SECURITY AGREEMENT
As of December 15, 2006, for value received, the undersigned ("Debtor") pledges,
assigns and grants to Comerica Bank ("Bank"), whose address is 333 West Santa
Clara Street, San Jose, CA, 95113, Attention: Commercial Loan Documentation,
Mail Code 4770, a continuing security interest and lien (any pledge, assignment,
security interest or other lien arising hereunder is sometimes referred to
herein as a "security interest") in the collateral (as defined below) to secure
payment when due, whether by stated maturity, demand, acceleration or otherwise,
of all existing and future indebtedness ("Indebtedness") to the Bank of Akeena
Solar, Inc. ("Borrower) and/or Debtor. Indebtedness includes without limit any
and all obligations or liabilities of the Borrower and/or Debtor to the Bank,
whether absolute or contingent, direct or indirect, voluntary or involuntary,
liquidated or unliquidated, joint or several, known or unknown; any and all
obligations or liabilities for which the Borrower and/or Debtor would otherwise
be liable to the Bank were it not for the invalidity or unenforceability of them
by reason of any bankruptcy, insolvency or other law, or for any other reason;
any and all amendments, modifications, renewals and/or extensions of any of the
above; all costs incurred by Bank in establishing, determining continuing, or
defending the validity or priority of its security interest, or in pursuing its
rights and remedies under this Agreement or under any other agreement between
Bank and Borrower and/or Debtor or in connection with any proceeding involving
Bank as a result of any financial accommodation to Borrower and/or Debtor; and
all other costs of collecting Indebtedness, including without limit attorneys
fees, Debtor agrees to pay Bank all such costs incurred by the Bank, immediately
upon demand, and until paid all costs shall bear interest at the highest per
annum rate applicable to any of the Indebtedness, but not in excess of the
maximum rate permitted by law. Any reference in this Agreement to attorneys fees
shall be deemed a reference to reasonable fees, costs, and expenses of both
in-house and outside counsel and paralegals, whether inside or outside counsel
is used, whether or not a suit or action is instituted, and to court costs if a
suit or action is instituted, and whether attorneys fees or court costs are
incurred at the trial court level, on appeal, in a bankruptcy, administrative or
probate proceeding or otherwise. Debtor further covenants, agrees, represents
and warrants as follows:
1. Collateral shall mean all personal property of Debtor including, without
limitation, all of the following property Debtor now or later owns or has
an interest in, wherever located:
o all Accounts Receivable (for purposes of this Agreement, "Accounts
Receivable" consists of all accounts, general intangibles, chattel
paper (including without limit electronic chattel paper and tangible
chattel paper), contract rights, deposit accounts, documents,
instruments and rights to payment evidenced by chattel paper,
documents or instruments, health care insurance receivables,
commercial tort claims, letters of credit, letter of credit rights,
supporting obligations, and rights to payment for money or funds
advanced or sold),
o all Inventory,
o all Equipment and Fixtures,
o all software (for purposes of this Agreement "Software" consists of
all (i) computer programs and supporting information provided in
connection with a transaction relating to the program, and (ii)
computer programs embedded in goods and any supporting information
provided in connection with a transaction relating to the program
whether or not the program is associated with the goods in such a
manner that it customarily is considered part of the goods, and
whether or not, by becoming the owner of the goods, a person acquires
a right to use the program in connection with the goods, and whether
or not the program is embedded in goods that consist solely of the
medium in which the program is embedded),
o all investment property (including, without limit, securities,
securities entitlements, and financial assets),
o specific items listed below and/or on attached Schedule A, if any,
is/are also included in Collateral;
o all goods, instruments, (including, without limit, promissory notes),
documents (including, without limit, negotiable documents), policies
and certificates of insurance, deposit accounts, and money or other
property (except real property which is not a fixture) which are now
or later in possession of Bank, or as to which Bank now or later
controls possession by documents or otherwise, and
o all additions, attachments, accessions, parts, replacements
substitutions, renewals, interest, dividends, distributions, rights of
any kind (including but not limited to stock splits, stock rights,
voting and preferential rights), products, and proceeds of or
pertaining to the above including, without limit, cash or other
property which were proceeds and are recovered by a bankruptcy trustee
or otherwise as a preferential transfer by Debtor.
In the definition of Collateral, a reference to a type of collateral shall
not be limited by a separate reference to a more specific or narrower type
of that collateral.
2. Warranties, Covenants and Agreements. Debtor warrants, covenants and agrees
as follows:
2.1 Debtor shall furnish to Bank, in form and at intervals as Bank may
request, any information Bank may reasonably request and allow Bank to
examine, inspect, and copy any of Debtor's books and records. Debtor
shall, at the request of Bank, mark its records and the Collateral to
clearly indicate the security interest of Bank under this Agreement.
2.2 At the time any Collateral becomes, or is represented to be, subject
to a security interest in favor of Bank, Debtor shall be deemed to
have warranted that: (a) Debtor is the lawful owner of the Collateral
and has the right and authority to subject it to a security interest
granted to Bank; (b) name of the Collateral is subject to any security
interest other than that in favor of Bank; (c) there are no financing
statements on file, other than in favor of Bank; (d) no person, other
than Bank, has possession or control (as defined in the Uniform
Commercial Code) of any Collateral of such nature that perfection of a
security interest may be accomplished by control; and (e) Debtor
acquired its rights in the Collateral in the ordinary course of its
business.
2.3 Debtor will keep the Collateral free at all times from all claims,
liens, security interest and encumbrances other than those in favor of
Bank. Debtor will not, without the prior written consent of Bank,
sell, transfer or lease, or permit to be sold, transferred or leased,
any or all of the Collateral, except (where Inventory is pledged as
Collateral) for inventory in the ordinary course of its business and
will not return any Inventory to its supplier. Bank or its
representatives may at all reasonable times inspect the Collateral and
may enter upon all premises where the Collateral is kept or might be
located.
2.4 Debtor will do all acts and will execute or cause to be executed all
writings requested by Bank to establish, maintain and continue an
exclusive, perfected and first security interest of Bank in the
Collateral. Debtor agrees that Bank has no obligation to acquire or
perfect any lien on or security interest in any asset(s), whether
realty or personality, to secure payment of the Indebtedness, and
Debtor is not relying upon assets in which the Bank may have a lien or
security interest for payment of the Indebtedness.
2.5 Debtor will pay within the time that they can be paid without interest
or penalty all taxes, assessments and similar charges which at any
time are or may become a lien, charge, or encumbrance upon any
Collateral, except to the extent contested in good faith and bonded in
a manner satisfactory to Bank. If Debtor fails to pay any of these
taxes, assessments, or other charges in the time provided above, Bank
has the option (but not the obligation) to do so and Debtor agrees to
repay all amounts so expanded by Bank Immediately upon demand,
together with interest at the highest lawful default rate which could
be charged by Bank on any Indebtedness.
2.6 Debtor will keep the Collateral in good condition and will protect it
from loss, damage, or deterioration from any cause. Debtor has and
will maintain at all times (a) with respect to the Collateral,
insurance under an "all risk" policy against fire and other risks
customarily insured against, and (b) pubic liability insurance and
other insurance as may be required by law or reasonably required by
Bank, all of which insurance shall be in amount, form and content, and
written by companies as may be satisfactory to Bank, containing a
lender's loss payable endorsement acceptable to Bank. Debtor will
deliver to Bank immediately upon demand evidence satisfactory to Bank
that the required insurance has been procured. If Debtor fails to
maintain satisfactory insurance, Bank has the option (but not the
obligation) to do so and Debtor agrees to repay all amounts so
expended by Bank immediately upon demand, together with interest at
the highest lawful default rate which could be charged by Bank on any
Indebtedness.
2.7 On each occasion on which Debtor evidences to Bank the account
balances on and the nature and extent of the Accounts Receivable,
Debtor shall be deemed to have warranted that except as otherwise
indicated: (a) each of those Accounts Receivable is valid and
enforceable without performance by Debtor of any act; (b) each of
those account balances are in fact owing; (c) there are no setoffs,
recoupments, credits, contra accounts, counterclaims or defenses
against any of those Accounts Receivable; (d) as to any Accounts
Receivable represented by a note, trade acceptance, draft or other
instrument or by any chattel paper or document, the same have been
endorsed and/or delivered by Debtor to Bank; (e) Debtor has not
received with respect to any Account Receivable, any notice of the
death of the related account debtor, nor of the dissolution,
liquidation, termination of existence, insolvency, business failure,
appointment of a receiver for, assignment for the benefit of creditors
by, or filing of a petition in bankruptcy by or against, the account
debtor; and (f) as to each Account Receivable, except as may be
expressly permitted by Bank to the contrary in another document, the
account debtor is not an affiliate of Debtor, the United States of
America or any department, agency or instrumentality of it, or a
citizen or resident of any jurisdiction outside of the United States.
Debtor will do all acts and will execute all writings requested by
Bank to perform, enforce performance of, and collect all Accounts
Receivable. Debtor shall neither make nor permit any modification,
compromise or substitution for any Account Receivable without the
prior written consent of Bank. Bank may at any time and from time to
time verify Accounts Receivable directly with account debtors or by
other methods acceptable to Bank without notifying Debtor. Debtor
agrees, at Bank's request, to arrange or cooperate with Bank in
arranging for verification of Accounts Receivable.
2.8 Debtor at all times shall be in strict compliance with all applicable
laws, including without limit any laws, ordinances, directives,
orders, statutes, or regulations an object of which is to regulate or
improve health, safety, or the environment ("Environmental Laws").
2.9 If Bank, acting in its sole discretion, redelivers Collateral to
Debtor or Debtor's designee for the purpose of (a) the ultimate sale
or exchange thereof; or (b) presentation, collection, renewal, or
registration of transfer thereof; or (c) loading, unloading, storing,
shipping, transshipping, manufacturing, processing or otherwise
dealing with it preliminary to sale or exchange; such redelivery shall
be in trust for the benefit of Bank and shall not constitute a release
of Bank's security interest in it or in the proceeds or products of it
unless Bank specifically so agrees in writing. If Debtor requests any
such redelivery, Debtor will deliver with such request a duly executed
financing statement in form and substance satisfactory to Bank. Any
proceeds of Collateral coming into Debtor's possession as a result of
any such redelivery shall be held in trust for Bank and immediately
delivered to Bank for application on the Indebtedness. Bank may (in
its sole discretion) deliver any or all of such collateral. Bank, at
its option, may require delivery of any Collateral to Bank at any time
with such endorsements or assignments of the Collateral as Bank may
request.
2.10 At any time and without notice, Bank may, as to Collateral other than
Equipment, Fixtures or Inventory: (a) cause any or all of such
Collateral to be transferred to its name or to the name of its
nominees; (b) receive or collect by legal proceedings or otherwise all
dividends, interest, principal payments and other sums and all other
distributions at any time payable or receivable on account of such
Collateral, and hold the same as Collateral, or apply the same to the
indebtedness, the manner and distribution of the application to be in
the sole discretion of Bank; (c) enter into any extension,
subordination, reorganization, deposit, merger or consolidation
agreement or any other agreement relating to or effecting such
Collateral, and deposit or surrender control of such Collateral, and
accept other property in exchange for such Collateral and hold or
apply the property or money so received pursuant to this Agreement;
and (d) take such actions in its own name or in Debtor's name as Bank,
in its sole discretion, deems necessary or appropriate to establish
exclusive control (as defined in the Uniform Commercial Code) over any
Collateral of such nature that perfection of the Bank's security
interest may be accomplished by control.
2.11 Bank may assign any of the Indebtedness and deliver any or all of the
Collateral to its assignee, who then shall have with respect to
Collateral so delivered all the rights and powers of Bank under this
Agreement, and after that bank shall be fully discharged from all
liability and responsibility with respect to Collateral so delivered.
2.12 Debtor delivers this Agreement based solely on Debtor's independent
investigation of (or decision not to investigate) the financial
condition of Borrower and is not relying on any information furnished
by Bank. Debtor assumes full responsibility for obtaining any further
information concerning the Borrower's financial condition, the status
of the Indebtedness or any other matter which the undersigned may deem
necessary or appropriate now or later. Debtor waives any duty on the
part of Bank, and agrees that Debtor is not relying upon nor expecting
Bank to disclose to Debtor any fact now or later known by Bank,
whether relating to the operations or condition of Borrower, the
existence, liabilities or financial condition of any guarantor of the
Indebtedness, the occurrence of any default with respect to the
Indebtedness, or otherwise, notwithstanding any effect such fact may
have upon Debtor's risk or Debtor's rights against Borrower. Debtor
knowingly accepts the full range of risk encompassed in this
Agreement, which risk includes without limit the possibility that
Borrower may incur Indebtedness to Bank after the financial condition
of Borrower, or Borrower's ability to pay debts as they mature, has
deteriorated.
2.13 Debtor shall defend, indemnify and hold harmless Bank, its employees,
agents, shareholders, affiliates, officers, and directors from and
against any and all claims, damages, fines, expenses, liabilities or
causes of action of whatever kind, including without limit consultant
fees, legal expenses, and attorneys fees, suffered by any of them as a
direct or indirect result of any actual or asserted violation of any
law, including, without limit, Environmental Laws, or of any
remediation relating to any property required by any law, including
without limit Environmental Laws, INCLUDING ANY CLAIMS, DAMAGES,
FINES, EXPENSES, LIABILITIES OR CAUSES OF ACTION OF WHATEVER KIND
RESULTING FROM BANK'S OWN NEGLIGENCE, except and to the extent (but
only to the extent) caused by Bank's gross negligence or wilful
misconduct.
3. Collection of Proceeds.
3.1 Debtor agrees to collect and enforce payment of all Collateral until
Bank shall direct Debtor to the contrary. Immediately upon notice to
Debtor by Bank and at all times after that, Debtor agrees to fully and
promptly cooperate and assist Bank in the collection and enforcement
of all Collateral and to hold in trust for Bank all payments received
in connection with Collateral and from the sale, lease or other
disposition of any Collateral, all rights by way of suretyship or
guaranty and all rights in the nature of a lien or security interest
which Debtor now or later has regarding Collateral. Immediately upon
and after such notice, Debtor agrees to (a) endorse to Bank and
immediately deliver to Bank all payments received on Collateral or
from the sale, lease or other disposition of any Collateral or arising
from any other rights or interests of Debtor in the Collateral, in the
form received by Debtor without commingling with any other funds, and
(b) immediately deliver to Bank all property in Debtor's possession or
later coming into Debtor's possession through enforcement of Debtor's
rights or interests in the Collateral. Debtor irrevocably authorizes
Bank or any Bank employee or agent to endorse the name of Debtor upon
any checks or other items which are received in payment for any
Collateral, and to do any and all things necessary in order to reduce
these items to money. Bank shall have no duty as to the collection or
protection of Collateral or the proceeds of it, nor as to the
preservation of any related rights, beyond the use of reasonable care
in the custody and preservation of Collateral in the possession of
Bank. Debtor agrees to take all steps necessary to preserve rights
against prior parties with respect to the Collateral. Nothing in this
Section 3.1 shall be deemed a consent by Bank to any sale, lease or
other disposition of any Collateral.
3.2 Debtor agrees that immediately upon Bank's request (whether or not any
Event of Default exists) the indebtedness shall be on a "remittance
basis" in accordance with the following. In connection therewith,
Debtor shall at its sole expense establish and maintain (and Bank, at
Bank's option, may establish and maintain at Debtor's expense):
(a) A United States Post Office lock box (the "Lock Box"), to which
Bank shall have exclusive access and control. Debtor expressly
authorizes Bank, from time to time, to remove contents from the
Lock Box, for disposition in accordance with this Agreement.
Debtor agrees to notify all account debtors and other parties
obligated to Debtor that all payments made to Debtor (other than
payments by electronic funds transfer) shall be remitted, for the
credit of Debtor, to the Lock Box, and Debtor shall include a
like statement on all invoices; and
(b) A non-interest bearing deposit account with Bank which shall be
titled as designated by Bank (the "Cash Collateral Account") to
which Bank shall have exclusive access and control. Debtor agrees
to notify all account debtors and other parties obligated to
Debtor that all payments made to Debtor by electronic funds
transfer shall be remitted to the Cash Collateral Account, and
Debtor, at Bank's request, shall include a like statement on all
invoices. Debtor shall executive all documents and authorizations
as required by Bank to establish and maintain the Lock Box and
the Cash Collateral Account.
3.3 All items or amounts which are remitted to the Lock Box, to the Cash
Collateral Account, or otherwise delivered by or for the benefit of
Debtor to Bank on account of partial or full payment of, or with
respect to, any Collateral shall, at Bank's option, (a) be applied to
the payment of the Indebtedness, whether then due or not, in such
order or at such time of application as Bank may determine in its sole
discretion, or, (b) be deposited to the Cash Collateral Account.
Debtor agrees that Bank shall not be liable for any loss or damage
which Debtor may suffer as a result of Bank's processing of items or
its exercise of any other rights or remedies under this Agreement,
including without limitation indirect, special or consequential
damages, loss of revenues or profits, or any claim, demand or action
by any third party arising out of or in connection with the processing
of items or the exercise of any other rights or remedies under this
Agreement. Debtor agrees to indemnify and hold Bank harmless from and
against all such third party claims, demands or actions, and all
related expenses or liabilities, including, without limitation,
attorney's fees and INCLUDING CLAIMS, DAMAGES, FINES, EXPENSES,
LIABILITIES OR CAUSES OF ACTION OF WHATEVER KIND RESULTING FROM BANK'S
OWN NEGLIGENCE except to the extent (but only to the extent) caused by
Bank's gross negligence or willful misconduct.
4. Defaults, Enforcement and Application of Proceeds.
4.1 Upon the occurrence of any of the following events (each an "Event of
Default"), Debtor shall be in default under this Agreement:
(a) Any failure to pay the Indebtedness or any other indebtedness
when due, or such portion of it as may be due, by acceleration or
otherwise; or
(b) Any failure or neglect to comply with, or breach of or default
under, any term of this Agreement, or any other agreement or
commitment between Borrower, Debtor, or any guarantor of any of
the Indebtedness ("Guarantor") and Bank; or
(c) Any warranty, representation, financial statement, or other
information made, given or furnished to Bank by or on behalf of
Borrower, Debtor, or any Guarantor shall be, or shall prove to
have been, false or materially misleading when made, given, or
furnished; or
(d) Any loss, theft, substantial damage or destruction to or of any
Collateral, or the issuance of filing of any attachment, levy,
garnishment or the commencement of any proceeding in connection
with any Collateral or of any other judicial process of, upon or
in respect of Borrower, Debtor, any Guarantor, or any Collateral;
or
(e) Sale or other disposition by Borrower, Debtor, or any Guarantor
of any substantial portion of its assets or property or voluntary
suspension of the transaction of business by Borrower, Debtor, or
any Guarantor, or death, dissolution, termination or existence,
merger, consolidation, insolvency, business failure, or
assignment for the benefit of creditors of or by Borrower,
Debtor, or any Guarantor; or commencement of any proceedings
under any state or federal bankruptcy or insolvency laws or laws
for the relief of debtors by or against Borrower, Debtor, or any
Guarantor; or the appointment of a receiver, trustee, court
appointee, sequestrator or otherwise, for all or any part of the
property of Borrower, Debtor, or any Guarantor; or
(f) Bank deems the margin of Collateral insufficient or itself
insecure, in good faith believing that the prospect of payment of
the Indebtedness or performance of this Agreement is impaired or
shall fear deterioration, removal, or waste of Collateral; or
(g) An event of default shall occur under any instrument, agreement
or other document evidencing, securing or otherwise relating to
any of the Indebtedness.
4.2 Upon the occurrence of any Event of Default, Bank may at its
discretion and without prior notice to Debtor declare any or all of
the Indebtedness to be immediately due and payable, and shall have and
may exercise any right or remedy available to it including, without
limitation, any one or more of the following rights and remedies:
(a) Exercise all the rights and remedies upon default, in foreclosure
and otherwise, available to secured parties under the provisions
of the Uniform Commercial Code and other applicable law;
(b) Institute legal proceedings to foreclose upon the lien and
security interest granted by this Agreement, to recover judgment
for all amounts then due and owing as Indebtedness, and to
collect the same out of any Collateral or the proceeds of any
sale of it;
(c) Institute legal proceedings for the sale, under the judgment or
decree of any court of competent jurisdiction, of any or all
Collateral; and/or
(d) Personally or by agents, attorneys, or appointment of a receiver,
enter upon any premises where collateral may then be located, and
take possession of all or any of it and/or render it unusable;
and without being responsible for loss or damage to such
Collateral, hold, operate, sell, lease, or dispose of all or any
Collateral at one or more public or private sales, leasings or
other dispositions, at places and times and on terms and
conditions as Bank may deem fit, without any previous demand or
advertisement; and except as provided in this Agreement, all
notice of sale, lease or other disposition, and advertisement,
and other notice or demand, any right or equity of redemption,
and any obligation of a prospective purchaser or lessee to
inquire as to the power and authority of Bank to sell, lease, or
otherwise dispose of the Collateral or as to the application by
Bank of the proceeds of sale or otherwise, which would otherwise
be required by, or available to Debtor under, applicable law are
expressly waived by Debtor to the fullest extent permitted.
At any sale pursuant to this Section 4.2, whether under the power
of sale, by virtue of judicial proceedings or otherwise, it shall
not be necessary for Bank or a public officer under order of a
court to have present physical or constructive possession of
Collateral to be sold. The recitals contained in any conveyances
and receipts made and given by Bank or the public officer to any
purchaser at any sale made pursuant to this Agreement shall, to
the extent permitted by applicable law, conclusively establish
the truth and accuracy of the matters stated (including, without
limit, as to the amounts of the principal of and interest on the
indebtedness, the accrual and nonpayment of it and advertisement
and conduct of the sale); and all prerequisites to the sale shall
be presumed to have been satisfied and performed. Upon any sale
of any Collateral, the receipt of the officer making the sale
under judicial proceedings or of Bank shall be
sufficient discharge to the purchase for the purchase money, and
the purchaser shall not be obligated to see to the application of
the money. Any sale of any Collateral under this Agreement shall
be a perpetual bar against Debtor with respect to that
Collateral. At any sale or other disposition of the Collateral
pursuant to this Section 4.2, Bank disclaims all warranties which
would otherwise be given under the Uniform Commercial Code,
including without limit a disclaimer of any warranty relating to
title, possesion, quiet enjoyment or the like, and Bank may
communicate these disclaimers to a purchaser at such disposition.
This disclaimer of warranties will not render the sale
commercially unreasonable.
4.3 Debtor shall at the request of Bank, notify the account debtors or
obligors of Bank's security interest in the Collateral and direct
payment of it to Bank. Bank may, itself, upon the occurrence of any
Event of Default so notify and direct any account debtor or obligor.
At the request of Bank, whether or not an Event of Default shall have
occurred, Debtor shall immediately take such actions as the Bank shall
request to establish exclusive control (as defined in the Uniform
Commercial Code) by Bank over any Collateral which is of such a nature
that perfection of a security interest may be accomplished by control.
4.4 The proceeds of any sale or other disposition of Collateral authorized
by this Agreement shall be applied by Bank first upon all expenses
authorized by the Uniform Commercial Code and all reasonable attorney
fees and legal expenses incurred by Bank; the balance of the proceeds
of the sale or other disposition shall be applied in the payment of
the Indebtedness, first to interest, then to principal, then to
remaining Indebtness and the surplus, if any shall be paid over to
Debtor or to such other person(s) as may be entitled to it under
applicable law. Debtor shall remain liable for any deficiency, which
it shall pay to Bank immediately upon demand. Debtor agrees that Bank
shall be under no obligation to accept any noncash proceeds in
connection with any sale or disposition of Collateral unless failure
to do so would be commercially unresonable. If Bank agrees in its sole
discreation to accept noncash proceeds (unless the failure to do so
would be commercially unreasonable), Bank may ascribe any commercially
reasonable value to such proceeds. without limiting the foregoing,
Bank may apply any discount factor in determining the present value of
proceeds to be received in the future or may elect to apply proceeds
to be received in the future only as and when such proceeds are
actually received in cash by Bank.
4.5 Nothing in this Agreement is intended, nor shall it be construed, to
preclude Bank from pursuing any other remedy provided by law or in
equity for the collection of the indebtedness or for the recovery of
any other sum to which Bank may be entitled for the breach of this
Agreement by Debtor. Nothing in this Agreement shall reduce or release
in any way any rights or security interests of Bank contained in any
existing agreement between Borrower, Debtor, or any Guarantor and
Bank.
4.6 No waiver of default or consent to any act by Debtor shall be
effective unless in writing and signed by an authorized officer of
Bank. No waiver of any default or forbearance on the part of Bank in
enforcing any of its rights under this Agreement shall operate as a
waiver of any other default or of the same default on a future
occasion or of any rights.
4.7 Debtor (a) irrevocably appoints Bank or any agent of Bank (which
appointment is coupled with an interest) the true and lawful attorney
of Debtor (with full power of substitution) in the name, place and
stead of, and at the expense of, Debtor and (b) authorizes Bank or any
agent of Bank, in its own name, at Debtor's expense, to do any of the
following, as Bank, in its sole discretion, deems appropriate:
(i) to demand, receive, sue for, and give receipts or acquittances
for any moneys due or to become due on any Collateral and to
endorse any item representing any payment on or proceeds of the
Collateral;
(ii) to execute and file in the name of and on behalf of Debtor all
financing statements or other filings deemed necessary or
desirable by Bank to evidence, perfect, or continue the security
interests granted in this Agreement; and
(iii) to do and perform any act on behalf of Debtor permitted or
required under this Agreement.
4.8 Upon the occurrence of an Event of Default, Debtor also agrees, upon
request of Bank, to assemble the Collateral and make it available to
Bank at any place designated by Bank which is reasonably convenient to
Bank and Debtor.
4.9 The following shall be the basis for any finder of fact's
determination of the value of any Collateral which is the subject
matter of a disposition giving rise to a calculation of any surplus or
deficiency under Section 9.615(f) of the Uniform Commercial Code (as
in effect on or after July 1, 2001): (a) The Collateral which is the
subject matter of the disposition shall be valued in an "as is"
condition as of the date of the disposition, without any assumption or
expectation that such Collateral will be repaired or improved in any
manner; (b) the valuation shall be based upon an assumption that the
transferee of such Collateral desires a resale of the Collateral for
cash promptly (but no later than 30 days) following the disposition;
(c) all reasonable closing costs customarily borne by the seller in
commercial sales transactions relating to property similar to such
Collateral shall be deducted including, without limitation, brokerage
commissions, tax prorations, attorney's fees, whether inside or
outside counsel is used, and marketing costs; (d) the value of the
Collateral which is the subject matter of the disposition shall be
further discounted to account for any estimated holding costs
associated with maintaining such Collateral pending sale (to the
extent not accounted for in (c) above), and other maintenance,
operational and ownership expenses; and (e) any expert opinion
testimony given or considered in connection with a determination of
the value of such Collateral must be given by persons having at least
5 years experience in appraising property similar to the Collateral
and who have conducted and prepared a complete written appraisal of
such Collateral taking into consideration the factors set forth above.
The "value" of any such Collateral shall be a factor in determining
the amount of proceeds which would have been realized in a disposition
to a transferee other than a secured party, a person related to a
secured party or a secondary obligor under Section 9.615(f) of the
Uniform Commercial Code.
5. Miscellaneous.
5.1 Until Bank is advised in writing by Debtor to the contrary, all
notices, requests and demands required under this Agreement or by law
shall be given to, or made upon, Debtor at the following address:
605 University Avenue
STREET ADDRESS
Los Gatos CA 95032 SANTA CLARA
CITY STATE ZIP CODE COUNTY
5.2 Debtor will give Bank not less than 90 days prior written notice of
all contemplated changes in Debtor's name, location, chief executive
office, principal place of business, and/or location of any
Collateral, but the giving of this notice shall not cure any Event of
Default caused by this change.
5.3 Bank assumes no duty of performance or other responsibility under any
contracts contained within the Collateral.
5.4 Bank has the right to sell, assign, transfer, negotiate or grant
participations or any interest in, any or all of the Indebtedness and
any related obligations, including without limit this Agreements. In
connection with the above, but without limiting its ability to make
other disclosures to the full extent allowable, Bank may disclose all
documents and information which Bank now or later has relating to
Debtor, the Indebtedness or this Agreement, however obtained. Debtor
further agrees that Bank may provide information relating to this
Agreement or relating to Debtor or the Indebtedness to the Bank's
parent, affiliates, subsidiaries, and service providers.
5.5 In addition to Bank's other rights, any indebtedness owing from Bank
to Debtor can be set off and applied by Bank on any Indebtedness at
any time(s) either before or after maturity or demand without notice
to anyone. Any such action shall not constitute acceptance of
collateral in discharge of any portion of the Indebtedness.
5.6 Debtor, to the extent not expressly prohibited by applicable law,
waives any right to require the Bank to: (a)
proceed against any person or property; (b) give notice of the terms,
time and place or any public or private sale of personal property
security held from Borrower or any other person, or otherwise comply
with the provisions of Section 9.504 of the Uniform Commercial Code in
effect prior to July 1, 2001 or its successor provisions thereafter;
or (c) pursue any other remedy in the Bank's power. Debtor waives
notice of acceptance of this Agreement and presentment, demand,
protest, notice of protest, dishonor, notice of dishonor, notice of
default, notice of intent to accelerate or demand payment of any
Indebtedness, any and all other notices to which the undersigned might
otherwise be entitled, and diligence in collecting any indebtedness,
and agree(s) that the Bank may, once or any number of times, modify
the terms of any Indebtedness, compromise, extend, increase,
accelerate, renew or forbear to enforce payment of any or all
Indebtedness, or permit Borrower to incur additional Indebtedness, all
without notice to Debtor and without affecting in any manner the
unconditional obligation of Debtor under this Agreement. Debtor
unconditionally and irrevocably waives each and every defense and
setoff of any nature which, under principles of guaranty or otherwise,
would operate to impair or diminish in any way the obligation of
Debtor under this Agreement, and acknowledges that such waiver is by
this reference incorporated into each security agreement, collateral
assignment, pledge and/or other document from Debtor now or later
securing the Indebtedness, and acknowledges that as of the date of
this Agreement no such defense or setoff exists.
5.7 Debtor waives any and all rights (whether by subrogation, indemnity,
reimbursement, or otherwise) to recover from Borrower any amounts paid
or the value of any Collateral given by Debtor pursuant to this
Agreement until such time as all of the Indebtedness has been fully
paid.
5.8 In the event that applicable law shall obligate Bank to give prior
notice to Debtor of any action to be taken under this Agreement,
Debtor agrees that a written notice given to Debtor at least ten days
before the date of the act shall be reasonably notice of the act and,
specifically, reasonable notification of the time and place of any
public sale or of the time after which any private sale, lease, or
other disposition is to be made, unless a shorter notice period is
reasonable under the circumstances. A notice shall be deemed to be
given under this Agreement when delivered to Debtor or when placed in
an envelope addressed to Debtor and deposited, with postage prepaid,
in a post office or official depository under the exclusive care and
custody of the United States Postal Service or delivered to an
overnight courier. The mailing shall be by overnight courier,
certified, or first class mail.
5.9 Notwithstanding any prior revocation, termination, surrender, or
discharge of this Agreement in whole or in part, the effectiveness of
this Agreement shall automatically continue or be reinstated in the
event that any payment received or credit given by Bank in respect of
the Indebtedness is returned, disgorged, or rescinded under any
applicable law, including, without limitation, bankruptcy or
insolvency laws, in which case this Agreement, shall be enforceable
against Debtor as if the returned, disgorged, or rescinded payment or
credit had not been received or given by Bank, and whether or not Bank
relied upon this payment or credit or changed its position as a
consequence of it. In the event of continuation or reinstatement of
this Agreement, Debtor agrees upon demand by Bank to execute and
deliver to Bank those documents which Bank determines are appropriate
to further evidence (in the public records or otherwise) this
continuation or reinstatement, although the failure of Debtor to do so
shall not affect in any way the reinstatement or continuation.
5.10 This Agreement and all the rights and remedies of Bank under this
Agreement shall inure to the benefit of Bank's successors and assigns
and to any other holder who derives from Bank title to or an interest
in the Indebtedness or any portion of it, and shall bind Debtor and
the heirs, legal representatives, successors, and assigns of Debtor.
Nothing in this Section 5.10 is deemed a consent by Bank to any
assignment by Debtor.
5.11 If there is more than one Debtor, all undertakings, warranties and
covenants made by Debtor and all rights, powers and authorities given
to or conferred upon Bank are made or given jointly and severally.
5.12 Except as otherwise provided in this Agreement, all terms in this
Agreement have the meanings assigned to them in Division 9 (or, absent
definition in Division 9, in any other Division) of the Uniform
Commercial Code, as those meanings may be amended, supplemented,
revised or replaced from time to time. "Uniform Commercial Code" means
the California Uniform Commercial Code, as amended, supplemented,
revised or replaced from time to time. Notwithstanding the forgoing,
the parties intend that the terms used herein which are defined in the
Uniform Commercial Code have, at all times, the broadest and most
inclusive meanings possible. Accordingly, if the Uniform Commercial
Code shall in the future be amended or held by a court to define any
term used herein more broadly or inclusively than the Uniform
Commercial Code in effect on the date of this Agreement, then such
term, as used herein, shall be given such broadened meaning. If the
Uniform Commercial Code shall in the future be amended or held by a
court to define any term used herein more narrowly, or less
inclusively, then the Uniform Commercial Code in effect on the date of
this Agreement, such amendment or holding shall be disregarded in
defining terms used in this Agreement.
5.13 No single or partial exercise, or delay in the exercise, of any right
or power under this Agreement, shall preclude other or further
exercise of the rights and powers under this Agreement. The
unenforceability of any provision of this Agreement shall not affect
the enforceability of the remainder of this Agreement. This Agreement
constitutes the entire agreement of Debtor and Bank with respect to
the subject matter of this Agreement. No amendment or modification of
this Agreement shall be effective unless the same shall be in writing
and signed by Debtor and an authorized officer of Bank. THIS AGREEMENT
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL
LAWS OF THE STATE OF CALIFORNIA, WITHOUT REGARD TO CONFLICT OF LAWS
PRINCIPALS.
5.14 To the extend that any of the Indebtedness is payable upon demand,
nothing contained in this Agreement shall modify the terms and
conditions of that Indebtedness nor shall anything contained in this
Agreement prevent Bank from making demand, without notice and with or
without reason, for immediate payment of any or all of that
indebtedness at any time(s), whether or not an Event of Default has
occurred.
5.15 Debtor represents and warrants that Debtor's exact name is the name
set forth in this Agreement. Debtor further represents and warrants
the following and agrees that Debtor is, and at all times shall be,
located in the following place:
Debtor is an individual, and Debtor is located (as determined pursuant
to the Uniform Commercial Code) at Debtor's principal residence which
is (street address, state and county or parish): N/A.
Debtor is a registered organisation which is organized under the laws
of one of the states comprising the United States (e.g. corporation,
limited partnership, registered limited liability partnership or
limited liability company), and Debtor is located (as determined
pursuant to the Uniform Commercial Code) in the state under the laws
of which it was organized, which is (state): DE.
Debtor is a domestic organization which is not a registered
organization under the laws of the United States or any state thereof
(e.g. general partnership, joint venture, trust, estate or
association), and Debtor is located (as determined pursuant to the
Uniform Commercial Code) at its sole place of business or, if it has
more than one place of business, at its chief executive office, which
is (street address, state and county or parish): N/A.
Debtor is a registered organization organized under the laws of the
United States, and Debtor is located in the state that United States
law designates as its location or, if United States law authorizes the
Debtor redesignate the state for its location, the state designated by
Debtor, or if neither of the foregoing are applicable, at the District
of Columbia. Based on the foregoing, Debtor is located (as determined
pursuant to the Uniform Commercial Code) at (state): N/A.
Debtor is a foreign individual or foreign organization or a branch or
agency of a bank that is not organized under the laws of the United
States or a state thereof, Debtor is located (as determined pursuant
to the Uniform Commercial Code) at (street address, state and county
or parish): N/A.
The Collateral is located at and shall be maintained at the following
location(s):
605 UNIVERSITY AVE.
STREET ADDRESS
LOS GATOS CA 95032 SANTA CLARA
CITY STATE ZIP CODE COUNTY
Collateral shall be maintained only at the locations identified in
this Section 5.15.
5.16 A carbon, photographic or other reproduction of this Agreement shall
be sufficient as a financing statement under the Uniform Commerical
Code and may be filed by Bank in any filing office.
5.17 This Agreement shall be terminated only by the filing of a termination
statement in accordance with the applicable provisions of the Uniform
Commerical Code, but the obligations contained in Section 2.13 of this
Agreement shall survive termination.
5.18 Debtor agrees to reimburse the Bank upon demand for any and all costs
and expenses (including, without limit, court costs, legal expenses
and reasonable attorneys' fees, whether inside or outside counsel is
used, whether or not suit is instituted and, if suit is instituted,
whether at the trial court level, appellate level, in a bankruptcy,
probate or administrative proceeding or otherwise) incurred in
enforcing or attempting to enforce this Agreement or in exercising or
attempting to exercise any right or remedy under this Agreement or
incurred in any other matter or proceeding relating to this Security
Agreement.
6. DEBTOR AND BANK ACKNOWLEDGE THAT THE RIGHT TO TRAIL BY JURY IS A
CONSTITUTIONAL ONE, BUT THAT IT MAY BE WAIVED UNDER CETAIN CIRCUMSTANCES.
TO THE EXTENT PERMITTED BY LAW, EACH PARTY, AFTER CONSULTING (OR HAVING HAD
THE OPPORTUNITY TO CONSULT) WITH COUNSEL OF THEIR CHOICE, KNOWINGLY AND
VOLUNTARILY, AND FOR THEIR MUTUAL BENEFIT, WAIVES ANY RIGHT TO TRIAL BY
JURY IN THE EVENT OF LITIGATION REGARDING THE PERFORMANCE OR ENFORCEMENT
OF, OR IN ANY WAY RELATED TO, THIS NOTE OR THE INDEBTEDNESS.
7. Special Provisions Applicable to this Agreement. (*None, if left blank)
DEBTOR: Akeena Solar, Inc.
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DEBTOR NAME TYPED/PRINTED
By: /s/ Barry Cinnamon
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SIGNATURE OF
Its: President
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TITLE (If applicable)
By:
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SIGNATURE OF
Its:
-----------------------------------
TITLE (If applicable)
By:
------------------------------------
SIGNATURE OF
Its:
-----------------------------------
TITLE (If applicable)
By:
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SIGNATURE OF
Its:
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TITLE (If applicable)
Borrower(s):
Akeena Solar, Inc.
PEDESTAL - Dynamic Security Agreement
Revision Date (12/03) KMA
