<PAGE>   1
                                                                   EXHIBIT 10.12


                                  EXHIBIT C-6

                               SECURITY AGREEMENT



This Security Agreement is made as of August 29, 2000 between Silicon Energy
Corp., a California corporation ("Pledgee"), and Leonard A. Berg ("Pledgor").


                                    Recitals

        Pursuant to Pledgor's election to purchase Shares under the Option
Agreement, dated March 1, 2000 (the "Option"), between Pledgor and Pledgee under
Pledgee's 1998 Incentive Stock Plan, and Pledgor's election under the terms of
the Option to pay for such shares with his promissory note (the "Note"), Pledgor
has purchased 75,000 shares of Pledgee's Common Stock (the "Shares") at a price
of $1.25 per share, for a total purchase price of $93,750. The Note and the
obligations thereunder are as set forth in Exhibit C-7 to the Option.

        NOW, THEREFORE, it is agreed as follows:

        1. Creation and Description of Security Interest. In consideration of
the transfer of the Shares to Pledgor under the Option Agreement, Pledgor,
pursuant to the California Commercial Code, hereby pledges all of such Shares
(herein sometimes referred to as the "Collateral") represented by certificate
number 77, duly endorsed in blank or with executed stock powers, and herewith
delivers said certificate to the Secretary of Pledgee ("Pledgeholder"), who
shall hold said certificate subject to the terms and conditions of this Security
Agreement.

                The pledged stock (together with an executed blank stock
assignment for use in transferring all or a portion of the Shares to Pledgee if,
as and when required pursuant to this Security Agreement) shall be held by the
Pledgeholder as security for the repayment of the Note, and any extensions or
renewals thereof, to be executed by Pledgor pursuant to the terms of the Option,
and the Pledgeholder shall not encumber or dispose of such Shares except in
accordance with the provisions of this Security Agreement.

        2. Pledgor's Representations and Covenants. To induce Pledgee to enter
into this Security Agreement, Pledgor represents and covenants to Pledgee, its
successors and assigns, as follows:

                (a) Payment of Indebtedness. Pledgor will pay the principal sum
of the Note secured hereby, together with interest thereon, at the time and in
the manner provided in the Note.
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                (b) Encumbrances. The Shares are free of all other encumbrances,
defenses and liens, and Pledgor will not further encumber the Shares without the
prior written consent of Pledgee.

                (c) Margin Regulations. In the event that Pledgee's Common Stock
is now or later becomes margin-listed by the Federal Reserve Board and Pledgee
is classified as a "lender" within the meaning of the regulations under Part 207
of Title 12 of the Code of Federal Regulations ("Regulation G"), Pledgor agrees
to cooperate with Pledgee in making any amendments to the Note or providing any
additional collateral as may be necessary to comply with such regulations.

        3. Voting Rights. During the term of this pledge and so long as all
payments of principal and interest are made as they become due under the terms
of the Note, Pledgor shall have the right to vote all of the Shares pledged
hereunder.

        4. Stock Adjustments. In the event that during the term of the pledge
any stock dividend, reclassification, readjustment or other changes are declared
or made in the capital structure of Pledgee, all new, substituted and additional
shares or other securities issued by reason of any such change shall be
delivered to and held by the Pledgee under the terms of this Security Agreement
in the same manner as the Shares originally pledged hereunder. In the event of
substitution of such securities, Pledgor, Pledgee and Pledgeholder shall
cooperate and execute such documents as are reasonable so as to provide for the
substitution of such Collateral and, upon such substitution, references to
"Shares" in this Security Agreement shall include the substituted shares of
capital stock of Pledgor as a result thereof.

        5. Options and Rights. In the event that, during the term of this
pledge, subscription Options or other rights or options shall be issued in
connection with the pledged Shares, such rights, Options and options shall be
the property of Pledgor and, if exercised by Pledgor, all new stock or other
securities so acquired by Pledgor as it relates to the pledged Shares then held
by Pledgeholder shall be immediately delivered to Pledgeholder, to be held under
the terms of this Security Agreement in the same manner as the Shares pledged.

        6. Default. Pledgor shall be deemed to be in default of the Note and of
this Security Agreement in the event:

                (a) Payment of principal or interest on the Note shall be
delinquent for a period of 10 days or more; or

                (b) Pledgor fails to perform any of the covenants set forth in
the Option or contained in this Security Agreement for a period of 10 days after
written notice thereof from Pledgee.

                In the case of an event of Default, as set forth above, Pledgee
shall have the right to accelerate payment of the Note upon notice to Pledgor,
and Pledgee shall thereafter be entitled to pursue its remedies under the
California Commercial Code.



                                      -2-
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        7. Release of Collateral. Subject to any applicable contrary rules under
Regulation G, there shall be released from this pledge a portion of the pledged
Shares held by Pledgeholder hereunder upon payments of the principal of the
Note. The number of the pledged Shares which shall be released shall be that
number of full Shares which bears the same proportion to the initial number of
Shares pledged hereunder as the payment of principal bears to the initial full
principal amount of the Note.

        8. Withdrawal or Substitution of Collateral. Pledgor shall not sell,
withdraw, pledge, substitute or otherwise dispose of all or any part of the
Collateral without the prior written consent of Pledgee.

        9. Term. The within pledge of Shares shall continue until the payment of
all indebtedness secured hereby, at which time the remaining pledged stock shall
be promptly delivered to Pledgor, subject to the provisions for prior release of
a portion of the Collateral as provided in paragraph 7 above.

        10. Insolvency. Pledgor agrees that if a bankruptcy or insolvency
proceeding is instituted by or against it, or if a receiver is appointed for the
property of Pledgor, or if Pledgor makes an assignment for the benefit of
creditors, the entire amount unpaid on the Note shall become immediately due and
payable, and Pledgee may proceed as provided in the case of default.

        11. Pledgeholder Liability. In the absence of willful or gross
negligence, Pledgeholder shall not be liable to any party for any of his acts,
or omissions to act, as Pledgeholder.

        12. Invalidity of Particular Provisions. Pledgor and Pledgee agree that
the enforceability or invalidity of any provision or provisions of this Security
Agreement shall not render any other provision or provisions herein contained
unenforceable or invalid.

        13. Successors or Assigns. Pledgor and Pledgee agree that all of the
terms of this Security Agreement shall be binding on their respective successors
and assigns, and that the term "Pledgor" and the term "Pledgee" as used herein
shall be deemed to include, for all purposes, the respective designees,
successors, assigns, heirs, executors and administrators.

        14. Governing Law. This Security Agreement shall be interpreted and
governed under the internal substantive laws, but not the choice of law rules,
of California.



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        IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.


"PLEDGOR"                               /s/ LEONARD A. BERG
                                       -----------------------------------------
                                       Signature

                                       Leonard A. Berg
                                       -----------------------------------------
                                       Print Name

                                       Address:  1335 Savannah Lane
                                                 -------------------------------
                                                 Carlsbad, CA  92009
                                                 -------------------------------



"PLEDGEE"                              SILICON ENERGY CORP.
                                       a California corporation


                                        /s/ JACK JENKINS-STARK
                                       -----------------------------------------
                                       Signature

                                       Jack Jenkins-Stark
                                       -----------------------------------------
                                       Print Name

                                       CFO CEO
                                       -----------------------------------------
                                       Title



"PLEDGEHOLDER"                         -----------------------------------------
                                       Secretary of Silicon Energy Corp.



                                      -4-
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                                   EXHIBIT C-7

                                      NOTE


$93,750.00                                                   Alameda, California

                                                                 August 29, 2000


        FOR VALUE RECEIVED, Leonard A. Berg promises to pay to Silicon Energy
Corp., a California corporation (the "Company"), or order, the principal sum of
Ninety-Three Thousand Seven Hundred and Fifty Dollars and Zero Cents
($93,750.00), together with interest on the unpaid principal hereof from the
date hereof at the rate of 10% per annum, compounded semiannually.

        Principal and interest shall be due and payable on August 29, 2002.
Payment of principal and interest shall be made in lawful money of the United
States of America.

        The undersigned may at any time prepay all or any portion of the
principal or interest owing hereunder.

        This Note is subject to the terms of the Option, dated as of March 1,
2000. This Note is secured in part by a pledge of the Company's Common Stock
under the terms of a Security Agreement of even date herewith and is subject to
all the provisions thereof.

        The holder of this Note shall have full recourse against the
undersigned, and shall not be required to proceed against the collateral
securing this Note in the event of default.

        In the event the undersigned shall cease to be an employee, director or
consultant of the Company for any reason, this Note shall, at the option of the
Company, be accelerated, and the whole unpaid balance on this Note of principal
and accrued interest shall be immediately due and payable.

        Should any action be instituted for the collection of this Note, the
reasonable costs and attorneys' fees therein of the holder shall be paid by the
undersigned.



                                        /s/ LEONARD A. BERG
                                       -----------------------------------------
                                       Leonard A. Berg
<PAGE>   6
                               AMENDMENT NO. 1 TO
                                 PROMISSORY NOTE



     This Amendment No. 1 to Promissory Note (the "Amendment") by and between
Leonard A. Berg ("Promisor") and Silicon Energy Corp. (the "Company") is entered
into as of this 12th day of June, 2001.

                                    RECITALS

     WHEREAS, in connection with the exercise of an option to purchase Seventy
Five Thousand (75,000) shares of common stock of the Company, Promisor issued to
the Company a note, dated as of August 29, 2000, for the principal sum of Ninety
Three Thousand Seven Hundred and Fifty Dollars ($93,750.00) with an interest
rate of ten percent (10%) per annum, a copy of which is attached hereto as
Exhibit A (the "Note");

     WHEREAS, In connection with and in order to induce Promisor's continued
employment with the Company, the board of directors of the Company has approved
a reduction in the interest rate payable on the principal of the Note from the
date of this Amendment;

     NOW, THEREFORE, for good and valuable consideration, the sufficiency of
which is hereby acknowledged, the Company and the Promisor agree as follows:

     1.   That the Note is hereby amended such that the interest payable on the
unpaid principal of the Note from the date hereof shall be at the rate of four
and eleven one-hundredths percent (4.11%) per annum.

     2.   All other provisions of the Note shall remain in full force and
          effect.

     IN   WITNESS WHEREOF, each of the parties hereto has executed this
Amendment No. 1 to Promissory Note, as of the date first written above.


                                         SILICON ENERGY CORP.

                                         By: /s/ JOHN WOOLARD
                                            ------------------------------------
                                         Name: John Woolard
                                         Title: CEO and President



                                         /s/ LEONARD A. BERG
                                         ---------------------------------------
                                         Name: Leonard A. Berg