8-K/A

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K/A

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): August 11, 2006

AKEENA SOLAR, INC.

(Exact Name of Registrant as Specified in Charter)

Delaware			333-130906			20-5132054
(State or other jurisdiction of incorporation)			(Commission File Number)			(IRS Employer Identification No.)

605 University Avenue Los Gatos, CA			95032
(Address of principal executive offices)			(Zip Code)

Registrant’s telephone number, including area code: (408) 395-7774

Fairview Energy Corporation, Inc.
585 Milsom Wynd
Delta, British Columbia
Canada V4M 2T6

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

[    ]	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

[    ]	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 DFR 240.14a-12)

[    ]	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

[    ]	Pre-commencement communications pursuant to Rule 13e-4 (c) under the Exchange Act (17 CFR 240.13e-4(c))

CURRENT REPORT ON FORM 8-K/A

AKEENA SOLAR, INC.

(f/k/a Fairview Energy Corporation, Inc.)

TABLE OF CONTENTS

								Page
Item 1.01.			Entry into a Material Definitive Agreement					1
Item 2.01.			Completion of Acquisition or Disposition of Assets					1
			Merger					2
			Description of Our Company					3
			Management’s Discussion and Analysis or Plan of Operations					24
			Risk Factors					30
			Security Ownership of Certain Beneficial Owners and Management					40
			Directors and Executive Officers					40
			Executive Compensation					43
			Certain Relationships and Related Transactions					43
Item 3.02.			Unregistered Sales of Equity Securities					44
Item 4.01.			Changes in Registrant’s Certifying Accountant					47
Item 5.01.			Changes in Control of Registrant.					48
Item 5.02.			Departure of Directors or Principal Officers; Election of Directors; Appointment of Principal Officers.					48
Item 5.03.			Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year					48
Item 5.06.			Change in Shell Company Status					48
Item 9.01.			Financial Statements and Exhibits					48

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EXPLANATORY NOTE

This Amendment No. 1 on Form 8-K/A to the Akeena Solar, Inc. Form 8-K originally filed with the Commission on August 14, 2006 (the ‘‘Form 8-K’’) is being filed solely to correct typographical errors in the Form 8-K and to include the lease for the registrant's main office in Los Gatos, California and a letter agreement, dated July 21, 2006, between the registrant's wholly owned subsidiary and Westminster Securities Corporation, as Exhibits 10.11 and 10.12 respectively.

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Item 1.01.    Entry into a Material Definitive Agreement

THE MERGER

On August 4, 2006, Fairview Energy Corporation, Inc., a Nevada corporation (‘‘Fairview-NV’’), was merged with and into Fairview Energy Corporation, Inc., a Delaware corporation (‘‘Fairview-DE’’), for the sole purpose of changing the state of incorporation to Delaware from Nevada pursuant to a Certificate of Ownership and Merger dated August 3, 2006 and approved by stockholders on August 3, 2006. Under the terms of the Certificate of Ownership and Merger, each share of Fairview-NV was exchanged for 1.084609 shares of Fairview-DE.

On August 11, 2006, Fairview-DE entered into an Agreement of Merger and Plan of Reorganization (the ‘‘Merger Agreement’’) by and among Fairview-DE, Akeena Solar, Inc., a privately held Delaware corporation (‘‘Akeena’’), and ASI Acquisition Sub, Inc., a newly formed wholly-owned Delaware subsidiary of Fairview-DE (‘‘Acquisition Sub’’). Upon closing of the merger transaction contemplated under the Merger Agreement (the ‘‘Merger’’), Acquisition Sub will be merged with and into Akeena, and Akeena will become a wholly-owned subsidiary of Fairview-DE. Pursuant to the terms of the Merger Agreement, following the Merger, Akeena’s name will be changed to ‘‘Akeena Corp.’’ and Fairview-DE will change its name to ‘‘Akeena Solar, Inc.’’

In addition, pursuant to the terms and conditions of the Merger Agreement:

	•	Each share of Akeena issued and outstanding immediately prior to the closing of the Merger will be converted into the right to receive one share of Fairview-DE common stock.

	•	3,656,488 shares of Fairview-DE common stock, which are registered under an SB-2 for resale, will remain outstanding and 3,877,477 shares of Fairview-DE outstanding common stock will be cancelled in connection with the Merger.

	•	Following the closing of the Merger and the Private Placement referred to below and the cancellation of 3,877,477 shares of Fairview-DE common stock, there will be up to 14,854,180 shares of Fairview-DE common stock issued and outstanding, approximately 55.2% of which shares will be held by the former stockholders of Akeena, or a greater percentage if a lesser amount is raised in the Private Placement (as defined below).

	•	Upon the closing of the Merger, each outstanding warrant to acquire Akeena’s capital stock will be assumed by Fairview-DE and will thereafter be exercisable for shares of Fairview-DE’s common stock.

	•	Fairview-DE will issue up to a maximum of $3,000,000 of its common stock, at $1.00 per share, in a private placement on terms acceptable to Akeena (the ‘‘Private Placement’’), in connection with the closing of the Merger.

	•	Immediately prior to the effective time of the Merger, Bruce Velestuk will resign as the sole director and officer of Fairview-DE and Acquisition Sub.

	•	Upon closing of the Merger, Fairview-DE’s board of directors will be reconstituted to consist initially of Barry Cinnamon, the sole existing director of Akeena.

	•	Each of Fairview-DE and Akeena provided customary representations and warranties, pre-closing covenants and closing conditions, including approval of the Merger by Akeena’s stockholders.

As of the date of the Merger Agreement and currently, there are no material relationships between Fairview-DE or any of its affiliates and Akeena, other than in respect of the Merger Agreement.

The foregoing description of the Merger Agreement does not purport to be complete and is qualified in its entirety by reference to the complete text of the Merger Agreement, which is filed as Exhibit 2.1 hereto and incorporated herein by reference.

Item 2.01.    Completion of Acquisition or Disposition of Assets

As used in this Current Report on Form 8-K, all references to the ‘‘Company,’’ ‘‘we,’’ ‘‘our’’ and ‘‘us’’ for periods prior to the closing of the Merger refer to Akeena, and references to the ‘‘Company,’’

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‘‘we,’’ ‘‘our’’ and ‘‘us’’ for periods subsequent to the closing of the Merger refer to Fairview-DE and its subsidiaries. Information regarding the Company, Akeena and the principal terms of the Merger are set forth below.

MERGER

The Merger.    On August 11, 2006, Fairview-DE entered into the Merger Agreement with Akeena and Acquisition Sub. Upon closing of the Merger on August 11, 2006, Acquisition Sub was merged with and into Akeena, and Akeena became a wholly-owned subsidiary of Fairview-DE. Pursuant to the terms of the Merger Agreement, Fairview-DE changed its name to ‘‘Akeena Solar, Inc.’’ and Akeena changed its name to ‘‘Akeena Corp.’’

Pursuant to the Merger Agreement, at closing, stockholders of Akeena received one share of Fairview-DE’s common stock for each issued and outstanding share of Akeena’s common stock. As a result, at closing Fairview-DE issued 8,197,692 shares of its common stock to the former stockholders of Akeena, representing approximately 57.0% of Fairview-DE’s outstanding common stock following (1) the Merger, (2) the closing of the Private Placement for $2,527,500 and (3) the cancellation of 3,877,477 shares of Fairview-DE common stock, in exchange for 100% of the outstanding capital stock of Akeena. In connection with the closing of the Merger, Fairview-DE completed the closing of the Private Placement and received gross proceeds of $2,527,500. See Item 3.02 below.

In connection with the Merger, 3,877,477 shares of Fairview-DE common stock were cancelled. As a result, 3,656,488 shares of our common stock were outstanding immediately prior to the closings of the Merger and the Private Placement. The 3,656,488 shares constituted Fairview-DE’s ‘‘public float’’ prior to the Merger and will continue to represent the shares of our common stock held for resale without further registration by the holders thereof until such time as the applicability of Rule 144 or other exemption from registration under the Securities Act permits additional sales, or a further registration statement has been declared effective. Pursuant to the plan of distribution described in a registration statement on Form SB-2 filed for Fairview-NV, the registered public float shares may be sold by the holders in one or more transactions, including block transactions, on such public markets or exchanges as the common stock may from time to time be trading or listed for quotation, in privately negotiated transactions or in any combination of these methods of distribution and as otherwise described in the Form SB-2.

Pursuant to the Merger, the Company assumed all of Akeena’s obligations under its outstanding warrants. At the time of the Merger, Akeena had outstanding warrants to purchase an aggregate of 1,000,000 shares of common stock, which outstanding warrants were converted into warrants to purchase the same number of shares of Fairview-DE’s common stock as provided in the Merger Agreement. Neither Fairview-DE nor Akeena had any options or other warrants to purchase shares of capital stock outstanding immediately prior to the Merger.

The shares of Fairview-DE’s common stock issued to former holders of Akeena’s capital stock in connection with the Merger, and the shares of Fairview-DE’s common stock issued in the Private Placement, were not registered under the Securities Act of 1933, as amended (the ‘‘Securities Act’’), in reliance upon the exemption from registration provided by Section 4(2) of the Securities Act and Regulation D promulgated under that section, which exempts transactions by an issuer not involving any public offering. These securities may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements. Certificates representing these shares contain a legend stating the same.

Prior to the announcement by the Company relating to the possibility of entering into the Merger, there were no material relationships between Fairview-NV, Fairview-DE or Akeena, or any of their respective affiliates, directors or officers, or any associates of their respective officers or directors.

Changes Resulting from the Merger.    The Company intends to carry on Akeena’s business as its sole line of business. The Company has relocated its executive offices to 605 University Avenue, Los Gatos, CA 95032 and its telephone number is (408) 395-7774.

Pre-Merger stockholders of Akeena will not be required to exchange their existing Akeena stock certificates for certificates of Fairview-DE, since the OTC Bulletin Board, where the Company’s

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common stock is approved for quotation, will consider the existing stock certificates as constituting ‘‘good delivery’’ in securities transactions subsequent to the Merger. The American Stock Exchange and NASDAQ Stock Market, where the Company intends to apply to list its common stock for trading as soon as is practicable, will also consider the submission of existing stock certificates as ‘‘good delivery.’’ The Company cannot be certain that it will receive approval to list its common stock on any exchange or market.

The Merger and its related transactions were approved by the holders of a requisite number of shares of Akeena’s capital stock by written consent on August 11, 2006. Under Delaware corporate law, Akeena’s stockholders who did not vote in favor of the Merger may demand in writing, pursuant to the exercise of their appraisal rights, that Akeena pay them the fair value of their shares. Determination of fair value is based on all relevant factors, except for any appreciation or depreciation resulting from the anticipation or accomplishment of the Merger.

Changes to the Board of Directors.    Immediately prior to the effective time of the Merger on August 11, 2006, Bruce Velestuk resigned as the sole director and executive officer of Fairview-DE and Acquisition Sub. Pursuant to the terms of the Merger Agreement, Barry Cinnamon was elected as the sole director of Fairview-DE and the sole director of Akeena, effective at the closing of the Merger.

All directors hold office for one-year terms until the election and qualification of their successors. Officers are elected by the board of directors and serve at the discretion of the board.

Accounting Treatment; Change of Control.    The Merger is being accounted for as a ‘‘reverse merger,’’ since the stockholders of Akeena own a majority of the outstanding shares of Fairview-DE common stock immediately following the Merger. Akeena is deemed to be the acquirer in the reverse merger. Consequently, the assets and liabilities and the historical operations that will be reflected in the financial statements prior to the Merger will be those of Akeena and will be recorded at the historical cost basis of Akeena, and the consolidated financial statements after completion of the Merger will include the assets and liabilities of Fairview-DE and Akeena, historical operations of Akeena and operations of Fairview-DE from the closing date of the Merger. Except as described in the previous paragraphs, no arrangements or understandings exist among present or former controlling stockholders with respect to the election of members of the Company’s board of directors and, to our knowledge, no other arrangements exist that might result in a change of control of the Company. Further, as a result of the issuance of the shares of Fairview-DE’s common stock pursuant to the Merger, a change in control of the Company occurred on the date of consummation of the Merger. Fairview-DE will continue to be a ‘‘small business issuer,’’ as defined under the Securities Exchange Act of 1934, as amended (the ‘‘Exchange Act’’), following the Merger.

DESCRIPTION OF OUR COMPANY

Fairview-NV was formed as a Nevada corporation on July 29, 2005 for the purpose of commencing business operations in the hydro-electric energy sector by identifying and developing ‘‘run-of-river’’ projects in British Columbia. ‘‘Run-of-river’’ hydro-electric projects involve the diversion of water in a river or stream into a pipe that runs downhill. A turbine is installed at the end of the pipe which turns when water travels through the pipe. The turbine is attached to a generator, which produces electricity that is fed into a power grid for consumer and commercial use. Fairview-NV had been a development stage company since its inception. On August 4, 2006, Fairview-NV merged into Fairview-DE for the sole purpose of reincorporating in the State of Delaware.

Akeena is engaged in the design, integration and installation of solar power systems for commercial and residential applications. Akeena was incorporated in the State of California on February 23, 2001 under the name ‘‘Akeena, Inc.’’ On June 2, 2006, Akeena merged into Akeena Solar, Inc., a Delaware corporation, for the sole purpose of reincorporating in the State of Delaware.

After the Merger, the Company succeeded to the business of Akeena as its sole line of business.

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DESCRIPTION OF OUR BUSINESS

All references to the ‘‘Company,’’ ‘‘we,’’ ‘‘our’’ and ‘‘us’’ for periods prior to the closing of the Merger refer to Akeena, and references to the ‘‘Company,’’ ‘‘we,’’ ‘‘our’’ and ‘‘us’’ for periods subsequent to the closing of the Merger refer to Fairview-DE and its subsidiaries.

Company Overview

Akeena is a designer and integrator of solar power systems. We market, sell, design and install systems for customers, sourcing components (such as solar modules and inverters) from manufacturers such as Sharp, Kyocera, SunPower and Fronius. We currently service customers in California, New York, New Jersey, Pennsylvania and Connecticut. According to data compiled by the California Energy Commission and the New Jersey Clean Energy Program, over the past three years Akeena has been one of the largest national integrators of residential and small commercial solar electric power systems in the United States. To date, we have installed over 500 solar power systems.

Our philosophy is simple: we believe that producing clean electricity directly from the sun is the right thing to do for our environment and economy. Since our founding, we have concentrated on serving the solar power needs of residential and small commercial customers tied to the electric power grid.

According to SolarBuzz, a research and consulting firm, these market segments represent about 65% of the U.S. market, and will continue to do so through 2010. The global solar power market, as defined by solar power system installations, had an estimated $10 billion in revenue in 2005 and is expected to grow to $19 billion by 2010. Although other solar technologies – such as pool heating, solar domestic hot water and off-grid systems – provide excellent customer benefits, we believe that we will be most successful by maintaining our focus on the solar power needs of residential and small commercial customers.

Maintaining this focus enables us to concentrate our efforts on what we consider to be the three factors most important for success in this rapidly growing industry:

	•	Developing proprietary solar power installation technology optimized for these market segments

	•	Leveraging and enhancing the Akeena brand name and reputation

	•	Utilizing a process-driven approach to sell and install solar power systems efficiently in multiple locations with guidance from our experienced management team

Akeena was originally formed in February 2001 as a California corporation under the name, ‘‘Akeena, Inc.’’ and subsequently re-domiciled to Delaware in June 2006, at which time it changed its corporate name to ‘‘Akeena Solar, Inc.’’ In December 2002, we moved our corporate headquarters to Los Gatos, California. We currently maintain offices with installation personnel and stocked warehouses at our Los Gatos facility and in Fairfield, New Jersey. We commenced our operations in 2001, and sales grew steadily each year to a level of approximately $7.1 million in 2005. We have been profitable in every full year of operation.

Our professionals are passionate about the environment. Several key management personnel started their careers in the solar industry in the 1970s and 1980s. As a result of this solar enthusiasm – and because public policy continues to be a key driver of the solar industry – Akeena is an active participant in government relations aspects of the solar energy industry. We are a member of the Solar Energy Industry Association, the California Solar Energy Industries Association, the Northern California Solar Energy Association, the Independent Power Providers, the Solar Energy Business Association of New England and the New York Solar Energy Industries Association. In December 2005, our CEO, Barry Cinnamon, was elected President of the California Solar Energy Industries Association, the largest state solar organization in the country. In addition, Akeena is an active member of the communities that it currently serves and is a member of the Silicon Valley Leadership Group and the Los Gatos Chamber of Commerce.

Akeena focuses on the residential and small commercial market segments of the solar power industry. We believe that over the next few years in the U.S. these market segments will grow steadily

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and will provide good opportunities for us to sell our products and services. The ways in which these market segments relate to the Solar Power industry in general, as well as the overall electric power industry and other renewable energy industry segments, are explained in the following sections.

Electric Power Industry

Electricity is used to operate businesses and industries, provides the power needed for homes and offices, and provides the power for our communications, entertainment, transportation and medical needs. As our energy supply and distribution mix changes, electricity is likely to be used more for local transportation (electric vehicles) and space/water heating needs. According the Edison Electric Institute, the electric power industry in the U.S. is over $218 billion in size, and will continue to grow with our economy.

According to the U.S. DOE, total net generation of electricity in the U.S. is 3.72 trillion kWh. This electricity was generated from coal 51%, nuclear 21%, gas 16%, hydro 6%, and oil 3%, with renewables contributing 3%. According to the International Energy Agency, global energy needs are likely to continue to grow steadily for at least the next two-and-a-half decades. If governments stick with current policies the world’s energy needs would be more than 50% higher in 2030 than today. Over 60% of that increase would be in the form of oil and natural gas. As a result, the electric power industry faces the following challenges in meeting these demands, both on a national and worldwide basis:

Limited Energy Supplies

The primary fuels that have supplied this industry – fossil fuels in the form of oil, coal and natural gas – are limited on a worldwide basis. Worldwide demand is increasing at a time that industry experts have concluded that supply is limited. According to many industry experts, we are at or near the time of Peak Oil – the point in time when extraction of oil from the earth reaches its highest point and then begins to decline Many of the world’s leading geologists and oil industry consultants have calculated that global production of crude oil from existing and known recoverable reserves (the current lifeblood of the global economy), will likely peak between year 2010 and 2020 (source: The Hydrogen Economy, Penguin Putnam Inc.). When we reach this supply-constrained point, increases in demand mean increases in price – making it more likely that long term average costs for electricity will continue to increase.

Generation, Transmission and Distribution Infrastructure Costs

Historically, electricity has been generated in centralized power plants; transmitted over high voltage lines; and distributed locally through lower voltage transmission lines and transformer equipment. As our electricity needs increase these systems need to be expanded to provide power to the end consumer. However, investments in these systems have lagged, increasing the likelihood of power shortages (‘‘brownouts’’ and ‘‘blackouts’’) – and have highlighted the need for further electric infrastructure investments.

Energy Security

Purchasing oil and natural gas from unstable regions of the world increases our risks of supply shortages and cost increases. The U.S. experienced these shortages directly in the 1970s, and in light of continued instability among the major fossil fuel supplying countries we are likely to experience more shortages in the future. Establishing stable, long-term supplies of energy from domestic sources is an effective way to improve our energy security.

Environmental Concerns and Climate Change Risks

The electric power industry has been successful in reducing harmful emissions – including particulates and green house gases – from their power plants. Nevertheless, these concerns persist as our society strives to make further improvements in our environment. In addition, there is growing

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consensus that man-made emissions are causing global warming. Regardless of the scientific certainty of this consensus, the electric power industry is being forced to react to these concerns. The Kyoto Protocol directs nations to reduce their greenhouse gas emissions; various U.S. states have or are enacting stricter emissions control laws; and utilities in several states are being required to comply with Renewable Portfolio Standards (RPS), requiring them to purchase a certain amount of power from renewable sources. The net result of these emissions controls and climate change risks is that generating power from traditional fossil fuel sources – which contribute to these problems – becomes increasingly expensive and raises electric rates.

The risks and threats to the electric power industry are generally contributing factors to the expected growth of the renewable energy industry, as described below.

Renewable Energy Industry

The renewable energy industry typically refers to non-traditional energy sources, including biomass, solar, wind, geothermal, and hydroelectric. With the exception of geothermal energy (which is based on heat within the earth), these renewable resources are generally based on energy transmitted to the earth by sunlight. For example, biomass fuels are based on photosynthesis from the sun; wind power is based on currents generated by the sun’s heating of the earth surface; and hydroelectric is based on evaporative water cycles generated by the sun.

Fossil fuels – including oil, coal and natural gas – were also originally created with photosynthesis from the sun, but these biomass sources then decomposed into purer hydrocarbon forms after millions of years of temperature and pressure. Fossil fuels are therefore not renewable. Moreover, since fossil fuels are carbon-based, they generate green house gases during combustion.

According to the Electrical Industry Association, conventional hydropower remains the largest source of renewable generation through 2030. However, a lack of untapped large-scale sites, coupled with environmental concerns, limits its growth, and its share of total generation falls from 6.8 percent in 2004 to 5.1 percent in 2030. Electricity generation from nonhydroelectric alternative fuels increases, however, bolstered by technology advances and State and Federal supports. Small-scale customer sited solar power applications are expected to grow rapidly.

Solar energy is the underlying energy source for renewable fuel sources. By extracting energy directly from the sun and converting it into an immediately usable form – either as heat or electricity – intermediate steps are eliminated. In this sense solar energy is one of the most elegant, direct and unlimited energy sources.

Solar energy can be converted into usable forms of energy either through the photovoltaic effect (generating electricity from photons) or by generating heat (solar thermal energy). Solar thermal systems include traditional domestic hot water collectors (DHW), swimming pool collectors, and high temperature thermal collectors (used to generate electricity in central generating systems). DHW thermal systems are typically distributed on rooftops so that they generate heat for the building on which they are situated. High temperature thermal collectors typically use concentrating mirror systems, and are typically located in remote sites.

Within the Alternative Energy Industry, solar power provides substantial and unique benefits, as described below.

Solar Power Industry

Solar power is the generation of electricity from solar cells using the photovoltaic effect. Electricity is generated directly from sunlight, without being converted into heat. This direct conversion of light to energy offers the following benefits compared to conventional energy sources:

Environmental – solar power is one of the cleanest ways of generating electricity. There are no harmful green house gas emissions, no wasted water, no noise, no waste generation and no particulates.

Reduced Fuel Risk – once a solar power system is installed the cost of generating electricity is fixed over the lifespan of the system. There are no risks that fuel prices will escalate or fuel shortages will develop.

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Offset Energy Peaks – as a result of air conditioning usage, most utility districts experience their highest energy demands and highest energy costs on sunny afternoons. Solar power systems produce their maximum power on these sunny days. Wind energy systems typically generate power during off-peak times.

Distributed Generation – solar power systems can be sited right on the building in which the power is to be used. Many buildings have abundant roof space or nearby ground space. By installing the solar power system at a customer’s site, electrical transmission and distribution losses and costs are drastically reduced. Unlike wind generating systems, solar power systems are widely accepted in urban and suburban areas.

Retail Rate Cost Offsets – solar power systems at customer sites generally qualify for net metering operation. Energy generated from such systems generally goes to offset a customer’s highest electric rate tiers and is credited at the retail – as opposed to the wholesale – electric rate.

Flexibility – solar power systems can be installed on a wide range of building types and customer sites. Solar modules can be mounted on small residential roofs, on the ground, on covered parking structures and can be used to cover the rooftops of large industrial buildings.

Low Maintenance – solar power systems have few if any moving parts. Solar modules are generally guaranteed to operate for 25 years. Maintenance and/or operating costs for solar power systems are low and reliability is high compared to other forms of power generation.

Escalating fuel costs, environmental concerns and energy security make it likely that the demand for solar power systems will continue to grow. The Federal government, and several states (primarily California and New Jersey) have put a variety of incentive programs in place that directly spur the installation of grid-tied solar power systems. This backdrop of fundamental energy industry forces explains why solar power demand has grown consistently by 20-25% per year over the past 20 years, according to Solarbuzz.

The following chart from Solarbuzz shows the size of the installation market worldwide, expressed in terms of total megawatts installed, for each of the years 1990 through 2005:

The worldwide market is estimated to be $10 billion in revenue in 2005, and is expected to grow to $19 billion by 2010, according to Solarbuzz. According to Navigant, the U.S. grid connected market is expected to grow at an average annual rate of 28% from 2005-2011. As shown in the chart below, the United States accounted for 7% of the worldwide market for solar power installations, with Germany and Japan leading with 57% and 20%, respectively. In the future, the United States market is expected to grow to be the largest solar power market in the world, according to Ron Kenedi, Vice President for Sharp’s Solar Energy Solutions Group, which is currently the world’s largest manufacturer of solar panels.

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Solar Power Industry Value Chain

Akeena is active in the Solar Power Industry as a designer and integrator – a segment which is distinct from other points along the solar value chain. The solar value chain includes companies engaged in several different activities, as follows:

	•	Silicon Refiners – companies that produce refined silicon, a material that has historically been used as the primary ingredient for solar panels. In light of the current shortage of silicon, it is possible that other materials may be used as the primary ingredient in the future.

	•	Wafer and Cell Manufacturers – companies that manufacture the electricity generating solar cells.

	•	Module Manufacturers – companies that assemble the cells into solar modules, generally laminating the cells between glass and plastic film, and attaching the wires and module frame.

	•	Distributors – companies that purchase from manufacturers and resell to designers/integrators and other equipment resellers.

	•	Designer/Integrator – companies (such as Akeena) that sell products to end user customers, and purchase primarily from manufacturers or from distributors.

In many cases there is overlap within this value chain – some companies are vertically integrated (going from refining silicon to manufacturing modules) – and some companies just specialize in one segment of the value chain (such as silicon refining or distribution).

Residential and Small Commercial Market Segments

According to the DOE, the average U.S. home in 2025 is expected to be 6% larger, and to use more electricity more intensively. The growth in demand for energy services and primary energy use per capita is projected to increase by 0.7% per year each year through 2025. Residential and small commercial installations are expected to account for the largest segments of the U.S. market, as illustrated by the following chart from Solarbuzz:

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In addition, according to PV News, California and New Jersey currently account for 90% of the U.S. residential market. We believe this is largely attributable to the fact that they currently have the most attractive incentive programs. According to DSIRE (the Database of State Incentives for Renewable Energy) at least 18 other states also have incentive programs. We expect that such programs, as well as Federal tax rebates and other incentives, will continue to drive growth in the solar power market for the near future.

The solar power design/integration and installation industry is highly fragmented, with many small companies. We believe that the market will consolidate based mostly on branding, technology and process advantages. Accordingly, we believe that the main factors necessary for successfully competing in the industry will be the development of proprietary technologies that provide cost advantages and efficiencies for systems integrators; brand name and reputation; and professional, process-driven management.

Solar Power Benefits

Solar power systems benefit two major stakeholders, the individual customer who installs the system, and the public at large. These benefits are described in more detail below.

Customer Benefits

Economic – Solar power systems save residential and business customers money on their electrical bills. Cash paybacks for systems, when considering various incentives, range from 5 to 25 years. Paybacks can be on the low end of this range in areas in which the combination of state and Federal incentives are high, electric rates are high, annualized sun intensity is high and installation costs are low. For many systems, Net Present Values on solar power investments are positive, and Returns on Investment can be in excess of 15%. When considered on a cash flow basis with financing, many customers can install a solar power system and achieve immediate monthly positive cash flows (reductions in electric costs are more than the after tax borrowing costs of the system).

At current prices and installation costs – and without considering incentives – a typical residential solar power system produces electricity for approximately $0.25 per kwh over the reasonable expected lifetime of the system. Incentives can defray a large portion of these initial costs, bringing the net cost of electricity produced by a solar power system to approximately $0.15 per kwh. Traditional power sources currently charge anywhere from $0.11 to $0.39 per kwh, often with rates increasing as usage increases. At these comparative levels, solar power competes favorably with conventional utility power – and since at some later date electricity costs (and related environmental expenses) will increase, we believe solar power systems are likely to become an economically sound investment even without the incentives.

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Environment – Solar power systems are one of the most environmentally friendly way of generating electricity. According to the EPA, a typical 6kw solar energy system in New Jersey will save 32 pounds of nitrogen oxides (NO) each year, 44 pounds of sulfur dioxide (SO2) each year and 17,199 pounds of carbon dioxide (CO2) each year – equivalent to the CO2 absorption of two acres of trees. The environmental benefits of solar power systems will continue for the lifetime of the system.

Energy Security – The U.S. purchases much of its fossil fuel energy from unstable regions of the world. Producing power directly from sunlight – and using that power at the same site – improves energy security both on an international level (by reducing fossil energy purchases from hostile countries) and local level (by reducing power strains on local electrical transmission and distribution systems).

Public Policy Benefits

In August 2005, Akeena completed a White Paper entitled ‘‘The Economics of Solar Power for California.’’ This White Paper was done in conjunction with Crossborder Energy, California Solar Energy Industries Association (CAL SEIA), students at the Stanford Masters of Management Science and Engineering School and the Wharton School of the University of Pennsylvania, and Coast Hills Partners. The purpose of this White Paper was to quantify and communicate the net costs and benefits of California’s ambitious Million Solar Roofs initiative.

The primary benefit of the Million Solar Roofs Initiative – now called the California Solar Initiative or CSI – is that it reduces California’s power needs during hot summer weekday afternoons. Without this 3,000 Megawatts of solar capacity, utilities must construct this generation, distribution and transmission infrastructure, as well as operate and fuel these plants. Ratepayers will ultimately pay for these costs.

It is a key finding of this White Paper that California Solar Initiative will save in excess of $6 billion net of incentives over the ten year duration of the initiative, primarily by avoiding additional investments in traditional power generation and distribution systems. Moreover, these savings are likely to be substantially higher as fuel prices are likely to escalate faster than the 3% assumed in this analysis. These costs and savings of this initiative are detailed below.

Energy Infrastructure – $7.1 billion will be saved in avoided costs for construction of additional energy infrastructure. These costs are primarily for building power plants, transmission lines, distribution systems and operating costs. Solar power systems installed and operating at customer sites replace this new infrastructure.

Economy – $1.5 billion will be saved by creating jobs and tax revenues. These jobs and tax revenues result from a robust solar industry in California – which is preferable to continuing to purchase fuel from overseas sources.

Environment – $500 million will be saved by reducing greenhouse gas emissions. These savings were based on historic costs for greenhouse gases; such savings are likely to be higher in the future as the fully-weighted costs of these emissions are considered.

According to the California Public Utilities Commission, The California Solar Initiative is expected to cost the state approximately $3.2 billion over an eleven year period. With net savings of $6 billion, there is approximately a two to one ratio of savings to costs for this program, providing a strong foundation for good public energy policy.

We believe that a similar cost-benefit result applies to the U.S. economy in general, and that these savings are likely to be even higher when one considers continued energy price escalation, energy independence costs and world environmental costs. As a result, there is a strong financial and moral foundation for continued expansion in solar power public policy programs, both on a state and Federal level.

Solar Power Public Policy

State and Federal governments realize that solar power can make a valuable contribution to our energy shortage, environmental situation and economy. As a result, a variety of public policy

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mechanisms have been used to stimulate demand for solar power. The general intention of these various incentive mechanisms has been to overcome the relatively high capital costs of these systems – encouraging residential, business and government customers to ‘‘purchase’’ their own power generating system rather than ‘‘renting’’ their power from a local utility. The following section provides an overview of some of the public policies in use or contemplated for the markets in which Akeena installs systems.

Rebates – are payments made to customers (or to installers) to reduce the initial cost of the solar power system. These rebates are generally based on the size of the system. California, New Jersey, New York, Connecticut and other states have rebates that can substantially reduce initial costs.

Tax Credits – are generally income tax offsets, directly reducing ordinary income tax payments. New York currently offers a state tax credit, and California has offered these credits in past years. There is currently a 10% Federal Tax Credit up to $2,000 for residential systems, and a 30% Federal Tax Credit (with no cap) for business systems. There is currently a proposed increase in the Federal Tax Credit for residential systems to $2,000 per kw (a typical residential system is about 5 kw). We believe that the likely effect of this increased Federal Tax Credit is to spur consumer interest in residential solar power systems, although this increased interest may be mitigated by a reduction in various state rebates and other incentives.

Accelerated Depreciation – solar power systems installed for businesses (including applicable home offices) are generally eligible for accelerated depreciation, thereby reducing a business’ tax payments.

Net Metering – by giving customers the full retail credit for energy that they generate, net metering can provide a substantial and easily measured incentive to customers. For example, customers in California who are in the high utility rate tiers may be paying in excess of $0.35 per kwh of energy that they consume; their solar power systems would directly offset these costs based on their actual energy generation.

Feed-in Tariffs – are additional credits given to consumers based on how much energy their solar power system generates. These tariffs can be used in conjunction with or independently of net metering. California is contemplating a feed-in tariff for large systems, beginning in 2007.

Renewable Portfolio Standards (RPS) – are requirements for utilities to ensure that a certain percentage of power they deliver is generated from renewable energy sources.

Renewable Energy Credits (RECs) – are additional credits provided to customers based on the amount of renewable energy they produce. New Jersey has a REC program in place that is expected to pay customers an additional $0.18 per kwh generated by their systems (this payment to customers may vary in the future as more solar resources come on line in New Jersey).

Solar Rights Acts – are laws passed by governments to prevent unreasonable restrictions on solar power systems. California’s Solar Rights Act has been updated several times in past years to make it easier for customers of all types and in all locations to install a solar power system.

California Solar Program

A recent example of these policy mechanisms is the California Solar Initiative, which provides $3.2 billion of incentives toward solar development over 11 years. In January 2006 the initiative was approved by the California Public Utilities’ Commission, or CPUC, and will be implemented by CPUC and the California Energy Commission. The goal of the initiative is to achieve 3,000 megawatts of solar power in the state by 2017. Declining rebates and performance based incentives are used to stimulate consumer demand to install these systems. It is important to note that although this program is approved, it is possible that regulatory, administrative or other problems may delay or interrupt the installation of this expected amount of solar capacity.

New Jersey Solar Program

In April 2006 the New Jersey Board of Public Utilities (BPU) approved new regulations that will require the state’s electric utilities to draw on wind power, solar power, and sustainable biomass power

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for 20 percent of their electricity by 2020. As part of these requirements, the new regulations require solar photovoltaic power to provide 2 percent of the state’s electricity needs by 2020, requiring the installation of 1,500 megawatts of solar electric power. It is important to note that although this program is approved, it is possible that regulatory, administrative or other problems may delay or interrupt the installation of this expected amount of solar capacity.

Solar Power Systems

Solar Power Systems convert the energy in sunlight directly into electrical energy. This conversion is accomplished within solar cells based on the photovoltaic effect. Multiple solar cells, which produce DC power, are electrically interconnected into solar modules. A typical 180 watt solar module may have 72 individual solar cells. Multiple solar modules (also referred to as solar panels) are electrically wired together. The number of solar modules installed on a building are generally selected to meet that building’s annual electrical usage, or selected to fill available unshaded roof or ground space. Solar modules are electrically wired to an inverter, which converts the power from DC to AC and interconnects with the utility grid. The following diagram schematically shows a typical solar power system:

Akeena concentrates on the design and integration of grid-tied solar power systems. These are systems that are electrically connected to the utility grid so that excess energy produced during the day flows backwards through the utility’s electric meter – actually running the electric meter backwards. The meter will run backwards when the power produced by the solar system is greater than the power needs of the building. During the evenings or on cloudy days energy is drawn from the grid normally and the meter runs forwards. Most utilities serving the areas in which Akeena installs systems allow for ‘‘net metering.’’ Customers on net metering only pay for the net amount of energy they consume during the year, essentially getting full retail credit for the energy they transmit back onto the utility grid during the day. Akeena typically does not install off-grid systems (systems in which there is no utility service, such as a remote cabin), nor do we typically install battery backup systems or solar thermal systems.

Metrics, Costs and Savings of a Solar Power System

Solar power systems are rated in watts. A typical small California system is 3,000 watts, or 3 kw, measured at peak DC wattage output. Systems are also measured in AC watts; such a system would typically have a rating of approximately 2.5 kw in California.

According to the EIA, the average U.S. household consumed approximately 10,600 kwh (kilowatt hours) of electricity per year. An efficiently installed California system produces about 1.4 kwh per

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installed kw per year, so to produce the amount of energy required for a typical house the solar power system would require a peak DC wattage output of about 7.5 kw.

A system of this size would cost approximately $64,000 to install. Considering applicable rebates and tax incentives, this system would cost approximately $44,000 in California and $29,000 in New Jersey. Annual savings in utility bills (and Renewable Energy Credits in New Jersey) would be approximately $1,800 in California and $2,800 in New Jersey, with cash breakevens (assuming continued electric cost increases of 7% per year) of 9 years and 6 years. The above examples are for illustrative purposes and may not reflect actual customer experiences, and regulatory incentives eliminated or reduced.

Solar Electric Cells

Solar electric cells convert light energy into electricity at the atomic level. Although first discovered in 1839, the process of producing electric current in a solid material with the aid of sunlight wasn’t truly understood for more than a hundred years. In the second half of the 20th century, the principles underlying the photovoltaic effect were determined and the manufacturing processes were more fully refined. As a result, the cost of these devices has put them into the mainstream of modern energy producers. This was caused in part by advances in the technology, which have considerably improved solar electric conversion efficiencies, and in part by improvements in manufacturing the other components in a system.

The conversion efficiency of a solar electric cell is defined as the ratio of the sunlight energy that hits the cell divided by the electrical energy that is produced by the cell. By improving this efficiency, solar electric energy becomes competitive with fossil fuel sources. For comparison, the earliest solar electric devices converted about 1%-2% of sunlight energy into electric energy. Today’s solar electric devices convert 5%-25% of light energy into electric energy (note that overall efficiency for solar modules is lower than solar cells because of the module frame and gaps between solar cells). Moreover, today’s mass produced panel systems are substantially less expensive than earlier systems.

The ‘‘photovoltaic effect’’ is the basic physical process through which a solar electric cell converts sunlight into electricity. Sunlight is composed of photons, or particles of solar energy. These photons contain various amounts of energy corresponding to the different wavelengths of the solar spectrum. When photons strike a solar electric cell, they may be reflected or absorbed, or they may pass right through. Only the absorbed photons generate electricity. When this happens, the energy of the photon is transferred to an electron in an atom of the solar electric cell (which is actually a semiconductor). With its newfound energy, the electron is able to escape from its normal position associated with that atom to become part of the current in an electrical circuit. By leaving this position, the electron causes a ‘‘hole’’ to form. Special electrical properties of the solar electric cell – a built-in electric field – provide the voltage needed to drive the current through an external load (such as a light bulb).

The most important parts of a solar electric cell are the semiconductor layers, because this is where the electron current is created. There are a number of different materials suitable for making these semiconductor layers. In addition, solar electric cells contain a metallic grid or other electrical contact to collect electrons from the semiconductor and transfer them to the external load and a back contact layer to complete the electrical circuit. A glass cover or other type of transparent encapsulant is used to seal the cell and keep weather out and an antireflective coating keeps the solar electric cell from reflecting the light away.

A great deal of effort is being directed towards the development of new solar cell technology, both in regards to reduced per watt costs and higher area efficiencies. Technologies that are being pursued include crystalline silicon (similar to existing cell technology), amorphous silicon (thin coatings of silicon), new photovoltaic materials often applied in thin films (cadmium telluride, copper indium gallium selenide, CIS, and various organic materials) and concentrators. It is important to note that regardless of the cell technology used in the future, the design/integration services that Akeena provides will still be needed by most customers. Moreover, we believe that the lower area efficiency of these new solar cell materials make Akeena’s installation technology more useful.

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Solar Modules

Solar electric modules (also referred to as solar panels) are composed of multiple solar cells, along with the necessary internal wiring, aluminum and glass framework, and external electrical connections. Modules range in power from about 50 watts up to 300 watts. Modules with output greater than about 225 watts are difficult to handle by one person and inconvenient to ‘‘tile’’ onto constrained roof spaces. Although modules are usually installed on top of a roof or on an external structure, certain designs include the solar electric cells as part of traditional building materials – such as shingles and rolled out roofing.

Several companies offer solar electric cells that have been integrated with traditional shingles. Theoretically, these can be a good choice for new construction and major renovations since they slightly offset costs for other building materials – although they are still more expensive than traditional modules. They are quite appealing from an architectural standpoint, and are usually most compatible with masonry roofs.

Solar electric cells can also be integrated with metal seam roofing, either as part of pre-fabricated panels or field-applied rolled out adhesive cell material. Interconnections among modules and other system components are usually done at the peak of the roof or under the eaves. Solar electric modules that are integrated with skylights and window walls are also available, as are modules that are integrated with other types of roofing materials.

Mounting Systems

Solar module manufacturers typically put a great deal of engineering effort into the modules themselves. Historically they have left the mounting and installation of these modules up to the designer/integrator. Current installation industry practices generally involve installing an aluminum (or other corrosion-resistant) metal racking system between the roof surface and the solar modules. This racking system is securely attached to the underlying roof surface, and the attachment points are sealed to minimize the chances of water leakage. These racks are generally fabricated from extruded aluminum with slots or channels so that the racks can be attached anywhere to an underlying rafter, and so that modules can be attached anywhere along the top surface of the rack. Solar modules are generally attached to the racks using a series of metal bolts and clips. By mounting the solar modules on a separate racking system, the solar modules are elevated three or four inches above the roof surface. Similar racking systems are used for ground mounted and commercial roof mounted systems.

Inverters

Inverters convert the DC power from solar modules to the AC power used in buildings and supplied by utilities. Grid-tie inverters synchronize to utility voltage and frequency, and only operate when utility power is stable (in the case of a power failure these grid-tie inverters shut down to safeguard utility personnel from possible harm during repairs). Inverters also operate to maximize the power extracted from the solar modules, regulating the voltage and current output of the solar array based on sun intensity.

Balance of System Components

This industry term, or BOS, generally refers to the module racking system, inverters, wiring systems and various electrical disconnects and switches necessary to install a code-compliant solar power system.

Monitoring

There are two basic approaches that one can take to access information on the performance of a solar power system. We believe that the most accurate and reliable approach is to collect the solar power performance data locally from the inverter with a hard-wired connection, and then transmit that data via the internet to a centralized database. Data on the performance of a system can then be

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accessed from any device with a web browser, including PCs and cell phones. Akeena, in partnership with Fat Spaniel Technologies, has been a pioneer in the development of a real-time web based solar electric monitoring system so that customers can see the performance of their system from any web browser. As an alternative to web-based remote monitoring, most commercial inverters have a digital display on the inverter itself that shows performance data; and most inverters can also display this data on a nearby personal computer with a hard-wired connection.

Net Metering

The owner of a grid-connected solar electric system may not only buy, but may also sell, electricity each month. This is because electricity generated by the solar electric system can be used on-site or fed through a meter into the utility grid. Utilities are required to buy power from owners of solar electric systems (and other independent producers of electricity) under the Public Utilities Regulatory Policy Act of 1978 (PURPA). California’s net metering law provides that all utilities must allow customers with solar electric systems rated up to 1.5 MW to interconnect with the local utility grid and receiving retail value for the electricity produced. When a home or business requires more electricity than the solar power array is generating (for example, in the evening), the need is automatically met by power from the utility grid. When the home or business requires less electricity than the solar electric system is generating, the excess is fed (or sold) back to the utility – and the electric meter actually spins backwards. Used this way, the utility serves as a backup to the solar electric similar to the way in which batteries do in stand-alone systems.

Building Integrated Photovoltaic Systems (BIPV)

Solar power modules that are integrated into a building’s roof, walls or windows are a compelling goal, primarily because of improved aesthetics. Several companies offer solar electric cells that have been integrated with traditional shingles. Theoretically, these can be a good choice for new construction and major renovations since they slightly offset costs for other building materials – although they are still more expensive than traditional panels. They are appealing from an architectural standpoint, and are usually most compatible with slate or masonry roofs. However, careful consideration must be paid to roof loading, solar power shingle interconnection reliability (typically wired below the shingles) and output degradation due to high temperature operation.

Solar electric cells can also be integrated with metal seam roofing, either as part of pre-fabricated panels or field-applied rolled out adhesive cell material. Interconnections among modules and other system components are usually done at the peak of the roof or under the eaves. Solar electric modules that are integrated with skylites and window walls are also available.

Challenges Facing Solar Power

From our perspective as a designer/integrator of solar power systems, there are three key challenges that the solar industry faces:

1.    Improve Customer Economics – more customers will purchase solar power systems if they produce electricity more affordably. In most cases, on a life cycle basis the cost for electricity produced by a solar power system is more expensive than conventional utility generated power. Lower equipment costs (primarily solar modules) and lower installation costs will reduce the total cost of a system and increase the potential market for solar power. The solar industry expects that these costs will be reduced to the point at which – even without incentives – solar power will be more cost effective than traditional power.

2.    Higher Efficiency Systems – in most residential and commercial applications the available roof space is insufficient at current average solar module efficiencies to generate all the electricity a building needs on an annualized basis. Manufacturing solar modules that have higher efficiencies (more watts per square foot) will allow design/integration companies to install higher capacity systems on these buildings. We believe customers will prefer to install higher capacity systems if they have the available roof area. Moreover, since there are fixed costs associated with every system, and variable costs are dependent on the area of the solar modules, we believe that higher efficiency systems are generally more cost effective.

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3.    Improve Aesthetics – the appearance of traditional rooftop metal framed solar modules raised off the roof is a barrier to purchase by some customers. We believe that customers prefer solar modules that blend into existing roof surfaces with fewer shiny parts. Moreover, we believe that customers will prefer solar modules that mount closely to the roof surface and have more of a ‘‘skylight’’ appearance.

Our Products And Services

We provide marketing, sales, design, construction, installation, maintenance, support and related solar power system services to residential and small commercial customers in the United States in locations in which the economics are favorable to solar power. Our solar power systems enable our customers to produce their own reliable and clean electricity directly from the sun. We provide our customers with a single point of contact for their system design, engineering work, building permit, rebate approval, utility hookup and any subsequent loose ends or required maintenance work. We use our own crews or carefully supervised contractors. We do our own engineering and design work with in-house staff and selected outside engineering firms. Although other forms of solar energy provide customer benefits, we concentrate our work on solar power systems and only occasionally work on solar thermal or solar pool systems as an accommodation to special customers (this non-solar power work is sometimes subcontracted).

Since our solar power systems are designed to operate for an extended period of time (inverter warranties are typically 5 years and solar module warranties are typically 25 years), we are conservative in our design practices and equipment selections. We generally purchase from manufacturers that have a track record of supplying reliable equipment, and we avoid installing equipment at customer sites that is not proven in the marketplace. We have developed internal processes and standardized installation practices that we believe provides a good combination of installation efficiency and system reliability.

Design and Integration Approach

Akeena takes an integrated approach to the design and installation of solar systems for our customers. From the initial customer contact to the final operation of the system, we strive to make the purchasing process as straightforward for our customers as possible.

Pre-Qualify Customers

After a customer initially contacts us via e-mail or telephone, our in-house staff determines if the customer is in a territory we serve, has sunny exposure and understands the economics of solar power for their application. An appointment is set up for a site visit to the customer’s location.

Site Visit

Our Design Consultant visits the customer’s site. For residential customers it is generally possible for the Design Consultant to perform the necessary site survey, initial design work, system performance, financial analysis, report generation and contract preparation in a single visit. For commercial customers we generally take a multiple step consultative sales approach. The sales process is simplified with proprietary software we have developed which takes into consideration current utility rate options, current electric rates, system performance, tax rate scenarios, equipment costs, installation costs, incentives and other factors applicable to a specific customer’s circumstances.

Project Documentation and Installation Preparation

Once a contract is signed the project documentation is prepared. This documentation may include incentive applications, utility permissions, engineering drawings, building permits, equipment acquisition and installation scheduling.

Installation

Once all of the preparatory work is completed, inventory is in stock and installation resources are available, the solar project is scheduled for installation. One of our in-house teams or contractors installs the system.

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Final Project Documentation

Upon completion of the installation, final customer documentation is prepared and submitted.

Maintenance and Support

Akeena provides a guarantee on systems that it installs. We remain available to customers to resolve to the best of our ability any support issue, maintenance problem, installation defect, equipment defect or question our customers may have about their solar power system.

Our Strengths

We believe we are one of the leading national designers and integrators of solar power systems. We believe that our competitive advantages include:

	•	Proprietary Module Technology

	•	Experienced Management Team

	•	Historically Profitable Operations

	•	Proprietary Design Software

	•	Well-Established Market Position Poised for Growth

	•	Limited Publicly-Traded Investment Opportunities in our Segment

	•	Exploiting ‘‘Renewable Energy’’ Solar Resources

We have developed proprietary solar module technology.

Based on our experience of a solar power designer and integrator over the past five years, we have come to understand certain areas in which costs for installations can be significantly reduced. Installation labor and BOS components (inverter, racking, miscellaneous parts) make up approximately 28% of the cost of the system to a customer. We have developed a solar module that has the mounting rails, DC wiring and ground wiring integrated into the unit. The result is a ‘‘plug and play’’ solar module that requires less labor and fewer parts to install. We anticipate this module technology will reduce net installation costs by $.50-$1.00 per installed watt of power, or approximately 10% of the entire cost of a solar power system. We have applied for a patent for this solar module.

Our management team is one of the most experienced in the industry.

Upon completion of the Merger, our existing management will assume their same positions with the publicly-traded company. Our President and Founder Barry Cinnamon is a recognized solar industry expert, has a BS degree in engineering from MIT and an MBA from the Wharton School, and has public company financing and operating experience. Our Executive Vice President Bill Scott has 18 years of experience in the renewable energy industry and 10 years of experience in the IT industry. Our Vice President of Residential Sales Douglas Sandlaufer has over 30 years of experience in the heating and cooling industry, and was formerly the Metro/District Manager for Sears Home Improvement Products and Services. Our Director of Marketing Gail Francisco has experience in the wind turbine industry and has concentrated her efforts over the last three years on optimizing company’s online marketing campaigns. We expect to hire additional people to enhance our management team, particularly in the areas of operations and R&D.

Our business has grown steadily, and has been profitable in every full year of operations.

We have generated net profits in each year since 2002, our first full year of operations. We have generated net income for the fiscal year ended December 31, 2005. Prior to the Merger, our 2005 audited financial results will be provided to subscribers in the Draft Current Report on Form 8-K to be distributed which should be carefully reviewed by subscribers and will supercede the financial reports included with this Memorandum. Following the closing of the Private Placement and the Merger, we will be debt-free (other than trade debt).

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We have developed proprietary solar design software.

Our Design Consultants use proprietary software to perform the necessary site survey, initial design work, system performance, financial analysis, report generation and contract preparation in a single visit for most residential customers. This software takes into consideration current utility rate options, current electric rates, system performance, tax rate scenarios, equipment costs, installation costs, incentives and other factors applicable to a specific customer’s circumstances. By using this software we are able to standardize our product offerings, improve consistency in our project pricing, improve accuracy and consistency in cost and savings estimates, and differentiate our customer presentations compared to our competitors

Akeena is one of the largest and most well-known companies in the solar industry.

According to data compiled by the California Energy Commission and the New Jersey Clean Energy Program, over the past three years Akeena has been one of the largest national integrators of solar power systems in the United States. We have consistently invested in promoting our company and brand name ‘‘Akeena,’’ and believe we have achieved good brand recognition for our name. According to a Solar Electric Dealer Study conducted in 2004, Akeena ranked as the best-known installation brand in Northern California.

The Merger makes Akeena an early stage publicly-traded ‘‘Renewable Energy’’ company.

Concurrently with the closing of the Private Placement, a publicly-traded company will acquire by merger the business of Akeena and continue the existing business operations of Akeena as a publicly-traded company. We believe that there are relatively few publicly traded renewable energy companies, and we will be one of the first publicly traded solar power design and integration companies. This early positioning in the public markets as a solar power company may give us a good opportunity to build value for stockholders.

Solar energy serves an important environmentally friendly renewable resource objective.

Solar energy systems are the most environmentally friendly way of generating electricity. According to the EPA, a typical 6 kilowatt solar energy system in New Jersey will save 32 pounds of nitrogen oxides (NO) each year, 44 pounds of sulfur dioxide (SOs) each year and 17,199 pounds of carbon dioxide (CO2) each year – equivalent to the CO2 absorption of two acres of trees. Solar energy benefits continue throughout the approximately 30+ year lifetime of a system. Management believes that rising costs of electricity, potential supply interruptions and increased concern for the environment should result in a long-term increase in demand for our products and services.

Our Strategy

The solar power industry is at an early stage of its growth. The prospects for long term worldwide demand for solar power have attracted many new solar module manufacturers, as well as a multitude of design/integration companies in Akeena’s market segment. The industry is therefore very fragmented, both on the manufacturing and customer integration side. We expect that the manufacturing parts of the value chain will consolidate as the ‘‘silicon shortage’’ mitigates and more solar module capacity comes on line. We expect that this consolidation is likely to reduce solar module prices in the future.

We expect that the design/integration parts of the value chain will also consolidate. In any given location – and on a national basis – we expect that fewer large companies will represent a greater portion of the market. We believe that the companies that succeed in this consolidation by building market share will be those that have the following characteristics:

	•	Proprietary products to reduce installed system costs and improve aesthetics

	•	Strong market awareness

	•	Efficient sales, marketing and installation activities spanning multiple geographic locations

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	•	Financial strength to achieve greater purchasing power from manufacturers

Akeena’s strategy reflects the factors that we expect to be instrumental to leadership in this coming era of solar industry consolidation:

	•	Akeena has developed proprietary solar module technology that we expect will reduce our installation costs by approximately 10%, with improved aesthetics compared to standard commercially available solar equipment.

	•	Akeena has created a strong brand name and industry reputation.

	•	Akeena uses a process-driven approach to sell and install solar power systems efficiently in multiple states, with guidance from our experienced management team.

Finally, the proceeds from this and possibly future public financings will provide us with enhanced ability to purchase equipment on favorable terms from international manufacturers. We expect that being a public company will improve our ability to grow internally and possibly by acquisition; our public company status will improve our reputation in the minds of customers; and our public company status will enhance our ability to attract and retain experienced management.

We intend to supplement our internal growth strategies by pursuing acquisitions of other solar power systems design, integration and installation companies. We believe that such acquisitions will provide the following benefits:

	•	Enable us to quickly enter new markets by providing us with existing facilities and marketing and sales systems;

	•	Help us to expand and diversify our product lines while reducing the risks and uncertainties associated with the development of new products;

	•	Enable us to achieve economies of scale by consolidating technologies, facilities and human resources; and

	•	Help us to build brand recognition by expanding our customer base and market presence.

We believe that the fragmented nature of the solar power systems market will provide attractive opportunities for consolidation due to the large number of small, specialized companies currently in existence.

In evaluating potential acquisition targets, we will seek out companies with strong experienced management teams and innovative, well-designed products. We anticipate looking to venture capital firms, which may be interested in selling their holdings in start-up solar power companies, financial consultants, investment banks and other parties as potential sources for finding acquisition candidates.

Research and Development

The following chart shows a breakdown of cost components of a solar power system as delivered and installed to a customer. This cost breakdown is based on an analysis of Akeena’s costs over the past several years. We believe that this breakdown is typical for companies similar to Akeena.

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Although solar module costs are the biggest single cost component, installation labor and BOS components (inverter, racking, miscellaneous parts) make up approximately 28% of the cost of the system to a customer. Historically the solar industry has directed a great deal of its cost improvement focus towards reducing the cost of the solar modules themselves. There is currently a great deal of R&D directed towards this goal of reducing the cost per watt of solar modules. Nevertheless, we believe that R&D directed towards the end of the solar value chain – customer installation – can also provide significant benefits. From a customer’s standpoint he or she is most concerned about the final installed cost per watt (and resulting output) of the system – not the cost per watt of the module alone. It is in the area of reducing the cost per watt of a completely installed solar power system that we have directed our R&D efforts.

Solar modules from the major manufacturers have historically been designed to be installed in a wide range of applications, from off-grid power (remote lighting and communications), to residential roofs to large commercial installations. These solar modules generally utilize an aluminum frame which provides rigidity and protection to the tempered glass to which the solar cells and wiring are attached. These aluminum frames provide a method to mount the solar modules in a wide range of different applications.

The following diagram shows how solar modules for typical residential and small commercial solar power system are installed.

	•	Solar Module – Three solar modules are shown; a typical residential installation may use 15 or more solar modules, and a typical commercial installation may use hundreds or thousands of solar modules.

	•	Aluminum Racking – a sub frame racking system is installed on the roof to which the solar modules are attached. This rack is generally fabricated from extruded aluminum, but may also be fabricated from other corrosion-resistant materials.

	•	Roof Attachment Points – L feet or standoffs are used to attach the rack to the roof. Note that it is important to connect these attachment points securely to the underlying roof supports in a manner that reduces the potential for roof leakage.

	•	Module Clips – clips are used to attach the solar modules to the rack. Alternatively, the modules may be bolted to the rack.

	•	DC Wiring – the positive and negative wires from each module are connected to nearby modules, or extended back to the inverter. To prevent these wires from being abraded or damaged, they are generally zip-tied to the module rack or module.

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	•	Component Grounding – a separate grounding conductor is connected to all modules and racks. This grounding conductor is then extended back to a suitable grounding electrode for the entire system.

To reduce the installation costs of solar power systems and improve the resulting aesthetics, Akeena has developed a proprietary solar module. This module allows an installer to quickly connect modules together. This module has an integrated mounting rail slot, internal splice clips for grounding and rigid frame connections, and plug-in wire connections. In addition, the module frame serves as a grounding conductor for the system. Our module can also be used in standard rack-mounted systems as well as systems without racking. We believe that our module is ideal for residential retrofits and new construction installations. A diagram of this module is shown below:

Because our module has the mounting rail and wire connections integrated into the unit, it provides ‘‘plug and play’’ ease of installation. There is less labor required to install and wire the solar modules, and there are fewer parts that must be purchased to complete an installation. Items shown in blue in the above diagram replace the items shown in red in the original diagram. We anticipate this module technology will reduce net installation costs by $.50-$1.00 per installed watt of power, or approximately 10% of the entire cost of a solar power system.

Our module technology provides the following benefits:

	•	Simplified module installation due to elimination of the underlying mounting rail structure and module clips, elimination of most manual module wiring and zip tying of module wires, and elimination of module and frame grounding conductors

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	•	Improved aesthetics of the resulting roof-mounted system since modules can be mounted closer to the roof without an underlying rack structure.

	•	Improved module reliability due to standardized module wiring, and fewer manual mounting and connection steps.

Installation costs for a solar power system are generally proportional to the area of modules installed. Thin film and amorphous solar cell technologies – although less expensive on a cost per watt basis – are generally less efficient (producing fewer watts per square foot) and more expensive to install. Therefore, Akeena’s module technology becomes even more useful for the new generation of less expensive but lower efficiency solar modules. We believe that Akeena’s module technology is generally applicable to all framed rooftop solar cell technologies, including silicon, amorphous, thin film and concentrators.

We have applied for a patent on the design of the module; the application is currently pending. A small scale prototype has been fabricated; we expect to use a portion of the proceeds of this offering for subsequent development of this module concept. Several major manufacturers of solar panels have expressed interest in our module technology, including Sharp, Kyocera, Sanyo and SunPower.

Our Customers

Our current residential customers are generally highly educated, high-income professionals who are concerned about the environment and also have the disposable income to install a solar power system. We have installed solar power systems in some of the most affluent counties in the San Francisco Bay Area and New Jersey (by US Census Bureau demographic data where owner-occupied homes with incomes over $150K are greatest.) Installation sizes range from 1.4 kW up to 23.68 kW. Average residential size systems are approximately 5 kw.

Our current commercial customers are schools, affordable housing and owner occupied businesses – including wineries and small commercial offices. We have or are in the process of installing commercial systems ranging in size from 10 kW to 125 kW. These commercial systems are in the San Francisco Bay Area.

Sales and Marketing

Our sales and marketing program incorporates a mix of print, web and radio advertisements as well as participation in industry trade shows and individual consultations with prospective customers. In addition, we rely heavily on the skill of our sales team. Our residential sales people are trained to design a system that best meets our customer’s needs, taking into account the unique installation and economic requirements for each location. Our commercial sales people take a more consultative, long term selling approach to meet the varying needs of larger customers.

We regularly evaluate the effectiveness of our sales team and marketing efforts using sales management software, and make tactical marketing and sales changes as indicated to achieve and maintain cost effectiveness. Solar system design work is facilitated by proprietary software we have developed. This software provides certain controls on price, margins, performance estimates, financial analyses and contract terms so that we can standardize our product offerings while still customizing a system for each application.

Intellectual Property

Akeena ‘‘Plug and Play’’ Solar Module

We have applied for patent protection for our integrated solar module technology. Our application is currently pending with the United States Patent and Trademark Office.

Akeena Trademarks

We have registered the trademark ‘‘Akeena’’ for consulting services in the field of energy systems; providing technical information via a global computer network in the field of renewable energy

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systems with the United States Patent & Trademark Office. We intend to apply for trademark protection for the phrase, ‘‘Run Your Electric Meter Backwards,’’ which we have used in conjunction with our logo since we established our business. We believe that both our name and the phrase ‘‘Run Your Electric Meter Backwards’’ have come to be closely associated with our company in the minds of our customers and in our market, and therefore should qualify for protection under Federal trademark laws. In addition, we believe that our historical use of these marks, combined with a high level of customer recognition, will provide us with common law trademark protection under state laws.

Akeena Proprietary Design Software

Our Design Consultants use our own proprietary software to perform the necessary site survey, initial design work, system performance, financial analysis, report generation and contract preparation in a single visit for most residential customers. This software takes into consideration current utility rate options, current electric rates, system performance, tax rate scenarios, equipment costs, installation costs, incentives and other factors applicable to a specific customer’s circumstances. By using this software we are able to standardize our product offerings, improve consistency in our project pricing, improve accuracy and consistency in cost and savings estimates, and differentiate our customer presentations compared to our competitors.

Competition

Currently, the solar power design and integration industry is in its early stages of development and is highly fragmented, consisting of many small companies with limited operating histories. Because the vast majority of companies are small and privately held, there is limited information available to us regarding many of our competitors.

We believe our major competitors in the California market include but are not limited to SPG&E (formerly SunPower and Geothermal), ReGrid, Borrego, RealGoods, and Premier Power. Several companies have expanded their market share in the California market by opening offices in multiple locations within the state. Rather than expand within the state, we made the decision in 2003 to expand into New Jersey. We believe our major competitors in the New Jersey market include but are not limited to Trinity Heating and Air, NJ Solar Power, The Solar Center, Energy Enterprises, 1st Light Energy, GeoGenix, SunFarm, and Advanced Solar Products. We believe our major national competitors include but are not limited to Renewable Energy Concepts, Suntechnics and PowerLight.

We believe that the industry will consolidate based on branding, technology and business process advantages. We are continuing to develop our brand, improve our business processes, plan for opening offices in additional California and East Coast locations, and develop proprietary module technology in order to respond to these competitive demands and position Akeena to become a premier solar design and integration company.

Legal Proceedings

We are not aware of any significant pending legal proceedings against us.

Property

Our offices are located in Los Gatos, California and Fairfield, New Jersey and occupy a total of approximately 3,415 and 3,000 square feet, respectively. The current lease on our Los Gatos, California facility expires on June 20, 2007. We lease our Fairfield, New Jersey facility on a month-to-month basis pursuant to an oral agreement.

We believe our current facilities are adequate for our immediate and near-term needs. Additional space may be required as we expand our activities. We do not foresee any significant difficulties in obtaining any required additional facilities.

Employees

Akeena has 41 employees: 16 full time installers, 11 full time sales and marketing personnel and 4 part time sales and marketing personnel, 2 full time finance personnel and 1 part time finance

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personnel, 3 administrative and 4 operations employees. Nine of our employees are members of management. To the best of our knowledge, Akeena is compliant with local prevailing wage, contractor licensing and insurance regulations.

Akeena employs three NABCEP Certified Solar Electric Installers – Barry Cinnamon and engineers Alex Au and Richard Abalos. Akeena hires and trains its own installation crews, works with subcontractors and is certified by those major manufacturers who have their own training programs. We also run periodic, in-house training courses for building and electrical inspectors. Our installers attend these courses so that we are current with the latest code requirements and safety procedures.

Akeena’s technicians are covered by a Contractor’s Bond issued by Western Surety Company. In addition, Akeena carries general liability and workman’s compensation insurance with respect to its employees.

Forward-Looking Statements

This Current Report on Form 8-K contains forward-looking statements. To the extent that any statements made in this Report contain information that is not historical, these statements are essentially forward-looking. Forward-looking statements can be identified by the use of words such as ‘‘expects,’’ ‘‘plans,’’ ‘‘will,’’ ‘‘may,’’ ‘‘anticipates,’’ believes,’’ ‘‘should,’’ ‘‘intends,’’ ‘‘estimates,’’ and other words of similar meaning. These statements are subject to risks and uncertainties that cannot be predicted or quantified and, consequently, actual results may differ materially from those expressed or implied by such forward-looking statements. Such risks and uncertainties are outlined in ‘‘Risk Factors’’ and include, without limitation, the Company’s limited operating history; the ability to raise additional capital to finance the Company’s activities; the effectiveness, profitability, and the marketability of its products; legal and regulatory risks associated with the Merger; the future trading of the common stock of the Company; the ability of the Company to operate as a public company; the period of time for which the proceeds of the Private Placement will enable us to fund our operations; the Company’s ability to protect its proprietary information; general economic and business conditions; the volatility of the Company’s operating results and financial condition; the Company’s ability to attract or retain qualified senior management personnel and research and development staff; and other risks detailed from time to time in the Company’s filings with the SEC, or otherwise.

Information regarding market and industry statistics contained in this Report is included based on information available to the Company that it believes is accurate. It is generally based on industry and other publications that are not produced for purposes of securities offerings or economic analysis. The Company has not reviewed or included data from all sources, and cannot assure investors of the accuracy or completeness of the data included in this Report. Forecasts and other forward-looking information obtained from these sources are subject to the same qualifications and the additional uncertainties accompanying any estimates of future market size, revenue and market acceptance of products and services. The Company does not undertake any obligation to publicly update any forward-looking statements. As a result, investors should not place undue reliance on these forward-looking statements.

MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS

All references to the ‘‘Company,’’ ‘‘we,’’ ‘‘our’’ and ‘‘us’’ for periods prior to the closing of the Merger refer to Akeena, and references to the ‘‘Company,’’ ‘‘we,’’ ‘‘our’’ and ‘‘us’’ for periods subsequent to the closing of the Merger refer to Fairview-DE and its subsidiaries.

The following discussion highlights the principal factors that have affected our financial condition and results of operations as well as our liquidity and capital resources for the periods described. This discussion contains forward-looking statements. Please see ‘‘Special cautionary statement concerning forward-looking statements’’ and ‘‘Risk factors’’ for a discussion of the uncertainties, risks and assumptions associated with these forward-looking statements. The operating results for the periods presented were not significantly affected by inflation.

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Company Overview

Akeena Solar is a leading designer and integrator of solar power systems. We market, sell, design and install systems for residential and small commercial customers. We currently service customers in California, New York, New Jersey, Pennsylvania and Connecticut. According to data compiled by the California Energy Commission and the New Jersey Clean Energy Program, over the past three years Akeena Solar has been one of the largest national integrators of residential and small commercial solar power systems in the United States. To date, we have installed over 500 solar power systems.

Akeena Solar was formed in February 2001 as a California corporation under the name ‘‘Akeena, Inc.’’ and reincorporated as a Delaware corporation in June 2006, at which time its name was changed to ‘‘Akeena Solar, Inc.’’ Our Corporate headquarters are located at 605 University Avenue, Los Gatos, California 95032. In addition, we maintain installation offices at our Los Gatos facility and at 26 Commerce Road, Suite F, Fairfield, New Jersey 07004.

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Results of Operations

The following table sets forth, for the periods indicated, certain information related to our operations, expressed in thousands of dollars and as a percentage of our net sales:

			Years ended December 31,																								Three Months Ended March 31,
(in thousands)			2005												2004												2006												2005
Net sales				$	7,191						100.0	%				$	5,876						100.0	%				$	2,490						100.0	%				$	1,201						100.0	%
Cost of sales					5,595						77.8	%					4,550						77.4	%					1,922						77.2	%					961						80.1	%
Gross profit					1,596						22.2	%					1,326						22.6	%					568						22.8	%					239						19.9	%
Operating expenses:
Selling, general and administrative					1,582						22	%					1,176						20	%					536						21.5	%					295						24.5	%
Total operating expenses					1,582						22	%					1,176						20	%					536						21.5	%					295						24.5	%
Income from operations					14						0.2	%					150						2.6	%					33						1.3	%					(55	)					-4.6	%
Interest expense, net					12						0.2	%											0	%					13						0.5	%					0						0	%
Other income (expense), net					—						0.0	%					6						0.1	%
Net income				$	2						0	%				$	156						2.7	%				$	20						0.8	%				$	(55	)					-4.6	%

Year ended December 31, 2005, as compared to year ended December 31, 2004

Net sales

Net sales increased $1.3 million, or 22% to $7.2 million for the year ended December 31, 2005, as compared to $5.9 million in 2004. The increase was due to higher installation volume of jobs in 2005 compared 2004. The average sales price of each job declined in 2005 due to a larger percentage of smaller residential jobs as compared to 2004. The increased in volume reflects both widening acceptance of photovoltaic technology on the consumer level, but also the addition of Mid-Atlantic States serviced out of our New Jersey office as a new market for Akeena. Most of the job volume increase in 2005 was installed in this new market.

Cost of goods sold

Cost of goods sold including all installation expenses in 2005 was 78% of revenues compared to 77% in 2004. The increase was due to increased staffing in engineering and operations management to support the New Jersey operation. California sales tax decreased as a percentage of revenues due to a growing percentage of our work being done outside of California. Inbound shipping was substantially higher in 2005 with the addition of a new major supplier and increased reliance on another existing vendor, both of which charge Akeena for shipping. Warranty expense decreased nominally as a percentage of revenues due to expiration of warranty reserves from 2001.

Selling, general and administrative expenses

Sales and marketing expenses increased by 39%, or approximately $156,000, in 2005. Sales and marketing expenses increased as a percentage of revenues from 6.9 to 7.8%. The increase is explained primarily by higher sales commissions and the cost of attendance at more trade and promotional events.

General and Administrative expenses increased by approximately $7,000 in 2005. Rents increased by approximately $18,000 due to a short-term staff housing commitment as well as the cost of the New Jersey facilities. Accounting fees increased with the addition of a consulting Chief Financial Officer in January of 2005. In 2005 we had legal expenses of $5,733 primarily associated with one mechanics lien which was resolved in the same year. Our legal expenses were $17,276 in 2004 for the most part associated with a successful action against the City of Los Gatos regarding our intention to place solar panels on the roof of our office. At year’s end in 2005 the company was involved in no outstanding litigation.

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Interest expense

Interest expense increased substantially in 2005 with the addition of a $500,000 credit facility from Citibank. Prior to September of 2005, Akeena had no credit facility apart from credit lines extended by vendors.

Income taxes

The Company did not record a provision for income taxes for the years ended December 31, 2005 and 2004, as the Company is a Subchapter S corporation, and any taxable income or loss is included within the stockholder’s income for federal and state income tax purposes.

Three months ended March 31, 2006 as compared to three months ended March 31, 2005

Net sales

The first quarter of 2006 showed 107% increase in installations compared to 2005. Gross profitability rose by 3% due to more efficient application of fixed and semi-fixed operating expenses. Solar panels rose by 4% as a percentage of revenues, caused by completion of jobs sold with pricing not reflective of new material costing by the time of installation. This issue has been resolved through forward job pricing predicated on expected material cost increases.

In New Jersey, sales and installation staffing were brought to appropriate levels both in terms of numbers of employees, and in terms of industry knowledge and experience as well. In 2006 operations in both the New Jersey and California offices were enhanced by changes in sales, engineering and installation procedures leading to more accurate selling and more responsive engineering and installation practices.

Selling, general and administrative expenses

Selling, General and Administrative expenses were better absorbed in 2006. As sales increase, we are expanding customer service and accounting capacity, thus creating the infrastructure for continued growth.

Interest expense

Interest expense was higher as a result of increasing interest rates charged on our Credit Facility.

Performance statistics for the first quarter of each year are volatile due to inclement weather events, which can hinder or temporarily halt installations. Weather in California for the first two months of 2006 was relatively calm and warm, whereas in New Jersey it was cold and volatile. During March 2006, California experienced significant rainfall which limited our installation capacity. Typically, by the second quarter, weather patterns change to allow installations to occur on a more consistent and routine basis.

Liquidity and capital resources

As of March 31, 2006 we had $23,245 on hand and no additional borrowing capacity under our line of credit. Our primary capital requirement is to fund purchases of solar panels and inverters as well as our receivables from the States of California and New Jersey. Significant sources of liquidity are cash on hand, cash flows from operating activities, working capital and borrowings from our revolving line of credit.

Cash flows provided by (used in) operating activities were ($231,076) and $73,972 for the three months ended March 31, 2006 and 2005, respectively. Large purchases of solar panels occurred in the first quarter of 2006 in preparation for installation on two commercial jobs. Similarly, accounts payable rose in response to these purchases, and revenue for those jobs was deferred until completion in the second and third quarters of 2006. A high level of inventory is a significant benefit in this industry;

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panels are difficult to procure and are immediately fungible. Prepaid expenses decreased due to the first quarter 2006 completion of two large commercial jobs that began in the fourth quarter of 2005, the expenses for which were expensed during the first quarter of 2006.

At March 31, 2005, we had a $500,000 outstanding balance under our Credit Facility. Borrowings under the Credit Facility bear interest at the prime rate, plus a margin rate of 1.25%.

No capital purchases were made in the first quarter of 2006.

We expect that funds generated from operations, our current cash on hand and funds available under our revolving line of credit, will be sufficient to finance our working capital requirements, fund capital expenditures, and meet our contractual obligations for at least the next twelve months.

Contractual obligations

At December 31, 2005, we had the following contractual obligation and commitment related to our office lease in Los Gatos, California:

2006				$	17,075
2007					—
2008					—
2009					—
2010					—
				$	17,075

Internal control over financial reporting

Management has initiated the following activities intended to improve our internal control over financial reporting.

	•	In January 2005, we entered into a consulting relationship with David ‘‘Lad’’ Wallace to act as new Chief Financial Officer. He terminated his contract with us in January of 2006 but returned as an employee in August of 2006. In the interim period Ron Rook became our acting contract Controller, a role in which he continues at this date. Lad has decades of senior financial and accounting management with both privately and publicly held companies. Ron is a certified public accountant (CPA) with previous experience in financial reporting for publicly traded companies. Lad has practical experience with the Sarbanes-Oxley Act. In June of 2006 we also retained independent consultants trained in accounting and financial reporting who are CPA’s.

	•	We are developing policies and procedures to monitor and track sales bookings and installations by product, date of sale, and by customer. Installation performance logs, identifying key product and installation type information, are now maintained and analyzed by management on a monthly basis.

	•	We are developing policies and procedures regarding installations to monitor when the risk of ownership of our products and services is transferred to our customers. Monthly sales at the end of each period along with installation completion documents are analyzed by management to determine whether the risk of ownership has been transferred to the customer and revenue has been appropriately recognized.

Although management believes that these measures have improved the design of our internal control over financial reporting, our internal control over financial reporting remains largely undocumented. We plan to document in writing our policies and procedures with regard to our internal control over financial reporting in connection with our compliance with Section 404 of the Sarbanes-Oxley Act.

Application of critical accounting policies and estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires estimates and assumptions that affect the reporting of assets,

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liabilities, sales and expenses, and the disclosure of contingent assets and liabilities. Note 2 to our consolidated financial statements provides a summary of our significant accounting policies, which are all in accordance with generally accepted accounting policies in the United States. Certain of our accounting policies are critical to understanding our consolidated financial statements, because their application requires management to make assumptions about future results and depends to a large extent on management’s judgment, because past results have fluctuated and are expected to continue to do so in the future.

We believe that the application of the accounting policies described in the following paragraphs is highly dependent on critical estimates and assumptions that are inherently uncertain and highly susceptible to change. For all these policies, we caution that future events rarely develop exactly as estimated, and the best estimates routinely require adjustment. On an ongoing basis, we evaluate our estimates and assumptions, including those discussed below.

Revenue recognition. Revenue from sales of products is recognized when: (1) persuasive evidence of an arrangement exists, (2) delivery has occurred or services have been rendered, (3) the sale price is fixed or determinable, and (4) collection of the related receivable is reasonably assured. We recognize revenue from installation sales when installations are at least 90% complete, or in the case of specific transfer of title of products, delivered and title and risk of loss pass to the customer.

Long-lived assets. We periodically review our property and equipment and identifiable intangible assets for possible impairment whenever facts and circumstances indicate that the carrying amount may not be fully recoverable. Assumptions and estimates used in the evaluation of impairment may affect the carrying value of long-lived assets, which could result in impairment charges in future periods. Significant assumptions and estimates include the projected cash flows based upon estimated revenue and expense growth rates and the discount rate applied to expected cash flows. In addition, our depreciation and amortization policies reflect judgments on the estimated useful lives of assets.

Contingencies. We accrue for estimated losses from legal actions or claims when events exist that make the realization of the losses probable and the losses can be reasonably estimated. We analyze our litigation claims based on currently available information to assess potential liability. We develop our estimates of litigation costs in consultation with outside counsel handling our defense in these matters, which involves an analysis of potential results assuming a combination of litigation and settlement strategies. These estimates involve significant judgment based on the facts and circumstances of each case. Our future results could be affected if our estimated loss accruals, if any, are below the actual costs incurred.

Seasonality

Our quarterly installation and operating results may vary significantly from quarter to quarter as a result of seasonal changes in State or Federal subsidies as well as weather. Historically, sales are highest during the third and fourth quarters as a result of good weather and robust bookings in the second quarter (typically due to rebate changes which have occurred at the end of the second and beginning of the third quarter).

Cautionary Factors That May Affect Future Results

This Current Report on Form 8-K and other written reports and oral statements made from time to time by the Company may contain so-called ‘‘forward-looking statements,’’ all of which are subject to risks and uncertainties. One can identify these forward-looking statements by their use of words such as ‘‘expects,’’ ‘‘plans,’’ ‘‘will,’’ ‘‘estimates,’’ ‘‘forecasts,’’ ‘‘projects’’ and other words of similar meaning. One can identify them by the fact that they do not relate strictly to historical or current facts. These statements are likely to address the Company’s growth strategy, financial results and product and development programs. One must carefully consider any such statement and should understand that many factors could cause actual results to differ from the Company’s forward-looking statements. These factors include inaccurate assumptions and a broad variety of other risks and uncertainties, including some that are known and some that are not. No forward-looking statement can be guaranteed and actual future results may vary materially.

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The Company does not assume the obligation to update any forward-looking statement. One should carefully evaluate such statements in light of factors described in the Company’s filings with the SEC, especially on Forms 10-KSB, 10-QSB and 8-K. In various filings the Company has identified important factors that could cause actual results to differ from expected or historic results. One should understand that it is not possible to predict or identify all such factors. Consequently, the reader should not consider any such list to be a complete list of all potential risks or uncertainties.

RISK FACTORS

Investing in our common stock involves a high degree of risk. Prospective investors should carefully consider the risks described below, together with all of the other information included or referred to in this Current Report on Form 8-K, before purchasing shares of our common stock. There are numerous and varied risks, known and unknown, that may prevent the Company from achieving its goals. The risks described below are not the only ones the Company will face. If any of these risks actually occurs, the Company’s business, financial condition or results of operations may be materially adversely affected. In such case, the trading price of our common stock could decline and investors in our common stock could lose all or part of their investment. The risks and uncertainties described below are not exclusive and are intended to reflect the material risks that are specific to us, material risks related to our industry and material risks related to companies that undertake a public offering or seek to maintain a class of securities that is registered or traded on any exchange or over-the-counter market.

Risks Relating to Our Business

The success of our business depends on the continuing contributions of Barry Cinnamon and other key personnel.

We rely heavily on the services of Barry Cinnamon, our CEO, as well as several other management personnel. Loss of the services of any of such individuals would adversely impact our operations. In addition, we believe our technical personnel represent a significant asset and provide us with a competitive advantage over many of our competitors. We believe our future success will depend upon our ability to retain these key employees and our ability to attract and retain other skilled financial, engineering, technical and managerial personnel. For example, we presently do not have any directors or officers (other than our CEO) experienced with public company SEC reporting and financial reporting requirements and will be required to engage such persons, and independent directors, in order to satisfy the initial listing standards of the major exchanges on which we may seek to list the common stock. In addition, as a result of failure to engage qualified personnel we may be unable to meet our responsibilities as a public reporting company under the rules and regulations of the SEC. None of our key personnel are party to any employment agreements with us. We do not currently maintain any ‘‘key man’’ life insurance with respect to any of such individuals.

We are dependent upon our suppliers for the components used in the systems we design and install; and our major suppliers are dependent upon the continued availability and pricing of silicon and other raw materials used in solar modules.

Components used in our systems are purchased from a limited number of manufacturers. In particular, Sharp, Kyocera and SunPower each account for more than 10% of our component purchases. We do not manufacture any of the major components used in our solar installations. We are subject to market prices for the components that we purchase for our installations, which are subject to fluctuation. We cannot ensure that the prices charged by our suppliers will not increase because of changes in market conditions or other factors beyond our control. An increase in the price of components used in our systems could result in an increase in costs to our customers and could have a material adverse effect on our revenues and demand for our services. Our suppliers are dependent upon the availability and pricing of silicon, a key component in solar modules. The world market for solar panels recently experienced a shortage of supply due to insufficient availability of silicon, one of the main materials used in manufacturing the panels. This shortage caused the prices

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for solar modules to increase. Interruptions in our ability to procure needed components for our systems, whether due to discontinuance by our suppliers, delays or failures in delivery, shortages caused by inadequate production capacity or unavailability, or for other reasons, would adversely affect or limit our sales and growth. In addition, increases in the prices of modules could make systems that have been sold but not yet installed unprofitable for us. There is no assurance that we will continue to find qualified manufacturers on acceptable terms and, if we do, there can be no assurance that product quality will continue to be acceptable, which could lead to a loss of sales and revenues.

We may not be able to effectively control and manage our growth.

We face challenges in managing expanding product and service offerings and in integrating acquired businesses with our own. Our plans include using a portion of the proceeds from this Offering to open additional offices. Such activities will increase demands on our existing management, workforce and facilities. Failure to satisfy such increased demands would interrupt or would have a material adverse effect on our business and results of operations.

Our limited operating history, including the uncertainty of our future performance and ability to maintain or improve our financial and operating systems, makes it difficult to evaluate our business.

Akeena was organized in February 2001. Our limited operating history makes it difficult to evaluate our business. In addition, the limited performance history of our management and sales teams and the uncertainty of our future performance and ability to maintain or improve our financial, sales and operating systems, procedures and controls increase the risk that we may be unable to continue to successfully operate our business. In the event that we are not able to manage our growth and operate as a public company due to our limited experience, our business may suffer uncertainty and failures, which would have a material adverse effect on our business and results of operations.

We may be unable to attain profitability by increasing net sales, expanding the range of our services or entering new markets.

There can be no assurance that we will be able to attain profitability and/or expand the sales of our business or any subsequently acquired businesses. Various factors, including demand for our systems and services, and our ability to expand the range of our product and service offerings and to successfully enter new markets, may affect our ability to maintain or increase the net sales of our business or any subsequently acquired businesses. Many of these factors are beyond our control. In addition, in order to effectively manage growth, we must expand and improve our operational, financial and other internal systems and attract, train, motivate and retain qualified employees. Expenditures related to our growth and acquisition initiatives may negatively affect our operating results, and we may not realize any incremental profitability from our growth and acquisition efforts.

Because our industry is highly competitive and has low barriers to entry, we may lose market share to larger companies that are better equipped to weather a deterioration in market conditions due to increased competition.

Our industry is highly competitive and fragmented, is subject to rapid change and has low barriers to entry. We may in the future compete for potential customers with solar and HVAC systems installers and servicers, electricians, utilities and other providers of solar power equipment or electric power. Some of these competitors may have significantly greater financial, technical and marketing resources and greater name recognition than we have. We believe the principal competitive factors in the solar power services industry include:

	•	Responsiveness to customer needs;

	•	Availability of technical personnel;

	•	Availability and prices of system components;

	•	Speed of system design and installation;

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	•	Quality of service;

	•	Price;

	•	Project management capabilities;

	•	Technical expertise;

	•	Company reputation; and

	•	Installation technology.

We believe that our ability to compete also depends in part on a number of factors outside of our control, including:

	•	The ability of our competitors to hire, retain and motivate qualified technical personnel;

	•	The ownership by competitors of proprietary tools to customize systems to the needs of a particular customer;

	•	The price at which others offer comparable services and equipment;

	•	The extent of our competitors’ responsiveness to client needs; and

	•	Installation technology.

It is possible that competition in the solar power services industry could increase in the future, partly due to low barriers to entry, as well as from other alternative energy resources now in existence or developed in the future. Increased competition could result in price reductions, reduced margins or loss of market share and greater competition for qualified technical personnel. There can be no assurance that we will be able to compete successfully against current and future competitors. If we are unable to compete effectively, or if competition results in a deterioration of market conditions, our business and results of operations would be adversely affected.

Our failure to meet a client’s expectations in the performance of our services, and the risks and liabilities associated with placing our employees and technicians in our customers’ homes and businesses, could give rise to claims against us.

Our engagements involve projects that are critical to our customers’ business or home. Our failure or inability to meet a customer’s expectations in the provision of our products and services could damage or result in a material adverse change to their premises or property and therefore could give rise to claims against us or damage our reputation. In addition, we are exposed to various risks and liabilities associated with placing our employees and technicians in the homes and workplaces of others, including possible claims of errors and omissions, including harassment, theft of client property, criminal activity and other claims.

Our profitability depends on our success on brand recognition and we could lose our competitive advantage if we are not able to protect our trademark against infringement, and any related litigation could be time-consuming and costly.

We believe our brand has gained substantial recognition by customers in certain geographic areas. We have registered our trademark with the United States Patent and Trademark Office. Use of our name or a similar name by competitors in geographic areas in which we have not to date operated could adversely affect our ability to use or gain protection for our brand in those markets, which could weaken our brand and harm our business and competitive position.

If we are unable to attract, train and retain highly qualified personnel, the quality of our services may decline and we may not successfully execute our internal growth strategies.

Our success depends in large part upon our ability to continue to attract, train, motivate and retain highly skilled and experienced employees, including technical personnel. Qualified technical employees periodically are in great demand and may be unavailable in the time frame required to satisfy our customers’ requirements. While we currently have available technical expertise sufficient for the requirements of our business, expansion of our business could require us to employ additional

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highly skilled technical personnel. We expect competition for such personnel to increase as the market for solar power systems expands. There can be no assurance that we will be able to attract and retain sufficient numbers of highly skilled technical employees in the future. The loss of personnel or our inability to hire or retain sufficient personnel at competitive rates of compensation could impair our ability to secure and complete customer engagements and could harm our business.

Unexpected warranty expenses or service claims could reduce our profits

We maintain a warranty reserve on our Balance Sheet for potential warranty or service claims that could occur in the future. This reserve is adjusted based on our ongoing operating experience with equipment and installations. It is possible, perhaps due to bad supplier material or defective installations, that we could have actual expenses substantially in excess of the reserves we maintain. Our failure to accurately predict future warranty claims could result in unexpected profit volatility.

Our Module technology is untested and may not be effective or patentable or may encounter other unexpected problems, which could adversely affect our business and results of operations.

Our module technology is new and has not been tested in installation settings to prove its long-term effectiveness and benefits. The module technology may not be effective or other problems may occur that are unexpected and could have a material adverse effect on our business or results of operations. While a patent application has been filed for the module technology, a patent may not be issued on such technology or we may not be able to realize the benefits from any patent that is issued.

Any acquisitions we make could result in difficulties in successfully managing our business and consequently harm our financial condition.

As part of our business strategy, we may seek to expand by acquiring competing businesses in our current or other geographic markets. We cannot accurately predict the timing, size and success of our acquisition efforts and the associated capital commitments that might be required. We expect to face competition for acquisition candidates, which may limit the number of acquisition opportunities available to us and may lead to higher acquisition prices. There can be no assurance that we will be able to identify, acquire or profitably manage additional businesses or successfully integrate acquired businesses, if any, into our company, without substantial costs, delays or other operational or financial difficulties. In addition, acquisitions involve a number of other risks, including:

	•	Failure of the acquired businesses to achieve expected results;

	•	Diversion of management's attention and resources to acquisitions;

	•	Failure to retain key customers or personnel of the acquired

	•	Businesses; and

	•	Risks associated with unanticipated events, liabilities or contingencies.

Client dissatisfaction or performance problems at a single acquired business could negatively affect our reputation. The inability to acquire businesses on reasonable terms or successfully integrate and manage acquired companies, or the occurrence of performance problems at acquired companies, could result in dilution, unfavorable accounting charges and difficulties in successfully managing our business.

Our inability to obtain capital, use internally generated cash or debt, or use shares of Common Stock to finance future acquisitions could impair the growth and expansion of our business.

Reliance on internally generated cash or debt to finance our operations or complete acquisitions could substantially limit our operational and financial flexibility. The extent to which we will be able or willing to use shares of Common Stock to consummate acquisitions will depend on our market value from time to time and the willingness of potential sellers to accept it as full or partial payment. Using shares of Common Stock for this purpose also may result in significant dilution to our then existing stockholders. To the extent that we are unable to use Common Stock to make future

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acquisitions, our ability to grow through acquisitions may be limited by the extent to which we are able to raise capital for this purpose through debt or additional equity financings. No assurance can be given that we will be able to obtain the necessary capital to finance a successful acquisition program or our other cash needs. If we are unable to obtain additional capital on acceptable terms, we may be required to reduce the scope of any expansion. In addition to requiring funding for acquisitions, we may need additional funds to implement our internal growth and operating strategies or to finance other aspects of our operations. Our failure to (i) obtain additional capital on acceptable terms, (ii) use internally generated cash or debt to complete acquisitions because it significantly limits our operational or financial flexibility, or (iii) use shares of Common Stock to make future acquisitions may hinder our ability to actively pursue our acquisition program.

Because our industry is highly competitive and has low barriers to entry, we may lose market share to larger companies that are better equipped to weather a deterioration in market conditions due to increased competition.

Our industry is highly competitive and fragmented, is subject to rapid change and has low barriers to entry. We may in the future compete for potential customers with solar and HVAC systems installers and servicers, utilities and other providers of solar power equipment or electric power. Some of these competitors may have significantly greater financial, technical and marketing resources and greater name recognition than we have. We believe the principal competitive factors in the solar power services industry include:

	•	Responsiveness to customer needs;

	•	Availability of technical personnel;

	•	Availability and prices of system components;

	•	Speed of system design and installation;

	•	Quality of service;

	•	Price;

	•	Project management capabilities; and

	•	Technical expertise

We believe that our ability to compete also depends in part on a number of factors outside of our control, including:

	•	The ability of our competitors to hire, retain and motivate qualified technical personnel;

	•	The ownership by competitors of proprietary tools to customize systems to the needs of a particular customer;

	•	The price at which others offer comparable services and equipment; and

	•	The extent of our competitors' responsiveness to client needs.

It is possible that competition in the solar power services industry could increase in the future, partly due to low barriers to entry. Increased competition could result in price reductions, reduced margins or loss of market share and greater competition for qualified technical personnel. There can be no assurance that we will be able to compete successfully against current and future competitors. If we are unable to compete effectively, or if competition among solar power services companies results in a deterioration of market conditions for solar power services companies, we could lose market share to our competitors.

Risks Relating to Our Industry

We have experienced technological changes in our industry; some new technologies may prove inappropriate and result in liability to us or may not gain market acceptance by our customers.

The solar power industry (and the alternative energy industry, in general) is subject to technological change. Our future success will depend on our ability to appropriately respond to

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changing technologies and changes in function of products and quality. If we adopt products and technologies that are not attractive to consumers, we may not be successful in capturing or retaining a significant share of our market. In addition, some new technologies are relatively untested and unperfected and may not perform as expected or as desired, in which event our adoption of such products or technologies may cause us to lose money.

A drop in the retail price of conventional energy or non-solar alternative energy sources may have a negative effect on our business.

We believe that a customer’s decision to purchase or install solar power capabilities is primarily driven by the cost and resultant return on investment resulting from solar power systems. Fluctuations in economic and market conditions that impact the prices of conventional and non-solar alternative energy sources, such as decreases in the prices of oil and other fossil fuels, could cause the demand for solar power systems to decline, which would have a negative impact on our business and results of operations. Changes in utility electric rates or net metering policies could also have a negative effect on our business.

Existing regulations, and changes to such regulations, may present technical, regulatory and economic barriers to the purchase and use of solar power products, which may significantly reduce demand for our products.

Installation of solar power systems are subject to oversight and regulation in accordance with national and local ordinances, building codes, zoning, environmental protection regulation, utility interconnection requirements for metering and other rules and regulations. We attempt to keep up-to-date about these requirements on a national, state, and local level, and must design systems to comply with varying standards. Certain cities may have ordinances that prevent or increase the cost of installation of our solar power systems. In addition, new government regulations or utility policies pertaining to solar power systems are unpredictable and may result in significant additional expenses or delays, and, as a result, could cause a significant reduction in demand for solar energy systems and our services. There currently exist metering caps in certain jurisdictions which effectively limit the aggregate amount of power that may be sold by solar power generators into the power grid. In California, Pacific Gas & Electric (PG&E) is approaching the limitation of 0.5% currently applicable in Northern California and as a result there could be limits from such restrictions on our ability to connect to the grid in this and other locations, although pending legislation could increase the cap, but there is no assurance that such cap will be increased

Our business depends on the availability of rebates, tax credits and other financial incentives; reduction or elimination of incentives would reduce the demand for our services.

Many states, including California and New Jersey, offer substantial incentives to offset the cost of solar power systems. These systems can take many forms, including direct rebates, state tax credits, system performance payments and Renewable Energy Credits (RECs). Moreover, the Federal government currently offers (only through 2007) a 30% tax credit for the installation of solar power systems (unlimited for businesses, capped at $2,000 for residences). This Federal Tax Credit may increase from approximately $2,000 per residential system to $2,000 per kw of residential system (effectively a $6,000 tax credit for a typical 3 kw residential system). The duration of the Federal Tax Credit may also be extended. Businesses may also elect to accelerate the depreciation on their system over five years. Reductions in or elimination of such incentives could substantially increase the cost of our systems to our customers, resulting in significant reductions in demand for our systems, which would have an adverse effect on our business and results of operations.

If solar power technology is not suitable for widespread adoption or sufficient demand for solar power products does not develop or takes longer to develop than we anticipate, our sales would decline and we would be unable to achieve or sustain profitability.

The market for solar power products is emerging and rapidly evolving, and its future success is uncertain. If solar power technology proves unsuitable for widespread commercial deployment or if demand for solar power products fails to develop sufficiently, we would be unable to generate enough

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revenue to achieve and sustain profitability. In addition, demand for solar power products in the markets and geographic regions we target may not develop or may develop more slowly than we anticipate. Many factors will influence the widespread adoption of solar power technology and demand for solar power products, including:

	•	Cost effectiveness of solar power technologies as compared with conventional and non-solar alternative energy technologies;

	•	Performance and reliability of solar power products as compared with conventional and non-solar alternative energy products;

	•	Capital expenditures by customers that tend to decrease if the U.S. economy slows; and

	•	Availability of government subsidies and incentives.

Risks Relating to the Merger

Our CEO, Barry Cinnamon, beneficially owns a substantial number of shares of our common stock, which gives him total control over certain major decisions on which our stockholders may vote, which may discourage an acquisition of the Company.

As a result of the Merger, Barry Cinnamon, our CEO, beneficially owns, in the aggregate, approximately 55.6% of our outstanding common stock. The interests of our CEO may differ from the interests of other stockholders. As a result, Mr. Cinnamon will have the right and ability to control virtually all corporate actions requiring stockholder approval, irrespective of how our other stockholders may vote, including the following actions:

	•	Electing or defeating the election of our directors;

	•	Amending or preventing amendment of our Certificate of Incorporation or By-laws;

	•	Effecting or preventing a merger, sale of assets or other corporate transaction; and

	•	Controlling the outcome of any other matter submitted to the stockholders for vote.

Mr. Cinnamon’s stock ownership may discourage a potential acquirer from seeking to acquire shares of our common stock or otherwise attempting to obtain control of the Company, which in turn could reduce our stock price or prevent our stockholders from realizing a premium over our stock price.

As a result of the Merger, we have become subject to the reporting requirements of Federal securities laws, which can be expensive.

As a result of the Merger, we have become a public reporting company and, accordingly, are subject to the information and reporting requirements of the Exchange Act and other Federal securities laws, including compliance with the Sarbanes-Oxley Act. The costs of preparing and filing annual and quarterly reports, proxy statements and other information with the SEC (including reporting of the Merger) and furnishing audited reports to stockholders will cause our expenses to be higher than they would be if we had remained privately-held and did not consummate the Merger. In addition, we will incur substantial expenses in connection with the preparation of the registration statement and related documents required under the terms of certain agreements that require us to register certain recently issued shares of our common stock.

In addition, it may be time consuming, difficult and costly for us to develop and implement the internal controls and reporting procedures required by the Sarbanes-Oxley Act. We may need to hire additional financial reporting, internal controls and other finance personnel in order to develop and implement appropriate internal controls and reporting procedures. If we are unable to comply with the internal controls requirements of the Sarbanes-Oxley Act, we may not be able to obtain the independent accountant certifications required by the Sarbanes-Oxley Act.

Public company compliance may make it more difficult to attract and retain officers and directors.

The Sarbanes-Oxley Act and new rules subsequently implemented by the SEC have required changes in corporate governance practices of public companies. As a public company, we expect these

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new rules and regulations to increase our compliance costs in 2006 and beyond and to make certain activities more time consuming and costly. As a public company, we also expect that these new rules and regulations may make it more difficult and expensive for us to obtain director and officer liability insurance in the future and we may be required to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage. As a result, it may be more difficult for us to attract and retain qualified persons to serve on our Board of Directors or as executive officers.

Because Akeena became public by means of a reverse merger with the Company, we may not be able to attract the attention of major brokerage firms.

There may be risks associated with Akeena’s becoming public through a ‘‘reverse merger’’. Securities analysts of major brokerage firms may not provide coverage of us since there is no incentive to brokerage firms to recommend the purchase of our common stock. No assurance can be given that brokerage firms will, in the future, want to conduct any secondary offerings on behalf of the Company.

Failure to cause a registration statement to become effective in a timely manner could materially adversely affect the Company.

We have agreed, at our expense, to prepare a registration statement covering the shares of common stock issued in the Private Placement and to use our best efforts to cause the Company to file that registration statement with the SEC within 90 days following the date of closing of the Private Placement. There are many reasons, including those over which we have no control, which could delay the filing or effectiveness of the registration statement, including delays resulting from the SEC review process and comments raised by the SEC during that process. Failure to file or cause a registration statement to become effective in a timely manner could materially adversely affect the Company and require us to pay penalties to the holders of those shares.

Risks Relating to Our Common Stock

Our stock price may be volatile.

The market price of our common stock is likely to be highly volatile and could fluctuate widely in price in response to various factors, many of which are beyond our control, including the following:

	•	Technological innovations or new products and services by us or our competitors;

	•	Additions or departures of key personnel;

	•	Limited ‘‘public float’’ following the Merger, in the hands of a small number of persons whose sales or lack of sales could result in positive or negative pricing pressure on the market price for our Common Stock;

	•	Sales of our common stock (particularly following effectiveness of the resale registration statement required to be filed in connection with the Private Placement);

	•	Our ability to execute our business plan;

	•	Operating results that fall below expectations;

	•	Loss of any strategic relationship;

	•	Industry developments;

	•	Economic and other external factors; and

	•	Period-to-period fluctuations in our financial results.

In addition, the securities markets have from time to time experienced significant price and volume fluctuations that are unrelated to the operating performance of particular companies. These market fluctuations may also materially and adversely affect the market price of our common stock.

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We have not paid dividends in the past and do not expect to pay dividends in the future. Any return on investment may be limited to the value of our common stock.

We have never paid cash dividends on our common stock and do not anticipate doing so in the foreseeable future. The payment of dividends on our common stock will depend on earnings, financial condition and other business and economic factors affecting it at such time as the board of directors may consider relevant. If we do not pay dividends, our common stock may be less valuable because a return on your investment will only occur if our stock price appreciates.

There is currently no liquid trading market for our common stock and we cannot ensure that one will ever develop or be sustained.

There is currently no liquid trading market for Akeena’s or the Company’s common stock. We cannot predict how liquid the market for the Company’s common stock might become. Our common stock is currently approved for quotation on the OTC Bulletin Board but is not trading. We anticipate applying for listing of our common stock on either the American Stock Exchange, The NASDAQ Stock Market or a national or other securities exchange as soon as is practicable, assuming that the Company can satisfy the initial listing standards for such. We currently do not satisfy the initial listing standards, and cannot ensure that we will be able to satisfy such listing standards or that our common stock will be accepted for listing on any such exchange. Should the Company fail to satisfy the initial listing standards of such exchanges, or our common stock be otherwise rejected for listing and remain on the OTC Bulletin Board or be suspended from the OTC Bulletin Board, the trading price of our common stock could suffer, the trading market for our common stock may be less liquid and our common stock price may be subject to increased volatility.

Our common stock may be deemed a ‘‘penny stock’’, which would make it more difficult for our investors to sell their shares.

Our common stock may be subject to the ‘‘penny stock’’ rules adopted under section 15(g) of the Securities Exchange Act of 1934. The penny stock rules apply to companies whose common stock is not listed on the NASDAQ Stock Market or other national securities exchange and trades at less than $5.00 per share or that have tangible net worth of less than $5,000,000 ($2,000,000 if the company has been operating for three or more years). These rules require, among other things, that brokers who trade penny stock to persons other than ‘‘established customers’’ complete certain documentation, make suitability inquiries of investors and provide investors with certain information concerning trading in the security, including a risk disclosure document and quote information under certain circumstances. Many brokers have decided not to trade penny stocks because of the requirements of the penny stock rules and, as a result, the number of broker-dealers willing to act as market makers in such securities is limited. If we remain subject to the penny stock rules for any significant period, it could have an adverse effect on the market, if any, for our securities. If our securities are subject to the penny stock rules, investors will find it more difficult to dispose of our securities.

Furthermore, for companies whose securities are quoted on the OTC Bulletin Board, it is more difficult (1) to obtain accurate quotations, (2) to obtain coverage for significant news events because major wire services generally do not publish press releases about such companies, and (3) to obtain needed capital.

Offers or availability for sale of a substantial number of shares of our common stock may cause the price of our common stock to decline.

If our stockholders sell substantial amounts of our common stock in the public market, including shares issued upon the effectiveness of the registration statement we are required to file, or upon the expiration of any statutory holding period, under Rule 144, or upon expiration of lock-up periods applicable to outstanding shares, or issued upon the exercise of outstanding options or warrants, could create a circumstance commonly referred to as an ‘‘overhang’’ and in anticipation of which the market price of our common stock could fall. The existence of an overhang, whether or not sales have occurred or are occurring, also could make more difficult our ability to raise additional financing

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through the sale of equity or equity-related securities in the future at a time and price that we deem reasonable or appropriate. The shares of common stock issued to Akeena’s officers, directors, and principal stockholders in the Merger will be subject to a lockup agreement prohibiting sales of such shares for a period of 12 months. Following expiration of the lockup agreement, all of those shares will become freely tradable, subject to securities laws and SEC regulations regarding sales by insiders. Additional shares of common stock will be freely tradable upon the earlier of: (i) effectiveness of the registration statement we are required to file; and (ii) the date on which such shares may be sold without registration pursuant to Rule 144 under the Securities Act.

Provisions of our Certificate of Incorporation and Delaware law could deter a change of control, which could discourage or delay offers to acquire us.

Provisions of our Certificate of Incorporation and Delaware law may make it more difficult for someone to acquire control of us or for our stockholders to remove existing management, and might discourage a third party from offering to acquire us, even if a change in control or in management would be beneficial to our stockholders. For example, our Certificate of Incorporation allows us to issue shares of preferred stock without any vote or further action by our stockholders.

Our Certificate of Incorporation authorizes our board to create new series of preferred stock without further approval by our stockholders, which could adversely affect the rights of the holders of our common stock.

Our Board of Directors has the authority to fix and determine the relative rights and preferences of preferred stock. Our Board of Directors also has the authority to issue preferred stock without further stockholder approval. As a result, our Board of Directors could authorize the issuance of a series of preferred stock that would grant to holders the preferred right to our assets upon liquidation, the right to receive dividend payments before dividends are distributed to the holders of common stock and the right to the redemption of the shares, together with a premium, prior to the redemption of our common stock. In addition our Board of Directors could authorize the issuance of a series of preferred stock that has greater voting power than our common stock or that is convertible into our common stock, which could decrease the relative voting power of our common stock or result in dilution to our existing stockholders.

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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth information regarding the number of shares of common stock beneficially owned on August 11, 2006, immediately following consummation of the Merger, by:

	•	Each person who is known by us to beneficially own 5% or more of our common stock;

	•	Each of our directors and named executive officers; and

	•	All of our directors and executive officers as a group.

Except as otherwise set forth below, the address of each of the persons listed below is 605 University Avenue, Los Gatos, CA 95032.

Name and Address of Beneficial Owner			Number of Shares Beneficially Owned(1)						Percentage of Shares Beneficially Owned(2)
Directors and Named Executive Officers:
Barry Cinnamon					8,090,000	(3)			55.9%
David Lad Wallace					22,204	(4)			*
All officers and directors as a group (2 persons)					8,112,204	(3)(4)			56.0%

(1)	Unless otherwise indicated, includes shares owned by a spouse, minor children and relatives sharing the same home, as well as entities owned or controlled by the named person. Also includes options and warrants to purchase shares of common stock exercisable within sixty (60) days. Unless otherwise noted, shares are owned of record and beneficially by the named person.

(2)	Based upon 14,381,680 shares of common stock outstanding immediately following the Merger, which incorporates (a) consummation of the closing of the Private Placement and the issuance of 2,527,000 shares thereunder and (b) the cancellation of 3,877,477 shares of common stock.

(3)	Does not include 750,000 shares issuable upon the exercise of outstanding warrants held by The Cinnamon 2006 Irrevocable Children’s Trust. Includes 90,000 shares issuable upon the exercise of outstanding warrants that are currently exercisable.

(4)	Includes 22,204 restricted shares granted to Mr. Wallace pursuant to the Akeena Solar, Inc. 2006 Stock Incentive Plan. Such shares will vest over a four year period, with 25% vesting each year beginning in August 2007 and are subject to forfeiture until vested.

DIRECTORS AND EXECUTIVE OFFICERS

The following table sets forth information regarding the members of our board of directors and our executive officers and other significant employees. All of our officers and directors were appointed on August 11, 2006, the closing date of the Merger. All directors hold office for one-year terms until the election and qualification of their successors. Officers are elected annually by the board of directors and serve at the discretion of the board.

Name			Age						Position
Barry Cinnamon					48				Director, President, Chief Executive Officer, Secretary and Treasurer
David Lad Wallace					53				Chief Financial Officer
Bill Scott					53				Executive Vice President
Douglas Sandlaufer					51				Vice President, Residential Sales
Gail Francisco					44				Marketing Director

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Biographies

Directors

Barry Cinnamon, Director, President, Chief Executive Officer, Secretary and Treasurer − 48.

Our founder, Barry Cinnamon, is a long-time advocate of solar energy and widely recognized solar energy expert. He started his career in solar energy in the late 1970s as a researcher into new flat plate and concentrating collector designs at the Massachusetts Institute of Technology (MIT). During the late 1970s and early 1980s, he designed and installed active solar, passive solar and ground coupled heat pump systems. His work in solar energy computer modeling led him into the software industry, where he served as CEO of Software Publishing Corporation, and founded Allegro New Media, a multimedia software publisher, which he led to an IPO in 1995. Mr. Cinnamon earned a BS Degree in Mechanical Engineering from MIT and an MBA degree in Marketing from Wharton. He is a NABCEP-Certified Solar Installer, a licensed California C-46 Solar Contractor, an active member of the Silicon Valley Leadership Group and President of the California Solar Energy Industry Association.

Executive Officers and Key Employees

Barry Cinnamon, President, Chief Executive Officer, Secretary and Treasurer − 48.

Mr. Cinnamon’s biography appears above under the subheading ‘‘Directors.’’

David Lad Wallace, Chief Financial Officer − 53.

David ‘‘Lad’’ Wallace has been consulting CFO for Akeena since January 2005. Mr. Wallace has an extensive history as senior financial manager in a number of industries, including micro-electronics manufacturing, winery, liquor and soft drink production, bottling and distribution, oil refining, sporting goods and clothing manufacturing. He has broad experience in development of financial systems, from creation of accounting systems to detailed financial reporting, and has helped develop Sarbanes Oxley and ISO 900X procedures. Mr. Wallace has been Controller to the Santa Cruz Sentinel since early 2006 and has been an independent financial management consultant since 2004. Prior to that, he was Chief Financial Officer of Bonny Doon Winery form 2002 to 2004. Prior to that, Mr. Wallace held contract positions as consulting CFO to Golden Vineyards LLC and as Business Development Consultant to Emcresal, a Spanish company, from 2000 to 2002. From 1997 to 2000, Mr. Wallace was Business Manager for Jacobs Engineering. Lad earned a B.A. from Linfield College and an MBA (International) from the Monterey Institute of International Studies.

Bill Scott, Executive Vice President − 53.

Mr. Scott has served as our Executive Vice President since October 2002. Mr. Scott has been an independent marketing, sales and business development contractor since July 2002. Prior to that, Mr. Scott served as Vice President, Marketing and Business Development at ViaSense, Inc., an Emeryville, California software developer, from September 2001 to March 2002. Prior to that, from January 2000 to August 2001, Mr. Scott was Vice President, Marketing and Business Development at Raining Data Corporation, an Irvine, California database technology and applications software company. Mr. Scott has 18 years of experience in the renewable energy industry and 10 years’ experience in information systems technology. His professional background includes positions in sales, marketing, operations and executive management. Mr. Scott holds an MS in Environmental Management from the University of San Francisco and a BS in Economics from the University of Wyoming.

Douglas Sandlaufer, Vice President of Residential Sales − 51.

Douglas Sandlaufer joined Akeena full-time in January 2006 after serving as Metro/District Manager for Sears Home Improvement Products & Services since April 2001. Prior to that, from December 1999 to April 2001, Mr. Sandlaufer was a Sales Manager at Jayson Oil Co., a Union,

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New Jersey based heating oil and heating and cooling equipment distributor. Mr. Sandlaufer has more than 30 years’ experience in the heating and cooling industry; he founded a heating oil company where he created the first discount for cash-payment heating oil service in the U.S. Mr. Sandlaufer’s interest in renewable energy began during the energy crisis of the mid-1970’s, when he was Vice President of Sales for American Solar Systems, a company which sold passive solar systems for swimming pools. At that time, he began studying renewable energy processes at California State University — Northridge and worked on research projects involving anaerobic digestion and gas production. Mr. Sandlaufer earned a B.A. in business and marketing from St. Peter’s University in Jersey City, New Jersey and a A.A. from New York University in New York City.

Gail Francisco, Marketing Director − 44.

Gail Francisco joined Akeena as Marketing Director in May 2006. Prior to joining Akeena, from October 2003 to May 2006, Ms. Francisco served with Alvarion, Inc., a wireless infrastructure manufacturer, and was responsible for the marketing activities of the Cellular Mobile Unit, which produced GSM and CDMA networks for under-developed and remote communities in the world. Prior to that, from May 2003 to August 2003, Ms. Francisco served as Advisor to the Chief Executive Officer of Bioelectric Systems, Inc., a San Diego, California-based medical device company, where she implemented corporate governance initiatives and reorganized the internal structure of the company. From July 2002 to September 2003, Ms. Francisco served as Administrator at the International Association for Kairos Therapy in Edinburgh, Scotland. Prior to that, from July 1999 to February 2002, she was a Plant and Operations Manager at Now & Zen, a San Francisco-based start-up, vegan food manufacturer. For the past three years, Ms. Francisco’s primary focus has been in online marketing. She has over 10 years of experience in marketing and operations for start-up companies with innovative products and technologies, including FloWind Corporation, a wind turbine manufacturer and independent power producer in California. Ms. Francisco holds a B.S. in Anthropology from University of California at Davis.

Meetings of Our Board of Directors

Neither Fairview-NV’s nor Fairview-DE’s Board of Directors held any meetings during the fiscal year ended October 31, 2005. Akeena’s Board of Directors did not hold any meetings during the year ended December 31, 2005.

Board Committees

Audit Committee.    We intend to establish an audit committee of the board of directors, which will consist of independent directors. The audit committee’s duties would be to recommend to our board of directors the engagement of independent auditors to audit our financial statements and to review our accounting and auditing principles. The audit committee would review the scope, timing and fees for the annual audit and the results of audit examinations performed by the internal auditors and independent public accountants, including their recommendations to improve the system of accounting and internal controls. The audit committee would at all times be composed exclusively of directors who are, in the opinion of our board of directors, free from any relationship which would interfere with the exercise of independent judgment as a committee member and who possess an understanding of financial statements and generally accepted accounting principles.

Compensation Committee.    We intend to establish a compensation committee of the board of directors. The compensation committee would review and approve our salary and benefits policies, including compensation of executive officers. The compensation committee would also administer our stock option plans and recommend and approve grants of stock options under such plans.

Director Compensation

We do not currently compensate our directors for acting as such, although we may do so in the future, including with cash and/or equity.

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EXECUTIVE COMPENSATION

Summary Compensation Table

The following Summary Compensation Table sets forth, for the years indicated, all cash compensation paid, distributed or accrued for services, including salary and bonus amounts, rendered in all capacities by the Company’s chief executive officer and all other executive officers who received or are entitled to receive remuneration in excess of $100,000 during the stated periods.

Summary Compensation table

			Annual compensation																								Long-Term Compensation																		All Other Compensation
Name and Principal Position			Year						Salary						Bonus						Other Annual Compensation						Awards						Payments
																											Restricted Stock Awards						Securities Underlying Options						LTIP Payouts
Barry Cinnamon, President,					2005					$	75,000						—						—						—						—						—					$	28,000(1	)
Chief Executive Officer,					2004					$	75,000												—						—						—						—					$	90,000(1	)
Secretary & Treasurer					2003					$	75,000												—						—						—						—					$	60,322(1	)

(1)	Paid to Mr. Cinnamon as distributions on his common stock.

Option Grants in Last Fiscal Year

There were no options granted to any of the named executive officers during the year ended December 31, 2005.

During the year ended December 31, 2005, none of the named executive officers exercised any stock options.

Employment Agreements

We currently do not have employment agreements with any of our employees.

Stock Incentive Plan

Prior to the Merger, Akeena adopted the Akeena Solar, Inc. 2006 Stock Incentive Plan. The plan allows for the grant of up to 450,000 shares of Akeena’s common stock as restricted stock or options to Akeena’s employees, directors and consultants. The Company assumed Akeena’s obligations under the plan in the Merger, as a result of which each share of Akeena restricted stock and each option granted under the plan was converted into a share of the Company’s restricted stock or an option to purchase a share of the Company’s common stock, respectively.

Directors’ and Officers’ Liability Insurance

We currently do not have insurance insuring directors and officers against liability; however, we are in the process of acquiring such insurance.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

On March 30, 2001, Akeena, Inc. purchased certain infrastructure and harvester technology (the ‘‘AWI Technology’’) from Andalay, Inc., a Delaware corporation, in exchange for warrants to purchase an aggregate of 1,000,000 shares of Akeena, Inc.’s common stock at an exercise price of $0.01 per share. Following the closing of that transaction, Andalay, Inc. changed its name to ‘‘Akeena Wireless, Inc.’’ (‘‘AWI’’). Barry Cinnamon is a director and principal stockholder and the Chief Executive Officer of AWI.

On June 2, 2006, Akeena assumed the obligations of Akeena, Inc. under the warrants in the re-domicile transaction, so that each warrant was converted into a warrant to purchase one share of

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common stock of Akeena. On July 18, 2006, AWI sold the warrants for an aggregate purchase price of $30,000, which was determined by an independent, third party appraiser to be the fair market value of the warrants. 750,000 of the warrants were purchased by The Cinnamon 2006 Irrevocable Children’s Trust, a trust established for the benefit of Barry Cinnamon’s children, and 90,000 of the warrants were purchased by Barry Cinnamon. On August 11, 2006, the Company assumed the obligations of Akeena under the warrants in the Merger, so that each warrant was converted into a warrant to purchase one share of the Company’s common stock. The warrants contain anti-dilution protection and are exercisable through the earlier to occur of (i) March 30, 2011, and (ii) the closing of a Change of Control (as defined in the warrants) of the Company.

On August 8, 2006, AWI repurchased the AWI Technology from Akeena for a purchase price of $24,215.21.

On July 18, 2006, Andalay Solar, Inc. a California corporation which is wholly-owned by Barry Cinnamon, assigned all of its right, title and interest in and to Patent Application No. 10/849.069 to Akeena. The Patent Application covers our solar module technology and had previously been assigned to Andalay Solar, Inc. by Barry Cinnamon, who is the inventor of the technology.

Bruce Velestuk, President of Fairview-DE prior to the Merger, provided a cash advance of $81 to Fairview-NV during the period ended October 31, 2005. This amount is unsecured, non-in-trust bearing and has no specific terms of repayment. Mr. Velestuk also provided office premises to Fairview-NV prior to the Merger. The premises were valued by management at $450 per month. During the period from July 29, 2005 to June 30, 2006, donated rent expense of $4,950 was charged to Fairview-DE’s operations.

Item 3.02.    Unregistered Sales of Equity Securities

In connection with the Merger, as of August 11, 2006, Fairview-DE accepted subscriptions for a total of 101.1 units, each unit consisting of 25,000 shares of our common stock, at a purchase price of $25,000 per unit, from accredited investors pursuant to the terms of a Confidential Private Offering Memorandum, dated July 7, 2006, as supplemented, in the Private Placement. We received gross proceeds from the closing of the Private Placement of $2,527,500.

The Private Placement was made solely to ‘‘accredited investors,’’ as that term is defined in Regulation D under the Securities Act. The units and the common stock were not registered under the Securities Act, or the securities laws of any state, and were offered and sold in reliance on the exemption from registration afforded by Section 4(2) and Regulation D (Rule 506) under the Securities Act and corresponding provisions of state securities laws, which exempt transactions by an issuer not involving any public offering.

We intend to use approximately $500,000 of the net proceeds from the Private Placement to repay an outstanding $500,000 line of credit owed to Citibank (West) FSB. We intend to use the remainder of such proceeds to continue research and development on our solar module technology and for general corporate purposes, including acquisitions, product inventory purchases, marketing, office expansion and working capital.

Because we have closed on only $2,527,500 in the Private Placement, we may need to seek additional sources of financing, including debt and equity financing, within the next 18 months, depending on our expected cash needs and the availability of cash flow at that time. Any additional equity financing would result in dilution to the percentage ownership of our existing stockholders.

We agreed to pay a placement agent the following fee in connection with the Private Placement: (1) a cash fee of 6% of the gross proceeds from sales of the units by the placement agent in the Private Placement; and (2) warrants to purchase a number of shares of common stock equal to 6% of the shares sold by the placement agent in the Private Placement at an exercise price of $1.00 per share, which expire the third anniversary of the date on which the warrants are issued.

The placement agent sold 33 units for a total of $825,000. In connection with such sales, we paid the placement agent a cash fee of $49,500 and warrants to purchase up to 49,500 shares of common stock.

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DESCRIPTION OF SECURITIES

The Company is authorized to issue 50,000,000 shares of common stock and 1,000,000 shares of preferred stock. Immediately following the Merger and the closing of the Private Placement for $2,527,500, there were 14,381,680 shares of common stock issued and outstanding and no shares of preferred stock issued and outstanding.

Common Stock

The holders of common stock are entitled to one vote per share. The Company’s Certificate of Incorporation does not provide for cumulative voting. The holders of common stock are entitled to receive ratably such dividends, if any, as may be declared by the board of directors out of legally available funds. However, the current policy of the board of directors is to retain earnings, if any, for operations and growth. Upon liquidation, dissolution or winding-up, the holders of common stock are entitled to share ratably in all assets that are legally available for distribution. The holders of common stock have no preemptive, subscription, redemption or conversion rights. The rights, preferences and privileges of holders of common stock are subject to, and may be adversely affected by, the rights of the holders of any series of preferred stock, which may be designated solely by action of the board of directors and issued in the future.

Preferred Stock

The board of directors is authorized, subject to any limitations prescribed by law, without further vote or action by the stockholders, to issue from time to time shares of preferred stock in one or more series. Each such series of preferred stock shall have such number of shares, designations, preferences, voting powers, qualifications, and special or relative rights or privileges as shall be determined by the board of directors, which may include, among others, dividend rights, voting rights, liquidation preferences, conversion rights and preemptive rights.

Warrants

The Company has outstanding warrants to purchase an aggregate of 1,000,000 shares of common stock at an exercise price of $0.01 per share. The warrants expire on the earlier to occur of (i) a Change of Control (as defined in the warrants) of the Company, and (ii) March 30, 2011.

Registration Rights

The Company has agreed to file a ‘‘resale’’ registration statement with the SEC covering all shares of common stock sold in the Private Placement on or before the date that is 90 days after the date of the closing of the Private Placement. The Company will use its reasonable best efforts to maintain the effectiveness of the ‘‘resale’’ registration statement from the effective date through and until 18 months after the closing date of the Private Placement, unless all securities registered under the registration statement have been sold or are otherwise able to be sold pursuant to Rule 144, at which time exempt sales may be permitted for purchasers of the units. The Company has agreed to use its reasonable best efforts to have such ‘‘resale’’ registration statement declared effective by the SEC as soon as possible and, in any event, within 120 days after the initial filing date.

The Company is obligated to pay to each purchaser of units a fee of 1% per month of the purchaser’s investment, payable in cash or common stock at Fair Market Value (as defined in the Registration Rights Agreement), in the discretion of the Company, up to a maximum of 6%, for each month (i) in excess of 60 days that the registration statement has not been filed, (ii) in excess of 21 days that the Company fails to respond to the initial comments of the SEC, and (iii) in which the Company fails to use its reasonable best efforts to cause the registration statement to be declared effective.

The description of registration rights is qualified in its entirety by reference to the Registration Rights Agreement filed herewith as Exhibit 10.3.

Lock-up Agreements

All shares of common stock held by officers and directors of the Company (together with the shares held by their respective affiliates) (the ‘‘Lock Up Shares’’) are subject to lock-up provisions

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that provide restrictions on the future sale of common stock by the holders and their transferees. These lock-up provisions provide, in general, that the Lock Up Shares may not, directly or indirectly, be offered, sold, offered for sale, contracted for sale, hedged or otherwise transferred or disposed of for a period of twelve (12) months following the closing of the Private Placement.

Market Price and Dividends

Akeena is, and has always been, a privately held company and now is a wholly-owned subsidiary of the Company. There is not, and never has been, a public market for the securities of Akeena. Akeena has never declared or paid any cash dividends on its capital stock. In addition, Fairview-NV’s common stock has been approved for quotation on the OTC Bulletin Board, but there has never been a trading market for the stock.

Indemnification of Directors and Officers

Section 145 of the Delaware General Corporation Law (‘‘DGCL’’) provides, in general, that a corporation incorporated under the laws of the State of Delaware, such as the Company, may indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding (other than a derivative action by or in the right of the corporation) by reason of the fact that such person is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another enterprise, against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by such person in connection with such action, suit or proceeding if such person acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe such person’s conduct was unlawful. In the case of a derivative action, a Delaware corporation may indemnify any such person against expenses (including attorneys’ fees) actually and reasonably incurred by such person in connection with the defense or settlement of such action or suit if such person acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interests of the corporation, except that no indemnification will be made in respect of any claim, issue or matter as to which such person will have been adjudged to be liable to the corporation unless and only to the extent that the Court of Chancery of the State of Delaware or any other court in which such action was brought determines such person is fairly and reasonably entitled to indemnity for such expenses.

The Company’s Certificate of Incorporation and Bylaws provide that the Company will indemnify the Company’s directors, officers, employees and agents to the extent and in the manner permitted by the provisions of the DGCL, as amended from time to time, subject to any permissible expansion or limitation of such indemnification, as may be set forth in any stockholders’ or directors’ resolution or by contract. In addition, the Company’s director and officer indemnification agreements with each of its executive officers and directors provide, among other things, for the indemnification to the fullest extent permitted or required by Delaware law, provided that such indemnitee shall not be entitled to indemnification in connection with any ‘‘claim’’ (as such term is defined in the agreement) initiated by the indemnitee against the Company or the Company’s directors or officers unless the Company joins or consents to the initiation of such claim, or the purchase and sale of securities by the indemnitee in violation of Section 16(b) of the Exchange Act.

Any repeal or modification of these provisions approved by the Company’s stockholders shall be prospective only, and shall not adversely affect any limitation on the liability of a director or officer of the Company existing as of the time of such repeal or modification.

The Company is also permitted to apply for insurance on behalf of any director, officer, employee or other agent for liability arising out of his actions, whether or not the DGCL would permit indemnification.

Anti-Takeover Effect of Delaware Law, Certain By-Law Provisions

Certain provisions of the Company’s By-Laws are intended to strengthen the board of directors’ position in the event of a hostile takeover attempt. These provisions have the following effects:

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	•	they provide that only business brought before an annual meeting by the board of directors or by a stockholder who complies with the procedures set forth in the By-Laws may be transacted at an annual meeting of stockholders; and

	•	they provide for advance notice or certain stockholder actions, such as the nomination of directors and stockholder proposals.

The Company is subject to the provisions of Section 203 of the DGCL, an anti-takeover law. In general, Section 203 prohibits a publicly held Delaware corporation from engaging in a ‘‘business combination’’ with an ‘‘interested stockholder’’ for a period of three years after the date of the transaction in which the person became an interested stockholder, unless the business combination is approved in a prescribed manner. For purposes of Section 203, a ‘‘business combination’’ includes a merger, asset sale or other transaction resulting in a financial benefit to the interested stockholder, and an ‘‘interested stockholder’’ is a person who, together with affiliates and associates, owns, or within three years prior, did own, 15% or more of the voting stock.

Trading Information

Our common stock is currently approved for quotation on the OTC Bulletin Board maintained by the National Association of Securities Dealers, Inc. under the symbol ‘‘FVWE,’’ but is not trading. We intend to notify the OTC Bulletin Board as soon as practicable of our name change and to obtain a new symbol. As soon as is practicable and assuming we satisfy all necessary initial listing requirements, we intend to apply to have our common stock listed for trading on the American Stock Exchange or NASDAQ Stock Market, although we cannot be certain that any of these applications will be submitted or approved.

The transfer agent for our common stock is Empire Stock Transfer, Inc., 7251 West Lake Mead Boulevard, Suite 300, Las Vegas, NV 89128, Telephone: 702-562-4091.

Item 4.01.    Changes in Registrant’s Certifying Accountant

Effective as of August 11, 2006, we dismissed Dale Matheson Carr-Hilton LaBonte (‘‘Dale Matheson’’) as our independent accountants. Dale Matheson had previously been engaged as the principal accountant to audit our financial statements. The reason for the dismissal of Dale Matheson is that, following the consummation of the Merger on August 11, 2006, (i) the former stockholders of Akeena owned a majority of the outstanding shares of our common stock and (ii) our primary business unit became the business previously conducted by Akeena. The independent registered public accountant of Akeena was the firm of Marcum & Kliegman, LLP. We believe that it is in our best interest to have Marcum & Kliegman, LLP continue to work with our business, and we therefore retained Marcum & Kliegman, LLP as our new independent registered accounting firm, effective as of August 11, 2006. Marcum & Kliegman, LLP is located at 655 Third Avenue, New York, NY 10017.

The report of Dale Matheson on our financial statements for the period from July 29, 2005 (inception) through our fiscal year ended October 31, 2005 did not contain an adverse opinion or disclaimer of opinion, nor was it qualified or modified as to uncertainty, audit scope or accounting principles, except that the report was qualified as to our ability to continue as a going concern.

The decision to change accountants was approved by our board of directors on August 11, 2006.

From July 29, 2005 through August 11, 2006, there were no disagreements with Dale Matheson on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure which, if not resolved to the satisfaction of Dale Matheson, would have caused it to make reference to the matter in connection with its reports.

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We had made the contents of this Current Report on Form 8-K available to Dale Matheson and requested it to furnish a letter addressed to the SEC as to whether it agrees or disagrees with, or wishes to clarify our expression of, our views, or containing any additional information. A copy of Dale Matheson’s letter to the SEC is included as Exhibit 16.1 to this Current Report on Form 8-K.

As of August 11, 2006, Marcum & Kliegman, LLP was engaged as our new independent registered public accountants. The appointment of Marcum & Kliegman, LLP was approved by our board of directors. During our two most recent fiscal years and the subsequent interim periods through August 11, 2006, we did not consult Marcum & Kliegman, LLP regarding either: (i) the application of accounting principles to a specific completed or contemplated transaction, or the type of audit opinion that might be rendered on the Company’s financial statements; or (ii) any matter that was the subject of a disagreement as defined in Item 304(a)(1)(iv) of Regulation S-B.

Item 5.01.    Changes in Control of Registrant.

Reference is made to the disclosure set forth under Item 2.01 of this Current Report on Form 8-K, which disclosure is incorporated herein by reference.

Item 5.02.    Departure of Directors or Principal Officers; Election of Directors; Appointment of Principal Officers.

Bruce Velestuk, our sole director and sole executive officer, resigned as of August 11, 2006, immediately prior to the closing of the Merger. Pursuant to the terms of the Merger Agreement, the new directors and officers of the Company are as set forth therein. Reference is made to the disclosure set forth under Item 2.01 of this Current Report on Form 8-K, which disclosure is incorporated herein by reference.

Item 5.03.    Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year

On August 11, 2006, the Company’s newly elected board of directors approved an amendment to its certificate of incorporation, changing the Company’s name from ‘‘Fairview Energy Corporation, Inc.’’ to ‘‘Akeena Solar, Inc.’’ On August 11, 2006, stockholders representing the requisite number of votes necessary to approve an amendment to the certificate of incorporation took action via written consent approving the corporate name change. On August 11, 2006, the Company filed a Certificate of Amendment to its Certificate of Incorporation with the Delaware Secretary of State effecting the name change.

As a result of the reverse merger, the Company's fiscal year end changed from October 31 to December 31.

Item 5.06.    Change in Shell Company Status

As a result of the consummation of the Merger described in Items 1.01 and 2.01 of this Current Report on Form 8-K, we believe that the Company is no longer a ‘‘shell corporation,’’ as that term is defined in Rule 405 of the Securities Act and Rule 12b-2 of the Exchange Act.

Item 9.01.    Financial Statements and Exhibits

(a)    Financial Statements of Businesses Acquired.

In accordance with Item 9.01(a), Akeena’s audited financial statements for the fiscal years ended December 31, 2005 and 2004 and Akeena’s unaudited financial statements for the three-month interim periods ended March 31, 2006 and 2005 are filed in this Current Report on Form 8-K as Exhibit 99.1.

(b)    Pro Forma Financial Information.

In accordance with Item 9.01(b), our pro forma financial statements are filed in this Current Report on Form 8-K as Exhibit 99.2.

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(d)    Exhibits.

The exhibits listed in the following Exhibit Index are filed as part of this Current Report on Form 8-K.

Exhibit No.						Description
	2	.1***				Agreement of Merger and Plan of Reorganization, dated as of August 11, 2006, by and among Fairview Energy Corporation, Inc., ASI Acquisition Sub, Inc. and Akeena Solar, Inc.
	3	.1*				Certificate of Incorporation of Fairview Energy Corporation, Inc.
	3	.2**				By-laws of Fairview Energy Corporation, Inc.
	3	.3***				Certificate of Amendment to Certificate of Incorporation of Fairview Energy Corporation, Inc., changing the Company’s name to Akeena Solar, Inc.
	10	.1***				Akeena Solar, Inc. 2006 Stock Incentive Plan
	10	.2***				Form of Akeena Solar, Inc. Private Placement Subscription Agreement
	10	.3				Form of Akeena Solar, Inc. Registration Rights Agreement
	10	.4***				Form of Lockup Agreement
	10	.5***				Relationship Ready Credit Agreement, dated August 31, 2005, by and between Akeena, Inc. and Citibank (West) FSB.
	10	.6***				Commercial Guaranty, dated August 31, 2005, of Barry Cinnamon to Citibank (West) FSB.
	10	.7***				Commercial Security Agreement, dated August 31, 2005, between Akeena, Inc. and Citibank (West) FSB.
	10	.8***				Form of Customer Purchase Agreement.
	10	.9***				Form of Director and Officer Indemnification Agreement.
	10	.10***				Letter Agreement, dated July 19, 2006, between Akeena Solar, Inc. and Lippert/Heilshorn & Associates.
	10	.11				Standard Industrial/Commercial Single-Tenant Lease – Net, dated September 30, 2002, between Mattiuz Children's Trust and Akeena Solar, Inc., as amended by Addendum to Standard Industrial/Commercial Single-Tenant Lease – Net, dated April 26, 2004, Second Addendum Standard Industrial/Commercial Single-Tenant Lease – Net, dated April 30, 2005 and Third Addendum to Standard Industrial/Commercial Single-Tenant Lease, dated July 7, 2006.
	10	.12				Letter Agreement, dated July 21, 2006, between Akeena Solar, Inc. and Westminster Securities Corp.
	16	.1***				Letter of Dale Matheson Carr-Hilton LaBonte, dated as of August 14, 2006
	17	.1***				Letter of Bruce Velestuk dated August 11, 2006
	21	.1***				List of Subsidiaries
	99	.1				Akeena Solar, Inc. financial statements for the fiscal years ended December 31, 2005 and 2004 (audited) and for the three months ended March 31, 2006 and 2005 (unaudited)
	99	.2				Unaudited pro forma consolidated balance sheet as of December 31, 2005 and March 31, 2006 and unaudited pro forma consolidated statement of operations for the year ended December 31, 2005 and for the three months ended March 31, 2006

*	Incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K of Fairview Energy Corporation, Inc. filed with the Commission on August 7, 2006.

**	Incorporated by reference to Exhibit 3.2 to the Current Report on Form 8-K of Fairview Energy Corporation, Inc. filed with the Commission on August 7, 2006.

***	Previously filed as Exhibits to the Company's Current Report on Form 8-K filed with the Commission on August 14, 2006.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Date: August 25, 2006			AKEENA SOLAR, INC.
			By:			/s/ Barry Cinnamon
						Barry Cinnamon
						President

EX-10.3

                               AKEENA SOLAR, INC.

                          REGISTRATION RIGHTS AGREEMENT

                                 _____ __, 2006






                                Table of Contents

                                                                            Page
                                                                            ----

1. Registration Rights...................................................     1
   1.1 Definitions.......................................................     1
   1.2 Company Registration..............................................     2
   1.3 Obligations of the Company........................................     3
   1.4 Furnish Information...............................................     4
   1.5 Delay of Registration.............................................     4
   1.6 Indemnification...................................................     4
   1.7 Reports Under Securities Exchange Act.............................     6
   1.8 Transfer or Assignment of Registration Rights.....................     7
   1.9 "Market Stand-Off" Agreement......................................     7
2. Covenants of the Company to the Investors.............................     8
   2.1 Information Rights................................................     8
   2.2 Confidentiality...................................................     8
3. Legend................................................................     8
4. Miscellaneous.........................................................     9
   4.1 Governing Law.....................................................     9
   4.2 Waivers and Amendments............................................     9
   4.3 Successors and Assigns............................................    10
   4.4 Entire Agreement..................................................    10
   4.5 Notices...........................................................    10
   4.6 Interpretation....................................................    10
   4.7 Severability......................................................    10
   4.8 Counterparts......................................................    10
   4.9 Telecopy Execution and Delivery...................................    10


                                        i




                          REGISTRATION RIGHTS AGREEMENT

     THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement") is made as of July
__, 2006, among Akeena Solar, Inc., a Delaware corporation (the "Company"), and
the individuals and entities listed on Schedule A hereto (each, an "Investor"
and collectively, the "Investors").

                                    RECITALS

     WHEREAS, the Company and the Investors are parties to Subscription
Agreements (the "Subscription Agreements") pursuant to a Private Placement
Memorandum dated July 7, 2006 ("PPM");

     WHEREAS, the Investors' obligations under the Subscription Agreements are
conditioned upon certain registration rights under the Securities Act of 1933,
as amended (the "Securities Act"), as described in the Subscription Agreements;
and

     WHEREAS, the Investors and the Company desire to provide for the rights of
registration under the Securities Act as are provided herein upon the execution
and delivery of this Agreement by such Investors and the Company.

     NOW, THEREFORE, in consideration of the promises, covenants and conditions
set forth herein, the parties hereto hereby agree as follows:

1.   Registration Rights.

     1.1 Definitions. As used in this Agreement, the following terms shall have
the meanings set forth below:

          (a) "Commission" means the United States Securities and Exchange
Commission.

          (b) "Common Stock" means the Company's common stock, par value $0.001
per share.

          (c) "Effectiveness Date" means the 180th day following the initial
filing date of the Registration Statement hereunder.

          (d) "Exchange Act" means the Securities Exchange Act of 1934, as
amended.

          (e) "Fair Market Value" means the average of the high and low prices
of publicly traded shares of Common Stock, rounded to the nearest cent, on the
principal national securities exchange on which shares of Common Stock are
listed (if the shares of Common Stock are so listed), or on the Nasdaq Stock
Market (if the shares of Common Stock are regularly quoted on the Nasdaq Stock
Market), or, if not so listed or regularly quoted, the mean between the closing
bid and asked prices of publicly traded shares of Common Stock in the
over-the-counter market, or, if such bid and asked prices shall not be
available, as reported by any nationally recognized quotation service selected
by the Company, or as determined by the Board



of Directors of the Company in a manner consistent with the provisions of the
Internal Revenue Code, as amended.

          (f) "Filing Date" means, with respect to the Registration Statement
required to be filed hereunder, a date no later than ninety (90) days following
the Termination Date.

          (g) "Investor" means any person owning Registrable Securities.

          (h) The terms "register," "registered" and "registration" refer to a
registration effected by preparing and filing a registration statement or
similar document in compliance with the Securities Act, and the declaration or
ordering of effectiveness of such registration statement or document.

          (i) "Registrable Securities" means any of the Shares or any securities
issued or issuable as (or any securities issued or issuable upon the conversion
or exercise of any warrant, right or other security that is issued as) a
dividend or other distribution with respect to, or in exchange for, or in
replacement of, the Shares; provided, however, that Registrable Securities shall
not include any shares of Common Stock which have previously been registered or
which have been sold to the public either pursuant to a registration statement
or Rule 144, or which have been sold in a private transaction in which the
transferor's rights under this Section 1 are not assigned, or which may be sold
immediately without registration under the Securities Act and without volume
restrictions pursuant to Rule 144(k).

          (j) "Rule 144" means Rule 144 as promulgated by the Commission under
the Securities Act, as such Rule may be amended from time to time, or any
similar successor rule that may be promulgated by the Commission.

          (k) "Rule 145" means Rule 145 as promulgated by the Commission under
the Securities Act, as such Rule may be amended from time to time, or any
similar successor rule that may be promulgated by the Commission.

          (l) "Shares" means the shares of the Common Stock issued pursuant to
the Subscription Agreements.

          (m) "Termination Date" shall have the meaning set forth in the PPM.

     1.2  Company Registration.

          (a) On or prior to the Filing Date the Company shall prepare and file
with the Commission a registration statement (the "Registration Statement")
covering the Registrable Securities for an offering to be made on a continuous
basis pursuant to Rule 415. The Registration Statement shall be on Form SB-2 or
Form S-3 (except if the Company is not then eligible to register for resale the
Registrable Securities on Form SB-2 or Form S-3, in which case such registration
shall be on another appropriate form in accordance herewith). The Company shall
cause the Registration Statement to become effective and remain effective as
provided herein. The Company shall use its reasonable best efforts to cause the
Registration Statement to be declared effective under the Securities Act as
promptly as possible after the filing thereof, but in any event no later than
the Effectiveness Date. The Company shall use its reasonable best


                                        2



efforts to keep the Registration Statement continuously effective under the
Securities Act until the date which is the earliest to occur of (i) the date
that is 18 months after the date hereof and (ii) the date when all Registrable
Securities have been sold (the "Effectiveness Period").

          (b) If: (i) the Registration Statement is not filed on or prior to the
Filing Date; (ii) the Company fails to respond to the initial comments of the
Commission with respect to the Registration Statement on or prior to the date
that is 21 days after the Company's receipt of such comments; or (iii) the
Company fails to use its reasonable best efforts to cause the Registration
Statement to be declared effective on or prior to the Effectiveness Date (any
such failure or breach being referred to as an "Event," and the date on which
such Event occurs being referred to as the "Event Date"), then until the
applicable Event is cured, the Company shall pay to each Investor, in cash or in
Common Stock at Fair Market Value, at the Company's option, as liquidated
damages and not as a penalty, an amount equal to 1.0% of the aggregate amount
invested by such Investor for each thirty (30) day period (prorated for partial
periods), up to a maximum of 6%. While such Event continues, such liquidated
damages shall be paid not less often than each thirty (30) days. Any unpaid
liquidated damages as of the date when an Event has been cured by the Company
shall be paid within three business (3) days following the date on which such
Event has been cured by the Company.

          (c) The Company shall bear and pay all expenses incurred in connection
with any registration, filing or qualification of Registrable Securities with
respect to the registration pursuant to this Section 1.2 for each Investor,
including (without limitation) all registration, filing and qualification fees,
printer's fees, accounting fees and fees and disbursements of counsel for the
Company, but excluding underwriting discounts and commissions relating to
Registrable Securities and fees and disbursements of counsel for the Investors.

     1.3 Obligations of the Company. Whenever required under this Section 1 to
effect the registration of any Registrable Securities, the Company shall, as
expeditiously as reasonably possible:

          (a) Prepare and file with the Commission a registration statement with
respect to such Registrable Securities and use its reasonable best efforts to
cause such Registration Statement to become effective and, upon the request of
the Investors of at least a majority of the Registrable Securities registered
thereunder, keep such Registration Statement effective during the Effectiveness
Period;

          (b) Prepare and file with the Commission such amendments and
supplements to such Registration Statement and the prospectus used in connection
with such Registration Statement as may be necessary to comply with the
provisions of the Securities Act with respect to the disposition of all
securities covered by such Registration Statement;

          (c) Furnish to the Investors such numbers of copies of a prospectus,
including a preliminary prospectus, in conformity with the requirements of the
Securities Act, and such other documents as they may reasonably request in order
to facilitate the disposition of Registrable Securities owned by them (provided
that the Company would not be required to print such prospectuses if readily
available to Investors from any electronic service, such as on the EDGAR filing
database maintained at www.sec.gov);


                                        3



          (d) Use its reasonable best efforts to register and qualify the
securities covered by such Registration Statement under such other securities'
or blue sky laws of such jurisdictions as shall be reasonably requested by the
Investors; provided that the Company shall not be required in connection
therewith or as a condition thereto to qualify to do business or to file a
general consent to service of process in any such states or jurisdictions;

          (e) In the event of any underwritten public offering, enter into and
perform its obligations under an underwriting agreement, in usual and customary
form, with the managing underwriter(s) of such offering (each Investor
participating in such underwriting shall also enter into and perform its
obligations under such an agreement);

          (f) Notify each Investor of Registrable Securities covered by such
Registration Statement at any time when a prospectus relating thereto is
required to be delivered under the Securities Act of the happening of any event
as a result of which the prospectus included in such Registration Statement, as
then in effect, includes an untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances then
existing;

          (g) Cause all such Registrable Securities registered pursuant hereto
to be listed on each securities exchange or nationally recognized quotation
system on which similar securities issued by the Company are then listed; and

          (h) Provide a transfer agent and registrar for all Registrable
Securities registered pursuant hereto and a CUSIP number for all such
Registrable Securities, in each case not later than the effective date of such
registration.

     1.4 Furnish Information. It shall be a condition precedent to the Company's
obligations to take any action pursuant to this Section 1 with respect to the
Registrable Securities of any selling Investor that such Investor shall furnish
to the Company such information regarding such Investor, the Registrable
Securities held by such Investor, and the intended method of disposition of such
securities as shall be required by the Company or the managing underwriters, if
any, to effect the registration of such Investor's Registrable Securities.

     1.5 Delay of Registration. No Investor shall have any right to obtain or
seek an injunction restraining or otherwise delaying any such registration as
the result of any controversy that might arise with respect to the
interpretation or implementation of this Section 1.

     1.6 Indemnification.

          (a) To the extent permitted by law, the Company will indemnify and
hold harmless each Investor, any underwriter (as defined in the Securities Act)
for such Investor and each person, if any, who controls such Investor or
underwriter within the meaning of the Securities Act or the Exchange Act,
against any losses, claims, damages or liabilities (joint or several) to which
any of the foregoing persons may become subject under the Securities Act, the
Exchange Act or other federal or state securities law, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out of or
are based upon any of the following statements, omissions or violations
(collectively, a "Violation"): (i) any untrue statement or alleged untrue
statement of a material fact contained in a registration statement, including
any


                                        4



preliminary prospectus or final prospectus contained therein or any amendments
or supplements thereto (collectively, the "Filings"), (ii) the omission or
alleged omission to state in the Filings a material fact required to be stated
therein, or necessary to make the statements therein not misleading, or (iii)
any violation or alleged violation by the Company of the Securities Act, the
Exchange Act, any state securities law or any rule or regulation promulgated
under the Securities Act, the Exchange Act or any state securities law; and the
Company will pay any legal or other expenses reasonably incurred by any person
to be indemnified pursuant to this Section 1.6(a) in connection with
investigating or defending any such loss, claim, damage, liability or action;
provided, however, that the indemnity agreement contained in this Section 1.6(a)
shall not apply to amounts paid in settlement of any such loss, claim, damage,
liability or action if such settlement is effected without the consent of the
Company (which consent shall not be unreasonably withheld), nor shall the
Company be liable in any such case for any such loss, claim, damage, liability
or action to the extent that it arises out of or is based upon a Violation that
occurs in reliance upon and in conformity with written information furnished
expressly for use in connection with such registration by any such Investor,
underwriter or controlling person.

          (b) To the extent permitted by law, each Investor will indemnify and
hold harmless the Company, each of its directors, each of its officers who has
signed the registration statement, each person, if any, who controls the Company
within the meaning of the Securities Act or the Exchange Act, any underwriter,
any other Investor selling securities in such registration statement and any
controlling person of any such underwriter or other Investor, against any
losses, claims, damages or liabilities (joint or several) to which any of the
foregoing persons may become subject under the Securities Act, the Exchange Act
or other federal or state securities law, insofar as such losses, claims,
damages or liabilities (or actions in respect thereto) arise out of or are based
upon any Violation, in each case to the extent (and only to the extent) that
such Violation occurs in reliance upon and in conformity with written
information furnished by such Investor expressly for use in connection with such
registration; and each such Investor will pay any legal or other expenses
reasonably incurred by any person to be indemnified pursuant to this Section
1.6(b) in connection with investigating or defending any such loss, claim,
damage, liability or action; provided, however, that the indemnity agreement
contained in this Section 1.6(b) shall not apply to amounts paid in settlement
of any such loss, claim, damage, liability or action if such settlement is
effected without the consent of the Investor (which consent shall not be
unreasonably withheld); provided, however, in no event shall any indemnity under
this subsection 1.6(b) exceed the gross proceeds from the offering received by
such Investor.

          (c) Promptly after receipt by an indemnified party under this Section
1.6 of notice of the commencement of any action (including any governmental
action), such indemnified party will, if a claim in respect thereof is to be
made against any indemnifying party under this Section 1.6, deliver to the
indemnifying party a written notice of the commencement thereof and the
indemnifying party shall have the right to participate in, and, to the extent
the indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume the defense thereof with counsel mutually
satisfactory to the parties; provided, however, that an indemnified party
(together with all other indemnified parties that may be represented without
conflict by one counsel) shall have the right to retain one separate counsel,
with the fees and expenses to be paid by the indemnifying party, if
representation of such indemnified party by the counsel retained by the
indemnifying party would be inappropriate due to actual or potential


                                        5



differing interests between such indemnified party and any other party
represented by such counsel in such proceeding. The failure to deliver written
notice to the indemnifying party within a reasonable time of the commencement of
any such action, if materially prejudicial to its ability to defend such action,
shall relieve such indemnifying party of any liability to the indemnified party
under this Section 1.6, but the omission so to deliver written notice to the
indemnifying party will not relieve it of any liability that it may have to any
indemnified party otherwise than under this Section 1.6.

          (d) If the indemnification provided for in Sections 1.6(a) and (b) is
held by a court of competent jurisdiction to be unavailable to an indemnified
party with respect to any loss, claim, damage or expense referred to herein,
then the indemnifying party, in lieu of indemnifying such indemnified party
hereunder, shall contribute to the amount paid or payable by such indemnified
party as a result of such loss, claim, damage or expense in such proportion as
is appropriate to reflect the relative fault of the indemnifying party on the
one hand and of the indemnified party on the other in connection with the
statements or omissions or alleged statements or omissions that resulted in such
loss, liability, claim or expense as well as any other relevant equitable
considerations. The relative fault of the indemnifying party and of the
indemnified party shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact relates to
information supplied by the indemnifying party or by the indemnified party and
the parties' relative intent, knowledge, access to information and opportunity
to correct or prevent such statement or omission. In no event shall any Investor
be required to contribute an amount in excess of the gross proceeds from the
offering received by such Investor.

          (e) Notwithstanding the foregoing, to the extent that the provisions
on indemnification and contribution contained in the underwriting agreement
entered into in connection with the underwritten public offering are in conflict
with the foregoing provisions, the provisions of the underwriting agreement
shall control.

          (f) The obligations of the Company and Investors under this Section
1.6 shall survive the completion of any offering of Registrable Securities in a
registration statement under this Section 1, and otherwise.

     1.7 Reports Under Securities Exchange Act. With a view to making available
the benefits of certain rules and regulations of the Commission, including Rule
144, that may at any time permit an Investor to sell securities of the Company
to the public without registration or pursuant to a registration on Form SB-2,
the Company agrees to:

          (a) make and keep public information available, as those terms are
understood and defined in Rule 144, at all times after ninety (90) days after
the effective date of the first registration statement filed by the Company for
the offering of its securities to the general public;

          (b) take such action, including the voluntary registration of its
Common Stock under Section 12 of the Exchange Act, as is necessary to enable the
Investors to utilize Form SB-2 for the sale of their Registrable Securities,
such action to be taken as soon as practicable after the end of the fiscal year
in which the first registration statement filed by the Company for the offering
of its securities to the general public is declared effective;


                                        6



          (c) file with the Commission in a timely manner all reports and other
documents required of the Company under the Securities Act and the Exchange Act;
and

          (d) furnish to any Investor, so long as the Investor owns any
Registrable Securities, forthwith upon request (i) a written statement by the
Company that it has complied with the reporting requirements of Rule 144 (at any
time after ninety (90) calendar days after the effective date of the first
registration statement filed by the Company), the Securities Act and the
Exchange Act (at any time after it has become subject to such reporting
requirements), or that it qualifies as a registrant whose securities may be
resold pursuant to Form SB-2 (at any time after it so qualifies), (ii) a copy of
the most recent annual or quarterly report of the Company and such other reports
and documents so filed by the Company, and (iii) such other information as may
be reasonably requested in availing any Investor of any rule or regulation of
the Commission that permits the selling of any such securities without
registration or pursuant to such form.

     1.8 Transfer or Assignment of Registration Rights. The rights to cause the
Company to register Registrable Securities pursuant to this Section 1 may be
transferred or assigned, but only with all related obligations, by a Investor to
a transferee or assignee who (a) acquires at least 100,000 shares (subject to
appropriate adjustment for stock splits, stock dividends and combinations) of
Registrable Securities from such transferring Investor or (b) holds Registrable
Securities immediately prior to such transfer or assignment; provided that in
the case of (a), (i) prior to such transfer or assignment, the Company is
furnished with written notice stating the name and address of such transferee or
assignee and identifying the securities with respect to which such registration
rights are being transferred or assigned, (ii) such transferee or assignee
agrees in writing to be bound by and subject to the terms and conditions of this
Agreement, including without limitation the provisions of Section 1.9 and (iii)
such transfer or assignment shall be effective only if immediately following
such transfer or assignment the further disposition of such securities by the
transferee or assignee is restricted under the Securities Act.

     1.9 "Market Stand-Off" Agreement. Each Investor hereby agrees that it will
not, without the prior written consent of the managing underwriter, during the
period commencing on the date of the final prospectus relating to the Company's
initial underwritten public offering and ending on the date specified by the
Company and the managing underwriter (such period not to exceed one hundred
eighty (180) calendar days) (i) lend, offer, pledge, sell, contract to sell,
sell any option or contract to purchase, purchase any option or contract to
sell, grant any option, right or warrant to purchase, or otherwise transfer or
dispose of, directly or indirectly, any securities of the Company, including
(without limitation) shares of Common Stock or any securities convertible into
or exercisable or exchangeable for Common Stock (whether now owned or hereafter
acquired) or (ii) enter into any swap or other arrangement that transfers to
another, in whole or in part, any of the economic consequences of ownership of
any securities of the Company, including (without limitation) shares of Common
Stock or any securities convertible into or exercisable or exchangeable for
Common Stock (whether now owned or hereafter acquired), whether any such
transaction described in clause (i) or (ii) above is to be settled by delivery
of securities, in cash or otherwise. The foregoing covenants shall apply only to
the Company's initial underwritten public offering of equity securities, shall
not apply to the sale of any shares by an Investor to an underwriter pursuant to
an underwriting agreement and shall only be applicable to the Investors if all
the Company's executive officers, directors and greater than five percent (5%)
stockholders enter into similar agreements. Each Investor agrees to execute an


                                        7



agreement(s) reflecting (i) and (ii) above as may be requested by the managing
underwriters at the time of the initial underwritten public offering, and
further agrees that the Company may impose stop transfer instructions with its
transfer agent in order to enforce the covenants in (i) and (ii) above. The
underwriters in connection with the Company's initial underwritten public
offering are intended third party beneficiaries of the covenants in this Section
1.9 and shall have the right, power and authority to enforce such covenants as
though they were a party hereto.

2.   Covenants of the Company to the Investors.

     2.1 Information Rights. The Company shall deliver to each Investor who
holds (and continues to hold) at least 25,000 Shares (subject to appropriate
adjustment for stock splits, stock dividends and combinations), upon the request
of such Investor (which may be satisfied by filing of Company quarterly and
annual reports under the Exchange Act):

          (a) as soon as practicable, but in any event within one hundred twenty
(120) calendar days after the end of each fiscal year of the Company,
consolidated balance sheets of the Company and its subsidiaries, if any, as of
the end of such fiscal year, and consolidated statements of income and
consolidated statements of cash flows of the Company and its subsidiaries, if
any, for such year, prepared in accordance with generally accepted accounting
principles ("GAAP"), all in reasonable detail; and

          (b) as soon as practicable, but in any event within forty-five (45)
calendar days after the end of each of the first three (3) quarters of each
fiscal year of the Company, consolidated balance sheets of the Company and its
subsidiaries, if any, as of the end of such quarter, and consolidated statements
of income and consolidated statements of cash flows of the Company and its
subsidiaries, if any, for such quarter prepared in accordance with GAAP, all in
reasonable detail.

     2.2 Confidentiality. Each Investor receiving any non-public information of
the Company hereby agrees to hold in confidence and trust and to act in a
fiduciary manner with respect to all information so provided; provided, however,
that notwithstanding the foregoing, an Investor may include summary financial
information concerning the Company and general statements concerning the nature
and progress of the Company's business in an Investor's reports to its
affiliates.

3.   Legend.

          (a) Each certificate representing the shares of Common Stock held by
the Investors shall be endorsed with the following legend:

          THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
          UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
          OR APPLICABLE STATE SECURITIES LAWS. THE SHARES MAY NOT BE OFFERED FOR
          SALE, SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF (A) AN EFFECTIVE
          REGISTRATION STATEMENT FOR THE SHARES UNDER THE SECURITIES ACT, (B) AN
          OPINION OF COUNSEL,


                                        8



          REASONABLY ACCEPTABLE TO THE COMPANY, THAT REGISTRATION IS NOT
          REQUIRED UNDER SAID ACT OR (C) REASONABLE ASSURANCE HAVING BEEN
          PROVIDED TO THE COMPANY THAT SUCH OFFER, SALE, ASSIGNMENT OR TRANSFER
          IS BEING MADE PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT.

          (b) The legend set forth above shall be removed, and the Company shall
issue a certificate without such legend to the transferee of the shares
represented thereby, if, unless otherwise required by state securities laws, (i)
such shares have been sold under an effective registration statement under the
Securities Act, (ii) in connection with a sale, assignment or other transfer,
such holder provides the Company with an opinion of counsel, reasonably
acceptable to the Company, to the effect that such sale, assignment or transfer
is being made pursuant to an exemption from the registration requirements of the
Securities Act, or (iii) such holder provides the Company with reasonable
assurance that the shares are being sold, assigned or transferred pursuant to
Rule 144 or Rule 144A under the Securities Act.

4.   Miscellaneous.

     4.1 Governing Law. This Agreement shall be governed in all respects by the
laws of the State of Delaware as such laws are applied to agreements between
Delaware residents entered into and to be performed entirely within Delaware,
without regard to conflict of laws rules. The parties hereby agree that any
dispute which may arise between them arising out of or in connection with this
Subscription Agreement shall be adjudicated before a court located in New York,
New York and they hereby submit to the exclusive jurisdiction of the federal and
state courts of the State of New York located in New York County with respect to
any action or legal proceeding commenced by any party, and irrevocably waive any
objection they now or hereafter may have respecting the venue of any such action
or proceeding brought in such a court or respecting the fact that such court is
an inconvenient forum, relating to or arising out of this Subscription Agreement
or any acts or omissions relating to the sale of the securities hereunder, and
consent to the service of process in any such action or legal proceeding by
means of registered or certified mail, return receipt requested, in care of the
address set forth below or such other address as the undersigned shall furnish
in writing to the other. The parties further agree that in the event of any
dispute, action, suit or other proceeding arising out of or in connection with
this Registration Rights Agreement brought by an Investor (or transferee), the
Company (and each other defendant) shall recover all of such party's attorneys'
fees and costs incurred in each and every such action, suit or other proceeding,
including any and all appeals or petitions therefrom. As used herein, attorneys'
fees shall be deemed to mean the full and actual costs of any the costs of
investigation and of legal services actually performed in connection with the
matters involved, calculated on the basis of the usual fee charged by the
attorneys performing such services.

     4.2 Waivers and Amendments. This Agreement may be terminated and any term
of this Agreement may be amended or waived (either generally or in a particular
instance and either retroactively or prospectively) with the written consent of
the Company and Investors holding at least a majority of the Registrable
Securities then outstanding (the "Majority Investors"). Notwithstanding the
foregoing, additional parties may be added as Investors under this


                                        9



Agreement with the written consent of the Company and the Majority Investors. No
such amendment or waiver shall reduce the aforesaid percentage of the
Registrable Securities, the holders of which are required to consent to any
termination, amendment or waiver without the consent of the record holders of
all of the Registrable Securities. Any termination, amendment or waiver effected
in accordance with this Section 4.2 shall be binding upon each holder of
Registrable Securities then outstanding, each future holder of all such
Registrable Securities and the Company.

     4.3 Successors and Assigns. Except as otherwise expressly provided herein,
the provisions of this Agreement shall inure to the benefit of, and be binding
upon, the successors, assigns, heirs, executors and administrators of the
parties hereto.

     4.4 Entire Agreement. This Agreement constitutes the full and entire
understanding and agreement among the parties with regard to the subject matter
hereof, and no party shall be liable or bound to any other party in any manner
by any warranties, representations or covenants except as specifically set forth
herein.

     4.5 Notices. All notices and other communications required or permitted
under this Agreement shall be in writing and shall be delivered personally by
hand or by overnight courier, mailed by United States first-class mail, postage
prepaid, sent by facsimile or sent by electronic mail directed (a) if to an
Investor, at such Investor's address, facsimile number or electronic mail
address set forth in the Company's records, or at such other address, facsimile
number or electronic mail address as such Investor may designate by ten (10)
days' advance written notice to the other parties hereto or (b) if to the
Company, to its address, facsimile number or electronic mail address set forth
on its signature page to this Agreement and directed to the attention of the
Chief Executive Officer, or at such other address, facsimile number or
electronic mail address as the Company may designate by ten (10) days' advance
written notice to the other parties hereto. All such notices and other
communications shall be effective or deemed given upon delivery, on the date of
mailing, upon confirmation of facsimile transfer or upon confirmation of
electronic mail delivery.

     4.6 Interpretation. The words "include," "includes" and "including" when
used herein shall be deemed in each case to be followed by the words "without
limitation." The titles and subtitles used in this Agreement are used for
convenience only and are not considered in construing or interpreting this
Agreement.

     4.7 Severability. If one or more provisions of this Agreement are held to
be unenforceable under applicable law, such provision shall be excluded from
this Agreement, and the balance of the Agreement shall be interpreted as if such
provision were so excluded, and shall be enforceable in accordance with its
terms.

     4.8 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.

     4.9 Telecopy Execution and Delivery. A facsimile, telecopy or other
reproduction of this Agreement may be executed by one or more parties hereto,
and an executed copy of this Agreement may be delivered by one or more parties
hereto by facsimile or similar electronic


                                       10



transmission device pursuant to which the signature of or on behalf of such
party can be seen, and such execution and delivery shall be considered valid,
binding and effective for all purposes. At the request of any party hereto, all
parties hereto agree to execute an original of this Agreement as well as any
facsimile, telecopy or other reproduction hereof.

                            [SIGNATURE PAGE FOLLOWS]


                                       11



     IN WITNESS WHEREOF, the parties have executed this Agreement on the day,
month and year first set forth above.

                                        "Investor"

                                        ________________________________________


                                        By:
                                            ------------------------------------
                                            Name
                                            Title:

                                        Address:

                                        ________________________________________

                                        ________________________________________

                                        ________________________________________

                                        Telephone:______________________________

                                        Telecopy:_______________________________

                                        Email:__________________________________

           [INVESTOR SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT]



                                   SCHEDULE A

                                    INVESTORS

EX-10.11

               [AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION LOGO]
            STANDARD INDUSTRIAL/COMMERCIAL SINGLE-TENANT LEASE -- NET
                (DO NOT USE THIS FORM FOR MULTI-TENANT BUILDINGS)

1. Basic Provisions ("Basic Provisions").

     1.1 Parties: This Lease ("Lease"), dated for reference purposes only,
September 30, 2002, is made by and between Mattiuz Children's Trust ("Lessor")
and Akeena Solar, Inc. ("Lessee"), (collectively the "Parties," or individually
a "Party").

     1.2 Premises: That certain real property, including all improvements
therein or to be provided by Lessor under the terms of this Lease, and commonly
known as 605 University Avenue, Los Gatos, located in the County of Santa Clara,
State of California, and generally described as (describe briefly the nature of
the property and, if applicable, the "Project", if the property is located
within a Project) an industrial/R&D building of approximately 3,415 square feet
("Premises"). (See also Paragraph 2)

     1.3 Term: 18 months and ten (10) days ("Original Term") commencing October
21, 2002 ("Commencement Date") and ending April 30, 2004 ("Expiration Date").
(See also Paragraph 3)

     1.4 Early Possession: October 7, 2002 ("Early Possession Date"). (See also
Paragraphs 3.2 and 3.3)

     1.5 Base Rent: $3,927.25 per month ("Base Rent"), payable on the first day
of each month commencing November 1, 2002 which will be a partial payment for
the period of November 21 - November 30, 2002. (See also Paragraph 4)

[_]  If this box is checked, there are provisions in this Lease for the Base
     Rent to be adjusted.

     1.6 Base Rent and Other Monies Paid Upon Execution:

          (a) Base Rent: $3,927.25 for the period October 21, 2002 - November
20, 2002

          (b) Security Deposit: $3,927.25 ("Security Deposit"). (See also
Paragraph 5)

          (d) Other: $__________________________________ for ___________________

_______________________________________________________________________________.

          (e) Total Due Upon Execution of this Lease: $7,854.50.

     1.7 Agreed Use: Lessee will use and occupy the Premises for office, R&D,
warehousing and other related legal uses (See also Paragraph 6)

     1.8 Insuring Party: Lessor is the "Insuring Party" unless otherwise stated
herein. (See also Paragraph 8)

     1.9 Real Estate Brokers: (See also Paragraph 15)

          (a) Representation: The following real estate brokers (the "Brokers")
and brokerage relationships exist in this transaction (check applicable boxes):

[X]  Grubb & Ellis represents Lessor exclusively ("Lessor's Broker");

[X]  Colliers International represents Lessee exclusively ("Lessee's Broker");
     or

[_]  ______________________________________________________________ represents
     both Lessor and Lessee ("Dual Agency").

          (b) Payment to Brokers: Upon execution and delivery of this Lease by
both Parties, Lessor shall pay to the Broker the fee agreed to in their separate
written agreement.

     1.11 Attachments. Attached hereto are the following, all of which
constitute a part of this Lease:

[X]  an Addendum consisting of Paragraphs 51 through 55;

[X]  a plot plan depicting the Premises;

[_]  a current set of the Rules and Regulations;

[_]  a Work Letter;

[_]  other (specify):___________________________________________________________
     ___________________________________________________________________________
     __________________________________________________________________________.

2. Premises.

     2.1 Letting. Lessor hereby leases to Lessee, and Lessee hereby leases from
Lessor, the Premises, for the term, at the rental, and upon all of the terms,
covenants and conditions set forth in this Lease. Unless otherwise provided
herein, any statement of size set forth in this Lease, or that may have been
used in calculating Rent, is an approximation which the Parties agree is
reasonable and any payments based thereon are not subject to revision whether or
not the actual size is more or less. Note: Lessee is advised to verify the
actual size prior to executing this Lease.

     2.2 Condition. Lessor shall deliver the Premises to Lessee broom clean and
free of debris on the Commencement Date ("Start Date"), and, so long as the
required service contracts described in Paragraph 7.1(b) below are obtained by
Lessee and in effect within thirty days following the Start Date, warrants that
the existing electrical, plumbing, fire sprinkler, lighting, heating,
ventilating and air conditioning systems ("HVAC"), loading doors, sump pumps, if
any, and all other such elements in the Premises, other than those constructed
by Lessee, shall be in good operating condition on said date and that the
structural elements of the roof, roof membrane, bearing walls and foundation of
any buildings on the Premises (the "Building") shall be free of material
defects. If a non-compliance with said warranty exists as of the Start Date, or
if one of such systems or elements should malfunction or fall within the
appropriate warranty period, Lessor shall, as Lessor's sole obligation with
respect to such matter, except as otherwise provided in this Lease, promptly
after receipt of written notice from Lessee setting forth with specificity the
nature and extent of such


                                                            /s/ BAC
- -----------------                                           --------------------


                                                            /s/ TB
- -----------------                                           --------------------
Initials                                                    Initials

                                  Page 1 of 12

(C)1997 - American Industrial Real Estate Association
                                     REVISED                    FORM STN-7-4/01E








non-compliance, malfunction or failure, rectify same at Lessor's expense. The
warranty periods shall be as follows: (i) 6 months as to the HVAC systems, and
(ii) 90 days as to the remaining systems and other elements of the Building. If
Lessee does not give Lessor the required notice within the appropriate warranty
period, correction of any such non-compliance, malfunction or failure shall be
the obligation of Lessee at Lessee's sole cost and expense.

     2.3 Compliance. Lessor warrants that the improvements on the Premises
comply with the building codes, applicable laws, covenants or restrictions of
record, regulations, and ordinances ("Applicable Requirements") that were in
effect at the time that each improvement, or portion thereof, was constructed.
Said warranty does not apply to the use to which Lessee will put the Premises,
modifications which may be required by the Americans with Disabilities Act or
any similar laws as a result of Lessee's use (see Paragraph 50), or to any
Alterations or Utility Installations (as defined in Paragraph 7.3(a)) made or to
be made by Lessee. NOTE: Lessee is responsible for determining whether or not
the Applicable Requirements, and especially the zoning, are appropriate for
Lessee's intended use, and acknowledges that past uses of the Premises may no
longer be allowed. If the Premises do not comply with said warranty, Lessor
shall, except as otherwise provided, promptly after receipt of written notice
from Lessee setting forth with specificity the nature and extent of such
non-compliance, rectify the same at Lessor's expense. If Lessee does not give
Lessor written notice of a non-compliance with this warranty within 6 months
following the Start Date, correction of that non-compliance shall be the
obligation of Lessee at Lessee's sole cost and expense. If the Applicable
Requirements are hereafter changed so as to require during the term of this
Lease the construction of an addition to or an alteration of the Premises and/or
Building, the remediation of any Hazardous Substance, or the reinforcement or
other physical modification of the Unit, Premises and/or Building ("Capital
Expenditure"), Lessor and Lessee shall allocate the cost of such work as
follows:

          (a) Subject to Paragraph 2.3(c) below, if such Capital Expenditures
are required as a result of the specific and unique use of the Premises by
Lessee as compared with uses by tenants in general, Lessee shall be fully
responsible for the cost thereof, provided, however that if such Capital
Expenditure is required during the last 2 years of this Lease and the cost
thereof exceeds 6 months' Base Rent, Lessee may instead terminate this Lease
unless Lessor notifies Lessee, in writing, within 10 days after receipt of
Lessee's termination notice that Lessor has elected to pay the difference
between the actual cost thereof and an amount equal to 6 months' Base Rent. If
Lessee elects termination, Lessee shall immediately cease the use of the
Premises which requires such Capital Expenditure and deliver to Lessor written
notice specifying a termination date at least 90 days thereafter. Such
termination date shall, however, in no event be earlier than the last day that
Lessee could legally utilize the Premises without commencing such Capital
Expenditure.

          (b) If such Capital Expenditure is not the result of the specific and
unique use of the Premises by Lessee (such as, governmentally mandated seismic
modifications), then Lessor and Lessee shall allocate the obligation to pay for
such costs pursuant to the provisions of Paragraph 7.1(d); provided, however,
that if such Capital Expenditure is required during the last 2 years of this
Lease or if Lessor reasonably determines that it is not economically feasible to
pay its share thereof, Lessor shall have the option to terminate this Lease upon
90 days prior written notice to Lessee unless Lessee notifies Lessor, in
writing, within 10 days after receipt of Lessor's termination notice that Lessee
will pay for such Capital Expenditure. If Lessor does not elect to terminate,
and fails to tender its share of any such Capital Expenditure, Lessee may
advance such funds and deduct same, with interest, from Rent until Lessor's
share of such costs have been fully paid. If Lessee is unable to finance
Lessor's share, or if the balance of the Rent due and payable for the remainder
of this Lease is not sufficient to fully reimburse Lessee on an offset basis,
Lessee shall have the right to terminate this Lease upon 30 days written notice
to Lessor.

          (c) Notwithstanding the above, the provisions concerning Capital
Expenditures are intended to apply only to non-voluntary, unexpected, and new
Applicable Requirements. If the Capital Expenditures are instead triggered by
Lessee as a result of an actual or proposed change in use, change in intensity
of use, or modification to the Premises then, and in that event, Lessee shall
either: (i) immediately cease such changed use or intensity of use and/or take
such other steps as may be necessary to eliminate the requirement for such
Capital Expenditure, or (ii) complete such Capital Expenditure at its own
expense. Lessee shall not, however, have any right to terminate this Lease.

     2.4 Acknowledgements. Lessee acknowledges that: (a) it has been advised by
Lessor and/or Brokers to satisfy itself with respect to the condition of the
Premises (including but not limited to the electrical, HVAC and fire sprinkler
systems, security, environmental aspects, and compliance with Applicable
Requirements and the Americans with Disabilities Act), and their suitability for
Lessee's intended use, (b) Lessee has made such investigation as it deems
necessary with reference to such matters and assumes all responsibility therefor
as the same relate to its occupancy of the Premises, and (c) neither Lessor,
Lessor's agents, not Brokers have made any oral or written representations or
warranties with respect to said matters other than as set forth in this Lease.
In addition, Lessor acknowledges that: (i) Brokers have made no representations,
promises or warranties concerning Lessee's ability to honor the Lease or
suitability to occupy the Premises, and (ii) it is Lessor's sole responsibility
to investigate the financial capability and/or suitability of all proposed
tenants.

     2.5 Lessee as Prior Owner/Occupant. The warranties made by Lessor in
Paragraph 2 shall be of no force or effect if immediately prior to the Start
Date Lessee was the owner or occupant of the Premises. In such event, Lessee
shall be responsible for any necessary corrective work.

3.   Term.

     3.1 Term. The Commencement Date, Expiration Date and Original Term of this
Lease are as specified in Paragraph 1.3.

     3.2 Early Possession. If Lessee totally or partially occupies the Premises
prior to the Commencement Date, the obligation to pay Base Rent shall be abated
for the period of such early possession. All other terms of this Lease
(including but not limited to the obligations to pay Real Property Taxes and
insurance premiums and to maintain the Premises) shall, however, be in effect
during such period. Any such early possession shall not affect the Expiration
Date.

     3.3 Delay in Possession. Lessor agrees to use its best commercially
reasonable efforts to deliver possession of the Premises to Lessee by the
Commencement Date. If, despite said efforts, Lessor is unable to deliver
possession by such date, Lessor shall not be subject to any liability therefor,
nor shall such failure affect the validity of this Lease. Lessee shall not,
however, be obligated to pay Rent or perform its other obligations until Lessor
delivers possession of the Premises and any period of rent abatement that Lessee
would otherwise have enjoyed shall run from the date of delivery of possession
and continue for a period equal to what Lessee would otherwise have enjoyed
under the terms hereof, but minus any days of delay caused by the acts or
omissions of Lessee. If possession is not delivered within 60 days after the
Commencement Date, Lessee may, at its option, by notice in writing within 10
days after the end of such 60 day period, cancel this Lease, in which event the
Parties shall be discharged from all obligations hereunder. If such written
notice is not received by Lessor within said 10 day period, Lessee's right to
cancel shall terminate. If possession of the Premises is not delivered within
120 days after the Commencement Date, this Lease shall terminate unless other
agreements are reached between Lessor and Lessee, in writing.

     3.4 Lessee Compliance. Lessor shall not be required to deliver possession
of the Premises to Lessee until Lessee complies with its obligation to provide
evidence of insurance (Paragraph 8.5). Pending delivery of such evidence, Lessee
shall be required to perform all of its obligations under this Lease from and
after the Start Date, including the payment of Rent, notwithstanding Lessor's
election to withhold possession pending receipt of such evidence of insurance.
Further, if Lessee is required to perform any other conditions prior to or
concurrent with the Start Date, the Start Date shall occur but Lessor may elect
to withhold possession until such conditions are satisfied.

4.   Rent.

     4.1 Rent Defined. All monetary obligations of Lessee to Lessor under the
terms of this Lease (except for the Security Deposit) are deemed to be rent
("Rent").

     4.2 Payment. Lessee shall cause payment of Rent to be received by Lessor in
lawful money of the United States on or before the day on which it is due,
without offset or deduction (except as specifically permitted in this Lease).
Rent for any period during the term hereof which is for less than one full
calendar month shall be prorated based upon the actual number of days of said
month. Payment of Rent shall be made to Lessor at its address stated herein or
to such other persons or place as Lessor may from time to time designate in
writing. Acceptance of a payment which is less than the amount then due shall
not be a waiver of Lessor's rights to the balance of such Rent, regardless of
Lessor's endorsement of any check so stating. In the event that any check,
draft, or other instrument of payment given by Lessee to Lessor is dishonored
for any reason, Lessee agrees to pay to Lessor the sum of $25 in addition to any
Late Charge and Lessor, at its option, may require all future payments to be
made by Lessee to be by cashier's check. Payments will be applied first to
accrued late charges and attorney's fees, second to accrued interest, then to
Base Rent and Operating Expense Increase, and any remaining amount to any other
outstanding charges or costs.

     4.3 Association Fees. In addition to the Base Rent, Lessee shall pay to
- -Lessor each month an amount equal to any owner's association or condominium fees
levied or assessed against the Premises. Said monies shall be paid at the same
time and in the same manner as the Base Rent.

5. Security Deposit. Lessee shall deposit with Lessor upon execution hereof the
Security Deposit as security for Lessee's faithful performance of its
obligations under this Lease. If Lessee fails to pay Rent, or otherwise Defaults
under this Lease, Lessor may use, apply or retain all or any portion of said
Security Deposit for the payment of any amount due Lessor or to reimburse or
compensate Lessor for any liability, expense, loss or damage which Lessor may
suffer or incur by reason thereof. If Lessor uses or applies all or any portion
of the Security Deposit, Lessee shall within 10 days after written request
therefor deposit monies with Lessor sufficient to restore said Security Deposit
to the full amount required by this Lease. If the Base Rent increases during the
term of this Lease, Lessee shall, upon written request from Lessor, deposit
additional moneys with Lessor so that the total amount of the Security Deposit
shall at all times bear the same proportion to the Increased Base Rent as the
initial Security Deposit bore to the initial Base Rent. Should the Agreed Use be
amended to accommodate a material change in the business of Lessee or to
accommodate a sublessee or assignee, Lessor shall have the right to increase the
Security Deposit to the extent necessary, in Lessor's reasonable judgment, to
account for any increased wear and tear that the Premises may suffer as a result
thereof. If a change in control of Lessee occurs during this Lease and following
such change the financial condition of Lessee is, in Lessor's reasonable
judgment, significantly reduced, Lessee shall deposit such additional monies
with Lessor as shall be sufficient to cause the Security Deposit to be at a
commercially reasonable level based on such change in financial condition.
Lessor shall not be required to keep the Security Deposit separate from its
general accounts. Within 14 days after the expiration or termination of this
Lease, if Lessor elects to apply the Security Deposit only to unpaid Rent, and
otherwise within 30 days after the Premises have been vacated pursuant to
Paragraph 7.4(c) below, Lessor shall return that portion of the Security Deposit


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not used or applied by Lessor. No part of the Security Deposit shall be
considered to be held in trust, to bear interest or to be prepayment for any
monies to be paid by Lessee under this Lease.

6. Use.

     6.1 Use. Lessee shall use and occupy the Premises only for the Agreed Use,
or any other legal use which is reasonably comparable thereto, and for no other
purpose. Lessee shall not use or permit the use of the Premises in a manner that
is unlawful, creates damage, waste or a nuisance, or that disturbs occupants of
or causes damage to neighboring premises or properties. Lessor shall not
unreasonably withhold or delay its consent to any written request for a
modification of the Agreed Use, so long as the same will not impair the
structural integrity of the improvements on the Premises or the mechanical or
electrical systems therein, and/or is not significantly more burdensome to the
Premises. If Lessor elects to withhold consent, Lessor shall within 7 days after
such request give written notification of same, which notice shall include an
explanation of Lessor's objections to the change in the Agreed Use.

     6.2 Hazardous Substances.

          (a) Reportable Uses Require Consent. The term "Hazardous Substance" as
used in this Lease shall mean any product, substance, or waste whose presence,
use, manufacture, disposal, transportation, or release, either by itself or in
combination with other materials expected to be on the Premises, is either: (i)
potentially injurious to the public health, safety or welfare, the environment
or the Premises, (ii) regulated or monitored by any governmental authority, or
(iii) a basis for potential liability of Lessor to any governmental agency or
third party under any applicable statute or common law theory. Hazardous
Substances shall include, but not be limited to, hydrocarbons, petroleum,
gasoline, and/or crude oil or any products, by-products or fractions thereof.
Lessee shall not engage in any activity in or on the Premises which constitutes
a Reportable Use of Hazardous Substances without the express prior written
consent of Lessor and timely compliance (at Lessee's expense) with all
Applicable Requirements. "Reportable Use" shall mean (i) the installation or use
of any above or below ground storage tank, (ii) the generation, possession,
storage, use, transportation, or disposal of a Hazardous Substance that requires
a permit from, or with respect to which a report, notice, registration or
business plan is required to be filed with, any governmental authority, and/or
(iii) the presence at the Premises of a Hazardous Substance with respect to
which any Applicable Requirements requires that a notice be given to persons
entering or occupying the Premises or neighboring properties. Notwithstanding
the foregoing, Lessee may use any ordinary and customary materials reasonably
required to be used in the normal course of the Agreed Use, ordinary office
supplies (copier toner, liquid paper, glue, etc.) and common household cleaning
materials, so long as such use is in compliance with all Applicable
Requirements, is not a Reportable Use, and does not expose the Premises or
neighboring property to any meaningful risk of contamination or damage or expose
Lessor to any liability therefor. In addition, Lessor may condition its consent
to any Reportable Use upon receiving such additional assurances as Lessor
reasonably deems necessary to protect itself, the public, the Premises and/or
the environment against damage, contamination, injury and/or liability,
including, but not limited to, the installation (and removal on or before Lease
expiration or termination) of protective modifications (such as concrete
encasements) and/or increasing the Security Deposit.

          (b) Duty to Inform Lessor. If Lessee knows, or has reasonable cause to
believe, that a Hazardous Substance has come to be located in, on, under or
about the Premises, other than as previously consented to by Lessor, Lessee
shall immediately give written notice of such fact to Lessor, and provide Lessor
with a copy of any report, notice, claim or other documentation which it has
concerning the presence of such Hazardous Substance.

          (c) Lessee Remediation. Lessee shall not cause or permit any Hazardous
Substance to be spilled or released in, on, under, or about the Premises
(including through the plumbing or sanitary sewer system) and shall promptly, at
Lessee's expense, comply with all Applicable Requirements and take all
investigatory and/or remedial action reasonably recommended, whether or not
formally ordered or required, for the cleanup of any contamination of, and for
the maintenance, security and/or monitoring of the Premises or neighboring
properties, that was caused or materially contributed to by Lessee, or
pertaining to or involving any Hazardous Substance brought onto the Premises
during the term of this Lease, by or for Lessee, or any third party.

          (d) Lessee Indemnification. Lessee shall indemnify, defend and hold
Lessor, its agents, employees, lenders and ground lessor, if any, harmless from
and against any and all loss of rents and/or damages, liabilities, judgments,
claims, expenses, penalties, and attorneys' and consultants' fees arising out of
or involving any Hazardous Substance brought onto the Premises by or for Lessee,
or any third party (provided, however, that Lessee shall have no liability under
this Lease with respect to underground migration of any Hazardous Substance
under the Premises from adjacent properties not caused or contributed to by
Lessee). Lessee's obligations shall include, but not be limited to, the effects
of any contamination or injury to person, property or the environment created or
suffered by Lessee, and the cost of investigation, removal, remediation,
restoration and/or abatement, and shall survive the expiration or termination of
this Lease. No termination, cancellation or release agreement entered into by
Lessor and Lessee shall release Lessee from its obligations under this Lease
with respect to Hazardous Substances, unless specifically so agreed by Lessor in
writing at the time of such agreement.

          (e) Lessor Indemnification. Lessor and its successors and assigns
shall indemnify, defend, reimburse and hold Lessee, its employees and lenders,
harmless from and against any and all environmental damages, including the cost
of remediation, which result from Hazardous Substances which existed on the
Premises prior to Lessee's occupancy or which are caused by the gross negligence
or willful misconduct of Lessor, its agents or employees. Lessor's obligations,
as and when required by the Applicable Requirements, shall include, but not be
limited to, the cost of investigation, removal, remediation, restoration and/or
abatement, and shall survive the expiration or termination of this Lease.

          (f) Investigations and Remediations. Lessor shall retain the
responsibility and pay for any investigations or remediation measures required
by governmental entities having jurisdiction with respect to the existence of
Hazardous Substances on the Premises prior to Lessee's occupancy, unless such
remediation measure is required as a result of Lessee's use (including
"Alterations", as defined in paragraph 7.3(a) below) of the Premises, in which
event Lessee shall be responsible for such payment. Lessee shall cooperate fully
in any such activities at the request of Lessor, including allowing Lessor and
Lessor's agents to have reasonable access to the Premises at reasonable times in
order to carry out Lessor's investigative and remedial responsibilities.

          (g) Termination Option. If a Hazardous Substance Condition (see
Paragraph 9.1(a)) occurs during the term of this Lease, unless Lessee is legally
responsible therefor (in which case Lessee shall make the investigation and
remediation thereof required by the Applicable Requirements and this Lease shall
continue in full force and effect, but subject to Lessor's rights under
Paragraph 6.2(d) and Paragraph 13), Lessor or Lessee may, at their
option, either (i) investigate and remediate such Hazardous Substance Condition,
if required, as soon as reasonably possible at their expense, in which
event this Lease shall continue in full force and effect, or (ii) if the
estimated cost to remediate such condition exceeds 12 times the then monthly
Base Rent or $100,000, whichever is greater, give written notice to the other,
within 30 days after receipt by either party of knowledge of the occurrence of
such Hazardous Substance Condition, of Lessor or Lessee's desire to terminate
this Lease as of the date 60 days following the date of such notice. In the
event Lessor elects to give a termination notice, Lessee may, within 10 days
thereafter, give written notice to Lessor of Lessee's commitment to pay the
amount by which the cost of the remediation of such Hazardous Substance
Condition exceeds an amount equal to 12 times the then monthly Base Rent or
$100,000, whichever is greater. Lessee shall provide Lessor with said funds or
satisfactory assurance thereof within 30 days following such commitment. In such
event, this Lease shall continue in full force and effect, and Lessor shall
proceed to make such remediation as soon as reasonably possible after the
required funds are available. If Lessee does not give such notice and provide
the required funds or assurance thereof within the time provided, this Lease
shall terminate as of the date specified in Lessor's notice of termination.

     6.3 Lessee's Compliance with Applicable Requirements. Except as otherwise
provided in this Lease, Lessee shall, at Lessee's sole expense, fully,
diligently and in a timely manner, materially comply with all Applicable
Requirements, the requirements of any applicable fire insurance underwriter or
rating bureau, and the recommendations of Lessor's engineers and/or consultants
which relate in any manner to the such Requirements, without regard to whether
such Requirements are now in effect or become effective after the Start Date.
Lessee shall, within 10 days after receipt of Lessor's written request, provide
Lessor with copies of all permits and other documents, and other information
evidencing Lessee's compliance with any Applicable Requirements specified by
Lessor, and shall immediately upon receipt, notify Lessor in writing (with
copies of any documents involved) of any threatened or actual claim, notice,
citation, warning, complaint or report pertaining to or involving the failure of
Lessee or the Premises to comply with any Applicable Requirements.

     6.4 Inspection; Compliance. Lessor and Lessor's "Lender" (as defined in
Paragraph 30) and consultants shall have the right to enter into Premises at any
time, in the case of an emergency, and otherwise at reasonable times after
reasonable notice, for the purpose of inspecting the condition of the Premises
and for verifying compliance by Lessee with this Lease. The cost of any such
inspections shall be paid by Lessor, unless a violation of Applicable
Requirements, or a Hazardous Substance Condition (see paragraph 9.1) is found to
exist or be imminent, or the inspection is requested or ordered by a
governmental authority. In such case, Lessee shall upon request reimburse Lessor
for the cost of such inspection, so long as such inspection is reasonably
related to the violation or contamination. In addition, Lessee shall provide
copies of all relevant material safety data sheets (MSDS) to Lessor within 10
days of the receipt of a written request therefor.

7. Maintenance; Repairs, Utility Installations; Trade Fixtures and Alterations.

     7.1 Lessee's Obligations.

          (a) In General. Subject to the provisions of Paragraph 2.2
(Condition), 2.3 (Compliance), 6.3 (Lessee's Compliance with Applicable
Requirements), 7.2 (Lessor's Obligations), 9 (Damage or Destruction), and 14
(Condemnation), Lessee shall, at Lessee's sole expense, keep the Premises,
Utility Installations (intended for Lessee's exclusive use, no matter where
located), and Alterations in good order, condition and repair (whether or not
the portion of the Premises requiring repairs, or the means of repairing the
same, are reasonably or readily accessible to Lessee, and whether or not the
need for such repairs occurs as a result of Lessee's use, any prior use, the
elements or the age of such portion of the Premises), including, but not limited
to, all equipment or facilities, such as plumbing, HVAC equipment, electrical,
lighting facilities, boilers, pressure vessels, fire protection system,
fixtures, walls (interior and exterior), foundations, ceilings, roofs, roof
drainage systems, floors, windows, doors, plate glass, skylights, landscaping,
driveways, parking lots,


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fences, retaining walls, signs, sidewalks and parkways located in, on, or
adjacent to the Premises. Lessee, in keeping the Premises in good order,
condition and repair, shall exercise and perform good maintenance practices,
specifically including the procurement and maintenance of the service contracts
required by Paragraph 7.1(b) below. Lessee's obligations shall include
restorations, replacements or renewals when necessary to keep the Premises and
all improvements thereon or a part thereof in good order, condition and state of
repair. Lessee shall, during the term of this Lease, keep the exterior
appearance of the Building in a first-class condition (including, e.g. graffiti
removal) consistent with the exterior appearance of other similar facilities of
comparable age and size in the vicinity, including, when necessary, the exterior
repainting of the Building.

          (b) Service Contracts. Lessee shall, at Lessee's sole expense, procure
and maintain contracts, with copies to Lessor, in customary form and substance
for, and with contractors specializing and experienced in the maintenance of the
following equipment and improvements, if any, if and when installed on the
Premises: (i) HVAC equipment, (ii) boiler, and pressure vessels, (iii) fire
extinguishing systems, including fire alarm and/or smoke detection, (iv)
landscaping and irrigation systems, (v) roof covering and drains, (vi)
clarifiers (vii) basic utility feed to the perimeter of the Building, and (viii)
any other equipment, if reasonably required by Lessor. However, Lessor reserves
the right, upon notice to Lessee, to procure and maintain any or all of such
service contracts, and if Lessor so elects, Lessee shall reimburse Lessor, upon
demand, for the cost thereof.

          (c) Failure to Perform. If Lessee fails to perform Lessee's
obligations under this Paragraph 7.1, Lessor may enter upon the Premises after
10 days' prior written notice to Lessee (except in the case of an emergency, in
which case no notice shall be required), perform such obligations on Lessee's
behalf, and put the Premises in good order, condition and repair, and Lessee
shall promptly pay to Lessor a sum equal to 115% of the cost thereof.

          (d) Replacement. Subject to Lessee's Indemnification of Lessor as set
forth in Paragraph 8.7 below, and without relieving Lessee of liability
resulting from Lessee's failure to exercise and perform good maintenance
practices, if an item described in Paragraph 7.1(b) cannot be repaired other
than at a cost which is in excess of 50% of the cost of replacing such item,
then such item shall be replaced by Lessor, and the cost thereof shall be
prorated between the Parties and Lessee shall only be obligated to pay, each
month during the remainder of the term of this Lease, on the date on which Base
Rent is due, an amount equal to the product of multiplying the cost of such
replacement by a fraction, the numerator of which is one, and the denominator of
which is 144 (i.e. 1/144th of the cost per month). Lessee shall pay interest on
the unamortized balance at a rate that is commercially reasonable in the
judgment of Lessor's accountants. Lessee may, however, prepay its obligation at
any time.

     7.2 Lessor's Obligations. Subject to the provisions of Paragraphs 2.2
(Condition), 2.3 (Compliance), 9 (Damage or Destruction) and 14 (Condemnation),
it is intended by the Parties hereto that Lessor have no obligation, in any
manner whatsoever, to repair and maintain the Premises, or the equipment
therein, all of which obligations are intended to be that of the Lessee. It is
the intention of the Parties that the terms of this Lease govern the respective
obligations of the Parties as to maintenance and repair of the Premises, and
they expressly waive the benefit of any statute now or hereafter in effect to
the extent it is inconsistent with the terms of this Lease.

     7.3 Utility Installations; Trade Fixtures; Alterations.

          (a) Definitions. The term "Utility Installations" refers to all floor
and window coverings, air and/or vacuum lines, power panels, electrical
distribution, security and fire protection systems, communication cabling,
lighting fixtures, HVAC equipment, plumbing, and fencing in or on the Premises.
The term "Trade Fixtures" shall mean Lessee's machinery and equipment that can
be removed without doing material damage to the Premises. The term "Alterations"
shall mean any modification of the improvements, other than Utility
Installations or Trade Fixtures, whether by addition or deletion. "Lessee Owned
Alterations and/or Utility Installations" are defined as Alterations and/or
Utility Installations made by Lessee that are not yet owned by Lessor pursuant
to Paragraph 7.4(a).

          (b) Consent. Lessee shall not make any Alterations or Utility
Installations to the Premises without Lessor's prior written consent. Lessee
may, however, make non-structural Utility Installations to the interior of the
Premises (excluding the roof) without such consent but upon notice to Lessor, as
long as they are not visible from the outside, do not involve puncturing,
relocating or removing the roof or any existing walls, will not affect the
electrical, plumbing, HVAC, and/or life safety systems, and the cumulative cost
thereof during this Lease as extended does not exceed a sum equal to 3 month's
Base Rent in the aggregate or a sum equal to one month's Base Rent in any one
year. Notwithstanding the foregoing, Lessee shall not make or permit any roof
penetrations and/or install anything on the roof without the prior written
approval of Lessor. Lessor may, as a precondition to granting such approval,
require Lessee to utilize a contractor chosen and/or approved by Lessor. Any
Alterations or Utility Installations that Lessee shall desire to make and which
require the consent of the Lessor shall be presented to Lessor in written form
with detailed plans. Consent shall be deemed conditioned upon Lessee's: (i)
acquiring all applicable governmental permits, (ii) furnishing Lessor with
copies of both the permits and the plans and specifications prior to
commencement of the work, and (iii) compliance with all conditions of said
permits and other Applicable Requirements in a prompt and expeditious manner.
Any Alterations or Utility Installations shall be performed in a workmanlike
manner with good and sufficient materials. Lessee shall promptly upon completion
furnish Lessor with as-built plans and specifications. For work which costs an
amount in excess of one month's Base Rent, Lessor may condition its consent upon
Lessee providing a lien and completion bond in an amount equal to 150% of the
estimated cost of such Alteration or Utility Installation and/or upon Lessee's
posting an additional Security Deposit with Lessor.

          (c) Liens; Bonds. Lessee shall pay, when due, all claims for labor or
materials furnished or alleged to have been furnished to or for Lessee at or
for use on the Promises, which claims are or may be secured by any mechanic's or
materialmen's lien against the Premises or any interest therein. Lessee shall
give Lessor not less than 10 days notice prior to the commencement of any work
in, on or about the Premises, and Lessor shall have the right to post notices of
non-responsibility. If Lessee shall contest the validity of any such lien, claim
or demand, then Lessee shall, at its sole expense defend and protect itself,
Lessor and the Premises against the same and shall pay and satisfy any such
adverse judgment that may be rendered thereon before the enforcement thereof. If
Lessor shall require, Lessee shall furnish a surety bond in an amount equal to
150% of the amount of such contested lien, claim or demand, indemnifying Lessor
against liability for the same. If Lessor elects to participate in any such
action, Lessee shall pay Lessor's attorneys' fees and costs.

     7.4 Ownership; Removal; Surrender; and Restoration.

          (a) Ownership. Subject to Lessor's right to require removal or elect
ownership as hereinafter provided, all Alterations and Utility installations
made by lessee shall be the property of Lessee, but considered a part of the
Premises. Lessor may, at any time, elect in writing to be the owner of all or
any specified part of the Lessee Owned Alterations and Utility Installations.
Unless otherwise instructed per paragraph 7.4(b) hereof, all Lessee Owned
Alterations and Utility Installations shall, at the expiration or termination of
this Lease, become the property of Lessor and be surrendered by Lessee with the
Premises.

          (b) Removal. By delivery to Lessee of written notice from Lessor not
earlier than 90 and not later than 30 days prior to the end of the term of this
Lease, Lessor may require that any or all Lessee Owned Alterations or Utility
Installations be removed by the expiration or termination of this Lease. Lessor
may require the removal at any time of all or any part of any Lessee Owned
Alterations or Utility Installations made without the required consent.

          (c) Surrender; Restoration. Lessee shall surrender the Premises by the
Expiration Date or any earlier termination date, with all of the improvements,
parts and surfaces thereof broom clean and free of debris, and in good operating
order, condition and state of repair, ordinary wear and tear excepted. "Ordinary
wear and tear" shall not include any damage or deterioration that would have
been prevented by good maintenance practice. Notwithstanding the foregoing, if
this Lease is for 12 months or less, then Lessee shall surrender the Premises in
the same condition as delivered to Lessee on the Start Date with NO allowance
for ordinary wear and tear. Lessee shall repair any damage occasioned by the
installation, maintenance or removal of Trade Fixtures, Lessee owned Alterations
and/or Utility Installations, furnishings, and equipment as well as the removal
of any storage tank installed by or for Lessee. Lessee shall completely remove
from the Premises any and all Hazardous Substances brought onto the Premises by
or for Lessee, or any third party (except Hazardous Substances which were
deposited via underground migration from areas outside of the Premises, or if
applicable, the Project) even if such removal would require Lessee to perform or
pay for work that exceeds statutory requirements. Trade Fixtures shall remain
the property of Lessee and shall be removed by Lessee. Any personal property of
Lessee not removed on or before the Expiration Date or any earlier termination
date shall be deemed to have been abandoned by Lessee and may be disposed of or
retained by Lessor as Lessor may desire. The failure by Lessee to timely vacate
the Premises pursuant to this Paragraph 7.4(c) without the express written
consent of Lessor shall constitute a holdover under the provisions of Paragraph
26 below.

8. Insurance; Indemnity.

     8.1 Payment For Insurance. Lessee shall pay for all insurance required
under Paragraph 8 except to the extent of the cost attributable to liability
insurance carried by Lessor under Paragraph 8.2(b) in excess of $2,000,000 per
occurrence. Premiums for policy periods commencing prior to or extending beyond
the Lease term shall be prorated to correspond to the Lease term. Payment shall
be made by Lessee to Lessor within 10 days following receipt of an invoice.

     8.2 Liability Insurance.

          (a) Carried by Lessee. Lessee shall obtain and keep in force a
Commercial General Liability policy of insurance protecting Lessee and Lessor as
an additional insured against claims for bodily injury, personal injury and
property damage based upon or arising out of the ownership, use occupancy or
maintenance of the Premises and all areas appurtenant thereto. Such insurance
shall be on an occurrence basis providing single limit coverage in an amount not
less than $1,000,000 per occurrence with an annual aggregate of not less than
$2,000,000, an "Additional Insured-Managers or Lessors of Premises Endorsement"
and contain the "Amendment of the Pollution Exclusion Endorsement" for damage
caused by heat, smoke or fumes from a hostile fire. The policy shall not contain
any intra-insured exclusions as between insured persons or organizations, but
shall include coverage for liability assumed under this Lease as an "insured
contract" for the performance of Lessee's indemnity obligations under this
Lease. The limits of said insurance shall not, however, limit the liability of
Lessee nor relieve Lessee of any obligation hereunder. All insurance carried by
Lessee shall be primary to and not contributory with any similar insurance
carried by Lessor, whose insurance shall be considered excess insurance only.

          (b) Carried by Lessor. Lessor shall maintain liability insurance as
described in Paragraph 8.2(a), in addition to and not in lieu of, the insurance
required to be maintained by Lessee. Lessee shall not be named as an additional
insured therein.


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     8.3 Property Insurance - Building, Improvements and Rental Value.

          (a) Building and Improvements. The Insuring Party shall obtain and
keep in force a policy or policies in the name of Lessor, with loss payable to
Lessor, any ground-lessor, and to any Lender insuring loss or damage to the
Premises. The amount of such insurance shall be equal to the full replacement
cost of the Premises, as the same shall exist from time to time, or the amount
required by any Lender, but in no event more than the commercially reasonable
and available insurable value thereof. If Lessor is the Insuring Party, however,
Lessee Owned Alterations and Utility Installations, Trade Fixtures, and Lessee's
personal property shall be insured by Lessee under Paragraph 8.4 rather than by
Lessor. If the coverage is available and commercially appropriate, such policy
or policies shall insure against all risks of direct physical loss or damage
(except the perils of flood and/or earthquake unless required by a Lender),
including coverage for debris removal and the enforcement of any Applicable
Requirements requiring the upgrading, demolition, reconstruction or replacement
of any portion of the Premises as the result of a covered loss. Said policy or
policies shall also contain an agreed valuation provision in lieu of any
coinsurance clause, waiver of subrogation, and inflation guard protection
causing an increase in the annual property insurance coverage amount by a factor
of not less than the adjusted U.S. Department of Labor Consumer Price Index for
All Urban Consumers for the city nearest to where the Premises are located. If
such insurance coverage has a deductible clause, the deductible amount shall not
exceed $1,000 per occurrence, and Lessee shall be liable for such deductible
amount in the event of an Insured Loss.

          (b) Rental Value.

          (c) Adjacent Premises. If the Premises are part of a larger building,
or of a group of buildings owned by Lessor which are adjacent to the Premises,
the Lessee shall pay for any increase in the premiums for the property insurance
of such building or buildings if said increase is caused by Lessee's acts,
omissions, use or occupancy of the Premises.

     8.4 Lessee's Property; Business Interruption Insurance.

          (a) Property Damage. Lessee shall obtain and maintain insurance
coverage on all of Lessee's personal property, Trade Fixtures, and Lessee Owned
Alterations and Utility Installations. Such insurance shall be full replacement
cost coverage with a deductible of not to exceed $1,000 per occurrence. The
proceeds from any such insurance shall be used by Lessee for the replacement of
personal property, Trade Fixtures and Lessee Owned Alterations and Utility
Installations. Lessee shall provide Lessor with written evidence that such
insurance is in force.

          (b) Business Interruption. Lessee shall obtain and maintain loss of
income and extra expense insurance in amounts as will reimburse Lessee for
direct or indirect loss of earnings attributable to all perils commonly insured
against by prudent lessees in the business of Lessee or attributable to
prevention of access to the Premises as a result of such perils.

          (c) No Representation of Adequate Coverage. Lessor makes no
representation that the limits or forms of coverage of insurance specified
herein are adequate to cover Lessee's property, business Operations or
obligations under this Lease.

     8.5 Insurance Policies. Insurance required herein shall be by companies
duly licensed or admitted to transact business in the state where the Premises
are located, and maintaining during the policy term a "General Policyholders
Rating" of at least B+, V, as set forth in the most current issue of "Best's
Insurance Guide", or such other rating as may be required by a Lender. Lessee
shall not do or permit to be done anything which Invalidates the required
insurance policies. Lessee shall, prior to the Start Date, deliver to Lessor
certified copies of policies of such insurance or certificates evidencing the
existence and amounts of the required insurance. No such policy shall be
cancelable or subject to modification except after 30 days prior written notice
to Lessor. Lessee shall, at least 30 days prior to the expiration of such
policies, furnish Lessor with evidence of renewals or "insurance binders"
evidencing renewal thereof, or Lessor may order such insurance and charge the
cost thereof to Lessee, which amount shall be payable by Lessee to Lessor upon
demand. Such policies shall be for a term of at least one year, or the length of
the remaining term of this Lease, whichever is less. If either Party shall fail
to procure and maintain the insurance required to be carried by it, the other
Party may, but shall not be required to, procure and maintain the same.

     8.6 Waiver of Subrogation. Without affecting any other rights or remedies,
Lessee and Lessor each hereby release and relieve the other, and waive their
entire right to recover damages against the other, for loss of or damage to its
property arising out of or incident to the perils required to be insured against
herein. The effect of such releases and waivers is not limited by the amount of
insurance carried or required, or by any deductibles applicable hereto. The
Parties agree to have their respective property damage insurance carriers waive
any right to subrogation that such companies may have against Lessor or Lessee,
as the case may be, so long as the insurance is not invalidated thereby.

     8.7 Indemnity. Except for Lessor's gross negligence or willful misconduct,
Lessee shall indemnify, protect, defend and hold harmless the Premises, Lessor
and its agents, Lessor's master or ground lessor, partners and Lenders, from and
against any and all claims, loss of rents and/or damages, liens, judgments,
penalties, attorneys' and consultants' fees, expenses and/or liabilities arising
out of, involving, or in connection with, the use and/or occupancy of the
Premises by Lessee. If any action or proceeding is brought against Lessor by
reason of any of the foregoing matters, Lessee shall upon notice defend the same
at Lessee's expense by counsel reasonably satisfactory to Lessor and Lessor
shall cooperate with Lessee in such defense. Lessor need not have first paid any
such claim in order to be defended or indemnified.

     8.8 Exemption of Lessor from Liability. Lessor shall not be liable for
injury or damage to the person or goods, wares, merchandise or other property of
Lessee, Lessee's employees, contractors, invitees, customers, or any other
person in or about the Premises, whether such damage or injury is caused by or
results from fire, steam, electricity, gas, water or rain, or from the breakage,
leakage, obstruction or other defects of pipes, fire sprinklers, wires,
appliances, plumbing, HVAC or lighting fixtures, or from any other cause,
whether the said injury or damage results from conditions arising upon the
Premises or upon other portions of the building of which the Premises are a
part, or from other sources or places. Lessor shall not be liable for any
damages arising from any act or neglect of any other tenant of Lessor nor from
the failure of Lessor to enforce the provisions of any other lease in the
Project. Notwithstanding Lessor's negligence or breach of this Lease. Lessor
shall under no circumstances be liable for injury to Lessee's business or for
any loss of income or profit therefrom.

     8.9 Failure to Provide Insurance. Lessee acknowledges that any failure on
its part to obtain or maintain the insurance required herein will expose Lessor
to risks and potentially cause Lessor to Incur costs not contemplated by this
Lease, the extent of which will be extremely difficult to ascertain.
Accordingly, for any month or portion thereof that Lessee does not maintain the
required insurance and/or does not provide Lessor with the required binders or
certificates evidencing the existence of the required insurance, the Base Rent
shall be automatically Increased, without any requirement for notice to Lessee,
by an amount equal to 10% of the then existing Base Rent or $100, whichever is
greater. The parties agree that such increase in Base Rent represents fair and
reasonable compensation for the additional risk/ costs that Lessor will incur by
reason of Lessee's failure to maintain the required insurance. Such increase in
Base Rent shall in no event constitute a waiver of Lessee's Default or Breach
with respect to the failure to maintain such insurance, prevent the exercise of
any of the other rights and remedies granted hereunder, nor relieve Lessee of
its obligation to maintain the insurance specified in this Lease.

9. Damage or Destruction.

     9.1 Definitions.

          (a) "Premises Partial Damage" shall mean damage or destruction to the
improvements on the Premises, other than Lessee Owned Alterations and Utility
installations, which can reasonably be repaired in 6 months or less from the
date of the damage or destruction. Lessor shall notify Lessee in writing within
30 days from the date of the damage or destruction as to whether or not the
damage is Partial or Total.

          (b) "Premises Total Destruction" shall mean damage or destruction to
the Premises, other than Lessee Owned Alterations and Utility installations and
Trade Fixtures, which cannot reasonably be repaired in 6 months or less from the
date of the damage or destruction. Lessor shall notify Lessee in writing within
30 days from the date of the damage or destruction as to whether or not the
damage is Partial or Total.

          (c) "Insured Loss" shall mean damage or destruction to improvements on
the Premises, other than Lessee Owned Alterations and Utility installations and
Trade Fixtures, which was caused by an event required to be covered by the
insurance described in Paragraph 8.3(a), irrespective of any deductible amounts
or coverage limits involved.

          (d) "Replacement Cost" shall mean the cost to repair or rebuild the
improvements owned by Lessor at the time of the occurrence to their condition
existing immediately prior thereto, including demolition, debris removal and
upgrading required by the operation of Applicable Requirements, and without
deduction for depreciation.

          (e) "Hazardous Substance Condition" shall mean the occurrence or
discovery of a condition involving the presence of, or a contamination by, a
Hazardous Substance as defined in Paragraph 8.2(a), in, on, or under the
Premises which requires repair, remediation, or restoration.

     9.2 Partial Damage - Insured Loss. If a Premises Partial Damage that is an
Insured Loss occurs, then Lessor shall, at Lessor's expense, repair such damage
(but not Lessee's Trade Fixtures or Lessee Owned Alterations and Utility
installations) as soon as reasonably possible and this Lease shall continue in
full force and effect; provided, however, that Lessee shall, at Lessor's
election, make the repair of any damage or destruction the total cost to repair
of which is $10,000 or less, and, in such event, Lessor shall make any
applicable insurance proceeds available to Lessee on a reasonable basis for that
purpose. Notwithstanding the foregoing, if the required insurance was not in
force or the insurance proceeds are not sufficient to effect such repair, the
insuring Party shall promptly contribute the shortage in proceeds (except as to
the deductible which is Lessee's responsibility) as and when required to
complete said repairs. In the event, however, such shortage was due to the fact
that, by reason of the unique nature of the improvements, full replacement cost
insurance coverage was not commercially reasonable and available. Lessor shall
have no obligation to pay for the shortage in insurance proceeds or to fully
restore the unique aspects of the Premises unless Lessee provides Lessor with
the funds to cover same, or adequate assurance thereof, within 10 days following
receipt of written notice of such shortage and request therefor. If Lessor
receives said funds or adequate assurance thereof within said 10 day period, the
party responsible for making the repairs shall complete them as soon as
reasonably possible and this Lease shall remain in full force and effect. If
such funds or assurance are not received, Lessor may nevertheless elect by
written notice to Lessee within 10 days thereafter to; (i) make such restoration
and repair as is commercially reasonable with Lessor paying any shortage in
proceeds, in which case this Lease shall remain in full force and effect, or
(ii)


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(C)1997 - American Industrial Real Estate Association
                                     REVISED                    FORM STN-7-4/01E



have this Lease terminate 30 days thereafter. Lessee shall not be entitled to
reimbursement of any funds contributed by Lessee to repair any such damage or
destruction. Premises Partial Damage due to flood or earthquake shall be subject
to Paragraph 9.3, notwithstanding that there may be some insurance coverage, but
the net proceeds of any such insurance shall be made available for the repairs
if made by either Party.

     9.3 Partial Damage - Uninsured Loss. If a Premises Partial Damage that is
not an Insured Loss occurs, unless caused by a negligent or willful act of
Lessee (in which event Lessee shall make the repairs at Lessee's expense),
Lessor may either: (i) repair such damage as soon as reasonably possible at
Lessor's expense, in which event this Lease shall continue in full force and
effect, or (ii) terminate this Lease by giving written notice to Lessee within
30 days after receipt by Lessor of knowledge of the occurrence of such damage.
Such termination shall be effective 60 days following the date of such notice.
In the event Lessor elects to terminate this Lease, Lessee shall have the right
within 10 days after receipt of the termination notice to give written notice to
Lessor of Lessee's commitment to pay for the repair of such damage without
reimbursement from Lessor. Lessee shall provide Lessor with said funds or
satisfactory assurance thereof within 30 days after making such commitment. In
such event this Lease shall continue in full force and effect, and Lessor shall
proceed to make such repairs as soon as reasonably possible after the required
funds are available. If Lessee does not make the required commitment, this Lease
shall terminate as of the date specified in the termination notice.

     9.4 Total Destruction. Notwithstanding any other provision hereof, if a
Premises Total Destruction occurs, this Lease shall terminate 60 days following
such Destruction. If the damage or destruction was caused by the gross
negligence or willful misconduct of Lessee, Lessor shall have the right to
recover Lessor's damages from Lessee, except as provided in Paragraph 8.6.

     9.5 Damage Near End of Term, if at any time during the last 6 months of
this Lease there is damage for which the cost to repair exceeds one month's Base
Rent, whether or not an Insured Loss, Lessor may terminate this Lease effective
6O days following the date of occurrence of such damage by giving a written
termination notice to Lessee within 30 days after the date of occurrence of such
damage. Notwithstanding the foregoing, if Lessee at that time has an exercisable
option to extend this Lease or to purchase the Premises, then Lessee may
preserve this Lease by, (a) exercising such option and (b) providing Lessor with
any shortage in insurance proceeds (or adequate assurance thereof) needed to
make the repairs on or before the earlier of (i) the date which is 10 days after
Lessee's receipt of Lessor's written notice purporting to terminate this Lease,
or (ii) the day prior to the date upon which such option expires. If Lessee duly
exercises such option during such period and provides Lessor with funds (or
adequate assurance thereof) to cover any shortage in insurance proceeds, Lessor
shall, at Lessor's commercially reasonable expense, repair such damage as soon
as reasonably possible and this Lease shall continue in full force and effect.
If Lessee fails to exercise such option and provide such funds or assurance
during such period, then this Lease shall terminate on the date specified in the
termination notice and Lessee's option snail be extinguished.

     9.6 Abatement of Rent; Lessee's Remedies.

          (a) Abatement. In the event of Premises Partial Damage or Premises
Total Destruction or a Hazardous Substance Condition for which Lessee is not
responsible under this Lease, the Rent payable by Lessee for the period required
for the repair, remediation or restoration of such damage shall be abated in
proportion to the degree to which Lessee's use of the Premises is Impaired, but
not to exceed the proceeds received from the Rental Value insurance. All other
obligations of Lessee hereunder shall be performed by Lessee, and Lessor shall
have no liability for any such damage, destruction, remediation, repair or
restoration except as provided herein.

          (b) Remedies. If Lessor shall be obligated to repair or restore the
Premises and does not commence, in a substantial and meaningful way, such repair
or restoration within 9O days after such obligation shall accrue. Lessee may, at
any time prior to the commencement of such repair or restoration, give written
notice to Lessor and to any Lenders of which Lessee has actual notice, of
Lessee's election to terminate this Lease on a date not less than 60 days
following the giving of such notice. If Lessee gives such notice and such repair
or restoration is not commenced within 30 days thereafter, this Lease shall
terminate as of the date specified in said notice. If the repair or restoration
is commenced within such 30 days, this Lease shall continue in full force and
effect. "Commence" shall mean either the unconditional authorization of the
preparation of the required plans, or the beginning of the actual work on the
Premises, whichever first occurs.

     9.7 Termination; Advance Payments. Upon termination of this Lease pursuant
to Paragraph 6.2(g) or Paragraph 9, an equitable adjustment shall be made
concerning advance Base Rent and any other advance payments made by Lessee to
Lessor. Lessor shall, in addition, return to Lessee so much of Lessee's Security
Deposit as has not been, or is not then required to be, used by Lessor.

     9.8 Waive Statutes. Lessor and Lessee agree that the terms of this Lease
shall govern the effect of any damage to or destruction of the Premises with
respect to the termination of this Lease and hereby waive the provisions of any
present or future statute to the extent Inconsistent herewith.

10. Real Property Taxes.

     10.1 Definition. As used herein, the term "Real Property Taxes" shall
include any form of assessment; real estate, general, special, ordinary or
extraordinary, or rental levy or tax (other than inheritance, personal income or
estate taxes); improvement bond; and/or license fee imposed upon or levied
against any legal or equitable interest of Lessor in the Premises or the
Project, Lessor's right to other income therefrom, and/or Lessor's business of
leasing, by any authority having the direct or indirect power to tax and where
the funds are generated with reference to the Building address and where the
proceeds so generated are to be applied by the city, county or other local
taxing authority of a Jurisdiction within which the Premises are located. Real
Property Taxes shall also include any tax, fee, levy, assessment or charge, or
any increase therein: (i) imposed by reason of events occurring during the term
of this Lease, including but not limited to, a change in the ownership of the
Premises, and (ii) levied or assessed on machinery or equipment provided by
Lessor to Lessee pursuant to this Lease.

     10.2 Payment of Taxes. In addition to Base Rent, Lessee shall pay to Lessor
in amount equal to the Real Property Tax installment due at least 20 days prior
to the applicable delinquency date. If any such installment shall cover any
period of time prior to or after the expiration or termination of this Lease,
Lessee's share of such installment shall be prorated. In the event Lessee incurs
a late charge on any Rent payment, Lessor may estimate the current Real Property
Taxes, and require, that such taxes be paid in advance to Lessor by Lessee
monthly in advance with the payment of the Base Rent. Such monthly payments
shall be an amount equal to the amount of the estimated installment of taxes
divided by the number of months remaining before the month in which said
installment becomes delinquent. When the actual amount of the applicable tax
bill is known, the amount of such equal monthly advance payments shall be
adjusted as required to provide the funds needed to pay the applicable taxes. If
the amount collected by Lessor is Insufficient to pay such Real Property Taxes
when due, Lessee shall pay Lessor, upon demand, such additional sum as is
necessary. Advance payments may be intermingled with other moneys of Lessor and
shall not bear interest. In the event of a Breach by Lessee in the performance
of its obligations under this Lease, then any such advance payments may be
treated by Lessor as an additional Security Deposit.

     10.3 Joint Assessment. If the Premises are not separately assessed,
Lessee's liability shall be an equitable proportion of the Real Property Taxes
for all of the land and improvements included within the tax parcel assessed,
such proportion to be conclusively determined by Lessor from the respective
valuations assigned in the assessor's work sheets or such other information as
may be reasonably available.

     10.4 Personal Property Taxes. Lessee shall pay, prior to delinquency, all
taxes assessed against and levied upon Lessee Owned Alterations, Utility
Installations, Trade Fixtures, furnishings, equipment and all personal property
of Lessee. When possible, Lessee shall cause its Lessee Owned Alterations and
Utility Installations, Trade Fixtures, furnishings, equipment and all other
personal property to be assessed and billed separately from the real property of
Lessor. If any of Lessee's said property shall be assessed with Lessor's real
property, Lessee shall pay Lessor the taxes attributable to Lessee's property
within 10 days after receipt of a written statement setting forth the taxes
applicable to Lessee's property.

11. Utilities and Services. Lessee shall pay for all water, gas, heat, light,
power, telephone, trash disposal and other utilities and services supplied to
the Premises, together with any taxes thereon. If any such services are not
separately metered or billed to Lessee, Lessee shall pay a reasonable
proportion, to be determined by Lessor, of all charges jointly metered or
billed. There shall be no abatement of rent and Lessor shall not be liable in
any respect whatsoever for the inadequacy, stoppage, interruption or
discontinuance of any utility or service due to riot, strike, labor dispute,
breakdown, accident, repair or other cause beyond Lessor's reasonable control or
in cooperation with governmental request or directions.

12. Assignment and Subletting.

     12.1 Lessor's Consent Required.

          (a) Lessee shall not voluntarily or by operation of law assign,
transfer, mortgage or encumber (collectively, "assign or assignment") or sublet
all or any part of Lessee's interest in this Lease or in the Premises without
Lessor's prior written consent which shall not be unreasonably withheld.

          (b) Unless Lessee is a corporation and its stock is publicly traded on
a national stock exchange, a change in the control of Lessee shall constitute an
assignment requiring consent. The transfer, on a cumulative basis, of 25% or
more of the voting control of Lessee shall constitute a change in control for
this purpose.

          (c) The involvement of Lessee or its assets in any transaction, or
series of transactions (by way of merger, sale, acquisition, financing,
transfer, leveraged buy-out or otherwise), whether or not a formal assignment or
hypothecation of this Lease or Lessee's assets occurs, which results or will
result in a reduction of the Net Worth of Lessee by an amount greater than 25%
of such Net Worth as it was represented at the time of the execution of this
Lease or at the time of the most recent assignment to which Lessor has
consented, or as it exists immediately prior to said transaction or transactions
constituting such reduction, whichever was or is greater, shall be considered an
assignment of this Lease to which Lessor may withhold its consent. "Net Worth of
Lessee" shall mean the net worth of Lessee (excluding any guarantors)
established under generally accepted accounting principles.

          (d) An assignment or subletting without consent shall, at Lessor's
option, be a Default curable after notice per Paragraph 13.1(c), or a noncurable
Breach without the necessity of any notice and grace period. If Lessor elects to
treat such unapproved assignment of subletting as a noncurable Breach, Lessor
may either (i) terminate this Lease, or (ii) upon 30 days written notice,
increase the monthly Base Rent to 110% of the Base Rent then in effect. Further,
in the event of such Breach and rental adjustment, (i) the purchase price of any
option to purchase the Premises held by Lessee shall be subject to similar
adjustment to 110% of the price previously in effect, and (ii) all fixed and
non-fixed rental adjustments scheduled during the remainder of the Lease term
shall be increased to 110% of the scheduled adjusted rent.


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(C)1997 - American Industrial Real Estate Association
                                     REVISED                    FORM STN-7-4/01E



          (e) Lessee's remedy for any breach of Paragraph 12.1 by Lessor shall
be limited to compensatory damages and/or injunctive relief.

     12.2 Terms and Conditions Applicable to Assignment and subletting.

          (a) Regardless of Lessor's consent, no assignment or subletting shall:
(i) be effective without the express written assumption by such assignee or
sublessee of the obligations of Lessee under this Lease, (ii) release Lessee of
any obligations hereunder, or (iii) after the primary liability of Lessee for
the payment of Rent or for the performance of any other obligations to be
performed by Lessee.

          (b) Lessor may accept Rent or performance of Lessee's obligations from
any person other than Lessee pending approval or disapproval of an assignment.
Neither a delay in the approval or disapproval of such assignment nor the
acceptance of Rent or performance shall constitute a waiver or estoppel of
Lessor's right to exercise its remedies for Lessee's Default or Breach.

          (c) Lessor's consent to any assignment or subletting shall not
constitute a consent to any subsequent assignment or subletting.

          (d) In the event of any Default or Breach by Lessee, Lessor may
proceed directly against Lessee, any Guarantors or anyone else responsible for
the performance of Lessee's obligations under this Lease, including any assignee
or sublessee, without first exhausting Lessor's remedies against any other
person or entity responsible therefor to Lessor, or any security held by Lessor.

          (e) Each request for consent to an assignment or subletting shall be
in writing, accompanied by information relevant to Lessor's determination as to
the financial and operational responsibility and appropriateness of the proposed
assignee or sublessee, including but not limited to the intended use and/or
required modification of the Premises, if any, together with a fee of $500 as
consideration for Lessor's considering and processing said request. Lessee
agrees to provide Lessor with such other or additional information and/or
documentation as may be reasonably requested. (See also Paragraph 36)

          (f) Any assignee of, or sublessee under, this Lease shall, by reason
of accepting such assignment or entering into such sublease, be deemed to have
assumed and agreed to conform and comply with each and every term, covenant,
condition and obligation herein to be observed or performed by Lessee during the
term of said assignment or sublease, other than such obligations as are contrary
to or inconsistent with provisions of an assignment or sublease to which Lessor
has specifically consented to in writing.

          (g) Lessor's consent to any assignment or subletting shall not
transfer to the assignee or sublessee any Option granted to the original Lessee
by this Lease unless such transfer is specifically consented to by Lessor in
writing. (See Paragraph 39.2)

     12.3 Additional Terms and Conditions Applicable to Subletting. The
following terms and conditions shall apply to any subletting by Lessee of all or
any part of the Premises and shall be deemed included in all subleases under
this Lease whether or not expressly incorporated therein:

          (a) Lessee hereby assigns and transfers to Lessor all of Lessee's
interest in all Rent payable on any sublease, and Lessor may collect such Rent
and apply same toward Lessee's obligations under this Lease; provided, however,
that until a Breach shall occur in the performance of Lessee's obligations,
Lessee may collect said Rent. In the event that the amount collected by Lessor
exceeds Lessee's obligations any such excess shall be refunded to Lessee, Lessor
shall not, by reason of the foregoing or any assignment of such sublease, nor by
reason of the collection of Rent, be deemed liable to the sublessee for any
failure of Lessee to perform and comply with any of Lessee's obligations to such
sublessee. Lessee hereby irrevocably authorizes and directs any such sublessee,
upon receipt of a written notice from Lessor stating that a Breach exists in the
performance of Lessee's obligations under this Lease, to pay to Lessor all Rent
due and to become due under the sublease. Sublessee shall rely upon any such
notice from Lessor and shall pay all Rents to Lessor without any obligation or
right to inquire as to whether such Breach exists, notwithstanding any claim
from Lessee to the contrary.

          (b) In the event of a Breach by Lessee, Lessor may, at its option,
require sublessee to attorn to Lessor, in which event Lessor shall undertake the
obligations of the sublessor under such sublease from the time of the exercise
of said option to the expiration of such sublease; provided, however, Lessor
shall not be liable for any prepaid rents or security deposit paid by such
sublessee to such sublessor or for any prior Defaults or Breaches of such
sublessor.

          (c) Any matter requiring the consent of the sublessor under a sublease
shall also require the consent of Lessor.

          (d) No sublessee shall further assign or sublet all or any part of the
Premises without Lessor's prior written consent.

          (e) Lessor shall deliver a copy of any notice of Default or Breach by
Lessee to the sublessee, who shall have the right to cure the Default of Lessee
within the grace period, if any, specified in such notice. The sublessee shall
have a right of reimbursement and offset from and against Lessee for any such
Defaults cured by the sublessee.

13. Default; Breach; Remedies.

     13.1 Default; Breach. A "Default" is defined as a failure by the Lessee to
comply with or perform any of the terms, covenants, conditions or Rules and
Regulations under this Lease. A "Breach" is defined as the occurrence of one or
more of the following Defaults, and the failure of Lessee to cure such Default
within any applicable grace period:

          (a) The abandonment of the Premises; or the vacating of the Premises
without providing a commercially reasonable level of security, or where the
coverage of the property insurance described in Paragraph 8.3 is jeopardized as
a result thereof, or without providing reasonable assurances to minimize
potential vandalism.

          (b) The failure of Lessee to make any payment of Rent or any Security
Deposit required to be made by Lessee hereunder, whether to Lessor or to a third
party, when due, to provide reasonable evidence of insurance or surety bond, or
to fulfill any obligation under this Lease which endangers or threatens life or
property, where such failure continues for a period of 3 business days following
written notice to Lessee.

          (c) The failure by Lessee to provide (i) reasonable written evidence
of compliance with Applicable Requirements, (ii) the service contracts, (iii)
the rescission of an unauthorized assignment or subletting, (iv) an Estoppel
Certificate, (v) a requested subordination, (vi) evidence concerning any
guaranty and/or Guarantor, (vii) any document requested under Paragraph 42,
(vii) material safety data sheets (MSDS), or (ix) any other documentation or
information which Lessor may reasonably require of Lessee under the terms of
this Lease, where any such failure continues for a period of 10 days following
written notice to Lessee.

          (d) A Default by Lessee as to the terms, covenants, conditions or
provisions of this Lease, or of the rules adopted under Paragraph 40 hereof,
other than those described in subparagraphs 13.1(a), (b) or (c), above, where
such Default continues for a period of 30 days after written notice; provided,
however, that if the nature of Lessee's Default is such that more than 30 days
are reasonably required for its cure, then it shall not be deemed to be a Breach
if Lessee commences such cure within said 30 day period and thereafter
diligently prosecutes such cure to completion.

          (e) The occurrence of any of the following events: (i) the making of
any general arrangement or assignment for the benefit of creditors; (ii)
becoming a "debtor" as defined in 11 U.S.C. Section 101 or any successor statute
thereto (unless, in the case of a petition filed against Lessee, the same is
dismissed within 60 days); (iii) the appointment of a trustee or receiver to
take possession of substantially all of Lessee's assets located at the Premises
or of Lessee's interest in this Lease, where possession is not restored to
Lessee within 30 days; or (iv) the attachment, execution or other judicial
seizure of substantially all of Lessee's assets located at the Premises or of
Lessee's interest in this Lease, where such seizure is not discharged within 30
days; provided, however, in the event that any provision of this subparagraph
(e) is contrary to any applicable law, such provision shall be of no force or
effect, and not affect the validity of the remaining provisions.

          (f) The discovery that any financial statement of Lessee or of any
Guarantor given to Lessor was materially false.

          (g) If the performance of Lessee's obligations under this Lease is
guaranteed: (i) the death of a Guarantor, (ii) the termination of a Guarantor's
liability with respect to this Lease other than in accordance with the terms of
such guaranty, (iii) a Guarantor's becoming insolvent or the subject of a
bankruptcy filing, (iv) a Guarantor's refusal to honor the guaranty, or (v) a
Guarantor's breach of its guaranty obligation on an anticipatory basis, and
Lessee's failure, within 60 days following written notice of any such event, to
provide written alternative assurance or security, which, when coupled with the
then existing resources of Lessee, equals or exceeds the combined financial
resources of Lessee and the Guarantors that existed at the time of execution of
this Lease.

     13.2 Remedies. If Lessee fails to perform any of its affirmative duties or
obligations, within 10 days after written notice (or in case of an emergency,
without notice), Lessor may, at its option, perform such duty or obligation on
Lessee's behalf, including but not limited to the obtaining of reasonably
required bonds, insurance policies, or governmental licenses, permits or
approvals. Lessee shall pay to Lessor an amount equal to 115% of the costs and
expenses incurred by Lessor in such performance upon receipt of an invoice
therefor. In the event of a Breach, Lessor may, with or without further notice
or demand, and without limiting Lessor in the exercise of any right or remedy
which Lessor may have by reason of such Breach:

          (a) Terminate Lessee's right to possession of the Premises by any
lawful means, in which case this Lease shall terminate and Lessee shall
immediately surrender possession to Lessor. In such event Lessor shall be
entitled to recover from Lessee: (i) the unpaid Rent which had been earned at
the time of termination; (ii) the worth at the time of award of the amount by
which the unpaid rent which would have been earned after termination until the
time of award exceeds the amount of such rental loss that the Lessee proves
could have been reasonably avoided; (iii) the worth at the time of award of the
amount by which the unpaid rent for the balance of the term after the time of
award exceeds the amount of such rental loss that the Lessee proves could be
reasonably avoided; and (iv) any other amount necessary to compensate Lessor for
all the detriment proximately caused by the Lessee's failure to perform its
obligations under this Lease or which in the ordinary course of things would be
likely to result therefrom, including but not limited to the cost of recovering
possession of the Premises, expenses of reletting, including necessary
renovation and alteration of the Premises, reasonable attorneys' fees, and that
portion of any leasing commission paid by Lessor in connection with this Lease
applicable to the unexpired term of this Lease. The worth at the time of award
of the amount referred to in provision (iv) of the immediately preceding sentence
shall be computed by discounting such amount at the discount rate of the Federal
Reserve Bank of the District within which the Premises are located at the time
of award plus one percent. Efforts by Lessor to mitigate damages caused by
Lessee's Breach of this Lease shall not waive Lessor's right to recover damages
under Paragraph 12. If termination of this Lease is obtained through the
provisional remedy of unlawful detainer, Lessor shall have the right to recover
in such proceeding any unpaid Rent and damages as are recoverable therein, or
Lessor may reserve the right to recover all or any part thereof in a separate
suit. If a notice and grace period required under Paragraph 13.1 was not
previously given, a notice to pay rent or quit, or to perform or quit given to
Lessee under the unlawful detainer statute shall also constitute the notice
required by Paragraph 13.1. In such case, the applicable grace period required
by Paragraph 13.1 and the unlawful detainer statute shall run concurrently, and
the failure of Lessee to cure the Default within the greater of the two such
grace periods shall constitute both an unlawful detainer and a Breach of this
Lease


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                                     REVISED                    FORM STN-7-4/01E



entitling Lessor to the remedies provided for in this Lease and/or by said
statute.

          (b) Continue the Lease and Lessee's right to possession and recover
the Rent as it becomes due, in which event Lessee may sublet or assign, subject
only to reasonable limitations. Acts of maintenance, efforts to relet, and/or
the appointment of a receiver to protect the Lessor's interests, shall not
constitute, a termination of the Lessee's right to possession.

          (c) Pursue any other remedy now or hereafter available under the laws
or judicial decisions of the state wherein the Premises are located. The
expiration or termination of this Lease and/or the termination of Lessee's
right to possession shall not relieve Lessee from liability under any indemnity
provisions of this Lease as to matters occurring or accruing during the term
hereof or by reason of Lessee's occupancy of the Premises.

     13.3 Inducement Recapture. Any agreement for free or abated rent or other
charges, or for the giving or paying by Lessor to or for Lessee of any cash or
other bonus, inducement or consideration for Lessee's entering into this Lease,
all of which concessions are hereinafter referred to as "Inducement Provisions,"
shall be deemed conditioned upon Lessee's full and faithful performance of all
of the terms, covenants and conditions of this Lease. Upon Breach of this Lease
by lessee, any such Inducement Provision shall automatically be deemed deleted
from this Lease and of no further force or effect, and any rent, other charge,
bonus, inducement or consideration theretofore abated, given or paid by Lessor
under such an inducement Provision shall be immediately due and payable by
Lessee to Lessor, notwithstanding any subsequent cure of said Breach by Lessee.
The acceptance by Lessor of rent or the cure of the Breach which initiated the
operation of this paragraph shall not be deemed a waiver by Lessor of the
provisions of this paragraph unless specifically so stated in writing by Lessor
at the time of such acceptance.

     13.4 Late Charges. Lessee hereby acknowledges that late payment by Lessee
of Rent will cause Lessor to incur costs not contemplated by this Lease, the
exact amount of which will be extremely difficult to ascertain. Such costs
include, but are not limited to, processing and accounting charges, and late
charges which may be imposed upon Lessor by any Lender. Accordingly, If any Rent
shall not be received by Lessor within 5 days after such amount shall be due,
then, without any requirement for notice to Lessee, Lessee shall immediately pay
to Lessor a one-time late charge equal to 10% of each such overdue amount or
$100, whichever is greater. The Parties hereby agree that such late charge
represents a fair and reasonable estimate of the costs Lessor will incur by
reason of such late payment. Acceptance of such late charge by Lessor shall in
no event constitute a waiver of Lessee's Default or Breach with respect to such
overdue amount, nor prevent the exercise of any of the other rights and remedies
granted hereunder. In the event that a late charge is payable hereunder, whether
or not collected, for 3 consecutive installments of Base Rent, then
notwithstanding any provision of this Lease to the contrary, Base Rent shall, at
Lessor's option, become due and payable quarterly in advance.

     13.5 Interest. Any monetary payment due Lessor hereunder, other than late
charges, not received by Lessor, when due as to scheduled payments (such as Base
Rent) or within 30 days following the date on which it was due for non-scheduled
payment, shall bear Interest from the date when due, as to scheduled payments,
or the 31st day after it was due as to non-scheduled payments. The interest
("Interest") charged shall be computed at the rate of 10% per annum but shall
not exceed the maximum rate allowed by law. Interest is payable in addition to
the potential late charge provided for in Paragraph 13.4.

     13.6 Breach by Lessor.

          (a) Notice of Breach. Lessor shall not be deemed in breach of this
Lease unless Lessor falls within a reasonable time to perform an obligation
required to be performed by Lessor. For purposes of this Paragraph, a reasonable
time shall in no event be less than 30 days after receipt by Lessor, and any
Lender whose name and address shall have been furnished Lessee in writing for
such purpose, of written notice specifying wherein such obligation of Lessor has
not been performed; provided, however, that if the nature of Lessor's obligation
is such that more than 30 days are reasonably required for its performance,
then Lessor shall not be in breach if performance is commenced within such 30
day period and thereafter diligently pursued to completion.

          (b) Performance by Lessee on Behalf of Lessor. In the event that
neither Lessor nor Lender cures said breach within 30 days after receipt of said
notice, or if having commenced said cure they do not diligently pursue it to
completion, then Lessee may elect to cure said breach at Lessee's expense and
offset from Rent the actual and reasonable cost to perform such cure, provided
however, that such offset shall not exceed an amount equal to the greater of one
month's Base Rent or the Security Deposit, reserving Lessee's right to seek
reimbursement from Lessor. Lessee shall document the cost of said cure and
supply said documentation to Lessor.

14. Condemnation. If the Premises or any portion thereof are taken under the
power of eminent domain or sold under the threat of the exercise of said power
(collectively "Condemnation"), this Lease shall terminate as to the part taken
as of the date the condemning authority takes title or possession, whichever
first occurs. If more than 10% of the Building, or more than 25% of that portion
of the Premises not occupied by any building, is taken by Condemnation, Lessee
may, at Lessee's option, to be exercised in writing within 10 days after Lessor
shall have given Lessee written notice of such taking (or in the absence of such
notice, within 10 days after the condemning authority shall have taken
possession) terminate this Lease as of the date the condemning authority takes
such possession. If Lessee does not terminate this Lease in accordance with the
foregoing, this Lease shall remain in full force and effect as to the portion of
the Premises remaining, except that the Base Rent shall be reduced in proportion
to the reduction In utility of the Premises caused by such Condemnation.
Condemnation awards and/or payments shall be the property of Lessor, whether
such award shall be made as compensation for diminution in value of the
leasehold, the value of the part taken, or for severance damages; provided,
however, that Lessee shall be entitled to any compensation for Lessee's
relocation expenses, loss of business goodwill and/or Trade Fixtures, without
regard to whether or not this Lease is terminated pursuant to the provisions of
this Paragraph. All Alterations and Utility Installations made to the Premises
by Lessee, for purposes of Condemnation only, shall be considered the property
of the Lessee and Lessee shall be entitled to any and all compensation which is
payable therefor. In the event that this Lease is not terminated by reason of
the Condemnation, Lessor shall repair any damage to the Premises caused by such
Condemnation.

15. Brokerage Fees.

     15.1 Additional Commission. In addition to the payments owed pursuant to
Paragraph 1.9 above, and unless Lessor and the Brokers otherwise agree in
writing, Lessor agrees that: (a) if Lessee exercises any Option, (b) if Lessee
acquires any rights to the Premises or other premises owned by Lessor and
located within the same Project, if any, within which the Premises is located,
(c) if Lessee remains in possession of the Premises, with the consent of Lessor,
after the expiration of this Lease, or (d) if Base Rent is increased, whether by
agreement or operation of an escalation clause herein, then, Lessor shall pay
Brokers a fee in accordance with the schedule of the Brokers in effect at the
time of the execution of this Lease.

     15.2 Assumption of Obligations. Any buyer or transferee of Lessor's
interest in this Lease shall be deemed to have assumed Lessor's obligation
hereunder. Brokers shall be third party beneficiaries of the provisions of
Paragraphs 1.9, 15, 22 and 31. If Lessor fails to pay to Brokers any amounts due
as and for brokerage fees pertaining to this Lease when due, then such amounts
shall accrue Interest. In addition, if Lessor fails to pay any amounts to
Lessee's Broker when due, Lessee's Broker may send written notice to Lessor and
Lessee of such failure and if Lessor fails to pay such amounts within 10 days
after said notice, Lessee shall pay said monies to its Broker and offset such
amounts against Rent. In addition, Lessee's Broker shall be deemed to be a third
party beneficiary of any commission agreement entered into by and/or between
Lessor and Lessor's Broker for the limited purpose of collecting any brokerage
fee owed.

     15.3 Representations and indemnities of Broker Relationships. Lessee and
Lessor each represent and warrant to the other that it has had no dealings with
any person, firm, broker or finder (other than the Brokers, if any) in
connection with this Lease, and that no one other than said named Brokers is
entitled to any commission or finder's fee in connection herewith. Lessee and
Lessor do each hereby agree to indemnify, protect, defend and hold the other
harmless from and against liability for compensation of charges which may be
claimed by any such unnamed broker, finder or other similar party by reason of
any dealings or actions of the indemnifying Party, including any costs,
expenses, attorneys' fees reasonably incurred with respect thereto.

16. Estoppel Certificates.

          (a) Each Party (as "Responding Party") shall within 10 days after
written notice from the other Party (the "Requesting Party") execute,
acknowledge and deliver to the Requesting Party a statement in writing in form
similar to the then most current "Estoppel Certificate" form published by the
American Industrial Real Estate Association, plus such additional information,
confirmation and/or statements as may be reasonably requested by the Requesting
Party.

          (b) If the Responding Party shall fail to execute or deliver the
Estoppel Certificate within such 10 day period, the Requesting Party may execute
an Estoppel Certificate stating that: (i) the Lease is in full force and effect
without modification except as may be represented by the Requesting Party, (ii)
there are no uncured defaults in the Requesting Party's performance, and (iii)
if Lessor is the Requesting Party, not more than one month's rent has been paid
in advance. Prospective purchasers and encumbrances may rely upon the Requesting
Party's Estoppel Certificate, and the Responding Party shall be estopped from
denying the truth of the facts contained in said Certificate.

          (c) If Lessor desires to finance, refinance, or sell the Premises, or
any part thereof, Lessee and all Guarantors shall deliver to any potential
lender or purchaser designated by Lessor such financial statements as may be
reasonably required by such lender or purchaser, including but not limited to
Lessee's financial statements for the past 3 years. All such financial
statements shall be received by Lessor and such lender or purchaser in
confidence and shall be used only for the purposes herein set forth.

17. Definition of Lessor. The term "Lessor" as used herein shall mean the owner
or owners at the time in question of the fee title to the Premises, or, if this
is a sublease, of the Lessee's interest in the prior lease. In the event of a
transfer of Lessor's title or interest in the Premises or this Lease. Lessor
shall deliver to the transferee or assignee (in cash or by credit) any unused
Security Deposit held by Lessor. Except as provided in Paragraph 15, upon such
transfer or assignment and delivery of the Security Deposit, as aforesaid, the
prior Lessor shall be relieved of all liability with respect to the obligations
and/or covenants under this Lease thereafter to be performed by the Lessor.
Subject to the foregoing, the obligations and/or covenants in this Lease to be
performed by the Lessor shall be binding only upon the Lessor as hereinabove
defined.


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                                  Page 8 of 12

(C)1997 - American Industrial Real Estate Association
                                     REVISED                    FORM STN-7-4/01E



18. Severability. The invalidity of any provision of this Lease, as determined
by a court of competent jurisdiction, shall in no way affect the validity of any
other provision hereof.

19. Days. Unless otherwise specifically indicated to the contrary, the word
"days" as used in this Lease shall mean and refer to calendar days.

20. Limitation on Liability. The obligations of Lessor under this Lease shall
not constitute personal obligations of Lessor or its partners, members,
directors, officers or shareholders, and Lessee shall look to the Premises, and
to no other assets of Lessor, for the satisfaction of any liability of Lessor
with respect to this Lease, and shall not seek recourse against Lessor's
partners, members, directors, officers or shareholders, or any of their personal
assets for such satisfaction.

21. Time of Essence. Time is of the essence with respect to the performance of
all obligations to be performed or observed by the Parties under this Lease.

22. No Prior or Other Agreements; Broker Disclaimer. This Lease contains all
agreements between the Parties with respect to any matter mentioned herein, and
no other prior or contemporaneous agreement or understanding shall be effective.
Lessor and Lessee each represents and warrants to the Brokers that it has made,
and is relying solely upon, its own investigation as to the nature, quality,
character and financial responsibility of the other Party to this Lease and as
to the use, nature, quality and character of the Premises. Brokers have no
responsibility with respect thereto or with respect to any default or breach
hereof by either Party. The liability (including court costs and attorneys'
fees), of any Broker with respect to negotiation, execution, delivery or
performance by either Lessor or Lessee under this Lease or any amendment of
modification hereto shall be limited to an amount up to the fee received by such
Broker pursuant to this Lease; provided, however, that the foregoing limitation
on each Broker's liability shall not be applicable to any gross negligence or
willful misconduct of such Broker.

23. Notices.

     23.1 Notice Requirements. All notices required or permitted by this Lease
or applicable law shall be in writing and may be delivered in person (by hand or
by courier) or may be sent by regular, certified or registered mail or U.S.
Postal Service Express Mail, with postage prepaid, or by facsimile transmission,
and shall be deemed sufficiently given if served in a manner specified in this
Paragraph 23. The addresses noted adjacent to a Party's signature on this Lease
shall be that Party's address for delivery or mailing of notices. Either Party
may by written notice to the other specify a different address for notice,
except that upon Lessee's taking possession of the Premises, the Premises shall
constitute Lessee's address for notice. A copy of all notices to Lessor shall be
concurrently transmitted to such party or parties at such addresses as Lessor
may from time to time hereafter designate in writing.

     23.2 Date Of Notice. Any notice sent by registered or certified mail,
return receipt requested, shall be deemed given on the date of delivery shown on
the receipt card, or if no delivery date is shown, the postmark thereon. If sent
by regular mail the notice shall be deemed given 48 hours after the same is
addressed as required herein and mailed with postage prepaid. Notices delivered
by United States Express Mail or overnight courier that guarantee next day
delivery shall be deemed given 24 hours after delivery of the same to the Postal
Service or courier. Notices transmitted by facsimile transmission or similar
means shall be deemed delivered upon telephone confirmation of receipt
(confirmation report from fax machine is sufficient), provided a copy is also
delivered via delivery or mail. If notice is received on a Saturday, Sunday or
legal holiday, it shall be deemed received on the next business day.

24. Waivers. No waiver by Lessor of the Default or Breach of any term, covenant
or condition hereof by Lessee, shall be deemed a waiver of any other term,
covenant or condition hereof, or of any subsequent Default or Breach by Lessee
of the same or of any other term, covenant or condition hereof. Lessor's consent
to, or approval of, any act shall not be deemed to render unnecessary the
obtaining of Lessor's consent to, or approval of, any subsequent or similar act
by Lessee, or be construed as the basis of an estoppel to enforce the provision
or provisions of this Lease requiring such consent. The acceptance of Rent by
Lessor shall not be a waiver of any Default or Breach by Lessee. Any payment by
Lessee may be accepted by Lessor on account of moneys or damages due Lessor,
notwithstanding any qualifying statements or conditions made by Lessee in
connection therewith, which such statements and/or conditions shall be of no
force or effect whatsoever unless specifically agreed to in writing by Lessor at
or before the time of deposit of such payment.

25. Disclosures Regarding the Nature of a Real Estate Agency Relationship.

          (a) When entering into a discussion with a real estate agent regarding
a real estate transaction, a Lessor or Lessee should from the outset understand
what type of agency relationship or representation it has with the agent or
agents in the transaction. Lessor and Lessee acknowledge being advised by the
Brokers in this transaction, as follows:

               (I) Lessor's Agent. A Lessor's agent under a listing agreement
with the Lessor acts as the agent for the Lessor only. A lessor's agent or
subagent has the following affirmative obligations: To the Lessor; A fiduciary
duty of utmost care, integrity, honesty, and loyalty in dealings with the
Lessor. To the Lessee and the Lessor; a. Diligent exercise of reasonable skills
and care in performance of the agent's duties. b. A duty of honest and fair
dealing and good faith. c. A duty to disclose all facts known to the agent
materially affecting the value or desirability of the property that are not
known to, or within the diligent attention and observation of, the Parties. An
agent is not obligated to reveal to either Party any confidential information
obtained from the other Party which does not involve the affirmative duties set
forth above.

               (II) Lessee's Agent. An agent can agree to act as agent for the
Lessee only. In these situations, the agent is not the Lessor's agent, even if
by agreement the agent may receive compensation for services rendered, either in
full or in part from the Lessor. An agent acting only for a Lessee has the
following affirmative obligations. To the Lessee: A fiduciary duty of utmost
care, integrity, honesty, and loyalty in dealings with the Lessee. To the Lessee
and the Lessor: a. Diligent exercise of reasonable skills and care in
performance of the agent's duties. b. A duty of honest and fair dealing and good
faith. c. A duty to disclose all facts known to the agent materially affecting
the value or desirability of the property that are not known to, or within the
diligent attention and observation of, the Parties. An agent is not obligated to
reveal to either Party any confidential information obtained from the other
Party which does not involve the affirmative duties set forth above.

               (III) Agent Representing Both Lessor and Lessee. A real estate
agent, either acting directly or through one or more associate licenses, can
legally be the agent of both the Lessor and the Lessee in a transaction, but
only within the knowledge and consent of both the Lessor and the Lessee. In a
dual agency situation, the agent has the following affirmative obligations to
both the Lessor and the Lessee: a. A fiduciary duty of utmost care, integrity,
honesty and loyalty in the dealings with either Lessor or the Lessee. b. Other
duties to the Lessor and the Lessee as stated above in subparagraphs (i) or
(ii). In representing both Lessor and Lessee, the agent may not without the
express permission of the respective Party, disclose to the other Party that the
Lessor will accept rent in an amount less than that indicated in the listing or
that the Lessee is willing to pay a higher rent than that offered. The above
duties of the agent in a real estate transaction do not relieve a Lessor or
Lessee from the responsibility to protect their own interests. Lessor and Lessee
should carefully read all agreements to assure that they adequately express
their understanding of the transaction. A real estate agent is a person
qualified to advise about real estate. If legal or tax advice is desired,
consult a competent professional.

          (b) Brokers have no responsibility with respect to any default or
breach hereof by either Party. The liability (including court costs and
attorneys' fees), of any Broker with respect to any breach of duty, error or
omission relating to this Lease shall not exceed the fee received by such Broker
pursuant to this Lease; provided, however, that the foregoing limitation on each
Broker's liability shall not be applicable to any gross negligence or willful
misconduct of such Broker.

          (c) Lessor and Lessee agree to identify to Brokers as "Confidential"
any communication or information given Brokers that is considered by such Party
to be confidential.

26. No Right To Holdover. Lessee has no right to retain possession of the
Premises or any part thereof beyond the expiration or termination of this Lease.
In the event that Lessee holds over, then the Base Rent shall be increased to
150% of the Base Rent applicable immediately preceding the expiration or
termination. Nothing contained herein shall be construed as consent by Lessor to
any holding over by Lessee.

27. Cumulative Remedies. No remedy or election hereunder shall be deemed
exclusive but shall, wherever possible, be cumulative with all other remedies at
law or in equity.

28. Covenants and Conditions; Construction of Agreement. All provisions of this
Lease to be observed or performed by Lessee are both covenants and conditions.
In construing this Lease, all headings and titles are for the convenience of the
Parties only and shall not be considered a part of this Lease. Whenever required
by the context, the singular shall include the plural and vice versa. This Lease
shall not be construed as if prepared by one of the Parties, but rather
according to its fair meaning as a whole, as if both Parties had prepared it.

29. Binding Effect: Choice of Law. This Lease shall be binding upon the Parties,
their personal representatives, successors and assigns and be governed by the
laws of the State in which the Premises are located. Any litigation between the
Parties hereto concerning this Lease shall be initiated in the county in which
the Premises are located.

30. Subordination; Attornment; Non-Disturbance.

     30.1 Subordination. This Lease and any Option granted hereby shall be
subject and subordinate to any ground lease, mortgage, deed of trust, or other
hypothecation or security device (collectively, "Security Device"), now or
hereafter placed upon the Premises, to any and all advances made


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(C)1997 - American Industrial Real Estate Association
                                     REVISED                    FORM STN-7-4/01E



on the security thereof, and to all renewals, modifications, and extensions
thereof. Lessee agrees that the holders of any such Security Devices (in this
Lease together referred to as "Lender") shall have no liability or obligation to
perform any of the obligations of Lessor under this Lease. Any Lender may elect
to have this Lease and/or any Option granted hereby superior to the lien of its
Security Device by giving written notice thereof to Lessee, whereupon this Lease
and such Options shall be deemed prior to such Security Device, notwithstanding
the relative dates of the documentation or recordation thereof.

     30.2 Attornment. In the event that Lessor transfers title to the Premises,
or the Premises are acquired by another upon the foreclosure or termination of a
Security Device to which this Lease is Subordinated (i) Lessee shall, subject to
the non-disturbance provisions of Paragraph 30.3, attorn to such new owner, and
upon request, enter into a new lease, containing all of the terms and provisions
of this Lease, with such new owner for the remainder of the term hereof, or, at
the election of such new owner, this Lease shall automatically become a new
Lease between Lessee and such new owner, upon all of the terms and conditions
hereof, for the remainder of the term hereof, and (ii) Lessor shall thereafter
be relieved of any further obligations hereunder and such new owner shall assume
all of Lessor's obligations hereunder, except that such new owner shall not: (a)
be liable for any act or omission of any prior lessor or with respect to events
occurring prior to acquisition of ownership; (b) be subject to any offsets or
defenses which Lessee might have against any prior lessor, (c) be bound by
prepayment of more than one month's rent, or (d) be liable for the return of any
security deposit paid to any prior lessor.

     30.3 Non-Disturbance. With respect to Security Devices entered into by
Lessor after the execution of this Lease, Lessee's subordination of this Lease
shall be subject to receiving a commercially reasonable non-disturbance
agreement (a "Non-Disturbance Agreement") from the Lender which Non-Disturbance
Agreement provides that Lessee's possession of the Premises, and this Lease,
including any options to extend the term hereof, will not be disturbed so long
as Lessee is not in Breach hereof and attorns to the record owner of the
Premises. Further, within 60 days after the execution of this Lease, Lessor
shall use its commercially reasonable efforts to obtain a Non-Disturbance
Agreement from the holder of any pre-existing Security Device which is secured
by the Premises. In the event that Lessor is unable to provide the
Non-Disturbance Agreement within said 60 days, then Lessee may, at Lessee's
option, directly contact Lender and attempt to negotiate for the execution and
delivery of a Non-Disturbance Agreement.

     30.4 Self-Executing. The agreements contained in this Paragraph 30 shall be
effective without the execution of any further documents; provided, however,
that, upon written request from Lessor or a Lender in connection with a sale,
financing or refinancing of the Premises, Lessee and Lessor shall execute such
further writings as may be reasonably required to separately document any
subordination, attornment and/or Non-Disturbance Agreement provided for herein.

31. Attorneys' Fees. If any Party or Broker brings an action or proceeding
involving the Premises whether founded in tort, contract or equity, or to
declare rights hereunder, the Prevailing Party (as hereafter defined) in any
such proceeding, action, or appeal thereon, shall be entitled to reasonable
attorneys' fees. Such fees may be awarded in the same suit or recovered in a
separate suit, whether or not such action or proceeding is pursued to decision
or judgment. The term, "Prevailing Party" shall include, without limitation, a
Party or Broker who substantially obtains or defeats the relief sought, as the
case may be, whether by compromise, settlement, judgment, or the abandonment by
the other Party or Broker of its claim or defense. The attorneys' fees award
shall not be computed in accordance with any court fee schedule, but shall be
such as to fully reimburse all attorneys' fees reasonably incurred. In addition,
Lessor shall be entitled to attorneys' fees, costs and expenses incurred in the
preparation and service of notices of Default and consultations in connection
therewith, whether or not a legal action is subsequently commenced in connection
with such Default or resulting Breach ($200 is a reasonable minimum per
occurrence for such services and consultation).

32. Lessor's Access; Showing Premises; Repairs. Lessor and Lessor's agents shall
have the right to enter the Premises at any time, in the case of an emergency,
and otherwise at reasonable times after reasonable prior notice for the purpose
of showing the same to prospective purchasers, lenders, or tenants, and making
such alterations, repairs, improvements or additions to the Premises as Lessor
may deem necessary or desirable and the erecting, using and maintaining of
utilities, services, pipes and conduits through the Premises and/or other
premises as long as there is no material adverse effect to Lessee's use of the
Premises. All such activities shall be without abatement of rent or liability to
Lessee.

33. Auctions. Lessee shall not conduct, nor permit to be conducted, any auction
upon the Premises without Lessor's prior written consent. Lessor shall not be
obligated to exercise any standard of reasonableness in determining whether to
permit an auction.

34. Signs. Lessor may place on the Premises ordinary "For Sale" signs at any
time and ordinary "For Lease" signs during the last 6 months of the term hereof.
Except for ordinary "for sublease" signs, Lessee shall not place any sign upon
the Premises without Lessor's prior written consent. All signs must comply with
all Applicable Requirements.

35. Termination; Merger. Unless specifically stated otherwise in writing by
Lessor, the voluntary or other surrender of this Lease by Lessee, the mutual
termination or cancellation hereof, or a termination hereof by Lessor for Breach
by Lessee, shall automatically terminate any sublease or lesser estate in the
Premises; provided, however, that Lessor may elect to continue any one or all
existing subtenancies. Lessor's failure within 10 days following any such event
to elect to the contrary by written notice to the holder of any such lesser
interest, shall constitute Lessor's election to have such event constitute the
termination of such interest.

36. Consents. Except as otherwise provided herein, wherever in this Lease the
consent of a Party is required to an act by or for the other Party, such consent
shall not be unreasonably withheld or delayed. Lessor's actual reasonable costs
and expenses (including but not limited to architects', attorneys', engineers'
and other consultants' fees) incurred in the consideration of, or response to,
a request by Lessee for any Lessor consent, including but not limited to
consents to an assignment, a subletting or the presence or use of a Hazardous
Substance, shall be paid by Lessee upon receipt of an invoice and supporting
documentation therefor. Lessor's consent to any act, assignment or subletting
shall not constitute an acknowledgment that no Default or Breach by Lessee of
this Lease exists, nor shall such consent be deemed a waiver of any then
existing Default or Breach, except as may be otherwise specifically stated in
writing by Lessor at the time of such consent. The failure to specify herein any
particular condition to Lessor's consent shall not preclude the imposition by
Lessor at the time of consent of such further or other conditions as are then
reasonable with reference to the particular matter for which consent is being
given. In the event that either Party disagrees with any determination made by
the other hereunder and reasonably requests the reasons for such determination,
the determining party shall furnish its reasons in writing and in reasonable
detail within 10 business days following such request.

37. Guarantor.

     37.1 Execution. The Guarantors, if any, shall each execute a guaranty in
the form most recently published by the American Industrial Real Estate
Association, and each such Guarantor shall have the same obligations as Lessee
under this Lease.

     37.2 Default. It shall constitute a Default of the Lessee if any Guarantor
fails or refuses, upon request to provide: (a) evidence of the execution of the
guaranty, including the authority of the party signing on Guarantor's behalf to
obligate Guarantor, and in the case of a corporate Guarantor, a certified copy
of a resolution of its board of directors authorizing the making of such
guaranty, (b) current financial statements, (c) an Estoppel Certificate, or (d)
written confirmation that the guaranty is still in effect.

38. Quiet Possession. Subject to payment by Lessee of the Rent and performance
of all of the covenants, conditions and provisions on Lessee's part to be
observed and performed under this Lease, Lessee shall have quiet possession and
quiet enjoyment of the Premises during the term hereof.

39. Options. If Lessee is granted an Option, as defined below, then the
following provisions shall apply:

     39.1 Definition. "Option" shall mean: (a) the right to extend the term of
or renew this Lease or to extend or renew any lease that Lessee has on other
property of Lessor; (b) the right of first refusal or first offer to lease
either the Premises or other property of Lessor; (c) the right to purchase or
the right of first refusal to purchase the Premises or other property of Lessor.

     39.2 Options Personal To Original Lessee. Any Option granted to Lessee in
this Lease is personal to the original Lessee, and cannot be assigned or
exercised by anyone other than said original Lessee and only while the original
Lessee is in full possession of the Premises and, if requested by Lessor, with
Lessee certifying that Lessee has no intention of thereafter assigning or
subletting.

     39.3 Multiple Options. In the event that Lessee has any multiple Options to
extend or renew this Lease, a later Option cannot be exercised unless the prior
Options have been validly exercised.

     39.4 Effect of Default on Options.

          (a) Lessee shall have no right to exercise an Option: (i) during the
period commencing with the giving of any notice of Default and continuing until
said Default is cured, (ii) during the period of time any Rent is unpaid
(without regard to whether notice thereof is given Lessee), (iii) during the
time Lessee is in Breach of this Lease, or (iv) in the event that Lessee has
been given 3 or more notices of separate Default, whether or not the Defaults
are cured, during the 12 month period immediately preceding the exercise of the
Option.

          (b) The period of time within which an Option may be exercised shall
not be extended or enlarged by reason of Lessee's inability to exercise an
Option because of the provisions of Paragraph 39.4(a).

          (c) An Option shall terminate and be of no further force or effect,
notwithstanding Lessee's due and timely exercise of the Option, if, after such
exercise and prior to the commencement of the extended term or completion of
the purchase, (i) Lessee fails to pay Rent for a period of 30 days after such
Rent becomes due (without any necessity of Lessor to give notice thereof), or
(ii) if Lessee commits a Breach of this Lease.

40. Multiple Buildings. If the Premises are a part of a group of buildings
controlled by Lessor, Lessee agrees that it will abide by and conform to all
reasonable rules and regulations which Lessor may make from time to time for the
management, safety, and care of said properties, including the care and


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(C)1997 - American Industrial Real Estate Association

                                     REVISED                   FORM STN-7-4/O1E



cleanliness of the grounds and including the parking, loading and unloading of
vehicles, and to cause its employees, suppliers, shippers, customers,
contractors and invitees to so abide and conform. Lessee also agrees to pay its
fair share of common expenses incurred in connection with such rules and
regulations.

41. Security Measures. Lessee hereby acknowledges that the Rent payable to
Lessor hereunder does not include the cost of guard service or other security
measures, and that Lessor shall have no obligation whatsoever to provide same.
Lessee assumes all responsibility for the protection of the Premises, Lessee,
its agents and invitees and their property from the acts of third parties.

42. Reservations. Lessor reserves to itself the right, from time to time, to
grant, without the consent or joinder of Lessee, such easements, rights and
dedications that Lessor deems necessary, and to cause the recordation of parcel
maps and restrictions, so long as such easements, rights, dedications, maps and
restrictions do not unreasonably interfere with the use of the Premises by
Lessee. Lessee agrees to sign any documents reasonably requested by Lessor to
effectuate any such easement rights, dedication, map or restrictions.

43. Performance Under Protest. If at any time a dispute shall arise as to any
amount of sum of money to be paid by one Party to the other under the provisions
hereof, the Party against whom the obligation to pay the money is asserted shall
have the right to make payment "under protest" and such payment shall not be
regarded as a voluntary payment and there shall survive the right on the part of
said Party to institute suit for recovery of such sum. If it shall be adjudged
that there was no legal obligation on the part of said Party to pay such sum or
any part thereof, said Party shall be entitled to recover such sum or so much
thereof as it was not legally required to pay.

44. Authority; Multiple Parties; Execution.

          (a) If either Party hereto is a corporation, trust, limited liability
company, partnership, or similar entity, each individual executing this Lease on
behalf of such entity represents and warrants that he or she is duly authorized
to execute and deliver this Lease on its behalf. Each party shall, within 30
days after request, deliver to the other party satisfactory evidence of such
authority.

          (b) If this Lease is executed by more than one person or entity as
"Lessee", each such person or entity shall be jointly and severally liable
hereunder. It is agreed that any one of the named Lessees shall be empowered to
execute any amendment to this Lease, or other document ancillary thereto and
bind all of the named Lessees, and Lessor may rely on the same as if all of the
named Lessees had executed such document.

          (c) This Lease may be executed by the Parties in counterparts, each of
which shall be deemed an original and all of which together shall constitute one
and the same instrument.

45. Conflict. Any conflict between the printed provisions of this Lease and
typewritten or handwritten provisions shall be controlled by the typewritten or
handwritten provisions.

46. Offer. Preparation of this Lease by either Party or their agent and
submission of same to the other Party shall not be deemed an offer to lease to
the other Party. This Lease is not intended to be binding until executed and
delivered by all Parties hereto.

47. Amendments. This Lease may be modified only in writing, signed by the
Parties in interest at the time of the modification. As long as they do not
materially change Lessee's obligations hereunder, Lessee agrees to make such
reasonable non-monetary modifications to this Lease as may be reasonably
required by a Lender in connection with the obtaining of normal financing or
refinancing of the Premises.

48. Waiver of Jury Trial. THE PARTIES HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO
TRIAL BY JURY IN ANY ACTION OR PROCEEDING INVOLVING THE PROPERTY OR ARISING OUT
OF THIS AGREEMENT.


49. Mediation and Arbitration of Disputes. An Addendum requiring the Mediation
and/or the Arbitration of all disputes between the Parties and/or Brokers
arising out of this Lease [_] is [X] is not attached to this Lease.

50. Americans with Disabilities Act. Since compliance with the Americans with
Disabilities Act (ADA) is dependent upon Lessee's specific use of the Premises,
Lessor makes no warranty or representation as to whether or not the Premises
comply with ADA or any similar legislation. In the event that Lessee's use of
the Premises requires modifications or additions to the Premises in order to be
in ADA compliance, Lessee agrees to make any such necessary modifications and/or
additions at Lessee's expense.


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(C)1997 - AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION

                                     REVISED                    FORM STN-7-4/01E

                                  Page 11 of 12




LESSOR AND LESSEE HAVE CAREFULLY READ AND REVIEWED THIS LEASE AND EACH TERM AND
PROVISION CONTAINED HEREIN, AND BY THE EXECUTION OF THIS LEASE SHOW THEIR
INFORMED AND VOLUNTARY CONSENT THERETO. THE PARTIES HEREBY AGREE THAT, AT THE
TIME THIS LEASE IS EXECUTED, THE TERMS OF THIS LEASE ARE COMMERCIALLY REASONABLE
AND EFFECTUATE THE INTENT AND PURPOSE OF LESSOR AND LESSEE WITH RESPECT TO THE
PREMISES.

ATTENTION: NO REPRESENTATION OR RECOMMENDATION IS MADE BY THE AMERICAN
INDUSTRIAL REAL ESTATE ASSOCIATION OR BY ANY BROKER AS TO THE LEGAL SUFFICIENCY,
LEGAL EFFECT, OR TAX CONSEQUENCES OF THIS LEASE OR THE TRANSACTION TO WHICH IT
RELATES. THE PARTIES ARE URGED TO:

1. SEEK ADVICE OF COUNSEL AS TO THE LEGAL AND TAX CONSEQUENCES OF THIS LEASE.

2. RETAIN APPROPRIATE CONSULTANTS TO REVIEW AND INVESTIGATE THE CONDITION OF THE
PREMISES. SAID INVESTIGATION SHOULD INCLUDE BUT NOT BE LIMITED TO: THE POSSIBLE
PRESENCE OF HAZARDOUS SUBSTANCES, THE ZONING OF THE PREMISES, THE STRUCTURAL
INTEGRITY, THE CONDITION OF THE ROOF AND OPERATING SYSTEMS, AND THE SUITABILITY
OF THE PREMISES FOR LESSEE'S INTENDED USE.

WARNING: IF THE PREMISES IS LOCATED IN A STATE OTHER THAN CALIFORNIA, CERTAIN
PROVISIONS OF THE LEASE MAY NEED TO BE REVISED TO COMPLY WITH THE LAWS OF THE
STATE IN WHICH THE PREMISES IS LOCATED.

The parties hereto have executed this Lease at the place and on the dates
specified above their respective signatures.

Executed at: Los Gatos CA 95032         Executed at: ___________________________
on: 10-5-02                             on: ____________________________________


By LESSOR:                              By LESSEE:
Mattiuz Children's Trust                Akeena Solar, Inc.

_____________________________________   ________________________________________


By: /s/ Toni Blackstock                 By: /s/ Barry Cinnamon
    ---------------------------------       ------------------------------------
Name Printed: Toni Blackstock           Name Printed: Barry Cinnamon
Title: Trustee                          Title: President


By:                                     By:
    ---------------------------------       ------------------------------------

Name Printed: _______________________   Name Printed: __________________________

Title: ______________________________   Title: _________________________________

Address: ____________________________   Address: _______________________________

_____________________________________   ________________________________________

Telephone/Facsimile: ________________   Telephone/Facsimile: 867-0558 phone

Federal ID No. ______________________   Federal ID No. 77-0566746


BROKER:                                 BROKER:

_____________________________________   ________________________________________

_____________________________________   ________________________________________

Attn: _______________________________   Attn: __________________________________

Title: ______________________________   Title: _________________________________

Address: ____________________________   Address: _______________________________

_____________________________________   ________________________________________

Telephone/Facsimile: ________________   Telephone/Facsimile: ___________________

Federal ID No. ______________________    Federal ID No. ________________________

______________

NOTE: These forms are often modified to meet the changing requirements of law
     and industry needs. Always write or call to make sure you are utilizing the
     most current form: AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION, 700 So.
     Flower Street, Suite 600, Los Angeles, California 90017. (213) 687-8777.
     Fax No. (213) 687-8616

    (C) COPYRIGHT 1997 - BY AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION. ALL
      RIGHTS RESERVED. NO PART OF THESE WORKS MAY BE REPORDUCED IN ANY FORM
                         WITHOUT PERMISSION IN WRITING.


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                                  Page 12 of 12

(C)1997 - American Industrial Real Estate Association
                                     REVISED                    FORM STN-7-4/01E



         FIRST ADDENDUM TO LEASE DATED SEPTEMBER 30, 2002 BY AND BETWEEN
     MATTIUZ CHILDREN'S TRUST (LESSOR) AND AKEENA SOLAR, INC. (LESSEE) FOR
        PROPERTY LOCATED AT 605 UNIVERSITY AVENUE, LOS GATOS, CALIFORNIA

51.  TENANT IMPROVEMENTS. Lessor, at Lessor's sole cost and expense shall make
     the following improvements to the previous:

     a.   Demise office area to create a "Private Office" and "Conference Room"
          as noted on the attached Exhibit "A".

     b.   Install carpet in area shaded on Exhibit "A".

     c.   Remove office and restroom from warehouse portion of Premises.

     d.   Replace grade level door in warehouse with metal roll up door and
          replace glass door with solid core door.

     e.   Remove fence and exterior shelving behind Premises.

     f.   Install window bars over window at rear of Premises and repair broken
          glass.

     g.   Prune tree in front of Premises to the extent allowed by the Town of
          Los Gatos.

52.  OPTION TO TERMINATE: Lessor grants to Lessee an option to terminate this
     lease at anytime during the term with the following conditions:

     a.   Lessee provides Lessor with written notice declaring Lessee's desire
          to terminate no later than sixty (60) days prior to requested
          termination date.

     b.   Lessee will reimburse Lessor for all unamortized tenant improvements
          and real estate commissions applicable as of the requested termination
          date. Improvements and fees will be amortized at eight percent (8%).

53.  RENEWAL OPTION: Lessor grants to Lessee one (1) six (6) month option to
     renew this lease for the Premises upon three (3) months prior written
     notice. The rental rate for the renewal term shall be at the then current
     fair market rate.

54.  PV SYSTEM INSTALLATION: Lessor grants Lessee the right to install a
     photovoltaic (PV) system on the roof of the Premises and remove same at end
     of Lease term. Any installation of said system shall be done without any
     penetration of roof membrane or damage to the Premises.

55.  SIGNAGE: Lessee will be permitted to install building signage on the
     Premises in accordance with any applicable municipal statutes or
     regulations for such signage.

READ AND APPROVED:

LESSOR: Mattiuz Children's Trust           LESSEE: Akeena Solar, Inc.


By: /s/ Toni Blackstock                    By: /s/ Barry Cinnamon
    ------------------------------------       ---------------------------------
Title: Trustee                             Title: Chief Executive Officer
                                                  ------------------------------
Date: 10-5-02                              Date:
                                                 -------------------------------



Addendum to Standard Industrial/Commercial Single-Tenant Lease-Net dated
September 30, 2002 by and between Mattiuz Children's Trust ("Lessor") and Akeena
Solar, Inc. ("Lessee") for the property at 605 University Avenue, Los Gatos, CA
("Premises").

The term of the above referenced Lease shall be extended until April 30, 2005.

All other terms and conditions contained in the above referenced Lease shall
remain applicable.

Read and Agreed,

Lessee: Akeena Solar, Inc


By: /s/ Barry Cinnamon
    ---------------------------------
Title: President
Date: 4-23-04

Approved,

Lessor: Mattiuz Children's Trust


By: /s/ Toni Blackstock
    ---------------------------------
Title: For Paolini - Blackstock
Date: 4-26-04



Second Addendum to Standard Industrial/Commercial Single-Tenant Lease-Net dated
September 30, 2002 by and between Mattiuz Children's Trust ("Lessor") and
Akeena Solar, Inc. ("Lessee") for the property at 605 University Avenue, Los
Gatos, CA ("Premises").

1.3 The term of the above referenced Lease shall be extended until April
30, 2006.

1.5 The Base Rent shall be changed to $4,268.75 per month.

All other terms and conditions contained in the above referenced Lease shall
remain applicable.

Read and Agreed,

Lessee: Akeena Solar, Inc.


By: /s/ Barry Cinnamon
    ---------------------------------
Title: Chief Financial Officer
Date: April 26, 2005

Approved,

Lessor: Mattiuz Children's Trust


By: /s/ Toni Blackstock
    ---------------------------------
Title: Owner
Date: 4/30/05



Third Addendum to Standard Industrial/Commercial Single-Tenant Lease-Net dated
September 30, 2002 by and between Mattiuz Children's Trust ("Lessor") and Akeena
Solar, Inc. ("Lessee") for the property at 605 University Avenue, Los Gatos, CA
("Premises")

1.3 The term of the above referenced Lease shall be extended until June 30,
2007.

1.5 The Base Rent shall be changed to:
       July 1, 2006 - July 15, 2006    No Rent
       July 16, 2006 - June 30, 2007   $1.50 NNN

All other terms and conditions contained in the above referenced Lease shall
remain applicable.

Read and Agreed,

Lessee Akeena Solar, Inc.


By: /s/ RONALD G. ROOK
    ---------------------------------
Title: CFO
Date: 06/23/06

Approved,

Lessor: Mattiuz Children's Trust


By: /s/ Toni Blackstock
    ---------------------------------
Title: for LNR Properties
Date: 7/7/06

EX-10.12

July 21, 2006

Akeena Solar, Inc.
605 University Avenue
Los Gatos, CA 95032

Ladies and Gentlemen:

This letter shall set forth our agreement ("Agreement") with respect to the
non-exclusive services to be provided by Westminster Securities Corp.
("Westminster") to Akeena Solar, Inc. (the "Company"), In connection with the
Company's desire to raise up to $2.5 million from the sale of its equity
securities ("Transaction"), upon terms and conditions proposed by or agreeable
to the Company. Westminster will endeavor to introduce to the Company, in
writing (via email, facsimile, or hard copy letter), individuals or entities
that are "accredited investors" as defined in Rule 501(a) of the Securities Act
of 1933 and who may have an Interest in investing in the Transaction (such
Introduced persons, together with their affiliated employees, funds and
management companies, "Investors"). For clarity, "Investors" shall only include
such Investors introduced by Westminster and shall not include any persons
completing any Transaction with the Company who are not investors. We hereby
agree as follows:

1. Services. Westminster shall use reasonable efforts to introduce to the
Company potential investors. The Company agrees to pay Westminster the fees set
forth in Paragraph 2 with respect to a Transaction entered into with any
investor (a "Completed Transaction"). Westminster represents that:

(i) It will introduce to the Company only to accredited investors who reside in
states where Westminster is registered as a broker-dealer.

(ii) It is a member in good standing of the National Association of Securities
Dealers, Inc. and a registered broker-dealer with the Securities and Exchange
Commission.

(iii) It has the power and authority to enter Agreement, and that the Agreement
will be binding and enforceable against it in accordance with its terms, subject
to bankruptcy laws and other laws applicable to the enforcement of creditors'
rights generally.

2. Compensation. As compensation for the assistance described above, the Company
agrees to pay to Westminster, with respect to any Completed Transaction and upon
each closing thereof, an amount equal to:

(i) Six percent (6%) of all gross cash proceeds received by the Company from any
Investors WESTMINSTER INTRODUCES in a Completed Transaction; and

(ii) Warrants to purchase six percent (6%) of the total number of shares of
common stock issued and issuable to Investors WHOM WESTMINSTER INTRODUCES in a
Completed Transaction (including common stock underlying warrants and
convertible securities). exercisable at the price paid by the Investors for the
common stock and expiring on the third anniversary of the issuance of the
warrants.

Such compensation shall be due and payable with respect to any Investor
introduced by Westminster in a Completed Transaction during the term hereof or
for up to twenty four (24) months following termination, completion or
abandonment of the Transaction. Notwithstanding anything to the contrary
contained herein, the Company shall have the sole and absolute discretion to
accept or not accept, in whole or in part, any subscriptions.



3. Term. This retention of Westminster by the Company hereunder shall commence
on the date hereof and shall continue until terminated by either party
immediately upon written notice to the other or, if earlier, the completion,
termination or abandonment of the Transaction, subject to the survival of
Section 2 for the period described therein and the survival of Section 5.

4. Independent Contractor. Westminster shall at all times act as and be an
independent contractor, and in no event shall either Westminster or any of its
employees, agents or representatives be deemed to be an employee, agent or
representative of the Company. Westminster shall have no authority to bind the
Company to any obligation, express or implied.

5. Indemnification. The Company shall indemnify Westminster and its agents and
hold them harmless from and against any and all losses, claims, damages,
actions, expenses (including without limitation reasonable attorneys' fees and
disbursements) and liabilities (collectively, "Claims") arising in any manner
out of or in connection with statements made in the written materials provided
by the Company to investors, directly or indirectly, except to the extent the
claims are caused by the gross negligence or willful misconduct of Westminster
or its agents.

6. Non-Circumvention. Westminster and the Company hereby represent, warrant and
covenant that neither party will directly or indirectly interfere with, seek to
terminate, limit, circumvent or otherwise damage or alter in any respect the
relationship, rights, duties and obligations of the Parties established hereby
or the interests of the Parties created hereby, and the Company represents that
it will not seek to arrange any transaction involving the Investor(s) which is
similar to the Transaction contemplated hereby other than pursuant to the terms
hereof to the benefit of all.

7. Miscellaneous. This Agreement constitutes the entire agreement of the parties
pertaining to the subject matter hereof, and the parties have made no
agreements, representations or warranties relating to the subject matter of this
Agreement that are not set forth herein. This Agreement may not be modified or
amended in any manner except by an instrument in writing signed by each of the
parties hereto. The waiver by either party of compliance with any provision of
this Agreement by the other party shall not operate or be construed as a waiver
of any other provision of this Agreement, or of any other breach by such party
of a provision of this Agreement. Neither party may assign its rights or
obligations hereunder. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York, without regard to the
conflicts of laws principles thereof. In the event that any controversy or claim
arising out of this Agreement cannot be settled by the parties hereto, such
controversy or claim may be settled by arbitration in accordance with the then
current rules of the American Arbitration Association, in the State of New York,
and judgment upon the award may be entered into any court having jurisdiction
thereof. The prevailing party shall be reimbursed by the nonprevailing party for
all reasonable attorney's fees and costs (including all arbitration costs)
incurred by the prevailing party in resolving any such dispute. This Agreement
may be executed in counterparts, each of which shall be deemed an original and
all of which together will constitute one and the same instrument.



if the foregoing represents our agreement, please sign below where indicated and
return to me. We look forward to assisting you in this matter.

Sincerely,

WESTMINSTER SECURITIES CORP.


By: /s/ John P. O'Shea
    ---------------------------------
John P. O'Shea
President/CEO

APPROVED AND ACCEPTED THIS
24 DAY OF July, 2006:

AKEENA SOLAR INC.


By: /s/ Barry Cinnamon
    ---------------------------------
    Name: Illegible
    Title: CEO

EX-99.1

                                                                    Exhibit 99.1



                          INDEPENDENT AUDITORS' REPORT
                          ----------------------------


To the Board of Directors of
Akeena, Inc.


We have audited the accompanying balance sheet of Akeena, Inc. (the "Company")
as of December 31, 2005, and the related statements of income, changes in
stockholder's equity and cash flows for the years ended December 31, 2005 and
2004. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. We also conducted our audits as of December 31,
2005 and for the years ended December 31, 2005 and 2004 in accordance with the
auditing standards of the Public Company Accounting Oversight Board (United
States). Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. The Company is not required to have, nor were we engaged to
perform, an audit of its internal control over financial reporting. Our audits
included consideration of internal control over financial reporting as a basis
for designing audit procedures that are appropriate in the circumstances, but
not for the purpose of expressing an opinion on the effectiveness of the
Company's internal control over financial reporting. Accordingly, we express no
such opinion. An audit also includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Akeena, Inc. as of December 31,
2005, and the results of its operations, and its cash flows for the years ended
December 31, 2005 and 2004, in conformity with accounting principles generally
accepted in the United States of America.


/s/ Marcum & Kliegman LLP
- -------------------------
New York, NY
August 1, 2006 (except for Note 14, as to which the date is August 11, 2006)




                                  AKEENA, INC.
                                  Balance Sheet
                                December 31, 2005


ASSETS
Current assets
   Cash and cash equivalents                                         $  270,046
   Accounts receivable, net                                           1,678,189
   Inventory                                                            539,868
   Prepaid expenses and other current assets                            436,455
                                                                     ----------
      Total current assets                                            2,924,558
Property and equipment, net                                              85,124
Due from related party                                                   21,025
Other assets                                                              3,927
                                                                     ----------
      Total assets                                                   $3,034,634
                                                                     ==========
LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities
   Accounts payable                                                  $1,457,168
   Accrued liabilities                                                  256,208
   Accrued product warranty                                             304,188
   Deferred revenue                                                     474,032
   Credit facility                                                      500,000
   Current portion of long-term debt                                     16,864
                                                                     ----------
      Total current liabilities                                       3,008,460
Long-term debt, less current portion                                     25,693
                                                                     ----------
      Total liabilities                                               3,034,153
                                                                     ----------
Commitments and contingencies
Stockholder's equity:
   Common stock, .01 par value; 16,000,000 shares authorized;
      9,000,000 shares issued and outstanding                            90,000
   Accumulated deficit                                                  (89,519)
                                                                     ----------
      Total stockholder's equity                                            481
                                                                     ----------
      Total liabilities and stockholder's equity                     $3,034,634
                                                                     ==========

      See accompanying notes, which are an integral part of these financial
                                   statements.


                                        1



                                  AKEENA, INC.
                              Statements of Income
                     Years Ended December 31, 2005 and 2004

                                                        2005         2004
                                                     ----------   ----------
NET SALES                                            $7,191,391   $5,876,365
COST OF SALES                                         5,595,475    4,550,338
                                                     ----------   ----------
   Gross profit                                       1,595,916    1,326,027
                                                     ----------   ----------
OPERATING EXPENSES
Selling, general and administrative                   1,582,258    1,175,570
                                                     ----------   ----------
      Total operating expenses                        1,582,258    1,175,570
                                                     ----------   ----------
      Income from operations                             13,658      150,457
                                                     ----------   ----------
OTHER INCOME (EXPENSE)
Interest income (expense), net                          (11,806)       5,620
                                                     ----------   ----------
      Total other income (expense)                      (11,806)       5,620
                                                     ----------   ----------
NET INCOME                                           $    1,852   $  156,077
                                                     ==========   ==========
Earnings per common and common equivalent share:
   Basic                                             $     0.00   $     0.02
                                                     ==========   ==========
   Diluted                                           $     0.00   $     0.02
                                                     ==========   ==========
Weighted average shares used in computing earnings
   per common and common equivalent share:
   Basic                                              9,000,000    9,000,000
                                                     ==========   ==========
   Diluted                                           10,000,000   10,000,000
                                                     ==========   ==========

      See accompanying notes, which are an integral part of these financial
                                   statements.


                                        2



                                  AKEENA, INC.
                  Statements of Changes in Stockholder's Equity
                     Years Ended December 31, 2005 and 2004



                                  COMMON STOCK
                               ------------------
                               NUMBER OF               ADDITIONAL      ACCUMULATED   STOCKHOLDER'S
                                 SHARES     AMOUNT   PAID-IN CAPITAL     DEFICIT         EQUITY
                               ---------   -------   ---------------   -----------   -------------

BALANCE AT JANUARY 1, 2004     5,000,000    $1,000         --           $ (8,126)      $ (7,126)
Distribution to Stockholder           --        --         --            (90,000)       (90,000)
Net income                            --        --         --            156,077        156,077
                               ---------   -------    -------------     --------       --------
BALANCE AT DECEMBER 31, 2004   5,000,000     1,000         --             57,951         58,951
Distribution to Stockholder           --        --         --            (60,322)       (60,322)
Recapitalization -
 Stock Conversion             (4,999,500)     (995)       995                 --             --
Recapitalization -
 Stock Split                   8,999,500    89,995       (995)           (89,000)            --
Net income                            --        --         --              1,852          1,852
                               ---------   -------     ------------     --------       --------
BALANCE AT DECEMBER 31, 2005   9,000,000   $90,000     $   --           $(89,519)      $    481
                               =========   =======     ============     ========       ========


      See accompanying notes, which are an integral part of these financial
                                   statements.


                                        3



                                  AKEENA, INC.
                            Statements of Cash Flows
                     Years Ended December 31, 2005 and 2004



                                                                    2005         2004
                                                                -----------   ---------

CASH FLOWS FROM OPERATING ACTIVITIES
Net income                                                      $     1,852   $ 156,077
Adjustments to reconcile net income to net cash used in
   operating activities
   Depreciation                                                      27,854      19,604
   Bad debt expense                                                  17,363       5,413
   Changes in assets and liabilities:
      Accounts receivable                                        (1,102,829)    297,135
      Inventory                                                     (22,694)   (357,236)
      Prepaid expenses and other current assets                    (295,374)     30,038
      Other assets                                                       --         518
      Accounts payable                                              590,685    (340,966)
      Accrued warranty and other liabilities                        205,469     119,621
      Deferred revenue                                              347,787     (73,816)
                                                                -----------   ---------
         Net cash used in operating activities                     (229,887)   (143,612)
                                                                -----------   ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures                                                (17,500)    (56,659)
Increase in amount due from related party                            (3,084)    (17,941)
                                                                -----------   ---------
         Net cash used in investing activities                      (20,584)    (74,600)
                                                                -----------   ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Borrowing on long-term debt                                              --      32,115
Repayment of long-term debt                                         (18,250)         --
Borrowings on line of credit, net of repayments                     500,000          --
Distributions to stockholder                                        (60,322)    (90,000)
                                                                -----------   ---------
         Net cash provided by (used in) financing activities        421,428     (57,885)
                                                                -----------   ---------
         Net increase (decrease) in cash and cash equivalents       170,957    (276,097)
CASH AND CASH EQUIVALENTS
Beginning of year                                                    99,089     375,186
                                                                -----------   ---------
End of year                                                     $   270,046   $  99,089
                                                                ===========   =========
SUPPLEMENTAL CASH FLOWS DISCLOSURES:
Cash paid during the year for Interest                          $    13,529   $   3,510
                                                                ===========   =========


      See accompanying notes, which are an integral part of these financial
                                   statements.


                                        4



                                  AKEENA, INC.
                          Notes to Financial Statements
                           December 31, 2005 and 2004

1.   DESCRIPTION OF BUSINESS

Akeena, Inc. (the "Company") was incorporated in February 2001 as a Subchapter S
corporation in the State of California. In June 2006, the Company merged with a
newly incorporated C corporation, Akeena Solar, Inc. (see Note 14). As a result,
the Company is currently conducting its operations as Akeena Solar, Inc. The
Company is engaged in the installation of solar panel systems to residential and
commercial markets.

2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

CASH AND CASH EQUIVALENTS

The Company considers all highly liquid investments with maturities of three
months or less, when purchased, to be cash equivalents. The Company maintains
cash and cash equivalents which consist principally of demand deposits with high
credit quality financial institutions. At certain times, such amounts exceed
FDIC insurance limits. The Company has not experienced any losses on these
investments.

ACCOUNTS RECEIVABLE

The Company regularly evaluates the collectibility of its accounts receivable.
An allowance for doubtful accounts is maintained for estimated credit losses,
and such losses have been minimal and within management's expectations. When
estimating credit losses, the Company considers a number of factors including
the aging of a customer's account, creditworthiness of specific customers,
historical trends and other information. Accounts receivable consist of trade
receivables and amounts due from state agencies for rebates on state-approved
solar systems installed. These rebate amounts are passed on to the customer,
either at the time the customer is billed, or when the money is received from
the states by the Company. Included within accounts payable at December 31, 2005
is approximately $318,000 of rebates payable to customers. Usually, the various
states remit the rebate amounts to the Company within 90-120 days.

INVENTORY

Inventory is stated at the lower of cost (on an average basis) or market value.

PROPERTY AND EQUIPMENT

Property and equipment are stated at cost less accumulated depreciation and
amortization. Depreciation and amortization are provided for using the
straight-line method over the estimated useful lives of the respective assets.


                                        5



Estimated useful lives are as follows:

CATEGORY                 USEFUL LIVES
- ----------------------   ------------
Furniture and Fixtures    7-10 years
Office Equipment          7-10 years
Vehicles                     5 years

Maintenance and repairs are expensed as incurred. Expenditures for significant
renewals or betterments are capitalized. Upon disposition, the cost and related
accumulated depreciation are removed from the accounts and the resulting gain or
loss is reflected in current operations.

LONG-LIVED ASSETS

The Company reviews long-lived assets for impairment whenever events or changes
in circumstances indicate that the carrying value of a long-lived asset may not
be recoverable. The Company periodically evaluates whether events and
circumstances have occurred that may warrant revision of the estimated useful
lives of its long-lived assets or whether the remaining balance of long-lived
assets should be evaluated for possible impairment. The Company does not believe
that there were any indicators of impairment that would require an adjustment to
such assets or their estimated periods of recovery at December 31, 2005.

MANUFACTURER AND INSTALLATION WARRANTIES

The Company warrants its products for various periods against defects in
material or installation workmanship. The manufacturer warranty on the solar
panels and the inverters have a warranty period range of 5 - 25 years. The
Company assists the customer in the event that the manufacturer warranty needs
to be used to replace a defective panel or inverter. The Company provides for a
5-year warranty on the installation of a system and all equipment and incidental
supplies other than solar panels and inverters that are covered under the
manufacturer warranty. The Company records a provision for the installation
warranty, within cost of sales, based on historical experience and future
expectations of the probable cost to be incurred in honoring its warranty
commitment.

The provision for installation warranty consisted of the following at December
31:

                                          2005       2004
                                        --------   --------
Balance at beginning of period          $199,788   $105,932
Provision charged to warranty expense    119,400    103,856
Less: warranty claims                    (15,000)   (10,000)
                                        --------   --------
Balance at end of period                $304,188   $199,788

FAIR VALUE OF FINANCIAL INSTRUMENTS

The carrying values reported for cash equivalents, accounts receivable, accounts
payable and accrued liabilities approximated their respective fair values at
each balance sheet date due to the short-term maturity of these financial
instruments.


                                        6



REVENUE RECOGNITION

Revenue from installation of a system is recognized when (1) persuasive evidence
of an arrangement exists, (2) delivery has occurred or services have been
rendered, (3) the sales price is fixed or determinable, and (4) collection of
the related receivable is reasonably assured. The Company recognizes revenue
upon completion of a system installation.

Defective solar panels or inverters are covered under the manufacturer warranty.
In the event that a panel or inverter needs to be replaced, the Company will
replace the defective item within the manufacturer's warranty period (between
20-25 years). See the "Manufacturer and installation warranties" discussion
above.

ADVERTISING

The Company expenses advertising costs as incurred. Advertising expense,
included in selling, general and administrative expenses, for the years ended
December 31, 2005 and 2004 was approximately $162,000 and $147,000,
respectively.

SHIPPING AND HANDLING COSTS

Shipping and handling costs associated with inbound freight are included in cost
of inventory and expensed as cost of sales when the related inventory is sold.
Amounts billed to customers for shipping and handling are recorded as revenue
and were not significant for the years ended December 31, 2005 and 2004.

INCOME TAXES

The Company did not record a provision for income taxes for the years ended
December 31, 2005 and 2004, as the Company is a Subchapter S corporation, and
any taxable income or loss is included within the stockholder's income for
federal and state income tax purposes.

EARNINGS PER SHARE

Basic earnings per share is computed by dividing net income by the weighted
average number of common shares outstanding during the period presented. Diluted
earnings per share is computed using the weighted average number of common
shares outstanding during the periods plus the effect of dilutive securities
outstanding during the periods.

The following summarizes the weighted-average number of common shares
outstanding during the year that were used to calculate the basic earnings per
share as well as the dilutive impact of stock warrants, as included in the
calculation of diluted weighted average shares at December 31:

                                                2005        2004
                                             ---------   ---------
Weighted-average common shares outstanding
   for basic earnings per share              9,000,000   9,000,000
Effect of dilutive securities:
   Stock warrants                            1,000,000   1,000,000
                                            ----------  ----------
Shares for diluted earnings per share       10,000,000  10,000,000

SEGMENT REPORTING

The Company has determined it operates in one operating segment. Operating
segments, are components of an enterprise for which separate financial
information is available and is


                                        7



evaluated regularly by the Company in deciding how to allocate resources and in
assessing performance. The Company's chief operating decision maker assesses the
Company's performance, and allocates its resources as a single operating
segment.

USE OF ESTIMATES

The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.

RECENT ACCOUNTING PRONOUNCEMENTS

In November 2004, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 151, "Inventory Costs,"
("SFAS 151"), which amends the provisions of Chapter 4 of Accounting Research
Bulletin No. 43, "Inventory Pricing," ("ARB 43"). SFAS 151 requires that certain
production costs, such as idle facility expense, freight, handling costs, and
spoilage be charged as a current period expense. Under ARB 43, these costs were
charged to current period expense only under certain circumstances.
Additionally, SFAS 151 requires that the allocation of fixed production overhead
to the costs of conversion be based on the normal capacity of the production
facilities. SFAS 151 is effective for fiscal years beginning after June 15, 2005
and is required to be adopted by the Company beginning on January 1, 2006. The
Company does not expect the adoption of SFAS 151 to have a material impact on
the Company's results of operations and financial position.

In December 2004, the FASB issued SFAS No. 123R, "Share-Based Payment" ("SFAS
123R"), which revises SFAS No. 123 "Accounting For Stock-Based Compensation"
("SFAS 123") and supersedes Accounting Principles Board Opinion No. 25 ("APB No.
25"). SFAS 123R requires companies to measure the cost of employee services
received in exchange for an award of equity instruments (including grants of
employee stock options) based on the grant date fair value of the award (with
limited exceptions). That cost will be recognized over the period during which
an employee is required to provide service in exchange for the award, or the
requisite service period (usually the vesting period). The pro forma disclosures
previously permitted under SFAS 123 will no longer be an alternative to
financial statement recognition. As permitted under SFAS 123 for private
companies, private companies may use the minimum value method of measuring
equity share options and similar instruments for pro forma disclosure purposes.
The Company would be allowed to apply the provisions of SFAS 123R prospectively
solely to new awards and to awards modified, repurchased or cancelled after the
required effective date of the statement. In April 2005, the Securities and
Exchange Commission ("SEC") announced the adoption of a rule that amends the
adoption date for SFAS 123R. Accordingly, the provisions of SFAS 123R are
effective commencing the first quarter of 2006. The Company's management is
currently in the process of evaluating SFAS 123R.

In May 2005, the FASB issued Statement No. 154, "Accounting Changes and Error
Corrections--a replacement of APB Opinion No. 20 and FASB Statement No. 3,"
("SFAS 154"). SFAS 154 replaces APB Opinion No. 20, "Accounting Changes," and
FASB Statement No. 3, "Reporting Accounting Changes in Interim Financial
Statements," and changes the requirements for the accounting for and reporting
of a change in accounting principle. SFAS 154


                                       8



applies to all voluntary changes in accounting principle, and also applies to
changes required by an accounting pronouncement in the unusual instance that the
pronouncement does not include specific transition provisions. When a
pronouncement includes specific transition provisions, those provisions should
be followed. SFAS 154 is effective for accounting changes and corrections of
errors made in fiscal years beginning after December 15, 2005. Consequently, the
Company will adopt the provisions of SFAS 154 in the first quarter of 2006.

3.   ACCOUNTS RECEIVABLE

Accounts receivable at December 31, 2005 consists of the following:

                                           2005
                                        ----------
Trade accounts                          $  522,374
Connecticut rebate receivable               55,361
California rebate receivable               190,544
State rebates receivable                   498,375
Rebate receivable assigned to vendor       421,535
Less: Allowance for doubtful accounts      (10,000)
                                        ----------
                                        $1,678,189

4.   INVENTORY

Inventory consists of the following at December 31:

                                          2005
                                        --------
Finished goods                          $539,868

5.   PROPERTY AND EQUIPMENT, NET

Property and equipment, net consist of the following at December 31:

                                                    2005
                                                  --------
Furniture and fixtures                            $  5,200
Office equipment                                     2,589
Vehicles                                           139,751
                                                  --------
                                                   147,540
Less: Accumulated depreciation and amortization    (62,416)
                                                  --------
                                                  $ 85,124

Depreciation expense for the years ended December 31, 2005 and 2004 was
approximately $28,000 and $20,000, respectively.


                                       9



6.   ACCRUED LIABILITIES

Accrued liabilities consist of the following at December 31:

                                  2005
                                --------
Accrued salaries and benefits   $ 63,929
Customer deposits                101,500
Other accrued liabilities         90,779
                                --------
                                $256,208

7.   CREDIT FACILITY

The Company has a revolving line of credit (the "Credit Facility"), which
provides for borrowings of up to $500.0 thousand. The Company entered into this
agreement on August 31, 2005 and the Company is planning to renew this Credit
Facility on August 31, 2006. The total available amount of $500.0 thousand is
outstanding at December 31, 2005.

Interest on the outstanding balance under the Credit Facility is calculated on
the prime rate ("Prime") plus 1.25%. Interest was calculated based on Prime plus
1.25% (8.50%) at December 31, 2005.

All of the existing property and assets of the Company are pledged as collateral
for the Credit Facility. In addition, the Company's obligations are
collateralized by a guaranty from the President of the Company, which includes
as collateral all personal property and assets.

8.   LONG-TERM DEBT

The Company's long-term debt consists of five vehicle loans. The scheduled
principal maturities of long-term debt at December 31, 2005 are as follows:

2006                    $ 16,864
2007                      13,588
2008                       7,577
2009                       4,528
                        --------
                        $ 42,557
Less: current portion    (16,864)
                        $ 25,653
                        --------

9.   STOCKHOLDERS' EQUITY

The Company was incorporated in 2001 as a Subchapter S corporation. The
President of the Company is the sole stockholder as of December 31, 2005, owning
100% of the issued and outstanding common stock.

10.  STOCK OPTIONS AND STOCK WARRANTS

The Company's 2001 Stock Option Plan (the "2001 Plan") provides for the issuance
of incentive stock options and non-statutory stock options. The Company's Board
of Directors, which,


                                       10



subject to the terms of the 2001 Plan, determines to whom grants are made, and
the vesting, timing, amounts and other terms of such grants. Incentive stock
options may be granted only to employees of the Company, while non-statutory
stock options may be granted to the Company's employees, officers, directors,
consultants and advisors. Options under the Plan vest as determined by the Board
of Directors, but in no event at a rate less than 20% per year. The term of the
options granted under the 2001 Plan may not exceed 10 years and the maximum
aggregate shares that may be issued upon exercise of such options is 4,000,000
shares of common stock. No options have been granted under the 2001 Plan as of
December 31, 2005.

In March 2001, the Company issued a warrant (the "Warrant") to purchase up to
1,000,000 shares of the Company's common stock at an exercise price per share of
$0.01 in exchange for the purchase of assets from, AWI, Inc., a related party
(see Note 11). The Warrant expires in March 2011; therefore, the remaining
contractual life of the Warrant at December 31, 2005 is 5.2 years. In connection
with the Company's reverse merger transaction (see Note 14) during August 2006,
the holder of the Warrant has not notified the Company of its intent to exercise
the Warrant.

11.  RELATED PARTY TRANSACTIONS

The Company issued the Warrant to AWI, Inc. ("AWI") during March 2001 to
purchase up to 1,000,000 shares of the Company's common stock at an exercise
price per share of $0.01. The President of the Company is a director of AWI and
is currently a custodian for AWI. The Company also has an amount due from this
related party for expenses of approximately $21,000 paid by the Company on
behalf of AWI, which is recorded as due from related party within the
accompanying balance sheet.

12.  COMMITMENTS AND CONTINGENCIES

NON-CANCELABLE OPERATING LEASES

The Company's operating lease for its California office and warehouse facility
expired during April 2006, and was subsequently renewed. The Company rents
office and warehouse space in New Jersey on a month-to-month basis. Total rent
expense amounted to approximately $80,000 and $62,000 for the years ended
December 31, 2005 and 2004, respectively.

Future minimum lease payments on operating leases at December 31, 2005 are
approximately $17,000.

LITIGATION

The Company is involved in certain legal proceedings arising in the ordinary
course of business. In the opinion of management, the outcome of such
proceedings will not materially affect the Company's financial position, results
of operations or cash flows.

13.  SIGNIFICANT CONCENTRATIONS OF BUSINESS AND CREDIT RISK

The Company maintains reserves for potential credit losses and such losses, in
the aggregate, have generally not exceeded management's estimates. The Company
has five customers that accounted for approximately 10.6% of net sales for the
year ended December 31, 2005 and five


                                       11



customers that accounted for approximately 11.4% of net sales for the year ended
December 31, 2004. At December 31, 2005 and 2004, accounts receivable included
amounts owed from these customers of approximately $256,000 and $25,000,
respectively. Due to the nature of the Company's business, the Company's
customer base is continuously being updated with new customers year over year,
with no significant recurring customers.

14.  SUBSEQUENT EVENTS

During 2006, a new entity named Akeena Solar, Inc. ("Akeena Solar" or the
"Surviving Corporation") was incorporated as a C Corporation in the State of
Delaware, and the Company was merged with Akeena Solar during June 2006 as
approved by the Board of Directors. At the time of this transaction, each share
of the Company's no par value common stock was converted into one ten-thousandth
(1/10,000) of a share of the Surviving Corporation's common stock with a par
value of $0.01 per share and the sole stockholder of the Company's outstanding
common shares became a holder of the shares of the Surviving Corporation.

Subsequent to the Company being merged into Akeena Solar, Akeena Solar became
the obligor on the Warrant (see Note 10). On June 23, 2006, Akeena Solar
declared and effected a 18,000-for-one stock split of the Company's outstanding
shares of common stock in the form of a stock dividend. Accordingly, all common
share and per share data in the financial statements have been retroactively
adjusted to reflect the impact of the 18,000-for-one stock split for all periods
presented. After the stock split, the Warrant was exercisable for up to
1,000,000 of Akeena Solar's common stock at an exercise price of $0.01 per
share. On July 18, 2006, the President of the Company purchased a warrant from
AWI to purchase up to 90,000 shares of Akeena Solar common stock for a purchase
price of $2,700. The purchase price was determined by an independent third-party
appraiser to be the fair market value of the warrants.

On August 11, 2006, Akeena Solar entered into a reverse merger transaction with
Fairview Energy Corporation, Inc. ("Fairview"). Pursuant to the merger
agreement, the stockholders of Akeena Solar received one share of Fairview
common stock for each issued and outstanding share of Akeena Solar common stock.
Subsequent to the closing of the merger transaction (the "Merger"), the closing
of a Private Placement for $2,527,500, and the cancellation of 3,877,477
shares of Fairview common stock in exchange for 100% of the outstanding capital
stock of Akeena Solar, the former stockholders of Akeena Solar hold 8,197,692
shares, or 57.0%, of Fairview's outstanding common stock. Since the stockholders
of Akeena Solar own a majority of the outstanding shares of Fairview common
stock immediately following the Merger, the Merger is being accounted for as a
reverse merger transaction and Akeena Solar is deemed to be the acquirer. The
assets, liabilities and the historical operations prior to the Merger will be
those of Akeena Solar. Subsequent to the Merger, the consolidated financial
statements will include the assets and liabilities of Akeena Solar and Fairview,
and the historical operations of Akeena Solar and the operations of Fairview
from the closing date of the Merger.

On August 8, 2006, Akeena Solar adopted the Akeena Solar, Inc. 2006 Stock
Incentive Plan (the "Stock Plan"), whereby 450,000 shares of common stock shall
be available for grant to employees, directors and consultants under the Stock
Plan. Restricted stock and stock options may be issued under the Stock Plan, and
as of August 11, 2006, 197,692 shares of restricted stock had been issued under
the Stock Plan.


                                       12






                                  AKEENA, INC.
                             Condensed Balance Sheet
                                 March 31, 2006
                                   (Unaudited)


ASSETS
Current assets
   Cash and cash equivalents                                     $   23,245
   Accounts receivable, net                                       1,570,552
   Inventory                                                      1,244,579
   Prepaid expenses and other current assets                        365,348
                                                                 ----------
      Total current assets                                        3,203,724
Property and equipment, net                                          77,942
Due from related party                                               21,025
Other assets                                                          3,927
                                                                 ----------
      Total assets                                               $3,306,618
                                                                 ==========
LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities
   Accounts payable                                              $1,906,401
   Accrued liabilities                                              308,649
   Accrued product warranty                                         334,967
   Deferred revenue                                                 209,658
   Credit facility                                                  500,000
   Current portion of long-term debt                                 16,060
                                                                 ----------
      Total current liabilities                                   3,275,735
Long-term debt, less current portion                                 21,772
                                                                 ----------
      Total liabilities                                           3,297,507
                                                                 ----------
Commitments and contingencies
Stockholder's equity:
   Common stock, $0.01 par value; 16,000,000 shares authorized;
   9,000,000 shares issued and outstanding                           90,000
   Retained earnings                                                (80,889)
                                                                 ----------
      Total stockholder's equity                                      9,111
                                                                 ----------
      Total liabilities and stockholder's equity                 $3,306,618
                                                                 ==========

 See accompanying notes, which are an integral part of these condensed financial
                                  statements.


                                       13



                                  AKEENA, INC.
                       Condensed Statements of Operations
                   Three Months Ended March 31, 2006 and 2005
                                   (Unaudited)

                                                    THREE MONTHS ENDED MARCH 31,
                                                         2006         2005
                                                      ----------   ----------
NET SALES                                             $2,490,173   $1,200,633
COST OF SALES                                          1,921,797      961,474
                                                      ----------   ----------
      Gross profit                                       568,376      239,159
                                                      ----------   ----------
OPERATING EXPENSES
Selling, general and administrative                      535,715      294,508
                                                      ----------   ----------
      Total operating expenses                           535,715      294,508
                                                      ----------   ----------
      Income from operations                              32,661      (55,349)
                                                      ----------   ----------
Other income (expense)
Interest income (expense), net                           (13,031)         (95)
                                                      ----------   ----------
      Total other income (expense)                       (13,031)         (95)
                                                      ----------   ----------
NET INCOME (LOSS)                                     $   19,630   $  (55,444)
                                                      ==========   ==========
Earnings per common and common equivalent share:
   Basic                                              $     0.00   $    (0.01)
                                                      ==========   ==========
   Diluted                                            $     0.00   $    (0.01)
                                                      ==========   ==========
Weighted average shares used in computing earnings
   per common and common equivalent share:
   Basic                                               9,000,000    9,000,000
                                                      ==========   ==========
   Diluted                                            10,000,000   10,000,000
                                                      ==========   ==========

 See accompanying notes, which are an integral part of these condensed financial
                                  statements.


                                       14



                                  AKEENA, INC.
                       Condensed Statements of Cash Flows
                   Three Months Ended March 31, 2006 and 2005
                                   (Unaudited)



                                                                   THREE MONTHS ENDED MARCH 31,
                                                                          2006        2005
                                                                       ---------   ---------

CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)                                                      $  19,630   $ (55,444)
Adjustments to reconcile net income (loss) to net cash (used in)
   provided by operating activities
   Depreciation                                                            7,182       6,307
   Bad debt expense                                                          175       4,681
   Changes in assets and liabilities:
      Accounts receivable                                                107,462      78,403
      Inventory                                                         (704,711)     74,734
      Prepaid expenses and other current assets                           71,107    (190,216)
      Accounts payable                                                   449,233     (52,946)
      Accrued warranty and other liabilities                              83,220      16,013
      Deferred revenue                                                  (264,374)    192,440
                                                                       ---------   ---------
         Net cash (used in) provided by operating activities            (231,076)     73,972
                                                                       ---------   ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures                                                          --     (17,500)
Increase in amount due from related party                                     --        (199)
                                                                       ---------   ---------
         Net cash used in investing activities                                --     (17,699)
                                                                       ---------   ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Repayment of long-term debt                                               (4,725)     (6,197)
Distributions to stockholder                                             (11,000)    (28,322)
                                                                       ---------   ---------
         Net cash used in financing activities                           (15,725)    (34,519)
                                                                       ---------   ---------
         Net (decrease) increase in cash and cash equivalents           (246,801)     21,754
CASH AND CASH EQUIVALENTS
Beginning of period                                                      270,046      99,089
                                                                       ---------   ---------
End of period                                                          $  23,245   $ 120,843
                                                                       =========   =========
SUPPLEMENTAL CASH FLOWS DISCLOSURES:
Cash paid during the period for
   Interest                                                            $  13,035   $     441
                                                                       =========   =========


 See accompanying notes, which are an integral part of these condensed financial
                                  statements.


                                       15



                                  AKEENA, INC.
                     Notes to Condensed Financial Statements
                                 March 31, 2006
                                   (Unaudited)

1.   BASIS OF PRESENTATION

BASIS OF PRESENTATION

The accompanying financial statements are unaudited and have been prepared in
accordance with accounting principles generally accepted in the United States of
America for interim financial information. They should be read in conjunction
with the financial statements and related notes to the financial statements of
Akeena, Inc. (the "Company") included elsewhere in this Form 8-K. The March 31,
2006 unaudited interim financial statements have been prepared pursuant to the
rules and regulations of the Securities and Exchange Commission ("SEC"). Certain
information and note disclosures normally included in the annual financial
statements haven been condensed or omitted pursuant to those rules and
regulations, although the Company's management believes the disclosures made are
adequate to make the information presented not misleading. In the opinion of
management, all adjustments, consisting of normal recurring accruals, necessary
for a fair statement of the result of operations for the interim periods
presented have been reflected herein. The results of operations for interim
periods are not necessarily indicative of the results to be expected for the
entire year.

USE OF ESTIMATES

The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.

MANUFACTURER AND INSTALLATION WARRANTIES

The Company warrants its products for various periods against defects in
material or installation workmanship. The manufacturer warranty on the solar
panels and the inverters have a warranty period range of 5 - 25 years. The
Company assists the customer in the event that the manufacturer warranty needs
to be used to replace a defected panel or inverter. The Company provides for a
5-year warranty on the installation of a system and all equipment and incidental
supplies other than solar panels and inverters that are covered under the
manufacturer warranty. The Company records a provision for the installation
warranty, within cost of sales, based on historical experience and future
expectations of the probable cost to be incurred in honoring its warranty
commitment. The provision for the installation warranty is included within
accrued liabilities in the accompanying balance sheet.


                                       16



The provision for installation warranty consisted of the following at March 31,
2006:

                                          2006
                                        --------
Balance at beginning of period          $304,188
Provision charged to warranty expense     34,529
Less: warranty claims                     (3,750)
                                        --------
Balance at end of period                $334,967

RECENT ACCOUNTING PRONOUNCEMENTS

In November 2004, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 151, "Inventory Costs,"
("SFAS 151"), which amends the provisions of Chapter 4 of Accounting Research
Bulletin No. 43, "Inventory Pricing," ("ARB 43"). SFAS 151 requires that certain
production costs, such as idle facility expense, freight, handling costs, and
spoilage be charged as a current period expense. Under ARB 43, these costs were
charged to current period expense only under certain circumstances.
Additionally, SFAS 151 requires that the allocation of fixed production overhead
to the costs of conversion be based on the normal capacity of the production
facilities. SFAS 151 is effective for fiscal years beginning after June 15, 2005
and is required to be adopted by the Company beginning on January 1, 2006. The
Company's adoption of SFAS 151 did not have a material impact on the Company's
results of operations and financial position.

In December 2004, the FASB issued SFAS No. 123R, "Share-Based Payment" ("SFAS
123R"), which revises SFAS No. 123 "Accounting For Stock-Based Compensation"
("SFAS 123") and supersedes Accounting Principles Board Opinion No. 25 ("APB No.
25"). SFAS 123R requires companies to measure the cost of employee services
received in exchange for an award of equity instruments (including grants of
employee stock options) based on the grant date fair value of the award (with
limited exceptions). That cost will be recognized over the period during which
an employee is required to provide service in exchange for the award, or the
requisite service period (usually the vesting period). The pro forma disclosures
previously permitted under SFAS 123 will no longer be an alternative to
financial statement recognition. As permitted under SFAS 123 for private
companies, private companies may use the minimum value method of measuring
equity share options and similar instruments for pro forma disclosure purposes.
The Company would be allowed to apply the provisions of SFAS 123R prospectively
solely to new awards and to awards modified, repurchased or cancelled after the
required effective date of the statement. In April 2005, the Securities and
Exchange Commission ("SEC") announced the adoption of a rule that amends the
adoption date for SFAS 123R. Accordingly, the provisions of SFAS 123R are
effective commencing the first quarter of 2006. The provisions of 123R did not
have an impact on the Company's results of operations and financial position as
the Company has not issued any equity instruments in exchange for employee
services.


                                       17



3.   ACCOUNTS RECEIVABLE

Accounts receivable at March 31, 2006 consists of the following:

                                                     2006
                                                  ----------
Trade accounts                                    $  384,406
Connecticut rebate receivable                         79,742
California rebate receivable                         237,421
New Jersey rebate receivable                          87,278
New York rebate receivable                            15,810
State rebates receivable                             541,690
Rebate receivable assigned to vendor                 211,962
Other receivables                                     22,243
Less: Allowance for doubtful accounts                (10,000)
                                                  ----------
                                                  $1,570,552

4.   INVENTORY

Inventory consists of the following at March 31:

                                                     2006
                                                  ----------
Finished goods                                    $1,244,579

5.   PROPERTY AND EQUIPMENT, NET

Property and equipment, net consist of the following at March 31:

                                                    2006
                                                  --------
Furniture and fixtures                            $  5,200
Office equipment                                     2,589
Vehicles                                           139,751
                                                  --------
                                                   147,540
Less: Accumulated depreciation and amortization    (69,598)
                                                  --------
                                                  $ 77,942

Depreciation expense for the periods ended March 31, 2006 and 2005 was
approximately $7,000 and $6,000 respectively.


                                       18



6.   ACCRUED LIABILITIES

Accrued liabilities consist of the following at March 31:

                                  2006
                                --------
Accrued salaries and benefits   $ 52,116
Customer deposits                149,000
Other accrued liabilities        107,533
                                --------
                                $308,649

7.   CREDIT FACILITY AND LONG-TERM DEBT

The Company has a revolving line of credit (the "Credit Facility"), which
provides for borrowings of up to $500,000. The Company entered into this
agreement on August 31, 2005 and the Company is planning to renew this Credit
Facility on August 31, 2006. The total available amount of $500,000 is
outstanding at March 31, 2006.

Interest on the outstanding balance under the Credit Facility is calculated on
the prime rate ("Prime") plus 1.25%. Interest was calculated based on Prime plus
1.25% (9.0%) at March 31, 2006.

All of the existing property and assets of the Company are pledged as collateral
for the Credit Facility. In addition, the Company's obligations are
collateralized by a guaranty from the President of the Company, which includes
as collateral all personal property and assets.

The Company's long-term debt consists of five vehicle loans with a total
outstanding balance of approximately $38.0 thousand at March 31, 2006, less the
current portion due of approximately $16.0 thousand at March 31, 2006.

8.   STOCKHOLDERS' EQUITY

The Company was incorporated in 2001 as a Subchapter S corporation. The
President of the Company is the sole stockholder as of March 31, 2006, owning
100% of the issued and outstanding common stock.

9.   STOCK OPTIONS AND STOCK WARRANTS

The Company's 2001 Stock Option Plan (the "2001 Plan") provides for the issuance
of incentive stock options and non-statutory stock options. The Company's Board
of Directors, which, subject to the terms of the 2001 Plan, determines to whom
grants are made, and the vesting, timing, amounts and other terms of such
grants. Incentive stock options may be granted only to employees of the Company,
while non-statutory stock options may be granted to the Company's employees,
officers, directors, consultants and advisors. Options under the Plan vest as
determined by the Board of Directors, but in no event at a rate less than 20%
per year. The term of the options granted under the 2001 Plan may not exceed 10
years and the maximum aggregate shares that may be issued upon exercise of such
options is 4,000,000 shares of common stock. No options have been granted under
the 2001 Plan as of March 31, 2006.


                                       19



In March 2001, the Company issued a warrant (the "Warrant") to purchase up to
1,000,000 shares of the Company's common stock at an exercise price per share of
$0.01 in exchange for the purchase of assets from, AWI, Inc., a related party
(see Note 11). The Warrant expires in March 2011; therefore, the remaining
contractual life of the Warrant at March 31, 2006 is 4.9 years.

10.  EARNINGS PER SHARE

Basic earnings per share is computed by dividing net income by the weighted
average number of common shares outstanding during the period presented. Diluted
earnings per share is computed using the weighted average number of common
shares outstanding during the periods plus the effect of dilutive securities
outstanding during the periods.

The following summarizes the weighted-average number of common shares
outstanding during the three months that were used to calculate the basic
earnings per share as well as the dilutive impact of stock warrants, as included
in the calculation of diluted weighted average shares at March 31:

                                                2006        2005
                                             ---------   ---------
Weighted-average common shares outstanding
   for basic earnings per share              9,000,000   9,000,000
Effect of dilutive securities:
   Stock warrants                            1,000,000   1,000,000
                                            ----------  ----------
Shares for diluted earnings per share       10,000,000  10,000,000

11.  RELATED PARTY TRANSACTIONS

The Company issued the Warrant (see Note 9) to AWI, Inc. ("AWI") during March
2001 to purchase up to 1,000,000 shares of the Company's common stock at an
exercise price per share of $0.01. The President of the Company is a director of
AWI and is currently a custodian for AWI. The Company also has an amount due
from this related party for expenses of approximately $21,000 paid by the
Company on behalf of AWI, which are recorded as due from related party within
the accompanying balance sheet.

12.  COMMITMENTS AND CONTINGENCIES

LITIGATION

The Company is involved in certain legal proceedings arising in the ordinary
course of business. In the opinion of management, the outcome of such
proceedings will not materially affect the Company's financial position, results
of operations or cash flows.

13.  SUBSEQUENT EVENTS

During 2006, a new entity named Akeena Solar, Inc. ("Akeena Solar" or the
"Surviving Corporation") was incorporated as a C Corporation in the State of
Delaware, and the Company was merged with Akeena Solar during June 2006 as
approved by the Board of Directors. At the time of this transaction, each share
of the Company's no par value common stock was converted


                                       20



into one ten-thousandth (1/10,000) of a share of the Surviving Corporation's
common stock with a par value of $0.01 per share and the sole stockholder of the
Company's outstanding common shares became a holder of the shares of the
Surviving Corporation.

Subsequent to the Company being merged into Akeena Solar, Akeena Solar became
the obligor on the Warrant (see Note 9 and Note 11). On June 23, 2006, Akeena
Solar declared and effected a 18,000-for-one stock split of the Company's
outstanding shares of common stock in the form of a stock dividend. Accordingly,
all common share and per share data in the financial statements have been
retroactively adjusted to reflect the impact of the 18,000-for-one stock split
for all periods presented. After the stock split, the Warrant was exercisable
for up to 1,000,000 of Akeena Solar's common stock at an exercise price of $0.01
per share. On July 18, 2006, the President of the Company purchased a warrant
from AWI to purchase up to 90,000 shares of Akeena Solar common stock for a
purchase price of $2,700. The purchase price was determined by an independent
third-party appraiser to be the fair market value of the warrants.

On August 11, 2006, Akeena Solar entered into a reverse merger transaction with
Fairview Energy Corporation, Inc. ("Fairview"). Pursuant to the merger
agreement, the stockholders of Akeena Solar received one share of Fairview
common stock for each issued and outstanding share of Akeena Solar common stock.
Subsequent to the closing of the merger transaction (the "Merger"), the closing
of a Private Placement for $2,527,500, and the cancellation of 3,877,477 shares
of Fairview common stock in exchange for 100% of the outstanding capital stock
of Akeena Solar, the former stockholders of Akeena Solar hold 8,197,692 shares,
or 57.0%, of Fairview's outstanding common stock. Since the stockholders of
Akeena Solar own a majority of the outstanding shares of Fairview common stock
immediately following the Merger, the Merger is being accounted for as a reverse
merger transaction and Akeena Solar is deemed to be the acquirer. The assets,
liabilities and the historical operations prior to the Merger will be those of
Akeena Solar. Subsequent to the Merger, the consolidated financial statements
will include the assets and liabilities of Akeena Solar and Fairview, and the
historical operations of Akeena Solar and the operations of Fairview from the
closing date of the Merger.

On August 8, 2006, Akeena Solar adopted the Akeena Solar, Inc. 2006 Stock
Incentive Plan (the "Stock Plan"), whereby 450,000 shares of common stock shall
be available for grant to employees, directors and consultants under the Stock
Plan. Restricted stock and stock options may be issued under the Stock Plan, and
as of August 11, 2006, 197,692 shares of restricted stock had been issued under
the Stock Plan.


                                       21

EX-99.2

                                                                    Exhibit 99.2

                               AKEENA SOLAR, INC.

                       INTRODUCTION TO PRO FORMA CONDENSED
                          COMBINED FINANCIAL STATEMENTS
                                   (Unaudited)

The following unaudited pro forma condensed combined financial statements give
effect to the merger transaction between Akeena Solar, Inc. ("Akeena") and
Fairview Energy Corporation, Inc ("Fairview"). On August 11, 2006, Akeena merged
with a wholly owned subsidiary of Fairview whereby 100% of the outstanding
shares of Akeena were exchanged for 8,197,692 shares of Fairview, a public shell
corporation, Fairview changed its name to Akeena Solar, Inc. and Akeena, as the
surviving corporation in the merger, changed its name to Akeena Corp. As a
result of the transaction, the former owners of Akeena became the controlling
stockholders of Fairview. Accordingly, the merger of Akeena and Fairview is a
reverse merger that has been accounted for as a recapitalization of Akeena.

The following unaudited pro forma condensed combined balance sheet combines the
balance sheet of Akeena with Fairview as of March 31, 2006, as if the
recapitalization of Akeena occurred on that date.

The unaudited pro forma balance sheet and earnings per share data should be read
in conjunction with the separate historical financial statements of Akeena,
appearing elsewhere herein, and the historical financial statements of Fairview,
as filed and included in Form 10-QSB for the quarterly period ended April 30,
2006 and Form SB-2 for the annual period ended October 31, 2005. The fiscal year
end of Akeena and Fairview is December 31 and October 31, respectively. The pro
forma condensed statement of income of Fairview is within the allowable 93 days
of the most recent quarterly period end of Akeena (Note 2). The unaudited pro
forma balance sheet and earnings per share data are not necessarily indicative
of the combined financial position, had the acquisition occurred on March 31,
2006.



                               AKEENA SOLAR, INC.

               NOTES TO PRO FORMA CONDENSED COMBINED BALANCE SHEET
                                   (Unaudited)

NOTE 1 - Merger Transaction

     Akeena Solar, Inc. ("Akeena") entered into a merger agreement with Fairview
     Energy Corporation, Inc. ("Fairview"), a public shell corporation, whereby
     100% of the shares of Akeena were exchanged for 8,197,692 shares of
     Fairview common stock. Fairview changed its name to Akeena and as a result
     of the transaction, the former owners of Akeena became the controlling
     stockholders of Fairview. Accordingly, the merger of Akeena and Fairview
     (the "Merger") is a reverse merger that has been accounted for as a
     recapitalization of Akeena.

NOTE 2 - Pro Forma Adjustments

     The pro forma adjustments to the condensed balance sheet give effect to the
     recapitalization of Akeena as if the transactions had occurred at the
     beginning of the period.

     Balance Sheet - March 31, 2006

     a.   Derived from the unaudited balance sheet of Akeena as of March 31,
          2006.

     b.   Derived from the unaudited balance sheet of Fairview as of April 30,
          2006.

     c.   Akeena common shares adjusted from $.01 par value to $.001 par value.

     d.   Cancellation of 1,000,000 shares of Akeena common stock upon closing
          of the Merger.

     e.   Issuance of 197,692 shares of restricted stock at $.001 par value.

     f.   Cancellation of 3,877,477 shares of Fairview common stock in
          connection with the Merger.

     g.   In connection with the Merger, Fairview will issue a maximum of
          $3,000,000 of its common stock at $1.00 per share, in a private
          placement (the "Private Placement") on terms acceptable to Akeena. As
          of August 11, 2006, $2,527,500 has been issued at $1.00 per share.

     h.   On August 4, 2006, each share of Fairview's 6,946,250 common shares
          outstanding was converted into 1.084609 shares for a total of
          7,533,965 common shares outstanding.

     i.   Elimination of Fairview accumulated deficit.

     j.   Adjustment made to reflect the costs relating to the Merger and the
          Private Placement.

     k.   The 14,381,680 shares of common stock issued and outstanding consist
          of 8,197,692 shares issued to the owners of Akeena and 6,183,988
          shares issued to the owners of Fairview.




                                  AKEENA, INC.
                   Pro Forma Condensed Combined Balance Sheet
                                 March 31, 2006
                                   (Unaudited)



                                                                          PRO FORMA ADJUSTMENTS
                                                                        ------------------------     PRO FORMA
                                                    AKEENA    FAIRVIEW    AKEENA       FAIRVIEW       COMBINED
                                                  ----------  --------  ---------     ----------     ----------
                                                      (A)        (B)

ASSETS
Current assets
   Cash and cash equivalents                      $   23,245  $ 25,006                 2,527,500 (g) $2,575,751
   Accounts receivable, net                        1,570,552                                          1,570,552
   Inventory                                       1,244,579                                          1,244,579
   Prepaid expenses and other current assets         365,348                                            365,348
                                                  ----------  --------  ---------     ----------     ----------
      Total current assets                         3,203,724    25,006         --      2,527,500      5,756,230
Property and equipment, net                           77,942                                             77,942
Due from related party                                21,025                                             21,025
Other assets                                           3,927                                              3,927
                                                  ----------  --------  ---------     ----------     ----------
      Total assets                                $3,306,618  $ 25,006  $      --     $2,527,500     $5,859,124
                                                  ==========  ========  =========     ==========     ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
   Accounts payable                               $1,906,401  $ 13,663                               $1,920,064
   Accrued liabilities                               643,616              265,000 (j)                   908,616
   Deferred revenue                                  209,658                                            209,658
   Credit facility                                   500,000                                            500,000
   Current portion of long-term debt                  16,060                                             16,060
                                                  ----------  --------  ---------     ----------     ----------
      Total current liabilities                    3,275,735    13,663    265,000             --      3,554,398
Long-term debt, less current portion                  21,772                                             21,772
                                                  ----------  --------  ---------     ----------     ----------
      Total liabilities                            3,297,507    13,663    265,000             --      3,576,170
                                                  ----------  --------  ---------     ----------     ----------
Commitments and contingencies (Note 12)
Stockholders' equity:
   Common stock                                       90,000     6,946    (81,000)(c)     (3,877)(f)     14,382
                                                                           (1,000)(d)      2,528 (g)
                                                                              198 (e)        587 (h)
   Additional paid-in capital                             --    27,229     81,000 (c)      3,877 (f)  2,614,461
                                                                            1,000 (d)  2,524,972 (g)
                                                                             (198)(e)       (587)(h)
                                                                                         (22,832)(i)
   Retained earnings (accumulated deficit)           (80,889)  (22,832)  (265,000)(j)     22,832 (i)   (345,889)
                                                  ----------  --------  ---------     ----------     ----------
      Total stockholders' equity                       9,111    11,343   (265,000)     2,527,500      2,282,954
                                                  ----------  --------  ---------     ----------     ----------
      Total liabilities and stockholders' equity  $3,306,618  $ 25,006  $      --     $2,527,500     $5,859,124
                                                  ==========  ========  =========     ==========     ==========


  See accompanying notes to pro forma condensed combined balance sheet.




The following table sets forth the computation of pro forma basic and diluted
earnings per share for the three months ended March 31, 2006 and the year ended
December 31, 2005 as if the Merger occurred at the beginning of the respective
periods.





THREE MONTHS ENDED MARCH 31, 2006:


                                                                                     PRO FORMA ADJUSTMENTS             PRO FORMA
                                            AKEENA             FAIRVIEW            AKEENA           FAIRVIEW           COMBINED
                                              (a)                (b)

NET INCOME (LOSS)                            $ 19,630           $ (10,034)       $ (265,000)(h)             $ -         $ (255,404)
                                       ===============    ================   ===============    ================   ================


Earnings per common and common
  equivalent share:

    Basic                                      $ 0.00             $ (0.00)                                                 $ (0.02)
                                       ===============    ================                                         ================

    Diluted                                    $ 0.00             $ (0.00)                                                 $ (0.02)
                                       ===============    ================                                         ================

Weighted average shares used in
  computing earnings per common and
  common equivalent share:

    Basic                                   9,000,000           6,946,250        (1,000,000)(c)      (3,877,477)(e)     14,381,680
                                       ===============    ================   ===============    ================   ================
                                                                                    197,692 (d)       2,527,500 (f)
                                                                             ===============    ================
                                                                                                        587,715 (g)
                                                                                                ================




    Diluted                                10,000,000           6,946,250          (802,308)           (762,262)        14,381,680
                                       ===============    ================   ===============    ================   ================
                                                                                 (1,000,000)(i)
                                                                             ===============




YEAR ENDED DECEMBER 31, 2005:
                                                                                     PRO FORMA ADJUSTMENTS             PRO FORMA
                                            AKEENA             FAIRVIEW            AKEENA           FAIRVIEW           COMBINED
                                              (a)                (b)

NET INCOME (LOSS)                             $ 1,852            $ (5,658)       $ (265,000)(h)             $ -         $ (268,806)
                                       ===============    ================   ===============    ================   ================


Earnings per common and common
  equivalent share:

    Basic                                      $ 0.00             $ (0.00)                                                 $ (0.02)
                                       ===============    ================                                         ================

    Diluted                                    $ 0.00             $ (0.00)                                                 $ (0.02)
                                       ===============    ================                                         ================

Weighted average shares used in
  computing earnings per common and
  common equivalent share:

    Basic                                   9,000,000           6,946,250        (1,000,000)(c)      (3,877,477)(e)     14,381,680
                                       ===============    ================   ===============    ================   ================
                                                                                    197,692 (d)       2,527,500 (f)
                                                                             ===============    ================
                                                                                                        587,715 (g)
                                                                                                ================




    Diluted                                10,000,000           6,946,250          (802,308)           (762,262)        14,381,680
                                       ===============    ================   ===============    ================   ================
                                                                                 (1,000,000)(i)
                                                                             ===============


     a.   Derived from the unaudited statement of operations of Akeena for the
          three months ended March 31, 2006 and the year ended December 31,
          2005, respectively.

     b.   Derived from the unaudited statement of operations of Fairview for the
          three months ended April 30, 2006 and the three months ended January
          31, 2006, respectively.

     c.   Cancellation of 1,000,000 shares of Akeena common stock upon closing
          of the Merger.

     d.   Issuance of 197,692 shares of restricted stock at $.001 par value.

     e.   Cancellation of 3,877,477 shares of Fairview common stock in
          connection with the Merger.

     f.   In connection with the Merger, Fairview will issue a maximum of
          $3,000,000 of its common stock at $1.00 per share, in a private
          placement (the "Private Placement") on terms acceptable to Akeena. As
          of August 11, 2006, $2,527,500 has been issued at $1.00 per share.

     g.   On August 4, 2006, each share of Fairview's 6,946,250 common shares
          outstanding was converted into 1.084609 shares for a total of
          7,533,965 common shares outstanding.

     h.   Adjustment made to reflect the costs relating to the Merger and the
          Private Placement.

     i.   Adjustment made to exclude warrants from diluted EPS calculation as
          inclusion of the warrants would be antidilutive as a result of the pro
          forma net loss.