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

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

SECURED PROMISSORY NOTE

 
Sacramento, California
$__________
September ___2006

This Secured Promissory Note (this "Note") is made and delivered pursuant to
that certain Credit Facility Agreement dated as of September __, 2006 between
Solar Power, Inc., a California corporation (“Borrower”) and Welund Fund, Inc.,
a Nevada corporation (“Lender” or “Holder”), as such may be amended from time to
time (the "Credit Agreement"). Unless otherwise defined herein, all capitalized
terms used in this Note shall have the same meanings that are given to such
terms in the Credit Agreement, the terms of which are incorporated into this
Note by reference.
 
 
1.    Obligation. The Borrower hereby promises to pay to the order of Lender or
Holder on or before the Maturity Date, at Lender's principal place of business,
or at such other place as Holder may direct, the principal sum of TWO MILLION
Dollars ($2,000,000.00) or so much thereof as may be advanced and outstanding,
together with all interest accrued on unpaid principal, to be computed on each
Advance from the date of its disbursement to Borrower, at a rate equal to eight
percent (8%) simple interest per annum, as provided in the Credit Agreement. The
outstanding principal amount of this Note, together with accrued interest
thereon, shall be due and payable in full on the Maturity Date. The outstanding
unpaid principal balance of this Note at any time shall be the total principal
amounts advanced hereunder by Holder less the amounts of payments of principal
made hereon by Borrower, which balance may be endorsed hereon from time to time
by Holder in accordance with Section 2.

2.    Recording Advances and Payments. Holder is authorized to record on
Schedule A hereto, and on any continuation(s) of such Schedule that may be
attached to this Note: (a) the date and principal amount of each Advance by
Lender under the Credit Agreement; and (b) the date and amount of each payment
or prepayment of principal and/or accrued interest of any Advance; which
recordation will constitute prima facie evidence of the accuracy of the
information so endorsed on Schedule A; provided however, that any failure to
record such information on such Schedule or continuation thereof will not in any
manner affect the obligations of Borrower to make payments of principal and
interest in accordance with the terms of this Note. Holder will promptly provide
Borrower with a copy of each recordation made by Holder on Schedule A attached
hereto.

3.    Prepayment. Prepayment of unpaid principal and/or interest due under this
Note may be made at any time without penalty as specified in the Credit
Agreement. Unless otherwise agreed in writing by Holder, all payments will be
made in lawful tender of the United States and will be applied (a) first, to the
payment of accrued interest, and (b) second, (to the extent that the amount of
such prepayment exceeds the amount of all such accrued interest), to the payment
of principal.

1

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

4.    Default, Acceleration of Obligation. Borrower will be deemed to be in
default under this Note and the outstanding unpaid principal balance of this
Note, together with all interest accrued thereon, will immediately become due
and payable in full, without the need for any further action on the part of
Holder, upon the occurrence of any Event of Default (as defined in the Credit
Agreement) not otherwise remedied pursuant to the terms of the Credit Agreement.

5.    Remedies on Default; Acceleration. Upon any Event of Default, Holder will
have, in addition to its rights and remedies under this Note and the Credit
Agreement, full recourse against any real, personal, tangible or intangible
assets of Borrower, and may pursue any legal or equitable remedies that are
available to Holder, and may declare the entire unpaid principal amount of this
Note and all unpaid accrued interest under this Note to be immediately due and
payable in full.

6.    Waiver and Amendment. Any provision of this Note may be amended or
modified only by a writing signed by both Borrower and Holder. Except as
provided below with respect to waivers by Borrower, no waiver or consent with
respect to this Note will be binding or effective unless it is set forth in
writing and signed by the party against whom such waiver is asserted. No course
of dealing between Borrower and Holder will operate as a waiver or modification
of any party's rights or obligations under this Note. No delay or failure on the
part of either party in exercising any right or remedy under this Note will
operate as a waiver of such right or any other right. A waiver given on one
occasion will not be construed as a bar to, or as a waiver of, any right or
remedy on any future occasion.

7.    Waiver of Borrower. Borrower hereby waives presentment, notice of
non-payment, notice of dishonor, protest, demand and diligence. This Note may be
amended only by a writing executed by Borrower and Holder.

8.    Governing Law. This Note will be governed by and construed in accordance
with the internal laws of the State of California as applied to agreements
between residents thereof to be performed entirely within such State, without
reference to that body of law relating to conflict of laws or choice of law.

9.    Severability; Headings. The invalidity or unenforceability of any term or
provision of this Note will not affect the validity or enforceability of any
other term or provision hereof. The headings in this Note are for convenience of
reference only and will not alter or otherwise affect the meaning of this Note.

10.     Jurisdiction; Venue. Borrower, by its execution of this Note, hereby
irrevocably submits to the in personal jurisdiction of the state courts of the
State of California and of the United States District Court for the Northern
District of California that are located in Sacramento, California, for the
purpose of any suit, action or other proceeding arising out of or based upon
this Note.

11.        Assignment. This Note is not assignable by Holder without the written
consent of Borrower. This Note may not be assigned or delegated by Borrower,
whether by voluntary assignment or transfer, operation of law, merger or
otherwise.

2

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

12.        Credit Agreement. This Note incorporates by reference all the
provisions of the Credit Agreement, including but not limited to all provisions
contained therein with respect to Events of Default, waivers, remedies and
covenants, and the description of the benefits, rights and obligations of each
of Borrower and Holder under the Credit Agreement.

IN WITNESS WHEREOF, the Borrower has executed and delivered this Note effective
as of the date first above written.

 
SOLAR POWER, INC.
     
/s/ Glenn Carnahan                                             
 
Glenn Carnahan, Chief Financial Officer

3

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

 

SCHEDULE A

LOANS AND PAYMENTS OF PRINCIPAL
 

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

Date
Amount of Loan
Amount of Principal Repaid
Notation Made By

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

 

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

 

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

 

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

 

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

  

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

  

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

 

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

 

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

 

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

 

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

 

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

 

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

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
4 

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