CREDIT FACILITY AGREEMENT

CREDIT FACILITY AGREEMENT

THIS CREDIT FACILITY AGREEMENT (the "Agreement"), is made and entered into and effective as of September 19, 2006, by and between Welund Fund, Inc., a Nevada corporation ("Welund") and Solar Power, Inc., a California corporation ("SPI").

For good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereby agree as follows:

1.     Purpose .

Welund and SPI are parties to a certain Agreement and Plan of Merger dated as of August 23, 2006, by and among Welund, SPI and Welund Acquisition Corp. (the “Merger Sub”), a Nevada corporation and wholly owned subsidiary of Welund (the “Merger Agreement”). Pursuant to the Merger Agreement, the parties contemplate that SPI will merge into the Merger Sub with SPI as the surviving entity (the “Merger”). Welund is conducting a private placement offering in the aggregate amount of $16,000,000 in order to raise working capital to be used by SPI upon the consummation of the Merger. SPI is currently in need of working capital. Welund desires to provide working capital to SPI and SPI desires to draw upon the Welund commitment to provide a revolving line of credit for up to an aggregate of Two Million Dollars ($2,000,000) for such purposes, pursuant to the terms and conditions of this Agreement

2.     Definitions .

The following terms shall have the meanings ascribed to them for purposes of this Agreement, the Exhibits, Attachments and Schedules thereto, unless otherwise specifically defined in such Exhibits, Attachments and Schedules.

“ Advances ” means the aggregate of funds made under the Revolving Loan Commitment to SPI during the term of this Agreement, including all accrued and unpaid interest.

“ Applicable Rate ” means, with respect to any Advance, as the case may be, the interest rate of eight percent (8%) simple interest per annum charged by Welund.

“ Commitments ” means the Revolving Loan Commitments under this Agreement.

“ Default ” means any event or condition which constitutes an Event of Default or which upon notice, lapse of time or both would, unless cured or waived, become an Event of Default, as defined in the Security Agreement attached to this Agreement.

“ Event of Default ” has the meaning assigned to such term in the Security Agreement attached hereto.

“ Loan Documents ” means, collectively, this Agreement, the Security Documents, Security Agreement, and other schedules, exhibits and attachments hereto.

“ Maturity Date ” means March 31, 2007, unless this Agreement is extended, as provided herein, in which case the Maturity Date shall be the date of termination of any extension.

“ Notes ” means, collectively, the Promissory Notes substantially in the form attached as Exhibit A hereto, and made by SPI to Welund in connection with each Advance.

“ Person ” means any natural person, corporation, trust, foundation, limited liability corporation, limited liability partnership, association, limited partnership, general partnership, or other entity, and their respective successors or assigns.

“ Revolving Loan Availability Period ” means the period from and including the Effective Date to and including February 28, 2007, unless extended by Welund, in its sole discretion, for additional terms.

“ Revolving Loan Commitment ” means the commitment of Welund to make one or more Revolving Loans hereunder during the Revolving Loan Availability Period, expressed as an amount representing the maximum aggregate principal amount of the Revolving Loans to be made by Welund which shall be outstanding at any one time hereunder. The aggregate amount of the Revolving Loan Commitment is $2,000,000.

“ Revolving Loans ” means the revolving loans made by Welund to the SPI pursuant to Section 3.

“ Security Agreement ” means a Security Agreement substantially in the form of Exhibit B between SPI, as the same shall be modified and supplemented and in effect from time to time.

“ Security Documents ” means, collectively, the Security Agreement, all California Commercial Code financing statements (Form UCC-1) and all other filings required by the Security Agreement to be filed with respect to the security interests in real property, personal property and fixtures created pursuant to the Security Agreement.

3.       Credit Facility . Advances and reports shall be governed by this Section 3.

(a)       The Commitments . Subject to the terms and conditions set forth herein, Welund agrees to make one or more Revolving Loans to the SPI during the Revolving Loan Availability Period up to the Revolving Loan Commitment subject to the terms and conditions set forth herein.

(b)       Notice by SPI . To request an Advance (other than any Advance on the date hereof or prior to the date hereof), SPI shall notify Welund of such request at least one (1) Business Day before the date of the proposed Advance. Each such request shall be irrevocable and shall be in a form approved by Welund and signed by the SPI.

(c)   Content of Advance Requests . Each telephonic and written request for an Advance shall specify the following information:

(d)       Funding of Advances . Welund shall make each Advance on the proposed date thereof by wire transfer of immediately available funds by 12:00 noon (P.S.T.), to the account of SPI as designated by it for such purpose in the request for Advance.

(e)       Termination and Reduction of the Commitments .

(i)     Scheduled Termination . Unless previously terminated, the Revolving Loan Commitments shall terminate at 5:00 p.m. (P.S.T.), on the last day of the Revolving Loan Availability Period.

(ii)     Voluntary Termination or Reduction . SPI may at any time terminate, or from time to time reduce, the Revolving Loan Commitments; provided that SPI shall not reduce or terminate the Revolving Loan Commitments if after giving effect to any concurrent prepayment of Advances, the Advances outstanding would exceed the total Revolving Loan Commitments.

(iii)     Notice of Voluntary Termination or Reduction . SPI shall notify Welund of any election to terminate or reduce the Revolving Loan Commitments under Section 3(e)(ii) of this Section at least three Business Days prior to the effective date of such termination or reduction, specifying such election and the effective date thereof. Each notice delivered by SPI pursuant to this Section shall be irrevocable.

(iv)     Effect of Termination or Reduction . Any termination or reduction of the Commitments shall be permanent.

(f)       Repayment of Advances; Evidence of Debt .

(i)       Repayment . SPI hereby unconditionally promises to pay to Welund the aggregate outstanding principal amount of the Advances and accrued interest on the Maturity Date.

(ii)     Maintenance of Records by Welund . Welund shall maintain in accordance with its usual practice records evidencing the Advances to SPI resulting from each Advance, including the amounts of principal and interest payable and paid to Welund from time to time hereunder.

(iii)     Effect of Entries . The entries made by Welund in its records maintained pursuant to Section 3(f)(ii) of this Section shall be prima facie evidence of the existence and amounts of the obligations recorded therein; provided that the failure of Welund maintain such records or any error therein shall not in any manner affect the obligation of SPI to repay the Advances in accordance with the terms of this Agreement.

(iv)     Promissory Notes . For each Advance, SPI shall prepare, execute and deliver to Welund a Note payable to Welund.

(g)       Prepayments .

(i)      Subject to the requirements of this Section, SPI shall have the right from time to time, on any Business Day, to prepay any Revolving Borrowings in whole or in part.

(ii)     SPI shall notify the President and Vice-President of Welund by telephone (confirmed by telecopy) of any prepayment hereunder not later than 12:00 noon (P.S.T.), three (3) Business Days before the date of prepayment. Each such notice shall be irrevocable and shall specify the Advances to be prepaid, the prepayment date, and the principal amount of such Advance.

(h)       Interest .

(i)         Advances . Each Advance shall bear interest at a rate per annum equal to the Applicable Rate.

(ii)       Payment of Interest . Accrued interest on the Advances shall be payable on the Maturity Date.

4.       Representations and Warranties of SPI .

As a material inducement to Welund to enter into and execute this Agreement and to perform its covenants, agreements, duties and obligations hereunder, and in consideration therefore, SPI hereby makes the following representations and warranties, each of which (i) is material and is being relied upon by Welund as a material inducement to enter into this Agreement and (ii) is true at and as of the date hereof.

(a)       Authority . SPI has full power and authority to enter into and perform its obligations set forth in this Agreement and to borrow and repay Advances under this Agreement.

(b)       Compliance with Laws, Etc . The execution and delivery of this Agreement and the drawing of Advances hereunder does not and will not violate any requirement of law or any contractual obligation of SPI.