CONSULTING AGREEMENT

Exhibit 4.2

CONSULTING AGREEMENT

     This Consulting Agreement (the “Agreement”) is made as of September 1, 2007, by and between Solar Power, Inc., having a principal place of business at 1115 Orlando Avenue, Roseville, CA 95661-5247 (the “Company”), and Steven Kay , having a principal place of business at 100 The Embarcadero, Penthouse, San Francisco, CA 94105-1291 (the “Consultant”).

     In consideration of services rendered and to be rendered, the mutual covenants set forth herein and for other valuable consideration, receipt and adequacy of which is acknowledged, the Company and the Consultant agree as follows:

     1.  Term of the Contract. This Agreement will be effective for one year as of September 1, 2007 .

     2.  Services to be Provided. Consultant agrees to provide the Company with sales leads for its franchise division.

     3.  Independent Contractor. It is the express intention of the parties that Consultant is an independent contractor and not an employee, agent, joint venturer, partner or representative of the Company. Nothing in this Agreement shall be interpreted or construed as creating or establishing the relationship of employer and employee. Both parties acknowledge that Consultant is not an employee for state or federal tax purposes. Consultant will be responsible for payment, staffing, worker’s compensation coverage and related matters for any people that Consultant may employ.

     4.  Method of Performing Services. Consultant will determine the method, details, and means of performing the above-described services. Consultant further agrees that the services to be performed will be conducted in a professional and competent manner in conformity with this Agreement and all Company policies, including its General Confidentiality and Disclosure policy. In providing the services hereunder, the Consultant will comply with all applicable laws, rules, regulations and standards of any public authority having jurisdiction.

     5.  Compensation for Services. In consideration for the services to be performed by Consultant, Company agrees to issue the Consultant 50,000 warrants to purchase common stock of Solar Power, Inc. at an exercise price of $1.00 and to register said warrants on Form S-8.

     6.  Ownership of Inventions; Representations and Indemnification .

          6.1. Consultant agrees that it will not incorporate into any work performed for Company any trade secrets, confidential information, or other information in violation of any third party’s rights, and represents that it will not employ any persons to assist or work on Company’s products unless such person can certify that they will not use any trade secrets, patents or other information in violation of any third party’s rights. Consultant further certifies that Consultant has no outstanding agreements or obligations that would conflict with any of the provisions of this Agreement, or that would preclude Consultant from complying with the provisions of this

Agreement.

          6.2. Consultant agrees that all notes, records, drawings, designs, inventions, improvements, developments, discoveries, trade secretes, copyrightable material, as well as all derivatives and modifications thereof and thereto (collectively, the “Inventions”) conceived of, made or discovered by Consultant, solely or in collaboration with others, which are created in furtherance of the services to be performed by Consultant pursuant to this Agreement, as well as any and all intellectual property rights therein and thereto, are the sole property of the Company. In addition, any Inventions that constitute copyrightable subject matter shall be considered “works made for hire” as that term is defined under the copyright laws of the United States, as amended from time to time. Consultant agrees to assign (or cause to be assigned) and does hereby assign fully to the Company all such Inventions and any intellectual property rights relating thereto.

          6.3. Consultant agrees to assist the Company, or its designee, at the Company’s expense, in every proper way to secure the Company’s rights in the Inventions and any intellectual property rights relating thereto in any and all countries, including the disclosure to the Company of all pertinent information and data with respect thereto, the execution of all applications, specifications, oaths, assignments and all other instruments that the Company shall deem necessary in order to apply for and obtain such rights and in order to assign and convey to the Company, its successors, assigns and nominees the sole and exclusive rights, title and interest in and to such Inventions and any intellectual property rights relating thereto. Consultant agrees that Consultant’s obligation to execute, or cause to be executed, when it is in Consultant’s power to do so, any such instrument or papers shall continue after termination of this Agreement.

          6.4. Omitted

          6.5. Omitted

          6.6. Notwithstanding anything else contained in this Agreement, Consultant makes no representation and shall not be obligated to provide Company with any rights in “off the shelf” software in connection with the services to be performed by Consultant pursuant to this Agreement.

     7.  State and Federal Taxes . Consultant is responsible for paying all required state and federal taxes. In particular, the Company will not withhold FICA, make state or federal unemployment insurance contributions, withhold state or federal income taxes, make disability insurance contributions or obtain workers’ compensation insurance on behalf of Consultant or any of Consultant’s employees or subcontractors.

     8.  No Privileges for Consultant . Consultant understands and agrees that neither it nor any of Consultant’s employees or subcontracts shall be entitled to any of the rights and privileges of the Company’s employees, including, but not limited to retirement benefits, medical insurance coverage, life insurance coverage, disability insurance coverage, severance pay benefits, paid vacation and sick pay or overtime pay.

     9.  Payment of Expenses. In addition to the compensation to be paid to Consultant pursuant to Section 5 above, Company shall pay Consultant its actual out-of—pocket expense

reasonably incurred by Consultant in furtherance of its performance hereunder including, without limitation, amounts incurred for travel, specialized hardware and third party software to be incorporated into the deliverables and products under this Agreement. The Consultant shall submit receipts and required reports for reimbursement.

     10.  Time Devoted to Company. Consultant agrees to devote a reasonable amount of time necessary to perform the services under this Agreement. Consultant may represent, perform services for, and be employed by such additional persons or companies as a consultant or employee, so long as such additional services does not materially interfere with the services to be rendered by Consultant to Company pursuant to this Agreement.

     11.  Hours During Which Services May Be Performed. Consultant may perform the services under this Agreement at any suitable time and location that Consultant sees fit, provided that Consultant will attempt to attend any meetings at the Company as may be reasonably requested by the Company’s CEO.

     12.  Assignment of Consultant’s Duties. This Agreement may not be assigned by Consultant without the prior written consent of Company.

     13.  Restrictions on Insider Trading . Consultant acknowledges that it is aware, and that it will advise its agents and affiliates who are informed as to the matters that are the subject of this Agreement, that the United States securities laws prohibit any person who has material, non-public information concerning the Company from purchasing or selling securities of the Company or from communicating such information to any other person under circumstances in which it is reasonably foreseeable that such person is likely to purchase or sell such securities. Consultant agrees that it will not, and it will cause each of the aforementioned persons to not violate any provisions of this paragraph or the United States securities laws or the analogous laws of any state or foreign government, until such time as this Agreement has terminated and Consultant has ceased having access to any confidential information.

     14.  Confidentiality and Non-Disclosure . Consultant agrees to execute the form of Proprietary Information and Confidentiality Agreement attached hereto as Exhibit A .

     15.  Expiration of Agreement. Unless otherwise terminated or extended as pro