Exhibit 10.1

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LOAN AND SECURITY AGREEMENT
(CASH COLLATERAL ACCOUNT)

 
OBLIGOR#
8718029017
NOTE #
N/A
AGREEMENT DATE
February 10, 2009
CREDIT LIMIT
$1,000,000.00
INTEREST RATE
Daily LIBOR plus 2.15%
OFFICER NO./INITIALS
48828

 
THIS AGREEMENT is entered into as of February 10, 2009, between COMERICA BANK
("Bank") as secured party, whose Western Market headquarters office is 333 West
Santa Clara Street, San Jose, California and the undersigned AKEENA SOLAR, INC.,
a Delaware corporation ("Borrower"), whose sole place of business (if it has
only one), chief executive office (if it has more than one place of business) or
residence (if an individual) is located at the address set forth below its name
on the signature page to this Agreement, with reference to the following facts:
 
WHEREAS, Borrower and Bank are parties to that certain Loan and Security
Agreement (Accounts and Inventory) dated January 29, 2007 (as modified by the
First Modification to Loan and Security Agreement dated as of June 26, 2007, the
Second Modification to Loan and Security Agreement dated as of December 31, 2007
and the Third Modification to Loan and Security Agreement dated as of August 4,
2008, collectively the "Prior Agreement") pursuant to which Bank has made
certain credit facilities available to Borrower.  In connection with the Prior
Agreement, ANDALAY SOLAR, INC., a California corporation ("Andalay") executed
that certain Guaranty dated as of December 31, 2007 (the "Andalay Guaranty") and
that certain Security Agreement dated as of December 31, 2007 (the "Andalay
Security Agreement").  Borrower and Andalay have asked Bank to (i) terminate the
Andalay Guaranty and the Andalay Security Agreement, (ii) make certain
modifications to the existing credit facilities, and (iii) replace the Prior
Agreement with this Agreement.  In connection with the termination of the
Andalay Guaranty and the Andalay Security Agreement, Borrower and Bank desire to
amend and restate the Prior Agreement in its entirety.
 
NOW THEREFORE, in consideration of the mutual covenants and conditions hereof,
the parties to this Agreement hereby agree that the Prior Agreement is hereby
amended and restated in full as follows:
 
1. 
DEFINITIONS.

 
1.1           "Agreement" shall mean and includes this Loan and Security
Agreement (Cash Collateral Account), any concurrent or subsequent rider to this
Loan and Security Agreement (Cash Collateral Account) and any extensions,
supplements, amendments or modifications to this Loan and Security Agreement
(Cash Collateral Account) and/or to any such rider.
 
1.2           "Bank Expenses" shall mean and includes: all costs or expenses
required to be paid by Borrower under this Agreement which are paid or advanced
by Bank; taxes and insurance premiums of every nature and kind of Borrower paid
by Bank; filing, recording, publication and search fees, appraiser fees, auditor
fees and costs, and title insurance premiums paid or incurred by Bank in
connection with Bank's transactions with Borrower; costs and expenses incurred
by Bank (with or without suit) to correct any default or enforce any provision
of this Agreement, in maintaining, handling, preserving, selling, disposing of,
preparing for sale and/or advertising to sell the Collateral, whether or not a
sale is consummated; costs and expenses of suit incurred by Bank in enforcing or
defending this Agreement or any portion hereof, including, but not limited to,
expenses incurred by Bank in attempting to obtain relief from any stay,
restraining order, injunction or similar process which prohibits Bank from
exercising any of its rights or remedies; and reasonable attorneys' fees and
expenses incurred by Bank in advising, structuring, drafting, reviewing,
amending, terminating, enforcing, defending or concerning this Agreement, or any
portion hereof or any agreement related hereto, whether or not suit is
brought.  Bank Expenses shall include Bank's in-house legal charges at
reasonable rates.
 
1.3           "Borrower's Books" shall mean and includes all of Borrower's books
and records including but not limited to minute books; ledgers; records
indicating, summarizing or evidencing Borrower's assets (including, without
limitation, the Cash Collateral Account), liabilities, business operations or
financial condition, and all information relating thereto, computer programs;
computer disk or tape files; computer printouts; computer runs; and other
computer prepared information and equipment of any kind.
 
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LOAN AND SECURITY AGREEMENT
(CASH COLLATERAL ACCOUNT)
 
1.4           “Cash Collateral Account” shall mean that certain money market
deposit account number 1894-04634-9 maintained by Borrower at Bank.
 
1.5           "Collateral" shall mean and include the Cash Collateral Account
and all sums on deposit therein from time to time.
 
1.6           "Credit" shall mean all Indebtedness, except that Indebtedness
arising pursuant to any other separate contract, instrument, note or other
separate agreement which, by its terms, provides for a specified interest rate
and term.
 
1.7           "Credit Limit" shall mean One Million and 00/100 Dollars
($1,000,000.00).
 
1.8           "Daily Balance" shall mean the principal amount determined by
taking the amount of the Credit owed at the beginning of a given day, adding the
principal amount of any new Credit advanced or incurred on such date, and
subtracting any payments or collections which are deemed to be paid and are
applied by Bank in reduction of the Credit on that date under the provisions of
this Agreement.
 
1.9           "Debt" shall mean, as of any applicable date of determination, all
items of indebtedness, obligation or liability of a Person, whether matured or
unmatured, liquidated or unliquidated, direct or indirect, absolute or
contingent, joint or several, that should be classified as liabilities in
accordance with GAAP.  In the case of Borrower, the term "Debt" shall include,
without limitation, the Indebtedness.
 
1.10         "Event of Default" shall mean one or more of those events described
in Section 7 contained herein below.
 
1.11         "GAAP" shall mean, as of any applicable period, generally accepted
accounting principles in effect during such period.
 
1.12         "Indebtedness" shall mean and includes any and all loans, advances,
Letter of Credit Obligations, overdrafts, debts, liabilities (including, without
limitation, any and all amounts charged to Borrower's loan account pursuant to
any agreement authorizing Bank to charge Borrower's loan account), obligations,
lease payments, guaranties, covenants and duties owing by Borrower to Bank of
any kind and description whether advanced pursuant to or evidenced by this
Agreement; by any note or other Instrument; or by any other agreement between
Bank and Borrower and whether or not for the payment of money, whether direct or
indirect, absolute or contingent, due or to become due now existing or hereafter
arising, including, without limitation, any interest, fees, expenses, costs and
other amounts owed to Bank that but for the provisions of the United States
Bankruptcy Code would have accrued after the commencement of any Insolvency
Proceeding, and including, without limitation, any debt, liability, or
obligations owing from Borrower to others which Bank may have obtained by
assignment, participation, purchase or otherwise, and further including, without
limitation, all interest not paid when due and all Bank Expenses which Borrower
is required to pay or reimburse by this Agreement, by law, or otherwise.
 
1.13         "Insolvency Proceeding" shall mean and includes any proceeding or
case commenced by or against Borrower, or any guarantor of Borrower's
Indebtedness, under any provisions of the United States Bankruptcy Code, as
amended, or any other bankruptcy or insolvency law, including, but not limited
to assignments for the benefit of creditors, formal or informal moratoriums,
composition or extensions with some or all creditors, any proceeding seeking a
reorganization, arrangement or any other relief under the United States
Bankruptcy Code, as amended, or any other bankruptcy or insolvency law.
 
1.14         "Judicial Officer or Assignee" shall mean and includes any trustee,
receiver, controller, custodian, assignee for the benefit of creditors or any
other person or entity having powers or duties like or similar to the powers and
duties of trustee, receiver, controller, custodian or assignee for the benefit
of creditors.
 
1.15         "Letter of Credit Obligations" shall mean, as of any applicable
date of determination, the sum of the undrawn amount of any letter(s) of credit
issued by Bank upon the application of and/or for the account of Borrower, plus
any unpaid reimbursement obligations owing by Borrower to Bank in respect of any
such letter(s) of credit.
 
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LOAN AND SECURITY AGREEMENT
(CASH COLLATERAL ACCOUNT)
 
1.16         "LIBOR Addendum" shall mean that certain Daily Adjusting LIBOR
Addendum to Loan and Security Agreement attached hereto and incorporated herein
by this reference.
 
1.17         “Maturity Date” means January 1, 2011.
 
1.18         "Person" or "person" shall mean and includes any individual,
corporation, partnership, joint venture, firm, association, trust,
unincorporated association, joint stock company, government, municipality,
political subdivision or agency or other entity.
 
1.19         "Subordinated Debt" shall mean indebtedness of Borrower to third
parties which has been subordinated to the Indebtedness pursuant to a
subordination agreement in form and content satisfactory to Bank.
 
1.20         "Tangible Effective Net Worth" shall mean, with respect to any
Person and as of any applicable date of determination, Tangible Net Worth plus
Subordinated Debt.
 
1.21         "Tangible Net Worth" shall mean, with respect to any Person and as
of any applicable date of determination, the excess of:
 
a.             the net book value of all assets of such Person (excluding
affiliate receivables, patents, patent rights, trademarks, trade names,
franchises, copyrights, licenses, goodwill, and all other intangible assets of
such Person) after all appropriate deductions in accordance with GAAP
(including, without limitation, reserves for doubtful receivables, obsolescence,
depreciation and amortization), over
 
b.             all Debt of such Person at such time.
 
Any and all terms used in the foregoing definitions and elsewhere in this
Agreement shall be construed and defined in accordance with the meaning and
definition of such terms under and pursuant to the California Uniform Commercial
Code (hereinafter referred to as the "Uniform Commercial Code") as amended,
revised or replaced from time to time.  Notwithstanding the foregoing, 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,
than 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.
 
2. 
LOAN AND TERMS OF PAYMENT.

 
For value received, Borrower promises to pay to the order of Bank the entire
Credit, together with interest, as provided for below.
 
2.1           Upon the request of Borrower, made at any time and from time to
time prior to the Maturity Date, and so long as no Event of Default has occurred
and is continuing, Bank shall make credit available to Borrower hereunder;
provided, however, that  the Daily Balance shall not exceed the Credit Limit,
minus all Letter of Credit Obligations.  If at any time for any reason, the
amount of Indebtedness owed by Borrower to Bank pursuant to this Section 2.1 and
Section 2.3 of this Agreement is greater than the aggregate amount available to
be drawn under this Section 2.1, Borrower shall immediately pay to Bank, in
cash, the amount of such excess.  The outstanding principal amount of all loans
made under this Section 2.1, together with all accrued and unpaid interest
thereon, shall in any event be due and payable in full on the earlier of the
Maturity Date or the termination of this Agreement.
 
2.2           Except as hereinbelow provided, the Credit shall bear interest, on
the Daily Balance owing, in accordance with the LIBOR Addendum.  Accrued and
unpaid interest on the Indebtedness shall be payable in accordance with the
LIBOR Addendum.
 
2.3           Subject to the terms and conditions of this Agreement, upon the
request of Borrower, made at any time and from time to time prior to the
Maturity Date, and so long as no Event of Default has occurred and is
continuing, Bank agrees to issue or cause to be issued letters of credit for the
account of  Borrower during the term of this Agreement in the aggregate
outstanding face amount not to exceed (i) the Credit Limit, minus (ii) the then
outstanding Daily Balance, provided that the Letter of Credit Obligations shall
not in any case exceed One Million and 00/100 Dollars ($1,000,000.00).  All
letters of credit shall be, in form and substance, acceptable to Bank in its
sole discretion and shall be subject to the terms and conditions of Bank's form
of standard Letter of Credit Application and Agreement.
 
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LOAN AND SECURITY AGREEMENT
(CASH COLLATERAL ACCOUNT)
 
a.           The obligation of Borrower to immediately reimburse Bank for
drawings made under letters of credit shall be absolute, unconditional and
irrevocable in accordance with the terms of this Agreement and the Letter of
Credit Application and Agreement with respect to each such letter of credit.  In
the absence of such reimbursement, the amount so advanced immediately and
automatically shall be deemed to be an advance under Section 2.1 of this
Agreement and, thereafter, shall bear interest at the rate then applicable to
advances under Section 2.2 hereof.
 
b.           Unless agreed to in writing by Bank, no letter of credit shall have
an expiration date that is later than the Maturity Date.
 
c.           Borrower shall indemnify, defend, protect and hold Bank harmless
from any loss, cost, expense, or liability, including, without limitation,
reasonable attorney's fees incurred by Bank, whether in-house or outside counsel
is used, arising out of or in connection with any letters of credit.
 
2.4           Bank and Borrower agree that any other loans which Bank in its
sole discretion has made or may now or hereafter make to Borrower (sometimes
hereinafter collectively referred to as the "Loans") shall be subject to the
terms and conditions of this Agreement unless otherwise agreed to in writing by
Bank and Borrower.  In the event there are contradictions between the provisions
of this Agreement and any other written agreement with the Bank, this Agreement
shall prevail.  The Loans shall be subject to the terms and conditions of this
Agreement, the LIBOR Addendum, any promissory note(s) executed in connection
therewith and/or previously or subsequently executed, and all amendments,
renewals and extensions thereof (singularly or collectively, the "Notes"), and
all those certain security agreements and/or such other security or other
documents as Bank has required or may now or hereafter require in connection
with the Loans (collectively, the "Loan Documents").  All such Loan(s) shall be
included in the Indebtedness.
 
a.           This Agreement supplements the terms and conditions of the other
Loan Documents.  Except as otherwise defined herein, all terms used in this
Agreement shall have the same meaning as given in the LIBOR Addendum and/or the
other Loan Documents which are incorporated herein by this reference.
 
b.           The principal and interest on the Loans shall be payable on the
terms set forth in the Notes and/or the other Loan Documents entered into in
connection therewith.  Except as specifically modified hereby, all of the terms
and conditions of the Notes and/or the other Loan Documents shall remain in full
force and effect.
 
2.5           Borrower shall pay to Bank:
 
a.           all Bank Expenses, as and when they are invoiced to Borrower, and
 
b.           an unused commitment fee of 0.25% for the Credit on the average
Daily Balance by which the Credit Limit exceeds the outstanding amount of
Credit, payable quarterly in arrears, with the first quarterly payment on April
1, 2009 and thereafter on each July 1, October 1, January 1 and April 1 of each
year.  Such unused commitment fee shall be computed on the basis of a year of
360 days, and shall be assessed for the actual number of days elapsed.
 
3. 
TERM.

 
3.1           This Agreement shall remain in full force and effect until the
Maturity Date, unless earlier terminated by notice by Borrower, provided,
however, that notwithstanding any such notice of termination by Borrower, this
Agreement shall remain in full force and effect until the later of (i) the
latest maturity date upon which the Indebtedness or any portion thereof shall be
due and payable hereunder and (ii) the date upon which all Indebtedness is paid
in full.  Notice of such earlier termination by Borrower shall be effectuated by
mailing of a registered or certified letter not less than ten (10) days prior to
the effective date of such termination, addressed to Bank at the address set
forth herein and the termination shall be effective as of the date so fixed in
such notice.  Any commitment of Bank, pursuant to the terms of this Agreement,
to make loans under this Agreement or any other document, instrument or
agreement entered into by Borrower with or in favor of Bank shall expire on the
Maturity Date, subject to Bank’s right to renew said commitment in its sole and
absolute discretion at Borrower’s request.  Any such renewal of said commitment
shall not be binding upon Bank unless it is in writing and signed by an officer
of Bank.
 
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LOAN AND SECURITY AGREEMENT
(CASH COLLATERAL ACCOUNT)
 
3.2           Notwithstanding the foregoing, should an Event of Default have
occurred and be continuing, Bank may terminate this Agreement at any time upon
notice from Bank to Borrower.  Notwithstanding the foregoing, should either Bank
or Borrower become insolvent or unable to meet its debts as they mature, or
fail, suspend, or go out of business, the other party shall have the right to
terminate this Agreement at any time without notice.  On the date of termination
all Indebtedness shall become immediately due and payable without notice or
demand; provided, however, that no such notice of termination by Borrower shall
be effective until the payment in full in cash of all Indebtedness to Bank
(including without limitation the expiration or cash collateralization of all
Letter of Credit Obligations in accordance with the terms and conditions of this
Agreement).  Any notice of termination given by Borrower shall be irrevocable
unless Bank otherwise agrees in writing, and Bank shall have no obligation to
make any loans or issue any letters of credit on or after the termination date
stated in such notice.  Borrower may elect to terminate this Agreement in its
entirety only.  No section of this Agreement or type of loan available hereunder
may be terminated singly.
 
3.3           All undertakings, agreements, covenants, warranties, and
representations of Borrower contained in this Agreement or any other document,
instrument or agreement entered into with or in favor of Bank in connection
herewith shall survive any such termination, and Bank shall retain its security
interest in and to all existing Collateral and Collateral arising thereafter,
any and all liens thereon, and all of its rights and remedies under this
Agreement or any other document, instrument or agreement entered into with or in
favor of Bank in connection herewith notwithstanding such termination until the
payment in full in cash of all Indebtedness to Bank (including, without
limitation, the expiration or cash collateralization of all Letter of Credit
Obligations in accordance with the terms and conditions of this Agreement and
the payment in full of all applicable termination charges, if
any).  Notwithstanding the satisfaction in full of the Indebtedness, Bank shall
not be required to terminate its security interests in the Collateral unless,
with respect to any loss or damage Bank may incur as a result of dishonored
checks or other items of payment received by Bank and applied to the
Indebtedness, Bank shall, at its option, (a) have received a written agreement,
executed by Borrower and by any Person whose loans or other advances to Borrower
are used in whole or in part to satisfy the Indebtedness, indemnifying Bank from
any such loss or damage, or (b) have retained such monetary reserves and liens
on the Collateral for such period of time as Bank, in its reasonable discretion,
may deem necessary to protect Bank from any such loss or damage.
 
3.4           After termination and when Bank has received payment in full of
Borrower's Indebtedness to Bank, Bank shall reassign to Borrower all Collateral
held by Bank, and shall execute and/or file a termination of all security
agreements and security interests given by Borrower to Bank.
 
4. 
CREATION OF SECURITY INTEREST.

 
4.1           Borrower hereby grants to Bank a continuing security interest in
all presently existing and hereafter arising Collateral in order to secure
prompt repayment of any and all Indebtedness owed by Borrower to Bank and in
order to secure prompt performance by Borrower of each and all of its covenants
and obligations under this Agreement and otherwise created. Bank's security
interest in the Collateral shall attach to all Collateral without further act on
the part of Bank or Borrower.
 
4.2           Bank's security interest in the Cash Collateral Account shall
attach to the Cash Collateral Account and all sums on deposit therein from time
to time without further act on the part of Bank or Borrower.
 
4.3           [Intentionally Deleted].
 
4.4           Concurrently with Borrower's execution of this Agreement, and at
any time or times hereafter at the request of Bank, Borrower shall (a) execute
and deliver to Bank security agreements, mortgages, assignments, certificates of
title, affidavits, reports, notices, schedules of accounts, letters of authority
and all other documents that Bank may reasonably request, in form satisfactory
to Bank, to perfect and maintain perfected Bank's security interest in the
Collateral and in order to fully consummate all of the transactions contemplated
under this Agreement, (b) cooperate with Bank in obtaining a control agreement
in form and substance satisfactory to Bank with respect to all deposit accounts,
electronic chattel paper, investment property, and letter-of-credit rights, and
(c) in the event that any Collateral is in the possession of a third party,
Borrower shall join with Bank in notifying such third party of Bank’s security
interest and Borrower shall use its best efforts to obtain an acknowledgment
from such third party that it is holding such Collateral for the benefit of
Bank.  By authenticating or becoming bound by this Agreement, Borrower
authorizes the filing of initial financing statement(s), and any amendment(s)
covering the Collateral to perfect and maintain perfected Bank's security
interest in the Collateral.  Upon the occurrence and during the continuance of
an Event of Default, Borrower hereby irrevocably makes, constitutes and appoints
Bank (and any of Bank's officers, employees or agents designated by Bank) as
Borrower's true and lawful attorney-in-fact with power to sign the name of
Borrower on any security agreement, mortgage, assignment, certificate of title,
affidavit, letter of authority, notice of other similar documents which must be
executed and/or filed in order to perfect or continue perfected Bank's security
interest in the Collateral, and to take such actions in its own name or in
Borrower’s name as Bank, in its sole discretion, deems necessary or appropriate
to establish exclusive possession or control (as defined in the Uniform
Commercial Code) over any Collateral of such nature that perfection of Bank's
security interest may be accomplished by possession or control.
 
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LOAN AND SECURITY AGREEMENT
(CASH COLLATERAL ACCOUNT)
 
4.5           Borrower shall make appropriate entries in Borrower's Books
disclosing Bank's security interest in the Cash Collateral Account.  Bank
(through any of its officers, employees or agents) shall have the right at any
time or times hereafter, provided that reasonable notice is provided, during
Borrower's usual business hours, or during the usual business hours of any third
party having control over the records of Borrower, to inspect and verify
Borrower's Books in order to verify the amount or condition of, or any other
matter, relating to, said Collateral and Borrower's financial condition.
 
4.6           Effective only upon the occurrence and during the continuance of
an Event of Default, Borrower appoints Bank or any other person whom Bank may
designate as Borrower's attorney-in-fact, with power to do all things necessary
to carry out this Agreement. Borrower ratifies and approves all acts of the
attorney-in-fact.  Neither Bank nor its attorney-in-fact will be liable for any
acts or omissions or for any error of judgement or mistake of fact or law.  This
power being coupled with an interest, is irrevocable until the Indebtedness has
been fully satisfied.
 
4.7           [Intentionally Deleted].
 
4.8           Borrower agrees that Bank may provide information relating to this
Agreement or relating to Borrower to Bank's parent, affiliates, subsidiaries and
service providers.
 
5. 
CONDITIONS PRECEDENT.

 
5.1           As conditions precedent to the making of the loans and the
extension of the financial accommodations hereunder, Borrower shall execute, or
cause to be executed, and deliver to Bank, in form and substance satisfactory to
Bank and its counsel, the following:
 
a.           This Agreement and other documents, instruments and agreements
required by Bank;
 
b.           If Borrower is a corporation, limited liability company, limited
partnership or other such entity, certified copies of all actions taken by
Borrower, any grantor of a security interest to Bank to secure the Indebtedness,
and any guarantor of the Indebtedness, authorizing the execution, delivery and
performance of this Agreement and any other documents, instruments or agreements
entered into in connection herewith, and authorizing specific officers to
execute and deliver any such documents, instruments and agreements;
 
c.           If Borrower is a corporation, limited liability company, limited
partnership or other such entity, then a certificate of good standing showing
that Borrower is in good standing under the laws of the state of its
incorporation or formation and certificates indicating that Borrower is
qualified to transact business and is in good standing in any other state in
which it conducts business;
 
d.           If Borrower is a partnership, then a copy of Borrower's partnership
agreement certified by each general partner of Borrower;
 
e.           UCC searches and financing statements, tax lien and litigation
searches, fictitious business statement filings, insurance certificates, notices
or other similar documents which Bank may require and in such form as Bank may
require, in order to reflect, perfect or protect Bank's first priority security
interest in the Collateral and in order to fully consummate all of the
transactions contemplated under this Agreement; and
 
f.           A certificate confirming no change in the financial condition of
Borrower that would represent a material adverse change from that reflected in
its most recent financial statements delivered to Bank.
 
6. 
WARRANTIES. REPRESENTATIONS AND COVENANTS.

 
6.1           Borrower warrants, represents, covenants and agrees that Borrower
has good and marketable title to the Collateral. Bank has and shall continue to
have a first priority perfected security interest in and to the Collateral. The
Collateral shall at all times remain free and clear of all liens, encumbrances
and security interests (except those in favor of Bank);
 
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LOAN AND SECURITY AGREEMENT
(CASH COLLATERAL ACCOUNT)
 
6.2           Borrower represents, warrants and covenants with Bank that
Borrower will not, without Bank's prior written consent, grant a security
interest in or permit a lien, claim or encumbrance upon any of the Collateral to
any person, association, firm, corporation, entity or governmental agency or
instrumentality.
 
6.3           Borrower represents, warrants, covenants and agrees that:
 
a.           Borrower’s true and correct legal name is that set forth on the
signature page to this Agreement.  Except as disclosed in writing to Bank on or
before the date of this Agreement, Borrower has not, prior to the date hereof,
done business under any name other than that set forth on the signature page to
this Agreement;
 
b.           If Borrower is a registered organization that is organized under
the laws of any one of the states comprising the United States (e.g.
corporation, limited partnership, registered limited liability partnership or
limited liability company), and is located (as determined pursuant to the
Uniform Commercial Code) in the state under the laws of which it was organized,
Borrower’s form of organization and the state in which it has been organized are
those set forth immediately following Borrower’s name on the signature page to
this Agreement;
 
6.4           If Borrower is a corporation, Borrower represents, warrants and
covenants as follows:
 
a.           Borrower is and shall at all times hereafter be a corporation duly
organized and existing in good standing under the laws of the state of its
incorporation and qualified and licensed to do business in California and in all
other states in which such qualification and/or licensing is required by
applicable law for the conduct of its business;
 
b.           Borrower has the right and power and is duly authorized to enter
into this Agreement; and
 
c.           The execution by Borrower of this Agreement shall not constitute a
breach of any provision contained in Borrower's articles of incorporation or
by-laws.
 
6.5           The execution of and performance by Borrower of all of the terms
and provisions contained in this Agreement shall not result in a breach of or
constitute an event of default under any agreement to which Borrower is now or
hereafter becomes a party.
 
6.6           All assessments and taxes, whether real, personal or otherwise,
due or payable by, or imposed, levied or assessed against, Borrower or any of
its property have been paid, and shall hereafter be paid in full, before
delinquency, except to the extent disputed in good faith and for which adequate
reserves are maintained in accordance with GAAP. Borrower shall make due and
timely payment or deposit of all federal, state and local taxes, assessments or
contributions required of it by law, and will execute and deliver to Bank, on
demand, appropriate certificates attesting to the payment or deposit thereof.
Borrower will make timely payment or deposit of all F.I.C.A. payments and
withholding taxes required of it by applicable laws, and will upon request
furnish Bank with proof satisfactory to it that Borrower has made such payments
or deposit. If Borrower fails to pay any such assessment, tax, contribution, or
make such deposit, or furnish the required proof, Bank may, in its sole and
absolute discretion and without notice to Borrower, (i) make payment of the same
or any part thereof, or (ii) set up such reserves in Borrower's loan account as
Bank deems necessary to satisfy the liability therefor, or both. Bank may
conclusively rely on the usual statements of the amount owing or other official
statements issued by the appropriate governmental agency. Each amount so paid or
deposited by Bank shall constitute a Bank Expense and an additional advance to
Borrower.
 
6.7           As of the date hereof and except as heretofore specifically
disclosed in writing to Bank, there are no actions or proceedings pending by or
against Borrower or any guarantor of Borrower before any court or administrative
agency and Borrower has no knowledge of any pending, threatened or imminent
litigation, governmental investigations or claims, complaints, actions or
prosecutions involving Borrower or any guarantor of Borrower, in each case which
could reasonably be expected to result in a judgment against Borrower or any
such guarantor in excess of $500,000.  If any of the foregoing arise during the
term of the Agreement, Borrower shall immediately notify Bank in writing.
 
6.8           All financial statements and information relating to Borrower
which have been or may hereafter be delivered by Borrower to Bank are true and
correct and have been prepared in accordance with GAAP consistently applied and
there has been no material adverse change in the financial condition of Borrower
since the submission of such financial information to Bank.
 
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LOAN AND SECURITY AGREEMENT
(CASH COLLATERAL ACCOUNT)
 
6.9           Financial Reporting.
 
a.           Borrower at all times hereafter shall maintain a standard and
modern system of accounting in accordance with GAAP consistently applied with
ledger and account cards and/or computer tapes and computer disks, computer
printouts and computer records pertaining to the Collateral which contain
information as may from time to time be requested by Bank, not modify or change
its method of accounting or enter into, modify or terminate any agreement
presently existing, or at any time hereafter entered into with any third party
accounting firm and/or service bureau for the preparation and/or storage of
Borrower's accounting records without the written consent of Bank first obtained
and without said accounting firm and/or service bureau agreeing to provide
information regarding Borrower's financial condition to Bank.
 
b.           Borrower shall deliver to Bank within ninety (90) days after the
end of each of Borrower's fiscal years, a CPA audited statement of the financial
condition of Borrower for each such fiscal year, including but not limited to, a
balance sheet and profit and loss statement and any other report requested by
Bank relating to the Collateral and the financial condition of Borrower, and a
certificate signed by an authorized employee of Borrower to the effect that all
reports, statements, computer disk or tape files, computer printouts, computer
runs, or other computer prepared information of any kind or nature relating to
the foregoing or documents delivered or caused to be delivered to Bank under
this subparagraph are complete, correct and thoroughly present the financial
condition of Borrower and that there exists on the date of delivery to Bank no
condition or event which constitutes a breach or Event of Default under this
Agreement.  In the event that Borrower is a public company, Borrower's filing of
its Annual Report on Form 10-K within the timeframe set forth above, shall be
deemed compliance with the requirements of this Subsection 6.9(b) regarding
delivery of Borrower's financial statements.
 
6.10         Borrower shall promptly supply Bank (and cause any guarantor to
supply Bank) with such other information (including tax returns) concerning its
financial affairs (or that of any guarantor) as Bank may reasonably request from
time to time hereafter, and shall promptly notify Bank of any material adverse
change in Borrower's financial condition and of any condition or event which
constitutes a breach of or an event which constitutes an Event of Default under
this Agreement.
 
6.11         Borrower is now and shall be at all times hereafter solvent and
able to pay its debts (including trade debts) as they mature.
 
6.12         Borrower shall immediately and without demand reimburse Bank for
all sums expended by Bank in connection with any action brought by Bank to
correct any default or enforce any provision of this Agreement, including all
Bank Expenses; Borrower authorizes and approves all advances and payments by
Bank for items described in this Agreement as Bank Expenses.
 
6.13         Each warranty, representation and agreement contained in this
Agreement shall automatically be deemed repeated with each advance and shall be
conclusively presumed to have been relied on by Bank regardless of any
investigation made or information possessed by Bank. The warranties,
representations and agreements set forth herein shall be cumulative and in
addition to any and all other warranties, representations and agreements which
Borrower shall give, or cause to be given, to Bank, either now or hereafter.
 
6.14         Borrower shall furnish to Bank:  (a) as soon as possible, but in no
event later than thirty (30) days after Borrower knows or has reason to know
that any reportable event with respect to any deferred compensation plan has
occurred, a statement of the chief financial officer of Borrower setting forth
the details concerning such reportable event and the action which Borrower
proposes to take with respect thereto, together with a copy of the notice of
such reportable event given to the Pension Benefit Guaranty Corporation, if a
copy of such notice is available to Borrower; (b) promptly after the filing
thereof with the United States Secretary of Labor or the Pension Benefit
Guaranty Corporation, copies of each annual report with respect to each deferred
compensation plan; (c) promptly after receipt thereof, a copy of any notice
Borrower may receive from the Pension Benefit Guaranty Corporation or the
Internal Revenue Service with respect to any deferred compensation plan;
provided, however, this subparagraph shall not apply to notice of general
application issued by the Pension Benefit Guaranty Corporation or the Internal
Revenue Service; and (d) when the same is made available to participants in the
deferred compensation plan, all notices and other forms of information from time
to time disseminated to the participants by the administrator of the deferred
compensation plan.
 
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LOAN AND SECURITY AGREEMENT
(CASH COLLATERAL ACCOUNT)
 
6.15         Borrower is now and shall at all times hereafter remain in
compliance in all material respects with all federal, state and municipal laws,
regulations and ordinances relating to the handling, treatment and disposal of
toxic substances, wastes and hazardous material and shall maintain all necessary
authorizations and permits.
 
6.16         Restrictions on Withdrawals From Cash Collateral Account.  Borrower
shall maintain at least One Million Dollars ($1,000,000.00) on deposit at all
times in the Cash Collateral Account.  Borrower shall be allowed to withdraw
funds from the Cash Collateral Account only if (i) no Event of Default has
occurred and is continuing, and (ii) following such withdrawal, there is at
least $1,000,000.00 remaining on deposit in the Cash Collateral Account.
 
7. 
EVENTS OF DEFAULT.

 
The occurrence of any one or more of the following events shall constitute an
Event of Default by Borrower under this Agreement:
 
a.           If Borrower fails or neglects to perform, keep or observe any term,
provision, condition, covenant, agreement, warranty or representation contained
in this Agreement, or any other present or future document, instrument or
agreement between Borrower and Bank, which failure shall continue for thirty
(30) days after notice thereof has been given by Bank to Borrower;
 
b.           If any representation, statement, report or certificate made or
delivered by Borrower, or any of its officers, employees or agents to Bank is
not true and correct in any material respect;
 
c.           If Borrower fails to pay when due and payable or declared due and
payable, all or any portion of Borrower's Indebtedness (whether of principal,
interest, taxes, reimbursement of Bank Expenses, or otherwise), provided that
such failure continues for three (3) Business Days;
 
d.           If there is a material impairment of the value or priority of
Bank's security interest in the Collateral;
 
e.           If all or a material amount of Borrower's assets are attached,
seized, subject to a writ or distress warrant, or are levied upon, or come into
the possession of any Judicial Officer or Assignee and the same are not
released, discharged or bonded against within twenty (20) days thereafter;
 
f.           If any Insolvency Proceeding is filed or commenced by or against
Borrower without being dismissed within thirty (30) days thereafter;
 
g.           If any proceeding is filed or commenced by or against Borrower for
its dissolution or liquidation which is not dismissed within thirty (30) days
thereafter;
 
h.           If Borrower is enjoined, restrained or in any way prevented by
court order from continuing to conduct all or any material part of its business
affairs for a period of more than ten (10) days;
 
i.           If a notice of lien, levy or assessment in excess of $200,000 is
filed of record with respect to any or all of Borrower's assets by the United
States Government, or any department, agency or instrumentality thereof, or by
any state, county, municipal or other government agency, or if any taxes or
debts owing at any time hereafter in excess of $200,000 to any one or more of
such entities becomes a lien, whether inchoate or otherwise, upon any or all of
Borrower's assets and the same is not paid on the payment date thereof;
 
j.           If a judgment or other claim becomes a lien or encumbrance upon all
or any material portion of Borrower's assets and the same is not satisfied,
dismissed or bonded against within twenty (20) days thereafter;
 
k.           If Borrower permits a default in any material agreement to which
Borrower is a party with third parties in excess of $200,000 so as to result in
an acceleration of the maturity of Borrower's indebtedness to others, whether
under any indenture, agreement or otherwise;
 
l.           If Borrower makes any payment on account of indebtedness which has
been subordinated to Borrower's Indebtedness to Bank except as otherwise
permitted under the terms of this Agreement;
 
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LOAN AND SECURITY AGREEMENT
(CASH COLLATERAL ACCOUNT)
 
m.           If any reportable event, which Bank determines constitutes grounds
for the termination of any deferred compensation plan by the Pension Benefit
Guaranty Corporation or for the appointment by the appropriate United States
District Court of a trustee to administer any such plan, shall have occurred and
be continuing thirty (30) days after written notice of such determination shall
have been given to Borrower by Bank, or any such Plan shall be terminated within
the meaning of Title IV of the Employment Retirement Income Security Act
("ERISA"), or a trustee shall be appointed by the appropriate United States
District Court to administer any such plan, or the Pension Benefit Guaranty
Corporation shall institute proceedings to terminate any plan and in case of any
event described in this Section 7, the aggregate amount of Borrower's liability
to the Pension Benefit Guaranty Corporation under Sections 4062, 4063 or 4064 of
ERISA shall exceed five percent (5%) of Borrower's Tangible Effective Net Worth.
 
8. 
BANK'S RIGHTS AND REMEDIES.

 
8.1           Upon the occurrence of an Event of Default by Borrower under this
Agreement, Bank may, at its election, without notice of its election and without
demand, do any one or more of the following, all of which are authorized by
Borrower:
 
a.           Declare Borrower's Indebtedness, whether evidenced by this
Agreement, installment notes, demand notes or otherwise, immediately due and
payable to Bank;
 
b.           Cease advancing money or extending credit to or for the benefit of
Borrower under this Agreement, or any other agreement between Borrower and Bank;
 
c.           Terminate this Agreement as to any future liability or obligation
of Bank, but without affecting Bank's rights and security interests in the
Collateral, and the Indebtedness of Borrower to Bank;
 
d.           Without notice to or demand upon Borrower or any guarantor, make
such payments and do such acts as Bank considers necessary or reasonable to
protect its security interest in the Collateral. Borrower agrees to assemble the
Collateral if Bank so requires and to make the Collateral available to Bank as
Bank may designate. Borrower authorizes Bank to enter the premises where the
Collateral is located, take and maintain possession of the Collateral and the
premises (at no charge to Bank), or any part thereof, and to pay, purchase,
contest or compromise any encumbrance, charge or lien which in the opinion of
Bank appears to be prior or superior to its security interest and to pay all
expenses incurred in connection therewith;
 
e.           [Intentionally Deleted];
 
f.           [Intentionally Deleted];
 
g.           [Intentionally Deleted];
 
h.           [Intentionally Deleted];
 
i.           Borrower shall pay all Bank Expenses incurred in connection with
Bank's enforcement and exercise of any of its rights and remedies as herein
provided, whether or not suit is commenced by Bank;
 
j.           Any deficiency which exists after disposition of the Collateral as
provided above will be paid immediately by Borrower. Any excess will be
returned, without interest and subject to the rights of third parties, to
Borrower by Bank, or, in Bank's discretion, to any party who Bank believes, in
good faith, is entitled to the excess;
 
k.           Without constituting a retention of Collateral in satisfaction of
an obligation within the meaning of 9620 of the Uniform Commercial Code or an
action under California Code of Civil Procedure 726, apply any and all amounts
maintained by Borrower as deposit accounts (as that term is defined under 9102
of the Uniform Commercial Code) or other accounts that Borrower maintains with
Bank against the Indebtedness;
 
l.           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, whether in-house or outside counsel is used,
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 Indebtedness and the surplus, if any, shall be paid over to Borrower
or to such other person(s) as may be entitled to it under applicable
law.  Borrower shall remain liable for any deficiency, which it shall pay to
Bank immediately upon demand.  Borrower 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
unreasonable.  If Bank agrees in its sole discretion 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; and
 
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LOAN AND SECURITY AGREEMENT
(CASH COLLATERAL ACCOUNT)
 
m.           [Intentionally Deleted].
 
8.2           In addition to any and all other rights and remedies available to
Bank under or pursuant to this Agreement or any other documents, instrument or
agreement contemplated hereby, Borrower acknowledges and agrees that (i) at any
time following the occurrence and during the continuance of any Event of
Default, and/or (ii) termination of Bank's commitment or obligation to make
loans or advances or otherwise extend credit to or in favor of Borrower
hereunder, in the event that and to the extent that there are any Letter of
Credit Obligations outstanding at such time, upon demand of Bank, Borrower shall
deliver to Bank, or cause to be delivered to Bank, to the extent not already on
deposit in the Cash Collateral Account, cash collateral in an amount not less
than such Letter of Credit Obligations, which cash collateral shall be held and
retained by Bank as cash collateral for the repayment of such Letter of Credit
Obligations, together with any and all other Indebtedness of Borrower to Bank
remaining unpaid, and Borrower pledges to Bank and grants to Bank a continuing
first priority security interest in such cash collateral so delivered to
Bank.  Alternatively, Borrower shall cause to be delivered to Bank an
irrevocable standby letter of credit issued in favor of Bank by a bank
acceptable to Bank, in its sole discretion, in an amount not less than such
Letter of Credit Obligations, and upon terms acceptable to Bank, in its sole
discretion.
 
8.3           Bank's rights and remedies under this Agreement and all other
agreements shall be cumulative. Bank shall have all other rights and remedies
not inconsistent herewith as provided by law or in equity. No exercise by Bank
of one right or remedy shall be deemed an election, and no waiver by Bank of any
default on Borrower's part shall be deemed a continuing waiver. No delay by Bank
shall constitute a waiver, election or acquiescence by Bank.
 
9.             TAXES AND EXPENSES REGARDING BORROWER'S PROPERTY.  If Borrower
fails to pay promptly when due to another person or entity, monies which
Borrower is required to pay by reason of any provision in this Agreement, Bank
may, but need not, pay the same and charge Borrower's loan account therefor, and
Borrower shall promptly reimburse Bank.  All such sums shall become additional
Indebtedness owing to Bank, shall bear interest at the rate hereinabove
provided, and shall be secured by all Collateral.  Any payments made by Bank
shall not constitute (i) an agreement by it to make similar payments in the
future, or (ii) a waiver by Bank of any default under this Agreement.  Bank need
not inquire as to, or contest the validity of, any such expense, tax, security
interest, encumbrance or lien and the receipt of the usual official notice of
the payment thereof shall be conclusive evidence that the same was validly due
and owing.  Such payments shall constitute Bank Expenses and additional advances
to Borrower.
 
10. 
WAIVERS.

 
10.1         Borrower agrees that checks and other instruments received by Bank
in payment or on account of Borrower's Indebtedness constitute only conditional
payment until such items are actually paid to Bank and Borrower waives the right
to direct the application of any and all payments at any time or times hereafter
received by Bank on account of Borrower's Indebtedness and Borrower agrees that
Bank shall have the continuing exclusive right to apply and reapply such
payments in any manner as Bank may deem advisable, notwithstanding any entry by
Bank upon its books.
 
10.2         Borrower waives demand, protest, notice of protest, notice of
default or dishonor, notice of payment and nonpayment, notice of any default,
nonpayment at maturity, release, compromise, settlement, extension or renewal of
any or all commercial paper, accounts, documents, instruments, chattel paper,
and guarantees at any time held by Bank on which Borrower may in any way be
liable.
 
10.3         [Intentionally Deleted].
 
10.4         Borrower waives the right and the right to assert a confidential
relationship, if any, it may have with any accountant, accounting firm and/or
service bureau or consultant in connection with any information requested by
Bank pursuant to or in accordance with this Agreement, and agrees that Bank may
contact directly any such accountants, accounting firm and/or service bureau or
consultant in order to obtain such information.
 
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LOAN AND SECURITY AGREEMENT
(CASH COLLATERAL ACCOUNT)
 
10.5         [Intentionally Deleted].
 
10.6         THE UNDERSIGNED AND THE BANK ACKNOWLEDGE THAT THE RIGHT TO TRIAL BY
JURY IS A CONSTITUTIONAL ONE, BUT THAT IT MAY BE WAIVED UNDER CERTAIN
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 AGREEMENT OR THE INDEBTEDNESS.
 
10.7         [Intentionally Deleted].
 
10.8         In the event that Bank elects to waive any rights or remedies
hereunder, or compliance with any of the terms hereof, or delays or fails to
pursue or enforce any term, such waiver, delay or failure to pursue or enforce
shall only be effective with respect to that single act and shall not be
construed to affect any subsequent transactions or Bank's right to later pursue
such rights and remedies.
 
11.           ONE CONTINUING LOAN TRANSACTION.  All loans and advances
heretofore, now or at any time or times hereafter made by Bank to Borrower under
this Agreement or any other agreement between Bank and Borrower, shall
constitute one loan secured by Bank's security interests in the Collateral and
by all other security interests, liens, encumbrances heretofore, now or from
time to time hereafter granted by Borrower to Bank.
 
Notwithstanding the above, (i) to the extent that any portion of the
Indebtedness is a consumer loan, that portion shall not be secured by any deed
of trust or mortgage on or other security interest in Borrower's principal
dwelling which is not a purchase money security interest as to that portion,
unless expressly provided to the contrary in another place, or (ii) if Borrower
(or any of them) has (have) given or give(s) Bank a deed of trust or mortgage
covering real property, that deed of trust or mortgage shall not secure the loan
and any other Indebtedness of Borrower (or any of them), unless expressly
provided to the contrary in another place.
 
12.           NOTICES. Unless otherwise provided in this Agreement, all notices
or demands by either party on the other relating to this Agreement shall be in
writing and shall be sent by personal delivery, national overnight courier or
regular United States mail, postage prepaid, in each case properly addressed to
Borrower or to Bank at the addresses stated in this Agreement, or to such other
addresses as Borrower or Bank may from time to time specify to the other in
writing.  Notices sent by personal delivery or national overnight courier shall
be deemed delivered upon completion of delivery or when proper delivery is
refused.  Notices sent by United States mail shall be deemed delivered upon the
third business day after the date of mailing.  Requests for information made to
Borrower by Bank from time to time hereunder may be made orally or in writing,
at Bank’s discretion.
 
13.           AUTHORIZATION TO DISBURSE.  Bank is hereby authorized to make
loans and advances hereunder upon telephonic or other instructions received from
anyone purporting to be an officer, employee, or representative of Borrower, or
at the discretion of Bank if said loans and advances are necessary to meet any
Indebtedness of Borrower to Bank. Bank shall have no duty to make inquiry or
verify the authority of any such party, and Borrower shall hold Bank harmless
from any damage, claims or liability by reason of Bank's honor of, or failure to
honor, any such instructions.
 
14.           PAYMENTS.  Borrower hereby authorizes Bank to deduct the full
amount of any interest, fees, costs, or Bank Expenses due under this Agreement
and not paid or collected when due in accordance with the terms and conditions
hereof from any account maintained by Borrower with Bank.  Should there be
insufficient funds in any such account to pay all such sums when due, the full
amount of such deficiency shall be immediately due and payable by Borrower;
provided, however, that Bank shall not be obligated to advance funds to cover
any such payment.
 
15.           DESTRUCTION OF BORROWER'S DOCUMENTS.  Any documents, schedules,
invoices or other papers delivered to Bank, may be destroyed or otherwise
disposed of by Bank six (6) months after they are delivered to or received by
Bank, unless Borrower requests, in writing, the return of the said documents,
schedules, invoices or other papers and makes arrangements, at Borrower's
expense, for their return.
 
16.           CHOICE OF LAW.  The validity of this Agreement, its construction,
interpretation and enforcement, and the rights of the parties hereunder and
concerning the Collateral, shall be determined according to the laws of the
State of California.  The parties agree that all actions or proceedings arising
in connection with this Agreement shall be tried and litigated only in the state
and federal courts in California.
 
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LOAN AND SECURITY AGREEMENT
(CASH COLLATERAL ACCOUNT)
 
17. 
GENERAL PROVISIONS.

 
17.1          This Agreement shall be binding and deemed effective when executed
by Borrower and accepted and executed by Bank at its Western Market headquarters
office.
 
17.2          This Agreement shall bind and inure to the benefit of the
respective successors and assigns of each of the parties; provided, however,
that Borrower may not assign this Agreement or any rights hereunder without
Bank's prior written consent and any prohibited assignment shall be absolutely
void.  No consent to an assignment by Bank shall release Borrower or any
guarantor from their obligations to Bank.  Bank may assign this Agreement and
its rights and duties hereunder.  Bank reserves the right to sell, assign,
transfer, negotiate or grant participations in all or any part of, or any
interest in Bank's rights and benefits hereunder.  In connection therewith,
Bank  may disclose all documents and information which Bank now or hereafter may
have relating to Borrower or Borrower's business.  If Bank grants a
participation interest in Bank's rights and benefits hereunder, Bank shall still
retain all of its obligations hereunder.
 
17.3          Paragraph headings and paragraph numbers have been set forth
herein for convenience only; unless the contrary is compelled by the context,
everything contained in each paragraph applies equally to this entire
Agreement.  Unless the context of this Agreement clearly requires otherwise,
references to the plural include the singular, references to the singular
include the plural, and the term “including” is not limiting.  The words
“hereof,” “herein,” “hereby,” “hereunder,” and similar terms in this Agreement
refer to this Agreement as a whole and not to any particular provision of this
Agreement.
 
17.4          Neither this Agreement nor any uncertainty or ambiguity herein
shall be construed or resolved against Bank or Borrower, whether under any rule
of construction or otherwise; on the contrary, this Agreement has been reviewed
by all parties and shall be construed and interpreted according to the ordinary
meaning of the words used so as to fairly accomplish the purposes and intentions
of all parties hereto.
 
17.5          Each provision of this Agreement shall be severable from every
other provision of this Agreement for the purpose of determining the legal
enforceability of any specific provision.
 
17.6          This Agreement cannot be changed or terminated orally.  This
Agreement contains the entire agreement of the parties hereto and supersedes all
prior agreements, understandings, representations, warranties and negotiations,
if any, related to the subject matter hereof, and none of the parties shall be
bound by anything not expressed in writing.
 
17.7          The parties intend and agree that their respective rights, duties,
powers, liabilities, obligations and discretions shall be performed, carried
out, discharged and exercised reasonably and in good faith.
 
17.8          In addition, if this Agreement is secured by a deed of trust or
mortgage covering real property, then the trustor or mortgagor shall not
mortgage or pledge the mortgaged premises as security for any other indebtedness
or obligations.  This Agreement, together with all other indebtedness secured by
said deed of trust or mortgage, shall become due and payable immediately,
without notice, at the option of Bank, (a) if said trustor or mortgagor shall
mortgage or pledge the mortgaged premises for any other indebtedness or
obligations or shall convey, assign or transfer the mortgaged premises by deed,
installment sale contract or other instrument; (b) if the title to the mortgaged
premises shall become vested in any other person or party in any manner
whatsoever, or (c) if there is any disposition (through one or more
transactions) of legal or beneficial title to a controlling interest of said
trustor or mortgagor.
 
17.9          Each undersigned Borrower hereby agrees that it is jointly and
severally, directly, and primarily liable to Bank for payment and performance in
full of all duties, obligations and liabilities under this Agreement and each
other document, instrument and agreement entered into by Borrower with or in
favor of Bank in connection herewith, and that such liability is independent of
the duties, obligations and liabilities of any other Borrower or any other
guarantor of the Indebtedness, as applicable.  Each reference herein to Borrower
shall mean each and every Borrower party hereto, individually and collectively,
jointly and severally.
 
17.10       This Agreement may be executed by the parties hereto in several
counterparts, each of which shall be deemed to be an original and all of which
shall constitute together but one and the same agreement. This Agreement,
together with each other document, instrument and agreement entered into with or
in favor of Bank in connection herewith, constitute the entire understanding
among the parties hereto, written or oral, with respect to the subject matter
hereof.
 
17.11       TERMINATION OF ANDALAY GUARANTY AND ANDALAY SECURITY AGREEMENT.  The
Andalay Guaranty and the Andalay Security Agreement are hereby terminated.  Bank
hereby confirms that Andalay shall have no further liability under the Andalay
Guaranty and the Andalay Security Agreement.
 
17.12       AMENDMENT AND RESTATEMENT.  The Prior Agreement is hereby amended
and restated in its entirety by this Agreement.
 
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LOAN AND SECURITY AGREEMENT
(CASH COLLATERAL ACCOUNT)
 
IN WITNESS WHEREOF, the parties hereto have caused this Loan and Security
Agreement (Accounts and Inventory) to be executed as of the date first
hereinabove written.
 

Accepted and effective as of February 10, 2009 at Bank’s Western Market
Headquarters Office  
BORROWER:
 
AKEENA SOLAR, INC., a Delaware corporation
BANK:             By:   /s/ Gary Effren
COMERICA BANK
     Gary Effren, its CFO
 
        By:   /s/ Reed Geisreiter        
Reed Geisreiter,
First Vice President-Western Market
    Address for Notices:                  
16005 Los Gatos Blvd.
Los Gatos, California 95032
Address for Notices:
 
75 East Trimble Road
San Jose, California 95131
Attn:  Credit Manager
Fax number:  (408) 556-5097
     

 
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LOAN AND SECURITY AGREEMENT
(CASH COLLATERAL ACCOUNT)
 
LIBOR ADDENDUM
 
(To be Attached)
 
LIBOR ADDENDUM – Page - 1

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