
arbitration unless it is in the form of a statement of decision as described in
California Code of Civil Procedure Section 632, and the parties specifically
reserve the right, upon a petition to vacate, to have any such award reviewed
and vacated upon the same grounds as would result in reversal on appeal from a
judgment after trial by court. Nothing in the Note or Guaranty shall preclude
any party from seeking equitable relief from a court of competent jurisdiction.
The statute of limitations, estoppel, waiver, laches, and similar doctrines
which would otherwise be applicable in an action brought by a party shall be
applicable in any arbitration proceeding, and the commencement of an arbitration
proceeding shall be deemed the commencement of an action for these purposes.

To the extent not provided by this agreement, including the Rules incorporated
herein, arbitration hereunder shall be governed by California arbitration law.
Arbitration shall be conducted in California, in English and, unless otherwise
agreed to by the parties with respect to a particular dispute, shall be heard by
a panel of three arbitrators. The arbitrators in any arbitration shall be
experienced in the areas of law raised by the subject matter of the dispute.
Lists of prospective arbitrators shall include retired judges. Notwithstanding
the AAA rules, (a) any party may strike from a list of prospective arbitrators
any individual who is regarded by that party as not appropriate for the dispute;
and (b), if the arbitrator appointment cannot be made from the initial list of
prospective arbitrators circulated by the AAA, a second and, if necessary, a
third list shall be circulated and exhausted before the AAA is empowered to make
the appointment.

The Federal Arbitration Act shall apply to the construction, interpretation, and
enforcement of this arbitration provision.

WAIVER OF CONFIDENTIALITY OF BUSINESS ADDRESS. Borrower hereby waives any rights
to keep business address on file with the Department of Motor Vehicles, or
equivalent governmental agency (“DMV”) confidential from Lender. Borrower
authorizes Lender, its agents, successors, and assigns to obtain business
address from the DMV when Lender has legitimate need for this information.

            (INITIAL) INTEREST RATE FLOOR. Under no circumstances will the
interest rate on this Note be less than 5.500% (the “Interest Rate Floor”) or
more than the maximum rate allowed by applicable law; provided, however, that if
this Note changes the amount of the Interest Rate Floor, the new amount of the
Interest Rate Floor will not be effective until such time (a) all conditions to
the effectiveness of this Note are satisfied, (b) all documents required by
Lender in connection with this Note have been received, and (c) Lender’s
internal loan department has made such adjustments to the Lender’s automated
loan system as may be necessary to change the amount of the Interest Rate Floor.

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BUSINESS LOAN AGREEMENT (ASSET BASED). This Note is additionally subject to all
the terms and conditions of a Business Loan Agreement (Asset Based) of even date
herewith together with any and all modifications and replacements thereof.

SUCCESSOR INTERESTS. The terms of this Note shall be binding upon Borrower, and
upon Borrower’s heirs, personal representatives, successors and assigns, and
shall inure to the benefit of Lender and its successors and assigns.

GENERAL PROVISIONS. If any part of this Note cannot be enforced, this fact will
not affect the rest of the Note. Lender may delay or forgo enforcing any of its
rights or remedies under this Note without losing them. Borrower and any other
person who signs, guarantees or endorses this Note, to the extent allowed by
law, waive any applicable statute of limitations, presentment, demand for
payment, and notice of dishonor. Upon any change in the terms of this Note, and
unless otherwise expressly stated in writing, no party who signs this Note,
whether as maker, guarantor, accommodation maker or endorser, shall be released
from liability. All such parties agree that Lender may renew or extend
(repeatedly and for any length of time) this loan or release any party or
guarantor or collateral; or impair, fail to realize upon or perfect Lender’s
security interest in the collateral; and take any other action deemed necessary
by Lender without the consent of or notice to anyone. All such parties also
agree that Lender may modify this loan without the consent of or notice to
anyone other than the party with whom the modification is made. The obligations
under this Note are joint and several.

PRIOR TO SIGNING THIS NOTE, BORROWER READ AND UNDERSTOOD ALL THE PROVISIONS OF
THIS NOTE, INCLUDING THE VARIABLE INTEREST RATE PROVISIONS. BORROWER AGREES TO
THE TERMS OF THE NOTE.

BORROWER ACKNOWLEDGES RECEIPT OF A COMPLETED COPY OF THIS PROMISSORY NOTE.

BORROWER:

 

SOLAR POWER, INC. By:  

/s/ James R. Pekarsky

  Authorized Signer for SOLAR POWER, INC.

 

 

 

LASER PRO Lending, Ver. 5.58.20.001    Copr. Harland Financial Solutions, Inc.
1997, 2011.    All Rights Reserved.    - CA    
d:\cfiwin\CFIWIN\WINDS\CFI\LPL\D20.FC    TR-25343 PR-33