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.
                                                --------------------------------
                                                DEBTOR NAME TYPED/PRINTED


                                        By: /s/ Barry Cinnamon
                                            ------------------------------------
                                            SIGNATURE OF


                                        Its: President
                                            ------------------------------------
                                             TITLE (If applicable)


                                        By:
                                            ------------------------------------
                                            SIGNATURE OF


                                        Its:
                                             -----------------------------------
                                             TITLE (If applicable)


                                        By:
                                            ------------------------------------
                                            SIGNATURE OF


                                        Its:
                                             -----------------------------------
                                             TITLE (If applicable)


                                        By:
                                            ------------------------------------
                                            SIGNATURE OF


                                        Its:
                                             -----------------------------------
                                             TITLE (If applicable)

Borrower(s):
Akeena Solar, Inc.

PEDESTAL - Dynamic Security Agreement
Revision Date (12/03) KMA