Exhibit
10.3


 


CONTINUING
GUARANTY


 


TO:       WELLS
FARGO BANK, NATIONAL ASSOCIATION


 


1.      GUARANTY; DEFINITIONS. In consideration of any credit or other
financial accommodation heretofore, now or hereafter extended or made to SUNPOWER
CORPORATION (“Borrowers”), or any of them, by WELLS FARGO BANK, NATIONAL
ASSOCIATION (“Bank”), and for other valuable consideration, the undersigned SUNPOWER
NORTH AMERICA, INC. and SUNPOWER CORPORATION, SYSTEMS (“Guarantors”), jointly
and severally unconditionally guarantees and promises to pay to Bank, or order,
on demand in lawful money of the United States of America and in immediately
available funds, any and all Indebtedness of any of the Borrowers to Bank. The
term “Indebtedness” is used herein in its most comprehensive sense and includes
any and all advances, debts, obligations and liabilities of Borrowers, or any
of them, heretofore, now or hereafter made, incurred or created, whether
voluntary or involuntary and however arising, whether due or not due, absolute
or contingent, liquidated or unliquidated, determined or undetermined, including
under any swap, derivative, foreign exchange, hedge, deposit, treasury
management or other similar transaction or arrangement, and whether any of the
Borrowers may be liable individually or jointly with others, or whether
recovery upon such Indebtedness may be or hereafter becomes unenforceable. This
Guaranty is a guaranty of payment and not collection.


 


2.      MAXIMUM LIABILITY; SUCCESSIVE TRANSACTIONS; REVOCATION; OBLIGATION
UNDER OTHER GUARANTIES. The liability of Guarantor shall not exceed at any time
the sum of (a) Fifty Million Dollars ($50,000,000.00), (b) all accrued and
unpaid interest on any Indebtedness, and (c) all costs and expenses pertaining
to the enforcement of this Guaranty and/or the collection of the Indebtedness. Notwithstanding
the foregoing, Bank may permit the Indebtedness of Borrowers to exceed
Guarantor’s liability. This is a continuing guaranty and all rights, powers and
remedies hereunder shall apply to all past, present and future Indebtedness of
each of the Borrowers to Bank, including that arising under successive
transactions which shall either continue the Indebtedness, increase or decrease
it, or from time to time create new Indebtedness after all or any prior
Indebtedness has been satisfied, and notwithstanding the death, incapacity,
dissolution, liquidation or bankruptcy of any of the Borrowers or Guarantor or
any other event or proceeding affecting any of the Borrowers or Guarantor. This
Guaranty shall not apply to any new Indebtedness created after actual receipt
by Bank of written notice of its revocation as to such new Indebtedness;
provided however, that loans or advances made by Bank to any of the Borrowers
after revocation under commitments existing prior to receipt by Bank of such
revocation, and extensions, renewals or modifications, of any kind, of
Indebtedness incurred by any of the Borrowers or committed by Bank prior to
receipt by Bank of such revocation, shall not be considered new Indebtedness. Any
such notice must be sent to Bank by registered U.S. mail, postage prepaid,
addressed to its office at Peninsula Technology RCBO, 400 Hamilton Avenue, Palo
Alto, CA 94301, or at such other address as Bank shall from time to time
designate. Any payment by Guarantor shall not reduce Guarantor’s maximum
obligation hereunder unless written notice to that effect is actually received
by Bank at or prior to the time of such payment. The obligations of Guarantor
hereunder shall be in addition to any obligations of Guarantor under any other
guaranties of any liabilities or obligations of any of the Borrowers or any
other persons heretofore or hereafter given to Bank unless said other
guaranties are expressly modified or revoked in writing; and this Guaranty
shall not, unless expressly herein provided, affect or invalidate any such
other guaranties.


 


3.      OBLIGATIONS JOINT AND SEVERAL; SEPARATE ACTIONS; WAIVER OF
STATUTE OF LIMITATIONS; REINSTATEMENT OF LIABILITY. The obligations hereunder
are joint and several and independent of the obligations of Borrowers, and a
separate action or actions may be brought and prosecuted against Guarantor
whether action is brought against any of the Borrowers or any other person, or
whether any of the Borrowers or any other person is joined in any such action
or actions. Guarantor acknowledges that this Guaranty is absolute and
unconditional, there are no conditions precedent to the effectiveness of this
Guaranty, and this Guaranty is in full force and effect and is binding on
Guarantor as of the date written below, regardless of whether Bank obtains
collateral or any guaranties from others or takes any other action contemplated
by Guarantor. Guarantor waives the


 


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benefit of any statute of limitations affecting Guarantor’s liability
hereunder or the enforcement thereof, and Guarantor agrees that any payment of
any Indebtedness or other act which shall toll any statute of limitations
applicable thereto shall similarly operate to toll such statute of limitations
applicable to Guarantor’s liability hereunder. The liability of Guarantor
hereunder shall be reinstated and revived and the rights of Bank shall continue
if and to the extent for any reason any amount at any time paid on account of
any Indebtedness guaranteed hereby is rescinded or must otherwise be restored
by Bank, whether as a result of any proceedings in bankruptcy or reorganization
or otherwise, all as though such amount had not been paid. The determination as
to whether any amount so paid must be rescinded or restored shall be made by
Bank in its sole discretion; provided however, that if Bank chooses to contest
any such matter at the request of Guarantor, Guarantor agrees to indemnify and
hold Bank harmless from and against all costs and expenses, including
reasonable attorneys’ fees, expended or incurred by Bank in connection
therewith, including without limitation, in any litigation with respect
thereto.


 


4.      AUTHORIZATIONS TO BANK. Guarantor authorizes Bank either before
or after revocation hereof, without notice to or demand on Guarantor, and
without affecting Guarantor’s liability hereunder, from time to time to:  (a) alter, compromise, renew, extend,
accelerate or otherwise change the time for payment of, or otherwise change the
terms of the Indebtedness or any portion thereof, including increase or
decrease of the rate of interest thereon; (b) take and hold security for the
payment of this Guaranty or the Indebtedness or any portion thereof, and
exchange, enforce, waive, subordinate or release any such security; (c) apply
such security and direct the order or manner of sale thereof, including without
limitation, a non-judicial sale permitted by the terms of the controlling
security agreement, mortgage or deed of trust, as Bank in its discretion may
determine; (d) release or substitute any one or more of the endorsers or any
other guarantors of the Indebtedness, or any portion thereof, or any other
party thereto; and (e) apply payments received by Bank from any of the
Borrowers to any Indebtedness of any of the Borrowers to Bank, in such order as
Bank shall determine in its sole discretion, whether or not such Indebtedness
is covered by this Guaranty, and Guarantor hereby waives any provision of law
regarding application of payments which specifies otherwise. Bank may without
notice assign this Guaranty in whole or in part. Upon Bank’s request, Guarantor
agrees to provide to Bank copies of Guarantor’s financial statements.


 


5.      REPRESENTATIONS AND WARRANTIES. Guarantor represents and
warrants to Bank that: (a) this Guaranty is executed at Borrowers’ request; (b)
Guarantor shall not, without Bank’s prior written consent, sell, lease, assign,
encumber, hypothecate, transfer or otherwise dispose of all or a substantial or
material part of Guarantor’s assets other than in the ordinary course of
Guarantor’s business; (c) Bank has made no representation to Guarantor as to
the creditworthiness of any of the Borrowers; and (d) Guarantor has established
adequate means of obtaining from each of the Borrowers on a continuing basis
financial and other information pertaining to Borrowers’ financial condition. Guarantor
agrees to keep adequately informed from such means of any facts, events or
circumstances which might in any way affect Guarantor’s risks hereunder, and
Guarantor further agrees that Bank shall have no obligation to disclose to
Guarantor any information or material about any of the Borrowers which is
acquired by Bank in any manner.


 


6.      GUARANTOR’S WAIVERS.


 


(a)     Guarantor waives any right to require Bank
to: (i) proceed against any of the Borrowers or any other person;
(ii) marshal assets or proceed against or exhaust any security held from
any of the Borrowers or any other person; (iii) give notice of the terms,
time and place of any public or private sale or other disposition of personal
property security held from any of the Borrowers or any other person; (iv) take
any other action or pursue any other remedy in Bank’s power; or (v) make any
presentment or demand for performance, or give any notice of nonperformance,
protest, notice of protest or notice of dishonor hereunder or in connection
with any obligations or evidences of indebtedness held by Bank as security for
or which constitute in whole or in part the Indebtedness guaranteed hereunder,
or in connection with the creation of new or additional Indebtedness.


 


(b)    Guarantor waives any defense to its
obligations hereunder based upon or arising by reason of: (i) any disability or
other defense of any of the Borrowers or any other person; (ii) the cessation
or limitation from any cause whatsoever, other than payment in full, of the
Indebtedness of any of the


 


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Borrowers or any other person; (iii) any lack of authority of any
officer, director, partner, agent or any other person acting or purporting to
act on behalf of any of the Borrowers which is a corporation, partnership or
other type of entity, or any defect in the formation of any such Borrower; (iv)
the application by any of the Borrowers of the proceeds of any Indebtedness for
purposes other than the purposes represented by Borrowers to, or intended or
understood by, Bank or Guarantor; (v) any act or omission by Bank which
directly or indirectly results in or aids the discharge of any of the Borrowers
or any portion of the Indebtedness by operation of law or otherwise, or which
in any way impairs or suspends any rights or remedies of Bank against  any of the Borrowers; (vi) any impairment of
the value of any interest in any security for the Indebtedness or any portion
thereof, including without limitation, the failure to obtain or maintain
perfection or recordation of any interest in any such security, the release of
any such security without substitution, and/or the failure to preserve the
value of, or to comply with applicable law in disposing of, any such security;
(vii) any modification of the Indebtedness, in any form whatsoever, including
any modification made after revocation hereof to any Indebtedness incurred
prior to such revocation, and including without limitation the renewal,
extension, acceleration or other change in time for payment of, or other change
in the terms of, the Indebtedness or any portion thereof, including increase or
decrease of the rate of interest thereon; or (viii) any requirement that Bank
give any notice of acceptance of this Guaranty. Until all Indebtedness shall
have been paid in full, Guarantor shall have no right of subrogation, and
Guarantor waives any right to enforce any remedy which Bank now has or may
hereafter have against any of the Borrowers or any other person, and waives any
benefit of, or any right to participate in, any security now or hereafter held
by Bank. Guarantor further waives all rights and defenses Guarantor may have
arising out of (A) any election of remedies by Bank, even though that election
of remedies, such as a non-judicial foreclosure with respect to any security
for any portion of the Indebtedness, destroys Guarantor’s rights of subrogation
or Guarantor’s rights to proceed against any of the Borrowers for
reimbursement, or (B) any loss of rights Guarantor may suffer by reason of
any rights, powers or remedies of any of the Borrowers in connection with any
anti-deficiency laws or any other laws limiting, qualifying or discharging
Borrowers’ Indebtedness, whether by operation of Sections 726, 580a or 580d of
the Code of Civil Procedure as from time to time amended, or otherwise,
including any rights Guarantor may have to a Section 580a fair market value
hearing to determine the size of a deficiency following any foreclosure sale or
other disposition of any real property security for any portion of the
Indebtedness.


 


7.      BANK’S RIGHTS WITH RESPECT TO GUARANTOR’S PROPERTY IN BANK’S
POSSESSION. In addition to all liens upon and rights of setoff against the
monies, securities or other property of Guarantor given to Bank by law, Bank
shall have a lien upon and a right of setoff against all monies, securities and
other property of Guarantor now or hereafter in the possession of or on deposit
with Bank, whether held in a general or special account or deposit or for
safekeeping or otherwise, and every such lien and right of setoff may be
exercised without demand upon or notice to Guarantor. No lien or right of
setoff shall be deemed to have been waived by any act or conduct on the part of
Bank, or by any neglect to exercise such right of setoff or to enforce such
lien, or by any delay in so doing, and every right of setoff and lien shall
continue in full force and effect until such right of setoff or lien is
specifically waived or released by Bank in writing.


 


8.      SUBORDINATION. Any Indebtedness of any of the Borrowers now or
hereafter held by Guarantor is hereby subordinated to the Indebtedness of
Borrowers to Bank. Such Indebtedness of Borrowers to Guarantor is assigned to
Bank as security for this Guaranty and the Indebtedness and, if Bank requests,
shall be collected and received by Guarantor as trustee for Bank and paid over
to Bank on account of the Indebtedness of Borrowers to Bank but without
reducing or affecting in any manner the liability of Guarantor under the other
provisions of this Guaranty. Any notes or other instruments now or hereafter
evidencing such Indebtedness of any of the Borrowers to Guarantor shall be
marked with a legend that the same are subject to this Guaranty and, if Bank so
requests, shall be delivered to Bank. Bank is hereby authorized in the name of
Guarantor from time to time to file financing statements and continuation
statements and execute such other documents and take such other action as Bank
deems necessary or appropriate to perfect, preserve and enforce its rights
hereunder.


 


9.      REMEDIES; NO WAIVER. All rights, powers and remedies of Bank
hereunder are cumulative. No delay, failure or discontinuance of Bank in
exercising any right, power or remedy


 


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hereunder shall affect or operate as a waiver of such right, power or
remedy; nor shall any single or partial exercise of any such right, power or
remedy preclude, waive or otherwise affect any other or further exercise
thereof or the exercise of any other right, power or remedy. Any waiver,
permit, consent or approval of any kind by Bank of any breach of this Guaranty,
or any such waiver of any provisions or conditions hereof, must be in writing
and shall be effective only to the extent set forth in writing.


 


10.    COSTS, EXPENSES AND ATTORNEYS’ FEES. Guarantor
shall pay to Bank immediately upon demand the full amount of all payments,
advances, charges, costs and expenses, including reasonable attorneys’ fees (to
include outside counsel fees and all allocated costs of Bank’s in-house
counsel), expended or incurred by Bank in connection with the enforcement of
any of Bank’s rights, powers or remedies and/or the collection of any amounts
which become due to Bank under this Guaranty, and the prosecution or defense of
any action in any way related to this Guaranty, whether incurred at the trial
or appellate level, in an arbitration proceeding or otherwise, and including
any of the foregoing incurred in connection with any bankruptcy proceeding
(including without limitation, any adversary proceeding, contested matter or
motion brought by Bank or any other person) relating to Guarantor or any other
person or entity. All of the foregoing shall be paid by Guarantor with interest
from the date of demand until paid in full at a rate per annum equal to the
greater of ten percent (10%) or Bank’s Prime Rate in effect from time to time.


 


11.    SUCCESSORS; ASSIGNMENT. This Guaranty shall
be binding upon and inure to the benefit of the heirs, executors,
administrators, legal representatives, successors and assigns of the parties;
provided however, that Guarantor may not assign or transfer any of its
interests or rights hereunder without Bank’s prior written consent. Guarantor
acknowledges that Bank has the right to sell, assign, transfer, negotiate or
grant participations in all or any part of, or any interest in, any
Indebtedness of Borrowers to Bank and any obligations with respect thereto,
including this Guaranty. In connection therewith, Bank may disclose all
documents and information which Bank now has or hereafter acquires relating to
Guarantor and/or this Guaranty, whether furnished by Borrowers, Guarantor or
otherwise. Guarantor further agrees that Bank may disclose such documents and
information to Borrowers.


 


12.    AMENDMENT. This Guaranty may be amended or
modified only in writing signed by Bank and Guarantor.


 


13.    OBLIGATIONS OF MARRIED PERSONS. Any married
person who signs this Guaranty as a Guarantor hereby expressly agrees that
recourse may be had against his or her separate property for all his or her
obligations under this Guaranty.


 


14.    APPLICATION OF SINGULAR AND PLURAL. In all
cases where there is but a single Borrower, then all words used herein in the
plural shall be deemed to have been used in the singular where the context and
construction so require; and when there is more than one Borrower named herein,
or when this Guaranty is executed by more than one Guarantor, the word “Borrowers”
and the word “Guarantor” respectively shall mean all or any one or more of them
as the context requires.


 


15.    UNDERSTANDING WITH RESPECT TO WAIVERS;
SEVERABILITY OF PROVISIONS. Guarantor warrants and agrees that each of the
waivers set forth herein is made with Guarantor’s full knowledge of its
significance and consequences, and that under the circumstances, the waivers
are reasonable and not contrary to public policy or law. If any waiver or other
provision of this Guaranty shall be held to be prohibited by or invalid under
applicable public policy or law, such waiver or other provision shall be
ineffective only to the extent of such prohibition or invalidity, without
invalidating the remainder of such waiver or other provision or any remaining
provisions of this Guaranty.


 


16.    GOVERNING LAW. This Guaranty shall be
governed by and construed in accordance with the laws of the State of
California.


 


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17.    ARBITRATION.


 


(a)     Arbitration. The parties hereto
agree, upon demand by any party, to submit to binding arbitration all claims,
disputes and controversies between or among them (and their respective
employees, officers, directors, attorneys, and other agents), whether in tort,
contract or otherwise, in any way arising out of or relating to this Guaranty
and its negotiation, execution, collateralization, administration, repayment,
modification, extension, substitution, formation, inducement, enforcement,
default or termination.


 


(b)    Governing Rules. Any arbitration
proceeding will (i) proceed in a location in California selected by the
American Arbitration Association (“AAA”); (ii) be governed by the Federal
Arbitration Act (Title 9 of the United States Code), notwithstanding any
conflicting choice of law provision in any of the documents between the
parties; and (iii) be conducted by the AAA, or such other administrator as the
parties shall mutually agree upon, in accordance with the AAA’s commercial
dispute resolution procedures, unless the claim or counterclaim is at least
$1,000,000.00 exclusive of claimed interest, arbitration fees and costs in
which case the arbitration shall be conducted in accordance with the AAA’s
optional procedures for large, complex commercial disputes (the commercial dispute
resolution procedures or the optional procedures for large, complex commercial
disputes to be referred to herein, as applicable, as the “Rules”). If there is
any inconsistency between the terms hereof and the Rules, the terms and
procedures set forth herein shall control. Any party who fails or refuses to
submit to arbitration following a demand by any other party shall bear all
costs and expenses incurred by such other party in compelling arbitration of
any dispute. Nothing contained herein shall be deemed to be a waiver by any
party that is a bank of the protections afforded to it under 12 U.S.C. §91 or
any similar applicable state law.


 


(c)     No Waiver of Provisional Remedies,
Self-Help and Foreclosure. The arbitration requirement does not limit the
right of any party to (i) foreclose against real or personal property
collateral; (ii) exercise self-help remedies relating to collateral or proceeds
of collateral such as setoff or repossession; or (iii) obtain provisional or
ancillary remedies such as replevin, injunctive relief, attachment or the
appointment of a receiver, before during or after the pendency of any
arbitration proceeding. This exclusion does not constitute a waiver of the
right or obligation of any party to submit any dispute to arbitration or
reference hereunder, including those arising from the exercise of the actions
detailed in sections (i), (ii) and (iii) of this paragraph.


 


(d)    Arbitrator Qualifications and Powers.
Any arbitration proceeding in which the amount in controversy is $5,000,000.00
or less will be decided by a single arbitrator selected according to the Rules,
and who shall not render an award of greater than $5,000,000.00. Any dispute in
which the amount in controversy exceeds $5,000,000.00 shall be decided by
majority vote of a panel of three arbitrators; provided however, that all three
arbitrators must actively participate in all hearings and deliberations. The
arbitrator will be a neutral attorney licensed in the State of California or a
neutral retired judge of the state or federal judiciary of California, in
either case with a minimum of ten years experience in the substantive law
applicable to the subject matter of the dispute to be arbitrated. The
arbitrator will determine whether or not an issue is arbitratable and will give
effect to the statutes of limitation in determining any claim. In any
arbitration proceeding the arbitrator will decide (by documents only or with a
hearing at the arbitrator’s discretion) any pre-hearing motions which are
similar to motions to dismiss for failure to state a claim or motions for
summary adjudication. The arbitrator shall resolve all disputes in accordance
with the substantive law of California and may grant any remedy or relief that
a court of such state could order or grant within the scope hereof and such
ancillary relief as is necessary to make effective any award. The arbitrator
shall also have the power to award recovery of all costs and fees, to impose
sanctions and to take such other action as the arbitrator deems necessary to
the same extent a judge could pursuant to the Federal Rules of Civil Procedure,
the California Rules of Civil Procedure or other applicable law. Judgment upon
the award rendered by the arbitrator may be entered in any court having
jurisdiction. The institution and maintenance of an action for judicial relief
or pursuit of a provisional or ancillary remedy shall not constitute a waiver
of the right of any party, including the plaintiff, to submit the controversy
or claim to arbitration if any other party contests such action for judicial
relief.


 


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(e)     Discovery. In any arbitration
proceeding, discovery will be permitted in accordance with the Rules. All
discovery shall be expressly limited to matters directly relevant to the
dispute being arbitrated and must be completed no later than 20 days before the
hearing date. Any requests for an extension of the discovery periods, or any
discovery disputes, will be subject to final determination by the arbitrator
upon a showing that the request for discovery is essential for the party’s
presentation and that no alternative means for obtaining information is
available.


 


(f)     Class Proceedings and Consolidations.
No party hereto shall be entitled to join or consolidate disputes by or against
others in any arbitration, except parties who have executed this Guaranty or
any other contract, instrument or document relating to any Indebtedness, or to
include in any arbitration any dispute as a representative or member of a class,
or to act in any arbitration in the interest of the general public or in a
private attorney general capacity.


 


(g)    Payment Of Arbitration Costs And Fees. The arbitrator shall award all costs and expenses of the
arbitration proceeding.


 


(h)    Real Property Collateral; Judicial
Reference. Notwithstanding anything herein to the contrary, no dispute
shall be submitted to arbitration if the dispute concerns indebtedness secured
directly or indirectly, in whole or in part, by any real property unless (i)
the holder of the mortgage, lien or security interest specifically elects in
writing to proceed with the arbitration, or (ii) all parties to the arbitration
waive any rights or benefits that might accrue to them by virtue of the single
action rule statute of California, thereby agreeing that all indebtedness and
obligations of the parties, and all mortgages, liens and security interests
securing such indebtedness and obligations, shall remain fully valid and
enforceable. If any such dispute is not submitted to arbitration, the dispute
shall be referred to a referee in accordance with California Code of Civil
Procedure Section 638 et seq., and this general reference agreement is intended
to be specifically enforceable in accordance with said Section 638. A referee
with the qualifications required herein for arbitrators shall be selected
pursuant to the AAA’s selection procedures. Judgment upon the decision rendered
by a referee shall be entered in the court in which such proceeding was
commenced in accordance with California Code of Civil Procedure Sections 644
and 645.


 


(i)      Miscellaneous. To the maximum
extent practicable, the AAA, the arbitrators and the parties shall take all
action required to conclude any arbitration proceeding within 180 days of the
filing of the dispute with the AAA. No arbitrator or other party to an
arbitration proceeding may disclose the existence, content or results thereof,
except for disclosures of information by a party required in the ordinary
course of its business or by applicable law or regulation. If more than one
agreement for arbitration by or between the parties potentially applies to a
dispute, the arbitration provision most directly related to the documents
between the parties or the subject matter of the dispute shall control. This
arbitration provision shall survive termination, amendment or expiration of any
of the documents or any relationship between the parties.


 


(j)      Small Claims Court. Notwithstanding
anything herein to the contrary, each party retains the right to pursue in
Small Claims Court any dispute within that court’s jurisdiction. Further, this
arbitration provision shall apply only to disputes in which either party seeks
to recover an amount of money (excluding attorneys’ fees and costs) that
exceeds the jurisdictional limit of the Small Claims Court.


 


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IN WITNESS WHEREOF, the
undersigned Guarantor has executed this Guaranty as of July 13, 2007.


 


	
  SUNPOWER NORTH AMERICA,
  INC.

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ THOMAS H. WERNER

  	
   

  	
   

  
	
   

  	
  Thomas H. Werner

  	
   

  
	
   

  	
  Chief Executive Officer

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ EMMANUEL T.
  HERNANDEZ

  	
   

  	
   

  
	
   

  	
  Emmanuel T. Hernandez

  	
   

  
	
   

  	
  Chief Financial Officer

  	
   

  
	
   

  	
   

  
	
  SUNPOWER CORPORATION,
  SYSTEMS

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ MICHAEL ARMSBY

  	
   

  	
   

  
	
   

  	
  Michael Armsby

  	
   

  
	
   

  	
  Chief Financial Officer

  	
   

  
						



 


 


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